Bankrupt Overnight…AI Startup Company

Most people don’t remember how during the Dotcom bubble many new companies went bankrupt overnight.

And it was because those companies were worthless empty shells claiming to have the next revolutionary technology that would change the world.

That was 25 years ago and (much to the delight of the Boyz in the “Club”) investors have short memories.

Cue Up:  Builder.ai when it was recently revealed that their AI software was simply a group of 700 Indians in a data center providing users with responses. *

 

LOL!

 

(* Note: We wonder if their AI also included selling extended warranties for cars… “Hello, Mr. Vincent. My name is Vinoid Patel and we have been trying to contact you about your car’s expired warranty”) …LOL!

 

Builder.ai was supposedly valued at $1.5 billion.

Not anymore.

 

In fact, they went bankrupt so fast it made Sam Bankman-Fried’s FTX crypto exchange (remember him?) bankruptcy look like a long drawn-out process.

 

Ironically (or NOT) Builder.ai’s AI services attracted major investors like Microsoft and Amazon (who lost $30 million and $85 million) to a company who engaged in what is known as “round-tripping” with VerSe Innovation.

 

In Case You Missed it…VerSe is an Indian social media firm, where each company they associated with billed the other for similar amounts in order to inflate sales.

As a result, investors were misled, believing the company was performing well.

 

Going Bankrupt Overnight

 

Going bankrupt quickly seems to follow a pattern of

• Screwing investors
• Posting inflated numbers that surprisingly get revised down
• And then hearing investors crying the familiar:

 

“I’m shocked I tell you…Shocked.  Who could have foreseen this happening?”

 

Builder.ai said their 2024 revenue was $220 million, which was later revised down to $55 million.

And in 2023, they initially claimed to gross $180 million in sales, but later revised this to $45 million.

The company’s AI service “Natasha” was said to be a revolutionary development in AI.

But it turns out that Natasha was barely functional, and 700 Indian engineers performed most of the coding.

 

We bring this bankruptcy up to remind caution you that we are in the midst of an AI start-up boom…where countless companies are claiming to offer real AI services.

 

Builder.ai is a classic example of how not all startups are operating on real AI platforms.

And that we’ve been down this road before.

 

 

 

 

AI is sexy, exciting and can easily seduce/fool even some of the most sophisticated companies like Microsoft and Amazon.

Think what they can do to the average investor.

As always, we constantly try to explain to our readers how the financial world operates “behind the curtain” so you can side-step Wall Street’s financial landmines.

 

Learn how to avoid these pitfalls every month in our “Simplifying Wall Street…In Plain English” newsletter (HERE).

Share this with a friend…especially if they’re excited about investing in AI.  They’ll thank YOU later.

 

And tell them:

We’re Not Just About Finance

But we use finance to give you hope.

 “And you shall know the truth, and the truth shall make you free.”

~John 8:32~