Builder․ai even more fake: creative accounting, no AI, no money
Builder.ai collapsed a couple of weeks ago.Its much-touted AI website builder seemed to be fully 100% AGI — A Guy Instead.
More details have come out in Builder’s US bankruptcy. Engineer.AI Corporation filed for Chapter 7 liquidation on Monday. The company has about $50–100 million in debts and only $5–$10 million in assets. [Petition, PDF; case docket]
It’s now confirmed that Builder.ai didn’t have any “AI” at all. It was 700 human engineers in India, paid $8 to $15 an hour. [Times of India, archive]
The Natasha chatbot was Builder.ai’s secret sauce. They claimed Natasha would analyse your business requirements for you. Builder was hoping to sell Natasha to Microsoft as a business app development tool. There’s a Builder ad directly promoting Natasha as being “AI.” [YouTube]
Natasha was, of course, the same bunch of Guys Instead. “Natasha” was a running joke in the development office. The engineers called Builder.ai “a call centre with better marketing.” And Builder.ai spun out this fake AI scam for eight years. [TFN]
The investors turned out not to care so much about the tawdry details of the AI being completely fake. But they care a lot about the money — and the extremely creative accounting.
For years, Builder.ai had its audits done by a good friend of the CEO. They got a proper auditor in once and the whole thing fell over immediately.
A startup can lose money hand over fist. If there’s revenue, this reassures the investors there’s something here that works as a business. But the Builder.ai revenue numbers were largely fake: [FT, archive]
- About $120 million of revenue from alleged “resellers” can’t be found.
- Customers would be signed up to contracts worth tens of thousands of dollars for only a few hundred dollars up front — but the revenue would be booked at the full tens of thousands.
- Sales included huge discounts, but they were written on the books at the full sticker price. The difference was accounted as marketing expenses.
- Many circular transactions with big customers — where I buy from you and you buy from me and there’s no net transfer of cash, but we can both write down huge revenue.
- Builder.ai also showed these fake revenue numbers to the investors.
The prosecutor’s office in the Southern District of New York is looking into Builder.ai. [Bloomberg, archive]
Builder.ai’s creditors in the bankruptcy include corporate private investigators Shibumi Strategy, crisis communications specialist Sitrick Group, and high-powered defamation lawyers at Quinn Emanuel. Builder engaged these outfits when the Financial Times started looking into its dodgy accounting in 2024. This didn’t put the FT off the trail. [List of creditors, PDF; FT, archive]
The big investors in Builder.ai and their valued partner company VerSe were Microsoft, the Qatar Investment Authority, and Insight Partners. The investors declined to comment when Bloomberg asked them how they failed to notice these accounting shenanigans going on right under their noses. [Bloomberg, archive]
None of the investors caught this because AI is a bubble — and the investors know better than to do anything silly like look inside the box. As long as they can just account big numbers and keep the line going up! Until it doesn’t.
If people with so much money are gullible enough to be strung along for so long, as an army of pliant careerists cheer them on, it’s hard to see an end to this. I increasingly imagine a bot stamping on a human face—forever.