Alright, time to crack this story wide open. This is one of the wildest AI industry faceplants we’ve seen yet. If it was‘nt real, i would bet it is a South Park Episode.
Fast forward a few years, and Builder.ai is riding high on the AI wave. Investors are lining up to throw money at them. Big names like Microsoft and the Qatar Investment Authority get on board, pumping over $445 million into the company. Builder.ai even hits unicorn status, boasting a valuation over $1.4 billion. Founder and CEO Sachin Dev Duggal becomes a rising star in the AI space, touting Natasha as the future of software engineering.
But while the startup was hyping its cutting-edge AI assistant, behind the scenes it was a different story entirely.
According to a bombshell report from The Information, what customers thought was AI-generated work was actually being done manually—by roughly 700 engineers based in India. These workers were coding apps the old-fashioned way, often under significant pressure, while the company pitched the output as seamless AI automation. One source told The Information that employees were even encouraged to impersonate “Natasha” during customer interactions, deepening the illusion that clients were chatting with a smart bot rather than a stressed-out developer.
And it gets worse.
In early 2025, suspicions started surfacing when Builder.ai’s financials began to look… shaky. Viola Credit, one of its creditors, seized $37 million from company accounts, raising red flags. An internal audit followed—and it was a bloodbath. While Builder.ai had been projecting revenue of $220 million for 2024, the audit revealed actual revenue was closer to $50 million. That’s a 300% inflation on the books.
Then came allegations of “round-tripping”—a shady tactic where companies simulate sales by moving money between friendly firms. In Builder.ai’s case, investigators found ties to Indian tech company VerSe Innovation. The two firms allegedly engaged in transactions designed to inflate Builder.ai’s sales numbers and make the business look more profitable than it actually was.
By June 2025, the walls came tumbling down.
Builder.ai filed for bankruptcy protection. Around 1,000 employees were laid off. Customers were left with half-built apps and broken promises. And the company that once branded itself as the Uber of app development now stands as a cautionary tale about what happens when AI hype gets weaponized for clout.
And here’s the kicker: this isn’t just one company going rogue. It’s part of a growing trend in tech known as “AI washing”—when startups exaggerate or outright fabricate their AI capabilities to attract investors and media attention. As the pressure to integrate AI into every product skyrockets, more companies are resorting to smoke and mirrors rather than actual innovation.
So, while the AI gold rush continues, stories like Builder.ai remind us that not everything labeled “AI” is powered by algorithms. Sometimes, it’s just a tired human behind a screen, pretending to be a robot.
