Builder.ai coded itself into a corner – now it's bankrupt
- Reference: 1747846508
- News link: https://www.theregister.co.uk/2025/05/21/builderai_insolvency/
- Source link:
Backed by Microsoft, Qatar's sovereign wealth fund, and a host of venture capitalists, Builder.ai rose rapidly to near-unicorn status as the startup's valuation [1]approached $1 billion . The company's business model was to leverage AI tools to allow customers to design and create applications, although the Builder.ai team actually built the apps.
Blue-chip investors poured in cash to the tune of more than $500 million. However, all was not well at the startup. The company was previously known as Engineer.ai, and attracted criticism after The Wall Street Journal [2]revealed in 2019 that the startup used human engineers rather than AI for most of its coding work.
[3]
Builder.ai grew more forthcoming about the human factor, but the company came unstuck over its finances. It [4]appointed a new CEO , Manpreet Ratia, in February 2025, taking over from founder Sachin Dev Duggal, whom the company credited with "transforming software development through AI-powered innovation."
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It fell to Ratia to inform employees during a May 20 call reported by [7]the Financial Times that the company was filing for bankruptcy as funds abruptly ran out. Builder.ai was reportedly "unable to recover from historic challenges and past decisions that placed significant strain on its financial position."
While the failure of startups, even one as high profile as Builder.ai, is not uncommon, the company's reliance on AI tools to speed coding might give some users pause for thought.
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The tech industry is generating a tsunami of AI slop, along with a few instances of true value. In the coding world, generative AI can make for [9]useful coding assistants but are often less than helpful when expected to behave like an engineer.
An amusing thread on Reddit [10]titled "My new hobby: watching AI slowly drive Microsoft employees insane" linked to several GitHub threads in the .NET runtime repo in which humans patiently handhold the GitHub Copilot coding agent as it makes mistake after mistake, many of which would make a junior developer blush. It all feels a bit Mechanical Turk, except for coding rather than chess, and the intervention of a human being is all too evident.
[11]Research reimagines LLMs as tireless tools of torture
[12]AI can't replace devs until it understands office politics
[13]Google, high on AI, flogs Gemini for all things
[14]Actors' union complains about Epic Games cloning Darth Vader
The [15]Mechanical Turk was supposedly an automaton capable of playing chess at a high level. It consisted of a wizard-like figure sitting at a wooden cabinet before a chessboard. The so-called automaton debuted in the 18th century and wowed many with its apparent prowess at the game.
However, it was later revealed that the machine was not autonomous at all. A human was secretly operating the device behind the scenes.
One commenter [16]said : "The amount of time they spend replying to a friggin LLM is just crazy... It's also depressing."
Last month, Microsoft CEO Satya Nadella [17]boasted that 30 percent of the code in some of the tech giant's repositories was written by AI. As such, an observer cannot help but suspect some passive aggression is occurring here, where a developer has been told that the agent must be used, and so they are going to jolly well do it. After all, Nadella is not one to shy from [18]layoffs .
The problem highlighted by both the pull requests in the .NET runtime repo and the failure of Builder.ai is that regardless of the wishful thinking from tech giants seeking their next big growth opportunity, startups pitching the latest and greatest innovation, and execs seeking to trim their budgets at the expense of engineers, generative AI tools are not a universal panacea.
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Although Builder.ai's fall has roots in financial mismanagement and forecasts that were arguably over-optimistic, the company was a darling of the generative AI coding industry and an example of how a business can optimize its processes through the application of the technology.
The fact that it wasn't able to convince enough customers to pay it enough money to stay solvent should give pause to those who see generative AI as a replacement for junior developers. As the experience of the unfortunate Microsoft staffers having to deal with the GitHub Copilot Agent shows, the technology still has some way to go. One day it might surpass a mediocre intern able to work a search engine, but that day is not today. ®
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[1] https://www.builder.ai/newsroom/press/builder-ai-announces-series-d-led-by-qia
[2] https://www.wsj.com/articles/ai-startup-boom-raises-questions-of-exaggerated-tech-savvy-11565775004
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aC5M-4Ob-PiwZXnJL84K7wAAAE0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.builder.ai/newsroom/press/manpreet-ratia-ceo
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aC5M-4Ob-PiwZXnJL84K7wAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aC5M-4Ob-PiwZXnJL84K7wAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.ft.com/content/9fdb4e2b-93ea-436d-92e5-fa76ee786caa
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aC5M-4Ob-PiwZXnJL84K7wAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://nmn.gl/blog/ai-and-programmers
[10] https://old.reddit.com/r/ExperiencedDevs/comments/1krttqo/my_new_hobby_watching_ai_slowly_drive_microsoft/
[11] https://www.theregister.com/2025/05/21/llm_torture_tools/
[12] https://www.theregister.com/2025/05/21/opinion_column_ai_cant_replace_developers/
[13] https://www.theregister.com/2025/05/20/google_high_on_ai_flogs/
[14] https://www.theregister.com/2025/05/20/actors_union_darth_vader_epic/
[15] https://www.chess.com/terms/turk-chess-automaton
[16] https://old.reddit.com/r/ExperiencedDevs/comments/1krttqo/my_new_hobby_watching_ai_slowly_drive_microsoft/mtg5ptn/
[17] https://www.theregister.com/2025/04/30/microsoft_meta_autocoding/
[18] https://www.theregister.com/2025/05/13/microsoft_layoff/
[19] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aC5M-4Ob-PiwZXnJL84K7wAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[20] https://whitepapers.theregister.com/
So Microsofties acting as help desk *to* an AI
Yeah, I see why they call it "Hell desk"
Wasted potential - there was clearly mismanagement but it wasn't all bad
As a former employee of Builder.AI it has probably not that much to do with AI so much as not having a grasp on contractor costs and financial mismanagement.
The company used to joke that the 'AI' stood for 'Another Indian', such was the reliance on cheap off-shore development.
However, they were genuinely trying to get building blocks to quickly assemble apps and AI code to convert the adaptations to those blocks from English-language requirements to code. The issue was that they didn't also manage to incentivise the contractors to actually use any of the generated code, because being billed by the hour and given no particular need to use that code they preferred to generally throw it out and write things from scratch. This meant that the ability to work out how close they were and refine that conversion was very limited. They had some spectacular cost over-runs on certain projects, again from the contract side.
To be charitable, it did look like they generally took the hit when they took on a project for a fixed price and contractors ending up costing too much. In part they ran out of cash because they weren't that keen to go back to the customer and ask for more when it became obvious there was more work than expected. They also needed to cut staff much earlier than they did, but tried really, really hard to avoid redundancies (ultimately costing a lot more jobs as they failed completely).
I'm not going to completely stand up for the leadership as there were plenty of mistakes, but they were trying to introduce a lot of AI smarts and efficiency, and to deliver a lot of useful apps. A few less 'side quests' of unnecessary developments, a bit more willing to be hard-nosed on failed projects, a better control on contractor costs and they could still have been one of the AI darlings. As it is former employees with suddenly terminated or holding now-worthless shares are instead out of pocket with just a few lessons on where you can and can't cut corners even as a unicorn.
Re: Wasted potential - there was clearly mismanagement but it wasn't all bad
They had 500 000 000 dollars to spend. Five. Hundred. Million. Dollars.
Even if everything you say is true, burning all that money goes a bit beyond "financial mismanagement" in my book.
Re: Wasted potential - there was clearly mismanagement but it wasn't all bad
Exactly! I could successfully perform such "financial mismanagement" with far less money than that!
Re: Wasted potential - there was clearly mismanagement but it wasn't all bad
To the proletariat that might seem like a lot of money, but in the real world that wouldn't even buy you one government IT system.
AI Sweetheart company goes TITSUP?
Shirley Not!
I am sure that they won't be the last as the AI. Bubble starts to pop and the fizz goes flat.
None of this generation of so called AI tools are true AI. That is years away.
Just a reminder that Intelligence is one of those words...
...where it is assumed that its casual usage refers to an attribute at the upper level of the scale.
Compare it with Quality.
"to leverage AI tool"
WTF was wrong with English, rather than bullshitspeak?
Re: "to leverage AI tool"
You’re clearly not management material; going forward let’s circle round to ideate and get our ducks in a row for optimally synergistic resultations.
(Ugh. I hate myself for typing all that.)
The whole AI model
"Although Builder.ai's fall has roots in financial mismanagement and forecasts that were arguably over-optimistic"
That's pretty much every single AI company.
"We've got this awesome product."
"Great, how you going to make money from it?"
"Next year it'll be bigger and faster"
It loook to me that the AI prompt sent a code requset to someone in Dumbai, who in turn asked some AI to write some code for him - which could work somehow if the first request was understood ccorrectly - but some people had 500M to spend...