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Mint
28-06-2025
- Business
- Mint
We are all stuck in a pyramid scheme fuelled by AI FOMO
Gift this article Here is what I recently read about a company called and perhaps you did too? Here was a $1.5 billion company that had promised to make app designing as simple as 'ordering a pizza" using an AI environment called Natasha. Apparently, the company began to fall apart in 2025 because of a revelation that Natasha was not AI at all and was actually 700 Indian engineers madly typing away. This made me laugh only because it dug up a memory of a video or a cartoon in which we go to the ATM, press buttons expecting high-tech delivery of cash but meanwhile there is someone behind the wall in a safari suit whose manly arm comes out of the slot. You know, low-tech silliness. Not that bad decisions leading to the loss of employment and well-being of innocent parties is otherwise funny in any way. Here is what I recently read about a company called and perhaps you did too? Here was a $1.5 billion company that had promised to make app designing as simple as 'ordering a pizza" using an AI environment called Natasha. Apparently, the company began to fall apart in 2025 because of a revelation that Natasha was not AI at all and was actually 700 Indian engineers madly typing away. This made me laugh only because it dug up a memory of a video or a cartoon in which we go to the ATM, press buttons expecting high-tech delivery of cash but meanwhile there is someone behind the wall in a safari suit whose manly arm comes out of the slot. You know, low-tech silliness. Not that bad decisions leading to the loss of employment and well-being of innocent parties is otherwise funny in any way. Also read: Banu Mushtaq's recipe for Gobi Manchurian Life can be full of hard-to-believe-is-this-true comedy but apparently in the case of I hear that this story wasn't quite it. The truth about collapse was reportedly more about investors finding out about sketchy accounting. was allegedly not making as much money as it was telling its investors it was. You can see why someone wanted the other story to be true. The idea of Natasha on the outside being Nitesh on the inside with a BE and not just one Nitesh with a BE but many Niteshes with many BEs, is irresistible. Financial investment is also about wanting stories to be true. It might sound rational but often it is about finding some stories irresistible. When I was a girl living in a Malayali world, the news from my parents' hometowns in Kerala came in steady waves that made patterns easily discernible. One year, everyone was enthusiastically planting manjiyam to get rich, manjiyam being a kind of acacia tree. Another year we heard, everyone was into teak. I don't remember what was special about these goats but one year was Peak Goat. Emus came along much later but they did. The special feature about these get-rich-quick schemes is that it feels very democratic. It is the opposite of your uncle from the Gulf going into the forest in Wayanad with his two brand-new friends who know exactly where to find a secret cobra with a jewel on its forehead. A goat in hand is better than a snake in Kalpetta. No one got rich with manjiyam. All of last year, watchdogs of financial markets, institutional investors and other folks who are in the long game have been warning the world of 'AI washing". This can be confused with AI washing machines which promise to dissolve detergent in water before the wash cycle starts but let's not get distracted. AI washing is not so terribly exciting as technology sold as AI to excite investors who are looking for a new high. A good 69% of Indian CEOs are hopping with their legs crossed, investing in AI even though they don't quite know what it can do One of the most honest stories I have read in this context was in an Outlook Business report about IBM's 2025 CEO study. The study reportedly showed that FOMO was pushing investment in AI and that Indian CEOs were stressed because the revenue was not rolling in yet. In case that was one acronym too many, FOMO is the fear of missing out and the reason why small children hop about with their legs crossed rather than go to the bathroom. A good 69% of Indian CEOs are hopping with their legs crossed, the report says, investing in AI even though they don't quite know what it can do because they are afraid of missing out. I recently wrote a set of at-home exams and my 16-year-old nephew asked me what is stopping me from using ChatGPT. On WhatsApp I am hindered from climbing on to my soapbox and becoming a bore about how thrilling it is to be able to study in my old age. So instead I just said that in these exams, it was not about getting correct answers from texts, it is about being able to say something new. Of course, folks working in education are constantly having to warn students that generative AI can get things wrong too. And that it skips the steps of knowledge creation where humans first get things wrong, then right, then they get wonderfully inventive. Also read: When we mock the working class, the joke is on us Casey Fiesler, an information science professor at the University of Colorado, Boulder, has an excellent explanation for why ChatGPT is not a search engine. Large Language Models, she says, is not searching for data, it only has a 'statistical echo" of data. ChatGPT gets things wrong, Fiesler says, because it is 'statistically probable, linguistically fluent not verifiably accurate." I heard this explanation and felt a deep sense of déjà vu—an echo of tech bro desire that doesn't mind being wrong as long as it happens fast and sounds smooth. The being wrong part is a problem, of course. It is the fast part that I think is a bigger problem. Why is everyone dying to be so fast? Why have big companies transferred their FOMO to not letting their employees go to the bathroom? Why do CEOs not want their employees to stay at home and look at their husbands or wives? People who already have a crazy amount of money feel like it isn't enough. And like the people who worked for the pharaohs, we are stuck in their pyramid scheme. With the disclaimer that I find a hand sticking out of the ATM slot funny, I want to say, my friends, AI is beginning to feel a wee bit manjiyam. Nisha Susan is the author of The Women Who Forgot to Invent Facebook and Other Stories. ChatGPT gets things wrong because it is statistically probable, linguistically fluent not verifiably accurate. 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First Post
05-06-2025
- Business
- First Post
Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools
A major AI scandal has shaken the tech world as once valued at $1.5 billion, has filed for bankruptcy. The company, backed by Microsoft and a Qatari sovereign fund, falsely claimed to build apps in minutes using AI, while actually relying on hundreds of human engineers in India. read more Behind bankruptcy plea of London start-up: It hired 700 Indian engineers to pose as AI tools London-based once valued at $1.5 billion and backed by Microsoft and Qatar's sovereign wealth fund, has filed for bankruptcy after it was revealed that its so-called was mostly done manually by engineers in India, According to a report from The Times of India. According to the report, round 700 Indian engineers were while developing apps. The startup had raised over $445 million by promoting its AI-based app development platform. STORY CONTINUES BELOW THIS AD The company marketed its platform as using AI to build apps quickly, powered by a digital assistant named 'Natasha.' Most of the coding was done manually However, reports revealed that most of the coding was actually done manually by Indian tech workers, while the company falsely presented their work as AI-generated. The collapse of The collapse began in May 2025 when lender Viola Credit seized $37 million from accounts after discovering the company had inflated its 2024 revenue by 300 per cent. Founder Sachin Dev Duggal had claimed $220 million in sales, but an audit revealed the actual figure was just $50 million. All engineer, no AI Concerns about AI claims had surfaced as early as 2019, when The Wall Street Journal reported that the platform largely depended on human engineers rather than real AI. Former employees described it as 'all engineer, no AI,' according to the report. The scheme fully unravelled when the new CEO, Manpreet Ratia, who replaced Duggal in February, discovered the extent of the financial misreporting. US prosecutors have since launched an investigation and requested access to the company's records and customer data. Biggest AI startup collapse downfall is considered the biggest AI startup collapse since the ChatGPT-driven investment boom began. The company now owes $85 million to Amazon and $30 million to Microsoft in cloud computing bills. About 1,000 employees have lost their jobs. 'AI washing' in the time of boom The case has sparked renewed concerns over 'AI washing', a growing trend where companies rebrand traditional services as AI-powered to attract investment during the current tech boom.
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Business Standard
04-06-2025
- Business
- Business Standard
Builder.ai faked AI with 700 engineers, now faces bankruptcy and probe
Once valued at $1.5 billion, collapsed after it was exposed for passing off human-written code as AI-generated, triggering global layoffs, audits, and regulatory scrutiny Founded in 2016 by Sachin Dev Duggal, — previously known as — positioned itself as an artificial intelligence (AI)-powered no-code platform designed to simplify app development. Headquartered in London and backed by major investors including Microsoft, the Qatar Investment Authority, SoftBank's DeepCore, and IFC, the startup promised to make software creation "as easy as ordering pizza". Its much-touted AI assistant, Natasha, was marketed as a breakthrough that could build software with minimal human input. At its peak, raised over $450 million and achieved a valuation of $1.5 billion. But the company's glittering image masked a starkly different reality. Behind the curtain: 700 engineers, not AI Contrary to its claims, development process relied on around 700 human engineers in India. These engineers manually wrote code for client projects while the company portrayed the work as AI-generated. The façade began to crack after industry observers and insiders, including Linas Beliūnas of Zero Hash, publicly accused of fraud. In a LinkedIn post, Beliūnas wrote: 'It turns out the company had no AI and instead was just a group of Indian developers pretending to write code as AI.' Red flags as early as 2019 AI narrative had long drawn scepticism. A 2019 investigation by the Wall Street Journal found that most of the coding was done manually, with the AI capabilities largely exaggerated. Former employee Robert Holdheim sued the company for $5 million, claiming he was fired after flagging concerns over deceptive practices. Legal filings revealed had misled investors by claiming apps were '80% built' by AI, though the supporting tech was barely functional. Other ex-employees later confirmed the company was 'all engineer, no AI'. Financial irregularities and collapse In early 2025, a leadership shake-up saw Manpreet Ratia replace Duggal as CEO in a bid to restore investor confidence. But Ratia discovered the company had massively inflated its 2024 revenue — claiming $220 million when actual income was closer to $50 million. An independent audit exposed the discrepancy, prompting lender Viola Credit to seize $37 million from accounts. Left with only $5 million in restricted funds, the company's operations across five countries — including India, the UK, and the US — came to a standstill. With regulatory issues freezing fresh capital, failed to pay staff, leading to nearly 1,000 layoffs. Allegations of financial misconduct Further inquiries suggested may have engaged in 'round-tripping' with Indian social media firm VerSe to inflate sales numbers — a tactic that helped attract investment. The company reportedly owes $85 million to Amazon and $30 million to Microsoft in unpaid cloud services. A US federal probe is underway, with investigators seeking access to its financial and client data. Public admission and bankruptcy filing In a statement on LinkedIn, admitted defeat: 'Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position.' The company has begun formal bankruptcy proceedings in jurisdictions where it operated, including India, the UK, and the US. AI hype vs. startup reality downfall has reignited concerns around 'AI washing' — branding basic tech services as AI to capitalise on investor excitement. Phil Brunkard of Info-Tech Research Group noted that many startups 'scaled fast without robust technology or governance', riding a wave of unchecked hype. With regulators now probing how AI firms market their products, the episode has become a cautionary tale. What was sold as an AI revolution turned out to be a conventional outsourcing firm cloaked in buzzwords. The result: employees out of work, millions in investor losses, and renewed demands for transparency and accountability in the AI startup ecosystem.


Int'l Business Times
03-06-2025
- Business
- Int'l Business Times
AI Startup Backed by Microsoft Revealed to Be 700 Indian Employees Pretending to Be Chatbots
A once-hyped AI startup backed by Microsoft has filed for bankruptcy after it was revealed that its so-called artificial intelligence was actually hundreds of human workers in India pretending to be chatbots. a London-based company previously valued at $1.5 billion, marketed its platform as an AI-powered solution that made building apps as simple as ordering pizza. Its virtual assistant, "Natasha," was supposed to generate software using artificial intelligence. In reality, nearly 700 engineers in India were manually coding customer requests behind the scenes, the Times of India reported. The ruse began to collapse in May when lender Viola Credit seized $37 million from the company's accounts, uncovering that had inflated its 2024 revenue projections by 300%. An audit revealed the company generated just $50 million in revenue, far below the $220 million it claimed to investors. A Wall Street Journal report from 2019 had already questioned AI claims, and a former executive sued the company that same year for allegedly misleading investors and overstating its technical capabilities. Despite that, the company raised over $445 million from big names including Microsoft and the Qatar Investment Authority. collapse has triggered a federal investigation in the U.S., with prosecutors in New York requesting financial documents and customer records. Founder Sachin Dev Duggal stepped down earlier this year and was replaced by Manpreet Ratia, who reportedly uncovered the company's internal misrepresentations. The company now owes millions to Amazon and Microsoft in cloud computing costs and has laid off around 1,000 employees. On LinkedIn , the company announced its entry into insolvency proceedings, citing "historic challenges and past decisions" that strained its finances. The fallout is seen as one of the biggest failures of the post-ChatGPT AI investment boom and has renewed scrutiny of "AI washing"—the trend of rebranding manual services as artificial intelligence to secure funding. Originally published on Latin Times


Time of India
02-06-2025
- Business
- Time of India
How this billion-dollar London startup backed by Microsoft made 700 engineers sitting in India pose as AI
London-based , once valued at $1.5 billion and backed by Microsoft and Qatar's sovereign wealth fund, has filed for bankruptcy after reports that its "AI-powered" app development platform was actually operated by Indian engineers, said to be around 700 of them, pretending to be artificial intelligence. The startup, which raised over $445 million from investors including Microsoft and the Qatar Investment Authority, promised to make software development "as easy as ordering pizza" through its AI assistant "Natasha." However, as per the reports, the company's technology was largely smoke and mirrors, human developers in India manually wrote code based on customer requests while the company marketed their work as AI-generated output. dramatic collapse came in May 2025 when lender Viola Credit seized $37 million from the company's accounts after discovering the startup had inflated its 2024 revenue projections by 300%. Founder Sachin Dev Duggal had promised $220 million in sales to creditors, but an independent audit revealed actual revenue of just $50 million. Years of deception behind AI claims The deception wasn't new. As early as 2019, The Wall Street Journal exposed questionable AI claims, revealing that the platform relied heavily on human contractors rather than artificial intelligence. Multiple former employees described the company as "all engineer, no AI," with most development work performed manually by staff in India. Former employee Robert Holdheim sued the company for $5 million in 2019, alleging he was dismissed after complaining that technology "did not work as promoted and was essentially nothing more than 'smoke and mirrors'." Court filings claimed the company told investors apps were "80% built" by AI technology they had "barely even begun to develop." Regulatory scrutiny and bankruptcy filing The scheme unraveled when new CEO Manpreet Ratia , brought in to replace Duggal in February, discovered the extent of the financial misrepresentations. US prosecutors in New York have since demanded the company's financial statements and customer lists as part of a federal investigation. collapse represents the largest AI startup failure since ChatGPT's launch triggered a global investment frenzy. The company now owes $85 million to Amazon and $30 million to Microsoft in cloud computing fees, while approximately 1,000 employees have lost their jobs. The failure highlights growing concerns about "AI washing," companies rebranding conventional technology services as artificial intelligence to attract investment in the current AI boom.