The AI Startup That Was Just Humans in a Trench Coat

Remember that startup that promised AI could build your app in an hour? Yeah, turns out the AI was just people.

Engineer.ai, an Indian startup that raised nearly $30 million from SoftBank and others, claimed to have built an AI-assisted app development platform. The reality, according to a Wall Street Journal report, is that they were mostly using human engineers in India and elsewhere to assemble apps. The AI part was, at best, aspirational.

The company’s founder, Sachin Dev Duggal (who also goes by “Chief Wizard” — always a red flag), said onstage last year that their tools could help customers make more than 80 percent of a mobile app from scratch in about an hour. But the WSJ found that Engineer.ai doesn’t actually use AI to compile code. Instead, they use conventional software and human engineers. The AI is more of a marketing angle than a technical reality.

This isn’t just a case of overpromising. The company was sued earlier this year by its own chief business officer, Robert Holdheim, who claimed Duggal was telling investors that the product was 80% done when he’d “barely even begun to develop” it. That’s not hype — that’s fraud.

When pressed on how they actually use machine learning, Engineer.ai told the WSJ they use natural language processing to estimate pricing and timelines, and a “decision tree” to assign tasks to engineers. Neither qualifies as modern AI. No AI agent is writing code. No neural network is assembling your app. It’s just humans behind a curtain, and the curtain says “AI” on it.

This kind of AI washing is more common than you’d think. According to MMC Ventures, startups with an AI component can attract up to 50 percent more funding than other software companies. And they suspect 40 percent or more of those companies don’t actually use any real AI at all. The .ai domain from Anguilla has doubled in recent years. Everyone wants to look like an AI company because that’s where the money flows.

The uncomfortable truth is that a lot of what passes for AI today barely exists. It’s like content moderation at Facebook and YouTube — they use some AI, but mostly it’s armies of contractors reviewing content. The AI is a thin veneer over human labor.

Funding for AI startups hit $31 billion last year. SoftBank alone has pledged hundreds of billions. When you have that much money chasing that much hype, you’re going to get companies that stretch the truth. Engineer.ai is just the one that got caught.

What bothers me most is that this hurts the entire field. Real AI research is hard, expensive, and slow. When startups like this burn investors and sour public trust, it makes it harder for legitimate companies to get funding and attention. It’s a classic case of the bad actors ruining it for everyone else.

So next time you see a startup promising AI that can do something in an hour that usually takes weeks, ask yourself: is it really AI, or is it just humans in a trench coat?