AI Startup Boom Raises Questions of Exaggerated Tech Savvy
Startup Engineer.ai says it uses artificial-intelligence technology to largely automate the development of mobile apps, but several current and former employees say the company exaggerates its AI capabilities to attract customers and investors.
The competing claims reflect a growing challenge in the tech world of assessing a company’s proficiency in artificial intelligence, which refers to technologies that can allow computers to learn or perform tasks typically requiring human decision makers—in many cases helping companies save money or better target consumers.
Because AI technology is complex and loosely defined, nonexperts can find it hard to discern when it is being deployed. Still, money is flowing into the sector, and many startups can say they use AI as a way to lure investments or corporate clients even when such claims are difficult to vet.
Venture firms nearly doubled their funding of AI startups to $31 billion last year from 2017, according to an analysis by data firm PitchBook, which also found the number of funded startups that have “.ai” in their domain names has grown more than twofold in recent years. The domain name extension, which is available for a fee, is associated with Anguilla but popular among tech startups world-wide.
Last month, Japanese tech conglomerateSoftBank Group Corp. unveiled an AI-focused investment fund with $108 billion in expected capital.
London and Los Angeles-based Engineer.ai raised $29.5 million last year from investors including Deepcore Inc., a wholly owned subsidiary of SoftBank. Other backers include Zurich-based venture-capital firm Lakestar—an early investor in Facebook Inc. and Airbnb Inc.—and Singapore-based Jungle Ventures.
Engineer.ai was spun out of an earlier company in 2016, the company has said. When announcing its funding last year, it said it had notched $24 million in revenue while self-funding its operations.
Engineer.ai says its “human-assisted AI” allows anyone to create a mobile app by clicking through a menu on its website. Users can then choose existing apps similar to their idea, such as Uber’s or Facebook’s. Then Engineer.ai creates the app largely automatically, it says, making the process cheaper and quicker than conventional app development.
“We’ve built software and an AI called Natasha that allows anyone to build custom software like ordering pizza,” Engineer.ai founder Sachin Dev Duggal said in an onstage interview in India last year. Since much of the code underpinning popular apps is similar, the company’s “human-assisted AI” can help assemble new ones automatically, he said. Roughly 82% of an app the company had recently developed “was built autonomously, in the first hour” by Engineer.ai’s technology, Mr. Duggal said at the time.
Documents reviewed by The Wall Street Journal and several people familiar with the company’s operations, including current and former staff, suggest Engineer.ai doesn’t use AI to assemble code for apps as it claims. They indicated that the company relies on human engineers in India and elsewhere to do most of that work, and that its AI claims are inflated even in light of the fake-it-till-you-make-it mentality common among tech startups.
Engineer.ai only started to build the technology needed to automate app-building in the last two months, a person familiar with the company’s operations said, adding that the company was more than a year away from being able to use any AI for its core service.
A spokesman for Engineer.ai and Mr. Duggal, who describes himself as the company’s “Chief Wizard,” said he is “pretty clear in anything he does” to stress that the company employs technology accurately characterized as human-assisted AI.
A SoftBank spokeswoman declined to comment.