Every week there is a new one. A shiny new "AI-powered" startup with a landing page that looks like it cost more than the product behind it. A seed round announcement on LinkedIn. A founder posting about "disrupting" an industry they have never worked in. A waitlist with 10,000 people and zero paying customers.
Every week I think the same thing: this would not pass the bar in any other era.
The Wrapper Economy
Here is what most of these companies actually are. They take an existing large language model — usually OpenAI's API — slap a user interface on top of it, add some prompts, and call it a product. That is the entire business.
The technical term is "wrapper." The honest term is "reskin."
There is no proprietary technology. There is no defensible moat. There is no unique dataset. There is nothing stopping someone else from building the exact same thing over a weekend. In most cases, someone already has.
The pitch deck says "AI-powered platform." The reality is a $20-a-month API bill and a Webflow site.
How They Get Funded Anyway
Venture capitalists — people whose literal job is to evaluate whether a business can survive and scale — are writing checks to companies with no product differentiation, no path to profitability, and no answer to the question: "What happens when the API you depend on changes its pricing?"
But the money keeps flowing because the fear of missing out on the next big thing is more powerful than due diligence. Every VC saw what happened with the early internet, with mobile. Nobody wants to be the person who passed on the AI equivalent of Google.
So they fund everything. Even the stuff that is clearly a marketing campaign disguised as a company.
The Marketing Is the Product
This is what frustrates me most as someone who actually works in marketing. These startups are not building products. They are building marketing funnels. The entire operation is designed to look impressive from the outside.
Beautiful landing page. Social proof from other startups nobody has heard of. A "case study" that is really just a demo. Content marketing that produces 50 LinkedIn posts a week about "the future of AI" while the product crashes every time you try to upload a PDF.
The growth metrics they show investors are marketing metrics, not product metrics. Waitlist signups. Website visits. Social media followers. None of that tells you whether anyone would actually pay for this thing once the free trial ends.
I have spent years telling clients that marketing cannot fix a bad product. And here is an entire generation of companies trying to prove me wrong. They will not.
What Happens Next
The money runs out. First, the free-tier users who never intended to pay quietly disappear. Then the burn rate starts to bite. Then the next funding round gets harder because the VC market has moved on to the next shiny thing and suddenly wants to see revenue.
And the founders who built their company on vibes and API calls discover that when the marketing budget goes to zero, so does the business. Because there was never anything behind the curtain.
The One Question That Matters
I am not saying AI is not transformative. It clearly is. But there is a difference between building a real business that uses AI as a tool and building a PowerPoint presentation that uses AI as a buzzword.
The companies that will survive this wave are the ones that could answer one simple question before they ever wrote a line of code: "Would this business make sense without the AI label?"
If the answer is no, it is not a startup. It is a countdown.