Home Teknoloji Sachin Dev Duggal and Builder.ai: The wild ride of a tech unicorn

Sachin Dev Duggal and Builder.ai: The wild ride of a tech unicorn

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Hundreds of employees from Builder.ai, one of the UK’s best-funded technology start-ups, gathered last summer in Vietnam for a lavish “off-site” company meeting.

At a five-star hotel in the centre of Ho Chi Minh City, they were treated to performances by local dancers and DJs. Chief executive and founder Sachin Dev Duggal, shadowed at times on the trip by a personal bodyguard, took to a stage to interview figures such as former Apple executive Tony Fadell and Serena Williams’s former tennis coach Patrick Mouratoglou.

There was much to celebrate. Just weeks earlier, Builder.ai had been valued at just over $1bn following a new $250mn investment round led by Qatar’s sovereign wealth fund. QIA had joined investors including Microsoft, SoftBank and Insight Partners, who had backed the start-up’s promise to use artificial intelligence to automate aspects of the expensive and labour-intensive task of building new apps.

As the launch of OpenAI’s ChatGPT a few months earlier sparked a generative AI frenzy, Builder.ai appeared well set to benefit from the rise of the cutting-edge technology. Yet, at the time, Duggal was dogged by a legal battle from his past.

Months before the Vietnam trip, Indian authorities had named him and his former business partner Saurabh Dhoot in relation to high-profile criminal probes over past business dealings unrelated to Builder.ai, the Financial Times reported in March.

Interviews with almost 50 people including employees, customers and others who have worked with Duggal, reveal he has also fought a series of other legal disputes during his career, including at Builder.ai.

Some of these people added that Builder.ai has faced other problems, from difficulty in retaining some staff due to the company’s hard-charging culture, to complaints over the company’s services and its ability to deliver on time.

Despite these travails, Duggal, who refers to himself as the start-up’s “chief wizard”, has enjoyed astonishing success.

Sachin Dev Duggal speaking at the Web Summit event in Doha, Qatar, in February © Sportsfile via Getty Images

His company has secured about $450mn in backing — a testament to what some describe as his vision, intellect and ability to build an impressive network of contacts, including musician Will.i.am and late Deutsche Bank CEO Anshu Jain.

Now, Duggal faces his biggest test. With vast sums at his disposal, Builder.ai’s chief must prove to his backers that he can turn a promising idea into a well-run business that delivers on its hype.

This is the tale behind the wild ride of one of Britain’s hottest tech unicorns — and the tumultuous career of its driving force.

An early cloud pioneer

As a teenager, Duggal built and sold computers, using his technology expertise to clinch an internship at Deutsche Bank aged just 17.

While there, Duggal impressed bankers more than twice his age with his grasp of technology and financial markets, persuading some of them to back his cloud computing venture, Nivio.

Nivio registered some of the first global “cloud” computing trademarks and was selected as a 2009 technology pioneer at the World Economic Forum in Davos.

“The concept behind Nivio was essentially cloud computing that went on to be a huge thing,” one person involved with the business said. “There were lots of reasons to believe this had a bright future.”

Nivio’s Indian entity secured a $3.8mn loan from Videocon — the Indian electronics group that was run by the family of Saurabh Dhoot, people involved said.

Sachin Dev Duggal, left, in 2007 when he was CEO of Nivio. Saurabh Dhoot, right, former director of a Videocon subsidiary © Getty Images

Like other tech start-ups, Nivio was losing money, some of the people involved said, but caught the attention of American telecommunications tycoon Al Cinelli, who invested at least $13mn in the company.

Tensions soon broke out. Cinelli accused Duggal of having donated $49,500 of money from Nivio’s parent company to a star-studded New York gala raising money for the charity of pop star Alicia Keys, without securing the correct permission. Duggal later reimbursed the company.

Duggal’s lawyers said Nivio’s chief financial officer approved his payment to Keys’s charity and that the money was used to buy seats for Nivio’s business contacts and a Nivio advert. They added that Duggal’s repayment was not an admission of liability.

Cinneli confronted Duggal over other disputed payments and Duggal stepped down as Nivio’s chief, afterwards saying he resigned under duress.

Nivio’s parent company filed a criminal complaint in Switzerland over a number of credit card expenses and transfers worth half a million Swiss francs that it alleged Duggal made from the business to his personal account without the correct permission.

Nivio’s parent company was dissolved in 2015. The following year the Swiss public prosecutor dismissed the company’s complaint, finding there was insufficient evidence, and ordered the state to pay Duggal’s legal costs.

Duggal’s lawyers added that he denied misusing company funds for personal purposes and that transfers to his personal account were not improper because they were made to pay back a loan from Videocon, which in turn owed Duggal money.

It was Videocon’s transactions with Nivio’s India entity that in 2022 led the Indian authorities to summons Duggal as a witness in a wider money laundering probe into Videocon. After Duggal did not appear, investigators changed his designation to “suspect” and obtained a warrant against him.

Duggal denies wrongdoing and is appealing the warrant with a hearing set for later this week. His lawyers said the original summons was invalid and maintain he is just a witness.

Despite the company’s failure, in 2018 Duggal was quoted in an interview as saying he sold Nivio for $100mn. His lawyers said he had been misquoted.

The birth of Builder.ai

After Nivio, Duggal set up other ventures before establishing Builder.ai in 2016.

With preternatural business instincts, he appeared to identify how AI could transform businesses many years before groups such as OpenAI took the technology mainstream. With the start-up, Duggal promised to do “to software development what Henry Ford did to car manufacturing”.

Like Nivio, Builder.ai enjoyed close ties with Videocon as it sought to get off the ground. Builder.ai’s former group finance head was previously a senior manager at Videocon and brought over to Builder.ai other Videocon employees. Videocon was also a customer of Builder.ai.

Videocon collapsed into bankruptcy in 2018. Last year the Indian Central Bureau of Investigation accused the company and its some of its senior leaders, including Dhoot, of loan fraud. Dhoot continues to deny wrongdoing.

In 2018, Builder.ai announced it had raised $29.5mn from backers including Japanese conglomerate SoftBank and European venture capital group Lakestar, prompting the UK’s then-trade secretary Liam Fox to highlight the importance of the start-up to the country’s technology scene.

Despite Builder.ai’s success attracting investors, legal problems again soon emerged. Two former US employees filed separate lawsuits in California state courts alleging, among other things, that an entity of the business had overstated its technological capabilities.

The allegations were denied in both lawsuits. One was settled with no admission of liability, while proceedings related to the other are ongoing.

Soon, Builder.ai won more high-profile investors, including US private equity group Insight Partners. The firm led a $100mn investment round in 2022 and Insight’s co-founder Jeff Horing took a seat on Builder.ai’s board. Microsoft also invested.

Insight described Builder.ai as having an “almost zero failure rate” in producing apps, adding that it was able to do so “multitudes cheaper and faster” than traditional software developers.

Customers contacted by the FT had mixed experiences. Devansh Mehta, the founder of a stock investment app, said Builder.ai did a “decent job”. Two other customers said they had “good” experiences, with another adding Builder.ai had “smashed it” on two projects the company was currently developing for them.

However, others were critical. Nishka Ranjan, who paid Builder.ai more than $10,000 for an app connecting corporate cleaning contractors to customers, said her company missed out on business opportunities because Builder.ai delivered the app more than a year late. It was meant to take four months, she said. When it was finally released in October 2023, the login process did not work, she said.

Lawyers for Builder.ai said delivery of Ranjan’s app had been delayed due to unforeseen technical challenges primarily related to third-party services she had chosen. They said the app the company built for her has received hundreds of downloads on app stores.

Anurag Gulati said he abandoned a dating app project in July 2023 having paid Builder.ai most of the $10,000 total project price, because he estimated only 25 per cent of the task had been completed.

Lawyers for Builder.ai said Gulati paused his project when it was 90 per cent complete after giving full marks for customer satisfaction, adding that he stopped attending calls and paying invoices so it could not complete his project. Gulati told the FT the full marks were only for a small part of the design and that if his project was really close to completion, he would not have abandoned it.

There are many positive online reviews of Builder.ai’s services. In one earlier this year the customer said they had “a very good experience” and “really appreciated that they were able to clearly understand the app I wanted built”, adding that they were satisfied with delivery timelines.

However, the FT found that some were written by the company’s own employees who adopted the tone of satisfied customers while recommending the platform. Lawyers for Builder.ai said the employees were not asked to write the reviews but were excited about the product and chose to do so themselves.

Builder.ai has also had issues with using logos of large corporations without their permission. The company ran an advertisement that said it had developed a prototype app for Air India. The airline later released a statement saying the prototype had been developed without the involvement or consent of the airline.

Builder.ai used the logos of carmaker Bentley and drinks giant Pepsi on its webpage featuring customer case studies despite having only been contracted by separate Dubai-based companies that distributed their products. People familiar with the matter told the FT neither company had authorised the start-up’s use of their logos. Bentley’s logo has since been removed.

Lawyers for Builder.ai said the company had at all times stated its campaign was not endorsed by Air India and that the company obtains permission for any other use of logos. They added Bentley’s logo was published in error on the company’s website for two weeks.

A unicorn takes flight

As the company grew, cash kept rolling in. Last May, the sovereign wealth fund Qatar Investment Authority led a new $250mn cash injection into Builder.ai.

At the time, Microsoft, another backer, said Builder.ai was empowering “everyone to be a developer”. Insight’s Horing praised the “tremendous results” that Duggal and his company had achieved since his firm invested a year before.

QIA, Microsoft, Insight and Lakestar declined to comment for this article. SoftBank and a lawyer for Videocon did not respond to a request for comment.

Duggal enjoyed the trappings of leading one of the UK’s hottest start-ups. He drove expensive cars, travelled by private jet and resides in a £5mn penthouse near Builder.ai’s office in Marylebone, an upmarket district of London, according to people who know him.

The Vietnam off-site, which happened shortly after the Qatar-led funding round, captured some of the company’s quirks.

Some employees were asked to wear colour-coded lanyards, which lawyers for Builder.ai said in some cases allowed senior management to spend more time talking to top-performing staff.

An internal app built by the company for the event also malfunctioned for several hours on the first day. Duggal spent time reading a children’s book to staff, according to an itinerary of the event. Lawyers for Duggal and Builder.ai said the event received exceptional feedback from employees.

The company’s ability to raise huge sums of money was not enough to stem what 10 former employees described as a fast turnover of some staff.

Sachin Dev Duggal, centre, speaking at the Milken Institute conference in May 2024 © Mik Milman

Some blamed Duggal’s style of leadership. Former employees described Duggal yelling at his staff, berating people on calls with several attendees and interrupting people by “shushing” them.

Duggal’s lawyers disputed all of these claims, saying the work at Builder.ai is “fast-paced” and “can be cutting-edge”. They added that employees are “encouraged to respond to that environment”.

Builder.ai’s chief wizard appears unfazed by the challenges. Earlier this month, he appeared on stage at the annual Milken Institute conference, which featured luminaries from the worlds of tech and finance, such as Tesla chief Elon Musk.

There, Duggal issued a warning to potential investors in AI start-ups.

“AI unfortunately has so much information asymmetry,” he told the audience. “The folks that can write the really large cheques are so far removed from what the potential of possible (and) not possible, hoax and real, that it’s creating a hype which is making it hard for folks that are actually also doing something.”

Alexandra.heal@ft.com

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