Why Most AI Startups Could Fail Just Like the App Boom

23 Oct 2026 · 1 min

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In a brief multi‑speaker discussion, Kevin Surace and two participants compare the current surge of AI startups to the earlier explosion of mobile‑first app companies after the iPhone’s launch. They argue that the AI boom suffers from the same lack of durable competitive moats: with APIs like ChatGPT readily available, anyone can spin up an AI‑driven product over a weekend, leading to hundreds of thousands of new firms. The speakers contend that, just as only a tiny fraction of the million app developers ever became profitable, only a small number of AI startups will survive and make money. The core warning is that without a defensible advantage—technology, data, network effects, or deep integration—AI companies risk rapid failure despite the hype.

The AI startup boom is repeating one of the biggest mistakes in tech history. And the last time this happened, almost nobody made money.
There's like hundreds of thousands of AI companies that have started in the past few months. And my own gut feeling is when I look at these companies is that there's nothing special. Like it's so easy now to just hook up to the API of ChatGPT and make a pseudo company that anyone else could also create overnight.
That's right. Where's the moat, right? Do you remember when mobile, once the iPhone came out and then there had to be 100,000 mobile-first companies? I'm doing mobile. And there were, I don't know, easily a million app companies that were writing apps for iPhone, right?
Yeah.
Are there like 20 that ever made money? And that's going to be true with AI, right? Everybody's going to do AI. But if you can write an AI interface in a weekend, your moat is too small.