The FDE Bubble: Silicon Valley’s Most Expensive Game Of Pretend
Enterprise AI companies relying on armies of forward deployed engineers are disguising labor-intensive services as scalable software, inflating recurring revenue and valuations while falling short of autonomy claims, argues Anurag Gurtu, co-founder and CEO of Airrived. In this guest commentary he urges buyers and investors to examine deployment costs and gross margins to distinguish sustainable…
Enterprise AI companies are raising massive amounts of money to hire armies of engineers who manually make their "autonomous" products work. The business model is simply to sell customers an AI platform that doesn't actually do what it claims, then bill them for expensive human labor. This "forward deployed engineer" model has exploded in popularity, with job postings up 800-1,000% year over year.
The result is a payroll dressed up as software, with gross margins that can't keep up as more humans are added to the process. Companies are betting investors won't ask the hard questions about cost until after the next funding round closes. But eventually, the reality will hit: these are really staffing agencies masquerading as software companies.
The model may look scalable on paper, but it's actually a pyramid scheme of human labor. Expect the unglamorous truth to come out as investors start separating software ARR from human-powered ARR on financial statements.
Written by urgent.news from Crunchbase News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
