Why 90% of AI Startups Will Fail in 2026: The Wrapper Trap

The Great Filter Is Coming

The barrier to entry for software has collapsed. That means competition is infinite. If OpenAI releases your feature next week, do you have a moat? Most startups don't.

The Core Problem

The only moat left is "Deep Workflow Integration" and "Proprietary Data." If you are just summarizing PDFs, you are a feature, not a business.

The Three Types of AI Startups

1. Wrapper companies — UI on top of an API. No proprietary data, no complex workflow, no moat. These will die first.
2. Application companies — Use AI as a core component of a product that solves a real workflow problem. They have domain expertise and customer relationships. These can survive.
3. Infrastructure companies — Build the tools that other AI companies depend on. Vector databases, evaluation frameworks, deployment platforms. These will thrive.

The Survival Checklist

Ask yourself:

• If OpenAI adds your feature, can your customers still not switch?
• Do you have data that no one else has?
• Is your workflow complex enough that a weekend project cannot replicate it?
• Do your users depend on integrations you have built?

If you answered "no" to all of these, you are a wrapper.

The Pivot

Move from "Features" to "Platforms" that create sticky dependencies users cannot easily leave. Focus on workflow depth, not AI novelty.

We help founders pivot from features to platforms. The AI hype will fade. The companies with real value will remain.