Some people are saying "AI wrappers aren't real startups."
But this is complete nonsense.
All startups are wrappers around other technologies.
You should take pride in using cool technologies in your business.
What this Lesson is about is the advantages and disadvantages of AI wrappers as businesses.
An AI wrapper is simply an app that uses someone else's AI tech (via API) combined with YOUR unique understanding of a specific problem.
Big Advantages of AI Wrapper Startups
The BIGGEST advantage? You can iterate FAST.
Unlike traditional startups that might take months to build an MVP, you can get an AI wrapper live in DAYS using tools like Cursor, VibeCode, Replit, or Windsurf.
One of the most successful “Wrappers” is Perplexity. They’re worth billions of dollars and they never trained any special models, they simply took a simple use case, which was searching the internet with AI, and made it amazing with existing models.
This was great for a while, but they are running into problems as ChatGPT, Gemini, Grok and many others all add search into their chat apps.
Other killer advantages:
Low upfront costs (just API keys and hosting)
Great for those entrenched in a niche. If you have a deep understanding of niche user problems you can build tools specifically for them. Big companies will likely not even see these opportunities
Perfect to pair with an existing audience/distribution channel
There are definitely risks:
Let's be honest about the downsides:
The API pricing is NOT under your control – if OpenAI jacks up prices tomorrow, your margins get crushed.
Currently, with where the cycle is right now, AI models are becoming more affordable. This has a lot to do with Chinese AI models like DeepSeek coming into the USA and undercutting the prices of OpenAI and Anthropic.
But there’s no guarantee this trend will last forever. Sam Altman of OpenAI and Dario Amodei of Anthropic are publicly speaking about Chinese models should be banned.
If this happens it could get a lot harder to make successful wrapper companies.
Other big challenges:
These apps are easily replicated (someone can copy your idea in days)
Agents from companies like Manus could eventually eat your entire workflow
The more complex your app gets, the harder it is to coordinate all the pieces
Distribution is critical - without followers, you're invisible
What do I mean “Agents could eventually eat your entire workflow”
Think about what Manus, Deep Research and o3 can do.
o3 is the new ChatGPT model that is made to be an agent by default.
If you ask o3 to analyze an image of a tree and then prompt it with the following:
o3 will literally analyze the image in segments.
o3 has access to tools that can select smaller portions of the image and do deep analysis, if o3 decides this is important. It can do this over and over and over again until it feels confident.
Therefore, it might not be the best idea in the world to create a wrapper that does general image analysis.
Because your entire startup might just be a simple step in a workflow that ChatGPT can do, and more.
Avoid this, you will get eaten →
Where are the best opportunities for AI Wrappers?
If you are not a programmer, the best wrappers are going to be created by agencies / consultants in my opinion.
If you work with clients who face problems every single day, and you can take your work and create.