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The generative AI boom minted a startup a minute. But as the dust starts to settle, two once-hot business models are looking more like cautionary tales: LLM wrappers and AI aggregators.
Darren Mowry, who leads Google’s global startup organization across Cloud, DeepMind, and Alphabet, says startups with these hooks have their “check engine light” on.
LLM wrappers are essentially startups that wrap existing large language models, like Claude, GPT, or Gemini, with a product or UX layer to solve a specific problem. An example would be a startup that uses AI to helps students study.
“If you’re really just counting on the back end model to do all the work and you’re almost white-labeling that model, the industry doesn’t have a lot of patience for that anymore,” Mowry said on this week’s episode of Equity.
Wrapping “very thin intellectual property wrapped around Gemini or GPT-5” signals you’re not differentiating yourself, Mowry says.
“You’ve got to have deep, wide moats that are either horizontally differentiated or something really specific to a vertical market” for a startup to “progress and grow,” he said. Examples of the deep moat LLM wrapper type include Cursor, a GPT-powered coding assistant, or Harvey AI, a legal AI assistant.
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