Google VP warns that two varieties of AI startups might not survive

The generative AI increase minted a startup a minute. However because the mud begins to settle, two once-hot enterprise fashions are wanting extra like cautionary tales: LLM wrappers and AI aggregators. 

Darren Mowry, who leads Google’s world startup group throughout Cloud, DeepMind, and Alphabet, says startups with these hooks have their “verify engine gentle” on.

LLM wrappers are basically startups that wrap present giant language fashions, like Claude, GPT, or Gemini, with a product or UX layer to unravel a particular drawback. An instance can be a startup that makes use of AI to helps college students examine.

“In the event you’re actually simply relying on the again finish mannequin to do all of the work and also you’re virtually white-labeling that mannequin, the business doesn’t have a variety of persistence for that anymore,” Mowry mentioned on this week’s episode of Fairness. 

Wrapping “very skinny mental property wrapped round Gemini or GPT-5” alerts you’re not differentiating your self, Mowry says. 

“You’ve acquired to have deep, large moats which are both horizontally differentiated or one thing actually particular to a vertical market” for a startup to “progress and develop,” he mentioned. Examples of the deep moat LLM wrapper kind embrace Cursor, a GPT-powered coding assistant, or Harvey AI, a authorized AI assistant.

In different phrases, startups can now not count on to slap a UI on prime of a GPT and get traction on their product, like they might, maybe, in mid-2024 when OpenAI launched its ChatGPT retailer. The problem now’s to construct sustainable product worth. 

AI aggregators are a subset of wrappers — they’re startups that combination a number of LLMs into one interface or API layer to route queries throughout fashions and provides customers entry to a number of fashions. These firms sometimes present an orchestration layer that features monitoring, governance, or eval tooling. Assume: AI search startup Perplexity or developer platform OpenRouter, which supplies entry to a number of AI fashions through a single API. 

Whereas many of those platforms have gained floor, Mowry’s phrases are clear to incoming startups: “Keep out of the aggregator enterprise.”

Usually talking, aggregators aren’t seeing a lot progress or development nowadays as a result of, he says, customers need “some mental property in-built” to make sure they’re routed to the precise mannequin on the proper time primarily based on their wants — not due to behind-the-scenes compute or entry constraints.

Mowry has been within the cloud recreation for many years, chopping his enamel at AWS and Microsoft earlier than organising store at Google Cloud, and he’s seen how this performs out. He mentioned the state of affairs immediately mirrors the early days of cloud computing within the late 2000s/early 2010s as Amazon’s cloud enterprise began taking off.

At the moment, a crop of startups sprang as much as resell AWS infrastructure, advertising themselves as simpler entry factors that offered tooling, billing consolidation, and help. However when Amazon constructed its personal enterprise instruments and prospects realized to handle cloud providers instantly, most of these startups had been squeezed out. The one survivors had been those who added actual providers, like safety, migration, or DevOps consulting. 

AI aggregators immediately face comparable margin strain as mannequin suppliers broaden into enterprise options themselves, probably sidelining middlemen. 

For his half, Mowry is bullish on vibe coding and developer platforms, which had a record-breaking 12 months in 2025 with startups like Replit, Lovable, and Cursor (all Google Cloud prospects, per Mowry) attracting main funding and buyer traction.

Mowry additionally expects sturdy progress in direct-to-consumer tech, in firms that put a few of these highly effective AI instruments into the palms of shoppers. He pointed to the chance for movie and TV college students to make use of Google’s AI video generator Veo to deliver tales to life.

Past AI, Mowry additionally thinks biotech and local weather tech are having a second — each when it comes to enterprise funding going into the 2 industries and the “unimaginable quantities of information” startups can entry to create actual worth “in methods we might by no means have been in a position to earlier than.”