StartUp Founders: AI Wrappers
Dear Reader,
“That’s just an AI wrapper.”
“A lazy UI on GPT with some marketing fluff.”
“A thin interface that adds nothing.”
“A business that could disappear overnight.”
Okay. And?
Postmates was kinda a wrapper on top of restaurants?
Uber was kinda a wrapper on top of car services?
Shopify was kinda a wrapper on top of selling stuff?
Confusing?
They started by aggregating existing supply, layered on a simple UI that connected users to a service. Isn’t that what a wrapper is?
Until they weren’t. Because they immediately built infra to adjust user behaviour, workflows, automations and control over the transactions.
The core value was not about connecting A to B – it was reimagining how A and B interacted. More specifically, it was owning the decision layer.
The mistake isn’t building an AI wrapper.
The mistake is staying one.
People calling your startup a wrapper?
Good. Let them.
Because what starts as a wrapper becomes the foundation of a business if you can evolve upstack quick enough.
What Isn’t a Wrapper?
Your startup is already a wrapper.
You didn’t build your own cloud. AWS.
You didn’t build your own payment processor. Stripe.
You didn’t build your own database. PostgreSQL.
So if everything is a wrapper on something, why is “AI wrapper” an insult?
Because when people call your startup a wrapper, what they’re really saying is:
👉 “You haven’t added enough defensibility yet.”
👉 “You don’t own enough of the workflow.”
👉 “If OpenAI builds your feature, your business disappears overnight.”
Cursor is technically a wrapper passing GPT-generated code back and forth. But what makes it transcend wrapper status? It’s not just generating code – it’s integrating those outputs directly into your files, executing inside your workflow, and embedding itself to the left and right of the coding process. AI is the feature, but the workflow becomes the product.
Do Your Customers Care?
You don’t demand your chef grow the peppers. You demand that you get the plate you want, how you want it, at an equitable price. The output.
This is the application layer. Where the raw ingredients are transformed into something meaningful, actionable and where your application moves from being a thin layer on top of the model, into delivering real functional value.
People don’t care how it happens.
They care that it happens better, faster, and easier because of you.
So don’t get defensive.
Let them call you a wrapper.
Then build so they can’t anymore.
The secret, is to own the last mile. If you own the experience the user operates in, you own the user, and wrappers, are just that, the last mile.
The Real AI Business Isn’t Tech it’s Distribution Arbitrage
Your real advantage isn’t the LLM.
It’s how you get users, keep them, and expand what they do inside your platform.
Because winning AI businesses aren’t just software companies.
They’re distribution companies.
The biggest moat isn’t owning the model.
The biggest moat is owning the user.
The biggest risk isn’t being a wrapper.
The biggest risk is staying one.
The fastest way to win is through distribution arbitrage.
If you can bring in users, convert them, and expand what they do inside your system, you control the market.
Start with a wrapper if you have to, but use it to build a distribution engine that captures the last mile.
Go Upstack Or Be Obliterated.
The stories are endless, first to market wrappers like medical voice AI startups charging $1K per month with a very reasonable pitch. “Cheaper and better than human medical scribes.”
Now? They’re fighting to survive at $100 per month. Why? They’re competing with 10+ AI voice startups racing to the bottom on price.
Not because of better technology.
Not because of changing customer needs.
Because of wrapper competition and the ease to switch between services.
This isn’t an argument against wrappers.
It’s the strongest argument for moving up the stack. Fast.
Because when you own:
✅ The workflow
✅ The user relationship
✅ The distribution
You’re not competing on price anymore. You’re competing on value.
The Journey: Wrapper → Application Layer → Vertical AI SaaS
🔥 Step 1: AI Wrapper (The Starting Point)
Every AI for xxxx starts here. You refine LLM prompts, improve UX, structure inputs, and optimize GPT outputs for a specific niche. It feels like you’re adding value.
🚨 The Risk:
But you’re just passing inputs and outputs.
If OpenAI improves prompting, your tool loses value overnight.
You’re not a business yet. You’re an interface.
✅ How to Evolve:
Don’t just optimize outputs. Own the workflow to the left and right of the value you deliver.
Build execution layers that force users to stay inside your product.
🔥 Step 2: Application Layer (Where You Become More Than a Wrapper)
At this stage, you stop just generating text/images/code and start owning the process.
Users aren’t just consuming AI-generated content. They’re executing tasks inside your product.
AI isn’t just generating responses, it’s guiding decisions.
🚨 The Risk:
If your product is still just an input/output engine, users can replace you with any other AI tool.
✅ How to Evolve:
Collect proprietary data that refines outputs over time.
Build automation layers that create lock-in.
Integrate into workflows so deeply that users can’t rip you out.
At this point, you start to have real leverage.
🔥 Step 3: Vertical AI SaaS (Where You Own the Market)
You’re now part of core operations, of how your user does their job.
You don’t just generate content, you own the system that executes it.
Now it’s about how you can better control the purchase, execution, and insights inside your platform, how you can integrate deeper, how you can own more of the core.
Your Next Move
✅ Start figuring out how to own the last mile.
✅ Build something users rely on. Then make it better every day.
This isn’t just the game.
This is the only way AI startups survive.
As always, if I can be of service, feel free to grab time.
LFG.
— James