Say you're not profitable, and raise money on the expectation that you can eventually lower costs and only then become profitable. If you then find out you can't lower costs (i.e. you can't automate something you could, and keep having to rely on more costly labor), then you eventually collapse.

Uber

Uber, Airbnb, others get their "partners" to provide the working capital.

This is a new take on the "value added reseller" business model. (I don't know what else to call it. Multi-level marketing?)

For instance, Autodesk's dealer channel covered the costs of marketing, sales, technical support, training, etc. While they kept the sweet nectar of profits for themselves.

> This is a new take on the "value added reseller" business model. (I don't know what else to call it. Multi-level marketing?)

"franchising" ?

If you are producing physical goods then becoming more popular just means that the stores that sell your product run out of stock faster. Then you scale up production.

With an internet based service, if you allow new people to sign up at any time and you become popular and you are not able to scale then you will not be able to service all of your users quickly enough. The people that you have pretending to be AI will be a bottleneck that makes it difficult to scale because you won’t be able to find more people suitable for that job and train them for it quickly enough. Then the business collapses.

The key distinction for many such "AI-enabled" services is that they're providing a service that is not cost-efficient even for low-paid labor, so they are selling below cost unless the expected AI-based automation gains materialize and achieve a drastic reduction in the manual labor required.