The a16z Show - Inside Cursor: The Anatomy of a Generational Startup

Episode Date: August 27, 2026

a16z General Partners Martin Casado, Sarah Wang, and Matt Bornstein unpack the story of Cursor: how a small, product-obsessed team entered one of the most competitive markets in technology, took on incumbents with seemingly unbeatable advantages, and repeatedly made decisions that ran against conventional startup wisdom. They revisit the early bet that the interface between humans and AI would matter more than building a coding-specific foundation model, why Cursor built its own product rather than a VS Code plugin, and how the founders' ability to say "no" became one of the company's defining strengths. They also discuss Cursor's rapid evolution from IDE to agent and model platform, and why the team was willing to cannibalize its own products as AI capabilities improved. The conversation gets into what founders can learn from Cursor's approach to competition, hiring, enterprise sales, M&A, and company culture, including why the team remained unfazed by competitors from Microsoft to Anthropic and how its obsessive focus on product ultimately extended into every part of building the company.   Resources: Explore Cursor Compile: https://cursor.com/compile Follow Martin Casado on X: https://x.com/martin_casado Follow Matt Bornstein on X: https://x.com/BornsteinMatt Follow Sarah Wang on X: https://x.com/sarahdingwang Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

We don't need to compete with anthropic and open AI on models right now. The interface between the human and the model is the key thing. If you looked at the competitive landscape, it was almost silly. I asked Michael. I was like, what do you think about Claudeco? And he said something to the extent, look, we are going after the biggest market in the world. You're always going to have the memorable competitors. That does not scare us. As founders, we all want to be ambitious and we want to push to the maximum point of Pareto Frontier,

but you have to kind of know what the curve is. For us, the decision to invest in Curseville was actually pretty obvious. I remember André Carpathie was using it. It was clearly a phenomenon. It was clearly like a known brand. They went and got all the users in record time. Now they have the asset, the data, the know-how to build their own models. You really couldn't do the flip of that unless you started as a frontier lab.

They were definitely a couple of old moments. Like, remember or not? Two years ago, betting on an independent AI coding company looked almost irrational. Microsoftode GitHub, V-S code, co-pilot, and had access to some of the world's best AI models. And yet, Curser broke through. In this episode, Martin Casado, Sarah Wang, and Matt Bornstein look back at the decisions that shaped Curser from its earliest days,

building a standalone product instead of a plug-in, resisting the push into enterprise sales too early, and staying relentlessly focused even as the competitive landscape changed around them. They also unpacked how the company repeatedly reinvented itself as AI advanced, built a culture around speed and taste, and eventually applied the same intensity it brought to product to hiring, sales, and MNA. It's a conversation about cursor,

but also a broader look at what it takes to build a defining company in a market where the technology, competition, and conventional wisdom can change almost overnight. So to kick off, I actually wanted to take us back to early 2024. And obviously, you guys led the day. deal in, I think it was May of 2024 that year, but can you walk us through what was going on and then Q1, Q2 of that year, and maybe how you guys started working with Cursor well before

we ever partnered officially with them? So you have to sort of transport yourself back to late 2023, early 2024. I went back and looked it up, the leading models at the time were GPT-40, Claude 3, and Lama 3. That feels like forever ago. Lama 3? Yeah, yeah, yeah. That was actually pretty good. That was great.

Yeah, it was a great. model change in strategy obviously now the leading coding harness was copilot by like a mile right this was like the consensus thing Microsoft was doing their Microsoft thing right they had copilot they had office they had vS code all of these things combined they were going to somehow win AI and so it was clear that AI coding was sort of working but it was a different universe compared to today right like you had this sort of early signs that you could do meaningful work with AI but agents didn't really exist loops didn't really exist. Reasoning didn't really exist at the time.

So it's sort of a crazy time. There was a continuum of like companies going after coding, right? So on one hand, you had those that like the only way to win coding is to build a base model. And it has to be a coding specific one. And on the other hand, you had very presently, by the way, companies just focus on agents, right? And like, Hursor was somewhere in between. And not only models, there were a million companies and plugins to it. And both of these were very reasonable things to do done by very smart people, right?

Like that's what's so interesting about these new spaces. It's like smart entrepreneurs show up and do really interesting things. And in this case, model training was a very reasonable thing to do because the models weren't that good at coding yet. And there was sort of a theory that if we focus on this into a coding specific model, that's the breakthrough. People doing plugins on the other side were sort of saying, hey, let's not toss out the whole IDE. That would be a crazy thing to do. But like the interface between human and model is really important. So plug-in is a great place to go.

You know, it just kind of turned out that the thing that Cursor was doing was the right thing to do, right? Like us, they were very bitter lesson-pilled. At the time, they would have said, oh, there's no need for us to go train our own model. Of course, that changed later for different reasons, which we're going to get into later in this podcast. But it's like, we don't need to compete with Anthropic and Open AI on models right now. The interface between the human and the model is the key thing. And this is something that I remember Michael and Amman saying a lot and just saying very clearly from the earliest days of cursor saying code in the future will look like pseudocode.

I remember Michael making this point a lot. Like when you look at old computer science papers, there's a section. Here's the algorithm, not in code, but in like pseudo code, which I'm sure many people are used to. And we don't exactly write in pseudocode now, but probably you could. Probably you could just take a pseudo code block from an old paper and like the models now would implement that. This is like really what the cursor got to sought from the very beginning. And they've proven to be exactly right about this, right? It's like this sort of natural language is specification, like pairing the programmer's intent down to the minimum possible spec, that's what really sort of matters now. So anyway, we were in this world, as Martin said,

we were talking to a ton of very smart, very interesting people working on coding in various ways. The cursor team kind of stood out because not only did they sort of align with the things that we thought about the world, more importantly, smarter people than us and engineers working. At the time, the leading AI companies like OpenAI, Mid-Journey, Replicate, a bunch of others, all kind of use this and subscribe to this model. And the team, frankly, just seemed kind of special, right? They had an unusual degree of focus. I remember we got Michael to come pitch our GP group,

and 90% of the meeting was him saying no to things, which is just like for founders out there working on products that you love. Like, VCs will always ask you kind of dumb questions about other things you might do or things you're related to or whatever. And Michael literally just sat there and like very politely listened to all the questions and said, hmm, interesting, no, we're not going to do that. Wait, wait, actually, on that point, can I ask you guys a question? Because I remember that meeting so vividly when you brought Michael in for the A.

And one of the things that he said no to was actually, and to your point on, there were a lot of plug-ins, right? And so there was this maybe more consensus thought that a VS-code fork versus the plug-in into BS code would, one would be better for Enterprise. And it wasn't the former, it would be the latter. And I recall, I think it was you, Martine, or maybe it was both of you, asking him, Well, are you going to get enterprise customers with this medium? Right? And he looked at all of us in the eye with high conviction. And, well, I'm going to turn it back to you.

And what did you think of his answer? And what gave you guys the conviction to take a pretty contrarian bet at the time? They actually had a very reason articulation for why, where they were in the design spade mates the most sense. So for example, why wouldn't you build a coding-specific foundation model? So what they said at the time was it turns out that you don't see. speak to these models in code. You speak to these as humans and natural languages. Therefore, the model has to understand the breadth of human experience and language, right? And so that

means in order to build a coding model, you're actually building a frontier language model, and that's just a very hard thing to do. And then, of course, there are other companies doing it, and they're much more focused problems like TAM complete to do. So I think every one of their decisions was very reasoned, in our opinion. They were also very product focused, which you actually don't see a lot in AI. So they really believe that you can build a product. The product, if it's really good, it'll be adopted, which, by the way, is very similar to how Elon thinks. And that dictated a lot of their decisions. If you really believe in the product, you would never do a plug-in because then you're part of somebody else's product. If you really believe in the product,

you wouldn't do enterprise early, you'd do it later because the product itself is to kind of go to market motion. And so there was a, I would say, and Matt, let me know you would agree, tremendous clarity on exactly what type of company they were. And the decisions that they said all fell from that consistently. Where many of the companies we saw were kind of these pastiche of we'll try all of these different things. We're not quite sure what's going to work. So there's plugins and their services and their whatever, whatever, whatever, whatever. This was a product company going after what they considered to be a product problem. Yeah, no, I think that's exactly right. And I think they had the ambition and the courage to kind of do the maximal form of what the product

would look like. Right. I think, you know, as founders, we all want to be ambitious, right? And we want to push to the maximum point in the Pareto Frontier. But like, you have to kind of know what the curve is. And they just kind of knew what the curve was, right? And then get distracted by the sort of non-product things. I remember when we were trying to convince the cursor team to let us invest in their company, I asked Michael once what he did for fun outside of work. And it was almost like he didn't understand the question. He's like, what do you mean? I'm like, when you're not in the office, he's like, what do you mean? I also remember, by the way, when we had the lunch after we did the investment. And I was talking about something about internet days that were similar. He was like,

I was five. And we're like, I mean, what's amazing about, not just Michael, but all of the founders, is even though they were pretty young when a lot of these things happen, they actually were kind of students of all this history, which is a trait that we see Al-Trempelle talks about this law. We see this across all of our top founders that they're able to study and really learn from what's kind of happened before.

I'm not going to turn the question back on you. I think Matt would agree. For us, the decision to invest in Chris Rathéo is actually pretty obvious. The team is phenomenal. It's incredibly focused. All of us were users. half the team actually used cursor. Remember, Andre Carpathie was using it.

It was clearly a phenomenon. It was clearly a known brand. The growth was asymptotic. So from an early stage investor is a pretty straightforward decision. It was a much less obvious decision for a growth investor. And so, like, I think probably what you heard in that first meeting, maybe it was a little bit dissonant with how you'd growth invest, but then you very, very quickly led the next round.

So maybe talk through how you kind of got past the typical growth evaluation and got conviction. Yeah, I mean, I think the timelines are so compressed here. It's crazy to think back on because I remember you guys led the A in May, June, right, early summer. And by October, we did the B. And so it was clearly just vertical liftoff. And there were a couple of things that summer, right? You guys talked about Andre Carpathie tweeting about them, but they went on Lex, incredibly thoughtful discussion of how they thought about their vision for, like, coding going forward.

And so I think it comes back to, Martine, something you said, which is they were just reimagining everything, right? And you know, you just talked about this as well, Matt. But you can't write growth memos that way. Like, never mind you. So, you know, you've got the bug, you know, because you were calling us and we were so excited. How did you convince David George? Yeah.

Like, don't you get enough to show like, you know. Yeah, you know, it's so funny because, and I think you had to think out of the box for this one. I mean, of course, the momentum was vertical, but there were so many things that they defied conventional thinking where I remember the first time, you know, Martin, you introduced me to Michael. We got a coffee that day. You know, as Michael, you know, they moved quickly. So I pulled some stuff together for them, right? Because we're, you know, we're trying to show them, hey, this is the next stage of what growth looks like. And there's so many conventional pieces of conventional wisdom that they just completely broke. Like we would say, hey, we'll help you find a sales leader. previously, it made sense to start layering a sales leader at 25 to 50 million of ARR when self-serve starts to peter out. Michael looks me dead in the eye and is like self-serve is not petering out. Right. And so then you start to pull these drivers that you're like, oh, these assumptions that would go into any growth model historically, you can't have that asymptoting at 25% growth in five years, right? And so I think a lot of the growth investment decision at the

time was throwing out some of the assumptions that we would typically make on how a company would eventually start to slow growth. I'm very glad that we did that. And then the second piece is we should talk about the competitive landscape, right? Because you mentioned co-pilot. I was actually going to say, and actually, I think Matt deserves a ton of credit here, which is what we talk about now in retrospect, I was a pretty easy decision on the series A. But, you know, Matt led the early deal, and he saw something, a lot of people didn't, which was this, which is if you looked at the competitive landscape,

it was almost silly, which is you had a large incumbent, which is Microsoft, that had a company at scale, that had the opening I awaits, and they own VS code. So everything, you know, everything would say that there's just no way

that you could survive relative to this one single competitor. We'll talk about the other ones later. And I think that also was the thing you said about Michael was what eyewitness. It would be great to hear Matt, which I even remember when Matt said this early on, he was like, you know, they have a good answer for everything,

which when you have founders that are students of what they do, they're very consistent in their answers. And, you know, and this is not, listen, I think when we did the deal, it was pretty obvious, but it wasn't so obvious six months before. You know, and Matt and the team had that deep conviction way back then. And I think for every one of these races, they're mirrors of that. Anyways, is this guy?

Yeah, no, totally. And look, I mean, people think venture capital is like an individual sport. Like, it's not at all at all. I mean, our whole team was working on this at the time. You know, I think it was over a year. We literally had a cursor team on our team. Like with our team. Marco was great.

Yeah, yeah, yeah, you know, you led the team. I mean, it was great. So, but, but yeah, no, you're exactly. I mean, I mean, these guys are crazy smart, right? They're like off the charts, sort of just raw intelligence. Yeah. they're able to do this thing we talk about all, like contact switch between tech and markets really, really seamlessly.

And they ingest data, right, whether it's historical data or like things happening in the market and act very, very quickly, which you said before, Sarah. But specifically, I agree with that, but specifically, it was just kind of crazy to think you're going to fork something from Microsoft who owns the thing. And then you're going to, you know, compete with them with smaller models, even they own the opening eye weights,

and they have enterprise sales force, and they have... The greatest, yeah, enterprise distribution. Yeah, ever. You know, it's so interesting, right? It's like... GitHub. They have GitHub.

Just 100 million developers. They literally own every piece of that. You know, it's so interesting, right? Because, like, that's definitely the conventional wisdom. And, like, it's usually correct the conventional wisdom in many of these cases. You know, one of the data points at the time was... It was actually Marko on our team set up a dinner where Amon sat right next to John Schumann.

And they talked, like, a lot about cursor. And I think John's thing was like, oh, yeah, I tried cursor, but, like, our code base, I think he was at Anthropic at the time, like, our, like, mono repo just, like, immediately killed it, right? It's like, I couldn't even load the code base. And, like, I think, like, the next day Amman came back, it's like, oh, we made some changes. Like, here you can look. And not only is, like, speed of iteration, but, like, you know, we just look for these

little data points where it's, like, actually, like, doing a plug-in or, or, or, you or just like riding on top of BS code is not, it's clearly not going to work because like the smartest people in the world have tried it and it doesn't work, right? So it's like, so these guys were sort of listening to it. And historically, we as a team have always bet on the independent in a large market, right? If there's a leading independent, we'll always bet even if the incumbent seems very scary.

I think I just think it's worth talking about competition because, you know, my experience with all of our experience with Cursor is that there was always like a looming existential threat. And we almost forget about it. But, like, you know, of course, Copilot was the big one. And then remember the whole windsurf thing? So, like, Windserve actually did this very smart thing, where they went to YC, and there was a lot of YC users using it.

And so you kind of had this kind of whole movement on windsurf. And, you know, Cognition was a phenomenal company. Actually, was making real waves with agents, and they've done a great job of that. And then you had the first version of Cloud Code that came out. And, like, that was kind of, like, you know, a competitive thing. And so, like, you kind of go through, like, there was always some competition.

And one thing I would say, and I would love, again, to actually hear your perspective on, is like, it is such a pleasure to work with founders that are entirely unfazed. You know, like normally, like, you know, founders of this things happen are calling and they're kind of freaking out and whatever. They were 100% unfazed by the competition. Yeah, paranoid but unfazed. I'll never forget, you know, and we've been lucky to do, I think, all of their rounds starting from the A. Is that true? To be invest in every cursor, right? We did, yeah, with increasing amounts of dollars.

But Sarah, so let the B and the C. That's amazing. That's real conviction. That's amazing. That was a harder conversation to convince. I was going to say the C. The team for the C. You know, at the B, you could argue, God, just bet on critical momentum.

That was actually. Who grows from 4 to 50 in like four months or whatever. But the, or actually, no, it was the D. So, Claude Code, not to take us on a time travel trip again, but Claude Code came out May 2025 with a splash. You know, the pickup wasn't right away, but obviously formidable. And I remember there was around, I think a couple months after, three months after that. And I asked Michael, I was like, what do you think about Claude Cod Cote?

And he said something to the extent, actually, you know, exactly what you're saying here, which is, look, we are going after the biggest market in the world. there's going to be competitors. In fact, there's been a rotating cast of characters from the very beginning. Microsoft co-pilot was the first one. Claude Code is one of a rotating set of characters. And, you know, we think in big markets,

you're always going to have formidable competitors. That does not scare us. And, you know, I just remember being, yeah, somewhat blown away by the clarity of that comment, the lack of fear, right? There's humility as well. Like, it's humility mixed with bravado. And I just think that is kind of the winning combo

when you're going after these juggernauts like that. And I know it sounds vague, but like things like this, it's almost a Bezos-ish thing. What's like, if you're smart and right, like it actually like gives you, I think, the confidence and the focus to like have that kind of attitude when you have this like mega competitor sort of coming after you. Yeah.

That I'll say. I will say they were definitely a couple of, oh fuck moments, but they were always around models. Like remember when Opus 4 or 5 came out? like we're all on vacation and I think everybody in the world classed me was like oh fuck that's true

you know these things are moving much much faster than any of us thought and then I think the same thing when the pre-release of mythos came out and people had access to it these models were getting so good so fast and I think another thing that the cursor team

probably doesn't get you know the level of credit for is to the extent they cannibalized themselves so dramatically in like a Reed Hastings type way in a matter of two years, right? So they were first an I-D-E, and then they moved to an agent platform, then they moved to a model platform. And it's very, very tough for founding teams to actually have the discipline. Yeah, Tab was the big thing. You know, Carpathie had that famous post. I guess he has a lot of famous posts where he's like, he was just tab, tab, tab, tab. Yeah, exactly. Like, that kind of doesn't

matter that much anymore. Yeah. I actually think that's a good. segue to maybe some of the other strategic decisions they made along the way around business model. And to your point on, oh, fuck moments, I don't know if they would consider this, that, because I don't think the vagaries of Twitter impact them as much. As the investment. Yeah, the rest of us just like scrolling all day. But it was probably summer of 25 where there was a lot of shit written about, their gross margins, et cetera.

And then, of course, you know, post the Opus 4-5, maybe the January period. I mean, we should all talk about that because that was kind of, those are both different but interesting times. Yeah, I mean, what I'll say is I just feel like X is driven by, like, tail-chasing, adrenaline, sinking and shot in fright. And there tends to be a massive disconnect by what people say on X and, like, how the business is actually doing.

And so even though there was a lot of this, the business tended to do very well. And it's so interesting, it's so much of this often comes for investors, especially things talking about, like, business quality. But tech transformations always proceed figuring out the business. Like, you guys remember the internet? Like, we didn't even figure out how to monetize it for a long time. Forget margins, making any money at all, right? And here you've got like unlimited demand, unlimited growth, and margins. So, you know, I think this tends to be, you know, A, X is its own kind of.

of Echo Chamber, as people say, but also be every single wave you have investors trying to say something that sounds smart, which is like picking apart, you know, the business model of a nascent tech transformation. And I just think historically, they've always been proven wrong. Yeah. Yeah, for sure. I mean, you know, I think I'm going to borrow this quote from something you said, Martine, but, you know, first comes the technical transformation, then comes the business model. And in this case, like, I think the strategy where they went and got all the users, in record time. Now they have the assets,

the data, the know-how, et cetera, to build their own models, right? You really couldn't do the flip of that unless you started as a frontier lab. And it's clearly paying off in this combo that we'll talk about later. But I think seeing that kind of backdoor strategy was really inspiring and they took a lot of heat for it.

So, Martine, how do you think Cursor really became a sales-driven company or a company that's good at sales. Because early on, I think I told Michael a few times, too, it's like, oh, you better invest in sales. He's like, nope, I'm not going to do that. They literally set up enterprise at cursor.com. It's like, if you're an enterprise, send your inquiries to this.

But obviously now they're very good at sales, right? And go to market and generally, like, how do you think they made that jump? You know, it's a great question. So here'd be my best guess, which is they are very much a students of what do. They're very thoughtful. Every raise, you know, every product decision. And I think as they learn more about the market, they realize that the margins were in the enterprise. So very classically, if you do your competitive set, say the large labs, the large labs will basically subsidize or give away the single search tier.

But then they actually have, they command great margins in third party. And they command great margins in the enterprise. And, you know, of course, it was really a scale. And as the company has always gone, they decided, okay. Like, so, you know, for future viability, we need to go into the enterprise. That's where, A, the bulk of the spend is, but also a lot of the margin, the market. The margin tends to be the value here. We've created a great, you know, top of funnel engine.

And so, you know, this is existential and this important. And then when they decided to do it, they really went in. And that may be the fastest grind of a sales team in the history of the planet, right? I mean, you know, you were very involved, Sarah, for example, on recruiting. So maybe talk about that actual expansion because it was. Yeah. I mean, it's so neat to see. you know that expression, how you do anything

is how you do everything. You really see it so much of what you guys are talking about and how they thought about product, et cetera, was reflected in how they did hiring and go-to-market hiring in particular. And we got a shout out Jordan and Roman and their team there, who in the early days built that engine from scratch.

They're just the most incredible, you know, some of the most incredible people I've ever worked with, but we've all ever worked with. Well, they also, spend 40% of the time recruiting. Yeah, exactly. This is amazing for technical product founders to spend 40% of the time recruit. I've never actually seen it before.

Absolutely. And it is so effective. And like a company really is the team that you build. And they took this to heart. Like everybody talks about it. Everybody talks about like doing a class matters, whatever. But it's entirely different. It's like how often was Oscar, you know, hey, I'm on a red eye to Europe to close?

I'm like literally like I see an engineer. Every week. Totally. And, you know, there was that great piece that Brie wrote about their hiring practices that everyone should read. A lot of that focuses on their end hiring, like the work study, all this stuff, right? But even on the go-to-market hiring, when the thought that they would put into hiring a single AE, right? And of course, like, this is nothing new, but just the back-channel, back-channel, back-channel ethos, they had that to a T. They knew exactly what they were looking for in founding AEs.

I remember we would go there and sit in their office for eight hours, helping them source stuff like that. And they weren't like, oh, we want to do it the old way. We're like, that's not going to, we're building a company in a new way, right? So we want very specific AEs that fit this profile. We're going to go get them. We're not just going to wait for people to walk in the door. All of those things that have been written a bit on the end side.

They did that on the go-to-market side. And clearly to phenomenal results. I mean, they got to over 50% of the Fortune 500. and I think faster than anyone we've ever seen. Can you talk about specifically how they applied the lessons in Enghiring to like A.E. hiring? Because this is something I think our founders deal with a lot. Like, you know, I've dealt with this a lot personally. Like, like, how do you actually make that jump and like what lessons really do carryover?

Yeah. Or that you observe in person. No, yeah. And, you know, hopefully I think this has been written about. So hopefully it's not sharing alpha. But the way that they think about sort of epochs of a person's career or of a company. and who was the key dial in making that happen. I love this intense research period that goes on where it's like, hey, these are the top

10 companies who have seen great in this type of selling. And then let's go a level deeper. Here are the top 10 teams in those companies. And then here are the number one and number two single AEs who drove that change and accounted, you know, again, back channel, back channel, back channel, right? Like who their boss, their boss is boss and their boss's boss. would say, this is a superstar AE. And of course, in the early days, it was like, can they deal with some uncertainty? Because you don't want someone who can just run a playbook. At this point,

maybe they can get those people. But in the early days, right, the founding AE set was super strong. And I think figuring out what does the best look like at what period of time and then which individuals drove that, that's so applicable for engineering, obviously product building, but on the go-to-market side as well. And I think that nailing the right star who did it at the right time is really hard. I mean, it narrows the base that you can hire from completely.

But because, you know, I think Jordan Roman and the early team got that right, they just were able to scale it quickly without losing the cursor culture. Which, you know, a lot's been written about the cursor culture. I'm curious, you know, maybe you guys can share your own impression of it.

You know, I mentioned earlier that, like, you know, kind of coding was all that they did. My impression at the time, and, like, we, you know, the founders could correct us on this. Like, my impression at the time is they weren't doing that because they were obsessed with work. And I think they're still not doing it because they're obsessed with work. They literally just, like, love writing code and love systems. And, like, I think the three of us sort of, you know, can feel that way at times here. I like that's, like, a very, very understandable thing. And that seemed to be the driving cultural, you know, kind of impetus at the time is a very small team.

Everybody had that, had that attitude. And, like, we're orienting towards the future of, like, what is this actually going to be? And that kind of, like, you know, from an edge standpoint and a product standpoint, like, very narrowly focused on what they were trying to accomplish and, like, how to run the team. But there's a huge paradox because I totally agree. I 100% agree. However, if you actually detailed their actions later on, that's not the conclusion you need to get to. Like, what do they spend their time on? It was like recruiting, go to market, understanding business models, biz dev.

And so in a way, again, I just totally agree. And again, on one hand, you have a very product-focused team that comes from the tech that literally wanted to build products that they wanted to use. So listen, I think that high-powered founding teams work on exactly what is needed by the business, and I think they did a very good job. And I think it allowed them to navigate the most competitive market we probably ever see. Has there been a more competitive market than coding? Then, I mean, it's just, it's hard to imagine.

There's so many companies. Database wars? Yeah, I mean, you have very intense competition in, like, relatively narrow markets. I mean, databases are huge, but compared to coding, I actually think it's much smaller, right? Like, for, like, I mean, coding's kind of the meta category, right? Like, it's like all expression of, like, human thought in, like, economic form is kind of, like, coding. I mean, imagine, like, starting competing with Microsoft, ending up competing with, say, Anthropic, you know, both of these kind of, you know, mega companies with tremendous amount of capital and power and distribution.

In the meantime, you evolve, like, fundamentally your product approach, and you change your go-to-market, and then you engage in the most complicated M&A of all time, and all in a matter of two years. It's so crazy. Right. It's so crazy. That's so crazy. Of, like, you know, startups.

No, totally. There's definitely something to what you're saying, right? Like, in the beginning, these guys were incredible. incredibly focused on the product and literally enriching their own lives. Like literally, they would be coding for fun. Like when I finally got him to admit they did something for fun, it was like, oh, that's also coding. But like, yeah, which by the way is the only. Guilty. Guilty. Yeah, it's the only fun left to any of us. By the way, you know,

now that's the models of like, you know, brought the post-scarcity future to us. It's like coding is like, you know, the last fashion. You know, and but like there was always awareness, or at least I always thought talking to Michael. He was always a little. He was always aware of the game, if that makes sense. Like, he truly was, and they were all truly in love with coding and creating great products. But, like, they kind of knew that building an enduring company or great company isn't just about product obsession.

I just kind of sense he always kind of understood that and, like, was thinking a couple of stuff. Yeah. If you're, listen, your goal is trading software that's a critical, it's critical to get the business right, yeah. Yeah. I was going to add an anecdote that's not related to them coding. But the other thing that, you know, we should.

sort of seen across a number of founders, but Michael and Swale and Amman, they sort of embodied this, is this, again, how you do anything is how you do everything, right? And so, of course, this detail attention to the product, very artisan, there's craftsmanship, right? Overused taste. They have taste in spades. But it extended to how not only they did hiring on the end, go to market side, but even the space they created, the events they throw. Like, I remember walking to their office and thinking, wow, in my early 20s, I would not have paid attention to putting, I don't know, twinkle lights here. They famously, no shoes, right? But you'd go in, you'd put on your slippers, and it would feel, you'd feel at home. Like, hence why everyone was

there working all the time, because you're like, this feels great like home. And they, you know, they, it was very Hege, the Scandinavian style. And I remember going to their second office when they finally expanded and complimenting them on a couch or something, because, you know, they're I think I was redoing my own house at the time. And they were like, oh, yeah, we got that from a secondhand, like, very hege furniture dealer. And so they were going after a specific look and feel. And I just was struck by that because I was like, wow, that is not how I remember guys in their early 20s, like thinking about the space that you create and are in, how that leads to the product and, you know, mine space you're in. Yeah, there's actually a nice adjacency here to a lot of the decisions they made.

So marketing was a very obvious one. They were very, very particularly. Like, we use X, that's not our voice. We're not spammy. We made so many suggestions. Yeah. We're like, oh, like, let's do this event. No, that's not our style.

So they're very good at saying no for stuff. I will say that they were also very good about this when it came to personnel. Like if there wasn't a fit, they make the hard decision pretty quickly. You very, very rarely see this with the founding teams. And they're very consistent about that. And so I would say it's almost this kind of un-talked- probably greatest strength of the company is that once they made a decision,

it doesn't matter how hard that was, whether it's deciding not to enter a market, deciding to be very limited in what they're doing, like they kind of follow through or like, you know, who would stay in the company, who wouldn't stay in the company. And so, you know, kudos to them for actually, you know, having the courage

and the tenacity for these tough decisions. Which is sort of an Elonish trait too. It's also very Elonian. Yeah. I actually think that these two companies, I mean, we just like, you know, talk about the M&A a little bit, are very good fits. They're very good fits on like a technical level, right?

Like Elon has a compute. They have the distribution in the data. On a vision level, they both think that, you know, code is the path to changing all of compute and maybe all of humanity, but also on the culture level, right? They're very product engineering focused, very, very, very, very product engineering heavy, very fast iterating, you know, they make hard decisions very quickly. And so, you know, I mean,

not been involved in a lot of M&A. And I would say this is probably the best fit I've ever seen as far as just the full package. Yeah, couldn't agree more. I mean, there's a funny analogy with our experience on the SpaceX side. I remember we met them in 2019. Back then, it was fully a launch business, but the SpaceX team was like, no, we're going to launch global communications. We're going to power the internet for everyone in the world. They had nothing at the time, no Starlink satellites in the sky. And of course, they did it. Right. And if you think about the cursor team telling us, and, you know, they actually beat every forecast they gave us, but.

Oh, by a lot. There's just so many Elon-ish characteristics of moving fast, going after large markets, winning them in the feet of impossible competitors, you know, Comcast, right, right, in the Starlink case, that there's so many parallels, totally different venues, obviously, but fascinating to see that. There's another thing I would say also, which I think between kind of Elon and, and, and, you like SpaceX and Cursors, like, in both cases, the consensus was decrying the death of both companies so many times. Totally.

Yeah, totally. So I think there's also like this kind of like, you know, you know, cultural perseverance to the naysayers, which I actually really respect on both sides. Actually, I do have one other real question I wanted to ask you guys. Cursor is also really good at doing M&A, like doing small talk and activities. I was actually going to mention it. Yeah, yeah. Yeah, I would love to know a little bit more, like from your. perspectives like why they were and what the philosophy was and all that.

So I will say, listen, so there is such a war for talent right now that the companies that have figured out how to do talent via acquisition can really get ahead. I mean, there's just a lot of advantage there. And so the early motions that they did were of that nature, which is like really good came, you know, they'll just go ahead and do the acquisition. And it was really nice about cursor. They were just never worried about like operational complexity. They're just like, it doesn't matter how messy it is.

We'll go ahead and do it. They also didn't really worry too much about their ability to set culture because they were just so good at it. Like, again, like that was just part of it. It wasn't until later, like the graphite acquisition where they started thinking about acquisitions in terms of strategic direction. And of course, that was a much larger acquisition. And, you know, listen, I think.

think the company was so fast. Like, who knows to the extent that they would have figured out how to integrate all of these things and execute on them in the limit? Just because, like, you know, like now they're part of a very large acquisition. But I will say that they approached these in the same way that they approached everything, which is incredibly thoughtful. They had a plan. They executed quite well. And so this may be the most concentrated company in the history of companies having done M&A. You know, I'm into everything else.

Yeah, I was going to say, I feel like there's this badge of honor now when a CEO of a company says, I have ex-founders in my company. And I think it should be a badge of honor, right? I don't know what that stat is for Cursor. Do you guys know? But I remember, and they have so many great founders there, but I remember when they brought on Tito from Kuala

and then Adam Ward on the talent side, actually. And just seeing firsthand the leverage that they got from bringing in someone who was a fact. founder, CEO effectively, but slotted really well into the cursor culture and just take that to great heights and add to the acceleration. Like I think that laybook, you know, I don't know, I'm sure they're not the ones who started it per se in this new Gen A.I era, but they certainly are, I think, one of the best examples of how to integrate founders really, really well into your company. It's funny, right, because Anthropic kind of gets that tag a lot. Now it's like, oh, like,

exec at Company A, just went to take an IC roll at Anthropi, but like, cursory. but like, Cursar kind of did this first, and they weren't just, like, slotting people into IC roles. Like, they're actually building the company this way, which I... Absolutely. Yeah, I thought. It's very, it's very unconventional, but, like... It's actually an incredibly complex.

Yeah, that's a conventional list. Yeah, yeah, and I think it's actually true. I mean, I think it's not that they, you know, did something that people think as hard, but is it actually easy. I think it's actually hard, and they just managed to pull it off. You know, put it to them. Thanks for listening to this episode of the ACR.

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