a16zHow Cursor Built One of AI’s Fastest-Growing Companies
EVERY SPOKEN WORD
40 min read · 8,480 words- 0:00 – 0:53
Intro
- MBMatt Bornstein
We don't need to compete with Anthropic and OpenAI on models right now. The interface between the human and the model is the key thing.
- MCMartin Casado
If you looked at the competitive landscape, it was almost silly.
- SWSarah Wang
I asked Michael, I was like, "What do you think about Claude Code?" And he said something to the extent, "Look, we are going after the biggest market in the world. You're always gonna have formidable competitors. That does not scare us."
- MBMatt Bornstein
As founders, we all wanna be ambitious, and we wanna push, like, to the maximum point of the Pareto frontier, but, like, you have to kinda know what the curve is.
- MCMartin Casado
For us, the decision to invest in Cursor was actually pretty obvious. I remember Andrej Karpathy [chuckles] was using it. It was clearly a phenomenon. It was clearly, like, a known brand.
- SWSarah Wang
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.
- MCMartin Casado
There were definitely a couple of "oh [beep] " moments. Like, remember when-
- 0:53 – 5:23
Back to Early 2024: How a16z First Met Cursor
- SWSarah Wang
So to kick off, I actually wanted to take us back to early 2024, and, you know, obviously you guys led the deal in, I think it was May of 2024 that year. Um, but can you walk us through what was going on in the Q1, Q2 of that year, and maybe how you guys started working with Cursor well before, uh, we ever partnered officially with them?
- MBMatt Bornstein
So you have to sort of transport yourself back to late 2023, early 2024. Um, I went back and looked it up. The leading models at the time were GPT-4.0, Claude 3, and Llama 3, like Llama was still a thing.
- SWSarah Wang
Wow. That feels like forever ago. [chuckles]
- MCMartin Casado
Llama 3?
- MBMatt Bornstein
Yeah, yeah, yeah.
- MCMartin Casado
That was actually pretty good.
- MBMatt Bornstein
That was great. Yeah, it was a great model. Um, you know, a change in strategy-
- SWSarah Wang
Yeah
- MBMatt Bornstein
... obviously now. Um, the leading, uh, coding harness was Copilot by like a mile.
- MCMartin Casado
Mm. Yeah.
- SWSarah Wang
Mm-hmm.
- MBMatt Bornstein
Right? This, this was like the consensus thing. Microsoft was doing their Microsoft thing, right? They had Copilot, they had Office, you know, they had VS Code, all of these things combined, they were gonna somehow win AI. Um, and, and so it was clear that AI coding was sort of working, but it was a different universe compared to today, right?
- SWSarah Wang
Mm.
- MBMatt Bornstein
Like, like you had the sort of early signs that you could, you could do meaningful work with AI, but agents didn't really exist. You know, loops didn't really exist. Reasoning didn't really exist at the time, so it's sort of, sort of a crazy time.
- MCMartin Casado
The, the-- That said, there, there was a continuum of, like, companies going after coding, right? So on one hand you had those that are 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-
- SWSarah Wang
Mm. Yep
- MCMartin Casado
... you had, you know, very presciently by the way, companies just focused on agents, right? And like Cursor s- was somewhere in between. Sorry.
- MBMatt Bornstein
And, and not only models, there were a million companies doing plug-ins too.
- MCMartin Casado
Right, yeah.
- MBMatt Bornstein
And both of these were very reasonable things to do, done by very smart people.
- MCMartin Casado
Yeah.
- MBMatt Bornstein
Right? Like, that, 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 very, 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 and do a coding-specific model, it'll... that's the breakthrough. People doing plug-ins on the other side were sort of saying, "Hey, like, let's not toss out the whole IDE, like that would be a crazy thing to do." But, like the interface between human and, and model is really important, so, so plug-in is a great place to go. Um, you know, it just kind of turned out that the thing that Cursor was doing was the right thing to do, right? They... Like, like us, they were very bitter lesson pilled. You know, at the time they would've 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 gonna get into later in this podcast. But it's like we don't need to compete with Anthropic and OpenAI on, on models right now. Um, the interface between the human and the model is the key thing, and this is something that, that I remember Michael and Aman saying, like, a lot, and saying, just saying very clearly from the earliest days of, of Cursor, saying, "Code in the future will look like pseudocode." Like, I remember Michael making this point a lot. Like, when you look at old, you know, like computer science papers, there's a section, it's like, "Here's the algorithm," not in code, but in like pseudocode, which, you know, I'm sure many people, um, you know, are used to. And, you know, we don't exactly write in pseudocode now, but probably you could. Like, probably you could just take a pseudocode, you know, block from an old paper and, and like the models now would implement that. Th- this is like really what the Cursor guys thought from the very beginning, and they've proven to be exactly right about this.
- SWSarah Wang
Mm.
- MBMatt Bornstein
Right? It's like this sort of natural language-ish specification, like pairing the programmer's intent down to the minimum possible spec. That's what really sort of matters now. So, so anyway, so we're in, we were in this world. As Martin said, we, you know, were talking to a ton of very smart, um, very interesting people working on coding in various ways. Um, you know, the Cursor team kind of stood out because not only did they sort of align with the things that we thought about the world, um, more importantly, smarter people than us, you know.
- SWSarah Wang
[chuckles]
- MBMatt Bornstein
And, you know, engineers working at, at the time the leading AI companies like OpenAI, Midjourney, Replicate, a bunch of others, um, you know, all, all kind of use this and subscribe to this model. Um, and the team frankly just seemed kind of special, right? Like, they had an unusual degree of focus. Um, I remember we s- we, we got Michael to come pitch our, our GP group, um, and 90% of the meeting was him saying no to things.
- MCMartin Casado
Yeah.
- SWSarah Wang
[chuckles]
- MBMatt Bornstein
Which, which, which is just like-
- MCMartin Casado
Which is great
- 5:23 – 9:57
The VS Code Fork vs Plug-In Decision & the Enterprise Bet
- MBMatt Bornstein
gonna do that."
- SWSarah Wang
Wait, wait, actually on that point, can I ask you guys a question? Um, because I remember that meeting so vividly when you brought, uh, Michael in for the A, and one of the things that he said no to was actually... And y- you know, to your point on like 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 VS Code would, one would be better for enterprise, and it wasn't the former, it would be the latter. Um, and I recall, I think it was you, Martin, or maybe it was both of you, asking him, "Well, are you gonna get enterprise customers with this medium?" Right? And he looked at all of us in the eye with high conviction and, you know- Well, I'm gonna turn it back to you and, like, what did you think of his answer and, um, what gave you guys the conviction to take a pretty not... I think, I would say a pretty contrarian bet at the time?
- MCMartin Casado
They actually had a very reasoned articulation for why, where they were in the design space makes the most sense. So for example, um, why wouldn't you build a coding-specific foundation model? So what they said at the time, uh, was, "It turns out that you don't speak to these models in code. You speak to these as humans in natural languages, therefore the, the model has to, like, understand, like, the, the breadth of human experience and language," right? And so, you know, that means in order to build a coding model, you're actually building, you know, a frontier language model, and that's just a very hard thing to do. And then of course, you know, there are other companies doing it, and there are much more focused problems like tab completion to do. So I think every one of their decisions was, was very reasoned in our opinion. Um, he, they were also very product-focused, um, which you actually don't see a lot in AI. So they, they, they really believe that you can build a product, a product, you know, if it's really good, it'll be adopted, which by the way, is very similar to how Elon thinks.
- SWSarah Wang
Mm.
- MCMartin Casado
Um, and that dictated a lot of their decisions. Like, 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 the kind of go-to-market motion. And so there was a, I would say, and, and Matt, let me know if you would agree, tremendous clarity on exactly what type of companies they, the type of company they were, and the decisions that they said or, uh, were all fell from that consistently, right? Where many of the companies we saw were kind of these pastiches of, "We'll try all of these different things. We're not quite sure what's gonna work." You know, so there's plug-ins and there are services and there are whatever, whatever, whatever. This was a product company going after what they considered to be a product problem.
- MBMatt Bornstein
Yeah, no, I think that's exactly right. And, and, and I think they had the ambition and the courage to kind of do the maximal form of what-
- MCMartin Casado
Yeah
- MBMatt Bornstein
... the product would look like, right? Like, I think, you know, as founders, we all want to be ambitious, right? And we want to, like, push, like, the, to the maximum point of the Pareto frontier, but, like, you have to kind of know what the curve is. And they, and they just kind of knew what the curve was, right? And didn't get distracted by the, by the sort of non-product things. Um, I remember, uh, I... When we were trying to convince the Cursor team to let us invest in their company [chuckles] um, uh, I asked Michael once what he did for fun, like, outside of, outside of work. And it was almost like he didn't understand the question. He's like, "What do you mean?"
- MCMartin Casado
[laughs] Yeah. That's funny.
- MBMatt Bornstein
I'm like, I'm like, "When you're not in the office." He's like, "What do you mean?" [laughs] You know?
- MCMartin Casado
I als- I also remember, by the way, when we had the lunch after we did the investment, and, uh, you know, I was talking about something a- about, like, like, internet days that were similar, and he was like, "I was five." [group laughing] And we're like, "Oh."
- MBMatt Bornstein
But, but, like, I mean, what's amazing about it, not just Michael, but all of the founders, is, like, even though they were pretty young when a lot of these things happened, like, they actually were kind of students of, of all this history, which, which is a trait that we see. Al Triumphel talks about this a lot. We see this across all of our top founders, that they're, like, able to study and really learn from what's kind of happened before.
- MCMartin Casado
Um, I'm gonna turn the question back on you. Um, I, I think Matt would agree. For, for us, the decision to invest in Cursor at the A was actually pretty obvious. Um, the, the, the team was phenomenal. It was incredibly focused. All of us were users. Um, like we're, you know, like half the team actually used Cursor. Uh, I remember Andrej Karpathy was using it. It was clearly-
- SWSarah Wang
Okay
- MCMartin Casado
... a phenomenon. It was clearly, like, a known brand. The growth was asymptotic. So from an early-stage investor, it was 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 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, like, got past the typical growth evaluation and, and got conviction.
- 9:57 – 17:03
Vertical Liftoff: Why the B Round Was a No-Brainer
- SWSarah Wang
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 had done, we did the B. And so it was clearly just vertical liftoff. And there were a couple things that summer, right? You, you guys talked about Andrej Karpathy tweeting about them, but they went on Lex, um, incredibly thoughtful, uh, discussion of how they thought about their vision for, like, coding going forward. Um, and so I think it comes back to, Martin, something you said, which is they were just reimagining everything, right? And you, you know, you just talked about this as well, Matt. Um-
- MBMatt Bornstein
But you can't, you can't write growth memos that way, like-
- SWSarah Wang
[laughs] Yeah.
- MCMartin Casado
Never mind you. So, you know, you got the bug, you know, 'cause you were calling us and we were so excited.
- MBMatt Bornstein
Cursor pitch.
- SWSarah Wang
Yeah, like-
- MCMartin Casado
How did you convince David George?
- MBMatt Bornstein
Yeah. [laughs]
- MCMartin Casado
Like, don't you guys have to show, like-
- MBMatt Bornstein
Right
- MCMartin Casado
... you know?
- SWSarah Wang
Yeah. You know, it's so funny 'cause, a- and th- I think you had to think out of the box for this one. I mean, of course the, the momentum was vertical, but there were so many things that they defied conventional thinking, where I remember I, the first time, you know, Martin, you l- you introduced me to Michael. We got a coffee that day, you know, as Michael... You know, they move quickly. Uh, so I pulled some stuff together for them, right? 'Cause we're, um, 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 p- pieces of conventional wisdom that they just completely broke. Like, we would say, "Hey, we'll help you find a sales leader," because, you know, 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, you know, eventually start to slow growth. Um, I'm very glad that we did that. Um, and then the second piece is we should talk about the competitive landscape, right? 'Cause you mentioned Copilot.
- MCMartin Casado
Well, I was, I was actually gonna say, and actually I, I, I think Matt deserves a ton of credit here, which is what we talk about now in retrospect how is it pretty ... easy decision on the Series A. But, you know, you know, Matt, Matt, Matt led the early deal, and he saw something, uh, 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 OpenAI weights, [chuckles] and they owned VS Code. So everything, you know, everything would say that there's just no way that you could survive relative to this, this, this one single competitor, and we'll talk about the other ones, um, later. And I, and I think that also was the thing you said about Michael was what I witnessed. It'd be great to hear Matt, which, um, and 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-
- MBMatt Bornstein
Hmm
- MCMartin Casado
... that are students of what they do, they're very consistent in their answers. Um, and you know, and this, this is not... Listen, when we-- I, I think when we did the deal, it was pretty obvious, but it wasn't so obvious six months before. Uh, you know, and Matt and the team had that deep conviction way back then, and I think for every one of these raises, there are, there are, there are mirrors of that. Anyways, is this, is this getting-
- MBMatt Bornstein
Yeah, no, t-totally. And look, I mean, people think venture capital is like an in-individual sport, like it's not at all, at all. I mean, our whole team was working, working on this at the time. Um, you know, I think it was over a year. We literally had a Cursor team [chuckles] on our team.
- MCMartin Casado
We did.
- MBMatt Bornstein
Like it was on our team.
- MCMartin Casado
Marco, Marco was great. Rachel was great.
- MBMatt Bornstein
Yeah, yeah. Yeah, yeah, yeah.
- MCMartin Casado
You know, you, you led the team. I mean, it was great.
- MBMatt Bornstein
So, but, but yeah, no, you're exactly right. I mean, I, I mean, these guys are crazy smart, right? They're like off the charts, sort of just, just raw intelligence.
- MCMartin Casado
Yeah.
- MBMatt Bornstein
Um, they're able to do this thing we talk about a lot, like context switch between tech and markets, um, really, really seamlessly. And, and, and, um, they like in-ingest data, right? Whether it's historical data or like things happening in the market, and act very, very quickly, which you, which you said before, Sarah.
- MCMartin Casado
But, but spec- but, but spec- I agree with that, but specifically, it was just kind of crazy to think you're gonna fork-
- MBMatt Bornstein
Yeah. Yeah, yeah, yeah
- MCMartin Casado
... something from Microsoft, who owns the thing, [chuckles] and then you're going to, you know, compete with them with smaller models, even they own the OpenAI weights, and they have enterprise sales force, and they had-
- MBMatt Bornstein
The greatest, yeah, enterprise distribution [laughs]
- MCMartin Casado
... yeah, ever.
- MBMatt Bornstein
You know, it's so interesting, right? It, it's, it's like-
- 17:03 – 23:38
The Hardest Round: Claude Code, Competition & the D
- MCMartin Casado
the C.
- MBMatt Bornstein
You know, at, at the B you could argue, God, just bet on vertical momentum.
- MCMartin Casado
That was, that was, that was actually, it was obvious. The C-
- MBMatt Bornstein
Uh, who grows from 4 to 50 in like four months or whatever.
- MCMartin Casado
Yeah.
- MBMatt Bornstein
But the, the, um... Or actually no, it was the, it was the D. So Claude Code, not to take us on a time travel trip again, but Claude Code came out May 2025-
- MCMartin Casado
Yeah
- MBMatt Bornstein
... um, with a splash. You know, it wasn't, the pickup wasn't right away, but obviously formidable. Um, and I remember there was a round, um, I think a couple months after, three months after that, and I asked Michael, I was like, "What do you think about Claude Code?" And he said something to the extent, actually d- 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. Copilot, Microsoft Copilot was the first one. Claude Code is one of a rotating set of characters."
- MCMartin Casado
Yeah.
- MBMatt Bornstein
And you know, w-we think in big markets, you're always gonna have formidable competitors. That does not scare us.
- MCMartin Casado
Yeah.
- MBMatt Bornstein
Um, and you know, I just remember being, yeah-
- MCMartin Casado
Yeah
- MBMatt Bornstein
... somewhat blown away by the clarity of that comment, um, the lack of fear, right? There's, there's humility as well, like it's humility mixed with bravado, and I just think that is kind of the winning
- SWSarah Wang
combo when you're going after these juggernauts like that.
- MBMatt Bornstein
And I know it sounds vague, but like things like this, it just, it's, it's almost a Bezos sh- Bezos-ish thing, where it's like if you're smart and right, like it actually, like gives you, I think, the confidence and the focus to, to like have that kind of-
- SWSarah Wang
Yeah
- MBMatt Bornstein
... attitude when you, when you have this like mega competitor sort of coming after you.
- SWSarah Wang
Yeah.
- MCMartin Casado
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 4.5 came out? Like we're all on vacation, and I think everybody in the world collectively was like, "Oh fuck."
- SWSarah Wang
[laughs]
- MCMartin Casado
And we were all like-
- SWSarah Wang
That's true. [laughs]
- MCMartin Casado
You know, these things are moving much, much faster, um, uh, than any of us thought. And then I think the same thing when the pre-release of Mythos came out and, uh, 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, the level of credit for, um, is to the extent they cannibalize themselves-
- SWSarah Wang
Mm.
- MCMartin Casado
... so dramatically-
- SWSarah Wang
Yeah
- MCMartin Casado
... in like a Reed Hastings type way in a matter of two years, right? So they were first an IDE, and then they b- you know, moved to an agent platform, then they moved to a model platform. And it's very, very tough for, you know, founding teams to actually-
- SWSarah Wang
Yeah
- MCMartin Casado
... have the discipline to do that.
- 23:38 – 27:24
How You Do Anything Is How You Do Everything: The Hiring Engine
- MCMartin Casado
it was-
- SWSarah Wang
Yeah. I mean, it's, um, it's so neat to see... You know that expression, how you do anything is how you do everything? You, you really see it. So much of what you guys are talking about and how they thought about product, et cetera, um, was reflected in how they did hiring, and go to market hiring in particular. And w- we got to shout out Jordan and Roman and their, their team there, who in the early days built that From s- that, that engine from scratch. They're just the most incredible, you know, some of the most incredible people I've ever worked with. Um, but or we've all ever worked with. And, um-
- MCMartin Casado
Well, they al- they also spend 40% of their time recruiting.
- SWSarah Wang
Yeah. [laughs] Yeah, exactly.
- MCMartin Casado
Which is ama- which is amazing.
- SWSarah Wang
Well-
- MCMartin Casado
For, for, for technical product founders to spend 40% of their j- time recruit. I've never actually seen it before.
- SWSarah Wang
Absolutely.
- MCMartin Casado
And it is so effective. And, like, a company really is the team that you build.
- MBMatt Bornstein
Yeah.
- MCMartin Casado
And they took this to heart. Like, everybody talks about it. Everybody talks about, like, doing A-class founders, whatever, but it's entirely different where it's like how often was Oscar, you know, "Hey, I'm on a red-eye to Europe to close."
- MBMatt Bornstein
[laughs]
- MCMartin Casado
I'm like literally, like, IC engineer.
- SWSarah Wang
Every week. [laughs] Yeah.
- MCMartin Casado
It's like it was constant.
- SWSarah Wang
Totally. And, you know, there was that great piece that Bree wrote about their hiring practices that everyone should read. Um, a lot of that focus is on their eng 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. Where, you know, 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 wanna do it the old way." We're like, "That, that's not gonna... We're building a company in a new way, right? So we want very specific AEs that, um, fit this profile. We're gonna go get them. We're not just gonna wait for people to walk in the door." All of those things that have been written a bit on the eng 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 in-
- MCMartin Casado
Yeah
- SWSarah Wang
... I think faster than anyone we've ever seen.
- MBMatt Bornstein
Can you talk about specifically how they applied the lessons in eng hiring to, to, like, AE hiring? 'Cause this is something I think our founders deal with a lot. Like, like, you know, I, you know, have dealt with this a lot personally. Like, like, like, how, how do you actually make that jump, and, like, what, what lessons really do carry over?
- SWSarah Wang
Yeah, I think-
- MBMatt Bornstein
Or, or that you observed in Cursor.
- SWSarah Wang
No, yeah. And, and, you know, hopefully, uh, uh, 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, this i- 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 within those companies, and then here are the one, uh, 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's boss, and their boss's 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? 'Cause 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 fi- 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, um, 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 t- early team got that right, they just were able to scale it quickly without losing the Cursor culture.
- MBMatt Bornstein
Yeah.
- 27:24 – 34:02
Cursor Culture: Craftsmanship, Taste & Twinkle Lights
- SWSarah Wang
Which, you know, a lot's been written about the Cursor culture. I'm curious, you know, maybe you guys can share your own, um, impression of it.
- MBMatt Bornstein
You know, I me- I mentioned earlier that, like, you know, kind of coding was all that they did. It wa- uh, my impression at the time, and, and, like, we, you know, the, the, the founders could, 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 'cause they're obsessed with work. They literally just, like, love writing code and love systems. And, and, like, I think the three of us sort of, you know, can feel that way at times here. Like, that, that's, like, a very, very understandable thing, and that seemed to be the driving cultural, you know, kind of impetus at, at, at the time. It was a very small team. Everybody had that, had that attitude, and, like, were orienting towards the future of, like, what is this actually going to be? And that kind of, like, you know, from an eng standpoint or product standpoint, like, very narrowly focused on what they were trying to accomplish and, like, how, how to run the team.
- MCMartin Casado
But there's this huge paradox, 'cause I totally agree. I 100% agree. However, if you actually detail their actions later on, that's not the conclusion you'd get to. Like, what do they spend their time on?
- MBMatt Bornstein
Yeah.
- MCMartin Casado
It was like-
- SWSarah Wang
Mm
- MCMartin Casado
... recruiting, go to market, understanding business models, biz dev. And so in a way, and again, I, like, just totally agree.
- MBMatt Bornstein
Yeah, yeah.
- MCMartin Casado
And again, on, on one hand you have a very product-focused team that comes from the tech that literally wanted to build products that they, that they wanted to use. Now listen, I, 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, uh, competitive market we probably ever see. Has there been a more, uh, competitive market than coding then? I mean, it's just, it's hard to imagine.
- SWSarah Wang
I don't know.
- MCMartin Casado
There's so many companies.
- SWSarah Wang
It's like the database wars.
- MBMatt Bornstein
Yeah. I mean, you, 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?
- MCMartin Casado
I do, yeah. I think-
- MBMatt Bornstein
For, for, like, I mean, coding's kind of the meta ca- category, right?
- SWSarah Wang
Yeah.
- MBMatt Bornstein
Like, like, it's like all expression of, like, human thought in, like, economic form is kind of like coding.
- MCMartin Casado
I mean, imagine, like, starting competing with Microsoft, ending, 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, ex- 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. [laughs]
- SWSarah Wang
[laughs]
- MBMatt Bornstein
[laughs]
- MCMartin Casado
Like, I, I think this-
- MBMatt Bornstein
That is so crazy, right? Just two years
- MCMartin Casado
... the magnum opus-
- MBMatt Bornstein
That is so crazy
- MCMartin Casado
... of, like, you know, startups or-
- SWSarah Wang
Absolutely
- MCMartin Casado
... just like-
- SWSarah Wang
No, I-- totally.
- MBMatt Bornstein
There's definitely something to what you're saying, right? Like, in the beginning, these guys were incredibly focused on the product and literally enriching their own lives. Like, literally they would be coding for fun.
- MCMartin Casado
Yeah.
- 34:02 – 38:19
The SpaceX Parallel: Elon-ish Ambition & Impossible Competitors
- SWSarah Wang
Yeah. C- couldn't agree more. I mean, there, there's a funny analogy with our experience with, 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 gonna launch global communications. We're gonna power the internet for everyone in the world." They had noth- you know, nothing at the time, no Starlink satellites in the sky. And of course they, they did it, right? And if you think about the Cursor team, um, telling us, and, you know, they actually beat every forecast they ever gave us, but it-
- MCMartin Casado
Oh, by a lot. I mean-
- SWSarah Wang
There's just so many Elon-ish characteristics of moving fast, going after large markets, winning them in the feet of [chuckles] impossible competitors, you know, Comcast, right, right in, in the Starlink case, um, that there's so many parallels. Totally different venues obviously, but, um, fascinating to see that.
- MCMartin Casado
There's another thing I would say also, um, which I think between kinda Elon and, and, and Cursor, like SpaceX and Cursor, is like in both cases, the consensus was decrying the death of both companies so many times.
- SWSarah Wang
Mm.
- MCMartin Casado
[chuckles] You know?
- SWSarah Wang
Yep.
- MCMartin Casado
So I think there's also like-
- SWSarah Wang
Absolutely
- MCMartin Casado
... this kind of like, you know, uh, you know, cultural perseverance to the naysayers, which I, I actually really respect on both sides.
- SWSarah Wang
Actually, I do have one other real question I wanted to ask you guys. Cursor is also really good at doing M&A, like, like doing small startup acquisitions.
- MCMartin Casado
How does... You know, it's funny, I was actually gonna mention it. Yeah, yeah. Go for it.
- SWSarah Wang
Yeah. I would love to know a little bit more, like from your perspectives, like why, why they were and what the philosophy was and all that.
- MCMartin Casado
Um, so I will say, listen, so, uh, there is such a war for talent, um, right now that the companies that have figured out how to do, uh, 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, of that nature, which is like really good team, you know, they'll just go ahead and do the acquisition. And what 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. Um, it wasn't until later, uh, like the Graphite acquisition, where they started thinking about acquisitions in terms of strategic direction. Um, and of course that was a much larger acquisition. Um, and you know, listen, I, I think, um, the company was so fast, like- Who, who, who knows to the extent that they would've figured out how to integrate all of these things and execute on them i- in the limit, um, just because like, you know, like now they're part of a, a very large acquisition. But I will say that they approach 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-
- MBMatt Bornstein
Yeah, yeah
- MCMartin Casado
... you know, and, and everything else.
- SWSarah Wang
Yeah. Yeah, I was gonna say, I feel like there's this t- badge of honor now when a CEO of a company says, "I have X founders in my company."
- MBMatt Bornstein
Yeah.
- SWSarah Wang
Um, and I think it should be a badge of honor, right? I don't know how many... what that stat is for Cursor. Do you guys know? Um, but-
- MBMatt Bornstein
Yeah
- SWSarah Wang
... I remember, and they have so many great founders there, but, uh, I remember when they brought on Tito from Quala-
- MBMatt Bornstein
Yeah
- SWSarah Wang
... and then Adam Ward on the talent side-
- MBMatt Bornstein
Yeah
- SWSarah Wang
... actually, and just seeing firsthand the leverage that they got from bringing in someone who was a 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 playbook, you know, I don't know, I'm sure they're not the ones who started it per se in this new gen AI era, but they certainly are, I think, one of the best examples of how to integrate founders really, really well into your company.
- MBMatt Bornstein
It, it, it's funny, right? 'Cause Anthropic kind of gets that tag a lot now. It's like, oh, like exec at company A just went to take an IC role-
- SWSarah Wang
Right
- MBMatt Bornstein
... at, at Anthropic. But like Cursor 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, I-
- SWSarah Wang
Absolutely
- MBMatt Bornstein
... you know, I thought it's very, it's very, um, unconventional, but, but like really impressive.
Episode duration: 38:34
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