For comparison, JetBrains generates over $400 million in annual revenue and is valued around $7 billion. They've built proprietary technology and deep expertise in that market over decades.
If AI (terminology aside) replaces many professional software engineers and programmers like some of its fierce advocates say it would, wouldn't their potential customer base shrink?
Professionals typically drive enterprise revenue, while hobbyists—who might become the primary users—generally don't support the same business model or spending levels.
What am I missing here?
hiring is hard
it's a high-functioning team swimming in contemporary design and eng practices
code is emerging as an important battleground
OpenAI has the $$$
OpenAI just had a fundraising round that put them at $300B. Maybe they're just giving Windsurf 1% of OpenAI. Maybe they're even giving less than 1% - if OpenAI was worth $300B at the end of March and $150B last October, maybe they're worth $400B now. Maybe Windsurf is getting 0.75% of OpenAI that's "valued" at $3B.
Looking for a moat in the technology is always a bit of a trap - it’s in the traction, the brand awareness, the user data etc.
Traction, brand awareness, and user data do not favor Windsurf over GitHub Copilot. The few of us who follow all the new developments are aware that Windsurf has been roughly leading the pack in terms of capabilities, but do not underestimate the power of being bundled into both VS Code and GitHub by default. Everyone else is an upstart by comparison and needs some form of edge to make up for it, and without a moat it will be very hard for them to maintain their edge long enough to beat GitHub's dominance.
Whether or not it's justified is a different matter, but for startups valuations are more about potential then current performance.
One is going to be valued at a much higher multiple than the other.
The contrary view is like saying gold miners are finding more gold, and it’s easier than ever, so we expect folks are going to leave town.
Same with Google vs OpenAI. I tend to agree with the sentiment that I most frequently hear which is that OpenAI is the currently popular brand, but that can only carry them so far against what will eventually be a better offering for cheaper.
Startups love flashing ARR figures because "$300M ARR" sounds impressive, but without knowing churn rates, they might never actually collect that full amount.
JetBrains however collected real $400M in a year.
They made $25M from subscriptions one month, took that number, multiplied it by 12, arrived at $300M and everyone has been running with that line without ever asking what their churn looks like.
They could have churned $24M the next month, ask yourself why they are silent on churn if they are doing so well.
If jetbrains can combine there IDE technology with cursor technology, that would be ideal.
I think the problem is jetbrains tech is sort of already very biased in a certain direction and it's hard for them to pivot as fast into this new AI direction.
However they fail to make a Cursor competitor so far. This alone suggests it's a harder task than meets the eye.
No, venture capitalists aren't ignorant, but their goal also might not be to build and run a healthy company long term. It might be to turn a quick profit by selling a startup to another company.
They built all of this assuming VSCode was a solid foundation for the next 30 years and I've completely undermined VSCode's technical foundations. Their castle is gonna sink into the swamp...
Someone like me isn't known at all but it means I have been able to experiment for a long time without pressure, which is how you do real innovation.
JetBrains as a company probably owns 10 million lines of code and it's just really hard to move fast when you're tugging that kind of ball and chain
If you need to write a lot of code I guess, but that's really rare, like saying "I need to write a lot of laws. I need to write 50 new laws by Tuesday with at least 15000 words of new regulation to one-up my rival legislator who wrote 40 new laws last week"
After all most of those investors are deeply invested in AI technology already. At the valuation, they need to be able to show that it replaces human workers because that's the specific kind of greed that is driving the value of the stock.
And if you see your competition tighten their belt then you should tighten yours right? So without proof companies are acting like they can use a small number of human-ai hybrid workers. There's strong peer pressure to think that way as a direct result of AI
That is the most hilarious maths I have ever seen, if this is true then it's maybe the biggest "holy fuck it's a bubble all the way down" I have ever seen
Just give them some time, they're not stupid. I'd drop Cursor in an instant once JetBrains catches up, because IntelliJ IDEs are just a way more powerful.
I prefer Claude Code still because it has access to more tools - Junie seems unable to fetch URLs and do other things. But that's a tiny gap that JetBrains can close quickly, and the Junie UI is quite pretty. Plus, inside the IDE they can equip the model with far more advanced tools than Claude Code will have from the CLI: inside Code Claude has to explore the codebase by banging stones together with ripgrep, whereas in the IDE it can be equipped with tools to access the indexes and navigate around like a human would.
In theory, JetBrains should be able to compete very strongly in this market. Their single line completion model is already excellent.
Realistically: I don’t know how many users windsurf actually has and I never actually met anyone that uses them. Whereas Cursor AI took a huge percentage of the VS code users I know in real life.
That's three good reasons to believe that lots of people will be cancelling in the next months unless something changes.
That AI is in a bubble akin to the crypto craze from a few years ago, and the valuation of these companies is divorced from their underlying business fundamentals
This is such a good point. The best reply available to the AI hype-men would probably be that LLMs "democratize" coding and therefore that even more people will use IDEs in the future, but that sounds like BS to me -- not unlike AI/hype itself.
It's a nice improvement over the last edition, but still quite not "smart" as Cursor or Windsurf. The agent seems too shortsighted compared to competitors: it may stop looking for files or making edits sooner and you're left with code made with incomplete context (that does not work or just doesn't address your needs). It also does not fix linter/compiler errors from its own output code before finishing, unlike Cursor.
So hypothetically 1 man can cut wood but it takes him 2 days to do a big job. With a power saw it takes him half a day so his output on this section of the job is amplified by 4x. Any tool that makes his life more trivial increases his output and therefore increases the supply of the product without touching demand. With an over supply the system will naturally lower in supply by replacing carpenters.
This happens for anything and any tool that makes someone’s occupation easier. You have to think in aggregate. It may be the increase is imperceptible as it only increases the efficiency of a worker by 1 percent which is nothing but in aggregate that translates to a 1 percent reduction in the work force. Of course reality is more complicated than that but I hope the example shows you what I’m saying.
And it gets even more complicated than this too because increasing supply can also increase demand because the product becomes cheaper. Or demand may have already been astronomically high so the increase in supply only meets the demand.
In general if the product is in equilibrium of supply and demand and you increase the efficiency of the worker producing the supply then you will reduce worker population because the job doesn’t pay well enough anymore and people leave or less people join. The system slowly comes back to equilibrium or it can oscillate back and forth between over supply and undersupply as it’s basically a control system. This is what’s been happening with software for the past 3 decades.
The idea that the power saw didn’t replace a carpenter is flat out wrong. The story is much more complicated than that but the reality is that in general it did replace some carpenters just like how vibe coding for sure is replacing some software engineers.
It was just a few years ago when automakers and rental car companies unanimously decided (has they had been told to decide) that COVID-19 would reduce demand for cars. They cut production, sold off fleets, and almost immediately found themselves unable to keep up with demand.
Making cabinets, etc.. sure. But woodworking has drastically changed, and maybe programming is changing that way, too.
OpenAI would have gotten more value by setting that 3 billion on fire, at least it would have powered the data center for a little while.
After all, in net, increased production has allowed us to have more. We aren't making do with the same amount of stuff and spending less. We're spending more, and receiving much more. That money is going to other people's pockets.
Achieving $300M ARR in 1 year is extremely extremely impressive regardless of churn or any other metrics really (assuming reasonable numbers). Being valued at $9B because of it doesn't seem out of line.
I'm skeptical of Cursor and not using Cursor myself. I actually use IntelliJ because I write Java.
Cursor's valuation is not unreasonable. But somehow you phrase it like $9B valuation for the fastest growing company that achieves the highest revenue per employee in the history of modern civilization is out of whack somehow.