20VC: Windsurf Founder on Will Model Companies Own the App Layer | Why Moats Do Not Exist in a World of AI | Why the Notion of Single Person $BN Companies is BS | Lovable vs Bolt & Cursor vs Windsurf: How Does it All End with Varun Mohan

Varun Mohan is the CEO and Co-Founder of Windsurf, the leading AI-native IDE, which has over a million users and generates over 50% of all committed software across thousands of companies. Prior to Windsurf, Varun graduated with a Master’s in Computer Science from MIT and led a team at Nuro focused on large-scale deep learning infrastructure for autonomous vehicles. Today's Agenda: [00:00] The $3B Startup That Only Happend on the Third Pivot [05:12] When to Give Up vs When To Stick at It [08:55] “Never Fall in Love With Your Idea” — Here’s Why [10:38] What Founders Get Wrong About Being First [13:52] What Would Windsurf Do If They Had Unlimited Resources [16:45] Will Lovable and Bolt Ultimately Compete with Windsurf and Cursor [19:25] The Product Development Rule That Breaks All Startup Rules [21:20] The Cold Truth About Moats in the AI Era [24:30] The OpenAI Question You’re Not Supposed to Ask [32:50] Who Actually Counts as an Engineer in 5 Years? [35:10] Will Product Managers Even Exist in 2030? [37:30] Async Agents Are Coming—But Most Will Fail.. Why? [41:00] The Truth About Agent-Only Workflows [44:20] The One Area of Engineering That AI Will Eat Next [46:12] What Cursor Got Right (That Windsurf Didn’t) [47:55] Are LLM APIs Already Commoditized? [50:30] Why Anthropic Won’t Win by Default [52:10] Should Model Companies Own the App Layer? [58:05] What Does Varun Want to be Remembered For?

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  One of the weird things about startups is that you don't win an award for doing the same wrong thing for longer. Down the line, when you fail, none of them will care. Companies that are usually first to a new paradigm are companies that are willing to disrupt themselves. When you have a new great idea, even the crappy version of that idea is already amazing. Startups don't fail because they look like messes inside. Startups fail because they don't do the right thing well enough. It is much easier to run a company that has only one thing that matters than it is to run a company with the same amount of revenue with five things that matters.

• 0:31Harry Stebbings?

  This is 20 VC with me, Harry Stebbings, and I'm so excited to welcome one of the hottest, most talked about startups from the valley today, Windsurf and their CEO Varun. Now, this story is insane. Windsurf is the third pivot of the company, and in just a year, they've become the leading AI-native IDE, which has over a million users and generates over 50% of all committed software across thousands of companies. As a result of this insane trajectory and growth, reports have emerged for a $3 billion acquisition by OpenAI. This was an incredible conversation with Varun today. But before we dive into the show today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data, and the projects

• 1:14Harry Stebbings?

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• 1:57Harry Stebbings?

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• 2:10Harry Stebbings?

  Months off the team plan for startups for free. That's coda c o d a dot I O slash two zero V C. And get six months off the team plan for free. Coda dot I O slash two zero V C. And while Coda keeps the engine running smoothly, Shopify puts the pedal to the metal when it's time to sell. When I was eighteen, I dreamed about being an investor with zero contacts in the industry. And through persistence, I'm now living that dream. Maybe you're dreaming of your own business and that's where Shopify steps in. I spend my time exploring successful businesses online. Often, there's a business behind the business driving success. For millions, that's Shopify, powering ten percent of U S commerce.

• 2:53Harry Stebbings?

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• 3:37Harry Stebbings?

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• 4:23Harry Stebbings?

  You have now arrived at your destination. Varun, I'm so excited for this dude. I've heard so many good things, by the way, from Lee Marie, from Neil Mator, from many others. So thank you so much for joining me, man.

• 4:35Speaker 00

  Yeah, thanks a lot, Harry, for having me.

• 4:36Harry Stebbings?

  Not at all, dude, but I wanted to kind of pick apart. I've literally just been running and I've been listening to some of your shows before. And there are a couple of segments where I was like, damn, I wish we'd double clicked on that. And there was one that I thought I wanted to start with. You said, it's very rare that the first thing you believe will be the right thing. How have you changed your mind on what a truly great idea is versus what's not?

• 4:59Speaker 00

  I think there's a lot that's right about the Peter Kielism of you want to pick something that seems a little bit not obvious to start with for whatever company you're starting. The problem is most ideas that are not obvious are just bad ideas. Like most ideas that are non-conventional, just because you are non-conventional doesn't mean you're going to pick a good idea. And I think people sometimes forget that. At a high level, though, if you pick an idea that is like obvious to everyone, there's probably no alpha, right? A big company is going to go out and already beat you to the market, right? Because they have more distribution, resources and capital than you. Startups usually win by picking non-conventional ideas to the public. But you kind of need to go in and be humble enough to understand that probably there's a good chance that your weird idea is not actually a good idea.

• 5:43Harry Stebbings?

  What do you believe was your non-conventional insight when you made the pivot to windsurf?

• 5:47Speaker 00

  The first idea that we had, even like our company name has changed twice now at this point. It was called ExaFunction when we first built GPU virtualization technology was that GPU workloads were going to power the world, right? That was like sort of the mission there. A lot of us at the company had previously worked in autonomous vehicles and AR VR at the company. We had a fairly small team. That was actually accurate that GPUs were going to become very popular. Like we were, we basically said Nvidia is going to sell a lot of GPUs. The thing we were wrong about was how diverse the GPU workloads were going to be. We thought a bunch of different model architectures would be run. There were going to be hundreds of different model architectures and we were wrong. All of them ended up being transformers. And in a world in which all the architectures look the same,

• 6:30Speaker 00

  there's very little reason for us to be a differentiated infrastructure provider in that category. So we needed to pivot at that point. But that's some, one of those things where you don't know going into the market that that's how the world is going to turn out. And we were just wrong about our hypothesis. So that's why, like, sometimes you have a take that is not very obvious at the time and then you could be wrong.

• 6:49Harry Stebbings?

  Totally. The trouble is, many people are in love with their thesis. That's why I hate thesis-driven investors bluntly. But many people are in love with their ideas. And they're told that actually, the true grit and persistence of an entrepreneur is what separates those that win versus those that don't. How do you think about that versus a brilliant statement, which I agree with? You said, "Never be too in love with your ideas."

• 7:09Speaker 00

  This is the partis part about starting a company or building a company in the first place, right? It requires these two almost counter beliefs in your head. Irrational optimism, because if you don't have any optimism at all, you won't do anything and you won't get out of bed. And uncompromising realism. Every single day, you need to be asking your question, "Do we have a reason to exist?" And if the answer is "not really", you need to change your mind really fast and reorient the entire company really fast. One of the weird things about startups is that you don't win an award for doing the same wrong thing for longer. Like, it might feel better to tell your coworkers, tell your investors, tell your friends that, "Hey, I'm still doing the thing I did." But down the line, when you fail, none of them will care.

• 7:50Harry Stebbings?

  What idea do you think that you are too in love with today? So I'll give you an example. For me, as an investor, discipline around portfolio construction. I love the belief of a disciplined investor, the craft of portfolio building. The challenge is, in today's world, you have to break most rules. And it doesn't mean that you're a cowboy and you're gambling, but it means you're much more elastic than the more concrete investor mind. That's what I'm too in love with. What do you think you're too in love with?

• 8:17Speaker 00

  I think if I was to go empirically, we were too in love with our ideas every time. Like, other people outside looking in might have been like, "This company has pivoted multiple times, and that's a positive outcome." But I wished we had done it faster. I still beat myself over the head on, "Why did we not pivot from the GPU virtualization to the Code AI company three months earlier?" I think we had the signals, but we waited until the companies we were working with were starting to go belly up before we actually pivoted the company. A lot of our customers at the time were autonomous vehicle companies, and it was peak Zerp era. And in the middle of 2022, when a lot of them were unable to raise their next funding round, that's when we started to question, "Hey, like, the market is changing, the technology is also changing, but also, our future customers are not looking like

• 9:01Speaker 00

  they're going to be able to kind of satisfy our market." I wish we had done that faster. And the same is also true for ideas like Windsurf. I think we knew agents were going to be very powerful, and we could have built Windsurf a couple of months earlier. We should have done that if we could have.

• 9:15Harry Stebbings?

  Can I ask you a question? I just had the CEO of Fiverr on the show and he said that time to clone is one of the most important things that have changed over the last few years. Time to clone being the amount of time it takes for someone to copy exactly what you have. How important is it to be first if time to clone is shorter than ever before?

• 9:34Speaker 00

  Being first does two things. I think it's a signal of how you're running the company. That's one. And the second thing is it allows you to learn faster. I'll maybe double click on the first one. Companies that are usually first to a new paradigm are companies that are willing to disrupt themselves. They're organizations that are open to the idea of changing at a dime very, very quickly. And they're always investing in technologies that are not incremental and, and willing to sort of break themselves. And I think that's a good organization in a category like software or code AI where the space is changing so, so quickly. And then two, I think it kind of boils down to what does it mean if you're first? That means you get to learn from the market faster and that means you're first to the next idea too. Because you see where all the dead bodies are in your category.

• 10:18Speaker 00

  One of the nice things that I like to think is if we have a product and market earlier, what are all the things we can learn in the first month that enable us to build the next product in the market as well? That could give us a compounding advantage with time.

• 10:30Harry Stebbings?

  Is it not more helpful seeing someone else go first? See what they do as a mistake and then learn from their mistakes and leverage the costs that they have and then do it without that cost for you.

• 10:40Speaker 00

  I think the problem in software in general is they could have made a lot of mistakes internally during research and development that we, we could never kind of take a look at. And organizationally now, I believe our company has so much wisdom in our category that there are ideas that we would not even touch because we are just like, hey, we've tried this before and it didn't actually work. And that's something that's like built into the DNA of the company as we continue to innovate.

• 11:03Harry Stebbings?

  What have you tried before that didn't work that the world doesn't know about?

• 11:07Speaker 00

  We shipped a beta version of this product, but we were dog fooding it for such a long time. I'll give you maybe a couple of examples here. The first thing is we actually shipped a beta product for code review last year. And we actually tried out different ways of shipping a code review product. We had a Chrome extension. We did something internally where we built a parallel. Website and we were able to try a bunch of things internally and none of them felt quite right. And now, a couple of weeks ago, we actually shipped a code review product and it feels much better and is providing a lot more value. And we shipped it in the way we shipped it because of all the failed attempts that we made last year. I'll give you a second example here for the Coda Agent product that we launched with Windsurf. We actually had a first cut of that product in the beginning of last year and it was not good.

• 11:49Speaker 00

  It was not good for a variety of reasons and that enabled us to go back to the drawing board and fix up the different elements that would allow us to ship Windsurf. Which was that we needed to get really better at codebase understanding as well as the models needed to get better. But then, once the, once the models had already gone better, our internal R and D on codebase understanding had gone good enough that we were ready to go and ship the product. This is one of those things where if we had just waited for the rest of the world to have it, we would need to have played catch up on multiple axes just to ship the product.

• 12:17Harry Stebbings?

  Do you advise founders to raise as much as possible early? Because it is about the number of at bats that you have, the experiments that you can take. And if you raise more, you have more experiments fundamentally. Do you advise that, given the experience that you have?

• 12:29Speaker 00

  Just to shed some light here, we actually raised our Series A on the GPU virtualization idea. Green Oaks actually led that round.

• 12:36Harry Stebbings?

  You led your seed as well, no?

• 12:38Speaker 00

  They did a three on twenty. Yeah, they led our seed too, which whether or not they should have invested in the Series A on that one, leave that to the audience. I think what that did give us is the confidence that, hey, like if we pivot, we will still have the cash to go out and pursue an idea. And we actually launched Codium, the extension product before this entirely free. And we were able to do that because of the infrastructure expertise inside the company. But also, we were confidently able to do that because we knew we had cash in the bank to go out and like actually ship this product and not have to worry about any details there. Right? So I actually agree with you. It does give you more shots at bat, but I think you need to be a company that is able to pivot very quickly. Most companies, I would say, when they have ten, fifteen, twenty people, they're unwilling to change their idea entirely.

• 13:21Speaker 00

  We, on the other hand, decided we wanted to work on Codium over a weekend, me and my co-founder, and we told the company on Monday. And everyone started working on it that Monday, despite the fact that we were making a couple of million in revenue off the previous business.

• 13:32Harry Stebbings?

  Is there anything that you can structurally do to increase the response time of an organization to move faster post pivot?

• 13:39Speaker 00

  Yeah, I think the answer is for a startup. One of my true beliefs is that companies don't succeed because they do many things well. They succeed because they do maybe one thing really well. Like, it's kind of like what I said. I think having one good idea already is like a miracle for most startups. And when you think about it from that perspective, when you think about a company, think about two companies. Any product has some sort of exponential curve at which it's able to grow, right? There's some R-value attached to a product. The right thing for a startup to do is always focus on the product with a higher R-value. It never makes sense to be diverting your resources to work on two different products that have different exponential growth curves if they're completely disjointed. So when you do a pivot, I think the right answer is you should just give up what you're doing in the past, because the thing you were doing in the past probably will have

• 14:23Speaker 00

  no sort of relevance to your business going forward. The revenue multiple on that business is not going to look at all like the revenue multiple of the other business. And I think if you can go cold turkey and actually go and make your organization completely work on the new thing, you're more likely to succeed. But that's scary, right? You need to tell people, tell your investors, tell your customers, you're no longer going to support that. But I think once you make the tough decision, it's really easy.

• 14:45Harry Stebbings?

  You said that success is about doing one thing really well, and it's hard enough to have one thing. You have that, but what thing would you most like to do that you're not doing because you retain that element of focused mindset?

• 14:58Speaker 00

  In our category, maybe if I was to just say this, in our category, a lot of our users of Windsurf are actually people that are non-developers. They're people that are vibe-coding apps, and they're actually using it for productive use cases. Like internally at our company, we have someone who's a non-developer who leads partnerships that has used our product and built apps to replace a lot of sales tool spend, like over $500,000 of sales tool spend internally.

• 15:21Harry Stebbings?

  They've coded 500,000?

• 15:22Speaker 00

  Yeah, they built apps inside the company for like a partner portal and quoting tool and so on and so forth. That, these are sales tools that in the past cost hundreds of thousands of dollars a year.

• 15:33Harry Stebbings?

  They deserve a pay rise, bro.

• 15:35Speaker 00

  Yeah, I mean, we should consider that. But the reason why that was the case before, not to go on a tangent, was because these are very bespoke tools that do a singular function, and no single company wants to build this out themselves. But now with software being so cheap to build, like ephemeral software or simpler software being so cheap to build, you can now have non-technical people kind of building these apps. Harry, like one interesting avenue for us is how do we make that user much more productive than they are right now? But there's always this tension, right? If we make that user much more productive, we might be giving up the ability to make developers that operate on large code bases much more productive, too. It's just a focus game.

• 16:14Harry Stebbings?

  Is Windsurf about making engineers 10x better? Or is it about making the normal person able to be an engineer?

• 16:22Speaker 00

  So I think we're focused on the former. We're focused on the former and a consequence of that is the latter. Because the technology underneath is capable of doing that, but the focus is definitely the former.

• 16:33Harry Stebbings?

  Will you converge over time? Will Cursor and you converge to eat the lovable's and bolts? And will the lovable's and bolts converge to try and eat you?

• 16:44Speaker 00

  I think those tools that are very focused on, like the lovable's, the bolts, that are very focused on the non-developer. With time, they're going to need to build out more and more tunables, more and more ways to configure the product with time. But I think for us, if we can deeply understand code, like large code bases, it'll naturally follow that with very little effort, non-technical people can build apps. But maybe my point is, if we build for that use case right now, we're going to be kind of foregoing the ability to help developers. But I think it will converge. It will converge with time between both of these categories. Like a company that deeply understands your code base will be able to, with very little natural language, build an entire app that is consistent with existing code bases inside the company.

• 17:25Harry Stebbings?

  I'm so enjoying this, by the way. I'm sorry, I had this beautiful schedule, but fuck it. If you had infinite resources, is there anything that you would do differently to how you're doing it today?

• 17:34Speaker 00

  We'd be making many more bets inside the company, like trying many more things. Like, as I said, probably 50% of the things that we try inside the company or more actually fail. We are actually investing a lot of our product technology on things that are in the future, and most of it fails. I would like to fail even more, but the weird thing about startups is the one thing that works pays for the hundreds of things that fail internally at a startup.

• 17:56Harry Stebbings?

  I spoke to Neil Maitre about stuff that I had to ask you before. And he said, you do have to ask him about how he builds product and his product building cycle. You mentioned that 50% fail, the internal cycle. Can you talk to me about some unconventional ways that you think about internal product building that you think are important?

• 18:14Speaker 00

  Yeah, I think there's conventional wisdom and, you know, from other people that a company with more engineers is just going to succeed. But that sort of kind of makes software engineering and just R and D feel like a factory building process. And the right way to actually look at it is when a product or an idea has no legs and you're proving it out, you should actually have very few people working on an idea. Everyone will understand this. Imagine having 10 people working on something that has not been proven out. Everyone has opinions, everyone has ideas, and nobody's ideas are wrong because no one has proven anything out. So it's very hard to get alignment. It's very hard for people to work in one direction without causing communication issues. Instead, what is actually really good is can you have a handful of people with an opinionated stance that can go out and prove out an idea?

• 18:58Speaker 00

  And then the question is, if you can go and get a nugget of value, and this is like a hard question for any product, how do you know when to stop working on it? And I think there's this interesting, like, kind of piece of wisdom that we've built. And a lot of us at the company have worked in hard tech before this, like companies, like autonomous vehicle companies before this, is that when you have a new great idea, even the crappy version of that idea is already amazing. Like, it already proves something amazing. Like, for instance, when we built the first working version of like the agent in Windsurf, even the crappy version of that was able to do things that we were never able to do in the past eight or nine months ago, right? And we were like, okay, this thing has legs. And then at that point, once you've proven the crappy version has legs, you can then

• 19:39Speaker 00

  go and resource more people on the project to actually go out and pursue it more deeply.

• 19:44Harry Stebbings?

  It's so funny. No wonder Neil loves you, because he always talks to me about like the real customer delight moment and that shock and awe that they feel when they have that first agent experience that you mentioned. I totally get that. Can I just dig in on a couple of elements before we carry on? You mentioned like a handful of people. How many is that? How do you structure these teams on new bets?

• 20:04Speaker 00

  It's maybe three or four people.

• 20:06Harry Stebbings?

  Couple of engineers and a designer?

• 20:07Speaker 00

  Yeah, it could be just, you know, kind of pure engineers that are building this out. One of the cool parts about our product is we're a developer product. So our developers themselves have some intuitions on a crappy version and how useful it could be. At least the V zero, right? Because we're building a product for developers.

• 20:23Harry Stebbings?

  Budget wise and time wise, do you set that? Do they set that? How does that work?

• 20:28Speaker 00

  I don't think we actually think about that. And I think that's partially because we're in an unconstrained market right now. Right? The value of great technology that could accelerate software development is so valuable to our customers that for us, like, I guess we largely speaking, don't think about it from like a perspective of what is the budget of a particular project? Now, what we do look at inside the company is what is the progress we're unlocking in a project over time? And whether or not we should decide to move on and work on something else, like table something and work on it later. Like, that is something that we decide and that's not a democratic process inside the company. It is, it is like a little bit of a top down process.

• 21:01Harry Stebbings?

  Is there anything that you've tabled that with the benefit of hindsight, you're like, oh, Varun, I should have kept going with that one?

• 21:08Speaker 00

  An example of something we probably did table was the autocomplete experience, which is the first product that we actually built out. I think we actually delayed on building a much better product experience sooner rather than later. Part of the reason why we, the product experience wasn't as good actually was because we were stuck in VS code. And VS code didn't give us the UI capability to make the product much better. And once we had Windsor, we were able to invest much more in the capability.

• 21:31Harry Stebbings?

  You mentioned VS code there. It brings me to the topic of kind of moats and defensibility. I'm obviously an investor for my sins today, as well as being a terrible British podcaster. Our moat's dead in a world of AI. You, you, you're not blind to this. Everyone says curse of Windsor, I can switch between the two. Help me understand, our moat's dead and how do you think about that?

• 21:54Speaker 00

  You know, I think startups by and large, just this idea of a startup having a moat is usually kind of silly for the most part. Like the conventional seven powers, you know, if, if anyone in the audience has actually listened, you know, read the book.

• 22:05Harry Stebbings?

  I love it.

• 22:06Speaker 00

  Yeah, it's a great, I think it's a great book. I think it's just a premature for a startup for the most part because, okay, fine. You have a company with 50 engineers, you could have. The best engineers in the world. I think we have amazing engineers, like a majority of our engineers are from MIT. I think we do get the top few percentage of MIT to come to the company. But still, like, it's still, like, if we have fifty to one hundred engineers, it's still only hundreds of engineering years that have gone into our product. This is not something where ultimately someone else can't build something in this as well. And I think the only mode in our category is speed. It's kind of like what I just said, it's learning where the dead bodies are, learning how to compound an advantage. And I think maybe an example of this that I like to bring up is even a company like Nvidia. I think everyone outside looking in is like CUDA is the real mode or something like that.

• 22:51Speaker 00

  I think that's just inaccurate. When you look at large companies like OpenAI, Anthropic, Google, let's say Google, if they were buying Nvidia. I know that they build their own TPUs. They spend tens of billions of dollars on chips. Are you telling me if CUDA didn't exist, they would not use Nvidia GPUs? No, they'd find a way to write assembly, the lowest level code, and make that run on the GPUs. It's that expensive for them. The reason why people use it is it's just awesome. They've made it really capable at doing low floating point math. They've made the interconnect really good, the computers really fast. And every year, they have a ticking time bomb on their head. If they don't make the hardware, the interconnect, kind of the memory bandwidth, much, much faster every year, they're gonna lose. Like, their profit margin is gonna shrink, right? And AMD will be on their case. That's a little bit of a surprising sort of feeling.

• 23:36Speaker 00

  Like Nvidia doesn't have the same properties of a company that a company like Google has. But it's still one of the most valuable companies out there.

• 23:43Harry Stebbings?

  I agree totally in terms of the moats for startups. Like, if you have two companies starting start line today. But if one of them becomes part of a very large company, say, an OpenAI or an Anthropic, and they suddenly have distribution, and they have brand, and they have resources which buys chips at scales that are unparalleled compared to what any other startup can do. Suddenly, Seven Powers becomes increasingly prominent, and moats exist. No.

• 24:10Speaker 00

  I think the reason why some of this wisdom is potentially not not correct is I think speed is still important in that case. And and the reason why is like, why does a startup ever win? Why does a startup ever win in an important category? Why did Google win in the early 2000s when Microsoft was already a behemoth at that point? If a company has good insights and is able to out execute strategically another company, they will win in a in a space.

• 24:34Harry Stebbings?

  I would I would argue that distribution is more important than speed. Listen, you're the multi-billion dollar founder, so like, please correct me. But I might partnership agreements is really what propelled Google in the early days to be so successful.

• 24:45Speaker 00

  But it was also that there were lots of companies in the category and they had the best product. And for that reason, a lot of people wanted to partner with them. Maybe let me put it this way. Our space is like very, very valuable. But if you actually look at a lot of the hyperscalers, their products in the category are not amazing products, even though they have a lot of distribution already. Why is that? And I think it's actually because it is hard to marshal together talent to actually go out and execute in this category very quickly. Right? We're the kind of company where right now we're shipping a major release every one to two weeks. Name a large company that is able to learn that quickly.

• 25:15Harry Stebbings?

  Why do large companies suck at velocity of development when the market is as hot as it is today?

• 25:21Speaker 00

  I think it's existential dread. A startup has existential dread on whether or not they can survive if they don't ship fast enough, if they don't learn fast enough. Right? If I'm inside a behemoth, like I'm inside Amazon, right? And Amazon has a product in our category right now. Do you think the employees working on this are worried if they will have a job in six months if they don't ship a great product? If we had shipped the same quality product that some of these hyperscalers have shipped, we'd be out of the market a year ago. But they probably still have their jobs right now.

• 25:50Harry Stebbings?

  It's the seven days a week that's becoming the norm again in Silicon Valley, huh?

• 25:54Speaker 00

  We're an in person company, actually, right now, like 100% in person company.

• 25:58Harry Stebbings?

  Can you build a company today remote as efficiently as the in person, seven days a week Silicon Valley specialness that you're seeing return to the valley again?

• 26:10Speaker 00

  I think it's just, it might just be a little bit harder, right? I think you need to be a much more principled company to start with. It's just an unfair advantage if a company is able to get their engineers kind of in the same room and on the same page every five minutes if necessary, right? It's an unfair advantage on speed compared to a company where people are on different time zones. Like you don't know when you can reach out to someone, right? Now, if it's two or three P M, everyone at the company can be kind of like brought into a room at that very moment. It just makes your flexibility a lot faster. And in the early days, Harry, when I was talking about how, how obvious it is that your first idea or your ideas are not going to be accurate. You should be able to pivot extremely fast and kind of like marshal everyone at the company as quickly as possible.

• 26:54Harry Stebbings?

  Do you think in your category, brand power is important? People associate with being a windsurf user or a cursor user. Do you think brand has that same power that it does in other categories?

• 27:06Speaker 00

  I would like to, obviously, I think having a good, a large brand is just helpful. It enables you as you ship more and more new products for more and more people to be able to use it and not have to build that, build the user base up from scratch. But if I just was to remind everyone, you know, kind of like a year or two ago, probably in Silicon Valley, GitHub Copilot was the product that everyone, everyone was talking about at that time. If I was to talk about it a year ago, actually a bit over a year ago, was the Devin launch. And I think for three to six months, I was not hearing anything but Devin from everyone. And I think it's like, in our category, we need to prove ourselves almost every day. If in three months, we don't ship something amazing to our users, we will become irrelevant to, to a lot of them, right?

• 27:50Speaker 00

  If we don't actually like keep up with, with the pace of innovation, we will become irrelevant. So I think it's, it's a little bit of, if you can maintain, if you can continue to innovate at breakneck pace, the brand is definitely helpful, but I don't think the brand gives you the right to move slower as a company.

• 28:06Harry Stebbings?

  But should these businesses not be valued inherently less or at a much lower multiple if that's? Sustenance of value is able to deteriorate more quickly than ever before. As you mentioned, Evan, as you mentioned GitHub Copilot, brilliant examples.

• 28:21Speaker 00

  Yeah.

• 28:21Harry Stebbings?

  And then suddenly have a reduction of value so fast. Should they be valued in the same way?

• 28:27Speaker 00

  So I think there are still qualities of our company that we haven't really talked about of like having a large enterprise business, being wall to wall at very large Fortune 500 companies. Right. And being able to work properly for large teams, which has inherent switching costs for the business. Right. Not the same class of switching costs as a, as some of the products like, I don't know, Salesforce yet. I don't think we built that out. There's a trade off where if you focus so hard at making your product to switch off of. If you also don't improve your product fast enough, people, people will just switch on to the better product. Despite the fact that it is hard to switch off of your product. Right?

• 29:00Harry Stebbings?

  I always remember seeing a tweet from Tom Blomfield, who's a friend of mine. And he was like, I didn't really get this space. I was a cursy user and I switched to Windsurf and it was like better or just as good. Or like he switched to Windsurf for this one project. I have no idea if he stayed. I'm not making a comment, Tom. Don't kill me. My question to you was like, how do you think about switching cost and retention? And is it that easy to switch between the two?

• 29:22Speaker 00

  We need to innovate on features and product fast enough that we are able to build differentiated experiences for, for folks. That actually takes a lot of work, right? Like, as I was saying, like, most of our products that we end up building don't end up working. And even though we're shipping releases every couple of weeks, some of the more complex pieces of technology that we've shipped, they take months to actually ship. So I'll give you an example. A couple of weeks ago, we shipped a model that was comparable to some of the frontier models at the Agentic workload. And our model, Sweet One, is much faster, much cheaper for us to run and capable of operating over a large code base as well. And we were able to do that by learning from our users on how they use the product internally. And that was not a single month kind of experience for us. It took us many months to actually build out that, that model internally.

• 30:05Speaker 00

  But these are the kinds of, and now it processes hundreds of billions of tokens of code a day, that single model, right? And it's running on our own GPUs. But this is like one of those things that it takes time to kind of build out these capabilities. Just like how maybe, you know, for everyone in the audience and folks like Tom, he probably never heard of our company 10 months ago and used our product 10 months ago. These things change extremely quickly, but you're totally right. The fact that it can change this quickly means that you need to be ultra vigilant. The same reason why no one had heard of us in Silicon Valley, like maybe 10, 12 months ago. And now like a lot of folks have heard of us, the same thing can happen in the other way too.

• 30:39Harry Stebbings?

  You mentioned the strength of enterprise in your business. How much of your revenue slash usage today is enterprise versus bottomed up?

• 30:47Speaker 00

  Yeah, so I would say like over 50% is actually enterprise.

• 30:51Harry Stebbings?

  What are the biggest questions, lessons, things that enterprises care about when they buy you?

• 30:56Speaker 00

  I think it's, there's a, maybe a handful of things. I think the first thing is a lot of enterprises and large companies. This is something that's not very obvious to folks outside looking in. They have a lot of Java developers and for the Java developers, actually most, most large companies have a lot of code in Java. They use an IDE called IntelliJ as part of the JetBrains family. So this is like an interesting fact, even though we have the Windsurf editor, we still support plugins into all the JetBrains IDEs. And it has the same functionality as the Windsurf editor. The reason why we forked the VS Code editor was because we didn't have enough flexibility to build out the UI that we wanted to give out the new agentic experience, but we were able to give that out entirely in JetBrains in the plugins.

• 31:36Speaker 00

  And I'll give you an example, JP Morgan Chase, who is a customer of ours, over 50% of their developers are JetBrains users inside the company. For those people, we're able to support all of their developers. We're not a product that's only for their VS Code users. So they can move over to Windsurf. So that's again, interesting fact that I think outside looking in, people don't really understand that for the enterprise, there are lots of these IntelliJ users that we need to satisfy. And when we go into an enterprise, we don't want to tell them, hey, only 40% of your users can use our product. We want to make sure all of their developers can use, use our product.

• 32:05Harry Stebbings?

  Do you think your customers will have more or less engineers in five years' time?

• 32:10Speaker 00

  It depends on the type of customer and the word engineer is going to become a very flexible word, as I was saying, right? As the technology gets better and better, people that are technical adjacent are going to be using Windsurf as well. And we're already seeing this, by the way, at some of the companies, but.

• 32:23Harry Stebbings?

  What does engineer in five years' time mean?

• 32:26Speaker 00

  If I was to explain it to an engineer, if you were to go over time, just for an engineer, right? If you go back 50 years, everyone is writing assembly, then after that they're writing C. And by the way, people still write assembly though, after that they write C, then it's like C++ then Java and Python. And then now a lot of people writing JavaScript, right? And ease of programming has gone up, but a lot of the people that are, that write JavaScript have no idea how to write assembly at this point. So I think it's going to be something along those lines, right? There will be people that are able to operate purely on a natural language-based abstraction. And the AI tools are able to explain to them how different components of the software stack work. So that even though they're operating on top of natural language, they're able to still be valuable to the company. But then ultimately down the line, there will always be production critical applications.

• 33:11Speaker 00

  Let me give you an example. Let's say I'm JP Morgan Chase and I'm building my transaction processing system. You probably don't want to vibe code then, right? Like Harry, if you give me a hundred dollars, probably you don't want to like lose a hundred and for me to not get the hundred dollars, right? I'm going to complain. And that's some transaction processing system that's running in JP Morgan Chase. That is probably doing millions of transactions or billions of transactions a day. And for that, you probably want someone that can go all the way down to the weeds and validate that this actually makes sense. Because that's core to the way the business operates. You're going to have a spectrum of people, right? People that can operate purely on top of natural language and they're building capabilities and technology and apps inside companies. But then people also that can go to the weeds, go down to the weeds. Now, how many people need to go down to the weeds? Probably fewer than there are today.

• 33:54Harry Stebbings?

  Do we have PMs? I'm always told that PMs are CEOs of the product. And many have said that actually, we're not going to have PMs anymore. Eleven Labs, I had that head of growth on the show the other day, he was like, we don't have PMs. Do PMs have a role in five years?

• 34:08Speaker 00

  I think the expectation for PMs is not going to be down the line. It's not going to be, I tell someone to go and build something. It's going to be, you should go out and build it too. There will be, need to be a lot more agency on their side. But the benefit is these AI tools are going to give them that capability, right? Let's say you do have a technical PM that is, that undersends code and that can write code. They are even more deadly now than they were in the past. You don't need to give them a team of 10 people to prove out their idea. One of the things that I kind of don't like about PMs, probably in nowadays in a lot of cases is they spend so much time writing docs to try to convince the organization to do what they, what needs to be done. But instead, they should just go and build a version of what they want to get done. And then prove to the organization that that's what needs to get done.

• 34:49Speaker 00

  Why do you need to spend so much time babying your organization, playing a game of thrones, right? It doesn't really make a ton of sense.

• 34:55Harry Stebbings?

  Do we skip the design stage and go straight to prototyping in the future?

• 35:00Speaker 00

  Probably the ability to very quickly mock up a design that is consistent with the design inside your company and prototype it is going to be much faster, right? Like internally, right now, when we build apps, we're not very, very quickly going to Figma at the very beginning if the app can be built very fast inside. And then obviously, if it's core to our product experience, we're going to go out and design the layout and make sure it's to our standards. But rapid prototyping, we can definitely skip like a laborious design stage right now.

• 35:29Harry Stebbings?

  I'm just fascinated, like where all of it converges together. As we said, you meet the lovable's and the bolts in the middle. And then the Figma's are coming in now and actually saying, hey, turn design into code and kind of coming in from outside. I'm trying to figure out what this kind of mess looks like in five years' time, respectfully.

• 35:47Speaker 00

  You know, yeah, I think it's a fair question. Maybe one thing is for people outside looking in, the things that the lovable's and Figma's do is like maybe a very small fraction of what software is, like ultimately. Like most software is not just like a website that has like some backend attached to it, right? There's complex database systems, software out there. There is all of this infrastructure. Most of Google is not the front end of Google. Like, think about how much work goes into Google. Google is probably one of the most complex pieces of technology. There's a very complex re-rank her. There's this database called Spanner that's a geographically consistent database that exists that's probably tens of millions of lines of code. All of those things, there's no one that's designing something in Figma for modifying the spanner code base inside the company.

• 36:30Speaker 00

  But we would like it so that they're using WinSurf to actually go out and do that. We don't sit and think about what these other companies are doing all the time. We're sort of thinking about what are all the ways in which software engineers spend their time and how do we make them much more efficient? So you're totally right that I think the design stage, a lot of things are going to get disrupted inside. But maybe one point I just wanted to add is that's maybe just the tip of the iceberg on what a software developer ultimately does.

• 36:54Harry Stebbings?

  I was going through some of your tweets as well, and you said async remote agents will happen. And I just wanted to double click on that first. Can you expand on how you think about this and which tasks will be automated first?

• 37:08Speaker 00

  I think what's most likely to, so the idea of async remote agents, if you were to look at a product like Windsurf, Windsurf is actually a local agent that runs locally and it can do very long running tasks. Like you can migrate an entire codebase from one version to the next. And it should be able to do that without you having to touch your keyboard once you instructed to, which is very, very powerful. But this idea of being able to do it asynchronously is also very powerful. You can imagine like just firing something off from your phone and it just generating a pull request for you. But I think one of the complexities of this is there's a building products in our category is I think there are three things that really are important. There's latency, so how long it takes to get the response back. There's quality, right, which is what is the correctness? And then correctability, how quickly can you make a change?

• 37:52Speaker 00

  And I think people kind of feel like if the technology is really good, they can kind of ignore these facts, but it's really, really important. If you build an asynchronous experience and it takes 10, 20, 30, maybe a couple of hours to go out and build something, people's expectations on the output are going to be really high. Your quality has to be really, really high. And if the quality is not high, it better be easy to correct. But it's not very easy to correct, like when the workflow of how people build software, if all I do at the very end is I create a pull request on GitHub, which is the final way that people review the code. And even 20% of it is wrong, let alone 10%. I wrote it has to be at least 90% correct. People were like, it needs to be 99% correct. I think they might be right, because if even 10% is wrong, people lose faith in the product

• 38:36Speaker 00

  because they waited hours to get the result, right? And they need to bring it back in locally. And modifying something that is 90% correct is not that easy because you need to understand the 10% that is wrong also, which takes time too. You're still human time limited at that point. So my rough feeling on things is what are going to be done asynchronously remotely are things that where the task is so easy that it can actually get it done properly. Like the complex tasks are still going to get done in Windsurf in the short term. Just because things that are complex and require a lot of rapid iteration, it's unlikely that you're going to do something asynchronously, wait 30 minutes, go and look at it in GitHub and then decide, hey, it's not correct and bring it back. The feedback loop is too slow at that point.

• 39:17Harry Stebbings?

  To what extent do users care about latency have you found?

• 39:20Speaker 00

  Very much. I'll give you an example, like even for a tab product, 10 milliseconds, which is like the product that gives you not only the autocomplete, but the automatic refactors as the user's typing. Every 10 milliseconds affects a percentage points in acceptance rate for the product.

• 39:36Harry Stebbings?

  When we think about these async remote agents that have to be incredibly responsive, that have to be correctable, what form factor do they take? We mentioned that earlier, like just pinging off a message. How do you envision the right form factor and what that will take?

• 39:51Speaker 00

  It's not super clear, right? It's possible that the right form factor is you need to fire this off from your ID because people are in their work state in their ID. Now, the question is, how common is the use case that people want to fire things off from their mobile phone? And then if they do, is it fine for it to just be on Slack? Do people want to continuously talk to something on their mobile phone? I think the answer is maybe not, because if I get thousands of lines of code changes, I don't know how to review code very effectively on my phone. And then in which case, like, I don't want to interact with something on my phone back and forth. So maybe I'm game to do one and done interactions on my phone, and then it better be 100% direct, and I'll go back to my laptop and be like, no, it's correct, and then stamp it and then approve it and merge the code. So there's a lot of trade-offs here.

• 40:36Harry Stebbings?

  When we talk about the right form factor for these remote async agents, it kind of makes me think about something that Satya said. And I did write it down because I wanted to make sure that I got it right, because I didn't want to misquote Satya. But he essentially said that obviously apps will collapse into agents and become just databases with business logics. Do you agree with him in that respect? Salesforce becomes a database that agents just crawl all over. A HubSpot the same, and you basically have their utility value reduced to just databases.

• 41:04Speaker 00

  I'm trying to think about why I think that's not exactly true, but you're totally right that, I mean, for any company, their entire state could be distilled down to a database, right? For any company. I don't know if I completely buy that in the short term, these complex applications like Salesforce and Workday completely get replaced by another company that just builds a database and an agent operating on top of it. A lot of complex workflow has been built around the idea of using Salesforce. I'll give you an example. When we build- Our sales team, everyone already knows how to use Salesforce down the line. And now we built custom workflows inside Salesforce. And you're right, those are all database transitions, but they affect the way humans operate with software. It's very unlikely to me that what's going to happen is Salesforce will get dethroned by a company

• 41:48Speaker 00

  that is just a database with an agent operating on top of it. It just, there's too much inertia for the company building out these complex workflows. And maybe here's the, the final piece and maybe why I believe that. I don't think agents are good enough today, that you can kind of just let them operate on top of, on top of a database and write to the database, automatically write to the database without human supervision for some arbitrary workflow. Right? Right now, we're still in the stage right now where these agents are mostly reading from data sources. They're not like modifying things at scale. And that's just because maybe we don't have the, the, we don't, we don't trust these systems deeply enough right now.

• 42:24Harry Stebbings?

  Do you think we are overly optimistic about the progression of the agent landscape? Obviously, as a venture investor, the only thing we give a shit about today is agents. Do you think we are overly optimistic about where we are?

• 42:35Speaker 00

  This is going to be the, the most obvious statement, but I think people think these systems are way more capable than they, like a lot of investors might believe they're more capable than they are today. And I'll give you an example. My goal here is not to, not to, you know, kind of downplay anything here. But I remember last, last March, when kind of the Devon launch came out. Everyone was giddy with excitement of the idea of like software engineers getting replaced. Like a bunch of investors were like, oh, there's no reason to ever hire junior developer. You will have this. And now we're very far from that right now, right? I don't think, or at the time, we were very far from actually replacing a junior developer with, with an asynchronous AI agent. But I think what people don't understand is even if the technology is not there yet, I don't think they grasp how quickly the exponentials are improving.

• 43:18Speaker 00

  Which is that in six months, what is capable of these models is going to be very different than what is capable today. I think people are, it's, it's very hard for people to understand that. Like what I just said about agents and the fact that they're really good at reading systems at scale, but people don't trust them to make writes to systems to internal databases at scale. That will probably change in six months because eight or nine months ago, people were not using agents a ton. Yeah, I think people underestimate the speed at which these things improve.

• 43:43Harry Stebbings?

  What do you think in 12 months will be crazy that we don't have today? Like you said there about kind of the transition and models bluntly improving so fast in such short timeframes. If you think about what we do today that we would consider crazy that will be a reality in 12 months, what do you think it would be?

• 43:58Speaker 00

  I think a lot of things that maybe I understand the software development landscape a lot better is how N10 these tools are going to be is going to be, I think, shocking to people. I think right now, if I was to say one of the biggest problems of these tools is mostly they help in the code writing experience. They're not helping in a lot of different aspects of the of the software development lifecycle, which is software developers design design software, right? They deploy software, review software, build, navigate, they do a lot of debug tests, they do a lot of different things. And I think the reason why it's mostly been kind of siloed to one or two areas is actually when when you look at a software engineer and their job at a company, they look at a lot of distinct data sources, they look at like a logging system, they might look at a database, they might do all these other things.

• 44:40Speaker 00

  And I think these agents are going to get access to all of this data and all of this data, your browser data, all this stuff. And I think what's going to be possible is debugging very complex tasks. Designing systems is going to be something that these agents are going to give much more leverage for than they are today. And I think this idea that software engineering, there's like a part of software engineering that AI is not going to touch because it's too hard, I think is is just going to be wrong. I think every aspect is going to become 10 times more effective.

• 45:06Harry Stebbings?

  Can I ask you a really hard one? You mentioned Devon there. If you look at, say, a cursor, what have they done well that you've learned from? And what do you think they've maybe made a mistake on that you've learned from?

• 45:16Speaker 00

  I don't know. I don't know about a mistake, but I think for them, just actually, I think they took a really good approach on building high quality UI UX that actually proved to be what people really loved, right? And I think that's that's like very impressive that they were that they that they were able to do this right off the bat. I think that's that's not actually what our initial intuition was, and I think they they executed well on that.

• 45:37Harry Stebbings?

  What do you mean by that? It wasn't where you placed importance in terms of that initial UI UX being seamless?

• 45:42Speaker 00

  Yeah, I think for us to go out and build Winserve, we actually felt that we needed a massive like technical breakthrough of like actually a new product experience. And I think that was the only reason why we actually decided to go out and build like actually have our own IDE. If we didn't do that, I think we're the type of company that would not just go out and build UI UX just for the for a much better experience by default unless we had great technology. I like to think of ourselves as like we're a technology company and I think we ship product to maximize the amount of technology that our users can consume productively. And we want UI UX that is not harming people's experience of our of our product.

• 46:18Harry Stebbings?

  To what extent is the quality of your customer experience defined by the software that you create, the UI, the UX versus the model progression that lies beneath it being OpenAI Anthropic?

• 46:32Speaker 00

  Yeah, I think I think you can't downplay the fact that that the latter is very helpful, right? The frontier models getting more and more capable. Every new capability unlocks maybe a new type of product experience that wasn't capable in the past. But I think it's a little bit of both, right? Maybe to put it kind of bluntly, like we were the first agentic IDE experience when we launched Winserve. We were the very first ones. Obviously, now that idea is not very, it's not non-consensus, like it was the obvious thing to do. But these models like Sonnet had existed for quite a while, but it actually took us some work to actually put together like using these models, but also using our own models internally to make this a usable experience with the UI UX to be able to review all the software very quickly before people actually the product experience kind of took off. So I think it's

• 47:17Speaker 00

  a it's maybe a little bit of both, but I don't want to underplay how much the models actually affect, you know, the value people get from these experiences.

• 47:24Harry Stebbings?

  People often compare the model landscape to the cloud landscape. The thing that I find challenging about that is cloud you generally stick to. You're on AWS, you're not switching between AWS and Google and anyone else. To what extent do you think model landscape will be one where you have a preferential relationship with an AWS of the world in cloud or Anthropic or OpenAI in models versus actually you just work between many different model providers and you switch between them for different functions?

• 47:52Speaker 00

  I think you're right. The space is very early is the reason why it's kind of like the switching costs of these categories are not very high, right? Moving from one model provider to the next, it's very low switching costs. And by the way, that's because there's no state in these models for the most part. So for the most part, it is almost like a Twilio-like experience where it's like send text message and you kind of send a text message, but maybe I could send text messages with a lot of different applications. But I don't take that as a big negative. I think what that means is we're still evolving in this category. Down the line, you could imagine models can actually internally keep a lot of state about a user, about all the data they have inside their company, about all the data they use locally. If you were to look at a lot of large code bases, they are actually getting to billions of tokens of code.

• 48:35Speaker 00

  What if that's actually something stateful that you can inject and inject and eject context about this from a particular model provider? Like, I'm sure there are ways in which they can increase their switching costs down the line as the technology gets better and better. But I think this is what it comes down to, right, Ari? In a category that is evolving so quickly, and when the models are improving so quickly, it is actually bad for them to overinvest in ways in which they can increase switching costs. This doesn't make sense. Because let's suppose they did do that, but they missed the next improvement in the model. They didn't do test time compute or something. They would be behind. And then it wouldn't matter that they increased the switching costs. Ultimately, the analogy to cloud providers is not accurate right now. They don't have the same properties. It's not the same kind of business right now. But could it be down the line? I think it could.

• 49:18Harry Stebbings?

  Today, models do have non-commoditized properties. Anthropic is often hailed as being better for developers, for example. To what extent do we actually see the complete commoditization? I mean, there are literally 12, 13 different providers in China who are racing faster than ever and will reach some asymptotic utility point where all of them hit the same level. And I'm sure the US will be the same. To what extent do we hit that versus, no, no, Anthropic is the one for developers, X is the one for whatever else?

• 49:50Speaker 00

  Yeah, I think it is unlikely that in the short term, you will have a like a an ability for one model provider to just run away with a particular category. If the category is like very valuable, it's unlikely that that's the case. Now, I do believe in things like the scaling hypothesis, which is to say with more scale, you you are able to build better and better models. You do have like your hot your hands tied up if you're operating with less capital in the category, the nature of the game. But I don't think we're anywhere near the point in which you're going to have someone who's the defining leader of having a great model and no one else can touch it for for years. And and maybe the the reason for that is actually because six months from now, if a new technique exists and someone else finds the new technique,

• 50:34Speaker 00

  they're able to do it in a much more efficient way. And if they're able to do it in a much more efficient way, it means that if you just miss it and you're still applying your previous technique, you're going to be behind them. So it's almost like unless you believe that company is one company is going to get all the capital in the world and no one else is ever going to get the capital in the world. And one company has a monopoly on all great ideas. It is unlikely that you're going to have someone that is able to like run away with something in in the short term, if that makes sense.

• 51:03Harry Stebbings?

  Given the commoditization of that model layer, as we said, and no one being able to run away, to what extent the model providers have to move into the app layer to have any form of differentiation?

• 51:13Speaker 00

  Yeah, maybe in the in the API side, I think there are lots of ways you can build better APIs for a lot of different applications. And you can you can kind of focus on the applications you do support. And an example of this is like, let's say you're you are kind of working with a company like us and we were using a model provider. When we output code, maybe a lot of the code looks the same as existing code. And you can actually optimize from a latency perspective to help our workload versus another workload that exists for images out there. And you can be a much better kind of vendor to us than another company. So there is maybe specialization you can have on different axes to provide a better experience. But as you can see, you you are seeing like these model companies actually going up to the app layer too, in whatever apps they see are like valuable to them. I think you're seeing a little bit of both.

• 51:58Speaker 00

  People have too many opinions about what the right way to do things are. And I think you you have to be rational on what the best way to win is. And I think that's the only thing that matters.

• 52:06Harry Stebbings?

  Final thing I do just have to touch on, because I talked to you for a long, long time. Dario, the other day, was talking at some event or conference or whatever. And he was like, 2026 will have like solo billion dollar companies without doubt. I just wanted to touch on this with you.

• 52:21Speaker 00

  I don't believe in that. No, I don't believe in that.

• 52:23Harry Stebbings?

  Please explain. This is a university essay discuss.

• 52:26Speaker 00

  I mean, I mean, I think the like the solo billion dollar company would imply that no one else cares. Like, we live in a capitalist market, so there's competition. And if you're able to do something with one person, unless you're just a thousand times smarter and more capable than everyone else, like someone with two people that are as smart as you are probably going to be able to do your idea. And if they do, that's going to compress your margins. That's going to compress your ability to be the pervasive brand out there. That's going to compress your customer acquisition cost or increase your customer acquisition cost like seems like very hard for it to be the case that a single person is going to be able to run away with a billion dollar product without continued investment. The implication of that is like no one else cares about this, but magically you're able to do well.

• 53:07Harry Stebbings?

  What do people who believe this to be true get wrong? What are they fundamentally mistaking?

• 53:12Speaker 00

  I actually I never understood this idea of like a single person is going to be able to build a billion dollar company. I've never kind of understood it, but I mean, because what is a company? A company is the sum of the discounted cash flows over time. And like down down the line, like you're going to need people probably. Or if the AI is so good that you don't need people, like at some point, I would just wonder like if like, what are you really contributing? And is the AI building the whole thing? In which case, like, I don't know, like, actually, that would reduce the that would increase competitive pressure because everyone else will have access to the AI too.

• 53:43Harry Stebbings?

  Can I ask you, you know, you've been across multiple different cycles of the business, ups and downs. When did you question your love for it most? I think we often say like, oh, I'm always inspired. I'm not inspired every day to do what I do. Some days I am, some days. Was there a period where you were not? And how did you get through that period?

• 54:02Speaker 00

  I think every time, basically every time we've needed to make a strategic pivot, like actually, it's before the pivot that that it's it's probably the the most anxiety inducing because you feel like something could be much better than it is. But you are not acting on it. And I think that is potentially the the part that is that is the most kind of gut wrenching. You know, it's actually an interesting point. When we pivoted from Exo Function to Codium, I actually think post pivot was was the freest I've ever felt. Because I'd written off in my head, both me and my co-founder, that we're likely going to fail. But at least we're likely going to fail in something that we believe in. In the past, yeah, we were making a couple million in revenue, but I know what it means to be like a very large, successful company. You need to be able to make billions in revenue, right?

• 54:44Speaker 00

  We were so far away from that outcome that it was almost like, yeah, this this feels very hard to do. But after pivoting, we had a new lease on life. I actually feel like for for us and for me, the part that is the most anxiety inducing is when we believe we could be doing much better, but there's random inertia friction that is preventing us from doing the right thing. And even if doing the doing the right thing has a low probability of success, actually starting to work on it is the most free experience that I feel like I've had at the company.

• 55:13Harry Stebbings?

  I heard you say once, an interesting statement. You said, you wait until you're drowning in a role before you hire for it. And I just thought it was really interesting because I was always brought up on the value of board members being they highlight hires that you need to make six months ahead. So you don't have a bottleneck in six months' time. How do you think about those two seemingly opposing ideas?

• 55:37Speaker 00

  Yeah, I guess we've had we've had cases where I would say it's a little bit of a of an anti-pattern on that one. Like, for instance, when we before we hired our VP of Sales, we actually closed some very large enterprises inside the company without any salespeople, some very large enterprise. But because we were able to do that inside the company, we were able to feel the pain of what enterprise sales would look like inside the company. And also, it proved to the person we were going to hire, Graham, that we were an awesome company to potentially work at. So I think it's it's an interesting trade off where maybe there's a belief that I have that domain experts are awesome. But if inside the company, you're not able to get Get an outcome that is 1%, 10% as good inside the company. It's probably not the right time to go out and make the hire.

• 56:22Speaker 00

  Like, maybe let me put it this way, the concise way to actually answer this. Startups don't fail because they look like messes inside. Startups fail because they don't do the right thing well enough. That is the reason why they fail. People love to say, hey, like, I don't have this role and that's why I'm not working. And it's like, actually, when you look at the most successful companies, they look like train wrecks inside. What I think is important there is as long as you are doing the basic things that make your product very successful. I think you can actually make these hires like as necessary. I don't think it's like critical that you make them six months in advance. The worst thing for me would be making a hire and for them to not be important on day one. And just to be, hey, chill out over here and wait for the next three, six, 12 months. Because then they're going to manufacture something to work on and I won't really care about what they're doing.

• 57:08Harry Stebbings?

  Final one for a quick fire. What did you believe on management that you've changed your mind on? So like for me, as an example, I brought in this incredible person, Julien. He led workplace in Europe for 10 years. And I always believed, dude, arrogantly as a young person, I could read Elag Gill's High Growth Handbook and I know how to manage people. And it's bullshit. The wisdom and experience this guy brought from 15, 20 years leading teams is so nuanced and granular. I learn so much from him about management every day now. You can't learn it in a book. I've changed my mind on that. What would your change of mind be on management?

• 57:42Speaker 00

  Maybe the biggest change of mind I did have was how large your team is is not a function of like output. And actually ruthless focus is the only thing that matters. So you can have a lot of people, but the answer is if those people are not ruthlessly focused on one thing, you are going to be very, very not successful. Like it is, it is much easier to run a company that is focused, that has only one thing that matters than it is to run a company with the same amount of revenue with five things that matters, that with five different priorities. In retrospect, that always feels, that feels obvious. But at a startup like ours, where there's so many things we can do, there's always a couple of shiny things. You can always open Twitter and it's like X is solved, Y is solved, Z is solved.

• 58:24Speaker 00

  But actually, I think being able to say no to things and to focus on the one thing that matters with many people and ruthlessly optimize, optimize that, it's very hard. But when you can actually get that right, you can, you can make magic happen.

• 58:38Harry Stebbings?

  I could talk to you all day. I do want to do a quick fire and I have some great quickfire questions for you. So I'm going to start with one of that I'm adding, fuck these ones. Neil Mator, I love him as an investor and I'm an investor. So I don't see the same Neil Mator that you see. What makes him so special for you as a founder?

• 58:55Speaker 00

  His ability to analyze companies and be very intellectually flexible is actually pretty remarkable. The breadth of knowledge that he has about all of these different businesses, but also to understand what makes them work, what are some of the ways they could improve? And how that could be applicable to us is actually like very awesome. And he's like a very kind of person with his time, right? You would assume, given the fact that he works with so many companies that he would not have a lot of time, but he is extremely generous with his time.

• 59:21Harry Stebbings?

  Who do you not have on your board that you would most like to have on your board?

• 59:25Speaker 00

  I actually, I would love to have someone like Scott Cook on our board, a CEO and founder of like an extremely successful software company. I've had a handful of conversations with him and every time I walk away, just with a deep understanding of just competitive dynamics and just what it takes to run a very enduring, long-term, successful business.

• 59:41Harry Stebbings?

  Dude, that is a great shout. I haven't had that before. If you had to make Windsurf open source tomorrow, how would you feel and what would you do instead to win?

• 59:49Speaker 00

  No, I feel like that's a question I've been, I've been getting recently. I don't think it would affect, affect much if we had to make it open source because most of the work that it's kind of like the thing I said before, right? You know, Google is, yeah, they have a front end, but the front end is just a single box. And if they open source the front end of Google, I don't think anything would really change about the world. That box of the UX for that was not really the big deal. I am aware of the fact that Copilot has done that, but most of our logic is actually in the backend ultimately. So I don't think that it would change a ton. I also don't think it would change our adoption of the product. Like most of the differentiation has nothing to do with the fact that the front end is actually open source or not.

• 1:00:25Harry Stebbings?

  You have a sibling, they're 18 years old, and they ask you, should I go to university? What should I study and how should I position myself best for this new world of work? What do you advise them?

• 1:00:37Speaker 00

  Just focus on problem solving, right? How do you, how do you like break down problems, be a high agency individual? And I think computer science largely speaking is just the study of problem solving. Maybe what doesn't matter as much is did you learn X language or Y language? But can you break apart a problem into their distinct pieces? And actually go out and execute on them is probably the most important thing.

• 1:00:57Harry Stebbings?

  What's one thing that you think OpenAI did wrong that you've learned from?

• 1:01:01Speaker 00

  Oh, maybe naming.

• 1:01:04Speaker 00

  Let's go with naming on that one.

• 1:01:06Harry Stebbings?

  Penultimate one, you can change one aspect of your CEO ship. What do you need to change most?

• 1:01:12Speaker 00

  I think there are probably some details I shouldn't be, I shouldn't be actually like looking at very deeply that fundamentally don't matter about the long-term success of the company. I'm a person that's very neurotic and I like to understand everything that's happening internally, like what we're spending money on at a level that probably doesn't matter. And that just like waste cycles in my head that could be put to better use.

• 1:01:33Harry Stebbings?

  Final one for you. You can be known for having one impact on humanity. What impact do you want your future generations to say? Varun, my grandfather, he did X.

• 1:01:44Speaker 00

  I think the mission of our company is very exciting and I wouldn't say it's just me, but the team is we want to reduce the time it takes to build technology by 99%. And if we are able to play a meaningful role of how that could shake out in the future, like I would be extremely excited about that.

• 1:01:59Harry Stebbings?

  Varun, listen, as I said, I heard so many things from Lee Murray, from Neil. I was so looking forward to this. You've been fantastic. Thank you so much for putting up with my base level of knowledge and I so appreciate it, man.

• 1:02:11Speaker 00

  No, this was, this was fantastic, man. Thanks a lot.

• 1:02:15Harry Stebbings?

  That was so much fun to do. Now we would love it if you left a review for the show. It makes such a difference. You can do it on YouTube, you can do it on Spotify, you can find us on YouTube at 20vc. Also, I want your feedback. Ping me, harry@20vc, that's 20vc.com. I want to make the show as good as possible for you. But before we leave you today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data and the projects that we're working on across dozens of platforms, products and tools. That's why we use Coda, the all-in-one collaborative workspace that's helped 50,000 teams all over the world get on the same page, offering the flexibility of docs with the structure of spreadsheets.

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• 1:03:40Harry Stebbings?

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• 1:05:50Harry Stebbings?

  As always, I so appreciate all your support and stay tuned for an incredible episode with me, Rory and Jason on Thursday.