Inside Cursor: The Anatomy of a Generational Startup

a16z General Partners Martin Casado, Sarah Wang, and Matt Bornstein unpack the story of Cursor: how a small, product-obsessed team entered one of the most competitive markets in technology, took on incumbents with seemingly unbeatable advantages, and repeatedly made decisions that ran against conventional startup wisdom. They revisit the early bet that the interface between humans and AI would matter more than building a coding-specific foundation model, why Cursor built its own product rather than a VS Code plugin, and how the founders' ability to say "no" became one of the company's defining strengths. They also discuss Cursor's rapid evolution from IDE to agent and model platform, and why the team was willing to cannibalize its own products as AI capabilities improved. The conversation gets into what founders can learn from Cursor's approach to competition, hiring, enterprise sales, M&A, and company culture, including why the team remained unfazed by competitors from Microsoft to Anthropic and how its obsessive focus on product ultimately extended into every part of building the company.

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

• 0:00Matt 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.

• 0:07Martin Casado?

  If you looked at the competitive landscape, it was almost silly.

• 0:09Sarah 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 going to have rival competitors. That does not scare us.

• 0:21Matt Bornstein?

  As founders, we all want to be ambitious and we want to push to the maximum point of Pareto frontier. But you have to kind of know what the curve is.

• 0:27Martin Casado?

  For us, the decision to invest in Cursor was actually pretty obvious. You remember Andre Karpathy was using it. It was clearly a phenomenon. It's clearly like a known brand.

• 0:35Sarah 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.

• 0:46Martin Casado?

  They were definitely a couple of o [bleep] moments. Like, remember when?

• 0:50Erik Torenberg?

  Two years ago, betting on an independent AI coding company looked almost irrational. Microsoft owed GitHub VS Code Copilot and had access to some of the world's best AI models. And yet Cursor broke through. In this episode, Martín Casado, Sarah Wang, and Matt Bornstein look back at the decisions that shaped Cursor from its earliest days: building a standalone product instead of a plugin, resisting the push into enterprise sales too early, and staying relentlessly focused even as the competitive landscape changed around them. They also unpack how the company repeatedly reinvented itself as AI advanced, built a culture around speed and taste, and eventually applied the same intensity it brought to product

• 1:35Erik Torenberg?

  to hiring, sales, and M&A. It's a conversation about Cursor, but also a broader look at what it takes to build a defining company in a market where the technology, competition, and conventional wisdom can change almost overnight.

• 1:53Sarah Wang?

  So to kick off, I actually wanted to take us back to early 2024. And obviously, you guys led the deal in, I think it was May of 2024 that year. 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 we ever partnered officially with them?

• 2:16Matt Bornstein?

  So you have to sort of transport yourself back to late 2023, early 2024. I went back and looked it up. The leading models at the time were GPT-4O, Claude 3, and Llama 3.

• 2:26Sarah Wang?

  That feels like forever ago.

• 2:28Martin Casado?

  Llama 3?

• 2:28Matt Bornstein?

  Yeah.

• 2:29Martin Casado?

  That was actually pretty good.

• 2:30Matt Bornstein?

  That was great. Yeah, it was a great model. Change in strategy, obviously. Now, the leading coding harness was Copilot by like a mile, right? This was like the consensus thing. Microsoft was doing their Microsoft thing, right? They had Copilot, they had Office, they had VS Code. All of these things combined, they were going to somehow win AI. And so it was clear that AI coding was sort of working, but it was a different universe compared to today, right? Like, you had the sort of early signs that you could do meaningful work with AI, but agents didn't really exist, loops didn't really exist, reasoning didn't really exist at the time. So it's sort of a crazy time.

• 3:05Martin Casado?

  There was a continuum of like, companies going after coding, right? So on one hand, you had those that like, the only way to win coding is to build a base model, and it has to be a coding-specific one. And on the other hand, you had, very presciently, by the way, companies just focused on agents, right? And Cursor was somewhere in between.

• 3:25Matt Bornstein?

  And not only models, there were a million companies doing plugins too.

• 3:30Martin Casado?

  Yeah.

• 3:30Matt Bornstein?

  And both of these were very reasonable things to do, done by very smart people, right? Like, that's what's so interesting about these new spaces. It's like, smart entrepreneurs show up and do really interesting things. And in this case, model training was a very reasonable thing to do because the models weren't that good at coding yet. And there was sort of a theory that if we focus on this, do a coding-specific model, that's the breakthrough. People doing plugins, on the other side, were sort of saying, hey, let's not toss out the whole IDE. That would be a crazy thing to do. But like, the interface between human and model is really important, so plugin is a great place to go. You know, it just kind of turned out that the thing that Cursor was doing was the right thing to do, right? Like us, there were very bitter lesson-pilled. By the time, they would have said, oh, there's no need for us to go train our own model.

• 4:13Matt Bornstein?

  Of course, that changed later for different reasons, which we're going to get into later in this podcast. But it's like, we don't need to compete with Anthropic and OpenAI on models right now. The interface between the human and the model is the key thing. And this is something that I remember Michael and Amon saying a lot, and just saying very clearly from the earliest days of Cursor, saying, code in the future will look like pseudocode. I remember Michael making this point a lot. Like, when you look at old, like, computer science papers, there's a section, here's the algorithm, not in code, but in like pseudocode, which I'm sure many people are used to. And we don't exactly write in pseudocode now, but probably you could. Probably you could just take a pseudocode block from an old paper and like, the models now implement that. This is like, really what the Cursor guys thought from the very beginning. And they've proven to be exactly right about this, right?

• 4:57Matt Bornstein?

  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 anyway, we were in this world, as Martín said, we were talking to a ton of very smart, very interesting people working on coding in various ways. The Cursor team kind of stood out because not only did they sort of align with the things that we thought about the world, more importantly, smarter people than us and engineers working. At the time, the leading AI companies like OpenAI, Midjourney, Replicate, a bunch of others, all kind of use this and subscribe to this model. And the team, frankly, just seemed kind of special, right? They had an unusual degree of focus. I remember we got Michael to come pitch our GP group, and 90% of the meeting was him

• 5:41Matt Bornstein?

  saying no to things, which is just like, for founders out there working on products that you love, like, VCs will always ask you kind of dumb questions about other things you might do or things you're related to or whatever. And Michael literally just sat there and like, very politely listened to all the questions and said, hmm, interesting, no, we're not going to do it.

• 5:58Sarah Wang?

  Wait, wait. Actually, on that point, can I ask you guys a question? Because I remember that meeting so vividly when you brought Michael in for the A. And one of the things that he said no to was actually, and to your point on, there were a lot of plugins, right? And so there was this, maybe more consensus thought that a VS Code fork versus the plugin into VS Code, one would be better for enterprise, and it wasn't the former, it would be the latter. And I recall, I think it was you, Martín, or maybe it was both of you, asking him, well, are you going to get enterprise customers with this medium, right? And he looked at all of us in the eye with high conviction. And, well, I'm going to turn it back to you. And what did you think of his answer?

• 6:40Sarah Wang?

  And what gave you guys the conviction to take a pretty contrarian bet at the time?

• 6:44Martin Casado?

  They actually had a very reasoned articulation for why. They were in the design space, made it the most sense. So for example, why wouldn't you build a coding-specific foundation model? So what they said at the time was, it turns out that you don't speak to these models in code. You speak to these as humans and natural languages. Therefore, the model has to understand the breadth of human experience and language, right? And so that means in order to build a coding model, you're actually building a frontier language model, and that's just a very hard thing to do. And then, of course, there are other companies doing it, and there are much more focused problems like TAMP completion to do. So I think every one of their decisions was very reasoned, in our opinion. They were also very product-focused, which you actually don't see a lot in AI.

• 7:28Martin Casado?

  So they really believed that you can build a product, the product, if it's really good, it'll be adopted, which, by the way, is very similar to how Elon thinks. And that dictated a lot of their decisions. If you really believe in the product, you would never do a plugin, because then you're part of somebody else's product. If you really believe in the product, you wouldn't do enterprise early, you'd do it later, because the product itself is to kind of go-to-market motion. And so there was, I would say, and let me know if you would agree, tremendous clarity on exactly what type of company they were, and the decisions that they said 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 going to work. So there's plugins and there's services and there's whatever, whatever, whatever. This was a product company going after, but they considered it to be a product problem.

• 8:11Matt Bornstein?

  Yeah, no, I think that's exactly right. And I think they had the ambition and the courage to kind of do the maximal form of what the product would look like, right? I think, you know, as founders, we all want to be ambitious, right? And we want to push to the maximum point of Pareto frontier. But like, you have to kind of know what the curve is. And they just kind of knew what the curve was, right? And then get distracted by the sort of non-product things. I remember when we were trying to convince the Cursor team to let us invest in their company, I asked Michael once what he did for fun outside of work, and it was almost like he didn't understand the question. He's like, what do you mean? I'm like, when you're not in the office. He's like, what do you mean?

• 8:45Martin Casado?

  I also remember, by the way, when we had the lunch after we did the investment, and I was talking about something about internet days that were similar, and he was like, I was five.

• 8:59Matt Bornstein?

  But I mean, what's amazing about not just Michael, but all of the founders is even though they were pretty young when a lot of these things happened, they actually were kind of students of all this history, which is a trait that we see, Altrampel 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.

• 9:16Martin Casado?

  I'm going to turn the question back on you. I think Matt would agree. For us, the decision to invest in Cursor 30 was actually pretty obvious. The team was phenomenal, was incredibly focused. All of us were users. Half the team actually used Cursor. Remember Andre Karpathy was using it. It was clearly a phenomenon. It was clearly 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 it was a little bit dissonant with how you'd growth invest, but then you very, very quickly led the next round. So maybe talk through how you kind of got past the typical growth evaluation and got conviction.

• 9:55Sarah 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 of things that summer, right? You guys talked about Andre Karpathy tweeting about them, but they went on Lex, incredibly thoughtful discussion of how they thought about their vision for like coding going forward. And so I think it comes back to, Martine, something you said, which is they were just reimagining everything, right? And you know, you just talked about this as well, Matt.

• 10:35Martin Casado?

  But you can't, you can't write growth memos that way.

• 10:39Martin Casado?

  Never mind you. So you know, you've got the bug, you know, because you were calling us and we were so excited. How did you convince David George?

• 10:48Martin Casado?

  Like, don't forget, that's a show like, you know.

• 10:50Sarah Wang?

  Yeah, you know, it's so funny because and I think you had to think out of the box for this one. I mean, of course, the momentum was vertical, but there were so many things that they defied conventional thinking where I remember I, the first time, you know, Martine, you introduced me to Michael. We got a coffee that day, you know, as Mike, you know, they moved quickly. So I pulled some stuff together for them, right? Because we're, you know, we're trying to show them, hey, this is the next stage of what growth looks like. And there's so many conventional pieces of conventional wisdom that they just completely broke. Like, we would say, hey, we'll help you find a sales leader because, you know, previously it made sense to start layering a sales leader at 25 to 50 million of ARR when self-serve

• 11:33Sarah Wang?

  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. I'm very glad that we did that. And then the second piece is, we should talk about the competitive landscape, right? Because you mentioned Copilot.

• 12:10Martin Casado?

  I was, I was actually going to say, and actually I think Matt deserves a ton of credit here, which is we talk about now in retrospect, how it was a pretty easy decision on the series A. But, you know, you know, Matt, Matt, Matt led the early deal and he saw something a lot of people didn't, which was this, which is if you looked at the competitive landscape, it was almost silly, which is you had a large incumbent, which is Microsoft, that had a company at scale that had the OpenAI weights and they own VS Code. So everything, you know, everything would say that there's just no way that you could survive relative to this, this one single competitor. We'll talk about the other ones later. And I, and I think that also was the thing you said about Michael was what I witnessed. It'd

• 12:51Martin Casado?

  be great to hear Matt, which I even remember when Matt said this early on, he was like, you know, they have a good answer for everything. Which when you have founders that are students of what they do, they're very consistent in their answers. And, you know, and this, this is not, I think when we did the deal, it was pretty obvious, but it wasn't so obvious six months before, you know, and Matt and the team had that deep conviction way back then. And I think for every one of these races, there are, there are, there are mirrors of that. Anyways, this is.

• 13:21Matt Bornstein?

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

• 13:36Martin Casado?

  Marco was great. Rachel was great. You led the team. I mean, it was great.

• 13:41Matt Bornstein?

  So, but, but yeah, no, you're exactly right. I mean,

• 13:46Matt Bornstein?

  I mean, these guys are crazy smart, right? They're like off the charts, sort of just, just raw intelligence. They're able to do this thing we talk about a lot, like context switch between tech and markets really, really seamlessly. And, and they like 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.

• 14:07Martin Casado?

  But specific, I agree with that, but specifically, it was just kind of crazy to think you're going to fork something from Microsoft who owns the thing. And then you're going to, you know, compete with them with smaller models, even they own the OpenAI weights and they have enterprise Salesforce and they had.

• 14:24Sarah Wang?

  Yeah, enterprise distribution.

• 14:26Martin Casado?

  Yeah, ever.

• 14:27Matt Bornstein?

  You know, it's so interesting, right? It's like.

• 14:33Sarah Wang?

  Just 100 million developers.

• 14:35Martin Casado?

  They literally own every piece of that.

• 14:37Matt Bornstein?

  You know, it's, it's so interesting, right? Because like, that's definitely the conventional wisdom. And like, it's usually correct, the conventional wisdom in many of these cases. You know, one of the data points at the time was, it was actually Marco and our team set up a dinner where Amon sat right next to John Schulman. And they talked like a lot about Cursor. And I think John's thing was like, oh yeah, I tried Cursor, but like our codebase, I think he was at Anthropic at the time, like our, like mono repo just like immediately killed it. Right? It's like, I couldn't even load the codebase. And, and like, I think like the next day, Amon came back, it's like, oh, we made some changes. Like, here you can look. And not only is it like speed of iteration, but like, you know, we just look for these little data points where it's like, like actually like doing

• 15:19Matt Bornstein?

  a plugin or, or just like writing on top of VS Code is not, is clearly not going to work because like the smartest people in the world have tried it and it doesn't work. Right? So it's like, so these guys were sort of listening to it.

• 15:28Martin Casado?

  And historically, we as a team have always bet on the independent in, in a large market, right? If there's a leading independent, we'll always bet, even if the incumbent seems very scary. I think, I think it's worth talking about competition because my, you know, my experience with all of our experience with Cursor is that there was always like a looming existential threat. And we almost forget about it. But like, you know, of course, Copilot was the big one. And then remember the whole Windsurf thing? So like Windsurf actually did this very smart thing where they went to YC and there was a lot of YC users using it. And so you kind of had this kind of whole movement on Windsurf. And you know, cognition was a phenomenal company, actually was making real waves with agents and they've done a great job of that. And then you had the first version of Claude

• 16:09Martin Casado?

  Code that came out. And like, that was kind of like, you know, a competitive thing. And so like, you kind of go through, like, there was always some competition. And, and one thing I would say, and I would love again to actually hear your perspective on is like, it is such a pleasure to work with founders that are entirely unfazed. You know, like normally, like, you know, founders have these things happen, are calling and they're kind of freaking out and whatever. They were 100% unfazed by the competition.

• 16:38Sarah Wang?

  Yeah, paranoid but unfazed. I'll never forget, you know, and we, we've been lucky to do, I think all of, all of their rounds, starting from the A. But the one that was.

• 16:48Matt Bornstein?

  Invested every Cursor.

• 16:49Sarah Wang?

  We did, yeah, with, I think increasing amounts of dollars, but.

• 16:52Martin Casado?

  Sarah, Sarah co-led the B and the C. That's real conviction. That was a harder conversation to convince.

• 16:59Sarah Wang?

  I was going to say the C.

• 17:01Martin Casado?

  The team for the C.

• 17:02Sarah Wang?

  You know, at, at the B, you could argue, God, just bet on vertical momentum.

• 17:06Martin Casado?

  That was actually.

• 17:08Sarah Wang?

  Who grows from four to 50 in like four months or whatever. But the, or actually, no, it was, it was the D. So Claude Code, not to take us on a time travel trip again, but Claude Code came out May 2025 with a splash. You know, it wasn't, the pickup wasn't right away, but obviously formidable. And I remember there was a round, 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, 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

• 17:49Sarah Wang?

  from the very beginning. Copilot, Microsoft Copilot was the first one. Claude Code is one of a rotating set of characters. And, you know, we think in big markets, you're always going to have formidable competitors. That does not scare us. And, you know, I just remember being, yeah, somewhat blown away by the clarity of that comment, the lack of fear, right? There's, there's humility as well. Like it's humility mixed with bravado. And I just think that is kind of the winning combo when you're going after these juggernauts like that.

• 18:20Matt Bornstein?

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

• 18:35Sarah Wang?

  Yeah.

• 18:35Martin 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 classed me like, oh, fuck.

• 18:49Sarah Wang?

  That's true.

• 18:52Martin Casado?

  You know, these things are moving much, much faster than any of us thought. And then I think the same thing when the pre-release of Mythos came out and people had access to it. These models were getting so good so fast. And I think another thing that the Cursor team probably doesn't get, you know, the, the level of credit for is to the extent they cannibalized themselves so dramatically in like a Reed Hastings type way in a matter of two years, right? So they were first an I to E. And then they moved to an agent platform, then they moved to a model platform. And it's very, very tough for founding teams to actually have the discipline.

• 19:29Matt Bornstein?

  Yeah, TAB was the big thing. You know, Karpathy had that famous post, I guess he has a lot of famous posts where he's like, he was just TAB, TAB, TAB. Yeah, exactly. Like, that kind of doesn't matter that much anymore.

• 19:41Sarah Wang?

  Yeah, I actually think that's a good segue to maybe some of the other strategic decisions they made along the way around business model. And to your point on oh, fuck moments, I don't know if they would consider this that because I don't think the vagaries of Twitter impact them as much.

• 20:02Martin Casado?

  As their investors.

• 20:05Sarah Wang?

  Yeah, as the rest of us just scrolling all day. But it was probably summer of 25 where there was a lot of shit written about their gross margins, et cetera. And then, of course, you know, post the Opus 4.5, maybe the January period. I mean, we should all talk about that because that was kind of, those are both in different, but interesting times.

• 20:23Martin Casado?

  Yeah, I mean, one thing I'll say is I just feel like X is driven by like tail chasing, adrenaline sinking in schadenfreude. And there tends to be a massive disconnect by what people say on X and like how the business is actually doing. And so even though there was a lot of this, the business tended to do very well. And it's so interesting is so much of this often comes from investors, especially things talking about like business quality. But tech transformations always proceed figuring out the business. Like, you guys remember the internet? Like, we didn't even figure out how to monetize it for a long time. Forget margins, making any money at all, right? And here you've got like unlimited demand, unlimited growth and margins.

• 21:06Martin Casado?

  So I think this tends to be, you know, A, X is its own kind of echo chamber, as people say, but also B, every single wave you have, investors trying to say something that sounds smart, which is like picking apart, you know, the business model of a nascent tech transformation. And I just think historically, they've always been proven wrong.

• 21:26Sarah Wang?

  Yeah, yeah, for sure. I mean, I think I'm going to borrow this quote from something you said, Martine, but you know, first comes the technical transformation, then comes the business model. And in this case, like, I think the strategy where they went and got all the users in record time, now they have the assets, the data, the know-how, et cetera, to build their own models, right? You really couldn't do the flip of that unless you started as a frontier lab. And it, you know, it's clearly paying off in this combo that we'll talk about later. But I think seeing that kind of backdoor strategy was really inspiring and they took a lot of heat for it.

• 22:07Matt Bornstein?

  So Martine, how do you think Cursor really became a sales-driven company or a company that's good at sales? Because, you know, early on, I think, I told Michael a few times too, it's like, oh, you better invest in sales. He's like, nope, not going to do that. They literally set up [email protected]. It's like, if you're in enterprise, send your inquiries to this. But like, but obviously now they're very good at sales, right? And go to market and generally, like, how do you think they made that jump?

• 22:30Martin Casado?

  You know, it's a great question. So here'd be my best guess, which is they are very much a students of what do they do? They're very thoughtful. Every raise, you know, every product decision. And I think as they learn more about the market, they realize that the margins were in the enterprise. So very classically, if you do your competitive set, say the large labs, the large labs will basically subsidize or give away the single server tier. But then they actually have, they command great margins in third party and they command great margins in the enterprise. And, you know, Cursor was really a scale. And as the company has always gone, they decided, okay, like, so, you know, for future viability, we need to go into the enterprise. That's where A, the bulk of the spend is, but also a lot of the margin, the margin tends to be the value here.

• 23:12Martin Casado?

  We've created a great, you know, top of funnel engine. And so, you know, this is existential and this is important. And then when they decided to do it, they really went in. And that's the fact, that may be the fastest growth of a sales team in the history of the planet, right? I mean, I mean, you know, you were very involved, Sarah, for example, on recruiting.

• 23:33Martin Casado?

  So maybe talk about that actual expansion because it was.

• 23:36Sarah Wang?

  Yeah, I mean, it's, it's so neat to see, you know, that expression, how you do anything is how you do everything. You really see it, so much of what you guys are talking about and how they thought about product, et cetera, was reflected in how they did hiring and go to market hiring in particular. And we got to shout out Jordan and Roman and their team there, who in the early days built that, that engine from scratch. They're just the most incredible, you know, some of the most incredible people I've ever worked with, but we've all ever worked with. And.

• 24:09Martin Casado?

  Well, they also spend 40% of the time recruiting.

• 24:12Sarah Wang?

  Yeah, exactly.

• 24:14Martin Casado?

  This is amazing for, for, for technical product founders to spend 40% of the time recruiting. I've never actually seen it before.

• 24:19Sarah Wang?

  Absolutely.

• 24:20Martin Casado?

  And it is so effective. And like, a company really is the team that you build and they took this to heart. Like, everybody talks about it. Everybody talks about like doing A-class 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? I'm like, literally like ICN engineer. It was constant.

• 24:39Sarah Wang?

  Totally. And, you know, there was that great piece that Bree wrote about their hiring practices that everyone should read. A lot of that focuses on their edge 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 want to do it the old way. We're like, that, that's not good. We're building a company in a new way, right? So we want very specific AEs that fit this profile.

• 25:24Sarah Wang?

  We're going to go get them. We're not just going to wait for people to walk in the door. All of those things that have been written a bit on the edge side, they did that on the go to market side and clearly to phenomenal results. I mean, they got to over 50% of the Fortune 500 and I think faster than anyone we've ever seen.

• 25:38Matt Bornstein?

  Can you talk about specifically how they applied the lessons in edge hiring to like AE hiring? Because this is something I think our founders deal with a lot. Like, like, you know, I, you know, dealt with this a lot personally. Like, like, how do you actually make that jump? And like, what lessons really do carry over?

• 25:53Sarah Wang?

  Yeah.

• 25:54Matt Bornstein?

  Or that you observe in Cursor?

• 25:55Sarah Wang?

  No, yeah. And, you know, hopefully, I think this has been written about, so hopefully it's not sharing alpha, but the way that they think about sort of epochs of a person's career or of a company and who was the key dial in making that happen. I love this intense research period that goes on where it's like, hey, this, these are the top 10 companies who have seen great in this type of selling. And then let's go a level deeper. Here are the top 10 teams in those companies. And then here are the one, at 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.

• 26:38Sarah Wang?

  And of course, in the early days, it was like, can they deal with some uncertainty? Because you don't want someone who can just run a playbook. At this point, maybe they can get those people. But in the early days, right, the founding AE set was super strong. And I think figuring out what does the best look like at what period of time? And then which individuals drove that? That's so applicable for engineering, obviously, product building, but on the go to market side as well. And I think that nailing the right star who did it the right time is really hard. I mean, it narrows the base that you can hire from completely. But because, you know, I think Jordan, Roman and the early team got that right, they just were able to scale it quickly without losing the Cursor culture.

• 27:23Sarah 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 impression of it.

• 27:30Matt Bornstein?

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

• 28:13Matt Bornstein?

  very narrowly focused on what they were trying to accomplish and like, how to run the team.

• 28:17Martin Casado?

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

• 29:02Sarah Wang?

  Database wars?

• 29:04Matt Bornstein?

  Yeah, I mean, you have very intense competition in like relatively narrow markets. I mean, databases are huge, but compared to coding, I actually think it's much smaller, right? Like, for like, I mean, coding's kind of the meta category, right? Like, like, it's like all expression of like human thought in like economic form is kind of like coding.

• 29:20Martin 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, 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.

• 29:46Martin Casado?

  I think this.

• 29:46Matt Bornstein?

  It's so crazy, right?

• 29:47Martin Casado?

  It's two years. Magnum opus of like, you know, startups.

• 29:52Matt 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. Like, when I finally got them to admit they did something for fun, it was like, oh, that's also coding.

• 30:09Matt Bornstein?

  Which, by the way, is the only.

• 30:10Martin Casado?

  Guilty, guilty.

• 30:11Matt Bornstein?

  Yeah, it's the only fun left to any of us, by the way. You know, now that the models have like, you know, brought the post scarcity future to us, it's like coding is like, you know, the last fashion.

• 30:21Matt Bornstein?

  You know, and but like, there was always awareness, or at least I always thought, talking to Michael, he was always aware of the game, if that makes sense. Like, like, he truly was, and they were all truly in love with coding, creating great products. But like, they kind of knew that building an enduring company or great company isn't just about product obsession. I just kind of sense he always kind of understood that and like, was thinking a couple of steps ahead.

• 30:43Martin Casado?

  Yeah, if your goal is changing software, that's a critical, it's critical to get the business right. Yeah.

• 30:49Sarah Wang?

  Yeah. I was gonna add an anecdote that's not related to them coding. But the other thing that, you know, we've sort of seen across a number of founders, but Michael and Suale and Amon, they sort of embodied this, is this, again, how you do anything is how you do everything, right? And so, of course, this detailed attention to the product, very artisan, there's craftsmanship, right? Overused taste, they have taste in spades. But it extended to how, not only they did hiring on the edge, go to market side, but even the space they created, the events they throw. Like, I remember walking into their office and thinking, wow, in my early twenties, I would not have paid attention to putting, I don't know, twinkle lights here.

• 31:34Sarah Wang?

  They famously, no shoes, right? But you'd go in, you'd put on your slippers, and it would feel, you would feel at home. Like, hence why everyone was there working all the time. Because you're like, this feels great, like home. And they, you know, they, it was very Hegi, the Scandinavian style. And I remember going to their second office, when they finally expanded, and complimenting them on a couch or something, because I think I was redoing my own house at the time. And they were like, oh, yeah, we got that from a secondhand, like, very Hegi furniture dealer. And so, they were going after a specific look and feel. And I just was struck by that, because I was like, wow, that is not how I remember guys in their early twenties, like, thinking about the space that you create or in,

• 32:18Sarah Wang?

  how that leads to the product and, you know, mind space you're in.

• 32:21Martin Casado?

  Yeah, there's actually a nice adjacency here to a lot of the decisions they made. So, so, marketing was a very obvious one. They were very, very particular. Like, we use X, that's not our voice, we're not spammy. We made so many suggestions. I remember we're like, oh, like, let's do this event. No, that's not our style. So, they're very good at saying no for stuff. I will say that they were also very good about this when it came to personnel. Like, if there wasn't a fit, they'd make the hard decision pretty quickly. You very, very rarely see this with early founding teams. And they were very consistent about that. And so, I would say it's almost this kind of untalked about, probably greatest strength of the company is that once they made a decision, it doesn't matter how hard that was, whether it's deciding not to enter a market, deciding to like, be very limited in what they're doing,

• 33:05Martin Casado?

  like, they kind of followed through. Or like, you know, who would stay in the company? Who wouldn't stay in the company? And so, you know, kudos to them for actually, you know, having the courage and the tenacity for these tough decisions.

• 33:18Matt Bornstein?

  Which is sort of an Elon-ish trait, too.

• 33:20Martin Casado?

  It's also very Elon-ish.

• 33:21Matt Bornstein?

  Isn't it?

• 33:21Martin Casado?

  Yeah. I actually think that these two companies, I mean, we just like, you know, talk about the M and A a little bit,

• 33:28Martin Casado?

  are very good fits. They're very good fits on, on like, a technical level, right? Like, Elon has a compute, they have the distribution of the data.

• 33:36Martin Casado?

  On a vision level, they both think that, you know, code is the path to changing all of compute, and maybe all of humanity. But also on the culture level, right? They're very product engineering focused, very, very, very, very product engineering heavy, very fast to iterating. You know, they make hard decisions very quickly. And so, I mean, I've been involved in a lot of M and A, and I would say this is probably the best fit I've ever seen as far as just the full package.

• 34:01Sarah Wang?

  Yeah, couldn't agree more. I mean, there's a funny analogy with our experience on the SpaceX side. I remember we met them in 2019. Back then, it was fully a launch business, but the SpaceX team was like, no, we're gonna launch global communications. We're gonna power the internet for everyone in the world. They had nothing, you know, nothing at the time, no Starlink satellites in the skies. And of course, they did it, right? And if you think about the Cursor team telling us, and, you know, they actually beat every forecast they ever gave us, but...

• 34:30Martin Casado?

  Oh, by a lot.

• 34:31Sarah Wang?

  There's just so many Elon-ish characteristics of moving fast, going after large markets, winning them in the feet of impossible competitors, you know, Comcast, right, right, in the Starlink case, that there's so many parallels, totally different venues, obviously, but fascinating to see that.

• 34:48Martin Casado?

  There's another thing I would say also, um, which I think between kind of Elon and Cursor, like SpaceX and Cursor is like, in both cases, the consensus was decrying the death of both companies so many times.

• 35:02Sarah Wang?

  Hmm.

• 35:03Martin Casado?

  You know, so I think there's also like, this kind of like, you know, you know, cultural perseverance to the naysayers, which I actually really respect on both sides.

• 35:13Matt Bornstein?

  Actually, I do have one other real question I wanted to ask you guys. Cursor is also really good at doing M and A? Like, like, doing small talk and activities?

• 35:20Martin Casado?

  I was actually gonna mention it. Yeah, yeah.

• 35:21Matt Bornstein?

  Yeah, I would love to know a little bit more, like, from your perspectives, like, why they were and what the philosophy was and all that.

• 35:29Martin Casado?

  So, I will say, listen, so, there is such a war for talent

• 35:35Martin Casado?

  right now, that the companies that have figured out how to do talent via acquisition can really get ahead. I mean, there's just a lot of advantage there. And so, the early motions that they did were of that nature, which is like, really good 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. It wasn't until later, like, the Graphite acquisition, where they started thinking about acquisitions in terms of strategic direction.

• 36:19Martin Casado?

  And of course, that was a much larger acquisition. And, you know, listen, I think the company was so fast. Like, who knows to the extent that they would have figured out how to integrate all of these things and execute on them in the limit? Just because, like, you know, like, now they're part of a very large acquisition. But I will say that they approached these in the same way that they approached everything, which was 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 and A, you know, and everything else.

• 36:55Sarah Wang?

  Yeah, I was gonna say, I feel like there's this badge of honor now when a CEO of a company says, I have ex-founders in my company. And I think it should be a badge of honor, right? I don't know how many, what that stat is for Cursor. Do you guys know? But I remember, and they have so many great founders there, but I remember when they brought on Tito from Koala, and then Adam Ward on the talent side, actually. And just seeing firsthand the leverage that they got from bringing in someone who was a 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,

• 37:40Sarah Wang?

  I think, one of the best examples of how to integrate founders really, really well into your company.

• 37:44Matt Bornstein?

  It's funny, right? Because Anthropic kind of gets that tag a lot now. It's like, oh, like, exec at company A just went to take an IC role 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...

• 37:59Sarah Wang?

  Absolutely.

• 37:59Matt Bornstein?

  Yeah, it's very, it's very unconventional, but like, really...

• 38:03Martin Casado?

  It's actually operation incredibly complex.

• 38:04Matt Bornstein?

  Yeah. That's a conventional list.

• 38:06Martin Casado?

  Yeah, yeah, and I think it's actually true. I mean, I think it's not that they, you know, did something that people think is hard, but is actually easy. I think it's actually hard, and they just managed to pull it off. You know, good to them.

• 38:21Erik Torenberg?

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z, and subscribe to our Substack at A16Z.substack.com. Thanks again for listening, and I'll see you in the next episode.

• 38:46Erik Torenberg?

  As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16Z.com/disclosures.