Interview
"Cursor is Dead" is Total BS: Here is Why | Miles Clements
- The legal and accounting AI market is expected to require an extended sales cycle for adoption by professionals, yet the resulting value proposition is predicted to be transformational for firms once integrated.
- Cloud Code's success is projected to be directly correlated with the performance of its underlying models, while the broader AI coding tools market is anticipated to expand significantly without necessarily cannibalizing competitors like Cursor.
- Adoption is driving massive consumption growth by bringing non-traditional developers online, with Cursor's agent products expanding 15x year-over-year to account for 35% of merged pull requests.
- A multi-model experience is deemed increasingly vital as 50% to 95% of developers reportedly switch model families daily, supporting plans to develop specialized coding models for enterprise tasks.
- The outlook envisions a shift from single-point engineering tools to a comprehensive engineering platform, leveraging the fact that no single entity currently owns the entire vertical despite the sector's rapid growth.
- Revenue projections are considered less relevant for underwriting high-growth, non-public entities compared to product-market fit, with growth rates of triple or double digit rates viewed as sustainable provided a path to significant outcomes exists.
- Market dynamics are expected to prevent true monopolies, allowing for multiple large players similar to AWS's 35% share, rather than a single winner taking the entire market.
- Investment strategies must adapt to an inverted market environment compared to 2000, requiring a multi-stage approach to ladder up to 20% ownership and support companies through late-stage sustainability via LBOs or IPOs.
- Generating fund returns will likely require $50 billion plus outcomes, though such events are recognized as rare occurrences taking 17 to 20 years to materialize, with some firms potentially reaching trillion-dollar valuations.
- Investors are cautioned against extrapolating from anomalous quarters, emphasizing the need to prioritize deep product usage engagement over top-line growth figures which can mask underlying business issues.
- A 80% win rate is considered healthy given the necessity of entering competitive scenarios where failure is possible, while a 100% win rate is acknowledged as an impossible industry standard.
- The innovation cycle in AI is described as merely beginning, with expectations that generational investments will eventually exceed previous visions, despite current market corrections being viewed as an over-rotation in valuations.
- Founders are identified as the primary determinant of a company's future trajectory, with investor focus shifting toward assessing founder principles and decision-making capabilities rather than just product metrics.
- Investment teams are advised to balance ambition with nuance, avoiding extreme positions of AI maximalism or hesitation, and instead constructing diversified baskets of companies to navigate heightened competition.
- VCs are characterized as proficient in timing hiring needs but deficient in identifying specific talent, while the role of board members should focus on strategic big decisions rather than operational minutiae.