I think what they're saying is that Cursor makes money because it's a good editor in general that integrates AI well, not just because of the fact that it uses AI.
If you just slap a ChatGPT backend onto your product, your competitors will do it too and you gain nothing without some additional innovation.
Cursor without AI is just VSCode. They came up with an AI-native code crafting experience that no one else has thought of before and if you asked me how they did it I wouldn't be able to answer you.
(1) That's what the original author is saying. Their valuation is possibly incorrect.
(2) On the other hand, Cursor's value is essentially gluing the two things together. If your data is already in the castle (e.g. my codebase and historical context of building it over time is now in Cursor's instance of Claude) then the software is very sticky and I likely wouldn't switch to my own instance of Claude. The author also addresses this noting that "how data flows in and out" has value, which Cursor does.
> The AI Code Editor - Built to make you extraordinarily productive,
Cursor is the best way to code with AI.
Cursor is literally a VS Code fork + AI.
> unless you’re building or hosting foundation models, saying that AI is a differentiating factor is sort of like saying that your choice of database is what differentiated your SaaS product: No one cares.
Cursor is doing exactly what they say "no one cares" about.
The article heavily emphasises the point that having the "smartest" AI isn't a moat, it's the experience and integrations that build the moat. That's exactly why Cursor is more popular than Aider.
TFA is saying that it's your product that matters, as always, and that using AI can't be your moat since everyone has access to AI.
It seems cursor did a bunch of things right, from choosing to base it on an already popular editor, to the vision and specific ways they have integrated AI, to the flexibility of which models to use. No doubt there was some "early mover" advantage too.
Certainly the AI isn't their moat since it's mostly using freely available models (although some of their own too I believe), and it remains to be seen how much of a moat of any kind or early-mover advantage they really have. The AI-assisted coding market is going to be huge, and presumably will attract a lot more competition.
I'm old enough to remember when the BRIEF (basic reconfigurable interactive editing facility) editor (by Underware) took the world by storm, but where is it now?
They are not safe against Microsoft, who have the resources to copy every feature that Cursor has into VS code and can afford to offer it for "free" for a very long time and Microsoft also has access to the exact same models as Cursor.
So not only that tells you there is no moat, but offering the best tools and models for free is exactly what Microsoft's modern definition of "Extinguish" is from their EEE strategy.
Copilot does seem to be catching up in some areas but from my testing Cursor still has better UX. There's substantial value in the "glue" that Cursor provides, one that Microsoft has failed to replicate so far.
An alternative phrasing is “you can’t build a moat with an AI model”. Which Cursor exemplifies by way of supporting 10 different models and adding more all the time.
I read the first one when it was posted here too and I don't get their point. It's a lot of words, but what are you trying to say?