[HN Gopher] OpenAI looked at buying Cursor creator before turnin...
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OpenAI looked at buying Cursor creator before turning to Windsurf
Author : mfiguiere
Score : 98 points
Date : 2025-04-17 13:51 UTC (9 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| warthog wrote:
| i wonder what the price was. If it was around $20 Bn which OAI
| could have afforded and okay to ask by Cursor guys, tough
| decision not to sell here.
|
| You are 25 yo and made $2.5 Bn in 4 years
| lowkey_ wrote:
| Fair, but worth noting the founders almost certainly already
| have gotten fat secondaries, and now have a chance to build
| something much larger if they can execute.
| InkCanon wrote:
| Strongly suspect OAI can't afford 20B cash. Their latest
| funding round was 40B, and they're burning through money like
| it's rice paper. They could offer OAI equity, but Cursor's
| founders would probably be very suspicious of private valued
| stock (which is fairy money).
|
| How wise it is to buy Cursor is another question. Current
| valuation has them at 100x revenue. And I suspect agentic
| products will be a lot less cash flow positive than traditional
| SaaS because of the massive cost of all that constant codebase
| context and stream of code.
| sksxihve wrote:
| > The initial funding will be $10 billion, followed by the
| remaining $30 billion by the end of 2025, the person said.
| But the round comes with a caveat. SoftBank said in an
| updated disclosure on Monday that its total investment could
| be slashed to as low as $20 billion if OpenAI doesn't
| restructure into a for-profit entity by Dec. 31.
|
| They might not even get the full $40 billion
| blitzar wrote:
| I would have assumed the same - earlyish stage comanies in
| this area will likely be happy to take a big wedge of openai
| stock and a little cash.
| Aurornis wrote:
| Rumors from yesterday were around $3 billion.
|
| They had raised a Series C investment recently. Historically
| that puts ownership of founders and employees at around 40%.
| Could be a lot higher for a hot AI company though.
|
| Given two founders, AI company, Series C, and a $3bn purchase
| price they could each have netted around $750 million in a good
| scenario. Less if they cashed out in secondaries in previous
| rounds (which would have been smart). Fantastic outcome for
| them, obviously. This is the 0.001% scenario that founders
| dream about.
| justanotheratom wrote:
| Recently, OpenAI CFO Sarah Friar said,
|
| "We have something called A-SWE, which is the Agentic Software
| Engineer. And this is where it starts to get really interesting
| because it's not just about augmenting a developer, like a
| Copilot might do, but actually saying, 'Hey, this thing can go
| off and build an app.' It can do the pull request, it can do the
| QA, it can do the bug testing, it can write the documentation."
|
| https://www.youtube.com/watch?v=2kzQM_BUe7E The relevant
| discussion about A-SWE begins around the 11:26 mark (686
| seconds).
| foobiekr wrote:
| And you believe this?
|
| Surely then they have no swe reqs right?
| justanotheratom wrote:
| just stating facts.
| stefan_ wrote:
| The fact being that Sarah "CEO of Nextdoor" Friar stated
| they have this A-SWE vapor thing? I don't see how it
| pertains to what the said being factual.
| wobblyasp wrote:
| If they actually had something like that they'd stop talking
| about it and release it.
|
| Until we play with it, it doesn't exist.
| quantumHazer wrote:
| All I will say is that she is the CFO of a company that want to
| sell """agentic""" swe models.
|
| edit: typo.
| Jcampuzano2 wrote:
| If they have this why are they hiring, and how much code for
| openAI itself has it written.
| Drakim wrote:
| ...don't get high on your own supply?
|
| It's pretty obvious that these tools are not replacements for
| developers as of yet. I've tried them, and they are very
| nifty, and can even do some boring tasks really well, but you
| can't actually substitute actual developer skill (yet). But
| everybody is holding their breath because it looks like they
| might eventually reach that level, and the time-frame for
| that eventually is unknown.
| Jcampuzano2 wrote:
| But thats exactly what she marketed it as and made the
| claim it already exists, an agent for hire that can do
| everything a SWE can do.
|
| If this truly exists they'd have no need to hire since it'd
| force multiply their existing developers.
|
| What better marketing than being able to proudly claim that
| "OpenAI no longer hires those pesky expensive developers
| and you can too" because they can improve/multiply the
| productivity of their existing developers with their
| innovations.
| sandeepkd wrote:
| Looks like there are engineers with few years on their
| belt who feel super excited about the capability of these
| tools and then the executives and business people who
| have to toe the line since everyone else is doing it. And
| then on the other hand there are engineers with multiple
| years of field and subject expertise who are skeptical
| about the advertised capabilities, however they are
| either quiet or in the wait-n-watch mode to see how it
| plays out.
|
| As some one who has been both in engineering and
| management roles, I feel the manager role (not all but a
| lot of managers are just information pass through and
| tool would be more consistent for it) should be
| relatively easier for the automation. Bit surprised how
| no one talks about that as a possibility?
| fuzzy_biscuit wrote:
| Vaporware until it isn't.
| darth_avocado wrote:
| The question isn't "can AI code?", the question is "can AI keep
| coding?".
|
| How do any of these companies create "an AI Software Engineer"?
| Scraping knowledge posted by actual engineers on StackOverflow?
| Scraping public (& arguably private) GitHub repos created by
| actual engineers? What happens when all of them are out of a
| job? AI gets trained on knowledge generated by AI? Where will
| the incremental gain come from?
|
| It's like saying I will teach myself to cook better food by
| only learning from recipe books I created based on the
| knowledge I already have.
| fragmede wrote:
| > AI gets trained on knowledge generated by AI?
|
| This sounds like the ouroboros snake eating its own tail,
| which it is, but because of tool use letting it compile and
| run code, it can generate code for, say, rust that does a
| thing, iterate until it's gotten the borrow checker to not be
| angry, then run the code to assert it does what it claims to,
| and then feed that working code into the training set as good
| code (and the non-working code as bad). Even using only the
| recipe books you already had, doing a lot of cooking practice
| would make you a better cook, and once you learn the recepies
| in the book well, mixing and matching recepies; egg
| preparation from one, flour ratios from another, is simply
| just something a good cook would just get a feel for what
| works and what doesn't, even if they only ever used that one
| book.
| ethanwillis wrote:
| The original recipe books don't cover all possible things
| that could be created, not even in all their combinations.
| And most importantly even the subset of novel combinations
| that can be created from the recipe books -- there is
| something missing.
|
| What's missing is the judgement call of a human to say if
| some newly created information makes sense to us, is useful
| to us, etc.
|
| The question above is not about whether new information can
| be created or the navigation of it. It's about the
| applicability of what is created to human ends.
| rchaud wrote:
| Out of interest, why is the CFO the person commenting on this
| opposed to a product person?
| justanotheratom wrote:
| my thought exactly.
| maronato wrote:
| On the few times I've used Cursor or Claude Code for tasks
| beyond simple tests or features, I found myself spending more
| time correcting their errors than if I had written the code
| from scratch.
|
| I like Cursor and use it daily, but none of its models are even
| close to being able to take nontrivial work. Besides, it
| quickly gets expensive if you're using the smarter models.
|
| IMO these AI tools will become to software engineers what CAD
| is to mechanical and civil engineers. Can they work without it?
| Sure, but why would they?
| theturtletalks wrote:
| This is because Cursor is not sending the full context even
| when you drag and drop things inside the chat box.
|
| I started getting worse results from Cursor too. Then, Gemini
| 2.5 Pro dropped with 1M context, I repomixed my project,
| popped it into AIStudio, and asked it make me prompts I can
| feed into Cursor to fix the issues I have.
|
| Gemini has the whole picture and the prompts it creates tell
| Cursor which items to change how.
| nopinsight wrote:
| OpenAI's early investment in Cursor was a masterstroke. Acquiring
| Windsurf would be another.
|
| Next advances in coding AI depend on real-world coding data, esp
| how professional developers use agentic AI for coding + other
| tasks.
|
| RL works well on sufficiently large base models as shown by rapid
| progress on verifiable problems with good training data, e.g.
| competition math, competitive coding problems, scientific
| question answering.
|
| Training LLMs on detailed interaction data from AI-powered IDEs
| could become a powerful flywheel leading to the automation of
| practical coding.
| kylehotchkiss wrote:
| How many developers want to have usage analytics of their
| editors helping companies build functionality that aspires to
| replace them? This is silly.
| nopinsight wrote:
| Many of them likely won't switch immediately. They could also
| try to keep them with sweet offers, like generous usage
| quotas, early access to the latest models, etc.
|
| Once sufficient data is gathered, the next generation models
| will be among the very best at agentic coding, which leads to
| stronger stickiness, and so on.
| palmotea wrote:
| > How many developers want to have usage analytics of their
| editors helping companies build functionality that aspires to
| replace them? This is silly.
|
| Honestly, too many. Software engineers can be really,
| _really_ dumb. I think it has something to do with assuming
| they 're really smart.
|
| But even unwilling developers may be forced to participate
| (see the recent Shopify CEO email), despite knowing full well
| what's going on. I mean, tons of people have already had to
| go through the humiliation of training their offshore
| replacements before getting laid off, and that's a much more
| in-your-face situation.
| xp84 wrote:
| The frustrating part is that this is another area where the
| realities of capitalism seem misaligned with anyone's well-
| being. Nobody wants to be out of a job, but doing the
| opposite of the Shopify CEO's strategy, like severely
| restricting AI usage, looks like a great way to ensure your
| competitors catch up with you and eat your lunch faster. I
| don't see any answers, just different ways to destroy
| ourselves.
| philomath_mn wrote:
| I agree: the incentives to use more and more AI are too
| strong. We're all stuck in some form of the prisoner's
| dilemma and the odds that nobody will defect are much too
| low.
|
| So it seems the most rational position is to embrace the
| tools and try to ride the wave before the gravy-train is
| over.
| xmprt wrote:
| Developers know that AI will replace some of their
| coworkers. But only the "bad" ones who can't code as well
| as them. AI will learn from all of their good code and be
| used to generate similar code that's better than the bad
| devs but not as good as theirs. The problem is that every
| developer thinks that the coding bar is going to be just
| barely below their skill level.
| palmotea wrote:
| Exactly. Software engineers can be really, _really_ dumb.
| lnenad wrote:
| > Honestly, too many. Software engineers can be really,
| really dumb. I think it has something to do with assuming
| they're really smart.
|
| Maybe I am one of the stupid ones but I don't get you
| people.
|
| This is going to happen whether you want it or not. The
| data is already out there. Our choice is either learn to
| use the tool so that we could have that in our arsenal for
| the future; or grumble in the corner that devs are digging
| their own graves and cry ourselves to sleep. I'd consider
| the latter to be stupid.
|
| If you had issues with machines replacing your hands in the
| industrial age, you had a choice of learning how to operate
| the machines, I consider this to be a parallel.
| sottol wrote:
| They're probably just short-sighted - take the easy win
| ("get more done in less time") now and worry about the
| future later.
| visarga wrote:
| > Training LLMs on detailed interaction data from AI-powered
| IDEs could become a powerful flywheel leading to the automation
| of practical coding.
|
| I agree. But this is a more general flywheel effect. OpenAI has
| 500M users generating trillions of interactive tokens per
| month. Those chat sessions are sequences of interaction, where
| downstream context can be used to judge prior responses.
| Basically, in hindsight, you check "has this LLM response been
| good or bad?", and generate a score. You can expand the window
| to multiple related chats. So you can leverage extended context
| and hindsight for judging response quality. Using that data you
| can finetune a RLHF model, and with it finetune the base model.
|
| But it's not just hindsight analysis. Sometimes users test or
| implement projects in the real world, and the LLM gets to see
| idea validation. Other times they elicit tacit experience from
| humans. That is what I think forms an experience flywheel. LLM
| being together with humans during problem solving,
| internalizing approaches, learning from outcomes.
|
| Besides problem solving assistance LLMs are used for
| counselling/keeping company/therapeutic role. People chat with
| LLMs to understand and clarify their goals. These are
| generative teleological models. They are also used by 90% of
| students if I am to believe a random article.
|
| So the triad of uses for LLMs are: professional problem
| solving, goal setting/therapy, and learning. All three benefit
| from the flywheel effect of interacting with millions of
| people.
| dttze wrote:
| How is it supposed to learn to automate development by watching
| us _not_ do things? Which is what the LLMs are used for
| currently.
| falcor84 wrote:
| Reinforcement learning - with vibe coding, it just needs us
| to give it the reward signal.
| dttze wrote:
| So a bunch of people who can't code are going to train it?
| Or, rather, how will you know it is the right reward?
| Doesn't seem like a good way to train.
| demarq wrote:
| If OpenAI buys windsurf I'm canceling my subscription
| immediately!
| plextoria wrote:
| Why?
| tcdent wrote:
| misdirected combative tendencies guised as free thinking
| falcor84 wrote:
| If I can get Windsurf included in the ChatGPT Plus
| subscription, that would actually probably keep me from
| intermittently signing up and abandoning that.
| tristanb wrote:
| Oh man - I love Windsurf, but only use Claude in there. This
| doesn't sound like great news to me.
| falcor84 wrote:
| I mostly use Claude, but have recently been playing with Gemini
| 2.5 and ChatGPT 4.1, and they've been great too, with slightly
| different strengths and weaknesses.
| CalmStorm wrote:
| I don't quite understand why OpenAI would pay so much when
| there's a solid open-source alternative like Cline. I tried both,
| and feel that Cline with DeepSeek v3 is comparable to Cursor and
| more cost-effective.
| gscott wrote:
| Plus they already have a coding agent. This is beginning to
| feel like Yahoo 2.0.
|
| When you have just raised $40 billion and you spend $3 billion
| on a company that has a product that you also build that is
| dumb as rocks.
| KaoruAoiShiho wrote:
| That describes Google buying Youtube and Facebook buying
| WhatsApp, those seem to have turned out okay.
| gscott wrote:
| WhatsApp is not profitable yet. At least not as October
| 2024.
|
| YouTube had the advantage of being able to post pirated
| videos something that I'm not sure Google would have been
| able to do. YouTube gained traction in ways Google couldn't
| duplicate.
| mritchie712 wrote:
| they get the people too... they are still hiring like crazy.
| beoberha wrote:
| People clearly want the subscription model where they don't
| have to worry about API keys and such. I bet a huge chunk of
| this market is non technical people who can't code and don't
| realize how bad the code they're writing is when Windsurf and
| Cursor chop off the context to make it cheaper to run.
| maille wrote:
| Are there any similar solutions for MSVC? Almost all these tools
| are focused on VSCode.
| thefourthchime wrote:
| Just open the root folder in cursor and it'll still do all the
| stuff for you. Just go build it in MSVC. This is how I build
| apps. I create an empty project in Xcode, and then I go over to
| Cursor and have it write all the code. And then I go back to
| Xcode to build and run it.
| threecheese wrote:
| Interestingly I had an email from Windsurf a few days back
| suggesting I lock in an early adopter price, as they expected to
| release new pricing plans and increases.
|
| Related to a potential M&A from OpenAI? I'm less likely to follow
| their suggestion if they turn around and bake this into OpenAI's
| product suite.
| baq wrote:
| > Related to a potential M&A from OpenAI?
|
| related to locking in revenue, any dollar counts when your
| multiple is 100
| fidotron wrote:
| This is beginning to look a bit like OpenAI is becoming to
| startups what Facebook was in the Instagram and WhatsApp era.
| Back then Facebook were far more established, and mobile was a
| big catalyst, but the sums being mentioned here are very large.
|
| We should all start building the products that we think will
| terrify OpenAI most.
| matchagaucho wrote:
| The difference, though, is these AI IDE startups are
| essentially built on a fork of Microsoft VS Code.
|
| And MSFT has many end game options to dump free IDEs on the
| market with integrated AI.
| indigodaddy wrote:
| To followup on this train of thought, I feel like it might be
| game over for everyone else if Google decides to release
| their own VS code Cursor-like clone and stays consistent with
| the incredible context and free tier for Gemini Pro that you
| currently get from online/webui Gemini and Google AI studio.
|
| The question is do they want to go in that direction? (And
| also if they do, do they only allow Gemini model or do they
| open it up to a choice of various models (to also include
| models not related to Google/Gemini) and/or BYOK). I don't
| see why not because I believe they will slaughter Cursor,
| Windsurf, et al if so ...
| falcor84 wrote:
| Google have https://firebase.studio (originally idx.dev),
| which they recently updated, so I'd assume that they
| wouldn't want to cannibalize that.
| indigodaddy wrote:
| Don't see why they can't offer a local option as well
| fragmede wrote:
| Google spends an inordinate amount of money on client
| software in the form of Chrome, so maybe they could do an
| additional something, but looking at how their Google
| docs offline support is implemented, I don't know that
| there's appetite for that.
|
| Then again there's also Android Studio, so what do I
| know. (not a lot)
| fidotron wrote:
| I think it speaks to the SV bubble that the single most
| valuable application of their LLM that they can think of
| would be software development.
|
| One of the oddities of Instagram and WhatsApp is both of them
| were twists on what the expected formula for user value was
| at the time. (Retro photos and international SMS replacement
| respectively).
| doctorpangloss wrote:
| What is the appeal of VS Code? It's free and the UI looks
| nice?
| tough wrote:
| they already started blocking some MSFT extensions on cursor
| saw another day a thread on hn about it
| krashidov wrote:
| I'm not sure it matters whether or not it's a fork of VS Code
| or not.
|
| Zed is a standalone editor written from scratch and it hasn't
| had the same success as Cursor (yet).
|
| JetBrains IDEs are my absolute favorite. JetBrains controls
| the entire stack but they haven't had the same results yet.
| Cursor and Claude Code have some sort of product
| differentiation here that is hard to argue against.
| paxys wrote:
| Not at all the same, because these startups are ultimately
| dependent on OpenAI or OpenAI-like model providers to be able
| to exist. So OpenAI isn't preemptively quashing competitors
| like Facebook did, rather moving further up and down the chain
| (chips -> data centers -> foundation models -> fine-tuned
| models -> AI-powered products) to expand their business.
| basisword wrote:
| I can see why they're doing it. If I use Cursor I can pick the
| best model - I'm not stuck using OpenAI if someone outperforms
| them. If they own the tools they can takeaway that choice.
| OxfordOutlander wrote:
| It makes sense for OpenAI to overpay for wrapper companies that
| have distribution - a good analogy is British pub (bar)
| companies. By mid 2000s they were struggling. Low margins, rising
| cost base, expensive debt.
|
| What saved them? Heineken. They didn't care if the pubs made much
| of a profit - they made positive margins on having people drink
| their beer at market prices. They just wanted to increase volume.
| So they bought up several major players. In 2008 they acquired
| Scottish & Newcastle's operations, later thought bought Star Pubs
| & Bars, which had 1,049 leased and tenanted pubs, and finally
| half of Punch Taverns.
|
| The same strategy can work for OpenAI - buy up the wrapper
| companies, and make sure YOUR models are served to the user base.
| somerandomness wrote:
| VS Code fork 'default model' is the new default search engine
| bluelightning2k wrote:
| Nice analogy. Although a simpler way to say it is simply
| vertical integration, a known term for the phenomenon with a
| whole class of benefits.
|
| One of those benefits brings to mind another analogy: Apple.
| The ai model and the tooling are kind of like the hardware and
| software. By co-developing them you can make a better product
| and certainly something hard to compete with.
| abxyz wrote:
| An apt analogy, given...
|
| "The company must change its mindset and become proactive in
| its approach to compliance. I have decided this can best be
| achieved by the imposition of a sanction that will serve as a
| deterrent to future non-compliant conduct by Star and other
| pub-owning businesses."
|
| https://www.gov.uk/government/news/heineken-pub-company-fine...
| fpgaminer wrote:
| Usability/Performance/etc aside, I get such a sense of magic and
| wonder with the new Agent mode in VSCode. Watching a little AI
| actually wander around the code and making decisions on how to
| accomplish a task. It's so unfathomably cool.
| PUSH_AX wrote:
| Buying a VSCode fork for billions seems wild to me, but hey.
| paxys wrote:
| It's funny that in under a year we went from Sam Altman publicly
| saying that OpenAI was going to "steamroll" startups that were
| building products within its blast radius to now offering
| multiple billion dollars for those same startups.
| square_usual wrote:
| Holy shit, what are these numbers? $3B for Windsurf? Windsurf
| doesn't even have models of its own, or any fundamental research,
| it's mostly a wrapper around an editor (that is becoming hostile
| to wrappers, btw) and prompts. How can anyone look at the amount
| of money flowing around here and think this is rational?
| redbell wrote:
| > Before entering into talks to acquire artificial intelligence
| code-writing startup Windsurf, OpenAI looked at buying another
| option: Cursor.
|
| I'm not entirely sure if this strategy will work out well for
| OpenAI. In my opinion, an AI company, especially in its early
| stages, should focus intensely on refining and expanding its core
| products--those they plan to monetize through APIs--rather than
| diverting resources toward acquiring wrapper companies. Cursor,
| for instance, gained traction by embedding Anthropic's Claude
| Sonnet model to automate programming tasks. If OpenAI were to
| acquire Cursor or a similar IDE, a key question arises: _would
| they keep it open to other models, or would they restrict it to
| OpenAI 's ecosystem?_
|
| Additionally, there's speculation that OpenAI might be venturing
| into social media
| (https://news.ycombinator.com/item?id=43694877). If true, this
| could open up numerous competitive fronts that the company may
| struggle to handle effectively. They're already dealing with
| fierce competition in their core business, so expanding too
| quickly into unrelated areas could spread their focus and
| resources too thin, potentially weakening their competitiveness
| in unfamiliar markets.
| segmondy wrote:
| So no AGI? and AI is not good enough to replace their
| programmers?
|
| Or... do they need more coding data from programmers to train
| their models?
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