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Comment by rob74 | Hacker News Reader

What's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...

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In terms of IDE yeah it is not that great.

I do have Copilot in VSCode and Cursor.

I thought both should be equal in solving problems - turns out Cursor with the same model selected somehow was able to solve tasks that Copilot would get stuck or run in loops.

They have some tricks on managing file access that others don’t.

Cynics on HN easily dismiss AI service wrappers (and many of them are in fact overblown and not worth their own code). But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy. The biggest issue is that model providers also see what the community likes and often move on with their own offerings that are tailored to their own models, potentially at the training stage. So even if you have the best harness for something today, unless you are also a frontier LLM provider, there's zero guarantee you will still be relevant in the future. More like the opposite.

Isn't Codex TUI available for free though? Besides others like Pi and OpenCode of course.

It can use local/oss models, but it doesn't make it simple to do (easiest with ollama) and it's not clear what else you 'lose' by making that choice.

If you had a really good (big) local model, maybe it's an option, but on the more common smaller (<32b) models, it will have similar problems in looping, losing context, etc. in my experience.

It's a nice TUI, but the ecosystem is what makes it good.

mac studio 512gb versions are entirely sold out for this reason precisely

> But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy.

true, but its not worth $60 billion fucking quid.

it's insanity.

the whole thing is driven by irrational stock market investers who NEED ai to be the thing that saves the world.

they're betting everything on it.

It's not like someone paid $60 billion for a product the way you pay for bananas at the store. They invested a much smaller amount and essentially bought an option to acquire. And even if you don't believe the company's assets are worth the current valuation, an acquisition can still make sense if you believe that valuation will go up further. And if they actually do acquire, it will probably still not be in cash. They'll just be swapping stocks. That is essentially how all startup funding works. There is nothing strange about this. It merely reached new dimensions thanks to AI.

I mean yes, you are right, but they also paid $10 billion for that option. Which is also far too much for a harness.

I mean they doubled revenue from $1B/yr to $2B in a month.

At some point it can be valued as a high growth business, the code that backs it is almost irrelevant if the business is strong.

trusting a startup to accurately report its revenue in this market is about the dumbest thing you can do

IIRC, it was $2B annualized. Which means nothing. Also, their expenses will be way north of that.

> (...) writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy.

This. They are after the harness engineering experience of the Cursor people, I'd assume the they want to absorb all that into Grok's offerings.

The value and the room for innovation on the harness side seems to be underestimated.

Oddly the harness also affects model training, since even GLM/Z.ai for example train (I suspect) their model on the actual Claude Code harness. So the choises made by harness engineers affects the model. For Kimi/Moonshot and OpenAI the company makes their own harness. Alibaba uses Gemini.

Very interesting dynamics.

There are plenty of harder things in the world and very few are worth 60B.

Something being harder and attributing value to that makes no sense. Sure a big moat is important for value but "difficult to do" is just a unidimensional angle.

Showing naked butt on the internet seems easy.

Earning millions that way is much more complicated.

"But writing a genuinely good harness with lots of context engineering and solid tool integration is in fact not that easy."

It is surprisingly easy to do it once someone else has done the work. Increasingly that's the nature of AI-based software engineering: point it at an existing tool and ask it to carefully duplicate features until it has parity. As you pointed out, frontier LLM companies happen to be well positioned to sell the resulting products.

Sure, but is it worth 60 billion?

SpaceX thinks so.

You mean Musk thinks xAI need to be shown making AI investments to keep getting outside funding.

SpaceX the space rocket and internet satellite company? Or SpaceX the Elon Musk piggy bank used to buy up all his financial misadventures?

Their annualized revenue run rate is on track to surpass $6 billion by the end of 2026 so it's not ridiculous for them to be valued at $60 billion at some point. Also worth noting that if they do get access to SpaceX compute, they could start pretraining their own model. Composer is good but its built on top of Kimi 2.5.

Definitely not if someone frames it "shitty IDE with some plugins".

But if someone frames it "engineering talent that knows how to make LLMs even better at software development than competition" it might.

I see with my own work it works so it is not like Devin that was basically a scam that was valued at 10 billion.

In this kind of context yeah feels like it is quite possible to be worth 60 billion.

They're using the code intelligence from the IDE to run the AI, while Claude Code only does greps.

AI coding is much more than just the model - all the tools that human use in IDE are also useful for AI. Claude Code on the other hand just works with grep.

>They have some tricks on managing file access that others don’t.

I thought it was a Windows thing. My Windows work computer is so heavily managed and monitored I assumed that was why Copilot stops being able to get terminal output or find the file I'm looking at. It's the same problem in IntelliJ and VSCode, with different models trying to find things in different ways.

Now that I think of it though, I've only used Copilot at work. At home I use Debian but I've never tried using Copilot. Claude, OpenCode, Gemini, and IntelliJ's AI Chat pointed at local Ollama models never have issues finding files or reading files and terminal output.

I actually now think ai prompt writing in the IDE is completely overkill nowadays.

IDEs are made for just a human to interact with code. I think the paradigm of forcing these tools that weren’t built for this to do this, is us trying to fit a square peg in a round hole.

Call me old, but don’t put ai in my ide. My ide was made for a human, not an ai. For the established players for sure it makes sense since they already have space on our machines. But for the new ones imo terminal, or dedicated llm interfaces are where it’s at.

If I’m writing code sure suggest the next line. If the machine is writing code, let it, and just supervise properly. and have the proper interface that allows the strength of each

My IDE has nicer tooling for things like diffs, and has all of my LSP's configured which the harness can utilize

Yeah but that is how many tools just to get it to work, and how much burden on your PC. it just seems simpler to me to just use as few tools as possible to accomplish the goal.

Also shameless plug, I wrote something about this very thing. https://khalah.medium.com/getting-ai-to-work-right-27b750dba...

They are now a Codex clone and without the subscription pricing. You have to spend thousands to get what you get from a $200 Codex subscription. How do they compete with this except from users who haven't caught on yet, or businesses that are unbothered to spend thousands a month per dev and wouldn't consider just subscribing to 1-3 $200 subscriptions instead?

And their price is so high because it's markup on API rates. API rates, even without markup, are just insanely irresponsible for anyone to be spending on full-time daily usage.

> users who haven't caught on yet

They are catching up fast!

https://www.businessinsider.com/chamath-palihapitiya-ai-cost...

Tellingly, from his full post: "Mostly because I do not yet see an equivalent uptick in productivity or revenue..."

https://x.com/chamath/status/2029634071966666964

I suspect that as the value a company provides is more than its code, then increasing code churn does not lead to an equivalent increase in revenue. Even for a tech company, a business' concept, connections, knowledge, assets, non-coding staff, etc.. are a significant value and increasing code doesn't increase the throughput of that value. For non-tech companies code is the grease in the gears, not the gears themselves.

Codex is coming for those non coding use cases too. Is Cursor?

API rates are the real rates. Subscription costs are the "first hit is free" subsidized pricing.

They’re not the “real rates”, they’re the rates that are being charged for API use. API reportedly has a margin of profit

You also neglect that products like Cursor run on two margins, their own plus the API provider’s. That’s always going to come at a premium

Yes, the rates with a margin of profit are the real rates.

The rates without a margin of profit (or with a negative one) are not real.

> users who haven't caught on yet

If you think this of users who use cursor then I don’t think you’ve used cursor much at all.

What do you mean?

Only the foundation model companies offer cheap/subsidized compute.

If you're an app layer company, you're offering a 10x worse deal to your customers.

Foundation model companies are willing to lose money to win loyalty. Remains to be seen if it'll work.

If you’re more worried about cost than you are being productive and getting good results then sure, stick with foundational model company apps.

“Being productive” without taking inputs/costs into consideration is an oxymoron.

A company that cares more about cost than results is probably a terrible company to work for. They will give you 10yo dell laptop with 8gb memory and complain that you’re slow when it takes 15m to build the application.

So no it’s not an oxymoron.

Productivity is literally a statement of the relationship between the result and the cost, presumably you found that out after reading the reply and that is why you switched from "productivity" to "results" in your reply.

Until you learn what productivity is we can’t continue the conversation.

Please at least try to keep track of which sockpuppet you are using in this thread sighthrowaway.

But euros spent on tokens is a tiny fraction of the overall costs of the project.

That’s the thing, I have never seen detailed costs of what people are spending their money on. I know that for Claude there’s a $200 monthly subscription through which assigned credits one burns pretty fast, at which point (and I may be wrong on this, because I’ve never used the thing) one can run extra code on a “pay as you use it” basis? Again, I might be wrong on this.

I’ve also seen it mentioned a lot of people having 2, 3 or even more subscriptions, which I’m pretty sure that can easily go South when it comes to costs.

But, again, and the most important point, I’ve never seen a detailed post on what people spend on this AI thing on a monthly basis (let’s say).

I've used Cursor a lot. Until recently it was mandated by my employer. I can't see the attraction at all. It's a (bad IMO) IDE integration, a reasonable model (but I still generally preferred Claude over Composer), and a bunch of other tools that weren't very developed (like cloud environments and multi-agent orchestration). It's a suite of tools, most of which have superior alternatives. What am I missing?

You have model choice in cursor… why would you use composer?

What's the advantage over github copilot actually? They seem to have all the same access and features (except for this sheduling thing?) for cheaper.

API rates on local models are quite cheap, and you can even run them locally. Yes, the hardware for doing so at speed is expensive, but people used to drop the equivalent of what would be $50k or $100k today on an individual workstation for full-time use. It's justified if the productivity gain is strong enough.

But that’s not competitive. The only reason to do that is out of need for privacy. Which is critical for some. The tradeoff is that the models are relatively bad. I don’t see how Cursor can win from this use case especially if to get the privacy benefit you need to spend a huge amount. You can already run Codex for free with local models too.

Whose pricing is above API rates? Not Cursor. It's 100% at each model provider's published API rate. With a bigger sub, you get it cheaper than that.

Cursor makes a ton of money because the product is great. It's easily the most sophisticated harness out there, and it isn't an IDE anymore. It's an agent dashboard since version 3.

Suffice it to say it's not all idiot money being thrown at them by users.

General Motors is worth $72B.

That feels more like a reflection of how terrible most GM cars are than about the inflated valuation of Cursor, which is what I infer you were trying to imply.

Their revenue and growth justified it. Plus, for xAI that could be the only way to get a SOTA coding model they want so hard.

I thought cursor became mostly obsolete with Claude Code and Codex TUIs?

That matches my anecdatal experience with a couple dozen devs. Many wnet hard on the Cursor train and have mostly gotten off now with CC and Codex TUIs available

Are TUIs not yesterday’s hot thing?

The way I work now in the Codex desktop app is that I spin up 3-5 conversations which work in their dedicated git worktree.

So while the agent works and runs the test suite I can come back to other conversations to address blockers or do verification.

Important is that I can see which conversation has an update and getting desktop notifications.

Maybe I could set this up with tabs in the Terminal, but it does not sound like the best UX.

That's probably more a personal preference than objective measurement. A lot of people already spent most of their dev time in the terminal, so for someone like myself that uses neovim claude code or codex cli are much easier than using the GUIs.

The solution is use both. They both have their usecases. Cursor's autocomplete and quickly highlight a few lines -> throw into context, plus it's got a very good file index/API (which burns much less tokens than Claude's grep'ing) and whatever else they are doing underneath to optimize it for coding.

Claude is still gold standard if you're not in an IDE though.

Grep'ing doesn't use tokens, it uses grep.

Claude has to use more tokens to read the grep output.

Reading files is always the biggest token burning when coding. If it can't find stuff quickly or has to use less and head to trim it before finding it, then you're just wasting context window

Cursor both lets you highlight specific lines multiple times per chat and is much quicker at finding stuff.

> I thought cursor became mostly obsolete with Claude Code and Codex TUIs?

I wouldn't think so. At work I have both cursor and claude code and while I use both, cursor is by far the most pleasant to use. If I had to give one up, I'd let claude go.

Because of user count? Same was said about instagram. with all due respect, devs don't seem to understand business

Who are the users? I haven't seen many pro users using cursor

  you've formed an opinion on the value of the company without knowing how many users it has? Kind of proves my point, no?

Companies. Single devs can jump around IDEs and TUIs more easily but that’s not what companies tend to do.

But do devs know a which IDE is better? That seems to be a rather important question here.

It's not 'the' most important question.

Or devs are just different users who care about different things and have different experiences.

Reminds me of the famous dropbox post: https://news.ycombinator.com/item?id=9224 - I don't even know if dropbox still exists in 2026 but i'm still happily using rsync and mailing things around because dropbox has just absolutely never worked reliably for me, unlike my 2007 gmail account.

Likewise, if it were up to me, instagram and any business whose business model revolves around ads would be banned (because ads would be banned because advertisement is harmful in general).

It's fine to care about different stuff, but if you want to understand the valuation of a company, then your experience only goes so far. it's not going to make any sense unless you broaden your scope of interest to the metrics that impact valuation.

I don't read OP's post we're talking about ("What's crazy is that a company [...] could be worth more than $60B...") as not understanding, but as disagreeing that our world should work in such a way where this state of affair is even remotely considered acceptable

It's an interesting idea that society should somehow prevent companies valuation being linked to how many people use their product.

Unsure how it would work in practice.

Are you using the same AI engineering tools you were using 2-3 years ago? 1 year ago? I'm not. Without a network effect, capturing revenue is hard.

My use is not relevant. It's not ideal to extrapolate from your own personal habits. cursor's user volume and growth is the important thing

can't X recreate one with 1B? As an IDE, honestly I can't even understand it needs more than 1M to create

It's not about the tech, it's about the pool of users that use Cursor, by acquiring Cursor you get a bunch of users + subscribed and already paying pool of people instead of just rebuilding something from scratch and convincing people to change their tools with a new one

Is it about the users or the data the users generate. Pretty easy to see the day devs are replaced by the data they themselves generated. Companies are only going to get one chance to grad this data. Similar to the internet cutoff.

True, especially with Composer (the finetuned model by cursor)

the IDE has little value

What they want is the massive user base, the data (Cursor has a lot of high quality coding data for training), the teams expertise in coding models and agents, and the Composer models

60 billion is a large number but these frontier labs are burning billions a month in compute alone, and SpaceX is IPOing soon so they'll have a lot of cash to spend

How massive is the Cursor user base?

The numbers I could find says 1 million, with about 35% paying.

I'd say that a million users is pretty good, but 350.000 paying users isn't, if you're a $60B company. Someone else mentioned that Anysphere has a $1B ARR, but I seriously doubt that each user is forking over ~$3000 per year.

Over $2B ARR now.

Why do you doubt $3k/yr? Corporate usage skews a lot higher, when it's evaluated against hiring, not as a nice to have addon.

If $10k/yr means you get work done with one less hire that's an easy decision.

enterprise contracts. ARR is almost definitely juiced by counting future contract value

>and the Composer models

You mean Kimi K2.5? They can get that for free.

This is it. I can’t believe the other commenters are unaware that Cursor recently fine-tuned an open-source model and brought it to the frontier, even if it remained there briefly.

Elon/xAI want Grok to become useful for coding. Cursor has enough data and expertise to create a useful coding model. They found a price and an arrangement that made sense for both parties.

Cursor sells its own models as well now

It's own RT'ed open source models right?

> What's crazy is that a company that sells an IDE (that's not even a particularly good one compared to competitors like JetBrains) integrating some AI plugins could be worth more than $60B...

yes. plus $2b ARR, 1m DAU

Welcome to the era of vibe-based valuations

* MicroSoft is shaking in the corner lol

MS is doing just fine I'm sure

AI yielding such incredible cost savings. /s

Cursor is useless

> that's not even a particularly good one compared to competitors like JetBrains

Massive understatement calling it "a not particularly good plugin". If it were that simple there wouldn't be a need to even do this.

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