Aakash Gupta@aakashgupta
Investors valued Cursor at $29 billion across three rounds in 12 months. That’s looking pretty suspect right now.
Cursor went from $1M to $1B ARR faster than any SaaS company in history. The trip back down could be just as fast.
An entire engineering team at Valon just canceled their Cursor seats in 7 minutes over Slack. 9:55 AM: one engineer asks to unsubscribe. 9:56 AM: done. 9:57 AM: “same.” 9:58 AM: “Cursor is so cooked my god.” 10:02 AM: “same I will never use.” No migration plan. No evaluation committee. No vendor review. One developer said “I don’t use this anymore” and the dominoes fell.
Cursor pays Anthropic hundreds of millions a year for Claude model access. Anthropic took that revenue stream, studied exactly what developers wanted, and shipped Claude Code, which crossed $1B ARR within six months and is now past $2.5B, growing faster than Cursor ever did. The model provider looked at its biggest distribution partner and decided to eat them.
Cursor has its own models for tab completion and autocomplete. But the heavy reasoning, the multi-file edits, the architectural decisions that make developers stay, that all runs on Claude. Claude Code delivers that same intelligence without the $20/month middleman.
Microsoft, the company that sells GitHub Copilot, has widely adopted Claude Code internally across major engineering teams. Cursor’s upstream provider is outgrowing them. Their competitor’s parent company chose the upstream provider’s tool over their own. Both happening at once.
The churn is going to be brutal. Enterprise seats look sticky in a spreadsheet until you watch a Slack channel where one cancellation triggers five more in 7 minutes. When your product is a layer between developers and the model they actually want, and the model ships its own interface, you’re selling a toll bridge on a road that just got a free lane. Accel, Thrive, a16z, NVIDIA, and Google all thought they were buying the next platform shift in developer tools. They may have bought the most expensive wrapper in SaaS history.