Jason M. Lemkin breaks down why Cursor's reported growth from $1 billion to $2 billion in 90 days surprised investors. Enterprise customers are driving the gains, but consumer churn may hit once annual subscriptions renew. VCs often miss what's actually working because their portfolios don't reflect the real market.
I tweeted about this the other day and thousands of people comment this and then, and everyone is in universal, Cursor's dead, Cloak Code rules all. And then Cursor announces their movement from a billion to 2 billion in revenue in, in 3 months.
I will say it's, it's funny because this is, this is one of those situations clearly where VCs judging the world based on their portfolio versus the real world are outta sync. So you hear these stories all the time and you just assumed that everyone had mainly moved to cloud code directly, right? And product teams had too. And you just assumed that's the way the rest of the world works. And that's why Cursor was smart to slip this news release to Bloomberg that they'd happened to double in the last 90 days. So our portfolios are not representative. I think the— listen, this is as much as I know, other than we all made the same jump to the conclusion based on our 40 portfolio companies. They said 60% of our revenue is enterprise. Probably the answer is right there. This is a trusted tool with a lot of things, including guardrails that can manage agentic swarms and others. They're pointing out how banks use them and other conservative enterprises and are just rolling them out. I don't know this to be true, but if Cursor is the more conservative choice, that's not the worst place in the world to be, especially if you can pick your model. But it's not my 5 fastest-growing investments. That's not where they're crushing it today versus 6 months ago. Um, but it's so funny we got it wrong. Like, numbers don't lie.
The feedback that I got from the tweet was, it was very simple from insiders, was twofold. Was one, that you have enterprise crushing it exactly as you said, and then two, actually just annual subscriptions and their cycles not being complete yet. And so there will be a wave of unsubscriptions, and that churn will be real on the consumer side.
You don't go from $1 to $2 billion in 90 days, uh, if you're having massive churn, like deferred churn at the end of the contract. I mean, That is growth that is just massive market pull, like epic market pull to grow that quickly, right?
And that's exactly, and I think the lesson is never underestimate big markets and momentum, right? You know, if you come into last year with the momentum they had or the middle of last year, even if, you know, things are slowing at the margin, even if at the marginal startup you're losing to Cloud Code, You know, you've built your name, you've built your brand. Every enterprise is trying to adopt coding. The adoption cycle there isn't, oh, I tried Cursor yesterday, I'm gonna try Cloud Code tomorrow. It's like corporate's gotta approve, purchase order's gotta be raised, we gotta have security review it, legal's reviewed the contract, we signed a deal. You're not gonna run in next day and say, we should switch to cloud now. It's like, no, we're gonna use this for the year. We'll do an eval mid-year and we'll think about it next year. I mean, Jason knows better than me.
