The Path of the "AI Programming Rising Star" Cursor: Initially contributed almost half of Anthropic's revenue, yet was backstabbed by ClaudeCode, and ultimately "sold" itself to SpaceX

This is an entrepreneurial story about a young genius, strategic misjudgments, and the clash with market realities.

Emerging from an MIT dormitory, the AI programming tool Cursor became one of the hottest startups in Silicon Valley at a staggering pace, surpassing $1 billion in annualized revenue and serving over 60% of Fortune 500 companies globally.

However, behind the dazzling growth figures lie persistently negative gross margins, repeated financing setbacks, and competitive threats from former “major benefactor” Anthropic.

Ultimately, Cursor chose to entrust its fate to Elon Musk’s SpaceX. This April, both parties announced an agreement granting SpaceX the right to acquire Cursor for $60 billion; if they walk away, SpaceX must pay a $10 billion breakup fee and provide an equivalent amount of computing resources.

This acquisition could take place as soon as about 30 days after SpaceX completes its IPO, estimated around July of this year. For Cursor, the deal is both a solution and a high-stakes gamble.

Musk posted on X that Grok’s recent versions have made "significant progress" after training on "large amounts" of Cursor data. Cursor CEO Michael Truell characterized the partnership as "the beginning of our collaboration," adding, "We hope to bring even more improvements very soon."

The story of Cursor begins with a programming test that was "instantly solved."

In 2019, 18-year-old MIT student Michael Truell sat in the cafe of the Computer History Museum and finished a programming question expected to take an hour in under ten minutes.

Tech investor Ali Partovi ran a project aimed at discovering the world’s best undergraduate programmers. Impressed, Partovi challenged Truell with a question of his own, only to end up with a messy solution while the young man’s code remained neat and clear.

In 2022, Truell graduated from MIT with dual degrees in Computer Science and Mathematics. He co-founded the code editing platform Anysphere with classmates Sualeh Asif, Arvid Lunnemark, and Aman Sanger.

Truell achieved $1 million in annual recurring revenue within 12 months by creating a version better than Microsoft’s open-source editor, VS Code.

In March 2023, Cursor officially launched, with its growth curve almost vertically accelerating.

By 2024, Cursor reported serving more than 40,000 clients. By the end of 2025, its user base grew to millions of developers, and annual revenue multiplied tenfold in less than a year, breaking the $1 billion mark.

Currently, Cursor boasts 700 employees and serves 60% of Fortune 500 companies worldwide. Annualized revenue is reportedly at $2.7 billion—about 14 times up from a year ago—with some investors expecting a potential breakthrough to $7 billion by year-end.

Truell himself is low-profile; colleagues see him as something of an ascetic, preferring long hours immersed in code to boasting about income or fitness stats on social media like other young founders. In the company’s early years, he didn’t even pay himself a salary.

Beneath this modesty, however, he is as ambitious about Cursor as anyone in Silicon Valley. He told employees that Cursor should be "a company that goes down in history."

In order to build a magical tool that "can write all software in the world," Truell instituted a highly intense—even harsh—company culture.

Cursor is famous for its labyrinthine "unpaid trial" process. Candidates must come to the San Francisco headquarters, which resembles a college campus, to undergo days of full-time simulated work—sharing lunches with the team and completing projects on real codebases using company computers.

According to former employees, there was once an executive candidate who went through a grueling month-long trial, met everyone at the company, yet was ultimately rejected for "not meeting standards."

This harsh selection process has sparked accusations of “exploitation” online, yet also established Cursor’s formidable combat effectiveness.

Cursor’s explosive growth cannot be separated from model support by the cutting-edge AI lab Anthropic. But staff usually describe the relationship with one word: weird.

In the early days, Cursor was not only Anthropic’s client, but also its biggest "cash cow."

According to reports citing an employee familiar with the numbers, in the early days, Cursor’s API calls contributed about 40% to 50% of Anthropic’s revenue. Another employee said:

Both sides recognized their mutual need: we brought massive revenue to Anthropic, but at the same time, Anthropic released a competing product.

However, this "honeymoon period" did not last. Before launching its flagship code editor, Claude Code, Anthropic executives privately assured Cursor’s leadership that it was more a research project than a major commercial initiative.

This turned out to be a textbook "betrayal." Claude Code quickly became a hit among developers.

By February 2026, Claude Code had achieved $2.5 billion in annualized revenue, about $500 million more than Cursor at that time.

Many developers posted on social media announcing the cancellation of their Cursor subscriptions in favor of Claude Code.

Given that Anthropic had previously cut off API access to another AI coding startup, Windsurf, during acquisition negotiations, Cursor’s leadership felt an unprecedented existential crisis.

Facing competitive pressure and cost challenges, Cursor chose to develop its own models.

On January 5 this year, Truell called an "emergency" all-hands, announcing that Cursor must build its own AI models.

According to two employees, his message was clear and urgent: We can’t fall behind. Cancel all non-essential meetings. Be ready for cross-team collaboration at any time. We must adapt quickly and act fast.

After the meeting, Cursor began developing its own programming model suite, Composer, based on the open-source Kimi model from Chinese AI company Moonshot AI.

Cursor stated that in Composer version 2.5 released this May, over 85% of the work was independently completed by Cursor, with the underlying Kimi model accounting for only a small portion of the final product.

Cursor engineer Lucas Garza noted that Composer received "extremely positive feedback" from developers due to its low price and quick responses. This advantage is especially prominent as rising AI costs strain engineering team budgets.

Designing and running top-tier AI models is an extremely expensive compute game, and Cursor lacks the foundational chips to do it independently.

At this critical juncture, Truell found another visionary game-changer—Elon Musk.

On April 21, Truell announced the partnership with SpaceX on X in his signature brief style, calling it "an important step on our journey to build the best AI programming platform."

The strategic logic of the deal is clear for both sides.

Cursor gains access to SpaceX’s massive computational resources, including the Colossus supercomputer powered by hundreds of thousands of top Nvidia AI chips, securing ongoing compute for model training.

SpaceX leverages Cursor’s product expertise and distribution among professional software engineers, giving Grok a crucial boost in the AI programming race.

From a financial perspective, the deal is attractive for SpaceX as well.

xAI’s capital expenditure reached $12.7 billion last year, but annual revenue was just $3.2 billion, most of which came from social platform X.

Cursor generated around $770 million in revenue in the fiscal year ending this January—a nearly 24-fold increase from $32 million the prior year, and nearly a quarter of xAI’s revenue in the same period.

With Cursor on board, SpaceX gains a substantial AI application business in the enterprise market, filling a gap that Grok has so far struggled to break through.

The structure of the deal is quite unique. According to SpaceX’s S-1 filing, if either party decides not to proceed, SpaceX must pay Cursor a $1.5 billion breakup fee and provide $8.5 billion in free computing resources.

If the acquisition is completed, early investors like Andreessen Horowitz and Thrive Capital will see significant returns, and Cursor’s valuation has soared from less than $3 billion early last year to a potential $60 billion acquisition price today.