Seeing young companies which are pre-revenue, which are competing for an unproven yet crowded sub market (AI coding assistant) out value an established incumbent in the larger space does not compute.
Add to this the fact that there is very little moat for AI coding assistants. Assuming the market as a whole proves itself, there is a very good chance that the winners will be the established incumbent IDEs who can add AI assistance as a feature in their established products.
All of that is to say, current AI valuations in this space look a lot like a bubble.
Which suggests that your framework is lacking.
Here's where:
1. You're neglecting to look at the differences between the fast-rising stars and the comparable incumbents, and instead you're assuming that the incumbents automatically represent a ceiling. In this particular case, JetBrains obviously isn't the most ambitious company on the planet, and isn't focused on hyper growth. There are plenty of avenues for AI IDEs to grow and expand their revenue that have yet to be explored.
2. You're overestimating the importance of concrete moats. Google had no concrete moat either. Just because people can switch easily doesn't mean they necessarily will.
3. These companies aren't pre-revenue. I believe JetBrains is making something like $400-$500 million dollars a year, after 25 years. Cursor is at half of that in just 2 years. Windsurf is also doing big numbers.
4. Related to #3, you're underestimating growth trajectories.
5. You're leaving out the context. Companies that can afford to make $3B acquisitions (a) have tremendous war chests, and (b) have extremely ambitious goals. They're not looking to build the next JetBrains, they're looking to join the pantheon of $1T companies. Achieving massive 10x or 100x or 1000x growth as an investor/owner requires making asymmetrical bets -- bets where if you lose you're still okay, but if you win, you win big.
ie it's a mistake to estimate the potential upside by looking at the size of the current developer market.
As you move you're coding tools towards a less technical customer base - there are two synergistic effects - your potential customer base is much much larger, and they are simultaneously less technically competent on average ( and so less likely to build their own tools if you charge too much ).
Whether those assumptions are true - time will tell - but I definitely see more people thinking software development is now accessible to them.
Almost everyone here is providing business value in service of these rules of the universe. Those who aren't in cost centers probably need to reflect on this reality more.
That is none-sens.
If that were true, all profits would go to the customers. No, you are hired because the company and its owners can extract the profits from your work. Laying you off could mean nothing to customers, but even more profits to them.
Why? What does that mean?
> No, you are hired because the company and its owners can extract the profits from your work. Laying you off could mean nothing to customers, but even more profits to them
Nothing you said here changes the fact that your employer is your customer, paying for your services. If you don't see it that way, it's to your own detriment.
- Generating revenue from customers is about more than just creating a great product. You also have to reach lots of customers and convince them of your value. Many naive idealists think only product matters (or should matter), and neglect distribution. But most people eventually come to understand that both are necessary, and that this is practically a law of physics, not something to moralize about. (FWIW JetBrains is quite good generating revenue, and I'm fairly certain their revenue dwarfs that of Cursor and Windsurf.)
- Whoever is paying you is your customer, no matter what alternative word we use for it. If you're an employee, your customer is your "employer." If you're being acquired, your customer is your "acquirer."
- In most cases, acquirers are playing the role of investor. Investors value returns. If you want to provide value for an acquirer, then, you need to convince them of the future value of your business should it be acquired. That's usually best done through growth trajectories.
- It's perfectly valid to continue generating revenue year after year without being acquired for eye-watering sums. It's a waste of your emotional energy to become jealous or indignant when others get acquired or succeed with less work. Good for them, just keep doing you. That also goes for the rest of us in the peanut gallery. We don't need to attack recent successes to defend the honor of our favorite incumbents.