Together with BeforeSunset

Get It Together With BeforeSunset

This planner designed to help users manage tasks, schedule events, take notes, and set timers, all within a unified platform. It offers features like AI scheduling, which optimizes your day using proven productivity methods, and a to-do assistant that breaks tasks into subtasks for easier completion.

Automate Now

Cursor, an AI code editor, is taking the programming community and AI industry by storm. The company has set a new standard for what’s possible by going from $1M to $100M ARR in just 12 months, valuing the company at $2.5 billion.

That’s a remarkable 9,900% YoY (Year over year) revenue growth in the last 12 months (TTM) for the company, Cursor, which was founded by four MIT students, Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger in 2022. However, before Cursor, a few companies had reached a similar milestone:

• Wiz: 18 months to reach $100M in ARR

• Deel: 20 months to reach $100M in ARR

• Ramp: 24 months to reach $100M in ARR

When a company achieves extraordinary success, it automatically puts pressure (also inspires) on other founders, leaders, and organizations to raise the bar for what they do and how they do things. So I wouldn’t be surprised if in the near future, a new company reaches $100M ARR in just 6 months, or even in just 3 months because the new standard has been set.

But the question is, how did Cursor do it?

Many founders overcomplicate “Growth” while it’s being simple. If you, as a founder and leader, look for hacks, tricks, shortcuts, or magic to grow your company, I’d say it’s the dumbest mistake you’re making. Because the reality is, there are no hacks, magic, or shortcuts to make a product or company as successful as Cursor.

Cursor grew doing the right things—the things most founders and leaders often overlook. So in today’s deep dive, I’m going to walk you through the strategies and factors that helped Cursor go from $1M to $100M ARR in 12 months. And maybe, you’d be so surprised to know that the things you’re taking for granted are the things that made Cursor a successful company.

Get your popcorn ready, and let’s dive in.

Top of the Funnel

In the startup world, there is a common advice that “Tech people” give to founders: “Have a waitlist of the product you’re about to launch—a big email list!” And of course, it’s generally good advice. But guess what, Cursor’s founders had no waitlist or a gigantic email list that’d blast the product with users on day one.

Neither ever since the company was founded has had a PR firm, marketing agency, or 100s of people working to market the product. But despite that, Cursor’s growth is exponential but all organic—people sharing, talking about, and recommending the product to other people for free.

It’s astonishing to see how Top of the Funnel works extremely well for Cursor—attracting hundreds of thousands of users for free. Most of its growth is driven by people sharing it, people creating content about the product, and recommending it to their friends, family, and coworkers.

Ricky Robinett is the VP of Developer Relations at Cloudflare, and his 8-year-old daughter knows how to use Cursor to build things. Last year, Ricky posted a short video of his daughter using Cursor, which took off on X.

The post has 2.7 million views with over 450 comments—Mega viral. The post grabbed the attention of co-founder and the CEO of Shopify, Tobi Lutke, a former employee at Tesla and OpenAI, Andrej Karpathy, and the author of the #1 business newsletter on Substack, Lenny Rachitsky, and more. Why did the video go viral? The reason it went viral is because it’s pretty obvious that when you see an 8-year-old coding and building “Stuff” using a simple tool, you can’t help but ask “Wow, if this kid can do it why can’t I or my family?” And you’ll not only start using the product immediately, but also share it with your friends, family, and coworkers.

And this is exactly what happened. But here’s even the bigger picture: Imagine how many people would have downloaded the video and reposted it on YouTube, Instagram, Facebook, and other platforms—it's a whole nother level of reach, which is just mind-blowing. And I’m pretty sure the video alone would’ve attracted thousands of paying customers for Cursor, generating millions of dollars in revenue.

Then there comes Cursor’s founder's interview with Lex Fridman. This is the biggest interview Cursor’s founders have ever done—bringing 600k+ video views. There are two main reasons why I’m including Lex's video in the Top of the Funnel: one, the video itself is all about Cursor and its journey. Two, Lex has a tech-savvy audience, resulting in the video being seen by the right audience. And the reality is, customers, especially potential customers love knowing the story and the people behind the company.

Moreover, Cursor uses X, just X, to share information and updates about the product, which helps it reach more customers and build a lifelong audience. X is the only platform Cursor uses to build an audience, attract new customers, and increase brand awareness, so far resulting in 150k people following Cursor on X, which is pretty unobvious for most brands.

And surprisingly, Cursor’s audience is very engaged—many of Cursor’s posts have gone viral, driving millions of views and thousands of likes, comments, and of course, resulting in tens of millions of dollars in revenue for the company.

What’s the big takeaway? If everyone talks about your product and becomes a word-of-mouth marketing engine for free, there is no way your product isn’t going to grow. It’s the same case with ChatGPT, Midjourney, Stripe, and many other products. The more aware people are about your product and company, the more users you’ll get and the more money you make. However, Top of the Funnel was impossible for Cursor without the second point, so let’s keep rolling.

Product-Led Growth

The top of the Funnel for Cursor only works because it’s a great product. The truth is, no one likes to share, talk about, and recommend a product that sucks. But when you have a great, really great product, it's marketing in itself.

If you are wondering what the heck Product-Led Growth is, it’s a term coined by Blake Bartlett in 2016, which promotes the idea that “It’s a Product-Led Growth if the product itself acts as the primary driver of acquisition, retention, and expansion.” Said differently, the product is the car and the top of the funnel is the “Gas” that runs the car—and they both go together.

This begs the question, how great Cursor is? We have already seen an 8-year-old coding and building stuff using Cursor. And it’s all because the product is so easy to use and is designed so simply that anyone, even kids can understand and build stuff on it without having unnecessary technical or programming knowledge.

Cursor is the fork of Visual Studio Code, built off of its open-source model. And because of this, when you start using Cursor, you get to experience that you’re not using Cursor, but literally the VS Code, a popular programming platform. Thus you become very familiar with Cursor’s ins and outs, and its features—very fast. The following are the unique features and capabilities Cursor’s has that help it stand out in the market and drive its growth like crazy!

#1: AI-Powered Autocompletion: When you use Cursor, you don’t need to write a single line of code manually, because Cursor doesn’t just predict the code, it also autocompletes them faster and smarter. Let’s say for example you start typing this code:

Based on this code, Cursor automatically predicts the next code something like this:

Of course, you can change, edit, or modify the code as you want.

#2: Automated Debugging: Cursor doesn’t just predict the next code and autocomplete them, but it also helps developers debug the existing code to fix issues and problems. To do this, a developer just needs to highlight an error and Cursor can find the error, tell you what went wrong, and fix the error through its powerful AI debugging system. This saves a ton of time because let’s be real, no one wants to debug, it’s the most boring task in programming, isn’t it?

#3: AI Chat Support: What if you “Stuck” making progress on Cursor? Don’t worry! You don’t need to use ChatGPT or Claude for it. Because Cursor has its built-in personalized AI chatbot for developers to solve specific queries related to the project they’re working on. So if you ever encounter a problem or have any doubt, you can ask Cursor’s Chatbot and it’ll instantly give you the right answer and resolve the problem.

#4: Super Fast Response: Most AI tools suck because they lack speed. But developers want speed in everything—coding, debugging, chat system, code refractory, etc. Cursor gets it, and this is why whatever the output Cursor gives occurs within 150 milliseconds, which is the lowest any developer can imagine. Cursor’s ultra-fast speed makes the coding feel seamless and uninterrupted, which massively increases the productivity and overall user experience.

#5: Context-Aware AI: The problem with most AI coding tools that exist in the market is that their models aren’t trained to understand the entire project or what the developer wants to build. But it’s not the case with Cursor, its AI model not only understands what the person wants next, but it also understands the entire project structure. It has the capability to reference other files and functions, generate cross-file fixes and optimizations, and adapt to project-specific patterns and code styles.

Moreover, Cursor gets better as it receives more inputs from the developers using the tool. The more inputs it gets, the better it gets in pattern recognition, understanding structures, and predicting the next “Accurate” move the developer wants. This means, the more developers use the product, the better and better it gets.

So it’s not just that Cursor’s onboarding process is simple and easy to navigate for its users, but also it has done a great job building its UI (User Interface) and provides features and tools that its competitors and other AI programming tools don’t. And this is why Cursor is winning.

Bottom-Up Approach

If there is one scenario I can imagine where Cursor would’ve gone nowhere, that is: starting with the Top-Down Approach. When you focus on selling to businesses and organizations, calling prospects to close the deal, and offering enterprise plans, it’s a Top-Down Approach. The Bottom-Up Approach is when you focus on individuals who can independently make the decision.

The Top-Down Approach brings complexity, takes a longer time in partnership, but has a high average contract value. The Bottom-Up Approach brings simplicity, takes less time in partnership, but has a low average contract value. Cursor chose the latter, which brought simplicity, sped up the process, and took less time to grow while seeing an enormous bump in its revenue.

Unlike Salesforce, Slack, and NVIDIA which focus on providing services to businesses and enterprises, Cursor focuses on providing and building the product to individual developers, founders, and engineers, which reduces the complexity of an ongoing process of back-and-forth emails, cold calling, negotiating, and closing the deal that often takes months.

But this is just the beginning of the growth, Cursor takes it even one step further. While most AI programming tools in the market either require paying X amount of money per month or at least input the Credit Card details, Cursor reduces the barrier to entry for any programmer by offering a Freemium model. This way, anyone with a minimum budget can download the Cursor app, create an account, and start building their dream projects through the platform immediately.

With Cursor’s free tier, you get 2,000 code completions per month. However, unlike other tech companies, Cursor doesn’t use sales tactics or force its users to upgrade their plans. It’s all up to developers whether they want to upgrade or not. And it works because if you love the product and find value in it, so even if no one asks you to upgrade, you will—because you want to unlock its full potential and build stuff using it, which is only possible if you have a paid plan.

So far this value-first approach is working quite well for Cursor—developers and engineers at Shopify, Midjourney, OpenAI, and Perplexity use Cursor. The product has 400k customers with an Annual Contract Value of $276 per customer. If we compare this to other companies that have also reached $100M in ARR, the numbers for total customers and Annual Contract Value (ACV) look totally different.

• Wiz: 260 customers for $384K ACV

• Deel: 1,800 customers for $55K ACV

• Ramp: 5,000 customers for $20K ACV

• Cursor: 400k customers for $276 ACV

Focusing on individual programmers and making the product free and affordable ($20 or $40 per month) helps Cursor provide a better service and have a word-of-mouth marketing engine that brings customers on autopilot. It would have not become possible if Cursor had been providing its services to businesses, organizations, and enterprises when it first started.

Community-Driven Retention

Some of the most successful companies—Airbnb, Figma, Discord, Reddit, Stripe, Shopify, and of course, Cursor—have a strong community online. Because these companies understand that community is one of the finest ways to attract new users and retain existing customers for an extended period of time. Community gives “New” customers a sense of belonging—it gives an identity that makes the customers feel special.

There are a couple of ways Cursor thinks about building a community. First and foremost, it has a solid, free, in-built community on its platform, which has more than 28,000 users, participating in the conversations, sharing ideas, and working as a “Free” marketing for Cursor. This directly means 28,000+ people are the “non-incentivized marketers” for Cursor who actively talk and share the product online.

And then there comes Cursor’s Twitter account, which has attracted 150k people. However Twitter isn’t like a community platform, but I still think it works as a community platform since people can join the conversations by commenting, sharing, and retweeting Cursor’s content.

But the most powerful is Cursor’s Reddit community, which has 28,000 members who talk about Cursor all day, every day. If you open Cursor’s Reddit community (not run by the Cursor team) you’ll find that all the people who have joined the community are Cursor’s users who share the project they are working on, new ideas to taste out, give product improvement feedbacks, and collab with other Cursor’s users and other programmers.

Why do these communities work? These communities don’t just give Cursor’s users a sense of belonging but also work as a Network Effect—People sharing their experience using Cursor, and often recommending it to the people they know. This not only helps Cursor get more new users but also helps retain existing customers—because we don’t just want a product, we also want a strong community, don’t we?

This community part is especially crucial for new developers and programmers who are new to programming and just started building products. Because these people often need to solve problems they don’t already know how to solve. Thus they love belonging somewhere online where they can directly talk to other programmers and developers—to not just solve problems but also to boost their motivation.

Timing and Market Opportunity

Google released Google Glass for public adoption in 2014, and commercially failed within 12 months of release. If you don’t know, Google Glass was built based on a pretty similar idea to Apple Vision Pro and Meta Glasses.

So how Meta Glasses are (if not Apple!) finding success when Google didn’t? Because Google launched it 10 years ago, way before the mass smartphone adoption, internet explosion, and the rise of Metaverse. People didn’t know if they wanted a glass for visualizing objects, they weren’t aware of the product, and on top of that, it raised privacy concerns. In other words, the timing was wrong as there was no opportunity for such markets when Google Glass was introduced, resulting in Google failing to sell the product units—at scale.

But today VR and AR glasses are finding success because we're almost there: many people understand the Metaverse, know the potential of AR and VR (awareness), and have an idea of what these glasses can do for them, resulting in steady adoption.

The point I’m trying to convey is, Cursor wouldn’t have become a success, if it had arrived in the market in 2014 or even in 2018. And the reason is, before Covid-19, the AI wave was not quite there yet, and we didn’t know if we needed a product like ChatGPT, Claude, or Grok. Not only that, if Cursor wanted to build a product-a-like in 2018, it would have been extremely difficult to build and would’ve cost a ton of money, resources, and time—with no surety if the product would succeed.

Cursor became successful because it came right at the moment in the AI wave when people were already familiar with AI, AI tools, and their enormous potential. It was the right time with the right opportunity.

Cursor’s co-founders have already publicly talked about it on the Lex Fridman Podcast. The co-founders got inspired to build Cursor when Copilot was released in 2021. This was the exact moment that sparked an idea in one of Cursor’s co-founders, Aman Sanger’s mind. Here is what he says about it:

It became possible to build Cursor because today GPUs are no longer expensive (compared to 10 years ago), the co-founders had an idea of what exactly to build, and since they already had seen the potential of ChatGPT and Copilot, they just needed to replicate the process using VS Code’s open source model—The timing was perfect and an untapped opportunity was there.

We have yet to see what Cursor does in the next 2 or 10 years. Will it keep on growing or fail? Time will tell. But let’s just put that aside and accept the fact that what Cursor has accomplished is appreciable and inspiring—going from $1M to $100M ARR in 12 months! This will definitely inspire so many companies to ramp up their game and achieve similar results. Thus, I wouldn’t be surprised if tomorrow, a new company reaches $100M ARR in 6 or 3 months, because the standard has been raised.

Thanks for reading, catch you on the next one.