Alliance Co-founder's Letter to Entrepreneurs: Written at the Moment Cursor Sold for $600 Billion
Alliance Co-founder's Letter to Entrepreneurs: On Cursor's $60 Billion Sale
Many aspiring founders see massive exits like Cursor's $60B sale and wonder why they can't achieve the same, often concluding opportunities are exhausted. But great companies aren't built in obvious, crowded spaces.
Cursor, like Stripe, Figma, and Shopify before it, started with a non-consensus belief about the future. Before ChatGPT, they believed AI would transform knowledge work. They focused on a genuinely exciting domain, became their own customer, and obsessed over power users. Their journey involved years of "glass-chewing" effort before the market was ready. The pattern is consistent: identify a long-term technological shift, find a missed entry point, and execute for years before the trend becomes obvious.
First-generation products (PayPal, Adobe, Amazon) prove a market exists. Second-generation winners (Stripe, Figma, Shopify) rebuild that market around new insights, technology, or changing customer behaviors. Founders must identify their phase in the cycle. Early entrants like Coinbase or Cursor focus on making new technology usable for power users. Later entrants find the "yin" to the established "yang"—the blind spots incumbents miss as they grow distant from individual users.
The key is deep market immersion. Use every product in your space. Talk to users. Build an audience. Stop looking for ideas and start *seeing* them everywhere. Then, choose one. The idea must offer a 10x improvement or solve a "hair-on-fire" pain point—something severe enough that users are already crafting workarounds.
When building, avoid feature bloat. Ask: why would someone switch? Great startups rarely force new behaviors; they improve familiar workflows with drastically lower friction (e.g., Cursor forked VS Code instead of creating a new editor). Distribution is the underestimated moat. Before product-market fit, achieve distribution-market fit. How do customers discover new tools? Founders like those at Airbnb, Stripe, and Cursor did unscalable, manual work to recruit early users.
The final, unteachable ingredient is resilience. Cursor built for years pre-market, faced rejection, and persisted. So did Airbnb, Nvidia, and Rain (which launched post-FTX collapse). The lesson isn't that these founders were smarter, but that they stayed in the game long enough for their insights to compound.
Framework: Spot technological cycles. Cultivate unique insight. Obsess over your market. Talk to customers. Find a hair-on-fire problem. Build the simplest wedge. Win your distribution channel. Above all, don't quit when it gets hard. Most people won't do these things consistently. The few who do build the next generation of great companies. Go build.
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