Sunday, July 05, 2026

5: Cursor

SpaceX just bought Cursor for $60 billion, the largest-ever acquisition of a VC-backed startup. Here’s the story of the multi-year team effort that led @Neo and me to make the first investment in Cursor, including wisdom from a 23yo colleague who saved me from a bad judgment. ............ We’re “people capitalists,” not just venture capitalists: we chose the people three years before they became founders. ...................... We first met Michael in June 2019 when he was an MIT freshman. The whole story begins two years earlier, when the sage Albert Ni and I crisscrossed America’s top colleges to pick the first cohort of Neo Scholars. ............... Obsessed with finding the most promising CS students, we spent thousands of hours interviewing candidates. Albert taught me untold lessons about assessing young talent. Thanks to him we met the brilliant Brian Gu (@gubsheep) in 2017 and chose him as one of the first Neo Scholars. ............... Brian has an amazing eye for talent, and I relished visiting his Hack Lodge hacker house multiple times a year to spend hours with the participants. In early 2019, he introduced us to Michael Truell and @BFSpector, each of them exceptional. I interviewed them that summer, and they both eventually became Neo Scholars. ................. I remember my first meeting with the 18yo Michael Truell at a cafe in Mountain View. As I did with every student in those years, I gave him a paper-and-pen coding challenge. He breezed through it, producing a clean, elegant solution in a few lines of code. I asked him to give me a coding challenge back, and he almost stumped me with a much tougher task. ..................... He was set on starting his own startup one day. Michael’s unique combination of calm confidence, kind energy, and absolute genius were unforgettable. I marked my notebook with stars and “A+” marks to highlight that he was a superstar.

I knew within minutes that I’d want to invest in anything he does.

............... We eventually welcomed Michael, his future cofounder @AmanRSanger, and Ben into the Neo community and offered them mentorship and connections that would maximize their potential.......... During the next three years before Cursor, my colleagues and I poured our hearts into supporting these rising stars................. We hosted Michael at Startup Camp, our week-long bootcamp for would-be founders at a beautiful workspace on the California coast. Little did we know how many of the students who met him there would go on to become future Cursor engineering leaders: @LukeMelas, @MilichAB, @MerrillLutsky, @GregFoster996, @TomasReimers, and @Wanqi_Zhu. .............. Three of my colleagues recall different sides of Michael. @CKLShorall remembers the coachability. Michael was pitching a new product and wanted her feedback on his customer calls. Huddled around the phone, Claire gave him points on crafting a narrative, and what struck her was his curiosity, his humility, and how fast he improved. He clearly had the magnetic “it” factor of a future star. .............. Lauren Lee remembers the mischievous confidence. At one Neo group competition, Michael named his team: “Winning Team.” @Jan_Crisostomo remembers the depth. She spoke to him about how his parents, both journalists, shaped his worldview. He listened more than he spoke and exuded a maturity and wisdom beyond his years. .................. As they entered their senior year, when the three said they wanted to start an AI company, I was ecstatic. I instantly committed to biweekly mentorship sessions to give them feedback on their ideas. The trio was brilliant, and I remember feeling I had little to offer them except constantly encouraging them to aim higher and think bigger. ....................

Ben decided to quit Cursor and do a PhD instead, and I spent hours trying in vain to convince him otherwise.

............... We ultimately settled on a valuation 10% lower than what they’d originally proposed. I’m pretty sure this was the last time any investor haggled with Cursor. ............... The lesson I’ve learned since then is to focus more on the people than on the numbers, and never drive too hard a bargain when investing in superstars. It’s because of experiences like this that our funding terms for Neo Residency are so generous. When dealing with truly exceptional people, it’s ok to offer ridiculously favorable terms. ......... As Cursor grew, we invested more capital in the company at every chance we got. They merged with Anysphere and joined forces with their college friends Arvid and Sualeh, and later raised additional money from amazing VCs including A16z, Accel, Benchmark, Coatue, OpenAI Fund, Thrive, and others. .......... We introduced them to countless customers, from individual developers to large enterprises. Mainly, we watched from the sidelines in astonishment as they assembled an unparalleled team and grew faster than any company in history. ..............

For seven years, we saw a team come together, a founder grow, and a community show up for each other. That's the story.

European vs. U.S. Economic Performance: An Update A progress report on trans-Atlantic comparisons .............. a funny thing happened on the way to inexorable European decline: If one compares either European GDP per capita or European productivity (GDP per hour) with that of the US on a year by year basis, using completely standard methods, one does not find an ever-growing gap. In fact, the gap between Europe and America has, if anything, narrowed somewhat over the past 25 years. ................ With authoritarianism on the rise in America, Europe is now the world’s great bastion of democracy. ............ the preponderance of the evidence supports the view that Europe is not in relative decline. I will show that comparisons that seem to show Europe lagging ignore important qualifications – qualifications that can render those comparisons misleading. First, there is a big difference between the EU and the US in industrial mix: the U.S. economy is more highly concentrated than Europe in “tech”, which creates a divergence in measured growth but not in living standards. Second, it is inherently difficult to measure growth in the face of technological change – a problem that doesn’t arise, notably, when comparing economies at a given point in time.

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