A Tale of Two IDEs: Windsurf vs Cursor
Routing and Context Windows Considerations for AI Wrapper Startups
Windsurf and Cursor’s divergent paths are a great case study for AI wrapper startups. Windsurf (a leading AI coding assistant a year ago) was sold for pieces. Cursor (parent company: Anysphere) has rejected acquisition offers and remains independent after a large $900 million raise at a $9 billion valuation. How did these two AI augmented developer environment startups end up in different situations? Let’s compare.
Windsurf’s Reliance on Claude
Windsurf bet on longer context windows. It relied heavily on Anthropic’s Claude models which supported longer context windows initially. For non-technical folks, a context window can be thought of as working memory that a model considers. 100,000 tokens as a context window converts to roughly 75-100 pages.
Windsurf traded increased initial “intelligence” in exchange for reduced speed, increased costs for API calls and model dependency. This put Windsurf in a tight spot when Anthropic launched a competing product.
Windsurf and Claude Code Timeline:
11/14/2024 Windsurf Editor Launch
02/13/2025 Windsurf Wave 3 Update
02/24/2025 Claude Code research preview
05/22/2025 Claude Code Full general availability launch
07/11/2025 Windsurf Leadership joins Google
07/14/2025 Cognition acquires remaining Windsurf team
In hindsight, Windsurf was a zombie company as of February 24th, 2025.
Anysphere’s (aka Cursor) Path of Survival
Cursor’s product design routes concise, task-specific contexts to multiple AI models, rather than relying on long-context, single-model pipelines. This includes its internal tab completion model. The end outcome of these decisions is faster speed, reduced costs and reduced model dependency.
Anthropic cutting access off to Cursor would lead to a transition of API calls routed to OpenAI and Google’s Gemini models. Any decision from the leading labs to cut off Cursor’s access strengthens the balance sheet of their larger competitors. It’s not a moat in the traditional sense. But there is a form of leverage they maintain that Windsurf did not have in the short-term.
AI software development has product market fit and Cursor faces a dangerous game. Anysphere recently raised $900 million at a $9.9 billion valuation. How much of that do they use for internal model development? They can increase their burn rate and reduce future dependencies or maintain a lower burn rate while trying to increase market share in the current paradigm. Are there impending catalysts that would affect decision making?
What would you do if you were the CEO of Anysphere?