Cognition (Devin AI) to Acquire Windsurf

I think the amount of turmoil around these deals is giving more weight to the possibility that we’re in a massive bubble thats quite divorced from any kind of fundamentals. Sooner or later the bubbles gonna burst.

> divorced from any kind of fundamentals

Anthropic ARR went $1B -> $4B in the first half of this year. They're getting my $200 a month and it's easily the best money I spend. There's definitely something there.

I’ve always dwelled over $5 a month subscriptions for iPhone apps due to subscription fatigue. I find myself signing up for $200 AI subscriptions without a moments hesitation.

I hope both of you know that you're in the extreme minority, right?

A very productive minority.

Have we seen any examples of any of these companies turning a profit yet even at $200+/mo? My understanding is that most, if not all, are still deeply in the red. Please feel free to correct me (not sarcastic - being genuine).

If that is the case at some point the music is going to stop and they will either perish or they will have to crank up their subscription costs.

I am absolutely benefitting from them subsidizing my usage to give me Claude Code at $200/month. However, even if they 10x the price its still going to be worth it for me personally.

I totally get that but that’s not really what I asked/am driving at. Though I certainly question how many people are willing to spend $2k/mo on this. I think it’s pretty hard for most folks to justify basically a mortgage for an AI tool.

My napkin math is that I can now accomplish 10x more in a day than I could even one year ago, which means I don't need to hire nearly as many engineers, and I still come out ahead.

I use claude code exclusively for the initial version of all new features, then I review and iterate. With the Max plan I can have many of these loops going concurrently in git worktrees. I even built a little script to make the workflow better: http://github.com/jarredkenny/cf

Again I understand and I don’t doubt you’re getting insane value out of it but if they believed people would spend $2000 a month for it they would be charging $2000 a month, not 1/10th of that, which is undoubtedly not generating a profit.

As I said above, I don’t think a single AI company is remotely in the black yet. They are driven by speculation and investment and they need to figure out real quick how they’re going to survive when that money dries up. People are not going to fork out 24k a year for these tools. I don’t think they’ll spend even $10k. People scoff at paying $70+ for internet, a thing we all use basically all the time.

I have found it rather odd that they have targeted individual consumers for the most part. These all seem like enterprise solutions that need to charge large sums and target large companies tbh. My guess is a lot of them think it will get cheaper and easier to provide the same level of service and that they won’t have to make such dramatic increases in their pricing. Time will tell, but I’m skeptical

> As I said above, I don’t think a single AI company is remotely in the black yet.

As I note above, Anthropic probably is in the black. $4B ARR, and spending less than $100M on training models.