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.

"Sooner or later the bubble's gonna burst" and "There's definitely something there" aren't mutually exclusive - in fact they often go together.

It makes me perhaps a little sad to say that "I'm showing my age" by bringing up the .com boom/bust, but this feels exactly the same. The late 90s/early 00s were the dawn of the consumer Internet, and all of that tech vastly changed global society and brought you companies like Google and Amazon. It also brought you Pets.com, Webvan, and the bajillion other companies chronicled in "Fucked Company".

You mention Anthropic, which I think is in a good a position as any to be one of the winners. I'm much less convinced about tons of the others. Look at Cursor - they were a first moving leader, but I know tons of people (myself included) who have cancelled their subscription because there are now better options.

Feels nothing like the same. The .com bubble was largely companies with no business, unchanged revenue but still having massive swings in price in private and public markets.

Cursor has a $500mm ARR your anecdote might be meaningful in the medium turn but so far growth as not slowed down.

> The .com bubble was largely companies with no business

Ah, yes, companies like Amazon.com, eBay, PayPal, Expedia, and Google. Never heard of those losers again. Not to mention those crazy kids at Kozmo foolishly thinking that people would want to have stuff delivered same-day.

The two lessons you should learn from the .com bubble are that the right idea won’t save you from bad execution, and that boom markets–especially when investors are hungry for big returns–can stay inflated longer than you think. You can be early to market, have a big share, and still end up like Netscape because Microsoft decided to take the money from under the couch cushions and destroy your revenue stream. That seems especially relevant for AI as long as model costs are high and nobody has a moat: even if you’re right on the market, if someone else can train users to expect subsidized low prices long enough you’ll run out of runway.

You’re right that many .com companies lacked fundamentals but you’re cherry-picking survivors. For every Amazon, there were dozens of Pets.coms. The current AI wave does feel different in terms of revenue traction (e.g., Cursor’s $500M ARR), but the broader lesson still applies: hype cycles don’t discriminate between good and bad execution in the short term.

Cursor’s growth is impressive, but sustained dominance isn’t guaranteed. Distribution, margins, and defensibility still matter and we haven’t seen how durable any of that is once incentives tighten and infra costs stop being subsidized.

My point in listing survivors was simply to make the point that while there were plenty of doomed businesses, there were also many giants which were big at the time and could be told apart by looking at their fundamentals — they had real people paying them money for tangible things at a price which could be profitable. Amazon famously reported low numbers due to reinvestment but they were profitable in most business segments a few years after entering, which was quite different from the “lose money on every sale, make it up on volume” plays many dotcoms made.

How does that refute the statement you quoted? I said the vast majority of companies during the bubble had no business, were run on hype dollars and had insane P/E ratios. That supports a handful of companies making it through the bloodbath, but also a cherry picked examples that neither refutes my claim or supports yours.

You said “largely” and I think that’s painting with too broad a brush. The dotcom world included a bunch of companies which are still around (or were acquired later after surviving the collapse), and it wasn’t hard to tell who those were even at the time. There was a lot of lazy boosterism and criticism painting the whole field as the same, and that was a disservice to readers who could’ve used a more thoughtful triage approach. That’s especially the case for companies like Kozmo which actually had a popular idea and had the potential to be profitable (they were in most urban markets) but made the mistake of expanding too quickly or taking on more debt than they could service.