Snapshot · The a16z Show
AI coding tool Cursor has accumulated 1 trillion coding tokens, creating a data moat that makes it increasingly difficult for incumbent software companies to catch up.
Where this was said
At 18:37 · chapter starts 14:50
In early 2024, Baker publicly predicted all application SaaS might be worth zero. He's moderating that view — some application SaaS companies, especially those serving fragmented SMB markets, could be big winners. But the competitive threat remains acute and the window is narrowing. He draws an analogy to retailers who saw Amazon's thin margins and decided they didn't want to compete — a mistake that took 25 years to fully reveal itself. For SaaS companies today, the equivalent mistake is protecting existing gross margin structures to preserve stock prices [2] — Gavin Baker "It is definitionally impossible, given what we just discussed, to succeed in AI without gross margin pressure. And I do not know why they h…" 15:35 . Baker is direct: it's definitionally impossible to succeed in AI without gross margin pressure, and Microsoft and Adobe both prove that a software company can navigate a margin-compressing transition and still produce a decade of strong returns. The most urgent example is Cursor, which has accumulated 1 trillion coding tokens — a data flywheel that incumbent public coding companies have inexplicably failed to challenge [1] — Gavin Baker "Baker once predicted all application SaaS could go to zero. He's walked that back, but the urgency remains: Cursor has accumulated 1 trilli…" 14:43 . The window to compete, he warns, is closing.
AI companies launching browsers may come to regret it. Chrome has 5 billion users, and Google — restrained by antitrust litigation — has been deliberately letting competitors run first. Baker's warning: Google can do this better, and they've been watching and waiting.
Bhanu and his team built approximately 50 free tools to attract search traffic, each linked back to SiteGPT.
With AI coding tools like Cursor, Bhanu can now create a new free marketing tool in less than 5 minutes by referencing existing tools.
Bhanu filters Ahrefs keyword results to show only those with a keyword difficulty below 10, making them realistic ranking targets for any decent website.
Bhanu sets a minimum search volume of 1,000 monthly searches when selecting keywords to target with free tools.
PropGPT averaged 20 downloads per day right after launching on the App Store through influencer marketing.
Eyal and Yali shut down all marketing and spent 4 months completely rebuilding PropGPT from scratch.
PropGPT has accumulated over 40,000 total downloads since launch.
PropGPT's large language model (AI) operating costs are just $20 per month, and the cost is continually falling.
Ad-based monetization works well for game apps where users spend extended time in-session, as seen with Grid and Wordle.
We use essential and analytics cookies to run Vuci. To understand how the site is used: Privacy Policy.
Install Vuci on your phone
Add it to your home screen for a faster, app-like experience.
Install Vuci on your phone
Tap the Share button, then “Add to Home Screen”.
A new version is available
Reload to get the latest Vuci.