An Open Letter from Alliance Co-Founders to Entrepreneurs: On the Occasion of Cursor’s $60 billion Sale

Sitting at your computer, you get the entrepreneurial itch. You see Cursor sold to Elon Musk for $60 billion. Perhaps your previous idols were Mark Zuckerberg or Evan Spiegel. You look at these founders and can’t help but compare yourself to them. They don’t seem much smarter than you. Their resumes aren’t much more impressive than yours.

So naturally, you ask yourself: why can’t I do the same thing? This is where most founder journeys begin. But it’s also where most founders get stuck.

They see AI. They see crypto. They see thousands of startups that have already raised funding. Every track seems crowded. Every obvious idea has already been done. They conclude: the opportunities have run out. So they close their laptops, call it a day, and walk away.

A large fraction of startups die in this way. Not because the founders lack ability, but because they assume the game is already over. Let’s take Cursor as an example. Not every path is a straight shot.

Back in 2022, Cursor began its “eating glass” journey. This was before ChatGPT was even born. There was no playbook to copy. No obvious market. Just a belief: AI would fundamentally change knowledge work.

To ground themselves, they focused on three things. First, they picked a domain they were genuinely excited about: AI. Second, they were customers of their own product. Third, they relentlessly focused on power users.

Because if you can win over power users, everyone else becomes easy. To be clear, this story isn’t unique to Cursor.

Stripe started when online payments seemed solved, but the founders believed developers would increasingly become the decision-makers within companies, and whoever won developers would ultimately win the internet. They had experienced the pain firsthand, and though PayPal had proven online payments were feasible, Stripe saw an opportunity to build a “developer-first” future.

Figma spent years developing before the market was ready, because they believed the future of design wasn’t in better individual design tools, but in collaborative design where everyone worked in the same file. Google Docs had already shown the immense power of real-time document collaboration. Figma extended this insight to design.

Shopify started as a way to sell snowboards online, because the founders believed millions of small businesses craved their own customers, brand, and destiny, rather than relying on large platforms. Amazon had proven centralized e-commerce was viable. Shopify bet that entrepreneurs would ultimately want to own their own destiny.

Different products. Same pattern. Every founder started with a non-consensus belief about the direction of the world, and spent years quietly building before that future became obvious to everyone else. Their luck was riding a strong tailwind.

For Stripe, this wind was the conviction that more and more commerce would move online. For Figma, it was the belief that software would be cloud-first and collaborative by default. For Shopify, it was the anticipation that the internet would empower millions of entrepreneurs to build independent businesses.

Cursor followed a similar trajectory. The company was built on the belief that AI would fundamentally reshape knowledge work, and that software engineers would be among the first power users. The product might seem obvious today, but when they started, there was no clear guide. Only conviction.

Different products. Different markets. Same underlying logic. Identify long-term trend shifts early, find an angle others miss, and spend years executing before the rest of the market catches up. For every yin, there is a yang. PayPal spawned Stripe. Adobe spawned Figma. Amazon spawned Shopify.

The first generation of products proved the market existed. The second generation reframes it around new insights, new technologies, or changing customer behavior. For founders, the important question is understanding where you are in the cycle. If you’re entering very early, like Coinbase or Cursor, your opportunity typically lies in making new technology practically usable for power users.

Coinbase didn’t invent crypto. It just made buying and holding Bitcoin incredibly simple, far easier than managing your own wallet or wiring money to Mt. Gox. Cursor didn’t invent AI programming. It just realized that autocompletion wasn’t the end game, and that developers truly craved an AI-native way to build software.

But if you’re entering mid-to-late in a technological shift, the opportunity typically looks different. The infrastructure is there. The market has been validated. Your job is no longer to prove the technology is feasible, but to find the “yin” to the existing “yang” – the blind spot that the first-generation players missed. Many of the greatest companies are born here.

Now you’ve confirmed where you stand in a technological shift. You have a few ideas and are ready to go, but then you realize something unsettling: you don’t actually have many unique insights. You don’t deeply understand the market, the customers, or even the product. And that’s perfectly okay.

This is where you must roll up your sleeves and start accumulating network, insights, and reputation. Thankfully, we live in an era with X (Twitter), and this is easier than ever. You can build an audience, meet customers, engage with power users, and learn directly from the people shaping the market.

The first thing I would do is try every product in the space. If you’re starting a company in a track, but aren’t a power user of the category-defining product, it’s hard to have unique insights about where the market is going. Go through every product in the ecosystem. Become a power user of each. Talk to the people who love them, hate them, and have given up on them. Understand why they stayed, why they left, and what features they wish existed but don’t.

Ultimately, you’ll find that most markets aren’t won because incumbents are stupid. They get replaced precisely because they become successful. As companies grow, they naturally drift further away from individual users. Feedback loops lengthen, edge cases get ignored, and a new generation of power users emerges that doesn’t fit the existing product. This is where emerging founders find opportunity.

The goal isn’t to have a lightbulb moment in isolation. The goal is to immerse yourself in the market until the missing puzzle piece becomes obvious. Once you do this long enough, you stop looking for ideas and start realizing they are everywhere. This is the state you want to be in. You’ll eventually find you have more opportunities than you can handle.

Next comes the hard part: picking one. Once you’ve settled on what you believe is the right idea, the next question is simple: is this a 10x improvement, or a burning pain point? If the answer is no, don’t bother. People rarely switch products for marginal improvements. They only switch when something is much better, or the pain is so severe it needs to be solved immediately.

The easiest way to find burning pain points is to look for people who are already hacking together workarounds. Spreadsheets, WhatsApp groups, cumbersome manual processes, copying data between systems – these are signals.

The best founders look for pain points because when the pain is large enough, customers will rip the product out of your hands. And when the pain is trivial, no amount of marketing, growth hacking, or clever positioning will save you.

Now you’ve confirmed the idea, found the pain point, and are building an MVP. With Claude, Codex, and various AI tools, building products is easier than ever. Ironically, this can become a trap in itself.

I found myself constantly adding features simply because I could. The product slowly became a Frankenstein’s monster. Every feature made sense in isolation, but together they made the product worse.

Ultimately I returned to first principles. The most important question isn’t what features should I build. It’s why would someone abandon their existing tools to use your product? Every great startup has an answer to this question. Cursor could have built another coding plugin. Instead, they forked VS Code. Developers already loved the editor, understood how it worked, and had embedded it into their workflows.

Cursor didn’t ask users to learn something entirely new. It just let users continue doing what they already loved, but with AI directly integrated into the experience.

The best startups rarely force users to learn entirely new behaviors. Instead, they find familiar workflows, remove friction, and make them significantly better. As founders, we’re obsessed with what we’re building. Customers care about what they have to give up. The lower the switching cost, the more value created, and the faster the adoption. This is why the best MVPs are not feature-rich. They are incredibly focused, providing customers with an unignorable reason to switch.

At this point, you’ve found the pain, built the MVP, and hopefully given customers a strong reason to choose you. What comes next is what most founders underestimate: distribution. I’ve seen many founders spend months grinding on product, only to spend five minutes thinking about how users will discover it. The truth is, distribution is often the moat.

Airbnb didn’t win because its website was better. The founders knocked on doors, took photos of apartments themselves, and manually onboarded hosts city by city. Stripe onboarded developers one by one. Long before crypto went mainstream, Coinbase was active in every Bitcoin forum.

Cursor is another great example. Their team posted on Hacker News six times. Most posts fell flat. They messaged thousands of developers, listened with extreme patience, and won users one by one.

Today, everyone says Cursor’s success was inevitable. But for years, they did unscalable, unglamorous work. Founders love to talk about product-market fit, but before product-market fit, you first need distribution-market fit. Where do your customers hang out? Who do they trust? How do they discover new products? The best founders don’t just build products. They build distribution engines. Because the market can’t fall in love with a product it’s never seen.

The final stage of all this is grit, resilience, and never giving up. Unfortunately, I can’t teach you this. Nobody can. It can only be learned through experience.

Cursor is again a great case study. They spent years developing before the market was ready. They posted repeatedly, messaged thousands of users, and were ignored by most. In hindsight, it all makes sense. But at the time, the future looked bleak.

The same pattern is everywhere. Airbnb’s founders faced rejection and at one point sold cereal boxes to keep the company afloat. Nvidia went through multiple near-death experiences before becoming one of the most valuable companies in the world.

Rain, a startup from our accelerator batch, was born after the FTX collapse, when most people thought the crypto industry was dead. While others fled the industry, they kept building. Years later, they raised over $100 million at a $2 billion valuation.

The lesson here isn’t that these founders are smarter than you. It’s that they stayed in the game long enough for their insights to compound.

So, I’ve laid out the framework for you. Look for technological shifts. Cultivate unique insights. Be obsessed with your market. Talk to customers. Find burning pain points. Build the simplest possible entry point. Win your distribution.

Most importantly, when things get tough, absolutely do not give up. That’s it. There’s no secret sauce. Most people can’t do these things for a long, sustained period. And the few who do end up building the great companies the next generation of founders will study. The world is yours. Go build it.

[ChainCatcher]