"Silicon Valley has spent billions of dollars funding startups that use artificial intelligence to generate computer code automatically, such as Replit, Cursor, Harness, Windsurf, Augment Code, and All Hands AI. Despite all that money, the startups may still end up going out of business or being acquired by much larger software companies. Cursor and the rest lack viable business plans to distinguish them from Anthropic, OpenAI, Google, Microsoft,"
""Code generation is so close to the foundation model. I just don't think you can add enough value above that over time to make a business," said Jeremy Burton, CEO of software startup Observe, Inc., in a chat he and I had recently via Zoom. Burton has served in numerous enterprise tech capacities, including as a senior vice president of marketing at Oracle, president for enterprise security and data management at Symantec, CEO of startup Serena Software, and head of corporate development at Dell Technologies."
Venture capital has funded numerous startups that use AI to generate code, but many lack sustainable differentiation from foundation models offered by large companies. Foundation models are nearing sufficient capability for code generation, absorbing core functionality that niche startups previously aimed to provide. Control of underlying models by major providers limits independent startups' ability to build defensible businesses. Observability and related tooling represent potential differentiation pathways. The funding landscape will likely lead to consolidation, with some startups acquired by larger software firms while others fail due to unviable business plans and competitive pressure from foundation-model providers.
Read at ZDNET
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