It makes sense for OpenAI to overpay for wrapper companies that have distribution - a good analogy is British pub (bar) companies. By mid 2000s they were struggling. Low margins, rising cost base, expensive debt.

What saved them? Heineken. They didn't care if the pubs made much of a profit - they made positive margins on having people drink their beer at market prices. They just wanted to increase volume. So they bought up several major players. In 2008 they acquired Scottish & Newcastle's operations, later thought bought Star Pubs & Bars, which had 1,049 leased and tenanted pubs, and finally half of Punch Taverns.

The same strategy can work for OpenAI - buy up the wrapper companies, and make sure YOUR models are served to the user base.

Recently, OpenAI CFO Sarah Friar said,

"We have something called A-SWE, which is the Agentic Software Engineer. And this is where it starts to get really interesting because it’s not just about augmenting a developer, like a Copilot might do, but actually saying, ‘Hey, this thing can go off and build an app.’ It can do the pull request, it can do the QA, it can do the bug testing, it can write the documentation."

https://www.youtube.com/watch?v=2kzQM_BUe7E The relevant discussion about A-SWE begins around the 11:26 mark (686 seconds).

OpenAI‘s early investment in Cursor was a masterstroke. Acquiring Windsurf would be another.

Next advances in coding AI depend on real-world coding data, esp how professional developers use agentic AI for coding + other tasks.

RL works well on sufficiently large base models as shown by rapid progress on verifiable problems with good training data, e.g. competition math, competitive coding problems, scientific question answering.

Training LLMs on detailed interaction data from AI-powered IDEs could become a powerful flywheel leading to the automation of practical coding.

This is beginning to look a bit like OpenAI is becoming to startups what Facebook was in the Instagram and WhatsApp era. Back then Facebook were far more established, and mobile was a big catalyst, but the sums being mentioned here are very large.

We should all start building the products that we think will terrify OpenAI most.

I don’t quite understand why OpenAI would pay so much when there’s a solid open-source alternative like Cline. I tried both, and feel that Cline with DeepSeek v3 is comparable to Cursor and more cost-effective.