What Makes an AI Company?

What makes an AI Company?

A simple test: remove the core AI component - does the company still function well, attract users, and maintain similar revenue growth? If the answer is no, then AI isn’t just an add on.

It needs to be the foundation of the business.

Take Cursor, for example. Its standout feature, Composer, powers the agentic coding experience that vibe coders rely on. Even without Composer, developers might still use Cursor for AI driven chat with their codebase or enhanced autocomplete. But strip away all AI features, and Cursor is just VS Code, its core differentiation disappears.

Now, consider ride hailing. Machine learning has always been a part of it - customer segmentation, supply positioning, pricing models. But if you removed ML (distinct from AI in this case, where AI refers to LLMs), the system would still function. Matching could default to shortest distance allocation, and pricing could rely on deterministic logic based on past data. AI enhances efficiency, but the product doesn’t depend on it.

Look at Apple Notes, Google Suite, and Meta products. They’ve integrated AI, but has it driven explosive user growth or revenue? Not really. Most people would still use them without AI, and few would pay extra for the current AI powered features.

For companies like Cursor, AI isn’t just a feature - it’s the engine behind their insane ARR growth. It attracts users who might have never used VS Code but can now build prototypes effortlessly on Cursor.

That’s the real distinction between an AI company and a company that merely uses AI.