Build or buy? AI coding tools alter a debate

Welcome to Runtime! Today: how coding assistants could change the conventional wisdom about enterprise software, why Elastic is back on the open-source train, and the latest funding rounds in enterprise tech.

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Learning to code

While the ongoing experiment with consumer-facing generative AI applications continues to be a very expensive and carbon-guzzling punchline, software developers are starting to see signs that their jobs may have changed forever. If GitHub Copilot was the first step toward a world where software development becomes cheaper and easier, new excitement around Cursor and other coding-assistant startups could accelerate that future.

Two weeks ago Anysphere, the team behind the Cursor coding assistant, announced that it had raised $60 million in funding. That prompted a lot of developers to kick the tires on the product, which is a fork of Microsoft's Visual Studio Code that predicts coding changes and edits.

• Cursor users can import all their existing settings from VS Code, which is the most widely used development console on the planet.
• The company describes Cursor as "a more powerful Copilot that suggests entire diffs with especially good memory," referring to a software-development technique that compares two different lines of code to see what has changed.
• The product also allows developers to ask questions about a codebase using natural-language inputs, which could dramatically speed up the time it takes to bring a new developer on board.
• “It’s been game changing for overcoming the cold start problem,” OpenAI's Shyamal Anadkat told Forbes.

As with any generative AI product, the quality of Cursor's output can be spotty and it requires some expertise to see real improvements. But while they won't magically build an enterprise-class application on their own, Cursor and other AI coding assistants are already showing real promise at simplifying a lot of fundamental but boring parts of software development.

• Amazon CEO Andy Jassy said last month that using AI tools helped Amazon engineers upgrade internal applications to a new version of Java in hours rather than days.
• "We estimate this has saved us the equivalent of 4,500 developer-years of work (yes, that number is crazy but, real)," he wrote on LinkedIn.
• There's so much work like that inside any decent-sized corporation, and it prompted new AWS CEO Matt Garman to tell employees that coding jobs probably won't look the same in the coming years.
• "It just means that each of us has to get more in tune with what our customers need and what the actual end thing is that we're going to try to go build, because that's going to be more and more of what the work is as opposed to sitting down and actually writing code," he said in an internal meeting, as reported by Business Insider.

Coding assistants will not replace software developers any time soon, but they are already making it cheaper and easier to build and maintain software. If they actually work at scale, this trend could have profound implications for enterprise software.

• One of the best arguments for enterprise SaaS has been that most companies don't have the expertise or resources to build and maintain all the software they need to run a business in the 21st century, and that they should free up their own developers to work on the projects that actually matter to their businesses.
• If the cost of building your own software exactly the way you want it plummets, however, that equation starts to look a little different.
• That doesn't mean every enterprise is going to build their own CRM, but it could change the way that CTOs and CIOs think about the eternal debate over building a capability they need versus buying it from the open market.

One reason so many companies have thrown themselves into a frenzy over generative AI is because they remember what happened to companies that didn't adapt as advances in software development made it easier to ship reliable code faster across different platforms.

• So many current generative AI products are desperate attempts to cash in on one of the bigger hype cycles to hit Silicon Valley in decades.
• Coding assistants, however, look like they are going to stick around.

Flexible strategy

Elastic has long been one of the more strident enterprise software companies to have changed their software licensing practices in response to perceived threats from Big Cloud, smashing the all-caps button in 2021 while lashing out at AWS. That made last week's announcement that it had once again changed the license for Elasticsearch — only to once again embrace a permissive license — a bit shocking.

"Being able to call Elasticsearch Open Source again is pure joy," wrote Elastic founder and CTO Shay Banon on Thursday. After adopting the SSPL and its own restrictive Elastic License in 2021, developers will now be able to use core components of Elasticsearch under the AGPL, which unlike the other two licenses is approved by the Open Source Initiative.

After Elastic's 2021 licensing change AWS announced plans to fork the project, but according to Banon "our partnership with AWS is stronger than ever." A recent report from Redmonk suggested that companies who made licensing changes in recent years actually haven't seen a noticeable financial bump, and Elastic's decision to re-open the core of its flagship project could spark an interesting trend in enterprise software.

Enterprise funding

Magic raised $320 million in new funding for its take on an AI-powered coding assistant that uses large context windows to retain more information.

Codeium scored $150 million in Series C funding as it hopes to join Magic and Anysphere in competition for the next batch of coding-assistant converts.

The Runtime roundup

Nvidia received a subpoena from the Department of Justice over charges it broke antitrust laws, sending its stock down over 9% Tuesday.

SAP CTO Juergen Mueller will leave the company at the end of this month after apologizing for "an incident at a past company event where my behavior was inappropriate."

Canva announced a new pricing strategy that could see business users of the design software pay as much as 300% more for the service.

HPE will continue its efforts to recover $4 billion from the estate of Mike Lynch, who died last month after being found not guilty of criminal charges related to the Autonomy deal.

Thanks for reading — see you Thursday!