Elon Musk told employees that Grok is behind Anthropic after SpaceX moved to buy Cursor in a $60 billion transaction, according to The Information.
Citing five people who attended the meeting, the report said Musk addressed more than 1,000 Cursor employees by video, with staff gathered at the company’s San Francisco headquarters and other offices. He said SpaceX’s AI operation does not have the same overwhelming edge that Tesla and SpaceX hold in their main businesses. Musk described Grok as “not the market leader” and said it needs to catch up. He also said he is “not used to losing.”
Anthropic named as the main rival
The Information said Musk singled out Anthropic as the toughest competitor in the current AI race. He also argued that AI models will eventually become so powerful that humans will not be able to control them, and said SpaceX must be the first organization to build that kind of technology. To do that, he pledged that SpaceX would keep stockpiling more computing power than any rival.
Fast ARR growth, but negative gross margins
Cursor’s annual recurring revenue has climbed sharply, according to the report. It was about $1 billion in November 2025, doubled to $2 billion in February 2026, and then reached $4 billion in June.
Those revenue figures came with negative gross margins. The coding editor startup, founded in 2022 by Massachusetts Institute of Technology alumni, had tried to raise money from outside investors in the weeks before the SpaceX deal was finalized, but some investors turned it down. The company also expected it would need several more billions of dollars in the second half of the year to cover infrastructure costs.
A technical-sharing deal came first
The report said Cursor chief executive Michael Truell had privately warned employees that the company could eventually be swallowed by foundation model companies such as OpenAI and Anthropic if it did not move beyond the coding editor business quickly enough.
That pressure led to a technology-sharing and compute agreement with SpaceX in April, with an acquisition option attached. In June, just days after SpaceX completed its IPO, the company exercised that option and moved to acquire Cursor for $60 billion.
Integration began as the deal closed
The transaction formally landed around Aug. 15, the report said, which was also the period when Musk held the all-hands meeting. The integration has not been smooth.
Cursor was not kept as a standalone unit. Its teams were broken up and folded into the existing SpaceXAI organization. The two companies’ Slack workspaces began merging last week, and employees were encouraged to work from SpaceXAI’s Palo Alto office. Management also distributed Liftoff, the book about Musk’s early startup years, as part of onboarding.
Changes to pay, equity and staffing
In August, Cursor told employees that an accelerated vesting provision previously described as having no time limit would expire in about three months. Some product and marketing managers were demoted and saw compensation reduced, while equity vesting was tied to new performance targets.
Since April, 45 employees have left, mainly from core product and engineering teams. The departures listed in the report included the head of reinforcement learning, the head of design, the vice president of global strategic accounts, the head of brand, and Cursor’s chief legal officer.
Graphite, the code review team that had been brought into Cursor earlier this year, also saw about 20 people leave. Its former chief executive, Merrill Lutsky, departed in June.