"Your AI startup could be growing fast… and still be on the road to bankruptcy." ->That’s the harsh reality many AI coding startups are waking up to. Behind the hype of soaring valuations, there’s a hidden cost crisis — negative margins and skyrocketing LLM expenses. ->The truth? Running advanced coding assistants often costs more than users are willing to pay. The main culprit — pricey large language models from providers like OpenAI and Anthropic. ->To stay competitive, startups must use the latest models — but every upgrade burns through revenue. And with giants like GitHub Copilot and Cursor in the race, competition forces even higher spending. ->Some startups gamble on building their own LLM to control costs — a move that demands massive investment and rare talent. Others, like Windsurf, chose a different route: exiting early before costs crushed margins. ->Even success stories like Cursor, which hit $500M ARR, feel the pressure. A price hike to cover new Claude model costs upset paying customers — a reminder that this market is extremely price-sensitive. Lesson: If you don’t own the core tech behind your AI product, your profits will always be at risk. And this warning isn’t just for coding assistants — it’s for any AI-first business dependent on third-party models. In the AI race, would you rather own your tech (and take the cost hit) or move fast on third-party models (and risk long-term margins)?