Startup Obituary : Kite

The AI coding assistant that saw the future—before the world was ready for it.

Author

Ram Gangisetty
April 16, 2025

In 2014, Adam Smith, a serial founder fresh off Yahoo’s acquisition of his startup Xobni, launched an ambitious new venture: Kite. The mission? Automate the dull parts of software development using artificial intelligence. No more constant trips to Stack Overflow. No more boilerplate. No more friction. Just a sleek assistant, always there, finishing your code like it could read your mind.

“A lot of programming is repetitive. We thought we could use machine learning to fix that.”

Adam Smith, 2019

At its core, Kite wasn’t just autocomplete—it was a vision for AI-assisted development long before GitHub Copilotstole the spotlight.

But as history often teaches us, being early is indistinguishable from being wrong.

🧠 The Idea: Code with Context

Kite embedded itself in your favorite editor—VS Code, PyCharm, Atom—and predicted code completions, offered inline documentation, suggested snippets, and even flagged bugs in real-time. It wasn’t just finishing your line of code; it was trying to finish your thought.

At its peak:

  • Supported 16+ languages (Python, JS, Go, Java, C++)

  • Ran locally, prioritizing privacy

  • Used ML trained on millions of code files

  • Served over 500,000 monthly users

It also offered enterprise-grade tools like Team Server and a Pro plan for $19.90/month. And for a while, it looked like Kite was flying high.

💰 The Funding

Kite raised $20 million, led by Trinity Ventures and backed by a stellar angel lineup:

  • Nat Friedman (GitHub)

  • Max Levchin (PayPal)

  • Matt Mullenweg (WordPress)

  • Kyle Vogt (Cruise)

  • Drew Houston (Dropbox)

VCs believed in the vision. Engineers loved the idea. The market… wasn’t quite there.

📉 The Descent

Kite’s unraveling came in two forms:

  1. Technical Hurdles: AI wasn’t ready. Code is structural, not just textual. Even the best language models struggled to grasp nested logic and architecture.

    They tried everything—from training on 22M JavaScript files to experimenting with GPT-2—but Kite could never deliver the 10x leap developers hoped for.

  2. Business Model Breakdown: Developers don’t like paying for tools. Period.

    Even with 500k users, most stuck to the free version. Enterprises hesitated. And Smith admitted the bitter truth:

    Monetization came too late, and wasn’t compelling enough.

⚰️ The End of Flight

In November 2022, Kite shut down. No big exit. No dramatic acquisition. Just a heartfelt blog post and a GitHub repo.

They open-sourced what they could—Python inference engines, editor plugins—and walked away.

“I’m sorry it didn’t work out. We took a shot at dramatically accelerating software development. It didn’t land. But maybe someone else will.”

Adam Smith, 2022

What Worked for Kite ✅

✅ Pioneered local-first AI code completion

✅ Built early traction without big marketing budgets

✅ Focused on developer trust and privacy

✅ Outpaced Copilot by years in vision and architecture

What Didn’t Work for Kite ❌

❌ Tech wasn’t mature enough for reliable code synthesis

❌ Failed to achieve product-market fit for monetization

❌ Competitive pressure from Copilot, Tabnine, and DeepCode

❌ Underestimated the cost of being first

🧩 The Legacy

Kite walked so others could run.

Its shift to local inference influenced trust in AI tools. Its open-source contributions still power editor plugins and code parsing frameworks. And its demise taught future startups a brutal truth:

“A great product isn’t enough. You need a business model—and the timing—to match.”

Even GitHub Copilot, now ubiquitous, is still navigating that balance—with lawsuits and pricing pushback to show for it.

Scorecard for Kite.com

Dimension 

Score 

Reasoning

Product-Market Fit

3/5

Devs loved the vision, but it couldn’t deliver consistent value—and most wouldn’t pay for it.

USP

5x/5

Local-first, privacy-focused AI code assistant years before Copilot. Visionary and well executed.

Timing

2/5

Too early. AI for code wasn’t mature, and dev habits + team adoption weren’t there yet.

Founder Fit

4/5

Adam Smith had strong technical and founder chops, but underestimated dev tool monetization.

Team (Execution)

4/5

Shipped a complex technical product across editors and languages with limited resources.

💡 Final Word for Founders

Vision matters. Execution matters more. Timing matters most.

Whether you’re building AI for code or SaaS or consumer app:

  • Don’t ignore monetization in pursuit of scale.

  • Don’t rely on tech alone to wow your market.

  • And when you’re early, be ready to wait—or pivot faster.

Because as Smith showed us, even the right idea at the wrong time can crash and burn.

But if you’re lucky, you’ll leave behind the blueprint for someone else’s rocket ship.

It took a lot of time and effort to write this post. If you found it helpful, share it with at least one person.

Cheers,

Ram

👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.

Startup Obituary is for educational purpose only not a business advice.

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