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First-generation tools
In 2025, the first generation of coding tools, like Microsoft Copilot at $20 a month, could improve the grammar of coding, maybe find a bug, or write a block of code about the size of a paragraph. Then Anthropic's tools arrived in the middle of the year and could do far more. They began to run agentically, and the coding market exploded.
The $100 a day
The $100 a day came from people who could use the tools unfettered, even inside Anthropic, and it came on seven-, eight-, or nine-month-old technology. Coding alone made for a half-trillion-dollar market.
The second jump
A second jump came when the newest models made Claude Code almost completely agentic. Andrej Karpathy's workflow flipped: last year's coding tools wrote about 20 percent of his code with 80 percent handwritten, and when the latest model came out that reversed. He now writes no code except in English.
How does an agentic coding tool work?
An agentic tool runs in a loop. The model reads files in a project, decides on a step, runs a command or edits code, and then reads the output, such as an error message or a failed test. It feeds that result back into its next decision and repeats until the goal is met or it gets stuck. The loop works because the model can call tools, a feature AI labs added to their APIs in 2023.
Why do coding agents use so many tokens?
A token is a chunk of text, roughly three quarters of an English word by OpenAI's rule of thumb. An agent rereads large amounts of code and its own earlier steps on nearly every turn of its loop. Long sessions therefore consume far more text than a single chat reply. Providers bill per million tokens, and prompt caching was introduced to discount the repeated portions.
How did early coding assistants work?
GitHub Copilot, owned by Microsoft, entered technical preview in June 2021 and was built on OpenAI's Codex model, which was trained on public code. It predicted the next lines as a developer typed inside the editor. It offered one suggestion at a time and could not run the code or see test results. Its general release for individual developers came in June 2022 at $10 a month.
How did vibe coding get its name?
Andrej Karpathy, a co-founder of OpenAI and former head of AI at Tesla, coined the term in a February 2025 post on X. He described a style of programming where you describe what you want in plain English, accept the model's changes, and barely read the code. The phrase spread quickly and was named Collins Dictionary's word of the year for 2025.
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