“There's an unspoken covenant that as a founder, you go down with the ship. For better or worse, it's changed a bit over the last year and I think it's disappointing, to be honest.” Enough said. This show is everything and more on: - What really happened behind the scenes - Did Google leave behind a treasure of an asset - How was the deal structured - How Cursor and Cognition deal with ever increasing reliance on Anthropic My 4 takeaways with @ScottWu46 👇

~10 yrs ago it felt like Silicon Valley had this really vibrant seed fund ecosystem, that felt just as important as the multi-stage venture firms Now, that feels totally dead Partially because a whole generation of top-tier companies just completely skipped that step in raising

It’s a privilege to welcome Windsurf to Cognition. Here are more details in the note I sent to our Cognition team this morning: Team, As discussed during our all-hands, we are acquiring Windsurf. We have now signed a definitive agreement and we couldn’t be more excited. Here’s a recap and, again, this information is highly confidential until 11am PT, after Windsurf’s all-hands. The Windsurf team deserves to hear this from Jeff and me in the right way, so please keep everything quiet in the interim out of respect for our new colleagues. So, what exactly is the deal? With this acquisition, Cognition will own Windsurf’s beloved product and strong business: -The Windsurf IDE, now with full access to the latest Claude models -Windsurf's IP, including their trademark and the strong brand they have built -$82M of ARR and a fast-growing business, with enterprise ARR doubling quarter-over-quarter -A user base that includes 350+ enterprise customers and hundreds of thousands of daily active users Above all, we are welcoming some of the most impressive people in our industry, including world-class GTM, engineering, and product teams. We’ve long admired the Windsurf team and what they’ve built. One of my top priorities in structuring this deal was to honor their talent, hard work, and accomplishments in making Windsurf the great business it is today. To that end, Jeff and I worked together to ensure that every single employee is treated with respect and well taken care of in this transaction. Specifically: 100% of Windsurf employees will participate financially in this deal 100% of Windsurf employees will have vesting cliffs waived for their work to date 100% of Windsurf employees will receive fully accelerated vesting for their work to date Every new employee of Cognition will be treated the same way as existing employees: with transparency, fairness, and deep respect for their abilities and value. After today, our efforts will be as a united and aligned team. There’s only one boat and we’re all in it together. What this means for Cognition is that we’ll be able to move even faster on our mission of building the future of software engineering. As you all know, we’ve had strong momentum and adoption over the last few months. For many enterprise engineering teams, Devin is already a top contributor. As our customer base continues to grow, it’s clear that combining the rapid adoption of Devin as the leading fully autonomous agent with Windsurf’s IDE product and scaled GTM machine will be a massive unlock. There’s never been a more exciting time to build. Within our lifetime, engineers will go from bricklayers to architects, focusing on the creativity of designing systems rather than the manual labor of putting them together. It’s a privilege to be in this position, and it’s your hard work that has brought us here. There’s much more to do ahead, and the work won’t be easy, but today is a huge win for all of us in the positive-sum game we’re playing. Thank you for being on this journey together. Now let’s get ready to give our new colleagues a warm welcome. Scott

Here is most of what I’ve gathered on the Windsurf / Google Deal The founders and dozens of engineers are going to Google. This group, along with the preferred shareholders will be sharing the $2.4B headline number. The exact split is unknown but investors are making some money on the deal and the founders plus this select group are making a ton. That brings us to the hundreds of employees that aren’t going to Google. From what I’ve heard they are all getting screwed regardless of their vesting status. Their consolation prize is that they now own 100% of the original company. Windsurf’s leadership is making the argument that this is a win for those that aren’t joining Google. Their claim is that Windsurf still has a meaningful amount of revenue and a solid balance sheet. But Windsurf will now be facing intense competition from not only its former founders and engineers who are now at Google, but every other company in code gen that they were already completing with / losing to (Cursor, Anthropic, etc). Given that Google now has a license to the core technology, it is safe to assume that the Windsurf will struggle and on a longer time horizon will be a zero. This structure appears to be very similar to Google’s deal with CharacterAI. Google effectively acquired Noam Shazeer and left CharacterAI employee owned. The difference there is that Google had no desire to compete in AI companionship, they just wanted Noam and some key people. Windsurf is a left in a much worse position. My read is that the Windsurf leadership team was desperate to find a way out and facing competition from the labs and Cursor structured a deal to benefit themselves. Why they thought they could structure a deal like this and get away with it is anyones guess. At this point, I imagine all the parties involved are scrambling to try to find a resolution because if things stay as they are, it will be a massive stain on the industry. We will probably see some more facts come out in the next 24 hours. I hope that Windsurf’s founders work quickly with all parties to properly take care of their team.