Windsurf CEO Shares Struggles Before Cognition Deal Success
▼ Summary
– Windsurf’s acquisition by Cognition followed failed talks with OpenAI and a deal where Google DeepMind hired Windsurf’s CEO, co-founder, and researchers while licensing its technology for $2.4 billion.
– The situation exemplified “reverse acquihires,” where big tech avoids antitrust scrutiny by hiring key startup talent instead of acquiring the company outright.
– Interim CEO Jeff Wang described the emotional fallout among employees after the Google deal, with many upset about financial losses, departures, and uncertainty.
– Despite losing key personnel, Windsurf retained its IP, product, and strong talent, leading to rapid negotiations with Cognition over a weekend.
– The final deal with Cognition included payouts for all employees, waived vesting cliffs, and accelerated equity vesting, turning a bleak situation into a positive outcome.
The recent acquisition of AI coding startup Windsurf by Cognition followed a turbulent period filled with uncertainty and last-minute negotiations. Windsurf’s interim CEO Jeff Wang recently shared details about the emotional rollercoaster employees endured when an earlier deal with OpenAI collapsed, only to be replaced by a licensing agreement with Google DeepMind.
Initially, Windsurf appeared set for acquisition by OpenAI, but the deal unraveled unexpectedly. Instead, Google DeepMind hired Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and several top researchers, a move seen as part of a growing “reverse acquihire” trend where big tech firms sidestep antitrust concerns by licensing technology rather than buying companies outright. This left the remaining team in limbo, with Wang stepping in as interim CEO to navigate the fallout.
During a tense all-hands meeting, Wang broke the news about the Google deal and the departure of key leaders. Reactions ranged from frustration over financial losses to fears about the company’s future. “The mood was very bleak,” Wang admitted, describing tearful employees and a hostile Q&A session. Despite the blow, he emphasized that Windsurf retained its intellectual property, product, and a strong go-to-market team, leaving options open for fundraising or another acquisition.
Then came an unexpected lifeline. Cognition executives Scott Wu and Russell Kaplan reached out, sparking intense weekend negotiations. Wang worked tirelessly to keep remaining engineers onboard while fielding interest from other potential buyers. The urgency was heightened by public speculation and memes circulating online.
Wang highlighted the strategic fit between the two companies. Cognition’s engineering prowess complemented Windsurf’s marketing strengths, creating a balanced partnership. Crucially, the deal included provisions to protect employees, accelerating equity vesting, waiving cliffs, and ensuring payouts for all.
By Monday morning, the agreement was signed, turning despair into celebration. Wang later reflected that the Friday all-hands was “probably the worst day of 250 people’s lives,” while the announcement of the Cognition deal marked “probably the best day.” The whirlwind resolution underscored both the fragility and resilience of startups navigating high-stakes tech acquisitions.
(Source: TechCrunch)
