Windsurf CEO opens up about ‘very bleak’ mood before Cognition deal

Days after AI coding startup Windsurf introduced that it’s being acquired by Cognition, Windsurf exec Jeff Wang took to X to supply extra particulars concerning the drama and uncertainty across the deal.

Windsurf was beforehand reported to be in acquisition talks with OpenAI, however that deal fell aside, with Google DeepMind instead hiring the startup’s CEO Varun Mohan, co-founder Douglas Chen, and a few of its high researchers. Google would reportedly license Windsurf’s know-how as a part of the $2.4 billion deal — however not take an fairness stake within the firm.

This seemed like the newest in the trend of “reverse acquihires,” wherein massive tech firms search to keep away from antitrust scrutiny by hiring key startup staff members and licensing their know-how, relatively than buying startups outright.

However what occurs to the startups and the workers who get left behind? As we mentioned on the latest episode of Equity, one startup founder in contrast the departing Windsurf executives to a captain abandoning his crew on a sinking ship. 

Wang, who had been Windsurf’s head of enterprise, turned the corporate’s interim CEO after Mohan’s departure. In his submit on X, he supplied some sympathy to Mohan and Chen, who he described as “nice founders” in a state of affairs that “will need to have been troublesome for them as nicely.” 

Nonetheless, Wang recounted an all-hands assembly on Friday, June 11, the place most staff members had been anticipating to listen to concerning the OpenAI acquisition. As a substitute, he needed to share the information concerning the Google deal and ensuing departures.

“The temper was very bleak,” Wang stated. “Some folks had been upset about monetary outcomes or colleagues leaving, whereas others had been frightened concerning the future. A number of had been in tears, and the Q&A had been understandably hostile.”

In Wang’s view, though the corporate “had misplaced some nice folks and brought a critical blow to morale,” it nonetheless had “all of our IP, product, and robust expertise together with a wonderful [go-to-market] machine.” So Windsurf might nonetheless attempt to elevate extra money, promote, or simply maintain going.

That night, nevertheless, Wang heard from Cognition executives Scott Wu and Russell Kaplan, and he stated Windsurf management “took the Cognition method very significantly from the beginning and launched proper into negotiations.” In his telling, what adopted was a frantic weekend of discussions with Cognition, whereas contemplating inbound curiosity from different potential acquirers and assembly with Windsurf’s remaining engineers to persuade them to not depart. (And as all that was taking place, “the timeline was exploding with memes and commentary.”)

The 2 firms are a very good match, Wang argued, partly due to complementary groups.

“Whereas [Cognition] had overinvested in engineering, they’d frankly underinvested in GTM and Advertising and marketing, and our groups in these features are nothing in need of world class,” he stated. “However, we now had been lacking a Core Engineering staff, and there’s no higher group of AI engineers than the lineup Cognition has assembled.”

Plus, Wang stated he and Wu (pictured collectively above) had been aligned on the necessity to “deal with all Windsurf workers.”

“That resulted in a key a part of the deal: structuring it to present a payout to each worker, to waive all cliffs, and to speed up all vesting for Windsurf fairness,” he stated.

The acquisition settlement was apparently signed at 9:30am on Monday morning, introduced to the staff shortly afterwards at one other all-hands, then announced to the public shortly after that.

In an interview with Bloomberg, Wang described that Friday all-hands as “in all probability the worst day of 250 folks’s lives,” adopted Monday by “in all probability the very best day.”