Windsurf CEO on Cognition Deal & Previous Concerns

Windsurf Acquisition: Details Emerge from Jeff Wang

Following the announcement of its acquisition by Cognition, Windsurf executive Jeff Wang utilized X to provide further clarification regarding the complexities and uncertainties surrounding the transaction.

Initial Acquisition Talks and Google's Involvement

Prior reports indicated that Windsurf was engaged in acquisition discussions with OpenAI; however, this potential deal ultimately dissolved. Subsequently, Google DeepMind recruited Windsurf’s CEO, Varun Mohan, co-founder Douglas Chen, and several leading researchers.

Reportedly, Google intends to license Windsurf’s technology as part of a $2.4 billion agreement, without acquiring an equity stake in the company.

The Rise of "Reverse Acqui-hires"

This situation mirrors a growing trend known as “reverse acqui-hires,” where major technology firms circumvent antitrust concerns by directly hiring key personnel from startups and licensing their technologies, rather than pursuing full acquisitions.

Impact on Remaining Employees

A significant question arises: what becomes of the startups and the employees who are not included in these arrangements? Recent discussions on the Equity podcast highlighted a comparison made by a startup founder, likening the departing Windsurf executives to a captain abandoning their crew.

Wang's Perspective and the All-Hands Meeting

Jeff Wang, previously Windsurf’s head of business, assumed the role of interim CEO after Mohan’s departure. He expressed empathy towards Mohan and Chen, acknowledging the challenging nature of their situation.

Wang detailed an all-hands meeting held on June 11th, during which the team anticipated news regarding the OpenAI acquisition. Instead, he was compelled to announce the Google deal and the subsequent departures.

“The atmosphere was decidedly somber,” Wang stated. “Reactions ranged from disappointment over financial implications and colleagues leaving, to anxieties about the company’s future. Some individuals were visibly upset, and the question-and-answer session was understandably fraught.”

Maintaining Momentum After Departures

Despite the loss of key personnel and the resulting impact on morale, Wang believed the company retained crucial assets. He emphasized that Windsurf still possessed its intellectual property, product, and a capable team, including a robust go-to-market strategy.

This allowed Windsurf to explore options such as further fundraising, a potential sale, or continued independent operation.

The Cognition Acquisition Emerges

That evening, Wang received communication from Cognition executives Scott Wu and Russell Kaplan. He indicated that Windsurf’s leadership seriously considered Cognition’s proposal and promptly initiated negotiations.

The following weekend involved intensive discussions with Cognition, alongside evaluating interest from other potential buyers and working to retain Windsurf’s remaining engineers. This period coincided with significant online discussion and commentary regarding the situation.

Synergies Between Windsurf and Cognition

Wang argued that the two companies were a strong strategic fit, particularly due to their complementary teams.

“While Cognition had prioritized engineering investment, they had comparatively underinvested in go-to-market and marketing functions, areas where our teams excel,” he explained. “Conversely, we were lacking a core engineering team, and Cognition has assembled an exceptional group of AI engineers.”

Prioritizing Employee Welfare

Wang also highlighted the shared commitment between himself and Scott Wu to ensure the well-being of all Windsurf employees.

“This led to a crucial element of the deal: structuring it to provide a payout to every employee, eliminating all vesting cliffs, and accelerating the vesting of all Windsurf equity,” he said.

Finalizing the Agreement

The acquisition agreement was finalized at 9:30 am on Monday and communicated to the team shortly thereafter, followed by a public announcement.

In a Bloomberg interview, Wang described the Friday all-hands meeting as “potentially the most difficult day in the professional lives of 250 people,” contrasting it with Monday, which he characterized as “potentially the best.”