Silicon Valley's Annual "Dissection Case": The Leader Swiped $2.4 Billion and Fled, and the Star Founder Was Blacklisted by VCs Collectively

Once a highly popular AI unicorn, it has now become an object despised by all VCs in Silicon Valley. The acquisition case of Windsurf has once again sparked heated discussions in the entire venture capital circle. The founder fled, ignoring the fate of employees, which has become a typical pattern for startups.

A well - known VC bluntly said that he has blocked them.

It's no longer news in Silicon Valley that the CEO of a startup company "flees" with the team overnight.

Recently, the most prominent example is the AI - booming programming unicorn, Windsurf.

Without any warning, Google successfully acquired part of this deal for $2.4 billion. The other half was brutally taken by Cognition.

This has caused some pain for some VC tycoons and team members in Silicon Valley.

In response, legendary venture capitalist Vinod Khosla criticized, "The founders of Windsurf are so unethical. They abandoned the team and didn't share the money."

Next time, I definitely won't cooperate with their founders again.

Why has a star company fallen to this state?

Failed to Be Snapped Up by OpenAI, and Was Brutally Divided

Originally, Windsurf would have had a happy ending -

OpenAI planned to acquire it entirely for $3 billion. For a startup that had only been established for four years, it would have been an unexpected fortune.

From the founding team to every employee, they would have all welcomed a life - changing moment of glory.

At that time, an employee of Windsurf received congratulations from his entrepreneurial friend Dave Pack and was teased, "Your net worth has skyrocketed. You should pay the bill for our next guys' trip."

Later, he said in an interview, "I'm really happy for him. He holds a high - level position, so his equity must be considerable. A startup being acquired for $3 billion is a milestone and a legend in the industry."

However, this high - profile deal fell through at the last moment...

No one expected that Google suddenly entered the scene and urged the leadership to make a quick decision. Within just a few days, the company was brutally divided into two.

Maor Fridman, a general partner at F2, said, "This is one of the craziest 72 - hour periods I've ever seen in the venture capital circle."

To be precise, Google didn't acquire Windsurf. Instead, it spent $2.4 billion to hire its CEO and top talents and obtain a license for the company's intellectual property.

This hasty and chaotic final negotiation left hundreds of remaining employees in a state of uncertainty.

Until last Monday, Cognition threw them a "life raft" by acquiring the remaining assets of the company.

The most direct impact of this incident is that the startup culture in Silicon Valley has been hit hard again.

Amjad Masad, the CEO of rival Replit, sharply commented, "This has broken the'social contract' in Silicon Valley."

If employees may be abandoned by the core team at any time, who would be willing to work hard for a startup?! (PS: Even though I'm not in Silicon Valley, the situation of domestic startups leaving China is exactly the same.)

The Founder "Fled", and the Team Broke Down in Tears

After founder Varun Mohan left, the new CEO, Jeff Wang, quickly took over the company.

He detailed the situation on X, telling how Windsurf found a way out within a crazy 48 - hour period after the failure of the OpenAI deal and finalized the acquisition agreement with Cognition.

Jeff Wang said, "As the CEO, I had to explain our suddenly changed fate to all the employees."

At that time, when everyone learned the news, the atmosphere in the office suddenly froze.

He recalled, "Some were angry about the missed wealth opportunity, some were sad about the colleagues who were about to leave, and some even burst into tears on the spot."

Although the details of the deal were not made public, according to three people familiar with the matter, the offer from Cognition was far less than that of OpenAI -

This company, with a valuation of only $4 billion, finally completed the acquisition of Windsurf with $300 million worth of stocks.

From $3 billion to $300 million, the price was drastically cut to one - tenth.

In a letter to all employees of Cognition, they promised that 100% of Windsurf employees would benefit from this deal, and the vested options would be fully accelerated for redemption.

For the remaining nearly 300 employees, this last - minute deal turned out to be much better than the concerns that emerged after the Google acquisition case.

VC Tycoons Blocked Them, Causing Dissatisfaction Among Investors

Some venture capitalists believe that this deal has set a dangerous precedent.

Deedy Das, an investor at Menlo Ventures, said that when you join a company, you expect everyone to work together and make decisions jointly.

However, this incident has had a profound negative impact on the entire startup ecosystem.

A foreign media called it the dawn of "shell - qui - hire".

Shell - qui - hire: A pseudo - acquisition where a company "acquires" another company by poaching part of its team members.

Generally, early employees usually choose to accept lower salaries in exchange for more equity and are willing to work overtime, hoping to get rich rewards when the company is acquired.

Masad pointed out, "If the company exits successfully but the employees get nothing, it's extremely unfair to the startup team."

This kind of financially - engineered deal actually damages the entire startup ecosystem.

After the Google deal was announced, Masad extended an olive branch on X, inviting the employees left behind by Windsurf to jump to Replit.

In addition, some investors in Windsurf were also dissatisfied with this deal.

Although they got some returns, the gap was too large compared with the "high - risk, high - return" gains they initially envisioned.

Krish Ramadurai, a partner at AIX Ventures, bet that this company could become a super - unicorn valued at over $10 billion.

"There was a chance to be acquired by OpenAI before, but the current situation is just a mess."

Ramadurai said that the poached core leaders and engineers were naturally excited, but the others left behind were in a state of purgatory -

They had to strive to maintain the normal operation and development rhythm of the company without the core talents and management.

Pseudo - acquisitions Have Become the Norm in Silicon Valley

Before Windsurf, there were already precedents for similar non - typical deals, including Character AI, Inflection, Scale AI, etc.

In these deals, large technology companies only poached the founders and top talents instead of directly acquiring the whole company.

Take Scale AI as an example. Meta paid $14 billion to acquire 49% of the company's shares and hired its founder Alexandr Wang to lead its super - intelligence laboratory.

Meanwhile, Meta also recruited some of its employees.

Just last week, Scale AI officially announced a 14% layoff, that is, 20 employees, and revealed that the company is still not profitable.

Of course, each deal is different.

Google regards Windsurf as an autonomous software engineer - an AI with an efficiency comparable to that of an elite full - stack team or even a department.

Danny Pantuso, an investor at Mucker Capital, said, "From this perspective, the licensing fee paid by Google is like an advance payment for permanent access to this ability, which is similar to the deal between Microsoft and OpenAI."

Google's Responsible Person Responds Positively

In an interview released today, Logan Kilpatrick, the product manager of GDM, also talked about this acquisition.

· What did the acquisition of Windsurf bring to Google DeepMind?

Looking back at the past two years, the initially amazing AI product moment was actually GitHub Copilot. It brought AI to all developers and even triggered industry discussions about "AI replacing programmers".

As the way developers build software changes, the world is also changing.

When the developer ecosystem undergoes fundamental changes due to AI, the addition of Windsurf clearly shows that there are still disruptive opportunities in the developer tools field.

· As you said, the product, IP, and customers were all taken by Cognition. Why didn't Google do the same and only acquired part of the team?

First of all, Windsurf built a product loved by developers. I'm also one of its heavy users. We hope that everyone can continue to use it.

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