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Why do people care about Windsurf?
1. Big tech acquisitions have been illegal since 2021. Previous admin put policy in place but interestingly enough current admin has continued the status quo. The Bannon / Hawley camp of MAGA “coalition” hate tech.
2. Why do acquisitions matter? Not every company can go public. But there are a % of companies that still end up being valuable enough to be acquired by a bigger company. By removing this option, you decrease returns for startup investors, which in turn makes it harder to fundraise (both raising as an entrepreneur and as an investor)
3. Who cares? VCs are rich anyways!
Well, the people most impacted by the removal of marginal liquidity provided by acquisitions: entrepreneurs having a hard time raising money (ie chasing the marginal dollars) and employees at the companies that don’t go public (the entrepreneurs are usually able to do their next thing).
4. OK, but this has been happening since 2021 why are people caring now?
Well, Jurassic Park “life finds a way”. AI boom has big tech in the most intense competition for talent in decades (ever?). So a new acquisition that’s not technically an acquisition has emerged. Basically it’s: hire away the AI talent, “license the tech” (they don’t actually care about the tech), and then the licensing fee pays out the cap table. Unconventional, but everyone gets paid — employees, investors, founders. This happened with Meta-Scale $14B deal.
But Windsurf was a 300 person startup where a high % of the employees had joined in the last year. So they technically had not vested yet (“12 month cliff”). So this meant that they did not participate in the windfall.
This upset a bunch of SV people on Twitter. The SV social contract is you work for a startup and get equity and if the startup does well (acquired, IPO) you make a bunch of money as an employee. This initially seemed to violate it.
Seems like the remaining Windsurf team is going to another equivalent startup Cognition on favorable terms.
But slippery slope.
Anyways, that’s why everyone was yapping about it. 8 replies
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fair enough, but seems like an existential leap from the sort of risky climate that an industrial and scientific revolution naturally breaks out of. there's no shortage of ideas, crackpot theories, manias, corporate restructuring, etc. ultimately, there must be some valuable product that the end consumer will foot the bill without jumping ship.
AWS just released a codepilot (that so far only wraps Claude), same should be expected of the other hyperscalers for other engines. imho, these are dime-a-dozen, and there doesn't seem to be a longterm moat.
otoh, companies like SpaceX do have their moat, but they also serve bargaining powers like DoD. therein is another reason to force companies public, rather than folding them into company culture like Boeing's. those finances and motives look extremely risky to the end consumer, instead. 1 reply
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