TL;DR: Windsurf (formerly Codeium) was this close to a $3B acquisition by OpenAI. But when OpenAI walked, spooked by Microsoft entanglements, Google reverse-acquihired the founding team, and Cognition swooped in 72 hours later to buy the actual product and team. What looked like a straight-forward exit became a cautionary tale in founder deals, strategic timing, and AI land grabs. Buckle up… this is how Big Tech and fast startups play chess in public. TL;DR: TL;DR: Windsurf (formerly Codeium) was this close to a $3B acquisition by OpenAI. But when OpenAI walked, spooked by Microsoft entanglements, Google reverse-acquihired the founding team, and Cognition swooped in 72 hours later to buy the actual product and team. What looked like a straight-forward exit became a cautionary tale in founder deals, strategic timing, and AI land grabs. Buckle up… this is how Big Tech and fast startups play chess in public. The Rise: From Dev Tool to AI Darling Let’s rewind. Windsurf had a hell of a run. In under a year, it went from “just another AI coding tool” to pulling $100M in ARR. The product was sticky, enterprise-ready, and growing fast. Hundreds of dev teams signed on. Investors and acquirers started circling. “just another AI coding tool” By Q2 2025, Windsurf looked like it was headed for a fairytale ending: OpenAI, with ChatGPT and Codex already under its belt, was reportedly ready to shell out $3B. Term sheets were flying. The industry had basically stamped the deal as “done.” “done.” But if you’ve been in this game long enough you know better. OpenAI Bails, Microsoft Looms When the deal’s exclusivity window quietly expired on July 11, no one wanted to believe what was happening. But the silence was the tell. OpenAI walked away. walked away Why? Because acquiring Windsurf would’ve stirred the regulatory pot and potentially torpedoed their already-complicated relationship with Microsoft. Remember: Microsoft has a multi-billion dollar stake in OpenAI and uses its models across Azure and Copilot. Buying a top-tier AI IDE startup that might compete with or integrate into Microsoft's stack? That’s not just awkward it’s potentially deal-breaking. So OpenAI didn’t flinch… they folded. Strategically. folded Lesson #1: Saying no to a good deal is how you stay alive for the great one. Saying no to a good deal is how you stay alive for the great one. Google’s Reverse-Acquihire Masterclass Before the industry had time to refresh their feeds, Google made their move. Rather than acquire Windsurf, DeepMind pulled a move: Paid $2.4B to license Windsurf’s core tech (not own it)
Poached CEO Varun Mohan, co-founder Douglas Chen, and the top R&D talent
Left behind the actual company, employees, enterprise contracts, and product Paid $2.4B to license Windsurf’s core tech (not own it) license Poached CEO Varun Mohan, co-founder Douglas Chen, and the top R&D talent Left behind the actual company, employees, enterprise contracts, and product This is what a reverse-acquihire looks like: strip the brains, rent the tech, and leave the legal baggage behind. reverse-acquihire Windsurf was now missing its leadership, with 250 employees wondering what just happened. What should’ve been a billion-dollar exit suddenly looked like a ghost ship. Windsurf was now missing its leadership, with 250 employees wondering what just happened. What should’ve been a billion-dollar exit suddenly looked like a ghost ship. Lesson #2: If your startup’s value is tied to its founders, you better plan for what happens when they leave. If your startup’s value is tied to its founders, you better plan for what happens when they leave. Cognition Pounces in 72 Hours While most of tech Twitter was still reacting to the Google drama, Cognition, creators of the AI agent Devin, was already dialing in. Devin They didn’t overthink it. They saw: A fully built, AI-native IDE
$82M ARR
350+ paying enterprise customers
A team that hadn’t defected
Access to Claude models (restored after OpenAI talks fell through) A fully built, AI-native IDE $82M ARR 350+ paying enterprise customers A team that hadn’t defected Access to Claude models (restored after OpenAI talks fell through) First call: Friday 5PMSigned agreement: Monday morning First call: Friday 5PMSigned agreement: Monday morning Three days. No press leaks. Just execution. Lesson #3: Great competitive intelligence isn’t just tracking… it’s acting fast when the market blinks. Great competitive intelligence isn’t just tracking… it’s acting fast when the market blinks. acting What Cognition Actually Bought Cognition didn’t buy a broken startup. They bought: A working AI coding environment with enterprise traction
A technical team still hungry and intact
Distribution that takes years to build
Strategic leverage in the full-stack AI race A working AI coding environment with enterprise traction A technical team still hungry and intact Distribution that takes years to build Strategic leverage in the full-stack AI race Remember, Cognition already had Devin, arguably the first end-to-end autonomous AI agent for software development. Now they own the workspace it lives in. Remember, Cognition already had Devin, arguably the first end-to-end autonomous AI agent for software development. Now they own the workspace it lives in. workspace They now control the agent and the IDE it works inside. That's how you build a moat in 2025. and The Strategic Debrief Let’s break this down like an engineer-turned-founder would. 🔒 Deal Discipline: OpenAI’s Play They bailed for strategic reasons, not weakness. Avoiding regulatory exposure, protecting Microsoft ties, and conserving focus for bigger bets? That’s senior-level thinking. 🎭 Acquihire Theater: Google’s Play Google got the R&D it wanted without the mess of an acquisition. This is how Big Tech preserves optionality. Is it ruthless? Sure. Effective? Absolutely. 🎯 Market Timing: Cognition’s Play Cognition didn’t “get lucky.” They were watching the field, understood the chessboard, and capitalized when others hesitated. Real founder energy. “get lucky.” What Happens Now? Cognition just went from “interesting agent startup” to a serious contender in enterprise AI tooling. Meanwhile: Google owns the tech DNA — not the customers
OpenAI walks away without drama — but also without a dev IDE
Windsurf is reborn — now backed by a team that actually ships fast Google owns the tech DNA — not the customers Google owns the tech DNA — not the customers OpenAI walks away without drama — but also without a dev IDE OpenAI walks away without drama — but also without a dev IDE Windsurf is reborn — now backed by a team that actually ships fast Windsurf is reborn — now backed by a team that actually ships fast The board just got reshuffled. Cognition has the product, the pipeline, and the talent to make real noise. Google’s betting on brains over brand. OpenAI’s playing the long game with its political capital intact. And Windsurf? It’s got a second wind and something to prove. In a market where velocity beats legacy, the next few months won’t just decide who builds the best dev tools, they’ll reveal who actually understands the game they’re playing.

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