New details on how Windsurf's VCs and founders profited from the Google deal

Google paid $2.4B for Windsurf tech, splitting $1.2B between investors and forty employees.

: Google's $2.4 billion deal with Windsurf had profound impacts, splitting payments between investors and compensations for key staff. Investors such as Greenoaks, Kleiner Perkins, and General Catalyst experienced a significant return, despite having anticipated a higher yield. Varun Mohan and Douglas Chen, co-founders of Windsurf, benefited substantially, but approximately 250 employees saw limited or no financial gain. Vinod Khosla publicly criticized the deal's inequality, while Windsurf eventually sold its remaining assets to Cognition, leading to financial benefits for other staff.

Google’s acquisition of technology from startup Windsurf ended up being a complex multimillion-dollar transaction with sweeping implications across Silicon Valley. Google agreed to pay $2.4 billion for Windsurf’s technology, company talent, and certain IP assets. This arrangement, unlike a full company purchase, allowed Google to avoid acquiring any stocks in Windsurf—a strategic maneuver enabling the acquisition of valuable intellectual property without assuming traditional ownership.

Of the $2.4 billion, $1.2 billion was allocated to investors from Windsurf's backing firms like Greenoaks, Kleiner Perkins, and General Catalyst. Greenoaks, responsible for the seed and Series A financings took about $500 million from a $65 million investment in Windsurf. Meanwhile, Kleiner Perkins enjoyed a threefold return on its investment, despite hopes for greater gains from previous expectations tied to a separate $3 billion acquisition attempt by OpenAI.

Contrastingly, the remaining half of Google’s fee package was dedicated to compensating around 40 essential Windsurf employees, with primary beneficiaries being co-founders Varun Mohan and Douglas Chen. However, this decision had cascading effects, leaving over 200 Windsurf staffers unsettled. Despite no payout, they had anticipated earning returns potentially from the previously anticipated sale to OpenAI. As per Vinod Khosla's social media criticism on X, stakeholders and employees who contributed to building Windsurf felt completely sidelined in the overall compensation scheme.

Ultimately, Windsurf’s interim CEO Jeff Wang pivoted by successfully selling the remaining enterprise, along with its intellectual assets, to a company named Cognition. This move finally allowed the remaining Windsurf employees to gain financially from the sale. Two sources believe Cognition paid an estimated $250 million for Windsurf. Google, investors, and the founders opted not to comment, further fueling Valleys' ongoing debates regarding employee compensation ethics and acquisitions.

Sources: TechCrunch, Windsurf official blog, X

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