Windsurf CEO discusses 'very bleak' feelings before Cognition deal

Windsurf's CEO described a bleak mood before the Cognition deal, yet the acquisition ultimately benefited all employees.

: After a failed acquisition by OpenAI, Windsurf found itself in a precarious position until Cognition entered the scene. Windsurf CEO Jeff Wang took over from Varun Mohan and had to manage morale after initial disappointment about the Google deal. The Cognition acquisition was structured to benefit all employees, with payout and equity vesting included. Despite challenges, the complementary strengths of both companies promise a positive future, particularly in technology and marketing.

Jeff Wang, the interim CEO of AI coding startup Windsurf, detailed the emotional turbulence the team experienced before their acquisition by Cognition. Initially, Windsurf was in acquisition talks with OpenAI, but the deal fell through, leading to Google DeepMind hiring key personnel like CEO Varun Mohan and co-founder Douglas Chen. This hiring strategy, known as a 'reverse acquihire,' involves bringing in key startup team members and licensing their technology without taking equity stakes, which is prevalent among large tech companies aiming to circumvent antitrust issues.

As a consequence, Windsurf faced significant departures that left the company's remaining employees concerned about their futures. Jeff Wang stepped in as the interim CEO after Mohan's departure and conducted an all-hands meeting on June 11, where he had to disclose the Google deal and corresponding exits, rather than the expected OpenAI acquisition. The announcement led to a notably emotional response from the team, with some members in tears and a tense Q&A session.

However, the landscape changed when Cognition executives, Scott Wu and Russell Kaplan, approached Windsurf with a proposal. Wang and the Windsurf leadership took the Cognition offer seriously and engaged in intense negotiations over a weekend, while also attempting to retain their remaining engineers amidst offers from other potential acquirers.

Through these negotiations, Wang recognized the complementary nature of Windsurf and Cognition, particularly highlighting Windsurf's strengths in go-to-market (GTM) and marketing functions versus Cognition's robust engineering team. The acquisition deal was carefully structured to support all Windsurf employees by offering a payout, waiving cliffs, and accelerating all equity vesting.

The formal agreement was signed on a Monday morning, with the team separately informed through another all-hands meeting before the public announcement. Despite the challenging journey, Wang noted it as a transformative series of events, explaining to Bloomberg that while Friday was "probably the worst day of 250 people’s lives," the subsequent Monday was "probably the best day."

Sources: TechCrunch, Bloomberg

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