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Incredible timeline to a $3B exit > Windsurf began in 2021 as Exafunction, founded by MIT graduates Varun Mohan and Douglas Chen. The company initially focused
by bko 1y ago
Incredible timeline to a $3B exit
> Windsurf began in 2021 as Exafunction, founded by MIT graduates Varun Mohan and Douglas Chen. The company initially focused on GPU optimization before pivoting to AI-assisted coding tools, launching Codeium, which later evolved into Windsurf.
> Series B (January 2024): $65 million at a $500 million valuation.
> Series C (September 2024): $150 million, led by General Catalyst, at a $1.3 billion valuation.
> May 2025: $3 billion acquisition from OpenAI
I wonder how much of the value is really from the model or the tooling around it. They all use the same models (mostly Claude, others have been horrible and buggy in my experience). Even co-pilot agent mode now uses Claude. The editor has their own LLM (?) that does the apply since LLMs often return snippets. They work well enough on Cursor. And then you have the auto-complete, which I think is their own model as well.
But the main value from me is from the agent mode and 95% of the value is the underlying model. The other stuff could be more or less a VS Code plugin. The other benefit is the fixed pricing. I have no idea how much 500 calls cost if I were to use the API, but I expect they're probably losing money.
- bfeynman 1y agotalented and smart folks for sure but can't not notice how much luck it is especially because its like 100% just better models. Windsurf raised a ton of money and then said they pivoted which they had millions raised to just do something completely different that likely wouldn't have been easier to raise for. Even in an interview with the cursor founder he kind of dumbly rambles that they launched and then basically lost a ton of traction until GPT4 came out. They have some core features like autocomplete but I'm struggling to see vision other than getting training data for iterative dev is a partial moat compared to just seeing commits and final code bases.
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- sigmoid10 1y agoTraining data is almost certainly their main reason for this acquisition. Users themselves and the models they use don't really matter. What matters is their interactions with the models. Especially if you're trying to build coding agents that will be marketed to companies for $10k a month. OpenAI is going for the industry B2B opportunity here, not consumers or end users.
- thomashop 1y agoBut aren't they getting this data already at a much larger scale? GPT is still one of the backbones in many coding assistants, even Windsurf.
- sigmoid10 1y agoThey only get the preprocesses stuff that is sent to their api. But if you want to do complex coding tasks, you need the whole user interaction with the project and not just bits and pieces.
- dist-epoch 1y ago> I wonder how much of the value is really from the model > The other stuff could be more or less a VS Code plugin The other stuff would take a team 6 months to implement. This is where the valuation comes from. Time to market, they are there TODAY.
- supportengineer 1y ago6 months of anyone's time is not worth 3 billion dollars.
- quantadev 1y agoThat was my thoughts too. No text editor is worth $3B, and probably not even VSCode is. So I think this deal was about buying more customers/users and buying "relevance". OpenAI lost it's monopoly and they're worried they might become irrelevant so they basically just purchased something popular to remain relevant.
- dockercompost 1y agoit's not just one person though
- pclmulqdq 1y agoAs usual, HN misses the point. The customer list was probably worth about $2.99 billion, and the engineering work about $10 million.
- moralestapia 1y agoThe right time and the right place, plus they did the work, ofc; but I'm sure 80% of this site has worked as hard as, or even more, than what it takes to clone VSCode. I'm jelly. Very rarely you see in history someone lucky enough to be riding the absolute top of the wave. Even OpenAI took about decade to cook their breakthrough product.
- rpgbr 1y agoIt's a bubble about to pop. That's where the value is coming from.
- ignoramous 1y agoBubble or not, given the exit, Windsurf's (Codeium) focus on enterprise sales motion has been rewarded rather handsomely: https://research.contrary.com/company/windsurf https://research.contrary.com/company/windsurf / mirror: https://archive.vn/ThWNz https://archive.vn/ThWNz
- alexchantavy 1y agoYeah, in the recent Lightcone Podcast episode, Varun was talking about how they have a lean eng team but large sales org. I thought that was super interesting for a dev tool since I was expecting a dev tool to involve bottom-up sales to the dev instead of top-down sales to a leader like a CTO or VP of Eng
- conartist6 1y agoIt will be super interesting to see how they do against the inverse: an engineering-focused company that wants to win devs from the bottom up
- alexchantavy 1y ago100%. You're referring to Cursor?
- tracerbulletx 1y agothats how you spend a lot of time making something great that no one pays for and everyone demonizes you if you even try
- throw234234234 1y ago5 years ago if you said coding tools would be worth in the billions in value it would of been surprising to most people. Dev Tools were the thing you could never get a company to buy for you or were just free for most people. Interesting times.
- mvkel 1y agoThe value is in the prompts being sent to OpenAI. Massive training depository. Only thing better would be a social network, which supposedly they're working on.
- bufferoverflow 1y agoBut OpenAI already knows every single prompt sent to its models. They don't need to buy Windsurf for that.
- Mtinie 1y agoNow they also get to see what is sent to Anthropic, Google, DeepSeek, etc., and what is returned. At scale, for a prime area of concern.
- bufferoverflow 1y agoReread the comment I replied to. It has nothing to do with Anthropic or Google or DeepSeek.
- Mtinie 1y agoYour comment only questioned why OpenAI cares about Windsurf from a first party perspective. I expanded the rationale for why the acquisition makes sense at a different level.
- r0b05 1y agoThat's valuable user and competitor data actually.
- NitpickLawyer 1y agoThere's much more to be gained if you also have the client side of those interaction. You can get signals from "accepted" completions/plans/etc, number of edits made to those completions, how users use context, what was passed in context from a code base, and so on. And that's just on their models. They'd also get (at the very least) signals on their direct competition, if not straight up prompts+completions as well.
- sagarpatil 1y agoI’ve been a WindSurf customer since day one. It was my first true AI agentic experience. [Dev mode] While working on Alembic migrations I broke one of my migration files. After an hour of manual debugging I handed the task to WindSurf. It methodically checked every config file, applied the migrations one by one, and narrowed the issue to a single file. It rewrote the migration, verified the fix, wrote tests, ensured everything passed, and opened a PR. I reviewed it and it worked flawlessly. Regarding the acquisition I don’t understand why OAI would pay $3 B. The team is strong, they have lots of data, and the agentic flow is great, but all of that feels commoditized. Claude Code launched two months ago and I prefer it to WindSurf, Cursor, and Aider. Augment Code also ranks above WindSurf for me. If I were in Sam’s place I would have doubled or tripled down on Codex CLI. Just my 2 cents.
- adventured 1y agoThey're paying $3 billion because money is hyper plentiful for OpenAI at present. Basically because they can. Money isn't their problem right now, it's not a scarce resource (maybe it will be in the future of course). They're trying to capture and lock-in, so as the hurdles and regulations go up they're one of the huge winners left standing. Try replacing Uber today, it's impossible. Nobody is going to give you billions of dollars to try to do it. It'd be an absolute nightmare to attempt it.
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- mike_hearn 1y agoUber has already been replaced, at least in some parts of the world. We recently went on holiday to Malta and on check-in the hotel staff told us not to bother with Uber, Bolt worked way better and had more drivers (Bolt is a European Uber competitor based in Estonia). So we signed up for Bolt and sure enough drivers were plentiful, the app worked great and there was no downside over Uber. I'll certainly be trying it again in future in other markets. The reason Uber invested in self-driving cars for years is that otherwise they have no sustainable edge. It's just a taxi company, which is a low margin business. People who can make slick mobile apps are plentiful and it takes a minute or less to sign up for a new service. Uber grew to its current size by buying market share using investors dollars, which was always a time-limited strategy. Once they started having to turn a profit prices rose and their edge over their competitors was lost.
- ulfw 1y agoIt's a beautiful world where you'll only put a little over 220 MM in and get 3000MM out mere months later.
- SwtCyber 1y agoTotally agree - a lot of the "magic" still feels like it boils down to whoever has the best underlying model
- froh 1y agoThe value is the team and their thinking and the customer base.
- pqtyw 1y agoHow is it different to a bunch of other apps which and tools which offer more or less exactly the same?
- Iolaum 1y agoI think part of the value is customer acquisition rather than product.
- qwytw 1y ago> Incredible timeline to a $3B exit dot-com vibes. Maybe not quite the same as Pets.com but still...
- meerita 1y agoVisual Studio Code Agent Mode uses whatever model you tell it to use.
- bcx 1y agoIncredible timeline - also helpful to understand the OpenAI side. 1) OpenAI is valued at 300B (as of March 31st) https://openai.com/index/march-funding-updates/ https://openai.com/index/march-funding-updates/ 2) OpenAI recently raised 40B from SoftBank and others. 3) Windsurf is getting roughly 1% of OpenAI's valuation. OpenAI needs to keep moving fast to outpace MS, Google, and others -- and I think we can all agree that agentic coding is a major trend -- that is likely to keep growing really fast -- and super high leverage in that the folks doing the coding are well paid -- and more likely to be early adopters than any other field. (e.g. if openAI wants a fast way to grow beyond $20-$200/month, owning a tool like windsurf is a good move) Some folks have been speculating the cash/equity split. I'd be confident whatever number they arrived at de-risks things for windsurf, and preserves the right amount of cash on hand for openAI. Even if OpenAI is burning 10-20B a year, with the recent raise would buy them between 1-2 years, and given the pace of AI development that's a pretty long time.