> 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.
[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.
Remember that none of these tools can survive forever. Exiting was EXTREMELY smart of the founders here. Incredibly smart. I'd F off into the sunset now myself.
The reason is because they are built on top of VS Code and use Claude. So OpenAI can switch the LLM, cool, but at the end of the day there's no moat for the Cursors and Windsurfs of the world. OpenAI has the keys here because they have the proprietary LLM. This doesn't mean OpenAI will survive btw. I think Google will awkwardly win this race. They're so so so awkward though it'll take some time. It's painful to watch, but because they have the user base, they'll win. Hold that thought for a moment.
So new tools like Cursor and Windsurf will pop up all the time and do you think Microsoft will just sit by and watch? Nope. They'll update VS Code and Copilot and voila, the pendulum shift. As quickly as Cursor and Windsurf gained users, they'll lose them all again back to VS Code and Copilot. Copilot does indeed index your entire codebase - a rumor or misunderstanding by people. So as the dust settles, we'll see this change in usage. As LLMs trade places, we'll have a revolving door of fanbois and people arguing about what's better. What a rollercoaster.
What's really interesting here is that I think we're going to see a LOT of litigation. Back to Google. Look at what's happening with Google Chrome. Some genius thought they were in violation of anti-trust laws (well maybe they are). The reality is they are about to make it WAY WAY WORSE because Google Chrome was open source and should someone buy Chrome and decide they don't want to share...Well bye bye funding to virtual every other web browser. Congratulations brilliant legal system, you created a monopoly. It just wasn't Google's monopoly so I suppose that's alright.
So what I would bet is going to happen here is we're going to see OpenAI, Google, Microsoft, Anthropic, etc. all start to mess with one another here in a similar fashion. It's all going to be lobbying and legal battles. All over the place. It's going to make for an incredibly turbulent landscape. This is a very very expensive game.
THIS is why we're talking $3B. Someone is looking to protect something. It's not because of value. To think about it as a business value somewhere is wrong. Windsurf and Cursor aren't worth billions. Are you out of your mind? There's no justifiable way any rational human being would think that. When they're built on top of other tech and have absolutely no defensible position?? Heck no. It's not about their value individually, it's about their added value to these other companies. It's about bet placing. It's about protecting a larger business.
Take a moment to think what the world would look like if OpenAI must remain an open source business and or had to divest ChatGPT. They get Screwgoogled. Now ask why they're going to gobble up other businesses and why they keep raising all this money. I still think it's foolish, but it definitely seems like an existential threat that's lurking in there to me.