| ▲ | CalChris 5 days ago |
| openai's $3b acquisition of windsurf falls apart. after months of negotiations, they walk away.
That isn't accurate. Microsoft was an OpenAI investor and had rights and for MS reasons, exercised them. That's what killed the deal. google announces they're paying $2.4b to hire windsurf's ceo and 41 researchers for deepmind. not to acquire windsurf. just the humans. the same day openai walks. what a coincidence!
That isn't accurate as well. Google also licensed the Windsurf IP.My question is what happened to the $2.4B? Apparently very little of it made its way to the Windsurf employees, as #2 tweeted last week. It wasn't an acquisition although Cognition was. Cognition bought a company for $250M that just got a check for $2.4B. How exactly did this work? |
|
| ▲ | jampa 5 days ago | parent | next [-] |
| > My question is what happened to the $2.4B We don't know what deal they made with the VCs, but they could have multiple liquidation preference agreements. > A liquidation preference multiple (e.g., 1x, 2x) determines how much investors receive before any distribution to common shareholders. A 2x preference means investors are entitled to twice their initial investment amount before others receive payouts. |
| |
| ▲ | CalChris 5 days ago | parent [-] | | So Google writes a check for $2.4B to Windsurf and gets the IP. Check deposited with Windsurf. Ledger entries made. Windsurf now has $2.4B in assets more than it had before. Money in the bank. Preference cliffs do not apply to this licensing deal. Key employees and CEO then take a 2.4 mile hike over to Google. Lunch is served. Then Cognition offers $250M for Windsurf itself. Ok, I can imagine the preference cliffs kicking in now. But Windsurf just got a check for $2.4B and I don't think they had anywhere close to that in liabilities. So where'd the $2.4B go? This seems like a strange deal. | | |
| ▲ | rohansood15 5 days ago | parent [-] | | 1.2B went to investors, the remaining 1.2B was actually an incentive/payout for the founders/employees that google took. The company basically has whatever money it had in the bank, plus a bit more from Google - but no investor liabilities. | | |
| ▲ | CalChris 5 days ago | parent [-] | | Ok, Google can pay $1.2B to the CEO and key employees to get them to walk. The other $1.2B is for the Windsurf IP and it cannot go directly to the investors. It has to go through the company where it is first revenue and then an asset. But Windsurf could distribute profit at this point before the Cognition deal. I guess this is where the preference rights got exercised. The tweet from employee #2 said his stock wasn't worth anything. Actually, he got preferenced out of the $1.2B in dividends. Then came the $250M Cognition deal. He got preferenced out of the proceeds of the Cognition deal as well. | | |
|
|
|
|
| ▲ | cnst 4 days ago | parent | prev | next [-] |
| If a #2 employee of such a unicorn startup with so much funding got dealt such a blow in this deal, what does this tell us about our prospects as employees of any startup? Isn't this an admission that you cannot get rich by getting a job at a hot private early-stage startup? Even if you're the employee #2? That you'd be far more likely to get rich by getting a job at Google / Meta / Amazon, getting rich through RSU time-of-award to time-of-disposition growth, then doing private investing in a company like Windsurf, then getting even richer as an investor, all actual employees creating value be damned? |
| |
| ▲ | wankerrific 4 days ago | parent [-] | | Yes exactly. The VCs and investors have broken the unwritten contract that early startup employees can see an exit like the founders. It’s going to be much more difficult to get employees for early stage startups from here on out. | | |
| ▲ | cnst 4 days ago | parent [-] | | This has actually always been the case (Dan Luu's article from 2015 comes to mind), but, previously, it required doing a bit of actual math, and doing a bit of reading: https://news.ycombinator.com/item?id=10758278 (2015 danluu.com/startup-tradeoffs) This Windsurf employee #2 revelation of the 99% loss in value for employee stock, is simply a confirmation of an existing practice, just more visible and easier to reason about. |
|
|
|
| ▲ | eddythompson80 5 days ago | parent | prev | next [-] |
| > My question is what happened to the $2.4B? Paying debitors and investors? |
| |
|
| ▲ | Jenk 5 days ago | parent | prev | next [-] |
| Firends who are windsurf employees tell me the in-office opinion is that the founder(s) were paid $.5bn each, and the rest was distributed amongst the researchers they poached. _Huge_ payday if true. |
|
| ▲ | krat0sprakhar 5 days ago | parent | prev [-] |
| > Google also licensed the Windsurf IP. Exactly! That definitely means that the $82M ARR business and the tech behind it is definitely valuable to Google |
| |
| ▲ | CPLX 4 days ago | parent [-] | | Far more likely is that they needed to do this so that whoever does own windsurf at the end of this can’t sue Google on account of all the IP that the former employees walked off with. |
|
