> 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.
I’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.
talented 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.
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.
The 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.
I'm skeptical about this VSCode fork commanding a $3 billion valuation when it depends on API services it doesn't own. What's their moat here?
For comparison, JetBrains generates over $400 million in annual revenue and is valued around $7 billion. They've built proprietary technology and deep expertise in that market over decades.
If AI (terminology aside) replaces many professional software engineers and programmers like some of its fierce advocates say it would, wouldn't their potential customer base shrink?
Professionals typically drive enterprise revenue, while hobbyists—who might become the primary users—generally don't support the same business model or spending levels.
Part of what you're missing is that OpenAI needs to justify its own overinflated valuation. They raise money on the premise that an AI-native company can and will outcompete giant established players, so lowballing Windsurf would run counter to the narrative they're selling to their own investors.
Windsurf and Cursor feel like temporary stopgaps, products of a narrow window in time before the landscape shifts again.
Microsoft has clearly taken notice. They're already starting to lock down the upstream VSCode codebase, as seen with recent changes to the C/C++ extension [0]. It's not hard to imagine that future features like TypeScript 7.0 might be limited or even withheld from forks entirely. At the same time, Microsoft will likely replicate Windsurf and Cursor's features within a year. And deliver them with far greater stability and polish.
Both Windsurf and Cursor are riddled with bugs that don't exist upstream, _especially_ in their AI assistant features beyond the VSCode core. Context management which is supposed to be the core featured added is itself incredibly poorly implemented [1].
Ultimately, the future isn't about a smarter editor, it's about a smarter teammate. Tools like GitHub Copilot or future agents will handle entire engineering tickets: generating PRs with tests, taking feedback, and iterating like a real collaborator.
- A $3B signal that OpenAI is unable to do product
- AI assisted coding is mostly about managing the context and knowing what to put in the context to avoid confusion and dumb mistakes, it's not about the UI.
- This signals that OpenAI believes that highly effective coding assistant LLMs will become a commodity / open source and so UI / tooling lock-in is a good investment.
The next step for Cursor and Windsurf both is that they need to work together to provide an answer for what it means to be a VS Code fork in the new era where Microsoft is trying to strangle the forks. If they're not already they should be teaming up with each other and with the VSCodium team and with the Open VSX marketplace.
Microsoft is an existential threat to their model here, but with the money they each have coming in they together have the opportunity to make the whole ecosystem better by building out viable infrastructure for all VS Code forks, if they can cooperate.
If I recall correctly from the recent YC interview, the Windsurf founder noted their team leans more toward GTM than engineering. That makes this less likely to be a classic acquihire (as with Rockset) and more plausibly a data play rather than a product integration.
My current read is that this is a frontier lab acquiring large-scale training data—cheaply—from a community of “vibe coders”, instead of paying professional annotators. In that light, it feels more like a “you are the product” scenario, which likely won’t sit well with Windsurf’s paying customers.
Agreed. It seems like a data play and a hedge to beef up vibe code competition against upcoming Google and MS models so OpenAI doesn't lose API revenue. I would assume vibe coding consumes more tokens than most other text based API usage.
They have an old-school enterprise sales operation that is doing superb work. Apart from that, ChatGPT's projects are useless crap (can't read other convos in a project; can't generate project documents from a convo), and so clearly they would get value out of just getting some developers who have built anything of use to a poweruser.
OpenAI knows that everyday someone uses Gemini their ChatGPT brand dies a bit faster. Wonder what Google has in storage for I/O now in May, would be a death sentence to just steamroll with Gemini-3.
Dumb, fail for user freedom, nothing owned by OpenAI can be used to … create AI or anything that competes with them: scheduled AI, AI agents, AI tools, AI coding, chat, audio, image gen, video gen, shopping, and oh, anything the AI can do, soon social networking and hardware, what’s left that doesn’t compete with these assholes?
ChatGPT is a great breakthrough but it’s wasted if everyone has to worry about a noncompete with it. Seriously, how is it not insane to think we should outsource our thoughts and agree never to use the thoughts to compete with the thinker? Who wants to live in a world where nobody thinks and nobody can make anything competitive with their “Saviour Machine?”
Anybody who would join an org like that for a few billion dollars is a sell out. It’s an AI safety nightmare, too. I’m just flabbergasted millions of noobs accept not to compete with intelligence, wtf is this world, if you can’t use your thoughts to compete with your thinker, what is left for you? lol this is worse than black mirror
You'd think with all these super hyper advanced AI tools they're shitting out they would be able to make a mediocre VSCode extension of their own instead of flushing 3B down the drain. Guess that's slightly out of reach of their "AGI"s though.
But is there a secret sauce in any of the coding agents (Copilot Agent, Windsurf, Claude Code, Cursor, Cline, Aider, etc)? Sure, some have better user experience than others, but what if anything makes one "better at coding" than another?
As this great blog post lays bare ("The Emperor Has No Clothes", https://ampcode.com/how-to-build-an-agent), the core tech of a coding agent isn't anything magic - it's a set of LLM prompts plus a main loop running the calls to the LLM and executing the tool calls that the LLM wants to do. The tools are pretty standard like, search, read file, edit file, execute a bash command, etc. etc. Really all the power and complexity and "coding ability is in the LLM itself. Sure, it's a lot of work to make something polished that devs want to use - but is there any more to it than that?
So what is the differentiator here, other than user experience (for which I prefer the CLI tools, but to each their own)? $3B is a lot for something that sure doesn't seem to have any secret sauce tech or moat that I can see.
Windsurf is terrible, I always use AI just in a normal website and I tried this product a few days ago and it asks me if it can run a command to make a file, which I find extremely strange, then it fails to write valid commands even to do mkdir.
That was my experience with OpenAI's Codex auto-coder thing (running o4-mini). It took 5 minutes and like 200 commands to do what Gemini 2.5 Flash (not even Pro!) did in about 30 seconds.
I see LLMs trying to do stuff that doesn't work in every AI coding thing I've tried, despite 20 pages of system prompts! (Or perhaps because of it.)
It worked allright for me when I was using it, a month ago. I cancelled because they somhow lost my paid credits and refused to refund me. No matter how great an AI tool, if the company is mismanaging user payments or usage tracking, it is useless.
IMO, there are few solid reasons to purchasing this tool
1. windsurf has lot of insights into how developer writes code, style, problem etc
2. for the prompt engineering that went into generating the code
3. only microsoft and cursor has the moat so they need to compete at the applications level not model level.
My prediction is anthropic, google or amazon will buy cursor. The next logical step to coding is building apps.
Windsurf probably sees this as a win. I still think they're behind in some areas, Cursor's Agent feels faster and more responsive but Windsurf nails the rest. The documentation is far better, and the overall developer experience is more solid. Cursor still feels like a hacked-on plug-in in a broken VS Code fork. Even small touches, like built-in Linux install instructions, show Windsurf's polish.
Here are my two cents on cursors versus windsurf approach:
CURSOR shifted to a more agentic approach even for chat requests to reduce input tokens.
Previously, they used the good old RAG pattern with code dumps: Request with user added files -> Retrieval (when Codebase enabled) -> LLM requests with combined context from user and retrieval.
Now they seem to be doing something like this:
Request -> LLM with tools to search code base and/or user-added files
I get constant search tool calls even for user-added files. Big reduction in input token but I think performance suffers as well.
WINDSURF is still willing to dump code into the context, which gives them an edge in some cases (presumably at a cost of input tokens).
Windsurf is willing to spent to acquire customers (lower subscription cost, higher expenses for llm calls). Cursor has a huge customer base and is working on making it sustainable by a) reducing costs (see above) and b) increasing revenue (e.g. "Pro" requests for 0.05 with more input and output token).
> Its the little things like having baked in instructions to install Windsurf on linux.
When I went to download Cursor the other day I noticed that they do not offer any .deb/.rpm packages and just offer the FlatPak (could be a Snap I'm not sure). This just tells me they really dont understand the community and just wanted to ship something for Linux and be done with it.
Very surprising outcome, since OpenAI went after Cursor (twice) [0] And I originally thought that Cursor would be bought instead a day before the rumour [1].
It was smart for Windsurf to take the offer and to get greedy in this hype cycle. Unless Cursor is thinking that Anthropic or someone else will buy them for a lot more, its going to get extremely competitive as the switching cost for Cursor is zero and that ARR can disappear very quickly.
Copilot will attempt to destroy Cursor on price and functionality for however long they want to.
Very risky for Cursor at $9B valuation (which I think is overvalued and based on VC FOMO).
$3B for a fork of an IDE which Microsoft keeps crippling by the day by making it's best extensions not work with forks (eg. C++, Python, C#, Remote SSH, etc)..
That's a oversimplified view. It doesn't matter if it's a fork. It has customers and paying ones. And it has a brand. That's more than enough. $3 billion would be peanuts for OpenAI
It's easy to downplay as a fork because it's such a young product but ultimately if people use Cursor or Windsurf instead of VSCode then it is VSCode that needs to worry about being upstream from them and Cursor or Windsurf making their extensions no longer work with VSCode.
[+] [-] neonate|10 months ago|reply
[+] [-] bko|10 months ago|reply
> 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.
[+] [-] sagarpatil|10 months ago|reply
[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.
[+] [-] bfeynman|10 months ago|reply
[+] [-] bcx|10 months ago|reply
1) OpenAI is valued at 300B (as of March 31st) 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.
[+] [-] rpgbr|10 months ago|reply
[+] [-] moralestapia|10 months ago|reply
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.
[+] [-] SwtCyber|10 months ago|reply
[+] [-] mvkel|10 months ago|reply
Only thing better would be a social network, which supposedly they're working on.
[+] [-] Iolaum|10 months ago|reply
[+] [-] ulfw|10 months ago|reply
[+] [-] qwytw|10 months ago|reply
dot-com vibes. Maybe not quite the same as Pets.com but still...
[+] [-] meerita|10 months ago|reply
[+] [-] froh|10 months ago|reply
[+] [-] dist-epoch|10 months ago|reply
> 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.
[+] [-] retornam|10 months ago|reply
For comparison, JetBrains generates over $400 million in annual revenue and is valued around $7 billion. They've built proprietary technology and deep expertise in that market over decades.
If AI (terminology aside) replaces many professional software engineers and programmers like some of its fierce advocates say it would, wouldn't their potential customer base shrink?
Professionals typically drive enterprise revenue, while hobbyists—who might become the primary users—generally don't support the same business model or spending levels.
What am I missing here?
[+] [-] lolinder|10 months ago|reply
[+] [-] ergocoder|10 months ago|reply
One is going to be valued at a much higher multiple than the other.
[+] [-] Androider|10 months ago|reply
Microsoft has clearly taken notice. They're already starting to lock down the upstream VSCode codebase, as seen with recent changes to the C/C++ extension [0]. It's not hard to imagine that future features like TypeScript 7.0 might be limited or even withheld from forks entirely. At the same time, Microsoft will likely replicate Windsurf and Cursor's features within a year. And deliver them with far greater stability and polish.
Both Windsurf and Cursor are riddled with bugs that don't exist upstream, _especially_ in their AI assistant features beyond the VSCode core. Context management which is supposed to be the core featured added is itself incredibly poorly implemented [1].
Ultimately, the future isn't about a smarter editor, it's about a smarter teammate. Tools like GitHub Copilot or future agents will handle entire engineering tickets: generating PRs with tests, taking feedback, and iterating like a real collaborator.
[0] https://www.theregister.com/2025/04/24/microsoft_vs_code_sub...
[1] https://www.reddit.com/r/cursor/comments/1kbt790/rules_in_49...
[+] [-] resters|10 months ago|reply
- AI assisted coding is mostly about managing the context and knowing what to put in the context to avoid confusion and dumb mistakes, it's not about the UI.
- This signals that OpenAI believes that highly effective coding assistant LLMs will become a commodity / open source and so UI / tooling lock-in is a good investment.
[+] [-] lolinder|10 months ago|reply
Microsoft is an existential threat to their model here, but with the money they each have coming in they together have the opportunity to make the whole ecosystem better by building out viable infrastructure for all VS Code forks, if they can cooperate.
[+] [-] bix6|10 months ago|reply
Cursor yesterday was a 45X for comparison (9B, 200M)
https://techcrunch.com/2025/04/16/openai-is-reportedly-in-ta...
[+] [-] ashvardanian|10 months ago|reply
My current read is that this is a frontier lab acquiring large-scale training data—cheaply—from a community of “vibe coders”, instead of paying professional annotators. In that light, it feels more like a “you are the product” scenario, which likely won’t sit well with Windsurf’s paying customers.
Interesting times.
[+] [-] simple10|10 months ago|reply
[+] [-] crsv|10 months ago|reply
[+] [-] arthur-st|10 months ago|reply
[+] [-] lnenad|10 months ago|reply
[+] [-] conradfr|10 months ago|reply
[+] [-] fcanesin|10 months ago|reply
[+] [-] bionhoward|10 months ago|reply
ChatGPT is a great breakthrough but it’s wasted if everyone has to worry about a noncompete with it. Seriously, how is it not insane to think we should outsource our thoughts and agree never to use the thoughts to compete with the thinker? Who wants to live in a world where nobody thinks and nobody can make anything competitive with their “Saviour Machine?”
Anybody who would join an org like that for a few billion dollars is a sell out. It’s an AI safety nightmare, too. I’m just flabbergasted millions of noobs accept not to compete with intelligence, wtf is this world, if you can’t use your thoughts to compete with your thinker, what is left for you? lol this is worse than black mirror
[+] [-] sensanaty|10 months ago|reply
[+] [-] libraryofbabel|10 months ago|reply
As this great blog post lays bare ("The Emperor Has No Clothes", https://ampcode.com/how-to-build-an-agent), the core tech of a coding agent isn't anything magic - it's a set of LLM prompts plus a main loop running the calls to the LLM and executing the tool calls that the LLM wants to do. The tools are pretty standard like, search, read file, edit file, execute a bash command, etc. etc. Really all the power and complexity and "coding ability is in the LLM itself. Sure, it's a lot of work to make something polished that devs want to use - but is there any more to it than that?
So what is the differentiator here, other than user experience (for which I prefer the CLI tools, but to each their own)? $3B is a lot for something that sure doesn't seem to have any secret sauce tech or moat that I can see.
[+] [-] incorrecthorse|10 months ago|reply
[+] [-] remoroid|10 months ago|reply
[+] [-] andai|10 months ago|reply
I see LLMs trying to do stuff that doesn't work in every AI coding thing I've tried, despite 20 pages of system prompts! (Or perhaps because of it.)
[+] [-] visarga|10 months ago|reply
[+] [-] soorya3|10 months ago|reply
My prediction is anthropic, google or amazon will buy cursor. The next logical step to coding is building apps.
[+] [-] infecto|10 months ago|reply
[+] [-] __jl__|10 months ago|reply
CURSOR shifted to a more agentic approach even for chat requests to reduce input tokens.
Previously, they used the good old RAG pattern with code dumps: Request with user added files -> Retrieval (when Codebase enabled) -> LLM requests with combined context from user and retrieval.
Now they seem to be doing something like this: Request -> LLM with tools to search code base and/or user-added files
I get constant search tool calls even for user-added files. Big reduction in input token but I think performance suffers as well.
WINDSURF is still willing to dump code into the context, which gives them an edge in some cases (presumably at a cost of input tokens).
Windsurf is willing to spent to acquire customers (lower subscription cost, higher expenses for llm calls). Cursor has a huge customer base and is working on making it sustainable by a) reducing costs (see above) and b) increasing revenue (e.g. "Pro" requests for 0.05 with more input and output token).
[+] [-] h8hawk|10 months ago|reply
[+] [-] _fat_santa|10 months ago|reply
When I went to download Cursor the other day I noticed that they do not offer any .deb/.rpm packages and just offer the FlatPak (could be a Snap I'm not sure). This just tells me they really dont understand the community and just wanted to ship something for Linux and be done with it.
[+] [-] dbbk|10 months ago|reply
[+] [-] rvz|10 months ago|reply
It was smart for Windsurf to take the offer and to get greedy in this hype cycle. Unless Cursor is thinking that Anthropic or someone else will buy them for a lot more, its going to get extremely competitive as the switching cost for Cursor is zero and that ARR can disappear very quickly.
Copilot will attempt to destroy Cursor on price and functionality for however long they want to.
Very risky for Cursor at $9B valuation (which I think is overvalued and based on VC FOMO).
[0] https://techcrunch.com/2025/04/17/openai-pursued-cursor-make...
[1] https://news.ycombinator.com/item?id=43698819
[+] [-] crimsonnoodle58|10 months ago|reply
[+] [-] sidcool|10 months ago|reply
[+] [-] whywhywhywhy|10 months ago|reply
[+] [-] unknown|10 months ago|reply
[deleted]
[+] [-] owendarko|10 months ago|reply
IDEs can support "AI coding agents" on their own.
The entire workflow for "AI coding agents" boils down to:
1. You write a prompt
2. The "agent" wraps it in a system prompt and sends it to the LLM
3. The LLM sends back a response
4. The agent performs specific actions based on that response (editing files, creating new ones, etc.)
Microsoft already started doing that with Copilot. And they have a vibrant ecosystem of VS Code extensions (I maintain one of them [1])
"AI agents" should be a feature, not a separate piece of software (IDE) that's integral to software devs.
[1] https://github.com/Kilo-Org/kilocode
[+] [-] unknown|10 months ago|reply
[deleted]
[+] [-] unknown|10 months ago|reply
[deleted]