Incredible timeline to a $3B exit<p>> 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.<p>> Series B (January 2024): $65 million at a $500 million valuation.<p>> Series C (September 2024): $150 million, led by General Catalyst, at a $1.3 billion valuation.<p>> May 2025: $3 billion acquisition from OpenAI<p>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.<p>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'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?<p>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.<p>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?<p>Professionals typically drive enterprise revenue, while hobbyists—who might become the primary users—generally don't support the same business model or spending levels.<p>What am I missing here?
Windsurf and Cursor feel like temporary stopgaps, products of a narrow window in time before the landscape shifts again.<p>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.<p>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].<p>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.<p>[0] <a href="https://www.theregister.com/2025/04/24/microsoft_vs_code_subtracts_cc_extension/" rel="nofollow">https://www.theregister.com/2025/04/24/microsoft_vs_code_sub...</a><p>[1] <a href="https://www.reddit.com/r/cursor/comments/1kbt790/rules_in_496_major_issues_uncovered/" rel="nofollow">https://www.reddit.com/r/cursor/comments/1kbt790/rules_in_49...</a>
- A $3B signal that OpenAI is unable to do product<p>- 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.<p>- 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.<p>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.
~$40M ARR makes this a 75x<p>Cursor yesterday was a 45X for comparison (9B, 200M)<p><a href="https://techcrunch.com/2025/04/16/openai-is-reportedly-in-talks-to-buy-windsurf-for-3b-with-news-expected-later-this-week/" rel="nofollow">https://techcrunch.com/2025/04/16/openai-is-reportedly-in-ta...</a>
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.<p>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.<p>Interesting times.
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.
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?<p>As this great blog post lays bare ("The Emperor Has No Clothes", <a href="https://ampcode.com/how-to-build-an-agent" rel="nofollow">https://ampcode.com/how-to-build-an-agent</a>), the <i>core</i> 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?<p>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.
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.
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?<p>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?”<p>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
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.
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.<p>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.
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].<p>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.<p>Copilot will attempt to destroy Cursor on price and functionality for however long they want to.<p>Very risky for Cursor at $9B valuation (which I think is overvalued and based on VC FOMO).<p>[0] <a href="https://techcrunch.com/2025/04/17/openai-pursued-cursor-maker-before-entering-into-talks-to-buy-windsurf-for-3b/" rel="nofollow">https://techcrunch.com/2025/04/17/openai-pursued-cursor-make...</a><p>[1] <a href="https://news.ycombinator.com/item?id=43698819">https://news.ycombinator.com/item?id=43698819</a>
$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)..
Maybe I'm missing something but I don't see many comments here talking about how this is a competitive move by OpenAI against Anthropic?<p>From what I've heard most people using/liking these agentic IDEs are using Claude models to power them, they seem to be the best at writing code. By buying Windsurf (and trying to buy Cursor) OpenAI can figure out why Claude is better at this task, fix GPT, and then make GPT the default for the coding use case.<p>Not sure it's worth $3B, but that's also not a lot to them when they can raise unlimited money at any time,
We're reaching a point where we don't need to switch to another IDE (from VS Code/IntelliJ/insert-your-IDE-here) for "AI/vibe coding"<p>IDEs can support "AI coding agents" on their own.<p>The entire workflow for "AI coding agents" boils down to:<p>1. You write a prompt<p>2. The "agent" wraps it in a system prompt and sends it to the LLM<p>3. The LLM sends back a response<p>4. The agent performs specific actions based on that response (editing files, creating new ones, etc.)<p>Microsoft already started doing that with Copilot. And they have a vibrant ecosystem of VS Code extensions (I maintain one of them [1])<p>"AI agents" should be a feature, not a separate piece of software (IDE) that's integral to software devs.<p>[1] <a href="https://github.com/Kilo-Org/kilocode">https://github.com/Kilo-Org/kilocode</a>
does that mean that Windsurf will only support OpenAI models going forward? I doubt OpenAI will pay to have users use Gemini/Claude? Especially as all of these Ai coding tools (Windsurf, Augment, Cursor) are heavily subsidizing the users.<p>I wonder what Anthropic makes of this. Windsurf was like a top 3 customers of them, might be a big revenue blow too?
They didn't even buy an IDE since windsurf is more like a VS code plugin.<p>So what was it exactly that was worth the 3B that they couldn't replicate themselves? Their prompts? Their training sets? Their users or user data?
probably a rare area I fully agree with HN on– the IP here seems weak and it's not hard to swap out code editors, nothing like tearing out Salesforce or other sales-driven tooling. and idk if first mover advantage actually means much in the next 10 years given how dynamic the underlying models are.<p>but undeniably these cos are all a great lesson in just how much cash lies in executing first/near first
OpenAI is turning to Profit Mode. Reference: <a href="https://newscvg.com/coverage/business-economy/openai-maintains-nonprofit-control-amid-structural-transition-CW2O4MY2U" rel="nofollow">https://newscvg.com/coverage/business-economy/openai-maintai...</a>
Podcast interview with the CEO of Windsurf talking about the tech behind it <a href="https://newsletter.pragmaticengineer.com/p/building-windsurf-with-varun-mohan" rel="nofollow">https://newsletter.pragmaticengineer.com/p/building-windsurf...</a>
Value isn’t just the editor, it’s the workflow. Letting LLMs plan and act across multi-step flows is a hard problem, and Windsurf figured out a dev-focused version of that. Gains to be made in browser automation once you add structure, retries, and context. Feels like a bet on that pattern becoming default.
But yeah as others said, highly doubt that's $3B in hard cash, more likely a roll-up of shares etc.
As a Vimmer, I'm not into VS Code forks. I really like the goose CLI[1] though. Some untapped market potential right there.<p>1: <a href="https://GitHub.com/block/goose">https://GitHub.com/block/goose</a>
Valuation aside, Windsurf has built its own models [1] and boasts enviable enterprise distribution: $100M ARR, per TechCrunch [2]<p>[1] <a href="https://windsurf.com/blog/our-model-strategy" rel="nofollow">https://windsurf.com/blog/our-model-strategy</a>
[2] <a href="https://techcrunch.com/2025/04/22/why-openai-wanted-to-buy-cursor-but-opted-for-the-fast-growing-windsur" rel="nofollow">https://techcrunch.com/2025/04/22/why-openai-wanted-to-buy-c...</a>
People seem to be pretty negative about this but of all the AI dev tools I've evaluated it's the only one that's felt meaningfully better than just using the web interfaces of the various frontier models.<p>I don't think it's good value for the money but pretending it's just a VSCode fork that wraps LLMs is underselling it. There's something they're doing that makes them better than Cursor, Claude Code, etc.
I think this is way over priced, could they not build their own with significantly less resource outlay?<p>But I guess I’m not really the guy that buys billion dollar things, so I probably don’t know how to evaluate them.
Has anybody actually used Windsurf's Emacs mode?<p>You'd think that with a generative AI coding editor, they'd stay on top of it and make it work. But I guess that wasn't the case up until now.<p>Maybe with this acquisition that might change...
i fail to understand what makes this $3B valuation justified.<p>i built my personal code assistant after using cursor/windsurf/aider/cline because i was frustrated with how crappy they worked for my use case. i only program in python/js/html/css and i needed something better. only took me an hour of prompting and after that tinycoder basically built itself from there on out. i still use vscode to inspect the code sometimes, but i might replace vscode ultimately too.<p>source code at <a href="https://github.com/koenvaneijk/tinycoder">https://github.com/koenvaneijk/tinycoder</a> and contributions welcome obviously.
This is probably a response to Claude Code, which is still experimental and terminal-only.<p>In my experience Claude Code is fantastic, both for answering questions about the codebase and coding.
I don't get it.<p>With $3bn budget you can replicate it in few months, promote for free using your own stronger brand and you're left with roughly $3bn in the bank to do whatever you want.
I think it's more of a time saver move by openAI - they can probably build something similar, cheaper – but, windsurf has established itself. Looking forward to see where this goes
I like Windsurf for RSE, but it sometimes gets a little too excited which can take me out of the flow to undo stuff and get back into the groove of things.<p>The Claude integration is quite nice - I hope that doesn't take a step backward with the acquisition.
here is the thing, even those editors are relict of the pasts, the code is still in the center in these editors. thats something we need now, but not in the near (2 years, 5 years, 10 years?) future.<p>then the prompt is the coding, the reasoning is the execution, the code just an abstract layer that we do not care to much about i.e.: like assembly, machine instructions.<p>we know it exists, bit even here on hackernews i would guess only a small fraction know how it really works on a detailed level.<p>there will still be coding, instructions (prompt) -> execution (reasoning and AI code and code execution -> feedback (debugging to AI then and one point to the user)<p>bur actual looking at the code, well, thats only when this cycle annoyingly fails.<p>so current IDEs are still built from an code first mindset. this will not be the IDE of the future.<p>so basically OpenAI bought a Dinosaur
Would love to know what exactly Windsurf brings to the table that justifies $3B. Infra play? Specialized team? Or is this another move to consolidate talent before others can?
What's funny is the translation layer between your prompt <--> agent <--> LLM, that code was written by ChatGPT.<p>So OpenAI are paying for software which leverages other LLMs written by their own LLM.<p>We live in a topsy turvy world.
Very strange move. They already have the models and their partner MS is providing the base editor.<p>So they’re paying 3bn for the integration and clients basically?<p>Seems pricey
They seem almost exactly the same as Cursor, but even using the exact same rules, Cursor gives much better results than Windsurf (which performs below viable for me) - my test case was a complex Python project.
Good for them, always rooting for startups who win.<p>That said, I have tried Windsurf multiple times, and it wasn't a pleasant experience compared to Cursor, which I've been using for more than 6 months as a paid customer.
I don't get why people want the AI right in their editor. In another windows inside the editor, fine, but not inline with code I'm writing. It's super distracting to have AI auto complete pop up at random all the time. As always, typing speed, or speed at generating raw code, is not the bottleneck in programming. The crux remains design, in which case having the LLM on the side is just fine (if you use it for that).<p>There are some niceties about inline completion (like spelling out a log message that's obvious from the surrounding code) but I don't get the hype much beyond that.<p>Maybe I'm missing some feature though ...
Here’s the crazy thing. All MSFT has to do is build in connections to every AI provider for VS Code and they win.<p>Embrace & Extend will never die.
my summary here <a href="https://news.smol.ai/issues/25-05-05-cursor-openai-windsurf" rel="nofollow">https://news.smol.ai/issues/25-05-05-cursor-openai-windsurf</a>
However crazy the 3 billion valuation is, windsurf's valuation is still very sane compared to that of Safe Super intelligence, who exists for less than a year, with no product, no roadmap,and virtually no hype, but is worth at 30 billion.
I cannot pretend that I know what is going on - I don't.<p>I think the long-term play here is something to do with Agents and they are simply cornering the market because coding tools are part to it.<p>That being said, quick search around what people are building with these VIDEs reveals mostly landing pages that are actually not even that good. For the amount of money spent one could have easily bought a good template or pay someone to customise an existing one.<p>I don't know. Maybe I am dumb.
Pretty stupid move with Microsoft moving to put the kibosh on all of these proprietary vscode forks. Could be worth almost nothing in a matter of months...
I use ChatGPT’s “work with” code helper and one of my biggest uses on ChatGPT. It’s a good first line before I pull out the big guns(APIs). Sadly the code canvas is rarely as it’s geared mostly for single page web app functionality useless demo tests. Maybe this is where Windsurf can come in
I need someone to convince me this isn't one of the biggest waste of money on an acquisition. If OpenAI can't build an official IDE for less than 3 Billion then what are they even doing? Windsurf can't have that high of a userbase that you feel the need to pay for it.
This is classic OpenAI - acquiring competitors rather than innovating internally. They're desperately trying to keep up with competition from Anthropic and Microsoft's GitHub, but throwing money at the problem is hardly a creative solution.<p>What's especially rich is the timing - right after OpenAI backpedaled on their restructuring plans due to "public pushback" (read: Sam Altman making yet another governance blunder). Now they're dumping billions into a tool that's essentially the same thing everyone else is building.
Who are these people that give OpenAI all this money? Aren't Microsoft, SoftBank, Nvidia publicly traded? Don't they owe a fiduciary duty to their investors? I'm surprised it's legal to just hand over a blank check to random private companies to make nonsense purchases. This isn't going to end well.<p>If I were any of these companies I would be suing OpenAI to try to get my money back. Thrive, ARK, Tiger and the others can pound sand