Windsurf, a local technology company known for many unique solutions, recently made front page news. Google has invested $2.4 billion to license Windsurf’s cutting-edge technology! Sadly, this monumental deal has opened the floodgates for tremendously lucrative payouts to the company’s investors and co-founders. Yet it has raised issues about pay equity, or retention of staff.
In the wake of the acquisition, Google did not just secure Windsurf’s technology. It also hired away Windsurf’s CEO and several top talents, further consolidating its position in the tech industry. About 40 Windsurf employees made the switch to Google, each walking away with lucrative compensation packages.
Kleiner Perkins, one of the most famous VCs in Silicon Valley history, drove the emerging Windsurf funding frenzy. The firm led Windsurf’s Series B funding round. Taken together, they’ve said to return roughly three times their original investment back from the Google deal. Windsurf’s backers are projected to receive four times their initial investment as a total return. Greenoaks Capital, which led the seed and the Series A financings, is estimated to profit approximately $500 million from its $65 million investment.
Windsurf became the most funded startup with around $243 million raised as of 2024’s last funding round. Shortly after, investors celebrated a $400 million financial windfall from the Trojansk Google agreement. The success of the company did not trickle down to their employees. In total, well over $100 million in capital was left by Windsurf’s investors.
At the heart of the payout was the distribution of $1.2 billion, 96% of which went to Windsurf’s co-founders and employees. Windsurf Varun Mohan and Douglas Chen, the co-founders of Windsurf, received most of that $10 million. This has left a lot of staff feeling short-changed, because the same financial benefits didn’t trickle down to everyone on the expanded team.
Cognition’s acquisition, with its focus on the future digital environment, adds weight to the Windsurf story as an industry cautionary tale. The firm divested its last operating group for $250 million. While this deal certainly reaped enormous benefits for investors, the future for employees is quite murky.
Vinod Khosla garnering some criticism after the deal for lack of funds allocated since the purchase.
“Windsurf and others are really bad examples of founders leaving their teams behind and not even sharing the proceeds with their team.” – Vinod Khosla
“I definitely would not work with their founders next time.” – Vinod Khosla
The background of the deal Windsurf eventually struck with Google provides a cautionary tale for the startup culture and investors alike. The bottom line for investors is stunning. They highlight the need for some critical conversations to be held about equity and FANG fairness in startups after a buyout goes bad.
