In a rapidly evolving tech landscape, the race to develop AI coding products has reached a fever pitch. Cognition, the company behind the viral AI coding agent Devin, has emerged as the latest victor in this cutthroat competition, announcing the acquisition of AI coding startup Windsurf. The deal comes on the heels of a whirlwind few days that saw Windsurf's leadership team, including CEO Varun Mohan and co-founder Douglas Chen, poached by Google in a $2.4 billion reverse-acquihire, leaving the remaining 250-person team in limbo.
The acquisition of Windsurf represents a significant milestone in the AI coding space, as companies scramble to secure the best talent and technology in the field. Jeff Wang, Windsurf's former head of business and now interim CEO, expressed his excitement about the deal, stating, "To our new teammates at Cognition: we at Windsurf feel incredibly lucky to be joining a team that shares our vision, our deep commitment to our users, and – most importantly – our values."
Cognition's acquisition of Windsurf includes the startup's intellectual property, product offerings, and all employees who were not hired by Google. While the financial terms of the deal were not disclosed, Windsurf has reported an impressive $82 million in annualized recurring revenue (ARR), with enterprise ARR doubling quarter-over-quarter. The company's user base has also grown to include at least 350 enterprise customers and "hundreds of thousands" of daily active users.
In the short term, Windsurf's team will focus on expanding Devin, Cognition's AI coding agent. Over time, Cognition plans to integrate Windsurf's intellectual property and capabilities into its own products, further strengthening its position in the AI coding market.
The acquisition also offers a financial lifeline to Windsurf employees who joined the company in the last year and did not receive a payout in Google's billion-dollar reverse-acquihire. Cognition has committed to ensuring that 100% of Windsurf employees will participate financially in this deal and have their vesting cliffs waived for their work to date.
As the dust settles on this high-stakes deal, one thing is clear: the race to develop AI coding products is only heating up. With major players like Google, OpenAI, and now Cognition vying for dominance, the future of AI coding is poised to be a thrilling and unpredictable ride.