AI coding startup Windsurf, founded in Odisha in June 2021 by MIT‑educated Varun Mohan and Douglas Chen, has hit the headlines. Once poised for a blockbuster acquisition by OpenAI, the deal collapsed, but that was just the beginning .
OpenAI’s $3 Billion Deal Falls Through
In April – June 2025, OpenAI was reportedly in exclusive talks to acquire Windsurf for around $3 billion. Negotiations dragged on until July, but fell apart, likely due to conflicts over Microsoft’s veto power and shared IP terms with OpenAI’s major backer.
Google Makes a Strategic Talent Grab
Within days, Google DeepMind swooped in with a $2.4 billion “reverse‑acquihire”, licensing Windsurf’s AI tech non‑exclusively and hiring Varun Mohan, Douglas Chen, and key researchers. This deal strengthens Gemini’s capabilities and highlights the aggressive AI talent war between tech giants.
Tech Crunch: A Talent‑Only Play, Not a Full Acquisition
According to TechCrunch, Google’s move didn’t involve buying Windsurf outright. The company secured top leadership and IP rights, but left the startup intact, even as most of its ~250‑person team stayed independent.
Cognition AI Acquires What Remains
With its leadership stripped, Windsurf faced uncertainty. Enter Cognition AI, creators of the AI coding agent Devin. On July 14, they signed a definitive agreement to acquire Windsurf’s remaining IP, product line, brand, and personnel. Cognition values the company’s $82 million ARR, 350+ enterprise clients, and hundreds of thousands of daily users.
Leadership Shake-Up & Staff Protections
Following the Google tech raid, Jeff Wang, former head of business, became interim CEO, while Graham Moreno stepped in as President. Cognition structured the acquisition to ensure 100% of remaining employees benefit financially, with waived vesting cliffs and accelerated equity vesting.
What It Means for AI Coding Wars
This whirlwind has only intensified the AI talent arms race. OpenAI lost out; Google gained elite coders and tech; Cognition emerged with full IP, users, and team support. It’s a three‑way game changer indicating that IP, human capital, and structure flexibility are now key battlefield assets.
Windsurf’s Future
- Windsurf under Cognition will continue scaling its AI‑powered IDE and integrate with Devin.
- Google DeepMind will channel newly hired talent to advance Gemini’s agentic coding.
- OpenAI will be watching closely, likely regrouping after losing a strategic acquisition.
This saga highlights how AI coding startups are the new gold rush, and Odisha‑origin Windsurf has been at the eye of the storm.
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