Anthropic ARR went $1B -> $4B in the first half of this year. They're getting my $200 a month and it's easily the best money I spend. There's definitely something there.
It makes me perhaps a little sad to say that "I'm showing my age" by bringing up the .com boom/bust, but this feels exactly the same. The late 90s/early 00s were the dawn of the consumer Internet, and all of that tech vastly changed global society and brought you companies like Google and Amazon. It also brought you Pets.com, Webvan, and the bajillion other companies chronicled in "Fucked Company".
You mention Anthropic, which I think is in a good a position as any to be one of the winners. I'm much less convinced about tons of the others. Look at Cursor - they were a first moving leader, but I know tons of people (myself included) who have cancelled their subscription because there are now better options.
2. They don't have a moat. DeepSeek and Kimi are already good enough to destroy any high margins they're hoping to generate from compute.
Just because something is highly useful doesn't mean it's highly profitable. Water is essential to life, but it's dirt cheap in most of the world. Same goes for food.
I decide to try out the agent built into VS Code. It basically matches most of these fly by night "agent" ides which are mostly just VS Code forks anyway.
But it's weird. Because Microsoft can use Anthropic's API, funnel them revenue and take a loss on Copilot.
We're all getting this stuff heavily subsidized by either VC money or big corp money.
Microsoft can eat billions in losses on this if they become *the* provider of choice.
This stuff isn't perfect, but this is the worst it'll ever be. In 2 years it'll be able to replace many of us.
Can you explain? I don't see how $200 makes that much difference than what I get from paying $20/month with OpenAI? What's the use case?
I think that there is a bubble but it's shaped more like the web bubble and less like the crypto bubble.
Regarding LLMs there are two concerns - current products don't have any killer feature to lock in customers, so people can easily jump ship. And diminishing returns, if there won't be a clear progress with models, then free/small, maybe even local models will fill most of people needs.
People are speculating that even OAI is burning more money than they make, it's hard to say what will happen if customer churn will increase. Like for example me - I never paid for LLMs specifically, and didn't use them in any major way, but I used free Claude for testing how it works, maybe incorporating in the workflow. I may transitioned to the paid tier in the future. But recently someone noted that Google cloud storage includes "free" Gemini Pro and I've switched to it, because why not, I'm already paying for the storage part. And there was nothing keeping me with Anthropic. Actually that name alone is revolting imo. I wrote this as an example that when monsters like Google or Microsoft or Apple would start bundling their solutions (and advertise them properly, unlike Google), then specialized companies including OAI will feel very very bad, with their insane expenses and investments.
The landscape has changed dramatically now. Investors and VCs have learnt if we stick with winners and growth companies, the payoffs are massive.
We also have more automatic, retail and foreign money flowing into the market. Buy the dip is a phenomenon that didn't exist at the scale it is now.
Pre-2015 if Big Money pulled out, the market was guaranteed to fail, but now retailers sometimes have longer views and belief (on people like Musk, Altman) than institutions and they continue to prop it.
So, it's foolish to apply 2000 parallels to now. Yes, history repeats, but doesn't with the exact time or price points
> Investors and VCs have learnt if we stick with winners and growth companies, the payoffs are massive.
Well... yes and no. 2021 wasn't that long ago.
> So, it's foolish to apply 2000 parallels to now
The stock market and other financial stuff is of course different. The fundamental trend not necessarily though. It took awhile for anyone to figure out how to directly build a highly profitable internet based business back then for AI it seems more or less the same so far.
Similar to the invention of the web, AI is not a bubble. Real value has been created.
lol. Investors and VCs have no idea what they're doing
I have lived and worked through two previous ‘AI winters’ and I expect the current bubble to eventually pop in a dramatic way. There will be good things produced by AI, but I am skeptical of the panic FOMO rush to AGI or super intelligence.
Look at the process of shifting manufacturing out of the USA: that was all about driving extreme wealth for special interest insiders. Sadly, most people look to their particular little political party for some form of relief - how is that working out?
A lot of VCs and PEs lost a lot of money during the crash. This means a lot of capital was spent in the economy, generating a lot of good activity, and the companies that failed then also put a lot more capital back into the economy through bankruptcies. Other businesses can pick up talent, IP, and assets for cheap, and everyone can learn from the failures. While losing that money isn't great for VCs, what they got was a very valuable education to be better stewards of their investments, and pick better companies. The next rounds of companies have to hit metrics, milestones, have to prove their value, etc.
Never waste a perfectly good crisis: learn if nothing else.
Things move fast in tech because there isn't nearly as much red tape and litigation as there are in other mature industries. This is because there's an agreed 'way of doing things'. Take funding, grow like crazy, sell/merge or IPO. Everyone wins or loses together (even if things are stacked in favour for some over others).
Once trust in this process is broken and founders or VCs start stacking the deck in their favour the game becomes rigged to the point where other people don't want to play anymore. Once that trust is gone red tape and litigation appears.
I'm astounded that anyone still genuinely believes we're not in a massive bubble. Of course AI company CEOs are going to say we're not and that AGI is just around the corner, it's deeply in their financial interest to keep inflating the bubble as long as possible.
That, by itself, would obliterate the entire value of Windsurf or Cursor or whatever. The fact that Google has this kind of money and spends it on dubious "talent" (though none of these people are known in the community) is a testament to how overfunded tech companies are compared to the value that they provide.
> For other IDEs: The protocol is editor-agnostic. Any editor that can run a WebSocket server and implement the MCP tools can integrate with Claude Code.
https://github.com/anthropics/claude-code/issues/1234 https://github.com/coder/claudecode.nvim/blob/da78309eaa2ca2...
Example in Emacs, this is how I use claude-code: https://github.com/manzaltu/claude-code-ide.el
It can also access the IDEs' real-time errors and warnings, not just compile output ('ideDiagnostics' tool), see your active editor selection, cursor position, etc.
The fact that one division of Google is wildly profitable does not exempt other parts of the company from criticism of their financially dubious choices.
aren't you reviewing diffs in whatever diff tool you like? I find magit to be superlative for this (and for correcting and committing things).
I use Rust and found it's better to let the AI hallucinate function names, then let the compiler correct them. Rust's compiler is significantly better than TypeScript's at this, so it works well.
Could you please avoid juicing a random comment this way?
Have used Cursor and I know that there is quite a bit of value between the model and the chat input box and it will be similar to Claude Code or Codex, it's what makes this agentic, it's just accessed through a different interface. So from that perspective, Cursor makes sense for folks that are already in the VSCode environment.
https://medium.com/@villispeaks/the-blitzhire-acquisition-e3...
which I first saw here
So, Google will be paying $2.5B to Devin guys?
Could there have been a clause that made this invalid in case of acquisition?
The sale price for Windsurf was likely significantly lower than the original acquisition plans.
It didn't go to $0 like some predicted, but it was never going to be as valuable as it was before the executives bailed on it.
The technology is nowhere close to what they're hoping for and incremental progress isn't getting us there.
If we get true AGI agents, anyone can also build a multi-billion dollar tech companies on the cheap.
That's not how the economy works...
Devin etc will give you let's say 10x more engineering power, but not necessarily elite one.
Last I checked, feeding the output of an LLM back into its training data leads to a progressively worse LLM. (Note I'm not talking about distillation, which involves training a smaller model, by sacrificing accuracy. I'm referring to an equal or greater number of model parameters)
There is no evidence at all in the announcement that is the case. It just says "100% of Windsurf employees will participate financially in this deal". What "participate financially" looks like is not elaborated upon.
It is possible you're right. It's also equally possible that the founders have still screwed over their employees, we just don't know. Nothing in this post supports either position.
In the lack of evidence, its okay to assume the most likely scenario, which is the executives & shareholders will make out like bandits and everyone else is likely to at best, get pennies.
Presumably the "payout" from Cognition is at a lower nominal value and in illiquid (and IMO overvalued) shares in Cognition rather than cash.
that's absolutely not the case. they ejected and the remaining executive team dealt with the sale over the weekend.
Did OpenAI ever actually announce anything publicly regarding a potential windsurf acquisition?
AFAICT most of the reporting was based on rumors or leaks. But they never actually announced an acquisition. Seems like Bloomberg may have made an oopsie here.
Geez is the cognitive distortion field active again? Even Grok could figure this one out.
If there's 47m software engineers in the world, at $200/month, and 50% gross profit that's a $56 billion TAM. Not crazy to think it's more if we include the adjacent space of analyst roles that write software (sql, advanced excel, etc).
They'll have to crush it to make a $2 billion acquihire look reasonable, but it's possible.
Basically anyone that inputs and outputs goods which can be digitized. So writers, graphic artists, accountants, legal work, etc.
> 100% of Windsurf employees will have vesting cliffs waived for their work to date
> 100% of Windsurf employees will receive fully accelerated vesting for their work to date
This sounds like a happy ending for the employees of Windsurf and a good deal for Cognition
The employees were robbed from having a big cash exit. Illiquid stock options from Windsurf were converted to illiquid stock options of Devin.
What's worse is that the well is now poisoned. I would advise against joining startups from now on, because I think that there's no upside for employees anymore.
The fact that it doesn't make sense with those numbers almost surely indicates those numbers are misleading.
> Google paid a $2.4 billion licensing fee
This is the reported number for licensing and compensation, but who knows what the terms really were.
> Cognition’s valuation is $4 billion
Doubtful
Microsoft poached the talent, devin Co. Picks up the scraps
But with all this changing of hands, I'm not sure I can trust it going forward at all, so I guess it's back to looking for alternatives.
They had released their own model which was free and good enough a couple of weeks back.
Obviously will need to look for alternatives.
Does this represent confirmation that there was no pro-rata compensation to common share holders in the Google deal?
I just have so many questions.
My name is Devin; it has been for many decades now. I'm embarrassed to see you've named your product after me. It has already prompted uncomfortable jokes at my expense, and I'm sure there will be more. I now have newfound empathy for people named Alexa.
For instance, people have made jokes about my name in interviews, and it's embarrassing for me, and thus awkward for everyone, and awkward interactions make it objectively less likely that I will get job offers.
I don't think any product should be named after people. Please change the name of Devin.
> To that end, Jeff and I worked together to ensure that every single employee is treated with respect and well taken care of in this transaction. Specifically:
> 100% of Windsurf employees will participate financially in this deal
> 100% of Windsurf employees will have vesting cliffs waived for their work to date
> 100% of Windsurf employees will receive fully accelerated vesting for their work to dateSee, most closed source software really just pisses me off of ideological reasons, I just like to tinker with things and just having the possibility to do so by being provided the source code really helps my mind feel happy I guess.
So I "vibe coded" a game that I used to play and some projects that I was curious about and I just wanted to tinker too. sure the game and code have bugs.
Also with the help of AI, I feel like I can tinker about things that I don't know too much about and get a decent distance ahead. You might think that I am an AI advocate by reading this comment, but quite the contrary, I personally think that this is the only positive quality that AI helped in quite substantially.
But at what cost? The job market has sunk a large hole and nobody's hiring the junior devs because everybody feels better doing some AI deals than hiring junior devs.
My hunch is that senior devs are extremely in demand and are paid decently and so will retire on average early too. Then, there would be a huge gap b/w senior and juniors, because nobody's hiring the junior engineers now, so who will become the senior engineers if nobody got hired in the first place. I really hope that most companies actually realize that the AI game is quite a funny game really, most companies are too invested into it to realize that really, open source AI will catch up and there is just no moat with AI and building with AI or just doing stuff with AI isn't that meaningfully significant as they think it is as shown by recent studies.
Cognition being worth $4B with Devin being raced to zero by Claude Code also undercutting both Windsurf and Cursor have a very steep hill to climb.
Having both Devin and Windsurf will just make them raise more money as they burn through their operational costs.
This is unclear. $2.4B was for licensing and compensation. Why would Google have agreed to pay any significant amount to the Windsurf leftovers?
It's also been a lot of random stuff recently with their 3 separate Ross and Rachel acquisition storylines.
Some takeaways:
1. Devin/Cognition definitely have a legit AI dev agent now
2. It's crazy what Google passed on. The fact that it was worth it to them without the traditional best assets is wild. Guess that's what happens when you play on ultra hard mode with an infinite money glitch.
3. I am worried/pre-emptively sad that Windsurf will likely go away or get nerfed, more expensive etc.
^ Any company that competes with them could say that and it would create some pause.
For those brief 2 weeks, Windsurf felt like the SOTA tool. Crazy how the winds change.
Feels like a new SOTA tool every couple weeks. Heck, the post below this is about a new agentic IDE.
> This transaction is structured so that 100% of Windsurf employees will participate financially. They will also have all vesting cliffs waived and will receive fully accelerated vesting for their work to date.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
First, OpenAI wanted to acquire Windsurf. Terrific move! Win-win for OpenAI (who needs more AI product) and Windsurf (for the deal price). But this fell apart because Windsurf didn't want the IP to go to Microsoft (which imo should not have been not a big deal, especially if you knew what would have happened next). Big loss for all parties for this to have fallen apart.
My biggest question still is why not continue on as an independent company? Perhaps losing access to Claude doomed signups; perhaps employees/investors had a taste of an exit and still wanted it; perhaps due to fiduciary duty to maximize returns; perhaps their growth stalled due to the announcement? In any case, the founders got a similarly equivalent deal from Google, and were arguably wise to pursue it.
But Google's Corp Dev team here is the most maddening. Why not fully acquire the entire company, instead of doing the same "acquihire and license" deal that was done to Character AI, Adept, Scale, etc.? Risk of FTC antitrust review is a thing, but Google's not even competitive in the coding market, so I doubt there is a review (though I do hear that all acquisitions by large tech companies these days are reviewed by default). If there's anyone to blame in this situation, it's the FTC and Google for pursuing this strategy, instead of a full acquisition. Win-win for Google (for the team) and Windsurf (for getting a similar acquisition price, but liquid!).
Imo, the founders did a good job ensuring that close to the $3B acquisition price was reflected in the $2.5B Google deal--all existing investors and vested employee/equity holders are paid out; the company also retained $100M which was suspiciously similar to the amount needed to pay out all unvested employee/equity holders [1]. So theoretically the remaining company could pay accelerate vesting, then pay out the cash to their remaining employees, and then shut down, to give everyone the same exit as an acquisition, or better. This might have been the best scenario, because the brand damage to Windsurf as an IDE that happened over the weekend was pretty close to unrecoverable for them as an independent company.
But instead, the company leadership decided to field acquisition offers for the remaining company and IP, and got one from Cognition. (I'm actually surprised this acquisition isn't under FTC review; it's more plainly an agentic coding company acquiring a competitor agentic coding company). In taking the offer, it reinforces that the Windsurf IDE will continue to exist, that they have a R&D team backing the IDE again, and can marry Windsurf's enterprise sales chops with Cognition's product [3]. Win-win for both Cognition and Windsurf.
So overall, win-win-win all around, except for OpenAI, Varun's public reputation (imo, undeserved), and startups hiring employees (who might think they might not get a proper exit) [2].
[1] https://x.com/haridigresses/status/1944406541064433848
[2] https://stratechery.com/2025/google-and-windsurf-stinky-deal...
But the statement from Cognition was:
> 100% of Windsurf employees will participate financially in this deal
> 100% of Windsurf employees will have vesting cliffs waived for their work to date
> 100% of Windsurf employees will receive fully accelerated vesting for their work to date
"Participate financially" means what exactly? They could all get a coupon for a free doughnut, and that statement would be true.
I'm not saying the employees are getting nothing, or even a raw deal. I'm saying we have no idea if the deal is good for them, without details.
> theoretically the remaining company could pay accelerate vesting, then pay out the cash to their remaining employees, and then shut down, to give everyone the same exit as an acquisition, or better.
unlikely that will happen. More likely the investors and VCs will take the lion's share of the $2.5B, that is what they do. That is why they exist. And they'll distribute as thin a slice as possible to the employees.
Clearly.
OpenAI’s Windsurf deal is off, and Windsurf’s CEO is going to Google - https://news.ycombinator.com/item?id=44536988 - July 2025 (679 comments))
Attended Windsurf's Build Night 18 hours before founders joined Google DeepMind - https://news.ycombinator.com/item?id=44539884 - July 2025 (1 comment)
I guess it's about to happen again!
The "world-class GTM" is a joke.
On the other hand, I can imagine the execs taking Google golden handcuffs while trying to close the Cognition deal so the employees are made whole or maybe even on better terms than if they all went to Google.
All right, cancelled.