Google’s $2.4B deal with Windsurf sparks Silicon Valley backlash
Google paid $2.4 billion to license Windsurf’s tech and hired about 40 of its employees, including co-founders Varun Mohan and Douglas Chen. Half the payout — $1.2 billion — went to Windsurf’s investors. The other half was compensation packages for the hired staff.
Investors saw a roughly 4x return on their $243 million invested, with Greenoaks returning $500 million on $65 million invested and Kleiner Perkins tripling its money. But many expected a bigger payday. 
The deal replaced a planned $3 billion acquisition by OpenAI that collapsed. Google’s deal focused on locking up talent and IP, not buying stock outright.
The problem? Around 200 Windsurf employees who weren’t hired by Google got no payout. New hires also lost stock grants or had vesting clocks reset, meaning they face a four-year wait for full payout in Google stock.
The leftover $100 million+ cash stayed in Windsurf under interim CEO Jeff Wang. Some insiders say that money could have paid all employees immediately, but feared bankruptcy after the founders and investors cashed out. Others disagree.
Top VCs slammed the co-founders for not sharing the windfall with their teams.
Vinod Khosla posted on X:
“Windsurf and others are really bad examples of founders leaving their teams behind and not even sharing the proceeds with their team,”
“I definitely would not work with their founders next time.”
After days of limbo, Windsurf’s remaining entity sold to Cognition. Cognition bought Windsurf’s IP, product, and staff not hired by Google. Estimated deal price: $250 million.
Cognition confirmed in a blog post that all employees finally got financial gains.
Google, Kleiner Perkins, and Greenoaks declined to comment. Varun Mohan, Douglas Chen, and General Catalyst didn’t respond. Cognition also stayed silent.
The fallout shows a divide between payouts for investors and founders versus rank-and-file employees in big tech deals. Windsurf’s story is rattling startups and founders across Silicon Valley.
