May 6, 2025

The Value of Windsurf

It’s been rumored for a few weeks now, but beginning to look the the rumors were true: OpenAI is about to close a 3 billion dollar deal to acquire Windsurf (fka Codeium).

I’ve found myself repeating the same points to a bunch of folks at Gauntlet who didn’t see how they could be valued so highly, so I’ll repeat them here again today.

First, a highly rated HN comment on today’s Bloomberg article as an example of the doubts:

I would also argue that the product could be built over two weekends with a small team. They offer some groundbreaking solutions, but since we know that they work and how, it’s easy to replicate them… That also means they have significant talent there. Hence, they are also buying the employees. The code base itself is basically worth nothing, in my opinion.

It’s just a VS Code fork, they’re just using Claude/Gemini/4o, there’s no moat, etc etc. These would all be fair critiques if it were Cline or Roo Code that were being bought $3b. But that’s not what’s being bought!

Enterprise

What’s being bought is an enterprise machine learning company in the fastest growing space for applied AI. You don’t need to read any tea leaves to understand this.

  • Codeium has been open about this strategy quite some time.
  • When they came to talk to us at Gauntlet, they mentioned several times that they started as a ML infrastructure company before pivoting to code completion, and that’s long been an advantage.
  • When I asked about their split between product engineers and sales engineers, they wouldn’t give hard numbers but implied it was nearly a 50/50 split
  • When you look at their careers page they have roles for things like Product Strategist, Federal.

So they: talk about being enterprise focused, have the talent and knowhow to sell and deploy into enterprise, staff their org to sell and deploy into the enterprise, and strategize about how to continue to sell and deploy into enterprise.

So yes it seems fair to say that the Windsurf VS-Code-fork-backed-by-SOTA-models-client would be overvalued if that’s what was being purchased. But it seems to me like that’s not really what’s being purchased.