OpenAI reaches agreement to buy Windsurf for $3B
bloomberg.com
bloomberg.com
> Windsurf began in 2021 as Exafunction, founded by MIT graduates Varun Mohan and Douglas Chen. The company initially focused on GPU optimization before pivoting to AI-assisted coding tools, launching Codeium, which later evolved into Windsurf.
> Series B (January 2024): $65 million at a $500 million valuation.
> Series C (September 2024): $150 million, led by General Catalyst, at a $1.3 billion valuation.
> May 2025: $3 billion acquisition from OpenAI
I wonder how much of the value is really from the model or the tooling around it. They all use the same models (mostly Claude, others have been horrible and buggy in my experience). Even co-pilot agent mode now uses Claude. The editor has their own LLM (?) that does the apply since LLMs often return snippets. They work well enough on Cursor. And then you have the auto-complete, which I think is their own model as well.
But the main value from me is from the agent mode and 95% of the value is the underlying model. The other stuff could be more or less a VS Code plugin. The other benefit is the fixed pricing. I have no idea how much 500 calls cost if I were to use the API, but I expect they're probably losing money.
> The other stuff could be more or less a VS Code plugin
The other stuff would take a team 6 months to implement. This is where the valuation comes from. Time to market, they are there TODAY.
How many customers do they have? At $30 per month it would take forever to pay off even with a lot of growth.
Open AI could release an equivalent VS Code clone and make it entirely free and it would still be a lot cheaper than $3 billion.
I'm jelly. Very rarely you see in history someone lucky enough to be riding the absolute top of the wave. Even OpenAI took about decade to cook their breakthrough product.
Only thing better would be a social network, which supposedly they're working on.
And that's just on their models. They'd also get (at the very least) signals on their direct competition, if not straight up prompts+completions as well.
All they really see as a model provider is little fragments of the picture, like trying to reconstruct the Mona Lisa by knowing which paint swatches Leonardo used.
In other words, they only saw whatever Windsurf sent as context with a "fix the bugs" prompt stapled to it.
By owning Windsurf, they see the entire source code of what's being built, all the time, plus how the model is interacting with it.
There's a massive amount of value in what happens client-side, and behind the scenes. The "director's cut" of context.
Huge difference.
[Dev mode] While working on Alembic migrations I broke one of my migration files. After an hour of manual debugging I handed the task to WindSurf. It methodically checked every config file, applied the migrations one by one, and narrowed the issue to a single file. It rewrote the migration, verified the fix, wrote tests, ensured everything passed, and opened a PR. I reviewed it and it worked flawlessly.
Regarding the acquisition I don’t understand why OAI would pay $3 B. The team is strong, they have lots of data, and the agentic flow is great, but all of that feels commoditized.
Claude Code launched two months ago and I prefer it to WindSurf, Cursor, and Aider. Augment Code also ranks above WindSurf for me.
If I were in Sam’s place I would have doubled or tripled down on Codex CLI. Just my 2 cents.
Try replacing Uber today, it's impossible. Nobody is going to give you billions of dollars to try to do it. It'd be an absolute nightmare to attempt it.
So we signed up for Bolt and sure enough drivers were plentiful, the app worked great and there was no downside over Uber. I'll certainly be trying it again in future in other markets.
The reason Uber invested in self-driving cars for years is that otherwise they have no sustainable edge. It's just a taxi company, which is a low margin business. People who can make slick mobile apps are plentiful and it takes a minute or less to sign up for a new service. Uber grew to its current size by buying market share using investors dollars, which was always a time-limited strategy. Once they started having to turn a profit prices rose and their edge over their competitors was lost.
I’m even more bearish on Uber than I used to be, as someone who’s used Grab and Careem and Bolt extensively, and seen Uber have to beat a retreat from SE Asia. If their more nimble competition get a foothold in the US they’re toast.
1. Solving a pain-point of many people re: hailing a cab, via an app that works everywhere.
2. Using VC funds to (initially) pay drivers more than you, the customer, were paying them.
3. Ignoring local regulations and passing the savings/convenience on to you.
1 is nice but I don't think they established much of a moat (both drivers and customers are willing to use multiple apps); 2 isn't sustainable in the long-term, and they failed to leverage 3 to establishing a permanent right to operate as they had been in most markets.
I think this makes Uber an even more interesting benchmark for other unicorns, since besides "solving a real problem without establishing a moat" they are also often burning through VC cash to prop up their business model while ignoring some laws which they may not be able to get away with ignoring long-term.
OpenAI has a new thing called codex but it isn't very good yet. I tried it and it's super flaky. Lot's of errors and it gets stuck when that happens. OpenAI needs something good urgently because agentic coding is the key AI feature right now and the blue print for non coding agentic solutions later. Cursor is probably too expensive currently and windsurf looks like their models are a bit better.
So, OpenAI gains something they don't have: a credible developer option with an active user base and some core IP in the form of training data and know how as well as custom models that they can fold into openai.
3 billion is a lot but not if you consider that world + dog in the enterprise world will be spending big time on AI subscriptions for their developers. This stops being optional in 2025. Millions of developers will be on paid subscriptions permanently very soon. If you start a new job you can expect to get a laptop and a paid subscription to whatever is the agentic coding tool of choice in your new company.
OpenAI wants double digit percentages of that revenue. 1M users paying something like 50$/month would amount to 600M revenue per year. I think the prices will go up and the amount of active users as well. Reason: as these tools are getting better they start saving non trivial amounts of engineering time. At that point you have to value the tool in terms of developer cost. Not 1 to 1. But it's worth a sizable portion of that.
I work in a small startup as the CTO. This is an no-brainer for us. We're cash strapped so we only spend on important things. This would be one of those things. We're doing things I previously would have needed to expand the team for because I would have had no capacity to do those things in the current team. So, in terms of value for money spending on these tools is easy to justify.
I get lots of people are skeptical about AI stuff here. But I would say that a lot of those people suffer from a short term focus and bias. Three years ago none of this stuff existed. Now it's a multi billion$ market that is set to grow rapidly. Stuff is getting better at a very rapid pace. Just stating facts here. 3 billion is a bargain if Openai can make this acquisition work for them. They are buying time to market here. They don't have a year to figure it out. In a year or so this market will be carved up and locked into hard to change year long SAAS contracts. At that point getting people to switch tools will get harder and harder.
I agree with this, not sure the experience of everyone else but I felt like Claude Code is more useful.
Meanwhile, I'm keeping tabs on Aider and open-codex, what other options are there?
In your opinion, what should one do/learn to get a SDE/related gig now? What do you/other companies look for?
Companies can be a bit slow to update their hiring processes to their needs. But good developers should be ahead of the curve in any case. For this, just be proficient with the tools.
Be ready for the inevitable interview question "so, AI ... explain me how you are using it and what you are doing with it?". Much easier to answer that question if you have some meaningful time of routinely using this stuff behind you and can articulate what works and doesn't work for you.
And if they don't ask, that's actually a great question to ask back if you get the opportunity "I've been using agentic tooling, how are you guys using that a <company name>? Also I would like a subscription to <my favorite AI tool> if I work for you". Stuff like that makes you stand out as ambitious and interested in the future. There are of course going to be places that maybe don't like that. But then ask yourself whether you'd want to work there. So, either way, you learn something.
So, would you consider it a bad idea to get into web dev, more specifically backend and infra?
Do you think using LLMs can accelerate learning software dev and programming skills?
The whole frontend/backend distinction did not really exist until the web. And infrastructure is definitely something that should be automated far more than it currently is. If it needs babysitting by a team of devops, you just created a lot of work rather than automating/solving it. Tedious and repetitive. It has "AI will make this a lot easier" written all over it.
So, just be ready for the ambition level to be raised for developers. Learn to build the whole system, not just bits and pieces of the system. Lean on AI to get stuff done and figure things out. It's all just code. None of it is really that hard. But it can be a lot of work if you do all of it manually.
And let's be honest, agentic tools are showing promise and great progress but they are nowhere close to independently working on existing code bases. That's not how I use them. But they are great for problem solving, debugging, prototyping, exploring some new languages and APIs, and generally taking care of more tedious coding tasks.
I need fewer devs to get more work done... but interestingly it has put a premium on experience because a lot of the "human work" is debugging and fixing where the LLM missed the mark. So less headcount, higher skill required.
Bring on (a lot) more competition! I am waiting for the point where "Simple Pricing" (Augment Code has that on the pricing page) means fixed pricing; Simple is NOT '600 messages included' because it's impossible to know what the ROI from those 600 messages is, so it's very far from 'Simple' (many of those prompts will deliver nothing or, worse, having to rollback because the agent produced garbage). I know it's not sustainable, but the only thing that will keep me not jumping from one to the other, signing up with different emails, trials, coupons etc is if they will lose the restrictions on usage. They will, as they have to compete and it's worth it seeing this acquisition; losing 10s of millions a month to get/keep people and getting nice growth is what they do to get the billions. So bring it on!
The person leading M&A said an intangible aspect of the price is what it does to the adjacent market. If the leading product A is valued during a raise at $Y, and you buy the next best product B at 1/10 that, you cause future issues with raises for A.
Might this be an attempt to clip Cursors wings?
So if I'm understanding your point then part of the value in paying $3B for Windsurf is that it acts as a pricing anchor on future raises (and presumably acquisitions as well) for competing products? So Cursor is less likely to raise at a $30B valuation if Windsurf is 95% as good and just sold for 1/10 that.
Regarding your other point about pedigree: I’ve a high school level education. I was considered senior at this specific co. as I had played an important role in building the product (I’m a “classic case” of self taught generalist). I’m not at all clear on how I was selected to take part in that effort to be frank. It was fun.
Also, we had to factor into account user management, infosec bring-up, streamlining deployment, cross training teams, etc.
This was a large co., there was generally the belief that everything can be copied relatively quickly to reach something like parity. Obviously, the discovered path has tons more learning in it that the copier doesn’t benefit from when making subsequent decisions, which can result in lots of time lost.
Remember that none of these tools can survive forever. Exiting was EXTREMELY smart of the founders here. Incredibly smart. I'd F off into the sunset now myself.
The reason is because they are built on top of VS Code and use Claude. So OpenAI can switch the LLM, cool, but at the end of the day there's no moat for the Cursors and Windsurfs of the world. OpenAI has the keys here because they have the proprietary LLM. This doesn't mean OpenAI will survive btw. I think Google will awkwardly win this race. They're so so so awkward though it'll take some time. It's painful to watch, but because they have the user base, they'll win. Hold that thought for a moment.
So new tools like Cursor and Windsurf will pop up all the time and do you think Microsoft will just sit by and watch? Nope. They'll update VS Code and Copilot and voila, the pendulum shift. As quickly as Cursor and Windsurf gained users, they'll lose them all again back to VS Code and Copilot. Copilot does indeed index your entire codebase - a rumor or misunderstanding by people. So as the dust settles, we'll see this change in usage. As LLMs trade places, we'll have a revolving door of fanbois and people arguing about what's better. What a rollercoaster.
What's really interesting here is that I think we're going to see a LOT of litigation. Back to Google. Look at what's happening with Google Chrome. Some genius thought they were in violation of anti-trust laws (well maybe they are). The reality is they are about to make it WAY WAY WORSE because Google Chrome was open source and should someone buy Chrome and decide they don't want to share...Well bye bye funding to virtual every other web browser. Congratulations brilliant legal system, you created a monopoly. It just wasn't Google's monopoly so I suppose that's alright.
So what I would bet is going to happen here is we're going to see OpenAI, Google, Microsoft, Anthropic, etc. all start to mess with one another here in a similar fashion. It's all going to be lobbying and legal battles. All over the place. It's going to make for an incredibly turbulent landscape. This is a very very expensive game.
THIS is why we're talking $3B. Someone is looking to protect something. It's not because of value. To think about it as a business value somewhere is wrong. Windsurf and Cursor aren't worth billions. Are you out of your mind? There's no justifiable way any rational human being would think that. When they're built on top of other tech and have absolutely no defensible position?? Heck no. It's not about their value individually, it's about their added value to these other companies. It's about bet placing. It's about protecting a larger business.
Take a moment to think what the world would look like if OpenAI must remain an open source business and or had to divest ChatGPT. They get Screwgoogled. Now ask why they're going to gobble up other businesses and why they keep raising all this money. I still think it's foolish, but it definitely seems like an existential threat that's lurking in there to me.
dot-com vibes. Maybe not quite the same as Pets.com but still...
1) OpenAI is valued at 300B (as of March 31st) https://openai.com/index/march-funding-updates/
2) OpenAI recently raised 40B from SoftBank and others.
3) Windsurf is getting roughly 1% of OpenAI's valuation.
OpenAI needs to keep moving fast to outpace MS, Google, and others -- and I think we can all agree that agentic coding is a major trend -- that is likely to keep growing really fast -- and super high leverage in that the folks doing the coding are well paid -- and more likely to be early adopters than any other field. (e.g. if openAI wants a fast way to grow beyond $20-$200/month, owning a tool like windsurf is a good move)
Some folks have been speculating the cash/equity split. I'd be confident whatever number they arrived at de-risks things for windsurf, and preserves the right amount of cash on hand for openAI.
Even if OpenAI is burning 10-20B a year, with the recent raise would buy them between 1-2 years, and given the pace of AI development that's a pretty long time.
For comparison, JetBrains generates over $400 million in annual revenue and is valued around $7 billion. They've built proprietary technology and deep expertise in that market over decades.
If AI (terminology aside) replaces many professional software engineers and programmers like some of its fierce advocates say it would, wouldn't their potential customer base shrink?
Professionals typically drive enterprise revenue, while hobbyists—who might become the primary users—generally don't support the same business model or spending levels.
What am I missing here?
OpenAI just had a fundraising round that put them at $300B. Maybe they're just giving Windsurf 1% of OpenAI. Maybe they're even giving less than 1% - if OpenAI was worth $300B at the end of March and $150B last October, maybe they're worth $400B now. Maybe Windsurf is getting 0.75% of OpenAI that's "valued" at $3B.
That is the most hilarious maths I have ever seen, if this is true then it's maybe the biggest "holy fuck it's a bubble all the way down" I have ever seen
They built all of this assuming VSCode was a solid foundation for the next 30 years and I've completely undermined VSCode's technical foundations. Their castle is gonna sink into the swamp...
The contrary view is like saying gold miners are finding more gold, and it’s easier than ever, so we expect folks are going to leave town.
After all most of those investors are deeply invested in AI technology already. At the valuation, they need to be able to show that it replaces human workers because that's the specific kind of greed that is driving the value of the stock.
And if you see your competition tighten their belt then you should tighten yours right? So without proof companies are acting like they can use a small number of human-ai hybrid workers. There's strong peer pressure to think that way as a direct result of AI
It was just a few years ago when automakers and rental car companies unanimously decided (has they had been told to decide) that COVID-19 would reduce demand for cars. They cut production, sold off fleets, and almost immediately found themselves unable to keep up with demand.
If you need to write a lot of code I guess, but that's really rare, like saying "I need to write a lot of laws. I need to write 50 new laws by Tuesday with at least 15000 words of new regulation to one-up my rival legislator who wrote 40 new laws last week"
hiring is hard
it's a high-functioning team swimming in contemporary design and eng practices
code is emerging as an important battleground
OpenAI has the $$$
However they fail to make a Cursor competitor so far. This alone suggests it's a harder task than meets the eye.
Someone like me isn't known at all but it means I have been able to experiment for a long time without pressure, which is how you do real innovation.
JetBrains as a company probably owns 10 million lines of code and it's just really hard to move fast when you're tugging that kind of ball and chain
Looking for a moat in the technology is always a bit of a trap - it’s in the traction, the brand awareness, the user data etc.
Traction, brand awareness, and user data do not favor Windsurf over GitHub Copilot. The few of us who follow all the new developments are aware that Windsurf has been roughly leading the pack in terms of capabilities, but do not underestimate the power of being bundled into both VS Code and GitHub by default. Everyone else is an upstart by comparison and needs some form of edge to make up for it, and without a moat it will be very hard for them to maintain their edge long enough to beat GitHub's dominance.
defaults matter
Same with Google vs OpenAI. I tend to agree with the sentiment that I most frequently hear which is that OpenAI is the currently popular brand, but that can only carry them so far against what will eventually be a better offering for cheaper.
Whether or not it's justified is a different matter, but for startups valuations are more about potential then current performance.
They made $25M from subscriptions one month, took that number, multiplied it by 12, arrived at $300M and everyone has been running with that line without ever asking what their churn looks like.
They could have churned $24M the next month, ask yourself why they are silent on churn if they are doing so well.
No, venture capitalists aren't ignorant, but their goal also might not be to build and run a healthy company long term. It might be to turn a quick profit by selling a startup to another company.
So hypothetically 1 man can cut wood but it takes him 2 days to do a big job. With a power saw it takes him half a day so his output on this section of the job is amplified by 4x. Any tool that makes his life more trivial increases his output and therefore increases the supply of the product without touching demand. With an over supply the system will naturally lower in supply by replacing carpenters.
This happens for anything and any tool that makes someone’s occupation easier. You have to think in aggregate. It may be the increase is imperceptible as it only increases the efficiency of a worker by 1 percent which is nothing but in aggregate that translates to a 1 percent reduction in the work force. Of course reality is more complicated than that but I hope the example shows you what I’m saying.
And it gets even more complicated than this too because increasing supply can also increase demand because the product becomes cheaper. Or demand may have already been astronomically high so the increase in supply only meets the demand.
In general if the product is in equilibrium of supply and demand and you increase the efficiency of the worker producing the supply then you will reduce worker population because the job doesn’t pay well enough anymore and people leave or less people join. The system slowly comes back to equilibrium or it can oscillate back and forth between over supply and undersupply as it’s basically a control system. This is what’s been happening with software for the past 3 decades.
The idea that the power saw didn’t replace a carpenter is flat out wrong. The story is much more complicated than that but the reality is that in general it did replace some carpenters just like how vibe coding for sure is replacing some software engineers.
After all, in net, increased production has allowed us to have more. We aren't making do with the same amount of stuff and spending less. We're spending more, and receiving much more. That money is going to other people's pockets.
Making cabinets, etc.. sure. But woodworking has drastically changed, and maybe programming is changing that way, too.
One is going to be valued at a much higher multiple than the other.
Startups love flashing ARR figures because "$300M ARR" sounds impressive, but without knowing churn rates, they might never actually collect that full amount.
JetBrains however collected real $400M in a year.
That's three good reasons to believe that lots of people will be cancelling in the next months unless something changes.
Achieving $300M ARR in 1 year is extremely extremely impressive regardless of churn or any other metrics really (assuming reasonable numbers). Being valued at $9B because of it doesn't seem out of line.
I'm skeptical of Cursor and not using Cursor myself. I actually use IntelliJ because I write Java.
Cursor's valuation is not unreasonable. But somehow you phrase it like $9B valuation for the fastest growing company that achieves the highest revenue per employee in the history of modern civilization is out of whack somehow.
If jetbrains can combine there IDE technology with cursor technology, that would be ideal.
I think the problem is jetbrains tech is sort of already very biased in a certain direction and it's hard for them to pivot as fast into this new AI direction.
Just give them some time, they're not stupid. I'd drop Cursor in an instant once JetBrains catches up, because IntelliJ IDEs are just a way more powerful.
It's a nice improvement over the last edition, but still quite not "smart" as Cursor or Windsurf. The agent seems too shortsighted compared to competitors: it may stop looking for files or making edits sooner and you're left with code made with incomplete context (that does not work or just doesn't address your needs). It also does not fix linter/compiler errors from its own output code before finishing, unlike Cursor.
I prefer Claude Code still because it has access to more tools - Junie seems unable to fetch URLs and do other things. But that's a tiny gap that JetBrains can close quickly, and the Junie UI is quite pretty. Plus, inside the IDE they can equip the model with far more advanced tools than Claude Code will have from the CLI: inside Code Claude has to explore the codebase by banging stones together with ripgrep, whereas in the IDE it can be equipped with tools to access the indexes and navigate around like a human would.
In theory, JetBrains should be able to compete very strongly in this market. Their single line completion model is already excellent.
Realistically: I don’t know how many users windsurf actually has and I never actually met anyone that uses them. Whereas Cursor AI took a huge percentage of the VS code users I know in real life.
That AI is in a bubble akin to the crypto craze from a few years ago, and the valuation of these companies is divorced from their underlying business fundamentals
This is such a good point. The best reply available to the AI hype-men would probably be that LLMs "democratize" coding and therefore that even more people will use IDEs in the future, but that sounds like BS to me -- not unlike AI/hype itself.
It now owns the API services.
OpenAI would have gotten more value by setting that 3 billion on fire, at least it would have powered the data center for a little while.
Microsoft has clearly taken notice. They're already starting to lock down the upstream VSCode codebase, as seen with recent changes to the C/C++ extension [0]. It's not hard to imagine that future features like TypeScript 7.0 might be limited or even withheld from forks entirely. At the same time, Microsoft will likely replicate Windsurf and Cursor's features within a year. And deliver them with far greater stability and polish.
Both Windsurf and Cursor are riddled with bugs that don't exist upstream, _especially_ in their AI assistant features beyond the VSCode core. Context management which is supposed to be the core featured added is itself incredibly poorly implemented [1].
Ultimately, the future isn't about a smarter editor, it's about a smarter teammate. Tools like GitHub Copilot or future agents will handle entire engineering tickets: generating PRs with tests, taking feedback, and iterating like a real collaborator.
[0] https://www.theregister.com/2025/04/24/microsoft_vs_code_sub...
[1] https://www.reddit.com/r/cursor/comments/1kbt790/rules_in_49...
We've seen this before with Office.
We'll see it again.
Microsoft Build is this month [0] and it will tell where they are going next (other than price cuts).
I'm expecting disappointment for now, but also expecting GitHub Copilot to be upgraded. Then we'll see if they are ahead or so far behind.
[0] https://code.visualstudio.com/blogs/2025/05/19/openSourceAIE...
If autonomous agents were just around the corner, then why wouldn't OpenAI bet on their own Codex product obviating (most) need for an IDE and save themselves the $3 billion?
Of course, back to reality. Today, at least in my workflow, I use / like Windsurf but it is a small part of what I am doing. For any code I want to keep I mostly write it by hand (using vim for a very bare-bones / cognitive mode experience). For me, the real flow state occurs in vim while ChatGPT and Windsurf are great for exploration.
this is the question i am still asking...
They don’t have access to copilot users in general, Microsoft and Google does. And perhaps they are realizing that Microsoft is hedging them over multiple LLM providers and maybe no longer feeding them juicy copilot data, with humans in a tight loop, correcting LLMs.
Have you used Cursor on a daily basis? I have. Every day for six months now. I haven't encountered a single bug that prevent me to work.
Moreover, while Microsoft tries to catch up lately, it's still very far behind, especially on the "tab autocompletion" front.
Microsoft provides the editor base, foundation models provide the smarts, and Cursor provides some, in my experience, extremely buggy context management features. There is no moat.
[0] https://knowyourmeme.com/memes/unfinished-horse-drawing-flam...
Maybe it's fine if you only do local development in other languages (Javascript?), but I completely swore it off.
Meanwhile GitHub web integration is approaching seamless in vs code. To the point I often forget I’m in a browser instead of the app, until an extension I use doesn’t work.
https://code.visualstudio.com/docs/copilot/copilot-customiza...
I gave up on Cursor because my trial ran out, while VS Code with Copilot doesn't seem to charge me anything.
I agree with the first part, I'm much less optimistic about the second part. I suspect they will create something that is worse, but cheaper if you already pay for Github/Office 365/whatever. Then many large enterprises will switch to save money whilst the engineers complain, just like with Teams.
I always felt that cursor and windsurf should be just extension to vscode instead of a fork. Was there some missing functionality is vscode that was missing? Is it still missing?
There are some extensions that work in this way and allow to use multiple implementations depending on task at hand without any long term commitment.
I feel like such fragmentation is by artificial just to lock users in single ecosystem.
It's in a lot of ways the OpenAI story itself: Can they keep an edge? Or is there at least something that will keep people from just switching product?
Who knows. People have opinions, of course. OpenAIs opinion (which should reasonably count for something, them being the current AI-as-a-product leader) is worth $3B as of today.
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.
What groundbreaking solutions does Windsurf offer?
Or you chat and suddenly it wants to use the azure copilot instead because reasons.
Horrible experience.
I've tried just about every model on its own over the years, and yet there's something about the Cursor workflow that frequently still gives me chills when it shows me again that it had clearly anticipated what I would think next in a way I just don't experience with other tools.
Holistic seems like the right word?
If it's all smoke and mirrors as some folks imply, then it's Penn and Teller level smoke and mirrors. Beware those who tell you that they could duplicate anything of value in a weekend.
For example, Github only autocompletes based on what file you have opened in the current editor's tab. Windsurf indexes your entire code base and seems able to autocomplete based on what other files you have in your project. Autocomplete also spans across multiple lines and open tabs.
Windsurf's agentic tool (Cascade) can run terminal commands and read the output without opening a terminal like copilot. It can undo the agent's actions easier than Copilot. Though I think Cursor is superior in that regard, it can undo multiple checkpoints.
Still evaluating Windsurf but it, Cursor, and Claude Code are all more sophisticated than Github copilot at the moment. I'm sure copilot will catchup but by that time the other tools may have already iterated ahead.
I actually find it a little reassuring that they can't seem to get out of their own way.
The fact that they are is not the results of the Microsoft takeover.
The MS acquisition traded the developer community to briefly appeal to enterprises, then quickly let both down.
And I have long held that they are hungry, shipping like clockwork on or about the 20th of every month, showing up with actual improvements all the time https://about.gitlab.com/releases/ It seems this month brings 18.0 with it, for whatever that version bump happens to include
They also have a pretty good track record of "liberating" some premium features into the MIT side of things; I think it's luck of the draw, but it's not zero and it doesn't seem to be tied to any underhanded reason that I can spot
I think the GitHub brand is still stronger and people just don't "care" about gitlab.
But, anytime I am empowered to pick, I'm going to pick GitLab 100% of the time because it has every feature that I care about and "being popular" isn't a feature that I care about
That’s why you won’t see a ton of work go into e.g. issues/projects on GitHub. Those features all already exist and are very robust in ADO, so if you need those kinds of things (and the reporting an enterprise would want to be able to run on that data), then you belong on ADO.
I didn’t mean to imply that MS wanted to migrate anyone, just that the different offerings serve different kinds of customers, so you can’t really just compare GitLab to GitHub and say MS is lacking in serving some group of them.
The official guidance from Microsoft since probably 2019 has been to encourage all greenfield projects to GitHub, as opposed to ADO.
I don't like that GitLab lets you nest organizations and such, it makes it so painful to find things over time. I appreciate GitHub doesn't do this, I view it as a plus
I also disagree about GitLab CI, not that it wasn't smart for them to include alot sooner than GitHub, but Actions is really good and really easy to get up and moving with. I find they run faster, have better features - like they can annotate a PR with lint errors and test failures - with very little comparative configuration.
GitLab CI yaml is a mess by comparison. GitHub was smart to push things to the runner level once a certain complexity threshold is hit.
This has been my experience of course, and so much of it is really subjective admittedly, but I don't think GitLab is truly ahead at this point.
Nah, I hate that. At my job we have a few different orgs, with terrible SSO boundaries (having to auth multiple times to GitHub because I work on repositories from different GitHub orgs). Allowing you to have a proper structure with nestedness, while still having good search, is great. You can also easily move projects and namespaces around, so if the structure doesn't work, it can evolve.
Why would you have the 50 library repositories you've had to fork as top level projects polluting your org? You also can't really do shared variable, environment, CI configs between repos of the same project/type.
This reminds me of "big companies moves slow.." line.
Buying competition while everyone’s still fighting might straddle you with a lame horse
Tale as old as time, song as old as rhyme: embrace, extend, extinguish.
They are very different companies in structure and it certainly is a "pick your poison" but it's completely stupid to act like they're the same on this front. Apple is better on user privacy
...unless you care about state actors, which you should, in which case your data is the US government's either way.
Cursor and other forks have decided to circumvent this, some even going so far as to use proxies to bypass restrictions.
I'm not convinced Microsoft owes other billion dollar companies free access to a product they've built, curated, and supported for over a decade. Plug-in authors are not restricted from publishing their products on competing marketplaces.
However, given that JetBrains also have their own AI offering[2], I'm not sure how long that will last too...
[0] https://plugins.jetbrains.com/plugin/20540-windsurf-plugin-f...
[1] https://marketplace.visualstudio.com/items?itemName=Codeium....
1) Cline (1.4mil downloads)
2) Roo Code (a fork of Cline, 450k downloads)
Still a drop in the bucket compared to Cursor in terms of # of users, but they're growing pretty fast.
Disclaimer: I maintain Kilo Code, which competes with 1) and 2) so I'm pretty familiar with this space/the growth patterns.
We also have our own provider, which means no need to bring your own API keys (you can if you like, but it is batteries included by default) and we're not charging anything on top of the API pricing. Instead of monetizing on individual developers, we want it to be free for them and make money eventually off enterprise contracts [1]
[0]: https://blog.kilocode.ai/p/roo-or-cline-were-building-a-supe... [1]: https://kilocode.ai
Not sure how they'd do it considering you bring your own API keys. Can you link me to a resource?
But, if you tell aider to watch your files, you can drop a specially formatted comment into your file, and aider will see that and use it as a prompt.
So the integration is sort of “implicit”. Which sounds kinda like the cheap way to go, in comparison to the current brand name tools that have their own chat boxes, dropdowns with mode selectors (ask, edit, agent), and so on.
But look further into the future and an ambient interface is probably where we end up. Something where the Ai agent is just watching what you do, maybe even watching your eyes and seeing what you’re attending to, and then harmonizing its attention to what you are attending to.
But I dunno, i’m just guessing
This doesn't mean that aider, claude code, etc. aren't very good tools, but it does make sense to distinguish between built-in tools vs external ones. A similar non-AI example is debugging or linting: IDE integration makes it much easier than using a separate tool.
What doesn't the current API allow plugins to do? I'm guessing custom UI stuff that lives outside a panel?
In fact, their own AI extension appears to be pluggable in and of itself. I think they see the value in being easy to adapt different AI solutions to rather than trying to only provide their own.
No, they should be LSPs so that they can be integrated into any editor, not just VSCode.
And autocomplete is the least interesting thing an LLM can do. Cursor’s UX isn’t the end game but has lots great features.
The ideal UX is still being worked out. It’s good that different people are building tools to try different ideas.
I am all for everyone adopting LSP, but the reality is harsh.
They should have restricted the Marketplace several years ago, however, they are doing it now.
With C++, they are part of MFC's, they are the legal owners, not like Google vs Oracle in case of Java.
Lastly, with AI Code IDEs I think yes, there is a case, the need for IDE might be very less. Like a steering on a self driving car.
Microsoft software quality has gone downhill recently, and I'm not going to bet on them delivering something more polished than WS and Cursor here.
Side: all images on Microsoft websites are low resolution! it's like they don't even check their own website.
Their “programmers” are more busy with making blogs and videos than functioning tests or technical documentation, and they start using JavaScript and Python for everything.
I’m not surprised their quality went to shit. There are some pearls left, C# in general is pretty good, and Aspire is becoming quite neat.
The latter I think mainly because David Fowler is just a great developer
Because if you're referencing to a headline (without reading the article) that was on H a couple of days ago, it stated that 20-30% of the code in the repos was written by software. Software != AI
To quote wongarsu in the same post: "Considering that most of their software has been developed for decades and AI assistants have only started becoming useful in the last ~4 years it would be very surprising if 30% of their code is AI written. I doubt they even touched 30% of their code in the last 4 years. But what is perfectly plausible is that 30% of their code is written by code generators. Microsoft has a lot of interface code. All the windows DLLs that are just thin syscall interfaces, the COM and OLE interfaces in their office suite and everywhere else, whatever Office uses nowadays for interoperability to allow you to embed content of one product in another, whatever APIs their online products use, etc. In the leaked Windows XP source code it can be difficult to find the actual source code in between the boilerplate files containing repeated definitions, and in the decades since then the world has only leaned more into code generation."
Probably.
> And deliver them with far greater stability and polish
That seems ... overly optimistic given MS's history.
I agree with the rest, they've all mostly lost market share or completely no longer exist due to VS Code, but not IntelliJ, that platform is going really strong.
Though no doubt, VS Code has pushed JetBrains to rethink some things, and be better in general.
They can have all the money in the world and it doesn't mean much in this context.
For while Microsoft is going to invest heavily in a Cursor / Windsurf like product and likely do alot to ship it in their editors - likely with exclusions or lag times between updates on other platforms - there's zero reason for Google to do this for example, when they could sell through Gemini for Code as an extension across all editors.
I don't see JetBrains having issues because of AI tooling, for most of these companies, its a boon to be on the JetBrains platform. Especially because JetBrains has lots of enterprise customers who would naturally be very interested in buying AI tooling for their developers. Its a natural market
vs-code is one of the few products coming of of microsoft that leads the pack by a big margin, and it is no surprise that all of these startups are forking it.
One exception in 50 years does not inspire confidence.
Only for azure devops, there are +6k problems listed on developer community website with 500 still not closed for the last 6 months. [1]
The complete integration in the ecosystem is what's flawless.
Any company with a better product has to fight that integration and they almost always lose (Sybase, Borland, WordPerfect, Lotus, Netscape...)
1 : https://developercommunity.visualstudio.com/AzureDevOps?ftyp...
it was crap compared to Borland's products 20 years ago
and today it's crap compared to JetBrains'
and christ knows how anyone could consider the Azure UI to be "great"
other than Teams I don't think I've used a worse piece of software
I’ll agree on Teams being crap though, mostly for how dumb it is that they’ve rewritten it multiple times and created a confusing slate of weird versions like “Teams (work or school)”
Care to place a bet?
But I agree with you about the first part, and I think it's awesome for me as a user that all this competition to build a matter mousetrap is happening right now! I'm not as certain as you are that Microsoft will end up building a better version. It's definitely one of the likely outcomes. But it's also totally plausible that Cursor or Windsurf can win the race, even if they need to replace every single one of the MS extensions and entirely diverge the core IDE from upstream. These products are well capitalized and it's just not that hard to build the core pieces of an IDE.
I think a few options for this already exist, but honestly they don't go far enough. I want something like an AI scrum master, for hyper agile teams, that can task out smaller tickets to AI sub agents.
I would integrate this thing in with something like an AI powered Jira.
Two arguments exists.
1. I need to take about 6 months off and start building this now, even if I don't know exactly how I'll get it done. Between a combination of vibe coding and maybe a bit of outsourced work ( looking at Eastern Europe), I could get this done with my personal funds.
2. To do this properly would probably require tens of millions of dollars. I'll probably burn myself out trying to do it solo without ultimately getting to a sellable product.
The biggest issue here is to actually scale I would need to either have users bring their own LLM keys or have tens of thousands to spend on LLM tokens.
But I'm glad OpenAI is getting into the tooling space in this way. I cant wait to use all the cool features they build after VSCode rips them off.
I am guessing you are talking about GitHub Copilot when you say VSCode. GitHub Copilot is far far inferior product when compared to Cursor, Windsurf or Augment Code. Most people who try almost any Copilot alternative for a reasonable amount of time end up canceling their Copilot subscription. I did, after two months of using both.
To be honest I think both are quite limited by context length (in that they try to limit the context they send to the LLM and hence cost), and so I find myself using Gemini 2.5 in AI studio with the 1m context length, and asking it to generate instructions for Copilot (which seems to work pretty well)
Mentally, I'm replacing claims like this with "it will do magic!" and I think I'm just about as likely to be correct.
I disagree, but would love to be wrong. These tools exploded onto the scene and were massive productivity helpers, but since their initial integrations they’ve churned rather than improved in the last 2 years. They are even worse when you try to iterate rather than just get them to one shot the problem space.
The last cycle I remember of this IMO is iPython -> Jupyterhub/Jupyterlab. Of course, iPython has existed for a long time, though that change was made because data was too big to analyze locally and it turns out it was more convenient to centrally manage kernels/images/libraries for convenience.
MCP servers and Cursor/Windsurf changed that a bit, but it will end up centralized again at some point (or at least aggregated, if it's not already?). People are passing around lists of interesting MCP servers now, and that will be out of fashion in less than 12 months.
Stable and polished are not words that ever came to my mind while using any Microsoft product.
- AI assisted coding is mostly about managing the context and knowing what to put in the context to avoid confusion and dumb mistakes, it's not about the UI.
- This signals that OpenAI believes that highly effective coding assistant LLMs will become a commodity / open source and so UI / tooling lock-in is a good investment.
they're acquiring one of the biggest the front doors to developers, with Windsurf - whether it'll _remain_ in fashion or not, that's a different debate. This can be like facebook acquiring instagram (if developers turn out to be the actual profit-driver niche for LLMs, which currently seems to be the case)
AI is definitely huge for anyone writing code, though one can imagine a model like o3 completely replacing 90% of white collar jobs that involve reading, writing and analysis.
Interestingly, o3 is particularly bad at legalese, likely not fully by accident. Of all professions whose professional organizations and regulatory capture create huge rents, the legal profession is the most ripe for disruption.
It's not uncommon for lawyers to bill $250 to $500 per hour for producing boilerplate language. Contracts reviewed or drawn up by lawyers never come with any guarantees either, so one does not learn until too late that the lawyer overlooked something important. Most lawyers have above average IQs and understand arcane things, but most of it is pretty basic at its core.
Lawyers, Pharmacists, many doctors, nearly all accountants, and most middle managers will be replaceable by AI agents.
Software engineers are still expected to produce novel outputs unlike those other fields, so there is still room for humans to pilot the machine for a while. And since most software is meant to be used by humans, soon software will need to be usable by AI agents, which will reduce a lot of UI to an MCP.
Honestly, same for doctors and accountants. Unless these model providers are willing to provide "guarantees" that they will compensate for damages faced as a result of their output.
Doctors and Lawyers are required in many areas to carry malpractice insurance. Good luck getting "hot new AI legal startup" to sign off on that.
The most obviously "lethal" case (cars) is already in large scale rollout worldwide.
At scale, self-driving car "errors" will fall under general liability insurance coverage, most likely. Firms will probably carry some insurance as well just in case.
LLMs already write better prose than 95% of humans and models like o3 reason better than 90% of humans on many tasks.
In both law and medicine there are many pre-existing safeguards that have been created to reduce error rates for human practitioners (checklists, text search tools (lexis nexis, uptodate, etc.), continuing education, etc.) which can be applied to AI professionals too.
Except except lawyers are ~.4%[1] of the population in the United States, so that 95% isn’t very impressive
[1] https://www.americanbar.org/news/profile-legal-profession/de...
I think the mistake people make is misunderstanding the slope of the S-curve and instead quibbling over the exact nature of the current reality. AI is moving very fast. A few years ago I'd have said that at most 25% of legal work could fall to AI.
Note that this massive change happened in less time than it takes to educate one class of law school grads!
Writing good prose is a far different skill than coming up with a compelling and innovative plot and style.
As a data point, OpenAI now blocks o3 from doing the "continue where the story left off" test on works of fiction. It says "Sorry, I can't do that".
That's how we will get to $20,000/month agents.
Wake me up when there’s any evidence of this whatsoever. Pure fantasy.
True, but how long does it take to build something similar? I see it as a defensive move, probably good for the industry to let some people with innovative ideas in AI cash out now so they can do the next thing.
Microsoft is an existential threat to their model here, but with the money they each have coming in they together have the opportunity to make the whole ecosystem better by building out viable infrastructure for all VS Code forks, if they can cooperate.
Cursor yesterday was a 45X for comparison (9B, 200M)
https://techcrunch.com/2025/04/16/openai-is-reportedly-in-ta...
So, I'd be inclined to believe the vast majority of the deal is stock (or whatever that is called pre-IPO).
At $40M ARR, I assume the founders don't really need to make more money and are not in a rush to sell. Therefore, the price would go even higher. This can't be compared with investment where the founders still retain the control.
Cursor is probably the fastest growing company in the history of our modern civilization. Achieving a really high multiple doesn't seem out of line.
I'm skeptical of Cursor but I can see why they achieve that high valuation.
My current read is that this is a frontier lab acquiring large-scale training data—cheaply—from a community of “vibe coders”, instead of paying professional annotators. In that light, it feels more like a “you are the product” scenario, which likely won’t sit well with Windsurf’s paying customers.
Interesting times.
The "space" exists for months, there are no people with 10y expertise here, with their brand they can attract any talent they can wish for in this "space", no?
You can probably vibe code 80% of it in a week or two?
Apparently, no. And the low quality of all OpenAI apps is proof of that.
I'm fairly into llms but it took me awhile to try cursor because the cost of changing editors is very high. I'd probably eventually try a OpenAI editor but only if I saw it was actually getting adoption and good feedback from others.
I'd also argue that while this llm powered editor space is pretty new, the editor space in general is much older.
"Gemini 2.5 Pro Preview (I/O edition)" https://news.ycombinator.com/item?id=43906018
Edit: Oh of course, it's the open weights model they've been teasing.
https://developers.googleblog.com/en/gemini-2-5-pro-io-impro...
Typical VI-fallacy BS. If LLMs were actually good they would replace IDEs completely not be integrated.
ChatGPT is a great breakthrough but it’s wasted if everyone has to worry about a noncompete with it. Seriously, how is it not insane to think we should outsource our thoughts and agree never to use the thoughts to compete with the thinker? Who wants to live in a world where nobody thinks and nobody can make anything competitive with their “Saviour Machine?”
Anybody who would join an org like that for a few billion dollars is a sell out. It’s an AI safety nightmare, too. I’m just flabbergasted millions of noobs accept not to compete with intelligence, wtf is this world, if you can’t use your thoughts to compete with your thinker, what is left for you? lol this is worse than black mirror
As this great blog post lays bare ("The Emperor Has No Clothes", https://ampcode.com/how-to-build-an-agent), the core tech of a coding agent isn't anything magic - it's a set of LLM prompts plus a main loop running the calls to the LLM and executing the tool calls that the LLM wants to do. The tools are pretty standard like, search, read file, edit file, execute a bash command, etc. etc. Really all the power and complexity and "coding ability is in the LLM itself. Sure, it's a lot of work to make something polished that devs want to use - but is there any more to it than that?
So what is the differentiator here, other than user experience (for which I prefer the CLI tools, but to each their own)? $3B is a lot for something that sure doesn't seem to have any secret sauce tech or moat that I can see.
Codeium (Windsurf’s parent) started as a GPU optimization company, so they have deep expertise there. Unlike most agents that might just wrap OpenAI/Claude/etc Windsurf’s own model powers its code edits, not external API calls.
That’s where the defensibility is. better in-house models + efficient infra = stronger long-term moat
it's also a bit of multiple arbitrage in terms of what seriously addressing the developer market means for their valuation, they likely recoup the 3b instantly.
I see LLMs trying to do stuff that doesn't work in every AI coding thing I've tried, despite 20 pages of system prompts! (Or perhaps because of it.)
My prediction is anthropic, google or amazon will buy cursor. The next logical step to coding is building apps.
When I went to download Cursor the other day I noticed that they do not offer any .deb/.rpm packages and just offer the FlatPak (could be a Snap I'm not sure). This just tells me they really dont understand the community and just wanted to ship something for Linux and be done with it.
I'm sure Cursor has more than few devs that primarily use Linux...
This what all developers want for a platform. They can release their software and not have to worry about some "maintainer" switching out dependencies out from under them introducing bugs and crashes in what they shipped.
Cursor ships as an AppImage.
Whenever I tried Windsurf Editor, or their plugin for vim, and Intellij, it didn't feel polished at all. The basic function of autocomplete felt much much snappier on Cursor, and even on GitHub Copilot for vim/intellij.
Linux builds are in the AppImage format.
Which makes a lot more sense to me than deb/rpm when it's just a single executable.
I find if I tell Windsurf to look at something it will, Cursor I sometimes lay everything out for it and it just doesn't even read it.
Ultimately though once you run out of requests on Windsurf it's very weak without Claude though, and the top up requests are burnt through too quickly.
So I went back to Cursor.
CURSOR shifted to a more agentic approach even for chat requests to reduce input tokens.
Previously, they used the good old RAG pattern with code dumps: Request with user added files -> Retrieval (when Codebase enabled) -> LLM requests with combined context from user and retrieval.
Now they seem to be doing something like this: Request -> LLM with tools to search code base and/or user-added files
I get constant search tool calls even for user-added files. Big reduction in input token but I think performance suffers as well.
WINDSURF is still willing to dump code into the context, which gives them an edge in some cases (presumably at a cost of input tokens).
Windsurf is willing to spent to acquire customers (lower subscription cost, higher expenses for llm calls). Cursor has a huge customer base and is working on making it sustainable by a) reducing costs (see above) and b) increasing revenue (e.g. "Pro" requests for 0.05 with more input and output token).
It was smart for Windsurf to take the offer and to get greedy in this hype cycle. Unless Cursor is thinking that Anthropic or someone else will buy them for a lot more, its going to get extremely competitive as the switching cost for Cursor is zero and that ARR can disappear very quickly.
Copilot will attempt to destroy Cursor on price and functionality for however long they want to.
Very risky for Cursor at $9B valuation (which I think is overvalued and based on VC FOMO).
[0] https://techcrunch.com/2025/04/17/openai-pursued-cursor-make...
Is OpenAI worth the $260 billion valuation... No, of course not, they're losing >$4 billion a year.
Are Cursor and Windsurf going to ask plugin devs to push to their own plugin stores in addition to VS Code's? Will they rally jointly behind a single open store? They need to have an answer to Microsoft here, and for the good of the ecosystem I hope they do have an answer, but customers will flee quickly if they lose access to all the proprietary plugins and to the broader ecosystem.
They should and probably will soon, and if I were them I'd even consider giving plugin devs a cut of their paying customer subs if MS gets competitive about it.
> but customers will flee quickly if they lose access to all the proprietary plugins and to the broader ecosystem.
Agentic AI coding is more important to customers than VSCode's extension ecosystem. VSCode is who has to worry in this equation unless they ship the same tools in the next few months and heavily subsidize them.
You’re in the minority if you favor manual coding + extensions over something doing your job for you.
For users who've already switched to the forks, the cost of switching back is essentially zero, especially if Microsoft begins introducing changes that break fork compatibility. In that case, the migration direction would reverse almost overnight.
and still MS could not build a chat App, they had to acquire Skype. Google could not build a social network.
Didn't they change names months ago? I know them as Codeium.
I think it's going to be fine.
This is xAI buying Twitter, with extra steps.
IDEs can support "AI coding agents" on their own.
The entire workflow for "AI coding agents" boils down to:
1. You write a prompt
2. The "agent" wraps it in a system prompt and sends it to the LLM
3. The LLM sends back a response
4. The agent performs specific actions based on that response (editing files, creating new ones, etc.)
Microsoft already started doing that with Copilot. And they have a vibrant ecosystem of VS Code extensions (I maintain one of them [1])
"AI agents" should be a feature, not a separate piece of software (IDE) that's integral to software devs.
I wonder what Anthropic makes of this. Windsurf was like a top 3 customers of them, might be a big revenue blow too?
From what I've heard most people using/liking these agentic IDEs are using Claude models to power them, they seem to be the best at writing code. By buying Windsurf (and trying to buy Cursor) OpenAI can figure out why Claude is better at this task, fix GPT, and then make GPT the default for the coding use case.
Not sure it's worth $3B, but that's also not a lot to them when they can raise unlimited money at any time,
So what was it exactly that was worth the 3B that they couldn't replicate themselves? Their prompts? Their training sets? Their users or user data?
I've found Windsurf more reliable/efficient than any other editors by leagues. How ever they have named the tools, crafted their prompts and generally how their internals reason is just on the money. I don't think that is easy to replicate, iterating on prompts over product releases whilst not pissing off your user base constantly is a feat in of itself.
They have certainly lost the monopoly.
but undeniably these cos are all a great lesson in just how much cash lies in executing first/near first
Buying a "bundle" should result in a lower price, as compared to buying both tools separately, making the loses worse. Unless they can reuse some of the same infrastructure and save a lot of money that way.
[1] https://windsurf.com/blog/our-model-strategy [2] https://techcrunch.com/2025/04/22/why-openai-wanted-to-buy-c...
What's especially rich is the timing - right after OpenAI backpedaled on their restructuring plans due to "public pushback" (read: Sam Altman making yet another governance blunder). Now they're dumping billions into a tool that's essentially the same thing everyone else is building.
In my experience Claude Code is fantastic, both for answering questions about the codebase and coding.
With $3bn budget you can replicate it in few months, promote for free using your own stronger brand and you're left with roughly $3bn in the bank to do whatever you want.
The real value lies in a successful execution, Windsurf is live and already has brand popularity with revenue stream. When it gets acquired by a titan, the die hard fans(vibe coders) will gain new trust that the product is not going anywhere and instead has solid future(we don’t yet know if oAI plans to do Msft style acquire, extend, kill yet). Cumulatively, this actually increases the value. Also Windsurf already has established enterprise revenue, hence brand trust and experience is already there.
In summary, an existing live and proven product is worth more any day over 100% uncertainty of building a sufficiently capable team to perfectly execute the same idea in specific deadline and also have the added burden of marketing, market penetration, user acquisition etc.
Github copilot, vscode and apis through azure - basically everything through Microsoft - is.
Alternative to Microsoft's monopoly in enterprise that exists is open source.
Comparing this situation to twitter is more like if there was some chat api service, known more than twitter itself, that twitter is using/wrapping where other alternative clients exist, some with stronger popularity, some being open source.
OpenAI has a much bigger brand.
I don't think it's good value for the money but pretending it's just a VSCode fork that wraps LLMs is underselling it. There's something they're doing that makes them better than Cursor, Claude Code, etc.
then the prompt is the coding, the reasoning is the execution, the code just an abstract layer that we do not care to much about i.e.: like assembly, machine instructions.
we know it exists, bit even here on hackernews i would guess only a small fraction know how it really works on a detailed level.
there will still be coding, instructions (prompt) -> execution (reasoning and AI code and code execution -> feedback (debugging to AI then and one point to the user)
bur actual looking at the code, well, thats only when this cycle annoyingly fails.
so current IDEs are still built from an code first mindset. this will not be the IDE of the future.
so basically OpenAI bought a Dinosaur
i built my personal code assistant after using cursor/windsurf/aider/cline because i was frustrated with how crappy they worked for my use case. i only program in python/js/html/css and i needed something better. only took me an hour of prompting and after that tinycoder basically built itself from there on out. i still use vscode to inspect the code sometimes, but i might replace vscode ultimately too.
source code at https://github.com/koenvaneijk/tinycoder and contributions welcome obviously.
If that seems stupid, is because it is. There are network effects and small UI benefits.
They don't have their own LLMs either, they've glued a 3rd party editor to 3rd party models. That's some expensive glue.
The Claude integration is quite nice - I hope that doesn't take a step backward with the acquisition.
You'd think that with a generative AI coding editor, they'd stay on top of it and make it work. But I guess that wasn't the case up until now.
Maybe with this acquisition that might change...
But I guess I’m not really the guy that buys billion dollar things, so I probably don’t know how to evaluate them.
So OpenAI are paying for software which leverages other LLMs written by their own LLM.
We live in a topsy turvy world.
That said, I have tried Windsurf multiple times, and it wasn't a pleasant experience compared to Cursor, which I've been using for more than 6 months as a paid customer.
There are some niceties about inline completion (like spelling out a log message that's obvious from the surrounding code) but I don't get the hype much beyond that.
Maybe I'm missing some feature though ...
AI autocomplete is the best thing I've experienced in developer experience in my career since git won over subversion.
I don't use LLM code prompting, but autocomplete is my jam. It's getting things right 90% of the time when I'm plumbing fields or refactoring. It makes life so much more pleasurable, and I say that as someone who is already using a statically typed language with robust IDE refactoring capabilities.
It's absolutely made me more productive.
Windsurfs on the other hand are much better. The only issue is that windsurf is super aggressive about them, but it is able to do do things like "the user made a change on this line, he most likely also want to make the change here".
So they’re paying 3bn for the integration and clients basically?
Seems pricey
Embrace & Extend will never die.
Spread too thin is often the final result of embrace and expand.
"hey Jim, can I use your credits? I have a deadline and I'm all out."
openai just seems to have a hole in their hand they keep temporarily patching up with new investor money
I think the long-term play here is something to do with Agents and they are simply cornering the market because coding tools are part to it.
That being said, quick search around what people are building with these VIDEs reveals mostly landing pages that are actually not even that good. For the amount of money spent one could have easily bought a good template or pay someone to customise an existing one.
I don't know. Maybe I am dumb.
If I were any of these companies I would be suing OpenAI to try to get my money back. Thrive, ARK, Tiger and the others can pound sand
Tell me what AI wrapper do I make that you would acquire my product?
I think that was when intel acquired McAfee for 8B in 2010.
i agree with you on this - it seems that openai hallucinates reality as much as their products do :-/
Oh, haven't you heard? Hiring people to write software is so last decade. Maybe they just didn't want to vibe code a Windsurf implementation and decided to buy a press cycle for $3B
How are you defining “these deals”? Most acquisitions of startup by larger companies in America over the last decade, at least, have been all cash.
In cases where the company being acquired is already publicly traded, those deals would have to be all cash as their shareholders would need to be bought out. IBM paid cash for Hashicorp, and Doordash will acquire Deliveroo in cash.
Okay, in that category of M&A in practically any category, the vast majority of deals are all cash. Deferred, for executives, in most cases. But cash.
> In cases where the company being acquired is already publicly traded, those deals would have to be all cash as their shareholders would need to be bought out
Not true. Preferable. Easier. Not not a requirement.
It's funny money / made-up value. This is not $3B cash.