OpenAI reaches agreement to buy Windsurf for $3B • Hacker News Board

Re: OpenAI reaches agreement to buy Windsurf for $3B

#401

Post by quantadev » Wed, May 07, 2025, 3:03 AM UTC

supportengineer wrote: post #261

dist-epoch wrote: post #73

Earlier quoted context omitted.

> I wonder how much of the value is really from the model > 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.

6 months of anyone's time is not worth 3 billion dollars.

That was my thoughts too. No text editor is worth $3B, and probably not even VSCode is. So I think this deal was about buying more customers/users and buying "relevance". OpenAI lost it's monopoly and they're worried they might become irrelevant so they basically just purchased something popular to remain relevant.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#402

Post by quantadev » Wed, May 07, 2025, 3:06 AM UTC

retornam wrote: post #240

I'm skeptical about this VSCode fork commanding a $3 billion valuation when it depends on API services it doesn't own. What's their moat here? 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…

It's about popularity. OpenAI lost their monopoly now that there are many competitors so they're just trying to make a move to purchase "relevance". They're just trying to buy their way into the cool kids club, to remain relevant to at least a large number of kids.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#403

Post by sigmoid10 » Wed, May 07, 2025, 3:06 AM UTC

bfeynman wrote: post #51

bko wrote: post #29

Incredible timeline to a $3B exit > 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…

talented and smart folks for sure but can't not notice how much luck it is especially because its like 100% just better models. Windsurf raised a ton of money and then said they pivoted which they had millions raised to just do something completely different that likely wouldn't have been easier to raise for. Even in an interview with the cursor founder he kind of dumbly rambles that they launched and then basically…

Training data is almost certainly their main reason for this acquisition. Users themselves and the models they use don't really matter. What matters is their interactions with the models. Especially if you're trying to build coding agents that will be marketed to companies for $10k a month. OpenAI is going for the industry B2B opportunity here, not consumers or end users.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#404

Post by quantadev » Wed, May 07, 2025, 3:10 AM UTC

supportengineer wrote: post #258

retornam wrote: post #240

I'm skeptical about this VSCode fork commanding a $3 billion valuation when it depends on API services it doesn't own. What's their moat here? 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…

High valuations for companies you've never heard of with no moat - it comes down to cronyism/nepotism/fraud.

Yeah it seems like there's really no "adult supervision" at all in OpenAI. This purchase was a panic move. Windsurf would be worthless without the AI. Probably OpenAI knows that AI is now a commodity technology and no longer a space they can monopolize so they're just trying to get off a ship that's sinking, and find some viable path to having a tech that doesn't ultimately depend on OpenAI even having a monopoly any longer.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#405

Post by retornam » Wed, May 07, 2025, 3:11 AM UTC

ergocoder wrote: post #364

retornam wrote: post #240

I'm skeptical about this VSCode fork commanding a $3 billion valuation when it depends on API services it doesn't own. What's their moat here? 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…

JetBrains makes $400M in revenue and is 10+ years old. Cursor is 1 year old and makes $300M in revenue. One is going to be valued at a much higher multiple than the other.

$400M in real revenue versus $300M in annual recurring revenue (ARR) are totally different things. Real revenue is money actually earned, while ARR just multiplies one month's subscription revenue ($25M) by 12, ignoring customer churn.

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.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#406

Post by dankwizard » Wed, May 07, 2025, 3:12 AM UTC

What's funny is the translation layer between your prompt agent LLM, that code was written by ChatGPT.

So OpenAI are paying for software which leverages other LLMs written by their own LLM.

We live in a topsy turvy world.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#407

Post by lolinder » Wed, May 07, 2025, 3:17 AM UTC

sdwr wrote: post #396

lolinder wrote: post #357

Earlier quoted context omitted.

Define losing? My company pays for Copilot but not for Cursor, and it's not at all clear to me that we're the exception rather than the norm. What numbers and data are you working with?

Copilot has every incumbent advantage, so if Cursor is doing halfway decent in the market (which it is), it's winning by default

That's not actually how unseating an incumbent works. The incumbent can adapt to the threat for quite a while if they act on it, they just have to not be Blockbuster. Copilot is showing every sign of making up ground feature-wise, which is bad news for the runners up.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#408

Post by rizky05 » Wed, May 07, 2025, 3:18 AM UTC

wkat4242 wrote: post #351

nick__m wrote: post #346

Earlier quoted context omitted.

I happy to know that I am not the only one that know about continue.

It's used a lot by self hosters like myself because you can modify their plugin to talk to your local LLM.

roo and cline also can use local llm

Re: OpenAI reaches agreement to buy Windsurf for $3B

#409

Post by retornam » Wed, May 07, 2025, 3:21 AM UTC

Illniyar wrote: post #316

retornam wrote: post #240

I'm skeptical about this VSCode fork commanding a $3 billion valuation when it depends on API services it doesn't own. What's their moat here? 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…

Cursor purports 200m in projected yearly revenue. With some months having 40% month over month growth. The trajectory is vastly different. Whether or not it's justified is a different matter, but for startups valuations are more about potential then current performance.

Cursor purports $300M in annual recurring revenue (ARR) but stays silent on churn.

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.

Re: OpenAI reaches agreement to buy Windsurf for $3B

#410

Post by bufferoverflow » Wed, May 07, 2025, 3:34 AM UTC

mvkel wrote: post #394

bko wrote: post #29

Incredible timeline to a $3B exit > 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…

The value is in the prompts being sent to OpenAI. Massive training depository. Only thing better would be a social network, which supposedly they're working on.

But OpenAI already knows every single prompt sent to its models. They don't need to buy Windsurf for that.