Overview

• Cognition closed its acquisition of Windsurf on July 14 after OpenAI talks lapsed and Google DeepMind hired the startup’s co-founders and key researchers
• Negotiations moved from initial outreach to a signed letter of intent in just over 24 hours and were finalized by Monday morning
• The deal guarantees payouts for every Windsurf employee, with all vesting cliffs waived and equity schedules accelerated
• Staff morale plunged following leadership departures and the collapse of the OpenAI deal, with interim CEO Jeff Wang describing the all-hands meeting as the team’s “worst day”
• The acquisition highlights Silicon Valley’s escalating AI talent arms race, featuring Meta’s aggressive recruitment and debate from investors like Vinod Khosla over founder loyalty