Google-Windsurf: M&A's SPAC moment?

Today’s post is the second in a row on current events–because I think this one really matters strategically to founders, especially early stage in AI. Unless crazy stuff happens, expect to go back to GTM-focused posts next week.

Speaking of GTM, if you’re curious what’s going on over at skyp.ai check out the site–added 10x more content (thanks to AI) including a vibe-coded video series player that took about ~15 min (but I still can’t stop the auto-play). More next week. For now, Google-Windsurf!

The Windsurf deal may seem like just another AI headline with 9 zeros: Google acquires [ AI company ] for [ x ] billion dollars. But to those of us buy and sell startups, and advise on acquisitions, it is a massive change. Here’s what happened, and why it may matter to you.

What happened with Windsurf

Windsurf was in talks with OpenAI to be acquired for $3 billion. The deal fell through. Or was never real. Who knows? Google stepped in, and in a very unusual deal, “acquihired” key team members and a non-exclusive IP license for $2.4 billion, leaving the entity, many employees, and actual IP behind. Days later Cognition AI, the company behind Devin, the $500/mo AI-developer-agent, bought the entity and (presumably) took on its left behind employees.

I don’t have insider info on this (if I did, I couldn’t talk about it) and there are many reasons why nobody will tell a real acquisition story in public. But the broad strokes of the deal are public–and the implications are profound.

The M&A basics needed to follow the rest of this post

Before we dive deep into pros and cons let’s provide context. Here are the three main ways to be acquired: