Coding startup Windsurf aims to rise from its own ashes

The big picture: New chief executive Jeff Wang tells Axios that the company is back to its original mission — playing neutral Switzerland in a world of warring AI coding models.

Catch up quick: Windsurf was in the process of selling itself to OpenAI. The deal fell apart in July, largely due to concerns over what access Microsoft would have to the technology.

• Google then hired its CEO and top researchers, leaving the rest of the team in limbo. That was the lowest point, Wang said. "People were crying," he said.
• After a weekend of negotiations, though, Windsurf ended up selling the remaining company to Cognition, a deal that preserved jobs and compensation for workers. That, he said, led to his highest moment as relieved employees applauded for several minutes.
• "I hope somebody makes a movie of it ... it was very, very dramatic," Wang told Axios. "Everyone thought we were dead and it was over, right? We kind of flipped the script on that."

Between the lines: The drama for Windsurf employees didn't end with the Cognition acquisition.

• Cognition made clear its work-first ethos, informing employees that it expects them to be working six-day, 80-hour weeks and offering buyouts to those who weren't on board.

What they're saying: Wang frames this as a positive, saying a return to startup mentality is key if the company is going to win against its well-heeled rivals, including Microsoft, Google, Anthropic, OpenAI and a host of startups.

• "This is ... the most competitive industry within the most competitive industry," Wang says.
• "And it's not like we're doing a negative thing either," he told Axios. "We're giving everybody nine months of pay and we're giving them health care for that nine months, too."
• "This is just the culture now," Wang said. "We want to make sure this is what you sign up for."
• Wang expects "the vast majority" will stay.

Zoom in: While many aspects of business have yet to see dramatic productivity gains from generative AI, programming has been dramatically transformed.

• Wang said he sees the potential for 100 times as much code being written in the coming year as in prior ones.
• "There's such a massive market for code," he says, noting that the code market is about $2 billion now and headed to $100 billion in two or three years.

Yes, but: As The Information reported last week, serving developers is expensive — they expect constant access to the latest, priciest models.

• Wang said the shifts at his company will help it be more cost-effective, noting that the research effort that left for Google required a lot of investment in both staff and computing infrastructure, which he describes as "very expensive."

• There's a lot of value, Wang said, in not developing one's own models. If Anthropic or Google or OpenAI falls behind in coding, a neutral third-party can switch to whichever model is most cost-effective, while those companies are largely reliant on their own products. In some cases, open source models, too, can be a good option.

Last week's launch of GPT-5 highlights the benefits of not taking sides, Wang said, noting that for months Anthropic had a clear lead in coding and was the go-to model despite being costlier.

• "I think they're both neck and neck now, which is a good thing," he said. "That does mean it is getting commoditized, and the prices should go down, and I think that makes our product a little more profitable."

What's next: For Wang, a key task has been mending fences with AI model providers, especially Anthropic, which had curtailed Windsurf's access to its technology when it appeared it was going to become part of OpenAI.

• "They looked at us differently because [they thought] we were with OpenAI," he said. "We want to make sure we are friends with all model providers."
• Cognition and Windsurf also have to bring together their product lines.
• Windsurf lost a lot of engineering talent to Google, but still has strong sales and marketing organizations, a gap Cognition was looking to fill. "Not only did the products not overlap, but the teams didn't really overlap."

The bottom line: Windsurf's chaotic month shows just how volatile the AI coding wars have become.