OpenAI’s Windsurf deal is off, and Windsurf’s CEO is going to Google

So Google, Meta, and Microsoft will just hollow out the best AI startups of their talent instead of buying them - out of fear of monopoly lawsuits I'm assuming?

Nice plan I guess. Kind of obvious to spot though.

Likely cheaper too. Nothing to pay the original shareholders

It's been working with software developers with no issues.

Can shareholders sue? I presume the only avenue is IP since that belongs to the company? Or the non-exclusive license somehow negates that? Brutal.

I actually don't know if there's much that can be done unless there's some non-competes in those employees' contracts which are usually not very enforceable outside of finance iirc.

“Buying the startup” just means handing over megabucks to do-nothing investors. If Google isn’t buying any product or technology, why should investors get a talent fee?

There are many AI startups and we are just in the beginning of learning how to use them. There will be some stupid company like those you’ve listed that figures out a way to use AI that is far better than any other implementation, and Google, Meta, and Microsoft may go the way of Yahoo and AOL, but we’ll see

Non competes aren’t enforceable in California but the company owns the IP so I’m curious about this license loophole they are using.

Do nothing investors who enabled the company to reach this point? Employees who chose lower salaries in expectation of shares being worth something? Come on now.

Doesn’t seem like it. Antitrust has no teeth so the mega corps are just buying all the talent with life changing cash.

The “talent” is not very talented, trust me. These are the short term whims of very large, increasingly bloated organizations. A leaner startup that knows what it has will not sell so quickly. At least, the odds will soon be in favor of whoever first decides to take that bet.

I’m honestly just surprised that the CEO and co-founder decided to walk away from the company and leave behind all these employees he was leading. Especially considering many of them probably joined for lower pay, hoping for a big upside.

Maybe there’s more to the story.

When you want to make a big impact for a big payday, why would this surprise you?

Gentle reminder that more startups die by suicide than homicide, and that an early-stage startup is a total crapshoot.

Yes, startups are always a bit of a gamble, but this feels like a captain abandoning ship while it’s still full of sailors (many of whom have families depending on them).

This really is a whole new level of getting screwed.

You're surprised that a CEO did something that massively financially benefitted them personally at the expense of rank and file employees?

You sweet summer child.

Non competes can definitely be enforceable in California for executives and those with fiduciary responsibilities to a company.

They’re just not enforceable against “rank and file” employees.

The only situation I know of is during a sale of business if the seller agrees. Which is clearly not the case here.

“We underpaid you relative to what price you were able to command on the market, and you left, how DARE you!”

> Do nothing investors who enabled the company to reach this point?

Were you under the impression that venture capital is anything more than rent-seeking?

This is why advice is always to treat options for a non-public company as if they're near zero in value.

Because for most people, they will end up being worth exactly zero in value. Less if they went and exercised those options prior to a liquidity event that may never happen.

Isn't this the case for pretty much every startup that gets sold?

Founders get a big pay day and leave within a couple years while 100 employees share a 1% of the company between themselves.

This is the direct result of regulations. As usual regulations backfire. Expect more regulations to address this, surely they won’t backfire as well.

Is there any IP that's actually valuable without the team ? I sincerely doubt it.

The big players know regulators are watching, so they're doing everything but the formal acquisition

“We spent our time and money helping you and now you leave taking everything with you and leaving us with nothing”

You think the only people in a company that matter are a few founders? It’s ok to screw over everyone else?

This is overly reductionist. The are plenty of laws that work well.

Any time I hear someone talk about more or less regulation, instead of talking about better or worse regulation, I suspect they are ideologists and trying to shift the narrative, or else they would be able to criticise based on actual merit.

Sure if you want to be negative about it and only look at the worst VCs. But the best VCs provide significant value outside capital and can be instrumental in a startups success or failure.