The “leftover” employees at Character were NOT screwed over. Options were converted to cash at the deal’s valuation.

Hopefully Windsurf employees are treated well here.

Note: I worked at Character until recently.

On the flipside, I’m pretty sure the investors got screwed.

The investors made money too. The valuation at the last round was $1B, and Google paid them out at a valuation of $2.5B as part of the agreement [1].

[1] https://www.theverge.com/2024/8/2/24212348/google-hires-char...

2.5x in 10 months. With returns like that - if I were the full time chef of the investors spare private jet I would be updating my CV and looking for a new gig.

That’s a deep burn.

The full time masseuse should be able to help with that.

To quote an analyst from the Dotcom bubble era: "Everbody's happy, everybody's making money, something's wrong here"

This is how it's supposed to work. Nobody has to get screwed. It's not a zero-sum game.

Hopefully. The world is healing.

Honestly depends on when they got in. Seed investors? They're probably fine with their preferences. Series B and beyond? That's where it gets messy. What round you thinking?

It's literally the opposite - seed investors get paid last with the exception of common.

Whose cash? OpenAI isn't paying, and Google isn't paying, and Windsurf investors already paid.

I wasn’t referring to Windsurf. But if there was no cash involved here, then ya, the employees were screwed. Do we know that’s the case though?

The rank and file equity pitch is quickly falling apart…

Think it started that way... I'm currently in a vesting/allocation situation where the incentive is to drive the share price down.

Geeeeeze

Always has been

This.

Character.ai reached out to me for an opportunity, but they've already been carved up.

I think it's great that the rank and file got some of their equity cash-out (based on the other comment), but I imagine it isn't an attractive prospect as a start-up to join at this point.

I just ignored the recruiter. I can't imagine their would be a second liquidity event.

FYI, It wasn't taken the money and leave, a lot of them got absorbed into GDM.

Source: I was in GDM when character was acquired.

Do you mean Google Deep Mind? Curious what use deep mind had for the leftovers (kubernetes and web scraping experts, etc)?

Otherwise why not merge all of engineering into ElGoog?

This might be the beginning of the end of tech VC startups in general.

High interest rates make VC funding more expensive and now bigtech can swoop in, poach all the necessary staff and deprive investors of an exit.

What is the point any more?

Isn't there not some contractual agreement between the VCs and the founders? (I understand that a non-compete might not apply [in CA], but taking VC money is a little different that simply getting hired).

Were I a Windsurf investor, I'd be pissed right now and calling my lawyer.

The low level employees are screwed. Basically they lost their job. Not cool.

the founder is on a vesting schedule set with the vc. walking away forfeits his ownership in the company (not sure of the specifics of this weird deal, but this is true in 99% of situations) which returns his ownership to the VCs either directly or functionally.

the only reason he'd walk away is because he thinks other opportunities are higher EV. if he believes this, a) the investors investment is likely worth virtually 0 anyway and b) if it's not, removing a leader who doesn't want to be there probably increases P(success) for the company and further increases the value of the investment.

founder departure isn't good for the narrative, but it's a symptom of an investment going bad, not often a cause.

Presumably the founder(s) is/are getting a better deal by walking away in this case. If they've been through a few round of funding, they may have been diluted to the point when this sort of exit is better (for them).

Not really true, I believe the "acquiring" (i.e. Google) company buys some equity from the employees (windsurf).

Edit: the people downvoting this clearly can't read, I made the exact same point as jonny_eh.

The acquisition of Windsurf was cancelled.

Instead they are paying 2.4B to "license" windsurfs IP. Still a loss vs OpenAI but at least the employees will get cash not openai stock.

> Unfortunate for any employees who aren't founders or researchers, as they don't get any payout or a nice new job from this exit structure. In fact they lose their whole time invested at the company.

Windsurf’s value didn’t go to $0 overnight. The company will continue and their equity is likely still worth a decent amount wherever the company ends up.

Obviously a disappointing outcome for the people who thought life changing money was right around the corner, but they didn’t lose everything.

Just like with Character I'm assuming the employees get something. Whatever nonsense "licensing" fee Google is paying to not cause an antitrust investigation should be paid out straight to employees

The general character of capital markets is to pay as little as possible. Otherwise you lose out to those who are more ruthless. It is plausible that Windsurf employees really are getting very little value for their work. We need to see details of the deal.

> I wonder how the founders justify going along with it

$2.4 billion.

This reads like a Dr. Evil plot.

Everything since ~2016 reads like a Dr. Evil plot! I swear it feels like the world is getting dumber around me.

100% agreed.

You've reminded me of when I first watched Idiocracy in 2006. At the time, I delighted in the comedic, sophomoreish, and seemingly ridiculous take on a possible trajectory of humanity. But now much of it is actually coming to pass. It's sad.

P.s. As a sidenote, apparently I love all of Mike Judge's productions, which also includes Office Space, and Beavis and Butthead.

He also made Silicon Valley.

Mike Judge does not judge wrong