Windsurf. Do the deal. But at $5B, not $3B. Sam can afford it.

Welcome to Cautious Optimism, a newsletter on tech, business, and power.

Happy Thursday. I am under the weather today, so the newsletter is brief. Hugs, and a lot more tomorrow! — Alex

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OpenAI wants Windsurf?

Back in late 2024 Jason and I invited a startup called Codeium onto TWiST to dig more deeply into what his company was building. Namely, a series of AI developer tools that had culminated in Windsurf, an IDE that melded AI agents and AI copilots.

A few weeks back, presumably buoyed by the success of Windsurf in the market — and the fact that there are too many AI dev tools that include the word code — Codeium rebranded to simply Windsurf. And, now, OpenAI is considering putting $3 billion down to snap it up.

For Windsurf and its backers, the deal could be pure gold. Last valued at around $1.25 billion — though reporting of another, larger, and more valuable round floated in February — meaning that its most recent backers could their money back several times over in less than a year.

What about OpenAI, though. Why does it want to buy Windsurf? The deal is actually smart as heck, I reckon. Here’s why:

• OpenAI is worth $300 billion; the transaction would therefore only be 1% of its effective market cap. That’s hardly a swing-for-the-fences transaction. Put more simply, OpenAI can afford it.

• Windsurf makes use of rival AI models from Anthropic — case study here — usage that OpenAI would like to bring home not only to drive more usage of its AI models, but also to deprive an arch-rival of a key, growing customer.

  • Eat Windsurf today and not only might Anthropic lose access to a customer today, it also loses out on future growth from Windsurf that it might have earned.

• And it may be that much of the long-term value in AI-land pools at the application layers (tools that use AI models) than at the model layer itself. OpenAI would do well to derisk itself. And with the chance to snap up something hot that comes with developer goodwill for 1% while undercutting a well-funded rival? How could it not.

Windsurf. Do the deal. But at $5 billion, not $3 billion. Sam can afford it.

Spine

While the United States government works to underfund its leading research universities while speed running a domestic brain drain, the Trump administration’s revenge campaign is harming normal business interests.

Chris Krebs, who led the Federal Cybersecurity and Infrastructure Security Agency during the 2020 election — that Trump lost — fell afoul of the President for having told the truth several years ago. In response for having the temerity to denote reality with words, Trump fired him back in 2020.

Since then, Krebs went to work at SentinelOne, a public cybersecurity company that went public in 2021 — my coverage from the time. Once back in power, Trump revoked Krebs security clearance and suspended “any active security clearance held by individuals at entities associated with Krebs, including SentinelOne, pending a review of whether such clearances are consistent with the national interest.”

For a cybersecurity firm, that’s a knee firmly in the stomach. Not because the company did anything wrong. No. Instead, it merely hired someone it felt was qualified to help its business succeed. Result? Being singled out like a pariah and punished by a petulant premier.

• Krebs did nothing so minor as try to violently overthrow the government. Too bad. He could have expected a pardon.

The good news in the above is that Krebs is not rolling over and giving up as we’ve seen from a great many firms of late. Instead, he’s leaving SentinelOne to go to war. Here’s the Wall Street Journal:

Chris Krebs, one of Trump’s top cybersecurity officials in his first term, will resign from a leading security firm to more freely challenge the White House, he said. He joins a small but growing list of universities and law firms seeking to push back on Trump’s efforts to use the office of the president to attack critics and opponents.

Per the same article, Krebs said that the situation is all about “the government pulling its levers to punish dissent,” adding that Trump’s revenge tour should “should concern everyone.”

Maybe I missed it, but market reaction to Krebs’ plight has felt smaller than I might have expected. After years of being told that the government was too involved in corporate life, where is the pan-Silicon Valley outrage that one of its former children — SentinelOne raised nearly $700 million while private from a laundry-list of well-known venture investors — is being so abused? So targeted? So undercut by a President who clearly isn’t grounding action in truth?

I guess the play the game on the field concept comes back into play here. If you stand up, you will get knocked. If you cower, perhaps not. But it really does seem that for all the words about standing up to government, there’s very little interest amongst those who either support or fear POTUS.

Back to bed with me. Tomorrow we’re discussing the ‘theory of everything’ concept. It’ll be a bop! — Alex