This editorial appeared in the July 17th, 2025, issue of the Topline newsletter.
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Would you join a startup if the founders could make billions while you get nothing? Less salary, longer hours, larger risk — and when the big exit comes, they win, without you. Sounds stupid right? It is. But it's also exactly what happened at Windsurf last week.
Varun Mohan made hundreds of millions when he and his top 40 people accepted $2.4B to join Google, deserting the 200+ employees Google didn't want.
This breaks the basic bargain of startup life. You trade stability for chaos because if the company wins, everyone wins. That's the promise that makes the sacrifice worth it.
But that’s just not a given anymore because Big Tech doesn't just buy companies anymore. They "license technology" for billions, which gets dividended to founders, investors, and the inner circle. In exchange, they take what they really want: your AI researchers and engineers. Everyone else inherits a hollowed-out shell.
Microsoft started it with Inflection. Amazon copied it with Adept. Google's done it twice — Character AI and now Windsurf.
These deals will transform the talent market — especially when more founders pull a Mohan. Let's look at how.
40 In, 200 Out
Before we dive into how these deals might transform the talent market, let's look at what actually went down last week.
AI today might not be perfect, but it's very good at writing code. Claude hits 72.5% on real-world coding benchmarks, OpenAI scores 68%. With 1.5 million software engineers in the US, that's a $27B market by 2027 — and everyone wants their piece.
Cursor is winning the startup race, having hit $500M in ARR, but companies like Bolt, Replit and Lovable are biting at their ankles. OpenAI and Anthropic aren't content just powering these tools, and Big Tech wants in too.
This has become the most competitive category in tech, and Windsurf was caught in the crossfire.
They'd hit $82M in ARR in just a year by targeting enterprise while everyone else fought over indie developers. Impressive growth, but not enough when Cursor's at $500M and OpenAI's breathing down your neck.
Windsurf needed an exit. OpenAI offered $3B. For months they negotiated, until last week the deal died—Microsoft wouldn't give up their automatic rights to Windsurf's IP through their OpenAI partnership.
Now Windsurf was truly screwed. Months wasted on a dead deal meant their product had stagnated. They couldn't raise enough to compete. The walls were closing in.
That's when Mohan invited 40 of his AI researchers to a mysterious off-site meeting. They walked into a room to find Mohan sitting next to Sergey Brin, with Demis Hassabis on screen.
Google's offer was simple: $2.4B for the 40 people in this room. Nobody else. Take it or leave it.
They took it.
The 200 employees left behind — including the entire GTM team — inherited a technical product without its technical team in the most brutal market in tech. They'd joined a startup, worked insane hours, sacrificed for the dream. They were left with a hollowed out shell of a company.
Cognition swooped in and acquired the remains, throwing the abandoned employees a lifeline. Lucky them. But if these deals happen 100 more times, how many Cognitions will show up to save the day? Not many.
And that's when the talent market starts to break.
From Missionaries to Mercenaries
So if the basic bargain of startup life is no longer a given, how will the talent market transform?
Your first instinct might be contractual protection. Good luck negotiating that when AI means companies need fewer employees. Less demand, less leverage. Maybe monthly vesting? Sure, if everyone adopted it. They won't. And it only takes a handful of founders pulling a Mohan to shift how employees think about startup employment.
When the traditional safeguards fail, employees adapt. They'll split into two camps:
Camp 1: The refugees. They'll flee startups entirely, choosing corporate stability over founder betrayal.
Camp 2: The mercenaries. They'll stay but treat every job like a transaction. No mission, no loyalty, just cash. Jump ship every 12 months. Sooner maybe. Get yours before the founder gets theirs.
The mercenaries will dominate. And that's where this gets dangerous.
You can't build generational companies with just mercenaries. Microsoft, Apple, OpenAI — they all succeeded because people bought into the mission. Replace believers with mercenaries, and building great companies becomes a lot harder.
By the way, what threatens Big Tech more than hungry startups full of missionaries? Nothing. But startups full of mercenaries? Far less scary.
These deals are perfect for Big Tech. They get the researchers, Mohan takes the PR hit, and the startup ecosystem gets a little weaker each time. Why would they stop?
The government won't save us either. The FTC's M&A crackdown is what created this workaround in the first place.
Which leaves us with a startup ecosystem slowly filling with mercenaries. But absolute shifts don't happen overnight. The founders who can still attract missionaries — who can prove they're not the next Mohan — will have a massive advantage.
