Note – These are reflections from my experience building and scaling deep-tech startup as a founding engineer. Not all ideas are fully formed yet.

OpenAI reaches aggreement to acquire Windsurf for $3B. This kicked off a series of thoughts about the compounding opportunity cost in startups/businesses.

Bloomberg news about acquisition

Firstly I will jot down my thoughts about this acquisition.

The Windsurf Acquisition : Notable Points

  • Is it peak bubble? OpenAI needs a product team? OpenAI great at building fundamental technology but not great at building products?
  • Windsurf is a fork of vs code but
  • Why not buy JetBrains(just saying)? They are more mature products. Maybe it is the case of finding cheapest product in the market. Cursor is valued at $9B whereas JetBrains at $7B.
  • In 2024, JetBrains reported an estimated $252 million in annual revenue, it has very bloated engineering team of 2000+ employees. Cursor has $300+ revenue with ~50 employees. Windsurf has $1.5b valuation with ~200 employees. However, according to the founder, Windsurf has a lean engineering team(high cost) but a large sales team(low cost).
  • Microsoft decided to take 49% strategic stake in for-profit OpenAI. Microsoft is already locking in VS Code, can’t they just build this? Polish it and ship it? Late movers always have the advantage of hindsight.
  • Is it a case for just having too much cash?
  • Honestly, I have always found code generated by ChatGPT and paste it in VS Code way better than AI-native IDEs. I have never used Windsurf/Cursor, but I am sure it is a good product.
  • This feels like a defensive acquisition. Microsoft has GitHub Copilot, Anthropic has Cursor. OpenAI can natively integrate Windsurf into its ecosystem. Get entry in a key segment and lock ChatGPT for other IDEs.
  • This allows OpenAI to build another revenue stream. ChatGPT and Windsurf can be offered separately. Allowing OpenAI to get more revenue from the same customer.
  • Recently OpenAI’s restructuring to a conventional for-profit company has been rolled back. This acquisition helps the company wrt cash flow.

The Compounding Opportunity Cost

Opportunity cost is the value of the best alternative you give up when making a decision.

In startups, that cost compounds. Signing a B2B customer today versus six months later isn’t just about delayed revenue. You lose their feedback loop, their logo on your deck, and the downstream deals they help you close.

Wait too long, and someone else wins them - and the market tilts.

Delays carry an invisible interest rate. Every month of hesitation erodes your advantage.

It’s the same with build vs. buy. Building gives control, but time-to-market is king. In fast-moving spaces, speed isn’t a luxury—it’s survival. The value lost by being six months late compounds in cost, competition, and opportunity.

Timing is Everything: Lessons from Strategic Acquisitions

History is full of companies that acted early—and won because of it.

Facebook buys Instagram (2012) $1B for a pre-revenue photo app with 13 people. Critics scoffed. But Zuckerberg saw what was coming: 30 million mobile users and a growing threat. Four years later, Instagram had 400M users. It’s now a billion-user platform and arguably Facebook’s smartest acquisition. Had they waited, they’d have faced a competitor instead of owning the ecosystem.

Google acquires DeepMind (2014) $500M for a team, not a product. Facebook was also bidding. Google moved fast, won the deal, and secured one of the best AI research labs in the world. DeepMind later delivered AlphaGo, AlphaFold, and decades of AI tailwinds.

Google snaps up YouTube (2006) $1.65B for a startup drowning in copyright risk. Yahoo was reportedly hours away from closing a deal. Google outbid at the last minute. YouTube now makes $50B+ per year. The cost of missing that window? Losing the future of online video.

When Timing Goes Wrong

Being late is sometimes worse than never showing up.

Microsoft buys Nokia (2014) $7.2B for a fading handset brand. The smartphone shift was already over. Microsoft tried to buy its way into mobile. It failed. Billions lost—and the mobile era passed them by.

IBM buys Red Hat (2019) $34B for a declining open-source player. IBM was behind in cloud and needed a bet. But Red Hat’s growth had slowed. The result? A huge price tag with little strategic lift. IBM still trails AWS, Azure, and GC

Open Source and Community: Value That Compounds

Strategy isn’t just what you do—it’s what you choose not to monetize.

Kubernetes (2014) Google open-sourced its internal orchestration tech. Some saw it as giving away IP. Instead, Kubernetes became the standard for cloud-native infra. Google gained mindshare, influence, and a stronger cloud ecosystem—benefits that compound year after year. Every major cloud had to support it. That’s compounding strategic leverage - earned, not bought.

Hugging Face Instead of hiding behind a paywall, they built a community. It paid off. Millions of users, massive network effects, and a valuation in the billions.

Short-term monetization is tempting. But ecosystems grow when you empower others.

Open source and community-first approaches create asymmetric upside:

  • You become the standard.
  • Others build around you.
  • Your influence compounds.

When the product is the platform, control comes not from ownership—but from adoption.

Takeaways for Founders

  • Act early on high-impact bets. The cost of delay isn’t static—it accelerates as others move faster.
  • In B2B/SaaS, time is leverage. Being first helps you win logos, learn faster, and build defensibility.
  • Buy vs. Build = Speed vs. Control. Speed usually wins.
  • Community compounds. Open-source and platform strategies take time, but when they work, they build moats money can’t buy.
  • Quantify the cost of inaction. Ask: what do I lose by waiting 6 months? Revenue? Talent? Market share? That’s your opportunity cost.

Closing Thought

Startups are a game of compounding returns—on product, on distribution, on timing. But compounding works in reverse too. Wait too long, and you lose not just today’s advantage, but tomorrow’s as well.

Every decision has a cost. Make sure it’s buying you momentum, not inertia.