Windsurf employee #2: I was given a payout of only 1% what my shares where worth

What happened in the Windsurf / Google / Cognition saga (as discussed)

• Many commenters find the tweet itself extremely unclear:
  • Was forfeiting vested equity conditional on joining Google, or mandatory regardless?
  • Was the “1%” payout contingent on taking the offer, or the consolation prize for not taking it?
• Reconstructed narrative from the thread (still partly ambiguous):
  • Google poached key Windsurf employees and licensed the tech, paying very large amounts to founders, executives, and investors.
  • Rank‑and‑file employees were reportedly given “exploding” offers: join Google and give up Windsurf equity at a very low effective valuation, or stay with a now‑gutted company.
  • Windsurf, with most value stripped out, was later acquired by Cognition for a much lower price; remaining employees came along with little equity value left.
• Several commenters question how this isn’t a breach of fiduciary duty to common shareholders, but others note that preferred stock, liquidation preferences, and deal structuring often make this legally defensible even if ethically dubious.

How startup equity actually screws employees

• Detailed explanations of:
  • Options vs RSUs; vesting vs exercising; 90‑day exercise windows; AMT/tax risks.
  • Liquidation waterfalls: debt → preferred with 1–5x prefs → participating preferred → common last.
  • Dilution, recapitalizations, and “preference cliffs” where employees get close to nothing even on big‑headline exits.
• New pattern noted: big tech “buys” the people and IP directly, leaving the corporate shell to be sold later, with VCs and founders paid but common shareholders gutted.

Is joining a startup still financially rational?

• Many argue: for non‑founders, it was always a bad EV bet, and is worse now (higher FAANG comp, fewer liquidity events, more sophisticated ways to zero out employee equity).
• Others say 2010s startups were a real, if risky, lottery; today the upside is being “hollowed out” by investors and executives.
• Some push back: good startups still exist, sometimes pay solid salaries, and successful exits can be life‑changing—but these are rare and heavily founder‑dependent.

Impact on trust and the startup ecosystem

• Strong sentiment that cases like Windsurf (and similar recent deals) break the social contract: employees trade lower cash and higher risk for upside that can now be structurally removed.
• Fear this will poison the early‑employee talent pipeline; people will either insist on big‑co jobs or founding their own companies.

Advice to engineers in the thread

• Treat private‑company equity as a lottery ticket, often worth ≈$0 for planning.
• Maximize cash compensation; assume you are financing founders and VCs otherwise.
• If you do care about upside, deeply evaluate founder integrity and insist on transparency: cap table, 409A, liquidation prefs, total shares outstanding.
• Consider startups for learning, autonomy, or mission—not as your primary retirement plan.