From $28M Pivot to $3B Deal: Varun Mohan’s Secrets to Building Windsurf

arun Mohan, co-founder of Windsurf, transformed a struggling GPU virtualization startup into a $3 billion AI powerhouse acquired by OpenAI.

His journey, marked by a bold pivot from ExaFunction to Windsurf, offers critical lessons for startups navigating the fast-evolving AI landscape.

Below, we dive into the key insights from Mohan’s experience, highlighting his quotes and strategies that fueled Windsurf’s meteoric rise.

‍The Pivot: Betting on the Future, Not the Present

‍Windsurf began as ExaFunction, a company focused on virtualizing GPU computations to simplify running complex tasks on GPUs. “The term ExaFunction means we want to run an exa number of functions, which is 10 to the 18 functions,” Mohan explained.

With $28 million raised and a few million in revenue, ExaFunction showed promise but faced a ceiling.

Mohan recognized that the rise of generative AI models, like transformers, was commoditizing their core offering.

“With the advent of these generative models, a lot of the complexity of running models would become commoditized,” he noted.

The pivotal realization came from looking ahead: “Machine learning models were going to get more capable very quickly.

You should not bet on where the technology is today but where it could be a couple years from now.”

This foresight drove a hard but necessary decision to pivot.

Despite the emotional and financial weight of scrapping a business with employees and funding, Mohan emphasized the opportunity in bold moves: “Every time you do a pivot, you have an opportunity to maybe 10x the size of the company.”

The pivot wasn’t incremental.

Mohan and his team abandoned the GPU virtualization platform, recognizing that “if all you’re doing is working on products that work today, you’re going to be quickly irrelevant a year from now.”

Over a weekend, Mohan and his co-founder decided to shift focus, informing the team on Monday to start fresh. This intellectual honesty—admitting when a strategy isn’t working—was critical.

“You don’t win an award for doing the wrong thing for longer,” Mohan quipped.

‍Zero to 1M Users in 2 Months: Building for Scale

‍The pivot led Windsurf to focus on AI-driven developer tools, inspired by early adoption of products like GitHub Copilot. Mohan saw untapped potential: “If all people were doing was autocompleting, we could potentially see a world in which entire PRs would get generated.”

Windsurf set an ambitious goal to “reduce the time it takes to build technology by 99%.” Leveraging their infrastructure expertise, they built and trained their own models, launching a free VS Code extension with autocomplete capabilities.The results were staggering.

“It took us less than 2 months to build the MVP and ship it out,” Mohan said, and the extension quickly gained “hundreds of thousands of users.”

This rapid traction validated their hypothesis, but Mohan remained cautious about overconfidence. “Product-market fit is probably something I don’t like a lot because it creates overconfidence.

If you don’t continue to innovate, it’s very quickly going to become a commodity,” he warned. Windsurf’s paranoia about failure fueled relentless innovation: “I always tell the company we’re probably going to fail. It creates enough energy to find the next thing.”

Customer feedback shaped their evolution. Large companies with complex codebases—some with “tens of millions of lines of code”—demanded secure, tailored solutions. Windsurf adapted, prioritizing low latency and minimal computational drag on users’ machines.

“Small details were quite important to the entire user experience,” Mohan noted, highlighting the shift from an infrastructure-focused company to a product-driven one.

‍Running 200 People Like 10: A Lean, Focused Culture

‍As Windsurf scaled to nearly 200 employees, Mohan maintained a startup mentality.

“I always try to run the company as the smallest company it can be,” he said. This lean philosophy didn’t mean understaffing but ensuring everyone was “underwater most of the time” with urgent, high-impact priorities.

This forced rapid prioritization and only scaled hiring when necessary: “You scale a company when everyone is underwater, and the moment people are no longer underwater, we don’t scale anymore.”

Mohan personally interviewed every hire to preserve Windsurf’s culture of intellectual honesty and focus. “It’s actually quite important to me to make sure we are adding people that maintain and embrace the culture,” he said.

This rigor ensured alignment on the company’s singular focus: “Startups, if they’re lucky, do one thing really well.”

Balancing irrational optimism with uncompromising realism defined Windsurf’s ethos. “You need some form of irrational optimism to believe you can build something generational, but you also need to agree most ideas are bad ideas and kill them quickly,” Mohan explained.

This tension—believing in bold visions while ruthlessly cutting failing strategies—kept Windsurf agile.

‍Lessons for Startups: Build for Tomorrow

‍Mohan’s core advice for founders is to anticipate technological trends: “Build for where you think the technology is going, not for today.”

Short-term optimizations often yield diminishing returns, as “the next model is going to be much better, and the heuristics are going to be unnecessary.” Instead, focus on leveraging user data to create better, evolving experiences.

For Windsurf, this meant building tools that developers, including their own team, used daily, ensuring constant internal feedback: “Everyone builds software on Windsurf for Windsurf.”Mohan’s journey underscores the power of intellectual honesty, bold pivots, and a relentless focus on the future.

By betting on where AI was headed, Windsurf transformed from a $28 million venture to a $3 billion acquisition, proving that the real moat for startups is “working on the right thing with enough people for long enough.”

‍Key Takeaways for Startups

1. Bet on the Future: Anticipate where technology will be in years, not months. As Mohan said, “Don’t build technologies in places that are as good as they will be given where the technology is today.”
2. Embrace the Pivot: A pivot can 10x your potential, but it requires courage to abandon sunk costs. “You have no other option but to change your mind and do something new,” Mohan advised.
3. Stay Lean and Focused: Run a large team like a small startup by keeping everyone busy with high-priority tasks. “Everyone should have too much to do,” Mohan emphasized.
4. Balance Optimism and Realism: Believe in your vision but kill bad ideas quickly. “You need irrational optimism, but most ideas are bad ideas,” Mohan noted.
5. Listen, but Don’t Follow Blindly: Customer feedback is vital, but transformative innovation comes from anticipating needs they don’t yet see.

Windsurf’s story is a masterclass in navigating the AI revolution. By pivoting decisively, building for scale, and maintaining a lean, honest culture, Varun Mohan turned a struggling startup into a $3 billion success. His advice—build for tomorrow, not today—offers a roadmap for founders aiming to stay ahead in a rapidly changing world.