In the high-stakes world of tech entrepreneurship, failure isn’t the opposite of success—it’s the runway to it. That’s the bold, counterintuitive philosophy of Varun, CEO and co-founder of Windsurf, an AI-powered integrated development environment (IDE) that’s rapidly transforming how developers and non-developers alike build and modify applications.
In a candid and deeply insightful conversation, Varun didn’t just recount his company’s journey—he revealed a mindset that every founder, especially in the fast-evolving AI space, needs to hear: Startups must fail fast, pivot faster, and build for the future—not the present.
This isn’t just motivational fluff. It’s a battle-tested strategy forged through millions in revenue, a $28M funding round, and not one—but two dramatic pivots that took Windsurf from GPU virtualization to becoming a platform used by over a million developers, including giants like JPMorgan Chase.
Let’s unpack how this startup turned existential uncertainty into exponential growth—and what it teaches us about building in the age of generative AI.
The Brutal Truth About Startups: Failure Is Not Optional—It’s Essential
“Startups are basically like getting slapped in the face over and over again.”
Varun doesn’t sugarcoat it. And he’s not alone—Silicon Valley lore is filled with tales of “overnight successes” that endured years of false starts, technical dead ends, and market misreads.
But here’s what sets successful founders apart: They don’t fear failure—they court it.
“It’s very freeing to know when something fails because that’s very obvious… The faster you fail, the faster you can decide to do something new.”
This isn’t recklessness. It’s strategic humility. In a world where AI models leap forward every six months, clinging to a “working” product today can be a death sentence tomorrow. If your startup isn’t failing on some experiments, you’re likely playing it too safe—and leaving massive upside on the table.
As Varun puts it:
“If everything is working, we’re operating below the company’s potential. We should be failing. That probably means we’re not taking enough bets.”
That mindset—fail to learn, not to lose—is the oxygen of innovation.
From GPU Virtualization to AI IDE: A Pivot That Saved the Company
Windsurf didn’t start as the AI development powerhouse it is today. Originally launched in 2021 under the name Exaf Function, the company focused on GPU virtualization and compiler technology—a complex, infrastructure-heavy play that generated a few million in revenue and employed eight engineers.
But then, everything changed.
In mid-2022, GPT-3.5 dropped—and with it, the entire landscape of software development began to shift. Varun and his team realized a fundamental truth: if everyone will soon run generative models, the real value won’t be in infrastructure—it’ll be in applications.
“We believed a lot of the value would accrue to companies that were applications—almost like in the early days of the internet, when Google and Amazon won.”
So they made a gut-wrenching decision: scrap everything and pivot.
This wasn’t a minor course correction. They had raised over $28 million, built a working product, and hired a team. Walking away felt like admitting defeat.
But Varun saw it differently:
“You don’t win an award for doing the wrong thing longer.”
Over a weekend walk with his co-founder, they decided to start fresh. On Monday, the entire team began building something new—a developer tool powered by generative AI.
The result? Kodium, a free IDE extension that offered AI-assisted coding across major platforms like VS Code. Within months, it hit over 1 million users, including Fortune 500 companies.
But they didn’t stop there.
The Second Pivot: Going All-In on the Full IDE Experience
By mid-2023, a new insight emerged: as AI models grew more agentic—capable of reasoning, planning, and acting autonomously—the user experience mattered more than ever. Relying on third-party IDEs limited their ability to deliver seamless, intelligent interactions.
So Windsurf did the unthinkable again: they built their own IDE.
“We needed to control more of the experience… That’s why we built Windsurf.”
And it worked. Fast. The product now boasts hundreds of thousands of monthly active users and continues to grow exponentially.
But the real secret? They built it in under two months.
How? Because they weren’t starting from zero—they were building on validated insights, user feedback, and a clear vision: reduce the time to build software by 99%.
Building for Tomorrow’s AI—Not Today’s Limitations
One of Varun’s most powerful lessons comes from his time in the autonomous vehicle industry at Nuro (an MIT-founded robotics startup). There, he witnessed a critical mistake many hard-tech companies make:
“They built a hard technology where it’s very hard to validate if the technology is good in the middle.”
In contrast, Windsurf embraced intermediate milestones—small, testable goals that validate direction without waiting years for a “moonshot” to pan out.
Their first checkpoint? A basic autocomplete extension powered by their own model. Simple, fast, and shippable.
This approach reflects a deeper principle:
“Don’t build for where technology is today—build for where it will be in 2–3 years.”
Consider this staggering stat Varun shared:
In 2017, consumer GPUs offered 10 teraflops of compute.
By 2022? 700 teraflops—a 70x increase in just five years.
If you design products assuming today’s AI limits are permanent, you’ll be obsolete before your Series B.
The Only Real Moat a Startup Has
Many founders obsess over “moats”—network effects, proprietary data, IP. But Varun sees it differently:
“The real moat is: you work on the right thing with enough great people for long enough.”
In a team of 10 or 20, your “moat” isn’t code—it’s clarity, speed, and intellectual honesty.
At Windsurf, that means:
- Brutal prioritization: Only one major initiative at a time.
- Radical transparency: Telling the team when a strategy is failing.
- Internal dogfooding: Every engineer uses Windsurf to build Windsurf.
“If no one at the company likes a part of the product, it’s unlikely users will either.”
This culture isn’t accidental. Varun still interviews every new hire, ensuring cultural fit remains paramount—even as the team approaches 200 people.
The Startup Paradox: Irrational Optimism + Uncompromising Realism
Perhaps the most nuanced insight from Varun is this duality:
“You need irrational optimism to believe you can beat Google… but uncompromising realism to kill bad ideas fast.”
Big companies have capital, distribution, and talent. Startups only have vision and velocity.
That means:
- Dream big (e.g., “Reduce dev time by 99%”)
- But validate fast (e.g., ship an MVP in 8 weeks)
- And pivot without ego (e.g., abandon $2M in revenue when the future shifts)
This tension—between belief and skepticism—is what keeps startups alive as they scale.
Why Product-Market Fit Is a Moving Target
Varun admits he’s wary of the term “product-market fit”:
“What you have as PMF today can become a commodity tomorrow if you stop innovating.”
True traction isn’t just revenue—it’s unignorable market pull.
For Windsurf, that moment came when enterprise inbound queries overwhelmed their tiny team. That’s when they knew they weren’t just building a tool—they were solving a real, urgent pain.
Yet even then, they stayed paranoid:
“I always tell the company: we’re probably going to fail.”
Not to demoralize—but to fuel urgency.
Final Lesson: Build Systems, Not Just Software
Windsurf’s success isn’t just about AI models. It’s about rethinking how software is built:
- Security: Running models on-prem for enterprise clients with 10M+ LOC codebases.
- Latency: Optimizing for sub-second responses—even if it means offloading less to local machines.
- Personalization: Learning from user behavior to deliver context-aware suggestions.
These aren’t features—they’re foundational design choices that reflect deep empathy for the developer experience.
The Future Belongs to Builders Who Embrace Uncertainty
Windsurf’s story is more than a startup case study. It’s a manifesto for the next generation of builders:
- Fail fast, but learn faster.
- Pivot without pride.
- Build for the AI of tomorrow—not the LLM of today.
- Hire for intellectual honesty, not just skill.
As generative AI blurs the line between developers and non-developers, tools like Windsurf won’t just accelerate coding—they’ll democratize creation itself.
And in that future, the winners won’t be the ones with the most funding or the flashiest demos. They’ll be the ones who dared to fail, adapted relentlessly, and never confused motion with progress.
“You don’t win an award for doing the wrong thing longer.”
Remember that. And start building.
About Windsurf
Windsurf is an AI-native IDE that empowers developers and non-developers to build and modify applications at unprecedented speed. With over 1 million users and growing, it’s redefining the future of software development. Learn more at windsurf.dev .
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