SWE-1 Windsurfed by OpenAI Codex
TL;DR
The $3B Codex, the aborted for-profit pivot & the battle for AI full-stack dev.
What do you get when:
OpenAI launches a next-gen coding agent
Windsurf drops its first frontier models
A $3B acquisition
And a failure to convert to a for-profit?
Only the most critical inflection point in AI software engineering since GitHub Copilot!
Let’s break it down ↓
📅 Timeline of Key Events
Jun ‘21
OpenAI releases the original Codex (a fine-tuned version of GPT-3 trained on public GitHub code) in partnership with GitHub Copilot
Mar ‘23
Support for the original Codex ends, marking a shift towards more advanced coding assistants
Aug ‘24
Windsurf (then known as Codeium) raises $150M in funding, valuing the company at $1.25B
May 5, ‘25
OpenAI abandons its plan to become a standard for-profit company
Bloomberg reports OpenAI has agreed to acquire Windsurf for approx. $3B, pending regulatory approval
May 15
Windsurf publishes a press release announcing SWE-1, its first family of AI frontier models
May 16
OpenAI releases a new version of Codex, an AI coding agent optimized for full-lifecycle software engineering tasks
Codex Reborn: Your Next-Gen AI Software ENG
Two days ago, OpenAI unveiled a new chapter in the Codex story.
No longer just a simple tab-autocomplete, the latest Codex is a cloud-based software engineering agent designed to function as a virtual dev colleague.
Powered by codex-1, a variant of OpenAI’s o3 reasoning model, the new version of Codex offers a broader range of agentic capabilities:
Generate & edit code from natural language
Find & fix bugs across large codebases
Run & explain test suites
Navigate unfamiliar repositories like a senior dev
Even generate pull requests on the fly
And it’s all done via a secure, sandboxed cloud IDE → available now for Pro, Team, and Enterprise users.
OpenAI released Codex in research preview. The company envisions evolving it into an autonomous agent capable of handling complex tasks independently.
Enter Windsurf 🌊 SWE-1
The day before Codex made headlines, Windsurf (formerly Codeium) dropped something just as bold 🤔
SWE-1: First Frontier Models by Windsurf Team
SWE-1 is Windsurf’s first generation of frontier AI models, designed to enhance the E2E software engineering process.
SWE-1: Approximately Claude 3.5 Sonnet levels of tool-call while being cheaper to serve.
SWE-1-lite: A light-weight model that replaces Cascade Base at better quality.
SWE-1-mini: A smaller, extremely fast model that powers the Windsurf Tab passive experience for all users.
These models are optimized not just for code generation, but also for tasks like codebase navigation, bug fixing, and automated testing.
“Why SWE-1?
Simply put, our goal is to accelerate software development by 99%. Writing code is only a fraction of what you do. A coding-capable model won’t cut it.”
Deployed in Windsurf’s IDE (which was forked from VS), SWE-1 is designed for devs who want a partner in crime.
Software dev isn't just about writing code.
Amongst the many spectacular things engineers do—working in the terminal, incorporating external knowledge across the internet, testing the product, and understanding user feedback to build world-class product experiences.
The best foundational models for coding today are still progressing along a string of incomplete states.
“It comes down to how we can incrementally iterate: flow awareness.”
↳ At the launch of Cascade (the IDE’s chat feature), Windsurf incorporated awareness of the text editor.
↳ Soon after, they incorporated awareness of terminal outputs.
↳ In Wave 4, they added basic awareness of the FE components in the browser.
When context is added to Cascade, it’s also added to Tab, via a shared timeline that best reflects the user’s actions and goals.
Windsurf’s version of Tab has:
Awareness of your terminal commands (Wave 5)
Awareness of your clipboard (Wave 5)
And awareness of the Cascade conversation (Wave 5)
💰 The Acquisition That Changed Everything
OpenAI reportedly agreed to acquire Windsurf for a reported $3B earlier in the month.
Why? The deal represents OpenAI’s largest acquisition to date and underscores its strategic focus on enhancing AI-driven software development tools.
1B dev user base
A team of real-time IDE engineers
An uncannily good LLM stack focused on software cognition
In short, the acquisition of Windsurf is a presumed moonshot to fuse Codex + SWE-1 into a dominant force in AI software development.
Then OpenAI Hit a Wall
Earlier in the year, OpenAI announced its plans to convert its for-profit subsidiary into a Public Benefit Corporation (PBC), aimed at attracting substantial investments, including a $30B commitment from SoftBank.
But then OpenAI’s transition attempt into a conventional for-profit faced significant challenges.
The proposed shift sparked legal scrutiny and ethical debates.
A coalition of former employees + AI experts, known as “Not For Private Gain,” raised concerns that the restructuring would undermine OpenAI’s original mission to ensure AI benefits humanity. They argued that transitioning to a for-profit model would prioritize investor interests over the public good.
Additionally, ex-cofounder Elon Musk filed a lawsuit against OpenAI, alleging that the restructuring violated the company’s foundational principles. Although an initial attempt to block the conversion was unsuccessful, the legal challenges contributed to the mounting pressure on OpenAI.
Ultimately, OpenAI abandoned its for-profit endeavor, with the nonprofit board maintaining control over its operations. It plans to restructure its for-profit subsidiary as a PBC.
Final Thoughts
As one can only imagine ✨ we’re watching the Codex–Windsurf merger form a new ecosystem: AI-native full-stack development.
And the stakes are higher than ever.
3 Signals to Watch Closely 👀
How Codex and SWE-1 integrate into a unified agentic IDE.
Developer sentiment — will builders trust OpenAI with their code and workflows? Some will say they already are.
Competitor responses — Replit, Cursor, and others aren’t standing by…
Are you keeping up?
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