Adam Wathan spent his holiday break running the numbers. The conclusion was brutal: Tailwind Labs had about six months before it couldn't make payroll. On January 6th, he laid off three of his four engineers.
The company's revenue had dropped 80%. Traffic to the documentation, down 40%. And the framework? More popular than it's ever been.
The paradox nobody saw coming
Here's what happened. Tailwind CSS became the default choice for AI coding assistants. When you ask Claude or ChatGPT or Cursor to build a website, it reaches for Tailwind. The 2025 State of CSS survey shows 51% of respondents use it. That's not a framework, that's infrastructure.
But developers stopped visiting the docs. Why would they? The AI already knows how to center a div with Tailwind. It learned from reading those docs. Now it answers the question directly in the IDE.
Wathan put it plainly in a GitHub comment: "Tailwind is growing faster than it ever has and is bigger than it ever has been, and our revenue is down close to 80%."
The business model was simple. Developers visit docs, discover Tailwind UI, buy the $299 component library. AI broke that funnel completely.
And then the cavalry showed up
Within 48 hours of Wathan going public, the sponsorship announcements started rolling in.
Vercel CEO Guillermo Rauch was first out of the gate on January 8th. "Tailwind is foundational web infrastructure at this point," he wrote. The framework "fixed CSS," he said. Vercel was already sponsoring the hosting but would now formally sponsor the project. He reached out to Wathan about making it a longer-term commitment.
Logan Kilpatrick, product lead at Google AI Studio, announced his team would sponsor Tailwind. Google. Sponsoring an open source CSS framework. The irony here is thick: AI tools trained on Tailwind's documentation are exactly what crushed Tailwind's business, and now Google is writing checks to keep it alive.
Anton Osika from Lovable, an AI-powered website builder that uses Tailwind for literally everything it generates, jumped in. Gumroad. Macroscope, the startup from former Twitter product head Kayvon Beykpour. Supabase, which Wathan described as "one of the earliest companies to start using Tailwind in production at a bigger scale." Profound. The list kept growing.
But here's the uncomfortable part
Nobody actually knows how much money we're talking about.
Tailwind's sponsor page shows tiers starting at $6,000 per year, going up to $60,000. The company was already pulling in roughly $1.1 million annually from 29 corporate sponsors. That wasn't enough. The layoffs happened anyway.
Some Hacker News commenters are skeptical. "It's important to read this as 'they're offering some money' and not 'Tailwind CSS now doesn't have financial issues because they have a major sponsor,'" one wrote. Google could be dropping $6,000 or $600,000. We don't know.
The GitHub thread that started all this
This whole thing became public in the weirdest way. Back in November, a developer submitted a pull request proposing an /llms.txt endpoint. It's an emerging standard for serving documentation optimized for language models. The PR sat for almost two months with comments piling up asking why it hadn't been merged.
The day after laying off 75% of his team, Wathan closed it.
"Making it easier for LLMs to read our docs just means less traffic to our docs which means less people learning about our paid products and the business being even less sustainable," he wrote.
The thread went off the rails. People called it "OSS unfriendly." Wathan briefly made the repo private, which he later acknowledged was an overreaction driven by financial stress. The thread eventually got locked at 95 comments.
But here's the thing that stings: Tailwind's sponsor program already includes access to an AGENTS.md file with guidance for optimizing LLM interactions. So Tailwind is kind of monetizing LLM-friendly documentation while refusing to provide it freely. Wathan pushed back on that characterization, calling it "just a short markdown file with a bunch of my own personal opinions," but the optics aren't great.
The math that doesn't work
Some context on the money. Tailwind Labs had grown to eight employees by 2024. Engineering salaries were advertised at $250,000 to $300,000 total compensation. The company had previously disclosed over $2 million in annual revenue from Tailwind UI alone back in 2020.
Then AI happened.
Now the remaining team is three co-founders plus one engineer. Robin Malfait and Peter Suhm stayed on. That's the whole company.
In his podcast, Wathan described the situation: "I feel like a fucking idiot for somehow being able to build this CSS framework that's taken over the world and it's used by everything and it's super popular, but I can't figure out how to have it make enough money that eight people can work on it."
What this means for everyone else
This isn't just a Tailwind problem.
The same dynamic threatens any business that depends on documentation traffic. News sites, technical blogs, Stack Overflow (traffic down over 80%, by the way), anyone whose value gets scraped and regurgitated by AI without attribution or payment.
One commenter in the GitHub thread calculated that Lovable, an AI website builder claiming $250 million ARR, uses Tailwind for everything but provided no apparent financial support. Until the public pressure campaign, anyway.
Microsoft's Marcos Rivas tweeted: "Just imagine if the most popular and widely used CSS framework is in such bad shape, how the others must be faring."
The suggestions people are throwing out
The community is full of ideas. Paid MCP servers. Pay-per-API-call documentation access. Getting acquired by an AI company. Someone pointed out that Bun just joined Anthropic, maybe something like that.
Cloudflare has announced plans for a "pay-per-crawl" product that could charge LLM companies for documentation access. That's interesting but not here yet.
One developer in the thread made a brutal observation: "Tailwind's paid product offering (prebuilt components with best practices) is being obviated by a technological disruption... its product is a 'text-output', and worse, with low configuration needs, which is EXACTLY the most automateable thing."
So what happens now
The sponsorships buy time. Wathan says he's still optimistic. "My job requires me to be optimistic," he said in the podcast, which, okay.
The company is explicitly not spending time on llms.txt right now. "Every second I spend trying to do fun free things for the community like this is a second I'm not spending trying to turn the business around," Wathan wrote.
Some observers are calling for OpenAI and Anthropic to sponsor as well, given how heavily Claude and ChatGPT rely on Tailwind-generated code. Neither has announced anything yet.
The next few months will tell us whether this sponsorship wave actually moves the needle, or whether it's just a temporary PR boost while the fundamental economics remain broken.
Nuxt, for what it's worth, just went the opposite direction after being acquired by Vercel. They made Nuxt UI Pro completely free and embraced AI-friendly documentation. Different strategy. We'll see who's right.
