The Fall of Tailwind and the End of Knowledge Arbitrage

The numbers are staggering, and the story has raced across the internet this week. Tailwind CSS laid off 75% of its engineering team following an 80% drop in revenue. The official cause, coming from creator Adam Wathan himself, is Artificial Intelligence.

Apparently, Tailwind’s business model relied on a very specific funnel that AI completely destroyed. It worked like this: we would forget how to center a div or what the class for a specific shadow was, we’d visit the documentation to search for it, and while we were there, we were exposed to ads for Tailwind UI. It was a symbiosis based on our memory failure.

But now, no one visits the documentation anymore. We just ask ChatGPT or Claude to “make a blue button with rounded borders,” and they give us the ready-to-use code. The traffic vanished, and the money dried up.

This highlights a structural problem that has always existed in open source, but which AI is brutally accelerating: the difficulty of monetizing something that is free. For years, we built an economy based on friction. Stack Overflow lost almost 80% of its question traffic because AI solved the simple doubt problem. Tailwind lived off our laziness to memorize classes. These were business models based on knowledge arbitrage, profiting from what the user couldn’t do alone.

AI has killed this arbitrage. Today, it solves problems that previously required research, reading, and navigation. If a service depends on me not knowing how to do something, its days are numbered.

Adam Wathan’s reaction to this was revealing. Recently, he rejected a contribution that would add an llms.txt file to the project (PR #2388), a standard that would help AIs read Tailwind’s documentation better. In the PR closing comment, he was brutally honest:

“The reality is that 75% of the people on our engineering team lost their jobs here yesterday because of the brutal impact AI has had on our business… 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 argument was that helping AI would be financial suicide. It’s a defensive stance that is understandable, but it creates a dangerous incentive. Trying to hide documentation or hinder model access won’t work in the long run—today, AIs can already browse the web and read documentation in real-time—but the attempt itself is worrying. Seeing a tool as ubiquitous as Tailwind adopting a “war on AI” stance to save its revenue is, at the very least, bizarre.

I don’t see this as the end of the world, but rather as a new Industrial Revolution. We are at that exact moment where repetitive manual work is being swallowed by the machine. Those who don’t adapt will be swallowed along with it.

I believe we are heading toward a scenario where hand-coding will become something “artisanal.” Just as the Industrial Revolution didn’t wipe out weavers but transformed manual weaving into a luxury art, coding without assistance will change its nature. AI is here to stay. It’s not perfect yet and makes silly mistakes, but ignoring its evolution is closing your eyes to reality. The paradigm has shifted, and fighting against the tool’s efficiency to save an old business model is a losing battle.