Tailwind's shattered business model is a grim warning for every business relying on site visits in the AI era

Tailwind CSS is more popular than ever, but revenue at the company behind it has dropped 80 percent. Founder Adam Wathan had to lay off three out of four engineers, and he blames AI assistants.

Tailwind Labs just let go of three out of four engineers. Founder Adam Wathan broke the news in a GitHub comment and a podcast episode, where he laid out exactly what went wrong.

"[...] 75% of the people on our engineering team lost their jobs here yesterday because of the brutal impact AI has had on our business," Wathan writes, adding, "Tailwind is growing faster than it ever has and is bigger than it ever has been, and our revenue is down close to 80%. Right now there's just no correlation between making Tailwind easier to use and making development of the framework more sustainable."

What's left is a skeleton crew: three owners, one engineer, and a part time employee. In the podcast, Wathan grapples with the painful irony of creating one of the world's most popular CSS frameworks while struggling to keep eight people employed.

AI coding assistants are killing the content funnel

The problem comes down to how Tailwind actually makes money. Traffic to the documentation has dropped about 40 percent since early 2023, and that matters because it's the only way users discover commercial products like Tailwind Plus.

Before AI assistants, the funnel was simple: a developer would search Google, land on the documentation, see the commercial products, and maybe buy something. Now coding assistants answer questions like "Which utility class do I need?" directly in the IDE. Developers get what they need without ever visiting the site.

Wathan says the decline was so gradual he didn't recognize it in time. It wasn't until he ran the numbers over the holidays that he realized the company had about six months of runway left without major changes.

The situation gets even more frustrating when you look at a recent GitHub pull request. A community member wanted to add an llms.txt endpoint, a summarized text version of the documentation designed specifically for language models. Wathan declined and closed the PR.

From a business perspective, his reasoning makes sense: making the documentation more AI friendly would only drive traffic down further. The Markdown files contained no references to commercial products, so every AI query answered meant another potential customer lost.

"[…] 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 writes. When users pushed back, he made the repository temporarily private, later acknowledging the financial strain had caused him to overreact.

A warning sign for content-based business models everywhere

What happened to Tailwind extends far beyond one CSS framework. AI is destroying the distribution channel even as the underlying product grows more popular. The same pattern threatens any business model that depends on people actually visiting content: documentation sites, news portals, blogs, online stores.

More and more content is consumed inside chatbots, and creators see nothing from it. Even when AI assistants cite their sources, users rarely click through. The World Wide Web as we've known it is fading away, and Tailwind's story shows just how fast it can happen.