Top News | Big Tech anxious about “adversarial distillation”: According to Bloomberg, “adversarial distillation” has become a hot topic in Washington DC’s tech policy community. That is, attempts by foreign companies (specifically in China or with connections to the Chinese government) to quickly forge their own powerful, lower-cost variations of frontier AI models from US companies like OpenAI and Anthropic, by churning through millions of outputs from those models. The Claude makers have accused companies including Alibaba (makers of the Qwen suite of models) of carrying out an “industrial-scale attack” on their intellectual property, in violation of their terms of service. Apparently, lobbyists representing Big Tech have told lawmakers that large-scale distillation of US models by Chinese companies could pose an “existential threat” to the entire industry. They further warn that, once AI models can self-improve without human intervention, future distillation attacks may become impossible to monitor or prevent. But fear not, Americans: the Chinese embassy in Washington calls all of this a “groundless allegation”! So it’s probably fine. Meanwhile, economists anxious about job displacement: A collective of over 200 economists — including 15 Novel laureates — signed on to a statement called “We Must Act Now,” that warns of potentially massive short-turn job displacement triggered by widespread adoption of AI tools. Most of the signatories — including Stanford economist Erik Brynjolfsson, one of the organizers behind the statement — believe that, long-term, AI will provide a major boost to the American economy and productivity. The fear is that, between now and then, millions of white collar workers will lose their jobs, while the current social safety net and US unemployment system is ill prepared to manage such a crisis. MIT economist (and Nobel recipient) Daron Acemoglu, previously known as an AI skeptic, now tells the New York Times: “If you look at what robots did in the manufacturing sector, if AI does something equivalent in a more compressed time period, that would be really disruptive, really costly for people’s livelihoods.” Meta dedicates $40B for Louisiana data center campus: The Facebook and Instagram owner committed to dropping an additional $40 billion on the 4,000-acre rural project, bringing their total anticipated investment above $250 billion. (That also includes $10 billion in funds for betterment of the surrounding community.) The company plans to generate at least 5 gigawatts of computing power from the facility. This is on top of the 33 data centers Meta has already built or has in active development. Founder and CEO Mark Zuckerberg has publicly committed to spending a total of $600 billion on AI infrastructure projects over the next few years. Note that they’re not planning to use all of this computing power themselves. Meta reportedly plans to set up its own cloud infrastructure business, selling access to its chips and models in the style of Amazon Web Services and Google Cloud.
| TWiST 500 | German defense startup Helsing is mostly associated with autonomous drones, but they’re primarily a software company, developing the AI that controls and directs these unmanned systems. Their primary products include Altra (for overseeing reconnaissance missions and military strikes), the AI pilot Centaur, underwater drone software Lura (which powers the SG-1 Fathom drone), and the “electronic warfare system” Cirra. The company does manufacture some drones of its own — such as the HX-2s assembled at its factory in Southern Germany — while collaborating with third-party manufacturers. (But only on behalf of democratic governments.) | One of Helsing’s most notable and earliest customers is Ukraine, which licensed and manufactured the company’s first drone release — the HF-1 — domestically, starting in September 2024. These are what’s known as “kamikaze” or “loitering munition” drones, because the drone itself is a weapon, rather than carrying any kind of firearm or payload. The drones circle an area searching or waiting for a target, and then once they’ve locked on to a position, they’re designed for a single-use self-detonating attack. For this reason, the HF-1s were designed specifically for low-cost manufacturing. Single-use drone warfare only works long-term if the drones are cheap to make. | Helsing announced a Series E financing round this week, bringing in $1.8 billion in fresh capital at a valuation of $18 billion. This makes the Munich-based company — which has positioned itself as Europe’s answer to US defense contractor Anduril — the continent’s overall largest defense startup. | A message from YSecurity | The on-demand security team for startups. Need enterprise-grade security without hiring a $400k seeso? YSecurity gives you 40+ expert engineers, matched to exactly what you need, by the hour, with your first six hours completely free. Go to YSecurity.io/TWIST. | This Week in Startups | E2310: Reservoir seeks out AgTech startups that want to revolutionize farming, and invites them to test out their new products on a working farm in Salinas, CA. On TWiST, founder Danny Bernstein tells Jason and Lon about how robots can automate the most difficult jobs (like picking stone fruit in the summer heat), while other innovations can cut down on the use of harmful pesticides or eliminate the need for chemical weed killers entirely. Then, Jason responds to designer Gal Shir’s viral tweet about quitting the industry in the age of AI, and reveals why he bought $100K worth of Figma stock. | E2309: How many startups matter in tech? Fewer than you think. That’s why venture capitalists are tripping over themselves to get onto their cap tables, no matter the cost. Why? Footwork’s Nikhil Basu Trivedi argues that the Valley has never been more “power-law-pilled” than it is today. Basu Trivedi joined Cendana Capital’s Michael Kim and TWiST’s Alex Wilhelm to go deep on secondary markets, the state of startup M&A, why the SaaSpocalypse may be temporary, and what could trigger a retrenchment of the AI trade. It’s Wednesday, so it’s time for our venture capital roundtable to go deep on how VCs are investing today, and where on the horizon they have their eyes fixed! | E2308: First up, Alex chats with Hanover Park CEO and co-founder Chris Hladczuk about what $100 trillion+ in global assets are being overseen by what he calls “human duct tape.” That is, teams of accountants working in back offices, patching together important data and results from a variety of legacy applications (like QuickBooks and Bill.com) that are essentially holding them hostage. His startup suggests that AI is the answer. PLUS Alex and Lon look back on a classic TWiST chat from March 2020 between Jason and Figma CEO Dylan Field. | TWiST Partner Offers | Quo: Quo (formerly OpenPhone) gives you a clean, modern way to handle every customer call, text, and thread all in one place. Try it free and get 20% off your first 6 months at quo.com/TWiST. Paypal: Built for payments, growth, and agentic. Paypal Open, built for all businesses. Visit Paypalopen.com to get started. Northwest Registered Agent: Get more when you start your business with Northwest. In 10 clicks and 10 minutes, you can form your company and walk away with a real business identity — Learn more at www.northwestregisteredagent.com/twist.
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