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Flexport: Return of the King
the industry #6 // flexport, elon averts nuclear war? (and is once again suing someone), big week for ai, tech links, and sanjana's dispatch from the california state legislative session
Last week, in a surprise reversal, Flexport founder Ryan Petersen ‘accepted the resignation’ of now former CEO Dave Clark, and resumed full-time command of his company. Following the news, which was delivered over a Zoom call, Clark immediately hired several political consultants to advise him on a run for governor of Texas (lol).
There’s been a mix of reporting on what went down at the company, with some implying Clark and Petersen butted heads, but Ryan personally poached Clark from Amazon, and the two co-led the company, amicably, for many months. Speaking of Amazon, however, the Information correctly (if a little too charitably) points out Clark was used to the kind of incredible spending possible at a once-in-a-generation runaway monopoly (worth about $1.4 trillion compared to Flexport’s $8 billion at last valuation), and based on my own conversations with people close to the situation it does seem spending was a major issue. In a world of higher interest rates, there are no more guaranteed successful IPOs. Profitability — and I understand this is going to sound insane — sort of matters, now. Compound this basic macro reality with the fact that e-commerce volume is down from its pandemic peak, and it seems Flexport will need to reassume its scrappier founding quality. Ryan is obviously the man for that job.
But there is a quite important piece that hasn’t yet been covered: large swaths of the company also appeared to genuinely hate Clark, who rarely left Texas, and couldn’t be reached by most employees without a nebulous journey through his EA. Even in a bull run, a remote-first leadership style would have been frustrating for a team used to the in-the-trenches type leadership of a founder/CEO. But in a market downturn? Clark’s style was unthinkable.
Following Ryan’s quick firing of the Amazon hires brought into Clark’s inner circle — described by one person at the company as “midwit yes men” who “couldn't understand the most basic things about an income statement much less a complex global freight network” — the following item was posted on Blind, where Ryan is presently more popular than Kim Jong Un:
A handful of other items on Blind generally indicate a culture in conflict. It was the old guards who built the place in opposition to a new class of Amazon execs:
There’s still some ambiguity surrounding how Ryan was insulated from the reality of Clark’s leadership until after Ryan left, but it’s clear the reality at Flexport was meaningfully different than Clark’s version laid before the board. In any case, an interesting — if difficult — fact for founders: unless you’re Google, there is almost never any leaving.
I first wrote about Ryan in a piece called Shitposting Gods of Silicon Valley, in which our intrepid CEO toured America’s frozen ports by boat, educated the public on our supply-chain crisis, and coordinated with our government to fix the problem. The world is created by fewer men than we often realize, and they tend to be more extraordinary than we’d like to acknowledge. Ground floor, it’s hard to replace people like this. Additionally, trying to build what one Flexport employee called “Amazon 2.0” was probably doomed from the start. As Thiel once said, every successful company is a miracle, each unique in its own way. Fortunately for Ryan, Flexport doesn’t have to be Amazon; it’s already an incredible company.
Back to the path we go.
THE FIFTH ESTATE
NOTABLE INDUSTRY TRENDS
Free speech is so hot right now. The Fifth Circuit Court of Appeals just said “thank you, next” to the notion that government officials are allowed to contact social media companies and tell them what is, and is not, “misinformation.” The state is currently no longer able to request information be removed from media platforms — which the court agrees it has done on a range of politically-charged topics — unless the content violates the law. The ruling specifically holds the Biden Administration has “coerced” social media companies, in violation of the First Amendment. The New York Times, which has argued on behalf of censorship since Trump’s election, tried to soften the Biden administration’s coercion by arguing the administration only attempted to pressure social media companies into removing “false content,” which is not only factually inaccurate, but irrelevant. Given we live in America, the state is still not allowed to determine what does and does not constitute “real information.” Thank God.
The court’s injunction is a fascinating read, worth checking out in full, but the tl;dr is the court looked at evidence indicating the Biden administration had de facto control of censorship across social media platforms on a range of issues, which materially “chilled” speech. Worth noting the pro-censorship left is claiming this is a “conservative” court, carrying on in the wild liberal concession of “liberalism” as a liberal value.
Speaking of speaking: Elon Musk is once again suing someone. According to X comms, Twitter/X filed a First Amendment lawsuit against the state of California in response to AB 587. AB 587 would require social media platforms to file reports on their official policies for the following categories of speech: hate speech or racism, extremism or radicalization, disinformation or misinformation, harassment, and foreign political interference.
X’s argument: forcing a company to talk about its content moderation policies concerning things like “hate speech,” “extremism,” and “disinformation,” which have no legal definition in the US, and legally can’t be banned, necessarily locks the company into an implied frame, and essentially force it to take public positions on each contentious topic. Elon’s team is suing on grounds that such compelled speech violates the First Amendment, and further argues the law will be used against Americans.
That the intention of the California law is to mainstream censorship reads to me as obviously true. But our courts have already signaled frustration with the state for this sort of thing, and I’m frankly expecting many victories for speech, one of the most robustly defended aspects of American law (thanks mostly to liberals, or at least up until about five minutes ago).
Pretty cool to see a social media company suing on behalf of our right to speech. Felt unthinkable a few years ago, and reminds me of the most ferocious days, in American antiquity, of journalists caring about this issue. Indicative, perhaps, of where meaningful speech is now happening. It makes sense the frontier is always where the battles are most hardly fought.
War. In Walter Isaacson’s new biography of Elon, it was revealed Starlink declined to expand service into the Russian-occupied territory of Crimea, which the Ukrainian government requested for purposes of an offensive. This act has been interpreted by supporters as preventing a nuclear war (which, thank you I guess, but this feels like sort of a lot of power?), and by detractors as treason (important to note Elon is not Ukrainian, nor is America at war with Russia). (@elonmusk)
The fact that single American citizens, largely in tech, now maintain such outsized impact on geopolitics is a relatively new phenomenon I covered back when Russia first invaded, and tech executives made a dangerous show of their support by actively engaging in retaliation. This one is tough. I understand the impulse to engage, and in the case of Starlink, Elon actually has to engage — the decision to offer service, or to expand service, is a decision that literally can’t be avoided. But these actions are often interpreted as American actions, and that poses many new challenges we still have yet to parse.
For what it’s worth, while the pro-censorship, Elon-obsessed pitbulls at CNN recently attempted to goad some criticism from Secretary of State Antony Blinken, he stood in defense of Elon. This has naturally been framed as indication Elon is bad. There is no winning, for any of Elon’s companies, until Twitter adopts CNN’s preferred censorship protocols.
Make sure to watch out the latest episode of our pod, TRAPPED AT BURNING MAN!, and rate, like, subscribe:
Lithium deposits found at the Nevada-Oregon border have been framed as large enough — up to 40 million metric tons of it — that they could alter the geopolitics around electronics supply chains (Futurism). IMO, given we’ve long since discovered tremendous rare metal deposits, the bigger issue continues to be regulatory mining and processing permission, which Pirate Wires covered last year in a great piece from Ryan McEntush called Control the Metal, Control the World.
FLASHBACK: a lot of lithium in Maine as well, the state just won’t let us dig it up.
22 percent of U.S. workers fear their jobs could become obsolete due to technology, up 7 points since 2021, according to a Gallup poll (The Hill). Call me crazy, but I’m starting to think the media’s AI histrionics might have something to do with a… general fear of AI?
Palantir CTO Shyam Sankar: “We want to flip the script and go all in on expanding Palantir’s mission by supporting and growing today’s nascent but inspiring defense tech ecosystem.” Read the full post here.
Cruise CEO says the company is days away from receiving federal approval to begin producing and deploying driverless cars without steering wheels or pedals. The boxier Origin car has been billed as “a party on wheels,” or a “Zen oasis between meetings or on your way to work.” (Tech Crunch)
Anyway, here is a video clip of a psychotic, too-online activist attempting to destroy a San Francisco AV with a hammer. Once the cars go national, we’ll see this in every city in the country. Given the entire hysteria is astroturfed by luddite union extremists, MSNBC hosts will defend the behavior, which will likely be framed as “vital activism,” or “freedom fighting,” or some such deranged euphemism. Looking forward to the discourse.
SEC Chair Gary Gensler appeared before the Senate Banking Committee on Tuesday, and doubled-down on his anti-crypto position in prepared remarks. “Given this industry’s wide-ranging non-compliance with the securities laws, it’s not surprising that we’ve seen many problems,” he wrote. (Decrypt)
Bloomberg Economics’ chief US economist acknowledges the economy is doing fine this summer, but “the big question is: Is this strength in consumption sustainable?” (Bloomberg)
Yellen is “feeling very good” about the U.S. sticking a soft landing, with Goldman Sachs economists now seeing just a 15% chance the US will slide into recession. (Bloomberg)
Instacart is targeting an IPO valuation of $7.8 billion. The company’s last private valuation, which it received in 2021, was $39 billion. (New York Times)
Getir, the online grocery startup valued at $11.8 billion just 18 months ago, is in talks to raise at a $2.5 billion valuation, in the face of a collapse in investor confidence around last-mile delivery startups. (FT)
HealthIQ, a company that sold Medicare Advantage plans, has filed for bankruptcy, citing $1.3 million in assets and nearly $257 million in liabilities (wut). One of the founders, Munjal Shah, stepped back from the company in January to co-found Hippocratic AI, which announced a $50 million Seed from a16z and General Catalyst in May. (Forbes)
The Arm IPO will likely be “the largest in nearly two years.” A major position for the greatly troubled SoftBank, and bankers have gone all in on selling this thing. With 28 banks lined up to sell the offering, some fund managers are skeptical of the exuberance on display (FT). Great primer on the company from John Coogan, here.
CB Insights, the tech intelligence firm, is rumored to be exploring a sale which could fetch $800 million. To date, they’ve only raised $10 million. (Bloomberg)
Litigation and regulation:
The FTC will likely sue Amazon this month for taking a cut of third party merchant sales, and tying access to its marketplace to use of its logistics service. This is the fourth case Biden’s anti-industry sockpuppet Lina Khan has brought against Amazon this year. In the madwoman’s first two cases, which concerned privacy issues with Ring and Alexa, Amazon settled for $30 million. Her third case, which alleges the company tricks people into signing up for Prime (?) then makes it hard to cancel (???), is still ongoing. (Bloomberg)
FTC rules Intuit broke the law, must stop advertising TurboTax as “free” (Intuit is appealing the ruling, even calling out Chair Lina Kahn by name). (Ars Technica)
The Justice Department’s monopoly case against Google kicked off yesterday, and is scheduled to last 10 weeks. This is the result of three years of preparation (producing over 5 million pages of documents), with an aim to be the first successful monopoly trial of an internet-era tech company. “This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” a lawyer for the Justice Department said in his opening statement (Bloomberg). There has been surprisingly little expressed concern over the notion of “consumer harm,” once considered the cornerstone of antitrust legislation.
Newsom is set to sign a law — SB 54 — that will require VC firms operating in California to report the gender and ethnic and racial background of the founders, along with the dollar amount invested (Tech Crunch). An absolutely horrifying piece of legislation, in equal measure racist and sexist, and of a kind now normalized among ostensible “progressives” literally demanding discrimination.
The CA Senate approved AB 316, which requires autonomous vehicles weighing over 10,001 pounds to have a “human safety operator” (i.e. a driver) physically present whenever on CA public roads. In other words, self-driving trucks are now illegal. Newsom will have to sign this one into law, however, and he's expected to veto the legislation (Yahoo!). A tough rope to walk for a wannabe future president who both needs the leftist ‘technology is evil vote,’ and the tech industry’s money to win a national election.
In the media:
An “e/acc” “hit piece” is apparently “imminent.” (@garrytan) (Garry it’s been six days we can’t wait much longer)
Data from analytics company NewsWhip seems to show Twitter/X throttling New York Times links, with shares-per-article in August down more than 3x than normal, and in comparison to outlets like the Post, which appear unaffected (Semafor). Two thoughts: one, welcome to caring about this issue, which nobody in the media really seemed to care about when it only targeted Substack (tell all your friends to subscribe, btw, our links are still very much dead on X). Two, I would have throttled the Post instead, fwiw. Anyway, I remain of the position that no links should be throttled. Free the links, Elon! Free the links for America!
An actual thing that was written and published: a Los Angeles Times columnist called Elon’s criticism of the ADL “the most extreme outburst of antisemitism by a purportedly mainstream public figure in more than 100 years.” So, literally worse than H*tler, who died in 1945.
Last but not least, a really glorious entrance in the cringe hall of fame from TIME, which just discovered AI several months ago and has now deigned to tell us all the industry’s 100 most important people. Naturally, “robots are racist” Timnit Gebru, most famous for quitting her job at Google and then framing that as a firing, made the list. Sadly, Gary Marcus, my favorite histrionic in the highly competitive field of “says scary things about AI for a living, now,” didn’t make the cut. FYI, we discussed this all at length in this week’s podcast episode.
The CCP banned iPhones from some governmental agencies for years, but recently expanded its ban to more agencies within the government, presumably to decrease reliance on foreign tech and shore up cybersecurity (Wall Street Journal). Question: why have we still not banned TikTok, the Chinese spy app?
Speaking of the Chinese spy app, TikTok is building data centers in Ireland and Denmark so that by the end of 2024 Euro-TikTokers’ data won’t leave the continent (ok lmao), a $1.3 billion gamble that this sweeping gesture will assuage regulators in Brussels (WIRED). Given general idiocy on the issue, this will probably work.
Foreign Policy analyzed Chinese defense spending, and concluded it has far outpaced its GDP growth — “from 2015 through 2019, China’s military spending grew nearly twice as fast as China’s official GDP in real terms.” In the States, our spending as a percentage of GDP is actually at historic lows. (Foreign Policy)
Biden visited Vietnam, and urged tech and aviation firms to “forge new partnerships,” seen as an effort to strengthen US-Vietnam ties in the face of China’s growing influence in Asia. (Forbes)
A frustrated mom took to ChatGPT after 17 doctor visits over three years failed to diagnose her seven year old son Alex’s unusual symptoms. During the Covid lockdown Alex began experiencing pain, then incessant “chewing,” and then stopped growing as he began to develop a limp. When his mom uploaded all his medical information to GPT, it eventually suggested tethered cord syndrome. A neurosurgeon immediately confirmed the diagnosis. Alex received corrective surgery, and is expected to make a full recovery (USA Today). On the other hand, GPT occasionally says true things about contentious political issues. I don’t know guys, should we ban it? Probably.
Apple is reportedly firing on all cylinders in its AI efforts, with teams inside the company developing a LLM internally known as Ajax GPT, and a multimodal AI that can recognize and produce imagery and video. (The Verge)
Meta is developing a new AI model intended to be as powerful as GPT-4, with a tentative launch date sometime next year. (Wall Street Journal)
OpenAI will host their first developer conference in S.F. on Nov. 6. Altman has said they’ll have “some great stuff to show developers,” but also tempered hopes for a major release (SF Chronicle)
Senators Hawley and Blumenthal have put together a bipartisan framework for AI regulation, advocating for a licensing regime, and ensuring that Section 230 protections don’t apply to AI models (The Hill). To quickly break this down: it seems we are getting regulatory capture, which we are absolutely assured would not happen!, rather than protectionism, which I would frankly like a little taste of for a treat (bring back mercantilism).
Musk, Altman, and Zuckerberg are among some of the tech leaders who will participate in a closed-door Senate forum on artificial intelligence today, but word has it their expectations are low, as they’ve received few details on the event. (Semafor)
People who like using Midjourney signed an open letter demanding a “seat at the table from US Congress,” arguing they should have a say in shaping AI policy. Interestingly, Creative Commons published the letter.
Google will require election ads to “prominently disclose” AI content, while last month X reversed a policy that banned political ads. 2024 will be spicy (FT)
While I typically blow through these unhinged items myself, this week’s Clown World lead is brought to you by Sanjana Friedman, who I forced to listen to the whole ass California State Senate legislative session as we waited for news on AB-316 (the bill that just tried to ban self-driving trucks). What followed, entirely by accident, was simply too beautiful not to share. Enjoy.
Last Wednesday, at 10 a.m. PT — 6 p.m. in London, where I’m based for the next two weeks — I settled into an armchair with a cup of coffee and braced myself to watch a livestream of the day’s California State Senate session. My goal was straightforward: listen for the results of the vote on AB-316, a bill which effectively bans autonomous trucks throughout the state, and hit send on a pre-written tweet as soon as it passed. The bill was item #412 on a lengthy daily agenda, but it seemed like a couple hours of engagement with our nation’s legislative process was worth a viral tweet.
Or so I thought.
Every California Senate session begins with a roll call, a “Prayer by the Chaplain,” and the Pledge of Allegiance. The Senate’s Chaplain, Sister Michelle Gorman, began her prayer by asking the “God of our ordinary days and nights, God of extraordinary times” to “guide our discerning and our deciding, and attune our hearts to the murmurings of both peace and of disquiet.” The chamber resounded with an ‘Amen.’
Then consideration of the Daily File began. AB-261, which makes the California Golden Chanterelle the official state mushroom, passed unanimously. AB-819, which decriminalizes fare evasion on public transportation, and AB-1679, a Prop C-style bill imposing a new tax on LA County and earmarking its revenue exclusively for ‘addressing homelessness,’ both passed without debate. On the other hand, AB-782, which protects the use of artificial flavoring in children’s medication, provoked comment from the chamber. “Mary Poppins always said that a spoonful of sugar makes the medicine go down,” one member noted.
Halfhearted debate briefly arose on AB-957, a bill introduced by the Senate’s “LGBTQ+ Caucus” to add non-affirmation of a child’s “gender identity or expression” to the list of welfare considerations in parental custody hearings. Members opposed to the measure spoke about how much they loved their own spouses and children. Members supporting the measure spoke about ‘trans genocide’ and ‘queer welfare.’ The bill passed by a wide margin.
Five hours into the hearing, as the steady beat of ayes and nays fell upon me like cold-water droplets in a medieval torture technique, I found myself wishing that all the bills — from the completely asinine to the completely destructive — would pass on a unanimous, simultaneous vote, if only so this prolonged torment would end. Let the kids drink orange-flavored cough syrup. Let them irrevocably stunt their puberty. Make payment optional on public transportation. Take my firstborn child. Do anything at all, but please make the democracy stop.
Finally, at 4 p.m. California time, 1 a.m. in London, the session adjourned. AB-316 had not been heard on the floor. I would have to tune in again tomorrow.
— Sanjana Friedman
A few more clown world links to close out:
Alright so you know about the gay sex app Grindr, yes? And you have already correctly intuited the company has attracted a largely unhinged employee base, right? Well, they tried to unionize in an effort to secure gay liberation (they didn’t want to go to work), but did not secure that ‘labor’ victory fast enough. Big Blowjob forced the employees back to the office (two days a week), and then the very crazy ones all quit (about half the company). Wired’s headline was too good to not include: “Grindr’s Return-to-Office Ultimatum Has Gutted a Uniquely Queer Space in Tech” (Wall Street Journal)
MacKenzie Scott (Bezos’ ex) donated $20 million to a San Francisco housing nonprofit run by police abolitionists, and a Dean Preston aide that buys property at over market prices, means-tests the tenants, and raises the rent on those who can afford to pay it — all without a new unit ever being built. The donation apparently 20x’d the nonprofit's budget, which is how, by the way, the city is run by the actual craziest activists in our country. As it turns out, when you give these people money they tend to stick around and use it. Billionaires! They really are destroying the city, turns out. (SF Chronicle)