October 4, 2019 What better way to start your Friday than with drone-killing robots?
I've written extensively in Term Sheet about Anduril, the secretive defense tech startup founded by Palmer Luckey and backed by Peter Thiel. The company works with the government to build surveillance systems on military bases and along the Mexican border. Over the summer, it raised $120 million at a $1 billion valuation from investors including Founders Fund, General Catalyst, and Andreessen Horowitz.
In a time when tech companies are turning down defense and border patrol contracts, Anduril and its investors have gone all in. But as the pace of innovation accelerates, there are ethical challenges it faces — such as the development of AI-based weaponry, the dehumanization of decision-making, and the use of surveillance to collect & analyze mass amounts of data.
Until now, Andruil was largely focused on surveillance. But my question has always been: Will the startup ever move beyond simply identifying threats to actually creating weapons?
In a fascinating and well-reported profile, Bloomberg's Joshua Brustein answers that question. He reveals that Anduril has, in fact, developed its first computer-operated weapon. Dubbed "The Interceptor," a self-piloted drone designed to destroy other drones.
From the story:
The prospect of a 2-year-old startup building and distributing a new class of potentially lethal weapons will undoubtedly raise ethical questions, especially amid a larger backlash against overreach by tech companies. The Interceptor in its current form doesn't target humans and requires explicit permission from a human operator before each attack, but it's conceivable that those controls could be changed in the future.
"You've already developed this technology, opened the so-called Pandora's box," argues Marta Kosmyna of the Campaign to Stop Killer Robots, a group opposed to autonomous weaponry. Technologies such as the Interceptor are "very rarely used as intended," she says.
It's clear the founders created this company with the best of intentions, but The Interceptor project is steering it toward a controversial technological issue: the development and deployment of autonomous weapons. As I've previously argued: Founders need to consider from the very inception of their company — Could my technology be used in ways that harm, and if so, what safeguards can we put in place to avoid losing control of the product?
Because once the genie is out of the bottle, there's no going back. And in the case of potentially making a mistake using autonomous weaponry, there's really no going back.
A SKY-HIGH BIRD VALUATION: Electric scooter startup Bird raised $275 million in Series D funding at a $2.5 billion pre-money valuation. Sequoia and CDPQ co-led the round. Fortune's Adam Lashinsky dug into the valuation to explain how on God's green earth a scooter company could be worth $2.5 billion. From Data Sheet:
First, as with many such startups, a game of the greater fool is at work. Investors reckon that a greater fool—in this case the bigger transportation services Uber or Lyft—will buy Bird to augment their services. Also, investors see what they want: Bird says it has positive unit economics on some scooters in some markets in some weather (summer). Alright then.
Valuation and an overabundance of competitors aside, "last-mile" urban transportation hardly is a dumb idea. I haven't ridden electric scooters, but I ride manual and pedal-assist share bikes every day. In decent weather, I'd rather take 15 minutes longer to get somewhere on a bike than be stuck in traffic in a car any day. (A few weeks ago I carried my helmet to New York where I rode Lyft's (Citibike) bikes everywhere I went. Takeaway: New York has serious work to do to catch up to San Francisco's bike lanes.) As we become more urbanized, as our cities become smarter, as climate change drives more infrastructure decisions, and as city centers become more congested, commuters will be more and more willing to pay for alternatives.
Read more here.
OPPORTUNITY ZONES: There’s been a lot of talk and interest around Opportunity Zones, a new capital gains exemption for people who make long-term investments in underserved communities. There are currently 8,700 designated Opportunity Zones in the U.S. Now, a trio of academics, are saying, "Opportunity Zones are a market, not a program."
We hope to sharpen this distinction because, while federal programs and nationwide markets can (and should) complement each other, they should not be confused with each other.
If Opportunity Zones were structured as a program, we would expect to see two key components. First, a finite appropriation of funds on an annual basis. Second, a competitive application and allocation process. This type of structuring enables more control over the activities and outcomes funded by the program, but it presents significant risk of annual disruption (Congress could fail to adopt a budget).
Instead, OZs are a market-based incentive designed to catalyze private sector investments in specified census tracts. Anyone meeting the qualifications for market entry can participate.
Read the full op-ed here.
LET'S MEET IRL: On October 15, I'll be in Columbus, Ohio to moderate panels at The Dance, a one-day event hosted by Drive Capital that focuses on robotics and automation. Let me know if you plan to attend, and we can meet as fellow humans outside of this newsletter. For a discounted ticket, enter the code "TermSheetReader" or purchase it here.
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