Trending Thursday #29

Hi !

Before we dive into this week's Silicon Valley circus, I've partnered with Notion to drop $50K in founder tools, including credits from PostHog, v0, and Supabase, with a vetted list of investors to help you go from idea to funded startup.

Here's what's been trending in Tech & VC this week:

• a16z wrote Congress's AI homework: The VC giant published a thorough 9-pillar federal AI policy framework that reads like draft legislation

• Tech Force launches after DOGE burned down Govtech: The Trump admin is recruiting 1,000 Big Tech engineers for 2-year gov stints

• OpenAI is raising $10B+ from Amazon at $500B+ valuation: The deal would commit OpenAI to using Amazon's Trainium chips

• OpenAI is also may be raising $100B at $750B valuation: This separate funding discussion would make OpenAI worth more than Berkshire Hathaway

• Console gaming is having its worst year since the mid-1990s: Xbox Series sales collapsed 70% YoY in November and the PS5 dropped 40%

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🏛️ DC’s AI Awakening: When VCs Write Policy and Tech Bros Join Government

📜 a16z's Nine Pillars: A VC Firm Writes Congress's Homework

Andreessen Horowitz published "A Roadmap for Federal AI Legislation", a comprehensive policy framework that reads less like a think-tank white paper and more like draft legislation waiting for a sponsor with 9 pillars:

1. Punish Harmful Uses: AI shouldn't be a "get out of jail free" card—existing criminal, civil rights, and consumer protection laws should apply

2. Protect Children: Prohibit AI use for under-13s without parental consent; require crisis protocols for self-harm situations

3. National Security: Direct federal agencies to test and benchmark CBRN and cyber capabilities with evidence-based assessments

4. Transparency Standards: Require "AI model facts" disclosures—who built it, when, intended uses, supported languages, and terms of service

5. Federal Leadership: Congress regulates model development; states retain authority over harmful uses within their borders

6. Talent Investment: Modernize the 80-year-old National Apprenticeship Act; implement AI literacy in K-12 curricula

7. Infrastructure Spending: Create a National AI Competitiveness Institute (NAICI) offering compute access, curated datasets, and benchmarking tools

8. Research Funding: Prioritize "moonshot" high-risk, high-reward projects across near, medium, and long-term horizons

9. Government Modernization: Every federal agency should develop time-bound AI implementation plans

The "Little Tech" Angle: a16z frames the entire document around protecting startups from regulatory burdens that favor deep-pocketed incumbents. As they put it, quoting former White House deputy CTO Jennifer Pahlka: "Paperwork favors the powerful."

Translation: When the most influential VC firm in tech hands Congress a fully drafted AI policy framework complete with constitutional analysis and implementation details, it's either lobbying genius or public service, depending on your view of whether "protect builders" and "protect people" can coexist in the same sentence.

🎖️ Tech Force: Building Government Tech After DOGE Burned It Down

The Trump administration launched the US Tech Force, recruiting an "elite corps" of ~1,000 engineers from Big Tech for two-year government modernization stints:

• Pay: $150k-$200k annually, employed directly by agencies

• Participating Companies: Palantir, Meta, Oracle, xAI, and about 20 others signed on

• Timeline: Initial cohort could start as early as March

• Administration: NobleReach Foundation is helping run the program

• Placement: Engineers stationed across War, Labor, IRS, and other agencies

The Irony Nobody's Ignoring: This comes after DOGE drove out thousands of federal tech workers:

• GSA dismantled 18F (the internal tech consultancy) in March after Musk posted it had been "deleted."

• The Social Security Administration closed its Office of Transformation.

• The Defense Digital Service collapsed after mass resignations.

• The IRS lost 2,000+ tech workers by June.

The Conflict Question: Private sector employees will take "leaves of absence" to become full-time government employees, but won't be required to divest their stock holdings. OPM Director Scott Kupor insists they've "run down all the various conflict issues," but critics note this setup could "recreate some of the worst aspects of early DOGE" by bringing in people who don't understand public sector legal constraints.

The Pitch: "Come work on literally the world's most complex and difficult problems," says Kupor. "There is no bigger and more complex set of problems than we face in the federal government."

Reality Check: The Tech Force website states it has no "political mission," a curious disclaimer for a program launched by an administration that used DOGE to access sensitive government data and systems, prompting multiple lawsuits.

🤖 OpenAI's Paradox: Record Revenue, Rising Tensions, Astronomical Valuations

💰 The $750B Fundraising Circus: Two Deals, One Company

OpenAI's fundraising ambitions have entered the realm of the surreal, with two potential mega-rounds reportedly in the works that could coexist or compete:

Track 1: The Amazon Strategic Deal: Amazon is in early talks to invest $10B+ in OpenAI at a $500B+ valuation, structured as a strategic partnership:

• Trainium Commitment: OpenAI would use Amazon's custom AI chips to train and run future models

• AWS Deepening: Builds on existing multibillion-dollar cloud agreement

• No Resale Rights: Amazon can't offer OpenAI models to AWS customers and Microsoft retains exclusive commercialization rights

• Amazon's Upside: Chip utilization, AI workload gravity on AWS, strategic alignment

Track 2: The Massive General Raise: Separately, OpenAI has held preliminary discussions about raising "tens of billions," potentially up to $100B, at around $750B valuation:

• Scale: Would be among the largest private fundraises in history

• Purpose: Fund compute, chips, and data center expansion

• Status: Early talks, subject to change

The Math That Breaks Brains: At $750B, OpenAI would be worth more than Berkshire Hathaway. For a company that has never been profitable and whose competitive moat is being actively eroded by Google, Anthropic, and open-source alternatives, the valuation assumes a future in which OpenAI wins everything.

🔥 The "Code Red" Behind the Curtain

Internal tensions between OpenAI's research and ChatGPT product groups contributed to Sam Altman's "code red" declaration, revealing friction even as the company beats its targets:

The Organizational Drama:

• Research vs. Product: Friction over priorities, resourcing, and how aggressively to chase mass-market monetization

• Resource Reallocation: "Code red" shifted resources toward upgrading ChatGPT

• Delayed Initiatives: Advertising plans, AI agents for health/shopping, and "Pulse" personal assistant, all pushed back

• Daily Standups: Altman established daily calls for ChatGPT improvement teams

The Revenue Reality:

• $13B Target: OpenAI is on track to exceed its 2025 goal

• Internal Projections: Some forecasts mention potential revenue reaching "far higher" by 2030

• Sustainability Questions: Heavy spending on computing and data centers raises profitability concerns

• University Land Grab: OpenAI has sold 700K+ ChatGPT licenses to ~35 US public universities, rapidly outpacing Copilot despite Microsoft’s enterprise relationships and Office integration

Translation: OpenAI is printing money while simultaneously panicking about competitive threats and dealing with teams that can't agree on priorities. The company embodies Silicon Valley's eternal truth: success and chaos are not mutually exclusive.

🛠️ OpenAI Feature Factory: Apps, Images, and Benchmarks

OpenAI continues shipping product improvements at breakneck speed:

• App Store Launch: Developers can now submit apps for review and publication in ChatGPT, with a new directory for user discovery—OpenAI's play for ecosystem lock-in

• Image Generation Upgrades: ChatGPT Images now generates up to 4x faster with more precise upload editing

• FrontierScience Benchmark: New 700+ question benchmark for expert-level scientific capabilities; GPT-5.2 leads their model lineup

The Platform Play: The app store launch is significant because it aims to create the same ecosystem lock-in that made Apple and Google's app stores so valuable. If third-party devs build on ChatGPT, users have more reasons to stay, and switching costs compound.

🤖 Product Quick Hits: The Production-Grade AI Race

⚡ Google's Gemini 3 Flash: Google's "fast path" to Gemini-level reasoning, which is small enough to be cheap, strong enough to replace older mid-tier models for chat, agents, and search. The strategic play: keep devs from defaulting to rival lightweight models while plugging directly into Google's infra (AI Studio, Vertex, Android, Search).

🔧 Nvidia's Nemotron 3 Family: Jensen's crew is making Nvidia hardware the default, not just for training, but for inference-time software too. Tuned models, quantization recipes, and deployment patterns that run best on Nvidia GPUs.

🇨🇳 Xiaomi's MiMo-V2-Flash: The "OEMs want their own model" story arrives. Open-weight release enables better on-device experiences, local customization, and reduced dependence on U.S. cloud vendors.

🔊 Meta's SAM Audio: "Segment Anything" extends from vision into sound: isolate a voice, instrument, or noise source via text, time spans, or visual cues in video. Direct building blocks for creator tools (podcasts, TikToks), AR/VR, and solid audio analysis.

📝 Allen Institute's Bolmo: A quiet but important bet on byte-level modeling. Avoid tokenizers entirely, handle arbitrary scripts and weird text, and potentially get more robust behavior across languages and formats.

🎬 Luma AI's Ray3 Modify: Pushes the "generate then edit" workflow for video. The same engine that makes footage can surgically change scenes, objects, or styles after the fact to tighten the loop between ideation, generation, and revision.

🎮 Gaming & Entertainment Hits: An Industry in Freefall

📉 Xbox's Nightmare November: Circana data reveals US game hardware spending hit its weakest November since the mid-1990s. Xbox Series hardware sales cratered 70% year-over-year, PlayStation 5 dropped over 40%, and combined Switch/Switch 2 fell around 10%. Total hardware revenue down 27% YoY with just 1.6M units sold.

🥽 Meta's VR Reality Check: Meta paused its plan to license Horizon OS to third-party XR makers, effectively shelving early headsets from ASUS and Lenovo. The company frames this as "tightening priorities" to make Reality Labs sustainable and raise quality.

🎬 YouTube's Oscar Takeover: The Academy signed a global deal giving YouTube exclusive Oscars streaming rights from the 101st ceremony in 2029 through 2033, ending the international broadcast era after ABC's contract expires in 2028.

🎭 Hollywood's AI Fault Line: Major studios are diverging sharply on AI adoption in pre-production, VFX, and marketing, while talent unions that recently struck over AI protections remain highly sensitive to deployment.

🏰 Disney Snubs Roblox: Disney declined to partner with Roblox over safety concerns. When the House of Mouse thinks your platform is too risky for kids, that's a significant signal about where brand-safe metaverse partnerships are heading.

👔 Workforce Quick Hits: More Tech Reshuffling

🇱🇺 Amazon's Luxembourg Layoffs: Amazon plans to cut ~370 roles at its European HQ, or roughly 8.5% of its 4,350-person Luxembourg workforce. Local officials say it's the largest single round of layoffs in the country in more than two decades.

🦊 Mozilla Gets a New Captain: Anthony Enzor-DeMeo becomes Mozilla's CEO after a period marked by staff cuts, product retrenchment, and sustained reliance on Google search revenue. The change is framed as an attempt to reset its strategy.

🇨🇳 Tencent Poaches OpenAI Talent: Former OpenAI researcher Yao Shunyu, who joined Tencent in September, has been promoted to chief AI scientist reporting directly to president Martin Lau. Tencent is pushing to boost foundational model research.

📣 OpenAI's PR Chief Exits: Chief Communications Officer Hannah Wong plans to leave in January after steering PR through the 2023 Sam Altman ouster and rehiring, plus subsequent safety-governance controversies.

🌟 Editor's Note

At Startup Intros, our mission is to bring the latest founder-investor news straight to your inbox, keeping you ahead in the fast-paced world of Silicon Valley.

🎁 $50K Founder Tools Giveaway

Partnering with Notion (just crossed $600M ARR, prepping for IPO) to give you: PostHog, Vercel & Supabase credits, 6 months of Notion Biz + AI, 2,000+ VC contacts, and 50 pitch decks from YC/a16z startups.

Comment "Founder" on my LinkedIn post to grab it.

💭 Parting Thoughts

The line between Silicon Valley and Washington has never been blurrier. VCs are drafting legislation, Big Tech engineers are taking "leaves of absence" to fix government systems their colleagues helped dismantle. Trade policy now names specific startups as leverage.

Whether this represents regulatory capture or a genuine public-private partnership probably depends on whose portfolio benefits.

Forward to a friend or hit reply to let me know what you're seeing in your world.

Till next time!

P.S. Raised this week, and we missed you? Want to be featured? Have tips or funding questions? Reply or DM us as we’re here to help.

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