The Musk-a16z admin continues to grow
Also: X raises price and prime government contractors are put on notice.
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It’s a holiday week, so CO will publish slightly less frequently than usual. Our economic calendar has a fun twist to it this week.
News is slowing down as we approach Christmas, Hanukkah and other end-of-year holidays. That means fewer technology stories, fewer funding rounds, and zero IPOs for a while. So, we’re focused on what news there is. For folks tired of reading about the next administration do not worry — we’ll get back to money soon enough. — Alex
Twitter gets more expensive
When in doubt, raise the price? One smaller tech story this morning is that X, formerly known as Twitter, is raising the cost of its most expensive subscription tier (Premium+) “by 37.5% to $22 a month, marking the largest price increase since Elon Musk bought the platform in 2022,” TechCrunch writes.
X explained the change in short post, noting that the service will cost more thanks to the Premium+ tier now being “completely ads-free,” offering services like search-service ‘Radar’ and “higher limits on our most cutting-edge Grok AI models, ensuring you're always ahead of the curve.”
That last bit stood out. X’s owner is also racing to build a competitor to Anthropic and OpenAI. Historically, this has been predicated on paying X for one of its tiered subscriber options; offering more Grok to higher value subscribers of X is not a shock.
But $229 yearly for X’s most expensive subscription tier is expensive. That’s more than the $16.99 that Spotify charges for a ‘Duo’ account with ad-free listening for two different accounts. OpenAI’s ‘Plus’ subscription is listed at $20 per month, for reference.
X isn’t competing entirely with rival services for dollar share. The company’s CEO has enough fans that he can offer pretty much whatever he wants, and whatever price he wants, and drive sales. But I wonder if the rising cost of the most pricey X service is predicated on the fact that two Musk companies are eating from the same plate. That xAI and X share investors helps, but if X is the chariot that xAI will ride to market, then we can infer that the two companies’ costs require more top line. Training AI is very, very not cheap, and xAI needs to not only challenge its rivals in terms of model and experience quality but also monetization prowess.
I doubt this is the last price hike we’ll see from X.
Venture goes to Washington and a new Prime rising
The incoming Presidential administration has drafted more names, dipping again into the a16z bucket for staffing. The venture firm will send Sriram Krishnan to the capitol. Here’s Trump:
Senior Policy Advisor for Artificial Intelligence at the White House Office of Science and Technology Policy. Working closely with David Sacks, Sriram will focus on ensuring continued American leadership in A.I., and help shape and coordinate A.I. policy across Government, including working with the President’s Council of Advisors on Science and Technology. Sriram started his career at Microsoft as a founding member of Windows Azure.
Krishnan has been a general partner at a16z since 2020, for reference.
Elsewhere, Trump elevated another a16z name to a big government job:
I am pleased to announce that Scott Kupor will serve as the Director of the Office of Personnel Management. Scott was the first employee of Andreessen Horowitz, and now serves as Managing Partner. He is also the former Chairman of the National Venture Capital Association. Scott will bring much needed reform to our federal workforce. Scott graduated Phi Beta Kappa from Stanford University, with a bachelor’s degree in Public Policy. He also holds a Law degree, with distinction, from Stanford University. Congratulations Scott!
Kupor has been at the firm for more than 15 years.
Again, when we first called the incoming administration the ‘Musk-a16z’ admin, we were somewhat kidding. Wrong! We were far more correct than expected.
Krishnan’s job working for Sacks isn’t one that I have any beef with. If memory serves, I met Krishnan back before I quit drinking, so the timeline thereof is a little hazy, but I’ve heard nothing but good things about the man. Fair enough, and having smart folks inside key policy roles doesn’t bother me.
The Kupor tap is more interesting. OPM lists its mission as follows:
We are champions of talent for the Federal Government. We lead Federal agencies in workforce policies, programs, and benefits in service to the American people.
Given that the current tenor in Silicon Valley is that most of the government should be fired, and Kupor hails from that corporate-philosophical nexus, it’s going to be an interesting marriage of talent and agency. Especially as one of the OPM’s goals today is to make “the Federal Government to be a model employer where every Federal job provides fair pay and benefits that reflect the diverse needs of the workforce.” (Read more here from the OPM fiscal 2022-2026 strategic plan.)
That’s going to be hard to do with a knife.
Closing out seemingly never-ending government watch work, the FT reports that:
Palantir and Anduril, two of the largest US defence technology companies, are in talks with about a dozen competitors to form a consortium that will jointly bid for US government work in an effort to disrupt the country’s oligopoly of “prime” contractors.
SpaceX, OpenAI, Scale AI and other names are also reportedly in the mix. Good.
Given my skepticism regarding an ability for business people to not self-deal while in government, I could worry that putting tech folks in big government roles will unfairly impact how defense contracting dollars will flow. Tech folks in government and tech companies linking arms for a shot at Federal dollars sounds like a recipe for bullshit, right?
Sure, but have you seen what we get from our existing defense contractors? We can’t build boats. We can barely build submarines. We don’t have enough shells. And we are seemingly unable to change the status quo. Alright then, let’s rip it all up and try again. Surely we can’t get less for our money than we already are.
Worst case: the new crew flounder, and the old guard gets put onto its toes. Best case: competition returns to defense contracting and we rebuild out our fighting force.
Well, given how LP capital has consolidated around 3-4 major firms, it's no surprise that government appointments have also consolidated around 3-4 major firms.