How to un-stupid AI regulation, defense tech, and eight years of not drinking
Welcome back to Cautious Optimism. Today is May 24th, 2024. Happy Friday. Let’s talk defense tech, AI regulation, and not drinking.
Trending Up: Getting high … crypto access in your brokerage account … talking shit about your employer … Flipkart, after Google invests $350M … French startups … Search Generative Experience eating glue … Alibaba’s debt load to rebuy its own shares …
Trending Down: Billionaire interest in the preservation of democracy … the value of Workday after earnings … Ticketmaster’s grip on live music … oil prices … Boeing’s cash position this year … Foursquare’s employee base …
What The Fuck: This week Forbes dropped a look at Mach Industries (soft paywall), a defense tech startup that wanted to end the U.S. military’s “reliance on gunpowder munitions by developing an array of hydrogen-powered weaponry,” per the publication. So far, so good. But, a young founder, huge slugs of capital too early in its life, a cavalier safety posture, and several product pivots point to a startup struggling to find its footing. Sequoia is a backer.
Cautious Optimism: It’s good that venture investors are putting capital into non-software companies. The American industrial base can use every dollar that folks are willing to put into it (progress report here). In fact, TechCrunch is prepping a panel for Disrupt later this year on this very topic, something that I was working on before I left.
But certain venture norms regarding how to pick founders to back, and how to help nascent startups navigate finding product-market fit probably don’t mesh well with many defense tech categories. Like building weapons. Mach Industries might pull off its hydrogen-powered guns-to-drones-to-cruise missile pivot, but there is probably a better way to put capital to work to rebuild the arsenal of democracy than what we are seeing here.
Time Flies: Today is my eighth anniversary of quitting drinking. A big thank you to my family and friends (and rehab) for helping me get my life together. Here’s to another eight years of caring for myself and being the best spouse, parent, and friend I can be. Hugs. alexwrites@protonmail.com if you are struggling with substance abuse of any sort and want to talk about it. I’m here to listen.
Chew On This
The passage of the blockchain-friendly FIT21 Act (overview here, text here) in the House this week saw more bipartisan participation than expected. For folks who consider the SEC’s approach to crypto regulation heavy-handed, the bill’s progress was a win. The Financial Innovation and Technology for the 21st Century Act faces an uncertain future in the Senate, and the current administration is not a fan, though it is holding short of issuing a veto threat for now.
Mix in the SEC’s approval of spot ethereum ETFs this week, and you might think that the tech industry is starting to win more than lose when it comes to its interactions with the United States government.
Kinda. At the federal level, the FTC is still using all the teeth it has to limit big tech companies from buying their smaller rivals to prevent consolidation, and Congress doesn’t appear close to sorting out national AI rules.
Why is it bad that Congress is not close to setting astute national rules for AI? States are digging in on their own, and what they are cooking up is not popular with the folks busy building new AI technology.
In California, for example, SB-1047 (progress tracker here) is being viewed with skepticism and outright hostility by many. Answer.AI, a venture-backed “new kind of AI R&D lab” in its own words, thinks that the bill “in its current form risks stifling innovation and undermining the state’s leadership in AI,” for example.
Criticism of SB-1047 often focuses on potential negative impacts it could have on open-source AI development, the creation of compliance costs that could limit who can participate in building new artificial intelligence technologies, and the risk of financial penalties could have on the willingness of people to build bleeding-edge AI models in the state.
Some of the criticisms of attempts at AI regulation at the state level are valid. For example, the decision by SB-1047 to place models that use “a quantity of computing power greater than 10^26 integer or floating-point operations” under its “covered model” category feels arbitrary and akin to saying that cars with more than 26 horsepower should be regulated differently than those with 10.
Add a zero, please. Or two.
Also, SB-1047 puts the balance of responsibility on AI model makers and not the end-users of those models. To wit:
You can see why folks are worried about the fate of open-source AI development if those are the rules of the road.
The answer to patchwork, state-level AI rules is strong, intelligent national-level policy that doesn’t create barriers to open-source AI development (something that those of us concerned about big tech companies getting even bigger should heartily back) and places the penalties for abuse on those doing bad stuff and not the folks making tools.
The EU has already implemented AI regulation that has faced related concerns about AI R&D. Notably, AI development in the EU (France, really) seems to be simultaneously cooking at a high temperature. It’s far, far too early to say that recent EU AI regulation and French AI funding rounds indicate that the bloc has hit the right balance in its regulatory approach, more that it is possible to do some rules-setting and not blow up tech development in the near term.
There will never be a set of regulations with which the E/ACC folks will not find fault. But what California is moving ahead with seems to be more rooted in fear of progress (bigger, smarter, better models) than reasonable concern about how individuals might use new technology to be shitty. A greater focus on regulating the latter over the former would be a good place to start.
Housekeeping: Cautious Optimism will likely be off Monday due to an American holiday. I am on This Week in Tech on Sunday, which you can watch live or in your favorite podcast app the next day. And, of course, there will be more This Week in Startups next week!