Small businesses are vital to the U.S. economy. Micro, small, and medium enterprises (up to 500 employees) generate 58% of jobs and 39% of the “value-added” economy, the portion beyond the cost of production. That’s according to an October 2024 report by McKinsey Global Institute titled “America’s small businesses: Time to think big.”
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Micro, small, and medium enterprises (MSMEs) significantly influence certain U.S. industries. For instance, in the construction industry, MSMEs employ over 75% of the workforce and contribute more than 75% of the value added. Additionally, MSMEs represent more than half of the employment and value-added in professional services and accommodation and food services.
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Per the McKinsey report, since 2000 a substantial share of publicly traded companies with a market capitalization of $10 billion or more began as MSMEs. Small technology firms have achieved some of the most notable successes, with nearly a quarter of large public tech companies having originated as MSMEs over the last 25 years. Likewise, many of today’s major manufacturing firms trace their roots to small factories.
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McKinsey computed the opportunities for productivity improvements among U.S. businesses compared to other advanced economies and then allocated the opportunities by industry sector. Retail and wholesale trade, manufacturing, construction, and technology represented the top opportunities owing to their impact on the overall economy.
Eighty-two percent of global CEOs in retail sectors are confident in their company’s growth prospects, but only 59% are optimistic about the overall worldwide economy. That’s according to KPMG’s 2024 “Consumer and Retail CEO Outlook” (PDF) released in December 2024.
The report summarizes the results of a KPMG survey of 1,325 CEOs between July 25 and August 29, 2024, across 11 key global markets and industries. All participants represented organizations with annual revenue exceeding $500 million, with one-third reporting revenue over $10 billion.
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According to the study, the leading challenges for retail CEOs in 2024 are economic uncertainty (58%), geopolitical complexities (53%), and generative AI integration (48%).
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In addition, when asked about the trends that could hinder their organizations’ prosperity over the next three years, 81% of retail CEOs identified the cost of living, followed by cyber crime at 79% and trade regulation at 74%.
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Moreover, 35% of surveyed CEOs ranked organic tactics as their top growth strategy. Twenty-seven percent identified mergers and acquisitions.
This article first appeared in The Debrief, MIT Technology Review’s weekly newsletter from our editor in chief Mat Honan. To receive it in your inbox every Friday, sign up here.
On Tuesday last week, Meta CEO Mark Zuckerberg released a blog post and video titled “More Speech and Fewer Mistakes.” Zuckerberg—whose previous self-acknowledged mistakes include the Cambridge Analytica data scandal, allowing a militia to put out a call to arms on Facebook that presaged two killings in Wisconsin, and helping to fuel a genocide in Myanmar—announced that Meta is done with fact checking in the US, that it will roll back “restrictions” on speech, and is going to start showing people more tailored political content in their feeds.
“I started building social media to give people a voice,” he said while wearing a $900,000 wristwatch.
While the end of fact checking has gotten most of the attention, the changes to its hateful speech policy are also notable. Among other things, the company will now allow people to call transgender people “it,” or to argue that women are property, or to claim homosexuality is a mental illness. (This went over predictably well with LGBTQ employees at Meta.) Meanwhile, thanks to that “more personalized approach to political content,” it looks like polarization is back on the menu, boys.
Zuckerberg’s announcement was one of the most cynical displays of revisionist history I hope I’ll ever see. As very many people have pointed out, it seems to be little more than an effort to curry favor with the incoming Trump administration—complete with a roll out on Fox and Friends.
I’ll leave it to others right now to parse the specific political implications here (and many people are certainly doing so). Rather, what struck me as so cynical was the way Zuckerberg presented Facebook’s history of fact-checking and content moderation as something he was pressured into doing by the government and media. The reality, of course, is that these were his decisions. He structured Meta so that he has near total control over it. He famously calls the shots, and always has.
Yet in Tuesday’s announcement, Zuckerberg tries to blame others for the policies he himself instituted and endorsed. “Governments and legacy media have pushed to censor more and more,” he said.
He went on: “After Trump first got elected in 2016, the legacy media wrote nonstop about how misinformation was a threat to democracy. We tried in good faith to address those concerns without becoming the arbiters of truth, but the fact-checkers have just been too politically biased and have destroyed more trust than they’ve created, especially in the US.”
While I’m not here to defend Meta’s fact checking system, I never thought it was particularly useful or effective, let’s get into the claims that it was done at the behest of the government and “legacy media.”
To start: The US government has never taken any meaningful enforcement actions against Meta whatsoever, and definitely nothing meaningful related to misinformation. Full stop. End of story. Call it a day. Sure, there have been fines and settlements, but for a company the size of Meta, these were mosquitos to be slapped away. Perhaps more significantly, there is an FTC antitrust case working its way through the court, but it again has nothing to do with censorship or fact-checking.
And when it comes to the media, consider the real power dynamics at play. Meta, with a current market cap of $1.54 trillion, is worth more than the combined value of the Walt Disney Company (which owns ABC news), Comcast (NBC), Paramount (CBS), Warner Bros (CNN), the New York Times Company, and Fox Corp (Fox News). In fact, Zuckerberg’s estimated personal net worth is greater than the market cap of any of those single companies.
Meanwhile, Meta’s audience completely dwarfs that of any “legacy media” company. According to the tech giant, it enjoys some 3.29 billion daily active users. Daily! And as the company has repeatedly shown, including in this week’s announcements, it is more than willing to twiddle its knobs to control what that audience sees from the legacy media.
As a result, publishers have long bent the knee to Meta to try and get even slivers of that audience. Remember the pivot to video? Or Instant Articles? Media has spent more than a decade now trying to respond or get ahead of what Facebook says it wants to feature, only for it to change its mind and throttle traffic. The notion that publishers have any leverage whatsoever over Meta is preposterous.
I think it’s useful to go back and look at how the company got here.
Once upon a time Twitter was an actual threat to Facebook’s business. After the 2012 election, for which Twitter was central and Facebook was an afterthought, Zuckerberg and company went hard after news. It created share buttons so people could easily drop content from around the Web into their feeds. By 2014, Zuckerberg was saying he wanted it to be the “perfect personalized newspaper” for everyone in the world. But there were consequences to this. By 2015, it had a fake news epidemic on its hands, which it was well aware of. By the time the election rolled around in 2016, Macedonian teens had famously turned fake news into an arbitrage play, creating bogus pro-Trump news stories expressly to take advantage of the combination of Facebook traffic and Google AdSense dollars. Following the 2016 election, this all blew up in Facebook’s face. And in December of that year, it announced it would begin partnering with fact checkers.
Zuckerberg elided all this inconvenient history. But let’s be real. No one forced him to hire fact checkers. No one was in a position to even truly pressure him to do so. If that were the case, he would not now be in a position to fire them from behind a desk wearing his $900,000 watch. He made the very choices which he now seeks to shirk responsibility for.
But here’s the thing, people already know Mark Zuckerberg too well for this transparent sucking up to be effective.
And while it may not be successful at winning MAGA over, at least the shamelessness and ignoring all past precedent is fully in character. After all, let’s remember what Mark Zuckerberg was busy doing in 2017:
Every week, I talk to one of MIT Technology Review’s journalists to go behind the scenes of a story they are working on. But this week, I turned the tables a bit and asked some of our editors to grill me about my recent story on the rise of generative search. Charlotte Jee: What makes you feel so sure that AI search is going to take off?
Mat: I just don’t think there’s any going back. There are definitely problems with it—it can be wild with inaccuracies when it cobbles those answers together. But I think, for the most part it is, to refer to my old colleague Rob Capps’ phenomenal essay, good enough. And I think that’s what usually wins the day. Easy answers that are good enough. Maybe that’s a sad statement, but I think it’s true.
Will Douglas Heaven: For years I’ve been asked if I think AI will take away my job and I always scoffed at the idea. Now I’m not so sure. I still don’t think AI is about to do my job exactly. But I think it might destroy the business model that makes my job exist. And that’s entirely down to this reinvention of search. As a journalist—and editor of the magazine that pays my bills—how worried are you? What can you—we—do about it?
Mat: Is this a trap? This feels like a trap, Will. I’m going to give you two answers here. I think we, as in MIT Technology Review, are relatively insulated here. We’re a subscription business. We’re less reliant on traffic than most. We’re also technology wonks, who tend to go deeper than what you might find in most tech pubs, which I think plays to our benefit.
But I am worried about it and I do think it will be a problem for us, and for others. One thing Rand Fishkin, who has long studied zero-click searches at SparkToro, said to me that wound up getting cut from my story was that brands needed to think more and more about how to build brand awareness. You can do that, for example, by being oft-cited in these models, by being seen as a reliable source. Hopefully, when people ask a question and see us as the expert the model is leaning on, that helps us build our brand and reputation. And maybe they become a readers. That’s a lot more leaps than a link out, obviously. But as he also said to me, if your business model is built on search referrals—and for a lot of publishers that is definitely the case—you’re in trouble.
Will: Is “Google” going to survive as a verb? If not, what are we going to call this new activity?
Mat: I kinda feel like it is already dying. This is anecdotal, but my kids and all their friends almost exclusively use the phrase “search up.” As in “search up George Washington” or “search up a pizza dough recipe.” Often it’s followed by a platform, search up “Charli XCX on Spotify.” We live in California. What floored me was when I heard kids in New Hampshire and Georgia using the exact same phrase.
But also I feel like we’re just going into a more conversational mode here. Maybe we don’t call it anything.
James O’Donnell: I found myself highlighting this line from your piece: “Who wants to have to learn when you can just know?” Part of me thinks the process of finding information with AI search is pretty nice—it can allow you to just follow your own curiosity a bit more than traditional search. But I also wonder how the meaning of research may change. Doesn’t the process of “digging” do something for us and our minds that AI search will eliminate?
Mat: Oh, this occurred to me too! I asked about it in one of my conversations with Google in fact. Blake Montgomery has a fantastic essay on this very thing. He talks about how he can’t navigate without Google Maps, can’t meet guys without Grindr, and wonders what effect ChatGPT will have on him. If you have not previously, you should read it.
Niall Firth: How much do you use AI search yourself? Do you feel conflicted about it?
Mat: I use it quite a bit. I find myself crafting queries for Google that I think will generate an AI Overview in fact. And I use ChatGPT a lot as well. I like being able to ask a long, complicated question, and I find that it often does a better job of getting at the heart of what I’m looking for — especially when I’m looking for something very specific—because it can suss out the intent along with the key words and phrases.
For example, for the story above I asked “What did Mark Zuckerberg say about misinformation and harmful content in 2016 and 2017? Ignore any news articles from the previous few days and focus only on his remarks in 2016 and 2017.” The top traditional Google result for that query was this story that I would have wanted specifically excluded. It also coughed up several others from the last few days in the top results. But ChatGPT was able to understand my intent and helped me find the older source material.
And yes, I feel conflicted. Both because I worry about its economic impact on publishers and I’m well aware that there’s a lot of junk in there. It’s also just sort of… an unpopular opinion. Sometimes it feels a bit like smoking, but I do it anyway.
The Recommendation
Most of the time, the recommendation is for something positive that I think people will enjoy. A song. A book. An app. Etc. This week though I’m going to suggest you take a look at something a little more unsettling. Nat Friedman, the former CEO of GitHub, set out to try and understand how much microplastic is in our food supply. He and a team tested hundreds of samples from foods drawn from the San Francisco Bay Area (but very many of which are nationally distributed). The results are pretty shocking. As a disclaimer on the site reads: “we have refrained from drawing high-confidence conclusions from these results, and we think that you should, too. Consider this a snapshot of our raw test results, suitable as a starting point and inspiration for further work, but not solid enough on its own to draw conclusions or make policy recommendations or even necessarily to alter your personal purchasing decisions.” With that said: check it out.
Jeff Sheldon is a designer turned entrepreneur. He started Ugmonk, a Pennsylvania-based direct-to-consumer brand, in 2008 as a seller of graphic-inspired t-shirts. His desktop organizers, which he added in 2020, are seemingly unrelated until realizing he designed both — the t-shirt graphics and the desk tools.
Jeff first appeared on the podcast in 2020. He had just moved t-shirt fulfillment in-house and launched a Kickstarter campaign for his first desktop tool.
In our recent conversation, he addressed phasing out the t-shirts, expanding the desktop line, and the dilemma of selling on Amazon. Our entire audio is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: Tell our listeners who you are.
Jeff Sheldon: I’m the founder of Ugmonk, a 16-year-old direct-to-consumer brand. Initially, we sold t-shirts, but we’ve evolved into well-designed, functional desk and organization products. One of our standout items is Analog, our desktop note card system to stay organized and reduce digital distractions. Ugmonk is known for design — aesthetics and functionality.
Folks associated Ugmonk with graphic tees for our first 12 years. I designed the graphics, and we eventually moved to manufacturing the shirts for improved quality. Working with a manufacturer in Los Angeles, we created a better garment. Despite the manufacturing challenges, we found a good rhythm and built a customer base around those shirts.
However, about two years ago, we stopped making apparel. Our business saw its highest single revenue day when we announced that change. Customers bought 20 to 50 shirts, not wanting to miss out. While leaving that part of the business behind was tough, I knew it was the right decision.
Bandholz: Have your apparel customers transitioned to desk products?
Sheldon: I haven’t dug deeply into the analytics, but surprisingly, many customers who bought our t-shirts have also purchased our desk products. At first glance, this might seem odd — how do t-shirts and desk accessories relate? However, Ugmonk attracts customers who appreciate design and functionality. Many customers who have been with us since the t-shirt days have moved into careers where they need quality, well-designed tools for their workspaces.
When I started Ugmonk, graphic tees were huge. Platforms like Threadless were popular, and many of my customers were in their teens and twenties, buying shirts and posters. Fast forward to now, and many customers have desk jobs or work from home. So, while some of our old customers still miss the shirts, many have moved on to the Analog system, which is now more popular than our peak apparel days.
The online t-shirt market is incredibly saturated. Everyone sells t-shirts, and countless brands use drop shipping to offer generic products. In the early years of Ugmonk, we thrived on organic growth — email lists and social media before it became pay-to-play. However, it was tough when we tried, in 2017, to scale using ads. Selling t-shirts through a Facebook ad, especially when competing against a sea of similar products, is difficult. We didn’t see much success.
In contrast, we launched the Analog system on Kickstarter in 2020 with immediate success. We raised almost half a million dollars from over 5,500 backers. We decided to invest in paid acquisition for the product, and it worked. It’s a visual product that solves a real problem — people are distracted by their devices, and the Analog system offers a tangible way to stay organized. Compared to t-shirts, selling Analog through advertising has been more scalable. It’s an example of a good product-market fit.
Bandholz: Has your role in the company changed?
Sheldon: My role has evolved, but I still handle many of the tasks I did in the early days. For instance, I still shoot most photos because I’m passionate about capturing our products in a way that tells their story. I could outsource photography, but I enjoy the creative aspect. Plus it’s a core part of our brand’s identity.
Our team has grown. It used to be just me. Then, I added an employee. Now we have two full-time employees and a part-time staff of two to five people, depending on our needs.
We’ve scaled operations with our in-house warehouse and fulfillment. I outsource some aspects of the business, like advertising, yet I’m still hands-on with organic marketing and writing most emails and my monthly “Five Things I’m Digging” newsletter, which has become a fan favorite.
Managing the creative and operational sides of the business is stressful, but it’s all part of the journey.
Bandholz: Ugmonk’s products are not on Amazon.
Sheldon: Amazon is a love-hate relationship for me, similar to Meta. In 2017, we tested our Gather desk organizers there but didn’t see much traction. So we pulled back. Amazon is flooded with cheap, knockoff products, making it hard for customers to distinguish between quality and subpar items.
I’ve become more open-minded lately. The reality is folks are shopping on Amazon — it’s where a significant percentage of ecommerce searches start.
I buy consumable items, like coffee filters, on Amazon for convenience. We’re considering selling refill cards for the Analog system there for the same reason. It’s about meeting people where they are. I still value owning our customer experience directly on our site, but Amazon can be complementary for certain products.
Bandholz: So listeners should go to your site to buy products.
According to Deloitte’s “2024 Connected Consumer” study, most U.S. consumers — Gen Zs, Millennials, Gen Xs, older — spend more time interacting with people online than in person. Moreover, most feel that online interactions build meaningful connections, viewing digital relationships equal to face-to-face.
Deloitte’s study explores the digital habits of U.S. consumers. Conducted by the firm’s Center for Technology, Media & Telecommunications, the June 2024 survey gathered insights from nearly 4,000 U.S. consumers. It examined their use of tech devices and services.
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According to the survey, 38% of respondents reported that they have either experimented with it or used generative AI for projects and tasks.
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Respondents to the Deloitte study stated experimenting with gen AI increased their confidence in producing quality content and creativity.
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Most generative AI users express interest in engaging with generative AI chatbots for various purposes.
Roman Zrazhevskiy is a survivalist of a sort. His company, Mira Safety, sells protective gear for seemingly existential events such as nuclear attacks or chemical warfare. He calls the threat of such events “red alerts,” when geopolitical crises prompt fear into consumers.
Zrazhevskiy first appeared on this podcast in 2021. In our recent conversation, he shared the evolution of Mira Safety, staffing strategies, growth plans, and more.
Our entire audio is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: Give us a rundown of your business.
Roman Zrazhevskiy: I own Mira Safety. We focus on protection from chemical, biological, radiological, and nuclear attacks. We sell directly to consumers through ecommerce, offering products like gas masks and hazmat suits. We also sell to government agencies and wholesale customers.
We launched Mira Safety in 2018, but I’ve been in the industry since 2013 with Ready to Go Survival, selling respirators without a lot of initial success. Then the Ebola scare happened in 2015. We call such events “red alerts,” geopolitical issues that lead people to buy emergency equipment. Another example was in 2017 when tensions arose between Donald Trump and Kim Jong Un of North Korea. That led to a surge of $50,000 in sales in just one week.
A red alert creates a massive uptick in demand. More recently, the Ukraine war in 2022 was our biggest red alert. Many thought the conflict might expand beyond Ukraine, possibly leading to a large-scale war between the East and West. Thankfully, that didn’t happen, but it sparked a wave of purchases.
Interestingly, as these events happen, people become a little more jaded. There’s a sense that each red alert doesn’t quite provoke the same fear as before. But if something catastrophic happened, like Russia attacking Poland, we’d likely see another massive spike in demand.
Bandholz: Your business thrives when the world is in crisis. How do you cope with that?
Zrazhevskiy: I don’t wrestle with it. We provide life-saving products. Our mission is to protect people, not hurt them. We’re more like an insurance provider. It’s a necessary service. We’re helping people prepare for the unimaginable, and I’m proud of that.
Bandholz: How do you manage between red alerts?
Zrazhevskiy: We keep things lean, avoid excessive spending, and keep reserves in case of a downturn. My rule is to set aside at least one year’s operating funds. Even if sales drop or a red alert doesn’t occur for a while, we can still run the business without making drastic cuts.
I’m conservative when it comes to debt. We don’t like borrowing money and take risks only with inventory and product launches. Our only significant debt is the mortgage on our headquarters building, and we plan to pay it off early.
Excess leverage can destroy a business, so I avoid it. I’ve seen many entrepreneurs go under because they borrowed too much and couldn’t recover when things didn’t go as planned. I prefer slow, steady, bootstrapped growth.
Bandholz: You’ve invested heavily into your physical workplace.
Zrazhevskiy: A strong company culture is important to us. We want people to work in the same building. Remote work has its advantages, but we’ve had issues with it. So, we decided to have most of our team in one location. The amenities, like saunas and red light therapy, are part of our wellness philosophy.
When employees feel good, they perform better. If our team is happy, healthy, and enjoys being here, they’ll likely be more productive and stay longer. Plus, I enjoy these things, and I want to share that with my team.
Bandholz: What are your long-term goals for the business?
Zrazhevskiy: Our mission is to protect people from the worst threats. That’s what drives us. We’re releasing more products, especially for children. There’s a lack of protective equipment for them. We’re one of a few companies offering children’s respirators. We provide protection for everyday families.
We’re also bringing a respirator assembly to the U.S. That’s our next big move. We’ve already ordered the machines, and once we start assembling here, we’ll apply for the certification from the National Institute for Occupational Safety and Health. That will open doors to more government contracts and allow us to sell to private companies that require NIOSH-rated products.
Planning for five years is hard, especially in a business like this. I’m also still learning, especially about manufacturing and leadership. There’s always room for improvement.
Last week, this space was all about OpenAI’s 12 days of shipmas. This week, the spotlight is on Google, which has been speeding toward the holiday by shipping or announcing its own flurry of products and updates. The combination of stuff here is pretty monumental, not just for a single company, but I think because it speaks to the power of the technology industry—even if it does trigger a personal desire that we could do more to harness that power and put it to more noble uses.
To start, last week Google Introduced Veo, a new video generation model, and Imagen 3, a new version of its image generation model.
Then on Monday, Google announced a breakthrough in quantum computing with its Willow chip. The company claims the new machine is capable of a “standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion (that is, 1025) years.” you may recall that MIT Technology Reviewcovered some of the Willow work after researchers posted a paper preprint in August. But this week marked the big media splash. It was a stunning update that had Silicon Valley abuzz. (Seriously, I have never gotten so many quantum computing pitches as in the past few days.)
Google followed this on Wednesday with even more gifts: a Gemini 2 release, a Project Astra update, and even more news about forthcoming agents called Mariner, an agent that can browse the web, and Jules, a coding assistant.
First: Gemini 2. It’s impressive, with a lot of performance updates. But I have frankly grown a little inured by language-model performance updates to the point of apathy. Or at least near-apathy. I want to see them do something.
So for me, the cooler update was second on the list: Project Astra, which comes across like an AI from a futuristic movie set. Google first showed a demo of Astra back in May at its developer conference, and it was the talk of the show. But, since demos offer companies chances to show off products at their most polished, it can be hard to tell what’s real and what’s just staged for the audience. Still, when my colleague Will Douglas Heaven recently got to try it out himself, live and unscripted, it largely lived up to the hype. Although he found it glitchy, he noted that those glitches can be easily corrected. He called the experience “stunning” and said it could be generative AI’s killer app.
On top of all this, Will notes that this week Google DeepMind CEO (the company’s AI division) Demis Hassabis was in Sweden to receive his Nobel Prize. And what did you do with your week?”
Making all this even more impressive, the advances represented in Willow, Gemini, Astra, and Veo are ones that just a few years ago many, many people would have said were not possible—or at least not in this timeframe.
A popular knock on the tech industry is that it has a tendency to over-promise and under-deliver. The phone in your pocket gives the lie to this. So too do the rides I took in Waymo’s self-driving cars this week. (Both of which arrived faster than Uber’s estimated wait time. And honestly it’s not been that long since the mere ability to summon an Uber was cool!) And while quantum has a long way to go, the Willow announcement seems like an exceptional advance; if not a tipping point exactly, then at least a real waypoint on a long road. (For what it’s worth, I’m still not totally sold on chatbots. They do offer novel ways of interacting with computers, and have revolutionized information retrieval. But whether they are beneficial for humanity—especially given energy debts, the use of copyrighted material in their training data, their perhaps insurmountable tendency to hallucinate, etc.—is debatable, and certainly is being debated. But I’m pretty floored by this week’s announcements from Google, as well as OpenAI—full stop.)
And for all the necessary and overdue talk about reining in the power of Big Tech, the ability to hit significant new milestones on so many different fronts all at once is something that only a company with the resources of a Google (or Apple or Microsoft or Amazon or Meta or Baidu or whichever other behemoth) can do.
All this said, I don’t want us to buy more gadgets or spend more time looking at our screens. I don’t want us to become more isolated physically, socializing with others only via our electronic devices. I don’t want us to fill the air with carbon or our soil with e-waste. I do not think these things should be the price we pay to drive progress forward. It’s indisputable that humanity would be better served if more of the tech industry was focused on ending poverty and hunger and disease and war.
Yet every once in a while, in the ever-rising tide of hype and nonsense that pumps out of Silicon Valley, epitomized by the AI gold rush of the past couple of years, there are moments that make me sit back in awe and amazement at what people can achieve, and in which I become hopeful about our ability to actually solve our larger problems—if only because we can solve so many other dumber, but incredibly complicated ones. This week was one of those times for me.
Every week, I talk to one of MIT Technology Review’s journalists to go behind the scenes of a story they are working on. This week, I hit up James O’Donnell, who covers AI and hardware, about his story on how the startup defense contractor Anduril is bringing AI to the battlefield.
Mat: James, you got a pretty up close look at something most people probably haven’t even thought about yet, which is how the future of AI-assisted warfare might look. What did you learn on that trip that you think will surprise people?
James: Two things stand out. One, I think people would be surprised by the gulf between how technology has developed for the last 15 years for consumers versus the military. For consumers, we’ve gotten phones, computers, smart TVs and other technologies that generally do a pretty good job of talking to each other and sharing our data, even though they’re made by dozens of different manufacturers. It’s called the “internet of things.” In the military, technology has developed in exactly the opposite way, and it’s putting them in a crisis. They have stealth aircraft all over the world, but communicating about a drone threat might be done with Powerpoints and a chat service reminiscent of AOL Instant Messenger.
The second is just how much the Pentagon is now looking to AI to change all of this. New initiatives have surged in the current AI boom. They are spending on training new AI models to better detect threats, autonomous fighter jets, and intelligence platforms that use AI to find pertinent information. What I saw at Anduril’s test site in California is also a key piece of that. Using AI to connect to and control lots of different pieces of hardware, like drones and cameras and submarines, from a single platform. The amount being invested in AI is much smaller than for aircraft carriers and jets, but it’s growing.
Mat: I was talking with a different startup defense contractor recently, who was talking to me about the difficulty of getting all these increasingly autonomous devices on the battlefield talking to each other in a coordinated way. Like Anduril, he was making the case that this has to be done at the edge, and that there is too much happening for human decision making to process. Do you think that’s true? Why is that?
James: So many in the defense space have pointed to the war in Ukraine as a sign that warfare is changing. Drones are cheaper and more capable than they ever were in the wars in the Middle East. It’s why the Pentagon is spending $1 billion on the Replicator initiative to field thousands of cheap drones by 2025. It’s also looking to field more underwater drones as it plans for scenarios in which China may invade Taiwan.
Once you get these systems, though, the problem is having all the devices communicate with one another securely. You need to play Air Traffic Control at the same time that you’re pulling in satellite imagery and intelligence information, all in environments where communication links are vulnerable to attacks.
Mat: I guess I still have a mental image of a control room somewhere, like you might see in Dr. Strangelove or War Games (or Star Wars for that matter) with a handful of humans directing things. Are those days over?
James: I think a couple things will change. One, a single person in that control room will be responsible for a lot more than they are now. Rather than running just one camera or drone system manually, they’ll command software that does it for them, for lots of different devices. The idea that the defense tech sector is pushing is to take them out of the mundane tasks—rotating a camera around to look for threats—and instead put them in the driver’s seat for decisions that only humans, not machines, can make.
Mat: I know that critics of the industry push back on the idea of AI being empowered to make battlefield decisions, particularly when it comes to life and death, but it seems to me that we are increasingly creeping toward that and it seems perhaps inevitable. What’s your sense?
James: This is painting with broad strokes, but I think the debates about military AI fall along similar lines to what we see for autonomous vehicles. You have proponents saying that driving is not a thing humans are particularly good at, and when they make mistakes, it takes lives. Others might agree conceptually, but debate at what point it’s appropriate to fully adopt fallible self-driving technology in the real world. How much better does it have to be than humans?
In the military, the stakes are higher. There’s no question that AI is increasingly being used to sort through and surface information to decision-makers. It’s finding patterns in data, translating information, and identifying possible threats. Proponents are outspoken that that will make warfare more precise and reduce casualties. What critics are concerned about is how far across that decision-making pipeline AI is going, and how much there is human oversight.
I think where it leaves me is wanting transparency. When AI systems make mistakes, just like when human military commanders make mistakes, I think we deserve to know, and that transparency does not have to compromise national security. It took years for reporter Azmat Khan to piece together the mistakes made during drone strikes in the Middle East, because agencies were not forthcoming. That obfuscation absolutely cannot be the norm as we enter the age of military AI.
Mat: Finally, did you have a chance to hit an In-N-Out burger while you were in California?
James: Normally In-N-Out is a requisite stop for me in California, but ahead of my trip I heard lots of good things about the burgers at The Apple Pan in West LA, so I went there. To be honest, the fries were better, but for the burger I have to hand it to In-N-Out.
The Recommendation
A few weeks ago I suggested Ca7riel and Paco Amoroso’s appearance on NPR Tiny Desk. At the risk of this space becoming a Tiny Desk stan account, I’m back again with another. I was completely floored by Doechii’s Tiny Desk appearance last week. It’s so full of talent and joy and style and power. I came away completely inspired and have basically had her music on repeat in Spotify ever since. If you are already a fan of her recorded music, you will love her live. If she’s new to you, well, you’re welcome. Go check it out. Oh, and don’t worry: I’m not planning to recommend Billie Eilish’s new Tiny Desk concert in next week’s newsletter. Mostly because I’m doing so now.
Lawmakers worldwide are recognizing the medicinal benefits of natural compounds, such as those in cannabis and mushrooms. Once considered dangerous “drugs,” both are now widely legal, and both are the focus of entrepreneur Alex Wolfe.
He co-founded a cannabis business in 2017, built a 650,000 sq. ft. growing facility, and took the company public. He now runs a mushroom-based nutritional supplement company called Eons, which he launched in 2021.
In our recent conversation, he shared the mission of Eons, the challenges of regulated industries, and more. Our entire audio is embedded below. The transcript has been edited for clarity and length.
Eric Bandholz: Give us your rundown.
Alex Wolfe: I’ve launched and sold several companies. The latest is Eons. It’s a nutritional supplement business combining mushrooms and biotechnology. Our goal is to make a massive impact on mental health.
In 2017, I co-founded what became one of the largest cannabis companies in Canada. We built a 650,000-square-foot facility in Quebec, got it licensed, and took it public. That experience taught me valuable lessons in entrepreneurship. It was a wild two-year ride.
Mushrooms have the potential to impact both physical health and mental health, even on a spiritual level. My current focus is how mushrooms, especially in microdoses, can heal and improve mental well-being.
Trailblazing so-called “high-risk” industries like cannabis and mushrooms has challenges, especially with banking, payment processors, and marketing. But we eventually found solutions. Some people were willing to take a chance and work with us. If you’re determined, there’s always a way to make things work. Even now, as we bring a legal psychedelic microdose product to market, we face regulatory hurdles. But we always manage to find solutions.
Bandholz: What are the hurdles?
Wolfe: Psychedelics encompass a broad category. The word itself means “soul-revealing,” helping people access parts of their consciousness. Many psychedelics have mind-altering effects, ranging from mild to intense. Microdosing is on the tame end, yet it can be incredibly healing when done with intention.
At Eons, we focus on responsibly stewarding psychedelic mushrooms to show people that microdosing, when done correctly, can have amazing benefits without downside side effects. Our flagship product, Dialed, is a true microdose with 14 patents on its delivery technology, allowing precise dosing and quick onset. It helps people move from stress and anxiety to calm and observe their thoughts.
Bandholz: How do you market Eons?
Wolfe: We’re careful about making claims. Dialed falls under the dietary supplement category, so we can’t say certain things. But we’re heavily focused on science and data to support the product’s effects.
My business partner leads our research efforts. We’re exploring natural psychedelic compounds that can benefit mental health without causing hallucinogenic effects. Over time, Dialed repairs the GABA receptors in the brain, which regulate fear and anxiety. After using it for three to four weeks, people often notice that triggers no longer cause stress.
We’re working on brain mapping and neuroscience to show how it creates new neural pathways, helping people respond to situations in healthier ways.
Our marketing strategy, again, is rooted in science and data. We’re conducting a study with 100 veterans to show how Dialed helps with anxiety, post-traumatic stress syndrome, and addiction issues. Many veterans struggle with mental health, and if we can demonstrate the product’s impact on their well-being, it’s a win-win.
The data we collect will boost credibility and legitimacy. We also want to help young men and women struggling with social media comparison and identity issues. Our goal is to impact mental health and societal challenges positively.
Adobe estimates U.S. shoppers spent $41.1 billion online in the five days from Thanksgiving 2024 through Cyber Monday. Shopify says global merchants on its platform received $11.5 billion in revenue from Black Friday through Cyber Monday.
The $137.14 million in sales on TikTok Shop for 2024 Black Friday ($85.9 million) and Cyber Monday ($51.24 million) may seem small, but the platform is little more than a year old, with growth ratesfar exceeding most retailers and marketplaces.
Charm.io is a U.S.-based data provider helping retailers, sales teams, and investors with in-depth industry analytics, including the TikTok Shop performance metrics in this recap.
According to Charm, from Black Friday 2024 through Cyber Monday, Tarte Cosmetics (makeup) emerged as the top-performing brand on U.S. TikTok Shop, generating an impressive $15.33 million in revenue. Goli Nutrition (supplements) followed with $9.17 million, and Halara (female apparel) secured the third spot with $7.28 million.
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The top-performing products highlighted diverse consumer interests. The Flybird Vibration Plate Exercise Machine led with $1.17 million in revenue from 15,940 sold units, followed by the Rhino USA Retractable Ratchet Straps ($981,190, 21,0000 units) and the ecozy Nugget Ice Maker ($930,650, 8,360 units).
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U.S. TikTok Shop’s top categories from Black Friday through Cyber Monday underscored broad consumer appeal. “Beauty & Personal Care” led with $51.11 million in revenue, followed by “Womenswear” with $26.47 million, and “Sports & Outdoors” at $19.21 million.
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Per Charm.io, livestreams were a powerful sales driver, with the 14-hour “Black Friday Knockout!” from Canvas Beauty Brand (hair and skin products) generating $2.10 million in revenue from 2.25 million viewers. The “Cyber Monday Mega Live” 10-hour event from Simply Mandys (cosmetics) stood out with $667,430 in sales and 1.49 million viewers.
This week, OpenAI announced what it calls the 12 days of OpenAI, or 12 days of shipmas. On December 4, CEO Sam Altman took to X to announce that the company would be “doing 12 days of openai. each weekday, we will have a livestream with a launch or demo, some big ones and some stocking stuffers.”
The company will livestream about new products every morning for 12 business days in a row during December. It’s an impressive-sounding (and media-savvy) schedule, to be sure. But it also speaks to how tight the race between the AI bigs has become, and also how much OpenAI is scrambling to build more revenue.
While it remains to be seen whether or not they’ve got AGI in a pear tree up their sleeve, and maybe putting aside whether or not Sam Altman is your true love, the man can ship. OpenAI has been a monster when it comes to actually getting new products out the door and into the hands of users. It’s hard for me to believe that it was just two years ago, almost exactly, that it released ChatGPT. That was a world-changing release, but was also just one of many. The company has been on an absolute tear: Since 2022, it’s shipped DALL-E 2, DALL-E 3, GPT-4, ChatGPT Plus, a realtime API, GPT-4o, an advanced voice mode, a preview version of a new model called o1, and a web search engine. And that’s just a partial list.
When it kicked off its 12-days shenanigans on Thursday, it was with an official roll out of OpenAI o1 and a new, $200-per-month service called ChatGPT Pro. Friday morning, it followed that up with an announcement about a new model customization technique.
If the point you have taken away from all this is that OpenAI is very, very bad at naming things, you would be right. But! There’s another point to be made, which is that the stuff it is shipping is not coming out in a vacuum anymore, as it was two years ago. When DALL-E 2 shipped, OpenAI seemed a little like the only game in town. That was still mostly true when ChatGPT came out a few months later. But those releases sent Google into full-on freakout mode, issuing a “code red” to catch up. And then it was off to the races.
Now, there is a full-scale sprint happening between OpenAI, Google (which released its Gemini models to the public almost exactly a year ago), Anthropic (which was founded by a bunch of OpenAI formers), Meta, and, to some extent, Microsoft (OpenAI’s partner).
To wit: A little over a month ago, Anthropic unveiled a bananas demo of its chatbot Claude’s ability to use a computer. On Thursday (aka: the first day of shipmas), Microsoft announced a version of CoPilot that can follow along with you while you browse the web using AI vision. And ahead of what is widely predicted to be OpenAI’s biggest release of shipmas, its new video generation tool Sora, Google jumped ahead with its own generative video product, Veo (although it has not released it widely to the public yet).
Oh. There was also one other announcement from OpenAI, just ahead of shipmas, that seems relevant. On Wednesday, it announced a new partnership with defense contractor Anduril. Some of you may remember that OpenAI is the company that had once pledged not to let its technology be used for weapons development or the military. As James O’Donnell points out, “OpenAI’s policies banning military use of its technology unraveled in less than a year.”
This is notable in its own right, but also in crystallizing just how much OpenAI needs cold hard cash. See also: the new $200-per-month ChatGPT Pro tier. (And while recurring revenue from users will bring in some much-needed cash flow, there is a fortune in defense spending.) In addition, the company is looking into bringing paid advertisements to its services, according to its CFO Sarah Friar in an interview with the FT way back in … (checks watch) … Monday.
As has been oft-discussed, OpenAI is just incinerating piles of money. It’s on track to lose billions and billions of dollars for several more years. It has to start bringing in more revenue, lots more. And to do that it has to stay ahead of its rivals. And to do that, it has to get new, compelling products to market that are better in some way than what its competitors offer. Which means it has to ship. And monetize. And ship. And monetize. Because Google and Anthropic and Meta and a host of others are all going to keep coming out with new products, and new services too.
The arms race is on. And while the 12 days of shipmas may seem jolly, internally I bet it feels a lot more like Santa’s workshop on December 23. Pressure’s on. Time to deliver.
If someone forwarded you this edition of The Debrief, you can subscribe here. I appreciate your feedback on this newsletter. Drop me a line at mat.honan@technologyreview.com with any and all thoughts. And of course, I love tips.
Every week, I talk to one of MIT Technology Review’s journalists to go behind the scenes of a story they are working on. This week, I hit up Amanda Silverman, our features and investigations editor, about our big story on the way the war in Ukraine is reshaping the tech sector in eastern Europe.
Amanda: I think that’s pretty spot on. Though maybe it’s more accurate to say, less expensive, more-easily-built tech products. It’s all relative, right? Like, the retrofitted consumer drones that have been so prevalent in Ukraine over the past few years are vastly cheaper than traditional weapons systems, and what we’re seeing now is that lots of other tech that was initially developed for civilian purposes—like, Pete reported on a type of scooter—are being sent to the front. And again, these are much, much cheaper than traditional weaponry. And they can be developed and shipped out really quickly.
The other thing Pete found was that this tech is being quickly reworked to respond to battlefield feedback—like that scooter has been customized to carry NATO standard-sized bullet boxes. I can’t imagine that happening in the old way of doing things.
Mat: It’s move fast and (hope not to) break things, but for war…. There is also this other, much scarier idea in there, which is that the war is changing, maybe has changed, Eastern Europe’s tech sector. What did Pete find is happening there?
Amanda: So a lot of the countries neighboring Ukraine are understandably pretty freaked out by what happened there and how the country had to turn on a dime to respond to the full-scale invasion by Russia. At the same time, Pete found that a lot of people in these countries, particularly in Latvia and particularly leading tech startups, have been inspired by how Ukrainians mobilized for the war and they’re trying to sort of get ahead of the potential enemy and get ready for a conflict within their borders. It’s not all scary, to be clear. It’s arguably somewhat thrilling to see all this innovation happening so quickly and to have some of the more burdensome red tape removed.
Mat: Okay so Russia’s neighbors are freaked out, as you say, understandably. Did anything about this story freak you out?
Amanda: Yeah, it’s impossible to ignore that there is a huge, scary risk here, too: as these companies develop new tech for war, they have an unprecedented opportunity to test it out in Ukraine without going through the traditional development and procurement process—which can be slow and laborious, sure, but also includes a lot of important testing, checks and balances, and more to prevent fraud and lots of other abuses and dangers. Like, Pete nods to how Clearview AI was deploying its tech to identify Russian war dead, which is scary in and of itself and also may violate the Geneva Conventions.
Mat: And then I’m curious, what do you look for when you are assigning a story like this? What caught your attention?
Amanda: I felt like I’d read quite a bit about the total mobilization of Ukrainian society (including a story from Pete inWired). But I had sort of thought about all this activity as happening in a bit of a vacuum. Or at least in a limited sense, within Ukrainian borders. Of course, the US and our European allies are sending loads of money and loads of weapons but (at least as I understand it) they’re largely weapons we already have in our arsenals. So when Pete pitched us this story about how the war was reshaping the tech sector of Ukraine’s neighbors, particularly civilian tech, I was really intrigued.
The Recommendation
Several weeks ago, we had our e-bike stolen. Some guy with an angle iron cut the lock. And as it turned out, our insurance didn’t cover the loss because the bike (like almost all e-bikes) had a top speed above 15 mph. As I came to learn, this is not uncommon. But you know what is common? E-bike theft. The police told us there is little chance of recovering our bike—in large part because we did not have a tracker attached to it. It was an all-around frustrating experience. We replaced the bike, and this time I’ve invested in one of these Elevation Labs waterproof mounts to affix an AirTag to the frame, hidden away below the seat. They have a whole line of mounts, a few of which are bike-specific. Much cheaper than a new bike. They make a good stocking stuffer.
