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The changing nature of startup employment, OpenAI’s e-commerce ambitions, and Powell’s future

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5 months ago

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It has been, to say the least, a wild week in the private markets. I’m taking you briefly inside my reporter’s notebook. (I do have both a literal notebook, and a Google Doc, for anyone wondering.) Here are some themes I’m watching, thinking, and hearing lots of chatter about: 

– Those left behind: If you think about it, joining a startup is a little crazy. In many cases, a startup employee leaves behind a stable job at a longstanding company where their next several years of life can, more or less, be planned. But at a startup, anything can happen, for better or worse. That’s what people sign up for—an adventure. Along with the prospect of some decent financial upside. 

And that’s something that’s come into question in recent days, as the social media ruckus over the Windsurf deal ballooned, followed by Scale cutting 14% of its staff (about 200 employees) Wednesday in the aftermath of its $14 billion Meta deal. Layoffs happen—we all get that—but a deal worth billions that potentially doesn’t account for all early employees is a tough pill to swallow. (To be sure, the full terms of these deals, particularly how they treat employee equity, are not known. It’s possible that the employees, even those laid off, will make out OK. If you have insight, hit me up!). 

Beyond the specific cases of Scale or Windsurf, what I find most interesting is that we’re having a broader conversation about the startup employee social contract. The classic story where an entrepreneur mints hundreds of millionaires by building a generational company, to me, is still the greatest societal good of venture-backed startups. We may be living less and less in a world like that, but I hope not. (If you have thoughts on how deals like Scale and Windsurf will affect conventions for startup employees moving forward, email me! That’s our Friday essay.)

– OpenAI buy: It may seem that no one is left at OpenAI given the seemingly ceaseless reports of Meta’s talent poaching, but the $300 billion AI bellwether still has some tricks up its sleeve. The Financial Times reported that OpenAI is working on a checkout system for online sales that would be tied to the LLM and through which OpenAI would take a cut. The search-shopping intersection isn’t a new one, but I do think this is far more interesting and points at the potential for AI business models to expand beyond premium subscriptions (it also strikes me as something I’d be more likely to engage with as a consumer than, say, an OpenAI phone.) As the hunt for revenue in AI continues, don’t be surprised if we see more e-commerce-AI intersections this year. 

– Trump’s Powell problem: The markets turned frenetic when reports initially emerged yesterday that Trump may fire Fed Chair Jerome Powell. For years Trump has called Powell a “very stupid person” and a “knucklehead,” so it was a surprise when Trump fired back that it was “highly unlikely” he’d fire Powell. (Per the Supreme Court, Trump does not have unilateral authority to fire Powell, whose term as chair ends in 2026.) Trump wants to see interest rates cut, as does a large swath of the private markets. But would that even be all that good of a thing?

After all, the famed boom of 2021 and 2022 derived its name, the ZIRP (zero interest rate policy) era, from the Fed. An intense bust followed, rescued by AI, where valuations have soared to stratospheric heights. So, the interest rate cut that Trump’s looking for could help the exit environment, but could also have concerning knockdown effects. As always, I would love to know what you think.

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Venture Deals

– Exodigo, a Palo Alto-based AI-powered underground mapping solution provider, raised $96 million in Series B funding. Zeev Ventures and Greenfield Partners the round and were joined by Vintage Investment Partners, Leblon Capital, and existing investors 10D, Square Peg and JIBE.

– Exein, a Rome-based cybersecurity company, raised €70 million ($81.3 million) in Series C funding. Balderton led the round and was joined by Supernova and Lakestar, as well as existing investors 33N, United Ventures and Partech. 

– Boulevard, a Los Angeles-based client experience platform for appointment based, self-care businesses, raised $80 million in Series D funding. JMI Equity led the round and was joined by existing investors Index Ventures and VMG Partners. 

– One Biosciences, a Paris-based AI-driven driven oncology solutions company, raised €15 million ($17.4 million) in Series A funding. Redmile Group and Blast led the round and were joined by Galion.exe, Invus, Adamed Technology, Sofinnova Partners, Polytechnique Ventures, and Kima Ventures. 

– Gen Phoenix, a recycled leather manufacturer, raised $15 million in funding. Material Impact led the round and was joined by existing investor Tapestry. 

– Empirical Security, a Chicago-based AI-powered cybersecurity company, secured $12 million in seed funding. Costanoa Ventures led the round. 

– Retirable, a New York City-based holistic retirement planning platform, raised $10 million in Series A funding. IA Capital Group led the round and was joined by Nationwide Ventures, Western & Southern Financial Group, Clocktower Ventures, and existing investors Primary Venture Partners, Portage Ventures, Vestigo Ventures and SilverCircle.

– Billee, a Dallas-based utility management platform, raised $9.15 million in seed funding. RET Ventures led the round. 

– BQP, a Syracuse-based quantum-first simulation company, raised $5 million in seed funding. Monta Vista Capital led the round and was joined by New York Ventures, Arc Ventures, Armory Square Ventures, and more.

– Coverflow, a San Francisco-based AI insurance platform, raised $4.8 in seed funding. AIX Ventures led the round and was joined by Founder Collective and Afore Capital. 

– Kiku, a Copenhagen-based AI-powered recruitment platform, raised €4 million ($4.6 million) in seed funding. Cherry Ventures led the round and was joined by Yellow and others.

– Mango, a Mexico-based fintech platform for the construction industry in Latin America, raised $3 million in seed funding. Ironspring Ventures led the round and was joined by Brick & Mortar Ventures, Great North Ventures, and Incisive Ventures. 

– Paypercut, a Bulgarian-based payments aggregation platform, raised €2 million ($2.3 million) in pre-seed funding.  Concentric led the round and was joined by Passion Capital, RTP Global, Tuesday Capital, and more.

– Hootology, a New York City-based market research platform, raised $1.1 million in pre-seed funding. JAD Family Revocable Trust led the round. 

Private Equity

– Rydoo, backed by Marlin Equity Partners and Eurazeo, acquired Semine, an Oslo-based AI-driven accounts payable automation platform. Financial terms were not disclosed. 

– PrecisionX, backed by CORE Industrial Partners, acquired Hudson Technologies, an Ormond, Fla.-based provider of specialty deep and shallow drawn stamping. Financial terms were not disclosed. 

– Unity Partners acquired a majority stake in The Byng Group, a Toronto-based residential renovations company. Financial terms were not disclosed. 

– KKR acquired a minority stake in ghSMART, a Chicago-based leadership advisory firm. Financial terms were not disclosed. 

– Abacus Group and Medicus IT, both backed by FFL Partners, merged to launch a new multi-vertical IT managed services provider exclusively focused on the financial services and healthcare industries. Financial terms were not disclosed. 

– Bessemer Venture Partners acquired a minority stake in StayTerra, a Bradenton, Fla.-based vacation rental management platform. Financial terms were not disclosed. 

– CASE, backed by AE Industrial Partners, acquired Ragnarok Technologies, a Reston, Va.-based IT services provider for federal and commercial clients. Financial terms were not disclosed. 

– Frontier Growth acquired a minority stake in EPR Fireworks, a Jacksonville, Fla.-based records management and operations software company for fire and emergency medical services agencies. Financial terms were not disclosed. 

Exits

– CEA CAPA Education Abroad, backed by Infinedi Partners, acquired CIS Abroad, an Easthampton, Mass.-based provider of education abroad programs, from Global Educators. Financial terms were not disclosed. 

– Warburg Pincus acquired a majority stake in Keystone Agency Partners, a Harrisburg, Penn.-based insurance broker and agency network, from Bain Capital, which launched Keystone in 2020. Bain Capital will retain a minority ownership in Keystone through a new investment from Bain Capital Insurance. Financial terms were not disclosed. 

– NexPhase Capital acquired Empower Community Care, an Atlanta-based behavioral health organization, from Northlane Capital Partners. Financial terms were not disclosed. 

Other

– Rokt agreed to acquire Canal, a San Francisco-based marketplace growth platform. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

– Pantheon, a London-based private equity firm, raised $2.2 billion for its third fund focused on absolute and risk-adjusted returns across a broad and diversified range of credit strategies and investments. 



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Senate Dems’ plan to fix Obamacare premiums adds nearly $300 billion to deficit, CRFB says

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8 hours ago

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December 5, 2025

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The Committee for a Responsible Federal Budget (CRFB) is a nonpartisan watchdog that regularly estimates how much the U.S. Congress is adding to the $38 trillion national debt.

With enhanced Affordable Care Act (ACA) subsidies due to expire within days, some Senate Democrats are scrambling to protect millions of Americans from getting the unpleasant holiday gift of spiking health insurance premiums. The CRFB says there’s just one problem with the plan: It’s not funded.

“With the national debt as large as the economy and interest payments costing $1 trillion annually, it is absurd to suggest adding hundreds of billions more to the debt,” CRFB President Maya MacGuineas wrote in a statement on Friday afternoon.

The proposal, backed by members of the Senate Democratic caucus, would fully extend the enhanced ACA subsidies for three years, from 2026 through 2028, with no additional income limits on who can qualify. Those subsidies, originally boosted during the pandemic and later renewed, were designed to lower premiums and prevent coverage losses for middle‑ and lower‑income households purchasing insurance on the ACA exchanges.

CRFB estimated that even this three‑year extension alone would add roughly $300 billion to federal deficits over the next decade, largely because the federal government would continue to shoulder a larger share of premium costs while enrollment and subsidy amounts remain elevated. If Congress ultimately moves to make the enhanced subsidies permanent—as many advocates have urged—the total cost could swell to nearly $550 billion in additional borrowing over the next decade.

Reversing recent guardrails

MacGuineas called the Senate bill “far worse than even a debt-financed extension” as it would roll back several “program integrity” measures that were enacted as part of a 2025 reconciliation law and were intended to tighten oversight of ACA subsidies. On top of that, it would be funded by borrowing even more. “This is a bad idea made worse,” MacGuineas added.

The watchdog group’s central critique is that the new Senate plan does not attempt to offset its costs through spending cuts or new revenue and, in their view, goes beyond a simple extension by expanding the underlying subsidy structure.

The legislation would permanently repeal restrictions that eliminated subsidies for certain groups enrolling during special enrollment periods and would scrap rules requiring full repayment of excess advance subsidies and stricter verification of eligibility and tax reconciliation. The bill would also nullify portions of a 2025 federal regulation that loosened limits on the actuarial value of exchange plans and altered how subsidies are calculated, effectively reshaping how generous plans can be and how federal support is determined. CRFB warned these reversals would increase costs further while weakening safeguards designed to reduce misuse and error in the subsidy system.

MacGuineas said that any subsidy extension should be paired with broader reforms to curb health spending and reduce overall borrowing. In her view, lawmakers are missing a chance to redesign ACA support in a way that lowers premiums while also improving the long‑term budget outlook.

The debate over ACA subsidies recently contributed to a government funding standoff, and CRFB argued that the new Senate bill reflects a political compromise that prioritizes short‑term relief over long‑term fiscal responsibility.

“After a pointless government shutdown over this issue, it is beyond disappointing that this is the preferred solution to such an important issue,” MacGuineas wrote.

The off-year elections cast the government shutdown and cost-of-living arguments in a different light. Democrats made stunning gains and almost flipped a deep-red district in Tennessee as politicians from the far left and center coalesced around “affordability.”

Senate Minority Leader Chuck Schumer is reportedly smelling blood in the water and doubling down on the theme heading into the pivotal midterm elections of 2026. President Donald Trump is scheduled to visit Pennsylvania soon to discuss pocketbook anxieties. But he is repeating predecessor Joe Biden’s habit of dismissing inflation, despite widespread evidence to the contrary.

“We fixed inflation, and we fixed almost everything,” Trump said in a Tuesday cabinet meeting, in which he also dismissed affordability as a “hoax” pushed by Democrats.​

Lawmakers on both sides of the aisle now face a politically fraught choice: allow premiums to jump sharply—including in swing states like Pennsylvania where ACA enrollees face double‑digit increases—or pass an expensive subsidy extension that would, as CRFB calculates, explode the deficit without addressing underlying health care costs.



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Netflix–Warner Bros. deal sets up $72 billion antitrust test

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8 hours ago

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December 5, 2025

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Netflix Inc. has won the heated takeover battle for Warner Bros. Discovery Inc. Now it must convince global antitrust regulators that the deal won’t give it an illegal advantage in the streaming market. 

The $72 billion tie-up joins the world’s dominant paid streaming service with one of Hollywood’s most iconic movie studios. It would reshape the market for online video content by combining the No. 1 streaming player with the No. 4 service HBO Max and its blockbuster hits such as Game Of Thrones, Friends, and the DC Universe comics characters franchise.  

That could raise red flags for global antitrust regulators over concerns that Netflix would have too much control over the streaming market. The company faces a lengthy Justice Department review and a possible US lawsuit seeking to block the deal if it doesn’t adopt some remedies to get it cleared, analysts said.

“Netflix will have an uphill climb unless it agrees to divest HBO Max as well as additional behavioral commitments — particularly on licensing content,” said Bloomberg Intelligence analyst Jennifer Rie. “The streaming overlap is significant,” she added, saying the argument that “the market should be viewed more broadly is a tough one to win.”

By choosing Netflix, Warner Bros. has jilted another bidder, Paramount Skydance Corp., a move that risks touching off a political battle in Washington. Paramount is backed by the world’s second-richest man, Larry Ellison, and his son, David Ellison, and the company has touted their longstanding close ties to President Donald Trump. Their acquisition of Paramount, which closed in August, has won public praise from Trump. 

Comcast Corp. also made a bid for Warner Bros., looking to merge it with its NBCUniversal division.

The Justice Department’s antitrust division, which would review the transaction in the US, could argue that the deal is illegal on its face because the combined market share would put Netflix well over a 30% threshold.

The White House, the Justice Department and Comcast didn’t immediately respond to requests for comment. 

US lawmakers from both parties, including Republican Representative Darrell Issa and Democratic Senator Elizabeth Warren have already faulted the transaction — which would create a global streaming giant with 450 million users — as harmful to consumers.

“This deal looks like an anti-monopoly nightmare,” Warren said after the Netflix announcement. Utah Senator Mike Lee, a Republican, said in a social media post earlier this week that a Warner Bros.-Netflix tie-up would raise more serious competition questions “than any transaction I’ve seen in about a decade.”

European Union regulators are also likely to subject the Netflix proposal to an intensive review amid pressure from legislators. In the UK, the deal has already drawn scrutiny before the announcement, with House of Lords member Baroness Luciana Berger pressing the government on how the transaction would impact competition and consumer prices.

The combined company could raise prices and broadly impact “culture, film, cinemas and theater releases,”said Andreas Schwab, a leading member of the European Parliament on competition issues, after the announcement.

Paramount has sought to frame the Netflix deal as a non-starter. “The simple truth is that a deal with Netflix as the buyer likely will never close, due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad,” Paramount’s antitrust lawyers wrote to their counterparts at Warner Bros. on Dec. 1.

Appealing directly to Trump could help Netflix avoid intense antitrust scrutiny, New Street Research’s Blair Levin wrote in a note on Friday. Levin said it’s possible that Trump could come to see the benefit of switching from a pro-Paramount position to a pro-Netflix position. “And if he does so, we believe the DOJ will follow suit,” Levin wrote.

Netflix co-Chief Executive Officer Ted Sarandos had dinner with Trump at the president’s Mar-a-Lago resort in Florida last December, a move other CEOs made after the election in order to win over the administration. In a call with investors Friday morning, Sarandos said that he’s “highly confident in the regulatory process,” contending the deal favors consumers, workers and innovation. 

“Our plans here are to work really closely with all the appropriate governments and regulators, but really confident that we’re going to get all the necessary approvals that we need,” he said.

Netflix will likely argue to regulators that other video services such as Google’s YouTube and ByteDance Ltd.’s TikTok should be included in any analysis of the market, which would dramatically shrink the company’s perceived dominance.

The US Federal Communications Commission, which regulates the transfer of broadcast-TV licenses, isn’t expected to play a role in the deal, as neither hold such licenses. Warner Bros. plans to spin off its cable TV division, which includes channels such as CNN, TBS and TNT, before the sale.

Even if antitrust reviews just focus on streaming, Netflix believes it will ultimately prevail, pointing to Amazon.com Inc.’s Prime and Walt Disney Co. as other major competitors, according to people familiar with the company’s thinking. 

Netflix is expected to argue that more than 75% of HBO Max subscribers already subscribe to Netflix, making them complementary offerings rather than competitors, said the people, who asked not to be named discussing confidential deliberations. The company is expected to make the case that reducing its content costs through owning Warner Bros., eliminating redundant back-end technology and bundling Netflix with Max will yield lower prices.



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The rise of AI reasoning models comes with a big energy tradeoff

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9 hours ago

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December 5, 2025

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Nearly all leading artificial intelligence developers are focused on building AI models that mimic the way humans reason, but new research shows these cutting-edge systems can be far more energy intensive, adding to concerns about AI’s strain on power grids.

AI reasoning models used 30 times more power on average to respond to 1,000 written prompts than alternatives without this reasoning capability or which had it disabled, according to a study released Thursday. The work was carried out by the AI Energy Score project, led by Hugging Face research scientist Sasha Luccioni and Salesforce Inc. head of AI sustainability Boris Gamazaychikov.

The researchers evaluated 40 open, freely available AI models, including software from OpenAI, Alphabet Inc.’s Google and Microsoft Corp. Some models were found to have a much wider disparity in energy consumption, including one from Chinese upstart DeepSeek. A slimmed-down version of DeepSeek’s R1 model used just 50 watt hours to respond to the prompts when reasoning was turned off, or about as much power as is needed to run a 50 watt lightbulb for an hour. With the reasoning feature enabled, the same model required 7,626 watt hours to complete the tasks.

The soaring energy needs of AI have increasingly come under scrutiny. As tech companies race to build more and bigger data centers to support AI, industry watchers have raised concerns about straining power grids and raising energy costs for consumers. A Bloomberg investigation in September found that wholesale electricity prices rose as much as 267% over the past five years in areas near data centers. There are also environmental drawbacks, as Microsoft, Google and Amazon.com Inc. have previously acknowledged the data center buildout could complicate their long-term climate objectives. 

More than a year ago, OpenAI released its first reasoning model, called o1. Where its prior software replied almost instantly to queries, o1 spent more time computing an answer before responding. Many other AI companies have since released similar systems, with the goal of solving more complex multistep problems for fields like science, math and coding.

Though reasoning systems have quickly become the industry norm for carrying out more complicated tasks, there has been little research into their energy demands. Much of the increase in power consumption is due to reasoning models generating much more text when responding, the researchers said. 

The new report aims to better understand how AI energy needs are evolving, Luccioni said. She also hopes it helps people better understand that there are different types of AI models suited to different actions. Not every query requires tapping the most computationally intensive AI reasoning systems.

“We should be smarter about the way that we use AI,” Luccioni said. “Choosing the right model for the right task is important.”

To test the difference in power use, the researchers ran all the models on the same computer hardware. They used the same prompts for each, ranging from simple questions — such as asking which team won the Super Bowl in a particular year — to more complex math problems. They also used a software tool called CodeCarbon to track how much energy was being consumed in real time.

The results varied considerably. The researchers found one of Microsoft’s Phi 4 reasoning models used 9,462 watt hours with reasoning turned on, compared with about 18 watt hours with it off. OpenAI’s largest gpt-oss model, meanwhile, had a less stark difference. It used 8,504 watt hours with reasoning on the most computationally intensive “high” setting and 5,313 watt hours with the setting turned down to “low.” 

OpenAI, Microsoft, Google and DeepSeek did not immediately respond to a request for comment.

Google released internal research in August that estimated the median text prompt for its Gemini AI service used 0.24 watt-hours of energy, roughly equal to watching TV for less than nine seconds. Google said that figure was “substantially lower than many public estimates.” 

Much of the discussion about AI power consumption has focused on large-scale facilities set up to train artificial intelligence systems. Increasingly, however, tech firms are shifting more resources to inference, or the process of running AI systems after they’ve been trained. The push toward reasoning models is a big piece of that as these systems are more reliant on inference.

Recently, some tech leaders have acknowledged that AI’s power draw needs to be reckoned with. Microsoft CEO Satya Nadella said the industry must earn the “social permission to consume energy” for AI data centers in a November interview. To do that, he argued tech must use AI to do good and foster broad economic growth.



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