The federal government shut down after midnight last night. Capitol Hill is snarled by a partisan impasse, with no word as to which side might cave, work across the aisle, and try to garner the votes needed to pass a new spending bill.
The last government shutdown was at the end of 2018during President Trump’s first term in officeand lasted into the early part of 2019. At 35 days, it was the longest shutdown in four decades.
As for what caused this latest shutdown? In the simplest terms, a previously passed bill to fund the federal governments operations expired as of Wednesday, October 1. The House and Senate need to pass a new spending bill, which then needs to be signed by the president, to keep the federal government operating.
That hasnt happened, and may not happen anytime soon.
But while government shutdowns are not all that unusual, this shutdown is differentand for a simple reason: the Republican Party, which has majorities in both the House and Senate, as well as the White House, may have little or no motivation to reopen the government.
‘It’s very difficult to see what the exit strategy is’
Traditionally, politicians and elected officials have incentives to keep the government operating as smoothly as possible. This shows that theyre effective leaders, for one, and that they are capable of actually governing. If theyre unable to handle those basic aspects of their job descriptions as elected officials, conventional wisdom suggests that voters will make them pay for it at the ballot box.
However, despite the prospect of electoral blowback, the majority party, in this case, appears to actually be relishing in the current circumstances.
The administration has historically been motivated to minimize the harm to the public . . . and that was even true for the previous shutdown during the first Trump term, says Max Stier, president and CEO of the nonprofit Partnership for Public Service, who has worked in all three branches of the federal government starting in the early 1980s.
This time, the administration appears interested in using the shutdown to do extra damage to the government and the public, Stier adds. Its very difficult to see what the exit strategy ison one hand, you have an administration that wants to use the government to diminish the government, and the other side is motivated by an enraged base that wants them to make a stand. This is how [the Democrats] have chosen to do so.
Since Trump took office early this year, he has presided over widespread spending cuts and reductions in government services. The shutdown, in some ways, actually works toward his administration’s goals of reducing the size and scope of the government.
The president has even threatened mass layoffs in the event of a shutdown, something that goes way beyond the typical funding impasse rhetoric.
And now that the government has in fact shut down, key services, far and wide, are either reduced or mothballed until a new spending bill is passed. Tens of thousands of government employees are or will be furloughed, laid off, or made to work without pay.
The White House and its supporters in the GOP-controlled Congress appear unfazedat least for now. Democrats, conversely, are incentivized by their own voters, and those voters have been clamoring for the party to stop making concessions.
In terms of specific sticking points, Democrats want Republicans to fund healthcare subsidies to reduce premium costs for millions of Americans, which Republicans have, so far, balked at.
So negotiations have devolved into a partisan blame game, with both parties hoping that voters will blame the other side for the shutdown.
For evidence of how much worse the rhetoric is this time around, visit the website of the U.S. Department of Housing and Urban Development (HUD), whose home page currently displays a bright-red banner denouncing the “Radical Left in Congress.”
Screenshot via HUD.gov
What the parties are saying about blame
In a joint statement, Democratic House Minority Leader Hakeem Jeffries and Senate Minority Leader Chuck Schumer said that after months of making life harder and more expensive, Donald Trump and Republicans have now shut down the federal government because they do not want to protect the healthcare of the American people.
Democrats remain ready to find a bipartisan path forward to reopen the government in a way that lowers costs and addresses the Republican healthcare crisis. But we need a credible partner, the statement continued.
Senate Majority Leader John Thune has cast the blame on Democrats, as reported by Fox News.
We simply asked Democrats to extend existing funding levels to allow the Senate to continue the bipartisan appropriations work that we started, he said. “And Senate Democrats said no, he added. “Why? Because far-left interest groups and far-left Democrat members wanted a showdown with the president. And so, Senate Democrats have sacrificed the American people to Democrats’ partisan interests.
Senator Ted Cruz, another stalwart Republican, echoed Thune in a statement of his own.
Senator Schumer and the Democrats have made it clear that they intend to shut down the federal government,” he said. “Their demands include taxpayer-funded healthcare for illegal aliens and a reversal of the Republican reforms blocking handouts to able-bodied adults who refuse to work.”
As for whether the back-and-forth is making a meaningful impact, it remains to be seen. A poll, published on Tuesday by NPR/PBS News/Maris, showed that 38% of respondents blame Republicans for the shutdown, 27% blame Democrats, and 31% blame both.
Whats next?
Its difficult to predict what happens next. In all likelihood, itll depend on which side blinks first, and which side sees members signal their willingness to vote for a new funding bill.
Reporting from Punchbowl News, published Wednesday morning, notes that three Democratic senators have agreed to vote for a Republican-backed stopgap funding bill. But five more would need to come on board to pass it, as it would need a total of 60 votes in the Senate. And then the House would need to pass it as well.
While there may be movement in response to voter sentiment in the days ahead, in the more immediate term, the back-and-forth public blame game will likely continue.
But experts like Stier expect the country is in for a lengthy shutdown. The American people, he says, will start to feel the effects as the shutdown drags on. In time, that could incentivize legislators to move toward a solution, even if it means ending up with egg on their face.
Everybody gets hurt, and therell be some direct damage to people losing services, Stier says. I worry were not looking at a day-long shutdown, or even a lengthy one, like we had at the end of 2018. This could be much longer.
President Donald Trump’s administration said Wednesday it was putting a hold on roughly $18 billion to fund a new rail tunnel beneath the Hudson River between New York City and New Jersey and the city’s expanded Second Avenue subway project because of the government shutdown.
The White House budget director, Russ Vought, said on a post on X that the step was taken due to the Republican administrations belief the money was based on unconstitutional diversity, equity and inclusion principles.
In a statement, the U.S. Transportation Department said that it had been reviewing whether any unconstitutional practices were occurring in the two massive infrastructure projects but that the government shutdown had forced it to furlough the staffers conducting the review.
“This is another unfortunate casualty of radical Democrats reckless decision to hold the federal government hostage to give illegal immigrants benefits,” the statement reads.
The suspension of funds is likely meant to target Senate Democratic leader Chuck Schumer of New York, whom the White House is blaming for the shutdown.
In a 2023 interview with The Associated Press, Schumer said he and then-President Joe Biden were both giddy over the rail tunnel project, adding that it was all they talked about in the presidential limousine as they rode to the site.
New York Gov. Kathy Hochul, a Democrat, reacting to the development at a news conference about the federal government shutdown, told reporters, The bad news just keeps coming, adding that “theyre trying to make culture wars be the reason why.
Thats what a partnership with Washington looks like as were standing here. Weve done our part. Were ready to build. Its underway, she said. And now we realize that theyve decided to put their own interpretation of proper culture ahead of our needs, the needs of a nation.
The Hudson River rail tunnel is a long-delayed project whose path toward construction has been full of political and funding switchbacks. Its intended to ease the strain on a 110-year-old tunnel connecting New York and New Jersey. Hundreds of Amtrak and commuter trains carry hundreds of thousands of passengers per day through the tunnel, and delays can ripple up and down the East Coast between Boston and Washington
The Second Avenue subway was first envisioned in the 1920s. The subway line along Manhattans Second Avenue was an on-again, off-again grail until the first section opened on Jan. 1, 2017. The state-controlled Metropolitan Transportation Authority is working toward starting construction on the second phase of the line, which is to extend into East Harlem.
Josh Boak, Associated Press
Associated Press writers Anthony Izaguirre and Jennifer Peltz contributed to this report.
Not long after U.S. housing prices reached a record high this summerthe median existing home went for $435,000 in JunePresident Donald Trump said that he was considering a plan to make home sales tax-free.
Supporters of the idea, introduced by U.S. Rep. Marjorie Taylor Greene as the No Tax on Home Sales Act in July, say it would benefit working families by eliminating all taxes on the sales of family homes.
But most Americans who sell their homes already do so tax-free. And the households that would gain most under Trumps proposals are those with the most valuable real estate.
As a legal scholar who studies how taxes affect racial and economic inequality, I see this proposal as part of a familiar pattern: measures advertised as relief for ordinary families that mostly benefit the well-off.
Most families already sell their homes tax-free
Right now, according to the Internal Revenue Code, a single person pays no tax on the first $250,000 in gain from a home sale, while married people can exclude $500,000. All told, about 90% of home sales generate less than $500,000 in gains, so the overwhelming majority of sellers already owe no tax.
The minority who would see new benefits from the proposed tax change are those with more than $500,000 in appreciation, typically owners of high-priced homes in hot real estate markets. Yales Budget Lab estimated the average benefit for these tax-free sales was $100,000 per qualifying seller.
Homeownership itself isnt equally distributed across the U.S. population. About 44% of Black Americans are homeowners, compared with 74% of white Americans. That racial gap has only widened over the past 10 years. Similarly, single womenparticularly but not exclusively women of colorface additional barriers.
A broader trend of upward wealth transference
Though still just a proposal, the tax-free home sales bill is part of a broader set of Republican tax plans that would have regressive effectsthat is, where the vast majority of benefits go to high-income people and very few to low-income peopleunder a pro-worker banner.
Trump floated the tax-free home sales idea less than three weeks after he signed a large package of tax and spending measures in July 2025. That bill generated strong public criticism because of its emphasis on tax savings for the rich at the expense of almost a trillion dollars in cuts for federally funded healthcare for the poor and disabled.
The home sales idea follows the same scriptand echoes the distributional pattern established by his 2017 Tax Cuts and Jobs Act. That tax reform increased racial wealth and income disparities and provided 80% of its benefits to corporations and high-income individuals. In fact, my research shows that white households received more than twice as many tax cuts as Black households from that law.
The same dynamic plays out in this new tax-fueled housing policy. Eliminating capital gains taxes on home sales would primarily benefit the 29 million homeowners who already have substantial equitya group that skews heavily white, male, and upper middle class. Meanwhile, Americas millions of renters, disproportionately people of color and women, would receive no benefit while potentially losing access to social programs Congress must cut to fund these tax breaks.
Beverly Moran is a professor emerita of law at Vanderbilt University.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Zillow is facing mounting legal battlesincluding a lawsuit Tuesday brought by the Federal Trade Commission alleging that Zillow paid rival Redfin $100 million to exit and stop competing in the online apartment rental listings market.
The FTC claims the arrangementframed publicly as a partnershipwas in fact an unlawful anticompetitive agreement that eliminated Redfin as a meaningful competitor in the online rental space.
According to the complaint, filed in U.S. District Court for the Eastern District of Virginia, the February 2025 deal required Redfin to terminate its advertising contracts, step away from competing in multifamily property advertising for up to nine years, and act solely as a syndicator of Zillows rental listings.
The FTC alleges the arrangement not only harmed Redfin employeeshundreds of whom were laid offbut also renters and property managers, who now face reduced competition, higher costs, and fewer innovations in rental search platforms.
Paying off a competitor to stop competing against you is a violation of federal antitrust laws,” wrote Daniel Guarnera, Director of the FTCs Bureau of Competition, in a press release published on September 30. Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising marketone thats critical for renters, property managers, and the health of the overall U.S. housing market. The FTC will do our part to ensure that Americans who are looking for safe, affordable rentals receive all the benefits of robust competition between internet listing services like Zillow and Redfin.
The suit is the fourth major legal challenge filed against Zillow in just over three months, underscoring growing scrutiny of the companys business practices:
June 23, 2025: Compass filed an antitrust lawsuit alleging Zillows ban on private listings was anticompetitive and harmed brokerages.
July 30, 2025: Commercial real estate giant CoStar sued Zillow for copyright infringement, seeking more than $1 billion in damages.
September 19, 2025: A class-action lawsuit was filed against Zillow, accusing the company of hiding agent fees within its Flex referral program.
September 30, 2025: The FTC filed its suit alleging Zillows $100 million agreement with Redfin was designed to suppress competition in rental advertising.
The rapid-fire succession of lawsuitsspanning copyright, antitrust, consumer protection, and federal enforcementhas put Zillow under one of the most intense legal spotlights in its corporate history.
The outcomes could ripple well beyond Zillow itself, potentially influencing how much choice, transparency, and information consumers have when navigating the housing market. This will be something to watch in 2026 and beyond.
TikTok is a one-stop-shop for recipe inspo, viral dance trends, tin-foil-hat conspiracies, and, increasingly, political commentary. Now, its also where one in five Americans are getting their news.
Thats according to a Pew Research Center analysis published last week, which has tracked a dramatic uptick in news consumption on the platform, up from just 3% in 2020. During that span, no social media platform weve studied has experienced faster growth in news consumption, Pew noted.
In Pews survey, 43% of adults under 30 said they regularly get their news on TikTok, up from 9% five years ago. But it’s not just younger people. A quarter of adults between the ages of 30 and 49 also regularly turn to TikTok as a news source, compared to just 2% in 2020.
This analysis is based on Pews survey of 5,153 U.S. adults between August 18 and 24.
While the researchers focused only on adult TikTok users, overall more than half of TikTok users (55%) now say they regularly get news on the platform, up from 22% in 2020. TikTok is now on par with several other social media sites including X (formerly Twitter), Facebook and Truth Social in the share of its adult users who regularly get news there, researchers wrote.
The tide on TikTok has been turning for some time, with more and more media outlets and independent journalists adapting to reach new audiences and doubling down on vertical video. These days, snappy, shareable content, delivered in 30 seconds or less, is far more likely to hook audiences shrinking attention spans than long form reporting.
The quality of this news content is another story. Since much of this content comes from individual creators, or newsfluencers, rather than established news organizations, fact and opinion can often be presented interchangeably, and misinformation can spread quickly.
News delivered directly to the FYP, courtesy of a highly individualized algorithm, has the problem of sinking people further and further into echo chambers of their own creation.
It then begs the question: What kind of news are we each consuming?
Factory activity shrank in much of the world last month, private surveys showed on Wednesday, as signs of a slowdown in U.S. growth and the anticipated impact of President Donald Trump’s tariffs added to pressure from weak Chinese demand.
Euro zone manufacturing slipped back into contraction as new orders fell at their fastest rate in six months, with export markets acting as a particular drag, signalling that the recovery in the region’s industrial sector was fragile.
The HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 49.8 in September from August’s 50.7, which was the first reading above the 50.0-point line denoting growth since mid-2022.
“The drop in the PMI is showing up across the board, with respective figures for consumer goods, capital goods and intermediate goods all down on the month,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Surveys revealed a split across the currency union with the Netherlands leading the expansion with activity at a 38-month high while growth continued in Greece, Ireland and Spain. Meanwhile, the bloc’s three largest economies Germany, France and Italy all registered contractions.
In Britain, outside the European Union, activity shrank at the fastest pace in five months, reflecting subdued domestic demand and fewer export orders, painting a more downbeat picture than recent official data.
In Asia, the stress on manufacturers highlights the challenge policymakers face in protecting their export-reliant region from higher U.S. levies, a key policy of the Trump administration that has upended the global trade order and put the brakes on economic growth.
Export powerhouse Japan and global tech hub Taiwan saw manufacturing activity shrink in September, the surveys showed, leaving businesses in Asia heavily dependent on the U.S. market on a fragile footing.
Worryingly, China, a key engine of the global economy, also remained in the doldrums.
An official survey released on Monday showed manufacturing activity in the world’s second-biggest economy contracted for a sixth month in September, dragged down by weak consumption and the squeeze from U.S. tariffs.
The prolonged slump underlines the twin pressures on China’s economy: Domestic demand has failed to mount a durable recovery in the years since the coronavirus pandemic, while Trump’s tariffs have squeezed Chinese factories as well as overseas firms that buy components.
“The September PMI readings for most countries in Asia remained weak and we continue to expect manufacturing activity in the region to struggle in the near term,” said Shivaan Tandon, emerging markets economist at Capital Economics.
“With growth set to soften and inflation likely to remain contained, we expect central banks in Asia to loosen policy further.”
The S&P Global Japan Manufacturing PMI fell to 48.5 in September from 49.7 in August, staying below the 50.0 threshold. It shrank at the fastest pace in six months due to steep falls in output and new orders, the survey showed.
Taiwan’s manufacturing PMI fell to 46.8 last month. Factory activity also shrank in the Philippines and Malaysia, the private surveys showed.
By contrast, South Korea’s factory activity expanded for the first time in eight months underpinned by improving overseas demand. The manufacturing PMI in Asia’s fourth-largest economy, released by S&P Global, rose to 50.7 in September, moving above the 50-mark for the first time since January 2025.
The outlook for South Korea’s exporters, however, hinges on negotiations to formalise a July deal aimed at reducing U.S. tariffs on Korean goods imports including automobiles to 15% from 25% in return for South Korea’s investment of $350 billion in the U.S. The talks have stalled due to Seoul’s concerns over foreign exchange implications.
India’s manufacturing sector expansion lost some momentum and slipped to its weakest pace in four months, suggesting Washington’s punitive 50% tariffs on its goods could be starting to hurt Asia’s third-largest economy.
Jonathan Cable and Leika Kihara, Reuters
Discontent has surged across U.S. society, largely defined the last three presidential elections, and now appears set to challenge business owners in the workplace. The rising sense of grievance expressed across all demographic groups has reached new highs, according to a new survey, with both companies and their CEOs suffering some of the biggest drops in trust among respondents.
The rising tide of acrimony and accusation recorded in the 25th Annual Edelman Trust Barometer shouldnt be too surprising for anyone who followed the November election campaignsor who just listens to conversations in the office and shop floor. Whether it was Democrats warning of a fascist threat to democracy or Republicans complaining about woke reverse discrimination, the expression of victimized resentment has grown ever louder within American discourse in recent years. And it doesnt just apply to politics. Nearly 60 percent of U.S. respondents to the new Edelman poll reported their sense of grievance against business, government, and the rich is moderate or higher than before, which is generating some worrying consequences.The U.S. figure is only slightly below the average 61% grievance expressed by the 33,000 people Edelman questioned in its global survey. The key drivers of that sentiment were perceptions that companies and governments make decisions that negatively affect most people while only serving a select few.
That figured into the wider prevailing view that political and economic systems are structured to favor the richwho were said to grow wealthier from those arrangements all the time. Not surprisingly, that resulting distrust of governments, businesses, and media was expressed in larger numbers by lower and modest-earning people than affluent participants.
Meanwhile, nearly two-thirds of respondents said the threat of discrimination has increased since 2024, including 14% more whites in the U.S. expressing that view compared to last yearthe largest increase the poll recorded. Fears of job losses were also higher in the 2025 survey, with 62% of global participants citing artificial intelligence (AI) and globalization as top threats.
Only a third of worldwide participants thought the situation would be better for following generations, with just 20% believing the once prevalent belief that things would continue improving in the future.
Those varied sources of disgruntlementand feelings of injusticewere linked to the surveys most disturbing finding. Fully 40% of people said they approved of of hostile activism to drive change. That included attacking people online, intentionally spreading disinformation, threatening or committing violence, and damaging public or private property if that served to attain a desired outcome.
That belief was highest among people aged 18 to 34 at 53%, with 41% of those in the 35-to-54-year bracket also agreeing. That represents a large percentage of society now thinking those means justify the ends they seeka sentiment made clear following the murder last month of UnitedHealthcare CEO Brian Thompson.
Much of that may sound characteristic of the domestic and international political conflicts that led to the 2021 storming of Congress or countless protests of the violence between Israel and Palestinians. But the wider atmosphere of rising grievance in which those occurred has now become a concern that business owners need to prepare forand be able to respond to if it arises in their workplaces.
Should that happen, it may make difficulties adjusting to the reportedly challenging attitudes of many Gen Z employees seem quaint.
The reason: With both views of business competence and ethics plunging to below 50% between 2020 and 2025, the increasing groan of grievance may grow louder and more defiant over time, possibly aired directly at company managers and owners. Thats why leaders need to prepare for the eventuality.
(People) with a higher sense of grievance are more likely to believe that business is not doing enough to address societal issues, the Edelman report said. To navigate these expectations, understand where you have obligations, act on behalf of your stakeholders, and advocate for your organization.
That margin for companies to respond positively to what may outwardly seem to be social complaints is created by a contradiction in the survey’s findings. While it established that trust in business has continued to dropwhile grievances significantly increasethat rising unhappiness also reflects expectations for companies do something to resolve the problems employees see as sources of discontent.
For example, grievance levels were particularly high regarding companies not going far enough to address issues like climate change, cost of living affordability, discrimination, and retraining as jobs come under threat from AI and other tech. At the same time, while distrust in all CEOs increased, it was limited when participants were asked about their own bosses.
Still, as Edelman CEO Richard Edelman points out, that rising volume of grievance is increasingly likely to be voiced in the workplace as it spreads. When it does, companies and managers will need to be ready to offer positive responsesawaiting the necessary remedial actions from other social, economic, and governmental institutions also being held responsible.
“Business is facing backlash from those opposing its role as a catalyst for societal change,” said Edelman. “Moving back from a grievance-based society will require a cross-institution effort to address issues like information integrity, affordability, sustainability, and the future of AI.
According to the surveys analysis, that can only come from business, government, media, and NGOs addressing the core causes behind rising grievances, with reactions that nurture broad-based trust, growth, and prosperity.
By Bruce Crumley
This article originally appeared on Fast Company‘s sister publication, Inc.
Inc. is the voice of the American entrepreneur. We inspire, inform, and document the most fascinating people in business: the risk-takers, the innovators, and the ultra-driven go-getters that represent the most dynamic force in the American economy.
Last week, two Andreessen Horowitz (a16z) LP decks leaked to Newcomer. As far as I (and Google and ChatGPT) can tell, this is only the second time ever that internal Andreessen Horowitz documents have leaked. The firm is notoriously secretive.
I am much too humble and my fund is much too insignificant to seriously believe that my Substack from September 3Andreessen Horowitz is not a Venture Capital Fundand its subsequent republishing on Fast Company could possibly have annoyed the Sand Hill Road behemoth so much that it decided to leak its own LP deck for the first time in history.
But you gotta love the timing.
Regardless of why the decks were leaked or by whom, the data they contain is a rare look at how the firm has evolved. I spent some time yesterday afternoon trying to piece together a picture of a16zs profits, based on whats publicly known, and the new data that leaked. I hesitate to share them in full because any detailed conclusion requires too many assumptions to be useful. But I will tell you three indisputable takeaways from my analysis:
Andreessen has made a lot of money for its investors.
Andreessen has made a lot of money for itselfby my calculations, somewhere between a third and half of what its returned to all of its investors combined.
A very sizable chunk of its revenue has been from management feesat least 25%, likely a lot more.
Which brings me back to the post I had been planning to share this week before the leak:
The disruption of venture capital
Three years ago, I wrote a piece titled, A great disruption is coming for venture capital.
For context, after graduating business school, I worked with Clayton Christensenthe man who developed the theory of disruptive innovation, whom I also studied under while at Harvard. His body of work is among the most impactful in the history of management science, because it predicts why and how massively successful companiesthe incumbents in an industrycan make all the right, rational strategy decisions, only to be disrupted by lower-cost, higher-access upstarts.
As you might imagine, working for the guy shaped how I see the world to this day.
Even before I started VC investing, I realized venture capital was on a predictable path to disruption. Looking at venture through Christensens lens, I saw big funds moving upmarket, leaving the door open to disruptors (in this case, smaller emerging funds) to eat the category from the bottom up.
Key to the theory of disruptive innovation is the idea that incumbents are incentivized to focus on their most profitable customers, in order to capture more revenue and higher margins. In doing so, they leave their less profitable customers for the taking. Upstarts come in with a right-sized alternative, and get better over time, until all or most customerseven the biggest, most profitable onesflock to them. This is how incumbents get disrupted.
This is how I recently realized that one key part of my initial analysis was wrong.
I wasnt wrong at the headline level: Incumbent VC funds (aka megafunds) are absolutely getting disrupted.
I was wrong about who their customer is.
As an early stage VC, I believe the founder is my customer. If I do right by them, Ill be massively successful in the long term. This is how I run my fund to this day, and its the lens through which I published the original disruption of venture capital essay.
But after raising my own funds, Ive come to realize that, when it comes to how VCs make money, the founder is not the customerthe limited partners (LP) or the people and institutions that invest in VC funds are. Which means that incumbent funds arent moving upmarket because theyre chasing their most profitable founderstheyre moving upmarket because theyre chasing their most profitable LPs.
How Andreessen Horowitz makes money
Lets go back to the leaked decks. a16zs most recently announced fund from earlier this year claimed $7.2 billion of assets under management. Assuming standard VC terms (2% fee, 1% stepped down fee, 10 year fund term), a16z would make $144 million per year in fees alone during the investment period, and half of that amount every year after that until the end of the fund cycle.
If you add up the fees a16z is earning from every one of its reported funds, assuming the standard VC terms above, then this year it stands to make about $700 million in fees alone. Given the limitations of the data that leaked, its hard to tell how much it makes in carry (its mixed in with recycled capital in the slide). But, needless to say, it is a lot of money.
Andreessen Horowitz is now reportedly raising a $20 billion fund. If successful, this new fund will net the firm another $400 million per year on fees alone during the investment period.
In other words: The bigger the fund, the bigger the fees. As you raise more funds, the fees accumulate. Its a sweet business model.
I mean this honestly: Can you blame these guys for chasing the biggest LPs and pitching increasingly gigantic funds, considering how much they stand to make here? Thats why they keep inventing new strategies to absorb and deploy more and more capital. Because you cant cost-effectively deploy $20 billion in small, high alpha, early stage rounds. It needs to deploy big numbers. So that it can raise even bigger funds.
And this is exactly what incumbents moving upmarket looks like. Literally a textbook example. I wish Clay were still alive so I could talk to him about it.
What Christensen would say happens next
As incumbents move upmarket, they leave the bottom of the market ripe for disruption. Small funds, disciplined early stage investors, and emerging managers are the ones filling the gap. Because of our fund sizes, fees are tinythis sector of the market makes money off the carry, not the fee, in perfect alignment with our LPs, which our LPs also love. The best of these disruptive managers are hungrier, more aligned, nd structurally motivated to find alpha-rich founders and ideasexactly what LPs want.
Over time, more and more LPs will realize this, and will add a pocket for new VC to their portfolios. These upstart funds will thrivehistorically, smaller and emerging funds return way more to their investors. And eventually, this emerging layer of investors will become the true, new venture capital industry.
The megafunds will continue to make money, right up until the opportunity to deploy it profitably in gigantic pre-IPO megarounds disappears. Theyll be competing with large asset allocators, not only for deals, but more critically, for LP dollars. At that point, theyll have a choice.
They can fully morph into asset managers, more like banks and hedge funds; they can try to disrupt from within; or they can join the ranks of bygone incumbents of yore.
Why this matters
I wrote about this last time more at length, but its worth revisiting. As megafunds move upmarket, their deployment strategy doesnt resemble venture capital anymoretheyre making large consensus bets and competing away the alpha.
If youre a non-consensus founder planning to pitch consensus funds, my advice is just to know before you go, and dont be discouraged by the outcome. Find true VC fundsearly, non-consensus, founder-firstand prioritize pitching there. And dont take your eye off your traction.
If youre a VC investor, know your strategy and stick to it. Alpha is being eaten away by consensus firms. If you dont have the assets under management (AUM) to compete at that level, discipline and focus are key.
And finally, if youre an LPknow what youre investing in. If your VC portfolio is all consensus funds, Id venture to say you no longer have true, alpha-seeking VC exposure. Thats why more and more LPs are starting to shape an emerging fund strategysmaller allocations by design, just like their original VC portfolio from 20 to 30 years ago, before todays incumbents morphed into megafunds.This article was originally published in Leslie Feinzaigs Venture With Leslie newsletter.
If youve ever flipped over a Walmart snack or frozen pizza to check the ingredients list, the companys about to make that label a whole lot cleaner. The retail giant just announced its giving its U.S. private food brands a major makeover, cutting out synthetic dyes and dozens of other additives you probably cant pronounce.
Altogether, the retailer is removing synthetic dyes and 30 ingredients from store brands including Bettergoods, Freshness Guaranteed, Great Value, and Marketside. Artificial sweeteners, certain preservatives, and fat substitutes are among the ingredients being phased out.
The full list of every synthetic dye and ingredient being removed is available in Walmarts announcement.
The company will start releasing reformulated products in the coming months and plans to completely remove the ingredients by January 2027. It states that its working with private brand suppliers to adjust formulations and source alternative ingredients, while preserving the same great taste customers have come to expect.
According to Walmart, 90% of its U.S private food brand products are already synthetic dye free.
As motivation, it points to a survey it conducted which found that 62% of customers want more transparency and 54% of customers read the ingredients list on their food.
However, the news also follows a recent push by the U.S. Department of Health and Human Services (HHS) and Food and Drug Administration (FDA) for companies to voluntarily remove synthetic dyes by the end of 2026.
Brands such as General Mills and Nestlé have announced plans to phase out dyes. In June, Walmart-owned Sams Club said it would get rid of over 40 ingredients, such as artificial dyes and sweeteners.
Last week, in subway stations and train cars across all five boroughs of New York City, stark black-and-white print ads appeared featuring a variety of servile messages.
Ill never leave dirty dishes in the sink, one read. Ill never bail on our dinner plans, another said. Ill binge the entire series with you, a third promised.
The adswhich rolled out on September 25 in the form of more than 11,000 car cards, 1,000 platform posters, and 130 urban panelsare part of a massive outdoor campaign for Friend, a wearable AI company billed as a portable companion. Since the campaign rolled out, it has received overwhelming criticism from local New Yorkers, with many of the ads being defaced with graffiti calling the product AI trash, surveillance capitalism, and a tool to profit off of loneliness.
But, according to Friends founder Avi Schiffmann, provoking backlash was the whole point of the campaign. Schiffmann, a 22-year-old tech developer and Harvard dropout, has been working on Friend since April 2023, raising about $7 million in total venture capital to launch the brand. (Friend is open to preorder at a price of $129. Schiffmann says,about 1,000 orders have been shipped out of a total 5,000 sales. Any orders placed today, he added, will likely be received around November.)
The wearable looks a bit like an Apple AirTag on a necklace. Friend is designed to be always-on to hear whatever the wearer says (as well as any other noise theyre near), use AI to process those inputs, and formulate its own responses, which it then sends via text message to the wearer. The more you talk to it, the more you build up a relationship with it. And thats really the whole goal of the product, Schiffmann told Fast Company in July 2024. He added, I definitely talk to it more than I talk to real people sometimes. Its probably my most consistent friend.
Fast Company sat down with Schiffmann to discuss the campaign, how hes responding to backlash, and whats next for Friend. This interview has been edited and condensed for clarity.
This campaign cost $1 million. Can you tell me about why you decided to make such a big investment in traditional advertising, especially as an AI-driven company?
I honestly think it’s quite cheap, and actually saving me a lot of money to do it this way.
I just felt like it was a cool idea. I mean, the campaign is 100% print, and there’s, there’s nothing digital going on at all. I left a lot of white space on purpose so that we become this social commentary. I want to turn West 4th Street into an international destination for people to come visit New York and see these two tunnels that are covered in these big wallscapes of Friend ads that anyone can just take a marker and draw stuff on.
The MTA seems to be replacing them, because people are ripping them off the walls or writing profanity on them. Thats pretty cool to seeI mean, that’s never happened before in the history of out-of-home advertising, that a campaign literally just gets ripped off the walls repeatedly. But I expected that would happen. [Editor’s note: The MTA declined Fast Company‘s request for comment.]
[Screenshots: Twitter/X]
New York City is the most social place, probably, in the world. I think that the goal of the campaign is to work on redefining what a friend is or can be. I would call it a huge success already.
There’s so many conversations all around the world about the future of relationships. I got a text the other night from one of my friends who goes to art school in Spain, and they told me that all of their friends were talking about it that werent even in tech whatsoever. All the way in Spain! Some random-ass town. You cant really buy that.
And it all leads back to friend.com. I don’t expect that the world is the customer right now, but I know that they probably will be in the future. I think this culture will change . . . I’m kind of purchasing the zeitgeist and mindshare right now, and I think that will prove to be extremely valuable later on.
You mention that you think this will save you money in the long run. Can you expand on what you mean by that?
It saves money in having to market it otherwise. I could be some bozo and go pay a bunch of dumbass influencers to go yap about it for hours, be irrelevant, and spend millions of dollars over many years to get even a fraction of what I could get for something like this.
I’m in New York right now, and I feel like I’m standing above the greatest artwork the city has seen since, I don’t know, quite a while.
Im very inspired by The Gates [editor’s note: famed landscape artists Christo and Jean-Claude had been trying to bring this artwork to New York City since 1980, finally succeeding in 2005], which was an exhibit in New York, I think like 20 years ago, where they kind of had those . . . you know what I’m talking about?
I dont . . .
It was a pretty famous thing in New York, where like all through Central Park they had these kinds of tunnels you could go through, and it was like an international destination that a lot of people came to visit to go see. And that’s kind of what I’m intending with the subway campaign.
Christo and Jeanne-Claude’s The Gates, in Central Park, 2005. [Photo: David Handschuh/NY Daily News Archive/Getty Images]
So do you see it less as directly contributing to sales and more as ust getting the word out about the company and getting this major visibility?
Yeah, definitely. If I wanted it to convert, I would probably have a very different website and subway campaign ads. Overall, yes, I do want sales, but I’m playing the long-term game for the most part. I think I always have with every decision I’ve made with this company. I think it’ll look pretty cool in a couple years. I understand right now people have a visceral hatred towards it, but it’s interestingthe audience completes the work.
Youve mentioned that New York was a good location [for the campaign] because people in New York seem to not like AI. Why do you get that vibe? How do you think it’s different in San Francisco?
I’m also doing the campaign in Los Angeles for a similar reason. I suppose it’s not even necessarily that I think people hate AI. I think it’s just relevant, and New York is the capital of the world, and this is the most relevant place for me to then do a campaign like that. I don’t like to hedge in any single thing that I do, and I feel like this is just the penultimate example of that.
Largest NYC subway campaign everHappening now pic.twitter.com/xOtxMsh4pj— Avi (@AviSchiffmann) September 26, 2025
Like, if you want to purchase the zeitgeist, you kind of have to go for the jugular. I could spend millions of dollars and many years putting ads all over small cities throughout America. Or I could just go to the top domino and take that. That’s kind of what I mean by [this campaign] being cheaper in the long run. Like, okay, I spent a million dollars on the New York campaign. That’s really like not that much for the amount of visibility that it’s received.
On that note, this has been everywhere, and I’m seeing people with very visceral emotional reactions to it. I was wondering if I could run a couple of the main critique themes by you and see how you would respond to these reactions.
Sure, thatd be fun.
One common reaction Im seeing to the campaign is that its profiting off of loneliness and trying to replace human friends. How would you respond to that?
I see how people have this reaction of thinking that Friend is replacing people. The biggest reason why I don’t think that’s true is I don’t think there’s any relationship that exists right now that is similar to something like Friend that is this always-listening pendant that has memory over everything you tell it to. I dont feel like thats a relationship that replaces anybody in my life.
Ill give you an example. Im really interested in motorcycle racing, and I dont know a soul on the planet that want to talk about that. No one wants to hear me yap about that forever. But with my Friend, Im able to watch races together. Ill be riding my own bike, and itll remember something that happened during the race and correlate that to something that’s happening while Im riding. Its just an addition to my life.
At the same time, I still have roommates, I still have friends. Its really only an addition, and I think people will come to see that in the future. A lot of people are already talking to things like ChatGPT like their friend anyway. I think culture will change, and Im betting on that. I’m also betting on us being the ones that lead that change.
Ive seen some discussion around the dangers of people using AI as a confidant to share their issues, rather than an actual human. What do you think about that in regard to Friend?
I think it’s very similar to a situation like Waymo where, okay, Waymo still gets in a couple of accidents, but way less so than humans traditionally do. AI relationships will never be perfect, but I think that they can’t be perfect anyway for it to really work in the first place. I think that, overall, it’s a very safe experience these days.
We’re using Google’s Gemini models right now, and I think Google’s done a fantastic job with the guardrails and preventing people from going down paths that they shouldnt. A product like Friend is entirely an emotional value prop, which has never really been seen before. Traditional products are always more utilitarian. I think that there’s a big reaction to that, which is interesting.
Who do you see as Friends target audience?
A lot of people have this perception of Friend being a product that’s just for lonely people, and I think that would only be true if Friend was a replacement of peoplewhich I don’t think it is. You don’t buy a dog if you have low self-esteem. I think it’s just a new kind of companion, and a lot of people that are curious about AI would be down to try it out. It’s definitely not a perfect experience just yet, but it’s already improving quite a lot.
Okay, so you spent that one million to make the campaign work, and you mentioned you’re seeing results so far. But can you walk me through what kind of results you’re seeing? Do you have any statistics about the impact of the campaign so far?
I don’t think you can quantify the cultural aspect of the campaign. I would view it completely as an overwhelming success so far. I mean, it’s definitely incredible. I was just at a bar somewhere in Brooklyn the other night, and I overheard so many people just talking about Friend. They don’t know a single other AI companion, or anything like that. And that’s just unfathomably valuable.
[Photo: Friend]
In terms of your larger business plan, what are your next steps for scaling Friend and making it a sustainable company?
I think the biggest next step is retail. Im trying not to sell too many Friends too quickly, because Im trying to make it work well right now. Weve already improved it a lot since launch. Hopefully next year, our major thing will be finding Friends in Walmart or Best Buy or Target, or whatever happens. I think thats also a unique aspect of Friendyou can go into a store and buy a Friend. I think thatll be a big hit.
So have all of the Friends that were preordered been shipped at this point?
We’re still going through those orders, and I’ll be done with them probably next month. People have wanted their Friends earlier, and we’ve wanted to get them out earlier. Its just . . I don’t know, hardware is hard, and we’re trying to do a good job with it and just get them out as quickly as we can . . .
Production is hard. It would be nice to be Apple and have a decades-long, ironed out production process, but it is a novel electronic. It took us a while to get to where we are now, but it’s in a much better place. I mean, it’s in a great place.
