Former members of the controversial Department of Government Efficiency (DOGE) are launching a new startup, dubbed Special, aiming to bring their approach to the private sector. The company has secured significant backing from prominent venture capital firm a16z, co-founded by billionaire Marc Andreessen, and reportedly includes investments from several other ex-DOGE members.
Special's founders, Nate Cavanaugh and Justin Fox, who previously spearheaded DOGE's initiatives across various government agencies, plan to build an "operating system to transform critical American industries with AI." They argue that "Main Street" suffers from the same inefficiencies they observed in the federal government. Their strategy involves vertically integrating by acquiring businesses in key sectors and managing them with their proprietary AI system. Their initial focus is on the senior care industry through a new venture called FigureHealth.
Cavanaugh indicated in an interview that Special is also eyeing other labor-intensive and highly regulated markets such as construction and manufacturing, believing that the lessons learned from DOGE's government operations can be effectively applied to these private sector arenas. The startup also aims to tackle perceived waste, echoing recent political talking points about fraud in government programs.
"This pitch relies on DOGE-y tropes, with references to fraud in Minnesota. It’s a very bro-y perspective on government and what the issues are," commented Don Moynihan, a public policy professor at the University of Michigan. He added that focusing on issues like welfare fraud suggests a narrow view of the major challenges facing the country, a perspective he associates with DOGE and its supporters.
The funding round, led by Andreessen Horowitz, also saw participation from notable figures connected to DOGE and Elon Musk's circle. These include Steve Davis, Musk's key associate and DOGE's operational coordinator; Antonio Gracias, founder of Valor Equity Partners and a close Musk associate; and Anthony Armstrong, former CFO at Musk's xAI. Brian Armstrong, founder of Coinbase, and Shyam Sankar, CTO at Palantir, also joined the investment group.
The backgrounds of Cavanaugh and Fox include controversial stints within DOGE. They were involved in the leadership changes at the US Institute of Peace (USIP) and the National Labor Relations Board (NLRB). In one instance, whistleblower Dan Berulis alleged that DOGE members compromised sensitive data at the NLRB, with an IP address in Russia attempting to access systems shortly after. Berulis's claims are currently under investigation by the NLRB's Office of the Inspector General.
Professor Moynihan suggests that DOGE functioned as a pathway into venture capital networks for its affiliates, allowing them to demonstrate their skills and loyalty to a particular owner class. This trend appears to continue, with other former DOGE members also transitioning to leadership roles in private sector startups, some reportedly positioning themselves for government contracts.
