U.S. President Donald Trump and his Republican allies in Congress are determined to enact his tax-cut agenda in a political push that has largely abandoned longtime party claims of fiscal discipline, by simply denying warnings that the measure will balloon the federal debt.
The drive has drawn the ire of Elon Musk, a once-close Trump ally and the biggest donor to Republicans in the 2024 election, who gave a boost to a handful of party deficit hawks opposed to the bill by publicly denigrating it as a “disgusting abomination,” opening a public feud with Trump.
But top congressional Republicans remain determined to squeeze Trump’s campaign promises through their narrow majorities in the Senate and House of Representatives by July 4, while shrugging off warnings from the official Congressional Budget Office and a host of outside economists and budget experts.
“All the talk about how this bill is going to generate an increase in our deficit is absolutely wrong,” Senate Finance Committee Chairman Mike Crapo told reporters after a meeting with Trump last week.
Outside Washington, financial markets have raised red flags about the nation’s rising debt, most notably when Moody’s cut its pristine “Aaa” U.S. credit rating. The bill also aims to raise the government’s self-imposed debt ceiling by up to $5 trillion, a step Congress must take by summer or risk a devastating default on $36.2 trillion in debt.
“Debt and deficits don’t seem to matter for the current Republican leadership, including the president of the United States,” said Bill Hoagland, a former Senate Republican aide who worked on fiscal bills including the 1997 Balanced Budget Act.
The few remaining Senate Republican fiscal hawks could be enough to block the bill’s passage in a chamber the party controls 5347. But some have appeared to be warming to the legislation, saying the spending cuts they seek may need to wait for future bills.
“We need a couple bites of the apple here,” said Republican Senator Ron Johnson of Wisconsin, a prominent fiscal hardliner.
Republicans who pledged fiscal responsibility in the 1990s secured a few years of budget surpluses under Democratic former President Bill Clinton. Deficits returned after Republican President George W. Bush’s tax cuts and the debt has pushed higher since under Democratic and Republican administrations.
“Thirty years have shown that it’s a lot easier to talk about these things when you’re out of power than to actually do something about them when you’re in,” said Jonathan Burks, who was a top aide to former House Speaker Paul Ryan when Trump’s Tax Cuts and Jobs Act was enacted into law in 2017.
“Both parties have really pushed us in the wrong direction on the debt problem,” he said.
Burks and Hoagland are now on the staff of the Bipartisan Policy Center think tank.
DEBT SET TO DOUBLE
Crapo’s denial of the cost of the Trump bill came hours after CBO reported that the legislation the House passed by a single vote last month would add $2.4 trillion to the debt over the next 10 years. Interest costs would bring the full price tag to $3 trillion, it said.
The cost will rise even higherreaching $5 trillion over a decadeif Senate Republicans can persuade Trump to make the bill’s temporary business tax breaks permanent, according to the nonpartisan Committee for a Responsible Federal Budget.
The CRFB projects that if Senate Republicans get their way, Trump’s One Big Beautiful Bill Act could drive the federal debt to $46.9 trillion in 2029, the end of Trump’s term. That is more than double the $20.2 trillion debt level of Trump’s first year at the White House in 2017.
Majorities of Americans of both parties72% of Republicans and 86% of Democratssaid they were concerned about the growing government debt in a Reuters/Ipsos poll last month.
Analysts say voters worry less about debt than about retaining benefits such as Medicaid healthcare coverage for working Americans, who helped elect Trump and the Republican majorities in Congress.
“Their concern is inflation,” Hoagland said. “Their concern is affordability of healthcare.”
The two problems are linked: As investors worry about the nation’s growing debt burden, they demand higher returns on government bonds, which likely means households will pay more for their home mortgages, auto loans and credit card balances.
Republican denial of the deficit forecasts rests largely on two arguments about the 2017 Tax Cuts and Jobs Act that independent analysts say are misleading.
One insists that CBO projections are not to be trusted because researchers predicted in 2018 that the TCJA would lose $1.8 trillion in revenue by 2024, while actual revenue for that year came in $1.5 trillion higher.
“CBO scores, when we’re dealing with taxes, have lost credibility,” Republican Senator Markwayne Mullin told reporters last week.
But independent analysts say the unexpected revenue gains resulted from a post-COVID inflation surge that pushed households into higher tax brackets and other factors unrelated to the tax legislation.
Top Republicans also claim that extending the 2017 tax cuts and adding new breaks included in the House bill will stimulate economic growth, raising tax revenues and paying for the bill.
Despite similar arguments in 2017, CBO estimates the Tax Cuts and Jobs Act increased the federal deficit by just under $1.9 trillion over a decade, even when including positive economic effects.
Economists say the impact of the current bill will be more muted, because most of the tax provisions extend current tax rates rather lowering rates.
“We find the package as it currently exists does boost the economy, but relatively modestly . . . it does not pay for itself,” said William McBride, chief economist at the nonpartisan Tax Foundation.
The legislation has also raised concerns among budget experts about a potential debt spiral.
Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics, said the danger of fiscal crisis has been heightened by a potential rise in global interest rates.
“This greatly increases the cost of having a high debt and of running high deficits and would accelerate the point at which we really got into trouble,” said Obstfeld, a former chief economist for the International Monetary Fund.
David Morgan, Reuters
President Donald Trump really wants to fly on an upgraded Air Force Onebut making that happen could depend on whether he’s willing to cut corners with security.As government lawyers sort out the legal arrangement for accepting a luxury jet from the Qatari royal family, another crucial conversation is unfolding about modifying the plane so it’s safe for the American president.Installing capabilities equivalent to the decades-old 747s now used as Air Force One would almost certainly consign the project to a similar fate as Boeing’s replacement initiative, which has been plagued by delays and cost overruns.Air Force Secretary Troy Meink told lawmakers Thursday that those security modifications would cost less than $400 million but provided no details.Satisfying Trump’s desire to use the new plane before the end of his term could require leaving out some of those precautions, however.A White House official said Trump wants the Qatari jet ready as soon as possible while adhering to security standards. The official, who spoke on the condition of anonymity, did not provide details on equipment issues or the timeline.Trump has survived two assassination attempts, and Iran allegedly also plotted to kill him, so he’s well aware of the danger he faces. However, he seems willing to take some chances with security, particularly when it comes to communications. For example, he likes to keep his personal phone handy despite the threat of hacks.He boasted this week that the government got the jet “for free,” saying, “We need it as Air Force One until the other ones are done.”Here’s a look at what it would take to make the Qatari plane into a presidential transport:
What makes a plane worthy of being Air Force One?
Air Force One is the call sign for any plane that’s carrying the president. The first aircraft to get the designation was a propeller-powered C-54 Skymaster, which ferried Franklin D. Roosevelt to the Yalta Conference in 1945. It featured a conference room with a bulletproof window.Things are a lot more complicated these days. Boeing has spent years stripping down and rebuilding two 747s to replace the versions that have carried presidents for more than three decades. The project is slated to cost more than $5.3 billion and may not be finished before Trump leaves office.A 2021 report made public through the Freedom of Information Act outlines the unclassified requirements for the replacement 747s under construction. At the top of the listsurvivability and communications.The government decided more than a decade ago that the new planes had to have four engines so they could remain airborne if one or two fail, said Deborah Lee James, who was Air Force secretary at the time. That creates a challenge because 747s are no longer manufactured, which could make spare parts harder to come by.Air Force One also has to have the highest level of classified communications, anti-jamming capabilities and external protections against foreign surveillance, so the president can securely command military forces and nuclear weapons during a national emergency. It’s an extremely sensitive and complex system, including video, voice and data transmissions.James said there are anti-missile measures and shielding against radiation or an electromagnetic pulse that could be caused by a nuclear blast.“The point is, it remains in flight no matter what,” she said.
Will Trump want all the security bells and whistles?
If the Qatari plane is retrofitted to presidential standards, it could cost $1.5 billion and take years, according to a U.S. official who spoke on the condition of anonymity to provide details that aren’t publicly available.Testifying before Congress this week, Meink discounted such estimates, arguing that some of the costs associated with retrofitting the Qatari plane would have been spent anyway as the Air Force moves to build the long-delayed new presidential planes, including buying aircraft for training and to have spares available if needed.In response, Rep. Joe Courtney, D-Conn., said that based on the contract costs for the planes that the Air Force is building, it would cost about $1 billion to strip down the Qatar plane, install encrypted communications, harden its defenses and make other required upgrades.James said simply redoing the wiring means “you’d have to break that whole thing wide open and almost start from scratch.”Trump, as commander in chief, could waive some of these requirements. He could decide to skip shielding systems from an electromagnetic pulse, leaving his communications more vulnerable in case of a disaster but shaving time off the project.After all, Boeing has already scaled back its original plans for the new 747s. Their range was trimmed by 1,200 nautical miles, and the ability to refuel while airborne was scrapped.Paul Eckloff, a former leader of protection details at the Secret Service, expects the president would get the final say.“The Secret Service’s job is to plan for and mitigate risk,” he said. “It can never eliminate it.”If Trump does waive some requirements, James said that should be kept under wraps because “you don’t want to advertise to your potential adversaries what the vulnerabilities of this new aircraft might be.”It’s unlikely that Trump will want to skimp on the plane’s appearance. He keeps a model of a new Air Force One in the Oval Office, complete with a darker color scheme that echoes his personal jet instead of the light blue design that’s been used for decades.
What happens next?
Trump toured the Qatari plane in February when it was parked at an airport near Mar-a-Lago, his Florida resort. Air Force chief of staff Gen. David Allvin was there, too.The U.S. official said the jet needs maintenance but not more than what would be expected of a four-engine plane of its complexity.Sen. Tammy Duckworth, an Illinois Democrat on the Senate Armed Services Committee, said it would be irresponsible to put the president and national security equipment aboard the Qatari plane “without knowing that the aircraft is fully capable of withstanding a nuclear attack.”“It’s a waste of taxpayer dollars,” she said.Meanwhile, Boeing’s project has been hampered by stress corrosion cracks on the planes and excessive noise in the cabins from the decompression system, among other issues that have delayed delivery, according to a Government Accountability Office report released last year.Boeing referred questions to the Air Force, which said in a statement that it’s working with the aircraft manufacturer to find ways to accelerate the delivery of at least one of the 747s.Even so, the aircraft will have to be tested and flown in real-world conditions to ensure no other issues.James said it remains to be seen how Trump would handle any of those challenges.“The normal course of business would say there could be delays in certifications,” she said. “But things seem to get waived these days when the president wants it.”
AP writer Lolita C. Baldor in Wasington contributed to this report.
Tara Copp and Chris Megerian, Associated Press
Warner Bros Discovery said on Monday it would split into two companies, separating its studios and streaming business from its fading cable television networks as the parent of HBO and CNN looks to compete better in the streaming era.
The breakup is the latest sign of the great unraveling of decades of media consolidation that have created global conglomerates spanning content creation, distribution and in some cases, telecommunications.
The strategic reset would provide Warner Bros Discovery’s streaming unit more room to scale by producing hit studio content without being bogged down by the declining cable networks business.
Its CEO David Zaslav will lead the streaming and studios business after the breakup, while CFO Gunnar Wiedenfels will head the global networks unit.
“By operating as two distinct and optimized companies in the future, we are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape,” Zaslav said.
The separation for the company formed out of a merger between WarnerMedia and Discovery in 2022 will be structured as a tax-free transaction and is expected to be completed by mid-2026. WBD shares were up nearly 6% in premarket trading.
The company had laid the groundwork for a possible sale or spin-off of its declining cable TV assets in December by announcing a separation from its streaming and studio operations.
The split will align the company with Comcast, which is spinning off most of its cable TV networks such as MSNBC and CNBC.
Bank of America research analyst Jessica Reif Ehrlich has said Warner Bros Discovery’s cable television assets are a “very logical partner” for Comcast’s new spin-off company.
WBD also said on Monday it launched tender offers to restructure its existing debt, funded by a $17.5 billion bridge facility provided by J.P. Morgan.
The bridge loan is expected to be refinanced ahead of the planned separation, it said, adding that global networks will retain up to a 20% stake in streaming and studios, which it plans to monetize to further reduce debt.
J.P. Morgan and Evercore are advising WBD on the deal, while Kirkland & Ellis is serving as legal counsel.
Aditya Soni and Akash Sriram, Reuters
Ballers, a social multisport venue and members’ club, just received a $20 million Series A investment joined by tennis star Andre Agassi ahead of its Philadelphia flagship opening in July.
With the location, Ballers aims to combine competition with culture. It will include courts where members can play pickleball, squash, and padel. There will also be a golf practice area with real sand traps and a large turf field where members can play soccer.
These are all social sports, cofounder David Gutstadt tells Fast Company. Theyre cool, relevant, elevated, but most importantly social.
Courting crosscourt players
Pickleball, specifically, is Americas fastest growing sport; participation has increased by 311% in the last three years, according to data from the Sports and Fitness Industry Association (SFIA). But almost half of racket sports players are crosscourt consumers, meaning they enjoy playing more than one of these sports, according to research by RacquetX.
[Rendering: Ballers]
And racket sports as a whole are in a growth phase, with five out of seven increasing their year-over-year participation totals, according to SFIA. By creating a dedicated space for these sports, Gutstadt says he hopes to bring country club sports to the city.
As consumers seek richer social interactions, competition has evolved from pastime to platform, Lloyd Danzig, a managing partner at Sharp Alpha, a firm that co-led the investment, wrote to Fast Company.
More locations on the horizon
Founders Gutstadt and Amanda Potter say that Ballers is the first of its kind: a multisport venue with a focus on hospitality and creating a culture. Outside of just offering sports practice and competition areas, the Ballers space also includes a full bar, a restaurant, and social activations like DJs or art installation pop-ups.
The Ballers space has been constructed from the shell of an old power plant, giving the club a unique but grand and majestic look, Potter says.
Throughout the rest of 2025 and 2026, expect to see Ballers locations pop up in Boston, Downtown Los Angeles, and Miami.
[Rendering: Ballers]
Ballers has amassed a group of celebrity and athlete investors that represent the venues array of sports offerings. These investors include tennis stars Agassi, Kim Clijsters, and Sloane Stephens; pickleballer Connor Garnett; and soccer player/padel aficionado Maarten Paes.
As lifelong tennis lovers, Gutstadt and Potter told Fast Company that working with Agassi was a dream come true. Agassi was the obvious first pick to represent Ballers, says Potter, because he represents a shift in racket sports fashion and culture.
Andre Agassi came into a sport that was pretty buttoned up and properyou know, white collar shirts and Wimbledon mentality, Potter says. He came in with a bit of an attitude and shook things up. And thats what we want for Ballers.
Correction: Agassi took part in the investment but did not lead it as an earlier version of this story and headline stated.
A significant recall of 1.7 million dozen eggs is underway. The eggs were believed to be the source of a salmonella outbreak that has sickened dozens of people across seven states and so far led to 21 people being hospitalized. They were distributed to several major retailers, including Walmart and Safeway. Heres what you need to know about the recall and outbreak.
Shell eggs recalled due to salmonella fears
On June 6, the August Egg Company of Hilmar, California, issued a voluntary recall of 1.7 million dozen eggs produced at its facilities. The company initiated the recall after it discovered that the eggs are feared to have been contaminated with salmonella, a potentially deadly bacterium.
On the same day, the U.S. Food and Drug Administration (FDA) published August Egg Companys recall notice on its website, while the U.S. Centers for Disease Control and Prevention (CDC) announced an investigation into a multistate outbreak of salmonella linked to eggs.
Dozens sickened and hospitalized across 7 states
The CDCs investigation has found that eggs produced by August Egg Company are linked to dozens of cases of people becoming ill after consuming them.
The agencys latest data shows that there are so far 79 cases linked to the August Egg Companys recalled products. Of those cases, 21 have resulted in hospitalizations. Thankfully, no deaths have been reported so far.
The cases are spread across seven states: Arizona, California, Kentucky, Nebraska, New Jersey, Nevada, and Washington.
Of those states, California has the most number of cases, at 63, followed by Washington and Nevada, with four cases each. Arizona has had three cases, Nebraska and New Jersey two cases, and Kentucky has one.
However, many people who become sick with salmonella see their symptoms resolve without contacting a health professional, so the actual number of cases could be higher.
When and where were the eggs distributed?
According to the notice posted on the FDAs website, the recalled eggs were distributed between February and May. The retail locations that received the eggs include:
Walmart
Save Mart
FoodMaxx
Lucky
Smart & Final
Safeway
Raley’s
Food 4 Less
Ralphs
The eggs were distributed between February 3 and May 15, to Save Mart, FoodMaxx, Lucky, Smart & Final, Safeway, Raley’s, Food 4 Less, and Ralphs locations in California and Nevada. Those eggs had sell-by dates ranging from March 4 to June 4.
The eggs were also distributed between February 3 through May 6, to Walmart stores in California, Washington, Nevada, Arizona, Wyoming, New Mexico, Nebraska, Indiana, and Illinois. Those eggs had sell-by dates ranging from March 4 to June 19.
What eggs are included in the recall?
Over two dozen egg products packaged under multiple brands are included in the recall. The recall notice states that the eggs were packaged in fiber or plastic cartons and have a plant code number P-6562 or CA5330 with the Julian Dates between 32 and 126.
Photographs of the cartons can be found here.
The item names of the egg products included in the recall, along with their plant number and carton UPC are:
Item NamePlant NumberCarton UPCClover Organic Large Brown 12 eggsP-6562 or CA-5330070852010427First Street Cage Free Large Brown Loose 1 case=150 eggsP-6562 or CA-5330041512039638Nulaid Medium Brown Cage Free 12 eggsP-6562 or CA-5330071230021042Nulaid Jumbo Brown Cage Free 12 eggsP-6562 or CA-5330071230021011O Organics Cage Free Large Brown 6 eggsP-6562 or CA-5330079893401522O Organics Large Brown 12 eggsP-6562 or CA-5330079893401508O Organics Large Brown 18 eggsP-6562 or CA-5330079893401546Marketside Organic Large Cage Free Brown 12 eggsP-6562 or CA-5330681131122771Marketside Organic Large Cage Free Brown 18 eggsP-6562 or CA-5330681131122801Marketside Large Cage Free Brown 12 eggsP-6562 or CA-5330681131122764Marketside Large Cage Free Brown 18 eggsP-6562 or CA-5330681131122795Raleys Large Cage Free Brown 12 eggsP-6562 or CA-5330046567033310Raleys Large Cage Free Brown 18 eggsP-6562 or CA-5330046567040325Raleys Organic Large Cage Free Brown 12 eggsP-6562 or CA-5330046567028798Raleys Organic Large Cage Free Brown 18 eggsP-6562 or CA-5330046567040295Simple Truth Medium Brown Cage Free 18 eggsP-6562 or CA-5330011110099327Simple Truth Large Brown Cage Free 18 eggsP-6562 or CA-5330011110873743Sun Harvest Organic Cage Free Large Brown 12 eggsP-6562 or CA-5330041512131950Sun Harvest Organic Cage Free Large Brown 18 eggsP-6562 or CA-5330041512145162Sunnyside Large Brown Cage Free 12 eggsP-6562 or CA-5330717544211747Sunnyside Large Brown Cage Free 18 eggsP-6562 or CA-5330717544211754Sunnyside Organic Cage Free Large Brown 12 eggsP-6562 or CA-5330717544201441Sunnyside Organic Cage Free Large Brown 18 eggsP-6562 or CA-5330717544211761Loose Small Brown Cage Free-1 box= 6 flats (1 flat= 30 eggs)P-6562 or CA-5330NALoose Medium Brown Cage Free -1 box= 6 flats (1 flat= 30 eggs)P-6562 or CA-5330NALoose Medium Brown Organic -1 box= 6 flats (1 flat= 30 eggs)P-6562 or CA-5330NALoose Large Brown Organic-1 box= 6 flats (1 flat= 30 eggs)P-6562 or CA-5330NALoose Jumbo Brown Cage Free -1 box=5 flats(1 flat=20 eggs)P-6562 or CA-5330NALoose Jumbo Brown Organic -1 box=5 flats(1 flat=20 eggs)P-6562 or CA-5330NA
What is salmonella?
Salmonella is a potentially deadly bacteria that is usually contracted after eating contaminated foods.
The CDC says that typical symptoms of a salmonella inection include diarrhea, fever, and stomach cramps, which typically present between six hours and six days after exposure to the bacteria.
Typical salmonella infections last between four and seven days, and most people recover without treatment. However, salmonella infections can also cause severe illness in individuals, especially those who are younger than 5 years old, older than 65 years old, or have weakened immune systems.
What should I do if I have the recalled eggs?
According to the CDC, if you have the recalled eggs in your possession, you should not consume them.
Instead, you should throw the eggs out or return them to their place of purchase for a refund. You should also sanitize all surfaces that may have come into contact with the eggs.
Consumers who think they may have the recalled eggs in their possession are urged to read the full recall and investigation notices.
Today, Apple is holding its annual Worldwide Developers Conference (WWDC). While WWDC is historically a developer-focused conference, where programmers who create iPhone, Mac, and iPad apps can attend online sessions to learn about Apple’s latest software technologies, it is also an event that draws significant interest from consumers and the media.
Thats because Apple kicks off each WWDC with a keynote presentation, in which the company showcases its upcoming softwarethe operating systems that power its devices, including the iPhone, iPad, Mac, Apple Watch, Apple TV, and more. These operating systems will be previewed for the first time today before they become available to the general public in the fall.
Fast Company has a detailed report on the software announcements and features that Apple is expected to make at todays WWDC25 keynote. All of the companys operating systems are expected to get a visual design overhaulthe most radical in years. The operating systems Apple is expected to reveal include iOS 26, iPadOS 26, macOS 26, tvOS 26, visionOS 26, and watchOS 26.
You can see those announcements by watching the WWDC25 keynote when Apple broadcasts it later today. Heres how.
What time is Apples WWDC 25 keynote?
Apples 2025 Worldwide Developers Conference keynote takes place today, Monday, June 9.
The keynote starts at 10 a.m. Pacific Time. Heres how that time translates into times in other time zones around the world:
Hawaii Standard Time (HST): 7 a.m.
Pacific Time (PT): 10 a.m.
Mountain Time (MT): 11 a.m.
Central Time (CT): 12 p.m.
Eastern Time (ET): 1 p.m.
BST (British Summer Time): 6 p.m.
CET (Central European Time): 7 p.m.
EEST (Eastern European Summer Time): 8 p.m.
MSK (Moscow Standard Time): 8 p.m.
IST (Indian Standard Time): 10:30 p.m.
ICT (Indochina Time): 11 p.m.
CST (China Standard Time): 1 a.m. (June 10)
JST (Japan Standard Time): 2 a.m. (June 10)
AWST (Western Australia Standard Time): 2 a.m. (June 10)
AEST (Australian Eastern Standard Time): 3 a.m. (June 10)
NZST (New Zealand Standard Time): 5 a.m. (June 10)
How can I livestream Apples WWDC 25 keynote?
Apple offers a variety of ways for you to watch its WWDC25 keynote. Heres how:
On Apple.com here.
On YouTube here.
On the Apple TV app on the iPhone, iPad, Mac, Apple TV, Windows PC, or other supported device here.
You can also watch the WWDC25 keynote right here on FastCompany.com. Weve embedded the WWDC25 YouTube stream on this page below.
Moderna CEO and cofounder Stéphane Bancel probably never imagined hed look back on March 2023 as the good old days. Then, he merely had to go before the Senate Health, Education, Labor, and Pensions Committee and take a spitty dressing-down from Senator Bernie Sanders over the price of Modernas COVID vaccine. The company was held up as a poster child for corporate greed. For a U.S. pharma executive, though, that was more or less business as usual.
Today, the situation is anything but. With the confirmation of Robert F. Kennedy Jr., a prominent anti-vaxxer, to be the secretary of the Department of Health and Human Services this February, once-fringe medical theories have been escalated to the level of policy, throwing established scientific and regulatory norms into doubt. Among drugmakers, perhaps none is worse situated to absorb the D.C. vibe shift than Moderna, which is now being targeted not for its pricing but for its one and only product: mRNA-based vaccines.
Kennedy has shown a particular distaste for mRNA vaccines, such as those that were rapidly developed by Moderna and Pfizer-BioNTech in response to the global outbreak of COVID-19. During the height of the pandemic, Kennedy petitioned the Food and Drug Administration to revoke authorization for COVID-19 vaccines and not approve any future ones, saying that the risks of adverse reactions and death werent adequately studied. These vaccineswhich have been safely administered to billions of people around the world and in 2021 alone saved at least an estimated 14.4 million lives worldwidehave been the subject of conspiracy theories and misinformation since they were first authorized for emergency use in late 2020. Among the debunked claims of critics: the vaccines can alter a persons genome; they contain microchips or tracking devices; They cause something dubbed turbo cancer. Several states, including Florida, Kentucky, South Carolina, Idaho, and Texas are considering laws that would severely limit or ban the use of mRNA vaccines. Louisiana and Texas have already ended mass vaccinations and any promotion of the vaccines.
Now, Kennedys HHS is taking action against Modernas signature product. In the past month alone, the CDC has revised its public health recommendations for COVID-19 vaccines, the FDA altered its vaccine approval process, and the government canceled a $766 million contract with Moderna to develop new vaccines against pandemic threats including H5N1 avian influenza. Taken together, these moves have effectively knee-capped Modernas business. Theyve also jeopardized public health, and spread uncertainty across the burgeoning landscape of next-generation RNA-based therapeutics.
Moderna can ill afford an unfavorable regulatory environment, much less an administration seemingly bent on its destruction. The company, which declined to make executives available for this story, took in $3.2 billion last yearless than half of the year priorat a net loss of $3.6 billion. For the first quarter this year, it brought in $100 million at a $1 billion loss. Although Moderna launched an RSV vaccine last year and is developing a personalized cancer immunotherapy, almost all of its money still comes from sales of COVID-19 shots, which are steadily declining. And with its entire technology under attack, Modernas future looks anything but certain.
Going all in on mRNA
While most pharma companies have grown by establishing franchises in particular diseases, Moderna has always been all-in on Bancels conception of a biotech platform company. The entire premise is right there in its ticker symbol: mRNA.
The promise of the technology is appealing. Older vaccines typically consist of weakened or killed viruses, or parts of viruses, to mimic an infection and elicit an immune response. These vaccines are grown in eggs or cell cultures, purified, and mixed with adjuvants that help them work in the body. Historically, developing vaccines in this way has taken anywhere from 5 to 10 years.
But mRNA vaccines dont require any viruses, or eggs. Instead, they work by delivering into the body genetic instructions, in the form of mRNA molecules, that cells use to manufacture a protein called an antigen, which induces an immune response. The original COVID vaccine contained mRNA instructions to produce a signature spike protein found on the surface of the coronavirus.
Because mRNA is digitallike DNA, it encodes a series of nucleotide letters (A, U, G, C)creating new mRNA vaccines is a relatively simple matter of rearranging these letters to create a different antigen. mRNA is made in an egg- and cell-free manufacturing process, and once the sequence for a vaccine has been selected, it can be manufactured in as little as a few weeks. This speed and flexibility are what enabled the development of a working vaccine for COVID within a year of its discovery. And it is why many experts in infectious disease believe mRNA vaccines are an essential tool in responding to future pandemic threats. Bancel has been banking on mRNA not only as a vaccine platform but also as a breakthrough way of treating cancer and other diseases.
Until last year, though, Moderna had brought just one product to the market: the Spikevax vaccine for COVID-19. In 2021, the company sold 807 million doses, pocketing $17.7 billion. The companys stock soaredin 2021, Modernas market cap hovered around $200 billion, surpassing legacy drugmakers including GlaxoSmithKline, Amgen, and Merck. But demand for the vaccines has abated quickly. In 2022, Moderna had $18.4 billion in vaccine sales. In 2023, the year the public health emergency was declared over and the federal government phased out paying for the vaccine doses, Modernas sales were less than $7 billion. Last year, they more than halved yet again.
Modernas second commercial product, an mRNA vaccine for Respiratory Syncytial Virus (RSV) was approved by the FDA in May 2024, for people 60 years and older. Marketed as mRESVIA, it had total 2024 sales of $25 million. At the start of this year, Modernas stock was down about 90% from its pandemic peak. Modernas cash reserve, meanwhile, has dwindled from $18.2 billion at the end of 2022 to $8.4 billion today.
Last fall, Bancel announced a plan to cut R&D spending by $1.1 billion by 2027 and to shelve five early-stage programs. This January, he said at the JP Morgan Healthcare Conference that the company would cut $1 billion in spending this year alone, and find another $500 million in cuts next year.
As Moderna, which was founded in 2010, grew from 800 employees pre-pandemic to 5,600 full-time global employees at the end of 2023, it gained a reputation as a tough workplace that burned through talent. Even so, its recent departures have signaled a company in turmoil. Since late 2023, when chief commercial officer Arpa Garay left the company less than two years after joining from Merck, his former duties have been split between Bancel, covering sales and marketing, and Modernas president Stephen Hoge responsible for commercial pipeline strategy and medical affairs. In November 2024, Hoge took charge of sales, as well.
Stephen and Stephane will go down with the ship, says a former employee speaking on background. Theyre a $10 billion company nowhow does that save them? Theyre in a really bad position. Others are jumping. This February, CIO Brad Millerwhod been driving the companys tech-driven insights for just over two yearsretired at age 52, as Moderna downsized its digital departments by about 50 employees, or 10%. Pharma folks took notice in March, when Kate Cronin, whod led marketingsince 2021, left the company and a month later joined Medtronic Diabetes. When Kate Cronin left, I thought, thats the rat leaving the sinking ship, says another industry insider. Multiple employees in communications roles have also recently left the company.
Keeping up with the FDA and CDC
Modernas pipeline includes vaccines for everything from shingles to HIV, as well as therapeutics for cancer and rare diseases. But near-term, its hopes had been riding on a new, improved COVID vaccine, along with a first-of-its-a-kind combination COVID-flu vaccine. In the last couple of weeks, though, those hopes have been tempered, if not crushed, by changes at the FDA and the Centers for Disease Control and Prevention, which taken together could dramatically limit who will get access to such vaccines moving forwardand determine whether companies like Moderna will continue to make them at all.
On May 31, Moderna had a partial win when the FDA approved its next-generation COVID-19 vaccine, called mNEXSPIKE. But unlike its predecessor, which is licensed for use for all individuals 12 years of age and older, regardless of health-risk statusit was authorized for use only for people aged 65 and older, or aged 12 to 64 with a qualifying medical condition. (The FDAs delayed approval in May of a non-mRNA COVID vaccine made by Novavax had the same restrictions.) People aged 65 and older account for the majority of COVID vaccines, and benefit the most from their protection.
In previous years, as long as updated COVID shots showed evidence that they generated a comparable immune response to the previous years version, the FDA approved them for use for most people. Now, to get approval for anyone under 65 and without an underlying medical condition, vaccine makers will have to show additional safety and efficacy data from randomized controlled trials. (The FDA and its advisers had previously considered it unfeasible to run such trials quickly enough.) Calling for robust, gold-standard data on persons at low risk,” the new requirements were put forth without the usual input from independent outside advisers.
Between 100 million to 200 million Americans (of a total population of 347 million) would be eligible for COVID vaccines under the new approach, according to an estimate cited by FDA commissioner Martin Makary and Vinay Prasad, director of the FDAs Center for Biologics Evaluation and Research. But the changes in the approval processas a new, highly transmissible COVID subvariant has been detected in California, heightening the risk of a summer wavecould leave a lot of people unprotected in the 20252026 season. On June 3, Kennedy announced on X that Moderna had agreed to a true placebo-controlled trial of the new vaccine; its not yet clear how that will impact availability of the 20252026 vaccine. Moderna declined to comment in response to Kennedys statement on X.
Further clouding the vaccination landscape is new CDC guidance about who should get an annual COVID booster. On May 28, Kennedy announced he was rescinding the governments recommendation that pregnant women and healthy children get COVID immunizations. Without this recommendation, health insurersincluding Medicaidwill not likely cover the cost of the vaccine. A couple of days later, the CDC partially contradicted Kennedy, advising that kids continue to get the vaccinebut only in consultation with a healthcare provider. It offered no additional guidance for pregnant women, who have higher risk for health complications from COVID.
Meanwhile, Moderna has voluntarily withdrawn its application for approval of its new combo flu/COVID vaccine after the FDA requested more efficacy data. Moderna expects to have additional data this summer, but it declined to share a target date for resubmitting its application.
Shutting down avian flu research
Perhaps the biggest recent blow to Modernas prospects came last week, when the U.S. Department of Health and Human Services terminated a contract with the company to develop vaccines against several strains of flu with pandemic potential, including the highly pathogenic avian flu viruses H1N1 and H7N9. Moderna had won the contractoriginally worth $176 million but expanded in the last days of the Biden administration by another $590 millionon the belief that mRNA vaccines would be a critical part of any future pandemic response. Andrew Nixon, director of communications at HHS, told STAT that the agency had ended the contract because continued investment in Modernas H5N1 mRNA vaccine was not scientifically or ethically justifiable.
The same day that news came out, Moderna shared data from its phase 1/2 trial of its avian flu vaccine, showing that three weeks after the second dose, nearly 98% of participants reached antibody levels considered protective. In a statement, Bancel wrote: “While the termination of funding from HHS adds uncertainty [ . . . ] we will explore alternative paths forward for the program.
The scientific communitys reaction to HHSs moves has ranged from befuddlement to outrage. This MAHA approach to killing vaccine technologies for ideological reasons and nothing to do with vaccines is both foolish and deadly. It weakens our nations biosecurity, says Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine, codirector of Texas Childrens Hospital Center for Vaccine Development, and codeveloper of the low-cost COVID vaccine Corbevax. It also reinforces my view that the MAHA movement is little more than an economic stimulus for the very corrupt wellness and influencer industry. We learned both from Ebola in Democratic Republic of Congo and COVID-19 that the single most important lesson of pandemic preparedness is to keep many vaccine technologies in play, because you cannot predict ahead of time which ones might rise to the top.
There are currently three licensed H5N1 vaccines (made by GSK, CSL Seqirus, and Sanofi) that are either made in eggs or grown in cell culture. None are commercially available, though the government has been adding to its stockpile. Even so, getting an up-to-date version of these vaccines ready for broad distribution would take many months. An mRNA-based vaccine, in contrast, could be matched to the most recently circulated variant of the virus and manufactured rapidly.
Other drugmakers, including GSK-Curevac and Pfizer, have been working on mRNA vaccines for avian flu. Its unclear what will happen to these programs now. Joe Payne, CEO of San Diego-based Arcturus Therapeutics, says that his company continues to have full support from the Biomedical Advanced Research and Development Authority (BARDA), which has committed up to $63 million to help advance the company’s avian flu vaccine. (Arcturus’s version uses self-amplifying mRNA, a new technology that works at lower doses than first-generation mRNA vaccines like Modernas.) This April, Arcturus received FDA Fast Track designation for the vaccine, which is currently being tested in a phase 1 trial.
Arcturus has also developed a self-amplifying mRNA COVID vaccine with CSL Seqirus, which the companies aim to submit for FDA approval later this year. There’s been a desire in the scientific community and regulatory agencies to identify lower-dose alternatives, says Payne. The new FDA guidance, he says, is a positive development for us, because it’s a fair, balanced and professional communication on their COVID policy, where a couple months ago [under Trump], there was a lot of uncertainty.
mRNA in the MAHA crosshairs
The long-term bet on Moderna rides almost entirely on its individualized cancer therapy, mRNA-4157, which its developing in conjunction with Merck. While sometimes called a personal cancer vaccine, mRNA-4157 doesnt actually protect you from getting cancer, but instead trains the immune system to attack an existing tumor, using custom-made mRNA that encodes antigens specific to each persons cancer.
The company has high hopes that the therapy can be used to treat multiple kinds of cancers. In Phase 2 trials, the therapy cut the risk of recurrence or death in advanced melanoma (after surgical resection) by 65% when combined with Mercks drug Keytruda, compared with Keytruda alone. Moderna also has trials underway or enrolling for its use in treating high-risk melanoma, non-small cell lung cancer, invasive bladder cancer, and adjuvant renal cell carcinoma.
While these personalized treatments could be very lucrative for the company, they wont be easy to scale quickly. And the timeline for FDA approval is uncertain, depending on trial results and regulatory review. The melanoma study isnt expected to be fully complete until 2030, and the FDA has not been supportive of accelerated approval. Whether Moderna can hang on that long is an open question.
In the meantime, a host of researchers and well-funded biotechs developing second- and third-generation therapies using mRNA and related technologies are quietly holding their breath, feeling that, for now, Kennedy and his lieutenants are concerned almost exclusively with examining the use of mRNA in protective vaccines for healthy people. Using mRNA for treating cancer and rare diseases seems to be a different story.
In the past year or so, researchers at the University of Florida and Memorial Sloan Kettering have published promising results from small studies of personalized mRNA-based therapeutic vaccines for glioblastoma and pancreatic cancer, respectively. The next wave of mRNA is with inhaled mRNA and intravenously dosed mRNA to treat really serious and fatal rare disease conditions, says Payne at Arcturus. And that’s where we’re getting the warmest support from the new administration.
There is a general belief that science will prevail, says another CEO of a venture-backed company focusing on therapeutic uses of self-amplifying mRNA. But there is anxiety from the uncertainty. Uncertainty is not good for anything.
Perhaps no company knows that better than Moderna.
Hello and welcome to Modern CEO! Im Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you’re reading this newsletter on the website, you can sign up to get it yourself every Monday morning.
For the first Modern CEO newsletter, published in January 2023, I contacted executive recruiter Jana Rich to talk about the importance of creative leaders in businessa theme Ive explored a few times as generative artificial intelligence (gen AI) and other technologies threaten to commoditize many aspects of work. So, when Rich recently announced that she has stepped away as planned from Rich Talent Group, the firm she founded in 2014 after 12 years at Russell Reynolds Associates, I asked her to reflect on her experiences during the last decade. Edited excerpts follow:
Why did you start Rich Talent Group?
It was for two primary reasons. One was I really lovedand still loveworking with founders who are to some degree building their first leadership team, their first board. And I didnt feel like that was particularly well aligned with the big firms. I dont think thats really where they spend their time and energy. And then, equally as important to me, was I wanted to do everything I could to find, identify, and promote women, people of color, and LGBTQ+ folks. I also felt, and still do feel, that is not a strong suit of the big firms.
What were you seeing in Silicon Valley at the time?
When we opened the doors in April of 2014, on day one, we had [as clients]and Im going to use the names that they were called back then versus what theyre called todayFacebook, Uber, Square, Airbnb, Pinterest, Dropbox, and Twitter. All of them. Day one.
Why did they take a chance on a boutique?
We had relationships, yes. But I truly believe they were all looking for a different approach. They wanted more creativity and a fresher approach to things. I look back and Im like, holy moly, that was a killer group of clients.
What kind of searches did you do for them, and how were you different from the incumbents?
Just to give you an example, we [recruited] Airbnbs first-ever chief marketing officer (CMO), Jonathan Mildenhall from Coca-Cola, who is Black and gay. We were different because we found someone who had never been in tech or high growth [but] who did have a global perspective and was uniquely passionate about belong anywhere (Airbnbs ethos and branding strategy).
Relatively early, we were doing board work, which was unusual in that the presiding wisdom at the time was that board work is done by the biggest firms and the most senior [people in them]. We were a brand-new firm, but we built the first-ever board at Square, the first-ever board at Eventbrite, the first-ever board at Asana.
From 2014 to today, how did your business change?
Its hard sometimes for people to remember, but in 2014, very few people were talking about DEI. There were no heads of DEI. Those roles didnt exist. If anything, there might have been more junior-level positions that were focused on diversity recruiting.
Every single year we would do an offsite, and we would ask one of our clients to come and be unscripted, to sit with us and tell us what we do well and not do well. How can we be better? In 2018, I remember it so clearly. Four years into the journey, this woman who is a Black woman, who was heading recruiting at one of the biggest tech companies, comes to the meeting. Ill never forget, she says, I think you really have to stop talking about DEI because its making you too much of a niche player, and its difficult for me to sell you [as a recruiter] to my big tech company.
I cant be mad at her for telling us the truth, but after she left I don’t think Ive ever been in a room of people that I was tasked with leading where the morale was lower. I said to them, I know that each and every one of you have come to this team at Rich Talent Group because you care deeply about this mission. I dont fundamentally believe that its niche. It might be right now, but I didnt jump out of the safety and security [of Russell Reynolds] to build something I thought was going to be inconsequential or tiny.
Then you jump forward to the murder of George Floyd and even beforehand. The demand for diversity increased dramatically during this time period. The challenge for us was to do our due diligence to ensure that the [client] was deeply committed to diversity as part of their mission versus merely trying to check a box.
What do you make of corporate Americas retreat from diversity?
It feels like [DEI] is happening but under the cover of the night or something. Were playing a little bit of a nomenclature game right now. Dont say “diversity” or “equity” or “inclusion,” but its okay to talk about “best teams” or “meritocracy.” Were changing words and, in the best possible scenario, were not changing efforts. Its sucking up a lot of energy that I wish could be just used for the betterment of these teams. Great recruiters should always focus on fully qualified candidates while looking outside the box to broaden the aperture for potential candidates. This is not only about hiring for diversity but also building the best teams. While there has been less emphasis on DEI, this is also a time when great companies are standing out because they are not backing down, such as Costco, for example.
How should CEOs think about executive search going forward?
Ive been in it for 30 years now, and one of the things I wish most for it is that [executive search] becomes as valued as a CEO relationship might be with McKinsey or Bain. I dont think its there yet, but I do think Ive seen a lot of positive change during a period of time whereby the right founder or CEO looks to a top-notch recruiter as a thought partneras somebody that understands the context of whats going on in the marketplace, the competitive set.
The diversity name game
How is your company framing diversity efforts today? Have you dismantled diversity, equity, and inclusion programs, and if so, why? Please send your experiences to me at stephaniemehta@mansueto.com. Id be excited to share your stories in a future newsletter.
Read and hear more: changes in DEI
Does changing the language of DEI protect companies?
The wider impact of DEI change
What comes after DEI?
Inside an airplane hangar in Roswell, New Mexico, a massive blimp-like airship214 feet longis getting ready to float into the stratosphere.
Built by a startup called Sceye (pronounced sky), the helium-filled aircraft is designed to gather information that satellites miss. In its next flight, in July, it will hover over New Mexico sending back real-time data about pollution from the states hundreds of oil and gas producers. It can report not only that theres a plume of methane pollution in the air, but that a particular gas tank from a particular company is leaking a specific amount of the potent greenhouse gas each hour.
We can see the specific emitter and the rate of emissions in real time, says Mikkel Vestergaard Frandsen, Sceyes CEO. And that’s entirely new.
[Photo: Sceye]
How a social entrepreneur started working with NASA tech
Frandsen, a Danish social entrepreneur, is known for transforming Vestergaard, his familys textile business, into a company focused on humanitarian innovation. (The company makes mosquito nets to help fight malaria, for example, and a spinoff called LifeStraw makes water purification tech.) Because of his work, Frandsen was invited to be part of an effort to discover how tech from NASA could be used to help improve life on Earth. Thats how he learned about HAPS, or high-altitude platform systems, the technology that now underlies Sceyes work.
HAPS are designed to go to the edge of space, around 65,000 feet above the surface of the Earth. Youre twice as high as air traffic, youre above the jet stream, youre 95-97% through the atmosphere, Frandsen says. So you can look up with great accuracy at stars, study black holes, look at asteroids. They were promoting this as a platform for science. I was reading this and thinking, sure, but you can also look down. You can have an entirely new way of addressing ocean conservation, or human trafficking, or last-mile connectivity, or methane monitoring, or early wildfire detection.
The concept for a HAPS airship wasnt new. It turned out the U.S. government had already spent billions trying to build this stratospheric airship because staying below orbital altitude was considered sort of the holy grail of aviation, he says. He started looking into why past efforts in the 1990s and early 2000s hadnt worked, and realized that some factors had changed. New materials like graphene, for example, could help significantly reduce the weight of the airship and the batteries onboard.
[Photo: Sceye]
A decade of R&D
Sceye, which was founded in 2014 and is based in New Mexico, took an iterative approach to its R&D. I learned from studying those previous attempts that government funding often incentives you to go straight to prototype build, he says. You dont have that iterative learning that tells you if you fail, why did you fail? Or if you succeed, why did you succeed? In every case, it didnt succeed, and they didnt really get their arms around the why. So it all stranded there.
In 2026, the startup tested a nine-foot version of the device. A year later, that scaled up to 70 feet. The prototypes kept growing and flying higher. By 2021, the team succeeded in reaching the stratosphere. In 2022, they started doing demonstration flights. A year ago, the company successfully showed that the airship could operate through day and night. In the day, it runs on solar power; at night, its powered by batteries. The company also raised a Series C round of funding in 2024, which Pitchbook estimates totalling $130 million. (Sceye declined to confirm fundraising numbers, but said that it was valued at $525 million before the Series C round.)
This year, the company plans to use its flights to demonstrate that the tech can hover in place for extended periods of time. Eventually, the team aims to be able to keep the HAPS in position for as long as 365 days. The 2025 flights will also demonstrate some of the uses of the tech. The company plans to deploy its platform in several ways; the next flight will also test the ability to track wildfires, for example. But it’s particularly well suited for tracking methane emissions.
[Photo: Sceye]
A powerful tool for tracking methane
Methane is potent greenhouse gas. Over the short term, its more than 80 times more powerful than CO2 at heating up the planet. Methane emissions are also surging; leaks from fossil fuel production are a major source of the pollution. New Mexico, which is part of the Permian Basin boom in oil and gas, adopted a methane waste rule in 2021 to try to tackle the problem. By the end of next year, producers will have to achieve a 98% capture rate for methane.
“We are looking at how we can make sure that gas is kept in the pipe and goes to its intended market instead of being released into the atmosphere, says Michelle Miano, environmental protection division director at the New Mexico Environment Department. The state started working with Sceye in 2021, in a partnership with the EPA.
Right now, much of the data about emissions comes directly from companies themselves; that obviously makes it difficult for the state to confirm accuracy. Satellite data can also help track methane emissions but not in the same granular detail.
“From space, it takes a lot of time in order to crunch that data and trace it back and figure out who exactly is the emitter in a certain region,” says Miano. “With technology that’s closer to the ground, there is the ability to get closer to some of the facilities to understand more specifically where they might be coming from.”
Because the Sceye airship is designed to stay in one position, it can continuously monitor emissions over hundreds of square miles in a region. Infrared sensors monitor methane emissions, while cameras take detailed photographs that can be overlaid with that data. The system means that it’s possible to spot leaks that a satellite can miss because it only passes over an area temporarily.
Satellites also don’t have the same resolution. The European Space Agency’s Sentinel-5, for example, sees methane in pixels that each represent seven square kilometers; the HAPS can get as close as one meter. (Sceye says that its approach is also more cost-effective than some other methods, including sensors on the ground that are slow to install, and planes or drones that have high hourly rates and can only take snapshots.)
“If we work with an oil company, we can say, ‘Hey, well number 62 has been leaking 68 kilos of methane per hour for the last 12 minutes,” Frandsen says. The company is now negotiating contracts with some fossil fuel companies, and planning to begin demonstration flights for them this year and commercial contracts next year.
In a test flight over New Mexico last year, the team identified a “super emitter” in Texas that was pumping an estimated 1,000 kilograms of methane an hour into the airthe equivalent of the hourly emissions from 210,000 cars.
When Sceye shared that data with the EPA last year, it’s not clear if the agency sent a warning letter to the polluter. Now, the Trump-era EPA is pulling back on enforcement. Congress also voted to stop the EPA from implementing a tax on excess methane emissions. But the New Mexico state government plans to continue doing as much as it can to fight pollution. Sceye’s data could help it work more efficiently.
“We are looking at how to increase funding for our agencies so that we are able to utilize technologies technologies that are coming online up and beyond standard reporting and standard on-the-ground inspections,” Miano says. “Because we have a limited staff, there are new ways that we need to continue looking at facilities with compliance issues to make sure that we can address as much as possible.”
As the director of commercial engagement for the Defense Innovation Unit (DIU), a Department of Defense (DOD) organization that funds startups developing cutting-edge weapons technology for the military, Sarah Pearson is well acquainted with keeping secrets.
Whats surprising is that her team often keeps secrets from the very startups it recruits.
Its not for any cloak-and-dagger reason, just bureaucracy. With security clearances taking up to 18 months, Pearsons team often supplies startups with fake datamade-up enemy capabilitiesto simulate real defense scenarios, so they have something to work on until they’re cleared to access classified material. In the fast-moving world of AI, if it takes 18 months . . . I no longer need that company, their model is already obsolete, she says.
Enter Nooks, a startup that acts as a kind of coworking space for classified communication. The companys cutesy name and squirrel logo belie its purpose: to build and maintain a network of these high-tech, espionage-proof, on-demand facilities where startups can handle classified informationspaces known as SCIFs, or sensitive compartmented information facilities.
Traditionally built inside military sites, defense contractor offices, and government buildings, SCIFs are fortified rooms designed to prevent electronic surveillance or intrusion. They require layers of specialized material, electronic shielding, metal reinforcements, and heavy security.
Nooks was founded in 2021 by former Navy pilot Sean Blackman and two fellow aviators to solve a paradox plaguing national security: you need a SCIF to win a defense contract, but probably dont have the funds or permission to build one without already having a contract. Instead, they asked, what if startups could rent access to SCIFs without the millions in upfront costs and years it takes to construct?
The firm just raised a $25 million Series A round, led by New Yorks Zigg Capital, in conjunction with the Space Development Agency within the Air Force, valuing the firm at $105 million. It now plans to launch its first three locations this year: in Arlington, Virginia; Colorado Springs, Colorado; and El Segundo, California. The idea is to offer classified infrastructure as a service, with 50,000-square-foot-sites subdivided into different classification levels, and eventually, grow to a network of 100 sites nationwide, especially areas with tech talent.
Theres only so much you can do unclassified before it becomes, ‘well, this was a nice science project,’ Blackman says.
Where traditional SCIFs are like buying a home and companies like Westway offer long-term leases, Nooks is more like Airbnb for classified work. For startups, that means faster entry into military innovationand for the military, a broader talent pool.
‘An outdated process’
SCIFs must be located in buildings without foreign ownership or proximity to adversarial entities, which is why many operators buy entire buildings outright. The design and security standards every SCIF must adhere to, set by the Office of the Director of National Intelligence, evolve sporadically as surveillance threats shift. (Pearson says the reason for the last SCIF update, ICD 705, which contained a laundry list of updates, remains classified.)
Meanwhile, many existing SCIFs are aging out of use, and the upkeep costs are adding up. Virginia Representative Rob Wittman, a member of the Houses Defense Modernization Caucus, says older SCIFs are small, isolated, and look like a walk-in cooler slammed into the corner of the building. These older spaces dont make for an attractive workspace for todays budding tech talent, and the cost of replacing offers a huge opportunity to Blackman.
Nooks seeks to untangle a bureaucratic bottleneck that defense and tech industry advocates say stifles military innovation. Battlefield technology is rapidly evolving, and startups want to take advantage of federal funding for dual-use tech that has civilian and battlefield applications, and funding is flowing. Already this year, over $3 billion has been invested in defense startups, according to Pitchbook, and the Pentagons $1 trillion budget will focus on high-tech weapon systems like drones, cybersecurity, robotics, and AI. Blackman, who had a stint at Facebook and experience in the defense innovation space, saw an opportunity to get government moving more like a startup; beginning in 2021, he and his colleagues interviewed hundreds of people across the defense innovation space to figure out their pain points and earn the trust needed to open Nooks, and eventually landed a small Air Force contract to start testing out the concept.
But to make these startup investments work requires classified info and sharing enemy battlefield capabilities; some DoD requests for proposals cant even be seen outside a SCIF.
The large defense contractorscalled primeshave historically taken the overwhelming chunk of defense spending, and maintain a chokehold on SCIF access. But startups often lack such access, and some go to extreme lengths: hiring staff with preexisting clearances, flying employees across the country to SCIFs, or even selling to a prime just to get in the room.
Building a new SCIF can cost millionsan immediate barrier to entry that comes at a time when warfare is changing faster than ever. Drone development alone has created a cat-and-mouse game, says Eric Snelgrove, founder of the consultancy Revere Federal Strategies. Every four to six months, as new GPS, unmanned aerial vehicle (UAV), or electronic warfare tech gets developed, previous drone models become irrelevant. A startup working on this tech needs classified updates of these rapidly changing conditions to make sure their design is relevant, shortening the feedback loop to almost constant iteration.
Wittman says the gap between the SCIF space we have and what we need is significant, though he wouldnt get into specific numbers for security reasons. Our defense ecosystem is still hampered by an outdated process that just isnt allowing us to be able to operate at the speed of relevance, he says.
‘A rear-view mirror nation’
Ken Biberaj, an executive managing director at the real estate brokerage Savills, says SCIF access is fast becoming a standard question among advanced manufacturing and dual-use startups he works with.
Much of my time now is spent with new defense/dual-use companies looking for a site and the question of a SCIF will always come up, he says.
San Diego State University sees the potential of locating a Nooks site within a forthcoming mixed-use campus extension featuring 1.6 million square feet of innovation space, allowing students and startups to do classified work on topics like material science research or cybersecurity. Officials see it as a magnet for engineering and research talent, and funding.
The demand for SCIF access grows, which the Pentagon is taking note of, but the challenge remains how fast the government can get more startups in the right, highly-secure rooms.
We’ve always had the luxury of being what I call a rear-view mirror nation, says Wittman. Weve just had to look and see how far ahead of our adversaries we are. Today, we have to be a windshield nation, see that there are some folks ahead of us, and not only press the gas pedal, but figure ut how were going to be innovative and creative.
The Trump administration has focused on bringing new, innovative companies into the defense-industrial complex and signed an executive order on defense procurement reform.
Pearson says the DIU and others are trying to streamline the clearance process; shes optimistically aiming to cut it to three months. The National Defense Authorization Act budget approved last year also has $100 million budgeted for the creation of more shared classified workspaces, some of which will support Nooks.
The technology stack that you need to fight a desert war in the Middle East is vastly different from what you need to fight China, right? says Blackman. The companies that the DOD tends to work with dont have that technology; theyre great with planes and tanks and missiles, but they suck at software. Theres just a whole sector thats really good at this stuff that wasnt meaningfully being engaged in the defense business.
