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• Lemon Slice turns agents into avatars: The startup’s Lemon Slice-2 diffusion model produces lifelike digital avatars from a single image. The idea is that these avatars can then live atop a third-party chatbot or model and function as a virtual AI agent. So rather than a student interacting with a text-only tutor, they could get homework assistance from a realistic virtual instructor. But of course, this only works if the video can stream fast enough to keep up its end of a natural language conversation. So Lemon Slice has focused on efficiency, and can livestream their model even when it’s running on a single GPU.

• Kargo raises $42M Series B: Warehouse automation is one of the overriding themes of 2025 on the pod, to the point that “warehouse tech” is now essentially its own TWiST 500 category. (The global AI warehousing market is projected to hit $45.12 billion by 2030.) One of the main players here is Kargo, which develops systems that use AI-powered camera towers at loading docks and yards, keeping an eye out for potential efficiency gains and catching small mistakes and human errors before they become major problems.

• ServiceNow acquires Armis: Bloomberg reports that the enterprise software company plans to pick up the Israeli cybersecurity startup for around $7.75 billion, in an all-cash deal. ServiceNow suggests that the acquisition will triple its market opportunity when it comes to AI-powered security solutions. CEO Bill McDermott told CNBC that enterprises desperately need more protection in the coming world of agentic AI, making this a surefire way to accelerate growth.

TWiST 500

It’s a great week if you’re a big fan of the holiday season… or if you’re world’s richest man Elon Musk.

The first item in Mr. Musk’s proverbial stocking… The US Department of War (fka The Department of Defense) has enlisted xAI as a preferred partner, and will deploy the Grok chatbot across its various systems. That includes the Pentagon’s newly launched AI platform, GenAI.mil.

This is no everyday collaboration. 3 million military and civilian personnel will gain access to Grok tools AND xAI gets some access to what Fox News describes as “sensitive government information.” (NOTE: That apparently does NOT include actual classified information. At least, for now.)

Additionally, the Pentagon will get access to “live information from X,” allowing them to more closely monitor ongoing events and crises around the globe.

Another brightly-wrapped package under the Musk family tree this season… The New York Times reports that the Chinese government plans to slow down on the manufacture of self-driving vehicles. Of nine total automakers that submitted plans for self-driving programs, the CCP’s Ministry of Industry and Information Technology only gave two companies the go-ahead, and for relatively narrow robotaxi projects as opposed to mass production.

This follows a deadly, high-profile accident involving a Xiaomi SU7 back in March, which took the lives of three university students, and raised questions in the country about the speed at which automated driving technology is being adopted. (The Xiamoi was moving at 72 mph in “assisted driving” mode, as opposed to fully automated driving, at the time of the crash.)

Tragic backstory aside, this is positive news for Tesla, the primary Western competitor to Chinese companies hoping to begin mass-producing automated vehicles. Recently on the pod, Jason suggested that Google might have to take extreme measures — even potentially purchasing Uber — in order to keep up with Tesla’s Cybercab plans. – Lon

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This Week in Startups

E2227: A power outage in the Bay Area led to WAYMO MADNESS, as the automated vehicles piled up in the streets of San Francisco, leading to traffic chaos and leagues of frustrated Uber drivers. How did this happen? And what were Jason’s impressions of the spectacle after seeing it unfold first-hand? We’re digging into the details on a brand new TWiST.

E2226: We’ve got Hampton co-founder and “My First Million” co-host Sam Parr joining the show for a full hour, to walk us through his best tips and tricks on copywriting and online marketing. Join us for a can’t-miss deep dive through the best-ever marketing books, why there’s no such thing as “too long,” only “too uninteresting,” why the best advertising tricks from the ‘40s and ‘50s are still effective, and much more!

E2225: On the debut of our new spinoff — “This Week in AI” — Jason hangs with three all-star founders: Mikey Schulman of Suno, Ali Ansari of Micro1, and Wade Foster from Zapier. Together they chat about the AI talent wars of 2025 (and soon to be 2026), the value of a “high-agency” mindset, how to work around the design bottleneck, entering the Post Training Era, and much more!

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