Former DOGE Operatives Launch AI Holding Company with a16z Backing

Former members of the Department of Government Efficiency (DOGE), Nate Cavanaugh and Justin Fox, have launched a new holding company named Special to apply their government operational methods to the private sector using artificial intelligence. The venture has secured funding from a16z, led by Marc Andreessen, alongside a coalition of former DOGE associates and high-profile technology investors. Special aims to vertically integrate critical industries, commencing with senior care through a subsidiary called FigureHealth, by deploying an AI-driven operating system to improve efficiency and reduce waste.

In a post on a16z’s Substack, Cavanaugh and Fox stated that their startup would build an operating system to transform critical American industries, arguing that Main Street suffers from inefficiencies similar to those found in the federal government. The plan involves acquiring businesses in key sectors and running them using Special’s proprietary system. Cavanaugh told the TBPN podcast that the company is also targeting markets such as construction and manufacturing, which are labour-intensive and highly regulated, areas where he believes DOGE’s learnings can be effectively applied.

The funding round includes investments from Steve Davis, Elon Musk’s right-hand man and former DOGE operations coordinator, as well as Antonio Gracias, founder of Valor Equity Partners. Other participants include Baris Akis, Anthony Armstrong, former chief financial officer at Musk’s xAI, and Donald Park, who was involved in DOGE’s operations at the Small Business Administration. Coinbase founder Brian Armstrong and Palantir CTO Shyam Sankar also participated in the round, with Armstrong noting in a deposition that he was a mentor to Fox.

Special’s pitch has drawn criticism from experts who view its focus on alleged fraud and waste as narrow and aligned with specific political talking points. Cavanaugh and Fox cited examples of waste in Minnesota childcare centres and California hospice businesses to justify their approach. Don Moynihan, a professor of public policy at the University of Michigan, described the initiative as relying on DOGE tropes and representing a bro-y perspective on government challenges, suggesting that an overemphasis on welfare fraud indicates a limited view of major systemic issues.

The launch follows a period of controversy for Cavanaugh and Fox during their tenure at DOGE. They led the forcible takeover of the US Institute of Peace (USIP), where Cavanaugh attempted to gift the organisation’s building to the government, a move currently subject to ongoing court proceedings. Both individuals were also involved in the DOGE takeover of the National Labor Relations Board (NLRB), where whistleblower Dan Berulis alleged that DOGE members compromised sensitive data and that an IP address in Russia attempted to log into the systems. In a legal deposition, Fox admitted to using a large language model to identify government contracts containing terms such as LGBTQ, tribal, and BIPOC to target diversity, equity, and inclusion initiatives.

While Cavanaugh and Fox did not respond to requests for comment, the broader DOGE network continues to transition into the private sector. Former member Ethan Shaotran is reportedly running a defence tech startup described as backed by big names, though he has not disclosed specific funders. Moynihan noted that DOGE appeared to function as an employment conveyor belt, operating effectively as a place for individuals to demonstrate skills and loyalty to venture capital networks.