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Forbes
13-05-2025
- Business
- Forbes
How A Grisly Injury Threw $5 Billion Drone Startup Shield AI Off Course
InApril of 2024, a handful of U.S. Navy officers gathered outside of Fort Stockton, Texas, to watch defense tech unicorn Shield AI demo its latest drone. Called the V-BAT, the autonomous aircraft was designed to launch and land vertically without a runway and could be piloted through war zones where GPS wasn't reliable. Shield had yet to announce a major contract for it, and the U.S. Navy's support was crucial to the company's hopes to sell thousands of the $1 million drones to the Pentagon. But as the 12-foot-long V-BAT came in for a landing, things went sideways. Unlike most drones, which don't require physical intervention, Shield's operators needed to assist the drone in landing vertically, like a SpaceX rocket. Instead it dropped to the ground and tipped over, resulting in a grisly incident: When a U.S. service member approached the drone, his fingers were caught in the spinning blades and partially severed. Shield AI has emerged as a lead contender in the increasingly crowded race against competitors like Anduril and AeroVironment to outfit the U.S. military with killer drones. The $5 billion-valued startup, founded in 2015 by brothers Ryan and Brandon Tseng, sells a suite of hardware and products, including autonomous piloting software that has been used to fly fighter jets. In March, it raised $240 million in a funding round led by Korean conglomerate Hanwha and American defense contractor L3Harris with the goal of preparing the military for the future of autonomous warfare. The V-BAT, though, has been the company's primary revenue driver. 'I have personally led the effort to scale revenues from zero to hundreds of millions of dollars in the defense sector,' Brandon Tseng, a former Navy SEAL, told a Congressional committee in September, 'something maybe only three to five people have achieved in the past 30 years.' Shield's 1,000-strong workforce has been encouraged to embody a warrior ethos, with slogans like 'Do what honor dictates' and 'Live as a servant leader.' But the incident with the U.S. Navy, which hasn't previously been reported, has spotlighted the risks brought by a new generation of hard-charging military startups seeking Pentagon contracts while hyping their companies to Silicon Valley investors, sometimes at the expense of physical safety. 'The V-BAT was not as I had thought it was when we acquired the company.' A spokesperson for U.S. Naval Special Warfare Command said in a statement that the service member had three fingers partially amputated during the incident. The person made a full recovery after four months and is now 'performing all duties without limitations.' (The service member declined to comment.) The spokesperson declined to provide information about the result of an investigation into the incident, and directed requests to the U.S. Naval Safety Command, which declined to comment. CEO Ryan Tseng, confirming the U.S. Navy incident to Forbes, said that flight restrictions were imposed on the drone by U.S. military customers for several months. 'It's the opposite of our mission if somebody gets hurt,' Tseng said in an interview with Forbes. 'We exist to protect service members and civilians.' Tseng said that the V-BAT 'had been flying almost 10 years, with a perfect safety record,' adding, 'The event was a surprise, and it was one that, frankly, I feel terribly about.' But Forbes found that for years, as Shield raised hundreds of millions of dollars from investors like Andreessen Horowitz and billionaire Thomas Tull's USIT, its executives overlooked engineering issues and safety hazards that ultimately scuttled contract opportunities, according to former employees, internal documents and legal filings. In 2022, almost two years before the U.S. Navy member was injured, Shield's then-quality assurance manager 'reported a safety issue involving danger of propeller strike/injury to personnel due to unsafe blower handling,' according to a lawsuit he filed against the company in October related to disability accommodation (at the time, Shield denied the safety claims in its legal response; the lawsuit was settled). Then in 2023, an employee's shirt was sucked into a propeller and shredded during a test flight, according to multiple people, one of whom raised alarms internally. Brandon Tseng, president and co-founder of Shield AI, said he plans to remain at Shield 'forever, until our mission is accomplished at grand scale.' After flagging concerns about the V-BAT to executives, two former employees told Forbes they were fired; they said they were aware of several other employees being fired for similar reasons. Two others told Forbes they became disillusioned and resigned when no action was taken regarding their complaints about the drone. 'You either had to do what you were told, or you would be let go,' said one former employee who worked on the V-BAT and was fired last year. 'Even though we knew from experience what they wanted us to do was unethical.' 'I reject the notion that we don't take concerns seriously,' Tseng said. 'We have a culture where across the organization, people call balls and strikes as they see them.' When asked why Shield AI didn't adequately address the propeller hazard when employees first flagged it, Tseng said 'numerous' safety improvements had been made to the V-BAT. 'Today, V-BAT retains a perfect record of no injuries when following trained procedures,' he said. Tseng said the company has since passed two Pentagon safety audits (the units that conducted the audits didn't respond to a comment request). He also said Shield has addressed the propeller hazard in an upgrade to the V-BAT announced last month, which included new landing gear that removed the need for human assistance during landing and take-off. He added that the drones now have warning stickers near the fan ducts, and that employees wear flight suits — a requirement imposed after the incident involving the shredded shirt. 'We have continuously invested in a safety culture,' he said. The company had hoped to generate more than $400 million in revenue and become profitable this year, mostly due to V-BAT sales, according to financial projections shared with investors in 2023 obtained by Forbes. Shield no longer expects to hit those financial targets, or reach profitability in 2025, Tseng told Forbes. 'The mishap delayed the decision process of many potential customers domestically and internationally,' he said in a written comment. 'We are back on track now.' Tseng told Forbes that Shield has recently signed contracts valued at more than $100 million for European government customers, including for V-BATs sent to Ukraine (he declined to disclose the customers). The company also has a five-year V-BAT contract with the U.S. Coast Guard, with a potential $200 million value if the order is fulfilled, and announced agreements with Taiwan and Japan governments, but has not disclosed their value. In the months after the U.S. Navy incident, Tseng said he suggested to the board that he should step down as CEO. 'I have always felt like I owed this team the absolute best possible leader,' he said. 'I was the guy on the side of the ship as it was racing forward.' Last month, Tseng announced publicly he would step aside, telling Forbes he would become co-president of the company with his brother. A new CEO, Gary Steele, who previously led cybersecurity companies Splunk and Proofpoint, is set to take over this month. 'I'm excited to work with him to build a great company that makes mission impact,' Tseng said. As for the co-president role: 'Brandon and I will both take on external facing roles, forming relationships with customers globally.' The company declined to provide a comment from Steele. Brandon Tseng said in a statement he plans to remain at Shield 'forever, until our mission is accomplished at grand scale.' Investors Hanwha, Andreessen Horowitz and USIT didn't respond to a comment request. 'Shield AI is proving that autonomy at scale is not only possible but inevitable,' L3Harris spokesperson Sara Banda said in a statement. Launched in 2015, Shield AI initially aimed to solve a fatal problem dogging U.S. service members in the Middle East: clearing buildings held by adversaries. Brandon Tseng was intimately familiar with the danger as a former SEAL, and pitched Ryan — an entrepreneur who had sold a startup that made wireless charging pads to Qualcomm — on a company to sell drones that could fly through buildings and detect dangers before soldiers went in. Its first product, a quadcopter called Nova they claimed could autonomously navigate buildings, helped Shield secure early investment from the Pentagon's Defense Innovation Unit and Andreessen Horowitz, which led two early funding rounds into the company totalling $30 million. But as the U.S. shifted its focus from Middle East war zones to China tensions, the Nova drones struggled to secure larger Pentagon contracts. The company said it no longer sells the Nova. In 2021, Shield acquired Martin UAV, a longtime developer of the V-BAT, and sold investors on its potential with plans to enhance the device using its autonomous AI software, known as Hivemind, which it claimed could allow a single person to pilot multiple V-BATs. Investors, including Point72 Ventures, poured in $200 million for a funding round that valued the company at $1 billion. 'We want to climb the unmanned systems food chain,' Tseng told Fortune at the time. (Point72 declined to comment.) Shield AI said its V-BAT drones have completed more than 150 missions in Ukraine. But the V-BAT, which had been in development for more than a decade, was an imperfect drone with limited success selling to the Pentagon. The aircraft was plagued by product defects, including cracked fuselages and faulty fuel systems that clogged with air bubbles, according to six former employees. The engineering issues were evident during multiple demos with U.S. military officials when V-BATs fell out of the sky; for example, two were lost in as many days during one set of demos for the U.S. Navy at a California facility in 2023, according to a person who was there (which Tseng confirmed). In other cases, the V-BATs crashed into the ocean during flight tests from ships ('We have lost aircraft over the ocean, as has every other vendor of [comparable] aircraft,' Tseng said). 'The V-BAT was not as, I'll just speak for myself, mature as I had thought it was when we acquired the company,' Tseng said. 'And the people we bought the company from, frankly, I think that they thought it was more mature than it was.' Now, Tseng says the company's woes are in the past. In addition to addressing the propeller hazard, Shield announced a major overhaul of the V-BAT last month. With the Hivemind software, it can fly more than 80 miles and stay in the air for more than 13 hours, while carrying more than 40 pounds of payload. In Ukraine, V-BATs have completed more than 150 missions, he said. The 'aircraft is, tip to tail, just a radically better airplane,' Tseng said. He plans to stay with Shield 'as long as possible.' In recent months, he has championed a flurry of announcements — a software partnership with Palantir to control autonomous systems, and with Airbus to install Hivemind on an autonomous helicopter. Shield has $1.9 billion in 'credible opportunities in our sales pipeline,' he added, and the company expects to announce new European contracts in the coming months. But plans for the V-BAT were notably absent from the press release announcing Shield's latest funding in March. Instead, the company focused on how it would use the new capital to scale its Hivemind platform — ideal for its new CEO, Steele, whose background is in software. 'I think he'll be better at the job than me,' Tseng said. Still, the brothers continue to talk a big game. 'I can confidently say no defense-tech company started after 2015 has made more strategic impact on the battlefield than @ShieldAI,' Brandon posted on X last week. Ryan agrees. 'I don't want to name companies,' he said, 'but I think that we have made a really tremendous impact.'
Daily Tribune
10-04-2025
- Business
- Daily Tribune
Trade war escalates as China hits US with huge tariff
China announced yesterday massive retaliatory tariffs on US goods, sharply escalating a trade war started by President Donald Trump and fuelling fresh panic in global markets. Trump's latest salvo of tariffs came into effect on dozens of trading partners earlier Wednesday, including punishing duties of 104% on imports of Chinese products. Beijing originally planned to respond with a 34% tariff on imports of US products from 1601 GMT Wednesday, but the finance ministry said it would now raise the toll to 84% after Trump dramatically hiked his own duties on imports from China. "The tariff escalation against China by the United States simply piles mistakes on top of mistakes (and) severely infringes on China's legitimate rights and interests," the ministry said. Washington's moves "severely damage the multilateral rulesbased trade system", it added. In a separate statement, Beijing's commerce ministry said it would blacklist six American artificial intelligence firms, including Shield AI and Sierra Nevada Corp. "This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing," the US president said on his Truth Social platform. He urged: "DON'T WAIT, DO IT NOW!" Trump believes his policy will revive America's lost manufacturing base by forcing companies to relocate to the United States. But many business experts and economists question how quickly -- if ever -- this can take place and warn it could reignite inflation. Drug makers next? Trump has said his government was working on "tailored deals" with trading partners, with the White House saying it would prioritise allies such as Japan and South Korea, which were hit with tariffs of 24 percent and 25 percent, respectively. His top trade official, Jamieson Greer, told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs. Vietnamese goods were hit with one of the highest tariffs, at 46 percent. Trump told a dinner with fellow Republicans on Tuesday night that countries were "dying" to make a deal. "I'm telling you, these countries are calling us up kissing my ass," he said. The European Union, whose goods were hit with a 20 percent tariff, is working on response that could be presented next week.
Yahoo
10-04-2025
- Business
- Yahoo
China slaps restrictions on 18 US firms over Trump tariffs
By Eduardo Baptista BEIJING (Reuters) -China's commerce ministry slapped restrictions on more than a dozen U.S. defence firms on Wednesday after President Donald Trump made good on his threat to impose an additional 50% tariff on Chinese imports. Beijing added 12 U.S. companies to a control list that prohibits exports of dual-use items and another six to its "unreliable entities" list, which allows Beijing to take punitive actions against foreign entities, according to commerce ministry statements. China also announced it would raise its levies on U.S. goods by 50%, adding to the 34% increase previously announced and due to be implemented on Thursday, to bring the total additional duties on U.S. imports to 84%. The most recent round of trade restrictions, also effective Thursday, are mainly targeted at U.S. firms that supply the Pentagon and federal government agencies, adding to the 60 or so American companies Beijing has already punished over Trump's tariffs on China, the first of which took effect in February. In the case of the unreliable entities list, Beijing said the six U.S. firms were added over arms sales or military cooperation with Taiwan and would be banned from China-related import and export activities, as well as investing in the country. "In recent years, the six companies, including Shield AI and Sierra Nevada Corporation, have... seriously jeopardised China's national sovereignty, security and development interests," the commerce ministry said in a statement. California-based Shield AI specializes in artificial intelligence-powered aircraft, especially military drones, while long-time Pentagon and NASA contractor Sierra Nevada Corporation last year was selected by the U.S. Army to convert a fleet of business jets into cutting-edge spy planes. While the affected firms have little to no business in China, according to a Reuters review of corporate records, the new restrictions could potentially disrupt their supply chains. When U.S. drone manufacturer Skydio was sanctioned by Beijing in October over arms sales to democratically governed Taiwan, which China claims as part of its territory, that quickly cut off the company's supply of batteries, according to the Financial Times. But even as Beijing retaliates against Trump's tariffs by targeting U.S. imports and companies, it has sought to include in its public messaging reassurances aimed at foreign firms operating in China, or looking to invest in the country. In a statement explaining the new additions to the unreliable entities list on Wednesday, the commerce ministry concluded by stating that the list only applied to "a very small number" of firms and that "foreign entities that are honest and law-abiding have nothing to worry about". Sign in to access your portfolio
Jordan Times
09-04-2025
- Business
- Jordan Times
Trade war escalates as China hits US with huge tariff
People walk across a foot bridge showing a screen displaying financial markets information at the financial district in Shanghai on April 9, 2025 (AFP photo) BEIJING — China announced Wednesday massive retaliatory tariffs on US goods, sharply escalating a trade war started by President Donald Trump and fuelling fresh panic in global markets. Trump's latest salvo of tariffs came into effect on dozens of trading partners earlier Wednesday, including punishing duties of 104 per cent on imports of Chinese products. Beijing originally planned to respond with a 34 per cent tariff on imports of US products from 1601 GMT Wednesday, but the finance ministry said it would now raise the toll to 84 per cent after Trump dramatically hiked his own duties on imports from China. "The tariff escalation against China by the United States simply piles mistakes on top of mistakes (and) severely infringes on China's legitimate rights and interests," the ministry said. Washington's moves "severely damage the multilateral rules-based trade system", it added. In a separate statement, Beijing's commerce ministry said it would blacklist six American artificial intelligence firms, including Shield AI and Sierra Nevada Corp. Trump did not immediately react to the Chinese counterattack but he called on companies to start relocating to the United States to avoid tariffs. "This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing," the US president said on his Truth Social platform. He urged: "DON'T WAIT, DO IT NOW!" Trump believes his policy will revive America's lost manufacturing base by forcing companies to relocate to the United States. But many business experts and economists question how quickly -- if ever -- this can take place and warn it could reignite inflation. Recession fears The escalating trade war has wiped off trillions of dollars in market value since last week as investors fear that the trade war will spark a recession. After some respite on Tuesday, stock markets were in panic mode again, with Tokyo's Nikkei index closing almost four per cent lower on Wednesday. Paris and Frankfurt sank four per cent in afternoon trading while London was down 3.5 per cent. US equities were expected to open with more losses. The Bank of England warned of risks to "UK financial stability" from increased geopolitical tensions, including the fallout from the US tariffs. Italy is preparing to cut its 2025 growth forecast in half, to 0.6 per cent from 1.2, a government source said, while Spain is also set to downgrade its outlook. Central banks in India and New Zealand cut interest rates to boost their economies in the face of tariffs. Oil prices fell below $60 a barrel, their lowest level in four years. Government bond yields — essentially the interest countries pay to borrow money — rose in the United States, Japan and Britain, among other countries. Drug makers next? Trump has said his government was working on "tailored deals" with trading partners, with the White House saying it would prioritise allies such as Japan and South Korea, which were hit with tariffs of 24 per cent and 25 per cent, respectively. His top trade official, Jamieson Greer, told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs. Vietnamese goods were hit with one of the highest tariffs, at 46 per cent. Trump told a dinner with fellow Republicans on Tuesday night that countries were "dying" to make a deal. "I'm telling you, these countries are calling us up kissing my ass," he said. The European Union, whose goods were hit with a 20 per cent tariff, is working on response that could be presented next week. A Chinese government white paper released on Wednesday emphasised that the Beijing and Washington could still resolve their differences "through equal-footed dialogue and mutually beneficial cooperation". Trump on Tuesday said the United States was "taking in almost $2 billion a day" from global tariffs. He also said the United States would announce a major tariff on pharmaceuticals "very shortly", prompting a sell-off in shares of pharmaceutical companies. Residents in Beijing expressed fears over the escalating trade war. "I hope that everyone can sit down and reconcile and talk, and then put things out step by step, rather than irrationally escalate them," Yu Yan, a lawyer, told AFP. In the United States, consumers also voiced worries over rising prices. At a supermarket in New York, mother-of-two Anastasia Nevin told AFP she was "just trying to get by. It's tough", adding that she was in "survival mode".
Al-Ahram Weekly
09-04-2025
- Business
- Al-Ahram Weekly
Trump trade war escalates as China, EU counterattack - International
US President Donald Trump's trade war boiled over on Wednesday as China and the European Union adopted retaliatory tariffs against US goods, fuelling fresh market volatility. Trump's latest salvo of tariffs came into effect on dozens of trading partners earlier Wednesday. "BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!" Trump posted on his Truth Social platform following the Chinese and EU counterattacks. In one of the most serious tests of China-US ties in recent decades, Trump ramped up the duties he had originally prepared for Chinese goods, finally raising them to 104 percent after Beijing said it would retaliate. Beijing initially planned to impose a 34 percent tariff on imports of US products from 1601 GMT on Wednesday, but the finance ministry said it would now raise the toll to 84 percent after Trump hiked his tariff. "The tariff escalation against China by the United States simply piles mistakes on top of mistakes (and) severely infringes on China's legitimate rights and interests," the ministry said. Washington's moves "severely damage the multilateral rules-based trade system", it added. China also said it would blacklist six American artificial intelligence firms, including Shield AI and Sierra Nevada Corp. The European Union announced measures targeting more than 20 billion euros' worth of US products, including soybeans, motorcycles and beauty products, starting April 15. The levies are in retaliation for US duties on global steel and aluminium exports imposed last month. "These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome," the European Commission said after EU member states approved the measures. "The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy," it added. The EU is still working on a response to the 20 percent levy that took effect on Wednesday. 'Cutting your own throat' US officials have warned nations against retaliating. "I think what a lot of people are missing here is that the levels that were put out last Wednesday are a ceiling, if you don't retaliate," US Treasury Secretary Scott Bessent said at a US banking summit Wednesday. Bessent warned countries that aligning with Beijing "would be cutting your own throat" as China is guilty of excess production and "dumping" inexpensive goods on other economies. Trump believes his policy will revive America's lost manufacturing base by forcing companies to relocate to the United States. "This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing," Trump posted on Truth Social, adding "DON'T WAIT, DO IT NOW!" But many business experts and economists question how quickly -- if ever -- this could take place and warn it could reignite inflation. Markets mixed The escalating trade war has wiped off trillions of dollars in market value since last week as investors fear that the trade war will spark a recession. After some respite on Tuesday, stock markets were rattled on Wednesday. Wall Street's main indexes were up in early morning deals while European stock markets were down around three percent in afternoon trading. Tokyo's Nikkei index closed almost four percent lower. The dollar fell against major currencies while oil prices fell below $60 a barrel, their lowest level in four years. Government bond yields -- essentially the interest countries pay to borrow money -- rose in the United States, Japan and Britain, among other countries. The Bank of England warned of risks to "UK financial stability" from increased geopolitical tensions, including the fallout from the US tariffs. Italy is preparing to cut its 2025 growth forecast in half, to 0.6 percent from 1.2, a government source said, while Spain is also set to downgrade its outlook. Trump has said his government was working on "tailored deals" with trading partners, with the White House saying it would prioritise allies such as Japan and South Korea, which were hit with tariffs of 24 percent and 25 percent, respectively. His top trade official, Jamieson Greer, told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs. Trump told a dinner with fellow Republicans on Tuesday night that countries were "dying" to make a deal. "I'm telling you, these countries are calling us up kissing my ass," he said. Trump also said the United States would announce a major tariff on pharmaceuticals "very shortly", prompting a sell-off in shares of pharmaceutical companies. Follow us on: Facebook Instagram Whatsapp Short link:
