Good morning. In today’s edition, more headlines about AI companies poaching AI talent, only to be sued by that talent’s former AI employers for stealing trade secrets.
Nothing we aren’t used to seeing in tech, but still…to apply an old sports idiom to the rapidly evolving world of AI, the best defense is a good offense, no?
Today’s tech news below. —Andrew Nusca
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Figma gets crushed in its post-IPO earnings debut
Shares of design software company Figma plunged 14% in extended trading yesterday as investors took a dim view of Figma’s first-quarter earnings report.
In its fiscal second quarter, Figma's revenue grew a healthy 41% year-over-year to $249.6 million, roughly in line with analyst expectations. Figma reported $28.2 million in net income, or break-even on a per share basis.
“We’re at the very start of what I hope is a long-term relationship together,” CEO Dylan Field confidently told listeners as he kicked off the earnings call.
Field, who cofounded the company in 2012 and watched its $20 billion acquisition by Adobe fall apart in 2023, clearly isn’t one to get caught up in the negative.
“No one knows whether we’re going to look back in five years at everything that’s happening right now in AI and say, ‘Oh my God, those were the bubbliest of times,” Field told Fortune yesterday ahead of the call. “Or: ‘Wow, we totally underestimated the effect it would have on society.’”
Field believes one of the key intersections between AI and design is that AI tools will help broaden access, letting more people become designers. Figma added four new AI-native tools to its platform this quarter and told investors on the call to expect significant investments in AI going forward.
“Our philosophy is that as the models get better, we get better,” he said. “That’s always the test I have strategically for us.” —Allie Garfinkle
Meet the $100m AI startup that wants to kill the billable hour
Eudia, a Palo Alto-based AI startup, is offering something entirely new: the world’s first AI-augmented law firm.
Its end goal is nothing less than the death of the billable hour that, according to CEO Omar Haroun, has run entirely out of control.
“Most legal departments have lost control of their budgets and their knowledge,” Haroun said in a press release announcing the launch of Eudia Counsel, which he called “the first AI-native law firm.”
The company has fought hard to bring its novel approach to light, Haroun told Fortune at the company’s 2025 Augmented Intelligence Summit in New York.
Arizona is the only state in the country where a law firm is not required to be owned by lawyers, he said. Even still, there are technicalities. Eudia is not technically set up as a law firm, but a company that is a “provider of a law firm.”
Haroun told Fortune that the economics of AI can, for example, transform pro bono work, which he sees as “the reason people like me went to law school” in the first place.
Gary Hood, general counsel for Berkshire Hathaway-owned Duracell, said using Eudia has been a “no-brainer” for contracts and due diligence during M&A.
Haroun said some clients were spending hundreds of millions of dollars on outside counsel, and that’s where Eudia steps in.
And what about people? Eudia co-founder Ashish Agrawal likened the tools to a brand new employee that every company has to be patient with and incorporate “organically.” Human inputs, he told Fortune, are essential to AI working properly. —Nick Lichtenberg
Is an ‘AI winter’ coming?
As summer fades into fall, many in the tech world are worried about an AI winter.
There’s a reason this phrase comes so naturally lately: We’ve already lived through several spells of waning enthusiasm and investment in AI over its 70-year history.
The most recent talk has been triggered by growing concerns among investors that AI technology may not live up to the hype surrounding it—and that the valuations of many AI-related companies are far too high.
Is this chill in the air a passing breeze or the first hints of an impending Ice Age? A look at past AI winters may help.
For example, there are clear parallels between the hype generated by today’s prominent AI figures and the competing camps working on the technology in the early days of the Cold War.
There are also historical parallels for recent studies suggesting AI isn’t meeting expectations. In 1966, a committee commissioned by the National Research Council issued a damning report concluding that computer-based translation was more expensive, slower, and less accurate than human translation.
You can guess what happened to research funding after that.
There are some key differences between then and now. Most significantly, today’s AI boom is not dependent on public funding—though government entities are becoming important customers.
And unlike in the very first AI winter, when such systems were mostly just research experiments, today’s AI is being widely deployed in businesses and homes.
Three years after ChatGPT’s debut, there are certainly a few autumnal signs here and there. But only time will tell if it is the prelude to a deep freeze in AI investment or a momentary cold-snap before the sun appears again. —Jeremy Kahn
More tech
—Apple AI search tool in development. “World Knowledge Answers” reportedly arrives in the spring.
—Instagram for iPadOS arrives. It only took 15 years, Meta!
—xAI CFO Mike Liberatore departs. He joined Elon Musk’s AI startup in April and reportedly exited in late July.
—Scale AI sues former employee for allegedly stealing trade secrets and sharing them with Mercor.
—Tom Siebel steps down at C3 AI, to be replaced by Stephen Ehikian. The company reported a Q1 revenue drop of 19% from the same period a year ago.
—Streameast shuts down. The world’s largest illegal sports streaming platform is knocked out by Egyptian law enforcement and others.
—Mistral valued at €12B. The French AI firm (of Le Chat fame) is reportedly putting the finishing touches on a €2B investment.
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