Investable Startups, Emerging Defense Technologies, and Shield Capital with David Rothzeid

Step into the future of defense technology and venture capitalism as David Rothzeid, a seasoned Air Force veteran with 13 years of experience, guides us through an illuminating exploration. Delve into the realm of low Earth orbit satellites, cutting-edge venture funding, and remarkable advancements in defense technology. Gain insights into the dynamic intersection of defense tech and venture capital that is reshaping industries and discover how this episode serves as a catalyst for innovation and progress. David shares his passion for national security technology and the exciting traction companies are gaining in this space.

Topic Highlights:

00:00 - Venture Capital and Defense Tech 
David and Callye discuss the challenges and potential returns of investing in defense tech. David explains Shield Capital's approach to investing and the importance of commercial applications for the success of a company. They also discuss the challenges startups face in targeting both defense and non-defense markets simultaneously.

05:48 - Investment Strategy
David shares insights on how his background in the Air Force informs his investment decisions and how Shield Capital helps its portfolio companies navigate the complexities of the defense ecosystem. He also talks about the importance of understanding the acquisition process and the value of partnerships.

12:01 - Making Strategic Decisions as a Startup
Rothzeid talks about the challenges startups face when approached by entities like the Air Force for demonstrations and how those exercises might not lead to the type of traction. He mentions the importance of understanding the decision-makers involved and whether it will lead to something worthwhile.

00:15:04 - Highlighting Albedo: Game-Changing Satellite Imagery
Rothzeid highlights Albedo, a company that is putting up satellites in very low earth orbit with exquisite sensors that will be a game-changer for both the national security mission and commercial industries.

23:48 - The Exciting Journey of a VC
David shares his insights on the excitement and challenges faced by venture capitalists, emphasizing the need for strategic portfolio construction and the importance of having conviction in the founders they choose to invest in.

25:24 - Criteria for an Investable Startup
David discusses the key criteria that Shield Capital looks for in a startup, including the applicability of the technology to both commercial and national security, the stage of the business, and the market potential. He also highlights the importance of the founder's vision and the ability to build a billion-dollar business.

Callye Keen - Kform
https://kform.com/ 
https://www.linkedin.com/in/callyekeen/ 
https://youtube.com/@kforminc  
https://twitter.com/CallyeKeen 

David Rothzeid - Shield Capital 
https://shieldcap.com 
https://twitter.com/ShieldCapVC 
https://www.linkedin.com/company/shieldcap/ 

About David Rothzeid
David Rothzeid is a Vice President of Investments for Shield Capital, a venture capital firm with over $170 million in assets under management based out of San Francisco, CA. David is responsible for sourcing, diligencing, and supporting cutting edge start-ups across multiple technology verticals operating at the nexus of commercial innovation and national security. 

David separated as a Major from the United States Air Force after thirteen years on active duty. With assignments at the Pentagon, Defense Innovation Unit, Air Force Materiel Command, Special Operations Command, and Air Force Space Command, David earned distinction as an innovative acquisition officer pioneering the Commercial Solutions Opening (CSO) and promoting other transaction (OT) authority among other

Transcript

David Rothzeid: 0:00

But the question I'm always asking myself is does this person have that glimmer of greatness in them? Is this somebody that I would want to go work for?

Callye Keen: 0:09

Welcome to the Startup Defense. Today I have from Shield Capital. So, david, you're in the venture capital world, but you came out of the Air Force and what you're up to at Shield Capital is a great overlap for the premise of this show. So I'm very excited to talk to you about some of the exciting companies that you are participating in, what Shield Capital has invested in and your background. Before we jump in, can you tell us who you are, what you're passionate about right now?

David Rothzeid: 0:41

Well, first off, thank you for having me on this show, been listening now for a little while.

David Rothzeid: 0:45

I'm excited to get going with you. As far as you know what, what am I passionate about right now? I think we're in a pretty exciting space where companies that have technology that's applicable to the national security environment are really starting to see a lot of traction and interest, and not just from firms like Shield Capital, but even others. You know that once upon a time we're saying to their startups don't do work with the DoD, forget about government, and I think a lot of that has to do with some of the recent events that we've been seeing in Ukraine, but then also just a fairly strong decoupling with the emergence of an authoritarian China and what that could mean to our way of life and our values and principles, and so it's a very interesting time, given some of the macro environments that have tended to push a lot of negativity in the third party capital markets, but overall, despite that, pretty big boons in what some people are calling defense tech or dual use or, you know, national security technology.

Callye Keen: 1:54

Yeah, I think it's a confluence of large market factors and, at the end of the day, it's also a really good return on your investment. So when we talk about adversarial capital or connecting with a mission, or improving our civilization, our society, there's all of those big plays which make us feel really great, but the return on capital makes it so, as investors, it actually works from a strict ROI sense.

David Rothzeid: 2:22

Well, I think you know the jury is still out a little bit on that one. You know some of the biggest successes in this emerging defense tech space. A lot of them are still private. You think about SpaceX, andorral Shield, ai. They've certainly raised serious money and they have changed a lot of people's opinions about how things ought to work.

David Rothzeid: 2:46

But until they go public and have that liquidity event and we all get to see what's behind the books, I think the idea that defense tech as its own market remains to be seen whether that can truly be profitable. And I would say that's where maybe Shield Capital is a little bit differentiated from some of the primary narratives around this. Insofar as the investments that we make to date, we have to have very strong conviction that the commercial application is going to be much larger than whatever it's going to be doing for the national security environment. We believe that defense DHS, the IC, etc. Can be a good secondary or tertiary market and we're going to help you be efficient and effective in navigating that. But overall, if you're not selling to or across other industries, remains to be seen whether you can be truly successful in just that one vertical.

Callye Keen: 3:44

The rallying cry for everyone is dual use innovation, the scale of commercial application, but the maybe first customer or the high value version of that, going into defense and aerospace, it makes sense. It's difficult from a contracting perspective for a lot of startups to pursue both things. It's very difficult to pursue both things, especially initially with a small, quick, moving team. That's the brass ring right. That's the in theory. What people are shooting for is dual use innovation.

David Rothzeid: 4:16

And I think you're right.

David Rothzeid: 4:17

It is extremely difficult to target both defense markets and non-defense markets simultaneously, especially when you're early stage and you're just a team of four or five, maybe 10 people. In the way that we think about it and how we get by our startups Go to where there are paying customers. Where can you get real traction so that you can iterate on your product, because that's probably the most important thing is getting that sort of feedback. In the instances where we will push our portfolio companies to maybe start with, defense is primarily because of a regulatory environment. So we'll know that, hey, there is a market in the defense ecosystem that you can sell into. There are prospective buyers that understand this technology, and this could be disruptive or game changing and the commercial market will come, but not until some other rules and regulations change. And that's just because sometimes these rules and regulations were created without the foresight of what sort of technology would emerge in the future. And so that's how we really like to position and talk to our portfolio companies about which markets to go after in one.

Callye Keen: 5:29

Now, you spent a career in the Air Force. Does a lot of that experience? Does that career really inform the decision of hey, I have first-hand experience understanding how this application might be, or this need or this contracting vehicle. Do you find yourself drawing continuously on that experience as an investor?

David Rothzeid: 5:51

Yeah, I can't help but do it because it is the background and frame of reference that I do have. So, just by way of background, I did a little over 13 years active duty in the Air Force as an acquisition officer and I was blessed to have a lot of incredible experiences working on satellite ground stations. And then what was Air Force Space Command now United States Space Force a stint behind the green door at Hanscom Air Force Base working on a lot of classified programs around data, aerial network layer and cybersecurity. I had the opportunity to go and work with Special Operations Command, specifically with fixed wing intelligence surveillance reconnaissance assets, both at Tampa and downrange, and I think the reason why I'm sitting in a seat today as a venture capitalist is because of the three years I spent at Defense Innovation Unit helping build out their business model, and our mandate was how do we bring in this innovative technology that doesn't have to do work with the DOD? Our marketplace is not big enough to convince them that the pain and all the hoops and hurdles and obstacles that they'd have to go through in order to receive a contract is worth it from a time and energy standpoint, and so me and a couple other people were sort of principally charged with make it suck less, bring value to them, impress upon their investors that the DOD and in this case, because I was DIU, it was just DOD can be that value added customer and help those businesses achieve success in trying to make a difference with technology. That matters and so that's what we did was an incredible three years to be there building out their business model. That's now known as the commercial solutions opening, leveraging other transaction authority, and that's a whole topic that I'm super passionate about. But it was my insight into that startup culture as well as the venture capital ecosystem that really is probably principally responsible for where I am today, as I worked for Raj Shah, who's now the managing partner at Shield Capital. He called me when my next tour.

David Rothzeid: 8:01

I was at the Pentagon and I was on a very controversial program and called advanced battle management system, and it was controversial because it was tried to be very disruptive in what it was doing and tried to apply a lot of these commercial technology principles to legacy concepts of operations and platforms.

David Rothzeid: 8:20

And nothing like learning all the planning, programming, budgeting, execution and the bureaucracy works like being a new thing on the block and trying to hoard a lot of already research, development, technology and valuation, rdc and E funding.

David Rothzeid: 8:36

That's when you learn where the knives are kept and who has a rice bowl they're trying to maintain, and so that was a very informative experience, and it was at that time when Raj called me and said hey, this is what we want to do with Shield Capital. And so kind of back to your question of do I leverage my position experience to help inform the portfolio companies that we're honored to be invested in? The answer is all day, every day, there's just knowing is there a buyer? Is there a program element? Is there an appropriate program office? Is this even a technology that the DOD is thinking about leveraging in the near future? Or are you better off focusing on the commercial sector? And at a certain point you'll become maybe a tier one or tier two supplier through somebody else's program of record, and that's the appropriate way then to get traction into the national security apparatus.

Callye Keen: 9:32

It all makes a lot of sense because I look at the investments that Shield Capital has made and there's some really market darlings there, so Hawkeye360, tetraai and a few others. And hey, your Air Force background makes a lot of sense. We have flight AI, ml systems, data acquisition systems. So a point that I want to pull out of this something that we commonly tell startups that they don't really think about is look at where your money comes from, not from an adversarial capital sense, but from a collaborative partnership sense.

Callye Keen: 10:08

You see a lot of deals, you see a lot of technology, but also you're in that position because of your background, so, bringing something into your portfolio, I gain a lot of other advantages, like your service, your other portfolio companies. So even if I don't particularly need that investment for that specific reason of direct capital, we can look at people like Shield Capital or other VCs for their knowledge and their access so that smart money moves. It's just not something that people intuitively think about. They want you to open up doors but not really inform the market or say, hey, I actually helped develop CSOs and I understand how OTAs work. So if you're looking at going after that DIU opportunity that the Air Force just posted. I understand how that actually structurally works from an acquisition standpoint, and so your expertise becomes much more additive than just hey, give me a million bucks because I've got a great idea. So I think that's a really important point to talk about.

David Rothzeid: 11:19

It's definitely an experience to draw on, Although I will admit, we have 13 companies that we've invested in from the money that we've raised and then we've got a bunch of other companies that we are positioned with because they're contributed assets. It's just like the way that the fund structure works and that's kind of a whole other thing, but, needless to say, there are approximately 30 companies that I can interact with at any given time and help be supportive. To get down into the nitty gritty of this targeted CSO or that specific BAA, I'll be stretched a little bit thin, but it's more along the lines of who are the right offices to spend your time with. You got a call from this current let's pick on the Air Force. You got a call from this colonel in the Air Force who's sitting in a requirement shop and they want you to go to this exercise in the middle of the ocean and I can kind of say there's probably none of their there.

David Rothzeid: 12:18

Like, they mean well and they probably do want to do some experimentation with your asset, but when balanced against all the other things that you as a startup are trying to do, which is a lot, this is not going to lead into the type of traction that makes sense for you. And so sometimes there are these big decisions that companies are going to be making and help them understand. Where are these people as far as like decision-making or stakeholder prowess? Will it lead to something that's worthwhile or not? If a company, their startup and there's an SBIR opportunity depending on which SBIR program it may be worth the time to go and find some third-party consultant to sort of support you in developing that proposal and then making the necessary introductions based on their skill sets and competency. So I like to think of it as like I'm not going to necessarily like do the proposal for you and no one at SHIELD is going to, but can we partner you with the right experts that are accretive to your overall journey?

Callye Keen: 13:24

Knowing where to focus, even at that high level, is incredibly valuable for a startup. I know you were a more mature business, but you can spend all day just chasing opportunities and every XYZ person at a prime or at another small company that wants a team, or somebody that's in DOD they're all going to have different requirements and different applications and you can create incredibly complex, bad products by just following up with all those opportunities instead of doing the one or two things that actually matter Absolutely. I could see I don't want to do that exercise in the middle of the ocean. That's a real pain. It sounds like something that could actually be a common occurrence.

Callye Keen: 14:09

I'd like to dive into some of the investments. I know that there's probably a pretty good firewall around a lot of that discussion, but to highlight some of the companies that are in the portfolio and how you see that contributing to the overall DOD or IC mission, there's some great companies that I see in that 1330 group that you're involved with. Do you have some that you would like to highlight? I understand that there's a lot behind the scenes that's going on. It's a great list and for everybody that's listening should go to shieldcapcom so you can see.

David Rothzeid: 14:48

I could talk about all of them and you love them all, because it's almost like if you're a parent and you've got children, you don't have favorites. But certainly there are some that I'm better able to speak to just based on my day-to-day involvement or whether or not I was on the diligence team. One that I'll just highlight right now Albedo. They are putting up satellites in very low Earth orbit. Traditionally, most satellites are either in low Earth orbit or medium Earth orbit or geostationary orbit, that's how far away you are from Earth. Leo tends to be about 500 kilometers altitude. V Leo is at much lower, and what Albedo is building is a 300 kilogram satellite, so fairly large, much larger than your traditional CubeSats. That's going to be at that 270 kilometer, first time, something that large with that sort of sustainment power.

David Rothzeid: 15:47

The expectation is the satellite stay in orbit for four to five years and putting on there some pretty exquisite sensors to be able to do 10 centimeter electro-optical and 2 meter infrared, which are just total game changers relative to what's out on the commercial market today, where, believe, maxar has 30 centimeters for electro-optical.

David Rothzeid: 16:11

This would just be a total game changer for both the national security mission but also for commercial industries where you can start to eat into the type of imagery that you would typically get from an aerial imagery, so some sort of a Cessna flying over or a Drone flying over. You're going to get it at a price point that's significantly cheaper, fairly on demand and doing it in a cost effective manner. And so this is the kind of company where the team has a lot of heritage across a lot of different defense primes and also commercial startups in space coming together, taking advantage of some really incredible advancements in the overall space economy and putting it together for the first time and they've got the license from NOAA to be able to do it and just really excited for those applications to be able to be on the spectrum, both for title 10, title 50 scenarios, but then also for the commercial market as well.

Callye Keen: 17:11

I can see agricultural, industrial applications of that, things that we would currently do adjacent to my work in clean tech. We do currently with drones or with aerial imagery. So then move that over into something that's more persistent and available all the time versus mission and deployed one time or on a continuous but not real time basis. See a lot of value that commercially. I love tech, so I love to see all the wonderful things that people come up with and that's why I really enjoy this space. I think, hey, I have a pretty good grip on computing technology or a pretty good grip on comms, what people are doing with comms and then somebody comes out and has a totally new value proposition. So I'm always interested to see where investment is going and who's applying for SBIRs and who's getting that early stage funding.

Callye Keen: 18:09

So what are people actually cutting checks for? Because that's a good market indicator of we find value in the problem or the technology that you're putting forward. It doesn't necessarily mean that that business is going to be specifically successful in the net-net long-term of things. As I said, we like a lot of the companies that are getting funding right now, but we can't see their books right. They're not public, so we don't know if they're making money or losing money. All the SaaS companies that people like. They just lose crazy amounts of money, but everybody loves investing in them. We don't actually know what's going on, but I do love to see the tech. Where is the interest going? Do you have another investment that you are particularly excited about? I know you said that they're all your children, so we don't want to pick favorites.

David Rothzeid: 18:55

Yeah, another one, I guess, Overwatch imaging.

David Rothzeid: 18:58

So the team got their start over at Institute with the Scan Eagles prior to Boeing acquiring them, and so they've got great heritage and sensor making.

David Rothzeid: 19:09

But what they've sort of been able to prove out is how to take all that sensor data and process it at the edge, where super important for different austere environments of how do you get the right data back, given some of the calm bandwidth limitations. And so they've really leaned into and supporting a lot of different sensor makers, whether that's Westcam or others right, Any heterogeneous, sensible and be able to do that data processing at the edge, which is just so critical to both applications in the national security environment but also things for search and rescue or fighting fires, being able to just be augmentative towards any of these different type of operations, whether it's a manned aircraft or drone. And so really proud of what the team has been able to build there. And they're based out of Hood River, not necessarily a traditional tech hub spot, but actually a really rich legacy in some really cool technology around sensors and drones and the like. So big fan of what Overwatch is doing and Greg Davis who's the CEO and founder there, and excited for them to continue on their journey.

Callye Keen: 20:21

They have a great portfolio because it is hardware and software so it can be deployed natively or you can just use the software itself. There's this obsession with 5G. So it's like, hey, we're going to use 5G and all of our data problems are going to be solved. But realistically, even if you're running your own private 5G network, you're not getting the data out of that network that, especially in any kind of contested space, that people need. So we look at all this tactical edge processing. So each node has to process as much as it can and backhaul as little as possible. The premise of being able to send just intelligent information back versus hey, we have four HD streams of video and you can process it back in XYZ location that could be tens of kilometers or hundreds of kilometers away. It makes a lot of sense. They do have a really nice looking sensor package. I love watching those camera systems moved around and what you can do with them.

David Rothzeid: 21:18

If you're not following Overwatch on LinkedIn. I highly recommend it, not just because you get advertised, but they put up some phenomenal pictures that are just absolutely beautiful, sometimes in the worst ways, when they're dealing with forced fires and trying to highlight where should we be putting our resources to best contain a disastrous event. But the pictures and what they're able to then do and layer on top of is just absolutely incredible. So very good follow on LinkedIn if you're into that sort of thing.

Callye Keen: 21:50

My LinkedIn feed is the best tech news feed you could possibly get For anybody that's listening. You're a startup or you're just into technology and you want to see what is the real deal. What are people actually doing with AI and ML applications? What are people actually doing in quantum? I advise you to go and look at these investments. Go, look at what ABC is invested in. Go look at what Incutel is invested in and follow all of those companies on LinkedIn and you will have this feed where you're the smartest person in the room right now, because you'll see where the mediest problems are being solved Solving problems around forced fires.

Callye Keen: 22:31

It's an existential crisis. It's something that immediately we need to throw money and tech at. It's not a nice to have and nice to have big problems. They need to be a more affordable right. Where is it for talking about supporting expeditionary forces or doing cutting edge technology? Let's be frank the DoD or Primes can invest in more novel technology and the companies that are operating that space. They have cooler tech right. So if you're a tech person, I like to just see what other people are doing, what the art of the possible is. I kind of am envious of your job. I develop products. I get to talk to a lot of tech people. You're kind of on the other side of that whole process. It must be fun day to day to see what people are up to and what's coming down the pike a couple of years from now.

David Rothzeid: 23:20

Absolutely Even more fun than just meeting with founders and seeing what is the next generation of technology that's going to maybe change small or large ways that we live on a day to day basis is the way that entrepreneurs think about certain problems. In a lot of cases it's applying old technology in new ways, but having a keen insight into a market and opportunity and trying to be able to exploit it. Then at that point it's like how fast can you move? That's a pretty exciting journey to be on. It takes a special kind of founder to be able to lean into something like that. You're always meeting with Very confident people with really good ideas.

David Rothzeid: 24:03

I think the hardest part maybe about being a VC is having to say no to a lot of them, and most of the time it's just because what they're doing is exciting but it doesn't necessarily fit our investment mandates and of course we don't have an unlimited pocketbook. So everything is an opportunity cost and you've got to be very mindful about how we're constructing the portfolio to ensure that we're meeting that fiduciary responsibility to our limited partners. But then also having just incredible conviction with the founders that we do choose to invest in, I think that's just like an awesome part of the overall journey. For a VC, it does stink to say no to a lot of founders because they have great ideas and they probably could be successful. You know you are looking for that 10X at 100X return and there are less of those than I think the industry can currently support. It's very competitive but also very inspiring.

Callye Keen: 25:04

David, I think this is a good place to land the conversation, because commonly people are searching for venture capital or they're searching for their funds for growth hey, we have a new opportunity to go after. We need to hire these people, whatever their need for growth capital is, but they're often not actually investable businesses. So this is a good question and you invest in a certain stage. So this changes based on your investment thesis and kind of the maturity stage that you look for investments. But what does an investable startup look like for a shield capital?

David Rothzeid: 25:39

That's a great question. I would say first and foremost it's making sure that the technology you're building is applicable to both the commercial and the national security. So we're looking for that intersection First and foremost. That's part of our investment mandate thesis and the reason is is we believe that companies that can operate at that intersection are going to outpace their peers, and we saw a little bit of that During our time at defense innovation unit, that if a commercial company and you know we were dealing with a little bit later stage when I was there but if we picked one company and they beat out a bunch of others, if you tracked their success over time, you might see that the ones that won the DIU prototype and they were able to transition into a production contract would go public faster than some of their contemporaries. And so we kind of felt like the proof is in the pudding there. Now can we apply that model one much earlier, at an earlier stage than what defense innovation unit would be looking at? But kind of following that same track record and I think the geopolitical atmosphere has only Further that thesis you can't just be a startup that has some success in the US and then go to China. That door is not open, so you need to be in the US and you need to look for adjacent industries that both the US and its ally can support. So that's first and foremost bull stuff. And then you mentioned it earlier. You know the stage, so you know we are very biased right now towards the earlier stage. So we're looking at mainly C deals, a little bit series A, and that's somewhat predicated on the power law. So if, with a little bit of money, you can take a good amount of equity in a company, and if you do that ten times, you're getting ten shots on goal and you just need one of them to be super successful in order to return the fund. Sebastian Malby wrote the book the power law and you can see that the top performing venture capital firms have all sort of whether winningly or not subscribe to this notion, and so that very much is top of mind for us.

David Rothzeid: 27:53

And then we have technology verticals. So we look at technology and artificial intelligence, cyber security, autonomy and space, and a lot of that has to do with our core competencies as a team. You know, I'm just one member of shield capital and I have pretty specific and niche skill set specifically within defense acquisition, and, of course, I've been exposed to a lot of different technology throughout my time. But if you look at the overall makeup of the team, you're talking about people that, for the most part, have been veterans as well, but also founders and operators at technology companies within those four specific domains, and so it's not just about money, it's not just about know how and national security. It also has a lot to do with. We've been in the seat before and we kind of know what success can look like, and so those are definitely the boxes that we're looking for right off the bat.

David Rothzeid: 28:49

And then, of course, it's all the soft side of it, right, like, do I believe in you as a founder, that you can build a billion dollar business, and I think there's a lot of people that can be successful entrepreneurs. But the question I'm always asking myself is does this person have that glimmer of greatness in them? Is this somebody that I would want to go work for? Would I quit Shield Capital, which I'm not going to do Would I in an alternate universe? I want to go work for this person because I just believe in their vision so much, and so those are some of the other things that we're looking for.

David Rothzeid: 29:26

And then, on top of it, the boring stuff like how big is the market? What's the cager on it? If it's something that's emerging, who are the competitors? Is this a tried and true? Is this dominated by a few? In certain cases, more competition is better. That just means there's a voracious appetite for what's going on. So what's then their specific insight that nobody else is targeting? And then, of course, it's a pretty exhaustive due diligence process beyond all of that. But I'd say at the top are you dual use? Are you early stage? Do you fit in one of those four technology category areas? We can certainly start to have a conversation at that point.

Callye Keen: 30:03

Thank you for that overview. That's very insightful. It's one of the most common questions that I get. Runs, accelerators and done a lot of community engagement. The number one thing people ask is how do I get investment? And then not in percent of the time they don't actually need investment. That's not really what they're asking. They need growth capital Should just come from sales. Honestly.

David Rothzeid: 30:26

You bring up a great point. I have definitely had conversations where it's just like you're not actually a venture backed business. You're going to be a 15, 20 million ARR thing and that's great and that's incredible. You should hold on to as much of the business as possible, because the moment that you take venture capital dollars, the expectation is you are going to grow like crazy and so you have to have a plan and it has to be a believable plan and there has to be customers that you can sell to.

David Rothzeid: 30:58

And I think the allure or appeal of the startup ecosystem because we've in certain ways glorified the founder has maybe given people a false impression that they ought to be a startup founder. If they're not, that they're not doing something innovative or great, and that's not necessarily the case with all businesses and industries. It's very poignant that you say that. I would say, yeah, if you can get traction and you don't necessarily need VC dollars, you should go for it. Raising money is takes a lot of time and the people that are most successful at it are those that have been founders before, and so there's a huge bias in the market against first time founders. Doesn't mean they're not going to be the most successful ones. I'm sure there's plenty of those right out there. A lot of anecdotes, but generally speaking, it's a very difficult thing, and when you're trying to raise money, you're not building product, you're not doing sales, you're not growing your business per se, and so I would only do it if it's absolutely necessary.

Callye Keen: 31:58

If you do have traction in sales and you say, hey, we're going to go in a different direction or we have a new opportunity, you're a lot more believable, maybe a bit easier to sell you on investing in my business and they say, hey, we're 20 million ARR right now. We have this new opportunity to go after, which is a $100 million potential opportunity, because we just acquired this intellectual property or we just brought this person on to our team. What do you think You're in a pretty good position to make that argument if you actually have run a business previously or you're doing it right now. So I think that's all really great points.

Callye Keen: 32:34

David, thank you so much for taking the time to be on the show. It's really great to have your insights from the investment side of things. We have a lot of tech founders on. We have a lot of people from organizations like DIU have been on the show so trying to come at this same market and these problem solution fit from all different angles. So I really appreciate your perspective because you've sat in a lot of those seats yourself. Thank you for the time.

David Rothzeid: 33:02

It's a pleasure to be on.

David Rothzeid: 33:03

There is just one last thing that I could maybe impress upon the audience is like a going out message.

David Rothzeid: 33:09

I know, and I read the literature, that it can be very demoralizing in the progress that we haven't made to date. But I only go back seven, eight years and the conversations were totally different. We have made as an entity, as a government, as a country, like tremendous progress towards understanding the value proposition that startups and third party capital can have on the overall national security landscape. And so I just kind of encourage the listeners to keep pressing on and pushing and trying to do something innovative and different, because all of it added up together is making a difference, and I think we're going to start seeing more and more of that, and not just like the NDAAs and the appropriation bills which are currently in conference right now, but also in just like the overall program structure and acquisition strategies coming out of the agencies. And so I just encourage everyone to keep pushing because together we are all making a difference.

David Rothzeid: 34:04

But thank you so much for having me on the show. It's been a blast and love talking about these topics, so anytime. Thank you, david. This has been the startup defense.