Speaking Defense Funding, AFWERX as a Catalyst, and Gallium Solutions with Eric Frahm

In the riveting EP031 of "The Startup Defense," host Callye Keen engages with Eric Frahm from Gallium Solutions. This episode unveils the transformative trends in defense innovation, focusing on the integration of commercial technology into national defense. They explore the significant role of dual-use technologies and the evolving landscape of defense startups. Frahm, with his insights from AFWERX to Gallium, offers a compelling view of the future of defense innovation and its impact on national security.

Topic Highlights:

[00:00] Introduce Eric Frahm 
Callye Keen introduces Eric Frahm, founder of Gallium Solutions, where Eric and his team are focused on making government collaboration affordable, accessible, and achievable.

[02:03] Venture Capital in Defense Innovation 
Frahm notes the growing interest of venture capitalists in defense-focused startups, indicating a mature and investable ecosystem where dual-use technologies are gaining prominence.

[08:18] Navigating the Government Innovation Ecosystem 
Frahm reflects on the progress in understanding government processes within the defense innovation space, highlighting a shift from basic knowledge to a more sophisticated grasp of complex government systems, as observed at the Fed Supernova conference. This evolution indicates a deeper, more effective engagement of companies with government entities in defense innovation.

[18:16] Government as a Catalyst in Technological Advancement 
The conversation debunks the notion of the government merely being a customer, instead highlighting its pivotal role in driving technological advancements, especially in defense.

[21:17] Prospects of Defense Innovation 
Eric provides a future outlook on defense innovation, predicting an accelerated pace of change and the necessity for operational transformation to fully harness emerging technologies.

[29:40] The Critical Role of Manufacturing in Defense 
A discussion on the indispensability of manufacturing technology and resilience in national security, stressing the need for a robust industrial base to support and sustain defense requirements.

[31:29] Guidance for Startups in Defense Space 
Offering practical advice, Eric urges startups in the defense sector to seriously consider the complexities of government contracting and the importance of strategic planning and team building in this niche.

Parting Thought:

"In the defense space, if you think there's a shortcut, you're heading towards a brick wall." - Eric Frahm emphasizes the importance of respecting the process and commitment in the defense innovation sector.

Callye Keen - Kform

https://kform.com/ 

https://www.linkedin.com/in/callyekeen/

Eric Frahm - Gallium Solutions

With a successful 20+ year Air Force career focused on aviation and revolutionizing military operations and technology, Eric is focused on sharing his extensive knowledge with our team and clients. Eric was a founding member of the AFWERX Austin team and played a pivotal role in remaking the Air Force’s SBIR process. Eric became a master at crossing the “technology valley of death” between R&D and transition in the government. Today, he’s a mentor at startup accelerators across the country and a frequent public speaker. As our Strategic Advisor, Eric creates broad client strategy, identifies government opportunities, and helps set client efforts apart from the competition.

https://www.linkedin.com/in/eric-frahm/

https://www.galliumsolutions.co/

Transcript

Speaker 1: 0:00

Your goal is to train up a high school graduate to fly the F-35, and six months or less Right now it's a two and a half year process so that they're minimally capable Flash forward. Well, what are we trying to do in Ukraine right now? We're handing F-16s to people who have never flown an American aircraft before.

Speaker 2: 0:19

Welcome to the Startup Defense. My name is Callie Keane. Today I have Eric Fram from Gallium Solutions. Eric has been fundamental in this shift that we are always talking about every week about how there was nothing and there was these innovation programs, and they've evolved. Now there is a pathway towards funding and innovation and all these fun things that we work in every day. It is complex, but Eric spent time at AFWORKS, had a pivotal role there, and now he is helping people connect with those types of funding. I lovingly and jokingly say you're the concierge to these types of opportunities. But, eric, this is how I like to kick off the show. What are you passionate about right now?

Speaker 1: 1:03

What I am most passionate about right now is the energy that I would say all the services are bringing, obviously to varying degrees, right, but all the services now are coming around to the notion of dual-use technologies being critical to the future of national security and a viable pathway for them to meet their needs. I'm seeing that certainly the Air Force, I think, was on the leading edge of that and I'm proud to play a role in that. The Army picked up our playbook and, frankly, improved on it in some important ways, and we're finally starting to see the Navy and the Marine Corps come along with not just some small unit-based innovation efforts, but starting to actually put some contract vehicles in place. That's what makes me excited on the government side, I would say on the commercial side. The other thing that makes me very excited is that commercial entities are starting to see this as a real opportunity.

Speaker 1: 1:58

You got Andreessen Horowitz raising a pretty huge fund to invest in dual-use and defense-focused startups. We're starting to see some companies achieve some very significant evaluations despite a very heavy defense focus. This system is starting to work. So we've now, at this point, watched about a half a decade of talk about defense innovation. It's starting to happen. That's what makes me very excited, because I start thinking, boy, if this was only in five years, what does the future look like in 2030, 2035, 2040? I think we're on the right track and that's great.

Speaker 2: 2:30

The joke I always make on the show is I've been doing this my whole life and suddenly now I'm cool. I don't really think that that's playing out the way that you might think. Yeah, the net of this is that in the past, very hidden market. Then there's these programs bubbling up and now people are talking about this and it is a really great time to be involved In the space as it moves very quickly. I think that's exciting. I just like making cool stuff and I like working with people that are also interested in seeing that stuff have an impact and get to market and do something interesting in the world. We met because of the programs that I'm doing with Department of Energy, the client on that side. We're connecting with their solar price challenge and some of the other programs that are on the non-DOD side of the innovation programs that are out there, because there really is one of every flavor and type. At this point they have another product which was a better fit for AFF works, softworks, those types of programs. You and I got connected through that and we've been talking about gallium solutions.

Speaker 2: 3:34

This is just a very different time than now From me as somebody running an accelerator or acting as a. I call it reverse commercialization, talking to people that are out there doing the thing and trying to figure out who has IP. That's around this. There's a huge gap between knowing a smart person that can do it and knowing a person that really needs it. There's this big jump. I work in hard tech, you do a lot in that hard tech space, and that gap is quite a bit of money, I guess. I think the returns, though, are starting to be seen. You see people like Andreas and realizing gains in the market, and you see big funded startups. We pick on Andrel and SHIELD and those top 50, top 100 investments. In the past, it was just Incutel and maybe some SBIR activity. How has that really pushed you to create gallium? How has that really changed from what you saw at the beginning of AFF works?

Speaker 1: 4:40

At gallium we have the luxury of I think, only probably tangentially being worried about the VC world in general. It's certainly something that we're close to and we speak a lot with venture capital, but that's all. What we do is really focus on adjusting to where the company is in terms of its maturity. If they're at a very early stage, where it's all about R&D, generally speaking, in the hard tech space, venture capital really isn't interested. It's too risky. There are typically several questions that need to be answered in that R&D space at the technical level to show viability, to be able to then evaluate product market fit more fully. And that starts looking like something like a prototyping contract where we've not only just theorized that this could be helpful to somebody, but now we've built something, deployed it, tested it, gathered some specific feedback. Now we have something that is starting to look like product market fit. That's more the time and space where Venture is more invested in it or more interested in it. It's not to say you're not going to get angel investment in that R&D phase but you're not going to be out there raising a large seed round, or certainly not a series A. Absent those things. I think the other thing we've seen here in the last two years on the Venture space is that early on I think there was probably a little bit of over exuberance on the Venture side Some folks were starting to engage and actually invest on the notion of, well, this company just won a million dollars from DoD without really fully realizing the implications of a million dollars and how a million dollars for you and I, for most startups, is a huge contract For DoD. It's what we found. This between the seed cushions or even less. It's because it's silver money.

Speaker 1: 6:32

We in the Air Force, prior to the point to me it's not me anymore, but when we were getting the open topic Don I may have this number right or wrong, but I believe it was something like $220 million of the silver money allocated to the Air Force every year was just going on spent. That was where the open topic got its budget literally on spent. What venture capital fund in America has $220 million of unallocated money year after year after year? It doesn't exist. But for the Air Force, there's really very little commitment behind that stuff.

Speaker 1: 7:02

Well, now we're starting to see in some important ways, those phase two start maturing, start becoming getting integrated into programs, start spinning out and getting picked up by primes and being placed into programs or embedded into programs, I guess I should say and now it's becoming more investable. I think the venture space is starting to mature and say, okay, a prototype is a prototype, that's not recurring engineering, that's great, keep it posted, we'll be in touch, which is the right answer. And so we're starting to see. I guess the bottom line is we're starting to see these processes inside of the government mature, to start more fully I'm not saying it's perfect, but more fully integrate these programs in. We're starting to see venture start, starting to understand the nuances and details of what it takes to win government business.

Speaker 1: 7:47

And I guess one final point that I would make is and this came out of a conference at Capital Factory put together out in Austin a couple of months ago, called FedSupernova just from walking around at this point, three, four years you hear the conversations going on around you and it's suddenly like something happened in the last 12 months where it went from how do I spell SBIR to suddenly I'm literally hearing people talk about well, I'm engaging this person and I'm talking to this, this PDO, and I'm going to get in the palm process here and I needed inserted this way. They're using the right language, they're talking to the right people, they know how to navigate the system. We're starting to see companies that are much more mature, who are recognizing. They're getting out of this mode that I call the idyllic syndrome.

Speaker 1: 8:31

You don't get anywhere in the government by just knowing somebody. Does it help, of course? Is it necessary? Maybe, but at the end of the day, the government spends money through process, and there are too many people in that process for one relationship I don't care who it's with, I don't care how deep it goes. There's too many people in that process for any one person to be completely determinative of whether or not you're going to get too much.

Speaker 1: 8:56

And, by the way, we want it that way. That's good. We do not want to live in a society where I, as a government program manager with a, you know, 50 million, 100 million billion dollar budget, can just capriciously decide to fund things. That's not the way we want our society to run. It's going to lead to a lot of really bad things, right? Anyway, I don't want to talk too long about that, but have been safe under a direction you want. But that's kind of what I see right now is everybody is getting better, the government's getting better, the EC is getting better and the companies I would say most importantly are getting better.

Speaker 2: 9:29

That's a fair lay of the land. Right now I think people are pulling out their jargon dictionary and learning a little bit more about the process and the words and helping navigate. Or I'm seeing more teams grab somebody with acquisition experience or have a consultant or work with a group that allows them to figure out. Okay, these are the pieces that I need to have in place. On the VC side, we're seeing a lot more of that is hey, I want one of my associates or I want deal flow from XYZ, where they understand. Where should I in this SBIR phase one, phase two, what is a phase three? Is that a real thing? Or where should I insert myself? And yeah, going from you realize that in hard tech, a million dollars for a prototype I don't care what vehicle it is, it's going to have some strings attached to it and it may not really go to where exactly you think it is. And then also, a million dollars might just get you like a concept prototype for a system. You're not going to build an exquisite system for a million dollars, you're going to write a paper and it's not investable yet. And let me look at let's just pick on AFORX SBIR phase one what's that? $180,000, you get that. That's great. It's market validation for me if I'm looking for deals. It's market validation if I'm looking for potential partners to do something interesting with it's traction. It's all those good things, but is it investable at that point? I would wait until they're executing on that SBIR or they're fulfilling that promise.

Speaker 2: 11:00

There's a lot of investors that are using those programs now as deal flow, which I think is ultra smart. It's public record right. You can pull who has what contract. You can go and select some of the smartest, most cutting edge things that you want and just search for it right on grantsgov and go have a conversation and people will be very happy for it. But unless they have a champion, to me it's kind of not investable. It does, in my opinion, unless they have a pathway to a pilot or they know that they can get some RD&E money to build a real.

Speaker 2: 11:31

There's all these additional questions that I have, but it is interesting to see. We've had SHIELD Capital on, we've had D-Code on, we've had, of course, people around AAL and that means Capital Factory on the show, and so there's all these people coming out of these programs, or coming out on my side of the industry, out of the innovation portion of the industry and then working in Capital, which we already understand. This because it's like my job to understand If I'm going to make a thousand of something, when is that going to happen? What are the hoops that are going to check through? What do I need? And so I can't just listen to an entrepreneur and say, hey, I just got an SBIR, that means that we're trucking now or cooking.

Speaker 1: 12:12

I'm like it's a good thing, right? It's a good thing to have even a phase one. Not everybody wins them.

Speaker 2: 12:18

It's the best way to get a phase two right. It's the one yeah.

Speaker 1: 12:22

I mean you have to start where you are, put too much weight on the notion that now I have the sole source capability, and I think that's where people got really caught up in and I think that, partly because that was what we were saying when we were the Air Force pushing all this stuff out, I think we, frankly, we oversold it and people listened to us and that's not good. But that message has, I think, been clarified a little bit. I think the next stage of clarification that I think folks need to understand is phase three is not the goal. Phase three is best thought of just like anything else that comes immediately after a prototype scale up. There is a gulf of difference between doing a prototype and full production. Now they call it production, but in any sort of a large government program you would first enter out of prototype and you would enter into what's called low rate initial production, l-rip. That's a better way of thinking of phase three.

Speaker 1: 13:13

We're still proving this out. There's still more work to be done. It's less about R&D, it's more about operational integration, but that's not to say that it's zero R&D. And now we're proving out more manufacturability, particularly the case of hard tech. But even in software. Look, bugs happen at scale. That don't happen in prototyping. I don't care how good your code is, I don't care how good your cloud architectures are. You start pumping more users through the system. You're going to start seeing it break in new and interesting ways. You got to go fix it. You have to prove the efficacy at a larger scale at some intermediate step. There's still a ton of stakeholder development needs to happen and if you have a really interesting technology and maybe even a marginally interesting technology, there are so many other people inside the government that should be using it or could be using it that there really needs to be a second, third, fourth, fifth line of effort running to really take advantage of this opportunity that you built Just by getting into a phase three.

Speaker 1: 14:10

So phase three is not the goal. I would not. I would say even a program record may not even be the goal. That is a milestone, it's a worthy achievement. It makes you successively more investable. You know this is really about how do we get more and more and more people inside of the government using this thing, making their mission better, making themselves more effective and Aligning all of the stakeholders that need to happen or need to be aligned to get that budget in place, to put the contract in place, to Execute on the contract, to manage the program.

Speaker 1: 14:38

There's a lot of machinations that have to happen.

Speaker 1: 14:41

It's not just these perfunctory sign-offs. Well, we really help our clients to understand is what is that process, how do we navigate it? And what I tell folks all the time is unless you respect that process for what it is and the value it provides, you're not going to be successful. Because you're going to come across somebody who does understand the value it provides and they're going to spot you from a mile away and they're just going to put the stop sign out. And so unless you're ready to engage in that Continual convincing process, you know this won't work. And that gets you into these other sets of Advice that I think is out there in the world of look, just go get a base to collect the money, do what you need to get it, move on, go back to the commercial market. That advice is out there. I won't take a position on whether, with the morality of it, it's business, it's all fair, but I think that it's ignoring a very real opportunity that's out there if you're willing to put in the work at engage.

Speaker 2: 15:35

Yeah, unless you make your company into an S, you know, into a cyber factory, there's not enough money on a phase two to really move the needle for a startup. It's definitely out there, right. So there's controls that are in place that people have suggested to limit that behavior. But from the startup perspective it's not going to move the needle for you. So it's really it's just a piece in the socialization process is the way I think of it is our job is to go socialize an idea and then Go socialize through demos and get people talking about it, giving us feedback and the program of record thing is. It's an interesting conversation because if we look at SBIR's and program of record, they all have their place, but I kind of put them over in this bucket of. This is how things Used to work and the program of record really makes sense. If you're building exquisite systems and you're a prime because you're going to go for army and you're gonna build this X, you know radar system, vehicle, you know missile system, you're gonna build this thing, you're gonna build a radio, it's gonna be in production, in use for 30 years, program of record makes a ton of sense. But from my perspective as an innovation focused Company or person. It's about socializing, because I know, every time I talk to somebody about Clients thing, my thing, they're like I love everything about it, except for I want to change everything. And then they give me all this Feedback and say, yeah, we would, you know, we'll buy ten of these, or we'll Demo this, or we would love this if it had X, y and Z.

Speaker 2: 17:09

And I think, man, if I followed the normal path of Waiting and trying to just get a program of record, I would have the exact wrong thing that 99% of the people that I talked to want. I might have one big contract, but if I'm trying to create innovation at this rapid pace and get it to market, that's exactly not it. It's an interesting perspective. I'll put it in a different way. I guess is that these programs and this start-up methodology into defense is popular enough now that it's attracted Haters who are like, hey, the government shouldn't fund innovation, they should just be a customer. I'm like I see the perspective here, but I also Think that the Chinese government spends a hundred billion dollars on defense innovation a year and we're spending two billion, and so this is an asymmetric use of capital. We should be funding innovation. It's. The gains on it are pretty absurd.

Speaker 1: 18:05

We have a tendency here in the US at least. I don't know if it's everywhere, but you know it's certainly here where it's just super easy A bag on the government. But look, here's my cell phone. I've got RF, micro electronics, capacitive touch miniaturized computing, the CMOS camera, the internet. Every aspect of our lives, logically speaking, traces its roots back to government R&D. It's that simple. You might even mount and say the reason VC exists and has been so successful is actually Exactly because of the investments that government made in critical technologies, often to solve defense needs that people were able to then find alternative uses for. You know, look at the last 30 years of history in venture capital and tell me what would have happened if the internet hadn't been invested in by DARPA.

Speaker 2: 18:57

That's Steve Blanks argument about Fairchild Semiconductor and the start of Silicon Valley is literally because of government intervention, funding and the triple helix of innovation, with colleges, industry and government all working together towards a common goal, and then they're able to create such a Synergistic area that to this day, the vast majority of software innovation and now now what's happening in LA is a whole separate conversation around hard tech and manufacturing, but, like regionally, it's just bizarre what has happened now, 70 years later still going, still going.

Speaker 1: 19:35

The other aspect of that too. I mean for folks living in the Bay Area again, none of this would have happened. There is a very direct line between government funding Berkeley and Stanford in particular, and Everything that's happened in the Bay Area since. I just don't think it's realistic and I just think the appetite for venture capital to invest in more formative technologies you know, this is this category we somehow call deep tech it's really just anything that isn't immediately marketable. I don't blame venture capital. It's already risky enough. You know there is a role for the government to invest in these sorts of formative technologies that have the opportunity To transform our lives over time horizons that are uninvestable by even large institutions or that involve a degree of complexity that large institutions aren't able to manage. To me, I just don't see any other argument. I see the other side of most arguments. That's not one that I do.

Speaker 2: 20:27

Yeah, I think we're in alignment on that. It's fun to play devil's advocate and you can get some attention on the internet by, you know, riling people up, but the reality of it is we've already played out the experiment. We're seeing a new experiment happen and we're seeing it play out. So it's kind of hard to make a Contrarian argument when the contrarian argument that was previous is already playing out. I can see it's working. Help me future pace on this, because I'd really like to get your perspective, since you have been in this vein for quite some time. Boots on the ground, working with founders, is like let's push this out maybe not on our current trajectory, because I really feel like in the past two years arguably maybe three years like the whole game has changed. Future pace with me. What do you see in the next three to five years? How will this situation evolve?

Speaker 1: 21:17

I would say, this pace of change is going to accelerate, if anything. I look back to 2016, 2017, where I was talking to my boss. At the time, I happened to be assigned to this war gaming outfit and I'm talking to my boss and like, look, I think that if we can get our thinking right, this whole defense innovation thing that at the time, bob worked and put out that was centered around war gaming I think this defense innovation thing is really about acquisition reform. He sits back in his chair and he's like that's interesting. It was a thought that he hadn't considered A very smart guy who had done a lot of thinking about this particular memo that Bob worked and put out. Yeah, you fast forward to today, this now what? Seven years later? But by 2018, aforx was on the radar and it was specifically about hey, war gaming isn't enough, thinking about it isn't enough. Shaping requirements isn't enough. We have to actually get out there. We have to actually get money in the people's hands, get them prototyping so that we can learn. All of that has happened.

Speaker 1: 22:19

At this point, I was involved in a program called pilot training, next starting in 2018. Long story short, we took a student paper and turned it into a concept demonstrator, turned it into a prototype, turned it into a program, secured $150 million for it in the space, after about maybe two, three years of experimentation and it's ultimately now steeled it across the Air Force, picking up steam in the Navy, getting played with in the army a little bit, but in the process it's transformed the global flight training and simulation industry. That's more of what we need. We need more of these. I would call it a moonshot project. Our boss at the time said your goal is to train up a high school graduate to fly the F-35, and six months or less Right now it's a two and a half year process, so that they're like minimally capable Flash forward. Well, what are we trying to do in Ukraine right now? We're handing F-16s to people who have never flown an American aircraft before. And how are they trying to prepare themselves for that lesson? They're using these VR devices that we build. We need more of that. That is what I think we'll see.

Speaker 1: 23:22

I think we need to think across what's called in military parlance and excuse me everybody for being ridiculously nerdy here, butmlpf, right, it's doctrine, operations, training this is embarrassing Maintenance, logistics and programming personnel and all that sort of stuff. Anyway, the full program. We need to think about innovation as not an acquisition activity. It's an operational transformation activity and government has to get its head wrapped around that to say look, if what I'm trying to do is squeeze the next 2% of efficiency out of this program using the same idea I did yesterday, I have a process for that and it works really well, and that's the traditional acquisition system. There needs to be a pathway where we can harness emerging technologies that fundamentally change the decision space in terms of operations, where we can start pulling the levers of doctrine, pulling the levers of operations, pulling the levers of training. How do I train somebody on this new technology so that they can conduct this operation to achieve this vision? We have Nobody's answering that question right now. Nobody's even asking that question right now.

Speaker 1: 24:28

I think that's what we're going to be seeing by the end of this decade and I think what I would love to see is places like Defense Innovation Unit, where I used to work. Phenomenal organization, hands down, smartest people in DOD, particularly from a technology standpoint, but also from an operation standpoint. Places like that being empowered to go out to the market to bring in critical technologies but, more importantly, to place it in the hands of a warfighter, to evaluate it and also play with it. But it's not a game. Seriously think about it, but not in an experimental framework. You have to use it. We have to be open to whatever it tells us. We have to be ready to scrap it at a moment's notice and we also have to be ready to scale.

Speaker 1: 25:13

I think we're going to see that, because as I look across DoD right now, I see pieces of that happening everywhere. I see all the big pieces of it happening somewhere. Nobody's put it together yet. I would submit, as we went through Ultimately at DIU was for that Pivot Training X program is an exemplar of what ought to be happening and if we can get there with even just a few programs every year, I think we will fundamentally solve this problem of accessing the innovation base in the United States and harnessing it for national security purposes. I hope that's what we see in the next five years. I won't say that that's what we're going to see, but I think that's what we're having.

Speaker 2: 25:53

That's fantastic. I think there's a lot of challenges around the messy middle of getting very smart people to solve very big challenges and, as we get the reps in, of moving across. However you want to see that as an innovation pipeline, commercialization or acquisition pipeline, you're going to see more. I believe there's going to be a lot more startups that are on the. Hey, we're building around training. Hey, we're building around sustainment. Hey, we're building around support services, integration, kidding depot activities. There's a huge space on that long tail of sustainment that needs innovation as well, but not because it doesn't work or because it's very expensive which in some cases you can argue whatever you'd like but because, as innovation moves across to solve those challenges, we'll have to more rapidly like in your case, train people, or we'll have to more rapidly understand how to configure something, deploy something, move something, maintain something. So as we start moving at venture speed versus traditional military speed, all of the support structures around that will have to change as well, which I think is really cool. You're seeing this play out already in manufacturing. The actual brass tax. Commercialization is like a lot of the innovations happening, but then how do you scale innovation? How are you actually going to produce this thing. I'm kind of or tangentially, in that business myself, so I understand that is a really, really, really hard challenge. And so everybody that's working on MRP software, erp software, supply chains, supply chain intelligence, machining, manufacturing, even hiring, training, security that's around the supply chain and security that's around industrial IoT all of these things also will tangentially change, and it's interesting to see that bubble up as well.

Speaker 2: 27:50

It's not just about we love SHIELD AI. I love the VBAT. I think it's really really cool. It's got cool software on it. It looks awesome, right. It flies great. Okay, make 10,000 of them, right. Make them cost the 10th as much. How do you do that? And right now, that's not really what they're doing and is probably not feasible. With the Dib that we have, there's a strong potential that we do need to do that. There's a less than zero probability that maybe not them, but something like that somebody will say I want 10,000 of those next year. I think innovation is great because it's a forcing function across an entire value stream.

Speaker 1: 28:30

I would say those sorts of trends to be capitalized on. The programs you're referring to are doing some amazing things in the autonomy space, but for them to be capitalized on, there's this saying quantity has a quality all its own. That's Mantec, manufacturing technology. I was just out with a client in Georgia a couple weeks ago doing a manufacturing technology demonstration that the Air Force had arranged I guess I can't say the company but it was a really great, great thing that this person said he's like look, I interview people coming in looking for a job and you would put down an object in front of them and say give them a tape measure and say measure this for me and they come back and say it's 10 inches and 12 millimeters. He says you want to try that again, 13 millimeters. His point is one of the critical challenges, most critical challenges in national security we're facing is our inability to use a tape measure.

Speaker 1: 29:25

We have so prioritized these software systems, data systems, and there is a tremendous amount that they are doing, can do, will do, not taking anything away from it. But at some point it becomes about manufacturing resilience, it becomes about our ability to out-produce. All of these old things are going to become new again, and I think we're starting to see that pivot. I think the fragility of the industrial base and our dependence on things like energy really came to the fore with the invasion of Ukraine and how quickly our defense industrial base not the defense innovation base ran out of capacity not just ours, but our allies as well, and I think this ongoing realization of how vulnerable we are in areas like microelectronics or energy disruptions we are seeing this decoupling.

Speaker 1: 30:17

We're going to be trading with China forever. We're going to stop. Nor should it and again, we don't want it to. But we will be more secure If capabilities like these autonomous swarming drones are able to be produced in much greater numbers, and I don't think there's anybody right now would argue that China has a clear lead in autonomy. I don't think that exists right now. I would actually argue we're probably in the lead, but I would not even attempt to argue that a system with 10% of the capability, from an autonomy perspective, what produced 100 times as often would not overwhelm anything we put together.

Speaker 2: 30:56

It's an easy argument to make, right.

Speaker 1: 30:59

So we have to be investing these hard tech solutions. I think clearly that's where the puck is going from the government perspective. I think that's where our stronger economy is going to be. Just in general, I think somebody has to be looking at these manufacturing technologies. How do we make these transformations and productivity that happened in the office start happening in manufacturing, to make ourselves competitive again, but also to make ourselves resilient? It's amazing.

Speaker 2: 31:24

Eric, before we go, do you have some words of wisdom for a startup that might be listening?

Speaker 1: 31:29

You know, I would say, if you were trying to be involved in this space, I think you need to have an honest discussion with your board, with your co-founders, with your team, and clearly evaluate the opportunity with the government. What is it going to take to get there? What are the timelines we're expecting and who on our team is in charge of that? What expertise are we bringing to the table in that realm and then have a willingness to go out and say, okay, we have that talent, we understand that timeline, or we don't. And I think that's the next level of maturity is to understand that. To do this well, you need multiple careers worth of people and talent that are focusing on all the different aspects of this. I think you need a strategist who understands how to navigate the system and how the government is wired. I think you need a contracting specialist or a person who understands the nuance of government contracting regulations, because you're not going to make that go away, by the way. There's like tremendous value in understanding it so that you can go toe-to-toe with a skilled government negotiator and make sure that you're getting the value that you deserve. I would say you need a proposal writer. It is not the case that a great technologist is automatically a great writer, and one of the things that we did on our team was recognize that proposal writing is an art form and it is not enough to just hire somebody who puts technical writer on their resume. Nobody goes out, sets out to become a technical writer. They happen into it. What we really focused on was just going out and getting great writers and then teaching them to be a technical writer. I think our writing is a lot better and it's a lot more readable. As somebody who's read like a couple thousand of these applications, you've got to be a great writer, so I'll leave that there. And then the last would be graphics. How do you display data? How do you communicate data in a simple way?

Speaker 1: 33:17

It's not to say you have to have all these people in a full-time team. In fact, our business model is exactly the opposite is seeing how much we can do on a fractional basis. There is a role for a full-time at a more advanced stage, right Phase two, phase three it's time to get an account manager, but all the things that get you into there and then navigate you through there. It takes a village to get this done, and if you don't have it on your team, you're not going to win. That would be. My message to folks is to take this seriously, respect the process and if you're going in thinking there's a short, you're running straight towards a brick wall. That's where you should just take your $2 million Phase Two award and pack it up and go off to something else Again. Perfectly viable strategy from a business perspective. I won't take a judgment on it. If that's your willingness, that's the strategy that you're on, whether you want to be on that strategy or not.

Speaker 2: 34:02

I'd prefer that they didn't, because I want to make something, I want to invent something, I want to make something, I want to sell something.

Speaker 1: 34:11

I think the exception to the rule is the person that's going to go out and do that, and most often, those folks don't end up getting the Phase Two. Most people, though, want it to be a lot easier and hope that it's a lot easier, and I think the fact is that if it were easy, it would have been done before.

Speaker 2: 34:27

Eric, thank you so much for taking the time. I know you're traveling around your busy man, so I really appreciate you hopping on the show and sharing your thoughts about startups, funding and gallium. This is great.

Speaker 1: 34:39

Well, thank you so much for the opportunity and I'm excited to see what the future is. I'm thankful that folks like you are a part of it and we've got so much energy behind this movement. So it's working and I hope folks can take heart in that.

Speaker 2: 34:52

My name is Callie Keane and this has been the Startup Defense.