Defense Tech Misconceptions, Detangling the Sales Process, and Using AI to Speed Proposals with John Ferry

Welcome back to The Startup Defense, in this week’s episode Callye Keen talks with John Ferry about innovation in government contracting. Ferry shares his background from military service to working acquisitions.

Topic Highlights:

[00:00] Introduce John Ferry
Callye Keen introduces John Ferry, CEO of UseRogue.com, an organization blazing the trail of applying AI to the GovCon industry. 

[02:12] The DARPA Experience and Technology Transition 
Ferry's recount of his tenure at DARPA illuminates the process of transitioning technology from labs to operational forces. This segment explores the nuances of bringing innovative solutions to the warfighter, emphasizing the organizational skills required to navigate the defense ecosystem.

[04:00] The Role of AI in Streamlining Acquisition
Highlighting his passion for applying cutting-edge technology to government procurement, Ferry discusses how automation and AI can revolutionize the acquisition process, making it faster and more efficient.

[07:00] Misconceptions in Selling to the Government 
Ferry addresses common misconceptions about selling technology to the government, shedding light on the distinction between users and customers within the DoD. This discussion is crucial for startups aiming to navigate the complex web of defense procurement successfully.

[18:28] Rogue: Revolutionizing Proposal Writing with AI 
An in-depth look at Rogue, Ferry's venture into using AI for proposal writing, offers a glimpse into the future of GovCon. This highlight underscores the transformative potential of AI in reducing the complexity and cost of proposal writing, making defense contracting more accessible.

[29:16] The Defense Innovation Ecosystem: A Call for Realistic Expectations 
Ferry critically examines the current state of defense venture capital and innovation, urging startups to temper their expectations and understand the long-term nature of DoD contracting. 

Parting Thought:

"Invest as much time into the people as you do into the process... You can make a quick buck, but you can't make a long buck if you do it wrong."  John Ferry

Callye Keen - Kform

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

John Ferry - UseRogue.com

With over 15 years of work experience in the defense and government sectors, John Ferry is the Chief Executive Officer of UseRogue.com, a company that applies AI to the GovCon industry. He is also the President of Trenchant Analytics, LLC, where he oversees the company's strategic vision, business development, and customer relations. John has a Masters of Public Policy from George Mason University and a Bachelor of Arts in Business Administration from American Military University. As a former Army officer and Special Forces candidate, John has a deep understanding of the needs and challenges of the operational force, and he leverages that expertise to match user needs and technology capabilities to identify opportunities for technology transition.

LinkedIn

UseRogue.com

Tacgov.com

Transcript

Speaker 1: 0:00

The challenge I see is that landscape hasn't changed. So you're coming into this landscape and you're going to have to learn those lessons one way or the other, or you're not going to be successful.

Speaker 2: 0:10

Welcome to the Startup Defense. My name is Callie Keene. Today I have John Ferry. John is a man of information, but also a lot of opinions. I have been fanboying around about some of his LinkedIn content which is cropped up. I find it funny but also insightful, so I had to have him on the show. John, tell us a little bit about your background, and the one question I ask everybody is what are you really passionate about right now?

Speaker 1: 0:34

Appreciate, being here. So thumbnail sketch on me real quick. I joined the Army National Guard straight out of high school, went to basic training on my 18th birthday Infantry airborne school. I was a SF baby. I went through the Special Forces qualification course pretty young in life but I was a National Guard guy. So I came back to DC 20 years old.

Speaker 1: 0:55

And what does a 20 year old grand brae do? Either work security or you get into GovCon. So I got into GovCon. So I got into Rapid Acquisition, which I think is sort of atypical for a Special Forces guy who would probably be actually going overseas. So I got into Jiedo, the joint IDED FEDA organization. Learned the wiles of three year colorless money and how to get things rapidly acquired, which was an interesting learning experience.

Speaker 1: 1:24

Took a trip overseas, did the job in Afghanistan for a little while, came home, did five years in the Pentagon as a support contractor doing budgeting and execution, first on the Army staff in the G3. And then I started doing planning in Palm Building. So I built a couple of Palms for a couple of program elements, learned how that whole world works. And then a buddy of mine that I graduated the Q-Course with took me over and recruited me to come over and work at DARPA, so spent about eight years working at the Defense Advanced Research Projects Agency For those of you who have not heard of it folks who invented the internet a lot of the AI that has been built for government over the past 50 so years has come out of DARPA, along with a bunch of other really cool things. The support that I provided was technology transition, so figuring out how to get technology out of the DARPA labs and into operational forces. When you get down to brass tacks, it's really a lot of what I call organizational orienting, like figuring out what the different participants and who the people are and the processes are in these different orbs and how to get the new technology in to work with them. And that's where a lot of my sort of attenuation to defense technology and how the whole acquisition world really works. And that's what, frankly, I've been trying to communicate with my recent stuff on LinkedIn and whatnot.

Speaker 1: 2:50

About five years ago I bought the company that I was working for. Small business owner did a leverage buyout of my company. So I've been living the small business contractor game for about five years now, writing proposals, doing that whole thing, making payroll. But I've also been on kind of the technology side. So I've won a couple of phase one sippers, won some phase two sippers, converted some phase one to phase two, converted some phase two to some OTAs, won some OTAs in and of themselves, one MAC, idiq task order contracts. So I've been all over the sort of business development, capture, execution side of things Varied experience and background, seen a lot of different things, but that kind of shapes how I kind of look at these things as defense technologies are really hot topic right now.

Speaker 1: 3:37

A lot of folks are leaning into the space. It's a good time to be there because there's a lot of important threats, but I think there's a lot of things that people don't fully recognize when they're getting into DOD. To talk about what I'm passionate about right now, interestingly enough, I am really passionate about applying cutting edge technology to the boring parts of the government. So I've spent a bunch of time at DARPA. I was there when they did the whole defense innovation board, came through like the second offset strategy, and then into the when they coined the whole JADC2 concept and all the things that underlie that. I know what all the really cutting edge applications of AI and all that stuff is in defense.

Speaker 1: 4:22

But something I'm passionate about is like you get down to the brass tacks. The end of the day, whether you're buying pencils or joint strike fighter, you have to buy it. The Pentagon is like a five-sided checkbook. Half of what the Pentagon does is either decide what we're spending money on or do the processes to spend that money. Being able to accelerate those processes is something that traditionally gets a lot less attention and, frankly, a lot less innovation and investment. But you can't buy F-35s. You can't get into those technologies as quickly as we would like with the really outdated and our OK systems that we used to do them with. So not the cool flashy Gucci applications of AI and natural language processing and stuff. I'm really interested in automating acquisition, and on both sides of the coin. That's me in a nutshell.

Speaker 2: 5:15

Yeah, that's great. Externally, you are putting a lot of energy in educating all the newcomers. The show is essentially an outreach to say, hey, this is this mission set that I'm really interested in, which is building technology to solve national security or big problems. And so, instead of working on the next social media app, hey, come over here and look at these really great problems that we have. That's kind of an odd way of putting it, but you're releasing this content around how to sell to the government, or you comment on a lot of posts that are giving information with your varied background. That's like, hey, it's not all. Just invent a product and then get a program of record and scale up and there's a lot of hype in here. You see my little poster here End Hype.

Speaker 2: 6:02

It was my old podcast about e-commerce and startups and it still holds true. It's kind of a core tenant of mine. I come from manufacturing and we make cool tech things, but all the value in moving forward is you're saying it's like in paperwork, it's in the boring stuff. So manufacturing is a pretty quiet business. Acquisitions is a very quiet, massive process that's happening to move things forward and externally it looks like okay, this is what John is working on. He's chipping away at both the information and then the execution around that acquisition process, and I want to talk about this piece of content on your blog and we'll put a link in the show notes about how to sell technology to the government, because I've been following this.

Speaker 2: 6:49

I think you're like version seven now. It's getting pretty long. I feel like a flipbook coming or I don't know. I feel like something's coming on the other end of this, but it is kind of a fun, humorous way of looking at a very boring, difficult to navigate process. Can you talk about some of the things that you're tackling there and explaining and maybe what are the misconceptions that you see Is like I have a new whizbang drone or AI unicorn like you talk about in this. Is like I'm going to go sell it to Kernel XYZ or operator ABC and why that doesn't really pan out the way people think.

Speaker 1: 7:26

Yeah. So what I'm trying to do with the content, to be honest with you, is I went through the school. I took a lot of defense acquisition university classes, lots of really painful death by PowerPoint. Computer based learning went really all the way down on how those functions work on the government side and then live the flip side of that how does this work on the industry side and their standard processes. But they're super painful and opaque and the way that you learn about them is not typically user friendly. It's not usually approachable.

Speaker 1: 8:01

There's kind of a latent barrier to entry in the knowledge space there. And if you look at how you typically acquire that knowledge, you can go to some classes, right, you can take the Shipley classes. You can go to various different education groups that teach you GovCon and teach you how to do capture and BD and those things, and they're fine, right, these are great tools. They typically teach you kind of one focused thing. But in order to really be successful, in my opinion, you kind of have to know the landscape, and there's a very, very large landscape and then you have to figure out how to navigate through that landscape. There's a lot of different skill sets. There's a lot of different specific things you have to do and getting kind of the big picture and understanding and understanding just kind of the core things you need to do, whether it's engaging with your customer, understanding the different participants in the game. It can be kind of overwhelming. And I've talked to a lot of founders. I've talked to a lot of small business owners. I've been a small business owner. I've talked to a lot of larger companies. Right, I have the sort of front row seat on this thing and it's tough, frankly, and a lot of the folks who play in this game for a long time they do it their entire careers, right, you talk about business development professionals in GovCon. They've been doing it for 20 years.

Speaker 1: 9:17

So if you're trying to break in from the outside to your point, there's a lot of hype. The DoD, to their credit, has done a very effective job over the past I'd say five years of attracting attention and interest in defense technology specifically, but really working with government and that's something they've really purposely tried to work on. There's various reports about the shrinking of the defense industrial brace and the number, the dwindling number, of small businesses and those things. There's recently some stuff coming out of the White House about invigorating small and disadvantaged businesses because they want these participants. The challenge, I see, is that landscape hasn't changed. So you're coming into this landscape and you're going to have to learn those lessons one way or the other, or you're not going to be successful.

Speaker 1: 10:05

It's just a fact of the matter, and so I like just trying to lay it out there as simply and as factually as possible. Here's all the things that I've learned. Here's the ways that I've seen it go good and bad. Here's just some of the things that I'm seeing in the space. And let's make it a little bit interesting, let's make it a little bit fun.

Speaker 1: 10:22

Nobody wants to read a book, nobody wants to listen to 400 podcast episodes to get all this stuff. Like, if somebody can just pick up the book or read the block and get a sense of like, oh, I feel this pain. That's why I'm feeling this pain. Here's something I can do better to not feel that pain as much. That's kind of the driving force behind that, and I'm not trying to make a buck on it. So you know, I'm just trying to like unpack the knowledge that it's rattling around in my head, and I think the interesting thing to look at is the amount of positive community that is starting to revolve around it, right, the folks who are jumping in and providing their comments and their insights, creating a little ecosystem around it, I think is super interesting. It's been really gratifying, so I'm going to keep doing it.

Speaker 2: 11:11

Yeah, I keep reading it and I'm like is John writing this for me? Because I have these conversations, particularly with founders, fairly frequently, because I have been in this world for my whole life. This is what my family has done at some level. We've changed what we do and how we do it over time. We would have these conversations with customers and I was like, why is this person so excited about doing this like exercise? Right, they're like, oh, I'm going to go do this exercise, we've got to have this product done so I can go demo it. And then we're going to sell 1000 of them.

Speaker 2: 11:45

And I hear the same thing now, 10 years later, from startups is like, oh, I'm going to go pitch at XYZ event. There's going to be a bunch of green suits there. They're going to love it, we have the best product out there. And then they're going to buy 1000 of them or whatever you know entrepreneur math that they're going to have. And I'm like, I wish that for you, but it's functionally impossible for that to occur.

Speaker 2: 12:09

Right, you might get an invitation to a subsequent exercise or to then submit for some open compete. Hey, there's a OTA opportunity here, there's a here, apply for this open topic and get an SBIR and get into the funnel. I just hear this in the last couple years over and over again, where we're working with these tech companies and saying like, hey, you have a cool piece of commercial tech. I want to translate this and then bring this over to my customers and they're like, oh no, I talked to the Navy last week, we're good. And I'm like, oh man, there is the mountain above all mountains, between that conversation that you guys had, no matter how excited that person was, and actually being able to sell this in any reasonable volume. You're walking through. I don't view it as disappointed, because it's more transparent and easier than ever to get involved in this, but it's very pragmatic. It's interesting to see all these conversations happen publicly on LinkedIn, instead of it being very opaque and not knowing where to get started.

Speaker 1: 13:13

Yeah, I appreciate that. I think that's one of the other reasons why I'm trying to push it. Is GovCon good, bad and different? From a social media perspective? Just brass tax. Where are you going to have a channel? Linkedin seems to be where GovCon lives. You can look at X, you can look at the other mediums. Govcon lives in LinkedIn, so that's cool. Within that, there's a lot of just bland communication on that platform. There's not a whole lot of brass tax. Here's how it goes.

Speaker 1: 13:48

I think that's refreshing to folks. You still have to maintain professional decorum. You still have to be. Nobody wants to see folks food fight or anything, but here's the way it actually is. Let's not sugarcoat it. Let's be 100% accurate about what it is. No value judgment. This is just the way the world works and now take it for what it is and move out with it. And I totally agree with you.

Speaker 1: 14:13

I've seen so many folks and I've talked to so many technology folks, both when I was at DARPA these folks who got often really great initial development efforts with DARPA and subsequently folks who are working in the SBIR realm, the folks who are working in the OTA realm like, oh yeah, we got this initial tranche of funding. We built an MVP and the users really love it. It's the best thing they've ever seen. And then you're like all right, well, who's your user? Who's this person that's really creating the demand signal? It's like oh well, it's Sergeant Snuffy. Like well, I've been Sergeant Snuffy. Sergeant Snuffy doesn't write capability development documents. Let's be very trans. Love that. Sergeant Snuffy loves your thing. You probably need his feedback, her feedback, to give you insights on finding part of Mark Fit. But at the end of the day, it's your responsibility as a technology developer to figure out how to sell your product to your customer.

Speaker 1: 15:08

And one of the things I put in the content is like that person actually isn't your customer. They're your user, but they're not your customer. They're not the person who buys. And the number of people who don't Like they just don't know that right. And there's honestly not a whole lot of places where people can just go and find that information. You can go to the small business office, you can go to the Apex Accelerators. They do great work, but just understanding the lay of the land of like oh, I actually need to go find a program office, and a program office is only gonna be able to buy my stuff through a contract vehicle and so I need to get on a contract vehicle. And that's sort of like backwards planning, to use a military terminology, like if you wanna sell to the, if you wanna put that thing in that person's hand.

Speaker 1: 15:52

An OTA is a great way to get your thing from a TR level three to a TR level nine, but then you actually have to sell. That last piece is at the end of the day. You have to sell Immutable as gravity. Whether you're selling to GovCon or you're selling business to consumer SaaS products, you have to sell and there is a pretty well-defined sales process in GovCon. It's pretty well-pattended. Just more founders need to go figure that part out and do that more. That's my hot take.

Speaker 2: 16:22

Yeah, there's definitely a big gap in the market and I just appreciate the more human approach to it. I mean, we've had Rob Slaughter on the show and he has defense unicorns. He's like got great branding for the market. And we've had Andrew Glenn on. He's a post some memes and then he posts all the different funding opportunities that are out there, which is incredibly valuable. I pretty much send his sub-stack to people every single time he releases and hey, apply for this, apply for this. I think being a human being is way undervalued in the GovCon market being a human being and having human conversations about the challenges that are here, so it's more approachable by people. But yeah, everything that you're saying makes In the past couple of years has given a different context to what I've worked on in the past and why things would be successful or not, or problems that we've encountered where we thought, oh well, we'll connect with this BD group and this person has connections and so they're gonna bring this product to XYZ.

Speaker 2: 17:21

But that's not necessarily the case. It's like a higher probability but not a guarantee of anything in particular. And walking through that is John reading. He's reading a biography of me that I'm unaware is I've been released. This kind of leads into rogue right.

Speaker 2: 17:40

I wanna talk about this a little bit, because we do push people to go after these funding opportunities, which have really ramped up since 2016. There's lots of them, from innovation challenges that are low effort, to higher dollar, faster acquisition vehicles that people have for prototyping and then kind of your traditional SBIR situation. But the problem is is people look at it and I know that startups they have a hard enough time just making a pitch deck that's interesting for investors, which, proportionate to applying for an SBIR, is not that difficult. So it's again like a fairly opaque process. Where do these opportunities live? What format should they be? How do I talk about this? Like what are important pieces, and it seems like a very boring thing, but you're attempting to tackle this and provide that on a broader level to people. Can we just touch on that?

Speaker 1: 18:33

So the idea for Rogue started and actually, ironically, originally was put on paper for a Phase 1 Air Force SBIR back in 2019. Still have that pitch deck. It was not awarded. I've lived through the travails but no, I was a small business owner. I personally hate writing proposals it is Ardrew's work and I love the people who love to write, like the proposal writers out there who love that craft. I love those folks. That folk is not me While I was working at DARPA.

Speaker 1: 19:04

I've told this story to a couple of folks but, like the original genus of the idea for Rogue started while I was working at DARPA and I was talking to a DARPA program manager who was a you know, he's currently a chaired professor at an Ivy League school for computer science and he was lamenting the fact that he was going to have to spend the next two weeks of his life locked in his office reading proposals for his most recent AI program brought in to the announcement. So he had like 75 proposals for his new program and he was going to have to sit down and read them all. That same week I was locked in my basement pouring through monthly status reports from my folks, trying to find relevant content to put into an RFI response for a Navy opportunity, which we ended up winning. So it's all good At that point. I'm sitting there at DARPA, I'm working with these folks and this particular guy is like literal AI expert, right, he literally teaches the stuff. He put out a BAA for AI, working in the office that has created AI for DOD for the last five decades, and I was just struck by the irony that we're sitting here surrounded by all this technology and we have none of it to use for the most like acute, painful part of the process, which is sit down and read proposals or sit down and write proposals. So that's what started. I kind of put that pen to paper, wrote an unsolicited or like a phase one open topic proposal and the idea was like use this is way before chat to PT. So like use generative AI, use natural language processing, use big data, which was the big buzzword five years ago and like use that corpus of data to create your solicitations and then, on the flip side for industry, use the same corpus of content that I have in my MSRs, my old proposals, all that stuff to create the responding proposal and just take that tedious manual arts and crafts project out of the equation where we burn thousands of hours of time and quiet part out loud.

Speaker 1: 21:12

The part that a lot of folks miss is the government pays 100% of both sides of that transaction. Through my bid and proposal costs, which are an allowable cost in the cost accounting system, I charge the government for every minute that I spend writing proposals. So you're asking me to write a book to offer you services and you're paying me to write that book. Whether I win your contract or not, somebody in the US federal government is paying that bill and we spend hundreds of millions, billions of dollars. When I talk to folks at large defense primes or even mid-range companies, small companies on teams are spending hundreds of thousands of dollars to make one bid. Large companies are spending millions of dollars on a single bid and the government's paying all of that. So being able to implement this type of technology on both sides of that equation one makes us able to go a lot faster but also makes the net cost of operating the government much, much less expensive and functionally, most of that time, most of that effort, is low value work. It's mining through your content to find the relevant stuff that you can put into proposals for proof points and what the sort of shipply method offers. So that was the original genius of Rogue. So we came up with the idea. We spun up the company in late 2022. We started with a free, open beta in early 23,. Started charging for the platform last April Mayish and we've steadily grown since then.

Speaker 1: 22:46

The thing I'll say is like I have strong thoughts about chat interfaces and chatbots. I think that they're miserable user experiences. So we did not follow the sort of UX path dependency of everything should look like a chat GPT. We went kind of in the opposite direction and said look, the way that people write proposals is standard. It's structured, it's pretty well laid down in industry best practices. So we're going to build a platform that mirrors that workflow and we're going to put all the AI magic in the back, because your average proposal writer is not a computer science geek or somebody who spends their time crafting prompts for chat to be tea or dolly, like I do.

Speaker 1: 23:26

They're English majors who got into GovCon. So we want to make this system built for them and built for those processes they've been doing for 20 years. And like all the prompt engineering, all the magic, retrieval, augmented generation, data embeddings, k&n, nearest neighbor search. All that stuff should be hidden in the background, so no one should ever have to write a prompt to use a product. It's a pretty strong point that I'm making across. Basically all AI implementation across the government is like the AI should be magic. You should be able to do your job, just be able to do it a lot faster and more efficiently. So that's kind of the thesis for Rogue and that's the driving force behind how we design the product and what kind of features and stuff we release. It's enough for my AI soapbox.

Speaker 2: 24:11

It's important to me because if I'm working with early stage founders and they have really great technology or, to be fair, some of the people we're working with they have a lot of funding and they have a really well used product commercially, and so, hey, I want to ruggedize this or I want to apply this to something that XYZ organization is using they don't have anyone on staff who understands any of this information. So when the government's trying to say we want to pull more innovation in, it's very self-selecting is that you have to have a team of a certain size, you have to have experience that looks a certain way, or you have to then afford to hire someone that has that experience. And so if they're looking for grassroots innovation, even if we're talking about very academic level, hey, I want to transfer intellectual property out of a lab and then turn it into a startup, or I want this group to create small businesses and apply for these pieces. It inherently disallows that end of the market. So someone with a smaller team or less experience to participate, and if they want to grow the industrial base, it needs to lower the threshold of complexity to get involved.

Speaker 2: 25:29

And if you can win a phase two, then you have funding and attention and you could probably attract more people or more people on your team to then go a little farther. But just in my experience saying sending a topic to someone, saying hey, you should apply for this or apply for a challenge, they're like how, how do I do that? Like, what does that look like? And I can send them a template, but it ends up coming down to me writing it at the last minute and so after doing that half a dozen times, I realized, okay, this is probably not good. If we're having this broader conversation about bringing commercial innovation or solving government problems at venture speed or however someone wants to characterize this, a new type of dual use innovation, if we're trying to have this conversation but only government contract experience people can apply for these opportunities, then isn't that counterintuitive or counterproductive? It's more open than ever, but you still have to be a part of this community to then apply for these opportunities.

Speaker 1: 26:34

In general, yeah, it's almost like if you use the funnel analogy from sales, right, the mouth end of the funnel for getting technology into DoD has never been wider. But the tube of the funnel it's the same gauge, right? I've said this a couple of times on. Linkedin is like I hope VCs are putting as much money into their Portco's BD capacity as they are in their technology capacity, because I've been down this road. I've done the phase one that turns into a phase two that then goes nowhere. And the other thing I'll say is, if your primary exposure to what it is like to win work in DoD is SBIRs and OTAs, you've never actually experienced what it's like to win work in GovCon. My real contracts that I've gotten real performance on that proposal wasn't 25 pages. That proposal was 150 pages with a fully built out cost volume with pricing comparison across BLS labor rates.

Speaker 1: 27:35

If you think that a 25 page phase two Sibir proposal is hard, wait till you try to sell your stuff for realsies. It is insane, right? And going back to my initial point, there's no way to be successful and not do that part. It's impossible. It's not the way the system's built. So that's one of the things that we had as part of the ethos and building Rogue and not to oversell it. A technical person should not have to learn how to become a proposal writer and a proposal writer should not have to learn how to be a technical person. The system should be able to give kind of training wheels to both sides so that, regardless of like who you are, you should be able to get through the process with minimal learning curve. Right, because the AI enables you to harvest your content and use it more efficiently.

Speaker 1: 28:25

But I think you know just from an industry perspective.

Speaker 1: 28:29

I wish the defense technology folks really well.

Speaker 1: 28:32

I hope they stick to it because, frankly, you know, the DOD sales cycle is two or three years long, no matter how you cut it, and if you go and you talk to large defense primes, they don't even look at deals that are closer than 12 months out. You need to kind of right size your expectations. You know, if you think that you're going to go from a phase two into some program of record, that's just not the way the world works Start preparing for reality and start using the tools that are available and I'll be honest, there's a lot of free resources out there. There's a lot of free education resources. There are some really great podcasts that tell you no kidding the sort of nuts and bolts about how to sell to the government, but at the end of the day, you have to do it right. There's no shortcut to that. You either do it with time or you do it with money and, frankly, doing it with time and blood, sweat and tears is the way that it works over the long run.

Speaker 2: 29:22

That's what I'll put out to the folks.

Speaker 2: 29:24

You said something interesting about VC and them having business development on their team, which it's interesting conversations. So people are already saying, hey, there's a bubble in defense VC. I think the bubble has a lot more to inflate. Personally, I think that it could get a lot bigger because if you look at it relative to all of the capital spending, it's very small. The idea of value add VC which in tech if I'm investing in this thesis, I probably have a background in that thesis or I have people on my team that understand that thesis, whereas that's increasingly not the case in defense tech, particularly not understanding the technology that's specific to defense relative to commercial technology.

Speaker 2: 30:08

The value add thing we're already seeing it bite people in the ass. Right, they're expecting to go to okay, well, how about series A? And it's like no, we're two years away from any kind of meaningful sales. There's not going to be a liquidity event outside of three to five years, probably an acquisition, but we're not going to be an IPO business. It's like we're going to be acquired for $20 million or $30 million.

Speaker 2: 30:35

The most probable outcome of a defense tech company is that they're going to grow to 50 to 75 employees and then be acquired by a prime or somebody looking to purchase their contract. I'm watching this play out because people on the show comment that our customers they'll go in that three to five window, they'll be acquired, do it without investment. But now that there's all this money in, it's like this forcing function of growth or I want these big returns in my portfolio, but it's not really that kind of business and so you, being a hot take kind of guy, I'd like to get your hot take on. This is like where do you think that vc issue is going?

Speaker 1: 31:15

So I'm not a vc and you know, disclaimer I've never worked at a vc or anything like that. So take my opinions as they are. I would agree. You know, having been in the game for a while.

Speaker 1: 31:25

Mna is a common thing in gov con, right, doing rollups, doing it with pe, you know, being bought out by a large prime, being bought to kill, bought to bury, bought to incorporate very common particularly in def tech. You can look at it over the years. Obviously the multiples are different in that space. Right, you're looking at three to five, tops ten, you're not looking at 20. So there's that. I will also say that just net of net. Look at how many ipos there have been in gov con writ large period ever like. There's just not even that many publicly listed period. What is the eventual space look like?

Speaker 1: 32:03

I personally think that there might be a couple of ipos of the bigger ones, the ones that have been around a longer, who are getting a little bit more deal flow. But I'm still kind of bearish even on the. The unicorns that are there right now might be an unpopular opinion. I think the thing that, again, you know, re-baseline into reality is if you want to put capital investment into gov con. Just the facts in the game are that what is your liquidity event? Look like it's likely going to be a buyout, what are the multiples on a buyout and what's the timeline, and just readjust your expectations for that. And if that's not within the realm of your investment thesis and your plan, then maybe it's not the best market for you. That should business math definitely brass tax.

Speaker 2: 32:49

I appreciate it, john, before we go, do you have some parting words, some words of wisdom, piece of advice for the audience?

Speaker 1: 32:57

I think the one thing that I will say that I think is also underappreciated in this space is we focus so much, and rightfully so. Right. If you read the far, the d fars, you looked at all those things. We focus a lot on process, like the government runs on processes. They go up, they go down all those things, and so it's very easy to get sucked into the process. The fact is, everyone who's played this game for a long time knows that this is a people business fact.

Speaker 1: 33:26

Bottom line on the ground. You have to curate a network and you have to make sure that that network is filled with good people who do good work and do the kind of work and have the same sort of morals and ethics that you do, because you can make a quick buck but you can't make a long buck if you do it wrong. So I would encourage folks to invest as much time into the people and more time into the people that they do into the process and really invest. And it's it's hard. I know that when you know it becomes a zero sum game of your time and attention. Every minute that I spend investing in people relationship is a minute that I'm not spending writing a proposal, and so you really have to be intentional about that, identify who you want to be associated with and what ecosystem you want to be in and and really invest in that. And I think there's some really good ecosystems. There's some really really good people in this industry.

Speaker 1: 34:21

The folks, for the most part, are really welcoming and a lot of them are willing to kind of share their insights and understanding and and help you learn. Particularly, the folks have been in the game for a long time. So look for those experiences. But I would also be jealous of your time. There's a lot of places that have perceived value whether they're events or whatnot where you can spend a lot of time and get caught up in activity masquerading as action. So you really, before you invest your time into something, you really need to think hard about the value proposition and don't waste time doing things that might seem valuable that you can't quantify the value of, and I've written blogs on points like that. You're you're welcome to go check them out. I won't rehash them here, but that's kind of what I would do is like be jealous of your time, but invest it. Invest it really well and invest it in other people.

Speaker 2: 35:14

That's really good advice this is definitely a relationship business and if you're not getting outside and talking to people, you're gonna have a really difficult time. Amazing, john. Thank you so much for coming on the show, not being jealous with the the past 40 50 minutes with me, but, uh, really appreciate it yeah, absolutely callie, anytime.

Speaker 1: 35:33

Appreciate you taking the time to to reach out and have me on and, um, you know, look forward to staying in contact fantastic.

Speaker 2: 35:40

My name is callie keen and this has been the startup defense.