Misson-Driven Innovation, Making the Improbable Possible, and Harpoon Ventures with Larsen Jensen

Episode Summary:
In this episode of "The Startup Defense," Callye Keen sits down with Larsen Jensen, a former SEAL and Olympic athlete, who is making significant strides in the world of impact investing through his work with Harpoon. Larsen discusses his journey from a rural upbringing through elite athletics and military service to becoming a pivotal figure in defense-focused venture capital. He shares insights into the power of private capital to drive innovation in defense technologies and the importance of dual-use applications.

Highlighted Topics:

• Larsen's Diverse Background: From his roots on a Californian almond farm to competing in the Olympics and serving as a Navy SEAL, Larsen's unique experiences have shaped his approach to venture capital and impact investing.
• Impact Investing in Defense: Larsen discusses how impact investing can simultaneously achieve significant financial returns and provide essential capabilities to the defense sector, contributing to national security.
• Challenges of Dual-Use Technologies: The conversation delves into the nuances of dual-use technology development, emphasizing strategic go-to-market approaches for startups in the defense and commercial sectors.
• The Role of Private Capital in Defense Innovation: Larsen highlights how private capital is increasingly pivotal in bringing cutting-edge technologies to the defense market, potentially accelerating development cycles and implementation.
• Advice for Entrepreneurs: Larsen encourages entrepreneurs to take bold actions and leverage their unique backgrounds to innovate within the defense sector, stressing the importance of moving from planning to execution to truly understand market needs.

Key Quotes:

• "I'm passionate about making the improbable possible." - Larsen Jensen
• "Everything's out of reach until it's not." - Larsen Jensen on breaking into the defense industry
• "We need to mass our resources where there is a gap in the market we can exploit." - Larsen Jensen on strategic market entry
• "Stop thinking too much and start doing more." - Larsen Jensen on taking action in entrepreneurship

About Larsen Jensen:
Larsen Jensen is the Founder and General Partner of Harpoon Ventures—one of the first dual-use venture capital firms in Silicon Valley, now with over $300M AUM. Larsen has led dozens of investments in defense tech, cybersecurity, AI, enterprise infrastructure, and frontier technology. Prior to his entrance into venture capital, Larsen was a two-time Olympic medalist (2004 and 2008) and maintains the American record in the 400m swimming event. After the Olympics, Larsen served as a Navy SEAL. Larsen previously held investment and asset management roles at UBS, Goldman Sachs, Andreessen Horowitz, and Lightspeed Venture Partners. Larsen earned a Bachelor’s degree from USC and an MBA from Stanford.

Transcript

Speaker 1: 0:00

Welcome to the Startup Defense. My name is Callie Keene. Today I have Larson Jensen, now high points. Okay, we will go into this a little bit. I don't want to embarrass you, but hey, he was a SEAL. He was also in the Olympics, has an MBA from Stanford, which we love. Stanford we have a lot of Stanford grads on the show. What you're doing right now with Harpoon is what I'm really interested in. But before we dive in, what are you passionate about right now? Let's just start there, because I'm really excited for this show, so bear with me.

Speaker 2: 0:36

Yeah, what am I passionate about right now? I was actually thinking about this earlier today. I was on a phone call and doing a walk around my office in San Diego, and what I'm passionate about is making the improbable possible, and I don't really care which technology area that is. I don ruthless desire to succeed and do something that's probably not going to work out probabilistically, but if it does, it's going to have such an astronomical impact on the technology landscape, to the end users, to the warfighters, to my former community and to our society. And so what I'm passionate about is being a footnote in that book, regardless of which one it is.

Speaker 1: 1:27

I love that Before we started recording, we were talking about this participation and the broader scope now of defense innovation and this is what I really like bringing in this show, because I've worked in this space for a really I guess this show because I've worked in this space for really, I guess, a long time relative to it wasn't cool up until a very short time period ago. But now there's all this attention and there's people who are very smart that would normally go to Google or Facebook. They're getting involved and there's this hesitancy because they look at you know no offense. They look at people like yourself with your background. They say that's for Larson, right? Or that's for people who are coming out of a DOD lab with a PhD. That's for people with these tremendous backgrounds.

Speaker 1: 2:20

And I've found that this show helps humanize the world. I mean, we had Rob on with Defense Unicorns, right. He's got a great brand, it's fun and I think he does a lot with that and his show. But in general it's kind of an opaque industry and now we're kind of seeing into it. How does that work for you or against you?

Speaker 2: 2:40

I mean, it's only obvious in retrospect, it never is before the fact and for me I have to pinch myself that I'm involved in this space, now that I have the opportunity to be on this podcast and to be working in this ecosystem, that I think does have a triple bottom line in the sense that if we do a good job, hopefully we make money for our investors. In the sense that if we do a good job, hopefully we make money for our investors, hopefully we provide greater capability to our public servants and hopefully America as a whole becomes more prosperous over time and that we help to enshrine our technological prowess that's in line with our ideals on a go forward basis for our country. But I grew up in rural California for our country. But I grew up in rural California. I grew up in the middle of an almond farm on the outskirts of Shafter and Wasco, california, where I doubt most of the listeners have heard of. My parents were almond farmers and it's because of swimming that I had the opportunity to then go to the big city, which for me was Los Angeles. I grew up in a very humble rural upbringing and then had the opportunity to swim there and subsequently, like many of the listeners and the people that work in this space, had the calling to serve and to give back to a country that gave me so much. I felt like this was the American dream that I lived out. That rural upbringing into competing on the international stage as representative of our country is something that I'll always treasure and look back on with the hugest amount of gratitude that my family and my country and my community gave me that opportunity, and so I wanted to put it all on the line the best I could and the best I knew how, just like the listeners of the show and just like we're all doing in this modern defense tech forum, where it's not just what we want, it's our desire to give back and increase the capability of our country and of our military and our national security apparatus, apparatus.

Speaker 2: 4:47

So I appreciate the comments that you know maybe some folks might look at me and what we're doing as being sort of the exception rather than the rule, but you know everything starts with different perspectives and upbringings than people might appreciate on first glance, and what you said is absolutely accurate. I mean, if it weren't for swimming, I probably wouldn't have had the opportunity to be in the SEAL teams. If it weren't for both of those, I probably wouldn't have had the opportunity to go, insert myself into the technology ecosystem and try to carve out a niche that I was passionate about. There was no different from the passion that I had, you know, with joining the military to try and serve in that capacity and wear the uniform.

Speaker 2: 5:22

So I think, to the listeners that might think that this is something that's out of reach for folks, everything's out of reach until it's not, and that's why I opened with what I'm passionate about being helping people and hopefully our team, to accomplish the improbable and make it absolutely possible. Because it is, and I think that, hopefully, my story is a specific example of that and if you look through anybody else in this ecosystem, I think you'd see innumerable examples of that. Public service is a noble calling and I think the military is the epitome of that to the next degree, and I think what we're now doing in sort of the tech landscape as it relates to national security is a byproduct of that will and desire to serve and give back to our country.

Speaker 1: 6:06

Yeah, I think people have an innate desire to work on something bigger than themselves, particularly smart driven people. They want to be a part of something, and what better thing can you be a part of than your entire nation, right? But I like that phrase triple bottom line meaning that it's money, but it's impact, it's servicing your investors or customers, and this concept of mission impact and it's so clear when somebody can take their intelligence and work on something that's important to them. We get involved in quite a bit in climate, and there's a huge crossover for climate, and then in defense tech, because you have a lot of the same problems. There's just more acute when you talk about energy or power.

Speaker 1: 6:54

But I love seeing that focus that somebody has, particularly in defense investment versus in the past 20, 30 years of. I'm going to invest in a SaaS company they're making this thing that may or may not be successful is chasing that impact in the competitive nature of the landscape itself is pushing a lot forward. Regardless of its venture scale, returns right.

Speaker 2: 7:24

Sure, and I like what you said there about impact investing, and I haven't really described ourselves as such to date, but I think we probably should, because what creates a better impact than actually servicing this customer base and giving them capability that can help save lives? So I totally agree and I think, for whatever reason, impact investing sometimes has a negative stigma. And I think, for whatever reason, impact investing sometimes has a negative stigma because I think what a lot of people assume is that you can't make money, making an impact, and I think that at this intersection, you can accomplish both at the same time. As we all know and we're all a creature of our circumstance and our education and our backgrounds I'm no different it's really hard for me to get out of bed and get excited about a consumer product even if it's something that's interesting.

Speaker 2: 8:08

On the periphery I've seen kale diapers and I got kids and whatever. But I don't really care about if they have kale diapers or not, but I sure as heck care about if our war fighters who are going down rage have the best enabling capability to keep them safe and out of harm's way. And I consider myself extremely fortunate that many of my best friends in the entire world are still wearing the uniform and still putting themselves into those positions. And so if I don't do my job from the outside, albeit a small part, I think that I'm letting them down and are letting our country down.

Speaker 2: 8:38

It's not all that dissimilar from how I felt about going from swimming into the military in the first place is, you know, I wasn't sure that I had the chops to make it through Bud's training, but I was pretty confident, I did and I felt like, if I had these God-given talents and this exposure to have gone from rural Central California into the Olympic Games, that I should, you know, provide that capability to Uncle Sam to a certain extent, if I had the physical and mental fortitude to be a part of that community.

Speaker 2: 9:07

It's a test that I wanted to take and to see how it went, and I think that, similarly now, this is a test that I want to take to be determined if we are truly making a large scale impact. I think we are. I mean, we've raised a decent amount of money and have invested in some companies that are providing some capabilities that I think are astronomically important and would have changed my world in my former life, and we hear this routinely from end users and customers inside of the government sector, but also in the commercial sector as well. I think it's something that we all need to work together on to secure America's dominance and our Western ideology on the global stage, and I'm very honored and proud to be a small hopefully footnote as a part of that, as I mentioned earlier.

Speaker 1: 9:54

It kind of begs a two-part question. One is your background, so different backgrounds like how does that make you a better investor? How do you pull from that background? And two, maybe leading into, let's talk about some of the companies in your portfolio. It's always interesting to have active investors on and to walk through some shining examples of that actually operationalized as an investment Sure.

Speaker 2: 10:23

There's so many different backgrounds and pedigrees of investors in Silicon Valley. There's so many different ways to skin the cat and there's a lot of different business models in venture. At the end of the day, and it's the same economic model, but some are going after a scale game, some are more bespoke boutiques. I think we're more on the boutique side, needless to say, and so there's a lot of people that I learned from and hugely admire in terms of what they look for in investing in a new capability that has the opportunity to make a large-scale impact. Venture is a fascinating asset class because it's very different from almost every other investment class in the sense that you're expecting to lose money on half of your investments. That's tremendously frustrating.

Speaker 2: 11:02

That would be pretty conservative yeah it's a huge human component to this too, because if you're losing money in a company, it's not just losing money, but people are losing their jobs and they've spent perhaps a decade of their life building towards something that never really materialized to make the impact that they thought that it could and that we all thought it could. So it's very frustrating in that regard, but ultimately, I think that it does come down to the magnitude of the outcome and the magnitude of the impact you can make in a handful of companies that end up making out the other side. So I think that a lot of things that all of us veterans have learned in this space in terms of risk mitigation and really ensuring that you're going to launch on a target that's truly worthy of the potential sacrifice, of going for it and that's the extreme case in the military situation, as we all know, but in our case, it's still livelihoods. Maybe it's not lives, but it's livelihoods and it's people's hard-earned time and their families. So it's tremendously consequential for a lot of reasons. So I think that that empathy is something that I think differentiates folks like us in terms of our work with early stage founders.

Speaker 2: 12:08

I remember when I moved to Silicon Valley in the first place that I thought that our service members and our entrepreneurs had more in common than people realized. Both of them sacrificed so much for a higher calling. In the entrepreneurship side of the house, it's more often to build a technology that can transform a customer base and I'm obviously more passionate about the customer bases that support my former line of work and similarly for our men and women in uniform, they're deployed for a very long time, absent from their families, dealing with very difficult conditions downrange. That's very hazardous, and so I think in some ways, these cultures are very much the same thing. The American entrepreneurial culture is almost identical to the American warfighter culture, and I think that those things I think that's something that's not commonly talked about or recognized, but I do think that it's important to mention and so I think for us just having that shared context and that shared empathy is really helpful because at the end of the day, at the stage we're investing, it's people first and people oriented. Sure, they have a great idea and hopefully a great capability and some plans of how they can change the world or an industry or a sector, but it's really a couple folks and some ideas and a whiteboard and on a laptop. You have to really have that shared trust and that empathy that you're going to go on that journey, come hell or high water, together, no different than the shared empathy you need to have with your teammates, your platoon mates or what have you as you go outside the wire. You got to have that and you know where you're signing up to get have each other's back through thick and thin, and so I think bringing that culture and embodying that into the startup ecosystem has been something that's been helpful for us, but also, I think it helps us in terms of deciding who we want to work with. We want to work with the mission-driven founders that want to have a tremendous impact and are dedicating their life's work towards this company, and that's something that's really important to us as well.

Speaker 2: 14:04

Vc and startup investing is an outlier business. It's not an asset class, it's an access class. You really need to invest in those upper echelon of folks, and unfortunately, they're not all created equal, and so identifying them and convincing them that we're a good partner is a really challenging thing to do, but, by virtue of us being different and coming from a different cloth than most of the Silicon Valley investment landscape, I think that helps us to stand apart there as well, to be determined if we're going to be the company or the firm that backs the next $100 billion outcome business. I'd like to say I don't care, but I obviously do. But I also think that only happens if, under the hood, the company has a significant impact across customer segments and also transcends into the government segment as well, and so that's something that's really important to us, needless to say.

Speaker 2: 14:58

So that's, I think, how we sort of think about what we're looking for and the types of companies that we're excited about and founders we're really excited about, and, across the portfolio, I think we have a lot of examples of those types of founders in a pretty diverse set of company sets, ranging from cybersecurity to deep tech, to machine learning, to enterprise infrastructure.

Speaker 2: 15:21

Those are all things that we think are a strategic imperative for our country, not just from a national security standpoint, but from an economic security standpoint. I think if we are really going to enshrine our way of life moving forward, we need to make sure that we are at the bleeding edge of technology, and America always has been. We are founded by risk takers. We have brilliant innovators and pioneers and explorers that have all come before us. It just so happens that in this modern era, technology progress is inflecting at a greater rate than it ever has before, so we've become more tech enabled as a civilization. To be an American really permeate the technology ecosystem and our military ecosystem as well, and we feel excited to be a part of that and happy to talk more specifically about specific examples if you'd like, but I'll follow your lead there.

Speaker 1: 16:18

Yeah. So for the audience, for reference, harpoon is early stage investing, so it really is a. It's a jockey bet, not a horse bet, because you could give people fairly similar business models, access to the same capital and tech. And it's like this I'm not going to beat you, it doesn't matter what swimming pool we go into, I'm not going to win, right? So a lot of that early stage.

Speaker 2: 16:45

I hope not, but you never know, you never know.

Speaker 1: 16:47

But a lot of that early stage is about.

Speaker 1: 16:50

It's about mission alignment, it's about founder problem fit, it's about the tech that they're bringing and their understanding of the actual problem that it solves, and lots of things that don't really involve how good of a programmer, specifically that they are just yet Right, and so I really like the way that you put that.

Speaker 1: 17:10

I think that defense investment is kind of self-filtering because people aren't going to they're not going to go into it without a certain set of cultural or mission parameters, certainly probably not be that successful in it, but it is slightly self-filtering. But I'd like to get your take on the dual use aspect, because that really is part of what this shows about. In a tongue in cheek way, I just don't view dual use as a thing that is possible in a parallel sense, and so I always like to ask people examples of this have you seen this? Because it's very difficult to do both things at the same time, right, but to get the scale eventually you're hoping that, hey, I have this pathway to incubate in one market and move laterally, maybe commercially, and get that unicorn status. But I'd love to hear your take, as your experience, on this concept.

Speaker 2: 18:09

Unfortunately, I have an example to prove the rule, regardless of the rule that you want to prove, as it goes with data science, so I can give you the statistics to help justify any segment of the argument. So I'll lay out a few observations that we've made that helped us come to the conclusion that we currently have and I'm not saying it's right in all cases, but it's right, I think, in some cases and there's precedent for it, I think. In terms of the defense investment landscape, I think it's important to abstract away Silicon Valley, venture capital or any of these preconceptions. That's where we play and we'll get into that in just a moment. But I think we have a long history of traditionally bootstrapped or businesses that just start with an idea and a capability and they sell it into the government market and they grow organically by repeatedly having sales by doing that. There's plenty of examples of that in our modern defense industrial base.

Speaker 2: 19:05

Not everything needs to be venture backed or even financed at all with equity dollars. Maybe it requires debt dollars or maybe no dollars to grow a large scale business. I've seen many of them and I have colleagues in private equity that love to buy a piece or buy the whole business of something that's scaled to maybe $100 million in revenue without receiving any external capital whatsoever. I think that's fantastic. I think that's a great option and I think there's a lot of those companies out there if you know where to look and you spend the time to kick the tires. On the other hand, I think there is a large amount of emerging capability that's AI-driven, integrated with robotics and a variety of other technology areas, where the critical mass of talent is really centralized into some of these traditionally Silicon Valley tech companies. The people that study it at some of these universities, the top research labs, you know, whether it be at a university or otherwise, end up going into some of those large scale businesses where they can hone their craft there, and so I think, if you're looking from a talent standpoint, there is some latent talent in the ecosystem that is world renowned in terms of where they are on the technology frontier, that might be venture backable and could actually provide a asymmetric solution to our national security base, and that's really where we try to be.

Speaker 2: 20:30

But on the topic that you brought up a moment ago about dual use, there's plenty of businesses throughout Silicon Valley history that have started in government and ultimately gone commercial. We have companies and capabilities ranging from. That's how Oracle started with working with the agency. Same thing with AWS. I believe their first customer was the agency as well. We have the internet. We have obviously NASA with our space capabilities, semiconductor industry itself.

Speaker 2: 21:00

Right yeah, semiconductor industry, darpa, with their grand challenge. I think that you know those that don't know history are doomed to repeat it and in some ways, I hope we do repeat it because there's many of these capabilities that are so large in scale that have been brought in for public consumption. But I think the opposite is the case as well. If you look at a large amount of our Fortune 500 big tech companies some of the more recent ones in recent memory, whether it be CrowdStrike, splunk, uipath, confluent, more recently, wiz and others they all started commercial but have about 10% of the revenue coming from public sector, coming from public sector. Nobody thinks about them as defense tech companies. Nobody thinks about Microsoft as a defense tech company, but I believe that their ARVR headset has one of the largest ARVR contracts out there. So there is this concept of dual use that already exists and where there already is precedence. But I think how you put things in series in terms of your go-to-market is really the nuance, whether that be starting with defense first and going all in on that market and capturing market share there and developing your product and then taking it commercial, or the opposite, staying commercial, going all in there, refining your product and when you have the right crack in the door, the right crack in the market, starting to walk through it to go into the defense sector.

Speaker 2: 22:23

Our preference is to do more of what DIU and, frankly, in-q-tel do as well, starting with that baseline of a commercial capability and helping it transcend into the government market. Like many of the companies that I previously mentioned. That's our preferred playbook of something that we'd like to work on, but we have examples to prove the rule. The opposite way, we have companies like Merlin Labs, which is an autonomous flight company. There's AI co-pilots for everything. These days. This is a literal AI co-pilot, where the FAA regulations and commercial adoption for resupply and logistics autonomously is just not there yet, right Like it's just not there yet. I don't know exactly when it's going to be there, but it's much more there in a national security or defense setting, because we've already had remotely piloted aircraft for the past. You know 25, 30 years.

Speaker 2: 23:11

So that's something that I think is, you know, the opposite of end of what we traditionally do, but I still think there's merits to it. So every single one of these situations is different. Merits to it. So every single one of these situations is different and there's a playbook to run, there's a play to run, regardless of which way this goes, and I do think there's a there there.

Speaker 2: 23:29

But if you try and do both at the same time, in tandem, you need to, you need to mash your forces at the enemy's weakest point. I think that's something a lot of the listeners will appreciate here. And if you're, you know, massing your forces where there's really strong defenses, you could have a really hard time. That's not really being asymmetric with your decision making and your utility of resources. So for us, we really want to be thoughtful with the companies we work with to say, all right, where should we mass our resources? Where is there a gap in the market? Where can we exploit it to make progress with the capability and with the company? And then, every so often, we need to periodically reset that thinking and pop our heads up, analyze the go-to-market battlefield and understand if there's a new market opportunity or a customer segment that's ready for the taking and that changes every so often.

Speaker 1: 24:18

I think that gives better clarity on it, because my main problem with the term dual use is that people, especially very early on, they interpret that to mean I will do both things at the same time and that's counter. It's extremely counterproductive. You hear terms like beachhead customer. I'm going to take massive action on this one point and I'm going to get traction and move forward very quickly. That's why I'm going for venture dollars and I'm going for partners and then for them to run both strategies at the same time when they have a team of three people or 10 people, it's impossible, right.

Speaker 2: 24:57

I'm with you. I think it's impossible. A startup's scarcest resource is its time. Exactly, it's not money, it's not technology, it's time and the shot clock is on. And if you are wasting time and I don't care what your market is the government market, the enterprise market, with people that are saying nice things but you haven't really found that critical need and hence that product market fit you can't waste your time. I think there is merits to exploring both to find where that heat is and, once you find it, concentrating, but I think to run two vastly different go-to-market processes in concert as a small, under-resourced team is I don't know if there's a great example of a company that's done that the good example I give to people is let's pick a fairly simple business model.

Speaker 1: 25:52

We'll pick distribution right. And so a really great distribution of tech company is CDW. Of tech companies, cdw, they have a whole different company, cdwg, that just handles logistics and distribution of the same exact stuff but for the government. And there's a bunch of those companies they compete with Graybar, anixter that really they might get acquired by a larger distribution company or be associated with, but they stay a separate org chart by a larger distribution company or be associated with, but they stay a separate org chart.

Speaker 1: 26:23

And you said Microsoft. If people don't know that Microsoft's a titan in defense, they can listen to the last episode, because I had Robert on who's one of the early CTOs of Microsoft Federal. So yes, they do. And they came from a position of power, though right, they had commercially viable solution. They saw that there was a lot of activity in the market and unfortunately some of their competitors had chosen to withdraw themselves from the market. So then they took that as an opportunity to move forward and they've been very successful. Do that strategy right. They're everywhere. It's interesting to see those different plays, from the largest companies on earth all the way to the smallest companies. But the big misconception and I'll see people post this is they're going after those DIU opportunities or the AFWERX opportunities, which are fantastic ways to incubate hard tech, but they have no intention of playing in that space, and so it's just very difficult to translate that over into commercial traction.

Speaker 2: 27:22

You're playing two games at the same time a nugget they think is real gold but it ends up not being actually real. That's not to dismiss what they are. I just think we need to be clear-eyed about what they are, about the AFWERX program, how you can go beyond that from a phase one phase two and you can theoretically commercialize into a phase three with program money from a real end customer.

Speaker 2: 27:57

At the end of the day, there is not necessarily signal in most of these things in terms of go-to-market signal. You know, if I was starting an early company I'd rather have, you know, a million dollars from one of these programs to help bolster my technology than not.

Speaker 1: 28:12

I'm not trying to say people shouldn't get it Like I'd rather have a million dollar PO, though at the end of the day, yeah totally Like if given the choice.

Speaker 2: 28:19

But like you know obviously you know a lot of times that's a stepping stone in that direction. But I think to your point about the misconceptions about dual use is you might have this whiz-bang cybersecurity company that stumbles into an AFWERX direct-to-phase-to and thinks that they now have a whole nother market that's desperate for their solution. In the reality, there's no signal in that noise, or very rarely is there a concrete signal in that noise, unless you have funds matching from cyber commerce, something like that, into it, and so it's really a unique market that's hard to decipher, even for the people that have spent a lifetime in public service. Unless you know how contracting works and you know how the colors of money work and you've learned some of these lessons, it's really difficult. And all the while, continuing resolutions can get in the way.

Speaker 2: 29:08

We've had this happen on occasion, where companies for sure have a deal that's going to happen, but it's kicked out 10 months nearly due to a CR and all of a sudden the company's up against the wall in terms of their runway, with investors that don't understand and can't underwrite the likelihood of that happening or, if there's going to be, you know, if the government shutdown is going to continue, or what have you like this is. It's really, really challenging to underwrite and hence why I think for us, we we like to work with companies to cherry pick like Astronis, which is a satellite internet business that operates from geostationary orbit, where they have a billion dollars in sales. They're sold out Satellites are sold out for the next three years and they're launching them Commercial Selling to internet service providers around the world to help connect the people that are not yet connected and to do so at a very low price point. But if we had built that business just waiting for Uncle Sam to come around even if we're helping to shape requirements and work in the hill and talking to end users and this was all thumbs up systems go who knows how long we'd be waiting. And it's not until very recently that the Space Force released a contract that seemingly that's a RFP. That seemingly is for exactly what they do and they're going to go for it and we're excited about them going for it.

Speaker 2: 30:36

But every time there's a large scale, multi-hundred or billion dollar deal that's out there, do you think the primes are just going to roll over and say, yeah, you go ahead and take it, they're going to come out with the sharpest elbows you could possibly imagine, and so are you. A company that's capitalized well enough, have a durable enough amount of revenue that they can sustain a potential political fight? Maybe not. I guarantee you that a 10 person startup with $5 million in the bank isn't going to be able to do it.

Speaker 1: 31:08

Yeah, Especially that in the space economy. What an interesting and fast moving area right now. But the dollars don't meet the discussion, that doesn't meet the demand for a lot of the technology. There's so much activity there and so much potential, but you think of the cost of go-to-market or the cost of a TRL 3 or TRL 6. I want to actually test this thing for real. Is such a high barrier thing for real is such a high barrier?

Speaker 2: 31:40

Yeah, I mean if you're one of the I think that's one of the you bring up an interesting point, you know. To digress slightly, I think that's one of the exciting things about being in the private capital world, or in the venture capital world more specifically. For us is the. There used to be a time in our country where, if you were going to go solve a big, audacious, hairy problem with a very difficult-to-build technology, that it had to be, by necessity, a government program, because this thing would take hundreds of millions, if not billions of dollars to get online. And where else would you capitalize an initiative such as that other than through an Uncle Sam-sponsored project? A lot's changed since the space race.

Speaker 2: 32:21

Now, not only has the government market evolved, but I think as importantly, if not more importantly, private capital markets have evolved. These days, if you are a talented enough founding team with an audacious enough idea and you think you can actually pull it off, there's situations of people raising straight out of the gate series A's that are a hundred million dollars in size. That's crazy. Like we we haven't done that ourselves because we're a relatively small fund That'd be putting our whole fund into a single deal, which I don't think is proper risk mitigation, but you don't need to go to Uncle Sam to bring something online to reach a TRL level that can make an impact.

Speaker 2: 33:02

I mean, look what Elon's done at SpaceX. He certainly had some great government interaction go his way, but he was sort of of the mindset of damn the torpedoes, we're going to do this with or without you, with sort of the bet that they were going to come around, and that's just a different paradigm to operate under and there's only been a few that have been able to pull that off. But I think it does speak to the opportunity of private capital to help accelerate capability that could benefit end user and government stakeholders without needing to wait around for a large scale RFP to occur, to spend five or 10 years developing it. It's like it's already developed. We've already done it Like do you want to buy it? That's just a fundamentally different way to think about bringing capability to Uncle Sam than we've done for most of our technology adoption history.

Speaker 1: 33:55

Yeah, especially as the larger capital allocators come into the market. So more PE is coming in and the larger venture investors are coming in and cutting extraordinarily large checks to what would traditionally be really early stage companies. So small teams of 20 people, 50 people on cutting $100 million checks to the teams to cut loose. But yeah, I think of Andrel's approach to we're going to get the requirements, we're going to build the thing and then demo it. So everyone else is demoing capabilities, in that we have the team capabilities and then he's demonstrating its actual capability of the product and its capacity to alter a mission. And how can you do that? Well, you can do it by and large, the founding team's private capital and then additional capital that's coming in. They can afford to actually build the product and show it off, which is something that me, growing up in this space, that's just not the way that somebody would do it before at that level.

Speaker 2: 34:59

And nobody would drop $20 million. It's like a risky value proposition. Yeah, it's a risky value proposition. You don't really see the primes doing that much. I mean, the traditional model is hey, I will show you that I can do it, but now you need to pay me to start developing it. And I think by turning that all on its head and saying, well, I'm going to develop it with my IRAD essentially my own internal research and development dollars and I'm not going to ask you for any and what you're going to get, hopefully, at the end of the day, is a capability that's faster, more refined, sooner to the taxpayer and to the warfighter under that model. So I'm a big believer in that model because I think it's what we should be doing.

Speaker 1: 35:37

Well, clearly because you started a fund, so hopefully you believe in the value of private capital. But, Larson, I really appreciate you taking the time to be on the show. This is super fun. Before we cut out of here.

Speaker 2: 35:50

This is fun for me, man. Thank you so much. Yeah, yeah, go ahead.

Speaker 1: 35:53

Yeah, before we cut out of here, do you have any gold nuggets, lessons learned that you can give our audience? Maybe they're sitting here and they're thinking, hey, should I take action, should I be involved here? I have an idea. Should I jump?

Speaker 2: 36:07

into defense. Yeah, default, take action, default, aggressive, and that's easier said than done. But I can't tell you how many times, through my education in the Bay Area, people analyze, you know, have analysis, paralysis on everything they want to do, and I think the nuance to that is don't be afraid to step off and go on to the objective and start making progress. Fortunately, in this case, like your, life is not at risk and it's only through stepping out of the building and actually starting to work on something that you're going to get those lessons learned. You're not going to get it in phone calls, just doing research, putting together models, putting together fancy PowerPoints. You're only going to do it by trying to build something, meeting with people, trying to sell something, trying to capitalize something and trying to conduct real world business. And there's so many businesses that I've tried to start through before I even started Harpoon, that didn't work, that failed by every, by every extent you could imagine. But those compounded learnings and networks and connections and understandings for something as simple as how to run an email marketing campaign or build a website or how to price something or what kinds of people I needed on a team to accomplish a certain objective, are utterly priceless and they're stepping stones towards an ultimate end decision. So if I had to go back and give myself one piece of advice, it would be to stress far less about what I'm actually working on at the time.

Speaker 2: 37:39

Whatever I'm working on today is likely not what I'm going to be working on in 20 or 30 years. I just need to surround myself that are smarter than me, better connected than me, more knowledgeable than me and more experienced than me, and over time, those learnings compound at a rate that I'm still in shock with how fast they compound. So I'm fortunate to be where we are six years into Harpoon. I can't even imagine where we're going to be six years from now, because every day, my goal is to be embarrassed about how I was thinking about things the day before. So I'll be curious to look back at this podcast in six years and be like man. I had no idea what I was talking about back then. But I think that's the power of compounding in terms of your own knowledge, and I think that's something that I would encourage everyone to do is, you know, stop thinking too much and start doing more, because, surprisingly, there's a lot of people that just think until it's too late.

Speaker 1: 38:31

That's incredible. Thank you so much again.

Speaker 2: 38:34

Yeah, thank you, this has been a pleasure. I appreciate the time.

Speaker 1: 38:37

My name is Callie Ke.