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What you’ll hear in this episode:

• Bilal Zuberi’s impressive career investing in emerging defense technologies
• How Lux Capital partners with entities like the Department of Defense as early investors in technology
• Why Zuberi spends time educating others about the businesses that can be built partnering with the DoD

Bilal Zuberi is like a defense investing evangelist. He’s been investing companies that work with, or want to work with, the Department of Defense for over 10 years. He says for him, that work is rooted in the belief that the modern defense workforce in America should have access to the best available technology that the country has to offer and that there is no reason why anybody else anywhere in the world should have access to any technology before they do.

“I think part of the work that some of us who have been investing in the defense sect do is constantly educate other investors so that they participate in this, and more capital is drawn in,” Zuberi explains to hosts Dan Dillard and Zach Walker. “We introduce them to people like DIU and others to say ‘you know guys, there’s resources available to figure out how to work with the defense and military. They will tell you what the needs are, they will tell you the processes. Nothing is easy, I can tell you it wasn’t easy for me, but you know, it’s worth giving it a shot because there’s real businesses is to be built.”

Zuberi is a partner at Lux Capital, an emerging science and technology venture capital firm. It’s his job to invest in companies developing the latest technologies and ensure their success. He and the companies in his portfolio work with organizations like the Defense Innovation Unit to ensure that the Department of Defense will actually want to purchase their products or services.

Listen to the latest episode of From Tanks to Teleportation to hear more about how Zuberi and his team partner with the DoD as early investors in emerging technologies. If you like what you hear, be sure to subscribe to our podcast and share it with a friend or colleague! And, if you haven’t already, check our previous episodes!

From Tanks to Teleportation is a founding_media podcast created in partnership with the Department of Defense and the Defense Innovation Unit.

Hosts: Dan Dillard, founding_media

Zach Walker, Defense Innovation Unit

Guest: Bilal Zuberi, Lux Capital

 

Transcript:
this is a founding media podcast
this is from tanks to teleportation a podcast where we explored the intersection of technology business and national security with the leaders the defense innovation unit part of the U. S. department of defense I’m your host Dan Dillard and is always enjoyed by my co host Zach Walker the Texas lead for the D. I. U. today Zac and I are joined by the loads of bearing a partner at looks capital looks is a venture capital firm investing in emerging science and technology that prides itself on attracting clients that are building the future the firm’s work is linked to the DOD because they’re often early co-investors in tech start ups then when the companies they’ve invested in our products that are ready for market the D. O. D. is often a top customer let’s go to our conversation to hear billal explain
Zach thanks for being on the show again hello thank you for being on the show thank you for inviting me to be here I’d like to start off by sharing your story and maybe tell us a little bit more about who looks is in the past and how you became a part of their so luxe capital is a bi coastal venture firm managing about two and a half billion dollars investing in early stage deep technology companies we invest in companies that are addressing real problems in the world Vetr addressing very large markets and usually things that have deep technical expertise required or deep deep deep technical risk associated with it for that you know and in many ways turns out to be investments in hardware software systems economist Justin’s automation robotics computer vision semiconductor chips biotech computational biology and and a lot of things that frankly you sometimes feel like science fiction becoming reality which technology enables to happen these days I’ve been a partner here for for many years before that I was at a firm called general catalyst I’ve been at the scene now for twelve years before that I was an entrepreneur the company in advanced materials for automotive and biomedical applications and before that I did a PhD at MIT and and before that I was an undergrad and before that I was day you know immigrant student in this country well well resolutions all that that’s that’s awesome
Billal thanks again for joining us today it’s really wonderful to have someone from the venture community so we put this podcast together calling a defense innovation from tanks a teleportation this idea like you said science fiction becoming reality so much of that in this country happens through things like venture investment so it’s wonderful to have you on the show since your firm has worked with the beauty you do have portfolio companies that do this release work could you speak of it too what led you to work with the D. O. D. but that was like what what has made to use technology an attractive investment for looks when I think maybe this is under appreciated by some in the technology sector but certainly those who are understand the history of the technology sector in the startup world and and Silicon Valley and Boston ecosystems and otherwise understand the DOD has played an extremely important role and and promoting technology and and and frankly bringing technology to life and to date a lot of companies that we work with the origins of the technology much out of grants that were made either by the you know airforce or navy or or dark order or otherwise to certainly be the origins of technology and a lot of hardtack deep technology has either DO D. as AJ Corbin you know a supporter and funder or definitely an early beneficiary we believe that D. O. D. is both a long term and short term partner to these companies date you know it is a an early believer an hourly you know the funder of these technologies that they become uncle partner and co investor in these companies but at the same time if done right and the big gap because there’s a lot of you know things that need to get done right along the way they can become a very large customer for some of these technologies as well we also believe that you know we we are American citizens and you know our our soldiers and our you know the modern defense workforce broadly should have access to the best available technology that the country has to offer and there’s no reason why anybody else anywhere in the world should have access to any technology before we
I’m curious what was your reaction when one of your portfolio comes inside to work for the department of defense did you have any reservations and was that what was the expectation versus the reality of your experience I’m just kind of curious about that I think working with the D. O. D. as an early investor in these companies are early investor in technologies is that has been relatively easy I would say and and and there wasn’t much you know hesitation certainly from our part in any which way I think it was when they when we talk about DOD as a customer that day was definitely differences that we realized they’re they’re obviously issues of secrecy privacy and secure national security stuff that one has to deal with and we all have to go through such process sees multiple times now but also you know the the buying process sees a different the accounting process sees are different and and most importantly and this I think the two sides will to the companion DOD are still trying to understand each other is product market fit is sort of golden birds in technology you have an idea of a technology you take that to turn it into a product and then you want to make sure that this is a product that the market once in the market once is best exhibited by the market paying for it this is something that has been harder to achieve with the DOD S. customers DOT has easy mechanisms in place often to provide grants and support development of technology but it takes much longer time for them to become customers and I think when we first started working with the DO deed that both came as a little bit of a surprise on how art was those processes might be but also a little bit about you’ll pick this affect where frankly you know we we had to learn how to find those some of those answers and figure out how to work with the innovators within the department of defense what they are and they exist we just have to find
yes to that and you know we like to think that we provide the connective tissue between the commercial world and the department of defense is certainly a challenge with the deity being a monopsony generally being a single buyer it completely changes the dynamics of what you see in venture backed companies can you speak a bit about what it was like specifically with the I. U. since we try to make things more commercial we try to make things go a little bit faster perhaps sixty days more so than you know five years percent of sometimes the acquisition machine can can take was it changing the changing that dynamic through yeah you was that something that you submitted easier for your companies and if so how a lot I’ve been investing in companies that directly sell to or want to sell to the DOD for over a decade and for the first many years of that it it felt like a little bit of the wild west great thank you have these technologists that are PH dis and coming out of technology industries are coming out of university labs and have the amazing idea and the start building it and then they build it with venture money for one or two years and then I take it to market in the market is the department defense and and there’s this wall and they don’t know how to penetrate they don’t know who to call to then end up hiding somebody who had expediency in inside the military in the bring him on as sort of the messiah that’s gonna fix at all but that doesn’t work and it was really not many people to to to be able to really talk to and understands that the creation of the D. I. you and yet you wax the predecessor name it was really important I I think it was important for a few different reasons one was that they need to be a communication and education on both sides I know speaking for Silicon Valley certainly I felt that there was a need for an education around how department defense works it is a monolith entity but it is not quite a monolith right and and you know what are the different various mechanisms by which you can work with the you know the army in the navy and the Air Force and and and so once I think that education was very helpful and continues to be helpful I think there’s probably a translation that you guys do of how Silicon Valley works the eighteen month cycles of financing and so on back to the customer side that you know the the venture capital especially now is flush with money like there’s no shortage of money that we can invest in companies the question is who is a customer that you want to put that money behind you know and and and the way CEOs and board members talk is you know you have a bunch of arrows that you are trying to to find commercial viability of the product that you have now invested in but you want to put wood behind the arrow that shows more success and I think P. R. U. has been absolutely critical in some ways for many companies not just some companies in our portfolio but I think broadly and in fact more so for other companies in our portfolio in opening door so that people understand how will your technology actually get operationalized taking the step that goes above and beyond you know small grants as B. I. R. programs and so on and so forth to the place where there is a customer on the other side that’s going to be deploying significant dollars but more importantly using your technology and giving you a real feedback on what the technology can and cannot achieve and what it needs to achieve and I think that’s been that’s been very important it’s also been useful that you know you within the are you at least with my limited experience you have people who have commercial background the people who have military background you have if people from all sorts of you know government broadly you know at that they understand the various stakeholders and and this is a complex process whether this is a two month process like sixty days or whether it’s a you know TA that could take a little bit longer aware that aids is a program of record that is the ultimate thing that people want to create and have access to these are complicated process sees and and I think you guys having those multiple stakeholders involved makes it easier for you to provide that that education back to to start ups who who are strapped for cash was strapped for talent I mean as far as this is concerned selling is concerned and and every CO that I’ve spoken to that you work with and truly appreciate the work that you guys do
from up the company’s perspective hello I’m kind of curious about once one lands a contract with the department offense I assume that that company immediately needs investor partners to scale quickly is that usually the case and secondly what does having the department of defense contract due for valuations of the startup companies in the eyes of the C. such as locks so we talk about this a lot and not only within locks but also among the venture community that is interested in defense that can invest in companies that work with but the defense sector we are in the business of investing in early stage technology taking on the technology risk solving those technical problems and creating products that in in customer with me that is our business so you know while a little bit of help here and there but some you know grant money and so on is is useful we can do that we get paid to do that the risk we take is that they will be customer on the other side if department defense is seen as a customer as a very large customer once the process of landing a contract and by contract I mean contract where I will be selling products and you will be buying products you’ll be paying me for the products I can calculate a gross margin and a net margin and I can talk about scalability and at what scale does this company needs cash flow break even and so on and so forth all of those things that come with it landing that kind of a contract is a major step in a in a in a company’s life and and and this is where I think you know in addition to D. I. you are absolutely critical in in in helping make that transition mmhm once that contract lands I think what you did the most important box that get checked off is product market fit customer wants your product when that happens there’s actually significant amounts of additional capital available at that time to deploy for scaling for manufacturing for servicing in the field for for the whole operation that needs to get set up and at that point for the company to become a bigger company and to become a bigger supplier again that capital is available but that is a lower risk capital and it needs to see significant commitment from the customer we I can tell you from my experience you know and you know the M. with with a few exceptions first early traction with the customer side you would go to investors and you say Hey the military’s really interested about two of our systems and you know give us a million dollar in PL the investors like okay who can I talk to the customer reference that I’ll call played well which colonel or general am I giving a phone number to the call there’s nobody who will pick up the phone even if they pick up a phone does he have the like this technology but we can’t tell you anything about how we using it to how much we gonna USAID water needs really are so the new investors like well okay I don’t know what that means like is is the last order you will see is is gonna continue so that’s one challenge that I need that need to get overcome and I think the I. you helps overcome some of that the second Charlie then then happens is you know we’re starting to get contracts we signed to get orders will they be sustainable is this filling a short term gap by these one off contracts or is there a sustained need for this particular capability of this particular need within the district of technology within the DOD I think those are like trying to figure out repeat contracts and then the third one is you know when when these contracts become larger and more importantly you know when this becomes operationalized and now lives of people are depending on this technology working at scale that is also you know I think what kind of partnerships need to exist in the battlefield so to say that all the other technologies that work together and this is not you know these are not one off you know you buy X. from this party and why from that party and now somebody has to figure out how to integrate these things and so you know then and then the complexity of it increases in other R. he’s become involved whether it’s D. you know that the large primes solar integrators or otherwise and again this is also a place where you know some entity like India you can be quite helpful in bridging that gap
definitely so trying to disambiguate the DOT is really an important thing that we we try to provide I think also a lot of companies assume that contracts with the government this is services contracts right this is people sitting in a seat during a job does not really help valuations that well what we do hyper focused on product revenue which is something that especially early stage startups to be able to have that kind of traction not only having product revenue from the duty but also having design partner I was talking to one of our portfolio companies you said it was so valuable to have that as a department of defense partner to help us it is I. partner and work through the process I’ll never forget it diligence call as a portfolio company was raising a series a I told them on the phone the investors that yeah it’s being used all across the U. D. every service there’s a major intelligence agencies and they love it yet seed stage but it’s in the hands of operators all across the DOD and and they’re just about it I had silence on the other end of the song I couldn’t believe that a company that was relatively that early stage has extraction that’s because we offer them a very very good products contracting and help them it is our partner so I I think giving you nailed it this is the I. I cannot stress that enough that while there is absolutely no reason for very early stage grants to exist you know whether the SBIR programs or other mechanisms that might exist they’re great they’re important they play a very important role what we’re talking about is finding Silicon Valley getting Silicon Valley and some of the best engineers and scientists and technologists in Silicon Valley to weapon defense technologies these guys are are are interested in what some investors have called to the hyper scaling companies right companies have become worth billion dollars or more so it was a proverbial well to get to a billion dollars or more and to get that in the time scale that VC’s have in mind you know you need to have under two hundred million dollars in revenue eight hundred twenty million dollars of revenue is not gonna come with cracks it’s not gonna come without in the you know one time mentalities it’s going to be product revenue how do we make that happen if you don’t make that happen frankly we are all losers right that venture industry your startup industry will continue to invest in the next chat app or social media app or whatever in the hell is you know the next big thing but it is not going to be you know helping our national security or defense forces you know fight about a war or say for four of our soldiers and so on so forth and and so I think we have to find a way around if you want the best engineers in the country to be able to work on defense technologies and I think the what you just said that we help people find product revenue that becomes critical we we are fine if we build a product that the customer doesn’t want right if if we if I build a product I take a risk that I’m gonna build X. that X. could be you know a weapon I system it could be an autonomous car it could be a component that could be a device it doesn’t matter if I take that risk and I have to raise capital available to invest in that and I and I choose to invest in something that is not going to do for the customer what it needs to do my back I made a bad bet and happens all the time seven out of ten you know start ups don’t find the right customer and don’t grow up but but where it is solving the problem that the customer half which is providing the capability to the customer has it’s doing so at a lower cost is doing so better than anything else anybody else can provide and yet we get caught in a bureaucratic quagmire or or a process that that just doesn’t fit the time lines off of the of the startup world then I think it’s just it’s very unfortunate because you know I’ve been doing this for as I said for over a decade that other investors who’ve been doing it but you know we had a moment right now where there’s a significant amount of interest from the venture industry to work with the department of defense what we don’t want is for that for that interest to go away right it doesn’t take very long it just takes one cycle for people to be like me and this is great and I love it and god bless them and patriotic zone but you know it’s not exactly where I want to invest my money and that is that is a real problem and that’s a real risk and I think part of the work that some of us have been investing in defense I do is constantly educate other investors so that they participate in this more capital is drawn and we introduce them to people like the are you in other so to say you know guys there’s resources available to figure out how to work with the defense and military they will tell you what the needs are to tell you the process sees nothing is easy I can tell you it wasn’t easy for me but you know it’s worth giving it a shot because there’s a real business is to be built
I’m really glad you brought that up because patriotism is wonderful I mean again we all love this nation but patriotism does not help in anyway right so we have to be very real about the fact that these companies then bills to pay and we’re not looking to make defense contractors we’re looking to make extremely successful companies with very good recurring product revenue that just happens to have a decent portion of it from the duties so we’ve we found it very important to try to to to make that distinction hundred percent look weak not only are these to work for somebody else’s money like this is not my personal money that I can decide to dedicate to X. Y. or Z. so we have to we have to generate returns for for our investors and after investing the best technologies that would return the best return for them but in addition to that defense industry is interested in working with Silicon Valley for one reason and one reason alone in my opinion which is that we have some of the world’s best engineers and scientists that are working in Silicon Valley and when I say Silicon Valley I don’t mean you obviously can valley I mean the tech industry broadly whatever you might be located we’ve been able to attract the best talent not only from across this country but frankly over the last twenty five thirty forty you had from across the world label to do that because we’re able to provide the sort of economic opportunities that simply have not existed anywhere else the immigrant story off the lawn musk is right there in front of us you know grew up in South Africa and comes out here and create bang bang bang bang how many billion dollar companies as he created you know it’s right there in front of us we want more the lawn mosques we want more companies like that and and and I think that talent exists in Silicon Valley and we have to show them that you can do that you can build the next SpaceX or Palin to your angle or whatever it might be you can do that by working with the defense department as either the primary customer or at least one of your customers
so having said that I know that you mentioned earlier in the in the podcast about some of the privacy things that you have to abide by and so on so forth as an investor but from what you can sure what have been some of the impressive solutions maybe capabilities that you’ve witnessed personally from companies to help shape the future of the department of defense I think there’s you know there’s a a few broad teams that that Silicon Valley is excited about and and I think the bottom defense can really benefit from that let me name a few and all the stevia portfolio companies that that that provide those technologies in various ways whether it’s to DOD biggest functions or intelligence agencies or one is around automation you know broadly speaking when we talk about the use of robotics and automation and we talk about efficiency and we talk about speeding things up you know defense department is responsible for a very big chunk of manufacturing in our country right so when we think about robotics manufacturing for metal parts we think about three D. printing off off of metal and plastic parts at scale for manufacturing we are you know all the cost benefits that accrue to the Ford and the GM and the BMW so the world also accrue to our you know our our DOD benefactress whether it’s a Lockheed Martins of the world with partners of us in temple or otherwise D. the second thing is around the kana systems whether you’re talking about eponymous vehicles and simulation of economists vehicles you’re talking about a ton of this drones aerial drones are ocean going drones these are all companies that are doing work with the DOD right now so we have you know D. I. you is actually a partner for us in central which is working with the U. S. navy right now an NGA right now we have air map which is doing work with the airforce right now and you know and and providing a UTM the solution for managing drones are everywhere we have entered that does a lot of work with DOD around drones and otherwise and counter drone systems a third area broadly is around A. I. N. A. I. A. N. think about NLP machine learning I brought these companies like crime but in others come to mind these are companies that do have a ton of data that gets generated either on the intelligence side or on the manufacturing side or system site and you need to process I need to create somebody’s afraid to understand what is happening there the same way that Walmart gets more happy millions of comments on its website and they need to make sense of it because I’ll be going to sit there and read millions of comments the same thing applies to DOD as well and intelligence agencies as well so we have that kind of companies and then you have you know companies that would be it that are sort of science fiction bringing to reality right so you have drones that were built you know for for consumer purposes can now go at you know hundred plus miles an hour note pilots that are flying those drones and becoming experts at it these guys are amazing simulators for like how do you fly the future generation military planes are you going to actually operate in tough environments and fast moving environments a completely new training education paradigm gamers how do you use them to train our our military so we have companies like drone racing league state space and others that provide those kind of talent two DOT type customers and last but not the least is companies in in in you know in biology and biotech and others whether it’s you know obviously you know our military is directly involved whether we like it or not in in fighting this this pandemic that we’re dealing with right now and they have to be right and and suddenly you know whether it’s drug development or access to drugs or trials or treatment or epidemiology or public health if you need access to the best technologies and so even the more what we would consider the Binhai and you know apps and so on these are very relevant for military to be able to do the task that they’re called to do and and so I think there’s a vast variety of companies that that provide that can provide and do provide technology solutions to the D. O. D. and I am I’m amazed that I would say ten years ago people used to come to us and say you know when a military specific company like you know here’s the thing we’re building because you know army gives its grand and we built it for that and this is our customer how often we see companies will pitch us I would say maybe fifty percent of companies approach us we can while they’re pitching us we can see that Hey man do you do you can be a customer of yours like DOD can use this capability we just have to then figure out how to not only translate their product into DOD’s needs but more importantly make that business connection so that they’re able to build their business models as well as a business teams to be able to succeed and working with the defense department
what you’re saying reminds me of that quote that’s something like the future is already here it’s just unevenly distributed yet and I think that’s it’s actually come up before in this podcast I think because that’s really where DO you live right the future is out there you just mentioned it the tiny artificial intelligence these things is this commercially they’re just not necessarily in the DOT yet S. thank for luxe it sounds like there’s a lot more purpose than simply just giving good returns to appease although certainly you have to give good returns LP’s but could you speak a bit more to how what’s wants to impact the world and and perhaps accelerate that transition of future technology being here today so we think some of the most interesting things happen at the intersection of multiple disciplines right so whether you’re talking physics chemistry computer science biology and someone or you’re talking about you know defense that needs very precise very specific capabilities but they needed ideally at a price point that would be seen as a commercial price point right and I think you know we are interested in finding solutions that address these very large markets very large problems in ways that you know C. like a commercial entity right we’re not interested in creating yet another crime we want to create if it is a prime is a prime that is you know highly innovative highly successful you know reducing the cost of the solutions that we can provide should make it affordable for us to implement it in the field quicker and faster and most importantly companies that it will be with you said that they’re also providing solutions to other markets as well you know innovation if you look back you know and I I I learned it from actually another investor so full that tradition to mark on the race and who was investor would mean a few companies innovation used to happen with defense as the first customer then you used to go to commercial customers and then he would end up in the car a consumer’s hands right and somehow over the last twenty five years or so that flipped right the innovation now happens first for the consumers you when I get access to the best technologies first then we go to the commercial sector right enterprise customers then get access to you know bring your own phone network so you can now use your iPhone network when all of us might use iPhone for years and then eventually end up in defence apart right is there a reason and is it a way for us to flip that again why should not defend apartment be in early should not have early access to technology or the use of that technology perhaps influencer on the development of that technology either as a as earlier than everybody else on at least at the same time as everybody else but certainly not the five or ten years after they’ve already done using it and in every sector because what happens is that enters a contest because the consumer sector first it ends up getting used everywhere around the world we have other countries that are not friendly countries to us we’ll get you know access to that and they’ll run to use that for military purposes say they end up getting access to some of that stuff in their defense department before we end up getting access to it for our defense department yeah I think that is not something that we want to continue to do and certainly a I think it hampers our our military’s ability to to be most effective at what they’re doing at least as far as the parts where you know innovative new technologies concern asking if you
hadn’t over thought of it that way but you’re exactly right he’s go back and look at the old James Bond movies everything else is always the military and all the latest gadgets and everything else you might I want that and all of a sudden it’s whole flip so it does that that certainly I was thinking about that as you were talking you mentioned earlier this year cobit in this New World of cobit what technologies do you what’s your next five years that could help shape the future of the nation of the world well several things come to mind look I’m actually writing on op ed on this and so hopefully we get published June cold it has exposed for us how vulnerable the systems we set up our we we have and it’s it’s the vulnerability is not just that you know of course the pandemic and unfortunately to leading to life loss and so on so forth but also just our systems broke down in some ways right we we worked for twenty five thirty years to to have the lowest cost manufacturing of everything which meant all our supply chains were heavily concentrated in China and some other parts of the world well turns out what do you do if you can have ships and planes coming from China here will you supply chains break if China shuts down the city or shut down the hospital shuts down a company your supply chain is stuck how do we deal with that how do we make our supply chains you know resistant to this that sort of a break down how do we make them more adaptable how do we make them more resilient we have to think about that across everything from drugs and drug delivery like what if the vaccine get invented in China how to get access to that right up to the two men a factory to our food you know we built our supply chains around food in such a way that on one hand we have you know food not available on shelves in U. S. markets and on the other hand we have potatoes rotting in the fields because we set up our supply chain such that the food that is sold to restaurants there’s no way for us to repackage it and sell it to consumers directly involved I guess what it’s not going to restaurants so it’s running in the field hi so I think we have to completely rethink you know how we have configured our our our industrial agricultural medical base and and and a part of that could be lessons learned from biology right like we build systems that have to be resilient systems that can adapt systems that can learn we haven’t done that and I think we can do that in every which way whether it comes from you know on shorting some of the stuff so some of the stuff needs to be brought back here you know we’ve we’ve been heading even though the government talking about semiconductor supply chain needs to be brought back to the US I think that’s definitely an important need I’ve been having these discussions around five G. and the infrastructure for five G. that’s an important one but if you think about three D. printing if you think about automation manufacturing robotics if you think about you know drug discovery and testing you know there’s a lot of different areas you know that the next generation food G. alternative proteins there’s a whole lot of stuff that I think we took for granted that we will have access to and I think pandemic is exposed that the supply chains these process sees the systems were set up on not resilient and they’re not capable of handling shocks which can come endemics we could be another pandemic you know another flu pandemic it could be war in either we engage in that war a war somewhere else that affected it could be an oil crisis like we’ve seen you know Saudi Arabia and Russia go up against each other and we are stuck paying the price for it and what it could be climate change induced but we we don’t know what the next problem will be but it is important to know that we have to be prepared better than we found ourselves in light of this particular problem
yeah that’s that’s really a fascinating way to put it and certainly for the supply chain stuff your COVID has been such a terrible disaster and it’s exposed to meet his weaknesses but in many ways the department defense has also seen these witnesses over over many many years I know when I was in Iraq whenever something would flirt with Pakistan suddenly we don’t get what we need anymore right and so that resiliency again as you mentioned it so hard for do you need to start building the scent because we typically have had last access to this technology trying to flip around with DIU in organizations like us trying to bring the technology hopefully the DOD and what we adopt in response to covert can then this were saying earlier then go back and help industry help the commercial world catch back up that would be a wonderful way to slip for things you know I I I would say one other thing we we it’s been writing about supplies and it’s not just about reshoring back to the US that could be one part of it I think it’s also thinking about the risk associated with the centralization of that broadly so you know when we take all our manufacturing to China China then goes out searching for raw materials around the world than China creates relationships with countries whether it’s in Africa or ports in Asia what not good then on their relationships with those countries China has a day in a much stronger commercial partnership with some of these countries than the west US and we have to change that we you know if if your three D. printing product there’s no reason why a you know a caterpillar tractor that you buy it’s the replacement component necessarily needs to come either from US are from China it can be produced on site and and and and and whatever in Africa that you might be you can provide three D. printing technology that US technology you can provide the designs get sent what encrypted real time for it to print the product and be available there’s no reason for him chunk of metal to be transported from you know Australia Africa back to China to then be machine and then the value added products from China goes out that creates a lot of economic value for them and makes them feel like the benefactors to the countries where these products are going yeah I think if you really think about supply chain with other you know factors in mind I think we would do things differently in the past we’ve you know we’ve we went down the path of full globalization and I think the big spike supporter of globalization broadly but I think we forgot that there are other factors that are really important national security is one of them and be facing that now but it also has to do is I said with resiliency and ability to adopt to changing circumstances political or otherwise that can bring our own industries to to to a halt and and we have to think about we think about insurance in everyday lives you know we have life insurance we have a disability insurance we have all kinds of insurances right well what is the insurance for us as an economy and for us as a country if something dramatic was to happen like a pandemic or like a global catastrophe due to climate change or something like that
so all talking about the department defense in the investment community being partners I think at last count we got six lacs portfolio companies working with the A. U. so it’s really a very very fortunate to have that that relationship what advice would you offer other investors either working with DOD or perhaps not yet working as duty but may be willing to first and foremost the other is the highest level and then we’ll get to more technical stuff the highest level advice is you know tech sector broadly used to be said of this cottage industry in a corner of the prototype was you know a bunch of guys eating pizza coding away creating a website that you can maybe sell some new socks on I I exaggerate but you know the idea was that these are people that you know I just got a notice in a corner and don’t have to be answerable to the society well turns out that that error has kind of passed we represent some of the largest companies and on our stock exchanges with representing the largest employers here and globally we have with largest media organisations now that reach billions of people globally on a daily basis be in L. attribute it our products are attributed to causing revolutions in other countries and so one the tech sector has now and very important role to play I think we see this on a daily basis whether it’s you know censorship in China or censorship in the US or or or the products we build and how we use them and and so on so forth so I think we have to as leaders of that industry and I speak to studios and I speak to founders and I speak and write out speaking also to be seized we have to take ownership and we have to we have to be serious about this we are playing on a bigger stage in a bigger way than we used to twenty five thirty years ago and when when you play at that stage national security has a role to play whether it’s here or anywhere else in the world whichever country you work in their national security will be just as important in our national security and you will have to deal with that and you need to have your moral compass right and you need to have your policies right and you need to be able to be transparent about it to the rest of your organization on how are you and where you stand on these issues so that’s what we can skip it the second is DOT represents a very large market somehow people ten DOD all it does is like somehow fly around the world and shoot people I mean this is not what do you need us right I mean that’s a part of what we have to do in time the way that is needed but DOT is managing large infrastructure in many large scale projects around the world from construction to human resources to education to all kinds of stuff is happening we have a you know veterans association is a very large I’ll get association right so this is a very large part of our economy and whether you look at it as your service to the country you look at it as a large total addressable market tam you’re going after or you look at it as you know the U. S. economy has improved this part of the economy has to become more efficient and and so on is what we have to play it I think is a great opportunity everywhere you look you know you don’t have to be involved necessarily DOD fighting machines you can be involved in extremely you know civilian type applications for for for for DOD so I think there’s there’s great opportunities for people to be involved the third thing I’d say is I I see this all the time two friends in the DOD and agencies as well but this time I say that to the B. C.’s you know there’s a lot we don’t know let’s be humble about it let’s be humble about not understanding the complexity of the organization that DOD Pentagon represents let’s be humble about the various different factors they have to take into account when you beat them that makes certain decisions let’s go learn let’s open doors and let’s learn I think this is where DO you plays an extremely important role in educating Silicon Valley and as again as I say not just this geography but the broader tech industry on on the needs of the DOD on the impetus that’s coming from there on what is driving it on building the relationships across the two sites on creating process season enabling processes that allow transactions to take place now we talk about products sales and so one but transaction can be up to a hundred different varieties the two enabling that to happen and most importantly building trust I think the the long term relationships if you can build trust that is a good partner on this site and it’s a good partner on the other side and we’re all working towards the same thing let’s figure out how to make it work I think good things happen as I mentioned in in if you think about enterprise customers they have what they call early beta customers these early beta customers and not just lucky few who get to test the product or the they’re really development partners they may pay along the way but the important thing is that the influence the product this is your wedge that Silicon Valley calls you know find that wedge which are you are you know your most loyal customers and then from there you expect there’s no reason why DOD cannot be a part of that bridge I think you know we have to create mechanisms for that to happen I don’t think enough of those wages exist today they if they exist often it’s because of a few crazy people they might say that the I. you would otherwise are entrepreneurs and founders who you know who are committed to making it work and then they somehow make it work thankfully but I think we need to create a more institutionally so that a larger group of people are excited by this and also not in frankly more poorly not intimidated by that they want to go build they want to serve they want to do good things but they don’t want to take on something that feels like this gigantic you know democratic nightmare to deal with and I think if we can if we can make that happen there’s an amazing opportunity look how how big a SpaceX now we we just put a using a commercial carrier we put man on another you know a space station right and and and that rocket landed back that has never happened before and and and that has created a whatever twenty thirty forty high Garbarino’s what SpaceX’s work but certainly forty billion dollar what type company right with one customer customer that itself has doesn’t have a very large budget friendly right it’s not gonna be ready but we did it it was a crazy entrepreneur Ilan mosque and obviously all his staff and team that made it happen think of volunteer same idea I think it can be done and I think we just need more examples that more entrepreneurs get up just like entrepreneurs around the world get up and say you know Hey I’m going to create the next after going to become like a Facebook or Snapchat or Twitter the scene we we need to do that so I can create the next company they’ll be the next an apology or SpaceX and hopefully a better version of Lockheed Martin and Raytheon and so on I think these are all doable and I think we need it because our our forty fifty year old systems are frankly just rusty in failing us
well below I don’t even have to follow that was that was inspirational just thank you so much this is been such a joy of listening and learning and being educated of the process on the other side and I learned a lot as much about the entire podcast about process the B. C. and and the relationship there with with the I. you and and the DOT so I just wanna thank you for taking the time to chat with us today yeah I think so much thank you so much for doing what you’re doing keep doing it and let us know how we can do better thanks a lot thanks to get thanks again to all for joining us today in helping startups and ventures connect to the department of defense hearing how you and other investors are thinking about the future defense technology is absolutely fascinating if you enjoyed this episode features describe insured with a friend or colleague and if you haven’t already be sure to listen to the first four episodes of from taxes importation to learn more about the exciting work the defense innovation unit is from Texas on the partition is a partnership between the defense innovation unit and founding media it’s created in Austin Texas learn more about the D. are you please visit our show notes thanks for listening