Dual-use technology can accelerate commercial industries and national security, but navigating the challenges of partnering with the U.S. government can be complex. Our own Austin Walne dug in with the leaders of three very unique ARTIS portfolio companies that have one thing in common - they have all forged multi-million-dollar government partnerships and have insightful information to share with any company considering a similar path.
The larger discussion, which can be watched here, featured:
Peter Dixon, founder and CEO of Second Front Systems, building the first digital prime defense contractor to bring commercial technology to the defense and national security communities in record time
Paul Garofolo, founder and CEO of Locus BioSciences, revolutionizing the treatment of bacteria across infectious disease, the microbiome, and beyond
Chris Kemp, founder and CEO of Astra, reshaping how the space industry works to enable a wave of innovation in low Earth orbit
The following condensed interview details just what makes it so difficult for private companies, especially startups, to partner with the government, and how to do it successfully, without losing sight of your mission.
What follows are the highlights from Peter Dixon. Read Paul Garofolo’s interview here, and Chris Kemp’s here.
Be careful in working with governmental DoD organizations - they don’t always understand your company is worried about runway, payroll, and keeping the lights on. Conversations can be time-consuming and are not necessarily a pathway to any sort of near-term revenue.
For startups seeking public partnerships - connect with the Defense Innovation Unit (DIU) and with AFWERX for the Air Force. The Army's big innovation effort, Army Futures Command, will also launch in the next year or so with significant capital.
If you’re a purely defense-focused company, you’ll need lobbyists, and you’ll need to start engaging the Hill (~2 year planning cycle).
Peter, will you please clarify exactly what dual-use technology is, and how it differs from companies that sell to the government as their primary customer?
Peter: Today dual-use is primarily used to refer to technologies that are commercially focused, targeting the defense sector as a secondary or tertiary market. It's not always easy though to transition these technologies from commercial to military/government applications.
As a former marine infantry and intelligence officer, I knew there was a lot of disruptive tech coming out of the Silicon Valley, but it wasn’t getting to my men who were actually in harm's way. That’s why I started Second Front – to really focus on that problem of finding dual-use technology and using software to solve those transition issues.
What is important for a company to consider when deciding to pursue a commercial vs. government route?
Peter: I would be very careful about working with other governmental or Department of Defense (DoD) organizations because they don't necessarily understand that your company is worried about runway, about payroll, and about keeping the lights on. They will consume a lot of your time and bandwidth if you let them, and are not necessarily a pathway to any sort of near-term revenue. You must figure out whether you are in fact on a bridge that gets you somewhere, or whether you are engaged in a cul-de-sac.
How can companies think about working with the government in a way that doesn't distract them from their mission?
Peter: If you're creating your technology under a defense contract, the average IT delivery cycle for the Pentagon historically is about 8 years. That means that your technology is going to be obsolete before it is fielded. That’s why I couldn’t understand how the U.S. is spending a multiple of all of the western democracies combined on our military, yet I'm in Afghanistan and I'm on a level playing field with the Taliban from a technology perspective? That is sort of mind boggling. We had small arms, they had small arms. We had air strikes, they had IEDs. Level playing field.
This is the problem Second Front solves, aiding with the barriers to transition from security clearances, to authority to operate, to vetting for Foreign Owners, Control and Influence, and so on. We help take care of all of those barriers to transition for those dual-use companies so that we can, as a whole, rapidly increase the rate of transition from years down to <8 months. This is necessary if we as a military and a country are going to be able to compete in a technology arms race with what the military calls near-peer adversaries, basically Russia and China.
If you're a VC with a portfolio of mostly commercial technology that has military application, you can be satisfied with what's on the left hand side of that equation. Make sure that your companies are interfacing with the Defense Innovation Unit (DIU) and with AFWERX for the Air Force. As the Army's big innovation effort called Army Futures Command comes online in the next year or so, they are going to have a lot of money and will also be a big player in that equation. I'd take a look there in the not-so-distant future.
If your company is in fact trying to break into the other side of the equation and you’re trying to do it as a defense-focused company, you actually need to start looking into getting lobbyists or engaging the hill or other types of efforts on what’s basically a 2 year planning cycle.
Can open source be assistive in solving some of these problems and challenges that we're talking about? Are government agencies like the DoD becoming more open to it?
Peter: The DoD is more open to it, but it’s not necessarily all good. When I was on the ground, we were desperate for something because we were using PowerPoint and Microsoft Word to try and do turnover files to keep track of counterinsurgency, which is essentially a big dirty data problem. Every time a new echelon of marines would come into Afghanistan, which was every 7 months for the Marine Corps, the Taliban would just reset all of their ambushes because we had no institutional memory. So every time a squad leader would go knock on a compound door, he didn't know whether the previous squad leader had been met with gunfire, and we were constantly repaying a cost in blood.
We were understandably really desperate, and so we worked with In-Q-Tel. Palantir was an In-Q-Tel portfolio company (ARTIS Ventures is also an early backer of Palantir). We wrote an urgent need statement to get it in, and 8 months later we had it across all echelons in Afghanistan with reach back support to the U.S. We did that by getting congressionally apportioned money that had been in these innovation units like the ISR Taskforce, the Intelligence, Surveillance and Reconnaissance Taskforce.