From Silicon Valley to Pentagon: The Intersection of VC and Dual-Use Tech | The Pair Program Ep32

Tim Winkler: 00:00:05

Welcome to The Pair Program from Hatchpad, the podcast that gives you a front row seat to candid conversations with tech leaders from the startup world. I'm your host, Tim Winkler, the creator of Hatchpad. And I'm your

Mike Gruen: 00:00:15

other host, Mike

Tim Winkler: 00:00:16

Ruin. Join us each episode as we bring together two guests to dissect topics at the intersection of technology, startups, and career growth. Back to another episode of the Pear Program, I'm your host, Tim. Tim Winkler joined by my co host, Mike Gruen. Mike, a quick question of the day for you. Um, you play board games. I do. Okay. Uh, so we had a little debate here at hatch around, uh, around board games, you know, in, in your opinion, what is the greatest of all time? Board games, the goat goat board game,

Mike Gruen: 00:00:56

the greatest of all time. I mean, I do like settlers of Catan. I like the German style, like Maxman type, uh, problems where the tactical and the strategic, um, so settlers definitely comes top to the list. Um, trying to think if there's anything else, but that's, that's pretty, it's

Topher Haddad: 00:01:13

pretty tough to beat. Yeah,

Tim Winkler: 00:01:14

Catan was actually one of the top ones. And then we had, um, Risk, Risk is my favorite, my personal favorite. Um, but Clue is an easier

Mike Gruen: 00:01:22

game. That's based mostly on Locke.

Tim Winkler: 00:01:25

Okay. You're clearly not making the right paths. It's, uh, but Clue is actually the number one, which I was surprised. I didn't know if I thought Monopoly was going to be up there, but either way, um, you know, talking, uh, talking a little board game talk, um, Well, let's, let's jump in, uh, give, give the, uh, listeners a little bit of a preview of today's episode. So today we're going to be talking about the intersection of venture capital and dual use tech startups, uh, for clarity, for, for our listeners, you know, a dual use venture is a technology startup that has both government and commercial customers. Uh, we've got two excellent guests with us to break this down. Uh, we have Mike Brown, uh, a partner at a venture capital firm in the Bay area called shield capital, uh, and Topher Haddad, uh, the co founder and CEO of, um, Is it out Albedo Albedo Albedo got it. Right. Cool. All right. Um, Albedo, uh, they are a, uh, satellite imagery startup headquartered, um, I believe in Denver, Colorado. You can correct me if I'm wrong on that. Uh, and to set the stage for this episode, you know, shield capital was one of the Albedo series a round. Uh, so it is not by accident that we have brought these two folks together. It was a strategic pairing of these guests. Uh, so I'm confident this will add to a really fascinating discussion today. Uh, guys, thank you both for joining us on the pair program. Glad to be here. Yeah, excited to be here. Cool. All right. So before we dive in to the discussion, we do kick things off the fun segment called pair me up. Here's where we're going to go around the a complimentary pairing. Mike. Bruin, uh, you always start us off. What do you got for us? So today's

Mike Gruen: 00:03:12

is a long meetings and many scheduled short breaks. Um, the key part of that is not the long meeting, but the scheduled short breaks. Uh, we had an all day planning session, uh, today. So it was sort of top of mind. Uh, it was several hours long, but I definitely appreciated the chief product officer scheduling many short breaks. Um, that. Broke up. The, the thing nicely, um, gave us a, gave everybody an opportunity to sort of catch up on all the stuff that they were missing. And I think it sort of made the whole, the whole day go a little bit faster because everybody was paying attention. 'cause they didn't have to, they didn't feel that need to like, oh, I have to go check Slack, or I have to check email right now. Like, they knew that like, in 20 minutes they're gonna have an opportunity to do that. Stuff like that. So. That's my parent, it worked out pretty well. Yeah. Yeah. You

Tim Winkler: 00:03:57

love your meetings.

Topher Haddad: 00:03:58

I hate my meetings,

Mike Gruen: 00:03:59

but meeting is the opposite of doing, uh, yeah.

Tim Winkler: 00:04:03

Yeah. Mike, Mike's an engineering leadership. So he's got one on ones out the kazoo. So I'm sure it's a relatable thing for, for many of our listeners as well.

Mike Gruen: 00:04:14

I mean, to be clear, I do like the one on ones. I enjoy that part of the job. It's the big, long, big session meetings. As I said, meeting is the opposite of doing for

Tim Winkler: 00:04:23

sure. So I agree. Yeah. Cool. All right. Um, I'll jump in, uh, so without getting too deep here, uh, my, my pairing is, uh, turning 40 and reflecting. Uh, so I recently celebrated my, my 40th birthday. It was a fun gathering had, had, you know, friends and family from, you know, years and years ago. Uh, I gave a toast, uh, at the party and prep for the toast was. It is doing a bit of reflecting on my life. Um, you know, a lot of folks say like the 40th is that mid point of life. Uh, it's a good opportunity to reflect on where you, where you are, uh, where you thought you, you would be. Uh, and for me, you know, just a good time to just reassess some life priorities and goals and, um, overall purpose. Uh, so, you know, got, got a little bit deep, uh, but, uh, you know, for me recently becoming a first time parent, um, you know, the purpose was. Quite clear or clearer for me, uh, I'll leave it at that. So, uh, it was a healthy exercise, uh, but that's, that's my parents. So turning, turning 40 and, and, uh, reflecting, um, so I'll pass it along to our guest, uh, Topher, uh, why don't you give us a quick intro and, and, uh, tell us your parent.

Topher Haddad: 00:05:41

Yeah. Awesome. Uh, excited to be here. So, uh, Topher, dad, co founder and CEO at Albedo, we are building satellites that fly very low and take very high resolution pictures of the earth. So we'll get, we'll get into that more. But, um, after thinking long and hard about my pairing, I think one of the best ones is Topo Chico with my nine to five or whatever the actual hours are, but I sit and work all day drinking Topo Chico, which is, uh, it turns out to be pretty expensive. Yeah. Work habit, but, uh, it helps me, uh, yeah, focus, so that's

Tim Winkler: 00:06:13

solid. Are you a ranch water fan by chance?

Topher Haddad: 00:06:18

Yeah, definitely. Yeah. And the ranch water, uh, I make some LaCroix too, but I'd say Key Lime LaCroix and a regular Topo Chico, maybe the occasional lime are my go tos all

Tim Winkler: 00:06:28

day. That's solid. My neighbor just opened up a, uh, Mexican, uh, street taco restaurant. Oh, yeah. One of the, one of the key like drinks that they've got like the Coke and like the old school glass bottle, but then they also have Topo Chico and it's always a, it's always a good option. You just don't see it very often, not, not around here anyways, not, not East coast. I

Topher Haddad: 00:06:50

think it's spreading. I remember when I was living in the Bay area and it first started, they started selling it there. Um, it was a big deal, but in Texas, it's everywhere. I mean, it's, yeah, it is the water or the wine, honey of Texas. So sweet.

Tim Winkler: 00:07:04

All right. Well, we'll have to evaluate if it's, if it's going to be the top of our pairing charts, we'll, we'll have to get back to you on that, but, but I do dig it. I like that. I like that. Um, awesome. Mike, how about yourself a quick intro and your pairing?

Michael Brown: 00:07:19

Okay. Uh, Michael Brown, uh, partner shield capital, uh, just leaving an assignment as the director of the defense innovation unit at the department of defense, whose mission was really to bring commercial technology into the military and now being at shield, I'm really doing similar thing, but now from the private sector side, how do we work with, you know, phenomenal entrepreneurs like Topher and help them get their companies to be successful. And selling into government and commercial applications. Well, Tim, for a pairing, I think I'm inspired by what you talked about in terms of reflection. So the other end of the spectrum in terms of age of this group, uh, and as a new grandparent, the, my favorite pairing is, uh, being with grandkids and lack of discipline. So the beautiful thing about moving on from being a parent is once you get to the grandkids. No discipline involved. It's just having fun with them and handing them back to the parent.

Tim Winkler: 00:08:15

Injecting them with lots of sugar and then handing them back to the parent. That's great. That's great. How many grandkids do you have? Uh, two. Oh, very nice. Good stuff. I like that. Um, well let's, um, let's go ahead and transition, uh, into the, the heart of our discussion, so. As I mentioned, you know, we're going to be talking about dual use tech today. Um, you know, this plays off some recent episodes that we've been running centered around, you know, commercial innovation and the defense and national security sector. Uh, you know, Michael, you, you, you, your experience at the defense innovation unit means super relevant, super spot on. So I'm really pumped that we got you. Uh, and I'd love to, you know, to expand on this concept of dual use technology, um, defining it in more detail, understanding some of the different use cases where we're seeing this popping up across both commercial and government sectors. Um, you know, we'll hear more on how VCs maybe evaluate and assess. Dual use companies, um, and, and expand a little bit on like what, what those regulations or what those challenges might come into play when positioning that tech and into these regulated industries like the Department of Defense. Uh, but first off, I'd love to begin with Mike. You know, give us a little context on maybe the investment thesis at shield and also I, I share with our listeners how the partnership between SHIELD and um, albedo began. Okay.

Michael Brown: 00:09:51

Yeah. Uh, you know, shield is really a first time venture fund focused on early stage companies, which means seed stage series a, uh, so, uh, uh, Albedo fits right in the center of it. And we're working on 4 different sectors, AI, cyber autonomy and space. And if you think about those sectors. They're all ones that the military needs, but is not leading the development on. So the big change, uh, in defense tech, if you go back 50 years, would be the department was inventing a lot of the technology it needed. So it was working with NASA to send rockets that, uh, basically it designed with some defense primes up into space. Uh, it was developing chips. Uh, all things that, uh, today the department needs, but is not on the front end of developing what the department's on the front end developing day would be hypersonics and what's called directed energy or concentrated lasers. So, a lot of the technology that's needed is developed in the commercial world. By companies like Albedo and others. So the challenge is, how does the department get access to that? So the good news is now we can leverage private investment venture capital to develop these companies rather than having to be purely taxpayer funded. You know, if you go back to the 60s, a big part of the federal budget was. Uh, developing the rockets and the, and the space program. Now that can be done with outside capital. So big benefit and we get competition. We get more companies that are participating here, which gives the taxpayers a bit of a break through that competition and you get leading edge capability, or not dependent on kind of one source to get that. So our thesis is that we'll be able to both invest in those companies. And make money for our investors, because not only do they serve the government, but they also have commercial applications. So that's the thesis. It's a pretty new one. It's a defense tech is a rapidly growing area, part of the venture market. But we haven't had enough time go by to see, okay, how do these investments play out? We've had some pretty good examples of big wins. Companies like Andrew, um, companies like shield AI are doing well, but we haven't seen this through a whole sort of crop of, of investments. And I'll let Topher talk about how. Uh, the partnership with the shield got connected with Albedo.

Topher Haddad: 00:12:18

Yeah, for sure. Actually, it was funny. The relationship started with shield as I was a customer reference for a different company that shield was evaluating and it turned in and I was actually fundraising at the time, so it turned into an investment, but, but yeah, that, um, that was a little over a year ago when we closed our series a and very much, I think Albedo. Reflects kind of the core dual use definition of really serving both commercial and defense and intelligence. And so. Historically, and, like, the heritage of a lot of our technology come from. The government owned and operated satellites that have been around for a long time and done a ton for our national security. And so what we're really bringing from, uh. From a commercial perspective, is this capability in this product that today you kind of need drones or planes for, uh, to capture this level of resolution and give our customers the certainty that comes with that. But now we can do it at a global scale with all the benefits you get from a satellite. And so that's really. Important for industries like insurance, utilities, mapping, agriculture, those different sectors on top of adding to the existing capability of the U. S. government in terms of high resolution, remote sensing in both the visible and the infrared. And so that really, um, that plus kind of the core technology we're building in this new part of space called Leo. Is what I think really attracted shield to Albedo and us working with them and the attraction was. Those connections, the network, the knowhow of working with the defense, uh, department and the intelligence community in terms of how to do, how to do business development, where to spend time and how to think about that strategically and long term. Um, so, so yeah, it's been, we've been working with SHIELD for about a year and it's been, been phenomenal. Uh, it's a huge tailwind to have, have, you know, a team that knows the defense world, um, like SHIELD does. When you were,

Tim Winkler: 00:14:06

um, you know, looking for, for investment, were you looking specifically for firms that, that had some expertise in dual use tech? Yes, I would

Topher Haddad: 00:14:16

say, um, and, and, and breakthrough energy ventures co led that round was shield. They were more of a climate tech oriented fund, and that was really like very well aligned with our go to market and our goals for, uh, the market opportunity was, was defensive and commercial with a lot of climate and applications. And so. We had, we didn't have as many, um, investors very actively involved before the series a. And so when we, when I was talking to different, different firms, knowing that there were certain firms out there with specific theses and focuses like shield and on the defense side. Was definitely something that was very attractive and something that we wanted, you know, from, from, uh, prioritization perspective was not just the capital, but, but a fund that could really bring value in other ways beyond that. So, yeah, definitely was, was of interest.

Tim Winkler: 00:15:03

Interesting. And, and so, uh, some context on your background, Topher. So, um, you know, where, where were you before you started Albedo, uh, talk to us a little bit about, uh, your background, where you came from.

Topher Haddad: 00:15:15

Certainly. So I worked for Lockheed Martin in the Bay Area for about 5 years before starting Albedo. I worked on classified remote sensing satellites for the U. S. government, and I did a mix of system architecture work with more of a specialty in optics and imaging science. And so both and, you know, I really, I thought space was cool as a kid, but wasn't necessarily the person that grew up set on working in space. But I feel super lucky that that was the 1st job I got because I just fell in love with the entire space industry and. Satellite imaging specifically, both the engineering side and then also the applications getting to see what it's done for our country. So that's what I did for about five years. I learned a ton, worked with amazing people, worked on amazing missions. Um, and yeah, I got exposed to kind of this defense tech and the application side of things.

Tim Winkler: 00:15:57

Neat. Um, I, I am curious on like, um, you know, so that, that obviously played a part in, you know, having some connections to, to folks in the defense space, uh, when you first started, uh, Albedo, did you know it was going to be a dual use tech kind of, um, you know, technology company, or was that something that evolved as you were going through some different use cases, um, and, and what kind of came first, the, you know, more of like a commercial use case or, or.

Topher Haddad: 00:16:26

Defense. Yeah. So I didn't really know. So the idea for Albedo, which we won't get into this story because it's kind of long, but it actually came from when Trump tweeted a classified satellite image. And I didn't know much about the commercial market for imagery, but it's this tweet sparked this conversation in the commercial industry around how game changing it would be to get this resolution in the hands of those different commercial markets. I'd mentioned. And so the, the. I guess, like, the early days of this, we kind of viewed Albedo as, yeah, there's obviously a big opportunity with the Department of Defense with the intelligence community. We know there's a lot of supply limitations today around how much high res imagery they can collect. And so that's kind of the bare minimum opportunity of, you know, this, this, this big market opportunity with the defense and intelligence community. But the commercial was kind of that. That was where this kind of venture scale potential outcome came in. If we could unlock all these applications or expand all these applications in these commercial markets by bringing high resolution, making it easier to buy and kind of these different kind of key ingredients that we think are needed to catalyze the commercial market. Um, so I think, yeah, from the beginning, we always knew both were the focus, but commercial is where. It's more, it's, it will take more work and more unlocking to really grow that market, which we're very bullish on. Um, but, um, but defense, yeah, it was definitely there at the forefront as well.

Tim Winkler: 00:17:48

And just when you think about how you're going to break down, you know, the, uh, a cut from a rep, maybe from a revenue perspective, you, do you have, uh, an idea in your mind of, of what that might look like from a balance of commercial and, uh, defense?

Topher Haddad: 00:18:03

Our goal would be half and half 50, 50.

Tim Winkler: 00:18:07

Um, I want to talk a little bit more about, you know, Mike, when you, when you invest in these types of companies, you know, what are some of the things that you're looking for from. Uh, the foundation of their technology or the founding team, um, you know, what, what is it that they're going to be up against, you know, when they're, when their strategy is to expand into these more regulated

Michael Brown: 00:18:28

industries? Yeah, well, I think, uh, what we look for is some of the things that you look for in any type of venture investment. Uh, how big is the market, uh, in this case, huge, uh, because space is undergoing a revolution. Maybe we come back to that point here. Uh, we look for how strong is the founding team. Uh, Topher is a great example of that, uh, very capable entrepreneur who also comes with co founders. So we found that it makes sense if you have a founding team versus someone who's trying to do it solo, there's a lot to get done in a, in a company as you're getting started, as I'm sure Topher can attest to. And, uh, we're looking for some differentiation relative to other offerings. Topher's got, uh, really the opportunity to bring, uh, you know, state of the art, uh, optical sensors combined with infrared or thermal imaging. And, uh, I think that's going to be a very, very powerful combination. He's also, uh, really pioneering this concept of what can we do in something that is below low earth orbit, very low earth orbit, where he used the acronym a little while ago, uh, VLEO. So those are some of the things that we would look at that looked like, uh, it could be a dynamite investment. I'll just say one bit about what's happening in space now for those folks who haven't followed it with a nod to SpaceX, another commercial company. Extremely successful here. Uh, they have pioneered this concept of a reusable rocket and it's reduced the cost of getting a payload or whatever you might want to send in space by an order of magnitude. You just can't underestimate how important that is for the growth of the industry that, uh, Topher is pursuing. So the ability to get at a lower cost, whatever you might want to have in space is really allowing an entire new industry to develop here. Um, and that's sensors, all different types of sensors, in Topher's case, it's optical plus a thermal, but there's other types of sensors like synthetic aperture radar, which was used very effectively to see the Russian intent in moving in Ukraine before Putin crossed the border, because those, uh, technology can see through clouds and see at night. Um, so this combination of, uh, different types of sensors that we're able to get better resolution of what's happening on Earth really revolutionizes defense because now my situational awareness is much better than it was before. Enemies can't hide. It's just going to be impossible to do things without, uh, seeing what, what's happening. Uh, and then the commercial application, most of what we know about the earth comes from sensors in space. So to be able to watch, um, you know, climate change, uh, the water content of the, uh, the, uh, snow in the Sierra, which is so important to know whether California is in drought on and on and on so many different applications here. And that's really what makes a great investment is a company that's able to pursue both. The defense market and the, and the commercial market and into this environment of the revolution in space and space sensors, that's happening right now, I'm curious, uh, tougher

Tim Winkler: 00:21:34

with regards to, you know, an expansion and to, and to more of the defense space, um, you know, D did you make a, an intentional effort and, uh, uh, you know, scaling a team that had that type of a background, maybe from a capture or BD perspective. Um, and things that you would recommend for, you know, maybe those, those startup founders out there that are considering like, uh, you know, their tech to be injected into, you know, more of a defense environment, but what steps they might run it, they need to consider or what, you know, what they might want to do to, uh, give themselves their best shot to, to navigate those waters. I mean, we're trying to educate a little bit more on that space because we, a lot of the listeners here are commercial technologists and so can be, you know, completely, uh, Unknown territory for folks that have it, like you had the background of Lockheed. So that clearly played a part, but what would you recommend and say, like some of the things that would be helpful to those that are trying to dip their toe in those waters? Yeah. Good. Great question.

Topher Haddad: 00:22:35

I honestly have like so many lessons learned from being a first time founder on a lot of this. I think at the end of the day, like you're bringing a capability or product to the market that is valuable to defense and intelligence, then that's, that's the biggest benefit. And so that, that fits us as well. And we've gotten a lot of traction there. We actually, we haven't really hired that many dedicated people on the business development and sales side. Most of our team is engineering. Thank you. As we have a lot of core technology that we're building to launch these satellites, we'll launch our 1st 1 in about a year and a half. Um, and so a lot of the early BD and sales was done by the founders on the defense side. We brought on a full time, uh, BD person on the US government side at the beginning of this year. He's phenomenal. But, and he has a lot of help from the team, different engineers that participate, but it's, it's still, um, he's, he's the 1 full time dedicated to that. But it's still enough for us in our phase to get a lot of traction when some of these contracts, some of these, uh, contracts, or the opportunities, like, where Mike. Used to lead and other opportunities from a perspective that we can pursue and. When some non deleted funding before we launch that will help us from an R and D perspective. Um, I think from like an advice perspective. A couple lessons learned in the early days, we're trying to develop our own proposals and just all the nuances around that doing it on ourselves. We lost a few at the beginning and then started working with a consulting group that helped a ton. So, I think adding in some external support is definitely worth the cost, especially, um. If they're kind of incentivized by the, the award of it as well. So that I think that was a lesson learned. And then additionally. Getting to the phase 2 part of the process as quickly as possible opens up a lot of opportunities from a different type of contract vehicle perspective to win some bigger awards. And so that was helpful for us as well. Uh, in terms of how quickly we were able to win some of those, but at the end of the day, I think it's really about. It is, does the messaging, the product itself, like really resonate with those customers? Do they need it? It's solving a pain point. Um, and that's where we've gotten, you know, the bulk of our traction from of, of not proper product led sales, but like it's, it's very much product based. And

Tim Winkler: 00:24:49

uh, we, we touched on this acronym in a previous episode, but SBIR, what does that uh, stand for?

Topher Haddad: 00:24:57

Okay. Yeah. I'm not, I'm not good at actually questions on what acronyms stand for because there's so many of them, small business, innovation, research, maybe something, is that right?

Michael Brown: 00:25:07

That's it. That's it. All right. It comes from, uh, uh, the small business administration, uh, which wanted to fund more smaller companies doing research. Uh, to help the government and so, uh, there's a tax placed on all of the R and D dollars that are given to each department of the government. Department of Defense has the biggest proportion of that. So it turns out to be about a 3 percent tax, about 3 billion that, uh, the Defense Department will award in SBIR grants each year. Based on its R and D budget.

Topher Haddad: 00:25:40

Gotcha.

Tim Winkler: 00:25:40

Okay. And, and Mike, you, you're, you spent a couple of years or maybe more at the defense innovation unit. Can, can you just give a little bit of a panel picture of what that role was? Because it sounds like it obviously played a big part into. How you add value at shield capital as

Michael Brown: 00:25:56

well. Sure. Sure. Yeah. 7 years at the defense department, uh, and the defense innovation unit again, set up by ash carter because he saw so many of what we, the innovations that we need are happening in small companies and silicon valley and other innovation hubs around the country, as opposed to in government labs. So he saw that flip we talked about a few minutes ago where the defense department used to be inventing. All the technology it needed. Now it's a 80, 20 on the other side, about 20 percent of the technology, uh, is invented by defense department and labs, but most of it is coming from. You know, the, the vibrant innovation, uh, economy that we have in this country, which is a real comparative advantage, uh, globally. So, uh, you know, we see that as companies funded by the venture industry. And these are technologies like AI, cyberspace autonomy. If you think about where's the, where are the new things coming from, like, uh, uh, generative AI, then they're not coming from defense. Or DARPA, even though those folks are still doing some great work, they're coming from younger, innovative companies out there. So, as Carter having realized that, so we need a way to connect with that economy that's happening. So, he created this unit, and the unit basically does 2 things. 1, it scopes for what are the hardest problems that the defense department has. Some of those will be military unique, so D. I. U. wouldn't be a factor there, but many of them will be leveraging the technologies we just talked about, and we need to find the commercial vendors. So D. I. U. is looking for which are the most important problems to work on. And then what is the. The commercial vendor set who might be able to solve that problem. So it's a, it's a matching of the problem with those commercial vendors. And then it's a process to basically make sure there's competition among those potential suppliers down, select and test in a military environment, how well those solutions work and then the DOD partner or customer. We'll be funding that effort and then getting those scaled up and the uses a special authority, which has a boring name. Other transaction authority. It was actually created when NASA was created to in the wake of Sputnik. To make sure that the government could go fast and not always use something called federal acquisition regulations. Which is every bit as cumbersome as it sounds. So, by using this special authority of OTA, it really is allowing DIU to operate more like a commercial entity and to go faster and streamline the process. Because 1 thing we know, uh, is that. Uh, startup companies, uh, live and die by cash flow, so the government has to find a way to work faster to be able to support young companies or they, uh, you know, physically, uh, put up their hands and say, no, I can't work with you. If you tell me it's going to take 3 or 4 years to get a contract, uh, you could live or die. Uh, is a young company by waiting for the government, which is why we have a whole set of defense primes that are uniquely configured to support the government. They know the process and they can wait that long for a government contract. So, so we need to inject an alternative. A process, which is what is doing that allows. The government to work better with a small companies. On that, I think

Mike Gruen: 00:29:16

that's, that's been 1 of the things that I've seen as being really great because in the early days, so my, you know, I worked at plenty of government oriented companies and trying to get that money. Like, there were plenty of opportunities where we were like, oh. It wasn't even a government oriented company. We had opportunities where we had a commercial product that could benefit the government, but like the sales site, everything about it was just so hard. It was like, or we can go spend all of our effort getting, you know, getting these smaller dollars faster rather than waiting for these big dollars that might take a long, long time to come. So I think that's been a great innovation on the government side in terms of trying to, trying to understand the cycle that you have to do to, to get these smaller

Topher Haddad: 00:29:54

companies in.

Tim Winkler: 00:29:57

And that's great inside knowledge for you to have Michael to, to be able to bring to, you know, as an advisor really to, to these startups that you're investing in, because I think that's part of it is educating them on, you know, the process and realistic timelines on what might be, you know, what to expect, because I think that's where, you know, like you said, as a startup, you're relying on that cash and those early stages, and you could find yourself in a real pickle if you're. Okay. Putting all your eggs in that basket, not knowing what that timeline might, might be. Um, so

Michael Brown: 00:30:29

that's right. Everyone at shield has experienced both in the government. Many have worn the uniform. So from military background or, uh, I'd say, and that's not or commercial experience. So most of my career experience was leading to Silicon Valley companies, quantum and Symantec. So I'm relatively new to the government side of this, but you need the skill set of both, uh, having led companies, which. This experience Topher is getting now to, uh, you know, how does it, how can you most effectively work with government partners?

Tim Winkler: 00:31:03

Yeah. It's, it's interesting. Topher, I was checking out some of your, um, advisors, some of your strategic advisors on your board. And you've got folks there that, you know, former chief of staff from, you know, intelligence agencies and department of defense. How did you align with those folks? Um, was that some, was that a part of the, the partnership with, with shield or were those connections that you had? Uh, I'm always curious on how folks align with their advisory boards.

Topher Haddad: 00:31:29

Shield was a big, I think 3 of those 4, 2 of those 4, 3 of those 4 were connections from shield. Um, and yeah, there's definitely, I mean, we've already, uh, had a ton of value come out of working with that strategic advisory board. We have former director of the National Geospatial Agency, uh, vice admiral retired Bob Sharp, who used to run an intelligence agency that's very relevant for imagery. And then I won't go into details on the others. They've all been phenomenal. But that was largely, yeah, from, I think, this signal of Shield's investment of how, um, distinguished the Shield team is generally across the board. And then, um, getting those connections, talking about what we're doing and really having people that are bought into the mission. Um, and so, yeah, that was, uh, in large part to Shield.

Tim Winkler: 00:32:17

Do you think, um, well, I guess with, with your engineering teams, um, what, what are, where are most of their backgrounds coming from?

Topher Haddad: 00:32:25

Yeah, I was actually talking to a friend about this yesterday. He was like, I was looking at y'all's jobs and your engineering positions. You have lists that just sound crazy because we have, you know, we need a safe mode, GNC algorithmic expert, PhD in this thing or whatever. Um, so a lot of, a lot of the background, we have a fair mix of. Experience from traditional aerospace classified space like Lockheed Martin, NASA, JPL, et cetera, but then also a fair mix of kind of the new space alumni with SpaceX and some of these other companies. So, that's been a great combo for us from a culture. And just engineering philosophy perspective, and some of the key. And some of the key aspects of how we've been so successful so far is bringing on these people that have a lot of experience. Pretty complex spacecraft from the traditional aerospace domain that, you know, are much more expensive, but have these very exquisite capabilities that we now are in the kind of freeze. That's pretty, but like, um, the less constrained space startup world, and we can move much faster. 1 of our core values is high speed, low drag. And so we have all that experience and then we have it in this less constrained environment. We can really build some amazing technology that's much more affordable, but still very capable and very, um, uh, yeah, very, very high performance. So so it's a fair mix of kind of different space engineering type backgrounds, some more traditional software backgrounds, but largely it's very specialized aerospace jobs. One of the

Tim Winkler: 00:33:54

big things, you know, just being based in the D. C. area, we've, you know, we've worked with a fair share of, you know, uh, government contracting companies, you know, commercial product, you know, companies, um, you know, within services, right, there's, there's a lot of work that's done that's, that's in a cleared environment. Uh, you know, you can only get exposure to certain, you know, Uh, pieces of work, especially if it's an Intel, right. If you're, you know, top secret and beyond types of types of clearance, when you're talking about building products, um, that might be, you know, supporting these agencies, uh, would you say it's, it's something that, you know, you're looking for folks that have. Built products that have, you know, uh, been, uh, impacting, you know, secure environments. I mean, I guess trying to think of how, what level of security, uh, it comes into play from a build perspective. Right. But. Not really necessarily saying like they need a security clearance, right. But, um, you know, I'd imagine when you're building, you know, for, for some of these agencies, right. They, they want to ensure like security is kept top front center. Uh, is that something that, that plays into your, uh, strategy when you're talking about hiring up engineers that are building for, you know, those types of customers?

Topher Haddad: 00:35:08

Not intentionally, more by coincidence, so a lot of our, a lot of our engineers, including myself and one of my co founders, AJ, we all worked, you know, for years in a building with no windows, and we couldn't bring our phone inside and et cetera. Um, also, it's just, it's crazy going from that to now, like, I can do half of my work on my phone because it's all Slack and email. It's a paradigm shift. Um, but. But not so not intentionally, but by coincidence, we do have a lot of those those people and some of them still have their clearances sponsored through other projects that they work on, which is helpful for us for albedo, because it is beneficial to have familiarity with what's going on in that environment. What kind of use cases and missions we can really provide value for, but in terms of how we're building the product and like needing to put the technology in certain places that we're not necessarily building classified type technology, but it is there are considerations, which is kind of a separate regulatory framework around how we can export information. What kind of technologies we can use in terms of supply chain and things like that. Um, so it's still is kind of in that family with. Thank you. Those types of technologies, but not necessarily needing to be in a skiff or anything.

Tim Winkler: 00:36:19

Got it. Okay. Yeah, that's, that's something that I think a lot of folks maybe has some hesitancy when they, when they look to expand is, you know, do I, am I a need to become a cleared facility here? Um, I think that's a different ball game if you're doing services. It's obviously it's very little bit different than building product. Um, but, um, always just bring it up because I think it's, it is something that we get asked quite a bit if we're. Working on that, a product type of role that's injecting that technology into defense.

Michael Brown: 00:36:50

This is indicative of how much defense is changing because if we went back 10 or 15 years, it would have all been classified. We're all been built by the government. Now, you've got the ability to have all these sensors developed by commercial companies available for anyone to use that information. So, the defense department needs it, but the flip side is if we don't figure out how to use that adversaries also can take advantage of that commercial information. So this is where defense needs to be much more welcoming of what's happening in the commercial world to combine what we can learn from those sensors with the exquisite government satellites, which are still being produced. But it's the combination of that. That's very powerful. Right.

Tim Winkler: 00:37:34

And that's, what's great about the, you know, the work that, you know, you all are doing at shield capital and, um, you know, some of these other agencies that are really kind of pushing the bill on. You know, being more open, uh, I think that's, you know, you kind of touched on those OTAs, but I think, you know, that's kind of like, uh, the backstory of, of where some of this began and, and, uh, you know, continuing to expand on that. I, we, we've been seeing it front and center and I love to see, you know, a lot more, uh, investment being applied to those types of industries. It's exciting and necessary. Um, I guess before we transition into the, the final segment, Mike Bruin, did you, did you have any other

Mike Gruen: 00:38:15

questions? Yeah. I mean, there's always questions I like to ask about the sort of the funding and that process. And Mike, one question for you. Um, like you mentioned earlier, assessing co founders and a, you'd like to have actual co founders and not just a single founder, but like, are there any concrete things that you really are looking for from, from a co founding team?

Michael Brown: 00:38:34

Um, I'm curious. Well, that's all about just bringing complimentary expertise to the CEO. I mean, the CEO is the most important person on that management team. So we've got to have faith as we do in Topher, uh, that he's going to be able to build a successful company, but no, because no one can do that alone, no matter how talented, uh, we would look for complimentary skills. So it could be someone that, uh, shoulders, part of the engineering or people who are. You know, helping on the sales and marketing side, but you just need complimentary expertise around you. There's just too much to do as a single person. And then you get into a fundraising period, which Topher's and now, and that, you know, sucks all the oxygen out of the room for the time that occurs. Because the number one job of a CEO is to make sure. You have a cash in the bank that allows you the runway to keep developing the product. You don't have that. It all comes to a screeching halt, right?

Mike Gruen: 00:39:29

And actually, that's a great segue to for like, what's been the most surprising thing for you as a first time founder going through all

Topher Haddad: 00:39:34

this process of getting that capital. Um, uh, yeah, good question. And I'll just comment on the co founder aspect too. I think one thing that's been really, I think in the early days, we identified this pretty quickly. It was just the dynamic between myself and my two co founders was. Kind of the perfect fit to Mike's point of just complimentary skill sets and being able to be dynamic when, like, in this example, I'm fundraising and I'm just like, okay, sorry, guys, can y'all can y'all do all this stuff normally doing? I'm not fundraising. Um, but that dynamic aspect, and then the, the, um, the collaborate, the collaboration aspect where I think for us, it's been helpful to have 3 because. Especially in the early days, we, we very much more were decided by consensus. Now we just don't have time for that. We have to divide and conquer, but having that, you know, always one other, or always a majority or just like those types of dynamics I think was really helpful for us. So three has been good from a capital perspective to your question. Um, you know, I, I don't know if there's been anything that stands out as like a big surprise as a first time founder. I think personally, I probably like. I wouldn't say I like fundraising, but I probably like it more than most. I think most practices really don't like it. I think it does kind of fit a lot of my natural skill sets of, um, of kind of the sales pitching aspect of it, but then also like having the engineering background and the technology we're building. And so I think maybe one surprise that's more of a recent one is just every, every round, it gets harder to delegate and really get into full time fundraising mode, because that's the ideal is that. That's that's all of your time. Um, kind of to my point earlier and so it just gets harder and harder because as the company grows. There's just more going on. Um, and so, but yeah, it's, uh, it's been a good journey for us. The timing has been good from a funding perspective. And we, uh, we're fortunate to have investors that not only just provide capital, but provide a lot of value. Like. I mean, I think that's an

Mike Gruen: 00:41:35

important last point on the getting investors that add value. Um, I've worked at any number of companies and, you know, there's this notion of like smart money and dumb money. And I've also worked at places where there's indifferent money. The, the people, the, the, the investors are smart. They. They know the space, but they're kind of indifferent and have so much trust in the founders that they're not that involved. Um, it's just, this is like interesting dynamic. And I think, um, making sure that you have that relationship, right? And that the people that are investing are. Like, as I think you've done a great job with, uh, with shield and everything, just really aligning, um, investors with the company itself and the overall goals. Um, so that's awesome.

Topher Haddad: 00:42:14

Seems like a really great

Michael Brown: 00:42:15

match. Yep. One thing about shield, uh, we're a small, uh, fund, this fund, 175 million under management, you might know some VC firms have billions. I think, uh, you know, Andreessen Horowitz might have 30 plus billion Sequoia. So for us, every investment matters. What can we do to make sure that Topher is successful is on the agenda for us. Um, if you're a huge fund like that, there's no way you could monitor every investment with that, that same level of care.

Topher Haddad: 00:42:42

Right. Yeah. I'll add onto that with shield specifically compared to some of some other investors we have with those really big funds. Is that we have our people from shield that are on our board and support us very heavily, but I feel like I get help from a lot of the team at shield, not just our 2 kind of core people. It's like, I'm on this podcast with Mike right now. And I feel like I know a lot of the different team that can help in different ways. So I think that's 1 benefit we have at Albedo partnering with shield as a small team and a smaller fund is that. There's a lot of that, you know, um, a lot of value there across the team, not just with your single partner, like it would be traditionally the case, maybe at a different VC fund.

Tim Winkler: 00:43:23

I'm getting some good vibes right now on this, this, uh, pairing of, of bringing a VC and their portfolio founder. I kind of like it. We've never done it before. So this is the first of its kind. I didn't want it to get too biased, but I think we're, I think we're in good shape here. This is a, this has been a really, really good back and forth. And, uh, I think it is important. It's important to, you know, I think that's a good point, uh, to for like, you know, Mike saw value in bringing, you know, you on and, you know, using this as a platform to continue the conversation. So yeah, good on you guys. All right. Uh, let's, let's transition to the final segment here. Um, it's called the five second scramble. I'll ask you each a series of questions. Try to give me a response within five seconds. Um, and, uh, some will be business some will be personal. I'm going to start with you to for, uh, explain albedo to me as if I were a 5 year old big camera.

Topher Haddad: 00:44:17

Go space.

Tim Winkler: 00:44:21

How would you describe

Topher Haddad: 00:44:22

your culture? Also, I had to credit 1 of our software engineers for that line. That was his, um, culture, uh, transparent driven.

Tim Winkler: 00:44:32

High speed, low drag. What kind of technologist thrives at Albedo?

Topher Haddad: 00:44:41

Tinkerers, curious people, and experienced, uh,

Tim Winkler: 00:44:47

engineers. What can folks be most excited about for Albedo in 2023? At the end of this year? Or yeah. Yeah, for, for, for the, let's just say the next 12 months,

Topher Haddad: 00:45:01

so much, a lot of technical milestones, a lot of risk burn down manufacturing, getting into, into hardware builds, um, and getting closer to that launch date in early 2025. What's

Tim Winkler: 00:45:14

the top value add that you look for in an investment partner beyond the check? So, uh,

Topher Haddad: 00:45:24

getting in the trenches with us.

Tim Winkler: 00:45:27

Yeah, good answer. What do you love most about yourself? Oh, gosh.

Topher Haddad: 00:45:35

My liking of Topo Chico.

Tim Winkler: 00:45:40

We'll take that. If you had to pick one fast food joint to establish as the first restaurant on Mars, which one would it be? Probably Raising Cane's. We just got one of those actually out here. Is it, is it like that, is it,

Topher Haddad: 00:45:56

I haven't had it in a couple years, but I just, I fond college memories of a lot of you know, late night rai paints, Right.

Tim Winkler: 00:46:03

Alright. Um, what's the worst fashion trend that you've ever followed? Oh.

Topher Haddad: 00:46:11

Oh, that's tough. Probably the way I dressed. Before my friend started a company called Wythe and now I just wear all his clothes because I have no taste for fashion, but I know he does, so.

Tim Winkler: 00:46:22

What's the name of the company? Wythe

Topher Haddad: 00:46:24

New York. Okay. This is his shirt. We also have great swag at Albedo. We've got a... That's a side hustle that might actually turn into the majority of our revenue.

Tim Winkler: 00:46:37

That's where Mike's investment dollars have been going.

Topher Haddad: 00:46:39

Uh, yeah, that's where the big returns are coming from.

Tim Winkler: 00:46:45

Um, what's a charity or corporate philanthropy that's near and dear to you. Oh, that's a good question.

Topher Haddad: 00:46:51

Um, actually, uh, uh, John Serafini who supports shield started this, uh, effort for Ukraine. And, uh, that's been cool. There's been a lot of earth observation companies have gotten behind that. So that's, that's the one that comes to mind.

Tim Winkler: 00:47:04

Cool. We'll, we'll throw it in the show notes. Um, what's one skill or hobby that you always wanted to learn, but you haven't had the chance to

Topher Haddad: 00:47:17

skateboarding. I. Like a lot. I try to get into it and then I get injured. I just hurt my wrist a couple of weeks ago. So didn't do that as a kid. I really like it, but I'm not, I feel like I've never quite gotten there to really

Tim Winkler: 00:47:28

get into it. That's good. Cool. Uh, and last one, greatest, uh, superhero of all time. Nice. All right. That's a wrap. Um, you are, you are a good passive flying colors, Topher, uh, Michael, you are up, um, what is your favorite stage of startup to invest in

Michael Brown: 00:47:53

seed as early as possible?

Topher Haddad: 00:47:57

What's your favorite

Tim Winkler: 00:47:57

part of the culture at Shield Capital?

Topher Haddad: 00:48:03

Uh,

Michael Brown: 00:48:04

collaborative, uh, but also, uh, environment where we speak the truth. So it's direct, direct and collaborative.

Tim Winkler: 00:48:12

What technologies are you most excited about investing in, in the next 12 months?

Michael Brown: 00:48:18

We'll have to include space, right? Even though that's not, not my specialty, um, space, AI, um, and cyber, my favorites.

Tim Winkler: 00:48:29

What, who is one of your biggest role models?

Michael Brown: 00:48:33

Oh my goodness. These days, a tremendous respect and we lost him too soon was Ash Carter. Just a phenomenal leader for innovation and cared so much about people. I don't know, it depends. Yep.

Tim Winkler: 00:48:47

Uh, what is a charity or corporate philanthropy that's near and dear to you? Uh,

Topher Haddad: 00:48:54

um,

Michael Brown: 00:48:54

second harvest food bank to, uh, try and end hunger, even in, uh, areas that are pretty affluent, like Northern California,

Tim Winkler: 00:49:04

lighthearted transition here. Uh, do you have a favorite cereal? That's a pretty serious question.

Topher Haddad: 00:49:09

I'm

Tim Winkler: 00:49:11

sorry, we're going to switch it up. Uh, favorite, favorite

Topher Haddad: 00:49:13

cereal. Yeah. I talked about superheroes and

Tim Winkler: 00:49:16

we're on the tail end and it's going to get real fun here. Watch. Um, do you have a favorite cereal or breakfast food?

Michael Brown: 00:49:25

Favorite cereal. I'm eating a lot of heritage flakes. It's, uh, it's kind of like cardboard, but it's a little bit of granola mixed

Topher Haddad: 00:49:36

in. When you get to my age,

Michael Brown: 00:49:39

you can't be eating, uh, you know, uh, frosted flakes anymore.

Tim Winkler: 00:49:43

Uh, do you have a celebrity doppelganger?

Michael Brown: 00:49:49

Well, this is an old one, but a lot of people said I look very much like Michael Dukakis. If you remember him, he was a presidential candidate, but from. Very long time ago, I ran against, uh, uh, Bush 41. I think I'm the only one on this call that might remember

Topher Haddad: 00:50:06

that.

Michael Brown: 00:50:08

I'm not good looking enough to have other celebrity doppelgangers.

Tim Winkler: 00:50:13

Do you have any phobias or irrational fears?

Michael Brown: 00:50:20

Snakes, I guess. That's, that's. Don't want to get very

Tim Winkler: 00:50:24

close with snakes. Same. Uh, if you could have any superpower, what would it be?

Michael Brown: 00:50:30

Oh, uh, knowing the future. It'd be very useful in my business.

Tim Winkler: 00:50:35

Yeah. And we'll cap it off, uh, favorite Disney character?

Michael Brown: 00:50:42

Mickey Mouse, the first one. Nice.

Tim Winkler: 00:50:46

Good stuff. All right, that is a wrap. Uh, thank you both for, for joining us. Uh, you've both been great guests. Uh, I think it's an interesting topic. It's. It's very top of mind for a lot of folks. Um, so appreciate y'all coming on and, and spending time with us on, uh, on the

Michael Brown: 00:51:02

pair program. Fun to be with

Topher Haddad: 00:51:04

you.