Guardians of Innovation: Exploring the Intersection of Military Defense and Tech | The Pair Program Ep42

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 other host, Mike Gruen. Join us each episode as we bring together two guests to dissect topics at the intersection of technology, startups and career growth. Welcome back everyone to The Pair Program. Tim Winkler here with Mike Gruen. Mike, um, so I, I was reading, uh, uh, some random, you know, what's going on in the world today, uh, news article. And it was talking about, um, Winston Churchill's false teeth were recently purchased at an auction for 22 grand. And yeah, the, the, so the dentures that he used to, he apparently had like a, a notorious lisp. Uh, and he wore them, uh, during some of his most famous speeches. So led me down this path of, of the question for you, uh, you know, what is a historical piece of like memorabilia that you'd want to purchase from an auction? So,

Mike Gruen: 00:01:20

I mean, I don't think I could afford anything that I'd really want, but I guess I think something from like the concept under like a hundred dollars. Exactly. Um, something from like the continental Congress or like signing the declaration of independence, something from, from that sort of timeframe and from America, I think would be in there. So I don't know, maybe. A pen that was used, or I don't know, something, although, or the ink bottle, I don't know, something along those lines.

Tim Winkler: 00:01:49

No, like, Rangers 1994 memorabilia. I mean, that would be the obvious first,

Mike Gruen: 00:01:54

right? Like a, you know, number two, uh, jersey from, um, Brian Leach or something like that from 94. Um, I have the, uh, the Ranger's hat over there in the corner that actually Les gave to me back when we worked together. That was Les's original. That's kind of cool. Um, so yeah. Um, but yeah, I mean, I have a lot, I have Ranger's memorabilia. So if I was going to go for something with historic, like something really much more historical would be sort of back then. What about you? Do you give it any thought?

Tim Winkler: 00:02:18

Yeah, I, I went down, uh, the sports path and then I went down like the tech path and I think sports memorabilia would be kind of cool to have like a, um, like a putter, uh, from Tiger woods, like one of his like original Scotty Cameron's from one of his first few years, uh, winning a major would be cool. Um, and then I thought that like the original. Apple one computer, uh, built by like Wozniak and Steve Jobs

Mike Gruen: 00:02:45

would be pretty cool. That would be pretty cool. I have a bunch of Mac classics, uh, in my attic. I have like a little museum of computers. That's cool. Um, next machines, Macs, nice. Like

Tim Winkler: 00:02:57

the colored, like the head, like the colored base.

Mike Gruen: 00:03:00

Uh, no, the color, like the color of the monitor. Yeah, the color monitor, but I also have the black and white ones. Um, and what I'd really love. I mean, if we're going to attack a Lisa would be awesome to add to that collection. Oh, yeah. Uh, they did precursor to the Mac was Lisa because it would really fit in. It's the nice theme of like the Mac to the all the way through next and then the more modern Mac. So I have, uh, whatever there's a reason it's in the attic. Yeah, I used to have a little museum in my office, uh, at home a long time ago. And then, you know, I got married and that changed.

Tim Winkler: 00:03:39

All right. He's aged himself on, on the show here as well. Folks. Um, cool. Let's, let's jump in. So. Another, another fascinating episode. Uh, we're going to continue to kind of unravel this, uh, tech modernization within the government space, uh, mini series that we've been building and going to hone in again on innovations across defense tech, this will kind of bleed into a dual use startups as well. Um, so this will be kind of a hodgepodge episode of some subtopics underneath this overarching theme. And to, uh, to spit some knowledge on the topic, we, we recruited a couple of heavyweight guests. I'm thrilled to welcome to the show. So we've got Les Craig, uh, Les is a general partner at Next Frontier Capital. Uh, he's led investments and transformative tech companies, um, Played a pivotal role in shaping Montana's tech ecosystem as well through MSU Innovation Campus and, uh, 406 Labs Launchpad Accelerator. Uh, prior to Next Frontier, he co founded, uh, the 20 and Red Owl Analytics, which is Red Owls, how we were, we got connected in the first place because you and grew and worked together, uh, back in the day. And, um, we've got le uh, Sean Lehe. Uh, so Sean is a, a technologist and a leader who's been at the forefront of supporting defense and intelligence missions with, with, uh, a lot of focus in data science intelligence systems and N lp, uh, most recently wrapped a Congressional Innovation Fellowship under Montana. Senator Steve Daines. Uh, prior to that, he served as, uh, director of technical services at Sayari, which is a venture backed dual use startup. And he first kind of got into, into the, the world of defense through Booz Allen, focusing on, uh, data science initiatives for defense and Intel customers. So. Um, pretty, pretty healthy resumes for both of you guys. We're super grateful to have you. Thanks for, for joining us on the pod. Cool. All right. Now, before we, we, uh, dive in, we kick off with, uh, the traditional kind of pair me up segment. Uh, Mike, you want to lead us off like you always do.

Mike Gruen: 00:05:47

Yep, sure. So, uh, as Tim mentioned, uh, less than I, uh, used to work together. So, uh, I, I use that for a little bit of inspiration. Um, I'm going to go with shared office space and close friends. So less than I actually had to, uh, share a very small office. It was. Probably good, good for one person. And we had both of our desks in there and then we eventually moved into a slightly bigger space that we nicknamed the dojo. But I would say, uh, that having that experience just brought us that much closer, it was an awesome, like we could, we just bonded and became really good friends. Um, and I've had that experience a couple of times over my career with, with people where you sort of are in a tight spot and shared office and I don't know, there's just something about it. And, uh, It's one of those things that I sort of miss as we've moved to a very remote culture. Um, yeah, not just the in office, but also like sharing that sort of the site quarters.

Tim Winkler: 00:06:44

Les, would you agree with that pairing?

Les Craig: 00:06:45

I was going to say it's a great pairing as long as you like the pair. Like always a great pairing. If the pair is good. Sure. Right.

Mike Gruen: 00:06:56

Cause I can go the other way. I think we moved here because we got along like it wasn't, it, it was not a forced upon us

Tim Winkler: 00:07:05

Yeah, you could totally go shared office space and enemies, you know, or terrible, terrible friendship. I

Les Craig: 00:07:14

forget why we called it the dojo, but I, I forgotten. I, why, why did we call it the dojo? Just because the way

Mike Gruen: 00:07:20

the glass, just the way, just the feel of it, the door had a sliding door, but it was glass. It just had a very, Dojo ish feel when you, you know. Yeah.

Les Craig: 00:07:30

And every once in while I'm envisioning we'd bring a, we'd bring a junior engineer in there and, you know, we'd sweep the leg. Right. Exactly.

Tim Winkler: 00:07:40

I, I was envisioning like, stepbrothers, like, do you, you wanna practice karate? Like, do we just become best friends? Pretty much. That's good. Uh, yeah. Good stuff. I dig that. All right. Yeah. And I agree with you, man. It's like, I, I kind of miss those, those days of, you know, being in a. In a, in an office space with, uh, with, with somebody that you, you know, you get along with it's gets a little, little lonely in the remote world sometimes. Um, but, uh, cool. I'll jump in. Um, so I was recently at a, uh, last night was at a, uh, old Hollywood themed dinner party. And I've had this kind of. Call it a costume, but kind of like one of those like newsy caps. If you guys are familiar, like that little newsboy kind of hat, uh, and a pair of suspenders that I wore. And I had that from previously for a new year's, uh, party going into 2020 is like a roaring, roaring twenties kind of party. Uh, so twice now I've had the opportunity to pair these two kind of throwback clothing accessories together. So I'm going with like that little newsboy cap and suspenders. Uh, and I'll be honest with you. I think it's a, I kind of dig that style and every time it's, it's been worn, I feel like it's, it's a fashion trend that kind of, you know, stands the test of time. Uh, like, uh, my wedding, we, we, we kind of had suspenders. We didn't wear the hat or anything, but. Uh, I think those two things kind of go, go well together. So that's, uh, that's the pairing I'm going with. Have you guys ever been to like one of these

Sean Leahy: 00:09:06

old school, Tim? I think, I think that's a cool pairing, but I wouldn't wear that pairing at the dojo. Oh,

Tim Winkler: 00:09:16

hell no. You get your ass kicked in the dojo. You wear that. Um, uh, good stuff. All right. I'm gonna, I'm gonna pass it along. Uh, let's go over to Les. How about a quick intro and you're pairing?

Les Craig: 00:09:30

Yeah, actually I got a first comment on your pairing, Tim. There's actually a photo of me on the back of a news truck in Erie, Pennsylvania, wearing your pair. Uh, so if you can find that, if you can source that, gee, you may, you may remember this, you can source that photo. I'll buy you lunch. All right. Um, Yeah, just

Sean Leahy: 00:09:51

leave us on the edge. I'm super curious. Yeah. I had no idea that Les is 127 years old.

Mike Gruen: 00:10:00

I know a lot of stories from that shared office. Anyway, go on.

Les Craig: 00:10:04

So my, I think you did a great job. I don't think there's anything else left for me to intro myself on, but, um, did a great job intro me. Um, uh, I'm excited. I will just add the one thing I'll add is, um, you know, I'm really excited with, with next frontier capital, with our fourth fund. Uh, as a partner in that fund, uh, my focus is going to be, uh, on dual use defense tech and cyber for this fund. So I've, I've historically been more of a generalist, despite a lot of my background and interest being in those specific fields. So I'm really excited about that as we move forward into 2024 with our, their fourth fund, um, my pair is I'm kind of in a bit of a skiing mood right now. It's that time of the year in Montana. So my pair is. Is actually skiing. A lot of people might say like skiing and beer or skiing and trees or skiing and powder. I'm going to say skiing and free refills. Do you guys know what that is? Free refills. No, I mean, that's when, that's when it keeps snowing all day long. And I love days where it's like not a great snow forecast, but you get the unexpected. Uh, kind of consistent snow throughout the day and everything fills in. And it's like, nobody's on the hill cause it wasn't supposed to be a good ski day. Good snow. And it consistently fills in. It's like. I just think there's something that puts me at peace. And I had one of those days recently, so that's why it's top of mind. That's pretty awesome.

Tim Winkler: 00:11:29

Hell yeah. What, what mountain do you, uh, do you frequent out there?

Les Craig: 00:11:33

Uh, I mostly, we frequent kind of the mountain collective pass. Uh, so, uh, like I just got back from a trip down to Utah. We skied Alta, Snowbird and Snow Basin, uh, with my daughters while they were on winter break. So. So we get all, all up and down the Rocky mountain, big skies, kind of the home resort, but, um, I love Targhee's actually my favorite. And if Jackson has good snow, that's a close second.

Tim Winkler: 00:11:57

Solid. Yeah. We just got back from a trip to, uh, to park city and they had free refills happening for three days straight. It was no joke, uh, nonstop snow for like 72 hours, I think they got like four feet over 72 hours. It was awesome. Um, but I've never heard that term before. I, I like that because it's like, yeah, everybody shreds out on it, but it just keeps getting refueled good stuff. All right. Well, good to have you on man. Uh, Sean, how about yourself? Quick

Sean Leahy: 00:12:27

intro and pairing. Yeah. Thanks for the intro, Tim. Uh, I think you covered most of it. The only thing I'll add is, uh, you know, part of the reason why I went to Congress and we can talk about that fellowship later was. To try and move forward some of the defense acquisition, uh, policy and, um, the legislation that's actually kind of the, the biggest blocker to getting good technology, the hands of war fighters and operators. Um, it's an interesting hodgepodge of folks who ended up in like acquisition reform stuff. You have hardcore acquisition and contracting people. You have former founders and startup executives. You have operators like, um, my buddy Mike, uh, who's, who's there with me 20 years in Marine Marine Corps special operations, right? So you have all these different people from these different backgrounds coming to try and fix what sounds like kind of really dry stuff and defense acquisition, but they're all doing it for kind of the same mission, trying to move things forward. Uh, so I just want to say that I'm, I'm part of that, that community. There are literally dozens of us, um, but, uh, trying to do, try and do some good work out there. Uh, for my pairing, I selected range day and barbecue. So I like shooting sports. I like shooting guns. Right. And so you go to the range. You know, sling some lead, have a good time, uh, and then, uh, and then you get barbecue because if you're, if you kind of like squish your brain a little bit, it almost feels like you just went hunting. You know, you totally did it because you're in an air conditioned range and you have like the robot target switchers and stuff. But now I'm eating some, some like good brisket and it's like, I don't know, maybe, maybe I'll remember this as the time that I tagged one. Right. Fresh beef

Tim Winkler: 00:14:14

in Northern Virginia. You're missing, uh, some of that, that Montana beef. Aren't you?

Sean Leahy: 00:14:22

I'll say that Senator Daines is an avid hunter. He's a professional in Montana and there's a whole wall of some of his trips and, uh, definitely interested to get back out there. Um, it's, uh, amazing. So I had the opportunity to go three times. That's how I met Les. Um, and yeah, Montana is just beyond, uh, beyond beautiful.

Tim Winkler: 00:14:38

That's great. Yeah, for sure. We're definitely going to tap a little bit more into that experience because I think that's, you know, at the heart of the discussion here is like, how do we streamline this? How do we move things forward? Um, so obviously a big talking point. So excited to pull on that thread a little bit. But, uh, yeah, let's, let's get into it. So, yeah. Transitioning here into the, uh, the heart of, of the discussion, you know, again, we're going to riff a little bit on, um, on defense tech, uh, and Sean, you previously kind of put it in our email back and forth, uh, defense tech is like, defense tech is almost as hot as NFTs in 2021, uh, couldn't be more true, uh, just let's just not hope it crashed and burns a year later, like the NFT market did. Um, so I want to start with a little bit of an overview on the state of the market today and, you know, why it's such a hot market for startups. Um, I, you know, I'll, I'll begin my kind of state and a few of the obvious. Factors here, like rising tensions with us and China, Russia's war in Ukraine, kind of dragging on, uh, developments of the Israel Hamas war. But Sean, let's start with you. You know, what else is leading to defense tech having its moment for startups? You're not only in Silicon Valley, but across the country at large. So there's, there's

Sean Leahy: 00:15:59

a couple of different angles. Um, I'll kind of Jump around, um, 1st ones is from just a very kind of. Bare knuckle, almost financial investment perspective, and I'm I'm immediately just stepping on less toes here, but, um, you know, government dollars, federal dollars, and this market, a lot of people have seen can kind of be recession proof. Right? And. When you have, you know, even with continuing resolutions being what they are, but. You know, federal budgets endure, right? And so this is something that can be kind of, you know, counter cyclical. It's, it's not related to the broader market. And so there's, there's an interesting, maybe portfolio kind of perspective there as well. Number 2, I actually think the, the bigger of a bigger reason here is a generational shift, right? Um, you have folks who entered service following 9 11, um. And now it's 20 plus years later, so they're at the level. And they, they're at the level where they can make decisions. They're getting to be, you know, colonels and, and, and leadership within the military, but also within civilian government. And they saw how defense technology failed them and how these acquisition process failed them, how the lack of commercial involvement. You know, failed them during 20 years of, of combat. Um, whereas before then you had folks who joined maybe in the nineties or the eighties and all the nineties was the peace dividend. We can talk about the, the legendary last supper meeting at the Pentagon, the early nineties. The secretary of defense said, Hey, there's going to be huge consolidation in this industry. Get ready for it. Right. Well, now you're seeing the, the after effects of that, where you have folks who are really motivated and mission motivated coming out and saying, man, I spent five years in Afghanistan or, you know, six years in Iraq or whatever. And we were using stuff that was made in the 90s, you know, I couldn't use a smartphone, even though I've been using a smartphone in my civilian life forever. Right? So it's just this kind of generational shift as well. And so people wanted to get back towards a mission mindset and bring cool technology that they see from the Silicon Valley model that can scale quickly. That can. Be improved rapidly and trying to apply that to some, some problems that are beyond just B2B SAS, no offense to B2B SAS, a little bit of offense to B2B SAS, but just trying to do something different with it.

Tim Winkler: 00:18:12

Yeah. Yeah. I love that insight, man. I, um, when we were talking about over coffee that kind of, yeah, it makes your mind spend a little bit when you're thinking about it from that generational change. Yeah. Um, Les, how about from, you know, just from, uh, yeah, from the investment perspective, like what, what are you all saying? And, you know, with that new fund, right, you're, you're, you're putting a lot of your eggs in those baskets. What is it that you're seeing in the market right now?

Les Craig: 00:18:36

Yeah, I mean, I think, I think what, what I'm seeing is, uh, you know, some really unique, uh, unique opportunities where founders are willing to kind of push traditional boundaries in this category because there are Complex problems that people are trying to solve. There's not commercially available solutions, but I think what, what we forget, it's like, why is this, why are we saying this is so hot now? It's always been a hot space for innovation. I mean, like, like, let's not forget what. Where did GPS come from? Where did the internet come from? Satellites, radar, like even just aviation. I was just, I was just reading, uh, just finished, uh, same as ever. And it talks about like the original. Aircraft like the, they, they weren't saying like when, when, when the Wright brothers, like, you know, demonstrated that you could fly an aircraft, it wasn't like, Oh, let's, let's create passenger planes. It was like, no, let's figure out if we can use this thing to drop bombs on our adversaries, right? Let's figure out if we can, well, it was more reconnaissance first and then bombs later. But, but, you know, it's like. Like we forget that the military, which is constantly solving some of the most pressing problems where, where there's lots of budget to do it because our very livelihood and security depends on it, like funds, the innovation, which then in the aftermath, we say like, Oh, well, of course it makes sense that like, we can fly from New York to LA on the same thing that we can use to drop a bomb on our adversaries. And so like, I think. I think it's always been hot. I feel like, uh, I feel like we've got, we've gotten a little bit, um, you know, just, just sort of comfortable and more like consumer and swipe left, swipe right kind of stuff that's not really changing our lives or innovating our day to day as much as like some of the potential of, of some of these defense tech applications could, um, But, but I, I think it's, I get, you know, I get excited specifically right now, um, in terms of the category, I get excited about autonomous systems. I get excited about cybersecurity innovations, um, and, and also just, just in general, I think, um, uh, You know, even, even quantum, I think represents like a next, the next wave within there's also cybersecurity implications related to quantum advancements, but those are three kind of dual use defense categories that I get excited about and not just because of what it means for defense. But what it means for, you know, additional, the, the dual of

Mike Gruen: 00:21:19

dual use

Les Craig: 00:21:20

defense,

Mike Gruen: 00:21:21

and that's, what's going to ask a little bit, cause I, part of me wonders if it's also, I mean, yes, it's always been hot. Like that's just the way. Right. And, um, but also if sort of the access to the computational power that we now all have access to, when you think about what problems I can start to think about me personally solving, I have access to. Things that it before I would have had to have been at DARPA or somewhere to get that kind of access. And now we can now you have that in more people's hands, potentially looking to how to solve problems that do tend to be more dual use. Um, so I wonder if there's some of that as well.

Les Craig: 00:22:02

Yeah, it's, it's, I think it's a double edged sword, right? It's like the same, same AI models that could power, uh, AI based cyber attacks could be used by cyber firms to build AI defense. It's like, uh, you know, a castle in a cannon problem. It's, it's, it's, Yeah. I mean, there's, it's, it's scary to peel that back more, but you're right. The tools are more at everybody's disposal more than

Sean Leahy: 00:22:25

ever. So, so, so Mike, to your point, you know, uh, people like to say nowadays that the world's a smaller place, it's not the same size, but things move faster. So it feels like it's smaller. And that's the, that's the, that's the truth of technology. And, um, so you're right in that, that you can have two guys in a garage who are coming up with something, maybe, yeah, with LLMs or whatnot, that can have a meaningful impact, not just on the commercial market, but on a state to state. Uh, competitive market, right? Um, I was in Congress during the 2023 AI wars where all of a sudden every legislative staffer was an AI expert. It's amazing to see happen overnight. Um, but there's a lot of intelligence in Congress just to tell me, but, uh, is this the part where I say we should take that out? No, I don't think everybody would agree with you. Yeah. Um, but there's, yeah, there's this, it's, it moves faster. And I think that part of the interest in defense tech is people realizing that technology is moving at one speed and the DOD and the federal government more broadly is moving at another. And that mismatch now is also creating a real strategic disadvantage for the United States. So, I mean, this country is still full of patriots. We have political disagreements, whatever, but we still want to make sure that we can, you know, have the best possible technology outcomes capabilities possible. And some of the things that are preventing that aren't necessarily our avatars, but some broken processes internally.

Mike Gruen: 00:23:55

So wait, are you trying to say that like the government's moving like slower? Is that take number

Sean Leahy: 00:24:02

one,

Mike Gruen: 00:24:03

number one, you

Sean Leahy: 00:24:04

know,

Tim Winkler: 00:24:08

Well, let's break down why, like, I think that's, that's a big question. Like when we talk about to a lot of, you know, founders and commercial that are making that transition or trying to, to make that pivot or, or also, you know, just why, why hasn't, you know, private capital really, you know, gotten on the defense tech bandwagon and, and the reality of the fact is like. What we were kind of riffing on when we first met Sean was that people don't always understand how procurement's truly done in this environment. And I was reading an article recently.

Sean Leahy: 00:24:41

The chart's right here. All you got to do is just memorize. Yeah, that's the chart. It's so easy.

Tim Winkler: 00:24:47

It's

Les Craig: 00:24:47

like the periodic table. Uh, above your bed, that, that hanging

Sean Leahy: 00:24:54

dream of my lessons at my desk. Yeah.

Tim Winkler: 00:25:04

So, you know, you're talking about selling to, you know, so in commercial environments, like you're doing user research, you know, where. The main difference here is right. It was referred to as like the triangle of death, where the users, the budget and the authority to kind of purchase, they all live in different places in the DoD and to make it worse, they don't know about each other. And so it's like. Yeah, that's, that's kind of want you to, to, to just kind of like pull on that thread a little bit, just to make sure like that's spelled out for folks that maybe aren't aware of the intricacies. Yeah,

Sean Leahy: 00:25:35

so I think, uh, a useful kind of analog here is to use something, some terminology that people are more familiar with and then, and then kind of draw a parallel. So product market fit is ubiquitous, right? In technology, you have a product that solves a customer need. You have a market, which is hopefully customers who are willing to buy that product to, to fit that or to meet that need. If, if you're, if you're targeting the wrong customers, the wrong needs, you pivot, you pivot, you find that product market fit cool and defense tech. You're talking about capability and mission, right? And how is capability different than product capability? There's just a higher level of support and, and required. If you want us to build a better mousetrap and just sell it, A little order form. I know quantity 10. Here you go. That's not going to cut it in the D. O. D. You have to support that thing, whatever it is. And and that means documentation. It might mean, like, actual frontline support things called F. S. R. S. field support representatives. Right? The level of of. Um, you know, really support just goes above and beyond and it's not an 800 call number. It's not customer success at Sean's awesome defense company dot com. So it's way more than that. And then mission is different from market because in a market you're, you're trying to create value or discover value. How much are customers willing to pay for perceived delivery of value? In a mission sense, it's, it's almost univariate where it's like, what are we supposed to do? What is, what is my tech, you know? My program office tasked with doing are we tasked with developing a better communication system for infantry units or armor units or whatever you have to nail that mission 1st and not get too bogged down up front and like a relative value sense. Cost comes in later on in the pipeline, but you have to understand that mission really, really well. I think that's maybe a potential weakness for some more traditional Silicon Valley types. But now here's the rub. There's a 3rd part. Mhm. And that third part is the acquisition, the bureaucracy, the procurement, the contracting stuff, everything that is on this chart. And it makes everything so much more complex. And one of the things I try to say to every defense tech founder, defense tech founder that I talked to, or for investors is you really have to be prepared to commit to this in a way that you're not, you're not going to be able to dip your toe in and kind of like see what the market's all about. If you really want to get into this, you kind of have to know some stuff up front, commit up front because it's going to take you multiple years to do what I'm a commercial pure commercial side. Yeah, you can do in, like, 6 months, right? Um, and that acquisition stuff is really hairy. Nasty. We can get into that, but I don't think anybody really wants to. I got into it completely accidentally in my career, but this is where the rubber meets the road. Um, you know, I'll start, I'll tap it here by saying that in the defense world, defense tech world. The person who's going to use your thing is going to use your product is not the person paying for it and the person who's in the person who's responsible for the capability that you're delivering to them doesn't own the mission. So there's this fundamental disconnect between product market or capability and mission. And all the people, all the stakeholders that you have to approach in order to, to, uh, you know, move your product forward. And if you don't understand how they, how they actually do integrate, interact with each other, you're going

Mike Gruen: 00:28:52

to fail. Are there any situations where it's also, um, probably the answer is yes, but, um, where they're, they're counter to each other, where the person who, like, I did some work at a, uh, government agency where. Basically, I was automating somebody else's job. The person who was in charge of the project, I was automating her job away. And so there was this like, tension of, well, what am I going to do once you're done? And I'm curious if you sort of run into that as well, um, in that sort of bureaucracy.

Sean Leahy: 00:29:24

Yeah, um, I'd say that the trap that I see companies, uh, industry fall into is they start to think that the program management office Is the customer or is the, is, is the whole point of everything is how do we get this program office to love our product, love our technical report, our cost information, stuff. No, the people that matter are the users. Those are war fighters. Those are intelligence professionals, whatever. If you can go out and find that user level person who is insanely excited about your product. You can find a way then to roll it back towards that program office, program, executive office, whatever it might be, and move it forward into a contract and meaningful revenue. Now it's going to take some time and take some doing, but that's the way to really build something durable and something that makes sense. If you just try and zero in on the requirements coming out of like an RFP or something like that, you're going to build something and might get bought maybe, but that's not durable. That's not long lasting. It's also not going to lead to the kind of frankly returns and growth and excitement that investors are going to want to see.

Mike Gruen: 00:30:29

Yeah, we def, I definitely had that experience where it was one of those, like once we got somebody to buy in on the end user, the actual person using the software side, it was amazing how many waivers and other things we were able to get to get our technology, especially in the research and development phases. Once we got into trying to get it into more of a production phase, it was now we're talking about real, real hurdles for real reasons. Like, obviously we need this to meet those requirements, but if we're just in the R and D phases, which was. Um, yeah, it was amazing how, once they were excited about it, doors opened, not closed. Oh, absolutely. Absolutely.

Tim Winkler: 00:31:07

I got a one more quick follow up on that, uh, on this point, then I want to hear less. I'd love to hear your insights on like, you know, how you're kind of probing founders on, on, you know, how they're navigating the waters, but is there a world where the budget authority would be closer to the end user? If we already know that this disconnect exists, right? I mean, and, and how, how far out is something like that to happen?

Sean Leahy: 00:31:31

So you're, you're, you're hitting on something that's big and kind of some of the acquisition reform circles, which is pushing some of that purchasing authority, um, lower in echelons. Right? Because right now to get towards a program of record, which is where everybody wants to be, you're going up to a program executive office level. This is like deep in the bureaucracy. This is, these are generals and SES is this. There's a lot of layers. You got to pass to get to that final boss. Pushing it down lower than that would be really hard. I mean, you would literally require changes to US code to law. What I'm seeing, um, I saw this in Congress and, and there's been moving towards this, um, for a couple of years now is just trying to spend money a little bit faster. The DoD doesn't have a budget volume problem. I mean, we're closing on a trillion dollar DoD annual budget, but it has a money speed problem, which is how long it takes to cut checks and and write contracts. And you're seeing some really cool, innovative, um, or innovation programs. I mean, chief among which is the DIU defense innovation unit, but then you've got air force, TAC five, strat five got Raider absent. Google all these later on, um, with the whole point is to just try and get money on contract to an innovator, to a smaller firm quicker. Right. Cause that starts the ball rolling forward. Um, and those units and those efforts are typically a little bit closer to mission and a little bit closer to war fighters. They're not up in the Pentagon at PEO levels. I mean, a little wishy washy with that, but generally speaking, that's the vector that's going forward. Um, and they're really promising. They're there's there's they're bearing some fruit. We're still early in the ball game. I think I like to say the top, the second inning, but, um, things are moving forward in a way that, that I don't think you really seen for, for multiple decades.

Tim Winkler: 00:33:19

Unless is that kind of like next frontiers making bets on some of those changes happening in the, you know, call it a near medium foreseeable future because, you know, you're talking to founders or, you know, banking on runway. Right? And so like, what's their game plan here to make it five years before they get over that valley of death?

Les Craig: 00:33:40

Yeah, well, we're, we're venture capitalists, so we don't make bets, but we do, uh, underwrite and invest in lots of things, uh, but, uh, but, you know, it's, it's funny, I, I think, like, what Sean just characterized, I think, was great, uh, in terms of, like, I, I have kind of a book ended perspec book end perspective of this cause like I used to, you know, 16 years ago, I was the warfighter. Um, and you know, in the words of Toby Keith, uh, I'm not as good as I once was, but I'm as good once as I ever was, you know. I remember those days. I remember those days. Uh, and um, even when you're at the tip of the spear, Like you can get whatever you want, but sometimes that doesn't mean you're getting the best, you're fielding the best technology. If you work at a, a Bay area growth stage tech firm, you can not only get whatever you want, but you can get the best and you know what the best is. And I think one of the challenges with, with the war fighter on that end and like getting technology, the war fighter is sometimes they don't even know. What they don't know, they don't even know what is in the realm of possible, but there are people out there that are innovating that, that, that do know. And that's where I think like when I'm looking, when I'm hunting for great tech companies in the space, I really want to see founders that have a deep rooted sort of understanding and background as it relates to the operator. Right. I want to see founders that have, you know, the same, the same great, uh, characteristics as strong technical founding teams that we invest in and more traditional B2B SaaS companies, but also they got to check that extra box. They they've got to understand the needs of the warfighter and, and, and what the, what sort of capabilities can be leveraged and brought to the warfighter in a more modern way. Because I think that's a gap on that end, on that end of the book. Yeah. On the other end of the book, and now I put my investor hat on, I think one of the greatest challenges, uh, in investing in this space is a lot of people don't understand this about venture, but every single fund that's out there, I'm not even talking about a firm I'm talking about a specific fund that the firm has raised that fund that they're actively investing out of. Has a sort of, you know, performance metrics that they promise their LP base or that they, they, their, their strategy that they're trying to deliver on that often backs into when they can invest, how big their checks are, what their targeted ownership, yada, yada, yada. And then ultimately they, they build a model and then that has to lead to this return profile of the portfolio. One of the challenges. Of investing in this category is in order to typically get the type of return, the sort of outsized return that you need to do in venture as an asset class, you have to go be willing to go really early and typically in this category really early, there's Other mechanisms and better mechanisms like, like Sean mentioned, um, some of these programs, you know, even, even SBIR, STTR programs as well, um, those are great non dilutive funding, especially for highly capital intensive endeavors, you know, in this category, um, but at what point, like where as a VC, can you find intersection between You know, sort of understanding of product market fit or understanding of traction and that the need is validated and that there's, there's enough momentum to deploy the right amount of capital that has the potential to yield the right. Return at exit. 'cause that's the challenge in the category is like, who are the acquirers? You know? Yeah. It's an eight, $800 billion tam. You know? And then as you narrow it down, it's still gonna be, you know, you're still gonna get to something that makes sense from a TAM perspective. But even if you can capture, you know, you build a hundred million dollars, you, you know, re recurring revenue business selling to the government, who's gonna acquire you? Unless you're on a path to become the next Anduril or the next, uh, or I should say like the next Raytheon, which is what, you know, like an Anduril is trying to do, unless you're on a path like that, which even there, it's like, well, then you got to go public. When was the last time a defense tech company went public? I mean, you could argue maybe, but. You know, it leads to all these downstream challenges as an investor that I think we, we have to think very hard about as we're searching and looking, but we also need to sort of, I think as a, a collective, we, we need to figure out this industry and like who are, who's going to write the follow on checks and then where do we, where do we end up, where do these companies end up? In terms of getting liquidity, uh, for, for these bonds that are backing them. And that's, that's something, you know, TBD.

Tim Winkler: 00:38:29

Yeah. It's an interesting, it's an interesting point because you're also seeing a lot of those bigs that you kind of referenced like Raytheon, they're, they're building out their own little studios, their own little labs and, you know, And they've got the money to, you know, to inject into it equally as, as, uh, you know, private, you know, VC would. Um, so, you know, I, I, I think through, um, and I think that point is valid in terms of like, when's the last time a big defense tech company went public. And that was actually one, one of the guys on our previous episode on palace, uh, from palace advisors was, was saying that. Until something like that happens and still, until one of those events happen, you know, it's still has this like hesitancy from venture of, oh yeah, it's time, like, it's super hot. This is it. Did you see what Andrew did? And so, you know, I think there is still this hesitancy of like, when is it going to happen? And why is it, why hasn't it happened yet? What, what's going on?

Les Craig: 00:39:26

And, and there's always, there's always been acquisitions in the space, but typically I think the majority of acquisitions in this category are, you know, through the defense primes, you know, typically you look at just the comps and they're not paying much more than a couple hundred million max usually. Right. Um, so it's, you know, there's, there's, there's some trickiness there that I think we need to, we need to see through and, and hopefully, As you know, things seem to be really heating up in the private investment, uh, opportunities in this space. I, you know, hopefully we'll see some good precedence, which will just encourage more people to, you know, to, to, to seek out these opportunities. I think it's what we need. I mean, I, I believe pretty strongly like national security depends on the success of this. Um, so, you know, I'm, I'm very hopeful that, that we, we figure it out.

Tim Winkler: 00:40:18

There's a part of that conversation that I want to, uh, go down a little bit more of, of that path, which was, um, you know, you're looking at founders that, yeah, maybe they have the, the traditional kind of tech founder mold. Um, but if you're going to play in this space, you know, there's this other key piece, uh, there's this other key mold that really kind of relates to somebody who understands the mission at a granular level. Maybe has been in the, in the, uh, the boots of, of a soldier, you know, as, as a user, uh, Sean, we were going down this path, uh, previously, I I'd love to, to expand on what does that mold look like? Because there's a lot of these, you know, maybe commercial startups that are maybe like they, they see a great use case, but they don't quite understand who they need to hire to be this, Chief product officer, or maybe even like a COO type that could take them to that next level. What would you describe as like that ideal person? And then what that looks

Sean Leahy: 00:41:17

like? Well, the first thing I'm going to say, uh, for my buddy JP is don't go out and hire an ex general. Right for your, if you're, if you're a four man startup, don't go find the one star who just separated from service and be like, Hey man, we're going to the moon and you're going to take us there. We do love generals. Let's just edit my career a little bit. A lot

Tim Winkler: 00:41:39

of editing.

Sean Leahy: 00:41:45

So I, there, there are a couple of different, you know, um, yeah, personas or models you can look at here, um, deployed military, um, uh, experience is, is close to non negotiable, um, or, or intelligence professional. If you're going to try and play in the, in the intelligence market. Um, I I'd say that there, that, that can be. You can get away with not having that if you had somebody who frankly grew up around it. I don't mean like as a kid, but someone whose career path they started at one of the primes or maybe a little bit smaller and that have like 10 or 15 years into this. That could work too, but really you need someone who can say, I've stood in front of warfighters, operators, et cetera, and understood their problems. And you need someone with a cultural fit. And what I, when I'm talking about that is there's an apocryphal story. I don't think this actually happened, but everyone tells a story at like happy hours where it was Palantir in the early days. And they sent like their first delegation to the Pentagon and they showed up in like jeans and hoodies and a general comes out and is like, learn how to dress like adults. And then we can have the meeting. It didn't happen. Right. That, that's definitely, it was got like a made up by someone out here, but there is, there is some of that where, you know, you're going to be talking to, to, you know, multiple combat deployment type folks, you're going to be talking to people who use acronyms left and right, who say things like, Hey, this is good for a two shop targeting package. And if you don't kind of know how to go with some of that, it's going to be a little bit more difficult for you to get developed that customer empathy. Um, but I'd say that, so yeah, you're, you know, veterans are critical and also you're doing a good thing there by, you know, getting veterans, you know, helping them transition out of service. Um, but you also need someone who understands the industry, right? Like I'll point back to it again, but like the acquisition chart, it's, it's not just like it's something you can foist off onto like your legal team or your proposal team or whatever. It's, it's part of your go to market strategy. Is, you know, which, which PEOs are in the right budget cycle and the right capability development cycle that we want to go target them. And the crazy thing about that is that a lot of veterans never even get involved in that world. Right? So you might have somebody who's got a great looking jacket. You know, with combat deployments, but they never understood how the thing that they use on deployment got into their hands. And so that's an, an even more rare skillset to have, um, to find. Um, but you need that. I think that like the chief product officer in a defense tech or even a dual use company needs to have some awareness of this, so they don't have to be experts. Right. But they need to be able to speak that language and understand. You know what budget activities are and what a presidential budget looks like, what a program objective memoranda is like, because that's how you get to the revenue and there's no shortcut to this, right? There are ways you can speed run, but there's no shortcut to it. Yeah,

Tim Winkler: 00:44:38

it's looking at this from like a recruiting mindset. Uh, you know, it's a really fascinating way of, of, you know, outlining to a founder of, Hey, like, why don't you go and, and, and look at what, you know, a Northup and a Lockheed hired at these different levels. Um, I would even break that down to like, not just the bigs, but like, let's look at like the, the, the mid tier. Integrators and who do they have sitting in their, yeah, in their C suite or like super, you know, EVP levels and scan those backgrounds and show me, you know, see, start to pick up on some themes because I'm pretty sure they've all kind of figured it out. They studied from, you know, what did Lockheed do, you know, and, and, you know, kind of like mimic that in the earliest of stages and trying to find individuals that have a similar mold. I think it's a really fascinating thought when you think about. You know, this COO or like this chief product person, cause it's very different than the chief product mold that you would look for. And just this, like, yeah, B2B SAS startup.

Sean Leahy: 00:45:40

One, one quick addition there. Um, some free chicken is look for somebody, you know, probably an ex officer, sorry, uh, to enlist their folks, but ex officer who had like a joint staff to her, right. Who like, who's literally walked around the Pentagon before that doesn't, that doesn't make them that they know everything about the Pentagon. Nobody does. But again, it's, they know that culture, they know some of these systems, some of these, these non documented ways of getting things done. So, um, that can be really, really effective, um, as, as, as a resume point, not, it's not always the golden star, but it's an indicator. What about hiring a lobbyist? Oh, all right. Um, there, you know, big potato to go with the free chicken. Well, it's, it's also that I'm coming off of being there for a year. And so I know like a lobby, I have a lot of lobbyist friends now, so I want to make sure that we still stay friends. Um, I'm like your general friends who,

Tim Winkler: 00:46:37

yeah,

Sean Leahy: 00:46:42

I'm going to go get the years of Lloyd Austin after this. Uh, yeah. My general friends, um, uh, Anyways, um, a lobbyist is going to be part of what you need to hire at the right time. It's, it's when you're really, really early on, right? You're, you've got a product, you've got an idea, uh, you're on a sib or sit or something like that. You're talking to, not even, you're talking to like next frontier unless you're a little bit before then, not the time for a lobbyist, but then eventually, yeah, you're going to need to get there because it's not just about maybe trying to go in and get some, some budgetary help. You have to watch Congress every single year. Because they passed the NDA, a National Defense Authorization Act, it's a huge documents over 1000 pages long, and it has meaningful changes to law every single year that can impact your business. Right? And 2023 or fiscal year 2024, the one that passed in 2023 had a lot of pretty big changes, which we can talk about for the industry. Uh, and if you're not paying attention to it, you're going to, you're behind the curve because there's other firms who are

Mike Gruen: 00:47:47

those other, and there's other firms that have gotten that legislation put in or got the words put in. I imagine.

Sean Leahy: 00:47:53

Yeah. Well, you know what? And as, as much as that, it's very true. I mean, the big primes, part of the reason that they're big primes is they've been playing this game for a long, long time and they have the head count and the people on the Hill and the people in PEOs. Where they live there, right? And so if you're, if you're a defense tech startup, you don't have, you can't teleport yourself. Yeah, we're still working on cloning, right? I think dark was working on it. I'll ask my buddies, but, um, you can't be more places than one. The big primes have armies of guys and girls who can, who can be multiple places at once. Right.

Tim Winkler: 00:48:32

Yeah. Let's, let's talk about that. Um, NDAA, uh, the National Defense Authorization Act, uh, because yeah, it's, it's, uh, an all time high this year, right? So what, what is it, uh, break it down and, and, you know, what does that amount that, that they're looking at for, for these programs, for these defense programs?

Sean Leahy: 00:48:52

I mean, I think all in we are just under 900 billion, right? Um, somewhere in that neighborhood. Um, now that's not just, that's, that's for everything. That's for, that's for soldier pay. That's for military construction. That's for procuring. That's for O& M for existing programs. That's for new RGT& E. So if you're looking from like a TAM perspective, Um, it's still in the hundreds of billions, right? It's still a lot of money. Um, but TAM is one thing speed is another and how quickly you're going to get those dollars.

Tim Winkler: 00:49:21

Right?

Sean Leahy: 00:49:22

So RDT& E, right? This is where a lot of startups are going to find their first levels of revenue. You're in the neighborhood of a hundred billion dollars all in on that, right? So that sounds like a lot of money you can go after and capture, but it's not that easy. Um, if, if, if you don't mind, I kind of want to pivot a little bit into some of the big changes. In the NDA, this, this, this go around that I think are pertinent. Um, so right, right up top is. There's a demand section 811 of this year's NDA for modernizing the DOD requirements process, right? So this big monster that I do keep on my next to my desk that there's now, you know, this effort to try and change it. It's going to be piecemeal. It's not going to be all at once. It's certainly not going to be fast. But this is an explicit acknowledgement codified in the U S law that we need to change things, right? So this, this is a pretty big signal. I'd think that things are actually changing at a, at a very fundamental way. Um, number two, there's something called a pilot program for everything as a service. So now you actually have the DOD using as a service, like that's a victory guys. We got it. We got to count that one as a victory, but the idea is that the DOD can actually purchase things like SAS, like, you know, a usage based. Whatever consumption based model, um, for up until literally this year, it's been kind of an open question if that was possible. I mean, legally possible for the to spend money that way. And the answer is, there are ways to get around it and stuff and creative contracting. But now it's like codified as we could go after using that model within the D O D, which is huge. Um. You also have now, um, they're going to try and put in trend technology, transition, um, advisors and every service level service acquisition, executive level, this whole valley of death concept where you have cool technology on the R and D R D T and E side. And it doesn't make sense to procurement. They're putting someone at the executive level that is entirely responsible for trying to find tech transition pathways, right? So that's, that's now a new stakeholder. Every team needs to get their email. All right, but they're not in place yet. But that's that's a major, a major part of it. Um, yeah. And then the last 1 is, uh, new IP strategies. This is getting a little bit into the weeds, so I'll cut it off here, but, um, selling IP to the government's hard and weird, because if you don't do your IP protection correctly, you can end up. Um, accidentally over not charging enough for not protecting your IP correctly. Um, it almost happened to a small company. I was involved with, uh, but and especially in the software and software as a service realm of things, not doing a good job. Protecting IP can can be really dangerous. Departments acknowledging that and trying to set up new ways to protect or to incentivize firms. To say it's okay to come and, and, and give us your IP and sell us, sell us IP.

Tim Winkler: 00:52:20

Yeah, that's, I mean, it all sounds like really promising. I think the, you know, I think what everybody is like, they want to see things in action and, you know, it's early stage in the year too. So it sounds like this is a, these are all things that we can expect, you know, rolling in throughout the course of the year and, uh, You know, it'll probably take about four

Sean Leahy: 00:52:40

years to do all the four years

Tim Winkler: 00:52:43

this

Sean Leahy: 00:52:43

year. It'll take four

Tim Winkler: 00:52:47

years. But, you know, I guess, yeah. Trying to paint a positive light that there's obviously acknowledgement that things need to change and it's, you know, moving quickly is always going to be a challenge, but at least it's been a knowledge. Um, so that's, that's great to hear. Um, well, I, I don't wanna, uh, hijack the entire episode without getting to our final, uh, segment here. Les. Anything else you want to kind of add to the, the conversation, um, before we put a bow on it and transition?

Les Craig: 00:53:18

Yeah, I just think one more thing I'll just kind of, uh, you know, kind of cherry to put on top. I think you, you know, if you consider venture capital, like at its core what it's about, it's about, it's about. Funding high growth potential companies, right? Businesses. And what, what, what if you, if you, if you just put, you know, DOD timelines and bureaucracy and different administrations and all that other stuff aside, I think fundamentally, if you look at defense tech investments. Especially those that have dual use component. If you look at them as independent of the craziness that can go on and the timelines that can slip, I think there's a lot of, there's a lot of goodness there. So like, I'm not looking at like hypersonics or directed energy weapons or space defense or stuff like that. But when you look at stuff that has more dual use capability. I think VCs should of all kinds and sorts should be looking at this stuff because when you underwrite these investments. The commercialization potential, if it's there, you can steward it in a, in a very positive way towards private markets. And the best, the best defense tech company that you've never heard of was a company that we backed that, you know, has, they had this, it's called, it was called Blackmore sensors and analytics. They had a, they had a great SBIR vehicle. Um, actually at the time they were called Bridger Photonics. They split the company. They started a, they use the same technology to apply to autonomous driving, uh, and they were acquired by Aurora and similarly bridge of photonics. abandoned that defense use case and went down the path of LIDAR gas mapping. And now they're one of the, one of the industry leaders in aerial LIDAR gas mapping. So there's two incredible commercial use cases, two companies that have created, you know, hundreds of millions of dollars of enterprise value independently of the single DOD contract that got it all started. So I, I think, I think looking at these investments independently and saying like, this is, yeah, this is a great defense tech application, but fundamentally this technology is, is game changing for commercial markets as well. Like that's where we should be underwriting a lot more investments. I think in this, in this space.

Sean Leahy: 00:55:41

Yeah, I want to plus one of that and in a big way, because there's some asymmetries that I think people miss out on because they get bogged down and the bureaucracy defense tech, but if you're investing in real and deep technology or sort of cutting edge technology and defense tech, you don't know where that's going to go. Innovation is not linear, right? Um, but if you stick with it, you're going to find, I think, these commercial back out applications, right? So dual uses one buzz term. I like the one of bi directional. Where if you invest in defense tech, you might all of a sudden 3, 4, 5 years into that see, oh, wow, this has an obvious commercial application because it got to a new level of technological advancement that we didn't know 3, 4 years ago that now we can peel this off and go back to commercial markets and. And get those kind of faster returns a little bit more, um, traditional in the BC. And there's no way of knowing that right now. It's an unknown unknown. Um, just as I think what people are focusing right now is all this great commercial tech that has obvious defense applications, bi directional back end. So VCs have this incredibly important part to play. Because they can see those 2 worlds. The D. O. D. doesn't care about the commercial markets. That's not their mission. Remember mission, right? Um, so you have, you have to have this, this 3rd party, which is kind of the investment, the venture community, entrepreneurship community. They can surf those worlds, right? Cause the DOD isn't going to do it themselves.

Tim Winkler: 00:57:08

I think the other piece of this too, Sean is like, uh, this, you know, we haven't even touched on is like some of the civilian agency, uh, applications because, you know, we, we kind of, uh, scratched that surface when you're talking about the department of agriculture and the use cases that are going to come into play for, you know, almost like drones and, uh, some of those, some of the similar technologies that are being implemented, like for autonomy, um, But, you know, health and human services, you know, veterans affairs, uh, energy, uh, agriculture. There's so many other agencies too that might be, you know, might have some similarities in terms of navigating, but might not be as difficult as it would be, uh, you know, getting into the user of like a war fighter. Um,

Sean Leahy: 00:57:54

So, you know, maybe, maybe not. If you wanna, if you wanna go up against HHS, be my guest. I don't, I'm not that man. Yeah, I'll stick, I'll stick with dod. Show me on the chart how to, um, hhs. Oh, there is no chart for that. There's that chart for that. No, it, it's just the void. You just have to,

Tim Winkler: 00:58:13

well, another one that's got a shit ton of money, uh, to spend. If you can figure out, maybe we'll do that as a follow up.

Mike Gruen: 00:58:20

I know some people who do the, uh, on the HHS side of things. We'll, we'll do that as a follow up. Okay. Sounds

Tim Winkler: 00:58:25

good. All right. Well, uh, yeah, I think this has been a really fascinating conversation. Uh, I want to continue to, to tap into some of those insights, Sean, I know that, you know, you, we talked about me having continued conversations around this and, uh, just really, really fascinating and really helpful for a lot of the folks that are tuning into this type of show. So. Appreciate the, uh, the Intel. Uh, let's pivot to the final segment here. Uh, it's a five second scramble. Uh, Mike and I are going to ask you both a series of questions. You kind of give your answers within five seconds. If, if, if you can, uh, you know, rapid fire Q and a some business, some personal Mike, why don't you lead us off with, with less and then I'll get to you, Sean. All right. So here

Mike Gruen: 00:59:13

we

Tim Winkler: 00:59:14

go,

Mike Gruen: 00:59:16

the door's open. This isn't closed door, a dojo to conversation. So here we go. What's your favorite stage of startup to

Les Craig: 00:59:26

invest in? I love seed stage. I love kind of the earlier, the better I don't, we don't do pre seed, but I love early.

Mike Gruen: 00:59:34

What do you think is the biggest challenge facing startup founders in 2024?

Les Craig: 00:59:38

Uh, I think, uh, raising capital will continue to be a challenge, but I also think, um, getting, you know, enter enterprise customers continue to be hard. You know, purse strings are still tight. Budgets are tight. So raising capital and getting revenue. But easy problems, not a big deal

Tim Winkler: 00:59:56

is good.

Mike Gruen: 00:59:59

Uh, what's your, uh, favorite part of the culture at ne at Next Frontier Capital?

Les Craig: 01:00:04

Uh, I think it's kind of like, uh, it's a culture where every, every idea is like, is given a chance and, um, it's a very flat organization. So, you know, we're, we're really, uh, we're a family and I, and I love that about our firm and we treat founders, like, founders become part of our family as well. So it's, it's a great culture. Uh, what's the

Mike Gruen: 01:00:23

best piece of advice you've ever been given?

Les Craig: 01:00:26

Um, probably, uh, to earn it. And, and by that, I mean like earning every day, um, every day when you wake up, um, you know, nobody's, nobody's made, uh, you, you gotta earn, earn everything every day. Tom Hanks actually gave me that advice.

Tim Winkler: 01:00:43

Uh,

Mike Gruen: 01:00:48

if you could have one hour mentor session with any tech giant, who would it be?

Les Craig: 01:00:52

Oh, man. Uh, I would actually say Elon Musk. Um, I think, uh, Elon more, more out of just the, uh, just curiosity and, and probably the, the interest that would come out of that conversation for me, I think would be, would be inspiring. And I know personally, he doesn't agree with everybody, but I think he's a, he's brilliant and admire his work. Uh, what's something you did as a kid that you still enjoy? Uh, playing the piano, I actually just started, uh, taking piano lessons again, uh, a couple months ago. Uh, who's your favorite

Mike Gruen: 01:01:29

Disney character?

Les Craig: 01:01:31

Ooh, Disney character, uh, probably, well, would like Luke Skywalker count? Because technically that's, yeah. I mean, they bought him. Yeah, because Star Wars

Mike Gruen: 01:01:40

is Disney now. Yeah.

Les Craig: 01:01:41

My acquisition,

Mike Gruen: 01:01:42

Luke Skywalker. Luke Skywalker, by acquisition. So you like the whiny ones.

Les Craig: 01:01:51

I've always kind of felt like a Luke Skywalker, you know, I just, yeah, I can see that. No, not in the whiny part, I mean, growing up, shooting womp, womp bats or whatever. Yeah.

Mike Gruen: 01:02:01

No, I hear you. Speaking of, here you go. What's the largest land animal you think you could take in a street fight? Uh, in a street fight, uh, no

Les Craig: 01:02:11

weapons, probably land animal that I was not expecting this question. I'd like to take a, I'd like to take like a whitetail buck down with a knife. I think that'd be fall out of a tree on his back and grab it around the neck and just a knife in hand. That's awesome. Yeah. Tie it up. Uh,

Mike Gruen: 01:02:39

last question. Here you go. Uh, what's something you hate doing but are, um, are really good at? Oh, man.

Les Craig: 01:02:46

Uh, parenting? No, I

Tim Winkler: 01:02:52

don't hate

Les Craig: 01:02:53

it. I'm just a teenager now, you know. It's a new level.

Mike Gruen: 01:03:03

Perfect. I love the authenticity. The question is, will they say the same thing? Will they say that you're good at it? Maybe someday. Awesome. Well, thanks so much.

Tim Winkler: 01:03:17

I love the authenticity of these answers. Uh, one last one, uh, Niners or Chiefs? Neither. Ooh. Steelers. Nice. Steelers. Okay.

Les Craig: 01:03:29

See ya. Do you want to re ask me that question? What's that? Do you want to re ask me that question for the, uh, Sure, I'll re ask that

Mike Gruen: 01:03:38

question. Okay. What's the, uh, charity or corporate philanthropy that's near and dear to you?

Les Craig: 01:03:44

Uh, Eagle Mount in, uh, in Bozeman. Uh, my mom's, uh, my mom, so my mom's brother, um, had a severe disability. So growing up, I, I had a real soft spot for him. Uh, my uncle and, and Eagle Mount, Eagle Mount is, uh, is a place in Bozeman that helps, um, folks with severe disabilities learn how to ski and get outside. It's a beautiful organization. Really

Tim Winkler: 01:04:09

cool. All right, Les, you are all through Sean. Are you ready? I am adequately prepared. Uh, what do you think is the biggest challenge challenge facing founders of defense tech startups in 2024?

Sean Leahy: 01:04:27

Commitment. This is the power lifting of business. If you're not good enough, you're going to fail. Don't suck.

Tim Winkler: 01:04:35

What's your favorite part about building your own company?

Sean Leahy: 01:04:40

Um, I'd say You get to focus on actually, um, seeing results with the people that you work with. Right. Um, and you're focused on, on process, but on outcomes. So I don't have to worry about TPS reports. I don't have to worry about PowerPoint decks unless they're part of a product. But I worry about, um, you know, my, my clients and my, and my, the people I'm working with actually achieving things. And so that's much more satisfying than just kind of doing corporate stuff that is part of the rigmarole.

Tim Winkler: 01:05:14

What are the top two to three areas that you believe you add the most value for your customers? Height,

Sean Leahy: 01:05:22

number one, six and a half feet tall. So, um, yeah, he's got an amateur basketball team. I'm your guy. Um, so where do I, so what do I, I, um, number one is bridging the two worlds of mission and capability. Right. So, uh, really quick and do it. I'll ship for, uh, I'll fit into five seconds. Um, I once had Marine Colonel, Infantry Colonel, and a DARPA PM in the same room at the same time talking in a language they could both understand, and that was a big moment for me. Um, so, so crossing those two worlds, and then back to answer number one, commitment. Like I grew up in Northern Virginia. This is, you know, I've been in defense tech for pretty much my entire career. It's a family business to a certain extent, like this is what I'm doing for forever.

Tim Winkler: 01:06:10

What would you say are some of the top, uh, agencies that are truly innovating, uh, in defense? Um,

Sean Leahy: 01:06:21

I like the air force. That's a little bit of a hot take, but I like the air force. Um, I'm, I'm bearish on SOCOM. I'll say that. Oh yeah. And, um, I will say that I am slightly bearish on In Q Tel, which is going to give me some, some heat from some friends, but I. I think their time has come or their time has passed. Oh,

Tim Winkler: 01:06:47

I'm trying to see how many people you can piss off in this episode. This is going to be so good. What are the most transformative areas of deep tech in the next five to 10 years?

Sean Leahy: 01:07:02

All right. Uh, the number one that no one's talking about is digital twins. And if you want to get on digital twins, take a look up at history digital, which is we'll, we'll Roper former undersecretary of air force for 18. I went digital twins could change everything. And that's because, uh, software test driven development, you know, you, you write code, you build something, you run it through a test pipeline, you get some feedback on how it doesn't work, or it does work you back and fix it really, really tight feedback loops. Digital twinning does that for the physical world, right? How do you test an airplane? You got to fly it. Well, if you fly it, it pulls out of the sky and breaks. That's a, that's an expensive feedback loop. It takes longer and you can even involve the loss of human life. If you have a digital twin, you can fly that airplane a thousand times a day and click meaningful intelligence from it and go and fix it. If we crack that code, we're going to Mars the next day, right? Les and Elon are going to have their podcast on the rocket towards Mars.

Tim Winkler: 01:07:57

Yeah. I've seen, I've seen, uh, digital twins being like rolled out and like energy tech or climate tech, uh, startups. It's a really fascinating, uh, space. Um, what's the last series you binge watched?

Sean Leahy: 01:08:12

All right. So this is, this is embarrassing for me. I only watch two series every year. I just watch Mad Men and the Wire. I do one in the summer and one in the winter and that's it. And I've been doing that for about six years. Okay. I don't know.

Mike Gruen: 01:08:24

Wire's awesome. Wire's

Sean Leahy: 01:08:25

great. It's a great It's one

Mike Gruen: 01:08:26

of my favorites.

Sean Leahy: 01:08:28

Favorite, favorite character in The Wire. I mean, the obvious answer is Omar, but Um, McNulty because of personal resemblance. What do

Tim Winkler: 01:08:43

you mean? That's great. Uh, uh, what's a charity or corporate philanthropy that's near and dear to you?

Sean Leahy: 01:08:52

Um, the Catholic Church. So I'm Catholic, uh, devoutly so. And every year, actually, I asked my parents for a Christmas gift, which is just to make a donation anonymously to our parish. Um, they do a lot of good stuff.

Tim Winkler: 01:09:06

Catholic church. Cool. If you could have dinner with any tech icon, pastor, president, who would it be?

Sean Leahy: 01:09:14

Uh, John Serafini. He is the CEO of Hawkeye three 60, which is one of the new defense tech unicorns. And before that though, he was at this company called allied minds, if I have that correct, and they did some cool IP commercialization stuff and, uh, that whole lab to market IP development to productization at a really early level, like almost pre seed level. It's something I have a huge fascination with because you're dealing with deep, deep tech problems. Uh, and he seems to have done, done it pretty well. So, uh, I don't know, John, if you're, if you're listening to this podcast by some chance, hit me up on LinkedIn, bro. We're actually trying to get him on. It's a West Pointer too, isn't he? Well, I didn't go to West Point. I'm not

Mike Gruen: 01:09:56

friends with generals

Sean Leahy: 01:09:57

and West

Tim Winkler: 01:09:58

Point people like

Mike Gruen: 01:09:59

you are. What's the saying is he is, so maybe we can make that happen.

Tim Winkler: 01:10:06

We're trying to get some senior folks from Hawkeye on the pod because they're a local shop as well. Yeah, they're out there. Uh, what's your favorite productivity hack?

Sean Leahy: 01:10:18

Oh, um, journal. sh. So it's a command line utility. I'm a big CLI guy, right? Just to live in the terminal. And it's just the best for random thoughts to pop into your head that you want to like, Keep, but don't know where to put them. Right. So you can like jot down whatever you're talking about, tag it with a little tag. Like I might do like at podcast to actually, I did that to prepare for this thing and it's great because you can just type really quick and then call up things by their tag later on. You got a bunch of jots in front of you. Good to go. That's solid. That is solid. Much better than my, uh. Taking notes. I will say, I'm a, I'm like a CLI extremist. I think that GUIs was when we went wrong as a species, because we should just be in the terminal only. Uh, all of this wanting to see things on the computer is just, it's gone

Mike Gruen: 01:11:06

haywire. Let's just go grab some beers and we can just riff on that for, for a few hours. I Yeah. I totally agree.

Tim Winkler: 01:11:15

Uh, all right. Wrapping it up. Last, uh, last two questions here. What's the worst fashion trend that you've ever followed?

Sean Leahy: 01:11:21

Oh, um, uh, like pop punk in the late night, like early two thousands, like think like green day and some 41. Uh, back when I had hair, I had blue hair, I had wallet chains, uh, yeah, yeah, yeah. Do you have Janko jeans? I never went to the really big Janko jeans, but I had like some pretty baggy stuff from, I don't know, Kohl's or whatever. My mom took me shopping for my punk rock gear. That's how punk rock started. Growing up in the freaking suburbs in Northern Virginia.

Tim Winkler: 01:11:53

Yeah. Oh, man. We got to get some, some photo creds on this. We got to post that to the show notes. Yeah. These show notes are getting spicy. Uh, all right. Last question. What was your dream job as a kid?

Sean Leahy: 01:12:08

Cowboy, obviously just wanted to just do cowboy stuff. Um, yeah, that's kind of, that explains my social life for a while. Uh, but, uh, explains your backdrop to cowboy back there. Yeah. And now I do this instead. So it's still

Tim Winkler: 01:12:29

wrangling. Still wrangling. Still wrangling. So wrangling requirements, uh, I, uh, that's a wrap guys. Thank you so much for spending time with us and, and sharing, uh, sharing your Intel, uh, with our listeners. Uh, thanks for continuing to kind of move the needle when it comes to, you know, this transformation in the public sector, uh, long road, we're, we're all kind of walking, but, uh, you know, you guys are all pushing it forward. So appreciate that. And thanks for, thanks for hanging with us on the pod. Thanks for

Les Craig: 01:12:58

having us.