Overcoming the Valley of Death: Startup Solutions in Government Tech | The Pair Program Ep44
Join us for an insightful exploration into the intricate landscape of government technology modernization, as we delve into the daunting valley of death faced by startups in the defense sector.
Our guests, Warren Katz and Col Aneel Alvares, bring unparalleled expertise and firsthand experience in overcoming the regulatory, bureaucratic, and scalability hurdles that often impede innovation in government operations.
They offer invaluable insights into the funding gap, product-market fit challenges, and the transformative potential of government reform. From navigating long sales cycles to addressing scalability and integration issues, this episode paints a comprehensive picture of the current state of affairs and highlights the critical need for a healthier ecosystem for small businesses in government tech.
About Aneel Alvares. Col Aneel "Cramden" Alvares helps lead engagement with the DoD and is the Boston Lead at the Defense Innovation Unit. His military background includes experience as a B-1 pilot, terminal attack controller, and operational test and evaluation leader, with service in both Iraq and Afghanistan. In his current role, he leads a team that frames new projects by leveraging commercial sector technologies to address priority DoD problems, while also working to engage the greater Boston and east coast innovation ecosystems.
About Warren Katz. Warren is currently Chairman of The Board of The Alliance for Commercial Technology in Government. Previously, Warren was the Managing Director for Techstars’ Air Force Accelerator, helping AFWERX and the US Air Force become more attractive customers to startup companies. He is an angel investor and mentor to dozens of dual-use companies and was formerly the CEO of MAK Technologies. With Bachelor’s in both Mechanical and Electrical Engineering from MIT, Warren possesses deep technical and business acumen, with specific expertise in barriers to doing business with the government.
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Welcome to The Pair Program from hatchpad, the podcast that gives you
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:a front row seat to candid conversations
with tech leaders from the startup world.
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:I'm your host, Tim Winkler, the
creator of hatchpad, and I'm
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:your other host, Mike Gruen.
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:Join us each episode as we bring
together two guests to dissect topics
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:at the intersection of technology,
startups and career growth.
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:Hey everyone.
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:Welcome back to The Pair Program.
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:Uh, Tim Winkler here alongside Mike Gruen.
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:Um, so Mike, we were kind of having a
little, little chatter on this earlier
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:today, but, uh, have you been, you've been
following the Ovechkin gold gold tracker?
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:Mike Gruen: I mean, I have no choice,
even though I'm a Rangers fan, uh, in DC,
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:you kind of have no choice, but, uh, and
it's, you know, it's a momentous thing.
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:Uh, it's, uh, I have mixed opinions on
it, uh, cause you know, uh, but at the
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:same time, like any, any, any records
that can be broken, it's awesome.
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:Um, it's awesome to be, you know, part,
you know, be alive during that time
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:or whatever, and seeing it happen and.
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:Um, certainly a prolific goal scorer who
probably would have broken the record
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:had it not been for COVID and for, uh,
what was it like a short and see a couple
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:of short and seasons and other things.
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:A couple of short seasons.
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:Yeah.
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:So, uh,
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:Tim Winkler: yeah, it's, it's pretty,
it's pretty exciting time just, you know,
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:as of this recording anyways, like, yes.
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:The other day he had, you know, two
goals and, um, I think he's about 51, 52
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:Mike Gruen: out, something like that.
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:Tim Winkler: He's 52 out,
but who's counting, right?
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:Uh, but the, the record is,
is held by Wayne Gretzky is.
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:Those listeners that aren't privy to
this is Ovechkin considered the greatest
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:goal scorer, one of the greatest
goal scorers in professional hockey.
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:So up there with Gretzky, um,
he's at 894 and Ovechkin's 52
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:goals short of breaking that.
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:So anyways, I bring it back cause it's
kind of a good, uh, full circle from when
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:our first episode and we both wearing
our, our jerseys and, uh, given some,
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:uh, some hockey love, but, uh, Yeah.
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:Exciting time heading into
playoffs, uh, hopefully for us.
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:I know that you're, you're in the,
in the, in the race, but we'll see.
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:Yeah.
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:We'll see
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:Mike Gruen: how far the right now that
the Rangers have good coaching, we'll
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:see if we can get a little further.
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:Tim Winkler: Yeah, we, we
could use some players.
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:Um, all right.
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:So let's, uh, let's, let's talk
about, uh, today's episode.
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:So we're going to again, continue
on this kind of deep dive into the
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:pivotal role that technology plays in.
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:Modernizing government operations.
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:Um, with this episode, we're going to
focus on, uh, the, the valley of death,
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:uh, for startups in the defense sector.
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:So to clarify on the valley of
death, um, and, and more broadly,
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:maybe just in tech innovation.
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:Uh, this refers to a gap that
startups face, uh, between say,
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:demonstrating the viability of their
technology and being able to scale
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:it to a point where they can secure.
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:Um, investment and contracts
and kind of sustain.
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:Uh, so this, this will kind of, this
covers areas like funding, like the
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:funding gap, uh, obviously like we'll
talk about regulatory and bureaucratic
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:hurdles, uh, product market fit
challenges, uh, long sales cycles.
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:And scalability, uh,
and integration issues.
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:So to add a little bit more context
for our listeners and prep for today's
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:discussion, um, to, to bridge the
valley of death, there's initiatives
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:like small business, innovation,
research programs, or servers, uh,
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:which will be referenced quite a
bit today, uh, are pretty critical.
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:Um, and so what those are,
they're providing non dilutive
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:funding to help startups develop.
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:Their technologies to a stage
where they're attracted for
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:further investment or procurement.
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:Um, and as well, entities like defense
innovation unit and Afworks, who is, you
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:know, um, organizations we've had on in
the, in the past, they can help startups
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:with navigating, uh, the, maybe the, the
complex defense procurement ecosystem,
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:um, and help match, uh, technologies with,
with opportunities within, in defense.
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:But as I'm sure our guests will point
out today that it all sounds great,
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:uh, in theory, but, uh, it's nowhere
near that easy and, and there is a lot
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:of work to be done, uh, to make that
process You know, work efficiently,
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:uh, for commercial startups.
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:So, uh, with that, I'm going to go
ahead and, uh, intro our, our two
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:guests that are joining us today.
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:So we have, uh, a Neil Alvarez,
uh, a Neil has a distinguished
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:military background, a former.
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:B 1 pilot and terminal attack
controller with the Air Force,
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:also worked for a few years in
the test and evaluation community.
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:And Neil has spent the past six years with
the Defense Innovation Unit in Boston.
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:Uh, Neil, thanks for joining us today.
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:Alongside Anil is Warren Katz.
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:So Warren is a former founder of a
dual use startup, Mac Technologies,
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:that was actually funded by Defense
Sibbers and was later acquired.
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:He was a managing director for an Air
Force accelerator powered by Techstars.
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:Um, also noting that that was the first
startup outreach effort by AFWERX.
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:Uh, and then most recently he's served as
the chairman of a nonprofit, the alliance
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:for commercial technology in government,
which has a mission to streamline the
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:integration of commercial technology
into, into government operations.
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:Um, so both of you guys welcome
for, uh, to join us, uh, on the pod.
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:Aneel Alvarez: Yeah.
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:Thanks for having us.
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:Tim Winkler: Good stuff.
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:All right.
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:Now, before we dive into the
discussion, we will kick things off
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:with a fun segment called pair me up.
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:Uh, Mike, you kick it
off on to lead us off.
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:Mike Gruen: All right.
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:So, uh, I'm going with actually
a pairing from my childhood that
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:you're, that I'm seeing disappearing.
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:Uh, so it's a disappearing pairing and
that is swing sets and playgrounds.
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:Uh, I think it's springtime.
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:I go on lots of walks.
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:I don't know what it's like where you guys
are, but in Montgomery County, Maryland,
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:uh, basically the schools have mandates.
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:They can't have any fun things
on their playground anymore.
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:No moving.
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:It's very, uh, it's all about safety.
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:I get it.
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:But swing sets just are tough to find.
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:And, uh, I have so many core memories
as a kid growing up on the swings,
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:playing around the swings, getting hit
by kids on the swings, whatever it is.
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:Uh, so.
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:That's my pairing.
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:It's sort of a disappearing thing.
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:Um, I know lots of people have the little
playground sets in their backyard, but
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:there's, there's something very different
between those and the really big,
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:like swing sets that, you know, I'm, I
grew up with at the elementary school.
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:So that's my, uh, that's
my, my parent today.
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:Tim Winkler: It sounds like
a county problem to me.
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:We've got parks popping up over here.
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:I've seen some pretty interesting
playgrounds popping up.
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:Um, but you know, I could see
that you could be, as I said,
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:are you guys seeing that?
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:I don't know.
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:Are you seeing, uh, a lack
of, uh, playgrounds around?
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:Mike Gruen: The playgrounds exist.
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:It's just the swing sets and
metal slides and, uh, anything,
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:Tim Winkler: anything that
might, might, for sure.
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:I haven't seen a merry
go round in a long time.
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:Yeah.
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:So I'm, I'm, I'm, I'm following on that.
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:Yeah.
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:Um, swings, uh, I don't know.
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:It's actually interesting.
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:Like we, we, um, we've got a 15 month
daughter and we have yet to put her
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:in a swing, so we're actually getting
ready to do something this weekend.
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:I'm pretty excited cause I know she's
going to love it, but, uh, yeah, swing
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:sets were Huge throwback to childhood.
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:Um, but yeah, I don't know.
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:I see him.
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:I need to move.
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:I'll put in a, put in a word.
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:Um, cool.
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:All right.
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:Um, for my parent, I'm going to go,
uh, with something that's basically
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:teed up perfectly for, uh, what we're
all about here on The Pair Program.
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:And, uh, that is a pairing of
a mentor with their protege.
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:Um, so that's a relationship that.
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:meets innovation and new ideas.
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:Uh, guidance helps kind of fit,
helps form those future, you know,
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:innovators or those future disruptors.
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:Um, I personally, you know,
would shout out a mentor in my
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:professional career, a long time
friend of mine, his name is Chad.
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:Uh, he always encouraged me to.
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:Just got to take on risk, uh, live outside
of my comfort zone and, uh, help shape
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:me into the, the entrepreneur I am today.
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:So the mentor and their protege
is, is, uh, my parent for today.
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:Um, and I know that we've, we've talked
to, for, for countless hours about
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:some of those relationships, Mike,
but, uh, but yeah, you know, every,
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:every guest that comes on this show,
you know, has some sort of a good,
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:good mentor or has a good story around
somebody that they have mentored.
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:Um, I'm going to pass it to
our guests at this point.
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:So, uh, Neil, how about a
quick intro and your pairing?
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:Aneel Alvarez: Yeah, thanks.
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:I think you pretty much covered my intro.
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:Um, didn't mean to be a career
Air Force officer, but that's
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:about where I am right now.
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:Probably a few more years to go.
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:Uh, and the last six years, the defense
innovation unit's really been great.
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:You know, spend most of my time in
operations and trying to see you're
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:seeing the other side of the fence,
acquisitions, and especially the way
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:the defense innovation unit does it.
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:It's been eyeopening
and a great experience.
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:Um, yeah, quick note on the,
on the second to last pairing.
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:If somebody hasn't invented it already,
and I bet somebody probably has, you
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:just need a video game swing set.
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:The virtual reality swing set exists.
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:Unfortunately, I bet it's going to.
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:Yeah, for me, that's
a, that's an easy one.
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:I'll go with one.
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:That's just kind of timely.
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:Uh, I'm going to go with lithium ion
batteries and motors connected to wheels.
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:Uh, we just not too long ago
about our first American car,
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:first electric car, Tesla.
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:And oh, my goodness.
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:I know I got a wife and kids and all that.
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:And that brings me joy.
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:But the Tesla, absolutely unbelievable.
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:I have not felt acceleration
like that probably ever, right?
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:Nice to fly fighter style
and bomber aircraft.
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:I mean, it is just amazing.
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:And I I'm so excited that
they went for performance.
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:You know, they prioritize
that over every other goal.
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:It's just an absolutely unreal machine.
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:That's great.
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:That's awesome.
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:Tim Winkler: You use the,
um, The auto drive feature.
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:How's that work for you?
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:Aneel Alvarez: I actually
don't like it, right?
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:Because there's there's so many
Uh safety features built into it.
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:You pretty much have to have your hands
on the wheels and eyes facing forward It's
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:kind of pointless and I love driving it.
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:So I tried it once never never again.
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:I'm sure someday amazing It's kind
of My opinion, not quite there yet.
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:And I love driving the car.
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:Tim Winkler: Yeah, cool.
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:Yeah.
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:I love, love Tesla's.
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:Um, awesome.
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:Uh, Warren, how about yourself?
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:Quick intro and pairing.
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:Warren Katz: All right.
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:Thanks a lot, guys.
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:So Warren Katz, I think he did a
good job of insuring me, uh, in the
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:beginning, um, entrepreneur myself,
founder of a company, had a good exit,
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:became an investor, pretty common arc.
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:Um, but I, I found that, um, it was
very, very, very difficult to get
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:the best stuff sold into government.
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:Just a bunch of barriers.
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:So, uh, dedicate a lot of time, less.
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:A couple of decades in how to make
how to grease the skids for commercial
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:product companies that invested in
something built it finished it and now
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:just want to sell it to the government
instead of having it knocked off
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:or remade or delayed or whatever.
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:Um, as far as my pairings go, uh,
you know, at this point, I'm sort of
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:like a quasi retired guy, but, uh,
everything I do revolves around food
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:and beverages and things like that.
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:Um, so from my childhood, uh, I don't know
if you guys know what a fluffer nutter is.
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:But it's a sandwich that is made
from peanut butter and fluff.
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:And I think the, uh, the reason
why it was invented is to get
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:kids to eat something healthy.
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:You have to slather it
in some kind of candy.
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:So fluff is this marshmallow
cream that I enjoyed.
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:It's, I don't know, a hundred years old.
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:It was invented here in Lynn,
Massachusetts, I think, is
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:the fluff factory, actually.
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:It's still around after a hundred years.
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:Um, so yeah, uh, falafel and peanut
butter on a fluff and utter is one of my
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:childhood delicacies and, uh, it is a,
uh, telling lesson on how to get somebody
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:to do what they don't want slather in
candy, enticement to get them to do
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:what they don't naturally want to do.
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:Mike Gruen: I definitely have strong
memories of a couple of kids at my,
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:at my summer camp who that's what
that was like their go to every day.
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:And, uh, And then not wanting to
get into the swimming pool with
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:them because they always had like
stuff all over their face, just
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:Tim Winkler: covered in fluff
and appreciate that fun fact on,
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:uh, you know, the origination
sort of where it came from.
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:That's, that's great.
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:Um, cool.
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:I will put a bow on, on that
segment and, uh, move into the
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:core, uh, of today's discussion.
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:So the way I kind of see this conversation
flowing, I think it'd be helpful to begin
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:with just kind of painting the picture of
maybe the current state of affairs and,
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:um, it's making sure that our listeners.
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:Are caught up on what, you know,
several programs entail, um, some
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:of those different phases, uh, how,
how the programs are leveraged.
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:And then, you know, some of
those challenges that startups
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:face in, in that journey.
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:Uh, and then next we can talk
about the government reform that's
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:needed for a healthier ecosystem.
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:Warren, I'm sure you have plenty
of, uh, thoughts on this topic.
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:Uh, and then, uh, I did want to make
sure that we covered Something that
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:Warren, we, we kind of riffed on,
on our disco call was the federal
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:acquisition streamlining act, uh,
FASA and the importance of this law.
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:And, and we can talk a little
bit about a few examples that, of
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:how this law has proven useful in
real world, real world scenarios.
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:Um, so Ania, maybe we'll start with
you and just, uh, just a little
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:bit more context on, you know,
maybe the current state of, uh,
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:of the ecosystem and a little bit
more context on, on SIBRs as well.
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:Aneel Alvarez: Yeah, um, so it's
probably worth clarifying D.
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:I.
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:U.
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:actually doesn't use servers at all.
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:Uh, our instrument of choice
is the other transaction.
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:Uh, so be happy to talk about that.
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:Uh, Warren, I know lives more in the
super world and it's probably better
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:place to talk about that specifically.
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:Uh, but the other transaction is probably
just as relevant to this discussion.
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:I normally explain it's something
along the lines of, if you look at
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:the federal acquisition regulations,
procedures by which things are
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:acquired in the government.
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:It's like a 1990s New
York City phone book.
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:I mean, it's just enormous with every
potential risk mitigation measure
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:under the sun baked into these things.
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:Um, and so what happens is
that acquisitions officers and
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:contracting officers by all the
risk mitigation measures that
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:would be needed may be needed.
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:That might be a stretch for the
purchase of an aircraft carrier.
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:They might apply that to the purchase
of a, uh, small unmanned aerial system,
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:which just doesn't make sense because
the cost of implementing those risk
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:mitigation measures probably far outweighs
in most instances, the total value of
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:the risk that you're trying to mitigate.
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:Uh, and so other transactions were
actually created in the:
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:NASA to move a little bit faster.
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:And then they were updated again
in the middle of the last decade.
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:Uh, and, and by comparison, you know,
you have the New York City phone book
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:example with an OT and other transaction.
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:You start out with a blank sheet of paper.
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:And then it's on that the parties
involved, the contracting officer,
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:acquisition officer, the, uh,
organization you're trying to do
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:business with actually write in all
the risk mitigation measures that are
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:applicable to that specific acquisition.
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:Um, there's oftentimes a lot
of reluctance to do so, right?
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:So it's like handing a chef, a bunch of
food, uh, or a bunch of ingredients and
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:telling him or her to make something
versus handing him or her a recipe.
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:And for better or worse, most folks in
the acquisition world would prefer the
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:recipe than to just be handed a plate of
ingredients and have to make something.
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:Uh, but DIU does do that exclusively.
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:We use other transactions exclusively,
and it allows us to move much,
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:much faster because risk mitigation
measures we're implementing
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:specific just to that acquisition.
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:Um, now the big difference
between OTs and CBERs.
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:CBERs, uh, as is implied in the name
or the full name, it's a grant, right?
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:It's a tax taken off the top
of the acquisition budget.
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:Okay.
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:That organizations are allowed to use
to fund small businesses to, you know,
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:research and develop capabilities
that they think they're going to
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:need versus another transaction
is purely just in a, you know,
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:contracting method acquisition method.
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:Interesting.
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:Tim Winkler: Perfect.
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:Yeah, that, that's helpful.
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:I, I didn't, uh, point out in the intro
kind of the, the OTs, um, so appreciate
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:you covering that and building a little
bit more awareness on, on that as well.
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:Um, we'll dig deeper into some of that
as well, but Warren, why don't you,
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:if you want to kind of just quickly
expand on your, uh, your two cents
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:on it and then we can keep going.
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:Warren Katz: Yeah.
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:So Neil is exactly right.
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:And OT is a contract type
of contract structure.
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:And in fact, some of my companies, many
of my companies have had their phase two
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:SBIRs use an OT as the contract mechanism.
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:So there are two sort of orthogonal
things, but can use each other.
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:Um, the CIPRA program is, is a grant
program exactly like a Neil described.
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:It was developed about 40
years ago, the early:
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:The best way to describe it is.
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:It was kind of like a government
seed stage venture capital fund.
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:They take, they take,
uh, what's today a 3.
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:2 percent tax.
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:Off the entire R and D budget of the
entire federal government is not just D.
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:O.
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:D.
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:It's the entire federal government.
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:So it's about 4Billion dollars
a year now, and that cash is
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:given back to the same people.
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:It's taken from, but when it's given
back, it's got some strings attached.
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:You have to award these grants and.
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:A phase one, which is anywhere between, I
believe, uh, on the low end, 75, 000 today
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:to a high end of two 50 for a phase one.
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:And if, uh, the company is successful,
they can be, uh, awarded a phase
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:two, which I believe is up to 1.
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:9 million today.
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:So a fairly significant chunk of
change for a really small, innovative
358
:startup company at the pre seed
level, uh, can help the company avoid.
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:Taking venture capital at that most
expensive stage of the company before
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:they start derisking the product.
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:And then if they want to take venture
capital later, then they can, but
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:they're in a stronger position.
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:They can keep more of their equity.
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:So I, I view it as a very attractive
alternative to taking very early
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:stage VC for a lot of these
deep tech, hard tech companies.
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:I myself, uh, built my
entire company only on SBIRs.
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:I never took any venture capital.
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:Which I highly recommend to anybody who
can possibly do that, because when you
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:do have an exit, you have nobody to share
the money with, which is a wonderful
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:thing, uh, at the end of the rainbow,
but a lot, a lot of the companies, a
371
:lot of companies, I'm an investor in,
and I've helped to accelerate do both.
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:They take and raise money.
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:Uh, through, through angels and
venture capital and the government
374
:is starting to, uh, recognize and
encourage that, especially through
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:things like the Air Force's, uh, TACFI
and STRATFI programs, which are, are
376
:wonderful phase 3 ish follow ons to,
to the phase 1, phase 2 SBIR program.
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:A lot to talk about with SBIR.
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:It's a wonderful thing.
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:If you know how to use it
right, hasn't been abused.
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:Over the years by companies that
view it just as sort of, you know,
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:a corporate welfare sort of thing.
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:You've, you've heard of
the term silver mills.
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:We can go to a whole
conversation on silver mills.
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:So, it has been abused by some
and Congress is trying to figure
385
:out how to put the screws to that.
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:Uh, but wonderful, wonderful
program funds, a lot of companies
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:fund a lot of, you know, if you
look at the greatest successes.
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:Out of the Sivir program, you get
companies like Amgen, Qualcomm, 23andMe,
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:Ginkgo Bioworks, iRobot, AeroVirement,
Broadcom, all these pieces of Broadcom.
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:These are multi billion dollar companies
that got their start at the SBR program,
391
:went on to raise venture capital
into other things, but phenomenal
392
:ROI, uh, for, for government dollars.
393
:I'll, I'll stop here and
see where you want to go.
394
:Tim Winkler: Yeah, so Neil, we were
talking a little bit about, um, on our
395
:discovery call of like some of those,
those pitfalls of where you go, once you
396
:hit a certain, a certain plateau, um, if
we want to maybe expand on that and just
397
:kind of, maybe this will just kind of
pick apart a little bit of some of those
398
:pain points, but the way that the system's
currently kind of structured, um, and then
399
:we can flip it back to Warren as well.
400
:Aneel Alvarez: Oh, yeah, sure.
401
:Uh, so I agree with Warren completely.
402
:I'm a huge fan of the
Simber program in general.
403
:Um, But yes, depending on where you
sit as a stakeholder in the innovation
404
:ecosystem, it's important to understand
the nature of what you're dealing with
405
:might be the best way to say, uh, so
oftentimes find myself at conferences and
406
:talks, uh, inside of our conversations
with companies that have received a grant.
407
:And they think they're on the fast
track to a big government contract, uh,
408
:because they have a separate phase 1.
409
:Uh, and, you know, some, some education
is probably warranted there where,
410
:you know, getting from a super phase
1 to a transition is just unbelievably
411
:difficult because you have this whole
thing called in between planning,
412
:programming, budgeting, and execution.
413
:Uh, so, like Warren said, you
got this I misspoke earlier.
414
:I said, attacks on the acquisition budget.
415
:Warren said it correctly attacks on the
R and D budget is what it actually is.
416
:Uh, then organizations get some of
that funding to hand out to small
417
:companies that they think are developing
capabilities relevant to their mission.
418
:Um, but you think about
skin in the game, right?
419
:So if somebody gives you free money.
420
:And they tell you, you have to
spend this in a certain way.
421
:And if you don't, I'm
going to take it back.
422
:It's not like you get to keep it.
423
:Of course, they're going
to spend it, right?
424
:Whether or not it's going to yield some
kind of long term benefit for them.
425
:They're almost definitely
going to spend it.
426
:Uh, and as a recipient of that
money, you may not necessarily see
427
:the incentive structure behind that
organization that's spending money on you.
428
:Um, so as a company, what I normally
advise them is it's really important
429
:to understand where the requirement
is coming from for whatever it is that
430
:they're receiving that money from.
431
:And it doesn't have to be a requirement,
but you know, ideally it would be,
432
:uh, if it's not a requirement, if
it's just A-D-A-D-O-D or a government
433
:organization giving them a super
phase one grant, that's fine.
434
:As long as they understand
that that's what it's right.
435
:Maybe it's $50,000 for Aase one
grant and then it's gonna end.
436
:That's great.
437
:You know, it keeps the lights
on for a few more days.
438
:Um, but it's really just
understanding what the end game is.
439
:So I said a little bit more about
the ideal is if there's actually a
440
:requirement behind that end game, right?
441
:So if there is a, an organization in
one of the services that has a hard and
442
:fast requirement for some capability
that doesn't quite exist from a
443
:technical perspective yet, and they,
in conjunction with an acquisition
444
:organization or handing out this, you
know, maybe a series of super face
445
:ones to help develop technology, That
is, um, that is going to fulfill a
446
:funded vetted requirement someday.
447
:That's the holy grail of what companies
probably want to be looking for.
448
:Uh, but that's, that's
really tough to find.
449
:And as a company, you can kind of prod
your, your government handlers into
450
:trying to figure out what that is,
or, or at least explaining to you,
451
:uh, what the nature of the end game
in that particular case might be.
452
:Mike Gruen: Is there any situation in
which they're doing that from where
453
:they're, it's that same requirement
and they're doing it across multiple
454
:companies and you're, I mean, like, I
assume that they, as the government,
455
:I'm not just going to pick one horse.
456
:I'm going to bet on a bunch of ponies.
457
:Um, is that, is that the case?
458
:Aneel Alvarez: Yeah, absolutely.
459
:And again, I'm not as well versed in
the super world, but I don't think
460
:Afworks is doing this anymore, but
in their first few years they were.
461
:Awarding something like 1500
super phase ones per year.
462
:Uh, and so if there are particular
tech areas where the air force, you
463
:know, really needed some concerted
development, they're probably
464
:gonna end out a lot of super phase
ones to companies in those areas.
465
:Tim Winkler: I want to, I want to
kind of jump right into, um, uh, a
466
:little bit worn specific with, with
what the Alliance for commercial
467
:technology and government is doing.
468
:So this is a non profit, uh, that, that
you all formed and, and, uh, Expand
469
:on a little bit on the, something like
these use cases that you, how you're
470
:getting involved and then, you know,
why, uh, you know, what these big areas
471
:that you feel there's room for reform.
472
:Warren Katz: Yeah, so it just follow on
exactly to, uh, where, uh, Neil left off.
473
:I'll point out 1 thing about the
silver program and how it's money
474
:and spend it was given back to.
475
:It's given back to researchers
in the research community.
476
:So for the first 35 ish years, uh, a
laboratory researcher and his white
477
:coat in the laboratory gets this
money back and spends it on a little
478
:company to try to make a product.
479
:It's not necessarily, it wasn't
necessarily the case that that
480
:researcher himself or herself actually
knew the end user war fighter and who
481
:was going to use the thing and didn't
really have a connection to that, the
482
:actual End user the product, and then
the company finishes their prototype.
483
:It works and they go back to that
research scientist and they say, I have
484
:no clue who would actually buy this.
485
:The company is thrown back on the
company to go find the end user.
486
:Uh, learn about what this requirements
process is that a Neil was.
487
:Was alluding to and then start
the process to get money aligned
488
:for this brand new thing.
489
:Nobody ever thought of in the D.
490
:O.
491
:D.
492
:and that is the value of death.
493
:Whereas the company thinks,
oh, my God, you're Mr.
494
:Research scientist who
gave me this 2M dollars.
495
:You're in the Air Force.
496
:How do you not know who would use
the product at the end that you have
497
:this all set up for me already so
that this this process is smooth.
498
:The federal government's a very big place.
499
:The army itself is a big place.
500
:The Air Force itself is a big place.
501
:So this, this went on for 30 years,
the company essentially thrown into
502
:this, you know, 5 year long or plus
even bigger than that process of
503
:understanding how things get, uh, get,
you know, products get built and the
504
:product is finished and ready to buy.
505
:Um, and so it's this horrible,
horrible, horrible problem.
506
:So, uh, what we do at the alliance
is try to make that gap nothing.
507
:Uh, bring that gap down to zero so
that as the company is making the
508
:thing, uh, the end users already
engaged right at the beginning.
509
:The end user can kibitz on what
they need and don't need the
510
:requirements are either being set
up or already are being broadened.
511
:To include the possibility of
this new thing, and the budget is,
512
:um, you may have heard of this P.
513
:P.
514
:B.
515
:E.
516
:reform thing that just.
517
:I dropped a suggestion for how to
make the budgeting process better to
518
:make the budgets a little more general
purpose so that when a surprise new
519
:thing shows up out of nowhere, the
money is already in a budget to buy
520
:the thing, even if it's a, it's the
requirements process didn't foresee
521
:it and didn't specifically design it.
522
:So, that's kind of in a nutshell,
that's kind of what the alliance
523
:is trying to do go to Congress.
524
:And work with Congress to figure out
how to take advantage of surprise
525
:technological developments, whether
they came to the SPR program,
526
:came to a or came 100 percent from
commercial venture capital backed.
527
:Private companies that finish the thing
by on their own nickel or on a VCs
528
:nickel and then magically show up at
the end said, Hey, I got this thing.
529
:You didn't think of it.
530
:It's done.
531
:Our adversaries around
the world are buying it.
532
:Uh, giving it to their war
fighters on the battlefield.
533
:They have it today.
534
:Do you want it now?
535
:Instead of having.
536
:The U.
537
:S.
538
:warfighters wait five years to get this
thing, or even worse, creating this,
539
:this, unfortunately, this happens to the,
even to this day, creating a new program
540
:in the DOD to pay a large defense prime
by the hour to remake the thing that was
541
:available today for billions and billions
of dollars, have our warfighters be forced
542
:to wait around for a decade, and then be
handed something that's already obsolete,
543
:that's worse, that's Then what our
adversaries have been using for a decade
544
:and all the while, screwing over that
little startup company that had the thing
545
:finished or stuck their own neck out,
risk their own capital, took VC money.
546
:Uh, and finished it and got to the
finish line, uh, taking out all the
547
:risks that Neil was talking about that
phone book that he's talking about.
548
:All of that risk mitigation
is all in the developmental
549
:part of developing a product.
550
:Okay.
551
:If a private capital, if those companies.
552
:Finish their own if all the risks are gone
yet, uh, the government still, you know,
553
:attempts in a very blunt fashion to apply
that phone book of rules to the company.
554
:They already finished it.
555
:You know, the risk, the whole thing.
556
:So, none of those those risk mitigation,
uh, the bureaucracies and processes are.
557
:Are appropriate anymore.
558
:Yet the phone book is still hurled
at the company that finished it
559
:already and took all the risk out.
560
:Uh, so that's what the alliance does.
561
:We're trying to, uh, make the D.
562
:O.
563
:D.
564
:and the government a warm, receptive
customer to the 2nd, uh, A hot new
565
:product technology or a company
shows up at the front door.
566
:They are sucked in like a vacuum
cleaner whisked through the
567
:process directly to the end.
568
:Users might use the thing that
the product is quickly assessed.
569
:It shouldn't have to meet all of the
requirements that a, a fantasy process,
570
:uh, we can talk about the requirements
process in a, but basically it's a
571
:bunch of guys in a room that, you know,
smoke dope and spitball and fantasize
572
:about sharks with laser beams on
their heads and space vehicles, space
573
:motorcycles and, and, uh, come up
with this fantasy list of requirements
574
:that, that the prime contractors love.
575
:Because then they engage in a fiction
writing contest to write this proposal.
576
:They know full well that they can't make.
577
:But then the government sets aside
billions of dollars, and they start
578
:making it, and seven years go by, and
they say, I'm sorry, we can't do sharks
579
:with laser beams or space motorcycles.
580
:It was just too hard.
581
:But give us another 10 billion,
and we'll try a little harder.
582
:And it's a monopoly at that
point, and it's too big to fail.
583
:So they can't shut it off.
584
:That's the requirements process.
585
:Fortunately, there are laws on the
books that say, you know, what, if a
586
:commercial item shows up and it meets
some of the requirements, and it's
587
:better than what the warfighters using
today, you have to buy it off the shelf.
588
:And he's going to have to, we have a, a
legally mandated preference for buying
589
:finished commercial articles over remaking
from scratch and developmental product.
590
:The problem is that those
laws are just not FASA.
591
:And those laws are not obeyed.
592
:They're, they're You ask a PEO, a
government contracting officer, they
593
:won't even believe it exists, those laws,
because they're so, they're, they're,
594
:they're so completely unenforced,
uh, that, that, uh, it's like, it's
595
:treated as like, like it's not there.
596
:So, bottom line, that's
what the alliance does.
597
:We are trying to make it so that
the innovator shows up, they're
598
:swept in, sucked up and, and.
599
:And their products purchased massive
quantities very, very quickly
600
:with the least amount of friction.
601
:That's a fan.
602
:That's, that's our goal.
603
:They ain't there yet,
but that is our goal.
604
:Tim Winkler: Yeah.
605
:And I, and I believe what you're referring
to as well as like the, the legislation
606
:that you, you kind of shared with me
that draft legislation anyways, the
607
:small business commercial transition
program that that's what you all are
608
:taking and presenting, uh, to Congress.
609
:Warren Katz: Yeah, so that's actually,
it looks like it's going pretty well.
610
:There's going to be the chunks of that.
611
:That whole legislation is going
to come out very, very soon.
612
:It may be part of the 2025 SBIR
reauthorization legislation itself
613
:because the SBIR program is up
for reauthorization in:
614
:Um, but, uh, yeah, it's, it's
formalizing that smooth transition
615
:from the phase 2 prototype into
phase 3 full scale production.
616
:Which really doesn't exist at this point.
617
:The closest thing to it is the air forces
stratify program, which is part of it
618
:was efforts attempt to do exactly this.
619
:And it's a, it's a 3 way
funding program between.
620
:Some silver money, some venture
capital money, and some.
621
:A war fighter and user
acquisition money, which is great.
622
:It's awesome because that
is a bridge essentially.
623
:From prototype into full scale production,
but it's, uh, it's only for the air force.
624
:It's, it's a little restrictive right now.
625
:So, essentially, this, uh, small
business commercial transition
626
:program is more of a formalization
of this throughout the entire treats
627
:the money a little more flexibly.
628
:Um, I, I, I think it's wonderful,
obviously, but, uh, we'll see how what
629
:Congress thinks about and whether it
actually gets in, gets in the legislation.
630
:Tim Winkler: Very interesting.
631
:Um, so, yeah, and, you know,
we can kick it back to you.
632
:I know that you had, um, uh,
an idea of that came to mind
633
:about the servers as well.
634
:Then I think you were going to.
635
:Uh, touch on, or you could just pick up
where Warren kind of left off as well.
636
:Aneel Alvarez: Yeah,
maybe I'll do the latter.
637
:Um, I was thinking it might be worth
just jumping up to the 50, 000 foot
638
:view here, make sure we get a holistic
view of how, how this works and where
639
:what we're talking about fits in.
640
:Um, I'm sure most Americans were like
me before I went into the military,
641
:assuming that the Air Force, Army,
Navy, uh, Space Force Marines fight
642
:wars, but they actually don't.
643
:They're just force providers.
644
:They train and equip the force in law.
645
:That's all they do.
646
:They don't fight wars.
647
:Instead, the U.
648
:S.
649
:has split up the world into some
number of combatant commands.
650
:There's a combatant commander for
each one of those combatant commands,
651
:like Indo Pacific Command, European
Command, African Command, etc.
652
:And those are the organizations
that actually fight wars.
653
:The services just provide forces
to those combatant commands.
654
:Um, and so the services given
that model don't necessarily know
655
:what's needed for war fighting.
656
:I mean, I think that with a grain
of salt, they kind of know, but the
657
:combatant commands, the ones who
are actually fighting the war should
658
:be the ones who really understand
what they need to fight wars.
659
:So, for the most part, it's the combatant
commands that are writing requirements
660
:and then passing those on to the services
to fight about and decide what's going
661
:to get funded and what's going to get
executed in terms of acquisitions.
662
:Um, so if you're in European command
and you decided you need a loitering or,
663
:you know, a ton of loitering munitions
to hang out over Ukraine, and you write
664
:that into a requirement and hand it
off to maybe the army or the air force.
665
:Um, that's that's kind of like
how requirements get generated
666
:from that grassroots level, and
then they kind of filter upwards
667
:through the chain of command.
668
:Uh, and then when they get to the top of
the services, the services again, fight
669
:about it, decide what they're going to
put forward in the president's budget.
670
:That's how that process gets
started at an absolute minimum.
671
:That's going to take about 2 years to
go from, uh, requirements after the
672
:requirement is decided upon for it to get
vetted, run into a president's budget.
673
:Congress fights about it, ask and
staffers, house armed services
674
:committee, so the service, many
staffers are going to fight about it.
675
:Um, so realistically, and probably
3 to 5 years, you're going to see
676
:what's called a program element line.
677
:In a national defense authorization
act that, uh, funds the procurement
678
:funding, uh, that gives an
acquisition organization, the
679
:permanent funding to go out and
start executing on that acquisition.
680
:Talk about some captain in European
command writing this requirement
681
:3 to 5 years from now, there's
going to be the funding to
682
:actually go after that requirement.
683
:Might be over, obviously, right?
684
:Hopefully.
685
:Um, and that's the start of
the acquisition process, right?
686
:That's the starting gun,
which is really a shame.
687
:And then you think about tech development
cycles that are, you know, probably two,
688
:three years, we've seen massive advances.
689
:So if you write a requirement for
something in:
690
:have the funding for it in 2027 or 2029.
691
:I mean, the tech's going to be far
different from what you thought
692
:it was back in 2024, right?
693
:I mean, the whole system is just so
ntiquated, literally from the:
694
:This is the McNamara when he was
Secretary of Defense, Vietnam era
695
:method of acquiring for the Department
of Defense and that PBBE Reform
696
:Commission that Warren mentioned
was intended to try to update it.
697
:I haven't actually seen the results.
698
:Um, I didn't, I didn't necessarily
know they were out there, but
699
:It'll be great to take a look.
700
:Um, so with the separate process,
what, what oftentimes happens like with
701
:organizations like Afworks is that, uh,
they present AF companies present efforts
702
:with, with things that they think are
of importance to the air force right
703
:near some air force, major lieutenant
colonel says, yes, that looks interesting.
704
:Uh, let's find it with a
super face one 50, 000.
705
:And then like Warren mentioned,
um, let's say they even get a super
706
:face too, so a little bit more money
to really develop the capability.
707
:And now it's somewhat viable.
708
:Cool.
709
:It's on that company to try to figure
out what requirement to match that up to.
710
:And for someone that doesn't know
the inner workings of, uh, the Air
711
:Force, it's virtually impossible.
712
:Uh, when I said in a, you know, in the
National Defense Authorization Act,
713
:there's going to be a program element
line that gets handed off to what's
714
:called a program executive officer.
715
:And so the Air Force has only
14 or 15 of those that are
716
:broken up by functional areas.
717
:So there's PEO for fighters, PEO
for bombers, PEO digital, et cetera.
718
:They're the ones that execute the
acquisitions, then within each of
719
:those are going to have maybe a G.
720
:S.
721
:12 to 14.
722
:So kind of like a mid level
office officer civilian.
723
:Um, that's going to be handed or
tasked with leading that acquisition.
724
:So what are the chances that that G.
725
:S.
726
:12 or 13 that's developing
the acquisition strategy?
727
:It's going to actually get married up with
this company that might have the perfect
728
:solution to that acquisition, uh, that
has that silver face to like, there's no
729
:mechanism to make that match right now.
730
:Uh, not in any kind of repeatable way.
731
:That's really unfortunate.
732
:You know, you've got, you've got
the alliance trying to, um, trying
733
:to bridge that gap and some of the
legislation warrants putting forward
734
:will hopefully bridge that gap.
735
:But that's really the fundamental
challenge thing with the server program
736
:is you start with some amazing solutions.
737
:That then have to go
find the problem right
738
:Warren Katz: now.
739
:And I'll interject here that Afrix
implemented a major fix to their
740
:SBR program about 3 or 4 years
ago, where a company is not allowed
741
:to submit their phase 2 proposal
without that end user warfighter
742
:customer signed on to be a customer.
743
:And this threw a huge wrench into the
Cibber program, because to be frank, a lot
744
:of these companies, uh, the Cibber mill
certainly didn't really care whether there
745
:was an end user, they were doing Cibbers
for that, just for the Cibber money.
746
:So they flipped out that now there
actually has to be an end user
747
:customer involved and actually
have to deploy a war fighting item.
748
:That was a very unusual new thing.
749
:And, uh, a lot of the, you know, a
lot of the scientists who were using
750
:this money as free science money.
751
:Inside the government was also a
little pissed off because, well, you
752
:have to actually have a real, uh, use
case here for this, uh, this item.
753
:I, this is just free, you
know, funny money, uh, as Dr.
754
:Roper called it a resort cash.
755
:When you go to a vacation to a resort
and they give you the free wampum
756
:points, you know, it's free money.
757
:I don't have to do, you know, so
anyway, that was a major, major change.
758
:Which, uh, you know, did piss off a lot
of people in the ecosystem was a major,
759
:beneficial, really positive change.
760
:At least now, the company is, you
know, you can't go forward and get
761
:money unless there's actually a
real user at the end of the rainbow.
762
:Now, whether the real user, uh, actually
has a requirement and the budgetary line
763
:to buy more of the stuff when the phase
two is over, that problem didn't go away.
764
:But at least at this point,
uh, the company has an actual
765
:customer that wants the thing.
766
:If they finish it, phase 2 SBIR usually
takes 2 years, 2 million dollars.
767
:Maybe they don't actually
finish the thing.
768
:Maybe somebody leapfrogged
them in the interim.
769
:So that was a major, major beneficial
change, at least in the Air Force side.
770
:Uh, and I will comment that the Navy
has always done a little bit better
771
:job connecting, uh, their big programs
with the SBIR program, but that
772
:went a little too far in the Navy.
773
:And that the Navy programs
themselves started using their
774
:just to shore up defects in their,
in their big ongoing programs.
775
:So, they kind of blended that money
into their acquisition program.
776
:And therefore, there were really no
innovations, new products being developed.
777
:It was just.
778
:Being used as supplemental
programmatic money.
779
:So as we adding and adding that to
acquisition, so they went a little
780
:too far on the Navy side that they
have a tremendous, a tremendous
781
:transition record, the Navy, the
transitioning SBIR products into
782
:Navy programs, but their innovation.
783
:You know, metric is poor because
they've been treating it like
784
:contract money, not like venture
capital to develop a new product.
785
:So, there's still, unfortunately, a huge
gap in the requirements and the PPBE for
786
:something surprising and new, but at least
the Air Force with both StratFi and this
787
:MOU signature requirement for end user
customer did kind of connect the dots a
788
:little better for, um, for the phase 2
789
:Mike Gruen: companies.
790
:So it sounds like, sorry, um, like
we're solving on the one side, right?
791
:The trying to get, there's these
solutions in need of a problem
792
:and trying to marry that up.
793
:I'm going back to the earlier
and the backdrop to some of my
794
:favorite stories from my friends
who actually served overseas.
795
:Um, and all of the like in field
innovation and stuff that they
796
:had to do because they couldn't
get what they actually needed.
797
:And it was all on the, you know, like.
798
:Sort of the backdrop for that was right.
799
:They technology that they needed
was really difficult to come by.
800
:Um, is there anything being done on
that side to sort of help with that
801
:captain and saying like, okay, I have
this requirement, but I can't wait
802
:five years because by then, whatever
I need it for is going to be gone.
803
:Warren Katz: So, so, so there is a
shortcut and, uh, you know, uh, uh, Anil
804
:did a great job of, of describing the
plate of ingredients handed to a chef.
805
:Uh, and the chef's gotta do it.
806
:So I have a, a, a similar analogy, uh,
that may be a little, uh, uh, different.
807
:I think an Neil got a chocolate out of it.
808
:I view the defense acquisition
system as a Swiss cheese.
809
:So meaning that you can enter any,
if you're a big block of Swiss
810
:cheese, you can enter at any hole.
811
:And as you're passing through the
middle, you can exit any hole you
812
:like, if you're smart enough to know
which hole you're given the hole
813
:you're entering, but you're, you're
smart enough how to navigate inside.
814
:You can exit any hole you like.
815
:Okay.
816
:Because it's so, so
complicated and intertwined.
817
:But there is the ability to say,
look, if I want something fast, and
818
:this is where FASA and FAR part 10
come in, which are the regulations
819
:that should be mandated and enforced
a million times more than they are.
820
:And a lot of our legislative effort is
about enforcement of FASA and FAR part 10.
821
:Step 1 is to do what's called
commercial market research.
822
:That's the most important step that's
usually either ignored or short shrift
823
:if a captain on the one, you know, on
the, on the firing line wants an article.
824
:This is the 1st thing that he
or his, his, um, you know, PEO
825
:program manager can and should do
is commercial market research step.
826
:1 is scouring the planet
for anything close to it.
827
:That's done and available and
buyable today off the shelf.
828
:If it's close, you're legally
mandated that you're supposed to buy
829
:it and you can buy it immediately.
830
:Uh, if you've got the cash sitting
aside, uh, and you, and you have the
831
:requirement or you have a broad enough
requirement, you're supposed to buy it.
832
:Now, so these are two impediments, having
the cash and having the requirement.
833
:Okay, how do you solve those two things?
834
:Well, FAR Part 10 has
a magnificent clause.
835
:That says, if the commercial item
that you found doesn't meet all the
836
:requirements, you have to do two things.
837
:One is you have to go back to
that captain, that warfighter,
838
:and say, hey, captain, we found
something that's pretty close.
839
:It's missing these three features.
840
:Is that good enough for you?
841
:And if that question ever gets
asked, The captain invariably
842
:says, yeah, hell yeah, I need it.
843
:Now I'm fighting here.
844
:Okay.
845
:I can't wait seven years for the perfect.
846
:The perfect is the enemy of good enough.
847
:This thing that you've
brought me is good enough.
848
:Give it to me right now.
849
:I want it right now.
850
:Okay.
851
:If the question legally required
question to be asked, usually doesn't.
852
:Okay.
853
:And the second thing that has to happen
is if that captain says, you know what,
854
:those three features and missing two
of them, I can do without, but this
855
:one, I really, really kind of need.
856
:Okay.
857
:Well, then the procurement person is
supposed to go back to that commercial
858
:vendors and say, Hey, we'll buy a
bazillion of these from you, but
859
:you got to add this one feature.
860
:We really kind of do need
this one feature that question
861
:also legally has to be asked.
862
:And, of course, any vendor in their
right mind is going to be, of course,
863
:I'll add it well, tell me what the
feature is and we'll negotiate it.
864
:But if you buy 38, 000 units.
865
:Of the thing.
866
:Yeah, I'll add it.
867
:I'll add it on my own nickel.
868
:No problem.
869
:Okay.
870
:If the quantity is high enough.
871
:So that's what FAR part 10 says.
872
:Okay.
873
:So there's, so if the procuring officer
program manager is doing their job,
874
:they're, they're trying desperately to
find the close enough commercial item
875
:and trying to match make with, with the
needs of the warfighter and get to yes.
876
:And get that war fighter,
that thing instantly.
877
:Okay.
878
:But the problem we have is that, uh,
the, the, the frozen middle, the, the,
879
:the program officers, the PEOs, the
contracting officer, and the prime
880
:contractors that are making all their
money from making everything from
881
:scratch because they sell their time by
the hour, that's how they make things.
882
:They actually don't have much interest
in getting to yes for that captain.
883
:They have interests, unfortunately,
parochial interest in getting
884
:to know, uh, getting to know
means they all make more money.
885
:Getting to know means that program,
that program manager, that contracting
886
:officer, they're going to have a 20 year
long job they're going to have to be
887
:able to run this multi billion dollar
program for decades, they're going to
888
:have job security, they're going to have.
889
:Cashier, they're going to have
a credibility, a huge budget,
890
:huge influence, huge staffs.
891
:Unfortunately, these parochial interests.
892
:That's sabotage the market research
mandate that we're talking about.
893
:Now, if the, if the incentives.
894
:We're changed so that those people were
somehow deeply rewarded for getting a yes.
895
:Then that's what would have happened.
896
:Then we'd go back to the Swiss cheese.
897
:Okay.
898
:Then they will come out the
hole that says, you know what?
899
:That commercial item is good enough.
900
:I've swear it's good enough.
901
:I'm going to beat up the captain and twist
his arm to make sure that he, that, that
902
:the commercial items good enough for him.
903
:And I'm going to beat up the vendor.
904
:So they put in that one or two
missing features and I want to
905
:be done with this in 30 days.
906
:I'm going to be finished and onto my next.
907
:Procurement thing in 30 days, because
if I get stuck on a decade long
908
:developmental program, my career is over.
909
:So it's by changing these incentives
that the people in the middle will change
910
:their behavior and they'll try to get to
yes, instead of what they're currently
911
:doing, which is trying to get them now,
912
:Mike Gruen: that's an amazing
summary of like my experience, like
913
:I haven't spent too much time in
government, but like the perverse
914
:incentives that just exist that really.
915
:Slow things down, move things
in the wrong direction.
916
:And it's just, that's the way the
system is like, Oh, we have this money.
917
:We have to spend it.
918
:Like we're not incented to save.
919
:We're not incented to do things quickly.
920
:We're not incented to buy a
commercial off the shelf solution.
921
:We're incented to create
our own and build.
922
:Um, so that's, that's
923
:Warren Katz: fortunately in 1994,
when the first commercial products
924
:of my company were coming out and I'd
show up at the program managers that
925
:show up at the prime contractors.
926
:And after a while, they would
be earnest and honest with me.
927
:And they'd look me in the eye
and say, Warren, this product
928
:does do everything we need.
929
:It's perfectly suitable.
930
:It's done today.
931
:And it's cheap.
932
:It's one 10th the price
we're going to pay.
933
:But please want to understand we make
all of our money by remaking this crap
934
:over and over and over and over again.
935
:We are have no interest in
buying your off the shelf item.
936
:It will be too cheap, and
it'll end too quickly.
937
:Okay, I'm sorry to bring
you the sobering news.
938
:And I had literally I had government PMs
who had enough respect for me to look me
939
:in the eye and tell me this to my face.
940
:And I On more than one occasion.
941
:And at that point is a commercial product.
942
:And it's like, ah, you know, what do I do?
943
:Where do I go?
944
:Okay.
945
:And that's why this, this arc of my career
took that turn 30 years ago, because of
946
:that honest, you know, answer that I got.
947
:So I've been trying to change the
incentive structure and the enforcement.
948
:You gotta have both carrots and sticks.
949
:You have to have incentives,
enforcement, both.
950
:Otherwise this isn't just, it's
just, isn't going to happen.
951
:Tim Winkler: Yeah.
952
:I, I, uh, I love how that
became a part of your journey.
953
:Uh, you know, the, what you're doing
with the Alliance from, you know,
954
:what you experienced early on as a
entrepreneur and that's kind of, you
955
:know, the, the picture we're trying to
paint for a lot of our listeners that
956
:are, you know, maybe building something
or especially if you're dual use, right?
957
:Like protecting yourself on one side
to, you know, make sure you have
958
:revenue coming through the door.
959
:If it's on your commercial side,
while you're, you know, You
960
:know, kind of working the lanes
on the, on the federal side.
961
:So it's, um, it's, it's, you know, again,
I don't think we're here to paint like
962
:the grimest of grim pictures, but the
reality is it's not, it's no cakewalk.
963
:And, uh, and those timelines
that you just described, Neil, I
964
:mean, Hey, that's daunting, uh,
considering how quick tech is moving.
965
:And if you can't innovate within a, you
know, that gap of shorten that three
966
:to five years, that's, that's an issue.
967
:So, um, love that the reform
is, is, is being pushed and
968
:by, by folks like yourself.
969
:Aneel Alvarez: So there is actually
another maybe exit hole to use Warren's
970
:analogy out of that Swiss cheese.
971
:Uh, so I mentioned before
combatant commands, they fight
972
:wars, they don't buy things.
973
:That's a little bit fungible, right?
974
:They do have operations and maintenance
budgets that they can spend in
975
:the current year for capabilities.
976
:Uh, and more and more what we're seeing,
especially out of the most relevant tech.
977
:So a lot of companies are selling
their tech as a service, right?
978
:And so that's something combatant
commands can buy as a service in
979
:the current year with current year O
and M operations maintenance funds.
980
:I think that's one of the best models
because you're getting the latest tech.
981
:You don't ever have to take ownership of
physical things and you get what you need.
982
:Uh, instantly, right?
983
:So some examples like satellite
services in the run up to Ukraine
984
:when, uh, Putin was amassing forces
on the border of Ukraine saying, no,
985
:we have no intent to invade Ukraine.
986
:That was commercial satellites
out there that the government was
987
:buying from commercial lenders.
988
:Government was buying the
imagery from commercial lenders.
989
:Um, you know, not that that was
not multi million dollar government
990
:satellites producing that imagery
that was commercial that the Biden
991
:administration was able to put out to
the public because it was completely
992
:unclassified, all bought as a service.
993
:Uh, it's a great company on the
west coast, sail drone, uh, wind
994
:and solar powered sailing vessel.
995
:They launched out of
somewhere in California.
996
:I can't remember where, sailed to
wherever in the world you want.
997
:You have your, your sensor
package on the vehicle.
998
:Uh, you never take, take
ownership of the vehicle.
999
:You just kind of like buy
time with the vehicle.
:
00:52:32,355 --> 00:52:35,195
But there's some great models out
there where combatant commands can
:
00:52:35,195 --> 00:52:36,845
buy things from your O and M funds.
:
00:52:36,935 --> 00:52:41,195
And one other thing to mention, so
special operations command has pretty
:
00:52:41,195 --> 00:52:42,815
much always had the ability to buy things.
:
00:52:42,825 --> 00:52:43,875
They've had a procurement budget.
:
00:52:43,905 --> 00:52:46,775
So they've always been a little bit
unique in the last maybe year and a
:
00:52:46,775 --> 00:52:51,525
half, uh, Congress gave cyber command
that same, uh, authority as well.
:
00:52:51,655 --> 00:52:54,295
So there are now actually PEO is
being developed in cyber command.
:
00:52:54,295 --> 00:52:57,535
I think there was the realization that
the services were buying capabilities
:
00:52:57,565 --> 00:53:00,535
that were too disjointed for a national
strategy with respect to cyber.
:
00:53:00,535 --> 00:53:02,265
So now cyber command has that capability.
:
00:53:02,845 --> 00:53:06,685
Um, I had the operation or the opportunity
to talk with some staffers and members
:
00:53:06,715 --> 00:53:10,935
about this with the creation of, uh,
Ukraine security assistance initiative
:
00:53:10,945 --> 00:53:12,095
funds, which have now dried up.
:
00:53:12,135 --> 00:53:12,765
Hopefully it will be replenished.
:
00:53:13,255 --> 00:53:17,215
But, uh, when that fund existed,
that essentially gave us European
:
00:53:17,215 --> 00:53:20,375
command and forces over there, the
ability to spend current year funds.
:
00:53:21,115 --> 00:53:24,685
And out of that USA iPod to buy
capabilities in the current year
:
00:53:24,695 --> 00:53:26,215
to then give to Ukraine, right?
:
00:53:26,245 --> 00:53:29,675
Which is just an amazing model, uh,
that a combatant command could do that.
:
00:53:29,765 --> 00:53:32,795
And, and what we're trying to point out
is that if other combatants commands like
:
00:53:32,795 --> 00:53:38,185
US Indo, uh, Pacific command had that
same capability, you know, if there is
:
00:53:38,185 --> 00:53:41,725
hopefully not, but if there is a shooting
war over Taiwan in the future, why wait
:
00:53:41,725 --> 00:53:45,545
until the war starts that combatant
command that capability to buy things now.
:
00:53:45,555 --> 00:53:48,725
So then you have those captains out there
in the combatant who know what they need.
:
00:53:49,135 --> 00:53:52,325
We can just buy things right away
without having to go through the
:
00:53:52,325 --> 00:53:53,375
entire acquisition ecosystem.
:
00:53:54,405 --> 00:53:55,155
That's fascinating.
:
00:53:55,215 --> 00:53:56,595
Warren Katz: Yeah, I'll flip stop on this.
:
00:53:56,595 --> 00:53:57,575
So calm thing.
:
00:53:57,585 --> 00:54:01,135
They, they are the best at buying
and they are very different.
:
00:54:01,675 --> 00:54:03,875
Um, for, for, for two main reasons.
:
00:54:03,875 --> 00:54:06,475
One, they're going on
a mission three weeks.
:
00:54:06,875 --> 00:54:08,965
They turn around to their
procurement people and said, I'm
:
00:54:08,965 --> 00:54:10,135
going on a mission in three weeks.
:
00:54:10,475 --> 00:54:12,895
I don't have seven years to wait
for whatever you fantasize up.
:
00:54:13,275 --> 00:54:13,875
What do you got?
:
00:54:14,255 --> 00:54:14,755
Okay.
:
00:54:15,205 --> 00:54:16,595
I need what you got right now.
:
00:54:16,605 --> 00:54:16,925
Okay.
:
00:54:17,645 --> 00:54:18,775
That's, that's 1 thing.
:
00:54:19,365 --> 00:54:24,805
Also, the, their budgetary requirements,
uh, processes are compressed.
:
00:54:25,695 --> 00:54:31,125
Their budget line items are extremely
few and extremely broad, just like that.
:
00:54:31,135 --> 00:54:33,695
PPP commission was recommending
for the rest of the military
:
00:54:34,245 --> 00:54:35,615
and their requirements process.
:
00:54:35,615 --> 00:54:39,665
I think I saw their requirements, like
any, anything at all that might help.
:
00:54:39,665 --> 00:54:41,665
So calm with their
mission is like their one.
:
00:54:42,180 --> 00:54:43,100
Requirement line.
:
00:54:43,100 --> 00:54:45,630
So pretty much any product at all
in the world that helps them with
:
00:54:45,640 --> 00:54:47,230
their mission falls under it.
:
00:54:47,610 --> 00:54:49,820
So they've managed to compress
their budget and their
:
00:54:49,820 --> 00:54:51,220
requirements down to nothing.
:
00:54:51,490 --> 00:54:54,460
And the urgency just means
they don't develop anything.
:
00:54:54,460 --> 00:54:54,940
They can't.
:
00:54:54,950 --> 00:54:58,710
So they've been, I always point all
of my companies, you got some hot
:
00:54:58,710 --> 00:55:02,474
noodle thing, go to SOCOM first, go
to SOCOM first, go to SOCOM first.
:
00:55:02,745 --> 00:55:06,225
If they like it, they'll just buy
it and they can, and then they will.
:
00:55:08,755 --> 00:55:08,965
Tim Winkler: Yeah.
:
00:55:08,965 --> 00:55:10,645
That's a really interesting point.
:
00:55:10,685 --> 00:55:15,475
Um, and I am curious on, on, uh, those
companies that you, you kind of advise
:
00:55:15,475 --> 00:55:17,345
or maybe they come through the Alliance.
:
00:55:17,515 --> 00:55:19,895
Um, how many are you working with at any
:
00:55:19,895 --> 00:55:20,305
Warren Katz: point?
:
00:55:20,855 --> 00:55:24,505
The Alliance has about 50 members
and I, as an investor, I had
:
00:55:24,505 --> 00:55:26,255
30 companies go through my.
:
00:55:26,870 --> 00:55:31,210
Text stars program, and we had 2
other programs, the space accelerator
:
00:55:31,660 --> 00:55:36,130
that my, my buddy, Matt Kozlov
ran out of, uh, Los Angeles.
:
00:55:36,130 --> 00:55:39,680
And he had, I think, uh, 3
or 4 classes, 10 companies.
:
00:55:39,680 --> 00:55:40,930
He's another 40 companies there.
:
00:55:40,930 --> 00:55:45,050
I helped them out when needed my other
colleague, Jonathan Fenske ran the
:
00:55:45,060 --> 00:55:47,300
allied space accelerator for 2 rounds.
:
00:55:47,350 --> 00:55:48,950
He had 20 more companies.
:
00:55:48,960 --> 00:55:52,880
So that number of companies that I have
touched through text stars, 100 ish.
:
00:55:53,390 --> 00:55:57,300
Something like that also, the
efforts guys, I, I, I pretty much
:
00:55:57,300 --> 00:56:00,000
will take a phone call from also
anybody trying to get the process.
:
00:56:00,000 --> 00:56:04,730
I've had hundreds and hundreds of,
uh, of conversations with companies
:
00:56:04,740 --> 00:56:09,710
in this all the way from a company
saying, Warren, I was giving you name.
:
00:56:10,455 --> 00:56:13,475
I've heard about SBIR and I've
heard about DIU, but I don't
:
00:56:13,475 --> 00:56:14,665
know if I want to get involved.
:
00:56:15,185 --> 00:56:15,765
Tell me about it.
:
00:56:16,535 --> 00:56:20,035
All the way to companies that
are like, I'm struggling to
:
00:56:20,035 --> 00:56:25,304
get my phase 3 OT production
contract out of my phase 2 SBIR.
:
00:56:25,305 --> 00:56:28,495
And this that and the other combatant
command has a requirement that
:
00:56:28,495 --> 00:56:32,075
we think it can help me morph the
requirement to change the budgetary
:
00:56:32,075 --> 00:56:33,325
line item and talk to this guy.
:
00:56:33,505 --> 00:56:34,105
So I get, I get.
:
00:56:34,830 --> 00:56:39,150
You know, conversation, the whole
spectrum, the number of companies I've,
:
00:56:39,190 --> 00:56:43,470
I've, uh, I've talked to who are trying
to get in, or I've gone through just
:
00:56:43,470 --> 00:56:44,940
about to the end is in the hundreds.
:
00:56:45,690 --> 00:56:48,970
Uh, and so the alliance has
about 50 members at this point.
:
00:56:49,800 --> 00:56:53,590
We're always looking for more, but,
uh, most of those companies are DIU
:
00:56:53,590 --> 00:56:58,440
and SBIR companies who are well into
phase two and are struggling and
:
00:56:58,440 --> 00:57:00,270
confronting that value of death.
:
00:57:00,660 --> 00:57:02,460
They're the ones we've
been most productive for.
:
00:57:04,335 --> 00:57:06,860
Tim Winkler: And, and, uh, a
Neil, I'm curious with like
:
00:57:07,370 --> 00:57:09,560
your time at DIU, you know, um.
:
00:57:10,130 --> 00:57:15,580
How, how many companies do you like a
ballpark, I guess, on, on the number of
:
00:57:15,580 --> 00:57:19,900
companies that you kind of get involved
with or interface with, um, and then
:
00:57:20,090 --> 00:57:21,840
say, like, maybe in like a given year.
:
00:57:23,050 --> 00:57:26,660
Aneel Alvarez: Yeah, so me personally,
it's been fewer than DIU as a whole.
:
00:57:26,760 --> 00:57:28,850
Uh, I've been mostly on the
defense engagement side.
:
00:57:28,870 --> 00:57:32,250
So working with defense organizations
to figure out what their needs are
:
00:57:32,280 --> 00:57:35,620
that might be able to be fulfilled by
commercial tech or modified commercial
:
00:57:35,650 --> 00:57:37,470
tech, like, like DIU specializes in.
:
00:57:38,205 --> 00:57:41,125
Also, you see far fewer companies
and far fewer solicitations out of
:
00:57:41,345 --> 00:57:43,445
you than out of the general world.
:
00:57:43,645 --> 00:57:46,385
And the reason is, I'll just
take out for us as an example.
:
00:57:46,795 --> 00:57:49,345
Historically, they've tried to
look for anything that might be
:
00:57:49,655 --> 00:57:53,435
relevant to Air Force missions,
uh, and try to build those up.
:
00:57:53,585 --> 00:57:54,525
It's a lot of things, right?
:
00:57:54,525 --> 00:57:58,305
So they wind up giving out, like
I mentioned before, a lot of, uh,
:
00:57:58,435 --> 00:58:00,105
phase 1 grants, phase 1 grants.
:
00:58:00,930 --> 00:58:04,350
Um, DIU has historically taken the
opposite approach, where we work with
:
00:58:04,450 --> 00:58:08,010
defense partners, as has been my role
for the last few years at DIU, figure
:
00:58:08,010 --> 00:58:12,510
out a very narrow problem that we can
address, and then look for companies that
:
00:58:12,510 --> 00:58:14,290
can address that very narrow problem.
:
00:58:14,710 --> 00:58:18,020
Uh, and then we also try to figure out
the transition pathway, who's writing
:
00:58:18,340 --> 00:58:21,470
all of the documentation that's needed
to create that formal requirement,
:
00:58:21,470 --> 00:58:22,710
if a requirement doesn't exist.
:
00:58:23,270 --> 00:58:25,960
What general officer or civilian
equivalent is going to push that
:
00:58:25,960 --> 00:58:28,720
through the process to make sure it
actually gets approved and vetted.
:
00:58:28,850 --> 00:58:32,960
And so it hopefully spits out as a
line in a program element line in
:
00:58:32,960 --> 00:58:35,150
the National Defense Authorization
Act in a couple of years.
:
00:58:35,160 --> 00:58:35,890
In other words.
:
00:58:36,465 --> 00:58:39,045
Most of the time, we're going to have to
try to figure out what that transition
:
00:58:39,075 --> 00:58:41,475
pathway is for those small number of
firms that we've worked with so that
:
00:58:41,605 --> 00:58:45,155
they actually get the abilities to
do the hands of end users at scale.
:
00:58:45,895 --> 00:58:49,295
So, in a nutshell, we start with a
very narrow problem and then look
:
00:58:49,325 --> 00:58:53,345
for a small number of appropriate
solutions versus the separate process.
:
00:58:54,195 --> 00:58:56,955
And it varies by organization, so
I'm mostly just focusing on the Air
:
00:58:56,955 --> 00:59:00,795
Force here, where they're largely
looking for a large number of
:
00:59:00,915 --> 00:59:04,395
solutions, and then it's mostly on the
companies to try to figure out what
:
00:59:04,395 --> 00:59:07,055
problems those can get matched up to.
:
00:59:07,525 --> 00:59:10,995
And actually, AFWERX has changed that
in the last year or so, so that what
:
00:59:10,995 --> 00:59:13,945
I just described was what they call
the open topic, but they've created
:
00:59:13,975 --> 00:59:17,555
something called the specific topic,
uh, in the last year or so, which is a
:
00:59:17,555 --> 00:59:21,145
little bit closer to the DIU model of
going to the PEOs, the program executive
:
00:59:21,145 --> 00:59:24,405
officers, those top level acquisition
organizations to say, what do you
:
00:59:24,405 --> 00:59:28,255
need, and then putting those out there
as topics where they want companies
:
00:59:28,305 --> 00:59:29,965
to, uh, to apply to those topics.
:
00:59:30,880 --> 00:59:31,430
Interesting.
:
00:59:32,690 --> 00:59:33,050
Tim Winkler: All right.
:
00:59:33,050 --> 00:59:37,410
Well, I think, um, I want to put a
bow on, uh, on the main conversation
:
00:59:37,410 --> 00:59:39,370
and transition to our final segment.
:
00:59:39,430 --> 00:59:43,990
Um, there's probably hours and hours
more of this conversation we'd be
:
00:59:43,990 --> 00:59:46,720
having, but we'll, we'll save that
maybe for a follow up discussion.
:
00:59:47,220 --> 00:59:51,000
Um, let's transition to the, to the
final segment at this point, uh,
:
00:59:51,010 --> 00:59:52,430
which is the five second scramble.
:
00:59:52,805 --> 00:59:57,135
A quick rapid fire Q and a, uh, with
both of our guests, some, some, uh,
:
00:59:57,475 --> 01:00:02,075
business, some personal questions,
uh, Mike, uh, why don't you go ahead
:
01:00:02,075 --> 01:00:06,105
and, and T us up, uh, with a Neil
and then I'll, I'll jump to Warren
:
01:00:06,215 --> 01:00:06,715
Mike Gruen: and Neil here.
:
01:00:06,715 --> 01:00:06,995
Yeah.
:
01:00:07,095 --> 01:00:07,875
Uh, yeah.
:
01:00:08,005 --> 01:00:10,045
Uh, I'll give you a second
to catch your breath.
:
01:00:10,515 --> 01:00:15,190
Um, If you could have a one
hour mentoring session with any
:
01:00:15,220 --> 01:00:16,400
tech giant, who would it be?
:
01:00:21,560 --> 01:00:24,460
Aneel Alvarez: Man, I, you know, I just
said, I just sung the praises of Tesla.
:
01:00:24,460 --> 01:00:26,080
I was about to say Elon
Musk, but I don't know.
:
01:00:26,100 --> 01:00:26,380
I want to go.
:
01:00:26,390 --> 01:00:27,190
I want to take that one back.
:
01:00:30,210 --> 01:00:31,850
Tim Winkler: It's probably the
number one answer that we get, right?
:
01:00:32,000 --> 01:00:32,380
Really?
:
01:00:33,350 --> 01:00:33,710
Mike Gruen: Yeah.
:
01:00:35,495 --> 01:00:38,075
What's, uh, what's the best piece
of, uh, career advice you've
:
01:00:38,075 --> 01:00:39,235
been, you've ever been given?
:
01:00:40,825 --> 01:00:42,735
Aneel Alvarez: Uh, so it wasn't
really advice from a person.
:
01:00:42,735 --> 01:00:46,175
It was actually a course that I took,
um, Air Command and Staff College.
:
01:00:46,175 --> 01:00:46,985
It was a leadership course.
:
01:00:46,985 --> 01:00:50,745
It was a Harvard, Harvard Business Review
article on vision, which I always thought
:
01:00:50,745 --> 01:00:52,345
was a stupid sign that hung up in offices.
:
01:00:52,345 --> 01:00:56,030
But Now, when you, when you read
about, read about, uh, when I read
:
01:00:56,030 --> 01:00:58,940
this article, it really changed my view
on leadership management in general,
:
01:00:59,110 --> 01:01:00,320
you know, leading to something.
:
01:01:00,340 --> 01:01:01,250
That's what the vision is.
:
01:01:01,300 --> 01:01:04,850
That's, you know, form your team
around, uh, that's it in 1 sentence.
:
01:01:04,880 --> 01:01:06,490
But, um, yeah, that's really shaped.
:
01:01:06,540 --> 01:01:06,830
I think.
:
01:01:07,390 --> 01:01:09,320
How I operate at work
more than anything else.
:
01:01:10,450 --> 01:01:13,880
Mike Gruen: Uh, what's one cultural value
you think is really important to foster?
:
01:01:15,920 --> 01:01:19,460
Aneel Alvarez: Um, I mean, there's
the, there's the, you know, the
:
01:01:19,460 --> 01:01:22,280
standard ones that hopefully your
parents taught you when you were three.
:
01:01:22,330 --> 01:01:26,030
So I'll skip those, uh, like the
integrity and all that sort of thing.
:
01:01:26,130 --> 01:01:29,950
Um, but now I, I don't know if I call
it a value, but coalescing around a
:
01:01:29,960 --> 01:01:34,140
vision or any organization, uh, and
rallying people around that vision.
:
01:01:34,710 --> 01:01:35,870
I found to be really critical.
:
01:01:37,110 --> 01:01:38,500
Mike Gruen: Suspecting
that might be a theme.
:
01:01:38,920 --> 01:01:42,400
Uh, in a word, what's the biggest
challenge facing, like the
:
01:01:42,400 --> 01:01:43,630
defense tech space right now?
:
01:01:46,765 --> 01:01:47,225
one word.
:
01:01:47,800 --> 01:01:48,520
Or you can use a phrase.
:
01:01:48,520 --> 01:01:50,050
I was expecting you just to say vision.
:
01:01:54,380 --> 01:01:54,650
word
:
01:01:56,500 --> 01:01:57,850
Aneel Alvarez: can be really
offensive, but I'll say it anyway.
:
01:01:58,000 --> 01:01:58,240
People.
:
01:01:58,480 --> 01:01:58,930
Mike Gruen: What was that?
:
01:02:00,000 --> 01:02:05,950
People, uh, uh, what type of technologists
thrive, uh, in that, in, or people
:
01:02:05,950 --> 01:02:07,750
in general in the defense tech space,
:
01:02:09,950 --> 01:02:11,390
Aneel Alvarez: uh, should
thrive or actually thrive?
:
01:02:12,170 --> 01:02:12,890
actually thrive.
:
01:02:14,640 --> 01:02:16,500
Unfortunately, it's
process oriented, folks.
:
01:02:18,990 --> 01:02:22,410
Mike Gruen: Uh, what was,
uh, your childhood dream job?
:
01:02:24,270 --> 01:02:24,420
Uh,
:
01:02:24,430 --> 01:02:24,860
Aneel Alvarez: astronaut.
:
01:02:26,520 --> 01:02:29,300
Mike Gruen: Uh, if you could live
in a fictional world from a book or
:
01:02:29,300 --> 01:02:30,630
movie, which one would you choose?
:
01:02:32,400 --> 01:02:33,090
Aneel Alvarez: Oh, man.
:
01:02:33,370 --> 01:02:35,260
My wife and I are watching
Stranger Things right now.
:
01:02:35,260 --> 01:02:37,349
Let's
:
01:02:37,350 --> 01:02:37,910
Mike Gruen: skip that one.
:
01:02:38,060 --> 01:02:38,660
Terrifying.
:
01:02:38,770 --> 01:02:39,050
Terrifying.
:
01:02:39,120 --> 01:02:41,509
That's not the one I'd choose.
:
01:02:41,990 --> 01:02:42,650
Aneel Alvarez: Yeah, same.
:
01:02:42,740 --> 01:02:44,420
It just, the first thing
that popped into my head.
:
01:02:44,910 --> 01:02:45,350
Mike Gruen: That's good.
:
01:02:45,620 --> 01:02:49,300
Uh, what's the most outdated piece
of technology you can't live without?
:
01:02:49,310 --> 01:02:49,320
Uh.
:
01:02:49,320 --> 01:02:49,434
Uh.
:
01:02:56,195 --> 01:02:58,865
Aneel Alvarez: I don't know if
I'd say it's outdated because, uh,
:
01:02:58,885 --> 01:03:01,945
I use these things all the time,
but, you know, I'm renovating my
:
01:03:01,945 --> 01:03:04,825
entire house and I still find myself
with like a hammer all the time.
:
01:03:05,625 --> 01:03:08,355
I have nail guns and auto hammers
and everything, but I have a physical
:
01:03:08,435 --> 01:03:09,985
steel hammer that I use continually.
:
01:03:10,595 --> 01:03:11,085
Mike Gruen: Sounds good.
:
01:03:11,085 --> 01:03:12,295
I don't think that'll ever go out.
:
01:03:12,465 --> 01:03:15,125
Uh, at least not until we have the
AI robots doing all the pounding.
:
01:03:15,535 --> 01:03:21,490
Um, Uh, what's a, uh, charity or corporate
philanthropy that's near and dear to you?
:
01:03:25,490 --> 01:03:27,720
Aneel Alvarez: I'd probably go with,
uh, I mean, not, I wouldn't say near
:
01:03:27,720 --> 01:03:31,270
and dear, dear to me, but the one that
kind of the approach they respect the
:
01:03:31,270 --> 01:03:35,280
most is the Bill and Melinda Gates type
approach of treating it like a business,
:
01:03:35,770 --> 01:03:38,420
uh, from, from soup to nuts, you know,
you want to do the most good for the
:
01:03:38,420 --> 01:03:45,760
most number of people, um, moving away
from the mom and pop model to what we
:
01:03:45,760 --> 01:03:49,540
know, yeah, our capitalist world is the
most effective way to get things done.
:
01:03:49,540 --> 01:03:49,600
Yeah.
:
01:03:50,910 --> 01:03:54,110
Mike Gruen: Uh, and finally, if
you could instantly be an expert
:
01:03:54,120 --> 01:03:55,270
at something, what would it be?
:
01:03:57,230 --> 01:03:58,950
Aneel Alvarez: Uh, programming.
:
01:04:00,670 --> 01:04:00,930
Cool.
:
01:04:00,980 --> 01:04:02,950
I took C and I shouldn't even say this.
:
01:04:02,950 --> 01:04:03,340
I'm old.
:
01:04:03,340 --> 01:04:04,210
I took Fortran.
:
01:04:04,270 --> 01:04:06,550
Like that's the only language
I actually programmed in.
:
01:04:08,300 --> 01:04:09,840
Mike Gruen: Modern
language would be awesome.
:
01:04:09,840 --> 01:04:12,260
Fortran, I believe is still in use.
:
01:04:12,300 --> 01:04:13,400
Uh, I have friends over at NASA.
:
01:04:18,710 --> 01:04:18,810
Tim Winkler: All right.
:
01:04:19,000 --> 01:04:19,970
Well, thanks so much.
:
01:04:21,140 --> 01:04:21,670
Good stuff.
:
01:04:21,690 --> 01:04:23,630
All right, one, let's knock
this out and then we'll wrap.
:
01:04:23,770 --> 01:04:30,020
Um, what is your favorite part about
serving as chairman for the Alliance?
:
01:04:31,060 --> 01:04:34,390
Warren Katz: Uh, it's to get to see,
uh, some of, you know, what I've, uh,
:
01:04:34,770 --> 01:04:38,380
proposed to staffers and congressmen
actually show up in legislation.
:
01:04:38,860 --> 01:04:42,870
It's very rewarding to see that,
um, sausage get made and a little,
:
01:04:43,100 --> 01:04:46,400
a little sentence or 2 here and
there, or a concept actually make
:
01:04:46,400 --> 01:04:47,570
it all the way to the finish line.
:
01:04:47,950 --> 01:04:51,000
Actually, 1 good example is
that open topic thing, and Neil.
:
01:04:51,420 --> 01:04:54,360
I mentioned that was pioneered
by, by AppWorks actually.
:
01:04:54,404 --> 01:04:59,510
They, they stole it from NSF and
then in::
01:04:59,510 --> 01:05:01,130
nd made it very successful in::
01:05:01,130 --> 01:05:06,710
It came out in the, uh, SBIR
Reauthorization Act of::
01:05:06,710 --> 01:05:10,610
the services in the DOD are now required
to have an open topic once a year.
:
01:05:11,000 --> 01:05:15,920
o from a huge arc starting in:or so, finally through, uh, a piece of
:
01:05:15,920 --> 01:05:18,980
legislation and they, and they sabotage
it and they don't really do it right,
:
01:05:18,980 --> 01:05:20,960
but at least it's in law at this point.
:
01:05:23,235 --> 01:05:25,795
Tim Winkler: What's one myth
about working with the government
:
01:05:25,795 --> 01:05:27,565
that you want to debunk?
:
01:05:29,325 --> 01:05:30,785
Warren Katz: Uh, one myth.
:
01:05:30,975 --> 01:05:32,785
It is actually just people.
:
01:05:33,435 --> 01:05:37,535
So you do, you do think that it's
just this giant phone book of process.
:
01:05:37,575 --> 01:05:37,985
But you know what?
:
01:05:38,055 --> 01:05:42,620
That giant phone book of process was
Invented by people who are sitting in
:
01:05:42,620 --> 01:05:44,620
a room, writing it up at some point.
:
01:05:45,190 --> 01:05:48,170
And even some people in the government,
sometimes they, Oh, the process says
:
01:05:48,190 --> 01:05:52,490
this and the process that process
was invented by human beings at
:
01:05:52,490 --> 01:05:56,540
some point in the past, so it can
actually be uninvented and unmade by
:
01:05:56,550 --> 01:05:58,210
another room full of human beings.
:
01:05:58,220 --> 01:05:58,250
Okay.
:
01:05:58,390 --> 01:06:03,690
It's not, it wasn't passed down by God to
Moses on the Mount with the twin tablets.
:
01:06:03,690 --> 01:06:05,900
It can, we can, we can
actually modify this.
:
01:06:05,950 --> 01:06:08,340
It's we're allowed, we're
allowed to, to modify this.
:
01:06:08,745 --> 01:06:11,615
So that's, um, and that actually does
not from people outside the government,
:
01:06:11,615 --> 01:06:15,045
it's people inside the government
who feel that, that, uh, this, this,
:
01:06:15,095 --> 01:06:19,735
these tablets that were handed them 30
years earlier, uh, are not modifiable.
:
01:06:20,005 --> 01:06:22,615
No, no, in fact, uh, we can
modify this if it makes sense.
:
01:06:24,535 --> 01:06:27,165
Tim Winkler: What's one piece of
advice you'd give to someone looking
:
01:06:27,165 --> 01:06:30,675
to invest in defense tech startups?
:
01:06:31,455 --> 01:06:35,245
Warren Katz: Uh, make sure it's a dual
use investments of a defense thing goes
:
01:06:35,375 --> 01:06:40,045
a tango uniform, as they say, uh, or,
or just, uh, winds up getting delayed
:
01:06:40,055 --> 01:06:45,215
by 5, the average 5 years before it, uh,
it, um, you know, it gets procured large
:
01:06:45,215 --> 01:06:51,485
quantity that you have a fallback that
you have multiple paths to realize the 6.
:
01:06:51,485 --> 01:06:52,285
And by the way, that's.
:
01:06:52,680 --> 01:06:55,830
Some of the advice I give a lot of
companies who are thinking about
:
01:06:55,830 --> 01:07:00,850
bidding on the SBIR program, I tell
them, don't count on the government,
:
01:07:00,930 --> 01:07:05,410
DOD, being your large scale purchaser
of these things when you're done.
:
01:07:05,990 --> 01:07:10,279
Take their money as free venture
capital, bootstrap your commercial
:
01:07:10,279 --> 01:07:12,965
product, And be successful commercially.
:
01:07:13,295 --> 01:07:17,425
And if the government does show up later
as a customer, wonderful, but treated
:
01:07:17,425 --> 01:07:23,075
as, as free venture capital, take your
idea, put a hat, perfume and lipstick
:
01:07:23,075 --> 01:07:27,575
and pearls on this pig, make it look like
what the government wants to buy, but,
:
01:07:28,285 --> 01:07:29,725
but have a commercial market in mind.
:
01:07:31,095 --> 01:07:31,635
Tim Winkler: Great advice.
:
01:07:32,865 --> 01:07:35,815
Who is a mentor in your life
that has influenced your
:
01:07:35,845 --> 01:07:36,725
Warren Katz: professional career?
:
01:07:37,605 --> 01:07:40,475
Uh, I would have to say,
uh, Leonard Nimoy or Mr.
:
01:07:40,475 --> 01:07:40,865
Spock.
:
01:07:41,135 --> 01:07:43,335
He's my, my childhood hero.
:
01:07:43,825 --> 01:07:49,355
Uh, and, uh, it just, it's so pleasurable
being logical about, uh, about things.
:
01:07:49,365 --> 01:07:51,985
So yeah, I would say Mr.
:
01:07:51,985 --> 01:07:52,465
Spock.
:
01:07:53,975 --> 01:07:56,575
Tim Winkler: What's an app on your
phone that you can't live without?
:
01:07:57,685 --> 01:07:58,975
Warren Katz: Uh, probably Waze.
:
01:08:02,345 --> 01:08:02,985
Tim Winkler: What's the biggest
:
01:08:02,985 --> 01:08:03,625
Warren Katz: fish you've ever
:
01:08:03,625 --> 01:08:03,904
Tim Winkler: caught?
:
01:08:04,915 --> 01:08:08,545
Warren Katz: Uh, I actually caught
a 54 inch striped bass once.
:
01:08:09,115 --> 01:08:11,585
And it was, uh, uh, not a keeper.
:
01:08:11,585 --> 01:08:12,645
I had to send it back.
:
01:08:12,745 --> 01:08:14,035
That was a very sad day.
:
01:08:15,385 --> 01:08:18,825
54 inches striper, uh,
Rhode Island waters.
:
01:08:18,825 --> 01:08:18,955
Yep.
:
01:08:20,335 --> 01:08:20,745
Tim Winkler: God.
:
01:08:22,064 --> 01:08:25,305
Uh, what's a charity or corporate
philanthropy that's near and dear
:
01:08:25,305 --> 01:08:28,305
to you besides the alliance for
commercial technology and government?
:
01:08:29,604 --> 01:08:29,755
I
:
01:08:30,675 --> 01:08:32,274
Warren Katz: have to think
very, very hard about that.
:
01:08:33,684 --> 01:08:34,295
There's plenty.
:
01:08:35,395 --> 01:08:38,274
Along the lines of what Anil was
saying, there's a charity in Boston
:
01:08:38,274 --> 01:08:44,495
called BUILD, B U I L D, that funds
high school children to start up little
:
01:08:44,505 --> 01:08:50,345
startup companies in their high schools
so that the allure of entrepreneurship
:
01:08:50,354 --> 01:08:51,975
convinces them to go to college.
:
01:08:52,665 --> 01:08:55,165
It was a very, very interesting
thesis and concepts.
:
01:08:55,165 --> 01:08:57,694
So I volunteered there, donated money.
:
01:08:57,745 --> 01:08:58,234
That was great.
:
01:08:59,245 --> 01:09:00,215
And then I'm an animal guy.
:
01:09:00,225 --> 01:09:00,885
I love cats.
:
01:09:00,885 --> 01:09:04,755
I'm surprised one of my cats has
not graced us with his or her
:
01:09:04,755 --> 01:09:05,854
presence during this podcast.
:
01:09:06,495 --> 01:09:08,745
They happen to, they usually
show up at inopportune moments.
:
01:09:09,740 --> 01:09:14,000
Um, but, uh, the Potter League for
animals, uh, is a charity in Rhode Island
:
01:09:14,059 --> 01:09:15,510
that, uh, that my wife and I are involved.
:
01:09:18,370 --> 01:09:20,559
What's the worst fashion trend
that you've ever followed?
:
01:09:21,660 --> 01:09:23,290
Uh, worst fashion trend.
:
01:09:23,290 --> 01:09:26,590
I think I had bell bottom pants,
uh, back in the seventies.
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01:09:26,590 --> 01:09:29,850
I seem to recall way back then,
uh, don't have any, any more
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01:09:30,229 --> 01:09:32,229
and my fashion dedication.
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01:09:32,370 --> 01:09:34,241
So you know, I have a mullet, okay.
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01:09:34,241 --> 01:09:39,170
And I've had this mullet now
probably for, for almost 50 years.
:
01:09:39,760 --> 01:09:43,050
And not at all a mistake, and I'm
bringing it back all by myself.
:
01:09:43,840 --> 01:09:44,779
It's, it's, it
:
01:09:44,819 --> 01:09:45,700
Mike Gruen: always comes back.
:
01:09:45,700 --> 01:09:46,399
It's coming back.
:
01:09:46,410 --> 01:09:48,149
It's, I mean, it's, it all comes back.
:
01:09:48,690 --> 01:09:49,069
Absolutely.
:
01:09:49,069 --> 01:09:49,880
Bell bottoms, bell
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01:09:49,880 --> 01:09:50,600
Tim Winkler: bottoms are back.
:
01:09:51,950 --> 01:09:52,380
Warren Katz: Nothing.
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01:09:53,870 --> 01:09:57,400
Tim Winkler: I, I have to have one final
bonus question just because of, uh, your
:
01:09:57,400 --> 01:10:01,230
animal shirt collection that you, you,
uh, tipped us off to at the beginning.
:
01:10:01,230 --> 01:10:03,820
So what's your, what's your
favorite animal shirt that
:
01:10:03,820 --> 01:10:04,900
you've got in your collection?
:
01:10:05,335 --> 01:10:07,775
Warren Katz: Oh, oh,
that's a great question.
:
01:10:07,825 --> 01:10:13,975
Um, right now is really up there, but
actually the one I gave out when I ran the
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01:10:13,975 --> 01:10:16,434
tech stars program, I gave, and I gave Dr.
:
01:10:16,434 --> 01:10:17,375
Roper one of these shirts.
:
01:10:17,385 --> 01:10:18,215
And I'm really kind of mad.
:
01:10:18,225 --> 01:10:22,575
He hasn't worn it yet publicly,
but it's a, a giant cat fighter
:
01:10:22,605 --> 01:10:25,085
pilot, uh, in, in sunglasses.
:
01:10:25,085 --> 01:10:28,715
I gave him hundreds of these out
to, uh, to everybody, but that's
:
01:10:29,035 --> 01:10:30,715
gotta be my favorite is the cat.
:
01:10:30,715 --> 01:10:33,774
That's how the pot kitty fighter pilot
:
01:10:34,665 --> 01:10:38,184
Tim Winkler: All right, gentlemen,
it has been a pleasure having you
:
01:10:38,184 --> 01:10:39,434
share your experiences with us.
:
01:10:39,434 --> 01:10:43,045
And I know driving change in
the government is no easy task.
:
01:10:43,055 --> 01:10:46,275
So, uh, appreciate you on the
efforts that you're, you're
:
01:10:46,275 --> 01:10:50,755
making and pushing us forward and
grateful for your time on the pod.
:
01:10:50,765 --> 01:10:51,635
I appreciate you joining
:
01:10:51,635 --> 01:10:55,285
us.