Tag Archives: startups

Air Force To Pump New Tech Startups With $10M Awards

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BREAKING DEFENSE

The service has been experimenting with ‘pitch days’ across the country over the last year, such as the Space Pitch Days held in San Francisco in November when the service handed out $22.5 million to 30 companies over two days. 

The first-of-its kind event in Austin, called the Air Force Pitch Bowl, will match Air Force investment with private venture capital funds on a one to two ratio

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“PENTAGON: The Air Force will roll out the final stage in its commercial startup investment strategy during the March 13-20 South By Southwest music festival, granting one or more contracts worth at least $10 million to startups with game-changing technologies, service acquisition chief Will Roper says.

So, if the Air Force investment fund, called Air Force Ventures, puts in $20 million, the private capital match would be $40 million.

AFWERX, the Air Force’s innovation unit, has one of its hubs in Austin.

“This has been a year in the making now, trying to make our investment arm, the Air Force Ventures, act like an investor, even if it’s a government entity,” Roper explained. “We don’t invest like a private investor — we don’t own equity — we’re just putting companies on contract. But for early stage companies, that contract acts a lot like an investor.”

The goal is to help steer private resources toward new technologies that will benefit both US consumers and national security to stay ahead of China’s rapid tech growth, Roper told reporters here Friday.

The Air Force wants to “catalyze the commercial market by bringing our military market to bear,” he said. “We’re going to be part of the global tech ecosystem.”

Figuring out how to harness the commercial marketplace is critical, Roper explained, because DoD dollars make up a dwindling percentage of the capital investment in US research and development. This is despite DoD’s 2021 budget request for research, development, test and evaluation (RDT&E) of $106.6 billion being “the largest in its history,” according to Pentagon budget rollout materials. The Air Force’s share is set at $37.3 billion, $10.3 billion of which is slated for Space Force programs. 

“We are 20 percent of the R&D is this country — that’s where the military is today,” Roper said. “So if we don’t start thinking of ourselves as part of a global ecosystem, looking to influence trends, investing in technologies that could be dual-use — well, 20 percent is not going to compete with China long-term, with a nationalized industrial base that can pick national winners.”

The process for interested startups to compete for funds has three steps, Roper explained, beginning with the Air Force “placing a thousand, $50K bets per year that are open.” That is, any company can put forward its ideas to the service in general instead of there being a certain program office in mind. “We’ll get you in the door,” Roper said, “we’ll provide the accelerator functions that connect you with a customer.

“Pitch days” are the second step, he said. Companies chosen to be groomed in the first round make a rapid-fire sales pitch to potential Air Force entities — such as Space and Missile Systems Center and Air Force Research Laboratory — that can provide funding, as well as to venture capitalists partnering with the Air Force.

As Breaking D broke in October, part of the new acquisition strategy is luring in private capital firms and individual investors to match Air Force funding in commercial startups as a way to to bridge the ‘valley of death’ and rapidly scale up capability.

Roper said he intends to make “maybe 300 of those awards per year,” with the research contracts ranging from $1 million to $3 million a piece and “where program dollars get matched by our investment dollars.”

The final piece of the strategy, Roper explained, is picking out the start-ups that can successfully field game-changing technologies.

“The thing that we’re working on now is the big bets, the 30 to 40 big ideas, disruptive ideas that can change our mission and hopefully change the world,” Roper said. “We’re looking for those types of companies.”

The Air Force on Oct. 16 issued its first call for firms to compete for these larger SBIR contracts under a new type of solicitation, called a “commercial solutions opening.” The call went to companies already holding Phase II Small Business Innovation Research (SBIR) awards. The winners will be announced in Austin.

If the strategy is successful, Roper said, the chosen firms will thrive and become profitable dual-use firms focused primarily on the commercial market.

“The, we’re starting to build a different kind of industry base,” Roper enthused. “So, we’ve gotta get the big bets right. Then most importantly, if you succeed in one of the big bets, then we need to put you on contract on the other side, or else the whole thing is bunk.”

When Starting A Business What Are The Most Important Steps?

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Image: Liquipedia Overwatch

By Ken Larson

“Don’t let technology make a monkey out of you and your idea as well as raid your treasury before you launch. Define your business vehicle and its journey first. Then pick the right technology tools to make a successful trip.”

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Test your idea:

1. Do you have a product or service niche in mind?

2. Do you believe you have a market for 1 above and the means to reach it?

3. Are you willing to develop a business plan using the tool kit linked below to validate 1 and 2 above before you launch?

Plan your Enterprise:

If the answer to the above questions is “Yes”,use the below planning aids to design your business vehicle and the road map you intend to follow on your journey:

General Planning Considerations

Market Research Guidance

Free Sample Business Plans

Use Your Plan to Choose Your Tools:

When you have completed the above definition and planning process you will then be in a position to astutely select the tools you wish to use along the way and apply them successfully.

You will be able to network your vehicle, pick up riders as industry partners, and attract revenue fuel in the form of customers by marketing and social networking based on the thorough definition and content of your business plan.

Don’t let technology make a monkey out of you and your idea as well as raid your treasury before you launch. Define your business vehicle and its journey first. Then pick the right technology tools to make a successful trip.”


Image result for Ken larson rosecoveredglasses

ABOUT THE AUTHOR:

Ken is SCORE and Micro Mentor Counselor currently living in Hastings, Minnesota. His interests range from existing small businesses to startups. He specializes in strategic, market and business planning as well as advising on government contracting and business operations for small enterprises.


Injecting Startup Culture Into Your Firm

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Image: “INC42.com

WASHINGTON TECHNOLOGYBy Sharif Aboulnaga

Where every employee is willing to step forward and take tasks that aren’t in their areas of expertise, outside of their comfort zones, take creative measures to solve a problem, and be vested in the outcome.

This leads to a positively charged environment driven for success.”

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“Startup cultures are characterized as being creative, passionate, innovative, and agile. Every employee in a startup is responsible for the success of their project and works in multiple lanes to ensure that success. They’re invested emotionally and are motivated to take on any responsibility they can to succeed. These are attractive characteristics that motivate some companies to embed that culture within their own to help raise their success bar.

Embedding a startup culture can realize many benefits, but there are some limitations that must be recognized in the government contracting space. In order to explore this, let’s take a wide lens look at the Washington, D.C., and the surrounding area, and we’ll see that:

  • A large portion of the economy of Northern Virginia consists of government contractors employed directly or indirectly by the federal government.
  • The government has a desire for IT modernization to incorporate advances in technology such as cloud, mobile, and AI.
  • Private companies are looking to attract fresh talent to gain an advantage over their competitors in a fast paced environment.
  • The startup community isn’t as developed as Silicon Valley.

Private companies desire to have an embedded startup culture that has been exposed to and experimented with new technologies. This attracts fresh talent that have learned new tech, that seek work on the latest cool projects, and keep up with the times.

This company also benefits from this talent seeking to produce goods and services for awarded contracts.

However, in the GovCon space contracts have legal implications which restrict the creativity and flexibility that startups have countering the desires mentioned. This is a challenge because startups aren’t limited in what they can do during the development phases. They can take any necessary steps to reach their objective and pivot as necessary.

Working on a contract, the path is determined beforehand and there is a commitment to deliver on a specific set of requirements that have legal implications if delivery isn’t possible.

Another way of putting it:

“Startups can do anything.

Companies can only do what’s legal.”

Steve Blank – Stanford Adjunct Professor

When the company owners have the freedom to make decisions without restriction, this allows for creative solutions and entrepreneurship.

Working for the government on an awarded contract, a team is assembled with members that have their roles explicitly defined. The contract includes a proposed solution as well as the objectives, methods, and measurables that need to be fulfilled for a successful delivery.

From an employee perspective, the desire to succeed is primarily driven by salary and job stability. This doesn’t discount the desire to learn and grow a career, however, in my experience employees do their job in the hopes that the employer will guarantee the continuation of the project, build a pipeline, and with their efforts in their respective areas get the contract extended or get a new one.

This limits the possibility for innovation during the contract period and could lead to a stagnant team that doesn’t grow to their potential, and could limit the possibility of the customer benefiting from ideas proposed along the way.

Working on a contract to fulfill its requirements doesn’t mean that you can’t advise your customer towards new solutions as you are engaged with them. That comes with long term relationships, trust, and a proven track record. When it’s realized that there are things that can be done for a better outcome, this could lead to a contract mod. The primary focus though, is producing the goods and services agreed upon.

The government has been striving to modernize and utilize the latest technologies, and embrace new development methodologies. For example Google “Agile in Government” and you’ll find a slew of articles and sites with lessons learned and challenges on why it’s hard to implement in GovTech. The desire to improve is there, but it’s stifled by different factors.

So how can a company or government realize these ambitions to compete with the development savvy and innovation of startups and realize their modernization goals?

With a mix of startup and corporate culture and with the understanding of government nuances, there are benefits that can be realized. There are various activities that can be done, that when combined together provide a holistic approach to foster a hybrid culture that serves the goals mentioned above. Solutioning becomes better, dispersing advise becomes easier, employee morale becomes higher, and the reputation as a thought leader becomes apparent. All of which, comply with constraints that come with government work.

Here are five things that can be done :

  • Top Down Vision: Leadership plays a crucial role in the success of merging cultures. Embracing a startup culture isn’t just a checkbox to fill so that a company seems progressive. Leadership must lead by example and provide an environment for employees to have the freedom to speak, engage, and feel that others are listening. If leadership doesn’t lead by example, enable, encourage, and engage in startup-like activities, then employees will feel that adopting a startup culture is a job requirement. Which I feel we can agree won’t foster a positive work environment.
  • Labs and Internal Innovation: Create an environment that allows people to share ideas, explore technologies, and act on them. Having an environment for open innovation can bring surprising results such as creative solutions that can be used as a service offering in the future.
  • Tech Talks: You could call these Brown Bags, Learning Sessions, Meetups. It doesn’t matter. When a space is made available for employees to bring their ideas to the front without judgment, this opens the opportunity to learn, collaborate, and participate in the larger culture. This outlet will inspire others to think creatively and start a conversation across people and teams.
  • Staff: Hire staff that have startup traits. Ideally, they would understand the nuances of government contracts, and if not, that’s something that can be taught.
  • Mentorship and guidance: Mentor the staff and guide them towards a unified vision while giving them room to innovate. Encourage creative ideas and assess if this can fall within the accepted limitations of a contract. If the ideas can’t be applied on a project, then take the opportunity to decouple it or package it in a way that can be used as a tool that could be picked up by others in the organization.

For the last 7 years, I’ve worked for ITG; a digital consulting firm (www.itgfirm.com) delivering IT systems modernization and business transformation. I was hired as the tenthh employee and it’s grown since to 400+ people working in various sectors in the Government developing solutions utilizing the latest technologies and platforms. I joined ITG because of the startup culture, ambition, and vision it had. In time with rapid growth, the culture seemed to disappear, but through a top down vision and desire to maintain these traits, and people actively working to preserve them, steps have been taken to keep and nurture it.

It’s a balancing act in a unique environment here in the D.C. area in the GovTech space that ultimately benefits everyone involved. The customer, the company, and the employee.”

https://washingtontechnology.com/articles/2019/08/06/insights-sharif-start-up-culture.aspx

ABOUT THE AUTHOR:

Sharif Aboulnaga is a program manager at ITG ofArlington, Virginia, and is co-founder of the startup Doumari LLC, a mobile app developer.

Air Force Wants Startups To Answer The Call For $40M

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Alex Kendall of Wayve on Centre Stage during the PITCH Final during day three of Web Summit 2018 at the Altice Arena in Lisbon, Portugal. (Photo by Diarmuid Greene/Web Summit via Sportsfile)

“FEDSCOOP”

“The Air Force will hold its first Air Force Pitch Day on Mar. 6 in New York City, offering startups the chance to win small awards for their innovative ideas that same day.

The service has allocated up to $40 million for the event. Startup companies and small businesses will have the chance to win up to $158,000 each.”

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“Many mind-blowing ideas are being birthed in U.S. startup companies, but the Pentagon largely misses out on them,” Will Roper, assistant secretary of the Air Force for acquisition, technology and logistics, said in a statement.
Pitch Day will mirror private sector pitch competitions, allowing for a smarter and faster delivery of awards during the event.

Roper’s further commentary on the event clearly reflects that he wants to avoid the sluggish contracting process of the federal government.
“For our big bureaucracy, awarding a contract in months is a flash. The Pentagon must do business at the speed of ideas: inspiring and accelerating startup creativity toward national security challenges,” Roper said.
The Air Force posted topics online Nov. 29. They are the subjects and problems that the Air Force is using to guide the pitches.

The service also released further criteria to help guide those who wish to submit their ideas. The ideas must have the primary task of advancing national security in the air, space and cyberspace.
To make this as clear as possible for contestants, the Air Force outlined three areas of particular interest:

*Command, Control, Communications, Intelligence and Network Technologies

*Battlefield Air Operations Family of Systems Technologies

*Digital Technologies

Submissions for pitches opened Jan. 8 and will continue through Feb. 6. Then the Air Force will take a week review the submissions and invite finalists. On Pitch Day, the Air Force will select same-day winners and award payments via credit card.


Any award will be a nondilutive, meaning startups won’t have to give up any ownership stake for the investment. Participant companies must be U.S.-based and more than half of its owners must be U.S. citizens or legally reside in the country.


In 2018, the Air Force hosted a similar type of pitch event called Spark Tank, during which airmen were “able to compete and pitch their ideas to increase the lethality of the force, and to reduce the cost of bringing power to the fight,” as Secretary Heather Wilson said. Of course, that event differed in that it was limited to only Air Force service members pitching. “

New Army Challenge Looks To ‘Enhance Engagements’ With Startups

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Army Engage Entrepreneurs

“FEDSCOOP”

“The U.S. Army is looking to build more relationships with tech startups and other “non-traditional defense partners.” And there’s a total of $1.95 million up for grabs.

The goal is to “enhance engagements” with the entrepreneurial community and improve the Army’s understanding of what’s potentially available, while integrating some of these innovators into the military’s tech ecosystem.”


“The Army Expeditionary Technology Search — or xTechSearch — is an initiative of the office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology, also known as ASA(ALT).

xTechSearch is a novel approach for linking innovators directly with the Army labs, with a focus on lowering the entrance barriers and spurring innovation,” the challenge page reads.

The prize competition will run in four stages between now and April 2019. The final winner will walk away with $200,000 in addition to intermediate prizes at each stage of the challenge.

The challenge outlines a number of specific “Army modernization priorities.” These include next generation combat vehicles, air and missile defense systems, “soldier lethality” and more. The Army imagines that participant startups might, for example, provide next-generation radar, better soldier protection equipment, gun-based unmanned aircraft systems or the necessary hardware and software to secure tactical communications.

The first stage of the challenge is open to all small businesses interested in pitching “novel technology solutions — a new application for an existing technology or a new technology concept entirely — to the Army.” This stage requires a tech proposal white paper, of under 1,000 words, due by July 11.

The submitted proposals will be judged by team experience, viability and, most importantly, “Potential for Impact/Revolutionizing the Army.”

Up to 125 winners at this stage will get $1,000 and an invitation to move forward with phase two.”

https://www.fedscoop.com/army-challenge-xtechsearch/

 

Managing Risk in Small Business Federal Government Contracting

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Image:  Govconadvisors.com

The challenges and difficulties for the small business in government contracting are not so much in the areas of barriers as  they are in lack of knowledge (which I concede is a form of barrier but one that can be dealt with)

Large business and government agencies take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows about the Federal Acquisition Regulation (FAR) and associated Cost Accounting Standards (CAS). This leads directly to abusive practices.

A prime example of an abusive practice is large corporations signing  teaming agreements during proposal efforts and then not awarding  subcontracts to the small enterprise as agreed, keeping the majority of work for themselves.

Agencies take forever these days to put in place actual prime contracts after source selections and award to a small business. They do not realize that a small enterprise does not have deep pockets and must have cash flow to sustain a new program with new employees.

Funding levels on IDIQ and Omnibus programs are insufficiently committed and the small enterprise is not adequately informed about limitation of funds and  funding exposure.

http://www.smalltofeds.com/2007/09/limitatoin-of-funds-and-funding.html

I have seen enough small  businesses succeed in the government contracting field that I am  convinced that the government needs more active roles in education of  the small enterprise and more trained contacting officers that understand the limitations of a small business.

The most common traumatic situation I encounter is with newly  established businesses who have won their first government contract and  have no CAS compliant job cost accounting system in place to bill it  out. The government has assumed that capability will materialize and  when it does not they audit the bills, find no backup and shut down the  cash flow until the system is fixed. At that point the business can fail. The company should have been educated much earlier in the process about these requirements.

http://www.smalltofeds.com/2012/09/what-small-business-should-know-about.html

The number of poorly performing SETA contractors in roles not suited  to them in contract administration support is increasing in federal  agencies. These firms need to be vetted and better managed for the  omissions and commissions they contribute to the above.

http://www.smalltofeds.com/2012/07/is-small-business-federal-government.html

Not every small enterprise can get  into a class on government contracting at George Washington University,  The Defense Acquisition University or send their personnel to lengthy  and costly seminars conducted by organizations like the National Contract  Management Association. These are  great education sources but do not  come close to filling the complete requirement and they cost time and money.

The contracting officer and his staff as well as larger enterprises need to be upgraded in the skills necessary to guide – not abuse – the small business in federal government contracting.

Defense Companies Courting Startups: Fad or Lasting Trend?

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Image: “Forbes.com”

“NATIONAL DEFENSE MAGAZINE”

“The aerospace and defense companies are “getting the message that we need to spend more time outside of our world and participate more broadly in the technology ecosystem,” Ryder said.

There are products out there that defense contractors don’t even realize exist.

During a closed-door meeting with top industry executives last month, Defense Secretary Ashton Carter once again sought to drive home the message that companies need to break out of their cocoon to help the Pentagon bring the next wave of innovation.

The conversation touched on familiar topics, according to participants, but Carter seemed especially animated by one executive’s comments about a recent industry “speed-dating” event where commercial startups were invited to hear about business opportunities with defense contractors.

“His eyes lit up when Raanan talked about this,” recalled Bob Edmonds, vice president of Elbit Systems of America.

Elbit CEO Raanan Horowitz gave Carter a brief account of the matchmaking event, hosted by tech startup SwitchPitch, where major defense contractors sought to attract commercial innovators that typically do not do business with the government.

This sounded like the type of outreach Carter had been wanting to see in the defense industry as Pentagon officials have grown increasingly worried about the military’s eroding technology edge and the cultural divide between the commercial and defense sectors. The most innovative industries in decades past were embedded in the defense establishment, but they now live in separate worlds. Carter and others fear that the Pentagon and its top contractors have built walls around the sector, keeping out innovators and creative thinkers.

The SwitchPitch model is one of many avenues that defense contractors are pursuing to “see what’s out there,” Edmonds told National Defense.

A four-year old venture, SwitchPitch was created to offer scrappy startups and small businesses an opportunity to break into corporate America. The meeting the company hosted in September in Arlington, Virginia, was the first one that focused on the defense and aerospace markets.

About 50 startups attended from across the country. Seven projects were pitched by BAE Systems, Harris Corp. and Elbit Systems, and 98 speed-meetings were held between large contractors and startups. Jerry McGinn, the Defense Department’s principal deputy director of the manufacturing and industrial base policy office, spoke at the event about the Pentagon’s desire to create new paths into the defense market.

Everyone seemed pleased by the results, said Michael Goldstein, president of SwitchPitch. The positive reaction speaks to the vast appetite for innovation in defense and aerospace, he said. The company provides a software-as-a-service platform for large companies to manage their startup and small-business engagements.

Glacier Point, a defense industry consulting startup, was hired to help organize the meeting and vet the participating startups. “We were seeing a major demand signal for non-traditional sources of technology,” said CEO Jeff Ryder.

The conventional wisdom that the defense sector is not appealing to the tech world does not apply in this case, Ryder said. “Startups were thrilled to be able to get into targeted conversations with multibillion dollar companies. It wasn’t abstract. They asked for specific things.”

Beyond the initial “discovery” phase, the next step is to figure out the business model for injecting startups into a “repeatable process in a defense company,” said Ryder. “That part is still in development.”

In the wake of Carter’s initiatives to court tech firms around the country, Ryder sees a huge opportunity to spread the SwitchPitch matchmaking model across defense agencies and military services.

BAE, Harris and Elbit pitched projects that were grouped in several major categories: precision navigation in GPS-denied environments; detection, identification, tracking and presentation of battlefield data coming from multiple sensors; tracking and classification of commercial drones; reducing size, weight, power and cost of electro-optics devices; public safety communications; cockpit and avionics solutions to reduce helicopter crew workload; and machine learning algorithms for radio-frequency spectrum analysis.

These are areas where the Pentagon is seeking “discriminating advantages in the future,” said Edmonds.

After hearing the presentations, the startups introduced themselves to the large contractors in a round of nine-minute “speed dating” sessions.

It was an eye-opening experience, said Elbit’s Chief Innovation Officer Doug Sandklev. “We heard about technologies we didn’t know were available.”

One such surprise was a product to help identify legitimate 3D-printed parts from counterfeits. A company named InfraTrac offered it as a solution to the aerospace industry’s growing anxiety about the proliferation of rogue components. A chemical “fingerprint” is inserted into the layers of material, and companies can detect it using a commercial chemical analyzer.

Sharon Flank, founder and CEO of InfraTrac, said the company has worked primarily in the medical devices and athletic footwear sectors, and is now becoming aware of promising opportunities in aerospace and defense. “I’ve seen printers that print circuit boards and connectors,” she said. “Counterfeit electronics is a big issue.”

Following the SwitchPitch event, Flank was invited to follow-up meetings at Elbit and BAE Systems, she said. “We’ll see what happens.”

Sandklev said many of the startups are wary of working with defense companies for fear of inadvertently giving away trade secrets. “Intellectual property issues are a top concern,” he said. There is no clear-cut answer to protect small businesses from the “big integrator taking his idea and running with it.”

The solution is probably a combination of teaming and licensing arrangements, Edmonds said. “We try to create a win-win.” There are times when large defense contractors will decide to buy a company so they can take ownership of the IP. “Do we look for targets to buy? Yes,” he said. “If there’s a conversation where the company entertains acquisition, it can happen.”

Ryder agreed that, of all the headaches that startups try to avoid in pursuit of government contracts, none is more daunting than the protection of IP. “Depending on the level of engagement, the barriers are not that bad,” he said. “Government contractors could do a better job articulating how they could work better with commercial companies.”

He expects more of the Pentagon’s large contractors will be motivated to work with startups, not only because of potentially lucrative IP but also to help change established companies’ culture and business models, Ryder said.

“Startups can move very quickly,” he said. “Having startups in your portfolio should have a cultural impact in terms of learning how to do things more quickly.” Commercial tech companies, unlike what some analysts have speculated, are not a threat to defense contractors, said Ryder. “A lot of contractors need to think about fundamental changes to their business models.”

John Kelly, vice president of business development at BAE Systems, said he found the SwitchPitch approach “quite effective.” What they offer are not “exquisite DoD needs” but technologies that the military is eager to acquire to modernize aging systems. “I went looking for three things and found five.”

He does not see IP issues as deal breakers. “We can license the IP, perhaps we can acquire the company. There are legal frameworks for that. Those problems have been solved.”

There are however unresolved questions about how the defense industry will integrate commercial technology and whether companies are truly committed to an “open systems” approach.

The issue was raised recently by Air Force Gen. Paul Selva, vice chairman of the Joint Chiefs of Staff. “For those of you in industry, I can’t tell you how many times I’ve asked the following question: ‘Will your widget subscribe to an open architecture?’ Answer is always, ‘Oh sir, of course.’” But when the government asks for a new upgrade to make the system more useful to the military, the response is, “Oh, sir, we can’t do that. It is an open architecture but only inside of our company or only inside of our proprietary IT,” Selva said at a Center for Strategic and International Studies forum.

The innovation sought by the Pentagon, said Selva, requires “resilient open architecture to which all of our systems can subscribe, and we’ve only scratched the surface on that.”
Kelly said the industry is well aware of these demands, and he cautions that commercial startups are just as leery of open systems as defense firms because they want to protect their IP. “DoD doesn’t want proprietary systems any more,” Kelly said. “But small companies, as they transition from commercial to defense, have to understand DoD doesn’t want to buy significantly IP-restricted systems.”

The massive flow of private investment into startups has created expectations in the Pentagon of faster, less costly development, Kelly noted. “But some of the constraints in the federal acquisition regulations are challenging when it comes to leveraging commercial technology,” he said. “DoD is trying to work through those issues.”

The push for innovation that Carter has championed, meanwhile, has spawned a broader debate about the Pentagon’s rigid ways and whether change also needs to happen from within. That has been the theme of an annual gathering of military officers and industry executives at the University of Chicago dubbed “Defense Entrepreneurs Forum.”

The forum’s executive director, Jim Perkins, is an Army engineer who has long been frustrated by what he describes as hidebound thinking across the Defense Department that stifles innovation.

“Our mission is to change the culture in the military,” he said. “We are incredibly bureaucratic and risk averse.” When the military is overseas fighting wars, commanders are allowed to take risks with technology if it might help win or save lives, he said. “But when we come back to the United States, no matter what your idea is, we categorically tell you, ‘No.’”

One encouraging development was the creation of the Defense Digital Service, he said. A Carter initiative, the DSS was set up to fix technology problems and was given authorities to cut through the bureaucracy. “It’s very empowering, and has made a lot of impact so far,” said Perkins.

In the grand scheme of things, the key is to develop leaders who are not afraid to innovate, he said. “We are not cultivating ‘out-of-the-box’ thinkers.”

http://www.nationaldefensemagazine.org/archive/2016/december/Pages/DefenseCompaniesCourtingStartupsFadorLastingTrend.aspx

 

 

Federal Agencies Challenged in Attracting Tech Startups

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“NATIONAL DEFENSE MAGAZINE’

“Entrepreneurs and innovators in commercial industry are just as patriotic as those who work in the traditional defense industry. They’re not comfortable on the long lead time and very long development cycles.

They are not comfortable inside the Federal Acquisition Regulations.

Startup companies and young entrepreneurs were largely absent from the Air Force Association’s air, space and cyber conference this week, an issue that came to a head Sept. 21 during a discussion among the Air Force’s top officers.

To speed the acquisition of commercial technologies and bring new companies into the fold, Defense Department leaders have been reaching out to firms in technology hubs such as Silicon Valley, Boston and Austin. But the AFA conference in National Harbor, Maryland, one of the most prominent annual defense industry expositions, was dominated by traditional contractors that have been doing business with the Pentagon for decades.

A panel of four-star and three-star general officers was asked by an audience member about the notable absence of the non-traditional companies that defense officials have been courting.

“Why would you expect to see a millennial at the opera?” said Gen. Ellen Pawlikowski, commander of Air Force Materiel Command. “By that I mean the forum that’s here for AFA and the booth concept is not the environment that the entrepreneurial community that … we engage with is one that they come to.”

“It’s not of interest to them,” she added. “That’s not their culture.”

The Defense Department will have to court them, not the other way around, she said. Pentagon officials must make a concerted effort to meet them on their turf, she noted.

“We have to reach out to the forums and to the venues that they go to,” she said. “That will put some of us out of our comfort zone that we’re used to participating in, but that is the way we have to draw them in.”

Secretary of Defense Ashton Carter has made several high-profile trips to Silicon Valley and other centers of innovation. Last week, the Pentagon chief attended a TechCrunch Disrupt conference in San Francisco, where he tried to persuade cyber technologists to work for or do business with the Defense Department

At a venue where a Pentagon official wearing a business suit looked like a fish out of water, Carter fielded tough questions. Some, including one about marijuana use, would be considered way out-of-left-field if they had been asked at a traditional industry conference.

Pawlikowski noted that she attended a venture capitalist conference in Los Angeles focused on space issues, with positive results.

“After I finished, I had about a dozen venture capitalists come up to me wanting [me] to know that they had entrepreneurs that were interested in getting involved in this business and [asking] how could they get involved” with the Defense Department, she said.

But the Pentagon’s acquisition process sometimes causes headaches for those involved in outreach efforts to non-traditional industry and startup companies.

Air Force Materiel Command has made a concerted effort to draw in commercial firms with small business innovative research funding, Pawlikowski said.

“What we found though that is if we just leave it up to our usual devices of going out and putting out, ‘Here’s our topics we’re interested in,’ we will get shall we say the more traditional small business” to respond, she said.

“It doesn’t necessarily attract the entrepreneurial business base as a general rule,” she added. “In fact, sometimes our definition of a small business actually makes it hard for that entrepreneurial business base to participate, because if a venture capitalist invests in an entrepreneur then they no longer qualify as a small business, for example.”

Gen. Paul Selva, vice chairman of the Joint Chiefs of Staff, echoed concerns about the hurdles thrown up by the often cumbersome acquisition process.

The Pentagon has been pursuing different paths of engagement, he noted.

“What we have to do and what we have been doing is trying to nurture relationships with those small companies by placing bets and asking them hard questions and giving them some time to chew on them,” he said.

They’re wiling to give their intellect to the questions we’re willing to ask,” he said. “We just have to find an environment that they’re comfortable operating in.”

http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2311

 

Silicon Valley’s Most Secretive Startup

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“THE MERCURY BUSINESS NEWS”

“Ranked as the third most valuable private company in the United States, Palantir rents about 20 downtown Palo Alto buildings.

The company’s products, named Gotham and Metropolis, comb through massive amounts of information to find connections between data points.

Launched in 2004 by a team that includes PayPal founder Peter Thiel, Palantir makes data analysis software that is rumored to have helped U.S. forces track down and kill Osama bin Laden and prosecutors convict Ponzi schemer Bernie Madoff.

As the $20 billion company expands, it has brought legions of techies to downtown restaurants and coffee shops. But what one local investor dubbed the “Palantirization” of Palo Alto also has sparked concerns that the big-data giant has left little room for smaller startups.

“They own Palo Alto,” said local entrepreneur Joe Beninato, founder of Internet startup S8. “There are Palantir people all over the place in Palantir shirts and hoodies. It’s kind of like downtown is their office.”

Launched in 2004 by a team that includes PayPal founder Peter Thiel, Palantir makes data analysis software that is rumored to have helped U.S. forces track down and kill Osama bin Laden and prosecutors convict Ponzi schemer Bernie Madoff. The company’s products, named Gotham and Metropolis, comb through massive amounts of information to find connections between data points. Since much of that data is highly confidential, Palantir is notoriously tight-lipped about its work.

But its popularity among government agencies and law enforcement has led to booming growth. Palantir employed 1,800 people last year and pulled in $1.5 billion in revenue — showing more than 100 percent revenue growth over the year before, according to PrivCo, which aggregates and analyzes private company data.

Palantir declined to comment.

Unlike other fast-growing companies such as Apple, Google and Facebook, which consolidate employees in massive campuses, real estate experts say Palantir seems committed to making a long-term home in downtown Palo Alto. The private company hasn’t released details about its office spaces, but information from researchers such PrivCo, real estate advisers, the city and Palantir’s many landlords paints a picture of the company’s expansion strategy.

PrivCo reports that the company currently rents more than 250,000 square feet in downtown Palo Alto. That’s about 12 percent of all available commercial space in the downtown area, based on data from Jones Lang LaSalle, a Chicago-based commercial real estate services firm.

Palantir’s empire starts with its headquarters, a stately brick building on Hamilton Avenue. Employees eat at the company cafeteria around the corner on High Street, and some work in smaller offices scattered throughout downtown. Palantir rents additional special event space, kitchen space, and residential units to house visiting employees — mostly within a half-mile radius of Hamilton Avenue. Recently, the company leased even more room in a historic building on the corner of Hamilton and Ramona Street.

To protect clients’ sensitive information, Palantir also needs special high-security facilities that can’t be penetrated electronically or physically by eavesdroppers, the company wrote in a 2009 blog post. These spaces, called Secure Compartmented Information Facilities, are fitted with shields that block cellphone reception, public Internet access and all other outside signals. If Palantir has such a facility in Palo Alto, it’s keeping it low-profile. But that’s the point, said Baltimore-based SCIF expert James Wallace of Gensler, an architecture firm.

“From the outside you would not be able to tell,” he said.

For the Coupa Cafe, across the street from Palantir’s new building, the company’s expansion is both a blessing and a curse. The new office will bring in hundreds of potential customers, said owner Jean Paul Coupal, but it also contributes to rising rents.

“Palo Alto will become a town that serves $8 lattes,” he said.

The company has made an effort to be neighborly, hosting coding classes for high school students and using its software to support a county effort to house the homeless.

Palantir, which reportedly signed a lease lasting more than 10 years for its new building, appears to be hunkering down just as other tech companies are leaving downtown Palo Alto. SurveyMonkey outgrew its Palo Alto headquarters and announced a move to San Mateo last summer. Pinterest moved to San Francisco in 2012. Smartwatch-maker Pebble and mobile marketing startup Kahuna moved to Redwood City last year. And Facebook, which had 10 buildings in downtown Palo Alto, moved into the Stanford Research Park in 2009 before ultimately settling in at its Menlo Park campus.

“They’ve gone a completely different route than what most companies have done,” PrivCo analyst Evan Danckwerth said of Palantir.

There are plenty of benefits to a downtown campus. Easy access to Caltrain and restaurants, coffee shops and bars makes the location a boon for current employees and a handy recruiting tool. But it’s getting more difficult for large startups to grow in Palo Alto. Average yearly rents for commercial spaces downtown have jumped from $71 per square foot to $102 in the past five years, according to JLL. Meanwhile, availability hit a seven-year low last year, dropping to less than 3 percent. The space crunch isn’t likely to ease soon. The city recently limited development of new offices and some other commercial spaces to 50,000 square feet per year downtown, in the California Avenue area and along the El Camino corridor.

Palantir is planning for future growth by leasing some spaces that are larger than it needs, and subleasing to other businesses, said Bradley Van Linge of commercial real estate advisory firm Newmark Cornish & Carey.

Michael Evans, founder and CEO of Palo Alto-based Flosstime, partly attributes ballooning rent prices to Palantir’s large presence. Flosstime, which makes a smart dental floss dispenser, can’t afford to move out of the space it has outgrown in the garage behind Evans’ house. But, he said, Palantir’s expansion is part of the Silicon Valley cycle — companies move in, grow, drive up prices and, in some cases, move on.

“I don’t see that as negative,” Evans said. “I see it as what downtown Palo Alto’s about.”

Silicon Valley’s most secretive startup is scooping up Palo Alto offices

 

 

The Pentagon Wants You To Tell Them What To Invest in for the Future

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“DEFENSE ONE”

“The Pentagon is asking for ideas from the private sector on breakthrough technologies to guide military investment for the next decade and beyond.  If you care to tell the military what they should invest in for the future, the link is here.

On Wednesday, Defense Department officials issued a request for information calling on interested parties “to identify current and emerging technologies…that could provide significant military advantage to the United States and its partners and allies in the 2030 time frame.”

It’s a sort of prelude to the not-yet-revealed offset strategy, the Pentagon’s ambitious plan to develop technology to put the United States decades ahead of rival nations like China and Russia in short period of time.

Previous examples of offset breakthroughs include precision-guided weapons and stealth. The concepts that win the current competition could shape weapons investment — indeed the military itself — well into the next decade.

“We’re after a competition of ideas,” Deputy Assistant Secretary of Defense for Systems Engineering Stephen Welby said on Wednesday during a briefing with reporters. “It’s a good time to ask, what’s the future of the department look like? That’s what we’re asking here.”

Who are they asking? Silicon Valley first.

“We made the pilgrimage to the Bay,” said Welby, referring to that American Mecca of computer technology, San Francisco Bay. They “talked to people in the start-up world about bets that they’re making. We would love to hear from folks in those communities.” That includes everyone from hotshot, 20-something social network magnates to “billionaire hobbyists” with rockets and moon ambitions.

There’s just one problem, no matter who you ask, predicting what sort of technology will remain relevant decades into the future was a lot easier when the Defense Department first attempted it 30 years ago. “The crystal ball worked pretty well,” said Welby, when the United States had but one major adversary in the Soviet Union and exclusive domain over the most cutting-edge research and development.

That’s no longer the case. New breakthroughs are copied, innovated against and rendered obsolete as quickly as the Internet spreads to new portions of the globe. Just look to the most recent Gartner report on those futuristic technologies that are already over the crest of the hype cycle like “big data” and “augmented reality,” technologies that have reached the point of investor saturation long before becoming household names. Inventor and futurist Ray Kurzweil posits that, as a result of information technology, the rate of technological advancement will increase by a factor of 5.6 per linear decade.

Without validating Kurzweil’s figures, Welby said that, broadly speaking, it’s a problem that the military is aware of. “The reality is that we’re not likely to get a 40-year run out of any technology,” he acknowledged. “You won’t have a 40-year advantage.”

The best bets include more capable robotic systems, commonly known by the shorthand, autonomy.  “The emergence of autonomy is a real shaper,” of the military approach to securing technological dominance in the future, said Welby. “The ability of systems to react to their environment…autonomy is an emerging technology with strong applications,” he said.

(RelatedThe Pentagon’s New Offset Strategy Includes Robots)

The request for information lists five broad areas of exploration: space, undersea, air strike, missile defense and “other technology-driven concepts.”

Does it make sense to plan that far into future given the rapid pace of technological progress? Mathew Burrows, the director of strategic foresight at the Atlantic Council and author of The Future Declassified: Megatrends That Will Undo the World Unless We Take Action (Palgrave, 2014) applauded the effort as timely, if not overdue. His only criticism:

“The five focus areas seem very constraining. There will be a lot of emerging technologies that don’t fall neatly into one or the other of the categories. Hopefully [the Defense Department] will look beyond their five constructs to see how emerging technologies—that don’t fall neatly into one of them—could transform the battlefield of the future.”

http://www.defenseone.com/technology/2014/12/pentagon-wants-you-tell-them-what-invest-future/100433/