As commercially developed space technology becomes increasingly common in government and defense operations, companies face the question of how closely to embrace that side of the industry. How can startups and growing companies better understand and navigate the complex world of dual use?
Foreign We'll try and make it uh entertaining For you all and informative Um I think this is Um the most military and DOD Representation at a tech tech crunch Conference that I've ever seen so it Certainly speaks to the fundamentally The fundamentally dual use nature of Space technology and that's what we're Going to talk about Um today uh Mel maybe you can start us Off Um Maybe set the stage for us you're coming From the U.S Air Force now you're in the Startup World Um why do we need to have a panel on This like what are the main challenges Of working in a dual use domain sure Yeah so in 2017 I decided to retire from An awesome career in the United States Air Force after serving 21 years and I did two things in the Air Force the First eight years I flew in the back of A surveillance aircraft that was pulling Lots of data together and trying to get That down to our uh folks in in low Latent time frames I learned a Tremendous amount as a young Airman I Was enlisted going to school nights and Weekends and crossed over to become an Officer I couldn't wait to get to the
Space side and there I did things that We do at slingshot today Space control and space situational Awareness and really understanding where Spacecraft were in relation to other Things whether that was the physical World of other debris and satellites and Defuncts or whether that was in relation To The non-physical so weather and those Types of things RF et cetera it was During that time though that I got to See from a unique perspective industry Partners coming into the center just Down the road here to pitch different Ideas and the tenacity and the Vigor in Their eyes and and to know that if those Things happen like reusables for example If that happens We are going to have a problem because We do not have a digital infrastructure Capable of holding what reusables will Put on orbit in record time and it was Then that I started to understand that Um you know the the air force uh Equipped me with leadership skills Through 21 years I still think maybe I'm Biased great leadership organization but It was then that I decided hey I've got The equipment to really build a team I'm Technically inclined and we have to Solve this for National Security First And then democratize it for commercial Second and really we've got to do those
In parallel can I build a team to do That and the answer was yes and so made The hardest decision in my life which Was to get out of well not get out but Retire from this awesome career that I Loved to do this and we have had Tremendous success in doing this now in The beginning we cast way too wide in That but let's get back to why it's Important that we do dual use Technologies and there's like three Different definitions and I'm sure we're Going to get into that of dual use but It's important for National Security Number one it's also important for our Placement in the world the United States Has a rich ecosystem of entrepreneurial Capability Um we need to keep that we cannot lose That it's part of our economic viability It's also part of our placement on the Global stage and so for me dual use Technology is very important to Accelerate technology to get better Roi On taxpayers dollars and to reduce the Time to Mission impact and for space Space isn't jurisdicted It doesn't have rules of the road and It's a global tenet of our economy it Has to be sustainable so that's why I do This that's why dual use Technologies From companies like slingshot and others Are super important to the the future of The United States International Security
Space Uh so following up on that Pete What are the challenges there when you Talk to companies when you talk to Private Industries what are the things That are most overlooked and what are The biggest uh challenges that would Maybe prevent a company from engaging With nro or other defense Partners well I think the uh a big item especially as We're looking at emerging commercial Companies um is frankly just a lack of Infrastructure especially kind of the The larger security apparatus that a lot Of our big Prime contractors have and Have had for a long time Um so uh so so building that up to the Extent it's appropriate and then frankly On our side especially as we're looking To procure commercial data which is Generally unclassified Um you know we're doing everything that We can to lower that barrier to entry as Well uh you know make it that much Easier to uh to kind of onboard get a Contract you know the contracts are Generally unclassified and we'll work Hand in hand to uh to to develop all the All the others kind of security Perspectives and other Um other areas of expertise that we do Expect contractors of ours to to hold That ranges from you know traditional Security you know some of the unique
Contracting things just by virtue of a Federal organization that we have to do But then also cyber security as well you Know we do have a kind of a nuanced Approach to that making sure again we Can start with a very low barrier entry You know not uh certainly not try to Choke Innovation out of a lot of these Emerging capabilities but but where we Can add layers of maturity areas of Assurance and frankly confidence on our Side we're able and willing to do that Hand in hand and so over time Um you're finding the nro is trying to Lower barriers to entry for newer Younger startups we certainly are and we Have a couple specific programs underway Okay do that well I would love to talk With you about that um I have uh a quick Follow-up for Mel and then I want to Bring a waste into this as well Um Thinking about how can a startup Integrate certain practices principles From day one to best Poise them for Working with defense what do you have Any thoughts about that yeah it's Relationships first right and so if you Have relationship with the knowledge Bank that that is the acquisition system Of the United States government that's Going to help a lot but it's Relationships uh between the people in Your company and uh the distance between
That big Federal acquisition regulation That's between you and that person you Gotta you gotta narrow that Gap and so My advice to any company that's going to Do National Security Capabilities development Etc is one Don't start off doing one-offs at all Keep pure to your commercial roadmap and Make sure you've got adequate folks on Your team that understand the Acquisition system thoroughly and those Methodologies therein and then make sure You've got relationships on the other Side of that far to do it Great Um a waste I want to bring you into the Conversation Pixel is working on some really Interesting technology it was founded by Four of you when you were students in India and so you didn't have access to Certain funding mechanisms like sbir but You have now not only do you have Technology in orbit but you've also Worked with different U.S agencies so Maybe talk to me a little bit about the Challenges not having access to certain Programs certain mechanisms and but then Also the kind of opportunities you've Been able to exploit yeah and I think Thanks for that we started in 2019 as we Said we were still students we broke all The rules of traditional how do you do a Startup we didn't start off with the
Market we didn't start off with talking To customers we said here's a cool Technology no one's done it let's let's Go out and build it right so Mel said She retired from the Air Force you know I retired from studying while at college And then got into pixel Um but but when we started we we sort of At least had an idea that the United States was place to be right it's where The biggest space ecosystem is it's Where the biggest military industrial Complexes and and regardless of how we Wanted to use our data for for creating Uh environmental use cases and measuring The health of the planet we also knew That this data will be required for National Security bringing more Transparency Um in the world so we set it we set up The the headquarters here in the in the United States Um and and the first experience that we Had in 2019 was being part of this Techstars accelerator right here in in La so as soon as we graduated the first Thing was we took a plane we landed in L.A we were part of the techstar space Accelerator we were working with the US Air Force Lockheed Martin JPL where Mel Was an advisor Um so I think that really we showed us The difference in terms of the the Industry that exists or the ecosystem
For space that exists outside versus Here out of the 10 cohort companies in The accelerator seven of them were us Domicile but also U.S owned whereas we Were is domicile but not us one because You know we started as Indian citizens So as you said we didn't have access to Any of the early stage grant funding Such as the sbirs or Africa space works That would give us access to a few Millions of dollars to start with but I Think that actually really helped us uh Later on as we see it now we we knew That we had to focus on Commercial Customers because in the end you can Obviously work with the government but If you don't have a commercial ecosystem To go with that where you have recurring Repeat contracts that you can that You're able to predict on a yearly basis And and how you can grow that like any Other startup would that becomes a Really good add-on to to what you're Working with the government so we had to Then focus on really building the best Technology regardless of what anyone Else was telling us and and thankfully Hyperspectral Imaging that we were Working on happened to be a use case That not only you required in in ag oil And gas mining or environment you Actually needed it Um for obviously looking at uh different Intelligence and security purposes as
Well so now now that there are different Uh different ways of actually engaging With the with the industry nro came up With a baa for hyperspectral Imaging Just a few weeks ago you know which we Are going through the motions for and uh You know thankfully that's that's been Open there so I would say that the Challenges have been fairly similar in That we had to completely really look at How we were set up as an organization How the auditing would happen and all The different registrations that we had To go through but as long as you have an Idea of what your Tech is and how you're Going to execute on it I think those are The challenges that can be overcome okay Um I'm really excited to have slingshot And pixel represented on this uh stage Both of you Um have raised notable amounts of money Slingshot just closed Um another round of funding today that Was announced today so congratulations Um Something that uh startups do need to Think about Um in partnering with with defense and And in the Dual use nature space Technologies is who they're accepting Money from right where is the money Coming from and sometimes Um you don't know where the source of The money that that you know a VC is
Offering you really is from so what kind Of due diligence Um Can Founders do Um I would love to hear from both of you And then uh Pete if you have any Thoughts as well or any advice in this Regard I would like to hear from you as Well Yeah certainly so for Founders very Important to get to know the CPS office Don't ask me what that stands for Because it is a very long acronym Um but that's the first place that that We went and said hey we want to raise Capital to accelerate this capability uh In parallel to taking in non-dilutive Capital from government contracts to Accelerate this road map to do that Um they checklist you know hey if There's like this many countries you Cannot take money from an advanced space Technologies right number two when you Do take in VC dollars those they VCS go Out and raise money right and those are Funds and they're made up of LPS and Those LPS can almost come from anywhere So we have to dive a step deeper with Our VCS and understand what LPS are Presenting money here and then from your Cap table perspective you have to make Sure that you know only a small Percentage of your overall cap table is From foreign investment and so Um it becomes clear when you make that
State department run and and make sure You stay in lockstep with cepheus for us We were fortunate enough from from my Background and those that we started Hiring within the company to keep a Percentage of that knowledge base inside The company we were fortunate to to come Pre-baked with that knowledge and and The knowledge at least enough knowledge To know that they had to be our friends Right cepheus has to be your friend Did you have any thoughts yeah so I Think it's it's fairly similar to that Cepheus is a big one so Committee of Foreign investment in the U.S You're when you're building for Something as critical as space Technology which has a geopolitical Angle to it you need to look at it from A from a long-term perspective you know It's easier to set that done given that You need lots of capital to actually Build Hardware in space and and send it Up to space but when you're looking at It from a long term you need to uh be Very careful of the investors that you Are bringing on board right there's There's this I would say there's three Broad spectrums of course the countries That are closest in terms of the Allies Which would be the safest whether that's U.S UK Canada countries that have really Strong relationship I think investments From from there are generally okay and
Then on the other side you have Countries that are a strict no no and we All know you know what those countries Are um and then there's the gray area in Between where it might be okay it might Not be okay depending on which country And and where the relationships go Um so I would say you know uh when You're building for something in space We have at least tried to be very Cognizant that we stick to the the Spectrum where it's it's the United States and the close Ally so I think That's step one and it just it just Doesn't stop at investors right we work With a lot of suppliers in the space Industry we work with a lot of customers We have to be very careful of who our Suppliers suppliers are who are Customers customers are and ensure that All of that is is very clearly audited So as I was mentioning earlier one of The challenges was we had to re-look at How we looked at these processes know Your customers know your suppliers and Ensure that it's it's limited to who Those set of countries where you can Have confidence that these are friendly Allied countries that that you can work With I would say that's something it Would be good for every startup that's That's looking at at being a dual use Technology from the get-go easier said Than done but being very careful in
Choosing your investors being very Careful in choosing your your customers Or t-sellers as well as your suppliers Did you have anything to ask yeah um so So I'll say uh obviously as as we look To buy commercial remote sensing data Which is kind of what my office does and Is concentrated on obviously we do that To one meet Mission and just get data to To meet the Warfighter and intelligence Community analyst needs um but uh but Also we do that in a way and we do that Very deliberately in a way to Incentivize the US industrial base the U.S domestic industrial base Specifically now exactly what Constitutes the U.S industrial base and What Falls outside of that it can be a Very complicated answer and it is very Nuanced and and frankly it's not a one Size fits-all answer and so when you Look at the various rfps that we put out In proposals we get back Um you know the it has varied over time You know sometimes we're very very Strict on uh on you know us ownership And control Um and NOAA licenses and like other Times you know especially when we're Just out exploring you know it's it's a Little bit more flexible but a big part Of that you know back to your original Question is Um the the source of funding from
Venture capitals or otherwise and that Is something we definitely pay a lot of Attention to Um I'm not going to go into many details But uh but certainly you know we are Concerned about foreign influence and Foreign influence by our adversaries Specifically and sometimes that can be Very clear and overt and other times uh You know it's a lot less clear but in Either case it is something that that we Pay close attention to and uh and worry A fair bit about Sure Yeah I mean I think we can all think of Of at least a handful of examples of of Uh foreign influence and and Um dual use domains um Pete I want to Talk a little bit more about nro's Procurement process you you just said That it's not necessarily one size fits All and sometimes you can you have a bit More flexibility Um so I wanted to ask you about that and Then uh just to follow up on something You said at the beginning of the Conversation that there are a few Different procurement mechanisms that I Don't know has at its disposal so can You talk about it absolutely so the nroa Of course that you know just talking About innovation in general has been Innovating in space for a long time I Think we uh you know for just over 60
Years at this point we're putting up you Know capabilities unmatched in the Entire world Um more recently and more and more Commercial capabilities are a big part Of that larger architecture and that set Of capabilities and that's true on the Launch side Um you know on the on the commercial Cloud side you know spacecraft Components as well and of course in my Office focused on procuring remote Sensing data and basically as a service And be that Electro Optical radar RF or Otherwise we do have a couple mechanisms That we've used to to buy that data you Probably are aware and familiar with a Large contract that we awarded earlier This year that we call the electro Optical commercial layer that was a very Deliberate and deliberative approach to Uh to meet a very specific set of Mission needs so you know going back to The sort of requirements we had in place We were quite picky about those both in Terms of specific technical requirements And other Financial requirements as well Um very successful you know I think we Continue to provide data obviously in Service to to our nation Um at very large scales you know it's a 10-year program overall I think that the Total award was uh was somewhere around Four billion dollars over that total
Period obviously a lot of priced options Both in capability Um and uh and time as part of that but But I think uh in addition to just Meeting needs we're also really focused On sending signals to the industrial Base and and frankly to the the Financial side too that we were serious About about procuring that imagery and Supporting that industrial base over the Long term it really was going to be an Integrated part of the larger Architecture not only in capability Space but uh you know kind of in the Broader sense as well Uh in addition to that in addition kind Of to that very deliberate uh Requirements driven approach we also Understand that that commercial industry Is always evolving and innovating and so We do have a separate set of activities Underway to uh to keep up with new Entrants and new phenomenologies and the Like Um so it's under that construct that we Call the Strategic and Commercial Enhancements it's currently run under a Baa broad agency announcement kind of a Paradigm but uh we we awarded a number Of uh I think it's five radar contracts It's a six RF contracts recently over The course of the year so 11 total uh in In that course of the year and it's been A very rapid turnaround as you mentioned
We have a hyper spectral ba on the Street right now we're really eager to See how that flushes out Um but but agility is a key part of that Um not only just you know keeping up With industry but it's really do just in The uh the the Contracting and Source Selection process as well Um I'm actually pretty pleased to be Able to say that that process you know Is averaging around two and a half in Three months to three months uh for Obviously we've done in can do sole Source Awards much much faster within a Day or two if we have to but uh but for Competitive award that was around three Months and half of that time was Actually what the companies themselves Putting together the proposals so it's a Pretty quick way to you know kind of Keep exploring with industry and Definitely something that we intend to Continue doing over the long term Yeah so that that sounds like a real um Evolution on the part of nro I'm curious Um particularly Mel because you did Straddle Both Worlds um you did you know Operate in both worlds are there like Cultural differences that can make this Challenging between a sort of Silicon Valley although that even that Concept is kind of diluted and the kind Of Washington Um military sort of world
Oh for sure yeah and even even within The military there's cultural Differences between operator which Should you should be aiming as your Customer in the end and the program Offices which is that procurement door That most people get in on the r d side There's a valley of death in between That but those two cultures in and of Themselves are way different so there's A little bit of complexity but then you Take into account the VC world the Silicon Valley world the we can now say Austin Texas World the Boston world that Almost everywhere world that has an Entrepreneurial base but um forever they Have not really Liked to invest in defense technology Right and so there's a there's an Education component to that there's a Thesis component to that an investment Thesis component to that and really Really what they're after is ARR high Quality Revenue High profit margin on Those those contracts and repeatability Right predictability repeatability That is not how the military thinks at All Um first you know and that culture has Shifted over time and it continues to Shift in a very good way but when we First started the company it was you Build what I tell you to build right Here's the technical spec right well
That doesn't fit my roadmap that I told You we had to stay pure to Um and but it's a lot of money so it's Really shiny and you kind of want that Money and all of us who have started a Company that do dual use have made that Mistake once if not more And so that cultural divide between the Investors who will not invest in that Drive us towards that shiny penny more Right Um and in the end it actually slows it Down so if you can find those investors That are culturally aligned with what You want to do on National Security and Understand that there's not a single Space company out there that hasn't had Success that has had success that hasn't Had a significant amount of their early Days first 10 years or so Portfolio funded by the United States Air Force or or Other parts in a row Etc it is a huge Component to the foundation of even SpaceX how they got where they are today And so if you can educate the investor On that pathway everyone wants to be Part of the space Revolution now right So that helps but educate them on this Is actually an accelerant if we stay Within the bounds of our product roadmap And oh by the way the same things that Our customer needs inside that roadmap On the government side are the same
Things that our commercial customers Need as they continue to orbit this Earth at least for us at slingshot That's the way we've been successfully Doing dual purpose but it had you just Have to you know bring those cultural Divides together and be pure to your Roadmap A waste we've we've talked a little bit About Um people you know you should not take Money from the ways that there are Cultural differences but um as Mel was Just talking about Investors can be you Know extraordinarily beneficial if They're aligned with your vision if They're aligned with the intention to Support America's defense base and things like That I I know pixel has gotten funding From Jordan noon among others what kinds Of assistance in this regard have you Gotten from investors Yeah I think uh it's the investors come In because they see that there's going To be a big outcome there now in most Cases They Don't Really Care where to Get that big outcome from right um There's obviously the commercial Market But then if the government is going to Be a big big sense of that you need to Be able to communicate that well that uh This might not be the most predictive of Revenues in the first few years it might
Take three years it might take four Years it might take five years for you To get to a point where you are reliably Generating revenue from the from the Government or from the from the Dual use Side of things but as long as you're Able to communicate that to the Investors I think you know um they Understand As Mel mentioned everyone wants to be Part of the space Revolution but Thankfully I think we have also seen an Increase in Venture capitalists that are Okay with uh not only okay with Investing in dual use Technologies but Are focused only on investing in Technologies that are dual use because You're you're seeing how the government Has moved from from being a slow Procurer to now um as Pete was Mentioning there's three months turn Around which you might have never sort Of heard of in in kinds of in terms of Technologies like this so having having The likes of Jordan noon who is who's The CTO at relativity space who've seen Some of these procure maintaining age to The government before obviously helps Reduce our time to learn those exact Same processes and mistakes that we Might have made in that case or in the Case of Ryan Johnson who was the President of Planet Labs who were one of The beneficiaries of the eocl contract
That nro handed out a few months ago Right so I think definitely having Investors in this space who have been There seen that not only directly but Through other portfolio companies Obviously helps shortcut your way into Into those things like you know we have An internal saying don't learn from your Own mistakes learn from others mistakes That's that's generally faster and Easier Um so yeah thankfully the the there's There has been a big gap between Traditional Silicon Valley versus the The defense comp defense industrial Complex there Um but that's that's coming that's Reducing now people Now understand Especially with the with the Ukraine Situation as to why it's important that There be a really strong relationship Between those ecosystems and and you Know that can be seen with how there are Different mechanisms for procurements And how it's it's getting sped up so I Would say yes having them definitely has Been helpful having more of these will Obviously be helpful as we as we go Ahead Um I want to talk just a little bit About customer diversification and how You can think about that as a Founder Um you know there are companies like Maxar where an outsized portion of their
Revenue comes from the government There's startups like Hadrian that are Building specifically and explicitly for Uh defense Um I know pixel I think um I I read Actually a lot of your customers are Commercial customers it's not a huge Portion of of government and defense Um but how do you think about Um that diversification that sort of Um that mix and how to how to balance That Yeah so I think you need to be very Careful in the early stages as to which Markets you are going after you know Well mentioned in a different way you Have you you have you'll have many shiny Objects along the way you might think That this is something that we should Focus on put all our resources on but That might not be scalable that could be A one-off project that then you put all Your energy money and resources into it But then if you can't really reuse that Elsewhere then you have you know in the Long run actually lost a bunch of time And money and effort Um into into doing that so in our case Very specifically look our our mission Statement is building a health monitor For the planet so we always knew that Our use cases and our customers had to Be from from industries that will have The need for this whether that's oil and
Gas companies where we are helping with Greenhouse gas emissions monitoring and Leaks in that cases are trying to Measure the amount of carbon that's Sequestered in different forests and and Things like that so it comes back to That same thing when you have Venture Capitalists on board you are you're Trying to grow your company uh to a Scale where it actually makes sense There it and for that you need not only Different Revenue sources you need those Revenue sources that are that are Scalable and where you have uh Consistency you need to know that these Contracts are going to be multi-year These contracts are going to keep coming If you're going to keep delivering on The quality of your technology and your Services not those one-off projects that Might not really scale everyone everyone Everything goes great until you are Doing one-off pilots and then you know You're getting money but if if those Can't scale then your business doesn't Really grow which is why as as Mel was Also mentioning earlier you need to have Focus on technologies that this large Diverse set of commercial customers will Use but at the same time those exact Same Technologies and services can be Used by different uh parts of the US Government for example so yeah yeah did You have anything to
To that You know diversity of customer base is Super important for any business for us We're fortunate that space is not Jurisdict that we talked about that and That we share it across civil defense And government our civil uh defense and And Commercial right everyone's there Together Um and so that diversity isn't uh as Clear as sometimes it can be with Geospatial But we knew that the preponderance of Our early day Revenue needed to come From government and that if we satisfied The most complex use cases that we Face There that that would answer the mail to The commercial and the commercial Market Would be ready for us at that point it Was not ready for us two years ago or Even almost yeah two years ago we'll say It wasn't ready it's ready now right and We're ready now and now we can take Capability not only that was developed Through those non-dilutive funds and Turn that back around and and sell it Commercially to the government which is The Holy Grail right get it there and Then sell it back commercially but we Can now sell that commercially to the World so and it's the case that the nro Doesn't even necessarily want to be the The main yeah absolutely Um you know it is definitely inner
Interest in something that we're looking Toward and looking forward to is uh we Just want to be a customer right of Commercial Services and we don't want to Be the only customer we don't want to be The anchor tenant if we can avoid it but We want to be one of the customers and That allows us of course to leverage That Capital efficiency cost efficiency And then frankly just back on the Mission side that allows us to put our Other resources building those things That we continue to need to do to uh to Address our adversaries right which are Always getting more and more difficult And making our lives harder and we have To keep developing systems and Capabilities to provide the insights we Need for a National Security perspective On the national classified side but Everywhere we can of course on the Commercial side as well as part of that Larger hybrid architecture yeah great All right well 30 minutes always goes by Much much faster than we think but That's our time so thank you to our Panelists thank you so much thank you Thank you
