Tough Tech Today with Meyen and Miller

Mastering Billion-Dollar Tech Investments & Galactic Defense 💸🛰️👾 featuring Preston Dunlap

September 12, 2023 Jonathan Miller and Forrest Meyen Season 3 Episode 6
Tough Tech Today with Meyen and Miller
Mastering Billion-Dollar Tech Investments & Galactic Defense 💸🛰️👾 featuring Preston Dunlap
Show Notes Transcript Chapter Markers

Standing up a space force within the world’s largest bureaucracy is not for the faint of heart.

Preston Dunlap – former (and first) Chief Architect / Chief Technology Officer of the United States Air Force and Space Force and present CEO of Arkenstone Ventures – has developed a privileged view into the government machinations necessary to design, develop, and buy the right mix of tough tech capabilities. Mission-focused and multidisciplinary, Dunlap and the organizations in which he engaged at the most senior levels have commanded hundreds of billions of dollars in defense acquisitions.

A curious combination of computer scientist, operations researcher, and international relations practitioner, Dunlap walks us through his approach to investing vast amounts of capital into companies and organizations big and small. We also discuss what it is like working within the government, aligning and mobilizing tremendous human resources to solve some of the biggest challenges facing the United States… which may or may not include actual space invaders.
P.S. Tough Tech Today is now open to patron support, so we have launched a pay-if-you-can membership so you can help us bring Tough Tech Today to more folks! 

🎧Listen: https://www.buzzsprout.com/1169378/13570194-architecting-the-space-force-with-preston-dunlap-of-arkenstone-ventures 

🧠Relevant Links:


👏Credit Roll: 
Producers: Jonathan 'JMill' Miller and Forrest Meyen
Guest: Preston Dunlap
Hosts: JMill and Forrest Meyen
Editing: JMill
Transcript: Alan Yan and JMill
Blog Author: JMill
Art Design: JMill (Space Force emblem credit to United States Space Force.)

🔖Topic Timecodes:
[2:08] What is Arkenstone Ventures?

[4:58] Most exciting technology areas

[7:47] Thoughts on government and VC investments in space

[14:02] New emerging phenomena, e.g. unidentified anomalous phenomena (UAPs)

[19:21] Bringing companies on board and helping them grow

[25:25] How starting Arkenstone was different than joining another company

[31:34] Biggest challenges as CTO of Air Force and Space Force

[37:39] Staying up to date and knowledgeable about many systems and sciences

[42:31] Does Preston spend time trying to predict the future of tech?

[46:08] Dealing with setbacks

[50:46] The name and ethos of Arkenstone Ventures 

[53:04] Preston’s closing thoughts



📖Transcript:
Transcript is viewable here: https://otter.ai/u/orLilBYuMDszJkz8bsif89OoNMA

Preston Dunlap:

I spent a lot of time working for five secretaries of defense at sort of the top of the food chain there. With the investment choices of more space or more navy or more subs, how many missiles, do we have the right mix, you're really an execution agent, but you got to deliver as a military servant. So it's not just a decision, you know, good luck. Here's the money. It's... you got to decide. And then move. If you want to be a startup founder, or you want to be a senior executive and government or anywhere else, you've got to have pretty thick skin, and you got to know what to expect. So when you get setbacks or challenges, that's where you get a good personal litmus test of whether that's a good environment for you to be in. If you want to operate in that space, you want to start something new, you're going to face setbacks every day, if you're building a new company. And if you want to go make a difference to the largest bureaucracy on the planet, that has tremendous mission impacts if you do, you should do it.

Announcer:

Welcome to Tough Tech Today with Meyen and Miller. This is the premiere show featuring trailblazers, who are building technologies today to solve tomorrow's toughest challenges.

JMill:

Welcome to Tough Tech Today. This is the third episode in our series on space. And we are so excited to be joined today by Preston Dunlap. Now Preston is the former Chief Technology Officer of the US Space Force and US Air Force, as well as chief architect of acquisitions managing the way that these forces are able to acquire new capabilities, billions of dollars, and we'll get into that soon. But also a Preston Dunlap is founder of Arkenstone Ventures. And so welcome Preston, could you first tell us more about what Arkenstone Ventures is?

Preston Dunlap:

Yeah, thanks, Jonathan and Forrest, thanks for having me as a guest. And yeah, it's a privilege to be able to talk about both the investing side and the technology side of some really sort of thorny technology challenging areas like space, air, and cyber. When I left a little over a year ago, from being the first CTO for the Air Force and Space Force, I just recognized that there were some real challenges out there that need to be addressed. And there's sort of two sides of the same coin. One is I felt like the venture capital community and the Defense Department and Congress, we're doing a decent job relative to history, still not sufficient, but decent to be able to encourage new companies that want to live at the intersection of national security, and technology, and commercial. But though the sort of the the wave started to move, there was a gap between getting things moving, and then transitioning things that can execute at scale, and at speed. And so when I departed, I wanted to really sort of zero in on being able to put fuel on the fire of technology companies that are creating step changes for us. And then to do that both directly with companies and then match increasingly large check sizes of investment to those companies, be they commercial with a dual track the national security or dedicated focus on national security. So to that end, I set up Arkenstone Ventures, which has two halves to it. One is working directly with companies that are building technology in deep tech areas like autonomy and AI and space, air and transportation areas. And then also partnering with private equity firms or growth equity firms to be able to increase the amount of investments that we have flowing into companies that are making it through the gauntlets of the early stage VC, and need capital and guidance and direction to be able to take the next steps to be able to grow and scale and execute at not sort of 100,000 or million dollar, but billion dollar levels of activities. And so the two pillars really are being able to help directly companies do that both financially as well as from a content perspective or a product perspective. And it's real privilege to be able to continue to work alongside the the government as well as many founders and well established companies to go do that. And so that spans both sort of publicly traded large companies all the way to really early stage, just idea type companies as well. So a great opportunity to be able to get both sides of the coin in terms of maturity, as well as the market on the investment side and the strategic advice and support side of the house as well.

Forrest Meyen:

Well, you mentioned a couple of areas that you're interested in for these companies focusing on either dual purpose ventures or ones specifically for national security. What specific area are you most interested in right now? What's kind of exciting you the most as far as that step change in capability based on new technologies that are developing?

Preston Dunlap:

Yeah, great, great question, Forrest. So like many folks that are excited about technology, it's always hard to sort of narrow down what the what the like the most important areas are that are going to be the the big changers in the future, so we'll just take a few of those here that I think are particularly fascinating. And you can already see the benefits, you know of them. And clearly that the topic that you're in a series on right now in the space world is right up there as an extremely interesting and sort of useful way of companies being able to contribute both commercially, international securities, like space is a category one. Category two, I think, generally transportation is at a bit of an inflection point, whether that's the commonly understood things like autonomous vehicles, or autonomous taxis and the billions of dollars going in there. But now moving that into the autonomous air vehicle beyond the military context, or package delivery, but things like vertical takeoff electrification, sort of mid-range to longer range autonomous aircraft or computer-assisted, which then taps into sort of the broader that are both hardware focused answers. And then there's the underneath, the sort of what I call software infused hardware layer, which is getting software into hardware. So making systems that work now even better with assistance, or sole autonomy, bringing in regular updates via DevSecOps approach to software and containerization. To be able to keep up with the speed and scale of software, where hardware sort of tends to get stuck in an era that you keep it through upgrading. And not to be sort of like too caught up in the the trendy thing today. But general autonomy and artificial intelligence and machine learning kind of cuts across each of those areas. So I think those are some of the hardware focus tech areas that are particularly interesting, and driving significant changes. But hardware can only do so much without good brains behind it and inside of it, and things like communications and algorithms that actually make things work and mature and grow over time is that hardware, sort of, you know, shakes out as well. So trying to see really interesting pushes on the hardware side, as well as the software side in those three circles and others.

JMill:

With your roles, looking back to a year plus ago, working within the US Space Force and Air Force, we see that the budget requested by the Department of Defense for the Space Force is about 30 billion dollars. Three zero. And that's on par with the budget for for NASA. How should we be thinking about this sort of potential or actual sort of militarization of space? Was that sort of obvious for decades? And then it's just now coming to fruition and the US is sort of playing catch up? Or is it something that's kind of surprising in terms of how soon it's become on our sort of public radar?

Preston Dunlap:

Yeah, so I think there's a few ways to kind of dive into that. Good question. So on the investment side, money sort of changed with economic conditions over the last year, but roughly so the last full year that we had numbers for, depending on how you slice it, there were something like $250 billion of investment going into space related companies across the globe. So $250 billion—of that about $92 billion came from governments across the globe. And then of that, about 50 to$60 billion from the US government, as you said, sort of roughly split between NASA and Space Force, sort of the two biggest players in that area. And the Space Force is gone so from like 17 to 24 to a proposal for about $30 billion next year, depending on how Congress sort of plays out. So that's, you know, of that $60 billion dollars, that's the half that you're referencing there. You know, kind of contrast sort of that government spend of $92 billion worldwide or 50 and 55 in the US, there's still kind of... depending on how you slice it, VC funding about $17 billion globally for the space economy. So that's, like 3% of VC funding total. So I'm seeing lots of increases in venture capital investments in this area. It's still sort of small relative to the size of government investents or other kinds of capital approaches to it. But it's a serious play so lots of money is going into it. And as we see that play out in different spaces, not a monolithic regime. So you can be at space at different altitudes, you can be at space and have different types of capabilities, something that we wouldn't have largely talked about a few years ago is it's not just space looking down to earth, but it's now space in space, helping space out to space. So there are literally new categories unfolding, you know, before us over the last few years, that haven't been categories of reasonable investment in the sort of space regime or the space economy. And those are, those are there. Now, given the hefty sort of relative investment from the government, you can sort of roll the tape back in history, to be able to sort of recognize whatever everybody sort of knows, which is that historically, governments have been the predominant player in the space regime, it's probably lots of reasons space has been costly. Those were the first sort of lynch pin, and that are the long pole in the tent is the ability to get to space. So you know, back when you were paying $100 million dollars plus to get a satellite into orbit, not a lot of startup companies are going to be building satellites, and then sort of chunk out $100 million to get me where I needed to go. And so the dramatic drop in space access or launch costs is created sort of the first sort of chip to fall to be able to get new entrants and new creativity outside the heavy capitalized government sort of industrial complex for being able to do this. Now, interestingly, I had the privilege of being sort of part of that inflection point here in a past role when I was working as a department executive at Johns Hopkins Applied Physics Lab, which is a great place and a fascinating place. It's a university research center, affiliated research center. So it's DOD chartered, but it sits in academia and sort of the nexus between commercial and government. And one of the things that while I was there, and still supporting the government, in a variety of prototyping and tech development efforts, made the case in roughly the 2015 timeframe that the world and space is about to change. I was the only one saying this. But inside the DOD sort of community, there was a small sort of set of voices that were recognizing that given the suspected drop in launch costs, that we'd be seeing more players. And there'll be a world where commercial space was a more dominant player, at least in terms of numbers than government players. And so we need to start thinking as a nation, about how do we live, work, operate, what policies and approaches do we take where the government isn't the main research and development provider isn't the main operator, and how to all the parties and civil national security and commercial space work together. And that led to the opportunity to be able to lead a number of exercises in the last two vice presidents office, and then a precursor to the National Space Council being restood up under Vice President Mike Pence, initially and has continued and this administration as well. But the opportunity to be able to take all the Cabinet Secretaries together, and the National Security Council leadership in the space council leadership to be able to work through what it would look like at the national level across all the agencies in this world that has now actually arrived with all these players. So in short, I think investments are still there, we're seeing lots of companies that have the crowded sort of charts you see from investment firms of all the companies and the different categories in space. So we're gonna see some consolidation and winners and losers here, which makes total sense as we go forward. But at the same time, you know, new markets are being created, as you get from Step A to B to C, all of a sudden new opportunities sort of pop out. And so it's a pretty exciting time to be in aerospace, in defense in space in general, certainly here in the US, but I think across the world.

JMill:

So Preston, within your role within aerospace, sort of at the nexus of militarization, of the commercial work, various parts of the forces within the Department of Defense... I appreciate your comment on some of the things that we've been seeing lately. For example, the recent congressional briefings on unidentified anomalous phenomena, UAPs, as well as last year, the standing up of the AARO, the All-domain Anomaly Resolution Office. Could you provide a comment on.... help us think about this phenomena that's emerging both within Congress and just the fact that there are unidentified, anomalous phenomena to be

Preston Dunlap:

Well, it's certainly a hot topic right now. commented on. And I guess it's fortuitous that I've got my Space Invaders shirt on so the good news is, as long as we know, something like left, right, left, right AB, up, down, we're gonna be good no matter what type of external technology we're facing, we've got the secret sauce there. You know, but on a serious note... Yeah, I think our pilots commercially or military are often it sounds like faced with things that they don't understand or see and can explain. Congress took a significant sort of step forward to be able to put science behind the reporting of activities over a long period of time, and have pointed John Kirkpatrick to be able to oversee that... who's a long-standing individual working in the intelligence in the space community. So a strong person to be able to take a serious sort of scientific approach to the data and work there to be able to move and compel the community forward. We got to hear some testimony from outside witnesses to Congress to be able to describe their experiences, both personally or from those that they talked to outside. And so anything that pilots believe pose risks to platforms, given uncertainty, it's a really important thing to be able to take care of, because safety is certainly in all commercial or military contexts, a real preeminent importance. Sounds like lots of work needs to be done to sort of discern fact and fiction and what's real and what's not and what the risks are. But certainly what is clear, like anything that needs to be explored via sort of aerial or otherwise, we got to get data and science and tracking and real math behind both assessment and tracking and understanding and then discern, you know, what is, if anything, going on in various incidents that have happened or will happen. And so the one sort of consistent thing that you hear out of those conversations is the need to destigmatize and to be able to track. And then that allows you the opportunity to apply the scientific method to figure out what what is happening in each of those sorts of circumstances, be able to get data. The other thing that points to I think, from a broader technology perspective, is that sort of behind a lot of the comments that you hear people saying is a general sense that it would be really nice if we had, the greater we, the greater global... had a greater sort of sensing and processing ability to be able to see and track really anything, certainly these are included, but by no means would it be limited, like getting better sight pictures, or common operating pictures of what's happening is really important in the military context, and certainly would be in this case, as well. So I think you're gonna you're hearing things like, you know, multi type of sensors and phenomenology, being able to track and surveil, that's important for space domain awareness, it's opposed, it's really important for air and ground and maritime domain awareness. But that sort of like is another reason to invest and look seriously at how to understand from a sensing and physics perspective, and then behind that, of course, is the ability to, to communicate and push that information where it needs to go and process that and filter the information. So there could be lots of noise out there, how to get signal from noise, and pull that together. So there's certainly a specific topic that I think highlights at least, you know, that handful of technical challenges and opportunities that we have before us, and solving those and increasing the ability to do that it's a really good thing for air defense, it's good thing for for space, traffic management and others that and certainly would be, you know, contributing to be able to help solve the data and sensing challenge that, you know, we got to hear about in part of that hearing.

JMill:

I think there's a saying that the eyes are useless if the mind is blind. And so maybe it's enough that we have incredible stories that can help us think about the what ifs and whether there's science fiction or fact out there, we'll hopefully get to the bottom of it. But in the meantime, just the thing about the possibilities may motivate and help develop new capabilities the old fashioned way, just the way we've been doing it in terms of the scientific method and trying to develop new technologies to impact planet beneficially. Forrest.

Forrest Meyen:

Sure, I think the next topic I'm kind of interested in is in your time at Arkenstone Ventures, can you kind of walk me through just the whole process of you know, a company that you've met, identified, what you learned about them that made you really think that you know, this is going to be a company that can make a huge impact in national security as well as you know, maybe dual-use ventures and what that process was like, kind of bringing them on board and kind of shepherding their their venture forward?

Preston Dunlap:

Yeah, so the way at least I like to look at things is you got to get excited by like the vision and the potential. So there's that, but you quickly move to, you know, what are the underlying sort of facts of the case. And so for each of the markets, in the technology areas that I'm particularly interested in and able to help from a content or market perspective, you can basically outline... we'll just use space, since that's sort of our main focus here. So if you you go and look at each of the individual sub markets, and they used to be sort of, we call them in the military sort of the space missions... you used to have eight of them, and now they keep growing every year, which is actually kind of an exciting opportunity. But the way I do it is... so if you're looking at Earth observation, then there's a bunch of different types of Earth observation that's there with different sensors and different algorithmic capabilities. You lay out then what that company or IP for that technology could then deliver, that is augmentative, or additive to whatever you have now or relative to other companies. And then you play that out and ask questions about like, what IP is there? How sensitive are the sensors? How long do they last? What type of swath is there? What type of sensitivity information relative to others... in the overall cost equation... if you're from the military context, that kind of sounds... is a bad word, I think generally, but like an analysis of alternatives we use in the acquisition context. And it often takes long time... you can do that very quickly and very thoughtfully here. It's basically lay out the analytic and the data associated with those opportunities. And then for you know, for me, it was basically ranking the companies that I saw moving into each of those areas, and how they fell out in each of those categories. Same thing for satellite communications, both inside space and down to earth opportunities, going from different bandwidths, different types of spectrum, all the way down to direct to device, which has both challenges and opportunities. And so taking a lens that basically provides for a data-driven analytic approach to the content or the product set itself as it matures. This sort of is case one, like how do you go through the filter to get to something that is sort of right place, right time. The next sort of filter then that I look at whether I'm helping directly for advising or on a board, or helping them with larger increments of capital, we then look at for the business and the execution side of the house. So certainly the government does a lot and research development. There are companies that are spending money to sort of push the bounds for S&T. But can the company, the team... Are they showing the ability to actually move from great ideas to great products that work and work for whatever the customer base is. So the next filter is how good is the operational team that being able to execute? And that question, of course, is different, whether I'm trying to help an early stage company or if I've got a very large enterprise that needs to go from, hey, I've been winning $20 million, I want to go, you know, when a 10 or $11 billion type of commercial or government program, it's a very different set of operational questions that you're asking, and of course, the capital kind of flows to go do that. And then, you know, third, it's how well are you addressing not just a cool, tough tech challenge, but how well you guessed it a cool, tough tech challenge that somebody cares about and will pay for. And that's sort of like... not to oversimplify things, but that's like another pretty important third leg of the stool, here. And so any of us could spend time doing lots of different things. You guys are super talented and smart in many different areas that I have no depth of knowledge in, you know, but you want to be able to prioritize the time and the emphasis in areas where you think will play the most difference. And so for me that's trying to partner with companies that are creating these opportunities in technology, that have a business potential and execution opportunities, that are already or are close to solving real problems that people care about, and then match that with the money that's available internally, or through the government or through venture or growth equity, or in some case, you know, buyout, or private equity, depending on the case, and then just drive in and focus on that to deliver your product. And that's the strategy that I use back in the government, which might sound a little strange, but that's how you prioritize time on what's the most most payout in that case for the mission, for the operators, and to get tech out quickly. It's a very similar playbook that that can be run out here as well. It's just a different set of players supporting both commercial customers and now in the world of space, the users or the customers are starting to look much more similar as opposed to... there are certain things that government customers care about, and other things that commercial customers care about. This sort of Venn diagram is sort of coming together much more tightly. There'll always be some differences, but you're starting to see applications that the same tech sensor processing could support now for multiple cases.

JMill:

I'm curious now... how has it felt as you were standing up Arkenstone Ventures, and comparing the challenges of creating an investment group, compared to when someone's like, hey Preston, we want you to be like the chief architect of this new branch. Like, I imagine they're both heavy lifts in different ways, perhaps... could you walk us through what does experience feel like.

Preston Dunlap:

So it's always a privilege to try to help new things become real, and to use, you know, creativity, given whatever resources you have. So one way to perhaps sort of describe it, just to think... you know one of my heroes is actually my grandfather, who is 102; he served in World War II, was a engineer in the Army Air Corps, served in Europe. And he was a farm boy from Middle America, with no engineering training other than what you might get on a farm, and yet, somehow was able to literally take wings off of planes that have fallen, and then put them on other fuselages, and then get pilots back up into the air in the middle of active bullets flying, and fire happening in a massive war, without tools and training and expertise, like we have now with opportunities in digital engineering and computer-aided assistance. So it'd be hard to imagine a scenario like that happening with many sort of industrialized nations these days yet there's sort of a crop of folks that apply that creativity here to be able to deliver in astounding ways. And so that was part of my motivation for moving from commercial world originally with a couple tech startup companies into working in the Secretary of Defense's office for a number of years. And that motivation was to say let's take this type of motivated, we're going to figure out how to get it done, application to like one of the most noble career paths, which is serving in this country, the US military; you're putting your lives on the line to go serve and support and defend and protect. We should be able to get technology in the hands of those who need it most and do that quickly. And so whether that was running an investment group, in the program and budget teams in the Pentagon to go move lots of money, $750 billion around to the right places and make trade-offs, or the most recent role that you mentioned, as CTO and Chief Architect for the Air Force and Space Force; we had about $74 billion of air space and cyber programs. The goal was let's change the process and the approach and the teams to be able to deliver the most important things quickly. Okay. If I am a person in private equity, or growth equity, or venture capital, you know, what am I trying to do? Well, I'm trying to build something that's useful, and get that delivered as quickly as possible. Now part of my motivation is going to be providing returns to limited partners and make good sort of economically. But you can also have greater sort of public good and missions associated with the why behind the products, it's for a good cause and a good purpose. And so bringing the opportunity here, now going back on the outside of government to be able to support companies that are doing great work, sort of commercially, or the dual track approach allows that sort of... where the government has still not quite figured out how to help companies scale beyond the early venture style investments, this is an opportunity to basically match private capital, with companies that are at that stage to graduate. But the US government hasn't quite figured out how to put the mechanics in place to be able to do that. And so being able to help solve those puzzles out here on the outside, you know, creates the opportunity to not lose companies that would sort of fall into this quicksand. But actually take those winning opportunities and then get them over the finish line to scale. And so the playbook is somewhat similar. The opportunities is just really important because it's a really, really good mission. And the other thing I'll just say, working with investors, which I know both of you do. The investment community is a great community but often sort of thinks in very sort of narrowly defined chunks, like I'm in a, maybe on a supply chain type market, or I'm in a semiconductor and chips or maybe I'm in autonomy or some kind of software enterprise software approach. And so you tend to have funds or teams organized around very discrete types of activities. And what I think the opportunity we're talking about here at this intersection, basically allows you to cut across each of those so that you shouldn't think about semiconductor investment as simply a subset of technology. But that's going to play into great commercial advancements, as we think about how to change the way we do large language modeling, for example, with greater processing ability, but at the same time, it's going to be able to make embedded sensor processing faster and in a small satellite, or an unmanned or uncrewed vehicle. And so you've got this tighter coupling that we need to recognize of this sort of layers of the technology stack, both hardware and software, that have tremendous opportunity and great effect in both areas. And so that's another sort of evangelistic type of opportunities to be able to help people see the investment opportunities in these areas are not simply focused on discrete areas, but actually have intricate ties across sort of vertically and horizontally. I think when people sort of recognize that sort of opens up a whole new category of opportunities, both sort of like adjacent investments, but also thinking about investment theses that you might otherwise not have, if you were simply looking at an individual asset or an individual type of technology area.

Forrest Meyen:

of the Air Force and Space Force, what was the biggest challenge within the government, getting the technologies that you thought would benefit our national security organization?

Preston Dunlap:

Challenges are always numerous. So filtering the greatest is a tough one. Everybody will say that speed of delivery is a big challenge... I guess in some sense that's more in my view, like a symptom than the problem. So trying to peel back the onion into why and how to address that. So the sort of multi-prong strategy, and when I left I wrote, with my team, a paper that sort of outlined a few pillars or categories, it's on my LinkedIn, if you want to check it out. But it's to be able to address how we sort of... the playbook at a strategic level... it'll list a bunch of examples on... this isn't just sort of like an ephemeral sort of theory, this is really executed. And here's some specific examples on how we did it. But sort of thing one is getting very focused on driving towards delivery of a specific capability. So quickly defining what that product is, and then getting it delivered. How is the next sort of question? So that's the like, why slash what; the how is different so there are things that you can kind of bucket into the long term, we want to keep around for a long time, reliability has to be high, could probably be expensive capital thing. Maybe I'm building a new big nuclear submarine or something. So that's sort of another category. But to be able to address the time and the speed, when I came in, after doing a bit of a listening tour, ended up creating a process where the operational elements of the Air Force and the Space Force and the combatant commands are operational to the users of the attack, not the builders. I put them in charge of a series of technology exercises or experiments, and I put a fixed timeline on it. So where as every four months, we're going to actually be coming back out here, you're going to put us through the gauntlet of real challenges that you're facing as an operational commander, and our companies that are signing up to want to participate, and the government organized train and equip elements, the services that are gonna participate where we're gonna have to go aim and four months is a pretty tight turn to go do that. But what it does is sort of lack of, you know, what to think of the diagnosis area here is a lack of sort of general urgency and focus. And so when you don't have urgency and focus, you just kind of like 1000 flowers use or work on things. But if you get attention to go deliver it, if you're a startup company, it's like I'm running out of runway, I better build that product so somebody buys it. What's the equivalent of that inside the US government? So in that role, and one of the I think most important strategic outcomes of that was creating this culture where operationally lead not not tech requisition lead, but operationally lead exercises in experiments that that pull the tech community, the companies and the operators and the acquisition personnel all together, created these fast cycles of customer, producer, requirer, or buyer conversations happening, and there's just no time to sort of fritter away. You literally have to deliver, otherwise you're embarrassed if you don't I mean, part of that's a serious factor. So I had very big names, some of the largest companies in the United States, bending over backwards, in addition to small companies to go produce and deliver and make changes to technology, in these very rapid cycles that got the mission, got excited, lots of people watching it, and then the opportunity to then transition that into, you know, programs or direct commercial procurement, that is sort of was the next step there. But that's sort of like the why and the what, let's prioritize how, let's get a sense of urgency, that's a mechanism to do it, that was pretty successful, to be able to get there. And you're trying to build out in the context of the government and the Defense Department, the intelligence community, equivalent sort of pressures, and focus that are sort of caused environmentally for different reasons, if you're in the business world, or a startup world or an investment world, and then use those sort of refining fire type opportunities to then go produce something and get it out there. Lastly, I'll just mention on that point is, I went around and was very surprised, by the number of acquisition teams across, I'm not calling any individual service, it's just across the DOD, where I met the acquisition teams of the program, executive office teams, and they had never met an operator or an end user, the closest they got was a requirements paper from some intermediary that then tried to interpret that, but the distance between the customer and the buyer, let alone the builder, way over here, was so great. And so bringing together those communities, I think would be the last thing I'll just mention on on a problem and challenge where we work to overcome in for our service, then I began to put, instead of program managers, I started having product managers, so you care about building something, not simply managing the schedule. And then I also allowed operators to be in charge of that. So to be product managers, and so there would be a mix of the customers actually running the overall product teams as well as people who were well versed and acquisition expertise doing as well. So you basically put people in where their expertise and strengths shine, and bring them together.

JMill:

How do you keep up to date on such a breadth of different kinds of emerging capabilities? So my understanding is that some of your prior works, it's touched on things from hypersonics to electronic warfare to communications directly and in space. And it's probably just a limited subset of the variety of kinds of systems and sciences that you have to have at least a good enough knowledge on to invest now, but also in your prior work for acquisition development, how do you? How does the mind across that work?

Preston Dunlap:

... Space Invaders. So you capitalize on sort of curiosity and creativity. So, you know, there's lots of folks that do great work, very deep on, you know, single areas, and those other people sort of cut across a broader spectrum. And then sort of people sort of cross the bridge into both. And I think if you're operating in this space in either the venture world or, you know, the advising sort of world, being able to not only sort of be a generalist, but be able to quickly sort of go into at least a somewhat of a deep end in areas will make that sort of high level, you know, much more useful, I can think of a number of work that we did when I worked in Secretary of Defense's office, where the outcomes of studies, very quantitative studies. And then I Haha. Do you spend a lot of time trying to kind of predict the took my teams out to go see the particular sites or the platforms of the people, and the two didn't always agree. And so decisions would have been made poorly had we not actually gone and seen the constraints, or the platforms or the people. And so, you know, being able to do that, and bring operations together with planning and administration and execution, along with the technology. You've got to be able to move across those spheres fairly fluidly. And if you're in the government space and trying to operate there, it's very difficult to get anything done. Just obviously because it's the largest, well the largest company on the planet, or the largest bureaucracy on the planet, depending on sort of, you know, how pokey you want to be at that particular time, was very hard to do it. So you have to have some expertise and the ability to maneuver all of those spaces at once. And it's kind of like Ender's Game but for the bureaucracy. And so it's sort of an essential element to be able to make things happen is to be able to play in all those buckets simultaneously, and work with the people that have decision authority, because usually, it's not you in each of those areas to be able to drive towards change. So it's something that you've got to have as a necessity, if you want to go through the ranks and make significant difference at a large, you know, massive type of an organization. And then you sort of run that playbook at a large corporate organization as well, you know, if you're an Amazon or Microsoft, or Google, those are... or Apple, those are things that will serve you well, in very large institutions, that if you're on the inside might actually feel a little bit like bureaucracies, even though sort of outside they look sort of very high speed and tech oriented. And so for me, there's utility in being able to move across the tech circles. It's general curiosity and interest. Technically, I'm a computer scientist and operations research and international relations person, which by the way is and if you ever do a survey, and I have to do that, it's pretty odd sort of, you check all those boxes. It's like, oh, that's probably Preston. So there is that, you know, but just keeping up with the companies, and going out and visiting things like manufacturing facilities, going and talking to the people actually building, whether it's semiconductors or sensors or spacecraft, just creates the fodder to then not only understand what they're building and how things work in the real world now, but also gets your creative juices going to say if I put A and B together, is that sum greater than the parts? Or if you pulled a really interesting thing out of sort of a large circle, does that then enable it to be able to flourish into something even more productive? And so you start to see these patterns and puzzles sort of unfold over time. And it's super fun to do tech, because that's just massively changing the way we live, the way we operate. And so yeah, I guess my dream job would be holding something to be able to sort of run a tough tech podcast, if only I knew somebody who did that. future of technology and anticipate what's next, in addition to kind of learning what the state of the art is? Yeah. So you can never predict perfectly, of course, but you can get a sense of the trends in the area. And so one of the things that I just use to be able to think that is... it was kind of like a large sort of learning model. But when you start to see different pieces or dots out there, you can then begin to formulate not only where those dots are going in a trajectory perspective, but if they were to come together in certain ways, or perhaps unexpected ways, you know, what new opportunities were there, or would unfold? I think kind of back to the example that we unpacked a bit earlier on the show about the the flipping of government versus commercial spacecraft, and who's the predominant player; at the time, that was somewhat of an odd viewpoint. I mean, I had to make the case with a couple others that we should be spending time on this. And it was not obvious. But you know, hindsight now, it's like, well, of course, commercial space is going to be massive as an opportunity. And so I think they're examples like that, where you got to go against the grain. I think Jonathan mentioned hypersonics earlier. So that's kind of

another area:

it was almost a decade ago that I was trying to convince the department to invest seriously in hypersonic capabilities. That' missiles that go or aspect, anything that goes faster than like Mach 5. And for a variety of reasons that seemed a really important thing, both from a defensive perspective, as well as the opportunity to be able to operate and then watching other organizations start to build hypersonic technologies like this... something is really important. But it took a long time, before the apparatus began to sort of embrace that, in fact, I was unsuccessful with my first attempt with a Secretary of Defense, and it was the next Secretary of Defense that began to take it seriously and actually, as I've laid it out for him into creating an actual program for hypersonics. And now that's not just like big missiles, but now you got small missiles, medium missiles. And so we're at a bit of an inflection point where there's still people who say, you know, what is it for, but there's less people that are questioning it now. And it's more like how do we execute? How do we get cost down? And how do we build it in sort of a scalable type model which is very different question than the why-would-we-ever-care-about-that questions at the beginning. So I think you can point to a variety of different cases like that where, you know, first... to your question, being able to see where the future may go either from an opportunity perspective, like these dots coming together would be phenomenal, or from a protective perspective, like, I think if they came together, and somebody else did it, from a national security perspective, that'd be a big problem. So we should, we should sort of figure out what that means and get our act together, either defensively or otherwise, to go address that. So by necessity you're thinking that way, as a strategist in the technology national security space. And from an investor, it's like the same sort of brainwaves need to need to sort of move as synapses need to fire because I may have financial reasons if you're an investment firm to go do that. But it's the same process you want to build products that are going to be great and be useful, and you won't always get it right. But you know, you want to be right some amount of the time, and you want to think about who else is building something that could either deflect that or remove the opportunities for those that tech to be successful.

JMill:

Did you ever feel like like quitting with like, when especially in those some of those bureaucratic situations, you exercise patience, and apparently, in terms of waiting for a changing of the guard, to get the timing right to re-elevate the argument in support of this sort of hypersonic budget allocation? What got you through tough

Preston Dunlap:

I think if you want to be a startup founder, or points? you want to be, you know, a senior executive in government, or anywhere else, you've got to get have pretty thick skin, and you got to know what to expect. So when you get setbacks or challenges, that's where you get a good personal litmus test of whether that's a good environment for you to be in. So how do you take that. And so if you want to operate in that space, you want to start something new, you're gonna face setbacks every day, if you're building a new company. And if you want to go make a difference to the largest bureaucracy on the planet that has tremendous mission impacts if you do or... you should do it. And so, you know, I spent a lot of time working for five secretaries of defense at sort of the top of the food chain there, with the investment choices of more space, or more navy or more subs, and how many missiles and do we have the right mix. And then this most recent time, coming back now on still making some of those choices, or supporting the Secretary of the Air Force making those choices for the two services. But if you're really an execution agent, like you got to deliver as a military service, so it's not just a decision, you know, good luck, here's the money, it's you got to decide and then and then move. So I came back with a pretty good sense that nothing is easy. And the more you understand the subject matter in depth and breadth, and have good networks with people across the enterprise that are essential decision makers, or partners in those decisions. Like that's how you make a difference. No one individual, even if they have a lofty title can do everything. And the good and the bad, you know, together means that you have to have collectives coming together to go actually make meaningful change. And then it's having the guts to go say, we know we really need to do this, and be willing to take the risk if people disagree, or they write you off, or they say no. And depending on where you are in the food chain, it may have professional risks associated with it as well. And making the choice to say, hey, look, this is what the facts say, I am totally fine if you choose to go somewhere else and do something different, which is the case that I would take back when I worked in the Secretary of Defense's office. Here's what the assessment looks like, here's what I think, you know, we'll go the direction that that you think and we'll make it happen, and we'll support it and go execute according to plan. And so you just have to have, you have to be able to sort of walk both sides of that fence. And, you know, you don't win every battle, you are wrong a lot of times too. So you just have to recognize that, like I don't have the market cornered on good ideas. And so you got to be able to, to sort of push through that. But just be willing, if you're going to work in a large place like a massive corporate entity and want to make strategic change, you're gonna have to do that in a professional way that is gracious and a good leader for the people that work for you and around; you got to be able to do that but at the same time you know be able to shake some of the trees and work through that and then sort of get past those brick walls with the roadblocks over the hill and the opportunities. It's like winning a football game or a soccer game, like it's great success when you actually punch through the wall and you get something on the other side. People are motivated to keep doing it. And so the more we've got people that are in there, that are fighting the fight in the big companies or in big DOD or the IC, I think the better we are, because it just motivates people to continue to push forward. And to break barriers, regardless of what those barriers are, to be able to get where we need to go as a national security enterprise or a technology enterprise. And those are just some attributes that I always look for in people that are interested in putting in different places to go take on those opportunities, and they're professional, but not shy about, like pushing to make something happen against sort of all odds or lots of odds against them.

Forrest Meyen:

So I had a question I've been been waiting to ask. So our last guest last month, their company and name was Mitral Technologies. You chose Arkenstone Ventures? Why the reference? What spoke to you about that name?

Preston Dunlap:

Yeah, great question. So it's a reference from Lord of the Rings books. And you know, here, the Arkenstone is the heart of the mountain. And so from here, for the heart of the progress that we make as a society, and in a national security context is the nexus of technology, commercial and national security. And so being able to put focus on what matters and makes the most difference is important to me. And sort of remembering what the heart is, the heartbeat of both the tech as well as the purpose is super important, I think to think about, because you will—to Jonathan's earlier question—sort of wither in the face of opposition, or you'll pivot too early or in a wrong direction, if you don't have the skin and the stomach to be able to get where you're going? And how do you address that you got to have the right heart, the right conviction, to be able to make a difference, or to do a breakthrough in tech that people haven't thought of before or thought it was impossible. So that's the sort of the ethos that we try to get to, with that sort of symbolism, to be able to help enable others, and hopefully lots of people outside the ecosystem that I don't even know, be able to do similar things in tech, in investing, in the government or national security space.

Forrest Meyen:

Fantastic. Great meaning behind it.

JMill:

Yeah, I think that's I think it's a beautiful origin story of the name. With the time we have remaining Preston, we would be glad to invite you to tell us what your priorities are, projecting into 2024. If there are startups that you would like to spotlight or any sort of things that you'd like to future or advice to deliver to our audience.

Preston Dunlap:

Well, I should probably I should probably turn the mic back to you guys for the good advice, given your expertise and all the great guests that you had. So the more we can have conviction and push forward, whatever the technology is. So, my areas are things like software and AI data, transportation and mobility and logistics, it's space and aero, and just sort of infrastructure and like communications, those are sort of hard tech areas, but there's also bio and others that are really important as well. And so the more we can have conviction, both financially from a startup community, from a scale-up community from an national security community, we need to push that the better. And so I think my goal here is to help companies that are in that space, either directly with direct support or advising or with investment at large scale to be able to make more of that happen. And where it makes sense across the tech value chain, whether you're at sort of this small micro electronics or subsystem type level, or you're building integrated systems, to be able to get that into the hands of the commercial companies that need it or in the government case, the government that needs it. And one of those linchpins is getting sufficient focus on what products and features do I need, and what investment do I need or capital do I need to make it happen? And how do I match that if you're in the government case with the confusing morass of customers that are out there between budget and acquisition and contracting and requirers or as an acquirers... it's just so much that you just cut through all of the confusion to an execution-prioritize plan that makes a difference? And so that's how we're gonna like win as an nation from a tech perspective. And then we're gonna win as a national security community if we focus on doing that across the tech space and partnering with commercial companies, even if they're not sort of the end integrator, but they're part of that essential value chain that gets pulled together to create the next tech. And so if I can help companies do that, or private equity firms do that, or the government directly be able to do that more effectively or more quickly, and it's certainly at scale I'm gonna have felt that we've made significant difference here over the next couple of years. And focusing on that sort of scale and large size tech changes I think is where we still need more emphasis. I'm very happy to see increasing numbers of venture firms or startups in the community; what my concern is that we can't leave them hanging, we have to be able to enable them and propel those that are producing really good work that is needed. And we got to get them to whatever company needs to buy them or consumer needs to get them or government needs to get them. So my focus is going to be making those things happen as much as possible across the scale of those technology areas. And the tech areas that we talked about today are super passions of mine. So you guys, thanks for having me on the show today. It's been great talking about really awesome tech in a lot of different areas. And the fact that you have spent this season talking about space, which is one of those areas that is just moving so fast, and creating literally new markets every week, in space and beyond and then back down to earth. This is an exciting area to keep watching. And it's good to increasingly include other areas of technology, and you could argue it is the toughest of tech, whether it's the shaking or the radiation or the superfast speeds that you're moving in space or the reliability that you have to have. I think I'll end by making the case that space is perhaps the most sort of tough tech area that you can have, and be able to survive and operate against all kinds of oppositional forces, like gravity and centrifugal forces and so on. So it's a good topic and a real honor for me to be able to round out your season here on space.

JMill:

Thank you so much Preston. Our conversation with Mr. Dunlap is the official capstone to our space-themed summer, but it's not the last you'll hear from us about this topic. Our upcoming theme is about energy, as you will soon discover with us, systems for harnessing and delivering power, applications in space, and also for us here on Earth. We encourage you to tell a colleague about Tough Tech Today. Also, we have a free mailing list so you can read about the newest episodes before everyone else. Until next time, stay tough.

Preston Dunlap:

Preston Dunlap here. Stay tough.

What is Arkenstone Ventures?
Most exciting technology areas
Thoughts on government and VC investments in space
New emerging phenomena, e.g. unidentified anomalous phenomena (UAPs)
Bringing companies on board and helping them grow
How starting Arkenstone was different than joining another company
Biggest challenges as CTO of Air Force and Space Force
Staying up to date and knowledgeable about many systems and sciences
Does Preston spend time trying to predict the future of tech?
Dealing with setbacks
The name and ethos of Arkenstone Ventures
Preston’s closing thoughts