How to Navigate Working with Government
Tune into this webinar to hear both from private industry and government about how to navigate the common obstacles when working with the federal market.
Nate:
Nice to meet everyone here. I’m Nate Ashton, I’ll be moderating today, Managing Director for Public Policy at Dcode. So spend a lot of time talking to folks on the hill about how to make government work with tech more effectively. Prior to that, I ran our accelerator programs, so helping tech startups navigate the government. Prior to that, worked in the government for a little bit at the White House on Capitol Hill, political campaigns, standard D.C. swamp rat stuff.
So really excited to have some great panelists here today. All are extremely accomplished in their own right with some very interesting stories to tell about the work that they’ve done both inside and outside of government. Hope to make this a bit of a conversation, so please make sure to pop questions in the Q&A and we’ll try to get to as many as we can. But I’ll kick things off with some introductions.
Devaki:
So my name’s Devaki, I’m the CEO and co-founder of CrowdAI. At CrowdAI, we’ve built a no-code end-to-end platform for anyone to deploy their own custom computer vision models.
So I want to briefly talk about how we started working with the U.S. government and how we got to be successful across a variety of different contracting vehicles as well as different projects. And then hopefully, the questions will kind of enable more conversation around that. So as I mentioned before, we started building best-in-class computer vision models, and doing a lot of research internally as a team. And around 2017, we were one of the only companies doing full motion video segmentation models. So we published some papers in NeurIPS and CVPR and we won a competition. So that’s when we were first picked up by a flagship AI project through an introduction through the DIU, and that’s when we got our first start in working with the DoD.
In parallel, what we realized was, given that we were a computer vision company, we have to go with where there’s the most imagery and video, and that’s the U.S. government. So we’ve been working with the U.S. government providing best-in-class computer vision since 2017. And since then we have been and continue to be part of DoD’s flagship AI projects, and we were the first AI vendor working with the JAIC, building wildfire models off of MQ-9 drones. We continue to navigate working with the U.S. government through a variety of different contracting mechanisms as well as a variety of different types of U.S. government bodies, and I’m happy to talk a little bit more about that in depth.
In parallel, I’m also a board member of the Alliance for Commercial Technology in Government. It’s a nonprofit that advocates for policies that can improve government services and bring more tech into government programs. So I’m really excited about this conversation that we have got representation for variety of different sides of both Silicon Valley as well as the U.S. government, as well as tech startups and Dcode. So I’m excited. Thank you for the time.
Nicole:
Thank you first of all Dcode for having me today. I’m Nicole Washington, Chief Transformation Officer for NGA Research. And for those of you who might not be familiar with NGA, we are the National Geospatial-Intelligence Agency doing some very important work for the country.
A little bit about my background, I’m a little bit different from most people in government. I actually have been in government for about six months now. And I’m here to do these things, just panels and communicate with industry and so on and so forth. But I came from private industry, I owned a couple of companies, started out as an engineer doing tech transition back in the day when there was AS/400 and mainframe, and we converted over to client-server, and worked for big six consulting. From there, I started my own company and internet technology consulting when the internet was becoming a big thing.
And about three years after I started my company, some of my guy friends came to me and they said, “Nicole, we’re trying to get more women, and African Americans, into this thing called angel investing, would you come, take a look?” And I was excited about almost anything. I said, “Sure.” I was so curious. I went and took a look and I was blown away by the fact that people were getting what I call free money. So I said, “I’m doing this and I’m telling everyone.” So that’s what I was doing for the last probably 12 years. This was back in 2009 until I came to the D.C. area. When I came to the D.C. area, I thought, how can I use my quirky gifts and talents and experiences to be of service to my country? And I just started looking around and socializing that idea among people that I knew.
And I came across NGA Research and they were looking for someone with relationships in industry and private capital in academia, so on and so forth, everything that I’d done. And they wanted someone to come in and do some transformation efforts around how we work with those different people, those different constituents, industry, academia, other government agencies, private capital folks and so on. So that’s what I’m here at NGA doing. It’s been an exciting ride. I believe I have been baptized by acronyms. So if I use some acronyms, I’ve been trained well. Forgive me.
Cory:
Yeah, Cory. I’m the CEO of a company called HAAS Alert. So we do cellular vehicle communication, situational awareness, and interoperability, mainly focusing on emergency services. So I used to work at a company called NAVTEQ or HERE maps. If you folks kind of familiar with any kind of Garmin device or in-dash vehicle mapping system, that was most likely that comes from the NAVTEQ HERE maps family of products. And actually when our company got started, we started looking at how we could get emergency fleets to communicate with vehicles out on the road as I was almost struck and killed by an ambulance personally here in the City of Chicago. I’ll say our entrance into the federal government was not really purposeful. So what happened was we were off building our product of enabling fleets to talk to connected cars and we came across a DHS Broad Agency Announcement looking for similar services.
So we actually applied. We were only three people at the time and we won it, so we had to quickly make some hires. But really from that stage, it kind of led us into finding out, okay, how do we get more and more federal government work? One, realizing that there were so many needs from the federal government and us realizing, wow, there’s real opportunity and value that we can deliver for these federal agencies. So we have a very sort of disparate experience of different types of contracts. But one thing I’ll say, I primarily focus on the federal work along with one of our sales folks. Somebody else internally actually runs a lot of the contract and grant writing these days, but by all means, oh, I’m still learning as well here on this panel so looking forward to the discussion. And I think we’re probably one of the smaller companies, but we really are bullish on federal government and doing more and more work with them.
Nate:
Thanks, Cory. So again, for the audience, feel free to start to drop the questions in the chat as you have them.
I’ll start with a few of my own. Again, we’ve got some folks here who’ve had some success in understanding and navigating the barriers that do exist in government. But I’ll kick off with a question for Nicole, on your side, six months in, what are some of the biggest barriers that you’ve seen that you’re sort of trying to tackle in terms of engaging with industry and getting tech on contract with the government? With the NGA?
Nicole:
Biggest barriers, I’ll speak about the barriers that have been big for industry that I’ve seen, and then I’ll talk a little bit about our barriers personally within the agency. For industry, we’re a large organization and it’s very hard to figure out who to talk to, right? That’s a big challenge and that’s something that I’m working on. The good thing is we do have a great process here for industry to navigate through. It’s just that you don’t really know where you are when that process ends or you don’t really know when that process has ended. So those are things that we know about and we are trying to work on those.
For us, I think the biggest barrier internal to the agency is that we are huge and who owns what, right? And where does industry come in? Because if we go to a conference, industry is going to see not just me, but they’re going to see my colleagues and other what we call key components. So they’re going to reach out to those other folks. So they don’t really know where to connect with government or they’re going to connect wherever they can, and we just have to figure out how do we work together so that we funnel them through the right place. I think those are some of the challenges that we know about again and that we’re working on.
Nate:
And again, Cory first, but from your perspective, having been brand new to government, trying to figure it out as a startup, had some success, what are the sort of barriers that you’ve seen and worked to overcome? Does that align with Nicole’s point or…
Cory:
Yeah, I think really it’s finding the motivated customer. So I think there all the regular complaints of like, “Oh, the contracts are long. It takes forever, and I got to dedicate time.” I mean once you get in the hang of how to apply for them, those kinds of things sort of go away. But it’s really matching your value with the value that’s needed and finding the person who’s going to be the champion to say like this is the work that I want to do with this company. It just makes life so much easier. There are other ways obviously, but once you find somebody whose problem you’re solving, it’s like everybody else out in the market that as companies we all sell to. It’s just once you identify and show them how you solve the problem and you have that person to say, great, I’m interested, do not let go of that person and do it quickly before they rotate, especially in DoD, move fast with them and get everything done before they move on to a different mission assignment. But yeah, that’s more valuable than anything that I’ve found.
Devaki:
Yeah, I’m going to echo what both Nicole and Cory said, right? The first thing is there’s this educational aspect. There are so many different technologies, and everything is so big, kind of making sure that the stakeholders know who’s doing what, what’s actually happening, and if there’s other technologies that are similar to yours that are already being implemented within that particular agency.
In parallel, obviously to Cory’s point, yeah, there is definitely turnover and just like large enterprise sales of seven figures to six figures. Even on the enterprise side, it’s a long lead time. So I don’t think that’s drastically different between the government and with enterprises. The issue is that people tend to leave and that there’s very rarely a clear transition. So you need to have not only a clear owner, they need to have budget, they want to execute against a mission set, and they’re going to be there to actually transition to a large program of record.
So that’s kind of the high level, more tactical. I think even if you have great technology, the place that you’re selling to may not have the infrastructure to bring in your technology successfully and scalably, right? So you have to do a lot more homework than this is the cool sexy technology that I’ve built. And then finally, even more tactically, is a lot of startups don’t have access to like classified networks, don’t have FedRAMP compliance. So as you get more and more complicated into more and more larger projects or you want to expand outside of kind of a POC or initial SBIR, there’s a lot more things you have to think about.
Nicole:
Yeah, I want to just go back around to what Cory said about finding your customer and that’s great. And I want to make sure people understand NGA is not your customer, someone inside of NGA is, and that’s why it’s a little bit difficult because it’s a huge organization. There might be several customers in here, but that’s the idea. We got to get you connected with that person, as Devaki has said, who would be your champion, who would be able to fund your initiative, who would be able to bring you in.
Cory:
One other thing to add to what Devaki said, we’re not FedRAMPed yet, but what I have seen happening is as we’re completing these projects, we have a good CPAR score. I don’t know if anyone looks at it, but I’ve heard it’s good. It’s getting easier and easier to do these projects. And right now, we’re going after our first ATO, we get through this IATT thing. So it’s kind of we’re using these projects as sort of a natural evolution to our federal qualifications versus trying to start with saying, well, let’s get FedRAMP first. We’re kind of using these contracts as a way to migrate to that. And so for us, it’s been an evolution. As a startup, we don’t have the capability to say, hey, we’re going to take the next year and a half or two years and spend X dollars to go get these things. We’re kind of using those contracts to do it.
Nate:
And for the folks who are brand new to government, we got a couple acronyms in there. Want to speak quickly, what FedRAMP and ATO is to you?
Cory:
Well, I don’t actually understand the full of what’s required with FedRAMP. I do know ATO and IATT. The IATT I mentioned “interim authority to test” and then an IATO “interim authority to operate.” We have found that we need by surprise in the middle of the contract, realize we have to have those to actually deploy on a military base. So that’s basically giving you a set time and it’s kind of gating the pilot and there’s a bunch of security checks that have to happen for you to do that. But it’s all on a path for us to get an ATO, which is an authority to operate so that we can actually sell and deploy onto the base.
And just in the nature of what we do with situational awareness, interoperability, cellular communications, it’s very heavily guarded. So for us, I feel like very specifically and we’ve been told it’s tougher. I think other folks who have ATO, it’s been easier to do. But if you’re dealing with connected services, hardware, if you’re really part of things that can be exposed, it becomes a higher path. If someone else wants to take a stab at explaining FedRAMP, please.
Devaki:
Yeah, essentially it’s specifically standardized security and authorization for cloud products and services.
Nate:
And a beast of a process.
Devaki:
Federal Risk and Authorization Management Program.
Cory:
And it’s expensive and takes a long time unless you can find someone to deal with.
Nicole:
I’m taking notes guys. Expensive, beast of a process.
Nate:
Nicole, so you mentioned sort of the importance of figuring out how to get into the right place within a large agency. Do you have any specific advice if someone’s in the audience, they’re a startup, they have a product that they think would solve a problem for the NGA, how do they even get started?
Nicole:
Well, I think the first thing that you have to do is your homework around the agency. You have to understand the agency’s mission and that goes for any agency. What are they in business to do? Or what are they serving, if you want to use a government term. What are they serving you to do? What has Congress said that they must do? And then look at how you can impact that mission, so being a student of what you do and how it can impact the mission. So you have this in government, they call it capabilities–what do you do? How do your capabilities impact what that agency’s mission does? You have to be able to articulate how the alignment between those two, because the government generally won’t be able to do that for you, and you are making that conversation or that decision easier for the person that you talk to.
Let’s say, you do find someone that can fund you or bring you in that probably does align with what you’re doing, the better you can articulate that, the more likely you are to get that next call, follow up email, or a handoff to someone who can actually sign the dotted line for you to complete that agreement. I did see someone ask about NGA, if I may, Nate, NGA’s SBIR program. We do have an SBIR program. A lot of the agencies do have an SBIR program. Ours is not as large as some of the other ones, but I should be able to get that information, the link to maybe Emily or some of the Dcode folks so that you can send it out to everyone afterwards. We also have a small business office, so I can talk more about that later if you’d like.
Nate:
Anything Cory, Devaki in terms of where to get started?
Devaki:
Yeah, I want to echo what Nicole said. When we first started CrowdAI, we were obviously tech first. We would say we could help you build computer vision models i.e. automate the analyst workflow. So for example, for NGA, we know that people look at pixels all day every day, and we say using our technology you can automate what your analysts are looking at so they could actually focus on the important things. But the “so what” wasn’t there, right? So we actually had to bring on people that are former NGA analysts, people that worked at the Air Force who really understand the mission sets. You could actually talk to the customer about how your technology can improve a specific mission. So instead of going from computer vision can improve an analyst’s workflow, it went to, it takes X amount of time for analysts to look at a hundred kilometer by a hundred kilometer area in one particular region or one particular area of responsibility. And using our technology, you could get that down to seconds.
So therefore, a person could focus on just identifying, is this actually in a list airstrip or is this something that we’ve already known that’s always been there? So it’s really, I think the beginning, I 100% agree with Nicole, which is you have to help define the mission with the customers so they’re more incentivized to say, okay, this is how it’s actually going to help my workflow.
In parallel, I do still think that there’s still that gap, which is you may have a really excited mission owner and we have a lot of excited mission owners, but they may not be the person that has access to the budget. So in parallel, we actually have to learn how to navigate budget and so we actually gotten on a bunch of different contracting vehicles so you could quickly get onto a contract if there is budget. So I’m happy to talk a little bit about that as well later.
Cory:
We took a different approach only because we weren’t targeting federal out of the gate. So we actually had worked with so many emergency services in the state and local level that then we started to bring that… There was actually a gap where technologies and solutions were being paid for state and local agencies. But if it was for federal, it wasn’t available because we didn’t have this ATO and it wasn’t there. So ours, we kind of had this sort of pull through with federal where the emergency services were saying, why do they have that and we don’t? And so then it became, okay, well how do you get it, and how do we buy this? Which of course is always an interesting question because we just weren’t used to that. And so then having to figure out, oh, we have to create a way for them to buy this into the things that, Devaki mentioned, there’s different contracts you can get on, but just because you get on that contract too, we realize that’s not a sure win.
You can’t just sell your product to some distributor or get on some schedule and magically the orders are going to cut. Just like any other customer, they still have to have the need. And I love that you mentioned the so what because a lot of times it’s like if you’re just trying to sell features and selling this, the tack, the people aren’t going to be interested. It’s a harder battle. But if you find the value proposition that they’re looking to fill and the problem they have and how you make it easier, you don’t even really need to talk about the how. It’s just kind of like, here’s the problem to help you succeed with your mission on what it is.
But for folks that have products already outside of federal, it helps greatly, because it kind of creates a little bit of FOMO too if it’s stuff where it’s like, well man, it’s so much easier doing it in the private industry and other agencies, here’s how we can help you. And it’s just all of a sudden kind of becomes almost can help sell it for you for them to see how it can help with their mission.
Devaki:
I guess it also depends on the company and the product, right? You guys we’re very specific on the target and the product and what you’re building. We were much more of a broad-based platform. So not only was our customer, the U.S. government, but we also have customers Anheuser-Busch, right? So it’s thinking about if you have a broad platform versus if you have a narrow platform and how do you focus it based on that conversation. It’s just like any other sale. It’s really like any sales process, actually.
Nate:
Another question from the audience that sort of ties into the how do we buy it and how do you contract. We had a question from Jorge about what the pros and cons might be to partnering with bigger primes if you are a small business? Lots of people have lots of thoughts on these.
Devaki:
I could start. We work with both primes as well as direct. I think in certain cases, we were pushed down in terms of the amount of money we would get and also we lost that government relationship, but we also wouldn’t have been able to get our foot in the door without that strategic partner. In parallel, we actually have some fantastic strategic partners that we work with that don’t do what we’re doing. So ideally, you find that strategic partner that doesn’t do what you’re doing and don’t have that on their roadmap and won’t slowly take over parts of your business. But I think that we still rely heavily on it. We do rely on large strategic partners but we are just more careful.
Cory:
I don’t like priming. So I mean, at all costs we will sub out at any time. We’ve done prime. We’re priming one now it’s only because we’re small. We’re not really set up to have four people to head up all the administrative processes and kind of herding the cats for all the different partners. It’s fine; we’ve tried to win some and tried to sort of push the priming off onto somebody else and say, here, you prime it, you can take more budget from it. Here’s what we want to do, and sometimes that hasn’t worked. But I think look, if you don’t want to prime but you see a contract still, go for it. Pull a team together, try to convince somebody else to prime if you win it. To Devaki’s point, we’ve actually now got some really good partners that we’ve worked with twice now where that’s their model.
They prime contracts, they pull together subs. That’s what they want to do. They’re more of a sort of a medium-sized consulting agency that does that, and we’ve had good success doing things that way and that’s like a natural fit. And just like in the private sector, they just become a really good natural partner that you’re kind of going after the stuff then together. But there are concerns of competition and if somebody always wants to get more, and it also kind of depends on how they’re motivated. Are they rewarded by the contract award? Are they rewarded by the dollar amount? Are they rewarded just to get contracts? Looking at the KPIs of the folks that you’re working with to see what’s making them successful can also kind of tip their hat into what kind of partners they’re going to be. But yeah, sometimes the priming is just such a pain, you’d rather just sub it. But at the end of the day, you need to get to work. So sometimes you just have to do it.
Nicole:
I think this partnership, when you look at advantages and disadvantages, it can be advantageous for two reasons. And as a business, you have to have customers, and you have to have revenue to continue going, right? And if you work under a prime or partner with a large strategic partner, you can get those things. It can be helpful for that. I think you both kind of alluded to it, especially if you’re just starting out in government and you just are not sure, you’ve never had a government customer before because it’s pretty hairy, which is why Cory does not like to prime, right Cory?
Cory:
Yeah.
Nicole:
But the other thing is the disadvantages. I think, Devaki, you enunciated it very clearly. Sometimes a prime can be a bad partner and take your business, mess up your relationship. You just have to be careful. So it’s like partner with anyone else, you have to find the right partner, be strategic about it. But I will take this time to mention that a lot of the agencies do have a Mentor-Protege program, particularly for people who are just starting out in government. And that program, at NGA, actually I think there’s a call for it out right now, I believe. And that program is done through our small business office, someone asked in the chat.
And it’s meant to help companies who’ve never done business with federal government kind of ease into it. So the prime has to figure out, actually you work together to figure out what types of things you need to learn or you want to get exposed to as a smaller company to prepare you to come in and do work for any agency really. So that program is out there. There’s also the SBA Mentor-Protege program that I’ve seen people take advantage of and this is one that basically subs out. The larger primes will sub out, and it can help you generate revenue and the customers as well. So those are two things that might be helpful for our audience.
Nate:
And I know there’s always sort of a mixed experience in terms of going to these offices that are somewhat cross-cutting but aren’t the direct customers. So curious Devaki or Cory, do you have experience with small business offices from the startup side?
Cory:
No, we just personally haven’t. Actually, I will say the first contracts that we did, the two primes that were those Broad Agency Announcements, I’ll say the person wound up turning into a mentor for us. We’re so helpful basically just saying, look, we really like what you all have. You need to federalize what you’re doing here and kind of very candid about who need to do these things to be ready to execute on this contract successfully. So that kind of led us to make some additional hires and figure out how to do that. So I think that was very lucky.
I would like to think that every agency that awards contracts to startups is that helpful to recognize like, hey, we really want to work with this company but they’re not yet there but we trust that they’re coachable and they can get there at least. Because the techs there, but it’s all the other attributes of a business to be able to operate at a federal level and the conciseness even from the budget to the reporting just to how you talk about and the language you use it, they were super helpful in us getting there.
So if that’s what the small business office does, I wish we did that in the beginning. But I do think having that kind of mentor and somebody to kind of hold your hand and not be afraid to ask simple, I didn’t even know what fringe was, I didn’t know what these things were in budget items. So it’s having somebody that you can ask the most basic questions to without having to worry about sounding dumb or concerned that like, oh, I won this contract, I’m supposed to know how to do this. It’s okay sometimes to just say, great, I won this, we want to do this, we’re coachable. I want to learn how to do it. Help us and we want to deliver. And that’s how we went about that first contract that we got.
Devaki:
Yeah, I’ll split it into two answers depending on what you guys are asking. SBIR program offices, once you’ve won an award, they’re really good about helping you go through the entire process, at least for that individual SBIR. I think transition is still something that’s outside of the hands of SBIRs. Small business innovation offices within government agencies, I think we’ve had mixed results. Just like innovation teams at Fortune 500 companies, they’re incentivized to learn about technology and take a lot of meetings. They’re not necessarily incentivized to then convert that into or they necessarily may not have budget to then convert that into contracts that then move into contracting vehicles. So I think it really just depends. But from working both on the enterprise and government side, I think innovation, it really depends on how it’s funded and how it’s recognized by the leadership of that particular agency.
Nicole:
And I just want to clarify for our audience, the SBIR program is part of small business, but small business for us is when we create those programs like Mentor-Protege so that we can help more small businesses come in. Because I think there’s a bit of a misconception about government in some audiences, maybe not ours because we are astute here, but that government does not work with small businesses, and that’s not true, at least not for our agency here.
We do want to work with small businesses. In fact, I think there’s an allocation or a mandate that we work with some small businesses. So one of the things that we found is just a hurdle that they have to cross. And so that’s why this small business program came about to pretty much enable the small businesses to have opportunity just as the large primes do by kind of connecting the two.
Cory:
Yeah, and there’s SBIRs and other things besides DoD, I don’t know. We just did some for DOT, Department of Transportation. I don’t think they were doing them that often is what folks had told me. And now they’re done two rounds, so the SBIR is all over the place. That doesn’t have to be… Now, some of them are different. They didn’t offer the Direct to Phase II, so they’re all a little different from what we’ve seen. But you can definitely broaden the scope outside of DoD, which are much easier by the way, security-wise.
Nate:
So also, we’ve got some government folks in the audience too, so want to make sure to sort of flip the script a little bit on that front as well. What sort of advice would you have to folks within government who are looking to get better at engaging with technology? Start with Cory.
Cory:
All right, I’ll try to be concise. No, most of the folks when they’re working with a small company, they’re already bought in that we have to start working with smaller companies, startups, new techno, they’re already bought in. So I haven’t really seen a lot of pushback on folks complaining about having to work with smaller companies or startups or new tack. But where they struggle is, I think some folks think it’s going to be easier and like, oh, there’s a SBIR. It’s going to be easy, just get a Phase I or apply for Phase II, we’re with you. And then all of a sudden, they’re not aware of all the grind that’s included in those next steps, and to no fault of their own because sometimes they don’t know. And it’s pitched as a very simple way to get something done and it’s not necessarily. So I would say understanding and looking at any, if your agency has already gone through a Phase III, really understanding what it took to take that company’s products through that process, a lot of people get Phase Is, a lot of people go Direct to Phase II.
I don’t know, you hear less of Phase IIIs or you hear less of products getting commercialized out of those Phase IIs whether you win I to II or Direct to II. So that is the hard part. With startups, you always hear, there’s always talks of how so-and-so raised a hundred million? Well, tell me how you raised $500,000. That’s kind of bring it down to a smaller scale to understand how can I help this company get through the steps that they’re going to need to do to commercialize it, at least for the SBIRs. That’s where I’ve seen the hardest part. And when it comes down to commercialization, it becomes sometimes foreign to some of the agencies of like, look, I got it to this part, now you have to do the rest.
Well, you still need all this other support and sort of you’re left kind of grabbing at straws trying to find out who do I have to talk to? And a lot of people don’t know. So the only way we found to solve that problem is just escalate, just go up and figure out. So it goes back up and comes back down, so then you have a path forward, which may be some of these small business offices that we’ve never been in touch with I feel able to help with. But I think that’s the one biggest gap is between this Phase II and Phase III and beyond. That seems to be sort of a gray area for some of the work that we’ve done at least.
Nate:
Devaki or Nicole, advice for folks within government who are trying to figure out how do I bring tech in more effectively? How do I open things up and work more with startups?
Devaki:
I think that to Cory’s point, right now, to move into kind of Phase II and beyond, you need to have a champion that is willing to move up the ladder to get a large pot of money, right? So I think we should flip the script. For example, we’re on a Phase II and this particular group of people is really, really excited. They’re really happy about the output and the only way to move forward is now we’re going to have to speak with the head of this particular command. And that is a huge, huge lift. You spend about a year and 18, 12 to 18 months executing. Everybody’s really happy with it, but they look around and say, well, we actually need a transition pot of money. And the only way we could do that is if we go to our boss’s boss’s boss. So I think that when companies get signed onto a Phase II, it’s really exciting because the money doesn’t come from that particular customer.
It comes from a third-party pot of money, which makes it a lot easier for them to say, of course, I’ll sign up for it. So I think when one allocates, these are what a group allocates that this is the number of Phase IIs we would like to execute within our agency and this is the pot of money that we will have for continuing these if X percent are successful, then I think the SBIR program would be looked on more favorably for long term.
Because you have to remember, we’re not a SBIR mill, we’re not a consulting company, we’re a software company. So we don’t rely on just consulting projects. After consulting projects, we rely on continued use and then continued growth once you’ve shown success. And that’s what I think is going to be really important. But this is obviously only the SBIR route, then you’ve got the other routes and you could do the BIA. And those are generally multiyear, so they already have the allocation of money you could obviously subcontract and then you already have an allocation of money. But specifically for SBIRs, I think there needs to be much more clear transition and a clear allocation of this is how much we’re going to do and go from there.
Cory:
And it helps to figure that out in the beginning, the pricing. I’ve seen some agencies caught off guard at a price standpoint. There was another company that was presenting everything went great, had a Direct to Phase II, everything was good, the company is excited. All of a sudden the agency realizes the price and it doesn’t happen until further down the line. And you’re like, well hold on. And it’s like, well, just like any customer, you want to make sure there’s a good fit in the beginning of your sales funnel because if you waste, not waste, but you spend all this time, you might create some really good R&D and maybe move the needle for your own company, which some folks are looking to do, it’s fine. But when you’re a company looking to commercially monetize and sell into the federal government, that’s very different than using the money to just kind of work on some R&D.
And then if it sells into the federal government, great. If not, we helped develop this technology that maybe we can sell into later. So if you’re a company that’s truly trying to use this contract vehicle as a way to get commercial sales and real contracts, that kind of stuff, it’s well worth just avoiding it all together in my opinion than realizing it too far down the line. And especially for startups, if you have investors and stuff you’re communicating in as, oh, well you know what? We’re priced out, that’s not a good message either. So that alignment needs to be there, which helps to have those internal champions out of the gate that you can have these honest conversations with.
And to Devaki’s point of you have to go up for folks that are from federal government, we have had amazing champions that have signed multiple letters to help this go up and say, go talk to this person. If your company, you prove yourself as being able to also conduct at that level, folks will get behind you if they want that product and they’ll figure out a way to make it happen. But you really got to be comfortable too, stepping outside of that comfort zone of going, oh, God, I got to put my name on something three to four levels up. That’s a big deal to folks.
Devaki:
You have to be deliberate about getting your champions. And a way we solved that was actually putting together a federal advisory board that has those high level connections. So it really depends on how you go about it, but I think you have to be deliberate knowing that unlike in commercial, you can come in and they could swipe a credit card, they could swipe a credit card and they’ll have to go up incrementally. This, I think you have to go fairly high up to get the amount that you potentially are going to be licensing your software with.
Nicole:
So just to kind of look at what I see something in the chat talking about going from Phase I to Phase III as well, or Phase II, all of the agencies, the climb is different, as you two were saying, the climb is different with every agency. How fast you go is different, how far you can go is different. The agencies have different pots of money to pull from. And the idea is for it to be progressively getting to finding the innovations that really will impact the agency. So the net is cast wide at Phase I and it does, as Cory was saying, it gets smaller and smaller. It’s like funnel. And this is just one way to work with government. But one thing that you should really understand and take to heart is that government really does want to work with industry and they want those innovations, which is why they create vehicles like SBIR, and innovation fund, STTR.
So really I think what we are here to do today is to figure out how. First of all, I’m taking a lot of notes because it’s good to hear where the bottlenecks are. That’s the only way we can try to fix them. And then to figure out how to or let you know what are the opportunities and how you navigate a little bit better. And to that end, I do want to mention a couple of things that we have with our partner, AFWERX, which does the SBIRs. And we kind of work with them on their SBIRs as well. They have two programs, TACFI and STRATFI, which are very good. And they also bring in the two of you were talking about what happens at that Phase III, they bring in other pots of money. One thing we don’t want is for government to be your only customer.
That doesn’t benefit any of us in most cases. So that is a chance for you to get D.C. money, government money, and there’s a third pot, maybe that’s agency. But anyway, there’s three pots of money that come together there and that’s diversification and that’s a non-dilutive aspect for those of you who might be raising capital. It’s great for that. So the bottom line I think is you have to be strategic. You have to understand these different vehicles and hopefully that forms like this will help with that and be strategic about which ones to tackle and why, which I think Cory enunciated very, very well.
Cory:
I was just going to say to add on to that question one, the fast development and deliverables by end of Phase II, you can go through if some people have one note, you can go faster. You don’t have to wait for the monthly gate and da, da, da. You can go faster. I mean, I don’t know if it’s kind of you can go out of order sometimes on some of the deliverable because it’s an R&D. I mean things change. So you can get a 12 month or if you did the full 15, fine, but even if you did 12, you can get done in 7. I mean they want to move this stuff along too. So you can go, I think is, unless there’s agencies that don’t like to go faster, as long as your stakeholders are all on board, you can go faster. You don’t have to go by that clock, I don’t believe.
Devaki:
And you can go from Phase I to Phase III if you have the right buyer. So it’s just really about making sure you execute really well and then getting with people with the pot of money to work on that contract with you.
Nate:
Digging a little bit more on that question, because I think, following up on Thanos’s question here to wrap up. So you both run commercial companies, Cory and Devaki. When you’re using the government to fund R&D via SBIR or something else, are there challenges there that people should be aware of? To that question, is there government understanding of what you’re trying to do and how you do it? Sounds like Cory, from your perspective, you’ve been able to be pretty flexible, but…
Cory:
Yeah, I love it.
Devaki:
Oh, sorry, go for it.
Cory:
No, I think it’s a fantastic program. I think it’s great ways to do R&D. I think it’s a really interesting, unique way to bring something to market with a much bigger customer base. I think I love those programs. I mean we’ve gotten a ton of value out of this stuff on tech, and the federal government doesn’t tip well, at least in our case, doesn’t want what we have out of the box in state, local. They have very specific needs. They want this, they want this, they want this. So if you have to do all that tinkering yourself and all that R&D internally, especially depending on your startup, whether you’re 3 or 50 people, it’s expensive.
And then you have to explain why you’re spending time and resources and development on this. It’s a whole mess like where hey, it puts you in sort of this mindset of we’re doing R&D, it’s a federal contract. Your team that you allocate to work on this is going to be in that head space of we’re going to take, come out of our standard commercial sale of what we’re selling over and over, and we’re actually going to have more of open dialogue, understand what needs to be tweaked and modified and developed to meet the needs of this federal agency.
So I think it’s a great way to do it and it’s a nice way to kind of get your team to work on another very interesting project and develop these new features. Because anything else you develop in federal that we found is also advantageous to state, local, and other customers. So I understand there may be some folks developing something very unique to federal government. But for the most part, we found 90% of what we learned in the R&D and on these projects has actually helped benefit all our other customers too. And if they’re funding it and they’re paying for, it’s like a great way to get the R&D done and open up potential new customers.
Devaki:
Well, I agree with Cory. We’ve got enterprise customers from, as I mentioned before, beer manufacturers to roof tile manufacturers. So for us, laying the groundwork of how our platform can be extensible to different use cases, and different sensor types, really started with the U.S. government. I’m really grateful for that. But a lot of our purchasing now that the U.S. government does is actually on licenses. It’s actually moved away from pure R&D. And so the SBIR program helped us lay that groundwork, both federal as well as on the commercial side.
Nate:
Thank you. So I know we’re running up on time here. Really, really appreciate all the insights that everyone shared today. Look forward to continuing the conversation. You’re all doing super interesting work, so looking forward to it.