The uncomfortable truth facing most VC-backed start-ups in the defense industry…
Success is defined by growth, and growth needs to lead to rapid and large scaling to achieve the goals of the VC-backing, and this just doesn’t happen often in the defense industry. It is not that it is impossible to do, just unlikely and not regularly accomplished. The reasons for this are the disparate ways that users, funding, and programmatics are separated within the DoD. The short version is to achieve that kind of success, you require the combination of three things: many users from all/most commands, a platform sponsorship from service level headquarters, and a transition path to for that new service level capability to a PEO. None of those three things are easy to come by, but many try to compile the recipe out of order, but here's the correct method.
First, you need to compile your user base from multiple commands. The number of users is important, but the most critical thing is funding. You need to get the commands to pay for their own usage, both now AND in the future. Too many times the goal is to kick the bill up the chain from the start, and I can tell you this is the WORST way to try for sustained funding.
Second, with your large and diverse self-funded user base, you then approach a service level headquarters directorate to establish a service-wide capability. The service HQ directorate wants fixed-cost high-impact capabilities as banner projects to champion their impact and facilitation to the force. They have the luxury of cherry-picking winners, so you want your offer to be the cheapest, easiest, most impactful choice they can make. If done right, you can have the HQ pick up the bill for just the fixed cost of platform operation, and the commands/units pay for their usage of the platform. All the HQ is doing at that point is allotting small fixed cost and a unifying contract to pull the preexisting separate contracts/funding efforts into a single unified effort, while also giving the users a smaller bill in the process through their cost offset of operations.
Third, with the establishment and continued success of the new service-level platform capability, after a year or two it will be time to pass off the operational care and funding of the capability to a PEO. This is always a challenging task, but the most successful way to execute this task is from the HQ to the PEO. You want taskings to flow down not up, as within the military structure rank has its benefits, and you want the HQ driving the PEO into the capability transition. The transition to a PEO brings sustainment funding through POM cycles, which getting back to our original goal, means large-multi-year funding at fully scaled success.
Build it tactically, fund it locally, scale it operationally, unify it programmatically, and sustain it finally….in that order. Recipe complete.
