A look at what it takes to build a dual-use startup
In the world of startups, moving fast is an advantage, but only if you are moving in the right direction. A thorough understanding of the problem you’re trying to solve and the landscape in which you’re applying it, whether it’s funding, customer acquisition, or product development, is key.
For dual-use startups, this is a gargantuan task. Learn to Win, an active platform that streamlines training for high-performance teams and improves professional education in areas from athletics to the defense sector, recently learned how to navigate this complex maze.
An alum of the 2019 Hacking 4 Defense® course at Stanford and participant in our recent H4XLabs cohort, Learn to Win developed a software prototype to revolutionize training for Air Force fighter pilots. The team had a background in high performance athletic training and developed a micro-video playbook learning platform for professional and NCAA athletes. They parlayed that knowledge into getting customers across the government and enterprise sectors--becoming the first H4D team to land a hard-to-get SBIR Phase III funding, and this week announcing $4 million in seed funding to bring its mobile-first active learning platform to first responders, frontline workers and the military.
Recently, the company’s co-founders -- Andrew Powell, Sasha Seymore, and Phil Stiefel -- shared how their collaboration with academia, enterprise and government helped them gain insights and business intelligence they wouldn’t have otherwise been able to get. Starting with a solid foundation, finding good mentors, being able to demonstrate value for dual uses and being guided by a shared mission helped them achieve success, they said. Here are their takeaways:
Start with a solid foundation
Learn to Win credits H4D®, the national academic program sponsored by NSIN and powered by BMNT and its nonprofit arm, The Common Mission Project, with giving them critical skills and knowledge for their startup journey.
“The appeal of Hacking 4 Defense was getting to learn the entrepreneurial skill set in the Lean Startup framework while also working on problems that really matter,” Andrew said. “The degree of collaboration and level of access was really impressive. And it was so valuable getting out into the field. Through the program, we spoke to more than 100 operators involved in all different parts of the training, enabling us to understand the nitty gritty of what people needed. Without Hacking 4 Defense, it would have taken us years to figure out the nuances of the challenges and how we could contribute. We've now gone beyond pilot training but that was one of the big things that struck me about being in the class.”
Phil added: “What struck me was how real world it was. InHacking 4 Defense, you have to prove your concepts in the laboratory of real life. It’s an effective way to educate people.”
Find good mentors
Following their success with the class, the team wanted to explore the technology and get real-world user data.
Finding helpful experts to help navigate the dual-use market was key, since finding a home for a private sector startup in the government has challenges from both sides. From a startup’s perspective, there are lots of unknowns in understanding how to bring a solution into an unfamiliar, yet established system. This includes conducting outreach with the right people, testing ideas effectively, and deeply understanding the problems you’re trying to solve. From the government perspective, there are significant hurdles around finding and adopting new technologies that fit the bill.
Learn to Win had proven their worth in the enterprise world and demonstrated the benefits of their modern, digitally based training.They also knew they’d need to evolve the idea to address the problems specific to the Department of Defense. But first, they needed funding to build out a solution customized for the DoD and prove their capacity as a dual-use business.
This is the point where a lot of young startups would throw their hands up. Getting a foot in the government door seems like an unclimbable wall. However, talking to the right people made all the difference. “As graduate students you can have a great idea and a ton of drive, but you're going to hit these really tough hurdles. And when you hit those hurdles, you can either invest a ton of time and spend hours and hours of research and think you might have the right answer. Or you can talk to somebody who's done it before,” Phil said.
In collaboration with university, industry and defense organizations supplemented with H4XLabs weekly coaching sessions, Learn to Win fast-tracked their understanding of funding programs like SBIR -- the self-described ‘America’s seed fund’ -- and helped them get their materials in prime shape for a strong application.
The result was a funding turnaround so fast any VC firm would gawk; one month from proposal, they received $750,000. In total, they’ve received $2.6M from the Air Force Inspection Agency. In doing so, Learn to Win was the first H4D alumnus to transition to SBIR Phase III.
Funding bodies like SBIR are valuable because they allow startups to introduce their solutions within government, but without an experienced mentor this can be difficult to do--particularly once you approachSBIR Phase III, where the government is spending its own dollars and therefore has a much lower acceptance rate.
SBIR Phase III funding has several distinct advantages. It enables sole-source contracting, which means startups can receive any type of money from more or less any budget. If approved by the DoD, as was the case with Learn to Win, any department within the government’s defense sector could choose to leverage the company’s services with minimal contracting overhead.Additionally, they can customize the contract to their needs, leveraging the product in a small or big way. These are huge incentives for adoption; a low-friction acquisition process will inevitably translate to rapid business growth.
Another benefit: Learn to Win was uniquely positioned to connect with the burning pain points of their customer. In tandem with the private sector, Learn to Win arrived at a time when the DoD was seeing a big push to implement mobile training and making content more accessible. The customer was already looking for a replacement, and Learn to Win was in a good spot to communicate their full value to the Air Force because of their work during the SBIR Phase II.
Still, it’s not enough to say, “This worked for the private sector!” to convert government customers. The connection between H4D and Phase III SBIR funding comes alive in positioning a startup for an impactful proof of concept, and validating a dual-use business model, Learn to Win’s co-founders said.
Demonstrate value for dual uses
Government funding can present challenges for startups that might want to seek SiliconValley funding down the road, but that wasn’t the case for Learn to Win, which was able to demonstrate its value in both government and commercial use cases.
They had worked with an elite sports team where each player needed to know a specific set of skills, and had done so quickly and consistently. Similarly, their work with the Air Force’s fighter squadron to prepare for a large exercise proved the value of their mission within government.
In both cases, Learn to Win had something to point to: a high-performance learning tool that makes everybody a faster learner, makes everybody a better teacher, and makes every organization more agile. That showed investors the power of their technology to replace the archaic training models, based on three-ring binders and outdated PowerPoints, which most of their incumbent customers were working with.
Investors could see a manifestation of the potential for a multi-billion dollar tech company in a dual-use way.
Be guided by a shared mission
Andrew said of the process: “In Silicon Valley, there's kind of this historical conventional wisdom that it's slow and laborious to work with the government. But that really hasn't been our experience. It's been fast, it's been agile. It's been welcoming. And we feel really excited about both the potential to build a very impactful business, and also to build a very successful business. There are innovators in government, in defense, building these long-term sustainable relationships with tech companies. And multi-billion dollar tech companies can be built in a dual-use way. And we have felt that through collaborating with that whole ecosystem of innovators.”
He added that a vital ingredient to a startup’s survival is a sense of purpose. One thing Learn to Win’s co-founders reference repeatedly in conversation about their company’s origin is how having a shared vision and a desire to be mission-driven is key for them.
“There’s a benefit to getting plugged in with folks who share the mission around a belief that America needs to really think hard about how we innovate and how the private sector contributes. It’s about finding that kindred spirit, people who share that mission, who you can connect with. It's not just about building a company, but it's about supporting our country and supporting a peaceful and prosperous world.”
Photo: Learn to Win and its H4D problem sponsors from the Air Combat Command Training Support Squadron. Pictured, from left: Lt Col Davisson; Learn to Win CEO Andrew Powell; Learn to Win COO Sasha Seymore; Lt Col Bubar; Lt Col Isokane; Phil Stiefel, DoD Team Lead at Learn to Win; and Maj Gen Huyck.
Photo courtesy of Learn to Win.