53. The Journey from Government Consulting to CEO of In-Q-Tel | All Quiet on the Second Front

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when I first got here I was trying to really make sense of the organization what did they really want from inkel and the big Epiphany that I had was this idea that in the traditional Venture business how do I get the highest quality deal flow you don't worry about quantity cuz quantity is just like noise in the system the government agencies wanted from us was both quantity and quality they wanted to see everything but they also wanted to see the highest quality Tech this country was developing which I happen to believe was resident with inventure back star companies [Music] this is All Quiet on the second front podcast where Boring conversations around defense Tech and National Security come to die join me Tyler sweat and my second front comrades as we dismantle the mundane cut through the bureaucratic BS to demystify the world of Defense Tech but be warned this is not a typical government podcast ready to get weird all right what's up everybody uh welcome to another episode of All Quiet on the second front the podcast where Boring defense talk comes to die uh I am your host Tyler sweat uh excited to be joined today by uh colleague friend partner you know Exemplar of sort of like American exceptionalism and indan Innovation Steve Bower um I'm gonna let Steve do his intro and all of that um but I'll say I'm very excited for the conversation given your career and where you sit and your Vantage Point on everything from sort of the global economics and the geopolitical down to the Venture and the tech operators and the government sort of mission use case that whole interet all of those complicated roads kind of drive right through you um so thanks a bunch for taking some time to come hang out to well thank you Tyler I'm I'm I'm excited to be here uh you and I have talked about these topics a lot over the years and and so it'll be fun uh to share with everybody else like yeah so I've had the you know you alluded to we we've had the benefit of knowing each other for quite some time for folks out there that might not be as familiar with you kind of give everybody the the who is Steve what's your career kind of look like what are you doing now and and sort of what's the organization sure so uh I actually grew up in Washington DC uh I'm one of the few people is proud to be born in in DC I was George Washington University Hospital and I grew up with my dad working 20 years for the federal government and a lot of my friends parents working for the government I went off to college uh came back and worked for a government consulting firm for two years in Rosland and sort of thought that was going to be my life I was going to live in DC I think it's uh one of the greatest cities in the world and uh was going to sort of do stuff sort government related but when I did that government Consulting uh job for two years I I figured out I like the business aspect of what I did more than the public sector aspect of what I was doing so I decided to go out and get an MBA Rebrand myself more as a business person because I sort of decided I was going to head down that path a little bit more and so I went out to California silon value to get my MBA and um uh I thought I was going to my two-e California vacation I was going to head head right back to DC cuz I I had a a really fun time from like Friday at 5:00 to Monday at 9:00 when I was living in DC and I wanted to continue that but when I got out to Silicon Valley I fell in love with the whole entrepreneurial nature of Silicon Valley and this world of startups you know which you know sort of scratched every itch that I got from public sector Consulting right you know like everything you do matters in a startup company like you're incredibly connected to the customer you get as much responsibility as an employee that you can demonstrate up until the point where you demonstrate you can't handle it more cuz you know there's just so much to do in in a startup company and it was Dynamic and fast-paced and I could wear shorts and a t-shirt and you know I was like you know wow this sounds awesome uh uh this is way better than a sutile exactly you know so um uh uh uh so I worked for three different startup companies uh coming out of business school in all in silon Valley and I always like to joke one went out of business one got bought one went public so I had the whole spectrum of outcome and then um you know along the way it gotten some exposure to what uh venture capitalist uh um uh did and so I stayed in touch with a few different firms and you know in January of 1999 when uh we were at the tail end of a bull uh Market in the Venture uh Capital uh you know Source Cycles which is a great time to get a job right because you know firms are raising new funds with you know uh larger and larger amounts of money under management and they need more people to help put that money to work um I got an offer from a firm called Interwest Partners to join to do you know uh some combination of uh uh e-commerce and uh Enterprise software investing for them I took that and moved over uh to the Venture side in uh January 1999 now the tail end of a bull market is a great time to get a job in Venture uh uh but it's a tough time to like pure job uh uh uh preservation is story exactly right because um you know you tend to be investing in companies at high prices you know at that part of the cycle and they come to fruition in terms of when they generate liquidity in a bare market right and that's you know so um you know uh uh job number one is to keep your job right you know I was I was able to do that but as you hit sort of 2003 2004 a lot of people in the Venture industry and I was no exception were trying to figure out how do you differentiate yourself as an investor how do you figure out a strategy that will make sense in in sort of an environment where people were thinking I think correctly that fortune 1000 was not going to buy a ton of enterprise software because they just bought all this stuff in the 90s that they hadn't really gotten value from that a lot of it was sitting on the shelf and so I went back to my roots and I remember that the US government used to be a large buyer of it products and services but it was never a comp a vertical Market that a the companies I was looking at we pursuing should I say asked myself that question huh why is uh uh why is that not the case and so I surveyed the CEOs in my portfolio and said hey I'm going to spend some time digging around uh DC trying to figure out how to help starup companies sell to the US government is anybody interested in exploring that with me a guy named Chris Darby raised his hand who was CEO of company that I'd invested in San we' recruited Chris to be the the CEO of and so Chris and I uh spent some time here in DC trying to figure that out we met inkel through that process inel was all set to invest in Sara uh next round of financing when instead we sold sarga to Intel Corporation and uh uh I continued sort of Kick this general you know idea and space around when uh Chris had to do his sort of year Purgatory at inel after the acquisition to make sure it went through and he calls me up and says hey not uh this about 9 months to his 12 months got a call about being coo he tell what do you think and so we went through the pros and cons of that and then two weeks later he calls back and goes listen you know there's a CEO job in DC there's a managing partner job in uh Meno Park which runs the investment team for inkel there's been some friction between those two parts of the organization before how about we do this together you know I'm in DC you're in Meno Park and because of our personal relationship you know we're going to keep those two parts of the organization completely aligned and I said well you know you're going to change jobs anyway so you go first so he went in August of 2006 uh jump in the water and tell me how the pool is exactly and he and he took this job as CEO and uh in November of uh 2006 I followed him and became managing partner and so I've been at inkel for over 17 years now uh 16 of which first 16 I was basically the number two person at inel and they changed my title along the way to president but when Chris stepped down last year uh the board saw F to kick me upstairs and and make me CEO so I've been uh officially CEO since September of uh 2023 so I've been at this organization for that long a period because I just love the mission of inkyo so one I mean it's just an amazing sort of Journey where I think a lot of folks listening are going to see themselves in different parts of it which is just interesting for like 800 different reasons given that and sort of given where you sit now you know looking back over the last you know 17 years what what sort of surprised you like what's one of those one or two things that were those big aha surprise isn't to be like a swan a Red or Black Swan but what are some of those big memorable things right so I think um uh a couple things that stick out to me you know first was when I first got here I was trying to really make sense of the organization and what the what what we call the customers which are the government partners that fund us the government agencies what did they really want from inkel and the big Epiphany that I had a few months in I wrote you know I remember having it as I was flying out here to DC and wrote this whole you know big email back then you couldn't send it so I had to like store it and send it the next day but um was this idea that you know in the traditional Venture business you always think about uh uh deal flow in terms of quality how do I get the highest quality deal flow right and you don't worry about quantity because quantity is just like noise in the system right you know but what I realized that um uh the government agencies wanted from us was both quantity and quality right you know they wanted to see everything you know because they have all sorts of different like you know out of the box reasons for why they might want to work with a company right but they also want to see the highest quality Tech that this country was developing which I happen to believe uh was resident with inventure back uh uh startup companies so the first real thing change that I made when I I came here was to copy a couple of very successful investment platforms ta Associates and Su partners that have been long-term un successful firms and they used to have a group of people that back in the uh uh day used to be known as Dialing for Dollars or Dialing for deals I should say so they uh had a group of Associates that would just outbound cold call companies to learn more information about them to figure out whether they were worthy of being investment candidate back then most investment firms were very reactive they would just look at deal flow that came across their desk and ta Summit were really the best in the business as far as I was concerned at proactively going out and generating deal flow and so I created an a part of our investment organization at enel that did just that now over time it involved into cold emailing right you know and then eventually signaling and direct messaging and you know some form or other these companies but I really I think helped Drive Inky tell towards this idea like we need to proactively go out and see everything you know and we created uh this process called a meeting note where we write up a meeting note uh for every company that we meet with uh and that mean you know get sent around to all the different agencies that are funding us so so all of a sudden the agencies were seeing every everything that we were seeing so so that was one thing the next thing I would say is uh the Epiphany that we've had was that we thought that maybe originally incel thought that it was in the matchmaking service right you know that that it thought that you know hey we need to find a company that has technology right you know and a end user that has a problem that you know there's a match and and all we had to do was create that match and we were done and what we realized was the real inhibition to a successful adoption of early emerging technology by end users within the intelligence committee wasn't so much finding the match but but breaking down all the barriers to when you see that match actually getting it deployed in Miss operational environment right and so I would argue the secret sauce of inel isn't the stuff we do on the pre- deal side of finding Technologies and companies although I think we're pretty good at it but the secret sauce of inil is what we do Post deal and we throw all these bodies at this problem of reducing friction and figuring out okay a company here's what you need to do and user what you need to do and there's all these stupid things that come up that that could break down like we had one situation where a company decided to change its pricing model right and now it's changing its pricing model the customer wasn't really good understanding you know early stage commercial technology and how they price things and they heard about and they're like oh my gosh there's no way we could ever afford this technology we want to stop this you know relationship right now you know and we and left to their own devices that deal would completely Fallen apart they would have been no what we call solution transfer the deployment of Technology M and we were able to go in and sort of say hey and you sir this is what they're really trying to do and you shouldn't be scared by it and we can figure out a pathway here that you can still abide and then we went to the company and S said hey you don't realize this but you just scared you know the end user to death and they were about to walk away from this uh uh deal here but if you make if you change the language here a little bit you'll you'll make them feel a lot better and that's just an example of uh what I call this deionizing process here where we hold the hand to both sides we're trusted by both sides both the end user and the portfolio company to really help them understand this is how you work together well and that's the secret sauce to think of inito yeah I've always explained to you guys as like a little bit of like the the Cracker Jack decoder ring where you're able to sort of just understand things that might be seemingly in a in a different language the the the old joke we like to make is government loves to throw out the spray kotar which is you know contractual uh resource term and you know people in C Valley think they're talking about some C young a warrior princess oh yeah 100% some sci-fi thing yeah yeah exactly so for like an organization that's sitting out there or an early stage founder that's maybe Pure commercial they're just they're seeing sort of the hype right now around defense Nar like how do they think about you how do they get smart about you when should they reach out like you know for for those listening who are that sort of captive audience that maybe your team hasn't found yet you know what's what do we say to them right so so look first of all we're open for business so we we love inbound requests the easiest thing to do is there's an email info iq.org the more you know likely path of success right is to figure out how to connect on LinkedIn to one of the people on the inel investment team and get some sort of warm introduction to us but uh you know we we look at it as our job is to look at everything so we will we will look at everything that that that's out there and give it consideration and try and give you acual feedback of whether interest or not and if not you know why not yeah and that's I mean that's a good just to to frame that for folks listening like you've got an idea you think you've got something that's interesting or a fit like hit them on LinkedIn hit them on the website like it is not this very difficult sort of Labyrinth of like literally shoot shoot them a DM yep U I think sometimes people might not might not realize that like when you say open for business it's very traditional we're open for business and we're accessible by Design exactly yeah so yeah I mean it's very easy to find any of us on on LinkedIn and and we absolutely uh we want to hear from you yeah um sort two two last questions um and I know sort of we've just come out of another event you guys put together where we we're talking about a bunch of things we're seeing in the world but I guess my my thing is given your positioning what piece of what trend or technology or you know interesting sort of phenomenon you not the organization like what are you most what what's got your attention right now well look I think what what has my attention at the biggest uh highest level here is that you know I think the United States has never faced a more serious threat Matrix than it has today right I mean it has the conflict that's uh going on in Ukraine right that's you know maybe escalating into sort of China versus Europe from some sort proxy war Battle we got the conflict going on in Gaza right we got the potential conflict that seems to be increasingly more likely every day in the South China SE we have two peer or near peer competitors in China and Russia that are both adversaries of us and are getting closer together with each other and then we have technology that's enabling small groups of Bad actors to do bad stuff around the world that we can't keep our eye off on as well H powerered individuals become like a huge problem right now right everyone wants to wants to turn the page from global war and terrorism to nation state competition and you can't lose sight of global war terrorism I don't think so so it's an incredibly diverse set of threats that we're facing and yet one of the underlying themes to all that is technology is changing the way conflict occurs right you know and so if you look at the one lesson learned from both Ukraine and Gaza I think is that the gap between the Davids and the goliaths has shrunk because of uh commercial technology right no one really expected Ukraine to hold up against Russia right you know and they have right and no one really expected ham Hamas to present the threat to isra that they've presented here in this conflict in in both cases they're taking advantage of cheap off-the-shelf commercial technology uh the the uh uh Davids of the world to go after the Goliath you know uh large expensive Exquisite connect platforms uh that they have so I happen to feel that what inkel is doing and what other groups in this you know space diu OC out works you know are are all doing it is incredibly important right right now in and then you so that's what's happening at the kinetic level that that we think about the next thing I think about is from a strategic geopolitical level China in particular is using commercial technology is a strategic lever in Asian state competition right the wakeup call for all of us in from that perspective was this realization that China was using Huawei with its subsidy and support of Huawei as a way to achieve geopolitical uh uh goals and the US had never really thought about commercial technology in in that way and now we have to do so and that's why you're seeing things like the chips act and other sorts of uh legislation being passed by by Congress and what policy makers and Capital Hill and the White House are asking of the US intelligence Community these days is to provide them with some sense of what's happening in the commercial Tech world so policy makers on Capital Hill in in in the white house I think are looking at the intelligence community and asking them to provide more intelligence on Commercial technology and how adversaries might be taking advantage of us and I think they realized that inkel is a resource for them in terms of helping understand where technology is going what's quantum really going to be able to do engineered biology things like that and also uh uh how adversaries may be taking advantage of them to project power and influence geopolitical events around the world so you teased it a little bit on sort of the this 25 years and we just celebrated you know the 25th anniversary vut first congratulations for that um you know as you look out towards the next one I normally end these with hey you're king for a you can change anything but we're going to we're going to go off script a little bit what's the next like we're let's Flash Forward and we're at the 50th Anniversary King Steve is still sitting up there you know we've solved like nobody dies anymore right it's just your AI or whatever it is you're playing implying otherwise I going be dead in 25 years see if you're paying attention no but so what what is what is Steve most proud of in 25 years at the 50th Anniversary what do you want that story to be yeah so look I I I I I think at the most strategic bigger biggest picture level what I want is the United States to continue to be the leader from an economic and National Security perspective uh uh in the world and they have done so by leveraging commercial technology in in a way that has enabled them to maintain leader positions in both areas and inkel has done our own small low part and helping them understand and take advantage of emerging commercial technology we've done that that we've done our job and we can have another big party in 25 years yeah and I'll say'll drink a little less than 1 180 fair fair but I'll say like I I appreciate the practicality of the answer because I think there there's often sometimes to the Chagrin of folks there's there's a lot of fanfare around like Hey we're bringing all these constituencies together but the ability to like deobfuscate yep processes and attributes and different like actual applications of technology and capability right um is a very very difficult task and you guys make it easy so thanks for doing what you guys do well thank you and and thank you for being part of our portfolio and doing what you guys do as well you know you guys are going to have are having already and will continue to have a big impact on on on everything that we're talking about here okay we're excited to be part of the team great thanks Steve thanks everybody thank you by cheers for