In 2009 I left a job at the Defense Advanced Research Projects Agency (DARPA) and started Siege Technologies. My goal was to fill the vacuum of small, innovative companies building advanced, disruptive technical solutions in offensive and defensive cyber warfare left by recent large corporate acquisitions. The last day at DARPA, I signed paperwork removing all the accesses I had received during my time there. They took my green badge, CaC card, DARPA badge, and computer. I felt a little like George Banks in Mary Poppins when the bank fires him and proceeds to destroy his umbrella and poke a hole in his hat as part of the discharge process. I founded Siege Technologies two weeks later and slowly collected most of those resources again over time. The experience was extremely informative and provided some important lessons for anyone contemplating a move into private industry from government or into a startup from a large company.
Starting from scratch is hard
It is not easy to take a blank piece of paper and write a novel. Starting a company is similar, as building something from nothing requires the ability to see a future that does not yet exist, and to make that vision a reality. Taking a small firm and helping it break out of a small business mindset to reach its potential is equally hard (and maybe harder in some ways), because you need to reshape structures that may have hardened and take on risk that may have been previously discarded or avoided. The technical team, technology, access to customers and partners, cash, and information are never as robust as you would like and are often in a state of flux.
A challenge unique to moving to a startup from government is the gossip mill of disgruntled government and commercial individuals who allege that stolen ideas, inside access, or other improprieties are actually driving your success. Additionally, it is imperative to change the mindset of the brave souls who move from the comfort of government to the excitement of a startup, as there is no checklist of procedures or higher authority to consult before getting things done. Sitting at your desk or attending meetings are not going to get a product built or customers signed up; startups are an exercise in energy exertion.
Smaller is riskier
There is a big difference between a job in the government, a job at a big business and a leadership position in a startup. The government rarely fires anyone or lays people off. Big business doesn’t usually fire people and layoffs are usually focused on culling the weaker ranked employees (although entire segments of the business can be felled in a single swipe!) And while small companies engage in layoffs and firing, they introduce a new variable into the equation: cash.
Starting a company involves working for free or reduced pay, gaps in funding, wondering how to make payroll and borrowing money from friends, banks, and signing numerous contracts as the guarantor. Even well funded venture capitalist-backed firms have to worry about cash throughout the process and keep track of the “going out of business” point at which your burn rate chews up the cash in the bank.
I vividly remember talking to my wife in December of 2009 about whether we would have a paycheck before Christmas and estimating how many days until our final credit line was maxed. Getting my first Siege paycheck on Christmas Eve was the best Christmas Eve gift I’ve received! As Benjamin Franklin said, “Nothing ventured, nothing gained”.
Smaller is faster
Making decisions in a small company is easy. The individual makes a decision and takes action. Sometimes there are managers or stakeholders to consult, but the reporting chain is much smaller and stakeholders to consult much fewer. The ability to make decisions quickly allows companies to react to changing market dynamics and technology much more quickly than larger firms competing in the same space.
A great example of this is purchasing. When I worked at a large defense contractor, I needed to get a copy of “PC Anywhere.” Weeks went by until I heard it was authorized. Weeks turned into months and when I didn’t receive it, I reached out to find where it was to discover the acquisition system had lost my order. When I explained what I needed I was assured it would be coming soon. A week or two later a different product arrived! Contrast that with a small firm with a flat management chain -if someone needs something at a small firm they ask their manager and it gets ordered on a corporate card within a day or two.
Smaller is more innovative
It’s easy to understand why small companies move faster, but why does the phrase “small companies innovate, big companies integrate” exist? I believe there are a number of factors behind the wave of innovation coming from small firms:
- Ability to attract and retain top talent. Employees like to work in nimble, more fun, better paying environments!
- Emphasis placed on innovation. Small companies are taking on larger, often entrenched competitors, and creating something new is often imperative to survival.
- A culture that values disruption over the status quo. Big companies don’t change quickly, while growth-oriented small companies are focused on how to change the game.
- Quicker access to resources and decision making. The lack of process and large management chains enable individuals to go and quickly buy/hire/talk/build whatever they need to do as part of their mission to get the job done, while larger organizations utilize processes to limit risk.
Building a company is rewarding
Taking a company from nothing or small into something large enough to have some “punching power” is extremely satisfying. It means the market recognizes that you are offering something of value, and that people are joining your endeavor to make a difference. The resources you accumulate as you grow mean some of the concerns from earlier days are mitigated, and new opportunities begin to present themselves. A new era of entrepreneurs are rising up who are increasingly availing themselves of the opportunity to inject a conscience into their work and engage in social causes through their corporate position, products, and with the resources created by the firm.
Perspectives on transitioning government-funded technology
At Siege, we have a number of government-funded technologies that we have developed. Some were developed entirely with government funds, some with almost exclusively internal or commercial funds and most with a hybrid. Taking these capabilities from the lab to product is not easy. Numerous hurdles must be addressed, from classification to export control to publication restrictions to the myriad of intellectual property rights issues. And that’s before you address the “valley of death” that exists between research and products.
Inventors are often beholden to their creations and believe it possesses more value than they often do. There is usually a gap between the requirements targeted during development and what the market needs. And there is funding required to get the product from where it is currently to where it needs to be. Inertia fights against changing anything and turning this technology into a product, but the fight can be well worth it if the numerous obstacles are addressed with vigor, head on. It is a fight that must be won to “change the game” and make a difference, instead of allowing new solutions to die in the lab.