Magazine article National Defense

Defense Companies Courting Startups: Fad or Lasting Trend?

Magazine article National Defense

Defense Companies Courting Startups: Fad or Lasting Trend?

Article excerpt

During a closed-door meeting with top industry executives last month, Defense Secretary Ashton Carter once again sought to drive home the message that companies need to break out of their cocoon to help the Pentagon bring the next wave of innovation.

The conversation touched on familiar topics, according to participants, but Carter seemed especially animated by one executive's comments about a recent industry "speed-dating" event where commercial startups were invited to hear about business opportunities with defense contractors.

"His eyes lit up when Raanan talked about this," recalled Bob Edmonds, vice president of Elbit Systems of America.

Elbit CEO Raanan Horowitz gave Carter a brief account of the matchmaking event, hosted by tech startup SwitchPitch, where major defense contractors sought to attract commercial innovators that typically do not do business with the government.

This sounded like the type of outreach Carter had been wanting to see in the defense industry as Pentagon officials have grown increasingly worried about the military's eroding technology edge and the cultural divide between the commercial and defense sectors. The most innovative industries in decades past were embedded in the defense establishment, but they now live in separate worlds. Carter and others fear that the Pentagon and its top contractors have built walls around the sector, keeping out innovators and creative thinkers.

The SwitchPitch model is one of many avenues that defense contractors are pursuing to "see what's out there," Edmonds told National Defense.

A four-year old venture, SwitchPitch was created to offer scrappy startups and small businesses an opportunity to break into corporate America. The meeting the company hosted in September in Arlington, Virginia, was the first one that focused on the defense and aerospace markets.

About 50 startups attended from across the country. Seven projects were pitched by BAE Systems, Harris Corp. and Elbit Systems, and 98 speed-meetings were held between large contractors and startups. Jerry McGinn, the Defense Department's principal deputy director of the manufacturing and industrial base policy office, spoke at the event about the Pentagon's desire to create new paths into the defense market.

Everyone seemed pleased by the results, said Michael Goldstein, president of SwitchPitch. The positive reaction speaks to the vast appetite for innovation in defense and aerospace, he said. The company provides a software-as-a-service platform for large companies to manage their startup and small-business engagements.

Glacier Point, a defense industry consulting startup, was hired to help organize the meeting and vet the participating startups. "We were seeing a major demand signal for non-traditional sources of technology," said CEO Jeff Ryder.

The conventional wisdom that the defense sector is not appealing to the tech world does not apply in this case, Ryder said. "Startups were thrilled to be able to get into targeted conversations with multibillion dollar companies. It wasn't abstract. They asked for specific things."

The aerospace and defense companies are "getting the message that we need to spend more time outside of our world and participate more broadly in the technology ecosystem," Ryder said. There are products out there that defense contractors don't even realize exist, he noted.

Beyond the initial "discovery" phase, the next step is to figure out the business model for injecting startups into a "repeatable process in a defense company," said Ryder. "That part is still in development."

In the wake of Carter's initiatives to court tech firms around the country, Ryder sees a huge opportunity to spread the SwitchPitch matchmaking model across defense agencies and military services.

BAE, Harris and Elbit pitched projects that were grouped in several major categories: precision navigation in GPS-denied environments; detection, identification, tracking and presentation of battlefield data coming from multiple sensors; tracking and classification of commercial drones; reducing size, weight, power and cost of electro-optics devices; public safety communications; cockpit and avionics solutions to reduce helicopter crew workload; and machine learning algorithms for radio-frequency spectrum analysis. …

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