Andrea Garrity joined me on the Acquisition Talk podcast to discuss how the government can build relationships with nontraditional companies. She is the Chief Growth Officer at goTenna, a company that offers mesh networking for off-grid devices and decentralized communications. Before that she was vice president at In-Q-Tel and client executive at IBM.
In the episode, we discuss an article Andrea recently wrote about bringing startups and government together. She argues that the procurement maze and multi-year timelines adds costs that are difficult for companies to burden in advance of contract awards. “I think it’s hard to ask these companies to take on that burden right away,” Andrea says. “Startups are beholden to their board, and the board wants to see market fit and revenue. They’re not willing to invest in a contract specialist or a GSA person without first seeing that fit.”
Download the full-text transcript
As a result, many startups focus on the commercial sector before deciding whether they have the resources to start expanding into the government market. Even then, many new technologies are cross-cutting and delivered “as a service.” Andrea describes the difficulty of selling a mesh networking capability to the DoD, where money and attention are inwardly focused on platform stovepipes like bombers, submarines, combat vehicles, and satellites.
How many people can I talk to? How many people can I demo for? And then. When we do those demos, we see people get excited and then they say, ‘Hey, we’ve got to pull in this other group.’ Figuring out how to engage at a level where we’re able to do the demonstration once, instead of 250 times would be great. And I say that as somebody who feels like I’m a veteran at engaging with the government.
There is no single “program of record” for many commercial technologies, meaning companies have to try to get a foothold anywhere they can. Selling a product “as a service” is another challenge, where pricing is based on metered rates, like cloud computing or uber rides. These pricing models are entirely different from anything government has used in the past. “The government looks at it and says, ‘we cant budget for that.'”
Government contracts obligates dollars to a specified level of service. Paying in arrears for the services actually used goes against the Anti-Deficiency Act — but that is being worked through with the consumption based solutions pilot.
Luckily for goTenna, their mesh networking offering is based on a small hardware device and can be sold by the unit. Each unit can send short-burst data like position, text, sensor data, etc., between 8 and 15 miles — up to 145 miles from an air asset — and relay that information up to six devices away in a daisy-chain fashion. Yet all this capability, and much of the value, is enabled by software. Here’s Andrea:
On the one hand I always say we need to talk about ourselves as a software company. On the other hand, I’m so glad that we get to price it by device because you’re absolutely right, software pricing and enterprise software pricing is really challenging.
One of those challenges, of course, is the government paying margins that includes continuous capability delivery and returns on sunk investment costs. That’s why it’s often easier to pursue commercial markets first. You can establish a commercial price and then use that as a basis for pricing a government version of the product.
International Traffic in Arms Regulation
During the conversation, Andrea brings up some of the issues that often produce an adversarial relationship between startups and government. One of them that I had not considered before was when government refuses to buy a startup’s products, but then hits them with restrictions that bar them from pursuing international customers — even on a commercial basis. Andrea explains:
One of the things that I’ve heard consistently is the government, looking at industries like commercial space and commercial imagery, wants to slap those companies with an ITAR restricted label. If the government thinks that technology is so great, that it doesn’t want other countries to have access to that tech, then the government themselves should be investing in that company and that technology and using it. And oftentimes what we’ve seen with startups is, the government might think that the company or the technology is not mature, but they’re still willing to go after them with an ITAR restriction.
… We’re not running into ITAR problems [at goTenna], but that was that was just something I was really surprised at and almost mad on behalf of the companies that we’re dealing with that.
I must second that gut reaction. Hearing how these ITAR restrictions are harming companies also riles me up, and seems to be the cherry on top of those the other ITAR issues like treating the UAVs as if they were a nuclear missile.
Some Good Quotes
“… It’s really hard to dig into what the actual problem is when the government releases requirements that were brought together 12 months ago. And nobody’s talked about it since…”
“… When we talk about those key ingredients like director engagement, end user engagement, budget, personality, it’s a lot like individuals winning hearts and minds of their organization…”
“… Nobody wants to do a live demo on a laptop in an, in a government building because there’s a chance, you might not have connectivity, live demo might not work, et cetera… “
“… I heard a lot about the heyday of IBM’s partnership with different government agencies and all that they were able to accomplish. People always talked very fondly about those days, where they felt they felt close to the mission. And at the end of the day, they were clearly creating successful solutions because they were getting commercialized…”
“… If they’re going to ask those mission users to take the time to talk to them, they’ve got to be able to follow up and deliver that tech to those users. Otherwise people start saying, ‘it’s not worth my time to have these conversations’…”
Thanks Andrea Garrity!
I’d like to thank Andrea for joining me on the Acquisition Talk podcast. I’d also like to thank her and goTenna for supporting Mason GovCon’s Acquisition NEXT playbook. We discuss a few of the plays in the podcast, so definitely listen to the whole thing!
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