Why Veterans Make Such Great Entrepreneurs + VCs

In the military, troops must be able to analyze and adapt quickly, make decisions with limited information, and act as a team. Coincidentally, these are also essential skills for VCs.

This week on the Kauffman Fellows Podcast, guest host Wayne Moore (KF Class 25) continues the “Vet to Venture” mini-series, sitting down with Brad Harrison of Scout Ventures and Larsen Jensen of Harpoon Ventures to discuss how the values, skills, and training instilled in the military are transferable to the civilian world, especially in entrepreneurial or capital formation roles.

Catch each episode below or on iTunes, Spotify, and Anchor.fm.

This season of the Kauffman Fellows Podcast is produced in partnership with Mighty Capital. Together, we unravel what truly makes a great VC investor.

Scout Ventures General Partner, Brad Harrison, On VC Success After the Military

Brad Harrison, General Partner of Scout Ventures, joins Wayne Moore (KF Class 25) to discuss the skills that make veterans great entrepreneurs, how he found success outside of the Bay Area and New York, and how to stand out in a competitive market where there’s more money than companies to invest in.

Tune in and catch some of our favorite soundbites below!

[embed]https://open.spotify.com/episode/46mYIN3DdsCQpZM94HRYKV[/embed]

On the skills that make veterans great entrepreneurs

Brad feels that many notions about veterans are stereotypical and misguided. Rather than simply following orders, Brad noted, troops must evaluate and adapt at all times, make decisions with the best available information, and find a way to succeed with whatever resources are available. They also are constantly working as part of a team.

“We’re robots, right? In fact, military people have to make split decisions under really stressful environments, they have to work in small teams, they have to be fit, they have to be mentally sharp, they have to focus on their fitness and their mental health. And those are all actually the same things that I would recommend any entrepreneur do.

If you can’t take care of your mind, body, and your soul, how are you going to be able to focus on the stress of building a company? Issues with your founder, raising money, product-market fit, issues with customers, issues with investors. There are just so many different things that you have to do; you have to wear so many hats.

And in the military, you’re very, very good at filling different roles, because it’s a team environment. And in a small team, you know, on a squad level, one day, you might carry the radio, the next day, you might be in charge of another four-man team. The next day, you might be the lookout, the next day, you might be the squad leader, so it can change. And having the ability to work and adjust in stressful environments is exactly what makes military veterans so great at being entrepreneurs.”

On choosing a path into VC

Brad was deliberate in choosing to attend MIT’s Sloan School and from there took the path of entrepreneurship. It was a good fit in some ways, but not all, he said.

“I realized very quickly that working in one company was too boring for me. So the way that you solve that is you become an investor, you help a bunch of entrepreneurs. So that’s how I ultimately got to the venture side. So entrepreneurial spirit, trained in venture product development, did a couple of startups and realized that it was way more fun to work on a lot of companies than just one.”

On competing with other VC companies

We’ve all experienced it — supply and demand. There’s more money than companies to invest in, so you end up scrambling to make deals and miss out or feel too rushed in due diligence. Some startups experience an avalanche of interest and can be choosy. How does Brad adapt and stand out in a competitive environment?

“I think your best calling card is your past entrepreneurs. If you’re an entrepreneur, and you think you want to work with a VC, the first thing you should do is ask for three entrepreneurial references. So for us, I think our entrepreneurs help us win deals because they act as references. I think the second thing is to have some good press and have some good wins.”

On differentiating by moving from New York

How do you stand out amidst fierce competition? Do you have to be based in New York or the Bay Area? Apparently not. Brad noted that some important hubs of innovation are located outside the traditional tech and VC hubs, such as Austin, Texas, where he’s now based.

“The center of innovation for the US Army was relocated to the Army Futures Command here in Austin. So Austin, being centrally located, became a really interesting, attractive place for us. New York is great — I happen to be a New Yorker, it’s my home, my dad’s still there, and I love New York to death. But I did feel like it was getting a little saturated with a lot of VCs. I liked the idea of being able to differentiate by having a presence in New York, DC, and Austin.

So for us, we do work with Los Alamos out in New Mexico, and we have the state investment Council of New Mexico as an LP. Being centrally located between the coasts actually works pretty good for us. And I’d say we have a fairly diverse geographic distribution of our companies, so I don’t feel like it was a disadvantage moving. From some of the stuff that’s going on here, it’s been a huge advantage.”

Harpoon Ventures Co-Founder and General Partner, Larsen Jensen, On Connecting VC with US Government Opportunities

Wayne Moore (KF Class 25) speaks with Larsen Jensen former Navy SEAL, two-time Olympic medalist, and Co-founder and General Partner at Harpoon Ventures, on his coincidental entry into the world of VC, his experience connecting VCs with federal government buyers, and how he found his unique differentiator in the mass of Silicon Valley.

Tune in and catch some of our favorite soundbites below!

[embed]https://open.spotify.com/episode/6g3Q1fpGthjj9J5tqWSYPF[/embed]

On getting into the VC world by happenstance

With two Olympic medals in swimming and a stint as a Navy SEAL, Jensen was no stranger to high-level achievement. Still, he said he didn’t know about the VC world until he was approached by friends from college and believes he’s had incredible good fortune along the way.

His friends were starting a business to serve young professionals. “They wanted to interview some SEALs about that concept. And through talking to them, they really opened my eyes to the startup community and venture capital. And I started to observe, I would say, less than optimal technology that we’re working within the Special Operations and intelligence communities.

It wasn’t as great as I thought it was going to be. It wasn’t Jason Bourne-esque, to use an overly used analogy. And so I was really curious as to why my iPhone, I think it was an iPhone 5 at the time, could do vastly more things more efficiently than much of my battlefield technology.

So out of that curiosity, paired with some firsthand experience with some colleagues and friends of mine from college who were being successful in the startup space, I wanted to learn more, I wanted to dig in, and I wanted to see how those worlds converged.”

On leveraging his military experience for VC

In working with experienced Silicon Valley investors, he saw how their time and connections in the industry benefited them organically year after year. Since he didn’t have that, he needed another approach.

“I really struggled with trying to find out what my unique differentiator is. And I think it was right in front of me all along. I think that a lot of people looked at me as an expert in national security as it relates to technology, just by virtue of my background, and there are very few people in Silicon Valley and very, very few people in venture who have that context.

So I think that really helped me to source deals, to be competitive in deals, and to be a valuable part of deal teams where companies are interested in federal go-to-market, and who are curious about the opportunities for their technology to be utilized in the broader federal market.

What’s really remarkable is that Uncle Sam, the US federal government is the single largest buyer of enterprise IT in the entire world. And when you consider the US government as a single buyer, that’s a remarkable opportunity.”

On using his experience to connect VCs with federal government buyers

Jensen said the Department of Veterans Affairs spends about $8 billion per year on IT alone, and that’s just one massive branch of a massive government system. In 2020 the federal government spent $150 billion on early-stage tech r&d, so the opportunity is staggering.

“What I observed at Lightspeed was that most enterprise IT companies were applicable in the federal market, and most attempted to try and break into that market when they were reaching the growth stages. And not only that, the federal market spends as much as the entire venture community on an annualized basis.

But interestingly, these two communities don’t really interact very efficiently. Certainly, they’re trying to do that more so recently with DIU and other organizations, which is the Defense Innovation Unit, and other organizations like that in Silicon Valley. And the heritage of Silicon Valley, if you rewind the clock even further, was really based on this post-World War II era and microelectronics coming out of Silicon Valley, and hence the name of the entire region.

So I think there’s this really interesting opportunity for veterans who have used emerging technology for a variety of use cases to put on that customer hat, and that user hat, and that go-to-market hat of what the end-users in the government space are really looking for, and add those insights to early-stage technology businesses. Just so happens that we started a fund with a thesis for that. But it was, I think, the right time, the right place, the right opportunity. It wasn’t something that was preordained or thought out when I was in the SEAL teams.”