What’s the most difficult part about selling to the government market? For a company that has never done it before, the answer quite likely is: knowing how to get started, in the first place.

Nowhere is this more apparent than with the Department of War (DoW). Start looking into the path towards a DoW contract, and you’ll instantly be hit with a panoply of unfamiliar acronyms, intertwining subagencies, and jargon that only superficially resembles plain English.

However, this only really became a noticeable problem in the last ten or so years: prior to that, DoW had been largely content to work with the traditional roster of giant contractors that have been serving the U.S. military for decades. But once the Pentagon began to recognize it had a broad-sweeping need to establish relationships with smaller companies working in emerging technological fields — for the most part, startups — voices from the government contracting space started shining a light on the challenges that startups tend to have in trying to enter the defense procurement market.

Companies across the additive manufacturing (AM) industry certainly have experience with those challenges, an issue that has naturally grown more acute as the industry and the DoW have started to intersect. This was one of the biggest focal points for discussion, for instance, at the most recent Members Meeting and Exchange (MMX), the annual conference hosted by America Makes. And the challenge of trying to sell to the DoW as a small startup leveraging new technology is indeed one of the primary reasons America Makes exists in the first place.

Steve Blank. Image courtesy of Stanford University.

What’s one thing that could make it easier for everyone trying to sell to the DoW? It’s an impossibly daunting question to think about, but that’s the only type of question that seems to drive Steve Blank, co-creator of Stanford University’s Gordian Knot Center (GKC) for National Security Innovation. Thinking about that question led Blank to create the recently published DoW PEO Directory, which the professor, entrepreneur, and civic leader describes succinctly as “a ‘Who buys in the government?’ phone book.”

In addition to drawing upon help from the GKC, Blank also created the PEO Directory in collaboration with America’s Frontier Fund (AFF), a venture capital group that targets companies involved in fields viewed as critical to the state of U.S. innovation, as well as BMNT, the Silicon Valley consultancy that specializes in bringing together private and public stakeholders to accelerate the commercialization of early-stage technologies. In 2019, BMNT helped create what was, at the time, the DoW’s largest repository of digital spare part files, a project I discussed with the consultancy’s CEO, Pete Newell, in a 2023 interview. Newell has extensive experience in the overlap between government and deeptech: between 2010 and 2013, Newell ran the U.S. Army’s Rapid Equipping Force (REF), giving him a unique vantage point into just how difficult it can be for the government and startups to establish connections with one another.

Pete Newell. Image courtesy of Stanford University.

I recently spoke to Blank and Newell in separate conversations about the PEO Directory. As much of a quantum leap as this document is for startups hoping to enter the government acquisition market, the primary thing that became clear from talking to both men is that it’s just the beginning. In fact, since my conversation with Blank, the directory has already undergone its first update; Blank expects the updates to happen every six weeks.

Interestingly, even though nothing like the PEO Directory existed before, Blank notes that he and the team were able to amass all the content from publicly available information:

“When I was getting started, I was a little concerned with the question of, ‘Is this going to be good for China or Russia or whoever else?’” Blank began. “But the only place I was getting these names was from sites like LinkedIn and other open sources.

“At first, the whole goal of the guide was so that I’d have a resource that allowed me to be able to tell my students, this is where you should go if you’re looking to do business with the DoW. Prior to creating the PEO Directory — which took about a month — approaching that whole process was based on word of mouth, and trial and error. We’ve mapped out in the first 30 pages of the document, more or less for the first time, a diagram of all the possible ways to get funded.”

Newell explained that while producing the document itself took around a month, it was something that Blank had been thinking about for a bit longer:

“Steve is one of those people who, when he gets something in his head, he just starts doing it until it’s accomplished,” said Newell. “We initially started talking about this about a year ago. And even prior to that, we’ve had countless conversations about how startups actually get into the government market, how they get funded, how they get past the Valley of Death.

“This year, we’ve had large cohorts for the Defense Innovation Unit (DIU) Acclerator, and we’ve had considerable success with the Hacking for Defense (H4D) class at Stanford, so we’ve seen teams that emerged in those settings turn into real companies. I think this has helped us develop much more astute observations about the struggles that companies in this area face.”

Perhaps the main struggle, according to Blank, is simply dealing with the DoW’s inherent complexity:

“The mistake people make is thinking that the DoW is just a giant corporation, and they can hire enterprise sales people and they’ll be fine. I can’t stop laughing every time I hear that,” Blank told me.

“That’s actually gonna put your company out of business. In a giant corporation, the money, the authority to buy, and the people who need whatever is being purchased are all part of the same command and control structure. Every key decision-maker in the organization ultimately reports up to a single individual and a board of directors.”

The DoW’s organizational structure, on the other hand, is far less straightforward:

“Regarding the military, there are at least three or four major different players with different agendas,” Blank continued. “Number one, there’s Congress, which writes what’s called the National Defense Authorization Act (NDAA), which says to the DoW, ‘Thanks for giving us your list, but we’ve looked at it and modified it.’

Then there’s inside the DoW itself, and within the DoW, there’s at least three different components.. The DoW is structured in a very interesting way: there are the military services, the Army, the Air Force, the Navy, the Marines, the Space Force, but there are also what are called the combatant commands — there’s eleven of them.”

If you feel like this is all fairly easy to understand so far, just wait:

“Here’s where it gets really weird. The services’ job is to recruit people, train them, and specify and buy equipment. But since 1985, they’re not the organizations responsible for actually fighting wars. That’s actually the combatant commands, which are split up by region or function — there’s the United States Indo Pacific Command (INDOPACOM), there’s US Central Command (CENTCOM) in the Middle East. Those are the organizations with different generals and different org charts that fight the wars. And there’s also combatant commands like TRANSCOM which does transportation, STRATCOM which has responsibility for nuclear weapons, etc.

“If you’re a company trying to sell to the DoW, the combatant commands are the ones who will tell you, here’s what we need now. But the services are the ones who buy the equipment. So inside of each service, there are requirement writers who write up what they think their service needs. That list then goes to Congress.

When the money is finally allocated, the money goes to a different group of people called Program Executive Offices (PEOs): they have Program Executive Officers and program managers who actually pick vendors, write contracts, and so forth.”

(Just as an aside: anyone in the AM industry who is aware of what the Maritime Industrial Base (MIB) is doing is likely to have some baseline familiarity with the term PEO, if only because of what Matt Sermon has been doing to accelerate the U.S. Navy’s AM adoption.)

“Finally, remember how I said the combatant commands don’t really buy anything? That’s not entirely true: as it turns out, there’s one which actually buys a lot, and they’re often the first place for startups. The U.S. has a combatant command where all the Special Forces sit called Special Operations Command, SOCOM.

They’re one of the few combatant commands with their own acquisition authority, and their attitude generally seems to be, screw what the Army or Navy want, we need X product now, and we’ll buy it today.”

Blank paused a moment to let my brain catch up, then concluded:

“So unless you know all this — and I just gave you a semester’s worth of lectures in five minutes — your head explodes. As a startup, you’re going to say, what’s this organization? Who are these people over there? Which one do I talk to first? Helping emerging companies figure that out was the impetus behind the first 30 pages of the document, simplifying those details as much as possible, and giving people all the boxes they need to check on their path to selling their products to the DoW.”

The resource that Blank and his partners have created is a minor miracle. At the same time, they have no illusions about how difficult it will still be, even with the PEO Directory, to sell to the DoW:

“If someone comes to me and tells me, I’m a defense company and I need to sell what I’m offering to the government, I usually tell that person, that’s not the business I’m in,” Newell explained. “I’m in the business of making companies better commercially, so that they can then be in the most viable possible position to sell to the government.

“We want the companies we work with to have a commercial purpose for existing so that they have the capacity to grow. This is a conversation I’ve been having going back to my days with REF. One time I was talking to a guy about all the different chemistries for lightweight batteries.

“He told me that as soon as one of the newer chemistries got down below a certain threshold, that’s when he would start buying it, so the discussion inevitably becomes, what’s it gonna take to get it below that level?

He said, quite frankly, the government market isn’t big enough to drive that significant of a change. We have to figure out how to create a commercial market for the technology so that eventually enough units can be sold to bring the price point down.”

For Newell, the lesson distilled in experiences like that is clear:

“That’s a very simple way of saying that if you want to be a defense-first company, you have to think of being a commercial-first company, if you want to survive.”

So while the directory isn’t going to help companies that aren’t starting with the right business model, it can help the startups with real potential avoid wasting precious capital:

“A lot of startups fail because they trade equity to get capital to do R&D surrounding product discovery. Eventually they spend so much of that equity capital on that one task that there’s not enough equity left to make them a viable investment,” Newell summed up. “They’re not the best investment in that space that a funder can make, therefore their working capital dries up. Not talking to the right people quickly enough is the easiest way to spend money and go nowhere.

“So really, the directory is about saving companies that time, and those resources, so they’re not reliant on hiring someone whose only function is to make a bunch of introductions. And by the way, 99 percent of those introductions are going to be useless, anyway.

“BMNT is actually using the directory as an additional database for our own purposes, which we can match against other resources that we have. We can go into the database, quickly find out who are the people and the PEOs that are genuinely interested in specific technologies we’re involved with, and narrow down the right group of people that we need to be talking to in order to start solving the problems we’re addressing.”

Check out the PEO Directory, and stay alert for the updates as they arise. For what it’s worth, the U.S. Army might be a good place to start.

Unless otherwise noted, all images courtesy of SteveBlank.com