Our CEO Brett Granberg walks through his founder journey, from Vannevar’s first days to a $1.5B valuation. We cover his lessons learned and key decisions he made along the way: why Vannevar is not dual-use, how he thinks about defense TAM, why you should reference-check your investors, and building credibility in the early days. Finally, Brett explains what shifts once you do raise venture capital – how incentives and expectations change, and why managing founder psychology and energy becomes part of the job if you want to build something durable.
I actually don’t think the biggest problems in national security are solvable by going ”dual-use.“ You need a company to build an end-to-end system.
- Brett Granberg, CEO of Vannevar Labs
Highlights:
- The $16K bill that triggered the leap
- Why defense-only > dual-use for actually shipping value
- How to talk TAM in defense (and how not to)
- Building credibility from zero with “part-time hooks”
- Reference-checking your investors
- Founder psychology and burnout, from survival mode to scale
🔗 Careers at Vannevar: https://vannevarlabs.com/careers
Watch the full episode below, or listen wherever you get your podcasts:
Episode Transcript
Hayley
I want to talk about what the early days of Vannevar actually looked like, and then we'll get into what changes when you bring venture capital into the picture with incentives and expectations and outcomes and and how things shift when you're trying to build something durable in defense Yeah. With those added expectations on top. I wanna start at the very, very beginning with a question that I think a lot of people ask of Vannevar just because they've seen your path. How did you decide to drop out of business school? Was there an incident or just kind of a point that you'd had enough?Brett
Yeah. The the literal point was I received the tuition bill in the mail. It was like $16,000 or something and I and it's per quarter. And that's like in addition to all the, you know, whatever housing and just And I I was thinking about how I was spending my time and like the classes. The classes for GSP specifically for the first quarter are notoriously bad and the school knows it, everybody knows it. So you're sitting through these classes that are kind of and it's mandatory attendance. They're not particularly good and getting hit with that, like, massive tuition bills, like, alright, it's time.Hayley
Wait. So so you dropped off to the first quarter?Brett
No. So, like, that was when I knew that I was gonna Okay. That's when I was, like, I am going to fundraise right now. So I think it was I came into business school knowing I wanted to start a defense company, and it but it took me like a year and a half of like thinking about it. Like it was one particular experience I had at In Q Tel seeing a defense prime like way underperformed on a on a contract that made me start I just spent like a year in In Q Tel just thinking about like why is it the case? Like, these contracts are so big, the mission is so important, we have really good engineers in The US. Like, why is it the case that the only options that exist are these underperforming primes that keep kind of getting re awarded these contracts because there aren't there isn't really competition? It took me a year and a half, literally, it's a like, I remember I was, like, walking around San Francisco. I don't know why. That's like feel like it's like very tech. But that's where I was. I was just walking around San Francisco one day and it, like, actually just occurred to me, oh, I think, actually, if you could get venture money and, like, good engineers and, like, could just build a small thing on this on a counter terrorism mission, I think you actually could start a company. And that's when I first realized, oh, it's possible to do this. Oh, like, maybe I could do it. The big question for me was, would anybody give us money? Like, wouldHayley
Customers or investors?Brett
Investors. Like, is it actually possible to raise money for a defense company? At the time, like, dual use, like, commercial, what like, nobody cared about defense. It was not like a sure thing that we could raise, and so business school for me was kind of the backup. Like, alright, well, if we if I try to raise and we don't raise, then alright, I guess I'll, like, do this. Go to class. Yeah. Guess I'll go to class. But it was really like that that first tuition bill. It was like, alright, I am doing this now. We're gonna I'm gonna go raise money. I think I texted Neeny, like like, a day later, maybe in that same day saying like, by the way, I think we're I'm doing this now. So if you wanna do it with me.Hayley
Wanna pull on that a little So you and Nini, as far as I understand it, everyone kind of set you up to start a company together. They knew you had similar interest in defense and similar backgrounds in the IC.Brett
Yeah.Hayley
What did it look like to, like, commit to building a company together tactically? Yeah.Brett
So it was yeah. The way we initially met, it was actually even before school. There was a trip, like, do these trips before school and I went on a trip. You know, I mean, it not that. It was not the HVS, but it's the same idea. So we, I was on a trip and I was just tell talking to people, you know, because people will ask you, like, why are you here, you know, why are you here? Why are you going to business school? And I I just kept telling people, like, I wanna do a defense company. And there was somebody else on the trip who knew Nini, who said, oh, you should really talk to Nini. She she was like the only other person in the class that had any background that sounded anything like what I was talking about. I just remember we did like a walk around campus and I was more interviewing her as a user actually at the time because I saw this one counterterrorism problem, again, this Arabic OCR problem, and I was trying to find other people that had had experienced that and she was a counterterrorism analyst that had deployed to, like, know, I think Afghanistan and a couple other places. And I was interviewing her, like, hey, did you see this problem? She's like, yeah, yeah, saw this problem. And then we we were kind of collaborating on, like, okay, well, do we find, like, what about your friends? Like, can we kinda start talking to more people about this to try to get a sense for what to build here? And that that's kinda how we just were doing that. That's like how it started. There wasn't like a formal, like, are we gonna cofound this thing together? At least I don't remember their being. It was more Lyric was like very organic, like, you you did the thing that I I saw the thing, you did the thing, like, you know, let's just we just started working together on, like, okay, can we solve this problem? Like, can we find more people that have this problem? It wasn't really until we had to sign the incorporation documents where it was like, oh, I guess we, like, really have to decide if we're doing this together. And I remember she had set up a friend who is a machine learning PhD, I think, at Berkeley. Really smart guy. Like, she was kinda set up a dinner that was kinda like an interview, like, sort of like him interviewing me on if this problem is like a real problem. And this person also had started a company before, like, this could this possibly be a real company? Thankfully, the guy after that dinner was like, yeah, sounds legit. And that was enough for That's funny. Was enough for Nini to be like, alright. Yeah. Let's give it a try. Reference check. Yeah. We'll give it a go. She definitely reference checked. She did an interview and a reference check.Hayley
What would be your advice on early product development Yeah. In those very beginning days before you have customers? It sounds like you talked with Mimi about it. Yeah. Sounds like you talked with her friends and contacts about it.Brett
Yeah. Yeah. Yeah. So we were me specifically, I was pretty naive on product development. The thing that I figured was actually, raising money was our number one thing because we didn't I I don't have an engineering background, so we could, you know, try to convince we could spend time in, like, one of two ways. We could try to convince people to, like, work with us for free because we have no money and, like, can't pay anybody and, like, maybe we'll do that. Or we can try to raise money and we can look for another co like, another, like, technical person to join the team. So we I we were kinda betting time in, like, the latter two categories. So I really prioritized fundraising first because I knew if we had money, definitely can hire engineers. And I knew enough about computer vision, that was like one of the things that I worked on at In Q Tel to know that what we were proposing to build was like very buildable. It wasn't like we weren't we needed to invent new math and so you don't need, like, a team of machine learning research PhDs, you just you actually just need, like, good, like, software engineers. And those are those were easier to find at the time than hardcore machine learning people. So, yeah, we we prioritized fundraising first. And so that, like, when we started, like, that was, like, the first that was the beginning of the company. It's like, alright, we're gonna incorporate, we're gonna see if anybody cares about defense enough to invest in us. And then if we if we are able to do that, then alright, let's give it a shot. It's it's good for solving this problem a shot.Hayley
What would you say is the biggest difference between raising money for a defense startup? And maybe I'll ask you 2019 and now Yeah. If if you had to make a conjecture. Yeah. Raising money for a defense startup versus a commercial startup.Brett
2019, it was terrible. Yeah. I mean, we we just, we pitched 40 VCs and we got, like, 39 nos ish. And it was real rough. The reasons people were not investing were are very valid reasons. Like, the reasons were, hey, it seems like the barriers to entry in the defense market are insane. And, like, there is no real proof of any company, like, really being able to do this at scale. At the time, Andrew, I don't know exactly what their revenue was in 2019, but it was, like, not a lot. So you have, like, Palantir as a data point, took them, like, twenty years or whatever, and they were still private, and so that wasn't, like, necessarily, like, a case that seed investors wanted to hear about. And then you had, yeah, Anduril, which nobody knew about still, like, because they were very, very early, nobody knew if that was gonna work. And so, yeah, most people were just leaning on their enterprise, SaaS or consumer or whatever knowledge. And there's like very valid reasons to not invest in defense. Extremely high barriers to entry, they don't understand how the sales process work works. We are two founders that haven't done a startup before and have not done a defense startup, you know, like, pretty high risk, you know? So, like, valid reasons why yeah. Nobody people at the time, the thesis and I actually think this was, like, a thesis largely borne out by the primes because this is, like, maybe too much history and whatever of like defense Silicon Valley. But when In Q Tel was getting stood up, the the story is that the defense primes were lobbying on Capitol Hill to require In Q Tel to invest in dual use companies because they didn't want In Q Tel to invest in defense only companies that could compete with the primes. And so In Q Tel's whole model, which was the thing that most investors knew about in Silicon Valley, was dual use only. Lart As the story goes, largely because, like, Lockheed or whatever lobbied Congress to force it to be dual use only so that new defense companies wouldn't beHayley
set the requirements.Brett
Set the requirements. Super good at lobbying, turns out, these defense companies. And and so that was, like, how people evaluated the defense ecosystem at the time. Like, oh, I don't understand defense, but if you're doing defense, it better be dual use or else it makes no sense to me. And so, yeah, we just got like a million noes except from Catherine Boyle, who is awesome, you know, now started the American Dynamism practice, who did lead our seed, and Greg Sands, who was the co lead in our seed from Costanoa.Hayley
How did you decide not to be a dual use company?Brett
I just didn't see it work. So I had, like, a bunch of examples from Ankit Tell where the, like, two I guess, factors here. So on the mission factor, the highest impact national security problems that I saw at In Q Tel were not dual use. So, like, I was trying to solve them as a dual use investor by throwing commercial companies into the mix and, like, I couldn't it wasn't working. Right? Like, I couldn't the problem was different enough that you can't just take, like, a commercial product and modify it a little bit and have it, like, work. So I I was seeing the biggest problems in national security I actually don't think are solvable dual use. I think you do need, like, a company to build an end to end system to solve some of these problems that are, like, really important. That was one factor. And then the other factor is what I saw for dual use startups is actually, like, very valid reasons to not invest in dual use startups. And those are that you end up splitting your engineering time, So you're kinda it this can work, by the way, like dual use can work. I'm, like, knocking a little bit, but it can work. But the failure mode is you're splitting your product development time and you end up building something that no one wants to use, like commercial doesn't wanna use it, defense doesn't wanna use it. You've just, like, built, like, a thing that solves no neither market. The other failure mode is you split your sales time. So it's actually really hard to figure out, like, commercial sales, especially enterprise sales, if you haven't you know, if you're you're a new startup, it's you just made it, like, 10 x harder on yourself if you're simultaneously also trying to crack defense sales. Because you it's not you can't hire your way out of defense sales. You honestly can't really hire your way out of enterprise sales either in the beginning. The founders have to be doing those things. And same thing on the product development side. The founders need to be doing. Like, what are we building? Like, iterating. And so you end up splitting your time and you like, so I saw that like, you know, a few dozen times in In Q Tel where companies try to split their time and failed. There were success cases too, but like, just that that combination of okay, I know from experience like, what I've seen that I think the biggest problems are not dual use in nature. And even if they were, like, dual use, I don't have a lot of faith that it's a good model for, like, a series c or series a startup. You should pick one market and nail that versus trying to, like, do two impossible things at the same time.Hayley
On the topic of marketBrett
Yeah.Hayley
How what do you think is the right way versus the wrong way to talk about the total addressable market size in defense especially?Brett
I think the right way to think about defense as a market is, like, more at, like, from, like, a macro standpoint. So, like, the macro dynamics for defense, you have roughly 400,000,000,000 in procurement spend that goes to defense primes. And then you have to make a judgment as an investor on, like, what do you believe about that spend in those primes? Like, do you believe that those are, like, super innovative? Like, are they perf really performing well or are they underperforming and, like, government actually doesn't really like the options that it has? And so that's kind of like step one and then the second step is like, okay, well what are the barriers? If you think that, okay, there's like 400,000,000,000 in procurement spend being defended by these primes that don't have the best engineers or the best products and are not particularly innovative, you have to then think about, like, what are the barriers to entry to that market? And there are, like, many. Like, that's why the market dynamics exist that way. So I think what worked for us in the seat again, like, I wouldn't say our our seed was awesome, like, two investors we got were incredible.Hayley
How big was the seed?Brett
Four and a half million. But we took quite a lot of dilution. I think it was 4 and a half million on 12,000,000 pre, so 16 and a half million post. You have to kind of convince investors that that that it's possible that a reality exists where there's 400,000,000,000 in spend, you have companies that are underperforming that the customers don't necessarily like. And that if you're able to figure out the, barriers to entry, once you get in there, it's free reign for you because you're gonna be able to launch multiple products, go after different verticals, capture more and more of that spend. That's more the story that works, like, that's the case that you're betting on, really, if you're At the time, if you were investing in us or another defense company. I think the failure mode is, like, trying to analyze, like, program by program 2019, I guess, this case, like, program spend for, you know, whatever, like, and using that as a way to figure out the TAM. The reason that's not a great way to do it is because if you're doing the the current programs were shaped by the primes two to three years ago. You need to be making a judgment call on where do you think programs are gonna be three to five years out. And that judgment call needs to include the company that you're investing in, being able to influence and shape and create new programs with the government. That's like the key thing that you need that has to be true. If that's not true, then you shouldn't invest in the company. So, like, investing purely based on, oh, I see the TAM for x thing is, like, this dollar amount, you're you're you're you're actually not even accurately predicting the success case. Like, don't your the judgment you're making is not act like isn't actually tied at all to like what the success case looks like. Betting on us in 2019 was like a very bold move, right? There weren't a lot of proven data points, but but that that broader thing turned out to be true and it and it was like, you know, could be it could have been true. Right? Like, huge market, incumbents not very good. If you figure out the barriers to entry, you can make it happen. And you're betting on like the team figuring out the barriers to entry and being able to build products and then sort of incrementally eat at the incumbents.Hayley
What about, like, recurring revenue? How what what's the right or wrong way to frame that?Brett
Yeah. So there's no, like, this is like a weird debate feel I feel like that people have. There's no real recurring revenue in defense because the deals are not like enterprise SaaS deals. So you can like, the most accurate way to talk about it from an accounting standpoint is probably ACV, like annual annual contract value. But what you wanna look at for recurring revenue is basically showing, like, what your net customer retention or, like, churn is on your existing deals. When you do that for defense, even though you have to, in some cases, sell if you don't have a program that's like a multi year budgeted program, you kind of have to sell that deal every year even to get a renewal. What you find is, for defense companies, at least for us, like our churn numbers are lower than in our well, like 99% of enterprise SaaS. I'm like making that number up. But some high percentage of enterprise SaaS companies, we have much lower churn than them because it is relatively sticky once you get in. It's not it's just the sales work that's different. Like, there is a when you're but this is true for large enterprise SaaS companies too. Like, our average deal size is, you know, 7, mid 7 figures or 8 figures, right? When your average deal size is that high, like, you're gonna have a you know, in any sorry. Within that within your revenue base, like, 80%, 70% of your revenue is gonna be made up of like three deals maybe. These deals are very large and very high touch and in the same way that if you had an enterprise deal that was like $10,000,000 or $20,000,000, that's gonna be like a high touch deal even on the renewal. So I think the using like the enterprise sales, like high dollar value contract way to analyze what's happening in defense is probably not a bad way to do it. It's it's as much like ARR as I would say those types of deals are. I would, you know, I would argue. I mean, it's like a somewhat hot take, I feel. That's yeah.Hayley
In the beginning, did you and Nini screen your investors? Or what questions do you think founders should be asking of their investors before they take their money?Brett
Yeah. So I think for Catherine I actually met Catherine before I started Bannerbar, probably seven, eight months before Vannevar when I was still at InQTel. And the reason I met her was she was she actually was on a podcast and she was talking about, before anybody else was talking about it, like, I think defense is gonna be a thing. And somebody sent me that podcast and was like, hey, you know, you do defense whatever at Inkutel, like, maybe you should go meet Catherine. So I met Catherine and we kind of organically, honestly, talked about, like, because I knew her and had this relationship with her, pretty sure there was like a meeting where, again, like before we were pitching General Catalysts, was like, hey, like, I I think maybe you could a defense company could be started with these conditions and work on these things. And we were kinda like talking about that a little bit before Vannevar was even like, was called Vannevar. Katherine and I had like a history of like, knowing each other a little bit before she made the investment. I think that helps a lot, honestly. Because she knows who I am and I know who she is, and, you know, you kind of like it's not just going in totally cold. For Greg from Costanoa, who's the other person that co led the the seed round, he he was a referral from my old boss at In Q Tel, Steve Bowsher, who is actually a GSB classmate of Greg and and introduced us. And what was crazy about Greg, which I've never seen since, is when I was doing reference calls with, like, founders he's invested in. And he was, like, the only person who gave me references of founders that he has fired. So he is the board member, fired these CEOs and they liked Greg enough to still do the call with me and be like, yeah. Yeah. Hey, Greg, yeah, made the right call. And, you know, I was like, oh my god. That's crazy. Yeah. And and, like, the other quote that I got, it would we were also did some back channel and I can't remember who said this, but it wasn't one of the references he gave us. And the quote that I got, which has been proven to be so true about Greg, is like, he is the person you wanna go to war with in a in like a strike. He's like, going to you're going to war. Like, there's gonna be insane things that pop up. He is like level headed and he will be like in your corner in the fight with you. And that would turn out to be a 100% true. So that at least at the seed round is like how we did reference checks a little bit.Hayley
What was the biggest challenge in the early days of starting Vannevar? Maybe the first year.Brett
Well, the first challenge was like nobody wanted to join our like random startup.Hayley
How did you build credibility in those early days?Brett
I think it was it goes back to like the first the best people at startups and also, like, the first people that you hire that are good tend to have to be a little crazy. The two engineers that that joined us that were awesome were, like, a little bit crazy in different ways, you know? Like, one of them was just like a startup person through and through and just liked tiny teams. We're talking like 10 or smaller in the entire company and was just open to I think interested in national security, but mostly just like, yeah, it seems like you guys are, you know, reasonable people. Like, I'll give it a go for as like part time contractor, and we just used that as a hook to kinda reel them in. And then the other guy was interested in national security, but more interested in the technology from a deep learning standpoint and just sick of, like, working in a big tech company. In order to find those people, you have to talk to, like I mean, we we probably did, I don't know, a 150 interviews to, like, 200 interviews. We did a lot of interviews and we made several offers and, like, our acceptance rate was very low. Yeah. Like, the the no yeah. Defense at the time was not popular amongst engineers in Silicon Valley and nobody knew who we are. We had no revenue. We didn't have a product. It's like, who are you? And, like, no, I'm not joining. I'm I'm making 300 k at whatever, Meta or something or Facebook at the time, you know. We're not joining your company. So that was the first challenge. And then the second challenge, once we had engineers, was product market fit, just trying to build something that people wanted to buy. That is really hard. That took us, you know, I don't know, six to twelve months probably to totally nail that. Maybe a little bit longer. Yeah.Hayley
Is there anything that really surprised you about being a founder even given your background as an investor investing in founders?Brett
I don't know how much of this I did, but watching somebody do the thing and actually doing the thing yourself are very different. Not the same thing at all. I I think I it's a pretty hard job, I guess. Like, your job, I think the most important thing for honestly any person in a startup, but like, you are the kind of main failure mode, especially in the early days as a founder, is like your learning rate is kind of the only thing that matters. Like, your personal learning rate on like how good are you at figuring out what functions are and, like, what needs to happen and, like, product and sales and whatever, that is, like, the single most determinant thing for, like, your, you know, success. And that's true for, like, everybody in startups, pretty much. What that looks like on a day to day basis is especially the first two years is like, you are making every day, you're making like five mistakes. And whenever you make one of those mistakes, not every mistake, but some of those mistakes, you it's like you're gonna get punched in the face. Every day you wake up and then you're just like in a fight with like a bear or something. And you're just like slowly trying to learn like, you know, and also get have enough reps that like eventually also you get a little lucky, but you're just trying to like learn every day and like, you know, kinda just keep going. If that's true for everybody at like a seed stage startup, that is basically your experience. But it's something that you only really appreciate until you've gone through it.Hayley
Going from those super early days to now where Vannevar is worth $1,500,000,000, you know, we're post series b, we don't need to raise money again ever, we're profitable, what would you say has been the biggest, like, mindset shift or just biggest difference for you as a founder going from, like, what you were focusing on and thinking about then versus now?Brett
I think the most important thing for me is managing my own energy and burnout, basically. And, like, my own psychology around how things are going. And I think that is I spend, like, 30% of my brain space just thinking about that and trying to set myself up, like, to do this for the next ten or twenty years or whatever it is. That has become increasingly important now. Whereas in the early days, like, you don't know if you're gonna be around, like, two years down or like, six months or whatever down the road. You have no idea of, like, if it's gonna work or not. Like, you you feel like it's you think it's gonna work, but you you really have no idea. And so, like, you planning for, like, your own longevity in the job makes no sense. It's just, like, it's not really a factor. But I think at at our, like, scale, it, like, becomes increasingly important. And it's also true for, like, leaders within Vannevar. It's really important to me that they also kind of are thinking about their own well-being and burnout for the specific reason that, like, what we're doing in the defense space is, like, requires a lot of domain knowledge that you build up over time. And so when you get these people that are really incredible at their jobs, you it's you you can't just like hire somebody in and have them immediately figure that out. Or it takes like a long time to grow people internally. So it's way better for the company, for the organization to keep people around and make sure it's sustainable for them. That's like really, really important. And and I have had to work on that myself a lot. And so I'm, like I I mean, it sounds kinda lame, but, like, I I I am strict and think about, like, sleep and, like, coffee and alcohol consumption and, like, all these things that I didn't used to have to think about, I now like think about and plan, like, you know, that's like part of my job is to do that now, which is kinda weird. So I would say that's the biggest change. It's just And it's just sort of like managing my own stress and psychology to make sure that when things are not going well, I I'm able to sort of help the company, like, get in the right place. And you have, you know, when things are really stressful, it matters how, you know, like how much battery, I guess, you have available to you. So I don't know. That's something that's different for this stage, I'd say.
