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Space Finance and Challenges Worth Solving with Adam Rentschler

Updated: Jan 17, 2022

Tim talks with Adam Rentschler, CEO of Valid Evaluation, who has been on a unique path to space and finance. This conversation is full of fascinating looks at where life's twists and turns can take you.

Adam is a serial entrepreneur who has spent his 26-year career running, fund-raising for, investing in, coaching and mentoring startup companies. He has raised money from a wide variety of sources including strategic venture capital, venture debt, friends and family, and a U.S. government intelligence agency. As a very junior VC, Adam had one positive exit. He co-founded, ran and sold in 2000 as the dot-com bubble burst. Valid Eval was born of Adam's frustration with poor learning outcomes for companies competing for grants, prizes and acceptance into accelerator programs.

View the Interview on Youtube here:

Full Transcript:

[00:00:00] Tim Chrisman: Hi, this is Tim Chrisman with another edition of podcasts for the future. Today, I'm joined by Adam Rentschler, who is the co-founder and CEO of valid evaluation. Valid evaluation is an evidence-based assessment platform for us government innovation programs. Adam's a three times CEO has founded two companies is a recovery engineer and has spent time working in venture capital.

[00:00:35] Adam has raised money on Sandhill road from friends and family venture debt providers and the government, his one and only investment is a VC even was successful. He's thrown hundreds of pitches in the trash been told no by. Venture firms that he cares to count. And that is what is informed his work in [00:01:00] founding and scaling Valid Eval.

[00:01:03] We're going to talk with him today about his work there and what got him there. The challenge he's faced and why it is, he thinks that this is something that is a challenge worth doing. So with that, I'll, let's get into it.


[00:01:22] Tim Chrisman: Adam Rentschler. Thank you for being here today. It's it's great having you on here for the first podcast for the future of 2022.

[00:01:31] Thanks for taking the time.

[00:01:32] Adam Rentschler: Oh, thank you so much for having me. I'm really excited. Yeah,

[00:01:36] Tim Chrisman: no, I I know we talked a little while ago and it was really cool hearing about some of the work you're doing and we'll get into that in a second, but I wanted to start back at the beginning, I'm told that's a good place to start, but when I was going through your bio and looking back through your history, I saw that your original [00:02:00] bachelor's degree was in material science.

[00:02:02] And then, and so it looks like that was where you went right out of college doing some of that work, but then that. Dropped off. And you started taking a different path away from material science. It appears maybe you were still using it doing what a P what I thought was political science work, but no, I'd love to hear about what was that like as a material science engineer making early, early sweater.

[00:02:31] Adam Rentschler: Yeah. So the switch happened before I even started my first job out of undergrad to tell you the truth. Although, I spent four years due to, if we studied thermodynamics I had my fill then and grad school for engineering was just not in my future. So the part of my undergrad that I enjoyed the most was a cooperative engineering education program that I was lucky enough to be a part of.

[00:02:51] And I graduated in five years with two years of full-time work experience as an engineer, which was really amazing. And [00:03:00] What I really enjoyed was getting out there and doing that work and solving practical problems. I was not interested in chasing a master's or a PhD in material science. And what I wound up doing was moving to San Francisco pretty much sight unseen from Chicago.

[00:03:15] And I was a bike messenger for three months while I found my first full-time gig. So I got paid to ride my bike around the most beautiful city in America. And it was a different time. This is the mid nineties, so I'm dating myself a little bit, but but it was a fantastic experience. Great way to get to know my new town and was very lucky to find a job, not as a materials engineer, but rather as a control systems engineer.

[00:03:39] So I went to work for a company called Berkeley process control in the bay area that was doing the most advanced motion and machine control problems, problem solving of the day. I started out as an applications engineer and doing mechanical engineering, like control systems work. So that was the first switch.

[00:03:57] It's okay, this is material science at all. [00:04:00] Yeah. And that it got crazier because my boss said, Hey, what is it you really want to do? And this is about six months into my day. And I said, I don't, I don't know doing this applications engineering stuff and, helping to write proposals and and supporting customers is pretty cool.

[00:04:14] Like I'm a happy kid. And his message to me was, dude, you're a sales guy. You just don't know it. So how about we turn you into a sales guy? And so that was another change, right? So I went from material science, into controls engineering, and from being an engineer into being.

[00:04:32] Tim Chrisman: Wow. Wow. That is, and I know there is a separate category of sales engineer compared to the used car salesman that everybody has in their head.

[00:04:45] But that's still quite a bit fresh out of engineering school. Being moved into that sort of outward facing position. It's a pretty, pretty cool opportunity there that I assume is not.[00:05:00]

[00:05:01] Adam Rentschler: I think you, you drew a really interesting distinction there, Tim, and that is the pejorative sort of used car salesman type of archetype versus sales engineer.

[00:05:12] And to me. The sales engineering I had to get, I had to get trained up on what that meant because I had a lot of ethic and I thought, I remembered back to being a little kid and, walking into an appliance store with my mom and this smarmy sales guy was like this is the refrigerator for you.

[00:05:27] And even at eight years old or whatever, I was like, oh man, that guy's gross. This is weird. No, I don't want to be a sales guy. And even out of college, that was still my perception. And what, as an engineer I had to get trained up on was the fact that Hey, sales engineering is really about figuring out how to solve a customer's problem in a novel way with the tech that you th that you can bring to bear on their particular problem set.

[00:05:53] And so it was quickly disabused of the, what's it going to take to get you into this car today and really began to revel [00:06:00] in the fact that we'll wait for. I'm here to solve problems that my customer is really struggling with. That's not smarmy and creepy. That's fricking awesome. This is a really cool gig because now I'm solving other problems.

[00:06:14] And what you quickly learn is that the game there is to bridge the gap between the highly technical and the business case. And it was that bridge that I'm still absolutely enthralled with. I think that, that is one of the coolest one of the coolest things to be able to connect, the business case with the technical, with the underlying technical

[00:06:35] Tim Chrisman: stuff. No I would agree. I love. No. I think most people who are passionate about something they're doing or something, they get a chance to make or know about love the idea of going out and talking with other people about it and explaining how it can help them.

[00:06:51] But we don't really usually connect that with sales, I'm not selling anything. I'm just telling you how this helps you. I'm helping you. But when we hear that in the appliance [00:07:00] store where you're not actually about helping the area so

[00:07:03] Adam Rentschler: there the fridge, that's $500 more than the one you actually need.

[00:07:07] Tim Chrisman: And so that, that whole learning what, what it is you're offering and what they need is an interesting distinction that I know, I personally don't always think about when I hear about sales positions But even, so you went material science, you do you jump into working at a company that's making semiconductors and optical fibers end up being the sales engineer.

[00:07:33] And then, and some point before the 2000 election, you're like, you know what I should be doing, I should be doing business. But not a regular one either. So like where did better Where did that idea

[00:07:49] Adam Rentschler: originate? Oh man. My younger brother gave me a call. He was living in Cincinnati at the time and he said, Hey, I've got this great idea.

[00:07:57] It was 1999. And [00:08:00] yeah it was a good year for audacious ideas and better was sure that I was. I was enamored enough with the opportunity and the optimism that was everywhere in San Francisco in those days. And I couldn't like not going for it. Wasn't even something I considered is obviously we're going to do this.

[00:08:21] Obviously you're going to, you're going to get in your car, you're gonna pack up and you're gonna crash on my couch until we figure something else out and we're going to go make this effing thing happen. So yeah, so better was born. And the premise there was that American American voters are undereducated American voters care about the issues.

[00:08:39] And if we could recenter politics around the issues that matter most to voters and then match them to the candidates that are most compatible with their views by gosh, you could get a better informed American electorate have elections that worked a little. Better and oh, by the [00:09:00] way, this would help to reform campaign finance.

[00:09:03] And we were going to make a big, huge pile of money all at the same time. And it wasn't quite as silly as as shipping dog food virtually was back in the day. Although I am a kindred spirit with the bygone sock puppet from that stuff. I love that little guy.

[00:09:21] But but yeah, so that, that was the plan. And we had, we enjoyed some great success and then failed spectacular.

[00:09:28] Tim Chrisman: And I, when I was first, I first read about this in your bio, like this sounds really familiar. And when I was going back through so it, at the time you started this, I was taking political science classes.

[00:09:43] That's what my, all of my degrees are in a pretty useless. But I used this oh no. What this website? Yeah. In one of the classes, because it was being talked about and. You know this too, all that's come out. One of the promises of the [00:10:00] internet. And it was really cool. And, in the lead up to this, I was actually trying to find the site.

[00:10:04] It appears to not be still alive.

[00:10:08] Adam Rentschler: It's not a thing anymore.

[00:10:10] Tim Chrisman: But I, I remember doing this and filling it out and I'm like, oh, I didn't know. She broke for that guy. Huh, this must be broken. This can't be right. I was raised very conservative and was yeah, one of the children out on street corners, holding jury, not George W.

[00:10:28] Bush, but George Bush signs. And

[00:10:31] Adam Rentschler: H w

[00:10:33] Tim Chrisman: yeah the old one, but Yeah. So that was really cool idea. And I know since then there have been other outlets, mainly like news focus that also will add something like this as a module. Yeah. When you say, failed spectacularly and in your bio you mentioned you're recovering multiple times CEO.

[00:10:54] What was it that you took from that? Because, as you said, there was never a [00:11:00] question of doing it. And so what came out of that that, you really stuck with you?

[00:11:08] Adam Rentschler: Oh boy, that's a, that's an interesting one, Tim. I would say. The thing that will probably stick with me for the longest.

[00:11:18] And we'll never be beaten out of me is the joy of creating a business from, with a clean sheet of paper, right? What is it we're going to do? What problem are we going to solve? How is it we're going to make money? What, all of that blank sheet of paper, let's put a proper strategy together stuff.

[00:11:37] And it's to this day, I think that process, but solving a problem, that's never been solved before and creating creating a viable business strategy around it with all of the hard, deep tech that I've been involved in across my career. That thing that looking at that blank sheet of paper and figuring out how [00:12:00] to create a viable business is the very hardest thing that I can imagine anyone doing.

[00:12:06] And that is the thing that sticks with me the most is number one, for whatever reason, I enjoy the shit out of that. It is a blast. It's also just about the hardest thing in the world. And so it's the fun and the challenge of it that is so alluring. And I think that's probably the thing that sticks with me the most.

[00:12:27] Tim Chrisman: No, and I think that's a good point that if for people, when they think, Hey, I'm going to start a business that, that backside work that strategizing that lane out, what do we need to do? How are we going to get there? What comes next? And in some cases like, Hey, what is enough? How far is far enough?

[00:12:47] How far is too far? That isn't the sexy part. The sexy part is, Hey, check out this cool

[00:12:54] Adam Rentschler: sacrifice. I couldn't disagree more. I think that is the sexy I

[00:12:58] Tim Chrisman: would agree with you. I would agree with you. [00:13:00] But like most of the time when people start talking about starting a business, they're like, I've got this sock puppet, let me sell it to you.

[00:13:06] And that the strategy side is a lot of fun. And maybe we're just not well, and that's why we like it. But but I agree with you. I really enjoy that. The sense of. I don't know what the right word, maybe it's control that comes when you're like I'm looking three to five years out.

[00:13:31] Adam Rentschler: I think if it's controlled though, you're doing it wrong. Because I think there has to be a lot of humility about the fact that there's a lot of this, that number one is unknown.

[00:13:40] Number two is uncontrollable, right? Like the behavior of your prospective customers, for example, you can't control any of that. So to me it's not about control. It's about creating it's about having it's about looking at that lump of clay. It's about looking at that blank canvas and figuring out, okay, this is a cool opportunity.

[00:13:58] What now? [00:14:00]

[00:14:00] Tim Chrisman: Yeah, no. And I think that's a good way of looking at it because that is ultimately what a new business ends up being. It's, a piece of art every bit, as much as a painting because it is something that you're molding. It is it's been weathered by the market and all this other stuff it's outside your control, but yeah you're shaping that and it looks like that's been something that's gotten in your blood and you keep going back to this.

[00:14:29] Yeah,

[00:14:30] Adam Rentschler: better for worse.

[00:14:32] Tim Chrisman: I assume it's for better. We don't touch fire too many times in our life without stopping, so can't be that bad. I mean you, so several years later you leave better boat as we're wanting to do when, after we've done a couple of jobs, like maybe I should go back to school.

[00:14:51] It wasn't so bad the first time. And

[00:14:54] Adam Rentschler: just to hide from a bad economy, frankly. It's

[00:14:56] Tim Chrisman: true. It's true. Yeah. And [00:15:00] some of the things you did during During your MBA looked really cool. Doing like venture capital work that at is, oh, what was that like? So I'm always fascinated by people who've worked in that space and how that looked early in career.

[00:15:17] Yeah. You were an intern essentially, or

[00:15:21] Adam Rentschler: a fellow th the technical term is summer associate Tim. So yeah, so I was I was incredibly lucky. I got to participate in a tiny little program at the university of Texas at Austin called the venture fellows. And it was a thing that, only 4% of my MBA class or something like this got the opportunity to do.

[00:15:42] And all of us were placed with Austin, Texas venture firms and or private equity firms. And the idea was to go out and learn that side of learn that side of entrepreneurship. Which is to say the entrepreneurial finance side of things and.[00:16:00] I was very lucky as I mentioned to have had that opportunity, but luck you're still in the sense that where I found my home was with a first fund that was doing material science-based investing and specifically in medical devices.

[00:16:15] And yeah I as a guy who enjoyed strategy and had been through a co a round of hard knocks and a lot of studying about what was working and what wasn't, just because the way my mind works, I was really drawn to the strategic implications. And even my first job, there was a lot of a lot of thinking I was doing about, oh what could have made that company more successful?

[00:16:40] That should have been a bigger deal than it was, what were some of the flaws strategically in that thing. And so having been to, to use your earlier term, having been the artist now, it was my opportunity to be the. Yeah, because fundamentally what you are as a venture capitalist is an art critic and it [00:17:00] is your job to say that's crap crap.

[00:17:02] Ooh, that's interesting. And you're anointing 19, literally 99% of the stuff that you see is crap. And it's not worth your time. And no, I'm not even, I'm not even going to call this entrepreneur back, which is one of the worst behaviors around, but that's how a lot of people in that industry role.

[00:17:22] So it was an incredibly exciting incredibly empowering Learning experience for me. Yeah. I'm throwing all those pitches in the trash and finding one that was very interesting. And raising my hand and saying, Hey boss here's one that I think we should really look hard at. And of course it's a lot like the military in the sense that the low ranking people like me were empowered to say no but not hard to say yes.

[00:17:49] So I had to like, Hey, I think this is interesting. We should probably look at it. That turned into a positive exit. So the one and only VC investment I did was a medical device company that [00:18:00] got sold to Smith and nephew. Oh, cool. Yeah. So that was, it was a super fun experience but what it really did is dramatically accelerated my study and learning about business strategy as it relates to things that in this case are fundable or not.

[00:18:16] Tim Chrisman: Yeah. No. And that's, a good point where everybody who comes up with an idea as positive it's fundable and yet, somehow most from Ark

[00:18:27] Adam Rentschler: what 99% are not. Yeah. What

[00:18:29] Tim Chrisman: did that look like? We knew. So you finished school, went back out into the big wide world. How were you able to use that new knowledge?

[00:18:38] Adam Rentschler: Oh man. I so wanted a full-time gig as a VC. I wanted that so badly. Unfortunately the university of Texas at Austin it's one of the 30 top 10 MBA programs, but it is not Harvard or Stanford and will never be confused with that. And. Those hiring for the venture industry re really [00:19:00] favor those top two type of institutions.

[00:19:03] So that was, it was clear that was going to be a very hard path for me, but but nevertheless, I tried really hard to make that happen. I, I then interned for a Colorado based firm because it was pretty clear to me that I wanted to move back from Austin to Denver. And I used that follow on internship to build my network in the Colorado community.

[00:19:24] Try like hell to get a full-time venture job, but was clear. I had enough that, Hey, I've got to get some tentacles out here and figure out what's next. And yeah, I was a little disappointed that a full-time gig as being an art critic, if you like, I was not going to be available to me.

[00:19:39] And it was pretty clear I had to get back to making my own art. So I was very fortunate again, to to be the BizDev guy for a Boulder, Colorado based firm called fire which was a Menlo ventures backed company. And we were up to some very interesting things wound up.

[00:19:58] I was there to help [00:20:00] facilitate the raising of venture debt, which is something with which I wasn't familiar with at the time. But a recognized an opportunity for us to extend some runway into, to burn down some additional technical risk turned out that was the wrong decision for the company.

[00:20:14] And yeah, so we wound up destroying about 13 million in venture capital and cratered. We were either going to be the next Intel corporation or a pile of smoking rebel. And unfortunately we turned into the ladder but it was Alvarado. And and again, my role, there was a BizDev guy, was my job to find find an application for this really esoteric, but groundbreaking technology and figure out a way to get that into the hands of the market and get a get the company, some revenue

[00:20:46] Tim Chrisman: did that did that tech ever get integrated elsewhere?

[00:20:49] No. No. Okay. Oh, that's a bummer.

[00:20:53] Adam Rentschler: Yeah. It was this it was really interesting. I, my, my NDAs have long since expired so I can talk about it, but it was it was

[00:20:59] a

[00:20:59] Adam Rentschler: [00:21:00] metal insulator electronics company. And so it was niobium and tantalum and their oxides. And it turns out if you make a little sandwich with that stuff, yeah.

[00:21:09] You can create something called the quantum tumbling diet, which would allow you to build radios that had that, that could detect signals all the way up to 26 terahertz, which yeah, it's really wild. So these are pretty rarefied error, but when you get beyond applications like radio astronomy, for which you could sell, maybe a handful of detectors, it was my job was so what, okay, you've got this quantum physics. Weirdness. All right, who cares? And what we wound up doing was working on working with Motorola at something in a much more modest spectrum back down at the gigahertz range. Okay. We were working at, in the millimeter wave bands. So 60 gigahertz which at the time was still science fiction for traditional semiconductor materials.

[00:21:59] Nobody [00:22:00] believes that Silicon CMOs, for example, could get there on the analog side of that. And we were there and blowing and going and had a pretty cool device. What we lacked was the transistor, so that the fascinating business problem for me was well. Okay. So I've got now a data sync, that's it?

[00:22:18] I can't transmit because I can't amplify in the analog regime. So if I don't have a trained sister, I can't boost the power in, at those frequencies in the analog regime. So if I can only receive, then I'm a data. What's a good data sync that needs super high bandwidth and consumes a lot of. Oh, holy shit.

[00:22:39] Televisions. And so we wound up working with Motorola on the predecessor to the Chromecast stick. Oh, wow. Yeah. So that was an application. And I put together some, a really interesting partnership with Phillips to actually talk to. Yeah, which is wild, right? Because high frequencies, you can have a very narrow beam.[00:23:00]

[00:23:00] And so you can do beam forming and have truly a pencil beam. And if you're looking at a warehouse and you want to interrogate and control individual light fixtures, having a simple pencil beam of radiation where you don't have to know, oh, that's, some gobbledygook serial number to talk to the light that's over your head.

[00:23:17] What are you going to do? Walk around the warehouse with a big old binder of light IDs. It seemed ridiculous. But in any case, no transistor, no series B no more funding. The partnerships didn't materialize quickly enough avenue. Wasn't wasn't quite there and oh, by the way, Silicon CMOs, again, defied all expectations as it often does.

[00:23:39] And those boys in the analog regime figured out how to do 60 gigahertz radios with just standard Silicon CMOs, which was mind blowing. But

[00:23:49] Tim Chrisman: what ended up being used for a lot of the, like the Phillips smart light bulb.

[00:23:54] Adam Rentschler: And we have, now it's all Silicon CMOs. These days, there are new exotic radios, right?

[00:23:59] If we're [00:24:00] talking about satellites, you can afford you can afford to play around with gallium arsenide and all these other compounds semiconductors. That has really interesting properties and cool things. But really the only place in the commercial land where you get any of that exotic stuff is in LEDs.

[00:24:17] Oh,

[00:24:19] Tim Chrisman: very good. Cool. And so after that you ended up going to lead a solar panel company. Yeah.

[00:24:26] Adam Rentschler: Which

[00:24:27] Tim Chrisman: I guess also uses Silicon.

[00:24:29] Adam Rentschler: I, this was solar thermal

[00:24:33] Tim Chrisman: vendetta against Silicon continues.

[00:24:36] Adam Rentschler: Silicon is lousy at generating heat. So I guess I ran to a place where I was safe from Silicon CMOs.

[00:24:43] Couldn't mess with me there. What I wasn't safe from was horizontal drilling and fracking which slashed the cost of our biggest competitor. So again, back to the strategy, right? The only way that business case works is if the price of natural gas was hot and then all of a sudden fracking and horizontal [00:25:00] drilling, fundamentally appended the economics of that whole business.

[00:25:05] So I w I was screwed by a different market force.

[00:25:08] Tim Chrisman: No. And what was, I remember $4 a gallon gas like things were made. So my dad was a roughneck he worked the pipeline in Alaska, too. So like I grew up around oil, natural gas and knowing about that sort of stuff.

[00:25:25] And so some of my uncles were working on fracking rigs fairly early on, and they were like, this is amazing. This is great. My dad's ah, I don't know. And it turns out they were right. Was pretty impressive what they could do. And yeah, and then it didn't last for them. Got them out a few years later that was rough.

[00:25:47] But you then seem to The side look, that's it I'm going my own way. And I'm going to, I'm going to be the master of my own shit.

[00:25:57] Adam Rentschler: Yeah. I CA I cut bait on that one pretty [00:26:00] quickly. It was also a FA a family run business that I was brought in to run, and that has its own interesting dynamics.

[00:26:06] That's awkward. Fundamentally though the economics of it just no longer worked. And again, it's often hard when you're in the fray to back up and ask the hard question, right? The strategic question, do the economics of this thing still work. And the answer is no.

[00:26:23] Tim Chrisman: Now if I remember right when I, and maybe I found the wrong sun track solar they're still around.

[00:26:29] Adam Rentschler: I don't know, frankly, it wouldn't surprise me if they are. But let's not confuse existence with success.

[00:26:36] Tim Chrisman: That's fair. There's a difference between surviving and thriving. Yeah. That's a fair point. And that, that sort of gets us to where you're at with valid evaluation which seems to be, and feel free to correct me a something you developed co-developed that took all this stuff you learned and were like, [00:27:00] Hey, I need a systematized way to make sure that people don't have to make the same mistakes as me.

[00:27:07] Adam Rentschler: That's right. That's right. Many of your listeners will recall the collapse of Lehman brothers and the, and it started that awful recession, 2007, 2008. That was also around the time when the Obama administration was seemingly going to really do something about clean tech and climate and get serious about it.

[00:27:29] They made a decision to focus instead on healthcare. And of course Obamacare resulted but nothing got done in those days. That was material really with regard to clean tech, but I hope Springs eternal in that community. And again, material science, looms really large in, in all things clean tech, particularly, for for a semiconductor kit.

[00:27:48] And then film, solar really seemed like it was going to be a thing 12, 12, 13 years ago. I was knocking around in the community trying to support as many clean tech entrepreneurs as I could. And that's [00:28:00] how I got involved in soundtrack solar. And one of the things that I think is not talked about much is the underlying gift account.

[00:28:13] Of entrepreneurial communities. So the thing that really makes entrepreneurial communities tick in my view is mentors and people that are giving of themselves to support the less experienced to help them bridge those strategic gaps. Often people starting businesses are brilliant technologists but do lack some of those strategy chops, right?

[00:28:35] And so there's this, there's this not very frequently talked about gift economy that underlies all that. And you've got a bunch of people running around with sort of various levels of credential and various levels of skill that are doing what they can to help entrepreneurs many do it out of the goodness of their hearts and just say, Hey, I'd love to help you entrepreneur X.

[00:28:59] [00:29:00] Don't worry about paying me. I'm doing this to pay it forward and it's all good. Then there's an awful lot of people that are trying to make money from helping multiple startup companies all at the same time. And I was in the latter camp because I was unemployed otherwise and had my shingle out as a consultant.

[00:29:19] And the thing that I realized was, number one, no one could afford me. Number two, I couldn't help, but help. Which is a money losing proposition, right? It wasn't like, I, I was sitting on a, some Scrooge McDuck pile of coins and I, from some fabulous past success, we'd just been over the abject preceded those.

[00:29:39] I wasn't feeling very flushed and was trying like held it, tend to make money on this. And given my background and the experiences that I'd been lucky enough to have that I felt like, Hey, I'm one of the guys in this community that. Can help. And so it's really worth it for you guys to be paying me.

[00:29:55] And one of the things that that you quickly realize is man, that's a [00:30:00] hardscrabble existence as a solo preneur consultant. It's really tough cause none of these people have money and it quite literally was like, okay, so I'm taking, I'm going to take $500 and this is man, this was really for next month's mortgage, but here you go, dude.

[00:30:18] See if you can help me pull this card out of the ditch and let's get this business going. And that kind of felt Vicky, right? And so one of the things that are really quickly realized Tim was that I didn't scale very well. And if there was a way to take the knowledge that I had and a way to take everything that I've learned along the way about strategy and to systematize that and to provide a consistent.

[00:30:43] Level of feedback that, that showed people the way show, and otherwise really smart engineer where the gaps are in her strategy. Yeah. And God dammit, if she knows, she's gonna figure out how to fill them, she's going to figure out how to fix it because she is a smart [00:31:00] technologist and solving problems is what she does.

[00:31:02] Yeah. Identifying those gaps and illuminating those for that entrepreneur is a hand-to-hand combat, very high touch, very inefficient process. And it takes an entrepreneur that is an unusually good listener and an unusually good hustler because what she has to do is hustle up a bunch of coffee. Shop meetings, hope that she is a good enough judge of character and has a good enough bullshit detector to know whether the person sitting across from her actually knows what they're talking about and then figures out well.

[00:31:36] Okay. That was bullshit. Bullshit, bullshit. Ooh, that's a nugget of good advice. I'm going to take that. And so you have this really inefficient feedback thing that happens in this gift economy. And I wanted to try to

[00:31:52] Tim Chrisman: fix that. Yeah.

[00:31:54] Adam Rentschler: Wow. So that was that's the long version [00:32:00] of why valid evaluation exists.

[00:32:03] Tim Chrisman: Yeah, no. And I think that idea of systematizing knowledge that can then be scaled. My wife and I talk about this with fairly regularly, she heard her dream job. She works with the federal reserve is to be the internal consultant for retiring people and go through and systematize everything they know and do so that as much as possible, it can be automated.

[00:32:32] And then what can't gets handed off to somebody else. And so that's not my instinct. I, I don't have that sort of. Yeah, natural proclivity, but it's fascinating to me to listen to it and figure out how that actually happens. Because in my head that's wildly complicated and there's no possible way I could ever do that.

[00:32:57] Adam Rentschler: It is. And what's, your wife is [00:33:00] after Tim is probably an order of magnitude or two harder than what.

[00:33:07] Tim Chrisman: Oh, okay. So what is it then that you all are doing? What, you talked about why and how this started, that was almost 12 years ago. 11 years ago, something like that.

[00:33:20] So what, you know what's happening now? Clearly that's evolved.

[00:33:25] Adam Rentschler: Let's talk about the what, and then we'll talk about, okay we'll talk about what's been happening over the last couple of years and our partnership with various DOD organism stations, which I think I'm pretty stoked about Nan and perhaps your listeners will be too.

[00:33:40] But the, what we do is is a deceptively simple thing. The, again, talking about this really inefficient economy, right? Like how do we buff up the strategies of entrepreneurs at scale and frankly show up hold up a brutally honest mirror that says this business is not worth your time.

[00:33:58] Go back to your day job, [00:34:00] please stop it. You're destroying. You're going to destroy your life if you continue down this path. And so it's what I quickly realized is that it is that thing, that feedback delivered. Was really is remains today, the crux of the problem in these entrepreneurial communities and in this gift economy.

[00:34:20] And so the corollary to that is that entrepreneurs are getting assessed all day, every day. And boy, wouldn't it be cool. If while people are passing judgment on them, they could also provide really kick ass feedback that was structured and prioritized for their benefit. Not just making the decision, not just saying, oh, I'm going to invest in you or I'm not going to invest in.

[00:34:46] You were, oh you're welcome to come into my accelerator or you're going to win this prize or whatever it is but providing everybody feedback and looking at this, not just as a problem of selecting a winner, but [00:35:00] rather as the problem. Maximizing the return on investment that the entire community is making.

[00:35:06] If you think about it, a typical entrepreneurial prize competition, or even a government grant opportunity, right? Like an SBI, our grant, you're always going to have far more applicants than you will have grantees or winners always. And so the return on investment of those programs, yes. We care about transition.

[00:35:24] Yes. We care about the ultimate success of that thing. Yes. We care about spending the U S government's money wisely. But my point is, God dammit. We have to be careful with how we're investing these people's time. It's the entrepreneur's time. It's their blood, it's their sweat, it's their tears. And it's the empaneled experts who are here to pass judgment on these people.

[00:35:48] And if the only thing we get out of this is that one's the shiniest that one's the best. It is a colossal. Because we don't have anything to show for that massive investment in time. If [00:36:00] you want to pick a winner, you might as well just put me in a room and let me do it or let you do it Tim or let expert fill in the blank.

[00:36:07] Do it. There are plenty of people that are capable of saying, yeah, that was the best pitch. There's no question about it. Yeah. What's hard is providing feedback at scale that can help the entire community that can get us from a place where we've invested a hopeless number of person hours in doing all these assessments and have nothing to show for it because people are terrified of debriefs.

[00:36:28] And the debriefs that come out are fucking worthless. So we have to, this is the problem that has to get fixed and unless, and until it's fixed. Gift economy for supporting entrepreneurs and giving them the support that they need to identify and fix their flaws, or to realize that, Hey, this thing is so flawed that strategically, it will just never fly unless, and until we solve that, our entrepreneur they're there it's like driving a car with it, with a boat, anchor attached to it [00:37:00] dragging down that, that asphalt as we go down the road it's ridiculously inefficient.

[00:37:04] And so that's the thing that we're solving. It turned that it turns out that a business strategy and the communication of that business strategy is what a learning scientist would call a complex performance. And so this thing sounds incredibly squishy, right? Oh, strategy. And you say, oh okay.

[00:37:25] If I've got Vinod Khosla, he knows what's what, and he's got this gold plated intuition and he's made billions, all those things are. Is Vanessa going to take your call, right? Probably not. Can't even find Superman's Cape to tug on it there. Much less actually get some feedback from the guy.

[00:37:43] And so the conventional wisdom is that strategy cannot be codified. Strategy cannot be measured. Strategy cannot be assessed in a way that scales. Yeah we've disproved. We have proven that by taking best practice of [00:38:00] assessment from the field called the learning sciences and applying that to innovation, whether that's engineering innovation, whether that's startup company innovation, it doesn't matter.

[00:38:10] It turns out that this squishy stuff can be systematically measured and it can be measured with an evidentiary basis and with analytical underpinnings. And so that's what we have done. So we've taken this concept that at the time was 20 years old from a field called the learning sciences. And it's just assessment.

[00:38:29] Like you talked to any professor of education, they'd say, oh yeah, you're. If you want to assess that five paragraph essay in your high school English. You're going to use a rubric and I'm too old and gray to have had that be part of my education. But but those younger certainly know exactly what a rubric is because this is how their five-paragraph frickin essay was measured in English class.

[00:38:48] Exactly. So all we've done is we've taken that construct, that rubric construct, and we've applied it to innovation. So that's the core of what we do. And it turns out that, built building a [00:39:00] software company around that has been really challenging in lots of ways some of which are maddening, others of which are quite interesting.

[00:39:08] Yeah. But that's it. So that's what Baladi bell does. We provide an evidentiary basis for scalably and repeatably evaluating innovation in a way that brings trust and better performance to government pro.

[00:39:25] Tim Chrisman: And so I recently applied for an SBR for one of my companies. And so I wanted to use the example of the feedback I got there to contrast with the source that you're gonna give the feedback I got there, a couple of pages from different evaluators that more or less said, let's get to know what he's talking about.

[00:39:44] How is he qualified to run a research project like this? Or or oh you probably need to look at XYZ criteria. But ultimately all of the feedback very much felt like a gut reaction [00:40:00] from somebody who didn't have very much time and wasn't entirely clear what they were giving feedback on much less why that feedback was being delivered.

[00:40:12] So what is different about. You're providing.

[00:40:19] Adam Rentschler: So everything starts with this notion of a rubric, which for those who are not in the know is nothing more than a matrix where the rows define the look, force the things that the program manager has decided are important for this particular thing.

[00:40:34] And then the columns define a really crappy performance all the way to an exemplary performance. And in each of the cells is a sentence fragment, right? That on an evidentiary basis describes exactly what the look for is so excellent. Looks like this. And there's a two, a couple of sentence fragments that describe what excellent looks like.

[00:40:57] And so the evaluators, if they had been using our [00:41:00] tool, as many in the army and the air force were already doing if the evaluators for your SBI, our proposal had been using our tool, they would have clicked the sentence fragments that they felt were most indicative of your performance. Your colleagues in parallel would be clicking the same thing, all asynchronously in a tool that has consumer grade user experience.

[00:41:21] So there's no training required and click. And the point of this is that when you get that debrief packet, no one should have to type something like good job on explaining your core technical breakthrough, right? No bullshit. That's a click that the comment should be reserved for.

[00:41:40] Have you talked to Bob Smith at the global strike MAJCOM because those guys like he would really get this. He would dig it. You need to reach out to that guy. So comments should be nuanced. The entire system has to be designed around the efficiency of [00:42:00] those evaluators, because as you say you got the palpable sense that, Hey, these people were in a hurry.

[00:42:04] Guess what? They are in a hurry. So if we don't build a system that honors that, and the fact that these poor people are often voluntarily. That they're going to be reviewing these things like this. This isn't work that anyone asks for. These are bonafide DOD experts, and many of them are the very best in the world.

[00:42:23] The folks that do these reviews, but they're all volunteered to do it. Nobody is getting a promotion based on how well they do it at evaluating our SBI, our proposal. So for those reasons, the status quo is just is absolutely unacceptable for our country.

[00:42:39] Tim Chrisman: Yeah, no. And you can be the best in the world at something you do, and if you don't want to do something, it

[00:42:46] Adam Rentschler: doesn't matter.

[00:42:48] Tim Chrisman: It's not going to be the best result. Yep. Yeah. I've never had death in the world that anything, but I'm pretty sure that's what would happen

[00:42:55] Adam Rentschler: to me. It's interesting. [00:43:00] 10 years ago. I would've said I'm not the best in the world, either at anything. And now we're the best in the world that this gossamer thin little tiny slice of the world, which is doing innovation assessment, which is just bizarrely, arcane, tiny little thin slice of stuff.

[00:43:15] Tim Chrisman: But no, but it sounds like a something that's incredibly useful and something that. When you hear it, you're like, why hasn't this been? Where has this been? And I know the answer to that because my wife beats me about my head and shoulders. Every time I asked that question that, Hey, some of these things are hard to implement Tim, just because it sounds like something that should have been done doesn't mean it's easy.

[00:43:44] And while it sounds like some of the user experience stuff you might be able to maybe not, might be able to borrow from other applications. The majority of this sounds like it's custom back in.

[00:43:59] Adam Rentschler: Oh it's a [00:44:00] completely custom platform. The substitutes for this are are things like Google sheets and Google forms, right?

[00:44:07] And so that is a way to try to begin to scale this. But our friends at app works quickly ran into that. When the pandemic struck, they had a, there was a joint, the joint acquisition task force to sing love it, lovingly known as Jada. And so those guys were trying to we're soliciting, Hey, who's got ideas.

[00:44:26] We don't care what bucket they fall in that can help the country with COVID. Yeah. And bless their hearts. They got 3000 responses and try to manage all the assessments and Google sheets. And then we got a call like, Hey, you got to pull us out of the ditch here. We're locked in. We don't know how to, like the Google sheet fell over at this scale they called us in we got them out of the ditch and back on the road and they were able to make some really smart funding decisions about innovations that were relevant for COVID.

[00:44:55] So that was the largest ever solicitation response that the DOD [00:45:00] has gotten ever. One has to think about scale and it user experience, making things really easy for everybody is key because you better believe that they're voluntold or not. No, one's going to sit there and review 3000 of these.

[00:45:13] And so if it's going to be Tim and Adam and, 400 of our closest friends that are reviewing this, then how do you make sure that things are consistent? How do you bring an evidentiary basis? How do you make sure that the right decisions are getting made by what is now a fairly big tent process?

[00:45:29] Because it has.

[00:45:32] Tim Chrisman: Yeah. That, that's a good question. How I don't know how and I do take great delight in hearing about how you had to pull them out of the Google docs ditch. Yeah, I'm surprised it wasn't a OneNote ditch because that seems to be another preferred DOD.

[00:45:49] Adam Rentschler: The our friends at have adopted Google and gotten the appropriate clearances.

[00:45:54] So they, they have unshackled themselves from Microsoft.

[00:45:57] Tim Chrisman: Okay. All right. At least that's good. But [00:46:00] yeah, so that I think gives a good backup. Description of what it is that valid evil is doing. What has been the trajectory of the company as you've grown and evolved, you mentioned you're working with some DOD customers.

[00:46:17] How long did that take this stark before you were able to start getting into that? Cause I would assume that's your ideal customer. Almost.

[00:46:26] Adam Rentschler: It really is to him. And so we realized, so the company was founded in 2011 and it was end of 2012, beginning of 13 when we realized that the federal government was our ideal.

[00:46:41] Yeah. The federal government is terrified of protests. The federal government is terrified of making the wrong decision and getting sued and having their entire program get drug into the muck. And they're all of a sudden Hey, like the Jedi project and the big fight with Trump and Bezos and Microsoft and all the rest, right?

[00:46:59] [00:47:00] Classic example on a huge $10 billion scale of the problem that we helped to solve, because if decisions are made in a big tent, but evidentiary basis within audit-able trail of how every single decision was made, it's becomes very difficult for a sour grapes, loser to protest. And so the government fricking loves that we had some pretty big strategic problems.

[00:47:23] We had no past performance with. Okay. We're in Denver, not the beltway. So relationships were zero with DOD individuals. And so we were bumping along in the private sector with people that valued us less. Not because they didn't think that the feedback was cool. Not because they didn't think that the user experience was going.

[00:47:43] Everybody loved that from the jump. Sure. But what we lacked was that added value of protest. X, which is so important to our federal friends. And so it turns out that from first contact through a phase one phase two [00:48:00] SPR, and finally a phase three SBR was less than 12 months. So sure enough, the hypothesis that the federal government was our highest.

[00:48:08] Customer-based was validated plus. And so in that 12 month period, we went from first contact all the way through a phase three indefinite duration, indefinite quantity contract with the GSA. So we find, we finally had the past performance. We finally had the relationships. And so fast forward to today we've got about 5 million under contract with the army principally with an army group called the assault, which is the assistant secretary for the army for acquisitions, with just sticks and technology.

[00:48:38] I think They they are managing among other things all of the Army's prize competitions. And we're also privileged to be helping with the applied, the applied SBR program for the army. So all of those decisions now run through us. So if you were to apply for an army SBR, if for one of your companies 10, you would get to experience the [00:49:00] feedback that comes from a valid, evil run process.

[00:49:03] So

[00:49:04] Tim Chrisman: just to get the feedback,

[00:49:06] Adam Rentschler: there you go. So we started out with the prize competition and quickly assault to, to their credit. Really is interested in doing things different and to channel Dr. Matt Willis the person for whom we all work. Dr. Willis would say that he is really trying hard to innovate the process of innovation and he and his team are doing exactly that.

[00:49:30] And so it was on the success of running a couple of the Army's X tech search programs, which are an open topic innovation call on, on, on the strength of our performance with that, we were given the opportunity to do a little bit more and a little bit more and a little bit more until finally now three quarters of the Army's SBI.

[00:49:47] Our funding runs through us in parallel. We've done some really interesting stuff with the air force. We I mentioned earlier that the COVID the COVID innovation thing, which [00:50:00] was in Africa an Upwork's led endeavor. It was at works that actually funded our phase one and phase two. And there, we had the opportunity to work with with the defense innovation unit and to do some other really interesting things today.

[00:50:15] We manage the down select for the catalyst campus out of Colorado Springs for for one of the air forces space forces, our principal accelerator programs. Also the hyperspace challenge down in Albuquerque and three major air force innovation programs out of AFRL, New Mexico. The thing that is principally holding us back right now is getting through the security wickets.

[00:50:37] And so once we have our authority to operate at a CUI level that's our hunting license. And right now, That's eminent. We're very close after three years in close to a million dollars invested as an unfunded mandate. And so we're very close to the end of that long and painful road and finally getting the accreditation that we need to [00:51:00] properly handle very sensitive VOD information.

[00:51:02] Tim Chrisman: Wow. That's pretty cool. Yeah, because so much of what is passing through a lot of these entities is classified projects. I would imagine the scale of what you can affect is an order of magnitude

[00:51:17] Adam Rentschler: more. There's no question. And it goes, to put it I've got to imagine that you and your listeners are very familiar with technology readiness level.

[00:51:27] And so we're playing now at earlier, TRL up through it, including TRL six, seven This same squishy down select process happens all the way through sustainment. So even if we want to think about sustaining the eight, 10 which which happily is going to Congress has said is going to lift a flight on maybe until we come up with something better.

[00:51:48] But. But even a program like that would greatly benefit from from a tool like ours. And so we're looking to own the entire TRL spectrum and to help, not just DOD, but [00:52:00] also the civilian federal. We're privileged to, to handle the entire SBR program for the department of transportation.

[00:52:07] And so that's been really interesting and it's, I'm sure it's not lost on you or others that that deity is a very well-funded entity these days with the infrastructure bill passing. Yeah, no,

[00:52:18] Tim Chrisman: That is somewhere that every bit, as much as DOD needs easy and repeatable ways to evaluate things NC natural fit

[00:52:33] Adam Rentschler: it is.

[00:52:33] And it's been a wonderful partnership. We really, we love all of our customers. Let's be clear, they're all superstars. But but the folks from the Volpi center, which is the innovation group for the department of transportation located principally in the Boston area are just, are amazing partners and have been just a blast to work with.

[00:52:52] Tim Chrisman: Yeah, no, that's cool. And we're we're coming up on, on part time here. So I wanted to give you a chance. Is there [00:53:00] anything that we missed talking about that you want to circle back on?

[00:53:08] Adam Rentschler: I guess I'll put in a shameless sales blog. If, to, to the extent that anyone listening is a program manager and you are interested in exploring what it might look like to up your game. We'd love to talk scalability, trust and mission performance, or what we deliver all day every day to our clients.

[00:53:27] And this is just the beginning for us, right? We've we're very blessed and lucky to have had the success that we've had. But man, there's a lot of federal government decision-making happens behind closed doors in some weird hotel ballroom where you don't let the voluntold experts out until they've got a decision.

[00:53:43] Yeah. God bless them. If they can tell you how they wound up at that decision to begin with after three days of arguing with each other okay, Steve, like this one and Sally liked that one and we went with the one that's Allie why

[00:53:56] Tim Chrisman: it was three days after that?

[00:53:58] Adam Rentschler: What can I tell you?[00:54:00]

[00:54:00] Tim Chrisman: Yeah, no. In fighting over the Y maybe it's a bridge too far for them. Yeah.

[00:54:06] Adam Rentschler: It is because everyone told and look and I think that one other thing to talk about is I think that though. Those who are paying attention to what's happening in DOD right now. And what's happening geopolitically understand that our country is navigating some very dangerous waters and we have to fix our innovations.

[00:54:30] In this country, if we're going to stay ahead and we're going to stay out of a war, I don't want my kids to live through losing a war. And and I know you don't either. And so the question is, how do we elevate our game? How do we empower more in the federal government to say yes and fewer people to say no?

[00:54:45] And what my operating principle is here is that if you can codify commander's intent in the sin called the rubric and providing the evidentiary basis for it. And that is your basis for saying yes, that unshackled us and allows us to make decisions quick, [00:55:00] more quickly, and to begin to move at the speed of relevance.

[00:55:02] And if in parallel, we can get out of this culture of secrecy and not giving debriefs and get into a world where we are manifestly transparent. And we are manifestly interested in supporting everybody in the dual use community. That rage that is brave enough to raise their hand and invest the time to apply for some government dollars.

[00:55:21] If we can support every single fucking one of those companies. Culture is going to change. And it won't be nearly as hard to attract a girl and her dog who has the most amazing satellite technology. And boy howdy does the space force need it, but she is terrified of doing business with the federal government because of all the horror stories she's heard.

[00:55:42] And so if we can do these things, we have an opportunity to get innovation right in this country. And if we don't free market capitalism and respect for the rule of law could be on the way out. And I don't want to live in a world where free market capitalism and the respect for [00:56:00] the rule of law is not how we live.

[00:56:03] I value that too much and it is imperiled. And so fixing how we do this is frankly, every everybody's mission. And it's my hope that that if not valid evil, that somebody helps to figure out how to solve this thing so that so that we can stay.

[00:56:19] Tim Chrisman: No. And it sounds like from what we've talked about over the last hour or so that this is maybe not a challenge that most people think of when they think of big challenges that organizations are facing right now, but this has a potential to have generational impact as this is being implemented and scaled throughout government, because this changes how government does everything.

[00:56:49] And so that's really cool. And that's an exciting prospect, no doubt from your end, but it's just exciting being able to hear about it over here. Yeah. Thanks for taking the time to chat today

[00:56:59] Adam Rentschler: out of [00:57:00] things. Thank you so much for the opportunity to, it's been a fantastic discussion and.

[00:57:05] I I really appreciate your time and your interest in what we're doing. Yeah. Thank you.

[00:57:09] Tim Chrisman: Take care. All right, bye.

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