The Future of Space and Startups: Where Smart Investors Are Betting Next | Ep 319 with Jake Chapman Managing Director of Marque Ventures

So Jake, I know at Mark Ventures, you are dealing with a lot of people that might have to

do with national security and obviously right now, there's a lot going on geopolitically.

How are you looking at this as yourself, as an organization, with everything that's

happening right now, since there could be impacts to your business?

Yeah, great question. I mean, I think anyone who gets, any founder who's building a company

and defense stacker for national security is probably a geopolitics nerd because, you know,

why are they in that space? They're in this space for a reason, right? They care about it.

I think it's the same thing with our team. Like, we all think a lot about what's going on in the world.

From a personal perspective, it's just interesting. But from a business perspective,

it's also quite important, right? So if you think about the old Wang Bretsky quote,

like you have to skate to where the puck is going, not where it is, you have to think about that

in your investing in national security, you have to think about how the world is changing and like

where your tools that you're investing in or your companies you're investing in might fit

into the future, right? So like, if you think about Ukraine, I think is a good example.

And what's being used in Ukraine, the technology is being used there. It's sort of high leverage.

It's small drones. It's fiber optic connections. It's electronic warfare.

But then you think about what the US is actually preparing for, which is to deter a war with China

in the Indo-Pacific, probably over Taiwan, maybe over some other islands. The tools are very different.

And so if you are only investing in the things that are being used today in a particular conflict,

then you would be missing a lot of the stuff that's important for the future, right? Adventure is

all about trying to predict the future with as much clarity as you can and then investing behind

that that future vision. Do you have a system or a way that you can evaluate things because

you bring up a great point. You're trying to predict the future. And as we know, things move

like a million times a second right now. So I could see the challenge with trying to predict,

but I imagine that you have some way in order to do that.

Yeah, I mean, we certainly try, right? We don't know about Crystal Ball.

I actually think national security, it's a little bit easier to predict the future needs than it

is in any other sector I invested in in the past. I mean, I started my career, I invested in

consumer package goods, write stuff you find in the grocery store, and all sorts of stuff.

I think consumer behavior is the hardest thing to predict.

In national security, especially in the US, we actually run an acquisition system that is

fairly communist. I mean, we have essentially five year plans and those plans to some degree

are classified, like you can get access to some information to all information, and you can see

where Congress's priorities are in their budget and that again unfolds over multiple years.

And so you actually can, if you know where to look, pretty good visibility into where

the spending is going to go. And then we can then take a step back and say, all right,

well, if this is where the spending is going to go for the next five years, where should we be

investing today to meet them where they're at? And so it's a more predictable space actually than

anything else I've ever invested in. Geopolitics aside. No, that is fascinating. I didn't even think,

I mean, yeah, consumers, you love something one day and you hate it the next day, something

happens and it changes. We've had a lot of people on who've also talked about this.

When you look at the funding space, so you came from the government and now you're starting your

own thing and you have your own venture capital fund, what were the differences in the two?

Yeah, and so taking a step back, I was running another fund and I was investing more and more

in what was called deep tech or frontier tech. So thank energy, autonomy, aerospace, stuff like that,

and moving my career more and more towards national security over time. All the companies we're

building in aerospace have a national security application. And so I ended up falling in love with

the mission. I loved working with active duty folks and thought it was a really important place to

be investing. It was well, you know, lucrative, but also I think important for the mission. And so

I left the firm I co-founded to go start a new firm. I was going to go start a private firm focused

on national security. And when I did that, a friend of mine asked if instead I would consider going

and trying to fix what was called the army venture capital corporation. So in 1999, Congress

CIA created Incutel, which was the venture arm of the intelligence community. So CIA then also

sort of more broadly. And the reason they did that is they realized that the best technology was

being developed in the private sector, not in government labs anymore. You know, back in the 40s

and 50s was all government labs. Now it's private sector R&D. And so they needed a tool to access

that technology. Then in 2002, Congress realized that the Department of Defense at the time,

now Department of War had a similar set of challenges. And so they created the army venture capital

initiative. What we became under us, the corporation, to help the department find the best technology

and get it to the war fighter as quickly as possible. So it ran for about 10 years from 2002 to 2012

under other leadership. And then it kind of sat fallow for 10 years. A lot of mistakes were made

along the way. I would say that the government is not a great venture capitalist. But then they asked

if we come in and fix it. And so we spent two years working with Congress and the services. So

Army Navy Air Force Marines Space Force trying to figure out how you run a venture arm hand in hand

with the department. And at the end of that process, like one of the realizations was you would

run it as a private firm because the sort of congressional budgeting cycles and just the bureaucracy

of being a quasi-governmental organization made it almost impossible to run a successful firm.

So we took the plan we put together and the team we had built inside that organization

and then left and started Mark Ventures. So that's kind of the origin story for our firm.

So if you're talking to a founder who's like, you know what? I see some problems. I never

thought about getting into this industry or industries impacted. But now I want to. What advice do

you give to them? Maybe because they want to do a startup or maybe they just started something

and they want to grow it to the point where they could look for funding.

Yeah, so I mean, I'll give advice specific to national security because that's what we do. I think

it's a it's a very unique space to break into. So one, I think if you're interested in this space,

maybe you've been watching the news and you see that the world is sort of a more dangerous place

today than it was, you know, 10 years ago or 20 years ago, you want to do something about it.

That's great. Like, would love to have you building in this space. Find someone on your team

that if you weren't active duty that was that serves and has like first hand experience

dealing with the bureaucracy at the Department of War, like how they acquire things, what they

need, understand that process, have that person on your team. If they're not a co-founder,

they need to be like a first hire. So that way you might build something that's awesome and never

find the customer. It's a really hard space to break into if you don't have some connectivity

and some understanding of how it works. So super important. That's number one. I think number two

is talk to the customer. I mean, this is true in every space, but like know who your end user is

and get like really early feedback on the thing you're building. You know, there are so many

founders who built really cool widgets, but if they're, you know, solutions in search of a problem,

or there's like something about it that they wouldn't think about that the end user would,

that makes it unusable. It's like an example in like the national security spaces. You know,

if you're building something for the individual soldier, you know, it might be like a one-pound

thing. Like relatively light, you would never think about the weight in your day-to-day life,

but they're already carrying, you know, 80 pounds in a sack, rucksack. They've got 100 things attached

to their bodies. It's all wired up. Maybe you have a wire now and so there's like a new wire

they have to have attached to their body that's going to tangle with things and they'll just never

use it. So what happens is you build it, it gets shipped to them overseas and then it sits in a

pelican case in a box, back at the base, never gets used and then doesn't get bought again.

And you would never know those things unless you talk to the end user who's like, oh yeah,

you know, I'd never carry that. It's got to be half the weight or if I'm going to carry it,

it's not going to be attached to my rifle. It's got to be like on my hip or whatever it is,

like you need that feedback. Yeah, I could see you need the first-hand experience in order to really

solve the problems. Like myself, I wasn't in the military. So the problem I think that they would

have, how would I even know where they would know the exact problem? What do you see is the biggest

mistake when founders are pitching you? Because I think I don't see a lot of VCs talking specifically

about like, this is what I want to see, but I would imagine though that there are a lot of mistakes

or bad pitches or things like that that you would see on an ongoing basis. So what do you see

that you're like, this totally is the wrong thing to do when you're pitching a VC.

I mean, there's a bunch of things that can go wrong. So first of all, when VCs say no to founders,

like every founder should know this, like 99% of the time it has nothing to do with the company

that's in front of them. It's like, they just did a deal last week and so their partner,

does the internal front politics is probably going to be the one that gets to do the next deal,

or they've invested in a company like yours or they don't want to invest in the competitive

business, or they just don't like your spate. Like whatever it is, there's like 99% of the time

it has nothing to do with the company. It's like an exogenous thing. That said, there's like lots of

things that make it easy for VCs to say no, right? Like if I'm going to look at a thousand deals

this year or 1500 deals or whatever the number is, then I'm going to do four. I'm basically looking

for reasons to say no because I just, I need to be able to move on and then look at the next company,

talk to the next founder. So one, we all have bad days or days where we're low energy,

but like if we're on a call or I'm meeting you and you are not like using excitement for the

thing you're building, like how am I going to be excited about it, right? Like you have to be

very passionate about it. Part of the reason I want you to be super passionate about it is if you're

a great founder, you can go get a job at Meta and make you know, $600,000 a year or whatever

with like very low downside risk. And you're going to face as a founder, especially in defense,

it's so hard, an existential risk like every six months or every year in your business. And you're

going to be confronted with the decision A or B, A, keep building this building that like is

giving me an ulcerer and is really hard and like maybe we'll never mount anything or B,

go take the job at Meta for $600,000 or name your, you know, major magnificent seven startup,

or tech company. And I need you to keep picking the company, right? So you have to really love

the thing you're building or the problem you're solving. So that's number one, like passion on

that call in the meeting, super important. And the other one is, in the thing I would say like

really impresses our team the most is if we ask you a question and you have an extremely thoughtful

answer. So it's clear that you've thought about it and whether we agree with your answer or not

is sort of irrelevant. Like what we care most about is the fact that you have thought about the

challenge and like thought deeply about it and can respond. And if you don't have an answer

and you say, let me think about that and get back to you. And then you send me a follow up email

with a well thought out written answer. Oh, incredible. Like that's what we want. We want founders who

have answers for all the tough questions. Whether we agree with their answers or not is sort of irrelevant.

It's like, I want to know that you thought about it. You probably know the space better than I do,

right? So like your answer is probably right, even if I don't think it's the right one. I think

those are like the two the two biggest things. Oh, number three, if I ask you who your competitors are

and you say I don't have competitors or you like quickly dismiss the other people that I know

are building in the space, like I have probably taught to those people there. There's a reason they're

building what they're building. Like you shouldn't be so dismissive of your competitors. Like

understand what it is that they're building and how you're different. So don't just say we don't

have competitors or like those guys will never get it off the ground. Like tell me why to be thoughtful.

Can you imagine blockbuster and Netflix? Like blockbuster probably said in meetings like Netflix is

not our competitor. They'll never get it off the ground. I heard a story from Netflix founder that

I guess blockbuster had a streaming, but a new CEO came in and squashed and said like they want

to focus on the in store and the DVDs and because I guess the Netflix founders were really afraid

that if this if they went in that they were going to be destroyed because they're theirs was

much smaller than blockbusters at the time. And then that's it. And now we know what happened,

which is a fascinating how something can be so far ahead yet someone else like you said smaller

can totally disrupt everything and then just propel past. Yeah. I love the blockbuster Netflix

example. I use it all the time when I'm talking about modern portfolio theory with folks,

which is that you know you can venture is inherently risky, but you can de-risk an investment

portfolio when you invest in venture. And the reason is because venture has low correlation to

the rest of your portfolio. So even though it's risky as a standalone, it's a counterbalance to

everything else. So we're like investing in national security actually. Like in good times for

the world, national security very slowly goes up and when times are bad national security investments

go up quite a lot, but everything else kind of comes down, right? So it's a it's a hedge on a

portfolio. And the example I always used for like how to hedge a portfolio is the blockbuster

Netflix example, which was there was a blockbuster on every street corner. Netflix seemed absolutely

crazy. What was the smart investment? Well, the smart investment turns out was to have invested in both

really. And you would have done great. So when what are you thinking about space and when it comes

in national security? I've been doing a lot of this like deep dive into space technology just

because I thought it was fake. So I was like, Oh, no, we're building like a hotel in space and we're

going to need like everyone who's doing things on earth. We're going to need in space. And I thought

that I really thought this was a joke. And as I did more research on like, Oh my gosh, like people

are really building things in space. And they're like building things on the moon. And I'm I can't even

believe this we're even living in a time where this is real. How are you looking at that? Or is that

even a thing yet when it comes to national security? Yeah. No, I mean, space is like hugely important

in our sector or industry. I mean, it used to not be a dedicated service, right? But now we have

the space force. So we have an organization in the Department of War dedicated to space dominance.

It's important for a whole bunch of reasons. So it's important economically, right? And like if you

think about what the Navy does, the Navy's main job of actually is to ensure like free trade or

like the free flow goods like to support the US economy through commerce. Like that's actually

what the Navy was originally designed to do and still largely what it does today. Space has the same

sort of characteristics now is the oceans, right? Like Starlink is like vitally important in a lot

of different businesses now. I mean, it's only a few years old, right? So imagine whatever be like

10 years from now. And Starlink is only one piece of space infrastructure that really supports

commerce and national security terrestrial. It's a defending that is super important. But yeah,

a ton of businesses are going to get built in space. Most of them, I think with customers, terrestrial

customers are not like a real true in space economy yet. But it does seem like that's coming at some

point. I know that like the asteroid belt has something like, you know, $106,000,000 worth of

like mineral wealth in asteroid, some insane number. And like single asteroids have like, you know,

more gold than all the gold that's ever been mined on the earth, right? Like not that you want to

mind all that gold because then gold doesn't doesn't have any value. But like the resources

themselves are valuable for things we need to build or do, right? So all that's coming. And if that's

coming, then like someday there might be space pirates, right? And so you need the ability to

that defend your assets in space. So yes, like I think it's real. There's like tons of economic value

being created today, mostly for terrestrial businesses. But then eventually there will be like true

in space in space economy stuff. We'll see if the aliens come or maybe they're already there.

Big or bigger. Big debate, right? Like they're they're going to release the files of aliens if aliens

or I don't know. What do you think about aliens? Well, okay. So I think statistically,

they're almost certainly intelligent life somewhere else in the universe. And there's a clip

of dangerous school, secretary of school who's now the secretary of the army from maybe six months

ago where he's he's talking to someone about talking to like a news anchor. And he's like, yeah,

I was just like talking to some of our astronauts like in space. And he said that he was talking to

a soldier on the moon. And then like there was no follow up question and like nothing nothing came of

that. And I was like, he just said there's a soldier on the moon. And like I think maybe he was,

he was like a he didn't mean to say that. Like he meant to say something else. I mean,

that just like sort of slipped out. Like I don't think we actually have soldiers on the moon.

But he said it. You can find the you can find the video clip. So I don't know. Why would we have

soldiers on the moon if not to fight aliens? No, but like to your question, do any aliens exist?

I think there's a decent chance. So if you look at UFOs from like the 1940s to today,

if you believe that like we've witnessed certain things, like we've witnessed things that like

accelerate faster than any known object if possibly accelerate or make turns faster than

anything could turn and still survive. So like there's like alien tech out there. There's like

lots of explanations for that. But I think actually the most compelling is that it's alien.

Because if it were an adversary, right? So if it's like Russia or China building this stuff,

or even if it was the US, the thing that you're seeing from 1940 would not look like the thing

that you're seeing in 2025, right? Like we would expect to have seen a tech curve, some

advancement in that technology wouldn't just be like, wow, we had this amazing thing and now it's

frozen in time. That's always going to be the same thing. And the other thing is if it had been

Chinese tech or Russian tech, like we would be speaking Mandarin or Russian probably and not

English right now. So you know, there's like other explanations, right? Swankass, weather balloons,

like it's, you know, sensor problems. But like the stuff that's come out in the last couple

years is like, it's like if some of it is verified by multiple sensor types, right? So you have like

a pilot in an F-35 who sees it. The radar picks it up. The ship born radar down below picks it up

and like the IR sensor see it. And so like I can imagine a scenario where like one sensor doesn't

see it. But when you have all this like overlapping corroborating sensor information, the chance that

it's a totally made up sort of figment of their imagination is like infinitesimally small. So

I don't know man. I think maybe it's aliens. I mean, like you said, we might even, I might,

I'm been thinking about this. I think we might even have become like we might be from aliens like,

you know, like Prometheus style, like they came down and they put something in the water. I don't

know. I mean, depends on like the religion that you believe and what people believe. But I have

been thinking about things around aliens lately. I was in Joshua tree once and I looked up in the

sky because there's no light pollution like in the middle of the desert and Joshua tree camping.

And I saw something going in like a diagonal really cropped like fast across the sky like,

like like zooming like this. And I told my wife like, do you see that? And she saw it. And I was like,

what the heck is that? And interestingly enough, I found out to that Joshua tree is right next to

like one of the largest military bases in the US in 99 palms. And I was like, this is, I don't know,

I don't know if they're related, but I was fascinated. And I was like, I'm not going to tell anyone

about that because people are going to think I'm crazy. I don't know what it was. But this is the

first time I've ever publicly said it, but I thought it was very strange. They do a lot of like

experimental aircraft testing out there. So it could have been that, but it's also true that there are,

there are more UFO sightings around military sites and nuclear sites, which may or may not be

related to the military doing testing of things. It could also be that those sites just attract

the attention of whatever the UFOs are. I used to live in New Mexico and say, you know,

go to Roswell. It's an interesting town. Like I tell people, go there one time in your life for

like 10 minutes, but don't stay longer than 10 minutes. But it's an interesting, interesting

place to live, by the way. But this has been great. Jake, I'm very interested about what's going to

be coming in the future. And the fact that founders have different industries that they can go into

and you know, military people can, when they get out of the military, they can become entrepreneurs.

I feel like I've known a lot of people that did that transition and they became amazing entrepreneurs.

And they can partner with other people too. It's, I think it's such a great way for them to be

able to, you know, advance themselves and to go into a totally new industry, but leveraging

all the knowledge and experience they had. So if you want to get in touch with you and they want to,

maybe they want to pitch you or maybe they want to find out more information. How can they do so?

Yeah. Well, you can email me. My email is, is Jake at mark m-a-r-q-u-e dot v-c. Or you can find me

on Twitter at v-c. It's a pretty, pretty easy Twitter handle to find. How did you get that?

Yeah. I wish it was a cooler story, but I had a, maybe, I don't know, eight years ago now. I had

an early Twitter employee reach out who had like a bunch of two and three-letter Twitter handles.

He was like, hey man, I love this stuff that you tweet. I think you're super interesting. Would

you like the at v-c Twitter handle? And I was like, you know, I'm not rich. I can't give you like a

million dollars for this Twitter handle, but like sure, I'd love it. He was like, ah, don't worry about

it. Like, we'll just, I'll just make sure you can have it. That's amazing. Like, that's like

getting one of those like URLs, like two, two letter URL. And that's, that's incredible. But at v-c,

I mean, totally, you can't forget that one. But Jake, this has been great. What a conversation.

And we even let into aliens like, I don't know if I've had this conversation that anyone before.

So I'm glad that I was able to talk to you today. And then all you do, you know, to help entrepreneurs,

like you said, you could go get a job at meta and make a bunch of money. But instead, there's

the old saying, I work 80 hours a week. So I can not work 40 hours a week at a job. But we know,

if we didn't have those entrepreneurs, how many things would we not have in the world?

There'd be so less advancements for those people, you know, if they make those sacrifices

to build and to create. And thank you so much for all that you do.

Yeah, absolutely, man. You read like veterans make phenomenal entrepreneurs.

We love working with veterans. We love working with veterans.