Transcript of He Got 30 Investor Rejections, Then Built a $12.7 billion Defense AI Company | Ep. 420 with Brandon Tseng President and Co-Founder of Shield AI

So Brandon, I mean, what a history that you have, and we'll, we'll dive into that later. But I mean, like, I was reading your bio and I'm like, wow, this guy has been through some things, and I can't wait to hear all about it. But I want to start differently today because in 2015, we were just talking that Basically defense tech wasn't even a thing when you started Shield AI. What gave you the ability that you could start something and create a whole industry when no one else was even thinking about it?

Yeah, no, great question, Dan. Thanks for having me. Look, I think, oh man, I tell everybody like ignorance is a superpower of any entrepreneur because you just don't know how hard something's going to be. And you think it's going to be a lot easier than it ends up being. And so, you know, for what it's worth, I was ignorant to the fact that, like, you know, I believed in a world full of autonomous systems for the military. I thought that Shield AI could make an impact. In terms of, like, having that confidence, I'll say, you know, in the ability to make an impact, I'll tell you two places I derived my confidence from. My mom always had a an unwarranted vast amount of confidence in her kids, you know, in my siblings and I, you know, she used to be like, Brandon, if you want to play in the NBA, you can play in the NBA. And I'm like, Mom, I can't play in the NBA. Trust me. She's like, no, you could do it. And then, you know, second thing that I would say gave me a lot of confidence in the ability to make an impact was the SEAL Teams.

After you go through Hell Week, once you become a Navy SEAL, you have a ton of self-assurance in yourself. And so, but again, I do think like to the point, I wasn't exactly sure how hard it was going to be. I was confident that I could figure out how to solve problems, make an impact, and, you know, just dove into it in 2015 and learned it was going to be a lot harder than I had ever anticipated.

How many investors said no before you got a yes?

Oh man. So in 2015, we went up to Silicon Valley, uh, August 2015, met with 30 investors. Every single one of them said no. In 2016, we met with another like 25 investors and 2 of them said yes. Uh, and then because those 2 had said yes, 1 more said yes. Um, and so that was, uh, that was Homebrew, Bloomberg Beta, uh, and Founder Collective who led our seed round. But I will, uh, one thing I tell entrepreneurs is, and one thing, this is actually, I'm stealing this from Peter Levine, who's our board member, uh, from Andreessen Horowitz, been on the Midas List, just one of the best investors, uh, of this century. He's like, look, all you need is one yes, right? He's like, you can have 100 nos, but if you have one yes, now you have the opportunity, uh, to go, you know, prove the other people wrong, prove the other investors wrong. And so that's, uh, you know, something, 'cause you get told no all the time, you know, whether you're raising, you know, your first million dollars or, you know, we just closed a, uh, a $2 billion round, you're still getting no, told nos all the time.

And every single time that, that rejection, it hurts, but you just have to remind yourself is I just need one yes.

Well, how does that make you feel when you think about 11 years in, $2 billion just raised? What emotions, what comes to mind?

I actually tell everybody, you know, the day you raise money is like the one of the sadder days of the journey because you're just signing up for really, really incredible expectations, right? And I have a great sense of debt and respect for all the investors who have been with us along the journey, who made a bet on us, right? I want to make them proud of their investment. But when you take on money, especially venture money, you are signing up for, right, the varsity leagues, the pro leagues, which means you are going to deliver top 0.1% results. And that is a hard thing to do 11 years in a row, right? And I tell everybody and tell the team, it's like, look, every year is a championship season. We have to win at least 20 championships in a row. And that is a hard thing to do. So, you know, I say that that's what makes me— when you do it, you're like, all right, this is You know, this is going to be a kick in the rear is what we would say in the SEAL teams. When you sign up for a hard mission, you're like, all right, it's going to be really hard.

That's, that's what it's like when you, you know, there's not, it's not a whole lot of, you know, joy, I would say, when you, when you close those deals, it's, it's a sense of reality check. Like, I'm going to, I'm going to have to work my ass off to deliver for these people who have made a bet.

Well, it sounds like the training you had in life, two deployments to Afghanistan, Pacific theater, Arabian Gulf. Uh, I mean, Navy SEALs training just looks incredible. Like I want to go through it knowing that I will definitely fail just the training part. I could never be a Navy SEAL, but then you went to Harvard Business School. How did the culmination of these things shape you as a leader?

Yeah. Um, look, I, I'll tell you, uh, learned all of my leadership lessons and my leadership philosophy. During my time in the Navy and started off as a surface warfare officer, did that for about a year, then became a U.S. Navy SEAL and just very blessed to have not working for great leaders, but also a culture that appreciated leadership, that, that would study it actively. And so I just learned, you know, and, and gave you the opportunity to actually lead people, right? You know, as a 21-year-old out of college, 3 days after I graduated from the Naval Academy, I flew across the world from Annapolis, Maryland, all the way to Phuket, Thailand, boarded a ship, and 20 people were reporting to me, looking to me to lead them and, you know, make decisions around different aspects of the job. And the SEAL teams, right, right out of, you know, my very first deployment as a SEAL in Afghanistan, not only, uh, I took over my platoon halfway through, um, and so I had 16 Navy SEALs, but I also had 800 Afghan commandos, uh, that I was responsible for and leading on the battlefield, uh, every single day.

And so there are few places, I would actually claim there are probably no other places like the military where you get a lot of leadership experience right out of the get-go. Um, you get, you get in and you get the academic side of things. You get the coaching side of things, and then you get the real-world experience. Um, and so credit to the Navy in terms of making me the leader that I am today.

Do you think a lot of people, when they get out, it helps them become entrepreneurs, or do you think it more helps them to become fantastic employees?

Uh, I think it's both, honestly. And I tell, uh, I tell military veterans, not just Navy SEALs, it's like, look, your superpower as a veteran is your ability to get things done and accomplish the mission and endure a lot of pain, whether you're— whether— and, and suffering. And, and those things are wildly valued in corporate America. Like, if you can get things done and if you can endure some pain, um, and if also if you can understand leadership, those things are, uh, again, very much valued in, in corporate America, whether you're an entrepreneur or whether you're joining a company and building a company. And look, to do what, you know, Shield AI has done, we have had to bring on some incredible company builders. And, you know, I know a lot of people focus on the entrepreneur entrepreneurship's not for everybody. Super painful. Like, all the respect in the world for, you know, the people on, whether it's the Shield AI team or any team that is helping build and grow a company. It's a lot of work and effort.

Yeah, I was, I wasn't sure if you were explaining Navy SEALs or if you were explaining entrepreneurship and what you were saying, because maybe it's, there's a lot of pain, a lot of ups and downs, a lot of pain. Was there a moment from 2015 to now where you were like, did we make a mistake?

I mean, yes. So many times where, uh, I, I tell investors, I tell teammates, like, look, I've stared into the abyss of death, doom, and despair so many times, right? Um, and at the same time, I would say, like, something that, again, credit to my experience in the SEAL teams, like, never quit, take it one step at a time. Um, You know, that's, that's in like, keep moving forward, right? At the end of the day. And that has been incredibly helpful. Certainly, yeah, we've had so many setbacks at Shield AI. Every single entrepreneur is going to experience so many different setbacks. If you're in like, I'll grant it, there are probably a handful of like company stories where there were no setbacks and like it was, that's like winning the lottery, right? But for like 99.9% of the other entrepreneurs out there, Um, there's going to be setback after setback after setback. Uh, and I tell people, you get a day to feel sorry for yourself, um, and then you move forward, you start solving the problems.

I like that. When you think back to Hell Week, what was the— what's the hardest part of Hell Week?

The hardest part of, uh, Hell Week, um, it's, it's all mental. Uh, and so, because I will tell you, Hell Week puts you into situation where you just feel incredibly sorry for yourself to the point where it makes you want to quit. Right. And 80% of every class does quit like during Hell Week. Um, because it makes you feel really bad. It is, you know, call it the— you couldn't actually start BUD/S and Hell Week today because people would deem it as modern-day torture. Um, and it is, it's just awful, right? Uh, to the core. And I would say like the worst thing is getting surf tortured. You know, I remember Wednesday night and this is, they know no one quits after, you know, this starts Sunday. They know zero people quit after Wednesday, right? Midnight on Wednesday hits, no one quits. So this is, you know, 11:00 PM on Wednesday and we're going through the worst evolution, which is something called Camp Surf where they're forcing you into the freezing cold water every minute on the minute for about 6 hours straight. And every single time you jump in, it's like a million needles coming onto your body.

Um, but they know you're not going to quit. And I remember asking them, they're like, we're like, they go, do you know why we make you do the worst evolution? We, we already know you're not going to quit. And, uh, you know, we're like, no, why do you guys do that? They're like, because we want you to understand that, you know, you never make it. It's always, you will always be suffering, whether you're a Navy SEAL, uh, when you become a Navy SEAL, it's just going to be a life of hardship and pain. Um, it is not, you know, glamorous in any way. And we want that. The reason that we bring up You know, camp surf on Wednesday night, uh, when we all know that you're not going to quit is because it's a reminder that this is the life that you're signing up for. Um, so, uh, that was definitely the hardest part of, uh, Hell Week.

Man, if I was like 20 years old, I would have liked to have experienced a Hell Week, but now 42, it definitely would not happen anymore. Um, you built this technology that's in real conflicts. VBAT. When I first saw it, I was like, I almost couldn't believe this is a real thing. It's incredible. It could be even flying over Ukraine right now. When you see footage of this product operating where a place like real lives are on the line, what are you thinking about?

Yeah, a couple things. One, I think it's like the coolest thing in the world, right? Coming from my background, I obviously I'm, I'm an engineer. I love, uh, military aircraft, military technology. And so getting to build something that's gonna— that's making an impact is like, it's very much rewarding, and it makes the pain all worth it when you're actually, uh— it makes that pain, that suffering that I was talking about, all worth it when you're actually delivering value, delivering outcomes to the customer in a really deeply meaningful way. Um, and, uh, you know, the, uh, That's, that's like what I think perhaps like the second thing about it is just like it's really rewarding to have that mission impact. Um, you know, we, the VBAT helped interdict £100,000 of narcotics, uh, last year with the U.S. Coast Guard, uh, a record for the U.S. Coast Guard. We are operating missions every single day in Russia, Ukraine, uh, we're operating in the Middle East, we're operating in the Asia-Pacific region, and just incredibly rewarding, right? Uh, as we make steps toward accomplishing our mission of protecting service members and $1 billion. So, um, yeah, that's, that's the cool part of like entrepreneurship is when you have a product, you finally get to the point where you have a product that works, that customers love, uh, that's delivering value.

Um, but yeah, a lot of pain to get there.

We're not always solving real-world problems, but you are solving maximum real-world problems. What are you thinking about when it comes to autonomous systems and the future of warfare?

Yeah, look, one, I started the company in 2015 because I believe the world is gonna be full of autonomous systems, right? If I ask myself what the world looks like 20 years from 2015, I said autonomous systems are gonna become ubiquitous. You know, maybe I'm off by like 5, 10 years, but I fundamentally have that belief in the same way, you know, probably in like 1994, there were a handful of entrepreneurs that were thinking that the internet was gonna become, you know, the backbone of the world. I think you're gonna see AI and autonomy become very much the backbone of the world. As it relates to, and I tell people like self-driving cars, humanoid robots, self-driving drones, like what Shield AI does, are really tip of the iceberg. There are gonna be autonomous systems that I can't even fathom, that I can't even imagine. So as it relates to the future of warfare, what you are going to see, you know, I'm gonna make a prediction. I think that you're gonna see every military Every modern military in the world in the next 5 years will declare that they're going to build a 1 million drone army.

To field a million drones, you're not going to have a million pilots. You need high levels of AI and autonomy so that a single person can field, you know, n number, up to thousands of drones at any given moment. And that's why AI and autonomy is so critical for the military as they move to this era of drone warfare. So, um, it's an exciting place to be. Uh, it is, like I said, it's, uh, it's always a challenge working with the government, but at the same time rewarding. Um, and it is, you know, some of the— I, I like being at the intersection of national security, AI, fast-growing, you know, uh, entrepreneurship. Uh, it is one of the coolest things in, like, in fighter jets, which we get to do, is like one of the coolest things in the world.

Yeah, I'm, I'm super fascinated by all the problems that AI is solving from this defense to health. I mean, you know, living to 150, curing diseases, maybe curing poverty, all these great things. But what scares you when you think about that, the 1 million drone armies that will be at different militaries and just autonomous weapons and warfare? What scares you?

Look, I'm an optimist. I'm also a Navy SEAL, so nothing scares me. But, Look, I'm, uh, I, I'm not, you know, I think everybody's mind goes to like the, the awful dystopian sci-fi futures that have been depicted in so many movies. It doesn't work like that. Yeah, there's not going to be a Terminator. Um, at the end of the day, I'm not, I'm not really— oh, here's, here's something I'll tell you that scares me. It has nothing to do with, um, with modern, uh, I'll say that's not scares me, it's like something I worry about for like my kids and my, you know, maybe eventually have grandkids one day. Um, when AI can do so much, what do people do? Right? And so like, I think having purpose, uh, having work, meaningful work is super important. Um, and if AI is all of a sudden, if humanoid robots are all of a sudden doing everything and we're treated like, you know, the human beings in WALL-E, like what do people do for purpose? What do people do for work is probably what I, uh, I worry about. Cause I do think like, That's super important to like, yeah, humankind.

Yeah. I get to talk to amazing people like yourself and I've really come to the conclusion that I don't see a world where we will have to do a physical job, like a job in the sense of what we think. So I'm thinking for myself, I want to be a DJ. Like if I didn't have to work, I think, I don't know. I feel like maybe that gives me meaning, but I'm not really sure. But the funny thing is our son who just started college. He wants to go in a field that I know doesn't really make any money. And before we were like, you really need to rethink this because like, you're not going to make any money from this field. Now we're like, in 3 years from now, I don't even like, just do it if you love it.

Yeah, just do it.

Like, I mean, if making music, playing music is your thing. And because I'm not really sure, like you're saying, what job will even like, what job will we even have to do? In the future. What do you think about that?

Yeah, no, look, I— that's, that's the, that's the concern. It's going to be— it's a crazy world, um, when AI and robots start doing near everything. And to be clear, look, I think that's kind of far off. I think it's like maybe 20, 30 years, uh, into the future when it's just completely, you know, when they're, you know, cleaning my house, doing my laundry, like everything that's going on in the world, even like, you know, building, you know, constructing buildings and everything like doing to your point, like everything, uh, is probably, uh, a bit far in our lifetime though. Yeah. That's the craziest thing. Um, so I think, uh, look, it's, I don't know. It's, it's a, it's a hard question, right? Cause to your point, and I have 3 kids, they're very young, 5, 3, and, and, uh, 6 months, but it's, um, I don't know what, you know, I think my parents are like, oh, we want you to be engineers, right? We want you to, you know, you'll get a job here. I have no idea what is going to be like the right thing for my kids. And, you know, you know, to the point, that's, that's— I'm not too worried about it.

Like, I will figure it out in the same way. Sounds like you're figuring it out with your kids. So we'll see.

You know what? Maybe we'll just focus on being happy. Yes. What's wrong? You know, I tell people all this time, they argue. I'm like, what's wrong with focusing on, on being happy? But talking about family, You know, you work with your brothers, you co-founded with one of your brothers, and then you also work with the other brother. So there's 3 of you. How has the family dynamic been? And do you suggest to others to work with family?

Look, there's pros and cons to it, right? And obviously my older brother and I who started the company together have been, you know, we've driven the business to where it is, and I would, claim, you know, experienced some relative success. Um, the pros are like, we, we know each other incredibly well. We share the same values. Um, and like, we trust each other and we can communicate with each other, right? Uh, in an incredible, like, lightning-fast way, right? Because we've known each other, or he's known me my entire life, right? I've, uh, or yeah. So, um, for the, on the con side of things, it's like, oh, You can communicate really, really well with each other. I know exactly like what is going to dig into him. He knows what's going to dig into me. And that can become challenging, uh, uh, you know, down the road. And certainly we've gotten into some very, very heated arguments. Um, I think it can, uh, I think it can work. Um, but I do think it works right. And there's actually lots of success stories between, uh, sibling, uh, founders. Um, you know, Walt Disney World, uh, a lot of people don't know there's Walt Disney and Roy Disney.

Um, and they worked, you know, one was Walt was the creative aspect of it and Roy was the operations aspect of it. Uh, and, and it's about really finding, it's like what I think works is when you have non-overlapping skill sets. So you want some overlapping things because you have to have something in common with the person in terms of like my brother and I, we both are engineers. We both, uh, think about leadership the same way. We think about values the same way, but. He is— thanks. And then like after that, we, we are wildly diverged in terms of like our perspectives, uh, on the world or our perspectives on how things should be. Um, and, uh, but you know, it's worked out for us.

Obviously the great thing is if you can have a co-founder that you trust, I feel like that's like such a brick and you can communicate with. Those two things are probably 80% of the ability to stay long-term, I'd imagine. You've said something that I really like: the greatest victory requires no war. After everything you've seen, combat, business, all the things that we talked about, when this chapter ends and your kids ask you about what you've actually built, what's the answer you hope to give?

Yeah, that's a great question. What would I tell my kid after this chapter event? Look, I think it's, um, I would like to tell them that I built something that has a positive impact on the world, and hopefully it has a big positive impact on the world. But, um, look, and that's what I was looking for, uh, after the SEAL teams, um, in business school, like for business school applications, they ask you like what matters most to you and why. And I'm very fortunate to have been put in the opportunity in the place to like have positive impact on the world. I got to have a small bit of positive impact on the world as a Navy SEAL. I want to continue to have positive impact on the world. And so, um, at the end of the day, I want to have as much impact as possible. And, you know, I would like to tell my kids, you know, that, you know, that I was able to, via the SEAL Teams, via Shield AI, had a truly, like, meaningful positive impact. And what, you know, where that lies on the scale, you know, we'll find out in terms of how much impact we were able to have.

So if you keep going the way you're going, there's a high probability that you will be a billionaire someday. Do you find that— that— is that a definition of success for you?

No, not a definition whatsoever. It's not something I think about whatsoever. And it—

I like—

so I don't care about it, to be super clear, right? Um, zero, zero care about it. Uh, I just want to the point, like, I want to build a cool company. I want to build cool products. Um, and I don't think about, and this is like something that my dad always taught, uh, told us and like said to us, he's like, look, just, you know, if you're doing what you love, like cool money, you know, you'll figure out how to make money along the way. But it's like, never do something to like make money, never make your goal like making money. And it's never been right for anybody in our family. And it's just been like, hey, how can I do the best job that I can at what I choose to do? And so that's what I think about at the end of the day. How can we make our customers proud? How can we make our investors proud? How can I make the Shield AI teammates proud? I could care less about what that dollar value for me at the end of the day is.

So my final question, my wife and I wrote this book here, Unlimited Possibilities, and the meaning is you have a moment in life that you didn't think was possible and you broke through. So that is your unlimited possibility moment. What was that moment for you? It doesn't have to be business. Any time in life when you had that breakthrough moment and you were like, wow, I did it.

Yeah, that was definitely like Hell Week, the SEAL Teams. Yeah. Again, your confidence just shoots through the roof when you, when you're You know, when you, when you actually like become a Navy SEAL, I would say like Hell Week's a big confidence booster, but then you still have like 18 months of training. Um, and then even after that, what I would say is like then the ultimate combat, uh, uh, confidence booster is going through combat, um, in war. And yeah, it, you know, blessed to have, uh, those opportunities, blessed to have been okay and brought everybody that was with me home. Um, but when you do that, like, to your point, you do think, hey, you know, to the point where it's like, all right, like unlimited possibilities. Again, that ignorance, like, oh, I can go start a company and make a huge impact on the world. Um, so, but that, that confidence came from my time in the SEAL team.

When you tell people that you were in the Navy SEALs, what's the response?

Um, I don't know.

Cool.

Like, that's awesome. I'm hardcore. What are you like?

Yeah. Is there a certain question that people ask you? Because I think, I mean, I think, you know, there's the last few years, a lot of people writing books. Obviously there's, you know, been a few prominent ones that wrote books and movies. It kind of became the cool factor. It was like, oh wow, like Navy SEAL. Is there something that people always ask you? Would you tell them that?

No, there's not. I've gotten every question under the sun around it. I don't think there's like a, in the, honestly, a lot of them are just different. A lot of them are like, what was Hell Week like? What was BUD/S like? What was, you know, war like? But yeah.

Do you get more questions about that than Harvard Business School?

Yeah. Yeah. Yeah. I mean, I don't tell people I went to Harvard Business School, so, you know, but yeah.

I mean, what an accomplishment. I'm super excited. When I heard that you were gonna come on, I've followed Shield AI and the V-BAT and all the things that you're doing, it's incredible. I'm so interested to see how AI is transforming warfare. I mean, talk about a ginormous topic right now that we are currently in. You know, in the moment, things are happening all around the world and AI and autonomous and robots, like it's so much stuff. It's like this convergence of so many technologies in one time. I don't remember in my lifetime when I saw so many things, so many advancements, the envelopes being pushed in one time. Uh, but Brandon, I super enjoyed the conversation, and I appreciate you coming on today.

Thank you so much for having me, Dan. Really appreciate it.