Transcript of 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 in defense tech or for national security is probably a geopolitics nerd because, you know, why are they in that space? They're in the 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 Wayne Gretzky quote, um, like, you have to skate to where the puck is going, not where it is. Um, you have to think about that in, in when you're investing in national security. You have to think about how the world is changing and like where your, 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, um, Ukraine I think is a good example and what's being used in Ukraine, the technology that's 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 were 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? Venture 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, uh, we certainly try, right? We don't have a crystal ball. Um, I actually think national security, it's a little bit easier to predict the future needs than it is in any other sector I've invested in in the past. Um, I mean, I started my career, I invested in, you know, consumer packaged goods, right? The 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, like, we actually run an acquisition system that is fairly communist. I mean, we have essentially 5-year plans. And those plans, to some degree, are classified, like you can get access to some information, not 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 5 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, so taking a step back, I, I was running another fund and I was investing more more in what was called deep tech or frontier tech. So think energy, autonomy, aerospace, stuff like that, and moving my career more and more towards national security over time. All the companies were building in aerospace have a national security application. And so, um, 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, um, as well, you know, lucrative, but also I think important for the mission. And so I left the firm I had 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, in 1999, Congress, CIA created In-Q-Tel, which was the, the venture arm of the intelligence community. So CIA, but 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, it 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, um, 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 warfighter 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'd come in and fix it. And so we spent 2 years working with Congress and the services. So Army, Navy, Air Force, Marines, um, Space Force, trying to figure out how you'd 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 the just the bureaucracy of being a quasi-governmental organization, um, made it almost impossible to run a successful firm.

So we took the plan we had 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, 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, that's what we do. And I think it's a, it's a very unique space to break into. So one, I think if you're interested in the 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 the space. Um, find someone on your team that if, if you weren't active duty, that was, that served and has like firsthand 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. Um, cause otherwise you might build something that's awesome and never find that 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 have 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 wood 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 1-pound thing, like relatively light. You would never think about the weight in your day-to-day life. But they're already carrying 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 firsthand experience in order to really solve the problems. Like myself, I wasn't in the military, So the problem that 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, 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, it's 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, because of internal firm politics, is probably going to be the one that gets to do the next deal. Or they've invested in a company like yours and they don't want to invest in a competitive business. Or they just don't like your space, whatever it is, there's like 99% of the time, there's 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 1,000 deals this year, or 1,500 deals, or whatever the number is, and I'm going to do 4, 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 oozing 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 are going to face as a founder, especially in defense, it's so hard, um, an existential risk like every 6 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 ulcer and is really hard and like maybe will never amount to anything. Or B, go take the job at Meta for $600,000 or name your, like, you know, major Magnificent Seven startup or, uh, 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 the call, in the meeting, super important. And the other one is, um, and 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, uh, 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 at 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, it's 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've thought about it because 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, um, 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 talked to those people.

There, there's a reason they're building what they're building. Um, 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.

So 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 it 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 theirs was much smaller than Blockbuster's at the time. And then that's it. Now we know what happened, which is 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, 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. Sort of like investing in national security, actually. Like in good times for the world, national security very slowly goes up. 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 use 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, it 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 to national security, I've been doing a lot of this, like, deep dive into space technology just because I thought it was fake. Someone was like, oh no, we're building like a hotel in space and we're gonna 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, I'm like, oh my gosh, like, people are really building things in space and 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. Um, so it's important economically, right? And like, if you think about what the Navy does, the Navy's main job actually, um, is to ensure like free trade or like the free flow of goods. It's like to, 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. Um, space has the same sort of characteristics now as the oceans. Um, right? Like Starlink is like vitally important in in a lot of different businesses now. I mean, it's only a few years old, right? So imagine what it'll be like 10 years from now. And Starlink is only one piece of space infrastructure that really supports commerce and national security terrestrially. So defending that is super important. But yeah, a ton of businesses are gonna get built in space. Most of them, I think, with customers that are terrestrial customers and 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, $100 sextillion worth of like mineral wealth in that, you know, in asteroids, 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 mine all that gold, because then gold doesn't have any value. But like the resources themselves are valuable for the 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 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. Oh, they're probably here. Big debate, right? Like 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. There's a clip of Dan Driscoll, Secretary Driscoll, who's now— he's Secretary of the Army from maybe 6 months ago. Where 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. Like 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, it 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 I think aliens exist? I think, uh, 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 could 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. It wouldn't just be like, wow, we have this amazing thing and now it's frozen in time. It'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? Swamp gas, weather balloons, like it's, you know, sensor problems. But like the stuff that's come out in the last couple of years is like, uh, it's like 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 shipborne radar down below picks it up and like the IR sensors 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've been thinking about this. Like, 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, it 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 in Joshua Tree camping, and I saw something going in like a diagonal, really, uh, like fast across the sky, 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 too 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 what— 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.

Yeah, 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, the UFOs are.

I used to live in New Mexico. And so, you know, go to Roswell. It's, 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 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 people 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 jake@marque.vc. Or you can find me on Twitter @VC. It's a 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, 8 years ago now, I had an early Twitter employee reach out who had like a bunch of 2 and 3 letter Twitter handles. He was like, hey man, I love the stuff that you tweet. I think you're super interesting. Would you like the @VC Twitter handle? And I was like, you know, I'm not rich. Like, I'm not— 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, um, we'll just— I'll just make sure you can have it.

Um, that's amazing. Like, that's like getting one of those like URLs, like two, two-letter URL, and, and that's, that's incredible. But @VC, I mean, totally, you can't forget that one. But Jake, this has been great. What a conversation. And we even led into aliens, like I don't know if I've had this conversation with anyone before, so I'm glad that I was able to talk to you today and that 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 that old saying, I work 80 hours a week so I cannot 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, they make those sacrifices. To, to build and to create. And thank you so much for all that you do.

Yeah, absolutely, man. You're right. Like, veterans make phenomenal entrepreneurs. We love working with veterans.