#24 How a Startup can help with Innovation and the Federal Government
Episode #24 of Students vs. Startups takes a look at innovation in the federal government. Our startup guest is the founder of Dcode42, Meagan Metzger.
Two student participants are candidates for a master’s degree in Technology Management from Georgetown’s School of Continuing Studies. Jennifer Lee and Rahul Bhardwaj are the “wannabes” and Maura Imparato has earned the degree.
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“I met a guy on an airplane, believe it or not, and I joined two other folks. We started a company,” Meagan Metzger, Founder CEO Decode42
“if you can figure out how to work with government, you can change the world.” Meagan Metzger, Founder CEO Decode42
“what might be wildly successful in the private sector may not translate.” Meagan Metzger, Founder CEO Decode42
If you enjoyed this podcast, you may want to listen to podcast #26 Richard McBride and his innovative real estate company SwingSpace.
Another similar podcast was #17 from Eminent
How a Marine Grows a Successful Information Technology Company
This is the transcript
About a 18 minute read
John Gilroy: So you’ve heard this podcast before, you know. We’re sitting in the offices of Eastern Foundry, just a stone’s throw from the Potomac River in the Washington, DC area. We’ve got a room. We’ve got an audio guy. We’ve got three students on one side of the table, and one startup on the other. We have a little chat, and everyone walks out of here smiling and shaking hands, so it’s a lot of fun.
I’ll introduce the students. We have two students who are wannabe graduates and one student who’s actually a graduate of the program. The program I’m talking about is the Master of Professional Studies in Technology Management from the School of Continuing Studies at Georgetown University. Our first student is Rahul Bhardwaj. What’s your background, please?
Rahul Bhardwaj: Hi, I’m Rahul Bhardwaj, graduate student at Georgetown University. It’s my second graduate degree. Background in statistics and financial engineering. Started my career in investment banking, Lazard, and then moved on into other stuff. I’m a partner in a holding company that does IP commercialization based in India, and we also do investment management as well.
John Gilroy: That’s interesting. Jennifer, your background, please.
Jennifer Lee: I’m also a graduate student at Georgetown University. Unlike Rahul, I don’t collect degrees, but I do collect certifications. I am also a full-time consultant with PriceWaterhouseCoopers in their public sector digital solutions.
John Gilroy: And Mora, you actually succeed in the program. So these two wannabes, and you’re completed, huh?
Mara: That’s right. I completed the program. I became a lecturer at Georgetown, and I’m starting my own IT consultancy. I just wrapped up at the International Monetary Fund, doing some IT product management, and looking forward to a new chapter in life.
John Gilroy: So Meagan, we’ve got some high IQs on this side of the table. You got to tell us about your team. Our guest here is Meagan Metzger, and her company is Dcode42. Tell us about your background please, Meagan.
Meagan Metzger: Sure. Thanks for having me. This is a lot of fun. Excited to be here and hear the questions for today.
A bit of my background. I have been in government for probably eleven or twelve years now. I started out at a large consulting company. I was building software for Reserve Army National Guard, and quickly realized that large companies aren’t personally for me. I met a guy on an airplane, believe it or not, and I joined two other folks. We started a company-
John Gilroy: “I met a guy on a plane.” Really?
Meagan Metzger: I met a met on an airplane. So don’t put on your headphones all the time, because you never know who you might meet. We started an IT consulting, quality assurance, product management, squarely focused on federal government. We went from three to 70 in about a year and a half. We were on the Washington Technology Fast 50-
John Gilroy: That’s employees.
Meagan Metzger: For three years in a row. Yup, employees. And I was the Chief Strategy Officer there. It was a wild ride, building a company, managing programs and doing all sorts of stuff.
John Gilroy: Pulling your hair out.
Meagan Metzger: Little bit of that, too. Wouldn’t change it for the world. From there, I kind of missed my engineering background, so I left and went to a company focused more on mobile and cloud strategy and solutions. I was the COO for the company. We serviced organization like Homeland Security, Department of Justice and several others, and that was a lot of fun, but in that process, what I realized is even if you had a very specific project in the government to put a technology on, the culture gap, the business gap was significant. We had to do a lot of work just in booting these companies up on how to work with the federal government before we could even execute an already-awarded contract.
That was the motivation and the spark behind Dcode42. Spun off from there and been doing that ever since, and it’s been a blast.
John Gilroy: Wow. We’re going to toss you over some questions now. Mora, why don’t you ask her about the name of the company before I do?
Mara: What are you decoding, and is it 42 of something?
Meagan Metzger: 42 of nothing. No, so we get this question a lot. Actually, if anyone goes to the website, there you’ll see on the left-hand side you’ll see a little telegraph, and you can click on that, and it’ll say, “What’s with the 42?” In 1842, Samuel Morse, after two years, finally convinced congress to let him demonstrate his single-line telegraph between two Congressional hearing rooms, and it resulted in a grant, and that’s how we got the single-line telegraph between Baltimore and Richmond, and we have Morse code. We like to say, “if you can figure out how to work with government, you can change the world.” So it’s DC’s ode to number 42, and also just decoding the government.
John Gilroy: Samuel F.B. Morse. Spent a lot of time in Paris, too. He’s quite a character. I’ve heard a lot of about him.
Meagan Metzger: Absolutely.
John Gilroy: Jennifer, you have a question for our guest, please.
Jennifer Lee: Yeah, well, first of all, I wanted to say congratulations. I saw on your LinkedIn that you were selected as one of the finalists in Women in Technology Women of the Year, entrepreneurs. So congratulations on that.
Meagan Metzger: Thank you. Thank you.
Jennifer Lee: That’s very impressive. When I went on your website, I did notice that for each of the cohort that you guys select, there’s a very specific topic. How do you guys come up with those topics?
Meagan Metzger: Fantastic question. So, several places. One, we worked closely with a lot of different government agencies. We’re trying to understand not only what are your biggest challenges, what are the technologies that could possibly really transform the way that the government’s running? Sourcing from that, I think it’s a mixture of what are they prepared for, and what is the private sector providing, and kind of matching those two up.
We also work across a lot of the larger ecosystems in the government. The prime contractor, your Deloittes, your BoozAllens and those folks, to understand also what challenges are they solving, and where is the opportunity for disruption and shake-up in that market.
From that is where we’ve picked the themes. When we first started, I think that was a big lesson learned, is we brought in a lot of fantastic technologies, but they were across the board. When you start focusing in on the different programs, then you can really bring in the right stakeholders to that. So, being able to pivot quickly and learn that lesson was very instrumental for us.
John Gilroy: So Rahul, this sounds like an IT accelerator of some sort, doesn’t it?
Rahul Bhardwaj: Absolutely. It sounds like you guys are incubating innovations that are definitely cutting-edge. I guess you’re doing the problem statement definition based on your network and then working with folks that are actually executing the issue. Are you guys doing a gap analysis, and then comparing that to what the market trends actually are, then zooming in to different assets? The second question is: what is your business model, exactly, and once you’re on board . . .
Meagan Metzger: Sure.
Rahul Bhardwaj: Solutions to solve a problem?
Meagan Metzger: There’s a lot of things that we look for when we’re sourcing tech. Once we’ve identified the theme for us, a lot of it just the nuances of federal government, so what might be wildly successful in the private sector may not translate. When we take in our applications, we’re looking at fairly established companies that have significant commercial traction. They just haven’t either completely penetrated the government market or they’ve gotten a little bit of a start, but there’s a big hurtle there. We’re going to evaluate it against what are the mission requirements of the government.
They solve a lot of different problems. They’re preventing terrorist attacks and the next outbreak, and they’re also doing simple things like servicing citizens, I won’t say they’re simple actually, but tax forms and things of that nature. What mission in the government can they solve? Then have to look at things, like what are the gaps between them and the compliance? Is their security going to be up to snuff, or will they need to actually completely re engineer their entire platform?
We evaluate all the technologies with that lens. I’ve seen a lot of fantastic stuff that just is not ready for that market. We have to consider things like their financials, because sales cycles in the government are a little bit longer. Can they sustain that?
We look for things like conviction. Why do you want to sell to the government? It can’t just be because you heard there’s a $79 billion IT budget. At the end of the day, when the market starts making no sense, that’s not going to get you through the hard times. It’s a kind of castle-in-a-moat scenario. Once you get over that moat of figuring out how to work with the government, it can be wildly successful, but it just takes a little bit to get past the crocodiles.
Rahul Bhardwaj: One quick follow-up question: so when you’re actually sourcing these solution sets, you are looking at the pretty mature assets? And then how do you define the problem statement and match them up?
Meagan Metzger: Sure. So we look at a wide range, I would say we’re size-agnostics. We’ve worked with some companies that have two people. We worked with companies that have IPOed, and every shape in between.
Our last cohort, one of our graduates just closed a $54 million c-round. We kind of say that when it comes to the government, if you’ve never done it, you’re a startup.
We look at the mission challenge. What problem are they trying to solve, and then let’s think about it in a little bit different context, because it’s a very large organization. They know what the problem is. A lot of times, just the way the procurement has translated over the years, they will try to tell you how to get to that problem, versus saying, “I want to go to the moon. Build me XYC,” versus just saying, “I want to go to the moon.”
Our job as Dcode is to say, “No, really, what is your actual problem you’re trying to solve, and let us tell you across the tech market. Let’s look at what the VCs are investing in. Let’s look at the latest, greatest breaking technologies and see what can help fill that gap in a way that you haven’t considered before. Then let’s also just cross-walk that with reality of what are you actually ready to buy?” We can talk about some solutions all day, but they have to be ready.
Rahul Bhardwaj: The government has to be ready, and the technology has to be ready.
Meagan Metzger: Absolutely.
John Gilroy: Jennifer.
Jennifer Lee: It sounds like you guys are kind of the accelerating incubator, but you’re business model seems to be a little different. I think I’ve read online the time commitment is six to eight hours a week versus some of the incubators, it’s essentially like an eight-week bootcamp. What else can differentiate you guys from other incubators, accelerators out there?
Meagan Metzger: Sure. Great question. I would say some things. One is the size component, like I just mentioned. The second is we’re squarely focused on government. When it comes to the smaller companies, a lot of times we’re working on strategies not only for the company but also the government market. When it comes to the larger firms, it’s a strategy for a new vertical and a new market you haven’t done before.
Because it’s so focused on government, we kind of at the beginning made a business decision to say, “It’s unrealistic to expect people to just pick up and move to DC for a potentially market.” Especially for very established companies. They’re based out of Chicago and San Francisco and Austin. They’re likely likely going to open up a new office and hopefully sit at Eastern Foundry.
That’s why we designed the model the way that it is, because we know you want to break into the new market, but you also still have a business to run and your sales guy likely still needs to make his quota, so we needed to design a program that was going to accommodate for the way that people operate.
John Gilroy: Great. Meagan if someone wants to learn more about Dcode42, what’s the website, please?
Meagan Metzger: Sure. The website is dcode42.com.
John Gilroy: Great, great. Students, we’ll have to take a quick break here. We’ll come back with more questions for Meagan.
The founding sponsor for Students vs. Startups is the Radiant Group. If you enjoy solving problems and like to work with bright people, the Radiant Group is the place for you. Contact Al Di Leonardo or Abe Usher at radiantgroup.com.
We are hosted by Eastern Foundry. It’s a community of government contractors who are bringing innovative solutions to the government marketplace. For more information, go to eastern-foundry.com.
Welcome back to Students vs. Startups: Showdown on the Potomac. Right now, our students, Rahul, Jennifer and Maura, and you know our startup, Meagan Metzger from Dcode42.
Maura, got any good questions for Meagan here?
Maura: Yes, yes, I’d like to know, briefly, what is an accelerator, for people who are new to that concept, and what is it, Meagan, do you do day-to-day?
Meagan Metzger: Sure, and accelerator is exactly what the word implies, which is, “How do you get to a different outcome or a point in time much more quickly than you would traditionally?”
We run a program specifically focused on how do you break into the federal government market with a start date and an end date in mind and defined curriculum in between. A lot of people confused this with an incubator, which I would say is a very different model, and a lot of times incubators don’t have that time cap. You’re going to sit in a space and have access to a lot of tremendous resources and stay there until you’re ready to leave the space, with some variations of the models in between. But we’re definitely focused on three months, and for three months, day-to-day, we cover different curriculum. We work through a series of topics, whether it’s marketing, your pricing strategy, how do you protect IP? How do you go to market with partners? We cover a curriculum and then everyday we’re working directly with each of the companies on trying to define their go-to-market strategies around those topics.
John Gilroy: Connect with partners is always a challenge, isn’t is Rahul? This is a challenge for everyone in this town.
Rahul Bhardwaj: Yeah, absolutely. Based on some of my experience and background, I’m kind of trying to noodle through some things personally in terms of, “How do I commercialize non-US-based technologies that are maybe focused on national security, video analytics and what have you?” There are certain certifications that are needed to sell to the federal government or provide a solution or address a mission challenge in the federal government.
Do you help with non-US-based companies, number one? Then number two: what is the success criteria of the people? Are there any common successes that you see across the graduates from your institute?
Meagan Metzger: To date, we have worked with Australian companies and we’ve worked with a Canadian company. We do evaluate that up front. Where’s your ownership go? At this point in time, if you are based in China or in North Korea, the government’s not going to buy you. Shades of gray.
There’s a lot of regulation-
Rahul Bhardwaj: Delaware LLC.
Meagan Metzger: Delaware LLC. We can talk. So there’s a lot of regulations around not just ownership, but it gets more granular than that. Where’s your code being developed? Import/ export controls, ITAR regulations. We will look at all that before we take companies into the program, because it just adds a layer of complexity.
Rahul Bhardwaj: Sure.
John Gilroy: Meagan, some of our listeners not familiar with ITAR, could you describe that for us, please? ITAR?
Meagan Metzger: You’re going to ask the tough question.
John Gilroy: I mean, if people don’t know ITAR, is that something to do with road-building or something?
Meagan Metzger: At the end of the day, the simplest way to put it is, “Are you performing business in a country that is friendly or acceptable to the United States?” Like I mentioned, that can be, “Where are you headquartered?” That could be, “Where is your product or your software built? Where is it modified?” You could build your software, but if the data and the modifications happen in the United States, there might be different implications around that.
John Gilroy: Jennifer, a lot of people tell us about this word: innovation of federal government. If you Google it, you get 10 million hits. Very hard to accomplish, isn’t it, though?
Jennifer Lee: Yeah, definitely. I was going to say, in terms of to help drive that innovation, for your very first cohort, how did you seek out those companies you wanted to work with?
Meagan Metzger: Fantastic question. When I launched Dcode, I really wanted to get outside the beltway, inside that ecosystem that already existed. When we launched, and I had some fantastic people there at the beginning with me, we actually did a campaign out to the venture capital community. Through lots of labor of love, some nights with some wine, we sent out an email to about 600 VCs, saying, “This is what we do. We’re not asking you for money. We’re not raising funds. We’re an accelerator focused on government,” and we had a 45% hit rate in response. I could say all but one, who shall remain nameless, said, “I’m all ears.”
Right out the gate, we were very fortunate the our companies were coming from very well-funded VCs. To date, that tends to still be our source. Our next cohort of companies are Andreessen-Horowitz-backed, NEA, Bain Capital and some folks like that.
John Gilroy: That sounds fantastic. Maura, can you top that? That’s bragging rights, I’d say.
Maura: It sounds like you have a series of startups in your background, and it’s a very impressive list. Sounds like you really grew some companies. How would somebody start out getting connected with that VC community, startup community?
Meagan Metzger: That’s a fantastic question. You know, I kind of operate under something my father used to say to me, which is, “The answer is no to every question you don’t ask.” That takes some practice. I think for startups across the board, you have to be comfortable being uncomfortable, and making the ask our to VCs. Really focusing in on what’s going to resonate with them? Everyone want to just sell what they have because they think it’s amazing, but people might not think it’s amazing unless it applies to them.
We spend a lot of time, I would say up front, doing our due diligence on understanding what’s their gap and what gap to we solve before we even approached them. Kind of know your audience.
John Gilroy: Meagan, you seem to be wise beyond your years. Doing gap analysis usually is someone my age. This is a very tricky skill to have, to look at a company and know what the gaps are. That’s tough.
Meagan Metzger: Yeah. It’s probably not as tough as it might seem if you’re willing to take the time to pause and put in the effort, because doing to prep work takes a lot of time. Instinctively, you want to skip it. You want to get straight to the question and the ask and thing that you think is going to drive the revenue, which you need to get to very quickly in startups. You need to fail fast, but part of that failing fast is failing fast smartly.
I think it makes all the difference in the world. We’ve done several things where we’ve went out of the gates swinging and we quickly said, “Time out. That did not work. Let’s readjust. Let’s step back and do the gap analysis.”
John Gilroy: Before the podcast, Rahul and I were talking about how you select your companies. This gets to be part of the gap analysis too, and which company’s selected. Rahul?
Rahul Bhardwaj: Absolutely. You’re going back to the basics. Fundamentals, really, seeing what the market is asking, and where the market is moving, and the ultimately addressing that need with best-in-class offerings. I mean, with Andreessen-Horowitz, maybe Sequoia as part of your network. That’d be interesting.
The question that I have is a little tongue-in-cheek. With the new political environment, people are draining the swamps and all of these kinds of things happening, right? I think you guys could have an expanded role in promoting innovation and really help the administration achieve the important objectives that affect us as Americans and beyond that. What are your thoughts with the new political environment, and then some low-hanging fruits, perhaps, that you’re seeing.
Meagan Metzger: That’s a great question. I would say one that we, even as a team, talk about continuously. At the end of the day, citizens need their services. The government has to run. Regardless of your political beliefs, the government still needs to operate, and they need to operate more efficiently. I really do think we could have a huge role in that. Unfortunately, after the election our cohort at the time lost a couple of companies because of uncertainty, which I understand. I don’t necessarily agree with, but I definitely understand.
Part of our job is one: how do we make this market more attractive and help them understand there is a difference between politics and government? At the end of the day, and that line can be a little bit blurred, but what people are doing on the hill is not necessarily always connected with the Chief Innovation Officer or the Chief Information Officer, even that, at the end of the day, wants to make sure his agency meets its mission.
The other piece of that is: new blood means they want to shake some trees. If anything, there’s an opportunity to really look at how the government’s buying things and shake it up a bit. Earlier today, I spoke with panel called the Section 809 Panel, and it’s coming out of the Pentagon, and it’s focused on how do we reevaluate how we’re buying technology. So we can get more innovative solutions in, instead of the same four large contractors that have had the top earnings spots for the last ten years. There’s a lot of effort being put in, and I think it’s a fantastic time to be in this space.
John Gilroy: Meagan, that was a world-class answer. I loved that one. That was like you’re on Meet the Press.
Meagan Metzger: Sure. I’ll wait for the phone call. Yeah.
John Gilroy: Maura, you’ve got to ask her a tough question. She did too good of a job on that last one. Get her something she can’t answer.
Maura: Where do you see yourself in five years? I’m think keep on doing more startups, a series of startups, or executive-level government official.
Meagan Metzger: Oh gosh.
John Gilroy: Or Meet the Press host.
Meagan Metzger: Meet the Press host. I think that’s in my future.
For right now, the goal is we’re going to continue to expand our programs. As we’re running more and more themes, we’ll just continue to add. I think we’ll start having more of an international play. We can work with companies that are coming from some incredible startup hubs around the world. From there, I guess we’ll see what happens. The more that we can influence policy to help the government buy better solutions, I’m up for it.
John Gilroy: When I went to your website, you talked about AI machine learning, big data analytics, market assessments. I mean, it’s difficult to develop expertise in just one of those, maybe just big data. Do you bring in experts? Are these people you have on staff or just make up answers?
Meagan Metzger: Yeah. Fantastic question. We’re very fortunate to have a large network of mentors, and every time we pick a theme, we seek out the best minds in that space, especially focused on public sector. As a core team, we make sure that we have procurement covered, technology, the fundamental aspects. We have a former Special Advisor from the Small Business Administration, the former Senior Advisor for Technology for General Service Administration, and things like that. For each theme, we bring in experts. So it’s fantastic.
John Gilroy: In my world, that would be strong Rolodex. Jennifer, real quick question here, please.
Jennifer Lee: Adding on to that, because network is so crucial when you’re in startups. Are there any strategies or plans you guys have in terms of growing that alum network?
Meagan Metzger: We think it’s critical to keep our alumni involved, because if they succeed, we succeed. Part of that is just continual engagement. We actually have a formal alumni program, where we have monthly check-ins. They’re always invited to events. We hold special events just for our alumni. we’re constantly reaching our and adding to our mentor network, especially right now. There’s a lot of feds coming out of the government from the last administration, and capitalizing on that fantastic talent to bring into our mentors.
John Gilroy: Great job Meagan. If people listening to this would like to get more information, what website should they visit, please?
Meagan Metzger: Sure. You can go to Dcode42.com.
John Gilroy: Numeral 42. Great. If you like the podcast, give us a review on iTunes. I’d like thank our founding sponsor, The Radiant Group, our host Eastern Foundry.
Signing off from high atop a nondescript building in lovely downtown Rosslyn, Virginia, I am John Gilroy and thanks for listening to Students vs. Startups: Showdown on the Potomac.