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

0:06So Brandon, I mean, what a history that you have. And 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?

0:45Brandon Tseng: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.

1:23Brandon Tseng:My mom always had a a 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 an AV 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.

2:03Brandon Tseng: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, August 2015, met with 30 investors, every single one of them said no. In 2016, we met with another like 25 investors, and two of them said yes. And then because those two had said yes, one more said yes. And so that was Homebrew, Bloomberg Beta, and Founder Collective who led our seed round. But one thing I tell entrepreneurs, and one thing this is actually, I'm stealing this from Peter Levine, who's our board member from Andreessen Horowitz, been on the Midas list, just one of the best investors of this century.

3:00Brandon Tseng:He's like, look, all you need is one yes, right? He's like, you can have 100 no's, but if you have one yes, now you have the opportunity to go prove the other people wrong, prove the other investors wrong. And so that's, you know, something because 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 two billion dollar round. You're still getting no told no's all the time. And every single time that that rejection, it hurts. But you just have to remind yourself is I just need one. Well, how does that make you feel when you think about 11 years in two billion just raised?

3:39What emotions, what comes to mind?

3:42Brandon Tseng:I actually tell everybody, you know, the day you raise money is like one of the Saturdays 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 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. And I tell everybody and tell the team, it's like, look, every year is a championship season.

4:24Brandon Tseng:We have to win at least 20 championships in a row. And that is a hard thing to do. um so uh 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 gonna be a kick in the rear is what we would say in the seal teams uh when you sign up for a hard mission you're like all right it's gonna be really hard that's uh 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 uh it's a sense of reality check like i'm gonna i'm gonna have to work my ass off to deliver for these people who have made a bet.

4:58Well, it sounds like the training you had in life, two deployments to Afghanistan, Pacific theater, Arabian golf. 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.

5:25Brandon Tseng:Look, I'll tell you, learned all of my leadership lessons and my leadership philosophy during my time in the Navy. And it 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 and gave you the opportunity to actually lead people. As a 21-year-old out of college, three 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.

6:13Brandon Tseng:And 20 people were reporting to me, looking to me to lead them and make decisions around different aspects of the job. And the SEAL teams, right out of my very first deployment as a SEAL in Afghanistan, not only I took over my platoon halfway through, and so I had 16 Navy SEALs, but I also had 800 Afghan commandos that I was responsible for and leading on the battlefield every single day. And so there are a 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. You get the academic side of things.

6:54Brandon Tseng:You get the coaching side of things. And then you get the real world experience. I built Founder's Story from a$50 microphone. And the most important thing is I didn't do it alone. For years, I've been using Upwork to hire marketing, editing, branding, you name it. In fact, the editor who cut this very episode and the team behind all of Founder's Story branding found them on Upwork. The quality of people is top notch and paying people is simple. Upwork is a one-stop platform to find, hire, and pay expert freelancers across development, data, marketing, operations, and more. With Business Plus, you can access the top 1 % of talent on Upwork.

7:38And with AI-powered shortlisting, you'll get matched to the right freelancer in under six hours. No endless searching required. It's free to sign up and posting a job is easy. Visit Upwork.com right now and post your job for free. That is Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com. Upwork.com.

8:08Brandon Tseng: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? I think it's both, honestly. And 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 and suffering. And those things are wildly valued in corporate America. Like if you can get things done and if you can endure some pain and also if you can understand leadership, those things are, again, very much valued in corporate America, whether you're an entrepreneur or whether you're joining a company and building a company.

8:59Brandon Tseng: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 All the respect in the world for the people 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 wasn't sure if you were explaining Navy SEALs Or if you were explaining entrepreneurship And what you were saying Because maybe 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?

9:40Brandon Tseng:I mean, yes. So many times where I tell investors, I tell teammates, like, look, I've stared into the abyss of death, doom, and despair so many times. Right? 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. 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, all granted, there are probably a handful of like company stories where there were no setbacks.

10:24Brandon Tseng:And like it was that's like winning the lottery. Right. But for like ninety nine point nine percent of the other entrepreneurs out there, there's going to be setback after setback after setback. And I tell people you get a day to feel sorry for yourself. 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, cause I will tell you how we put you into a situation where you just feel incredibly sorry for yourself to the point where it makes you want to quit, right?

11:04Brandon Tseng:And 80 % of every class does quit like during Hell Week because it makes you feel really bad. It is, you know, called the, you couldn't actually start buds in Hell Week today because people would deem it as modern day torture. And it is, it's just awful, right? 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 uh after wednesday right midnight on wednesday hits no one quits so this is you know 11 p.m 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 six hours straight um and every single time you jump in it's like a million needles coming onto your body.

11:54Brandon Tseng:Um, but they know you're not going to quit. And I, 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 Camp Surf on Wednesday night 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.

12:32So that was definitely the hardest part of 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. 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?

13:11Brandon Tseng:Yeah, a couple of things. One, I think it's like the coolest thing in the world, right? Coming from my background. Obviously, I'm an engineer. I love military aircraft, military technology. And so getting to build something that's going to that's making an impact is like it's very much rewarding and it makes the pain all worth it when you're actually 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. And, you know, 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.

13:50Brandon Tseng:You know, the VBAT helped interdict 100 ,000 pounds of narcotics last year with the U.S. Coast Guard, a record for the U.S. Coast Guard. We are operating missions every single day in Russia, Ukraine. We're operating in the Middle East. We're operating in the Asia-Pacific region. and just incredibly rewarding, right? As we make steps toward accomplishing our mission of protecting service members and civilians. So yeah, 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, that's delivering value.

14:25Brandon Tseng: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, I built Founder's Story from a$50 microphone. And the most important thing is I didn't do it alone. For years, I've been using Upwork to hire marketing, editing, branding, you name it. In fact, the editor who cut this very episode and the team behind all of Founder's Story branding found them on Upwork. The quality of people is top notch and paying people is simple.

15:06Upwork is a one-stop platform to find, hire, and pay expert freelancers across development, data, marketing, operations, and more. With Business Plus, you can access the top 1 % of talent on Upwork. And with AI-powered shortlisting, you'll get matched to the right freelancer in under six hours. No endless searching required. It's free to sign up and posting a job is easy. Visit Upwork.com right now and post your job for free. That is Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com. Upwork.com.

15:52Brandon Tseng:One, I started the company in 2015 because I believe the world is going to be full of autonomous systems, right? If I ask myself what the world looks like 20 years from 2015, I said, autonomous systems are going to become ubiquitous. You know, maybe I'm off by like five, 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 going to become, you know, the backbone of the world. I think you're going to 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 S.H.I.E.L.D.

16:33Brandon Tseng:AI does are really tip of the iceberg. There are going to 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're going to see, I'm going to make a prediction. I think that you're going to see every modern military in the world in the next five years will declare that they're going to build a one 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 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.

17:17Brandon Tseng:So it's an exciting place to be. It is, like I said, it's always a challenge working with the government, but at the same time rewarding. And it is, you know, some of the, like being at the intersection of national security, AI, fast growing, you know, entrepreneurship. 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 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?

18:04What scares you?

18:05Brandon Tseng:Look, I'm an optimist. I'm also a Navy SEAL, so nothing scares me. But look, I'm not, I think everybody's mind goes to like the awful dystopian sci-fi features that have been depicted in so many movies. It doesn't work like that. Yeah, there's not going to be a Terminator. At the end of the day, I'm not really, here's something I'll tell you that scares me. And it has nothing to do with modern, I would say, not scares me. It's like something I worry about for like my kids and maybe eventually have grandkids one day. When AI can do so much, what do people do, right? And so like I think having purpose, having work, meaningful work is super important.

18:50Brandon Tseng:And if AI is all of a sudden, if humanoid robots are all of a sudden doing everything and we're treated like the human beings in WALL-E, like what do people do for purpose? What do people do for work is probably what I worry about. Because 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 a 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.

19:27But 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 three years from now i don't even like just do it if you love it yeah just do it like i mean if making you know 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?

19:59Brandon Tseng: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 and everything like doing to your point like everything uh is probably uh a bit far in our lifetime though yeah it's what are you that's the craziest thing um so i think oh look it's i don't know it's it's a it's a hard question right because to your point and i have three kids they're very young five three in in uh six 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.

20:53Brandon Tseng: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 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 brothers.

21:29So there's three of you. How has the family dynamic been? And do you suggest to others to work with family?

21:36Brandon Tseng:Look, there's there's pros and cons to it. Right. And obviously, my older brother and I, who started the company together, have been, you know, you know, we've we've driven to the business to where it is. and I would claim, you know, experience some relative success. The pros are like, we know each other incredibly well. We share the same values. And like, we trust each other and we can communicate with each other, right? In a incredible, like lightning fast way, right? Because we've known each other, he's known me my entire life, right? Or yeah. So for the, on the con side of things, it's like, oh, you can communicate really, really well with each other.

22:17Brandon Tseng: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, you know, down the road. And certainly we've gotten to some very, very heated arguments. I built FounderStory from a$50 microphone. And the most important thing is I didn't do it alone. For years, I've been using Upwork to hire marketing, editing, branding, you name it. In fact, the editor who cut this very episode and the team behind all of Founder Story branding found them on Upwork. The quality of people is top notch and paying people is simple. Upwork is a one-stop platform to find, hire, and pay expert freelancers across development, data, marketing operations and more with business plus you can access the top one percent of talent on upwork and with ai powered short listing you'll get matched to the right freelancer in under six hours no endless searching required it's free to sign up and posting a job is easy visit upwork.com right now and post your job for free.

23:27That is Upwork.com to connect with top talent, ready to help your business grow. That's U-P-W-O-R-K.com, Upwork.com.

23:39Brandon Tseng:I think it can work, but I do think it works. There's actually lots of success stories between sibling founders. Walt Disney World, a lot of people don't know. There's Walt Disney, and Roy Disney. And they were, you know, one was, Walt was the creative aspect of it and Roy was the operations aspect of it. 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 think about leadership the same way.

24:20Brandon Tseng:We think about values the same way. But he is, Thanks. And then like after that, we are wildly diverge in terms of like our perspectives on the world, our perspectives on how things should be. And 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 break and you can communicate with. Those two things are probably 80 percent 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 i 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.

25:25Brandon Tseng:But, um, and that's what I was looking for, uh, after the seal teams, um, in business school, like for business school applications, they asked you like, what matters most to you and why? And I'm very fortunate to have been putting 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 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, would the SEAL teams be a shield AI had a truly like meaningful, positive impact.