Hon. Heidi Shyu
SUMMARY KEYWORDS
Heidi Shyu, Department of Defense, technology readiness, joint services challenges, APFIT funding, small businesses, defense industrial base, private sector, government engagement, manufacturing focus, supply chain, venture capital, innovation growth, defense primes, venture capital, Office of Strategic Capital, women in defense
SPEAKERS
Hondo Geurts, Lauren Bedula, Hon. Heidi Shyu
Hon. Heidi Shyu 00:00
And then Dr. Ash Carter also called me and said, you know, Heidi, we're living in a pivotal time, right? With the threats ever increasing, right? It's critically important for you. You have the expertise in industry as well as in government. You sit at the intersection of that, right? You understand technology, you understand program management, you bring unique insights, and you're the right person for the job. So I had a sleepless night, deciding if I needed to come back to the government, and I ended up accepting the position.
Lauren Bedula 00:42
Welcome back to Building the Base, recording live from the Reagan National Defense Forum. I'm Lauren Bedula here with Hondo Geurts, and we are absolutely thrilled to have the Honorable Heidi Shyu with us, Under Secretary of Defense for Research and Engineering. Ma'am, thank you so much for joining us today.
Hon. Heidi Shyu 00:57
Very happy to do this.
Hondo Geurts 01:00
Ma'am, it's funny calling you ma'am, but we worked together for years and years, and I want to thank you for all your service. You know, it's it's not an easy job, and you've done it with gusto, finishing up here a really impactful assignment as the Under Secretary for Research and Engineering. Can you help the listeners to explain kind of what that job is and what you were really focused on these last couple years to help the department?
Hon. Heidi Shyu 01:29
Yeah, absolutely. I think when I came into the job, it was very important for me to kind of think about the strategy where we can bring the best value. And really, Hondo, I've admired you for a long, long time, okay, because you were so fast in executing things for SOCOM, right? That was a model I wanted to be able to accelerate. So once the key thing came in to identify where are the critical technology areas we need to invest in. And then the next piece we looked at, what are the joint war fighting challenges that's out there? Because every service focuses on their own specific challenge areas but we fight in the joint service right? So there are joint service needs, so we focus on those specific challenges and then work very closely with the services and industry to figure out other stuff you guys are developing in terms of prototype, we can help you to accelerate the development of prototypes. And then the next piece we needed to do, we created the Technology Readiness Experimentation Events to make sure that whatever is claimed in terms of tech readiness really is proven in terms of technology maturity. And then beyond that, it's the radar experimentation we work very closely with, INDOPACOM, in terms of demonstrating military utility, right? And then we were able to take all of these, push it forward to say, okay, here's the here's the stuff. The prototype is demonstrated. Utility is ready to transition into production. We work very closely with the services to figure out which service is willing to accept that into production. So that whole process has been mapped out, and it's been running for the last couple of years, right? I would say the other thing that's really helped is APFIT funding. APFIT funding helps small businesses to ramp up into production, right? It's the most difficult thing a small company has. I've got a prototype here that whichever service, whichever COCOM said, oh, this is great. I want it. Well, you got to put in your palm, right? Well, that's a two year process, right? So at the earliest you're gonna get funding two to three years from now. So you've got this valley of death, right? A small company cannot twiddle their thumbs waiting for a contract to drop in two to three years. So we literally utilize APFIT funding. The first year helped 10 companies give them 10 million each to accelerate into production. Okay? Second year is 150 million. This year was 300 million. It's been huge. And today, we actually announced another five companies. You know, for the 25 right? There's early winner out of the 25 tranche. So it's very exciting. So total of 46 companies, $590 million right? That is huge for a small company. And I think the other thing that's important to say these the small companies told us that on the money that you have given us via APFIT, it has helped them to obtain 3x more procurement money, because the other services see what they're buying. Oh, this is really great. You're using it. I want some too, right? So if you think about our actual buying power has brought $2 billion additional procurement money to these small businesses.
Lauren Bedula 05:20
It's amazing to hear about it, and we actually had a defense tech executive on earlier today who received APFIT funding, had an initial program through DIU. So it's really exciting to see the process working, and something we love to highlight to our followers, because we want to replicate it and share those best practices. So thank you, and thank you to your team again for the limited series that we collaborated on. We had Shotgun earlier talking about some of these efforts. I want to dial back though and say, how on earth did you get into this? What inspired you to have a career like this?
Hon. Heidi Shyu 06:00
Yeah, well, I kind of fell into the career. This is pretty funny. I graduated with my bachelor's and master's degree in mathematics, and had no idea what I could do for a living, so I literally called up a friend and found out he also got his degree in mathematics, and he was working at a huge aircraft company. Okay? So I said, Oh, can I come down and talk to you to figure out what I can do for a living, right? My mom doesn't want me to live on her paycheck, right? So I went down, and little did I know, he scheduled an interview for me. I flew down on Saturday to visit his mom and him, right? And he said, I set up an interview for you on Monday. So not expecting that, I was just going down for the weekend. I showed up in summertime, right in May, so Southern California, t shirt, painters pants, and sandals. I showed up for my interview, okay? And I actually got a job offer for a huge aircraft company, so I just sort of fell into the job. It was not planned.
Lauren Bedula 07:10
Oh, that's amazing.
Hondo Geurts 07:11
And so how did you get from a huge aircraft company to now being the Chief Technology Officer for the DoD? How did that path look?
Hon. Heidi Shyu 07:18
So I would say it's very step wise. Went from engineer into a project manager, into gradually line management, in which I managed 100 people doing antenna design, okay? And then I moved into program management, okay, and then I moved up to managing a business of unmanned systems, okay? Then I moved into a corporate VP job, right? And during that time when I was moving to the corporate VP job, I was selected on the Air Force Scientific Advisory Board, so that greatly broadened my perspective in terms of, wow, there's a lot of problems, not just designing an active electronically scanned array, right, but much broader problems. So that fascinated me. I loved the challenge with the big picture. So after that, all of a sudden, I get a phone call, and it was under the Obama administration to come in as a Principal Deputy Assistant Secretary in the Army for Acquisition, Technology and Logistics (AT&L) position. So I did that for about seven months. So that's when Ash Carter called me in and said I'd like you to step in as the acting, right? I have a lot of confidence in you. I said, Okay, can't really say no, so, I acccepted that position, and I did the acting job for a while, and then I was nominated officially, so I became the ASALT. And then that greatly expanded your perspective, having 12 different program executive PEOs underneath you, understanding all how to juggle all these demands, right? And then I retired like my life was gonna be easy, right? And then companies started calling me up to be on their boards. So I ended up being on eight different boards, and then consulted for about a dozen different companies having good old time, like Hondo is. And then I got another phone call.
Hondo Geurts 09:35
And you answered the phone a second time? Did you learn your lesson?
Hon. Heidi Shyu 09:39
[laughing] Yes, I accidentally answered the phone call. So that time was basically Frank Kendall tried to recruit me to come back into his administration, and then Dr Ash Carter also called me, you know Dr. Ash Carter, and actually said, you know, Heidi, we're living a pivotal time, right? The threats are ever increasing, right? It's critically important for you to have the expertise in industry as well as in government. You sit in the intersection of that, right? You understand technology, you understand program management, you bring unique insights. You're the right person for the job. So I had a sleepless night, right, deciding tocome back to the government, and I ended up accepting the position.
Lauren Bedula 10:31
Your story is an incredible one of cross pollination between the private sector, having had that experience and then having these government significant leadership roles. Is there any advice you could give to our private sector listeners now that you're sitting on the government side and have seen so much about how they can perhaps be better partners, or communicate better, or what sticks with you when you're meeting with them and stands out as productive?
Hon. Heidi Shyu 10:56
Having having been on both sides, I can tell you on the private industry side, you're on the outside, peeking into the window, trying to figure out what the government wants, right, and then when you're on the government side, if you don't engage with industry, you don't understand the capabilities they may bring. So the thing that I learned the most is you've got to engage with your with industry partners, and that spans from, you know, the big primes, all the way down to the startups, because they have unique capabilities, right? So my job here is trying to figure out how to accelerate some of the great capabilities we've seen, especially not just in the startups in the commercial world, which I engage quite a bit with, but also working with the defense primes to say, what if, what if you could add this capability in a highly contested fight? So I'm able to pivot hundreds of millions of dollars to address our problems. It's been phenomenal.
Lauren Bedula 12:04
Wow. And what's your take, having paid such close attention to the defense industrial base over the past couple of decades, on the evolution of it?
Hon. Heidi Shyu 12:14
Huge changes, right. Certainly when I started out in the Renaissance Era [laughing] , I mean, it was only the defense primes that were designing products, right? There's really no startups jumping into the defense industry, right? And if there were small supplier there, you know, component suppliers, right? So the sea shift that's really happened, even during my time within R&E, is explosive growth, a startup company that's venture funded, right? Incredible explosive growth in terms of innovation coming out from the commercial side, right? It's changing the landscape because they can make decisions much faster than a large prime, which has the same gazillion layers of management as the Pentagon, it takes forever for the decision to be made, right? So, sea change. And the thing that excites me, I will see I look at some small companies with site and development also found components. I said, wow, if we had this component, we could completely revolutionize active array antennas right down to a wafer size. I just said, this is phenomenal. So it's transformational, and then you have additive manufacturing companies doing that. They're additive manufacturing UAVs, right? Now, instead of lugging everything from point A across the Pacific, you can just put a Conex box. Build it at the point I need, right? So, it's very much a sea shift.
Hondo Geurts 14:03
One of the things that I know we had been trying to get at when we both served as acquisition executives was how to leverage America's dominance in the capital markets, and you had a number of initiatives of how to make that happen, standing up to the Office of Strategic Capital and all that. How is that coming along? Are you happy with the progress made, and where do you see that going in the future?
Hon. Heidi Shyu 14:29
Well, I tell you, I'm incredibly happy to see the progress. Think about in the period of two years standing up an office and getting the Hill's buy-in, after 44 meetings, to put it in language to authorize the ability to provide guaranteed loans. Because I've met a number of small companies, they say, look, I've got this world class product. I'm right here. I can't get the capital to scale into production. I need, you know, the first time there a company came in and say, I need ten million. Well, I don't have $10 million, just to give you right, another company said, well, I've got this part, that's made in Sweden. China bought the foundry. I now need to resource capability. I need $100 million. Well, I don't have pocket money to give them, but still through the OSC we can now give guaranteed loans, right? Instead of the three year payback that the banks would demand, we can give them a 10 year payback, right? It's huge. So January 2, we're opening up. We're waiting for proposals to come in. They've got, you know, one month to provide the proposal to us. We'll evaluate it and provide feedback, and probably go through round two, the phase two in which we will be anticipating awards this summer, next summer. Okay, that's pretty exciting, and we'll have like, $49.2 million of DOD money from that. It's just, it's 5% of the money we put down, right? We're leveraging 95% from the Department of Treasury for these loans. It's colorless money, right? So it's been huge. I can tell you, there's a number of small companies I visited. They can't wait. They're all gearing up.
Lauren Bedula 16:34
And the OSC call and interest really aligned around manufacturing. Can you talk a little bit about why manufacturing and supply chain are also such great priorities for you and your work?
Hon. Heidi Shyu 16:47
Absolutely, it's the biggest problem that we saw. There's no lack of innovation, right? Tons of small companies and even large companies. They have lots of innovative ideas. It is crossing the valley of death right into manufacturing. That's where the funnel happens, right? So we really focus on the manufacturing aspect to help scale up. So we're not dependent upon component suppliers. That's, you know, somewhere in Asia, right? So you can actually manufacture the components here, and control your own destiny if you can manufacture here. That's why it's so incredibly important to do that, right? That's our biggest focus. And then the venture capital firms, they like to fund software companies, right? The hardware companies that develop critical enabling products, it's component level. It's hard for them to get the love. So that's why we're focusing on that.
Hondo Geurts 17:45
So, ma'am, when you came in, you did a really, I think, impactful job of outlining the key technology, or is you thought the department needed to make progress on how have you seen progress along those lines? And do you, do you see any new technologies that we need to add that in the list of track or or, do you think the ones we've identified have held up pretty well and for the next couple of years?
Hon. Heidi Shyu 18:13
Yeah, I think I tell you some of the stuff we have done, it has been, you know, in the other world, ie, the black world in which we can develop stuff and give our warfighter an asymmetric advantage. Some stuff we've done is in that world. And we have pushed through capability very quickly and to the point in which we actually fielded the capabilities this this past summer. And we're continuing to push capability. We still have things that's in development that will give us an asymmetric advantage. These are things which we initiated, and I'm going to have conversations with the Hill, just in the SAP world, and say, here are the things that are ongoing, right? You need to keep make sure this is continuing, because XYZ, right? So that's being scheduled. I'm planning to have these very important dialogues and they really want to hear from me.
Lauren Bedula 19:21
I've got one more because we know you're on a very tight schedule and in high demand here at the Reagan National Defense forum. But ma'am, you set such a great example for women like me in the defense and national security space and tech space. I wanted to know if you have any advice to our listeners, maybe women breaking into this field, about how to have such an incredible career like you have.
Hon. Heidi Shyu 19:43
Well, I just visited Mount St Mary's University in LA. And this is a university that is 99% a women's college. 99% are minorities, right? And they're underprivileged minorities, but having opportunities to talk to some of them and try to motivate them to continue their education despite the hardships, right? I mean, that's what excites me, right? And I would say to to lot of young women, that's in the area of defense, when I came in the dinosaur era [laughing] , I was the only woman in my class, right? But that that's actually just started to change quite a bit, right? There's significant opportunities. Don't be afraid to take risks. Don't be risk averse, right? Take assignments that's outside of your comfort zone, right? And that will expand your horizon. And don't think every job you take is going to be a ladder, a big step up. You could be building your foundation, then you can leap into a much higher responsibility job, right? I would say, as long as you're passionate about what you're doing, you learn to communicate succinctly, okay, and you'll never stop learning. And don't be afraid to take risks. You've got it made.
Lauren Bedula 21:21
Wow. And for our listeners, I'm excited to point out, actually, I'm looking around at our teams here, and the women outnumber the men. So sorry, gentlemen, she's right. There are changes happening. So with that, thank you, ma'am, so much for coming on today to share your advice, your initiatives, so that folks can take advantage of it. We're grateful for your time.
Hon. Heidi Shyu 21:43
Thank you so much. It's great to see both of you.
Hannah Greene Spata (BtB Director) 21:47
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