Connecting National Security, Startups, and San Diego’s Innovation featuring Scott Tait

Did you know fiber optic cables could contribute to national defense? Find out more today. Welcome to The Connect Current, the flow of innovation in San Diego. We bring you the founders, investors, and leaders building the future across life science, tech, climate, defense, AI, and more. This is where San Diego's next chapter takes shape. Welcome to The Connect Current, the flow of innovation in San Diego. I'm your host, James Zanewicz, and this episode is being recorded at the UC San Diego Park and Market building. UC San Diego Park and Market offers a flexible venue in the heart of downtown San Diego for meetings, conferences, and events of all sizes, featuring cityscape views, modern spaces, built-in AV, on-site staff, and no catering requirements. That bears repeating. You can bring your own food in, y'all. It's a lot cheaper here. Find your details on UC San Diego Park and Market at parkandmarket.ucsd.edu. More information will be in our show notes. And now on to our show. Today I'm joined by Scott Tate, COO of LumaTech and previously COO at Startup Science and Executive Director of the National Security Innovation Catalyst at UC San Diego. So he does not like free time. He brings a rare combination of national security, technology, strategy, innovation experience, and he also knows the best burger bars in the city, so that's a good thing to know. And before moving into this work, he served 27 years in the US Navy, including command of the USS Mustin and the USS Zumwalt, and held senior roles focused on strategy, policy, and innovation. Through the National Security Innovation Catalyst, Scott helped strengthen the connections between San Diego's national security community, entrepreneurial companies, academia, investors, and policy leaders. At Startup Science and Lumitech, he has worked inside the national security startup ecosystem. So he has multiple perspectives for this conversation, and that's great because San Diego has that unique mix of defense presence, research strength, technical talent, and startup energy. The real question for today is how do we turn those assets into a more connected system that helps promising technologies reach the people and missions that need them? Welcome, Scott.

Thanks, James. It's great to be here. Great to be part of the ecosystem.

All right. So for listeners meeting you for the first time, how would you describe the path from your Navy career to the work you're doing now?

I think when people look at the military, they see it as sort of monolithic, and they tend to assume that you have well-defined roles. But in fact, to succeed in the military, you have to be pretty damn entrepreneurial to begin with. You're changing jobs every 2 years. They might be radically different jobs. So you kind of get used to learning on the fly and doing new things, doing different things. Combat certainly is a very innovative process. Military people are sort of well-suited to this to begin with. When I got out, I decided first what I didn't want to do, which was go back into government service or work for one of the big primes, and I kind of started to look around the ecosystem. Fortunately, I'd done my master's up at Stanford, so I was plugged into the VC and tech community anyway. It was just a really good fit here in San Diego to start a national security innovation ecosystem because of our proximity to the border. Everybody sees the Navy and the Marine Corps. What they don't see, all the other organizations that are here that are doing security-related stuff, because we're about as far away from DC as you can get in the lower 48, they tend to be a little more collaborative out here, and we can actually get some things done.

Because national security is way more than boats and guns and boots on the ground, right?

Absolutely.

There's so much more to it.

Yeah, and resilience now is a big thing too. It's not just security, it's both, right? Can you prevent the thing, the bad thing from happening? And then when it inevitably does anyway, can you quickly recover from it?

I like that. All right, I want to turn to Lumatek for a second though, because it's a company using distributed acoustic sensing that makes fiber optic cables do much more than they were originally intended for. So what does the LumaTech technology do? What are the applications for it? And why is that so important right now at this moment?

Yeah, so I joined the LumaTech team about 5 months ago. A fellow investor asked me to go up and take a look at what they were doing, and I was absolutely blown away. One of the things I love most about technology is how new technologies constantly enable older technologies and allow them to do new and interesting and powerful things. In simplest terms, Distributed acoustic sensing is the ability to use changes in light. So basically when energy hits the outside of any fiber optic cable, it modulates the light inside and that imposes useful information on it. We know the speed of light through glass, so when we see reflections, we know exactly where on a cable it took place. And by now applying signal processing to the information that's on the light, we can get useful stuff. So that's a long way of saying, imagine that every fiber optic cable in the world today is essentially a very, very sensitive hydrophone. The fundamental technology's 30 years old. What's made it different in the last 3 years and what Lumatek does differently is the AI signal processing that allows us to pull weak and meaningful signals out of high volumes of data. Like on an average cable, we're pulling 2 to 3 terabytes a day off of it. The machine learning algorithms that let us match that signal with something that we know is meaningful so we can Go from, hey, I found a signal, to now I know what that signal is. And the big compute of GPU processors allow us to do it in real time, which means that we can use it for applications that we previously couldn't. So latency of 5 seconds over 150-kilometer cable. There's millions and millions of use cases for this stuff.

Mm-hmm.

A lot of smart city applications. At LumaTech, our first and primary use case right now is undersea infrastructure protection. So not just data cables, but the power cables that are down there, pipelines, oil and gas farms, wind farms, all those things have fiber already built into them, lots and lots and lots of it. So we can plug in a laser interrogator, which is very non-intrusive, about a 3-hour install. And within that 3-hour period, we can start to tell you what's going on around those cables, whether somebody has dropped an anchor on the bottom, whether somebody's dragging fishing trawls across the bottom, what's going on in the water column, what are the mammals and divers and things doing there, and then what type of shipping is going over the top. For people not well-versed in the maritime world, there's a thing called Automatic Identification of Shipping, or AIS, which every vessel over about 100 tons is supposed to have. 100 tons sounds like a lot, but it's not. It's a large sailboat. Yeah, they're supposed to have this on so you know who they are. About a third of them don't, and almost all of them that are going to do something nefarious don't.

Don't.

Yeah. So we can collect the same type of acoustic data off of them that you would get from military hydrophones. So we can basically identify to an individual ship level, which allows us To do things like interventions. If we know they're doing something dangerous, we can identify them and either give them a call or send them a nasty letter from a lawyer. Or if there is damage, then we can attribute who did it so that costs can be recovered and whatnot.

Was this an accidental discovery or something intentional where somebody's like, oh, it can do this, let me apply it? Or was it a, wow, this actually can be useful?

I'm just curious. Yeah, so it started out with the communications companies 30-plus years ago trying to remove that noise to basically overcome this backscatter phenomenon that we use. So at a nano level, every piece of glass has billions of imperfections in it, which means that at a photon level, there's light reflected back up the glass, and that's the light that we use. They were actually trying to get rid of it.

They were trying to take it out, and I said, you realize that—

When they realized there was gold—

Is valuable?

There was gold in them thar hills. I love that. Yeah, it's pretty crazy. And the oil and gas guys funded the hardware, and then in the last 2 or 3 years, as I said, the AI, ML, and compute have made it possible for us to do things with it. with the data stream that just were impossible before that.

I want to turn from Lumentek now to a bit more about just San Diego's unique advantage in general, because we have a combination of military presence, research institutions, technical companies, entrepreneurs, investors. From your perspective, what makes us really well positioned for national security defense dual-use innovation here in this region?

Yeah, so we have the user base. People don't realize that San Diego's maritime and airspace is some of the most complicated anywhere in the US because you've got Simultaneous use by commercial fishing, commercial shipping, recreational, military, and research. And all those things kind of have to be coordinated. So while we look like a surfer beach town, there's actually a lot going on below the surface, no pun intended. People tend to be just very collaborative here, whether they're in tech or the universities or the military. I think the other thing that makes San Diego so different is that it's got this existing $40 billion defense Mm-hmm. Industrial ecosystem. And so there's a lot of conventional learning, and those people are generally very willing to help startups learn that space and navigate it. So you've got tons and tons of conventional wisdom here on the sort of traditional innovation side, whether that's out at Naval Information Warfare Center, which is a 5,000-person Navy lab here that does all the command and control and intelligence-type surveillance systems, or the industry partners, the bigs, the primes all have a footprint here. And then there's thousands of small and medium-sized businesses. Resources that are available to partner with startups, help them figure out how to navigate, in some cases even partner with them on contracts and take some of the management burden off of them. We still make real things in San Diego.

Mm-hmm.

Where Silicon Valley has gone to become apps are us and they don't want to invest in anything that isn't digital and a unicorn in a week, San Diego bends a lot of metal. The manufacturing know-how is here, the plants are here, and if you can't do it here, you go across into Tijuana. You can do it there. So the binational region really plays to our strengths in a way that I don't think you find anywhere else in California and rarely outside the Midwest in the US.

Even with those strengths as startups, it's always hard to build in an area and sometimes special considerations when you're looking at serving national security needs. So where do you see entrepreneurs most often get stuck in this vertical when they're trying to move from that promising innovation to real adoption, both by the military and by the public at the same time?

Yeah. So as we're seeing in Ukraine, almost everything is now what we would call dual use or multi-use. So if it doesn't explode, it's probably dual use in some way. So entrepreneurs have these 2 paths available to them. One of the things that sticks them up is they try to do both at the same time and then don't do either well. You should decide whether you're better suited to land and expand inside the government and then Take what you've built there and commercialize it, or whether you should start with a commercial path and then figure out how to get it into government. Do one of them really well first. There are some areas, people talk about the golden era of like the 1950s, 1960s when defence was really leading research and development. Well, we're seeing in some areas that start to come back, not only money, but interest flowing in. And in areas like AI decision-making for critical systems, autonomy, where the legal risk of— The risk of developing autonomous systems in the commercial market is pretty high. Something goes autonomously wrong and you're immediately out of business, whereas if you develop that inside the government, you have a much lower risk surface on the legal side. So do an assessment and figure out which of those markets is best for you to start with, but with an eye to eventually expanding it, because any investor is going to want you to walk them through both paths and when you transition from one or when you grow from one into the other and what those 2 market sizes are. The biggest barrier to entry for most entrepreneurs is just It's just that it's scary. It's different. There's a lot of compliance stuff, although the government has gone to some lengths to try to reduce some of those barriers to entry.

They've done this successfully.

Yeah. I mean, it's still at the end of the day, it's a big bureaucratic system and it tends to be slow. Now, once you're in, it's a very nice stable revenue stream and it's the world's biggest customer, but getting in is never pleasant and comes with a lot of compliance regulation. But there are ways around that, in particular partnering, if you can, with your solution, making it more of a commercial off-the-shelf solution that the government can just buy without formally contracting you through the traditional processes or partnering. You have to be careful, but partnering with a prime or another contractor who can kind of do compliance as a service and help you get into the market.

Yeah, and this is where I think working with folks like yourself or Rachel Costello or Marshall Fritz or Gretel Van Saun on our team, it can help people find those entry points onto those pathways. And you mentioned the pathways before. And so I want to ask, what might a stronger, easier, more navigable pathway look like between the people developing new technologies and the government defense or mission-driven users who ultimately test, evaluate, and adopt these things? Are there things we could do to make it better?

So one of the things we developed at the Catalyst— didn't develop, we adopted it, right? It really grew out of Germany in the interwar years. When we started Catalyst, we took a look at where and when in history military innovation had been most successful. And it's really hard to beat that period between Between the 2 World Wars, and in particular in Germany, but also in Japan. And I think if we have one thing wrong in the way that we're generally approaching military innovation or security innovation today, it's that we want to start with the technology, find shiny new technologies, and then hope that we have an application where— what they started with in the '20s and '30s, and what we did at Catalyst, was to start with war games and develop operational concepts that look promising, and then go find technologies that can enable them.

Right.

That way you at least have some key performance indicators that you know the thing has to meet. You have a sense of where it fits in this greater scheme of context. The Germans didn't invent a kick-ass tank and then go, oh, let's build a blitzkrieg around this, right? They started with a strategic necessity.

Yeah.

Came up with military concepts to achieve what they needed to do, and then they said, okay, here's the tech we need. It's got to be this good, this fast. I think San Diego is well-placed, especially with the universities, to foster that kind of engagement and exchange of Let's get the concepts right first and then we'll fit the technologies in rather than let's just find the next shiny ball and hopefully the force can figure out how to use it.

Yeah, well, and speaking of universities, we have involved in this process, it's not just the entrepreneurs and the end purchaser, but it's universities, government, other industry investors are all in here. How can we get those groups to better collaborate in the national security defense space to help engender more trust, to enhance that speed of moving things into adoption?

Yeah.

This is your I Have a Dream speech.

Yeah, exactly. Exactly. We have a great ecosystem and it could certainly be better organized, but what you're doing at Connect, what you mentioned Rachel is doing at UCSD, what they're doing at SDSU, the DIU folks that are here, all the right elements are here, including the investment side. I would advocate for more opportunities like unclassified war games where the military can provide context, if you will, to all those people that want to help them so that they understand what needs to be done and what sort of challenges are being faced. The holy grail is kind of how do we create these testable moments more frequently with less barriers to entry where entrepreneurs can get onto the military ranges and they can get onto areas where they can just take their stuff out, not once every 6 months, but twice a week, get out there and fly, dive, sail, get on the networks, do real things with end users so that they really get a chance to prove out the tech, demonstrate it, and get customer feedback.

Could this apply potentially to some of the regulatory things we see in California too, where like a, you know, almost like the libraries do the return your book with no fine days, there could be a few regulatory free pass days to develop a little more innovatively for companies to do that. Do you see a benefit to that down the line?

Yeah, absolutely. Regulation is a good check and balance, but I think we've gone a little too far towards the restrictions rather than—

We want to incentivize innovation a little more.

Yeah.

Yeah.

Even if we did one environmental impact study and then said everything that falls within this kind of range of stuff, go for it out there. I like that.

It's a really good solution.

There's a lot of different things we could do that you'd think would ease that burden.

Nice. I want to turn back before we close out to Lumitech really quick and ask, are you guys doing any sort of raise, looking for partners? What is the company looking for right now so you can throw your ask out into the universe?

Thank you. I pimped myself out just for this moment. We are blessed to just be completing a $4 million raise. It was oversubscribed. We would like to meet investors that are looking at about a $10 to $20 million check about a year from now, which should be our, hopefully our last investment needed before we hit profitability.

Will that be a Series A, Series B?

Everybody calls everything something different nowadays.

What are you calling it?

Yeah, we'll call it a Series A. Sure, why not? It'll be— this round will be our first priced round, and then so that'll be a more traditional Series A round then. We're always looking for anybody who owns or operates something in the fiber optic world that is interested in this technology and wants to work with us. We would love to talk to them. Undersea infrastructure is our first landing zone, but we're also getting more into border perimeter and facility security. You can sense footsteps on the ground, you can sense drones flying over, you can sense all sorts of stuff and get incredible levels of sensitivity with this tool as well. So anybody in that business that wants to talk, we'd love to collaborate and work with them.

Fantastic. And then we have our last question, which is the more personal insightful one, is our Connect Current note. What drives your innovative flow?

I just love working with especially the young people and the technologies and seeing how they're using stuff in ways we never imagined it would be used.

And by that you mean people my age, of course, right?

Yeah, of course. You know, young is all relative. What is it, 50 is the new 20 or whatever they say?

I'm going with that. Chris Lichter just called me middle-aged before, so like, I appreciate you so much more. You are my favorite guest today.

Middle-aged, middle of the century maybe, but you know.

Anyways, I didn't mean to interrupt.

First 100 years are hard.

But you like working with the next generation.

Just the energy. I mean, the energy and the innovation ecosystem. There's never anybody who says we can't do this. It's how are we going to do it and what do we need to do it and watch this, hold my beer, I'm going to go do it. Just a cool group of people.

Well, and I think, you know, this is a great opportunity for Connect to advertise something we do as well. But as you close this round, if you want to do press on it, you have Trey Brackett right here who can help you with that in exchange for nothing. That's for any company in the San Diego ecosystem. They can work with Trey for those kinds of things.

I really appreciate you coming in and out.

also wanna say you're one of the first people to drag me out for beers and burgers when I came to town. You've been one of the most welcoming to the San Diego— not that everyone's not welcoming, but like you actually drug me out of my office on a Saturday and said, stop working and come be fun. Really appreciate that. If you wanna know where, you can hit Scott up and find out where he thinks the best burgers in the city are. This was such a great conversation because the defense, national security, military, which however you wanna call it, vertical in San Diego has been a crucial part of its entire story, but is one we haven't focused on in innovation so much, which is why we're really proud to do that. Connect Now, Proud to highlight it, to have had Rachel on, to have you on talking more and more about this, because it's not just about technology, it's not just about defense, but it's about relationships, pathways, and a shared understanding of what these technologies can do for not just the world, but for San Diego in particular, and how these ingredients allow us to do that when we connect them more effectively.

Absolutely. Pleasure to be here. Thanks for having me. Let's go get burgers and beer. I like that.

Thanks for listening to The Connect Current. If you want to learn more about Connect and explore resources across San Diego's innovation ecosystem, follow us on LinkedIn or visit connect.org. We'll see you next time on The Connect Current, where San Diego's innovation story keeps moving forward.

This podcast was edited by Resonate Recordings.