Ben Kohlmann is an investor at Cubit Capital, a venture capital firm that invests in leaders who build businesses that confront meaningful problems.
How did you get started investing?
When I was on active duty in Afghanistan and Iraq, I became disillusioned with how we approached technology development, acquisition, and deployment. We were using outdated technology from the 90s and 2000s, well-suited for the Cold War but not the ambiguous war we were fighting. There were no pathways then to bring in new ideas. In parallel, we witnessed an explosion of technology from Silicon Valley, multi-billion-dollar companies changing how people interact with the world.
The foundational element ensuring America’s continued global leadership is security. I made a couple of efforts to drive reform in the U.S. Department of Defense (DOD) and for the Chief of Naval Operations. Although these efforts were unsophisticated, they initiated a conversation around defense tactics that could be discussed outside the context of criminal activities. Having flown 1500 hours with F-18s on carriers, I saw the importance of physical assets that could project American power. Simultaneously, we witnessed America’s deindustrialization and a move towards less energy-dense endeavors. My thesis is that energy is the main currency of human flourishing. More energy creates better outcomes, so we need cheap, clean, abundant energy.
Why is now the right time to invest in or build hardware?
Now is the right time to invest in hardware because the government has caught up by funding entities like the Defense Innovation Unit (DIU). With Congress also on board, this is the best moment we’ve had to double down on hardcore tech entrepreneurship as we have funding from all sorts of sources and the people to make it happen. Additionally, if you look at what Elon did with SpaceX and Tesla, he proved that money can be made building physical things so I think investors are less afraid of investing in hardware than they used to be.
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When you think about the founders you’re investing in, what makes them stand out? Is there anything specific you’re looking for?
The areas we focus on are raw determination, a deep understanding of the problem, and an alignment with reality. I was listening to a podcast where an investor said their ideal ratio of boldness to capability is two-to-one. Although those are fluffy terms, I think that’s a great metric. If a founder’s boldness exceeds their capability in that sector, it won’t be a good fit. It also won’t work if a genius has the next nuclear power breakthrough, but lacks boldness. We’re interested in someone trying to build something at the very edge of their capabilities that is still within reason. We’ve started using that internally to assess a founder’s ability.
Another important thing is strong beliefs, loosely held. Entrepreneurs need strong hypotheses about what they’re building, but they must be willing to listen to market feedback. I’d say some of our best entrepreneurs have a strong idea, go to market for feedback, and directly apply those lessons. On the flip side, there are companies so convinced of their conception that when they get market feedback, they have no willingness to change or stop because they are so convinced it will eventually happen.
There’s a balance between vision, boldness, and determination. You don’t want people to give up at the first challenge, but there’s an art to knowing when to double down and when to move on. It’s hard to quantify, but the more you listen, you can see if they have that quality. Another telling sign is the speed of response. There’s a strong correlation between a CEO’s success and how fast they respond to texts or emails. This doesn’t mean I’m entitled to immediate responses from the founder, but it shows the pace at which they operate and how they structure their time. If they can delegate quickly or make fast decisions to focus on the next step, I think that translates to strategic acumen and the ability to operate on a fast decision loop.
Finally – deep intentionality in building relationships over time. There are a couple of founders who haven’t been raising for 9-12 months but continue to provide drumbeat updates, like “We have a new contract” or “Here’s what we’re thinking with our team.” These quick hits develop a line of behavior and trust, so when they say they’re raising funds, there’s already momentum and excitement instead of having to overcome it with a new deck.
When you look at companies, how do you evaluate whether to invest?
It’s great if the technology being developed is best in class. We also have to believe that if the technology is unlocked, it will start a cascade of untapped dollars. In software, you can put something on the market quickly, test it, iterate, change it, and quickly know if people want to pay. For hardware, you’re really betting on the market in five to seven years. Say a concept for a low-cost, rapidly produced underwater torpedo that changes battlefield dynamics exists at a certain price point. Is there a pool of dollars that will immediately flow to it and take advantage of it? We have to consider that with hard tech because it’s so capital and time-intensive. Investors have to be deeply convinced that there is a pot of gold at the end of the rainbow. This isn’t something where you can spend 10 years and $2 billion to test only to hit the market and learn that your assessment was wrong. You can’t pivot when building a rocket engine or fleet of unmanned submarines. You have to go all-in on that technology and believe the market will be there. When you look at these technologies, there eventually has to be a huge infusion of customer dollars to make it worthwhile. I think the bar of conviction has to be higher because of the time and intensity required to get the technology to the point where it has a chance.
How has venture capital shaped the way the U.S. Department of Defense interacts with defense tech startups?
I think the government moves at its own pace, but they’ve made meaningful progress in the past couple of years appreciating what the private sector and capital can bring to bear. For example, I was a reservist at the beginning of the DIU, and it’s very different than it is now. To their credit, the DIU came to Silicon Valley with a hypothesis, tested the hypothesis, pivoted, changed it a bit, and stayed alive. Now in year nine, they’ve really honed in on a powerful strategy. They’ve identified that it isn’t just about R&D but getting technology to scale. They’ve realized we don’t have time to let R&D play out for 5 or 10 years – we need this technology now. They wouldn’t have discovered that if they hadn’t been met with the realities of the venture market.
Now there are reasons the government isn’t rolling out as fast as many in Silicon Valley would like, but there is a huge backlog of demand. Even the Nuclear Regulatory Commission (NRC), which was once the pin cushion of venture capital because it wasn’t moving at all, is transitioning from a sclerotic organization to one that understands and appreciates what partnerships with private capital can unlock. We’re still in the early stages, but you have to start somewhere. There’s recognition that this is important, and a lot of work needs to be done.
Is there a specific technology that truly excites you?
We have not yet made an energy investment but I have a deep conviction that nuclear power is an untapped opportunity. If we can unlock that technology, the possibilities are limitless. This unlocks getting into space faster, as we can build gas stations in orbit that allow launching points to mine asteroids, which then creates a space manufacturing economy with feedback loops to Earth. Energy is at the core of all of this, and we have it at the tip of our fingers. We’ve discovered the most energy-dense particle we are currently aware of and we are not taking advantage of it. The potential for human flourishing is immense.
We know how to do nuclear fission safely, but it comes down to cost. I think costs have been driven up by regulation because today there is not much repeatability, but that is changing. If you look at the two Vogtle nuclear plants in Georgia, for example, there was a roughly 40% cost reduction between plant one and plant two. I believe they actually had to slow the construction of the second plant because they were building it too quickly. So even from just plant one to two, they realized those economies of scale. Can you imagine plants three to ten? Suddenly, we could have a huge abundance of nuclear energy available, and we would no longer have to worry about rolling blackouts in Texas or developing economies where there are brownouts. This could be monumental.