A former Air Force acquisition officer turned VC, David Rothzeid joins host Chris Hamm to unpack the rise of OTAs and CSOs, the Raincloud protest that chilled production OTs, and why “SBIR mills” are draining America’s innovation fund. They talk leadership voids, speed as the new sacred variable, and how venture-backed startups can actually win in DoD.
In this episode of the Optimize Podcast, host Chris Hamm sits down with David Rothzeid — Principal at Shield Capital, U.S. Air Force reservist, and former acquisition lead at Defense Innovation Unit (DIU) — for a candid look at how protests, OTAs, and SBIR policy really shape DoD innovation.
David walks through his journey from ROTC and early Air Force contracting roles to DIU, where he helped stand up the Commercial Solutions Opening (CSO) model and use Other Transaction Authority (OTAs) to pull non-traditional tech companies into defense. He explains how a high-profile production OT for Raincloud was protested and sustained on a “ticky-tacky” issue — and how that single GAO decision effectively froze enthusiasm for production OTs and hurt both the company and the mission.
Chris and David then connect that experience to today’s landscape: new “speed of delivery first” guidance from the Secretary, the FORGE and SPEED Acts, and why schedule — not cost or performance — must become the sacred variable for defense acquisition.
In the second half, David talks about leaving active duty to join Shield Capital, what he actually does as a venture investor for dual-use startups, and why he’s been pushing hard on SBIR/STTR reform to shut down “SBIR mills” that live off endless grants with no commercialization intent. He shares his work supporting the INNOVATE Act, his view of how SBIR should work, and how he helps founders decide when (and when not) to pursue DoD.
They close with a lighter segment on Sweat Equity, David’s early-morning workout and networking group on the National Mall — a healthier, more human way for the national security community to connect.
In this episode, you’ll learn:
How OTAs evolved from NASA’s early days to DIU’s CSO model — and why their flexibility and collaborative nature matter so much.
What actually happened in the Raincloud protest, why GAO sustained it, and how it chilled production OT usage across DoD.
Why protests and cultural risk aversion make it harder for leaders to override decisions, even when they believe they were right.
How new guidance and legislation aim to make speed of delivery the primary success metric for defense acquisition.
What “SBIR mills” are, why David calls them exploitative, and how the INNOVATE Act could reset incentives toward commercialization.
How a national-security-focused VC like Shield Capital works with startups on capability gaps, GTM strategy, and when to tackle DoD.
Why leaving uniform actually made it easier for David to engage Congress and senior leaders on acquisition reform.
The story behind Sweat Equity and why he thinks we need new ways to build community in the defense innovation ecosystem.
Timestamps (approximate)
00:00 – 04:10 – Meet David Rothzeid: ROTC, discovering acquisition, early Air Force contracting roles, and the road to DIU.
04:10 – 08:10 – Joining DIU, DIUX 2.0, and the push for new authorities like OTAs and CSOs.
08:10 – 12:30 – OTAs 101: NASA origins, DARPA, codifying prototype authority, and why DIU built the CSO process.
12:30 – 16:30 – “Being right but early is the same as being wrong”: institutional pushback, being called a heretic, and the Raincloud production OT.
16:30 – 20:30 – The Oracle protest, GAO’s decision, and how one sustained protest killed momentum for production OTs.
20:30 – 24:30 – Secretary’s memo, FORGE/SPEED Acts, and elevating schedule over cost and performance.
24:30 – 28:30 – Leaving active duty for Shield Capital, staying in the reserves, and discovering how accessible Congress and senior leaders can be.
28:30 – 32:30 – SBIR/STTR, SBIR mills, the INNOVATE Act, and why perpetual grants are “asinine.”
32:30 – 35:30 – What David actually does as a VC for founders: government translator, strategy coach, and talent advisor.
35:30 – 36:30 – Sweat Equity workouts and closing thoughts.
Resources & links
🔗 Optimize Podcast hub: https://www.visiblethread.com/podcasts/
🔗 Connect with host Chris Hamm on LinkedIn: https://www.linkedin.com/in/chris-hamm-304103/
🔗 Connect with guest David Rothzeid on LinkedIn: https://www.linkedin.com/in/david-rothzeid-7a116961