Eric Hanft’s Journey from Bootstrap to Strategic Exit
About Eric
Eric didn’t start as an entrepreneur. After serving 12 years as an infantry officer in the US Army, including deployments during the Iraq war, he attended Stanford GSB while still on active duty. Exposure to business school thinking, combined with his frontline understanding of technology pain points, set him on an unexpected path. In 2020, he co-founded Key Square Labs with two technical experts, bringing a military veteran’s perspective to solving a critical but unsexy infrastructure problem.
About Key Square Labs
Key Square Labs addressed a scaling challenge that few people outside the defense community understood: the ATAK networking problem. Android Team Awareness Kit (ATAK) had become a critical situational awareness app for military users, but it relied on custom hardware with modified firmware to connect to military networks. This worked fine for a small, elite user base, but as adoption grew to hundreds of thousands of users across the joint force, the custom hardware became a bottleneck—expensive, hard to update, and limiting combat effectiveness.
Key Square’s innovation was reimagining firmware-level capabilities as application-layer software. This meant any Android device could run ATAK networking without custom hardware modifications. The company operated as a bootstrapped three-person team, funded by R&D contracts and direct sales to eight foreign governments. They never raised venture capital, yet they achieved real-world validation, including deploying with the 75th Ranger Regiment during the Afghanistan withdrawal to solve urgent communication challenges. In 2024, Key Square was acquired by Ditto, a Series B commercial company applying edge computing technology to defense problems.
Key Takeaways
1. Problem Intuitiveness is a Gating Factor for VC Funding; Plan Accordingly
Eric spent a year pitching venture capitalists with limited success. The challenge wasn’t so much a lack of validation (they had Rangers using the tech in combat and sales to multiple NATO allies) as explanation. While other founders pitched intuitive problems (”We’re building AI for drones”), Eric was explaining firmware replacement and network routing tables. His takeaway: “If all of your time with an investor is spent helping them understand what you’re doing, that makes it hard.” This doesn’t mean the problem isn’t important or the market isn’t real. It means if your problem requires deep technical context to understand, venture capital may not be the optimal funding path.
2. The Written Policy and the Pragmatic Reality are Often Different
Key Square Labs was on a fast track to a $50 million APFIT deal with SOCOM, as the government customer encouraged them to apply for the program’s stated upper limit. But after months of work and internal approvals, OSD passed. Eric learned that the real ceiling was around $20 million, regardless of what was “allowed” on paper. This pattern appears throughout defense acquisition: what’s technically authorized and what’s likely to get approved are different things. Successful founders understand both the formal rules and the informal norms. When pursuing large, novel contract vehicles, validate the pragmatic thresholds with people who’ve recently succeeded (or failed) at similar scales. Ask: “What’s the largest deal actually approved in the last 18 months?” not just “What does the policy say?”
3. Validation from Use Beats Validation from Pilots
Key Square’s strongest proof point wasn’t a pilot program or successful demo—it was the Rangers putting their software on 100 devices during a real-world operation to solve an actual communications failure. Similarly, their sales to eight foreign governments provided faster feedback and revenue than navigating US acquisition processes. Sometimes the path to proving value is finding customers who can move at commercial speed, whether that’s allies operating outside the US bureaucracy or units with flexible procurement authorities. Real operational use creates undeniable evidence and unlocks broader adoption.
4. Recognize When Growing Demand Signals Growing Risk
Conventional wisdom says increasing demand is a good thing. Eric made a counterintuitive assessment: as interest in Key Square’s technology grew, his risk actually increased. More demand meant more technical complexity, more feature requests, and more operational burden, all with the same limited resources and no VC funding. “I came to believe it was not in our interest to continue to assume increasing risk that things would go to zero.” This is a critical insight for bootstrapped founders: growth without resources can accelerate failure rather than prevent it. Sometimes the right move is strategic acquisition or partnership before you’re too stretched to deliver.
5. Relationship Building at Those So-Called “Boring” Defense Conferences Creates Real Strategic Options
Eric met Ditto’s CEO Adam at a TAP conference years before the acquisition. They had casual conversations, stayed loosely in touch for 2.5 years, and built mutual respect and understanding. When Key Square needed strategic options, that relationship provided one, replete with pre-existing trust and technical knowledge. Many of us have criticized defense conferences as being chock full of “the same people,” but that familiarity is exactly what builds the high-trust relationships that create opportunities. Don’t just attend for lead generation. Invest in relationships with technical peers, potential partners, and companies solving adjacent problems. Those connections, built over years, become strategic assets when you need them. As Eric noted about smaller, technical conferences: “you can find people who are not only trying to sell their stuff, but they’re trying to solve problems with the smart people in the room.”
So get out there and enjoy AUSA, CTV readers.
We’ll see you next week!
For more on Ditto: https://www.ditto.com/
Follow Eric: LinkedIn
