YC Founder Fixes $2.7T Gov Waste with AI

The US government spends $2.7 trillion a year on everything from water bottles to fighter jets, yet the entire process is held together by Microsoft Word and tribal knowledge. In this episode, we sit down with August Chen, founder of Hazel (YC W24), to discuss why he left Palantir to tackle the antiquated world of government procurement. We dive into the "missionary vs. mercenary" mindset, the reality of the 1% acceptance rate at YC, and why the "death of the paper-pusher" is the greatest opportunity in VC today. What you’ll learn: Why 50% of small businesses have abandoned government contracts.The Palantir playbook: How to "deploy yourself" into a customer's workflow.Why selling to the Government requires a "hierarchy of needs" approach.The pivot from B2B2G to direct B2G: When the mission stays, but the product moves.How AI is turning months of RFP paperwork into seconds of work.Predictions for the "DOGE" era and the future of civil servant tech stacks. 📌 Watch now and subscribe for more smart, fast, founder-first interviews. Chapters:  00:00 Million Dollar Toilet Problem 00:39 YC Roaster Ad Break 01:22 Why Gov Procurement Lags 02:50 Broken Systems Examples 04:05 Inside Procurement Tech Stack 05:30 Palantir Lessons On Procurement 07:29 YC Pivot To B2G 11:36 Selling To Government Reality 17:22 Scaling A Small Sales Team 21:29 AI For Deterministic Compliance 25:15 Workflow First AI Second 26:00 Vendor Search Enrichment 26:18 Drafting Requirements Fast 26:36 Evaluation Notes Assistant 27:04 Safety and Tesla Analogy 28:35 Scope Review Guardrails 30:29 Palantir Patience Lessons 32:36 Hair on Fire Problems 33:57 Fast Pilots and Features 36:07 Overcoming Trust Deficit 39:04 Why the Name Hazel 41:50 Predictions Rapid Fire 43:58 Procurement Jobs Future 45:32 Investor Takeaway and Wra “🎧 Listen on the go:  Spotify: https://open.spotify.com/show/1u1JyRKH8JYFjhBkvTUOAP  Apple: https://apple.co/4cZ8RMm  My other YouTube Channel: https://www.youtube.com/@lobstercap This Lobster Talks episode is brought to you by YC Roaster, a free tool helping founders improve their YC applications.  🔗 https://ycroaster.com