An Interview with Pete Morrison - From a Garage to Defence Giant Acquisition and the Lessons Learned

In part one of our interview with Pete Morrison, he discussed the influence of gaming on military simulation. Here in part two, he reflects on his experience taking a small start-up working out of a garage to a global company of hundreds and its eventual acquisition by defence giant BAE Systems, sharing the opportunities and challenges he faced along the way.

When Pete Morrison left the Australian Army in 2005, paying out his return-of-service obligation two years early, his goal was simple: build software that soldiers would love. Twenty years later, after private equity investment, a devastating loss that halved the company's value overnight, and eventual acquisition by BAE Systems, Morrison's journey offers crucial lessons for anyone building a defence technology company.

Starting in a Garage

Morrison's hiring strategy was unconventional: "I simply hired the people that I met on the internet who were modifying the computer game with me." Andrew Barron from the U.S., Mark Lacey from the UK, Mark Dzulko from Germany, these online modders came to Australia and worked out of “effectively a garage at the back of my friend's house. That's where we built VBS2."

Morrison moved incredibly fast, flying around the world about 32 times in the first six to eight years. "While I was on the plane, I was typically programming," he recalls. By 2007, the Czech Španěl brothers, creators of Operation Flashpoint, formed Bohemia Interactive Simulations with Morrison as its first CEO.

The Business Model

Unlike many startups, Morrison had customers from day one. Bohemia Interactive Studio already had contracts with the U.S. Marines and Australian Army. "We didn't need to take another dollar of investment from our shareholders for that first eight-year period because customer funding was adequate," Morrison explains.

The model was elegant: military customers bought annual enterprise licenses and funded specific features they needed. This created a flywheel effect as each new customer brought maintenance revenue and development that benefited all users. "I didn't realise until many years later how lucky we were," Morrison admits.

Morrison's philosophy was product-first. "Running the business was very much secondary to building good product," he says. "I don't think I was a good CEO in those early years, but I focused on building a product that soldiers would love, and growth followed."

The Private Equity Chapter

By 2012, the company had grown to about 75 people but needed a technology refresh. Then came the surprise: "The Španěl brothers just told me one day, 'We think we want to sell the business.' It came out of the blue and completely caught me by surprise."

Morrison knew nothing about M&A. The team chose private equity over a strategic buyer as they could stay in control as long as the business grew. The Riverside Company acquired the business, but it quickly became clear that scaling from 75 to 500 people required different skills.

"Pete Morrison didn't have the skills to grow this enterprise," Morrison acknowledges. Arthur Alexion joined as CFO in 2013, then became Co-CEO with Morrison focusing on product and business development. "It was a very welcome change."

Private equity's biggest contribution was capital, with millions of dollars invested in developing the brand-new VBS Blue engine. "We made a series of good decisions that paid off almost a decade later," Morrison notes, referring to the U.S. Army's Synthetic Training Environment program - a major Army procurement that commenced in the late 2010s.

The Humbling Loss

In 2019, as private equity prepared to sell the company, disaster struck. Bohemia lost the competition for the Common Synthetic Environment component of the Synthetic Training Environment. "That was a very bad day," Morrison recalls. "The value of the business was cut in half overnight. We had to pause the sale process."

It was their first major loss in 15 years. The lesson? "We just had to be better. Our pitch wasn't as good as the companies that won, despite having better technology. We didn't pull together a good enough pitch."

For two years, they believed they were out of the Army market. Then the Common Synthetic Environment contractor underdelivered. The Army recompeted the program, and this time, partnering with a U.S. prime, Bohemia won. "We built great tech, had a dose of humility handed to us, and then we sold the business to BAE in 2022," Morrison added.

The BAE Acquisition

BAE Systems emerged as the right buyer. Morrison appreciated the stability after private equity's growth demands. BAE had a vision for wargaming that included Bohemia's capabilities and, crucially, "were willing to allow us to sell to the broader market. There was acknowledgement of our value as a semi-independent entity."

The rebrand from Bohemia Interactive Simulations to OneArc BAE Systems was handled respectfully and "the last three years under BAE ownership have been enjoyable," Morrison reflects. "The private equity acquisition stimulated growth that had to happen, and the BAE acquisition is about stable long-term growth. I wouldn't change anything. It was the Goldilocks private equity journey."

Lessons for Defence Entrepreneurs

Morrison's 20-year journey offers crucial lessons. First, solve a real problem: "If you're struggling to articulate the problem you're solving, it's not going to succeed." VBS filled a clear gap in infantry training.

Fourth, know your limitations. Morrison wasn't a good CEO initially and accepted that scaling required different skills. "There's nothing wrong with taking advice from people who have done it before," he says. "Founders tend to think we know it all. I would have benefited from more advice."

Finally, learn from losses. The 2019 defeat was devastating but instructive. The company improved and won the recompete. Humility can be a gift.

Morrison left OneArc in late 2025 after 20 years. "I've got three young kids, and I want to focus on my family, and I want time to reflect. I'm only 46." But he also felt the company no longer needed him the same way. "I felt like I could leave without damaging the business. My baby had grown up."

For his part, Morrison is not disappearing. Stepping away from OneArc is not the same as stepping away from the field, and he intends to keep publishing, presenting, and turning up at the trade shows. Someone who has navigated private equity, a humbling loss, and a strategic acquisition, and who still has strong views on simulation, doctrine, and procurement reform, is not someone the defence community can afford to lose to the sidelines.