Helios is a little broader in the markets that it targets. And for those folks, it provides them access to GEO in under a day. Time is money. That value of that time can be, you know, $50 million plus.
Mira is about precision maneuvering. It's a high-thrust, high-delta-V vehicle. The mission set is really about loitering, usually in GEO, for long periods of time, up to five years, and then very rapidly moving from one part of GEO to another. We want to create the capabilities and infrastructure to enable more and more businesses in space, and we don't know yet today what those are going to be. We're going to keep looking.
What is the question that the Impulse team internally most debates?
You've been making your rounds on all the podcasts. I see your face everywhere now.
Well, so does that mean you're no more podcasts?
That's okay. Because, you know, for a while, you were a little bit more behind the scenes, and now I feel like you're slowly becoming the co-face of Impulse along with Tom.
Yeah. You know, Tom has more board work to do, mostly. So I get to do this stuff. Yeah. I also am a pretty big believer in tell me what you did, not what you might do. And so we've done a lot more stuff lately. So more to talk about.
How did you end up at the company?
Yeah. So, I met Tom in the fall of 2002, I guess. Yeah, 2002. So, I got an email. I was at Stanford at grad school. I got an email from one of my professors and it said something to the effect of one of the guys from PayPal is starting a rocket company. Does anybody want to apply? And I'm pretty sure I'm the only person who responded to the email. And then a couple weeks later, I did like a phone screen, which I was such an idiot. I didn't know how to interview for jobs or whatever, and I'm pretty sure I took the phone screen like in the car. And mind you, this is like 2002, so I had one of the little flip phones, right, and like no headset. I'm like on the phone driving down University Avenue, like somehow doing a phone screen. I definitely should have not passed the phone screen, but again, I don't think anybody applied. So then a couple weeks later, Tom and Elon were on campus, and so I came and I met with them and did an interview, which I was also certain that I had failed. And then ended up at SpaceX in the early part of 2003. So, I joined in like January of 2003.
What was the role you were interviewing for at the time?
Well, so I don't actually know if I knew what the role was. I think it might have been called propulsion analyst. I'm not sure, but it was just, you know, propulsion department. So at the time, when I interviewed, the propulsion department was Tom, Jeremy Holman, a guy whose name I don't even remember because he left soon after and does not need to be infamous about the fact that he left SpaceX too early. And that was it. And then Tim Buzza was in test, so he was doing a lot of propulsion and stuff, but that was the prop team. And so I was interviewing to be, what, like the next guy. And when I interviewed, I think Tom was trying to figure out like what can this kid do because, you know, it's 2002, so I just turned 24. And I'd never had like a practical engineering job before. And so Tom was asking me all these questions that, in Tom fashion, were about like assembling hardware and testing things. And the closest I'd gotten to that was when I was in the lab in grad school. I almost blew myself up a couple of times. That was the closest I'd gotten to doing anything relevant with hardware. And so anyway, I think we quickly realized like the kid is good with numbers, like stick him in the corner with spreadsheets and figure stuff out to do. And so that's ultimately...
How many people were at SpaceX at the time?
I was the 13th person. So I met pretty much everybody. I think when I interviewed, I interviewed like November or December of 2002 on site at the old El Segundo building, which is now like a fish distribution company or something, I think. And I think at that point there were probably like 10 or 9 people or something when I interviewed. I met pretty much everybody, and again, I did a bunch of boneheaded things in that interview that I shouldn't have — I should not have gotten the job.
Hold on. You're a smart and impressive guy. You know, you don't have to be modest, but why did they hire you? Like, no, in all seriousness, like what was the...
Well, so look, there were no startups in LA, right? El Segundo did not exist, right? So the idea of people working at startups in space was not a thing anybody thought about doing. And it's not like, you know, and I was there later, right? So I can tell you what it was like three months after I got there, and I'm sure it was similar right before I did. It was not like we were — we didn't have candidates falling out of trees. Sure. Right. Like the idea of like, I'm going to go — you're going to go to a space startup? Like, what, are you crazy? You know, it was not a thing lots of people were doing. It was not like — look, people were aware that there was some person named Elon who was at PayPal, but it's not like he was what he is today, right? And so, you know, right now today people are flocking to go work at companies like that. So, you know, it's not me being, you know, self-deprecating. I actually don't think they had that many people apply. Like, literally, I think that's true. Now, when I got there, hopefully I did an okay job, but I think it was uncommon at the time to go to a company like that.
And so, you were at SpaceX for a little bit, but then you left the space industry. So what, I mean, was it just not doing it for you, like, or what was going through your mind? I think, you know, people of course just assume that, you know, 2003, like obviously SpaceX was going to be massively successful. You know, everyone knew that.
No, people didn't know that, right? I mean, at the time we were building Falcon 1, which was a competitor to the Pegasus rocket, which like nobody really talks about very much Pegasus anymore. But the reality is like the mass to orbit and price point was approximately the same as Pegasus, right? And yes, there was a — when you walked into the office, there was a schematic of a giant turbopump on the wall that articulated that one day the company would build something bigger, right? And it was funny because it was literally a single giant turbopump. Like that was the plan. We're going to build one big pump and one big engine, right? And that's obviously not what the company did, but like that was the company, right? Is Falcon 1. And two things kind of happened. One is that I kept asking questions like, 'Hey, why is this the right size rocket? And is $6 million really a good price? And who needs approximately 1,000 kg to low Earth orbit?' And I was more interested in that kind of question, but felt completely unequipped to actually address and answer those questions myself. Like I had no — like where do I even start trying to figure out the answer to these questions? But I was definitely more interested in that.
So one could argue that your questioning and asking these very astute questions at the time has generated hundreds of billions of dollars of enterprise value.
Definitely. Yes, that's definitely what happened. No, I played absolutely no part in any of that.
Hey, honestly, I joke, but I mean, you never know in these types of situations. Like, I mean, things — I mean, this is not the same, but, you know, folks in my company ask me questions all the time where I'm like, wait, I didn't think about it that way, and like this could be a really interesting business.
So, look, like there's a few things that were true at the time. Mars is definitely like the foundational part of the company. Like the whole story about Elon trying to book a rocket to Mars and wanted to get the whatever it was, a little terrarium or whatever he wanted to land there. That was totally the story at the time. But it's not like we had giant pictures of Mars on the wall. It was not like we were wearing those, you know, Occupy Mars or whatever shirts or whatever. Those came like 15 years later. The mantra around Mars was not really a thing at the time. I think the motivation was around like launch is too expensive. We got to figure out how to get launch down, then other things will happen. And Elon was pretty open, you know, publicly and in the company at the time of like, hey, I'm not actually sure what the next industry is that this is going to unlock. But I think there's something after launch prices come down. When I was there, you know, Starlink was not a glimmer in anybody's eye, right? Like we didn't, you know, talk about that at the time. I remember the first time I heard about that was one of the investors who I got close to in like 2012 saying like, hey, I think we're starting to think about working on satellites or something like that, right? So really long time later. So no, I think there was an understanding that, you know, we can attack this launch market, we can be better than the incumbents by dropping the price and getting share. I think there was definitely a knowledge that like pretty early on, like Falcon 1 was not going to be it, right? Like the Falcon 5 was the thing when, you know, it's kind of part of the time I was there. I think maybe we'd switched to nine right as I was leaving or something, but like Falcon 5 was going to be the thing. So there was acknowledgement like Falcon 1 is not it. But that was like thing one that happened. And, you know, basically like that, you know, it's not my job, right? I got other things I need to do. But I was more captivated by those questions. And then the second thing that happened was we — Tom married a guy that he had known from, I think, from TRW, and a great guy, and he joins, and he's like, I don't know, 15 years older than I am roughly at that point, you know, late 30s, early 40s maybe. And hey, you know, nice to meet you, what are you going to work on here? And he described his job, and I went back to my desk and I said, that's my job. [laughter] And I just thought, you know, am I going to work on the same thing over and over and over again for the next 15 years? And I just said, if I'm more interested by this other thing and I'm going to be working on these problems, like probably it's not the right fit.
Yeah. I want to come back to Mars for a second. So Mars was not in the beginning of the company at SpaceX. It wasn't a huge focus or, you know, it wasn't the thing that everyone was talking about. And then of course at some point it became the entire identity of the company, which was like getting to Mars. And now, especially now we've had the IPO last week, like it's pulled back, you know, the narrative...
Yeah, so it's a totally different... So I am curious, like two questions: like what is your perspective on why Elon has pulled back on Mars, and where do you think it fits into the company now?
I think the focus, strategy, and narrative is actually consistent to what it's been in the past, which is they've been really clear: hey, we need the economic engine that funds the development, that pays for going to Mars and that sort of thing. The infrastructure around getting to Mars and building something sustainable on Mars, that's a, you know, hundred, multi-hundred billion dollar, trillion dollar type thing you need to fund, right? And in order to fund the hard technological things to get there, you need to have a business that pays for it. I think there's been a realization that, hey, Starlink is going the way it's going to go, and I'm not an analyst in the telecom space, so I couldn't tell you how much room that has left to run, but that hey, there's another thing here that we could start to invest in. And then, oh by the way, there's probably proving ourselves out on the moon first before getting to Mars is the right thing to do. So I think it's — I don't know how they've handled that story internally, but I do think the logic is consistent from my perspective. And we, for what it's worth, like think about ourselves kind of similarly in that the things that we want to do in space are really challenging, and in order to get there, you need to build really hard things. To build those hard things, you need money, and you can't just get it from investors. You have to get it from a business that's sustainable.
So, let's fast forward to right before you joined Impulse. How did that happen? Was it a phone call? Was it like you were looking?
I was not looking to have a job, to be clear. Like, I'm not good at having a boss. That's the other thing I think I realized pretty quickly at SpaceX is I'm — I don't know. I'm just not good at that. And so, you know, I started a company after business school. I started another company after that one. And then I ended up at Facebook for a little while after my second company was acquired. And was not real good at having a boss there. And so when I left, I was clear, hey, I'm going to go start something else. And I spent probably nine months like looking at different concepts. I looked at some stuff I thought was really cool in water desalination technology I thought would be interesting. I looked at some stuff in robotics that is now interesting enough, like all three and a half years later happening, but I was kind of not the right guy to do those things. Looked at some stuff in biomedical that I thought would be pretty interesting, but again, like the idea of wearing a lab coat every day is not me. So then I was starting to look at stuff in space again, because I had largely ignored the sector for almost 20 years, but I was aware that more stuff was happening. Hey, SpaceX is finally like actually really successful, and there's something happening in the space market that I kind of didn't follow. And so I thought, okay, well, what's here? You know, what is the commercial market? What is the market for space? And I know a bunch of founders in the segment, like, you know, John Gimmark from Astronis and I were at Stanford together, Johnny Dyer and I were from Muon and were at Stanford together, and known those guys for, you know, 20 years. And I went and I saw each of them and I said, hey, you know, I can see that there's some telecom stuff, there's some defense stuff, there's kind of a little NASA. Like, what else? You know, what else is going on? And both of them said like, 'No, that's it. There's no fourth thing. Those are the three things.' I said, 'Okay, well, so I guess if you have a business, you have to have some play hopefully across all of those if you can.' And I was doing this kind of research in concert a little bit with my friend Scott Nolan from Founders Fund. Scott's now general partner, but Scott was at SpaceX with me and Tom. Known Scott for almost 25 years. And he said, 'Well, if you're going to look at space stuff again, you should probably go talk to Tom,' because we just gave him a whole bunch of money. And they had done the seed round at Impulse. So, I called up Tom and said, 'Hey, what are you working on?' And he explained that we're going to fly this mirror thing. He kind of walked me through that a little bit, and he just kind of lit up when he started talking about Helios. I'm like, 'Okay, well, you seem like you really have something there. So, let me understand this a little bit better.'
So this was probably — okay, so this is three years ago, 2023, like, I don't know, March, April, something like that.
By the way, how was that reunion with Tom? Obviously, you'd worked together many years before that. And then all of a sudden, like — sorry, I didn't mean to put so much of an emphasis on 'many'. But had you guys been in touch, or were you really just kind of coming back together for the opportunity?
You know, off and on. I think we'd seen each other at some things. I'd pop by the office a couple of times. You know, every few years I'd come by and say hi to a bunch of people because I kept in touch with a surprising number of people that just stayed at SpaceX for a really long time. Right. And so I would come by and see folks, and so it's not like we'd been out of touch for 20 years. And, you know, Tom's the same guy. He's more — I guess, but, you know, he's still super, super down to earth and focused on the work and level-headed. And so it was great to — it just felt good to reunite and talk to him. And then, you know, the more we had more conversations, it more was kind of clear like, hey, that, you know, he's obviously got the technical part just locked down, right? But as far as the company was, you know, 35, 40 people at that point, you know, how do we think about growing the business? How do we think about having a business? Everything budgeting and planning and which products we should work on and why. That stuff is just, you know, less interesting to him, more interesting to me. And so I came down, I met some of the team, and I said, 'Tom, I think I can help with like, you know, a couple of things here and there. And I think what would help me is that I'm trying to learn what's going on in space again because I'm probably going to go do my own thing. And what would help you is that you get, you know, pretty cheap labor for a few months, and I could see if I can help the company a little bit.' And the plan was I would work for a couple months and then peace out and go do my own thing. And about, I think probably like six weeks into it, I came into Tom's office and I just said, 'Tom, this feels good. I don't know where this is going. I'm not sure where this company's going, but, you know, working with you again, being around the team that you've been able to bring in here, it's like this is — I like this feeling. So, do you mind if I stick around?' And so he's like, 'All right, well, what are we going to call you?' I was like, 'I don't know, man. Just put a C in front of something.' And he's like, 'All right, COO.' I'm like, 'Cool, great.' And then the next day he comes in, he's like, 'I was thinking about it last night. How about CFO?' I'm like, 'Great, fine.' And so we stuck with CFO for a little while, and we kept having this problem where I'd come into like a customer meeting and they're like, 'Why is the CFO here?' You know, they were just super confused by this title. I'm like, 'All right, Tom, this is confusing people. We got to pick a different title.' And I was like, 'I don't know. How about president?' It's like, 'Great.' So with president, but my job hasn't changed. It's just been the same basically since the day I walked in the door. Because we finagled the title a couple times.
So you mentioned earlier that, like, you know, having a boss isn't something you've really wanted. Now, Tom is a very impressive person to say the least, right, as you know, given his background and his technical expertise. And, you know, you guys have this conversation, you come in, you're thinking of joining the company, or at this point you have joined the business. You two have very different personalities and two different skill sets. Maybe talk to me a little bit about that dynamic. And why Tom's the person that you feel like you can work with and for.
I think your first boss is kind of like your first car, right? It is like you learn what you like based on it. It shapes your opinion to some extent. And Tom is the same as a manager as he was, you know, 25 years ago, which is Tom expects a lot from the people that work for him, but is very empowering to say, 'Hey, let's understand, hey, where's the big hill that we need to climb, and then, okay, go ahead and get it. Let me know how you did.' He's not the kind of guy who's going to be breathing down your neck, you know, wanting a status update in 30 seconds and creating a bunch of work for you to keep him informed. You know, he assumes you will keep him informed, right? But is not going to take your time in that way. He's very focused on kind of long-term goals, and so he does not whipsaw you on short-term priorities over and over again. I think, you know, he's not really worried about his perception, right? Like I think he's got a pretty good reputation and a great reputation with our investors. And so it's not like I have to help him manage his, you know, perception in the market, which is the thing you get with bosses sometimes and making your boss look good. He doesn't need any help looking good. And so, you know, I think coming into it, he was the same person in those regards as he was a long time ago. Now, obviously, when I was a, you know, 24-year-old kid, we didn't know anything about anything — well, different than today. But I think the working relationship is quite similar. And so I think what I've taken from — probably took from him, frankly, and take to my everyday is I want to — what I find fulfilling is I get to wake up every day, think about what's the most important thing I could possibly do for the company, and then go do that. And I like when I get to say what is the most important thing, right? It's not because I trust my opinion more, but just because that's what I kind of feel most enthusiastic about.
What was the vision of the company that Tom had presented to you even just a few years ago, and has that evolved much today?
I think that's pretty consistent too in that, you know, Tom obviously played a big part in the evolution of getting access to space, right? And saw that the consistency of that access and the cost of that access and to some extent the price of that access, which we've talked about before, have dramatically changed. And I think understanding that that problem has not only made tremendous progress recently but also is on a path to being even further solved with things like Starship led him to think, okay, well, you know, what's next? Moving things around space should be the thing. I think there was probably a little more emphasis on Starship in the past than maybe there is today. I think the kind of reality of the pace and timing of commercial Starship is really set into the industry to some extent. And so there's maybe a little bit more of that in the business plan of like when Starship, you know, I think that's probably what's changed. It's more of when Starship, but that might be a while, right? Sort of in there. I think there was an understanding that modern launch vehicles are really optimized around LEO to a large extent. That's consistent, and that's why you see things like Helios to, you know, get access to GEO and further beyond. So I think those are pretty close to the same. I think as the business has matured, as the company's matured, it allows our vision to get a little bit bigger. You know, we're even more focused on, okay, the moon is kind of the thing, right? We really want to help with access to the moon. And I think whereas before we were just like, we want to do more cool stuff in space, period. I think that's allowed us to narrow down a little bit.
So current product set, you have Mira, Helios, Caravan. Can you walk through each of those and what's the end market that they're serving?
Yeah, you know, Mira is about precision maneuvering. It's a high-thrust, high-delta-V vehicle. There are applications in civil space and to a lesser extent in commercial space, but a lot of them are in defense. So we've announced contracts with Space Force and a partnership with Anduril. Somewhere over my right shoulder there's like four or five of them being assembled right now to meet the backlog that we have. So we've got a lot of work in that regard. It's a kind of — as far as size, and you had a very knowledgeable viewership base, so I can go a little more geeky here, but it's — so, you know, it's 300 kg wet and holds payloads on the top. Typical payloads will be things like optical payloads. And the mission set is really about loitering usually in GEO for long periods of time, up to five years, and then very rapidly moving from one part of GEO to another. And the reason you need to move rapidly is that if you want to characterize some new asset that's in space — China launches something, Russia launches something — our ability to understand that asset from the ground is kind of de minimis as far as understanding really what it is. We know where it is. So we know if it's moving, but, you know, can you get a good picture of it? Understand what is that thing they launched? Can't do that unless you're in space. And GEO is just so ponderously big that you really need to move quickly towards something, get closer to it to take a good picture. So Mira is kind of about that precise maneuvering from one part of GEO to another, usually for national security applications. Helios is a little broader in the markets it targets. So we're starting mostly with the commercial market there, and the commercial market for Helios is really mostly your traditional legacy comsat operators and some up-and-coming comsat operators, but people who want to operate communication satellites in GEO. So basically everybody that's not Starlink, right, in the comms market. And for those folks, it provides them access to GEO in under a day, whereas right now they typically go through a transfer orbit, takes six, eight, ten months to get there. Time is money. That value of that time can be, you know, $50 million plus. And so it kind of shaves that, allows them to get there faster. On the government side, both the Space Force and NASA typically will mandate a heavy launch vehicle to get direct access to wherever they're trying to go. And the challenge with those is that there's not very many of those. You know, Falcon Heavy is really the only one that flies consistently. You know, Vulcan's grounded still, and Blue is grounded still. And so there's really not a lot of options to get direct access to GEO for those applications. This provides another one. It's also, we think, considerably more cost-effective than those heavy launch vehicles. But that's kind of the market for those. And then Caravan is a kind of derivation of the Helios product where it provides a rideshare service for smaller payloads to GEO, which is kind of an interesting trend in the industry that — it was weird how this came about, actually, because we kept talking to these customers who — or potential customers who would say, 'Hey, I've got this, you know, 500 kg satellite that needs to go to GEO,' and we'd, you know, have the conversation and we'd ask, 'How are you getting it there?' And then we'd get an answer, but we'd leave the room and have a conversation. We'd say, that didn't sound like a real plan. Sounds like there — that's not a very good option. Then there's some — like, every once in a while there's a GEO rideshare opportunity. Every once in a while there's a GTO rideshare opportunity, but these are like not common occurrences. They're things that are the exception, not the rule. So we kept hearing this, and we heard it from multiple different parties. And so we thought, okay, these folks need help. There needs to be some way to get them to GEO because what I think they're trying to do — and this is folks like Astranis — are trying to go down this path where satellites get cheaper, they get smaller, which has happened very much in LEO but has not happened in GEO. So we were working on — we kept having these conversations. We thought, okay, let's go to the market and see if the market comes back and says, yes, we want this service. And luckily the answer has been a resounding yes. The first one sold out. We have two more in 2028. They're selling like hotcakes. So it looks like a good offering. Looks like our price is probably too low because they're selling too fast, but it seems like it fills a hole in the market.
So, I want to pressure test this assumption about how big the GEO market is, right? Because historically it's been declining. It's been flat to declining. I'm assuming you have a perspective and a view that that's changing. But what is — I mean, we could talk a little bit about the story that you recently told on Mira and how, you know, the original model was around arbing the difference between a rideshare versus an Electron rocket and how that all went. But ultimately, your conclusion there was, hey, this market, this tug market for LEO rideshare, is not like that big of a market. So what then convinced you to say, okay, well, actually GEO is a much bigger market even though most of the constellations that are being built are LEO constellations?
Yeah. Yeah, we looked at this from starting in the commercial space and said, okay, well, how many potential commercial launches are there per year? And when we looked at it, it was mostly in the monolithic geocomsat market, right? The large four-ton-ish spacecraft that folks have launched traditionally, and there's like mid to high single digits per year best case of those. And then we looked at the national security market, which is probably like almost 2x that. And we got reasonable signal from people that we trust that the demand is actually probably even higher than that. It's just that there's not actually supply of those heavy launch vehicles. And then, you know, you could track what's going on with NASA with outer planets and moon and stuff like that. So, you know, we convinced ourselves, I think, that the total potential market for Helios was something like 20 launches per year, excluding China, Russia, but, you know, allied nations, US demand, something like 20 launches per year. And that's not that big. And, you know, we came into it knowing, hey, that's maybe not that big, but if we actually do improve the economics, then there should be some elasticity of demand there and that market should grow somewhat. I think we didn't convince ourselves it's going to grow 10x or anything like that. But I think one of the things that I think we believe is true that's maybe a little different than some industry narratives or public companies that have to say this sort of thing is that I actually don't think there's that many really strong business opportunities in the space segment, which I'm sorry, investors or whatever. There's — oh, no, I know. Doom and gloom. Well, but by that I mean where the market is, you know, a reasonable size, you know, and hundred million, right? Where your gross margin profile could be attractive, right? You know, 30, 40, 50% gross margins, right? Where your working capital dynamics are decent. You don't have to, you know, employ some crazy strategy around that. I just think there's not — you know, there's some, right? But there's not that many where the customers are willing to pay you today. I guess that's the last thing, right? Like you can describe what some of these future opportunities might be. But where right now, literally today, you can go get deposits from customers on these things, there's not that many of those. And so when you find one that you feel like you can uniquely well serve where you do have some barriers that are going to be hard for other people to get over, for us we said, okay, well, we're going to jump at that. And at the time, you know, this was the one that we'd identified, right, for the company. We didn't have a robust thesis around Mira and national security space. We didn't have a robust thesis around where NASA might be with the moon base. Right, this was the one thing where we said, okay, it's, you know, maybe this is not big enough for our grand ambitions for the future of the company, but it's big enough to start. And if we can start with this and start getting some cash flow from this and start getting positive gross margins for this, then we can find, okay, what's the next one? Because I think in this segment, waiting till you have the one and only big one is a thing where you just might wait too long. And the capital markets are fantastic for space right now. I don't think they've ever been better, right? But I've been around long enough to know that that story can change. I don't have any prediction when it will change or how it will change, and I don't want it to change, but I wanted to make sure that if it did, we had a business that made sense that we could fund the company on that business.
No, I think it has changed pretty meaningfully, right? Because you had the 2020 to 2022 sort of ZERP era financing bubble on the private side. Obviously you had the SPAC side, and at the time a lot of stuff was getting funded at very large scales. I mean, there were many launch companies that had raised close to a billion dollars apiece. And, you know, obviously they didn't work, but I think it's starting to become very clear that there is a business model, there's actual revenue and profit to generate in space. And I do think that the investors that are getting involved in the industry are, on average, much more thoughtful, is what I'll say. Right, so you do have a lot more institutional players that have like a long track record and legacy. And so I do think it has changed for the better. And I think, you know, maybe I'll go as far as to say I think Pandora's box has opened and I think this is going to become, ex-SpaceX, a real investable kind of...
How much of that do you think — I'll interview you — how much of that do you think is just education, right? Because I think when in the ZERP and the SPAC and all of that, you had a lot of people who had never considered space. Space is complicated by definition. How much of it is just, okay, now people have learned through a cycle and have educated themselves?
I think a lot of it is that. I also think that like when you look back at everything, you know, people tend to — I mean, I'm guilty of this — tend to just point back at the SPAC era and say, 'Oh, well, you know, this was like not great for the space industry and like, you know, the ZERP era.' But like a lot of other industries had the same dynamic, right? Energy, clean energy, like there's so — there's a lot of other industries that saw lots of capital get like totally eviscerated over those few years. So it's not just specific to space. It's really just, you know, a lot of these hardware-centric businesses that, you know, there was some meaningful innovation happening but the business models weren't quite clicking yet. So I do think, yeah, I think to your point, education has been a big part of it.
I want to go back to Caravan for just a second. So the Caravan thesis is centered around smaller GEO satellites, right? And I'm curious to get your perspective on the trend within industry of larger-scale satellites. Right. Going from CubeSats to now much larger satellites. And because in GEO your power requirements are much more significant, or can be depending on the use case. Everything gets — your propulsion needs are much more significant. Hence, you know, why you guys exist. But what do you think of that trend of larger satellites, right? And I'm thinking of, you know, just down the road there's a company doing that. And, you know, you do have Starship, and we'll talk about the commercial launch market as it relates to Starship, but you also have Blue Origin and New Glenn that will, you know, at some point be operational at cadence. So, yeah. What do you think of that dynamic?
I think what I've noticed, and I don't know that I'm an expert in any of this, but what I've noticed is that the communications industry, which is where a lot of this is, and we can talk about AI and data centers in a second, but a lot of the different sizes and scales of spacecraft are to meet different use cases in the communications market. And I think traditionally speaking, you know, power has correlated with bandwidth, which is correlated with revenue, which is, you know, that gets the economics of your spacecraft. I think that with the advent of Starlink, people are trying to find their niches of service that they can defend from Starlink, right? Because Starlink is widely deployed and relatively low cost and ubiquitous and great service. But I think you're looking at players that are trying to figure out, okay, what are the pockets of demand that Starlink does not serve well. I think one of the ones that's come up that's been quite consistent is a sort of, you know, nation-state satellites, right? Of like, hey, I'm a country, I want to have my own dedicated secure comms. And the question then is, okay, well, how much comms do you need in that regard, right? Do you need, you know, 500 gigabits per second from the largest Viasat satellite ever deployed, or do you need like 50 or whatever it is from some of these smaller ones? And I think a lot of the niches that exist are actually these smaller bandwidth requirements, so they don't need to be, you know, 100 kilowatts of power to meet that market demand, which is different than saying that there's not a market for the larger ones. I'm sure there is, right? But I think a lot of the demand that we've seen on the Caravan side, you know, because we're looking, right, is in that smaller spacecraft that is serving some particular niche of like emergency responder services in this area, right? Where there's an SLA that maybe Starlink doesn't meet for some reason, where there's a customer that would prefer not to be a SpaceX customer for some reason, right? These are the pockets and niches of demand. I think if I had to guess of somebody sort of economically competing with Starlink in RF, I think probably higher power is the direction to go, is my guess. I've never, you know, run the trade or whatever, but it just seems like it's hard to imagine that those small satellites are actually more economical than the larger ones when it comes to your cost per bit, something like that. The question is just, are there customers for those larger power satellites for the number of bits that they push? And I don't know. I'm just not steeped enough in the comms space to know. And then certainly it seems like on the compute side, it seems like bigger is better there. But again, despite the fact that I was once a thermal engineer, I don't really understand that whole premise either.
So let's go back to Mira for a second. So we don't need to get into all of the details here. You've talked about it at length, but at some point, you know, Mira is your first product. We realized very quickly, wait, the economics here don't necessarily work to build us into a scalable business. The demand's not there. You have working capital issues. Like, what was the conversation internally? Were you guys like, 'Oh, we're screwed'? Or were you like, 'Okay, we think there's this other business that, you know, we should pursue, like GEO'? But what were those conversations internally? And how did you guys make that sort of pivot?
I think, you know, whenever I meet somebody who's thinking about starting a company, I always say, do a lot of work before you start the company to convince yourself that this is the thing you want to work on, because once you do and once you take other people's capital, you will no longer be able to rationally evaluate whether or not you have a good idea. You will be completely irrational at that point. And you will hang on by the skin of your fingernails to keep that business going and alive even if the world is telling you this is no longer actually a good idea, like you're wrong, you won't hear it. And so I think that there were definitely times when I think people were just like, you know, what do you mean? We've been talking about this for nine months, and, you know, all these companies went public based on the fact that there's this space tug market, and we got other companies who are still in the market who are yelling about how, you know, hosting little payloads and zooming around and doing space tug stuff is the right business. And so there was definitely some hesitancy to that, and it was, I think, counter to the market narrative. Certainly I think it really helped that we could then paint a really clear picture internally about the economics of Helios and the potential margin profile and the return on investment and all that stuff. It was like a very, very stark contrast of like...
This thing is like hurts in these five ways and this thing is like actually pretty awesome. Oh, by the way, it'll also help us go to the moon, you know, that sort of thing was was pretty helpful. So it was not a, I don't, it was not particularly contentious, you know, and certainly Tom doesn't really operate that way. He's just like, all right, show me the facts, show me the data, like, all right, let's go and move on. So it wasn't that hard, but there were some folks who had been, you know, fighting for that use case that I think were disappointed.
Yeah, so you call Mera, or the company calls Mera, the most maneuverable spacecraft on orbit. What does that mean?
Yeah, that's what that means. So...
It's on your website, by the way.
It's on the website. Okay, there you go.
I don't know if you're hearing that for the first time. [laughter]
Definitely not hearing that for the first time. Um, you know, so Mera is a fairly high thrust vehicle for its size, right? So most vehicles like this will use hydrazine. I think we'll have, if they don't use hydrazine, we'll have like very much higher minimum impulse bits, much harder to pulse the engines. So the combination of high thrust, high delta V, and the ability to kind of pulse very rapidly off-sear makes it very, very highly maneuverable, high precision.
Um, you know, I think the nuance that I like that, you know, doesn't fit for a soundbite on the website is that, um, you know, people have obviously made six-pound thrusters forever, right, in space. Um, I think the challenge is that the, you know, dominant way of doing that is with hydrazine thrusters, which are, um, hydrazine is a deadly toxic propellant, um, which makes it very expensive to handle, makes it very expensive to do operations and testing and qualification. Um, so the combination that I actually like is the maneuverability, but then the, uh, relatively speaking lower cost that comes from using nitrous oxide and ethane, which are room temperature storeable and not toxic and air breathable, and we test them literally right here in the office. And so it's that, you know, precision at the right price that I think is the combination the customer really likes. And, you know, talking about pricing, your website's no fun, but that's the reality, is we've been able to make these propellants work, you know, almost as well as hydrazine, but for a fraction of the cost.
Yeah. Why does the government care about this?
Why does the government care about this? Yeah. I think the government's done a really good job of understanding that they need to proliferate things in space. So traditionally we've talked about building these, you know, monolithic spacecraft on the government side, and traditionally we've been able to get away with having these kind of monolithic spacecraft in MEO and GEO basically undefended. That's changed, and to cover the ground, frankly, of MEO and GEO, I think you need some number of spacecraft, not as many as you do in LEO. It's just impossible to do that many. I mean, the volume between the upper end of LEO and where we operate in GEO is literally a million times bigger than the volume of LEO, a million times, right? So you can't have that same proliferation strategy, but you do need to have assets there. And in order to have assets there, you need to be relatively cost effective. Again, the traditional way of solving this is, you know, a small number of very expensive spacecraft. That's what we've seen in the past from the very few programs that are out there that talk about space mobility and space defense. But I think the government understands that, you know, we need more and more of these things.
What other companies that you're tracking are doing this type of spacecraft?
Well, certainly most of the primes work on stuff. I mean, I think you've seen, like, a good example is the Andromeda program. The IDIQ is public. You've got like a dozen different people on there, and I think three or four of them are the primes. That's a good example of the type of thing we've seen. Pretty much any government thing we're working on, we'll end up seeing the primes. We'll typically see True Anomaly being in a lot of the stuff that we work on. I think they've got a great understanding of the space defense market, and so they are often on these programs. Those are the main ones. And then there's obviously a few more who work on mobility things who I think are a little further behind as far as deploying assets.
What do you think the key advantage is? Like, how do you win, I guess? Is it propulsion? Is it something else? Like, what is the key factor that allows a Mera to be more successful, more maneuverable? Yeah.
I mean, certainly we walk in the door with an understood advantage in propulsion, right? I mean, you have Tom as the founder and CEO. Like, you walk in the door and say, 'Hey, this thruster is going to work,' and they say, 'Yep, I believe it is,' right? And so that...
Have you had anyone in any conversation ever say like, 'I don't know. I'm not sure. I'm not sure I trust that guy.' [laughter]
Um, no. No. That's a pretty big advantage. It is very, very hard to push back on that, which we very much enjoy that advantage.
But then the company and the products are more than that, right? These are spacecraft that we're building essentially every part of ourselves. You know, we're vertically integrated down to winding solenoid valves and building radios and antennas and GPS receivers. We need to be good at all of that stuff, and that's really hard.
I think we've taken the approach, and this is a different approach than most of the other folks in this market, of being vertically integrated and not being an integrator. And that means that we need a breadth of technical talent. That's really hard. Means we need production talent across everything from winding composites to building those valves to, you know, qualifying thrusters. That's really hard. And so being able to do all of that well produces a better system, we think, because you can optimize the whole system if you're controlling all the parts of the stack, and then allows you to have a better cost structure, which allows you probably to offer a better price but also to have better gross margins. Yeah.
And then gross margins are important because that gets to feed all the mouths here and facilities here. So it's really the whole package of, you know, starting with the reason we start with propulsion is because that's what we know we can sell well, right? But then that allows us to build the system around it. We've got to be good at every part of it.
How exposed are our GEO assets today? And what I'll caveat is I think if you fast forward five to ten years, I think it's very easy to make the argument that they will be very exposed. But today, like, how much capability do adversaries have to target a satellite that you've said before looks like one pixel on an image?
You look in the public domain, right? I'm not saying anything that's out of school here. You can find in the news, if you're a space nerd and look for it, launches that China is doing where they're launching assets to GEO and then looking at rendezvous and proximity operations that they do. And they, late last year, I think, did a close approach of a, I forget if it was an intel sat or a weather satellite, that they did a close approach and inspection loops and were taking a look at it. And I mean, they were obviously, you know, sniffing comms to try and see if they could break the RF. They're obviously taking a look at it to characterize it, to see how they would take that asset out if they needed to. Then they've done, again, public sphere, they've done things like what we assume is a refueling and docking action in GEO that shows an ability to refuel assets, which is important for new deliverability, but also shows an ability to get extremely close and touch an asset in GEO, which is them demonstrating, hey, we could do this, right, to other assets, cooperative or uncooperative.
I don't know what the numbers are, but I think it's probably true to say that they're launching more assets to GEO than we are right now. I think the general market, in part because we're so enthusiastic about SpaceX, probably discounts just how massive the investment China is making into their launch infrastructure there. And, you know, I had the fortune or misfortune of starting a solar company in 2006 and watching China ramp their solar investment and capacity there in the late 2000s and early teens, and they just clobbered everybody, right? Because they outinvested everyone in the space. And they're doing the same thing in launch right now. And yes, perhaps they are not there yet. And we can look disparagingly at their different technologies that they're using and how much they are or are not copying what we do here. But the reality is that when they show that level of dedication to an industry, they absolutely will follow through on it. And so it's a thing we should take seriously here.
When you look across the portfolio today, Mera versus Helios versus Caravan as a service, what is the biggest market in your mind?
Well, I think, you know, the commercial side, we've talked about the rough size of that market, right? So it's not a particularly big one. I think it's also true, you know, without knowing anything about the company, that the United States government is by far and away the biggest payer in the space industry, far and away. And so when we look at, you know, us as a company, we want to have a stake in all of those spaces. I think you need to look no further than just the budgets, right, of understanding NASA's approximately $25 billion budget that is flat, right? And while they're shifting their mix from insourced to outsourced, it's not ever been sort of, you know, wholly outsourced, right? So only some of that is going outside. Space Force going from $17 billion a few years ago to now the proposal was for 71, and there's another thing in the news today that's going to be 50-some, or I don't know, I can't follow all the budget shenanigans, but the reality is it's, you know, somewhere between two and three times what NASA is. So I think you can kind of rough out from that, you know, where our business likely is going to be. I think for us, you know, the thing we hold very true to ourselves, it's not like a marketing BS for investors, is like we didn't totally know what the business was going to be three years ago. Our perspective on it is different than it was two years ago or one year ago.
So, what are we going to know in a year? Yeah. And I think the thing that we fall back on is we want to create the capabilities and infrastructure to enable more and more businesses in space. And we don't know yet today what those are going to be.
We're going to keep looking. What's the nature of the Anduril partnership?
Yeah, so it's a close partnership in go-to-market in space defense. I think they're very good at understanding the government customer in a way that I think I am not. We increasingly have some people on the team who are, but I am not one of those people. And they've shown an ability to go disrupt primes in other segments of defense, Army and Air Force and the Navy. And we share a bunch of investors, and so we kind of have some shared DNA. And a couple of years ago, they said, 'Hey, we're thinking about getting into this space market in a more robust way. Should we talk about working together?' And I think what we found very quickly is that we operate on very similar timescales. We're high sense of urgency in all we do. We communicate in much the same way, very openly and transparently, not through walls of NDAs and lawyers and things like that. And so we've found a sort of like a cultural fit of how we might operate together. And then from a strategic perspective, I think they luckily recognized that we bring some challenging things to the table that would be hard to replicate. They've been open and we've been open, and they have a history of acquiring small companies and then, you know, building up that capability and capacity internally, of starting from something that's a nucleus or, you know, raw materials or whatever of a company and then, you know, really building that up to a full-blown operation. I think they recognize that doing that in what we do would be quite challenging and that the opportunities are right now and they didn't necessarily have time to wait to do that. And then on our side, you know, same thing.
So there is a scenario that there could be a closer partnership. Let's just call it that.
You know, you don't ever rule anything out in this segment, right? I think we have a lot more that we want to do than defense, right? I mean, I think we've got a big... it will be a massive failure with this company if we do not have a substantial role in helping NASA on the moon, we will consider that we failed at something. So I think to that extent, you know, we want to stay focused on being diversified.
How much is the moon and Mars part of the day-to-day discussions here?
Yeah, I mean, right now, very much day-to-day. There's a solicitation out for the new patch of entrance for the Eclipse program, trying to figure out if we can help with that. We were clear late last fall about sort of our ambitions to help with it. And I think we were really fortunate that the right guy got a seat and decided that the moon was the thing to do. And then what we saw in the Moonbase proposal was frankly a lot of our pitch to them was based on things that they had told us, right? So we heard those things again in the Moonbase launch a couple of months ago. So now we're chomping at the bit to help. You know, we've got the cornerstone of that lander would be the Riel engine, which we started developing, the first thing Tom did in the company, but it started developing again last summer. And that's something we've been firing since last December and working really hard on. We believe that the tank and infrastructure would be kind of a derivative of what we do for Helios. So a lot of the same technologies around friction welding and dome machining would be useful there. We believe we can transition a lot of the avionics components over to a lander. So things like antennas and radios, and then of course any lander we do would sit on top of Helios as being the thing that would drive even more mass to the moon. So even without sort of being on the program officially, we're working on a lot of the pieces and parts. And what we've told NASA pretty clearly is, hey, we're going to continue doing that no matter what. It's stuff that's really, really bespoke to, you know, literally could just use for a moon lander. But we want to see that, you know, you want us as part of this for us to start investing more and more on that, which we're excited to, but we just want to make sure we fit in the plans.
Yeah. So I want to talk about Starship for a second. And you recently made comments about companies that have business models that are predicated on that, that are misguided. Starship... and I will tell you, when I heard that conversation, I remember, like, I think I got out of my seat thinking, like, wait a minute, I completely agree with that, and I'm glad that you're saying it so forcefully. Okay, so to take a step back, what you'd said was that there's many, many companies, many pitch decks out there that are all talking about and have built into their business model that when launch gets to hundreds of dollars per kilogram, i.e., you know, via Starship, that this business is going to make sense and, you know, we're going to be able to do this at this cost, you know, etc., etc. So maybe tell me a little bit about why you think what you think.
Well, so, okay, there's a couple things. One is that, you know, Elon's been very public about what he expects the cost of Starship to be, right? Cost. And I think there's a... we're in an industry where people want to believe that space is going to be a big thing. We're all in this because we grew up building model rockets or rockets with Legos or flying Estes rockets or whatever they're called. So we really want this to all work and want this to happen. And then we hear data that kind of reinforces our preconception that this is going to be a thing, and we just latch on that and tune everything else out, right? And so there's a lot of hearing the company SpaceX talk about cost and presuming what that means for price. I do not think that there are many examples of people booking rides on Starships today. I know that there are some examples out there where some companies have announced that they have a ride on Starship, and they probably booked that ride like three, four, five years ago. But I do not believe that there are many transactions happening in the market, and certainly SpaceX is a public company, probably would talk about them if there were, where people are saying, like, okay, I booked my whole full Starship...
