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Transcript of our conversation with Topher Haddad:
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If someone had like a more simple use case where it was like, hey, they can take, you know, microsat off the off the shelf and all they're doing is kind of software on top of it. Like, what is the least amount of money and the least amount of time, do you think, to get to space, like based on, like today's economics?
00:00:14:16 - 00:00:17:21
I think you could probably do it in a few months.
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few months,
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I think at the at the smallest scale.
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I think maybe two. If I could do it a few months, then I know me, or I could do it in a few months.
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small satellite. There's, there's a lot of suppliers now that have stuff like ready on the shelf, put some software on it, find a slot on a SpaceX rocket and get up there. But it's very much a spectrum on like, yeah, what's the capability, what's the size? You know what. What are you actually trying
00:00:43:00 - 00:00:45:08
Well, how much would it cost?
00:00:45:08 - 00:00:50:08
at the, in the minimum maybe, maybe a million bucks.
00:00:50:08 - 00:00:54:18
Wow. A million bucks in a few months. And week two could have something in space that's got to go.
00:00:54:18 - 00:00:55:21
Yeah. Yeah.
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Hi everyone. Welcome to the Founders and Arms podcast with me. Immad Akhund co founder and CEO of Mercury
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And I'm Raj Suri, co-founder of Lima & Tribe. And today we have with us Topher Haddad. Welcome. Topher, co-founder and CEO of Albedo Is that how you pronounce it Albedo
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Albedo Tell us some more about albedo.
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We build satellites that fly very low in this new orbit called V0. It's about twice as close to the Earth as today's low satellites fly. And that enables us to capture imagery at a resolution that previously you could only get from planes or drones commercially or from, classified national systems.
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How I is a.
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It's about. We'll fly at 275km. The regime of Leo is probably in kind of a 200 to 400 kilometer range.
00:01:47:23 - 00:01:51:13
And what do I guess for context, what do the Starlink satellites flier?
00:01:51:15 - 00:02:05:19
Most of them, I think, are around 450km. They are starting to fly lower. And they're definitely, in the scheme of a lot of the Leo satellites. They're on the lower end of that. BF 450 is about, I think, where most of em fly.
00:02:05:19 - 00:02:16:07
one quick, quick question. What are the different layers of the cake? So you say Leo is the low Earth orbit? V Leo is where you guys fly. And then is that below? That is that just planes?
00:02:16:17 - 00:02:36:22
Yeah. Way below that would be planes. Yeah. Leo is still SpaceX. It's kind of getting into the kind of stratospheric regime if you go really low and B Leo, but and then there's, above that, there's meo medium Earth orbit. That's where the GPS satellites fly way higher than Leo. And then the farthest orbit that we put satellites in is called geo.
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That's where a lot of communication satellites fly, because that's the orbit where you can hover over one spot on Earth indefinitely. It's about 70 times further away than Leo.
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I'll cook it to. No.
00:02:49:19 - 00:03:09:16
Yeah, I was just saying I'm an investor, and, beta, congrats on all the progress of, You know, one of the interesting elements is you're getting actual atmospheric drag where you're flying these satellites, right? So how are you dealing with, like hitting, I guess mostly hydrogen elements up there. I don't know what's. What do you head up there?
00:03:09:16 - 00:03:11:07
But, Yeah.
00:03:11:11 - 00:03:29:19
Yeah. So the drag is a big reason why. Why satellites haven't really fun. And v Leo before. There's been a few research missions. Actually, the early reconnaissance satellites, Corona and Gambit and others that have been declassified flew in V Leo. Partially just because the rockets at that time in the 60s couldn't take them much farther.
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But the drag is a big
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piece, of it being a different environment and why we, design a very specific type of satellite for it.
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There's also atomic oxygen, which is very prevalent there, in different than Leo. That makes traditional satellite materials degrade much more quickly. So that's a unique part of it. And then also the speeds of are really key in driving our architecture to be able to point very precisely and, and do, a few different things in kind of the, the precision pointing regime from a drag perspective.
00:04:02:23 - 00:04:21:10
Our satellites are pretty big compared to a lot of the new startups out there today. They're building smaller satellites and being heavy in V Leo. As long as you have a slick cross-sectional area. So like a small surface area relatively, that's going into the kind of into the wind as it's orbiting, that helps a lot with the drag and
00:04:22:12 - 00:04:34:07
So you'd like to have a aerodynamically efficient kind of, like, footprint. Well. Let's go. Yeah, because normally satellites look like bricks, right? Like you don't have to care about, like, aerodynamics at all.
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And they normally deploy out solar arrays. And so you see these big kind of appendages hanging off. We keep our solar arrays body mounted. So it is actually more like a brick. It's got
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some specific geometry that we've
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designed that we we call the bead ogan. It's kind of like a hexagon type of thing that helps the coefficient of drag.
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But there's a second order effects that come with that too, because satellites deploy out their solar arrays because you can generate a lot more power. That way we end up very power constrained, even though the whole thing is covered in solar arrays. And we we use kind of a top shelf high efficiency cells. But yeah, a lot of that, plus the propulsion we have on board and the dynamics software we have to detect when this the density, the atmosphere swells from these solar storms that that will occur.
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There's a lot of, that that's kind of how we, compensate for the drag.
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what do you do if the density swells?
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We turn on the thrusters for a lot longer. So we we so imaging missions, imaging satellite missions, tend to only image like 5 to 15% of the time of, of it orbiting. And then you have time where you're downloading data, you have time when you're doing calibrations, but it leaves a lot of time to just turn on the thrusters and do the orbit maintenance to stay up.
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And so when the when we detect these solar flares, we basically trigger into this different mode we call protect mode that turns on the thrusters for a lot longer during that orbit and changes the attitude or the orientation of the satellite to be much more, have a, have a better kind of coefficient of drag.
00:06:06:01 - 00:06:12:07
So if you've got thrusters on there, presumably you just run out of fuel eventually, right? Like, what's the lifetime of these things?
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On average, they'll be about five years. It's very dependent on this 11 year cycle that the sun goes through. So 2025 is actually the peak. It's the worst time to be in Leo. It's when the atmosphere is the most dense. If we launch satellites in 2024, they would last about three years. But then at the minimum it doubles to six years.
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So satellites launch in like 2028. 2029 will be a six year life. And so as we, average that over, over the deployment of our planned satellites, that's where the average five years comes from.
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Yeah. That's cool. I had no idea that, this kind of solar activity, like, makes the atmosphere, change up. That. That's crazy. Yeah.
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but it's much it's much, less prevalent because there's just not much atmosphere to to begin with. But but yeah, changes pretty drastically over that, that kind of five and a half years from, from max to man.
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Yeah. I had to, just general question about, like, you know, your use case, so, you know, you're offering, if I can understand correctly, you offering better clarity for people who want to, you know, a better resolution for people who want to understand what's going on in different environments then. But you're offering, the alternative would be to use, like, planes or like, which would be more expensive, presumably.
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Is that right?
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Yes. More expensive and also more kind of onerous operationally. And that's actually the bigger pain point when we talk to customers. Is the limited access trying to get you know, planes or drones over power lines or crops out in rural areas, a lack of on demand ability to just like, you know, ping the API and get an image when you need it.
00:07:50:17 - 00:08:07:11
And it can be a lot more expensive from a unit cost perspective, because you often you have to pilot, you know, an aircraft or a drone. And so it can be pretty pricey. The, the idea for albedo came about when, President Trump, in his first term tweeted a classified satellite image, and everyone was like, well, this is super high res.
00:08:07:11 - 00:08:33:04
This must be from one of our our spy satellites would be great to have commercially because it could replace planes and drones due to those, those owners pain points, but it would cost like $1 billion because in Leo you would need a massive telescope to get that. And so that's what drove the idea for Leo. And so in addition to kind of being a solution instead of planes and drones for the commercial side, it's also a much more affordable way, to capture this quality for national security purposes.
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And also there's some resiliency benefits that come with that. And so those are kind of the two categories of of ultimately, you know, the use cases is the national security piece. And then, a lot of the commercial industries across power lines, agriculture, insurance, mapping, oil and gas that fly a lot of planes and drones
00:08:50:01 - 00:08:58:09
Super cool. So how long after? Like, making a call to. Sounds like you have an API. Can you get an image to someone?
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launched our first satellite a couple of months ago. We just started the descent down to, v Leo. We were doing the commissioning up in Leo. We'll start taking pictures when we get to V Leo, and we'll pop out the lens cap when we're below all the other satellites for space safety reasons. So that will be that will be coming up in a couple of months when we when we start delivering imagery to customers, says the API, they can, that you can pay with with just one satellite, the latency will be longer than normal.
00:09:24:06 - 00:09:47:03
As we deploy more satellites, the revisit over different areas will increase. But if the satellite's going to pass over the area that you care about, and you kind of take that out of the equation, then our average latency is about 30 minutes from taking the picture to delivering that picture to the customer. So pretty fast. You can also ping the API to say, like, hey, when's the next time you're going to pass over?
00:09:47:04 - 00:09:59:12
You know, these, these wineries in Sonoma or or that sort of thing. And if it's four days, maybe you wait to place the order. If you if it's about to happen, you could get that image actually really quickly. Yeah.
00:09:59:17 - 00:10:07:00
Good to know. Good to know. So you have to. There is a cycle time. How long does it take to, like, go around the earth for one of these videos?
00:10:07:02 - 00:10:22:00
It's about a little under 90 minutes. So it's fairly similar to, to Leo. In that kind of hour and a half kind of regime. So about 15 orbits a day. But as that is, it's going around, the Earth is rotating beneath it. And so on
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average, with one satellite
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about once a week, the satellite will pass over everywhere on the Earth at least
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Right. As a each each satellite will have a different latitude. Or is like, How, like, do you have, like, an array of satellites from north to south pole or something?
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The first few will put in this orbit, this polar orbit that, a lot of imaging sallies, fine called sun synchronous orbit. You can you can kind of stagger it. So that the sunlight is the same with every pass. And so, you get consistent kind of sun conditions in the imagery. Once we get a few in that kind of orbit, we'll start deploying into an inclination that's actually more similar to Starlink, which is more optimized for population density, where most people care about imaging.
00:11:06:08 - 00:11:15:12
And so that gives us more coverage in those regions. But then we still have the poles kind of covered for for any requests that we get up there with the first few satellites that we'll have up there.
00:11:16:00 - 00:11:18:00
That's fascinating stuff.
00:11:18:04 - 00:11:35:12
When is. When is the moment that you kind of quit your job? Was it was your previous job, Lockheed Martin, or did you have something in between? So when's the moment you quit your job to, like. I guess the satellite launched in March 2025. I'm just trying to understand, like, how long does it take to get a satellite in space?
00:11:35:12 - 00:11:41:17
Yeah. It was, November 2020. And so we started out in Y Combinator.
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did you think it would take less time or did you think like, hey, I'm here for five years before I can get like my first customer this live?
00:11:47:22 - 00:12:15:11
early days, we thought it would take less time. Yeah. If you look back at, like, the whatever press or what blogs we had in 2021 era, it was probably a little more aggressive in terms of like, we're gonna launch this many satellites on this timeframe, that sort of thing. But pretty quickly, once we firmed up the design, the architecture, the supply chain and how we were going to do it all, and then ultimately the really the kind of core, v Leo, in-house technology we built, which is the spacecraft bus.
00:12:15:11 - 00:12:32:18
Once we started building that, we we had the timelines actually projected out very accurately, which is rare in the space industry, but, but yeah, spring 2025 was the target to have it launch ready. Then fortunately, SpaceX was able to slot us in on a rocket in that exact time frame when we
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And how much and how much did you raise, before March 20th, 25. Like before getting the first rocket live.
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about 100 million.
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Underbody. I guess the tricky thing with what you are doing is it's not just getting something in space. You also like inventing the hardware that's going to work in this orbit. And like, you also have like it's quite a tricky hardware like challenge, right?
00:12:56:09 - 00:13:07:22
Totally, totally in software. And. Yeah. And so a lot of that time period was developing those new V Leo technologies, that haven't hadn't been invented yet. And a lot of its hardware, a lot of its software.
00:13:07:22 - 00:13:23:09
if If someone had like a more simple use case where it was like, hey, they can take, you know, microsat off the off the shelf and all they're doing is kind of software on top of it. Like, what is the least amount of money and the least amount of time, do you think, to get to space, like based on, like today's economics?
00:13:24:04 - 00:13:27:09
I think you could probably do it in a few months.
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few months,
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I think at the
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I think maybe two. If I could do it a few months, then I know me, or I could do it in a few months.
00:13:35:21 - 00:13:51:13
small satellite. There's, there's a lot of suppliers now that have stuff like ready on the shelf, put some software on it, find a slot on a SpaceX rocket and get up there. But it's very much a spectrum on like, yeah, what's the capability, what's the size? You know what. What are you actually trying
00:13:51:13 - 00:13:53:21
Well, how much would it cost?
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at the, in the minimum maybe, maybe a million bucks.
00:13:58:21 - 00:14:03:07
Wow. A million bucks in a few months. And week two could have something in space that's got to go.
00:14:03:07 - 00:14:04:21
I don't know what I would put in space,
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but
00:14:06:21 - 00:14:22:10
I think one of the interesting things about albedo is, Yeah, there's only really two markets that actually make sense today in space, right? It's imagery and communication. And then everything else is like extremely like, you know, you're hoping the market gets graded and things like that.
00:14:22:10 - 00:14:37:08
So like when you look at all these other kind of, startups, those are actually a really fun one that Sequoia funded that's like got these mirrors in space and it's going to shine light even when the stock. But yeah, there's a lot of these kind of much more like, oh, you know,
00:14:37:08 - 00:14:40:07
Pharmaceutical labs. We interviewed a right?
00:14:41:01 - 00:14:50:09
Yeah. Yeah, there's the manufacturing and space use case. But how do you think of the rest of the space market. Like what do you think is like really exciting opportunities? What do you think is like, probably not going to work.
00:14:51:17 - 00:15:20:08
I think there's I think everything's going to work. It's just a matter of when. Yeah. And then that's where, you know, some things will work sooner and some things will work later. Everything. And like, if you look back over the past decade, projections of launch costs and rocket availability and projections of, you know, companies that that were started and failed that were leveraging imagery for different applications, everything just took longer, I think was like part of the underlying issues across different things.
00:15:20:10 - 00:15:34:05
And, and so for like the Earth observation example, where there's a company working on an application with imagery like there's going to be tons of imagery in the next three years, it's going to become a commodity. And so this is where the value is going to accrue. Then it ended up taking, you know, 8 or 9 years to get to that point.
00:15:34:07 - 00:15:44:19
And so I think that's the big question going forward. And that a lot of the, the really crazy business models are going to make way more sense when when SpaceX is Starship is
00:15:47:09 - 00:15:55:09
that just opens up a ton of different applications that companies are starting today. And if their timelines are right, then it's the perfect time to start that company.
00:15:56:06 - 00:16:00:22
Does the economics of your business get a lot better when Starship is operational?
00:16:00:22 - 00:16:10:09
definitely gets better. We, launch costs is a bigger kind of cost for us than than most companies because our satellites are fairly large.
00:16:10:12 - 00:16:11:21
Yeah.
00:16:11:21 - 00:16:21:22
of the many things that came together for like the why now of when we started, a lot of that. Was the launch costs coming down, because the size of our satellites, like a phone booth, 600kg would.
00:16:21:22 - 00:16:45:09
It costs a lot more to launch pre space X that cost coming down with with Starship will help a ton. Absolutely. But not in the same way as maybe some of the other, you know, much larger data center, you know, solar power from space. Lights as a service. Those sorts of things really, really make more sense with, with Starship kind of economics.
00:16:45:09 - 00:17:08:03
Just a question. Like, how is this, like, space evolving in terms of, like, how many companies now have, like, satellites? It feels like it's becoming a lot more common now. And like, you know, the more private companies obviously operating because of space, but, you know, are we talking about, you know, a dozen or so companies or are we talking about hundreds of companies now launching satellites or even more thousands?
00:17:08:08 - 00:17:31:14
I think launching satellites today, it would probably be in the in the 50s, you know, plus or -25%. Off the top of my head. There's definitely been a lot of companies in the past that have started and and failed. And there was probably like a peak years ago that's come back down and now it's going back up.
00:17:31:14 - 00:18:01:02
I'd say even more, especially with a lot of the opportunities on the defense tech side of things. And so there's probably an equivalent number of companies that are planning to launch satellites that haven't launched yet in that kind of 50 number. But then the spectrum of how many satellites each of those companies is launching is drastically, you know, broad for us, we're more in the kind of exquisite, highly capable per satellite side of the spectrum, 12, 15, 24 satellites is is sufficient for our business.
00:18:01:04 - 00:18:17:03
Starlink is is thousands. You know, they have tons of satellites in space right now. A lot of the communications, a lot of the really proliferated architectures, you know, launch a lot more. And then some of the more OG companies are doing maybe 3 or 4 for their constellation. So that varies a ton.
00:18:19:04 - 00:18:28:09
50 seems so small. Like. That's because you're focusing on, like us startups. Like, presumably the. The world of people who launch satellites is way bigger than 50, right?
00:18:28:09 - 00:18:44:01
Maybe so maybe. So I'm trying to, yeah. Yeah. When you look at like the small stuff to universities, things like that, that that probably opens up a lot. But I'm trying to think of, like, active companies that are actively deploying satellites into space.
00:18:44:01 - 00:18:45:01
Yeah.
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maybe it's much larger than that.
00:18:46:17 - 00:19:06:02
What's it like working with, defense and, like, military? You know, for an application? We are. They're a good customer. Are they? You know, I've heard, I was I was listening to this great podcast yesterday, you know, with the Steve Ballmer, on acquired and, he talked a lot about Microsoft selling to the military, and he talked about there's two forms of government.
00:19:06:02 - 00:19:17:13
There's actually the there's a military and then the rest of the government. And he said, the military is a much better buyer than the rest of the government. They're actually quite competent. Have you seen any, you know, can you verify that?
00:19:17:15 - 00:19:50:20
Yeah. I have not sold to other parts, then military and intelligence. But that would make sense. It's, a lot of our myself and our team's background come from that world, like the national security world. And so for me, either an engineering or BD perspective, we have have some experience there for us were more our product market fit is stronger on the Intel side than the the defense and tactical side, given kind of if you think back to the founding story of the classified satellite image and meeting that kind of same quality.
00:19:50:22 - 00:20:10:12
And so that ends up adding another layer of challenges to selling to the government because of the classification nature of that and being a startup. We do have cleared people, but it's not the same thing as working for Lockheed Martin, having direct access to a chef and and knowing where all the files are and the latest updates on the architectures and that sort of thing.
00:20:10:16 - 00:20:38:08
And so, I think in any case, no matter how strong the product is, it takes a lot of work. It takes a lot of, perseverance and like, finding the right champions in the government that are going to be able to get things done that you just can't on the industry side. But when you have the compelling capability and it's it's timely for us that that looks like basically there's all these threats from some of our from our adversaries of our satellites in space.
00:20:38:08 - 00:20:57:21
They're developing counter space weapons that are driving the US to really go after these proliferated architectures. And so you can imagine if you have, you know, three satellites versus 300, it's much harder for an adversary to take out 300. Typically you would not be able to capture that same exquisite, you know, capability when you go the proliferated route.
00:20:58:01 - 00:21:20:16
That's really what Leo unlocks because it's so much cheaper. You can spend those cost savings on proliferation. And so having that kind of macro tailwind from that perspective and developing the capability that there's existing requirements for, there's existing, you know, value that has been, you know, invested a lot in over the last, you know, many decades. That helps a lot.
00:21:20:16 - 00:21:27:04
But it's still very much a full court press across the hill and the customer and policy and, you know,
00:21:28:12 - 00:21:49:15
If you were advising a founder that's thinking about selling into defense, would you say, you know. Hey, go talk to them. And you have just a, you know, napkin idea and has the people you talk to, and they're, like, open to that, or is this more like, you know, go raise 10,000,001st before you even think about, like having this conversation with them, like, like how early do you approach it and how do you approach.
00:21:49:15 - 00:22:09:15
I think you have to approach it early. It's a it's a really it's a weird kind of, dilemma because most of the time you're thinking like, I'm too early. And I had this conversation. It felt like it didn't go well because they're like, well, call me back when you have a satellite in space or whatever, but if you wait until that point, then it's just going to take forever to get it going in the first place.
00:22:09:15 - 00:22:39:11
And so I think you have to start early no matter what. The other benefit of starting early is, there are these funding programs that are, available to very early stage kind of concepts and to get meaningful amounts of dollars for some of the bigger programs like Stratify or App Fit or these other programs that have been created for advanced technology, there certain timeline requirements from doing like an early phase one type of contract or an early phase two type of contract.
00:22:39:11 - 00:22:46:01
And so if you can start that clock quickly, then that basically gives you a lot more optionality for different, different programs.
00:22:46:01 - 00:22:57:01
Is it like VC space where you have to be networked and know the right people, etc.? Or is this much more like, hey, you apply online and you know, as long as you fit some requirements, you can you can get these contracts.
00:22:57:01 - 00:23:17:21
networks. It's not to the same degree as the VC kind of world. But ideally you're getting intros from the actual government officials. So you talk to someone at one, you know, program office or one agency and they're like, oh, you should talk to this person and they connect you with them. That's a that's a very strong intro compared to even someone that knows that person from the outside.
00:23:17:21 - 00:23:23:11
But, you know, he's retired from the government or whatever. I think that's the best kind of network effects you can get, and
00:23:24:10 - 00:23:34:11
Is that like a Y combinator of the space? Like, is there if you, I mean, who was, like, the most useful person to you when you were first trying to, like, get in, get into these networks?
00:23:35:08 - 00:23:58:23
Yeah, that's a good question. I'd say I'd say, you know, wiki is still I would I would do it again. Absolutely. I think it's a great place to build defense tech startups and hardware startups. I think for us it was a mix of like advisory board. We brought on some really great, folks, that ran different intelligence agencies, investors, early investors.
00:23:58:23 - 00:24:23:01
We got some, like, retired generals on the cap table very early. And then, working with some outside consultants, you know, some some early stage lobbyist shops, some kind of Space Force consulting groups, and them just having all the back channels, knowing who to talk to those. That's probably the trio of what unlocked it for us. Not any one person, maybe in particular.
00:24:23:03 - 00:24:29:11
But just based on the timing and the need and, you know who was the most warm, finding out through that?
00:24:29:18 - 00:24:35:11
Do you find, like, these retired generals? Just like LinkedIn or something? Like. How did you reach out to them?
00:24:35:13 - 00:24:39:06
Through their existing, network at Lockheed Martin.
00:24:39:09 - 00:24:52:23
Okay, like a bargain. Yeah. So that I give you a bit of a network to start with, right. I do think, like Silicon Valley is building more connections to, you know, you know, to Washington. It sounds like a traditional Horowitz. You're doing a lot in this regard,
00:24:52:23 - 00:25:05:23
I mean, I think back when tofu, started this, it was almost, in 2020. It was, like, almost like an unheard off and also, like, almost a negative thing to work with. With defense. Whereas, like, that's obviously changed in the last couple of years.
00:25:05:23 - 00:25:06:23
Yeah,
00:25:06:23 - 00:25:16:03
yeah. Pro war certainly help with, well, you know, creating a forcing function for this type of thing. This type of thing. Right. So,
00:25:16:03 - 00:25:33:09
I would say I feel like the investors in that phase, you know, when I, when I talk to you first time on and, and in that kind of early era, there was still that, positive view of like, well, the US government has at least the floor of what this, you know, if elevator can pull off the technology, there's at least a floor there.
00:25:33:11 - 00:25:45:23
Now it's viewed more as upside or not is just like a whole, you know, market in itself. But it wasn't. I didn't experience as much. It looked down upon, just like it wasn't as much of a thing at that time.
00:25:46:04 - 00:26:00:23
I think, generally speaking, like people that have some defense tech but also have a commercial use case are viewed better. And I think they should be because like, you can just build a bigger business when you have like less concentration and you have like, broad set of kind of use cases.
00:26:00:23 - 00:26:02:23
Right. Exactly.
00:26:03:03 - 00:26:17:15
Topher, how do you think, this evolves over the next ten years? Like this? This whole space, like, this and the space. Space. You know, the space industry, like, you know, where do you think that there's going to be a lot more innovation or there's a lot more scope for innovation? Or where do you think there is?
00:26:17:15 - 00:26:24:18
Like, you know, there's some areas which, may take a lot longer, like what would you how would you kind of describe the future?
00:26:25:11 - 00:27:08:02
I think, Their, space is going to continue to dominate, like. No question. I mean, they've done the impossible so many times and just moves so fast. And so I'm very bullish on Starship at some point in time that's gonna unlock the interplanetary stuff going to Mars. And, and unlock a lot of these, you know, some of these business cases we talked about earlier, I think on the military and defense side of things, an area that that there are a ton of amazing things going on in space today that are classified and like, are are really cutting edge stuff, but historically have been 100 like almost 100% defense primes that are
00:27:08:02 - 00:27:45:06
running and building those programs. And now you see all these new new companies and new cutting edge technologies, way more affordable, way more proliferated, more resilient. I think that's going to become a much more dominant kind of part of space from, with like the Android model applied, where it's not these cost plus, development contracts with the government, but but a startup raises 100 million, like in our case, we we've developed all the technology for this exquisite high res V Leo spacecraft that the government could just buy off the shelf the production line effectively, without taking any of the risk of the non-recurring engineering or the development side.
00:27:45:08 - 00:28:06:01
And they get a capability that meets, you know, 90% of the requirements. And so if there's enough procurement shifts and mindset shifts on that side of things, I think that's going to be a huge change over the next decade. Yeah. And there's going to be a ton of satellites in space. It's going to be, you know, Starlink is going to grow a ton.
00:28:06:01 - 00:28:22:06
There's going to probably be other mega constellations that finally take off. And it's going to be very mobile too, like there's going to be more or less of like there's the Leo Meo Geo and you park it and that sort of thing. But, I think there's going to be some interesting activity going on up there to.
00:28:23:10 - 00:28:36:20
How far is the US ahead of, you know, some of our adversaries on this front? I mean, you tell, like, we have a very vibrant ecosystem here. I'm not hearing as much. I mean, you know, you see other countries, they're like, trying to go to the moon or something or, you know, like, I think India has,
00:28:39:01 - 00:28:45:06
I think China is really trying hard to get a reusable rocket working. And have they got something working at.
00:28:45:18 - 00:29:27:16
I actually don't know the answer to that, but they might. They're definitely working on it. And they're they're rapidly like building, progressing, innovating at a pace much faster than the US. I wouldn't say they're a past the US across the board, but their pace of progress is faster. I'm reading this really good book right now. I don't read much, but this is a book called Phantom Orbit that's kind of a fictional, story on very real events and like, history of China, basically slowly and strategically growing their ability to, you know, be be dominant in space over the past 20 years and it's really good.
00:29:27:18 - 00:29:42:18
But they're, they're doing some really impressive things. And yeah, we, I think I'm very bullish on the US as well. I think we're starting to pick up the pace a lot. But if you look probably over the last 5 or 10 years, the pace has been very different.
00:29:42:18 - 00:29:49:00
What is giving them the advantage? Or like, is it just like the government's? Like we need to win in space.
00:29:49:08 - 00:30:20:05
I think that's a big part of it. I think everybody is like every company, big company or small company is is very, they're just charging it like they, they, they, they're maybe start as the underdog and have no entitlement or, you know, kind of cush kind of, set up like a lot of today's, you know, companies that work in space do just given how things have shaped up over the last century with the defense primes and, and kind of how the contracts and the incentives work.
00:30:20:07 - 00:30:27:14
So I think it's agency for each individual and that the government is very much like making it happen and and helping out from that perspective.
00:30:27:14 - 00:30:54:05
I mean, I, I just have all reminds me of, you know, the current war and Israel and Iran. You know, I like, you know, how within 48 hours, like, Israel is basically able to take out dome a lot of things, a lot of people, a lot of installations in Iran. And, you know, like their intelligence capability was like incredible, like, and basically, you know, almost ended the war before it started.
00:30:54:07 - 00:31:15:22
And I just think about that as a future, right? Like, you know, where like, these countries are competing to, to have this full knowledge of, like, what's happening in the other countries. And if war starts to just, like, end it instantaneously, almost. And, do you kind of see that as well, like, you know, is that where people are thinking like the future is going to be is where you have this complete knowledge of what's happening?
00:31:16:04 - 00:31:17:06
Yeah, I can imagine that.
00:31:17:06 - 00:31:36:14
there's also similarity between kind of the Ukraine doing the attack on the bombers and deep Siberia and in this kind of Israel attack, because apparently Israel infiltrated a ton of, like, drones to the locations so that they could, like, simultaneously do this. Obviously they also had separate. But. Yeah. Stover, what are you going to say?
00:31:36:18 - 00:31:59:18
Yeah. No, it's it's it's pretty incredible to to to see both of those. Both of those events. I think there's, there's always like the, the level of intelligence and the secrets we can discover are going to grow rapidly, especially with AI. And what that's going to be able to do with all the historical data and all the new kind of sensors and data that's being collected.
00:31:59:20 - 00:32:23:15
But the, you know, the the evasion and concealment and sometimes asymmetric kind of games, you can play, I think will continue to persist as they always have. So like missile defense can be a really asymmetric kind of thing, between the defensive side and the offensive side. I think similarly on the intelligence side, I think it's going to be maybe someday with a crazy level of super intelligence, we'll just know everything.
00:32:23:15 - 00:32:40:14
But I think there will continue to be, you know, defensive measures against that and the need to always have the right, you know, real time, very high quality data inputs to those. But it's going to I it's going to get pretty crazy with AI. It's something I, I think about a lot. It's, it's it's pretty wild.
00:32:40:18 - 00:32:48:16
As a American company, are you allowed to sell to foreign governments? Or are you. Are you only allowed to sell to U.S government?
00:32:48:16 - 00:33:12:04
to sell to, to foreign governments. There's a denied parties list that we cannot sell to and would not want to, but generally, for the imagery itself, we have a license, to sell this resolution commercially and internationally. And so working with allies, we absolutely do. And then there is, I tr controlled to export controlled parts of the actual satellite technology.
00:33:12:08 - 00:33:29:16
And so there's limitations there. But the imagery itself is, is, yeah, approved and licensed for that. What gets you guys most excited about space. Like what what are your what's, of interest to all as you, I've kind of seen things take place over the last five years.
00:33:30:09 - 00:33:51:21
I've done 8 or 9 at a space Companies. I think firstly, it's just kind of a fun space. Like, I think, I think the interesting parts to me, it, you know, around the time, I guess, before you guys, around 2016, it stopped being a science project, and it became an engineering challenge. And I think that's what made it interesting.
00:33:51:21 - 00:34:11:15
Like it was no longer like, yeah. Is this going to be, like, a research thing where they may get some something like one space or may not? And it's, you know, and they have to like, solve some, science, thing and a big game into like, okay, there's this like, you know, for you it was very clear the market sizes, I think 40 billion or something at the time.
00:34:11:17 - 00:34:29:04
And yeah, you're going to you have a better product. Yeah. Obviously, I don't think either of us thought 100,000,000 in 5 years. I think your pitch was probably like 20 or 30 million in three years or something. But either way, there was like a path to, getting revenue in a big market that just seemed like much more reasonable.
00:34:29:09 - 00:34:48:20
And actually, you know, it's not that competitive, right? Like, as you as you describe it, it's like if it's an interesting kind of and this doesn't exist for a long time, but it's like it's mostly an engineering challenge. The market is pretty big and it's obviously ten bucks better and that's not that competitive. So it's like almost a no brainer, right?
00:34:48:20 - 00:35:10:03
I've done some of the stuff in space that I won't name it, which is like a lot of more like the market doesn't exist. And, you know, we're all hoping that, you know, maybe space makes it, cheap enough with Starship or like, they developed markets. Those things are a little more, harder to do. But there's also, I think there's a bunch of, like, these kind of no brainer things.
00:35:10:03 - 00:35:26:13
And to some extent, maybe a lot of the no brainer things have been tried, but, you know, it's surprising. Like, I was a, I'm an investor in stock space. And, you know, they're doing reusable rockets. And yeah, they entered that space very late. Right? Like after Space-x was like pretty dominant. And they seem to be doing like really well.
00:35:26:13 - 00:35:32:15
And again, not that many, competitors in the US for reusable rockets.
00:35:32:15 - 00:35:44:21
to any satellite company, they. We would welcome any new player in that space. Because the more the merrier, the more you know options we have, the more leverage we have. And Stoke is absolutely crushing it. Yeah. They're, they're we're super
00:35:46:01 - 00:36:05:21
I think one thing that I was surprised by, and I'd love your take on this, Tofa, is, you know, when 2022 happened and the markets crash and, you know, the 2021, kind of bubble was over, I thought space tech startups will really suffer. And I had, like, a bunch of investments. I thought I was like, you know, all these people need to raise another $50 million or something before they're in market.
00:36:05:21 - 00:36:22:23
I think you probably still needed to raise a bunch of the money that you, that you raised. So why did, you know, why did. And actually, I was surprised. I actually, like most of the companies that suffered in my portfolio were not the hot tech companies. Actually, the hot tech companies seem to like even through 2023.
00:36:22:23 - 00:36:42:16
And, they raised money, whereas the software companies often struggled. So what was it about that time period where there was still enough money available that, you know, people like you were able to raise money with Pre-revenue? Basically, even the that the bubble had basically like disappeared.
00:36:42:16 - 00:37:08:11
Yeah, I think so. In our in our case specifically, we lucked out in terms of, like, the timing of not raising at a super inflated valuation when it was the zero pay day, and so we weren't too constrained on the progress in the future needs from there. I think maybe that happened with some other space companies too. I think there were some space companies that aren't around today or like, are in a much worse place today because of that.
00:37:08:11 - 00:37:37:19
But I think the, the, the broader and I'm just thinking off the top of my head, but I think probably why they were more shielded or we were more shielded across the board is because the software companies or the more conventional VC companies from that era, you can pretty quickly see if it's working or it's not working. And so if you raise it a crazy valuation in 2021, and then you can quickly see that it's not working amazingly, that's a tough spot for a satellite company, especially in kind of the earlier phases.
00:37:37:21 - 00:37:59:03
It takes a while to understand, you know, okay, maybe this team missed on execution here, but they were able to make it work there. Like their lives or contracts have slowed a bit. But I think the the the time that it takes to understand if, if the business is working or not just takes longer. And so maybe inherently we were all more shielded, from that perspective.
00:37:59:03 - 00:38:21:16
But yeah, I agree, it's a good it's a good observation. I feel like there wasn't that much damage from from the fall out in 2022. And maybe we all just had enough, you know, knobs to turn to extend runway and slow down some production or slow down some procurements. In a way that you can't as much on the SAS side, if you hire a massive sales team and and try to grow really fast.
00:38:21:22 - 00:38:41:04
You know, normally I would say, you know, if someone comes to me and says, hey, we need to raise 100 million before we have something in space and we're going to make revenue like that. Seems like a really hard thing to achieve. What were you showing the investors along the way that made it gave them confidence to say, oh, actually, you know, yes, this is worth another 30 million to because they've unlocked these milestones.
00:38:41:08 - 00:38:52:16
Yeah. So for this series A, which we raised in mid 2022, a lot of it was sales. So we we signed some big binding contracts you know years ahead of having a product to depict. Hey
00:38:53:14 - 00:38:59:04
But why would why would people willing to sign a binding contract for something that was is a is a way.
00:38:59:11 - 00:39:18:13
Because with just one satellite up we have it. So our business model is is based on tasking is what the the industry term would be where a customer is saying, hey, image these specific power lines monthly or these specific crops weekly or like point and shoot right here. And with one satellite, we have a finite supply of that tasking imagery.
00:39:18:15 - 00:39:37:06
And so the, the incentive because yeah, even if you have an amazing product, you need some incentive for someone to buy before you have it. And so the incentive for these customers was, if you want guaranteed allocation of that capacity, you need to you need to join this program and sign this contract. And so now we've actually sold out, various regions, from that.
00:39:37:06 - 00:39:39:08
But that was the incentive. And so that was the unlock
00:39:39:08 - 00:39:47:05
So how many? How many yearly. How much in early revenue of binding contracts did you have when you like? Got that series? I'm sure you'd signed.
00:39:47:11 - 00:39:52:05
I think it was, it was in the double digits.
00:39:52:05 - 00:40:07:22
okay. Yeah. That's a I mean that's obviously like a really powerful, like basically you were able to go to these investors and say like, hey, the we're going to be, you know, of 200 and $300 million company minimum as soon as the satellite is live. So you might as well invest in this. Now.
00:40:07:22 - 00:40:11:06
Yeah, yeah, yeah. And the,
00:40:11:06 - 00:40:22:11
We raised this series A1 after the a we we pretty quickly after raise a big series A, we decided that we kind of made the wrong decision with the things that we had outsourced to suppliers
00:40:22:11 - 00:40:23:23
and we we work with the board. We were
00:40:23:23 - 00:40:26:20
like, we think we need to bring this in-house, vertically, integrate this.
00:40:26:21 - 00:40:49:23
It was both kind of on the supplier's end and on our end of just like, not fully appreciating how much value specific things drive the architecture. And so that was what prompted the next raise. But by that point, we had made so much progress on this kind of in-house pivot and this vertical integration that we were doing, and we were so close to the finish line or close enough that that was kind of the big milestone that that unlocked that round.
00:40:50:01 - 00:41:05:11
But that was part of the the zigzagging, that I was maybe kind of alluding to of like, you think it's going to take a certain amount of time and certain amount of dollars, right? When you start out and things happen. But that was very much an execution, like a technical execution. And, that unlike that around.
00:41:05:19 - 00:41:26:00
Super cool man. Nice job. But focusing on sales. I think a lot of deep tech companies, hard tech companies don't do enough of that. And I think it's really important. You know, I think, the next level of that, which I always recommend to founders is like try to get as much upfront deposits from contracts as possible, you know, and try to get financing from the customers, because then basically, you know,
00:41:26:07 - 00:41:32:03
I mean, it's hard to do that when you're three years out, right? It's like.
00:41:32:03 - 00:41:33:03
yeah.
00:41:33:03 - 00:41:50:18
We? Yeah, absolutely. And you know who inspired me to do that? Is Andy Lapasset stoked space? Because we signed a contract with him. I was trying to negotiate away this nonrefundable deposit. He was like, dude, come on, you have some skin in the game here. And so then when when we, like, really kicked off the pre-sales a year for a little over a year ago.
00:41:50:20 - 00:41:59:00
That was kind of the, you know, it's like, hey, we're not going to lock you into something and sell it. You know, worst case scenario doesn't work. But we do need you have some skin in the game. And so yeah,
00:42:00:19 - 00:42:06:16
Like this. And these, like some skin in the game. And you don't achieve scale.
00:42:06:16 - 00:42:25:19
it's absolutely the right way to go. It's absolutely. Especially when you're selling hardware or you're selling like, you know, some complicated technology. You really need to do that because it shows, like, people really need your product, you know? And I think it builds your confidence in what you're building and also builds investor confidence. I think you sometimes you have to have those tough conversations with customers.
00:42:25:19 - 00:42:36:15
They like, look, you know, this is a new endeavor. We need your you know, it could be a refundable deposit if we don't deliver in this time, we give you the money back. But like, it really needs to, you know, we need to have the tough conversations. I think.
00:42:36:19 - 00:42:53:06
Yeah, yeah. And and a big thing for us, too, was we didn't compromise on it. And so as soon as you have a handful of customers that have paid it, then every future customer, like, like we everybody's paid this, like, this is part of it. And so that compounding helps a ton. Then, then it's the less hard conversations basically.
00:42:53:08 - 00:42:53:23
Yeah.
00:42:53:23 - 00:42:57:23
Yeah. What percentage of the revenue do you like? Get them to deposit.
00:42:59:07 - 00:43:03:11
There's like a it's about 5%. Yeah.
00:43:04:00 - 00:43:08:12
so. Yeah, that's a small skin in the game.
00:43:08:12 - 00:43:23:19
matters. An investor conversation that it matters a lot. I would say, you know. Yeah. And, you know. So, yeah, that, you know, that's really you're doing absolutely the right thing. So, you know, it's like you got to be very commercial with these, deep tech stuff. I think a lot of people get it wrong.
00:43:23:23 - 00:43:48:02
They get too obsessed with the technology. And, you know, there's been so many there's been such a wave of, like, hard tech companies, like, you know, just running out of money and, like, you know, not able to, like, see what they, you know, I think it's almost sometimes is better to be a little bit late, you know, two point about like, it's better to have the market proven and come in with a slightly better product, or slightly cheaper product in this case, you know, maybe stoked it.
00:43:48:02 - 00:44:02:15
I'm not sure exactly what they're, you know, go to market was, but, you know, it's it's okay to be a little bit late. You know, I think founders are always like, oh, I'm going to miss the boat. I'd like, you know, you want to have some someone else ticked? Do the de-risking for you.
00:44:03:23 - 00:44:12:00
Yeah. Especially when the market's a big. Was this founder led sales so far? Was it still or did you actually get some, like, great sales people?
00:44:12:15 - 00:44:33:05
It, It was a mix. Yeah. We've had one, head of business development, in the commercial sales side since the very early days. Katie. Bet she's awesome. So her and I have basically tag team sales since the beginning, and then we have, Dan on the federal side. And so similarly tag teaming that. And that's how we've been set up basically since, since we started.
00:44:33:05 - 00:44:46:00
Once we get, start delivering product and maybe do more pre-selling or some bigger kind of opportunities, we'll probably bring on more. But yeah, I'd say hybrid founder sales. For, for the last four years.
00:44:46:02 - 00:45:00:21
It's kind of amazing that, you know, like, space has, like, unlocked a lot of these companies. I feel like the, you know, what, the work they've done. It was like this huge ecosystem of companies that's only going to grow. I feel like this whole market is going to grow a lot. You know, space will probably capture a lot of it, not just buy.
00:45:00:23 - 00:45:05:03
They should probably like, invest in all these companies too, you know, and like, whereas, like, you know, buying their
00:45:05:20 - 00:45:10:18
Yeah, that'd be real skin in the game. They're like, if you want to launch, you got to give us some equity.
00:45:11:06 - 00:45:14:10
Yeah, yeah, yeah, I really say chance would definitely take him up
00:45:15:10 - 00:45:21:15
Yeah. That's the thing. Yeah. I mean, they could be they could be a big player in the space, like, they could be. They could be the VC as
00:45:21:20 - 00:45:23:10
Yeah. I mean, it kind of reminds
00:45:23:10 - 00:45:32:10
me of OpenAI investing. And because, like, I think they've invested in a few different things. They're trying to take some of the upside of the ecosystem. They enable.
00:45:32:10 - 00:45:47:18
Absolutely. Yeah. Upside. And also you build alliances led, you know, so like, so someone like Topher is not going to go to a competitor, you know, down the line, right? And like, or maybe less chance of doing that, right? So, like, you know, that would be a really smart move by space. They're really the market maker here in many cases.
00:45:47:18 - 00:45:48:10
Yeah.
00:45:48:10 - 00:46:08:15
Totally. And that is one interesting thing. I've expected more alliances to form because there's so many of these different pockets of different synergies and competitiveness, but you haven't really seen that yet of, like, actually, like actual exclusive or like proper alliances versus just like we're going to partner over here and we're going to partner over there. So maybe we'll see that in the next few years.
00:46:08:15 - 00:46:21:12
I mean, space is also like, such an obviously dominant, monopolistic player. Like, you know, I don't know, it might actually be kind of a risky thing for them to have any sort of alliance formation.
00:46:21:13 - 00:46:24:14
He is now, but he wasn't a year ago.
00:46:24:14 - 00:46:46:11
and I think there's honestly very little value to them in that, but I think everybody else that I would expect more of. But yeah, their, their style, Ellen style, I mean they it even like the OpenAI example like there's, there's a distinction with space where they just vertically integrate everything. They've done an incredible job, like going from blank page and first principles to where they are now.
00:46:46:11 - 00:46:57:03
And so a lot of the strategic investments or acquisitions just don't really make sense for that model. Which I think is why they haven't really leaned into that at all. But
00:46:57:10 - 00:47:03:15
What do you think of, Blue Origin? Not. Not really a good competitor. Seems like Jeff is really focused on it.
00:47:03:15 - 00:47:22:07
I think, it seems like they're making progress. Yeah. And, it's they've been, you know, much slower, comparatively, but for some of the really big missions going to Mars, going to the moon, deploying massive amounts of Kuiper for them, like, it seems like they're starting to get there.
00:47:22:09 - 00:47:28:07
Are they actually is selling slots to companies like Alberto? Like, can you go and go to them and say, hey, put me on the launch?
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