#37 - DELIAN ASPAROUHOV

Thank you so much, Delian, for coming on the show today. I really appreciate you taking the time. Discovered you on Twitter and been following you on there, but also had the chance to do some reading on some of the stuff you've written. Obviously you're well known. Principal at the Founders Fund, also recently co founder of Varda Space, previously principal at Coastal Ventures, head of growth at a startup, founded another startup in the healthcare space. Best way to start, I think for people who may not be so familiar, would just be to hear your background, your story from as early as you're willing to go to where you are now.

Yeah, sure. I mean, if you're saying as early as possible, then I'll start off with I was born in Sofia, Bulgaria, grew up in a super Eastern European household, basically escaped communism because my parents were basically good at math. And so we went off both my parents became PhDs at Caltech, grew up on that campus, eventually moved to Utah as my mom became a professor at the University of Utah and just got grilled in the Eastern European household of math, robotics, physics. And thankfully that all kind of prepared me to end up going off to mit, study computer science there, thought that I was going to follow in the footsteps of my parents and become an academic professor, PhD type. And suddenly in the first couple of weeks, discovered actually through Balazzu Berry, who's now a partner at Lux Capital that actually ended up investing in Varda. So it kind of ties together at the end quite nicely. But met him sort of second day on campus at mit, ended up getting exposed the whole world of startups and entrepreneurship. Ended up joining this entrepreneurship club, going to these dinners, ended up applying to work at Square back in the day. That was my very first Silicon Valley job. Was an intern at Square over the summer of 2012 and just got hooked on Silicon Valley and how much I was learning there and how much more exciting and engaging it felt than computer science at mit. And so I started strategizing about how I could make it out there full time. And sort of the number one path was the Thiel Fellowship, just because I'd actually been sort of friends or roommates with a guy who was friends with a Thiel Fellow. And so I sort of got to know that program, applied for the Thiel Fellowship, basically like the winter break of my sophomore year, ended up thankfully through a variety of kind of crazy circumstances actually getting into the program and so sort of dropped out. And I've been in Silicon Valley now for the past basically seven, seven and a half years, sort of since Then have gone through a variety of different journeys. The first one that you kind of briefly touched on basically started this company in the enterprise healthcare space. We did okay, not amazing, definitely proud of the fact that we actually got to a decent user base and had sort of healthcare clinics using us. It was sort of like a autism EMR sort of workflow tool. We got to sort of. I think our peak month was around like 15k mrr. So not exactly like breakaway success, but it also wasn't as two 19 year old MIT dropouts. It turns out we're not particularly great at enterprise healthcare sales, but we were at least good enough to close a handful of contracts and so learned a lot about just fundraising, recruiting. We raised 600k seed round, went through Y Combinator, learned how to hire and fire people, learned about marketing, learned about sales, all kind of the basics. But after about three and a half years we were kind of stagnating on growth, sort of flatlining. So ended up soft shutting down the company where we never really turned it off. It actually kept running. Even as I was a vc, I was still sometimes doing customer support for Nightingale and ended up sort of taking a one year sort of little hiatus break and worked as the VP of growth at this company called Teespring. Learned a lot there about how to be part of a sort of larger organization. We were like 300 million revenue, 300 people or so, had a pretty large team and just learned how to grow a business line that was handed to me. How to interact with a lot of other executives was definitely a significant career accelerant. Even if the company didn't end up being sort of super successful. I always recommend to people when you're offered a seat on a rocket ship, definitely take it. But then also when you're offered a seat on the Titanic, sometimes it can be an opportunity to have outsized responsibility and help right the ship. That was a Titanic situation and we helped take it from. Basically the plan was that they were going to run out of capital and we said got that EBITDA profitable and it's been profitable now for the past almost three and a half years. But then I was thinking about starting a company again and got waylaid into the world of venture capital. Because Keith Rabboy, who had been an angel investor in my company, he had been on the board at Teespring, basically convinced me to come join him at Coastal Ventures as a half chief of staff, half eir, figure out basically what I wanted to work on and who I wanted my founding team to be. At Coastal Ventures. But maybe about six, seven months into that ended up discovering that my personality, skill set and the things that I'm interested in were probably much better suited for Venture than they were for being a founder. And so I had this whole reorientation moment about eight months in where I was like, whoa, I can do space stuff on day one. I can be my ADD intellectually curious, jump jumping all over the place kind of self. And those are all huge pros over here versus they're all huge cons as a founder. That's how I made it in venture. And now I've been in Venture for the four years. First half of Coastal Venture, second half of Founders Fund, and as you kind of mentioned most recently with all those spare time in Covid times, we started getting a little antsy and finally felt like it was time to incubate a space company. And it came together a lot better and a lot faster than I could have predicted, honestly, six or seven months ago.

Yeah, that's great. That's a great story. And excuse me, it's pretty funny. People talk. A lot of people are bored. Not a lot of people take their boredom and then they go and start a space company. So it's pretty funny. Also, you talked about how you were entrepreneur in residence type of chief of staff thing and then realized your variety of interest was actually maybe more applicable in vc. That's something that I can certainly sympathize with myself. I dropped out of school and started a company. And then more recently as I've been thinking about what's next, I'm realizing that the longer I can put off committing to one specific thing and a founder type role and the more I can diversify my interests, not for the sake of diversification, but just because those are the different threads I want to go down. It's actually a lot more interesting to me and probably do better because of that. I want to mostly talk about the present and the things that you're doing now, Varda Space and otherwise. But I do want to double click on one thing that you mentioned, part of your story that's participating in the Thiel Fellowship. That's been something that's been super interesting to me for a long time. I was fortunate to have Vitalik on the show who participated. Another person like Laura Deming who's leading some of the anti aging work I think is fascinating. It's just crazy to me how much success has come out of that program. And I think I'm hopeful that there's a way in the Future where less of a nonprofit and more of a for profit endeavor, can enable that for a lot more people and a lot more kids. You see like this year with COVID a lot more people than ever taking a gap year. I took my, you know, dropping out of college for me, ended up becoming a gap year. Probably the best thing I ever did. So I think it's super interesting. Would love to hear kind of the, you know, the story of how you got into it in the first place or how you got interested in applying and then how it eventually worked out and what sort of the benefits were from the actual program itself.

Yeah, I mean, God, that summer in 2012 when I got that first Square internship was the thing that really, like, you know, sort of lit the fire under my, you know, sort of ass to get me super excited about Silicon Valley. And I basically lived in this like, crazy kind of hacker house type thing where I paid, like, it was basically just the cheapest rent that I could find. It was basically like a thousand bucks a month for, like a bunk bed in like, a shared room with, like, you know, a couple other guys. And I remember just like walking into the house, having my first week at Square and just being like, oh, my God, like, this is what I was meant to do, like MIT cool and all and, like, you know, learning some stuff. But I was like, I've been coding since fifth grade. I didn't feel like I was learning that much. But like, man, that first week and being at that hacker house, and I was like, I got to figure out how to do this full time. And I remember literally, like, talking to everybody at that house. I was like, I need to figure out how to be out here full time. Like, I can't just go back to mit. It's one of the guys that lived in the house. He was like, well, I have a friend that just started in this program. This is like, this is the second class of the Thiel Fellows very nascent program. He was like, you should come with me to this summer event type thing that they're having. So went to the summer event, met a couple of the Thiel fellows. Hell, might have even been actually Laura, since she was one of the OG ones and was like, this seems like an amazing program. I should absolutely try to do this. And so, yeah, back then, Teal Fellowship, it was actually like somewhat, you know, the application process was a lot more about sort of you as an individual than it was about the particular company or thing that you're working on. And so, you know, spent sort of, you know, winter break that year, you know, filling out that application, then getting flown out later that May to sort of do the, you know, interviews and presentation and meet, you know, the extended sort of Teal Fellowship team. But yeah, you know, extremely grateful for that program, I will say, you know, was in the third class of Teal Fellows. You know, right now there's probably, you know, we're probably on the maybe 10th class or 9th class or almost like a decade in at this point. They do basically one class of about 20 to 30 teal fellows every single basically May. It's a little bit more of a rolling basis now, but that's still typically when they at least announce it. And at the time it was still like pretty unclear what was going to happen with this program. Was it going to kind of be like a Y combinator? Was it like, you know, how successful was it going to be? And honestly like three or four years in, like I would not have predicted that it was going to be particularly successful. Honestly, like the average Steel fellow wasn't doing anything like that. Interesting in 2014, 15, even the ones that had been in the program for a little while. But I guess it's one of those things where it's just like, yeah, if you set people on this non traditional life path and they selected for some pretty weird crazy people, give those people enough time and enough resources in Silicon Valley, eventually a set of them doing quite well. So now you've got companies like Upstart, which is just about to ipo, maybe just. Did I forget the timing of that? Figma with Dylan Field at the helm. You've got Lauren Deming with all her research in vc. You've got Vitalik. Yes. There's a wide array now, Teal Fellows that have done pretty sort of groundbreaking success. Austin Russell with Luminar. And then the other maybe more surprising thing, I was actually just thinking about this the other day. I was like, it's impressive to me that this program has also just had such an impact personally, not just professionally where several of my groomsmen at my wedding are going to be Teal Fellows. And I'd probably say it's roughly 50% or so. And so not only has the program minted a lot of sort of professional success amongst the group, but because it's a relatively sort of small and tight knit group, it's actually quite personally connected as well. Like now the programs, you know, 200 and probably 50 or so people. So I can't quite know everybody personally. But from the Teal fellows, from the first, let's say five classes. Like I think I know all of them like personally, you know, ranging from extremely close friend to acquaintance, but like know all of them and feel comfortable reaching out to them, asking them for advice, et cetera. And so yeah, pretty, pretty incredible, you know, pretty incredible program and feel like I somewhat quite luckily stumbled into it via that sort of Square internship, hacker house type thing. And then I'm super grateful for the opportunity that they gave me to basically actually be able to basically afford to drop out. Otherwise I probably would have just like ended up back at Square and been on a maybe, you know, still non traditional in that I dropped out path, but maybe more traditional that I just worked at a larger, you know, tech company type path.

Yeah, it makes a lot of sense and it's interesting to hear the personal aspect as well. Fast forwarding to current day. You obviously you talked about at the beginning you're co founder of Varda Space. Now it's pretty interesting. I look at Keith having co founded Opendoor while being a full time vc. Now you're co founding Varda Space full time vc. That's something that obviously it's not totally unique, but it's uncommon enough that the fact that you and Keith obviously work hand in hand and you're both doing that. Keith's company is obviously off to the races at Opendoor Varda Space, just early and getting started, but with huge ambition. What makes you guys comfortable starting a company while also being a full time vc where that seems like something that a lot of people just wouldn't even think about doing?

Yeah, I think part of it is I'd say the average VC in Silicon Valley just doesn't have that hard of a job job. It's a job that at least when I started in Silicon Valley was seen as sort of like retirement in some ways. I feel like only in the more recent years has it become sort of like a hotter, more sought after role and also because that started to get sort of like more competitive. But I'd say part of that reason is why I felt like when I worked at Coastal Ventures, for example, it felt pretty anomalous to see sort of how hard the partners worked at an average VC firm. Typically, typically a partner manages, let's say on average, if you divide the latest fund size by the number of partners, you're talking about 30 to 40 million. And typically partner only has between three to five active board seats at a time. At close to ventures at the time, the amount per active GP was closer to 5 to 6x at and the number of board seats was also basically 5 to 6x that. And so I think one could credibly say that just the average KV partner and now also is at FF just like works 5 to 6x harder than most VCs in value. You're just allocating a lot more capital, you're working with a lot more companies, you're meeting with a lot more companies and they're just honestly just having met a lot of different VCs, just putting more raw hours in the day. I think part of that, let's say professional ambition leads to being like, well, I'm putting so many hours in, I'm competing at such a high level and yet there are particular ways that I want to influence the world that I'm not seeing happen. Both Opendoor and Varda really came out of like personal itches that just weren't being scratched by the like founder community, let's say. Right. Keith had been thinking about, you know, Opendoor, it was called Home run back in 2003 for basically a decade and was pitching people on it, trying to convince people to do it with basically like no success. Like he'd been pitching this idea of like, somebody needs to do this, somebody needs to do this over and over and over again with zero success. And at some point I think it's like, you know, the whole point in some ways of like, you know, doing ventures because like, yeah, you can like, you know, make money doing it, but like the fun part of it is like really helping, you know, I think it gives you the, the ability to have outsized impact on the future of technology. And at some point if you've got this idea that you've been itching about and craving about, but you're not seeing anybody do it, at some point you just have to scratch that itch and maybe you're more comfortable doing it because you're like, well, I already sort of like outwork all the average VCs anyways, how to get an additional whatever, 40 hours a week with another full time job incubating company. Like it's just like the cherry on top of the cake. And it's worth it because it's this particular idea that I've been thinking about. And so that was kind of how Varda came to be as well. I'd been thinking about sort of in Orbital manufacturing for almost a decade, had been talking to friends about it, pitching founders on it, analyzing the various companies in the space, but nobody's quite doing it the right way. And at some Point it was sort of like the summer of this year where I just had just this flashpoint of frustration where I was like, I'm just going to be looking another five years down the line, looking back and being like, still nobody's doing this the right way. And so I was like, I just think I need to kind of pursue this. And so there's huge opportunity costs. Like at the end of the day, it is going to eat into the VC time, but it can be worth it if the company has an outsized outcome. And in particular, especially with both Keith with Opendoor, let's say Trey Stevens, and Earl myself with Varda. It can also sort of make you a lightning rod for the types of company of all the companies. If you're starting a real estate company now, like, everybody goes and pitches Keith. If you're starting a defense company now, everybody goes and pitches Trey. The goal with Varda is also that whenever anybody's starting a space company, they come and pitch me because they see that I'm one of the few people that is sort of both investing in space companies, but then also have the experience of having started one. And so there are some, let's say, dual uses to the time. And it's not like the time towards Varda, doesn't have any application or use on the VC side of my business, but realized that there's basically a huge opportunity cost. Set myself a sort of list of requirements of like, okay, in order to do this, I would want like an absolutely killer CEO that was like high up at SpaceX, really well respected on the Dragon project, and like has entrepreneurial ambitions and has like leadership experience. And I'd want a chief scientist that had basically done microgravity manufacturing before. And like the first one there's maybe like 20 people I could recruit from the second one was like five. And so I remember telling my girlfriend in July, I was like, there's just no fucking way I'd pull this off. Just like, you know, there's just so few people for me to pull from. Likelihood of them being available, interested, like one to work on this with me taking these sort of incubation deal, just super unlikely. I put it at sub 5% chance. But yeah, unfortunately over the past six months or so, that chance went from 5 to 100%. And so now all of a sudden I remember as we were Starting to pitch VCs, I felt like I was staring down the barrel of a shotgun where I was like, oh my God, I pointed the shotgun at myself. And now I actually have to do the damn thing. But yeah it's worth it for the idea and yeah it's a lot less sleep and I kind of tweeted this somewhat facetiously about a couple days ago. Definitely been feeling it over the past week of just if you want work life balance, I definitely don't recommend working really really hard as a VC and working at a place like Coastal Ventures or Founders Fund where you just have a lot more responsibilities. But then I especially don't recommend having a second full time job on top of that. It means you don't really get much time outside of work. It's just work, work balance.

So in short the answer is basically you just have to like work really hard. And that's there's a lot of details but it comes down that's pretty funny. You talk about there's maybe 20 people at SpaceX that you could choose from for the one role, the CEO kind of type and then for chief scientist there was maybe five people in the world that would fit the bill. You were fortunate to get those people and co found the company together. Do you think about how do you contrast that versus what Thiel talks about which is you want to have a history with your founders, you want to have your founders be long term friends who you know and trust. It just makes everything a lot easier. Or how do you think you can overcome that having just. I don't know if you. Maybe you do have background with some of these people but was that a consideration at all? And thinking about co founding this company and just finding someone versus actually having the people already who you know historically it's interesting. Yeah.

I actually didn't know that Peter speaks a lot obviously publicly and so I wasn't aware of this particular belief of his, but it's actually one that I probably relatively strongly disagree with. And the kind of quote and this is definitely a Keith ism. I can't strike of claim this but helped sort of dig into the data on this forum as well. But if you look at the sort of technology companies that have IPO'd over the past decade, there's actually like pretty limited correlation between the amount of time that the sort of co founders knew each other before starting the company and the net success of the company. And so Keith sort of took this approach with Opendoor as well. Right. Like all the co founders of Opendoor didn't really have much history with each other and didn't know each other. The analogy that I always like that Keith always uses is a lot of the most successful Startups look a lot closer to producing a film than they do sort of other projects where there's a script writer that comes up with the script and then you go out and have a casting director that goes and finds the best actors for each individual role. But it's not like a requirement that those actors have necessarily worked with each other in order to have chemistry. If you just do a really good job as a casting director, you will just cast people that by default will have great chemistry. And so that was sort of the thesis behind okay, I needed to be able to be such a great casting director that I could find sort of world class people and not only did they have the necessary skill sets, but also be like, you know, meshing personalities both with each other and myself, such they could well together. And so it definitely sometimes can be more difficult and require a lot more search costs. But I think those types of companies in some ways can be even more successful than sort of. As an example, my original startup was sort of this closer to the Peter type example of knew each other well, had similar skill sets, similar backgrounds, but in some ways that ended up not working out great for the company because you basically just had two MIT computer scientists and we had limited diversity in our background and skill sets and that ended up not working super well for us when it came to tackling problems that were outside of our skill sets. Versus the founding team of Varda comes from extremely different backgrounds, skill sets, personalities and that ends up actually meshing quite well together. So yeah, I guess there's different approaches obviously to building startups. It's not like Peter's point is totally untrue. I'm sure that if you look at just the entire, you know, how often do you are there co founder disputes when the founders haven't known each other for a long time. I'm sure that there are more when they haven't known each other. But in this particular case where you have a sort of VC as the incubator and VCs tend to be very good quote unquote like casting directors. Because we've just seen so many different sort of founding team pair ups and how they mesh well together, I think you can kind of take a slightly different approach than sort of the approach that Peter recommends.

Yeah, it's interesting. And I think one of your guys, you know, outside looking in, one of the big things that makes Founders Fund so successful is you guys take, you know, reservations in disagreeing with each other and thinking for yourselves. And almost everyone's independently a contrarian, which Ends up bringing a lot of interesting ideas to the table and sometimes conflicting ones that can both be true in different situations. Let's talk about Varda Space specifically. There's not a whole lot of public information I don't know how much you're comfortable sharing here on the podcast. I know basically that you're focused on, like you said, orbital manufacturing, manufacturing special products in space. Can you do like a brief intro and then there's a couple of things that like I did find that I can ask about, but would love to hear. Just like the brief intro of what you can share?

Yeah, I think, you know, when people think of space factories, they think of something like, you know, truly fantastical and out there. But the way to sort of like simplify it and make it sort of more relatable is there are a wide array of products that are valuable to people on Earth and increase our quality of life down here that can can only be manufactured in a microgravity environment that is in space. And there are people that have shown this via research on the ISS and have even brought some of these products back down at a small scale. Varda is basically focused on commercializing that research and making it so that we have sort of large scale supply chains that manufacture products up in space, but then are brought back down to Earth. And so at the end of the day, like our end customers have no clue that our stuff got made in space. Right? Like, we're not a space factory that makes stuff for space. We're a space factory that makes stuff for Earth. And most of our customers on Earth have no clue that their products came from a space factory. So that's kind of the sort of simplest introduction to kind of what we're doing.

Right. Can you talk a little bit more about some of those products that makes the most sense? Like I read that it's got to.

Be.

It'S super sensitive products, like super high cost products. I even read like organs, like man made, or rather, I guess robot made organs. Robot made meat. What makes a product. You talked a little bit about the microgravity aspect, but like, why can't you build certain products on Earth that you can build in space? Or at the very least, why are they cheaper to do so in space?

Yeah, the high level physics of it comes from basically controlling crystals. So basically on Earth you have sedimentation, you have convection, you have gravity, these things. Cause maybe a really high level example that's easy for your audience to understand is imagine trying to 3D print a human heart, right? The classic problems that are really difficult in 3D printing are super thin walls and complicated shapes. And as you can imagine, a heart has many thin walls and many complicated sh. And so if you were to start to try to print that on Earth, the moment that you have this super thin wall, it would basically start to flop over in a gravity field because it wouldn't be able to hold itself. Because the only way that a heart really holds the structure is once the entire thing has been built, you can't build the bottom third of it, because the bottom third, all of those walls within your heart, will basically start to flop over, and then you can't continue to 3D print them. But the flopping over doesn't happen when you're not in a gravity field. Right. And so because that you can actually much more precisely control how you grow tissue. Sort of true with, you know, everything from semiconductors to fiber optic cables to carbon nanotubes. Basically, if you remove gravity from the equation, you can control these very delicate materials and how they're produced in a much more precise fashion because they're in a sort of uncontrolled environment, right? Like, they, there's. There's nothing affecting them. There's no, there's no, There's. They're in vacuum. There's no gravity, there's no sedimentation, there's no convection. The only thing being applied to them is whatever you do in your manufacturing process. Like, the other way to think about it is like the law of physics in our factory are just fundamentally different than the law of physics on every factory on Earth, right? So the Taiwanese semiconductor manufacturing lines, they all have to operate all of their processes and the way that they build things inside of a gravity field. And it turns out if you remove that gravity field, there's a lot of things that get a lot, a lot easier. And so, hell, one day, I wouldn't be surprised if Apple is developing their next whatever, M5 silicon chips in space rather than Earth, because you can just do them at much cheaper rates, much higher yields, much higher quality in space than you can on. On Earth. So, yeah, happy to dive into any one of those examples, but that's kind of the way to think about it is like, remove gravity and controlling these types of manufacturing processes gets a lot easier and a lot cheaper.

Yeah, I don't want to get super technical on the podcast, but that's a good overview that's helpful and certainly, like, lays out the groundwork for what are the things that make most sense and why. How did you get into space in the first place and how much of, how much of actually starting Vartospace was like a personal thing. You just kind of had it with not seeing this thing exist and wanted to make it yourself. Versus the easiest question and the most obvious question to the why now for your company, to me would seem to be, and I think it's been ran about a little bit as well in relation to Varta. Space is the rapidly decreasing cost of loss of rockets. And I think you even said in one of your substacks that it was like almost Moore's Law for launch costs.

Yeah, the primary motivation behind it is at the end of the day, the reason that I'm excited about space is because I want to help humanity explore that next frontier. But then in particular, I think orbital manufacturing has been an underappreciated area because most people have just been focused on basically satellites plus launch. But at the end of the day, look at where I am right now in California. California was not developed by the government paying for Lewis and Clark to go on exploration missions. California was developed because of the gold rush. And orbital manufacturing to me is the equivalent of that gold rush for space where if you industrialize and create commercial supply chains in low Earth orbit, that will significantly accelerate humanity's path into the stars. Way more so than just sending a huge rocket filled with people to Mars or the moon. Because at the end of the day, the way that exploration and consistent supply chains happen is via commercialization, not through sort of like one off attempts or state funded endeavors. And so that was sort of like the primary motivation. And for sure, yeah, the why now? And sort of in particular in July, why I had this like flashpoint frustration was like the launch costs were dropping even faster than I expected. You know, Falcon 9 has now had several rockets that have launched for, you know, there was a rocket that launched for the first time in May and by the end of the year had gone on six different launches. Like I definitely thought they were going to get through reusability relatively quickly, but like not this quickly and not at this level of scale. And so both with Falcon 9 reusability, but then also having some pretty close friends working on the starship project, talking about, you know, right now SpaceX on their website lists at $5,000 a kilogram, rapidly decreasing down to targeting roughly $3,000 over the next year or two. But my friends on Starship are basically guaranteeing me that they'll get to $50 to $100 a kilogram once they get Starship up and going by 20, 25. I pretty credibly believe those numbers. Maybe it'll slip by a year, maybe by two years, but it's not going to slip by much more than that. And at the end of the day with orbital manufacturing, that cost per kilogram is the thing that really matters. Because the way that you can think about it is it costs you a certain amount per kg to send something to space. But then there's also a certain benefit per kilogram of manufacturing something in space. Right? Like when we're manufacturing semiconductors, we have to compare those economics to the Taiwanese semiconductor industry. And there's for sure benefit in space. But the dollars per kilogram benefit needs to be greater than obviously the cost of sending something to space. And so as launch costs get cheaper and cheaper, the types of products and the volume of products that are more profitably manufactured in space continues to increase. And so I sort of started to see this curve and I was like, now is the time to start an orbital manufacturing company. Not five years from now when you. But it was up and going because then you'll sort of be too late to the curve and won't be able to take sort of full advantage of it. Because there's just like a lot of, there's a lot of sort of in house domain expertise that you need to build up of. Just like how to manufacture things in orbit. Right? Like nobody's made semiconductor manufacturing lines in microgravity. Like everybody relies on gravity for a lot of different sort of fail safes and components of the manufacturing process. You need to remove that. And so not only the actual manufacturing, but then also just the supply chain. How do you get things up there, how do you get them back down, how do you deliver them, your customers, how do you package them? There's a lot that needs to get built out in parallel with the drops in launch costs. Not waiting for starship to be done and then only then starting down the orbital manufacturing path.

So you talk about all the different complexities. You guys raised $9 million seed funding. I don't really know too much, but it doesn't seem to me that that gets a lot done in a space related industry. But I understand you guys aren't actually going to be building the rockets yourself itself. So there's things that you can do with that $9 million. Would just be curious to hear high level, what you expect to do with that seed funding that you can then get to the next point in the chapter, raise some more money and keep going from there.

Yeah, what I'd say is Space has gotten a lot cheaper over the past decade. And so, yeah, a project like this even five years ago would have required a minimum $100 million raise and probably a 150 person engineering team to really make it work. Thankfully, we can make our MVP space, factoring that we'll be sending up ideally in the next couple years with not much more capital than we've already raised. Actually it's going to require a little bit more, but not much more. Thankfully, space has gotten a lot cheaper than you'd expect and we'll have more out in the public soon discussing our plans and our timelines and things like that. But yeah, I think it might seem counterintuitive, but with 9 million bucks, you can actually go quite far in space nowadays, especially comparison to what you could do five years ago.

Yeah, and that's how I wanted to preface, I don't know much, but it just seems like you guys have huge ambitions and obviously this is just the first raise and a very substantial seed. But I wanted to hear what step one was, so that's.

Yeah, step one's kind of just like the MVP of the space factory, right? Like prove you can do it at a small scale. And if so, then Both commercial partners, DOD, other VCs are very interested in seeing that system scale up. Both through economic benefit, defense benefit, actual commercial benefit. Tons of different parties that are excited to see something like this come to fruition.

You made the analogy to California with the gold rush earlier. This is again something that I don't know too much about, but just from studying bitcoin and crypto, I've heard people talk about how gold, while we appreciate it as being being definitely scarce, there could be technologies in the future, such as asteroid mining that could potentially discover gold elsewhere or like deep sea underwater as well. And I don't know if it's like literally gold, but I know asteroid mining is something that a lot of people are interested in. I haven't really done too much research myself, but we're curious if that's at all part of kind of the roadmap for varda.

Yeah, I mean, I definitely am a person that's super excited by again, furthering humanity's reaching of the stars and asteroid mining and sort of in situ resource util. Using resources not from Earth to develop space, but from space to develop space are things that I'm super excited about. But the problem that I have with a lot of these ideas and paths that people are pursuing is like nobody has a use for those resources. Like if I brought an asteroid with a ton of materials into low Earth orbit today, nobody would have any clue what to do. We don't know how to bring that down to Earth safely to use materials down here. We don't know how to use those materials in orbit. And so that's why it's such a key component of the path is taking the first very bite sized approach, which is early on we're going to be taking things from, from Earth, making them in orbit and then bringing them back down. But eventually we don't need to get the raw materials from Earth. Eventually we can get those raw materials from asteroids, from the moon, etc. But we need to set up a supply chain first that is utilizing resources from Earth before we can even start to think about utilizing resources from outside Earth. Because even if you brought those resources right now into orbit, again, nobody would have any clue what to do with those resources. And so for sure, in our long term ambitions we would like to pursue those. Whether it's lunar ice mining or bringing asteroids into low Earth orbit and utilizing those raw resources. Definitely things that we want to do. And we think whether we're the primary customer for those or how we even do it ourselves, that having something like Varda set up in the lower Earth orbit makes a lot of these other ideas much more technologically viable.

Yeah, it's certainly an exciting roadmap and I'll look forward to following along and seeing as you guys start to release some more information publicly what's going on and hopefully following the progress over the years to come. Let's bring things back to Earth little bit. One interesting investment that you've made that I read about on your substack was a company called Cover. They're building houses on Earth and starting specifically with additional dwelling units. ADUs and it seems like for me, like a cookie cutter business for Founders Fund. Both from Peter's philosophy to Keith to yours, I assume there's some overlap and it's like a super vertically integrated business where they're taking care of everything. For people who are Interested in these ADUs, can you talk a little bit about that investment and like why you're excited about the possibility that homes can be more modular and really disrupt the high prices for housing that we have today.

Yeah, I mean through the mentorship from Keith and exposure to Opendoor and a variety of different companies just got a ton of exposure to the real estate and construction industry and over the past couple of years had met a lot of different companies doing everything from multifamily units high rises, ADUs, single family, family homes and trying to innovate on the technology surrounding construction. And unfortunately most of the companies that I've met didn't actually tackle the core economic lever of construction, that is how the homes actually get built. There are a lot of people building software to try and coordinate. There are people trying to move the labor off site like companies like Katera, but at the end of the day they're still sort of using the same sort of plumbers, electricians, drywallers that traditional home construction does. And at the end of the day because of that, there's just limited ability to significantly improve the economics of home construction if you're still basically using the traditional techniques and just throwing software layer on top of it. Now there are some companies that were sort of pursuing the world of let's say like 3D printing of homes, which was fundamentally obviously changing the construction techniques. But having looked at a lot of these 3D printed homes, they're not homes that at least I would want to live in. And, and so because that it's hard for me to get super excited about investing in them. And so Cover was actually the first company that I met that was both one producing homes that I would actually personally like want to live in. Like I am very much looking forward to one day being able to afford to build my first Cover, but then second, they're the only ones in the market. And still to date this is effectively the case that are actually like fundamentally changing the way that the homes actually get constructed in terms of utilizing the construction. And it's primarily because they basically took a bunch of basically ex Tesla engineers and applied the philosophy of automotive lines to home construction. Meaning that rather than basically having super high skill labor doing individual tasks like you know, drywall, electrician, plumbing, et cetera, they instead had a ton of extremely difficult in house full stack software that they built that will take the basically designs of. And they don't do just ADUs, they also do some single family homes, break that down into particular sort of like modular components, then go out onto their factory line and then can be actually produced by relatively low scale labor where like each individual member on that factory line has a very simple job. Like one person literally just drills holes, the next person just connects this wire to like this wire. But they're like extremely low skill. Like you and I could go swap in for any of those people on the construction line and be able to actually help out versus like I have no idea how I would like, you know, swap in to Katera's. Model and figure out how to be an electrician at Katera. And it leads to just much, much better economics where they can deliver super, super high quality homes in the 99th percentile at like the 40th or 50th percentile of cost per square foot. And also just the floor on their construction costs is much, much lower because they're not reliant purely on labor. Like a lot of what they're starting to improve their economics by is more just providing more leverage on their labor and also just getting sort of bulk deals for some of the materials that they have to purchase. And so they actually to get down to the 5th or 10th percentile of construction costs, which typically would look like shanty homes, while producing extremely high quality, beautiful units that I would be absolutely thrilled to live in. They Produced around roughly 20 units or so today, raised on the order of around $10 million, but are rapidly scaling up their production and revenues and are off of the races. And so it's been amazing to see, see the company invested maybe a year, year and a half ago when they'd only produced maybe about six or seven units total. So they've basically tripled that over the past year and a half and then also significantly improved the rate of production where they're doing roughly two or so a month now. Yeah, super excited by that team and the opportunity they're tackling. And I'm always happy to see people pursuing the lowering of housing costs. And so I think that's a lot of what has led to at least especially California's profits problems. And so I look forward to having more people live in super high quality homes for much cheaper prices.

Yeah, it's pretty interesting. I've been talking about for a while that I expected kind of like a Tesla of housing to come in the 2000s at some point. Cover certainly seems like a great, if not the best candidate to kind of be that. And I didn't realize how literal that kind of was with the fact that you said that there's a lot of Tesla people there or former Tesla people there. And I know that a part of the strategy as well, well as starting with the Roadster and like you said, it might be even out of your price range, really starting out for the ultra wealthy and then eventually they can launch the S and then ultimately the three. This strategy is something that's obviously worked very well for. Tesla could work, you could see it working very well in housing as well, maybe a little bit different, but related to Tesla as well. I know you have investment in the self driving cars space. You did a great podcast with your colleague Mike Solana that I encourage people to go listen to if they want a deep dive on the self driving car stuff, but without diving too deeply into it. You didn't really talk about Tesla on the podcast at all. I'm curious. It seems to me that, and I know you have an investment in the space, so I don't want to have you contradicting anything there or anything like that, but if you're cool talking about it, I'm curious what your thoughts are on Tesla. Tesla's full self driving. Obviously it's not literally full self driving yet, but do you think that they have a shot to be the first winners in the space?

Yeah, I mean the reason that we were so excited about the company that I discussed in that podcast with Solana was because their infrastructure and architecture was actually most similar to Tesla. Sometimes the way that we would describe the company to other investors as to why we invested was we would describe them as their Tesla, but for everybody else, because the Audis, et cetera of the world don't know how to develop Tesla like software. So no, I'm a huge fan of the Tesla approach, which I would describe as sort of cheaper sensors, more reliant on vision and more reliant on like extreme levels of data collection. Like the way that I sort of analyze all these companies is just look at basically what their sort of dollars per mile of data collected cost is. Because with most of these sort of machine learning AI algorithms, what matters is having a large enough training set on especially the extreme edge cases like most of your miles that you collect in terms of data are actually completely used after you have 100,000 miles of driving on the 280. The 100,000 and first mile is basically completely useless because when you are encountering semi truck rolling over or construction blocking off half of the highway, those are the types of miles that are incredibly valuable and actually train the algorithm on completely new edge cases. Because the way that I sometimes think about self driving is what you really want do to to do is you don't want to drive in a new way. Right? Like there's a lot of instincts that humans have around when they see a car approaching in a particular way or at a stop sign, you add a red light, you sort of intuit like what the human is thinking. And so what you ideally want to do is you don't want to drive like a machine, you just want to drive like a human would drive in Every scenario and the best way to know how to drive like a human is to have data about how a human has driven in this particular scenario before. At the end of the day all that matters is how much data you've collected. And so when you look at companies like Cruise and you look at the amount of data and miles they've driven relative to the total budget of the company, you're talking on the order of tens of dollars, if not hundreds of thousands of dollars per mile driven. And so if you want to get to a billion miles, you're talking about quite the budget of capital going towards just doing the data collection, let alone the actual product development. Versus both Tesla and the company that you're referencing going Ghost basically have incredibly sort of cheap data collection because of both sort of the cheap sensors and then also just the number of miles driven sort of in the vehicles that are outfitted with their sensors. And so Tesla is probably on the order of like a tenth of a cent. And Ghost, just because of the subscale and doesn't have access to the whole Tesla user base is probably on the order of like half a cent per mile, but still orders and orders of magnitude cheaper versus the Cruise Zoox waymos of the world. And so yeah, fundamentally if I had to place a bet on the self driving race, I would absolutely put it on Tesla being number one and Ghost being a very fast number two. That is for the rest of the car market beyond Tesla, since I don't think Tesla is going to be allowing other automakers to retrofit Tesla's sensor stack onto their vehicles versus that's the explicit goal for Ghost.

Yeah, it's really interesting perspective and I'm glad I asked because it adds to my understanding from what you were talking about with Solana. We have about 10 minutes left here. I want to touch on a few different kind of random topics. You're interested in a lot of interesting things that overlap with myself. So one thing I read, you actually wrote back in, I think it was 2012 when you were an intern at Square, you wrote a few blogs that I was to able to read. One of them you were talking about how it's important to, I guess one of your friends had met Sergey Brin and didn't have anything to say. And you wrote about the importance of always having basically a pitch or at least something interesting to talk about in case you run into Elon Musk in a coffee shop or something like that. And in that article, just in passing, you gave an example of one thing you could be ready to talk about would be online currency. And I kind of took note because that was like 2012. Were you paying attention to crypto back then? And if not, or if you were, would just love to hear your perspective on crypto, if you have one, and how long you've been following or aware of the space.

That is actually extremely funny. I mean, yeah, I've been a long time, let's say follower of the space, but generally have been relatively hands off in terms of both financial and personal involvement. I think it's an interesting industry. I'm glad that it's having the success that it's. It has, but it hasn't been something that I guess I personally have been super passionate about or thought about a ton. So it's actually kind of funny to see. I mean, I can imagine in 2012 I was at Square and so I was a little bit maybe deeper in the world of financial services and thinking about this stuff and obviously Jack even at the time was thinking about and talking about bitcoin. But yeah, unfortunately, maybe should have back then put some capital into bitcoin, but it was kind of more focused on. More focused on sort of putting that capital to work into myself instead. And so I think at the end of the day that's probably the better bet. But yes, definitely, I'd say both myself and FF as a whole, we're definitely bitcoin bulls and think that bitcoin maximalist, let's say, and think that that is going to be the largest market crypto coin for an extended, extended long period of time. But then excited to also see sort of some of the regulatory changes that are starting to accept some of this. The OCC passing the recognizing block as a sort of similar technology to Swift and some of the other sort of banking APIs is great to see that people are starting to adopt this stuff at scale. There's obviously some of the more worrying stuff around some of the data collection that some regulators want to do. But net Net, I think it's great that the Fed and banks have a little bit more competition and some headwinds ahead of them if they want to keep printing money in an unfettered way. There's, you know, I like a true alternative.

I'm sorry, you. Are you there?

Oh yeah, hey, sorry, sorry, you faded.

Out there for a second. It's happened a few times over the course of the podcast, but I think I should be able to cut it up fine. It's just like every once in a while. Okay, last couple of things another interesting technology, GPT3, you wrote about it a bit. I know you were playing with it or earlier. It was all the hype for a little bit and now it's kind of faded off into the background. I'm sure a lot of people are still really excited about it. Is there anything that you've seen kind of developing or bubbling up since the hype cycle might have worn out a bit, that you're really excited about seeing actual applications using GPT3 coming out in the near future or it's totally fine if you're not as well?

Yeah, I mean there's two sort of early stage companies that are utilizing GPT3 and have sort of partnerships with OpenAI that are building, I mean still extremely early stage business, but they are like real businesses. There's Paul Yakobin with his copywriting tool, basically helping copywriters come up with various ad copy. One of the most difficult things is you're sort of doing DTC marketing is you're best off advertising on Facebook when you have 100 different variants that allow Facebook to sort of a B test its way into what resonates most with your audience. But as a copywriter, it can sometimes be tough to actually create 100 high quality and quite unique variants. But turns out that's something that GPT3 is actually really good at. Um, and so he's starting to build up. You know, I think he actually posts like MRR numbers publicly, but I think he like just crossed like somewhere around, you know, 60 or 70K MRR. So again, super early stage business, but still interesting to see that somebody's actually getting to some level of scale built on top of GPT3. And there's a set of founders that I'm forgetting the name of the company or their name that basically are doing sort of like email autocomplete tools based off of GPT3 that are at a roughly, you know, maybe similar slightly subscale in comparison to that, you know, stage. And so there's clearly, you know, some developers that are actually now starting to build commercial businesses on it. And then, you know, I think it was a day or two days ago, OpenAI just released a sort of version of GPT3 that allows you to put in basically like freeform text for describing a image. And then GPT3 actually generates the image. You can put like a snail made of corkscrew or a penguin dancing at the edge of a cliff. They actually come up with cute little kind of like illustrations of describing sort of what you typed out. So it's super interesting to see the capabilities of their software and how rapidly, rapidly they're expanding. But yeah, those are probably the two sort of, let's say, most interesting developments is people actually commercializing on top of GPT3 and then also them starting to at OpenAI certainly expand the use cases of types of, let's say, quote unquote, APIs that GPT3 offers beyond just text generation. Now they're doing image generation.

Right. So I ended the podcast with Keith. I asked him about a few of the most interesting people he's worked with, from Peter Thiel to Elon Musk and Jack Dorsey and people like that, and kind of what he had learned from them. Curious to ask you the same question to close this one out, starting with Keith and then maybe a couple other people you've worked with. Some of the most interesting learnings. I know you have a long form podcast with Eric Thornberg about specifically lessons from Keith and you've written a lot about it as well. But really, if we could just be super specific and just pick one thing that comes to mind very often has been very useful for you. Be curious to hear what that might be. Be.

Yeah, I mean, I think the somewhat pithy way of putting it that is kind of my. One of my favorite quotes from Keith is on average, if you look in Silicon Valley, the quote unquote success rate of startups that are decently funded, have the right teams, etc. Are roughly 10%. But Keith's belief, and this is something that he's really imprinted at me, is basically like if you don't do, or if you just avoid all the dumb shit, you can actually get it so that your success rate is actually closer to basically it actually has sometimes more to do, which is kind of like macro environments. Did you choose the right idea timings of fundraisings? And you can actually significantly improve your success rate. And so I do actually think that operating is actually a science and it's a lot of little things and a lot of those little things sometimes can be counterintuitive, but if you do all the little things correctly, it sort of does add up to actually significantly impacting your success rate. And so I guess maybe the book that encapsulates this ethos the most that, you know, Keith loves to recommend is by, you know, the former 49ers coach called the Score Takes care of itself. I don't actually love football or anything, but it's a great book that describes like one of the ways that his management philosophy around his football team was rather than trying to focus on, like, hey, we need to win the super bowl. Instead of focus on just, like, all the little things, like, he trained the secretaries, how, you know how to pick up the phone and what the script was. He made sure that everybody had their, like, shirts tucked into practice. It was just like, by focusing on all the little details that actually can add up to significantly impacting your net success. And I think that's probably one of the things that I've learned the most from, is just do all the little things correctly, recruit the right people, make sure that the board decks are actually high quality, make sure that you're talking to the right investors, make sure that you're consistently telling the story, make sure that you're putting in the hours. And in some ways, if you trust the process, that can actually be what makes your startup successful. Way more so than sort of like the pure vision or sort of out there or like extreme energies. It's just like, do all the little things correctly and that'll add up to a big thing.

All right, so I know we're really running close on time now, but I actually do have one more question I forgot, and then we'll wrap things up, I promise. But you had the tweet that went out that the mayor of Miami responded to. I had the mayor on two days ago and recorded with him on the podcast that blew up, went viral. He said, how can I help? You said before that you said, could hear me out. Could Miami be the next Silicon Valley? I don't know if you're down there or thinking about going down there, but would be curious to hear how crazy that was to just blow up. And now Miami for the last month has been just all the rage, and he's obviously doing great work. Mayor Suarez, I'm curious to hear your thoughts on maybe on the one side the exit from Silicon Valley and on the other side, the potential for Miami.

Yeah, I think just like my comments on Bitcoin, I think it's just great that there's more comments, competition. The fact that San Francisco officials now have to deal with Miami mayor stealing their constituents one by one and removing their tax revenue is just going to force them to operate at a higher level than they've ever had to. I think SF politicians have been able to be relatively complacent because they felt like they had network effects and a monopoly. They could never be challenged versus now it's very clearly proven to not be the case. Unfortunately, I haven't gotten to participate as much in that exodus, partially because it just started Varda and definitely basing in the company. We very much have to be an in person company. Can't do remote, kind of hard to build space remotely. I'm pretty locked into California for sure for the next five years. In particular the Bay Area, at minimum for the next two years. And so can't participate in that exodus. And the tweet was partially motivated by. I actually tweeted at maybe five or six minutes after SF sort of announced their latest outdoor dining lockdowns. And so it was originally sort of a pithy tweet of just like frustration. Cause, like, I'd been pretty, let's say, you know, not on the Miami bandwagon, and then saw sort of the, you know, shutdown of outdoor dining. I was like, oh, my God, this is just like so unscientific, unprincipled with data. We have like no Covid in San Francisco. None of that is actually none of that spread is happening via outdoor dining. And that by shutting everything down, you might actually encourage spread because people are gonna hang out indoors together. And so somewhat, you know, sent off the pithy tweet being like, oh, my God, like now I kind of get it. I'm like, you know, hear me out, guys. What if we move silic value to Miami? But yeah, I definitely was not expecting that level of response. And it's been amazing to see how Mayor Suarez has really leaned into this trend and created a real moment and so excited that we also get to benefit from that at Founders Fund, given that we have Keith down there. And so if San Francisco succeeds, great, I'm here and happy to ride that wave. And if Miami succeeds, thankfully, we've got Keith down there to ride the wave as well.

Yeah, that's awesome. I think it'll go down potentially seeing what Miami does. It could go down as quite a historic tweet. I want to wrap things up here. I really appreciate you taking the time today Deli and sharing all this stuff and looking forward to seeing your success as an investor. But also with Varda space, just working on some fascinating things. So looking forward to keeping in the loop on those things. Wrapping up. Where can people follow you on Twitter? Follow Varda Space when they have public announcements, things like that.

Yeah. So for myself, I'm Zeboulgar. That's Z E B U L G A in regards to Varda, probably the easiest. Just go to, you know, varda.com or blog.varda.com you know, and sign up there for, you know, any announcements, but, you know, I'll typically tweet out everything, you know, Varda related. That's, you know, big news as well, so following me can get you that info, too.