Manufacturing in Low Earth Orbit with Delian Asparouhov, Co-Founder of Varda Space Industries

So for our first, you know, call it, you know, 10 plus missions, the re entry capsule is about a meter, you know, in diameter and can bring back about 40 to 50 kilograms of materials. There is a very wide set of basically like, you know, pharmaceutical candidates that we can pursue that, you know, 40 to 50 kilograms once a quarter far, you know, outweighs basically, you know, the total patient population consumption again of the primary ingredient. Our pharmaceutical partners will take that primary ingredient, that crystal structure that we have formed and then go send that to a secondary CDMO manufacturing facility where then that gets put into, you know, a gel capsule, a tablet, a saline syringe, an IV drip, you know, however, that particular, you know, basically drug, you know, is administered to the patient. But that part does not have to happen in space.

Welcome to the Curiosity podcast where we go deep on a wide variety of technical topics with the smartest leaders in the world. I'm Imadha Khan, the co founder and CEO of Mercury.

And I'm Raj Suri. I'm the co founder of Lima, Presto and Lyft. And today we're talking to Delian, who is the co founder of Varda, which is a space technology company doing lower earth orbits and focusing on space manufacturing. And he's also a partner at Founders Fund and has done a lot of investing there as well. And he's kind of well known on X Twitter as well. And I was really interested to talk to Delian. He's really well versed in his space and very curious to learn about space manufacturing, which is a whole field that I had no idea about could make any sense at all. But actually the way Delian explains it, it makes a ton of sense. Imad, what were you curious to learn about from Delian today?

Yeah, I think the interesting thing of his background in vc, kind of investing in aerospace and then becoming a founder here gives them this kind of commercial mindset that's kind of missing sometimes from these hard tech endeavors. And he's really thought about everything from first principles, like how do you do anything in space and how do you do kind of harder in space? I am feeling like much more hopeful about all of space industry after speaking to Delian. I feel like, you know, if there's enough smart people taking a crack at these things from different angles, we're going to have like a real space civilization in the next kind of 10, 20 years.

Absolutely. Yeah. And, and you definitely come away from here in Delhi and you feel, feel a lot more hopeful because he's really thought about it from every Aspect, he knows the technology inside out. He knows the customers, knows the use cases. He, you know, he knows the economic model and the history of what's gone into this. So, you know, I think having people like that work on these types of problems is exactly what we need. And, you know, and the ecosystem just gets better and better too. So very excited to talk to him today. And one, one recommendation for some folks is Dalian speaks fast, so you may want to turn down the audio speed, you know, so you can make sure you get every bit of wisdom he's spouting. So with that, let's welcome Delian.

Welcome, Delian. Thanks for joining us.

Thanks so much for having me. Excited to chat today.

Yeah, you have a really interesting kind of story like software founder, kind of turned VC turned to startup founder in the space. Space, space, space, space tech. Can you walk us through how you ended up here and what your kind of thinking was throughout it?

Yeah, I've had this long term fascination with aerospace since a very young age. And originally it was on where you thought that, you know, the sort of default path was going to be, you know, study robotics and, you know, computer science in high school, go off to, you know, undergrad at a technical university, do grad school at Caltech and then, you know, join GPL and then join NASA to, you know, do deep space robotic missions. Given that, you know, felt like the most, you know, sort of applicable interest to, you know, my skill set and, you know, call it like, you know, freshman year of college, started to take a bit of a, you know, sort of hard left turn and realize that, you know, the world of, you know, let's say more academic training and working at a, you know, sort of government, you know, institution like NASA was less of an interest of mine and, you know, is more interested in the world of sort of the speed of Silicon Valley entrepreneurship there. And you know, when I looked though at, you know, some of the heroes that I had, you know, in the world of Silicon Valley plus, you know, called aerospace, there was really only one common pattern amongst all them. Right. So if you look at, you know, Elon Musk, Chamath Papatia, Steve Jurvetson, etc. All of them basically, you know, sort of made it big in normal tech and then went to go work on aerospace. And so, you know, as I thought about my path forward, I thought, okay, I can do this JPL thing, I can go be like an individual engineer. And I had a lot of friends from MIT that went and did that go be an individual engineer. You know, at Space X, you know, or I can try and follow the, you know, you know, Chamath, Elon, Steve, you know, sort of path and instead like go work in sort of like quote unquote normal tech, make it big there and then basically go work, you know, in space tech. And so, you know, decided that that sort of third path was going to be my path and so decided to work, like you said, on, you know, things that were in sort of pure software, you know, become an investor. And part of why I actually did decide to stick around in the world of investing originally, it's just be just like a one year stopover was because I ended up within the first sort of six, nine months of working at Coastal Ventures, actually ended up sourcing an aerospace investment that we ultimately ended up making Akash Systems. And through that sort of had this like sudden aha moment. This would have been late 2017, early 2018 timeframe, you know, after making that first investment that, you know, rather than just having to wait until I was like, you know, 40 or 45 and it made it big in normal tech and then, you know, work on aerospace, there's a way for me to do it much soon, sooner in a very strategic and interesting way that just wasn't just being an, you know, IC software engineer over at SpaceX. It was, you know, the fact that because, you know, people like Elon Musk had sort of lowered the barriers of entry to the space economy. Let's say, you know, now as an individual investor you could actually, you know, you know, make investments even at, you know, the ages of 23, 24, that I was, you know, Coastal Ventures and start to, you know, sort of work in the space in a way that combines both technical expertise as well as, you know, call it more business, you know, sort of more business background. And so kind of got, you know, hooked on this idea of hey, let me, you know, start working in aerospace today at 23, 24 adventures. The only way to do that today. Great. Let me, you know, sort of keep doing, doubling down on that. And by the way, I kind of like being an investor a bit more than I like being a founder. And so let's just, you sort of lean into this and hopefully I can get back to the like building space companies, you know, one day, a bit later. And so it turns out sort of paying that tuition for three, four or five years. You know, investing into space companies was a great way to sort of eventually prepare myself for the founding of Varda. So yeah, it had always been this let's say lifelong interest in how to navigate my way towards building an aerospace company, but with a variety of sort of factors and partially due to the advent of reusable rockets, rather than having to wait until I was 60 to do something like that, I could actually do it sort of much sooner in my career.

That's an interesting path. Would you recommend that path to kind of the younger Delian, or would you say that's like a pretty random set of things that came together and it would be hard to replicate?

You know, I think today there are easier ways to accomplish this path in that because the space economy has grown so much. If your number one criteria is the same as mine, which is, you know, build your own interesting space company and you're, you know, whatever, 19 and just dropped out of MIT relative to, you know, when I dropped out in 2013. There are a much wider set of very interesting early stage companies operating in the space economy. In 2013, it was effectively just like SpaceX, Rocket Lab and Planet Labs. That's basically it. There's only three options. And at that point all those companies were relatively scaled up. Your ability to like, you know, join the founding team basically had already passed. If you look at it in the space economy, I can't actually think of an interesting space company that was founded between 2012 and maybe 15. Everything that was founded in that time frame was either too late in that it was a rocket company that, you know, wasn't able to then compete the SpaceX and Rocket Lab, or it was too early in that it was, you know, a fanciful idea that did not make sense before, you know, the advent of reusable rockets. And so it was too early to its time. If you are, you know, 19 and dropping out of MIT today, I think there's a much wider set of opportunities that you can join at the very early stages, not just be a cog in the machine and also learn a lot about the like, you know, space economy. Right. If I look now in the summer, you know, fall of 2023, what are the like, you know, interesting. Between seed and Series B aerospace companies, I can now name like 10 of them versus, you know, I think of the 2000 sort of 12 through 15 times. I think you could have really, you know, named basically none. And so I think the alternative path today would just be go join an early stage aerospace company, use that experience, you know, to, you know, then, you know, go build your own. So I think there's a much more direct path today. In some ways I had to Kind of sit on my hands for a bit to, you know, wait for the progress in the ecosystem to catch up to the point where somebody with my experience could actually dive into it in a more interesting lens than just being an individual software engineer. Yeah.

You said you had four to five years experience on the VC side investing in aerospace and space companies. What would you say were the biggest kind of advantages of that? And do you think there's major kind of disadvantages from this kind of VC mindset you kind of came into this with?

Yeah, I mean the advantages were quite immense in that relative to even hyper sophisticated SpaceX executives that had been at the company for like six plus years. My understanding of the end use cases, how to actually sort of build up a business model in space, you know, what the plethora of various sort of vendors, regulators needed to interact with was actually much deeper, even with a much smaller set of years of experience. Obviously. Now did I have as many years experience like actually building spacecraft, going through the systems engineering of that, you know, thinking through the trade offs? No, but most of that stuff is not necessarily immediately, immediately the first sort of relevant factor when you know, considering what business to build. So I think a ton of advantages there. I do think obviously there would be great disadvantages if I was the CEO of Varda with the only the experience that I had in that my ability to then assess sort of top tier mechanical systems, thermal and engineers was effectively nil. But that was explicitly something that I knew that I would not be great at and was looking to round out with a co founder. So I think the disadvantages were I guess pretty clear, but I don't think also impossible to solve for. And the advantages were definitely pretty sort of immense. Not only understanding, you know, how to analyze and understand a particular business model in space and what the end users are, but then also obviously like that skill being then helpful in relation to, you know, describing the opportunity to investors for, you know, financing.

Very interesting backstory. We just love to dive into Varda and ask some questions about like, you know, why Varda? Why, you know, clearly the space ecosystem is exploding. Why did you pick this particular problem?

Yeah, the particular problem space that Varda exists within is something that I've been fascinated with since call it like 2009, year 10. I think if you study all of human history, when you look at any time that there's a permanent human settlement outside of where the current society is, the only time that those things ever become sort of long term sustainable end up being with economic incentives. Whether you Have California gold rush, the original United States colonies, you know, the Portuguese and the Chinese, you know, naval empires in the 1400s. All of them, you know, follow this familiar pattern where, you know, when there is not a continuous economic incentive, things fall apart. When there is, things become very sustainable. And that's why, you know, in the Apollo era, we effectively, you know, visited the moon a handful of times and never went back. Because fundamentally there was no sort of economic use case for that. And, you know, governments are only willing to throw empty dollars towards sort of deep research capabilities for so long. Ultimately, if, you know, they're not making a return on it, they themselves are, you know, not particularly efficient, but they are still, you know, ultimately capital allocators. And so when I thought about sort of the future of space, you know, it was clear that there are people thinking about the early economic use cases around satellite communications. Obviously things like Starlink, the Earth observations, you know, taking photos of the planet, like Planet Labs, ici, et cetera. And while those economic, initial economic use cases were interesting and definitely the right ones to pursue before reusable rockets, none of them really had any justification for human presence at any level of scale. Right. You know, the moment that you're scaling up Internet communication satellites, all you're going to want to do is just basically build more and more parallel, individual, small, fully automated satellites. Same thing basically with, you know, taking photos of the Earth. But industrialization of space, whether it was like asteroid mining, you know, lunar ice mining, or in space manufacturing, all of those were business models where, you know, fundamentally, you know, autonomy was absolutely going to be relevant and almost certainly kick off the use case. But these were highly complex industrial processes that, if you observe those same processes on Earth, absolutely required pretty significant human presence, even in the most automated facilities. And so my idea was, you know, when the time comes, you know, focusing on the industrialization of space is ultimately what's going to create economic incentive for there to be humans having extended presence in space. And that's how you eventually get to the point of having, you know, a city the size of San Francisco and low Earth orbit and eventually a permanent lunar base. So that was the original fascination called in 2009 through 11, in 2011 actually, you know, considered back in the day, originally working, potentially working with some of the very sort of first generation companies working on some of these problems, but things like Planetary Resources, Moon Express, Made in Space, these were all Silicon Valley VC sort of funded companies back in the day, but ultimately felt like the time period was not yet sort of correct. In that all these are predicated on easier access to space. And that fundamental sort of input had not been solved yet. And so as time progressed, and especially in call it the 2017 timeframe, where it was clear to me, if you basically study the curve of SpaceX's mass to orbit every single year is almost a perfect exponential curve. And so it felt clear to me that the access to space problem was going to be solved in a very short time frame. And so I did sort of a deeper dive into each of these use cases. And to me it felt quite obvious that if you looked at everything from these, and again, probably top three being these, but many more between call it lunar ice mining, asteroid mining and in space manufacturing, it felt very clear that the easiest one to commercialize in a very near term timeframe was in space manufacturing. In some ways, just given the logistics and the ease of it, like I love asteroid mining and lunarized mining, it'd be very cool to get to work on those one day. But those are still, you know, definitely pie in the sky relative to just staying very close to the Earth, manufacturing goods and bringing them back down. It's just like logistically a much sort of simpler problem instead of ultimately makes it, you know, a much simpler, you know, business. So that was when I sort of, let's say, narrowed in from the broader industrial use case to in space manufacturing particularly. And then I really picked up the idea again after I joined founders fund in Q4, 2019, where for the first time a SpaceX rocket basically launched and landed four times in a row. And it went from this 2017 projection of an exponential curve to like 2019. Very realistically you're seeing this exponential curve come to life. Paid a couple friends at SpaceX were involved in Falcon 9 and asked them, you know, how much wear and tear are you guys seeing on these first rockets that are landing? The resounding feedback was, you know, these things are landing three or four times now. There's no reason why we shouldn't be able to get it to 20 plus times. And that's where the bit sort of, you know, switched or flipped in my head where it went from in space manufacturing being something that I was like intrigued with to now. This is no longer even like a theoretical future unit, unit economics, like today with these current reusable Falcon Nines, this is something that you can absolutely commercialize. And so I spent actually about five or six months, you know, from the beginning of Q4 19 till basically, you know, Covid hit, meeting with everybody that had ever thought about in space manufacturing. Everything from the venture bat groups that had still stuck around since 2013, to academics that had published papers, to pharmaceutical researchers that were working within larger commercial corporations, but ultimately came away from that six month excursion and analysis realizing that nobody quite had the right approach. And the sort of one liner summary of it was that everybody that was working on this problem to date was only interested in working on this as long as basically they were working within the confines of the International Space Station and had backing and funding from NASA. And my first principle thesis, again, I don't know a ton about spacecraft, but my first principal thesis was there's just no way that you're going to be like commercializing this type of business model on top of a super bureaucratic government run, extremely low risk tolerance space station. You should ideally be doing this sort of on an independent initially satellite and eventually sort of scaled up to what one would call a station. But when I talked to any of these groups that were working on this problem, all of them had no interest in ever moving off of the iss, given that they saw that they be no funding from NASA and they didn't necessarily have interest in figuring out basically one of their biggest risk factors or technical fears was when you're a part of the International Space Station, you get a free ride down effectively from the state government or the national governments, whether it's the Russians with the Soyuz, the United States with the cargo Dragon and the Starliner. These things were ways to bring back goods, you didn't really have to pay for them. If you then went independent of the iss, you were responsible for your own ride down. And so put the idea sort of on the shelf again. But then finally really decided to pursue it in summer 2020 and again to tie it all together, it was basically this like super long term fascination with ultimately, if you build this economic use case, this is ultimately what will lead there to be you know, eventually, you know, ten humans, a hundred humans, a thousand humans that are in low earth orbit, that are, you know, generating economic value rather than just being paid for, you know, by governments. And you know, finally decided that I just had to do it myself rather than, you know, try and fund somebody else to do it.

Cool. Yeah, makes sense. And tell me a little bit about this in space manufacturing. So looking at the website, it looks like, you know, there's some qualities in space that are different than Earth which make it a different place to manufacture. Can you give us some like concrete examples of what is better or easier to manufacture in space than down Here on Earth.

Yeah. The simplest way to think about it in some ways is there are four fundamental forces of physics. You have the strong and weak nuclear force. You have electromagnetism, and you have gravity. Down here on Earth, gravity is effectively just. If it's constant, is that what we consider to be one G? It's somewhat arbitrary. The amount of acceleration that we feel on our surface is based off of the mass of the Earth. But it could easily go up or down. It's very easy for us to experiment with seeing what happens when gravity goes up. We do that relatively all the time in a variety of material processes using either pressure stirring or, effectively, centrifuge systems. But at least on the surface of the Earth for extended periods of time, there's no way to basically decrease, you know, gravity. And so when you're up in low Earth orbit, what it gives you access to is effectively you're not truly, obviously escaping your gravity field, but you basically have a centrifugal force that is perfectly equal to Earth's gravitational force. So effectively are inconsistent free fall. And so you effectively experience the equivalent of, you know, microgravity.

Well, by microgravity, like what. What fraction of 1G, I guess, would there be?

Typically, a. I believe microgravity is defined as micro, which is 10 to the negative sixth. Right. So it's basically six zeros of. So 0.0000001 GS. You never technically say zero gravity, since it is effectively impossible anywhere in the universe to truly get to zero. But, I mean, you can effectively think of it as zero gravity. But just the technical term is microgravity. And that type of sort of environment being impossible to obviously create down here on the surface. And given that it's one of the four fundamental forces of physics, there's a wide variety of effects. Some that are cute in that you can have the astronaut spinning around and playing his guitar and you have the, like, you know, water bubbles floating, some that are, you know, sort of more interesting and have, you know, commercial applications in particular, in what I would, you know, categorize is basically like, you know, mesoscopic chemical systems, which is at the medium level of, you know, scale. And I think the easiest way to, you know, explain sort of why in these mesoscopic systems you end up having, you know, gravity have a significant effect is actually just going to a very macroscopic analogy which I like to use, which is a candle. If in front of the desks, in front of us, you basically lit a candle. When you put your hand, you Know, above the candle, you're, you know, taught as a kid, basically you can feel that heat because the hot air is rising, right? Or hot air rises in a room. Why does that actually happen? What is the fundamental, basically, physics behind that? When you light the, you know, wick of a candle, what's happening is basically you have a combustion reaction that is introducing thermal energy into the atmosphere around it. That atmosphere is comprised of, you know, nitrogen, oxygen, et cetera. And so that thermal energy transfers into those individual nitrogen oxygen atoms and basically takes that thermal energy, transfers it into kinetic energy. Those atmospheric, you know, basically molecules start to move more quickly. When they start to move more quickly. And anytime you have molecules moving more quickly in a gas, it becomes a less dense gas. Anytime you're inside of a gravity field, you have that type of acceleration. You basically, you know, have, you know, sedimentation effectively, or, you know, convection that occurs where effectively the less dense gas moves to the top of the room and the more dense gas moves down. The same thing is true with liquids as well, right? So the reason that, you know, the hot air rises from a candle is the same reason why inside of a glass of water ice, you know, floats to the top of the glass, basically. Exact same reasoning. So as that heat basically moves up, basically you create negative pressure in that air pressure system. You basically have these, you know, constant, you know, currents forming. If we take that same basic candle and you light it inside of a microgravity environment where there's enough oxygen to sustain the, you know, reaction, etc. What ends up happening? So you still have the combustion reaction, right? The wick still lights, you know, ignites with the oxygen around it and consumes it. It still creates that thermal energy. That atmosphere again, speeds up, it become less dense. But now you're not inside of a gravitational field. And so what ends up happening with that less dense gas? It doesn't move around. Instead, it just very steadily disperses its kinetic energy throughout the entire room, very slowly through, you know, what's known as a, you basically diffusive, you know, motion. So that's a very macroscopic analogy. But let's take it out of the microscopic level. If you're thinking about, you know, sort of trying to get, you know, sort of two molecules to attach to one another. If you remember from high school, you know, the sort of, you know, very simple molecular reaction is, you know, take two molecules, you put them on top of a Bunsen burner, you're basically trying to get above that activation energy, you know, so that you eventually get into a different, you know, sort of potential state, right? And anytime that you're, you know, sort of trying to do that on Earth, and especially if you have two things that are slightly different molecular weights, those same basic convective, you know, currents end up, you know, effectively dominating where, you know, one of those molecules made up being, you know, heavier versus lighter, you start to apply thermal energy into the system. It basically starts to move those things around with convective currents. And it makes it much more difficult to basically, especially if there are, let's say, like multiple, you know, sort of energy states that the reaction can land in. It's very difficult to precisely control which one, because you have a lot of this, like, entropy or let's say chaos in those chemical reactions. Take that, you know, sort of same reaction of the microgravity environment to space. Much easier to basically introduce thermal energy without basically having these convective currents. Instead, that thermal energy steadily diffuses. You can precisely basically control that molecular reaction. Okay, so we've gone from an, you know, candle analogy to microscopic sort of, you know, chemical system to, okay, well, what does this actually mean, you know, in the world of like, economics and, you know, capitalism? Why does this, you know, fucking matter at all? By far, you know, sort of the, you know, gold standard, let's say from the International Space Station or, you know, the best, you know, case study was performed by Merck. They're one of the top 20 biopharmaceutical companies in the world. They took their blockbuster monoclonal antibody, Biologic. It's basically like a cancer drug. It's called Keytruda. It does about $25 billion a year reven know for them. So, you know, it's a massive drug. But anyways, they check it up to the International Space Station. And to provide a very, you know, simple analogy for how this pharmaceutical is manufactured, you can effectively think of it as on the ground. Think of it as almost like a saline solution where you're trying to evaporate things out and little salts are basically like, left behind. And what happens when they manufacture it on the ground is as each individual, what is known as a nucleation point forms basically where, you know, crystal forms for, for the first time. What ends up happening is because you have this convective currents, more basically salt water ends up attaching to each individual, like nucleation or crystallization point, and makes it so that each individual crystal ends up being basically very variable in size because you have these convective currents, you know, basically moving, you know, the solution around and making it so that these nucleation points, rather than being very uniform, can be sort of a wide range of crystal sizes. So because this is a drug where you try to distribute it to patients and those crystals end up breaking down in your blood very differently depending on the size, basically the smaller that the crystal is, the more easily breaks down in your blood, the larger that it is, the more slowly it breaks down in your blood. The way that they end up basically delivering this to patients is effectively having you come into a clinic and do like a one to four hour basically intravenous drip on the International Space Station. Effectively, what they were able to confirm is when they basically took that same process, because again, there weren't those convective currents. You didn't have solution moving into each, you know, nucleation or crystallization point. Instead you basically had like thousands of individual nucleation points. They were all perfectly uniform because basically the little salt crystal would form, there wouldn't be new solution that would flow towards it because you didn't have convective currents. And so what does that mean as a patient? Well, now you know that every single crystal is basically, it's a very narrow monomodal basically distribution. And so that means you can perfectly predict how it's going to break down in the patient's blood. And so instead of having them come into a clinic for one to four hours every single day, you could instead just send them home with a series of syringes or, you know, subcutaneous injections that they can take from home. So this $25 billion a year drug, basically, rather than being distributed to millions of patients in a IV clinic for hours and hours every single day, instead now has a form where they can basically send patients at home. And when you think about the actual dosing, a Varda capsule that we bring back with 40 kg, this type of material can dose a very significant patient population far in excess of cost it takes to launch it to orbit, manufacture and bring it back down. So that would by far be the blockbuster use case that we would love to sort of work on, but there's a wide set of other ones where you can basically think of this microgravity physical effect is just changing the performance characteristics of a drug, not in relation to what diseases it cure, that does not get affected by microgravity. But you can think of it more as like, what is the crystal structure, the crystal form? And that typically can affect everything from the shelf stability, whether it's room temperature, stable, you know, whether or not it can pass the blood brain barrier, how easily it breaks apart in a patient's blood. And a lot of times those could be some of the like, you know, sort of critical or limiting steps of actually bringing a drug to market. So anyways, you know, long winded, you know, answer to your question, but tried to start from first principles and work all the way through to commercialization.

Did you do a full kind of TAM analysis of like all the drugs this could be applied to and like what would be the TAM if you did this? Or just too hot to kind of figure out?

I never believed that much in TAME analysis for any investment that I make. And so it didn't feel that relevant for a company that I'm starting in that look, the sort of one liner TAME analysis was we have a monopoly on one of the four fundamental forces of physics in an area where chemistry is extremely important to be precise. And this is an extremely, extremely large market, far bigger than anything that anybody in the tech industry basically works on. Um, and so it didn't seem to warrant a super precise analysis especially because as rocket, you know, launch costs continue to decrease as our cadence continues to increases, the economics change not by like 10, 20%, but change by orders of magnitude. And so therefore the like, you know, team you can even tackle also changes by, you know, order of magnitude. Given that it's a question of economics and you just sort of value, you know, creation. There's definitely drugs. You know, the example that I like to provide by the way, that you know, sometimes helps people understand, you know, why does crystal structure matter? And if you take, you know, ibuprofen, you've almost certainly seen basically, you know, two types of ibuprofen. Whenever you go into a pharmacy where you have basically like the long lasting ibuprofen that is used for things like, you know, arthritis and then you have the short acting, you know, ibuprofen that is effectively, you know, meant, you know, for like a headache. It's still ibuprofen, it's still the same molecule, but the difference is basically one of those molecules is being put inside of a crystalline structure that breaks apart very slowly in your blood. So that arthritis, you have something that basically like lasts 12 hours, but at a very low level or low dosing. And the other one is the exact opposite. It's basically meant to break apart very quickly your blood and dose you very quickly. So you basically reduce the inflammation and your headache or whatever like injury that you have. And so I'm not saying that we're going to be working on ibuprofen anytime soon. But as you start to basically make the economics of manufacturing space cheaper and cheaper, you can start to go after things that are less critical, let's say in terms of value proposition, where maybe one thing was that, oh, my God, we can't bring this drug to market because it needs to pass the blood brain barrier. Space manufacturing is the only way to like, you know, you know, bring this like, neurological compound to market that is like extremely high value. And over time it might be like, hey, like when we make it on the ground, it's like room temperature. It's like, you know, shelf stable at like 2 degrees Celsius. Like, we kind of need a cold chain. That's pretty annoying. And then like, you know, patients have to put it in their fridge when they get home. But if we make it in space, it's like room temperature stable. And so it's like, that's more marginal. But it actually may end up being cheaper over time, you know, to actually just, you know, solve it in space rather than actually, you know, have a cold chain down here on the ground.

So when Merc, I guess, working with someone else did this test on iss, I guess how long ago was that? And why didn't that group try to commercialize it? Or was ISS really holding them back?

Merck mostly ran with it on their own, and they did this in late 2018 and published their results basically at Q1, 2019. So again, one of these things in the 2019 timeframe, as I was considering, the idea was definitely a heavy weight. Where it went from a lot of interesting theory, tons of great academic experiments. This was just true, in my opinion. You, blockbuster commercial results, ultimately there's just like there was no path forward. Merck didn't have a company to go work with or partner with to figure out how to scale this up. It's not like they could go to NASA and say, hey, please shut down the International Space Station, instead, allow us to take this over and turn it into a drug manufacturing facility. There is no commercial player at the time that had, you know, let's say any path forward in terms of, you know, allowing them to work off of the iss. But I can't comment, let's say, on our discussions with various, you know, sort of pharmaceutical partners. But what I can say is the, you know, primary principal investigator of that experiment by Merck, the, you know, blockbuster result did provide a public quote for our launch article that was done by cnn. And he basically explicitly called out, you know, the ISS has been a Phenomenal place for us to do, you know, early, you know, research and validation work. But I find, you know, a platform like Varda that allows us to do this at, you know, greater scale, lower cost, and higher cadence, extremely intriguing. And I look forward. I think it's something along the lines of, like, I look forward to partnering with them, even if we haven't quite yet today. And so clearly, this sort of value proposition is resonating with the groups that had by far the best results from microgravity.

So when you're making these. These new crystal structures up in lower orbit space and you bring them back to Earth, there's no, like, disruption to the structure and changing the gravity environment, or is it just the way that it's formed that stays permanent in different gravity environments?

Think of this as basically like a phase transition where you basically are taking something that was previously a liquid and basically turning it into a solid. Once it has its solid state form, it then maintains that solid state form, even if you put it into a different gravitational field. What mattered was what was basically the acceleration that it was experiencing during the phase transition. So from the transition from liquid to solid, it matters a lot what acceleration is. After it's solid, it maintains its crystal lattice. Now, that is a not entirely perfect answer in that re entry. Not, you know, anything here on the ground per se, but the reentry process, you know, does put significant G forces in our current reentry capsule. So we rip anywhere from like 8-11g disease during reentry. There are certain molecules that the solid state forms effectively aren't stable at that level of acceleration and shock. And so they will lose that structure that you formed in space. But we basically have started out by focusing on what are, you know, prototypically considered small molecules. Small molecules are basically what all drugs were until. Call it like the 2008, 2009 timeframe. Everything from, like, ibuprofen to. Yeah, you know, basically, you know, most drugs on the market were small molecules in the 2008-9 time frame. Basically, they started working on what are known as, you know, larger molecules or biologics. Basically, think of it rather than being formed through, ergo, chemistry mixing, you know, chemicals together and heating and cooling them and, you know, creating various chemical reactions. Instead, these things are formed with, you know, closer to biological processes. You know, think like something that either looks like, you know, yeast fermentation or eventually, you know, even ultimately up to something, you know, closer to what looks like a human cell. Those type of things for sure, are more sensitive To G forces. And so, you know, we won't be able to tackle that type of product today. We would have to improve upon our reentry vehicle capabilities where it can more precisely control G forces by basically having active aerodynamic controls. So, yeah, you know, across all these drug categories, once you create that salt tape form down here on the ground, totally fine to sustain it, it's actually more the process of reentry itself, less so being down here on the ground, that affects it.

You mentioned re entry a couple of times. It's kind of interesting. I feel like space manufacturing should not have to solve the reentry problem. It feels like someone else would have solved that. But is it a really hard problem? Are you just hitting things against the earth's atmosphere? How do you kind of go around thinking about reentry?

Yeah, I mean, in some ways, when I was considering starting the company, I fundamentally realized that the space manufacturing problem is a reentry problem. That that was the fundamental sort of limiter in a lot of ways, the actual space manufacturing portion of it. If you look at what we're doing to these various pharmaceutical compounds, you know, it's complex for sure. It's not sort of trivial problem. But, you know, it's clearly been demonstrated it's possible to be done on the International Space Station. People are definitely, you know, mixing together complex fluids. They're recreating some of the industrial processes that are done here on Earth, you know, in a microgravity environment. So, like, one of the simple examples is like, you know, when you mix fluid sometimes down here on Earth, you rely on gravity to basically bring them into a beaker and you stir them around up there. You have to rely more on, like, you know, microfluidics and capillary action and things like that. But, you know, point being that that is like, you know, difficult engineering, but not anything too crazy. But, you know, the re entry problem, and especially doing that at sort of high cadence, which is not something that anybody, you know, had really done. Because if you think about it, why come back from space? Like, there's just not any particular, you know, reason to. The only time that we've really come back from space on a consistent basis is to bring the humans back. Because, like, you know, humans do want to eventually return to their life, you know, down here on Earth. But other than that, there's nothing to bring back from there. If you are communicating with your satellites, you communicate via radio. The satellites themselves, easier to just let them burn up and send up a new one than, like, you know, try and bring it back down. And so there really hasn't been any like, you know, non government use case for bringing things back. The only, you know, times where small scale reentry capsules like Vardas have really been landed are two things. One, in the more recent years, including almost exactly 24 hours ago, asteroid sample return missions, where NASA, for example, yesterday landed in the Utah desert with this mission called Osiris Rex, where they basically went out to an asteroid called Bennu. They launched in, I want to say 2017, landed a Bennu in like 2019, and then I think basically left Bennu in like late 2020 to come back to Earth. You know, there you are trying to explicitly bring something back from space. It's a small asteroid sample. And the Japanese did it twice with Hayabusa, and also NASA did it once with Stardust in 2000. But anyways, other than these asteroid sample returns missions, the only other time that we really did reentry capsules, small scale that didn't have humans on board regularly was actually in the early days at the same time as the Apollo program was going. But there was a parallel program going that had almost basically as large of a budget as the Apollo program and just as much headcount called the CORONA spy satellite program, where basically in the very early days before we had powerful enough radios to communicate with satellites and be able to actually downlink photos, we would actually send satellites up to space to take photos of the Soviet Union. We'd take photos on physical Kodak film, reel that film into basically small reentry capsules, and then reenter those reentry capsules and actually pick them up with basically like, you know, military bombers and actually use a skyhook to pick the parachute up basically out of the air once the reentry capsule is down on the ground. And we flew about, I believe it was 134 of those corona RE entry capsules. And I believe like something like 120 of them were recovered. So they had a really high success rate. So, you know, clearly it was possible to solve this reentry problem. Humanity had obviously done it, you know, about 50 years prior. But in the past 20 years, really nobody had solved a reentry problem. Is it a difficult problem? You know, absolutely. You know, there's a reason why, you know, you know, the United States has yet to field an operational hypersonic boost glide, you know, interceptor or, you know, weapon system, you know, from space, and that it is effectively, you know, you know, a system that would be trying to reenter it's just an extremely complex environment. Getting to space is definitely hard, but maybe coming back from space is even harder. Because when you're getting to space, really, the rocket, what it's doing is it's basically going up and then it's going sideways super, super fast. And in order to come back from space, you could do two things. You could send a fully fueled Falcon 9 all the way to space, somehow get it up there and just use that to slow you down. Or you can take the cheaper way coming back and instead just hit the atmosphere and basically use the atmosphere to slow you down. When you're up there, you're basically going Mach 25. And so Mach 25. Hitting the atmosphere at those speeds introduces some pretty complex factors. You know, there's basically three main things that you get hit with. One is effectively like G forces or shock forces. If you ever been on like a commercial 747 flight, you hit a little pocket of gravity, it absolutely obviously creates some level of G forces. Imagine that. But obviously, you know, at Mach 25, those G forces are far more intense too. There's a thermal load. You know, if you ever watch like the Tom Hanks, you know, Apollo film, you know, he's coming back through reentry, there's all that, you know, basically plasma around him. And you know, basically that heat, you get to higher than the temperature of the sun on the actual, you know, capsules heat shield. And then the third is because you're going so fast, you're actually separating the individual atoms in the atmosphere from another. So if you have like, you know, paired together nitrogen or oxygen, you're actually creating highly charged ions that actually form the fourth state of matter. So rather than being a liquid, solid or gas, you actually form a plasma. And plasma also interacts, you know, with, you know, aerodynamic vehicles and very, you know, sort of difficult to predict ways. And so the combination of all of those three factors makes the reentry environment an incredibly difficult environment to engineer for. And so when we thought about Varda, especially in the early days, we fundamentally thought about it in some ways as like, solve the reentry problem first. Because if you prove to everybody that you can reenter on a regular basis, then the in space manufacturing is sort of a walk in the park in comparison.

Have you proven that? Have you done a test reentry?

We had our first launch June 12th of this year. And then, you know, we did have some planned dates in both July and September to reenter. But, you know, unfortunately you're still working through some government Partner, let's say collaborations in order to, you know, have the approval to land, hopefully relatively soon. So the vehicle's ready to land and ready to do the test. But unfortunately in the United States, it's not as simple as that. In order to bring a reentry capsule back.

Yeah, I'm very excited. So when you talk about doing the space manufacturing, I'm wondering about other meaning of the word space. Like how much space actually, like area do you need to, like, do this manufacturing and how will it actually scale? Like, at some point are you going to have a full factory up there and you plan to do it all automated so there's no humans? You're doing like a basically fully human free flight, right?

Yeah, we'll definitely be automated, you know, for now. But, you know, referencing, if you remember my very first answer around why, you know, work on Varda, it's because there is eventually that motivation you have to have humans on there. Even if you look at the most automated pharmaceutical or semiconductor manufacturing facilities on the ground today, they do, on some, you know, occasional basis, do require human maintenance. And so, you know, I do think there will be a tipping point for Varda where today it absolutely does not make sense for economics to have humans up there. But over time, as you get to a large enough basically manufacturing facility, you will have justification for humans up there. And that's how you get from one human to 10 humans to, you know, hundreds of humans. You know, when you think about how much space that we need, especially for some of the early, you know, sort of pharmaceutical drug candidates that we're working on, you know, people underappreciate, you know, how much of an actual, you know, drug they're taking when they, you know, come in to, you know, take something. If you look at the Pfizer COVID vaccine, entire United states consumption in 2021, 2022, which was, I believe, on the order of about 600, you know, million doses. If you look at the actual, like, active pharmaceutical ingredients, the, you know, the thing that is, you know, actively, you know, interacting with your body, which is the thing that Varda works on, that primary ingredient for all of those 600 million doses in the United States effectively filled up only two milk gallon jugs. Now there's two milk gallon jugs of, like, MRNA crystals, then get distributed out into, like, you know, hundreds of millions of individual doses. So that when you go in, you have this, like, saline syringe, you know, at the, you know, clinic, wherever you got your, you know, COVID vaccine. But it only has a very, very small amount of that, you know, sort of RNA crystal and that secondary manufacturing process in terms of putting into the, you know, putting the primary ingredient into a saline syringe that for Varda still happens on the ground. We just basically focus on those like two milk gallon jugs. So for our first, you know, call it, you know, 10 plus missions, the reentry capsule is about a meter in diameter. It could bring back about 40 to 50 kilograms of materials. There is a very wide set of basically like, you know, pharmaceutical candidates that we can pursue that, you know, 40 to 50 kilograms once a quarter far, you know, outweighs basically, you know, the total patient, you know, population consumption again of the primary ingredient. Our pharmaceutical partners will take that primary ingredient, that crystal, you know, structure that we have formed and then go send that to a secondary CDMO manufacturing facility where then that gets put into, you know, a gel capsule, a tablet, a saline syringe, an IV drip, you know, however, that particular, you know, basically drug, you know, is administered to the patient. But that part does not have to happen in space. So, yes, for sure. Obviously over time we will need to, you know, get larger, but there's no reason why, you know, at our current scale, we couldn't make this into a, you know, sort of multi billion dollar company regularly bringing, you know, drugs to market. Obviously I, you know, fantasize about the day when I get to send up, you know, something that is like the size of a skyscraper up into space and have that, you know, sort of manufacturing. But that is not, you know, a requirement for Varda to, you know, IPO anytime soon.

I'm just wondering what. So what is the, what do you think the requirement is for Varda to, you know, get to a decent scale?

I think Varda could be a multi billion dollar company, you know, flying, you know, six to seven missions a year of like, you know, 300 kilogram satellites basically. And, you know, I don't think we need to go, you know, large in that in order to, you know, hit that. If you look at, you know, some of the drug candidates that, you know, we're working on with pharmaceutical partners. Yeah. The dosing on a per patient basis does not require something that is a permanent either station or, you know, anything much larger than what we're, you know, sort of developing today. Think about, you know, sort of artist business model or provide a, you know, parallel, you know, the way that we end up partnering with our pharmaceutical clients and actual contract structure looks very net, similar to groups like, if you're familiar with like Ginkgo Bioworks, Appcelera, Halozyme, where effectively we partner with our pharmaceutical partners in the particular drugs they're working on that have crystal structure, you know, basically issues. And we get a combination of both milestone payments based off of the actual deliverables that we bring to them, but as well as effectively you can think of it as like, you know, royalties in the actual or equities basically in the drug that we work on, that when it gets brought to market, we become a partner in the actual drug. And so, yeah, you know, I don't think you'll see us working on anything, you know, sort of much, much larger than what we're working on today in the next three, four or five years. But for sure, over time, you know, after this company's, you know, much larger than is today, definitely look forward to kicking off the, the V2 and the V3, they will all steadily get larger and larger. But for now I would say it's more, you know, higher cadence of our current, you know, sized infrastructure and really improve the economics of that. And that will be more than, you know, plenty to, you know, get us through to being a public company.

Got it. So the order of operations, if I can just summarize, is like, you know, nailing what you're currently doing, the 300 kilograms, you know, sort of loads payloads and you're trying to get higher cadence of that, improve the economics. Where are you on the economics? If you can give us our frames, like where do you need to be versus where you are today?

Yeah. In this current V1 architecture, you can basically think of our all in cost for our very first mission that we did about like $12 million a pop. There's no reason why by mission four, five or so, we'll be able to get that down to 5 or 6 million. And what we're really ultimately aiming, aiming for is, you know, by mission 10, there's no reason why, basically with a bit of reusability, why we shouldn't be able to basically get this down to like, you know, sub two, two and a half million dollars mission at that price point, with the amount of pharmaceuticals that we're manufacturing at that point, we'd be far more focused on like basically scale up of that two and a half million emission more so than actually continuing to improve the economics and all that is basically like assuming that launch costs basically stay flat, you know, where they are today. So yeah, that's, that's, you know, that's the, you know, sort of cost curve that we're you know, looking to write down. Obviously we're still in our first mission, so we're still on, like, the most expensive parts of that, you know, sort of cost curve. But, you know, thankfully, beyond just the pharmaceutical business that we've been talking about, we also have a ton of support, you know, from the DOD to utilize our capsule effectively as a, you know, hypersonic testing mechanism. That also offsets a lot of the, like, upfront R and D&NRE and also establishes, let's say, like a base cadence of the number of flights that we do every single year. So it makes it so each, you know, marginal, marginal pharmaceutical flight is sort of much cheaper and we can get to that scale that gets us to that, you know, sort of cost structure, you know, much, much more easily than if we were to just rely on the pharmaceutical business alone.

That's fascinating. So the DOD is helping you with these startup costs.

100%. Vardo would not exist if not for the DOD.

It's kind of interesting the way you describe it, especially with the two milk gallon jugs, which is like a really interesting data point. It seems like, yeah, the dollars per kilogram of pharmaceutical kind of, I guess, end product is just super duper high.

Right.

Like, there's probably nothing else like it, I guess, outside pharma. Is there something else that it does have this kind of extreme high dollar per kilogram of manufacturing kind of output that you think is viable in space manufacturing?

Yeah. Other than illicit drugs, there's basically nothing on earth that sells for more than $100 a kilo other than basically biopharmaceuticals. So.

Well, illicit drugs also. Also Obama pharma.

Yeah, exactly, exactly. And even then, there's only a very small handful of extremely high purity illicit drugs that even sell for that amount per kilo. So that was sort of the realization that we came to relatively quickly was as we were looking at basically like value generation, where we could, you know, sort of attack various markets. There's been a ton of interesting work around fiber optics, semiconductors, you know, in space. But at the end of the day, you get stuck with just this mass problem, like, you know, as much as, like the A5 chip in your phone, you know, in the iPhone is, you know, very valuable and very light. It just still pales in comparison to drugs. It's just like orders and orders of magnitude sort of difference. And so, yeah, you know, it's just a lot easier to deal with the economics of space when you're talking about, okay, $5,000 a kilogram launch cost, which, you know, end up meaning, okay, your total, you know, cost of emission all baked in or like, you know, 25, 30, 40,000. Because obviously, you know, you don't want launch costs to represent, you know, too small or too large of a portion of your total sort of flight costs. And, you know, it's just a lot easier to work with, you know, compounds that are a million dollars a kilo or, you know, $500,000 a kilo than it is to work with something that's, you know, far less than that.

Yeah, that's interesting. What is position number two? Is it. Is it fiber optics or is it semiconductors or something else?

I think it's such a steep drop off that, like, in some ways nobody knows. And it is interesting because there are like, there's like, weirdly, there's like this whole group at like, Stanford that is, like, extremely obsessed with, you know, semiconductors in space. They, like, try to invite me as a speaker and I basically told them, I was like, I'm going to tell you that I don't think this is a good idea. So I don't think you, like, want me as a speaker. And so they basically, like, hung up on me. And I'm like, okay. I mean, I don't know what you want from me. And then there is like this, like, you know, there are some, like, you know, smaller startup, you know, companies actually like, trying to focus on this. But, yeah, I just, like, have a really hard time. Like, if you look at it actually, like our chief science officer that now obviously, you know, Tyler works in pharmaceuticals. He came from the semiconductor industry. Like, you know, we're like, pretty deeply familiar. We definitely, like, studied it, you know, quite extensively of just like, you know, is there something that we could do here? But it's just. Yeah, I'm not saying that there isn't value to be had. It's just like you're never going to, you know, build a business with good unit economics on it in the next decade. You know, 20, 30 and beyond, starships, online, lunar base, you know, whatever. All bets are off then because, you know, now you might be talking about, like, you know, 25, 50, $100 a kilogram. Sure. Then there's going to be a ton of stuff. I mean, but then at that point, you're also talking about, like, people are going to, like, start brewing wine in space just for the novelty of it. Right. So.

I can see people paying a lot of money for that, like, wine, space brewing.

There is, there's like this, like, Bottle of space wine that sold for, I don't know, $100,000 or something like that. Yeah, so it's like it exists maybe.

A space engagement ring, like something that's just like expensive for the point of it.

Space rocks.

I once heard someone say like, it might be interesting to like 3D print like hearts in space. Is that a real viable type thing or was that just like some like sci fi?

You know, I think that's one that is more likely we like solve it terrestrially. I'm not saying it's like totally impossible, but that's just like a pretty, pretty difficult problem in that, you know, if you remember, we were talking about basically like, you know, stability, g forces, loading, etc. During reentry. Reentry is not that kind on a heart that's inside a human, let alone, you know, one that's outside of a human. So yeah, I think, I think a little bit of a trickier problem. So it is something that like NASA's been investing a lot into. They like recently did this release about Tiny talking about like somebody building like A, like 3D printed like meniscus up in space. But yeah, while we're interested in biopharmaceuticals and the sort of healthcare industry, I think like organ and tissue printing space is going to be a tougher one as well.

What's meniscus?

It's like a, like a ligament inside of your knee. And so they basically like 3D printed a ligament in space.

Oh, that's interesting. I guess less constraints on like what G forces it can take.

Yeah, yeah, exactly. It's like an easier problem than a heart. A heart is very hard problem to solve. Ligament is a step along the way. Let's say.

Lower stakes do.

Yeah, yeah, lower stakes.

So when do we get to a level where like you need humans in space to run this manufacturing? It seems like, you know, the tendency is probably to try to automate as much of it as possible.

Right, Yeah, I, you know, I'm not claiming that it's in any sort of short time frame, but if you look at the set of companies that are out on the market today commercializing various use cases, I think Vardo will be the first to have an economic use case, you know, sort of for it. You know, if I were to try and you know, put a prediction, I would say it's like no earlier than 2029, no later than 2035, you know, for Varda to, you know, justify that. But in relation to the improvement or economics, you basically start to want to invest into reusability. The first thing that's very easy to reuse is the actual reentry capsule. That thing literally comes back down on the ground. You can analyze it, you can see basically what it takes to refurbish, start to engineer around, basically making it, you know, sort of reusable. The second step is the actual, basically satellite and manufacturing, you know, portion of the satellite that right now we basically burn up after each orbit. But instead, what you could eventually imagine doing is instead actually leaving that as a somewhat more fixed station in orbit and instead bringing re entry capsules, basically with raw goods to the manufacturing station, exchanging it for fabricated pharmaceuticals and basically bringing it back down. Initially, I think what you'll see is basically just like a, you know, similar to how Starlink has a constellation of a thousand satellites. You might see a constellation of Varda satellites that are a bit larger. Maybe they're 1,000 kilograms a piece. And one of them is small molecule focused, one of them is biologics focused. One of them is dealt with more toxic compounds. One has more, you know, thermal processes and super high temperatures, right? And so you'll see like a constellation and basically depending on which manufacturing process your drug is most suitable for, you'll get, you know, sent to that one. And initially those will probably be distributed. But once you start to get to on the order of like, you know, sort of several thousand kilograms on each of these, it will start to make sense to aggregate them and then basically, you know, likely initially just have like a human visitor that comes by, maybe like, you know, one week every, you know, three months or something like that, you know, does a bunch of like, you know, manual repairs and things like that, because things like that. Given that yes, you know, automation is, you know, really, you know, phenomenal. And, you know, I think we're getting better and better at robotics down here on the ground, but there is still some level of, like, fine motor control that, you know, humans can have in decision making that you just can't, you can't yet replicate. And I don't think you will be able to, you know, anytime soon. And so I think that's what it probably looks like is like we like start to pay for like a crew dragon to, you know, bring somebody close to our station do a sort of spacewalk. And then once you're doing that, like, rather than one week every three months, you get one week a month. And then it's like, you know, two weeks a month. And then all of a sudden it turns out that somebody Just needs to live close by. And so then they actually like hook into our station for water and for oxygen and things like that. And then all of a sudden you have like one human living there. And I think, you know, that stuff is probably called 2028, 2029 time frame at the soonest that would be sort of the, the best possible trajectory, you know, for Varda. Definitely, you know, a lot of work in order to make that happen.

So initially you're not reusing the factory. Like did I hear you correctly that you're shipping the raw materials?

Yeah, everything is one time use today. Basically we burn up the whole main, basically satellite and factoring everything after each use. Just, basically just make it as simple as possible. Because the docking and rendezvous problem of making it so you can reuse the satellite and you can bring new reentry capsules to it is like a $100 million engineering problem. And so easier to not tackle that today and instead just do basically disposable, just like, you know, Elon with Falcon, you know, one, in the early days of Falcon 9, it disposable end to end. Same thing here. Just keep it simple, disposable end to end, prove it out and then start to focus on reusability.

Yeah, it's kind of funny on the, on the ground, everything is reusable by default. And in spaces everything is, everything is.

Not reusable by default. It burns up when it hits the atmosphere. Except for reentry capsules, those don't burn up.

What are the timelines towards this cost curve you talked about? I think 12 million down to like 2. Is that like 2029 as well, to 2035?

Oh, no, no, no. That cost curve is much shorter. We'll have it down to like 2 or 3,3 million a launch by like 2025. So yeah, that's, that's pretty short time frame.

And the main levers there are. The reusability is that the main lever.

To get it from 12 to the main lever is, you know, primarily, you know, there was a set of components and things that we bought off the shelf to get us up to flight basically as quickly as possible that are over engineered for our mission. But we preferred to purchase them. One, because of speed to flight, because we could buy something off the shelf. And two, better to over engineer the first handful of missions, get data sets about what the actual environment looks like, what it's experiencing, and then you can engineer basically around that actual flight data. And so by 2025 you'll notice that basically like Our satellites start to look much less capable basically as we just focus on the minimum level of capability rather than the first handful of satellites being sort of over engineered to ensure basically success. That cost curve is a relatively short term cost curve.

Right, so and you did, you said your first launch this year was June 12th, right?

Yeah, June 12th at 3:10 PST.

Yeah. So and you started the company in 2020, right?

You know, technically, yeah, I met my co founder August 2020, incorporated November 19, you know, 2020. But we didn't really open our office doors until January 19, 2021. So you know, when you look at like, you know, a significant number of people working on it full time is really, let's say Jan20, 20, 21.

Wow.

So still two and a half years to first launch. I mean, that's pretty incredible, isn't it? Like for a space company to do that seems like a very short period.

Yeah. Credit to my co founder. You know, you know, sort of core cultural value of Vardo was, you know, the trains take off on time, even if they don't have all the features that you want, even if it's a little bit riskier than you want. At the end of the day, the trains take off on time. And so I think it's that iterative hardware, you know, sort of approach and obsession with schedule that's led to our ability to sort of get to flight so quickly. And in some ways just the maturity of the space ecosystem relative to a decade ago, there's just a set of components that we were able to buy off the shelf that groups like SpaceX were not able to in 2008 that made their life sort of far more difficult. And so yeah, I'm very proud of the fact that we were able to get to flight so quickly. And for sure we want to continue to improve from our first flight. Definitely things that we learned about the satellite and about the mission already that we definitely want to fix by the second and the third and the fourth. But better to learn those and get to flight more quickly rather than, I think a lot of companies just get stuck in this engineering analysis paralysis state constantly trying to improve upon the satellite before they ever actually fly it. But it turns out the best way to learn about your designs is just go fly them.

Yeah, cool. I mean, I know the software companies that don't launch in two and a half years, let alone space companies. What do you think the future of the space industry looks like? Like 10 years from now, what do you think we're going to be talking about? That's already real. Like 10 years ago, things like Starlink weren't real, and it sounded like science fiction and reusable rockets weren't real. What do you think? Ten years from now we'll be like, yeah, this is normal.

I think you'll have north of 100 humans in orbit on a permanent basis and call it that being the minimum, minimum number. And, you know, maybe that's stretching up to, you know, 1500 or maybe even 2000. So, you know, sort of small village in low Earth orbit being, you know, quite, you know, sustained. And I think, you know, call it, you know, the number of people that we basically have on the ISS today, call it between like, you know, 9 to 17, you know, being a part of a lunar base. And I think, you know, both those things will feel, you know, extremely normal. Just like the International Space Station has been permanently manned, you know, since 1999, 24 7, I think, you know, call it in the 2028 timeframe or, you know, 2032 timeframe. You'll basically have the initial basically, you know, built out, you know, lunar, lunar base that, you know, from then on will be, you know, permanently manned. And again, those types of things, they're going to be government run to start. Just like the ISS basically proved out the early days of the low Earth orbit economy by, you know, being subsidized.

By the federal government.

The same thing will be true for the lunar base Groups like Varda and, you know, Axiom Space and, you know, you know, vast will take over basically like, you know, low Earth orbit because you no longer need federal incentives to build there. That'll just be something that is done by commercial entities and, you know, sort of NASA and the federal government will take over the, you know, sort of next, you know, you know, next frontier. And I think, you know, lunar surface will absolutely be that. And so I think that will feel very normal as well as, you know, I think people have talked fancifully, obviously about Mars for an extended period of time, but there's not been any type of, like, concrete. Like, it's not like nobody's designing a vehicle that is currently, you know, going to Mars with humans on it, right? Like, that is something that people talk about, in theory, as a future thing that humanity might want to do, but nothing is currently being worked on. I think, like 10 years from today, just as we see that today people are designing things to go to the moon in 2032, you will see things that are actually being designed to go.

To Mars, as you said, right. The Key thing is economic incentive. So we need to figure out that piece of it for Mars.

Yeah, that one I think for sure will be a little bit harder to figure out relative to like low Earth orbit and the Moon. But I think if you have really established, you know, trading posts, let's say, on, you know, in low Earth orbit and the Moon, the like, moon to Mars problem, in my opinion, is a significantly easier problem than the Earth to Mars problem in that if you have established basically trading posts in low Earth orbit in the Moon, it means at that point you have a functioning society that has likely significant capabilities. Like if you look at the International Space Station, they have a robot arm, they have humans up there, they for sure have microscopes and a decent amount of lab equipment, but that's about it. They don't have bulldozers, they don't have raw materials, they don't have the ability to create large scale structures. If you have a lunar base, you're talking about the idea of like something that, you know, is obviously permanently, you know, settled, is built. And you're luckily talking about industrial equipment that, you know, can actually operate in the lunar environment. And you're talking about a shit ton of material that is available to you in the form of everything from like the lunar ice caps on the moon to, you know, regolith you can actually use to actually start to build, you know, macro structures, whether in low Earth orbit, lunar orbit, you know, or somewhere, or cisluna or something like that. And so that then allows you to now build massive, massive sort of spaceships without having the penalty of having to send them from the surface of the Earth. And so, you know, I think you, even without the economic incentive for Mars, if you have the economic incentives on low Earth orbit in the Moon, the Mars problem just becomes so much easier relative to today. Just sending stuff. It's just, you know, it's heavy down here.

Plus we have the atmosphere.

Yeah, I mean, atmosphere, gravity, big gravity. Well, lots of things. Earth is barely on the edge of like, you know, you just get a little heavier and a little thicker atmosphere and the rocket equation shifts from like barely being able to get out to like, literally, you know, chemical rocket engines not having enough propulsion to actually, you know, get out of the atmosphere. I think people forget about this. I forget the exact number, but it's something on the order of like, if you increased Earth's mass by about 40% and increased basically the atmospheric density by about 40%, no chemical rocket engine that is available to humanity today would be able to escape orbit Basically you would need more fuel than basically how much fuel the engine can take. And so we are basically as difficult as it gets for what explosions can allow you to do.

That's crazy. Obviously Varda is doing kind of pharma manufacturing. What's the next use case that would have kind of economics in space, outside kind of communication?

Yeah, you know, I always like to think of these companies as like, you know, sort of generations of companies that form the infrastructure that enables the next generation. Right. If you look at like the early days of the Internet, you know, companies like Amazon building out AWS in 2008 is ultimately what enabled the next generation of like Uber, Airbnb, et cetera. So that rather than having to build their own data centers, they can focus on, you know, you know, ride sharing of cars and you know, home sharing of, you know, homes. And I kind of think of space the same way where you had that first generation of companies like SpaceX, like Planet Labs, that built up the initial infrastructure for the space economy, whether it be sort of rockets or more robust satellite supply chains. And then for a while, until those companies were successful, like I mentioned in 2012 through 15, there was no interesting companies being founded because there just weren't other use cases that made any sense. If you look at Founders Fund, we basically invested a lot in aerospace from like 2009 through 12 and then basically took almost like a 10 year break. And a part of it was you just needed reusable rockets to then enable the second generation of companies. And similar to the first generation, I don't think there's like an infinite set of use cases. I think there is this like in space manufacturing use case. I do think that there's like this in space basically like gas station servicing, repairs, taxiing, basically use case where now that you have a higher density of basically like vehicles on the highway, you can now justify basically putting gas stations on the highway versus like before you couldn't. And then I don't think there really is like much else. Like, you know, I love that there's a lot of people working on a wide variety of other commercial use cases, but I don't think anything else makes sense in today's generation. When those two business models succeed, whether it's in space manufacturing and these like in space gas station servicing, taxi systems, then I do think that enables things like asteroid mining, lunar ice mining, etc. Like, the way that I like to describe it is like, you know, people always talk about like, wouldn't it be amazing if you took like, you know, 10 tons of, you know, ice from the moon and put it into low Earth orbit. I always tell people, like, who's going to use that ice today? Even if you had an asteroid you brought into, like, low Earth orbit today, there's nobody up there that is like, you know, built for or uses tons and tons of water on a daily basis other than the International Space Station. But if you have something like Varda succeeding, where you have like a massive factory or you have a really large gas station that is consistently refueling satellites, that is an entity that would very happily buy sort of lots and lots and tons and tons of water. And so I think right now there isn't really anything that interesting outside of basically those two sort of in space. But in another five, six years, as things like Varda and these space gas stations succeed, I do think then there start to be more sort of economic use cases that open up.

When you say space gas stations, do you literally mean, like, like there's people sending gas to space and then distributing it within satellites that are already in space? That's actually a viable market?

Yeah, there's people actively working on this today that have contracts from Space Force, Air Force, NASA for initial demonstration missions, everything from refueling geostationary satellites to extending the lifetime of satellites that are in low Earth orbit. Yeah, again, I think the easiest analogy to think about is just when there weren't that many cars on the highway, it was just easier for everybody to carry their own gas versus when there should be lots of cars on the highway. It's a little easier for there to be a centralized gas station. And instead you just, you know, refill anytime you're kind of close to the gas station.

Apart from getting water from an asteroid or the, the moon, is there any other, like, I guess there's H3 mining on the moon. Are there other things that would be useful to have in low Earth orbit, like steel or something?

Yeah, I mean, I think when you start to think about, you know, helium 3 or like, you know, platinum or things like that, those would then just be more like, returning down to Earth. Obviously. You know, hopefully we have, like, lots of nuclear reactors in space over time, but it's more likely that the helium 3 and platinum from an asteroid, you know, more gets, like, returned down to Earth versus like, used up in space, basically. So, yeah, I think, you know, outside of, you know, those, then there's definitely more of a drop off. And it's kind of also probably hard to perfectly predict, you know, sort of that far out. You know, then you start to probably get into the worlds of, you know, what looks a little bit more like the, you know, sort of United States colonies where, like, the forward base on Mars ends up, like, discovering some sort of natural resource that Mars has, you know, very plentiful amounts of that, you know, somewhere else in the solar system isn't. And so they end up sending back sort of trade ships, you know, back to. Back to Earth. But, yeah, that stuff is, like, so fanciful that it's kind of hard to, you know, purposefully predict. But there's. Surprisingly, there's not an infinite list of business models after the ones that I articulated. Right. Like, if you go from. In space manufacturing, there's for sure, like tourism, hotels, et cetera. But, you know, I don't find that to be like that, that interesting. You have the gas stations. You then have like, you know, resource extraction for use in space, like, you know, water, etc. Or you have. Or you have resource extraction, you know, for use on Earth, like Helium 3. And then, you know, beyond that. Yeah, I'm not sure. Not sure about that.

Do you think it'll always be extremely uncomfortable living in space, or do you think over time we'll have artificial gravity and other things and it could be, like, pretty comfortable living there?

There. There will be a four seasons in space at some point. It'll take some time, but, you know, for sure, I mean, there's no reason why you can't replicate all of the niceties that we have down here on Earth, you know, basically in space and get all the benefits of being in space. You know, I definitely imagine a day where like, you know, rather than people, you know, coming to South Florida to retire, you know, they instead, you know, go to, you know, the surface of the moon, given that you just have lower gravity and so you can be more mobile and so you might not be able to, like, you know, run around and, you know, be, you know, play golf, you know, in your full 18 holes. If you're like, you know, 95 and, you know, bones are cracking a little bit down here on Earth, but you sure as hell can do it when, like, gravity's a lot less. And so, yeah, I think. I think, you know, if anything, there may be, you know, preferential comfort, you know, in space, you know, over time. It is not comfortable today, to be clear. Like, if you read the twin study that they did with Mark Kelly and. Oh, gosh, that's the senator and his brother, anyways, his twin brother. I forget his twin's name. But anyways, the two twins Basically went up to space. Mark who went up for a year, man, if you read his book, his retelling of the first week when he was back after being up in space for a year is just brutal. Everything in his body was not working correctly when he was down here and it took a long time to get back to normal.

All right, that's a good point to maybe come to a stop both four seasons and the one week of pain. This is a super interesting chat Deliance. Thanks for taking the time.

It was great.

Dalian, we're cheering for you. You're building a great company.

Thanks Raj. Thanks so much for having me guys.

Raj, that was a super interesting conversation. What was your kind of favorite part?

Well, I did not expect that honestly I was looking at the website beforehand of Varda and I was pretty confused. Honestly I didn't have no idea what exactly they do. It sounded very far fetched to be honest. I thought well there's a bunch of investors wasting money on this one.

Wow, you came in as a skeptic.

I came in as a skeptic, absolutely. Yeah. And you know, and Delian doesn't have a background either in like space or anything so it's not like, you know, I come in as a fellow entrepreneur looking at it I'm like geez, this seems a bit like, you know, science fiction type stuff and you know we've seen a lot of companies out there who they just raise a bunch of money for something that sounds great that could be a decade out and then they all eventually what happens, like you know, like a magic leap. Right. They never make it past the chasm. Right. And so I think being a skeptic is probably the default here just based on the history. But I mean Deline won me over. I mean he, he knows the stuff, he knows the science inside out, he knows what he's working on. Like the application is very clear, the economics are very clear to him as well. And I came away thinking well this, this should happen, like there's, there's going to be a bunch of problems to solve. But everything he said made a lot of sense and, and it seems like he's picked the right and narrow application for a startup to work on. What were your thoughts?

Yeah, the pharma thing is kind of interesting in hindsight. It seems obvious, I guess after that conversation that hey, this is just the highest dollars per kilogram use case here. What's interesting is I think as a non pharma person I had no idea that the gravity of the conditions while like crystallization was happening can be a huge difference. I think it makes sense. I had always thought that the applications would be like carbon nanotubes or something like that. So it was kind of interesting to go, hey, actually there's just simpler, not future sci fi kind of applications in space.

Yeah, for sure. I mean it sounded like it was something that was well understood. They already did some testing in the ISS and there were some promising early trials there. And the fact that they were able to launch something within two and a half years of starting.

Yeah, that's crazy.

It's really promising that it's promising for the whole space ecosystem because I think one thing that Starlink in particular is proving out is there's real applications in space that people maybe haven't thought of before or haven't really invested in before. And so that probably allows for a lot more space companies to go out and try some new stuff.

Yeah.

I also thought it was interesting that you hear about these experiments being done on the iss, but you kind of just assume that nothing actually useful is coming out of it. But it actually sounds like basically the kind of research part and the science part of it was massively de risked by kind of the work that the governments did in iss. So this could be a massive kind of dividend from that work.

Absolutely, yeah. And I think there's probably, you know the space better than I do, but there's probably a lot of interesting applications coming out of that. And it's great that you know that there's a thousand flowers sort of blooming. Maybe not thousand, maybe a dozen, but you know, there's a lot of interesting stuff coming out of it and I like the fact that it's really focused on a near term goal and a clear ROI for a clear customer. So that is really important.

One thing that was kind of funny to me is his initial thinking was like, how do we make a space civilization?

Right.

How do we get humans on space? But the application is not very human intensive and actually think there's a reasonable likelihood that robots will get better faster than the requirement. Right. Like by 20, what was it like? 2029 there's a reasonable chance there'll be a reasonable humanoid robot that's got enough articulation and enough kind of pre programmed kind of AI skills that they can basically do this manufacturing use case. Right. Because we're already getting rid of humans and manufacturing on Earth. So it's kind of interesting kind of race that we're trying to put humans in space, but then we're making Robots that are good enough to do these things in the first place.

Yeah, yeah, yeah. I mean for sure there's going to need to be parallel track. I mean, you know, you're right, the robotic manufacturing is much better now on Earth, but you're always going to need some human for like when the robots break, right? In general.

For now.

Yeah, for now, yeah. So even probably the robot factories here have some level of humans in it and he admitted the same. So. But yeah, humans are very expensive. Right. And so there's so much work going on in like robotic aviation with drones and things like that and, and autonomous vehicles. So it's all going to kind of come together. So it's exciting to see that.

Right.

There's a really good book called Case for Mars and there's definitely like a, a separate kind of mindset which is very much like, hey, we just need to get to Mars. Which is like, you know, the only place it makes sense to put a human humans for prolonged periods is Mars. Because you've got the kind of the atmosphere protecting you from cosmic rays and you've got all of these kind of other kind of built in systems there that like humans kind of rely on like gravity and all that kind of stuff. So I think at least Varda is much more in the camp of like let's make lower bit work, whereas this is other camp which is like let's get low Earth orbit and let's make Mars work. I think actually like if either of them work it helps each other, which Delian made that point. But it's kind of interesting to see these kind of opposing kind of viewpoints.

What's the economic argument for Mars?

Honestly, it's much more of the almost like a land argument. Mars has as much land as the continents on Earth. So it's more of an argument of okay, we have a massive of land mass there and we should go make it work and eventually we can. It's more of a colonial argument than like a purely economic argument, I would say.

Yeah, yeah, I can see that. Okay, makes sense. Well, that was a lot of fun, very dense conversation too because he, he gave a lot of information in a short period of time so it was fun to listen to him.