Why Impulse Raised $500M to Move Things in Space | President & COO Eric Romo

[00:00] You've just raised a massive Series D. This was a $500 million round. This brings your total funding to over $1.025 billion. Yeah, a little over a billion dollars. That just means the bar just got higher for us. This funding will allow us to be just a little bit more forward-leaning, to have the freedom to execute. We've got our Mira product line, which is now scaling to where we have to build one of those per month. If they had an option to go directly and it was economical, they would take it. So Helios gets them to their same place they want to go the same day of the launch, eight hours later. [00:30] of dollars of value for a single flight at Helios. China launches XYZ thing, it's headed towards geo. The reality is from the ground, you don't know what that thing is. Does it have robot arms? Does it have machine guns? We don't know. The way that you figure out is you actually have to get quite close to it. All of a sudden, the defense market unlocked for us. And that's why you've seen us get a lot of traction in that market. [00:58] Eric Romo, welcome to Sorcery. Thank you for having me. [01:01] Thanks for having us here. So where are we today? We are in Impulse Space Disciples in Bonanno Beach. You're in particular on the manufacturing floor right now. [01:09] So I think you're going to take a walk around later and get shown around by the one and only Tom Mueller, the Manufacturers Corps. [01:16] We're here on Manhattan Beach Boulevard. [01:19] few buildings here, but you're going to see the dense and intense portion of our factory. I want to get into what's sitting behind us right now. Yes, it's very cool. [01:27] But before we do that, huge congratulations. You've just raised a massive Series D. So what happened?

[01:34] Yeah, so what happened is that it turns out space is pretty interesting to investors right now. [01:41] You know, we started out a few years ago. Tom started the company five years ago, really focusing on Tom's excellence in propulsion and then figuring out [01:50] where can we build a real business around that? Where can we build [01:54] high-performance based vehicles that move things around quickly or far away. [01:58] And I think as the company's grown up, we've realized where that really has a lot of traction. [02:03] and there's a good bit of need for that in a commercial space with our pod, Akilios, which I think you'll see later. [02:10] And then in defense with our product Mira. And then we hope to have a business around NASA [02:16] And really in the last couple of years, all of those business segments have taken off really quickly. [02:22] We had a number of ambassadors that have been following the company pretty closely through that time. [02:27] And when they saw sort of the hockey stick start, they thought, OK, now it's the time to go ahead and do a round. [02:32] In particular, we had the firms that led around are 1-7 Ventures and Vanner VC. [02:38] One through seven has known us for a while. They're relatively small shareholder before this round. And I decided this was the right time to step up. [02:47] Um, pretty interesting timing for them because, um, as I like to joke to them and to other, other board members, they're, um, [02:54] Not exactly household name yet, but they're kind of about to be. They're a very large SpaceX shareholder. [03:00] I've been investing in that company for a long time and are about to deliver an amazing return to all of their investors, which I think is going to get a lot of news for them.

[03:08] I think they just actually, just a few weeks ago, raised another $700 million in new funds as well. [03:13] In addition to SpaceX, they're big Android shareholders and Breck shareholders and so [03:18] So they're a firm that's been like maybe a little bit below the radar for the last few years, but I think they're now coming out. [03:25] And so it was exciting to see them essentially decide that we were the next big ones in space. That's a real big endorsement coming from somebody who runs more than 1% of SpaceX. [03:35] And then Banner is a new firm, but we've known the GP there for a while as an investor that his prior fund as a shareholder in Impulse. And so [03:44] Again, both of them sort of tracking the company and watching that growth really start and saying, okay, now's the time to write bigger and bigger checks. [03:52] And then very fortunately, you know, that happened pretty quickly after we decided we wanted to raise a round. And what happened from there is that [04:00] Usually in this process, like my first call after the term sheet is to go out to the insider and say, hey, [04:05] "What do you wanna do in this round?" It's kinda starting to come together, there's evaluation, et cetera. [04:09] and then see how much of the round they might take up versus we want to fill from outsiders. And we're just massively oversubscribed just from insiders. [04:17] good problem to have. And so that came together really quickly as well. So, [04:21] It's a [04:23] uh you know it's a good sized round but it's one of the quicker ones i think i've ever done just because there was so much interest in the company [04:30] So this was a $500 million round. This brings your total funding to over $1.025 billion. Yeah, a little over a billion dollars. You got the big B. Yeah, yeah, there you go. Yeah, yeah. I mean, so, you know, I think,

[04:44] some [04:45] people maybe think that they're putting numbers up on the scoreboard and they should be excited about that that just means the bar just got higher for us right about we've got to return that capital and then some right to those shareholders which means we need to build a really big business and so it's exciting obviously to have that amount of funding to [05:02] to run the business. [05:04] quite a lot of money on the balance sheet, even before he raised this round. So there was no kind of forcing function, you know, it wasn't [05:10] sense of urgency or anything around it. Um, [05:13] But now we just get to expand the business and hire. I think we've been... [05:18] uh, [05:19] I think some folks internally would argue we've been a little bit cautious in how we've hired. I mean, we're companies... [05:25] Now almost 500 people. That's a lot, obviously. [05:29] But I think we arguably could have hired even faster than we have in the past. [05:34] but really wanted to make sure we had the throttle at the right place, where we had enough runway and had enough business. We're kind of matching those things. [05:40] this funding will allow us to be just a little bit more forward-leaning in the people we hire and how quickly we staff up. [05:47] a little bit more forward leaning in facilities and capitalizing the business [05:52] So I think it's going to help us to [05:55] have the freedom to execute that maybe we were holding ourselves back a little bit before. [06:00] So this unlocks hiring, expansion. What else? That's the bulk of it. I mean, people are really the biggest place we spend money and the biggest resource that we need internally. And so this will allow us to continue to hire great people, I think.

[06:15] You know, in the past, we would... [06:17] you know, really limit ourselves and kind of hold ourselves to site budgets, which we'll continue to do, but budgets will be higher. [06:24] And that meant that really talented people, you know, maybe didn't make the cut. [06:28] right to get hired and I think this allows our hiring teams to say [06:32] "Okay, let's go make sure that if it's an amazing person that works in the stuff that we do, let's make sure we find room for them." [06:38] Um, [06:39] And capital has always been a thing we've invested in. I think it's an interesting conversation around businesses like ours and just how capital intensive they really are. [06:47] because I think there's this perception outside of hard tech, deep tech, whatever you want to call the segment we're in, that they're incredibly capital intensive. And you can't imagine how much they're spending on capex, but that's [06:58] That's not really the case. I mean, you're going to walk around and see stuff, but, and certainly we do buy off auto machines, but [07:04] people are by far and away the expensive company that's going to continue. So what does scale actually mean for impulse? Being able to simultaneously execute a number of things. So, you know, we've got our Helios program, which is to build effectively a third stage for medium launch vehicles. [07:25] that's building a rocket stage. You know, it's like, it's roughly the same size as like the second stage of Falcon 1. [07:31] for example, like as a size of the program. That's a big undertaking. We've got our Mira product line, which is now scaling to where we have to build one of those per month at this point. [07:43] That's a big deal because we both need the engineers to develop it and the production to get it done.

[07:47] And then we've got aspirations on building a number of other vehicles as well. And so being able to simultaneously do multiple things is not easy for a company. [07:57] So scaling for us is really how do we hire great engineers across all of those programs? [08:02] um [08:03] There's a saying in the valley that startups don't die from starvation, they die from indigestion. [08:10] Right. And [08:10] I think it's a balance that we always try to find the right place to strike of. [08:14] hey, should we actually go out and try and execute on this amazing business opportunity, or should we live by the wayside? [08:20] And as I think we've [08:21] maybe talked about a little before, there's not that many great opportunities in the space business segment. And so when we see a really big one, it's hard for us to turn it down. [08:30] The company was started in November 2021. What were the early days of product development like? Yeah, so I only got here three years ago. So I don't exactly know what the first couple of years were like. But I know that, you know, Tom left SpaceX. He was there for almost 20 years and I think tried real hard to be retired. [08:50] and found himself nights and weekends building rocket engines in his garage. [08:55] as he is wont to do. [08:57] and talked to some folks that we all know well, and they said, "Hey, look, you're doing this anyway. Why don't you have a company around this work?" [09:06] um and so he's able to quickly capitalize the company when you're when you're [09:09] Tom Mueller, you start a company, you can just kind of raise your hand and people have been sending checks your way. And that's kind of what happened in the early days of the company. [09:16] And then as a result of that, starting the company, he was also able to attract

[09:22] a lot of really strong talent quickly. People that you've worked with in the past who are maybe ready for a new thing. [09:28] And so this meant that your company immediately is well capitalized with extremely strong technical talent, kind of best in class talent. [09:35] Then the question is, okay, well, what do we do? And where's the real market opportunity? [09:40] When I got here, the company had been working on the Mira vehicle for a little while. [09:45] and it had, Mira went from, [09:48] not existing to being built and ready to fly in about 14 months. So really fast, which is testament to Tom and the talent the team had. [09:56] um, [09:56] But when we flew Mira for that first time, we had this hypothesis of what we thought the business was going to be for Mira. And there was a hypothesis around... [10:05] Um, [10:06] the commercial market for [10:08] orbital transfer vehicles in low Earth orbit. Okay, it's kind of space tug market. [10:12] And I came in and I, with kind of fresh white eyes, having not been in the space industry for almost 20 years, [10:20] I said, all right, let me learn about this market a little bit. [10:23] And what I saw as I dug in is a market where the [10:27] the value proposition to the customer kind of existed. So I'll give you a quick pitch. It's like, okay. [10:32] So Rocket Lab has this product called Electron. I always forget the names of their rockets. Electron's a small one, okay? And it'll lift a few hundred kilograms to low Earth orbit. [10:42] Okay, so... [10:43] 200 kilograms somewhere in Leo. [10:46] SpaceX has this [10:48] program called Transporter. [10:49] where they send a big bus of payloads, a bunch of 200 kilograms at a time, 40 of them or whatever,

[10:56] and they send them up to low Earth orbit as well. [10:59] So Rocket Lab will go anywhere in low-Earth orbit you want to go. It's not all one thing. There's a bunch of different ways you can be in low-Earth orbit. They'll go anywhere you want to go, kind of anytime you want to go there. [11:09] Um, [11:10] SpaceX, you're taking the bus. So you go on the bus schedule and you go to the bus stop. [11:14] Right. So, but the price for an electron for those [redacted address] higher. It's like $8 million. [11:22] then the price for that equivalent transporter slot is like $2 million maybe, something like that. [11:26] So there's a big spread between eight and two, [11:29] But in theory, you're paying for, I get to go exactly where I want to go, and I get to go exactly when I want to go there. [11:34] Okay, so the pitch for orbital transfer vehicles at that time in the commercial market was, [11:40] with that difference between 8 and 2, [11:42] Can I add an orbital transfer vehicle? Can I add the launch costs? So send that up as well and still save the customer money on that aid. [11:50] And the answer when we looked at the economics was, yeah, actually you can maybe save like a million, maybe a little bit more than a million dollars for that customer. Maybe you end up charging them seven or something all in instead of a million dollars. Pretty meaningful. [12:02] The challenge with that market is that [12:06] number one is not at it. [12:07] You know, Rocket Lab does something like 30 launches a year and you're basically pitching that you're going to steal share from them, right? So how many are you really going to steal? [12:15] Problem number two is that in order to make that math work there, the economics for the orbital transfer vehicle, the margins are pretty skinny. So like a 20% gross margin, something like that, it's not great in hardware.

[12:26] And the killer was in order to serve those customers well, I needed to go out and buy a bunch of launches from SpaceX. I got to do 20 of those a year. I got to buy 20 launches a year, which means I need two years worth of launches. I need 40 launches, which means I need, I don't know, like 50, 70 million dollars tied up in launch costs. [12:43] for a company that had only raised $30 million at a time, right? So it's just... [12:47] So when you stack those things together, you know, dubious economic, small market and bad working capital dynamics, it just didn't really pencil. [12:56] So here we are, we just launched this first Mira. [12:58] and we thought they had this commercial market, we kind of realizing, oh, actually that market's DOA. [13:03] So what do we do? [13:05] So, [13:06] Tom and I had this conversation and he said, well, you know, maybe Mira's our Falcon 1. [13:11] know falcon one spacex was the thing launched a few times to get to the bigger one [13:15] We launch Miro once or twice. We show we can build a spacecraft. We show we can operate on orbit. And we'll move on to the bigger thing, Helios. [13:21] Because Helios said, [13:23] unit economics, working capital dynamics, all that's really good. [13:25] Um, [13:26] Mark, it's not that big, but that's a different discussion. [13:28] But anyway, so we move on to the bigger thing that we know kind of works. [13:32] So we launched Mira, first mission, you know, kind of by the skin of our teeth goes well. And [13:38] all of a sudden our conversations with Space Force kind of [13:42] shifted in Tenant really quickly. It went from, hey, there's all these sorts of things maybe we can work on together to [13:48] We now know exactly what we can work on together with you, and we want to talk about it more. [13:52] And so we went from not knowing if we had a space to fence business, not knowing what it could be, to laser focused on kind of this high thrust, high delta V.

[14:04] business for space for us. [14:06] And they kind of, to some extent, led us by the hand to say, here's where we think the market could be for vehicles like Mira. Here's how we think you need to change it. This is the one from a first version of Mira to a second version of Mira to get that market. [14:17] And that is a big thing that changed was all of a sudden the defense market unlocked for us on the mirror side. [14:23] And that's gone on too. Now we're increasingly a trusted partner with them. And so it's something that we can work on more and more stuff with Space Force. [14:31] So this is kind of the big shift from the initial founding of the company was, hey, we think maybe there's this commercial angle. [14:37] to now we not only have a commercial angle with Helios, but also have this defense signal with Mira and eventual cousins of Mira. [14:45] And then we really hope to be a big part of NASA as well. [15:15] checking, treasury, and FDIC protection into one powerful account. You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one. With same day and even same hour liquidity, access your funds anytime. Companies like Scale AI, DoorDash, Service Titan, HIMSS, Anthropic, Flexport,

[15:45] slash sorcery. That's B-R-E-X dot com slash sorcery. Turing is training the next generation of AI with tasks that require real expertise and real world judgment. That's why companies like NVIDIA, Anthropic, Salesforce, and Gemini partner with Turing. Turing builds realistic reinforcement learning environments and data systems based on real operational traces, the kind of infrastructure [16:15] turing.com/s-o-u-r-c-e-r-y. So I know we talked about this in our New York Stock Exchange Space Summit hot takes, the breakdown of the products. [16:27] Mira, Helios, and Caravan, and then the customer sets within them. Yep. But to reiterate those, you went through it a bit. I'd love for you to break down where they fit in the market a little bit more and how you're helping your customers out. Yeah, let's start with commercial and Helios and Caravan are our products for the commercial market. [16:46] Right now, commercial space is largely comms, and comms is kind of divided in a really [16:53] blunt way, like between Starlink with operates in low Earth orbit. [16:57] and traditional legacy [16:59] comms operators that operate in geosync or so of it. So, and geo is for references, about a hundred times further away than Leo. [17:05] Really far away, really hard to get to. [17:07] but that's where [17:10] you know, the SES as one of our customers, Astronus is another of our customers. That's where they operate. Their spacecraft is out in geo. You get to,

[17:17] You get to park over one spot on Earth, you get to park over LA, and I just stay there. Whereas in LEO, if you want to serve LA, you need hundreds, if not thousands, because your spacecraft are orbiting all the time. [17:27] Right. [17:28] So Geo is super far away, hard to get there. [17:32] The way a typical GeoCommSat operator will get there right now, [17:35] is they'll launch on a Falcon 9, or presumably another launch vehicle, but basically on Falcon 9. They'll launch to a transfer orbit, so it's what they call GT, or Geostationary Transfer Orbit. [17:46] And they'll take somewhere between six and 10 months to finally reach their destination. So they launch on day one. And then on day, I don't know, whatever it is, 300 or something, they finally get to where they're trying to go. [17:57] And during that time between day one and day 300, they don't make any money. [18:01] They're not actually revenue producing at that point. They're not in service. [18:05] they burn... [18:06] something like four to six million dollars worth of like expensive gas to do that raise to get there. [18:12] they go through these intense radiation belts where the spacecraft gets pounded by radiation over and over again, which means they need to design the spacecraft to overcome that. [18:23] And they have to operate on the ground. They have to watch the spacecraft. That costs a bunch of money to do the operations around that orbit race. [18:29] So they spend, you know, in hard costs, they spend millions of dollars. And then in their time, they spend probably tens of billions of dollars, depending on the spacecraft. [18:37] So, [18:38] The alternative to this is you go direct to GEO. And so the main spacecraft, the main launch vehicle that goes direct to GEO right now is Falcon Heavy. [18:46] So Falcon Heavy will launch you

[18:48] get to geo the same day you launch um eight hours later something like that [18:52] But the thing is, Falcon Heavy is extremely expensive. [18:55] Um, uh, [18:56] in part because it's three Falcon 9s wrapped together. And it's part because SpaceX has been clear they would prefer kind of not to fly that vehicle. And it makes sense because [19:06] Every time they fly one of those, they have to shut down the pad for longer than they would for a Falcon 9. So when you look at how much time does it take to launch one Falcon Heavy and how many Falcon 9s they could have launched during that time, [19:16] It's actually economically better for them to launch Falcon Knights. [19:19] but they have to launch Falcon Heavies because they've got big contracts with Space Force. Our government really needs it. NASA really needs it. [19:25] but in the commercial market, those launches don't happen very often. [19:29] There was just one, [19:31] a month ago when this comes out but uh uh they there haven't been uh many in the last two years [19:38] So commercial customers basically don't go direct. They only go through the transfer orbit. That transfer orbit takes a super long amount of time. [19:46] If they had an option to go directly and it was economical, they would take it. And that's our bototelios. [19:52] So Helios gets them to their same place they want to go the same day to launch, eight hours later. [19:57] And it's cheaper than a Falcon Heavy, more expensive than Falcon 9, obviously, because they need to pay for that and the Helios. [20:03] But the economics tend to work out really well for them. And that's why you've seen us get a lot of traction in that market. [20:09] In addition to that, a big trend that's happening in the commercial market right now for GEO [20:15] is moving to smaller and smaller spacecraft. [20:17] So here, Astronis is a really good example of this, or kind of dull weather of this change.

[20:21] where it used to be, [20:23] that in GEO you had these [20:25] monolithic, mega spacecraft. They're four tons in up. [20:29] It costs hundreds and hundreds of millions of dollars. [20:31] Um, [20:32] What's interesting is that the trend that you saw in LEO, where LEO spacecraft also used to be really expensive, [20:39] And then you had folks like Planet Labs and then eventually Starlink really iterate on taking commercial components and making spacecraft smaller and kind of the shoebox satellite type thing. [20:49] That never happened in GEO until now. [20:51] And so what's happening is you have the... [20:53] miniaturization is the wrong word, but because they're still way like a [20:57] 2200 pounds or something they're massive things but they're way smaller than they ever used to be before [21:02] And so you're now finally seeing this almost consumer electronicization of Geo spacecraft [21:09] and Astronus is one of the ones leading the charge, and there are a few more. [21:13] The problem is that those spacecraft don't have really good ways to get to geo. [21:16] So again, back to how do they typically go? They go through that transfer orbit. [21:20] Well, in order to go through the transorbit, you kind of need a lot of power to drive your electric propulsion system. And those smaller spacecraft have a hard time kind of making the math work around how much power they have, how much electric propulsion they can use to raise. [21:31] the orbit. So they actually tend to take longer, like on that high end, that range of the orbital transfer. [21:37] And then for getting directly to GEO, they basically have no options. There's been one example in the last two and a half or three years of [21:45] a way for small spacecraft to hitch a ride to get direct access to geo. [21:50] So Caravan serves this niche in the market where there's a lot more of these small spacecraft that have no good options to get to GEO. We can provide them a good option by essentially taking a number of them together.

[22:02] And it might be, you know, four or five, seven of them together on the same ride. It's kind of [22:06] You know, SpaceX transporter, but for geo is sort of the way to think about it. [22:09] And this, as it turns out, has been a really big hit in the market. More demand than we expected in that marketplace. And so we have a couple of flights in 2028 that we'll do around this offering. [22:21] And what's fun about this is that both Helios by itself and then Caravan [22:28] As people understand the capacity here, they can change the designs of their spacecraft [22:32] so that they can assume that this is going to be available. So for example, on those bigger spacecraft, [22:38] They can say, "Hey, we can drop the electric propulsion down and make it smaller. We can get rid of some of that shielding for the radiation that they need to go through. They can make the tank smaller. [22:47] And that by itself actually could come close to paying for the ride on Helios, just the changes that they made in spacecraft. [22:53] And by the same token, if folks assume that Caravan is in the market, [22:58] then they can assume that they can get rides for smaller spacecraft and they can go smaller and smaller geo so um we didn't expect sort of that impact in the market to happen for a little while because you know we haven't flown helios yet we'll fly at the beginning next year [23:12] but we're hearing from customers that they're excited about what it can bring to them. So we're hopeful that this helps the market. Because as I think alluded to in our conversation, the Geo ComSat market, [23:23] you just look at the data, it's kind of flat to down in the last 10 years. It's not grown heavily. I think it's something that... [23:31] We would like it obviously to grow. And if we can improve the economics of the people that operate there,

[23:36] then it should grow supply demand, elasticity. [23:39] and we're hopeful to see that in the next few years. [23:42] If you can talk about this, could you walk through the business model costing a bit, even if it's frameworks, and then how customers measure value and success? [23:52] Yeah, absolutely. And so when we're talking about getting the geo, [23:56] when you look at those components of [23:58] uh, that time, how much is the time worth of them? [24:01] and then how much are the hard costs worth them, the fuel, the radiation shielding, etc. [24:07] Time tends to be the biggest one there for sure. [24:09] um and when we looked at that time [24:12] It's a pretty wide distribution because you have some customers in Geo where they have, for example, [24:19] they might have a contract with a ground operator, a local telco or something, where they have to provide the bits down to that local telco [24:28] And if they don't do it by a certain date, then they have huge penalties or they lose the contracts. [24:33] Um, [24:33] And the penalties or the delay fees or whatever it might be, they might be hundreds of millions of dollars potentially in that contract. [24:42] Whereas if you just looked at the revenue that they would get through that time, because we're basically pulling that revenue stream forward, [24:48] it might be tens of millions of dollars. [24:51] We look at the different customers, we think kind of the middle of that distribution is in the, you know, is in the tens, maybe middle tens of millions of dollars of value of that time per a single flight at Helios. [25:02] Um, [25:03] And then the hard costs around fuel, et cetera, et cetera, might stack up to something like $5 or $10 million in total.

[25:11] So there's a pretty good amount of value there, but the interesting thing is, and I don't know how much of this is still on the website, but when you look at the difference between a Falcon 9 and a Falcon Heavy, it's like $70, $80 million, something like that, historically. [25:25] Um, [25:26] And so that probably is bigger than the value that the average customer get there. [25:31] And again, there's some customers way on the end of the bell curve that it still would pay for them to use Falcon Heavy. [25:36] Whereas we look at our pricing and we don't talk about our pricing publicly, but it's lower than that. And so the typical customer can quickly do the math basically in their head and say, OK, my time's worth $50 million. My hard cost is worth another $7 million. Therefore, here's the price. OK, cool. I want to do a doobat. [25:52] And it's a really straightforward sort of value proposition to that end customer. [25:57] Um, [25:58] Contractually, it's provided as a service. So it actually looks an awful lot like a launch contract for these customers. [26:04] you know, we need to ride on a Falcon 9. [26:07] So sometimes, like in the case of Caravan, we buy the Falcon 9. We have a free launch agreement with SpaceX. [26:14] in some of these rides that customer buys the Falcon 9 and we attack Helios on as part of the payload, but we're [26:20] sort of ambivalent there. [26:22] We're in Southern California, specifically LA, and there's a ton of space companies here now. So what is the competitive market look like? And could you walk through different kinds of sets of companies, especially, I know you don't like this word, but could you walk through what a tug is and define that and how you're not a tug?

[26:43] Yeah, I think people thought that there was this market for this kind of tugboat service between parts of Leo. And they thought that that was a thing. Like, if you... [26:53] I miss the whole SPAC thing. I don't know if you were around during the SPAC stuff. [26:56] Uh, but, but I, I kind of got back into space, like just after all those kind of stocks tanks. [27:02] And it was kind of like, [27:04] I don't know, going to a frat party, like, but, but at like seven o'clock in the morning, there's like a bunch of half drunk silo cups around and, and there's a bunch of people kind of laying on the floor. It's like, wow, I miss a really good party here. And now I maybe have to clean up. I'm not sure. [27:17] Um, [27:18] But so I missed all this, but I gather that in this back nonsense, there was sort of this big pitch around how we're going to just be moving things around Leo all the time. We're going to be picking them up from one spot and dropping them off to another spot. And we're going to be going up on transporters and tugging them around. [27:35] just generally that market has not manifested at all. [27:39] There's been almost no [27:41] examples of this actually getting transactions actually completed in the market, or this kind of Leo to Leo move things around, you know, [27:48] people throw in that bucket, like orbital debris remediation, right? Of like, hey, we're going to clean up space junk. [27:55] So I've got some feelings on we should talk about. - Oh wow. - Things like [27:59] Yeah, it's a scam, I think, largely. So look, the orbital remediation [28:05] could be a problem one day. [28:07] Could be. [28:07] It is not currently a problem. [28:09] And I think there are studies you can point to on this around like what's the probability of collision and what challenge could that cause? How if there was a collision, how much economic value would be removed?

[28:22] There's like a... [28:23] long tail black swan event possibility around orbital space debris. But people show these really misleading graphics around low Earth orbit where they show like, here's Earth, [28:34] And then here's, oh my God, look at all that junk around earth. It's so congested. It's crazy. It's all going to... [28:39] blow up and crash into each other. The reality is if you showed that at scale, [28:44] you wouldn't even see the satellites. [28:46] Because they're all so tiny. You're talking about thousands and maybe some tens of thousands of objects. [28:52] that are like the size of mini fridges, a lot of these. [28:55] And yes, if we put data centers there, maybe that starts to become a bigger problem. [28:59] But right now today, there's basically no economic value in helping solve that problem. [29:04] There have been a bunch of companies, however, who have wanted to prove to investors that they are doing social good work. [29:10] And so they've said, like, let me show you that I'm going to help clean up this huge problem. And so I made a big deal out of it. [29:15] The reality is, I think, when you really look at the dollars and cents of it, if you could wave a wand tomorrow and say, OK, I'm going to clean up the different problem, how much would that be worth? It's like tens of millions of dollars. [29:27] There's this grid report that I can never find every time I remember it, but I think NASA did it like five years ago or something. [29:33] It's just the economic value of cleaning up space debris is not that high. But anyway, this was one of the things. [29:38] in that category of like, we're going to move stuff around, we're going to be a tugboat. [29:41] Satellite repositioning is another one of like, hey, it's in the wrong spot, so bring it and put it somewhere else, which nobody does. There's not a thing that happens. [29:50] There are some companies that are working on life extension. That's useful in geo where satellites are really expensive. And so therefore we should extend their life a little bit. Never going to be useful in Leo.

[30:00] It's not a Leo, just replace it. It's easy to get there now. [30:03] And then there's the kind of Rocket Lab SpaceX arbitrage case that we talked about earlier. So these were all in like the tugboat category. [30:10] The practical reality is that the product market fit for Mira for a high thrust, [30:14] I-delta-V space vehicle. [30:16] is it's closer to a fighter jet than a tugboat. [30:19] This is a thing that what Space Force wants to do with this is move really fast at some point. [30:24] foreign actor spacecraft and characterize it. [30:27] that is not a tugboat mission. Maybe it's a speedboat. I don't know, but I don't like the boat analogies. Anyway, it's more like a fighter jet. And I think that's, [30:37] couldn't be further from tugboats. [30:40] At the upfront summit, you gave a really good keynote on the national security advantage of being able to reposition in space. So I'd love for you to go deeper into that. And especially as... [30:51] competition between US and our adversaries [30:55] just increases more and we can get into Golden Dome too, but could you just explain that a little bit further of the current state of that and why it's been so important? It's probably useful to start by just framing up what space defense is historically. [31:09] for most of the existence of Space Force and our nation's opportunities in space, it's been assets in space that help the warfighter on the ground. [31:19] A really good example of this is GPS constellation. So GPS provides, you know, position, navigation, and timing to warfighters. It's how the [31:29] Air Force drops precision munitions and things like that.

[31:32] Um, [31:33] it's also become a social good for the world. It's an amazing thing for each of us. I think I've seen estimates where it's, [31:43] something like a trillion dollars in economic value every year really rely on GPS. [31:48] Um, [31:49] So GPS is like the one canonical example of these assets in space that provide benefits of the warfighter underground, but we also have things like [31:58] the missile warning tracking layer. So anybody shoots off an ICDM somewhere, we find out [32:03] Things like secure communications. So how do you tell somebody else that somebody shot an ICBM? [32:10] So historically, we've invested tens if not hundreds of billions of dollars in these assets in space. [32:17] light value on the ground, [32:18] They've traditionally mostly been in medium Earth orbit and geostationary orbit, so not really in LEO. [32:24] The thing that's happened recently is I think we've been able to rely on the fact that we didn't really need to defend those assets. [32:33] So Russia was the only other country that had consistent access to space. [32:37] And we had an understanding with them. Don't come near our stuff. We won't come near your stuff. [32:42] That understanding may be breaking down, depending on what you read in the public news. [32:46] And then China now has consistent access to space and has a massive program to essentially duplicate our launch capacity. They've got, you know, [32:56] five different companies trying to be SpaceX over there that they're throwing lots and lots of money at. [33:00] And that's not just for commercial purposes, it's for a lot for defense.

[33:03] So now, and I think Space Force knew this was coming when it got [33:08] started, but there's this real need to actually defend those assets for the first time. [33:12] And this is part of why you see Space Force's budget going from [33:15] 17 billion dollars a few years ago to now the request is for 71 billion dollars [33:20] And how you defend those assets depends on where they are. So right now a lot of action is deploying new assets in low Earth orbit to where Starlink and Starshield are. And the strategy for defending the assets in LEO is proliferation. [33:34] So you have hundreds, if not thousands of targets for the enemy to need to take out if they're gonna cripple your capacity. And so you solve defending it by just having more things for them too. They can't take them out at all of them. So just put more. [33:48] The problem is that when you look at the [33:51] volume of Leo, [33:53] compared to the volume between LEO and GEO, MEO and GEO are a million times bigger, literally a million times bigger than LEO. So if you're going to have that same strategy of proliferation of, hey, there's always an asset somewhere around here, [34:07] you'd need a million times more assets, which is just impractical. [34:10] So instead, you solve the defensive problem in Neon Geo with a spacecraft that can move really rapidly from one part of the orbit to another. [34:18] And so Mirairo spacecraft is really good at this, going from one part of geo to another, because it's really, really big. And so in order to cover all that ground, you need to move fast. And you still have those same assets that provide value to the warfighters, but now you need patrols to vend them. You need bodyguard satellites that stick around them. And what those missions typically start with is characterization.

[34:43] of understanding what is that foreign actor asset that's out there. [34:49] You know, because space is so big, you know, you see these pictures of of assets from the ground, like a telescope will take a picture of something in space. [34:57] and the picture of the thing in in leo will be this kind of like blurry thing that you can sort of mix out as a box and maybe those are solar panels [35:04] And the picture of the thing in Geo is literally like one pixel is a dot. You can just don't have no idea what the heck that thing is. [35:09] And so when you see in the news, you'll see China launches XYZ thing, it's headed towards geo. [35:15] reality is from the ground we don't know what that thing is like does it have [35:19] robot arms? Does it have machine guns? We don't know. And so the way that you figure out what is that thing and what should I do about it is you actually have to get quite close to it [35:28] and in any kind of contested environment, you probably want to get close to it pretty quickly. [35:32] And so you want to move very rapidly from one part of TO to another. [35:36] So this is the part of it we work on. And Space Force is investing across the whole gamut, right? They're investing in proliferating and having more and more stuff going on in LEO. And then they're investing in these defensive capabilities in MEO and GEO. Today's episode is sponsored by VCX by Fundrise, the public ticker for private tech, allowing investors of all sizes to invest in venture capital. [35:58] Learn more at getvcx.com. [36:01] Some of you may not have heard this yet, but our sponsor Public just launched something called Generated Assets, and it brings AI into investing in a way I've honestly never seen before. Here's how it works. You type in an idea like AI-powered supply chain companies with positive free cash flow or defense tech companies growing revenue over 25% year over year. Public's AI then dispatches a swarm of agents that scan every single US stock, evaluates them, and instantly builds a custom

[36:31] why each stock is included. And before you invest, you can even backtest your idea against the S&P 500, so you're making decisions with real context, not just guessing. [36:40] And beyond generated assets, Public lets you invest in stocks, bonds, options, crypto, all in one place. They'll even give you an uncapped 1% match when you transfer your investments over from another platform. If you want to build a portfolio that actually reflects your thesis, visit public.com slash sorcery. [36:57] Paid for by Public Investing. Full disclosures in the description. [37:01] Enterprise AI runs on Merge, the AI infra platform for integrations, agent tooling, and model orchestration, so your teams ship product, not plumbing. [37:11] Mistral, Dropbox, and Drada already trust Merge in production. Start building at merge.dev. [37:17] Founders scale faster on Deal. Set up payroll for any country in minutes. Hire anyone anywhere. Get visas handled fast. And get back to building. Visit deal.com slash sorcery. That's D-E-E-L dot com slash sorcery. [37:33] So I want to talk more about the product development cycle [37:36] You were the 13th employee at SpaceX. Tom Mueller was the second. So I would assume this might be crazy that there might be some SpaceX DNA within the company. A little. Tom was officially in the payroll system the first. [37:51] Really? So you're employee 001. So Elon's not even an employee? I don't know what the, I don't know how that works, but it's, yeah, in the payroll system, I mean, I think [38:00] You know, he found Tom and I think that was really the impetus for saying, OK, I actually think I could make a company around this because.

[38:07] the engines are the thing that failed, or the thing that's the hardest to build, or the thing that's [38:12] is always the critical path in the schedule. And so I think without Tom, I don't think that company goes in the first days. [38:19] And so I think, I don't know, that was part of the calculus for making an employee one of the payroll system or whatever, but that's officially the case. So what was the hardest lesson that you learned at SpaceX in the very early days that has kept with you through this time and through the build of Impulse? [38:36] One of the really, really biggest things that I think we learned there that I watched happen that is definitely part of our DNA now is really about the iteration speed or the reduction of cycle time for development. [38:49] So how quickly can you learn about this thing you're trying to build? [38:54] And so I was there in the early days, and I was an analyst on the propulsion team. So what that means is that I'm not real good at hardware or using machines or building anything. I kind of spend all my time in simulation land and Excel spreadsheets and... [39:10] Um, [39:11] which is funny because Tom is like super hands-on, right? And when I first met him, he asked me all these questions about, you know, when's the last time you used a lathe and a drill press? And, you know, how do you expect tubing on this thing? And I'm just like, dude, I have no idea. I excel real good. I'm like, if you want that, I'm your guy. And so I was pretty sure he was not going to hire me, but then luckily he did. [39:33] So I was an analyst on the team, but the team was so small that I basically just had to stay attached to Tom no matter where he went.

[39:42] And it was right around the time when I joined in early 2003 when the team started going down to the test site in McGregor in Texas for the first time. And at the time, the team in McGregor, there was one full-time employee there. [39:57] Um, and the rest of us would fly in, uh, and spend 10 days there and, you know, work for 10 days. And then we'd come back to LA for four days and we'd. [40:05] do that over and over and over again. And I did that for like nine, 12 months, something like that. I'm done that for years until the team finally stood up there and it was built out. [40:14] And what we were doing is we would bring hardware there to test. So like, hey, we've got this new version of the engine. We're going to build it up there. We're going to test it there because testing it in LA, these things blow up. So you can't test them around here. [40:29] And we would go down there and we'd bring our new hardware and then we'd get everybody to [40:34] you know, McGregor, which is, you know, [40:36] a little west of Waco, give you an idea of kind of where it is in the middle of Texas. And we would have brought the wrong part. [40:44] Oh, no. And it's like, well, I guess we're going home. [40:47] And so sometimes we would, right? We'd get back and get on a jet and fly back there. At that time at SpaceX, the big philosophy is kind of funny. I took away as a 20-whatever-year-old kid, I had two things that I remembered about a strategy of SpaceX. And one was we're going to not rely on the government as a customer. [41:08] with the all commercial. [41:10] which is amusing to me because a few years later, NASA became the anchor customer, basically made the company, what is that? And then number two was, we're going to outsource all manufacturing because there's such an amazing supply base here in LA that why would we make stuff internally when we can just rely on all these defenders or these vendors?

[41:29] which, of course, I'm using because they're canonically so integrated now. [41:34] So, but at the time we were outsourcing basically everything. [41:36] So we had a little... [41:38] Tiny machine shop, but basically anytime we would need some new part built, it was, okay, send the drawing to the vendor and get it built. [41:45] And that would mean that, you know, you need some [41:48] new piece to the engine built. Okay, we'll send in the drawing and maybe two weeks later, if you're lucky, you get this thing back. [41:53] oh, by the way, you got the wrong one, and you flew to Texas to test it, [41:57] Get on back and wait two weeks to test that thing because you got to go fix it. [42:01] So, [42:02] We got this cycle where we had a couple of vendors that we were really reliant on that were doing well for us. And one of the ones was, you know, [42:11] always the quickest and they're pretty cost effective and they're very communicative so they were okay we're really relying on this one they're the ones that are helping us move fast [42:20] And I remember sitting in the bunker in Texas and underground, [42:24] I'm the team, and we get a call from that vendor. [42:26] And I was like, hey, sorry, but [42:28] We're shutting down. [42:30] We're closing our doors. We can no longer, I don't know what the heck happened, but some internal dispute or whatever, I don't know. And they're shutting down. So we're like, we're screwed. [42:40] This is our number one vendor. This is the vendor that's helping us move quickly. [42:44] And we sit around having a conversation and we realize like, oh, we got to go hire as many people from that vendor as we can. And we got to build up the internal capacity because that's what's going to help us iterate. [42:55] It's all stuff that seems like super obvious now, right? So most, you know, hard tech companies, you walk around, they have a bunch of machine shops and lathes and 3D printers and all that sort of thing, but 2003,

[43:05] That was not so obvious at the time. [43:07] And now it's so core, so what we do here, that if you want to move quickly, you absolutely must insource a lot of the development. You must build your own components. You must take as much internally as you can. [43:18] which is not easy to do. [43:19] These spacecraft that we build are really complicated. They have a lot of components. [43:24] and so there is a uh it's not the norm to build all this stuff in in-house it's the norm from [43:31] the primes to integrate from other suppliers. They very proudly proclaim like, hey, we have suppliers in 50 different states, right? [43:37] Um, [43:38] The reality is that those 50 different suppliers and 50 different states on their spacecraft create a ton of risk in their supply chain. [43:46] And when they're in the development stage, when they're trying to build something new, [43:49] it means that they're super slow because they have to wait two weeks for that next component to come back. [43:54] And there are companies that are startups that [43:59] It's hard to hire the level of technical talent that we have. [44:02] And when you're trying to do something that has a broad range, [44:06] of technical competencies needed, [44:08] You got to hire smart people across all those ranges, and that's really challenging to do. [44:12] Having Tom be a founder, the founding team that we have here, I think really helps us to bring in that talent and helped us to be able to do this. [44:20] Whereas I think other companies are kind of struggling at sometimes. [44:23] Okay, as we wrap up, I'll have some quicker questions, but you're going to be hiring a bunch. Yeah. What roles are you hiring out for? [44:31] Yeah, almost all of it is technical talent. It's either people who are going to be working in the machine shop or in the integration facility building spacecraft or engineers who are helping design those components or engineers who are building test setups. I think when we look at budgeting for the company, it's typically, you know, 85 to 90 percent is...

[44:48] those people and the rest is kind of overhead like me. But, you know, we really want to continue to keep being a focus on being a technical company. And I think what's a little different is that we tend to hire, we have something which you could talk to Tom about if you want, really around this responsible engineering mindset. So, you know, who is the person that's ultimately accountable for the success of this part or this vehicle or this process? And we want people to be that single [45:18] whereas other companies takes more of a systems approach where it's kind of diffused throughout the organization. It's really important when people come in and say, you are going to own this. Like you're going to be the owner of this thing. And I think that's really empowering for people to come in here. And we need 200 more owners of important stuff. [45:37] If you weren't president and COO, what role would you want here? Pick any role. [45:42] Oh my gosh. Well, they don't want me in the prop team anymore. The propulsion team is so far light years advanced from where I was 20 years ago. It's crazy. I look at the work that they're doing and I don't know how... [45:55] They do that. And I look at the resumes of some of the people that we bring in, and it's like, oh, my God. I've never gone out here for that job. [46:03] I mean, I think I invariably spend a bunch of time selling stuff. [46:07] company. So that's a big part of what I do. And again, our sales team's better than I am at that. So luckily they don't need me too much for it. [46:15] Um, [46:16] What's the most fun job here? [46:18] kind of think.

[46:20] You know, I was always a little, I'll be honest, I was always a little jealous of the folks who were really good at testing stuff. Like when I would go with Tom to the middle of the desert in Texas and I would sit in the bunker and play with my spreadsheets all day and the guys were out there, you know, blowing stuff up. [46:35] that was always seemed like a lot of fun and I always wished that I had spent [46:39] I'd been better at that. And so I think probably somewhere in the development of test side. [46:43] uh one of our sponsors is brex and they're all about performance so i'll ask this quickly but [46:49] What are the biggest milestones that you're looking forward to over the next year? [46:54] We've got to do an awful lot of development on Helios. We're testing that engine a lot. We've fired it hundreds of times. We need to keep doing that. We're about to bring the Helios tank, second tank, out to the desert to set up the vertical test stand there. It's going to be really exciting. [47:08] Start testing on the Vertical Test Am. [47:10] We've got to continue to produce Miras. We've got contracts we've announced and others that we have not, where we need to build a lot of these over the next few months. [47:18] And then we're going to continue to develop some of the other engines that we've talked about, like the Rigel engine that we announced. That's for a wide range of programs. [47:26] So, [47:27] Lots and lots of development on complicated spacecraft. [47:31] Amazing. Well, thank you so much, Eric. Thank you for having me. Hey, it's Molly. If you enjoy our interviews, check out our newsletter, sorcery.vc, where we deliver a once a week top deals and tech headlines email and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.