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

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Transcription of our conversation with Delian Asparouhov, Co-Founder of Varda Space Industries

Immad Akhund:

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 Immad Akhund, the co-founder and CEO of Mercury.

Rajat Suri:

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 a 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. And Matt, what were you curious to learn about from Delian today?

Immad Akhund:

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

Rajat Suri:

Absolutely, yeah, and you definitely come away from here in Delian and you 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 knows the economic model and the history of what's gone into this. So having people like that work on these types of problems is exactly what we need and the ecosystem just gets better and better too. So we're excited to talk to him today and one recommendation for some folks is Delian speaks fast, so you may want to turn down the audio speed so you can make sure you get every bit of wisdom you're spouting. So with that, let's welcome Delian.

Delian Asparouhov:

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

Immad Akhund:

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

Delian Asparouhov:

I've had this long-term fascination with aerospace since a very young age, and originally it was on this life path where thought that this sort default path was going to be study robotics in computer science in high school, go off to undergrad at a tactical university, do grad school at Caltech, and then join GPL and then join NASA to do basically deep, deep space robotic missions given that felt like the most applicable interest to my skillset and call it. And freshman year of college started to take a bit of a hard left turn and realized that the world of let's say more academic training and working at a sort of government institution like NASA was less of an interest of mine. I was more interested in the world of sort the speed of Silicon Valley entrepreneurship there. And when I looked though at some of the heroes that I had in the world of Silicon Valley plus called it aerospace, there was really only one common pattern amongst all of them.

So if you look at Elon Musk, Chamath Palihapitiya, Steve Jurgensen, et cetera, all of them basically sort of made it big in normal tech and then went to go work on aerospace. And so as I thought about my path forward, I thought, okay, I can do this JPL L thing, I can go be an individual engineer and I had a lot of friends from MIT that went and did that, go be an individual engineer at SpaceX or I can try and follow the Chamath, Elon, and Steve sort of path and instead go work in sort of normal tech, make it big there and then basically go work in space tech. And so decided that that third path was going to be my path, and so I decided to work, like you said, on things that were in pure software become an investor, and part of why I actually ended deciding to stick around in the world of investing originally it was supposed to be just like a one year stop over was because I ended up within the first six, nine months of working at Coastal Ventures actually ended up sourcing an aerospace investment that we ultimately ended up making Acosh systems.

And through that it sort of had this sudden an aha moment in the call, this would've been late 2017, early 2018 timeframe after making that first investment that rather than just having to wait until I was like 40 or 45 and had made it big in normal tech and then work on aerospace, there's a way for me to do it much sooner in a very strategic and interesting way that just wasn't just being an IC software engineer over at SpaceX, it was the fact that because people like Elon Musk had sort of lowered the barriers of entry to the space economy, let's say now as an individual investor, you could actually make investments even at the ages of 23, 24 that I was at Coastal Ventures and start to work in the space in a way that combines both technical expertise as well as call it more business background.

And so kind of got hooked on this idea of, hey, let me start working in aerospace today at 2324 ventures. The only way to do that today. Great, let me keep 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 lean into this and hopefully I can get back to the building space companies one day a bit later. Turns out paying that tuition for three, four or five years investing into space companies was a great way to eventually prepare myself for the founding of Vardas. 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 much sooner in my career.

Immad Akhund:

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

Delian Asparouhov:

I think today there are easier ways to accomplish this path in that because the space economy has grown so much let's say. I mean if your number one criteria is the same as mine, which is build your own interesting space company and you're 19 and just dropped out of MIT relative to 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 was basically it. There was only three options and at that point all those companies were relatively scaled up. Your ability to join the founding team basically had already passed and there weren't, if you look at it at the space economy, I can't actually think of an interesting space company that was founded between 2012 and maybe 15.

There were no interesting space companies that have been founded. Everything that was founded in that timeframe was either too late in that it was a rocket company that wasn't able to then compete SpaceX and Rocket Lab or it was too early in that it was a fanciful idea that did not make sense before the advent of reusable rockets. And so it was too early to its time. If you are 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 space economy. If I look now in the summer fall of 2023, what are the interesting between seed and series B aerospace companies, I can now name 10 of them versus I think of the 2012 through 15 times thing. I think you could have really named basically none. And so I think the alternative path today would just be go join an early stage aerospace company, use that experience to then 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 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.

Immad Akhund:

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 advantages of that and do you think there's major disadvantages from this VC mindset you came into this with?

Delian Asparouhov:

Yeah, I mean the advantages were quite immense in that relative to even hyper sophisticated SpaceX executives that had been at the company for six plus years, my understanding of the end use cases, how to actually build up a business model in space, what the plethora of various vendors, regulators, et cetera they needed to interact with was actually much deeper even with a much smaller set of years of experience. Obviously now didn't have as many years experience like actually building spacecraft going through the systems engineering of that think through the trade-offs. No, but most of that stuff is not necessarily immediately, immediately the first relevant factor when 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 only the experience that I had in that my ability to then assess 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 the disadvantages where it gets pretty clear but I don't think also impossible to solve for and the advantages were definitely pretty immense. Not only understanding, let's say how to analyze and understand a particular business model in space and what the end users are, but then also obviously that skill being then helpful in relation to describing the opportunity to investors for financing.

Rajat Suri:

We'd just love to dive into Varda and ask some questions about clearly the space ecosystem is exploding. Why did you pick this particular problem? Maybe you can describe the problem you're looking to solve and why you picked it.

Delian Asparouhov:

The particular problem space that Varda exists within is something that I've been fascinated with since call it 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 of society is, the only time that those things ever become long-term sustainable end up being with economic incentives, right? Whether you have the California gold rush, the original United States colonies, the Portuguese and the Chinese Naval empires and the 14 hundreds, all of them follow the familiar pattern where when there is not a continuous economic incentive, things fall apart. When there is things become very sustainable. And that's why in the Apollo era, we effectively visited the moon a handful of times and never went back because fundamentally there was no sort of economic use case for that. And governments are only willing to throw empty dollars towards deep research and capabilities for so long.

Ultimately if they're not making a return on it, they themselves are not particularly efficient, but they are still ultimately capital allocators. And so when I thought about the future of space, it was clear that there are people thinking about the early economic use cases around satellite communications. Obviously things like starlink, those observations, taking photos of the planet like Planet Labs, isci, et cetera. And while those economic initial economic use cases were interesting and definitely the right ones to have pursued before reusable rockets, none of them really had any justification for human presence at any level of scale, right? 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 taking photos of the earth, but industrialization of space, whether it was asteroid mining, lunar ice mining, or in-space manufacturing, all of those were business models where fundamentally 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. So my idea was when the time comes 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 a city the size of San Francisco and low earth orbit and eventually a permanent sort of lunar base. So that was the original fascination call in 2009 through 11. In 2011 actually considered back in the day potentially working with some of the very first generation companies working on some of these problems. I'm not sure if you guys remember any of them, they were around Silicon Valley at the time, but things like planetary resources, moon Express made in space, these were all Silicon Valley VC funded companies back in the day, but it ultimately felt like the time period was not yet correct in that all these are predicated on easier access to space and that fundamental 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 master orbit every single year, it was 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 timeframe. 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, 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. I love asteroid mining, lunar ice mining, it would be very cool to get to work on those one day, but those are still definitely pie in the sky relative to just staying very close to the earth manufacturing goods and bringing 'em back down.

It's just logistically a much sort simpler problem instead of ultimately makes it a much simpler business. So that was when you sort of let's say narrowed it 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 2019. Very realistically, you were seeing this exponential curve come to life, paid a couple friends at SpaceX were involved in Falcon nine and asked them, how much wear and tear are you guys seeing on these first rockets that are landing? The resounding feedback was 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 switched or flipped in my head where it went from in space manufacturing being something that I was intrigued with to now this is no longer even a theoretical future 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 from the beginning of Q4 19 till basically covid hit meeting with everybody that had ever thought about in space manufacturing, everything from the back 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 principle thesis was there's just no way that you're going to be 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 sort of 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 there would 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 national governments, whether it's the Russians with the sous, the United States, with the cargo dragon and the Star liner, these things were ways to bring back goods and you didn't really have to pay for them if you then went independent of the ISAs, 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 is basically just super long-term fascination with ultimately if you build this economic use case, this is ultimately what will lead there to be eventually 10 humans, a hundred humans, a thousand humans that are in low earth orbit that are generating economic value rather than just being paid for by governments and finally decided that I just had to do it myself rather than try and fund somebody else to do it.

Rajat Suri:

Tell me a little bit about this in-space manufacturing. So looking at the website, it looks like there's some qualities in space that are different than earth, which make it a different place to manufacture. Can you give us some concrete examples of what is better or easier to manufacture in space than down here on earth?

Delian Asparouhov:

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 a, its constant. Is that what we consider to be one G? It's somewhat arbitrary that the amount of acceleration that we feel on our surface just based off of the mass of the earth, but we could easily sort of 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 assuring or effectively like centrifuge systems, but at least on the surface of the earth for extended period, there's a time there's no way to basically decrease 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 you effectively ends consistent freefall and so you effectively experience the equivalent of microgravity.

Rajat Suri:

By microgravity. What fraction of one G, I guess would it be?

Delian Asparouhov:

I believe microgravity is defined as micro, which is 10 to the negative sixth, right? So 0.0 0, 0, 0 0 1 Gs. You never technically say zero gravity since effectively impossible anywhere in the universe 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 environment being impossible to obviously create down here on the surface and given that it's one of the four fundamental forces of physics and as of wide variety of effects, some that are cute in that you can have the astronauts spinning around and playing his guitar and have the water bubbles floating some that are sort of more interesting and have commercial applications, particular in what I would categorize as basically meso chemical systems, which is call at the medium level of scale. And I think the easiest way to explain sort of why in these meso systems you end up having 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 us you basically lit a candle, you put your hand above the candle, you're 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 of basically physics behind that? When you light the wake up 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 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 atmosphere 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 and you have that type of acceleration, you basically have sedimentation effectively or 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 as well. So the reason that the hot air rises from a candle is the same reason why inside of a glass of water, ice 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 constant currents forming. If we take that same basically candle and you light it inside of a microgravity environment where there's enough oxygen to sustain the reaction, et cetera, what ends up happening? So you still have the combustion reaction, right? The wick still lights ignites with the oxygen around it and consumes it. It still creates that thermal energy then gets transferred to kinetic energy to the atmosphere around it. That atmosphere again speeds up, it becomes 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 what's known as a basically diffusive motion. So that's a very macroscopic analogy, but let's take it down to the microscopic level. If you're thinking about trying to get two molecules to attach to one another, if you remember from high school the sort of very simple molecular reaction is take two molecules, put them on top of a bunsen burner. You're basically trying to get above that activation energy so that you eventually get into a different potential state. And anytime that you're trying to do that on earth, and especially if you have two things that are slightly different molecular weights, those same basically convective currents end up effectively dominating where one of those molecules may end up being 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 multiple energy states that the reaction can land in, it's very difficult to precisely control which one, because you have a lot of this entropy or chaos in those chemical reactions, take that 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 candle analogy to microscopic chemical system to, okay, well what does this actually mean in the world of economics and capitalism? Why does this fucking matter at all? By far the gold standard, let's say from the International Space station or the best case study was performed by Merck. They're one of the top 22 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 revenue. But anyways, they took it up to the international Space station and to provide a very simple analogy for how this pharmaceutical is manufactured 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 left behind and what happens when they manufacture it on the ground is as each individual, what is known as a nucleation point form basically where crystal forms for the first time, what ends up happening is because you have this convective currents more basically saltwater 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 moving 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 it 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 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 nucleation or crystallization point. Instead you basically had thousands of individual nucleation points that were all perfectly uniform because basically the little sock crystal would form, there wouldn't be a 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 a very narrow mono modal basically distribution, and so that means you can perfectly predict how it's going to break down to 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 subcutaneous injections that 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 kilograms, this type of material can dose a very significant patient population far in excess of the, let's say cost it takes to launch it to orbit manufacture and bring it back down.

So that would by far be to 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 as 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 what is the crystal structure of the crystal form, and that typically can affect everything from the shelf stability, whether it's room temperature stable, 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 critical or limiting steps of actually bringing a drug to market. So anyways, long-winded answer to your question, but tried to start from first principles and work all the way through to commercialization.

Immad Akhund:

Did you do a full TAM analysis of all the drugs this could be applied to and what would be the tam if you did this or it's just too hard to kind of figure that out?

Delian Asparouhov:

I never believed that much in TAM 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 entertainment 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 kit, far bigger than anything that anybody in the tech industry basically works on. And so it just didn't seem to warrant a super precise analysis, especially because as rocket launch costs continue to decrease as our cadence continues to increases the economics change not by 10 20%, but change by orders of magnitude. And so therefore you can even tackle also changes by order of magnitude given that it's a question of economics and value creation. The example that I like to provide by the way, that sometimes helps people understand why does crystal structure matter?

If you take ibuprofen, you've almost certainly seen basically two types of ibuprofen Whenever you go into a pharmacy where you have basically the long lasting ibuprofen that is used for things like arthritis and you have the short-acting ibuprofen that is effectively meant for 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 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 in your blood and dose you very quickly, so you basically reduce the inflammation in your headache or whatever 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 your 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 blur brain barrier space manufacturing is the only way to bring this neurological compound to market that is extremely high value and over time it might be like, Hey, when we make it on the ground, it's shelf stable at two degrees Celsius.

We kind of need a cold chain. It's pretty annoying. And then patients have to put it in their fridge what they get home, but if we make it in space, it's like room temperature stable, and so that's more marginal, but it actually may end up being cheaper over time to actually just solve it in space rather than actually have a cold chain down here on the ground.

Immad Akhund:

So when Merck, 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?

Delian Asparouhov:

Merck mostly ran with it on their own and they did this in late 2018 and published their results basically like Q1 2019. So it was again, one of these things in the 2019 timeframe as I was considering. The idea was definitely a heavyweight where it went from a lot of interesting sort of theory, tons of great academic experiments to like, this was just true in my opinion, you sort of blockbuster commercial results. Ultimately there's just, 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 was no commercial player at the time that had let's say any path forward in terms of allowing them to work off of the ISAs, but I can't comment let's say on discussions with various pharmaceutical partners.

But what I can say is the primary principal investigator of that experiment by Merck that blockbuster result did provide a public quote for our launch article that was done by CNN and he basically explicitly called out the ISS has been a phenomenal place for us to do early research and validation work, but I find a platform like Varda that allows us to do this at greater scale, lower cost and higher cadence, extremely intriguing and I look forward, I think he said something along the lines of like, I look forward to partnering with them even if we haven't quite yet today. Clearly this sort of value proposition is resonating with the groups that had by far the best results from microgravity.

Rajat Suri:

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

Delian Asparouhov:

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 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 reentry, not anything here on the ground per se, but the reentry process does put significant G-Force in our current reentry capsule. So we rip anywhere from like eight to 11 Gs 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 prototypically considered small molecules? Small molecules are basically what all drugs were until call it the 2008, 2009 timeframe. Everything from ibuprofen to basically most drugs in the market were small molecules in the 2008 through nine timeframe. Basically they started working on what are known as larger molecules or biologics, basically things that basically think of it rather than being formed through orgo chemistry, mixing chemicals together and heating and cooling them and creating various chemical reactions. Instead, these things are formed with closer to biological processes think like something that either looks like yeast fermentation or eventually even ultimately up to something closer to what looks like a human cell. Those types of things for sure are more sensitive to G-Force and so we won't be able to tackle that type of product today. We would have to improve upon our re-entry vehicle capabilities where it can more precisely control G-Force by basically having active aerodynamic controls 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 re-entry itself less so being down here on the ground that affects it.

Immad Akhund:

You mentioned reentry 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've solved that, but is it a really hard problem? Are you just hitting things against earth's atmosphere? How do you kind of go around thinking about reentry?

Delian Asparouhov:

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 contents, it's complex for sure. It's not sort of trivial problem, but it's clearly been demonstrated it's possible to be done on the international Space station and people are definitely mixing together complex fluids. They're recreating some of the industrial processes that are done here on earth in a microgravity environment. So one of the simple examples is when you mix fluids sometimes down here on earth, you rely on gravity to basically bring them into a beaker and you stir 'em around up there. You have to rely more on microfluidics and capillary reaction and things like that, but point being that that is difficult engineering, but not anything too crazy, but the reentry problem and especially doing that at sort of high cadence was just not something that anybody had really done.

If you think about it, why come back from space? There's just not any particular reason to, the only time that we've really come back from space on the consistent basis is to bring the humans back because humans do want to eventually return to their life 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, it's easier to just let them burn up and send up a new one than try and bring it back down. So there really hasn't been any non-government use case for bringing things back. The only 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 Osirus Rex, where they basically went out to an asteroid called Benu.

They launched in, I want to say 2017, landed at a benu in 2019 and then I think basically left Benu in late 2020 to come back to earth. There you are trying to explicitly bring something back from space. It's a small asteroid sample, right? Or the only other time really, and the Japanese did it twice with hybusha and also acid did it once with stardust in 2004. But anyways, other than these asteroid sample returns, transmissions, which have happened four times in the last call like 20 years before that, the only other time that we really did reentry capsules small scale that didn't have humans on board regularly, it was actually in the early days at the same time as the Apollo program was going, people dunno this don't appreciate this, let's say, 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 down link 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 military bombers and actually use a skyhook to pick the parachute up basically out of the air once the reentry capsules down on the ground. And we flew about, I believe it was 134 of those Corona reentry capsules and I believe something like 120 of them were recovered. They had a really high success rate, so clearly it was possible to solve this reentry problem. Humanity had obviously done it about 50 years prior, but in the past 20 years, really nobody had solved a reentry problem. Is it a difficult problem? Absolutely. There's a reason why the United States has yet to field an operational hypersonic boost, glide, interceptor or weapon system from space in that it is effectively a system that would be trying to reenter.

It's just an extremely complex environment in some ways. I like to joke, 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 nine 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. But when you're up there, you're basically going mach 25 and so Mach 25 hitting the atmosphere at this speed introduces some pretty complex factors. There's basically three main things that you get hit with.

One is effectively like G-Force or shock forces. If you've ever been on a commercial 7 47 flight, you hit a little pocket of gravity. It absolutely obviously creates some level of G-Force, imagine that. But obviously at Mach 25, those g-forces are far more intense. Two, there's a thermal load. If you've ever watched like the Tom Hanks Apollo film, he's coming back through reentry. There's all that basically plasma around him and basically that heat you get to higher than the temperature of the sun on the actual 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 one another. So if you've 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 with aerodynamic vehicles and very 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 is 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 parking comparison.

Immad Akhund:

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

Delian Asparouhov:

We had our first launch June 12th of this year. We did have some planned dates in both July and September to reenter, but unfortunately you're still working through some government partner collaborations in order to 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.

Rajat Suri:

When you talk about doing the space manufacturing, I'm wondering about how much actual area do you need to do this manufacturing and how will it actually scale 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 basically fully human free flight, right?

Delian Asparouhov:

We'll definitely be automated for now, but referencing, if you remember my very first answer around why work on Varda, it's because there is eventually that motivation you 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 occasional basis do require human maintenance. And so 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 hundreds of humans. When you think about how much space that we need, especially for some of the early pharmaceutical drug candidates that we're working on, people under appreciate how much of an actual drug they're taking when they come in to take something.

The example that I sometimes like to provide is 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 million doses, if you look at the actual active pharmaceutical ingredients, the thing that is actively 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 mRNA crystals then get distributed out into hundreds of millions of individual doses so that when you go in, you have this saline syringe at the clinic where you got your covid vaccine, but it only has a very, very small amount of that sort of air, RNA crystal, that secondary manufacturing process in terms of putting the primary ingredient into a saline syringe, that Vardas still happens on the ground.

We just basically focus on those two milk gallon jugs. So for our first call it 10 plus missions, the reentry capsule is about a meter in diameters and can bring back about 40 to 50 kilograms of materials. There is a very wide set of basically pharmaceutical candidates that we can pursue that 40 to 50 kilograms once a quarter far outweighs basically 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 a gel capsule, a tablet, a saline syringe, an IV drip, however that particular basically drug 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 get larger, but there's no reason why at our current scale we couldn't make this into a multi-billion dollar company regularly bringing drugs to market. Obviously I fantasize about the day when I get to send up something that is the size of a skyscraper up into space and have that sort of manufacturing, but that is not a requirement for Varda to IPO anytime soon.

Rajat Suri:

What do you think the requirement is for Varda to get to a decent scale? What size sort of building or shuttle or you'd have a permanent base right in lower earth orbit, right.

Delian Asparouhov:

I think Varda could be a multi-billion dollar company flying six to seven missions a year of like 300 kilogram satellites basically, and I don't think we need to go large in that in order to hit that. If you look at some of the drug candidates that we're working on with pharmaceutical partners, the dosing on a per patient basis does not require something that is a permanent station or anything much larger than what we're developing today. In some ways, if you want to think about art business model or provide parallel with the way that we end up partnering with our pharmaceutical clients and the actual contract structure looks very net similar to groups like if you're familiar with Ginkgo Bioworks, Abela, Halozyme, where effectively we partner with our pharmaceutical partners in the particular drugs that they're working on that have crystal structure 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 royalties in the actual or equities basically in the drug that we work on so that when it gets brought to market, we become a partner in the actual drug.

And so yeah, I don't think you'll see us working on anything much, much larger than what we're working on today in the next three, four or five years. But for sure over time after this company's much larger than it is today, definitely look forward to kicking off the V two and the V three. They'll all steadily get larger and larger, but for now I would say it's more higher cadence of our current sized infrastructure and really improve the economics of that, and that will be more than plenty to get us through to being a public company.

Rajat Suri:

So the order of operations, if I can just summarize, is nailing what you're currently doing, the 300 kilogram 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 a phrase, where do you need to be versus where you are today?

Delian Asparouhov:

In this current V one architecture, you can basically think of our all in costs. For our very first mission that we did about $12 million a pop, there's no reason why by mission four or five or so we'll be able to get that down to five or 6 million, and what we're really ultimately aiming for is 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 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 basically scale up of that two and a half million emission more so than actually continuing to improve the economics and all of that is basically assuming that launch costs basically stay flat where they are today. That's the cost curve that we're looking to ride down.

Obviously we're still in our first mission, so we're still in the most expensive parts of that cost curve, but thankfully beyond just the pharmaceutical business that we've been talking about, we also have a ton of support from the DOD to utilize our capsules effectively as a hypersonic testing mechanism. So that also offsets a lot of the upfront R&D and NRE and also establishes, let's say, a base cadence of the number of flights that we do every single year. So it makes each marginal pharmaceutical flight is much cheaper and we can get to that scale that gets us to that cost structure much more easily than if we were to just rely on the pharmaceutical business alone.

Immad Akhund:

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

Delian Asparouhov:

Hundred percent. Varda would not exist if not for the DOD.

Immad Akhund:

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

Delian Asparouhov:

Other than illicit drugs? There's basically nothing on earth that sells for more than a hundred dollars a kilo other than basically biopharmaceuticals.

Immad Akhund:

Well, illicit drugs also a pharma product.

Delian Asparouhov:

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 there's not really anything else. Now was sort of the realization that we came to relatively quickly was as we were looking at basically value generation where we could attack various markets, there's been a ton of interesting work around fiber optics semiconductors in space, but at the end of the day, you get stuck with just this mass problem as much as a five chip in your phone and the iPhone is very valuable and very light. It just still pales in comparison to drugs. It's just orders and orders of magnitude. You sort a difference. And so it's just a lot easier to deal with the economics of space when you're talking about, okay, $5,000 a kilogram launch costs, which end up meaning, okay, your total cost of emission all baked in are like 25, 30, 40,000 because obviously you don't want launch costs to represent too small or too large of a portion of your total sort of flight costs, and it's just a lot easier to work with compounds that are a million dollars a kilo or $500,000 a kilo than it is to work with something that's far less than that.

Immad Akhund:

Yeah, that's interesting. I guess outside pharma, what is position number two? Is it fiber optics or is it semiconductors or something else?

Delian Asparouhov:

I think it's such a steep dropoff that in some ways nobody knows. And it is interesting because weirdly, there's this whole group that Stanford that is extremely obsessed with semiconductors in space. They try to invite me as a speaker and I basically told 'em, well, I was, I'm going to tell you that I don't think this is a good idea, so I don't think you want me as a speaker. And so they basically hung up on me and I was like, okay, I dunno what you want from me. There are some smaller startup companies actually trying to focus on this. But yeah, I have a really hard time if you look at it, actually, our chief science officer that now obviously entirely works on pharmaceuticals, he came from the semiconductor industry, we're pretty deeply familiar. We definitely studied it quite extensively of just like, is there something that we could do here? But I'm not saying that there isn't value to be had. It's just like you're never going to build a business with good unit dynamics on it in the next decade, 2030 and beyond, starships online, lunar base, whatever, all betts are off. Then now you might be talking about 25, 50, a hundred dollars a kilogram. Sure. Then there's going to be a ton of stuff, but then at that point you're also talking about people are going to start brewing wine in space just for the novelty of it.

Immad Akhund:

I can see people paying a lot of money for that, like wine space, brewed wine. Yeah, I would pay for space wine.

Delian Asparouhov:

There’s like bottle of space wine that's sold for, I don't know, a hundred thousand dollars, something like that. So it exists.

Immad Akhund:

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

Delian Asparouhov:

Space rocks.

Immad Akhund:

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

Delian Asparouhov:

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

Immad Akhund:

What's meniscus?

Delian Asparouhov:

A ligament inside of your knee and so they basically like 3D printed ligament in space.

Immad Akhund:

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

Delian Asparouhov:

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

Immad Akhund:

Lower stakes too. Yeah.

Delian Asparouhov:

Yeah, lower stakes.

Immad Akhund:

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

Delian Asparouhov:

I'm not claiming that it's in any sort of short timeframe, but if you look at the set of companies that are out on the market today commercializing various use cases, I think Varda will be the first to have an economic use case for it. If I were to try and put a prediction, I would say it's like no earlier than 2029, no later than 2035 for Varda to justify that, where what you'll initially see is basically in relation to the improvement to economics, you basically start to want to invest into reusability. The first thing that's very easy to reuse is the actual re-entry 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 sort of reusable. The second step is the actual basically satellite and manufacturing 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 orbit and instead bring a reentry 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 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 a thousand kilograms a piece, and one of them is small molecule focus and one of them is biologics focused and one of them is dealt with more toxic compounds. One has more thermal processes and super high temperatures, and so you'll see a constellation and basically depending on which manufacturing process your drug is most suitable for, you'll get sent to that one and initially those will probably be distributed, but once you start to get to on the order of several thousand kilograms on each of these, it will start to make sense to aggregate them and then basically likely initially just have a human visitor that comes by maybe one week every three months or something like that, does a bunch of manual repairs and that, things like that.

Given that yes, automation is really phenomenal. I think we're getting better and better at robotics down here on the ground, but there's still some level of fine motor control that humans can have in decision-making that you just can't yet replicate and I don't think you will be able to at any time soon. And so I think that's what it probably looks like because we start to pay for a crew dragon to bring somebody close to our station, do a spacewalk. Then once you're doing that, rather than one week every three months, you do it one week a month and then it's 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 hook into our station for water and for oxygen and things like that, and then all of a sudden you have one human living there and I think that stuff is probably called 20 28, 20 29 timeframe at the soonest. That would be sort of the best possible trajectory for Varda. Definitely a lot of work in order to make that happen.

Immad Akhund:

So initially you're not reusing the factory.

Delian Asparouhov:

Everything is onetime use. Yeah, everything is onetime use today. Basically we burn up the whole basically satellite and factored 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 a satellite and you can bring new reentry capsules to it is like a hundred million dollars engineering problem and so easier to not tackle that today and instead just do basically disposable just like Elon with Falcon one in the early days of Falcon nine, it was fully 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.

Immad Akhund:

Yeah, it's kind of funny. On the ground, everything is reusable by default and in spaces. Everything is reusable by default.

Delian Asparouhov:

Everything is not reusable by default, it burns up when it hits the atmosphere.

Immad Akhund:

Yeah, that's interesting.

Delian Asparouhov:

Except for reentry capsules.

Rajat Suri:

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

Delian Asparouhov:

Oh, no, no, no. That cost curve is much shorter. We'll have it down to two or 3 million a launch by 2025. That's pretty short timeframe.

Rajat Suri:

And the main levers there are the reusability, is that the main lever to get it from 12 to two?

Delian Asparouhov:

The main lever is primarily 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 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 over-engineered to ensure basically success. So that cost curve is a relatively short-term cost curve.

Rajat Suri:

Your first launch this year was June 12th, right?

Delian Asparouhov:

Yeah, June 12th at three 10 PST.

Rajat Suri:

Yeah. And you started the company 2020, right?

Delian Asparouhov:

Technically, yeah. I met my co-founder August, 2020, incorporated November 19th, 2020, but we didn't really open our office doors until January 19th, 2021, so when you look at a significant number of people working on it full time, it was really, let's say Jan 2021.

Rajat Suri:

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

Delian Asparouhov:

Yeah. Credit to my co-founder, core cultural value of Varda was 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 approach and obsession with schedule that's led to our ability to 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 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.

Rajat Suri:

I know the software companies that don't launch in two and a half years let launch space companies. So what do you think the future of the space industry looks like 10 years from now? What do you think we're going to be talking about that's already real? 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 10 years from now we'll be like, yeah, this is normal. This is all happening apart from Varda.

Delian Asparouhov:

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

The same thing will be true for the lunar base groups like Varda and Axiom Space and Vast will take over basically lower earth orbit because you no longer need federal incentives to build there. That'll just be something that is done by commercial entities and NASA and the federal government will take over the next frontier, but I think lunar sort of surface will absolutely be that, and so I think that will feel very normal as well as I think people have talked fancifully obviously about Mars for an extended period of time, but nobody's designing a vehicle that is currently going Mars with humans on it. That is something that people talk about in theory is 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.

Rajat Suri:

As you said, the key thing is economic incentive, so we need to figure out that piece of it for Mars.

Delian Asparouhov:

Yeah, that one I think for sure will be a little bit harder to figure out relative to lower earth orbit in the moon, but I think if you have really established trading posts, let's say in lower Earth orbit in the moon, the 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. 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 something that is obviously permanently settled is built, and you're luckily technically about industrial equipment that 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 the lunar ice caps on the moon to reiff.

You can actually use to actually start to build macro structures, whether in low earth orbit, lunar orbit or somewhere or cis lunar 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 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 heavy down here. There's a reason why we have that…

Immad Akhund:

Atmosphere.

Delian Asparouhov:

Yeah, I mean atmosphere, gravity, big gravity, well, lots of things. It's just like this is not a fun place. Earth is barely on the edge of you just get a little heavier and a little thicker atmosphere, and the rocket equation shifts from barely being able to get out to literally chemical rocket engines, not having enough propulsion to actually get out of the atmosphere. I think people forget out this, I forget the exact number, but it's something on the order of 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.

Immad Akhund:

Oh, that's crazy. Obviously ADA's doing pharma manufacturing, what's the next use case that would have economics in space, outside communication?

Delian Asparouhov:

Yeah, I always like to think of these companies as generations of companies that form the infrastructure that enables the next generation. If you look at the early days of the internet, companies like Amazon building out AWS in thousand eight is ultimately what enabled the next generation of Uber, Airbnb, et cetera. So that rather than them having to build their own data centers, they can focus on ride sharing of cars and home sharing of 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 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 into aerospace from 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 an infinite set of use cases. I think there is this in-space manufacturing use case, I do think that there's this in-space, basically gas station servicing, repairs, taxing basically use case where now that you have a higher density of basically vehicles on the highway, you can now justify basically putting gas stations on the highway versus before you couldn't. And then I don't think there really is much else. 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 in-space gas station servicing taxi systems, then I do think it then enables things like asteroid mining, lunar ice mining, et cetera. The way that I like to describe it's, people always talk about, wouldn't it be amazing if you took 10 tons of ice from the moon and put it into low earth orbit? And I always tell people, I'm like, who's going to use that ice today? Even if you had an asteroid that you brought into low earth orbit today, there's nobody up there that is 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 Vardas succeeding where you have 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 lots and lots and tons and tons of water. So I think right now there isn't really anything that interesting outside of basically those two 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 economic use cases that open up.

Immad Akhund:

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

Delian Asparouhov:

Yeah. 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's had to be lots of cars on the highway. It's a little easier for there to be a centralized gas station and instead you just refill anytime you're kind of close to the gas station.

Immad Akhund:

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

Delian Asparouhov:

Yeah, I mean, I think when you start to think about Helium three or platinum or things like that, those would then just be more returning down to earth. Obviously, hopefully we have lots of nuclear reactors in space over time, but it's more likely that the Helium three and platinum from an asteroid more gets returned down to earth versus used up in space basically. So yeah, I think outside of those then there's definitely more of a dropoff, and it's also probably hard to perfectly predict that far out. Then you start to probably get into the world of what looks a little bit more like the United States colonies, where the forward base on Mars ends up discovering some sort of natural resource that Mars has very plentiful amounts of that somewhere else in the solar system, and so they end up sending back trade chip back to earth.

But that stuff is so fanciful and it's kind of hard to perfectly predict, but there's surprising, there's not an infinite set. There's not an infinite list of business models after the ones that I articulated. If you go from in space manufacturing, there's for sure tourism, hotels, et cetera, but I don't find that to be like that. Interesting. You have the gas stations, you then have resource extraction for use in space like water, et cetera, or you have resource extraction for use on earth like Helium three and then beyond that? Yeah, I'm not sure about that.

Immad Akhund:

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

Delian Asparouhov:

There'll be a four seasons in space at some point. It'll take some time, but for sure, I mean, there's no reason why you can't replicate all of the niceties that we have down here on earth basically in space and get all the benefits of being in space. I definitely imagine a day where rather than people coming to South Florida to retire, they instead go to 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 run around and play golf in your full 18 holes if you're 95, and bones are cracking a little bit down here on earth, but you sure as hell can do it when gravity's a lot less. And so yeah, I think if anything, there may be preferential comfort in space over time and he is not comfortable today.

To be clear, 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. It is just everything in his body was not working correctly when he was down here, and it took a long time to get back to normal.

Immad Akhund:

Alright, a good point to maybe come to a stop, but four seasons and the one week of pain, this is a super interesting chat. Delian, thanks for taking the time.

Delian Asparouhov:

Sweet, sweet. Thanks so much for having me guys. It was great.

Rajat Suri:

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

Delian Asparouhov:

Thanks, Raj.

Immad Akhund:

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

Rajat Suri:

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 farfetched to be honest. It was like I thought, well, there's a bunch of investors wasting money on this one.

Immad Akhund:

Wow, you came in as a skeptic.

Rajat Suri:

I came in as a skeptic. Absolutely. Yeah. And then Delian doesn't have a background either in space or anything, so it's not like I come in as a fellow entrepreneur looking at it. I'm like, this seems a bit like science fiction type stuff. 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 a magic leap. They never make it past the chasm. And so yeah, of course, I think being a skeptic is probably the default here, probably just based on the history, but I mean de won me over. I mean, he knows the science inside out. He knows what he's working on. The application is very clear. The economics are very clear to him as well, and I came away thinking, well, this should happen. There's going to be a bunch of problems to solve, but everything he said made a lot of sense. And it seems like you've picked the right and narrow application for a startup to work on. Yeah. What was your thoughts?

Immad Akhund:

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 crystallization was happening can be a huge difference. I think it makes sense. I had always thought that the applications would be like carbon UBS or something like that, so it's kind of interesting to go, Hey, actually there's just simpler, not future sci-fi kind of applications in space.

Rajat Suri:

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 was some promising early trials there and the fact that they were able to launch something within two and a half years of starting. Yeah.

Immad Akhund:

That's crazy.

Rajat Suri:

It's really promising. That'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.

Immad Akhund:

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

Rajat Suri:

Absolutely. The space better than I do, but there's probably a lot of interesting applications coming out of that. It's great that 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.

Immad Akhund:

One thing that was kind of funny to me is his initial thinking was like, how do we make a space civilization? How do we get humans on space? But the application is not very human intensive, and actually I think there's a reasonable likelihood that robots will get better faster than the requirement by 2029, there's a reasonable chance there'll be a reasonable humanoid robot that's got enough articulation and enough pre-programmed AI skills that they can basically do this manufacturing use case because we already getting rid of humans and manufacturing on earth. So it's kind of interesting race that we're trying to put humans in space, but then we are making robots that are good enough to do these things in the first place.

Rajat Suri:

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

Rajat Suri:

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

Immad Akhund:

There's a really good book called Case for Mars, and there's definitely a separate kind of mindset, which is very much like, Hey, we just need to get to Mars, which is the only place it makes sense to put humans for prolonged periods is Mars because you've got the atmosphere protecting you from cosmic rays, and you've got all of these other built-in systems there that humans kind rely on gravity and all that kind of stuff. So at least ADA is much more on the camp of let's make low health orbit work. Whereas there is other camp which is like, let's skip a low earth orbit and let's make Mars work. I think actually 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 viewpoints.

Rajat Suri:

What's the economic argument from Mars?

Immad Akhund:

Honestly, it's much more of the almost like a land argument that, hey, there's another, Mars has as much land as the continent's on earth, so it's more of an argument of, okay, we have a massive landmass there and we should go make it work. Eventually we can. It's more of a colonial argument than a purely economic argument, I would say.

Rajat Suri:

I can see that makes sense. Well, that was a lot of fun. Very dense conversation too. He gave a lot of information in a short period of time. It was fun to listen to.