Jonathan Godwin, CEO at Orbital: Orbital raised $50m Series B

0:00Jonathan Godwin:Hello and welcome back to the Scaling Europe show. I'm Sed Johnson. Today on the show we have got Jonathan Goodwin who is the co-founder and CEO of Orbital Industries which just raised an amazing$50 million Series B led by Plural. He is a deep mind vet, spent five years there and is now building an amazing company. Tell us what is it that you have built Jonathan? Yeah, so Orbital Industries, we use this phrase, it's an AI industrial. And an AI industrial has two parts to it. So one is a frontier AI research team. That's my background. I think the team we've got is world-leading in this space. I say I think it really is.

0:40We've released an open source, really the world's best models for advanced materials design. can be used across semiconductors, catalysts, cooling fluids, which I'm sure we'll touch on in more detail, thermal management. The whole gamut is incredibly general, incredibly powerful, and we do that across advanced materials, hardware, and manufacturing. And that's our Frontier AI team. That's the first core part of an AI industrial. The second core part is product development teams that use that AI platform to develop new hardware products for critical industries. And our first go-to-market there is within the data center industry.

1:22But that's a muscle that we're building that can be applied across all sorts of things. And when you think about the world's most important problems and the things that we're talking about scaling Europe here, things that Europe needs to do, a lot of those are hard-legged. We've got to be better at defense, We've got to be better at AI. We've got to be better at semiconductors. And we need new technologies to do that that are homegrown and commercialized here.

1:45Jonathan Godwin:Absolutely. So tell me a bit about the data center angle. What is it that you've built and deploying there? Yeah, so our primary discovery there, and it's truly extraordinary, actually. We have used our AI platform to discover a whole new category of calling technologies for GPUs. a new family of materials that is going to be better at cooling GPUs as they become more energy intensive and produce more heat. It's entirely new, got an incredible sort of patent position about that and are scaling up the manufacturer of that material. And that will be the first time that AI has been used to discover a new material and bring it to market.

2:34First time in the history of this industry and perhaps the first time that's happened for a new molecule because that's also not happened in the pharmaceutical space. And this material, this technology is really required by the major chip providers

2:52Jonathan Godwin:to enable them to continue to develop better chips for training and inference. So it's a core bottleneck technology that we've managed to solve with AI. And extraordinary to do that in just three years. You know, when we go speak to folks and say, this is what we've done, it would normally cost$100 million in 10 years to do that. And we managed to do that with far less money and far less time, which is a testament to the AI industrial vision really starting to work. That's a phenomenal achievement, I guess. The idea that this is the first molecule from AI to be on the market and and i think it kind of actually just shows the size of the opportunity right what you've been able to achieve in three years you're developing something that can really have a huge impact in the world of data centers outside of data centers where can you see this going you know what's what's the grand ambition then yeah well you know when i think about you what do we need to do as a you know human race what are the what are the biggest challenge that we need to try and solve.

3:56You think about it as we have to produce way more stuff, right? We want to bring the per capita GDP of the world up to where it is for the wealthiest countries. And that just means that we need to have industrial capabilities that spread way beyond where they currently are now. You know, we need to do that with the real challenges. We need to do that with far fewer people. You know, the world's population is declining pretty significantly. And so what that means is the means of production of the goods that we use needs to become more automated. We need to become more productive. Every individual needs to be able to produce more stuff.

4:43And that means that we need new physical hardware technologies across every area of society. And so our ambition at Orbital is to provide the mechanism to do that at scale systematically and faster than ever before across all major critical industries, starting with advanced materials, but really heading into hardware and manufacturing in every major area. That's a muscle and a capability that we think AI is able to bring. But specifically beyond data centers, you know, we think there are core challenges in critical mineral supply. You know, how do we take control over the production of the rare earth metals and the things that are required for our critical industry?

5:33So critical minerals is a really important one. And we also think there are really significant challenges in aerospace and energy where the sorts of technologies that we have a unique capability in developing are critically needed.

5:49Jonathan Godwin:Amazing. Let's go back in time a bit. At the moment, we're seeing a general push towards hardware and deep tech across Europe and across the world. You founded this company three years ago. When you founded it at the time, oh, three years ago, four years ago, end of 2022, I think. What was the reaction when you first spoke to investors? Was this something that was easy for them to understand or get on board with? Or were people looking at you like you're crazy? When we very first spoke to investors, I think this was before ChatGPT. And I mean, so a couple of pretty big reactions, right? So one was not really understanding what advanced materials and deep tech and hardware almost really were.

6:33Not understanding what advanced materials was, maybe something like synthetic leather or something rather than a semiconductor, but also just like a huge skepticism and reticence about anything that touches the physical world, anything deep tech or hardware based. And the second thing was that I think the current enthusiasm around AI wasn't actually not there. I think AI businesses until that point had been, in many cases, a bit of a letdown. And so the combination of these two things, which were not top of the list of what people wanted to invest it in,

7:12Jonathan Godwin:made it a very small intersection of folks who were really excited about what we're doing. I think what we've seen over the past few years is that everyone has obviously become a lot more enthusiastic about AI. And as a kind of lagging indicator or sort of lagging development has become also a lot more interested and excited about hardware as a sort of technology and investment that has the defensibility and capability of really changing the world. but also not being subject to AI disruption in the way that a normal SaaS business would be. So it's extraordinary to see how those things have changed in the past few years.

7:56Jonathan Godwin:You must feel like you've got sort of the wind behind your sails, right? Like you took an early bet, I guess, and now the market is coming with you in a way that they probably weren't a few years ago. And when I look at the fundraising history, I think you raised like a pre-seed when you first launched. you raised series a and then you raised some strategic investment from n ventures but that is is this round with plural it's 50 million dollars is like a it's a big series b which is i think from plural who i think are phenomenal investors what gave them the conviction to back you yeah well you know i think that when you when you look at Plural and I think maybe if you look at the in our previous investors as well there is a sense of you know we are going to back things that have founders who you know really see the future and are incredibly ambitious and want to do do things that have a really significant impact on the world.

9:03You know, I think sometimes, you know, when Ian, who's a sort of lead from Plural, kind of describes the way he thinks about being a VC is like, I want to invest in people I believe in and, you know, initiatives that I would want to see succeed, whether or not I was investors in them. And so, you know, I think when you look at what the scope is of what Orbital is trying to achieve, there is no doubt that the world needs something like Orbital. And there is no doubt that the world is going to create something like Orbital. And we want to have that in the UK and we want to have that in Europe. And so that motivation behind the ambition, the inevitability of what we're doing, that this is, in 10 years' time, one of the world's most valuable companies is going to be a hardware company that is using AI in every area of the stack.

9:56um you know i think that's what that that's what led to a plural to to invest in orbital um i think the sort of sense of true inevitability around what we're doing has only just become more and more clear um and you know we were the first first folks to to spot it and identify it that's amazing

10:16Jonathan Godwin:and how important in this world do you think having the hex style that you've had is you know I think when you think about the sorts of things that we're trying to do, some of what unlocks the capability is capital, and that's why we're going to raise a series B. Some of what unlocks that is time, because there are certain things as you develop a new material, you've got to go, for example, you've got to go test it, and maybe you need six months of testing data or a year of testing data for someone to go and buy that product. So time is really important. That head start gives you that. It really is the head start in time.

10:57It's not always really recoverable with additional capital. So that has been really important for us to, I think, establish a really unique position with our products in the market in a way that is really challenging for someone to try and start doing that. So that head start has been really valuable, and we're just building on that momentum with this stun race.

11:19Jonathan Godwin:And can you tell me a bit about the Orb model? This is your open source model host on AWS that is truly leading in the benchmarks. Can you explain to people who don't really know what it is? Give us a bit of context. Yeah. So when you think about what's been holding back advanced materials design or even just like molecular design for the last 100 years. It's that the world is sort of too complicated to simulate with a bottoms-up physics simulation the way that we would try and simulate the way that air flows over an F1 car. And so your only choice in developing these technologies is to go into the lab and try and use human reasoning to think up some new experiment and go and run that experiment.

12:16And if it works, that's great. If it doesn't work, you've just got to try again. So there's this sort of analog trial and error challenge in any form of advanced materials or chemistry design. That means that it just takes so long and so much money to develop something new. And so what would the solution to that be? The solution to that would be, well, if you could, if you could specify a material and instead of going into the lab and taking a week to run an experiment you'd have a way to computationally figure out what the properties of that material are going to be and do that at a scale where you could do that millions of times or hundreds of millions of times to identify the needle in the haystack that has all of the sort of goldilocks and perfect properties that you need for your application and that's what orbit you know orbit is basically like a virtual lab.

13:10It gives incredibly accurate results on the properties of completely new materials that have never been made before. And that allows us to quickly find things that would normally have taken years to discover. We identify it first time, go into the lab, make it, and it worked exactly as we thought it would be. So that is what Orb is. Orb is the model that allows us to do that. And it's incredibly general purpose. It really is used across the material spectrum from everything from semiconductors to critical minerals to alloys. You know, it's really like a general advanced materials model. It also then gives Orbital the capability to go into all those different areas as well.

13:56So it's, yeah, it's incredibly exciting. One of the first things that we did as a company and it's the cornerstone of our success.

14:03Jonathan Godwin:And why is it important to make it open source?

14:08You know, we have an internal version of Orb with proprietary data, so we still maintain an advantage, especially in the areas that we care most about from a commercialization standpoint. I think there are two reasons that we wanted to open source it. One is that we thought the impact of this was going to be way more significant beyond what Orbital is going to be able to do individually. We wanted to give something back to the community that has often done the training for our team, and we've benefited a huge amount of open source. And the third point is that our business model doesn't depend upon selling that software.

14:44Our business model depends upon selling the hardware that we discover. And so the sort of strategic importance of keeping that inside is a little bit less, but we get a lot of benefit from a talent and goodwill, engagement,

15:02Jonathan Godwin:usage perspective from open sourcing it. And so, you know, we think that's really a really important and valuable thing to do. And yeah, we're really excited to continue doing that. And when I look at some of the other big labs in this space that are doing sort of like AI for materials, it feels like a lot of them are very much focused on the models. Whether you look at DeepMind or Microsoft, even I think Meta has one, Open Catalysis, if I'm not mistaken. I think your bet is it's not enough just to have the models. You've got to have the models and build the hardware. Why do you think that? I think there are a couple of reasons why Orbital has done this.

15:49There is a, do we believe this is the right bet and the way to build a big company? And then there is what are the values and goals of the team around Orbital? What's our ambition and what do we want to do as a group of people? And I think in many ways that second one is A more important and B something that I think is very unusual about Orbital. When you think about most companies and the way they figure out what they're going to do it's mostly a sort of how can I make the most money right like it's sort of like individuals without a goal beyond creating a successful organization and there I think there are some companies that have a sense about what they want to achieve in the world and work towards that and it's not always the easiest thing to do um but those companies i think funnily enough end up being the biggest companies you know you think about spacex spacex was built to you know go to mars

17:00Jonathan Godwin:and make you know the humanity a a multi-planetary uh species and anthropic's goal has been to um bend the curve of agi to make it more safe agi is happening it's coming it has incredible capabilities um but we need to make sure it's safe and and those are things that unite those companies and the people who work at those companies and those ambitions of those companies that in some ways at the outset feel like they are not the most obvious route towards success you know anthropic why would you why would you care about safety you know safety is not something that your customers are demanding, right?

17:48It's something that you are doing because you care about it. It has turned out to be an incredibly important part of A, having better models, and B, having a set of individuals who really care about what they're doing and a culture that is incredibly valuable and important. You know, and SpaceX, you know, I think that the ambitions of what they were trying to do, ultimately what created the people who work day and night to build those rockets against all the odds. So a large part of our view in the world is that we need new and better industrial companies who are making new advanced devices that change the shape of humanity.

18:39And we want to do that. That's an ambition and a goal of Orbital, of myself and the founding team of Orbital. So that's a huge part of it that is completely separate from a sort of business analysis of whether or not this is the only route towards making a bunch of cash. but I think there are really good reasons to believe that there's also that as well and you know the reason we believe that is that when you look at the you really look at the world's largest companies most of them are either hardware companies or have become hardware companies over the period of their existence and if certainly if you look at the world's most valuable advanced materials companies, you know, there's certainly also hardware companies.

19:31And that tells you a lot about the value capture associated with being able to do hardware. And in the advanced materials case, an advanced devices case, really like owning that specific IP and owning the large blockbuster results in that. Like it's a power curve. These things are more like venture capital investments. You know, they're probably three or four, you know, advanced materials or, you know, advanced device categories or products that you need to own in any five-year period. And that 90 % of the revenue and value created through that, through the entire industry is concentrated in those three to five products.

20:16So you really need to own those ones. need to own them in a significant way and capture all the value of that. If you're really serious about becoming a very significant company. And so that's always been our ambition and our goal. And that's just because we want to be that big of a company. We don't want to necessarily be the easiest company to build.

20:39Jonathan Godwin:That's amazing. I think your point around SpaceX and Anthropik and being mission-driven is so... It's not something people talk about. You know, the classic YC advice is like build something people want. And it's like make money, get ready. I don't know. It's just really, you're absolutely right. We're the biggest and best companies and have never built something that people want. They've had a mission and they've been willing to do whatever it takes to achieve that. Well, we're out of time. I feel like I could talk for ages, but thank you so much for joining me. Absolutely love what you're building.

21:06Jonathan Godwin:I love your mission. So thank you for taking the time. It's a pleasure. Thanks so much, Ted. Have a great rest of your day. See ya.

21:16yeah