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

22:42We can get rid of some of that shielding for the radiation that they need to go through. They can make the tanks smaller. And that by itself actually could come close to paying for the ride on Helios, just the changes that they made in spacecraft. And by the same token, if folks assume that Caravan is in the market, then they can assume that they can get rides for smaller spacecraft and they can go smaller and smaller geo. So we didn't expect sort of that impact in the market to happen for a little while. You know, we haven't flown Helios yet. We'll fly at the beginning of next year. But we're hearing from customers that they're excited about what it can bring to them.

23:16So we're hopeful that this helps the market. Because as I think alluded to in our conversation, the geocompset market, you just look at the data. It's kind of flatted down in the last 10 years. It's not grown heavily. I think it's something that we would like it, obviously, to grow. And if we can improve the economics of the people that operate there, then it should grow. You know, supply, demand, plasticity. And we're hopeful to see that in the next few years.

23:42Eric Romo:If you can talk about this, could you walk through the business model costing a bit, even if it's frameworks, and then how customers measure value and success? Yeah, absolutely. And so when we're talking about getting the geo, when you look at those components of that time, how much is the time worth to them, and then how much are the hard costs worth to them, the fuel, the radiation shielding, et cetera. time tends to be the biggest one there for sure. And when we've looked at that time, it's a pretty wide distribution because you have some customers in Geo where they have, for example, they might have a contract with a ground operator, a local telco or something, where they have to provide the bits down to that local telco.

24:27And if they don't do it by a certain date, then they have huge penalties or they lose the contract. and the penalties or the delay fees or whatever it might be, they might be hundreds of millions of dollars potentially in that contract. Whereas if you just looked at the revenue that they would get through that time, because we're basically pulling that revenue stream forward, it might be tens of millions of dollars. So we look at the different customers, we think kind of the middle of that distribution is in the tens, maybe middle tens of millions of dollars of value of that time per a single flight at Helios.

25:03And then the hard costs around fuel, et cetera, et cetera, might stack up to something like five or$10 million in total. So there's a pretty good amount of value there. But the interesting thing is, and I don't know how much of this is still on the website, but when you look at the difference between a Falcon 9 and a Falcon Heavy, it's like$70,$80 million, something like that, historically. And so that probably is bigger than the value that the average customer would get there. And again, there's some customers way on the end of the bell curve that it would still would pay for them to use stock and heavy.

25:36Whereas we look at our pricing and we don't talk about pricing publicly, but it's lower than that. Right. And so the typical customer can quickly do the math basically in their head and say, OK, my time's worth 50 million dollars. My hard cost is worth another seven million dollars. Therefore, here's the price. OK, cool. I want to do that. And it's a really straightforward sort of value proposition to that to that end customer. um contractually it's provided as a service so so it actually looks an awful lot like a launch contract for these customers um you know we need to ride on a falcon 9 so sometimes like care case of caravan we buy the falcon 9 we have a free launch agreement with spacex and some of these uh rides that customer buys the falcon 9 and we attack helios on as part of the payload but we're sort of ambivalent there.

26:23Eric Romo:We're in Southern California, specifically LA, and there's a ton of space companies here now. So what is the competitive market look like? And could you walk through different kinds of sets of companies, especially, I know you don't like this word, but could you walk through what a tug is and define that and how you're not a tug? Yeah, I think people thought that there was this market for this kind of tugboat service between parts of Leo. And they thought that that was a thing. Like if you, I missed the whole SPAC thing. I don't know if you're around during the SPAC stuff, but I kind of got back into space like just after all those kind of stocks tanks.

27:03And it was kind of like, I don't know, going to a frat party, but at like seven o 'clock in the morning, there was like a bunch of half-thrunk silo cups around and there's a bunch of people kind of laying on the floor. It's like, wow, I miss a really good party here. And now I maybe have to clean up, I'm not sure. Um, but, uh, so I, so I, so I missed all this, but I gather that in this back nonsense, there was sort of this, uh, big pitch around how we're going to just be moving things around Leo all the time. We're going to be picking them up from one spot and dropping them off to another spot.

27:31And then we're going to be, you know, going up on transporters and tugging them around. And, um, uh, just generally that market has not manifested at all. There's been almost no examples of this actually getting transactions actually completed in the market. Or this kind of Leo to Leo move things around. You know, people throw in that bucket like orbital debris remediation. Right. I'm like, hey, we're going to clean up space junk. So I've got some feelings on to talk about. Oh, wow. Things like. Yeah, it's a scam, I think, largely. So look, the orbital remediation could be a problem one day. Could be.

28:07It is not currently a problem. And I think there are studies you can point to on this around like what's the probability of collision and what challenge could that cause? If there was a collision, how much economic value would be removed? There's like a long tail black swan event possibility around orbital space debris. But people show these really misleading graphics around low Earth orbit where they show like here's Earth and then here's oh my God, look at all that junk around Earth. It's so congested. It's crazy. It's all going to blow up and crash into each other. The reality is if you showed that at scale, you wouldn't even see the satellites because they're all so tiny.

28:48You're talking about thousands and maybe some tens of thousands of objects that are like the size of mini fridges, a lot of these. And yes, if we put data centers there, maybe that starts to become a bigger problem. But right now today, there's basically no economic value in helping solve that problem. There have been a bunch of companies, however, who have wanted to prove to investors that they are doing social good work. And so they've said, like, let me show you that I'm going to help clean up this huge problem. And so I made a big deal out of it. The reality is, I think, when you really look at the dollars and cents of it, you know, if you could wave a wand tomorrow and say, OK, I'm going to clean up the different problem, how much would that be worth?

29:24It's like tens of millions of dollars. There's this grid report that I can never find every time I remember it. But I think NASA did it like five years ago or something. And it's just the economic value of cleaning up space debris is not that high. But anyway, this was one of the things in that category of like, we're going to move stuff around. We're going to be a tugboat. Satellite repositioning is another one of like, hey, it's in the wrong spot. So bring it and put it somewhere else. Nobody does. There's not a thing that happens. There are some companies that are working on life extension.

29:53That's useful in geo where satellites are really expensive. And so therefore we should extend their life a little bit. Never going to be useful in LEO. It's not a Leo, just replace it. It's easy to get there now. And then there's the kind of Rocket Lab SpaceX arbitrage case that we talked about earlier. So these are all in like the tugboat category. The practical reality is that the product market fit for Mira for a high thrust, high Delta V space vehicle is it's closer to a fighter jet than a tugboat. This is a thing that what Space Force wants to do with this is move really fast at some foreign actor spacecraft and characterize it.

30:27That is not a tugboat mission. Maybe it's a speedboat. I don't know, but I don't like the boat analogies. Anyway, it's more like a fighter jet. And I think that couldn't be further from tugboats.

30:40Eric Romo:At the Uprunt Summit, you gave a really good keynote on the national security advantage of being able to reposition in space. So I'd love for you to go deeper into that. And especially as competition between U.S. and our adversaries just increases more and we can get into Golden Dome, too. But could you just explain that a little bit further of the current state of that and why it's been so important? It's probably useful to start by just framing up what space defense is historically. For most of the existence of Space Force and our nation's opportunities in space, it's been assets in space that help the warfighter on the ground.

31:19A really good example of this is GPS constellation. So GPS provides, you know, position, navigation, and timing to warfighters. It's how the Air Force drops precision munitions and things like that. It's also become a social good for the world. It's an amazing thing for each of us. I think I've seen estimates where it's something like a trillion dollars in economic value every year really rely on GPS. GPS. So GPS is the one canonical example of these assets in space that provide benefits of the warfighter underground. But we also have things like the missile warning tracking layer. So if anybody shoots off an ICBM somewhere, we find out.

32:04Things like secure communication. So how do you tell somebody else that somebody shot an ICBM? So historically, we've invested tens, if not hundreds of billions of dollars in these assets in space, light value on the ground. They've traditionally mostly been in medium Earth orbit and geostationary orbits and not really in LEO. The thing that's happened recently is I think we've been able to rely on the fact that we didn't really need to defend those assets. So Russia was the only other country that had consistent access to space and we had an understanding with them. Don't come near our stuff and won't continue your stuff.

32:42That understanding may be breaking down, depending on what you read in the public news. And then China now has consistent access to space and has a massive program to essentially duplicate our launch capacity. They've got five different companies trying to be SpaceX over there that they're throwing lots and lots of money at. And that's not just for commercial purposes, it's for a lot for defense. So now, and I think I think Space Force knew this was coming when it got started, but there's this real need to actually defend those assets for the first time. And this is part of why you see Space Force's budget going from $17 billion a few years ago to now the request is for$71 billion.

33:21And how you defend those assets depends on where they are. So right now, a lot of action is deploying new assets in low Earth orbit, to where Starlink and Starshield are. And the strategy for defending the assets in LEO is proliferation. So you have hundreds, if not thousands, of targets for the enemy to need to take out if they're going to cripple your capacity. And so you solve defending it by just having more things for them to. They can't take them out at all of them, so just put more. The problem is that when you look at the volume of Leo compared to the volume between Leo and Geo, Leo and Geo are a million times bigger, literally a million times bigger than Leo.

34:01So if you're going to have that same strategy of proliferation of, hey, there's always an asset somewhere around here, you'd need a million times more assets, which is just impractical. So instead, you solve the defensive problem in Mio and Geo with a spacecraft that can move really rapidly from one part of that orbit to another. And so Mirai spacecraft is really good at this, going from one part of Geo to another, because it's really, really big. And so in order to cover all that ground, you need to move fast. And this is you still have those same assets that provide value to the warfighters, but now you need to patrols to defend them.

34:36You need bodyguard satellites that stick around them. And those missions typically start with this characterization of understanding what is that foreign actor asset that's out there? You know, because space is so big, you know, you see these pictures of of assets from the ground, like a telescope will take a picture of something in space. and the picture of the thing in in leo will be this kind of like blurry thing that you can sort of makes out as a box and maybe those are solar panels and the picture of the thing in geo is literally like one pixel is a dot you can just don't i have no idea what the heck that thing is and so when you see in the news you'll see you know china launches xyz thing it's headed towards geo the reality is from the ground we don't know what that thing is like does it have robot arms does it have machine guns like we we don't know and so the way that you figure out what is that thing and what should I do about it is you actually have to get quite close to it.

35:28And in any kind of contested environment, you probably want to get close to it pretty quickly. And so you want to move very rapidly from one part of Geo to another. So this is the part of it we work on. And Space Force is investing across the whole gamut, right? They're investing in proliferating and having more and more stuff going on in LEO. And then they're investing in these defensive capabilities in MEO and Geo.

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37:08Eric Romo:So your teams ship product, not plumbing. Mistral, Dropbox, and Drada already trust Merge in production. Start building at merge.dev. Founders scale faster on Deal. Set up payroll for any country in minutes. Hire anyone anywhere. Get visas handled fast and get back to building. Visit deal.com slash sorcery. That's D-E-E-L dot com slash sorcery. So I want to talk more about the product development cycle. You were the 13th employee at SpaceX. Tom Mueller was the second. So I would assume this might be crazy that there might be some SpaceX DNA within the company. A little. Tom was officially in the payroll system the first.

37:51Really? Employee 001.

37:53Eric Romo:So Elon's not even an employee? I don't know how that works, but it's, yeah, in the payroll system. I mean, I think, you know, he found Tom, and I think that was really the impetus for saying, okay, I actually think I could make a company around this. Because, you know, the engines are the thing that fail. They're the thing that's the hardest to build. They're the thing that is always the critical path in the schedule. And so I think without Tom, I don't think that company goes in the first days. And so I think, I don't know, that was part of the calculus for making an employee one in the payroll system or whatever.

38:25But that's officially the case.

38:27Eric Romo:So what was the hardest lesson that you learned at SpaceX in the very early days that has kept with you through this time and through the build of Impulse? One of the really, really biggest things that I think we learned there that I watched happen that is definitely part of our DNA now is really about the iteration speed or the reduction of cycle time for development. So how quickly can you learn about this thing you're trying to build? And so I was there in the early days and I was an analyst on the propulsion team. So what that means is that I'm not real good at hardware or using machines or building anything.

39:06I kind of spend all my time in simulation land and Excel spreadsheets, which is funny because Tom is like super hands-on, right? And when I first met him, he asked me all these questions about, you know, when's the last time you used a lathe and a drill press? And, you know, how do you expect tubing on this thing? And I'm just like, dude, I have no idea. Like, I excel real good. I'm like, if you want that, I'm your guy. and so I was pretty sure he was not going to hire me but then then luckily he did but so I was in an analyst on the team but the team was so small that I basically just had to like stay attached to Tom no matter where he went and it was right around the time when I joined in early 2003 when the team started going down to the test site in McGregor in Texas for the first time and at the time, the team in McGregor, there was one full-time deploy there.

39:57And the rest of us would fly in and spend 10 days there and work for 10 days. And then we'd come back to LA for four days and we'd do that over and over and over again. And I did that for like nine, 12 months, something like that. I'm dead after years until the team finally stood up there and it was built out. And what we were doing is we would bring hardware there to test. It was like, hey, we've got this new version of the engine, you know, build it up there. We're going to to test it there because testing it you know in la this thing's blow up so you know you can't test them around here um and uh you know we would go down there and we'd bring our new hardware and then we'd get everybody to you know mcgregor which is you know a little west of waco give you an idea of kind of where it is in the middle of texas and uh uh we would have brought the wrong part oh no and it's like well i guess we're going home and so sometimes we would right we get back and get on a jet and fly back there.

40:52At that time at SpaceX, the big philosophy is kind of funny. I took away as a 20 or whatever year old kid, like I had two things that I remembered about like a strategy of SpaceX. And one was we're going to not rely on the government as a customer. We're going to do all commercial, which is amusing to me because a few years later, NASA became the anchor customer, basically made the company that is there. And then number two was we're going to outsource all manufacturing because there's such an amazing supply base here in LA that why would we make stuff internally when we could just rely on all these defenders or these vendors, which of course is amusing because they're, you know, canonically so integrated now.

41:34So, but at the time we were outsourcing basically everything, right? So we did, we had a little tiny machine shop, but, but basically anytime we would need some new part built, it was okay. Send the drawing to the vendor and get it built. And that would mean that, you know, you need some new piece to the engine built. Okay, we'll send in the drawing and maybe two weeks later, if you're lucky, you get this thing back. Oh, by the way, you got the wrong one and you flew to Texas to test it, get on back and wait two weeks to test that thing because you got to go fix it. So we got to the cycle where we had a couple of vendors that we were really reliant on that were doing well for us.

42:09And one of the ones was, you know, always the quickest and they're pretty cost effective and they're very communicative. So they were okay. We're really relying on this one. They're the ones that are helping us move fast. And I remember sitting in the bunker in Texas and underground on the team. And we got a call from that vendor and it's like, Hey, sorry, but we're shutting down. We're closing our doors. We can no longer, I don't know what the heck happened, but you know, some internal dispute or whatever. I don't know. And they're shutting down. So we're like, we're screwed. This is our number one vendor.

42:42This is the vendor that's helping us move quickly. And we sit around having a conversation and we realize like, oh, we got to go hire as many people from that vendor as we can. And we got to build up team trail capacity because that's what's going to help us iterate. It's all stuff that seems like super obvious now. Most hard tech companies, you walk around, they have a bunch of machine shops and lathes and 3D printers and all that sort of thing. But 2003, that was not so obvious at the time. And now it's so core. So what we do here, that if you want to move quickly, you absolutely must insource a lot of the development.

43:14You must build your own components. You must take as much internally as you can, which is not easy to do. These spacecraft that we build are really complicated. They have a lot of components. And so there is a, it's not the norm to build all this stuff in-house. It's the norm from the primes to integrate from other suppliers. They very proudly proclaim like, hey, we have suppliers in 50 different states, right? The reality is that those 50 different suppliers in 50 different states on their spacecraft create a ton of risk in their supply chain. And when they're in the development stage, when they're trying to build something new, it means that they're super slow because they have to wait two weeks for that next component to come back.

43:54And there are companies that are startups that it's hard to hire the level of technical talent that we have. And when you're trying to do something that has a broad range of technical competencies needed, you got to hire smart people across all those ranges. And that's really challenging to do. Having Tom be a founder, the founding team that we have here, I think really helps us to bring in that talent and helped us to be able to do this. Whereas I think other companies are kind of struggling at some times.

44:23Eric Romo:Okay, as we wrap up, I'll have some quicker questions, but you're going to be hiring a bunch. Yeah. What roles are you hiring out for? Yeah, almost all of it is technical talent. It's either people who are going to be working in the machine shop or in the integration facility building spacecraft or engineers who are helping design those components or engineers who are building test setups. I think when we look at budgeting for the company, it's typically 85 % to 90 % is those people, and the rest is kind of overhead like me. but we really want to continue to keep focused on being a technical company.

44:57And I think what's a little different is that we tend to hire, we have something which you could talk to Tom about if you want, really around this responsible engineering mindset. So who is the person that's ultimately accountable for the success of this part or this vehicle or this process? And we want people to be that single point of accountability, whereas other companies takes more of a systems approach where it's kind of diffused throughout the organization. It's really important when people come in and say, you are going to own this. Like you're going to be the owner of this thing. And I think that's really empowering for people to come in here and we need 200 more owners of important stuff.

45:37Eric Romo:If you weren't president and COO, what role would you want here? Pick any role. Oh my gosh. Well, they don't want me in the prop team anymore. The propulsion team is like so far light years advanced from where I was 20 years ago. It's crazy. Like I look at the work that they're doing and I don't know how they do that. And I look at the resumes of some of the people that we bring in and it's like, oh, my God. I've never gone out here for that job. I mean, I think I invariably spend a bunch of time selling stuff in the company. So that's a big part of what I do. And again, our sales team is better than I am at that.

46:12So luckily, they don't give me too much for it. But what's the most fun job here? I kind of think. You know, I was always a little, I'll be honest, I was always a little jealous of the folks who were really good at testing stuff. Like when I would go with Tom to the middle of the desert in Texas and I would sit in the bunker and play with my spreadsheets all day and the guys were out there blowing stuff up, that was always, it seemed like a lot of fun. And I always wished that I'd spent, I'd been better at that. And so I think probably somewhere in the development of test side.

46:44Eric Romo:One of our sponsors is Brex and they're all about performance. So I'll ask this quickly, but what are the biggest milestones that you're looking forward to over the next year? We've got to do an awful lot of development on Helios. We're testing that engine a lot. We've fired it hundreds of times. We need to keep doing that. We're about to bring the Helios tank, second tank, out to the desert, set up the vertical test dam there. It's going to be really exciting. Start testing on the vertical test dam. We've got to continue to produce Mirus. We've got contracts we've announced and others that we have not, where we need to build a lot of these over the next few months.

47:18And then we're going to continue to develop some of the other engines that we've talked about, like the Rigel engine that we announced. That's for a wide range of programs. So lots and lots of development on complicated spacecraft.

47:31Eric Romo:Amazing. Well, thank you so much, Eric. Thank you for having me. Hey, it's Molly. if you enjoy our interviews, check out our newsletter, sorcery.bc, where we deliver a once a week top deals and tech headlines email, and also go deeper on our podcast interviews. Subscribe to Sorcery today. And don't forget to subscribe to the podcast on YouTube, Spotify, Apple, or wherever you listen. Link in description to sign up.