Hélène Huby, CEO of The Exploration Company: 'Only the crazy people change the world'

0:02Hello, as usual, it's your host Amy Lewy. Joining me today from Bordeaux is Hélène Huby, founder and CEO of the Exploration Company, the Munich-based startup building space vehicles. The company, which is only five years old, builds reusable and refillable vehicles to carry cargo to and from space stations in low Earth orbit and beyond. Eventually, it also hopes to transport humans. The exploration company has raised$215 million to date from investors including Borderton, Bessemer, Partec, Cherry, EQT, Plural, V-Squared Ventures and a whole lot more. Before starting the exploration company, Hélène worked on space technologies for prime contractors like Airbus and Ariane Group for over a decade.

0:45She's also an angel investor, although she tells me this takes up a very small smidgen of her time, in deep tech and space tech startups through her private investment company, Urania VC. And as you'll hear during the podcast from the many notifications that her laptop picks up, she's a very, very busy lady. Hélène, thank you so much for joining us. Thank you very much, Ami, for having me. And you're joining us from France at the moment, which is where you have one of your production sites. Is that right? Correct. In France, we have, well, not all our production sites, but we produce very critical elements of the space capsule, we produce a thermal protection so that the capsule does not burn when we re-enter the atmosphere.

1:26And we also produce the propulsion, so thrusters, valves in this site in Bordeaux. Amazing. We'll get into your own and the exploration company story in a little bit. But first off, I wanted to ask about the kind of space state of play. I found a report that says the space industry is expected to grow from$630 billion valuation in 2023 to$1.8 trillion in 2035. Why is that? What's going on in space at the moment that makes it such a big and growing industry yeah the the main reason is that space is more and more answering basic needs we have on earth and basic needs which are growing like very very fast the big need is communication for people for machines everything everybody wants to be connected with very like broadband connectivity everywhere at any time and before access to space was extremely expensive so space could not answer that for everybody space would answer the communication need for military people because they could afford space but not like you and me but since almost 20 years access to space has become more affordable starship so the very big um rocket of space six coming in the next month next years into the market will again drop access to space by a minimum of one order of magnitude.

3:03So it's becoming more and more accessible. And because it's becoming more and more accessible, you can send stuff to space for a fraction of a cost. You could do that before. And at the same time, the market for, or the need for like broadband communication and all sorts of creation on earth is exploding and will continue to explode. So this is basically the main driver for this huge growth of space. The second main driver is defense needs. We need secured communication. We need also observation from a defense perspective. And unfortunately, given the state of the world today, these needs are exploding.

3:36And the third one, which is very important, also in my opinion, is climate change. If we want to optimize our human activities, we need data from space. You take a farmer in India, you take a farmer in the United States, they want to optimize the use of fertilizers. They want to optimize the use of water. and to optimize the issues of water and fertilizers, you need space data. You take a logistic company in Africa. They want to optimize, you know, what kind of yogurt and like the quantity of yogurt being brought to this market. So they need to understand like how many people are in these markets because like sometime in these roles, like the fridge chain is not away at the top and they need space data for that.

4:16You take the logistic industry, which is polluting a lot. They don't want to be waiting to the harbor very, very long. they want to be able to plan their trip in the most optimized way, to use less fuel, but also to better protect the planet. And they need space data. So basically, I mean, a lot of data we need to optimize our activities on Earth is space data. So these are the three big, I would say, demand drivers for this huge growth of space. Number one is communication and within communication, broadband communication. Number two is defense. and number three is climate change and the need for optimizing activities on Earth.

4:55And then this is made accessible or made possible because access to space has diminished significantly in terms of cost of access to space. And in terms of who kind of owns space at the moment, you already mentioned SpaceX and I feel like it's SpaceX that we're always, always hearing about with regards to space. But what does that picture look like between, I guess, private companies, government organizations? What's the landscape like there and what's changing? Yeah. So if I zoom out and I look at governments, it's clear that the two driving or dominating forces today are China on the one hand and the United States on the other hand.

5:43there is as we speak a very important race to the moon and it's not clear who is going to win that race now speaking from private companies in both China and the United States there is this strength towards more and more commercial space it's like much more in the US also because I mean SpaceX here has become like a dominant player and is a dominant player, globally speaking. And, I mean, Elon Musk has changed the way we do things in space, and I'm a big admirer of what he did for our business because, I mean, that's amazing. Now, if I look, you know, 20 years, 25 years down the road, on the one hand, and if I look back in history, we have seen that even companies which were dominant players, they've been challenged by others.

6:41I mean, I'm taking a few examples right now, but in the past, you know, Airbus was a nobody, like some decades ago. And now it's as big as Boeing, sometimes even bigger than Boeing on certain market segments. So it takes time. It takes time. It takes courage. It takes vision. It takes government support. But it's feasible. Because market is changing. because if you want to become a global player, you need to catch up. And most of the companies right now, there is a need to catch up with SpaceX because SpaceX is by far ahead. But typically what has happened for everybody, for example, that there was a catch up and afterwards there was a disruption of the A320.

7:28So our hope with the exploration company is that first we need to be realistic, we need to catch up, we need to build in Europe and in the other countries where we are in the United States and in the UAE. The key technology to build space capsule, reusable space capsule, and also heavy reusable rocket. This is our roadmap. And then, I mean, SpaceX, of course, will be at a certain point in time, but like the market will be also at a certain point in time. And I'm very confident that we will have the possibility to bring the world something really, really new. And what we're bringing to the world already as something really, really new is that we are the only company in the world whose mission is to build space vehicles across nations.

8:10Like, we are not building a European capsule. We are building a capsule for humanity. We are not building a European rocket. We are building a rocket for humanity. Yes, the core of the workforce is in Europe. And yes, our products are going to serve Europe, but they're going to serve the United States too for the capsule. We are working in very, very close collaboration with NASA. That we're going to have, as soon as we've flown the first one to the ISS, in terms of the space station, we're going to have a production line in the U.S. so that we can serve the American market. And for the rocket, I cannot share with which countries, but we are in discussion already with some countries to be able so that our rocket, of course, can serve the European need, but can serve also for some other countries' needs of access to space.

8:52And I think this is a DNA, which is not very common, because many companies, they are like the number one American player or like the number one in Europe or whatsoever. For us, space is a place for humans. And in the collaboration, technical collaboration that we have in our vehicle, we want to embody the spirit of collaboration, the spirit of humanity. We are not naive. We know our technology can serve like defense needs and we will be serving also the defense needs in Europe and in the allies of Europe. But first and foremost, we want to build our vehicles as humans working together. And I think this is very unique and this is very different from other companies.

9:33And we bring the spirit of collaboration already in the world today. And how is that playing out in, as you mentioned already, this world where it feels like everything's becoming a lot less collaborative and we're dividing up much more into different sort of centers of power around the world? I mean, is that making your job harder? Do your US customers want you to focus just on them? Does it make it harder on those defense capabilities to work with governments if you're not saying, we are exclusively working with European governments or we will exclusively work with Germany or whoever? Yeah, it's a great question.

10:21It makes the collaboration between government more difficult. It doesn't make our job actually more difficult.

10:33because, okay, I think there are two ways to see that. In a very difficult time, I could think about the Civil War or I can think about other times, but you have certain people who decided to fight for their values to build a better world. And right now, I'm not a big fan of what I'm seeing in the world, but doesn't mean that suddenly I have only to serve you know the interest of power and fighting against each other we can continue and we are continuing to serve our values of peace and collaboration and we continue to work with the UAE we continue to work with the United States we continue to work with Germany and France for example even if the relationship between these two countries have been better in the past than what they are right now I don't care and we stick to our mission because this is who we are and the kind of world we want to be and the direction in which we want to contribute.

11:27Of course, we abide by the laws, right? So we are not working with countries with which we cannot work as per the laws of the countries in which we are. This is very, very clear. And it's also, I believe, an opportunity because you have in this world many people who've been used to collaborate because space has been, and I believe will continue to a place of amazing collaboration. You can think about the International Space Station. It was built in the middle of the Cold War. It was built between USSR and the USA. And it's like, it's the biggest laboratory ever built by humans. In the middle of the Cold War.

12:14So this was possible in the past. and I am sure such things will continue to be possible. So to be very clear with you, the current situation of the world has not impacted our business in the United States, has not impacted our business in Europe, has not impacted our business, let's say. In the UAE, the first right now, we need to take care of our team and this is our first duty, but we've already written to the authorities to say that we intend to continue and even accelerate our business there as much as possible given the current circumstances.

12:53Hélène Huby:The current situation, I think, is really for us a trigger to be even more thoughtful in the cause we want to serve. Because as an example, many technologies we develop or dual use we can use the thermal protection for a capsule we can also sell the same thermal protection to ballistic missiles or to hypersonic missiles so this raises of course a number of questions right now the choice we've made is to serve also the defense needs because we believe in the country where we are established and we want to contribute to protect the citizens of these countries What are some of the other defense sort of capabilities that the exploration company has or potential use cases for governments, etc.?

13:54Yeah, of course. So let's say to start from now, what is operational now and what is going to be operational in the future? Right now, we have two technologies which are operational. Number one, we are the only company in Europe which knows how to print in Yerbion. Nervium is a very heat-resistant material, which is widely used in the United States for missile thrusters. Number two, we are producing already several protection tiles, which can be used for, as I was mentioning, hypersnake missiles and also ballistic missiles. So these are technologies that we have right now available. In the near future, this means a contract that we've won already, but we've not yet flown the vehicles corresponding to this contract.

14:47We have won three contracts, dual-use contract, to basically reuse the technology we have on the capsule to perform in-space defense. So what does that mean? When you fly to a space station, there is one thing you must never do. You must never collide. with the space station, right? Otherwise, there is a life danger for the astronauts. Okay, now let's imagine you don't fly to a space station, but you fly to a spy satellite. Or you fly to a target satellite, which is poofing, hacking, like doing something bad, basically. What you want first, you want to gather information, so you're going to fly very close to that satellite to observe the satellite, and potentially afterwards, you want to act upon the satellite very precisely.

15:37and you have exactly the same problematic. You don't want to collide with the satellite because this would create a diplomatic incident, as you can imagine, and potentially trigger your consequences that you don't want to trigger. So right now we have one against major player in Europe, for example, against OHB in Germany. We have one dual use contract to perform these, it's called proximity operation. So inspection, action, docking with targets let's put it like that and we may be winning a fourth contract where we are providing this technology at the service of a very big European prime we don't know yet the results so I want to be careful but this would be of course a major win for the exploration company and this is a direct application of the technology we are already developing for the capsule to dock with the space station and very long in the future longer in the future Of course, once we built our heavy, reusable rocket, this will serve defense needs because then we'll be able to launch constellations of military satellites.

16:45And moving, I guess, defense aside, what else is kind of on the roadmap for the exploration company? What's hopefully going to happen this year in terms of new products, product development, tests, etc., and what's maybe happening over the next decade? Okay, so the next year is very simple. On the capsule side, we will test basically all the critical technologies and we will test. It's called a structural test model. So it's a model with the exact size of the capsule that we are shaking, we are vibrating, we are putting in thermal chamber. Basically, we are simulating the condition of space and the condition of launch to make sure that the capsule can sustain the condition in space and the condition of the launch.

17:39That's something that's going to happen this year. and for all the critical technologies we have, we will have de-risked this technology on Earth and we will have proved, we have, let's say, evidenced that these technologies, they work on Earth in a space environment. So that's a very important step and we plan to do that actually before summer. The second very important step is that we are right now in the process of answering an invitation to tender to ESA, ESA is the European Space Agency, ESA is our anchor clients who they have They are in the process of buying the first mission that we will be flying to the International Space Station.

18:16They bought already like a first part of this mission. And this year they're going to buy the second part of the mission. So, of course, we absolutely need to win this second part of the big contract, basically. And we are in the process of answering the invitation to tender. And the results will be known in June. and I'm reasonably confident that we'll be in the winner's list. Not to say more. I mean, we are the frontrunner right now in Europe. And the third important milestone is that I spoke a little bit about rocket. I said that, you know, one of our objectives is to basically verticalize the company so that we started with capsule and then we're going down the value chain.

19:00And so we started working on a high-stress rocket engine two years ago approximately, like more like R &D mode and now we want to accelerate so we'll be fundraising significant amount of money second part of next year so that we can accelerate on this high-thrust rocket engine and we can deliver on a roadmap to a build alone or in collaboration because there are many rocket players in Europe that we can build together heavy reusable rockets but you cannot build such a rocket without a high-thrust rocket engine so the first brick is the rocket engine and that's where we're to focus on energy for the team, but also for the fundraising this year.

19:38When it comes to funding for a company like yours, what does the funding roadmap look like? You've obviously raised hundreds of millions of dollars from VCs, but you've also, you know, you'll be putting in for tenders and grants with space agencies and governments. You also mentioned that you have some collaborations with primes. You know, what are the kind of key funding components for a deep tech company like yours? That's a great question. For deep tech companies like ours, perhaps to give you a number, if I caricature, building a cargo capsule is a half a billion effort. It takes minimum six years.

20:29so like it gives you like an order of time and an order of cost so our strategy has been to walk on two legs and if you look at SpaceX in the US it's a very similar strategy we started privately funded because we are four people 50k in the bank account we say hey we're going to build like the first year pen capsule it's a bit like you know This is very ambitious, not to say it's half crazy, but okay, only the crazy people are the ones who really change the world. So I think there are some good in being crazy. And we used the money to produce a very, very small demonstrator, so that we could demonstrate that we know how to build a spacecraft and we can fly a spacecraft.

21:18And this was 100 % private money. And step by step, we built our credibility. and in parallel we've been working with the governments so that the governments would understand why Europe needs a capsule. And it's very simple because if we don't have a space capsule, we pay half a billion cash for the United States to fly our astronauts. So I think it's just better to have the technology and the jobs here. So the pitch to the government is actually pretty simple, plus it's an inspiration for Europe. It demonstrates what we can do when we work together across nations in Europe. and it's also an amazing capability for the United States because the NASA says they need more capsule.

21:56And the American commercial space station is struggling to replace the ISS, the International Space Station, because we're moving from a world where you have only the International Space Station up there and the Chinese space station. We are moving towards a world where more and more countries are going to have their space station and there will be a mix of, let's say, space stations from countries like India is going to have its own space station, Japan is going to have its own module attached to an American space station. And you will have also commercial space station, as we speak, four commercial space stations, so private space stations being built.

22:29So, long story short, the funding roadmap was we start with private money first. It gives us also a lot of freedom. We work with the government and we create with the government a program. and then we co-finance the capsule together with government and with private investors. For the private investors, it de-risks significantly the program because when you have a program of half a billion, you know, every year of delay may cost 45 million, 35 million, 40 million, whatever, like a lot of money. So it's good to have government on the side. If you work only with government, One euro of public money is coming with constraint.

23:18Because government, they want you to create jobs in their country. They want you to create technologies in their country. If you combine the two and you start with private money, and if the government, they act not as people who pay to develop something, but people who buy a service, then you have the de-risking factor between public and private money. It costs ways less money for the government. because they don't pay for everything. Very simple. It's much, much faster because a normal way of building space business, let's say the old way, is you first go to government. So you first spend five, seven years negotiating with Italy, France, Germany, Spain.

24:01Hey, I'm going to build that technology in Spain. No, in Italy, no, in France, no, so that. Then you end up with an industrial setup, which is politically optimized, but not business optimized. So if If you start with private money, nobody's going to give you one euro if you are not business optimized, if you cannot demonstrate a product market fit. And then you also like kind of discard or you don't have this whole negotiation phase. So you win when you start with private money, five to seven years of negotiation. And that's a win for the taxpayer monies. Right. And so it's a win-win on both sides.

24:36And this is what we've been able to build thanks to the collaboration of the Open Space Agency and thanks to the collaboration of investors. And for the rocket, we intend to have exactly the same idea. And when it comes to customers, are you already making revenue? Or is that further? So how does that work at the moment? And who will be the key core customers for you moving forwards? Yeah, so for the capsule actually, it's quite simple. the clients or the Open Space Agency, NASA, and in the future, the Commercial Space Station, so the stations which are going to replace the International Space Station.

25:18The way it works, it's very similar with DHL. So if you're a client of DHL, you give a phone call or you go to the post office and you can buy one envelope or you can buy a batch of envelopes. and for each envelope you have a maximum size and maximum weight basically and you can give to DHL whatever kind of cargo just basically need to miss the volume and the maximum weight of the envelope. So we don't sell like transportation services for envelopes but we sell transportation services with capsule. And so NASA or the Open Space Agency or Anchor Client right now is a open space agency. They can buy one mission, which is equivalent to one envelope, or they can buy a batch of missions.

26:10Typically, what they do is they start with buying one mission because they want to assess the technical credibility of the company. And very, very fast, they start buying batches of missions, typically five to ten missions together. Because the people up there in the space station, they need water. They need food. The station must be repaired. The station must be refueled. Like you have very critical needs. So when you manage the space station as a commercial space station or NASA for the initial space station or the European Space Agency for the initial space station, you want to make sure that the astronauts, they always have what they need.

26:44And so you want to give the industry the time to plan and you want to make sure that if one vehicle does not work, you can have another vehicle which is working and bring water or like people to the station and back. So that's why normally in our business, as soon as the first flight is successfully done, you end up with billions of, let's say, batch contracts, which gives us a very, very strong visibility on what we're doing. So right now, in June, we will have one, like the number one contract for what is called a demonstration mission, the first mission to the International Space Station. Bearing in mind that we already send two prototype capsules in space, but that will be the first time we fly to the space station.

27:28and the European Space Agency and the member states have already pre-committed for six flights afterwards. And so we are hoping to be able to sign the first batch mission with the European Space Agency around 28-29. In addition to that, we already have signed missions with the commercial space station. So with the stations that will basically take over after the International Space Station is being retired. So we have signed one mission with Axiom, one mission with VAST, three missions with Starlab. So we have a pipe, which is actually a very nice number. And the amount of our pipe will be above one billion in June.

28:07And I guess part and parcel of being a space company is that when you succeed, it's a very public event. And when you fail or something doesn't quite go right, it's also a very public event. And in June last year, one of your capsules crashed into the Pacific before it kind of released its payload. And, you know, there were there were some headlines around it. How how do you kind of manage those inevitable situations as a CEO? Is it is it quite a demoralizing thing for a team or is it something that people just understand is, you know, this is how this industry industry works? Yeah, it's a great question.

28:55As a CEO, you don't think really about yourself. You think about your team first and foremost. So I knew it was a possibility that we would lose our capsule because we decided to take risks. And would we have not taken these risks, we would have been much slower. It would have cost much more. Just to give you some data points, we've been the third company in Europe who re-entered successfully within the atmosphere with a capsule that was piloted, basically. And before, there were two attempts, fully successful, and we were not fully successful. But these two fully successful demonstrators, The first one costed more than$125 million and took more than six years.

29:53The second one costed more than$20 million and took almost eight years. So we did that in three years for$35 million. So, of course, we took risks and we decided to do some shortcuts. and I mean just to give you one example and actually the most probable root cause why we failed is that we lost the control of the capsule and we lost the control of the capsule because we had it's a little bit technical but like we were zero failure tolerant on the whole thrusters like a set of thrusters which are managing basically the direction of the capsule and we were zero failure tolerant because we decided to go very very fast and we also like accepted higher risks and that's a risk we took.