Founder Mode: Andy Lapsa, Founder & CEO, Stoke Space

0:00Carolyn, I'm so excited because today we are at the Y Combinator Founder Mode Retreat, and we are sitting down with Andy Lapsa, the founder and CEO of Stoke Space. Welcome. Welcome, Andy. Nice to see you, Andy. Thank you for having me. I'd like you to tell our listeners a little bit about Stoke. Very exciting company. Sure. We are a vertically integrated launch service provider. We're building fully, rapidly reusable rockets that go to space, that can move around in space and then come back to ground. And the idea is to make space and the space economy, and specifically transportation, mobility, to, through, and from space, just a natural extension of other mobility solutions around the world.

0:39For example, you take satellites up to space. Yeah, that's the main application today, but I think there's some really exciting, if you have mobility solved, if you can access space the same way we use access, other modes of transportation. You go to the UPS store, you drop off a box, you say, I want it there in three days, and it gets there, right? What if space was one of those options? So there are a lot of applications you can build on top of that, provided that the availability is there and the price point is there. And you went through YC in winter 21, but when did you start the company and what was your background?

1:17Yeah, so officially we started at the end of 2019, but we started effectively on a thesis, but we didn't really have a way to respond to the thesis from a technical or a plan perspective. So that first year was a lot of, I would say, I mean, you could call it my co-founder and I doing diligence on this thesis for ourselves. Okay. seeing if we could come up with a technical solution for fully rapidly reusable rockets that we believed in. And so that was a lot of very heads down effort. And then as we gained, you know, conviction ourselves, we said, okay, let's go and try to, you know, do this thing for real.

1:59And that's when we did YC and winter 21 batch and closed our seed round and, you know, really started to ramp from there. And just to be a little more detailed, it's the reusable part means that it's cost effective. Like the idea here is that you can save all this money because you keep reusing the parts, which right now everything just explodes or something. Right now, well, let's say this before SpaceX, every rocket that went to space, the entire thing gets thrown away after every flight. So you can imagine air transportation being not very economical and not very accessible if you threw away the airplane after every flight.

2:39And that's what space was, right? SpaceX came along and it's, you know, we've now started to take it for granted, but really it was only 10 years ago when they did the first landing of their booster stage. Rockets are typically two stages to orbit. First stage like punches you out of the atmosphere and the second stage takes you the rest of the way to space. And so they started reusing the first stage, which is transformational for the industry but they still throw away the second stage on every single flight and so that means a couple things. First of all, it costs money obviously to build this and the other big thing is we're still in this production rate limited paradigm where you can only fly as many times as you can produce in their case second stages which is a stage, it's a second stage engine It's the certification and test, pre-flight certification and test campaigns that go into all of the components that go into that stage, etc., etc., right?

3:35So that's their flight rate limiter today. And it's also their cost driver. What's the expensive part? Is it the parts? Or is it all of it? Yeah. So there are two big cost drivers to launch. One is the vehicle cost. Interestingly, though, the vehicle cost of a rocket is less than the cost of a 737, comfortably less than a 737, right? But it's still tens of millions of dollars. Sure. Okay? So that's a cost driver, especially if you're throwing it away every time. Yeah. The other big cost driver in launch is the infrastructure that you need. So it is the factory. It's the test facilities for engines and for other high-energy explosives and other things that we deal with every day.

4:21And then it's the launch infrastructure, the launch complex that it takes to actually go and execute. Those are the two big cost drivers. And what reusability does is, again, go back to the aircraft analogy, right? It makes absolutely no sense to throw away$120 million 737 on every flight. You're not going to access that many customers that way. You're not going to have great availability. and that's where we're at with space. So reusability amortizes the cost of that$100 million asset, whatever it is, right? It amortizes the cost. So the more you can launch that item, the more the amortized cost goes down.

5:00So that's number one. And then the infrastructure costs and the fixed costs, which includes the cost of labor as the other big driver, and to get those costs down, like you need that infrastructure just to go do this activity yeah um but the way you can effectively amortize those costs is by flying at a higher frequency so before spacex started reusing i think this is still true there is no company like so when you're in this world where we're throwing away rockets every time there's no company that flew more than 16 times per year okay um and it's you know it's like a really small number but that's because we were completely production rate limited yeah and spacex actually fits into that number also before they started reusing the first stage they didn't fly more than 16 times a year i'm pretty sure that's a number once they started reusing the first stage now they get to like the first stage is bigger it's more expensive it is the right first stage to start reusing um but they were able to basically shift their factory from producing first stages into full-on like crank out second stages yeah And that's what enabled them to scale from 16 flights a year up to now in the neighborhood of 150.

6:15Really? I did not think you were going to say that big of a number. It's a big number for space. It's a big number for space. But it's a small night's a pittance for any other mode of transportation. That's true. And so, you know, if they want to do 300, they have to double their factory and double their test facilities and whatnot. Right. And are they also working on the second stage? They're doing a whole new vehicle called Starship, and that is intended to be fully reasonable. But they're not there yet. So is this your first, I mean, let's first of all mention this is the epitome of hard tech.

6:49And is this your first startup? It is my first startup. That you founded. I've been in the industry, you know. Okay. Tell us about how you have evolved. How big is your company? I want to hear how you've evolved as a manager and what does founder mode mean to you? Sure. So, yeah, I was in the industry for a while and we started as myself and my co-founder. And today we're, you know, a little bit north of 260 people. So we've been very methodically scaling in terms of headcount. Obviously, when you start, there's a huge number of variables. Funding is one of them. technical progress is one of them the ability to attract recruit and retain talent is one of them and you're recruiting rocket scientists i would just note right yeah i mean it's a lot of specialized things and then there's other things where there's transferable skill sets so we'll bring people in from outside the industry and train them up and things like that but yeah um uh so anyway there's a lot of variables and um it's it's uh i would say for me it's been very useful to have prior experience to sort of form how I think about building and scaling a company from scratch, given the opportunity to do whatever you want, right?

8:07So however you think it should have been, we have the opportunity to go and try to do that. So that's been fun. Maybe that's part one of your question and part two of the question is - I had a lot of questions pushed into my questions. I'm quite sorry. The founder mode question is a great one. Founder mode obviously got a lot of attention in the last, what, year or six months or whatever it is. It was a year ago. Was it really a year ago? Brian Chesky gave his mind-blowing talk at a YC. Yeah, it was this one last year. It was this conference. And while Paul wrote the essay and he's defined it as doing things as a founder CEO that a hired CEO wouldn't necessarily be able to do, we don't know what it's like in practice.

8:55Carolyn and I are collecting examples to learn more about it. I think founder mode is exactly what you said, where a founder is just acutely aware that survival is on the line and that survival is very personal and it's real and it's always this threat. It's like you are always on edge about the threat to survive. And that just engenders a different level of urgency required. Yeah. So founder mode, I think, is how that urgency manifests in day-to-day activity or what it takes to get something done. And for us, we have, I think, terrible market timing in terms of the fundraising markets, right?

9:48When we started, we were winter 21. COVID had just hit. But nobody's investing in anything except trying to understand what the world meant at that point and keep their portfolios alive. Nobody wanted to invest in this kind of crazy rocket company. And by the way, I'm a first-time founder and didn't really have any network for fundraising. So it was both trying to figure that out and grow the network and navigate that at a time when, you know, it certainly wasn't the hot topic on Silicon Valley. And then, you know, so we did that. We muscled through the seed. YC certainly was a huge help for that.

10:28And then 21 was an okay market. But then in the 23-24 timeframe, it was a really difficult market, especially for hardware growth companies and especially for companies like ours that were kind of in this, let's call it a tweenage stage where we are in the market for proper growth capital, but we're still pre-market in terms of revenue generation. Right. So this is the classic hardware valley of death. Right. And so we had to figure out how to navigate that in a difficult market as well. For us, the founder mode really started with how we have this idea. We have taken our time and found conviction in ourselves that we have a good idea that we think holds water, which, by the way, has only been reinforced over the last four years.

11:23So we still feel really excited about it. But what do we do next? And so we did a number of things, but I think the beginning of founder mode was we want to differentiate ourselves. We didn't want to raise on what we would call a PowerPoint rocket or flashy marketing. We wanted to differentiate ourselves and say, hey, we are no joke, hardware driven people, and we will deliver on what we say. And so we bought a shipping container. We had it dropped off in my co-founder's yard. we started building a little rocket test stand in his yard and um and that was kind of a wild time but yeah i think it's all about the urgency feel around survival but i would say you know now that we've scaled a little bit it's it's my um my sentiment around founder mode is maybe evolved that is what founder mode is it's you will do whatever it takes to get the job done whatever's in front of you it has to get done there's nobody else to do it you just have to do whatever it's going to take whatever that is stuff right even crazy stuff um now that we scaled a little bit i have founder mode invokes for me in two different ways the first way is if i feel like I have to go into founder mode, which is go in there and do something myself, whatever it's going to take.

12:52To me, I view that as a failure of the, like I have failed to put the organization in a place to succeed itself, right? The organization, like everybody in the company should feel founder mode. And they should feel the ownership and the urgency to get their thing done. And if I feel like I need to go do something, that implicitly means it's not getting done. So I have failed to create the organization to have its own founder mode through the org do you feel like that happens um you know we are a still a early and growing company so um i still feel like that happens a lot right like i i would say that we have unfilled holes in our company as any company that's scaling will and who's going to fill those right and so it's always a competition between keeping people focused or asking them to go fill a hole or whatever right so it does happen a lot yeah but that means that the the organization is not yet but that doesn't just that doesn't make you really feel like a failure it just reminds you of like what you have to do to get to this place you want to go right because it would be awful to feel like if it's fully growth right or if something's not functioning yeah um the way that it should be then you know the organization is not working.

14:10So it's kind of constant maintenance. That's one thing. The other place you see it all the time is, let's say there's an opportunity that is adjacent or not exactly what you were working on and set up the company to do, but it would be a huge loss if you don't go and leverage that or capture that opportunity. We're not set up to do this opportunity, but it's something that we want to do. That requires founder mode, right? Because Now you have to go and scramble and you're flexing and doing whatever it takes to do this thing that the company and the organization wasn't set up to do. Right. Right.

14:44And that's always like the decision to go after or not go after is an important one because it's an early and scaling company. You have to stay focused and you have to continue to execute on your core. Right. And is that a distraction? And is it going to be a distraction? And how do you know? And so that's a judgment call you have to make. But once you make the decision, you've got to go all in. Yeah. Yeah. Thank you so much. Well, thank you for having me, of course. Thank you, Andy. And hope to see you again on the show someday. All right. And best of luck to Stoke. Thank you.