foreign [Music] and welcome to Pathfinder presented by payload the leading digital media company in the space industry I'm your host Noah Islam and today we're joined by Jim control the co-founder and CEO of phantom space a company aiming to mass produce and fly small launch Vehicles now before Phantom chip has had a fascinating career in the industry working for the French space agency being a founding employee at SpaceX and starting one of the first micro launch vehicle companies we'll get into all this but first forward from our sponsors spider Oaks orbit secure software is designed for hybrid space operators struggling to manage the chaos of securing data flow and access to and from tens of thousands of small satellites in low earth orbit using a unique combination of end-to-end zero trust encryption and blockchain distributed Ledger orbit secure allows your mission to orchestrate and secure earth to orbit orbit to Earth transmission communication and storage of sensitive data across even the most complex and unsecure hybrid space environments to learn how orbit secure can bring zero trust security and resiliency to your zero gravity environments check out spider Oak at www.spideroak.com Jim welcome to the show Good morning I appreciate you uh you speaking to me on a Sunday so I I'm particularly grateful because uh this is my first weekend recording of Pathfinder well I'm happy to be here I really like what you guys are doing at payload and uh anything to help you out I appreciate it uh so um let's Jump Right In so there's an Infamous story that we have to begin with which involves you Elon and Russia so let's start there tell us a little bit about it yeah given the headlines in Russia today it's been on my mind uh this weekend you know I was there during the first Pooch so I'm imagining what's going on over there today but back in 2001 it was a July afternoon in Northern Utah and my cell phone rang and uh some guy who I thought he said his name was Ian musk and uh he came to me and said hey uh you know I wanted to I want to do this private Mission to Mars and I need a Russian rocket and you're the guy I'm told to told the call and I was on you know on my way home uh to to after work and I just said hey let me call you when I get home so I did and I got his fax machine and I thought yeah he said he was an internet billionaire I thought he said that and I thought well billionaire doesn't you know call from a fax machine he could probably afford more than a few phones and uh he called me about 20 minutes later and he's angry and he said well you need to call me back and I said you know got your fax machine and it's the only time he's ever apologized to me I said oh I'm sorry so anyhow we talked some more and uh you know he he I guess he decided that you know I was the guy he needed to needed to do the work he said uh you know can you can you meet tomorrow and you know where do you live and I said I live in Logan Utah can you you have an airport there and I said yeah I can see it from my front porch yeah now would you uh you know would you meet me tomorrow and I'm thinking nobody like this is coming to my house you know because I've got kids and yeah I don't know you could be a wacko and uh I didn't know what PayPal was and uh so I said no I said I'll meet you uh tomorrow or Sunday rather uh behind uh Security in Salt Lake City because I've got to fly out on a Sunday and and he said okay so I did that because I knew he couldn't pack her weapon behind security and uh so that's when we that's where we met and we met in what used to be called the Delta Crown Room now it's called The Sky Club it was a conference room we could rent we met there and I found out the guy was real by the time I you know met him I'd done enough research and found out it was Elon and not Ian and uh so suddenly I saw the guy was pretty real but you know this wasn't all that unusual back in 2001 to get calls from people who made a lot of money on the internet and wanted to uh wanted to make things happen in in space so you know it followed pattern that I'd seen before with the gross brothers and some of the others and uh and so we put Plants together to go uh buy rockets in in Russia but you know we first I put a team together talked about the Mars mission because to buy a rocket we need to know what we're putting on it and so I went back to my friends at Jacob and some of my other Rogue characters Chris Thompson was one of them uh who's now our CTO Phantom and said hey you know we got this guy who wants to pay us to design a Mars mission and uh so that that team started the work eventually you know we decided what what vehicles would work and we went over to Moscow on on at least two visits second one was with Mike Griffin who later became the NASA administrator and and Elon and I and uh we visited two places first place the uh Michigan Australia with the stroller they uh they didn't take Elon seriously I mean he was a 20-something oily dressed you know by Russian standards and uh they took that kind of respect so that treated him with disrespect and uh um what was the point of going on that trip right like what what were you guys looking to achieve yeah we were we wanted to buy vehicles right so Elon was not going to wait you know and think about it for a while he just wanted to buy a couple of rockets he wanted two missions and now you wanted two Rockets So machine Australia was the first one the cosmetros was the other with the nepper and uh for those of you old enough to remember the nepper was kind of the Rideshare program back before SpaceX and uh yeah so so we were unable to achieve our goal of buying the Rockets Russians did US goodbye and we went off into the November snow Mike Griffin and Elon and me and uh thought we'd failed and we got on the airplane to come home and Elon uh announces to Mike and me that we're going to build this rocket ourselves and that was an act of sheer Insanity in 2001 you can't imagine you know there were only four countries that had ever built uh launch vehicles that made it to space there were there were some people that tried privately uh interview in Texas namely spent 100 million dollars his own money and then said I've had enough and uh so you know Mike and I our reaction was very skeptical and uh Elon uh Elon had been doing work with this team of people I brought together and had apparently been going out into the desert and seeing them uh uh you know do these rocket launches with beer money and so it was uh it was a very interesting uh very interesting uh sort of episode in history and uh I later wrote a book about it uh Breaking All the Rules uh you know and expanded it really to include how do we even get to that point is there there's a story of people who just weren't happy with the nation state space programs and care for Soviet French American and we just wanted to do things and and that's really the the spirit of the commercial space industry today that lives on and we've found like-minded people that would come along with us what prompted him to call you right so you know at the time I guess like who are you in the industry that Elon decided to reach out to you and say hey like I want to do this ambitious program yeah I was always somebody known to know everybody so to speak and Bob zubrin was a guy I tried to uh you know you know get a job with it at Martin Marietta now walking Martin uh back in uh 92 after the Soviet Union Clash I was working in France on a joint Soviet uh French Mission to Mars and after the Soviet Union collapsed I I said well I need to come home because uh my job's probably going to be no more and nobody would have me and I was considered a traitor uh because I'd worked with the Soviets and maybe more French and uh so so I went back to uh Utah State where I graduated from the small space lab they had there and uh you know Bob had uh started the Mars Society by then and by 2001 and uh Elon showed up at a Mars Society uh gathering in Palo Alto one day after he'd been fired from PayPal um I guess he got married and went on a honeymoon and came back and didn't have a desk anymore so he decided to dedicate himself to this and that's uh that when when Elon revealed to to uh Bob zubrin his Ambitions Bob said uh you know if you need Russian Rockets I know just the guy all right interesting okay so Bob was the one who made the connection initially to be fair after I come back from Russia and uh worked at uh space Dynamics lab uh I was recruited to go back into the former Soviet Union and help stop brain drains so I'd help convert some of these icbms to uh satellite launchers and so forth we were just trying to keep the Russians busy so they didn't going to work for the North Koreans or the or the Iranians did you uh did you lend Elon any of your books it's kind of famous yeah so during that summer when we were working on this this Mission you know Elon asked me you said do you have any books on uh rocket propulsion or launch Vehicles unless yeah sure so I I gave them my college textbooks you know uh Bates and Mueller astrodynamics which is kind of the standard in the in the industry It Was Written in the 60s but nothing better has ever been made and so we had my copy of that and then uh rocket propulsion by Sutton and then uh there was an AI double a book on on launch vehicles that uh sakowitz wrote Steve a sakowitz so so yeah you took those never returned them but uh that's okay it's my contribution to the the world of science there you go so uh so I do want to talk about um let's talk about Phantom because uh and we'll fast forward a little bit now and we'll we'll get back into more of your background um later on in the show but uh Phantom okay so you you're you're starting or you've started this launch company um not too long ago in uh which is I think a pretty ambitious feat uh considering the market and and the players out there um today so maybe tell tell us a little bit about you know what is the value proposition of Phantom and what makes it different from the companies out there trying to do this yeah it's a good question uh so Phantom we started in in uh in October of 2019 and we just wanted to be quiet about it that's why we call the Phantom but we seek to be the Henry Ford of space and by that we mean to apply mass production to First launch Vehicles next the The Satellites then ultimately to to constellations to create an ecosystem in space that not only can launch and uh develop the third-party customer constellations but eventually our own much in the same way that SpaceX has developed its own constellation starlink which constitutes about 75 percent of their of their market value right now so we we think that you know launch is hard we we think that there aren't that many people that know how to do it I I liken it to Formula One cars you know there's a lot of guys in my neighborhood that could probably build one there's only a few people that can actually get them to run and even less they can make them competitive and Rockets are the same way so we we know that there's a limited talent pool out there there's a capital barrier there's uh uh there's also a mentality barrier I would say and that's one thing place where we're different um you know a lot of people think that you have to spend hundreds of millions of dollars to get it to work and we spent about 28 million dollars to date get past the second fire a second stage hot fire test and we're close to uh getting a first stage hot fire test done uh we think we can get to space for under 100 million dollars and uh we've used a a unique supply chain approach compared to SpaceX that is and to be fair to SpaceX 20 years ago so you know there's reasons to build everything yourself today there's a lot of companies that come out of SpaceX that you know for example there's a major with their engines we buy them there uh there's a lot of other piece parts and software that's available that that really came out of SpaceX so our business plan is really first to get the the first vehicle up which we call the Daytona which Services the under 500 kilogram class of satellites which is the fastest growing segment uh it is also half the up Mass from last year that went up worldwide it's 95 of all the numbers of satellites that get flown so it's clearly a dominant one we believe that SpaceX will leave this market right now they service it with Rideshare which means you put maybe 50 or 100 satellites on one launch and you drop them off kind of looks like a bomb going off in in space and the customers really wants something that can place their satellites in a custom Orbit on a custom timeline and right now you can't get a launch on SpaceX for at least two years and this is something that is becoming a bigger and bigger problem and nobody wants to be relying on a single launch provider so while there are others out there that like rocket lab who are doing this they're they're leaving this Market um and they're they're actually uh going to uh go compete with the Falcon 9. a lot of us believe that the Falcon 9 will eventually become less of a priority for commercial launch and will serve as starlink and and the astronaut uh type of flights as it's sole uh activity and then then the large uh large Starship will be focused on interplanetary and uh starlink deployment so so that's why we want to do that first it becomes a strategic asset that we can use then to build other people's constellations and uh we already have several contracts there on on satellites we also have a uh 300 million dollar NASA launch Services contract it's a task order we won four launches there we have 23 commercial launch uh contracts in place and uh so we're ready to go we just have to fulfill the rest of our obligation to build this and get it to space all ultimately we'll we're going to build our own constellation like starlink but not competing with starlink and we think this is what the model has to happen in the future you have to operate these rocket companies these space Transportation companies like Airlines and um to that effect you know we've gone ahead and solved what we think is the choke point which is the launch ranges so we have 60 launches out of Vandenberg approved and we just got a launch pad out at Cape Canaveral and we're working on one in the Bahama Islands with the government of the Bahamas so so we we plan to uh you know try and be as lean as possible in the future and make profit which is kind of an unknown word in some launch startups but uh we're we're focused on it so uh Jim I actually recently uh did a bit of an analysis on the dollars um raised and spent on uh getting the orbit across some of the major startups major startups out there and you know when you say 100 million to get to orbit at that payload class uh that's a pretty significant uh no I would say significantly less number than the than the what's out there so I'm curious on your approach um you know speed clearly is part of the advantage um cost clearly is one of the advantage especially if you guys can get Daytona to orbit can we talk about reliability and how you think about reliability when you're talking about um you know really leaning in to a supply chain that's outside of your control in in some ways yeah so so that's a good question uh one of my backgrounds is automotive and uh you know when I started buying cars in my teen years uh you know they were horrible cars this was in the 70s and uh they were unreliable but as time has gone on they've gotten much much more reliable through technology through Metallurgy through but you know ultimately through building more and more of them having more experience with these vehicles and I honestly don't know how many vehicles have been built worldwide but clearly the more experience you have with them the more more reliable they get so we think of of reliabilities being very important to the rocket industry and we're borrowing the concepts from the automotive industry to make them reliable we don't think the necessarily you uh you you know you design in and you process in if you will reliability that's sort of NASA think and it works but it ends up with a very expensive product if you have limited production and and you have to realize to date you know the rocket industry has been very limited production even SpaceX they reuse their rocket and there's a in that reuse they get a lot more experience they've flown north of 200 rockets and so if we're flying you know 300 Rockets that's which is our ultimate goal 300 a year we start to get some pretty significant experience with these things and we believe as long as we're somewhat uh uh somewhat uh in self-control of not changing the design every time it flies that we can reap benefits from from that that side of the mass production so we ultimately think that we can make these Rockets as reliable enough to launch from some of these Inland sites maybe 10 years down the road right now we have to launch over water because of the the lower liabilities Rockets but you know the the not only do we want to be profitable but we think like Airlines we can make these things very very reliable right so so um I'm curious um so much of the industry launch Industries our lunch sector I should say is heavily focused on vertical integration and you know owning the process um and part of it is you know and I've spoken to a number of other CEOs who've said that you know it's integrating an engine into a structure is quite difficult and we want to own that process and we don't want to be beholden to any other any other players um why do you think the um you know there aren't other companies out there taking this approach I guess what are you seeing that's different what are you seeing differently um from the other CEOs out there well it's how you look at risk frankly and right now in in the in the place before we've made significant revenue and we're not cash flow positive you know there's a there's a huge Financial Risk and and we like to think that our biggest risk frankly is capital formation can we raise the money and so the less of that that you have to do the better so you have you have this this play between what do I have to pay for something like an engine from Ursa Major versus doing it ourselves and you know you know to develop a rocket engine is going going to be at least a couple hundred million dollars so if we can avoid that and we can get an engine at a price that that makes our vehicle ultimately affordable it's a no-brainer in my book and same with other parts now uh like we build our own vowels for example we build our own tanks we pursue our own integration we licensed our avionics from NASA got the software from them you know very modest fee for that and uh stuff all works right so back in 2001 or two when we got going with SpaceX this was an argument Elon and I had a lot and uh he was right that that you know if you went into the supply chain as it was then it was so expensive you would make your rocket too expensive and therefore you had to make it yourself the second thing which he was also very right about was that the players at the time namely Boeing and Lockheed and Northrop Grumman would once they realize they have a competitor on their hand they would retaliate through the supply chain and they you you couldn't be beholden to that so today we have a different risk you know our supply chain risk is you know you have a reliable partner can they be trusted you know are they are they going to play games so you know we're locked in with Ursa Major in a very good partnership and uh we we think of them uh you know as part of our team and uh you know at some point in the future uh you know we will probably in-house a lot of things probably not engines but uh you know there's a lot of things we will in-house that we can't buy anymore and uh that you know some people I think take the the SpaceX Playbook and just say well look you know it this is how SpaceX did it must be how we have to do it in fact I had an employee that came from SpaceX a fairly senior person um that was was in there for two days and uh on the second day he had a he had the whole place reorged under in his mind he was a director level guy and he wanted everybody to report through him and him to report to me and he said this is how SpaceX does it if you do it then you're not going to be successful so we walked him out the door the next day so so we we just we're thinking people and and we question everything and and we started with a clean sheet of paper and this is one of the questions is do we need to build everything ourselves and the answer we came up with is in some cases yes in some cases no so you know the other thing we've done is maintain an all-us supply chain uh so that we can have a secure supply chain for defense applications which is fair because it's very important right well so look you make a really good point because the capital piece of it arguably is the biggest risk um for all of these for a number of these companies especially companies that have had quite a bit of progress I don't think that they're out of the woods even still because of the sheer amount of dollars that need to be raised in order to achieve what they're trying to achieve and it's a big risk and there's a possibility in potential scenarios that some of these companies a number of these companies that I think may be considered like you know some of the key players um they could go away like I I don't think it's out of the realm of possibility just because of the sheer dollars that are needed in the market so I think I think I think um the the way you're describing this makes sense um you know of course there's pros and cons to both both methodologies um but curious given um your approach like what is the current development timeline of Daytona and I know you have something I know you have a upgraded vehicle behind Daytona called Laguna so maybe let's talk talk about how do you think about development timeline and let's assume capital is is not an issue for the time being like meaning like you're able to to to obtain the capital that you need in order to to execute so yeah we're we're just finishing our series B uh we've got mostly commitments lined up we have a lead investor Valerian space Ventures so that's been the the big thing for us it's it's delayed our our development we thought we would have this closed late last year here we are in June and uh we're getting it closed now but the the issue is um uh you know delayed our our uh our development so we're about a year and a quarter away from our first launch we think the end of next year is the first launch of Daytona we have engines sitting on our on our shop floor you know we just we just uh uh qualified our flight tanks um we are building flight Hardware from the first vehicle uh we have the we have the launch site so so we're in pretty good shape we turned in the FAA uh license application a number of months ago so we had a schedule on that it's really a capital deployment issue for us to get to that first launch to just sort of put an exclamation point on my last comments so once we have that first launch we you know we're raising enough money to fly four of them out and we'll fly those in pretty rapid succession uh next well in 25 and then uh we will be raising another round of money in late 25 uh because this money will take us almost to 26 that we're raising and uh then by that point I will start developing on some new new vehicles and we'll be ramping up production of Daytona and we think we can double the uh the flight rates every year that's kind of what our what our model says Laguna is a larger version so Daytona is fully expendable the Laguna is a reusable version of that where we return the first stage back pretty much how SpaceX does it there's no reason to you know reinvent the wheel there other than Pride uh so so you know we like the Landing Lake approach we need some bigger engines so that you know we're working with our sun some bigger engines for Laguna and then uh we'll we'll have that operational we think about 27 and then uh following that we have something we call Sebring and if you notice a pattern in the naming it's all after race tracks and Chris Thompson's a racer I'm a racer A VP of engineering's eraser so this this is in our blood here and uh so Sebring is a fully reusable vehicle that will use the Laguna first stage to return and then the second stage uh on the on the seabird comes back and it's a space plane uh based uh Second Stage so that one should be probably operational 28 29 that's always down the road what is the uh plan payload capacity of Laguna so Lagoon will be in an Expendable format will be about 1200 1300 kills to orbit and so in a uh in a reusable version about 600 uh so it'd be up a bit from the Daytona and this all is driven by engine sizing and uh you know we we think that we know that the sweet spot in the Market's about 500. and uh we did that analytically when we first started we could see that that you know the profitability peaked at about that point uh and and our sales have been very strong in this so it's a good match to the to the market it seems at the moment markets change right so that it could you know 10 years ago we saw a demand for smaller stuff but Rock a lot built to that and they found out they have too small of a vehicle so those things can happen we don't see it but it could come so we're you know we're ready to uh we're ready to to be nimble on that one and and uh part of the you know the gradual deployment of upgraded versions of this is part of their strategy right now is the Phantom Vision uh just launch vehicles um because I do know that uh it it's a tendency for launch companies to to think about other products outside of the you know the getting up into space but are you thinking about anything else for the business yeah we uh in fact uh our very first year in business were cash flow positive because we had a satellite contract we built a radar satellite for a commercial company and deliver the hardware and that is something that turns out our skill sets are are you know cross over nicely our VP of engineering Val uh he uh he worked on some commercial size one of them's at the moon right now uh prior to coming and and so we speak both satellites and Rockets and uh we think of the Satellite Industries being two things one it's a bigger total available Market to us but it's also uh something that we can create sort of captive customers if you will so we have several satellite constellations we're working with have agreements in place where we design build and fly out their constellation and in the early days we give them a pretty steep discount to help them along with capital formation and take a uh take a REV share or an equity position with with the company on the on the back side so that's that's really our big model there we'll probably be building eventually some of the piece Parts there's there's it turns out for U.S defense applications there's a criticality of of U.S availability of parts and you can go around the world and find the small sap parts so we'll probably get into that kind of business we already make uh small plasma thrusters for small satellites we license that from George Washington University and ultimately our own constellation which we call fan of cloud which is a data back call service so if I think think of it as as ground stations in the sky and that'll all back data back from the satellites and then also from connected cars oh boy so how do you um so early on how do you think about Team Construction because you know you're you're working on a couple different things um not to say that the satellite piece of the business is is um is a particularly big part of the business right now but yeah how have you thought about kind of early on Team Construction um you've you know you surrounded Yourself by at least a couple very interesting um uh folks in the industry but in general as you think about the team at Large so this is the most important thing you do with a startup and I found this out through tough experience but um you know the team that you particularly your co-founder but also your key people are the most important thing you can do and then then you have to maintain that team spirit if you will or that that consistency of of the team as you hire on others we're only 26 people uh just to give you a sort of a relative size of SpaceX during Falcon one was about 50 people and they had an engine program so you know you can do it with a lean crew and they can be very efficient so we we look for people first of all that are like-minded um and by that I don't mean political I just mean do they have the same basic values in life are they interested in the same thing so we think of ourselves as Builders Builders doers and and makers and so if you fit that category you know that you that's the big Wicket you got to get through and then there's a mixture of of experience and and inexperience and energy right so as you get older you have a little less energy although I'm not showing it yet uh nor that no there's Chris Thompson who's my CTO uh but you know we've we have a very experienced Senior Team uh you know Mike D'Angelo is my co-founder he's got 35 years in the business like me and he's he's been exposed much more to the venture capital and the in the business management side so he takes that part because Thompson you know was employee number two at SpaceX and he's forgotten more about rockets and I'll ever know and uh he knows all the things not to do and uh so it's like walking through a field of landmines and you know that's how you you know when you ask the question how do you do this so cheaply the first thing you have to say is we don't make major mistakes and if you don't make major mistakes those are very costly and you can only do that with experience and that's why I say this there's a dearth of that kind of experience out there I'm not saying that that the people who haven't done it before can't get it done because they can and do but you know they sometimes spend a lot more money than you need to to get there so we have Mark Lester who came on board from Alaska uh Aerospace he ran the launch site up there in Alaska so we gotta have a focus on developing launch sites so it made all the sense in the world so that's that's the core of our senior executive team and then the rest of the people you know it's people we know from our networks people that have proven themselves and uh we're hoping as we expand that our engineering team doesn't have to be huge because as we get done with the Daytona we're going to roll them over to the Laguna and then when that's done we roll them over to the Sebring and you know we're not going to have hundreds and hundreds of Engineers we may have hundreds and hundreds of touch labor I call it Joe six-pack labor and and Tucson is a great place for that and we've got a weapons Factory called Raytheon not very far away that builds a lot of this stuff so so you know the team construction you just have to get the right people in their right place and you got to watch out for for management blow you know I don't have an assistant um I don't need an assistant I do my own schedule and nobody else has a system but when you start getting into this business of having assistance and Chiefs of Staff and all this and everybody's got to have their assistant before they before you know you're at 900 people and you're burning 30 million dollars a month that's unsustainable right so so the team is everything yeah no I think uh uh that's a that's a great point and I will say that um you know one of the biggest things I've noticed or a big challenge that I witnessed um where I have seen at other companies is and it doesn't just have to be launch but you know you're building a critical or very difficult piece of technology there's a truck you know you spend years and years and years and years on R D then you finally get the thing to work um and that's a huge success and step but you're not out of the woods because you actually need to now transition into a manufacturing business from an r d business and that type of transition especially if you don't have the right people can can sink a business right because you need to repeat repeatably build that piece of technology which is difficult to do and I think um so so your approach is what it sounds like is you know you have your kind of r d phase which I would call it you know maybe r d light because you're able to Outsource some of the critical pieces of Technology like propulsion um and then you know once you get Daytona to work then it's a question of okay well we we're almost like this kind of Quasi manufacturing but also integration business so maybe you don't need that many people to be able to pull off that sort of next phase of scaling up the business am I thinking about that the right way yeah that's that's the whole idea you know we have a pretty good model for touch labor on putting the vehicles together and uh that's that's a lower cost labor category and we brought in from day one uh somebody who's who's done manufacturing uh work both at Raytheon and for me in the past and uh they're they're involved from day one so we have we developed the organization early on to to reflect what it's going to be later so in terms of structure and I think that's important because I've had an experience where I didn't do that and that transitions touch here because the the people aren't thinking the engineers aren't thinking about manufacturability so leave an engineer and I'm an engineer so I can criticize others uh that are Engineers but you leave an engineer by themselves and they'll make a Rube Goldberg device because it looks great and I remember the first uh version of our engine structure we have nine engines on the first stage and we looked at that and Chris and I just shook our heads you know we said oh all these links and all these heim joints and all this yeah sure it would work but it was a manufacturing nightmare so we designed a sheet metal structure that we could uh roll up and we're building that right now right and we're doing it with hand tools so so that's the kind of thinking you have to have that you embed this into the engineering approach and and this is again where experience pays off right no that's a great point I want to get into your uh pre-fantom days but we're gonna take a quick break uh Jim just for uh for a message from our sponsors but when we come back we're going to chat a little bit more about uh um some of your uh some of your early days or I would say earlier days so stay with us space is the New Frontier for cyber security to quote the commander of the U.S space forces Operations Command cyber threats are unfortunately the soft underbelly of our Global space Networks spider Oak the leader in space cyber security software is dedicated to providing space operators the solutions they need to protect hybrid Space Systems their orbit secure software uses a unique combination of end-to-end zero trust encryption and blockchain distributed Ledger allowing missions to orchestrate and secure earth to orbit orbit to Earth transmission communication and storage of sensitive data across even the most complex and unsecure Leo and hybrid Space Systems to learn how orbit secure can bring zero trust security and resiliency to your zero gravity environments check out spider Oak at www.spideroak.com Jim welcome back so I want to talk a little bit about vector so um it was uh one of the first companies you know you've started um you know is in the launch space as well and I believe if I have my dates correct it was sometime in 2015 2016 when you started that company in in a way right you were way ahead of the curve in terms of thinking about where the small launch market was at the time on the commercial side now ultimately Vector didn't work out so I do want to talk a little bit about um you know what went well um at the company but then what were the key challenges at the time and maybe some of your kind of early learnings from those key challenges yeah so so yeah you're right we started it in uh 2015 and it ended at least my involvement ended in August of 2019 and it went on to become bankrupt after I left and uh you know the the things that worked well let's start there I think you're right we were early to the market you know Chris Thompson and I was the proponents of the Falcon one back in the early SpaceX days which is about a daytona-sized vehicle and uh you know we saw that this future of making a lot of the launch in a lot of them was a cost competitive way against large reusables which we see Falcon doing now SpaceX took that direction because they ultimately have a goal of Mars if you want to do commercial we think this is another alternative to all Transportation Systems as you look around the world have multi-mode kinds of Transportation so that's what we saw early uh that was really my idea uh and I went up and gathered uh Garvey spacecraft company to to get Kickstart a jump start if you will they've been working on this since the SpaceX days these small Vehicles theirs was smaller too small for the market um and you know but nonetheless we started there uh and uh I think we had a very good early Market lead there we raised a lot of money um I raised over 100 million dollars and and Sequoia was our was our series a lead and along with the lightspeed so we had all the brand names involved and uh you know what what went wrong was a couple of things it started with the engine development which uh as I look back at it I don't think that engine would have ever worked and uh you know we didn't have the right people in the room but that had had I had Chris Thompson there who I do now uh he in fact he wanted to get involved in through various uh sort of personality conflicts with the other Founders um we didn't bring them in and that would have that would have been the right thing to do but the engine started the engine program started installing consuming a lot of money and uh quite frankly the investors got tired of of the delays and uh when they saw the founders starting to fight because you know finger pointing starts in you you told me to do this fast and we can't do it fast it's going to take all these years and you told me it was already and you know so this is kind of finger pointing uh let's equator just say we're out and that collapsed the financing round that we're in we still had money in the bank um then I left and I left because I brought in financing it could have saved the company but the the other Founders had other ideas for the company they wanted to split it up and go their own separate ways we had a a really a very strong uh portfolio of Ip and in the satellite side with with software-defined satellites using uh some you know some concurrent uh networking technology but on the satellite side and uh Lockheed ended up buying that out of the bankruptcy so so what did I learn um the first thing it kind of your earlier question team the team is everything you're you're your co-founders are everything it's it's almost even more important to choose them well than it is to choose a marriage well you know your spouse or your life partner whatever it is and getting out of these things is painful and expensive but uh you know you have to really make sure you're very well aligned uh just in your mentality and how you see things and really kind of a on a morality basis you know what's what's your sense of right and wrong and what would you do because you don't know how people are really are until things get tough and you you know you think you know somebody for 20 years and then you find out they behave completely differently when the chips are down so that that's the first thing the second thing I learned which we've applied to Phantom which is you just don't spend any money until you absolutely have to we thought we could solve the engine problem with money and it was wrong so that you know it there's an old phrase you can't put lipstick on a pig because it annoys the pig and it doesn't do any good well that that's kind of where we were with the engine program and we should have we should have gone a different direction in fact there's some major was knocking down my door back then I was talking to him um but uh you know the co-founders that the engine was their baby so you you know you're sort of stuck there but back to the point of spending money you know the other thing that some of our our investors and board members urged us to do was to build out the manufacturing capability so we could scale it and they brought software thinking to the table which really wasn't applicable so we spent a lot of money on that that we shouldn't have spent so if you go to Phantom today we have 50 000 square feet and about 20 000 of its air conditioned the rest of it not and uh why because I don't want to spend the money and and it served me very well we've survived this valley of death in the financing World which I think a lot of other companies besides virgin aren't going to and that that cheapness is is part of what's done it and uh you pay your people well but you don't spend money on things you don't absolutely have to have and uh you know a couple of my guys came to me the other day and said hey your golf cart's out in the out in the high Bay can we use it to to you know motivate us a slosh experiment I said yeah sure I love that kind of thinking right and that that's what we've embedded in the entire company we didn't have that at Vector so I I wish Vector would have worked um you know they got the assets got bought and there's uh you know by uh Robert Spalding and his group and I knew I knew Spalding from when he was on the White House National Security Council and I think they have a lot more a focus on defense applications which that size of Rocket really is well suited for it's probably not well suited for the uh the satellite launch market so wish them well I like those guys and uh it was it was a great learning to experience I just wish it wouldn't have been as painful now um I I do have a question about the The Venture um capitalist side of all this um I'm curious right because in in 2015 2016 especially that early really there was the only other company out there that was um on on the launch side that was that was remotely investable right it was SpaceX at least that was the General kind of consensus amongst the investor community how did VCS at the time think about the space industry um and how do you think that that's changed today so like what were um you know because that was as far as as Venture capitalists are concerned that was pretty early days to be investing in a space company I mean and I know that's not very long ago but but it certainly was yes it was yeah so the VCS were fascinated by space it was cool right and that if you go back in the history of course SpaceX being successful made it safe for investing in space but there were still a very slow uptake on that so my first experience with this was actually Skybox Imaging and I helped those guys and uh helped them you know raise their series A and B they eventually sold the sold to Google for 500 million dollars which was fantastic they they were building Imaging satellites and that was super early days and and they got coleslaw LED their first round and I can't remember who led the second round but it was all Silicon Valley VCS and one once the VC saw that there were several that re-upped that came back in to that and then then you got the interest from Sequoia and that but I remember so many days on Sand Sand Hill Road with uh you know the door effectively sliding on the face they were polite about it but you know nobody nobody wanted to take their money and deploy it into space they I don't think they had an appreciation of how big a market it is it's really a frontier and you know it's a lot like you know the new world was was 500 years ago and the Spaniards were first coming here nobody has any idea what we can do in space truly we don't we we believe it's big it's probably bigger than we can even imagine and uh my view is almost anything you do in space that you can control your costs make a profit and continue on is going to be massively successful like SpaceX right there's more spacex's waiting to be founded and made uh you know Android's one that I'm seeing today you know that they just bought uh adranos and and uh who's a portfolio company of the bolerant who's leading our our series uh B round and uh you know they're a defense company so so a lot has changed since then um and and the VCS are seen it but the the mistake the VCS make is they treat it like a software uh process that you can turn in three years and their funds are structured so that they you know they need a three-year turn on a lot of these things so they get really impatient and uh you know space people aren't really good at forecasting their timelines either I think there's a lot of learning and Improvement that can be made there so between those two things you've got a ready-made disaster we're finding family office money is much more consistent with with this space business and they don't have I call it a Ponzi scheme minded approach which it's not really a criticism of VCS but you know you want to in a VC world you want to build up the value of something so you as high as you can so that's why you want to scale it early and that's why I got that twice I got a vector and then you want to you want to sell it on the market and return to your fund and go do it again and space is not like that this is a this is a five to ten year Capital commitment to get to where SpaceX is I mean they're 20 years old and they're worth what 150 plus billion dollars so they're one of the most valuable companies out there and uh to do that it's just not going to happen in a few years and uh you know you're building something that's probably if you get to that point it's much more stable in terms of Revenue in terms of valuation and so on so the payoff is good and family offices you know are used to that kind of thing they're used to investing in oil in real estate and these other things uh so so they tend to be more comfortable with the entrepreneurial risk and the and the timeline uh whereas whereas the VCS they're coming around right there and and you know Andreessen Horowitz for example as their American dynamism fund and they and they're looking at this as being a place to put money because it's good for the country it's good for the world frankly Freedom around the world and uh it's good for their bottom line but they have they have that sort of patient thinking about it yeah are there um are there any other verticals in the industry in the space industry I should say that aren't that folk are focused too much on vertical integration and should be taking your sort of Henry Ford uh esque approach is there any anything else out there that you've kind of identified yeah I think satellites are definitely that um and there's enough supply chain out there the reason satellites have gone from 100 million dollars each to a million dollars each for a you know typical Imaging satellite supply chain and and enough people are building enough stuff the problem is is that uh you know again like blue Canyon got bought by Raytheon and I think Raytheon would completely ruin the company that's my prediction because they ruin every company they touch my wife was a Hughes employee and they Raytheon bottom and they ruined Hughes uh but that's sort of the creative destruction of capitalism right so that's happened here uh in the United States there's there's not enough supply chain for satellite uh components here but you can buy worldwide so if if people want to spend you know what I believe is scary otherwise scares capital on developing their own technology for something that you can buy to me that's irresponsible right uh so so you know where the where the money really needs to go is into the application side so what what new and unique ways can we create value from space is it is it simply putting bits from point to point on the earth through space which is a great application we all know about is it turning food photons in the decision quality information there's a whole value chain there the sensors how can we get new new kinds of value out of photons you can convert them into digital data and then how do you take that Digital Data and turn that into decision quality information if you're a hedge fund manager if you're a farm manager if you're I don't know Gala wine for example how do you move your how do you move your stuff around to to you know account for the Harvest which happens all at the same time there's just there's just so many pieces of that value chain that ought to be developed in in the analytical side I think this is where the sun satellite imaging guys make make mistakes they say well we want to be the analytics guys but the analytics guys really need everybody every bit of data they can't just you know rely on one proprietary stream of data that comes from your satellite that's I think a big mistake where people are trying to vertically integrate in in the space business you know and then propulsion is another one that you know I'm obviously a big fan of of you know these other companies so so forever and ever um You Know Thy call and then ATK announced Arthur Grumman uh were the only ones besides aerojet in the United States making solid rocket Motors and suddenly their startup I mean out there and this is healthy this is good and uh that because Solid Rock and Motors got so expensive as a government you know that was paying for all of them and uh just like when you're married to somebody for 25 or 30 years you start to act and talk like them and think like them you know when you do business with the government for your entire life you start to act like the government and I don't think any of us would agree that that the government's more efficient than the private sector so I'm really happy to see that happen are there uh are there companies and I would say uh outside of your supply chain currently um that you are excited about or that you're following and you're uh you you you you appreciate what they're what they're working on what they're doing yeah or drawn us I mentioned them earlier they just got acquired by Andrew that came out this morning in the Wall Street Journal and uh yeah I'm excited about what they're doing uh you know I'm excited also about Ursa Major there's uh there's a lot of 3D printing capabilities out there it's kind of amazing you really don't need to in-house that either so uh uh uh you know Brad Keselowski who's the famous NASCAR racer he's actually better in my opinion Brad will probably slapped me for saying this he's better at manufacturing stuff he's got because obviously Advanced manufacturing he's got a terrific 3D printing setup so a lot of that manufacturing core that doesn't need to be replicated inside companies is really growing I'm excited about how that that whole sector is really coming along and then and then I'm waiting for somebody and this is kind of my challenge to the industry to make those breakthroughs in propulsion you know we're you know I just got through telling you how we need to run this like a like an airline but you know propulsion's the same as it was more or less for the last 50 years maybe maybe 100 years and with the exception of advancements in printing 3D printing and some cement allergy by and large it's not changed so I'm looking for those things that allow us to go to the Stars right that that will fundamentally change the rocket equation and take that tyranny away what do you um what do you think about some of these companies out there that are trying to uh re I don't know if reinvent is the right word but like change the way that we get to orbit so you know there's some single stage to orbit type planes that are out there that have a combination of existing techno existing propulsion technology combining it with sort of air breathing propulsion technology what do you think about some of those um more I would say uh on on the French tier type companies that are trying to get to orbit in in a rather different way yeah I'm very supportive of what they're doing um you know they're they're I think of them as technology companies not you know true sort of operational companies and when you when you look at Phantom the way to think of phantom is you know we do the development we have to do but we're really we're like Southwest Airlines we just have to build parts of the airplane right we don't build everything but unfortunately nobody else does and we have to do that but these other companies think of as the Pratt and Whitney's of the world or the you know I don't know the experimental you know aircraft companies and and you know what they're doing is advancing the ball down the down the path and then eventually get adopted and uh so you know yeah if you don't have to carry your oxidizer with you and breed the oxygen in to go up that's that's fundamentally a better way to get there it's more efficient um that you know if you uh uh do like uh spin launch does and and spin yourself up to Mach 7 inside a concrete carsophagus I you know with all due respect and my friends out there it looks like the weapon system to me an ASAP system and uh doesn't seem too practical right so there's some things that probably will never be very practical for us uh but you know it's hard to it's hard to say that any of these are going to revolutionize you know somebody's going to come along and say hey we've got this thing that goes single stage to orbit Breeze Air and gets there and we're even at the cost down because the technology is not mature enough you know where you know as we do our analysis we can get our our costs with this fully reusable Sebring under a thousand dollars a kilo our internal costs right and and that's pretty aggressive so there's a point of diminishing returns that comes with that and but but that's why I see these things as all incremental Improvement yeah no I think that's a great way to look at it um I have one last question Jim because I know we're running out of time here um I had Tom Mueller here on the podcast a few weeks ago and I asked him a question um and it's something that you brought up earlier in the conversation so I want to ask you too which was uh building a winning Formula One car and what would be more difficult for you which is winning a Formula One racing car or building a uh a a launch vehicle from scratch so I'm going to toss that question to you because I'm curious about your answer and I always I also find it fascinating how many how many of you guys are in the racing you and Tom and of course Chris um but yeah I'm curious your perspective on that well yeah to put it in perspective so you know after I get done here I'll probably go work on one of my race cars I I've built dozens race cars from from the bottom up I I have two that I've designed from the start and uh I'm in the process of you know getting the frames built and so on that I'll be building in the next few years so it's a it's a complete passion for me I don't have enough money to build a Formula One car that's that's in the in the tens of millions of dollars kind of thing so or more and uh so so I've never had any experience with that but it's a good question so I I actually understand the path to getting to building a rocket from scratch because we're doing it uh better than I do building a Formula One car and I've got uh you know more experience at it and I know how to raise capital for it I don't know how to raise capital for Formula One team although I could probably go to my Andretti uh family friends and and ask them because they're doing it you know so uh at any rate uh yeah I would say Formula One car would be harder for me actually it's a people don't realize how hard that stuff is there's so much subtlety it's it's just like rockets there's so much subtlety in in making them competitive making them operate uh you know that's why I'm forever fascinated with race cars you know I have a a I used to drag race a long time ago I Road Race now mostly but now I've gotten this Fascination again with building a nitromethane-powered uh hemi-powered dragster so I'm doing that in my spare time but it's it's part of the you know the learning process I just want to master that skill and that that knowledge base yeah you know it's it's I I ask because it is uh as I've I've learned more about cars over the years and uh it is absolutely fascinating especially at the highest level of racing how difficult it is to build something slightly better right and it's uh it's the the pushing the pushing the boundaries of performance is is is it's it's fascinating it's what what folks do and what Engineers come up with in order to do so yeah just a prologue on that point you know the the most success I've had in building cars is making them reliable we put a number of cars in these 24-hour 12-hour events and that's a whole other skill set right is to build these things that are fast but yet still reliable so at the Le Mans for those of you that watch that there was a garage 56 entry which was a NASCAR car and and everybody cheered when it finished right because nobody's ever run a NASCAR for 24 hours and uh that that's that's really the the thing that interests me but Jim thank you so much for for being on the show it was a pleasure um really appreciate it really appreciate you joining on on a Sunday oh I know you have uh a lot a lot of things to do and and cars to drive so I'm gonna let you get back to it and uh excited to have you back on the show at a later date okay take care of them yeah foreign