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Varda founders on building the first ‘space factory’

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Delian Asparouhov & Will Bruey, Varda Space Industries Founders, join Yahoo Finance to discuss the company’s mission to build the first space factories and outlook on the business of Space.

Video Transcript

[MUSIC PLAYING]

KRISTIN MYERS: Welcome back. Let's chat about space now because the startup Varda is on a mission to build the first space factories. We're joined now by Delian Asparouhov and Will Bruey, Varda Space Industries' founders. Let's start with you, Delian. I'm curious to know why the desire to produce products in space? How is it better, perhaps, than manufacturing right here on Earth?

WILL BRUEY: There are certain really high-value materials, everything from semiconductors, fiber optic cables, pharmaceuticals, that have shown lots of promise on the International Space Station over the past decade. Plenty of research has shown that you can produce higher-quality, lower-defect versions than what you can down here on Earth.

But you just can't scale those commercial supply chains on the International Space Station. That Space Station is set up as a research institution, run by many multinationals, lots of bureaucracy. And so Varda's primarily focused on taking that research and work that's been done on the International Space Station and commercializing it in a near-term and much more pragmatic format where we're just building a sort of miniature, small, satellite space factory, sending it up into orbit, fabricating the materials the same way that they are on the ISS, and then bringing those materials back down.

And so while it's exciting to see folks like Branson and Bezos-- and, hell, even Musk now has, this fall, a documentary coming out with Netflix, doing sort of space tourism. That's still only really bringing the value of space to a very small segment of the commercial population. What Varda's focused on is bringing the value of space, i.e. the microgravity, to a much wider population.

And so we're really excited to be helping unlock the value of space to a much larger set of people and are very grateful for all the infrastructure that's been built over the past decade, like the SpaceX Falcon 9, like the Rocket Lab and Astra, which are about to SPAC and go public. We're only possible because of this prior decade of work that has made all of these costs so much cheaper.

ALEXIS CHRISTOFOUROS: Speaking of which, Will, I know that you spent much of the past decade working on SpaceX's Cargo Dragon spacecraft. And I understand that some of your employees even came from SpaceX. What does your former boss Elon Musk have to say about that? and has he talked to you about your current venture?

WILL BRUEY: No. Thanks for having me. No, he hasn't spoken with me about it. I think he would be happy in the fact that Varda is kind of the elasticity in the market that is responding to an order of magnitude drop in launch costs.

When we were at SpaceX, we loved it. I still love my time at SpaceX. And we always worked on reusable rockets and the enabling capability that that is. And just one of many things that reusable rockets enables are manufacturing in space and companies like Varda.

KRISTIN MYERS: So Will, let's just continue with you here. We just heard from Delian a moment ago. He mentioned costs. Curious to know what the cost of manufacturing in space would be. And then bring some of those goods back home here to Earth.

WILL BRUEY: Sure. I don't want to dive into the exact unit economics because that does contain some of our secret sauce. But it's pretty lemonade stand business model. We build the factories. We buy the raw materials. We ship them to space. And then we recover them and sell them.

So there's no miracles required. And there's no anything enabling for our technology other better unit economics thanks to a thriving space economy.

KRISTIN MYERS: I like that, likening what you're doing there in space to a lemonade stand. If only it were so easy. Listen, Delian, I know that you guys founded this company a short eight months ago. You've already raised some $53 million, no small feat. So congratulations there.

I'm wondering if that's enough money to get you through your first mission and if you can share with us who some of your investors are.

DELIAN ASPAROUHOV: Yeah. So we went around the table and made sure to bring together some of the top-tier venture investors. So on our cap table we have Founders Fund, who are one of the primary backers of SpaceX, Koslow Ventures, who are one of the primary backers of Rocket Lab, Caffeinated Capital, who are one of the primary backers of Boom Aerospace, and Lux Capital, who are the primary backers of Relativity.

And so we wanted to go out and get a very deep capital pool from everyone involved in some of these really game-changing, innovative aerospace companies. And again, these infrastructure costs have just gotten so much lower. A company like Varda, a decade ago, we would have had to build the rocket, build the satellite. We would have had to do, entirely, everything in-house. It would have probably taken a billion dollars to even just do a single demonstration mission versus our initial mission will probably actually only take us $24 million.

And so we've actually raised enough to not only be able to do our first mission but to potentially skate even to our more ambitious second mission and larger space factory. And so it's truly incredible what these dropped infrastructure costs from companies, everything from SpaceX to Blue Canyon Technologies, to even public companies like Maxar and Iridium, just the fact that they've scaled up their satellite constellations has made it so that even simple components like a flight computer on a satellite or a solar panel are just so much cheaper.

And so when people think about why are space factories possible, it's not just the reusable rockets. It's that all of these parts of space have just become so much more high-volume, so much more commoditized and consistent. A decade ago, satellites were science projects done by governments. Now, so many satellites are sent up every day, you can actually basically just buy a satellite off the shelf. And that is what enables Varda to be possible.

We just focus on what we're good at. We buy the satellite off the shelf. We buy the rocket launch off the shelf. We just focus on the zero-gravity manufacturing and then bringing those materials back down from orbit, back down to Earth onto land. And that is only possible because of all the work that's been done over the past decade.

KRISTIN MYERS: And of course, you guys have already done so much in less than a year already. How quickly do you think that you'll be able to have that first factory going? When is that first mission going to be? Do you have a target date in mind?

WILL BRUEY: Yeah our target date is the first half of 2023. And the reason for the rapid development is because we know we have to take the most pragmatic approach, just in order to be a realistic business but also to appease investors. And so that timeline allows us to really focus on pragmatism. And no miracles required from a technology perspective.

DELIAN ASPAROUHOV: You'll see a lot of space companies end up going out and raising hundreds of millions of dollars before they actually even get their first product to market or get into orbit. We've been really focused on-- and I think why we're seeing so much investor excitement, customer excitement, excitement from the DOD, it's because we're taking a very near-term, commercially pragmatic approach.

We're not talking about seven years away or something like that for a space factory. We're talking about 18 months from today, being able to produce those first materials in orbit and bring them back down. And most of our customers down here on Earth, they could care less about us being a space factory company. They just like the materials that we're bringing down because they're better than any material that they've seen on Earth because, well, it's not possible down here on Earth.

And so I think that's why you're seeing so much enthusiasm and momentum across both the industries that are involved, the talent that Will is bringing on board, and so many of his ex-SpaceX colleagues being so excited to join. They're seeing that this is something that's going to launch in 18 months, not in five-plus years.

ALEXIS CHRISTOFOUROS: Will, just break this down for the average person. What kinds of things are you bringing back down to Earth? And also if you could just speak to how you're going to re-enter with that first mission. When you re-enter the capsule, it's going to happen over land not water. That was a little surprising to me. So sort of a two-parter there for you, Will.

WILL BRUEY: Sure. The first initial products are similar to-- we kind of think of it like the App Store in the sense that we're providing microgravity as a service to our customers. Like Delian said, they don't really care that we're going to space. What they care about is that we can fundamentally change one of the major laws of physics, gravity, which all engineering is built atop of.

But since that capability doesn't exist, much like the App Store didn't exist at one point, we have to design our first few products in-house to kind of show the value, in much the same way Apple wrote the first few apps for the App Store.

As far as reentry, that is also part of our secret sauce. But I will note that we are landing over land. And the purpose for that is unit economics. I tell the team every week at our all-hands that we will know we are successful when we can go camping and see, every once in a while, a shooting star come across, one of our capsules coming back, in much the same way as a semi truck would come back from an industrial park.

KRISTIN MYERS: All right. I wish we could talk to you both even longer. It is absolutely fascinating. We want to hear more about that secret sauce, Will. So hopefully, you'll have to come on back and give us some more insight. Delian Asparouhov, Will Bruey, founders of Varda Space Industries, thanks so much for dropping on by.