Mo Islam
Andy, welcome back to the show.
Andy Lapsa
Well, thanks so much for having me.
Mo Islam
So you were last on here 21 months ago. And yes, I calculated the number and it’s actually 21 months and 13 days. Thank you, ChatGPT for helping me figure that out very quickly. But yeah.
Andy Lapsa
What is without chatGPT in front of me, what is that in dates? That’s, what is it like June or something of 22.
Mo Islam
October 2021, October 25, 2021. It’s okay, we’re in the ballpark. But yeah, so it’s been a while. Yeah. But no, very excited to get into this with you. So maybe let’s just start like, you know, how are things going? It’s been two years since we had you, almost two years, I should say. A lot has changed. Maybe give us a little bit of the what’s changed.
Andy Lapsa
Okay, yeah, I messed that up. October 2021. Wow, okay, so real early days. Got it. Okay well, it’s been a mile minute. We’re moving really fast. October, 2021 would have been before we closed our series A, so we had done, our seed round. We really, think a company would have been, you know, around 15 people big at that point tops. And, and we had done some very basic demonstrations, but we hadn’t, we hadn’t, I would say done anything quote on quote real yet. And so it was real, real early days since that time. You know, we we’ve got some pretty interesting and new let’s call inventive solutions to what we’re doing. and we’ve built not only those things at the full scale and really demonstrated them out, end to end, but we’ve built all the facilities and the infrastructure and the vertical integration behind them to go do that. We’ve built, designed and built two pretty. Leading cutting edge rocket engines and proving them out. We’ve built a full scale reusable upper stage prototype and proven that out. We’ve built a vertically integrated manufacturing machine. An amazing test facility built an incredible team. We’re now, I guess, as of this week, about 140 people. So it’s been, it’s been really, really fast. It’s been incredible to be part of and it’s been a lot of fun.
Mo Islam
Also, you were right. I just double checked. was October 2022. Missed that by a year. This is why you’re the rocket engineer, not me. Well, look, I have to assume that not everyone’s gone back and listened to that episode. So maybe why don’t we just talk a little bit about the Stoke creation story. What led you to start the company?
Andy Lapsa
There you go. Okay. Well, yeah, look, I spent about 10 years in the industry, gaining some incredible experience and, and it’s just really fun time to be part of this industry. think there’s been no, no more exciting time than, know, arguably in 1960s, but I think, you know, as this, as this thing unfolds, I think it’s actually more exciting to be part of it now. so it’s spent, spent 10 years and then, decided it was time for me to move on. And I looked around at the state of the industry, really got excited about, you know, commercial space applications and business prospects and wanted to be a part of that. So, in this thought process, I thought, okay, what does the end state of this industry look like? What needs to be true?
What are the blockers both, you know, guess logistically and technically to get to that end state. And how do we get there as fast as possible? And then from there, once I have conviction on that, who are the ones building toward that thing? Because when we started the company at the very end of 2019, there was a lot going on. And I would say that there, you know, there’s some good ideas. There are some maybe less good ideas. There’s just a lot going on in the industry. And, and it was important for me to be able to kind of cut through the chaff and figure out, you know, where I wanted to place my bet. It was not with the intention to actually go start a new company. So, so this exercise led me to a couple of conclusions. The first conclusion was that from a business prospect perspective for any new companies, access to space is still the primary choke point of the industry. And I think that’s still true five years later. the second thing is the, we’re very far from the end state of the industry. We still have an incredible amount of progress that can and will be made. we’ve, we’ve made it as an industry I’m speaking incredible progress in the last 10 to 15 years, but it is still very much day one in an industry and there are still orders of magnitude improvements that we can make.
And to do that, what I think is the end state of this industry is vehicles that come and go to space, they do it in a way that’s 100% reusable with very high quick turnaround. And that is the thing that unlocks the three, I think choke points and pillars of pain for people trying to get to space today. Those three things are cost, availability, and reliability. And I think all three of those get unlocked by the fully reusable architecture. And strangely, nobody was doing it. And so it was only after that that I said, hey, let’s start a company.
Mo Islam
So a couple of quick questions and I’m just gonna take a quick step back. You have a PhD in aerospace engineering from U Michigan, correct? Is there a reason why you don’t go by Dr.Lapsa?
Andy Lapsa
Look, I think people take different paths to get where they want to go. For me, at the time, I did the PhD because I wanted to teach. over time, as I got deeper into that, I realized, no, I actually want to build stuff and make what I think is the biggest impact that I can make or have the most fun doing or whatever. But that process was very important to me. Other people might leave out of undergrad and immerse themselves and get incredible experience in the same equivalent four to five years. I don’t know. I mean, like, I don’t think it’s central to who I am or what I do. And it was impactful and very meaningful for me, but I don’t know. I don’t need like letters in front of my name, you know?
Mo Islam
So, fair enough, fair enough, fair enough. So I’ll continue to call you Andy. So I do wanna talk about blue in your time at Blue Origin. some of the elements that you’ve mentioned as to why you started Stoke, one could argue or maybe argue against is or isn’t happening at Blue. But I think Blue would argue that there are elements of what you’ve described that they are doing. Was there any particular reason why you felt like that wasn’t ultimately the place? Was it your desire to sort of be an owner and driver of the vision? Or was there a speed component where, you wanted to get to an outcome sooner and you felt like that you could drive to that outcome much sooner.
Andy Lapsa
Well, first of all, I’m very grateful for my time at Blue. think I got some incredible experience. I was afforded some incredible opportunity. I learned a lot, I think with anybody’s experience doing anything. If they’re introspective, there are things that they liked and things that they would hope to improve upon. And so I think that there’s no way that Stoke and me, I myself could have done what we have done if we didn’t have that experience and, and, and frankly, that’s true for everybody that we bring into the company builds on prior experience, right? Everybody should do that. So, very appreciative of the opportunity there. at the end of the day, I thought that, I thought that things could be done faster. I don’t, like I said, I I didn’t leave setting out to start a company. I left to try to figure out, you know, where the place was that I wanted to place my bet for the rest or the next big chunk of my career and have the biggest impact. And that turned out to be starting a company, but I don’t feel like I need to be the one who is driving the vision or whatever. But it turned out that I thought that was the best path in this case.
Mo Islam
Right. All right, well, let’s talk technology. tell us a little bit about what differentiates Stoke from the other launch providers and maybe walk through the general architecture of your first launch vehicle, Nova.
Andy Lapsa
Sure thing. the, the first thing I’ll say is one of the big, great lessons I learned, you know, having been in the industry was that, anything you do in this industry is pretty damn hard. and so it’s, it’s a little bit with that appreciation in mind. The second thing and really the forming vision of, of this. Company is to have really seamless mobility to space, three space and back from space. That’s the thing that really unlocks. think about, if you think about, transportation, any other mode of transportation that we have could be over road transportation, rail transportation, shipping, air transportation, whatever it is, right? Any of those things more or less we can get on demand and in none of those cases are we throwing away the vehicles each time, right? And I think we can get to a place where space transportation to, through and from space can be akin to that, but not with today’s technology, right?
So you know, and then we put financial model together, modeled it out. There were other theories and theses at the time and still are about how to get economic access to space, et cetera. but to me, when I did that exercise, the only way you’re going to make orders of magnitude change over the status quo is through this rapid, and full reuse. so this had to happen. Okay. So tie those two things together. anything you do in space is hard even if you try to replicate today’s technology and the future is inevitably, it will be, it’s just a matter of time and when, who and when, it will be 100% full rapid reuse. That’s where the industry goes because the economics are so powerful. Okay, so to me, no matter what mountain you climb, it’s gonna be hard, so you might as well climb the right mountain right out of the gate and that is to go to this full rapid reuse. Yeah. So, that’s the direction that we’re taking that guides everything we think about. And I think that is demonstrably different from virtually every other rocket company there is, you know, with the possible exception of SpaceX, obviously, pursuing Starship. And what I would say is that, Starship is amazing. I, I want it to be successful. I think that’s actually a difference between myself and a lot of other rocket companies. I actually am excited and hopeful for a successful Starship because I think that moves the entire industry forward and creates more opportunity for something that’s complimentary. And that’s what we’re trying to build. But it has to be competitive on cost. to win in certain ways like availability or dedicated access or whatever. Yeah, so that I think is pretty unique in the rocket space.
Mo Islam
Absolutely. And is that why you started with building the second stage first? Because effectively that was the, I’m not trying to say that first stage is a throwaway, but it’s clearly more challenging to bring the second stage back from orbit.
Andy Lapsa
Yeah, so if you. Well, there’s two parts of it. The first thing is we have a playbook. The industry has a playbook for reusing first stages. And I would make the claim that it’s not just SpaceX, actually Blue Origin’s New Shepard. There’s a technical playbook for doing this, right? So we kind of understand what that takes now as an industry. What we don’t understand as an industry is how do you reuse the second stage and especially how do you reuse the second stage rapidly? Right. That’s it’s an unsolved problem in our industry right now. And it’s, in my opinion, it’s the last big domino to fall before we do get full and rapid reuse. So that’s part one. Part two is, rockets are highly coupled systems. It’s we’re in this kind of both lucky and lucky, unlucky spot on earth where, the physics pan out, but we can, we can barely get to space with chemical rocket rocketry, we can get to space with chemical rocketry.
So that’s the reason why margins are so thin in rocketry is because they have to be in order to actually physically do this thing. And that means that the first stage and the second stage are really, you know, have to play together very closely. Okay, but if we don’t have a playbook for how to reuse the second stage yet, we don’t know what that looks like, then how in the world can we build the right first stage? Right, and the answer is probably that we can’t until we understand what the second stage looks like and how it operates and so that’s the reason to start with the second stage to say, Hey, we need to solve this problem. need to understand what his performance parameters look like, how heavy it’s going to be, et cetera. and only after we understand those things, then can we build the proper first stage below it. Right. so that’s what it is. Yes. You know, what is the architecture of the vehicle? It’s a, it’s a two-stage orbit vehicle. have a first stage. Think about it operating similar to the way a Falcon nine operates. It can return to launch site and land down range. Either one, the second stage proceeds from effectively the drop off point from the first stage goes all the way to orbit. Can sit on orbit for a period of time, can maneuver on orbit and then comes back from orbit and can land either at the launch site or anywhere else that you may want to go.
Mo Islam
That’s an interesting comment. So we’ll come back to the down mass capability of that in a little bit. But talk about payload capacity. How large is this vehicle?
Andy Lapsa
The right way to think about it is the bread and butter mission is about 5,000 kilos to low Earth orbit. We have capacity to, very meaningful capacity, I would say, to GTO. One of the unique things about the vehicle, it is very high performing from, think about it as gas mileage perspective. And that’s one of the things that really enables the reusable mission. Our second stage is unique by running on liquid hydrogen and liquid oxygen that gives it’s kind of incredible gas mileage, which leads to a multiple of payload capacities in the deeper space missions. We’re very unique in that perspective. Other vehicles don’t have that direct access from a medium class vehicle. So we can go to LEO, we can go to the higher energy orbits, we can do trans lunar injection, escape trajectories, et
Mo Islam
So I have a question in regards to SpaceX’s Falcon 9 development. I’m kind of curious, given what you’ve said, and it makes a ton of sense why you’re approaching the architecture and the process that you are, when the Falcon 9 was being developed, why, and I know that there were discussions about second stage reusability at that juncture, why do you think that SpaceX decided not to pursue second stage reusability with Falcon 9? And why do you think over the many years that they’ve launched the vehicle, have they decided, obviously with Starship, Starship will be fully reusable. It will be the first fully reusable vehicle that they develop. But why do you think it took, basically the question is why do you think, why is it until now and with Starship that the company has been pursuing fully reusable kind of second stage, rapidly reusable vehicle?
Andy Lapsa
Well, I think it’s always been Elon’s vision. I think it’s taken until now for two reasons. One, SpaceX was started in a fundamentally different time and era and had fundamentally different talent pool available. Market dynamics were fundamentally different, et cetera. So they did the right thing by starting with, I mean, they started with an expendable Falcon, they started with Falcon 1, which is expendable. And then they started with an expendable Falcon 9. And then they retrofitted reusability. well, they operated and retrofitted reusability into the Falcon nine first stage. And I think that their exploration into the reusable second stage. Basically hit what I just said, the first stage and the second stage are fundamentally intertwined. are tightly coupled system and they didn’t know what a reusable second stage looked like yet. And frankly, they shouldn’t have, they did exactly what they should have.
They respond to the market. They disrupted the market. With Falcon nine, it’s the best launch vehicle that’s ever existed. That’s what they should have done. It was a fundamentally different era. And when they tried, went and tried to look at how would they reuse the second stage on this vehicle that already existed, they realized the payload penalty, if they actually did that would be too high and not worth it. And the right answer is instead of retrofitting it on a Falcon nine, they should just build Starship. I think that’s, I think that’s, mean, I’m speaking for them without actually knowing, but that’s, that’s my read on it.
Mo Islam
No, I think that’s it.
Andy Lapsa
And I think there’s a technical justification there for that.
Mo Islam
Yeah, I think that makes sense. mean, the reality is if they pursued second stage reusability from the get-go, it would have kept them out of the market for many more years. And I think the ability to come to market, correct. Yeah. Yeah, I think that’s fair. That’s fair. So setting SpaceX aside, do you believe there’s a market for multiple launch providers?
Andy Lapsa
Yeah, and they didn’t have to do it to disrupt the market at the time, well, not only do I believe that there’s a market for multiple launch providers, there’s a legal requirement for multiple launch providers. so absolutely I do. I think that there’s, like SpaceX is a thousand percent in the pole position right now and they deserve to be. but I think no stable, healthy, competitive market, survive in a, in a monopolistic environment that it won’t last forever. Right. And, so the question is, who’s gonna stand up? I think that a good market analogy for us, I’m trying to like abstract our way and our thinking around the market is to think about kind of aircraft and commercial air travel in the 1930s, 40s, 50s and into the 60s. In kind of that era, you had many, many, different startup aircraft at that point. You had the defense element as well coming in. You had a handful of companies getting bigger.
And then two things happened from a technical standpoint. People figured out the jet engine. People figured out the pressurized cabin. And once you had those things, commercial air travel started to make sense. You could fly higher. You could fly faster economically. So people weren’t getting seasick on every flight and thrown up, right? It actually worked and Boeing was kind of the first one to put those two together. Lockheed and Northrop were pretty close to follow, but also pursued the defense market, which Boeing, you know, did as well, by the way, Grumman was in there. They’ve obviously now merged. And so what you saw was this kind of, you could call it the entrepreneurial explosion in the thirties and forties, kind of coalesce around a couple of different players, you have in a mature market, you have those, let’s say four players, you have the Lockheed, have Northup, you have Boeing, and all of those are the giants of today because they mastered mobility first. And then they built layers and layers upon their companies. And then Airbus is a kind of a weird example, kind of a European stand up to go and play in that business as well. But I think that’s what you’re going to see in space. You’re to see a handful of very, very big companies is absolutely going to be more than one, probably not more than five. but I think that, the winners are going to be the ones who show, kind of the end state economics first. And then after that, there’s very little incentive to start a new company.
Mo Islam
what kind of demand, how do you demand forecasts? How do you, sorry, how do you forecast the demand for launch services? And I wanna bring up, a few weeks ago, we had a economist on the show, Pierre Lionnet. He’s, I would say, he’s, some people don’t like his views. Let’s just keep it at that. And he believes that a common misconception, is that launch costs are continuing to fall and that’s going to lead to an increased demand. And he thinks that outside space, outside Starlink and a few other projects, for example, Kuiper, there isn’t going to be a significant growth in launch demand and the market for the most part is stable absent the increase of these mega constellation projects. And yeah, maybe let’s just start there. What do you think about that.
Andy Lapsa
Well, I think I disagree. Yeah, I think, look. I think that the choke point on the industry is affordable access on a reasonable timeline. And one of the examples that I’ll paint is that, you go back and look at history of the OneWeb deployment, the OneWeb constellation deployment, they were there. They had the idea first. They had kind of a messy interaction with Elon early on, but they had satellites trying to get up to orbit and they couldn’t get them to orbit, right? They had procured launch from around the globe. They wrote very expensive contracts that they had to renegotiate. They sat on the ground for a long time. Ultimately, they used Falcon 9 to finish the deployment. But by the time they finished deployment, their initial satellites had already run out of service life. That’s how long it took them to deploy. Okay. And now I would ask you, are those market dynamics different today for the next constellation that wants to go up. Is it different for Kuiper today? The answer is no.
Kuiper wrote really expensive contracts with Ariane 6, with ULA’s Vulcan, and with Blue Origin’s New Glenn. How many times have those rockets flown? And they were sued by their shareholders because those contracts are way more expensive than the Falcon 9 commercial contracts. Now if they wanted to go deploy on Falcon 9. Good luck, man. It’s a two year wait for a vehicle. Falcon nine is going to prioritize Starlink. The next priority is the U S government and everything else is after that. Right. So I would argue that, nothing has changed or very little has changed. Right. So if you just look, if all you care about is deployment of telecom constellations, and if you accept that probably the end state of that industry is two, maybe three global constellations. How are those, how is the second and the third one gonna get up? It’s not that much different than Oneweb was, you five plus years ago. Okay, so that’s part one. Part two, or maybe let’s stick with telecom, okay? Like I just said, by the time Oneweb finished deploying its constellation, its first satellites were already basically defunct, right? So it’s terrible place to be. There’s gonna be replenishment. And the replenishment of these, you know, in a healthy competitive environment where it takes cell phones as an analogy, you’re going from 3G to 4G from 5G. It’s very important to get the next capability deployed as fast as possible to win and retain customers, right?
You care a lot about the deployment time of these things in a healthy competitive environment. And as consumers of this technology, we want that evolution of technology. We want faster speeds, we want more bandwidth, et cetera. Okay, that means like just because you deployed the first constellation, you know, you’re not done. You’ve got to go deploy the next one. Okay. So how does that get done? That’s it. There’s massive amount of demand just if you think about that. Right. I also think that there’s going to be some interesting. Well, we’ll see how it all evolves, but there’s some interesting regulatory components of deploying next gen constellations over and over and over again. I think you’re going to get to a place where if you’re going to deploy a thousand more satellites, you’ve got to deorbit a thousand of your earlier satellites. How do you do it? Do you orbit them? Do you just let them burn up in the atmosphere today? That’s what you do. Is that going to be the status quo as we start launching millions and millions of pounds of heavy metals? Is that what we want floating around in our atmosphere? Do we need a different, more efficient way to, or more, I guess, sustainable way to deorbit that mass, right? I think that’s a very interesting dynamic that people aren’t talking about very much. So just in telecom, there’s huge pain points already. And then you start thinking about, okay, I think that, well, if you look at prices, then prices are not going down, prices are going up because there’s exactly one launch provider that is meaningful in the market. And they’re raising prices as they should. Why would they not?
So, you need some competition, need some, you need just an alternative, right? Today’s market just needs I think if you look at the end state of the industry, we can get the cost basis of launch down by a norm by factor of 20 compared to what you’re seeing today. And I think if you start thinking about the world in that light, then there are a million other, you know, applications that start to make a whole lot of sense. Things like, you know, commercial space stations for humans. Starship is one reason I’m really excited about Starship. think Starship enables us. And I think there’s a huge market for so it’s great for deploying heavy industry in space. How are you going to service that? What are your clientele? What are the use cases of those space stations? It’s probably, you know, luxury tourism and manufacturing. Yeah, to start. Okay. All right. What are those? What are those two use cases need? Luxury tourists don’t want to eat, you know, the frozen ice cream that you get at Disneyland, right? They want fresh food. Where is that going to come from? It’s probably, it has to come from, you multiple times per week shipments of fresh supplies and removal of garbage. Okay, the same, like if you think about a skyscraper as a closed ecosystem, how many times per week do you have box trucks pulling up and giving you fresh food and pulling away your garbage, right? It’s all the time. Is Starship the right vehicle to do that? Do you need a hundred tons every time, three times a week? Probably not, right? So what’s the other service that does that and I think, I think a healthy ecosystem needs both, but it has to again, be competitive on the cost basis. So I think that gets unlocked. I think, you know, I could keep going on for probably hours on that topic, but, we are in, we are in a nascent market. So some of it is on how do you project it? How do you prove it? And you know, I think there are projections that we can make, but also you have to believe in, in the future.
Mo Islam
Well, so it sounds like you’ve thought about this question. So I actually have a scenario for you. let’s just say we’re sitting at a round table with all of your competitors at that round table. And you have your customer walking around asking each one of you guys, what is your value proposition? Why should I work with you? What are the one or two things you’re pointing to?
Andy Lapsa
Well, I think the first thing is we say what we do and we do what we say. And I think that is somewhat of a differentiator also. And so we’re not gonna, you know, we’re not gonna blow smoke around and say, we’re gonna launch a hundred times next year. We’re going to work you in and, you know, be as dependable of a partner as possible. And so that’s part one. Part two is, you know, if you work with us over time, we have fundamentally different cost basis than any of the other providers. And, and that’s good, right? That’s good for the customer. And then, you know, especially as, as we’re all sort of, you know, getting going in the industry, we do provide some very unique capabilities that none of the others can do simply by the nature of the vehicle. so, you know, certainly for our, let’s say our early beachhead customers. You know, we can do things that are unique that they can’t get anywhere. They simply can’t get anywhere elsewhere.
Mo Islam
I want to go back to the technical pieces of what you’re building. setting aside reusability for a second, I do want to ask about how you’re thinking about your ability to simply get to orbit and how you guys are thinking about that. Obviously, the way you’re thinking about it is you’re going to get there, but maybe talk a little bit about sort of the risk dynamics. And I think other startups have spent nearly a billion dollars trying to achieve this milestone and have failed. Just getting orbit, right? And I think for a long, you know, there are times we kind of just kind of think, perceive it as a given, but like you said, kind of quote you earlier, like, this is really, really hard in general. So, and that’s proven time and time again, even though we’ve been going up to space regularly for many decades, it’s still very complex. So maybe talk a little bit about how you think about just getting to orbit first and foremost.
Andy Lapsa
Yeah, I think, look, I think, I think the whole vehicle from a technical side has to be designed with the end state in mind. It has to be architected for that. everything we’ve done from, you know, founding to today is take that end state and state and build toward that end state architecture. But for each of our milestones, you know, simplify the problem as much as possible, strip it down and demonstrate the next thing and don’t get distracted by things that are a little you know, further down the road. so for, first orbit, you know, we take that same kind of mentality. We are focused on getting from ground to orbit. And if we do that on the first try, we’ll be the first entity in the history of the world to do it on the first try. and so, you know, kind of have enough humility around that challenge to plan the business accordingly, and plan the technical side accordingly. The millisecond we reach orbit.
Our focus shifts entirely on, now let’s show that we can get back down. And then once we show that we can get back down through the MS atmosphere, then the millisecond after that, we start focusing on reusing, right? But it is, is, you know, one by one, you know, a step by step process. to your point, you know, yeah, other companies have, you know, spent a billion dollars and not gotten there. I think, you know, when I was, when I was looking at where I wanted to go next, I found myself looking at, you know, I spent a lot of time thinking about the thesis and I wanted to work toward the right thesis, but there were a couple other components also that I thought were really important. We needed the right thesis. needed the right team and we needed, you know, some level of demonstrated execution and I call it habitual execution. We’re actually, it is a habit for us to deliver on time. And those three components, I think, are the factors that win in the long run. When I looked around, I couldn’t, it was very hard to find any one of those three things in the industry, you know. And so those are kind of the focus areas for our company. And I think we’ve done a very good job, you know, demonstrating those three to date.
Mo Islam
And to your credit, you guys have, I mean, you you’ve raised a fraction of a billion dollars, not quite a billion dollars.
Andy Lapsa
we’ve raised a fraction of a billion dollars is much better way to put it. It’s not close to a billion dollars, but yet I think one of the rubs on us early on was we’re biting off too much, it’s too complex or whatever. We’re going after these kind of holy grail technologies out of the gate. You gotta crawl before you run or whatever. And in general, I believe that, but you have to be building toward the right end goal or else all you’re saying is you’re going to stop everything you’re doing and start over again. And we’ve seen that play out with other companies as well. You’ve seen, you know, relativity did a pretty hard pivot. Rocket lab is doing a pretty hard pivot. Even, Firefly’s pivot, right? Like you’re seeing these pivots play out because they have to, and it amounts to a starting over. And so, you know, our thesis is no matter what you do, like if you’re going to go for this Holy grail, if you believe in then you’re gonna have to start over and build it from scratch. And that’s our bet. We have to do this. It’s not an option. We have to bite off these technologies if we’re gonna win.
And I think now we’ve de-risked every element from tip to tail of the vehicle. We de-risked every single one. We’ve built two cutting edge engines from scratch in this three and a half years from seed. Done that we’ve flown the vehicle and demonstrated the full scale prototype of the second stage. We’ve demonstrated a full scale, first stage, you know, tank development and, proved that out, structurally. Right. So, and we’ve done all that in three and a half years with a team that only just got to 140 people. We’ve built all the infrastructure behind it. and I just would say, let that speak for itself. We’ve done it for, you know, a little bit over $100 million. Right. And so it’s a very logical next step. those, you know, fundamental or those unknown unknowns, a lot of the unknown unknowns are answered now, I think, is now incumbent on us to put those pieces together and actually fly to orbit. And again, I want to come at that with humility. I’m not trying to make it sound like it’s easy, but it’s important to design the business to be robust to failure so that you can iterate and keep moving. Starship is the same way, right? Starship, you know, takes a lump on the chin, turns around, three months later, they go again, right? That’s how you want to design the business.
Mo Islam
Are you still targeting next year for first launch?
Andy Lapsa
Yes, it’s within the realm of doable.
Mo Islam
And what does success look like on that first launch for you? Minimum viable success, let’s call it that.
Andy Lapsa
Well, know, minimum viable success. We absolutely want to get off the pad and downrange. I think that’s minimal. Again, I think it’s important to design for iterations. we’ll have, we already have vehicles multiple on the line, on the production line. So we are building flight hardware today. We want to show up to the pad and we want to have the next one basically ready. and so we’re designing, you know, with that in mind, you know, I think it goes without saying, I hope we get a lot farther than just off the bat and a little down range, but, you know, regardless of how far we make it, the, the key is you learn something important along that path. so you can pick the pieces up and go very quickly afterwards and, maybe I’ll say it another way and we talk about it all the time internally is, when you fail, you want to fail for a reason that is, you know, a complex or an unknown unknown or whatever it is. You don’t want to fail for a stupid reason that was easily preventable, right? That’s the most important thing to me so that we can take a meaningful lesson out of this and, know, go fly again.
Mo Islam
What is the product roadmap post-Nova? I mean, I know you can’t reveal all, but give us a little bit of like, you know, some generalities at least.
Andy Lapsa
Yeah, I can give you some generalities. I would go back to the founding mantra. We want to do seamless mobility to space, through space, and back from space. Those three modalities are very important for, you know think about transportation, space transportation as just another modality of moving goods and services through the world economy. That’s what it right. And so if you don’t have all three of those modalities, then you are incomplete. You are not making space and extension of the world economy. is something weird and different. if you can never get back. so I would say all three of those modalities are very important to us. I think it’s very important to our customers as well. And, we have something that is pretty unique in its ability to do that. Our second stage again, is very, very high performing. It’s the highest performing second stage of any new space company. That means it can do these deep space missions. It’s in the realm of capability for it. It can get back from those locations. It can maneuver on orbit. It can bring things from orbit back to ground. It’s a pretty unique and diverse platform for mobility. That’s what we want.
Mo Islam
For those reading between the lines point to point is maybe the thought that comes to comes to mind.
Andy Lapsa
Point to point is one of them. I would say also, let’s say, tactically responsive capabilities, whether that’s on the ground or on orbit, getting capabilities to a location on demand is very important. in time, equally important is withdrawing those capabilities from location is also important.
Mo Islam
I’m curious, launch is one of the areas of the industry where I feel like I’ve seen the most amount of investor misconception. I’m curious to hear from you, you just relatively recently raised a pretty large series B, what are some common or what are the most common misconceptions or misconception from investors that you’ve kind of come across investing in launch that like you’re like if there’s an investor listening to this, this is something you shouldn’t get wrong on day one.
Andy Lapsa
I think there are actually a couple, the first maybe most basic one is the assumption that launch is solved. It is not solved. There’s, like I said, there’s an easy order of magnitude or more improvement that we can make in cost on the cost basis in the industry. I think the idea that launch costs have fallen through the floor and SpaceX has solved everybody’s problems is a wild misconception their brochure price is hovering around $7,000 per kilogram right now. And the narrative is that that came down from $100,000 per kilogram. Well, that’s a space shuttle quoted price. The actual commercial pricing on an Atlas was $15,000 per kilogram, right? So it’s improved, but it’s not like it’s orders of magnitude improved. They fly frequently. Which is great, but they fly for themselves frequently. They only do four or five rideshare missions a year. So it’s not like that is much better. Right. and there’s a huge amount. talked about the challenge in deploying a constellation. That’s very hard. I don’t think those dynamics have changed considerably for anybody not named space X. And, and so anybody who’s trying to do that is at a fundamental structural disadvantage to SpaceX because SpaceX owns mobility. And that’s also why I think that the largest companies in the long run are the ones who own mobility. They own the keys to the entire economy, right? They have the keys to the gate. Yeah, so I think that’s the biggest misconception. Launch is solved and it’s anything but.
Mo Islam
Do you believe in the concept that the factory is the product.
Andy Lapsa
Absolutely.
Mo Islam
So talk a little bit about a year and a half, two years from now, or maybe it’s already in progress, but how are you prepping to manufacture at scale once you’ve solved all of the R&D?
Andy Lapsa
well, a lot of that goes into design, you know, so, you know, would say that the prepping for manufacturing is a huge part of the R&D, right? The design has to be designed to be manufactured efficiently and quickly, at a low cost, with no fixed tooling, and in a way that you can continue to iterate and evolve the product without, you know, reinvesting a good $1,000,000 in manufacturing. So you have to be designing, and R&D-ing the manufacturing coincident with R&D-ing the product itself. I’ll just say that, you know, I think our track record can speak for itself on this. We’ve built prototype vehicles, you know, very, very quickly. We’ve moved through, I mean, we’re developing, or we are building flight vehicles today very, very quickly. I think faster than, you know, most others have shown doable before. We’ve got an amazing group of people who bring an incredibly diverse experience set from not only within aerospace, but also outside aerospace to start designing with this in mind.
One of the neat things about full reuse is we don’t need to be building a thousand vehicles per year. don’t need these, I don’t think we want at this point in the industry, we don’t want these very formal know, automotive like production lines stamping out hundreds of thousands of units. We’re not there yet, and one of the beautiful things about reusability is we can scale flight frequency, which is one of the biggest cost drivers to launch costs. can scale flight frequency without necessarily scaling the factory. So actually the big factory is the product, but so is the operations of the product also. What you really care a lot about is once you demonstrate that you can get to space, once you demonstrate you can get back, and once you demonstrate that you can reuse, the overwhelming focus is what Elon calls stage zero. There’s everything on the ground to make that process as seamless as possible. So you land, fuel, and go again.
Mo Islam
Right. I don’t want to treat this as a throwaway item. Let’s talk about Fusion. Talk a little bit about it. Why build this? It feels like there are solutions out there that exist.
Andy Lapsa
well, the reason, okay. First of all, let me back up. What is fusion? Fusion is our, basically our software operating system that we use to, basically join all elements of our business and help us, you know, go through design, procurement, inventory, assembly test, all the way through flight, through service, all the way to retirement of parts. So it’s kind of our operating system for the business. I would disagree with you in, you know, the claim that this already exists. I think that when, when we started the company, it’s a huge pain point from my past experience, with every single hardware founder that I talked to, it’s also either a huge payment, pain point or something that they ignore and say, that’s too far away. I’m going to worry about it later. And my conviction was by the time you need this, it’s already too late to start thinking about it. I know that we need great configuration management, not only for our build reliability and our flight reliability, but also for doing business with our government customers, with insurance providers, with all of those things.
Having a full blown digital thread is very important for all those things. In the long run, it’s even more important to understand what parts do I have on the vehicle? How long have they been in service? How many pressure cycles have they seen? How many thermal cycles have they seen? When did they need scheduled maintenance? When did they get to end of life? And when do they need unscheduled maintenance? Is the flight that just flew, was it nominal? How does it compare to our family of data prior? you know, I want that to be automated that we can, you should be able to throw. You know, all of the today’s Silicon Valley buzzwords, you should be able to throw machine learning and AI at these data sets and understand is this vehicle ready to go again? and that should all be automated. Well, if you don’t have the infrastructure in place to track, you know, your configuration, your parts, times and time and service at the piece part level, you can’t do any of that. So you need it. You need the, you need this foundation, very early. And if you wait until you fly to orbit the first time to start thinking about it, then guess what? Your factory is already broken or it needs this massive reinvention in order to do it. so, so that’s kind of the philosophy behind it. I think that there were software products out there that, you know, sort of fit the bill kind of, but they were, they, what, what they needed, they were pretty rigid in, in their application. So let me, let me say this. If I had a stable. Design that I’m going to go through production and make a thousand units of the thing.
I could probably get away with, you know, somebody else’s third party hardware or sorry, software. but that is absolutely not the world we live in. And so, is there a software product out there that does all the things that I just said, but does it in a world of high cadence engineering and iteration? And, you know, everything that you build is slightly different from the last thing you built, but you’re still getting full traceability through this whole thing. that’s the thing that didn’t exist. Right. And, and, and what we want to do is build this. maybe there’s another very important distinction between existing products and what fusion does. I think in general, if I were to overclassify or generalize the existing software products, products that exist in this space are, inspired, let’s say by the management level, whatever that may be. It could be procurement could be the financial accounting team, it could be even mission assurance teams, right? Or systems engineering teams, right? But its inception is at this management level. And what the management level cares about are things like roll-ups, KPIs, statistics, et cetera. All of those things are important. But typically the way they manifest is pain at the factory level or at the individual contributor or the technician level, right? It is pain and overhead for them. And what you see is, you get conformance by breathing down their neck and like requiring it. Or you see people like saying that’s a pain in the ass, I just need to get this thing done. And then they go around the system and fusion is fundamentally architected to optimize for like the technician experience, right? It should be a net. should actually help them do their job. And then we use software to pull out the things that the management levels cares about, which are the KPIs and you know, are we good to go? Do we have green on our board for, you know, things like non-conformances and, you know, risk items and things like that. Right. but those should all just be, they, should fall out of your natural daily habits. The technician wants to stay organized. It wants, they want to know where their parts are, they want to be able to follow a procedure and take notes on that procedure and edit the procedure for the next time. They want to do all that. It’s not that they don’t want to do all that. It’s just that there’s never been a software platform where that’s natural to the process.
Mo Islam
So SpaceX keeps warp drive internal. I’m kind of curious what has driven your decision from my understanding that this is something that anyone can purchase from you guys. What has driven that decision?
Andy Lapsa
Yeah. So, so we’ve opened this up to, you know, to the outside world. the decision to do that was, you know, we, debated it quite a bit, internally and the decision was the following, we had belief that we had a vision on this and we have a unique place to build this where our software engineers can walk out onto the floor every day and see their product in the wild sit next to the technician, watch them experience the pain of whatever bug it is and then get that fixed. Right. That’s a very, this thing is it’s a nuanced and big enough challenge to solve that ability is extremely valuable and important. Okay, so, so it’s going to be, it’s going to be an effort. Now, if you look at the trajectory of most internal enterprise tools, they’re awesome for maybe three, probably at tops five years in the software world, right? And then they go stale. And that sucks, right? Our vision is much longer than a five-year window. And so what that means is we need, if we keep it internal, it will require continual investment from the business to keep this as an amazing tool that simply doesn’t exist elsewhere or otherwise.
And so every one of those software heads is competing against a rocket head if we keep it internal. Meanwhile, every single other hardware founder that I talked to is like, this is a huge pain in the, I don’t know how solve it. Excel sucks. Jira’s terrible for this. Jira’s, you know, great for software, but not for hardware applications. and so, and so I’m like, well, okay, the way to build this and keep it awesome for us in the long run and have it not compete with, you know, rocket heads is why don’t we just open it up? And then our customers will drive us to make it more awesome. We can make this team self-sufficient. And I actually think as we’ve gotten deeper and deeper into this, think the TAM on this is enormous. It’s every single manufacturer of a hardware good, all the way from your garage shop hobbyist, all the way up to very large applications, which we’re already selling into, well outside of aerospace. The TAM is enormous. And so I got you know, I’m real excited about it. We’re focused on making the product amazing right now. We are selling it a bit. We’re getting really great traction. You know, usage numbers and all your standard software KPIs are really, really, you know, very strong. Yeah, so I’m pretty excited about it.
Mo Islam
Look, it sounds like a lot of things are going the right direction, right? You guys have hit a number of technical milestones. You have the software product that makes a ton of sense and need for in the market. What keeps you up at night?
Andy Lapsa
Well, there’s a lot to do. Yeah, think, look, there’s always something that needs to be solved. For us, we’re working really hard on the launch complex. It’sreally the next big, big project that we have. We’ve got some incredible momentum and work going on there. You know, in my seat, there’s always, you know, we have a very big vision and so there’s a funding component of it as well. I would say those are probably the biggest areas that, occupy my time, but look, you know, on the technical side, we’ve got a lot to do as well. the team is unbelievable. and I think that’s, evidenced again by the milestones that we’ve hit to date, but, you know, there’s still a lot of work to be done. we’re, constantly pushing ourselves to move faster more efficiently and with better product output.
Mo Islam
Do you expect to go back into market with another round before flight one?
Andy Lapsa
Of course.
Mo Islam
Okay. Sorry, I didn’t think I was asking the obvious question, but you guys have been very capital efficient so far and I’m sure we will continue to be.
Andy Lapsa
Yeah, I think the big thing is to say, you know, want to scale into the market and ramp in there. We don’t want to limp into the market. Right. And so, you know, in order to do that and before we’re looking and, and, and project forward.
Mo Islam
Yeah, sure, sure, sure. You mentioned big vision. Just give us a preview of that big vision. Like what does the Stoke look like many, many years from now?
Andy Lapsa
Well, there’s a lot of pretty exciting places that, that it can go. Let’s start with seamless mobility to space through space and from space. I think that the number of applications that are enabled once you have that mobility element solved, there, let me just say, there are a number of things that are really, really exciting to me right now that, you know, that I’m excited about. I usually don’t get excited about things until we’ve done a little bit of homework. There’s definitely more homework that needs to be done in certain areas, but there’s a number of different directions that we can take the company in that I think are thrilling and create huge benefit.
Mo Islam
So let’s just say five, ten years from now, you get approached by a movie studio and they’re like, Andy, we’re doing a movie about Stoke, but we can’t quite figure out who to play you in the movie. Can you give us, can you help us out?
Andy Lapsa
Well, I am quite possibly the worst person to ask that question. Yeah, I’m not good with my pop culture and actor Rolodex. So let me dodge that one. I could turn it around on you. Who do you think should play me?
Mo Islam
Ha ha! Alright, well I’ll a great question. That’s a great question, Andy. We’ll come back to it. I want to get you back on, Andy, after Flight 1. I don’t want to wait another 21 months and seven days, I think it was, to get you back on the show. But I’m sure Flight 1 will be well in advance of that.
Andy Lapsa
All right, come back to it later.
Mo Islam
I’m excited to have you back. Congratulations on everything you’ve done, everything you’ve built. I do hear nothing but amazing things about the company and about you and how you’re building the business. So you’re definitely doing things right.
Andy Lapsa
Awesome Mo, thank you so much for having me and for sure be happy to jump back on.
Mo Islam
I appreciate it. And do think about that question about who’s playing you because I’m going to ask it again in a year. OK.
Andy Lapsa
All right. Frankly, what I’ll do is out, I’ll outsource, I’ll crowdsource that one. All right. Thanks Mo.
Mo Islam
Okay, perfect. Alright, till next
