The Pomp Podcast - #1180 Delian Asparouhov | INSANE: Space Factories Are Coming!

Episode Date: March 29, 2023

Delian Asparouhov is a principal at Founders Fund and the co-founder of Varda Space Industries. In this conversation, we talk about building space factories, what is going on in the venture investing community, why Delian believes more people should be starting tech companies, AI, and bitcoin. This conversation was held at Lyceum Miami. ======================= Pomp writes a daily letter to over 200,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

Delian Asparohab is a principal at Founders Fund and the co-founder of Varda Space Industries. In this conversation, we talk about building space factories, we talk about what's going on in the venture investing community, and also why Delian believes more people should be creating companies, especially tech startups. I always enjoy talking to Delian and this conversation was no different. It was filmed live at Lyceum Miami, which is a conference that I hosted earlier this year. Here is my conversation with Delian Asparohab. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows.

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or in the cases of many men, you may have some leakage. If this is something that's affecting your quality of life, there are really good solutions these days. Depend makes the guard and the shield. The shield would be if you have some leakage on occasion, if you have heavier leakage, you could use the guard. I think a great place to start is that you have tons of hot takes on Twitter, but really the hot takes come directly from a degree of independent thinking that is hard to keep, no matter how much

people kind of keep hitting on you. Every time that we talk, I think that there's some new idea that we debate, that we're considering. There's somebody that we know that said something that sounds insane, but like, it's actually interesting. How do you think about the ability to think independently in a world where that is becoming more and more rare, but also there's more pressure not to do that? It's a good question. I mean, I think definitely there's a part of it that helps knowing that there's very limited professional threat to me thinking through crazy ideas and expressing opinions. Like a lot of times when I, you know, I'm debating or chewing on a particular idea, I'm typically doing it with somebody else that is like, you know, helping me think it

group but they may or may not be able to actually like go out and talk about it explore it because like they actually will like literally have their job taken away if they do it versus you know working for you know peter founders fund and starting your own company it's like real tough to find the line at which one would get fired and so i think there's definitely a part of it that is like you know having that type of uh i don't know professional financial security um i think another part of it is you know i was born into and your wife as well into a very you know sort different culture than what the united states has right you know i was originally born in sofia bulgaria um and you know when i try to describe to friends what the culture of bulgaria is like

i always try and tell them like imagine yourself kind of transported to like 1960s u.s but obviously like sovietify it everything from like the gender norms to like the way that people communicate to one another it is just like so far off kilter in a way that actually i do think like changes how you think and then being aware and present of this like completely different culture that i grew up But also in the United States, it makes you start to realize that there are these just like almost like, you know, walls you build up based off of like where you're embedded into and where you spend all day with. And having these two different viewpoints makes you realize that all the walls are actually kind of fake and allows you, I think, to traverse much more easily than if you're like born and raised into a single individual culture. And so I think those are the two things that probably like influenced me the most. As an investor, a lot of the investment returns over the years have come from either ideas that seemed stupid in the beginning.

they seemed impossible or they seemed kind of like it's not stupid it's not impossible but like it's not worth working on maybe is kind of the way i think about it does that create like this economic incentive to basically have to think independently and have to go outside of the consensus because there's not really returns in the consensus thinking yeah i mean uh you know peter always gives this really great you know framework where we repeat on a regular basis at founders fund which is if you take a two by two grid and you have like non-consensus and consensus and you have right and wrong. Ultimately, there are a variety of different ways of making returns. Consensus and right is a place where actually there's a decent amount of returns to

be made. Take companies like Uber, for example, relatively quickly in Silicon Valley, very rapidly became consensus. And so it's actually in some ways quite difficult to make returns. And if you look at it from series C onwards, those investors actually had pretty shitty IRR. And so it's one way to make returns. You can be consistent and wrong, and you just look like an idiot. And the only real place to make massive returns is non-consensus and right. Now, ultimately, for a company to like succeed at the grand scales it eventually has to shift from non-consensus to consensus so like spacex which founders fund was a very early investor in is a great example of this of like super non-consensus even up until like 2012 13 and then very rapidly shifted on a

dime and then nowadays it's basically like the hottest brand name on the planet but like when founders fund originally invested in 2009 was definitely not and so i think about that with like if i look at you know in the past i've been a venture capitalist now for about you know six years or so my two best performing investments were extremely non-consensus at the beginning And they actually had some interesting parallels to one another where basically both companies, one was Ramp Financial, this corporate card competitor, corporate card competitor to Brex, and then Sword Health, which is this digital physical therapist. Both companies, when they were founded, effectively at their seed series A, had an incumbent tech company that had over a billion dollar market cap, had massive investors around the cap table that were all tier one and had a ton of momentum. It's every single time, any time that I brought

either of those investments to committee, both times my sort of colleagues were like, what are you doing? Why would you go after this behemoth that is clearly doing super well? And it's not like a behemoth that's like Amex that is like super antiquated and there's clearly angles of tech.

You're going after like a tech-enabled behemoth that has a ton of momentum, talent, funding, et cetera. And in both cases identified that I thought there was something basically fundamentally wrong with the product. And that ultimately the founders that I was betting on had better engineering and product discipline. And that would ultimately play out

over the course of the following five, six years that would lead them to have differentiated sort of performance. And so if you look at it both, you know, Ramp and Sword Health, I think are truly outcompeting the like incumbent tech competitors, Brex and then Sword Health, Brex and Hinge Health. Now, I thought that was interesting form of like contrarian thinking, but it was one of these things where it's just like, you know, I approached a set of investments that just other people

were deeply uncomfortable with because it was sort of thought of, you know, the consensus view was, oh, those markets are already fully tapped out. There's no more alpha to be had there. So if I look at my like career, a lot of them are either like go into areas that nobody's fucking comfortable with. i like space manufacturing so there's like clearly no incumbent or going to areas where like the incumbent has proven that there is a market there but like are clearly not going after it in the

appropriate like pattern when you see those companies uh kind of grow so quickly even though there is the tech incumbent who to a non-tech incumbent looks like the challenger right how how much does that reinforce the idea that like it's all about the execution and the idea doesn't nearly matter as much versus like no the idea really did matter but the execution is you know as important, if not more important. Yeah, if there's one thing that I feel like I've learned over the last decade is like, all that matters is that early team and DNA that you put together. Like take the company that I started, Vardis Space Industries.

The idea of microgravity manufacturing, the particular materials that we're going after, has been discussed and thought about every single decade, basically since the 1970s. And a significant, you know, sort of financial pursuit was, you know, gone after it. So like the 1970s, we, you know, funded Skylab, Senator Bill Nelson, the current NASA administrator,

was literally up there doing a protein crystallization experiment, trying to figure out whether or not that would be something that could be brought to market. In the 80s and 90s, you had nonstop, basically, projects going on in the ISS. In the 2000s and 2010s, there was an early set of venture-backed companies made in space, a few others that basically got started.

And so it's not as if the idea is particularly different than we're pursuing. It's just the fact that we are pursuing it maybe at a time that is different. But I think, in particular, the reason that we're able to recruit the team that we're able to is because the time is different. But then, ultimately, that team is what makes it absolutely

out-execute. And it's one of the things where it's like, when you put that initial sort of group of like 10 people together, it ends up self-replicating and it's almost impossible to steer it sort of off course, even if you wanted to. And so, you know, if there's another thing that I've learned is like,

once I start up as past 10 people or so, the sort of like, you know, end outcome is effectively baked in. Like there's limited amounts that you can do either as a founder or as an investor to really influence it at that point, if you haven't made that right call in the first time. Yeah.

I'm an investor in Varda. You guys continue to do a great job, but talk a little bit about time as an important part as well, because one of the things that is interesting about this business specifically, there are certain technologies that are available now that previously weren't.

There's also this like sexiness around working on space related technologies because of a SpaceX. There's also what I would consider like fertile recruiting grounds, where like maybe somebody went to work at SpaceX or another space company for three, four, five years. Now they're like, hey, I wanna go earlier.

And so you're able to kind of capitalize on that. Like, how do you think about time? And do you think maybe Varto wouldn't be nearly as successful as it has been already and hopefully will become if you started maybe even just like two or three years before you actually did it. No, I think the timing is critical on this stuff. Like if you look at the early teams that started

the most influential aerospace companies in like 2008 through 11, they basically had no what I would call traditional like Silicon Valley DNA, except for maybe like one founder effectively that was like Elon bringing the capital to the table. But if you look at the broader team that Elon basically recruited, none of them had worked at like Silicon Valley companies. They'd all been at, like, NASA, you know, Aerojet, Rocketdyne, basically, like, working at, like, you know, defense contractors. And he was the first one to, like, sort of put them together.

Same thing with Planet Labs. It was effectively a bunch of, like, basically ex-NASA, you know, engineers that put it together and got venture capital. But, like, they themselves had no, you know, sort of Silicon Valley DNA. And a part of it was at the time it was not thought that sort of Silicon Valley, you know, sort of venture funding was at a scale where you could pursue these types of super ambitious projects. Compare that to, you know, even 2017. You still kind of have that be the case. like the next set of startups that got started are like Relativity is probably, you know, the most interesting one from that era, Astronis. Those were founded by people that, okay, maybe had

worked at like SpaceX for two or three years. But again, like, you know, they didn't have like Silicon Valley, you know, type DNA. It's only in like 2019, 2020, where I really started to notice two things happening. One was you actually started to have people that were like, you know, sort of top tier Silicon Valley operatives going and joining SpaceX, which I'd never seen before. So like the example that I like to pick is one of my, you know, friends was one of the very early employees at Opendoor, I think like number six or seven or something like that, went and basically was head of all international business development for Starlink. I was like, whoa, the DNA is starting to cross. And then when starting Varda, my two co-founders, very much so aerospace,

but basically our very first hire, who is now our chief business officer, he was straight and narrow, basically Silicon Valley. He was first 15, 25 employees at Stripe, led business development there. Then he joined Zipline, another Silicon Valley company. His entire DNA was basically Silicon Valley. And I think a lot of what ultimately makes Varda successful is the fact that we started the company in 2020, we built that company and the early team in 2020, and now is the very first time we're like Silicon Valley and aerospace intersecting.

That makes it so we can tackle a more complex problem that does actually require skills that aren't just strictly basically aerospace skills, right? You do need to build the satellite, the factory, et cetera, but there's a lot of other things that involve traditional sort of business development, growth, et cetera, that are much more applicable to like Silicon Valley type companies

than they ever were to SpaceX, because SpaceX ultimately really only like sold to the government for a very long time. Explain what you guys are trying to do with Varda and kind of when successful, not if, when, what the ramifications of that are. Yeah, so Varda was predicated off a very simple thesis that I can't even take sort of full credit myself for.

I give a lot of credit to probably Robert Zubrini, where he wrote this book, originally that actually inspired Elon way back in the day, The Case for Mars, which was basically like, how do we get to Mars? Elon read the book, interviewed Zubrini, got really excited. I think he even had some early SpaceX shares. Zubrini followed that up.

That book was basically published in 1998, I want to say. He followed it up basically 20 years later with this book called The Case for Space in 2018. Highly recommend reading it. But he basically goes through what does he think the future of space is looking like. And in it, he actually does specifically talk about this business model around in-space manufacturing

for goods that you don't necessarily use up there, but actually bring back down to Earth. So this isn't like build space hotels or infrastructure like a lunar base. This is, hey, there's this set of materials. And he analyzes three different use cases, fiber optics, semiconductors, and biopharmaceuticals. Now you might wonder, why the hell

would you go through the expense and the pain of sending biopharmaceutical up to space and then bringing it back down, well, it comes down to this very simple reason due to physics, which is in space, when you're up there, you're experiencing what's known as microgravity. What that means is you're basically orbiting the Earth fast enough that you basically have a centrifugal force that is perfectly equaling out

the gravitational force on literally an atom by atom basis. And that actually changes a lot of how chemical reactions and a variety of different transport and convective mechanisms basically work in space. The simplest analogy that you can use is if I lit a candle here in front of us on the table, you're taught as a kid when you put your hand above it,

the hot air rises. Now, why does that happen? You basically have a combustion reaction that is transferring thermal energy into the atmosphere around it. That atmosphere is then gaining kinetic energy. It then becomes less dense. And what happens when you're in a gravity field,

where we're sitting today, the less dense gas basically rises to the top of the room. And then the more dense gas basically shuffles in basically to replace due to the negative air pressure. And so what happens is as a candle, you basically have what's known as like convective currents, right? So that's why when you put your hand above a candle,

the hot air rises, you can feel that heat. Take that same experiment and do it in basically microgravity, what happens? You still have the combustion, you have the thermal energy, but there's no up, there's no down. So that less dense gas that forms around it basically actually just slowly dissipates the energy into the rest of the room.

And so if you put your hand above a candle in space, you don't feel any heat, at least not for a very long time, until it very slowly dissipates away. Interestingly enough, the candle actually in space will go out after a couple seconds, because on Earth, the candle actually relies on those convective currents to bring it net new oxygen keep the reaction going. So if you take that sort of macroscopic analogy of a candle and take it to

the microscopic level of like a particular atom that you're trying to place onto a semiconductor wafer or into a fiber optic or a molecule they're trying to fabricate in a particular way in a biopharmaceutical reaction, in all those cases you typically are applying some level of heat into that reaction you're trying to place a molecule. When you do that on earth there's basically constantly these convective currents that are moving the molecule around that affect it in a sort of chaotic unpredictable way that basically lower the quality of the good versus is if you do that same thing in space, you can actually very precisely basically arrange and place

the molecules. And that allows you to create super high performance semiconductors, fiber optics, and basically versions of drugs we can't actually make down here on Earth. And so I think in some ways, the way that I like to say, if VARTA is successful, ideally call it no later than five to six years from now, there will be a life that we can point to to save due to a drug that was only

possible to be manufactured on Earth. So as you guys build this, you have a very specific mission. You have a very good idea today as to what you think is possible once you get there, once you kind of do all this. One of the things that's interesting about SpaceX is I was at Facebook in 2014. Internet.org was a huge effort. And at the same time, there was Project Lunar,

a bunch of stuff at Google. They were trying drones. They were trying hot air balloons. Literally, should we drive trucks out into some African nation and put up a mobile receiver? all kinds of things like get internet to people somewhere on earth uh the critics would say that's because they were running out of people to sign up and so they needed more people to have internet uh they would say hey we're trying to bring internet because it has all this like economic

value they both were unsuccessful for the most part in doing this uh even though they were pouring tons of money uh tons of intelligent people like all this effort whatever spacex like snaps their fingers essentially and kind of backs into the starlink which is solving a very similar type of problem they don't talk about it necessarily the same way totally same problem though but but they basically said hey wait a second we can put satellites up why don't we just beam the internet down and so i look at that as like one company was very focused on accomplishing this for business reasons the other one kind of seems at least from afar like they just backed into it and it ends up being this big multi-billion dollar opportunity is that how you evaluate that playing out and then

are there things with varta that maybe you guys have thought about but you're like we'd have to get up there and see if it's viable yeah i think ultimately if you look at like project loon etc and some of these, you know, other, you know, internet access projects, they ultimately were coming from a place of, like, social good, non-profit, etc. But ultimately, you know, one of the core philosophies of Varda is that, like, the only incentive that ultimately affects change in the world is economic incentive. And without that, you're just never going to affect sort of true change. And so a lot of the prior projects trying to work on in space manufacturing sort of have that similar feel to the, you know, sort of Google Loon, you know, type projects where

they're trying to pursue it, they're maybe trying to make some drugs in space, but they're doing it for the good of humanity, et cetera, et cetera, versus for a pure economic reason. And ultimately, the reason that SpaceX was doing it was because they were going to go out of business. Otherwise, they needed something that could justify a valuation that was far above launch. It's an interesting market, but it probably

gets you capped out at roughly $5 billion in market cap. Elon clearly wanted to build something much larger. And so it was through economic desperation, retrofitting it, and talk about the Mars vision, et cetera. But ultimately, if you talk to the folks at SpaceX, they're clearly just trying to make money, whereas the people of Project Loon were never really just trying to make money.

And so Varda's one-liner mission that we actually started the company with was expand the economic bounds of humankind. We are doing this purely for economic reasons and trying to make it so that there is economic activity outside of space. The upside of that is if something like Varda does work, we do start to produce drugs or semiconductors or fiber optics

at scale in space, then the economic implications of that, I think, are very interesting to humanity, where I actually tend to believe shooting a large rocket towards Mars, the moon, is unlikely to make it so we have a multi-planetary presence. The only way and the only incentive that gets people out there is ultimately economic. Because like the lunar base, you know, if you think, you know, oil rig workers got to get paid 500K a year to like spend two weeks a month, you know, on an oil rig, the moon's going to be a lot worse. You're going to pay people a couple million bucks, you know, a year to justify that because not the easiest flight up, down, and not the, you know, sort of prettiest, you know, environment around you.

And so I tend to think, you know, if VARD is successful, that's what we'll need is like sort of compounding economic activity where you start with small factories, then bigger factories. Then eventually we're consuming so much water that we're like, hey, we'd actually make like a lunar ice mine and start to get the water from there. And then once you're starting to expand that, then you can eventually start to think about, okay, what are the economic incentives and why go pursue Mars, Jupiter, et cetera, the rest of the solar system? One of the things that I think I appreciated as you guys started the company was this idea that you're mentioning around Google almost had like, they were choking on money, right? Like there was so much money that Google was generating that they started thinking to themselves

like, where can we stuff it? What can we do that may be something else that's interesting? SpaceX, on the other hand, you called it economic starvation, right? Like they literally were starved of resources and they had to figure it out. And so it was kind of innovation came out of this need. Startups, for the most part, are usually starved of resources. The last two or three years, not so much. And you and kind of the way that you built the business, where you work on the venture side, the network that you have, you could have raised a hell of a lot of money for this thing.

You didn't do that. And so talk through a little bit as to, like, the discipline of really embracing, like, the milestone-based funding of venture capital and, like, why kind of not just go raise $100 million and say, hey, fuck it, let's see what happens. You know, I will say in the grand scheme of things, we did raise a boatload of money. But, you know, mostly, you know, put it aside in fixed income interest accounts that, you know, basically cover a decent amount of our burn. And I think it took some, you know, discipline. and I even credit my co-founder. It was funny, we were going through this interesting argument over the past two or three days

about what ultimately amounts to a $30K per year expense. But the fact that we actually debated it back and forth was so interesting to me because I relayed this anecdote to him. I was meeting with this investor in Miami. And this is like, I won't name them by name, but they are a very solid space tech investor that had some pretty great performance.

And he was catching up with me about Varda. And at one point I was talking about, I was in DC last week meeting with some Space Force, Air Force generals, my flight got delayed on the way back. And he was like, oh, why didn't you just fly private? That way you didn't have to deal with commercial delays. And I was like, bro,

what liquidity? He's like, well, Varda, you guys have raised enough. Why doesn't Varda pay for the private jet? And my jaw literally just completely dropped. And I was like, is this guy fucking serious? And he wants to invest in Varda? Like, you don't stand. Like, we were so clearly, and I think he started to sense it too, that I was so deeply uncomfortable

that I froze for so long. And so I was joking with my co-founder. I was like, bro, somebody asked me if we were going to take a private plane to, like, Washington. We're debating this, like, 30k a year, like, you know, investment for, like, you know, over an hour. Like, it's just completely, you know, sort of different worlds. And in some ways, honestly, I credit to my co-founder. I think he's done a great job of, like, you know, I think I've generally been economically disciplined, but he, even more so than I, is extremely, extremely scrappy. Now, with something like Varda, SpaceX, etc., there's no way to do it with, like, true scrappiness, bootstrap, etc., you know, the equivalent of, like, what people

have done, you know, in software. Ultimately, in order to build a satellite, in order to fly it, in order to get onto a SpaceX rocket, you're talking about millions of dollars by default. There's no way to do it without those millions of dollars. And so I think we take a prudent approach of like we did raise a boatload of cash at a time where like interest rates were super low. I talk about this sometimes.

Part of why I started Varda was in like May, June, 2020, I was chatting with my partner and sort of mentor, Keith, our boy, about how frustrated I was that we weren't investing that much and didn't have that much money on our hands. And he was like, well, you should think about what you could do in this period of time,

maybe start a company. And I literally tweeted this idea out where I was like, hey, in a low interest rate environment, This is probably one of the best times to start hypercapital-intensive businesses that maybe would be viable in a couple of years, but sort of low-interest environment is actually bringing that sort of future forward. And literally, I tweeted that out, and then I thought about it for like 24 hours,

and I was like, fuck, I've got to start this space manufacturing company. I'm so screwed. Talk about attracting your co-founder and kind of building out that initial team. You said earlier that the first 10 employees basically are the death sentence or ultimately will be the tailwind. And where do you find those 10 people? How do you vet them? What do you look for when you go after talent?

Yeah, starting Varda, I was sort of very nervous going into it. There was even a period of time where, like, you know, with some pillow talk with my then-fiancee, I was almost, like, about to back out. And she even encouraged me. She's like, Dallian, like, this is going to be your life's work. Like, you really got to stick with this. And the reason that I was so nervous was I started my first company

maybe about basically, you know, four, no, six years prior to starting Varda is when I started my first company. And it effectively failed miserably in the grand scheme of things. we got to like ramen profitability you know type revenue went through a combinator raise a small seed round but you know return no capital back to investors um you know no major you know sort of outcome for anyone we ended up just like selling you know the software to one of our customers at the end um and so when i was starting it i was

like man i've got this like really great gig where i'm investing there's a huge opportunity cost to like starting a company especially since like as an investor if i really wanted to start something like i should really make sure that there isn't something else out there that i can just invest in because like you kind of get the same economic upside as like starting it um you don't have to either sort of spend as much time on it but ultimately couldn't find anything and so i was like okay if i'm going to do this and i was like a big if for me at the time i was really reticent i was like i need to find the perfect team and there's sort

of two you know pieces of dna that i was looking for one somebody that was like a scientist that had done microgravity manufacturing before but like wasn't so deep in academia that their like mind was corrupted by like just wanting to publish papers but like really wanted to bring a product to market um and so thankfully actually that one you know in some ways like found relatively quickly but the other one was even more critical because i realized a lot of the company ultimately while it was this like microgravity, you know, pharma, semiconductor, etc. You couldn't do that unless you built a good spacecraft to like do the whole manufacturing portion of it. And so I realized there's like the most critical component that a lot of my engineering friends told me was

actually that re-entry vehicle. Basically, if you do, you know, anything in space today, especially on the ISS, like microgravity manufacturing, you kind of get a free ride down from the government. They take you down on the crew of the Cargo Dragon, the Soyuz, the Cygnus. There's a couple vehicles. If you're off and on your own doing your own independent microgravity manufacturing, you got to bring those materials down. That means you got to build your own small scale re-entry vehicle so i was like i need specifically somebody who is an engineer that has worked on a re-entry vehicle has like leadership experience so a bunch of people follow him because a lot of the first 10 people are going to need to be people that have also worked on the re-entry vehicle with him

in those other sort of domains of engineering and ideally has entrepreneurial spirit because like this person probably needs to be the ceo ultimately of a you know largely spacecraft company you need a spacecraft ceo and so thankfully i had a couple buddies from it that went to spacex after college basically like mine through their networks gave them my list of criteria and Thankfully, after about two months or so of interviewing various candidates, I came across my now co-founder, Will Brewey. Literally, if you look at it, it matches the exact set of criteria that I had. He basically worked at SpaceX for seven and a half years.

He was in mission control flying several of the Dragon missions to the ISS. He had worked on the avionics team there, building out the early avionics. Ultimately, the number one thing that I did in that first year of 2020 was convincing him that he should join me and start the company and incubate it within Founders Fund. Beyond those initial three co-founders, there was then the first set of the broader team. credit mostly to my co-founder for like call like eight out of those next 10 were basically all his recruiting and largely honestly just the network of people that he worked with at SpaceX which

just made it so that that risk of that first 10 being like you know a sort of killer outcome versus death now it was a lot easier because like he worked if you look on average the first 10 employees at Varda you know they had probably worked with our CEO for five and a half years or something like that on average which is like very difficult to do if you're like a fresh grad out of school or if you've been hopping you know job to job but he had this like extremely deep network there's basically like one bd person and one ops person i basically helped bring in in the very early days and so i think that's what really set it up for success was like aiming for a co-founder that i knew specifically both had a skill set but then also a network to then build

out that first time getting the right people there is important um but the culture that you build the the actions of what you do uh early on is really important i know one thing that i think you've borrowed from the ramp guys is counting the days since founding the business. And I love that. I try to tell every single company, I'm like, dude, I don't understand why. Just put this on and count and it will make you do shit. And so are there other things like that that you guys have done to either reinforce culture or specific actions that you're like, again, maybe you understand why it works or maybe not. But if people do this, it seems to have this kind of push to actually be more productive or get more done yeah one of the things that i really like that in some ways is a

corollary to the you know counting days thing so this you know habit that uh you know pomp is talking about is the very first ramp board meeting that i went to they basically put day 33 of the business and then every single board meeting after that they would talk about it in relation to like the days and the average like you know sort of progress they'd made per day and so definitely you know took that at barter one of the ways that it plays into something like an aerospace company versus you know a corporate card company is um you know how you think about sort of launch schedule and how to track things and me and my co-founder really talked about this extensively um when we were first starting the company about you know he'd obviously been at

spacex for an extended period of time that was basically largely his only professional experience i'd been in a couple different companies but largely an investor so obviously most of the corporate culture was going to come from spacex especially since we were bringing eight of the first ten were also going to be spacex so we talked about okay like what parts of spacex culture do we want to have and what do we not the first that we like quickly read on was like look spacex works very hard but they sometimes go to the level of like kind of being an asshole so like let's get the like hard work ethic of like spacex without the asshole side of it and the second was, how do we think about and communicate launch schedules? And at SpaceX, there's actually

sort of two launch schedules that people maintain at any time. There's one, the like Elon prettified launch schedule, which they're never going to hit, but they just upward manage and make sure that Elon sees something pretty. And then there's like the real launch schedule that everybody manages day to day. And our whole thing was like, we are only going to maintain that real launch schedule. And it comes with trade-offs of not having any super aggressive sort of fake schedule or being willing to push things back. So if you think about it for our first mission, one thing that I think my co-founder has really instilled into the team is like the trains take off time. We basically committed to our investors when we started the company. We were going to be

launching two years and a quarter from the founding date, our very first mission. We're basically roughly there now. We're actually launching in about, you know, two and a half months from today. And ultimately, it did come with trade-offs where, you know, as we started to approach like a year out from the, you know, sort of mission, we had a set of engineers that wanted to work on a project to sort of like think of it as like increase the feature set and the capabilities of the vehicle. But it came with some associated risk of potentially not being able to hit the launch deadline. And ultimately, we made the call like, look, while our customers might value of that a lot while we might be able to make more money on mission one if we did include these

features we are not going to do it because ultimately look the trains take off in time the trains take off on time there's a train that hits you know three months from today and then there'll be another mission that launches six months later we'll make that one the more fully featured one but the important organizational habit to build is not building the most fully featured sort of version of the spacecraft on day one but instead just making sure that it launches on time and building that muscle of launching on time will make it so that over time your spacecraft is much more capable because you're just launching it every six months super consistently And that type of iterative design culture ultimately actually stems way back to like the Apollo days.

And, you know, I think SpaceX has done a great job of sort of, you know, reinvigorating that and bringing it back to aerospace after, you know, aerospace kind of lost its way for a couple of decades there. So I think, you know, the corollary to the days thing around like maintaining launch schedule and that being sort of the ground truth and sacrificing. And ultimately, I think any sort of principle needs to have the counter principle of like, what are you sacrificing? If you prioritize, let's say, peer-to-peer kindness at a company, it comes with a trade-off of, well, maybe people don't get the feedback that they need to grow. Or if you prioritize hours in the office, it comes with a trade-off of potentially people burn out at certain times. And so I think it's really important when thinking about the principles of your company, practically thinking about, I think too many times people will be like, I want my company to be hard work ethic and integrity and et cetera and this. and it's like all these like positive things but it's like okay of course everybody wants to be the most perfect positive version of themselves but you need to think through what are the principles

that actually do come with realistic trade-offs that when it comes down to a particular decision the employees have thought about it they know about that fundamental principle and are making that trade-off because like ultimately my co-founder can communicate it but like if there's three engineers in a room that are debating about a particular technical problem and there is that tension of hey should we build this feature or should we make sure that everything ships on time he's not going to be there in the room every time but making sure that people know that that is the trade-off that we make that we say hey we ship on time and we'll deal with the like extra features later um i think it's really important how have you changed your investing style based on things

you're learning as you're operating a business especially one that is i mean pretty dead on right it's a tech startup with venture capital funding that you're uh seeing a lot of success with it's growing in a very fast rate like all the things that you'd want to see in the companies you're investing in has it made you a better investor has it made you make less investments but more concentrated like what's changed yeah it's ebbed and flowed obviously you know of the six-year career in venture two and a half for Varda so a significant portion of it you know sort of has been Varda um the very first year initially enough was like my highest volume year and I think it was a combination of obviously both it was the 2021 financing you know environment so

you know there was a lot of deployment happening across the board um and then also it was the fact that like you know especially in the early days of Varda there was a lot of attention and a lot of founders that were super intrigued by it and wanted to work with me on it and uh with me because of it. And so there's a huge increase in sort of top of funnel and conversion rate in the investments that I wanted to make. You know, there's some things that I think have stayed roughly, you know, the same and that as I assess founders and think through them, I don't think it's actually changed, you know, that much with, you know, you know, starting Varda and that like, you know, I assessed my co-founder of Varda and I'm very happy with that, but it's not like it's

given me like an infinite number of reps. The one area that I think it has is like, I do really obsess now, you know, this doesn't really work for a pre-seed or seed company where it's just the founders. But now anytime that it's a series A company, I was never as diligent about this before but now i literally go through the linkedin of like every single employee and you know you can't perfectly gauge somebody off of their resume but you have a decent sense on average of like what is the quality of people that this founder is able to attract to their company and you know generally if i know their prior background the companies that they worked at i can even go start to reference like i never did this before i'm now start to reference like random engineers basically

at a series a company and use that to basically gauge like what is that bar that our founder is recruiting towards and so i think that's one tactical thing that has really changed and the Second is, in the world of, let's say, more strategic BD, and especially with the DoD, I have a much more intimate sense of what those deals take to get across the line. We have a big one that we'll be announcing March 15, so look out for that in Bloomberg. But it was supposed to happen two days ago,

so I was hoping we could talk about it today. But unfortunately, I'm still whatever, on the exclusive. So anyways, coming soon. But I have a much more accurate ability to assess what is that contracting process looking like and how is that company going. And then there's also some amount of tactical, I know a lot more about spacecraft

than I did three years ago. I'm not a spacecraft engineer myself at any point, but we have this habit of, at the company, everybody sends a sort of, roughly call it, two paragraph long weekly update of major accomplishments, et cetera. And I am religious about, even though we're now at whatever, 65 employees,

so it takes me a solid two and a half, three hours to read every single week, I do go through and I read through it and I really try and understand exactly the engineering problem that every single employee is working on, partially just for making sure that I feel like I have a really good sense of the business,

but also it's one of the best ways to learn about aerospace is like, how are these engineers thinking through the very problem that like my company is trying to solve? When you think about the economic environment, 2021 is all you had to say on the way up. Now, a little bit different. You all seem to be very methodical

and kind of the bar maybe has risen in terms of what you guys want to fund and what you don't at Founders Fund. Talk a little bit about how you're thinking. Yeah, I mean, I think, you know, honestly credit to our GPs, you know, Peter, Keith, and etc i think for being very you know it's always difficult with these things to perfectly let's say you know call it and you know can you actually predict it maybe maybe not but you know

ultimately i think founders did a great job of in you know q4 q3 of 2021 we ended up distributing more capital than the total amount of capital that the fund had raised since lifetime which i think is very rare for venture capital firm especially as you're growing because you're talking about like the funds that are returning all that capital were like much smaller than the funds that we're raising today and even then the rough math is like the firm has probably raised $13 or $14 billion or something like that, and we basically returned that amount of capital to LPs just in those two quarters.

After that, we quickly realized that the markets were deteriorating, and at the end of the day, while we are very long-term thinkers and still aren't letting short-term market dynamics affect how we invest, ultimately there is this downstream financing risk that any company takes on, and while we are multistaging people all the way, We do need to sort of underwrite what are the potential downstream risks for these types of companies. And so we've definitely slowed down our pace and have been much more judicious.

But at the same time, it's not like it's stopping us from tackling capital-intensive companies. Just last week, we co-led the seed round for a highly capital-intensive, risky, basically aerospace defense company. They're basically building long-range, think of it as a competitor to predator drone-type things. And so, you know, we definitely have slowed down and we're more deliberate, but it's not as if we totally, totally stopped. And I think we'll start to pick back up again, especially now that, like, I think the bid-ask spread in the market is really compressed. If you look at, like, the, you know, call it Q2, Q3, Q4, 22, I still think there were a lot of founders that both had this capital overhang. So they didn't have, like, a need to raise for their business. And maybe some, you know, rosy-eyed hope that, like, you know, things would, you know, quickly return and bounce back.

Now, as I think founders are starting to get into desperation mode where there's just much lower runways, People are starting to realize that the markets aren't necessarily balancing back. There's a willingness to sort of accept term sheets at pretty reasonable prices. And, you know, I think we're very optimistic that this is going to be one of the best ventures of all time, where I think there's such a broad swath of industries that tech startups are now tackling, right? And the dot-com, you know, bust. Tech companies were basically just like, you know, LinkedIn tackling, you know, sort of social media. Again, SpaceX was still a couple years later.

Maybe Tesla was around then. But it was a pretty narrow set of problems that they were tackling. Now, you know, the startup world is basically tackling every single problem on Earth. everything from like you know logistics space you know enterprise infrastructure you know just everything is being touched by software startups and so i think it's a really attractive time to be investing there's two other areas i want to talk about the first is bitcoin crypto you are one of the only people i know who was i don't say critical but like you definitely weren't super excited about it and i remember you went and i won't say who it is but you went and met with

someone and then you started tweeting and you were like hey i'm trying to do this it's broken who can fix this and then like it was like literally watching you debug problems live on twitter and what i took away from it was like oh like whether you come out of this optimistic or not like you did the work which could is a lot more than i think people who just kind of talk on the internet do where do you stand now on like are there areas of that that are exciting to you not exciting to you if people read your twitter they know that like the really speculative crypto shit is uh probably not your favorite but like where do you lay yeah i don't know if you uh noticed uh but uh on twitter somebody tagged the two of us i think like 48 hours ago or something

oh i basically had a screenshot of an old tweet of mine which was you know i'll try and roughly paraphrase it but it was like i'm glad the world is finally realizing that you know the future is basically american dynamism and like you know reshoring uh you know manufacturing and you know bringing america to the frontier and you know keeping our national security and then all crypto is basically a scam so i look forward to pomp and dummy chatting i mean are you wrong uh i don't think i'm too wrong uh yeah i you know the the weekend that you're talking about where i played around with crypto basically i had a friend you know talking to me uh about defy specifically and my mom's actually an economics professor so i spent a lot of time she actually is in this world

of what's called experimental microeconomics so what she does is she actually sets up fake market environments pays basically you know undergraduate and graduate students actually trade in that market and actually gives them financial incentives of like ultimately if they do make the most sort of like money off of their trades in this like artificial stock market where she controls the interest rates, the inflation, the news that comes out, what earnings reports are, then ultimately, the students actually do make real cold hard cash. So I thought a lot about, I literally

helped my mom build this software interface that actually helped liquidity and make trades. So the concept of DeFi and actually being able to do this decentralized liquidity pool that allow you to trade into asset classes, I did find extremely intriguing, theoretically, over lunch. And then, yeah, I spent the full weekend. And I was like, OK, I have a Coinbase account.

It shouldn't take me too, too long to figure this out. literally spent like eight hours going from like that to i think like contributing to a liquidity pool to getting this like you know weird fucking qr code that i was like i don't know what to do if i scan it it just takes me back to the qr code and ultimately like figuring out how that actually like gave me some sort of like yield and it was just like an impossibly difficult user interface and it's one of these moments where i was like in theory this stuff like could have some like potential practical applications we're like we're so so far from it and it's one of these things that is like it's so hard to as i'm sure as a crypto founder not get caught up in the speculation

use case because that's the thing that makes the most money and it's the thing that the users are most interested in so actually trying to build something legitimate seems like almost like an impossible task and like all these like crypto investors that are like still talking about their stuff they're talking about like oh like gaming is like the future of like you know bringing crypto the real world i'm like bro i fucking game like way too much i'm addicted to video games there's no chance that crypto is going to be like integrated in these video games and that's an all an interesting use case and that's like you're betting the hope of like the future of crypto and it's just like store of value and speculation great use case let's just like stick to that

everybody should like quit their crypto jobs and just like hold you know bitcoin or whatever for like the next you know decade and it's probably going to be priced out at like you know 50k a year or like the price cap of bitcoin is probably 50k and it's never going to get above that it's never going to like you know shift massively you know below 25k you think 50k is the top i think 50k is basically the top dude we hit 69k uh you know and never again maybe all right ai is uh all the rage now all the crypto uh bros have run over to ai i saw elon tweet recently he said uh i found this new ai thing after i left my crypto thing yeah or whatever he said um what what is uh what is the general sense around ai and kind of what you find

interesting there you know before we touch on that i i always think it's funny to you know i've now been in silicon valley or like the tech world which at this point is like an abstract concept i feel like you know we're at silicon valley it's miami valley yeah miami valley you know wherever but you know i've been in let's say like the tech industry now for like 13 years and it's so fascinating to see that like there are just like the exact same set of people over the course to 13 years that every two years are working in like whatever is like the hot new trend and the problem is you never capture any value doing that if it has become the hot new trend you by default are just like the grifter that is coming in way too late into the game and like you're not going

to make any money off of it which is fine but like it's amazing to see if these people really think that maybe like the sixth time around it'll finally work um and they'll you know find a way to capture value and i think it's this you know commentary that i that i think is important for people's careers i actually admire a lot what you've done over the past you know a couple years which is like you know i think called pre-2019 i think there were a couple different projects and things you're working on and i think ultimately sometime in like the covid era i feel like you started to recognize look like media interviewing like you know providing these you know conferences like this is ultimately like my core skill set that i'm differentiated ability at than anybody

else in the world and i'm going to lean into it and as i was driving over here uh towards miami beach i'm a big kite surfer and right now there's about 20 knots uh wind coming straight from the south and there was like these huge eagles that like looked like so majestic they were trying to like you know sort of feed on these fish that were in like the miami ocean and they were just staying afloat completely effortless and it made me think about like that is what a like ideal career should look like in that you should identify what is the thing that you are differentiated at better than anybody else in the world that sort of comes very naturally to you right that bird that's floating in the air it's not thinking about it at all it literally just sits there

in the 29 wind like opens it's like you know basically wings and it sits there until a fish basically comes then dive down dives down immediately if i try to do that i'm basically like exerting all this effort on my kite and like takes me like five years of practice to be able to do the shit that he's doing when he's born and so i think that's what you need to do when you're doing a career is like really focus on what is the thing that you're truly differentiated at that comes out naturally and just focus on that and sometimes that means look you know maybe you're not an ai engineer maybe just like stick to the thing that you're good at and then someday hopefully it'll be the thing that is hot in the world and that's when you'll capture all the value

right sam allman was not working on ai when it was hot he was working on it in like 2014 but he's been working on it super consistently since then and it's been his like life passion and now that it's hot he's basically getting to capture all the value you've been working on you know showing that you have a voice and are able to interview and maybe that wasn't like the you know hottest thing or whatever in, like, you know, 2019, but, like, dedicating towards that and finding that and making that your life's work, I think, is what allows you to capture the value. So on the AI stuff, it's, like, I think it's a very interesting field. I think all the people that are going to be capturing the value are the people that already started companies way before,

you know, ChatGPT came out. One of my best friends, this guy, Connors Wick, he runs his company Speak, which is, like, this, like, sort of AI tutor for language learning. And effectively, what it does is both, you know, recognizes super accented speech, so that if you're, like, a Korean that's basically trying to learn English. It can actually understand you if it's super broken. And it basically gives you a sort of like, choose your own adventure. You play like Hermione at Hogwarts,

and you basically talk to the thing. And it both in real time gives you feedback on how you're talking, and also guides you along through various subjects as you learn. He started the company in 2015. And it turns out he's been grinding, building a great user experience. As AI has advanced, the tools that he

has access to, the infrastructure that he has has improved. And of course, this year, as chat GPTs come into the world, Whisper just came out, their new speech recognition API about OpenAI, OpenAI leaves the largest funding round that it's ever had into his company. It's a series B, $20 million round, biggest check for OpenAI.

And he's like the hottest thing on the planet. The company's revenue is exploding and growing like crazy. But it's like, it's not something where he's like retrofitted and like come into the market super, super late and just decided, hey, I'm gonna build like a super thin layer and check GPT. It's like, no, he has like distribution, a brand, a set of like product, content, technology, a team

that's been working on this for like five and a half years and now is getting the acceleration of it. And I think a lot of like capturing value in a career is like sticking to your thing and then making sure that you understand what those underlying trends are. I started working on aerospace, semi full time in some ways in like 2017.

At the time, to me, it felt super obvious that it was gonna be this massive wave that was coming. If you just looked at how often SpaceX was launching, it was basically a perfect exponential curve. The likelihood that like something was gonna knock them off that track felt very, very low. If you look at it today in 2023, they're launching a rocket on average,

largely from Florida on every four hours, four days and six hours, which is like, I mean, it's just, it's incomprehensible. We launched more rockets in 2023 than like in the Apollo era peak rocketry that we would do over the course of like a full year. And not just in the first, basically like two and a half months of the year.

And so now it's just like a phenomenal time we work on aerospace. And so I think the AI stuff is like very interesting, but like, dear God, if you're in this room and you're thinking about pivoting your career to AI, do not do it. You're too late. Ladies and gentlemen, Deleon.

It was fun, good to see you brother. Thank you for coming.