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“Trust is not what makes successful co-founding relationships. Having the world-class skillset that you need to succeed is what will then form that trust that will allow you to succeed.” – Delian Asparahouv

Delian Asparouhov (@zebulgar) is Co-Founder, President, and Chairman of Varda Space Industriess, and he is also Principal at Founders Fund. He was previously Chief of Staff, then Principal at Khosla Ventures, where he created essays on the habits and processes of Keith Rabois. Before founding his first company, Nightingale, he was interned at Square as an Android developer.

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Chapters

00:00:00 – Introduction
00:02:43 – Delian’s background in robotics and path to entrepreneurship
00:07:32 – Mentorship from Jack Dorsey and Keith Rabois
00:21:43 – Leaning into your superpowers when investing
00:25:01 – Cultivating optimism in investing
00:29:29 – Common mistakes in venture capital
00:33:48 – Incubating a company
00:38:59 – Getting started in the space industry
00:42:09 – What is a space factory?
00:45:38 – Problem solving with space manufacturing
00:51:35 – Exciting changes in the space industry
00:55:43 – Recommended resources in the space industry

Links

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Manufacturing In Outer Space: Not Such A Far-Out Idea

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Dylan Taylor of Voyager Space Holdings on Building the Berkshire Hathaway of Outer Space (Outlier Academy, Ep. 5)

Check out our interview with Dylan Taylor as we discuss the future of space tourism and manufacturing, investing in space, and how anyone can get involved in space (even if they didn’t study science).

Space Manufacturing Companies

A great list of the current players in the space manufacturing industry.

Ideas about Space from TED Talks

Explore everything from the history of modern astronomy to the preparing for spaceflight in this collection of TED talks.

Is Now the Time to Invest in Space Exploration?

Nasdaq’s primer on investments in the space industry.

Transcript

Daniel Scrivner:

Delian, thank you so much for taking the time. I am thrilled to have you join me on Infinite Games. So, thank you so much for coming on.

Delian Asparouhov:

Thanks so much for having me, Daniel. Excited.

Daniel Scrivner:

We're going to spend today talking about a bunch of things. We're obviously going to spend a lot of time talking about Varda, space manufacturing, what that unlocks. We're going to talk about your path to co-founding Varda, which is through venture or through investing.

Daniel Scrivner:

But I thought a neat place to start would be ... I was doing research. I came across that you were on the robotics team in high school, and I have to ask about that. What was that? What was the setup? What were you working on? What was that experience like?

Delian Asparouhov:

Yeah, pre the robotics team. I used to be largely focused on competitive math. My dad was an IMO gold medalist. It's basically the most competitive of math competition that you can compete in, in high school. And he got the gold medal internationally. So, literally, for his year in high school, he was in basically the top eight math competitions in the world.

Delian Asparouhov:

I was tracking towards that decently well, but had this realization roughly 9th and 10th grade where I was like, "I'm not going to be as world-class at this as my dad was. I will be very, very, very good, but I'm not going to be top 10 in the world." So, decided that I needed to pivot my career into something that I thought I could be top in the world at. And robotics, and hardware, and mechanical engineering felt like that path.

Delian Asparouhov:

So, I had this crazy physics teacher in high school that I credit a lot of my early career success to. He was literally so bipolar that he would keep a little Dr. Jekyll and Mr. Hyde slider on his desk, so that when you came in each day, you knew which side of the equation he was going to be on that day. But he was an incredible physics teacher.

Delian Asparouhov:

For his AP physics class that I took, it was something like 25 students and 24 of them got fives, the highest score the one get. And then, one person got a four. The average, obviously, in the United States is the average. Most people just get three out of the five scale. And few people in the class at five. So, he was an incredible teacher.

Delian Asparouhov:

And he kicked off the idea, basically, our high school, having this robotics team. And pitched me on coming to join it as being one of the early software engineers. And just immediately fell in love. I think the first robotics competition is a really fascinating structure for high school students to actually have to ship and build things.

Delian Asparouhov:

And gave me such a great intuitive sense for just software deployment, actually shipping mechanical engineering, operating in a machine shop. Even four or five years later when I took a junior, senior-level mechanical engineering course at MIT, a part of that was a production engineering course where it was just basically teaching you how to apply mechanical engineering philosophies and design to actual production engineering environments, at an Apple factory or something like that.

Delian Asparouhov:

And the fascinating thing was, there's a lot of theory that I did very poorly on because I took that class when I was a sophomore in computer science. So, I knew nothing about mechanical theory. But 50% of the grade at the end of the semester was, who could manufacture, it was a hundred yo-yos. And the way that they would grade the class was how consistent were the yo-yos across manufacturing runs, assembly, et cetera?

Delian Asparouhov:

And I fucking knocked it out of the park on that. And I entirely credit it to the fact that I just spent a lot of time in the machine shop from ages 14 to 18. So, yeah, the team was Team 3006, or as our very bipolar team founder like to call it, the Team 30 Odd 6. And we had a big old pistol as our original logo. And then, eventually, some of the parents were like, we probably shouldn't have that as the logo.

Delian Asparouhov:

But eventually got kicked out of the high school because he was too crazy. And I still keep in touch with him though. He's awesome. Dan McGuire. It's funny, he had a whole generation of kids that went off to MIT, Harvard, Stanford, et cetera. Then, after they booted him from the school, the physics program, the robotics program, unfortunately really deteriorated.

Delian Asparouhov:

But got very lucky. And I think that set me off towards the original plan in life, which was I ... Both my parents are academic PhDs. And I was going to take this robotics expertise that I built. And I was like, "Okay, I'm going to go MIT for undergrad. I'm going to go to Caltech for grad school. I'm going to work at JPL in their extraterrestrial robotics programs. Work on some sort of robotics space exploration mission. Work on the Mars Rover." And that was life path until entrepreneurship and startups took me for a while left turn.

Daniel Scrivner:

That's an incredible story. So, I'm guessing you were wildly popular and cool in high school?

Delian Asparouhov:

I was super fucking late for quite some time. But then something around senior year, I don't know what it was. I think it was getting into MIT early. And then, at that point, that original bipolar teacher got in such a big fight with the parents that he actually quit the robotics team that he founded. And then, founded a competing robotics team that was going to work on a different set of robotics programs.

Delian Asparouhov:

So, instead, we had a Lemelson program from MIT where you would actually apply with an idea. We applied with a robotic bomb-sniffing robot. And then, we worked on that robotic bomb-sniffing robot from within his class. But then, I had to always sneak around. Technically made it a rule that you weren't allowed to be on both robotics team. But obviously, I was on both.

Delian Asparouhov:

So, he would get mad and frustrated that you, like, "You traitor. How dare you go work on both robots at once?" But then, with the bomb-sniffing robot, we would actually test it by driving it around the high school and placing fake ... We made sure that the administration knew they were fake, what looked like metal bombs or whatever.

Delian Asparouhov:

But then, something I think about having this big physical robot, the MIT thing. I think a couple movies came out that year that made geeks seem cool. So, I went from being like very not cool to, I don't know, senior spring. I was really fun. That was the first time where I started partying in my life. And it was two thumbs up.

Daniel Scrivner:

I feel like that's lift off for nerds. It's right at the end of high school, maybe slightly after that.

Delian Asparouhov:

I had no more responsibilities, basically.

Daniel Scrivner:

I want to hear more about ... You had this path. I mean, it just sounds obviously, you're incredibly smart and you love learning. You love exploring these deeply technical nuanced things that are around your fascinations and your interests. So, you have this path where you're going to go. You're going to study. You're going to become a PhD.

Daniel Scrivner:

What was it? Was it a moment? Was it something that came out of left field that altered that course and set you off to become a founder or a builder?

Delian Asparouhov:

Yeah, it was literally, I think, fourth or fifth day at MIT. Literally, in the elevator of my dorm hall. This guy, [Romey Cawdry 00:05:24], stops me in the elevator and is just like, "Hey, are you Delian?" I was like, "Yeah." And he's like, "I heard about you. I heard you got a lot of energy. I hear you like building stuff. You should come to this entrepreneurship dinner that we host across the street in one of the MBA buildings.

Delian Asparouhov:

"But it's meant for undergrads. We bring in local bustling entrepreneurs. Also, it's free dinner at food. You should come by and come to these weekly dinners." And I was like, "That sounds cool. I don't know much about this. But yeah, why not go to these dinners?" And basically, started going to them and Paul, what was is it? English, I want to say.

Delian Asparouhov:

The CEO of KAYAK and founder came in for basically that first dinner. And literally, I'd vaguely, from The Social Network and odd of things, heard about it. But basically, just started going to these weekly dinners. Then, ultimately, that guy that literally ran into me in an elevator, he and I actually like started a company my freshman year of school. I described it as a data-driven touring manager.

Delian Asparouhov:

This was in the very early days of YouTube taking off and Twitter taking off. So, what we would do is, we'd go to artists that had a lot of success in social media, but were failing at touring. And there was a couple of artists, this Romey Cawdry guy who stopped me in the elevator had worked at Interscope Records the prior summer. And they had a couple country artists that they were struggling with. Had great social media followings. But then they would go play shows in Texas and nobody would show up.

Delian Asparouhov:

So, our whole pitch to Interscope was like, "Hey, let us basically run analysis and build the heat map of where all these fans are. And then, we'll actually run the tours based off of that heat map." So, we ended up discovering that actually one of their country artists, that 90% of this fan base that was online was all in Singapore. Turns out, if you put her in Texas, she can barely sell 200 tickets. Versus, you take it out to Singapore and she was basically selling out stadiums.

Delian Asparouhov:

So, it created this data-driven touring manager, my first startup. And then, ultimately decided that, unfortunately, a data-driven touring manager, 90% of the work is actually still just being a touring manager. And I was tired of being an A&R relationship type, and dealing with the artist, and blah, blah, blah. So, ultimately, ended up parting ways.

Delian Asparouhov:

But it was a really fun early building experience that got me hooked on this idea of, "Oh my God, maybe I actually really do this idea of entrepreneurship." And then, I was like, "Okay, I like this world of entrepreneurship. I should explore this as an alternative path potentially. Who would be the best entrepreneur in the world for me to learn from?

Delian Asparouhov:

And at the time, because I had gotten into the world of social media, because of this data-driven touring manager, I'd gotten into Twitter. And I'd just seen that Jack Dorsey had been a founder of Twitter, but then, now had this killer new company taking off. And I was like, "Wow, how many founders build one company, and then have a second company that's also working damn well?" And so I was like, "I got to go learn from this guy."

Delian Asparouhov:

So, then basically went to Square's career fair or booth or whatever they had. Tried to play it off casual like I wasn't totally obsessed with the company, but got those recruiters to give me a shot. And ended up going through the whole interview process, getting flowed out, meeting with their CTO. Ultimately, actually, they originally rejected me. And then, two hours later reversed the decision because basically, most of the engineers weren't necessarily my biggest fans. But the CTO really loved me.

Delian Asparouhov:

So, when the recruiter did the circle up at the end of the day, the CTO was busy. He wasn't there. So, they originally called me and passed. And then, the CTO checked in later in the day. He was like, "Why the hell did Delian not get an offer?" basically. So anyways, ultimately, going off to Square and actually getting to help with Square and new recruit. One-on-one walk with Jack Dorsey and seeing him describe how he was going to build his company.

Delian Asparouhov:

And then, I'm very grateful that even that summer, he actually took me out onto one-on-one walk where I talked about, "Hey, I don't want to just be an engineer at Square. I'd like to start a company like how you've started companies. How should I do so?" He didn't necessarily give me the most encouraging advice.

Delian Asparouhov:

He was like, "No, you should just be an engineer at Square." I was like, "Huh, that's not going to work." I then ultimately just fell in love with Silicon Valley. And it was like, "I need to get back here as soon as possible."

Daniel Scrivner:

That's amazing. And one of the people that you ended up meeting there, who you then have gotten close with, you've now been a part of his team at both Coastal Ventures and now Founders Fund is Keith Rabois. When and how did you first meet Keith? And was there a story there, a moment there, something to share?

Delian Asparouhov:

Yeah, so I had been an intern at Square, but I was technically, originally reporting directly to the CTO as his personal intern. But ultimately, he ended up, by the time I joined the CTO, just had too much stuff on his plate. So he was like, "Just go join whatever team you wanted." I'd been a longtime fan of the Android team at Google. And most of that team had actually moved over to Square to build their original Android application.

Delian Asparouhov:

So, decided to join that team. I obviously had limited interactions with Keith, who, at the time, was COO. But I believe it was August 11th or 12th. It was basically the first Friday or second Friday in August of 2012. Square had, for the first time, basically not grown north of 10% to 15% month of a month, the prior month. And up until then, it had been a perfect growth curve.

Delian Asparouhov:

And of course, the entire company was freaking out because it's like, "Oh my God, has our perfect growth curve ended? What do we do? How do we make sure that we keep growing?" And Keith gave just this incredible all-hands presentation that week that, at the time, I thought was statistical black magic. Both my parents are basically statisticians. So, I was like, "Oh my God, this is incredible."

Delian Asparouhov:

Now, looking back on it, it was a cohort analysis. But still, if you've never seen a cohort analysis in your entire life, it's an incredible analysis to see them. Back then, cohort analyses weren't as popular as they are now. And he basically showed, "Look, in prior summers, Square was just so nascent that the new cohorts that we would add would make it so that we grew enough that we wouldn't notice the seasonality.

Delian Asparouhov:

"But now, we just have such a large base of business that's being affected by seasonality where just there's less local commerce in July and August, because people are on vacation that the new cohort doesn't make up for it. But don't worry. This will all come raging back in September." And low and behold, it did. So, I remember just being in the audience of that all-hands presentation, never having to spoken to him in my entire life.

Delian Asparouhov:

But just seeing that presentation, being like, "Wow, that is the job that I want. I don't want to be an engineer. I don't want to do what Jack was trying to tell me to do. I want to do statistics in business because I'm really good at statistics. And I like the idea of actually getting involved in the business side of things. I'm not the product visionary, whatever, aesthetics guy. I'm the statistics guy."

Delian Asparouhov:

That really struck in my mind. And then, again, didn't necessarily reach out to him or talk to him until about seven or eight months later when I was basically finally started to think about dropping out of MIT, working on my first startup. And he had just joined Coastal Ventures as a venture investor.

Delian Asparouhov:

So, I was like, "Okay, I have a reason to reach out to him now. I'm technically a founder. He's technically an investor. This is a good reason for me to reach out to him and see if I can convince him to potentially mentor me." So, I actually ended up basically sending him a cold email.

Delian Asparouhov:

And he hopped on the phone with me either later that day or within 24 hours. And gave me a bunch of really great advice. Agreed to meet with me in person when I made it out to Silicon Valley after I dropped out from MIT. But it was funny. Five or six years later after we had gotten close and gotten friendly, I asked him, I was like, "Keith, I've seen now, your email inbox, and how you treat meetings, and who you meet with, et cetera.

Delian Asparouhov:

"You don't meet with even other Square interns from that same year if they email you on a 24-hour notice. You have a very busy schedule. Why did you prioritize me? I just thought that was normal what you were doing. But now, looking at it as quite exceptional." And he was like, "Well I never interacted with you at Square, but you were really annoying. You would come into the office and you were wearing a short shorts and tank tops. And you'd climb on the air ducts. And you'd walk barefoot around the office and just make a ton of noise. But as COO, I would get every type of personnel complaint."

Delian Asparouhov:

And especially at Square where everybody was aesthetic and had their little things, everybody had complaints about everything. Somebody's desk being a little too messy. Be like, "Smoothie's not arriving at the right time." Everybody complained about everything. But he was like, "Not a single person complained about you the entire summer that you were there. And so the conclusion that I had was, you must have just been a brilliant engineer, otherwise people just wouldn't have been willing to tolerate it."

Delian Asparouhov:

So, that was why he hopped on the phone with me was basically because I was annoying, but nobody complained. I don't know what life lesson there is in that. Maybe it's, be annoying. I don't know. And then, ended up meeting with him on a regular basis after that with my first company that he then angel invested in. And yeah, I've been working with closely since then.

Daniel Scrivner:

That's amazing. In that speech, how many times did he say basis points? Because I remember Square and Keith was the first time I was like, "What is a basis point?"

Delian Asparouhov:

Yeah, I think that took me a little while to figure out. I'm not even sure that I knew in that presentation what BPS were. And then, it became part of the lingo, honestly, years later when I finally figured out what the hell of BP was.

Daniel Scrivner:

I think there were people at Square that, for years, had no idea what that meant. And they just were like, "That's fine. That's okay. I'll just let Keith and the rest of the team-"

Delian Asparouhov:

You could survive. You just know that you need more of them or less of them sometimes.

Daniel Scrivner:

Yeah, yeah, yeah. They're good it's going up. It's bad if it's going down.

Delian Asparouhov:

Exactly.

Daniel Scrivner:

That's an amazing story. This is obviously going to be jumping forward in time. One of the things that's so fun preparing for this interview is, you've written a lot and you've written a lot of great stuff. And one of the things that's on your site that will link to in the show notes, anyone can go to, we'll create a ... spin up a link for this. But OutlierAcademy.com/Delian. We'll make that a redirect to go straight to the show notes.

Daniel Scrivner:

One of the things you wrote was basically five posts that were all lessons from Keith Rabois. Is there an origin story there? Was that, at this point you had worked for years and you wanted to distill this down? What was the origin there and what were you hoping and encapsulate or be able to share?

Delian Asparouhov:

Yeah, I originally started working with Keith more directly. So, he had been an angel investor in my first company that we ultimately end up failing and selling to one of our clients. And then, I was on the Teespring executive team where he was on the board. And then, eventually, became the chief of staff at Coastal Ventures and worked very, very closely with him at that point, 8 to 10 hours a day.

Delian Asparouhov:

And over the course of two years, I became more effective for Keith as I started to realize that the way that he would guide various founders and entrepreneurs was more of a science than it was an art. And that the best way that I could provide leverage for his time was actually starting to basically replicate him in certain scenarios by just applying those scientific methodologies to founders. And fixing their problems before they would ever have to go to Keith.

Delian Asparouhov:

And I realized basically after two years when we were switching venture firms from Coastal Ventures to Founders Fund, I had a little bit of time off. And I realized, I was like, "One, I think it would be well appreciated by the public. But two, would also provide me a lot of leverage if I just wrote down this science where it's like, God, I'd spent so much time helping three or four companies in a row. Helping prepare for board meetings."

Delian Asparouhov:

And I was like, "I'm doing the same thing every time. I could write this into a really good guide." And I just quickly Googled around to see if anybody had made good guides." There's some stuff online that's "Oh, here's slide deck template," et cetera. But it's never as comprehensive as I wanted of the actual philosophy of the template and the framework. And then, yes, also the slides are relevant. But how to think about how to make the slides is the much more important part.

Delian Asparouhov:

So, I came up with just a set of ideas. I've had some time off between the two firms. And I was like, "Keith, I think I could distill this stuff into a science and write it out. What do you think of these various lessons?" And certain lessons from him were ones that he had already very clearly articulated into a framework.

Delian Asparouhov:

For example, I think it's lesson three or something like that of how to be an effective executive. That was actually just entirely based off of a management presentation that he used to do at Square on a regular basis once a quarter for new managers. So, what I asked them to do was, there was one time where a portfolio company asked him to give that Square management presentation, but basically to their managers.

Delian Asparouhov:

And I basically just recorded it, turned it into an essay, et cetera. Versus, there were other ones where the how to make an effective board meeting and build an effective board, Keith had never really thought about how to distill it into a science. He'd just had a lot of instincts. So, I actually had to, in some ways, extract it from him/I had to build the framework myself. And then, run it by him. And then, he'd give me some feedback.

Delian Asparouhov:

I'd be like, "Ooh, you got something right, but some things wrong." So, there's some of them that I would say, "These are like 95% just me parroting some of Keith's ideas." And there were some where it was like, "Man, some of these were weeks of deep work of figuring out how to take all these patterns that I've seen over the past two years. And distill them into a simpler-to-understanding framework."

Delian Asparouhov:

Maybe the other one being how to interview executives effectively. I had sat in on ... Keith had interviewed probably 30 CFOs, 30 VPs of Eaze, 30 VPs of sales over the course of the two years that I'd worked with him. And I was like, "There's actually a pattern. And this is, objectively, in my opinion, the best way to interview an executive. After seeing him it over and over."

Delian Asparouhov:

And again, it was one of those things where I had to explain like, "Keith, is this what you're doing when you're interviewing an executive? Is this the framework?" And then, he'd sit there for a little bit and be like, "Huh, I'd never thought about it. But yes, that is my framework. But I'd never really explicitly thought about it. I just did it off of instinct or habit in some ways."

Delian Asparouhov:

Those original essays actually were what made my, at least, media profile, Twitter profile, et cetera, go viral. I'm meaning to, at some point, rehighlight them now that I've got a little bit of a larger presence. When Varda was building its first board deck, the first thing I did was ... I don't remember the lesson. It's been like two years since I wrote that essay. And it took a lot of effort.

Delian Asparouhov:

So, I pulled it back up and I was like, "Wow, this is a really good guide. I'm going to use these slides. I'm going to make sure that the Varda board slides follow this too." And now, literally every Founders Fund portfolio company that Keith, or I, or honesty, most of the portfolios involved in, all the board decks, literally just look the exact same. And all follow this exact same structure.

Delian Asparouhov:

And it's great, because they're all really good board decks. And they end up being really effective board meetings because of that.

Daniel Scrivner:

Amazing. Was there one of those that really resonated with people or were you surprised by which ones resonated with people? Because they cover a number of different topics. I mean, they're amazing as a series. I'm just curious. It would be interesting to know if you were surprised by the reception one way or another.

Delian Asparouhov:

Yeah, I think the thing that was surprising was just the audiences for each are very, very different. The first one is how to become a venture capitalist basically. And how to think about venture capital, which is a very different audience. That's fresh grads and maybe junior founders, to interviewing executives. Obviously, that's series B and beyond founders, to running really effective board meetings.

Delian Asparouhov:

Okay, maybe it's relevant for series A, but it especially gets more relevant for later stage. So, I guess the thing that maybe was surprising to me was that people did treat it like a series. And really enjoyed it consistently despite the fact that the appropriate audience for all of them is very different. And then, I guess maybe the surprising thing now, two and a half, three years later is that the board meeting one is the one that, by far, has given me the most benefit.

Delian Asparouhov:

Because if you can think about it, I've had series-D hyper successful founders reach out to me and be like, "Yeah, I based my board decks all off of that." It's a very niche and narrow audience of people that are preparing board decks. But the ones that do find that guide to be very useful have been extremely valuable connections. So, I guess like the surprising thing has also just been the staying power of ...

Delian Asparouhov:

I guess we're coming up on almost like three years from the publication. I haven't found anything as good as that. So, it's still my default thing that I sent. And hell, I was even at a call with a founder earlier today. They were asking these questions like, "Oh, how should I make my board slides?"

Delian Asparouhov:

And I was like, "Well, I hate to parrot my own work. I'm not trying tap my own ego, but I'm not even going to give as good advice as the essay that I wrote, because I can't even remember it as well anymore. The fidelity is so much higher in the essay than it is in my head anymore."

Daniel Scrivner:

It's amazing. It's just a service you did to your future self.

Delian Asparouhov:

It has saved me a lot of time. Absolutely. Both from not having to help other founders, to the fact that all my portfolio companies' board meetings are very effective. It has been a huge ROI. And hell, honestly, I can point to several investments that have come basically from those essays.

Daniel Scrivner:

Amazing. One of the other things you wrote that I really appreciated was, you also shared an investment memo you put together for SWORD Health. And what I loved about that was, one, now we're starting to see more people share and discuss what their investment memo looks like. But you still don't see a lot of that.

Daniel Scrivner:

So, I think it's cool that you put that out up there. I think the framework you put together ... We'll link to this in the show notes as well, too ... is great. And there are two questions I want to ask. One, this was a really large investment. I think you ended up investing ... You were the lead investor in the round. I'm not sure if this was at Coastal or Founders Fund.

Daniel Scrivner:

And you invested $5 million out of a seven and a half million dollar round. So, it took up two thirds of the round. Well, the first question I'm curious about is, how do you think about position sizing? And when do you know that you really want to lean in? And obviously, so much of that now is, you're competing for that position size.

Daniel Scrivner:

I'm sure that's probably different for Founders Fund than it is for angels and smaller investors like myself. But just on position sizing, any thoughts? Anything you've learned? Anything you've absorbed there?

Delian Asparouhov:

Yeah, in comparison to, let's say, most investors, I think it's important to just recognize what your superpower is. And where to lean into, versus not. My superpower is I'm quite technical, I really like building things, and I think I've got a pretty good taste for people that are builders. And in particular, I think the areas where I tend to have a lot of success is when the builders are good product builders, more so than they are great sales and marketing company builders or sales and marketing engine builders.

Delian Asparouhov:

There's been several examples in my portfolio where I've invested in a company that has been an underdog in a market. Let's say maybe the most prominent example right now is Brex versus Ramp. But believed in the founders of the company, because I believe that their ability to build was much greater than anything on the market.

Delian Asparouhov:

Even SWORD versus Hinge Health is sort of that same thesis where there was a well-funded competitor that already existed in the market, but didn't believe that they had the right product-building culture. Versus, really felt like Virgilio and the team at SWORD were building a superior product that, in the short term, would allow them to win. But also, in the long term, having a superior product-building culture would allow them to win.

Delian Asparouhov:

So, I think I'm much better at assessing that as opposed to, I am not the greatest IRR calculator, analytical, "Here's how other people are investing versus how we should be investing." I'm not actively disinterested, but in some ways, I think you should lean into your superpowers and rely on others for other aspects of it.

Delian Asparouhov:

So, I'd say I typically tend to be relatively binary in that once I get super excited about a founder and a particular market, I basically want to just put in as much money as possible. And as often as possible, as long as the companies continue to do well. And if anything, I rely on other members of my team to be like, "Delian, well, this one's a little too crazy risky."

Delian Asparouhov:

I tend to think of it more of, I want to put in as much as possible relative to just how many dollars at risk am I willing to put. I like, "Has this person effectively proven before that they know how to deploy a million?" In which case, if they haven't, probably just start with a million. If they've already proven how to do a million, ah, probably go up to 10 million. If they've proven 10 million, like 100. And I tend to think a scales up in orders of magnitude.

Delian Asparouhov:

So, with Virgilio and with that round, it was like, they had previously raised $4 million total. They relatively productively spent it. So, I was like, "Okay, seems reasonable to double that and just give them seven-and-half-million-dollar round. And tried to take up as much as possible." And just had to give up some for Parata.

Delian Asparouhov:

So, I can't claim I have some super smart intellectual framework for how to determine the exact amount. I think my better framework is around just assessing Virgilio as a founder and assessing the product, which largely came to ... I actually just did physical therapy with the Hinge Health product and the SWORD Health product to determine the differential between the two.

Daniel Scrivner:

Yeah. I mean, there's two really interesting points you made that I would just call out is, one seems like your point of being able to grok really technical people that are product builders. A lot of those people aren't the shiniest candidates on the surface. So, I think that is an amazing superpower, because you're looking at the core of what's really going to power this business. But sometimes it's hard to see other things that are maybe not there that you're not seeing.

Daniel Scrivner:

And then, another one is just your point around being able to do the calculus, because you see this all the time as an investor. Every space is more crowded. There's well-funded, even successful or well-scaling competitors in industries. And then, there's nascent companies. And those calls are really tough off. Anyway, it's interesting to hear you opine on those.

Daniel Scrivner:

One other thing I wanted to ask you about was a sentence in that memo that I really liked, which is pretty philosophical. But you say, "At the end of the day, venture is defined by the outliers. So, most of your time should be spent thinking about why a company can have massive upside." I love that because it articulates something that I think everybody in venture groks. But I've never heard it put so elegantly.

Daniel Scrivner:

Which is really, one, it speaks to the heart of, I think, venture investors have to be optimists. You have to have that muscle. You have to be able to flex that muscle, or at least be able to see potential. And be able to bet on that. So, I just wanted to ask, is that something you learned on the job? Is that something you picked up from particular investors? Where did that sentiment come from?

Delian Asparouhov:

I think one of those things where it's very difficult to build up this instinct without just lots of reps on bat. I think one thing that Coastal Ventures does phenomenally well, even if there are aspects of the 10-hour-long partner meeting that I don't love every Monday, because it slows down process. It just gives you so much exposure into a variety of different companies.

Delian Asparouhov:

I feel like at Coastal Ventures, every Monday was almost like a grad school lesson plan with Vinod being the professor. And students coming in to present their projects. And him doing critiquing versus not. And the rest of the investors were basically like the TAs debating it. We just had such incredible intellectual debates about the fundamental technologies driving particular innovations, how large those markets could actually end up being, and balancing those.

Delian Asparouhov:

I think Vinod is one of the best, just, polymaths in the world that can combine everything from the tip of the spear of machine learning, to pharmaceutical development, to robotics and material science. And balance that with, "Okay, with these technical implications, what are the actual market implications?"

Delian Asparouhov:

So, even in, call it SWORD Health, I'd say some of the thesis that I had there were specifically because Vinod himself actually did have a physical therapy thesis. Him and his family had gone through ... They're really big skiers. They had to have multiple knee surgeries because of injuries that they had on the mountain.

Delian Asparouhov:

They had gone through the preexisting process of physical therapy. It was like, there's going to be a massive opportunity here. This is clearly super archaic, brick-and-mortar. There needs to be a technology-based provider that is truly full stack, not just selling software into clinics, but actually replicating the clinics via sensors, AI, et cetera.

Delian Asparouhov:

So, in some ways, I had that thesis embedded in my head and was looking for the right team, right product, et cetera. So, by having that outlier, was willing to take the bet on a company that was in Porto Portugal, in the middle of nowhere, had basically only a single, very small US pilot rollout. And able to see through to where they are today, which is multiple Fortune 100 customers. Insane.

Delian Asparouhov:

Over the past year, they've growed 40x year over year at a very, very large scale of revenue. Have raised now many, many rounds of venture funding, obviously, since that original series A. Have a massive team in the United States that does all the rollouts and customer success. They've treated now, I think it's on the order of 10,000 patients in the US. And obviously, that's growing exponentially.

Delian Asparouhov:

That investment that I made was not that long ago. It's was like two and a half years ago. I think reps on bat and seeing really great investors think through how to think about outliers is, by far, the best way. I think venture's one of those jobs that was very unappreciated how much of an app apprenticeship job it is. I think a lot of people that try to strike it out either as solo capitalists.

Delian Asparouhov:

Or sometimes they strike it out at the wrong firm that teaches you all of the wrong lessons. And they end up handicapping their ability to ever build up these mental frameworks they need. I'm very glad that I came to Coastal Ventures with basically a blank slate on how venture works. There's, for sure, some things where I think Coastal Ventures gets over indexed on the technological advantage. And sometimes forgets about the storytelling and sales marketing, et cetera.

Delian Asparouhov:

And there are times where I've gotten burned by that because I was induced with that. And I've had to somewhat self-crack where it's like, "Okay, don't get just obsessed with the CTO. Make sure that the CEO can actually fundraise, because if they can't fundraise, the technology's not going to go anywhere. So, that's not a perfect lens. And no venture firm or no investor is perfect.

Delian Asparouhov:

But I feel like that was really where I learned a lot, which is hundreds and hundreds of reps at bat, watching Vinod, Samir, Keith, David Weiden, Sven Strohband, all think through all these various companies. And they're all phenomenal investors.

Daniel Scrivner:

No, amazing story. And I'm sure amazing perspectives. And especially, very different lenses on the world too. So, I'm sure you're picking up a lot from each of them and assembling your own. I want to ask one other question, which is part why I love that statement is, it's about what you need to get right in venture.

Daniel Scrivner:

So, I want to ask the inverse question, which is, what do you think the biggest mistakes people make in venture are? And that could either be, just talk about what mistakes you feel like you've learned from your investments. Maybe what you've observed from others, but any observations there on the flip side of the coin?

Delian Asparouhov:

I think a lot of both investors and founders make this mistake of shying away from the biggest risks in the business, by thinking you can make steady, incremental accomplishments that will eventually allow you to tackle the biggest risk. And as I said, that is the worst way to think about businesses. Instead, you should be stack ranking the risks that could potentially kill your business.

Delian Asparouhov:

And taking on the biggest risk first at the earliest stages of the company. Not trying to wait until later stages, because it turns out if you wait until the latest stages and the biggest race didn't work out, then your unit economics don't work. The entire thing effectively falls apart. So, I think that's, by far, the biggest mistake the founders make. And then, investors make by not necessarily assessing that.

Delian Asparouhov:

So, as much as I do believe most of the job of an investor is thinking through, what is the upside if this works? And making sure to realize how large it could be. Yeah, could the crazy Portuguese team actually have a shot in becoming a multi-billion dollar company? Yeah, they could potentially treat all of MSK in the United States. And it's bigger than all of oncology combined.

Delian Asparouhov:

That is a massive, massive market that they could go after. But you do need to also think about, "Okay, well what are the biggest risks to this business?" and, "Do the founding team members have the expertise necessary for the core risks?" So, maybe to fast forward in some ways to Varda, because this is also how I thought about building the team around Varda for the incubation was, there are three core risks for building a space factory.

Delian Asparouhov:

One, getting the financing that you need because this is a capital-intensive business. Two, you need to be able to actually produce things in microgravity. And three, once you produce them, you need to bring them back down. So, the ideal founding team for something like Varda would have world-class people across all of those three.

Delian Asparouhov:

On number one, I'd like to think I'm pretty world-class at fundraising at this point. Mostly from the fact that it's a lot easier when you've just been on the other side of the table for like four and a half years. Two, our co-founder chief scientist is one of 15 people in the world that is actually produced materials on the ISS. i.e. he has microgravity material science experience.

Delian Asparouhov:

And then, three, our co-founder and CEO, Will, has been a lead hardware engineer on the crew and the Cargo Dragon. And been head of mission control for eight of the Cargo ISS missions. So, he is also 1 out of 15 people in the world that has expertise in bringing things back down from space.

Delian Asparouhov:

I think that's the mistake that some co-founding teams make when they're forming their team, where they'll think about, "Oh, well, I should just co-found my team with people that I'm friendly with or prior coworkers." And it's like, no, no, no. If you want to create a world-class company, you need to get world-class people at the core risk areas of your business.

Delian Asparouhov:

Even if that means that they're not necessarily your best buddy from college or something like that. Because I think what people under appreciate is, if you actually study over the past decade, the various IPOs that have been created or that have happened from venture-backed companies, and you look at the amount of time that the founders knew each other before co-founding the company, there's effectively no correlation between the amount of time knowing each other and likelihood or percentage chance of getting to IPO.

Delian Asparouhov:

So, I think people have this artificial view in their mind. They teach you in college like, "Oh, there's co-founder risk. Make sure it's somebody that you really, really trust." And it's like, no, trust is not what makes successful co-founding relationships. Having the world-class skillset that you need to succeed is what will then form that trust that will allow you to succeed. And people think about it backwards in some ways.

Delian Asparouhov:

And then, that's how you should be assessing it as a VC. Don't just assess the story because you like the story, and you like the business, or you like how the CEO talks. It's like, no, is this CEO world-class for this business? The other way that I like to explain it is, Elon Musk is an incredible CEO and has driven SpaceX very, very far. Zuckerberg is an incredible CEO and has driven, now, Meta very, very far. But they would be terrible CEOs for each other's companies.

Delian Asparouhov:

Zuck would have no idea how to crack the whip on his softy engineers that want smoothies all day, and massages, and things like that. And they would never deliver a rocket on time. And Elon would be tweeting some random bullshit that would constantly get him in front of senatorial hearings that would get his company basically regulated to death. They would be terrible at each other's businesses.

Delian Asparouhov:

And so there is no one singular concept of a top-tier CEO. It is, for this particular company, what is the biggest risks of this company and what does it need to succeed? And what would a top-tier CEO look like that would be able to address those key risks?

Delian Asparouhov:

Anyways, long-winded answer. But those are the things that I think both founders miss when forming their co-founding teams, and venture investors, miss when they're assessing founding teams.

Daniel Scrivner:

Yeah, no, that's fantastic. And let's go ahead and just switch over to Varda. I asked first about the origin store, because I know, at least I have a sense, that it was incubated, what was needed first to be able to actually say, "Okay, now is the time. Let's go and let's form the company. And let's go and let's do this." But before we get there, I think it's just, talk about what this incubating the company was like. What did that look like? What that feel like?

Delian Asparouhov:

Yeah. I mean, in some ways it's hard to pinpoint the exact origin date because, in some ways, it's been like a decades' long process. I started from, I call it, 2010 when the Lunar X or Google X prize was announced. And there's a handful of companies that launched around that that had industrialization of space as their explicit goal. And just got obsessed with those companies. Would track them. Would try to talk to their CEOs. Listened to everything through release.

Delian Asparouhov:

And particularly, these two companies, Moon Express and Made In Space, I was just truly, truly fascinated by. That was mostly a hobby for, call it, like the following six or seven years. Then, once I got to Coastal Ventures, I was obsessed with the idea of now taking the space hobby and turning into profession. So, I started to invest into a variety of companies. Started to meet with some of these companies that were doing this type of industrialization of space.

Delian Asparouhov:

And then, even formed a thesis round it where I was like, "Okay, maybe we can tie into this bit later, but now is the time do it." Went out. Assessed all the various groups that were working on it. In actually Q1 of 2020, just right before COVID, actually flew out and met with several of these groups. And ultimately decided that it wasn't the approach that I thought was these appropriate approach.

Delian Asparouhov:

Most of these groups were really focused on being NASA BAC, research-funded, primarily bringing papers to market and getting more grant funding. As opposed to focusing on how would one take some of the research that's been done and commercialize it at scale, and satisfy commercial customers at a large scale?

Delian Asparouhov:

So, ultimately put the idea on the shelf after Q1. COVID hits. Peter basically tells all the Founders Fund, "No investing allowed for six months." So, for the first month and a half, I just fell into a very deep depression and played a lot of video games. I didn't know what the hell to do with myself. I've never not had a way to productively apply myself. I'm employed, I've got a paycheck coming in, but I literally don't know what to do with myself all day if we're not supposed to be investing.

Delian Asparouhov:

Told us to take a vacation, but March 2020 was not a particularly fun time to try to vacation anywhere. But ultimately, ended up deciding to pick my head out of that. Keith actually was like, "Yo, let's take you down to Malibu for a weekend and we'll do super distance. We'll rent a big place. But let's just spend some time outdoors and get your head out of things."

Delian Asparouhov:

And I remember us going on this hike and he's like, "Okay, well, we can't necessarily be investing in companies, but now's a great time where we've got a lot more free time to create proprietary deal flow. Let's incubate companies, since that's something that I did with great success with Opendoor. And now it feels like a moment where we have some free time on our plate to do so. We should both try to incubate a company."

Delian Asparouhov:

So, he's like Delian, "What would you incubate? And I was like, "Well, the only thing that I would ever do and have the motivation for, because I have the PTSD for my first company failing and I was such a pain in the ass, I would only be willing to do it for a space company." And so he was like, "Oh, interesting. Maybe I would do something that's in the relation of Opendoor, but I'll make a call it OpenStore or something like that."

Daniel Scrivner:

Which is what he's doing.

Delian Asparouhov:

Exactly. Exactly. And so came back from that weekend being like, "Huh, maybe I should do it." And then, basically Biden announced one of his stimulus check plans. And I remember I tweeted this very particular tweet that was basically like, "Fed prints money. Interest rates are down. Lots of cash is flowing into the system.

Delian Asparouhov:

"Equities go up like crazy. Therefore venture returns like crazy. Therefore LPs get lots of liquidity. Therefore they drive all those dollars back into venture. Therefore venture investors have crazy amounts of cash and are looking to invest into companies. Therefore it's the best fucking time in the world to start a deep-tech capital-intensive space company."

Delian Asparouhov:

And I hit tweet. And then, I looked at it like three or four minutes later and I was like, "Oh my God, I know what I have to do. I literally have to follow this guide. Keith told me I need to start a company. It is the best time in the world to start a deep-tech capital-intensive company. And I already know the exact idea. It's the thing that I so frustrated by in Q1. I know how to do it correctly.

Delian Asparouhov:

"The thing that I do correctly is move this work off the ISS. I need to make this so that it's an independent space factory. Not dependent on NASA. Not dependent on a research platform. That way, we can send it out up, send it down at any scale that we want to at any cadence that we want to." And I was like, "Okay, time to start recruiting the co-founders."

Delian Asparouhov:

And I remember turning to my girlfriend at the time, now she's my fiance, and saying, "Okay, I'm only willing to do this, given that I know the hellhole that it is to build a company, if I do get the top-tier people in the world to work on this for these appropriate skill sets." And I did articulate, "I need somebody that is microgravity manufacturing, and I need somebody that has worked on re-entry vehicles.

Delian Asparouhov:

"But has enough leadership and expertise. And by a cadre of people that would move over from SpaceX with them to come work on this with me." And I was talking, I was like, "There's no chance. There's like 15 of 1, 15 of the other in the entire world. The fact that I can actually find them, that they're available, that we get along, that founder equity splits work out, no freaking chance."

Delian Asparouhov:

I think, low and behold, three and a half months later, I told my girlfriend, I was like, "I kind of feel like I'm staring down the double barrels of a shotgun and it's in my mouth. And I'm choosing to fucking pull the trigger. But I feel like I have to because I did find those two people. And I can't not do it now that I have them."

Delian Asparouhov:

I literally felt compelled to do it. And that was when I was like, "This feels very different than my first company. My first company, I forced myself to do it. This one, I'm terrified to do. I do not want to do it. It's going to be terrible for my mental health." But I'm like, "I have to. I don't have a choice. I have to do it."

Daniel Scrivner:

It's amazing. And I love that the metaphor for founding a company is, you have a shotgun in your mouth. You're going to pull the trigger.

Delian Asparouhov:

And you're choosing to pull the trigger. It's terrible. You're blowing your fucking brains out for years on end. I spend less time with my fiance. I sleep less. My physical health is deteriorated. But it's what it takes to bring space factories to life and they are worth the sacrifice.

Daniel Scrivner:

We're going to dive into a bunch of fascinating details in which you just scratched the surface of in just a second. But first, I just want to talk about what was needed for Varda to be viable. And obviously, the biggest component there I'm guessing you're going to touch on is that the cost of sending mass to space needed to come way, way, way down.

Daniel Scrivner:

That happened and is still happening. And I think the world, especially people in the US watching SpaceX launches, getting ready to watch the Super Heavy. And this massive stacked vehicle potentially get into orbit for the first time is fascinating. From your lens, what were you looking for and what boxes needed to be check?

Delian Asparouhov:

Yeah, for me, it was basically, I wanted there to be even a hint of Starship coming online. And so Jan 2020, this was before Starship had ever flown, I thankfully just had basically insider her information from a bunch of friends that worked at SpaceX that it was going well, it was going to fly.

Delian Asparouhov:

These are my friends that are also very conservative. They don't agree with Elon's launch schedules. They'll say that he is sometimes being crazy with it. But when they tell me something's going to fly, it flies within the next five years. Has it happened immediately a year later? No, not necessarily, but it does fly. And so I was like, "Okay, time to kick into gear," all the investing that I want to do when Starship was finally viable.

Delian Asparouhov:

And I think the thing that people also underappreciate is, it's not just the launch cost. There's a lot of costs that go into operating a space business. It's the flight computer. It's the battery. It's the actual mission operations and control center, all of that. A decade ago, SpaceX had to do everything, everything in-house, because there just wasn't basically commercial space ecosystem. And same thing with Planet Labs. They basically had to do it all in-house.

Delian Asparouhov:

At this point, there are 10 providers of satellite buses. There are 10 providers of flight computers. There are 10 providers of flight batteries. There's so much more of a deep low-cost commercial supply chain for all these components that, in some ways, maturity of that is actually a bigger input into Varda's cost levers than just the launch costs. But they go hand in hand.

Delian Asparouhov:

The reason being that if you spend 2 million bucks to send a satellite up to orbit, the satellite itself better basically cost 2 million bucks, because if it fails for some reason and you only spend $500K, you're going to look like a real dumb idiot for having spent $2 million on the actual launch costs.

Delian Asparouhov:

But when launch costs are $10K, if you're spending $2 million on a satellite, you might as well just send up 20 satellites that are $20K each. And even if half of them fail, because they've got cheaper components, it's still way cheaper than the $2 million satellite. So, in some ways, these two things are relatively tied together.

Delian Asparouhov:

But I think one thing that the public maybe underappreciate is, it's not just these launches getting more consistent. But there's just a lot more manufacturers of this type of space-based equipment that makes this stuff a lot cheaper. And I'd say the fact that the ISS research, over the past decade, has gone and become much more mature.

Delian Asparouhov:

A decade ago, there's only a very small handful of experiments that have been done on the ISS. Versus now, Merck, a pharmaceutical company, publicly traded, spends $15 million a year doing microgravity experiments. And they've actually reformulated a drug that is on the market based off of microgravity research that they did on the ISS.

Delian Asparouhov:

Keytruda was a drug that previously had to be a 12-hour-long IV. You'd have to go to the doctor's office, sit there for 12 hours. Through reformulation that they did in the microgram environment on the ISS, they managed to turn that drug from a 12-hour IV into a single-dose injectable. i.e. You just go to the doctor's office and you get a syringe pumped into you.

Delian Asparouhov:

So, not only had microgravity research been expanded significantly over the prior decade, but also, there's, for the first time, a true proof point of somebody commercializing it. Now, at a very small scale, only one drug, et cetera. But there is clearly a potential to scale that up.

Daniel Scrivner:

It's amazing. It's been super fun for me. I feel like, over the last six months, I've gone deep into just studying. One, there's now a number of companies focused on space that are publicly traded, that are doing really interesting stuff. Everybody from Planet Labs is in a SPAC. You have Rocket Labs, which just came out of a SPAC. You have Astra. You're starting to see this ecosystem that is really cool, that I don't think many people are following. But it's fascinating.

Daniel Scrivner:

And I wanted to talk first about just, what is a space factory? I think some of the basic questions there are, obviously, I think everyone can grasp the concept. And we'll talk in a second. I think that Merck example's fantastic. I wasn't aware of that. But we'll talk in a second about some of the other reasons why manufacturing and zero-G unit space is so interesting.

Daniel Scrivner:

But first, I just wanted to talk about ... Try to paint a picture for people listening about what this looks like. So, some of the questions, I was curious, I'll just throw them out and go through them in any order that you like is, from a form-factor perspective, what do they look like? Do they look like the ISS? Do they look very different? How will they be operated?

Daniel Scrivner:

And I think they're really ... I'm like, "Are they going to be humans that you're flying? Is this going to be all automated with basically robots?" I don't know. Maybe we can just start there. Paint a little bit of a picture.

Delian Asparouhov:

Yeah, I think when people think of space factories, they're either thinking of humans up there, or six degrees of freedom, like robot arms moving things around a crazy conveyor belt. It's none of the above. It is an extremely, extremely simple system.

Delian Asparouhov:

And that's the whole thesis behind the company, is that it turns out you can produce things in the microgravity environment to space with actually very simple systems bringing them down. And that is much cheaper and faster cadence than going to something that is human-rated and the size of the ISS.

Delian Asparouhov:

So, our first couple space factories, they just kind of look like satellites. They've got a flight computer. They've got solar panels that extend. On top of that, there's a little, "Space factory," but the materials that we're producing, it's very simple. Thermal mechanics. Think, a couple heaters, a motor, a little storage system, a camera to observe the process.

Delian Asparouhov:

Again, these aren't robot arms moving around. It's heating some things, and manipulating a little bit of pressure, and putting it into a package. And then, the thing that looks a little bit funky relative to most satellite missions is, there's a little miniature Dragon capsule sitting on top of that. It's very small. It's basically like a huggable-sized capsule.

Delian Asparouhov:

And that's where, when the materials are all done, they basically go into that re-entry capsule. Their re-entry capsule separates from the rest of the vehicle, i.e. like that satellite in the factory. The re-entry capsule brings the materials back down to earth and lands on land. We pick up those materials and sell them to our customers. And then, ideally we just increase the cadence into that.

Delian Asparouhov:

So, in some ways, space factories, they just look like satellites. And they're about 300 kilograms. If you saw them in the night sky, they would look like any other satellite. And there's definitely no humans on board. There's no crazy robots on board. They're very, very simple.

Delian Asparouhov:

Now, as we start to show success with that, we start to show positive unit economics, yes, we'll make those bigger. They'll start to look like very big satellites. And then, they'll look like the size of a school bus. And then, one day, yes, potentially, they're the size of the ISS and they're fully automated.

Delian Asparouhov:

One day, they're 10 times the size of the ISS. And maybe there's a section of it that we actually human-rate and have some humans up there. But that is far, far down the line. So, I think part of why both investors and engineers have been so invigorated by our approach is, it's a very pragmatic step-by-step approach.

Delian Asparouhov:

Prove the market. Prove the technical roadmap. We're not trying to go to some sci-fi vision of some crazy station in orbit that's got humans in it. That stuff is 10x more ... Not even 10x more. 1,000x more expensive. 1,000x more complicated. Involves a lot of regulations. We're just doing stuff that just looks like satellite missions.

Delian Asparouhov:

Just, the unique part is, most satellites just take photos of the earth. We, instead, manipulate some materials while we're in microgravity. And then, the particular unique part is, our satellites come back down and they have ride down. Most satellites obviously just burn up when they enter the atmosphere. Ours intentionally survives when it enters the atmosphere and actually lands in a very precise area. So, we can pick up those materials.

Daniel Scrivner:

It's fascinating. Although you've totally popped my bubble of Boston Dynamic robots, walking around doing all the manufacturing, doing flips in zero G. But that's okay. I mean, it does sound very practical. It makes sense. When it comes to manufacturing in space, I want to talk about that because I think that is fascinating.

Daniel Scrivner:

And one of the things I love, there's a few ways you guys describe what you're building at Varda. You talk about space factories for earthbound product. Talk about scaling in space manufacturing. My favorite is a gravity off switch for manufacturing, because I feel like it just literally, in a couple of words, you're like, "Oh, yeah. Okay, that's interesting."

Daniel Scrivner:

But then, the next question is, what does that unlock? And I think that was the funnest rabbit hole for me to go down preparing for this is, I've spent really no time thinking about, what does that unlock? So, I just want to read ... Apologize to everyone, but I just want to read a couple of ... one of the favorite things I found.

Daniel Scrivner:

So this is an article published by Space. It published in 2018. So, it's actually, I think, quite old at this point, but it's got some amazing points. One of the paragraphs is, "Space is a dangerous place for humans. Microgravity sets our fluids wandering, weakens muscles, and radiation tears through DNA. And the harsh vacuum outside is an ever-present threat.

Daniel Scrivner:

"But for materials that show incredible strength, transmit information with barely any loss, form enormous crystals, or even grow into organs, the hardness of space can be the perfect construction zone." I feel like that starts to scratch the surface. And then, it talks about things like they give examples of growing crystals. In space, microgravity lets materials grow without encountering walls. And the vacuum of space helps things form without impurities.

Daniel Scrivner:

So, just by not having gravity, which influences everything. And by being able to work in a vacuum, that makes a lot of things. And then, just the last thing I'll read is, starts to paint a little bit of a picture it's like, "Demand for high-tech solutions requiring higher resolutions, faster processors, more bandwidth, greater position, greater precision, novel materials, unique alloys."

Daniel Scrivner:

I think that starts to become really interesting because then you get that, sure, you can do drugs. You can do semiconductors. You can do fiber-optic cables. You can also do novel materials that we would never be able to produce here on earth. So, I'll stop blabbing, but maybe, how would you build on top of that? How would you push back and maybe clarify some of that?

Delian Asparouhov:

Yeah, I mean, fundamentally, there's four fundamental forces in physics, electromagnetism, gravity, the strong force, and the weak force, right? And all of our manufacturing processes and everything that we produce here on earth is predicated on those four forces. And you can't really change those. You can't turn those off. They're all fundamentally fixed. And everything's designed around that.

Delian Asparouhov:

And we are basically a platform that allows you to turn one of those forces off. As you can imagine, people have level of experimentation about what's possible with that. But almost certainly, we have nowhere near even scratched the surface of what is possible with the various materials that you could produce that.

Delian Asparouhov:

However, you can't just launch a platform. You have to provide value to an end customer. The analogy that I always like to provide is, the iPhone did not launch with the App Store. It launched with 15 apps that were extremely well developed, that were beautifully designed, and the consumers truly. And then, a couple generations in, they launched the App Store once they had proven the value of the platform.

Delian Asparouhov:

And that's what Varda's focused on today is like, yes, I think there's going to be a wide, wide array of materials that are produced. But we're focused on one or two initial applications that are based off of work on the ISS, that is the most scientifically derisked. And has the simplest thermo and mechanical hardware environment.

Delian Asparouhov:

So, that we can produce that in a way that doesn't require six degrees of freedom, doesn't require crazy robot arms, can be done with reasonable unit economics, and it most importantly actually has value to customers down here on earth that could potentially actually make the unit economics of a space factory possible.

Delian Asparouhov:

And so when we're considering that trade study of all the materials that have ever been researched, one of the most important and high-level ones is, relative to process that you have on earth for producing this, or relative to other materials you can compete against, how much value does this provide to the end customer?

Delian Asparouhov:

There's a lot of materials that I think are very fascinating. For example, people have shown work around improving the capabilities of semiconductor wafers. But the problem is we actually make pretty good wafers down here on earth. And the ones that we can make in microgravity, at least so far, they're at the high end of the spectrum. But they're just the equivalent of the high end of the spectrum down here.

Delian Asparouhov:

And yes, it's more consistent, the yield is better. But competing on yield alone is really tough. Versus, there are other things like pharmaceuticals where it's actually taking a drug that was previously toxic and failed phase-two clinical trials to something that they can actually get all the way through. And actually can be absorbed by the human body and is effective.

Delian Asparouhov:

That, effectively, has billions in billions of value if that is allowing a drug to go to market, right? So, it's making sure to run that study on, how much value does producing this material in microgravity provide your end customer relative to any other alternative, obviously that they have given that space factors are quite expensive?

Delian Asparouhov:

So, yeah, at some point over time, I would like Varda transitioning to being a space factory as a platform. Where more of a contract manufacturer, other people come to us and say, "Hey, I've got this material. I'd like to experiment with it at microgravity. I think there'll be some value in it."

Delian Asparouhov:

But until then, we're kind of a pharmaceutical company, and a semiconductor company, and a fiber-optic company, and a human-working company. And proving the value of those. And then, one day will be the platform.

Daniel Scrivner:

Maybe another way of saying that is just, you guys are focused on applications or opportunities that have asymmetric upside. So, obviously you're just looking for something where, like that example of Merck, especially in the context of, there's now a drug that rather than needing to go intravenous and be just terrible in terms of the way it would be delivered. And just the accessibility in the market they could serve.

Daniel Scrivner:

They found something that's literally mass market. And $15 million, I don't know what the all-end cost was, but that starts to sound very, very, very cheap.

Delian Asparouhov:

Yeah, I mean, in certain industries, relative to how much it cost to spin up a semiconductor foundry line, or relative to how much we spend on submarine cables for use and fiber-optics communicate chain, or how much we spend on phase-two clinical trials, then space factories start to actually look pretty darn reasonable relative to that.

Delian Asparouhov:

But again, only if you're doing it purely commercially, independently away from the ISS where it's not human-rated, et cetera, because the moment that you start to get into the world of ISS now, again, you're talking about hundreds of millions, 150 million, et cetera, per run. Versus, at some point, Varda can get it down to each individual space factory, costing single-digit million dollars. Potentially even less than that. It'll take us a little ways to get there, but that's definitely viable in the next three to five years.

Daniel Scrivner:

Yeah, it's fascinating. I want to ask you a couple questions just to zoom out for a little bit. One is, one thing I imagine there's not many people outside of the people at SpaceX and at these next-generation space companies that get to spend all day emerged in that ecosystem. Seeing how it's developing. Seeing all the cool stuff that's going on.

Daniel Scrivner:

You have that perspective. So, one of the questions I wanted to ask is, by building Varda, by just being immersed, what are you seeing that other people aren't, that just makes you excited and thrilled and that maybe people aren't even aware of that's happening? And this could be space-related. This can just be related to Varda. Anything there that's interesting?

Delian Asparouhov:

Yeah, I think it's been very obvious to me since 2015 or 2016, that the space ecosystem has been riding an exponential curve. And exponential curves are very counterintuitive where they look like linear, linear, linear. And then, all of a sudden they just hit effectively what looks like a wall.

Delian Asparouhov:

And we're big basically hitting that wall right now where, all of a sudden, it's going from single-launch providers to, now, there're going to be three, four, fives, to dozens pretty darn soon. And the thing that's cracking in some ways is, most of the sort of aerospace supply chain was not built for exponential growth.

Delian Asparouhov:

Most of the aerospace supply chain was built in the Apollo era, which was the last time that we had significant space activity. And we are now starting to surpass that level of activity. So, I think a lot of the most interesting returns are coming from basically selling the ... producing the picks and shovels for this upcoming space gold rush. And making sure there's enough picks and shovels relative to how minors are basically coming to market.

Delian Asparouhov:

So, that's where a lot of my investing outside of Varda focuses, as well as what are these, what I call, next-generation use cases that isn't just sending up a satellite to observe the earth or communicate the earth. But what are these next-generation use cases that are now actually viable because launch costs are so much lower?

Delian Asparouhov:

Things like orbital servicing. Things like orbital refueling. Eventually, as Varda starts to succeed, rather than us constantly call it bringing water from earth up to our space factories to be utilized in a manufacturing process, earth's in a pretty deep gravity well. The moon's close by and has much less of a gravity well.

Delian Asparouhov:

So, one thing that I always get excited about with Varda is the downstream implications of the business models that then become venture backable of we succeed. I can't, in good faith, right now, back a lunar ice-mining company. But four years from now, I could back a lunar ice-mining company, because I'll buy that ice. I'm the customer.

Delian Asparouhov:

Versus, right now, you go get a bunch of ice. Who are you selling it to? There's nobody ... What? You're going to sell at the ISS? Yeah, they consume some amount of ice and water, but not that much. Versus, Varda would consume a lot of ice potentially.

Daniel Scrivner:

I just want to start asking a couple of closing questions. One that I was curious, again, just because I'm obviously from the outside looking into the space, fascinated by it. And I think companies that interest me are everyone from Spire to BlackSky and Planet Labs. And then, some of the launch vehicle companies that are taking very different approaches.

Daniel Scrivner:

But it's just fascinating, one, from just a business-venture-capital perspective to watch it play out. This week, we saw SpinLaunch actually able to send the one-third prototype rocket up into the air, which is incredible. What companies, what teams are you looking at just with fascination and interest?

Delian Asparouhov:

Especially the public ones. I get really excited by people that are helping bridge the space economy with the real-world economy, right? Because at the end of the day, you can only sustain an insular economy for so long with just investor dollars. It eventually has to connect into the rest of the world's economy.

Delian Asparouhov:

So I think companies Spire are ones that particularly excite me where it's like, yes, they are technically a satellite company. I mean, they obviously interact with launch providers. They have to send satellites up. But if you look at lead customers, it's insurance companies. It's DOD. It's people that are looking to purchase the data that they're actually providing. And they're just seeing as a API data provider.

Delian Asparouhov:

So, that's where I really get excited because that, to me, provides more sustainability, where it's like, by default, a rocket company is typically just selling to other space companies because they're selling to a satellite company. Those are great, but they're not long-term sustainable unless those satellite companies also have a reason to go up there.

Delian Asparouhov:

And which is also why I get excited about Varda is, we provide that sort of reason to go up there even more so in some ways than satellite companies, because they can just send a satellite up and it produces revenue forever. Versus, we need to send satellites up every time we want to produce revenue, because we need to send up the raw materials and bring them back down.

Delian Asparouhov:

So, I think those are the companies that I get most excited by are the ones that connected back to the, call it, real-world economy to make it much more sustainable.

Daniel Scrivner:

Yeah, which is also important because I think that this phase of space, I think what's fascinating about it is, you're seeing people build. And they're building things that are actual business applications actually innovating and actually impacting the rest of the world. One question I want to ask is ... I'm fascinated by space. I don't have a great sense of what blogs and newsletters sites to follow.

Daniel Scrivner:

So, I wanted to ask ... And this may be something you're like, "No, I don't really do any of that. I get enough of that in my day job." But is there any resources you would point people to? People that are fascinated in space, want high-quality newsletters, sites, blogs, whatever it is, anything to share there?

Delian Asparouhov:

Yeah, no, I actually think one of the best ways to learn about space is just inundate yourself with the people that cover this stuff quite regularly. So, my favorite newsletter that just switched from doing a weekly newsletter now daily, and I pretty religiously read at the top of each day, is Payload Space.

Delian Asparouhov:

They're really great. They're overview of the space industry. They dive into the actual details. Basically, every CEO of a space company is willing to chat with them because they're, by far, the just biggest insider, and most regular producer, and super friendly.

Delian Asparouhov:

And then, there's a variety of mainstream publications that have really great journalists that are focused in space. So, Michael Sheetz at CNBC, Loren Grush at Verge. And then, you also have folks that are at space-specific agencies like SpaceNews and Jeff Foust over there is particularly great. So, I've really enjoyed following all those various journalists on Twitter.

Delian Asparouhov:

Ashlee Vance as well, although less day-to-day active. But does some great more editorial type of quarterly long forms. But yeah, if you actually just follow all those, you'd be surprised. I think a lot of people view the space industry as like, "Oh man, it must be this big behemoth with lots of moving parts," et cetera.

Delian Asparouhov:

No, if you actually look in the past five years, the number of companies that have raised north of, call it, $20 million is 17 or something like that. It's very few. So, if you know those 17, you know the entire industry. And then, if you'd like to start a company, if you're the other space companies and 1 of those 17 people isn't willing to be your customer, then you don't have a viable business model. And then, if you're not selling to space companies, then great. You have a business model that sells to other people.

Delian Asparouhov:

But it's too funny to me how often I'll have a founder come pitch me on some space company. They're like, "Oh, yeah, satellite companies will buy this." And I'm like, "Okay, which satellite company? There's not a plethora of satellite companies. There's like seven. So which of the seven have you talked to it?"

Delian Asparouhov:

And it's like, "Oh, well, I looked at market research." It's like, "What market research? There's seven people. Just go talk to the seven people right now. Yeah, one day will be like Cloud and there'll be like 10,000 companies. But we're not that there's 30. So, just go talk to the 30 companies. Understand what the actual ecosystem looks like."

Daniel Scrivner:

More good, practical advice. Now, the one I would add a plus to there is, I've been following Michael Sheetz. He's one of the few people on Twitter that I turn on all tweets as notifications. And literally, just almost everything is consistently amazing. And just by following even that one account, although you've named a bunch of others, and we'll link all these in the show notes again, you can just learn an incredible amount. And It's super cool.

Delian Asparouhov:

I was very humbled that Sheetz was willing to agree to cover our series. That was definitely a really fun moment for myself, our team. Everybody was really excited.

Daniel Scrivner:

That's so cool. The last question. And then, I'll ask where people can go to find out more about Varda and follow you. But the last question is just ... Whenever we cover a topic, this big, I'm just conscious that I don't want to miss anything, especially if there's a message or just some idea that you want to land around space, around innovation, around what you think is next in this space. So, just any closing thoughts or anything that you would share that we haven't covered?

Delian Asparouhov:

Tim Urban writes an incredible blog. And in it, he has a post that's on basically the future of space and space exploration. And talking about this concept of the exponential curve, which is, if you think the last three years have been fascinating in space, just fucking imagine what the 3 three years and the next 10 years are going to look like. People are just shocked when I tell them.

Delian Asparouhov:

They're like, "Oh, Delian, when do you think you're going to space?" And I'm like, "No earlier than 2027. It's going to take some time. But no later than 2030." That range is narrow because that exponential curve is moving quite, quite quickly. We are going to have a commercial lunar base at the end of the decade. That is, to me, unquestionable.

Delian Asparouhov:

I'm sure that the US government will not be very successful at creating a government base. But they will eventually fund a commercial provider that does certain contracts for them that will have a base up there. And the base up there won't just be there for tourism or efficient random reason. That will be there for a commercial reason, whether it's our Helium-3 to do fusion or whether that's providing lunar ice to LEO companies or like Varda.

Delian Asparouhov:

I think it's going to be a very, very exciting time over the next decade. And it's a great time to get involved in space where it's a lot easier to have a very successful career when you tie yourself to a rising tide. And the 2010s was everything from mobile, to financial services, to social media. And I think the 2020s is going to be like crypto, space, industrial automation, and robotics, AI.

Delian Asparouhov:

And now is a great time to get involved in space. You have not missed the boat or missed the trend whatsoever. There is far more growth ahead of us in space than there has been over the past decade.

Daniel Scrivner:

It's a great time to join Varda [crosstalk 00:57:14].

Delian Asparouhov:

Exactly, Varda.com.

Daniel Scrivner:

Varda.com. Where can people go to follow you? What's your website online as well too?

Delian Asparouhov:

For Varda, it's at Varda.com. On Twitter, we're @vardaspace. And my personal info is Delian.io is where I have all those essays up. And then, my handle is at @zebulgar, Z-E-B-U-L-G-A-R.

Daniel Scrivner:

Thank you so much, man. This has been such a fun conversation. It was so much fun preparing for this. It was so much fun to talk through this all together. And I just really appreciate the time.

Delian Asparouhov:

Thanks so much for having me, Daniel.

On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.

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