00:03:40 · Eric Romo, Molly O'Shea
And so, again, both of them sort of tracking the company and watching that growth really start and saying, okay, now's the time to write bigger and bigger checks. And then very fortunately, you know, that happened pretty quickly after we decided we wanted to raise a round. And what happened from there is that usually in this process, like my first call after the term sheet is to go out to insiders and say, hey. You know, what do you wanna do in this round? It's kinda starting to come together. There's evaluation, etcetera. And then see how much of the round they they might take up versus we wanna fill from outsiders. And we're just massively oversubscribed just from insiders. Good problem to have. And so that came together really quickly as well. So it's a good sized round, but it's one of the quicker ones I think I've ever done just because there was so much interest in the company. [00:04:30] S0: So this was a $500,000,000 round. This brings your total funding to over $1,025,000,000 [00:04:37] S1: Yeah, a little over $1,000,000,000. [00:04:38] S0: You got the big B.
00:04:38 · Molly O'Shea, Eric Romo
[00:04:38] S0: You got the big B. [00:04:39] S1: Yeah, yeah, there you go. Yeah, yeah. I mean, so, you know, I think some people maybe think that they're putting numbers up on the scoreboard and they should be excited about that. That just means the bar just got higher for us, right, about we've gotta return that capital and then some, right, to those shareholders, which means we need to build a really big business. And so it's exciting, obviously, to have that amount of funding to run the business. We had quite a lot of money on the balance sheet even before we raised this round. So there was no kinda forcing function. You know, it wasn't sense of urgency or anything around it. But now we just get to expand the business and hire. I think some folks internally would argue we've been a little bit cautious in how we've hired. I mean, we're a company now almost 500 people. That's a lot, obviously. But I think we arguably could have hired even faster than we have in the past, but really wanted to make sure we had the throttle at the right place where we had enough runway and had enough business, we're kinda matching those things. This funding will allow us to be just a little bit more forward leaning in the people we hire and how quickly we staff up, a little bit more forward leaning in facilities and capitalizing the business. So I think it's gonna help us to have the freedom to execute that maybe we were holding ourselves back a little bit before. [00:06:00] S0: So this unlocks hiring, expansion, what else?
00:06:00 · Molly O'Shea, Eric Romo
[00:06:00] S0: So this unlocks hiring, expansion, what else? [00:06:05] S1: That's the bulk of it. I mean, people are really the biggest place we spend money and the biggest resource that we need internally. And so this will allow us just to continue to hire great people. Think in the past, we would really limit ourselves and kind of hold ourselves to site budgets, which we'll continue to do, but budgets will be higher. And that meant that really talented people maybe didn't make the cut, right, to get hired. And I think this allows our hiring teams to say, Okay, let's go make sure that if it's an amazing person that works in the stuff that we do, let's make sure we find room for them. And capital always been a thing we've invested in. Think it's an interesting conversation around businesses like ours and just how capital intensive they really are, because I think there's this perception outside of hard tech, deep tech, whatever you wanna call the segment we're in, that they're incredibly capital intensive and you can't imagine how much you're spending on CapEx, but that's not really the case. I mean, you're gonna walk around and see stuff, and certainly we do buy awful lot of machines, but people are by far and away the basic expense of the company and that's gonna continue. [00:07:09] S0: So what does scale actually mean for Impulse?
00:07:09 · Molly O'Shea, Eric Romo
[00:07:09] S0: So what does scale actually mean for Impulse? [00:07:13] S1: Being able to simultaneously execute on a number of things. So, we've got our Helios program, which is to build effectively a third stage for medium launch vehicles. That's building a rocket stage. It's roughly the same size as the second stage of Falcon one, for example, as the size of the program. That's a big undertaking. We've got our MIRA product line, which is now scaling to where we have to build one of those per month at this point. That's a big deal because we both need the engineers to develop it and the production to get it done. And then we've got aspirations on building a number of other vehicles as well. And so being able to simultaneously do multiple things is not easy for a company. So scaling for us is really how do we hire great engineers across all of those programs? There's a saying in the Valley that startups don't starvation. They die from indigestion. Right? And I think it's a balance that we always try to find the right place to strike of, hey. Should we actually go out and try and execute on this amazing business opportunity, or should we lead by the wayside? And as I think we've maybe talked about a little before, there's not that many great opportunities in the space business segment. And so when we see a really big one, it's hard for us to turn it down. [00:08:30] S0: The company was started in November 2021. What were the early days of product development like?
00:08:36 · Eric Romo
[00:08:36] S1: Yeah. So I only got here three years ago, so, I don't exactly know what the first couple of years were like. But I know that, you know, Tom, left SpaceX. He was there for almost twenty years and, I think tried real hard to be retired, and found himself, nights and weekends building rocket engines in his garage as he is want to do. And talked to some folks that we all know well, they said, Hey, look, you're doing this anyway. Why don't you have a company around this work? And so he was able to quickly capitalize the company. When Tom Mueller started a company, you can just kind of raise your hand and people then send checks your way. And that's kind of what happened in the early days of the company. And then as a result of that, starting the company was also able to attract a lot of really strong talent quickly, people that he'd worked with in the past who were maybe ready for a new thing. And so this meant that your company immediately is well capitalized with extremely strong technical talent, kind of best in class talent. Then the question is, okay, well, what do we do? And where's the real market opportunity? When I got here, the company had been working on the Miura vehicle for a little while. Miura went from not existing to being built and ready to fly in about fourteen months. So really fast, which is tested at the time and the talent the team had. But when we flew Miura for that first time, we had this hypothesis of what we thought the business was gonna be for Miura. And there was a hypothesis around the commercial market for orbital transfer vehicles in low earth orbit. Okay, it's kind of space tug market. And I came in and I, with kind of fresh, wide eyes, having not been in the space industry for almost twenty years, said, all right, let me learn about this market a little bit. And what I saw as I dug in is a market where the value proposition to the customer kind of existed. So I'll give you a quick pitch. It's like, so Rocket Lab has this product called Electron. I always forget the names of their rockets. Electron's a small one. And it'll lift a few 100 kilograms to low earth orbit. So 200 kilograms somewhere in LEO. SpaceX has this program called transporter, where they send a big bus of payloads, a bunch of 200 kilograms at a time, you know, 40 of them or whatever, and they send them up to low earth orbit as well.
00:10:47 · Eric Romo
So Rocket Lab will go anywhere in low earth orbit you wanna go. It's not all one thing. There's a bunch of different ways you can be in low earth orbit. They'll go anywhere you wanna go, kinda anytime you wanna go there. SpaceX, you're taking the bus. So you go on the bus schedule and you go to the bus stop. Right? So, but the price for an electron for those 200 kilograms is way higher, it's like $8,000,000 than the price for that equivalent transporter slot is like $2,000,000 maybe, something like that. So there's a big spread between, you know, eight and two, but in theory, you're paying for, I get to go exactly where I wanna go and I get to go exactly when I wanna go to. Okay. So the pitch for orbital transfer vehicles at that time in the commercial market was with that, you know, difference between eight and two, can I add an orbital transfer vehicle? Can I add the launch costs so it'd send that up as well and still save the customer money on that eight? And the answer when we looked at the economics was, yeah, actually, you can maybe save like a million, maybe a little bit more than a million dollars for that customer. Maybe you end up charging them 7 or something all in instead of $8,000,000, pretty meaningful. The challenge with that market is that, number one, it's not that big. Rocket Lab does something like 30 launches a year, and you're basically pitching that you're gonna steal share from them. Right? So how many are you really gonna steal? Problem number two is that in order to make that math work there, the economics for the orbital transfer vehicle, the margins are pretty skinny. So like a 20% gross margin, something like that, just not great in hardware. And the killer was, in order to serve those customers well, I needed to go out and buy a bunch of launches from SpaceX. If I had to do 20 of those a year, I gotta buy 20 launches a year, which means I need two years' worth of launches. I need 40 launches, which means I need, I don't know, like $50.70000000 tied up in launch costs for a company that had only raised $30,000,000 at a time. So when you stack those things together, dubious economic, small market, and bad working capital dynamics, it just didn't really pencil. So here we are, and we just launched this first Miura and we thought that had this commercial market. We kind of realizing, oh, actually that market's DOA. So what do we do?