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?
00:13:00 · Eric Romo
So Tom and I have this conversation and he said, well, you know, maybe MIRA is our Falcon one. You know, Falcon one and SpaceX was the thing launched a few times to get to the bigger one. We launch MIRA once or twice. We show we can build the space spacecraft. We show we can operate on orbit. And then we'll move on to the bigger thing, Helios. Because Helios, the unit economics working capital dynamics, all that's really good. Market's not that big, but that's a different discussion. But anyway, so we move on to the bigger thing that we know kind of works. So we launch MIRA, first mission, you know, kinda by the skin of our teeth goes well. And all of a sudden our conversations with Space Force kind of shifted in tenet really quickly. It went from, hey, there's all these sorts of things maybe we can work on together to, we now know exactly what we can work on together with you and we wanna talk about it. And so we went from, not knowing if we had a space defense business, not knowing what it could be to laser focused on kind of this high, thrust, high delta V business force, base force. And they kind of, to some extent, led us by the hand to say, here, here's where we think the market could be for vehicles like Miura. Here's how we think you need to change it, because it went from a first version of Miura to a second version of Miura to get that market. And that is a big thing that changed, was all of a sudden, the defense market unlocked for us on the Miura side. And that's gone on to now we're increasingly a trusted partner with them. And so it's something that we can work on more and more stuff with Space Force. So this is kinda big The big shift from the initial founding of the company was, hey, we think maybe there's this commercial angle to now we not only have a commercial angle with Helios, but also have this defense angle with Miura and eventual cousins of Miura. And then we we really hope to be be a big part of NASA as well.
00:14:49 · Molly O'Shea
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00:16:19 · Molly O'Shea
[00:16:19] S0: So I know we talked about this in our New York Stock Exchange Space Summit hot takes. The breakdown of the products, Mira, Helios, and Caravan, and then the customer sets within them. But to reiterate those, you went through it a bit. I'd love for you to break down where they fit in the market a little bit more and how you're helping your customers out.