Y Combinator Startup Podcast
00:23:38 · Philip Johnston, S3, S4
[00:23:38] S0: Do not buy the StarCloud meme coin. [00:23:40] S3: Yeah. Yeah. [00:23:41] S0: So, yeah, we'll we'll we'll launching... We'll be we'll have one of those on there. We'll have a whole bunch more. H one hundreds, Blackwell ship. We're also partnering with AWS on launching the Outpost hardware. That's their on premises server blade that they give to customers to run a local instance of v c two, and that will be useful for... Particularly for our military customers. [00:24:00] S4: Something we were talking about earlier is at YC, we just observed over the last few years, it's been quite hard for hard tech companies to raise funding in general. There's not been much investor appetite for it. It certainly seems to have changed over the last six months. [00:24:14] S3: Great news. Yeah. [00:24:15] S4: From your perspective, I'm curious here, like, how was it raising the seed round in... Sort of during YC and then this huge round you raised from from Benchmark? Just sort of maybe tell us the inside story of kind of how that all came together and and what it feels like being a hard tech founder raising money today.
00:24:15 · S4, Philip Johnston
[00:24:15] S4: From your perspective, I'm curious here, like, how was it raising the seed round in... Sort of during YC and then this huge round you raised from from Benchmark? Just sort of maybe tell us the inside story of kind of how that all came together and and what it feels like being a hard tech founder raising money today. [00:24:32] S0: So when we first raised, end of twenty twenty three, we tried to raise $2,000,000 at 10 post, yeah, that took three months to get together. About a 100 VCs said no. Yeah. Deep tech and hard tech and space were definitely not a cool thing to invest in back then. Then after YC, yeah, we we... It took us quite a while to raise. So I think we got rejection from at least 20 VCs before we got our first, first check on the demo day raise. And things have definitely swung around since then. It's become a lot, easier to raise for deep tech, I think. I think a number of reasons for that. One is people think that the software doesn't have a moat anymore, which I think is probably accurate. [00:25:11] S4: That sort of high... It's funny that the high of mind just switched, [00:25:13] S0: Yeah. [00:25:14] S4: Seemed to me, like, very quickly. It was just like the SaaS stocks. And like, ClaudeCode came out, SaaS stock, public company stocks all went down, and then suddenly it, was a... I I think the, like, fastest I've seen sort of things in the public markets, like, directly affect Demo Day, where suddenly everyone's like, oh, like, we need to, like, invest in hard tech now.
00:25:14 · S4, Philip Johnston, S3
[00:25:14] S4: Seemed to me, like, very quickly. It was just like the SaaS stocks. And like, ClaudeCode came out, SaaS stock, public company stocks all went down, and then suddenly it, was a... I I think the, like, fastest I've seen sort of things in the public markets, like, directly affect Demo Day, where suddenly everyone's like, oh, like, we need to, like, invest in hard tech now. [00:25:30] S0: Yeah. That's that's fascinating. Yeah. I think, yeah, people are just much more open to investing in hard tech now. Yeah. Like, I think we were the first space investment benchmark we've done. [00:25:37] S4: Yeah. Mean, whatever you can share, like, how did that round kinda come together? And and, yeah, what what you think sort of benchmark saw in saw in you guys? [00:25:45] S0: So to be frank, that round wasn't as easy as it looks from the outside. There's a lot of VCs that have big SpaceX positions for one thing. And SpaceX, like, midway through the round came out saying they're doing exactly what we're doing, and it wasn't public then. And so anybody with, a conflict policy then was like, okay. We're conflicted out. But, I mean, towards the end of the round, it it suddenly kinda came together much faster. I think, to be frank, I don't think... So Chetan is our partner. Chetan's awesome. [00:26:15] S3: Amazing investor.
00:26:15 · S3, Philip Johnston, S1
[00:26:15] S3: Amazing investor. [00:26:16] S0: Yeah. He's he's great. I think basically he saw a really, really strong technical team doing something that if it worked, could be incredible. And I think when he came to visit us, you know, he spent a lot of time doing DD on other things, you know, on the backgrounds of all of our... We've got the best and we literally have the best freaking engineering team in the world in Redmond building this stuff, you know, half of them from SpaceX, half from from some of the hyperscalers. So he spent a lot of time with the team. He spent a lot of time. But I I don't think if he'd I don't think if he'd come across a report that said that cooling in space was impossible, that that would have, like, thrown him off. I think he was like, okay. This is a good enough team that they can figure out. [00:26:57] S1: How did you build such an awesome team?
00:26:57 · S1, Philip Johnston
[00:26:57] S1: How did you build such an awesome team? [00:26:59] S0: So my co founders, Adi and Ezra, I... Well, with Ezra, I I reached out to him after being down to Starbase, Texas, I was like, have you got any ideas that would make money if launch cost was 10 x cheaper than it is today? And we started with this space based solar idea with Adi who was introduced to a friend... Through a friend. He he actually had already been thinking about this. He already had registered the domain name stellarcloud.com before. And then with the team, we were just ruthlessly slow at hiring, and, like, picky about hiring. After YC, we'd raised, like 11,000,000 at 40, which is like a decent round in YC. And even then, took us six months to make our first hire. And we've got, like, the most kick ass space engineers, our first hire. We've raised, like, a lot of money now. Even this round that we announced in March, we've raised a much larger round since then. We're still only 20 engineers. Like, the... And we have one commercial guy who came from the Space Force who was working on Golden Dome. We are so picky about who we hire. Like, it is, to a point of being very frustrating, to be honest, but it's the whole game. It's the whole game is having an... A kick ass engineering team.
00:28:08 · S3, Philip Johnston, S2
[00:28:08] S3: What was it like to have this idea, have people sort of poo poo it, like, didn't really get it, and then suddenly, I mean, to have much more commercial validation that, like, you know, Google, SpaceX, the the stalwarts of the industry sort of embraced the idea and realized, actually, like, some crazy percentage of future data centers likely are going to be in space. What was that like to sort of see the the sea change and be early? [00:28:34] S0: It was surreal. So if you go back through my Twitter feed, I've been, like, shouting from the rooftops for the last, like, three years about this. [00:28:42] S3: I'm concerned, but right. [00:28:43] S0: Every day, I would post something about, like, why data center space are gonna be... Are gonna make sense. And then slowly and slowly and slowly, people would start to drop hints about things. Like Elon at one point was like, 99.999% of the energy in the in the solar system is is is from the sun. So I'd repost that, and I'd be like, we need to build data centers in space. Yeah. Like, I would like everything I would find a hook for. Like [00:29:12] S2: I think this is one of the things we see with all the best hard tech founders. You're essentially living in the future and are almost like a prophet that brings the future back to now, us underlayings, the earth that don't quite get it yet. [00:29:26] S0: I'm gonna tell my mom, who's very religious, why she said I'm a prophet.