Felix: What is Akash Systems? We make gear for the satellite communications industry. The world today is going through a revolution and transformation in communications. There is a large number of people who are not connected to the Internet. Around here we get 4G and LTE. Most people in the world are using 2G. The gap between what we could have and where we are today is huge. Satellites are aiming to close that information gap. Akash is enabling the solution for that gap. [0:30]
Delian: [How Delian of Founders Fund analyzes Space startups and why he invested in Akash]:
1. Is there a real commercial market that already exists?
2. Are you just developing a commoditized product or a highly differentiated product? Akash has developed a material science innovation that is very unique and has massive business implications to their customers. It is a highly differentiated and defensible product.
3. What is the total addressable market? This is an industry where people are willing to spend a lot of money to get online. The current satellite radio business is already a couple billion a year. There will be tons and tons of people buying radios and we will have the best one. There is a risk that one day people won’t be using radios to communicate with satellites but we have been using radios to communicate for a long time. [3:05]
Delian: There is an incredible book The Case for Space: How the Revolution in Spaceflight Opens Up a Future of Limitless Possibility. It is the same author that wrote the book that inspired Elon Musk to want to go to Mars. The Case for Mars: The Plan to Settle the Red Planet and Why We Must . [10:25]
Delian: The most difficult part of space exploration is the rocket equation. The heavier something is that you need to launch, the exponential amount of fuel you need. The ideal end-state for humanity is not bringing any heavy things up and down from Earth. It is having the heavy things built outside of Earth. The only things coming up and down from the surface are people. [12:58]
Felix: There is a wave of opportunity coming. I don’t think we have seen the winners in Space. That company may have not been born yet. Google was search engine number 16. They came at a time when Yahoo was already declared the winner. It is still very much early days. [16:57]
Felix: Space is not a far fetched idea. There are very real ideas being pushed right now. An example: Recently an NGO asked us to provide satellites to them to help them collect data from fishermen around the world. To make sure they aren’t catching endangered species. There an infinite number of applications. [21:03]
Delian: Akash is a company that can start making real revenues in a year. Not in five or ten years. In a year they could start selling radios to commercial operators like Elon and Bezos. They could sell to anyone who needs to communicate with their satellites. That is basically everyone in the Space industry. [31:10]
Felix: There are a lot fewer companies making hardware than software. Probably by a factor of 10. Within hardware, there are even fewer [companies] making [hardware] for Space. [32:43]
Delian: SpaceX really helped shift the curve. The government used to go to ULA and say we need to launch this satellite. Tell us how much it cost you and we will pay you 20% above that. ULA is incentivized to make the launch cost a billion dollars. When SpaceX comes in and says we can launch it for 100 million the government is obligated to take a serious look. SpaceX has gone through many lawsuits to get to this point. [38:21]
Felix: There is an extraordinary, backbreaking demand for data that wasn’t there before. I think that is the justification for so much push into space. That is what is pulling so many companies to make things in space. [42:55]
Delian: Space is one of the few places where there is literally uncapped upside. How do you not pay attention to space? [44:23]
Full podcast here: Venture Stories: Investing in Space with Delian Asparouhov and Felix Ejeckam
If you want to learn more about investing in Space I recommend reading The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos by Christian Davenport
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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