Lessons from a $145M Space Startup

Last week I shared part one of an interview with Mike Cassidy, the founding CEO of Apollo Fusion. Today's newsletter is part two of that interview. Apollo was acquired by Astra Space in 2021 for $145M, making it one of the few major space acquisitions of the last decade. If you haven’t read that article yet, I recommend starting there.

That newsletter covered some incredible topics, including technical decisions around propellant choice, building for scale, their acquisition by Astra, and more.

Now for part two…

In my mind, the ASE thruster demonstrates the power of serving constellation customers, where a single spacecraft customer is able to purchase hundreds of component systems. That seemingly allows you to achieve scale much more rapidly. Were satellite constellations something you anticipated when you founded Apollo Fusion in 2016?

Absolutely. Frankly, we wanted to win the SpaceX Starlink constellation. We wanted to win the OneWeb constellation. We wanted to win the TeleSat constellation. The increase in constellations was one of our big motivators for getting into this business. We never won the SpaceX constellation, but chasing that opportunity was enough to spur us on to jump into the business.

Having gone through the process of building and exiting a space startup, is there any advice you'd give to a space founder at this time?

Everyone wants to be your second customer, so it’s helpful to be thinking about that ahead of time. For example, how we struggled with getting flight heritage and working creatively with Spaceflight to make that happen. I would encourage founders to just move heaven and Earth to get on-orbit flight heritage, whatever it takes. Do a free mission, camp outside people's buildings begging for it, do whatever it takes. Because once we flew successfully, the doors opened wide for us.

Another piece of advice is something that everyone's heard and everyone sort of knows, but I just want to triply underline for founders; you absolutely want to get the most amazing people you can on the team. It made all the difference at Apollo. I mean, we had only 16 people on the team when we sold it for almost $150M. You're not gonna do that unless you have A plus, plus, plus, plus people. It's true, you want to get people who are really that good. Many times in the startups I’ve previously founded, the people are kind of overqualified for what they're doing. Some days I’m taking out the trash or moving the dumpster and not everyone wants to do that work. But when you have super talented people, it just gives you so much flexibility to accelerate. Like when we had to do the Spaceflight mission, we only had about five months to design, build, and test that system and get it shipped. We had a team that could do that. You want to get the most amazing people. I think we had like 20 plus university degrees, including five PhDs, among our first eight team members.

Is there anything you would change about how venture capital is done when applied to the space industry?

The relationship between venture and the space industry is still being figured out. I think there are some good investors out there. Reid Hoffman had invested in us at Apollo. He's an amazing investor. Super supportive, there to help whenever we needed it. One of the Apollo execs, Maureen Haverty is now a venture capitalist with Seraphim. So I think she definitely understands the process of building a space startup.

I think there is a changing environment in terms of raising funds for space startups now. If it was hot a year and a half ago it is now maybe cooler. But I think good companies still can get funded. The keys are to have a great team, move quickly, and focus on an area where there's a real need. There’s a saying that you want to sell aspirin, not vitamins. Look for people who have a pain point and look for ways to help. In those areas, there are still opportunities for startups.

Because you had brought it up earlier, I’d like to ask you about the topic of pivoting a startup, something that happens frequently but doesn’t get discussed a ton. How do you communicate that and how do you lead a team through that? especially a team with an incredible amount of talent that you want to keep onboard.

Yeah, it's miserable. And it's been miserable for me four times.

I think for one, you need to pick the right people in the first place so that when you have to pivot, it's not as traumatic. You want people who are resilient, who are team players, who are basically relentless optimists. So it's just tough. But you want those people. So when you come into the room and say, “We gotta pivot,” They're not like, “What the hell?” So start with the right people in the first place.

The second thing is that you have to make it a collaborative process as you shift. Now, that doesn’t mean that it’s a democracy. I communicate clearly that it’s not a democracy and there is a chain of command. But when we have meetings and discuss things, people need to feel free to speak their minds and say “Mike, you're an idiot. Here are four reasons why this is a totally stupid thing.” But at the end of the meeting, we're gonna make a decision. And then once we make a decision, everyone gets behind the decision and we don't revisit decisions.

That’s important. You don't go into the corner and talk about it with one person and keep it a secret. You get everyone in the room and say, “We’ve got a problem, we're gonna pivot.” And you have the discussion in front of a whiteboard and put everyone’s ideas up there.

It’s important also that you're decisive and quick when you pivot. All four times I’ve pivoted startups, we pivoted within two weeks of recognizing that we had to. I think a lot of people get in trouble when they say, “Things aren't working. We're gonna take 15% of the company, and they're gonna spend 50% of their time exploring new ideas.” No. Once you realize something's wrong, within two weeks, everyone should be working on a new thing, and you gotta throw a lot of stuff overboard. But that's what you gotta do to be successful.

There's tension in entrepreneurship when you have to pivot. On the one hand, entrepreneurs are supposed to be tenacious and never give up. As a result, they pursue bad ideas far longer than they should. On the other hand, entrepreneurs should be flexible and pivot and quick and fast.

And so how do you mix these two? Well, they don't mix. The way I kind of try to thread the needle is that once you make a decision, we agree that we’re not going to revisit it for maybe five months or so. As a result, for the next five months, I don't want to hear someone come into my office a week later to try to rehash that decision. No, once we make a decision, we pick a day and don’t talk about it again until that day comes. So for that five months, you're tenacious as hell. You're all in, you're not looking back, and you're not revisiting decisions. And then when you get to that date, you're like, “Let's look at all the data.” And if at that point you're like, “Ugh, this product sucks,” then you gotta pivot fast again. It’s important to remain decisive there.

Changing directions a bit, before you founded Apollo Fusion you used to be Vice President at Google and Project Leader for Project Loon, one of the moonshot projects within Google X. High-altitude balloon projects are increasing areas of activity in the aerospace community, either for atmospheric tourism or Earth Observation. What are your thoughts on the opportunities and challenges of those technologies?

There are some real advantages to balloons. Theoretically, it requires zero energy to go from the ground to 60,000 feet because you're using buoyancy and there’s no propulsion system needed for raising the balloon. In addition, conceptually it requires zero energy to keep the balloon at 60,000 feet because again, its buoyancy holding it up there. That's a big advantage over a powered drone or something like that.

There are other advantages to balloons from an earth observation perspective. The resolution of imagery, or how clear your pictures are, increases linearly with the distance. So it's a huge advantage to be, say, 20 kilometers up versus 400 kilometers up. That's a 20X advantage in terms of image resolution.

In addition, it improves with the square of distance for link budgets, meaning the power and losses for a communication signal. So if you have a balloon at 20 kilometers, you're gonna get 400 times better link budget than a satellite at 400 kilometers. At the same time though, many people thought that in terms of connecting to a phone handset, balloons could do that but satellites never would be able to because of the link budget being so much worse on a satellite. That's not so true anymore though. You have a number of companies working on that problem, for example Lynk, AST Mobile, and Apple with SOS systems. You’re at the very edge of being able to do that if you’re around 400 kilometers up, but I think people are starting to do it with satellites now. At the time I was working on Loon though, that was a big advantage for balloons.

However, the big challenge for balloons is in getting overflight permission. Balloons need overflight permission. Every country whose airspace you fly into, by definition you need their permission. Whereas with satellites, all the UN nations basically agreed that with satellites you can fly wherever you want. That’s maybe the biggest difference between balloons and satellites.

Any thoughts on all the geopolitical activity related to balloons earlier this year?

Well, to start, I think the Chinese balloon was definitely a spy balloon. I suspect they got away with it a few times previously, so they didn't really imagine how much of a ruckus it would cause. I wouldn't be surprised if it actually did get blown off course, but unless they lost command and control ability over their balloon, they could have brought it down in the ocean off of Alaska or some very remote place in Canada. So that was a provocative move.

Balloons can be pretty inexpensive though. The US government is potentially spending $500,000 on missiles to take down $25,000 balloons. So it's a little crazy. But we'll have to see what happens.

That wraps up part two. If you enjoyed this interview, subscribe to SpaceDotBiz to get more insights like these straight to your inbox!