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Hi friends 👋,

Happy Monday! Hope you had a refreshing weekend; now it’s time to talk about space factories.

Varda is one of the most ambitious companies I’ve ever come across. It’s a space company and a biotech company rolled into one, with a hypersonic testing service thrown in for good measure. Not Boring Capital is an investor in Varda, and I’ve been talking to Varda’s co-founders, Delian and Will, about writing a piece on the company for almost two years. We decided to wait until the perfect time: launch day.

This afternoon, Varda is going to launch a drug manufacturing factory into space aboard a SpaceX Falcon 9 rocket. The factory will orbit the earth for a little over a month, running tests on the spacecraft and its drug manufacturing capabilities, and then come hurling back down into the Utah desert in mid-July.

Because Varda does both space and bio, I teamed up with Elliot Hershberg to tell its story. In addition to being our biotech partner, Elliot writes The Century of Biology. Little did he know when he started writing that the Century of Biology would play out both on the earth and above it.

I’ve told you that things were going to get really weird, and that the most interesting things were going to happen at the intersections. Varda is what I’m talking about.

Let’s get to it.

Varda: The Space Drug Factory

(Click this 👆 to read the full post online)

I was on a call with Varda co-founder and CEO Will Bruey the other day when, answering a question about how his company has been able to recruit so many SpaceX engineers, he said something that really helped put Varda in context: 

“For all of us who’ve been at SpaceX for the past decade working on how to get up to space cheaply, once we did that, the question became: what do we do up there? Manufacturing was the obvious next step to a lot of us.” 

No matter what happens next, where we currently stand in human history is marvelous in the original sense of the word. Going up to space is cheap! Manufacturing things in space is an obvious next step! What a time to be alive. 

This afternoon, just 874 days into its existence, Varda will launch the world’s first commercial space factory into orbit. It’s the company’s first test flight en route to manufacturing drugs in space for use on earth, and a major milestone in humanity’s journey to expand our capabilities beyond our home planet.

The video ends with a catchy line: “Getting to space is old news. Now, it’s what you do when you’re out there that counts.” Getting to space is old news! Wild. For most of our species’ existence, getting to space was unimaginable.

For the vast, vast, vast majority of human history, everything that our ancestors did and made remained on earth’s surface and within its atmosphere. A picture of earth and all of the man-made things in the sky would have looked like this: 

We became a spacefaring people in 1944, when Wernher von Braun and the Nazis sent the first human-made object beyond the 100 km boundary that defines space, the V-2 rocket. 

It would take another thirteen years for us to send something out to space and get it to stay there, in orbit around the earth. In 1957, the Soviet Union launched Sputnik, the first artificial satellite to orbit the earth. 

The Soviets struck again four years later, sending the first human, cosmonaut Yuri Gagarin, into space, where he orbited for 108 minutes on April 12, 1961 aboard the Vostok 1. Gagarin joined a small but growing number of satellites in low earth orbit (LEO), those little green dots. 

The Soviets’ space supremacy spurred their Cold War rivals into action. In 1962, President John F. Kennedy “chose to go to the moon in this decade,” and in under seven years, NASA fulfilled his promise when Neil Armstrong took “one small step for man, one giant leap for mankind.” 

The Americans had won the Space Race, but the Soviets continued on. In 1971, they launched the first space station, the Salyut 1, into orbit, marking the first time that humans could live and work in space for extended periods. They joined a growing number of LEO satellites (the green dots) and newer satellites further out in geostationary orbit (GEO, the purple dots) in their journeys around the earth. 

NASA’s funding plummeted after the Space Race wrapped up, but it didn’t completely stop innovating. In 1981, the US launched the Space Shuttle, the first partially reusable spacecraft. The rocket itself couldn’t be reused, but the Orbiter, the plane-looking thing strapped to it, carried astronauts back down to earth in relative comfort compared to splash-landing in capsules. 

The Space Shuttle would come in handy when, in 1998, construction began on the International Space Station, a cooperative effort between the US, Russia, Japan, Europe, and Canada. Humans have continuously inhabited the ISS since its completion in 2000, where they’ve conducted scientific research in microgravity spanning biology, physics, astronomy, and meteorology. 

While commercial enterprises launched communications satellites, space remained largely the domain of the governments who monopolized launch capabilities until 2003, when Elon Musk founded SpaceX with the goal of building reusable rockets in an effort to dramatically lower the cost of getting things and people into orbit and beyond. In 2015, SpaceX successfully landed its Falcon 9 rocket for the first time, effectively firing the starting gun on the commercialization of space. 

Just seven years after the first successful landing, the number of objects launched into space annually has increased 10x, from 222 in 2015 to 2,163 in 2022. The ramp has been particularly steep since 2018, when SpaceX launched the Falcon Heavy, bringing launch costs down from 10x from the turn of the millennia, to $1,500/kg. On April 20 of this year, SpaceX launched its first orbital test flight of the tallest and most powerful rocket ever flown: Starship. While the rocket exploded, getting that behemoth off the ground was another giant leap towards a future in which launch costs on Starship reach less than $100/kg. 

We’ve written about it before, but it takes a lot of repetition for it to sink it. We can’t quite grok it yet ourselves. The existence of SpaceX and the dramatically cheaper and more frequent launches it offers makes space businesses not only possible, but economically viable. 

Satellites were the first step. Thousands of satellites, used primarily for earth observation and communication, dot the skies. SpaceX’s Starlink satellites make up a huge chunk of the objects in space, and their number is set to grow dramatically with Starship. In the coming years, cheap satellite internet will blanket the earth. Already, the map of 8,315 active satellites orbiting our planet looks like this: 

But if we are to expand the economic bounds of humankind beyond our planet, the economy that evolves in space will need to mirror the one that’s developed on earth. 

Today, we’re entering the next frontier on that journey. At 2:19pm PST this afternoon, Varda is launching the world’s first commercial space factory onboard a SpaceX rocket. 

This first flight is mainly a test. Varda needs to prove, primarily, that it can send a factory to space, orbit it around the earth, and send a capsule with a payload safely back down to the planet’s surface. 

If things go really well, Varda will also showcase its ability to manufacture drugs in space. It will crystallize ritonavir in microgravity in order to explore how gravity influences the resulting crystal structure. Ritonavir is a famous example of polymorphism in pharmaceuticals, where differences in the symmetry and structures of the crystals lead to drastic changes in solubility and bioavailability. By crystallizing pharmaceuticals in low-earth orbit, Varda seeks to explore how microgravity can be used to drive novel polymorphic outcomes.

It’s one small step on a mission to manufacture things in space for use on earth as we learn to manufacture things in space for use throughout the Solar System. 

We’re lucky to be investors in Varda via Not Boring Capital and to have had an inside look at the company’s progress and future plans, and we can’t think of any better time to share them than right before the company’s potentially historic first launch. So today, we’ll cover: 

• The Varda Story

• How to Build a Deeptech Company

• Varda Goes to Washington

• The Benefits of Dual Use 

• Manufacturing Drugs in Space

• What to Expect from the First Mission

• Expanding the Economic Bounds of Humankind

When you say the Varda concept out loud – space factories making drugs in orbit – it sounds crazy, or at least sci-fi, like one of those things that could maybe happen in the future but surely not now. But when you break down all of the things that go into making Varda work, from launch rideshares to satellite manufacturing to pharmaceutical research in microgravity, it all snaps into place: this is a futuristic sci-fi capability that’s both possible and practical today. 

The Varda Story

If you’ve spent any time with Delian Asparouhov, the Founders Fund partner and Varda co-founder, it’s hard to imagine him locked inside with no outlet for his energy during COVID. Delian speaks so fast his words are measured in Machs. He dropped out of MIT with one course to go because they tried to make him sit through a CS class on a topic he already knew. I’m surprised the photographer was able to get him to stand still for this picture. 

So when COVID lockdowns hit, and Delian was stuck at home with the venture market slowing and a bunch of free time, he started re-obsessing over an idea he’d been obsessing over for a long time: space. Specifically, Delian was interested in space manufacturing. 

Space manufacturing, even manufacturing drugs in space, had made sense from a technical perspective for a while. Astronauts have been doing research on protein crystallization for decades, first on SkyLab in the 1970s, and on the International Space Station since it went into orbit around the turn of the millennium. 

Shifting from research to manufacturing, and doing it economically and commercially, however, was still a moonshot. A company called Made in Space, founded in 2010, had seen some success building on-orbit manufacturing capabilities for the ISS, but it didn’t reach serious scale or make much economic sense and was acquired by Redwire in 2020. So space manufacturing was kicked into the “sci-fi things to do one day” pile. 

But by the start of COVID, the stars were starting to align, on the macro and micro levels. 

On the macro, the ZIRP environment was fertile ground for capital intensive space companies, something Delian noted on Twitter as he was noodling on the idea for Varda.  

On the micro, space economics had shifted dramatically. Declining launch costs could make the unit economics of space manufacturing pencil out for the first time. 

In 2019, author/astronautical engineer Robert Zubrin wrote a book called The Case for Space: How the Revolution in Spaceflight Opens Up a Future of Limitless Possibility. Zubrin would know; he was partially responsible for the Revolution in Spaceflight. In 1996, he’d written The Case for Mars, which inspired a young Elon Musk to start SpaceX. The 2019 installment took stock of the near-term implications of that company’s impact, and the long-term possibilities as we bumped into the limits of physics. 

Zubrin goes through the math on a number of soon-economical space verticals, including rapid passenger travel, space tourism, space business parks, on-orbit research, and orbital industries. Specifically, he writes: 

Could profitable mass-production operations actually be initiated on orbit? 

The answer to this question depends upon a variety of factors, chief among them the cost of space launch, which today stands at roughly $5,000 per kilogram to low Earth orbit. At such rates, creating orbital industries is out of the question. But at the $200/kg rate that now appears to be achievable, matters change radically. In order for space-based manufacturing to be profitable, the value of the goods produced per unit weight must exceed this figure...

Taken together, these factors would tend to rule out almost all alloy or other materials production operations, but the production of advanced computer chips, unique pharmaceuticals, or lossless fiber-optic cables. 

Reading the book helped convince Delian that the time was right to take space manufacturing out of the “sci-fi things to do one day” pile and make it a reality. He’d seen SpaceX’s impact firsthand. 

We’ve shown this graph a bunch, because it’s the most important one underpinning the explosion of activity in space: 

SpaceX’s impact extends beyond costs, though. Elon’s rocket company has also made getting to space more flexible and trained a new wave of space talent. 

To make space manufacturing work, Delian would need to leverage both of those opportunities. Easily bookable (and moveable) ridesharing would mean more flexibility in product development and scheduling to meet customer needs. And the availability of SpaceX-trained talent – a rare group that possessed both rocket scientist smarts and Silicon Valley speed – would mean faster ramp times and a higher likelihood of success for the companies alluring enough to hire them. 

That was the first thing Delian needed to prove to himself before starting the company: that he could get the right early people onboard. To be successful, the company needed to excel at three key things - manufacturing in space, getting the payload back to Earth, and selling to both commercial and government customers. He’d need leaders who were world-class in each of the three. 

Will Bruey, Varda’s co-founder and CEO, is an expert at getting things back to earth. He spent over five years at SpaceX, where he led hardware engineering on the Dragon and was the primary mission control operator for the spacecraft during flight. There are very few people in the world who know reentry like Will does. 

SpaceX is one of only two private companies to successfully re-enter from orbit, and when they re-enter, they do it in the Dragon capsule on which Will led hardware engineering. In March, four SpaceX astronauts splashed down in the Gulf of Mexico inside of a Dragon capsule. (Video of Dragon test landings.) 

Will said that when Delian reached out, it didn’t take a lot of convincing to get him to join on as CEO. As he mentioned in the quote at the top of the piece, space manufacturing, while a wild futuristic idea to the rest of us, was something he and his fellow SpaceX engineers had been anticipating for a while. And he thought the approach that Delian laid out was the right one. 

Delian and Will incorporated Varda Space Industries, Inc. and incubated it out of Founders Fund. In the tradition of Founders Fund-founded aerospace and defense companies, the name Varda was plucked from the pages of J.R.R. Tolkien’s The Lord of the Rings.

Palantir, the $31 billion public company that helps government clients visualize and analyze data to make better decisions, is named after the book’s seeing stones that allow their users to communicate and view events over large distances. 

Anduril, the $8.4 billion startup that “transforms defense capabilities with advanced technology” for western defense clients takes its name from the sword of Aragon whose name means “Flame of the West.”

The company that would bring manufacturing to space, then, would be named after Varda, the Queen of Valar who made the stars.

In December 2020, the newly formed Varda raised a $9 million Seed round co-led by Founders Fund and Lux Capital. 

Varda now had the money and the expertise to send things from the heavens back down to earth, but they still needed to figure out how to make things up there.

When he was considering joining Varda, Will called his Cornell classmate, Adrian Radocea, a materials science PhD who’d been working on materials for semiconductors, to ask a crucial question: “Does microgravity matter for materials?” 

Adrian was dismissive: “Absolutely not,” he told Will. “At the atomic scale, the force of gravity is nothing compared to the electrostatic force.” (The electrostatic force between a proton and electron is 10³⁶ more powerful than the gravitational force.) 

But it was COVID, and Adrian was stuck at home, too. So he started reading scientific articles on the question and came across literature on the effect of microgravity on protein crystallization. Turns out, microgravity does matter at the mesoscopic scale, ​​the length scale on which objects are larger than nanoscale (on the order of atoms and molecules) but still small enough that quantum mechanical or other non-trivial "microscopic" behavior becomes apparent. This is the scale at which protein crystallization occurs, which has important implications for pharmaceutical manufacturing. 

He called Will back to tell him that there might actually be something there, and that he wanted to come help figure it out. Adrian joined Varda as the Head of Product. 

Now the only questions left were what exactly to make and who would be willing to buy it. 

So Delian and Will tapped Eric Lasker, a physicist by education who worked as a cook at Michelin Star restaurants before transitioning to the business side of startups. Eric worked in Enterprise Sales and Market Development at Stripe and then led US Federal Partnerships for Zipline, the autonomous drone delivery company. 

They gave him his task: “Go build a business.” 

They knew that they’d be able to launch factories into space, make things up there, and send them back down, and they had ideas about the types of things you could make up there and that a rare commercial reentry vehicle that didn’t have human cargo might be valuable to the DoD, but that was about it. There were no comps for a business like Varda. 

January 19, 2021 was Day 1 at Varda. Will, Delian, Adrian, Eric, COO Jon Barr, and a handful of aerospace engineers got to work. 

The engineers, many of whom Will had brought over from SpaceX, knew where to start. They’d need to figure out how to build their satellite factory and capsule. 

Meanwhile, Eric and Adrian started figuring out which markets to attack first, and who would be willing to pay them for their out of this world capabilities, and quickly.

The Varda story can’t be contained to this planet… or to the email length limit. To learn about how to build a deeptech company, reentry-as-a-service, the benefits of being dual-use, why pharma wants to manufacture drugs in space, what to expect from today’s launch, and where Varda is heading…

Continue Reading Online

Thanks to Elliot for writing this with me, to Delian, Will, Eric, Adrian, and the Varda team for helping us get up to speed, and to Dan for editing.

That’s all for today. We’ll be back in your inbox on Friday for the Weekly Dose and we’ll be back on the summer schedule next Tuesday.

Thanks for reading,

Packy