Very fun movie. Anyway, we have Deli and Aspiru hub from Varda and Founders Fund in the TVP and Ultradome. Hit that com. Here he goes. There we go, the cell phone. There we go. Grab a seat. Oh, he's doing a victory lap. He's doing a victory laugh. We love a victory lap running around the table. For anyone who's been living under a data center, introduce yourself. Hi, my name is Dellene, co founder and president of Varda. Have a couple other side gigs, but that's the main gig. Let's focus on Varda today. Oh, yeah, we're talk space data centers. Right. We do have some chips up there. So in theory. But we do more valuable things than just some inference. We make some drugs up there. And there's a big announcement today. Yeah. So for the first time in human history, there is a large publicly traded company, United Therapeutics. $25 billion in market cap traded on the NASDAQ. They're using their own balance sheet to go produce a product, physical product, in low earth orbit with us Pharmaceuticals. They focus on pulmonary disease. So think, you know, lungs, blood, etc. Yeah, we're working on those products together, crystallizing them into a better formulation, bringing them back down. That's the only company that makes physical products in space. Everybody else, it's all radio waves, it's Internet inference, it's, you know, you know, photos of the earth, etc. This is literally the first time in human history where there is physical products being moved in space as a way to generate revenue for real business that that's happening or is about to be happening. Yeah. So we signed this deal, you know, caught like, you know, stop you right there. Because there's an opportunity for someone else to put. Oh, it's a race in a balloon. We should, we should race. We should race a bit. Balloons can't go to space. Balloons can't go to space. You gotta go. You gotta go on the rocket. A balloon. And then once you're up there, jetpack type thing to. Yeah, people have talked about that, like, you know, could you go float a rocket up there? But it turns out the like, size of balloon complexity, that you're just better off building a rocket to get the rocket up there. Yeah, I talked about it. Space ride. They would, they would take the balloon up and. Yeah, and this was actually used back in like the 30s, I think. I think they did some like, very early tests when rockets were small. Yeah. Yeah. Now that rockets are big and like satellites are big, a little, little harder to get up there. But, yeah, we signed the deal a little while ago. We've been working on the products with them for a period of time in order to get ready to go to space. We do do some work on the ground to understand, hey, what is the thing that we're going to go do in space? And let's make sure we figure out all the other process parameters. When you're, like, crystallizing a drug, there's a particular temperature, a mixing rate, a solvent, we just bring one extra knob, the gravity. Now, here on Earth, we can't decrease gravity, but we can increase it. And so alongside the customer, we look at basically adjusting that gravity knob down here on Earth, figure out kind of how to tune all the other things. So we're tuning the right knob. Once we get that all set, load that up into a spacecraft, send it up to space, obviously there, the gravity knob goes to zero, get a different result, land it in Australia, and then send it off to the clinic. We're still working with United on the ground so far, getting those drugs ready for flight, but we'd expect basically next year to fly the first United. And how are they making this drug on Earth today? Today, you're using traditional techniques. So there's a whole set of companies much less efficient. You're just getting a different result. So as an example, you know, the, you know, sort of use case or paper that the company was in some ways predicated on, Obviously there's been 40 to 50 years of work on protein crystallization up on the international space station, Skylab space shuttle. But in 2019, Merck basically showed their blockbuster cancer drug, Keytruda. They crystallized it up in space. They showed that they could shift the administration from what was previously an IV drip to now a subcutaneous syringe. So you don't have to go to an IV clinic. A rural patient that can't access IV clinics can now access this drug. And so that's what we're doing up there with United Therapeutics, is we're looking for basically changes in performance of the drug because of those different results that allows them to shift administration. United Therapeutics is famous for a variety of different things. So the company was originally started by Martine Rothblatt to solve a rare pulmonary disorder for her daughter, built that up into a huge platform. They've really leaned into the frontier over the course of last year, so 20, 30 years, including, they, like, you know, make, you know, gene modifications for pigs to create human organs inside of pigs. But one of the things that they're known for is for one of their pulmonary compounds. They shifted the administration from a nice pig town. Well done, well done. I like it, you know, a lot better than waiting on like a, you know, whatever 24 year old kid to die on a motorcycle to get your kidney instead. Just get it from a pig farm. But one of the other things that they're known for is they actually shifted one of their, you know, sort of primary drugs from an oral pill to instead of inhalable and made it much more efficacious, easier for the patient because you have to take the drug less often. It's things like that that we're looking to sort of do with them. Dumb question. You have the gravity knob, you're able to turn that off, but aren't you adding a knob for like vibrations and basically dialing it to 10? Like does that ever affect. Because you imagine you're sort of centrifuging it, like it's gyrating as it's reentering. So is that a problem? Do you have to, is that like for the selection criteria, do you have mitigation strategies? What you can think of is like in a pharmaceutical process where you're crystallizing something, you're basically going through like a phase change, you're going through from like a liquid to a solid. Okay. Where things is when that phase change is happening, okay, in that particular moment is where you don't want the sedimentation, convection, et cetera. So we do in some ways we like load up all the liquids ahead of time. Those liquids for sure on the rocket, light up, get shaken, et cetera. But it doesn't matter because the liquid's still saying a liquid. Yeah. Then up in space, what we do is we go through that phase change. We go from basically like a liquid to a solid. Okay. That needs to happen in a very pure environment. We shut down all the reaction wheels. We make sure that everything on the spacecraft that would vibrate is totally silent. Got it. So that it is as pure of microgravity basically as possible. Got it. It then becomes a solid and at the end of it, it kind of looks like a salt. Basically like think of it like table salt. Now on the way back, that table salt for sure is shaken a bunch. But the table salt, if you think about like a, you know, some table salt that we put, and we go put it in like a centrifuge for 100 years at, you know, a thousand GS, it's still going to be table salt. Where are those like Vibrations, you need to manage heat more. You do need to manage heat. If you melt the salt, you're fucked because then it's back to a liquid. But you know, this is what you convinced United that we would be capable as a partner is we actually had data sets from our very first mission where the surface of the heat shield was than the temperature of the surface of the sun. So like extremely hot on board. I think it was like something like 14 degrees centigrade, plus or minus 0.1 degrees. And so we had extremely precise temperature control on board. And so a lot of what has brought people to the table for this sort of first commercial deal is while there's been this historical work on the iss, nobody had showed how do you go do this on a purely private platform, fully autonomous, low cost, high cadence. And a part of what convinced them was yes, both the regular flights we've been doing right, we are now on w, sort of 6, 7, 8 and 9 will be sort of launching later this year. But it was also, hey, not only are they launching and landing these things, but on board they've got the right process control. So I can see, hey, they can go work on my drug. And by next year when we fly seven times in a year, that's gonna be higher cadence than everything that the like iss, space shuttle, etcetera have done in all of human history, let alone in 2028, 2029 as we continue to go higher and higher cadence. So how many things need to go right in a row to have a successful mission? I imagine that there's like all these different, like just the space mission or get the drug into the clinic because the drug in the clinic is more complex. There's just the space mission. The space mission at this point we've kind of shown we can do pretty safely. But I'll walk you through it. First on the ground we got to go build basically effectively think of it as like a two part spacecraft. One is sort of looks like a traditional satellite system. It's a little bit lower power and under, you know, spec'd relative to most satellites because we don't need super high power to communicate with, you know, Internet terminals, radio waves of photos, et cetera. Oh, that makes sense, yeah. The only power we need is just to run the bioreactor and the bioreactor doesn't consume that much power. So think of it as like, it is like basic telemetry. Yeah, basic telemetry, but we don't need like super high pointing accuracy while just flo because again we're not pointing at a particular place on the ground to basically try and like take a photo of it. And so think of it as like we build an underspec sort of satellite. Now the one thing that it is big on is like it's got a lot of thrust and propulsion on board because we need to come back unlike every other satellite, but otherwise underspec satellite. So we do those on the ground. We've now built a handful of those. Then we have to build the second part of the spacecraft, which is the re entry pod. All of this does have a relatively complex supply chain. Think like those solar panels, the GPS chip, the flight computer, that type of stuff we buy out of house. Some things you have to do in house, you can't buy a capsule like off the shelf. So we have to build the heat shield, the structure, etc. Around that. Those have to get integrated. We have to do a bunch of ground tests to make sure that works. Then you ship it off to SpaceX's facility a couple months before launch. Make sure that everything's still working over there, install it onto the rocket. Once we're on the rocket, we kind of look like any other satellite that goes up there. Whether it's like, you know, asteroid mining satellites or comm satellites or spy satellites. SpaceX takes us up to orbit, they then drop us off again. Like any other satellite. We spend between, call it like 4 to 12 weeks up there. Kind of depends on the drug manufacturing process. Some go pretty quick, some take quite a bit of time. While we're up there, we have basically pharmaceutical scientists on the ground in Mission Control. So you remember those like Apollo films. In Mission Control we literally have like, think like Amgen scientists, but like they're in Mission Control talking to the Bairu out there. I can imagine you love hanging out in there. Brui always makes fun of me. He's like, you know, I don't quite know the American idiom or don't get it, but hopefully you guys will. But he's like, he calls me like the gentleman's Mission Control where like there's like the gentleman's farmer. It's like the guy that stands around the farm, but it's like he's not really doing anything. I'm like the gentleman's mission Control where like yeah, I like hanging out there. Obviously I like. I'm completely useless and mostly a distraction. So I try and mostly just listen into the live stream. Now. Every team needs a class clown. Yeah, exactly. Can you unpack a little bit more about the Orbit. There's a piece in the Journal today, space data centers face a lot of challenges. They all got to go to sun synchronous orbit. I imagine you don't. But I want to know about the knock on effects of like, what can you tell me about Sun Synchronous orbit? What orbit do you use and why? And then how might this change what happens in the future? Yeah, part of what's beneficial about sun synchronous orbit is you're basically like always like facing towards the sun and have sunshine. We are not as dependent on that. As I mentioned earlier, we're not super power constrained. And so we can just charge up, you know, basically our batteries on board. And while we're on the dark side of the Earth, we can basically just drain those batteries, recharge them basically on like the next orbit. We're up there just for the microgravity and so we can be in almost any orbit. That gives us a ton of benefits. One, when you're in space, you don't have to worry as much about traffic. We just go where other people aren't. But two, it actually helps a ton with launch. You know, as an example, later this year for the first time we'll be actually launching. Historically we've only launched to sun synchronous orbit because that's where all the transporter missions, which are the SpaceX rideshare missions. That's what I was going to ask. They now have what are called bandwagon missions, which go up to. They're also rideshare, but they go to polar orbit. We'll actually be flying on our first bandwagon mission later this year. So now we have launch flexibility. Bunch of companies that can't go on bandwagon or basically we're actually probably one of the only companies that can go on either. Yeah, that's what I was going to ask. Because what happens if everything winds up being sun synchronous orbit? Because I think there's 10,000 or so Starlink satellites. Elon's asking for a million for space data centers. That means like 90% of the launches are going to be Sun Synchronous. But that's okay for you? Yeah, we're okay going to Sun Synchronous and we can quickly get out of the orbit if we can need to try and go, you know, so slightly off of it, or we can just go to Polar and be totally sort of happy there. Yeah, and that gives us some benefits on the launch economic side of things where now we're Basically able to go on any rocket. Yeah. So I was going to ask. It seems like every hyperscaler, some startups are and some of the labs are thinking about space. Are you expecting launch to could theoretically increase bottleneck launch? It's been falling for so long, but yeah. What do you expect? Yeah. How are you planning? Because you have to buy capacity. Launch capacity years out. Yeah. To date, launch prices have only gone up, so they have not gone down since we started the company. Launch costs for Space X, I'm sure have, but there has not yet been pricing competition, so why would they necessarily pass on those savings to us, you know, and they haven't, I think, seen that much price elasticity in the market when they've like lowered prices, it's not like they've seen like 10x greater demand. And so for them it's like capture as many margin dollars basically as possible. Yeah. I do think what we're going to start to see is more competition in the launch market over the course of the next five years rather than the prior five. Right. Blue Origin, I think it was today or yesterday, announced that they're going to be doing their first external sort of fundraising, which speaks to, I think, them taking themselves much more seriously as a company that is going to regularly show shareholder value and launch very regularly. You've got Rocket Lab now. It's like a $65 billion company. Definitely have enough resources to go tackle Neutron and they've got shareholder expectations for them to get that medium lift sort of rocket up. You've got Stokespace and so there's a few others basically playing in it. We are booking out sort of rocket launches now all the way through 2029, so have the capacity that we need for the next year, sort of many years. And I think by the time we're getting into booking late 2029 flights. Yeah. There's a world where there start to be basically more providers online. SpaceX, at least basically to date, has been like for us at least as many times as we've wanted to launch, that capacity has been available. They are not capacity constrained, they are still more demand constrained. I do think that because no one's making anything in space, totally nobody's making one. And that's why they were able to be so successful with Starlink, was because they had the residual capabilities. Right. It's like tealism. Right. It's like we created the space economy and then it's just more Internet. Yeah. More apps and now it's just gonna be more AI. How are you thinking about Other drug categories. I can imagine Space Retta would be a pretty hot drug if people would smoke Space retta. Yeah. One thing that I didn't realize is, so Ozempic. Today, one kilo of ozempic retails for a million dollars. And so what people don't realize what people ask me, like, oh, space drugs, economic, etc. Does this stuff work? I have to tell them, like, yeah, for you, it might be like a thousand bucks, you know, basically per shot. But like, it's because there's very, very little Ozempic basically on board. A lot of them are like powders that then get diluted and then injected. And so like. Yeah, the actual core ingredient's so tiny. Exactly. And what we do up there is we just make the powder. Yeah, exactly. United has United Therapeutics, you know, our partner that we're announcing today. They have a ton of expertise in all things like, you know, rare pulmonary, certain disorders. They're for sure going to be the person that we work with on that indication area. But microgravity has a wide set of pharmaceutical applications. Neurological, immunology, oncology, et cetera. And so for sure we'll start to, I think in the success case of Sivarta, it's not going to be like we have 50 different partners. It's probably going to be like five to seven that we go really deep with. We kind of choose sort of one partner per indication area that we go as deep as possible. Ophthalmology is another area that we're looking so deeply at, partially because the eye, smallest organ, again, smallest amount of powder that you need. Also an area where some of the other changes of administration technologies don't really work as well. And so, yeah, we're starting to explore who are the partners for the other indication areas. What about beyond Bio? I remember ZB Land being something that people were talking about potentially being able to manufacture microgravity. Wildly different economic trade off there. But are there other. When you imagine like the industrial city in Leo, like, are there other categories that extend maybe 10 years out, 20 years out, where it might be logical? Yeah. I think, like, if we look at the next decade, you know, call it if there's 200 products that are manufactured in orbit, I think 195 of those are going to be pharmaceuticals. So vast majority is going to be, you know, sort of there. And that's where our core focus area is. If I, you know, sort of peer into the crystal ball and look at what comes next, I do actually think probably fiber before semis is probably you know, sort of my rough guess. Yeah, when we were looking at that like high end, you know, sort of Z bland, you know, fiber market back in 2021 when we started the company, there was clearly some level of like, you know, sort of interesting capabilities there, but just like relative to what we were seeing on hypersonic pharma, not large. Interestingly, that market has matured a lot. There's sort of two sort of call three areas where it has applications. One is it is the lowest. Basically you know, think of it as like interference inside the optical fiber for infrared. Near infrared is now used in a lot of the high energy weapon systems. If you think about having to pump that laser through a fiber, you basically want as little basically resistance as possible. There's just like a lot more being spent on those types of near infrared weapon systems. Especially with some of the like the anti drone stuff that's sort of coming down the pipe. So that's sort of expanded. It's also used now a lot more in like metal cutting and like organ like eye surgery relative to where it was sort of five years ago. So that's expanded. The other area is quantum communications. So quantum entangled photons are much more sensitive to those types of impurities in fiber. Quantum comms has also grown a lot over the last five years. And then the other area is oddly data centers. You know I was going to say as soon as there's a data center story, there's going to be 25 companies that funding IPOs and stuff. So ground data centers, not space ones, but they are actually. No, no, no, no there you bring it back and then you. Dude, zblan is now being used in terrestrial data centers. That was not a use case at all five years ago. So all these things and optical inner. Yeah, they're still like early I would say but. And like you know what's happening though is also like the VARD economics keep improving on a flight by flight basis. The Z plan market keeps growing. We're like for the first time, I would say we're like dedicating resources or anything but like around the office for the first time in five years somebody was like the Z plan stuff is like almost starting to pencil out again. It's probably like four years till we like, you know, sort of do anything. But like you're starting to see those lines start to get closer together. That's what I love about a platform like ours is like if you had told me like predict where your revenues would be five years ago, really hard even this year like, things that are landing are probably not what I would have underwritten a year ago. Like, I think pharma has, like, way exceeded expectations. Like, it's pulled in probably like three and a half years relative to like, you know, our series C that we announced last year, our financial projections on that, on pharma were just like, totally, you know, sort of wrong. And so I'm excited by the idea that, like, yeah, there might be other areas that are wrong. Semis, I think, is just going to be like, you know, the furthest out partially. Just like the process equipment and the sensitivities. Like, if you think about a bioreactor, it's like hard, but it's kind of like mixing liquids together. The hard thing is which liquids. That's what's hard, the mixing of it. Not so hard. Yeah, but you're making those decisions down here on the ground. Fiber, same thing. It's like, you know, it's like once you make that like, precursor, like rod, then drawing it is not like a crazy, complex process. It's making that rod that's hard. But again, you're doing that on the ground with semis. It's like, oh, my God, that process is so, so sensitive. Right. If you look at like the like, you know, stuff that they use for euv, basically, like, you know, lithography, the mirrors for that. If you were to lay out a lithography mirror over the course of this of Germany, the amount of variation you see in terms of like mountains would still be less than 0.1 millimeters. And so this stuff just has to be like, so, so, so, so, so, so, so precise that it's just like the cost is so high. Yeah. Even during the experimentation process, you could. Yeah. The famous quote from TSMC is that if there's an earthquake, they don't have like a pager duty. Like, they don't slack. Everyone. Hey, you got to come in. There was an earthquake. Everyone knows if there's an earthquake, just go to the factory. Exactly. And the employees just know because it's just so, so important. And so just that like microgravity process equipment is just so much more complex. So it'll get there one day. But like bioreactors, the fiber draw things are like orders and orders of magnitude simpler to make. Like microgravity bioreactors, microgravity fiber draw towers. Yeah, yeah, yeah. Will it ever make sense to have a permanent, like, ISS style structure that you are transporting supplies to and then sending, you know, finished product down? Because, like, knowing you, you would like to Have a proper like dedicated space factory. But does it actually make sense? It's always been the somewhat secret, somewhat not secret, like ambition of Varda is to go build that, but go do it step by step, right? So when you look at like generation one of basically what we're building, it's this two part spacecraft, right? Satellite, pod, satellite has all the process equipment, et cetera. Pod just has the finished good. When we're done, pod survives all that process equipment, everything on board. We basically just burned it up. Generation 2 that'll be flying in like Hall 2029. Think of it as just like we make it so that that heat shield material just envelops everything. And so now the satellite plus the pod, they both survive. And that'll probably look like a little mini space plane is kind of how you can think about it. So space plane has the solar panels, the propulsion, it's got the process equipment. It's also got the finished good that goes up and down. And so now that full system is reusable. Improves the economics. We'll have more payload on board too. Now at some point it doesn't make economic sense to keep moving that process equipment up, down, up, down every time call. By the end of the decade, the goal will be we'll start to invest into those fixed pieces of infrastructure in orbit. Early on they'll probably just look like a satellite, just with a little docking port. Basically the space plane will come with the raw ingredients, basically the liquids, et cetera. It'll dock with that satellite up in orbit, exchange for the fabricated goods. But then we'll have 10 of those satellites. We'll start to stitch them together. Basically looks like a station. One day there'll be so many of those pieces of equipment on board that we'll be able to economically justify, hey, probably need a dude with a wrench every once in a while to go like fix some stuff up there. But like once we can economically justify like one person with a wrench, 10, 100, a thousand and so like yeah, we for sure we want to build the first industrial city in low earth orbit. But we're taking it like one step at a time. Building out the business, getting great unit economics, proving out one use case at a time. What about the other parts of the stack that you actually need for that? So like I'm thinking like docking. Is there a startup that's just. Just working on docking? Yeah, I mean, you know, sort of credit to them. There's a company in Seattle called Starfish, you know, sort of space that is Hyper focused just on like the like docking, maneuvering, the software for that. Yeah, that, that feels like something that like if that's not your core competency, like seems like you could have a series of nightmares around just trying to figure out docking. And that is a probably, you know, super widely applicable process for the rest of the space economy. Totally. It's like, you know, back in the day we would have had to make our own solar panels, our own thrusters, propulsion tanks, etc. For like the stuff that we build on the ground. That stuff, you know, over the course of the last decade has become a much more mature supply chain. As we start to get to this like space station world, I think there'll be some of these things where like Starfish I believe basically makes this like camera that you can basically attach to your satellite. They take over the controls for your like propulsion and they'll dock you to wherever you're needing to go. Yeah, five, ten years ago, there's no way that we would have like been able to buy that. We would have absolutely had to build it. And so yeah, I think on an ongoing basis we'll always be doing that, you know, sort of by trade and ideally obviously if there's an off the shelf solution, integrating that and that only accelerates basically our progress. And so yeah, it's cool to see that like as obviously VAR is developing the general space economy and all these use cases are developing and heck, when you said like you know, sort of warehouse in space, there are companies like Gravitics that are trying to do like dedicated warehouse vehicles. Maybe there's some world where like, yeah, we like buy the warehouse and we just install some docking ports, fill it up with process equipment, but we don't have to like build the warehouse. I'm not like opposed to that. What we really want to focus on is like we're have the best lab down here on earth to like assess how to make these formulations. We definitely have to make the bioreactors ourselves. Nobody else is going to make microgravity bioreactors. We got to make those space planes basically ourselves because like nobody else is going to be bringing those up and down all the time. But the rest of it pretty open to like you know, buying where we can. How are you thinking about the public markets? SpaceX is going out at like in the trillions. A lot of bio companies, I'm sure United Therapeutics went out in the billions probably. And a lot of biotech companies, they go out early, pharmaceutical companies go out earlier. The public markets sometimes they like really stable projections. Do we understand the quarterly forecast? Sometimes they like a big vision and you get out there with a Tesla or something and it does really well. What is your take on how you might fit into the public markets in the future? Yeah, I mean there's not a lot of private like 10 billion dollar in market cap like pharmaceutical companies, they basically all go public before that it's like, I mean there's so many deals like every day a big biotech company is buying something for 1 billion, 2 billion all day long. Totally. That's basically the default. Yeah. Now I think like GLPs have shown that like in the therapeutics world you can build a like you know, business that can effectively be like a trillion dollar outcome one therapeutics business. You know we're definitely thinking about that from the you know, founders fund. Hat side of things. How do we back things that aren't just that one to $5 billion therapeutics outcome? Edvard. I think we'll look at it like on a round by round basis where like I think about it as like cost of capital. The public markets are offering me a lower cost of capital because they have more expertise because there's a bunch of hedge funds that have like MD PhDs and tons of them on staff to deeply understand pulmonary diseases, ophthalmology, et cetera. Yeah, we'll go to the public markets if that's the case. If we're still seeing tons of support in the private market and we think it's like relatively not similar, we'll study private for a period of time. If I had to again peer into the crystal ball, my guess is like yes, relative to a SpaceX or an Anduril or things like that, I think we will have much lower cost of capital early on sort of being public rather than not because the public markets have so much appreciation for the types of clinical data sets that we'll be putting out. What about on the other side? I've heard there's like a really great way to make a lot of money really quickly as like an unlicensed broker dealer of like SPVs. Like would you recommend that? What's your take? You know, get into that game like find, go to some employee. There's no securities laws. Random person, oh, there we go. He can't find me there. But how have you been processing the SPV boom. All of these questions around brokering and what's going on there. Yeah, I mean I think, I do think that one ladies like anthropic tweet basically Led to anthropic, like, policy on this. Part of why that, you know, sort of is happening is, you know, there's this SEC regulation on the number of entities you can have on your cap table while staying a private company. I forget the exact number. I think it used to be a thousand. Now at 6,000. These private companies, as they stay private so long and have this number of SPVs, and especially as these SPVs get warehoused out, it increases your entity count. And so I do think there's a significant user lockdown on it. And employees typically own options and the. They don't show up on the cap table until they exercise. Exactly, exactly. So, yeah, I mean, we're, we're obviously tracking that of ARDA in terms of how many entities we have. We're not seeing some, like, exponential growth. We're like, we're too worried about it. You know, I don't know that we've been like, as stringent to date, but as I look at our future rounds. Yeah, like, you need to start to think about, like, okay, how many more rounds am I going to stay private? And at some point, like, I need to keep the entity count managed. So I totally get the anthropics of the world. It's like they've just raised so many good bajillion of dollars in the private markets that like, they have to. I did get some more backstory on that one deal. Yeah, it was allegedly. Allegedly. It was a much more complicated structure that wasn't as bad sounding as the original post said and there was an SPV involved and some other stuff. But anyways, why? Every single person that you know that has invested in the company has probably come to you saying, like, what are you doing with data centers? And all the biggest companies in the world are now like, dedicating resources to it. You guys are seemingly staying like, extremely focused. You've had conviction around timelines, around space data centers being longer. But now that the sort of regulatory environment on earth is changing, things that could change potentially the need or the economics. Like, when would you change your mind and capitulate? I mean, I'm definitely, you know, sort of open to changing my mind as like a shareholder of companies that may take advantage of these technologies. As somebody that's going and building a space company, I really want to focus on, like, where I think we have the right to win. And can you sort of build up something that has, like, you know, sort of durable margins? Yeah. Not a great situation. Like you being in a situation where you're like, this like deeply entrenched partner with, with five, you know, massive pharmaceutical companies that are dependent on you for a specific part of their supply chain. That is much better business to me than like competing with SpaceX on like, you know, putting GPUs in space when they just are naturally going to have a lot of advantages. And so it feels like, yeah, you could pull forward like around. But do you shoot yourself in the foot in the process of that? Yeah, I just think there are a lot of companies in the space industry that will raise off of contracts, renders, etc. But ultimately these things aren't durable unless you are regularly flying spacecraft, building up a production line. Right. You know, the Elon quote that I love is like, the factory is the sort of product. I think the thing that we've done well at Varda is we've stayed hyper focused on just like our particular W series vehicle, getting that up to, you know, production rate, flying it regularly, making sure that is succeeding and serving, you know, customers across a wide variety of verticals versus distracting ourselves with like there have been a lot of opportunities that we've said no to. I'm sure some of those things in the short term would have inflated our valuation, top line, etc. But wearing your investor hat, you're like, I don't care about what my valuation is today. I care about, I care about where it is in like 10, 20 years. And so like, I don't need to like listen to the noise of the market. And so I think that is the benefit of like having somebody like me on the, you know, sort of cap table or as a, you know, sort of co founder versus like there are plenty of companies that had XYZ vision two years ago and are now fully pivoting to space data centers because like that's where investors are deploying capital. And at some point it's like if you're changing your company vision and product off of the basis of like where investors are like cycling capital into versus like what customers are demanding. And this is where it's like, look, I like, are there areas where it's like, yeah, Z plan might get affected and there I think we have much more of like a right to win. And that affects terrestrial data centers and things like that. Yeah, like there might be areas that we, you know, sort of play but like go launch a bunch of Nvidia Jetsons up into orbit and do that at economics that aren't competitive relative to SpaceX. And even then I think the SpaceX economics, while promising, still have A long ways to go. That's not a game that I want to play in. You know, competition is for losers. There you go. Yeah. Yeah. I mean, also, like, you're so far from realizing, like, the TAM of what you're building, like, makes sense for Google to, like, jump into AI. Like, search is saturated and they need the next thing. Yeah. It's possible we'll look back on this moment and be like, okay, every viable competitor to actually go and compete in pharma, like, went and did this other thing, and maybe some did well, but then that still left an opportunity to just kind of like, verticalize, own the category. And I think what, like, tech people misunderstand is just like the, like, size of the TAM in pharma. Oh, yeah. So, you know, anthropic is what I think, like a $60 billion run rate or something like that. I forget like the, you know, sort of latest numbers. Keytruda, that drug that I mentioned that Merck did in 2019, that one drugs top line last year for Merck, $25 billion in revenue. Just that one drug. Yeah. They obviously have many other drugs. There are many other cancer drugs, There are many other immunology drugs. And so it is a massive tam. If you're able to actually significantly improve the performance on these things, capture some upside side, start to go more full stack yourself in pharma. I'm not concerned. And especially, by the way, once there's AGI, what do you think everybody's gonna be focused on afterwards, when there's no more white collar labor that is needed, Everybody's just gonna want to live for forever. Where do you think all that capital is going to rotate into? It's going to rotate into longevity, therapeutics, manufacturing. And so I'm sort of happy to stay on the sidelines and sort of accept that capital once all the AGI people rotate out. I love it. I love it. Well, thank you so much for coming on the show. Oh, yeah. Excited to finally come in person in. Good to see you boys. So good to you in person. We'll talk to you soon, darling. Have a great. Say hi to the team.

Our next guest, Max Levchin, from a firm. He's the co. Founder and CEO. He's returning to the show. We've been keeping and waiting far too long. Max, how are you doing? I'm great. Thanks for having me again. Third time's a charm. Third time. What have you learned about. Third time can't be the charm I want 25th time to be so far. What have you learned? Let's keep it going. I love these. I enjoy this tourist. What have you learned about making coffee since the last. Yes, the important update, because I'm assuming you're never like, oh, I'm pretty good at this, or are you resting on your laurels? Are you the final boss? I'm absolutely not. Okay. I took apart E61 group, which is the classic 1961 sort of that. That's the granddaddy of all the espresso espresso group heads. And I wanted to learn how the mushroom valve works because I thought mine was clogged, and it turned out not to be clogged. But I went down an extremely deep rabbit hole of taking apart an E61, which I've actually never done before. So I'm. I'm now really boned up on how espresso machines worked in 1961 and since. But, yeah, yeah. People always talk about, like, when you get into coffee, you go. You effectively vertically integrate or go deeper in the supply chain. You start roasting the beans. You got to grow your own coffee. At a certain point, you have to be smelting the metals that go into the machines, understanding the alloys, coming up with new chemical processes. You have to set up your own mind. You're putting all kinds of wrong ideas. Not yet. Yeah, yeah, yeah, yeah, yeah. Did. Did you smelt the metal that went into the espresso mach? I've not smelt anything lately. I'm a novice, a real novice. Anyway, we're not here. Next time, I'll tell you all about my smelting experiences. Fantastic. I imagine that the smelting process is as intricate and as rewarding as the coffee making process. In some ways. Yeah. I expect you to be able to try a coffee and understand the alloy of the machine. Possibly, but I'm very, very long depth. Anything that you can go very deep into. Like, this is the time in general, but, like, depth as a competitive advantage is like a profound strength. So the reason I'm so into whatever things I'm into is I found over the years that if you out depth your competitors, they just can't be You. So I'm very pro smelting. I'm very pro going, yeah, yeah, that's interesting. Is there, is there a translation or if you transpose that to sort of like adv for young people who might have anxiety about traditional career paths. I was sort of, you know, we look at like job numbers all the time and layoffs and at the same time I think about when I was a kid, if I said, oh, when you grow up you will be a live streamer who at an AI lab. It's like none of those words existed back in the 90s and here I am also a lot of, a lot of. There's so much advice out there. It's like you want to be a generalist. This is the age of being. Yeah. Strong. You know, maybe it's the opposite. And when I, when I look at, at people that are, that are maybe sort of midway through their career the highest earning, you know, the most respected are almost always the ones with extreme depth where they can simply out compete anyone else in that role because they know more about it, they put in more hours. Yeah, but, yeah, but what are you thinking for young people? I'm definitely big on depth. I think I'll be. These are like entirely non contrarian opinions, but maybe they're contrarian right now. But I think it's a great time to get a computer science degree. I think if you're like ultra deep into really understanding how software is made, you are like everyone's going to be 10x engineer. If you're 1x engineer yesterday, you better be a 10x engineer tomorrow. That's the new baseline. But if you really, really get it, if you're like, if you're smelting your own code, I'm just going to go with the smelting analogy for. But if you're that good, you're going to be 10,000x engineer and like you will be worth your weight in smelted gold. Who knows. But it's very, very powerful to be a deep expert. Like you are the one AI's one to learn from and like that, that is the unattainable Mount Olympus of value. And so I would strongly suggest that being deep is great. Majoring computer science is great. If you love computer science, like this is the time to major in whatever it is you see yourself being as deep as possible because then you will become absolutely valuable world. What about industry specific depth? Like if a founder comes to you and they're like, oh, I've been building, I've been building an E commerce. But really. And I've done quite well. But really I'm interested in space. I want to work on that. You've done, you're interested in space and you're not working on it. Like, what are you doing? The very best time in history to do that. Yeah, yeah, but, but, but generally like you've done quite well by just focusing on something and a category that you know better than. Maybe there's maybe like three, four other people in the world that understand the intersection of like money and technology the way that you do. And, and I feel like a lot of founders oftentimes will do one thing, feel like they kind of like climbed the mountain. And then some, some will just go back and climb a very similar mountain and do quite well again. Others want to jump ship and do something completely different. So I tried both. My last startup in between, the other payments startup was not in payments and it turns out that I'm very good at climbing this one mountain. I'm just going to keep climbing it because the reason I'm good at it is because I love depth and I love getting deep and deep, deeper and deeper into payments, into how to make payments more expedient, more transparent. In the case of a firm, payments are a lot of things and access to credit is a totally new idea. Like I've never touched credit until a firm and now maybe without false humility, I think we are definitely one of the very best credit underwriters in the world and are just getting better and better. We just announced yesterday we built an entire new model family loosely inspired by the attention mechanism that is powering all of your LLMs out there, including your parent company. Now, some ideas we borrowed from all these really amazing discoveries in pure, you know, language, AI. And yet it feels like we're just getting started. Like every time I look at the sort of corpus of things that we can try to do, things we can build, the products we can launch, it's like, oh my God, we have so much to do. Like, there's absolutely no chance I'll get to rest. I'm not sure if I'll get to. After all, it's the greatest time to build stuff because everything is faster and more exciting and easier to start. But the depth reveals itself the deeper you dig. Okay, so yeah, we sort of mentioned, we referred to it a little bit, the 2026 Investor Forum who attended. What was the goal of that? Take us through that event. And then I have a whole bunch of follow up questions about how you're communicating at the current time. Yeah, it was amazing. I'm still kind of slightly high on the whole thing, but the thing was really fascinating. So we did this event three years ago or similar event three years ago and it's like a blink of an eye. I remember it was in the same building, so a lot of the same people attended. So these are mostly buy and sell side analysts, a bunch of our shareholders, a couple of our board members actually flew in for which was like a nice surprise to me. And the entire management team gets on stage and like, here's what I work on, here's what the company is and but like the reason analysts are there, they're like, okay, tell us about your vision Max. Yada, yada yada. Really what will the next three years worth of gross targets going to look like? And so the main act, I was the warm up act, I try to be funny, but the main act was our CFO Rob, who got on stage and said, all right, so we're going to grow to 100 billion billion of GMV. We're just in the range of touching 50. We're going to double and we're going to do this by compounding at 25% every year and we're going to move our profitability target from 3 to 4% which is our current range to 3.75 up. And so we're going to up the floor. We're going to be more profitable and grow faster. And it's like faster. We're a bigger company now. Like what are we doing? Wait a second. Last time we did this three years ago, we said we're going to compound at 20% but instead we did it like 30 plus. And so just like this out of body experience, like we're getting bigger. The room was significantly larger. Same building, different floor, different room, Many more people, many more shareholders. And yet we're telling people like, hey, we're going to compound that much faster than the last time. It's like, I guess it's like a flywheel, this network we've built. It keeps on spinning and spinning faster. And so it was amazing in a sense that like I said, I knew all these numbers. I obviously approved and worked with the team to make sure we feel great about them. But when you sort of say that out loud, like compare that to the last time we told you the same thing, we're going to accelerate. It's like, wow, that is so cool. So anyway, so I'm still very high from being able to say that out loud is very fun. So there's a flywheel, I imagine with a lot of financial companies, there's economies of scale, and so that seems doable. Are you also talking about TAM at this point because the company's so large, or is. Is it still early enough that that's not something that investors are coming to you asking to sort of justify? Well, you know, the global economy is only this big, and if you take 50% of it, well, there's nothing else. The good News is that $100 billion of payments in this country is but a drop in the bucket. Even larger bucket. We're in no danger. The US revolving credit, which is obviously a fraction of total, total economic rotation is like a trillion three. Right now, 100 billion is like, then that's worth taking share. So I like to compare that to that number. People are not using revolving credit. They're using a firm. Good for them. Not revolving, no fees, all that. And so we're not yet at the sort of town. By the way, these are all US numbers, and we're already live in the UK and Canada and we've announced a bunch of other countries. Okay. So speaking of the investors, obviously it's very important to communicate with investors right now, both for your growth plans and what's going on in the market. As you think back to the March time period, the SaaS apocalypse, every company got sort of beaten up. You came back really quickly. How much of that was show versus tell? How did you think about communicating to investors through that? How important was the investor communication versus just continuing to deliver on the actual metrics? Like, what? As you're confronted with one of these, like, oh, there's a new narrative. How do you. What's your playbook for actually working with investors to get them comfortable? You know, to be completely honest, I don't know. I think, well, I'm hugely honest, so I might as well tell the truth every time. So this particular time, we said nothing. We said, okay, I guess the sky's falling. It doesn't feel like it's falling on us. We're printing a really, really good quarter. Yeah, we're about to report it. We could, like, wave our hands. You got it all wrong, we're fine. Or just wait a few more weeks and be like, hey, here's what we printed. How about that? And by the way, we're going to guide so we're going to reveal that we're having a pretty good quarter too. And so that's what we did this time. And we just didn't spend too much time communicating how the story isn't true. Yeah, I don't know. That's like the best response. Like we've definitely in the past we would read, you know, the, the most recent time when I thought we need to speak was when the rates were rising very quickly. We were screaming into the void of like, no, no, no, this business is fantastic. At ZIRP, it is fantastic. At 5% fed funds rate, it is just fine. At a number that's higher than that. We love our value creation opportunities more or less. At any rate. Obviously it breaks at some point, but US Economy breaks at some point too. For all possible values of the federal funds rate, we're going to be just fine. And a long explanation why, and I don't think anybody heard it, people are like, yeah, but the rates are up. So you're obviously. And so the dip in return of our stock is like, oh, a great turnaround. But it basically amounts to people saying, wait a second, this thing is in just as much demand, does just as well grow just as fast, just as profitably through whatever rate cycle. Yeah, I think we've talked about the history of the, the, the effect of interest rates on a firm, but we're now in a new regime and the fear is not higher rates, it's higher inflation. And so are you. Do you, do you already have an intuitive sense of how a different inflation regime or different inflation environment will affect a firm? Are you confident? How do you the real. Yeah, I can imagine somewhat of a double edged sword and that like, you know, higher prices means people are more likely to want to use credit. But maybe this, there's a drop in some purchasing activity of some items. You know, also just like if you're getting $10 in two years and it's worth less, that should have an effect. But how is it actually playing out? So a little too early to tell, but you are exactly right in a sense that we saw this game play out in the last inflation spike just a few years ago. We absolutely saw an increase in demand because as things became a little bit more expensive, people felt that it would be better if they weren't paying for them upfront. People who initially would say, yeah, it doesn't really make sense for me to finance this thing. I have the cash, but I kind of want my cash to go a bit longer because I don't know exactly which way the price are going to go. So we expect more demand. We have to be, we're always very careful. The number one line I give at every investor event is credit is job Number zero. As a computer science major, I count from zero. And it is the most important job. We grow as fast as credit performance will allow us to grow, full stop. We have to print consistent credit returns otherwise we lose credibility with our debt investors. And that's the most important thing. So we will grow fast, no faster than credit results will allow us to. We expect more demand. We don't yet see literally anything related to change in credit performance. We just printed our results and they were just as we expected them. And so TBD whether we see some deterioration of consumer credit due to prices. We really didn't see much of it at all through the last inflation cycle, which was quite dramatic, if you remember. And so we feel pretty great about our ability to underwrite kind of all eventualities. We are obviously not blind to the macro reality. The minute before I got on stage and promised people 25% growth with an increased profit margin. So we must think we're going to be okay. And that is in fact the case. Yeah. How is AI changing how you think about international expansion? Does it make teams more efficient in terms of adapting the product for different markets? Everything from language to just simply being able to ship more code? Or is is international? Is your like international GTM just like much more. Like we know what it takes to launch a new market. If AI makes it slightly more efficient, great, but it's not going to change the strategy. I think the 1A of every list of things that have really changed thanks to AI is shipping code. Like, I think it's, this is the best time to be a CEO with a computer science degree because you feel what this means, you know what it's like to make code. You've done it, in my case, for the last 40 years. And I know how much easier it is, how much more effective teams can be, how you can have three people in a room build the product over the weekend, which is kind of an amazing thing that didn't exist six months ago. And so shipping code is absolutely. We're seeing that in. My latest shareholder letter actually showed an illustration of percentage of code written by AI at a firm. And it's like, and it's not like a slow rise, like, okay, we're trying, we're trying. We're convinced 60% to start, 75% last month. So it's just rocketing. It's not like people are writing less code or reviewing less code. They're just that much more productive. So that helps us internationally, helps us domestically, helps us with everything. I think other parts of the Business are much better with AI. So translation, obviously services are fantastically effective. With AI you can do a lot of interesting things. With legal, anything that's text heavy, you have just a great helping hand. But the sort of night and day moment is writing code that's 1/8 or maybe like 1p on the list of things that just stunningly effective. Are you expecting token costs to be like an important line item in the PNL going forward? Like we've seen, because there's so many stories of a lot of code written by AI. Sometimes that moves the needle, sometimes you're just sort of doing what you needed to do and doing it more efficiently or faster. But at the same time, if you get hit with like a billion dollar token bill in a year, that might be material and so you start having to do. And it feels like we're at the earliest innings of ROI calculations. We're more in like the feeling of like, oh, everyone loves this, we're seeing good results. Max doesn't strike me as someone who's just going to tell your team to slap it up a lot of AI because obviously there's stories coming out of Amazon and Meta where teams are basically just like, I want the optics to be that I'm using more AI than anyone else on my team, so I'm just going to run things overnight for no reason. Yeah, we are extremely, extremely metrics driven company. Some might take issue with just how completely obsessed we are. You improve what you can measure. If you're going on fields, you're going to, you know, feel great until you don't. So we measure everything obsessively. We have at the moment at least, fantastic ROI on our token spend. We are, I would say, you know, it's real numbers, so it's not like, oh, you know, don't care, don't look. We have a weekly report that's generated thanks to AI and some very smart humans who are monitoring our token use and tell us how each team is producing value and what it's costing us in tokens and all the sort of various conclusions downstream. So we are already very mindful of what it means in terms of return on investment on tokens, return to shareholders at the limit right now, it's undoubtedly a very, very accretive thing. But we're also not assuming that infinite budgets are just great. And we also expect, by the way, prices of tokens will probably increase over time. I think there's plenty of subsidies taking place. You're now inside of one of those places, so you probably Know the true price if we can circle back to specialization from AI creating effectively more generalists. I'm interested in computer science history, your career history. How have you processed? There was a point where front end and back end engineering were two very separate disciplines. At the point where you could do JavaScript on the front end and the back end, you see more full stack engineers. Now you have engineers that are designers, designers that are engineers, designers that might be pushing server code and stuff. So I'm wondering how you're thinking about maintaining that idea of you want the specialized genius, the artisan, the true expert in your organization versus you also want to empower someone to move really fast with a small team. And so you might not need to staff 100 experts to do one thing. And there's got to be a tension there. So I'm wondering how you're grappling with that. It's a great question and you're totally right. So there are definitely pockets of today's software engineering that accrete profoundly to specialists. So if you are an extraordinary infrastructure engineer, you're far from being replaced by some mindless drone because it's as much art as it is science, intuition, experience. I've seen this kind of a failure before. AI is good at it. But AI is a great tool. You're in no danger of being supplanted just because so much depth goes into that. And by the way, AI making a slight mistake could cost you a massive outage in the case of. And so the cost of error is very high. An even better example actually in my world would be an underwriting model. So somebody who designs underwriting models, it's like, hey AI, go build me a great underwriting model. Come back when you're done here. It is a hallucinated one for you. Like that's like real money lost that we will never see again if it in fact didn't hallucinate the right thing. And so many of these sort of ultra specialist roles, they are absolutely benefiting from AI. But that human is not just in control, they're not just steering, they're like reviewing every line of code. They have another human making sure that there's absolutely nothing that could go wrong. So that's sort of one thing. On the completely other spectrum of this, which is, I think, what you're alluding to. So fun examples, we just had a product hackathon, so only product managers can attend. A lot of our product managers have CS degrees, so we're cheating here a little bit. But these people were like Hey, I love writing code, but I want to make it into things as opposed to code and I want to ship a full product. So most of the folks haven't written code professionally in quite some time, maybe since college. They're really good with Figma. They know how to design things, they have a sense for taste, but they don't remember anymore what it's like to go deep into some, you know, SQL query debugging. We had 100 people, 37 projects in 27 hours. Went from a whiteboard plan to a shippable feature that was presented to the entire company. Like, hey, we have this thing. And we graded it not just on. So the winners and the whole grading of who won 1st through whatever, 10th were all people that had to report. Not just like, here's my idea, here's what it looks like, here's my prototype. How close are we to shipping it? Like, are you ready? And the winner was absolutely, probably the best idea, but also the ones that said we're ready, like if we're allowed to ship it tomorrow, we will. So that is like an extreme generalist who has a vision and few tokens and a feature in 27 hours with like two of their co conspirators in like a pizza box. So that is new and different and it's totally a new phenomenon. This AI thing is going to be terrible for the pizza industry because famously two pizza team, you only need one pizza teams now. 50% reduction. 50% reduction, short dominoes. This is a disaster. I hadn't thought about this. We, we, we, we, we sprung for a somewhat higher quality. Oh, yes. Okay, so revenue's flat, margins potentially going up in the pizza industry. Okay, last question. How are you? How are you? What's your framework for evaluating the, the, all the different AI products being pitched to you across the rest of the organization? Yeah, you have the benefit of being a technical, you know, CEO. A lot of other CEOs in your role are just like, I just want to buy AI everywhere. Just give me every part of my company. Just give me, give me, give me three pilots, I'll pilot anything. Whereas I think you're probably looking at some of this more non, you know, non deterministic work saying like, hey, you can play around with it, but maybe you don't have budget. I have a great heuristic. This will be potentially worth the rest of my drill. If you know how to describe the evaluation criteria being used by the maker of the tool you're buying. It's probably worth piloting if you can't it is slop and you're being sold a story. We know Codegen works and is amazing and it's only getting more amazing because we know how to validate code. And you can use another AI to validate code, but you can also just like look it. Does it work? Does it pass the unit test? So the feedback loop of I gave you a thing like Codex was okay, and then it was better and then it was great and now it's really pretty damn good. It's not because someone was coding faster, it's because it has really objective eval criteria and it just loops on making itself better with some degree of human influence. The same can be said for a bunch of industries, it cannot be said for others. I'm not going to dig into examples too quickly. We're short on time. But if you can say, oh yeah, I know exactly what these guys are doing. Customer service centers. Is the consumer happy after they hung up the phone with an agent? Can we ask them? Yes. What's the satisfaction rate? Is there a way to say that was good, that was bad? AI do more of the good kind, Fast feedback loop, high quality eval criteria. So we use a ton of agentic customer service because we know it'll just get better and better and better. That's a great thing to buy. We're not a specialist. We are excited to buy it from a specialist. Somebody tells you, oh, it's AI, it's going to be a tool that's going to make you a better writer of fiction. Yeah. Or even pitch decks are an example because like you could have the worst formatted pitch deck and having tremendous success with it. But it didn't have anything to do with the deck. It had to do with your delivery and who you are. So I would not buy pitch deck AI assistant even if somebody paid me to do it because it's 95% the talk track and the company so far, and the company and the idea and the market and the TAM and all those things. But most importantly, 100 companies pitch their decks, get old and made by AI. 7 out of 100 get funded. 93% failure rate sucks. Should never raise money like is that the conclusion? So I would stay away from the non objective or very slow feedback loop systems before I consider buying tools there. I love it. Well, thank you so much for taking the time to come chat with us. Great to catch up. Have a great week on the progress. I'll come in the guide. Thank you. And I'll come back with smelting news we'll talk to you soon. Have a good one.

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