Look Up and See the Future

In this podcast, Motley Fool host Ricky Mulvey caught up with Tom Vice, CEO of Sierra Space and author of We Have Liftoff: Envisioning Your Place in the Orbital Age, for a conversation about the future of space commercialization.

They discuss:

• The magic of microgravity and its impact on everything from biotech and batteries to chemistry and computing.
• Rent in low Earth orbit (LEO).
• Defense systems and the hope of a space-based "McDonald's effect."

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 30, 2024.

Tom Vice: Everything we do here is how do we affect the lives of a billion people. Whether it's cancer research, oncology, broadly leukemia, longevity, trying to figure out the next-generation breakthroughs in semiconductors even greatly accelerate the transition to electrification. I think of those things, and again, before we go off and buy another insurance policy, I'm convinced that we need to do more here, not to screw this place up.

Mary Long: I'm Mary Long, and that's Tom Vice, CEO of Sierra Space and co-author of the book We Have Liftoff. The mission of Sierra Space is to build a platform in space that benefits life on Earth. They are engineering a fleet of Dream Chaser space planes which can land on commercial runways. They're building commercial space stations to house researchers 250 miles above our heads. They're developing defense-tech systems in addition to a whole lot more. Ricky Mulvey caught up with Vice in person at Sierra's campus in Broomfield, Colorado, to share an optimistic vision of what space commercialization might actually look like.

Ricky Mulvey: Maybe we'll get to the business stuff. I'm more curious about the life stuff, the possibility. I mean, what is life in low Earth orbit going to look like?

Tom Vice: I think it's good maybe to take a step back and think about, we're transitioning from 60 years of space exploration to a point where we're now moving into the full commercialization of low Earth orbit. We're transitioning from a time when just a handful of astronauts on government-owned space stations have been doing some research on low Earth orbit to the point where we are now building factories, building cities, finding the next-generation of disruptive products and oncology longevity, microprocessors, clean energy. In a way, we see this played out and I wrote about the some of the book.

This is going to be a time in which we start to think differently, that there's the Earth's surface and then there's space, they're two different things. Terrestrial markets and markets that get developed in low Earth orbit are going to be seen as one integrated ecosystem. The people are going to be living and working in space. People are going to be doing research and manufacturing in space. Of course, you're going to see a vibrant economy in terms of the way people think about vacationing differently in space.

As I wrote about in the book, I've always had this dream of this really iconic restaurant called the Blue Dot. Of course it's the Blue Dot because you look outside and boom. The whole thing is to imagine that we really are on the cusp. Sometimes it's hard to see industrial revolution when you're at the beginning but I believe we're on the most profound industrial revolution in human history. It's really the result of this convergence of technologies. We've been able to build rockets that have massively decreased the cost per pound to get to orbit.

Now for us, Geospace is reinventing the space station to bring down significantly the cost of doing work in space. To be able to transition from not just what you put in space, but now what you can build in space that you can't do on Earth. This time it was going to, obviously we are integrating at a massive pace, both foundational tech of micro-gravity, foundational tech of AI, the foundational tech associated with spacecraft that are turning into spaceliners.

All that's coming together. I think this is a time where you're going to see us move from what there's little over 600 people to ever have gone to orbit to a time in which 10,000 people at any time are going to be living in orbit. That's going to happen in your lifetime, your generation. That's why I think about our focus of our company is to really build this business platform in space to focus on this very unique place we call Earth. I'm inspired by visions like Occupy Mars.

I think before we can figure out how to have people, human beings live 100 million miles away from Earth, we're going to get really good at protecting this planet. This is a very special place. That's our focus. We're just going 240 miles above our head. It's like the distance between, if you're a baseball fan. I was putting things in terms of the Red Sox and the Yankees. It's about that distance above our head.

Ricky Mulvey: The food part is interesting especially. It's going to be difficult because all the food has to come in essentially blobs. It's going to be hard to spread things. A lot of globs and blobs because you have to keep it together for people to eat in little mucci balls.

Tom Vice: Sure. It'd be fun. I did a bunch of Zero-G flights. If you haven't had a chance to do those, I encourage you to go do those.

Ricky Mulvey: I have not had a chance to do those.

Tom Vice: You got to do it. There's nothing like chase and in the M and M world. Again, the purpose of the book was really to put every chapter was different if you had the chance to read it. It was trying to describe what life would be like. Most books, although I am a huge Gene Roddenberry fan. Most books are scary about space. Something always terrible happens. I see space is exciting. I see that we're going to invent new things.

But you have to think about what will life be like when people working on orbit? What will social life look like? What will eating look like? We try to describe that so that as more and more people start to think about traveling to space, whether they're biologists, chemists, physicists, or a couple of people that are thinking about the next big breakthrough in cancer research. It's not going to be just government astronauts. It's going to be you, your generation, my two granddaughters. I tried to write a book for them to try in the sky, but living 250 miles above our head for months on end then. Part of that is food and what it would be like.

Ricky Mulvey: It's going to be a difficult life. You have to work out for three hours a day. You're taking sponge baths; water is going to be a concern. It's certainly not an easy life to live in a low Earth orbit.

Tom Vice: It's not going to be easy. I mean, there's all kinds of stresses and strains on the blood system. Your body, you have to make sure you are exercising or your muscles will atrophy, your bone density will atrophy. But I have to tell you it's going to be a lot easier than living on Mars 100 million miles away from Earth. Let's get this right, let's understand it, and then we can move on. Even think about lunar surface, everything gets a bit harder.

Traveling 240 miles, I think getting that understood and then the civilizations grow up and be able to understand that. By the way, while you're there, really do great things on behalf of eight billion people still living here. Next jump is 240,000 miles, that's the moon. If something goes wrong, it's much harder to get back, 240,000 miles is a lot longer than you think. Then you think about Mars, the two-plan has come the closest together at 35 million miles. The average is 140. You're out there. How many people are going to be able to live on the service of Mars? Very harsh place to live. In the next 100 years what, maybe you affect a handful of people if we're lucky.

Ricky Mulvey: I hear that. Two things, one is that I think the vision for Mars though is that this is an insurance population. If we all blow ourselves up due to nuclear war, the spark of humanity lives on a little bit on Mars. While the moon is closer, and keep in mind, I'm an amateur talking to a space CEO. The moon doesn't have an atmosphere. The light's very difficult. Gravity is a lot more difficult than on Mars.

Tom Vice: Well, I don't know. But you have a lifeboat. I can get back here in days and not a year. But I would say again, build a platform in space to benefit life on Earth. What do we mean by that? We're going to try really hard so we don't blow ourselves up. We're going to try really hard so that we don't pollute the plant where our grand-kids can't even breathe anymore.

I worked for decade on James Webb Space Telescope. We just haven't found life anywhere. We've only found a handful of planets that are even in the Goldilocks Zone. By the way, the closest one is 100 light years away. The planet is a unique place. The planet and humans all form together here. This is a quite a nice place. You go outside, you can breathe, you get sunshine, go down to the ocean, go up in the mountain and ski. I don't know about you, but I don't want to leave.

Ricky Mulvey: I'm pretty happy here.

Tom Vice: I pretty happy here.

Ricky Mulvey: You're also training to be an astronaut though. You are leaving in a sense.

Tom Vice: But it is a trip. It's like I'm just going on vacation for a year. But I know that my family's here, I know I'm coming back. But what really drives us is the fact that we're not a company that's trying to affect the lives of a handful of people. We're not trying to give joy rides to a couple of billionaires who want to spend a quick trip in space.

Everything we do here is how do we affect the lives of a billion people? Whether it's cancer research, oncology, broadly leukemia, longevity, trying to figure out the next-generation breakthroughs and semiconductors. I think we're going to find new chemistry for batteries to even greatly accelerate the transition to electrical letification. I think of those things. Again, before we go off and buy another insurance policy to protect the human race by putting five people on the planet and try to regrow, I'm convinced that we need to do more here not to screw this place up. So far we're doing a pretty good job screwing it up.

Ricky Mulvey: It's difficult to imagine people living in space when we're not going to the moon anymore. It seems that NASA has shutdown the shuttle program and shut down a lot, even the space station coming up. I've heard you compare it to the birth of the railroads in low Earth orbit. Why should people be excited about the future of space and even the next 3, 5, 10 years?

Tom Vice: It's a very insightful question because I grew up in the '60s and I was the classical young kid, glued to a black and white television set in my grandfather's living room watching the Apollo program and inspired me to be an engineer, but inspired me to do really hard things that were meaningful. It has been a long period of us getting back to the surface of the moon. But you see that we are going back. You see NASAs Artemis program. You see commercial companies going back. It was great to see Intuitive Machines landing again, ispace almost.

They were within a couple of meters. The amount of energy being put into going back to the moon by private companies, non-governmental is so exciting. I think there's a general consensus now that we're not just going back to land human beings on the moon, we're going back to stay. I think that's exciting for a whole new generation. As I look at the shuttle program, in many ways, I would say Dream Chaser is testament the wings are back. But I think even in a better way, we build Dream Chaser to be able to land at any commercial runway, 737 MAX or an A321 can land.

That creates, wow, what's happened there? We just invented the first commercial space plane. But what's more exciting is we just invented the first space liner. You think about, we're taking advantage of the worldwide global infrastructure. Instead of everybody coming back or everything coming back from space today, it gets plunged into the ocean in a capsule or into the dirt in a capsule. I think it's going to go to a whole new generation excited just like the five-year-old, six-year-old Tom Vice was in the '60s. There's going to be a five-year-old, a six-year-old girl that's watching Dream Chaser land at the Paris Airshow and go, wow.

The first space liner. I got to tell you, this is a really interesting story. I was a keynote speaker at Oshkosh one year, maybe, 5, 6 years ago, I think it was. A ninth grade girl stood up out of this, if you've ever been to Oshkosh, it's for the cool place. She's stood up and she asked me, did I believe that someday we would build a space plane that would be just like an airplane. You can imagine my answer, I'm giving it to you right now, which is that day has now come.

I think that will be very exciting. I think the ISS, it's done a remarkable job. We've had space stations now in orbit since 1971. The ISS has served humanity very well and its time is coming due at the end of 2030. The plan is to deorbit it. But before we deorbit it, the most exciting is that there's going to be commercial space stations in orbit. Ours will clearly be there. It's not just to replace the ISS, it opens up a whole new world of commercialization. It's meant specifically to be a research and manufacturing center. Largely for us, it's biotech and industrial tech. Just like Merck's drug, Keytruda, if you know the drug?

Ricky Mulvey: I don't.

Tom Vice: It's a monoclonal antibody meant for cancer, which has done a remarkable job. In 2023, that drug was $23 billion in sales. You know where that drug came from? Research that was done in the ISS. That's just one drug. Imagine if we do that 100 times a year. I have two young granddaughters. To think about, we have for the first time the opportunity to cure leukemia. If you think about just the impact you could have on just that one thing. What was the benefit? That's why we say we're building this platform to benefit life on Earth. Isn't that more meaningful than trying to put five people on the planet of Mars? You can affect eight billion people. By the way, just maybe we can prevent nuclear war.

Ricky Mulvey: Yes.

Tom Vice: Along the way.

Ricky Mulvey: I hope it's the McDonald's effect up there. The countries that have McDonald's don't go to war with each other.

Tom Vice: I hadn't thought of that before, but that's a good analogy.

Ricky Mulvey: If you're doing research with each other up there, maybe you don't go to war either. Dream Chasers are supposed to launch in 2024. Right now it's getting shaken up at NASA.

Tom Vice: We finished the shake. Now we're in the bake. It's in its thermal vac chamber. It's doing really well. But bringing it back out of the chamber in all three weeks, get it down to Kennedy Space Center. We got some additional testing to do, which really unique is because it's the plane we've got to get on the runway and do all the traditional runway testing. Then we integrate it and get it on top of the ULA Vulcan rocket load it up with cargo and send it all the ISS later this year.

Ricky Mulvey: We talked about some of the research possibilities, building this commercial space station, that these inflatable space habitats talked about battery technology, you talked about some medicine. But for those who may not be familiar, why is gravity, such a problem for developing these drugs and technologies?

Tom Vice: Obviously, we built a lot of great stuff in the gravity fields of Earth. But if you think about gravity is a very strong for us. I mean, we don't feel it because we are used to it. But it's actually a very strong force. Without gravity, you can do things that are very different in terms of crystallization. Very pure, very structured, very uniformed crystals because I don't have gravity interrupting in the crystallization. That crystallization could be protein that goes into biotech.

Protein crystallization for biotech merely goes into cell structures, protein structures, body absorption, all kinds of things. It's also an inorganic. I can do very pure glass. As of today we're all used to fiber optics, in space you can build glass at far more pure. I can build chips. I used to run several foundries. You can build chips that are very different. Now when you think about all of that happening, now when you add AI into that, I can accelerate all of that research.

The crystallization of micro-gravity fields is very unique. Again, I always say, wow, if I could figure out how to build anti-gravity factories on earth, I'd have already done it. That's how powerful it is. There's been thousands of research done, hundreds of companies on the ISS. This science is known. Just Google patents on micro-gravity. It's amazing the amount of work. But the ISS was never established to be able to go from research to research to research into production very fast.

The ISS is expensive. Our focus has been to get the economics so that the board meetings of Pfizers, and Modernas, and Mercks of the world start to realize now there's a return on investment and now is the time to find a cure to cancer or a cure to cardiovascular disease, or being able to print tissues for livers and hearts they can't do on the Earth. That's been our focus.

Ricky Mulvey: I'm going to ask one dumb business question then I'm going to get back to the cool stuff. Earlier today, I had a conversation with my landlord, got me thinking about rent. How does rent work?

Tom Vice: We have many different models. Part of it is that there's a real estate, we're the largest real estate developers in low Earth orbit. That's one way to think of us. We're also partners on some cases where we are partnering with a drug company and the cost of that research is borne by both partners. There's a revenue stream based upon the drug we just developed. Some companies that we talk to, they just want to buy part of the real estate instead of lease it.

Some companies want to lease it. Some want to lease 100 cubic meters and some want lease enough to do five experiments a year. We're very open and flexible and agile in terms of what the leasing arrangements are. Again, in your case, you're leasing or renting an apartment. Some people like to own the condo, some people like to own the building. Think of this as a real estate agent. But we provide the real estate, the utilities, and in some cases will provide additional venture capital. Then we get a percentage of the drug, or percentage of the chemistry or whatever it might be that we're producing.

Ricky Mulvey: There's probably a pretty strong HOA up there as well.

Tom Vice: Well, we'll be the HOA and manage the HOA.

Ricky Mulvey: I heard you mentioned basic, you're a lot tough decisions in terms of what companies get up there first. For the space stations, I've heard that it's three biotech firms and one tempered glass.

Tom Vice: You probably asking, why did we pick those?

Ricky Mulvey: Yeah.

Tom Vice: Just because what we looked at was a combination of factors. One is, how large were those terrestrial markets? Have those markets proven to show benefits of micro-gravity in space? The third is, is the companies that did that work in space, how 40 lean are they to do, want to do work? When you combine all that together, what we saw was monoclonal antibodies, stem cell research and regenerative medicine, advanced glass, were the four that were the closest in terms of ready to move to space.

Now, if I think of the markets there, just those four markets in 2022 was $900 billion a year in terrestrial sales, 8.3% cagar going to a $3.7 trillion business by 2038. The market is huge. For us, our focus is to go capture 1-5% of that. To have a huge business in space, I don't have to capture 50% or 100%. You just have to capture 1-5% and the numbers are massive. Now, I think we will capture much more than that, to build a business case though, you're in the single digits of capturing that market. That's why those three or four were very powerful.

Ricky Mulvey: The tempered glass one was surprising to me. When I read your book, I'm so excited about the possibilities of quantum computers and putting these computers out in space where they don't have to pump all of the energy to get to basically near-zero temperatures. That one's surprising me.

Tom Vice: Just a little bit.

Ricky Mulvey: I hope you guys are able to do that.

Tom Vice: We are going to do that. I just don't know if that is first. I think that as computers the size has come down. I don't know if you saw Nvidia's announcements, I was really excited about the new chip. But as the new chip get more and more powerful, they get cheaper, they consume less energy then you'll see data centers not in the cloud, but in space. By the way, it's really great to manage the temperature. If you think about moving stuff to space, I'll give you a really interesting one happening right now because we're very excited about this, the entire directed device.

You're watching this. This is where lots of conversations now, I just want to connect my iPhone to satellites without cell towers, my iPhone works anywhere. A lot of effort, a lot of incredible technology is going in to directly connect your phone to satellite systems. You don't need cellular, you're not talking to cell tower, you talking to a satellite. There's an ecosystem between cell tower, terrestrial cellular, and in-space mobile services from satellites. All that ecosystem is coming together.

But you think about if we had thought about just taking the entire structure to space, you wouldn't need any of these ugly cell towers everywhere. Just think about what we just moved off the planet. If you do that with chemistry, wait, I just moved chemistry factories which are hazardous to space. Now you think about data centers. You think about how much energy data centers take. We talk about how much CO_2 airliners put in the atmosphere or business jets? Data centers are far worse.

Ricky Mulvey: I didn't know that.

Tom Vice: You move all the data centers to off the planet. It makes the planet greener. It provides more space for people to live and vacation. Taking stuff off the planet into low Earth orbit, that's this whole idea of building a platform in space to benefit life. Part of it is data centers are really exciting for us. I think they're not going to be the first thing we take up because they're just massive today. You have been to the data centers, they're massive. Although they're much more than they were, again, in the 1980s, 1990s.

A Terabyte now fits, my iPhone has two terabytes. If they're getting smaller and smaller, consuming less power, we put them into space. You put them in LEO so latency is low. If we build them right, they'll be really cheap. That's going to happen. I will say though, I still remain really, really excited first on biotech. A person dies every nine minutes in the US with leukemia. Again, I always tell our team if we did nothing but solve one issue like leukemia. Huge. Now if i can solve cancer, cancer is a trillion-dollar problem. What I'm really excited about because I'm a little older than you, is I'm really excited about longevity. There's a massive research going in longevity right now.

Ricky Mulvey: You're going to be able to print organs where they're not collapsing in on themselves.

Tom Vice: Right now we're already proven we can. Retinas are already something that's been proved. I think livers are next organs are to follow. Hearts a little harder. But ultimately be able to print organs without somebody happened to die to harvest at first. I think that's a pretty cool thing.

Ricky Mulvey: That'd be pretty cool. One thing we've touched on didn't get into too much those is defense. I want the commercial space station to be an American company. I think that that's going to be important as you try to keep life on Earth safer. How's your work going to do that?

Tom Vice: I think that's another great question. We believe if we're going to be able to accelerate a vibrant LEO-based economy and keep space free and available to everyone. We also have to be the company that defense space. We have a big part of our business that's a defense tech company that's leveraging our technology and ingenuity. We're building high-end systems. Critical missions for missile defense, missile tracking, missile classification, fire control.

We focus a lot on space superiority, space situational awareness, exquisite earth observation and pull all that together so that we make sure that if you want to do things of harm in space, we can stop you. We do that on behalf of United States government of course. We were in stealth mode on the defense tech side of our business for the last couple of years. But over the last 10 months, you've seen announcements where we've now been awarded $1.3 billion in contracts to do those missions. We think it's really incredible. I encourage all high-tech companies and space tech companies specifically that if you're building things and you're a patriot of this country, you owe to make sure that we keep space free.

Ricky Mulvey: I want to ask a couple business see questions. One is, you have a partnership with Blue Origin. How are they helping you build these space habitats.

Tom Vice: We build all the habitats. We build all the technology associated with the space infrastructure. We provide that to ourselves because we're building a pathfinder station that we intend to have up in just a few years. But we also provide as part of our partnership with Blue Origin for Orbital Reef. Orbital Reef really scheduled in the 2030. We're moving even faster than that because my concern is that if the ISSD orbits early, I want to make sure the United States does not have a gap in low Earth orbit. We focus a lot on taking our same tech and applying it to our pathfinder station and we also apply that to our partnership with Blue Origin for Orbital Reef.

Ricky Mulvey: It sounds like you have a pretty busy schedule. You want to go public as a company. Why do that? What's that going to allow your company to do?

Tom Vice: Let's see we focus a lot not just on technology, for technology sake. We're a company that is really doing fundamental, great work that leads into a high revenue growth rate, high net income growth rate. We kicked off a lot of free cash flow. Going in from a private into the public markets gets us access to public market capitalization. But we do it in a way where we'll enter the public markets as a company that has free cash flow, positive, EBITDA being positive. We don't just say we're going to have this hockey stick growth. We proved it year after year that we've doubled in size.

I think the capital markets will reward us for that and therefore will have capitalization that comes with it. We will time it right, as you can imagine, when we first kicked this off in 2021. Every bank of the world was calling about doing a SPAC, had no interest in that. I wanted to de-risk the business de-risk the portfolio, built a leadership team, build a capital structure of the business. You saw, we've got significant capitalization with our series A and the first phase of B. Now we're in a path through 2024. We've done all the work to make sure that we're public company ready. When we enter 2025, will be the company that has a lot of trust, both in the institutional and the retail investors and I think we'll be rewarded for that.

Ricky Mulvey: I hope so too. Two final questions. One is, you worked on the James Webb Telescope?

Tom Vice: Yeah.

Ricky Mulvey: That's been out for about two years now. What have you been excited to see come from that work?

Tom Vice: Well, we built that telescope to be able to do several things. We wanted to go back and look at the very first slide from the very first star, that's 13-and-a-half billion years ago. We wanted to see fundamental science. I met with Stephen Hawking once, it was just a brilliant afternoon, just thinking about the origins of the universe. It was all theoretical physics. The James Webb is proving some theories rights, proving some theories wrong. I think it's been remarkable in terms of being able to find planets within that Goldilocks Zone.

I think someday it will probably help us find life on distant planets. It's just remarkable. I mean, if you think about wherever those tiny little blue dot, we know everything. The great Carl Sagan quotes, it's, what's really interesting is that this universe is not only expanding, is accelerating its expansion, and then it will collapse and do it all over again. I think for the first time we're really starting to understand some really fundamental things about the universe through James Webb. Before then it was just a theory. Now it's backed up by data and some of those theories are oops. Cool really, I can see back in time, three-and-a-half billion years really.

Because I always thought it was cool. Everybody that was working in extra planet research or any of the customer or any of that stuff. But the day I knew that it was really meaningful is when I was walking in New York City and in times square on the big monitor was image from James Webb and people just stopped. They all stopped and they looked up and they didn't necessarily know what they were looking at. I don't know that they were all theoretical physicist, but they all knew was important. They all knew it was new science. I think they had a fundamental understanding that, well, I could actually change things.

Mary Long: As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy yourselves stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see you tomorrow