Building the First Data Centers in Space

Philip Johnston is the co-founder and CEO of Starcloud, the company building data centers in space. In November 2025, Starcloud launched an Nvidia H100 GPU into orbit and trained the first large language model in space. They've since raised $200 million, hit a billion-dollar valuation just 17 months after YC demo day, and filed with the FCC to deploy 88,000 more satellites. In this episode, Philip walks us through their wild origin story, the engineering challenges behind the Starcloud-1, why they booked a SpaceX launch before they even knew what they were building, and how data centers in space make sense both economically and politically.

• 0:00Speaker 00

  First thing every space company should do is book the first available launch they can.

• 0:04Speaker 01

  Before they built the thing that they're going to.

• 0:05Speaker 00

  Before they built the thing, before they probably even know what they're going to launch. Booking a launch is such a good forcing function for a space company. So we founded the company January 1st, 2024. January 2nd, we booked the first available SpaceX Rideshare launch. And we were like, okay, something is going to be on that rocket. I'm not sure 100% sure what it's going to be at this point, but something is going to be on there.

• 0:26Speaker 02

  Sounds like the same advice for all the software companies, just going to keep launching and launching, same thing.

• 0:38Speaker 03

  Welcome back to another episode of The Light Cone. Today, we're sitting down with Philip Johnston, the co-founder and CEO of Star Cloud. Star Cloud is building data centers in space to address the energy bottleneck that AI is creating here on Earth. Earlier this year, they raised $170 million, led by Benchmark, and became the fastest-growing unicorn in YC history, just 17 months after Demo Day. Philip, welcome to The Light Cone.

• 1:05Speaker 00

  Thanks so much for having me.

• 1:06Speaker 03

  So to start off, why data centers in space?

• 1:09Speaker 00

  So we are very quickly running up on constraints on where we can build new energy projects terrestrially. And so by building them in space, we get access to this almost unlimited low-cost energy in the form of solar. Of course, there's other costs, like the cost of launch, and the cost of launch is actually very rapidly trending down, you know, with new launch vehicles coming online, the Falcon 9 program and Starship on the horizon. And so that's the reason we're building data centers in space.

• 1:35Speaker 01

  How did you come up with the idea? It's not sort of like the typical idea that if your people come up with.

• 1:43Speaker 00

  I'd actually been working, I was with McKinsey for a few years, working with the space agencies of different governments. And I could see that the launch cost was very rapidly trending down. And actually, in early 2023, I decided randomly on a weekend to take a trip down to Starbase, Texas, where they're building the Starship launch program, even before the first launch. And not many people were paying attention back then. And I could see that they were just building an enormous capacity. So they're building these two Starship giga factories that are designed to produce something like three Starships per day. And because Starship is reusable, you know, on a sort of three or four-year timeframe, that could lead to us having thousands of times the capacity to get things to space. And so I started thinking, okay, let's just run the clock forward.

• 2:24Speaker 00

  If the launch cost was 10 times lower than it is today and the launch capacity was maybe 1,000 times more than we have today, what would make sense that currently doesn't make sense? And so I started thinking about some of the concepts from sci-fi that I remember as a kid, you know, like space-based solar, where you have these huge solar panels in space. You beam that power down. And essentially, I just reached out to a few folks I knew in the space industry and got connected with a few others and started ideating on, okay, what would make sense if the launch cost was much lower than it is today?

• 2:53Speaker 01

  I'm curious, are there any other ideas that occurred to you during this process? When you were like thinking of like what people could build in space and it's cheap?

• 3:02Speaker 00

  Yeah, tons. I mean, we definitely looked at manufacturing in space and there's Varda. We looked at asteroid mining and, you know, obviously YC has Astroforge. We looked at space hotels, we looked at basically anything where which could make sense if the launch cost was a lot lower than it is today.

• 3:17Speaker 01

  And how come data centers was the best choice?

• 3:20Speaker 00

  Data centers makes a lot of sense to be the first thing you do because you don't need to re-enter a product. So with things like asteroid mining or with manufacturing in space or space hotels, they require this very expensive re-entry process. Initially, what we actually started doing was space-based solar, so huge solar panels. And then you beam that power down and it's a concept from, I think, like the 60s. Even Asimov in the 40s was writing about it. The problem with space-based solar is you actually lose 95% of the energy in transmission from space to Earth. And so for the first two months of the company, that was literally what we were doing. We were called Lumen Orbit because of that reason, luminosity in orbit. We were thinking, okay, once we get that power down, what are we going to be using it for? And even back in 23, most new energy projects were being built for data centers.

• 4:05Speaker 00

  So we were like, okay, well, either directly or indirectly, this power is going to go into data centers. Let's rerun those numbers. So initially, we'd run the numbers to know what's the launch cost break even that makes sense for space-based solar. And we'd come to a number of like $50 a kilo. So then we reran the calculations. We were like, okay, let's spend a month figuring out what would the launch cost break even need to be to make data centers in space break even? And we came to a much closer to reality number of $500 a kilo. And that's what we think currently that the break even launch cost is. And so then we rapidly pivoted the company towards that.

• 4:38Speaker 03

  So Philip, you launched Star Cloud 1 in November of 2025, and that was a real emotional moment. Like, can you walk us through what that was like?

• 4:47Speaker 00

  Yeah, I mean, it was incredible. So just to tell people a bit about Star Cloud 1. So we'd set this launch date, you know, 18 months in the future. And we initially started with something quite unimpressive, like we were going to fly some Nvidia jets and chips. They've been flown in space before and we're going to try and do some new workloads on there. Yeah, so it was Addy that came on and said, no, we need to do something way, way cooler than that. And we actually ended up putting five GPUs on there, three from Nvidia, two from ARM. But the most interesting one was this Nvidia H100. We did some crazy things, like, for example, you have to put it through thermal cycling. And we didn't have time to, we like booked the vacuum chamber, the thermal and vacuum chamber.

• 5:28Speaker 00

  And but we needed to know, okay, if we heat up this face change material and cool it down and heat it up and cool it down, is it going to crack anything? And so at like 5:00 AM, the day we had to ship it down, we were working through the night. Addy and Ezra are dunking this thing in an ice bath to cool it down. And then we pull it out of the ice bath and I'm like, are you sure it's going to be fine? And the electronics are like, don't worry about it, yeah, it's totally fine. They pulled it out of the ice bath, then we had these like hairdries to heat it up and melt the wax, like or like hot air guns. And then we're dunking it back in the ice bath. It is a miracle that it works, to be honest.

• 6:03Speaker 03

  You can just do things.

• 6:04Speaker 00

  You can just do things. Yeah, this is the kind of thing you can do as a startup. Because we actually had a quote from one of the primes on what it would cost to do Star Cloud 1. And they said $75 million to $100 million. And we did the whole of Star Cloud 2, including the launch, for $2 million.

• 6:16Speaker 03

  Yeah.

• 6:16Speaker 00

  So yeah, leading up to the to the launch, I mean, we got the most incredible separation video. I think we're going to play it now.

• 6:24Speaker 04

  Star Cloud 1 separation confirmed.

• 6:26Speaker 00

  So half the time as it deploys, it will be behind the shadow of the earth and you don't see anything. The other half of the time it will deploy not into the silhouette of the earth. And so I mean, it just is the most perfect like deployment video I've ever seen. And this was played by Jensen as he walked on stage at the GTC conference this year. This five-story tall like screen behind him playing the Star Cloud 1 separation video.

• 6:49Speaker 03

  Amazing.

• 6:50Speaker 00

  So no, it was the most incredible feeling seeing this deploy.

• 6:53Speaker 01

  Where was the team for this? Did you all like?

• 6:55Speaker 00

  So we took the whole team down. Yeah, there was only 12 in the team at the time of Star Cloud 1 launch. So we took the whole team to Florida and we had like 100 friends and family, investors. Some of our team brought their family and kids down and like it was a real nice, really nice day. We're going to release a behind-the-scenes video of some of the like family moments in that launch.

• 7:15Speaker 01

  How long was it from like when the rocket lifted off until the thing deployed, until you powered it up and were able to verify the thing actually worked?

• 7:22Speaker 00

  Yeah, so it lifted off, we were all on what they call the banana bleachers. It's like the famous from the Apollo era, but it was in the middle of the night. So it lifted off at around midnight and then at 1:00 AM, they closed the bleachers and everyone had to get on a bus and leave. And we're like, oh shit, I thought we were going to like be able to watch the deployment. And then I'm sitting in the back of a cab, like watching the live feed on spacex.com, literally. Oh my God, it's deploying, I can't believe it's deploying. And then it took about 12 hours to make first contact, which is not bad, actually. It usually takes at least 24 hours to get first contact. And then it's like a two-week commissioning period and we had a whole bunch of software issues we had to work through. Like it kept, the whole satellite kept restarting every two hours.

• 8:03Speaker 00

  And what was happening is one of 20 different like failure like triggers was triggering. And we didn't know which one it was. And we can only get a ground station pass every, like at least every hour and a half, maybe longer. And so we had to manually turn off each one, turn back on everything else and wait for a ground station pass to know which one it was. So that took like, you know, that took like three days just to figure out that software issue. And then, yeah, two weeks after that, then we started commissioning and turning on all the different payloads. And then we trained the first model, ran the first version of Gemini. We did the first fine tuning of a model in orbit, did the first high-powered inference on satellite imagery and all this kind of stuff.

• 8:42Speaker 03

  So Star Cloud 1, right now as we speak, has just left Chinese airspace, I think.

• 8:47Speaker 00

  Yeah.

• 8:47Speaker 03

  About to enter Japan. Yeah. It's going quite fast, actually.

• 8:51Speaker 00

  Yeah, so it travels around 17,000 miles an hour. It's about an hour and a half to do one circumnavigation.

• 8:59Speaker 03

  So I mean, by Star Cloud 4 or so, this won't be like one, it'll be a giant network sort of covering the Earth, actually.

• 9:08Speaker 00

  Yeah, from Star Cloud 3 onwards, we'll have 88,000 and they'll all fly. This one is in what they call mid-inclination orbit, so it doesn't go over the poles, Star Cloud. And that's another point here on how janky this one is. It doesn't even fly in the right orbit, but at least it enables us to test the hardware. The next one will fly over the poles and that gives us 24-hour, always in the sun.

• 9:32Speaker 01

  In order to do that, you need to put thrusters on the satellite to move it into that orbit?

• 9:35Speaker 00

  In the end, they will be deployed in that orbit, but you need thrusters anyway to maintain the orbit because you have drag from the upper atmosphere there.

• 9:42Speaker 02

  What are the engineering and physics trade-offs you have to make this happen? Because what you basically are doing with Star Cloud is you're getting infinite energy because the sun is basically the natural fusion reactor, it's just a giant mass that. Generates a nuclear reaction with the giant mass and you have infinite energy, basically abundant and lots of space. But as a result of that, which we were constrained of that in Earth, you have a bunch of other really hard problems to solve, like things around interconnect, how you send all the data back and forth back to Earth? How do you handle cooling? People think that space is cold, but actually there's no, unlike Earth, there's no air to circulate it back. So you need some crazy solution with cooling.

• 10:25Speaker 02

  There's things around radiation to flip the bits in, in, in processors. And there's probably other things around how to get the solar panels to become really big and expand and many more. I mean, these are the ones that I could think of. I mean, what are, there's like so many things that are just so hard to build.

• 10:44Speaker 00

  Yeah, you are correct. There are many engineering challenges to, to, to be solved. The two biggest ones that are outstanding and most of our engineering, our engineering team is split basically 50 50 down these two lines is number one, as you mentioned, how do you get rid of this heat in a vacuum? And then number two, how do we make the chips work in a higher radiation environment? Some of the other problems are being solved by other people, you know, the interconnect, we've just signed a contract with SpaceX for our next 20 satellites to have a Starlink laser terminal. That gives us very high bandwidth, low latency connectivity. Other people are solving some other parts of this. The, the core ones we're solving are that. And so for the first one, for the thermal management side of things, we are building a very large, low cost and low mass deployable radiator. Now, radiators in space are not new.

• 11:29Speaker 00

  It's not a new physics, you know, solution. It's, it's more of a manufacturing and engineering challenge. Cause the, you know, the International Space Station has had a radiator which dissipates, you know, lots of heat already, very similar mechanism. So a, a liquid cooled loop. Well, the challenge with it is making it cheap and light. So our radiator is at least 10 times less mass per watt of dissipation than the ISS radiator and 500 times less cost per watt of dissipation than the ISS radiator. So very low bench, very easy benchmark to beat on cost for the ISS. But yeah, and then on radiation, it's just a lot of ground testing and different particle accelerators. So we've done several rounds of testing at the Brookhaven National Lab Particle Accelerator for heavy ions.

• 12:11Speaker 00

  And also the, there's a cyclotron for high velocity protons down in Knoxville. So we ship all of our hardware down there. My co-founder Addy runs in and out wearing this protective thing. Addy is a lunatic when he comes to this stuff. He's like, oh yes, it's the same as flying transatlantic. Don't worry about the radiation.

• 12:30Speaker 00

  So yeah, basically you expose it over a 24 hour period to the same radiation dose that you would have in a five year mission. And then that, all of that telemetry and data then informs our choice on both shielding and software to mitigate bit flips. I think we're the only people in the world now that know where both an H100, a B200, H200 will fail if you blast it with high velocity protons and heavy ions.

• 12:49Speaker 01

  Do you have to change any of the underlying electronics to solve the problem or you just build shielding around it?

• 12:54Speaker 00

  Both, both. So we do build shielding around it. There, there's a lot of it is just component selection. So for example, all of the SSDs, all of the power delivery system, all of the power converters and everything else. We, we test 10 components and whichever the best one is, we pick. We're trying not to use space grade rad hard components. We're trying to use off the shelf like automotive style components because it's way cheaper. And most people have never tested those in radiation chambers.

• 13:20Speaker 02

  I think that's one of the secrets of how SpaceX has actually reduced a lot of the costs of a, a lot of the satellites as well. They use not space graded electronics, which would be extraordinarily very expensive, but instead you take regular components that there's a supply chain and run through all the tests and make sure if it works. And I think actually this is one of the things that Stranis does as well is to make sure that telecommunications satellites actually work in space. Because they're, they're also in, in GEO, which has more radiation. Are you in GEO as well?

• 13:53Speaker 00

  No, we're in GEO.

• 13:54Speaker 02

  Okay.

• 13:54Speaker 01

  When you first told people that you were going to put data centers in space, what were people's reactions?

• 14:02Speaker 00

  For a very long time, their reactions was, this is the dumbest thing I've ever heard.

• 14:08Speaker 00

  So the, yeah, we, we tried to, we actually applied to YC once and we got rejected. We, we then tried to raise and it took, we tried to raise 2 million at 10 posts on a safe. It took us three months and we got rejected from at least 100 VCs. And then even after YC, when we went out to raise after demo day, I think we got rejected from at least 20 VCs before we got to the first, the first check.

• 14:30Speaker 01

  This is one of these ideas that was like extremely unpopular with investors. And if you had believed the, if you had listened to what all the investors were telling you, you would have quit and not ever done this idea. I'm curious, why did people tell you that they were not investing and what did they get wrong?

• 14:45Speaker 00

  People had a hard time visualizing a world with low cost launch. And, and to be fair, we're still not out of the woods on that front. You know, lots of things need to go right with the Starship program for that to make sense. So that, that's one thing. I think it just sounds too sci-fi and too, yeah, it's a, to make this work, there's a convergence of two factors. One is the launch cost coming down and people have to believe that. The second is it becoming way harder to build stuff terrestrially. Maybe two years ago, that wasn't quite as obvious as it is today. Now people are like, okay, well they've just banned building new data centers in New York, they're going to ban it in like seven other states. Now that, those two things I think converge to make it more investable essentially.

• 15:26Speaker 02

  And I think the other thing, after hearing you explain all the engineering and physics, it actually is doable. It doesn't sound like sci-fi from first principles. It's like, it's actually buildable.

• 15:35Speaker 00

  The reason I had confidence in it is because we had such a strong engineering team. So if, if you have, you know, the world's best space engineers saying this is possible, and to be frank, my background isn't as a space engineer, but you know, I, I have full confidence in my, my two co-founders, one from SpaceX, the other was building satellites for NASA, saying it's possible, then you know, that's a, it's a, it's good enough for me.

• 16:02Speaker 05

  Once you had the idea and then as you, once you're in YC, how did you sort of break the problem down into like a, a plan for what to do? Obviously in software, you know, you, you think of your MVP and you launch quickly and you get feedback, but hard to do that with data centers in space.

• 16:18Speaker 00

  I have a very tangible piece of advice for all space companies. The first thing every space company should do is book the first available launch they can.

• 16:25Speaker 01

  Before they built the thing that they're going to launch.

• 16:27Speaker 00

  Before they built the thing, before they probably even know what they're going to launch. Booking a launch is such a good forcing function for a space company. So we founded the company January 1st, 2024. January 2nd, we booked the first available SpaceX rideshare launch and it was cheap, it's like 300 grand, you know, which.

• 16:44Speaker 01

  Which was how far out was the launch?

• 16:45Speaker 00

  It was 18 months out and then it got pushed to 21 months out. And we were like, okay, something is going to be on that rocket. I'm not sure 100% sure what it's going to be at this point, but something is going to be on there.

• 16:55Speaker 01

  That's interesting.

• 16:56Speaker 02

  Sounds like the same advice for all the software companies, just got to keep launching and launching, same thing.

• 17:01Speaker 00

  Yeah. And what, what we initially planned to launch was very unimpressive. Actually, it was like, we were going to put a Jetson chip, which has been flown on many satellites before, and we were going to use it for, for kind of edge processing and things. We actually had a co-founder change quite early on. And when we got Addy from SpaceX, Addy was like, oh, that's, that's lame. Like let's, let's put an H100 on there. We're like, Addy, you can't put H100 on a, on a satellite. He's like, sure you can.

• 17:28Speaker 00

  The amount of people who said it was physically impossible to run a pack, like a, a chip that's that power dense in orbit. Like people just thought it was like literally impossible to run data center grade, you know, GPUs on orbit.

• 17:40Speaker 01

  What would have caused it to be impossible?

• 17:42Speaker 00

  There's two things. One is the thermal side of things. They're very power dense, they produce a lot of heat. And the second is they'd never been tested in the radiation environment in space. And both of those, so for the first one, like it's kind of a wacky solution. Like we submerged the entire thing in this phase change material. So the, everything on Star Cloud one is, is submerged in this like phase change material. So it's like immersion cooling for all of the components, all of the power delivery, memory, everything is submerged. Like nobody's ever considered doing anything like that in space before. It's, it's not a particularly scalable solution. It's not like you, you have quite a low duty cycle. You have to wait for it to melt and then, and then, and then it solidifies every so often. But it enables us to prove that you can run the H100 in space.

• 18:27Speaker 00

  The, the next one is this directed chip like we're calling architecture, that we can run continuously. But yeah, I mean, I, I give full credit to my co-founder Addy for coming out with some pretty wacky and crazy ideas.

• 18:37Speaker 01

  To get to a data center that's like commercial scale, where you can actually like make money on it, it's actually like profitable, it's going to require many steps. How did you like, think about like sequencing out like the journey to get there?

• 18:49Speaker 00

  So as I say, first step was book whatever the like first launch lowest MVP we can have available. Second step is producing something which is a commer, like a, a product we can sell to customers. So that's Star Cloud two, that's a 10 kilowatt spacecraft that we can sell compute to government and military satellites. And then the third step is the product that we're going to be able to sell to hyperscale data centers. So that's the Star Cloud three, we can, it's 200 kilowatt, three ton spacecraft, that's six meters long. With that, we can fit 50 of them per Starship. So about 10 megawatts of new compute capacity per Starship. And we've just filed with the FCC for a constellation of 88,000 of those. So that means on the order of 20 gigawatts of new compute capacity.

• 19:32Speaker 02

  Wow.

• 19:32Speaker 00

  And we can fit up to 10 terawatts in the Dawn of Sun synchronous orbit. So that's like 20 times the entire US power grid.

• 19:39Speaker 02

  For context, what's the largest data center deployment on Earth? Because you're talking about 22 gigawatts. Oh my God. What's, what's the largest one here on Earth today?

• 19:48Speaker 00

  They're about a gigawatt is the, is the largest. Yeah.

• 19:51Speaker 01

  What's the timetable for all of this to become real?

• 19:53Speaker 00

  Yeah, it's very dependent on the launch cost. And so, you know, this, this estimates for Starship, if you believe Elon, it'll be end of this year, but let's say it could be end of next year, early 2028 for Starship deploying, you know, ramping up the launch cadence. They're actually phasing out Falcon nine, so they're going to be moving over commercial customers to Starship. There's also a whole bunch of other launch vehicles coming online. Stoke Space has the Nova rocket. Rocket Lab has Neutron, Blue Glen, Blue Origin has New Glen, so.

• 20:26Speaker 00

  End of 2028, I'd say, is when we're starting to ramp up for the terrestrial business, competing with terrestrial data centers.

• 20:31Speaker 03

  So your customers are actually anyone who wants compute? And then initially?

• 20:35Speaker 00

  Initially, it's government and military, but then as Starship ramps up. So for the next two, three years, we've just won four contracts with various DOW and government entities.

• 20:45Speaker 03

  And then initially also, it's people who want that compute actually like for other purposes in space then, is that right?

• 20:52Speaker 00

  Yeah, exactly. So right now, many satellites are very constrained with the amount of data they can downlink. And so using optical terminals, we'll have three optical terminals on our second satellite. They can ship enormous amounts of raw satellite imagery and SAR data, synthetic capture radar data to us. We then process that on orbit and then we can just downlink very quickly the insight from that. And the insight might be the coordinates of a vessel or something like that.

• 21:16Speaker 03

  In terms of Nvidia, I mean, are you, how are you partnering with them around chip design? And, you know, are there changes that you have to make to the design to, I mean, as you rescale? Like being, making it more radiation resistant or, you know, what does that look like?

• 21:31Speaker 00

  Yeah, so we're, we're working very closely with Nvidia. They, we recently announced this Ruben, Space Ruben one chip that we're working with them on. So that's designed for the space environment. We very heavily modified the H100 to make it work in space. So on the mass side of things, we stripped out a lot of things like the AC to DC converters, the, um, the direct, the cold plates and everything else we sort of stripped out. And then we stiffened the board, we made it radiation tolerant. So because of that, they, they're very interested in, you know, whether any people basically that have any data on how one of these high powered GPUs operates in space. So yeah, we're working with them very closely on designing this new space chip. Cause you, you can actually do very simple things to make these chips way more effectively,

• 22:17Speaker 00

  effective to run in space. And so that's what we're doing.

• 22:19Speaker 03

  YC's next batch is now taking applications. Got a startup in you? Apply at ycombinator.com/apply. It's never too early and filling out the app will level up your idea. Okay, back to the video.

• 22:32Speaker 02

  I think the thing of getting GPUs to now natively run on DC, you avoid the whole conversion of energy ECDC because that's what makes solar panels not as efficient. It's the whole conversion.

• 22:45Speaker 00

  Exactly.

• 22:45Speaker 02

  Lose a lot of power, which is very clever.

• 22:47Speaker 00

  Solar panels generate DC immediately. So there's no point doing, we, we just need DC to DC converters. But that's much better than AC to DC converters.

• 22:56Speaker 02

  So we could unlock a bunch of companies also just building GPU data centers using solar power, period.

• 23:02Speaker 00

  Yeah.

• 23:03Speaker 02

  Whether in space, under the water or in earth.

• 23:05Speaker 00

  Yeah, I mean, yeah, actually people can definitely use this tech for other things, yeah.

• 23:09Speaker 03

  You talk about StarCloud two a little bit more like, is there actually a Bitcoin miner in there as well?

• 23:14Speaker 00

  Yes, we will be flying a Bitcoin mining ASIC next, next year, which the crypto community is very excited about. There's much more enthusiasm than I was expecting to be honest about that, so.

• 23:25Speaker 05

  That was a good narrative.

• 23:28Speaker 00

  The number of people that want me to launch Starcoin, you have no idea.

• 23:33Speaker 00

  There is actually a StarCloud meme coin, I think, out there.

• 23:35Speaker 03

  Yeah, don't buy it. It's not official.

• 23:38Speaker 00

  Do not buy the StarCloud meme coin.

• 23:40Speaker 03

  Yeah, yeah.

• 23:41Speaker 00

  So yeah, we'll, we'll, we'll be launching, we'll be, we'll have one of those on there. We'll have a whole bunch more H100s, Blackrock chip. We're also partnering with AWS on launching the outpost hardware. That's their on-premises server blade that they give to customers to run a local instance of VC2. And that will be useful for, particularly for our military customers.

• 24:00Speaker 05

  Something we were talking about earlier is at YC, you just observed over the last few years, it's been quite hard for hard tech companies to raise funding in general. There's not been much investor appetite for it. It certainly seems to have changed over the last six months.

• 24:14Speaker 03

  Great news, yeah.

• 24:15Speaker 05

  From your perspective, I'm curious, like, how was it raising the seed round in, during YC? And then this huge round you raised from, um, from benchmark? Just sort of maybe tell us the inside story of kind of how that all came together and what it feels like being a hard tech founder raising money today?

• 24:32Speaker 00

  So when we first raised, uh, end of 2023, we tried to raise $2 million at 10 posts. And yeah, that took three months to get together, about a hundred VCs said no. Yeah, deep tech and hard tech in space were definitely not a cool thing to invest in back then. Then after YC, yeah, we, we, it took us quite a while to raise. So I think we got rejected from at least 20 VCs before we got our first, uh, first check on the demo day raise. And things have definitely swung around since then. It's become a lot, uh, easier to raise for deep tech, I think. I think a number of reasons for that. One is people think that software doesn't have a moat anymore, which I think is probably accurate.

• 25:11Speaker 05

  That sort of hive, it's funny, like the hive mind just switched, like, seemed to me like very quickly. It was just like the SaaS stocks and like Claude Code came out, SaaS stocks, public company stocks all went down. And then suddenly it like was, I, I think the like fastest I've seen sort of things in the public markets, like directly affect demo day, where suddenly everyone's like, oh, like we need to like invest in hard tech now.

• 25:30Speaker 00

  Yeah, that's, that's fascinating, yeah. I think, yeah, people are just much more open to investing in hard tech now. Yeah, like I think we were the first space investment benchmark we've done.

• 25:37Speaker 05

  Yeah, I mean, whatever you can shit, like, how did that round kind of come together? And, um, and again, what do, what do you think sort of benchmark saw in, saw in you guys?

• 25:45Speaker 00

  So to be frank, that round wasn't as easy as it looks from the outside. There's a lot of VCs that have big SpaceX positions for one thing. And SpaceX, like midway through the round, came out saying they're doing exactly what we're doing. And it wasn't public then. And so anybody with like a conflict policy then was like, okay, we're conflicted out. But I mean, towards the end of the round, it certainly came together much faster. I think, to be frank, I don't think, so Chathin is our partner and Chathin's awesome.

• 26:15Speaker 03

  Amazing investor.

• 26:16Speaker 00

  Yeah, he's, he's great. I think basically he saw a really, really strong technical team doing something that if it worked, could be incredible. And I think when he came to visit us, you know, he spent a lot of time doing DD on other things, you know, on the backgrounds of all of our, we've got the best, and we literally have the best freaking engineering team in the world in Redmond, building the stuff, you know, half of them from SpaceX, half of them from, from some of the hyperscalers. So he spent a lot of time with the team, he spent a lot of time. But I, I don't think if he'd, I don't think if he'd come across a report that said that cooling in space was impossible, that that would have like thrown him off. I think he was like, okay, this is a good enough team that they can figure it out.

• 26:57Speaker 05

  How did you build such an awesome team?

• 26:59Speaker 00

  So my co-founders, Addie and Ezra, um, I, well, with Ezra, I, I reached out to him after being down to Starbase Texas. And I was like, have you got any ideas that would make money if, uh, launch cost was 10x cheaper than it is today? And we started with this space-based solo idea. With Addie, who's introduced to, to a friend, through a friend, uh, he, he actually had already been thinking about this. He already had registered the domain name stellarcloud.com before. And then with the team, we were just ruthlessly slow at hiring and like picky about hiring. After YC, we'd raised like 11 million at 40, which is like a decent round in YC. And even then it took us six months to make our first hire. And we've got like the most kickass space engineers, our first hire.

• 27:42Speaker 00

  We've raised like a lot of money now, even this round that we announced in March, we've raised a much larger round since then. We're still only 20 engineers, like the, and we have one commercial guy who came from the Space Force, who was working on Golden Dome. We are so picky about who we hire, like it is to a point of being very frustrating to be honest, but it's the whole game. It's the whole game is having a kickass engineering team.

• 28:07Speaker 03

  What was it like to have this idea, have people sort of poo poo it, like didn't really get it? And then suddenly, I mean, to have much more commercial validation that like, you know, Google, SpaceX, the, the stalwarts of the industry sort of embrace the idea and realize actually like, some crazy percentage of future data centers likely are going to be in space. What was that like to sort of see the, the sea change and be early?

• 28:34Speaker 00

  It was surreal. So if you go back through my Twitter feed, I've been like shouting from the rooftops for the last like three years about this.

• 28:42Speaker 03

  Contrarian, but right.

• 28:43Speaker 00

  Every day I would post something about like why data centers in space are going to be, uh, are going to make sense. And then slowly and slowly and slowly, people would start to drop hints about things. Like Elon at one point was like, Ninety nine point nine nine nine percent of the energy in the in the solar system is is from the sun. So I'd repost that and I'd be like, we need to build data centers in space.

• 29:08Speaker 00

  Like, I would like, everything I would find a hook for, like.

• 29:12Speaker 02

  I think this is one of the things we see with all the best hard tech founders. You're essentially living in the future and are almost like a prophet that brings the future back to now us underlings and the earth that don't quite get it yet.

• 29:26Speaker 00

  I'm going to tell my mom, who's very religious, that Y C said I'm a prophet.

• 29:31Speaker 02

  But I think that's cool. And the other thing that's fascinating to me is that your background, if you go on your LinkedIn, is not very legible that you would be in space. But you had a background previously doing software and physics and then went to business, but nothing there that said space.

• 29:52Speaker 00

  Yeah. So for people who don't know, my background, spent the first five years of my career as an engineer on the software side, studied math and physics before that, undergrad and masters. And then I went to McKinsey, more on the commercial product side. But I actually ended up doing a couple of projects with national space agencies on different satellite missions. And that's where I really started to notice the launch cost coming down very rapidly. I actually had another startup before this. And yeah, when I left that one, decided, okay, if I'm going to do another startup, it has to be something I'm like, very passionate about. And, and yeah, for my whole life, I've been very passionate about space. Because I don't have a space engineering background, realized, okay, I'm going to need the world's most kickass space engineers. And actually, this

• 30:36Speaker 00

  is where I give credit to Y C. I was kind of blindly following the Y C advice. I was like, okay, the first thing we need to do before coming up with an idea is get the most incredible space engineers in the world on the team, essentially.

• 30:49Speaker 01

  This is before you even knew what you wanted to do in space. All you knew at that point was that like, launch costs were going to come down dramatically and there was going to be cool stuff to do in space. And you wanted to find some space people to do it with.

• 30:59Speaker 00

  Yes, literally, that's literally it.

• 31:02Speaker 03

  But it wasn't a vibe of like, oh, can you please build this crazy idea that I have? It's like, the reverse even, like, I'm going to figure out the commercial part.

• 31:10Speaker 00

  Yeah, exactly. My pitch to Adyen Ezra was essentially, if you have any ideas that would make sense if the launch cost was 10x less than it is today, I can figure out everything else around that, besides the building the satellite piece.

• 31:26Speaker 01

  How did you, how did you find them? How did you recruit them?

• 31:29Speaker 00

  So Ezra and I had grown up in the same place in the UK. I didn't, actually, to be frank, I messaged like a lot of space engineers, maybe 10 of them took a call and two of them said yes.

• 31:39Speaker 03

  That's all you need. You don't need like a hundred people to do it. You only need one or two.

• 31:44Speaker 01

  So Philip, during the batch, the way I thought about Star Cloud was that it could only work if you were able to make it cheaper per unit of compute than like ground based compute. And I think you will. But it's occurred to me since then that like, it's not actually clear to me anymore that that is necessary for Star Cloud to succeed. I'm curious if you think about it the same way, because since the batch, we've learned that AI data centers are becoming politically incredibly unpopular. And it seems not unlikely to me that it will soon become like, basically de facto impossible to build AI data centers like anywhere, at least in like a democratically hiked country. Like, I'm curious, like, how you think about that, how it affects your plans for the company?

• 32:24Speaker 00

  Yeah, 100%. And this has moved faster than I was expecting as well, to be honest. You know, we've just seen New York now blocking data centers, construction, you know, for reasons which are not grounded in science, really, you know, it seems like more, more like vibes than anything else. Building these things in space will definitely be much easier from a regulatory perspective.

• 32:45Speaker 03

  So let's do some myth busting. There are a lot of misconceptions about certainly water and data centers, but also power. You know, what are some of the things that come to your mind?

• 32:58Speaker 00

  With water specifically, water is really actually just a function of power. You know, you can cool data centers with no daily consumptive use of water if you're, if you just throw more power at the problem, essentially. And that is what all of the data center companies are now proposing. It's very unlikely that any data center company proposes any, any, any data center that is going to be consuming daily amounts of water.

• 33:22Speaker 03

  And there is actually evidence that you can have closed loop systems that consume very little water. And I think the analogy is like, if you ran a burger shop, like a fairly large data center with like hundreds of megawatts would consume about the same amount of water as like a McDonald's. So it's like, it's really, you know, a non-issue, but it's unbelievable that they're repeating this so much.

• 33:47Speaker 00

  Yeah, they do use a lot of power, though. And so most new power projects for data centers right now are being built with natural gas generators, actually. And so there's certainly some people that are pushing back on, on those.

• 33:58Speaker 03

  I mean, you know, one of the arguments is that as data centers get built, they sort of compete on the grid, which is kind of not true. I mean,

• 34:06Speaker 00

  Also not true if you, if you build a new power project for it.

• 34:10Speaker 03

  Right. Which is generally what people are doing. You just can't get enough power from the grid. So there's also some evidence, actually, that adding data centers increases the capacity of the grid and then prices actually come down over time. That being said, you know, it's sort of a perfect storm. Like, we need intelligence, we need data centers. It's become basically a national security issue, you know, for America and for the West to have access to intelligence is sort of the most important tech tree of the next hundred years. And so for tech policy to sort of put us back into the Stone Age and possibly lose the war for us, that puts Star Cloud in a different position in terms

• 34:51Speaker 03

  of bringing compute and AI and power online.

• 34:57Speaker 00

  Yeah, for sure. Definitely puts us squarely in the national security bucket at that point.

• 35:03Speaker 03

  I mean, thank you so much for fighting for the West, then.

• 35:07Speaker 00

  We're doing our best.

• 35:09Speaker 03

  So as one of the fastest growing unicorns in Y C history, and to do it as a hardware company, do you have any closing thoughts for people who are, you know, looking at space, looking at hard tech as a thing that they want to work on? Like, you know, what have you learned? And what would you tell the, you know, just starting out version of yourself, based on where you're at now?

• 35:28Speaker 00

  Yeah, I mean, I think there's just huge opportunities now coming in with space. We're really at the like, very early innings with what's going to be this enormous industry in space. You know, the amount of capacity and launch that's going to come online in the next five years is, is really mind boggling. So yeah, I would definitely encourage people to, to step into that. In terms of advice, like, the, the Y C advice stands true. It's technical talent on the founding team is the thing you need to solve for first, and then everything else follows from there.

• 35:57Speaker 03

  Philip, thanks so much for coming on the Light Cone.

• 35:59Speaker 00

  Yeah, thanks so much, Adam. Nice being here.