“Pay attention to the space industry. There will come a time in the next one hundred years where the in-space economy is bigger than the Earth economy. Don’t miss that.”
Daniel Faber is the CEO & Co-Founder of Orbit Fab, a space company building “gas stations” in space to provide the infrastructure necessary to create a robust in-space economy. Orbit Fab recently raised $10M in seed financing from numerous investors including Lockeed Martin Ventures and Asymmetry Ventures who led the round. Prior to Orbit Fab, Daniel was the CEO of Space Arena and Deep Space Industries.
Tell us about Orbit Fab. How did it all start?
So the previous company that I was running, Deep Space Industries, was an asteroid mining company. But really what we were building was some of the core tech that was needed to actually mine the asteroids. Along the way we recognized there weren’t enough thrusters to move small spacecrafts around orbit. There’s a huge gap in the market. So we built a thruster that could run on water--basically a glorified steam kettle—and that was Deep Space Industries’ core product. But our customers always had this conundrum of buying a cheap thruster with low fuel efficiency and needing lots of fuel, or buying an expensive thruster that had high fuel efficiency. And so I realized that there was always this dynamic tension. There had to be a better way to solve for that.
After Deep Space Industries was acquired by Bradford, I started looking at other business models and opportunities and teamed up with Jeremy Shiel, my co-founder. He had done a short contract at Deep Space Industries. We hit it off there and had a similar vision for the future. We ran four or five business models that we were trying to run to ground to figure out what was going to stick. The refueling one was actually a pivot from looking at a commodity exchange in orbit. We talked to some of those customers that I’d worked with before and the resounding feedback was that no one in this space was doing it (refueling tanks). Yet, it was absolutely needed for the future.
We had the market interest. We had the team coming together, so we went out for investment. It took us five months to close a pre-seed round. Four and a half months later we delivered two tanker test beds for flight to the International Space Station, fully qualified for NASA’s curated safety standards. We got ahead of NASA on everything. We had to preempt their concerns and solve them before they raised them. We got our final requirements signed off two weeks before we handed over the flight hardware. But that’s the risk. We had to accept that risk that it might not line up. But it paid off because we got to fly within the first year of just having a concept.
So that got us off the ground. We raised a seed round and launched our first operational tanker two months ago.
So how did it work before? Was it just a shorter lifespan for these vehicles?
We’re specifically looking at refueling satellites, not rockets. The satellites go up, and all the fuel they’re ever going to have is in the fuel tank. It’s like buying a car with fifteen years’ worth of fuel in the tank, and you’ve got to carry that fuel around all the time, which costs you a lot more fuel. And when it’s done, you’ve got no options. The tech is fine they just run out of fuel. These satellites also last about 15 years but you’ve got no idea what the business is going to be like in 15 years. There’s no business model flexibility. It’s incredible that we do anything in space given the inefficiencies, and yet the value of being able to provide services from space is so huge. Once we take away some of those inefficiencies, and the economy in space is going to take off.
Interesting to think about a robust space economy up there one day. And since you provide the fuel – you’ll largely be the center of it.
That’s what we want. And that’s our vision: a bustling in-space economy that’s big enough to support permanent jobs in space. And we are the infrastructure. It’s not just fuel distribution. We’re building a petrochemicals company. Orbit Fab will take material from asteroid miners or from Earth or whatever we can scavenge and will turn it into propellant.
You want to create fuel from space?
I’d love to place a purchase order with the first asteroid-mining company. And we won’t be an asteroid-mining company, but I’d love to place that purchase order. That’s five to ten years away. But we want to build the tech, then take that material and turn it into the things people want to buy.
There’s so much going on in space industry now. Has a lot of this been in the works for a long time or has everything just exploded in the last few years?
Well, you’ve got to realize that the space stations have been refueled for forty years now (Mir, ISS); they’re refueling those. They are transferring propellant, so often they will just plug on a module and fire its thrusters. But that’s not new. People have talked about fuel depots and propellant depots for a very long time. There are two real things that have changed--three, maybe--that make this the right timing.
The first is that we’ve now got robotic rendezvous and docking figured out. So DARPA and NASA funded a bunch of projects. And now you see Northrop Grumman operating the MEV in geostationary orbit. When we started, there were seven or eight companies working on what are effectively “tow trucks” in space, like the MEVs for life extension, debris-removal, and orbital-transfer vehicles. There’s a whole bunch of different business models that I just lump under tow trucks. It’s been a 400 percent increase in three and a half years on the number of companies working in this space. That velocity of new entrants tells you there’s value to be created and captured here. We looked at that like, Well, they’re our natural customers. For a lot of them, like debris removal, the business case doesn’t work if you don’t have fuel because it’s like launching a tow truck, and you tow three satellites, then you run out of fuel, and you throw away the tow truck and have to buy a new tow truck. It’s almost ridiculous to imagine that you can actually make a business model on such an inefficient system, and yet that’s how the economy is trying to run. So we came in and said, “We are that infrastructure layer. We’ll get your fuel and just improve your business out of sight.” That’s what we do. One huge tech innovation is the autonomous, self-driving vehicles, right? We have self-driving cars. Now we’re going to get self-driving satellites.
The second big thing was risk profiles in the industry driven by CubeSats, then SpaceX bringing down launch prices and things. People are doing more entrepreneurial things because the barrier to entry and the dollars per product experiment have come down, and that’s leading to innovation across the board.
And then the third thing: Everybody who looked at propellant depots before--and this is specific to how we approach the business--they’ve looked at cryogenic propellants because you need a lot of fuel to fill up the upper stages of rockets, and you get a lot of advantage to that, and that’s what SpaceX is doing. And NASA put $250M into this to develop that tech last year. Because with cryo you have to keep things so cold that it requires a certain minimum size of the equipment to make any sense so there’s no minimum viable product. You need a billion dollars. You can’t raise a Series A on a billion dollars. You basically have to wait for the government to start offering checks. We came along and said we were going to focus on storable propellants. We’re going to focus on a minimum viable product. We’re going to focus on how we get to market quickly and how we can do this capital efficiently. Capital efficiency has become our mantra. And how we do that is our secret sauce that’s allowed us to get this far this quickly and will let us build out a whole network.
There are a lot of people looking at these rockets going to space and wondering what’s the purpose of space tourism. Why do we need to be in space and have an economy in space?
I’ll give you two answers to that. The first is long term. If you look really long term, we either get off this rock--become an interplanetary species--or we go away. There’s no choice on that when you look at it long term. In the short term, there is no reason. There’s no inherent reason that we should do this except for the extremely long term--unless you can make money. That’s the crux of it. And it doesn’t have to matter to 99% of the people on Earth. But if I can make money, I can start up a business, I can do my own thing, I can get investors interested--you don’t have to care about my business. I don’t have to sell it to everybody. I just have to make money, and if it’s making money, it attracts other entrepreneurs. If it attracts other investors, it attracts other people to work there. If we build a bustling space economy, we can support permanent jobs. And now you start talking about farms. How do you provide people with food, real estate, education, health care, right? Every single industry that’s operating on Earth will start operating in space one day, and I believe that day is in the next couple of decades. And so that is a really exciting paradigm shift, and it doesn’t need anybody to care. It just needs people who want to make money, and that’s the most powerful incentive that we have on this planet.
Hence the reason for the explosion of private space companies.
People have realized they can make money. The biggest problem in the space industry to date has been the lack of profitable business models. That is what we’re attacking.
What about the team you’re building? What’s the characteristics you’re looking for in employees of a space company?
We spend a lot of time talking about this. If you’ve read Steve Blank or Lean Startup and those kinds of things, he gives a great definition: A startup company is a temporary organization in search of a scalable business model. Now what happens when you find a scalable business model is that you need a completely different company that is really good at optimizing, and not at searching for scalable business models. You need a company that’s really good at executing on a business model. They have to be efficient at that execution. They have to know how to grow and expand that business. When you do an MBA, that’s what they teach you. They don’t teach you very much about how to search for business models because it’s a temporary state of most businesses.
The team we have now, the first fifty people we get on board, I expect every one of those to be great at or to learn how to search for business models, make products quickly, get customer feedback, be adventurous, take some risks on product, fail often in our product discovery . . . And I fully realize that in two or three years, we don’t need those people as much, and they’re going to get really annoyed if we try and turn them into production people. So the people I’m hiring right now - I want them to eventually go off and create a bustling space economy outside of Orbit Fab, and I want to give them all of the skills and capabilities. I want to send them to the places they’re going to get the network. I want them, if they’re engineers, to see how capital is raised so if they decide to do their own thing, they can do it, and they’re fully equipped. These first fifty people are going to dominate this industry because I don’t see anybody else training them and giving people skills like that. That is what we want in our fist fifty people.
You’ve been a CEO in a few different companies now. What has been your biggest lesson so far as the CEO?
Whew! Do you want to see the scars and the arrows stuck in my back? I think the art of being any CEO isn’t not making mistakes - everybody makes mistakes, and it’s unavoidable. It’s to avoid making the mistakes that will kill a company.
But the other thing I’d say in terms of setting up a company would be choosing the people that you’re working with very carefully. It took me several mistakes to really internalize this and to understand why my mentors were saying it. But the business partner that you get matters more than anything. The first investors matter. These people will set the culture, the tenor, the direction—everything. Your first hires matter. Everyone needs to be pulling in the same direction.
Getting those people on early, you nail it. Everybody will just accelerate. There’s a huge trade-off between finding people that get that and being able to pay them because there’s no way you can pay them at the start either. You got to pay them in nonfinancial ways. But if you get that right, then you lay the foundation for at least the first five years.
And how do you intentionally build that culture within? How do you go about doing that?
A lot of luck. And experience. Though the only bad thing about twenty years of experience is it takes twenty years to get.
You have to be recognizing the signs for when there are problems and the indications that there might be problems. And developing habits and recognizing those in others. That’s the important thing. And it’s taken me twenty-five years to figure this stuff out to the point where I feel confident running a company the size of twenty. Of course, our company is now bigger than twenty, and I have no idea what I’m doing again. But that’s the life of a startup.
But just recognizing when things are going to go off the rails, what the indications are, and nipping that in the bud. Otherwise, you accumulate what I call management debt, and you pay it back with massive interest. You have to go back and take your focus off the game at hand and go and fix the company. And you rarely have the time to do that. But if you don’t fix it, then it just builds and builds and builds until the whole thing is a drag, and you can’t afford any drag.
What’s been your favorite book so far in your journey?
That changes every time I read another good book. I read a lot of science fiction as a kid. My parents had a wall of science fiction. My mom’s a scientist. My dad’s an engineer. If I had to pick one right now, I would say Delta V by Daniel Suarez, a science fiction book about asteroid mining that is almost believable.
Any parting advice for fellow founders and CEO’s?
I would leave, perhaps, with this: Pay attention to the space industry. There will come a time in the next one hundred years where the in-space economy is bigger than the Earth economy. Don’t miss that.