Best-of Interview: Tom Vice, CEO of Sierra Space

Ricky Mulvey caught up with Vice at the Sierra Space headquarters for a show that originally aired on March 30, 2024.

They discuss:

• The magic of microgravity, and its impact on everything from biotech and batteries to chemistry and computing.
• How rent works in outer space.
• Defense systems and the hope of a space-based “McDonald’s Effect.”

Companies mentioned: MRK, PFE, MRNA, NVDA

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

This video was recorded on Dec. 22, 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 and semiconductors. I think we're going to find new chemistry for batteries to even greatly accelerate the transition to electrical electrification. 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.

Ricky Mulvey: As we wrap up the year, we're playing back some of our favorite conversations from 2024. This one is my interview with Tom Vice, CEO of Sierra Space and co author of the book We Have Liftoff. The mission of his company is to build a platform in space that benefits life on Earth. I met Vice back in March at Sierra Space's headquarters in Louisville, Colorado. We talked about the research possibilities in a more commercialized space. What's to come in the orbital age. We're playing it on today's show because it ultimately made me and I hope you a little more optimistic about the future. Maybe we'll get to the business stuff. I'm more curious about the life stuff, the possibilities. 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 obit. 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 obit. To the point where we will now be doing building factories, building cities, finding the next generation of disruptive products in oncology, longevity, microprocessors, clean energy. The way we see this playing out and I wrote about some of the book was really 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. Like there are two different things. Terrestrial markets and markets that get developed in low Earth orbit are going to be seen as one integrated ecosystem. 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. 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 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 and it's really the result of this convergence of technologies. We've been able to build rockets that massively decrease the cost per pound to get to orbit. Now we're building, for us, airspace 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 is going to obviously, we are integrating at a massive pace, both the foundational tech of micro-gravity, the 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 a little over 600 people that have ever gone to orbit to a time in which 10,000 people at any one 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. But I think, before we can figure out how to have people, human beings live 100 million miles away from Earth, we've got to get really good at protecting this planet. This is a very special place and so 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. You can't It's going to be hard to spread things, a lot of globs and blobs, 'cause you got to keep it together for people to eat in little mochi balls.

Tom Vice: Sure. It'll 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.

Tom Vice: You got to go do it. There's nothing like chasing an M&M around. But yeah, so you have to think about again, the purpose of the book was really to put every chapter was different if you had a chance to read it. It was trying to describe what life will be like most books. Although I'm a huge Gene Rodbery fan, most books are kind of scary about space. Something always terrible happens. I see space as exciting. I see that we're going to invent new things. But you have to think about what will life be like when people are working on orbit. Will social life look like? What will eating look like and so we try to describe that so that as more and more people start to think about traveling to space, whether they're biologist, 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 try to write a book for them to tie in the sky, but living 250 miles above her head for months on Andar and part of that is food and what will it 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's going to be a concern. It's certainly not an easy life to live in low Earth orbit.

Tom Vice: It's not going to be easy. There's all stresses and strains on the blood system, your body, you have to make sure you are exercising, your muscles 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 having civilizations grow up and be able to understand that. No, by the way, while you're there, really do great things on behalf of eight billion people still living here.

Tom Vice: 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 planets come the closest together at 35 million miles. The average is 140. That's wow, you're out there and how many people are going to be able to live on the surface of Mars? A very harsh place to live. The next hundred 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 and 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: Everything's difficult. Well, I don't know. But you have a lifeboat. I can get back here in days, 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 planet where our grandkids can't even breathe anymore. I worked for a decade on James Webb Space Telescope. We still haven't found life anywhere. We've only found a handful of planets that are even in the gold lock zone. I know, 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 mountains and ski. I don't know about you, but I don't want to leave.

Ricky Mulvey: I'm pretty happy here. 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 dries 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 electrification. 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 re-grow. I'm convinced that we need to do more here not to screw this place up and 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, and it seems that NASA has shut down the Shuttle program and shut down a lot of 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 three, five, 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 it 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're going back. You see NASA's Artemis program. You see commercial companies going back. It was great to see intuitive machines landing again, a space 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 a testament to wings are back. But I think even in a better way, we built Dream Chaser, to be able to land at any commercial runway, a 737 Max or an A321 can land. That creates, wow. What's happened there? We just invented the first spaceplane, commercial space plane but what's more exciting is we just invented the first spaceliner. You think about we're taking advantage of the worldwide global infrastructure. Instead of everybody coming back or everything coming back from space to day, it gets plunged into the ocean in a capsule or into the dirt in a capsule. I think it's going to get a whole new generation excited, just like the five year old, six year old Tom Weiss was in the 60s. There's going to be a five year old, a six year old girl that's watching Dream Chaser for and at the Paris Airshow and go, Wow. The first Spaceline I got to tell you, this is a really interesting story. I was a keynote speaker at Oshkosh one year, maybe, I don't know, five, six years ago, I think it was. A ninth grade girl stood up out of this if you've ever been to Oshkosh. It's a cool place. She stood up and she asked me, did I believe that someday we would build a spaceplane that would be just like an airplane? You can imagine my answer. I'm giving it to you right now, which is that day is 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 this time is coming due. At the end of 2030, the plan is to deorbit it. But before we debit it, the most exciting is that there's going to be commercial space stations in orbit. Ours will clearly be there and it's not just a replacement at 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 on the ISS. That's just one drug. Imagine if we do that 100 times a year. I have two young daughters, now two young granddaughters and 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, maybe we can prevent nuclear war along the way.

Ricky Mulvey: I hope it's the McDonald's effect up there. What is the countries that have McDonald's don't go to war.

Tom Vice: I hadn't thought it out 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. We talked about some of the research possibilities of building this commercial space station, these inflatable space habitats. We 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 when you take if you think about gravity is a very strong force. We don't fill it because we're 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.

Tom Vice: Very uniform crystals because I don't have gravity interrupting in the crystallization. That crystallization could be protein that goes into biotech and protein crystallization for biotech meanly goes into cell structures, protein structurization, body absorption, all things. It's also an inorganic. I can do very pure glass. So today we're all used to fiber optics. In space, you can build glass that's 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 to that, I can accelerate all of that research. So the crystallization of microgravity fields is very unique. Again, I always say, 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 microgravity. 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. So our focus has been to get the economics so that the board meetings of Pfizer's Moderna's and Merck of the world start to realize now there's a return on investment and now's the time to find a cure to cancer or a cure to cardiovascular disease or be able to print tissues for livers and hearts that you can't do on the Earth. So that's been our focus.

Ricky Mulvey: I'm going to ask one dumb business question, then I want 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 and there's a revenue stream based upon the drug that gets 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 to lease enough to do five experiments a year. So we're very open and flexible and agile in terms of what the leasing arrangements are. So you may want to, 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. So think of us as a real estate agent, but we provide the real estate, the utilities and in some cases, we provide additional venture capital and 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 mention basically, you have a lot of tough decisions in terms of what companies get up there first. For these space stations, I've heard that it's three biotech firms and one tempered glass.

Tom Vice: Now, you're probably asking, why did we pick those? Just because what we looked at was a combination of factors. One is, how large were those terrestrial markets and have those markets proven to show benefits of microgravity in space? The third is the companies that did that work in space. How ford lean are they want to do work? When you combine all that together, what we saw was monoclonal antibodies, stem cell research, and regenerative medicine, advanced class were the four that were the closest in terms of ready to move to space. Now, if I think of just those four markets in 2022 was $900 billion a year in terrestrial sales. 8.3% CAGR, going to a 3.7 trillion dollar business by 2038. The market is huge. So, 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'll capture much more than that. To build a business case, though, you're in the single digits of capturing that market. But that's why those three or four were very powerful.

Ricky Mulvey: The tempered glass one was surprising to me instead of 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 surprised me a little bit. So 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 computer the size has come down. I don't know if you saw NVIDIA's announcement. I was really excited about their new chip, but as the new chips 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 mean, I'll give you a really interesting one's happening right now, 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 by iPhone to satellites without Cell Tower, my iPhone works anywhere. So a lot of effort, a lot of incredible technology is going in to directly connect your phone to satellite systems. So you don't need cellular. You're not talking to cell tower. You're talking to a satellite. So there's an ecosystem between cell tower, cellular, terrestrial cellular and in space mobile services from satellites. All that ecosystems coming together. If we you had thought about just taking the entire structure to space, you wouldn't need any of these ugly cell towers everywhere. I mean, 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. So 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.

Ricky Mulvey: So you move all the data centers off the planet. It makes the planet greener. It provides more space for people to live in vacation. So taking stuff off the planet in the Low Earth Orbit that's this whole idea of building a platform in space to benefit life. So 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. I mean, you ever been to a data center. They're massive. Although they're much smarter than they were again, in the 1980s or 1990s, I mean, a terabyte now fits my iPhone has two terabytes in it. But they're getting smaller and smaller consuming less power, we put them into space. You put them in LEO, so latency is low and if we build them right, they'll be really cheap. That's going to happen. I will say, though, I still remain 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: I mean, right now, we're already proving. Retinas are already something that's being proved. I think livers are next. Organs are to follow, heart is a little harder. But ultimately, I mean, be able to print organs without somebody having to die to harvest it first. I think that's a pretty cool thing.

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

Tom Vice: I think it'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 defends space. So we have a big part of our business that's a defense tech company that's leveraging our technology and ingenuity and 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 the 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 ten 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 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 businessy questions. One is you have a partnership with Blue Origin. How are they helping you build these space habitats?

Tom Vice: So 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 that as part of our partnership with Blue Origin for Orbit Reef. Orbit Reef really schedules in the 2030. We're moving even faster than that because my concern is that if the ISS deorbits early. I want to make sure the United States does not have a gap in Low Earth Orbit. So 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 Orbit Reef.

Ricky Mulvey: 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: Well, see, we focus a lot, not just on technology for technology's sake. We are a company that is really doing fundamental great work that leads into a high revenue growth rate, high net income growth rate. We kick off a lot of free cash flow and so going 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, but 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. So I think the capital markets will reward us for that and therefore, we'll have capitalization that comes with it. So we'll time it right, as you can imagine, when we first kicked this off in 2021 it seemed like every bank in the world was calling about doing back I had no interest in that. I wanted to de-risk the business, de-risk the portfolio, build a leadership team build the capital structure of the business. You saw what we've got significant capitalization with our series A and the first phase of B. So now we're in a path through 2024, we've done all the work to make sure that we're public company ready. So when we're in 2025 we'll be a 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. 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 light from the very first store. That's 13-and-a-half billion years ago. We wanted to see fundamental science. I met with Stephen Hocking once, it was just a brilliant afternoon just thinking about the origins of the universe. I mean, it was all theoretical physics. The James Webb's is proving some theories right, proving some theories wrong. I think it's been remarkable in terms of being able to find planets within that GOI lock zone. I think someday it will probably help us find life on distant planets. It's just remarkable. I mean, if you think about, "We're this tiny little blue dot, everything we know, everything". The great Carl Sagan quotes. What's really interesting is that this universe is not only expanding, it's 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 cool, really. You can see back in time, 13-and-a-half billion years, really? Because I always thought it was cool. I mean, everybody that was working in exoplanet research 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 Time Square on the big monitor was an 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 the physicist. 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 electrification. So 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: I think one of the reasons that we have a difficult time imagining this industrial age coming is because in many ways, it feels like space has almost moved backward from the '60s when people were on the moon. I was talking about moon, Mars. Same letter very different place. Slightly different. It's difficult to imagine people living in space when we're not going to the moon anymore and it seems that NASA has shut down the shuttle program and shut down a lot of 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 three, five, 10 years?

Tom Vice: It's a very insightful question because I grew up in the '60s. I was the classical young kid glued to a black and white television set in my grandfather's living room watching the Apollo program. It inspired me to be an engineer, but inspired me to do really hard things that are meaningful.

Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about. The Motley Fool may have formal recommendations for or against so buyers sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards in or not approved by advertisers. Motley Fool only picks products that I would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.