TeamUp #001 🤝 - Varda, EightSleep, and REGENT
Building spacecraft for space factories, a smart bed powering the sleep of racing champions, and electric sea gliders revolutionizing traffic in the Mediterranean
I’m starting a new experiment. It’s called TeamUp - a newsletter about the most exciting partnerships and collaborations in tech and beyond. Welcome to the first edition!
I have always been fascinated by what can happen when two
people companies come together to start a partnership. Every week new collaborations get announced - some better than others. The nuances often get lost in translation because most of the legacy media doesn’t do much more than copy/paste the press release and hit “publish”. Yet there is so much exciting stuff happening :
how do partnerships happen
who are the people behind them
and most importantly - how they create value for both sides
We’ll find out what makes the best ones work. Let’s take a look behind the curtain. Here we go with edition #001 of TeamUp:
1. Varda x Rocket Lab 🚀 🏭 ✨
Yes, you read that right: to manufacture critical materials for mankind in space and return them back to Earth. What exactly will be manufactured is still to be announced. There are applications for fiber optic cables, pharmaceuticals, semi-conductors to organs for transplants that can only or much better be manufactured in zero-gravity. So far almost all zero-g research has taken place on the ISS which has proven that materials manufactured in low-earth orbit (LEO) can be higher performing and more innovative. The goal of Varda is to demonstrate that this can be done economically and to make it scalable. What sounds like sci-fi will become much more real when the first vehicle is scheduled to launch from Cape Canaveral in May 2023.
Why is that partnership important?
Founders Fund’s Keith Rabois has talked about how his protegé and Varda co-founder Delian Asparouhov pitched him on the things that “have to go right” for Varda to be successful:
returning the products back to Earth
Varda has secured partnerships with SpaceX for the launch on the Falcon 9 rocket and with NASA to provide key technologies. Now the barely two-year-old Varda is collaborating with Rocket Lab. The latter can already be considered an incumbent in the young commercial space industry. It is mostly known for its Electron rocket which is the second most frequented private launch vehicle with more than 100 delivered satellites. Most of those satellite missions are fulfilled with their Photon spacecraft. Through the partnership with Varda, Rocket Lab will now adapt Photon to build up to four autonomous spacecraft that are fully integrated with Varda’s manufacturing module and re-entry module. The first spacecraft will then take Varda’s 120kg “space factory” to operational orbit, make sure it stays in position and help the Varda module return safely to Earth.
How did the partnership happen?
Choosing the right company to partner with depends on a variety of factors - like the use case, budget and cultural fit. In this particular case, the commercial space industry is still small. You can only choose between a handful of companies in the U.S. for both launch services and spacecraft design. Most of them are based in Los Angeles - just like Varda and Rocket Lab are located within a mere 30 minutes of each other.
The choice for Varda and Rocket Lab to partner was probably an easy one. It provides Varda with the engineering power and flexibility it needs at this early stage to custom-build thee spacecraft on a tight deadline and budget. As far as Rocket Lab goes, they can help create an entirely new economic sector (space manufacturing) and can quickly become a leader in providing the vehicles for it.
Had Varda gone with the seemingly obvious choice of SpaceX for the spacecraft - Varda’s CEO Will Bruey is a former SpaceX veteran who worked on the Dragon capsules - they would have competed with a lot of other missions. While SpaceX is an unparalleled operational powerhouse, it seems pretty busy with averaging both one launch a week as well as manufacturing one raptor engine a day in 2022. They are also rolling out Starlink at scale and iterating 24/7 on the enormous Starship to take humanity to Mars. Given the non-standard use case, that is why Varda and Rocket Lab seem like the best possible partners for a focused development phase for their spacecraft.
It will be fascinating to see how things will progress once Varda and Rocket Lab have successfully completed their demo flight.
The signs point in the right direction: the demand for high-value products that can be produced in zero-G seems to be infinite. Therefore it will depend on the practicality of producing materials in space and most importantly, the cost. That is why the true challenge for Varda will be to build a viable business model. Even though SpaceX has made it almost as easy to book a ride-share mission as it is to buy a pair of sneakers online (including entering your card details), it’s still early-days. Companies like Varda are betting on the cost of launch per kilogram to go down by more than an order of magnitude with regular launches of the massive Starship, starting sometime in the second half of 2023 or 2024. It will be interesting to see how Varda plans to scale its operations. Will it send a multitude of mini-factories to space à la Starlink? Will it launch a large zero-gravity factory on Starship? Or will it one day decouple the launch/return from the manufacturing and just keep stationary factories in space with Varda modules arriving and leaving it like it’s an Amazon warehouse?
There is also the potential for other exciting partnerships in the future for turning this into reality. New promising space-adjacent companies are on the horizon - and the railroads and assembly lines of the new industrial space age are just being built with companies like Hadrian or Impulse Space. One thing is for sure: The future is bright. ✨
2. EightSleep x AMG Petronas F1 🛌 🏎️ 🏆
EightSleep’s product is a smart bed solution that matches its temperature to your sleep phases. The value proposition is clear: Better sleep, better recovery, better performance - or as EightSleep calls it: “Sleep fitness”. Eight Sleep says that you can fall asleep faster and get more deep sleep.
The Miami-based startup has raised more than $150 million in venture financing from Founders Fund, Valor Equity Partners, and Khosla Ventures. From the outside, it may look like just another sponsorship with all that fresh funding - but it’s hard to find a better strategic fit than these two.
Why is the partnership important for both EightSleep and AMG Petronas?
First of all, it is highly unusual for a startup like EightSleep with <100 employees to partner with an international powerhouse like the 8x F1 world champions backed by Mercedes. Even though EightSleep is now valued at a proper $500 million, it is still a relatively small company that is just now entering its growth phase. It is cleverly tapping into the energy of the Formula 1 franchise and its unprecedented rise in popularity particularly in the U.S. mainly due the Netflix Series “Drive to Survive”.
EightSleep and AMG Petronas are a great fit because they offer something quite rare: They are leaders in technology, design, and marketing.
They are also a great match in regard to their strategy. As strategic mastermind
Michael Porter Hamilton Helmer writes in “7 Powers”, branding and counter-positioning are important strategic levers.
As far as branding goes, both EightSleep and AMG Petronas have created iconic brands. EightSleep’s main product is counter-positioned to any normal bed: in contrast to traditional mattress companies, the branding of its smart bed is reminiscent of a new Apple product. And its software (yes, a bed with software) gets updated “over-the-air” like a Tesla. That allows EightSleep to charge a premium price tag.
That bares the question: Who are their customers who are paying more than $3,500 for an EightSleep product? There seems to be a Venn diagram overlapping between high-performing individuals who are obsessed with quality sleep who are also racing fans. For example “Why We Sleep”-author Matthew Walker and renowned longevity expert Peter Attia are both race car fanatics.
Besides that core customer segment, the partnership allows EightSleep to reach more of Formula 1’s mainstream audience - which makes sense considering that they are now also ramping up their international expansion. One underrated aspect of having a collaboration like this is not just the banners or logos on cars during live TV streamings, but the pictures that get distributed through social media - both via EightSleep’s own digital channels and more importantly through AMG Petronas’ social channels with millions of followers. It also includes co-marketing initiatives and media appearances as the recent podcast with EightSleep co-founder Matteo Franschecetti and team manager Toto Wolff.
What EightSleep has done exemplary is to create a movement, for defining a category, using social proof of its customers through a wall of love of reviews and power it by non-stop content creation by its founders on social media around the importance of sleep for health and performance. With this partnership, they just got even more fresh material for content. They are also getting additional social proof by cleverly tapping into one of the leading brands for high performance.
This points out one of the keys to any successful partnership - if done right, it works as persuasion by mere affiliation. Through creating a literal connection between two parties, the value of one party can influence the perception of the other. However, to create a lasting impact, both parties have to be strong in their own ways. The best partners do not only contribute monetarily but are also in alignment with their missions.
Now, why is that partnership valuable for a company like AMG Petronas? First and foremost, it’s a sponsorship. And sponsorship revenue is an important part of the business equation of an expensive sport like Formula 1. What makes this partnership truly special is that the usual team sponsors are large multinationals or luxury companies. In this case, the partner is an innovative technology startup whose product helps solve a problem for the F1 team: Sleep.
The schedule of Formula 1 is extremely challenging. Drivers and teams constantly travel the world and often race on a new continent every other week. Constantly changing time zones, jet lag, and quite literally different beds are part of the mix. All while competing for milliseconds both on the track and during pit stops. When you are performing at the highest level with full focus at an intensity similar to fighter pilots, a good night’s sleep can make the difference.
As Toto Wolff, Team Principal and CEO of the Mercedes-AMG Petronas F1 Team said:
“Sleep is the most complex thing in our lives. It’s very difficult to get the right environment. The right temperature in your room, the right temperature under your blanket. We are traveling from hotel to hotel, from time zone to time zone. EightSleep allows us to optimize it. The technology is groundbreaking. Our team is made up of over 2,000 people, all of whom perform at their peak every day in a sport where every single detail matters. To achieve the level of sustained performance that is required to compete in Formula 1, we are relentless in exploring all possible optimizations, including sleep.
EightSleep is already working on new health features. Their Pod Pro uses algorithms that track your respiratory rate almost as accurately as gold-standard respiratory tracking devices.
Besides tracking biometrics, EightSleep could soon also advance further into using them for early diagnostics. Already markers like HRV can be a leading indicator for health issues - just like when you have caught a cold but haven’t noticed it yet. Imagine if in the future, your EightSleep could soon continuously scan your body even for more serious potential health implications. The product could use high-end precision diagnostics similar to when engineers of an F1 car can anticipate mechanical issues and call a pitstop before something blows up. And that brings us full circle. 🏁
3. REGENT x City of Nice ✈️🌊
REGENT, a Boston-based startup building innovative electric sea gliders, has announced a partnership with the City of Nice. Its goal is to develop a new approach to coastal, all-electric transportation in the South of France.
First of all - what is REGENT and what is a
ferry helicopter airplane sea glider? REGENT is pioneering a new electric vehicle category that operates exclusively over water. Backed by Founders Fund, Thiel Capital, Caffeinated Capital, and others, it has raised $27 million in venture funding.
The goal of its sea gliders is to operate with a 100% electric propulsion system that enables zero-emission, high-speed transportation. It operates a few meters off the water's surface and couples the high speed of an airplane with the low operating cost of a boat. It is also quieter than an airplane or a helicopter and is faster than a ferry - all while using less fuel.
REGENT has the potential to drastically reduce the time and cost of moving people and goods between coastal cities. Seagliders could service routes up to 180 miles with existing battery technology and up to 500 miles with next-generation batteries. The first vehicle is slated to carry 12 passengers and the next version will have the capacity for at least 50 passengers. The team has already sold over 325 seagliders with a $7B pre-order backlog spanning. It has partnered with almost a dozen ferry companies around the world with the first orders to be shipped by 2025. Much of the team is MIT-trained and worked for companies like Boeing, Blue Origin, and Virgin Galactic.
Why is this partnership important for REGENT and the City of Nice?
REGENT’s mission is to “drastically reduce the cost and headache of regional transportation between coastal cities”.
Regional transport in the Mediterranean is indeed a headache. Billy Thalheimer has said that Southern Europe and the Mediterranean have more traffic between coastal cities than any other region. The South of France is particularly notorious for congested roads. The alternatives are suboptimal. Ferries are slow and are burning gigantic amounts of fossil fuels. They also require substantial infrastructure to function. Planes and helicopters are also not ideal because of noise pollution.
For the City of Nice, this innovative approach has several advantages. It is positioning the city as a testing ground for innovative technologies. It is also an opportunity for new job creation, attracting top international talent, improving the local infrastructure and regulation, and has a chance to become a hub for similar companies. And it might help solve a lot of the critical traffic challenges of the region.
Part of the initial agreement is even though REGENT can operate with existing dock infrastructure, there are still ways to make the local infrastructure and the regulatory environment more suitable for futuristic ways of transport like sea gliders. Exploring that is part of the initial agreement between the two parties.
The South of France has traditionally been an aerospace hub. So right in Airbus’ front yard, REGENT is now testing this innovative approach.
It’s early days for REGENT and for government partnerships like this. At this point the company is continuing to iterate on its prototypes, making test flights and eventually scaling up production. It is keeping track of advances in battery technology to eventually extend the range of its vehicles.
In the meantime partnering with local governments around the world is a great approach for piloting the technology and infrastructure, advocating for more innovative regulations, and also for attracting capital. In addition to this, working closely with customers in these regions, REGENT is tapping into new ways of distribution. There are also other opportunities beyond passenger transport - sea gliders could soon be used to transport cargo, for offshore logistics such as oil rigs and wind farms, or even for air ambulance or defense capabilities. Moonshot partnership projects like this demonstrate the importance of (local) governments to opening up to innovation - in and beyond Europe.
Hope you enjoyed the first edition of TeamUp! See you next time :)
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