Mo Islam
So Sinead, I don’t know if you remember this, but you were one of the earliest friends of Payload. I can see you’re already laughing. I think when we met, we were just two people. Payload was just two people. It was myself and my co -founder. Yeah, a lot younger. Myself and my co -founder, Ari. And now here we are three years later doing a podcast. Welcome to the show.

Sinead
Yeah. We were both a lot younger. Yeah, I don’t know if I should be offended that it took… I was one of your first payload friends and it took you, what, 10,000 seasons of this to ask me on? Very offended.

Mo Islam
That’s…well, well, well, you did leave the country for two years, which is part of, I think, you know, the challenge. But I mean, you know, I won’t blame it on that. I’ll say it was my fault. But OK, why don’t we why don’t we kick things off? Tell us a little bit about yourself. You have a long history with the space industry, but you’ve you do and you’ve done a lot of other things. Maybe share a little bit about your journey and how you ended up where you are today.

Sinead
Yeah, so when I was five years old, no, I’m joking. I hate it when people are like, I was three years old and I saw the sky and then I knew I had to go to space. I did my undergraduate, so I’m from Northern Ireland, which, you know, people are like, where is that? It’s literally the North part of Ireland. And I did my undergrad at Queen’s University there in aerospace engineering. I was supposed to go and work for the Swedish Space Agency building a sounding rocket and I decided last minute to take a job offer. they kind of piqued my interest a little bit. It was a little bit outside of anything I’d done before, but it was in finance on wall street. And so I ended up working, for a while as a quant doing some programming stuff on mortgage backed securities, which in 2009 was a ton of fun and very interesting and was a weird introduction to the world of finance, particularly the global collapse of the financial industry. And it was really interesting, but I kind of wanted to go back into the space world. So I ended up going back to grad school, doing a master’s in aerospace engineering at Georgia Tech in the US. And I got really lucky because I worked for an engineering lab there called the aerospace systems design laboratory. My god, I can’t even remember the name of it anymore. And the work we did there was really cool because it was looking at a lot of the same kinds of math that I had done and some similar programming stuff that I had done on Wall Street. But it basically looked at complex systems and I got to model things within the aerospace, but specifically the space world as complex systems. So I did a lot of human space flight design work there. And then I also did some more broad defense projects, aerospace and defense projects there as well, like robotics, underwater, in-air robotics, swarming stuff, underwater mines, autonomous systems. But yeah, my favorite stuff was definitely the NASA work around human spaceflight design. And that got me into every part of the design project, whether it was astronaut, astronaut teaming, propulsion, data collection on the lunar and or asteroid and or Mars surface. And so I got to see and do a little bit of everything through that, which was really cool and fun. Met a ton of really interesting, fun people. And then I went to Harvard Business School to do an MBA and I ended up kind of staying. So one of the other projects I started working on at Georgia Tech was actually in the hedge fund space and looking at AI developing some algorithms that would now be known as LLMs. And, yeah, I kind of had this interest in finance as well when I was there. And so when I went to Harvard Business School, I ended up staying, which is not the lucrative thing that most people who go to business school end up doing, and kind of had this dual interest in, you know, space, defense, tech, but then also finance and capital markets. And so I kind of developed my work there more into understanding geopolitics, industrial policy, and then how that kind of translated into real life outcomes through capital markets, private and public markets. So anything from central capital, private equity, through, you know, stock markets, equities, even bonds at the minute. So yeah, that’s kind of that’s that was that. Spent a couple of years at MIT in the middle of this, defected across the river to MIT, looked at kind of national security technology, industrial policy, and then went back to Harvard Business School. And now I’m kind of, you know, I left the US a couple of years ago, I’m Europe at the minute. And I’m, yeah, I work on various space adjacent defense stuff and the interaction between that and capital markets. So the business and finance of space is something that’s interesting enough to me to befriend you when you start a payload.

Mo Islam
Well, your name comes up more often than you think, especially because you’ve done a lot of, I know, great work educating the industry. And, you know, you had a great class, therefore a little bit focused on the business and economics of space that I still hear about, actually. So, you know, you’ve done…I actually took the class too, so it was great. Great class. If it was still…

Sinead
Yeah, no, you are a resident DJ. Your core contribution was one week of Spotify. So you were a bad student.

Mo Islam
If you were still offering it, I would still be participating. Would you… Okay. Hey, I don’t want everyone to know about my academic deficiencies here. Would you consider yourself an engineer or an economist? Or both?

Sinead
You’d still be a bad student. Good question. I’ve never been asked that before. Good question. You know, so I teach, I’m a professor of aerospace engineering still at Illinois Tech. It’s weird. I do a lot of both. I, you know, on a day to day basis, I’m not engineering. I’m not actually doing engineering. Although I might be sometimes teaching it. But like, I’m definitely on the business economic side of it now. There’s no doubt about that. I think. However, it’s nearly impossible to be able to do what I do without really understanding and having done the engineering. And that sounds like a weird thing that people say when you ask for career advice, like, do the underlying thing and then learn about it. But it’s kind of true because in the world, like I kind of live in this weird world of like public sector, private sector, investors. And like, I honestly don’t know how people invest in shit that they don’t understand how it actually works. Like I feel like I have a good bullshit radar because I’m like, that’s dumb. Or I saw that 10 years ago, or I know the people that are trying to work on that. And I understand the problems that they’re facing and they’re not going to sell a product in that space for 15 years. And then I see people who like are investing in this, this stuff. And I mean, they don’t have a good understanding of, of they didn’t, they didn’t have a bullshit radar. But to be honest, I mean, like let’s, you know, I don’t know how much you need a bullshit radar and venture capital anyway, but it doesn’t, it didn’t seem to impact some people’s ability to become well -known investors in the space. But yeah, I definitely say more on the economic side than the engineering side now.

Mo Islam
We’ll get into that in a little bit. Yeah. Yeah. And then the only other thing I do want to talk about as it relates to you specifically is that you’ve been writing a lot lately. You are a contributor at the FT and a publication called The Currency and The New Yorker, which by the way, love to see that. That was amazing, New Yorker and Vogue. And…

Sinead
So yeah, I was like, all my space specific stuff. Yeah. Yeah, the New Yorker, I was like, let me write this super serious piece about space. And they were like, no, but we’ll take the Taylor Swift angle. I was like, great. Sold.

Mo Islam
Yeah, well, well… Well, what I was going to say is you’ve written pieces like, Our Investors Prepared for Nuclear War in Space, Slaying Space Zombies, Writing About Winemakers in Dublin, that was in Vogue, I believe, and then Taylor Swift’s Unique Place in the Music Industry. And I think that was your most recent article on The New Yorker. So is that just for fun, or are you living out some kind of childhood dream?

Sinead
Yeah, it’s always been a childhood dream to pitch endlessly to editors and for them to say no and the stuff that I really want to write about. No, it’s fun because I think that this based off is interesting. When I first started writing for… So I write for Alphaville at the FT, which is my guiding principle about what would make a good Alphaville piece because that’s their blog, right? They’re kind of quirky finance blog. And, you know, it really is a mix of serious writing about serious things in an unserious way, or writing about unserious things in a serious way. And the space industry so often feels exactly that thing. You have these very deeply on serious people that are being that are begging to be taken seriously. And I’m kind of like, that’s funny. And then you have these very serious things that are being done by some kind of serious people. So yeah, the space industry is a walking party sometimes, it’s too easy. I don’t know how much people are gonna like me saying that, but it’s kind of true. You look around the space industry sometimes and I’m like, wow, that’s interesting.

Mo Islam
All right, well, we’re getting into the main topic of conversation today. So, you’ve done a lot of very interesting things across various elements of the space ecosystem. Obviously, you’ve mentioned you spent time as an economist, as a business economist. I want to spend today’s time talking about two kind of… topics, which one, which is sort of the current state of financing, as well as sort of the startup ecosystem, which you’re getting into a little bit, but we’ll save the startup stuff for a little later. But why don’t we start off with just like, the space industry has gone through a very interesting, you know, five or six years in terms of like capital allocators and how capital allocators have viewed the industry, how they view it today. But before we even get into that, I want to take a quick step back and ask you public versus private funding or funding sources, I should say. What is the difference between public investors and sort of private investors in terms of impact and objective as it relates to the space industry that you’ve sort of noticed in your time over the last few years?

Sinead
yeah. I mean, it’s an interesting question, because I think, you know, there’s what should the role of private versus public be? And then there’s what are public and private actually doing right now? Like, nobody wants a history lesson. But it might be useful to kind of step back and kind of look at, you know, how I think about the industry as it stands right now, particularly in terms of like, who’s doing what. So, you know, the financial crisis happened 2008. And what we saw, you know, okay, so let’s go back even further to the 80s. And we kind of saw this massive liberalization of the entire kind of financial capital markets. People had access to investing and investments that just, you know, hadn’t, hadn’t, that we hadn’t really seen before. We had investors accessing the ability to invest in all sorts of new things, private equity was created. And, you know, a few years later after that, we kind of saw the creation of venture capital. After the global financial crisis, interest rates were lowered massively to try to stimulate the economy. I guess one of the main areas of investment prior to that had been bonds. And after, you know, as interest rates lowered bonds just became a very unappealing place to try to multiply money. As interest rates got lower and lower, the risk that investors were able to, I say able to, that they wanted to, or that they sought to take on, increased and increased and increased. That weird moments of the history of capital markets, which we really had never seen before, culminated in investors moving into spaces that I think were crazy for an investor to be in, such as, you know, complex, expensive, capital intensive industries like the space industry. And even industries that hadn’t yet been created and weren’t commercial yet. And so we kind of, you know, I think a lot of people, and maybe even a lot of your readers and listeners may have moved into the space industry at this really weird, unique time where we were seeing something that was totally, totally, I guess, different and unique from what had ever happened before at a single point in time. And so, you know, what we’ve seen since is that interest rates have risen again. And we’re kind of going through this, like, whatever you want to call it, renormalization or dislocation of the market, some people are calling it. But during during those few years, you know, what we saw investors do and what we saw the kind of public sector do was really interesting. So, you know, I would say that the role of the private markets really is to return and generate return profit to investors. That is the role of the investor. The role of the public sector, the government, is really just to use the capital or should be, you know, the capital markets is a tool for the government to be able to shape different things. So they can create different markets by allocating capital in different ways, they can create R&D in different places. They can use that R&D to compete against different countries and become more or less competitive in different areas. They can, you know, I think in the space industry, one of the biggest things that a government could or should do is to stimulate demand, which the private market can then use to generate returns. So that would be a kind of normal healthy way that we might have seen other industries grow and will firstly be established and then grow. You know, the last few years have been weird because we kind of saw like a role reversal there. We saw private markets and by private markets, I mean like the private sector, but probably mostly private capital markets, the venture capital and private equity go in and…do what is totally unprecedented, which is to try to establish a new industry. And it’s kind of wild to see that because it kind of goes against any and all investing ideology that we’ve had up until now. It doesn’t really make sense for private markets to do that. However, in a couple of instances, we’ve seen that it’s kind of nearly been successful. If you remove SpaceX from the equation. And I think this is an interesting, if you were to remove SpaceX from the equation, you’d kind of question what industry is there at all. But SpaceX is there. And so to a certain degree, there has been this massive success on the end of private markets, having taken on the risk that the government usually takes on. Now, there are certain economists like Mariana Mazzucato that will say NASA is you know, wholly responsible for this. And the US government is wholly, DARPA is wholly responsible for what we’re seeing today. But I think a large amount of the credit for the establishment of a commercial space industry in the first place could and probably should be allocated largely to the private sector, which we haven’t really seen before. So that, that’s where we’re kind of at right now. I guess my question and a lot of the things that I think about now are like, what’s next? You know, so for Europe, for example, are they going to be able to reuse that playbook in creating their own private kind of commercial space sector? Is the US going to be able to continue to use that model to grow the private kind of commercial space sector? And my answer to that is probably no, because all of that happened to this weird vacuum that was the, you know, post 2008, extremely low interest rate environment. And that’s kind of completely changed now. But, you know, I, this weird role reversal public and private interests is kind of interesting and unique.

Mo Islam
Yeah, so one of my well, I guess my next question is really around and I guess you’ve sort of you’re you’re questioning, I think, where potentially this can all go. But I do want to get your thoughts on if you think that this sort of like this this weighting of private heavy sort of capital towards an industry like this at such an early stage is sustainable, even though it is new. And I do ask from the perspective of, you know, one of my favorite books is a book called Engines That Move Markets. And it basically talks about technological change since like basically the British Industrial Revolution and how capital moves sort of like within those changes in technology. And basically what you see is the sort of the gist of the book is that, hey, this is a pattern that repeats and keeps repeating over time. And there’s a lot of capital destruction that occurs as new technologies form and old technologies that people thought were going to change everything kind of go away. Now, I’m certainly not making that assumption here, but what I’m trying to say is, capital movement towards new technologies is something that is very, very well understood. Do you think that what we’re seeing today is sustainable? Or do you think that there comes a point where…investors look at? I mean, you mentioned, you know, maybe taking SpaceX out of the equation. There may not be a space economy. Do investors realize that at some point? And you see that there’s a risk of a pullback of capital from an industry that’s been sort of somewhat seemingly moving in the right direction from at least from an R&D perspective.

Sinead
these are all good questions. It’s funny because it…

Mo Islam
Sorry if that was like five in one.

Sinead
I mean, I feel like this is at least 20 PhDs. I’m going to make, turn this into a list for PhDs. You know, it’s interesting because, well, firstly, as you were asking me these questions, I was thinking about other industries, because I could answer this question very simply about other industries. And it’s harder to do for the space industry because of, because of one big reason, which is that the space industry, has not. So I think it’s both the space industry and the venture capital industry, and especially the point of their collision, which is aiming through the big vessel, which is SpaceX. Our two areas which we don’t see people or investors or companies following normal behavioral cues around investing in the economy, right? Like it’s, it’s, you know,in any other industry, you could kind of say, well, here’s what would and probably is going to happen because of dynamic aviancy. I don’t know. It’s just, it’s harder to do that with the space industry because people don’t do things for normal reasons in the industry. Like people are weird in this industry. Investors don’t make normal investing decisions in the space industry that they do in other industries. you know, if this was about any other industry, I’d say that, you know, so I guess it sounds like your question.

Mo Islam
Right.

Sinead
which was many questions, it’s kind of like, are we in a bubble? Is it sustainable? Where do we go next? And your point about, you know, capital destruction for new technologies is a valid one, but like, yeah, I think we were in a bubble, not just the space industry, but like across all industries, because we were at, you know, negative interest rate environment, which is insane. But great things come out of that, like, you know, great things always, if you throw enough shit at a wall, some of it sticks. which is not the technical term, I guess, but like, you know, maybe SpaceX is the ship that’s sticking to the wall. The nicest way possible. I don’t know. I don’t know if, if, if SpaceX is as a business is sustainable. So like, you know, in my world of strategy and finance, we would, you know, we optimize for a sustainable profitability.

Mo Islam
Right.

Sinead
I don’t know enough about SpaceX to know if they’ll ever be profitable. And I certainly don’t know enough about the dynamics around that to know if it will be sustainable profitability. You know, are those margins, if there are margins, are they going to erode very quickly? You know, is it going to be turned into basically utilities company, which the margins are not there at all. I don’t know the answer to these. I don’t know that Elon Musk knows the answer to these. And frankly, given what I’ve seen, and this is not me shitting on Elon, but like what I’ve seen coming out of his other businesses, I wouldn’t believe a word of what I hear or see until post -facts with SpaceX. So like it’s interesting because when I think about the sustainability of the private commercial space industry, it’s like, you know, people often look at the size of it and look at the massive growth that it’s had to be like, this is a great industry. I think we don’t often enough talk about the health of the industry. Like what is the concentration? Where are the big risks in the industry? And I think there’s certainly a risk around, you know, and I’ve spoken to a lot of people about this, including investors that invest in companies that are reliant on SpaceX. And they say, what happens, you know, what happens if SpaceX disappears or what happens if Elon Musk is, is found to be acting contrary to the government that, you know, personally acting contrary to the government that is backing his multi -billion dollar businesses. Like, you know, there are so many risks around this that are kind of swept under the carpet. And maybe that’s fine. Maybe we’ll never need to know the answer to these questions. Irrational is a word that comes to mind when I think about the space industry. So yeah. I would say that it’s unsustainable, but you know, if people acted in a normal rational way as investors in this, we probably wouldn’t have SpaceX in the first place. So it’s hard to tell.

Mo Islam
No, I think it’s a very interesting point and we can talk about SpaceX all day. But I’ve spoken to a number of very smart institutional investors who are large investors in SpaceX and have very significant look through into the financials. And effectively, the sort of one pretty large conclusion that I hear a lot is like, look, we’re investors because we have to invest because it’s one of the most important private companies out there right now. But the reality is we have a hard time justifying what this company’s worth. And just if you’re looking at traditional metrics, let’s not, we can sit here and talk about Mars and colonizing planets and stuff and multi -trillion dollar industries and I don’t know, there’s a lot that you can, but from just a traditional perspective, it’s like, look, at the end of the day, SpaceX on the transportation side provides a real, like sort of a road. It’s a railroad. How much are the railroads worth? Like back here, back in the, you know, here on land, right? There’s a lot of, anyway, and even just talking about Starlink, right? Like there’s a lot of open -ended questions. And I think that, you know, most of the investors I’ve spoken to sound like they have a hard time understanding sort of the current sort of values from the business like that. But obviously there’s a lot of folks in the venture world who, you know,

Sinead
Right.

Mo Islam
you see the tweet storms of like SpaceX, a trillion dollar company, but there’s not an actual financial or intellectual rigor behind what goes into that goes into statements like that. However, okay, so anyway, having said that, let’s let’s let I want to go in a different direction. So

Sinead
I haven’t seen any tweet storms about SpaceX ever.

Mo Islam
Yeah, of course. There’s a great, there’s a really great article in the journal from a few months back highlighting that VCs have invested over a hundred billion dollars in US defense startups in the last two years, which is great. Obviously that’s awesome to see from that perspective, but venture backed companies were actually awarded less than 1 % of the DOD contracts, which is about 400 billion. So clearly huge kind of like mismatch in terms of where the capital is going and what the companies are actually achieving. So from that perspective, do you think that, what should the role of government be? Are government funding mechanisms sufficient? Or do you think that maybe we are plowing too much capital too quickly into this industry? And obviously I’m referring to defense in general, but you can tie it back to space.

Sinead
Yeah. that’s a good question. So like, you know, yeah, so I mean, anecdotally, I was chatting to a large private equity funds. I mean, the second largest in the world and the head of their aerospace defense. You know, they’re they’re selling assets, not buying. At the same moment that venture capital is plowing, you know, is plowing billions into this. And so like, yes, we need to invest in defense capabilities 100%. There’s there’s there are no two ways about that. People think that I’m really bearish on if you read my stuff on the FT, people might think that I’m against the space industry or against I’m not. I just you know, where I guess, you know, I’m all for investing in this stuff. I think that we have to be sensible about around looking at the mechanisms that we that we use to do that. So if you’re I don’t know, it seems rather obvious to me that if you were a smart venture capital investor, you would look at what is happening slightly downstream of you and you would look at, okay, what are my exit scenarios for this? Now, this is something that seems alien to many VCs who, I guess, have never had to think about exit scenarios before because…came along and saved their asses, you know? But we don’t really have that anymore. Then you’re looking at private equity and you’re like, okay, this startup I’m investing in, let’s say it gets to Series D, we know growth capital, private equity is selling, not buying assets. Where does that leave us? You know, with no follow on capital. At the same time, you’ve got the governments that are like, trying to figure out how to change your acquisition process and get more contracts out, but it’s taking years.

Sinead
So there is this huge, potentially huge hole in the market that I have heard some smarter or at least more considerate investors with a big question mark around this, how do we fill this hole? There’s no doubt about it that space and defense is a sexy place for investors right now. And so that’s one thing. The other thing is that, you know, you have $14 trillion of private markets capital right now. Now, I don’t know how much of that is dry powder. Let’s imagine that like that that’s a really small percentage of that that can actually be deployed right now. What do you put it into? You got, you know, Sequoia. No, sorry, it wasn’t Sequoia. General Catalyst just raised six billion. A16Z just raised six billion. Where are you putting this capital? I mean, you have to allocate it to something, right? I like I don’t know. I want to say crypto is dead, but who’s the hell knows? I got it. Whatever. That’s another irrational market. Like every consumer is dead. Let’s imagine that the IPO market shuts for another few years. Private equity has dried up. You got to allocate the capital somewhere. Defense is sexy. The government may be prepared to spend more money on it. What I’m trying to say is that there are dynamics around this, which is why you’re seeing massive volumes of venture going into this. The other reason is that people genuinely, the investors do want to invest into it for ideological reasons, which I don’t disagree with. But I want to get back to your other question, are we allocating too much money to this? I would say that we, in Europe and in the US, well, the US is slightly different in Europe, at least where I am right now, we need to allocate more capital to defense. There are no two ways about that. However, I find it kind of interesting when I hear people say things like, we need to double the amount of capital that we’re investing in the space industry. And I kind of, at the government level, and I kind of, it always makes me sit back and think, do we and why, like, how do you know that? What makes you think that? And again, the space industry is a little bit different because a lot of the people that are in it are ideologically biased towards wanting that pie to grow, even though it seems rather clear that there are no natural drivers of that growth that we’ve seen through the market so far. Let’s say that we’ve 10x capital going into the sector, we haven’t seen a 10x demand for those products, that data, whatever. And so the question is, why should we grow it? I also want to see the space sector grow. Why is it so that we can do cooler things, different things, better things? And the ultimate question is what are we willing to forgo for that growth? Right. So like we can’t, we can’t print money forever. Although let’s leave the money printer aside because you know, some countries like in Europe, some countries that are non USD denominated genuinely cannot print forever they’re going to have to reallocate budget. And so it’s an interesting conversation to have in Europe when people are like, we need to double our spending on space. And I think that, you know, I don’t disagree with that, but are we willing to have what we’re putting into education, health care and other things? Because in many respects, especially with our demographics and our economic data, the way it is right now, it’s a zero, it’s a zero sum game. So I would always say, yeah, we might need to increase our capital allocation to the space sector, but what is the goal of doing that? And are we willing to forego as a society, how important is going to Mars? Are we willing to have a percentage less investment into the education or healthcare sector for that? And I think a lot, this is where there’s like a mismatch between the people in the industry. In the wider public that are like, fuck no, I want my kids to get an education. I don’t care about who goes swimming. And then you have the people in the industry that are like, I will die. Like this is the hill I will die on. So it’s weird. It’s weird because I live kind of one foot in this and then one foot in like, I don’t want to say the real world, but like, you know, a more neutral, a more neutral space that kind of functions and things differently to, to inside the space industry. And yeah, it’s, it’s the contrast is insane, but like, I think with capital allocation, I keep going back to the fact that for an investor, your job as an investor is not to create this new economy and it’s not to create a new market. It is literally to generate returns. You can choose to generate returns in an industry that is good and helpful and better than others, but the premise is to generate returns. And I think within space investing, I think sometimes I get lost. Investors are like, my job here is to go to Mars. And I’m like, no, your job is to return capital to LPs. And I’m always confused when I meet an investor and they’re like, we just invested in this technology that will have a proof of concept in 14 years. And I’m like, your fun life is six years long. You realize that you’ve just given away free money. It’s not a charity. So it’s weird. I mean, I’m sure you see this too.

Mo Islam
Well, you know, what I was going to say first is that I think that, you know, your comment earlier where you were like, maybe I’m doing being too bearish and readers and listeners might not like that. But I actually think that these types of conversations are, in my opinion, the most refreshing because I spend so much of my time talking to people who are obviously like hugely passionate and big believers of their product as they should be, but also investors who you know, talk about the industry, like you mentioned, from the perspective of like the impact on humanity, which is extremely important. But at the end of the day, their first mandate priority is return of capital to LPs and being a fiduciary to their LPs. So and one of the things that we do at Payload is we’re actually holding our second annual Institutional Investor Summit in November on LA. We held it last year. It was awesome. We’re holding it again this year. You know, and we’re going to bring in some of the biggest investors in the world in the room. But interestingly, at least half of that crowd will have never made a space investment outside of SpaceX, probably more than that, because, well, because most of those crowd are the sovereign big sovereign wealth funds, private equity funds, large institutions, which interestingly, are interested in the space economy as a whole. They’re like, yeah, we’ve made an investment in SpaceX, but we want to do more like there’s interest and there’s people putting real resources. Like I’m talking about large sovereign wealth funds, like, you know, trillion dollar sovereign wealth funds who we know who are spending time on the industry. However, they have not made an investment outside SpaceX yet because they haven’t found anything viable. And, you know, I think, I think it’s really important to be able to, it’s like, in my opinion, the industry can’t get to sort of 2.0 or 3.0 without real institutional capital like real, like all of these major providers, like without them, the industry’s not getting to where it needs to be. So we need to build an economy that is actually interesting and appealable, appealing, appealable, that’s not a word, appealing, appealable, fine, we’ll use it. But we’re not building an economy that is interesting to them, right? At least not yet.

Sinead
100%. Yeah. It appealable. No, no, there’s nothing, no, 100%.

Mo Islam
because they’re not making any investments. And those that have raised capital at like multi-billion dollar valuations from some institutions so far are now like, those institutions are like, we’re not putting more money into this. So there’s a lot of interesting challenging dynamics on the institutional side that the venture side is sort of like ignoring or saying like, hey, yeah, we’ll get there and we’ll eventually get there. So I do think that that’s it’s anyway.

Sinead
Right. No, I love this. Let’s actually talk about this because this is one of the biggest issues that I think, in fact, I think it’s the issue that the space sector, if it is genuinely to grow faces, right? I mean, we just did a big several months long study with the European Space Policy Institute on this, right? The idea at the minute is, you know, the space industry and venture capital go hand in hand right now. You know, I mentioned rather cynically before that this is potentially because there’s a lot of hype and people who believe their own echo chambers that exist in this. And to a certain degree, there is this unappealability because they’re kind of ring -fenced away from, like, again, I don’t want to say the real world, but like, there’s a huge gap between a VC that tweets storms, you know, all day every day about based off and real institutional investors who have an obligation to teachers to return their pension. And every time I think about a pension fund making an investment, I think about people like my parents. What is the state of their pension? Whereas the VC is, what we saw in the late 2018s was throwing capital, I mean, literally throwing shit at a wall. And I would be horrified if an institutional investor did that.

Mo Islam
By the way. Yeah, by the way, I’ll tell you a story since you brought this up. Are you going down this direction? Like, you know, the Canadian pension plan and Ontario teachers both made large investments. Actually, definitely the Canadian pension plan. I don’t remember off the top of my head if Ontario did as well. But Canadian Pension Plan made a big investment in a number of crypto companies, large, multi -billion dollar investments, which went to zero. And when that happens, when that…

Sinead
Yeah. No, I, yeah.

Mo Islam
when that happens, those pension plans and social ones take a huge step back away from the industry. Like CPP and OTPP have both basically now like said off of their mandates. I don’t know. Like they’ve basically said like we’re not, I mean, I don’t want to misquote anyone, but like from my understanding, it’s basically we’re not investing in crypto. Like, so when you have situations where like there are those types of blowups, like you can do a tremendous disservice to the industry. I mean, there’s no real institutional capital in crypto right now. Not in the private space for sure. I mean, yes, in Bitcoin, sure, there’s like ETFs and the banks are getting interested in it, but the major institutional capital providers have stepped away from crypto. So that would just be a bad outcome if we ended up like that in space somewhere down the road in like, I don’t know, three to five years.

Sinead
No, I agree. I think venture is so far removed from the pension funds that there’s a completely different set of incentives. Let’s look at how a VC generates returns, at least how a lot of the space returns have been generated by VCs. It’s been through hype and SPACs. Ultimately, the value… I take the perspective as a value investor, goes to zero. You think pension funds aren’t looking at that and thinking, shit, I hope I don’t get left with the hot potato. There’s a real concern there. The other thing is that there are structural issues as to why pension funds right now cannot invest in the space industry. One of them, at least in Europe, is that, and this is changing slowly, is that it’s not seen as sustainable. It’s not a sustainable investment. Pension funds traditionally cannot invest in Europe, cannot invest in national security or adjacent to defense sectors, which space absolutely is to use. The other thing is that, you know, they write 50, 100, 150 million, 200 million plus check sizes. I’m sorry, but like what, you know, what growth stage space investment could they make with a generally high expectation of actually generating returns on that? There are very few. And I think one of the weird things is that, you know, when I’ve spoken to even like some of the, you know, the leading funds in the space and defense sector, and I talked to them around these expectations of pension funds, private equity funds, even the own LPs of those funds, there’s a misunderstanding of what those LPs are looking for or how they even make investment decisions so that they can curate a portfolio that they can move sustainably along for further investment and to grow the value of the startup. You know, I think when you think about the capital markets and the space industry, it’s barren. There’s nothing there apart from this weird little noise thing happening in venture capital, which doesn’t feel very sustainable. And so what I’m trying to do is think about like, like, how do we engage governments and the public sector in a way that we can de-risk the space for all investors so that pension funds can go into it and can allocate capital to it? Because there isn’t enough venture capital in the industry to generate the rest of the space economy that we need, right? There just isn’t enough capital. But nor do I think should there be more capital because there hasn’t been enough market demand yet to kind of demonstrate that we need to invest and that we can generate returns on this. So I think there’s a massive amount of work that needs to be done in various other parts of capital markets, both private and public. And by private and public, I mean, you know, equities, bonds, PE, VC, and then also the public sector with the government. One of the big issues though, and the reason why this is so hard to do is that they speak completely different languages. I got a bunch of VCs and a bunch of pension funds into the same room recently. It was weird. It was weird. Yeah, I mean, it was, it was weird. They don’t speak the same language. Throwing a couple of government agencies into that and it was very weird. And so there’s like this, you know, one of the, some of the feedback I got recently from, from a large multi trillion dollar investor, institutional investor was that you know, they don’t they don’t seem to understand the fundamentals of investing. When I say they, you know, they were referring to various other stakeholders in the in the ecosystem, but it is a problem. It’s a huge problem. And, you know, people might think that I’m doing the space service, the space sector to service by being bearish on it, but it’s legitimately not going to grow until you know, there’s an adult in the room who can take it a more modest approach that is not driven by hype and venture capital to the industry.

Mo Islam
What do you think it’s going to take for institutional capital to take the industry seriously?

Sinead
I think the space industry needs to take itself more seriously is one thing. I’ll explain by what I mean by that in a minute. I think institutional investors, it is hard to allocate capital. One of the hardest things in the world to do is get landed with a billion dollar fund and have to figure out how to spend it because there are genuinely very few opportunities that can generate returns. The easiest thing, the easiest way to grow the space industry is to create one where there’s a market and growing companies and returns. The leader in the market has not yet demonstrated to my knowledge, like I am unaware of any real path to profitability that has been even partially demonstrated. And so it’s hard to see that if the leader isn’t doing that, which is multiple times bigger than it’s the next biggest, the second leader, then it’s there.

Mo Islam
Well, also, the leader is also the largest, it’s larger than any prime, global prime now, as a private company, from a valuations perspective.

Sinead
Yeah. Yeah. And I think it’s hard. I mean, it’s hard to understand what that even means anymore because it’s like, you know, here’s the thing, primes are market to market daily. By which I mean, if you’re Boeing, if you’re Northrop, if you’re Lockheed, every single day, there are people buying and selling your shares. You are obligated to disclose. Everything about the business, its operations, its profitability, how it’s being financed. Everything is there to be seen. And it is market to market daily. You know what that company is worth today, tomorrow in 10 minutes time, three hours ago. Like, are you going to invest in SpaceX and have a fucking clue what’s going to… No, I’m sorry. Even, even, even, even institutions multi-million dollar holdings in SpaceX, I’m sure don’t know what’s really going on. So what does it mean when we say that it’s bigger than a prime? I don’t know. Valuations, like the private markets are difficult at the minute to invest in because how do you put a valuation? You know, in the private markets, venture capital has historically kind of been driven by, I mean, its value has pretty much been derived from how much demand slash hype a VC can create for the next funding round which is completely disassociated with any impact that that business might have on the market that it’s in, the products that it might create. I mean, space is not a 0.2% of GDP industry. Defense is nearly a 3%. And the fact that the leader in space is bigger than defense primes doesn’t mathematically make sense to me. But…

Mo Islam
That’s interesting.

Sinead
Isn’t that the private markets? They don’t have to mathematically make sense and that’s why we like them. So I don’t know.

Mo Islam
That’s an interesting, you know, it’s an interesting way to think about it because I mean, look, at the end of the day, public markets are what, you know, really kind of end up showcasing your true value, right? And I mean, you know, not in the space industry, but there’s another hype-filled company in the nuclear space that we’ve been monitoring in our sister brand Ignition called Oklo which is backed by Sam Altman, first day of trading down 50%. So, the first day of trading the stock’s down 50%.

Sinead
It’s so it is hard. It is hard to take. I mean, so the industry seeds. Okay, so here’s here’s the thing, right? People in the industry see the industry is this real thing with real people with hopes, dreams, ambitions, an entire ideology and several cults thrown in there, right? If you step back and look at the industry from the outside. You know, there’s a there’s. There’s a justifiable claim there that it’s nothing but a wealth generation or wealth transfer, wealth transfer mechanism for taking capital from pension funds and putting it straight into the back pocket of VCs who know nothing about the wider economy. SPACs were insane and have done the industry no favors. And all of the reasons that we’ve already talked about. But yeah, like it’s kind of crazy. You look at the exit and what the investors get at exit, and then you look at what’s left afterwards. And I just, I always think about the employees. Like these people are the smartest people in the world. They build stuff. You know, it’s so hard to find people to build stuff. And they’ve been screwed over by some investors who are like, fuck it, I’ll take, yeah, that 2% at the top is mine middlemen who do nothing. You know, like I’m a capitalist, right? And I believe that the capital markets do a whole lot of good in allocating resources. But SPACs were bad. And SPACs did the space industry absolutely no favors. They did, they, you know, they enriched about 20 people in the industry.

Mo Islam
Yeah, well, yeah, we will. Yes, SPACS have been. Yes, SPACS have been. Yeah, I mean, that almost comes up like every week, I feel like still to this day. But yeah, I agree with you in your comments on SPACS.

Sinead
Have you heard any, are people still, I mean up until six months ago I still heard people talking about trying to put together a SPAC. And I was like, whoa, I mean.

Mo Islam
No, no one’s I actually happen to know a couple of people who are but that’s not the norm. I mean, I don’t I don’t you don’t you don’t hear about that anymore. So anyway, and by the way, SPACs, I mean, forget about just the space industry. They there are so many industries like EV, like EV space, like, like that were just demolished by these funding mechanisms. So anyway.

Sinead
But I think, but I think, you know, well, the existence of a SPAC, right, to me says that there is this massive dislocation between what an industry needs and what forms of capital are available for it. And this goes back to my point that like, I’m always confused by smart people that I meet that are raising large funds for venture capital, or for large VC funds for aerospace defense or similar. And I’m like, but how do you plan to…generate an exit within six to eight years for your funds? How is this form of financing just doesn’t work for capital intensive, long cycle industries like aerospace and defense? What are you going to do in eight years that’s going to generate a sustainable exit? What is a startup actually going to achieve within that timeframe? Instead of pushing a mechanism onto an industry where there just isn’t a good fit. Why are people not spending more time talking about alternative financing vehicles that could actually inject a whole lot more capital into the industry in a way that’s favorable for both investors and startups? Because the current model is just not working. And so like I’m way more interested in, if I was raising a fund at the minute, you know, I’d be trying to see if there are alternative models outside of venture capital, because guess what? Like you’re a charlatan if you’re trying to…Imagine that today after what we’ve seen in the last 15 years, it’s going to work any differently than it did last year or two years ago. And SPACs were just an expression of that. There’s a mismatch and investors are like, fuck, our portfolio is down and we got a bail. And they’ve got the buckets and the buckets, you know, they’re getting the water out of the boat with the buckets and those are SPACs. You know, we should look at that and take it seriously instead of saying, well, some people got rich and you know, others got nothing. We should actually say, you know, if the government isn’t going to be able to regulate SPACs away in time to stop them being used again, the next time there was a hype cycle, a much better and easier way of getting rid of SPACs is by creating a better investment vehicle to begin with so that SPACs aren’t needed.

Mo Islam
What are your predictions for what financing is going to look like for the space industry in the next decade?

Sinead
I think the government is back. I really, you know, I think, I think the government kind of said, you know, we’re going to let the private markets do their thing and look at how well it works. And now I think they’re like, we fucked that one. I think there’s going to be increasing, I think there’s a massive need for the government at the minute. I guess the concern amongst many people, including me, a little bit cynical is that the government are just not good allocators of capital. And so what I wouldn’t want to see is that the government are picking winners. I don’t want to see the government saying that they think startup A is going to be better than startup B. I think the government needs to allocate that capital to investors who can do that for them. But I think what we’re also going to see a lot of, which I think is really exciting, is that the government are going into spend mode. And I think unlocking capital in the form of acquisition or, you know, increasing budgets and contracts is going to be really important. I think at the minute in venture, like I venture, I think it’s a mess. I think it’s the wild west at the minute. You’ve got a lot of startups, there just aren’t the amount or the quantity or the size of contracts available for those startups to maneuver back into their own valuations right now, nevermind in five years time after two more funding rounds. So I think, you know, I like, I don’t know what happens to startups. I genuinely don’t know what happens to them. And it’s sad because I suspect what will end up happening is that, you know, they’re going to hit the wall, which would be a sad loss of five, 10 years of technology.

Mo Islam
Well, a number of them are already hitting walls, there’s no question. And yeah, look, I want to remind especially people listening that this isn’t meant to be a, hey, let’s talk about why there’s so many, you know, like why the space economy is not going to work. I think that it’s really important to look at it in a critical lens if you want to actually see this industry grow to what we are, you know, those multi -trillion dollar economy projections that everyone, including the banks, love to talk about. You know, we’re not gonna get there unless we actually make smart moves, right, between now and then. And there’s plenty of companies that have raised, you know, 100 million bucks in their series, between their series A, series B, they put a satellite up into space or craft into space and then, wait, it doesn’t work. How did that happen? Like, there’s like. You know, so there has been that.

Sinead
Like I have infinitely, I have infinitely more respect for someone who goes and tries it, that doesn’t try it at all. I have huge amount of respect for founders and people doing stuff in this industry. I have far less respect for the people that know it’s not going to work, but will capitalize those businesses to capitalize their own entities in the process. And I think what ends up happening is that we lose 10 years of real R&D. Like, you know, one of the projects I’m doing at the minute, which is really interesting, is looking at investment into the industry, an R&D outcome, which is really hard to measure. it, you know, if I were to kind of point my finger in the air and try and get a read on what the R&D outcome in the space sector over the last 15 years is, I’d say it’s really high. But I think it could have been higher had we not blown up a ton of our good companies with shitty SPAC. So I think actually the funding mechanism is so important because like, I don’t know, like I don’t, I want these people to actually succeed, but throwing dumb capital at them is the fastest way to make sure that, you know, those founders are going to disappear when their companies hit the wall. They’re not going to come back for round two. there are, there are, there are better ways to do it. Like there are smart enough people in the world to figure out how to capitalize these businesses properly over the longterm.

Mo Islam
So I’ll tease this, but I’m not going to ask you a question because we’re running out of time, which is that I know that you have a very interesting perspective on innovative financing mechanisms for the industry. So for anyone who’s interested, I’m going to just have them reach out to you to ask. Yeah, no problem. But I think you have something pretty interesting in mind. So I’ll just leave it at that. Now.

Sinead
Yeah, thanks for that.

Mo Islam
There’s one thing I do want to ask you about, which has nothing to do with the space industry just as we close, is you’re a board member of the Irish Museum of Arts. sorry, sorry. So tell me a little bit about that. Have you always been interested in modern art? What is that side of…

Sinead
Modern Art. Yeah. The modern makes the difference. No, I hate it. No, I think, you know, I have been, you know, I, I got involved in art about a decade ago when I was working on a project. I mean, this is this is a long time before AI was a thing that people could use on their desktop. Myself and a friend were trying to figure out some artistic outcomes of AI models that we had generated. And I reached out to a friend, a very good friend of mine who was senior at the Whitney, which for some listeners might not know is a famous contemporary art museum in New York. And we kind of got into this long thing about like, what is art and how does it work? And it is a fascinating industry. If you’re into stuff like VC and space from a grifty perspective, art beats all of that. Like art is the griftiest, weirdest, funnest, coolest industry in the world. Like you think VCs and space people are weird, these art people are even weirder. I don’t know what it says that I’m now one of them, but yeah, the opportunity arose for me to sit on the board of the Irish Museum of Modern Art, which, you know, we’re kind of tasked with being the national collector of what we deem to be important and representative of what we’re seeing culturally in Ireland at the minute and increasingly Northern Ireland. And yeah, it’s cool. It’s nice to have something outside of tech and capital and investing that’s not that different people, my God, it’s nice to meet different people outside of aerospace and defense. Not that you’re not fun. You have other artistic. Tell me about your last show that you, that you, show, gig, set? I think set, set is the word, set is the word. Gonna put you in the hot seat.

Mo Islam
This is not something I’d like to talk about very often. My last set. Well, I was, so my last show, what was that? I think that may have been in April. I think, yeah, I think that was in April, early April, it was in Deer Valley, which is a ski resort in Park City, Utah and there is a opera ski club there called the Vintage Room and I was one of their residents. It’s when you play at a place often they call you a resident. I was one of their residents. So yeah, that was my last musical excursion, so to speak.

Sinead
You’re a resident DJ. Damn it.

Mo Islam
But for anyone who’s in, everyone who’s in the Park City area during ski season, let me know because I will be back there next ski season.

Sinead
Now word on the street is that you’re gonna start combining your music, your music making with space. See, I might start going back to space conferences if you’re DJing at them.

Mo Islam
There is no…No, we will see. In all seriousness, actually, just kind of like in yours, music has always been a huge part of my life. I’ve been producing and playing dance music since I was in college, so many, many, many, many years ago. I know now like…

Sinead
Wait, sorry, I just realized I have a very important question. What is your stage name?

Mo Islam
Sure. that’s… Well, my stage name has evolved. You have to remember, I started playing in 2011. So it’s been some time.

Sinead
It was like Mo1989 at Devo or Hotmail.com.

Mo Islam
It’s just Mo. It’s just Mo. Nothing exciting, but it might evolve. Who knows? We’ll see. We’ll see. We’ll see. Well, Sinead, it was a pleasure to have you. Thanks for being on the show. This is great. Thanks for calling me out on all the things that most people don’t know about me. But no, this is great.

Sinead
my gosh, you need to work on that.
Hehehehe. I mean, you were terrible at being the DJ of my class. So I genuinely, for the residents of Deer Valley, hope that you’re a better resident DJ for them. But thanks for inviting me finally onto your show.

Mo Islam
Yes, yes. Hope, hope, hope, hope, hopefully. Yeah, absolutely. And we’ll have you back, I’m sure. Because we actually, we didn’t get through, we only got through like a third of the things I wanted to ask you. So we’ll definitely have to get you back sometime soon. But anyway, thanks for being on the show.

Sinead
Thank you. Thank you, bye.

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