Building the First Data Centers in Space

Summary

Y Combinator Startup Podcast
Episode: Building the First Data Centers in Space
Date: August 5, 2026

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Episode Overview

In this episode, the Y Combinator Podcast’s "Light Cone" series welcomes Philip Johnston, co-founder and CEO of StarCloud. StarCloud is pioneering the construction of data centers in space, tapping into the vast solar energy available off-Earth to address the escalating energy demands of AI computation—demands that are becoming unmanageable and politically charged on Earth. Johnston discusses StarCloud’s origins, technical and market challenges, their first successful deployment, and the future trajectory for space-based compute.

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Key Discussion Points & Insights

1. The Genesis of StarCloud & The Big Idea

• Motivation: Earth is running up against energy constraints for building new AI data centers. Space, by contrast, offers essentially unlimited, low-cost energy (solar) and growing capacity as launch costs decline.
  Quote: "By building them in space we get access to this almost unlimited low cost energy in the form of solar...with new launch vehicles coming online the cost of launch is rapidly trending down." — Philip Johnston [01:10]

• Idea Formation: Inspired by witnessing the scale of SpaceX’s Starship production and a belief that costs would soon plummet, Johnston pivoted from legacy space concepts (like beaming solar energy to Earth) to the more practical idea of running data centers directly in orbit.
  Notable moment: Johnston visited Starbase, saw the reality of rapid Starship scaling, and thought, “What would make sense that currently doesn’t make sense?” [01:42–02:53]

2. Why Data Centers in Space? Alternatives Considered

• Alternatives Explored: Manufacturing (like Varda), asteroid mining (like AstroForge), and space hotels—all requiring re-entry and carrying high transition losses or re-entry costs.
• Decision: Data centers avoid these bottlenecks and tap into a fast-growing market, especially as launch cost reaches “break-even” points for profitability. Quote: "Data centers make a lot of sense to be the first thing you do, because you don’t need to re-enter a product.” — Philip Johnston [03:20]

3. StarCloud One: Building and Launching the First Data Center

• Setting the Forcing Function: Johnston’s #1 advice is to book a launch immediately, even before knowing the payload details.
  Quote: "First thing every space company should do is book the first available launch they can before they built the thing, before they probably even know what they're going to launch." — Philip Johnston [00:00, 16:17]
• Startup Scrappiness: The StarCloud 1 launch was hardware startup grit incarnate; they improvised testing methods (e.g., dunking electronics in ice baths hours before shipment) due to time constraints.
• Notable Moment: A remarkable video showed StarCloud 1’s separation, later played by Jensen Huang at Nvidia’s GTC conference.
  Quote: "It is a miracle that it works, to be honest." — Philip Johnston [05:44]
• Technical MVP: Initially planned as a modest test, StarCloud 1 ended up running five GPUs, including the Nvidia H100, with makeshift phase change material immersion cooling.
  Quote: "The amount of people who said it was physically impossible to run a chip that’s that power dense in orbit...Like, people just thought it was literally impossible." — Philip Johnston [17:13]

4. Technical and Engineering Challenges

• Thermal Management: Cooling in vacuum is a massive challenge—no air to conduct heat. StarCloud developed ultra-light, ultra-cheap radiators and used immersion cooling for protoyping. Quote: "For the first one...we submerged the entire thing in this phase change material. It’s like immersion cooling for all of the components." — Philip Johnston [17:42]
• Radiation Hardening: Standard consumer electronics (not “space-grade”) are tested and selectively shielded instead of defaulting to expensive “rad-hard” components.
  Quote: "We're trying not to use space grade rad hard components. We're trying to use off the shelf like automotive style components because it’s way cheaper and most people have never tested those in radiation chambers." — Philip Johnston [12:54]
• Interconnectivity: Partnering with SpaceX for Starlink laser terminals for high-bandwidth, low-latency data connections [10:44].
• Orbit Selection: StarCloud 1 was a proof of concept in suboptimal orbit; future versions will use sun-synchronous orbits for constant solar power.

5. Commercialization and Scale

• Stepping Stones:

  • StarCloud 1: MVP/prototype proving feasibility (2025).
  • StarCloud 2: 10 kW unit for government/military customers, including Bitcoin mining. Hardware partnerships with AWS (Outpost blade deployments).
  • StarCloud 3: 200 kW, 6m-long spacecraft, 50 units per Starship = 10 MW per launch. Filed for 88,000-satellite constellation.
  • Full Vision: 20+ gigawatts of new compute capacity; future potential for up to 10 terawatts, vastly exceeding today’s total U.S. grid. Quote: “We can fit up to 10 terawatts in the DawnDust sun-synchronous orbit. So that’s like 20 times the entire US power grid.” — Philip Johnston [19:32]

• Partnerships: Close collaboration with Nvidia (space-modified Rubin One chip; stripped-out, ruggedized H100); AWS Outpost; and government contracts [21:31–22:19].

6. Fundraising and the Deep Tech Climate

• Initial Skepticism: StarCloud was widely dismissed as a “dumb” or “sci-fi” idea by investors.
  Quote: "For a very long time their reaction was, 'This is the dumbest thing I've ever heard.'" — Philip Johnston [14:02]

• Tide Turned: As AI demand surged and terrestrial data center build-outs became politically and physically constrained, attention and investment rapidly shifted to hard tech and deep tech. Quote: "Deep Tech and Hard tech and space were definitely not a cool thing to invest in back then...It's become a lot easier to raise for Deep Tech. I think a number of reasons for that. One is people think that software doesn’t have a moat anymore." — Philip Johnston [24:32]

• Team Building: Ruthlessly selective hiring, with a tiny but elite engineering team, mostly ex-SpaceX and NASA talent. Quote: “We are so picky about who we hire. Like it is to a point of being very frustrating to be honest. But it's the whole game, it's the whole game is having a kick ass engineering team.” — Philip Johnston [26:59]

7. Vibes, Regulation, and the Future of AI Compute

• Political Landscape: Data centers have become politically unpopular, with New York and other locations blocking new builds—sometimes for irrational reasons. Space circumvents many of these hurdles. Quote: "Building these things in space will definitely be much easier from a regulatory perspective." — Philip Johnston [32:24]
• National Security: Compute capacity is now positioned as a national security issue.
  Quote: “It definitely puts us squarely in the national security bucket at that point.” — Philip Johnston [34:57]

8. Lessons for Space and Hard Tech Founders

• YC-Style Execution: Build a technical leadership team first, then book a launch to set your forcing function, even before you know the exact product.
• “Launch, Launch, Launch”: Applies to hardware as much as software. Lower fidelity in the early days is okay; just get real-world feedback ASAP. Quote: "Booking a launch is such a good forcing function for a space company." — Philip Johnston [16:17]
• The Arc of Conviction: Hold on through skepticism and rejection; a future that seems sci-fi today can become obvious very quickly.

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Notable Quotes & Memorable Moments

• Booking launches before you know what to launch:
  "Something is going to be on that rocket. I’m not 100% sure what it’s going to be at this point, but something is going to be on there." — Philip Johnston [00:05]
• Improv cooling solutions pre-launch:
  "Addy and Ezra are like dunking this thing in an ice bath to cool it down...They pulled it out of the ice bath. Then we had these hair dryers to heat it up and melt all the like, or like hot air guns. And then we're dunking it back in the ice path. It is a miracle that it works, to be honest." — Philip Johnston [05:44]
• Investor skepticism flipped:
  “If you had listened to what all the investors were telling you, you would have quit and not ever done this idea.” — Interviewer 1 [14:29]
• Building technical edge via consumer electronics:
  “We’re trying not to use space grade rad hard components. We’re trying to use off-the-shelf automotive style components...most people have never tested those in radiation chambers." — Philip Johnston [12:54]
• Vision for scale:
  "We can fit up to 10 terawatts in the DawnDust sun-synchronous orbit. So that’s like 20 times the entire US power grid." — Philip Johnston [19:39]
• On perseverance and being early:
  “Every day I would post something about why data center space are going to make sense. And then slowly and slowly and slowly people would start to drop hints about things.” — Philip Johnston [28:34]
• Advice to future founders:
  "Technical talent on the founding team is the thing you need to solve for first and then everything else follows from there." — Philip Johnston [35:28]

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Timestamps for Important Segments

• [01:10] — Why build data centers in space?
• [03:02] — Alternatives evaluated and why data centers won
• [04:47] — The story of StarCloud One’s launch and MVP improvisation
• [10:44] — Detailed engineering challenges (cooling, radiation, interconnect, etc.)
• [16:17] — How to approach a hard tech/space MVP
• [19:32] — Vision for scaling: 88,000 satellites, 10 TW compute
• [24:32] — Fundraising realities for hard tech
• [28:34] — Watching mainstream consensus come around
• [32:24] — Regulatory and political dynamics
• [35:28] — Closing advice for the next generation of hard tech founders

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Conclusion

StarCloud’s journey from outlandish-sounding idea to one of YC's fastest unicorns dramatically illustrates how quickly deep tech landscapes can shift as underlying cost structures and geopolitical realities evolve. Johnston’s relentless focus on assembling technical talent and setting forcing functions reflects proven YC DNA, and his story is a testament to both the importance of first principles engineering and the necessity of founder conviction in the face of early skepticism.

Transcript

[Philip Johnston]

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

[Interviewer 1]

can before they built the thing that

[Philip Johnston]

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

[Interviewer 2]

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

[Interviewer 1]

Foreign.

[Host]

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

[Philip Johnston]

Thanks so much for having me.

[Host]

So to start off, why data centers in space?

[Philip Johnston]

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

[Interviewer 3]

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

[Philip Johnston]

I'd actually been working, I was with McKinsey for a few years working with the space agencies of different governments and I could see that the launch cost was very rapidly trending down. And actually in early 2023, I decided randomly on a weekend to take a trip down to Starbase Texas where they're building the Starship launch program even before the first launch. And not many people were paying attention back then and I could see were just building enormous capacity. So they're building these two starship gigafactories. They're designed to produce something like three starships per day. And because Starship is reusable on a sort of three or four year timeframe, that could lead to us having thousands of times the capacity to get Things to space. And so I started thinking, okay, let's just run the clock forward. If the launch cost was 10 times lower than it is today, and the launch capacity was maybe a thousand times more than we have today, what would make sense that currently doesn't make sense? And so started thinking about some of the kind of concepts from sci fi that I remember as a kid. You know, like space based solar, where you have these huge solar panels in space, you beam that power down. And essentially I just reached out to a few folks I knew in the space industry and got connected with a few others and started ideating on, okay, what would make sense if the launch cost was much lower than it is today?

[Interviewer 1]

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

[Philip Johnston]

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

[Interviewer 1]

And how come data centers was the best choice?

[Philip Johnston]

Data centers makes a lot of sense to be the first thing you do because you don't need to re enter a product. So with things like asteroid mining or with manufacturing in space or space hotels, they require this very expensive re entry process. Initially what we actually started doing was space based solar. So huge solar panels and you beam that power down. And it's a concept from I think like the 60s. Even Asimov in the 40s was writing about it. The problem with space based solar is you actually lose 95% of the energy in transmission from space to earth. And so for the first two months of the company, that was literally what we're doing. We were called lumen orbit because of that reason, luminosity in orbit. We were thinking, okay, once we get that power down, what are we going to be using it for? And Even back in 23, most new energy projects were being built for data centers. So we were like, okay, well either directly or indirectly, this power is going to go into data centers. Let's rerun those numbers. So initially we'd run the numbers to know what's the launch cost Break even. That makes sense for space based solar. And we'd come to a number of like $50 a kilo. So then we reran the calculations. We were like, okay, let's spend a month figuring out what would the launch cost break even need to be to make data centers in space break even. And we came to a much closer to reality number of $500 a kilo. And that's what we think currently the break even launch cost is. And so then we rapidly pivoted the company towards that.

[Host]

So, Philip, you launched StarCloud One in November of 2025. And that was a real emotional moment. Like, can you walk us through what that was like?

[Philip Johnston]

Yeah, I mean, it was incredible. So just to tell people a bit about StarCloud One, so we'd set this launch date, you know, 18 months in the future. And we initially started with something quite unimpressive, like we were going to fly some Nvidia Jetson chips. They've been flown in space before and we're going to try and do some new, new workloads on there. Yeah. So it was Addy that came on and said, no, we need to do something way, way cooler than that. And we actually ended up putting five GPUs on there, two, three from Nvidia, two from ARM. But the most interesting one was this Nvidia H100. We did some crazy things like, for example, you have to put it through thermal cycling. And we didn't have time to. We like book the vacuum chamber, the thermal and vacuum chamber. And. But we needed to know, okay, if we heat up this phase change material and cool it down, heat it up and cool it down, is it going to crack anything? And so at like 5am the day we had to ship it down, we were working through the night. Addie and Ezra are like dunking this thing in an ice bath to cool it down. Oh my God. And then we pull it out of the ice bath. And I'm like, are you sure it's going to be fine with electronics? They're like, don't worry about it yet. It's totally fine. They pulled it out of the ice bath. Then we had these like, like hair dryers to heat it up and melt all the like, or like hot air guns. And then we're dunking it back in the ice path. It is a miracle that it works, to be honest.

[Host]

You can just do things.

[Philip Johnston]

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

[Host]

Yeah.

[Philip Johnston]

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

[Interviewer 2]

Star Cloud 1 separation confirmed.

[Philip Johnston]

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

[Host]

Amazing.

[Philip Johnston]

So now it was the most incredible feeling seeing this deploy.

[Interviewer 1]

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

[Philip Johnston]

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

[Interviewer 1]

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

[Philip Johnston]

Yeah. So lifted off we were all on what they call the banana bleachers. It's like the famous from the Apollo era, but it was in the middle of the night. So it lifted off at around midnight and then at 1am they closed the bleachers and everyone had to get on a bus and leave. And we're like, oh, I thought we're gonna like be able to watch the deployment. And then I'm sitting in the back of a cab like watching the live feed on SpaceX.com literally, oh my God, it's the plane. I can't is deploying. And then it took about 12 hours to make first contact, which is not bad actually. It usually takes at least 24 hours to get first contact and then it's like a two week commissioning period and we had a whole bunch of software issues we had to work through. Like it kept the whole satellite kept restarting every two hours. And what was happening was one of 20 different like failure like triggers was triggering and we didn't know which one it was. And we can only get a ground station pass every like at least every hour and a half, maybe longer. And so we had to manually turn off each one, turn back on everything else and wait for a ground station pass to know which one it was. So that took like, you know, that took like three days just to figure out that software issue. And then, yeah, two weeks after that, then we started commissioning and turning on all the different payloads. And then we trained the first model, ran the first version of Gemini, we did the first fine tuning of a model in orbit, did the first high powered inference on, on satellite imagery and all this kind of stuff.

[Host]

So Star Cloud 1 right now as we speak is just left Chinese airspace, I think about to enter Japan. Yeah, it's going quite fast actually.

[Philip Johnston]

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

[Host]

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

[Philip Johnston]

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

[Interviewer 1]

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

[Philip Johnston]

end state will be deployed in that orbit. But you need thrusters anyway to maintain the orbit because you have to, you know, drag from the upper atmosphere there.

[Interviewer 2]

What are the engineering and physics trade offs you have to make this happen because what you basically are doing with Star Cloud is you're getting infinite energy because the sun is basically the natural fusion reactors is a giant mass that generates a nuclear reaction with the giant mass. And you have infinite energy, basically abundant and lots of space. But as a result of that which we're constrained of that in Earth, you have a bunch of other really hard problems to solve. Like things around interconnect. How do you send all the data back and forth back to Earth? How do you handle cooling? People think that space is cold, but actually there's no, unlike Earth, there's no air to circulate it back. So you need some crazy solutions with cooling. There's things around radiation to flip the bits in processors and there's probably other things around how to get the solar panels to become really big and expand and many more. I mean these are the ones that I could think of. I mean what are, there's like so many things that are just so hard to build.

[Philip Johnston]

Yeah, you are correct. There are many engineering challenges to be solved. The two biggest ones that are outstanding and most of our engineering, our engineering team is split basically 50, 50 down these two lines is number one, as you mentioned, how do you get rid of this heat in a vacuum? And then number two, how do we make the chips work in a higher radiation environment? Some of the other problems are being solved by other people. You know, the interconnect. We've signed a contract with SpaceX for our next 20 satellites to have a Starlink laser terminal that gives us very high bandwidth, low latency connectivity. Other people are solving some other parts of this. The core ones we're solving are that. And so for the first one, for the thermal management side of things, we are building a very large, low cost and low mass deployable radiator. Now, radiators in space are not new. It's not a new physics solution. It's more of a manufacturing and engineering challenge because the International Space Station has had a radiator which dissipates, you know, lots of heat already very similar mechanism. So a liquid cooled loop. The challenge with it is making it cheap and light. So our radiator is at least 10 times less mass per watt of dissipation than the ISS radiator and 500 times less cost per watt of dissipation than the ISS radiator. So very low benchmark, very easy benchmark to beat on cost for the iss, but yeah, and then on radiation, it's just a lot of ground testing in different particle accelerators. So we've done several rounds of testing at the Brookhaven National Lab particle accelerator for heavy ions. And also at the, there's a cyclotron for high velocity protons down in Knoxville. So we ship all of our hardware down there. My co founder Adi runs in and out wearing this protective thing. ADI is a lunatic when it comes to this stuff. He's like, oh yes, it's the same as flying transatlantic, don't worry about the radiation. So yeah, basically you expose it over a 24 hour period to the same radiation dose that you would have in a five year mission. And, and then all of that telemetry and data then informs our choice on both shielding and software to mitigate bit flips. I think we're the only people in the world now that know where both an H100A B200 H200 will fail if you blast it with high velocity protons and heavy ions.

[Interviewer 1]

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

[Philip Johnston]

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

[Interviewer 2]

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

[Philip Johnston]

No, we're in leo.

[Interviewer 1]

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

[Philip Johnston]

For a very long time their reactions was this is the dumbest thing I've ever heard. So the. Yeah, we tried to, we actually applied to YC once and we got reaction. We then tried to raise and it took, we tried to raise 2 million at 10 posts on a safe. It took us three months and we got rejected from at least 100 VCs. And then even after YC, when we went out to raise after demo day, I think we got rejected from at least 20 VCs before we got to the first, the first check.

[Interviewer 1]

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

[Philip Johnston]

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

[Interviewer 2]

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

[Philip Johnston]

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

[Interviewer 3]

Once you had the idea, and then I'd say once you were in yc, how did you sort of break the problem down into a plan for what to do? Obviously in software you think of your MVP and you launch quickly and you get feedback. But hard to do that with data setups in space.

[Philip Johnston]

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

[Interviewer 1]

they can before they built the thing

[Philip Johnston]

that they're going to launch before they built the thing before they probably even know what they're going to launch. Booking a launch is such a good forcing function for a space company. So we founded the company January 1, 2024. January 2 we booked the first available SpaceX rideshare launch. And it was cheap, it was like 300 grand, which was how far out was the launch? It was 18 months out and then it got pushed to 21 months out. And we were like, okay, something is going to be on that rocket. I'm not sure 100% sure what it's going to be at this point, but something is going to be on that. That's interesting.

[Interviewer 2]

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

[Philip Johnston]

Yeah, yeah. And what we initially planned to launch was very unimpressive actually. It was like we were going to put a Jetson chip, which has been flown on many satellites before, and we were going to use it for kind of edge processing and things. We actually had a co founder change quite early on. And when we got Addy from SpaceX, Addie was like, oh, that's lame. Let's put an H100 on there. We're like Addie, you can't put H100 on a satellite. He's like, sure you can. The amount of people who said it was physically impossible to run a chip that's that power dense in orbit. Like people just thought it was literally impossible to run Data center grade GPUs on orbit.

[Interviewer 1]

What would have caused it to be impossible?

[Philip Johnston]

There's two things. One is the thermal side of things. They very power dense, they produce a lot of heat. And the second is they had never been tested in the radiation environment of space. And both of those. So for the first one like it's kind of a wacky solution. Like we submerged the entire thing in this phase change material. So everything on StarCloud 1 is, is submerged in this like phase change material. So it's like immersion cooling for all of the components. All of the power delivery, memory, everything is submerged. Like nobody's ever considered doing anything like that in space before. It's not a particularly scalable solution. It's not like you have quite a low duty cycle. You have to wait for it to melt and then it solidifies every so often. But it enables us to prove that you can run the H100 in space. The next one is this director chip liquid calling architecture that we can run continuously. But yeah, I mean, yeah, I give full credit to my co founder Addy for coming up with some pretty wacky and crazy ideas to get to a

[Interviewer 1]

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

[Philip Johnston]

So as I say first step was book whatever the like first launched, lowest MVP we can have available. Second step is producing something which is a commercial like a, a product we can sell to customers. So that's StarCloud 2. That's a 10 kilowatt spacecraft that we can sell compute to government and military satellites. And then the third step is the product that we're going to be able to sell to hyperscale data centers. So that's the StarCloud 3. We can, it's 200 kilowatt 3 ton spacecraft. It's about 6 meters long. With that we can fit 50 of them per Starship. So about 10 megawatts of new compute capacity per starship. And we've just filed with the FCC for a constellation of 88,000 of those. So that means on the order of 20 gigawatts of new comp capacity.

[Interviewer 2]

Wow.

[Philip Johnston]

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

[Interviewer 2]

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

[Philip Johnston]

They're about a gigawatt is the largest.

[Interviewer 1]

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

[Philip Johnston]

Yeah, it's very dependent on the launch cost. And so the estimates for starship, if you believe Elon, it will be end of this year, but let's say could be end of next year, early 2028 for Starship deploying, you know, ramping up the launch cadence. They're actually phasing out Falcon 9, so they're going to be moving over commercial customers to Starship. There's also a whole bunch of other launch vehicles coming online. Stokes Base has the Nova Rocket. Rocket Lab has Neutron Blue Glenn, Blue Origin has New Glenn. So end of 2028, I'd say is when we're starting to ramp up for the terrestrial business, competing with terrestrial data centers.

[Host]

So your customers are actually anyone who wants compute, and then initially, Initially it's

[Philip Johnston]

government and military, but then as starship ramps up. So for the next two, three years, we've just won four contracts with various Dow and government entities.

[Host]

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

[Philip Johnston]

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

[Host]

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

[Philip Johnston]

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

[Host]

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

[Interviewer 2]

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

[Philip Johnston]

Exactly.

[Interviewer 2]

And lose a lot of power, which is.

[Philip Johnston]

Yeah. And our solar panels generate DC immediately. So there's no point doing. We just need DC to DC converters. But that's much better than AC to DC converters.

[Interviewer 2]

So you could unlock a bunch of companies also just building GPU data centers just using solar power, period. Whether in space, under the water or in earth.

[Philip Johnston]

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

[Host]

Can you talk about starcloud too? A little bit more like. Is there actually a bitcoin miner in there as well?

[Philip Johnston]

Yes, we will be flying a bitcoin mining ASIC next next year, which the crypto community is very excited about. There's much more enthusiasm than I was expecting, to be honest about that. So he loves a good narrative. The number of people that want me to launch Star Coin, you have no idea. There is actually a Star Cloud meme Coin I think out there.

[Host]

Yeah. Don't buy it. It's not official.

[Philip Johnston]

Do not buy the Star Cloud meme Coin.

[Host]

Yeah, yeah.

[Philip Johnston]

So yeah, we'll be launching. We'll have one of those on there. We'll have a, a whole bunch more H1 hundreds Blackwell chip. We're also partnering with AWS on launching the Outpost hardware. That's their on premises server blade that they give to customers to run a local instance of VC2 and that will be useful for particularly for our military customers.

[Interviewer 3]

Something we were talking about earlier is at yc, we just observed over the last few years it's been quite hard for hard tech companies to Raise funding in general, there's not been much investor appetite for it. It certainly seems to have changed over the last six months. Great news from your perspective. I'm curious, how was it raising the siege round during YC and then this huge round you raised from Benchmark just sort of maybe tell us the inside story of kind of how that all came together and what it feels like being a hard tech founder raising money today.

[Philip Johnston]

So when we first raised end of 2023, we tried to raise $2 million at 10 post and yeah, that took three months to get together. About 100 VCs said no. Yeah, Deep Tech and Hard tech and space were definitely not a cool thing to invest in back then. Then after yc, yeah, we, it took us quite a while to raise, so I think we got rejection from at least 20 VCs before we got our first check on the demo day raise. And things have definitely swung around since then. It's become a lot easier to raise for Deep Tech. I think, I think a number of reasons for that. One is people think that software doesn't have a moat anymore, which I think is probably accurate.

[Interviewer 3]

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

[Philip Johnston]

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

[Interviewer 3]

Yeah, I mean whatever you can share. Like how did that round kind of come together and, and again, what do you think sort of benchmark saw in you guys?

[Philip Johnston]

So to be frank, that round wasn't as easy as it looks from the outside. There's a lot of VCs that have big SpaceX positions for one thing. And SpaceX, like midway through the round came out saying they're doing exactly what we're doing and it wasn't public then. And so anybody with like a conflict policy then was like, okay, we're conflicted out, but I mean, towards the end of the round it certainly came together much faster I think, to be frank, I don't think so. Chathan is our partner. Chathan's awesome, amazing investor. Yeah, he's great. I think basically he saw A really, really strong technical team doing something that if it worked, could be incredible. And I think when he came to visit us, you know, he spent a lot of time doing DD on other things, you know, on the backgrounds of all of our, We've got the best, we literally have the best freaking engineering team in the world in Redmond building this stuff. You know, half of them from SpaceX, half from, from some of the hyperscalers. So he spent a lot of time with the team. He spent a lot of time. But I, I don't think if he'd, I don't think if he'd come across a report that said that cooling in space was impossible that that would have like thrown him off. I think he was like, okay, this is a good enough team that they can figure it out.

[Interviewer 1]

How did you build such an awesome team?

[Philip Johnston]

So my co founders, Addie and Ezra, I, well with Ezra I, I reached out to him after a been down to Starbase Texas and I was like, have you got any ideas that would make money if Launch cost was 10x cheaper than it is today? And we started with this space based solar idea with Addie who was introduced to a friend through a friend and he, he actually had already been thinking about this. He already had registered the domain name stellacloud.com before. And then with the team we were just ruthlessly slow at hiring and like picky about hiring. After YC we'd raised like 11 million at 40 which is like a decent round in YC and, and even then it took us six months to make our first hire and we've got like the most kick ass space engineer as our first hire. We've raised like a lot of money now even this round that we announced in March, we've raised a much larger round since then. We're still only 20 engineers like the, and we have one commercial guy who came from the space force who was working on Golden Dome. We are so picky about who we hire. Like it is to a point of being very frustrating to be honest. But it's the whole game, it's the whole game is having a kick ass engineering team.

[Host]

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

[Philip Johnston]

It was surreal. So if you go back through my Twitter feed, I've been like shouting from the rooftops for the last like three years about this. Every day I would post something about like why data center space are going to be are going to make sense. And then slowly and slowly and slowly people would start to drop hints about things. Like Elon at one point was like 99.999% of the energy in the solar system is from the sun. So I'd repost that and I'd be like we need to build data centers in space. Like I would like everything I would find a hook for.

[Interviewer 2]

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

[Philip Johnston]

I'm going to tell my mom who's very religious that YC of profit.

[Interviewer 2]

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

[Philip Johnston]

Yeah. So for people who don't know my background spent the first five years of my career as a an engineer on the software side studying math and physics. Before that undergrad and masters and then I went to McKinsey more on the commercial product side. But I actually ended up doing a couple of projects with national space agencies on different satellite missions. And that's where I really started to notice the launch cost coming down very rapidly. Actually had another startup before this and yeah when I left that one decided okay, if I'm going to do another startup it has to be something I'm like very passionate about. And yeah, for my whole life I've been very passionate about space because I don't have a space engineering background. Realized okay, I'm going to need the world's most kick ass space engineers. And actually this is where I give credit to yc. I was kind of blindly following the YC advice. I was like, okay, the first thing we need to do before coming up with an idea is get the most incredible space engineers in the world on the team. Essentially this is before you even knew

[Interviewer 1]

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

[Philip Johnston]

Yes, literally. That's literally it.

[Host]

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

[Philip Johnston]

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

[Interviewer 1]

How did you. How did you find them? How did you recruit them?

[Philip Johnston]

So Ezra and I had grown up in the same place in the uk. I didn't actually, to be frank, I messaged like a lot of space engineers. Maybe 10 of them took a call and two of them said, yes, that's all you need.

[Host]

You don't need like a hundred people to do it. You only need one or two too.

[Interviewer 1]

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

[Philip Johnston]

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

[Host]

So let's do some myth busting. There are a lot of misconceptions about certainly water and data centers, but also power. What are some of the things that

[Philip Johnston]

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

[Host]

amounts of water and there is actually evidence that you can have closed loop systems that can very little water. And I think the analogy is like if you ran a burger shop, like a fairly large data center with like hundreds of megawatts would consume about the same amount of water as like a McDonald's.

[Philip Johnston]

Yeah.

[Host]

So it's like, it's really, you know, a non issue. But it's unbelievable that they're repeating this so much.

[Philip Johnston]

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

[Host]

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

[Philip Johnston]

I mean also not true if you, if you build a new power project for it.

[Interviewer 2]

Right.

[Host]

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

[Philip Johnston]

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

[Host]

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

[Philip Johnston]

We're doing our best.

[Host]

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

[Philip Johnston]

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

[Host]

Philip, thanks so much for coming on the light cone.

[Philip Johnston]

Yeah, thanks so much for having me.

[Interviewer 3]

Nice being.

[Interviewer 1]

It.