The Mars Portfolio
What I think are great companies doing work scalable beyond Earth, and how I would deliver a brief investment memo for these companies. (Not an existing portfolio)
Over three funds we’ve put together what we call the Mars Portfolio, an idea incepted years ago, where we want to invest in extraordinary companies whose offerings can scale beyond usage on Earth.
We asked: What are the companies that are doing extraordinary things, so much so that their offering would be an essential when humans are a multi planetary species?
In that light, we’re investing in the larger themes of the world, those that, to quote Peter Thiel; “bring our civilisation to the next level”.
Themes we’re most excited about are Space, Robotics and Artificial Intelligence, Energy, Communications, Transportation, Education, Raw Materials Production, and the broader Supply Chains embedded in each theme. These themes may sound familiar but we believe the companies we’ve included in our portfolio are adding new schools of thought and new dimensions to their respective industries, redefining these industries, and enabling integration between different themes.
MP Materials
A rare earths mining facility.
MP Materials (MP) is an environmentally conscious, closed loop, zero-discharge rare earth elements production facility located in Mountain Pass, California. The Mountain Pass mine was discovered in 1949 and production began in 1952. Between 1965 and 1992 the Mountain Pass mine produced a significant majority of global rare earths. From the late 1990s global supply chains began being concentrated towards China, and the Mountain Pass mine experienced financial and operational hardship. In 2017 new investment was set on reviving rare earths production at the Mountain Pass facility, with a longer term three stage plan to create a western hemisphere leader in rare earths production.
Rare earth elements are a group of strategically important minerals that are used in manufacturing products such as LED lighting, drones, guidance and control systems for defence purposes, and the miniaturisation of smartphones. The most important use of rare earths however, is in manufacturing permanent magnets used in electric vehicle motors and wind turbine motors.
With the global shift towards electrification we think that rare earth minerals are a critical resource needed to reach climate goals and advance innovative industries, mainly auto and energy (clean energy).
The global supply chain for rare earths is currently highly dependent on China (a single point of failure)
As of 2021, 60% of the world’s rare earths come from China
The global EV market is expected to grow from ∼ 8% of the entire auto market to ∼70% by 2040. Affordable and reliably available rare earths and permanent magnets will play a huge role in allowing that to happen.
Being the only rare earths mine in the western hemisphere, MP is ripe for further investment where the entire world has woken up to the dangers of a non-diverse supply chain.
In 2020, MP Materials was awarded funding in a US Department of Defence preliminary contract to restore domestic heavy rare earths production and separation capabilities to the US.
MP was also awarded a Defence Production Act technology investment to expand the company’s efforts.
In 2021, MP and and General Motors struck a deal to build a permanent magnet manufacturing facility in Texas, creating a fully integrated permanent magnet supply chain in the United States - the only such supply chain in the Western Hemisphere.
Promising Potential:
Permanent magnet manufacturing
A part of MP Materials’s stage 3 growth plan, production to start in 2023
Mining capacity and rare earth mineral production expansion in Mountain Pass
Mining exploration to be expanded into nearing land since MP holds broader exploration rights
Expanded potential customer pool in the western hemisphere as EV production grows at General Motors, Ford, Lucid, Rivian, etc
MP Metrics:
Three year Revenue CAGR of 65%
EBITDA margin of 57% - negative to positive EBITDA in three years
Total Enterprise Value of $5.21 billion.
Tesla
An automobile, hardware and software engineering, data and artificial intelligence, battery production, and energy company.
Founded in 2003, Tesla set out to make electric vehicles (EV) that were reliable, fun, and could compete with combustion engine vehicles - hopefully replacing demand for combustion engine vehicles. Tesla experienced many hardships in the production of its vehicle ranges, and between 2017 and 2019 the company came close to bankruptcy. New investment ensured this did not happen, cementing Tesla as one of only two American car companies to never go bankrupt.
Vehicles
Global EV sales have grown 110x since 2012 and we believe Tesla has been a leading influence in convincing the world that EVs can scale and can be produced at great quality in terms of safety, driving range, and reliability.
We believe that combustion engine automobiles will go the way of the dinosaurs and Tesla will continue to be the market leader in this evolution, given the company’s goals, most recent performance, and potential for improvement
To ensure the stability of its EV supply chain while minimising cost per vehicle, Tesla production facilities are now located in California, Texas, Shanghai, and Berlin - with plans for additional production facilities
Market share of Tesla vehicles has grown from near zero in 2016 to ∼ 2.5% in 2021 in the United States and Canada
Market share of Tesla vehicles has grown from near zero in 2016 to near ∼1.5% each in Europe and in China
In 2021, Tesla achieved a record 940 million EVs produced, and an annualised run rate of 1.22 million cars in Q4 2021
Tesla vehicle deliveries were up 87% in 2021
In Q4 2021 Tesla achieved the highest quarterly operating margin of all OEMs
Tesla Autopilot and Full Self Driving awarded top ratings in collision avoidance.
Energy
In the fight against climate change, most countries are putting a lot of focus on diverse energy supply chains - the fragility of which have been highlighted most recently during covid-19 and even more recently with the war in Ukraine.
To supplement energy supply sources we believe residential regions, housing estates, commercial buildings, and industrial properties, where possible, will all shift to using solar energy to ensure steady and reliable energy supply.
Tesla’s energy division have proven themselves experts in this field as well, subtly building virtual power plant capabilities with every sale of a solar roof installation and a battery pack. Virtual power plants allow buildings with solar installations and power packs to send energy back into the grid in times of need, allowing the region’s energy supply to become more reliable.
The first Tesla virtual power plant was rolled out in Australia in 2018, the second is in California, and the most recent is in Japan
Energy costs are significantly reduced through solar and battery adoption
Tesla energy storage deployments have 4x’d since 2018
In Australia, Tesla scaled energy production and storage with the Hornsdale Power Reserve - a project built to support the South Australian energy grid
Tesla contributed to the project by installing Tesla Power Pack’s ranging between 100kWh to 210kWh in capacity.
Tesla’s involvement in the Hornsdale project helped reduce total energy costs in the South Australian National Electricity Market by $116 million
Promising Potential:
Full self driving - global scalability
Autonomous taxi network - global scalability
Expanded virtual power plant network - global scalability
Tesla Metrics (consolidated):
Five year Revenue CAGR of 36%
Five year EBITDA CAGR of 373% - negative to positive Operating Income
EBITDA Margin of 18%
Total Enterprise Value of $836 billion.
SpaceX
A rocket manufacturing and space transportation company. SpaceX’s stated mission is to make humans multi planetary.
Founded in 2002, SpaceX was an ambitious project to build rockets as a private company, at a significantly lower cost than the industry expectation. Between 2006 and 2008 SpaceX had 3 launch failures, and was at risk of going bankrupt. After the success of their 4th launch SpaceX had figured out what worked for them, and what needed to be done for successful execution of launch missions.
The space industry has seen tremendous growth since the inception of SpaceX and especially since SpaceX made it a goal to standardise the manufacturing of reusable rockets. This made the entire world confident about the fact that regular space missions, commercial space flight, and space exploration/multi-planet exploration are definitely possible - but also could be done at significantly lower prices. Early in its life SpaceX engineered a reduced relative cost per seat for space missions;
The Apollo program: $390 million cost per seat
The Space Shuttle: $170 million cost per seat
The Russian Soyuz: $80 million cost per seat
The SpaceX Dragon 2: $55 million cost per seat
In 2011, NASA lost the ability to send astronauts into orbit when they retired the Space Shuttle - meaning the United States had to depend on Russia and the Soyuz spacecraft to send astronauts into orbit. SpaceX’s 2020 Crew Dragon flight created new hope for the space industry and for the United States - reducing their dependence on Russia for space exploration.
In 2017, SpaceX became the first private company to launch a resupply mission to the International Space Station on a reused rocket. Since then SpaceX has standardised the recovery and reuse of its rockets (booster and shuttle included), setting an industry standard as seen with many space service companies today.
SpaceX has achieved 177 launches, and 115 total re-flights (including payload and manned missions)
Promising Potential:
The first company (and private company) to lead a manned mission to the moon since 1972
Leading payload transportation service into multiple orbits
Leading payload and human transportation to orbit, ISS, the moon, and Mars
Point to point travel on earth: e.g reducing flight from New York to Shanghai to roughly 30-40 mins.
Current Valuation: $127 billion.
Starlink
A satellite internet service provider, a subsidiary of SpaceX. Starlink designs and launches satellite constellations into low earth orbit to provide fast-internet services.
According to research by the World Economic Forum and UNESCO, about 55% of households globally don’t have Internet coverage, and in total 3.7 billion people have no internet access. We believe Starlink will be the largest contributor to connecting the entire world through the internet.
Starlink satellites are smartly designed, enabling the satellite to manoeuvre to avoid debris and other spacecraft, as well as map the location of other satellites to allow for better throughput
Starlink satellite iteration is faster and cheaper than industry competitors (thanks to proximity with SpaceX)
Over 500 000 people have ordered or put down a deposit for Starlink internet services
Starlink currently has ∼ 2 800 satellites in low earth orbit, with a longer term goal for 42 000 satellites, and global internet coverage.
Around the world private + public sector partnerships are springing up that support satellite internet services. Canadian, Russian, and Chinese governments have all granted funding to their respective domestic leading satellite internet service companies. Private companies are also chopping at the bid to become leading providers through private funding.
The last manned mission to the moon was in 2017. It has become a space industry goal to have humans return to the moon, and every company that can make rockets is hoping to be the first. The idea is to create moon bases for manufacturing, mining, refuelling/relaunch projects. In addition to those services on the moon, internet and communication services will be essential. We believe Starlink will be the leader in this industry simply because of Starlink’s promising potential.
Promising Potential:
Fast satellite design iteration (due to proximity with SpaceX)
Frequent constellation deployment (due to proximity with SpaceX) - allowing faster growth in coverage and Starlink services
Subscription service costs are expected to fall drastically vs the market due to falling satellite launch costs - positively affected by Starlink’s proximity to SpaceX
The three factors listed above mean Starlink is likely to experience outlier growth and become a leader in the satellite internet services space, allowing the company to gather enough data, quickly enough to scale its offerings beyond just earth relative to the market.
Synthesis
A revolutionary education platform.
In 2012 Elon Musk decided he wasn’t happy with the education system the way it is and that it wasn’t good enough for the kids that he wanted to raise. He asked a friend of his to help him design a unique school for his kids, and they named it Ad Astra, now called Astra Nova. A part of the program called synthesis, where children learned using simulations and other software designed programs, was spun out into a standalone education program called Synthesis.
To ensure future generations gain the skills and abilities to master teamwork, creative thinking, independent thinking, critical thinking, and breaking down complex ideas - educational projects such as Synthesis must be expanded. Kids learn online, therefore Synthesis does away with assembly line seating for kids, where information feeds are also hierarchical and fixed, and are unable to adapt fast enough to the way the world currently works.
The education system has been in need of major reform for decades. Additionally, the ideas laid out in our Mars portfolio companies are long term plays that will need to be further nurtured by highly competent future generations. We believe the type of future leaders and builders required for the success of these portfolio companies will come from Synthesis.
Something about Synthesis works, and parents actually love it for their children:
Students are between the ages of 8 and 14
Synthesis currently has a two to three month waiting list
Kids work in cohorts of between 15 and 18 kids, and meet weekly, but can meet more often
Kids can collaborate with other kids from around the world
More then 85% of students stay in the program for more than 90 days
$127 reservation charge, $180 monthly tuition
Promising Potential:
A replacement for k - 12
Incubator for ideas/startups stemming from learners
Feeder school for STEM programs
Reduced educational costs
Decentralised education and international collaboration for learners (learners will be exposed to broader culture, creativity, and problem solving from multiple angles and experiences)
Accelerated learning for young minds.
Relativity Space
A rocket manufacturing company. Relativity Space 3D prints the entire rocket, including the engine.
Along with the mission to create reusable rockets and more regular space flights we need to scale technologies that are also allowing faster and simpler rocket designs and manufacturing times. This will ensure industry production costs are lowered over time, making space flights more affordable and scalable.
We believe Relativity Space is an industry leader in this mission. Since inception Relativity Space has 3D printed the Terran 1, the world’s first 3D printed rocket - built from raw material to flight ready within 60 days. First launch is set for September 2022.
Additionally, Relativity is working on the Terran R design, which will be the world’s first 3D printed fully reusable rocket - from raw material to flight ready in 60 days. The first launch is set for 2024.
Because Relativity uses 3D printers to design and build rockets, the design of the rocket can be altered every 60 days, allowing faster rocket design iteration, lower costs and lower launch unit economics, a simpler supply chain, and less manual labour. This compares to the 18 to 24 month standard manufacturing time for rockets, at generally significantly high costs.
Promising Potential:
Because Relativity will eventually 3D print reusable rockets, this will result in idle 3D printers, and allow 3D manufacturing at Relativity to scale
Relativity can create and grow a customer list as a rocket printing company
Relativity can create and grow a customer list as a 3D printing company for other complex machinery
Industry leader in helping the space industry become more standardised
More companies competing to launch rockets
Rocket launch missions will become drastically more affordable - expanding payload launch possibilities, and revenue options for Relativity
Manufacturing provider of choice for broader space exploration such as assets required to establish moon bases, and in-space manufacturing
Current valuation: $4.2 billion, Series E.
Varda
An in-space manufacturing company.
Currently research and small scale in-space manufacturing takes place at the International Space Station (ISS). Manufacturing products in microgravity removes certain restrictions on the quality of the product. For example there is research that shows that fiber optic cables manufactured in space are of a better quality than those manufactured on earth, because the cables develop micro crystals in the process, which ruins the cable’s potential.
Varda aims to manufacture products in microgravity that are more difficult to manufacture on earth/that would be better to manufacture in space due to the vacuum that space allows. For example bio printed organs, specialised semi-conductors, and pharmaceuticals.
It is near impossible to scale manufacturing at the ISS, and due to the falling costs in space missions thanks to companies like SpaceX, Relativity, and other companies in the space industry - in-space manufacturing can scale tremendously, allowing companies like Varda to thrive.
Varda’s first mission is set for 2023, on a spacecraft built by Rocket Lab, and the second will be sent out by SpaceX on Falcon 9. Each spacecraft will spend ∼3 months in space, and once manufacturing is complete, Varda’s re-entry module will bring back 40-60kg of manufactured materials on average.
Promising Potential:
Scaled in-space manufacturing as launch unit economics continue to fall
Leader in in-space manufacturing, backed by an experienced team of engineers and investor group
In-space 3D printed products allowing for higher quality manufactured organs, and other hardware
In-space manufactured products will also be delivered to other destinations (ISS, the moon, or Mars)
Current valuation: Undisclosed.
The Boring Company
A tunnel boring company.
Humans are building in 3D (tall buildings in cities), resulting in dramatically higher road traffic because road networks are mostly in 2D. The solution is 3D “roads”.
We’re seeing a lot of progress in “fast transportation”. Of the company’s operating in service of fast transportation we believe The Boring Company (TBC) is poised to gain the largest market share, simply due to the advancement TBC has made towards building tunnels, but mainly the company’s advancements in reducing the cost per mile for building tunnels.
It typically costs anywhere between $100 million to $1 billion per mile to build an underground tunnel
TBC’s R&D tunnel located in Hawthorne, California, is a 1.14 mile tunnel and it cost the company only $10 million. The second tunnel, also currently open for travel, is the Las Vegas Convention Centre Loop.
TBC’s internally designed second generation tunnel boring machine (Prufrock) digs 6x faster than their first generation machine
The additional cost associated with tunnel boring is transporting/disposing of sand (earth) that is dug out. TBC is significantly reducing this cost by turning that earth into bricks, on site, and using these bricks to line the newly dug tunnels, or selling the bricks at a significantly lower price than a standard concrete/cement brick - reducing both housing construction costs and greenhouse gas emissions from cement production.
Promising Potential:
Extended Las Vegas, and intercity tunnel networks
Hyperloop travel intracity/intercity - for commercial and freight transportation (test track currently complete)
Faster freight transportation in containers or other packing
Tunnel exploration capabilities expanding into mining - on earth, on the moon, on Mars
Current valuation: $5.7 billion, Series C.
As absurd as our approach or delivery may seem to some, we believe our views are more than supported by the entire world. Each industry in which our Mars Portfolio companies operate is a booming industry supported by large amounts of highly competent human capital and capabilities, a lot of government support through funding and supportive legislation, and a lot of private capital willing to explore long term plays and innovative playbooks.
MP Materials is a strategically important company for the global supply chain for rare earths production (a critical resource). Tesla (both the vehicle and energy divisions) have achieved what very few thought was possible, and a strong argument could be made that if it weren’t for Tesla excelling in their operations (and the potential that Tesla still has), the world conversation on climate would not be where it is today.
An audacious dream to create a private space company led to the huge success and even greater potential that SpaceX is showing, revolutionising the entire space industry. Relativity Space will cement the new way rocket manufacturing is done, further enabling rocket launch unit economics to fall and empower companies such as Varda and Starlink to thrive.
The Boring Company is the market leader working on improving our transport networks on earth, with the potential to scale this activity beyond earth, as our capabilities allow us to further explore space.
To tie it all together, it is imperative that our future generations propel these ideas at an exponential rate to see each of these themes and related companies reach their full potential. Synthesis will empower future generations with the necessary capabilities.
Our mission is to support audacious goals and push the boundaries of reality. We believe that the Mars Portfolio groups some of the most audacious companies and ideas, in service of our mission, and that these companies will have the greatest positive impact on the world.