Payam Banazadeh On Raising $170 Million To Improve Decisions Around Conservation And Security On Earth

Payam Banazadeh fell in love with space at a young age. He has since worked for NASA and has now launched his own space startup that has attracted over $170M in capital from investors. The venture, Capella Space, has been financed by NightDragon Security, Cota Capital, Alumni Ventures, and DCVC.

In this episode, you will learn:

• What’s next for data coming from space
• How to raise $170M for your startup
• Keeping a team of 200 on track to achieve short-term goals and long-term vision
• Decision-making as a leader

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About Payam Banazadeh:

Payam Banazadeh is the CEO and founder of Capella Space, a Silicon Valley company building the largest constellation of commercial Synthetic Aperture Radar (SAR) satellites in order to provide hourly monitoring services anywhere in the globe.

Prior to starting Capella Space, Payam was a project manager and flight systems engineer at NASA JetPropulsion Laboratory (JPL) and has been awarded NASA Mariner Award, NASA Discovery Award, and NASA Formulation Award.

Most recently, Payam was selected to be on the prestigious “Forbes 30 under 30” list in 2017, and Capella has been recognized by The New York Times, Bloomberg, and recently Inc magazine as one of the top 25 disruptive companies in the world.

Outside of Capella, Payam spends his time thinking about the impact of technology on society, the economy, politics, and human behavior. He is an advocate of raising awareness around the volatility of life on earth and the responsibilities of technologists to think proactively about their work and its intended and unintended consequences.

Payam holds a business/management degree from Stanford University and graduated Magna Cum Laude with a BS in Aerospace Engineering from The University of Texas.

Connect with Payam Banazadeh:

• Crunchbase
• LinkedIn
• Twitter
• Entrepreneur

Read the Full Transcription of the Interview:

Alejandro Cremades: Hello hello everyone and welcome to the deal maker show. So super excited about the guest that we have today. We’re gonna be talking about building scaling financing and all of the above all the good stuff that we love to hear so without further ado. Let’s welcome our guest today. Payam Bena Salli welcome to the show.

Payam Banazadeh: It’s good to be with you happy and excited to chat with you and your audience about building a satellite company.

Alejandro Cremades: Amazing. So hey, let’s say let’s do a little if a walk through memory lane Payam so how was life growing up in Texas.

Payam Banazadeh: So I actually grew up in Iran and then I moved to Texas when I was a teenager and Iran and Texas are quite different I used to live in Tehran the capital of Iran we get 4 seasons. Um. We get snow. We get fall spring and and summer I was about you know 30 minutes away from a ski resort. Um, and so I would go skiing. Um, whenever I could and then I moved to Texas obviously nowhere to ski no snow. And no 4 seasons. Um, but ah, but that was fun and you know when someone asked me, um, ah in us where I am from of course I’m from Iran but within us I still say I’m from Texas even though I’ve been living in California for the last Ah what 1213 years

Alejandro Cremades: and and I guess for you guys I mean moving to the us is is a really big deal I mean obviously different culture different everything how how big of a culture shock was it first.

Payam Banazadeh: Yeah, so iranian culture and american cultures are actually quite similar in a lot of different ways. Um and and so at a high level. It wasn’t big of a cultural differences. But of course, um, you know, need country different language. Different systems. Um, and I you know I had to get adjusted pretty quickly and um and I think I got adjusted really fast I remember I was going to baseball games. Um I would go ah go hunting. Um, you know I became as. Much of a texan as I as I could within probably the first six months and and I and I really enjoyed my time in Texas it was. It’s a it’s good place and I called it home for a while.

Alejandro Cremades: So and how inspiring do you think it was I’m sure it was big time you know to come to the us obviously super uncertain everything new friendships new everything. But you know also seeing your parents you know, go through that incredible transition because I’m sure that for them probably was. Ah, bigger. You know change right? I mean they lived in family friends you know jobs careers and came here to the us. So I’m sure that seeing that first time for you I’m sure that was very inspiring. So.

Payam Banazadeh: Yeah, for sure you know my my my family actually moved to us long time ago before before I was born before they were married. They moved to us. Um and they came up. They came alone. They came separately. They didn’t know each other they went to school here. And so they went through sort of this immigration process much earlier in life and and they moved here with with absolutely no money. Um, my dad has told me stories of him you know working in restaurants as ah as a dishwasher um to just really, you know. To be able to pay for his education and I think there is a very unique experience when you immigrate to a new country which is everything starts. Um, you know it’s a clean canvas and now you’ve got you’ve got to build new friends. You got to build a new life. Um, you’ve got to build your credibility again from 0 um, you’ve got to build a network um of of people that can that can help you and you helping them and um and because you have so much proving to do um from day one. I think you go into this sort of overdrive mode where um, where you are forced to to work harder and you’re forced to be um, ah, standing out because you have a lot to prove and to show both to yourself as well as you know people around you and I think that is.

Payam Banazadeh: That is a very unique experience that all the immigrants from all the countries go through and um and it really sets them up for for success in in entrepreneurship. Um, and you know we can obviously talk more about that. But. I Certainly felt that way as ah as an immigrant moving here.

Alejandro Cremades: And in your case, How do you get into space because I mean you got into it. You know, pretty pretty early on and and that has been you know the path that you’ve been embarked since.

Payam Banazadeh: Yeah, so I um, you know I liked ah I liked space from from early on and um I think the the first time I remember doing anything so you know sort of space related was in element in middle school. Not elementary. Sorry middle school. And that was through astronomy I was attracted to the sky the night sky and and I got into astronomy and looking through the lens of a telescope and and looking at the stars and and planets is what attracted me to to space initially. Learning about how stars are formed and and how they and how they die and and how planets go around around the sun. Um, and the physics of it was sort of the next step for me and then at some point I realized ah more of an engineer than a scientist. Um, and so I wanted to get into building things and of course because of the attraction to astronomy and space I decided to go into aerospace engineering and tried to build stuff that goes into a space. Um, and so sky was. You know the the stars and the and the night sky was what attracted me initially to space and um and then one 1 thing led into another and now now I have a space company.

Alejandro Cremades: And I mean in your case I mean it’s it’s a pretty interesting transition because as you were saying I mean you go from research to engineering and then from engineering at at 1 point you realize hold on I’m going to put a pause on this and I’m going to go to grad school. So why business school I mean how how do you think? or how do you realize that perhaps business school is you know the next up for you? yeah.

Payam Banazadeh: Yeah, so I so I if we go back in time in 2012 I graduated ah from ut austin with my with my bachelor in aerospace and I immediately applied for grad schools. Um, and I wanted to go get a ph d in aerospace and ah and I I had graduated in in ah in a weird timing I graduated middle of the year um and and so the the grad school applications wouldn’t open up until the next year and so I had like six months to go work somewhere I decided to go to Jpl the Nasa Jet Propulsion lab worked for six months and in the meantime apply for grad schools and I applied for all the grad schools that I wanted to go to the the stanfords and the mit and the Georgia techs and and all of those went to Jpl. And I like my job so much that I decided that I’m not going to go to grad school immediately I’m going to actually stick around for an extra couple years and work in the industry and and at some point after that couple years into it I realized aospace was actually not the thing I wanted to do um. And and the reason for that was it’s just it used to be very slow. You know this is now back in 2012 and in order to do ah to do a project at Nasa um, you’re lucky if your project from the time you start working on it till the time that it actually gets launched in space.

Payam Banazadeh: You’re lucky if it’s 10 years and so if you’re going to work for 30 years you’re going to do maybe 3 projects total and all my friends were in software and they were shipping software. You know every other week things are moving really fast and I decided that I that aospace was a little too slow for me and I felt like. Been there done that I’ve come to Nasa um it was it was ah it was a dream of mine to go work there and now I want to leave and I want to switch my major and want to switch industry and I want to get into software and that’s when I decided to leave Nasa 2 years into it and and come to Stanford. Um, and and do and you know switch to business now I didn’t go to the business school at Stanford I went and I did ah what’s called an engineering management but I took all the business school classes and I and that helped me sort of you know change my career a little bit but of course, um. I I couldn’t leave aerospace I loved it so much and I decided that there is a company that I could build to change some of um you know how things are being done in space and do it faster and so that’s what we do at capella um, and so it’s funny I wanted to leave aospace but then it sort of sucked me back into it. Um, and now I’m pretty deep into aerospace with capella.

Alejandro Cremades: But that is ah a really big shift now because I mean before you were an employee and you didn’t have exposure to to startups right? to the venture world before so as they say you know I ideas ideas they take time to incubate. You know they’re Doorman. We don’t even know they’re there. But essentially you know there are certain events that trigger us or that push us over the edge to really you know take action. So what would you say you know happening in your case by m to really? um, you know, tell yourself hey you know I think that I want to do this I think I want to. Build my own company and this is what I want to do.

Payam Banazadeh: Yeah, it’s so when I when I came to Stanford after Jpo this is in 2014 and and you know at Stanford University it’s everyone is thinking about starting a company and it. Even if you had no idea and you had no desire of wanting to start a company when you come to campus when you go to classes at Stanford you often find people that are sitting right next to you right? behind you right in front of you in class at cafeteria outside you know at a bar. Literally you overhearing people talking about ideas and starting companies and so it’s in a weird way really contagious. Um, and so the idea of well you know if all these people are starting companies. Um I could also think about starting companies is. You know, got into my hit that first year um and it was at the same time there was ah there was a plane that was a malaysian flight image three seventy that went missing. Um, this was a big plan triple 7 and it just wentt missing. Ah you might remember it was all over the news. People were talking about this plane for a very long time. No one could find um, find the plane. No one. No one knew what happened and where exactly this plane went down and I was just sitting there thinking to myself. Holy crap. There’s a triple 7 with two hundred um eighty passengers or so.

Payam Banazadeh: Who’ve just gone missing on this one planet we call home and we can’t find it I mean how crazy is that you know we’re in the you know it’s twenty first century triple 7 goes missing on this one planet we call home and we can’t find it what else goes missing and we don’t even know. Um, and is is there is there values or importance should we know and is there anyone is there anyone looking for these things and that was a journey of probably a couple years um to really go understand what are we doing from space to monitor our planet. There was a ton that we did back then there’s a ton that we do today but there was a massive gap in how we monitor our planet from space and and that’s the gap that capella my company is now filling which is we’re not monitoring our planet um, reliably enough and we’re not doing it. Um. At at a high frequency all the time and so with all the satellites that are going around earth you know some of them are providing communication. Um, um, some of them are providing internet and Tv um, and some of them are taking pictures of our planet. But. Ah, not not a whole lot of them. Especially when we started capella can do imaging of our planet when it’s when it’s cloudy which is you know a lot of the times or um or when it’s nighttime they can’t do imaging at night and that just left the massive gap.

Payam Banazadeh: Um, of observation if if you can’t look at the planet when it’s cloudy and or if it’s nighttime that is like 75% of the time at any given time so most of our planet essentially at any given time was invisible to to ourselves because we just didn’t have an um. You know capability to monitor our planet reliably all the time and so that you know those few things led me to to think that we could start a company and really change that paradigm by launching satellites that allows us to um to do imaging um at all times in all weather conditions and in all, um. All light conditions day nights foggy smoky hazy thunderstorm and then now we’ve got a constellation of more than seven satellites that we’re operating as capella space. Um, and we’re collecting imagery of. Ah, lots of places around our our planet and we’re doing it all the time daytime nighttime and through all the weather so that was sort of the genesis of the idea. Um, and we’ve been doing it for now you know the last seven years or so.

Alejandro Cremades: And for the people that are listening to get it Payam. What what ended up being the business model. How do you guys make money with capella.

Payam Banazadeh: So we’re we’re essentially 4 companies in one. So. The first company is ah it’s a design and manufacturing of satellite companies. So we design and manufacture our own satellites. Ah, we’re headquartered in San Francisco and then we have a pretty big office in Colorado um, and so that’s what that’s what the first company does we build our own satellites then we give those satellites to rocket companies such as spacex to launch them for us. And then once they’re launched we then operate those satellites ourselves. So that’s the second company where we can do satellite operations ourselves. We operate our own satellites and then those satellites are going around earth and our customers are um, requesting images of. Areas that are important for them to them and we collect those imagery for them on their behalf and now we’re a data company and that’s the third company which is now we’re collecting this data and then we’re monetizing and selling that data to our customers and then the fourth company that we’re just starting to to get into is we’re starting to build. Analytics to analyze the data that we’re collecting from our own satellites and be able to sell um information to customers as opposed to just the images and just the data and so as an example when we collect an image over you know a ah port of Singapore.

Payam Banazadeh: Ah, we are then able to detect all the vessels. All the ships that are in that port and Deliver. You know how many ships are in that port to the customer along with the image of that port and we charge those customers Obviously a fee for collecting the imagery and processing it and. And and delivering that information and so um, you know it’s a um, um, yeah, that that’s that’s simply putting. That’s how we make money.

Alejandro Cremades: And now your guys case you guys have raised quite a bit of money. How much capital have you guys raised today.

Payam Banazadeh: We’ve raised more than one hundred and seventy million dollars from venture capital investors. Um, and you know I’ll probably raise additional funding um in in the coming in the coming months as well.

Alejandro Cremades: And in this case I mean how has it been the experience of going from 1 financing to the next in and I’m sure that you’ve had some setbacks. so so what what has been that experience.

Payam Banazadeh: Yeah, so financing a business is is pretty. It’s pretty fascinating I think um, if there is anywhere in the world that that can do this? Um, you know it’s it’s it’s just remarkable how how us and the and and the system here allows it I mean if you think about it my investors who have given me money you know more than $70000000 um to them, especially at the beginning the very first time that I raise capital I was just a random stranger with just an idea and I don’t think there is anywhere in the world where. Ah, random stranger with an idea can show up and convince a bunch of other random strangers with money to give to give that person millions and millions of dollars um to go after an idea. So um, you know the first time I raised money was back in 2016 and we raised a few million dollars then then the next time we raised money was early 2017 and we raised you know I think close to 10 to $15000000 and then from then on every time we raised the next round of financing we raised more Um, and you know the key is making sure that. You are making progress. Um, and you’re under promising and over-delivering every time um to the previous investors who came in right? So you go to an investor you say hey give me $5000000 here’s the vision of where I want to take this company.

Payam Banazadeh: I need 5000000 to take it to this next milestone and um and that’s going to happen in twelve months well if you took the five million bucks you better come back after twelve months and you should have if you’ve exceeded what you promised them. You’re going to do then you’re going to raise another chunk of money to go hit the next milestone and. And so you just have to first have a good vision have a good business idea that actually is sound and makes sense and can make money and then chunk and then split it into smaller um chunks of of milestone and be able to then very coherently. Um. Tell a story of how you’re going to go through these milestones to get to that big vision and be able to build a business and um, of course you know that’s what we’ve done here and you you asked about setbacks. Um, um, you know I think the everyone knows that. When ah when an entrepreneur comes to to their office and they’re going to say um I’m going to do it this way here’s how much it’s going to cost and here’s what I’m going to do it. Everyone knows that that plan is probably going to change in six months um and that’s why early on people are investing in the team. And not necessarily your implementation because the team has to figure out how to move around different obstacles um to figure a new solution to a bunch of new problems that they didn’t know they they were going to have you know a year earlier and so lots of setbacks along the way. Lots of obstacles.

Payam Banazadeh: Um, especially in what we do you know satellites there’s delays and launches. There is um, there is delays from you know some of the suppliers that we use to you know, build our satellites. Um. Launches could blow up and you could literally build this satellite putting on a rocket and the rocket could blow up and your your entire investment goes into flames. So There’s a lot of execution risk in what we do. Um and so I think the key is being able to maneuver through those and and really get to the finish line still still alive. And still marching towards the vision that you’ve set set from the from the very beginning.

Alejandro Cremades: And when it comes to um you know vision and and growth. Um, how do you think that you’ve been able to transform yourself as a leader from you know, a company of 1 to a company now over 200 because the last thing that you want is for the company to outpace you. Right? And you know you see that on many founders that they get stuck and they’re not able to really reinvent themselves as the company goes from 1 lifecycle to the next. So in your case, how were you able to keep the same speed.

Payam Banazadeh: It’s really really difficult I’m not going to sure get coded I think you know Payam of six years ago and Payam of five years ago and piam of yesterday are very different piams different personality. Um. Different skill sets and I think what’s really critical in being able to rement yourself is you have to acknowledge. Um that most of what you’re about to do and and start with this journey of company building. You don’t know. And and you need to surround yourself with people who do know and who can help you and and you also have to recognize that those people um will either also scale with your company or um, the time for them and a place for them might also change depending on. Phase that you’re going through the company. Um, but having people around you that can help you go through these transformations that you can trust and you can rely on um and so therefore you can reinvent yourself to the new challenges that you as the founder and Ceo have to deal with is critical because. Otherwise it’s just not scalable. You’re not going to be able to solve all the problems. You just have to focus change your focus as a Ceo and the type of problems that you want to focus on. Um and so your team becomes I think your secret in superpower in being able to go through these transitions as.

Payam Banazadeh: As smoothly as possible. It’s still going to be really difficult. But that’s that’s your only way through it. Um, if you want to continue to scale.

Alejandro Cremades: And as we’re talking about vision here to dig deep a little bit into that if you were to go to sleep tonight Payam and and you work wait. You wake up in a world where the vision of capel is fully realized what does that world look like.

Payam Banazadeh: Well so we um, we believe in a future where um, there is complete transparency of what’s happening here on earth we want to get to a future where there is no change literally 0 change. That goes unnoticed on planet earth we’re not there Today. We’re nowhere close to it in order to get there. We need to monitor our planet from space which is the piece that we’re working on and we need to be able to do that almost real-time so you need to be able to take a picture. Or frankly video of San Francisco l la washington dcsingapore I mean frankly, all the places that there is there is a change that people care about. Um, you need to be able to take a picture or video in real-time all the time in all conditions from space. Then you need to be able to connect that feed from space to other sensors and other feeds from other places such as terrestrial centers sensors and the ocean sensors in the air and we want to be able to get to a point where we have real-time data from. All over our planet that then we can use to make better decisions and so we want this data to be actionable right? and we want to get to a point where you can say if something happens somewhere in the world. Then you can build a logic around it and say if this happens.

Payam Banazadeh: And by the way we’re automatically monitoring then automatically do this other thing right? So if this then do that type of an algorithm but in a very digital way for our entire planet and so people can use Apis to log into the system and essentially. Use this as a workflow to build additional applications and processes. Ah for both personal use as well as for commercial use and and that’s the future that we’re going to get to It’s just a matter of time and at capella we’re playing a pretty important and critical role in. In executing on that vision. Um, and so I think that’s that’s going to happen and and we’re we’re we’re we’re we’re working really hard every day to to to make it a reality faster.

Alejandro Cremades: And obviously you have now over two hundred people and as we’re thinking about vision I think that it’s also very important to have each and every single one of those 200 people being excited with that vision and being excited too about the future that they’re living into. So how do you go about? you know, making sure that everyone knows in which direction they’re rowing into.

Payam Banazadeh: Was I think it’s really important to um, restating the vision of the company as often as you can I think it’s really important to um, go from the vision which is more of a long-term path for the company to immediate goals. For the next twelve months twenty four months and be able to reiterate that I think it’s also really important to go from those twelve months twenty four months goals and and and and flow that down to this quarter and specifically to individuals in the company and. And this whole thing needs to really tie well together. You know people need to know in the company. The thing that they’re doing today this quarter how does it impact the the short-term goals and then how does it impact the long-term vision of the company and as you scale the company communicating that and reiterating that becomes pretty critical because. And when we’re a company of 20 people. It was easy to to to make sure we’re all online. We’re all doing the same thing for the same you know in the same direction company of 200 people. You just have to reiterate and and communicate effectively as often as you can.

Alejandro Cremades: Now if I was to put you into a time machine and I bring you back in time you know I bring you back in time to that moment where you were coming out of Stanford where you were thinking about you know hey how do I build a company you know to perhaps. Solve this problem of mapping things out and and and finding out where the hell is this plane and things like that imagine if you were able to go back in time and he but and have a chat with that younger Payam and giving that younger Payam. 1 piece of advice for launching a business but would that be and why given what you know now.

Payam Banazadeh: Oh man, that’s a thst. There’s the I can’t it’s hard. It’s going to be hard giving just one advice I mean I ah, it’s I can probably write a book for that Payam and and would have probably 20 different chapters on 20 different ways that. I should have done things differently. Um I think um I think 1 big thing that’s that I’ve realized over the last six and a half years of capella is um there’s a lot of times where um, no one knows any better than you. And and everyone is trying to make guesses and um and and it’s I think it’s really important to realize when you’re in those moments where um, you can’t make a scientific decision. And there’s just no one that knows any better. You just have to make a decision. Everyone you’re in the same boat as everyone else is and everyone else is in the same boat as you are um I think recognizing when you are in that situation versus in situations where um, there is a right answer and someone could. Um, um, you know could tell you exactly what the right answer should be realizing that those 2 are different situations and both of them happen and when you’re in which situation. Um, is going to I think save a lot of time and um and it leads into better decision making.

Payam Banazadeh: I Think early on in my career. Um I was I was either I was I was overdoing um both of them. There were times where um I was making decisions fast because I had to make a decision fast where.

Payam Banazadeh: Maybe the decisions were wrong and I could get to the to ah to a you know objective truth if I consulted with the right people and then there were times where I was trying to find truth by by consulting with as many people as I could but but no one really knew and it was one of these decisions where you just had to. You were trailblazing and you had to make the right decisions based on the information you had and there was no right or wrong answer. Um, and I think it’s really important to realize whenever you’re in those type of situations.

Alejandro Cremades: I Love it So Payam for the people that are listening. What is the best way for them to reach out and say hi.

Payam Banazadeh: Um, follow me on Twitter um, follow me on Linkedin. Those are probably the best ways to reach out I check my Linkedin messages and tweets and we’re hiring. We’re hiring. A lot of people over the next twelve months so um get on the capella website capellaspace dot com and you know we love to we love to love to chat.

Alejandro Cremades: Amazing what Payam it was. It was an honor to have you on. Thank you so so much for taking the time to be with all of us today.

Payam Banazadeh: Thanks, It was great to be with you.

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