Main Engine Cut Off - T+298: Eric Schmidt Takes Over at Relativity, Rocket Lab Plans Mynaric Acquisition

Episode Date: March 14, 2025

Eric Schmidt has taken a majority stake in Relativity and will serve as its CEO, so this is a good time to check in on their plans. Rocket Lab is planning to acquire Mynaric, and I have a theory I felt like I needed to float.This episode of Main Engine Cut Off is brought to you by 32 executive producers—Matt, Donald, Frank, David, Lee, Will and Lars from Agile, Kris, Pat from KC, Joel, Bob, The Astrogators at SEE, Joakim (Jo-Kim), Steve, Josh from Impulse, Tim Dodd (the Everyday Astronaut!), Warren, Better Every Day Studios, Ryan, Heiko, Joonas, Pat, Jan, Fred, Stealth Julian, Theo and Violet, Russell, and four anonymous—and hundreds of supporters.TopicsEric Schmidt Joins Relativity Space as C.E.O. - The New York TimesFormer Google CEO Eric Schmidt is the new leader of Relativity Space - Ars TechnicaRelativity Space makes significant progress on Terran R; flight hardware in production - NASASpaceFlight.comRelativity names Eric Schmidt as CEO as it updates Terran R development - SpaceNewsTo avoid the Panama Canal, Relativity Space is moving some operations to Texas - Ars TechnicaRocket Lab to expand into laser communications with Mynaric acquisition - SpaceNewsThe ShowLike the show? Support the show on Patreon or Substack!Email your thoughts, comments, and questions to [e-mail] @WeHaveMECOFollow @[e-mail] on MastodonListen to MECO HeadlinesListen to Off-NominalJoin the Off-Nominal DiscordSubscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhereSubscribe to the Main Engine Cut Off NewsletterArtwork photo by FireflyWork with me and my design and development agency: Pine Works

Hello and welcome to Main Engine Cutoff. I am Anthony Colangelo and I've got a couple of thoughts to share around the news that came out the last couple of days that Eric Schmidt, the former CEO of Google, executive chairman of Alphabet and other things in the tech industry for decades, really, is, as the rumors were last fall, confirmed to be the one that was injecting a lot of money into relativity space and has now taken over as CEO at the company. Like I said, this was rumored in the fall that there was a you know somebody that was from the tech area tech industry putting a lot of money in relativity

when we've heard that they were having a lot of problems raising more funding to make it all the way to turn our. It was rumored to be a Schmidt it is Schmidt is now take over a CEO and as part of this deal Tim Ellis the founder and CEO of Relativity up to this point is stepping aside, who will remain as co-founder and board member, which means he is effectively ousted as part of this deal, or that was the agreement as part of the deal. Now this is an interesting piece of news for sure.

There's a lot to talk about with it. I don't know that it really changes what I think about Relativity a lot, to be honest. Longtime listeners will remember some of my takes about relativity in the past. I probably will just link them in the show notes here because many of those takes still remain the same. But again, I really don't know

if this changes the outlook overall. It certainly gives them a strong financial backing, right? Eric Schmidt is a multi-billionaire, tens of billions of dollars of net worth to lean on and help funding. Relativity has a ton of investment money into them, right? They had raised, I don't even know the final count, it was something in the order of, what,

one and a half billion dollars or something like that over time. So they had taken a ton of money and burnt through it. There was reports of them having money problems last fall, which led to all this in the first place. So they're a company that has spent a ton of money and done relatively little on the whole achievements front. They built Terran R, Terran 1, I should say, geez.

They built Terran 1 by way of their additive manufacturing tech that they were, you know, so hot about in the early days and, and so hot about it that I asked Tim Ellis on the show, are you an additive manufacturing company who happens to do launch services or are you a launch services company that happens to do that by way of additive manufacturing? It always seemed to me like it was a more of an additive manufacturing company. I'll be there all the sun you know as they got close to launch return one there was reports of the stages and the tanking you know cracking and was not looking like they were gonna actually. Make this a thing that really works on the on the long haul they were able to get turn one off one time They canceled it a month later because it was not good enough.

They had issues with all of the flight hardware for the following flights. So they had gotten themselves in this technical corner that was hard to dig out of, and all of a sudden they were facing, you know, at the same time as everyone in the industry was looking at making their launch vehicles bigger and growing their launch vehicles to compete more with Falcon 9 and compete less on the small launch side of things. They jumped on that trend as well. They announced plans for Terran R in a way that I thought at the time was very critical of. It felt incredibly rushed. It felt half-assed in many ways. And it felt specifically timed to preempt the announcement of Neutron from Rocket Lab. There was rumors that Rocket Lab was about to announce Neutron from Rocket Lab. There was rumors that Rocket Lab

was about to announce Neutron. Relativity, I think that was, they gave the exclusive to Michael Sheets at the time at CNBC. All they had was a couple of talking points and a teaser image of a backlit launch vehicle that didn't look anything like the plans that they eventually announced as Terran R. So it was clear to me that they rushed that announcement out the door they needed it to get out there to get out in front of a story that felt potentially

harmful to them which was the fact that rocket lab was going up and making their bigger launch vehicle. All that just give me a bad taste in my mouth right that the communication strategy all along about relativity and about turn one and what the strategy you know, rug pulling that after one launch and not really talking openly about the challenges that they had at the time. Flipping to Terran R and the initial architecture being like a mini starship and then backing away very quickly from that and it looking like a, you know, a little bit of an older brother to Falcon 9 in terms of its diameters a couple feet bigger. It does, you know, performance- wise kind of about the same as a stock in nine does same architecture of nine engines and one engine on the upper stage. I like legs look pretty similar grid fans hold the whole nine yards. And so that's where they were right they were.

Years away from turn our flying they were burning through money as they develop this new launch vehicle and they try to figure out. They were burning through money as they develop this new launch vehicle and they try to figure out what we're gonna do now that we're not additive Me add it of lead manufacturing the stages. We're going to traditional friction stir welding production for the the tanks There was the whole round of stuff that Eric Berger had last year or yeah It was probably last year that they were buying, you know effectively arian six fairings and tank domes That that was confirmed this week by Relativity's video themselves. They put out about a 45 minute video talking about Terran R's development and showing a lot of the hardware behind the scenes, but you watch it and it's like they're doing a really good job convincing you that

they're committed to this direction and they're talking specifically about these technical changes that they've went on and the journey that they're committed to this direction and they're talking specifically about these technical changes that they've went on and the journey that they've went on from turn one to turn R. But it just feels like, it's a big meh for me. It's like a company that all along painted this vision of totally changing the way we're thinking

about manufacturing, totally changing the way we're thinking about launch services. We're doing a fully reusable vehicle, and they end up just kind of doing a launch vehicle that looks like everyone else's launch vehicles. Now don't get me wrong, we need another one in the industry. We do need another regular launch vehicle to put some pressure on the Falcon 9,

because until then, Falcon 9 pricing is going to be the best pricing, and they have no incentive to change that or lower it until someone starts putting some downer pressure on them. So we do need a Terran R or a Neutron or a New Glenn to come and really challenge the standing of Falcon 9 but right now Starship certainly seems like the next thing that's going to put pricing pressure on Falcon 9 and I wouldn't have bet that a couple years ago. If we believe Rocket Lab, we'll talk about them more in a couple

of minutes, but if we believe Rocket Lab that they are going to get Neutron off the pad this late this year, that's got a shot with the state that Starship's in and the things that they've got to work on the remainder of the year. And Neutron does have a legitimate shot at being that kind of second to the market. But Ter but Terran R just feels like, you know, I don't really know what its purpose in life is. Um, if you are buying these components from the Ariane six production lines and you're doing it in a way that is, you know, resource intensive, but really doesn't change a lot and is skating to where the current industry is and where the current

industry puck is. I don't know. I can't get up about it, you know? And they've got some great people at Relativity that I'm sure are, you know, trying to do the best version of this thing that they know how and take what they've learned at places like SpaceX and clean it up, refine it, make a bigger and better version of it. But I don't, it just, I still am not sure that they've got, you know, they're going to make it financially if Eric Schmidt's backing them like this, but I don't know that they've,

they've got that thing that will put them over the edge compared to the other competitors in the market. They've had a tumultuous past with some launch agreements at the Department of Defense that left a bad taste in many people's mouths over at the DoD. The way that they were set to fly a couple of, the only contracts that we've heard about from Relativity were contracts that they were going to fly on Terran 1 and bailed on after one flight of that vehicle.

If you're a customer, how does that feel? That they had the launch vehicle, right? They weren't, maybe to the customers, they were more open about the problems they were having with the cracking of the tankage and all that, but they had the launch vehicle, they launched it, they canceled it, and then your mission was tossed off or moved to another launch vehicle or renegotiated

or whatever. Those were, again, the only launch contracts, the only legitimate hard data we had on launch contracts with Relativity were the ones that they canceled on Terran 1. That feels bad to me. That feels gross. So maybe I have it out for Relativity.

I don't know. I've never really, there's just certain companies in the industry that I feel like I'm not in sync with, and Relativity is one that I don't feel in sync with. The Virgin companies never felt in sync with. Relativity, don't feel in sync with. I'm sure never felt in sync with, Relativity don't feel in sync with. I'm sure there's others that I'm not thinking of at the moment, but all in all, yeah. I mean, now we don't have to sit in question

if they're going to make it to the launch of Terranar, but we can then say, all right, well, what is this strategy here? How does this change the game? How does this actually drive the cost significantly lower than what we're seeing with Falcon 9? And again, do you have to get significantly lower than it? No. Do you have to get close to it? Yeah. Eric Berger has some sources that say that they're gonna move operations to Texas so that they make

their logistics a little easier. They do have a vehicle that's about five feet bigger than Falcon 9 in diameter so you cannot move it on a highway across the country. So that was going to lead to really intense shipping costs through the Panama Canal. Eric Berger has sources that they're looking at a site in, it was like Baytown, Texas, which is east of Houston. So that would be more, you know, better proximity to their test facilities in mississippi monster in florida logistically that makes a lot of sense so if eric schmidt comes in and is able to inject a personality of questioning some of things that they had landed on and having a financial backlink to change those and make them the right decision that make more sense from a business perspective

them the right decision that make more sense from a business perspective, then I think that's good because the first, you know, large majority of Relativity's life was spent hyping up the tech side of their vision so heavily and attracting so much investment potential for that, but not delivering on the business side. And so if this is the flip, maybe I'm game. Maybe that's the thing that I've been waiting on for relativity. And maybe that's the thing that Eric Schmidt brings. That's the hope, right? I mean, from Eric Schmidt's side, if he wanted a project like this, this was the one to go

out there and grab. If it was in a distressed state last fall, running out of money, and you can be the one that comes in and provides backing and it puts you in the game. So that's good, but yeah, I think the jury's still out for me on how this will all shake out for Relativity. Now I want to talk about a couple of Rocket Lab announcements and just some things that have been tickling my brain. But before I do that, I want to say thank you to everyone who supports Main Engine Cutoff over at

mainenginecutoff.com slash support. There are almost around, or I don't know, I can't do the math anymore because Patreon makes it weird and now there's Substack too, but there's about 900 of your support every single month over there and I'm so thankful for your support including the 32 executive producers who produced this episode of Main Engine Cutoff. Thanks to Matt, Donald, Frank, David, Lee, Will and Lars from Agile, Chris, Pat from KC, Joel, Bob, the Astrogators at SCE, Joe Kim, Steve, Josh from Impulse, Tim Dodd, the Everyday Astronaut, Warren, Better Everyday Studios, Ryan, Heiko, Eunice, Pat, Jan, Fred, Stealth, Julian, Theo and Violet, Russell, and

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mainenginecutoff.com slash support, join up and get access to a whole nother podcast in your life from me. Thank you all so much. All right, the Rocket Lab side of things. They have had a flurry of news lately. We talked about some of it recently on the show where they've announced the recovery vessel

and the new flat-a-light. Just an absolute ton of announcements in the last month or so. Now, the most recent one is that they've announced plans to acquire Minarik, which is a communications terminal supplier that is based in Germany, right? And they are, they were having production and technical issues with their product, this laser communications and optical communications terminal for laser cross-links between satellites.

They had supply chain issues that they credited with this, but they were in a spot where they, you know, they couldn't service debt. They were effectively going into bankruptcy restructuring, and that is where Rocket Lab is scooping up this acquisition from. They are doing it for $75 million, payable in cash or shares. There's an additional $75 million tied to revenue targets beyond that, but you know, my Narik had about $300 million injected in investment. So quite a deal again, rocket lab always find those deals out there, like the way that they got the facilities from the Virgin Orbit collapse. But this deal actually makes a lot of sense for rocket lab rocket lab had a contract with my Narik to supply

optical terminals for their space development agency contract. That's a $515 million prime contract that rocket lab has for 18 satellites supplied to the space development agency as part of their proliferated constellation. And you know, this is just a smart business decision straight up. I think Peter Beck told us on this show, you know, four or five years ago, when they were going through a wave of acquisitions, that this is a thing that they look at of suppliers that they have that are really important and they would like to bring under the Rocket Lab brand and flagship, the flagship brand there at Rocket Lab, Sinclair and Planetary, did the same. I can't remember the solar panel and solar cell provider that they bought out in the US West. Albuquerque? I feel like that was in Albuquerque.

It might have been Arizona. I apologize if I mixed you up, but I'm pretty sure it was the Albuquerque? I feel like that was in Albuquerque. Might have been Arizona. I apologize if I mixed you up, but I'm pretty sure it was the Albuquerque area. So this is a smart decision, just a straight up business decision wise. Now, the reason I'm mentioning this is, number one, Rocket Lab bringing these things in house and rolling them into the stack of spacecraft components

that they already build, which they've been really successful with. If you look at the revenue breakdown of Rocket Lab, spacecraft systems, they're building their own buses, all these things are doing really well and are a major growth area for them that gets them away from relying solely on launch services and in many cases, they're relying more on the other part

of their business than launch services. And launch services is an enabler for the other parts of the business. But the thing that I brought this up for is that in the last couple of press releases from Rocket Lab, they have continued to talk about their own constellation. They don't give us details on what that is, but it is making its presence known in more and more of these press releases. Rocket Lab is not a sloppy communications company.

They are maybe overly tight when it comes to communications. They are extremely well coordinated on that front. It's not some fly-by-night operation over there. They're legit. So the fact that this is making a presence in so many different press releases is just something that keeps catching my eye. We know that they're supplying buses for the Global Star constellation that Global Star is a partnership with Apple for the satellite features that Apple's rolling out into iOS.

And I just bring that up because when Rocket Lab says their own constellation, now they've announced this flatolite that seems to hook in with Neutron, they've always talked about Neutron as a constellation launcher, clearly they see the way SpaceX has been the biggest beneficiary of Falcon 9's productivity is launching their own Starlink Constellation and Rocket Lab sees that as a good business direction. So there's a couple different ways we could take that, right? Is their Constellation going to be something for the defense market that they seem to do

really well in this day and age? So they have a good relationship with defense agencies here in the US and in Five Eyes countries. They could certainly build some sort of defense constellation and offer those services to the DOD that they have a lot of experience. They could do something in that Global Star partnership. Maybe that is the biggest thing from a commercial or like a consumer constellation

is the fact that you need access to Spectrum. It's kind of like real estate business up there. You need access to Spectrum to be able to supply services. If this whole Apple Global Star Rocket Lab partnership thing really starts to come into a league of its own and we get ratcheted up another level, I've always, there's always been something that's tickled my brain, and there was rumors back in the day

that Apple was doing something in the space industry. There was rumors that, you know, there was some Boeing constellation, that maybe Apple was the one behind that. And there was a lot of smoke a couple of years ago in this department. Ended up with a Global Star partnership that was kind of a smaller scale thing than what we were seeing with Starlink or T-Mobile or AST Space Mobile or Link. All these others that were doing direct device, like broadband effectively,

GlobalStar and Apple were doing emergency services at first. Part of me just wonders, the more that I see these names tossed around, if like, is that gonna expand and become something that is a full blown, not necessarily Starlink competitor because I don't think Apple would supply terminals that go onto airplanes and things like that, but Apple's got the cash to fund a project like this.

If Apple's got the cash and Global Star's got the spectrum and Rocket Lab has all the space parts, that makes a lot of sense together. So I wanted to say this here in a way that I can link back to when I forget that I had that take or when I'm when this happens that we can be like, man, he nailed it, or I'll be totally wrong and you can laugh at me in like five years. But there's just something that's tickling my brain in that department. I should have Caleb Henry on the show again to just be like, dude, is this, is this even a thing that could possibly happen? But they rocket lab has been mentioning it so much. They haven't made the announcement yet. We know that they're providing hardware to global star as part of this.

Could that be the area that, that, that goes all out and they are assembling the pieces they need to do that in house. Now they've got their laser cross links that would be part of that. They've got the flat-a-light bus that they're promoting. They've got Neutron coming to the launch pad. In the next two years, let's say, things are moving in the right direction. All it takes is that spectrum and the money. And I see the GlobalStar spectrum and I see the Apple money and I see the rest of the things that Rocket Lab has going.

And that whole stack makes a lot of sense to me. I don't know what to do with it. I don't know if it's legit, but now it's in your brain too. Please hit me up if this feels like a Charlie Day. Just send me an email. Don't write any content in the body of the email. In the subject line, just write Charlie Day pin map conspiracy theory or Rocket Lab Global Star Apple thing is legit just

wanted to take a quick survey and I will report the results to you on my subject line based survey mechanism Anthony at managing cutoff comm hit me up let's see where this is at and I don't know just wanted to put that out there so but all in all I do think the whole my Narc thing is a good idea from rocket lab and they do really well with these kind of acquisitions. So we'll see if it closes out. It's contingent on this whole restructuring process that Mineric's going through. So I guess there's still some possibilities that it would collapse, but it does seem like

a really good idea for them, and it was worth talking about. So that's what I got for you today. Thank you all so much for listening, for your support as always at managercutoff.com slash support. I give out the email, anthion at managercutoff.com. You can find me on the other social networks if you feel like it, and until next time, I'll talk to you soon.