Off-Nominal - 103 - Same Ice Cream Man

Episode Date: April 14, 2023

Anthony is joined by Caleb Henry of Quilty Analytics to talk about his recent trip to India for a OneWeb launch, and to talk about all the acquisitions and mergers going on in the satellite communications market right now.TopicsOff-Nominal - YouTubeEpisode 103 - Same Ice Cream Man (with Caleb Henry) - YouTubeCaleb Henry on Twitter: “Here are some of my favorite photos I took from the #OneWebLaunch18mission, plus a small thread of things I learned about GSLV Mk3 and OneWeb. (1/5)”Virgin Orbit seeking expedited bankruptcy sale - SpaceNewsSES confirms Intelsat merger talks - SpaceNewsEutelsat’s board approves OneWeb merger - SpaceNewsFollow CalebCaleb Henry (@CHenry_QA) / TwitterQuilty AnalyticsQuilty SpaceFollow Off-NominalSubscribe to the show! - Off-NominalSupport the show, join the DiscordOff-Nominal (@offnom) / TwitterOff-Nominal (@[e-mail]) - Spacey SpaceFollow JakeWeMartians Podcast - Follow Humanity's Journey to MarsWeMartians Podcast (@We_Martians) | TwitterJake Robins (@JakeOnOrbit) | TwitterJake Robins (@[e-mail]) - Spacey SpaceFollow AnthonyMain Engine Cut OffMain Engine Cut Off (@WeHaveMECO) | TwitterMain Engine Cut Off (@[e-mail]) - Spacey SpaceAnthony Colangelo (@acolangelo) | TwitterAnthony Colangelo (@[e-mail]) - jawns.club 🐘Off-Nominal MerchandiseOff-Nominal Logo TeeWeMartians Shop | MECO Shop

DLS and go for main engine, start. I'm all out of sorts. I'm all out of sorts. Usually Jake does a bunch of this stuff, and I pushed the wrong button first, and everyone could see me before they could hear us. But we're here, we're live. Happy Thursday. Caleb Henry is with me. How you doing, buddy?

Hey, I'm good, man. Good to see you. This was supposed to be the first episode of Off Nominal Live from my couch, but unfortunately the family had a sickness rolling through, so I was not bringing this sickness onto you with our flights to space symposium imminent. You're leaving pretty soon, I think, right? Sunday, yeah. And I appreciate you sparing me because I have just accepted that it's a flip of a coin,

whether or not I'll get sick on the return from Space Symposium. I feel like every conference I go to, there's a very high chance that I'm going to be knocked down for like a couple days afterwards. Yeah, productivity is dropped to zero at that point. So that's going to be an awesome time. We should mention up front. I don't know why it's so bright in my room today. I have to like turn my light down or something.

everything's off. I need Jake back in my life, apparently, to run a successful show. But you are going to be on one of the live shows that I'm doing at Space Symposium, and I am very pumped for it. So Wednesday after noon, now I'm forgetting which particular time slot. You will be at 2.30 local time. You're going to be hanging out with me. We've got Peter Beck of Rocket Lab and Jonathan Bayliff, who's the CFO of Redwire, and we're going to talk about all sorts of financial and business strategy stuff. And I felt completely out of my expertise. so I figured I'd rope you into it. And it's going to be a fun time.

Is there anything in particular you're going to ask either of them that you want to spoil here? No. No, all right, I'm driving. I'll tease out one thing, which I have a hunch I already know the answer to. But I find it amusing that Rocket Lab has expanded so much that Peter Beck has already equipped. They should be called Space Lab. I don't know if Red Wire supplies any rocketry stuff, any avionics or components or anything.

I'm not expecting them to get into the launch business at all, but is there any direction on their side into the launch side of the equation? Good question. Well, I'm going to have a lot of time to find out because I'm going to be basically doing a Celine Dion style residency at their booth for Tuesday and Wednesday. So Managing Cutoff.com slash live. I've got a whole list of shows here from Tuesday afternoon all the way through the off-nominal live show that we'll do next week. I don't know yet if that'll be live stream on this channel, but it will definitely be posted after the fact.

So stay tuned on exactly the logistics there. It will be live streamed to some capacity. I just need to figure that out. So I wanted to plug that up front because that's coming up fast and furious and I'm pumped for it. So come hang out. If you're at the show, I'll be at the Red Wire booth. It's like 1374 or something.

It's right next to the now. acid booth, so come find me there. But, Caleb, did you bring any fun drinks to the show today? I was going to ask you, because you're recovering. I don't know what you got. Oh, I went with a very light on the gin, gin and tonic, because the benefit there is I could put a lot of lime in it, and it feels hydration, feels hydrating, even if it's not. It's questionably hydrating, but I don't know. I felt like this was the easiest thing I could go with. So, I went with that. All right. So I, uh, I didn't really feel like drinking alcohol today. So I grabbed a, uh, I have a ginger beer. Oh yeah, look at that. From, uh, who these guys?

You do love a ginger beer. I do. Yeah. I've seen you drink a couple of ginger beers in my life, I feel like this one has so much ginger. I can't even guarantee that I won't like cough through this episode. Like, it just a new button. Back of the throat and you're like, all right, well, it's there. There's no substitute. Fun fact, if you go to the

World Satellite business, I know we're headed for Colorado, but if you make it out to Paris and you go to that show, the hotel bar, which the conference is small, so a lot of meetings happen in the hotel bar there, they're very diligent about making sure that you

order something while you're there. And in order not be wasted all day at this conference. The thing for me that's easiest to order is a ginger beer. And so this same thing right here costs you 10 euros. No, out of the inflation rate, that's terrible. Yeah, it's probably... Inflation or exchange rate is what I meant. Either one, both are high right now. Just generally infuriating. I think it's the same cost for one of these as it is for almost an entire case. Well, don't think too hard about it. It'll be fine. All right, we've got a lot of things that I would like to talk to you about.

Number one, you made a trip. We know, I think, actually, people on Off Nominal might not know. People on Miko heard you and I take a road trip down to Wallops Island two or three months ago for a rocket lab launch. And that was the first launch that you saw from the United States of America, the country in which you live. All of your other launches have happened. The country in which you live and also has one of the highest rates of launches every year forever. And yet the only ones that you've seen were from all the other launch sites in the world, and you've now continued this love of seeing launches from elsewhere in the world,

and you've made the trip out to the most recent ISRO launch for OneWIP. Yeah. What the hell's going on with that? Tell me how that trip even, like, came about, however much you want to divulge of that. I would love to hear the story of how that went and what the deal was that you found out at there. Yeah, I should say I have no aversion to American launches. They just aren't the ones that I've been invited to as often for whatever reason. So, yeah, I think the first one I did was Karoo in French Guiana.

Next was Bikinor in Kazakhstan and now Sri Harakota in India. And the way that happens, see now I'm going to eat my words. The way that happened is I was invited to a one-we-one. web launch and it was from the cape but I couldn't go. You were like, sorry, I don't do that. Yeah, I was like, I don't do the cape. I don't need a passport. I like to bring as much paperwork as possible when I see rocket launches.

So this driver's license only is not going to work for me. Yeah, I need visas and like multiple security checks and that stuff. I mean, if I don't feel nervous about it, then why am I been there? So I just I couldn't go to the one that was in Florida It overlapsed with something else work related And then kind of the time kept taking by And I realized that if I was going to try and see a one web launch I was running out of launches

And so I reached back out to them and said hey is this Invitation still valid and if so can I use it for the India It's a transferable Yeah is this transferable can I get the credit store credit for this launch. And they said, yes, I needed to get a visa, which actually proved fairly straightforward. And I had the official invitation. And it did come together fairly late.

So I got the visa and got all the approvals like the week before the launch. I think it flew on a Sunday. And I booked my ticket and like six days prior Monday. Sounds cheap. You know it. So I guess this is the launch vehicle that was previously known as the GSLV, but apparently they're rebranding this and it's now just the LVM3. Is that rebranding true or is that just some stuff that I heard on Twitter?

Yeah, so I saw both while I was there. I didn't hear people like say that one had replaced the other in terminology. but you know I think the biggest thing for me was that this was the this was the point at which that rocket GSLV Mark 3 LV M3 is now a commercial vehicle you know before that it was exclusively for Israel missions it was exclusively for science missions or the Indian government and it was a lot of just working on improving the rocket you know it had had a series of kind of troubling issues with the cryogenic upper stage. They just didn't have a high degree of reliability on it.

But they had two very important, you know, successful back-to-back launches with OneWeb and basically proved that it could be used commercially. And so you may have seen, I've actually kept my word and I have been more active on Twitter this year. I feel like that's my outgoing statement on all of these interviews. But I tweeted a little thread of things that I had learned, and I thought it was fun that this went all the way up to Prime Minister Modi to basically clear it and make it okay so that they could use it for a commercial mission. And now there's a strong desire in India to use that rocket for more commercial missions

and actually increase the lift capacity a bit more by a metric ton. which I'm trying to think of a comparable vehicle. You know, it's like 8,000 kilograms to Leo today, so you boost it to 9,000. I want to say, you know, it's still well below, like, Falcon 9 or, you know, your heavy vehicles. But it's not inconsequential. Yeah, it's like a lower, lower level Atlas, or, I mean, I guess to compare

to what we'll go see in the future, neutron, it's right in that range of neutron, almost exactly, I think. Yeah, yeah, that's probably the best thing. comparison. Now your view of the launch looked somewhat far away, but I heard that this was not the closest that you got to the rocket. We got much closer during a no cameras allowed visit to the launch pad. The rocket may have been fueled. That's what I've been told. It may have been fueled. That is or isn't to be definitely inside a mile from this thing. probably inside a kilometer.

You were in the blast range. Yeah, it's definitely a no-smoking environment. So what we need to do, based on your love of international launch sites and your love of being that close to rockets, is we need to hook you up with Paskets, Richard Garriott. I think I'm remembering that it was him who, was it him? No, you know what, who it was? It wasn't him.

It was somebody at NASA Goddard. I'm thinking of Richard Garry, because he was way too close to a story. Soyuz launch, but one of the scientists at NASA Goddard when I went down for a visit down there told me that he went to, I guess it must have been an H2 launch at some point over in Japan and got to push the button. There was a button back in the day, and he was in like the blockhouse that was like 800 meters from the liftoff, which is just like shockingly close. I have to dig that contact info up because you got to go in that little, I don't know,

Maybe they won't let you there now with H3, but that would be the premier experience. I'm going to, like, knead my head out. I'll probably die. Competition for who can get closest to a rocket before a liftoff. That's a thing, man. As Richard Garrett said, you could be inside the kill zone if you know the right person to talk to out in Bikinor. So you apparently didn't get that experience when you were there. I would like, I'm one of those people where, like, when I die, you know, I think it would be nice to have my ashes.

put into space, but you know, this could be, I could just have my ashes under the rocket. In the flame trench? Yeah, just put me in the flame trench and just let it shoot out with the rest. That's a new market for Celestus right there. That's way cheaper, same effects. Quite epic. I mean, I'm game. I'm game for that. Yeah. Your ashes would effectively be in some ocean at some point. So, yeah. That's a good market right there. Having now explored all these different launch sites, do you have any general takeaways or vibes from each different one?

Like, are there particular things that you remember from each of the launch sites you've been to? You know, each one is definitely really special. And now I'm counting four, because like you said, we did the road trip out to Wallops. So, seeing one, and Kazakhstan's kind of in a weird spot, I feel like I want to count that as a separate continent, like not really Asia, very different from India for sure. But, you know, four wildly different locations, wildly different spaceports. I don't know how to succinctly answer that question. You know, there's a, I can say that the one that actually had the most hype was like the energy, like,

at location was the Israel launch, you know, once that was successful. the control room was just flocks of people and lots of young people, you know, people in their 20s and 30s that were there just celebrating, you take pictures together. It reminded me... I love how close this ice cream man is about to get to your window. That's the same ice cream man I have, by the way. And just a quick note, I don't want to blow up his spot. If it's the same guy that has been around for like a decade, he sells more than ice cream, is all I'll say. All right, well, I wouldn't expect anything less than Philly. You probably passed your block like 10, 15 minutes ago.

Now, I'd be very weird. But no, the energy there was honestly, it wasn't at, like, early SpaceX Falcon 9 levels, but it's the closest that I've stood to it. You know, just like people that were really happy for a mission that was really important and were there to celebrate it. So the enthusiasm there was really high, you know, when I was in Bikano. I was very far away from the actual launch site. And so it was like a bunch of us buy a van in the Kazakh desert

with like a guy sitting almost on top of the band so that like his radio could like get the signal and it's just like blasting at us in Russian. He's like, means nominal. That's what you would expect really. If that's what you would imagine for a Russian launch. You know, Kourou is very put together. it's just them kind of fighting back the Amazon

and losing and winning at the same time like it kept it today but it also rains every day so like who do you really keep score yeah they're all magical places I love space ports I think I love any space facility which is not really anybody no not at all

Tanagashima is the one that I'm always I have a hard time rating that not the most beautiful one That is always, every time I see a picture of it, I'm like, wow, those are some good, because like, you know, New Zealand, the Mahia Peninsula where Rock Lab flies, has good cliffs and stuff like that, but Tanigashma also has beaches right there, so it's both, it's both things. It's like beautiful beaches like Canaveral, but cliffs, and I love that. It's always got a good, a good vibe to it, so we'll have to take a trip out there.

You've got to complete the circuit at this point. You're so close at this point. You need to see an orbital launch. I guess like Plezixix is kind of out of the question at this point. point, but. Yeah, I'm counting my one Russian was sufficient. One per country. Yeah, you got to get to Canaveral at some point, but, you know. All right, so that's number one an awesome trip. I'm curious, though, if, were there like, so you were there to, like you said, the one web people have invited you to a launch in the past. So you were there kind of in the one web capacity, but

on the ISRO side of things, I always have a hard time figuring out how they're going to fit into the commercial launch market generally right now. There's a lot of talk about, like, how there's a big undersupply of launch in that range of payloads because Amazon bought all the launch vehicles for Kuiper, and we've seen, like, relativity this week is pivoting on Taryn R to go into that range and do it not as cool of a way as they were going to do previously. Neutron is pushing up into that market. So clearly everyone's bailed on the Falcon 1 competitors and even, like, the one-ton launch vehicles, and they're now setting their eyes on the Falcon 9 class. I don't even understand, though, like, are they going to be able to nail down a bunch of commercial launches?

Do you feel like they're going to hit some sort of sweet spot in the market? Do we have any sense of pricing? Like, what's the deal? You know, it's kind of amusing. Like, what's that old phrase? Everything old is new again. Everybody that was working on a small launch vehicle or a lot of the players that were working on small launch vehicles have now had an epiphany that the right way to do it is exactly the way. it was done before.

Just with like 3D printing or carbon composites or, you know, something, you know, some smaller differentiator. But in terms of like actual size of rocket, it's changed. Yeah, a lot of that, I do feel, really feel like it's the difficulty of chasing a moving target. You know, this is an industry that if you look back, like a lot of the, the inception for small launch for everybody, it's suddenly just like, excuse me, it's the ginger beer. There it is, and I'm only taking like two sips. So it'll be fun.

But the inception for this was around 2017, you know, if you look at, I should have sent you this beforehand. If I knew we were going to go here, but the chart that we have of like the founding dates for like various launch vehicles, it's all right there. Like within like 12 to 18 months of the announcements of Starlink and One Web as constellations, basically everybody said, oh, wow, there's these huge new commercial systems. Let's develop rockets that can launch them. We've got mega constellations. We've also got a lot of cube sets going up from Planet Inspire. Israel was an even bigger deal then.

I would argue they're less of a deal in the launch scene now. because you had Planet that put like, is it, 88 or 104 cubesats on a PSLB, and they didn't have any viable commercial option, none that were really compelling. So you had this exodus of business from the U.S. and Europe looking for cheap ways to space. It made sense until it didn't, until you realized that for mega constellations, the cheapest thing for them was still going to be heavy launch, that their priority was going to be when they can, filling out an entire ring or orbital plane of satellites with a single vehicle, and that the dollar per kilogram tends to work more favorably with big rockets as opposed to small. So it's been challenging. And you

see this gradual metamorphosis into what was there before. What I'm hoping is that The energy that all of these companies carried in, this really strong entrepreneurial energy, this do something different, change the game, push the envelope, that that carries through. Because the senses that I've gotten is before the emergence of all these startups, before SpaceX and a hundred or so others, there was, you know, the power was with the launch providers. So, yes, they came out with new rockets on occasion, but there wasn't like this huge impetus to make something better and to lower the price and to experiment with 3D printing, reusability, new manufacturing techniques. I hope that that ethos stays. And if it does, then that makes me optimistic for a future where the price for launch can continue to come down.

and that can serve as an enabler for lots of new businesses going forward. The weird thing with that is, like, we've heard that for so long that, you know, people are bringing down the price of launch, and it's like the graph is heading in that direction, but it's not as extreme as people were hoping. And that's primarily because, like, you need more than one player doing it before there's actual, like, SpaceX only needs to be $1 cheaper than, for a while at was 5, right? They could have bid every launch $1 cheaper than Atlas 5 and won every single NASA launch and every single Space Force launch and anyone that they're going against. And they only have to stay $1 cheaper than the next cheapest person.

And so, like, that, it's just we've been waiting so long for anyone to put any pressure on that. And for a while, it was like, okay, is Isro going to, what's the new, like the commercial arm? I forget what it's called. New Space India Limited or something. Nizzle to just not differentiate from Nizzle. the other one. You know, it was like that. And then there was talk of, oh, what is H3 in it in the commercial market?

Are there, like, players that are going to come in and have different pricing models or shake things up? And no one's really ever put pressure on Falcon 9 in any way, right? Like, the price has gone up of a Falcon 9 over years. The price of electrons have gone up over the years because everything gets more expensive, obviously. But, like, there is no pressure keeping things down. There's the whole question of, like, the Chinese commercial companies, however heavy of

air quotes you want to put around commercial or private or whatever. Like, you know, was it satellite logic that bought a bunch of launches on Chinese rockets? I forget exactly what their deal was, but... Yeah, they did. Once upon a time. Once on the time. Once on the whole thing, right? Like, it's unclear on how much these markets actually interact on a global scale.

So, like, how much of the pricing from one market does impact the other is very strange. because even then there's going to be stuff like there are certain things that Europe wants to launch on their own rockets and they can't blame them for that but that also like plays with the market economics in a weird way so it just it's so hard to really have you're probably the only person that has data on this stuff by the way so that's why I'm trying to like chip into this

because you've probably seen of you've probably actually seen numbers on certain contracts that most people can't Google if they wanted to but it's just unclear on what any of these things actually have effects on the actual launch price that we're seeing? You know, I agree with everything that you've said here. Yeah, launch prices have gone up, and supply and demand right now is imbalanced. You know, SpaceX is king of the world as far as launch is concerned right now.

So they have the ability to increase their prices. And Rocket Lab and other small launch companies have realized that because the economics of small vehicles are not as compelling as inviagnation, that they need to try and offset that by raising their prices. This is an area that I'm curious about for Israel because the PSLV was historically a very cheap launch vehicle. So if they can carry that same kind of pricing energy into the GSLV, that makes me really wonder if that's going to be like a competitive market, or excuse me, a competitive vehicle on the commercial market.

And, you know, they don't have the same restrictions that, or restrictions that China has. There was a time where, you know, just five years ago or so, like around when Saddle Logic had their deal. When the Long March rockets look very affordable, look reliable, and we're starting to make headway into the commercial sector. And then the general mood changed emanating from the U.S., but really the world over. and they were sort of this binary decision that people had to make where it's like if you choose to launch with a Chinese

rocket, you have now alienated yourself from the U.S. government, which is the world's biggest space customer. So you kind of pick your poison, what are you going to do? But you can't have both. And I'd say most people

realize that now, and I don't follow Chinese launch companies that close closely. It's kind of hard too. It is hard. Yeah. I would like to follow them more closely. I think that would be fun. But I haven't seen a whole lot that goes on there. The most obvious thing is just that all these companies that had contracts or deals with China have backed away from them. So the vast majority, you know, overwhelming majority is Chinese entities launching on Chinese rockets. There's probably a reverse

Biden stuff. Brydenstein. It totally is. We'll have to find them and get them on the show, whoever it is out there doing Chinese astronauts on Chinese rockets from Chinese soil. We'll find them at some point, I'm sure. Before we get into the satellite industry stuff that I want to pick your brain on, you mentioned the last time we chatted, that you were watching the Virgin Orbit bankruptcy court situation over the last week or so. I don't know if there's anything that you want to talk about there. I saw an article, I think Jeff Faust wrote the other day with some of the findings about how quickly Virgin Orbit was trying to go for sale after their SPAC situation.

But maybe it's worth talking about for a few minutes. Sure, yeah. I mean, that detail that you highlighted was the biggest takeaway for me. Because we had been at Quilty, we've been saying before and that if you had a SPAC deal, if you went public through a special purpose acquisition company and you were an immature company, this presented a lot of risk because the forgiveness for missteps was going to be in very short supply. It doesn't mean a company can't make it, but that it's going to be more. much harder to do so. And you look at Virgin Orbit story, they had received a billion of a billion dollars in investment over the course of their life from Virgin Group and from Mubidala out of the UAE. They go public, you know, through this back IPO. They've got something

like 82% redemption rate on their proceeds, which would have been even worse if it weren't for the fact that they found an additional investor to come in and sort of save their offset some of those losses, but they were still in immediate trouble from the time the IPO concluded. Yeah. And in the Fowles article, they said that the potential total was $382 million that they would get out of going spec, but they only got $67.8 million. And then you're saying after that there was an additional investment, one of those like private equity rounds or whatever that happens.

at the same time as this back? Is that what happened? Yeah, because I remember right, they had around $200 million at the end of the IPO process. I forget the exact figure. But it wasn't sufficient for them to do what they had a vision doing. You know, I just did, we did a whole report on OHA. I won't spoil the whole thing here, so I've also been mad at me. But that was one of the top takeaways was certainly this revelation that what had been external speculation about the impact of the spec deal proved to be really true. You know, I would also, you know, so a couple of other reasons why, you know, if they found themselves in hot water, you look at their customer base and they like,

lacked an anchor customer. You know, this is why you see everybody trying the core DOD. That's why SpaceX, as soon as they got, you know, some teeth, they went after the Air Force now Space Force program to get contracts there. You know, they had NASA. You see Rocket Lab doing similar moves, making similar moves, ABL, relativity, Blue Origin. You need either a megaconsolation or a big government customer.

to provide reliability in terms of backlog for a steady launch rate. And they didn't have that. And I think combined with like a series of delays for Launcher 1,

which was supposed to have been operational in 2016, 2016, 2017, and you know, didn't really get to the launch pad until 2020. and wasn't commercially successful until 2021. You know, it was a long gap that I think cost them many of the customers that they did have. And it was just, there were a number of things that just all kind of pinched them at the same time.

And it made it very tough for them as a business. Yeah, you're right about the delay, too, because if they were, I mean, remember, the first Rocket Lab flight was May 2017, I think, off the top of my head. in that time range. So they would have been very quickly the second in that market. By the time they actually got flying though, 2020, 2021, they were now pinched on price from, they were as expensive as the next class up in ABL and relativity and whatnot, Firefly. And they were the same performance as the next class down in Rocket Lab and others in that area. So they had this weird like, okay, they got crunched on both ends and they were marketing responsive as like, oh, we're responsive

space because you can take off from an airport and fly at any orbit. It's like, that only works for so long until you're flying three times a year and you're not that responsive. Like every three months, every four months, is not responsive space, even if you can take off from an airport and launch to space. So it was that weird mix that was evident to me, someone who is very uninformed in terms of people that should be analyzing this stuff, people that have your position, like people in the company that, even from my level, I was like, this doesn't really, I feel like a lot of these things are turning the wrong way here for this company. So, I don't know, I have a general,

I've never been big on the Virgin companies, so no one will be surprised by my bias, but I was always like, I don't know about this. This is, and air launch generally, I'm actually more, I'm more interested in, so I had a Stefan Powell from Dawn Airspace on Miko last week to talk about their, they were starting to do rocket-powered flights with their space plane. I'm more interested in that kind of air launch,

which is a rocket-powered plane that launches an upper stage and then flies back to the launch site. I'm way more interested in that style of air launch. Instead of... No, like, stop it with the 747s and the strata launches and all that kind of stuff. Give me a rocket-powered plane that can go significantly higher and faster

than a regular airplane and then fly back to the launch site. I am here for that all day. But this other style... I don't know. The only thing I thought was Virgin orbit might get bought by like somebody interested in hypersonics, and they would go fully into like the strata launch direction of hypersonics,

market to the other end of the DoD like you mentioned. Because that's one thing I will lay out here to be dissected, and we can come back to this later, is that if you are one of these companies that makes rockets, there are other pieces of the DoD to sell to that don't necessarily need to put things into orbit. And that is a huge market that is currently the realm of people that do not operate in the space industry

and would never sniff at the prices of certain commercial companies. So, I mean, even SpaceX themselves have been pushing, like, we'll do point-to-point starship stuff and we'll sell it to defense logistics agencies. There's so many space-adjacent markets there that in the era of, like, the constellations all being swept up by a few launch vehicles, I wouldn't be shocked to see certain launch companies diversify into in interesting ways. Yeah, and Virgin Orbit was working with the missile defense agency on making Launcher 1, or giving Launcher 1 applicability in hypersonics. They weren't super descript on what exactly that entailed, for obvious reasons. That was a customer line and a line of business that they were pursuing. If you ask me, I feel like it's something that they should have pushed fast.

faster than they did. Because I think they needed to diversify their revenue streams. And, you know, just you look at what they did since going public. And they were really beholden to launching, you know, to getting off the pack or runway. And, you know, their launch rate was not great. You know, they're averaging like two launches a year. I saw them tweet out recently. They're still working on the next rocket.

Maybe they'll launch again this year and whatever new incarnation the company takes, but two flights a year is still really low, especially for a commercial company without any government banking. That's kind of the only way I imagine those vehicles work. If you're not part of a family, like Falcon Heavy being supported by Falcon 9.

And you're not anchored by a government, like the Vega, Vega, Sea with Italy and Europe, or SLS, that's not even really worth bringing up in a commercial discussion. Well, so says you. That won't stop them from trying. Yeah, none of these rockets are really fly without some deep-pocketed customer that says, I want this. So they've got to change and they've got to do something to get their flight rate up.

That either involves getting a lot of customers and getting moving and or diversifying and doing more than launch. Well, I don't know where that's going to end up, but I am shocked. There were way fewer headlines referencing runways than I thought there would be. I thought there would be Virgin orbit runs out of runway, runs off the end of the the runway. I thought there would be a thousand of these, but nobody took the opportunity, so that's a bummer. Got to look for the UK tabloids. I'm sure they did it.

That's probably what it was. You're totally right. We're going to find that, yeah. All right, UK listeners, hit me up. Give me the sun. I want all that. I want all that in our, tweet that at us, so I want to see it. All right, the other thing I need you to help me figure out is what the hell's going on in the satellite com world. Everyone's buying everyone. I've completely lost track. and Intel set, we're fighting about who was going to get money from the FCC, now they're merging. Please help me understand the current state of everything. There's a lot happening.

And I'll trim this. Let me trim it in a little more. Which part should I care about? That's really what I want to know. Should I care about any of this? I mean, it depends on what you care about now. So are you asking as it pertains to launch, as it pertains to building new satellites, as it pertains to just cheaper satellite internet, you know, Yeah, like which part matters to people are into space but aren't like, don't really care about like the financials of any given particular company in SATCOM, but are like a one web customer or a Starlink customer or they're buying, you know, internet from via SAT or something like that today. Like which stuff, which merger matters? Sure. So I'll back up a little bit from that because whenever I see one of these merger headlines today, they almost exclusive. talk about these mergers happening as like a direct response to what Elon Musk is doing or what Amazon is doing. You know, it's like the only way to pitch the story for whatever reason. Come on, you used to work in journalism. You know the reason?

I know the reason. Have you forgotten about clicks, sir? There's only so much pandering. Even the journalists, you don't have to pander. People actually do hate it, believe it. as a reader, journalist-term reader. But no, the story was always much bigger than that. There has been the talk of consolidation in the space industry and in the satellite communications industry has gone on for years. And beforehand, before all the stuff that was happening today,

it used to be an annoyance to the global operators like SCS and IntelSet that you had so many regional operators, operators popping up. Every country wanted to have its own satellite. You know, Laos got its own satellite. Australia has its own satellites. Thailand has its own satellites. You know, Angola, Brazil. You name, you know, lots of countries that you wouldn't expect to have a satellite will have one or two or three. And they're not always driven by actual market forces, which is why they were sometimes nickname Pride Sats because it was just for the pride of the country. You could point at a spot in the sky and be like, that's where it is. It's right there.

Yeah. It's like, you know, we named the satellite after us. It's like the asteroid things, right? Where you can buy, yeah, the original NFTs, really, is what those were. Yeah, yeah, only this one cost 300 million. Hey, man, you were buying the wrong NFTs, is all I'm saying. So that's where it started. And then the conversation sort of changed. I think you had a desire for scale. You know, it was less about this kind of cropping up of little players that were, like, nipping at the heels of the bigger guys.

And a recognition that scale was going to be really advantageous in driving down capacity costs and being a more effective business. But because the space business is hard, it's hard to build up scale. These satellites are expensive. They take a long time to build. Every part of this is slow, getting market access, building out a customer base, getting a network of service providers and all these things. And so scaling through M&A has a lot of appeal. But then you've also got some of the same nationalistic barriers that preclude a lot of that. So the Asia Pacific has a lot of satellite operators that will probably never merge because they're all in different countries.

and their respective governments do not want to see, do not want to have to pay their SATCOM bill to their neighbor. You know, if all of the American, if America had one satellite operator and Canada was like, we're going to buy it, like America would flip out. It would never have it. And it's the same thing for most other countries. So this is a huge barrier.

And you picked a neighbor that has good relations with this. Yeah. You could have picked like, I don't know, someone that we don't get along as well with nearby, you know. I don't even like, we don't have to not get along with them. We just have to like not think of them as like the friendliest nation ever, you know, like, I'm trying to think of who else. If it was like, if it was the reverse of like, so, you know, if in Marsat wanted to buy a sat, I do wonder how that would go down. You know, would the DoD, you know, not be happy because one of their major suppliers would be going overseas, you know, even if it's a five-wise country, you know, God forbid it's not a five-eyes country, you know, if there was like a this entity in, God, now I'm forgetting who isn't five-eyes. Germany's not five. Just pick on Italy.

All right, yeah. Italy's easy. Italy wanted that, yeah, had some rich Italian billionaire and they bought, wanted to buy Intel set. I think that'd be really hard. It'd be really hard pressed to make that happen. But some of those barriers are finally coming down. So you see UtilSat in France buying one web out of the UK. And you see Biasat, buying MRSat, also out of the UK. And now possibly IntelSat and SCS,

which has been rumored for years. Like the big three that were always rumored to be combining in some way, shape, or form. IntelSat, SES, and UtilSat. And they would have talks, they would fall apart, and they would acknowledge they were talking to each other, and then they'd say, no, we're not going to do it. And they would fight in court.

Remember, these two were fighting in court, right? They were. They said they would share the FCC money, and they said they wouldn't share it, and then they were... There was more tabloid stuff. It was like, the court documents had, like, text messages, you know, between executives, and they were talking about, like, late dinners and all this, like, crazy.

this industry has so much drama it's hysteria like if somebody came up to me and was like you would not believe the drama that is in the plumbing industry these two plumbing CEOs were texting each other about this billion dollars just would never cross my mind

but in space in saccom the great way to find out that like an industry niche drama is to do a Google news search type in an industry and then in quotes put apologizes for it's always the best It's always the best niche stuff. That's the way I find it.

I'll try it with plumbing later. Yeah, I got to do it. That's like the next Florida, man. I just haven't even realized. Yeah, I apologize this for it. You can guess what at least half of the stories are about. You could take a wild guess. I'm sure, I'm sure.

So, yeah, why is this happening today? So I'll try to answer this kind of succinctly. For Intel Satin SES and then for the industry broadly. for IntelSat and SES, you know, I think there's three major things that have changed. You know, one is that IntelSat was carrying a huge debt load for many years. They had around $15 to $16 billion of debt from past private equity owners who were not kind to a company in the long term. And I kind of hung around their neck for up until Chapter 11, you know, around COVID and they were able to escape it.

So they are a much better partner today than they could have been before because nobody really wanted to share that massive deadload. It just was not pretty. You know, the second is this battle over the spectrum proceeds. I admittedly have fallen behind on what's happening there. I think they've resolved it. I don't know for sure, but if they have or if they think they can through M&A, you know, it becomes a way for SES to get a hold of the money that they thought belonged to them.

You know, they can bury the hatchet and just get married instead. The third is... I thought they had just resolved it because it was finally that they were actually going to finally get the money. So at this point, they're all like, eh, whatever, we'll get the... We're like a year out from the cash at this point. Like, we'll just take it. Yeah. I mean, it's getting distributed one way or another.

The third is that IntelSat wants a multi-orbit strategy. You've seen them float a medium-earth orbit constellation idea. The only company out there that has a medium-earth orbit network is SES. So if you were looking at a way to skip straight to the good part, without having to build a bunch of satellites and spend all that money and whatnot, they could merge. So still nowhere on it if it'll actually happen. You know, they've acknowledged that they're talking.

They have not come out with an actual merger deal. But I would say the case for a merger between those two is stronger today than it has been probably any point in the past five years, maybe longer. But the industry as a whole, a lot of the M&A talk, I think, pertains to it's both a that we talked about before and also having a multi-orbit strategy. Companies really want to be able to offer your traditional satellite industry is almost entirely in geostationary orbit. They want medium-earth orbit, they want low-earth orbit. And in order to get that, again, a faster way than trying to fund and build your own constellation

is to buy somebody that already has one and scale that way. So I would imagine, you know, I would envision that, you know, OneWeb was once almost bought by IntelSat. You know, I know they had other suitors at one point and they didn't materialize, but these are kind of discussions that happen in the background of the industry on and off all the time. And to see them come to fruition like this isn't wildly surprising because the industry has been soul-searching for the better part of half a decade now, trying to figure out what the best go-forward strategy is.

And, you know, I think it really helps to have the scale to do some of these things. Smaller and medium-sized satellite operators worry about being crowded out by the biggest players. And then even big players worry about being crowded out by billionaire players. So it's very much, I would say, a defensive game right now. And then, so on the other side, UTELSAT and one web got together a couple years ago at this point, maybe a year ago. I forget exactly when that all started going down. So that's UTELSat trying to have a low Earth orbit capability. Do you assume, based on the trajectory, that SCS and IntelSat, if that all goes together, eventually they're going to be on the hunt for somebody that's got low Earth orbit?

satellites? And is that what, is that hypothetically what a, is there another provider that might be like, well, maybe IntelSat won't buy us eventually? Um, that is an interesting question. Um, you know, we've seen, we saw Intel Sat and I think it was 2017, try to merge with One Web. Uh, and they couldn't, again, because of their debt, amongst other things. And then, We saw SES a few years ago make a filing with the FCC for not only more Neo satellites, but a small low Earth orbit network. I think that S.S. is conviction, you know, they have been very bullish on medium Earth orbit as something that gives you most of the latency of Leo. you know, like you go up to geo, it's like a half a second of lag time. You got a medium Earth orbit, it's like 150 milliseconds lag time.

And then Leo is like 50 milliseconds. So you have shed most of it, but you don't have to go for hundreds or thousands of satellites. You can stay in the dozens. And your cost can be much cheaper through that approach. So I would be really surprised to see SES. pursue some sort of Leo service, just because the rationale that they've given and the money that they've put behind their own convictions already. But I would never say never, and this is kind of a cop-out answer, and I don't even work there.

I would never say never just because I've been surprised in the past. But I think for those two, that medium-orth orbit is going to be their area of highest entry. You know, they, neither of them are huge on consumer internet. And so I don't think that they're going to go to Leo because I don't think they're going to try and do a consumer internet experience. Also, the antenna problem has still not been solved outside of vertically integrated companies. So you look at even one web and you look at the money that Intel sat and SES, like those are two players that have actually invested in antenna companies. companies, they put money into Khymeta, they put money into Alkan systems, put money in the Vyazat and various players and said, like, Phaser, help us build an antenna that's going to

unlock the true potential of the satellite industry. And it hasn't been done yet. It hasn't been done outside these vertically integrated guys. So it's hard to build a business case without knowing how you're going to actually reach your customers. I think that lesson has been learned and I hope it's been learned a couple of times now. And it just doesn't make sense to have an incomplete plan where you've got the satellites and you've got the capacity and you've got no way to use it. So until that changes, I would expect more reluctance on the part of those big players. Now I feel like I've caught up.

This is great. I mean, it is, like you're saying, that the 150 milliseconds of latency verse 50, like there are a handful of things where that really matters, and there's a lot of things where it doesn't. So when you're running the numbers, it's like, eh, like, in this day and age of Zoom meetings, it's probably more impactful than it was pre-COVID when it was mostly like, you know, everything but gaming, so Halo player you are, like you would be sad about it, but most people would be fine if their Netflix took another 100 milliseconds, it would be fine.

But it's always interesting to see, like, where is everyone balancing out? What things are they prioritizing over others and how much money does it cost to actually roll things out in that way? It's interesting, so, yeah. Well, all right, we nailed it. I'm curious, before we get out here for the day, so you're going out to the space symposium. Are there particular things that you're going out there to track, or are you going to see certain things? Are you just going to be there and partake in the mayhem? A little of all.

So, Space Symposium is not a conference that I've gone to as religiously as some of the others that are more in the satellite communications world. So I just don't know it as well as the rest. I do know, I think it's the biggest, you know, of all of all. like the satellite shows in D.C. Last month, Euroconsultes small, and then there's kind of various tiny, even more niche shows across the U.S., Europe and Asia. But Space Symposium has like the biggest booths.

You know, the show floor is amazing. You know, it's kind of fun to just walk around like it's Hollywood and just like see all the stuff that people have put out there, you know, get free snacks and whatnot. But I guess one thing that I'm really looking for, out of the show this year is to try and get a pulse on like what's the mood of the industry right now and I feel like I usually try to do that at the satcom shows because that's that's fun and you know it gives you kind of an indication of where people are going to be investing their money and time but for a

broader space you know including cis lunar space and civil space and all of those things more DoD talk I'm really curious what the overall theme is going to be and what the mood of the conference will be. So that's what I'm looking out for. A vibe check. I always love doing a vibe check. This is what I do when I go places. I do the vibe check

and they were, I feel like, pretty right on about astrobotic the last time I did a vibe check. So that's good news. All right, so I'll be looking for your vibe check for the conference. I'm going to be fairly busy, so we'll see. I will have some time to explain. explore the floor, which, yeah, I mean, so when we went to IAC and D.C. that one year, I had more fun just, like, prowling around the booth area and, like, making people talk to me about whatever

they've got going on. And there were some people I ran into that didn't, weren't interested in talking to me at all. And then there's some people that wanted to chat a lot. So I always enjoyed that. So I'm pumped, but it should be a really fun time. Like I said, you'll be live with me Wednesday. We've got a whole host of Miko stuff happening, and then Off Nominal Live. It'll be Wednesday at 3.30 Mountain, so slightly later than our usual slot. It'll be live streamed. I don't know exactly if it'll be on the Off Nominal channel yet, so keep eyes posted on Twitter and stuff. I'll post there, but that'll be Michael Sheets, CNBC will be with me, Lauren Grush of Bloomberg, and Jacqueline Feldcher of payload, assuming that they don't all end up at Bocat.

Chica for the Starship launch, in which case you're coming back on the next episode of Off Nominal. I'll drag you and a couple people from Quilty. We should talk about Quilty Analytics. Can you plug some of the stuff that you've been working on lately and how people can check it out? Sure. Wow. So I don't know if you can do this right now. This is a little bit of an early reveal, but if you type in QuiltySpace.com, you're able to see the new website.

Wow. Look at this. There we go. We're in a little website launch. This is the first one. We've had book announcements and stuff, but we've never had website unveils. Yeah, so here's the new website and the new company name. So we are going to be at Space Symposium, showing people, you're giving people

kind of an under the hood look at some of the new stuff that we've got coming in terms of research that you see May 23. We're going to have a lot more responsive research, I don't know if. Maybe that's like a curse term because like responsive launch didn't go anywhere. Oh, and my other half of my life, responsive web design really worked out. So that's good. But no, we want to be kind of close to the ground with like a lot of the analytical work that we do. And so I'm really excited about some of the new research that we're going to have coming out later this year.

You know, I would say our even our version orbit autopsy piece was like a good indicator of like following current events and trying to give detailed insight from the team here, which has decades of experience just in both M&A and transactional stuff, and then just following the industry from a financial perspective. So it's a lot of experience that we all get in and we've got these email threads inside where we're just debating stuff that's happening in industry. And some of that will get polished and published more regularly. So some cool stuff coming up. Nice. And you have a booth at the show?

We do. We do. I don't know the booth number off the top of my head. We are near, I think we're near the Australians, which means it will probably be in the general vicinity of beer. Hold on. I have the map link. We can look at the map. So there's red thing is red wire all the way over here. I'm going to have to zoom in a little bit. I see, let's see. Hopefully, what if you're like super close? Let's see. scrolling around. Maybe this is a different part. I don't know.

You got to find out the booth number. There might be another room. Yeah. Hmm. Oh, I see Australia. Maybe you're just not on this map yet. We might be too small, which is okay. You might be over here.

Well, there's an empty one right by Australia. Oh, maybe that's us. All right. Well, look near Australia. That's not too far from where I'm hanging out. So you'll have a short walk for the show. but you can get to that link if they are going to update it

and finally put Quilty on the goddamn map like they should be. This is ridiculous. Mainengineconoff.com slash live. I've got the link there. You can check out the thing and check out the whole schedule. So that's what's happening, man.

I appreciate you hanging out. So next week I'll be live at the show and then the week after Jake will finally be back after his hiatus. So we'll see what he comes back with. I don't know what he's discovered. He was cruising across the Atlantic. So he was going full on,

full on, not full on Titanic, hopefully, but emulating. There's any satellite services out there. How is he staying connected? Oh, yeah, we'll have to check. We should tweet at him and see. He probably got something. He's probably got something cooking. That's what I want to know.

Asking the real questions here. All right, Caleb, thank you so much for hanging out. And hopefully next time we can actually do one for my couch like we planned.