Off-Nominal - 98 - Bing It with ChatGPT

Episode Date: March 10, 2023

Jake and Anthony are joined by Michael Sheetz, space journalist from CNBC, to talk about recent earnings calls, ULA for sale, and other space business!TopicsOff-Nominal - YouTubeEpisode 98 - Bing It with ChatGPT (with Michael Sheetz) - YouTubeSources say prominent US rocket-maker United Launch Alliance is up for sale | Ars TechnicaInvesting in Space newsletter: Launch jittersRocket Lab (RKLB) Q4 2022 earningsVirgin Orbit stock plummets after UK launch failureBlackSky (BKSY) Q4 results: Slowing losses, new military contractFollow MichaelMichael Sheetz (@thesheetztweetz) / TwitterMichael Sheetz Profile - CNBCFollow 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

TLS and go for main engine, start. Happy Thursday, everybody. It's Thursday. Jake, I have a question for you. If you had somebody last minute guest schedule conflict, what type of reporter

would you immediately call to see if they are available within 12 hours? I would call the one who has at least two phones. That's what I would do. Two phones that does live TV hits all the time. That's what I would do.

The most available person who just drops everything, think of the drop of a hat. Well, and importantly, like... This is the kind of pull we have, really, when you get down there. You know, we can just call up CNBZ and get a guy, right? The only reason this worked is that all the earnings calls have already happened. Yes.

It truly is. Well, and so you're running into this fortunate situation where we're in a gap between them, because we have all the, like, ones who are doing kind of, you know, pretty solid city, you know, fairly predictable results right now, who, they all report in the last two. weeks and then we have like the ones who are like we're going to report Q4 earnings during Q2 so there's you know there's a different dynamic right now because we may or may not be out of business by then yeah anyway this is Michael Sheets by the way we didn't do the full intro Jake no we didn't know Michael and just to clear the air Jake does not have a vendetta against Sheets no no no

not shared the airwaves with him previously it took a lot of calls for me to convince Jake to show up today. But he finally relented and he said, you know what? I'll show my face on the same screen as you. You know, it won't be, you know, as angry. Gotta keep your enemies closer. You know how it is, right? Anything for a drink.

Anything for a drink. Speaking of it. I was like pretty, I was pretty sad that I missed actually the last couple episodes with you. So I'm excited to see how those. Yeah. He brought some game today too. He did.

Yeah. This is a Jake one upper. Look at this. The whole scene is set. He's got. drapes? What kind of, what is this? Is this a French 75? What is this? This is a classic gin martini with some dry removed and a lemon twist. I'm not an olive guy. Sorry to the listeners who are all of people. My Italian wife is very much an olive person, so she consumes all the

households all of. So we're taking care of there. Don't worry. The sheet's household is steady as far as olive consumption goes. But yeah, this is a classic gin martini. Generally for something like this, I probably would have gone with like a, you know, Chris by PA, we've got some great local brews here in Brooklyn that I would have picked up. However, with the week that it's been, felt something a little stronger. I like it. I like it. That's good energy to start the show.

I like it. I have a whole box of wine. Anthony has different kind of good energy. I'm going for quantity. It's not even going to tell us like the brand or. Oh, it's both. I think boto box of all the box wine says the best one, especially because they leave their boxes as regular cardboard rather than making it, you know, a nice finish.

Why try to? Like, you already are accepting where you are. Just like one color print on top of cardboard is where I'm at with the boto box. It's actually pretty good, though. So I recommend it. The Cabernet Sauvignon of all of the boxes. That's the good one to go with this. I have something today that looks like Michael's, but is actually like Anthony's.

So this is a fancy looking cocktail. You know, I got a little maraschino in there. It's a nice kind of color. But this is just the juices in the rum I had. So. And what juices in which rum? I think there's like a little bit of a pineapple, coconut. And then I think it's Captain Morgan's white rum.

And so I think I threw some, um, amaretto in it too, just to give it a little bit of a. Wow. So take you on a little switch. Clewik tour. My wife prefers some Blanton's bourbon, so we have regular Blantins and Blanton's gold. But then I am personally a rum drinker myself. So that's some Grand Chairman's Reserve Spiced Rum. That's my favorite drink of choice to have neat. So I'm right there with you on the rum kick, man. Like it's just makes everybody happy. Yours is slightly classier than my Captain Morgan's, though.

Hey, there's some silver in there and underneath the cabinet. Don't worry. Okay, good, good. That stays inside. That one doesn't go out on the nice display that shows and tours like that. All right. Well, where do we start? I like to, when we hurriedly invited Michael on the show, the best part was your email back, which was like, I would love to talk about earnings calls with heavy air quotes around earnings.

What has it been your highlight of the week? I've had a tendency to call them results as opposed to earnings because that's the gist of where we are. I mean, I personally I've kind of been like, I'm leaving the whole like, oh, these are space backs behind idea. And now we're in a mode of like survival. It's like how good are your results?

Like the projections for everyone were all crazy. Everyone got sued by shareholders and for, you know, misleading people. And like, there was just all that spat craziness. But I'm like, we can't keep living in that as if that's the reality of today. And for most of these companies, it's now about executing and about showing, you know, okay, we can actually, you know, drive revenue. We can decrease our quarterly earnings. You know, our quarterly losses start to, you know, have an edge towards profitability. Oh, here's the different markets. We're delving into. Here's development's going, here's the funds that we can actually raise now in the marketplace.

So that's the story I'm trying to tell as much as everything. So as much as the earnings thing is kind of a joke, it's like, yeah, let's get to like the earnings, please. And they're a ways off. I mean, there's also like, yeah, the survival. Yeah, it's really interesting because there's different classes. There's like the rocket labs that we all feel pretty good about. And it's the most interesting note there is like launch,

everything else and what's making money. And then there's the other end, which is the Virgin Orbits that are like teetering on the edge. And then there's Intuitive Machines, which is essentially GameStop in the last month. Whatever happened with that is bizarre. I looked into that one a little bit. And I mean, I got a comment from the company when I saw the stock was at like $120 or something dollars a share. And, you know, I wish I had a great answer for you guys. I would have reported if I had a great answer on what happened there.

It's down back towards where they debuted at, and I think that's about probably right for the stock and moving forward. People need to get a sense of how much they can actually deliver moving forward, and let them settle into it. Being a public company is not an easy change. It's a really big transition. Changes so much, even just for your own employees as a company. So yeah, that's, I'm glad to see it settled down a little bit.

I assume it like caught on TikTok or something. I don't know. I mean, I looked around at like discords. I looked around it like, is there a cash tag that they're like interpreting it as a crypto coin on accident? Like I looked into like anything. Is there someone who's like buying and arbitrage trading this like really strongly? I didn't find a definitive answer. I think there probably is a good and maybe very fascinating answer behind it, but like, I don't have one for you guys today.

I love that crypto was high up your list of like, this has to be a crypto thing. This is exactly what happens with crypto, though. This is precisely, like a bunch of people will trigger a bunch of buys of price strikes, and then the first people that started to bail out and they take the money. And it's like it's this awful cycle that they do sometimes. Right. That's kind of what I was worried about. I was like, is this, that scenario happening?

And maybe it was, but I can't tell you. Pump and dump. That's what they call it. God. Please, let's not pump and dump space docs, guys. I hadn't like enough of that. Yeah, well, I mean, I know a few nooks and crannies of the space community that would be into that kind of thing. So I wouldn't be super surprised if there was some weird subsect of space fans

that were like, we can really drive this. And yeah, I don't know. Okay. The Intuitive Machines thing in particular, though, is like another. level, just to close out the SPAC thread here. Yeah. You know, the original SPAC heyday, we all were like, I don't know. Like, this company's not doing anything yet.

And no one has any idea when, like, you know, Astra, notably a good example, Virgin Orbit, notably a good example, where it seemed like the actual moneymaking part of this, the high point, the revenue growth was like way off in the distance. And then they took it to Moonlanders, which is like, that's, there's maybe one or two a year that are going to fly and they're maybe going to not lose a ton of money on the initial missions and it's is there any explainable reasoning here in your eyes as to as to anything other than they were out of all other fundraising mechanisms and this was the last one left not to be harsh but like is there any other legitimate answer to insuda machines go in spec i think that one is the

fundraising thing makes the most sense. It not only gets you funds now and like helps, you know, the folks on the inside currently, but also gives you some more flexibility moving forward. I was surprised, to be honest. I mean, I wrote about this in one of my first newsletters last year about like just kind of the questions that were being asked. But I think on the flip side of like the question I have for, you know, intuitive machines future is can you find more customers than NASA for this as a solid revenue stream. If you look at their pitch decks and even their more recent presentations and stuff, like it's NASA all over the place.

And granted, like, yeah, the people and a lot of the know-how come from a NASA background. So, of course, they understand that more than anything else. But I think if you really want this to be like a successful stock and you have to be delivering not just one customer's payloads to the moon, but a variety of customers' payloads and you need to be doing it frequently. And that's, I think it's still an open question until they actually fly a single mission. And so, you know, that's, that juries completely out there. Yeah.

I mean, the, the Moonlander one is even just like the extreme example of, of why I thought the rockets were a weird idea to SPAC. Like, you know, like, when Astra was launching stuff after they had gone SPAC and it was like the price, like you could just see the price. Oh my gosh. Literally go up with altitude on the rocket. Like it was like a linear and then remember it back down again. And, you know, I'm thinking like, you really just, it seems so strange to have a public stock on something where the revenue points are so acute, you know, like, it's like, loop, you get some money on this, like, on this week and then you go, like, you got to live off that for a quarter. And then like, okay, and some other money comes in. And the moon lander's like, it's even worse than that. Like, you know, intuitive the machine, we're going to fly like twice a year is like your plan right now. You're not going to achieve that for a while. It's tough. I don't remember. I can't quite.

figured out. I would say that if you guys wanted to like really dive into the historical parallels of like I'm not it's not space is not niche but like the idea of volatility or surrounding a development technology and from a stock's perspective go look back at like the biotech stocks and even to this day you know how biotech stocks trade around the results and like approvals of their drugs and pharmaceuticals and everything else. Like you're talking about a stock that would be one day, $2 and the next day, $45 based off of like one lab result. And so there's that similar sense of really lumpy volatility where it's make or break and you've got to show that you can actually pull this thing off. I think one of the most fascinating things, and I think I mentioned it to Anthony last time I

was on, was like the trend I noticed, and this wasn't like a absolute trend or anything like that but the trend of going into a launch you'd see a launch company stock climb like pretty steadily in the days coming up and then even if it was a success it would sell off pretty hard the day after and it I just kept thinking it was like the old adage in the the wall street world which is that you buy the rumor and then you sell the news so once the announcements out there once the rocket's off the pad you you sell like it's okay cool that that money has realized like cool we're moving and that was the high point. So I think that was shown by the time Virgin orbit put a rocket in Times Square wherever it was.

I forget if it was by the Bull statue or something in the financial district where it was like the stock was higher then than it was after the launch two days later or whatever. So I was there in Times Square for that actually and talking with them. The work they had to do to get a even a like model rocket into Times Square is just insane. Like props to them were pulling off it. It's a very virgin group thing to do. to pull off a marketing piece like that. But I, you know, it was so funny because it was like gently snowing. You have this very picturesque time square.

And then flat in the middle of it is just a rocket sitting there. And it was kind of bizarre. But like it clearly worked to get people's attention of like, hey, look, we're here. This is our company. This is what we're doing. Yeah, didn't work long run though. Well, I mean, that's just the, the, that needy. of the market and the nature of like sentimentality and speculation around these things.

Yeah. I think that's the thing that maybe people in the industry, you always have to kind of be reminded of is that the market is a very emotional, like we think we can get more money for this at some point or not. And people batting against that in every possible way or for it. So it's incredibly emotional. It can be very speculative. And the disconnect, especially in the last few years, and my broader CNBC colleagues talked about is the disconnect between reality and like what's happening and say the economy versus what then happens on the stock market.

That can just be a cruel reality for some companies that get caught in the crossfire. How does it for, you know, intuitive machines maybe a weird example because the amount of money that they actually raised out of this doesn't seem like it's even close to what they were hoping or aiming for when they originally announced. But for companies like that, once they go public, how does that impact their actual workflow, like on a day-to-day level, other than people just checking the stocks at more often? You know, once they get that fundraising happening, what is the actual changes that they see internally about the way they work now that they're a public company? I would say the two ones are the like accounting processes and needing to get everything on board with, like, proper regulatory procedures and making sure. that you're delivering your quarterly results on time and, you know, making announcements and talking about things and, like, making the right filings of the right times. And, like, from just a, like, back end of the business and telling people at the right,

you know, in the right way as you're supposed to, that's a huge change. That just affects so much of what you do. It affects how you can tell your employees about things and what you're working on and when they're going to make announcements and that changes things. The other one is that like the whole world gets to see every three months how you're doing. And it's and even employees who maybe might have like been able to guess internally like, oh, like this business line isn't doing as well or that one's doing better. Like no, you can just see it in the filings and you can match your reality of what you're

experiencing with what the company is announcing. And so that's that's a huge change then because you can't be telling. your company one thing internally and then going and telling the market something else externally, you get caught out by that. And we've seen people get caught out by that time and time again, not in the space world, but like in the broader industry. So it's a different harsh day-to-day reality that you live in because everything's so much more underneath a public microscope. I suppose it's a lot better for someone like you, though, like to have all these new space companies like exposing their guts at this really critical phase, right?

Because like we never really got to, you know, we never got to see what this looked like for SpaceX or Blue Origin or, relativity. Yeah, like there's a lot of like, you know, mainstay companies now that didn't have that kind of exposure. And so we have to kind of make guesses as to, you know, how they were doing and why they were doing well or why they weren't doing well or whatever. So this must be just like a great for you.

This is a SPAC trend. Everyone goes public trend. and now Michael's got job security. Yeah, I got to admit that it makes my life much more interesting, and I think gives me a lot more, like you said, look into what they're doing. I'll give you a very concrete example of that, which is that if I'm interviewing a private company and I ask them anything related to their financials,

how's your revenue, you know, when do you think you can be profitable, like even generic broad questions like that, right? They never have to answer me. there's no if they're not going to be profitable for seven years they can be like yeah we're not going to answer space is going to be a one trillion dollar industry and then by 2030 you can take that up with Bank of America or somebody else I'm that yeah but like no I uh the the real like juicy tidbit of it all is the disclosure of it is the fact that you know I've got 10k filings on my laptop open right

now from different companies which are the big annual reports where they it's like so in depth it's hundreds of pages typically and it tells you even more than what like a quarter report might and those ones like give me access to information and little stuff that maybe I wouldn't report on but help me understand a little bit more about the company in ways that like they never would have had to told me before and then if I'd go in an interview an executive after one of their calls, like I can be very pointed about like, hey, your quarterly, you know, loss was bigger in Q4 than Q3. Why was that? Yeah. Yeah, yeah, yeah. Like, they have an incentive to answer because the numbers are there out in public. So if they don't answer it, it can

look a lot worse. So it's very much, it changes the perception. It changes the dialogue. And I, and I'm always, like any transparency, more transparency is always better for my job as a reporter. I know the 10Ks are really fun because they have that big section rate at the beginning that's like risks, you know, where they have to like, they're like obliged to like say every possible thing that could go wrong with their business. Wayward boats. Exactly. I know I read a bandenberg fog. A cumulative cloud rule. Yeah.

I remember back when I was like... My favorite ones are old... Oh, go ahead. I was going to say back, I was looking... I dabble in stocks a while ago. I don't know, a few years ago once. And... I told in stocks a while ago.

I did. I did. I don't buy individual stocks anymore. But anyway, when I did, I remember reading a few of those. And I remember looking at Netflix at one point. I'm like, should I buy Netflix? And I opened up that 10K. And their risk thing was like 17 pages.

And like, it's like one paragraph. And it's just like, we might... lose access to this money. We might not have this thing. The internet might stop working. But then, you know, I just like, like just crazy stuff they have to put on there just as to be, you know, uh, smart about it. People might go outside. People might start exercising again. We could lose all of our distributors and have no content. Like it's just like crazy stuff like that. So I imagine the space ones must be so similar. I haven't read to them recently,

but like I'm just like the rocket might blow up. The lander might crash. We might not have any revenue for three years. Like, you know. Yeah. Customers may lose like confidence. and our ability to deliver on time. And like, those are all the benign ones. And like the ones that are always interesting are the like, what do you call, acts of God, like risks of like, a hurricane could destroy our launch facility

and it doesn't exist anymore. And you're like, what? Excuse me? And next one, we could destroy our launch facility and it might not exist anymore. It's like this or in different orders. An ABL story. Yeah.

Antares would be a good one too. Oh, Antares. Oh, dear. Classic. Yeah, yeah. All right. Okay. The other aspect of the companies that are currently public is, you know,

we all like to get on the launch side because it's easy to point at Astra and version orbit and whatnot. But planet, black sky, I'm probably forgetting the other ones that went public during the mayhem, but there's a list of them. Yeah. Their stocks are not exactly taken off to any extreme degree either, right? They're all sitting three, four bucks or whatever. Now, I'm not an analyst in this way, but I look at some of those companies and I'm like,

that certainly has a lot more of like fundamental value than launch has proven thus far in that there is a pretty active market for imagery. It's even getting more so as we watch like the war in Ukraine prove out the worth of planet imagery tracking convoys, you know, is there, are those in a spot that you feel like they'll eventually turn the corner and start really being legitimate revenue coming in there? Or do they feel like they're still, they just feel like a different class to me than the launch startups felt when they went public? I think it's fair to classify them in a different category.

I think it's interesting that the launch startups, I mean, like Rocket Lab, for example, the space Systems Division ever since they've gone public has outclass launch in revenue. They're not a rocket company anymore. Yeah. I mean, we call a rocket lab. Significant digit or something. Right. It's spacecraft lab with a launch vehicle.

And like that, it's a great benefit for them, as we've seen with SpaceX and like what happens when you drive cost down by launching your own satellites. It helps sell it a lot. And you don't lose access to space because, say, a foreign country invades another foreign country. But I think the interesting dilemma that I'm kind of watching to see if it happens is the fact that like, you know, Spire just reported this last week. They're public. They're trading, you know, well below their debut price. And they just reported they're polling, you know, their subscription revenue, what they call annual recurring revenue hit $100 million.

I mean, like, that's not inconsequential. Now, granted, how much can they build off of that? How much can they grow that market share? How much can they continue to decrease their cash burn each quarter? All those are open questions and it's something that they're clearly working on. But I talked to the CFO Planet while she was here in New York in January. Had a great conversation about this exact topic. And she was talking about how for them, investor education has been one of the hardest parts about like, hey, look, like,

When our revenue goes up, and the fact that we're not having to launch it as many more satellites means that our margins are improving on the data analytics that we provide and the services we provide. And it's fascinating to hear like the reason behind a lot of why their investor education was becoming more easy was because their imagery was being utilized in Ukraine in a lot of different ways. And so more investors were coming across planet imagery and saying like, oh, hey, you know, interesting like let's learn about how other ways we can leverage this. And so I think one of the other questions about companies where I'm like, okay, you have a stronger footing, but you're still trading at a low price, is that like,

can you get your message through to investors? Do people start listening to what you're having to say and seeing the potential? And does really at the end of the day right now, the risk appetite swing back around in the broader market sense where people go, okay, there are space companies out there. they're, you know, risky in each in their own way. And so understanding, first taking the time to understand how the risks that face like Astra are different than the risks that face planet. And then also on top of that, going and being like, oh, hey, this company has pulling

more than $100 million in revenue a year and stuff like that, right? Like trying to get deeper into why they see value there. So that being more widespread, I think is a. slow burn idea. And I'm curious to see if there's like an inflection, a momentum point where more and more investors come to the table and are like, oh yeah, like, we want to do space stocks again because we were super jazzed about it a couple of years ago. And now we're really trying to like build on it.

Yeah. I think I find interesting about those companies is that their fundamental product is something that retains value. Like the immediacy of their imagery is certainly valuable. but now that they have like it's not like they're deleting their images from four years ago like they have this huge archive now of historical imagery and that that gets its own value in another way when people want to look at trends over time and and look at like you know climate analytics and there's so many things that become valuable once you have 10 years of data and 20

years of data and and so the stuff they're doing now they're making money off because it's immediate and then the stuff that they're gathering over all that time eventually will retain value as well So it just feels like one of those instances that the core product is valuable and hard to replicate and launch is just a really not good money-making commodity. It's a commodity, yeah. It's tough. But I understand that it takes time for people to realize that value because most of us are just like, well, I've used Google Earth before.

Like, why would I need other pictures of Earth? Like, they all exist. They're on Google Earth. Yeah. When Planet releases their 25 anniversary, like look at, look at, you know, how Washington, D.C. has grown over 25 years. And they're one of those like time lapse things, you know, that's going to be like wild. We're going to have products like that.

They can do that anywhere in the world. Like they'll be able to just like show you like, hey, you want to see what your family farmers look like for the last hundred years? Let's go. Bam, there you go. Sell that for a hundred bucks for your grandpa's memento or something. And like, there's retail products they can do there. It's cool stuff.

Yeah. It definitely like adds different, you know, different kinds of values. over time. It's like compounding value. It's pretty good. Okay, now I got to buy planet stocks. Thank you. He's back into stocks, baby. I just talked myself into buying more planet stocks. Hey, I'll just say, Jake, that I don't own individual stocks either, as you might guess. Yeah, I imagine that would not be in your interest. A different reason than Jake was just not good at it, though. If Jake was good at it, he'd still own individual stocks. Jury's out, I could still also not be good at it. So I'm not putting any shade on Jake here.

I've decided that market index fund does really well for me, and I'm really happy with that one. Yeah, absolutely. Yeah, I think that's the fundamental question. And then also is that customer acquisition cost is a really challenging part of those other company's strategies. And people love to talk about, like, oh, they're going to build this constellation of X number of satellites going to cost how much per satellite.

blah, like, you know, that's like the really nitty gritty, like, hard thing that you can quantify pretty easily based off of like how much it costs to build a satellite and a sensor and blah, blah, blah, and like buy a launch. But like how much it takes money wise to like hire a salesperson to sell into Brazil and how much time it takes to acquire the customers in Brazil and how much the people in Brazil are willing to pay for, you know, agricultural, you know, monitoring services or whatever, right? Like those. questions and you start getting into them are much harder and the little like the longer burn behind a lot of those businesses that is a really hard question and i do not envy like their um

you know execution task in front of them there yeah well should we talk about the sexy as fire and you know rocket engines so let's go right back there so eric burger had an interesting story last week uh i should pull it up that people are starting to talk about ULA being, I almost said Ayrjet Rocketdyn because that was the last time that this happened, but that ULA is back on the market, as it were. And we have not kicked this story around yet, Jake. No, we haven't. I do need to pull up while you give me your take on this, Jake, I'm going to pull up your excellent AI work that you did on this story as well. I don't know.

So give me a minute on that. Okay, okay, yeah. What do you make of this, Jake? Okay, well, I want to just add a disclaimer that my AI work does not reflect my actual prediction on what will happen. I just want to level set exactly what we're talking about there. But hey, you never know. I could be wrong. I've been wrong a lot.

So, no, I don't know. It's super interesting. So the story is really interesting to me because, though, you know, like immediately people were just like, who's buying ULA? Like, who went to ULA? But if you go to the story, of course, it's like, if they're shocked. it around. They're looking for buyers. They're like presenting this as an offer. So like it's for sales, not being bought. And I think that like regardless of who buys it, I think there's a big story just behind that, right? Like because ULA is a partnership. It's Boeing. It's Lockheed Martin,

50-50. And I, you know, they both have to agree to sell it. So that means that before, at least one of them didn't agree and now both of them agree and finding out which one said yes Or one agreed and the other one said, yes, we'll buy that in half too. Or that as well, right? So there's a really interesting dynamic there to unpack that I'm really interested to see. Real quick. I also love this photo of Tori. If you love this photo, just you wait.

So this is the classic photo of Tori Bruno having purchased all the BE4s, and this was in 2014. And Jake's taken it and just rift on it a little bit and turned them into Batman and Robin. This is just an incredible piece of work, Jake. I would like to, for one minute, unpack the process that you went through to get to this image. Take five minutes. Come on. First of all, what the hell? Second of all, how did you do it?

You know what? I'm not like, I'm not an AI guy. I don't really know this stuff. But I think I just looked up, is it stable diffusion? Is that a thing? Okay. This is a stable diffusion situation? It was like, I don't know.

I just played around with the prompts until I found when I liked. You know, like whatever it else does in AI. They just click it until something funny happens and then they treat about it. That's the value of AI. You know, like it's, it's for amusement. Yeah, that's the smart side of this. So, yeah. When you said AI for the first time, I thought you meant you put Eric's story through chat,

GBT and then came up with like the fifth iteration, like kind of like putting something through Google Translate like five times until it doesn't make sense anymore. The whisper down the lane mechanism. That's what I was expecting was like some sort of, like, the fifth iteration. like wild interpretation of like who's going to buy ULA. Yeah. But this is way better. This is so good. Yeah.

So all the podcast listeners, you're missing out, you need to come over to YouTube and look at that one because it's a really good picture. Yeah. There is. That's, wow, that's a gem. So anyway,

I may come back to you for licensing for that photo. If I can figure out who's going to buy it. You can have, you know, I didn't make it. AI made it. well we'll see what the Supreme Court says Jake yeah yeah that's good this will be a state of New York for Michael Sheets and Jake Robbins

they'll be like you two will be in a Supreme Court case over this I've been I've been to New York Supreme Court it's actually pretty nice it's actually pretty nice good to know did you think it was like kind of shit before some courtrooms aren't as nice as everyone so I mean like I'm just trying to reassure Jake and just be like, we're going to have a good time. It'll be totally a legit place to hang out, Jake. Anyway, Michael, who the hell's buying ULA? And also, how does this intersect things that you analyze?

Because many of the buyers that I have in mind are public companies. Amazon, Lockheed Martin, Northrop Grumman, I think L3 is public, right? They better be. They're huge. Pretty much all of the options that are out there, except Blue Origin, which is the least likely option of all time, in my opinion, are public. So will people care about this outside of our little nerds fear, or is this going to be like a non-story? So first of all, I can tell you that by the reaction to Eric's story, which is a great scoop, like, you know, that's a great story to get.

And I was incredibly jealous when I saw him publish it because I was like, damn, like, I've been calling the wrong people this last week. But, no, like, I think it matters clearly beyond. like just the industry because people who even just pay attention to like aerospace and defense like are interested in the outcome of you know this potential sale so that's being said I think that's the thing that I've been pursuing since the story dropped is okay not just you know who potential buyers are but like who's seriously considering it and I think that's the thing that I if you look at like a sale process like this, who received those pitches from Morgan Stanley and Bain and was like, oh, okay, yeah,

let's have a follow-up meeting. And so that's what I want to try to figure out is, you know, not just who it's been sent to, because we can guess the likely suspects of, you know, who out there might be, like talking about it. I think there's an important thing to consider as well on the regulatory side of things too, which is that the FTC hasn't taken super kindly to like primes buying stuff like this as we saw with lock eat an aerojet and why L3 is buying arrowjet right and so and that that deal's not even closed yet either like ostensibly it looks like it's moving along well but maybe it gets runs into some regulatory hurdles we'll we'll see um so I think like all those are good questions to be asking I am curious because of advent

making it to deal with maxar as a private equity shop to come in and be like hey we think that this is a valuable space asset, one, that two, our capital and our, you know, overview can really bring more value out of in the private world. I think that's a really fascinating potential for like maybe private equity, you know, shops are sniffing around at this. One thing that's really fascinating, I think, is also the timing of this because, you know, Tori's tweeting pictures right now of Vulcan gleaming red and beautiful and proud, you know, And the development for that rocket is largely paid for at this point. And I've toured ULA's facilities down at the Cape.

I'm driven by them down in Alabama and everything like that. It's an incredibly impressive infrastructure that's very, very valuable. So there's a number of thank you for the tweet photo. I mean, like, come on, crystal clear, skies. Listen, I'm never going to deny an opportunity to put the evil-conneval rocket on the screen. This thing is ridiculous. It's so cool. paint job. It's like, I love it. I think one of his tweets was like, isn't this the most

beautiful, isn't this the prettiest rocket I've ever seen? I'm like, I don't know, man, that's a pretty, that's a ridiculous paint job. Oh, man. So I'm just saying that like, even beyond like, oh, the question of Boeing and Lockhe coming to the table and being like, here's the price we'll sell our stakes in the ULA for. And whether or not one of the other might be the ones that buys them I think the question of like how valuable is everything that ULA has right now is a great one. I mean, you're talking about a company that has, you know, B-4s are showing up at the doorstep, Vulcans out there ready to roll, and you've got the biggest commercial launch deal in history already signed and done with Amazon.

So it's a fascinating, you know, prospect. And you're putting in a bid at the end of this year for the next round of National Security Space launch. stuff as well. So, yeah. Like before that closes, that'll probably, they'll have put a bit in for that likely winning a good portion of it. Right. And so I think that that's the thing I'm chasing. I'll be, I'll be very frank of like trying to figure out not just who's being like told about this deal and being like, hey, like check it out, but also who's actually seriously considering it. Um, because that's, I mean, and, and how much they'd be willing to pay? Like, how much is Bill and Lockheed willing to walk away from something that,

from my perspective, maybe, you know, both of them would be, would rather own it internally and be like, this is all of our, you know, this is my baby, not our joint custody baby. But like, we like, we can clearly look at ULA and where they are and what Tori's done in development and say like, yeah, there's quite a lot of value here. my order is this is the order that makes most sense to me and I wish it I my personal wish is that it would go in the opposite order would be Lockheed Martin makes the most sense to me private equity makes the second most sense and then Amazon makes the most tactical sense but is unlikely but it's the one I put a bet on in the Discord Jake so don't don't be don't be harsion on that

because I wish it was the opposite order. I got to talk to you guys about that because I have never really leveraged discord for my reporting before, which, granted, I don't know if the off-nominal discord is probably the best place for productive reporting. You would be shocked. You have some great memes. Great memes in there. We have great memes and shockingly good people.

Most of what reporting is. Yeah, I mean, you would have had the Batman and Robin picture before this podcast. Like days ago, days ago. Oh, come on. These are scoops I got to get. Jake's AI work is up to be had. Yeah. Oh, man.

No, I just had an amazing vision of, you know, like the Amazon Prime Airplanes, but Vulcan with that livery, could you quick Photoshop like a Prime Air livery on the Vulcan? That's a believable thing. I've seen, I've seen trucks. I've seen the new Rivian Amazon trucks are driving around Philly now, which is making me just super jealous. I'm dying for airplanes. Are there Amazon boats yet to like bring stuff over from? I don't know if they've gone into drug smuggling.

Yeah, Amazon Containership. Maybe they have. I don't know. There's got to be Amazon container. That's the one. Yeah. That's the one. Yeah.

Are there Amazon containers? Probably not. There's got to be. I don't think. I haven't seen any. There's plenty of trucks on the road. That's for sure. Yeah.

Yeah. Yeah. It is honestly so interesting. The Amazon math makes sense. It's all the same. It kind of does. Yeah. I'm like,

I'm like I'm obsessed with this. This is like my favorite story of the year, I think. I really love. It's just the, I don't want anyone to actually pull a trigger. I just want to speak. on this forever. It's going to be fun. Tantra cat positions.

Nine months to try to like find a better scoop. You're just like done. 2023 is over. Go home. Stop publishing. Eric Berger gets the trophy. We're done. Pack it until 2024. Give it to Eric. We'll walk out of here. Yeah. No, no.

It's just very interesting because like no matter who buys it. Like you can put all the all the possibilities in the board. You can do a Lockheed buyout or a Boeing buyout. You can do a private equity, you can do a interesting player like Amazon or Apple or you can have Blue Origin come in and decide to buy their engine contract back. There's like all these different possibilities and they have, you know, varying chances of success. No matter which one it is, it is a really

interesting story that follows after that. Like it's just, yeah. It's just, it's just good from a, from a like a quality of juicy news standpoint. Like we get to have a great year. Like no matter what. I'm just so excited about it. Multiple. You took the wrong year to cancel your podcast. Jake. I know. I know. That's how it goes. But now I can, I can just talk about this. Every week, I'm going to bring up the ULA deal. By the way. Like, you haven't even, I don't actually know what you think about this, Jake. Like, who's going to do it? Yeah. I think, I think my list is pretty close to yours. Like, I think Lockheed, it's definitely not Boeing. I think if one of the parents is buying it, Lockheed's paying Boeing for their half because Lockheed is interested in launch and Boeing is interested in money. so, you know, just in sort of where they're at right now.

The private equity thing, I think, is pretty high on the list. I might even place that higher than Lockheed, like, just some unknown, like, it's going to be, like, you know, like Watson and Johnson firm from, I've never heard of them. And they're just, like, some group that has $100 billion sitting in a bank account, you know, like one of these kind of people. I have a question. If that came to fruition, would that, would that look like this? It might.

This should be the announcement image? Yeah, Bruce Wayne Incorporated. That's Watson and Johnson right there, yeah. Yeah. So I think that's probably likely. I'm not buying the Amazon or definitely not Blue Origin. I think that's not as likely as some people have said it is, even though I made the Batman and Robin meme.

I don't know. I just like, okay, so Amazon, it's like, do they really want to get into that? I don't think so, but the math makes sense. It's like $1 billion more to own a thing. Yeah, it kind of makes sense. versus what they're already paying for the rest of this thing, though, you know? Yeah, but they own Whole Foods and ERO and Ring and all this other stuff. Like, Whole Foods itself was a $14 billion acquisition.

Yeah, but it's just retail. Like, it's not hard. It's size of Whole Foods. It's just retail, though. I'm just saying, I think a lot of us think this is a way bigger acquisition than it really is. It is my point. Small, yes, yes. But what I'm saying, though, is that, like, buying Whole Foods is like a pretty natural extension of their core business already.

you know, if they're... Of a website that sells books? Of a retail company. Yes. Okay. How about doorbells? How do you feel about doorbells? If we're selling them...

How do you feel about buying airplanes? Have you ever bought an airplane, Jake? No, I've never bought an airplane. Have you ever potentially bought routers that send people internet's over their air in their house? That seems like a pretty diverse business. Yeah, yeah. I'm just saying that the list of acquisitions, research. are very,

Amazon does not, like, they're an infrastructure company. They also sell books, but they run half the internet. I think if they are interested in what the infrastructure of the future is,

getting their own satellites up seems like a pretty integral part of running a business to them. Yeah, I think that point makes sense. I just don't think it's enough. That's kind of where I stand on it. I think if you're looking at that,

you're saying, like, I already bought all the rides for like the core of the constellation. So like, do I really want to buy a rocket company for the maintenance after? I don't know. Maybe. Maybe. It's a pretty long-term play.

And I don't know. So I'm skeptical on the Amazon bid. The private equity one is just disappointingly boring to me. It is. It's super boring. That's the only one that doesn't like make my thing come true. Yeah. Because what are these scenarios lets us see Tori Bruno in his like unencumbered form?

That's really what I wish we got to see. Yeah. Well, and maybe probably. private equity's that. Maybe that's like someone who's just like, Tori's pretty great and he's been handcuffed by the parents. Like, what have we bought his company and gave him an extra couple of bill a year to do development stuff?

And hey, Tori, what would you do? And then he's like, his brain just goes into, you know, fireworks mode and he gets to do all of his crazy Cicillian or nine million stuff or whatever it is, right? He has been at Lockheed since like before I was alive. So he's a Lockheed company man. So if Lockheed bought it, I don't know that he would not have freedom. Yeah, if Lockheed buys it, maybe. Yeah, we'll see.

Michael. That was our rat. Sorry. I forgot we had to guess yours. Oh, boy. Yeah, no, I think it'll be fascinating and I'm mostly trying to sort out like is a great example. Yeah, like Tori comes from Lockheed. Does Lockheed step in and take over and be like, hey, well,

We'll pay a big premium Boeing. Thanks for the work that we've done together. We want to, I mean, even, I can't remember what call it was. There's a Q3 call I want to say in like 2020 or 2021 where Lockheed on their like quarterly earnings call mentioned SpaceX for I think the first time ever and was like, this is eating at our ULA equity like growth. And it was this kind of like, wow. Okay, they're like willing to like kind of say that quiet part out loud. And so maybe they would be willing to pay up for it to like see if they can drive it further and really step in. But we will see.

Yeah. Yeah. Yeah. It's interesting because I don't know. It's like you also have to, I mean, as much as I love Tori and I have like such a like an emotional attachment to like, you know, Atlas Rockets and everything that company like has done and what it stands for. You also have to like really ask yourself of the business. Like is it? How much is it worth?

I was like, well, you know, okay, so it's got some like guaranteed contracts now, but it's like from a marketing standpoint, the rocket has a few challenges, right? Just in terms of like staying competitive with the big gorilla in the room. So if you try to, and I hope that anyone who's buying a company for that, you know, for seven figures is, or not seven, not ten figures is, you know, thinking. That would be great. Drop some, drop some zero zero. Anyone who's buying.

I'm going on with you guys. Yeah, we could kickstart that. Yeah, if it's go for it. But, you know, if you're buying anything for 10 figures, you're probably asking those questions with a lot of skepticism and really trying to get to the bottom of it, right? And I'm curious to know who gets to the end of that question with ULA and is like, yeah, I'm ready. And what they want to do with it. Like what conditions that comes with, right? It's kind of interesting.

Especially the commercial viability of Vulcan is not clear. Like the Amazon, the ones that Amazon bought are the ones with six solid rocket boosters. So I don't know what the price is for that, but it's like a Falcon Heavy per launch. They got North of Grumman money in there now. So that's not cheap and not really something that I would see them selling on the commercial market in five years. And that's a viable product. That's one of the things that drives me away from the Amazon bid. Because if you're talking about trying to own the infrastructure and be vertically integrated,

like you really want to buy a rocket where you own the metal cylinder and all the other parts get bought from other contractors. Like is it really that big of a jump? you know, the engines, both the upper stage and the lower stage and the solid rocket boosters, they all come for vendors, right? But I think my only argument about that is that the, without it, they are at the whim of whatever the most viable launch company wants to give them a term sheet for, you know? Yeah.

If they are going. Last year, like three of them stepped up and gave them term sheets they clearly accepted. So like. But they weren't the ones that could really turn the screws on them in five or 10 years when they need to put up their second gen or replenish their constellation. You know? Right. They pick the ones that they had the most leverage over.

And it's a bet that you'll always have people that you can have leverage over that still exist in the industry. So that's the part that if I'm Amazon, I'm concerned about that every single day that Kuiper is on like my number one priority list. Yeah. Yeah. Amazon, call me if you need someone to run your new one. Rocket Company. I will sell out at a minute. Sorry, Jake. You guys could do the show from now on. First thing I would do is get a new paint job

for Vulcan. A whole new paint job. Yeah, yeah. It matches your shirt. What are you going to, come on. Yeah, well, it doesn't exactly have the Phillies logo on it, but that would be fine by me. You put the Phillies logo on it. Listen, day one, Phillies have a Bryce Harper face on the rocket. It would be great. My shirt's got the other guy on it. so it's not going to be that. It's not that one. Last few minutes,

what's going to be put on your conjecture hat for us and tell us how exactly Virgin Orbit is going to go out of business. Oh, God. I hate telling you what companies are going out of business. Like, I think that's my least favorite part of, like, reporting. These little investments of Richard Branson

are not exactly, like, leaving us with a lot of doubt, right? Well, yeah, I think they should be like, I'm helping you look at it and be like, okay, how do they move forward from here? I think the timing of the launch failure, I mean, you're talking about something that could have been worse for their prospects of like, say,

raising money, et cetera. I don't know if they would say, dealist, you know, bankruptcy, whatever, before they get acquired by somebody. I think it's clear. One of the interesting things about the whole discussion with Virgin Orbit, I think is the relationship that Branson, like, really pioneered with a lot of the folks within the Department of Defense and how jazz so many of them were about the capability

that the launch platform that they built offered as opposed to, like, what Pegasus did before, something like that. So I could really see someone coming in and being like, hey, we'll take it for pennies on the dollar and we'll keep it going. I don't know if that's happened. I don't know if that's any time soon. I don't know if that discussion's already begun or not, but I'm very curious because I think a lot of people will be watching for when Astra and Virgin Orbit reports their Q4 of what they're saying about their future and like how long that they have and what their prospects are. I think one important thing to consider is that companies who are maybe struggling or running out of cash, you don't really see it until all of a sudden that day

just comes. It usually runs into like a wall because the entire point is to keep things operating as smoothly as possible, keep hiring, keep moving things along until there's a point of no return. And so I think you'd very much see that with, you know, and I'm not trying to single either these companies, but I think you could see that where, you know, they're going to keep telling you like, hey, we're moving forward, here's the progress that we're making. And they absolutely should do that. But I, we're not going to see it until it's like on the week that it happens that like, you know, shit's really hitting the fan. All right. Now, who's going to buy this rocket company, Jake?

I'm telling you, it's got to be Boeing because it's already a Boeing first stage. or Amazon in my bed. I'll keep the same bet line. How many Khyber satellites can you launch on Launcher 1? Maybe one. I don't know. They're having problems at the performance. You've got to look at it as a chance to do orbital assembly.

That's really what you need. It's one half the satellite on one launcher one, and the other half on the other, and just meet in orbit. The only one that would have made more sense like a year or two ago would be North of Cromen being like, wow, that is cheaper than that old plane that we have. Like that old one, we can't even get parts for that thing anymore. This one, there's parts for it. But they did the firefly deal, so like they're off the table.

Yeah. Well, I don't know. Maybe. They're the only other ones that have sold air launch. Can you put a firefly rocket underneath the wing of a 747? Are you Paul Allen? Is this strata launch again? Here's a new visualization of every rocket under a giant airplane.

How about this one? No, okay. How about this one? No? Okay. Yeah, I still think like the Falcon Air is like one of the best names for a rocket I've ever heard in my life. Yeah, there's a lot of products you could call that. The whole like straddle launch partnership with SpaceX for launching a Falcon 9 underneath the like the stradal launch airplane, like that would have been nuts.

And the fact that it was called like Falcon Air, I mean like, come on, that would have been wild. It is like the funniest visualization. Like I'm pretty sure Jake made this one in stable diffusion. You probably did. Yeah. I think that was a Falcon 5 back in the day? I think so. I think it was like a variation of the 5.

Classic. That's some classic stuff right there. Yeah. Anyway. It always brings to mind like when I'm getting, you know, pitched some company's announcement and they send me a rendering of what they're building is something like that. It always makes me wonder of like, what is the thing that right now I'm looking at my

inbox that like eight years from now I'm going to look back and be like, Wow, that was nuts. What a dumb idea. Because, like, I know there are going to be some, and I think that's the fun part of my job, is the fact that, like, you have this kind of current, like, never-ending catalog of history that you're building. And I love that part of it because I, even today, I look back. So I wrote my newsletter today about, you know, debut launch failures.

And I interviewed George Nield, who obviously is like, we talk about people who understand, like, risk and space flight safety and stuff there's no one really not much better out there and i was thinking about it and i was talking to my editor i was like you know like one of the first stories ever wrote on space was an interview with george neal and so like back in 2017 i wrote a story about the f a and like licensing space ports and he was like one of the first people who ever picked up the phone when i was like this young newbie reporter just bumbling around trying to get interviews with space executives and like george called me back and like the amount of patience he had the amount of like you know the time he took to really like walk me through and help me understand like to this

day like forever grateful for that all right we should have him on the show jake that i was going to space so just writing that one down like yeah NASA like he's on the ASAP panel right now he's you know he's gone to space as an astronaut himself he led the f a space office like the dude His resume is amazing. Yeah, yeah. And they'll call us back because we're some newbie startups. So it'll be great. We're not newbie startups, Anthony.

We had CNBC on the phone in like 24 hours. That's true. That's a good point. Yeah. We've had two scoops. Yeah. Yeah, two scoops. Eric Berger's birthday and the Tom Cruise thing that will never exist because it was

scooped on the show. Two scoops of raisins, man. That's us. Oh, man. Anyway. Yeah, the raisin brand guy. Michael, where can people find you or follow you if they are not partaking in the sheets tweets?

Yeah, primarily is my newsletter, which goes out every Thursday morning. We try to do it like late morning Eastern Time so that people in the West Coast aren't like looking for their 4 a.m. email for me. So that's the biggest way. really trying to build that as much as I can. That's been a big focus. We've had a lot of success with it. I've been like, honestly, like,

surpassed my wildest imagination of how much people seem to enjoy it and, like, the opportunities it provides for me to really try to challenge myself and think about things in new ways. So that's the biggest way. So CNBC, Space Newsletter, just Google that. You'll find it or bang it with chat GPT, I guess. What a sense.

We got to start changing apparently the ways we talk about search engines. It's kind of like personally frustrating because you just throw away Google. I'm good if that's the only time ever heard anyone say Bing it with Chat GPD. I'm totally fine if that's the only time. Oh man that's oh man that burns personally. It's not your fault that they gave him ridiculous names. That's fair. Twitter at the Sheets tweets

You know you can find these guys tagging me in last minute podcasts And you can find me on post which is a great little social media site Same thing Michael Sheets LinkedIn you can follow me there Michael Sheets Same name same place everywhere you look If you DM me or like email me for my signal number I'll probably give it to you So that, you know, people can contact me that way.

And we can maybe foray on the, uh, the off nominal discord. Yes. We'll be in touch. There's some intel you need on that. So I think some memes I need to be seeing. So yeah. So I guess that means we should plug it too, right? We should probably say this.

If you, tell people about that. If you want to come and hang out with Michael Sheets and support Lori mom's, Lori McArthur's mom's favorite podcast, You definitely want to head over to Discord. Offnom.com slash Discord. Neverfly ride share. That's the cool club because you don't you don't tolerate anything less than a dedicated launch. I realized there is one never fly ride share.

We forgot to shout out though. So we should probably do that now. Yeah, it was Benjamin because I think he snuck it in like right when we were first launching it and I didn't see it. So I think he might be the OG never fly ride share anyway. But thank you Benjamin for for helping. the cell with that one. Nice.

Yeah. Yeah. I got nothing, well, I have stuff to plug, but the only thing I'm going to mention, Jake, is that I'm going to be at

Space Symposium and more details coming on that. So if you're there, let me know if you're going to be there because I got some things in planning. Cool. Sweet.

I'm excited. I'll be there. Sweet. Well, I will probably be in touch about that then. Sweet. Awesome. You guys go on the space prom tomorrow?

No. Oh, damn. No. Look. If you can get me on the show in 24 hours, you can get an invite to space prom. That's true. What is space prom? Oh, come on.

The Goddard Memorial dinner down in D.C. every year. Everyone gets fancy. Some people wear ridiculous outfits. And it's apparently a great time. This is my first time going, and I'm super excited. So going down. If you need a last minute date, you can pick me up on the way. So it'd be great.

Swing through Philly real quick on my 4 a.m. train tomorrow. I mean, you'll be here. So, you know. And Joe Biden's in town today, so everything should be running real smooth. He did fly about 100 feet over my house earlier. It was pretty epic. So, anyway, this is the weirdest ending of this podcast of all time. So I'm going to leave it there.

See, everyone. Michael, thanks for hanging out. Hi, everybody. Thank you, Michael. Thanks, guys. See you. One, two, three, four, five.