The a16z Show - The Evolution of the Satellite Economy

Episode Date: September 19, 2023

The cost of launching payloads to orbit has dramatically dropped, igniting a space renaissance. In 2022, a record 186 rocket launches (41 more than the previous year!) underscores this shift.In Part 1 of our satellite economy mini-series, we sit down with John Gedmark, co-founder of Astranis, to reflect on today's innovations, who’s on the other side of the satellite market, the capabilities they’re looking for, competition, and their mission to provide internet access to 4 billion underserved people.Look out for Part 2, where we tackle the challenges of rapidly reusable rockets with Andy Lapsa from Stoke Space. Resources: Learn more about Astranis: https://www.astranis.comFind John on Twitter: https://x.com/Gedmark?s=20 Stay Updated: Find a16z on Twitter: https://twitter.com/a16zFind a16z on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://twitter.com/stephsmithioPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Space is really not for the faint of heart, but this is sort of hard squared. The moon will need its own GPS system. You're on the lunar servers. You want to know where you are. Same thing as on the earth. You want to be able to just pull up, you know, Google Maps, now we get back to your lunar base. So people used to talk about the other three billion that don't have access to the internet

when, you know, the internet was first really taking off. Now is the other four billion. The problem actually got worse. you know, we just figured, okay, there's got to be a way to do this better. It's like when you see that magnitude of opportunity and no one is doing it, you know, you just got to go and figure out why no one else is doing it. One thing we love to talk about here on the A16C podcast is exponential trends. And one such trend that is approaching exponential is the price of shipping a kilogram to orbit.

Significant declines and cost have resulted in an absolute renaissance of activity. In fact, 2022 was a record year for the space sector, with 186 successful rocket launches. That was 41 more than 2021. So what are all these rockets bringing to orbit? And who is on the other side of that market? What entities, public, or private, are buying the capabilities up there? And how might this increasingly diverse computing shell around the Earth evolve? If you know anything about exponential trends, then the idea of mining asteroids or manufacturing drugs in space actually no longer sounds crazy.

And that is why we bring you this mini-series on the satellite economy, together with the founders of two companies trying to participate, Astronis and Stoke Space. Here in part one, John Gedmark from Astronis joins us after a few decades in the industry, from forming the commercial space flight federation. in 2006 to Astronis' very own launch in May. And as John now builds his own satellites, he reflects on the transition from the government shuttle era, where satellites were literally the size of school buses and lasted for decades to something much different. Here, we discuss why Astronis is tackling geo instead of Leo, what government and non-government buyers are looking for, and how competition and costs are shaping up.

Astronist, by the way, is trying to bring connectivity to the mind-boggling 4 billion people that still do not have internet access. And they're doing that by partnering with customers, ranging from Alaska's Pacific Dataport to a Peruvian telecommunications provider and also an in-flight connectivity company. So naturally, I had to ask why in-flight Wi-Fi is so bad. So make sure you tune in for that. But also, be sure to join us for part two, where we discuss the U.S. unique engineering challenge of reusable rockets. All right, prepare for liftoff. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security,

and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see A16C.com So you've been in space for a while. I think what was it in 2006, you helped found the Commercial Space Flight Federation. Why don't we start there? What caused you to want to be a part of that way back then? What did you see at the time?

Oh, sure. I mean, that was back when this new industry was just getting off the ground, right? People were figuring out that they could, with private dollars, go and start a new space company and actually do something useful. It's sort of a, you know, a non-giant, government blank check, you know, amount of money. So I wanted to find, you know, basically the place where the action was happening. And I was very lucky I was pretty fresh out of school. And I started as an intern at the XPRIES Foundation. And so, you know, X-Prize at the time,

it's this nonprofit organization that develops these prizes for technological breakthroughs. And, you know, it's just this phenomenal organization. At the time, the big prize was this $10 million prize for a private company to launch people in the space. Yeah. And they ended up winning that, then that technology ended up becoming what is now perjic galactic still today, right? So like that really kicked off this new wave of activity in the space industry. And I was very lucky to just be there and be a part of it and be right in the middle of it.

So one of the projects that I worked on was this new industry group, the commercial spaceflight Federation and that you have these industry groups that try to decide as an industry, what are the important policies, what are things we want, you know, whether it's industry standards that cut across, you know, all these companies, or it's public policy. And all the organizations at the time were basically run by the major aerospace and defense companies, right? So really, the basic idea was just like, let's have our own organization, you know, no big defense contractors allowed and figure out what policies make the most sense for this new emerging set of companies. This new world.

I mean, maybe you can speak to that transition because really for a few decades, it really was the government that was the primary home. And you also mentioned some of these large contractors. But those were the entities driving space forward, right? And now in 2023, things look pretty different. We've gone from the shuttle model to something with a lot more startups, a lot more grittiness, innovation, probably more failures along the way, but also it's just a totally different environment that went from the government now also to something, you know,

these private companies. It really is. I mean, there were basically three eras of spaceflight, right? There was the initial Apollo era where we were in, it was this massive, almost monolithic government program, and everything was huge and epic in scale. by design because we were trying to compete against the Soviet Union and show that we can do things better and faster and, you know, laying a person on the moon before they could. Then we entered into this era in the 80s, basically with the space shuttle and with a lot of other, a lot of other space programs, defense programs, where these things got very entrenched with these cost plus contracts. Yes.

And the major aerospace and defense contractors were basically able to lock in, you know, in the airspace. programs at a cost of billions of dollars, and they were just not going anywhere. It was like, you know, the space shuttle flew for almost three decades. And the craziest thing about the space shuttle is that it was basically a government ride to space that was owned and operated by the government, but private companies sometimes had no choice but to fly their satellites up on a space shuttle to get into space. And so it'd be like if there were some government-owned and operated fleet of cargo container ships that would take your cargo, you know, that you wanted and that's the only way that you could take. Yes. I mean, so there were certainly companies

that tried over the course of those decades to come up with new private vehicles on the 90s, there was actually a huge number of startups that tried to do new rockets, basically. But they were, in effect, competing with this government monopoly. I'm not sure that the conditions were really right until we got into the end of that era, which I would demarcate as like the retirement of the space shuttle. And that retirement, it took many years for the retirement to actually happen. But it started with the Colombian disaster. And that was finally when people said, okay, you know, I've been flying this thing for

almost 25 years. It's time to retire it. And then it took several more years after that. So you really had all these ingredients of a number, basically private individuals who had, made enough money in the dot-com boom and had this passion for space to go and take a run at it. And then you also add, on the government side, you had the retirement of the special coming up on the horizon as this, basically this huge opportunity that those companies could then step into. Yeah. Were there any other changes that have really brought us to like this, what feels like

a golden age of space innovation? Is it like regulatory changes? Is it technological innovation that's unlocked. So the other one was just the technologies that were starting to become available. So for small satellites to be possible, you really needed this combination of technologies to all come together. One of them was actually just lithium ion batteries. Yeah. And so the old satellites used to have lead acid batteries that were absolutely these massive heavy. Massive heavy things, right? So that lead to lithium ion batteries. You know, we all know about the benefits of that here on Earth because we have one thousand now every device that we carry. But it actually also made a huge deal and being able to shrink the size of satellites.

And then there's also new chips that became available at a lower cost, but it's just Moore's Law in action. There were some things that just got to the point where there was enough compute for a low enough price that it made sense. And then also some advances on the propulsion side. So there was really like a whole basket of technologies that started to come together and let companies like one of the first ones was Skybox go and say, hey, we can at actually surprisingly low cost, build a small satellite that will do this very useful thing, have a lot of capability in a small package in a way that just would have never been capable before, before, you know, would have taken a huge satellite the size of a school bus and be able to raise venture capital dollars on that,

right? And so that was a pretty big change. Can you just kind of help us get a sense of size here? You said, like, the old satellites were maybe as big of it as a school bus. Yes. When we're talking about these smaller satellites, like, how big of a difference are we talking about? Yeah. So when we talk about small satellites, you know, it could be anything from a CubeSat, which is like a breadbox up to, you know, something that size of a large home appliance, right? So like a kitchen range or a mini-gridge, right?

Our satellites that are a little bit larger than that, similar class, you know, what we call micro-satellites. the big satellites that historically cost several hundred million dollars each, you know, they are the size of a school bus, if not like a double-decker, you know, big red London double-decker bus. Yeah. So it's a huge difference. It's kind of fascinating because it's just as mind-bending to imagine like this massive school bus throttling around orbit, but it's also kind of just as crazy to imagine like a tiny little

toaster. But on that note, we'll get to the future of the satellite economy and all the different implications, opportunities. Tell us a little bit about why specifically you've chosen to tackle the unique domain and land that you have on these smaller geostationary orbit satellites. Totally. I wanted to go and, you know, do something really disruptive in space. I mean, I knew that there was, and there still is just massive amounts of value to be had. in doing things with these new approaches small satellites. The thing about geo and so these other higher orbits is they are hard. They're hard to operate in and they're harder to get to.

So it makes sense that when all those different technologies came together that allowed people to build small satellites early for the first time, that they would start in lower orbit in Leo, right? That perfectly makes sense. But historically, geo is actually. the most valuable orbit. Okay. That is where the bulk of money has been spent to put satellites into orbit.

I mean, it's hard to know the exact numbers because a lot of it's classified. So these are like multiple billions of dollars per satellite. For some of these classified satellites, right? It could be in the hundreds of billions of dollars. No one knows the exact number. But it is a big number that has been spent putting satellites up into geo. And it's been to enormous economic benefit. One of the biggest moneymakers in the history of all of space was broadcast satellite TV.

And that was all done with these large, very expensive geo-satellites, right? So you know there's an enormous amount of value up there in this real estate, which is this belt that surrounds the Earth at geo. And, you know, we just figured, okay, there's got to be a way to do this better. It's like when you see that magnitude of opportunity and no one is doing it, you know, you just got to go and. and figure out why no one else is doing it and take a stab at it. But I mean, to that point, there's a lot of people, when they hear that, they're like, there must be a reason, like, there must be a reason that this hasn't been tackled or that for several decades, it's only been done this one way where there's just massive satellites,

mostly shot up there from the government that stay up there for, what is it, years or for decades as well. And so, I guess, kind of two questions there. One, why was no one doing this and probably related to this? Tell us a little bit more about the difference between low-growth orbit, which is where a lot of different companies are now launching satellites into and geo, which is where you've chosen to go. Like, what is the difference there? And again, why was no one else doing this? Yeah, totally. So the reason no one else was doing is that is hard, right?

It is up at this high orbit where you're actually right in the thick of what we call the Van Allen radiation belts. so the satellites are just swimming in this sea of radiation all the time these belts have basically trapped all of this radiation that's come in from space this is actually why earth is such a pleasant place to live because we have this magnetic field and then basically being earth's deflector shields so that's very beneficial for all of us on earth very convenient thankfully but it traps any of these particles that are ionized they get trapped there like a magnetic bottle, right? And so there's just this soup of radiation and designase particles that satellites up in these high orbits are just swimming in. So it is hard. I mean, it is the radiation

effects that we have to design to, and they have to design all our electronics to qualify them, you know, really make sure that they were going to work in this radiation environment. It's just a massive additional challenge on top of all the normal challenges of building small satellites and building something that will work in space. That's already hard. Like that, you know, anything in space is really not for the faint of heart, but this is sort of hard squared. Your electronic steps in five, all the normal, huge temperature ranges, it gets to the

most, you know, sort of extremes you can imagine because when you're in with eclipse, you're in total darkness, and then you're in the deepest cold of space. And then when you're in direct sunlight, then you get super hot because you don't have, you know, the Earth's atmosphere like we do to sort of buffer that. So you see this huge temperature swings. Yeah. And so you're electronic stuff to not only build a handle just sitting at one and then sitting at the other, but also these fairly rapid changes between them. Yeah. And then on top of that, we have this radiation challenge. But clearly it just is worth it. Once you're up, any asset you can get up in that high orbit is just becomes this incredibly valuable thing because you can

park it over a country or part of the world and provide, you know, a service with just that one satellite. So it ends up being this like structurally very low cost approach to covering an area like an entire country with broadband internet. Each individual satellite is only overhead for about five minutes. Then you just do the math of how many satellites need to be up there to have 24-7 coverage. And typically you'll need two or three then you can talk to at any given time because there might be trees in the way, there might be other things you need to build a sort of switch back and forth. So you just need a large number of satellites. Once you get that number of satellites up and are able to sustain them with further launches, then there's a lot of great capability there for sure, right?

I mean, we are huge fans of everything that people are doing in lower Earth orbit. But there is just clearly this massive value to be had up in these higher orbits and geostation orbit. Somebody should go after it. Yeah. what gave you the confidence that the technology was there? Because you said space was hard already. And then now you're taking it to this, you know, N squared, let's say. And so was there any evidence per se that you were like, oh, I do see how certain technologies are advancing even further?

Or what can be the confidence to say? We can actually make the smaller, cheaper, more iterative. I would say there was a little bit maybe of humors there. I would, this is sort of a classic case. We, you know, we didn't know what we didn't know when we started coming back in, you know, 2015. Yeah, in my apartment, myself and my co-openter Ryan, you know, who's a brilliant engineer, old friend of mine. And, you know, we basically looked at how quickly and, you know, sort of simply could we pull together all the right pieces for, you know, one of these satellites. And certainly at first blush, you could go and go out to this great space economy that we have.

now of suppliers and vendors for building components for different things. I think what we didn't realize was really the magnitude of that gap between Leo and geo, especially on the radiation environment. A lot of the components that you could buy were really designed for Leo satellites. And once we dug into it, would just not work for us in geo. And that's not through any fault of the vendors that's just designed for a different thing. So it ended up. being a lot more work to find either the right component that we could use or we ended up having to design our own because there's nothing out there that would work. It definitely appeared a lot easier when we're first starting out that ended up being. So I want to get to who's buying the

satellites, the business, the economics of all this. But to your point, like you have to some extent made it to the other side. You had your first launch earlier this year and you have another one coming later this year. You have your dedicated Falcon 9 launch. Like that's pretty awesome. Like, does it feel that way? I just went, you know, as a person who spent the last eight years on this with maybe not full certainty that it would work out. How did it feel? Like, I watched that YouTube video that will link, you know, in the show notes of that first launch in your team, watching this go up. And I was like getting emotional during it because I was like, and then I read the comments and other people are like, why am I cheering up? And it's like, I guess,

It's because it is like quite the feat. Does it feel that way on your end as well? Yes. Yeah, no, there's no question. You know, had a single rocket go out that has, you know, a satellite on, especially, you know, you've spent years getting to that point as that's something special. The next one will be next level because, you know, with a dedicated launch, be the Astronautist logo on that rocket, right?

Yeah. And just knowing that that rocket is going up just for us. So that's a pretty big, yeah, that's going to be a pretty big moment. Pretty big moment. Okay, so let's talk about some of those satellites, including the one that's already up there. You've chosen specifically, again, to be in geo and to have these smaller satellites that provide Internet to folks in specific regions. Yes. Why that of all the different functionalities that satellites can offer?

And then also, just like, tell me a little bit more about this question of just how many people on Earth actually don't have access to Internet. So, to be clear, I think this is the most valuable thing that we can do in space. There are a lot of things you can only do in space, just from having this vanish point of being that high and looking down and seeing a good chunk of the earth or, you know, basically this whole earth view. But getting people connected is just of such enormous value. It really changes people's lives. Yeah.

They don't have access to health care information, being able to get educated. educate themselves. When you get access to the internet, you are getting access to the sum total of the world's knowledge. Yeah. In one, you know, it tends to get lost now in the,

you know, the Instagram era. But if you had nothing and no access to the internet, and you were just a smart capable person who wanted to, you know, improve your life, having then that door opened, suddenly having access to the entire world's knowledge on any topic you could imagine.

Right. I mean, talk about a massive enabler for people to improve their lives, you know, economic growth, all the rest is a huge deal. I think the place we're at with connectivity today around the world, I think we have essentially reached the people we're going to reach with fiber. Laying fiber is enormously expensive and difficult, right? In a lot of countries, it's done by trenching. You know, there's just the labor costs of doing that.

And then there's all these other, you know, complicating factors, rates of way. Like, you're going through someone's land. And especially in a world where people are mobile first, right? It's even more challenging because what you really want is you want cell towers just everywhere, right? Because people want connectivity everywhere they're going to go all the time. Yeah. A lot of the challenge with cell towers and providing people with cellular connectivity is connecting that cell tower to the internet. It's actually not building the cell tower.

Building a cell tower is just a little metal tower. And there's some electronics on it that do the job of connecting to your cell phone. But those electronics have been mass produced to the largest scale you can imagine. I mean, think about how many cell towers there are around the world. Building the cell tower is relatively cheap compared to the value it's going to create of getting those people in that area connected. Right. Very cheap. That's what we call the backhaul problem.

And so that is what we realized was this key problem to go and solve. And so we have found a set of customers in countries around the world that are either telcos who, you know, there's telcos that build these cell towers and operate these networks or service providers for those telcoes who, you know, help them manage their cell towers, that basically are buying this capacity in large quantities. So they want big pipes of dedicated connections. And these are big sort of trunk lines to connect these cell towers to the internet. So, you know, it's not just the cell towers, right? It's also enterprise customers who need connectivity for anything from that could be like hospitals

and schools to mining installations or, you know, things like oil and gas or, you know, there's sort of a whole gamut there. Obviously, you put up a bunch of capacity, but you're charging these very high prices where it just doesn't make any sense. No one's going to buy it. On the other end of the spectrum, if you put it up at a low enough price, then the demand, becomes almost effectively unlimited. I mean, at a loan of price point, people will consume all the internet bandwidth that is available and then, you know, come back asking for more. Yeah.

And I think we are there. You think the economics are there. Correct, yes. With the satellites that we have designed and begun building, I think we are at that inflection point, right? And, you know, I think we'll continue to get the price down and even get some number of percentage of unconnected population of the world online and we'll get up to scale because we're going to massively scale what we're doing and build hundreds of these satellites

will be able to get that economies of scale and get those prices down even lower and get even more people. So people used to talk about the other three billion that don't have access to the internet when the internet was first really ticking off. Now is the other four billion. The problem actually got worse. I know. Yes, how is that possible? It doesn't seem right. It seems actually quite astounding that somehow we've not only failed to solve the problem and the problem actually got worse over time, not better.

There's a limit to where it makes sense to run fiber or it's even physically possible around fiber. You know, very remote places or out on islands, deserts. And I mean, there's a very sizable percentage of planet Earth. So those populations have been growing over time, but we have failed to, you know, expand the reach of our fiber networks to meet that. So, yeah, I think it is on us in the space industry to solve this problem. I do not see any other means solving it. I mean, you know, people have looked at like balloons and, you know, drones that stay up for

days at a time and are trying to beam down the internet. And those things are just pretty tough. There's high operations costs of, you know, these things that, you know, you have to, like, deal with the weather and they have to be refueled and you bring them down and, you know, manage this giant sort of fleet of things. They could follow this guy and, you know, follow somebody's house. There's possibly some solution there that could work.

I would love to see it. But I really do think it's on us in the space business to solve its problem. And, you know, we can figure out how to do that. We're talking about one of the world's most epic problems here. So it's on the order of scale of solving the world's energy problems, selling the world's food problems. It's just going to take a basket of solutions to be able to solve Yeah. Maybe you can share a little bit more about who the buyers are on the other side, right? Because all of these companies that are shipping satellites into orbit, that costs a lot of money and to recoup that money to really have a functional business because we're no longer talking about the government.

Yeah. So the ultimate end users are individual people with their cell phone data plan. Yeah. But in our case, we're not going all the way direct to those consumers, right? We're selling to enterprises where B2B. So we are selling to either telcos or the service providers who manage cell towers and provide connectivity. That's sort of like a course of customers. And then there's actually quite a few others. I mean, if you can get things low enough costs, which I think that we have, it gets to the point where a single satellite or really the network that you can build and deploy with that satellite is affordable to a Fortune 500 company. or even a Fortune 2000 company. There's a huge world of connectivity needs that I think exists out beyond that.

One of the big ones that we haven't talked about yet is In-Flight Wi-Fi. So two of our satellites that were launching on our next launch at the end of this year are basically just totally dedicated to boosting In-Flight Wi-Fi capacity over the U.S. Can you explain why is In-Light Wi-Fi so bad today? I almost can't. I mean, it's like it doesn't make sense in that we know that everyone knows the demand is there. It's not a surprise that people want to have broadband internet on an airplane. And yet somehow, you know, there's been this market failure where the suppliers of capacity, of the satellite capacity have failed to put up enough satellites.

You know, I'm talking about the traditional large geo satellites. Yeah. They have failed to put up enough of those satellites to meet that demand. And I honestly, I am not sure how that happened. To us, it's a no-brainer. We've seen the demand is so massive, you know, there's so much value being created there, so much money to be made that we could launch, you know, dozens of our satellites and just do employ, right? And it's actually a small part of our business today, but it is a, you know, a huge demand. Okay. So you've kind of talked about the internet connectivity side of things, but there's also some government buyers, right, of these satellites and their functionality. So what is, you know, the government looking for in those cases? Anyone in our position, a company doing new technology for aerospace, almost by definition there are national security implications of what we do. There's almost always going to be this point where the U.S. government comes in, you know, sort of knocks on your

door and is like, hey, what are you doing over there? We have had, so this is for us in Space Force, right? So this is the U.S. military and saying, hey, there's real applications here for U.S. national security. Can we talk about this? Like a very high-ranking general will, you know, ask for a meeting and say, hey, I heard from my team, from my staff about some of the things you guys are doing. They're very excited about, you know, so, you know, tell me more. We have been having a lot of this conversation, especially as we've seen, you know, these tensions ratching up around the world, right? And then really this sort of dam broke open when Russia invaded Ukraine, right? That was a big moment for us to say, okay, this is really important. And we should

really start to put some focus on this. What they're looking for is the same as I think anybody else. They need reliable communications. They need that. And there's many different flavors of that. They're out operating in remote places. The Navy, when they're out at sea, it's really across the board. They need broadband cops, right? And to make sure they have that reliably, they want that through multiple channels, multiple paths. And ideally, get everything set up so that they could just seamlessly switch between different things. You know, no different than your cell phone, switching between your home Wi-Fi and then switching the cell tower when you leave your house, right? In geo, and I think what's different in our cases, we can do this with small satellites.

It's more of this swarm approach. So with the traditional big geo-satellites, cost a billion dollars. And a geostationary, you know, you can divide up the world by region. And over, you know, a given region that we might care about, Asia, for example, there might only be a handful of these satellites that were totally dependent on where it would be devastating if those satellites were all taken out at the start of a conflict. And is that the magnitude we're really talking about over Asia? We're talking about like 10, 100? I don't know. In geo, I mean, for any given type of capability, it could easily be, you know, just a couple, certainly less than 10. Yeah, just a few. Wow. So the military communication satellites, I think there's roughly a dozen

that cover the whole world. So they are spread around the whole world. Where Space Force got excited about, I think, our ability to add value here is in taking this swarm approach up into that higher orbit. You know, deploying a large number of small satellites that can provide all kinds of communications capability and be, you know, more scattered around, be more maneuverable. The invasion of Ukraine by Russia was a big moment for. I think all of U.S. national security, but it was a huge deal on the space side of things

because Ukraine was using a large geo-satellite for a lot of its communications. It's a satellite called K-A.SAT over Europe. It's commercial satellite. It's being managed by a U.S.-based commercial company, and the Russians took out that satellite on day one of the invasion with a massive cyber attack. and just in one fell swoop cut off comms across, you know, almost all of Ukraine because they've been very heavily reliant on just this one satellite.

And so the Russians, I mean, they really had this planned out, you know, to a T. I mean, they had everything was ready to go. It's like they just press one button and unleash these, you know, viruses. And they basically, they crippled the satellite. So this is, you know, it's no longer this theoretical. thing of like, are these satellites important? Will our adversaries see them as targets or take action against them? It's like, no, we just saw a conflict.

And that's exactly what they did on day one was takeout one of the satellites. And when you say takeout, is that a permanent loss of that satellite? It doesn't like come back online? If this case, they actually bricked all of the modems that were talking to the satellite on the ground. Okay. I believe the satellite itself was left still operation. But by breaking the modems, it basically made it so that, you know, in order to get the modems up and running again, I think some of them may have been actually permanently damaged.

For others, they had to go modem by modem with a thumb drive and, you know, basically put in a software update to update the software to get it running again. And, you know, you can talk about tens of thousands of these modems across. For some reason, didn't even dawn on me that these attacks on these very critical pieces of infrastructure would come. come through a cyber attack. I mean, it seems obvious now that you said it, but I was imagining like, you know, actually targeting the satellite in orbit. That is also of concern, yes. The thing to remember about a lot of these large geo assets is they're built to last for decades. Yes. And so some of them have been up there, that were still up, that were built with 20-year-old technology. And so they may have all kinds of vulnerabilities, right? We've since figured out fixes on new

satellites, but this old model of putting up a satellite is going to last for 20 years. Yeah. It's very concerning. Whereas, you know, we have absolutely some of the best, you know, security engineers that is possible to find. I mean, we're in Silicon Valley and have, you know, access to literally the world's top talent on cybersecurity. We are folding in all of the latest, you know, findings and approaches on our cybersecurity side.

But, you know, it is concerning these big satellites have been out there for, you know, two decades, right, and whether or not they're going to have vulnerabilities. Yeah, it's almost like you're saying the lack of iteration is a national security threat. 100%. Yes. Everything else that we use today across, you know, our lives and business at home has gotten smaller and smaller and, you know, faster and faster refresh of technology, right? It's kind of a great point because you imagine around the same time as some of these satellites went out,

That's when you had computers the size of a room. And now we have computers the size of our phones that fit in our pocket. Satellites are getting bigger. We're actually having more people with no internet. This is an interesting phenomenon happening over this period. Yes, a lot of problems resolved, unfortunately. Maybe one other angle during, let's just say the last decade that I'd love to hear you elaborate on. What have you seen change in the regulatory landscape?

Yeah, I mean, so the biggest thing to be concerned about is orbital debris, right? And that is definitely a real concern, right? It's a classic tragedy of the commons. It's something that, you know, all countries have a stake in. Yes. And I think everyone feels the same way about it, that if you create a bunch of orbital debris in space, is just a bad day for everyone, right?

And it could take us decades to clean up and get out of. So that is definitely a big concern. It is an area where, you know, the United States needs to hopefully lead and also bring other countries along with us. So, yeah, we've seen some great progress on that front, and it is starting to become important. Yeah, especially as things are getting cheaper, there are more satellites going up.

On that note, maybe we can talk, just zoom out a little bit in terms of this satellite economy, but really just all of the infrastructure being built for space. And maybe you could just share a little bit more about what you're excited about when it comes to, like, let's say the next five, 10, 20 years, people are talking about refueling in space, like reusable rockets, or talking about tourism.

They're talking about mining asteroids. Like there's all of these kind of disparate ideas coming about that are all, quite frankly, at the very least, interesting. What gets you excited and what do you think maybe people are overlooking as potential in this industry? I would say that, you know, we don't know yet where these other sources of value are going to be. is asteroid mining going to be a massive business opportunity? I think we're still figuring that out. There's talk of both government programs and private programs to put people back on the moon.

Well, if we're going to do that, whether it's government or private, any kind of extradition of that type or setting up a lunar base is just going to need all kinds of other pieces of the sort of overall economy and infrastructure rate. People are going to be operating on the lunar surface. you're going to need communications infrastructure. That's something we've thought about and looked at a little bit. How would we take our satellites that are designed for these higher orbits and provide a similar type of connectivity on the lunar service that we are on the Earth service?

It's a very cool application. The moon will need its own GPS system. You're on the lunar servers. You want to know where you are. Same thing is on the Earth. You want to be able to just pull up, you know, Google Maps. Navig it back to your lunar base, right? We're going to need all kinds of transport of cargo, you know, fuel, food, water, all of these things.

We're going to need cargo ships probably have a variety of sizes and types that can take things either, you know, to lunar orbit or up and down from the lunar surface. And then there's just all, you know, all the things you can imagine around supporting people, which I think is, you know, that is something. It's just something we are going to do, right? there's a ton of opportunity for companies to go and sort of, you know, carve out a specific part of that ecosystem and be really, really good at, you know, doing that specific thing as a service or building that component. Yeah. Well, it sounds like there's a lot of opportunity and maybe to close things off because

we do have a lot of people who are current founders or maybe some of these future founders curving out some slice of that market. We'd just love to hear any war stories, any true challenges that you, you have faced or are currently facing with Estranas, because as we've talked about, building a space, is just inherently hard. You know, I realized the other day, you know, these once-in-a-generation black swan events, you know, in some ways, everybody who starts a company that's going to have any kind of staying power is going to have to deal with one of those.

Yes. We have had to deal with one per year. So if, you know, something, like, oh, there was COVID. there was the invasion of Ukraine's new land war in Asia. There's been this stream of Black Swan events. So it is, yeah, it has not been easy. I think COVID was certainly the most challenging

as a hardware company. There was a period there of a couple weeks where employees cannot go into the office. Well, we actually ended up having a determination by Space Force, a general space force, determined that we are part of the U.S. critical infrastructure and our ability to put up these communication satellites and help provide that broadband infrastructure, whether that be at home or abroad. And with that piece of paper,

we were able to reopen the office. So thankfully we were able to reopen fairly quickly. But there was a period of time there where all the hardware of the company divided up to individual engineers, you know, where they basically took home, you know, a specific piece of hardware to go and work on it. And so, you know, we had engineers literally working in their, in their garage on space hardware that, you know, was supposed to, like, you know, setting up like an equivalent of a mini clean room that was supposed to be built in our facility. Yeah.

Well, I want to say thank you for everything that you and the team have been building. It's so cool. Like I said, I watched some of those videos and I was like, oh, my gosh, like, we should be celebrating this stuff. Like, these are like monumentous moments, not just astronomers, but just sending this stuff up to to orbit so far away and doing it regularly. now and doing it in a way where we're getting new functionality. It's exciting. It really is. Yeah. It is a new golden age of space for sure. If you like this episode, if you made it this far, help us grow the show.

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