We Study Billionaires - The Investor’s Podcast Network - TIP408: A Deep Dive into Terran Orbital w/ Marc Bell

Starting point is 00:00:00 You're listening to TIP. On episode 399 with Josh Wolfe, we discuss Lux investment in a company called Planet, which has hundreds of satellites currently in lower Earth orbit capturing visual data every day. It's a very compelling idea, so on episode 401, we discuss Planet in more detail with Chris DeMuth of Rangely Capital. From these discussions, it appeared that Planet didn't have much competition, but today we are speaking to Mark Bell, who says, Not So Fast. Mark is the chairman, CEO, and co-founder of Taryn Orbital. Terran has been primarily manufacturing satellites for others for the past nine years, but has an aggressive plan to take on planet and others in the race for Earth observation services.

Starting point is 00:00:39 In this episode, we discussed Terran's fundamentals, the competitive landscape of the Earth observation as a service industry, key differences in the technology of the satellites in play, why Terran is choosing to go public through a SPAC merger, a look into the team behind Terran and the SPAC sponsorship team, Mark's experience as a private investor, and much, much more. Mark is an extremely accomplished individual who is about to realize his fifth unicorn company, meaning a company valued over a billion dollars. I walked away from this discussion feeling that this is not a man I would bet against. The flurry and excitement around space technology continues,

Starting point is 00:01:12 so please enjoy this very enlightening conversation with Mark Bell. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to the Investors Podcast. I'm your host, Trey Lockerby, and today I am very pleased to have with me the chairman, chief executive officer and co-founder of Taryn Orbital Corp, Mr. Mark Bell. Welcome to the show, Mark.

Starting point is 00:01:54 Thank you for having me today. I've been kind of going down this rabbit hole a little bit on space companies going public, and this one came on my radar, and it looks very interesting. And there's a lot of flurry of sorts, and this space. space and also a lot tied to SPACs, etc. But Taryn has been around for almost a decade. You've been around, you've been a proven business in many ways. So I'd like to kind of start out there and talk about the mission behind Taryn, what led

Starting point is 00:02:20 you to found the company and what you've been doing up until today. Great. Well, Taryn is really one of the pioneers of this industry. One of our subsidiaries, Tivac, was founded by Dr. Jordy Pug Swari, who was the co-inventor of the KubeSat. So one could say that we really are the reason why all these small set companies exist is because of us and the technology that we help develop. Wow. Talk to us about the CubeSat a little bit more because that was an innovative product, but what was so innovative about it specifically? It enabled people to build satellites the size you can hold in your hand. It was literally a cube, the first ones.

Starting point is 00:02:58 And it started off as an educational demonstrator as a lot of things and started off in universities, colleges and universities. They were building satellites to put in orbit to demonstrate what could be done in a small form factor. And all of a sudden, you know, the government realized that there are applications that you can do in a small form factor. And as that took off, then commercial followed. As with a lot of technologies, such as the Internet today, started off with the government and today's used by us today. So what was your particular interest in founding the company and getting into the space in the first place? You have a very interesting track record, different background across different industries. What led you to space?

Starting point is 00:03:37 As a child, I've always been fascinated with space. I was one of those kids who always wanted to be an astronaut. But as I got older, I realized that they don't put overweight middle-aged Jews into space. And so I went ahead. And back in the early 90s, I owned a clinical globics. We ran 20,000 miles of fiber around the world. And we were the world's largest logical peer on the internet. But in places like Eastern Europe, we couldn't reach it with fiber.

Starting point is 00:04:03 So we started buying satellite transponder space. It was a company called Netsat Express, building ground stations all over Eastern Europe. And that was my first forward into space. And I've been fascinated with it ever since. And was it the particular CubeSat technology that got you interested in solid the opportunity in the space? What did it look like 10 years ago, I guess, as compared to today? It was the idea of what we could do with it. I was reading about, I was at the Milken conference, and people were talking about CubeSats,

Starting point is 00:04:35 and I was looking at all these people were building, you know, really big satellites. And when I realized that my iPhone has more computing power than the space shuttle, why is anybody building a satellite the size of a school bus anymore? And so we got to the idea of how can we make satellites smaller, more affordable, technologically superior to where they are today, because you think about it, Most satellites in orbit today were built, especially in geosynchronous orbit, were built 25 years ago. You know, they were built, you know, long before your iPhone was even created. And so we are here with small sets in low-worth orbit.

Starting point is 00:05:12 You're able to build satellites quickly. You're able to replace them quickly. And you keep updated in the technology with every satellite you launch. So give us an idea of Taryn today and just an overview of the basic financials. you have a couple of different revenue streams. So walk us through each one and give us the general overview there. We have one primary revenue stream, which is a satellite solutions business. So this is where we do contract manufacturing for the U.S. government, both for NASA,

Starting point is 00:05:43 the military and intelligence community, and also commercial companies as well. We have built satellites and a wide variety. We're a bus provider and we're payload agnostic, meaning we'll build buses for for electrical imaging, synthetic aperture radar, hyperspectral imaging, 5G, internet of things. Whatever you want to do, we'll help you do it. But we started building a second business called Mission Solutions around Earth observation. It started off with software-defined synthetic aperture radar, which is basically imaging the earth at night and through clouds using radar.

Starting point is 00:06:19 And then we expanded it to include electrical optical cameras as well. and that constellation will start flying at the end of next year. Got it. So you mentioned one of the clients being the Department of Defense for the U.S. at least as far as building and manufacturing these satellites. Do you ever take in business from international countries as well? We do do work with our allies, but our predominant business is national security and the national interest.

Starting point is 00:06:46 So we focus very heavily on the U.S. government. We have a strategic cooperation agreement with Lockheed Martin that has a, been immensely beneficial for both of us. We build everything from up to 500 kilograms now for Locky Martin. So we build the LM50 bus and others as well. And they've been a fabulous partner. We've been thrilled with the relationship and it continues to expand. So I want to talk about this new revenue stream you're going into, especially with this product called the Predasar. And you mentioned the synthetic aperture radar technology, which I'm just learning about now. Is this something that's proprietary to Taryn or is there other companies using the same kind of technology as well?

Starting point is 00:07:29 So, SAR was invented about over 50 years ago. It has predominantly been used by governments. It is not something that in the U.S. side, almost all star satellites today are classified. It has been a technology that we didn't invent it, but we do like to think about that we're perfecting it in terms of we are building it to a small form factor. and we're building a constellation that we're going to begin with 96 satellites. So we'll provide a very high revisit rate on a large percentage of the globe and provide the government with, you know, tactically relevant and timely information. You mentioned electro-optical earlier versus the SAR technology. So what is, you know, what exactly is the benefit of using the SAR?

Starting point is 00:08:14 Is it on top of the electro-optical or is it on its own? What are some of the benefits or advantages of using that? So let's think of it this way. A electric optical, like planet, is Earth Observation 1.0. People have been taking, like, Digi Globe and other companies have been taking pictures of the Earth for decades. And there's tons and tons of satellites in orbit from people in the U.S. and other countries around the world, photographing the Earth every day.

Starting point is 00:08:39 So we call that Earth Observation 1.0. Then you go to Earth Observation 2.0, because the problem you have is when you're taking pictures from space, the joke is half the time the Earth is at night. Half of the time it's covered with clouds. Because the only way you can get a photograph from space is you need the sun to reflect off the earth to give you the back to give you the light to take a picture. You can't have any cloud cover. So you're very small windows to do it.

Starting point is 00:09:04 What synthetic obfuturator does is it uses radar which can penetrate clouds. It could penetrate night, obviously. And a computer then creates an image using that radar data. And so we call that, you know, imaging or Earth observation 2.0. Now, what we're doing with PEDAIRS, we're taking 1.0 and 2.0 and combining it together for what we call, obviously, Earth Observation 3.0, whereas we're mixed. We're combining imagery along with radar in a single bus to give people a complete image day or night, weather independent of whatever they want to image around the globe 24-7.

Starting point is 00:09:43 With this new product line, what is the exact problem you're setting out to solve? Talk to us a little bit about the industries that are going to benefit. from this or who your customers will ultimately be? We solve a lot of problems with it. Imagine never losing a plane, never losing a ship. Imagine being able to look under the canopy, because with SAR, as long as you know the chemical composition of an object, you could see through things, looking under the canopy, the Brazilian rainforest and telling us where there's indigenous tribes, where there's illegal logging.

Starting point is 00:10:14 Imagine tracking, you know, missile launchers and tanks through the forests of different countries. I mean, for national security, it has huge implications for global warming. Imagine seeing every iceberg 24-7, seeing when ice falls off an iceberg and knowing how that affects the oceans. I mean, there are incredible uses of this in many different industries, even insurance. Wouldn't it be great to image the state of Florida the day before a hurricane and the day after a hurricane and have a computer tell you which homes already had the roofs missing or roofs damaged before the hurricane to stop insurance fraud, and how many billions of dollars

Starting point is 00:10:52 that would save the insurance industry. So there are tremendous amounts of applications throughout different industries throughout different countries for this product. Wow. So that's been part of the appeal, or at least part of the interest I've had in this space, is just the TAM seems so incredibly large. What is Terran's observation of what the Tam is for the Earth Observation Industry? The Earth Observation Industry, if we look at it over the next five years, not including government customers, is a $35 billion marketplace. Government budgets are mostly classified when it comes to this sort of stuff.

Starting point is 00:11:30 But on the commercial side, it's the $35 billion over the next five years will be spent. Fantastic. So talk to us about your current Tyvec products and how they compare to the Predasar. Obviously, they're going after two different markets, but what was the original intention and what are you doing with the Tyvec satellites? Well, you can think of it as Predator is really like a customer of Tyback. Tyvec manufacturer satellites. Pretesars having Tyvec is building satellites for our new brand Predator, which is what we're

Starting point is 00:11:58 called that we're going to own. So what Tyvec does is it's a, you know, we're a contract manufacturer. We're the last independent manufacturer of small to the United States. All our competitors have been acquired. People, Millennium got acquired by Boeing, Blue County. got acquired by Raytheon. We're the sole survivors. We have no interest in being acquired. We decided to take a different path. Why is that exactly? We felt on our own we could grow faster and being independent. There's a lot of opportunity. You hear a lot from Space Force and the U.S. military

Starting point is 00:12:32 that they want to expand the repertoire vendors. They want more companies to come in. And the relationship between us and Lockheed is really the perfect relationship because, you know, we have old space versus with all the experience and knowledge that Lockheed brings to the table with the nibleness of an entrepreneurial enterprise like Terranorbital. So you combine the two of them together and we're able to have all the wisdom that we bring from Lockheed with the speed we can do a tieback. Got it. So how does the breakdown look of the business, meaning it's 100% co-manufacturing, essentially, or just the manufacturing part today with this intention of taking. taking Predesar up into orbit and creating that revenue stream.

Starting point is 00:13:14 What are the expectations of that with a $35 billion tam? Are we thinking that Predesar is going to overtake the existing primary business, or is that continuing to grow at a certain rate as well? I mean, we expect by around 2025, Predesar will become the dominant player within Ternorbital. If you think of it, it's data as a service. So we're selling data. We're selling it on different levels. We're doing subscription models.

Starting point is 00:13:41 We're doing models where people can log into our satellites directly, task them, and release them to us. We're doing, we will sell archive imagery. But we expect the bulk of our data to be real time and sold directly to government customers. Got it. Interesting. So I read here that the company is stating it has a $9 billion pipeline for Taryn Orbital. What does the makeup of that pipeline look like exactly? That pipeline is almost predominantly government programs. We're listed on a lot of programs like the NASA Rapid Rewards Contract 4.

Starting point is 00:14:18 You know, we're on this SDAA's Tronch Zero. We have a lot of programs that we're on currently. We have a lot more programs that are coming down the pipe. So we view ourselves unlike a lot of startups you see out there. We've, you know, we're a 10-year-old company. We've been doing this with over 30 years. This is not our first company we've taken public. We are a real manager team with a real backlog, real revenues, real pipeline.

Starting point is 00:14:45 And we've been with a real plan. And we're very excited about the future. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. And every conversation you have is with people who are actually. actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd,

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Starting point is 00:19:08 his investment in Planet, and it sounded incredibly interesting. So shortly thereafter, on episode 401, we had Chris Demuth of Rangely on the show to discuss Planet in more detail. And on both occasions, it seemed as if Planet had this huge head start in this space. And the competitive landscape was pretty scarce. So I'm hoping you can give us a better lay of the land here because that seems to not be essentially the case. And now being aware of planet, satellite, black sky, Taryn and others, what does the competitive landscape truly look like for the Earth observation industry?

Starting point is 00:19:46 So as far as a huge head start, the U.S. government had a huge head start 50 years ago. We're all new. And you've had companies that have been around like DigiGlobe that have been around a long time that also had a huge head start. And but, you know, things are changing. Just because you're the first doesn't mean you're the best. Just ask Myspace, Lycos, you know, a lot of Yahoo. You know, there's a lot of companies out there.

Starting point is 00:20:12 They were first, but didn't, they weren't the best. And things, you know, we've watched everybody. Our satellite that we're building for Predasar is dramatically larger. in mass, then almost all, if we take all our competitors and combine them together, we're still larger, almost larger than all of them combined. We're a 350 kilogram satellite to start, which is about the size of a small fridge. It means we have a pack a lot of power, capacity for secondary payloads. There's a lot of things we can do on our satellite that they just can't do. You've got people putting up there, you know, with CubeSats, you know, they're toys, they're cute,

Starting point is 00:20:49 they're fun. But at the end of the day, you know, the world's moving beyond that. They were great at the time, but we're building adults-sized satellites. Talk a little bit more about that because that's interesting, because we've been talking about small form, but small form is obviously relative, right? You said 350 kilograms, whereas something like a planet satellite is only 5 kilograms. So we're talking about a 70x difference there. These are quite a bit larger. So is the intention if you're just trying to observe the planet? I mean, why so much bigger? Is it just the SAR technology that takes up that much more space?

Starting point is 00:21:23 Talk to us a little bit about the difference in size or the advantage there. Size is a few things. With size, you can have a lot of power. So you have a lot of batteries on board. So you're not married to the sun, meaning you can, when you go around the earth, you still have enough power saved up to image the planet and to download data to Earth. The more power you have on board, the more you can image, the more you can download. So you're not relied to always be in the sun to do it.

Starting point is 00:21:50 And that allows us to do polar orbits, not just sun synchronous orbits. That gives us a huge advantage. It allows us to have other payloads. So we're able to take SAR and couple it with other technologies and put them on the same bus to provide also a more robust image. It allows us to do processing in space. So we'll be able to process our data in space, not have to download it to the Earth to process. be able to have a larger aperture lens. So we get higher resolution imagery and higher processing

Starting point is 00:22:22 for the imagery on the satellites. So the smallest satellite, the small of the lens. That doesn't mean it's a bad lens. We have some phenomenal lenses that we've built that are very small, but it gives you more optionality for all kinds of different technologies that when you're in a very small form factor, you don't have that ability. So this was a little bit confusing for me as well because I know that planet has something like 450, I want to say, satellites up in orbit already, and they're covering what I see on the materials here, one plane of the planet. But Terran Orbital was only expected to launch something like 96 satellites, but then covering 24 planes. So you have less satellites covering more, as I understand it simply, right?

Starting point is 00:23:03 So I'm curious, how does that work exactly? You know, you would think more satellites gives you more coverage. It has to do with the star antenna being very large. So we're able to do strips and cover a larger piece of land than you can do on a smaller aperture lens. We're able to see a very, very narrow pinpoint part of the Earth. So we're able to cover a lot more of the planet with fewer satellites. And also you can remember, all the satellites keep deorbiting every five years or so.

Starting point is 00:23:29 So they always got to continue to be replaced. That was actually my next question, because it seemed like with that larger satellite, I was wondering if it had the ability to stay up any longer than the others or if not. So there's not much of a CAPEX advantage except for the fact that you're building less, I guess, of them. Do you know much about the difference in manufacturing costs, you know, say on your satellites versus someone like planets? And is there a limiting factor or advantage there?

Starting point is 00:23:54 I mean, when we build, I can't talk to how planet does it. You know, we, 85% of our components on our satellites, we build in house. So unlike most people where they buy components from all over the place, we're building everything in house. And we recently announced a new facility up at Cape Canaver with Space Florida. We're going to be building the world's largest satellite assembly facility, over 660,000 square feet. To end, it's almost a kilometer long. And that will, economies of scale, help drive down costs.

Starting point is 00:24:25 So we'll drive down our costs and our total cost of ownership in our satellite and other studies who built for other people dramatically over the next decade. From what I saw that, would allow you to then produce something like a thousand satellites per year. So how does that compare to maybe other competitors in the space as far as production goes? There is nobody else who could do that to the best of my knowledge on all different kinds of platforms. Remember, we're not just building just a single kind of satellite. We're building different payloads for different people. But you're seeing people now, instead of people ordering one satellite, now they're ordering 10 or 20.

Starting point is 00:25:02 and we've got people talking about thousands of satellites. Starlink was the first, was SpaceX. But we're seeing many customers now thinking about how to build their own massive constellations and more importantly, how to make money at it. And so we are like Echo Star, for example, we just launched three satellites for. And, you know, that's hopefully the beginning for them of many. It's interesting that you are choosing to go into Earth observation with these satellites, given your background as far as laying down fiber for the internet, et cetera.

Starting point is 00:25:33 You know, we've got Elon with the SpaceX Starlink internet through satellite. And one would think you might be going in that direction, but you're not. You're choosing the observation direction. I'm curious as to why. When you think about, you know, what people are doing with Starlink and Internet from space, we wanted something that had high barriers to entry. And, you know, Internet of things is, you know, relatively easy to use. Intinent from space has been around for over a decade.

Starting point is 00:25:59 I think Eridium or maybe before Ritium was one of the first to do it a long time ago. But software to find synthetic optior radar, that's new. And that's very, very complicated. It's a lot of math to design the antennas and to have the resolution that we have. And so it's a very difficult business to get into. It's not easy like 5G or something like that. And do you have any concern knowing that you are a SpaceX? they have that sort of barrier to get up into space.

Starting point is 00:26:28 One would think that this might be low-hanging fruit for someone like a SpaceX to enter this space as well and create their own fleet of Earth observation satellites. Do they not have much interest in that? This is really a niche product. When I say niche, it's been, you know, historically, it's national security product. Like I said, you can Google it. You can't find any U.S. government star satellites on the internet. You know, it's been a classic.

Starting point is 00:26:53 It's always been classified. And we'll probably remain that way for a long time to come. I think there's only 13 star satellites of size from other nations and space total from all the countries around the world and outside the U.S. that people are aware of. So we are, we're filling a need. But it's, you know, it's a unique industry. It's complicated. And that's our advantage.

Starting point is 00:27:14 And we've been doing this for quite a while. So we've been working with SAR for many years. And so we definitely have a head start advantage that way, technologically speaking. Not a lot of people might be aware of the processing advantage that you touched on earlier. But with these satellites, I think a lot of people just assume, oh, it's a satellite. I'm getting my text instantly. It's going shooting up to a satellite coming back down. Everything's beaming instantly.

Starting point is 00:27:39 But with some of these images, we're talking about hours as far as the delay from getting the image. And I believe the technology here with Taryn and maybe some others, it's cutting that down quite a bit. But I'm curious as to how or why and, you know, is that something that's a fairly innovative new step for Taryn? What's not a new step? I mean, we're taking the Pizza Hut approach, 30 minutes or less from order to delivery. And that's what we're aiming is that, you know, you can take a picture within minutes and then get a process within minutes, then download it within minutes. So at the end of the cycle, within 30 minutes, from the time someone types of the keyboard, they want something, they can have the image on their computer screen. Got it. So before we move on, I'm just a little bit more curious about the manufacturing piece of your business as well. What does the future of that look like and how much expansion are you projecting for that part of the business?

Starting point is 00:28:33 You know, the way we view it is you always hear about, you know, all these rocket launch companies like SpaceX, rocket labs, talk about 50,000 satellites are going to be launched over the next 10 years into orbit. someone's got to build them and no one talks about the guy building them and that's going to be us. You know, we are, you know, we are uniquely positioned and with the construction of our facility out at Cape Canaveral and other facilities that we'll announce in the new year, we are very well positioned to have a dramatic manufacturing advantage over everybody else. Between robotics and augmented reality and additive manufacturing, we will automate a lot of this in an assembly line fashion, similar to a Ford Model T for lack of a better term. And we'll be taking automation to satellites for the first time on assembly lines. Wow, 50,000 satellites. I know the Earth is large, but that sounds like a lot of satellites.

Starting point is 00:29:32 And I'm curious, what is ultimately the competitive advantage here with all these satellites going up into space. It's just hard to imagine, you know, creating that moat. You're creating a sticky revenue stream by just the quality of the imagery. And I imagine, and that speed, as we kind of touched on. But is there any other moat as far as like claiming space in space, if that makes sense, claiming certain orbit thresholds or routes? Well, these are for all different customers, doing all different things. People will be doing 5G from space, your cell phone, internet for your home. People will be doing all sorts of things, different ways to monitor. monitor the Earth, people will be monitoring space debris, space situational awareness, is becoming

Starting point is 00:30:13 a big deal. You know, if you remember the TV show Quark from, I think it was the 1970s, the garbage truck in space, people laughed. Now everybody wants it. And to clean up what's up there. But, you know, there's a lot of uses for satellites. And 50,000 is not a lot. If you think about it, the Earth is, you know, 40% land, 60% covered by water, and you

Starting point is 00:30:36 have on that land over 3 billion cars. So you have a lot of cars driving around on a small part of the Earth. And you have maybe 18,000 satellites in orbit and maybe another 18,000 pieces of junk floating around up there. So in space, you have a lot on Earth. You know, you think British Kleefe, you have 2,000 feet wide. And that's it. In space, you got 43,000 miles away. You have a lot of space and space. And so there's a lot of room for a lot of satellites. At the of the day, it's really all about the application. What are people going to do? And you're going to see, just like we've seen in the past, it's going to be a boom bust boom cycle. People boomed. They're in the early 90s. They ran a lot of fiber. People went bust. Then people

Starting point is 00:31:19 went and build data centers. Now they're booming again. And you're going to see that in space. Everyone's rushing to put up different competing constellations. They're going to be some winners and some losers. But for our business, the majority of our business today is we're agnostic. We who wins, because we win no matter what, as long as people build satellites. Predesar is a unique outlier, as we don't have a lot of competition. We don't have a lot of the commercial people getting into synthetic obtrator are building silly little satellites without a lot of power and not a lot of resolution. And so we don't take them very seriously.

Starting point is 00:31:54 And we're just going to augment and supplant what the U.S. government has today. That's our real mission for Predesar. So as I understand it, you're going public now to raise some funds. You're going to build this massive facility to keep building these satellites and you're projecting to put them up in the sky, I think at the end of next year. But there is a lot that can go wrong. I mean, that sounds like a lot of things in the way of that, right? You know, the building, the building of the actual satellites, getting them on a ship to go up in the space. I mean, there are a lot of steps here along the way. What are some of the biggest challenges you're currently facing? Is it timing of funding? Is it getting this through quickly? What does it? What is it? that look like? You know, we're very lucky in a lot of aspects. So when you think of the new facility being built, that's being funded by the state of Florida. So that money is coming from Florida. It's not going to be done for three years.

Starting point is 00:32:44 Predisar will be long on its way. It'll be built at our California facility and then eventually we'll move the production to the Florida facility. But we have facilities in California today that can handle it. And we already begun producing, we were already begun the manufacturing process. of getting those satellites built. As far as funding goes, you know, we've been very lucky to be very well funded. We put together a very creative finance, $250 million financing arrangement as part of the SPAC.

Starting point is 00:33:12 With the SPAC, we will get $345 million, but we have another $250 million of financing that went side by side with it. So we just drew down $25 million, that $250. And so think of it as kind of like getting the pipe in advance. And so we have a constant access to capital. throughout this process. So we're not capital constrained because between the three, 45 plus the 250, depending on how much we draw down, and then 300 from the state of Florida, you're approaching almost three quarters of a billion dollars. And that's just the next six months.

Starting point is 00:33:49 Wow. And as I understand it, Taryn did about 25 million in revenue last year. I think around 35. We're going to close out this year. Let's start with the revenue. So how does that compare to other competitors, for example, Planet did I think around 100 million already from this stream. What does some of the other competitors look like in size? And what is the forecast for the first year of having this up in orbit? Well, you've got to compare Apple to Apple. So Planet is selling data as a service with their satellites. We're not selling any data as well of a service. Now our revenue numbers today are 100% manufacturing. It's a totally different business than what Planet does today. So you can't really compare that. You've got to compare our

Starting point is 00:34:29 satellite solution, our Earth Observation Solutions business to that, but that doesn't get going for a few years. So they do have a head start, but we'll dwarf them on a size revenue-wise once we're operational. And if you look at their projections going forward in ours, you know, we're pretty confident about where we're going. Should investors look at this as just Taryn has been in the space for a long time? They have a great relationship with the DOD, for example. Their, you know, relationships are big as far as revenue goes. Is there any other exclusivity that creates an advantage on the revenue piece for this observation industry? Well, it ties to, you know, we do lots of craters with the U.S. government, cooperative research

Starting point is 00:35:08 and development agreements. And we do them with everybody from Lawrence Livermore Labs to Jet Propulsion Labs and many other U.S. funded entities. That gives us access to research and development. It gives us access to technologies that these commercial companies don't have. So we keep building our technology base internally that we're able to build superior products on a commercial basis as we commercialize military technologies. And maybe talk to us a little bit about the margins as well.

Starting point is 00:35:37 You mentioned this new facility going live, so you're going to have some economies of scale once that is live. How will that differ from today? What does the margin improvement look like from today? I mean, we'll see margins going in 2021. We're looking at a gross problem margin of about 26%. But as we get into a SaaS model with data as a service, you'll see gross margins hitting 75% by 2026.

Starting point is 00:36:03 And so the data is a very, very high margin business. The satellite margins will also improve. You know, you will see some price compression in terms of the satellites, but margins will improve faster than the price compression because of automation. So we will get more sophisticated in our manufacturing process. Right now, a lot of it is by hand and bespoke. But now we're getting to a point that we're standardizing buses and standardizing satellite buses for in all different sizes.

Starting point is 00:36:31 And by doing that, we're able to build them en masse and build them at two-thirds of cost. What is the cost of a Predasar up in the space? What does the cost of a Predasar look like today? So all in for building it, launching it, and running it for five years is about $20 million. And at that same time period, we'll get about $120 million of revenue. And how many customers do you think will make up that $100? And the bulk will be a handful of customers. Wow.

Starting point is 00:37:03 Incredible. So you have chosen SPAC sponsor, Tailwind 2. Talk to us a little bit about why this particular sponsor. What did you see in them and what do you like about them? You know, we picked Tailwind. We did a bakeoff of a lot of different SPACs. We liked the experience of the management team there. They were very entrepreneurial.

Starting point is 00:37:23 They built their own businesses. They got us. They understood us. They understood what we were going through. They had a lot of experience with technology, and they had some exposure to space in the past. And so it was a very easy conversation, and that made it a lot easier because they understood what we were doing. Let's talk about the valuation, because it seems maybe more conservative than some of the other competitors that have gone public recently. I'm kind of curious as to why that is.

Starting point is 00:37:49 You know, this is not the first company we've taken public, and we understand the need. You always want to leave money on the table because you know you're going to make it up down the road. You know, you want the institutional investor to feel there's a value there. You know, we could have gone from applying the sky valuation, but we try to be pragmatic and look at it like, you know, we want to, you know, we know we're going to perform. We know we're going to deliver. And we want institutions to get interested in what we're doing, investing in the company. And, you know, but we are, you know, and we are comfortable with our numbers. And whatever we gave up today, we're making up tomorrow.

Starting point is 00:38:26 So we're not too worried. So, you know, stock price only matters the day you sell. And just for those listening, as I'm understanding it, the SPAC is going to make up something around 19% of the overall company once this closes, whereas the planet SPAC was only about 12.5% or so percent. So you're actually capturing quite a bit more equity in this particular opportunity, it seems, with this lower valuation. So I think that's kind of interesting, just to kind of note.

Starting point is 00:38:52 All right. So what are the next steps as far as taking this thing public? I know it's got about a Q1 projection to do so. What are the next steps along the way? Are there more diligence or what does that look like? We just filed our S4 during Thanksgiving. We wait for the SEC comments. We'll do a few rounds of comments with the SEC. Once we get cleared from the SEC, then the SPAC will then go for vote. And that takes about 30 days. Once the vote is cleared, we're a public company. So hopefully, by the NQ1 in a perfect world, we'll be public. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer.

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Starting point is 00:43:04 planet or does it just tell you more about the space and the excitement around this in general? You know, if you look at space specs, everyone tries to group SPACs in one bucket. And you can't do that. You have space facts have been an outlier in a good way. Rocket Labs had 3% redemptions. Planet had 2%. You know, space is becoming an asset class. It's becoming, you know, when people are finally acknowledging it, banks are finally

Starting point is 00:43:29 bringing on analysts to cover space, they're bringing on investment bankers to bank space. It's becoming an asset class similar to automotive, similar to. Air Force of Defense, similar to consumer goods. As we become an asset class, you know, people want to own part of it. You know, it's exciting. You don't know me wrong. You know, people are excited about space, but they also know it's the future. And, you know, there are very few things out there that have a lot of hope in the future like space does.

Starting point is 00:43:59 And so we're very, we're seeing a lot of excitement from not only the institutional investor, but the retail investor as well. You know, it's exciting to, you know, wake up in the morning and solve, we solve problems. People come to us with a problem and we figure out how to solve it from space. And we get to, you know, we get to work with some really amazing technologies and some really smart people. And it's fun. It's, you know, I mean, listen, it's an exciting.

Starting point is 00:44:24 It's very exciting to go to work every day and do what we do and, you know, see things going to space and see them work. And it's not too often. You get to be like, wow, we're putting something to space today. And we've done that, I think this year we put, oh gosh, I mean, you don't have many salaries in the space this year a lot. And it was great because all different kinds, doing different missions, different things. We did one called SV2 with Lawrence Livermore National Labs and that we're super excited about because we're taking optical imagery of the earth at a fraction of the cost that's ever been done before at our resolution that's never been done before. And it's just phenomenal, the quality of the pictures that we're getting back on a demonstrator that we're,

Starting point is 00:45:05 we built. And so it's fun. You know, if you can wake up every day and go to work and say, wow, that was a fun day. And you're doing great things and you're keeping the country safe. You know, you're checking all the boxes at the end of the day. Very cool. So for those who are interested in learning more just about this industry in general, what are some of the best resources you could think of to share with them to get them a little bit more up to speed on it? You know, there's lots of place. Unfortunately, there's no great place to get up to speed. there are lots of websites like satellite network news

Starting point is 00:45:40 like space news you've got lots of analysts of the banks that are writing pieces that are getting better every week you have but there's no real depository there's a real go-to that you have for space yet

Starting point is 00:45:55 you have people doing different aspects like via satellite just covering satellites but there's no this is a must-go-to place to learn everything you want to know about space. It'll happen, but there's nobody yet. Okay, so talk to us a little bit about the management team at Taryn. I understand there's a number of different ex-military executives on the team, which is pretty unique. What is the advantage of that or was that intentional?

Starting point is 00:46:19 How did that come about? It was by design and by luck. We have a lot of amazing former military leaders like retired Major General Roger Teague, retired Admiral Boris Becker, retired Lieutenant General David Mann, these people were the customer. And it's a testament to what we're doing here. So Roger left Boeing as the head of space intelligence and missile defense to come to us. He left the world's crissiest job to come work for a startup running defense and intelligence. Why? Because he knew the future of what we're doing is tremendous. You know, and he ran all space and space procurement for the DOD and the IC community. when he was in the military.

Starting point is 00:47:05 If you look at Boris Becker, who was a rear admiral, he ran all space for the U.S. Navy, and he came straight from the Navy to us, where he could have gone anywhere. He could have gone to Lockheed, Boeing, Northrop, or a million other places, but he chose us. Or David Mann, who ran missile defense for the U.S. Army. And, you know, he is another person that's just, you know, he could have gone anywhere. And he came to us. And they're all coming to us, along with a lot of other colonels, lieutenant colonels, and all these people whose service were very grateful for because they were on the customer,

Starting point is 00:47:40 they were on the other side, and they see the products that we're building, and all the products that are necessary to keep the warfighters safe and to serve our country. So it's thrilling to have such an amazing pool of talent kicking around. And speaking of talent, you're at the helm of this, but you're already a very wealthy guy. I mean, this is not your first company. You've done this before and exited some companies along the way. I'm kind of curious as to your extracurriculars. It looks like you've even won some Tony Awards from producing some plays on Broadway, I believe.

Starting point is 00:48:15 So you must have had that retirement thought process along the way at some point and said, what do I do next? 21 years ago, I tried to retire and I realized I don't play tennis. I don't play golf. And it was really bad at golf. But I liked working. And so I went back to work. And some things were done just for fun or to see if I could do it.

Starting point is 00:48:37 Doing the Broadway shows like Jersey Boys or Augustusage County started off as a goof. Someone asked me if I wanted me to do a Broadway show and I'm like, I don't even like Broadway. Why would I do this? But you know what I said, if I'm going to do it, I'm going to do it. I have two conditions. One, I want to win a Tony Award. Two, I want to make money. If I can't do both, I don't want to do it.

Starting point is 00:48:57 And my buddy goes, done deal. He was, that's a joke. And we did it. Jersey Boys was our first show. It was a billion dollar show in Broadway. And then he said, we should do a play next. And I was like, okay, see him up with same two rules. Got to win in Tony, got to make money.

Starting point is 00:49:14 And we did August Ossage County. Clint Eastwood did turn Jersey Boys into a movie. And a Mel Streep starred in August Ossage County when we turned that into a movie. It was, Jersey Boys won a Grammy Award, a, And I have a gold record and platinum record sitting outside my office from it. And August Lusselstich County wanted a pulled surprise. So it was something fun, something different. But definitely not a passion.

Starting point is 00:49:40 But it was definitely, being a native New Yorker, it was very entertaining to do. As my mother dragged me of these shows when I was a kid involuntarily. But now I look going forward, you know, in space, that's always been my thing. Every since I was a kid, wanted to, you know, do something in space. And when the opportunity arose to acquire tieback, I jumped at the opportunity. I never looked back. And it's been a blast doing it. And I'm going to keep doing it.

Starting point is 00:50:04 I signed on for five years to stay on as CEO. I just started in March. And my business partner ran it for the first eight years. And then he goes, tag you're it. And so I said, look, if I'm going to do this, I want to do it big. And he said, knock yourself out. So here we go. Bring some mind another space CEO, which is Elon Musk.

Starting point is 00:50:24 And given that you guys partner with SpaceX quite a bit, I'm curious what that relationship looks like, where what the experience has been working with someone like SpaceX and maybe particular Elon himself? I never met the man, but I could tell you he's obviously brilliant. I mean, everything he touches turns to gold. And they are a very reliable partner of ours for launch. You know, and their rockets don't blow up. And that's always a key metric.

Starting point is 00:50:50 And they go where they're supposed to go, which is a key metric. At a price, that is great. So we've been very thrilled with SpaceX. and the product and the quality of service they've been giving us. So not all the complaints on our end. So Beyond Taryn Orbital and your Tony Award-winning shows, you've done a number of investments in multiple categories, space specifically, of course,

Starting point is 00:51:14 but then there's some others as well. I'm kind of curious about your investing experience. What have been some of the biggest wins, maybe some of the biggest failures, what are the biggest learnings from both? You know, there's an expression. Successes are very public and your failures are very private. You know, we've been very lucky.

Starting point is 00:51:32 We've invested in a lot of great companies over the decades. I think at one point we had investments in 156 different companies. We did C, C, Series A, Series B. We used to own a lot of websites like Earnings.com, which we sold the Thompson Financial, to Edgar Online, which we took public, did on a residential read. I mean, that's why we did javelin, a residential mortgage, which we sold to Armour, emerged with Arbor residential. We did our SPAC called Enterprise Acquisition, which became Armour.

Starting point is 00:52:03 We are in space. We were very active. I was trying to build an ecosystem. So we invested in the GP in Space Angels, and they have been amazing. And through them, we met a lot of great companies like Made in Space, Nanorax, Hoggai-360, Atlas space, analytical space, Ersa Majors, Leolabs. The goal was to try to build an ecosystem of different companies that could all work together. And most importantly, companies that I know could succeed.

Starting point is 00:52:32 You know, we weren't trying to mine asteroids. We weren't trying to build a lunar colony. We were trying to make money. And, you know, like we sold made in space, we sold nanorex, things that we can monetize. And things that are real businesses run by real people. And that's kind of how we look at these things. not looking at pie in the sky stuff, even though it's all in the sky. How much does the team play into the diligence or the consideration, meaning you find a perfect

Starting point is 00:52:58 company that's fitting that piece of the puzzle in the ecosystem. How much do you put into the weight of the execution? I view it, you always been on the jockey, not on the horse. And that's one thing. And I always, I love a management team. You know, when they start telling me how they're going to go IPO, I always remind them, you've statistically speaking, you've been a bit of a team. chance of getting struck by lightning than you do of going public. I think it's a one in a three

Starting point is 00:53:24 to 30,000 chance of being struck by lightning versus one in three million chance of going public, something like that. You know, I always go to CEOs and I say, look, I'll give you the money, but I want you to personally guarantee it. Those who say yes, not that I want them to, but those who say yes, I know they believe. Those who be like, no, I'm not going to do that. They don't believe. So, you know, every business I've gone into, I've gone in, you know, head first and, you know, bet the farm many times on Globix I bet the farm and many others I bet the farm. And, you know, had a few close calls over the years. But it all works out because I believe, I believe that I was building a better product, a better, a better system, a better way of doing

Starting point is 00:54:03 things. And eventually, you know, the numbers are proof of their own. As long as you keep meeting and exceeding Wall Street's estimates, you will continue to, the street will continue to support you. Between my business partner and I, we've raised over 10 billion of equity for a wide variety of companies and over 100 billion of debt. This will be our 17th company we've taken public together. And this will be our fifth unicorn. So we've had an immense 30-plus year career of building great businesses. All right. So before I let you go, I want to just make sure I give you an opportunity to hand off to our audience where they can learn more about Taryn Orbital, where they can learn more about you or follow along with what you're up to and any

Starting point is 00:54:46 other resources you want to share. Sure. People can learn more about Taronorbital at ternorbital.com. I finally got a Twitter account. I'm at Mark Bell, Mark with his seat. And look forward to hearing from everybody. Fantastic. Well, Mark, this is really enlightening.

Starting point is 00:55:06 I'm very interested in this space. and this is just another piece of the puzzle that I'm putting together. And it was really cool to learn about. So thank you for coming on the show. I look forward to it. I look forward to meeting you one day. All right, everybody, that's all we had for you this time. If you're loving the show, please don't forget to follow us on your favorite podcast app.

Starting point is 00:55:22 And I'd like to thank the folks on Twitter who brought to my attention that there are other competitors in this space. If you want to reach me on Twitter, you can find me at Trey Lockerby. And if you're looking for opportunities for your portfolio, the best place to start is our TIP finance tool. Just Google TIP Finance and it'll pop right up. And with that, we will see you again next time. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to achieve financial independence.

Starting point is 00:55:51 To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision consult a professional, this show is copyrighted by the Investors Podcast Network. written permission must be granted before syndication or rebroadcasting.

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