AST SpaceMobile - Space-Based Sensing and Targeting Confirmed

[00:00:00] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies. 18+.
[00:00:24] Speaker B: Still wearing those old cargo shorts? If your wardrobe's due for an upgrade, but you don't know where to start, you need Stitch Fix. Your stylist learns your size, your style, and your budget, then sends a box picked just for you. They always nail the fit. No store, no hassle, no subscription required. Get started today at stitchfix.com. I'm so excited. That's stitchfix.com.
[00:00:54] Speaker C: Good afternoon. As we all try to cross-translate between English and Spanish, I was reading a comment from a guy with a Porsche profile pic, so naturally I like him, um, Jonah Tanga, and he was responding to Tut where Tut was requesting that I do Este podcast en español, pero no puede. And he goes, "I'm telling you in Spanish, this doesn't look good." So it's it's just interesting. Everyone's freaking out between pause and AI, which I'm kind of on the David Sachs camp. I'm at this point in my life like to judge a book by its cover, and when you look at Sam Altman and sort of just the weakness in his face, I don't trust this guy as far as I can throw him. And then when you look at Dario, I think Elon said it best. It looks like this guy's just chronically constipated, and he's always wearing these like thick sweaters with the collar. I don't know what they're called, but it's like old man Mr. Rogers sweater, the disheveled hair and the eyes sort of cock sideways, looking like he's so concerned. These are just like not trustworthy people when I just sort of look at them, at least in my own opinion. So it's a little scary that some of the apparently most promising weapons of mass destruction are in the hands of people that. don't look particularly trustworthy, but they also seem incredibly disingenuous given their cash burn rates and things like that. It does make sense why they need to figure out a way to slow down because their capital intensity is out of control. And it almost just seems like this competitive downloop they have where every new model is just incrementally more expensive. We don't know the numbers, but potentially not generating very high or good incremental revenue. As there's cost pressures and things like that, and you know brave new world. We have no idea if these frontier models are profitable businesses. They generate a lot of revenue, but we don't really know if they're profitable. And so anyway, you have this AI stuff which is taking down the futures. You have the entire country of Spain freaking out because a guy named Espíritu Quintana, who seems like a good investor—I was doing some research on this guy. I never heard of him. He was following me, so. all of a sudden, I realized that I should be nice to him. So I did a little research on this guy. He seems like a good investor. He seems like he's kind of like a better Antonio Linares because it seems like he makes money predictably, and he owns these big idea themes, which I respect. So it seems like he was early in Tesla, understood Bitcoin, and AST SpaceMobile. So what's not to like? Seems like a good thinker. And so then my DMs exploded. I was trying to live a normal life, you know, I was camping this weekend and made the critical mistake of when I got to the campsite, thought, oh wow, imagine my luck. There was like a really good spot for a tent left that was closest to the water. I'm thinking, this is awesome. Well, pro tip, check the tide before grabbing the last tent spot closest to the water. So I was sitting there at 10:30 at night because I have Surfline. And so I was just checking the tide and high tide was at 10:30. And wow, that water got close to my tent. And so my son was already asleep. So I'm like, oh God, do I have to like wake my son up, pick up my stupid tent? I have this massive Gazelle tent, but I ended up having like maybe 7 to 8 feet of clearance before my tent was going to be submerged in the tide. So that's a little also a PSA is, you know, be wary of attacks from Spain. You know, I should have known, right? The Armada. This is like in their blood is just like go attack English people. But you know, there's that. Then you got to check the tide before pitching a tent. And then there's AI regulatory capture. What a weekend. So I'm trying to check out from it. I was just navigating a playdate where my son's best friend came over, but then because the parents were busy, that kid's brother came over who happens to be the same age and in the same class as my daughter and she has a crush on him. And so, imagine the fun I just had chaperoning sort of a playdate between 2 socially awkward preteenagers. My wife and I are just laughing our asses off the whole time because we really like this kid and really hope that my daughter marries him. So, we're playing the long game here. But, back to reality, and my reality is AST SpaceMobile. So nerves are frayed. X has become a particularly terrible place to be recently. And I was noticing this guy I really respect a lot named Yeah Dave, who's just a cool guy, but also seems like a phenomenal investor. He took a month off X, and I was thinking, yeah, I got to do the same thing. I mean, now what you have is just everyone fighting with each other, me included. And so I've just gone on these blocking rampages, and some of these people will be like, seemingly pretty bad people. Let me go to my DMs again, 'cause sometimes it just blows my mind. Like some of the people that DM me, like this one guy goes by an ISIS handle, El Baghdadi. And so, you know, if you have a screen name from a known and since assassinated terrorist, I'm not gonna engage with you. And so there was some guy that, you know, felt offended, but he had like a very misogynistic track record on his posts. Dude, I have a daughter. I'm not, I'm not into that. And so I've retained the right to block you. It's always a good reminder that I'm running an unpaid parody account, so I don't really need to honor your privileges of free speech. It's not my problem. You're, you're entitled to it, but I don't need to see it. And my path of least resistance, and in fact cathartic outlet for most of this, is just to block you and delete you and just I'm not, I'm not the New York Times here. And so there's a lot of that going around. Everyone's fighting. Um, you have, again, you know, the Spanish people crashing out, which is a shame to me because it's actually pretty interesting how many of these Spanish people got involved. ASTS has a pretty big presence in Spain. Uh, Abel is, is Spanish. He's obviously Venezuelan, but he's, um, he's obviously Spanish, um, descent. And it's a big, you know, big group of enthusiastic people. So it's always not great when we lose a country. And so I tried to understand this guy's perspective. I wasn't going to sit there for 4 hours and read subtitles because I'd rather stab myself with a blunt instrument than do that, given all the hours I've already spent on this. But the basic premise I could gather when doing an AI summary is he did the physics, which I've done. He's an engineer. I'm not. He concluded quite rightly that when you have a couple of things that are a constant, one being spectrum, so there's an amount of spectrum you can have, and then spectral efficiency, which is how much data you can move on the spectrum, and then you look at how big a beam is, beams— we have very small beams, all things considered, but beams are still big. Beams are shared by people in them. He concluded that ASTS was not a substitute for very dense urban environments that are served by terrestrial capacity. I could have told you that. And so then I get all these people whining in the comments like, kook, you should listen to this contrary view. Again, I don't have to do anything. I'm not the arbiter of opinion for AST SpaceMobile. I don't work for the company. I can be as crazy as I want. I should be one of many voices if on any voice you listen to. But having said that, I humored them. So I tried to get an understanding of this guy's perspective. And I was thinking like, I don't know if he really understood the problem statements of ASTS because then he seemingly arrived at like a $200 or something target price, but then he was discounting it back at some really high discount rate. And then he goes, oh, it's fairly valued. Well, The first problem with that, which is always quite interesting when people discount something back, that's the rate of presuming you're right and you won't be, but presuming you're right, as someone who went to one of the best business schools in the world and got a 4.0, and literally I wrote a finance textbook with one of the major publishers, I feel like I can go on a limb and say I know a little bit about academic finance. And so the funny thing about academic finance is academic financiers actually don't really make any money. One professor I worked for was actually really funny. He just was so— he was a University of Chicago guy. He was so convinced of efficient market theory that he literally just threw darts at a paper to pick his stock portfolio. When my friend and I were helping manage his portfolio, it was pretty funny because it was truly random, and he actually outperformed the market because he just randomly bought Microsoft. Anyway, academic finance is a funny thing. Supposing you can accurately predict future cash flows, which you cannot, but you can try, And I have, and so has the spiritu. And you know, great. And then you know, you say those are going to happen in 2028, 2030, whatever, and you discount that back. If you discount that back at 20%, let me just see if I can figure out what his discount rate was. Let me just see if I still have this chat open. I have so many AIs I use now, I actually forget which AI. The spiritu. What the hell is this guy named? of a weird Spanish name. I've never heard of it. Um, but let's say you were using a 20% discount rate. That's what you earn. Um, and so what discount rate was he using in his analysis? So if you're using a 20% discount rate and then you conclude that the stock price is only worth $68 or something, which I think is what he said, well, for one, you should understand the sensitivity to your discount rate. as the company de-risks itself, so it looks like he was using a 10% fixed hurdle rate. Oh, here we go. So he said that the gross nominal equity value was going to be $210 by 2036, and then he discounted it back 12 years to 10%, a reasonable placeholder, and that gets you to $68. So implied in that is if you own it, it's not worth $68 forever. It's worth $68, assuming you're right on all those assumptions today, and then you compound it 10% per year. Well, then what happens if the right discount rate goes to 5%? Well, you need to understand the duration risk you have. So with a long-duration asset— duration is a pretty important concept in finance— you're going to have monstrous moves because there's convexity to it. So then you need to think, well, what if the right discount rate is 5%? Now, why would the discount rate be 5%? Well, a discount rate should be the nominal interest rate minus growth. Well, this is going to be a very high-growth company. So all of a sudden you can just see why doing it the academic finance way is pretty freaking dumb. This is the problem with academic finance. It's just not actually really good at translating that into making money. What you should really be doing is sort of the things I was sharing on one of my threads today, is generally figure out the scope of the revenue opportunity, Generally figure out the bands around it. Will they get it done? And then keep it really simple. But if you're starting to do a DCF on something like AST, you've already kind of lost the battle. But he's still getting into a $210 future price, and he's assuming that that will accurately happen efficiently in 2036. You know, dude, welcome to America. We do stuff fast over here. This is not. España. And so the second the market starts to understand that these things will happen, guess what we do in America? We trip over each other taking risk to get there first, which is why then we'll have a collapse in the discount rate and it will go up way faster than you think. So he didn't really even seem to have a problem. It doesn't seem like a short. Um, it seems like a smart guy. Again, I couldn't actually see the video, so I don't know the tone he was using. Um, I can ask Gemini, actually. What tone was he using? Was he cynical to the company? AI is incredible. So I really don't know because I didn't— I just can't consume his content in the way he's delivering it. But I do see that a lot of people are freaking out about it. And so his tone was somber, analytical, and respectful other than cynical and hostile. He does not treat AST SpaceMobile as a failed project or a bad company. In fact, he was an early institutional bull. pragmatic, academic and dispassionate, disciplined capital management, respectful transparency. I don't know. It seems like a pretty reasonable guy to me. And as we dissect some of his arguments, it actually creates some useful debate, but more importantly, probably some really useful clarifications for people who are new to the stock. And so the right analog to me is thinking about what you have in your garage. And so I have a pretty Awesome garage, if I could flex a little bit. You're never going to see me posting pictures of fancy watches on my wrist because I'm not a watch guy because I've gone to Brazil too many times and I'm worried about someone macheting my wrist off to take my watch. Personal preference of keeping my hands. But my garage is pretty dope. But when I think about the cars I have, some of them are unbelievably low margin, but They're mass market. So my Toyota Tacoma, which I actually have an awesome one, so that's actually probably pretty high margin for Toyota, but that car, they're going to sell hundreds of thousands of them. It's a mass market vehicle. In other words, his urban dense analogy, but the margin on that is going to be incredibly low. Mass market product, low margin. There's usually a relationship between a lot of those things. My Porsche is unbelievably low quantity. You could go your entire life and unless you live in certain areas of the country, you'll probably never see my car. It's just a very rare thing. There are not many of them. And the margin on it is eyeball-popping. Porsche, when you do the math, it scales. As you get super duper rare ones, they crucify you. Because they can, because they realize that that buyer is pretty price insensitive because they're neurotic and they just want that thing. ASTS is the limited-run Porsche. It is the Ferrari. This is what it is. It is the highest value at used connectivity that will be offered in the market. It is not meant to be serving everyone at the same time in New York City. Now, if there is a 911 event, God forbid, hopefully that never happens again. But my family was in the North Tower, or my in-laws were in the North Tower, and thank God decided to not listen to their HR department and ran for it. And 176 of their colleagues died. And the horror, which we relive every year, is when my wife and her parents kept calling relentlessly and the daughter didn't pick up the phone, and they saw the tower just collapse. And you could imagine what they assumed had happened. Well, in that moment, and thank God that didn't happen because she had gotten out by the grace of God, but the cell phone network crashed on 9/11. That was also 25 years ago. Cell phone network is very different, but cell phone networks go down. In that instance, that capacity, it will serve all of New York at some level, but it is not going to be so people can catch up on the latest season of Valda. or the gentleman. It's going to be for emergency communications, probably voice and text, critical infrastructure. The remaining capacity in non-emergency environments is going to be segmented out. So for someone like Anpanman, who's a high roller, he's going to be paying a lot so that he can have connectivity when he goes to the Hamptons and does whatever he wants. My friends that are portfolio managers, same thing. They're going to be able to pay Whatever they want, they truly won't care, but just what they cannot ever have happen is not have their phone or their Bloomberg work. And so you're gonna be segmenting the market. The margin's gonna be crazy on some very small subsegment and affinity groups, and then the mass market product will be constrained. You're gonna have very limited data allowances because the system, but a lot of people are gonna pay a lot of money for a little bit of data. And that's what I think Espírito is. I might be mispronouncing his name, which I'm not doing intentionally. Let me just see what his name actually was. Oh, Amerito, not Espírito. Amerito, I think, was getting tripped up on this concept. Could be wrong. Don't want to speak for him. Smart. Definitely a smart guy. I'm not assuming he doesn't understand stuff, but I do think this is a nuance. And if you understand his argument, which I'm again not saying that I truly do, He's also not bearish on the company. He thinks it's worth $210 and he just discounts it. So anyway, that was just sort of like an interesting thing for me to just think about. It's always kind of fun when someone comes out with a negative, not even negative, but just like something out of the blue. And it just gives me a chance to be, um, you know, rethinking something, which is useful. And so going to this point, and I'm not calling Amerito a David Einhorn, I would save that insult. for someone else. I actually think Amareto and I are going to be good friends. But there was an interesting article that came out, or interview that came out about Ron Baron, who I do not know, but I do know people that work for him and I have worked in his building. And Ron Baron is the big thinker. So this is not the guy who's going to be doing a detailed DCF and discounting it back. He's looking for the broad tidal movements, the big secular trend, and then doesn't trade. And there's this funny thing about how George Soros had seated Ron Baron along with some other analysts, and the other guys were trading like crazy, and Ron Baron basically didn't even touch his position. He was just buy and hold. This has been the magic of this guy. And I used to laugh at him because he'd be owning Tesla and all my friends were short Tesla. And then finally, when I owned Tesla and I was listening to him, I thought— I had this crazy model on Tesla, every detail modeled out, He just had this back-of-the-envelope calculation. I kind of had that moment, I'll never forget. It just hit me how simple you can make it and how simple the great investors are able to contextualize something. That's where I've really tried to change my own style over the years. Simple does not mean dumb, and simple does not mean that you're not doing research. Simple just means you're abstracting away a lot of the distractions and the complexity that can obfuscate the true big move. Most of the great big moves in stocks end up being so amazingly simple in hindsight. It just blows my mind. This is why I love investing so much is because of this challenge where someone who's wired for complexity, which I certainly am, this challenge to have to slow it down and to abstract away all of this noise. And so this is actually something I use AI for quite a lot, is really challenge it to help me with my top of funnel, to abstract away all of the noise and really just get to some of these big secular trends. And Ron Baron is one of the best in the world at this. And I think he's often dismissed because he sounds very simple. And so gunslinger hedge fund guys, We'll usually dismiss him like, ah, slow guy. Where's the alpha? And the alpha is in the patience and seeing the big swing. And so just for your own learning, never mind ASTS, I would watch this Ron Baron interview and just to learn how this guy thinks. And so then when you go to the types of things Ron Baron has made money on, it's things that are hard. And so Tesla, SpaceX, These sorts of things were not marked by—
[00:21:26] Speaker A: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration blog, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, set up required compatibility and availability varies, 18+.
[00:21:56] Speaker B: Still wearing those old cargo shorts? If your wardrobe's due for an upgrade, but you don't know where to start, you need Stitch Fix. Your stylist learns your size, your style, and your budget, then sends a box picked just for you. They always nail the fit. No store, no hassle, no subscription required. Get started today at stitchfix.com. That's stitchfix.com.
[00:22:22] Speaker C: Immediate home runs. There's production hell, there's blown up rockets, there's missed deadlines. You know, I was actually just looking at this new Tesla Roadster speculation around it. You know, the first Tesla Roadster never happened. I don't even know if it would've been successful 'cause it's more of like a remake or whatever that is. Now the guy that ditched his own company, I think, to go to Bugatti, which is pretty cool. But you can't let the little details get in the way of the big idea. You need to make sure there is a massive idea, and then most importantly, the entrepreneur and the team that's able to deliver it. And so the hard part with ASTS I see just happening— in hindsight, I'll be able to say this with conviction. Right now, it can just come across as me being seemingly tone deaf, condescending, or arrogant, or all the above. But the reality is scaling is hard and there's a very big difference between hard and impossible along the way. Hard can make people give up and then it becomes impossible because people don't have the follow-through, but doing the first of anything. Well, first of all, building a company is really hard. Building a company where you're doing the first thing in a hard industry is going to have mishaps and this complete sort of defenestration of self-defenestration people take with this of like, some comment was like, has this company done anything to dispel the concerns of investors? I'm just thinking, I want to use Fable to hack their brokerage account and sell their stock for them. I wonder if there's safeguards against that. Be like, look, Fable, look at this person's posts. They clearly shouldn't be investing in these things. we help them and hack their account and sell their position? And Fable will be like, you know what? That is alignment. That is good for humanity. And so I'll see if I can do that later. But these are people that are just not equipped to deal with this type of investing, which is fine. It's no statement against them. It's just my observation as someone who does this. It's really hard. You have to be tough. The volatility will grind you into pieces. And it does. And so But these companies that do something hard first, by the time they get to the top of the mountain— think about any sort of military tactic like Bunker Hill. If you get to the top of the hill first, it can be really hard to get to the top of the hill, but then the people that are trying to come up behind you, shooting down is a lot more advantageous than shooting up. And ASTS is going to be having a lot of pillboxes and machine guns on the top of the mountain. Able to shoot down to anyone that tries to follow them. And that's the type of thing that I don't think many investors quite appreciate it. And so chasing that prize now is blood and guts, but once you get there, you're going to be able to slam the door behind. And so the thing that gets compounded here is by taking first prize, you also take away The actual pathway by which anyone could ever compete again, because you're going to lock up all the MNOs. There will be no business. There'll be no go-to-market swing available to any second follower later. So this is different from people trying to chase Nvidia. I have no doubt, and Google's already proven it, that these AI companies are going to be able to create their own silicon. Will it be as good as Nvidia? I don't know, but like, they're going to be able to do it. There's no inherent network effect there. If you can design it, then you can go get Taiwan Semiconductor to build it. I know it's not that simple, but then beyond that, they already have customers for the silicon. They are the customer. There's no regulatory barrier, things like that. It's just someone got a big head start. Other people are catching up. I believe that there'll be other options for silicon on the market. Take ASTS though. So once they have their constellation up, and they have all the MNOs across the world. How does someone enter this market? It's going to be very difficult. Are they going to build a constellation on spec, have it flying around deorbiting while they knock on AT&T's door and pray to God that they get signed up? Who's going to be willing to take that $3 to $4 billion bet with 7 to 10 years of lead time to take to take that chance. I just don't see it. And so once the Marine Expeditionary Force of ASTS takes that hill, I just don't see how anyone can really come behind them. And I think what you're seeing with SpaceX is SpaceX with infinite resources, they have kind of realized this. And so they're not even trying to attack that hill. They're actually just going to a different hill and they're trying to just go direct to consumer. But in reality, what I do know now is SpaceX, I think, has all but abandoned this anyway. They're just going to be doing AI data centers in space, which makes all the sense in the world. But we can just see the continued support that ASTS gets. What was nice this week, you know, awkward for the Marine Expeditionary Force analog, but Japan supports this Marine Expeditionary Force. And so, you know, how things change in 80 years. And JLo is continuing to put out regulatory filings. Uh, the Japanese government continues to discuss the Rakuten ASTS opportunity, and by all accounts, we just see this moving forward. But we see also the logic. And so, quote, right now the Ministry of Internal Affairs and Communications is working with Jaleo. So when it comes to direct communication when using satellites from now on, ultimately there's a strong possibility that things like direct communication with weapon systems Will become extremely necessary. Here we go. All of a sudden, there is TAM creep. No longer about disaster recovery, which is important for Japan. It's also about military use, which makes sense. Japan has some pretty volatile neighbors, and so they understand. And then we have Europe waking up again. Europe has become a particularly interesting political machine to analyze, as we have, you know, obviously some nationalism coming back, which I think is going to mean splintering of military resources. It's, it's hard to imagine the EU when you actually really think about it. Doesn't make a whole lot of sense how a bunch of very distinct, uh, national identities can link up as states and act as one. I see how creating a trade zone is one thing, but the military cohesion hasn't been tested, and the EU is really not that new. So I don't know, but does make sense to me why EU for sure needs satellite, uh, connectivity and layers. But then are the individual countries gonna totally trust each other? I think we'll find out pretty soon. Germany potentially being the First country that gives us some more clarity on this. But Ursula von der Leyen was talking about the Iris Squared initiative, and so they go: Our security on Earth increasingly depends on our security in space. And then she talks about how they're building the Iris Two constellation. We'll see how that goes. But then meanwhile, we have Macron out there again talking about it. but then seems to be talking about Satellite Connect Europe, which already has all of the key ingredients lined up to provide exactly what Europe wants, especially as it relates to the consumer applications. And what we know is what we just saw in Japan is if you first solve one of the many critical problems, whether it's disaster recovery as one, just consumer coverage as two, or military uses as another, leading with one naturally leads to others because of the way these systems scale. And so that's where I do believe there's going to be this collision where what might seem like a bunch of purpose-built systems for one of those 3 applications, very quickly, the first of those systems that is scaled and up starts to take over those other use cases as well. And that becomes very powerful from a revenue perspective. And it's something I don't know how to model. And I'm also pretty sure that Amerito doesn't know how to model it either. But what I do believe is that when you take into account the words, it's almost like the words, the divine words of Scott. He has said, we are building against a revenue opportunity of tens of billions of dollars. Easy comment to hear and have it go out the other ear, another to start working backwards and figuring out why he says something like this. He's a conservative guy. And so that I posted my own sort of napkin math on that in that tweet where I was just kind of thinking out loud about Amerito and you can see how I can kind of do it. And I was looking at this since I wrote that research, you know, a lot of things have shifted upward. Jay Leno shifted upward. T-Mobile, which hasn't been announced yet, no one needs to point that out, but T-Mobile will get announced. That increases our US opportunity by a lot. The rapid developments with Satellite Connect Europe have advanced a lot. So I think a lot of my initial numbers, which we're getting to these big-time revenue estimates, I think all of that has maybe doubled over the past year as we've had developments. And that's exciting things. So to me, that's serviceable addressable market. That's the subset of the total addressable market. That's the stuff that we're really lined up front and center. And so then thinking about the US business, which is first and foremost one of the great defensive blocks of all time, because if you make it so that no one else can access the US market, you've permanently tattooed the economic viability of any other constellation. Because you really have to believe that ASTS is going to have probably the lowest cost basis in a constellation of anyone, perhaps other than Starlink, because Starlink is able to launch at cost, but not really because they also have to implicitly charge themselves for returns on their launch. But you could go down the rabbit hole on that concept. Nothing is free in life, but certainly Europe is not going to be lower cost than ASTS. They have high-cost industries. There's going to be a lot of national infighting, for example, between the Germans and the French, and they're going to look a lot like prime contractor deals, which are certainly cost prohibitive. Look at Boeing. And so the US market, if you've basically taken that off the table, given that everyone else is going to have high-cost basis anyway, but then be missing the world's most profitable and important telecom market, Good luck. You're not going to be in a good place in the cost curve. And if you know a lot about commodities, you always want to be on the low part of the cost curve. That's where winning happens. And here we have T-Mobile attacking Starlink again. And so reiterating that they will not enable Starlink to have an MVNO service or provide a backdoor to find an MVNO. So really taking a hard line that Starlink, if they want to have a direct-to-consumer service, which is not going to just be satellite, you got to find a way to do it with a terrestrial element, hence the non-terrestrial network hybrid network. And that's another thing that I think Amerito is missing. I'm sure he follows Katzi. I would bet Anpanman's life on it, as I have done repeatedly. And I would point out, Anpanman is still alive. And so even though I bet this guy's life on the regular, I keep him safe because of my prudent bets. But if this guy studied Katzi at all, you would see that Katzi's not saying that this is existing in isolation. This is part of a complex system, which the telecoms are aware of, where you have a hybrid network architecture. It's a pretty interesting concept. So a simple kook like myself might've thought in a vacuum of like, whoa, I have a satellite network. And thinking about it, like, I'm going to cover dead zones, you know? And then I add a little bit of Kevin Shen to my thinking and I'm like, oh wow, it's about gray zones too. Wow. But then I take a shot of the CATSI and it's like The Matrix. I see ones and zeros. And so then you start to think about the hybrid telecom network. This is where it gets really complex really quickly. But CATSI's shown that when you start to pair this with the degradation of the signal from a terrestrial network, and you start to effectively think of these little tent domes, like party tents, where we're almost like a circus tent, where there's this big spike and then it has this slope. The hybrid network starts to increase those tails with satellite coverage while then leaving that diameter around the terrestrial tower, you know, with the heavy lifting for that area, and the 2 work in tandem. And the revenue sharing between this and how this works, I really don't know. This, this is interesting because it gets gray because these networks are working together, unlike Starlink, where it's a roaming deal. You can't hit your tower, you roam, you scream into space, drain your battery, It's one or the other versus ASTS is working in tandem with that network seamlessly. How they apportion the value is an issue only the company knows now, but it's a big-time concept in this. It also immediately blows apart some of the monoline thinking that someone like Amerito is getting tripped up on, if I'm able to take a view on his work. And so I can quit blabbing about that, but it's really interesting stuff. And then, you know, again, we have some more data that supports the idea that Starlink sucks, but I don't think we have to really go down that route anymore because I'm also just getting more and more color from people, which I really appreciate them passing on, that the prediction that I had a long time ago was that Starlink was going to abandon D2C because it just doesn't make sense for them to do it. When I think first principles, SpaceX is a company that controls its own destiny. SpaceX is a great company. SpaceX is not a wholesale middleware provider to legacy telecoms. They think big. And I don't want to take away from ASTS here, but like SpaceX has their own DNA. They like to reinvent, they like to invent. and absolutely dominate markets that were thought to be impossible. That is what these guys do. The idea that they're going to be providing middleware to telecoms on a wholesale basis without controlling their destiny never made sense to me. I thought their D2C product was always a reaction to just try to wipe ASTS off the face of the earth by starving them of capital, creating FUD, getting everyone to puke the stock so that ASTS would go bankrupt and/or get sold. That was always my view. And so what do we have? Again, fast forward, AI data centers in space seem like it is a solved problem as per what we talked about last week. That would make sense where they're putting all of their best engineering talent. Why wouldn't you? It's a massive opportunity. And then you just have Starlink telling them that, The DSC service they have is a texting service. They want to stand up a service to compete against an MNO cartel, but as T-Mobile pointed out, they literally change their strategy every 2 months. T-Mobile made the point, if we did that, you would laugh us out of the room. Starlink and SpaceX can get away with murder because they're pretty impressive, and normal companies can't just literally throw shit against the wall. And that's what Starlink is doing because I think they have to keep this D2C narrative alive for now until they can come out and really show that they're going to launch a million satellites with AI data centers. And I actually believe that they are going to do that and it's probably going to be awesome for them and great. And I just cannot see how they're going to make the math math on D2C because they will have no partners. And so doing it by themselves means they're gonna have to go acquire all those customers with a service that does not work without an ability to actually add the terrestrial components. I just really struggle to see how that is a good idea when looking at the other good ideas that they actually have and can actually have an advantage of. So the Starlink perceived threat thesis on this, I think, will sort of fade away over time, is my personal belief. And it's not like the spectrum is useless. So I was having this debate with a guy who, it was funny, I was in my firm, we were having a debate about something with telecom and they don't, people in my firm don't know what I do on my free time. And so this guy was like, well, Cook, you know, Starlink is going to totally dominate all the MNOs. They're not going to exist anymore. They bought spectrum. And I was like, hey dude, you don't want to go, you don't want to go there. And he did. And so then he was like, well, gloves off, buddy. You don't understand. By day, I am random, boring finance executive. By night, I am kook, and he doesn't know about my Batman secret life. Then I was dropping all this knowledge on him about S-band, and it's not worthless. The reality, Elon's logic on this would have been as complicated as buying Bitcoin. You have $20 billion burning a hole in your pocket, and you need to do something. But Bitcoin's probably okay. I don't know Bitcoin, but like, it's probably okay. There's a finite amount of it. More money is going to go after it. It will probably go up. Spectrum is Bitcoin. You cannot make more of it. The demand for it is more certainly going up than the demand for Bitcoin is going up. And so it is truly a store of value. So buying some S-band from a distressed seller who was about to lose it, because Charlie really overplayed his hand, That then allows you to have massive optionality as you figure things out with your own telecom ambitions, that then worst case, you could sell it because you yourself just helped revalue it. But then also you could probably use it somehow, some way for some of your AI data center stuff. You can use it for Tesla. There's so many things Elon can do with the spectrum if he were to ditch what we commonly believe now is D2C. in my view, is just like a riskless trade. When I saw the trade print, I thought, oh my God, $20 billion. As you think about it, it's just a one-way option for him, no-brainer. So I don't really read into him dropping 20 Bs on Spectrum as a commitment of anything toward DTC because it was just him buying a store of value that has and will go up. Yeah, that's what I have to say about that. So then we have Justin Barrett, who is just a machine. Um, we gotta figure out, you know, if this guy does anything other than just read FCC filings all day now. He's like the new Katzy. Um, but he found this really good filing, uh, which was the 30-day extension for our STA. But most interestingly in this document was a part that, uh, talks about, um, the SDA, Space Development Authority, conveying its support for the STA. And they say it's in the national security interest. So the SDA has determined that the capabilities to be demonstrated under this STA are of significant interest to the Department of War, and more specifically, the Space-Based Sensing and Targeting Portfolio Acquisition Executive. Space-based sensing and targeting. Huh. Feel like the space mob was on top of this. I mean, this goes back to the Katzi files when Anpanman are like, okay, like, how are we going to tell this guy to like, are we going to tell this guy the stock's at $2? Like, you know, he's like Swedish. He's nice. He's like, this is going to be used for radar. And we're like, we are going bankrupt. And you know what? He was right. We didn't go bankrupt. Thank God. And he was right. And here we have it now. Proof for, for this guy was literally laughed out of the room by the experts, literally laughed out of the room. The vitriol, the invective, the venom. What other big words do I know? The pure hatred that was spread to this individual for him putting together little tidbits unlike literally anyone on planet Earth. He was the only guy to my knowledge that actually figured all this out. Was laughed out of the room. He didn't give a shit because he actually knows how much smarter he is than these people. And then here we have it in writing. And what is so crazy for anyone. that's newer to the stock is just to realize just how, how much crap we took along the way. And, you know, we were laughed out of the room by everyone for some of these things when we came to believe them. And here we have it. To me, it's just so shocking. It's just literally right here, written by the US government, saying we are testing ASTS with this spectrum for space-based sensing and targeting. There's a point where you get kind of jaded by these things and you're like, oh yeah, of course. You know, but the stock is below 60 and, you know, my TA says it's definitely going to 38. You know, it's easy to just kind of forget these things, but then you zoom out. Ron Baron. This opens up entirely new vectors of revenue. So let's think about it from Amerito's perspective. He's a— I like this guy's name, honestly. He seems like a good guy. But okay. So first you're looking at your consumer business. And so you start to go, oh my God, there's not many dead spots. And maybe you haven't yet believed in the gray zone. Zone theory. Maybe you don't yet know about the hybrid network architecture. Maybe you do know about emergency response, but how many emergencies are there? Then you think about space-based sensing and targeting. I don't know if he thought about that. Let me ask Gemini. So did he talk about space-based sensing and targeting? He spoke for 4 hours, so he might have. I don't want to dismiss that this guy might not have thought about this. But what's so interesting about these markets Is you're using capacity where they ain't, and so guess where you're probably not doing space-based sensing and targeting over Anpanman's house? And so why? Because unfortunately, ASTS is not going to be launching a guided missile at Anpanman's house. You know, despite my attempts at Claude, along with the Houthis, to create a missile guidance system to do the funniest thing possible. They are not going to use the system to drone him, which would then give me a monopoly on ASTS space production and my revenue share with X would skyrocket. So, I mean, look, let's just call it like it is. But Emeritu, now I know he did not model or discuss AST SpaceMobile as a space-based sensing and targeting platform. What he did discuss includes tactical secure communications, good boy, dual-use architecture, Interesting. And then talked about the margin impact, but okay. So he was actually pretty, pretty thorough, but the space-based sensing and targeting, think about the numbers involved by the US government. They're going to just be writing billion dollars and we've seen them, they're writing billion dollar checks here and there, because this is big boy stuff with Lockheed. You know, these are in Raytheon. These are big things. And importantly, you're going to be using your network capacity where you're otherwise not going to be doing commercial activities. Like we're not going to be serving the Russian and Chinese markets for obvious reasons. We're not going to be serving the Iranian market. We're not going to be serving Yemen probably. And so we are producing data. We are having solar power going through our phased array over those places. So how do you monetize that? And so when I model this company, I'm usually using like a 30% utilization rate. The oceans are blank. These other countries are blank. All of a sudden with these non-communication use cases, you start to actually fill in the blanks. All of a sudden you do care about where people should not be, like the middle of the ocean. You do care about things in Russia, even though your subscriber base in Russia hopefully is zero from Russians. your electromagnetic energy transmission to see things in Russia is not zero. And so that's where this gets interesting. It's also just kind of cool that these technologies work like this, but from a business perspective, that's actually very powerful because it's using capacity that I'm otherwise modeling at zero, which means in a model that I'm constructing, the marginal cost of this is also zero. So when you start to dial in revenue, from these types of things. Sure, there'll be some incremental costs. I'm oversimplifying this, but you effectively have found value. The operating leverage is through the roof. This is why a company like ASTS, when we get to some future point, as they're layering on applications like this, that's why the trading multiple is going to be wild because the incremental margins are wild. These are good things. And so each day we have more TAM. Why secular growth? Think like Ron Baron, as I've come to appreciate, think like a West Coast American. One reason I was excited other than the surfing to move from New York is I saw it in my own day-to-day, the limited East Coast New York thinking versus the sort of crazy West Coast thinking. Now, naturally, I am more of a New York thinker. I'm a— just, I wasn't born to really fit in the Silicon Valley scene, but it is good to sit there because it tests your thinking, expands your thinking, and you see how some of these really great venture capitalists were able to catch the really big waves is they didn't get burdened by their 2,000-line Excel model trying to predict the next quarter. In fact, they have no model, as I increasingly find. They actually don't do any of the work I do. And so, but they do see the bigger picture. And so thinking about the TAM again, where a lot of these other analysts, well-intended, miss is they don't see around the corner of the things that don't presently exist, but will. And so there's this interesting tweet by, um, @JFCBruin, and it just shows that CyberCabs are now coming off the production line with Starlinks installed on the back. There's your TAM. So it was actually pretty interesting because my daughter today, there was a Range Rover next to us at the parking lot and she was like, what's this little double fin on top? And I was like, well, let me tell you about Sirius Satellite and their business model about how they paid all the OEMs to put the satellite on and then it's a gaming conversion. And it was an interesting thing to talk to a kid about. I don't think she found it interesting, but it's interesting for me because I wanted to tell her about How did Sirius have a go-to-market? And then how do you get people to listen to Sirius? I'm not a Sirius customer. I actually get the SiriusXM delete because I don't want this crap on my cars because it disrupts the beauty of them. Um, but if you look at a car, there's all these little Sirius satellite radio things. And so now, sure enough, cyber cabs have it. Why? Connectivity, positive control. You can't just rely on the terrestrial network. And so autonomy is going to drive use cases for connectivity, and then it's going to come down to cost. And so this weekend I was camping and was with some really smart guys, and they were talking about actually how much they love their Teslas and how incredible the FSD is and has become versus the older versions. And they were then talking about the LiDAR versus camera approach and just interesting perspective on Elon, which I think a lot of us know this, debate, but Elon initially just, you know, is a camera-only guy and people are like, well, the cameras don't work. They're not good enough. And he goes, they will be, and they will cost less. They, you know, he understood where things would go. They didn't presently exist, but he understood the trajectory because he wanted to make sure, as he does, he has the cheapest things possible to make it accessible. So now ASTS only requires like $5 or $10 cell phone modem for connectivity. Probably a lot cheaper than integrating a Starlink D2C on a cab, as cheap as Starlink D2C is. But also, Starlink is big. And so for all of the things, cars included, that are small and smaller, just think about the opportunity ASTS has, is all of these devices, modes of transportation, really anything becomes Connected, but importantly must remain connected. So drones, positive control, that humanoid robot that is misaligned with Anthropic AI that knocks at your door to kill you, as I was told will happen. Your TAM is that. So AST will allow that robot to hunt you down and stalk you and kill you, but you can rest easy knowing that your TAM increased by enabling this. And so, you know, what have we done? But these things have to be connected or should be connected. And you really want them connected. Like, don't you want that autonomous kill drone to be having positive control so someone can turn it off? Like, probably. And so every day we just see more and more TAM. Um, the scalability matters. So only 6 inches is really helpful at keeping us all, um, up to date. On the latest expert calls, and what did we have here? So he says, "Oh, it's actually very timely. This is pre-Amerito." He says, "When people worry about capacity, I say don't. These birds will pay for themselves back in less than six months, maybe three months." That actually kind of tracks my own estimates and have a ten-year lifetime. I still believe this expert underestimates the level of oversubscription that these will have. He uses rural multiples as a proxy, which I think undershoots. And that goes to the point which I've made too, is this is really about oversubscription. So take an airplane where they sell more seats than they have under the belief that some people will cancel. You really can't oversubscribe an airplane by very much because my strong belief is that the yield of passengers showing up is probably very high. I don't know the actual answer, but it's probably very high versus what we know. for telecom is the concurrent usage rate. So people using their phone at the same time is actually very, very low. So for example, right now I'm not using my phone. Um, and another, actually interesting, another guy I was camping with, uh, does own a telecom company and he sells data packages. And so part of his game is he'll sell people like 5 gig plan, whatever, 20 gig plan, unlimited plan. And then he, is short that. So then he has to go in the wholesale market to go buy that capacity, and he's managing that utilization. And so he spent a lot of time with his team to optimize that and really understand, first of all, the little things that influence that, but just realizing just how lopsided he can be. Because if he sells 5 gigs to someone but he knows they're only going to use 3 gigs, he doesn't want to go one of the MNOs and buy 5 gigs and then burn 2. He has a massive profit opportunity if he can accurately predict that he can effectively sell 5, but only needs to cover 3. And that's what ASTS is going to do for sure. They are going to massively oversell this capacity. And that's where a lot of our math looking at the data side is going to be wrong. So the initial way I've modeled this is Well, what's the data production? Let me put a couple of dollars per gig on that, and that's my revenue. That is wrong because you're going to be able to sell that same gig of capacity 5, 10, 20, 30 times over, and everyone will be happy because the consumers will be none the wiser. They just need it when they use it and has to be available when they use it. They don't care if someone else also bought capacity. no one's the wiser. And so the scalability of this platform matters. We're going to add a ton of satellites. Things should be pretty good. And so then the raw enabler of all this is spectrum. Satellites, you can put as many up in the sky as you want. Now I get it, right now people would be like, well, Kuk, it'd be nice if they could put some in the air at all. Let's not get ahead of ourselves here and talk about 500 satellites. Let's talk about another But at the end of the day, there needs to be spectrum. Spectrum is the scarce asset. And so the FCC continues to move in the right direction. They want to unlock 1,000+ megahertz of additional spectrum for these next-generation satellites. And what's great is a lot of this capacity is already what ASTS uses. So we're seeing this regulatory response, which is great. And in fact, what the FCC should be doing is find ways to most efficiently allocate spectrum toward the public interest, and they're doing that. It not only is it in the public interest, but it is in our interest, which is great.
[00:56:40] Speaker A: But this episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a '50s Page restoration block, or finally break down that long article you've had open for weeks. Gemini in Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses. Setup required. Compatibility and availability varies.
[00:57:07] Speaker B: 18+. Clothes shopping really isn't my thing, but I still want to look sharp and feel confident.
[00:57:13] Speaker C: That's why I use Stitch Fix, the OG personal styling service.
[00:57:17] Speaker B: No more scrolling through websites or wasting my day at the store. My stylist sends pieces picked just for me straight to my door. Free shipping, free returns, no subscription required. Get started today at stitchfix.com. That's stitchfix.com.
[00:57:34] Speaker C: Again, I get it. This is all fun and games, but you actually need satellites for any of this to happen. And so people are going, where are the satellites? Well, we got a puff piece PR this week. I think it was well-intentioned, the company doing proof of life, and then immediately the negative comments were crazy. People were like, oh, this is negative because they didn't show any shipment, and woe is me, and this management sucks, and they're liars. And it's like, well, hold on, they're actually showing us like detailed, if not blurred, footage of their production facilities showing that they have tons of satellites in work in progress. They are usually deliberately showing things to Tanner and to Katzi little details that really only those guys would pick up on to then help educate all of us on the true status. And sure enough, you know, Tanner, Dreamboat Tammer, says BB20 and 23 are about to get the arrays installed and enter final testing phase. Lots of progress on the Bluebirds. And then we have Kevin shows that the company is well positioned to build and launch up to Bluebird 25 by the end of the year. And so then what we had this weekend is another Antonov coming. And from— it was just crazy the level of due diligence the Space Mob does. The Antonov came from Germany, which is where those operations are based on, and then there were unloading trucks. So we don't know what they were unloading. There was some speculation of would there be something going back in the Antonov from Midland. We don't know. But what could ASTS be doing? Well, more composites make sense. So those, those usually come from India, but then production gear, more machines, they're building out that entire other Micron facility. And, you know, I'm sure some other critical path items for production were coming, but then what's going on here? And so what I've come to appreciate through the help of others is again, this recognition that ASTS is building a machine, but also still building a machine to make the machine. And what I do know also from personal experience is when you're— and this is brutal sometimes— when you're really quickly scaling into a market opportunity, the way you lay out your production floor can sometimes be terrible and inefficient, but it will work for a period of time. But then you need to rip a bandaid off and realize like, this is going to suck now for me to reorient how my production floor works. And I don't want that to happen. But basically every day I have it inefficiently laid out based on new changes, new scale I added, or new learnings. I basically then have that tech debt forever and it compounds versus rip the bandaid off, get it right, suffer some short-term, uh, it's not even a delay because it's just reality, you know, just have to do things for then the future benefit that I get from now until the end of time. This is something I hadn't quite appreciated until I was involved with some portfolio companies and started walking the floor and just literally saw a production line in terms of the flow. The result of it, this was a consumer goods company, but what you always have to be worrying about is shrink and loss in yield. So if you have a supply line where all of a sudden you entered a new type of product, you changed the process, so you added a machine in spot Y when it could have been in spot Z, At a future point, all of a sudden there could be just like extra steps, extra movement, extra possibility for something to break, something to get lost, wear your people out, you know, blah blah blah. And so you need to change that. And so it's come to my attention that ASTS is also optimizing their factory floor as they go, and they're having to train up people. Oil's $100, and you know, all of a sudden there's a big bid in the oil field for some of that same labor. There's just a lot of things that go on. None of this is terminal. None of it is necessarily even problematic when you zoom out 3 to 6 months, but it's these little things. And then one could reasonably assume because of their testing regimen, if the next batch is delayed by a week or two, it's probably because they found something. These are immensely complex spacecraft and we just see how quickly they get effed up. And so Blue Origin literally had a bolt that wasn't torqued correctly. And that's why our second stage vehicle ran outta gas and screwed up Bluebird 7. That sucks. New Glenn floor blew up on the pad because of a broken sensor with a, a liquid oxygen valve. That sucks. Don't we wish that they had done a little bit more testing and perhaps delayed something by a little bit? I do. And so every time there's a delay because of testing or fixing or re-engineering something, I, I honestly celebrate it. It's my coping mechanism because it means that their process works. There's gonna be failed satellites at some point. It just strikes me as inevitable. But you can have really, really good processes so that you're not in the data collection business, which is always what SpaceX is. I like to collect the data from successful things and the data from testing processes that caught problems before they got to the launch pad. And that's what we could reasonably assume is happening. And so then the other thing we're checking very carefully is BW11. So I've been just refreshing my code. Let me do it again. Oh, actually, I was adjusting this code. But so all of us, some of us are checking BW11 on the regular. And I see these same things. Obviously, a lot of us are checking the B*, which is the drag. But then We're checking the motion of it, we're checking the altitude, the apogee, so there's the orbit. And you still just see BW11, BB11 doing its thing. It looks nominal to me. It has not deployed, uh, yet. And it is interestingly, um, I saw the point from, I think it was Toad Somalia, showing that they were also doing some orbital lift. But then when I checked my numbers, I actually Don't see that. So we do know that deploying a satellite is something you do carefully. They're still within the window they previously had done, and there had been a solar storm. So we'll find out. It would be great just to deploy that because it's become a distraction, but it has not deployed yet, uh, based on what I'm seeing. But it also hasn't blown up in space and it hasn't run into anything and it hasn't gone to the moon and it hasn't gone to the sea. So it's doing what it should do when you have a satellite in a non-deployed status. And I'm sure we'll learn soon enough. And then we should also begin the next shipment pretty soon. We're checking that pretty carefully. And then the last thing that we saw this week is Amazon tying up a bunch of launch with Arianespace. And we saw AT&T is becoming the first major telecom to integrate with Amazon's LEO satellite. which will directly tie in with fiber and 5G, which is interesting. Again, shows that the MNOs are looking for those wholesale partners to advance their own businesses as a response to SpaceX. And so to think that the MNOs are just going to roll over and die to SpaceX is naive. Maybe they lose. I think that that is like a decade-out sort of process if it ever happens, and I just don't think it will, but it just shows that the MNOs are looking for trusted partners. And AT&T has ASTS for D2C and now is getting its fixed broadband satellite with Amazon. Makes a lot of sense when you think about it for Amazon Satellite and ASTS to combine, potentially get put with Blue. I think that makes a lot of sense because then you have a fully integrated company, but that's another story altogether. So it's been A little bit over an hour. I'm going to end here. I'm, as always, really excited about my investment here. Really, as I zoom out and think about it and get pushed on it in new ways every week, I always just realize just how bright the future is and how excited I am about what's going to come, which is not easily earned. It's very hard to own any high-vol story stock. This isn't true just for ASTS, it's for anyone that's chasing an opportunity like this. And the hard part is to remind yourself just how hard it is. If it were easy, everyone would do it. Just scroll around on X and see all the mental destruction if you're wondering why everyone isn't a millionaire from investing in stocks. It sort of answers itself when looking as to Why doesn't everyone do it? Well, it's brutal. And then you look for guidance from some of the people who have done it, who can teach you, like Ron Baron, and learn how to train your mind on how to abstract the critically important simple observations so that you don't get thrown for a loop on the much smaller nearsighted observations that ultimately fade away, uh, to insignificance. if you're right on the big thing. So with that, I've now reclaimed the rest of my afternoon. Um, so I think it's chess day, maybe wash a car, you know, who knows? Opportunity is mine. So I'll talk to everyone later. Have a good one. Bye. Thanks for listening to the AST SpaceMobile Podcast. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. To catch all the latest news about AST SpaceMobile, make sure to subscribe. Thanks again. Thanks for listening. And I'll see you next time. Listen, waffles.
[01:08:00] Speaker B: Still wearing those old cargo shorts? If your wardrobe's due for an upgrade, but you don't know where to start, you need Stitch Fix. Your stylist learns your size. your style, and your budget, then sends a box picked just for you. They always nail the fit. No store, no hassle, no subscription required. Get started today at stitchfix.com. That's stitchfix.com.