Kook's Weekly - June 7 - Riders of the storm

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[00:01:03] Speaker C: This is the AST SpaceMobile Podcast. It will just basically come to your phone and be seamless regardless of where you are. We don't want the user even to know that it's connected by satellite. Listen, the opportunity that we have is very, very, very large.
[00:01:23] Speaker A: All right.
[00:01:23] Speaker D: Good evening, everyone. Hope everyone had a fun weekend. Totally physically exhausted. Just got back from a camping trip and I don't know always why that's so tiring, but everyone survived. Last time I went, a guy had like a nasty stab wound that was self-inflicted from showing off his diving knife. This time everyone kind of made it and did have a fox jump into a guy's tent.
[00:01:48] Speaker A: Oh, no.
[00:01:48] Speaker D: So that I'm sure was super exciting for that individual at 3 in the morning. But come back and I'm expecting the Sunday night market to show a total implosion of security prices. So I had already made peace with everything and, you know, lo and behold, I check and it's up. So thought we were supposed to have Black Monday, but now I'm realizing maybe King Tut's tweets were all parody. I don't really know what the thing, but market's ripping after it was supposed to get destroyed. ASTS is up, all is good. But the key to life is focusing on the fundamentals. And so it's interesting is, and I'm meeting a lot of really interesting people camping because there's no really better way to bond with someone than just being out in the wilderness with some chairs. And the original competition for TV was people talking. And luckily I had some interesting people to talk to. And so one guy I was talking to actually used to work at one of the publicly traded rocket companies that shall remain unnamed and has a lot of insight about said rocket company, um, which shall remain unspoken, but now is working for one of the most exciting private defense companies, which will also remain unnamed, but super exciting company that seemingly relies a lot on connectivity. for its exciting systems. And so we were talking about things and I was telling him about what I do. He was telling me about what he does. And I just, I asked him, I said, well, do you know anything about AST SpaceMobile and whether or not you guys are using them for your exciting technologies that shall remain unnamed? And he said, even if we were using them, that type of stuff is so protected if it's being used for things like Golden Dome, that it would, never mind that he wouldn't tell me anyway, because it would be inside information, but it is inside information in the sense that it is so well inside that it is not known and not supposed to be known by others, which is pretty, pretty interesting. I learned a little bit more about this exciting company's difficulties in partnerships with SpaceX. Which is revelatory because wherever there is a difficult partner, usually once you know that, you get a replacement partner whenever you have an opportunity. And so to someone like me who sees the world through hopium, copium, delirium, delusion, all the things Tim says, really, you know, all those things, just throw them at me. I will maybe sometimes hear what I want to hear, but I also think pretty rationally. And so if I'm hearing that one of the world's leading defense companies had been cut off by SpaceX and then sort of was restored, it's the same kind of thing the Pentagon had happen, which it's like, wait, what? This is an unstable yet critical path vendor. We should probably not be exposed in this way in the future. So that was neat. But what was even neater, even though I had asked the question, you know, do you know AST SpaceMobile? At that moment, he didn't know that literally my entire life depended on it in, in every, like really no exaggeration. And so then I said, well, what do you guys find exciting? And he said, well, I don't really know much about investing. It's not really my thing, but I've been asking about it lately. And he said 2 of his managers at this exciting defense company, and then one of his friends that works at a, let's say, a less exciting defense company, but a big one that starts with a B, um, had said for him to buy AST SpaceMobile. And I thought, holy shit, that's exciting. You know, so I was like, well, these are managers, like, what do they know? And he didn't really know the specifics, but it's very interesting when you channel the open source world of what people who see good things see. And he made it very clear, these people don't have insider information, But nor do they need to. And so if someone is in a position where this is what they do for a living and they see which ways the world is going, they can have uncommon insights. And so we were talking about this because some of these other guys work at NVIDIA and things like that. And so the conversation went to, you know, you didn't have to have, you certainly didn't need a model on NVIDIA. All you had to understand was AI was coming and their technology was in the best position to capture all this. And the company had a will to pursue it. then you just had to ride the wave. You didn't need to be too cute or anything like that. And so what I find particularly interesting is these people that are somewhat senior from what I can tell, certainly above the VP level, because that's where my friend is. If this is kind of what's coming to them is like, hey bro, you should like buy this thing. That's, I think, telling you a lot about what they see in terms of both technology and trends and potentially leadership. So anyway, that was kind of cool. It's just a good reminder for me because I was telling him, you know, sort of my lessons in life and in style of investing where, you know, I was just saying, look, I, one guy said, well, is it a good valuation? I kind of laughed. I'm like, well, you get a, you know, you should ask the shorts. They're going to say that I'm a total crackhead and this thing has no revenue and you really can't say it's a cheap stock by any conventional measure, you know, throw out the Intelligent Investor book, you know, anyone that wants to be in the space mob. And so I let 'em know, like, I'm not saying this is sort of like trading at a low P/E multiple, but I explained to them, it's, you know, what I've learned is it's about seeing the secular wave and then the crazy founder, you know, which is really important. I've said that many, many times is you have to have someone who's just truly crazy, sees a vision that other people don't see, and then doesn't listen to common sense that would say you can't win, you cannot be successful, that crazy founder is going to not listen to those voices of reason, but instead find a way to make it happen. That's a critical component for me. And then just appreciating how things can evolve and with product roadmap and things like that. And, you know, this really resonated with this group I was with because they work at companies like this where it starts with sort of like a pretty boring drone. And before you know, you have, you know, Skynet. And things evolve if you have a founder with a lot of vision. So it's pretty neat. You know, most people would say, you know, hey, Cook, did you have a good campout? And I would say, yes, I did. I converted, you know, a couple accounts to the good side and they're probably going to be buying some AST SpaceMobile on Monday. And, you know, my son didn't get hurt and everyone had a good time and we're totally exhausted and my foot hurts. Overall, good weekend. So then let's get back to The agenda. So last week was really about the exhale from the New Glenn 3 or New Glenn 4 panic. We started the week with incredible uncertainty. Like most things, people can only breathe into a paper bag for so long before they either pass out or calm down. And so we had that happen. We get some good news. And so The dust settled and we started to get some information about New Glenn 4. And the initial information is that it's not as bad as feared. It could end up still actually being maybe as delayed as some other people fear. So in other words, not launching before year end, but they came out and said, we're launching before year end. My view is that would be great if it happens, but if it doesn't happen, the market is going to have so much more information about AST SpaceMobile that It won't matter anyway. It'll be forward-looking. But the initial take on this from really what the company was saying is that this is maybe a 3 to 6 month delay for where they would otherwise be just because of the pace of launching. And, you know, it's easy if you're on options, which is like the same thing. It's like if you're on drugs, you know, this is going to come as a shock. If you're on options, which is the same as being on drugs, Because it doesn't put you in your right mind, and that's where you see you know a lot of mental damage on Twitter is people who aren't in their right mind because they're on financial drugs called options. Those people cannot be helped. I sympathize deeply with them because I know what it I know it feels like. But I also know that when I'm on these drugs called options, I'm not the same person. I have the wrong incentives. I have the wrong mindset. I'm desperate. You know it is what it is. You know when you Pop that, pop that option pill. You're just not going to think like a founder. But so just humor me now, as if you were just owning common stock, which is what a bell owns. A three to six month delay sucks, but it's not the end of the world because the market will start to really see the manifest destiny of what you're doing. And by then, by the time you get to the year end. The investment horizon for people will really be all of 2027 where the job will get done. That's where it's going to be hard to keep this thing down given the other positive momentum we have. The other thing that was highlighted is that ASTS announced that it was authorized for 10 by 10 megahertz of spectrum in Brazil. Kind of a press release that maybe ultimately is going to be more important than we think. Because now, like, we're so used to all these cool announcements that this one's like, yeah, yeah, of course they got some spectrum. But this is really just showing the aggregation effect of this technology where when you invent the most efficient system, spectrum gets thrown at you that would otherwise previously cost, you know, $3, $5 billion or something, you know, whatever it's going to be, a big number to get all this S-band and we're getting it. because we are an enabler. And that's a really powerful thing to watch because I could see it being a gradually then sudden recognition by the market where these things are adding up. No one's going to really remark the stock on this, you know, especially after the progress we have in the US market. Incremental stuff in these other countries with spectrum shouldn't really drive the stock price from day to day, but it's setting up this massive coil where down the line, when let's say I'm right, Really suspend your disbelief, Tim Ferriss. If the stock is at $2,500 and I've started the Institute of timferrissucks.com.org, which will be my nonprofit dedicated to saying Tim sucks, in that moment you might look back and go, well, how did we arrive at a world where Kook has a nonprofit foundation dedicated to saying that Tim sucks? You'll rewind and the path to that outcome will have been this gradual but sudden buildup of value, the aggregation of all of this spectrum. And then voilà, there's this effectively like a debutante ball where this all-conquering hero comes out. And where I actually kind of heard this before, it was funny enough, it was really long time ago about Citadel, where Ken Griffin was sitting there doing his thing in Chicago, sort of out of the light. No one's really seen. And I remember these guys telling me that, you know, Ken is building this thing piece by piece, building this market maker thing like that. And then you wait, there's going to be a day he comes, walks up Fifth Avenue and goes, bitches, you all work for me. And he'll just come out of nowhere from what it appears. And that's exactly what happened. I think the same thing is going to happen with AST. Aggregate all these little things. And then you wake up one day and you go, how did they get more spectrum? Than anyone else, and spectrum is gold. It's the true scarce asset, and we have just yet another little example of where of where they're winning. And it goes to just seeing the difference between today's weather. Anyone can like out the weather. The weather for me today was you know pretty good. But then seeing the forecast is different. And so Tech Investor, a good account, put out this tweet that I thought was actually like a really great example of this. And it goes to, you know, shorts can generally have better information than us in some areas because they're sneaky. They don't have the same arc of understanding of what's happening. They certainly wouldn't have understood all the things that we understood, you know, really what Cathie understood. But imagine their experience. And so nearly 2 months ago, they were sitting there short ASTS, and you have a satellite put into the wrong orbit. Your launch partner detonates itself on the pad, creating a small nuclear explosion on their platform. Yet ASTS SpaceMobile, the stock you're short, is up 40% in that timeframe. Imagine the cognitive dissonance wondering, what have I done to deserve this? Oh mighty Lord, why do you punish thee? This is what the shorts must be asking themselves, because if you had insider information, you could never have even known that. If you were psychic and you had said they're going to put a satellite in the wrong orbit, deorbit it, and then New Glenn is going to self-immolate, you would have thought you would have had a successful short, and yet you did not. Is the market irrational? I don't think so. It's telling you the market is looking through to something bigger. And this is where the experts, and frankly most people on most stocks, get wrong most of the time, is correctly identifying the bigger picture. And this works the other way too. When a company is over-earning right before it goes to zero, uh, and that can happen— take like a Blockbuster example— you can have your peak profitability right before your business basically goes away. So The alternative is you can under-earn for quite a period right before you have this all-conquering party and destroy everything. So blah, blah, blah. We also had a bunch of misinformation. So last week was chaotic. We had this guy bust on the scene, Jacob Keaton, who was really quick to correct some FUD. And so immediately the FUDsters were taking Jacob Isaacson's comments out of— sorry, Jared Isaacman's comments out of context. And basically people were panicking from that because he was saying, we don't think Blue Origin's going to launch until 2028. Boom, heart attack. And what he was really talking about is the lunar program. And then this was all very quickly corrected in terms of what the implication was for Blue Origin. And then we had Blue Origin just come out and really what we're seeing, I believe, is founder mode. And so Jeff Bezos on the scene in the safety coat, in the hard helmet, rallying the troops, saying it's a 24/7 operation. There's a solid path forward to launch this year. And you've got NASA and the Space Force and Trump saying this is important to them. They're going to make it happen. Some great updates even just recently, as I was just checking the latest from David Limp. They're moving the boosters that were able to survive. They're rebuilding the pad. They're doing some things that are improvements such as vertical operations, which is how Starship and Atlas V work so that you don't need the transporter erector. So you don't need to go from horizontal to vertical and just doubling down on when they plan to fly this. Next, um, the propellant farm survived, which is really great because those are long lead time items. The water tower survived and they can repair the tower. That's exciting. Um, 3 of the second stages are fine. The booster— never tell me the odds. Well, glad we didn't tell the odds because I would have said the odds were not looking good for that booster. And I would have been wrong. Glad there wasn't a cow shoe market on that booster. And so they're not going to go straight to the 9x4 configuration. They will not do that. They're going to keep going on the 7x2 rocket because they are down the path of the S-curve of doing that. Just like ASTS is not going to stop making satellites. They now have that machine going. The shifts are working. The people are trained. They're going to keep producing the satellites. New Glenn will keep producing that standard rocket configuration because they finally have it down. It would be a shame to stop and then you, you lose all that flow. So quite a lot of nice updates out of that. And, you know, my simple thinking, again, I'm happy to be, well, not happy to be wrong, but likely to be wrong in most of my speculations, but I really kind of believe in the psychology of everything. And so what you had is two Fridays ago, you would have had every launcher in the world calling ASTS being like, "Well, it's a shame New Glenn didn't work out. Would you like to talk to us about launch capacity?" Which of course the answer was going to be yes. Whether that's MHI, ULA, ISRO, MHI, all of these guys. So these people in the new business development at these launchers were licking their chops thinking we are going to have this. You know, 400-ton customer, underwrite everything. This is amazing. You know, we might not have the capacity now, but now's the time to get a big partnership going. People were going to start getting business done. And then you, they got kind of rug pulled by the positive update from New Glenn. And all of a sudden, wow, they just sort of dialed in their own bonuses on, they're going to have this real new cargo provider that they can work with. And now it's a little less clear that the acute need will be as large as it is. At the same time, ASTS hopefully was never so silly to bet on only one launcher. So they should be all too happy to use this momentum. And all of a sudden, the new sort of one minute you think you're going to hit some higher numbers than, than you thought with new business development. The next second, it's a little less certain. All of a sudden, having the launcher sort of engaged. But then having the leverage flipped on them pretty quickly is really positive as far as I can see. Again, on a much longer-term horizon than most people with weekly options, this sort of dynamic, this sort of shaking of the industry, I think can only really be positive both as a wake-up call to the need for everyone to go a lot faster on getting more of these heavy launchers up, but also then Everyone just all of a sudden thinking like, hey, we have a chance to get ASTS as a really big customer. And by the same token, ASTS seeing, you know, we can actually, you know, accelerate and work up another launch partner. So I think there's always going to be silver linings. I'm a silver lining type of person. I always will find a way to see again why everything is good luck. That's just how I live my life. No matter what happens, it is always good luck to me. And, um, I've had some things happen that would certainly not look like good luck, but I've turned it into good luck. And I believe in that. And I believe ASTS is a good luck company and will use an opportunity, uh, use a tragedy, you know, what unfolded, um, to improve their situation. Now, when I was asking my buddy who worked at a rocket company what happened, his, it was interesting. He said, well, New Glenn actually developed a rocket engine in the most difficult way Physically possible the way they have this tri-fuel engine. It's just the absolute most difficult thing that you could have done. They did it, and the benefit of it is it's just super efficient. And his view was that it was really a process issue in terms of how they did the hot fire. I hope he's right. I mean, it kind of blows my mind that you'd have a process failure. You know, you'd think that at least someone would load in their SOPs into Claude and be like, hey Claude, can you just like check this and make sure it's not Going to result in a detonation of the entire coast of Florida. And Claude would be like, you should reorder step 15. But who knows how this all happens? But I'm certainly not seeing anything on my end that suggests that the rocket is terminally flawed, which is good. And that certainly would be a setback and nothing's happening like that. And again, we're having the government response, which is important. And so, you know, a lot of things, relate to the permitting and environmental studies and things like this. And so having the government totally aligned really helps. It is interesting to note that last week we had Chinese SpaceX launch its Long March 12B. So this video is posted into the weekly and it looks like a Falcon. It probably literally is a Falcon. It's probably Their blueprints, and they are carrying Starlink-shaped satellites. Again, they are probably Starlink satellites. Anyone in the US watching this is going, the race is real. The race is on. We need to win. And that's why you shouldn't have artificial barriers. And it's important for the entire US space industry to coalesce to win. Blue Origin is still in the running. For the NSSL program, so all they have to do is just not blow up rockets anymore, and the future will be theirs. And also, the launchers are coming. And so we have a post from Lucas, who's great; he makes the patches, I believe. And just showing the updates on ULA. And so ULA stacked the first 85,000 Leo optimized Centaur. 5 upper stage for, of all people, Amazon. Yay, we're so happy for you, Amazon. And so Vulcan's gearing up, and that's a big vehicle that is going to also be launching AST SpaceMobile satellites. I think they can fit 5 satellites, and the Vulcan will return to service after July. So all of a sudden, you know, it's always darkest before dawn. A week and a half ago was pretty bleak. I know I was really stressed out. I don't even pretend to put on a brave face all the time. I was racking my brain like everyone and thinking, what's the true implications of all this? Am I totally stupid in not appreciating the risk of really just launch availability? It's like, oh, it's so simple. Could this in fact be the valid short thesis? And then, you know, it's good to just collect more information always. That's always my view is just settle. If you're feeling amped up, take a couple days. You know, sometimes if you're catastrophically wrong on something with a lot of reflexivity, like, oh, I have a huge position in Lehman Brothers, you know, and turns out I think their loans are all, you know, overmarked and they're all going to recover 30 cents on the dollar. Well, maybe don't like sit around and be pensive about that because there's a lot of nonlinearity. But if it's something that's more linear, you generally have more time to reassess. And whether that's you want to buy the stock, you don't ever rush. Don't ever chase. In my view, everything can reverse really quickly. You'll always get a second chance. But at the same time too, panicking is usually not a great strategy. And, you know, hope no one really panicked immediately. Panicking at $110, You know, you'd have $15 more than I have, but you'd also have a tax bill. And also a lot of people that sell at $110 don't end up buying at $95. And then they go, you know, when the stock is $2,000, they go, I wish I hadn't traded around. There's a lot of those people that traded it around at $5, $2, $20. I don't know a lot of people that trade back in. And that's always the risk when you get a little, when you know, not you get too cute, but you try to be cute. So the ultimate technology here is something I still haven't really seen talked about more broadly when thinking about the competition. So obviously a lot of eyes on SpaceX. Elon put out a tweet, which we'll get to down the line, but just about the size of the V3. Ultimately, no other company has created the Micron sandwich. And so Leo Edge wrote a post. He's learning and discovering things too. And the patent that a lot of us understood very quickly a long time ago was what a micron was. And so a micron is a sandwich. It has solar on one side. It has heat transfer and things like that on the middle. And then the RF, basically the thing that does something with the power on the earth-facing side. This sandwich is very efficient because For every square footage of sandwich, you have both power generation and do-something generation. Most other satellites don't double-use the square footage. It's either solar or the do-something side. And that's the killer breakthrough here. And that's what's patented. And we haven't seen anyone else do it yet. We don't know if that's because of the patent protection or if it's difficult or if they will try. But ultimately it leads to ASTS having the most efficient system, which according to the Catseye theorem, which I think we should now establish that this is one of like the 11th commandment, is that spectrum will find the most efficient system. And again, as we talked about, ASTS gets authorized for 10 by 10 megahertz Spectrum in Brazil. You know, I believe one of many future announcements along this line. Very exciting. And then we get to just the secular trends, you know, thinking about that long arc. I was thinking a lot about it last week. It's how I cope with stock price declines, just trying to think big. And that's really the challenge, is challenging yourself to think big about the way the world could look in a couple years, because as it begins to be more obvious, security prices will adjust. The thing doesn't even have to happen yet. The market just needs to coalesce around the inevitability of something. It's a very powerful thing. And just the more I think about it, the more I think about AI data centers in space. And there's talking about that around the campfire this weekend and you don't really get any pushback. And this video from SpaceX, you know, it was again, great. Just take a step back. You know, people who do this all day, who are thinking about this problem all day, They just so naturally conclude that this is where the puck is going. And this guy I was just having, um, dinner with at a different camping group, very active social life for my children. And he just made the point, he's like, people just don't listen to Jensen enough. He, he works for Jensen. He's like, he's like, all you have to do is listen to Jensen. He literally tells you. What is going to happen? And I think there are a lot of companies like that. You just literally have to listen. And so these SpaceX guys say AI space data centers are quote a no-brainer. It's a race to power. In space, you have all the power you would ever need. It's so simple. Sure doesn't sound simple, but when I hear it from a guy at SpaceX that does this all day. And then you think about it and then you look at this chaos going on with these NeoClouds, all this environmental impact, all these systems to support the chips, all the usage of precious metals, heat transfer systems, liquid cooling, terrestrial power, grid buildout. It's all wild. And then you just think about the simplicity of space. You need to radiate the heat out. You need solar, you need the chip. I'm sure there's more to it. You need some backhaul, so some lasers. And it does seem like that's where it could go. So do I put any, it's not like I have like this really detailed model of ASTS where I'm like, well, I'm going to now toggle my AI thing. I would expect there to be zero value in the stock for AI data centers, both now and maybe for a while. I wouldn't explicitly pay for that right now, but I believe I own that business development. I believe I own that product roadmap. And I believe as it becomes more true, because I still don't know why anyone would be more beneficially positioned in this than ASTS because we have the biggest arrays. That's where I start to, again, just think, is this the path to a multi-trillion dollar company? Wouldn't that be funny? And the more I think about it, and again, I'm not putting any value on this right now, but I do view myself as long this inflection of perception possibility that could happen within a year or two. It's quite exciting to be long inflection of perception. Just like no one valued AWS for the longest time. I'll never forget the day they broke out the separate accounting for AWS. That was the time you were supposed to just put all of your money in Amazon. The stock was up like 11% that day. Needless to say, that was not the end move there. The market will give you these opportunities where you can see a change factor, and if you can extrapolate it out, the market never does it correctly on day one. And so you quite literally have all the time in the world if you have one thing, or really two things. One, the vision That has been shown to you by the company, and then the conviction to just hold your nose and not worry about the volatility. Those 2 things can result in tremendous investment outcomes, but it is a very, very, very difficult thing to do. Even as someone who can be on a podcast and wax poetically about this all the time, it is the hardest thing to do because it's so confusing in between. I mean, for all we know, the simplest investment in the world is to just go buy Nvidia or just honestly go buy Google, things like this. I mean, who, who would have difficulty in seeing that Google is not going to just dominate AI 5 years out? Seems like a pretty easy thing to think about. But everyone's worried about, you know, oh my God, is Israel going to strike Iran in the next 10 minutes? I should sell all of my S&P 500. And so these short-term decisions really get in the way. and either prevent you from having the vision or prevent you from having conviction in your vision. And that can be a very troubling thing, but that's why most people don't get rich. So speaking of another company where, you know, I am wondering, like, again, going back to just listen to Jensen Huang when he says Marvell is going to be a trillion-dollar company, you know, the market actually listened to him because Marvell went up 50% in like 5 seconds. And seems a little bit frothy to me that big cap companies are trading like that. But the Marvell CEO calls connectivity the next AI bottleneck. It's an interesting theme. You know, the information from these chips and data centers has to get places and especially just literally has to get from chip to chip as the first leg of the journey. But there's a lot of other problems that have to be solved as we transition the world to a new technology. But in the short term, there's a pretty simple roadmap as far as I see it for AST SpaceMobile. It's just simply launch some satellites, ship some satellites, win some contracts, launch some satellites, ship some satellites, launch some satellites. And so you notice that in between Launch and ship. There are some sprinkled wins, and so it was interesting to know that Jennifer Manor was liking posts about MilSatCom, which is some SDA programs, and all of a sudden this started to pop up again. These contracts were awarded back in February. All of a sudden, this stuff is making it to the front again, which makes me believe I agree with Peter Lindmark here. Something is up. So it's been a lot of time since we've been testing FM1, and there's some other catsy stuff that came out this weekend that suggests that FM1 is now operational, doing some cool radar stuff. And that would also then dovetail to some big awards coming out in this respect. So terrible pun, but my radar is up thinking about this, and I'm pretty Excited about it. And then just going to the simplicity of my stock strategy plan, you know, joke, joke, joke, is just the launch, ship, launch. We're about to have a launch in the next 2 weeks, and then in early July we're going to ship the next batch based on my research. And then we'll probably launch those within, certainly before September. Just always figure these things slip a little bit because They do. It's space. So figure we get sort of like a, you know, I'm just assuming August because it's a reasonable guess for the next shipment. And before you know it, we're starting to actually have quite a lot of satellites in the air and we're certainly uncorking our production. And so when we go back to what Kevin Chen reminded us of, we have this MLA, this multi-launch agreement, with SpaceX in place. So we're going to have quite a lot of satellites going up. I also shared the SpaceX IPO roadshow, which is sort of like the mother of all SPAC decks. Um, that's there if you haven't read it. I thought it was kind of bizarre, the deck, but the, um, you know, it's there for you. Another thing worth commenting is just sort of sector enthusiasm. Which can certainly generate a lot of excitement more broadly, but ultimately the good things get separated from the bad things. And so over time there's going to be real dispersion, very simply based on usually return on equity of a company that's adjusted for its ability to reinvest at those same ROEs. So basically profitable companies that have growth opportunities are going to go up a lot over time. Versus unprofitable companies without growth opportunities. And there's a cool article shared by Alex from Babylon just about how the private market was basically funding all this random space stuff, you know, left, right, and center, and all these bus manufacturers. And so there's a really big difference between a contract satellite bus manufacturer, which is really just engineering hours, and a company that has its own proprietary satellite system that it is operationalizing for itself with its own commercial strategy and rent capture model, the bus manufacturer's going to have really low margins and there's going to, it's not very scalable and not going to have very good enterprise value creation. These are not the same. And so a lot, well, they're not the same from an AST space model. These types of things where there's a lot of excitement in the private markets, and this is a, you know, something I know very well because I see it day in, day out. These things will over time get smushed by reality. So you want to always be careful to pick your sector carefully. You want to find a nice growth sector, but then within a growth sector, you want to find the companies that have economic rent capture. What that means is basically, do you have a highly profitable business? So margins, good margins, on high absolute dollar revenue that when turned into a quotient against your invested capital equals a good ratio. If you have that thing, your investment will probably work out really well. If you do not have that thing, no matter how sexy your industry is, you will probably have a bad investment. So I would not be doing all of this work If I thought this was going to be a bad investment, which is pretty hysterical. I got some DMs. I, oh, by the way, if you DM me over the past 6 months, I actually kind of forgot about DMs for the most part. And so there were all these message requests I just had missed for the past couple weeks. But one guy was like, are you an ASTS shareholder? And I was like, is this a serious question? Could you imagine looking at my profile? And asking yourself, is Cook an ASTS shareholder? So I said, no, no, of course not. And he went, what are you doing then? Are you just trolling the ASTS shareholders? I went, yeah, dude, we're just trolling it. And he's like, why? He's, you know, just love of the game, dude. What do you, what do you do with your life? It's like, yeah, dude, you think, you think I'm spending an hour of my Sunday night to troll ASTS shareholders by writing my 300-page memo and doing it weekly? Some people cannot be helped. And so, yeah, I've thought about this industry a lot and I think this is going to be the economic model with the management team that will not only have the best economic model, but you have the market share winning solution to just absolutely dominate and crush it and create a trillion dollar company, which is going to be very different from some contract manufacturer making satellite buses, you know. Again, we are not the same. So I hope that answers this guy's question. If like I'm an ASTS space mobile shareholder or whether or not I'm just trolling everyone, kind of silly. But speaking of fighters, a bunch of links that I posted that also go back to this military opportunity about the SDA posting again about the Halo Europa program, which we won in February. So why are they reposting it? Peter Lindmark on the case about that as well. Kind of wondering why is this? There are no coincidences in life. So I'm optimistic. No change there, but I'm optimistic that maybe we're going to get some exciting military deals. But when thinking more broadly about why it is that we will win commercially, look no further than this SpaceX deck. One thing I thought was, was great. is Elon. Elon is great, but Elon has very good first principles. And certainly I glommed onto this maybe earlier in my career when I learned the phrase first principles. And so a guy I work for who's the portfolio manager would really always talk about first principles and go to that place. So when thinking about our portfolio and what positions we had, he would really think on a first principles basis. To get to the core of an idea, this is the right way. Elon is really the mother of all first principles guys and writes them out very clearly. And so the strategy of his companies, both in terms of the business models and how he runs his company, say what you will about Elon Musk. I don't know that I've seen many people with greater simplicity and purity of thought. and discipline to hold to that than this individual. The clarity with which he thinks of business problems and how to have organizations be creative and effective strikes me as nearly second to none. So of course it is with great interest I read the slide about his repeatable business model. So he's creating a flywheel. Pretty simple. So we have a lot of launch. Let's find cool stuff to do with launch and create these massive markets, which will generate more demand for launch. So we have lower cost launch. So we have an even greater competitive advantage to then win in the new market, which creates more demand for our launch, which creates lower cost, blah, blah, blah, blah, blah. And so then one of his core tenets is to vertically integrate. There's a lot of reasons why you vertically integrate control, margin capture. Those are two good reasons. But this is key to his strategy, is vertically integrate all the way to the end customer. This is something I knew a very long time ago about how Elon was going to pursue this business. Look no further than Tesla. He owns the battery manufacturers. He's vertically integrated, as far as I can tell, as much of the production process as possible. And he cut out the dealers. He goes direct to customer. Look at Starlink, direct-to-customer. Elon, as someone clearly struggling with autism, has lots of challenges in his own brain, just navigating the world that he sees versus the world he lives in. But this is an individual that does not like dumb partners. And I can guarantee you, he thinks MNOs are dumb. He thinks these are stodgy, stupid, slow companies. There's no chance in the world he respects them, just like there's no chance in the world he respected, you know, the big 3 auto suppliers like Lear or whatever making seats for Tesla, or the battery manufacturers. And there's no way he had respect for car dealers, so he nuked them. So it does not take a lot of imagination to understand why this individual Was not going to ever be a partner with the MNOs. Maybe a relationship of convenience, but on that wonderful slow dance with T-Mobile, my view is he would always whip out a switchblade and stab him in the lung whenever he could. And he just can't help himself. He literally would tell you that, like, "Oh, I'm gonna make a SpaceX phone." Ha ha ha! Or maybe I won't, but I will. Wink wink. Definitely. And then he puts it out here: vertically integrate all the way to end customer. Every MNO in the world knew this, but now sees this because this statement means just one thing: if you partner with me, I will find a way to screw you and disintermediate you somehow, some way. And I'm a fierce competitor. That is the only message an MNO would ever hear, and they have all heard it. This is why. ASTS will win in mobile so long as the spectrum and the customers are and continue to be largely controlled by the MNOs. If SpaceX makes a phone and gets a bunch of low-band spectrum and gets a trillion dollars to invest in Super Bowl ads, then sure, all bets are off. But that process, I'm not going to hold my breath. That's like 20 or 30-year type of problem. I find it very difficult to see how the MNOs get disrupted, um, really during my investable lifetime. That's really your risk as an AST shareholder. But also then that implies that ASTS would never also hedge their bets to integrate to the customer, but in a less egregious and a less threatening way. So that slide's important. Um, and then you don't have to look further to understand just how upset The MNOs are. So previously, when T-Mobile would get interviewed, they would say nice things like, "Well, you know, SpaceX is a valuable partner, and you know, we think satellite's great." The message is changing. The CFO of T-Mobile is now just flat out going to war. And so Anpanman was able to find this transcript of this talk, and I agree with Anpanman here. Anpanman said, "I've never seen T-Mobile respond like this about Starlink." In prior periods, they would have said they're happy with the partnership and that Starlink Mobile is a complementary service. But instead, the CFO of T-Mobile goes into a full dressing down of Starlink. So something has changed. I think we all know what's changed. And that's that this 1-year contract is almost over. It's coming up and they're probably going to go with AST SpaceMobile, whether they ditch SpaceX outright or just have it as a non-exclusive partner. But I think it's very clear that Deutsche Telekom and now T-Mobile are done with SpaceX. It's stupid for them to partner with SpaceX. It is doing themselves harm strategically over the long term, and they shouldn't do it. And I believe that they won't do it. They will go to a carrier-neutral problem. And it, everyone sees this. So Wall Street analysts are coming out. Oppenheimer downgrades AT&T on increasing satellite competition. And this is really from the various angles with which SpaceX hits the MNOs. It's not, but it's really definitely not the satellite phone is that, that is the immediate problem. That's the more distant problem. The immediate problem is that Starlink fixed wireless competes directly with the MNOs for home fiber and 5G business. It's just, this is hitting the triple play. You know, it's funny is these guys I was just out with, they're all going camping this summer when I'm not here. And one guy's like, yeah, I'm going to bring my Starlink. It's awesome. But you know, this place we're going camping has trees, so you really can't be under the trees because then you lose the service. You got to be in a field. You know, nothing I didn't know, but interesting just how general retail consumers are so acutely aware of the limitations. They're very happy with their Starlink system, to be clear. It's a total enabler for them. So you can be out really off the grid, but then still be able to connect with work and You know, honestly, as simple as it is, like get a little bit of a break from entertaining kids because you can just have them use their iPads for a little bit. So Starlink is a game changer, but it doesn't work unless you have clear view because it's high-band spectrum. But nonetheless, for example, at my house, I could easily just put up a Starlink panel because I have clear view of the sky and I'd have great internet. And It's a great service, a great product. Starlink has done a great job with it and it has hurt MNOs and they're aware of it. So they need, they should be panicking on figuring out what technologies can they leverage to equalize things. And so Scott Powell did great work. The last tweet really of the day is really his response To that interview, and I won't read it all, but it's this great critique of Starlink, but then also why the Blueberg architecture really with the massive phased arrays, the low-band spectrum, the beamforming is specifically designed to provide the strong penetrating high-capacity signal needed for real mobile broadband. It's the solution. So I know while I was away, I was trying to, you know, do a little bit of doom scrolling while camping just to keep up on what was going on. So I knew there were some really exciting tweets by Katzi. I'll throw those in for next week's weekly, but it looks like the world's not yet imploding, which is nice break. So hopefully no one really panicked on Friday. But I just remember, you know, squint, see if you share the same visions I have of What a future might look like. See if you believe that in 2 years, as impossible as it seems right now, if you see that AI data centers in space is a thing, does that vision make sense to you? Do you see why the MNOs would be silly to partner with Starlink? Do you understand the bear case about ASTS not getting any foreign spectrum, but then do you see the cognitive dissonance of the fact that they are? And do you understand what the implications of that are over time? Do you understand that there's 5 to 10 Falcon 9 launches, which get you almost to apparently where New Glenn will be launching again, but at the same time where these other launch vehicles are going to start to be in the market? And if you're a launcher, what do you want? A onesie and a twosie cargo from someone or someone who's going to be launching every month with you? Able to give you predictable volume so that you're always full, so you can work on your cadence. These are the sort of things that I think about all the time, and also explains my descent into insanity. But that notwithstanding, these are the type of things that I think are very important to be front and center of your minds if you want to keep kind of a winning attitude to catch the big the big winners. So anyway. That's what I got to say. I'm exhausted. I'm looking forward to showering and my foot hurts. So with that, look forward to seeing a great week. Hopefully we get some news about encapsulating batch 1. We should have a launch date. Then with any luck, the world won't end. So that's what I got for you guys. Have a great Sunday evening.
[00:51:21] Speaker C: 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, and I'll see you next time. Thanks for listening to the AST SpaceMobile Podcast.
[00:51:45] Speaker B: Listen.
[00:51:45] Speaker C: Mmm, waffles.