00:22:54 · Eric Romo, Molly O'Shea
And by the same token, if folks assume that Caravan is in the market, then they can assume that they can get rides for smaller spacecraft and they can go smaller and smaller GEO. So, we didn't expect sort of that impact in the market to happen for a little while, because we haven't flown Helios yet. We'll fly at the beginning of next year, but we're hearing from customers that they're excited about what it can bring to them. So we're hopeful that this helps the market, because as I think alluded to in our conversation, the GEO Comsat market, you just look at the data. It's it's kinda flat to down in the last ten years. It's it's not grown heavily. I think it's something that we would like it, obviously, to grow. And if we can improve the economics of the people that operate there, then it should grow, you know, supply, demand, plasticity. And we're hopeful to see that in the next few years. [00:23:43] S0: If you can talk about this, could you walk through the business model costing a bit, even if it's frameworks, and then how customers measure value and success?
00:23:52 · Eric Romo
[00:23:52] S1: Yeah, And so when we're talking about getting to geo, when you look at those components of that time, how much is the time worth of them? And then how much are the hard costs worth of them? The fuel, the radiation shielding, etcetera. Time tends to be the biggest one there for sure. And when we looked at that time, it's a pretty wide distribution, because you have some customers in geo where they have, for example, they might have a contract with a ground operator, a local telco or something, where they have to provide that, the bits down to that local telco. And if they don't do it by a certain date, then they have huge penalties or they lose the contract. And the penalties or the delay fees or whatever it might be, they might be hundreds of millions of dollars potentially in that contract. Whereas if you just looked at the revenue that they would get through that time, because we're basically pulling that revenue stream forward, it might be tens of millions of dollars, right? So we look at the different customers, we think kind of the middle of that distribution is in the tens, maybe middle tens of millions of dollars of value of that time per a single flight of Helios. And then the hard costs around fuel and etcetera, etcetera, might stack up to something like 5 or $10,000,000 in total. So there's a pretty good amount of value there, but the interesting thing is, and I don't know how much of this is still on the website, when but you look at like the difference between a Falcon nine and a Falcon Heavy, it's like $7,080,000,000 dollars, something like that, historically. And so that probably is bigger than the value that the average customer would get there. And again, there's some customers way on the end of the bell curve that it would still would pay for them to use Falcon Heavy. Whereas we look at our pricing and we don't talk about pricing publicly, but it's lower than that, right? And so the typical customer can quickly do the math basically in their head and say, okay, my time's worth $50,000,000 My hard cost is worth another $7,000,000 therefore here's the price. Okay, cool, I wanna do a dubat. And it's a really straightforward sort of value proposition to that end customer. Contractually, it's provided as a service. So so it actually looks an awful lot like a launch contract for these customers.
00:26:05 · Eric Romo, Molly O'Shea
You know, we need to ride on a Falcon nine. So sometimes, like case of Caravan, we buy the Falcon nine with an extra free launch agreement with SpaceX. In some of these, rides, the customer buys the Falcon nine, and we attack Helios on as part of the payload, but we're, you know, sort of ambivalent there. [00:26:23] S0: We're in Southern California, specifically LA, and there's a ton of space companies here now. So what is the competitive market look like? And could you walk through different kinds of sets of companies? Especially, I know you don't like this word, but could you walk through what TUG is and define that and how you're not a TUG?
00:26:43 · Eric Romo
[00:26:43] S1: Yeah. I think people thought that there was this market for this kind of TUG boat service between parts of LEO, and they thought that that was a thing. Like, if you I missed the whole SPAC thing. I don't know if you're around during the SPAC stuff. But but I I kinda got back into space, like, just after all this kinda stocks tanked. And it it was kinda like, I don't know, going to a frat party, like, but but at, 07:00 in the morning Yeah. Where it was, like, a bunch of half drunk Silo cups around, and and there's a bunch of people kinda laying on the floor. It's like, wow. I missed a really good party here, and now I maybe have to clean up. I'm not sure. But, so I so I so I all this, but I gather that in this back nonsense, there was sort of this, big pitch around how we're gonna just be moving things around LEO all the time. We're gonna be, you picking them up from one spot and dropping them off to another spot, and we're gonna be going up on transporters and tugging them around. Generally, that market has not manifested at all. There's been almost no examples of this actually getting transactions actually completed in the market, or this kind of Leo to Leo move things around. People throw in that bucket orbital debris remediation, of like, Hey, we're gonna clean up space junk. So I've got some feelings on, let's talk about Oh, wow. Things like Yeah, it's a scam, I think, largely. So look, orbital remediation could be a problem one day. Could be. It is not currently a problem. And I think there are studies you can point to on this around like, what's the probability of collision and what challenge could that cause? If there was a collision, how much economic value would be removed? There's like a long tail black swan event possibility around orbital space debris, but people show these really misleading graphics around low Earth orbit where they show like, Here's Earth, and then here's, Oh my god, look at all that junk around Earth. It's so congested. It's crazy. It's all gonna blow up and crash into each other. The reality is if you showed that at scale, you wouldn't even see the satellites because they're all so tiny. You're talking about thousands and maybe some tens of thousands of objects that are like the size of mini fridges, a lot of these.
00:28:46 · Eric Romo
And yes, like, if we put data centers there, like, maybe that starts to become a bigger problem. But right now, today, there's basically no economic value in helping solve that problem. There have been a bunch of companies, however, who have wanted to prove to investors that they are doing social good work. And so they've said, like, let me show you that I'm gonna help clean up this huge problem. And so I've made a big deal out of it. The reality is, I think, when you when you really look at the dollars and cents of it, you know, if if you could wave a wand tomorrow and say, okay. I'm gonna I'm gonna clean up the different problem. How much would that be worth? It's like tens of millions of dollars. There's this grid report that I can never find every time I remember it, but it's, I think NASA did it like five years ago or something. And it's just the economic value of cleaning up space debris is not that high. But anyway, this was one of the things in that category of like, we're gonna move stuff around. We're gonna be a tugboat. Satellite repositioning is another one of like, hey, it's in the wrong spot, so bring it in, put it somewhere else, which nobody does. So this is not a thing that happens. There are some companies that are working on life extension. That's useful in GEO where satellites are really expensive. And so therefore we should extend their life a little bit. Never gonna be useful in LEO. Not a LEO, we just replace it. It's easy to get there now. And then there's the kind of Rocket Lab SpaceX arbitrage case that I already talked about earlier. So these were all in like the tugboat category. The practical reality is that the product market fit for MIRA for a high thrust, high Delta V space vehicle is it's closer to a fighter jet than a tugboat. This is a thing that the the what Space Force wants to do with this is move really fast at some foreign actor spacecraft and characterize it. That is not a tugboat mission. That that maybe it's a speedboat. I don't know. But I don't like their boat analogies. Anyway, more like a fighter jet. And I think that couldn't be further from tugboats.
00:30:40 · Molly O'Shea
[00:30:40] S0: At the upfront summit, you gave a really good keynote on the national security advantage of being able reposition in space. I'd love for you to go deeper into that, and especially as competition between US and our adversaries just increases more and we can get into Golden Dome too, but could you just explain that a little bit further of the current state of that and why it's been so important?