00:15:13 · Casey Handmer
[00:15:13] S1: Well, he's done it many times at this point, but also, like, he knows the numbers to call to say, like, hey. Do you want chips, do you wanna lose the next war to China? Right? And it it actually helps to be on the critical path for national security at a certain scale. And and, you know, in in in those cases, you can you can sometimes cut some corners, but but, you know, the the the reality is that most of US economic growth is not happening by, like, one or two people. Right? It's it's tens of thousands of of small businesses that are growing gradually like miners that are providing mentorship and opportunities for people to to, like, build their build their skills and and level up and good pay and local housing and and tax revenue for the local cities and all the rest. And, I mean, I... Actually, I re... Re listened to our our interview this morning on my way to work, just so I'd be, you know, up to the moment. And a year ago, I said, we're in this castle, and we're gonna gradually expand through this entire neighborhood until we're up to the freeway, which would be... There's probably 500,000 square feet or something. Maybe maybe a million square feet between here and freeway, plenty, basically, over the next five, ten, fifteen years. I like it. The city likes us. We get on well. We like the local fire brigade. It's convenient. All the people already live nearby. There's local residential areas. It's it's a great place to build. Okay? But but it turns out that even here in, like, heavy industrially zoned Burbank, there are enough restrictions that basically make it impossible for us to expand here. We're gonna have to move into, like, down the road, like, miles and miles into another another industrial area that's larger. I can give you some examples. The... All the buildings east of here, they're, like, a few blocks east of here, were redeveloped in the nineties. And even though it's it's heavy industrially zoned land, they were built as light industrial. And so even though the city will permit heavy industrial use, the building owner won't. So they're just gonna have like city block full of vacant studios because all the studio business has left Burbank, generating zero income or tax revenue for the city for you know, as long as the landlord can afford to be patient, I guess, decades. That's just as an example. You know?
00:17:12 · Casey Handmer
And and then meanwhile, just top the road here, we have some of the last anodizing plants in California because it's now illegal to do metal metal refining in California of any kind. You can't even build, like, PCB, like, printed circuit board traces here. San Dimico is very good on this. And so you got these legacy shops that are, like, a 100 years old and, like, ridiculously bad for the environment and for people who work in them. And... But they grandfathered in, and they'll they'll never shut them down. Because once they do, that's it. They'll have to go they'll have to go to Texas Texas or Louisiana to do this work. So this neighborhood and this whole city was once like a global center of aircraft manufacturing. They built maybe a 100,000 aircraft here in World War two, and it's it's pretty much all gone. It's desolate. It's... I mean, there's still businesses occurring here. LA is still a vibrant and economically dynamic place, but it's not like it was. And it's no longer a center of manufacturing. And second year manufacturing is is massively underrated for its importance. I think it's like the single biggest, like, value increase. Right? So the purpose of a business is to, like, consume inputs where they're cheaper, then produce outputs and sell them where they're expensive or market them where they're where they're valuable, and thus generate value. And second year manufacturing takes in commodified input, you know, materials like aluminum or whatever for air... Airplane manufacturing, and then does a series of operations on it with extremely sophisticated machine tools. Our neighbors across the road here do aircraft hinges, and they're the only, as far as I know, the only certified aircraft hinge manufacturer in all of NATO. So all of Airbus and all of Boeing and all of the military people and their maintainers and everyone else for the hinges that, like, allow flaps and stuff on the wings to work, they get them done here. Right? That's... It's bizarre. Right? But these are just like, you know, all these all these old all these old places here. They're kind of... The original proprietors are aging out now, and and they were part of the satellite kind of industrial complex that served the Lockheed plant, which is now an Amazon fulfillment center until the mid nineties.
00:19:09 · Casey Handmer, Ty Morse
You know, this is where Kelly Johnson built all those airplanes, and he was able to go out and get the landing gear made and and so on, like the specialists who do just those things that weren't within the plant itself. They gotta rebuild it, or we just won't have wealth. The Australian economy made this mistake. Right? The Australian economy lost its middle, and now it's just tertiary services, which is extremely low leverage because it's just one on one on one stuff. Right? And primary production, which is just digging up dirt and shipping it to Asia. And none of those things... You know, basically, like, you get your first 1% and your last 1% of value generation, and you miss the 98% in the middle. Australia's economy is flat. That's insane. Like, it's a peaceful, modern, you know, western liberal democratic system with well educated, relatively young, demographically vibrant workforce, good culture, no violence, no no threats, really. Like, New Zealand's not gonna invade, and unlimited natural resources, their economy is flat. Lotus numbers. [00:20:02] S0: Let's talk through the build out of Starmind, the economics behind it, and what the timeline looks like for that. [00:20:10] S1: It's interesting. So I'd say it like, I wish there was moon dirt here. Yeah. Yeah. It'd be so cool. Starmind. I don't like the name very much. You should talk with Bev. Is it his fault? [00:20:24] S0: Yes. [00:20:25] S1: Okay. Like, StarThink was right there. [00:20:30] S0: You like StarThink?
00:20:31 · Casey Handmer
[00:20:31] S1: Well, it runs Starmind. This... You got that joke potential. Right? Alright. It's an interesting one. So when I when I first, you know, heard of, like, oh, we're gonna do data centers in space, I was pretty skeptical. There's a couple of good reasons to be skeptical. The first is that, you know, the juice is never worth worth a squeeze when it comes to, like, oh, but there's infinite free power in space. It's not infinite, and it's not free. And, you know, if you're in in most orbits, you'll eventually be shadowed by by the earth, etcetera, etcetera. But there are a couple of ways to kinda get around that, and I think Starlink really shows the way. So people who've read some of my blogs will know that that, like, space based solar power is kind of dumb because you're taking a product where it's expensive and you're selling it somewhere where it's cheap, which is not what a business should do. So in space, power is really expensive, and then you're beaming that power as undifferentiated microwaves down to the earth where you're collecting them, and now you're having to compete with solar and nuclear and coal and gas and everything else for, like... I don't know. Like, what does what does your merchant power producer earn in California? 10¢ a kilowatt hour? Like, not very much. You pay more than that, but you're paying for distribution. However, Starlink works because instead of just beaming, like, a shitload of microwaves at the earth for power, they modulate those microwaves with, like, gram something or other, like, some quadrature amplitude modulation radio signal thing that allows them to transmit not power, but but information. Right? And so if you if you run the math on, like, what is the revenue per watt of transmitted microwave power for Starlink? It's a billion times higher than space based solar power. So while SpaceX is making money hand over fist with Starlink, and it's worth kind of putting a pin here in the fact that other people have tried and not succeeded, but space... SpaceX has, their margins might be, I don't know, a 100% or something optimistically. If you reduce their revenue by a factor of a billion, they are no longer in business. So, basically, you take that model and you say, well, we can make money being the middleman transmitting data from your content delivery service or an edge edge node or whatever.
00:22:41 · Casey Handmer
You know, Netflix is down the road here. Via our network, which initially was just this bent pipe system, and now they've got LaserLink set up so they can they can transmit a lot of, you know, a lot of data in in the shell, you know, the shell of Starlink satellites and then land it again at some other place, either at a consumer place or or, you know, like a consumer satellite dish or or a fiber hotel or, you know, a gateway, what they call a gateway, which is like a gigantic dish, which is, you know, where all the data goes in. They can make money doing that, which is very cool. Then you say, well, what if we, like, mess up our latency a little bit? And so we can put all these satellites in some synchronous orbit so they're always in the sun, except for during lunar eclipses. And then we don't need anywhere near as many batteries. And we use laser links to transmit data to and from those via the Starlink network. Although if you didn't have that, you could also transmit to the ground. And instead of charging people a $100 a month to relay, like, Netflix, where, like, the value of the marginal bit is not all that high. In fact, Netflix, like all these systems, uses error correction, so you can delete 10% of the bits, and it'll be fine. You won't notice. And instead of transmitting Netflix, you instead transmit tokens of some hyperintelligent model that you can update with software. So once you got the hardware flying, update software. And then you say, well, what is the comparative value between your your average Starlink bit versus your average Starmind bit of data? And it... It's, like, probably at least a thousand times more valuable, like a token. Like, what do you pay for tokens versus, like, your subscription to Netflix or something? Right? It's it's not even in the same category. I was doing a project on on Saturday where I rediscovered that, like, nested loops consume resources when I basically had an AI go out and scrape scrape the entire Internet for all sources of data on on 200 separate topics and then categorize that data across 200 separate principal components, which then resulted in, like, 40,000 times. Yeah. It's like $260 of tokens. Like, unbelievable. Like, this is... It gave me better results than a team of expert professional analysts would do in a... With a year's work.
00:24:48 · Casey Handmer
And this is just, like, just as an idea, just like me mumbling into my phone and then forgetting about it. Yeah. So that's that's real money. That's real money right there. It'll be interesting to see if economic demand for intelligence in the form of, you know, AI tokens can saturate. I suspect not. Yeah. So that's the idea. Giant giant solar array GPUs. No. And and, like, data center in space, you have this, like, massive thermal problem, but you don't necessarily have that if you do it right. Like, instead of building, like, a giant box with full of racks of hardware and cooling systems, you can actually just, like, sprinkle the GPUs out along your solar array. Right? Because, like, each solar module generates a kilowatt and each GPU consumes a kilowatt and then just have, like, local Wi Fi or or or optical fiber link or something to transmit data up and down the the solar array, you know, train or or or chain or whatever, and then you've got, you know, a star tracker and a couple of radio antennas and stuff in the middle. Then if your GPU dies, who cares? And it's like, it's bolt on to a solar array, and the GPU is the expensive part. Does it make sense? So it's like, well, how do you replace a GPU when it dies? In a in a data center, you got all these fixed costs. And if your GPU dies, you gotta go find it and rip it out and put a new one in. In space, you're like, no. No. Like, I've got a 100 GPUs on this particular satellite, and one of them just died. And then 99 of them are still going fine. And, eventually, you know, maybe you're down to one or two or they're very old and you just deorbit, burn up, crash in Alaska.