00:07:21 · Saurav Shroff
[00:07:21] S1: I guess it's best to answer your question by breaking up the future into two relatively distinct time periods. We're gonna call the first time period, which is in the immediate future, the period where AI data sets are not the majority. And then we're gonna call... And we... I think that's, like, roughly now till, like, 2029 or something, or 2030. Then we're gonna call the period after that the period where AI sets are the majority. And when I say the majority, I mean the majority of satellites sent to space measured by their size or power. Okay. The aggregate size of power of all the satellites. During the first phase, our businesses really has no problems. As in, SpaceX, before exiting the launch market, which they recently did, sold lots of launch, using their current rocket Falcon nine to many companies, most of most of whom are our customers. And, there are other rocket launch companies who will be moderately successful in catching up to Falcon nine's capability, which is to say 10 to a 100... Well, I guess Falcon's higher than a 100, but 10 to a 100 flights a year, 10 tons per launch, and the economics of a rocket that is not fully reusable. And all of those things will be true over the next two to three years, and during that period of time, our products will continue to sell and continue to provide immense value to customers. So we're not worried about this phase. This phase one. Phase two is where there's some reason to be concerned. Let's look at what an AI dataset is, why it's better than a terrestrial data center, aka a data center on the ground, and then what's required to make it good on the rocket side. So AI data satellite, very simple. Take a chip, take a memory, basically take a compute module, not memory, take memory, sorry, take a chip in memory, and put it inside of a satellite that's quite a bare bones satellite that's extremely large and generates a huge amount of power, but is very simple in that it doesn't have, you know, great pointing accuracy, it doesn't have the ability... It doesn't it doesn't have very many unique capabilities. It's basically just a a powered shell. So just a box that has a huge solar panel, a tiny battery, some interconnection, you know, networking, devices, some attitude control devices, a small thruster, but basically a very bare bones satellite. That's what an AI data satellite is.
00:09:41 · Saurav Shroff
Roughly speaking, an AI data satellite needs to be about $5 per watt for it to be competitive with a data center on the ground, because the data center on the ground costs between 10 and $15 a watt, and lasts a little bit longer. Okay? So if you wanna make it better, has to be about $5 a watt, and that's all in. So that's building the satellite, that's every single component that's out the door and into space. So roughly speaking, to make a $5 a watt satellite, something like $1 per watt needs to be launched. Needs to be the launch cost. So if we break this down, and we look at the numbers, and look at, let's say, a 200 kilowatt class data satellite, this satellite should cost about a million dollars in total, of which something like 800,000 will be the cost to build the satellite, and 200,000 should be launch. If 200,000 is launch, and the satellite weighs something like 1,000 kilograms, which is quite optimistic, actually, for the weight of the satellites, actually very optimistic for the weight of the satellite, then launch needs to needs to cost $200 a kilogram. Right now, SpaceX, well, when they were in the market, would sell you launch on Falcon Nine for single digit thousands of dollars a kilogram, and it would cost them something like $1,000. So you can see how Falcon Nine is not a sufficient vehicle to make... It's five x off. Yeah. It's five x off. Exactly. Additionally, if you look at any of the companies that are currently deploying data centers at large, okay, look at OpenAI, Anthropic, any Neo Cloud, SpaceX themselves actually with XAI. They're deploying data centers on the order of sort of one to 10 gigawatts a year. So let's do some more math. If a 200 kilowatt satellite is one ton, and a rocket like Falcon Nine can carry about 10 tons to sun synchronous orbit, which is where AI data sets need to be in order to be useful, each Falcon Nine launch can carry two megawatts. What that means is that to get to two gigawatts, okay, which is a medium number in comparison to in comparison to one to 10 gigawatts is a thousand launches. So, Falcon nine is 10 x short on scale, and five X short on cost. And so what this means is that you need a roughly one order of magnitude improvement in both scale and cost, just to get to the baseline, where the AI data set is both better at cost wise, and even modest in scale. Right?
00:12:01 · Saurav Shroff
People talk about how AI data sets are the solution because, you know, solution to needing lots of AI compute because they have infinite scale, and this is true. More or less they have infinite scale, once you have infinite, you know, pseudo infinite launch capacity. But to get there from Falcon nine, you need five x cheaper cost and 10 x higher scale just to get to the baseline, and then you need a 100 x scale to get to, you know, appreciable capacity, and and a thousand x scale to get to really serious capacity. So so rocket like Falcon nine is limiting, and it's limiting because it's too expensive, and it's too slow to launch. The thing that limits its... That makes its cost high and the rate of launch low is the fact that the second stage of the rocket is not reusable, which is to say it gets thrown away on every launch. So, to launch it twice, have to build two second stages, which is time consuming, and to launch it twice, you have to build two second stages, which costs money. So, the solution to this problem that is known and has been known for decades is to make both the first and second stage of the rocket reusable. So, in simple English, rockets that are useful for deploying AI data sets are defined as rockets whose first and second stage are reusable. Right now, there are exactly two companies on Earth that are seriously developing a two stage to orbit, fully reusable rocket. One of them is SpaceX, who we already described has roughly no incentive to sell services. And the second is a company called Stoke Space, which I think is an amazing company that is also developing a rocket of similar... Categorically similar performance, although it's a bit smaller, which doesn't really matter. And so it is for this second stage of the future where we are immensely scared. Because, if you look at the optimal sort of the game theory optimal logic for each participant in the market, it's as follows. First, SpaceX has a rocket that works. Let's say they have star... Let's say Starship works in about a year. So let's say SpaceX has a rocket that works. They have no incentive to sell, they deploy their own data sets because super intelligence is valuable. Great. If another company makes a rocket, and that rocket works, and the other people who are also building rockets, and by rockets here, I'm talking about useful rockets for data sets, so reusable ones.
00:14:22 · Saurav Shroff, Ty Morse
The other reusable rocket makers are not selling services, then the game theory optimal to sit... The game theory optimal choice for them is the same. My rocket works. I have no incentive to sell it. Scale AI data sets because super intelligence is valuable. Then if another company builds rockets that it works, their logic is the same. So it's it's for this future that we're worried. [00:14:45] S0: So, basically it's never optimal for any of these companies to sell launch once?
00:14:49 · Saurav Shroff
[00:14:49] S1: Yeah. On- on an instantaneous And basis, this is as soon as multiple companies start selling launch, this dynamic changes. So, really you just need two companies that are selling launch, and for a long time we thought the launch market is gonna be solved because SpaceX sells launch, so it just takes one other person or company to come along and also sell launch. So, you sold launch, we'd be in good shape. But we went from one hoping for two, down to zero hoping for one, but when we're at zero, nobody wants to be the first. And so, our solution to this problem is, it's very simple, and this will be my first time saying this on record, which is that we have a date in the back of our heads, where if the launch market doesn't fix itself, we're gonna go build a launch company. And, the reason that we have to do it is because, we want our customers to be successful. So for those who are listening, who haven't had... Who don't know about us, we supply mass produced components, including the world's lightest space solar panel to companies building satellites, including those building AI data centers in space. And because we want our customers to be successful, and because they have no way of being successful in the present world, there's date in the back of our head, and there is a clock that is ticking towards that date. And if something doesn't change, like SpaceX entering the market, or multiple players competitively bidding large volume launch contracts, and offering reasonable prices like 200, 300, or heck $500 a kilogram, we will go build the launch company and sell that product. And and and the reason is for the betterment of the world. Because we think super intelligence is something that everybody should have, not just a couple of companies.
00:16:33 · Ty Morse
[00:16:33] S0: When you're thinking through the decision to... Like, this business alone is hard enough. Like, it's very, very difficult to build one space company. How did you kind of map the logic in your head for even thinking about doing a launch company as well?