Trey Lockerbie (02:44):
Wow. Talk to us about the CubeSat a little bit more, because that was an innovative product, but what was so innovative about it specifically?

Marc Bell (02:52):
It enabled people to build satellites the size you could hold in your hand. It was literally a cube, the first ones, and it started off as an educational demonstrator as a lot of things and started off in universities, colleges and universities. They were building satellites to put an orbit to demonstrate what could be done in a small form factor. And all of a sudden, the government realized that there are applications that you could do in a small form factor. And as that took off then commercial followed as with a lot of technologies, such as the internet today, started off with the government and today’s used by us today.

Trey Lockerbie (03:26):
So what was your particular interest in founding the company and getting into the space in the first place? You have a very interesting track record, different background across different industries. What led you to space?

Marc Bell (03:37):
As a child, I’ve always been and fascinated with space. I was one of those kids who always wanted to be an astronaut, but as I got older, I realized that they don’t put overweight middle-aged Jews into space. And so I went ahead and back in the early ’90s, I owned a company called Globix. We ran 20,000 miles of fiber around the world and we were the world’s largest logical peer in the internet. But in places like Eastern Europe, we couldn’t reach it with fiber. So we started buying a satellite transponder space. It was company called NetSat Express, building ground stations all over Eastern Europe. And that was my first foray into space and I had been fascinated with it ever since.

Trey Lockerbie (04:18):
And was it the particular CubeSat technology that got you interested and saw the opportunity in the space? What did it look like 10 years ago, I guess, as compared to today?

Marc Bell (04:27):
It was the idea of what we could do with it. I was reading about it, I was at the [MILCOM 00:04:31] conference and people were talking about CubeSats and I was looking how all these people were building really big satellites. And when I realized that my iPhone has more computing power than the space shuttle, why is anybody building a satellite the size of a school bus anymore? And so we got to the idea of how can we make satellites smaller, more affordable, technologically superior to they are today? Because if you think about it, most satellites in orbit today were built, especially in geosynchronous orbit, were built 25 years ago. They were built long before your iPhone was even created. And so we are here with small sats in low earth orbit, you’re able to build satellites quickly. You’re able to replace them quickly and you keep updating the technology with every satellite you launch.

Trey Lockerbie (05:22):
So give us an idea of Terran today and just an overview of the basic financials. You have a couple of different revenue streams, so walk us through each one and give us the general overview there.

Marc Bell (05:33):
We have one primary revenue stream, which is satellite solutions business. So this is where we do contract manufacturing for the US government, both for NASA, the military and intelligence community, and also commercial companies as well. We have built satellites in a wide variety. We’re a bus provider and we’re payload agnostic, meaning we’ll build buses for electro-optical imaging, synthetic aperture radar, hyperspectral imaging, 5G internet of things, whatever you want to do, we’ll help you do it. But we started building a second business called Mission Solutions around Earth Observation. It started off with software defined synthetic aperture radar, which is basically imaging the earth at night and through clouds using radar. And then we expanded it to include electro-optical cameras as well. And that constellation will start flying at the end of next year.

Trey Lockerbie (06:28):
Got it. So you mentioned one of the clients being the Department of Defense, for the US at least, for as far as building and manufacturing these satellites. Do you ever take in business from international countries as well?

Marc Bell (06:40):
We do work with our allies, but our predominant business is a national security and the national interest. So we focus very heavily on the US government. We have a strategic cooperation agreement with Lockheed Martin that has been immensely beneficial for both of us. We build everything from up to 500 kilograms now for Lockheed Martin. So we build the LM 50 bus and others as well and they’ve been a fabulous partner. We’ve been thrilled with the relationship and it continues to expand.

Trey Lockerbie (07:12):
So I want to talk about this new revenue stream you’re going into, especially with this product called the PredaSAR and you mentioned the synthetic aperture radar technology, which I’m just learning about now. Is this something that’s proprietary to Terran or is there other companies using the same kind of technology as well?

Marc Bell (07:28):
So SAR was invented about over 50 years ago. It has predominantly been used by governments. It is not something that it’d be… In the US side, almost all SAR satellites today are classified. It has been a technology that we didn’t invent it, but we do like to think about that we’re perfecting it in terms of we are building it into a small form factor and we’re building a constellation that we’re going to begin with 96 satellites. So we’ll provide a very high revisit rate on a large percentage of the globe and provide the government with their tactically relevant and timely information.

Trey Lockerbie (08:05):
You mentioned electro-optical earlier versus the SAR technology. So what exactly is the benefit of using the SAR? Is it on top of the electro-optical or is it on its own? What are some of the benefits or advantages of using that?

Marc Bell (08:20):
So let’s think of it this way. Electro-optical like Planet is Earth Observation 1.0, people have been taking like DigiGlobe and other companies have been taking pictures of the Earth for decades. And there’s tons and tons of satellites in orbit from the people in the US and other countries around the world photographing the Earth every day. So we call that Earth Observation 1.0. Then you go to Earth Observation 2.0, because the problem you have is when you’re taking pictures from space, the joke is half the time the Earth is at night, half the time it’s covered with clouds. Because the way only way you can get a photograph from space is you need the sun to reflect off the Earth, to give you the back to give you the light, to take a picture, you can’t have any cloud cover.

Marc Bell (09:02):
So you have very small windows to do it. What synthetic aperture radar does is it uses radar in which it can penetrate clouds, it could penetrate night obviously, and a computer then creates an image using that radar data. And so we call that imaging or Earth Observation 2.0. Now what we’re doing with PredaSAR is we’re taking 1.0 and 2.0 and combining it together for what we call obviously Earth Observation 3.0, whereas we’re mix, we’re combining imagery along with radar in a single bus to give people a complete image, day or night, weather-independent of whatever they want to image around the globe, 24/7.

Trey Lockerbie (09:43):
With this new product line, what is the exact problem you’re setting out to solve? Talk to us a little bit about the industries that are going to benefit from this or who your customers will ultimately be.

Marc Bell (09:54):
We solve a lot of problems with it. Imagine never losing a plane, never losing a ship. Imagine being able to look under the canopy because with SAR, as long as you know the chemical composition of an object, you could see through things. Looking under the canopy of the Brazilian rainforest and telling you just where there’s indigenous tribes, where there’s illegal logging. Imagine tracking missile launchers and tanks through the forest of different countries. I mean, for national security, it has huge implications. For global warming, imagine seeing every iceberg 24/7, seeing when ice falls off an iceberg and knowing how that affects the oceans. I mean there are incredible uses of this in many different industries. Even insurance, wouldn’t it be great to image the state of Florida the day before hurricane and the day after the hurricane and have a computer tell you which homes already had the roofs missing or roofs damage before the hurricane to stop insurance fraud? And how many billions of dollars that would save the insurance industry. So there are tremendous amounts of applications throughout different industries, throughout different countries for this product.

Trey Lockerbie (11:03):
Wow. So that’s been part of the appeal or at least part of the interest I’ve had in this space is just the TAM seems so incredibly large. What is Terran’s observation of what the TAM is for the Earth Observation industry?

Marc Bell (11:17):
The Earth Observation industry, if we look at it over the next five years, not including government customers, is a 35 billion marketplace. Government budgets are mostly classified when it comes to this sort of stuff. But on the commercial side, it’s $35 billion over the next five years will be spent.

Trey Lockerbie (11:36):
Fantastic. So talk to us about your current Tyvak products and how they compare to the PredaSAR. Obviously they’re going after two different markets, but what was the original intention and what have you been doing with the Tyvak satellites?

Marc Bell (11:47):
Well, you can think of it as PredaSAR is really like a customer of Tyvak. Tyvak manufactures satellites. Tyvak is building satellites for our new brand, PredaSAR, which is what we’re called that we’re going to own. So what Tyvak does is it’s a… We’re a contract manufacturer. We’re the last independent manufacturer of small [inaudible 00:12:07] to the United States. All of our competitors have been acquired. Millennium got acquired by Boeing, Blue Canyon got acquired by Raytheon. We’re the sole survivors and we have no interest in being acquired. We decided to take a different path.

Trey Lockerbie (12:20):
Why is that exactly?

Marc Bell (12:23):
We felt on our own we could grow faster and being independent, there’s a lot of opportunity. You hear a lot from Space Force and the US military that they want to expand the repertoire of vendors. They want more companies to come in. And the relationship between us and Lockheed is really the perfect relationship because we have old space whereas as with all the experience and knowledge that Lockheed brings to the table, with the nimbleness of an entrepreneurial enterprise, like Terran Orbital. So you combine the two of them together and we’re able to have all the wisdom that we bring from Lockheed with the speed we can do at Tyvak.

Trey Lockerbie (13:01):
Got it. So how does the breakdown look of the business? Meaning it’s a hundred percent co-manufacturing essentially, or just the manufacturing part today with this intention of taking PredaSAR up into orbit and creating that revenue extreme. What are the expectations of that with a 35 billion TAM? Are we thinking that PredaSAR is going to overtake the existing primary business or is that continuing to grow at a certain rate as well?

Marc Bell (13:26):
Yeah, I mean we expect by around 2025, PredaSAR will become the dominant player with Terran Orbital. If you think of it, it’s data is a service. So we’re selling data, we’re selling it on different levels. We’re doing subscription models. We’re doing models where people can log into our satellites directly, task them and release them to us. We will sell archive imagery, but we expect the bulk of our data to be real time and sold directly to government customers.

Trey Lockerbie (13:57):
Got it. Interesting. So I read here that the company is stating it has a $9 billion pipeline for Terran Orbital. What does the makeup of that pipeline look like exactly?

Marc Bell (14:10):
That pipeline is almost predominantly government programs. We’re listed on a lot of programs like the NASA Rapid awards contract IV. We’re on this SCAs trache zero. We have a lot of programs that we’re on currently. We have a lot more programs that are coming down the pipe. So we view ourselves, unlike a lot of startups you see out there, we’re only nine year old company. We’ve been doing this it’s over 30 years. This is not our first company we’ve taken public. We are a real management team with real backlog, real revenues, real pipeline. And we have a real plan and we’re very excited about the future.

Trey Lockerbie (14:51):
So in episode 399, we had Josh Wolfe of Lux Capital as our guest and he introduced us to his investment in Planet, and it sounded incredibly interesting. So shortly thereafter on episode 401, we had Chris DeMuth of Rangeley on the show to discuss Planet in more detail. And on both occasion it seemed as if Planet had this huge headstart in this space and the competitive landscape was pretty scarce. So I’m hoping you can give us a better lay of the land here, because that seems to not be essentially the case. And now being aware of Planets, Satellogic, BlackSky, Terran and others, what does the competitive landscape truly look like for the Earth Observation industry?

Marc Bell (15:36):
So as far as a huge headstart, the US government had a huge headstart 50 years ago. We’re all new and you have companies that have been around like DigiGlobe that have been around a long time that also had a huge headstart. But things are changing. Just because you’re the first doesn’t mean you’re the best. Just ask Myspace, Lycos, a lot of Yahoo. There’s a lot of companies out there they were first, but they weren’t the best.

Marc Bell (16:07):
We’ve watched everybody. Our satellite that we’re building for PredaSAR is dramatically larger in mass than almost all… If we take all of our competitors and combine them together, we’re still larger, almost larger than all of them combined. We’re a 350 kilogram satellite to start, which is about the size of a small fridge. It means we have packed a lot of power, capacity for secondary payloads. There’s a lot of things we can do on our satellite that they just can’t do. You’ve got people putting up there CubeSats, they’re toys, they’re cute, they’re fun. But at the end of the day, the world’s moving beyond that. They were great at the time, but we’re building adult size satellites.

Trey Lockerbie (16:47):
Talk a little bit more about that because that’s interesting because we’ve been talking about small form, but small form is up obviously relative, right? You said 350 kilograms whereas something like a Planet satellite is only five kilograms. So we’re talking about a 70X difference there. These are quite a bit larger. So is the intention if you’re just trying to observe the planet, I mean, why so much bigger? Is it just the SAR technology that takes up that much more space or talk to us a little bit about the difference in size or the advantage there.

Marc Bell (17:17):
Size is a few things. With size, you can have a lot of power. So you have a lot of batteries on board so you’re not married to the sun, meaning when you go around the earth, you still have enough power saved up to image the planet and to download data to Earth. The more power you have on board, the more you can image, the more you can download. So you’re not relied to always be in the sun to do it. And that allows us to do polar orbits, not just sun-synchronous orbits. That gives us a huge advantage.

Marc Bell (17:47):
It allows us to have other payloads. So we’re able to take SAR and couple it with other technologies and put them on the same bus to provide also a more robust image. It allows us to do processing space, so we’ll be able to process our data in space, not have to download it to the Earth to process. We’ll be able to have a larger aperture lens. So we get higher resolution imagery and higher processing for the imagery on the satellites. So the smallest satellite, the smaller lens. That doesn’t mean it’s a bad lens. We have some phenomenal lenses that we’ve built that are very small, but it gives you more optionality for all kinds of different technologies that when you’re in a very small form factor, you don’t have that ability.

Trey Lockerbie (18:29):
So this was a little bit confusing for me as well, because I know that Planet has something like 450 I want to say satellites up in orbit already and they’re covering what I hear see on the materials here one plane of the planet. But Terran Orbital is only expected to launch something like 96 satellites, but then covering 24 planes. So you have less satellites covering more as I understand it simply. Right? So I’m curious, how does that work exactly? You’d think more satellites gives you more coverage.

Marc Bell (18:58):
It has to do with the SAR antenna being very large. So we’re able to do strips and cover a larger piece of land than you can do on a smaller aperture lens. We’re able to see a very, very narrow pinpoint part of the Earth. So we’re able to cover a lot more of the planet with fewer satellites. And also you can remember, all those satellites keep de-orbiting every five years or so. So they always got to continue to be replaced.

Trey Lockerbie (19:22):
That was actually my next question because it seemed like with that larger satellite, I was wondering if it had the ability to stay up any longer than the others or if not. So there’s not much of a CapEx advantage except for the fact that you are building less, I guess, of them. Do you know much about the difference in manufacturing costs say on your satellites versus someone like Planet’s? And is there a limiting factor or advantage there?

Marc Bell (19:45):
I mean, when we build… I can’t talk to how Planet does it, 85% of our components on our satellites, we build in-house. So unlike most people where they buy components from all over the place, we’re building everything in house. And we recently announced a new facility up at Cape Canaveral with Space Florida. We’re going to be building the world’s largest satellite assembly facility, over 660,000 square feet. To end, it’s almost a kilometer long and that will economies of scale help drive down costs. So we’ll drive down our costs and our total cost of ownership in our satellite and other satellite to build on other people dramatically over the next decade.

Trey Lockerbie (20:24):
From when I saw that would allow you to then produce something like a thousand satellites per year. So how does that compare to maybe other competitors in the space as far as production goes?

Marc Bell (20:34):
There is nobody else who could do that to the best of my knowledge on all different kinds of platforms. Remember, we’re not just building just a single kind of satellite, we’re building different payloads for different people. But you’re seeing people now, instead of people ordering one satellite, now they’re ordering 10 or 20 and we’ve got people talking about thousands of satellites. Starlink was the first, was the SpaceX, but we’re seeing many customers now thinking about how to build their own massive constellations and more importantly, how to make money at it. And so EchoStar, for example, we just launched three satellites for. And that’s hopefully the beginning for them of many.

Trey Lockerbie (21:13):
It’s interesting that you are choosing to go into Earth Observation with these satellites given your background, as far as laying down fiber for the internet, et cetera. You’ve got Elon with the SpaceX Starlink internet, right? Through satellite. And as one would think, you might be going in that direction, but you’re not. You’re choosing the observation direction, I’m curious as to why.

Marc Bell (21:34):
When you think about what people are doing with Starlink and internet from space, we wanted something that had high barriers to entry and internet of things is relatively easy to use. Internet from space has been around for over a decade. I think Iridium, or maybe some before Iridium was one of the first to do it a long time ago. But software defined synthetic aperture radar, that’s new. And that’s very, very complicated. It’s a lot of math to design the antennas and to have the resolution that we have. And so it’s a very difficult business to get into. It’s not easy like 5G or something like that.

Trey Lockerbie (22:11):
And do you have any concern knowing that you are a SpaceX… They have that sort of barrier to get up into space. One would think that this would might be low hanging fruit for someone like a SpaceX to enter this space as well and create their own fleet of Earth Observation satellites. Do they not have much interest in that?

Marc Bell (22:27):
This is a really a niche product. When I say niche, it’s been historically it’s national security product. Like I said, that you can Google it. You can’t find any US government SAR satellites on the internet. It’s always been classified and will probably remain that way for a long time to come. And I think there’s only 13 SAR satellites of size from other nations in space total from all the countries around the world and outside the US that people are aware of. So we’re filling a need, but it’s a unique industry, it’s complicated and that’s our advantage and we’ve been doing this for quite a while. So we’ve been working with SAR for many years. And so we definitely have a headstart advantage that way technologically speaking.

Trey Lockerbie (23:13):
Not a lot of people might be aware of the processing advantage that you touched on earlier. But with these satellites, I think a lot of people just assume, “Oh, it’s a satellite. I’m getting my texts instantly. It’s going shooting up to a satellite coming back down, everything’s beaming instantly.” But with some of these images, we’re talking about hours as far as the delay from getting the image. And I believe the technology here with Terran and maybe some others, it’s cutting that down quite a bit. But I’m curious as to how or why and is that something that’s a fairly innovative new step for Terran?

Marc Bell (23:47):
What’s not a new step? I mean, we’re taking the Pizza Hut approach, 30 minutes or less from order to delivery. And that’s what we’re aiming is that you can take a picture within minutes and then get it processed within minutes and download it within minutes. So at the end of the cycle, within 30 minutes from the time someone types in the keyboard, they want something, they can have the image on their computer screen.

Trey Lockerbie (24:10):
Got it. So before we move on, I’m just a little bit more curious about the manufacturing piece of your business as well. What does the future of that look like and how much expansion are you projecting for that part of the business?

Marc Bell (24:23):
The way we view it is you always hear about all these rocket launch companies like SpaceX, Rocket Labs talking about 50,000 satellites are going to be launched over the next 10 years into orbit. Someone’s got to build them and no one talks about the guy building them and that’s going to be us. We are uniquely positioned and with the construction of our facility out at Cape Canaveral and other facilities that will announce in the new year, we are very well positioned to have a dramatic manufacturing advantage over everybody else. Between robotics and our augmented reality and additive manufacturing, we will automate a lot of this in assembly line fashion, similar to a Ford Model T for lack of a better term. And we’ll be taking automation to satellites for the first time on assembly lines.

Trey Lockerbie (25:15):
Wow. 50,000 satellites. I know the Earth is large, but that sounds like a lot of satellites. And I’m curious, what is ultimately the competitive advantage here with all these satellites going up into space? It’s just hard to imagine creating that moat. You’re creating a sticky revenue stream by just the quality of the imagery, I imagine, and the speed as we kind of touched on. But is there any other moat as far as claiming space in space, if that makes sense, claiming orbit thresholds or routes?

Marc Bell (25:46):
Well, these are for all different customers doing all different things. People will be doing 5G from space for your cellphone, internet for your home. People will be doing all sorts of things. Different ways to monitor the earth. People will be monitoring space debris, space situational awareness is becoming a big deal. If you remember the TV show, Quark, from I think it was the 1970s with a garbage truck in space, people laughed. And now everybody wants it and they clean up what’s up there. But there’s a lot of uses for satellites. And 50,000 is not a lot. If you think about it, the Earth is 40% land, 60% covered by water. And you have on that land over 3 billion cars. So you have a lot of cars driving around on a small part of the earth.

Marc Bell (26:34):
And you have maybe 18,000 satellites in orbit and maybe another 18,000 pieces of junk floating around up there. And the space you have a lot on Earth, you think Burj Khalifa, you have 2,000 feet of wide and that’s it. In space, you got 43,000 miles of wide. You have a lot of space in space and so there’s a lot of room for a lot of satellites. At the end of the day, it’s really all about the application. What are people going to do? And you’re going to see just like we’ve seen in the past, it’s going to be a boom bust, boom cycle. People boomed in the early ’90s, they ran a lot of fiber. People went bust. Then people ran build data centers, now they’re booming again. And you’re going to see that in space, everyone’s rushing to put up different competing constellations.

Marc Bell (27:17):
They’re going to be some winners and some losers, but for our business, the majority of our business today is we’re agnostic. We don’t care who wins because we win no matter what, as long as people build satellites. PredaSAR is a unique outlier as we don’t have a lot of competition, we don’t have a lot of the commercial people getting into synthetic aperture radar, are building silly little satellites without a lot of power and not a lot of resolution. And so we don’t take them very seriously and we’re just going to augment it’s to Planet with the US government has today. That’s our real mission for PredaSAR.

Trey Lockerbie (27:51):
So as I understand it, you’re going public now to raise some funds, you’re going to build this massive facility to keep building these satellites and you’re projecting to put them up in the sky, I think at the end of next year, but there is a lot that can go wrong. I mean, that sounds like a lot of things in the way of that, right? The building, the building of the actual satellites, getting them on a ship to go up in the space. I mean, there are a lot of steps here along the way. What are some of the biggest challenges you’re currently facing? Is it timing of funding? Is it getting this through quickly? What does that look like?

Marc Bell (28:22):
We’re very lucky in a lot of aspects. So when you think of the new facility being built, that’s being funded by the state of Florida. So that money’s coming from Florida, it’s not going to be done for three years. PredaSAR will be long on its way. It’ll be built at our California facility and then eventually we’ll move the production to the Florida facility. But we have facilities in California today that can handle it. And we’ve already begun the manufacturing process of getting those satellites built. As far as funding goes, we’ve been very lucky to be very well-funded and we put together a very creative $250 million financing arrangement as part of the Spac. With the Spac, we will get $345 million.

Marc Bell (29:04):
And we’ve another $250 million of financing that went side by side with it. So we just drew down $25 million to that 250. And so think of it as kind of getting the pipe in advance. And so we have constant access to capital throughout this process. So we’re not capital constrained because between the 345 plus the 250, depending on how much we draw down and then 300 from the state of Florida, you’re approaching almost three quarters of billion dollars and that’s just the next six months.

Trey Lockerbie (29:39):
Wow. And as I understand it, Terran did about 25 million in revenue last year, I think around 35. We’re going to close out this year. Let’s start with the revenue. So how does that compare to other competitors? For example, Planet did, I think, around a hundred million already from this stream. What does some of the other competitors look like in size? And what does the forecast for the first year of having this up in orbit?

Marc Bell (30:01):
Well, you got to compare apples to apple. So Planet is selling data as a service off their satellites. We’re not selling any data off as service. Now our revenue numbers today are 100% manufacturing. It’s a totally different business than what Planet does today. So you can’t really compare that. You’ve got to compare our satellite solution, our Earth Observation solutions business to that, but that doesn’t get going for a few years. So they do have a headstart, but we’ll dwarf them on size revenue-wise once we’re operational. And if you look at their projections going forward in ours, we’re pretty confident about where we’re going.

Trey Lockerbie (30:37):
Should investors look at this as just Terran has been in the space for a long time, they have a great relationship with the DOD for example, their relationships are big as far as revenue goes? Is there any other exclusivity that creates an advantage on the revenue piece for this observation industry?

Marc Bell (30:53):
Well, it ties to we do lots of CRADAs with the US government cooperative research and development agreements. And we do them with everybody for Lawrence Livermore Labs to Jet Propulsion Labs and many other US funded entities. That gives us access to research and development. It gives us access to technologies that these commercial companies don’t have. So we keep building our technology base internally that we’re able to build superior products on a commercial basis as we commercialize military technologies.

Trey Lockerbie (31:24):
And maybe talk to us a little bit about the margins as well. You mentioned this new facility going live, so you’re going to have some economies of scale once that is live. How will that differ from today? What’s the margin improvement look like from today?

Marc Bell (31:37):
I mean, we’ll see margins going… In 2021, we’re looking at a gross product margin about 26%. But as we get into a SaaS model with data as a service, you’ll see gross margins hitting 75% by 2026. And so the data is a very, very high margin business. The satellite margins will also improve. You will see some price compression in terms of the satellites, but margins will improve faster than the price compression because of automation. So we’ll get more sophisticated in our manufacturing process. Right now, a lot of it is by hand and bespoke, but now we’re getting to a point that we’re standardizing buses and standardizing satellite buses in all different sizes. And by doing that, we’re able to build them in mass and build them at two thirds of costs.

Trey Lockerbie (32:26):
What is the cost of a PredaSAR up into space? What does the cost of a PredaSAR look like today?

Marc Bell (32:32):
So all in for building it, launching it and running it for five years is about $20 million. And at that same time period, we’ll get about $120 million of revenue.

Trey Lockerbie (32:45):
And how many customers do you think will make up that 120 million?

Marc Bell (32:48):
The bulk will be a handful of customers.

Trey Lockerbie (32:52):
Wow, incredible. So you have chosen Spac sponsor Tailwind Two. Talk to us a little bit about why this particular sponsor, what did you see in them and what do you like about them?

Marc Bell (33:03):
We picked Tailwind when we did a bakeoff of a lot of different Spacs. We liked the experience of the management team there. They were very entrepreneurial. They built their own businesses, they got us, they understood us. They understood what we were going through. They had a lot of experience with technology and they had some exposure to space in the past. And so it was a very easy conversation and that made it a lot easier because they understood what we were doing.

Trey Lockerbie (33:29):
Let’s talk about the valuation, because it seems maybe more conservative than some of the other competitors that have gone public recently. I’m kind of curious as to why that is.

Marc Bell (33:37):
This is not the first company we’ve taken public and we understand the need. You always want to leave money on the table because you know you’re going to make it up down the road. You want the institutional investor to feel there’s a value there. We could have gone for pie in the sky evaluation, but we try to be pragmatic and look at it like we wanted to… We know we’re going to perform, we know we’re going to deliver and we want institutions to get interested in what we’re doing, invest in the company, and we are comfortable with our numbers. And whatever we gave up today, we’re making up tomorrow so we’re not too worried. So, stock price only matters the day you sell.

Trey Lockerbie (34:18):
And just for those listening as I’m understanding it, the Spac is going to make up something around 19% of the overall company once this closes. Whereas the Planet Spac was only about 12 and a half or so percent. So you’re actually capturing quite a bit more equity in this particular opportunity it seems with this lower valuation. So I think that’s kind of interesting just to kind of note. All right. So what are the next steps as far as taking this thing public? I know it’s got about a Q1 projection to do so. What are the next steps along the way? Are there more diligence or what does that look like?

Marc Bell (34:53):
We just filed our S4 during Thanksgiving. We wait for the SCC comments. We’ll do a few rounds of comments with the SCC. Once we, we get cleared from the SCC, then the Spac will then go for vote and that takes about 30 days. Once the vote is cleared, we’re a public company. So hopefully by the end of Q1, in a perfect world, we’ll be public.

Trey Lockerbie (35:16):
Now, speaking of the voter rights or the redemption potential, Planet just went public today. They only had a 2% redemption and you know this because you’ve been around Spac for a long time, you know that a 2% redemption is pretty extraordinary would seem. What does that tell you about Planet or does it just tell you more about the space and the excitement around this in general?

Marc Bell (35:36):
If you look at space Spacs, everyone tries to group Spacs on one bucket and you can’t do that. You have space Spacs have been an outlier in a good way. Rocket Labs had 3% redemptions, Planet had 2%. Space is becoming an asset class. It’s becoming when people are finally acknowledging it, banks are finally bringing on analysts to cover space. They’re bringing on investment bankers to bank space.

Marc Bell (36:01):
It’s becoming an asset class similar to automotive, similar to [airspace 00:36:06] of defense, similar to consumer goods. As we become an asset class, people want to own part of it. It’s exciting. You got me wrong. People are excited about space, but they also know it’s the future. And there are very few things out there that have a lot of hope in the future like space does. And so we’re seeing a lot of excitement from not only the institutional investor, but the retail investor as well. It’s exciting to wake up in the morning and solve… We solve problems. People come to us with a problem and we figure out how to solve it from space. And we get to work with some really amazing technologies and some really smart people and it’s fun.

Marc Bell (36:49):
It’s very exciting to go to work every day and do what we do and see things going to space and see them work. And it’s not too often you get to be like, “Wow, we’re putting something to space today.” And we’ve done that, I think this year we’ve put… Oh gosh, I don’t know how many satellites are in the space this year, a lot. And it was great because in all different kinds, doing different missions, different things. We did one called SV2 with Lawrence Livermore National Labs and that we’re super excited about because we’re taking optical imagery of the earth at a fraction of the cost that’s ever been done before at our resolution that’s never been done before.

Marc Bell (37:27):
And it’s just phenomenal the quality of pictures that we’re getting back on it demonstrated that we built. And so it’s fun. If you can wake up every day and go to work and say, “Wow, that was a fun day.” And you’re doing great things and you’re keeping the country safe. You’re checking all the boxes at the end of the day.

Trey Lockerbie (37:45):
Very cool. So for those who are interested in learning more just about this industry in general, what are some of the best resources you could think of to share with them to get them a little bit more up to speed on it?

Marc Bell (37:55):
There’s lots of place… Unfortunately, there’s no great place to get up to speed. There are lots of websites like Satellite Network News, like Space News. You got lots of analysts at the banks that are writing pieces, that are getting better every week. But there’s no real depository. There’s no real go-to that you have for space yet. You have people doing different aspects like via satellite, just covering satellites, but there’s no this is the must go-to place to learn everything you want to know about space. It’ll happen, but there’s nobody yet.

Trey Lockerbie (38:33):
Okay. So talk to us a little bit about the management team at Terran. I understand there’s a number of different ex-military executives on the team, which is pretty unique. What is the advantage of that? Or was that intentional? How did that come about?

Marc Bell (38:47):
It was by design and by luck. We have a lot of amazing former military leaders like retired Major General Roger Teague, retired Rear Admiral Boris Becker, retired Lieutenant General David Mann. These people were the customer and it’s a testament to what we’re doing here. So Roger left Boeing as the head of Space Intelligence and Missile Defense to come to us. He left the world’s cushiest job to come work for a startup, running defense and intelligence. Why? Because he knew the future of what we’re doing is tremendous. And he ran all space and space procurement for the DOD and the IC community when he was in the military. If you look at Boris Becker, who was a rear admiral, he ran all space for the US Navy. And he came straight from the Navy to us where he could have gone anywhere.

Marc Bell (39:40):
He could have gone to Lockheed, Boeing, Northrop or a million other places, but he chose us. Or David Mann, who ran a missile defense for the US army. And he is another person that’s just he could have gone anywhere and he came to us and they’re all coming to us along with a lot of other colonels, lieutenant colonels and all these people whose service were very grateful for because these were on the customer, they were on the other side and they see the products that we’re building. They know the products that are necessary to keep the war fighters safe and to serve our country. So it’s thrilling to have such an amazing pool of talent kicking around.

Trey Lockerbie (40:23):
And speaking of talent, you’re at the helm of this, but you’re already a very wealthy guy. I mean, this is not your first company. You’ve done this before and exited some companies along the way. I’m kind of curious as to your extracurriculars, it looks like you’ve even won some Tony Awards from producing some plays on Broadway I believe. So you must have had that retirement thought process along the way at some point and said, “What do I do next?”

Marc Bell (40:47):
21 years ago, I tried to retire and I realized I don’t play tennis. I don’t play golf. And I was really bad at golf but I liked working. And so I went back to work and some things were done just for fun or to see if I could do it, doing the Broadway shows like Jersey Boys or August: Osage County, started off as a goof. Someone asked me if I wanted me to do a Broadway show and I’m like, “I don’t even like Broadway. Why would I do this?” But I said if I’m going to do it, I have two conditions. One, I want to win a Tony Award. Two, I want to make money. If I can’t do both, I don’t want to do it. And my buddy goes, “Done deal.” That’s a joke and we did it. Jersey Boys was our first show.

Marc Bell (41:30):
It was a billion dollar show in Broadway. And then he said, “We should do a play next.” And I was like, “Okay, [inaudible 00:41:39] same two rules, got to win a Tony, got to make money.” And we did August: Osage County. Clint Eastwood turned Jersey Boys into a movie and Meryl Streep started in August: Osage County when we turned that into a movie. It was Jersey Boys won a Grammy Award and I have a gold record and platinum records sitting outside my office from it. And August: Osage County went a full surprise. So it was something fun, something different, but definitely not a passion. But it was definitely being a native new Yorker, it was very entertaining to do as my mother dragged me into these shows when I was a kid involuntarily.

Marc Bell (42:14):
But now I look going forward with space, that’s always been my thing ever since I was a kid, wanted to do something in space. And when the opportunity arose to acquire Tyvak, I jumped at the opportunity. I never look back and it’s been a blast doing it and I’m going to keep doing it. I signed on for five years to stay on as CEO. I just started in March and my business partner ran it for the first eight years. And then he goes, “Tag, you’re it.” And so I said, “Look, if I’m going to do this, I want to do it big.” And he said, “Knock yourself out.” So here we go.

Trey Lockerbie (42:49):[inaudible 00:42:49] another space CEO, which is Elon Musk. And given that you guys partner with SpaceX quite a bit, I’m curious what that relationship looks like or what the experience has been working with someone like SpaceX and maybe particular, Elon himself.

Marc Bell (43:03):
I never met the man, but I could tell you he’s obviously brilliant. I mean, I think everything he touches turns to gold and they are very reliable partner of ours for launch. Their rockets don’t blow up and that’s always a key metric and they go where they’re supposed to go, which is a key metric at a price that is great. So we’ve been very thrilled with SpaceX and the product and the quality of service they’ve been giving us. So none at all complaints on our end.

Trey Lockerbie (43:31):
So beyond Terran Orbital and your Tony Award-winning shows, you’ve done a number of investments in multiple categories, space specifically, of course, but then there’s some others as well. I’m kind of curious about your investing experience. What have been some of the biggest wins, maybe some of the biggest failures, what are the biggest learnings from both?

Marc Bell (43:52):
There’s an expression, successes are very public and your failures are very private. We’ve been very lucky we’ve invested in a lot of great companies over the decades. I think at one point we had investments at 156 different companies. We do seeds, series A, series B. We used to own a lot of websites like earnings.com, which we sold to Thompson Financial to [Eggor 00:44:16] Online, which we took public, did ARMOUR Residential REIT… I’m sorry. We did Javelin, a residential mortgage, which we sold to or merged ARMOUR Residential REIT, did our Spac called Enterprise Acquisition and which became ARMOUR.

Marc Bell (44:30):
In space, we were very active. I was trying to build an ecosystem. So we invested in the GP and Space Angels and they had been amazing. And through them, we met a lot of great companies like Made In Space, Nanoracks, HawkEye 360, ATLAS Space, Analytical Space, Ursa Major, LeoLabs. The goal was to try to build an ecosystem of different companies that could all work together. And most importantly, companies that I know could succeed. We weren’t trying to mine asteroids. We weren’t trying to build a lunar colony. I’m trying to make money. And we sold Made In Space, we sold Nanoracks, things that we can monetize and things that are real businesses run by real people. And that’s kind of how we look at these things, not looking at pie in the sky stuff, even though it’s all in the sky.

Trey Lockerbie (45:20):
How much does the team play into the diligence or the consideration? Meaning you find a perfect company that’s fitting that piece of the puzzle in the ecosystem. How much do you put into the weight of execution?

Marc Bell (45:34):
You always bet on the jockey, not on the horse. And that’s one thing. And I love when management team… When they start telling me how they’re going to go IPO, I always remind them, statistically speaking, you have a better chance of getting struck by lightning than you do of going public. I think it’s a one in three to 30,000 chance being struck by lightning versus one in 3 million chance of going public, something like that. I go always go to CEOs and I say, “Look, I’ll give you the money, but I want you to personally guarantee it.” Those who say yes, not that I want them to, but those who say yes, I know they believe. Those who be like, “No, I’m not going to do that.” They don’t believe. So every business I’ve gone in to, I’ve gone in head first and bet the farm many times on Globix, I’ve bet the farm and many others I’ve bet the farm and had a few close calls over the years, but it all works out.

Marc Bell (46:25):
Because I believe. I believe I was building a better product, a better system, a better way of doing things. And eventually, the numbers are proof of their own. As long as you keep meeting and exceeding Wall Street’s estimates, the Street will continue to support you. Between my business partner and I, we’ve raised over 10 billion of equity for a wide variety of companies and over a hundred billion of debt, this will be our 17th company we’ve taken public together and this will be our fifth unicorn. So we’ve had an immense 30 plus year career of building great businesses.

Trey Lockerbie (47:00):
All right. So before I let you go, I want to just make sure I give you an opportunity to hand off to our audience where they can learn more about Terran Orbital, where they can learn more about you or follow along with what you’re up to and any other resources you want to share.

Marc Bell (47:15):
Sure. People can learn more about Terran Orbital at terranorbital.com. I finally got a Twitter account. I’m @MarcBell, Marc with a C, and look forward to hearing from everybody.

Trey Lockerbie (47:30):
Fantastic. Well, Marc, this is really enlightening. I’m very interested in this space and this is just another piece of the puzzle that I’m putting together. And it was really cool to learn about so thank you for coming on the show.

Marc Bell (47:41):
I look forward to it and I look forward to meeting one day.

Trey Lockerbie (47:43):
All right, everybody. That’s all we had for you this time. If you’re loving the show, please don’t forget to follow us on your favorite podcast app. And I’d like to thank the folks on Twitter who brought to my attention that there are other competitors in this space. If you want to reach me on Twitter, you can find me at Trey Lockerbie. And if you’re looking for opportunities for your portfolio, the best place to start is our TIP Finance tool. Just Google TIP Finance and it’ll pop right up. And with that, we will see you again next time.

Outro (48:07):
Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by The Investor’s Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network, written permission must be granted before syndication or rebroadcasting.