Charles Beames — Welcome to the Second Space Race (EP.269)
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Hi, I'm Jim O'Shaughnessy and welcome to Infinite Loops.

Sometimes we get caught up in what feel like infinite loops when trying to figure things out. Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started. The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that

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Thanks for joining us. Now, please enjoy this episode of Infinite Loops. Well, hello, everyone. It's Jim O'Shaughnessy with yet another Infinite Loops. I spent like the last 20 minutes just kind of gushing over my next guest.

because we're about to have a great conversation with a very formidable and impressive individual. My guest is Chuck Beams, the chairman of York Space Systems, a leader in commercial small satellite design, manufacturing, and operations. He's also executive chair of TrustPoint, SpiderOak, and SmallSat Alliance.

My God, your CV is like incredibly formidable. You were the president of Vulcan Aerospace, managing Paul Allen's $1 billion aerospace and tech portfolio. 23 years as an active duty Air Force officer in the Space and Intelligence Department.

Division, retiring as a colonel. Thank you very much for your service. Air Force Academy, bachelor's in science and mechanical engineering, but then degree upon degree from Johns Hopkins, the National War College, Georgetown. Like, I'm intimidated. Don't be. Well, welcome. This is a new world, probably, to many of our listeners and viewers. So if you wouldn't mind sharing

Walk me through the entire kind of ecosystem of what many are referring to as our second space race, the kind of a primer on the commercial aspects and the explosive growth that is happening there. Sure. That's it. Well, what's happened is different people kind of frame it different ways, but here's the way I frame it. We had

The first space race, we all, you know, Jim, you and I kind of grew up in that era. And in fact, my dad was an engineer in the space program. I lived at the Cape as a little kid. Oh, cool. Watch the Apollo, you know, watch those Saturn V booster go as a kid and all that kind of stuff. And the race really was just about who could get to the moon first and bring an astronaut home safely because that was symbolic of space.

who would win the Cold War. It was almost like a proxy, right? It was a safe way to sort of compete and to try to convince the non-aligned nations which system was going to win in the end. It's a funny little thing, looking back on it all. But that was the space race, big deal, lots of money spent, and it worked. We won, we lined up our best scientists and engineers and even recruited some from...

from Germany there. And anyway, we won, right? And so that was the thing. And then it got awfully expensive. And then I was a kid when this happened too. The country's interest sort of moved away from it a little bit. The president said, you know,

look, this is interesting stuff, but we've got other priorities. And so for the most part, the big space program was shut down, right? We stopped production of the Saturn V boosters. We had a few left over. We did the Soyuz. We did the Mir stuff. You know, remember that in the 70s, we did some of that joint Soviet-US stuff. And then we had the space shuttle program, but that was all low Earth orbit. And it was all, you know, it was just kind of to keep everything on a simmer.

Well, what's kind of happened is there was this thing called Moore's law that that's been marching along, you know, in the background that, that, that was the, the spark plug really for the whole tech race. But meanwhile, technology was advancing in space as well. And then those two intersected. And so now what you have is the commercial tech.

that is that was largely developed for terrestrial computers and all that kind of stuff now is Easily transferable and used in low-earth orbit It turns out that the radiation environment in low-earth orbit is not nearly as bad as we worried about I mean, it's it's not perfect But it's not nearly that so you can use commercial processors commercial memory a lot of the networking technologies like that and you can do amazing things and

And those amazing things translate into adding value to life here on Earth and, you know, in the way of autonomy and all kinds of stuff. So the race now goes from the first space race was about national pride and all kinds of stuff to now it's an economic one, right? It's about who...

Who is going to, first of all, win economically? And also, at least as important, is who's going to define the rules of the road in this new thing? Is it going to be more of a Western-style free market, private capital, all that kind of thing? Or is it going to be what I call the Stalinist model, right, which is –

Candidly, that's kind of how even the U.S. program operated. It was largely government-driven. Yes, we had private companies doing some things, but for the most part, they were just doing what they were told. It's a new era now, and it requires, frankly, it requires different government policies, which is why I created the Small Satellites as an example. It needs different government policy. It needs policies that promote free markets, commerce,

incentivize private capital to come into the arena. So that's really how I frame this second space race. And it requires the whole of country kind of approach. Because if you have old government policies that tend to encourage the old way of thinking where everything has to come from the government, we're not going to win, frankly, because we're not playing to America's greatest strengths.

Right. Those are the best strengths of China. But we will beat China if we play by our own game. That's the way I look at it.

Yeah, and that's what intrigued me when I first came across you and your ideas. You have argued what you just said. The Cold War containment mindset in cybersecurity is fatal. Yeah. And we've got to literally change that. So if I were going to wave a wand and make you the U.S. cybersecurity czar for a day, what would be the first statutory change that you would make

to make it more compatible with American strength, i.e. private enterprise, all of the multiple ways that we can take advantage of that, but are currently kind of precluded from because of antiquated federal agency regulations?

Well, now, cybersecurity is an interesting one because it's cybersecurity is almost you can look at a little bit like airline traffic things or something like that. You want to you want to incentivize the free market, but it does require some government action not to control it, but to to define it in a way that allows them promotes the greatest growth and the greatest private sector growth.

And I can tell you there is an initiative that has been brewing for a while. The last administration actually made some really solid policy progress on this, and it's what's called zero trust. This idea that we need to get to where we have to assume that all of our networks, any of them—

are actually have been compromised, that there's Chinese bots on them and all that stuff. Not to make us paranoid, but if we do that, we assume that, and then the government then buys systems and procures systems that ensure that the data is secure. Irrespective of who else might be sitting on that network, your data is secure. Then I think we

What we do is we will unlock, unleash a whole new era of kind of like what we saw the tech boom of the last 10 or 15 years. We'd see a whole nother one because what's hobbling a lot of commerce, e-commerce, it's all of it. E-commerce, all that stuff. The autonomous thing is, is the, is that we haven't, we haven't done that. And, and so, and, and it happens to everybody. We, everybody gets hacked and phished and all that kind of stuff. It's because it's so easy.

Because all kinds of new and interesting apps are written, software is written to do all amazing things, right? But there's always these little problems with the software. And the adversary immediately figures out how to exploit those quickly, and then they get in. And in fact...

And so that's, that's the challenge. But if the, if the policy is, it's sort of like, I'm not a big, as you probably would surmise, I'm not a big believer in heavy handed government, but there are certain things the government needs to do to protect all of us from everything in a way, like, like, like it's almost like helmet laws or, or things like that. Right. Or making sure everybody who flies an airplane has to have a beacon, right. That's to, to broadcast to everybody else, this is where I am and this is who I am and all that kind of thing. And it's, it's sort of like the zero trusting is a little bit like that. That's the way I see it.

But if we do that and we just sort of mandate that, then I think, and the government would have to lead when it, when it buys its things, it says, Hey, we're doing this zero trust thing. No kidding. Right. We're going to, we're going to pressure you to do the penetration testing. We're going to do all that kind of stuff then because there are commercial companies that have that software. So this isn't something that the government would have to do.

have to develop the software for or whatever. There's a natural marketplace for it. And anyway, that's the way I sort of see that. That is probably the biggest thing.

Yeah. And I went down a fascinating rabbit hole on zero trust systems and everything. And I had kind of the generative adversarial AIs battling it out. And they came up with some like really interesting edge cases. But before we get to that, because I'm sure you know all about them, but they were new to me. Please, for our listeners, explain what the zero trust protocol actually is.

Well, it's really an idea. And the idea is this. Quite simply, in order for a system to have the designed environment

you know, purpose design, right? In other words, from the ground up as a zero trust system, you assume at all levels that at all levels, things have been compromised. For example, like I'll give you an example. Like we think about, we create a VPN and we can communicate now. And that is a secure network, right? Around which, but once somebody is inside of that network, a bad actor, then it's compromised. So that's not real. It's zero trust at the network level, but it's not zero trust at the data level.

And what we need to get to is zero trust at the data level because ultimately it's data is the thing that everybody wants. That's what they want to exploit. They want your bank accounts. They want your cryptocurrency. They want whatever. That's the data record. Data record.

And so there's a, there's a term that's now becoming the thing. And I like it. It's called secure by design, which means that basically software engineers, software, you know, coders, wherever you want to call them, they are trained to think about this. So you use, you know, there are certain languages, programming languages like rust, for example, that are, that are much more memory, what's called memory safe, because a lot of what these, the evil sort of people do is they exploit, uh,

Little challenges in software, in other software things where it's not what happens. And I don't want to get too technical, but basically you're writing and rewriting over memory. And there's ways by which nefarious people can exploit that writing and rewriting against a memory register.

to then get to sort of hack in. And that's just one example. So using like a language like Rust is one that is from the ground up was purposely designed as a memory safe programming language. And so I'm not a big believer in saying, okay, everybody has to program in Rust. But I think that what we need to do is have these gradually over time, but quickly,

These recommendations. And then what happens is you get into a once that's done, you get into a marketplace where you have, you know, there's there's insurance. You can insure against attacks. You can have underwriters that can that can help underwrite those policies.

Um, because it's going to be essential for a lot of people don't understand this. I know you do cause you're a businessman, but a lot of people don't understand how important insurance is. For example, success of a business enterprises, right? That's the way they can mitigate risk.

Well, this cyber security thing, cyber attacks, is a huge risk to a company. It doesn't matter whether it's a dental office down the street or Microsoft. It's a major sort of thing. And so the risk associated with that, we haven't even gone into how do you mitigate that. And there are ways to do it. It doesn't have to be the government. It doesn't have to be Uncle Sam's army defending all cyber interests in the country. That would be too expensive and all. There's smarter, more sophisticated,

smarter, clever ways to do all that stuff. But anyway, I don't want to go on and on about, but I think you kind of, you might get the idea there.

I do. And I think it's actually leaning into your comment about we, if we play the game the way to our strengths in America, we can have all sorts of startups, all sorts of think tanks, all sorts of people working on these particular problems, right? Because this seems to me as I was learning more about your world, it's fascinating, number one, but

the coordination problems, the logistical problems that you then have to pile security problems on top of. And, you know, some things are classified, some things are not classified. What, for example, what's currently, as best as you can tell me, what is currently behind the wall, i.e. classified?

That if we declassified it would lead to like a burst of creativity and all of those separate entities that I just mentioned thinking, whoa, let's – okay, let's solve this problem. What kind of technology could be declassified? Well, I mean there is a lot of technology that's classified. Whether or not that would become –

exploitable for commercial purposes, you really don't know until you've done it. But even somebody like me who understands all this stuff, it's hard to really speculate. I'll give you an example. GPS, I'm an old GPS guy from the early days, right?

And, you know, a lot of people don't know this or maybe they don't even care or whatever, but GPS was not, the U.S. government did not develop GPS so that we could all get an easy Uber ride, right? It was developed for a very specific military purpose, which was to have a navigation system that can survive a nuclear war, right? Because it was part of the mutual assured destruction sort of framework for defense of the country.

In other words, if there's a nuclear detonation and there's a nuclear cloud and you can't, there's no other way to navigate, right? You'll have the GPS beacon and you'll be able to do your bombers. Your bombers will still make it to Moscow. Your ICMs will still make it to Moscow. So they better think twice about attacking us because no matter what, even if they smoke us, they're dead too.

That was really the whole thing. But back then, again, I was talking about Moore's law. Come back to today. Back then, the receive, you know, the user segment, we used to call it user equipment. That thing was like the size of like a small desk. Right. Now it's like it's a third of a chip in your iPhone. Right. Right. So what's required is.

So Moore's Law and all that stuff keeps shrinking. And then what happens is some really smart tech people, again, from Silicon Valley, that kind of stuff, they start thinking, my gosh, look at all the things you can do with this signal, including now the whole banking system uses the timing signal, network, all the networks, they all require.

Now we're so dependent on it in a different way. We're more dependent on it from a civil infrastructure and from a standpoint of just like our economy and everything else. It's almost we've gone through the door where it's important in a fundamentally different way. And there are different teams and folks working on that and looking at that. Like, for example, with GPS, the military still needs this thing. It still needs...

It's for dropping bombs and all that kind of stuff and soldiers navigation and all that. But at the same time, my God, if GPS goes down, the NASDAQ stops, New York Stock Exchange stops, most of our networking in the country goes away. We go back to the eighth century in a matter of a week.

Which is really scary. And so now I happen to be a proponent of this idea of splitting the two and sort of the military takes care of the military needs because they are different. They're similar, but they're different. The civil, what they call the civil folks.

you and me as just regular ordinary citizens. We have needs too. And they are getting more and more exquisite as well, just in a different way. And I think that that's a great area, for example, where the commercial world, this free market where private can step in, work closely with the military and develop what we call a hybrid space architecture. This idea that

the, the, the commercial stuff can work well with the military thing and it just address and, and, you know, and, and the military can buy, buy, buy the pound, the commercial thing is they need it for their, for their purposes. But you always have to make sure that the, the, the soldier in the field, right? The Marine, whoever the, the pilot in the air that they have their assured navigation and their assured communication, all that kind of stuff. And that's,

That's where we're counting on our leadership to make those decisions and those adjudications to make sure that they don't forget that, frankly, because sometimes folks get enamored with everything is commercial. Let's just do that. Well, that's great. But we have to make sure at the end of the day, you know, the soldiers, the soldiers rifle works.

Right. No kidding. And I was reading about all of the advantages of unbundling GPS. And then I kind of thought about, you know, in the disaggregation of GPS, Space Force, for example, is exploring lighter, cheaper GPS craft alongside the legacy ones. Yeah.

What kind of problems, technical or otherwise, does that introduce into a complex system? That's a great question. And I hesitate to offer too much of an opinion on this, but I will. I think that the Air Force or Space Force was well-intentioned with this idea of augmenting their GPS with sort of like a GPS light kind of a thing, right? Right.

But the challenge with that, frankly, is that that's a government funded program. And so the government just isn't good at managing things that are supposed to be kind of commercial in nature. And really what...

What the smart, you know, if I were the king for a day kind of a thing, what I would suggest doing is staying in rate production on what's called GPS three, right? Get that, get that working. Those are the satellites that Lockheed Martin, for example, is currently building. Stick with those, maybe put some incentives on there to bring, bring the price down or something like that. We, you know, government has experience with that kind of thing. You do lot buys and you do all kinds of things like that. You can build in incentives for them to,

to realize, you know, some gains and stuff like that. And then, and then put, put money against sort of initial, and they, and the Space Force is doing this about sort of testing out these pure commercial companies and,

and letting them, paying them to do demonstrations. Because it takes a while. You've got to get lots of satellites up there. It'll take like five to ten years to kind of get to these other architectures. But if the government just stays involved in a very kind of hands-off way, but incentivize them to work closely with the Space Force, then what happens is they work well together. They have the right interfaces. But the Space Force doesn't have to worry about managing that baseline. They don't have to fund it. They don't have to worry about Congress appropriating it.

They can just buy that as a service. Meanwhile, the soldier in the field, the pilot in the air, the sailor at sea still has their assured what's called PNT, precision navigation and timing signal. Now, is it possible 20 or 30 years from now, we no longer need any of a government thing? That's possible, but we're nowhere close to that. And I don't think the answer is to buy PNT.

a handful of these but yet a new sort of baseline but the space force has to manage i think it's i think it'll end up if they really ran the numbers they find that's more expensive than just buying more and i don't have any relationship with lockheed martin or anything like that i just think i just give it to you straight this is the way i see it i think i think they ought to just

buy more, commit to buying more of those GPS threes. And frankly, there's a lot that needs to be fixed on that. I'm focused on the satellites because I'm a space guy, but there's the whole ground segment that needs to be, it still needs work, frankly. There's what's called OCX and then there's the user equipment. Now, again, the user equipment, as I said, it's for people like you and me, you know, just regular Joe civilians, it's a little chip inside your iPhone, right? But for a soldier who needs this thing called M3,

M-code, right? Which is a military code. It's much tougher for, to jam and all that kind of stuff. That's where the military stuff really, that hasn't really been, I mean, it doesn't really work yet. And frankly, they have satellites that were launched, satellites that were what's called M-code capable.

They're getting ready to have to deorbit those things, and they still don't work end-to-end because they didn't work on the user equipment. So I think, frankly, the Space Force would be smart and work with the other services and get that end-to-end thing nailed down. Because it's not just a soldier, but when you think about bombs, for example, right? If you want to have GPS-guided bombs in the future, in what's called the GPS-denied environment,

then that M-code sort of thing has to work all the way from the satellite to the ground station and the satellite directly into the aircraft. And then the aircraft has to hand that M-code signal off to the bomb.

And that's hard. That's that integration problem you're talking about. Very complex. And just dealing with that alone will keep the Space Force busy for a while. Yeah. And that was the thing as I was getting ready to talk to you that really fascinated me. The complexities. I mean, we're talking about multiple complex adaptive systems interacting with each other. And holy shit, man. Like, I was just like...

A single complex adaptive system is hard enough to try to deal with. And I did like your idea, though, of letting the like the startups and all of that. Let them run wild with this stuff. Yeah. Making sure that the military is the winners. The government just picks the winners, you know? Yeah. Yeah. And in fact, you've gone so far as to advocate for the Pentagon to offer a simple yes with a contract or no, thank you.

Right. And I think that like, what would be one of the federal acquisition regulation clauses that you, if you could change that would make that a reality? What, what, what, what is the big bottleneck getting in the way of yes, with your contractor? No, thank you. You know, it's funny. It's, it's actually not, they could do it today. There's no far that

stipulation that requires that kind of thing. It's really cultural. It's really, it's about the folks that manage all this stuff. They grew up, a lot of them are, they're younger than I am, but they're not much younger, right? They're maybe 50 or, you know, especially the ones that are in senior positions now. They grew up under the old system where the government was very involved in designing everything. So their ego and their sense of responsibility was

carried into the the system that they were working on developing and and what what what really needs to happen is a mindset needs to shift where it's just like well No, we don't want that and just be you know, be polite but basically be firm with it What I've noticed culturally is there's their sense of because they have that sense of mission and they care they want to help they want to help these companies and

To do better, to be better. And first of all, number one, they're ill-equipped to even do that because these people are not businessmen anyway. And secondly, they have too many other things to focus on. And so, in fact, not only do I suggest what you said, but I also have gotten to, so there's the be firm.

That's the best signal to the market. Yes, this is great. No, this is not. We don't see a use for this. The other sort of flip side of that same coin is kind of, we used to say when I was growing up, cash on the barrel head. Pay when it's delivered, right? Don't fund it. Don't.

don't fund it like incrementally, like cost plus and all this kind of nonsense. It either is or it isn't. Now there's some things like jet fighters and stuff like that. You have to, you have to pay them because those things are complex and, and there's no commercial marketplace for, you know, we, by design, we don't want a commercial marketplace for our best fighters and our best bombers and all that kind of stuff. But for space systems are unique in that they,

Jim, for the most part, and some of my space brothers and sisters get a little mad when I say this because it's an oversimplification, but it's not nearly as much of an oversimplification as you might believe, which is this, that really all a satellite is is a solar-powered computer on orbit. It has input and output, and then it performs a function on orbit.

If it's taking a picture, it's got a camera on it. But really, it's just a computer. And that's why with everything going now, because when I was a lieutenant and coming up through the ranks, everything was in geo. It was Air Force then. Most of everything was, in fact, still is for the most part, except for the new stuff, the SDA stuff. It was all in geostationary orbit. And these were huge satellites about the size of those old yellow school buses.

Right. And that's that's just the way it that's just the way it was. And so the radiation environment out there is is much more severe. It takes it's more expensive to get a satellite way out there. And so we built them big and launch was very expensive until SpaceX came along. Launch was expensive.

So we so we it was just a different way of looking at everything. And 15 year design life. Now, these satellites that go up on orbit, I keep my my iPhone. In fact, I was just talking to Alexander about this. I my iPhone is is six years old and it works. It works fine. But she said, you know, I said, can I get a new battery for it?

And she said, no, they don't let you do that. So I have to get a new one just because the battery, it's sort of, it's the equivalent of a satellite. You know, the satellites that York, for example, is delivering have a five-year design life.

Now they'll, they'll last longer than that. You can leave them up. You can leave them up cause they'll keep going. But you know, at a certain point, like the solar rays degrade a bit, you know, all that kind of stuff. That's the, it's a different, it's more of an iPhone mentality than, than for example, computer. I learned originally learned to code on, to write software on was, was IBM 360, you know, and then a hundred. You remember those, right? Yep.

I was just a kid, but I was good at math and they thought, oh, if you're good at math, you should stare at a computer. So I ended up learning how to program a little bit as a kid. But anyway, so that's kind of a big difference in the era. But getting the Space Force and everybody to really understand that, it's...

It's tough. They're doing it. I mean, we have great leaders in there. They're doing good work. But as you probably know, it sounds like you've read some of my stuff I write. You know, I'm the person that kind of pushes a little bit, right? It's why I created the Alliance and all that kind of stuff. I really want, because these guys know my heart's in the right place. I'm a patriot through and through. They know, they can disagree with me, but they know where I'm coming from. It's purely what I think is best for the nation. Yeah. Yeah.

Well, that's clear from your writing. But this also brings us into the new interaction between business types like me and you, right? I don't have your background because you're both. But, like, you know, you did a deal in 2023 with a big PE player. In fact, it was dubbed the largest private equity deal of the modern space era. Right.

And what specific metrics convinced you that the sector was ready for kind of that scale of capital growth?

And what blind spots do traditional PE investors face when they cross the Carmen line? Right. I mean, they're not they're not thinking about that. Probably they haven't been spent like you. They haven't spent their career thinking about that. Yeah, I got to I got to guess because I know a lot of these guys that they're going to have some blind spots.

They do. It's a great question, actually, because even somebody like, as you mentioned in the intro, I worked for about three and a half, almost four years for Paul Allen, right? Because he was a big space and he was a tech guy, but he was an investor. He was really more of an investor than he was

tech guy, you know, because he and all that, you know, the history there. So he was fascinated with space. And that's what I did. I oversaw that all those investments and stuff like that for him. And I say even with Paul, but but just generally, you

One of the things that a lot of folks, private equity types, investment bankers, though they're getting better, what they don't quite understand is there is a culture associated with the space community that is important to understand.

Because, you know, at the end of the day, I'm sure you know this business is personal, too. It's not it's not a mechanical thing. And so there's an emotional component to stuff. There's all these other things and they affect the bottom line. So anyway, I think that's one thing. I think more significantly, though, you didn't ask about this, but I'll go ahead and say the venture capital firms are actually a little bit.

candidly a little more worrisome because their culture is, first of all, it's completely geared toward the software, the tech community, right? That's really where its origin. And even though, pardon me, space systems are tech-dominant,

They still are capital intensive to put up constellations and all that kind of stuff. And so it's, and VCs often want to kind of get in and get out, right? They kind of want to do their thing. They're really just about a multiple, you know, from A to B or A to C or whatever. And, and,

And that's, that really ends up not being well. So they, the, the venture firms I've worked with and I've worked with pretty much all of them. They, they kind of tend to look at, look at it. They like metrics and all that kind of stuff. And that's, that's fine. But really it's, it's the fundamentals of how businesses actually transacted in the space community, which is different. It is different. They would do themselves and their LPs a service by sort of spending more time actually understanding that.

And then, frankly, I've worked hard on this, but to get a lot of the military leadership to not be so enamored with VCs, like just because they have that, that doesn't mean they have any kind of wisdom. I'm like, you guys have the wisdom. Trust me. I've been on both sides of this. You guys have the wisdom. You may not have the business savviness, but guess what? Neither do most of those VCs.

Most of those guys that are put together, they're doing diligence work or whatever. They don't know, you know, they're kind of making up as they go. So that's why I kind of get back to this recommendation I always get to, which is,

We don't have the government that Space Force, for example, doesn't have to worry about that anymore. They can just, you know, cash on the barrel and buy it when it works, buy it when it's delivered to the launch site or and then maybe maybe you have two hops. You maybe when they're awarded the contract, they get some amount of money to, you know, get going. Then they get paid.

When they're delivered to the launch facility, and that's another payment. And then the other one is, you know, what we used to call first light. When the satellite's working, they get their final payment. That's it. All this other stuff needs to go away. And you would eliminate an immense amount of bureaucracy. And the Pentagon is...

filled to the brim with people that are checking on the checkers and all that kind of thing. Can you imagine if you and I went into the, I'm a big Toyota guy, I love Toyotas, but if we went into the Toyota dealership and we said, yeah, I want to talk to you about how you design your 4Runner. And I really think you ought to go to a quad, you know, a quad exhaust system because the

They're like, no, this is what's for sale. You take one of these models we've got or, you know, with Toyotas, you can't even order one. It's like, this is what we have. We can check other dealers if they might have, you know, I'm not a fancy guy when it comes to lifestyle stuff. So, and I love Toyotas. They work great and all. So anyways, but that, I think that the, the, the acquisition community, what they call it in the, in the Space Force needs to sort of shift more into that mode, right?

But it's hard because they're engineers. Engineers like to design things themselves. They like to armchair. It's like armchair quarterbacking, right? They like to pretend like they're actually designing things. But more often than not, they get themselves and then ultimately the warfighter in trouble because you get into these delays and stuff like that. So anyway, that's-

Little oversimplified, but I think that's kind of where that's what I advocate for. And I think we're getting there. You know, I think we're getting there. And that is close to one of the other things that as I was looking at this that I thought about, like, you know, Silicon Valley has been this gravity well for talent. Right. And and you are definitely dealing with different ethos. Right. So Silicon Valley dangles stock options with the military. They dangle mission.

The way that you're talking about the, the way the space community does things like, well,

What would be something that you could advocate so that the next graduating AI whiz kid decides to pick working in this environment as opposed to, you know, an L7 comp package at a fang company? That's a good question. And that's one that is one that the military and specifically the space force, but that's like the first digital service or whatever it's, it struggles with probably more than any other, but yeah,

Let me flip that around a little bit. I think the Space Force, just to kind of drill in on that, I think they need to worry less about hiring AI experts to be guardians or whatever, right? What they need are technical, like maybe they studied it. They understand. They're more conversant than a normal consumer would be.

Because, but what they need to be smart about, what they need there after they graduate and they're, they're, they're second lieutenants or whatever, is to understand how to apply those tools, how to think about understanding what the different types like autonomous type AI or, or generative AI or the new agentic, they call it, right? The agent, these autonomous agents that reside on networks, understand what they are and what they can do and start thinking about,

With a military mindset, how do we defend our turf? How do we engage offensively and defensively in a war, in a space war? Because that's what the space war is. The space war is not Luke Skywalker, right? It's not lightsabers and stuff like that. It's basically network warfare on orbit. That's not all of it, but that's like the bulk of it by far and away. General Whiting, Steve Whiting, he's the four-star commander of U.S. Space Command.

And he famously has said that cybersecurity is the soft underbelly of the Space Force. In other words, it is the thing that keeps them up at night. It's the thing that makes the whole Space Force vulnerable. And it's not just the satellites, but even I'm guilty of this. You think of space, you think of the satellite, but it's really the satellite, the ground, the user equipment, it's the links, it's all of that is really what Space Force is about.

Yeah. And I was thinking about that and immediately kind of thought about the whole AI situation and kind of rules of engagement, right? What happens when an AI-enabled satellite can detect and neutralize a threat before a human even sees the telemetry? You know, where do we put the tripwires?

That's an excellent question. Those are the kind of questions that some really smart people are asking inside the Pentagon right now.

And they don't have answers yet because we're not really there yet, but we will be there. We will be there in a matter of years. And so we need to have smart people thinking about that kind of stuff, worrying less about how, how good of a software engineer you are for writing the next algorithm, just understanding what those things are. And then thinking about how you wage war, defend war, what are the right policy? What are the tripwires? Like you said, where, because some of these things become our reaction to them could be an act of war.

Or it could be even worse than that. For example, we have early warning satellites on orbit. They're a key part of our whole early warning system for nuclear attack so that we know if we're under attack, we can respond.

So it has been the policy. I don't know if it still is, but it was the policy all when I was active duty that an attack on one of those satellites was essentially like an attack on America. Yep. Right. And so that and we we signaled that to the Soviet Union. That was a that was very clear to anybody that that may if you're attacking are they were called today they're called Cibber space based infrared system. Right. The early warning systems.

And there's also communication systems associated with that. It's a whole network that all has 99.999% reliability because the fate of the nation is at play there. And so you have to have a human in the loop. But at what level? For example, obviously you can't have just an AI bot just saying, okay, we're going to shoot that satellite out. But at the same time, is it a lieutenant? Is it a colonel? Does it have to go to the president?

Right. That, that kind of stuff has not been worked out yet. And they're working on it. They're doing, they do these things called war games, right? Schriever war games. They do all this stuff. They do it every year. It's really important work where they, they role play these things because when you role play it, you learn like the little gotchas, the little glitches in, in your logic sequence. And then,

And then these things get teed up and then what are called O-plans, operational plans, get written and rewritten to accommodate either new technologies or new tactics, techniques, and procedures to make sure that

that everything is congruent. So does it need to just go to the COCOM committee, the Steve Whiting, or does it need, or does it have to go all the way up to the secretary of defense? Or in some cases, like an actual nuclear attack, it does go to the president. If the president did incapacitate, then it's delegated back down to the SECDEP. And, you know, it's all very prescribed, but this stuff about space things, and especially you get into an autonomous world

We need to think about that because it's coming and we can talk about rules of engagement. We can talk about all this stuff in, you know, in ivory towers, but,

But the reality is that the AI thing is coming. I mean, it is. We know the Chinese are deploying the stuff now. They're testing it out. They're seeing how we react to these things. And so we know it's coming. And, you know, there's the most worrisome people think that, you know, these things could be deployed for real in 2027. Right. And so if that's the case, well, we really need to ship this thing into overdrive because, you

you know, this, the zero trust stuff we were talking about earlier, because that becomes essential. Otherwise we, you know, we, again, we go back to the eighth century. Yeah. And as I was learning about all this, which was incredibly fascinating for me, at least like the whole idea of Russia running these rendezvous and proximity operation satellites, the Chinese doing SJ 17. Like I didn't know anything about that prior to doing the research, but,

Do you think like a better educated investor class, a better educated, you know, from the business side,

Would they make better choices? As I was reading this, one of the things we have here at OSV is we run ideas that we have through generative adversarial AIs, and we have them fight it out. There's always a human in the loop saying, oh, wow, I didn't think of that. Right, right. And I just wonder if those kinds of things...

where people like you especially could be very helpful to the investor class who, you know, might not even be thinking about all of this. Or am I wrong about that? That's interesting. You know, the whole AI thing to me, unpacking that box is just a fascinating thing when you think about even just generative AI, like how it can be used or how it will be used by our adversaries.

And, for example, in the wargaming, right, that would be because what you're kind of describing that your team does is like a form of wargaming in part of your diligence process. Exactly. Which is interesting and fascinating. I think it's I think it's a brilliant idea.

In fact, I would even, I would suggest that it might be useful. Maybe you already have some, but you have, you have a couple of advisor type people, maybe former, you know, recently retired or whatever. They wouldn't have to be senior. In fact, if anything, the more junior they are, the probably the more helpful they'll be because a retired four star, they're great. They've accomplished great things, but they really don't know much anymore about the tactical fight. You know what I mean? Like they've kind of, their war was like 20 years ago or whatever. So-

But I think it's a brilliant idea. And having, that's a really, I hadn't even thought about that, but what you described for your firm, it's an interesting idea. Ultimately, though, when it comes to that offensive and defensive, what they call counter space stuff, our Space Force guardians need to sort of, because they're going to be the buyers of it. They're going to be the, so they have to make that decision whether it's useful or not. I think they might be going a little far ahead

as an investor. I mean, it's used anything. Any data is useful when you're an investor. I'm an investor too, as you know. So I, any data like that is useful. Um, but it's probably, I think the investor classes is actually well lined up to do what they want to do. What has to happen is the government side needs more reform where, where, cause that'll just, if the investor class sort of, or if the government can reform itself a bit, doesn't have to completely change, but just a bit, it,

It'll it'll heighten the confidence of the investors to put more money against these things. Right. Yeah. Because they've seen now we've been doing this for about 10 years in this new space race. And we've seen, for example, when I give in like a keynote or something I use and and I use it because it's I don't mean it in a pejorative way, but Virgin Orbit was an amazing capability.

This is the air launched rocket thing, right? They spent about a billion, raised about a billion dollars in capital, developed a working, really impressive capability. But there was no market for it.

Right. And so it went bankrupt. So a billion dollars invested and it went to auction for $35 million. 25 was for the 747. You know what I mean? I mean, I do. And I mean, it could, could somebody like me talk about like use cases for it? Yes. But guess what? The space force was like,

Interesting, but maybe once a year, you know, and you can't, you know, these the rockets were, you know, whatever they were 20 million, a lot less than the earlier generation of air launch type things. But still, it wasn't economically viable. The business case didn't close until we've learned. And then there's the whole the whole SPAC thing, right, where the hype is.

And again, I kind of blame more the beast. I call it the VC culture. The hype culture kind of did a disservice to the community generally. So we just need to kind of get serious. I think in fact, I had the first one this year and I'd love for you. I will make sure you get an invitation because mostly for investors, but it's called the Miami space summit. And I had it. I live, I live, you could probably see, I live here on the beach in Miami. So I have this

And we had the first one. It was about 150 all like senior investors, very senior White House, Pentagon policy people, and then company, all the companies that are part of this new generation. It was not a BD conference at all. It was about it was about the sort of the gathering of sort of eagles kind of a thing to to talk about.

Like what, what do we each need to do to really leverage private cap along the lines of what we're talking about here in your, in your podcast? And, and, and it was, I just thought, I just saw it as necessary and who doesn't want to come to Miami in February. Right. So exactly. It was great. Invited people to bring their, their, their significant others or plus ones and everything.

And it went really well. In fact, the feedback, I teamed with the U.S. Chamber of Commerce. So we had good sponsorships, stuff like that. And the feedback we got was tremendous. And so we're going to do it again next, this coming February. In fact, my team is already cracking a whip on me to start pulling together the plans for all that. But anyway, I...

Jim, it'd be great if you could come because a guy like you would be – we had the big investment bankers that are putting together the big deals right now and then the top private equity firms that are in this space right now. Yeah.

It went really well. One of the feedback things we got was like, look, this is so good. Just don't turn it into one of these big, beady, mega thousands of people running around with their lanyards and getting too drunk. So we're going to kind of keep it to no more than like 180, I think, 180 people. And there's a lot of people who want to come now. So somebody smarter than I am is going to have to figure out how to adjudicate who gets to come and who doesn't. But anyway, I will make it.

Jim, I can tell you're definitely of the mindset that we need to have as part of that conversation. Well, I very much appreciate that, and I will come if invited. In the connection of having these adversarial models go back and forth, let me just give you two questions it proposed that I ask somebody if I was going to be investing in.

And like the first was, have you contemplated adversarial AI in space? We've been talking about that. What if an attacker uploads a cleverly crafted data packet that poisons the satellites in situ? In other words, up there, is there any in orbit adversarial training on the roadmap for your company? And then the second one was, hey, what about laser spoofing with an optical cross link, uh,

or promising huge bandwidth, but an adversary could insert a nearly invisible laser pulse train to desynchronize the satellite comms. Like what's the defensive handshake or anomaly signal that would flag the man in the vacuum exploit? Right. Well, that's, that's a, wow. Those are some good ones.

You got some smart, I don't know if your team put those together, but like clearly somebody that's got some, uh, some military thinking going on there. Well, as, as I think you might know, my chief of staff is a graduate of the, the boats Academy. That's right. Canoe U we used to call it canoe U. I love that. I used to call West Point Hudson high West. Yeah.

You know, there's a big rivalry among the three. I know. I know very well. Yeah. Well, the laser one, that's absolutely true. Much more difficult, by the way, than jamming up RF. So it's more survival than the old RF systems. But nonetheless, that would be a technique. One of the things, though, that

that they call these things mesh networks, but they're building in low earth orbit. This is different for the military compared to what these commercial ones are doing. But each satellite is kind of like it does its own onboard processing. And each satellite is going to have like between six to eight laser heads on it. And so if one of them kind of goes out, it sort of has this dynamically healing effect

That's not today, but it'll have the ability to do that kind of thing. So you reroute traffic. So the key is to actually know if you're being jammed up or if you're being spoofed or whatever with your lasers. Because if you know that, but again, you're only going to know that if you have your own AI autonomous system.

software running in the background that's monitoring all your systems. So if you see something that's a glitch, like you see, well, that shouldn't have happened or whatever. So that's, again, that's where I highly encourage and I really push hard for the Space Force. This is an area, by the way, where they're going to have to invest because there isn't a, the specific things that the Space Force is going to need in these AI agents, if you will, there's not going to be a commercial equivalent.

You know what I mean? So, so they're going to be very specific. It's sort of like you need a fighter aircraft that's going to pull nine G's and do all the, and be invisible and all that stuff. Well, there's no equivalent for that. Like after you and I flying from, you know, Miami to Reagan airport, right? It doesn't need to be visible. I mean, you want to be very visible.

Right. So those kinds of things, that is what the government is still going to have to do very, very detailed investment and all that kind of stuff. Now, but that's just the AI, not the hardware that it runs on, not all the other stuff, all the old what we used to call rocket science stuff. That stuff now is all off the shelf, right? It's just getting cheaper every year, right? I mean, York, we manufacture, as you know, satellites for different customers and stuff like that. Yeah.

And we're on the Moore's Law train. Every year, our new generation of satellites are more capable and cheaper than the previous one, right? That's the cost curve we're on now. It was not that way while I was in the Air Force. I can tell you that much. We were spending billions per satellite, but that's changed now. And so getting the Space Force to think about that and plan for that. And it's not just the Space Force. It's the

what's called OSD, the Office of the Secretary of Defense, the folks that give the Space Force their money, right? And then up to what's called OMB, Office of Management and Budget, and then Capitol Hill, getting all those people above the Space Force people to understand it's a different way of thinking about the business. It takes time. It's happening, though. Candidly, it is happening. It's just...

It's just, you know, it's a lot of inertia, a lot of, a lot of old scar tissue and stuff like that, that needs to be cleared out, you know, but it's happening. It's happening. Yeah. And what, what fascinates me again is we're, we're dealing with so many moving parts. Yeah. And like, who's going to start thinking about these security things? Like for another example, like ghost firmware and bricked constellations, right? Like,

In a zero-trust world, how do you guard against a dormant exploit that only activates after a satellite's final firmware update window has closed?

essentially bricking the entire system years later. Like whose job is it to think about that? Is it the companies? Is it Space Force? That's a really important, you know, that gets into supply chain kinds of discussions, which are their own, that's his own whole world, not an easy one. Of course, your crack staff put together like a really tough case. But I will say this, if you get to the zero trust kind of thing I'm talking about. Now, the firmware, if you have a satellite,

and the firmware is corrupted, right? They could, where they could sort of, they might be able to render the satellite useless, or they could kind of take it over something. Well, that's true. But the data that's going through the satellite, if the satellite, it won't get exploited because if it's zero trust, then the data packets themselves, each data record is actually encrypted.

So, so they're not going to be able to, because the encryption keys are, are maintained at the end points. You know, you talked about the edge and all that kind of stuff. So that's who the, and then the ability to rekey and all that kind of stuff needs, needs to happen in software. Nothing is, is completely foolproof. Um,

But you can even require – this gets into this secure by design thing. So that the satellite itself, like in other words, the internal command and control of the satellite itself, if every little – every data message that's communicated to do the different functions like move the solar arrays or move the camera, slew the camera or whatever –

If every one of those things is actually done in that same secure by design, zero trust way, then you, it's just become that much more secure. You never, it's almost, it's, it's like any other form of warfare, right? You're constantly going like this up the, up the, up the thing, or this may be down would be the, but, but yeah,

But right now we're not doing any of it, frankly. So, so I kind of say it's interesting to have people come up and it's valuable to posit these kinds of things, especially when they're doing war gaming and stuff like that. But from a policy perspective today, we're not even dealing with like the, you know, first base here on this, because what's happened is.

In the old days, when satellites were in geostationary orbit, everything was called point-to-point. Because in geostationary, that's over the same point on the Earth the whole time, by definition.

So you just had a point to point link. You encrypted it at one end and decrypted the other. And that was easy. And we have we have the world's best encryption technology, especially the military NSA, all those guys. So it's bulletproof, right? Well, that's no longer the case with with mesh networking, where things are you're doing onboard processing and you have satellite to satellite to satellite handing off and all that you have and you have to do it that way. Now, there's no there's no going back. And so so anyway, that's

That's where the old way sort of breaks down. The point-to-point thing just breaks down. And you mentioned the supply chain, and obviously that is incredibly critical. Yeah. How do we establish supply chain sovereignty? How vulnerable are we in the supply chain? I'll tell you, we're very vulnerable, especially when it comes to things like core component stuff like memory and all that kind of stuff.

I'm a big believer in, in figure out ways to onshore like us kind of stuff, right? We need, we need again for the minimum. I'm not, I'm not an anti international guy, but I think that we, when it comes to the, you know, making sure our soldiers, sailors, airmen, Marines, all those people are

have what they need to, when, when they're called go fight that they've got what they need and secure, we have to make sure we have solid indigenous supply chains for that stock that can get inspected. You know, York, we do have some foreign suppliers there, you know, we, but not many, but we do have some because sometimes there is just no other choice. Right. Right. But we have inspection regimes. We have all kinds of things to, to,

And frankly, the government comes in and they validate our methodologies for testing and all that. But nothing's perfect. Nothing's ever fail safe. But I feel good about...

But the stuff right now, for example, that the Space Development Agency is developing and the Space Force is doing, I feel good about those supply chains. Like, we're not vulnerable on that now. But that is a concern. And they know it's an issue, and they're working that one. But the cybersecurity, basically the idea of just hacking into systems, that's a today problem. And frankly, we're not batting a thousand on that one. I'll just leave it at that.

Yeah. And, you know, again, coming up with all these sort of scenarios I thought was absolutely fascinating for me, at least. Like IP theft via Gerber files, right? You have a two-day build at York. Yep. Obviously, to have a two-day build, you have to have replicatable designs. What's the plan if a rogue fabricator abroad, you mentioned you don't have too many non-U.S. subsystems,

suppliers but like what if they surreptitiously alter a gerber file to insert back channel circuitry how how do you find that is you know i i candidly now you're getting to a level of technical complexity i can't even i don't know but i'll again i'll just say that you hire the best people that you can possibly hire you empower them to to to feel like if they see something that concerns them

they, they're comfortable bringing it up to their boss. Cause one thing you don't want to have is this. And it's, it's all too common as this autocratic culture where people are afraid to bring problems and concerns to their boss. Right. And so if you have, if you have a culture like that, that's a, that's a,

A big risk mitigator to those kinds of things, because the smartest people on the things like you just described are actually the young people. Yep. The ones that are the most educated, the most current. They go to all the conferences that are the real geek conference, not the BD ones, but the hardcore ones where they're really talking about these kinds of things. And they're going to have the instinct, even though they may not have the wisdom to run a major weapons system program, they're going to have the instincts to

to know about concerns like that, to see those kinds of things, to see, I'll just give an example. Another one of my companies is called Spider Oak, right? And it's, it specializes in cybersecurity, stuff like that. It uses a blockchain, you know, distributed ledger type technologies to, to, to do its thing. Well, that, none of that existed when I was learning how to write software and all that kind of stuff. In fact,

And, and not only that, but even, you know, we have rewritten just, just in the last year, we rewrote all the software that had, had been written only four years, four or five years ago. We wrote the entire thing because we could make it more efficient because we want it. We're moving toward like what's called the edge economy and all that. Right. So, so now, and, but also we rewrote it in a language.

So that it's it's one of these memory safe languages, right? So I think that's just gonna be a part of the of the culture is is is making sure you have young people interested in getting into this world They're they're in incentivize their their they find it exciting and interesting and then they come to work for companies like spider-oak or whatever and and they want to apply their their talents and

to the national security thing. I think that's what happened in my generation. It wasn't tech-based, but it was the same idea. The big major, it's funny now, but the big major was aerospace engineering, right? Everyone wanted to be in aerospace engineering.

I don't think anybody majors in that anymore, but that was the big thing. Now it's software. What we need, what the market needs are software people of all different types. And I definitely agree with your assessment that it's the young people today who get that. But I was thinking about one of the major problems during the Vietnam War was McNamara wasn't getting true intel.

Right. Right. They were literally feeding him intel that they knew he wanted so that he could go to the White House and say, we are winning the war. No, no.

And that was a chain of command problem. Yes. As it went up the chain, there were fewer and fewer people who were willing to call bullshit on the data that he was getting. And you know what? That still exists today. Yeah. It's the nature of bureaucracies and anything that has any semblance of autocracy to it. Big companies, corporations.

you know, all that kind of stuff. And so that's why scandals fester forever, all that kind of stuff, people. And so I can tell you as the chairman of the board of a bunch of these companies, I, one of the things that I tell my CEOs is I will, when I, when I, because I basically look at them as my business partner, because I'm an investor and I, I make the decision because I work very closely with that CEO on a daily basis often.

Um, but one of the things that I said, my commitment to you and I need your commitment to down is I'm going to do everything I can to make you feel comfortable bringing issues to me, concerns to me that, you know, I'm not going to shoot the messenger. I am here to help you think through and solve these problems.

because that's the only cure I've ever seen, Jim, for that kind of thing. It happens when I was in the military. Every unit I was in charge of, the people are afraid because they want to get promoted. They don't want to get in trouble. It happens when you're little kids, right? You're a little kid. You don't want your parents to know something bad that happened to you, even though your parents actually need to know. But it's something in our nature. And so really the burden is on the boss, right?

to create a climate where the people are comfortable doing that. You're still the boss, but they need to feel comfortable bringing these concerned, whatever they are. It's a tough thing. It's a tough leadership challenge. They probably don't teach it at business school, but I can tell you, I can learn from my 22 years active duty that there's nothing more important to a successful command tour. Yeah, and I agree. It's not taught in business schools. Like when I was still running an asset management company,

One of the things that had great effect for me was telling everyone, like we would trade billions of dollars of securities every day.

People make mistakes. Yeah. And so like at the all hands, I would basically say you will never get fired for making a mistake that you tell us about. You will always be fired for trying to cover up a mistake. Right. Like we just made it as binary as we could. And so what happened is we grew a culture of,

immediate notification hey i think i fucked up and i i really need to talk to you which is much better than but it takes a boss that that is is that wants that and that's that's that's why the i i mean it's a hats off to you because there aren't many people they they might say that but they they don't actually want it because they're

There are suckers for flattery, you know, there are suckers for the, the person that, you know, the, the student that brings the apple to the teacher, not the student that brings the, you know, the, the right, the good test scores or whatever. So it's, it's kind of it again, the burden because it's a reward system is what, how, what do you, what behaviors do you, do you reward? I, a good example of the whole reward culture or whatever. One of the reasons why I'm so against cost plus contracting is

I mean, sometimes it's necessary and I accept that, but for the most part, it's not, especially in the space business. And the reason why I'm so opposed to it is because it rewards exactly the opposite behavior of what you want.

It rewards more costs. It reward you are incentivized because you get fee on top of that. Right. So you get more fee. You get more profit if you spend more of the government's money. That's like the exact opposite of what you want. What you want are incentive structures that they incentivize contractors to to deliver the same capability for a lower price competitive environment.

It's like, to me, it's like one of the most foundational, fundamental things that I, and that's why I work it into almost every op-ed, every column I write Forbes or whatever.

Well, I completely agree with you. And it's like when good old Charlie Munger would say incentives determine every outcome, right? Like if you're and you're not even aware that you're incenting exactly the thing that you don't want. You know, everyone knows the stories about the Brits when they ruled the world. We're trying to get rid of snakes or whatever. And so they offered a bounty on any kind of snake head or rat tail. It's different story, different times.

But of course, what did it do? Everyone started breeding more snakes so that they could chop off that and bring it in. A lot more rats. And so you had a bunch of tailless rats running around and you compounded the problem rather than solve it. Right. And so some of these things can like appear. You don't really know when you first make your decision. That's why you have to be a learning organization. Exactly. And the boss can't be arrogant. The boss has to always be listening to it.

to their people and all that kind of stuff. So, yeah. Totally agree. For a completely different kind of perspective, you're a woodworking aficionado. And I kind of wondered, you know, you've built hundreds of cabinets and... My gosh, you've done some diligence on me. Woodworking, though, you know, you have to think about tolerances, modularity, craftsmanship,

Like how does what you learned over there help you make decisions over here? Because like you still have to be really sensitive to all these things with satellites, right? And, you know, in my opinion, at least your typical MBA is going to be just totally clueless about that. Yeah, no, that's a good question. Where's the intersection between the two? I don't know if there is one except...

I am a believer in no matter how hard you work and you're in your, this is just us sitting, having a scotch together. I think it's important that people have a hobby or a diversion that takes them, takes their brain out of the details of what they're doing and does something different because when they come back then, it's almost like a little mini holiday for their brain and they can come back to those problems and they can all of a sudden see them in a slightly different light

And so whatever it is, I just happened to like cabin making. And a lot of that is because, you know, growing up, that was a thing. You know, shop class was a big deal when I was growing up as a kid. And then I was particularly good at it. So I really took one of the other dirty little secrets. I really took a vocational track in high school.

And the fact that I ended up getting into the space, but you know, the, the air force and space and intelligence and all that kind of stuff is a bit of an accident. And it was only because I happened to be, I was discovered to be particularly gifted in mathematics. So they whisked me off to Carnegie Mellon university. I was only 16, right? I wasn't even, I hadn't even graduated from high school, but I was really good with a really good work woodworker. And so I, so I just kind of developed this, this love of that. And then I kind of got back into it when I was

I was stationed at Wright-Patterson Air Force Base out in Ohio, right? And I kind of, a neighbor, an elderly guy was a friend of mine and we kind of

He had a wood shop and I thought, man, I love this. Get back into it. And I was working long days, long, long days then. And so and I loved it. And it just became this little mental thing for me that everything about it. I love the design, the creativity I would design. I didn't build to print. Right. I I would design something. And it was always something that was a little bit more of a challenge from the last thing I made.

Maybe the next thing had dovetail joinery or it had a Morrison 10 and joints or whatever, all different things. And then also the finishing of it. It does. One thing I will say, I think young people today would, they ought to have something like that because one of the things it does do is it helps young people develop their,

self-discipline um you know what i mean to like to to stay focused on something and not get distracted whatever it is whether it's because you know you're using a table saw you get distracted you can lose a finger right so that there's a there's an imminent danger there as well but but those kinds of trades doesn't matter if you go on to become president united states right those trades are useful learning there's something in the human animal of using

using your hands. And I, you know, to my chagrin someday when I retire again, I will, I'm going to, I'll kid out a whole, my, my fantasy workshop. I don't, I sold my wood shop a few years ago, sold everything, sold it to a bunch of young guys. And so right now I don't have a wood shop. So I go a little bit crazy because I can't, you know, I can't run a, make some sawdust and stuff, but I cook. I love to cook because I have something about, I like working with my hands and all that kind of stuff. So anyway, that's my, that's my outlet. But

But other than that, I would just say it's just important to have a diversion. I think it's important at all ages, frankly, even little kids. Sports are sort of one, but this, I'm talking about something slightly different than sports or slightly different than, you know, health and all that kind of stuff. But I think it's just good. I have friends of mine, this guy I served with, a West Point guy, this rough and tough sort of West Point, you know, guy, but he knitted. He

He actually, yeah, which you think of like the grandmother sitting there knitting, but that was his thing. And it, and it, it worked for him. He'd make stuff for his, you know, nieces and nephews or whatever. Yeah. And you'd never guess like, here's this, you know, army rough and tough army guy. It could be anything, but I do, I do think it's an important thing. It did. When I was looking at your passion for woodworking, it did, it did generate a question. Oh,

That is actually a question about the satellite business. There is a wooden satellite up there, by the way. Really? No, I didn't know that. Yeah, Japan launched one. Wow. No, no, that's very cool. I didn't know that. But, okay, so tomorrow you discover a would-not-like flaw in your entire satellite bus design.

What are you going to do? Are you going to triage, patch, recall, or redesign knowing the enemy is watching your every move? What a question. Well, I guess I'd say if it's on orbit, you go to war with what you have, right? So if it's up there and it's working and you discover this flaw, you just figure out how you can squeeze as much operational utility out of it as possible.

If it's on the ground, you know, because we're in rate production all the time. So these things actually do happen. Usually, though, it's not a design flaw. Usually it's some kind of material defect or something like that. And then we go back and assess, you know,

you know, the root cause or whatever. Was it a supplier issue? Did we miss it in screening? Was it our own thing? Because we actually, we make probably about 70 to 80% of the satellite, of the satellite bus and all that. But there are some, so we have, it's a combination. And then I think ultimately we're a very customer driven company.

So we, and we have a very close, it's important to us to have a very close relationship with our customer, that they understand exactly what we're doing for them. And they're involved in every step of the process. They're invited if they want, they can, in fact, we've had them sometimes they'll just, they'll have a temporary office just to watch, watch their satellites being built and all that. We don't, we don't mind that as long as they don't slow us down. But, but, um, and so, you know, we would, we would present and we have done this. We would present what we know.

Our options are recommended and then our recommendation. And it would depend, let them ultimately make an informed decision. Do they want to take the risk of this particular knothole or because it may not matter, right? So we'd have to quantify it and all that, but it may not matter or because the urgency, right?

let's say it's, it's, it's a military satellite and they're like, yeah, we understand it's a risk, but damn it. Like the, the Chinese are up there right now. We got to get this thing on a rocket, like in a week and get it up there. We'll accept that, that risk of that not whole is all, as you're saying, it's got a, you know, an 80% chance of not being an issue. Then we'll go with it or whatever. So very important to involve the customer in that, those decisions. We, we were very transparent. We don't believe in hiding anything. Hmm.

Unless it's classified, but our customer is the one that flows down. Anything we do that's classified, it's because our customer has classified it. So we can always have that conversation. And we work very hard. I encourage the team from the CEO all the way down to have very good rapport with their counterparts.

Yeah, that obviously comes back to some kind of really old ideas, doesn't it? Right. The more you communicate, the better. And if they trust you. Right. And that was he took the words right out of my mouth. If you have a trusting relationship.

That's going to make all the difference because, like, if you don't, if there is no trust, you get a McNamara situation, right? And you're getting fed bad data all the way up. And problems compound negatively as well as positively. Absolutely.

The downward compounding, negative compounding that can happen if there's no trust or if there's a bad communication, that could be catastrophic. Well, I was just going to say, the interesting thing about going up versus going down, when things are positive, they're going up, you have compound interest is the thing, right? Everything's great, everything's going up. What's interesting, the negative cycle, though, is that

it's often hidden like it's compounding negatively but no one knows until it's a cat as you said a catastrophic and then it's like like that and then when when something when the catastrophe happens it happens overnight yep so it's like the so there's a strange thing that happens where where you're climbing up up up up everything you know you're compounding compounding if there's a negative thing that's maybe you just don't see that negative curve it's it's hidden

Whenever that thing triggers, the whole thing goes down. It's like an avalanche, right? And so that's why communication at all levels is just so important. And again, the burden, bosses can complain that their people aren't communicating up, but that the burden is on the boss to set the right reward structures and incentive structures that they

The message doesn't get shot. Not only that, but they're actually rewarded for bringing, not telling on people, but they're rewarded for integrity, honesty, candor up to their boss and all the way up.

at all levels too, including what we used to call the middleocracy, like the mid-level managers, right? They just want to preserve their job or that kind of thing. And those are not easy things to do, to come up with the right reward structure. But I do have ideas on that that I share with my CEOs on little things. And I think, candidly, because the way I operate, a lot of people, you haven't asked this, but I'll just tell you, the way I

People have asked me, what do I do as a chairman? And really it's, yes, of course I chair the board and, you know, all the directors and the usual thing, but I'm often what they call an executive chairman because I'm very hands-on with the CEO and it's not dictatorial. It's, it's more like I'm a partnership person.

And you can think of it a little bit like an executive coach, right? Because a lot of times these entrepreneurs, they're brilliant. They have business experience, but they don't have really executive level experience. They're certainly capable of learning it, but they just need somebody. But the old expression is lonely at the top. They're the CEO. There's nobody else they can really turn to. And so I work closely with them to help them

Help them think through, think like an executive, think strategically about the decisions they need to make and all that kind of stuff. So that's, and that candidly, I feel incredibly blessed because I love what I get to do. It's like the dream. It's the dream thing for me. Money is interesting, but it's actually what I get to do every day is just an amazing thing. And what's brilliant about that is that remember the old joke from Saving Private Ryan, gripes only go up.

where they're asking Tom Hanks' character, why don't you ever gripe? And he's like, gripes only go up. I can't gripe to you guys. Right, exactly.

So your CEO has somebody to gripe up to, which really works out pretty well. If you know, and they need that candidly, they need that also from a mental health standpoint, right? They need that venting and they need, they need a little bit of the, I don't know, like a coach, you know, like, yeah, you get it. Yeah. Yeah. I totally get it. And you're right. That is kind of a pressure valve release thing.

that if you don't have that, things are going to go sideways. Talk about weird behaviors. They feel like there's nowhere to turn. I've seen it. Probably I'm the youngest of big Irish Catholic families. I'm the youngest. I watch more than anything else. We share that. I'm the youngest of a large Irish Catholic family too. You know what I'm talking about. I observe things. When I was running a lot of stuff for Paul Allen,

I had lots of responsibility for all kinds of different deals and stuff like that. And I watched what worked and what didn't work. So when I decided to go out on my own and do my own thing, I had, even though it was an accelerated sort of timeline from, you know, because it was less than four years, I really learned a lot in those four years about, you know,

Not so much executive management because I had done that, but the understanding what it takes to be an effective CEO and how important – all these things you and I have been just talking about, the honesty, the candor, the communication.

the lack of fear, the need for a CEO to have that person. Because very often in these situations, early stage companies, if there is a chairman that's not the CEO, it's just the lead investor who often has almost no experience. They can't really with any kind of credibility, they can't coach, they can't mentor, they can't, not really. You know what I mean? That's the niche that I enjoy doing and being involved with.

Well, this has been an absolutely fascinating conversation. I'm incredibly impressed by what you're doing. I loved my kind of deep dive on this entire field because, frankly, I didn't know nearly as much as I should have. And so I was thinking to myself, I really have no business unless I do a kind of a real deep dive here. But it's

but thank you because it was absolutely fascinating for me because all of these edge case questions and like just thinking about the elaborate, uh, you know,

triage that has to go on. Oh yeah. It's huge. It's huge. In fact, I'll tell you, I hope we stay connected because I have some others. I'll just tell you, I have some other ideas that are, that'll, that'll be their stealth right now. They're, that'll be coming out in the next year, year and a half. Oh, terrific. We'd love to see them. That actually touch on some of those things that you're, you're touching on. So you're obviously you're, you're one of those guys that plays the aw shucks thing. Like we were talking about in the beginning, but they're,

But I can tell you're obviously a deep thinking guy because what you're putting your finger on is that is one of the big, big challenges into the future is the military, the Pentagon calls it JADC2, Joint All Domain Command and Control. But it's the orchestration of all of it. It's incredibly complex.

And so, yeah, I'll be taking on some of that in a new company that you'll hear about. You'll probably hear about it in about six months or so. It'll come out. Terrific. Can't wait. As a final question, Chuck, we have a little game we play here at Infinite Loops, and that is we're going to make you the emperor of the world. Now, there are rules. You can't kill anybody, and you can't put anyone in a re-education camp. But what you can do is we're going to hand you a magical microphone.

And you can say two things into it. And the two things that you say are going to incept the entire population of the world. The next morning, whenever their next morning is, everybody's going to wake up and say, you know what? I just had two of the greatest ideas. And unlike all the other times, I'm going to actually act on both of these ideas today. What two things are you going to incept into the world's population?

As, as, as, as think is thought pieces. You mean that kind of a thing? Like it can be anything. The first one that comes to mind that I think everybody needs to know and understand is that it's going to be okay. You know, I think too often in the world that we're in today with everything's hyped up and everything is,

It's about clickbait. And I think there's a level of fear that's rolling through this whole thing and the world. And I think we all need to just take the message that it's going to be okay. And then I guess the other thing I would want to say is, it kind of relates to that. Think about what you want for yourself and for your life and do not be afraid to

to go do it. Just don't be afraid. Trust, reach for whatever it is that you need to touch that gives you the courage to go do the thing. Because we all know, all of us, we have an inner voice. We know what we're supposed to do, what we want to do.

And find it, whether it's through your spiritual beliefs or whatever it is, your self-confidence, I don't know, your friends, I don't know, whatever people get to that. Find the courage to go do it. Because I'll be 60 soon, and there's no point in waiting. And if you don't, all you will have is regret that you didn't. And so just, you get one life,

So just go do it. And I think if people keep those two things close to themselves at all times, I think the world would be a much better place, candidly.

Amen to both of those. I'm turning 65 in a few, actually in a week. So I absolutely are sharing your thought patterns on both of those. And like the first one, people need to remember, you know, Pandora's box is often given as a real negative. Oh my God, you've opened Pandora's box. What people forget is the last thing at the bottom of Pandora's box that emerges is hope.

And the second one, man, I could not underline that message more. I completely agree because it may seem daunting. It might be frightening when you're younger, but boy, you're going to regret it if you don't do it. And life happens fast. And as you say, we only got one. So make it absolutely really matter.

Yes, sir. Chuck, thank you so much. This has been such a delightful conversation. Thank you, Jim. I've enjoyed it as well. I really have. When this was pitched to me, I thought, I don't know, why not? I was assured you're a funny and interesting guy, and they were more right than they even realized. So, great meeting you. Well, thank you very much. And I was assured the same of you. So, we have mutually good intel on people working for us. Thanks so much for joining me, Chuck. Thank you. Take care. Bye-bye. Thanks.

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