Rocket Lab Enters SpaceX Arena, Meta’s Prediction Market, America’s Tech Wishlist | Diet TBPN

0:01John Coogan:People were clamoring for a Rocket Lab story that never came yesterday. Rocket Lab enters the arena with SpaceX. Brandon Grel fired up the TBPN newsletter, which you can subscribe to at tbpn.com today, because we were on the horn with Prof G. We did his podcast. Very excited for that to come out. Anyway, Rocket Lab, they are duking it out with SpaceX. Let's go through it. Yesterday, the launch services and space systems provider, Rocket Lab, agreed to purchase satellite manufacturer slash operator Iridium in a cash and stock deal that values the company at$8 billion, or 20 % more than the share price at Friday's close.

0:38John Coogan:Iridium pioneered Leo's satellites, launching its first one some 30 years ago. The Iridium network was the original sat phone, this huge block of a phone. You would take out the antenna out of the back, and the antenna was big enough to kill you instantly if you let it get near your brain. No, just kidding. It was very safe. But it would be terrifying to anyone worried about microwave technology or any sort of radiation. But it was wildly successful. The company grew and grew, and now it's part of Rocket Lab. Today, they operate a fleet of 66 satellites. That seems low. That's because these are bigger, older satellites.

1:13John Coogan:But this partnership is probably going up against Starlink. So it connects handsets and other devices used by ships, mining sites, U.S. government agencies, enterprise connectivity play. The move represents yet more vertical integration at Rocket Lab. Over the years, the company has grown from a small niche satellite launch provider to an integrated space powerhouse. It now designs satellites and aerospace components, serves the defense primes, has the second most launched U.S. rocket annually, the Electron rocket, and is currently developing a reusable medium lift launch vehicle. But Jeff Bezos is probably coming for that silver medal any day now.

1:51John Coogan:With the Iridium acquisition, Rocket Lab is positioning itself to compete directly with SpaceX, which already operates a 10 ,000 satellite fleet. Rocket Lab has its work cut out for it, says Brandon Gurrell. On August 25th, 2021, Rocket Lab SPAC'd at$4.1 billion, the usual SPAC price, probably$10 a share,$4 billion valuation. It stayed at or below that price in the public markets for three whole years until September 2024, when it started to grow both revenue and get re-rated. Now it's acquiring Iridium for$8 billion, twice its original IPO price. And Dellian says, this is the value. Yeah, you could buy it for around$4.80 a share on July 1st in 2024.

2:35It is now sitting at$101.

2:38John Coogan:Yeah, what a run. And, yeah, the whole space economy has been booming. Very, very good. It's a$60 billion company, so they're picking up an$8 billion connectivity provider. And we can play a little bit of this from the founder of Rocket Lab, the CEO, Rocket Man himself. Rocket Lab is acquiring Iridium Communications. Last time I was wearing this blue jacket, I was announcing Neutron. So I guess that means there's something important to announce today. Wait, pause for a second. You ever put on a jacket like that? It seems to be one of the more Wait, wait, whoa No, I don't think I have but now I want to try Okay, we're gonna go back to school for a little bit.

3:31I want to introduce you to the space application equation

3:40So you've heard me talk a lot in the past about applications. It's where all the value in space truly lies. But in order to exploit that value to the fullest, you need a few other things. First thing is unfitted access to space. So you need your own launch.

3:59And then of course you need your own ability to build spacecraft at scale. We've got that too.

4:09But there's some other really big barriers to building large successful constellations in orbit. And the first one... Romantic companions. Spectrum. Spectrum is a finite, almost impossible to get, and of course not all spectrum is created the same. The next thing is, it takes a long time to build and launch your infrastructure, a long time to design and build your satellites, launch them, and even longer time to get get your first one dollar of revenue. And then finally, it's a long time to a sustained cash flow model, a long time to build your business model, a long time to build your customer base, and it takes just that long extended time until you've got proper reoccurring cash flow.

4:51So those of you who know me will know that I'm way too impatient for that. So we found a bit of a shortcut.

4:59Rocket Lab is acquiring Iridium Communications. Good music. Very clear video. I believe this will be one of the most transformative deals in the space industry. It's the ultimate combination for growth. And if you think back to our little whiteboard session a moment ago, this is a deal where one plus one equals three, not just two. One being Rocket Lab, we have unfettered access to space. Unfettered! Unfettered intelligence. Unfettered access to space again. And then you think of Iridium, they have an already operational constellation. Spectrum, not just any Spectrum, extremely valuable Spectrum.

5:33Oh yeah, the Spectrum's really important. Millions of customers and they're a profitable business. SpaceX just bought some Spectrum too. So where the three comes in is the result of these two things is a fully integrated, self-launching space superpower. One that will unlock more growth from Orion's existing network and build new constellations to unlock new services and market opportunities. This is officially our entrance into the space applications market. A thing we've been talking about for a long time now. But to be clear, this is not the finish line. Now we won't just continue Iridium's network as is, we're going to build upon it to unlock new markets and pioneer new space-based services.

6:07Rocket Lab's future in space applications has just been unlocked and accelerated.

6:17I like this guy. I'm off to buy a new jacket.

6:21John Coogan:This thing's too small. See, it goes full circle. The reason he had to put the jacket on sort of awkwardly was too small. It was a part of the story. Yeah, it was good. That's a really good video. I like that. Anyway, Comcast split. In 2011, Comcast, which was primarily a cable TV, internet, and phone provider, to something like 30 million Americans, bought a 51 % stake in NBCUniversal from General Electric. I love it. I love an industrial company that owns a media company. It's happened before, folks. It's not that crazy. Just might work. In 2013, it purchased the remaining 49 % stake. Since then, Comcast has acquired the European media company Sky, the movie studio DreamWorks Animation, and through NBCUniversal, spun up Peacock, among other activity in the entertainment space.

7:13John Coogan:Yesterday, the Wall Street Journal reported that Comcast's decade-long into trying to be a content-plus distribution company is coming to an end. It's planning to split the businesses into two. The Comcast entity will once again become a connectivity-only business, and NBCUniversal will focus entirely on content. And there's been a number of spin-outs that have been happening for a while. And this is the final big one, I guess. There's a recent history of telecom connectivity companies rolling up entertainment businesses and then spinning them out or getting rid of them. Over the past decade, Verizon bought AOL and Yahoo, reorganized the two into an entity called Verizon Media, and ultimately sold Verizon Media to Apollo in 2021.

7:59John Coogan:Over roughly the same period, AT &T bought DirecTV and Time Warner, but ended up fully exiting its position in DirecTV and spun off Time Warner as Warner Media into its own entity in 2022. So, interesting deal to follow along. The other good news in the space world is that after that explosion at Blue Origin launch, that New Glenn launch that was so disheartening, there were rumors that it might be two years until they got that launch pad back online, but there is some updates here. There are some updates. To return to flight this year, we're not rebuilding the same pad. We're going straight to a horizontal vertical hybrid con ops.

8:41John Coogan:We had already been developing for our 9X4 New Glenn launch vehicle using existing infrastructure, skipping a new transporter erector and creating a common con ops across two paths. So Dave Wim shares. There we go. They just used the explosion as sort of like a demo. They demoed the old setup. A demolition? Yeah. Yeah, they did. But good news from Dave Limp, the CEO of Blue Origin, that they're going to get New Glenn flying again sooner than people thought. I have a pitch for you. I have a business idea. I want to give you feedback. Let's hear it. So what's the biggest problem with being a doctor?

9:19John Coogan:You make a lot of money as a doctor, right? What's the biggest problem? The odd hours. No. Taxes. You make so much money, you get taxed on normal income, ordinary income. Even if you're a doctor, you're saving people's lives. You're doing the most important job in our economy. You have a doctor buddy that also runs a hedge fund, though. And when he runs the hedge fund, he's making capital gains. But when he does an operation, he makes ordinary income. Which to me is personally very concerning. I don't know if I'd want to go to see a doctor that does surgery that also... To be fair, he's building a new clinic and he has time off.

9:55John Coogan:Well, he's not up and running. But when I heard that a surgeon was also running a hedge fund, I got a little bit worried. Just, you know, if I was under the knife and the market was open, I'd be a little nervous. But the doctor makes a ton of money, saves people's lives, does all sorts of good things, gets taxed at ordinary income, not capital gains. So you're taxing doctors who are saving lives at a higher rate. So my business idea is with the power of agentic AI, I, we create thousands and thousands of Delaware C Corps for every doctor. So every time that there's a doctor's appointment and you have to pay the doctor, you acquire one of their Delaware C Corps.

10:41John Coogan:And within that C Corp, there is on the balance sheet of that company, basically an IOU for the services the doctor must render you. Sitting on the balance sheet. Sitting on the balance sheet. Yeah, it's an asset. It's an asset. And so you can then depreciate that asset since you've acquired it. The doctor reaps capital gains, and then you cash in your... Yeah, and they can have a sort of a farm of C-corps, so they've had them in the shares for over a year. Exactly. Exactly. Long-term capital gains. And then the patient, on their way out, they sign one form, agentic AI does its thing, winds down the C corp and cashes in the asset.

11:25John Coogan:And then the doctor can reap capital gains. What do you think? You think we got a business there? I think you just created vertical AI agents for tax fraud. I asked JGBT and it said, this is almost certainly dead on arrival, not clever tax optimization, more like abusive tax shelter with healthcare law side quests. The core problem is the economic substance is obvious. The patient is paying for medical care. The doctor is being paid for performing medical services. IRC 61 includes compensation for services and fees and gross income. And the IRS says you generally include everything received in payment for personal services.

12:04John Coogan:Wrapping the bill in a newly minted C-Corp does not change the income character. Well, I think we'll have to take that one to the Supreme Court. All the way. Take it all the way. I think if we take it to the Supreme Court, there's a chance. I think you can wrap it in a prediction market, right? So every single time you go to the doctor, you say, okay, there's like 0 % chance the doctor is going to do well. And then he bets yes. He bets yes. And then we'll see what happens. But, you know, if it's a good doctor, then he'll be paid out in full. I'm pretty sure it adds insurance to it as well because you don't pay if the doctor doesn't do a good job.

12:33Yeah, it's like insurance is built in. Built in. So I think this is actually.

12:36John Coogan:But are winnings on prediction markets capital gains? I think it's still mostly unclear. So for the next few years, I think this will definitely be a good strategy. Okay, I like it. I like it. You have to imagine, because they say they don't use the word bet. They use the word trade. Trade. Yeah. Predict. So capital gains. Trading. Capital gains treatment, maybe? I think the post last year where someone was saying, like, prediction markets will replace everything. If I want blueberries delivered to my house, I go to the market for blueberries being delivered to my house, and I bet$15, and I bet no.

13:10Someone else, they bet yes. They deliver me blueberries. They get the$15.

13:16John Coogan:Works every time. Works every single time. We keep debating this meta question of will they launch a financially incentivized prediction market or will it purely be for social clout? You're still in the camp of there's going to be real dollars. It just feels like the first time meta will ever have - The reason I believe that is because I believe they had meta, like, was reaching out to the various prediction market providers to try to be potential, like, partners and or vendors. But, I mean, partnership can mean so many different things, right? Partnership with prediction market can mean we'll give you ad reads or discounted ads or we'll vend your data so that if someone is on Instagram and hits the search box acting for something and Llama 5 or Muse Spark wants to answer it and surface data from a prediction market, we have the rights to do that without infringing on your copyright or something like that.

14:21John Coogan:It could be a data licensing partnership. It could be an acquisition funnel. It could be something where Meta's funneling people to the prediction markets or back. I read the same article that you read, and it doesn't make any sense to say, oh, yeah, I want to create a competitor, so I'm going to reach out to my direct competitors and see if they want to give me their customers. Why would they ever do that? That makes no sense. You see what I'm saying? The only thing is the prediction markets have a history of partnering with other applications and basically being the infrastructure providers to actually place real dollar prediction.

14:56But if you go to any partner,

14:59John Coogan:whether it's, you know, there was that whole suite of like - No, I agree with you. I generally agree that there is a possibility that there's no dollars and it's just a social cloud. CNN, CNBC - But I just don't - New York Stock Exchange, they all have partnerships with prediction markets. None of them have like, Like, oh, go in the CNBC app and upload your credit card information. Like, Meta's been on this path of, like, maybe we'd like a financial relationship with our customers for decades. And, like, it's never really matured. There was always this idea that you would be able to, like, save your payment information.

15:35John Coogan:And then when you see a T-shirt, you could just click and one-click check out in the Instagram app or in the Facebook app. And that never really took off for a variety of reasons. So, John, in this case, it'd be like you see an ad and then it's like I place a bet that there won't be a T-shirt delivered to my house. Yes, yes. And then it'll get fulfilled. This is the final boss. Hopefully. Hopefully. The answer to your question on can doctors reap capital gains by using prediction markets instead. Prediction market profits are taxable, but the character is unsettled at the moment. CFTC regulated event contracts like Kalshi style contracts.

16:10John Coogan:There is a decent argument that they are financial derivatives rather than gambling. The CFTC describes event contracts as derivative contracts whose payoff depends on the specified event. It also granted call sheet status as a designated contract market. So best case, some contracts might be treated as 1256 contracts. That means marked to market annually and gains and losses split across 60 % long-term capital, 40 % short-term capital, regardless of holding period. So there's a chance that that's the solution. I think we might have solved it, but we'll have to use every tool in the modern financialization and technology box.

16:52John Coogan:The Wall Street Journal asked their readers what innovations they want to see in the next 20 years. And the answers are sort of all over the place. Number five. will shock you. Number five might shock you. What innovation do you want to see in the next 20 years? Tyler, think of something. Jordy, think of something. I'll read some of what the Wall Street Journal readers wrote in. Mary Gillespie from Irving, Texas said, solar on wheels. She wants, she says, why can't cars be manufactured with solar panels integrated into the top of the vehicle? Then it could recharge the car's battery as you travel and when you park.

17:29John Coogan:So this is not actually a new idea. There are cars that have solar panels on the roof, but solar panels are extremely weak. And so you'd have to leave the car outside for like five months to charge a full electric car. Now there have been DARPA Grand Challenge cars and specific almost science experiments vehicles where they have a huge surface area and it's this massive wing of solar panels. And I think there's a plane that's also potentially able to ply indefinitely by having solar panels that recharge a motor and it spins. But for a normal car, a single solar panel on the roof doesn't get you much in the way of charging.

18:10John Coogan:She's basically asking for a stronger solar density, stronger energy density. And I'm in, I'm in. In 20 years, totally feasible. Mary from Irving, Texas. I think it's going to happen. I think it's possible in 20 years. Anyway, traffic jam plan. I would love to see an autopilot feature. I would love to see autopilot features on cars talk to each other. They're saying the chat wants nuclear cars. Just get a nuclear car. That's very fallout. I like the, what is that, nuclear punk or something? What was that? There's like this alternate history of like the 1960s if it was powered by nuclear. Not solar punk, atom punk.

18:46John Coogan:Atompunk is the term. And it has all these really cool things that could be powered by nuclear. Maybe we'll get there. Fusion is sort of promising that. We've talked to a couple companies that do smaller fusion reactors. And they tend, Avalanche is one up in Seattle or maybe Washington, where it's basically the nuclear reactor, but it's fusion, not fission. And it's about the size of a large battery. And so you could potentially put it in a car, put it in a drone, put it in a space vehicle, keep it up there for a long time. Accordion traffic jams would be a thing of the past. What is an accordion traffic jam?

19:27I think that's when the traffic's like.

19:29John Coogan:Oh, going in and out. In and out. Yeah. People are stopping and going. And there's that slight delay when theoretically if everyone was like moving at the perfect. Yeah. You know. So Morgan Clayton from Birmingham, Alabama wants autopilot features on all the cars to talk to each other. So they never do that. So they know, okay, I got to speed up. I got to slow down. And then they're all perfectly in sync. Probably doable. You need some standard or something. What are you thinking? Musical vision. This is a good one. These people are thinking outside the box. This is not like, oh, I want inference at one-tenth of the cost.

20:04John Coogan:Silicon Valley is unimaginative by comparison. But Mary Stickner Gifford from Alpine, Utah says she wants musical vision. I'd like to see the invention of a device to help musicians with eyesight limitations read music. There are many ways to help the sight impaired read the printed word, but pianists and others need to read music at the piano. My father's sight was so bad that he had to look at the music about two inches away, memorize one or two phrases, then practice what he memorized. He gave his last recital from memory at age 94. What a legend. Let's give it up for Mary Schickner Giffords' father, grandfather.