E228: SpaceX to enter the cell service business; Anduril wins $1.26b of new deals; OpenAI + Microsoft work out non-profit to for-profit switch; Will AI/robotics yield a decade long bull market?

0:00Clint, I got three good topics today.

0:02Clint Sorenson:SpaceX is getting into the cell phone game, man. They just did a$17 billion deal with EcoStar to buy some bandwidth that will allow them to do satellite to cell phone connectivity. It was a big deal,$17 billion deal. Here's my question. SpaceX now has a$413 billion valuation. They're like turning on Starlink and all of these countries in Africa and South America and Asia, like revenues really starting to ramp. You know, obviously, they're making great project progress with Starship. Right. But this is really interesting to me because this you could argue that this is even really different than Starlink.

0:45Clint Sorenson:Right. The self direct cell phone service. Like, what do you think of that business? Is that going to be real business? Do you think they're going to be competing with Verizon and T-Mobile? Will people use it? What are your thoughts there?

0:58Nick Fusco:Yeah, it's more than that. It's going to be a carrier overlay too, right? So at the end of the day, I mean, everything is coming down to data and compute. And when you think about it now, the phones we walk around with, the majority of the population walks around with are supercomputers, more powerful than the computer that put us on the moon. So when you start to think about how much data, we had a 35 % year over year jump in mobile data, 132.5 trillion megabytes. That is, you need scale. And, you know, I remember when a lot of people had the big audacious goal of bringing the Internet to rural areas and to untouched areas and underserved areas and to impoverished areas, to other countries, et cetera, et cetera, et cetera.

1:50Nick Fusco:And I remember there was – remember Google had the balloons? Oh, yeah. Right? They had that big project. A lot of people were trying to create this, how do we connect the globe? And SpaceX did. it. Starlink did it. And I think when you consider the infrastructure, the 8 ,000 Starlink satellites, you consider what this is going to mean as a direct to cellular service. It is massive.

2:18Clint Sorenson:Right.

2:18Nick Fusco:The question is, can you get it through? Right. Yeah. Because EchoStar, don't they have some other, they have AT &T, they have an AT &T couple buyouts, there's like 24 billion or something they got to get that through this has to go through so fcc has to approve all this right um yeah i'm hopeful but yeah this is massive man yeah i just spacex just continues to

2:42Clint Sorenson:surprise i mean this is kind of yeah yeah they're actually they're for sure actually but they continue to surprise like like standing up new businesses that i think folks didn't really see coming right i mean did you see a direct to cellular satellite or a carrier overlay like me This is a CapEx arbitrage for a carrier. Everybody's like, oh, it's going to compete. Yeah, it might, but it's also going to be what the carriers tap into. For sure. Yeah, I mean, there's probably big portions, especially in the United States, and then who knows where else they're going to turn this on at, what other countries or continents they turn this on at too, right?

3:16Clint Sorenson:So, I mean, there's going to be some really interesting revenue opportunities for the company. But this is what I'm saying. This is my thing with SpaceX. is like, you know, the ability to launch payload to space is going to open up so many different businesses for that company that I think we don't even really, I don't think everyone fully appreciates the stuff coming down the pipe, right? Like I keep talking with people about SpaceX, about how it's like a mining company. Or logistic company. Or logistic company. Mine stuff on the moon, mine stuff on Andrew. Yeah, right. I mean, it's a real thing.

3:50Clint Sorenson:So it's not one, I don't think it's one revenue stream or two revenue streams. It's going to be a multi-revenue stream. It's going to be like a diversified, you know, base of revenue. Elon Musk builds platforms. He doesn't just build a singular purpose business, right? He builds platforms. And this is a robust platform. Yeah, yeah, yeah. It's the Apple App Store of space. Yeah, exactly. Of space, of logistics, now cellular, of internet connection, like the wild. Yes. All right. Another company that's crushing it is Andrel, right? So these guys just announced, my math had$1.26 billion worth of new contracts.

4:35Clint Sorenson:They got a$1.1 billion deal with the Australian Navy for an underwater autonomous submarine, okay? And then they just did a deal with the US Army for AI-driven night vision and kind of augmented reality, like an Oculus-type glasses, right, for the helmet. I think he knows a thing or two about that, right? A hundred percent. Okay, Andruel's a monster. Here's my question for you, man. If you look at the defense primes, they kind of range from like$50 billion to$200 billion, right? I mean, Palantir is out there in the public markets. I haven't looked at their revenue multiple in a while, but it was like 100x at one point it was huge 100x sales bro not right yeah yeah yeah wild right i mean profits that's like that is a lot that's really high but you know here's the question for andrew like i you know if andrew was a publicly traded company i don't i actually there's probably a potential it could have 100x sales revenue multiple right or multiple but i like this like do you think this company like where do you think this company ends up in the long run like like i keep looking at the defense primes and they're like 50 to 200 billion i mean like andrew's got kind of you know one customer they got the department of defense they got maybe european countries got like australia like they did this deal with right you know i mean there's x amount of dollars per year to spend you know what i mean it's like that this is not this is not a legacy defense contract this is a disruptive software company that's disrupting defense and it is it's massive and this industry is massive.

6:18And here's why I like it. In a de-globalizing world where you have these regional, how do I say this politely?

6:27Nick Fusco:You have regional cohorts that are really built around trade that become defense partnerships. No more, you know, everyone trying to defend the entire, or the U.S. trying to defend the whole globe, right, at the end of the day. Police, globalization, and trade rates. This now becomes about who, and it's a Ricky Bobby economy, right? It's a Ricky Bobby industry because if you're not first, you're last in this environment. And AI is the accelerant. So this is a national and regional security issue. And we have to do a couple things, and I'm going to speak from the U.S.'s perspective, to maintain our position as a superpower and an empire.

7:07Nick Fusco:And that is, number one, we have to regionalize trade. We have to onshore certain key supply chain issues, especially around tech innovation and tech manufacturing. We have to absolutely make sure that we protect South America and Canada, so our regional trade partners, that we can solidify and guarantee that we can ship natural gas and oil. We can import labor. Right. Very critical to us being what we need to do. And then we need the defense capabilities and the leadership there to continue to back our ability to print money. Because everybody's like, oh, we can't just continue to print. Absolutely, we can continue to print.

7:44Nick Fusco:We can print until you – we're going to print more money than you'll ever believe. But guess where it's going to go? It's going to go into AI and tech and infrastructure and defense. Because military spending has to be there in order to protect our ability to print money or borrow money in our own currency, which means money to pay back the bill. And that is what drives, that's what keeps us in the empire seat. And anyone that doesn't support military spending to be the leader there doesn't support us being the empire and being the world's reserve currency.

8:18Clint Sorenson:So that said then, so you're thinking is the amount of military spending is going to continue to go up in the US. It sounds like you believe Andrew's going to - win market share. Not only in the U.S., but they're going to win it globally among our allies. And then maybe is a third point as well, because it's like this high-tech, AI-first business, it's going to have a higher multiple valuation. It's going to destroy the competition. It's going to take all the market share. And when you start to think about the – you start running down the rabbit hole of what this means for this company. Yeah. Man, it's massive.

9:02Clint Sorenson:Well, plus two, Clint. I don't know if you knew this, but Andrel sponsors Ohio State Athletics, which you know I'm a Buckeye, right? And if you look at now, they had this ad up at the Horseshoe. That's the football stadium in Columbus, Ohio, right? It says Andrel, protect the shoe. Come on. I mean, how do they build that big facility in Ohio? I mean, I love – I literally – They are, yeah. Big manufacturing facility in Ohio. If you say, Clint, what's your favorite company, companies in the pre-IP space, Andrew would be at the top, in the top three. Okay. Absolutely. So this is what I've been telling customers.

9:42One more thing. Who are you going to, what are we going to export as a nation in a deglobalizing world? We're going to export what we're the masters at. We're going to export military. Right. And we're going to export defense goods. He is aligned with what he, like, I just can't get happier about this. It's AI and it's alignment with deglobalization and what keeps us in the catbird seat. So I'm all for it.

10:04Nick Fusco:Sorry. Didn't mean to interrupt. But what you're telling people.

10:06Clint Sorenson:I keep telling advisors and everybody, I think this company is like, because look, I like to keep things rational on a base case level. You know what I mean? I'm like, look, I think this is a$150 billion business, like rock solid with an incredible risk-adjusted return profile. Right? So it's trading like$51,$52 billion right now. So it's like a 3x from here. And then I'm like, if it goes public. What's this projected revenue now? Well, I'm saying 20x revenue multiple. But I mean, to your point, like there's huge upside potential. Didn't it just close the deal with the US Army early in the year for like 20 something billion?

10:42Oh, yeah. I mean, that's part of the deal.

10:45Clint Sorenson:Yeah. I mean, it has potential. But listen, this is what I'm saying. If you can look. I think I feel very confident looking somebody in the eye and being like, Andrew's a 3x in like three years. right? With very solid risk adjusted return, like very, you know, I'm not comfortable downside risk, right? Like that's a great, what's wrong with that? What's wrong with 3X in three years? And then, and if it goes better, if it ends up all the things that you just said, right? Some of these things start to play out, then that's just incremental upside, right? So that's why I like this thing. But you know, like I'm trying to temper people's expectations.

11:24I can't, I am more I'm more excited. Like the three themes I think that dominate the macro landscape for the next 20 years are deglobalization, what that means. Number two is AI and technological disruption. Like we're in a leap and it's amazing. And then the third thing is fiscal dominance. Right. Which is eloquently saying we're going to print money. And so it just aligns with all three. I'm just like, man, I couldn't think of a better company, more aligned with where we are globally. From a positional perspective, they've got the wind. I mean, they've got to execute, but they have got the wind in the sails.

12:05Clint Sorenson:I mean, plus Palmer, look, he's like a real life Tony Stark. Isn't he? Yeah. I mean, everybody's like Elon Musk. I'm like, no, this guy. I think it's him. It's like, honestly, like I wouldn't be surprised if the guy comes up with something. I mean, he was on the Sean Ryan podcast. I don't know if you've ever listened to that guy, but he was talking about like an exoskeleton suit and he was like running around and running a four minute mile. And this guy's like Tony Stark and he's like building it himself. He's like Tony Stark, this guy. It really is. There's something about a founder of a company like that who's already a billionaire and he's like building stuff in his garage.

12:41Clint Sorenson:It's incredible, right? It's crazy. All right. So, so last one I want to hit on. So OpenAI and Microsoft, this is like all over the news here in the last couple of days. It sounds like they've kind of agreed on this for-profit or non-profit, the for-profit flip. And of course, it's got to get past the states and everything. But I have a sneaking suspicion it'll get through those once Microsoft kind of agrees. So here's the thing, not to get into the details of this stuff. This is the thing I want to talk to you about. Once OpenAI becomes a normal fastball down the middle, for-profit company, regular cap table, right?

13:21Clint Sorenson:How many more people come off the sideline to want to invest in this thing? Because right now, it's kind of a very interesting structure. Or do you think it doesn't matter? Like everybody who wants in right now is in or is trying to get in? What do you think? I think what we've seen is that the IPO market is open and the equity markets are functioning really well. And anything in the AI play, the money's there. I'm talking private market investors. I'm talking about like, let's say you're like a pension fund and you're a CIO and you're like, oh man, I just can't get my head around going into open AI because they have this like nonprofit for profit structure right now.

14:02Clint Sorenson:It's too confusing. Like I love the business. I love the leadership. Like, I love where it's going. Do you think people care about that anymore? No, I think this opens it up, right? If you think about the public benefit corporation, what it's doing is it's kind of like mission with muscle. It's just acknowledging the fact. The fact is, in order for us to scale and hit our goals, which is for the public benefit, we need to raise a lot of capital because that's the game. And that's the rules we live by. I don't think that's a bad scenario at all. Actually, it's just an acknowledgment and shows self-awareness.

14:35I think to hide behind something that's not really conducive to you reaching your mission, and that's false, and it doesn't feel authentic.

14:45Nick Fusco:And I think that would hurt the trust in the company, at least from my perspective, more than just saying, hey, guys, when we started this, we didn't know what we had. Now we have something that can really make a difference and is making a difference in people's lives. And in order to hit our mission, we've got to raise a trillion dollars in capital. Yeah, right. Logistically. Which you can't do as a nonprofit. You can't do it. And I think people say, you know what? I can get with that. Yeah. Right. It's when you don't offer clarity that there's.

15:12Clint Sorenson:Right. I mean, my thing, I think. So to me, I'm trying to get my head around like the supply and demand dynamics of this. Like, I think 25 % more people come off the sidelines and they're like, now I can invest into this thing because the cap table is clean. Right. It's clean. You know what I mean? I think there's going to be a lot more demand for OpenAI stock, whether it's private or public, right? Because this is a clean corporate structure. You know what I mean? And also, too, man, listen, I think similar to – yeah. But also, too, I think just like CoreWeave went public, right, because I think it needed to take on debt, I wouldn't be surprised to see OpenAI go public for the same reasons.

16:01Clint Sorenson:It's got all these data centers and everything that it wants to build out, and it'll use debt instead of equity to finance some of the stuff, right? But I think it's better to be public to do that than to be a private company. Absolutely. Okay, good. Well, listen, that's what I have for us today. Anything else on your mind, man, as it relates to pre-IPO stocks? I mean, it's just exciting to be in the space, to see all the change. It's the best time to be alive, as you and I talk about. And if you're an advisor, you've got to partner with A.G. Dillon because at the end of the day, what a better way to compete.

16:39it. I'm doing the large cases. As the head of the asset management division, I'm doing the large cases with these huge wealthy families and these big clients. It is exciting. It gets them access to things. It's about optimism and opportunity instead of saying, oh, you need to move some to bonds or diversify, whatever. I feel like Wu-Tang Financial from the Chappelle show. You need to diversify your bonds. At the end of the day, that's not exciting. like, yeah, asset allocation drives it. But at the end of the day, let's talk about what's going on exciting and why we invest in the first place. And I don't know, since being partnered with you, it's really changed my perspective to a more optimistic one because there's something, there's a lot of cool things out there.

17:23So that's my shout out to you. And I appreciate that for all that you do for the advisor community and for the advisors listening, got to partner with AG Dillon, man. There's no better.

17:33Clint Sorenson:Listen, I do think on the optimistic side of things, I do think we're like on the verge of a like a decade long bull market. Right. I mean, there's so many good here comes the boom. I think I actually think the private sector. I was talking about this the other day was with my driver, my Uber driver. And I was telling you before we hopped on, but my goal was last week. So I'm talking to the Uber driver on the way to the Dallas airport. and we started talking about trades and we started talking about how we needed 500 ,000 electricians. And I was like, man, you know this, I actually think the time we're going through right now, the technological leaps, the everything we're going through, this deglobalization, these big megatrends, I feel like they're driving the growth we need in the private sector to

18:20Nick Fusco:support a rising up of the bottom 50 to 90 percent. I actually think we've never been a better time for that because what's AI disrupting? It's, you know, it's disrupting the financial advisors, the lawyers, the accountants, the white car, high income earners. But what do you need? You need trades. It's going to accelerate those. And I'm like, that's right. This is so exciting. I mean, it's so exciting for the middle class. I think everybody was talking about middle classes, dead or going the way of the UK. I think if we embrace the movement now in this AI wave, I think we're going to create a huge growing middle class in the United States, all back on small business and trades.

19:00And I couldn't be a better time. Now, then the question is, who's going to pay for it? And I just say the government, because at the end of the day, it's going to be. Oh, yeah.

19:07Clint Sorenson:But I think the math will all make sense, right? I mean, I think that's the nice thing about the AI, and this is kind of the stuff I see coming, paired with the robotics, which those two things are very much intertwined, right? They can't function without the other. That's right. I was a student of China for a long time, and they had a very big focus in their five-year plan, like two five-year plans ago, about high-end manufacturing, right? So it's not like someone just sitting down and sitting around in the conveyor belt and just doing the same thing all the time. High-end manufacturing, using robotics, using this stuff.

19:42Clint Sorenson:Like we can pull a lot of manufacturing back to the country, but you need really thoughtful, sophisticated people, right, to do that work and be on the ground and on the floor, like making those machines work. And you can produce a lot of stuff here, right? But you can't just do it. You can't – the robots just won't run those things by themselves. Like you're still going to need people there, right? So I think you're going to see this great intersection of bringing home manufacturing back to the United States, but doing that with high-end robotics and technology, which is going to provide really great jobs for people.

20:20Clint Sorenson:You know what I mean? To your point, trade jobs, right? Think about what we're going to be able to do as a nation. That's how we got it. We got to inspire the private sector. and I think it's never been a better time. Yeah, I'm pretty excited as an investor. The stuff I see coming down the pipe, I see there's going to be some pretty incredible investment opportunities. So, yeah, a lot of tech, so get ready. Everything's tech now. I feel like we mess up stuff with words, like AI. Why don't we just say fancy computer, right? Better computer than you've ever had before. That's right. I feel like we mess things up in language.

21:00Like everything's tech, right? At the end of the day, we've been using technology since we were cavemen, and that wasn't that many people ago.