Team Favorite: AI-Era Internet, Spaceport Investment, Bolivia’s Investability 

27:01And the latest opportunity may lie 1 ,000 miles south of Florida in the Dominican Republic.

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28:57This is a story about making money 22 ,000 miles up, meeting a commercial need for tens of thousands of satellites to be launched by 2030. There is a race on to get all those satellites into orbit, but also a race with China, which has already built a range of satellite ground stations in Latin America, something that's gotten the attention of the U.S. government.

29:30So it's about 45 minutes on a helicopter flight. It's probably about four or five hours driving. In the western part of the Dominican Republic, on the border with Haiti, lies Pedernales, a quiet coastal province that will soon be home to the country's first spaceport and what is slated to be the first U.S.-owned commercial spaceport in Latin America. If they were to identify this region as ideal for commercial space, it would be essentially the Straits of Hormuz for space. When we talk about the Straits of Hormuz, we think of all that oil and fertilizer and aluminum trying to get through a narrow sea channel.

30:07When it comes to space, it's satellites, And the choke point isn't a sea passage, but launch pads that we simply don't have enough of. How many pads are you going to have here? Four. Four pads here? Yeah. Burton Catledge is a former Air Force colonel who founded aerospace company Launch On Demand in 2018. The amount of support that they came back with was amazing. He's now developing a$600 million commercial spaceport in this remote part of the Dominican Republic. The ecosystem at Cape Canaveral more or less has grown out of ad hoc. It was not necessarily built with the idea for the commercial space industry.

30:44The entire market has changed. Space industry is something on the order. Last time I checked, it was like$650 billion. It's supposed to be over a trillion by 2030, maybe a trillion and a half. Some people are even saying that's pretty low. To relieve the bottleneck in launching the growing number of satellites we need, the U.S. has to have more spaceports, creating a business opportunity for companies like Launch On Demand. Right now, there are over a dozen U.S. spaceports across the country, and just one internationally, Rocket Lab's launch site in New Zealand. I think the United States, from the space economy perspective, is in a position of extreme opportunity, and they are in a growth phase.

31:26Ryan Brukhart is a senior partner at McKinsey, who focuses on global aerospace, defense, and space companies. I think the infrastructure in the U.S. is becoming a bit stretched, right? If you look at our launch sites, we're launching, you know, every day or a couple times a day from some of these launch sites. There's a huge backlog of, you know, U.S. companies looking to launch things into space and to be able to accomplish their mission and get the return that their investors are looking for. Right now, I've heard that it's about three-year waiting list to get a satellite on orbit. What accounts for that demand ramping up so dramatically?

32:00And do you expect it's going to continue to increase that much? Well, in order to have global coverage of the entire Earth, you have to have a lot of satellites. Right now, there's about 14 ,000 satellites in orbit. The FCC tracks all the number of satellites that are going to be submitted, and they're looking at over 100 ,000 satellites by 2030. So if we got 14 ,000 satellites, and it's 2026 already, and we have to launch 100 ,000 satellites by 2030, that's a lot of launches that have to happen between now and then. That may explain the need for more launch sites, but where? The goal for a rocket is to get to space in the most efficient and effective way possible.

32:39And engineers spend hundreds of millions of dollars trying to finesse what does that efficiency look like. But eventually it comes down to two things. How much fuel can I put on the rocket and how much mass can I put on top of the lift? So they're always playing with that equation. Well, the geography has an important part in here. this. Because in order to achieve escape velocity, a rocket has to achieve 17 ,500 miles per hour. And the Earth closer to the equator spins faster than it does at the poles. What that translates into is you could put more satellites up with less of a smaller rocket.

33:17And so the goal of most spaceports is to try and get to the as close to the equator as possible. But why does it take me to Dominican Republic. So what we ended up doing about three years ago was doing a technical feasibility study. We looked at everything we could possibly look at, but as we did our analysis, it started shifting to peridonalis, which has a relatively low population, and because it's on the coastline, and because people don't live in the water, we have almost a straight shot to orbit without hazarding the public. So if something goes wrong, it goes in the ocean. That's right. So that's why a lot of our spaceports are built next to the coast.

33:53It's not necessarily because of the water, it's because of the low population. It's not really about whether the rocket explodes or whether the rocket gets to orbit. It's all about public safety. Safety is no small concern in the new space race, as we saw just last month when Jeff Bezos' Blue Origin rocket test blew up in spectacular fashion. Along with the expected trillion-dollar IPO of Elon Musk's SpaceX, It's a reminder of just how public the failures and successes can be in this business and how big the players are. The pad will be two miles to the coast. That's one reason that Burton would rather work with them than against them.

34:29You are, though, competitive with SpaceX, right? Most of the feedback that we have gotten from all the commercial operators is they would like the ground infrastructure to be more responsive, to be more not like we launch on this day, we launch on readiness. And right now, the infrastructure and the processes are not designed that way. So right now, statutorily, the Office of Commercial Space has six months to review it and give you a decision. We're going to give you a license in 45 days. That's very attractive. We don't look at ourselves as competitors to the Rocket customers. We look at us as enablers.

35:04What's the attraction for investors, and what's been your experience so far on people stepping up? there is a large appetite right now for space. This is kind of like the early, you know, early Internet age, if you will. The problem is there's not very many investment opportunities or good investment opportunities to get into space. The first phase of the spaceport is going to be about$600 million of investment. And the response that we've gotten has been really quite significant. As launch on demand prepares to break ground later this year, a larger race is already underway in Latin America. Space infrastructure has become a new front in the U.S.-China rivalry.

35:44China is aggressively making investments in our hemisphere, particularly in Latin and South America. Also, partnerships that they have made with Caribbean nations to have aerospace applications, satellite demonstrations, civilian applications, also with military application components to it. A recent report from the Select Committee on the Chinese Communist Party warned about China's growing space footprint in the region, including more than 10 satellite tracking stations. Congresswoman Haley Stevens of Michigan is a member of the committee. This is a call to double down on the way our system works.

36:28And so we don't want to be ceding ground to China. We don't want to see them continuing to eat our lunch with our neighbors. and we can win this race. I guess you could look at it as a marathon or maybe an ultra marathon, but I don't see an end here. There is not a clear finish line. Carrie Bingen is a director of CSIS's Aerospace Security Project. Well, I thought what was really interesting in the decades that we were competing against the Soviet Union, so much of what was happening in space, it was fueled by government. I think what you're seeing now, which really sets this current era apart, is so much of what's happening in space is commercial.

37:08Over 80 % of the satellites on orbit today are commercial systems. A lot from the United States, SpaceX, Starlink, but many other countries are now players in space. The technology is much more distributed across the globe. Launch costs are a lot cheaper, so any country or even entity can put something in orbit. And much of that is now fueled by private capital, not just taxpayer dollars. China has ambitions to be the world's space power. Their presence and their capabilities in Latin America are part of that strategy. They want access. They want influence. They want to be able to band together with these countries in bodies like the United Nations to start shaping where the standards are.

37:56We started this program well before people realized that China was very interested in taking over real estate in Latin America. As we have gotten the Trump administration and President Abendaner's administration together, they are aligned on what has been called the pivot to the Western Hemisphere. So I would call the spaceport more of an artifact of the decision to pivot to the Western Hemisphere rather than anything else. And we emphasize this is run by a U.S. company that is designed to be commercial, that is complementary, not competitive with the spaceports in the United States. And we work very, very hard to make sure that they understand we're a friend, not a foe.

38:42And so, so much so that when we have talked to the president in there, we said, we want to adopt the U.S. safety standards for launch and reentry. And he agreed. And so if you're a customer that launches from the United States, the standard will be the same if you launch from the Dominican Republic. We have holes. We never thought that missiles would be launched across the southern hemisphere, so we did not put a lot of radars down in South America or in Africa, for example. But we're realizing we need to have coverage of everything that's happening in orbit. We're seeing China, we're seeing Russia maneuver satellites much more frequently.

39:23Are they benign or do they have a hidden weapon? We don't know, but we know that they're testing these kind of capabilities. And so you need to be able to monitor that. Are there restrictions on who can use your space board? We want to stay in line with U.S. foreign policy. And what do I mean by that? So even though I'm a U.S. company operating in Dominican Republic, I need to make sure that my host country, the U.S. in this case, is aligned with what I'm doing. So if I sort of went kind of off the beaten path, I would essentially be cutting myself up from the largest commercial market in the world, which doesn't make much sense.

40:03Launch on Demand's being aligned with the U.S. government on the geopolitics of space infrastructure in Latin America is important to Catledge. But make no mistake, at its heart, this U.S. spaceport company is a business, one that Kalich believes will be a good one. So we estimate that by about the 10-year point after we hit full operations, we'll be generating about$8 billion. And so this will be the first private revenue-generating spaceport in the world. And the reason why is because we're leveraging all the technology that's been invented. We're bringing that here. Coming up, from the Dominican Republic to Bolivia for a look at another Latin American country chasing U.S.

40:43investment with the president trying to shake things up.

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42:37This is a story of rebranding a country. Rodrigo Paz was elected president of Bolivia in November, marking a major shift for the country following two decades of socialist rule. Paz has a mandate of economic reform, closer relations with the United States, and increased foreign investment. But as our colleague David Gura found out, ideas and execution are sometimes very different things.

43:06The Solar de Ayuni in Bolivia is the country's crown jewel. It's a sprawling salt flat on the Andean Altiplano. So large, it's visible from space. We are at 3 ,650 meters above sea level, my friend. Very high. Very high. Bolivia's economy benefits from the tourists who flock to the Salar from all over the world. But what the country's leadership is banking on is what's underneath this snow-like layer of salt. So the lithium mining is just down on the salt. The idea of the government was like, do some manufacturing batteries or electric cars, things like that. But, you know, it takes a long time, of course.

43:50And also we need some technology from outside, you know. We're standing on top of one of the largest lithium resources in the world. And President Rodrigo Paz says if the country can develop these reserves, it will transform Bolivia's struggling economy, improving the lives of some 12 million Bolivians. Peru, Bolivia, and Chile collectively hold the largest concentration of minerals in the world. Peru generates$50 billion annually. Chile generates$65 billion annually.

44:29Bolivia possesses the highest concentration of minerals of the three, yet we generate only$6 billion per year. The question is, why do we choose to be poor? After he was elected last October, President Paz signaled Bolivia is open for business. But as we discovered, there is a disconnect between his rhetoric and the realities on the ground. We arrived in La Paz to sit down with the president as violent protests erupted across the country. Shut down parts of the city. We got the go-ahead to climb through barricades, part of a police perimeter that protected Bolivia's parliament building and presidential palace.

45:09We were told to wait in a cafe on a mostly empty plaza. And as the hours ticked by, we could hear protesters just a few blocks away throwing dynamite. Tear gas hung in the air. President Paz, we learned, was locked in tense negotiations. Just before midnight, we got word from one of his advisors the president would have to postpone our interview. One week later, we finally got our chance to talk with him. It's been a busy week. Three weeks. Many of these protesters are calling on you to resign, to step down. And I'm wondering if there's a point at which that will become something that you would consider.

45:54In five years from now, when we conclude our administration, Bolivia will be an advanced nation grounded in a modernity made necessary by new institutions, a frontal assault on corruption, a controlled fiscal deficit, and a clear path towards growth within an open economy governed by clear laws.

46:24Moreover, it will be a country where racial, regional, and cultural differences are not exploited to fuel political conflict, where I hope I will leave behind a government characterized by pluralistic participation. At a precarious moment for his presidency, Rodrigo Paz has gotten public support from the Trump administration. Secretary of State Marco Rubio said the United States stands squarely in support of Bolivia's government. Trump and his team have embraced Paz's new vision for Bolivia, as they've welcomed wins by other center-right politicians in Latin America. I met with President Trump.

47:07There is a relationship regarding the geopolitical and geoeconomic vision on the continental level. Bolivia's vision is very clear. Pragmatic is everything that is functional for the development of our economy, of the economy of the people. We will be seated so that we can collaborate and be part of a global vision. I think that investors in general should have the patience to follow the situation and see, you know, how well he pulls it off. Hans Humes has spent his career investing in frontier markets. He's the chairman and CEO of Greylock Capital. The markets generally give a pretty positive tailwind when a right of center government comes in.

47:56So getting the enthusiasm, putting it out there, saying we're open for investment, great. And then tapping the markets when they did, raising a billion dollars, I think it was a good signal. Everybody knows the Bolivia story. It's an incredibly, you know, commodity-wise, it's kind of hard not to see it as a really easy place to make money. It's just the sort of the ethnic tensions there that have always existed. And the fact that they have a tradition of going out in the streets, there's been a lot of turnover of governments. And as we're seeing now, it's pretty easy to sort of choke the economy.

48:31Doing business in Bolivia has not been easy. And there's been talk of harnessing its lithium for decades. Today, a lithium plant owned by the state is running at just 15 % of capacity, and contracts that Chinese and Russian companies signed with Paz's predecessor haven't been ratified by Bolivia's Congress. In the near term, Bolivia wants to boost tourism as a source of revenue, but the longer-term vision is to do more with its minerals. The country's never been closed for business, right? There's always been foreign investors coming in, and there's always been the ability to do business. But there was always difficulties with the administration.

49:11Jorge Nchauste is a senior partner at the law firm Dentons, based in La Paz, and he spends a lot of his time working with foreign investors on deals involving Bolivia's natural resources. Foreign investors are a little weary and concerned that their rights won't be respected, And they won't be able to carry out the project in the terms that they want. One of the main things in some strategic sectors was that you needed to be in an agreement with the government. And to the extent that you weren't able to have a security, that the government was going to actually comply with their side of the agreement.

49:51That was a complicated situation. If the government had too much of a say, right, and you were not in a position to, you know, make your rights upheld, then, of course, that gives everyone pause. The fact that Bolivia left the ICSID convention and was reluctant to enter into international arbitration agreements, that gave a lot of investors pause. What needs to happen over the course of the next year? President Paz has a five-year term, but for Bolivia to get on track in the way that he wants it to, what needs to happen in a year's time? They need to see results of some sort, right? So some of those results have already been seen, right?

50:35We need to stabilize the economy. To do that, Bolivia has turned to the International Monetary Fund. It's in negotiations for a$3 billion package that Paz says would go towards social organizations organizations, entrepreneurship, and economic development. But just six months into President Paz's term, many Bolivians seem to be running out of patience. Protests have followed his decision to cut fuel subsidies, and with inflation at 14 % as recently as April, the pressure has mounted. But the calls for Paz to step down go beyond economics. Some opposition groups have sought to force him from office entirely, and the blockades they've erected are now causing shortages of food, gasoline, and medical supplies.

51:21Do you see any missteps, things he could have done differently or should have done differently? Pulling away subsidies, it's the right thing to do. It's a wrong thing to do if you don't manage it well. One of the problems that you see in a lot of these countries, whether it's Ecuador or Bolivia, is, you know, you want to head off people going into the street. So maybe he should have tried to have a bit of a negotiation on the timing of removing subsidies, slow walking it. He probably should have recognized it stylistically. He might have wanted to do a melee, but practically speaking, He didn't have, you know, he didn't have the national support that Belay did.

52:21I imagine there are investors outside the country who are watching what's unfolding in Bolivia and wondering how much has changed. If it's still status quo that there are protests and demonstrations and overarching uncertainty. What would you say to those investors, to those prospective investors, about what Bolivia is like today and how welcoming Bolivia is of outside investment?

52:44We were promised 20 years of the possibility of becoming a Switzerland. That was the promise made 20 years ago. 20 years later, they have left behind a shattered economy, stripped of the natural resources such as hydrocarbons that we would otherwise export. We possess abundant hydrocarbon reserves, yet they have left us without the necessary investments and without the security required to ensure that those wishing to invest in Bolivia find clear rules and laws during this transition, laws that would foster an investment-safe environment in Bolivia. President Paz is pushing for changes to Bolivia's legal framework to make the country more business-friendly.

53:34He's still making his pitch to the Bolivian people and also to outside investors. The country just held its first dollar-denominated bond sale in almost five years. What would it take for you personally to invest in Bolivia at this point in time? We own some of the bonds. I mean, we're already in there. We're bond guys. I'm not going to buy a lithium mine. I have friends who might be, you know, I just wouldn't know what to do with it. But yeah, I think the risk-reward now, it's tricky. I'm not going to put 50 % of the portfolio in it, but I think it's a good risk return. We've had a lot of bad headlines.

54:06I'm willing to keep the focus there because the macro story is a good one. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

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