Katie Perry (00:00):
I am Katie Perry.
Austin Hankwitz (00:02):
And I'm Austin Hankwitz. And this is After Earnings, the show for Morning Brew in Stakeholder labs that brings investors up close and personal with the executives behind the world's most interesting companies.
Katie Perry (00:14):
Today we're talking with Peter Canto, the CEO of Red Wire. Red Wire's a space infrastructure company. What does that mean? We're going to get into it, but you can think about it as the picks and shovels of both space exploration and research, which factor into all aspects of the value chain.
Austin Hankwitz (00:30):
This interview was super enlightening for me as someone who has no idea about space, what's going on in space, how people make money inside of space. We talked about how they're supporting the national security of the United States against Russia and China, their work with the International Space Station and how they're working with the creator of insulin, Eli Lilly to pioneer microgravity drug research. Really interesting stuff. I'm telling y'all you're going to love this interview, so stay tuned and let's get into things. Peter, thanks so much for joining us on this episode of After Earnings. Can't wait to dive in.
Peter Cannito (01:07):
Yeah, it's great to be here. Thanks for having me.
Austin Hankwitz (01:10):
So you all generated nearly a quarter billion dollars in revenue last year. Now I'm not an astronaut or a space expert, so when I hear a space company is making a quarter billion a year from space, I get really confused. How does your company specifically generate revenue? It sounds like the alien economy is just booming.
Peter Cannito (01:31):
Well, it's not all for them, but yeah, red Wire is a space infrastructure company. So just like any other infrastructure, maybe if you were to use a terrestrial analogy here on earth, we build things like roads and structures and we have things like cameras and power generation. Well, you need all of that to operate in space as well. So as part of an infrastructure company, we're providing what we call the fundamental building blocks of space. These are things like solar arrays, avionics cameras. So in the image behind me right now, you see an astronaut who's holding onto two cylinders. Those are our rollout solar array products. They're very large solar arrays. So when you see the International Space Station and it looks like it has these wings on 'em, those are the solar arrays and we build those. And so those have been deployed. So that's an example providing power to the International Space Station, but it also is providing power for satellites. And we also provided cameras for the recent Artemis one Orion mission. So all the cameras and all the imagery you saw coming from Orion as it did its lap around the moon, those came from red wire cameras. So yeah, these are critical infrastructure and components. Sometimes we like to say it's the picks and shovels of space exploration.
Katie Perry (03:09):
Yeah, I'm so glad you cleared that up because I know in your industry most of the buzzes coming from the people who are shooting stuff into the sky. And I think stepping back, what goes into that? I almost think of going to Home Depot before a project. And what do you need to pick up? Can you clarify? Is this just hardware or are there hardware and software components?
Peter Cannito (03:35):
The majority of it is hardware, but almost any hardware system. There's integrated software in a lot of these different hardware capabilities as well. So it's not exclusively hardware, but I would say the majority is things like the solar arrays or there's launch adapters or different structures that are important to satellites or power units and things like that.
Katie Perry (04:03):
And in terms of where you guys sit in the value chain of space, can you talk about at what point you're brought in? Where do you integrate? Is it the beginning, the end, some everywhere along their way? How would you articulate that?
Peter Cannito (04:17):
Yeah, well, we're a pretty diversified company and maybe that helps with the amount of revenue that we can generate because we do have a fair number of products. So the answer is it depends. And really there's three primary areas where we participate in the value chain. Probably the largest is as a mission enabler where we're a supplier to really large companies like Boeing and Lockheed Martin or Blue Origin where they're buying these, what we refer to as fundamental building blocks or picks and shovels. They want to put solar arrays on spacecraft or on Artemis. They want camera systems or avionics. So in that particular case, we're a little further down in the value chain providing these infrastructure elements to a variety of different missions. We work across commercial space, national security space and civil space. In addition to that though, 29% of our revenue comes from Europe.
(05:26)
So we're a global company and in Europe we're more of a full mission integrator. We're kind of act more like the prime contractors. There's a full satellite that we develop and we have been developing it for many years For the European Space Agency, often like you would say nasa, they're referred to as isa. So ISA buys actually full missions from us. We have a mission coming up for our Proba bus where two other satellites are actually going to be flying autonomously in tandem. And so that's really exciting state of the art as well. And then lastly, we have a really interesting element of our organization that is focused on microgravity payload development. And so sometimes you'll see we'll put out information about payloads that we're putting on the international space station that can do things like bioprinting. So we printed recently human meniscus on orbit using our bioprint, and I can talk a little bit more about that if that's of interest. We also are doing some interesting biotech work with Eli Lilly in pharmaceuticals where we're growing crystals for drug development. So it's really that picks and shovels emission enabler full systems in Europe. And then lastly, we have some really exciting microgravity payloads we're doing where it's more of this next generation technology for bio and advanced materials.
Austin Hankwitz (07:07):
I appreciate the breakdown there, Peter. And the first thing that you said that really made my ears perk up was national security space national security business. And that reminds me in your Q4 earnings call, you had said that your Q4 national security revenue has doubled. What does that mean specifically? Who is buying what from you all?
Peter Cannito (07:31):
Yeah, so national security is a really interesting area that's been growing very rapidly. I'm sure a lot of people are familiar with the formation of the space force that has occurred in the last decade here. And so now we have an entire branch of the military dedicated exclusively to space. So that's an example of a national security customer. Of course, our intelligence community also uses space for a variety of missions that they support as well. So really there's been some topical things in the news. There was a lot of buzz a few weeks ago about some of the things that the Russians are doing in space that is really a threat to our space capability in the United States. So we got to think about how we're going to defend against that threat and where are the capabilities we need to do. Of course, satellite is a critical backbone for warfighter communications, and I think some of our potential adversaries recognize, if you go back even as far as the first Gulf War, which was really the advent of shock and awe and precision guided munitions, this was all dependent on GPS.
(08:57)
Now we live in a world where almost everything we do, finding your way in your car depends on GPS. So this is critical infrastructure. And many of the military organizations have now started referring to space as a war fighter domain, meaning that in a conflict it would be likely that there would be some sort of conflict occurring concurrently in space, whether it be trying to negate each other's capabilities. So we really need a whole new national security architecture in order to ensure that our space assets are resilient into the future. So China's been very aggressive in space. They're investing a lot of money both from a national security perspective, which of course we have to counterbalance, but also space is a really important soft power. The United States, wherever we go, we tend to go with our international partners. The International Space Station is no different.
(10:13)
It's really a very important piece of US diplomacy. So now China has a space station as well, and in many cases we're competing for participation via soft power with other countries, for instance in the Middle East, who are also looking to participate in space programs that not only include the current space stations, but also ultimately the moon. I think if you were to ask me, we're really in a second space race with China for developing a permanent presence on the moon. Both the United States and China have plans for that, and it's an important part of soft power, international diplomacy and really national prestige as well. So there's what you traditionally think of as kind of space national security, and then there's also this other element of competition in space from the diplomatic perspective as well,
Katie Perry (11:25):
The moon kind of battle that you just described quickly, I am trying to wrap my head around this. What is the benefit of having domination or dominance on the moon, us versus China? Is there a world where likely there will be both there? And if so, what kind of advantage does a country have by setting up shop there?
Peter Cannito (11:47):
Yeah, it's a great question. So there's a number of things that make the moon really exciting, and there's no doubt in my mind that both the United States and China and perhaps even other countries will ultimately have a permanent presence on the moon. And I believe that everyone will be able to peacefully cooperate and coexist with presence on the moon, but it's not always a given. So you have to make sure that we establish norms of behavior. There's a policy out there called the Artemis Accords that our chief growth officer, Mike Gold, actually had a direct hand in helping shape. Ouris Accords are a set of policies that countries sign on to agree to certain norms of behavior in space and particularly on the moon, but there's a lot of science to be had from having a permanent human presence on the moon.
(12:56)
You can learn a lot. It's a great place to look out further into space from. There's a lot of still work to be done in characterizing the different elements that are on the moon. There's certainly a search for the ability for water and the ability to create fuel from water because the earth is also a great stepping off point to go further out in our solar system. So a lot of people believe that the moon is just a first step to ultimately going to Mars, which would be really exciting. I know SpaceX and certainly Elon Musk has been very vocal about their aspirations to ultimately do that. So a one architecture could be that you fly a rocket to the moon and use water and oxygen on the moon to make additional fuel that could take you out to Mars or one of the other planetary moons, for instance, that are out in the solar system as well. So I think we're just starting to think about, hey, what could be all the great benefits of being on the moon? And so there's a lot of excitement there in the international community.
Katie Perry (14:14):
Yeah, it's weird to think about the moon as a pit stop. That was it for a while and now it's like we're just going to refuel and launch from there. I want to pivot to space as a research and testing ground for pharma because this is something that I know is probably not on a lot of people's radars, and you all announced a continued partnership with Eli Lilly and you're planning for a second space flight now where they'll be using your infrastructure as a pharmaceutical testing ground. And I would love for you to talk about why space, why pharma, how that fits together, how you're working with Eli Lilly and what's to come there.
Peter Cannito (14:56):
Yeah, no, it's an excellent question. And so fundamentally, in its most simplistic form, the key advantage to any manufacturing in space is the difference between regular gravity here on earth and microgravity. So obviously the gravity is much lower in space. We've seen images of astronauts floating around, well that has a very gravity, very serious impact on the production of materials. And these can be metals, they can be any materials, ceramics, plastics, red wire through our legacy company, mainspace was the first company ever 3D print on orbit, so it could be biological materials. So there's a lot of research and opportunity to understand how microgravity affects the manufacturing environment and what benefits can we get from that. And an example of that is our partnership with Eli Lilly. We have a capability that we've developed that we call pillbox. And pillbox is a facility, a payload that goes up to the International Space Station where you can grow crystals from compounds that show potential for future drug development.
(16:27)
When you grow crystals in space, because there is no gravity, they tend to be more pure, they tend to grow larger. These crystals, you can think of them as a blueprint of a compound that you would do research on to turn into a future drug. And the higher fidelity of the crystal informs the scientists who are doing the drug development so that they can characterize the different aspects of these compounds in a much more accurate way. So what happens is you say you're looking at a drug for heart disease and you look at it and you say what they do is they use these crystals as kind of a map of it and then they do their development off of that. If they look at there might be a side effect for instance, and they're not under sure what's causing this side effect, but if they had a higher fidelity map, they could use that crystal map to perhaps mitigate that side effect easier or they could see some aspect of the form of what they're testing that would make it more effective. So that's very attractive obviously to, as a matter of fact, sometimes we think about how many drugs or compounds that showed a lot of potential benefit but had side effects that were just unacceptable that might've been put on the shelf. Could we take those off the shelf now, recharacterize them in microgravity, and then find an easier way to mitigate the side effects to get the benefit from those? That would be one example of a use case. Yeah,
Austin Hankwitz (18:21):
That's insane. Literally before I turned into your earnings call, had no idea that we were making pharmaceutical drugs in space and had the opportunity to learn a different way of drug making because of the no gravity. That's crazy to me. So you guys were part of a cluster of space related special purpose acquisition companies, SPACs that went public in 2021. Some of those companies haven't been doing that. Great. You all obviously have been. So what do you think is the main two or three things that set red wire apart from your competitors? Is it the diversification of products? Is it your different geographies? Is it what is catalyzing this profitable growth for your company?
Peter Cannito (19:09):
Yeah. Well, when the SPACs surge happened fundamentally when you peel it back, it was really just an opportunity for companies to accelerate going public right now. It was a pretty broad opportunity, so a lot of people took advantage of that dynamic in the market at the time. I think the difference from us and some others was the fact that we already had very mature products that were proven on orbit. We already had a fair amount of revenue actually as a private company, we were also profitable. So it was really about where we were in the maturation of our offerings compared to others. And I think once all the sediment settles down or the smoke clears around those companies, space companies that went public via spac, you'll find that the ones that had really mature products with space, flight heritage and were proven on orbit that were already had a broad set of customers and were already making sales and had good revenue and a path to profitability, those companies are the ones I think that you're going to see are the ones that will be the ultimate winners.
(20:42)
And in a few years we won't even be talking about a SPAC versus there's really no difference Once you're public, you don't get special rules if you're a spac, you're public, you're public. So people start to talk less about how you went public and more how you're doing as a public company. But by and large, I think you'll look back and you'll see that the really successful ones had proven capabilities with a pretty well-defined customer base that we call that space now, meaning space in the present versus some companies that might've had more aspirational business models without current customers.
Katie Perry (21:30):
Peter and you talk about SPACs not having special privileges, but they seem to have reputations for better or for worse, and you kind of get bundled into this group, a cohort of companies, and I loved how you articulated on your earnings call calling Red Wire a not a maybe someday company. And is that in addition to that being a testament of having these existing products versus investing into some pipe dream, is it also due to the fact of where you sit on the value chain and some of those other space stocks? We're a little ahead of the market, I think, of things like commercial trips into space. Is that part of it? It's where you sit in the value chain versus some of these other space companies out there that you might want to think about a little differently if you're an investor.
Peter Cannito (22:18):
Yeah, I mean, I think you have to have a strong foundation of revenue generating products now that are going to generate revenue, generate cashflow, ultimately generate profitability. We had $15 million in EBITDA this year, and that's important in this environment. Now, in fairness to our fellow space companies, the market changed dramatically. The macro environment changed dramatically. Money got a lot more expensive. A lot of these companies may have been very successful and closed their business case if there was still the same amount of capital out there going to space companies, but it actually ended up benefiting those who had programs. Now you can see, like I said behind me, our solar arrays being installed on the International Space Station. That's a really compelling thing to go to market with and to point to customers. I think you might've mentioned we recently had 142 million contract award from an undisclosed satellite manufacturer for our ROSA product.
(23:36)
It's a smaller form factor, but similar technology. Well, when you go in and you talk about customers who are building satellites and you can point to on orbit performance associated with the International Space Station, again, that's not a someday company that's very compelling. However, I wouldn't dismiss that potential for breakout technologies too. I'll often say Red Wire has a blue chip foundation with venture optionality, and what I mean by that is we're going to generate good revenue, good cashflow associated with selling our power systems, with selling our structures or avionics for current space infrastructure, but we're not making a ton of money on these future things like the pharmaceuticals or we have a biofabrication facility, essentially a 3D bioprint that we recently demonstrated printing a human meniscus on orbit. That's the venture optionality that's exciting someday stuff. But our strategy has always been heritage plus innovation, blue chip foundation plus venture optionality. Make sure you have things that customers are buying and deploying in space today so that you can thrive and ultimately be around long enough regardless of the economic environment because it changes as we all know, that we'll be around long enough to really realize the full potential of some of these more out there technologies that show Great promise.
Austin Hankwitz (25:23):
Peter, I'm really glad you mentioned a lot of these numbers because let's talk earnings, right? That's what this podcast is all about. So first off, congrats on the incredible year. You guys seem to be doing everything right. Your revenue increased by 52%, net income improved by over a hundred million dollars free cashflow improved by nearly 29 million in adjusted EBITDA by more than 26 million. So you're now a free cashflow in adjusted EBITDA positive company. Your net loss is shrinking. You guided to 300 million in revenue in 2024. We touched on this a little bit before, but now that I've got the numbers in front of me, I want to hear specifically from you what is driving this profitable growth? What were some key levers that you guys pulled in 2023 to say, no, we're going to be adjusted EBITDA positive, we're going to be free cashflow positive, and we are going to continue trending toward that direction in 24 and beyond?
Peter Cannito (26:18):
Yeah, no, it's a fantastic question and thank you by the way. We're very proud and very proud of all the employees at Red Wire that were able to have such an extraordinary year for us. Again, I think we have really long-term relationships with a lot of the major customers. We work across national security, civil and commercial space to include international space as well. So the diversity helps in addition to not only having things that are really exciting today that are going up in orbit, but also having these future technology, the diversity of customer base, and this allows us to pivot. So when capital was much more freely available, interest rates were lower and people were investing a lot, commercial space was very hot and there were a lot of really exciting customers there for us, since a large part of our businesses providing the mission, enabling picks and shovels for these commercial space missions, that was really exciting.
(27:26)
But when that dried up, national security got hot. So I think we had talked a little bit about totally in the last year we doubled our national security revenue associated with that. So that kind of resiliency associated with having a diversified portfolio and really long-term customer relationships across all of the different missionaries, the space has been important for red wire. So right now we're riding the wave in national security. There's a lot of excitement about lunar infrastructure. We announced last year a NASA program, I believe it was $12.9 million NASA program to look at the technologies that would be necessary to build landing pads and ultimately roads on the moon. So when you start looking at this idea of having a permanent presence on the moon, there's a lot of interest in lunar infrastructure. We'll participate in that because we have that civil element to our portfolio as well.
(28:35)
So you don't want to be too broad, and I don't think we are. Some people say, well, red wire does a lot. How do you keep track of it? I say, well, we don't do launch. We're not a launch company. We're not selling data. We don't have our own constellation. There's a lot we're not doing right. We don't do ground infrastructure. But with the continuing decrease in the cost of launch, I would believe there's a strongly correlated trend as the cost of launch goes down, the demand for space infrastructure goes up, we often use our tagline build above because we're essentially, instead of building hotels or office spaces or road infrastructure terrestrial, we do something analogous for space. And it being kind of a diversified, being a diversified portfolio, I think helps.
Katie Perry (29:35):
Very cool. And unlike here on earth, I mean that real estate is infinite. I mean literally infinite. So that's also another interesting angle to what you're doing. How do you know what the ceiling is potentially, and is there one to people who are building in your space?
Peter Cannito (29:54):
Yeah, no, I mean the TAM is large, right? To your point, and I think you're hitting on something that's really important. A lot of people, they think of space and they think of satellites because that's I think which is the most visible, but it's more than that. First of all, you have satellites in low earth orbit, medium earth orbit, geostationary earth orbit. So there's multiple orbits. Then you have the idea of lunar infrastructure. You also have deep space exploration. There's a really exciting upcoming trend towards the development of commercial space stations that we haven't talked about yet. But that's really exciting as well. And if you're going to be putting up commercial space stations, which I believe we ultimately will be because it's on NASA's roadmap and the International Space Station isn't going to last forever. So that's a whole nother element of space infrastructure. So yeah, every time somebody comes up with a new idea on how to use space, we get really excited because that's another potential opportunity to provide some sort of infrastructure elements.
Katie Perry (31:13):
Peter, you're pretty adamant during your earnings call not to provide quarterly revenue estimates, and that was attributed to the lumpiness of your revenue and how these large projects that are signed can take course over months, years on. Can you explain why this is the case in your industry and how investors should think about this maybe a little bit differently than companies that they're investing in that might have more of a predictable revenue month to month or even quarter to quarter?
Peter Cannito (31:44):
Yeah, no, it is a fantastic question and there's a number of different elements to it. First and foremost is the vast majority of our business development or bids as we refer them to have a pretty long sales cycle, and they tend to be large as a percentage of revenue. Something like roll out solar arrays for the International Space Station, you'll win it. It'll be a multi-year contract. It'll be large as a total percentage of your revenue. You'll burn that over time. We like to use this metric called book to bill. That's simply the amount of work that you are winning, contracts that you're winning over, the amount of revenue, the work executing, the work that you're doing. So you want that to be greater than one because that tells you that you're actually bringing in contracts that you can continue to work on to sustain a certain amount of revenue generation going forward.
(32:57)
Usually we look at A LTM and then we project on a forward looking 12 month basis based on what our current book to bill is. But what'll happen is you will have a great bookings quarter that'll generate a lot of contract backlog, another term we like to talk about, and then you spend a few quarters burning that backlog down, and then another deal or two will come in that will then replenish that backlog. And so you're book to bill will go up and down. So it tends to, when you're dealing with the loss, smaller numbers, we're bidding things that are multiples of red wire's, total revenue on multi-year contracts. So for instance, we did 243.8 million in revenue in 2023, but we won a two year $142 million contract in Q4 of 2023. Whereas I know people in Q3 were kind of looking at our book to bill and saying like, oh, guys are like, how's it going here? We haven't seen really great contract awards. And I sit there and just try to say it's lumpy folks knowing that we have some of these bids working through our pipeline. So I think we drive ourselves crazy if we tried to estimate these timings. Many of them can be dependent on factors like the government budget. So we might be thinking we're going to close something in Q4 or early Q1, and then you have a continuing resolution and the budgets don't get approved and then that's pushed out and then investors are disappointed.
Austin Hankwitz (34:54):
Well, government budgets, man, come on now, Congressman, holding everything
Peter Cannito (34:59):
Out, just trying to be topical. Right?
Austin Hankwitz (35:03):
Well, let's, it's not only government a conversation about the bidding going because you guys bid on 944 million worth of contracts to be awarded, and I just wanted to know what's the bidding process? How do you select the 944 million? You mentioned you have a pipeline, I think on your earnings, you said it's 5 billion, so why are you only bidding on, call it 20% of the total pipeline? And then of those, call it 944 million of bids, how long is the selection process versus like, Hey, you got selected now you can realize revenue. I think you mentioned you guys are trying to focus on the contracts that kind of pay some revenue upfront. So how are you guys really approaching the bidding process?
Peter Cannito (35:42):
Yeah, no, great question. So everything starts as an opportunity, if you will. If you think about different phases of the pipeline that an organization is planning to develop a constellation, and we have a number of products that could be helpful in that, or there's an advertised future request for proposal that might be coming out of the government, we identify that early. If you take the summation of all those identified opportunities and put that together, that is our pipeline, our 4 billion pipeline number. And then the opportunities, and it varies by product. Some of the smaller products like cameras have a shorter sales cycle. They tend not to, they're smaller dollar amounts. You can have greater turnaround. Some of the bigger opportunities like a full satellite system can have a year or greater, or a good example is our international birthing and docking. That's a large piece of infrastructure that can have a really long sales cycle associated with a future space station or something like that.
(37:04)
But they all kind of moved through this pipeline from an identified opportunity, qualified opportunity, some might say, to something that we're in the process of bidding on. And then ultimately this idea is a submitted bid, and that's what the 900 references, it's of this 4 billion pipeline, the ones that are at the latter stage of the pipeline, meaning you could see a near term award. That's what we call the bids under submission that are being evaluated. So that's what we think about. But again, diversity helps us because we kind of have these big ones that are moving through the pipeline, big boulders, if you will, that are moving through the pipeline, but we like to fill in the gaps with what we'll call singles and doubles or whatever the terminology you want to use, where you're saying like, Hey, let's get a couple million dollars wins to keep our book to bill going a
Austin Hankwitz (38:07):
Couple million dollar wins. Like there's singles and doubles. I mean, he is, yeah, just a couple million dollars, nothing crazy.
Peter Cannito (38:16):
Well, you'd be surprised how much effort it takes to keep the pipeline moving and all that kind of stuff. You don't want to, again, we're not a someday company. We want to constantly be participating in launch and putting stuff on orbit that generates revenue in the here now, and then you fill that in with some of these big wins that can, again, materially level us up as well. So it's a mix.
Katie Perry (38:46):
Peter, real quick, when you say bit, I think a lot of us and a lot of folks listening when we pitch in our jobs, it's slides presentation, the due diligence is maybe a couple meetings. Is a bid really just a series of proof points and hurdles that you need to demonstrate capability and trustworthiness before it's signed? What does that look like in your world?
Peter Cannito (39:11):
Yeah, yeah, it varies. Commercial companies tend to have a different bid process than government, and of course international government and commercial could be different as well. The governments is the easiest to describe because it's very much like for your investors out there who are familiar with the aerospace model or defense, aerospace, government contracting model, it's very much the same. So the government will have a solicitation, they'll put together a request for proposal, they'll define the specification and the bid process on how companies can compete by submitting proposals depending on the size of the opportunity that can, and of course the size of their budget. That can happen relatively quickly or it can take a while. And those tend to be very formal bids. They are working, and the government has, I think, made great strides in Agile acquisition with, I think one of the organizations that's getting a lot of press, they had a significant plus up in their budget this year, is the defense Innovation Unit, DIUX. They obviously can move things through the process quicker, but whereas the commercial, it may be if they're trying to buy a camera and it's largely been specked out and they're trying to move fast, it can be pretty short sales. They just send over a purchase order,
Katie Perry (40:51):
Apple Pay, even just one click checkout.
Peter Cannito (40:55):
Yeah, I don't know that we're not quite there. Yeah, I don't be nice if you go up the red wire and order yourself a robotic arm with a click, but we're not there yet. So
Austin Hankwitz (41:10):
I'll be on the lookout for that cash app, red wire partnership. Alright, Peter, so kind of moving on now from earnings a little bit more toward your leadership style and you as a personal, just like leader here, you're a former marine officer and you've mentioned actually in your last earnings call that you have a high level security clearance and you've worked in national security for your entire career. What's it mean to have a high level of security clearance? I mean, is there anything secret and cool that you can tell the world right now?
Peter Cannito (41:39):
Yeah. No, unfortunately.
Austin Hankwitz (41:41):
It's like No way.
Peter Cannito (41:43):
No way. Unfortunately, I cannot, I would say so, yeah, I started out my career. Once I graduated from college, I was commissioned as a second lieutenant in the Marine Corps and really had an extraordinary time learning leadership. Quite frankly, that was my first experience with being a leader in the United States Marine Corps. And I am biased, but I think they do a fantastic job training young leaders. I did four years and then returned to get my MBA from the University of Maryland after I got out. But that time was very formative for me. I will tell you, red wire on our executive team, our CFO was a fighter pilot in the Air Force. Our CIO is a retired Navy captain, I believe, who was also flew, but also worked in IT systems for the Navy. Our head of national security space is a retired colonel who worked for the Air Force and also the NRO. We have a lot of former military leadership, not only in our management team, but throughout our organization. And I always feel really good about hiring veterans. They just come with a certain amount of discipline and work ethic. Sure.
Katie Perry (43:07):
Perspective too. I mean, yeah,
Peter Cannito (43:09):
Perspective maturity, it's great. So yeah, that was formative. And then I got my MBA and I did some entrepreneurial work for a little bit, and after nine 11, I wanted to get back into the national security business and cut my teeth at Booz Allen, which is a great accompany. I often, I've young adult children and I will say to them, it's good to go to a big reputable company to really learn how an particular industry operates to take advantage of their leadership programs, their development programs, even their technical development programs. Obviously really big companies invest a lot and they're people, so that's good. So I benefit from that. Got the entrepreneurial bug again and started working with private equity backed companies. This is actually my third private equity backed company, but they were all had some sort of national security element to them, and therefore, in order to do my job, I needed a security clearance.
(44:28)
And it's exciting for me because one of the things I think is really exciting about Red Wire is I like to say we hit above our weight class in terms of the ability to do a classified work. That's a barrier to entry for most companies our size. We've invested a lot in the architectures, the investments, the capital infrastructure that you need. You need certain facilities, you need cleared people, you need contracts that give you these permission. You need a program that ensures that we're going to protect the government's information. So that gives us an advantage because there's certain things that we can bid on that other companies our size.
Katie Perry (45:19):
Yeah,
Austin Hankwitz (45:20):
That was awesome. Very
Katie Perry (45:21):
Cool. Yeah. And Peter, thank you for your service and not to harp on the security clearance. I know we can't pry in there too much, but I'm curious, you seem like a guy that knows a lot, a lot more than most people, specific to national security, but also space. Is there anything about space that scares you?
Peter Cannito (45:44):
Well, first of all, I want you to take that clip and send it to me so I can send it to my young adult children because they might say, sometimes I wonder if they really
Katie Perry (45:55):
Believe a guy that knows a lot, your dad is really cool,
Peter Cannito (46:00):
Clip it.
(46:01)
They might dispute that I'm a guy who knows a lot about a lot of things, so I appreciate the comment and it's always good to hear anything associated with national security can be scary. I think it was some media that was put out, I believe it was from the Space Force, but don't quote me on that a while ago that was called The Day Without Space, and it was all about the premise. And this is probably something you could find on YouTube, was what would happen to our society if we didn't have access to space.
(46:44)
GPS, like I already mentioned, it's not just about finding your way to somewhere you've never been before. The timing aspect of GPS is very important for the systems that underpin a lot of our critical infrastructure. And of course, it's a critical aspect of our communications architecture to include emergency communication, architecture. Of course, military communication is highly dependent on space-based assets. So yeah, so I think it's important for the public to understand the dependency we have on space and that if we don't have access to space, that's a really bad day for our society. So I
Austin Hankwitz (47:43):
Wouldn't be able to listen to my serious XM radio anymore, man. That'd be, yeah,
Peter Cannito (47:46):
Yeah, yeah. Just think about how stressed out everybody would be if they couldn't get their chill music from SiriusXM or E
Katie Perry (47:57):
Street Radio. Yeah, the Springsteen station can't live without it.
Peter Cannito (48:02):
Yeah. Now,
Austin Hankwitz (48:03):
Last question here for you, Peter, before we wrap things up. Do you believe in aliens and have you ever seen evidence supporting that aliens are real, considering how many times you guys have been to space, seen space been around space? What's up with aliens? Real, not real. Shoot me straight.
Peter Cannito (48:19):
Yeah. Yeah. So I believe in a high probability, and there's is a thing out there called Drake's Equation, and if you're not familiar with it, Drake's equation takes, oh gosh, don't quote me on it. You can look it up. But it takes the number of galaxies times the number of stars in each galaxy, times the number of planets around potential planets around each star comes up with the number of potential planets in a universe that could support life. And although there's a very low probability that there's a planet that supports life, although we found many of these exoplanets already with, even though it may be a low probability when you multiply it by just how many stars there are in the universe, the number, the solution to the equation starts to gross so high that it's almost a certainty.
(49:25)
So I believe that it's really highly probable. Now, of course, the universe is so extraordinarily vast, you could then do a calculation of what's the probability that humans, whatever interact with intelligent life out there, that might be a very low number because that space is just so big and they would have to be so advanced, much more advanced. Us we're still working on, we've been to the moon, we're still working on that permanent presence, and maybe once we get out to Mars or farther, that probability will go up. But for now, I think it's still pretty low. But I do believe that there's a high probability of intelligence life out in the universe somewhere.
Austin Hankwitz (50:13):
You heard it here first. I
Peter Cannito (50:14):
Have not seen any evidence. But again, our chief growth officer, Mike Gold, was involved in the, I think it's called UAP committee, and the government, NASA and the Department of Defense included, have started to open up and have put together a number of committees to start taking anomalous behavior more seriously. I think that's good for the nation and for the world. I think if there's anomalous activity, whether it be caused by aliens or not out there, we should know about it. We should know. Totally agree what it
Katie Perry (50:54):
Is.
Austin Hankwitz (50:55):
Well, with that being said, everyone, thanks so much for hanging out with us on this episode of After earnings. Peter, we really enjoyed the interview and we can't wait to have you back hopefully here pretty soon, Katie. Oh my goodness. Are you just ready to jump on a SpaceX rocket right now and just go to the moon? I'm so thrilled
Katie Perry (51:14):
After this me space. I'm ready. Yeah, I'm hyped up. I'm ready to go. So Mars colonization,
Austin Hankwitz (51:21):
What was your biggest takeaway from this interview?
Katie Perry (51:24):
Few things really stood out for me. One was just getting the lowdown on the economics of a space infrastructure company. So how businesses won, what's the bidding process like? The diversity of projects and programs from smaller things like solar panels, which by the way isn't that small to much larger projects where it might take a year to win the business. I thought that was really fascinating to hear. Also, understanding the metrics that matter for investors that are looking into the space economy, things like book to bill ratio, things like backlog, getting to know those terms as they apply uniquely to that area. And also just his general POV on space in his point that the unknown is actually not as scary as not having access to learn about space. And I thought that was a really, really poignant thing for him to point out and made me think a little bit differently about space.
Austin Hankwitz (52:17):
Same here. I mean how he mentioned near the end there of if we didn't have access to space, how different our lives would be, not just from a GPS perspective, but I couldn't listen to SiriusXM radio when I'm driving around. Oh my gosh. But I do think though, some cool things that he mentioned first off was what they're doing with Eli Lilly. I think that's really important, especially as it relates to taking these existing drugs off of the side effects are too harmful shelf and now kind of beginning to reimagine what those could look like with the aid of microgravity and crystals and everything around that. That's super cool. And then I also liked how we broke down to your point, talking about the pipeline and the bids and the contracts and the backlog, just to really add some additional color to the retail investors tuning in right now, trying to learn more about this company. So really, really cool and I enjoyed it.
Katie Perry (53:09):
Totally agree with you, Austin, right there with you. And with that, I'm Katie Perry.
Austin Hankwitz (53:14):
And I'm Austin Hankwitz.
Katie Perry (53:16):
And this was the After earnings podcast brought to you by Stakeholder Labs in Morning Brew.
Austin Hankwitz (53:21):
Be sure to subscribe and share this episode with a friend if you learn something new about space like we certainly did. And we will catch you on the next episode.
