I am @Compound248 and this is the next installment in our Business Breakdowns mini-series focused on Digital Infrastructure, where we are breaking down a handful of companies that are key players in the digital infrastructure asset class.
In this episode, we will talk about a company that delivers that airbourne experience, Gogo. Known for its eponymous inflight WiFi service, Gogo is frequently misunderstood, having undergone a transformation to focus purely on the business, or private, aviation industry. It sells equipment that gets installed on a private aviation airplane, and then, in infrastructure like fashion, monetizes that equipment with high margin service revenue for decades. We’re fortunate to be joined by Oak Thorne, who has led Gogo for 20 years into the success it is today.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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This episode is brought to you in partnership with Roundhill Investments, the advisor to the Roundhill IO Digital Infrastructure ETF – BYTE – which trades on the New York Stock Exchange under the ticker symbol BYTE. The fund tracks the BYTE Index, which measures the performance of 40 leading global digital infrastructure businesses, such as towers and mobile communications, fiber and fixed line connectivity, and data centers. For a prospectus and more information, please visit roundhillinvestments.com/etf/byte.
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[00:04:02] – [First question] – Gogo’s history and how his history intersects with it
[00:08:03] – His background and what lead him to joining Gogo
[00:10:01] – A primary focus on US airlines and high-end air travel specifically
[00:11:37] – 30% market penetration of potential WiFi signal outfitted aircraft
[00:12:33] – What the competitive landscape looks like today and how many planes they have
[00:14:15] – Whether the formerly unaddressable planes will make their way into their fleet
[00:16:04] – Their product offerings today and the differences between them
[00:19:26] – Overview of their business economics and their digital infrastructure
[00:21:31] – Unit economics and labor and install costs
[00:23:44] – How much more traffic their existing network could handle
[00:24:17] – CapEx, service revenue, and a projected 20% system growth
[00:25:55] – Cost structure margin on their recurring service revenue
[00:26:36] – Where they are in building out their 5G network
[00:27:25] – Momentum of business growth year-over-year
[00:28:29] – How the ATG network actually works and how the 5G connection improves it
[00:30:44] – What portion of their business comes from aftermarket installations
[00:32:18] – Competitive nature of this sector and if someone could come after Gogo
[00:35:23] – Speed differentials between their varying network offerings
[00:36:48] – Price differences with competitors and the strength of their dealer network
[00:38:19] – Expensive alternatives and the customer experience of GeoSatellite services
[00:40:42] – Describing the differences between GeoSatellite and Elon’s Starlink
[00:46:19] – Reasons why Starlink might become a competitor
[00:48:56] – How Gogo’s 5G and global broadband product are offensive and defensive
[00:51:24] – Portion of new US delivery aviation planes built with in-flight WiFi solutions
[00:53:39] – Plans to become a free cash flow generating machine
[00:55:01] – How long he anticipates this growth runway to continue
[00:56:27] – Potential risks to Gogo from a legal and regulatory perspective
[00:57:33] – Legal allegations from SmartSky and using the unlicensed spectrum
[00:59:50] – Cyclicality of their clients and suspended business periods
[01:02:18] – Their channels and customer concentration
[01:03:17] – Minority shareholders and their long term vision
[01:04:57] – Two key lessons for others attempting to build and lead a company