Since the 1990s, Bill Gates has supported the idea of investing in the internet.

• Since the 1990s, Bill Gates has been a proponent of low-earth orbit (LEO) satellite internet as a crucial element of global connectivity, despite his previous investment in Teledesic failing.
• The LEO satellite space race is being led by companies such as Elon Musk's Starlink, which is part of the rapidly growing private space industry.
• Gates continues to have a stake in space-based communications, as he recently led an $84 million funding round for Kymeta, a privately held internet antenna technology company founded a decade ago, which has a deal with Starlink rival OneWeb.

CNBC examines the progress of companies on the Disruptor 50 list, 10 years after their initial recognition.

In the 1990s, Bill Gates invested heavily in satellite-based connectivity through Teledesic, along with telecom billionaire Craig McCaw. However, the venture failed.

Despite never giving up on investing in the space-based future of connectivity, Gates has remained committed to this goal.

Kymeta, a flat panel antenna technology for global satellite and cellular connectivity, was founded about a decade ago with Gates as a major investor and has gained traction in the defense, maritime, and aviation sectors. Recently, Gates led another $84 million round of investment in the company.

The engineering design, which utilizes metamaterial thin film transistors to eliminate dependence on silicon, is currently in its second generation and preparing to release its third generation shortly. Additionally, the use cases for this technology are expanding, particularly in the defense industry at a time when NATO is facing the greatest threat in Eastern Europe since World War II. In numerous real-world scenarios, such as healthcare workers in remote areas and forest firefighters, the absence of connectivity directly correlates with uncertainty and increased risks.

Kymeta has conducted health-care trials that enable paramedics to perform surgery alongside trauma centers through satellite-based communication links. Firefighters can view real-time satellite imagery on their body cameras and coordinate water tankers with drones in ways previously unimagined.

According to Doug Hutcheson, who has been the executive chairman and co-CEO of Kymeta since 2019, the company is currently focused on business-to-business communications. He believes that this will remain the case in the near future. Unlike other satellite companies, Kymeta's hallmark is its ability to provide communications on the move, with an antenna that can travel at 600mph and communicate with satellites moving at 17,000 miles per hour.

Connected, autonomous Teslas

Kymeta’s biggest opportunity of all may be in vehicles.

Kymeta's ultimate goal is to achieve the connected car, which involves vehicles with wheels and the autonomous vehicle that is expected to occur in the next 10 to 20 years, according to Hutcheson.

Our addressable market comprises approximately 200 million things that move in the global transportation system, including vehicles with wheels, tracks, and mobility.

Roughly half of cars shipped by automakers like Toyota remain disconnected from WiFi or cellular signals every year. As autonomy and virtualization become increasingly important, Kymeta predicts that three to five lines of broadband connectivity will be necessary to maintain control of autonomous vehicles and enhance the passenger experience.

Hutcheson stated that every major manufacturer is striving to address the challenge of satellite technology in cars, particularly when they operate outside of urban areas.

Elon mentioning putting satellite tech on a Tesla is the best thing for us, as it awakens everyone and makes them realize it's the future.

The private space race

SpaceX's Starlink internet service is part of Musk's vertically integrated business model, from the satellite launched by SpaceX to the internet service in a Tesla. While Hutcheson didn't rule out one day potentially working with more companies, including Starlink and Amazon Kuiper, Kymeta is independent and currently works with entities from the Department of Defense to Starlink's low-earth orbit (LEO) rival OneWeb, as well as existing geostationary (GEO) satellites.

The objective is to switch seamlessly between a low-earth orbit satellite on the horizon due south and a GEO satellite at the equator or another satellite constellation, with an antenna capable of seeing "all of what is in the sky and switch in microseconds," while achieving very fast download speeds.

Kymeta aims to achieve one gigabyte per second of connectivity, but its tests with OneWeb have only reached download speeds between 100 mbps and 200 mbps. In comparison, the current available standard service is slower. Elon Musk has stated that the download speeds for his Starlink service will more than double to 300 mbps from the current levels of service.

Kymeta and OneWeb have a cross-selling relationship, but it has become more complex due to OneWeb's dependence on Russian rockets and its recent deal with Starlink, a competitor, amid the economic conflict between the West and Russia. Additionally, there are other competitors in the market offering mobile and remote connectivity solutions, such as Inmarsat, Iridium, ThinKom, and Kratos, as well as defense industry giants like Boeing and Lockheed Martin in the satellite sector.

Hutcheson, who previously worked at Qualcomm, stated that Kymeta, if successful, will be similar to what Qualcomm was to the phone industry. Consumers do not purchase Qualcomm directly but rather include its chips in their phones. "We don't want to be the brand name on top," he said.

Gates' focus on technology is driven by the ongoing private space race.

Bill is highly motivated because of the $50 billion being invested in space, Hutcheson stated.

As Teledesic failed, McCaw and Gates recognized the need to address a fundamental challenge for the future of connectivity: developing a ground-based user terminal.

Kymeta, an engineering concept that has been around for several decades, was founded on the belief that low-earth orbit (LEO) satellites would eventually become the dominant form of space-based communication. If LEOs combined with legacy geostationary (GEO) satellites were to provide the maximum global connectivity, "it needs something that can make it work on earth," Hutcheson stated.

He stated that what is currently happening is the foundation of our purpose, and witnessing it come to fruition will bring about as much change in the next decade as we have seen in the past ten years, ten times more.

Potential for laser-based disruption

According to Rich Safran, an analyst at Seaport Global who specializes in defense and aerospace, there are significant technological advancements on the horizon. However, he is uncertain about declaring a clear winner among today's design and engineering innovations. The RF-based approach that powers modern communication networks is at risk of being disrupted by breakthroughs in laser-based optical communication.

Kymeta's moveable antenna has addressed one geometry challenge by enabling constant communication and electronic steering for ships and airplanes. However, it is not the only solution, and optical communication could potentially replace this approach, with companies such as General Atomics and Mynaric developing new, yet unproven, ideas.

The telecom sector experienced a boom and bust in the 1990s, and Safran is concerned that the current rush to put up satellite constellations and communication solutions may lead to a repeat of this pattern.

He remarked, "What distinguishes this era from the 90s, when the global trend was towards higher bandwidth and everyone was striving to develop commercial models?"

The government's investment in laser-based communications technology suggests that this technology may replace RF technology in the future, potentially disadvantaging the latest advances in RF technology. However, niche markets for companies like Kymeta may still exist. The world of RF-based connectivity solutions is already crowded with competing solutions for a limited set of contracts.

The classic battle between VHS and beta remains undecided, according to Safran.

In the near-term, all solutions will continue to be based on RF technology, and OneWeb and Kymeta may have an advantage due to their number of launches and funding, but all tech start-ups follow a "hockey stick" model, promising exponential growth and revenue in the future.

The capture rate, market share, and margins have not been discussed. Some companies are better capitalized, providing better chances, but no assurance." Safran stated. "Gates has a history of success and deep resources, so he likely knows how to avoid potential pitfalls.

Kymeta would not discuss financial information.

Defense analysts assume that government-funded R&D will eventually become tomorrow's production program. While this may be true for laser-based communication, it is still too early to determine. According to Safran, the good thing about Gates is that he recognizes the importance of defense, but the question is, how many contracts does he have?

The geopolitical landscape is rapidly changing, leading to a de-globalization of relationships. Private investment is increasing access to space, but nation-state prioritization remains. North America and Europe have captive satellite systems, while China is launching its own LEO satellites. Military users and commercial users require redundancies across systems and massive amounts of traffic that are harder to attack. Therefore, the opportunities should reinforce each other.

Major powers are discussing the integration of communications in the theatre of war, from logistics to individual troop activities, which require significant improvements in communications. According to Hutcheson, the events in Ukraine have made the need for fully integrated communications even more apparent. He emphasized that having everyone aware of what is happening and how the information is used will be a crucial factor in differentiating the success of the operation.

Hutcheson stated that he wouldn't discuss any exit strategy for Kymeta, including the possibility of an IPO. However, regarding Bill Gates' involvement, he was clear. According to Hutcheson, the reason for Gates' name being included in the press release was because he is highly knowledgeable about what is happening.