Author Topic: Thoughts on Commercial Space -- New Blog by George Sowers  (Read 12546 times)

Online AncientU

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George Sowers speaks out:

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I decided to officially kick off my blog with some thoughts on commercial space.  I anticipate three parts.  This first part will contain some general observations.  Part II will chronicle the somewhat torpid history of commercial space activities and a few key lessons learned.  Part III will be my thoughts on the future of commercial space and how we can escape the doldrums.
   
I am passionate about space in general, but commercial space occupies a special place in my heart.  It represents an intersection of many of my beliefs:  my libertarian political philosophy, my capitalist economic philosophy, my overarching philosophy of power which elevates human exploration and exploitation of space to a moral imperative.  You see, for the space enterprise to be sustainable and grow, we must harness the power of the free market.  And that means commercial space.

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Thoughts on Commercial Space, Part I
http://georgesowers.blogspot.com/

Yeah George! :)

Thanks to Eric Berger for re-Tweeting GS post.
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Hey kids, I've started a blog.  Check out my first post http://georgesowers.blogspot.com/  "Thoughts on Commercial Space"
https://twitter.com/george_sowers/status/873900132105846785
« Last Edit: 06/11/2017 06:59 PM by AncientU »
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Offline Coastal Ron

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #1 on: 06/11/2017 07:41 PM »
Lots to look forward to, especially with Part III.

For Part I, I think his observations show that we are still in the early years of space transportation and space activity, since so much of what we can do in space can be traced to direct or indirect government supported efforts. Which is not a surprise, and echo's to some degree the aviation industry throughout it's history. And at least for the U.S. Government, it has a multitude of needs in space that the private sector is slowing taking over, both directly and indirectly.

No one has left any comments yet, so I think he needs to be better discovered. Worth a look.
If we don't continuously lower the cost to access space, how are we ever going to afford to expand humanity out into space?

Online AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #2 on: 06/11/2017 10:54 PM »
Yes, his site is shinny new (Part 1 just today), though he's been at this for a long time.  His perspective on history of (attempted) commercialization in Part 2 will spawn discussion where his set of definitions in Part 1 are not particularly conversation stimulating.  I do think a pragmatic approach is fundamental to succeeding in space commercialization -- and getting the government* out of the way is also key.  Just like the old saying, " I'm from the government and I'm here to help..." -- run away, as fast as possible.

* GS put it nicely:
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If space continues to be (mostly) the purview of governments, it is constrained by government budgets, subject to political winds, subject to hijacking by special interests both inside and outside government and subject to the gross inefficiencies and lack of accountability of any government enterprise.

Quite an independent thought by one steeped in USG service (servitude) at ULA.

So, GS is a free thinker!  Look forward to more from him.
"If we shared everything [we are working on] people would think we are insane!"
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Offline Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #3 on: 06/12/2017 01:29 AM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.
« Last Edit: 06/12/2017 01:32 AM by Lar »
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Offline Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #4 on: 06/12/2017 03:42 AM »
(mod) Arguing over the proper role of government, even when responding to trolling (perhaps especially) is space policy and therefore off topic. Some posts removed.
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Online Lars-J

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #5 on: 06/12/2017 06:14 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

Offline Craftyatom

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #6 on: 06/12/2017 07:35 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

The way I read it was that commercial space reaches a turning point when it no longer requires government money - can the business case close if the government decides it no longer wants to fund space, or is no longer able to?  For example, SpaceX had some rough times prior to COTS.  It's debatable whether it would've continued in earnest without government funding.  However, nowadays, it could certainly turn a profit even if NASA and the DoD gave up on space launches entirely.  So, nowadays, it is, in my opinion, "fully commercial" - entirely capable of operating without government funding - but it needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar...  I'd be interested on what Sowers' take on that distinction is.

Speaking of "purist" views on commercial, I'd be surprised if we don't see a mention of Beal in Part 2, given that their downfall is sometimes considered to be their utter refusal to accept government money.  My guess is that Part 2 will say that they had the right idea at the wrong time, and Part 3 will discuss how, if done today (or 10 years in the future), Beal could've been successful - or, at least, how companies like them need to be successful in order for space to become a large, healthy industry.  Personally, I'm not completely sold on the point, but it's a good possibility to explore, and I look forward to what Sowers has to say about it.
All aboard the HSF hype train!  Choo Choo!

Offline Star One

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #7 on: 06/12/2017 08:19 AM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.

I'd thought that broad discussion of what his personal politics are would be OT as you're just opening the door on the discussion by mentioning this as a mod.

Offline high road

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #8 on: 06/12/2017 09:33 AM »
I'm not sure I see the validity in his argument that the only commercial space that matters has no involvement with governments at all. That seems needlessly purist when governments are a fact of life and can be a customer just as any other entities. (Excluding deep involvements like his SLS example)

The way I read it was that commercial space reaches a turning point when it no longer requires government money - can the business case close if the government decides it no longer wants to fund space, or is no longer able to?  For example, SpaceX had some rough times prior to COTS.  It's debatable whether it would've continued in earnest without government funding.  However, nowadays, it could certainly turn a profit even if NASA and the DoD gave up on space launches entirely.  So, nowadays, it is, in my opinion, "fully commercial" - entirely capable of operating without government funding - but it needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar...  I'd be interested on what Sowers' take on that distinction is.

Unfortunately, the same is true for all new commercial activities in space: commercial space stations, mining asteroids, any activities on the moon, none of those are likely to be able to cover the initial investments (or charge lower prices to attract more customers to recover those investments) without initial government supported demand for their services. Without government support for new activities, the commercialization of space stops with cheap launches and satellites.

Offline TrevorMonty

RL seems to be truly commercial, it doesn't seem to be relying on government payloads.


« Last Edit: 06/12/2017 10:58 AM by TrevorMonty »

Offline LouScheffer

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #10 on: 06/12/2017 12:24 PM »
[...]  [existing companies] needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar... 
Funding a rocket startup from venture capital is completely a "business case" problem. If investors could be assured the market was there, then no government help would be required.

About 20 years ago, i was part of an attempt to predict the electronics industry 10 years into the future.   We predicted at that time that a semiconductor fab would cost well over a billion dollars, and hence there would be only 1-3 of them worldwide.  Semiconductor fabs are a lot like rockets - they are technically extremely tricky and unforgiving, if you are late you can lose your market, and even if they work you can lose on costs. 

When we went back 10 years later to see how our predictions fared, we found our predicted costs were correct, but we were very wrong about ability to invest.  There were, at that time, 52 different fabs worldwide.  So at least 52 different organizations, most of them purely commercial, were able to scrounge up a billion or two for a risky technical play.   The difference is that there was no doubt about the market - the bet is strictly about the ability to deliver.

So overall, there's plenty of money available if you can make a business case.

Offline Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #11 on: 06/12/2017 01:25 PM »
I'm surprised and pleased to discover he's a libertarian.

I find myself in broad agreement with his Part I...

Shared it on my FB and elsewhere.

I'd thought that broad discussion of what his personal politics are would be OT as you're just opening the door on the discussion by mentioning this as a mod.

(mod)
I mentioned it in passing. Even that might be too far (push the "report to mod" button and the mods will discuss it, although I already self reported myself internally)... but the stuff I removed was overtly polemic rather than just a passing mention.

What I see in the discussion following that post now is pretty good... it is a dispassionate discussion of whether government as customer is necessary, and whether that is likely to change in future, without discussion of whether that is right or wrong. 

We are people, I think it is OK to mention that I "like Fords", (especially if it's in context, as here... Dr Sowers "likes Fords" too) but not OK to get into a big  discussion of "why Fords suck and Chevys are better"...  I hope that distinction helps.

« Last Edit: 06/12/2017 02:22 PM by Lar »
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Offline Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #12 on: 06/12/2017 01:32 PM »
Unfortunately, the same is true for all new commercial activities in space: commercial space stations, mining asteroids, any activities on the moon, none of those are likely to be able to cover the initial investments (or charge lower prices to attract more customers to recover those investments) without initial government supported demand for their services. Without government support for new activities, the commercialization of space stops with cheap launches and satellites.

At 10,000/kg to LEO you might be right. at 10/kg to LEO I'm pretty sure you are not right. We're already seeing business cases for asteroid mining that suggest the total initial investment to get to break even  is the same order of magnitude as a big new terrestrial mine. And those cases are not predicated on 10/kg

And this is the thing that Musk and Bezos are focusing on. Reducing cost. Arguably the large scale settlement and expansion of the human footprint in the American West was massively accelerated by the order of magnitude lowering of transport cost due to the switch from clipper ships and wagon trains to railroads. The western railroads were built with (indirect) government support, in that they got big blocks of land given to them (alternate sections along their lines were given directly to them in some cases). That worked as well, or better, than direct cash grants would have.
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Online AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #13 on: 06/12/2017 01:47 PM »
The tipping point for truly commercial space probably is when venture capital exceeds government 'investment' by a factor of a few.  We may already be there on commercial space overall... as evidenced by the large constellation investments.  Distribution of VC funds still quite skewed, though.
« Last Edit: 06/12/2017 01:49 PM by AncientU »
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Online AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #14 on: 06/12/2017 01:54 PM »
[...]  [existing companies] needed government money to get off the ground.  This is bad news for other potential startups, because if they all need that extra funding, then only a select few of them can ever truly get going.  Of course, that implies a distinction between "government investment" and "venture capitalist investment", even though they're quite similar... 
Funding a rocket startup from venture capital is completely a "business case" problem. If investors could be assured the market was there, then no government help would be required.

About 20 years ago, i was part of an attempt to predict the electronics industry 10 years into the future.   We predicted at that time that a semiconductor fab would cost well over a billion dollars, and hence there would be only 1-3 of them worldwide.  Semiconductor fabs are a lot like rockets - they are technically extremely tricky and unforgiving, if you are late you can lose your market, and even if they work you can lose on costs. 

When we went back 10 years later to see how our predictions fared, we found our predicted costs were correct, but we were very wrong about ability to invest.  There were, at that time, 52 different fabs worldwide.  So at least 52 different organizations, most of them purely commercial, were able to scrounge up a billion or two for a risky technical play.   The difference is that there was no doubt about the market - the bet is strictly about the ability to deliver.

So overall, there's plenty of money available if you can make a business case.

Excellent example.  Hard to foresee the emergent demand in a true growth area.
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Offline oldAtlas_Eguy

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #15 on: 06/12/2017 02:55 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Online AncientU

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #16 on: 06/12/2017 04:41 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Formal 'venture capital' is not the only source of funding -- SpaceX and Blue Origin are investing a ton of their own capital into LV development, engine development, etc.  Not sure how internal R&D funding is estimated in the financial world, but suspect it is of same order of magnitude as VC's $1.8B last year, still leaving a big gap to government funding.
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Offline oldAtlas_Eguy

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #17 on: 06/12/2017 04:54 PM »
http://martinwilson.me/commercial-space-venture-capital-investment/

This article has some interesting points on the venture capital argument. But just using this data as a measure, venture capital will need to increase the total invested by around a factor of 5 to equal all the combined R&D space funding NASA and DoD (the actual space development stuff not plain management or even operations). This includes engine developments, LV developments, senors, and unique spacecraft.

But the argument is that the VC has started to rise sharply but has yet to pass the level of gov "investment" spending.

Formal 'venture capital' is not the only source of funding -- SpaceX and Blue Origin are investing a ton of their own capital into LV development, engine development, etc.  Not sure how internal R&D funding is estimated in the financial world, but suspect it is of same order of magnitude as VC's $1.8B last year, still leaving a big gap to government funding.
Yes but that comparison was just to US gov spending. The comparison should be worldwide "VC" investrment to worldwide gov "investment" on a yearly basis. I still think it is just about a 1 to 5 ratio.

But here is another element to think about and that is the efficiency of the usage. How much funds of "VC" does it take vs the amount of gov "investment" to achieve same task? 1 to 2? 1 to 3? 1 to ??? This was part of Sowers comments is that private only does a more efficient job of work accomplished for the funds used. We see this significantly with what SpaceX spends and accomplishes vs what a gov controlled program would spend. But here is another twist and that is established corporations can act just like a gov in strangling and in inefficient spending of funds by a subsidiary trying to do space innovations. So the problem is not a VC vs gov funding but a efficiency of usage of funds (a cultural problem by the developer).

So if the VC investment equaled the gov "investment" it would actually be accomplishing much more.
« Last Edit: 06/12/2017 04:55 PM by oldAtlas_Eguy »

Offline savuporo

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #18 on: 06/12/2017 10:30 PM »
Satellite industry analysts read the blog post and this thread and go Where's The Flux ?
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Offline Lar

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Re: Thoughts on Commercial Space -- New Blog by George Sowers
« Reply #19 on: 06/12/2017 10:32 PM »
Satellite industry analysts read the blog post and this thread and go Where's The Flux ?

Do you have any links to reactions? Those would be interesting reading. Or is that just your take? Thanks!
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

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