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.
Thoughts on Commercial Space, Part I
Hey kids, I've started a blog. Check out my first post http://georgesowers.blogspot.com/ "Thoughts on Commercial Space"
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.
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)
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.
Quote from: Lars-J on 06/12/2017 06:14 amI'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.
[...] [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...
Quote from: Lar on 06/12/2017 01:29 amI'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.
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.
Quote from: Craftyatom on 06/12/2017 07:35 am[...] [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.
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.
Quote from: oldAtlas_Eguy on 06/12/2017 02:55 pmhttp://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.
Satellite industry analysts read the blog post and this thread and go Where's The Flux ?
We are witnessing private companies doing ambitious research on their own without a government agenda. There is an aboundance of money for new space now. Once we get $5 million dollars 200kg into Leo and $30 million for 20000 kgs. What SpaceX has achieved in ten years is amazing. And remember the govt money was for services at a fraction of the cost previously for stuff to the space station.There is a lot of hype on the size of the market for launchers that have not yet come on stream. But they will in the next two years. Then we see what happens to the hype.
Quote from: Zingpc on 06/12/2017 11:11 pmWe are witnessing private companies doing ambitious research on their own without a government agenda. There is an aboundance of money for new space now. Once we get $5 million dollars 200kg into Leo and $30 million for 20000 kgs. What SpaceX has achieved in ten years is amazing. And remember the govt money was for services at a fraction of the cost previously for stuff to the space station.There is a lot of hype on the size of the market for launchers that have not yet come on stream. But they will in the next two years. Then we see what happens to the hype.Too bad that unlike government work, a lot of it remains secret and non-public. I guess thats the sacrifice we make with commercial, more is done, but less benefits and spinoffs to the public. (I think thats all I'll say, its abundantly clear the way this forum/thread is leaning politically.)
Too bad that unlike government work, a lot of it remains secret and non-public. I guess thats the sacrifice we make with commercial, more is done, but less benefits and spinoffs to the public.
No, the window will not close if SpaceX and Blue Origin succeed with reusability. Just like with any technology breakthrough, the followers will have the benefit of knowing what works. (And what doesn't)Will it still be a difficult? Of course, but it's not exactly easy to break into the expendable launch business either...
It would almost seem like the more money spent in the commercial sector, more progress in made in the industry, whereas money spent on government systems seem to result in more of the same, with few exceptions.
...and you are missing my point. Followers won't need to spend as much on R&D when how to do it has been demonstrated.
Once both the technical viability of, and business case for rapidly reusable launch is proven, it will be MUCH easier to get financing for commercial development of new vehicles.
Quote from: envy887 on 06/19/2017 11:44 amOnce both the technical viability of, and business case for rapidly reusable launch is proven, it will be MUCH easier to get financing for commercial development of new vehicles.I don't doubt that the technology will be proven. I doubt that the Business Case will be obvious for new entrants, unless they have some kind of breakthrough technology that fundamentally changes their value offering.Since reusability changes the launch business to a low margin, high volume game, it perhaps becomes analogous to the auto industry. Sure, someone could come along with sufficient financing to build a new car. But first they have to build the factories, do the R&D and produce their first car. And then they need to sell enough to justify the investment, and do so in competition with the established players. How many new US car companies have we seen in the last few decades? There may be more, but I can only think of Tesla, really. And in their case it was because they brought something fundamentally new to the market. And even then, they are seen as something of a miracle case, as yet unproven.How would a new car company be able to compete with Ford, GM etc. with just a comparable product, rather than a breakthrough one? My point is that once SpaceX and Blue Origin have perfected reusability, they will effectively remove, or at the very least reduce, the business case for new entrants to try and enter the market.
Yes, but the first internal combustion engine was in the late 1860's. It wasn't until the 1890's that it began to take off. Then it wasn't until the 1920's that automobiles took off. It also took a while for the steam locomotive to get enough track built to become competitive with riverboats and wagons. ... Rockets and spacecraft are harder than vehicles, trains, steamships, even aircraft, thus taking longer to get reusable.
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.
To me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.
Quote from: M.E.T. on 06/19/2017 01:56 pmTo me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.I'm not so sure I can agree with you on this. While the tourist trade will be important, overall, the space industry has been hampered, largely, by the expense of launch services. we're seeing an explosion, so far, of short term micro and small sats, due to a combination of both more advanced microelectronics and cheaper launch services. Given sufficient cost drops, major colleges and universities could and likely would sponsor their own long term sats for both Earth and space observations, as well as eventually, sponsoring and building their own interplanetary space probes. Universities have, already, sponsored and built experiments launched on NASA probes, and having probes of their own, that they have less restrictions of what experiments they put on them, would have a huge appeal to such institutes of learning. Corporate sponsors are already sending out their own small sats and probes, so building larger craft, designed to exploit microgravity, as well as available resources in space, are natural growth areas that are only now being addressed.
In this spectrum, what I mean by commercial space is pure commercial space, or at least as close to the top of the list as possible. The reasons are economic. 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.On the other hand, a pure commercial enterprise is subject to the tyranny of consumers who will vote with their feet if the product or service does not meet their needs in both price and performance. It is subject to competition not just from other space companies, but any other idea that meets the same consumer demand. For example, satellite communication services compete with terrestrial communication services. Furthermore, it is accountable to investors who expect a return on their investment. All these pressures drive innovation and efficiency resulting in a continual reduction in cost and increase in performance.
Quote from: JasonAW3 on 06/19/2017 08:09 pmQuote from: M.E.T. on 06/19/2017 01:56 pmTo me the issue is the relatively small size of the launch market, compared to the massive size of the market for satellite construction, space habitat construction, LEO internet constellations, exploration probes and the like.The money is not in providing launch services. It is in constructing payloads and deriving benefit from them. Why invest in the risky business of developing your own rocket, when you could just buy a cheap launch from SpaceX or Blue Origin to launch your new asteroid mining machine, or satellite constellation or Space Hotel.That's where the money lies. SpaceX can just be the sub-contractor who gets your stuff into orbit for a minimal fee, now that launch services are so cheap.I'm not so sure I can agree with you on this. While the tourist trade will be important, overall, the space industry has been hampered, largely, by the expense of launch services. we're seeing an explosion, so far, of short term micro and small sats, due to a combination of both more advanced microelectronics and cheaper launch services. Given sufficient cost drops, major colleges and universities could and likely would sponsor their own long term sats for both Earth and space observations, as well as eventually, sponsoring and building their own interplanetary space probes. Universities have, already, sponsored and built experiments launched on NASA probes, and having probes of their own, that they have less restrictions of what experiments they put on them, would have a huge appeal to such institutes of learning. Corporate sponsors are already sending out their own small sats and probes, so building larger craft, designed to exploit microgravity, as well as available resources in space, are natural growth areas that are only now being addressed.But all of that growth relates to what people can do in space, thanks to cheap launches. None of it is focused on making money by providing cheap launches. Cheap launches becomes the catalyst for the explosion of the space industry. It does not represent the money making mechanism itself. Merely the platform that enables the money making to take place in orbit and beyond.SpaceX themselves admit this. Hence their focus on the satellite constellation. The revenue of which will dwarf the money they can hope to make from launch services.
Thoughts on Commercial Space, Part IIAhttp://georgesowers.blogspot.co.uk/
What do the steps beyond 4.0 look like? Any speculations?
Quote from: sanman on 06/25/2017 09:51 pmWhat do the steps beyond 4.0 look like? Any speculations?Commoditization of launch services market, leading to lower launch services price, leading to new markets... or at least proof that the launch services market is (a) inelastic; or (b) elastic. If the former, don't expect much to change; if the latter, who knows what new markets lurk out there?
Is Reusability a sufficient game-changer, that it deserves its own distinct category (ie. 5.0)?
Any space business counts launch as one of the largest costs as well as one of the highest risks. Access to space remains a significant barrier to entry for any prospective commercial space business.
Quote from: sanman on 06/26/2017 07:52 amIs Reusability a sufficient game-changer, that it deserves its own distinct category (ie. 5.0)?Strange, I was going to propose the opposite. The entrepreneurs described in phase 4 overlap with the ones succesful in phase 3. Unless phase 4 is later explained to contain the billionaires developing new kinds of payloads to put on those commercial launchers from phase 3, it's not a phase in and of itself. And even then, these phases overlap in time, so 'phase' might be a misnomer.As for reusability being a 'phase': reusability has been under development since phase 1. What makes it game-changing at this iteration (phase 3), is that competing government bodies are no longer tacking on commercially unviable requirements (phase 1), actual demand for launches and TRL has caught up with business models (which wasn't the case in phase 2). Plus, reusability is only one of two roads being taken towards lowering the cost. The other being mass production. These aren't even mutually exclusive within a single company. The fact that multiple alternatives are being experimented with, using mostly private startup money, is the strongest identifying aspect of phase 3. COTS falls into phase 3 because the government in this case is much more a consumer/client rather than the main investor who bears the brunt of the risk of going over budget and not becoming succesful.So how about making it: phase 3A: commercial launchers and phase 3B: new space applications. Both with mostly private investment and, wherever necessary, with programmes like COTS to help commercial suppliers manage their burn rate so they can attract investors much earlier in the game.
Dr. Sowers just posted part 2B of his Thoughts on Commercial Space series.
These facts make it tough for any commercial company to break into commercial space on either the demand side (satellite operations), or the (launch) supply side. All the initial satellite companies got their start as some sort of IGO or other heavily government supported entity. The initial launchers were also government. It was only after the trail was blazed that the private sector could or would step in.Even then, profits proved elusive.
Lesson Learned #3: Beware the terrestrial competitor who has a scalable business model. Competing with terrestrial businesses from space is fraught with peril. The terrestrial business model is generally scalable. The cell phone company can put in some cell towers, gain some customers (revenue), then put in some more—on a timescale measured in months. The space business (in the mode of Iridium) must get everything fielded before any revenue accrues. The timescale is measured in years.Lesson Learned #4: Be deeply suspicious of your own market analysis. You should start from the premise that all commercial space business models suck (See Lesson Learned #1). I still shake my head at the wild market analyses we used to justify the investment into Atlas V and Delta IV. We were assuming that the worldwide launch market would grow by 4 to 5 times its then size in just a few years. The fact that everyone got it wrong is little consolation. If it seems too good to be true, it probably is. Compounding the problem was that each side assumed they alone would garner the lion’s share of that new market and priced accordingly. Obviously, in the real world, the market will be shared among many competitors, some of whom don’t have to recover investment or make a profit. (See Lesson Learned #2).
What sorts of vehicles were proposed by Boeing and Alliant Techsystems in response to the Air Force's RFP in 1995?
But all of that growth relates to what people can do in space, thanks to cheap launches. None of it is focused on making money by providing cheap launches. Cheap launches becomes the catalyst for the explosion of the space industry. It does not represent the money making mechanism itself. Merely the platform that enables the money making to take place in orbit and beyond.SpaceX themselves admit this. Hence their focus on the satellite constellation. The revenue of which will dwarf the money they can hope to make from launch services.
