The Age-Old Question: “What’s Next?”
To say that the past 18 months have been crazy would be an enormous understatement. No, I’m not talking about the pandemic. I’m talking about the large number of deals announced and vast amounts of capital committed across the global private space venture ecosystem.
The media latched on to the SPAC “bubble” at the start of this year (also mentioning some of the recent key IPOs and private investment rounds), and then they pivoted last month to the “Billionaire Space Race”. Like many of my long-time colleagues, I have been approached by numerous journalists asking two questions: given my almost two decades in the space world, (1) what is my perspective on all of these developments?; and (2) what’s next?
Ah, yes, … “what’s next?”, indeed.
While I may not be a good prognosticator, I am fairly certain of two things:
(1) Starship will create massive disruption on a scale we have never seen before; and
(2) as of right now, this disruption is being overlooked by just about everyone.
I say “as of right now”, because I am also sure it won’t take long for visionary entrepreneurs and bold investors to jump all over this opportunity.
Disruption Waves in Space
Depending on how we compartmentalize our space history, there have been at least a couple of “disruption waves” over the past few decades. We are now on the very brink of the next one.
Transition to Private Sector (1990s)
After the national governments of the US and the Soviet Union pushed humanity into space during the 1960s-1970s and the US made an attempt at lowering launch costs with a reusable Space Transportation System (i.e., “Space Shuttle”) in the 1980s, the private sector took up the mantle with its first “disruption wave” in the 1990s. During these early baby steps, it made sense that large companies would start with space-based operations that governments had already proven to be technologically feasible, namely, satellite communications, remote sensing, and GNSS/PNT. This first wave was immensely critical to humanity’s transition to a global private space economy and absolutely cannot be understated or underappreciated. These folks were true visionaries and pioneers.
Smaller, Cheaper, Faster (2000s)
Over the past 20 years (and especially the past 5-7 years), the private space industry has been experiencing its second “disruption wave”, as audacious entrepreneurs and their investors have been bringing to space a Silicon Valley mentality of doing everything “smaller, cheaper, faster” … usually without sacrificing quality or reliability. Arguably the two most powerful drivers for this wave have been the exponential reduction in launch costs (spearheaded by SpaceX but followed by many others) and the increased capabilities of extremely miniaturized satellites. Once again, it makes sense that this wave would focus its disruptive force on the market segments already established by the early private space companies, namely, launch services, satellite manufacturing, satellite communications, remote sensing, and GNSS/PNT. This is the wave that is currently reaching the early stages of maturity, specifically evidenced by the recent success of several “startups” becoming public companies, either via SPAC or IPO.
Against this historical backdrop, the question remains, “What’s next?”
Starship – a Stellar Game-Changer
I have told the story many times of when Elon Musk was the keynote speaker at a space investor event in 2007 (before the first successful flight of Falcon 1) and was asked this same question by one of the investors in the audience. Paraphrasing his response, “I don’t know. However, I will ask you this: since we are going to reduce the cost of accessing space to 10% of what it is today, what business models would suddenly make sense that do not make sense today?” Although I have not spoken with Elon in years, I am sure that today he would have a similar response, but this time in reference to Starship.
Over the past few months, I have tried putting the enormity of this pending disruption into perspective for my non-space friends. Here is the best I could come up with:
The International Space Station is–by many criteria–the largest and most ambitious engineering project that humanity has ever undertaken. Its maximum operational crew capacity is 6, although it can be expanded to 12. This has been fine, since the maximum carrying capacity for even the largest of our crew-capable launch systems has been 7 (Space Shuttle and Crew Dragon). However, what happens when Starship becomes operational and can carry 100 at a time? To make this even more interesting, SpaceX eventually plans to be able to launch Starship on a monthly or ultimately weekly basis. All at a cost exponentially cheaper than today.
As Elon would likely ask, “What business models would suddenly make sense that do not make sense today?
“If You Build It, They Will Come”
According to Elon, SpaceX is only months away from putting Starship into orbit. Even if we take the most negative view of his timeline, we could still comfortably assume that the complete Starship system (i.e., the Falcon Super Heavy first stage and the Starship second stage) will be fully operational within, say, 5 years. That is now within the investment horizon of seed- and early-stage VCs, so over the next 12-18 months I anticipate that we will start seeing a flood of business plans leveraging this new platform.
What will the world’s space entrepreneurs create during this next “disruption wave”? Although some inventive ideas are starting to emerge, it is difficult for anyone to know for sure. However, we can be certain that the next 10-20 years will be incredibly productive as humanity’s collective imagination begins to truly turn “science fiction” into “science fact”.
As my friend Dylan Taylor has repeatedly said, “What an amazing time to be alive!”
