“Good Question!”

I just received this little piece of optimism from SpaceNews yesterday: Falcon 9 slashed launch costs. Will Starship?

I get it. 

SpaceX has cut launch costs–and this is a good thing for SpaceX customers. SpaceX has changed the economics for itself and its customers only. Its significance doesn’t extend to other launch service providers. While ULA’s launch costs dropped from ridiculously predatory to somewhat reasonable and Arianespace refuses to compete at all, launch costs have not been “slashed” among SpaceX’s competitors so much as made merely palatable. But, again, there is no reason for them to do so when governments are supporting them for “competitive” reasons. A successful Starship system may encourage both to finally do the work to be competitive–if they survive the initial years of diminishing government business and no commercial customers.

On to the next topic.

At the beginning of my 2021 industry trends observations, I noted that I had completed classes dealing with electron-volts and Debye lengths for my “Commercial Enterprise in Space” master’s degree. And a friend asked a reasonable question (other readers might be wondering similarly):

“[W]hat are you planning to do with all these classes in electrostatic effects and radiation (and yes I had to look up the terms in the prologue to today’s post)?”

My initial response? “Good question!”

That’s not meant to be a snarky response. It encompasses questions of relevance I’ve pondered since I chose to pursue this degree. How do classes covering those (and other technical) topics have anything to do with commercial space enterprise? The space environment, orbital mechanics, RF transmission, and other topics have a place in space, but they don’t define the “commercial” aspect of the global commercial space industry. Are they crucial knowledge for entrepreneurs, venture capitalists, research analysts, and the like to succeed in their endeavors? 

I am not sure. I don’t believe anyone can be sure, but the following ramble is based on my observations.

Ignorance is Strength (for the greedy)

One reason for my uncertainty is some industry confusion of technical achievements (the bright ideas) as potential sources for seismic market shifts. Technical advancements can help with opening markets but are not initially even known or understood well enough to increase market share on their own. The other is that ignorance of those topics doesn’t hinder the greedy and ambitious. I’ll quickly address the latter reason first.

Some people in the industry have no clue about space’s technical details, space generally, the current actual state of the industry, or the market realities driving it. Some of them, including CEOs, appear to make it up as they go. Online contains the best resources to see this ignorance at play, where lately, at least one CEO made obviously very incorrect assumptions and statements about satellites, power, and orbits to gain investor interest.

And this blatant ignorance seems to work for them…at least in the short term. Their lack of knowledge (and scruples) and public displays thereof indicate they believe facts aren’t required to win business buy-in. Instead, merely place the latest entrepreneurial buzzwords (and smart-sounding space terms) on a pitch deck for gullible investors and customers. Some may view the fleecing of investors and customers who haven’t done their homework of any sector they enter as a learning opportunity.

Maybe preventing that sort of business model from spreading requires potential investors and customers to gain some grounding in the industry and the environment (if only to keep the shysters from their wallets). But that doesn’t require industry omniscience or attending technical space classes (such as the ones I’ve been taking), merely commonsense understanding.

Flailing Around the Elephant

Still, gaining some background and understanding of those topics is helpful for more than looking behind the curtain. I’ve used the knowledge accumulated over my careers to help make sense of some of the events and changes going on in the global space industry. To be clear, I am not close to being a proficient engineer or scientist–but I am a fairly promiscuous researcher. This means I try to find as many valid resources as possible for my information, and I judge what’s beneficial for my writing. 

Frankly, I’ve yet to figure out how knowledge about electrostatic effects, radiation shielding, etc. will help my commercial space focus. On the other hand, FIT’s classes covering business management and innovation are immediately useful for my writing. Those topics promote ideas for running businesses and fostering idea-generating environments (which are, sadly, discarded in the real world due to fear and perceived loss of control). However, they don’t necessarily get into defining the commercial space sector. 

I incorporate those ideas into my analyses, too, because they bring more realistic and intriguing dimensions to bear on a company rather than, for example, teasing out limited meaning from YoY EBITDA comparisons and scripted reports. Of course, those comparisons can be helpful–businesses are built on analyzing such reports, after all. But, a la the blind men and the elephant, they only provide one perspective. And those comparisons aren’t available when talking about companies such as SpaceX and ULA. I suspect business management and innovation topics aren’t used for identifying company health and progress as often because there isn’t a method to measure them, relying on squishy observation and experience instead.

Bright Ideas Going Down in Flames?

Before answering my friend’s question, I have another question.

Do the technical challenges emphasized in those classes inadvertently encourage students to believe that coming up with a technical solution will result in a thriving commercial space business? 

My answer is: maybe? But, unfortunately, this type of confusion is very prevalent.  

That confusion appears borne out whenever some industry professionals introduce a version of electrospray propulsion, a new optical interconnect, different rocket-manufacturing technologies, or a higher-impulse rocket engine. They believe their bright ideas’ utility are self-evident and will drive innovations in the space technology arena, which will change the market—a commonly accepted narrative from many space entrepreneurs. The problem is, at least based on Peter Drucker’s data from his “Innovation and Entrepreneurship” book, bright ideas are:

“…the riskiest and least successful source of innovative opportunities. The casualty rate is enormous. No more than one out of every hundred patents for an innovation of this kind earns enough to pay back development costs and patent fees. A far smaller proportion, perhaps as low as one in five hundred, makes any money above its out-of-pocket costs.”

My version of his book is old–released in 2009–so perhaps today’s data may tell a slightly different story. 

However, for those industry optimists, there is some limited solace. Drucker notes that the sheer volume of bright ideas leads to a phishing-email campaign (or fart application) result: a small percentage get take-up. That small percentage is so large that it represents new business opportunities. Note that Drucker is referring to the general business sector, which encompasses the significantly smaller space business sector. How much smaller is the percentage of successful, bright ideas in the commercial space business? While they might be meaningfully useful, are they meaningfully impactful?

It’s not helpful when the confusion gets spread by those with no commercial expertise (NONE!), such as NASA and the United States Space Force, who value and have the technical and operational expertise. And yet they still try pushing their versions of “commercial” markets supporting their needs, when in fact, they are only experimenting with different ways to buy space equipment and services (which, admittedly, does need to happen–but that doesn’t create a commercial market). So they chase the bright ideas but can do so with minimal risk. 

In a very roundabout way, all this leads to a thoughtful answer for my friend. The technical class information is useful, but not in the way it may have been expected to be used. Instead, the information will be my bulwark against the many others pushing technical solutions to non-technical challenges in the space industry. While technical knowledge and research underpin the space industry’s operations, they aren’t the most important considerations for increasing the commercial space economy (even though some might paint them as such). 

At least…that’s the plan.

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