A space craft orbiting the earth

Houston, we have an opportunity

growth innovation market opportunity Feb 01, 2022

‘I've seen things you people wouldn't believe. Attack ships on fire off the shoulder of Orion. I watched C-beams glitter in the dark near the Tannhauser gate.’ Roy Batty, Blade Runner.

Congratulations to Richard Branson, who won the opening leg of the latest space race. He was aboard his Virgin Galactic rocket plane when it reached space, 85km above New Mexico, in its latest test flight. It won’t be long now before anyone with a spare $200,000 can enjoy the ultimate joyride, a 20 minute trip to the stratosphere. A huge achievement at any time, this will have been all the sweeter for happening a week before Jeff Bezos’ own trip into space. Not that Bezos will be overly worried. His company, Blue Origin, is interested in space tourism as a means, not an end. Bezos dreams of being able to colonise the moon, making it hospitable for millions of people, and creating a commercial and industrial outpost to which we can transfer activities damaging to the earth. The current petition to not let Bezos return to earth misses the point: he wants to live in space. His plan seems modest compared to Elon Musk’s lifelong quest to make humankind an inter-planetary civilisation. His focus is on the Red Planet. As he has said, ‘I would like to die on Mars – just not on impact.’

Why are these billionaires obsessing about space? Why now? And does this matter to us?

There is no doubt that Jeff Bezos and Elon Musk are space enthusiasts. As kids they dreamed about travelling to the stars. Elon Musk built rockets and planned to become a rocket engineer, before he decided to make money first. Bezos is known to be a big sci-fi and Star Trek fan. Space is in their blood. For Richard Branson, we know it is about the thrill of adventure, taking the next step to exploring the greatest unknown. He is right to believe that millions of people will want to follow in his footsteps, even happier to board a Virgin Galactic than a Virgin Atlantic flight.

Space exploration is also the next natural step for any successful billionaire who feels they have achieved all their earthly goals. Once you have made billions, what is the point of repeating the trick? You either follow Bill Gates’ example and try to redistribute your wealth, or you find new ways of competing and winning. Space is the perfect place for people with megalomaniac tendencies, as anyone who has seen Moonraker will know.

There is no doubt these men have a strong sense of purpose. It is no exaggeration to suggest that the fate of humanity rests on their success. For if we are facing possible extinction, being able to get off the planet is the only way humanity can survive. Extinction-level events are manifold, from global pandemics, nuclear war, catastrophic climate change or exposure to radiation, a new ice age, the eruption of super-volcanoes and possible impact with giant meteorites. And if we survive all that, in 5 billion years’ time, the sun will burn up and turn into a giant black hole, sucking into it the entire solar system. If it is not time to be packing our bags, we should at the very least be checking the travel timetables.

We definitely need billionaires to pump cash into space companies that are at the bleeding edge, so other, less wealthy companies can follow in their slipstream and extend the chain of innovation. The end of the Cold War ended the almost unlimited Government funding that NASA used to complete the successful Apollo and Shuttle programmes. If Governments are going to fund anything in future, it will be security (aka militarisation of space), to give themselves the edge on the 21st Century battlefield. Barak Obama effectively defunded all the key NASA Mars programmes, making it clear the path to the stars was not vertical, but via Wall Street and private capital. The call has been heeded. By 2018, $18bn had been invested in space companies. $6bn more was invested in 2019, with SpaceX, Virgin Galactic and OneWeb taking the lion’s share. In 2020 Sequoia Capital and Andreessen Horowitz (heard of them?) were the largest investors in space firms. Space is going mainstream.

The reasons why this is happening now, is because of money. We have three wealthy billionaires willing to invest in space venture. Space is a rich man’s game, and it has taken Bezos and Musk many years to accumulate enough wealth to be able to speculate.

VCs are getting interested because the cost of space travel is falling dramatically. The technology has been known since von Braun’s rocket programme of the 1940s, and honed to perfection by NASA during the post-war period. The biggest barrier to date has been cost. Between 1970 and 2000 it cost an average of $18,500 to launch 1 kg of material into space. SpaceX, with its focus on re-usable booster rockets, has lowered that to $2,720 per kg. Their next generation of heavy rockets will lower it further. This explains why there are 7,389 individual satellites in orbit, and why we can expect many more. This number increased 27.97% in the last year!

Most of all, the commercial opportunity is becoming apparent. With no regulation and no rights of ownership, space will be like the wild west for an entire next generation. And there is plenty of scope to make money in such circumstances, whether it be $200k a pop for space tourism, or a share in the single 900 metre wide asteroid chock full of rare earth minerals, valued at $5.4 trillion in 2015. While NASA, SpaceX and Blue Origin may use space revenues to further exploration and colonisation, other companies will seek to enrich themselves. Already VCs are funding companies to mine asteroids and the Moon. Everything is being considered (except, one hopes, the development of military satellite control systems called Skynet).

How can we define the opportunity? The space race breaks down into four areas: getting into space, cleaning space (half of all satellites are inactive), monetising space and colonising space. You don’t have to be a billionaire with deep pockets to play this game. Just as the military-industrial complex grew out of the Cold War spending in the 1940s, then a techno-space complex is developing now. These will be enormous ecosystems of connected companies, demanding every kind of innovation. Energy, engineering and biotechnology will be at the forefront, but the demand will go far beyond. The cost of the first Mars trip is expected to be $500 billion. The space economy could be worth $1 trillion pa by 2040. Whether exploration is done by human or robot, every step of every action needs to be designed, to reduce the risks of catastrophic failure and ensure the successful outcome of the mission. Where will people live when they get to the moon or Mars? How will they generate air, food and water? How can they survive the mental and physical strains of the journey, and living in splendid isolation?

At least one of the billionaires, Elon Musk, is well-placed to take advantage of this demand for solutions. His investments in solar energy and batteries won’t just yield dividends for Tesla, they will help power the next stage of his mission to Mars. Perhaps you are already working on something that might be needed? If you are not sure, there are legions of physicists and space scientists who would be willing to talk to you about the possible future applications of your ideas and technologies. If you are lucky enough to have such an application, you may quickly find that whatever the purpose you had in mind when you founded your company, it is superseded by the need to help save humanity. And if you are looking for a new company to build, why not look to the stars. One day you may be able to see things people wouldn’t believe…


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