Description
In such a file with regards to reviewing the new space entrepreneurs origins, management, and influence.
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 1
Reviewing the New Space Entrepreneurs:
Origins, Management, And Influence
Mr. A.C. Charania
President | SpaceWorks Commercial | [email protected] | 1+770.379.8006 | 1+770.379.8001 (Fax)
Mr. Amaresh Kollipara
Founder and Managing Partner | Earth2Orbit, LLC | [email protected]
Note: opinions that are expressed here are solely those of authors and do not represent any official viewpoint of their respective organizations
Version A
A Division of SpaceWorks Engineering, Inc. (SEI)
IAC-08-E6.1.5
59
th
International Astronautical Congress (IAC), 29 September – 03 October 2008, Glasgow, Scotland, UK
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 2
INTRODUCTION
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 3
SpaceWorks Commercial is a division within SpaceWorks Engineering, Inc. (SEI) -
a leader in advanced space concept design and analysis.
SpaceWorks Commercial deals with commercial and international space ventures.
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 4
SAMPLE SPACEWORKS ENGINEERING, INC. (SEI) PROJECTS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 5
BACKGROUND AND MOTIVATIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 6
“ A review of history’s ambitious projects -- those that
have garnered an uncommonly large fraction of a
nation’s gross domestic product -- demonstrates that
only three drivers have been sufficient to create them:
defense (e.g. Great Wall of China, Manhattan Project,
Apollo Project), the promise of economic return (e.g.
Columbus Voyages, Magellan Voyages, Tennessee
Valley Authority), and the praise of power (e.g.
Pyramids, Cathedrals, Palaces).
?Astrophysicist Neil deGrasse Tyson, director of New
York City's Hayden Planetarium
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 7
? Perspectives on entrepreneurs
? French economist Jean-Baptiste described the entrepreneur as one who
“ shifts economic resources out of an area of lower and into an area of
higher productivity and greater yield,”
? Austrian economist Joseph Schumpeter states that successful
entrepreneurship, he sets off a chain reaction, encouraging other
entrepreneurs to iterate upon and ultimately propagate the innovation to the
point of “ creative destruction,” a state at which the new venture and all its
related ventures effectively render existing products, services, and business
models obsolete.
? Peter Drucker: “ The entrepreneur always searches for change, responds to
it, and exploits it as an opportunity,”
? Israel Kirzner, who identifies “ alertness” as the entrepreneur’s most
important trait
? Entrepreneurship definition [Roger L. Martin and Sally Osberg]
?The combination of a context in which an opportunity is
situated, a set of personal characteristics required to identify
and pursue this opportunity, and the creation of a particular
outcome.
? “ The entrepreneur is attracted to this suboptimal equilibrium, seeing
embedded in it an opportunity to provide a new solution, product, service,
or process”
? Inspired or frustrated
THE ENTREPRENEUR
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 8
? What defines the NewSpace industry?
? The term has been utilized over the last few years to describe the range of
new, entrepreneurial focused space companies (another term is alt.space).
? One characteristic offered here is that most of the NewSpace
companies are those companies that have come in the wake of or
offered substantially different products than during the mobile satellite
system (MSS) and global satellite telephony ventures of the late 1990s
? These included the firms of Iridium (66 satellites) and Globalstar (48
satellites), both of which eventually went bankrupt, but still exist today after
various technical and management restructuring efforts.
? There current generation of companies that make up the NewSpace industry
including many launch providers.
? If one defines the space economy broadly to include hardware (launch
vehicle, satellites, etc.) and services, then space launch is a small
component of the commercial space industry (but an important one
nonetheless).
? Even so, this presentation focuses on many of the NewSpace companies
devoted to development for space launch services. Thus even at the outset
the authors acknowledge the skewed nature of the following narrative
wherein most revenue in the space industry is generated from services.
NEWSPACE DEFINITIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 9
? AirLaunch LLC
? Armadillo Aerospace
? Blue Origin
? Rocketplane Global
? Space Adventures, Inc.
? Virgin Galactic
? Zero Gravity Corporation
? Bigelow Aerospace
? Ecliptic Enterprises Corporation
? XCOR Aerospace, Inc.
? SpaceDev (OTCBB: SPDV)
? Transformational Space Corporation
? JP Aerospace
? Masten Space
? Orion Propulsion, Inc
? SpaceHab
? Orbital Sciences Corporation
? Surrey Satellite
? ClydeSpace
? Innovative Solutions In Space (ISSI)
SAMPLE NEWSPACE COMPANIES
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 10
? 1. EMERGING SPACE COMMUNITY IS REAL AND READY TO WORK; AT BEST IT IS THE
MOST EFFICIENT PROVIDER, AT A MINIMUM AS AN OFF-RAMP.
? A mistaken perception of relative risk should not preclude use of the emerging commercial space
community (or “ new space” ) in exploration activities. These firms offer the government efficiency,
something quite at odds with the traditional aerospace contracting process.
? 2. DON’T JUST ENGAGE, BUT LEARN HOW TO ENGAGE.
? Bureaucracy and inconsistency (i.e. changing requirements, non fixed-priced contracts, etc.) are large
barriers to commercial sector involvement with the government.
? 3. NASA HAS A LEGITIMATE ROLE TO PLAY.
? NASA can still act as a champion for exploration in general. NASA could also utilize commercial
expertise in the promotion of the VSE (e.g. ISS crew/cargo support).
? 4. BUY, DO NOT DEVELOP.
? NASA should not develop ETO launch services but buy where appropriate.
? 5. MANAGE PRIZES APPROPRIATELY.
? The government should continue the use of prizes but be careful in their applicability. Prizes for
activities with excessive risk will not be attractive for commercial companies.
? 6. OTHER SERVICES BEYOND TOURISM.
? Telecommunications and ground services may be immediate areas of additional commercialization
beyond sub-orbital and orbital tourism.
? 7. BRIDGE BUILDING BETWEEN EMERGING AND TRADITIONAL SPACE.
? he government should encourage partnerships between the emerging/“ new space” community and
the traditional aerospace industrial base.
? 8. BUSINESS IS INTERNATIONAL, SPACE IS INTERNATIONAL.
? The government, along with industry, should reexamine existing International Traffic In Arms (ITAR)
regulations.
? 9. BASIC TECHNOLOGY RESEARCH.
? The more appropriate technologies for the government to fund are those fundamental, enabling
technologies that affect the major design disciplines (power, propulsion, and structures).
? 10. MORE FOCUSED DIALOGUE.
? This type of dialogue is a valuable activity and should go forward, yet with a broad variety of voices
and with facilitated discussions.
SOME PERSPECTIVES OF THE NEWSPACE COMMUNITY
Source: EDS Workshops Summary Report, SpaceWorks Engineering, 2005
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 11
? “ A social entrepreneur is someone who recognizes a social problem
and uses entrepreneurial principles to organize, create, and manage a
venture to make social change” [Wikipedia]
? Whereas a business entrepreneur typically measures performance in profit
and return, a social entrepreneur assesses success in terms of the impact
s/he has on society. While social entrepreneurs often work through
nonprofits and citizen groups, many work in the private and governmental
sectors.
? “ If we can be one of the companies that makes it possible for humans to become
a multi-planetary species, that would be the Holy Grail. It sounds a bit crazy but
it's going to happen, and only if people build the means to do so. We're making
progress toward a greater philosophical goal while building a sound business.”
? Elon Musk, SpaceX
THE NEWSPACE ENTREPRENEUR AS A SOCIAL ENTREPRENEUR?
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 12
OBSERVATIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 13
NOW: GLOBAL SPACE ACTIVITY (2007, FROM THE SPACE REPORT)
Source: The Space Report 2008: The Authoritative Guide to Global Space Activity, http://www.thespacereport.org/
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 14
Sustained out-year activity in 2008 forecast
2008 Non-Geosynchronous Orbits Commercial Space Transportation Forecast, John
Sloan, Federal Aviation Administration, Office of Commercial Space Transportation,
May 16, 2008.
NEXT: MIS-FORECASTING THE FUTURE
Historical Launches and Forecast 2008-2017
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 15
?Lack of general knowledge in the aerospace industry of
economics
? Lack of understanding of cost field relative to performance arena,
economics/Financials different than cost (or cost-benefit)
?Lack of basic business knowledge of current people in the
industry (versus Nanotech and Biotech)
? Example of themes within recent U.S. Space Investment Summits
(SIS), in comparison with other investment summits in other
industries
?Grasping for inappropriate analogies
? Using the airline industry as an example may not be most
appropriate, may have some applicability in terms of government
support (different elasticities, competitive structure, etc.)
?Some NewSpace entrepreneurs have less of the above problems
? Possess better business knowledge
? Have understand of alternative analogies to apply new models
EDUCATION OF THE ROCKET SCIENTIST
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 16
? " I've never invested in any airline…I'm an airline manager. I don't invest
in airlines. And I always said to the employees of American, 'This is not
an appropriate investment. It's a great place to work and it's a great
company that does important work. But airlines are not an investment.'"
[since the airline deregulation of the 1970s, some 150 airlines have gone
out of business.] " A lot of people came into the airline business. Most of
them promptly exited, minus their money,”
? Robert Crandall, former president and chairman of American Airlines
? " The worst sort of business is one that grows rapidly, requires
significant capital to engender the growth, and then earns little or no
money. Think airlines. Here a durable competitive advantage has proven
elusive ever since the days of the Wright Brothers. Indeed, if a
farsighted capitalist had been present at Kitty Hawk, he would have
done his successors a huge favor by shooting Orville down. The airline
industry’s demand for capital ever since that first flight has been
insatiable. Investors have poured money into a bottomless pit, attracted
by growth when they should have been repelled by it.
? Warren Buffett, February 2007 annual letter to the stockholders of Berkshire
Hathaway
THE AIRLINE INDUSTRY: PERHAPS NOT A GOOD MODEL?
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 17
?Within the aerospace community (and here we refer to those
involved in the launch business rather than the services
business), entrepreneurs generally fail to realize that they are
attempting to create businesses rather than what I would refer to
as “ technological indulgences” .
? These indulgences seek to develop “ cool” technologies versus
sustainable businesses.
?This illustrates some repeated problems of space entrepreneurs,
the failure to execute on the business plan, the failure to deliver
a product or service, and the failure to stop a technical person's
habit of becoming enamored with the next " cool" thing you are
not working on, versus the current " cool" thing you are on.
ADDICTION IDENTIFICATION: TECHNOLOGICAL INDULGENCES
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 18
?In Newspace, a large scale commercial success which has not
only proven a new technology, but also demonstrated a
substantial return on investment has not occurred.
?Nevertheless, a simple comparison to the biotechnology
example may suggest that it might take time
? In 1973, several years before the founding of Genentech, the
concept of recombinant DNA was proven
? 20 years prior, the theoretical assertion that genetic engineering
and recombinant DNA techniques might be possible was born after
Watson and Crick’s discovery of DNA structure
? It took more than 26 years from the development of a theory and six
years from a proven concept for modern biotechnology to begin its
true path towards commercial viability.
? The timeframes in the Newspace industry may be even longer due
to large capital costs in many of the Newspace sectors
BIOTECH ANALOGY
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 19
?Industries have to start somewhere. The timeframes from
inception to commercial viability may take several years.
?In most instances, investors took a bet on a team and
technology. This bet, if successful, has led to a broader growth
in the industry.
?A large success usually attracts broader interest and investment
to the industry as a whole.
?We may be in the extremely early stages of the Newspace
industry.
?A success, even though it may be short-lived for one company,
can be beneficial for industry growth.
THEMES FROM BIOTECH ANALOGY
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 20
?Space Exploration Technologies (SpaceX)
? Spent approximately $100M of CEO’s own money [Musk]
? Received over $200M dollars so far (out of $278M for COTS Phase 1)
? $100M IDIQ launch services contract from USAF
?Scaled Composites
? History of development for final government customers
? Leveraged for commercial use
BROADCAST AS A LIBERTARIAN, PRACTICE AS A PRAGMATIST
Source: http://www.scaled.com/projects/index.html
Scaled Composites Project List on Corporate Website
Indicates project whose funding or ultimate destination was the government
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 21
?Prior Era Knowledge
? Pintle engine (SpaceX)
? Suborbital itself (X-15 inspiration to SS1)
?Technology advances, more with less people
? CFD in place of wind tunnel (Scaled Composites)
? Smallsats (Surrey, Clydespace)
?The Power and Irrelevance of Geography
? Location of companies (Mojave California = Silicon Valley) and
spaceports
? Human capital (international workforce)
? ITAR (U.S.)
? Small companies working together regionally and globally
OTHER FACTORS AFFECTING NEWSPACE
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 22
? Need more moments of clarity within the aerospace industry
? 2010-2012 may be years for those successes
? More X-prize type successes
? Investors/public were not ready for Ansari X-Prize flight
? Demand estimation could be better and now more knowledgeable
? Payload and People
? Update of Futron Zogby survey
? Additional complementary companies emerging
? Orbital Outfitters (U.S.): pressure suite for sub-orbital tourism
? Innovative Solutions In Space (Netherlands): Cubesat launch integrator
? In-Sourcing Versus Outsourcing
? SpaceX model versus RpK
? Failure may affect multiple space market niches, (i.e. beyond several suborbital
space tourism companies) but companies across the vertical and horizontal
components of the industry
? What is the role outside the U.S.? (FAA regulatory framework adopted abroad?)
? Global spaceport interest is a proxy for the global distribution of wealth
? We need to await outcome of next few years to determine legitimacy of
Newspace
? Sustainable sub-orbital tourism after the “ pioneers” fly (transition to payload or
orbital?)
? In U.S.: COTS Phase 2 (and Capability D-Human transport) services
FINAL THOUGHTS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 23
w w w . s e i . a e r o
SpaceWorks Commercial
A Division of SpaceWorks Engineering, Inc. (SEI)
1200 Ashwood Parkway | Suite 506 | Atlanta, GA 30338-4747 U.S.A.
Phone: 1+770.379.8000 | Fax: 1+770.379.8001
www.sei.aero | E-mail: [email protected]
doc_730021044.pdf
In such a file with regards to reviewing the new space entrepreneurs origins, management, and influence.
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 1
Reviewing the New Space Entrepreneurs:
Origins, Management, And Influence
Mr. A.C. Charania
President | SpaceWorks Commercial | [email protected] | 1+770.379.8006 | 1+770.379.8001 (Fax)
Mr. Amaresh Kollipara
Founder and Managing Partner | Earth2Orbit, LLC | [email protected]
Note: opinions that are expressed here are solely those of authors and do not represent any official viewpoint of their respective organizations
Version A
A Division of SpaceWorks Engineering, Inc. (SEI)
IAC-08-E6.1.5
59
th
International Astronautical Congress (IAC), 29 September – 03 October 2008, Glasgow, Scotland, UK
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 2
INTRODUCTION
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 3
SpaceWorks Commercial is a division within SpaceWorks Engineering, Inc. (SEI) -
a leader in advanced space concept design and analysis.
SpaceWorks Commercial deals with commercial and international space ventures.
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 4
SAMPLE SPACEWORKS ENGINEERING, INC. (SEI) PROJECTS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 5
BACKGROUND AND MOTIVATIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 6
“ A review of history’s ambitious projects -- those that
have garnered an uncommonly large fraction of a
nation’s gross domestic product -- demonstrates that
only three drivers have been sufficient to create them:
defense (e.g. Great Wall of China, Manhattan Project,
Apollo Project), the promise of economic return (e.g.
Columbus Voyages, Magellan Voyages, Tennessee
Valley Authority), and the praise of power (e.g.
Pyramids, Cathedrals, Palaces).
?Astrophysicist Neil deGrasse Tyson, director of New
York City's Hayden Planetarium
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 7
? Perspectives on entrepreneurs
? French economist Jean-Baptiste described the entrepreneur as one who
“ shifts economic resources out of an area of lower and into an area of
higher productivity and greater yield,”
? Austrian economist Joseph Schumpeter states that successful
entrepreneurship, he sets off a chain reaction, encouraging other
entrepreneurs to iterate upon and ultimately propagate the innovation to the
point of “ creative destruction,” a state at which the new venture and all its
related ventures effectively render existing products, services, and business
models obsolete.
? Peter Drucker: “ The entrepreneur always searches for change, responds to
it, and exploits it as an opportunity,”
? Israel Kirzner, who identifies “ alertness” as the entrepreneur’s most
important trait
? Entrepreneurship definition [Roger L. Martin and Sally Osberg]
?The combination of a context in which an opportunity is
situated, a set of personal characteristics required to identify
and pursue this opportunity, and the creation of a particular
outcome.
? “ The entrepreneur is attracted to this suboptimal equilibrium, seeing
embedded in it an opportunity to provide a new solution, product, service,
or process”
? Inspired or frustrated
THE ENTREPRENEUR
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 8
? What defines the NewSpace industry?
? The term has been utilized over the last few years to describe the range of
new, entrepreneurial focused space companies (another term is alt.space).
? One characteristic offered here is that most of the NewSpace
companies are those companies that have come in the wake of or
offered substantially different products than during the mobile satellite
system (MSS) and global satellite telephony ventures of the late 1990s
? These included the firms of Iridium (66 satellites) and Globalstar (48
satellites), both of which eventually went bankrupt, but still exist today after
various technical and management restructuring efforts.
? There current generation of companies that make up the NewSpace industry
including many launch providers.
? If one defines the space economy broadly to include hardware (launch
vehicle, satellites, etc.) and services, then space launch is a small
component of the commercial space industry (but an important one
nonetheless).
? Even so, this presentation focuses on many of the NewSpace companies
devoted to development for space launch services. Thus even at the outset
the authors acknowledge the skewed nature of the following narrative
wherein most revenue in the space industry is generated from services.
NEWSPACE DEFINITIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 9
? AirLaunch LLC
? Armadillo Aerospace
? Blue Origin
? Rocketplane Global
? Space Adventures, Inc.
? Virgin Galactic
? Zero Gravity Corporation
? Bigelow Aerospace
? Ecliptic Enterprises Corporation
? XCOR Aerospace, Inc.
? SpaceDev (OTCBB: SPDV)
? Transformational Space Corporation
? JP Aerospace
? Masten Space
? Orion Propulsion, Inc
? SpaceHab
? Orbital Sciences Corporation
? Surrey Satellite
? ClydeSpace
? Innovative Solutions In Space (ISSI)
SAMPLE NEWSPACE COMPANIES
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 10
? 1. EMERGING SPACE COMMUNITY IS REAL AND READY TO WORK; AT BEST IT IS THE
MOST EFFICIENT PROVIDER, AT A MINIMUM AS AN OFF-RAMP.
? A mistaken perception of relative risk should not preclude use of the emerging commercial space
community (or “ new space” ) in exploration activities. These firms offer the government efficiency,
something quite at odds with the traditional aerospace contracting process.
? 2. DON’T JUST ENGAGE, BUT LEARN HOW TO ENGAGE.
? Bureaucracy and inconsistency (i.e. changing requirements, non fixed-priced contracts, etc.) are large
barriers to commercial sector involvement with the government.
? 3. NASA HAS A LEGITIMATE ROLE TO PLAY.
? NASA can still act as a champion for exploration in general. NASA could also utilize commercial
expertise in the promotion of the VSE (e.g. ISS crew/cargo support).
? 4. BUY, DO NOT DEVELOP.
? NASA should not develop ETO launch services but buy where appropriate.
? 5. MANAGE PRIZES APPROPRIATELY.
? The government should continue the use of prizes but be careful in their applicability. Prizes for
activities with excessive risk will not be attractive for commercial companies.
? 6. OTHER SERVICES BEYOND TOURISM.
? Telecommunications and ground services may be immediate areas of additional commercialization
beyond sub-orbital and orbital tourism.
? 7. BRIDGE BUILDING BETWEEN EMERGING AND TRADITIONAL SPACE.
? he government should encourage partnerships between the emerging/“ new space” community and
the traditional aerospace industrial base.
? 8. BUSINESS IS INTERNATIONAL, SPACE IS INTERNATIONAL.
? The government, along with industry, should reexamine existing International Traffic In Arms (ITAR)
regulations.
? 9. BASIC TECHNOLOGY RESEARCH.
? The more appropriate technologies for the government to fund are those fundamental, enabling
technologies that affect the major design disciplines (power, propulsion, and structures).
? 10. MORE FOCUSED DIALOGUE.
? This type of dialogue is a valuable activity and should go forward, yet with a broad variety of voices
and with facilitated discussions.
SOME PERSPECTIVES OF THE NEWSPACE COMMUNITY
Source: EDS Workshops Summary Report, SpaceWorks Engineering, 2005
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 11
? “ A social entrepreneur is someone who recognizes a social problem
and uses entrepreneurial principles to organize, create, and manage a
venture to make social change” [Wikipedia]
? Whereas a business entrepreneur typically measures performance in profit
and return, a social entrepreneur assesses success in terms of the impact
s/he has on society. While social entrepreneurs often work through
nonprofits and citizen groups, many work in the private and governmental
sectors.
? “ If we can be one of the companies that makes it possible for humans to become
a multi-planetary species, that would be the Holy Grail. It sounds a bit crazy but
it's going to happen, and only if people build the means to do so. We're making
progress toward a greater philosophical goal while building a sound business.”
? Elon Musk, SpaceX
THE NEWSPACE ENTREPRENEUR AS A SOCIAL ENTREPRENEUR?
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 12
OBSERVATIONS
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 13
NOW: GLOBAL SPACE ACTIVITY (2007, FROM THE SPACE REPORT)
Source: The Space Report 2008: The Authoritative Guide to Global Space Activity, http://www.thespacereport.org/
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 14
Sustained out-year activity in 2008 forecast
2008 Non-Geosynchronous Orbits Commercial Space Transportation Forecast, John
Sloan, Federal Aviation Administration, Office of Commercial Space Transportation,
May 16, 2008.
NEXT: MIS-FORECASTING THE FUTURE
Historical Launches and Forecast 2008-2017
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 15
?Lack of general knowledge in the aerospace industry of
economics
? Lack of understanding of cost field relative to performance arena,
economics/Financials different than cost (or cost-benefit)
?Lack of basic business knowledge of current people in the
industry (versus Nanotech and Biotech)
? Example of themes within recent U.S. Space Investment Summits
(SIS), in comparison with other investment summits in other
industries
?Grasping for inappropriate analogies
? Using the airline industry as an example may not be most
appropriate, may have some applicability in terms of government
support (different elasticities, competitive structure, etc.)
?Some NewSpace entrepreneurs have less of the above problems
? Possess better business knowledge
? Have understand of alternative analogies to apply new models
EDUCATION OF THE ROCKET SCIENTIST
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 16
? " I've never invested in any airline…I'm an airline manager. I don't invest
in airlines. And I always said to the employees of American, 'This is not
an appropriate investment. It's a great place to work and it's a great
company that does important work. But airlines are not an investment.'"
[since the airline deregulation of the 1970s, some 150 airlines have gone
out of business.] " A lot of people came into the airline business. Most of
them promptly exited, minus their money,”
? Robert Crandall, former president and chairman of American Airlines
? " The worst sort of business is one that grows rapidly, requires
significant capital to engender the growth, and then earns little or no
money. Think airlines. Here a durable competitive advantage has proven
elusive ever since the days of the Wright Brothers. Indeed, if a
farsighted capitalist had been present at Kitty Hawk, he would have
done his successors a huge favor by shooting Orville down. The airline
industry’s demand for capital ever since that first flight has been
insatiable. Investors have poured money into a bottomless pit, attracted
by growth when they should have been repelled by it.
? Warren Buffett, February 2007 annual letter to the stockholders of Berkshire
Hathaway
THE AIRLINE INDUSTRY: PERHAPS NOT A GOOD MODEL?
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 17
?Within the aerospace community (and here we refer to those
involved in the launch business rather than the services
business), entrepreneurs generally fail to realize that they are
attempting to create businesses rather than what I would refer to
as “ technological indulgences” .
? These indulgences seek to develop “ cool” technologies versus
sustainable businesses.
?This illustrates some repeated problems of space entrepreneurs,
the failure to execute on the business plan, the failure to deliver
a product or service, and the failure to stop a technical person's
habit of becoming enamored with the next " cool" thing you are
not working on, versus the current " cool" thing you are on.
ADDICTION IDENTIFICATION: TECHNOLOGICAL INDULGENCES
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 18
?In Newspace, a large scale commercial success which has not
only proven a new technology, but also demonstrated a
substantial return on investment has not occurred.
?Nevertheless, a simple comparison to the biotechnology
example may suggest that it might take time
? In 1973, several years before the founding of Genentech, the
concept of recombinant DNA was proven
? 20 years prior, the theoretical assertion that genetic engineering
and recombinant DNA techniques might be possible was born after
Watson and Crick’s discovery of DNA structure
? It took more than 26 years from the development of a theory and six
years from a proven concept for modern biotechnology to begin its
true path towards commercial viability.
? The timeframes in the Newspace industry may be even longer due
to large capital costs in many of the Newspace sectors
BIOTECH ANALOGY
Copyright ©2008, SpaceWorks Commercial, A Division of SpaceWorks Engineering, Inc. (SEI) All Rights Reserved 19
?Industries have to start somewhere. The timeframes from
inception to commercial viability may take several years.
?In most instances, investors took a bet on a team and
technology. This bet, if successful, has led to a broader growth
in the industry.
?A large success usually attracts broader interest and investment
to the industry as a whole.
?We may be in the extremely early stages of the Newspace
industry.
?A success, even though it may be short-lived for one company,
can be beneficial for industry growth.
THEMES FROM BIOTECH ANALOGY
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?Space Exploration Technologies (SpaceX)
? Spent approximately $100M of CEO’s own money [Musk]
? Received over $200M dollars so far (out of $278M for COTS Phase 1)
? $100M IDIQ launch services contract from USAF
?Scaled Composites
? History of development for final government customers
? Leveraged for commercial use
BROADCAST AS A LIBERTARIAN, PRACTICE AS A PRAGMATIST
Source: http://www.scaled.com/projects/index.html
Scaled Composites Project List on Corporate Website
Indicates project whose funding or ultimate destination was the government
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?Prior Era Knowledge
? Pintle engine (SpaceX)
? Suborbital itself (X-15 inspiration to SS1)
?Technology advances, more with less people
? CFD in place of wind tunnel (Scaled Composites)
? Smallsats (Surrey, Clydespace)
?The Power and Irrelevance of Geography
? Location of companies (Mojave California = Silicon Valley) and
spaceports
? Human capital (international workforce)
? ITAR (U.S.)
? Small companies working together regionally and globally
OTHER FACTORS AFFECTING NEWSPACE
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? Need more moments of clarity within the aerospace industry
? 2010-2012 may be years for those successes
? More X-prize type successes
? Investors/public were not ready for Ansari X-Prize flight
? Demand estimation could be better and now more knowledgeable
? Payload and People
? Update of Futron Zogby survey
? Additional complementary companies emerging
? Orbital Outfitters (U.S.): pressure suite for sub-orbital tourism
? Innovative Solutions In Space (Netherlands): Cubesat launch integrator
? In-Sourcing Versus Outsourcing
? SpaceX model versus RpK
? Failure may affect multiple space market niches, (i.e. beyond several suborbital
space tourism companies) but companies across the vertical and horizontal
components of the industry
? What is the role outside the U.S.? (FAA regulatory framework adopted abroad?)
? Global spaceport interest is a proxy for the global distribution of wealth
? We need to await outcome of next few years to determine legitimacy of
Newspace
? Sustainable sub-orbital tourism after the “ pioneers” fly (transition to payload or
orbital?)
? In U.S.: COTS Phase 2 (and Capability D-Human transport) services
FINAL THOUGHTS
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SpaceWorks Commercial
A Division of SpaceWorks Engineering, Inc. (SEI)
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Phone: 1+770.379.8000 | Fax: 1+770.379.8001
www.sei.aero | E-mail: [email protected]
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