Is it Worth Spending Money to Explore Space?
Erik Huckle, Senior Product Manager, SailPoint
“To the frontier the American intellect owes its striking characteristics…For a moment, at the frontier, the bonds of custom are broken, and unrestraint is triumphant…in spite of the environment, and in spite of custom, each frontier did indeed furnish a new opportunity…” — Frederick Jackson Turner from “The Significance of the Frontier in American History” (1893).
The Apollo program (1961–1972) stands out as a triumphant success among all of humankind’s accomplishments. NASA was able to land men on the moon at a total cost of $107 billion in 2016 dollars (link). As we consider the future of space exploration, it is helpful to look back to Apollo to understand the full impact of a focused research program. The two drivers for space exploration at that time were:
1. Scientific exploration and discovery — The desire to develop the technical ability to get humankind to and from space safely
2. The geopolitical environment — There was intense pressure to be first to the moon, which created an atmosphere of competition that focused the will of the American people and their political leadership
This blog post will focus on another factor which wasn’t considered to be a motivator at that time.
3. The economic advantages of opening up a brand-new market (SPACE!)
For the rest of this post, I am going to discuss the benefits of our government investing in a program like Apollo. I will then touch on the current private investing landscape, economic opportunities being created by space investments, the hurdles businesses need to overcome and the tremendous rewards of overcoming those hurdles.
The result of the Apollo program’s mad dash to get Americans on the moon resulted in many technological breakthroughs, which were later adapted for consumer and applications. The spacecraft we took to the moon required a navigation system powered by a smaller, lighter and more powerful computer than what was available at the time. Out of pure necessity, the Integrated Circuit was developed [1].
The integrated circuit was unique at the time in that all of the components were made out of the same block of material, allowing for smaller-sized circuits, automated assembly, and decreased failure rates (which was a critical feature for any piece of equipment powering NASA’s spacecraft).
NASA’s order of one million units kickstarted the fledgling industry and was instrumental in paving the way for modern technology. The majority of modern electrical devices rely on integrated circuits, the microprocessor being the most notable and widespread.
The industry is now valued at over $278B.
For a look at what technology NASA is working on now, check this out.
Government programs don’t have to show the same return on investments as public and private companies. What are the benefits of starting, or investing in, a company focused on developing technology for space?
Exciting Growth Field — SpaceX and Blue Origin are helping to de-risk the idea of a private space company. There will continue to be more private ventures developing space technology as it becomes easier to receive investment capital. More competition will breed innovation, which will lead to faster growth in this field and the possibility of 10X’ing returns on investments.
Cost-Effective — Public-private partnerships are helping to lower costs which allows NASA to be more flexible with budget allocation. Large (or small) companies can win big contracts by saving the government money.
Economic — Private space exploration companies are creating opportunities in a field that has been non-existent until recently. These new ventures will create jobs and boost the economy. This flywheel will bring more intelligent people into the field to develop even better technology and products.
You: Give me an example of a specific market opportunity that hasn’t existed before…
Me: …
“The first trillionaire there will ever be is the person who exploits the natural resources on asteroids.”
-Neil DeGrasse Tyson (American Astrophysicist)
Near Earth there are around 10,000 asteroids containing metal, iron, nickel, cobalt, hydrated clay, and water. Each of these elements is useful and in demand on Earth; others, like water, are useful for space exploration purposes–water can be converted to rocket fuel by splitting off the hydrogen, enabling space crafts to refuel without returning to earth. The potential for mining asteroids has inspired several private companies to begin the initial phases of exploration. The two companies leading this are Planetary Resources and Deep Space Industries, which are currently designing and testing the technologies necessary to enable the mass transport of raw materials from space to earth. [2]
What companies are trying to make money in the space industry?
The space industry is projected to reach $2.7 trillion in the next three decades (link). The companies who have received the most press (SpaceX, Blue Origin and Virgin Galactic) have been working on reducing the cost of access to space — mainly through the reuse of launchers and spacecraft — in order to make space accessible to people who are not specially trained astronauts.
Other prominent companies commercializing space are OneWeb and Ligado, which are involved in launching satellites to provide broadband communications; Axiom Space, which aims to build the first commercial space center by 2024; Moon Express, a company that is developing a robotic spacecraft; Planet, which builds Earth-imaging satellites; and Bigelow Aerospace, which plans to launch hotels in space. VCs are closely following these companies and have shown they have been increasingly interested in this space [😏].
In 2017, private investors put $3.9B into commercial space companies Link
You, again: Okay I am sold on there being business opportunities in space…What type of challenges do we need to overcome to build this new industry?
- Entrepreneurial companies in this industry have historically over-promised and under-delivered. Prior to 2010, over a dozen companies tried to break into the launch business and only one made the transition to a respectably sized company (Orbital Sciences).
- NASA will have to establish a more efficient system to certify commercial orbital vehicles as safe for human transport, which will take years if they use the current systems that are tied down with bureaucratic red tape. There isn’t the same urgency now as we had during the Apollo Program, and the current space industry is used by politicians to funnel pork barrel dollars back to their home states. This is not an ideal startup environment.
- Legal challenges of the global commons of space. Currently all nations have the right to explore, but there is no agreement as to who has the right to stake out resources (or who owns asteroids once they are mined, for example). The current Outer Space Treaty was made 50 years ago and prohibited nations from making any claim over any sovereignty of resources in the solar system. Moon Express received U.S. approval to go to the moon after a long legal debate (2016). If we can’t work with other nations, there could quickly become a winner take all space-race with myriad knock-on geopolitical risks.
These issues make it very difficult to convince investors to spend money in a capital-intensive industry.
You, for the third time: This seems like a massive headache. All of the good technology was already invented. Why should we even bother changing our current system?
Me: There is some ground-breaking technology that has been developed which hasn’t received much media attention. I will go over a few of them for you.
Quantum Communications — The ability to reduce reliance on large antennas while transforming how we encrypt information. Quantum communications use the phenomena of entangled photons to achieve secure, high data rate, long-range communications across space. I wrote a little about quantum computing here if you need a refresher.
Damage Tolerant Systems — A nanoscale approach to significantly improve engineered materials and structures which can hold up against high levels of pressure and heat. Two examples include the growth of carbon nanotubes to increase material toughness and mimicking nanoscale features of seashells to improve ceramics. These approaches will not only improve reliability and safety but also reduce weight by up to 25 percent.
Miniaturized Nuclear Space Reactor — Scientists have developed small nuclear reactors (sweet video) which are much less dangerous than the highly-enriched uranium reactor we currently use. I was able to work with some of the scientists on this program while I was at Los Alamos.
If we want the huge payoffs of going to space, we are going to have to accept a high level of tolerance for the risk, and the unknowns, involved in blasting off of Earth.
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This post relied on a much larger project I worked on way back when I was finishing my MBA at McCombs in a class called “Strategies of Networked Economies” taught by Professor Prabhudev Konana. The classmates who worked on this with me were Mohit Maheshwari and Julia Brannan among others. Please share if you found this informative or enjoyed reading!
Works Referenced or Cited
NASA. Project Apollo: A Retrospective Analysis. 21 April 2014. https://history.nasa.gov/Apollomon/Apollo.html.
NASA. Benefits from Apollo: Giant Leaps in Technology. July 2004. https://www.nasa.gov/sites/default/files/80660main_ApolloFS.pdf
NASA. STMD: Tech Transfer. https://www.nasa.gov/directorates/spacetech/techtransfer
[1] Nobelprize.org. The History of the Integrated Circuit. 5 May 2003. https://www.nobelprize.org/educational/physics/integrated_circuit/history/
[2] Stone, Maddie. How Asteroid Mining Could Pay for Our First Space Colony. 17 February 2016. Article. https://gizmodo.com/how-asteroid-mining-could-pay-for-our-first-space-colon-1685429089.
