Preparation of Papers for AIAA Technical Conferences
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IAC-08-E6.1.5 REVIEWING THE NEW SPACE ENTREPRENEURS: ORIGINS, MANAGEMENT, AND INFLUENCE A.C. Charania* SpaceWorks Commercial, a Division of SpaceWorks Engineering, Inc. (SEI), United States of America (USA) [email protected] Amaresh Kolliparat Earth2Orbit, LLC, United States of America (USA) [email protected] ABSTRACT This paper will review the current generation of “new space” entrepreneurs examining origins, motivations, accompanying strategies, and measures of success (financial and overall influence). This paper will attempt to identify some top level qualitative trends from these “new space” entrepreneurs. Over the last few years, the aerospace industry, particularly but not exclusively in the United States, has seen new entrants. These new companies and the individuals behind them represent a slight shift from the traditional aerospace industrial base. Many of these new companies have matured, from idea to corporation. At this point in the life cycle of companies some relevant observations can be gathered as to which strategies seem to be on the path to success, which strategies were inappropriate, and what the impact of these firms will be on the industry in general. This impact is beyond just financial, and includes the impact of these firms upon world governments and their policies. In addition, this paper compares these “new space” entrepreneurs versus those in other industries. scale projects. These are projects that require large NOMENCLATURE capital and labor resources that involve both the government and private sector. Specifically, he has IRR Internal Rate of Return stated: LEO Low Earth Orbit NASA National Aeronautics and Space A review of history’s ambitious projects -- those Administration that have garnered an uncommonly large fraction of NPV Net Present Value a nation’s gross domestic product -- demonstrates that only three drivers have been sufficient to create INTRODUCTION them: defense (e.g. Great Wall of China, Manhattan Project, Apollo Project), the promise of economic Astrophysicist Neil deGrasse Tyson, the director of return (e.g. Columbus Voyages, Magellan Voyages, New York's Hayden Planetarium, has previously Tennessee Valley Authority), and the praise of discussed the reasons why humans engage in large power (e.g. Pyramids, Cathedrals, Palaces). For expensive projects that satisfy more than one of ______________________________________________ these criteria, money flows like rivers. The * - President, Senior Member AIAA. Eisenhower Interstate highway system makes a t - Founder and Managing Partner crisp example: conceived in the post WWII era to move materiel and personnel for the defense of the Copyright ©2008 by SpaceWorks Engineering, Inc. (SEI). Published by the IAF, with permission. Released to nation, yet used heavily by commerce. That’s why IAF/IAA/AIAA to publish in all forms. there’s always money for roads [Ref. 1]. 1 The exploration and utilization of space with humans attention within the space industry. The attempt here is can be considered one case. For economically mature not to present a comprehensive assessment of all these economics in the modern world (absent reactions to “new space” companies, but to bring out for discussion terrorism or competition with China), defense and several themes that emerge when looking at these praise of power are subordinate to economic returns. companies in totality. This paper will attempt to Tyson’s comments apply to large scale projects but identify some top level qualitative trends. Additionally they are also a good introduction to discussions about some comparisons will be made with these the people and process of recent space “NewSpace” entrepreneurs versus models from other commercialization. industries. Throughout the recent history of man in space, If one defines the space economy broadly to include enthusiasts have tried to imagine what will be the hardware (launch vehicle, satellites, etc.) and services, ultimate product or service that would revolutionize then space launch is a small component of the space exploration. The goal was always to make the commercial space industry (but an important one dreams in all those pulp novels of ubiquitous space nonetheless). Even so, this paper focuses on many of travel possible. Many waited for the government to the NewSpace companies devoted to development for make it possible for everyone to experience space space launch services. Thus even at the outset the exploration personally and not by proxy through the authors acknowledge the skewed nature of the world’s select cadre of astronauts and cosmonauts; that following narrative wherein most revenue in the space did not happen. In the most recent past, experts industry is generated from services [Ref: the Space predicted that Low Earth Orbit (LEO) constellations Report]. would be the catalyst for a space boom; currently many companies market suborbital space tourism as one of The opinions that are expressed here are solely those of the news markets that may usher in a new era of space authors and do not represent any official viewpoint of exploration, one of the only future markets large their respective organizations. enough to sustain high flight rates that may reduce the cost to orbit (or develop high speed global point to point travel). BACKGROUND Whatever the case may be in the actual future, Definitions financially constrained governments may not be the ultimate guarantor of sustained space exploration. There have been multiple attempts to define However, the government may still be able to enable entrepreneurship. Some particular attempts include the (and is enabling) some of this progress even given its following [Ref 2]: sometimes constraining approaches to commerce (taxes and regulation). This is happening now in a few case French economist Jean-Baptiste described the instances including where NASA is attempting to entrepreneur as one who “shifts economic accelerate the development of space launch services of resources out of an area of lower and into an logistic supplies to the International Space Station area of higher productivity and greater yield,” (ISS), the Commercial Orbital Transportation Services Austrian economist Joseph Schumpeter states (COTS). In face, the history of civilization on Earth has that successful entrepreneurship, he sets off a examples of government assisted industries chain reaction, encouraging other transforming into viable and competitive commercial entrepreneurs to iterate upon and ultimately marketplaces (e.g. railroads, the Internet). propagate the innovation to the point of “creative destruction,” a state at which the Over the last few years there have been various new venture and all its related ventures companies that have emerged within the aerospace effectively render existing products, services, industry. They can be distinguished, or distinguish and business models obsolete. themselves, as different from “traditional” aerospace Peter Drucker: “The entrepreneur always companies, whether through their vision, personnel, searches for change, responds to it, and funding, timelines, products, or overall objectives. exploits it as an opportunity,” Israel Kirzner, who identifies “alertness” as the This paper will present some observations about some entrepreneur’s most important trait of recent entrepreneurial companies that have generated 2 Martin and Osberg aggregate these opinions into their Musk from Paypal), Blue Origin (Jeff Bezos of definition of entrepreneurship: “The combination of a Amazon.com), SpaceDev, Xcor, Microcosm, context in which an opportunity is situated, a set of Armadillo Aerospace (John Carmack of id Software), personal characteristics required to identify and pursue Rocketplane Global. Additionally, Bigelow Aerospace this opportunity, and the creation of a particular (Robert Bigelow) is in development of inflatable on- outcome…The entrepreneur is attracted to this orbit modules based upon NASA-licensed technology. suboptimal equilibrium, seeing embedded in it an There are also reduced gravity flights being offered by opportunity to provide a new solution, product, service, Zero Gravity Corporation. Space Adventures has sent or process.” [Ref 2]. These individuals are inspired or paying customers to the International Space Station frustrated at the current situation. (ISS) and has proposed using a modified Soyuz vehicle with a new propulsion stage for a round trip flight to NewSpace the moon with one crew and two paying passengers for an individual ticket prices of $100M per passenger. What defines the NewSpace industry? The term has Space Exploration Technologies (SpaceX) is been utilized over the last few years to describe the developing new cargo launch vehicles with potential range of new, entrepreneurial focused companies ambitions for crew launch capability. This has included (another term is alt.space). One characteristic offered two new engine developments and three new facility here is that the NewSpace companies are those developments for approximately $100M on investor companies that have come in the wake of the mobile funds ($200M+ of NASA funds). In order to serve the satellite system (MSS) and global satellite telephony sub-orbital space tourism market, Virgin Galactic, in ventures of the late 1990s [Ref 3]. These included the combination with Scaled Composites, is developing a firms of Iridium (66 satellites) and Globalstar (48 larger follow-on vehicle to the Ansari X-Prize winning satellites), both of which eventually went bankrupt, but SpaceShipOne