Old Space Meets New Space

I just returned from a Silicon Valley investor conference for so-called "New Space".  Space 2.0, as it is called, has a catchy name with a hint of the software heritage that the modern aerospace industry aspires to associate with.  After all, who would not want to be associated with the tremendous accomplishments of the modern information era and its boundless ability to create value and attract investments.  I can hardly blame the conference organizers for attaching themselves to this brand imagery in a fresh and new way to help sell aerospace to a budding investment community.

Apart from the name of the conference, I found its participants to be much more interesting.  It was a mix of what I termed "the Old Human Barnacles and the New Human Barnacles".  The basic problem with the aerospace industry, as I see it, is that it's so small in terms of human capital that at times the industry seems to have only 324 people working it.  Clearly that is an exaggeration but the conference attendee list really brought home the idea that the older generation of aerospace leaders have finally stopped and taken notice of what is going on in the entreprenurial sector known as "New Space".  There is a lot of money flowing into this sector, lots of new faces showing up and lots of new ideas and value being created.  The traditionalists, or "Old Space" as they are termed by some, are now taking note and taking the time to investigate this new energetic sector of the aerospace industry.  The whole episode reminds me of a personal experience I had when an older relative once looked at my daughter Sarah's iPod and was unable to truly comprehend that his entire vinyl record collection could fit into that "tiny little thing" in his hand.  This person, college educated in physics but isolated from technology development, seemed to disbelieve that this technological advancement was even possible.  He spent seemingly forever looking at the device, turning it over and over in his hands and never quite comprehending it.  I saw some of the same behavior at the Space 2.0 conference.

It would be unfair to tarnish everyone over the age of 30 in the aerospace industry as being a 'dinosaur' and I frankly find the terms "New Space" and "Old Space" as being unnecessarily divisive.  I, for one, am 50 years old this year and would be automatically condemned by this attitude.  I actually find the true divisions in the emerging industry falling more along the lines of career background and ability to think about problems in new ways.  Recognizing this simple fact told me more about the changes underway in the industry than anything else.  The conference attendees fell into one of four categories: New Space Companies, Investors in New Space companies, Traditional Aerospace Companies, and individuals who self ejected from Traditional Aerospace years ago.  I fall into the latter category. 

The keynote speaker was Dan Birkenstock - one of the founders of Skybox Imaging who recently sold their startup to Google for 500 M$.  I helped Dan and his team raise the money they needed from the venture capital community and develop technically from the very beginning until their sale to Google.  Dan is truly a story of New Space success.  He graduated from the University of Michigan ten years ago and became involved in Skybox early on when they were composed of just a few individuals from Stanford University with absolutely no experience in the space industry at all.  They had a dream, keen minds and a will to make something happen that many people told them was impossible.  They didn't listen to the naysayers, worked hard, hired experienced individuals with open minds, matured the technical concept, built and tested hardware and were eventually successful.  Despite the fact that they have satellites flying and have sold their little startup for a hefty sum of cash, I still hear grumbling and complaining from some Traditional Aerospace observers that Skybox 'failed' to complete the constellation of satellites or was somehow an anomaly.  Its really hard to argue with such individuals as they are bent on seeing their own lives and existences in such a way that they don't feel irrelevant to the future.  I have seen the same thing in the past and the comparison of the past with the present was striking to me.

I spent almost 25 years working with the Soviets, and later Russians, on space  programs during my career.  One thing clear from the beginning of my work with them was that the Soviet/Russian space industry was government owned and operated in the strictest sense of the term and remained so despite any apparent private ownership of the companies and design bureaus.  It was clearly based on Soviet Economics where the government set the demand, decided what was built, how many were built, how much it would cost, how many people would be employed and what kinds of salaries would be paid.  There was no room for capitalist economics but only politics and power.  In my time with the Russian space industry, we injected both government and private capital into projects to develop flight hardware and other items of interest.  The result was always the same and the Russian industry was always the same.   Neither the outcome nor the industry itself was changed by the outside influence, new capital, new ways of doing things or new ideas. They did not really operate on what we westerners would consider capitalistic economics.  Rather, they operated more out of self interest and were subjected to the daily whims of politics swirling around them.  While we did eventually have some successes working with the Russians, most of the projects were overly complex and difficult to manage. Despite extremely low price points, the Russian aerospace industry suffered from a lack of good projects and the resulting brain drain to other software and financial sectors. They never became the major force in the global aerospace industry that many expected 25 years ago.

It occurred to me about 3 years ago that the greatest irony of my life is that the US Aerospace industry was based on essentially the same economic model. The same aerospace industry that put a man on the Moon and defeated the great Soviet threat in the defense of capitalism was, and still is, operating on a Soviet economic model that has little resemblance to the actual capitalistic economic model in which it is immersed.  The implications of this idea are profound.  I have written about this before and what this means to the future of aerospace in the US.  The response to this observation has been stark, disturbing and interesting.  Many of the defensive responses to this article were mirrored in similar attitudes and comments at the Space 2.0 conference.  I can only conclude that the success of the US Aerospace industry has been in spite of the economic model that it operated under and is a testament to many talented and driven individuals that made good things happen.

While the jury is still out on the so called New Space movement, it is clearly different from traditional aerospace and more closely aligned with the capitalist roots from which it derives financial support.   There have been a number of important successes in this sector including Iridium, SpaceX, Skybox and now Planet Labs. The future is even more impressive and holds even greater opportunities for a whole host of New Space companies such as PlanetIQ, Rocket Lab, Moon Express and Satellogic.  These companies will revolutionize the way we transit the Earth-space corridor and how we observe the Earth while creating yet unimagined financial and social value.  While the story is still being written by these companies, they are leading the way to a new era of space exploration that is both as exciting as it is potentially lucrative.  

In the end, success in all of these ventures is about the people who bring their passions, their drive, their visions and their simple hard work to the table.  Our early space efforts that put mankind on the Moon and defeated the Soviet Union had a passion of a different sort and produced great results despite the crippling effects of the economic system in which it operated.  In both New Space and Traditional Space, great accomplishments depend on people who come from humble beginnings, arrive from all walks of life, believe in making their dreams come true, and believe that they can make the world a better place in the process.  I simply cannot think of a better American story than this and am proud that Silicon Valley has become the hub and focus for this new spirit and energy in space.  In the end, this new entrepreneurial space industry is an extension of the boundless success and energy of capitalism. I am optimistic that this new era that ties economic return to our space exploration efforts will be a golden era much like the  rush to populate and build the "New World" over the past 4 centuries culminating in the early space age that put mankind on the Moon.   I have waited my entire life for this to happen and feel a renewed optimism for our future.