Space: The Final Business Frontier | GIANT LEAP Ep. 1

Space: The Final Business Frontier | GIANT LEAP Ep. 1


T-minus 10, nine, eight, seven, six, five, four, three, two, one– The space race isn’t
just global superpowers duking it out for bragging rights and technological supremacy anymore. Private companies, lots of them, are rushing to commercialize
not just the final frontier, but the act of getting there. I am a sports guy, this is
like March Madness to me. It’s one and done, I got
one shot to get to the end or else I’m either gonna
fail, run out of money, or be gobbled up by someone else. And whoever figures out how to make launch safe, affordable, and convenient is going to
take the next giant leap. We choose to go to the moon in this decade and do the other things, not because they are easy,
but because they are hard. 60 years into the space race, the way we leave Earth
has changed remarkably. Zero, all engine running. Liftoff, we have a liftoff,
32 minutes past the hour. Space seemed like a vast, black desert, but now we’re ready to
make the desert bloom. I’m talking about opening
space up to business, to private enterprise. Opening space up to commerce and experimentation and development. Why? To improve the quality of life on Earth. 25 years after Ronald Reagan signed the Commercial Space Launch act, the desert has begun blooming. I think if you’re a young person in 1969 and you saw people walking on the moon, and 50 years later, we
still haven’t gone back, I think that’s a little disappointing. I think they took that,
their hopes and dreams of their youth, and are applying
it to today’s marketplace. And I think they’re having
a fantastic success. In the world of rocket launch, there are two very
distinct races going on. The first are the large rocket companies like SpaceX, Virgin
Galactic, and Blue Origin. Jeff Bezos has reportedly
invested billions already in Blue Origin and
will invest billions more. Liftoff. SpaceX has also raised billions of dollars and acquired very large
contracts from NASA as well, in order to fund both
development and operations of its vehicles. Liftoff of the SpaceX Falcon-9 rocket. But they aren’t the only
players in the game. There’s a heated race picking up between small and medium launch companies. There’s a subset of the community not named SpaceX, not named Blue Origin, trying to figure out, okay,
how we get there fast? Companies like Rocket Lab, Relativity, Firefly, and Virgin Orbit. Right now, there are more than
100 small launch companies competing not just to get to space, but to see who can get
there most reliably, cheapest, and then repeat it
over and over and over again. And ideally, end up with
their business in the black. Because in time, new industries rely on these launch companies
getting payloads into orbit. And any missteps can spell disaster. Not just for a rocket,
but an entire company. There is a $200+ billion
commercial space industry right now today. There are a couple of huge markets that have been very profitable. The most profitable is
the satellite industry. In 2018, the global space
economy was estimated to be around $360 billion. $277 billion of that is
the satellite industry, which has actually grown over $100 billion over the past decade. And for those satellites to get to space, they need to be launched on a rocket. Global launches in 2018 increased by 46% over the number of launches a decade ago. In many respects, it’s never been easier to put a satellite into space, in terms of the cost and
the availability of rockets to ride into orbit. And a new era of smaller,
cheaper satellite technology is creating this boom. Once a year, out in a desert north Utah, the Small Satellite or SmallSat
Conference, comes to Logan. It has all the trademark features
of an industry trade show, bright lanyards, tons of swag, but the deals happening
here are carving out what the future of the space
economy will look like. I’ve been coming to this
conference for 20 years and seen it grow from
300 people to over 3,000. So, it is exciting to see that transition as we move into the next phase. Traditional satellites are often powerful behemoths, the
size of school buses, costing hundreds of millions, if not billions of dollars to build. Today, the proliferation of smallsats, CubeSats, even nanosats, can cost as little as $10,000, and can be built with similar hardware that goes into your cell phone. They range from the size of a Rubik’s Cube up to about the size of
a dorm room refrigerator. And so that’s a big difference. And so, some of these launch ventures want to launch a few
dorm-size refrigerators, and others want to launch
dozens of CubeSats. And so, they’re trying to
divide the market that way. Those satellites are providing
imaging of the Earth, they’re potentially providing
telecommunications services, and they’re attracting
quite a lot of investment in 10s, hundreds of millions of dollars, even billions of dollars. The Earth’s insatiable
need for communications and internet is really what’s driving this huge number of satellites
that are going into orbit in the next five to seven years. There’s gonna be thousands,
if not 10s of thousands of new satellites in orbit in
the next five to seven years. The question is, are they
able to actually provide business services that will be successful? The idea is that entirely new business models as well as revenue streams will be propped up by the
data these smallsats collect. The imaging and data
collected from these smallsats will be used by everyone, from hedge funds to telecom
giants to the US government. Just think of how much
the photos you can get with your Android or iPhone have improved from the first generation
to the current generation. Similar things happening in smallsats. Market research says
smallsat manufacturing will nearly double by 2020, with nearly 8,000 new
smallsats in space by 2026. The issue is always, small satellites have a lot of capability,
but there’s not a good, affordable way to get them into orbit. And that’s where the
small launch companies see a promising business. The fact that a small launch vehicle is much cheaper in total
than a large launch vehicle on the order of five or $10 million, as opposed to $50 to $100 million, and there are more customers. Say you have a smallsat that you want to launch into orbit. Think of the big companies
like SpaceX as a bus, and the small and medium launch companies like Rocket Lab as a taxi. With large launches, you’re
at the back of the bus, after the needs of what’s
called the primary, which is the main payload on the rocket, like a big government satellite. Your smallsat is just
piggybacking off that primary since they bought the
majority of the rocket. With small launchers like Rocket Lab, you and your smallsat can dictate more of your terms on
when and how you’ll fly. And you’ll pay for the whole ride. So booking a taxi for a smallsat gives you more flexibility about when and exactly where you
want to go into orbit. But it’s more expensive. Sometimes a ride share on a big rocket and the chance to save
on your launch expense is more suitable depending
on the satellite, its mission, and the budget. Far more important is
the orbital inclination or the angle of the satellite’s orbit relative to the equator. It’s much easier to move a satellite into a higher or lower orbit
than to change its inclination. And that’s why all launch customers have to decide how
their mission priorities and budget can align when
choosing how to get to space. It’s getting to the point
that hitching a ride on the really big rockets, it works for some people, it doesn’t work for all business cases. And so you’ve got smallsat
ventures that say, we want our own rides. Those customers will determine which of these small
rocket companies succeeds and which of the companies will fail. This is not the internet, where you build up a huge userbase and then you figure out
how to monetize them later. Launch doesn’t work that way. You’ve gotta built up
a backlog of customers. Out of the more than 120 small and medium-size launch
companies out there, just one is successfully launching rockets for customers right now. And that is Rocket lab. People can actually walk on
up to us and we’ll fly them. That’s a great competitive
advantage to have over, you know, folks that are
still developing a vehicle. Peter Beck’s Rocket Lab has raised over $280 million from outsider investors, with a valuation of more
than one billion dollars, and is currently flying
a rocket every 30 days. It looked what the hardest thing to do was to go from zero to first
successful orbital flight. But really, going from first
successful orbital flight through to producing one every month has been an equal amount
of stress and energy and complexity and toughness. We obviously, we’ve
completed our test flights, and moved into full commercial operations with the first flight
of its business time. And then straight on the heels of that, we flew our NASA mission,
and now we’re, you know, we’re building and launching one vehicle every sort of 30 days, every month. And while other rocket companies are looking to build their customer base, Rocket Lab can’t meet the
rising demand for launches. Our biggest issue is we
can’t broaden out profits. That is our challenge. We’ve built four and a
half acres of new factories and, you know, we’re pushing
in every direction we can to build more capacity. We fear that there aren’t, you know, we are the only dedicated
solution available on the marketplace right now. You know, at an affordable price. And so, what we see, a
tremendous amount of demand. So the demand is there,
that’s not the issue. The issue is figuring out
how to provide reliability, scale, and cadence, while keeping
prices as low as possible. And each company has its own approach. Every company has a unique
way to building their rocket. You know, whether they’re using liquid, solids, fuels, or a
combination of the two. Whether they’re 3D printing their stages, everyone has their unique
approach to getting to a rocket. However, the bottom line
is good business in space is exactly like good business on Earth. A focus on customers,
incremental successes, and a vision that’s supported
by a real business model is what works in space,
just as it works on Earth. One of the companies who believes they have a successful
business model is Firefly, a medium-size launch company
based out of Austin, Texas. So I’m gonna run through this
part of the procedure, ‘kay? Please set baming, press logic to the next
pressure increment, and and we’ll go in 10 PSI increments, starting from ambient, with a window of one. And so, in the next six months, Firefly’s gonna launch this rocket. We’ve been working on it for years now, and we’re gonna have that cathartic moment where we launch the rocket, everything’s gonna go great. But the outlook for Firefly wasn’t always so rosy. This is a very difficult business. There are a lot easier ways
to make money in the world than building a rocket company. And you have a lot of setbacks, you have technical setbacks, you have financial setbacks. But the most challenging one for me has been the financial setbacks. Firefly, like many other rocket companies, is familiar with financial setbacks. Vector, one of the more
well-known launch startups, ran into financial woes
in the summer of 2019, and saw their CEO depart amid uncertainty about the company’s future. Back in 2017, Firefly, then
known as Firefly Space Systems, was saddled with financial instability and filed for bankruptcy. That’s when Silicon Valley investment fund Noosphere Ventures swooped
in, bought their assets, and rebranded the company
to Firefly Aerospace. I’ve learned a lot about
the types of investors that you want to have involved in this. That learning has made us, I think, very strong to push through this time. As an investor and a
sort of, like, you know, one of the financial sort of
people behind the company, I try to encourage the company to think beyond simply building a product, but building a business. Thank God we went bankrupt, frankly. We have a better product now. I have a better partner, who lets me do what I’m good at doing and he funds the project, and I’m not off, you know, humping the dot com guys’ legs, please give me another $100,000. Now, after two years of R&D, they’re about to launch
their first rocket. Our plan is to have
five launches next year. All five of them will be from Vandenberg Air
Force Base in California. But the next thing is to
start adding technology as an established
company, and reusability, and continuing to drive the costs down. And we wanna do things in a different way. Companies like Firefly are hard-pressed to
differentiate themselves to stand out to investors
and attract customers. We’re differentiated by our payload class. Even among small launchers,
we are a big small launcher, so, our first rocket, Alpha, is capable of carrying
a thousand kilograms, whereas our competitors are more in the 500 kilograms and less area. That big a payload means they can service bigger clients such as NASA and other federal agencies
like the US Air Force. We are on track to be able to provide NASA lunar lander capabilities, landing on the moon in the 2021 timeframe when these would typically
be launched in early 2021. Firefly has restructured and rebuilt its organization
from the ground up, but the question remains if they can remain competitive
when it comes to price. We currently have a backlog
of about $1.3 billion, and a pipeline of over three
and a half billion dollars for our launch services alone. If we fly according to our
projected flight rates, we expect to be cashflow
positive by the end of 2020. We’re very conscious of cost, that’s one of the fundamental
tenets of Noospace, so Firefly will try to be
competitive with anyone. And we take all competition seriously. That competition comes not only from other small and
medium launch companies, but large ones as well. Like SpaceX, who announced
a smallsat solution priced as low as one million dollars for payloads up to 150 kilograms. Which equates to approximately
$15,000 per kilogram to put something in orbit. Coincidentally, that is exactly the same as the Firefly economics
for our Alpha vehicle. Firefly believes they can deliver something that Elon
Musk’s space giant cannot. Unlike SpaceX, where those satellites will be one of many,
quite possibly one of 60, our partners will have
the same unit economics, but will have a much more custom, dedicated offering, it
could be one of four or one of five satellites in our faring. Ride share’s not the best opportunity for a lot of small satellite customers. In some ways, it’s like hitchhiking. You don’t get to go exactly
where you want to go and you don’t get to go
on your own time schedule, and that’s important
to a lot of customers. In five years’ time, Firefly plans to not just
be launching a rocket, but a family of rockets. We are interested in building a multi-billion dollar business. And in order to do that, we know that we need
to be cost competitive with whatever the market throws at us, not just simply what the
competition’s doing today. And one of those competitors is in Long Beach, California. Virgin Orbit is an offshoot of Richard Branson’s Virgin
Galactic space company. And while they’re a
medium-size launch company, just like Firefly and Rocket Lab, their approach to getting
a rocket into orbit is a bit different. Virgin Orbit is a dedicated
small satellite launch vehicle that is seeking to revolutionize
the small satellite market. We’re utilizing our flying launchpad, it’s a Boeing 747 400
aircraft that we modified, and it has an attached rocket under the left wing of the plane. It’s a two-stage rocket,
liquid oxygen kerosene rocket. It has been flown before
and has many successes. Some of those other successes are by their sister
company, Virgin Galactic, who has used this
launchpad drop technology for space tourism instead
of small satellites, which they believe is a
difference maker in the industry. Everything we built around
the air launch system is meant to mitigate against,
you know, long-term delays. For example, an air launch system can fly in most weather conditions. Because we’re air launch,
our cadence is very quick, so it only takes four to six hours to really fuel the rocket, you know, attach it to the plane,
and take off on a mission. And having that flexibility, having that quick cadence turnaround time is critical to making sure that payloads can get to orbit when
they wanna get there. That flexibility is what most small launch companies
hope will set them apart. That responsive rapid launch to exactly where you want to go, that appeals to government users. Government missions, scientific missions, government military missions, government intelligence missions are all exploring the
potential for lower total cost small launch vehicles that can do exactly what they need, when they need it. And without even having a successful full-duration test launch, Virgin Orbit already has
a backlog of customers. Of course, we see the market expanding. There’s a lot of potential out there. So we certainly could see ourselves providing even more launch support than, between 20 and 24 a year, and of course that is a
more mid to long-term goal. Ignition. Liftoff. The future for companies like Rocket Lab, Firefly, and Virgin Orbit looks promising. But what about the hundreds of smaller launch companies out there? Will everybody survive? Probably not. There’s not enough demand
for 100 and some odd rockets that are currently in development. We absolutely believe that the window to invest in launch has already closed. There are some investors who made some early good plays here. That are going to work out very well, but at this point, the industry is well past that kind of venture capital investment
stage, in our opinion. So, we see it shaking out to
maybe 10 companies surviving. The launch industry is unforgiving. It’s not very tolerant of failures. On behalf of Arianespace, I wish to express my deepest apologies to our customers for the
loss of their payload. And telling them how sorry I am. If you’re having a bad run of luck, you don’t get a whole lot of
patience out of the market before people start using other rockets. The technology of space
activities is fascinating, the technological challenges
are extraordinary, the competence that it
requires to conduct operations in space is intimidating. The launch industry has an energized, passionate collection of engineers, venture investors, and designers singularly focused on
moving private enterprise off the planet. It’s not just a new industry, but a new way of seeing the
world and working above it. Once you have that cheap access to space, now you have entirely new business models that close that didn’t before. You have an entirely new cases
for space as an environment. You have an entire ecosystem
of support services that are developing to
support those satellites that are being launched in
the next five to seven years. And so, that has kind of unlimited amount of economic development, economic
growth possibility there. You know, I like of
liken where are right now to the very first
beginnings of the internet, where were just starting to send emails. That’s really where we are in space, we’re just starting to send emails. And if you think, if you
go back, when, you know, you just started sending
emails and if I said to you all of the stuff that was gonna occur because of the internet, you
wouldn’t believe me, right? You would think that’s just crazy. But that’s where I think
we’re at right now, is we’ve sent our first email, and now space is opened up to innovators to really try new things. That’s why perfecting the world of launch is just the beginning. Rockets aren’t just providing
a platform for spaceflight, but a platform for innovation as we figure out the business
of how we get to space. The next problem is where do we stay? On the next episode of Giant Leap, the International Space Station
its nearing its retirement. And NASA wants to open the
door for commercial companies to develop the technology and the business to create our next space habitats.

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About the Author: Oren Garnes

62 Comments

  1. More than a 100 companies? You mean the 1 that is actually going to achieve it? Led by the only guy that makes sense, yet your mainstream analysts call him stupid all the time? Despite the fact that he made several things reality that you said were impossible…. Anyway.. I'll see what you have to say but you better acknowledge his key role in this.

  2. Thanks for watching! New episodes of Giant Leap will be released each day this week, so be sure to check back each morning. What do you think will be the next disruptive industry in space?

  3. I don't understand how they can group Blue Origin with SpaceX Blue Origin has never even launched an orbital class rocket hell they haven't even shown it to the public which makes me doubt they will have anything ready to launch for at least a decade by then SpaceX will be on their 4th orbital class rocket the Starship V2.

  4. We are gonna build a giant wall between the earth and mars by 2100 and will make space aliens pay for it.

    – Trump 2019

  5. That’s some limited thinking. But I’m glad too see this. I’d start thinking about orbital trash collection.

  6. In Elon Musk,We Musk,We Trust,We Husk,We Dusk,We Rust,We Last,We Fast,We Tucks,We Cast,We Vast,We Yucks… yea thats about it :)))
    like for elonn!!!!

    Jeff who??

  7. Rockets are geeting cheap now. I actualy think soon a private company will build the first company owned space station. Maybe in 10 years if lsuper lucky, 20 if lucky 30 years if being realisitc.

  8. You didn't mention Russians, Indians, Chinese, Japanese who are all providing reliable and cost-effective launch services for decades. With a near-perfect track record, it's hard to beat them.

  9. the space industry is a complete racket. nobody in this video has ever been to space but yet they are all making $$$ off it

  10. "Large rocket companies like SpaceX, Virgin Galactic, and Blue Origin".

    Uhhh, what? Don't include Virgin Galactic as a "large rocket company", that just makes you sound ignorant to reality. Maybe swap out Virgin Galactic and Blue Origin with United Launch Alliance and Orbital ATK … and toss Virgin and Blue Origin into the wannabes.

  11. Refreshing to see an actually good documentary on the smallsat launch sector! (apart from Everyday Astronaut's stuff, which is also always great)

  12. satellites don't exist in space because space is fake. Space will be faked as long as space is seen as real but reality is only real if we do not allow it to be faked Hubble telescope is Hoax.
    No one's ever been to space or left low Earth orbit.
    NASA stupefied everyone with CGI.

  13. Really scared about how we are going pollute space. At some time we will be catastrophically destroying all the Satellites / space stationa like in Gravity movie. Where ever Humans go they will not use it but destroy it.

  14. Should we have to worry about satellite pollution? I imagine having thousands and thousands more satellites hovering around our planet will cause some secondary effects that we can't predict.

  15. You only know something exists when nothing exists.
    You only know nothing exists when something exists.
    What is that nothing?
    You only know sound exists when you hear nothing.
    You only know silence exists when you hear something.

  16. All those rocket payloads need insurance so the next frontier in space is insurance! Getting a reasonable insurance rate from a reputable deep pocketed company should placate costumers and investors . . .

    Insurance!!!

  17. what we need is a space ship. we need to reverse engineer the UFOs' anti-gravity propulsion system that we have in Area 51 and S4. this way we also eliminate carbon dioxide.

  18. Space is fake and so are you. You're not going anywhere and there will be consequences for everything done and everything undone. There is no escape.

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