Far from being out of this world, Musk’s space strategy is classic Silicon Valley
As risky, long-range technology bets go, they do not come much riskier or longer range than space exploration. The term “moonshots” is applied to other grandiose tech projects for a reason.
But the mystique around space obscures what are often very mundane reasons for success and failure.
That has been evident again this week as Jeff Bezos’ Blue Origin finally named a date for its first, long-delayed mission to send a tourist into space. It has taken 21 years to reach this point, and it comes only after the Amazon founder upped his personal backing to $1bn or more a year.
Rival space tourism entrepreneur Richard Branson is still struggling to even get this far. A new book, Test Gods, underlines again the challenge his Virgin Galactic has faced in trying to turn a brilliantly improvisational piece of spacecraft technology, first used to win the X Prize, into dependable transport for mass tourism.
It is tempting to see this as proof that space lies far outside the normal run of technology investment and is accessible only to billionaires with cash to burn.
Yet private space development need not be this way. The obvious counterpoint, Elon Musk’s SpaceX, is younger than Blue Origin by two years but outstripped its would-be rival long ago. It first reached orbit in 2010, since when its Falcon 9 rocket has become the low-cost workhorse for lifting payloads into space.
The scale of this success, and the central role SpaceX could play in space exploration for many years to come, is only just becoming apparent. After handing yet another contract to the company last month, this time to operate a moon lander, Nasa declared a hasty review of competition in the commercial space industry to see if there is any way to prevent it becoming a one-company game.
An emergent space monopolist and a dabbler in zero-gravity tourism: the contrast between the planet’s two richest men as they turn their sights to the stars could hardly be starker.
With hindsight, Musk’s triumph has followed a classic Silicon Valley arc and suggests that space is not so out of line with the usual tenets of tech investing, after all. It involved a time-tested strategy: ride on the back of government-funded research, while also using government as the anchor customer to fund the development of a new market.
SpaceX didn’t attempt to reinvent the wheel when picking its core rocket technology or planning for crewed flight. Instead, it built on what Nasa had done before. And it put all its effort into building a rocket aimed squarely at the Nasa and the Pentagon launch budgets.
That formula echoes Silicon Valley’s origins, working in electronics for the defence industry, as well as its later boom on the back of the government-funded internet. The timescale was barely outside the scope of other big venture-backed bets, and Musk was able to bring outside investors on board almost from the outset.
The second part of the Silicon Valley formula involved a disruptive economic model. The secret of SpaceX’s success has been its command of fixed-price contracting, a new technique that a cash-strapped Nasa has used to stretch its budget further. Space contractors brought up in the previous cost-plus world have struggled to adapt. A Nasa study credited SpaceX with leaner staffing, fewer levels of management and a new supply chain that didn’t depend on the automatic mark-ups contractors applied in the past.
The extent of this economic disruption is likely to reverberate through the space sector for years. Nasa calculated that SpaceX’s Falcon 9 rocket took under $400m to develop, less than a tenth of what it would have cost to create the rocket under its traditional contracting method.
By contrast, Bezos’ decision to set his sights first on suborbital space tourism looks almost whimsical. Blue Origin’s next plan involves a big leap into high orbits with a planned monster rocket called New Glenn.
Much of the money for commercial operators in space, though, has been in between, in low earth orbit. Getting cargo and crew to the International Space Station, or launching constellations of communications satellites, have produced plenty of cash to feed SpaceX’s growth.
For good measure, Musk’s company is now pursuing another time-tested Silicon Valley plan with the launch of its own broadband satellite service, Starlink. This echoes a strategy used by Microsoft to dominate PC software, and Apple to cash in on its iPhone. First, build a dominant new tech platform (a low-cost way to get to space), then create the “killer apps” that the new platform makes possible (the space-borne broadband network).
It’s too early to tell if SpaceX will make it in the crowded broadband satellite market, but its record makes it hard to count out.