One of the greatest business successes over the last 20 years has been SpaceX’s rise to dominance. SpaceX now launches more rockets to orbit than any other company (or nation) in the world. They seem to move fast on every level, out executing and out innovating everyone in the industry.
Their story has been rightfully told as one of engineering brilliance and determination.
But at its core, the key their success is much simpler.
There’s a clue in this NASA report on the Commercial Crew Program:
SpaceX and Boeing have very different philosophies in terms of how they develop hardware. SpaceX focuses on rapidly iterating through a build-test-learn approach that drives modifications toward design maturity. Boeing utilizes a well-established systems engineering methodology targeted at an initial investment in engineering studies and analysis to mature the system design prior to building and testing the hardware. Each approach has advantages and disadvantages.
This is the heart of why SpaceX won. They take an iterative path.
Taking the determinate path
Let’s talk about the Boeing philosophy first, which is the most common approach taken by other traditional aerospace companies. “There are basically two approaches to building complex systems like rockets: linear and iterative design,” Eric Berger writes in the book “Liftoff” about the early history of SpaceX:
The linear method begins with an initial goal, and moves through developing requirements to meet that goal, followed by numerous qualification tests of subsystems before assembling them into the major pieces of the rocket, such as its structures, propulsion, and avionics. With linear design, years are spent engineering a project before development begins. This is because it is difficult, time-consuming, and expensive to modify a design and requirements after beginning to build hardware.
I call this the “determinate path” — in trying to accomplish a goal, the path to get there is planned and fixed in advance.
It’s been a while. Although I have 3 or so posts outlined and in various states of completion, life has gotten in the way. My wife and I’s first child is due in a few months (Are we in the thick of a post-Covid baby boom?) and in an act of complete lunacy this summer we started a major home renovation. This has, to put it mildly, put a damper on my free time.
Nonetheless I really wanted to write a bit and put something out there. So instead of the typical focused post, I’m doing it roundup style. Each section below is an area I follow or find interesting.
Here’s an outline of the roundup so you can jump to whichever section sounds interesting:
A 10x reduction in cost to orbit has already started to change things. The next 10x reduction will lead to outcomes and use cases much harder to comprehend or predict. It would have been hard for anyone in the late 1800s to predict what drastically lower costs of energy and electricity would eventually bring. Or for anyone in the 1970s to predict the consequences of abundant computing power and ubiquitous global communication (Reddit? NFTs? Protein folding?).
But we can try.
This summary is focused on some of the changes we’re likely to see in the next 5 to 20 years. A lot can happen in that time frame. For reference, it’s taken SpaceX only 19 years to accomplish what they have. But progress compounds and is exponential — especially so once a tipping point like this has been crossed. The change we’ll see in the next 20 years will dwarf that of the last 20.
(Quick note: This isn’t meant to be comprehensive. It’s a highlight of the new areas I find most interesting, and doesn’t include anything on the two biggest space segments: communication and Earth observation. Although there are plenty of interesting potentials here — like globally available high-speed internet [Starlink] or ubiquitous, near-real-time worldwide monitoring [Planet].)
Infrastructure
Transportation & Launch Services
The progress of SpaceX, the current leader here, was detailed in Part I. Given the Falcon 9’s low costs, it’s likely to be the preferred choice for medium-sized payloads, and even smaller payloads with rideshares.
Until now, SpaceX has self-funded their Starship super-heavy launch vehicle. That changed a few weeks ago when NASA announced that Starship had won the contract to land humans on the Moon again. This is huge. The contract will fund $2.9 billion of development costs and speed up the timeline for Starship to become human rated. With the pace of their current development, Starship is on track to become fully operational within 3 years. This should keep SpaceX the leader for heavy and super-heavy launches for some time.
When it comes to delivering humans, the other Commercial Crew competitor, Boeing, is more than a year behind after testing mishaps. Blue Origin may the next best bet for heavy-launch vehicles and a dark horse candidate given its potential funding from Jeff Bezos. There’s multiple smaller upstarts like Rocket Lab,Relativity Space or Astra at the low-end of the market, potentially moving disruptively upward. SpaceX blazed the path for these rocket companies, showing how far costs can come down, and proving that lower prices can expand market size.
Also included in this category are spaceports. Most spaceports are currently owned and operated by governments — like Kennedy Space Center at Cape Canaveral, Florida, or Vandenberg Air Force Base in California. This will start to change in tandem with the growth of commercial space.
Spaceport America in New Mexico is an example of an all-commercial spaceport, similar to most airports in that it’s owned and operated by the state. Rocket Lab built their own spaceport, Rocket Lab Launch Complex 1, in New Zealand. SpaceX’s R&D facilities in Boca Chica, Texas are now being converted into not only a spaceport, but a township to support Starship launches. Given Starship’s eventual importance, there’s no doubt this will become a hub of activity. Launches, and more importantly landings, will also take place on converted offshore oil rigs.
Most current space activity takes place in Earth orbit. As it becomes cheaper to leave the influence of Earth’s gravity, we’ll start expanding further out into the Solar System. The best staging point for this expansion isn’t spaceports on Earth — it’s the Moon and lunar orbit.
The Moon has one-sixth the gravity of Earth and no atmosphere. The means the energy (or delta-v) required to launch from its surface is much lower. The Moon also contains 600 million tons of ice, and its soil is 40-45% oxygen by mass. These raw materials can be used to produce propellants for launch, along with water and breathable oxygen — nearly 100 grams for every kilogram of soil. A Moon base is not far off in our future.
On the Moon, concepts like space elevators or skyhooks also become possible[1]. Imagine a structure — similar to piers going into the ocean — extending from the lunar surface into orbit. Satellites can be sent up the elevator into orbit and ships can “dock” at the top, where supplies can be loaded with much less energy cost.
Once other infrastructure like commercial space stations and lunar bases get set up, I think we’ll start seeing regularly scheduled launches to specific destinations. From quarterly launches to monthly, weekly, and eventually daily. (Questions to ponder: Can rockets fit in the existing intermodal shipping system? What would a new space-specific intermodal container look like?)
Expansion of life across our solar system and beyond has been a dream of mine since childhood. Of course, this isn’t uncommon among other sci-fi enthusiasts, or anyone who grew up knowing we’ve sent humans to the Moon but haven’t sent them back in nearly 50 years.
Space is fascinating for many reasons. It’s a frontier in every sense: physically, technically, even socially. It’s at the bleeding edge of what humanity is capable of. “Looking to the stars” and “shooting for the moon” are common idioms because space has defined our limits for generations.
Now (finally!) the technical and business tailwinds are coming together to make it possible. The cost and ease of getting to space are about to improve by many orders of magnitude. This will drive the space industry to be one of the biggest sources of growth over the next 10-20 years.[1] It will make existing technologies cheaper and more ubiquitous, like allowing worldwide high-speed internet in even the most remote, rural areas. It will also open up a host of new possibilities previously only imagined in science fiction.
This is the first of a two-part essay on the upcoming future of the space industry. I’ve been closely following SpaceX’s progress in particular since their first launch of the Falcon 9 in 2010, so I’m excited to finally write about it.
Why now?
TLDR: SpaceX has pushed cost to orbit down by 10x, and will by another 10x in 5 years. Along with further commercialization and government funding, a threshold has been crossed.
The success of commercial launch services puts the space industry in the same place as the early days of railroads in the 1800s or commercial ocean shippers in the 1600s. The key here is early days as things are really just getting started.
The “why now?” can be reduced to one chart — the average cost to get 1 kilogram to orbit:
In the next section I’ll go over the reasons why this makes such a big difference. But first, how did it happen? As should be evident by the chart, this is essentially the story of one company — SpaceX.
The driving ambition for Elon Musk when he founded SpaceX in 2002 was to drastically reduce the cost of escaping Earth’s gravity. Their “MVP” was the Falcon 1, a single-engine rocket that could launch small satellites. Falcon 1 only launched 5 times, with only the last 3 succeeding. Haven proven viability, SpaceX quickly moved onto production of the Falcon 9, a scaled up version with nine Merlin engines eventually capable of delivering over 22,000 kg to Low Earth Orbit (LEO). Here’s the price progression of each SpaceX rocket, starting from the base of what a conventional rocket costs:
From a conventional rocket price of $10k per kg to LEO, to a price of $60/kg for a Starship with 50 launches, over 100x lower. See the Google Sheet here to check my math.
Driving the first order-of-magnitude reduction in cost are the following:
Better incentives. Traditional government contracts were cost-plus. This incentivizes contractors to increase their costs both to make more profit and for more admin overhead to track expenses. With fixed-prices, companies are incentivized to drive costs down as much as possible.
Standardization of launch config. Rather than customized configurations for each launch and customer, SpaceX “productized” the Falcon 9, allowing for cheaper setups and repeated processes.
Reusability. Why is air travel cheaper than space travel? It’s obvious, right? Aircraft are reusable while rockets are destroyed after a single use. But not anymore, as anyone not living under a rock now knows that SpaceX can land and reuse the first stage(s) of their rockets.
And the next 10x reduction with Starship:
Bigger rocket. There are economies of size in rocketry: The bigger the rocket, the higher the payload-to-fuel ratio can be.
Full reusability. 100% of Starship will be reusable, allowing dozens (or hundreds?) of uses for each stage and engine.
More launches. The more launches you can sell in a year, the less markup you need to charge to cover admin costs. Economies of scale and purchasing power are also achieved in raw materials and fuel production.
Refuel in orbit. Starship can park in orbit while it’s refueled by up to 8 other launches. This makes payload capacity to orbit the same as payload capacity to nearly anywhere in the solar system. Imagine what we can do with the ability to send over 100 tons to Moon, Mars or Europa.
Government funding, particularly from NASA, has been a key enabler. Without these contracts it would have been very difficult for SpaceX to fund R&D. And they’ll continue to play a key role for SpaceX and other commercial space providers. In recent years NASA has stepped up their commercial contracts significantly, and with further falling costs this is likely to continue. (See footnote [2] for a list of recent milestones.)
This moment for space companies is the equivalent of 1995 when the NSF dropped all restrictions on Internet commerce, which let private companies take over the backbone. The breaking of the dam that releases a tidal wave of activity.
The cost-driven industry flywheel
Expensive launches aren’t just costly in their own right — they lead to cost inflation of everything else. If it costs $100M to get a satellite to orbit, reducing the cost of development from $10M to $5M is only a 5% difference. So why not over-engineer, paying up for components and testing to ensure everything is perfect? Now if a launch costs $10M, there’s more incentive to cut costs. Even if there’s an issue, a second launch is much cheaper. Order-of-magnitude-lower launch costs will lead to similar decreases in payload costs.
Currently, the cost to launch a satellite has declined to about $60 million, from $200 million, via reusable rockets, with a potential drop to as low as $5 million. And satellite mass production could decrease that cost from $500 million per satellite to $500,000.
More launches will lead to even cheaper costs, which will lead to cheaper payloads, which… see where I’m going here?
There are 4 distinct feedback loops here, all driving more launches. Not shown in this diagram are balancing (negative) loops involving things like launch failures or excessive regulations.
SpaceX has initially started the flywheel that got the industry to this inflection point.[3] But it won’t be the only one turning it. Ultimately to truly take advantage of space transportation we’ll be seeing many competing service providers, at all different levels of payload size and capability.
The flywheel is already turning and has led to a higher volume of launches:
At some point in the near future we’ll be seeing a launch per day, with spaceports treated more like shipping ports: hubs of travel and commercial activity.
Current state of the industry
Before moving on to Part II, I want to quickly review the two main categories of payload currently being launched:
Government research and exploration.
International Space Station cargo. In the U.S. this encompasses missions for Commercial Resupply (sending equipment and supplies) and Commercial Crew (sending people).
Other research and exploratory efforts. This includes missions like the recently landed Mars Perseverance rover, the James Webb Telescope set to launch after much delay later this year on an Ariane 5 rocket, and the Europa Clipper set to launch in 2024.
Satellites. Communication and Imaging satellites account for a vast majority of the space industry. Exploratory missions get all the publicity, but they are currently very tiny. This will continue, especially with broadband internet constellations.
The use of communication satellites in particular is already a ubiquitous part of everyday life: from GPS navigation[4] to phone calls, TV signals, internet, and more. Satellite imagery as well: what once was a tool for only the military and intelligence agencies of large governments is now used by anyone with a smartphone.
Satellites come in a range of sizes, from tiny CubeSats the size of a shoebox launched 100s at a time; to huge geostationary satellites that take up the entire payload of a rocket.[5] Most of this hardware — particularly for the larger ones — requires costly, sophisticated engineering and infrastructure. The full stack can include satellite manufacturers, operators, suppliers, and ground equipment. As costs come down, so will satellite size and launch frequency.
What’s to come
I hope I’ve convinced you that getting to space is about to get a whole lot easier.
In Part II, I’ll talk about the progress we will potentially see in space in the upcoming 10 to 20 years: commercial space stations, tourism, manufacturing, mining, exploration and more.
Footnotes
The same is true for biotech in the upcoming decades. Areas like AI and Crypto will play big roles as well, but they’re not the thing. They’re the “thing that gets us to the thing“.
Here’s a timeline of a few milestones:
2008-12 — Commercial Resupply Services (CRS) contract of $1.6B to SpaceX and $1.9B to Orbital Sciences to deliver supplies to ISS. This helps fund Falcon 9 development.
2012-05 — SpaceX Dragon capsule launches “empty” to perform tests and dock with the ISS, the first commercial spacecraft ever to do so.
2012-10 — SpaceX CRS-1 mission sends Dragon with supplies to ISS. Dragon is the only cargo vehicle at the time capable of returning supplies to Earth.
2014-09 — NASA awards final Commercial Crew Program (CCP) contract to SpaceX ($2.6B) and Boeing ($4.2B) for the capability to send 4-5 astronauts to the ISS. First flights for both initially planned in 2017.
2020-04 — NASA awards lunar lander contracts to Blue Origin, Dynetics, and SpaceX under the Artemis program. The goal is to land “the first woman and the next man” on the Moon by 2024.
2020-05 — Commercial Crew Demo mission sends 2 astronauts to ISS. These are the first astronauts on a commercial mission, and the first from US soil since retirement of the Space Shuttle in 2011. 10 million people worldwide watched it live.
2020-11 — Crew 1, the first operational flight, sends 4 astronauts to ISS. Due to delays and other issues, Boeing’s Starliner isn’t set to fly for another year.
2020-12 — NASA awards Blue Origin a Launch Services contract to transport planetary, Earth observation, exploration and scientific satellites.
Elon Musk is a master at many things, but one of the greatest is his ability to get massive, company- or industry-wide flywheels moving.
Global Positioning System (GPS) was developed by the military in the 1960s but not made public until 1996. GPS is an extremely critical part of our current technical infrastructure. Every time you use your phone to navigate, order food, or track your run, it is pinging multiple GPS satellites to triangulate your exact location.
Here’s a good visual size comparison of satellites:
Last week I was outside of Vandenberg Air Force Base to watch the launch of SpaceX’s Falcon 9 rocket. (It was perfect weather and an amazing experience for my first launch!) To commemorate it, this is another one of a handful of product case studies I wrote to help understand successful product launches.
Falcon 9 was finished in early 2010, and had been in development since 2005. Its first flight occurred on June 4, 2010, a demonstration flight to orbit where it circled Earth over 300 times before reentry.
1st flight to ISS: May 22, 2012
1st cargo resupply (CRS-1): October 7, 2012
1st successful commercial flight: September 29, 2013
Development costs for v1.0 were estimated at $300M. NASA estimated that under traditional cost-plus contracts costs would have been over $3.6B. Total combined costs for F9 and Dragon up to 2014 were ~$850M, $400M of that provided by NASA.
By September 2013, the SpaceX production line was manufacturing 1 F9 every month.
(1) Value created — Simply describe the innovation. How did it create value?
The Falcon 9 is a two-stage rocket that delivers payloads to Earth orbit or beyond. It’s a transportation vehicle to space. F9 drastically reduced launch costs, allowing NASA and small satellite companies to send payloads at a fraction of the cost.
(2) Value captured — Competitive advantages, barriers to entry. Why didn’t incumbents have a reason to fight them?
Ahead on the learning curve — highly advanced, experiential, expert knowledge
Capital and time barriers — lots of money and time needed to get to scale
F9 was a disruptive innovation, built from the ground up at low cost. Incumbent launch companies had no reason to start from scratch and lower their profits when they had strong (mainly cost-plus) contracts with existing customers. Industry was viewed as very inelastic and that little demand existed at low end.
FutureBlind 