“If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”
Antoine de Saint-Exupéry
It’s obvious that humanity hasn’t been careful with regards to resource extraction. Despite only having one planet – a pale blue dot adrift in the cosmos – corporations and people abuse Earth like it’s an infinite cornucopia. Like any good relationship, there’s a balance of give and take. And, for life to flourish, it requires certain inputs that only Earth has been able to provide. This won’t be the case much longer.
Nature’s untold riches are nowhere more abundant than in space. NASA has claimed that the amount of wealth hidden in a typical asteroid in the Kuiper belt adds up to over $100 billion per person in the form of rare, platinum-based minerals. But are they practical to bring back to Earth and do we need a space economy first?
The current hype in the space sector is trying to match the demand for cheap bandwidth: companies are launching cheap satellites to provide high-speed internet access to rural areas. Contemporary satellies made by ViaSat are 36,000 km in space and monolithic, resulting in higher latency communications as the transmission times are too slow. However, SpaceX through its Starlink project and OneWeb are launching satellites that are only 340 km from the Earth’s surface, cutting the time delay by a factor of 100. The pervasiveness of these satellites will result in an accessible internet economy for everyone.
The Mars Flywheel
“We see [Starlink] as a way for SpaceX to generate revenue that can be used to develop more advanced rockets and spaceships…This is a key stepping stone on the way toward establishing a self-sustaining city on Mars and a base on the moon.”
Elon Musk
Much of the world’s learning and debates take place online; yet from the get-go, over 3 billion people don’t have the chance to participate. One interesting project on this note is Pioneer, a platform to find and fund the “lost Einsteins” in our world. What if Musk was born as an Uighur in modern-day XinJiang forced into some concentration camp – who would have built Space-X? Providing internet access is the first step in turning humanity into a cohesive hivemind. But what happens next?
As the diagram displays, SpaceX started off with the high-risk, lower-margin business of launching rockets to fund Starlink, which carries much higher margins. Starlink amortizes itself fairly quickly, so the fixed cost of sending thousands of satellites to space is worth it once people are accustomed to Starlink’s cheap and high quality of service. Physicist Casey Handmer did a preliminary analysis of what the unit economics for Starlink might be: “Even taking into account its ludicrously low usage fraction, a Starlink satellite can deliver 30 PB of data over its lifetime at an amortized cost of $0.003/GB, with practically no marginal cost increase for transmission over a longer distance.”
The fixed cost creates a unique competitive advantage for SpaceX: the business funds the Mars journey all while providing internet usage to millions across the globe. It’s an obvious enough strategy that Amazon is pursuing the same with Project Kuiper, led by the ex-head of Starlink. The race to space is on.
“On any day in the last 5 years there were on average 640,000 people online for the first time. This was 27,000 every hour.”
“Any planet is 'Earth' to those that live on it”
It seems obvious that we need an ecosystem around space. For example, big-box retailers only became viable once the American populace generally owned cars. What are the big-box retailers of space? Inherently, this is predicting second-order effects so results will vary. Regardless of the answer, we need an ecosystem and to build upon those layers to progress. Nothing will be achieved if people don’t want to live in space – it’s an essential step.
Projects like Starlink and Kuiper allow entrepreneurs like Musk and Bezos to take even greater risks once they have sustainable cash flows. The question remains though of how we ignite the interest in space? On the opposite side of the spectrum, Virgin Galactic has carved out its own niche by creating a hype around space exploration. Communication satellites don’t exactly inspire your average citizen; however, if they were able to wistfully see their friends fly into the cosmos, I believe it would be undeniably compelling.
Galactic is betting that people who have a net worth greater than $10 million would pay $250k to take a 90-minute journey into sub-orbital space where they’ll experience weightlessness. It seems steep for the price, yet the demand is certainly there. Virgin Galactic boasts $80 million in ticket pre-orders already. The next boon is that they own The Spaceship Company as well; they can manufacture their own aircraft while other competitors might have to buy from a vendor like SpaceX.
The the vertical integration of travel is compelling – if you make your own aircraft, you’d want to charter it for flights as well, which embody higher margins than the one making the item. For instance, Apple takes the majority of the margins from the iPhone while FoxConn has to fight tooth and nail to survive. Once you start leasing out the product such as airplanes, you can price differentiate. This is how some people pay over $20k for a first-class ticket from LA to Sydney. And in perspective, the trip to Everest can cost more than $100k. Fewer than 600 people have ever been to space; Virgin Galactic is charging merely 1.5x more than the cost of Everest to undertake a journey most of humanity never experienced.
As recorded, the first trips to the New World were abysmal and Malthusian; it took countless voyages where death tolls were greater than 50% to sustain Jamestown’s population for the brief hope that people would trust in the possibilities of America. Eventually the replenishment rate was high enough and the cycle was self-sustaining. I think it’s the same with space; as people become accustomed to space travel, opportunity will follow in lockstep. Once demand is there, more providers will be dealing in space tourism and its overall economy.
In the beginning, I see two paths. If we continue the trend we’ve witnessed for the next two decades, outer space will be a haven for the rich; a steeper price point means that the first viable business models will be centered around pleasure. We’ll see longer journeys that act as pseudo-networking events away from the prying eyes of governments.
This can culminate with a fledgling moon base, which could be utilized as an escape from Earth over time. Think of it as another Switzerland or the Hamptons – a private getaway for the ultra-wealthy. Indeed Orion Span, an aerospace start-up, is working on a modular space station placed over low-earth orbit that will take travelers on a two-week escapade for $10 million. Every day travelers will be present for 16 sunrises and sunsets.
The other strategy is that with a two-stage launch system, orbital rockets allow for speedy global travel and drop the price point low enough for the masses. SpaceX is working on rockets that could take people anywhere on Earth in 90 minutes. Reusuability means that a rocket’s first-stage isn’t expensive and can be amortized. The second-stage would be transporting passengers across the world.
What would such an experience feel like?
“Takeoff would certainly be noisy, as would landing for nonwinged options, so the pads for such systems would probably have to be platforms located some tens of kilometers offshore, or else far out in open country or desert. This suggests a brief boat, seaplane, or helicopter ride would also be part of the trip. Also, an aspect of the experience of a transglobal flight would be about forty minutes of zero gravity and the same view of space that astronauts get.”
Robert Zubrin
Because many of these rockets would be moving in unison and they can hold hundreds of passengers, the economies of scale would result in a cost attractive enough for the masses, helping propagate the idea of space travel to anyone.
Space piracy
Only when people live in space does asteroid mining become a viable option. It otherwise makes no sense to transport rare minerals to Earth to suffer dreadful commodity prices, so we need a flourishing economy in space to make asteroid mining viable.
The idea is remarkably analogous to my recent charter city piece: there’s a stack that we need to build before certain projects are attempted. How are we going to build Facebook before TCP/IP? It doesn’t make sense. In this way, asteroid mining was jumping the gun.
The last decade saw a bubble form and pop in asteroid mining. Before the 2010s, two companies, Planetary Resources and Deep Space Industries were formed to take advantage of SpaceX’s cheap orbital access with the Falcon series of rockets. At the same time, Luxembourg proudly proclaimed that it would be the “silicon valley for asteroid mining.” However, it became apparent that the structural challenges and the idea maze behind asteroid mining were unsolved and that it required an operating budget larger than SpaceX: investors were not happy. Therefore both companies ended up selling for parts; in fact Planetary Resources sold to notable blockchain consultancy, Consensys, in a strange twist of fate.
The idea is definitely viable, but it seems unlikely that mining can be undertaken without a space base, preferably on the moon, first. Why the moon? It’s proximity to Earth and pervasiveness of minerals would allow rockets to replenish fuel and zip back home.
Mars is impractical as a base with which to mine asteroids. The distance and cost to send and receive resources would be immense. Space is tough enough as is, there’s no need to complicate the challenge of the final frontier. Certainly, history is rhyming once more. The siren song and the vastness of the oceans called out to adventurers and we conquered those; the skies were the daunting next step and now aerospace is remarkably convenient; the last step is permitting anyone to wallow in the bewilderment of the pale blue dot from the cosmos.
“Extinction is the rule. Survival is the exception.”
Carl Sagan