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What the Future Holds

Moderator - We agree that the most important thing one could do for space exploration is reduce the cost of launch vehicles which everyone agrees is ruinously expensive. At the moment NASA and few other bodies have a monopoly on that. Why are launch vehicles so ruinously expensive and what's the best thing we can do to drop the cost?

Mr. Fleming - I think you have to look back at the history of launch vehicles. Everything including shuttle traces its history back to ICBMs and every ICBM traces its history back to being a glorified artillery shell. Artillery is not very good at being reusable.

The new companies in the field, small startups and perhaps big startups, have to reject that mindset which is not just NASA, they have to reject that and start looking like airplanes. If you have to take a 747 land it, take it apart reconfigure 20,000 components, re-certify, and do all the paperwork before you can take off again, you'd probably get 3 flights a year out of the 747. You can't run an airline that way.

Moderator - I'd like the panel to paint a picture for me of what the consequences are for NASA failure. Show me the benefits for a truly commercialized private space industry. What kinds of things might I be seeing?

Mr. Anderson - I can think of a number of things. First of all the cost of existing industry. We can reduce the cost of putting satellites in orbit and servicing them in orbit. We can build bigger antennae arrays which means smaller satellites which can put more power to earth. Just existing business, which is a proven business model, can become more efficient …Solar power satellites could provide power to a large part of earth, but right now the economics aren't there because launch costs are so high. There are asteroids with valuable minerals can be places in orbit and mined at a very low cost using solar power.

Mr. Fleming - Let's imagine a profile of this company which is going to take an astronomical amount of money to get off the ground with capital costs of lets all it $100 million. Lets say it's going into a market that is dominated by government and by multi-billion dollar corporations that are well-established. Let's say its incredibly influenced by government regulation. You have to make very critical science and engineering decisions on day one of the enterprise and not no for many years whether or not those were the right decisions. Sometimes the science and technology just flat doesn't work and what you invested in is a complete write-off. We've got human lives at stake. Is this an investable company?

I just described a bio-tech company! We've been doing this for the last twenty years. What's the difference between a space company coming to a venture capital firm and a biotech one? The difference is with biotech the market is obvious. If you develop a pill the cures heart disease or you develop a pill that cures cancer or you develop a widget that lets people with Parkinson's disease function more normally, the payoff is obvious because it is an obvious market. What the small private space companies have historically failed to do and now in the last couple of years are begging to do is come to investment sources talked about baby steps towards markets that actually make money, rather than spending $100 million before you see the first dime. There is trillions of dollars floating around in venture funds that sure as hell is not going into telecom deals this year. There's a whole bunch of funds that need to figure out what to do with their money.

Mr. Anderson - The last few years of writing a business plan & concept and getting money are over. The space industry never benefited from the dot com craze … There are people in this room and that I have met in the last few years that have very focused plans to build very specific products to serve very specific markets and they don't need billions, they need millions.

Moderator - Give me some good stories. Tell me what the world is like now. Perhaps you'd like to suggest from some lessons from the past that commercial ventures could benefit now.

Mr. Musk - I think there is opportunity in the space industry. It's not in anything incredible exciting. There is tens of billions of dollars going into space every year. It's in basic stuff like communications satellites. Launches vehicles to get the satellites up there. Defense spending. If you want to build a company that is going to succeed, meaning that you will bring in more cash than you will spend, then you have to address the current market. Once you address the current market perhaps other markets will open up down the road.

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