The business of space travel

By Pascal-Emmanuel Gobry on August 13th, 2013

Just as China built ocean-faring boats only to destroy them later and cede exploration, and ultimately the modern era, to the West, governments of the world have given up on space exploration. The United States didn’t just retire the Space Shuttle: it purposefully designed it to be useless. Not since the Apollo Program has any government been serious about space exploration. Thankfully, entrepreneurs have begun to tackle the opportunity. We’ve heard about Virgin Galactic. We’ve heard about SpaceX. What these companies are doing is interesting, but are they taking us closer to the science-fiction dreams of true space exploration?

In order to get there, we need to have not just the right technology, but also the right business models. It’s only when profitable, scalable business models for space exploration are achieved that it will begin in earnest. To put it another way: dreamers and zillionaires built the first – and some of the greatest – cars, but only when Henry Ford came on the scene did we truly enter the car age. And Henry Ford became Henry Ford not because he was a better car designer. His chief innovation was the assembly process, which allowed him to make cars much more cheaply, inventing a new model for car manufacturing.

Inventing a new process led to inventing a new business model which led to radically cheaper cars which led to a radical transformation of society. What will be the business model of the space age?

Space Tourism

The first business model for private space travel was space tourism, but it’s clear that it won’t be the business model of the Space Age. It might be profitable, because Planet Earth has certainly no shortage of rich people looking to be parted with their dollars for the feeling of weightlessness, but people didn’t settle in America because of the pretty sights. They did it because it offered a new life – and the dream of wealth.

As things stand, Virgin Galactic is the most prominent space tourism company, but it’s clear that it’s little more than a marketing arm for Virgin Airlines. That is, of course, totally fine, but let’s not kid ourselves that Richard Branson is Christopher Columbus.

Asteroid Mining

Another business model that has been touted lately is mining ore from asteroids. Planetary Resources, a company incubated by billionaires is promising to harness mineral-rich asteroids, mine them, and bring the minerals back to Earth. At first, it sounds like a promising idea. The technological challenges are daunting, but they always are when you’re talking about space. There’s only one problem: basic economics.

Why are some minerals expensive? It’s not because of their intrinsic properties. It’s because of supply and demand. There is high demand for a lot of minerals, and supply is limited, because digging stuff out of the ground is expensive. (So expensive that, despite their massive size and oligopolistic tendencies, mining companies typically aren’t very profitable.) Because prices are subject to the forces of supply and demand, if you were to find a great new supply of some expensive mineral… the price would fall. That would be great for the world, but not so much for the companies bringing it to market.

If an asteroid mining company got off the ground and managed to tackle all of the technical challenges required, it would quickly become a victim of its own success as it flooded the global markets with its goods. Ultimately, commodities are commodities. Space gold isn’t worth more than Earth gold; it’s just an element in the table of elements.

Maybe our asteroid mining company would try to  keep prices up artificially, by becoming some sort of OPEC of space, but that would lead to a few problems. One, governments, spurred by customers, might not look so kindly upon this (and even if they couldn’t seize the starships, they could certainly seize the company’s Earth-bound executives and bank accounts). Two, competitors would certainly try to match the company’s achievements. If one company proves the feasibility of asteroid mining, fast followers won’t be slow to bring up the rear (a truism, but one worth repeating).

It’s hard to break Saudi Arabia’s monopoly because it sits on the oil, but space is free and asteroids are countless. In any case, the dynamic would always be the same: prices going down as supply goes up, and profitability with it. That’s not to say asteroid mining can’t be a worthwhile endeavour, as mining is on Earth. But it’s likely to be a commodity business, with commodity return on investment, and not the game changer that takes us to a new Space Age.

(Is it possible to imagine an “Amazon of space” that, despite very narrow margins, manages to dominate asteroid mining so much that it becomes a game-changing company? Perhaps. But if that’s so, it’s only because going to space and bringing back ore is this extremely tricky thing that only one company can master, and that, ipso facto, means that we haven’t entered a Space Age of easy, cheap spacefaring.)

Reusable rockets

Now we’re talking. The big problem with space exploration as it currently stands is that rockets are expendable. If you had to blow up your car each time you got somewhere and buy a new one to get back, we’d all still be riding horses. Now, reusable rockets sound like common sense, but it is a fiendishly hard thing to do. A rocket is put through unimaginable friction and heat as it leaves the atmosphere, and then again as it re-enters it – so much so that it usually disintegrates, and, when it doesn’t, is so damaged that it is still unusable.

Trying to make the rockets sturdier to fix the problem runs into the cardinal problem of engineering: trade-offs. If you put more metal on your rocket so it’s sturdier, it gets heavier even as it has less room for fuel… and, before you know it, it won’t take off. (Or will take off only if you don’t put cargo on it, which sort of defeats the purpose.) And if you want to reuse it, it doesn’t just need to make it back in the atmosphere intact, it needs to be able to land somewhere. Which means designing extremely complicated avionics and landing systems, and packing even more fuel which will only weigh down the rocket on the way up.

Another problem is that the kinds of rockets and fuel you need inside Earth’s atmosphere and to leave it and outside Earth’s atmosphere are very different, which explains why rockets have stages and the various “space-planes” that have been considered have all been stillborn (yes, that includes the Space Shuttle). Rockets are still, for the foreseeable future, the best way to get to space. But until they become reusable, they’ll be too expensive to change the game.

So reusable rockets are complicated. But are they possible? SpaceX founder Elon Musk has made it clear that his company is hard at work on them. SpaceX has been successful so far because it has very deftly picked all of the low-hanging fruits of space exploration: bypassing the insane “cost-plus” government contracting rules that dominate the space industry and needlessly inflating the costs of rockets. But the real apple is reusable rockets, and Musk knows it.

Another contender is Amazon founder Jeff Bezos. Bezos has a space company, Blue Origin. And what’s noteworthy about this company is that so little about it is noteworthy. Bezos is nothing if not an ambitious, clever man. SpaceX is winning contracts to launch cargo into space left and right, and Bezos is at least as good at squeezing out greedy suppliers as Musk is.

The reason, it has emerged, is that Blue Origin is working on… reusable rockets. Musk has picked the low-hanging fruit on his way to the apple, and thereby generated a lot of hype (a lot of it certainly justified). Bezos has decided to go straight for the apple and not worry about the low-hanging fruit. His company is working in Texas in the deepest secrecy, trying to get prototypes of reusable rockets off the ground (or, rather, safely on: it’s not the getting off that’s the hard part).

So, are they possible? If I knew, I’d be richer than I am. And, possibly, on a rocket to Mars. But there are at least two men with serious capital, expertise and entrepreneurial talent who clearly believe it is and are doing everything they can to get there. If anyone can do it, it’s them.

Space elevators and cold fusion

When we think about science fiction, we typically have two mental boxes: “could happen one day” (designer drugs, consumer genomics, rockets to Mars, Brave New World) and “nope, not gonna happen” (The Matrix, teleportation, immortality). “Space elevators” and “cold fusion” sound like two things that absolutely belong in the latter box. And yet, they’re not that far-fetched. Space elevators are actually a simple concept. Send a satellite into geostationary orbit (i.e., hovering over one spot on the Earth). Have it unfurl a very long cable, down to Earth’s surface. The cable carries power, which means robots can carry cargo (and people) up and down from space on the cable. That’s a space elevator.

It’s  within the realms of feasability. Building a tower to space is impossible, but because the cable is, essentially, an orbiting satellite with a very long “tail”, it only has to support its own weight, and only the part of its weight that’s within Earth’s gravity. That’s already a tall order, but a type of material called carbon nanotubes, which already exists in the lab, has the required tensile strength. So it’s actually physically possible.

The engineering challenge is still very daunting. Space elevators are not for tomorrow. But they’re not that much more far-fetched than reusable rockets, which in turn are not that much more far-fetched than the rockets that took men to the Moon back when Steve Jobs was an unruly, smelly teenager. Why are space elevators important for space economics? For two reasons. First of all, obviously, they make sending stuff into orbit much cheaper. Instead of building a rocket (or even fuelling it, if you have a reusable rocket), the only cost is the electricity required to carry stuff up and down the cable.

They also make sending stuff beyond orbit conceivably much cheaper: once you’ve built your space elevator down to the ground, you can also build it up beyond geostationary orbit. The Earth spins very fast. So if you put something at the very top of a space elevator well above geostationary orbit, and let go, the force of the Earth’s rotation will slingshot it into space. Yes, pretty much like throwing a baseball. Which cuts down on fuel, and therefore weight and cost, a lot.

And this is where the second reason comes in: cold fusion. In popular culture, cold fusion is regarded as this physical impossibility, akin to turning lead into gold. But actually, cold fusion is quite easy to do. What’s hard to do (almost certainly impossible under certain conditions) is to make cold fusion that’s useful. It’s very easy to get a cold fusion reaction going in the lab. For that, all you need is a special helium isotope called He-3. The problem is that He-3 doesn’t occur naturally on Earth. So to do it, you first have to make He-3 from regular helium. And that consumes more energy than your cold fusion reactor will produce. Fun to do in the lab, but pretty useless if you’re trying to start an energy revolution.

However, if we could somehow find a plentiful, cheap source of He-3, then we would have a complete energy revolution on Earth. We’d have energy that would be clean, and absolutely abundant – too cheap to meter. And it just happens that the gas giants in our solar system (Jupiter and Saturn) are chock-full of He-3.

If you could build big space elevators, fling big robotic cargo containers into Jupiter, and have them return to Earth to fuel a network of cold fusion reactors, that would be a really, really good business. It would also be a revolution in human affairs, as it would be the first time the species had abundant, clean, really cheap energy.

And that’s on top of the fact that Space Elevator, Inc would make carrying things into orbit – extremely cheaply. Space elevators wouldn’t really be the Model T of the Space Age. They would be akin to a previous invention, which had perhaps an even deeper impact on the world:  railroads, which fuelled the Industrial Revolution.

A New Age of Exploration

So He-3 mining is pretty great. But… you know what I’m going to say. It’s not the most potentially profitable space business model. The problem with mining space, whether it’s gold or He-3, is that it imagines that wealth comes from stuff, whereas in reality wealth comes from the cooperation and ingenuity of people, not from material things. The best way to make money is therefore to harness that energy, in the form of new space colonies that companies could set up and manage in exchange for some percentage of the revenue generated by that colony.

As in all early space exploration endeavours, a lot of the initial revenue would come from commodities, but in time those colonies would diversify their economies and move up the value chain, thanks to promotion from the companies owning them. If that sounds like what a government does, you’ve got the idea. And, depending on your political persuasion, the idea of private companies setting up proto-states in space will have you either terrified or enormously excited.

It’s not unprecedented. The East India Company, which was like the Apple of its day – if Apple controlled the US Navy and had resolved its dispute with Samsung with drone strikes. Think of Venice, one of the greatest city-states of the world whose glory still enraptures us. Venice was one of the earliest examples of a Republic, with a quasi-democratic regime, but it is best understood as a for-profit corporation, with its Doges as board chairmen. (Which is why corporate-run space city-states don’t sound so bad: corporations would recognise citizens as customers and cater to them better.)

We remember, rightly, the Age of Exploration as the age of corsairs and pirates, but it was also the age of entrepreneurs, who built literal ventures and differentiated themselves through both marketing and the steel of the blade. Anyone with the gumption and the right amount of luck could not just get rich, but build an empire – a real one. Is that really so scary? Ok, maybe it’s a little bit scary. But you’ve got no spirit in you if you don’t find it just a little exciting as well.