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New Shepard landing
The propulsion module of a Blue Origin New Shepard suborbital vehicle makes a powered landing after a recent test flight. At vehicles like this demonstrate the potential of reusability, how does that translate into business? (credit: Blue Origin)

Making it happen


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Jeff Bezos and his team at Blue Origin achieved a milestone last November with the successful launch and return of both their booster and capsule from a suborbital flight. On December 21st, Elon Musk and his team at SpaceX also had a landmark triumph in returning the Falcon 9’s first stage to a pinpoint touchdown on land after successfully deploying a clutch of satellites on orbit. Between those two events there was a public exchange by Bezos and Musk over who had achieved what and who did it first.

No matter how deep, and experienced-based our knowledge may be… You cannot second-guess a genius.

The reaction in the media came in three varieties: Talking up the exchanges between the two space entrepreneurs to make a good story, and asking which of them will win; a more thoughtful appraisal of these events as representing the tipping point that will lead to true reusability of boosters and spacecraft; and finally, some articles analyzing the potential flaws in the economics of the reusability concept, and the extent of the market that may or may not exist for a sustainable business. The last type of article has been mostly concerned with the SpaceX business and how it will develop (or struggle.)

Leaving aside (for now) the first variety of response, and welcoming the straightforward appraisals offered by the second, we come to the third category of comments. It’s an interesting exercise to work out what we think the future holds for some new and daring enterprise, but there’s a caveat: No matter how deep, and experienced-based our knowledge may be… You cannot second-guess a genius.

In this discussion, I am referring to the great entrepreneurial geniuses who create groundbreaking enterprises that create new markets, industries, and, of course, great wealth and prestige not only for themselves but for the nation.

There are many players in the private enterprise space industry, but for now the headline-makers are Musk and Bezos, and at this point they have advanced the most in developing their businesses. But what is the future these two entrepreneurs are dreaming of, and is there a market? An example from history might give us some insights, namely the work of Juan Terry Trippe and Pan American Airways. The highlights of Trippe’s work are as follows:

• His first venture, Long Island Airways, was formed to provide sightseeing trips and an air-taxi service to the elite summer vacation crowd on Long Island. He bought seven World War I surplus planes and realized he could create more business by converting the cockpits to accommodate two passengers instead of one, and adopting a powerful, yet smaller, engine to enable this change.

• With his next airline, Eastern Air Transport, Trippe lobbied hard for the Boston-New York airmail route, one of the new services being funded by the federal government. He merged his airline with a competitor who was doing better in the bidding process, and headed up the new entity. He ordered tri-motor Fokker aircraft that could accommodate both passengers and cargo, while his competitors stayed with single-engine equipment. He went on to win the first five foreign airmail service contracts from the federal government, having negotiated landing rights throughout the Caribbean and eliminated virtually all competition.

Every launch includes upgrades and new elements so that so that advances are happening in a rapid evolutionary way that, in aggregate, will soon take on the appearance of being revolutionary.

• Trippe continued to build his airline business into what became Pan American Airways. Along the way he inaugurated a service from San Francisco to the Philippines using the famous China Clippers. He also acquired the then-revolutionary DC-3, and by the end of World War II, PanAm was positioned to dominate international air travel. Trippe was the first to inaugurate a US-based jet service across the North Atlantic with the Boeing 707, and later inspired Boeing to build the 747.

• Trippe introduced low tourist-class fares, and even allowed tickets to be bought on an installment basis. Other airlines eventually followed suit. Air travel was now available for the masses, not just the wealthy few.

• Named one of Time magazine’s business titans of the 20th century, Juan Trippe was described by Sir Richard Branson as “having the great American instinct of seeing a market before it happened—and then making it happen. He fathered the international airline business.”

These brief details highlight some parallels with today’s space entrepreneurs and offers responses to some of the critiques of their work.

Trippe’s early career involved two key elements: offering services only the wealthy could afford, and using tried and tested (even obsolete) equipment. But in the process, he learned a great deal about operating an airline and identified other markets that he could enter. Though some consider the work of Musk and Bezos to be merely a continuation of Apollo-era technologies, the emphasis is to gain credibility in the marketplace as a reliable operator, which would take much longer to achieve with untried and untested systems. The wealthy may be keen to experience a suborbital space adventure, but not when the risks are too high. Nevertheless, every launch includes upgrades and new elements so that so that advances are happening in a rapid evolutionary way that, in aggregate, will soon take on the appearance of being revolutionary.

Until the low-cost point has been reached, and reliability assured, potential customers can’t imagine what they might be able to achieve and how often they can afford to fly something.

The next expansion was based on government contracts for airmail services. To be competitively placed, Trippe invested in higher-performance equipment that also enabled him to attract fare-paying passengers as well as cargo, and negotiated landing rights in foreign destinations before his competitors. Today’s space entrepreneurs are also competing for government business to provide an early revenue stream, while continuing to develop their own systems to achieve higher performance in carrying passengers in the medium term, and, for now, launching resupply missions to the International Space Station and lofting satellites for governments and commercial customers. As they earn their credibility, and expand their full-service capabilities, they will attract more business from a wider market at home and abroad, as the SpaceX manifest illustrates.

Trippe threw open the doors of the young aviation industry with the introduction of low-cost travel. The work of Musk and Bezos is similarly targeted at reducing the cost of launching payloads and people into space. The key element in this endeavor is reusability. Both space entrepreneurs have demonstrated early abilities to achieve this. Once recovery and refurbishment have been perfected, the cost per kilogram of launching anything will be reduced by orders of magnitude, and the markets will develop.

At this point, it is difficult to predict the scale and scope of those markets, and there is little opportunity to gather any meaningful market research data. Until the low-cost point has been reached, and reliability assured, potential customers can’t imagine what they might be able to achieve and how often they can afford to fly something. In addition, once Bigelow habitats become commonplace, the idea of orbiting workshops, laboratories, and even hotels will open up a wide range of new possibilities. As for the economics of refurbishing the hardware, we can make a calculated guess that Musk and Bezos will have already figured out the process they’re going to use, the costs involved, and the market opportunities for used rockets.

To divert for a moment, we have no problem stepping on board a “used” aircraft today, which they all are. In the extreme case, Southwest Airlines, the short-haul model created by another genius, Herb Kelleher, is inherently unprofitable, and only works by the rapid turnaround of planes to get them airborne again as fast as possible. During the lifetime of a plane, with a high rate of takeoffs and landings along with the stresses of flying through turbulence, the accumulated strains on the airframe and landing gear probably may well equal what a rocket will suffer even in multiple launches.

We shouldn’t be too doubtful at how things play out because, as Branson said, it’s all down to the instinct of the American entrepreneurial genius who “sees a market before it happens,” and then sets about “making it happen.”

Schumpeter’s principle of “creative destruction” may also come into play. The rise of Pan Am and the other airlines created a new industry, but sealed the fate of an old one: the transatlantic liners. The current incumbents in the rocketry business will have to scramble to avoid that fate.

What about that “contest” between Musk and Bezos? Who will win? They both will, and so will the other enterprises developing their own affordable solutions for going into space—there’s room for all. Let’s celebrate them.


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