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p. In An alternative to the Heinlein Prize Jeff Foust discusses the fact that the recently announced Heinlein Prize for Accomplishments in Commercial Space Activities rewards past achievements when its support of future endeavors would do more for advancing commercial space activity. Specifically he suggests resurrecting the FINDS model: bq. Because these companies can make big initial strides with a small amount of funding, a little bit of money could go a long way. Instead of giving one person $500,000 for past accomplishments, the prize could award $100,000 each to five promising, but cash-strapped, commercial space startups. Different permutations could spread the money further, such as awarding four $100,000 and four $25,000 prizes. The prizes would ideally be in the form of grants with some modest reporting requirements, allowing the startups to conserve their equity for later investments.

p. While I very much agree with Jeff here, there are problems with the FINDS model.First of all, it didn't limit itself to commercial activities. Funding for things such as SETI, near-Earth objects and conferences while useful for those involved, simply drained money away from FINDS. While I don't want to second guess the FINDS funding sources and its methods, my opinion is that it would have been much better spent following Jeff's model plus a healthy dose of entrepreneurial education and market development.

p. Part of the problem with things such as FINDS, CATS, SFF's Enterprise Project, and many other commercial space 'foundations' is that they all seem to be dancing around the idea of being an incubator without actually committing to be one. FINDS funding non-commercial activities, thus being more of a charitable fund. CATS assumed that technology changes instead of customers would drive markets. SFF's Enterprise Project waits for people to come with business plans instead of helping the community develop them. A serious attempt should be made to combine the best of these efforts with a serious and professional attempt at building a real incubator. Something with the following features:

Funding

<dd>The incubator must have funding. It should pick up the slack areas where Angels and VCs typically don't fund.This means initial seed money (usually $10K - $50K) and pre-VC prototype money (the kind that usually gets the prototypes built and the first customer signed up). This does not mean the money is easy, just very targeted.</dd>

Mentoring

Many incubators will pair an entrepreneur with a mentor prior even to seed money. Mentors provide the real world knowledge that a startup entrepreneur needs in order to craft the business plan and develop the contacts needed to build a management team.

Market Development

One of the things missing in space commercialization is fresh thinking around markets and customers. This means providing business development think tanks and market analysis teams that can develop business plan skeletons for entrepreneurs to pick up and run with. Fund focus groups and market analysis efforts instead of conferences.

Ongoing Support

Startups are hard. They need a support team that understands what they're trying to do and can help (not hinder) their efforts. This means help with contacts, advice, access to other capital sources, access to other market segments and customers, etc.

p. The slight problem with this plan is that none of the current crop of space organizations has the ability to do something like this. It is truly an incubator which requires participation from people who typically don't participate in space activist/policy organizations. Of all of us the Space Frontier Foundation has the best access to the seasoned entrepreneurs that can pull it off. Some of the presentations from people like The Colony Fund suggest they might have some of the tools. But beyond that, no one has all of the components. Which means we have to build it.

p. So who's interested in building such a thing?

Rocket (Ted?) Jones (Rocket Jones) found this gem from Peter Alway on R.M.R. To quote just a little of it: bq. “Because the hot flamey stuff that comes out of the thruster thingo is accelleratized to the fastness of that noisy stuff you hear by passing through an other-way funnel-like thingy…”

I almost blew milk through my nose…

In “Ad Astra Wihout NASA,” Winds of Change.NET said:

bq. “This coming decade has the potential to be the most exciting time in the history of human space travel since the 1970s - maybe ever. All the pieces are there….”

Well, not quite. In fact, there are 2 major pieces missing, and they're affecting America's military as well as its civilian space program. One is cheaper launch technologies. The other is a space industry that doesn't have to depend solely on NASA and other central-planning agencies. This follow-up post examine those missing pieces, offering analysis and links that will bring you up to speed - and maybe, just maybe, change the way you think about our next steps to space.

read the rest! »

In C. Blake Power's two latest articles (A Business Plan For Space and Near-Term, Incremental Space Business Development) he covers the basics about business plans that anyone interested in a viable space industry should already know. This article isn't a disagreement with Blake. Instead it's an attempt to push the discussion to the next level. The point I will be attempting to make below is that we have to go back to the beginning and think differently about the entire industry. That we need to stop thinking in terms of technology or goals. Instead think about customers, markets, and ROI.

p. A little bit of background (and a bit of a confessional) might help frame where I'm coming from. My 'day job' is with VeriSign's R&D group (VeriSign Labs). I've been there since 1996. Before that I was at Georgia Tech and was involved in some of the earliest work on the World Wide Web. Coming from an academic background and heavily immersed in the IETF I had a very naive view of what it took to deploy technology. At the time the Internet was relatively tiny compared to today. It was run by people who had easy access to 'free' money (governments, grants, etc) to upgrade the network. New technology was deployed easily because everyone was a geek and new stuff was just cool. It was a false economy.

p. As I moved into VeriSign I took that “just build it and they will come” naivete with me. I attempted to build several new services but could never figure out why the market wouldn't just starting doing what I thought was the right thing. Eventually I started reading business books and understanding why certain things were successful and others weren't. I basically forced myself through a Business 101 course. I learned several critical things that I think we need to apply to commercial space policy:

1. Start with the customer, not the technology

   p. This is so fundamentally important and well understood in business that its not even mentioned. Talking about it in business circles would be like remarking on how well that oxygen thing seems to be working for us carbon based life-forms. This means understanding a customer as a human being with a set of irrational needs, wants, and desires. A term I picked up is something called a 'pain point'. Its the point at which a person is willing to part with money to satisfy the pain of some situation, be it hunger, status, coolness, fear, etc.

   p. The lack of any customer focus within the space industry is amazing. No wonder the American people have lost interest in space, no one ever thought to figure out how it directly applied to their lives. There is no space 'pain point'. Many of us even attempted to do just that at one point or other. We annoyed our families with questions like: “Is there anything about space you would be willing to pay for”? While a valiant attempt, it still begs the question. As an industry we should be getting to know the customer well enough that we understand their existing pain points. We should be asking them a much more fundamental question: What are the problems in your life that you want products or services to fix"? When we have those answers then we can figure out if there are space related technologies that can provide the goods and services needed to satisfy those pain points.

   p.

   And that means market research. It also means throwing out old pet projects that no consumer is willing to pay for. It means listening to 12-year-old girls since market research shows that they have the most influence on consumer trends. It means talking to people like the Zandl Group.

2. Risk mitigation means $1 profit on 10 million items is better than $10 million profit on one item

   p. This has been one of the largest problems with attracting venture capital to space businesses. They have all invariably required investments of hundreds of millions of dollars before even the first dollar of revenue is made. It also means that the loss of one rocket can wash out the entire business. Take He3 production on the moon for example, even a robotic test facility would require hundreds of millions of dollars just to test viability. If there were any accidents then the lost interest income of waiting to build another mission would scare off any intelligent investor.

   p. That's one of the reasons space tourism is so attractive: if there is one lost sale there are hundreds of thousands of other sales opportunities to be had. If you are attempting to run a He3 extraction business there will probably be only one or two buyers. A lost He3 sale would be a disaster.

   p.

   What this means is that we should be focusing our search for opportunities on things that have large unit sales numbers. Satellite radio understands this: they amortize their satellite costs over millions of listeners and content providers.

3. Evolve a product line. The final product should never be done first. Figure out how to make even your smallest component dual use.

   p. The software market understands this very well. Never sell more than the customer wants. Save features for new versions of the products. This is another area where space tourism out-shines other products. Space Adventures is making money now off of space tourism without ever making it into space. People are willing to pay for version 0.1 of their product. At each stage of development figure out some way to make money off of what the product is capable of at that point. Sure, people are willing to pay significant money for a trip into space. But I'm willing to bet a not insignificant number of people would also pay money for a ride in a rocket that never went into space. Those people can provide revenue that can be used to subsidize subsequent product development.

   p. One of the more significant payoffs of this approach is that you are including the customer in the product development process. By the time you've gotten the first few iterations of the product out you already have a customer base that provides invaluable feedback. For example, I bet we will learn that tourists don't want their ride to be to smooth. A little bit of rattle and roll makes the experience more valuable. But you won't know that until you've taken a few people on non-suborbital trips.

   p.

   By making components dual use you create secondary markets that can fund your primary market's development costs. In many cases amateur rocket engineers are using parts from the high performance automotive and paint ball industries. That type of dual use is a two way street: once you've perfected materials for use in engines or avionics, figure out how to sell them back to the industry you borrowed them from.

4. Aerospace costs have either stayed static or dropped slightly in the past 60 years. Conversely, due to globalization, the number of accessible customers for any product has reached into the multiples of billions.

   p. There is a reason so many businesses are tripping over themselves to get into the Chinese market. One product with $1 profit sold to one third of that one countries population would instantly get you into the same country club as Bill Gates and Warren Buffet. I'm mostly speaking to Americans here since we don't seem to notice the rest of the world as anything more than a headline subject on the evening news. But we are missing an extremely important opportunity to bypass some of what I've discussed above when it comes to some of our more science fiction inspired dreams. The world has become an economic engine that can be used to propel us further than any rocket. Simple, directed and goal-oriented capitalism can provide funding that would dwarf anything any government could be convinced of supplying. A few hit products sold around the world could easily dwarf NASA's annual budget. That kind of money in the hands of business people who understand project planning and cost mitigation could easily put a colony on the moon.

p. I've found these lessons useful when it comes to business development for the Internet and I think they are 'Business 101' enough to be directly applicable to the space markets. We simply have to start applying them. That means dropping any pretext about missions, rockets, projects, bases or all the other stuff we see in our minds eye when we read our science fiction author. As engineers we must always let the data lead us to the right conclusions. If the data says a girder will fail we don't keep installing it in the hopes that one day it won't fail. The data has told us that all of our previous methods of space commercialization have largely failed. Maybe its time to go back to first principles and re-evaluate our approach.

(via Transterrestrial Musings) Clark Lindsey (aka Mr. HobbySpace) has an excellent plan for what he would do with NASA if he were “declared King of NASA”. Roughly:

• Purchase more Soyuz/Progress missions to keep the ISS up
• Starting in ‘06, contract for ISS re-supply flights
• a revitalized suborbital science program as a way to do science and help create a suborbital marketplace
• move science and deep space probes to university, research institute and commercial contracts
• funding for X vehicles that are not intended to be operational
• NASA should work on innovative space technologies to support large scale space settlements
• expanded development of deep space transports

He calculates all of this using 'shuttle equivalent' dollars. I.e. 1 $SE = $500 million.

So who wants to start the Lindsey For NASA Administrator campaign?

p. After the Columbia incident there was a great deal of discussion over just what our role in space should be. As the Columbia investigation rolled on the discussion died down to a low murmur, often punctuated by mainstream media debates over humans vs robots. But with the release of the CAIB report the discussion has begun again in earnest:

• A Time For Everything
• What Should A Space Agency Do?
• Stuck In The Sixties
• Sorry, Bob (a nice review of multiple other articles)

p. As part of the first round of these discussions, I decided to test out RocketForge's polling software by running a Why Do We Want To Go To Space? poll based on Why We Fly (John Carter McKnight). After running for almost 6 months, the poll's results are an interesting way to frame the discussion:

    Humans "belong" anyplace they choose.



    The question is really just a euphemism for "Shouldn't we just give up and be small?"__