Is Space Launch Overheating? I Ask Five Rocket Startups

The space business is hot. You just won't believe how vastly, hugely, mind-bogglingly hot it is. I mean, you may think that apps and blockchain are a big deal, but they’re just peanuts to space.* 2016 mobile app revenue was $88 billion with a 2024 forecast of $189 billion. The global blockchain market hit $708 million in 2017 with 2024 projected at $60.7 billion. Peanuts. Meanwhile, the Space Foundation’s seminal Space Report shows the 2018 space market was $383 billion and my own research aligns with that estimate. Reports from Goldman Sachs and Merrill suggest that will grow to between $1 trillion and $3 trillion over the next two decades. Space Angels reports that $20 Billion has been invested in commercial space startups.

Launch is the sine qua non of the space business. The price, availability, reliability and capabilities of launch systems define everything else in the space market. The size and weight of satellites are determined by rocket lift capacities and this size of the fairings at the nose of the rocket that hold the payloads. Satellite orbital inclinations, and hence the locations they fly over, are determined by the location of the launch sites those rockets fly from.

Until recently, launch providers were all “national champion” firms. If your payload absolutely, positively had to get to space in one piece you paid a premium for the impeccable record of U.S. based United Launch Alliance or Europe’s Arianespace. If you were feeling a bit lucky or cheap, state-owned Great Wall Industries Corp of China or Russia’s Roscosmos were the options. The rockets didn’t change and the prices went up each year. Then, California-based SpaceX dramatically disrupted that static market and suddenly hundreds of startups are eager to replicate that success, most with small new rockets.

Having a lot of competitors enter any market will drive prices down and options up. That’s great if you’re a satellite operator but the questions keeping space business analysts up at night are:

• Do we really need small launchers?
• Do we have too much launch capacity coming on line?
• Will new demand arise quickly?
• Are these launchers sufficiently differentiated?

The consensus answers from the armchair pundits are: “maybe”, “no”, “we don’t’ know” and “probably not.” Many fear a “launch bubble” and consolidation as small firms fail and are gobbled up for the value of their intellectual property and talent. I reached out to five of the leading new launch firms: Rocket Lab, Virgin Orbit, Vector, Firefly and Relativity Space to find out what they were thinking. Here is what I asked them and what they had to say.

Are Small Launchers Needed at All? The five startups all agreed that “ridesharing” on big rockets like the Falcon 9 was cost effective if they happened to be going somewhere you wanted to go, when you needed to go there. However, they argue that new commercial satellite constellations will be operationally unique, particularly when it comes to launching replacements and filling in spots. Newer defense and intelligence space initiatives have even more responsive launch requirements.

Peter Beck, founder and CEO of Rocket Lab, whose Electron has five orbital successes, summed up the argument for small launchers with, “When you account for the extended time it takes to put together a rideshare launch, coupled with the lack of control on scheduling or delays, plus the missed opportunity costs for operating in an imperfect orbit – the benefit of dedicated, frequent launch for small satellites is clear.”

Robert Cleave, CRO of Vector, maker of the Vector-R and Vector-H was more specific, “If too many of these constellations ride share they end up in these 50 degree inclinations. You get all this stuff in the same altitude and inclination as the space stations. We can avoid clogging these orbits and give people what they want, like maybe a zero degree, equatorial orbit.”

Two firms have targeted slightly larger payloads. Max Polyakov at Firefly said their market lays “BETWEEN the upper band of small satellites and medium satellites.” Relativity Space’s Jordan Noone told me, “We saw the biggest opportunity in the medium launch market and Terran 1 launches up to a 1250kg payload to low earth orbit, for just $10m.”

Do We Need This Many Small Launchers? Rocket Lab’s Beck argues that his firm is “in a unique position to assess the demand in the small satellite market, given that we’re launching payloads to orbit now.” With that insight he asserts, “There are not enough small satellites out there to support the 100+ small launch vehicles in various stages of development.” Beck also notes that R&D is difficult but commercialization is just as hard, “We spent approximately the same amount of capital getting from first launch to full commercial operations as we did getting from nothing to first launch.”

Virgin Orbit’s, Will Pomerantz concurred, “An overwhelming majority of small launchers are, at least for the moment, basically a good idea and some nice renderings, but nothing more — which is a good start, but does not compare to having real hardware, a high level of technical maturity, and a facility and team big enough to kick off production like Virgin Orbit.”

Firefly’s Polyakov was blunt as well, “The next 2-3 years will see a culling of small launch aspirants, maybe acquisition of small launchers by larger traditional aerospace companies, and a maturing of market demand for small satellite launches.”

Relativity’s Noone was more upbeat about competition, “We believe that more entrants means more innovation and progress, which is healthy for the industry.”

What is Your Competitive Advantage? Every company needs some secret sauce and each of the five launch firms I spoke to are confident that their technologies and/or business models will prevail in a highly competitive landscape. Here are their replies:

Rocket Lab: Our Photon satellite platform allows payload providers to come to us with a mission idea or sensor and we take care of the rest. By encompassing both launch and satellite services, we’ve completely streamlined the path for small satellites. We also designed the Electron to be rapidly manufactured. We invest in continual technology improvements, such as 3d printing for the Rutherford engines and lithium ion batteries. Our two launch sites (New Zeeland and Wallops, VA) provide a unique operational advantage.

Relativity: Traditional aerospace manufacturing relies on fixed tooling, a complex supply chain, and extensive labor. Traditional rockets are comprised of more than 100,000 parts, resulting in expensive, complex rockets that take 18 months or more to build and launch. Relativity is building the first and only aerospace platform to integrate machine learning, software, and robotics with metal 3D printing technology to optimize every aspect of the rocket manufacturing process, disrupting 60 years of aerospace technology.

Vector: Our advantages are numerous, including an automobile industry style rate-of-production approach to manufacturing with a super simple design containing fewer than 800 parts. That’s less parts than a washing machine. We are pressure fed, which means no pumps, the cause of many rocket failures. We can also design the rocket to fit the payload and choose a Vector-R or larger Vector-H depending on rideshare opportunities. However, our strongest long-term advantage is likely to be the flexibility of our mobile launch platform on land or sea.

Firefly: Firefly’s unique competitive advantage is Alpha’s performance range. We are the only competitor in a particularly lucrative niche. In both commercial and national security markets, satellite size always trend larger. With the small sats, we think the feature sets will expand and the trend will be the same. Our Concept of Operations (CONOPs) also addresses the need for short callup and rapid deployment of both commercial smallsats and USG payloads. In short, Firefly is elevating the treatment of small satellite customers to the status of “prime”.

Virgin Orbit: Flexibility and speed of design, build and deployment made small satellites attractive. So, we built a launch system aligned with those strengths. Using a Boeing 747 as our ‘flying launch pad’ is the key to that. We can fly from regular runways all over the world and take our launch site wherever it needs to go—which not only means we can directly inject into every type of orbit, it also means that we can tailor every launch to the specific needs of the customer and the moment, whether that’s political interests, weather or whatever else. Our other big differentiator is that we are a Virgin company; having not only the financial backing but also the global network of suppliers, experts, customers and everything else is enormously helpful.

Is the U.S. Government a Hindrance or a Supporter? Each of the small launch companies viewed the US government as a good customer. NASA, DoD and NRO are all important potential launch clients for them and they are pleased with the genuine interest that their new solutions are receiving.

There was also wide praise for U.S. lawmakers and regulators for taking an active interest in seeing a competitive space market evolve. The FAA’s Office of Commercial Space Transportation, otherwise known as FAA AST, gets particular kudos for its role in licensing the launches and overseeing public safety to date. Rocket Lab noted, “We worked very closely with them [AST] to navigate the unique regulatory environment surrounding the establishment of a private launch site in New Zealand.”

However, the space startups have real concerns about the ability of FAA and others to streamline and to keep up with the coming hockey-stick curve of launches. I can say from my years of research and direct observations that FAA is entirely aware of this challenge and that AST under its new Associate Administrator, Wayne Monteith, is laser focused on it. Several of the firms also expressed concerns about the need for space traffic management and debris prevention, a topic that the Office of Space Commerce is particularly engaged with.

How is The International Climate?

All of the firms expressed interest in international customers. Rocket Lab noted that they’ve already launched satellites for Australian and European customers and that “more international operators continue to manifest on Electron.” Virgin’s Pomerantz brags that Virgin’s flying launcher’s mobility makes it particularly attractive to global customers.

Concerned were expressed about competition from foreign state actors establishing nominally “commercial” entities, particularly China and India. Relativity’s Noone summed up that concern, “State subsidized firms that are allowed to compete against commercial entities will have a market distorting advantage that will reduce commercial entities’ ability to attract investment, and fund innovation.” Pomerantz adds, “When superpower nations have the ability to flood any market with systems that are developed with public money but then relabeled as ‘commercial’ to be sold on unit basis, that’s an uncomfortable place to be in, whether you are talking cars, consumer electronics, or rockets.”

Some firms expressed a common frustration with the International Traffic in Arms Regulations (ITAR) that apply broadly to rockets and missiles limiting access to facilities and cooperation with potential foreign customer and suppliers. Polyakov remarked that, “ITAR remains oppressive to the entire industry, not just small launch, but this tide is turning.” He went on to praise the efforts of the Vice President, the Department of Commerce and the National Space Council in their engagement on these issues. Relativity and Vector were clear that they had no problems with ITAR. Noone called the rules, “Well established and manageable.” Rocket Lab said that for them, the ITAR downside was essentially, “extra paperwork and time.”

I’ll be moderating a panel with participants from each of these firms at this year’s International Space Development Conference on Thursday, June 6 in Washington DC.

*apologies to D.A.