Some thoughts on the lessons of space investing, from Jeff Foust.
Fortunately, the situation that Jeff describes is starting to change. I think that VCs are starting to get interested now. The situation at NASA, where the agency is openly supportive of commercial (as opposed to the past, in which it was hostile, and often told investors doing due diligence not to waste their money) is one factor that may be helping.
Well at least George put his money where is mouth was and like in football, left it all on the field.
Rand,
[[[as opposed to the past, in which it was hostile, and often told investors doing due diligence not to waste their money]]]
Evidence please? I keep hearing this urban myth from New Spacers, but when pressed for names and dates as proof no seems able to produce them.
Could it be that just as with RpK, the business plans are so poorly developed, with financials so poorly constructed, that investors simply move on to better quality investments?
Evidence please?
What would constitute evidence? If we gave you names and dates, you’d just say we were lying.
Could it be that just as with RpK, the business plans are so poorly developed, with financials so poorly constructed, that investors simply move on to better quality investments?
It could be in some cases. It could be in RpK’s case. But that doesn’t make it true for all cases. And having NASA bad mouth you doesn’t increase the perceived quality of the investment. Or at least it didn’t in the past. It might now.
I suspect the problem with Rocketplane’s business model was that, to a VC firm, it looked like a very high risk investment. Imagine that you have $100 million to invest. You can fund one firm with the whole wad or ten firms at $10 million each. Clearly, funding ten lowers both your individual risk (each firm costs less) while increasing your chances of making a big jackpot.
A startup needs focus on a potentially lucrative market and a champion to keep that focus. It helps if you have an income stream early (even if it doesn’t keep up with development costs.)
Losing focus is probably one of the biggest dangers, which is why people putting up their own money have a greater degree of success… they tend to focus more.
From what I understand SpaceShipOne flew with similar levels of funding (tens of millions of dollars). What did Rocketplane achieve with the money?
I pretty much wrote Kistler off back in the day when the original management and technical team were thrown overboard in favor of George Mueller and all of the other NASA pensioners. I didn’t see any way they were going to succeed by scrapping the original concept and going in a much more conservative and traditional-looking direction, including paying the old-space major NASA contractors to do their metal-bending for them at NASA-style rates. The burn rate of this approach was insane and appeared obviously unsustainable. That proved to be entirely true. I didn’t figure it would take several more years for the last dregs to finally gurgle down the drain, but the intervening machinations have seemed, to me, to be mostly shuck and jive by people looking to preserve their meal ticket and not really a serious effort to do space – orbital, sub-orbital, new, old or any other kind. Kistler, and Spaceplane too, separately or in any combination, was simply one more Moller Skycar – a con in constant search of more marks.
Rand,
[[[What would constitute evidence? If we gave you names and dates, you’d just say we were lying.]]]
As I figured, no evidence. Just another New Space myth. My firm failed because “big bad” NASA was out to get me…. You think with commercial crew New Space would finally grow out of its paranoia stage.
As I figured, no evidence.
Thank you for proving my point.
Rand,
Thank you for confirming its an old New Space myth.
You know I have been asking that question of New Spacers for nearly 20 years and all I get is the same silence.
You know I have been asking that question of New Spacers for nearly 20 years and all I get is the same silence.
Heh, that’s kind of the opposite of IT recruiters looking for someone with 10 years of experience with Windows 7.
Thank you for confirming its an old New Space myth.
I didn’t do that. I was present one of the times it happened. But as I said, there’s no point in discussing it with the likes of you, because you won’t believe it anyway.
the past, in which it was hostile, and often told investors doing due diligence not to waste their money
I’ve read this in more than one case history, but I’m afraid I don’t remember the reference. I do remember this being one of the claimed issues with the DC-X.
Martijn Meijering,
[[[Heh, that’s kind of the opposite of IT recruiters looking for someone with 10 years of experience with Windows 7.]]]
There is nothing New, about “New Space”, its just the current label for the “space libertarians” who have been around since the L-5 Society days since the 1970’s. They just come up with a new name for the same old ideas every few years after they wear the old name out. In the 1990’s they called themselves Alt Spacers, when that name got stale they started calling themselves New Space…
Rand,
Yep, same old arguments. I KNOW it happened, but the details are “secret”….
Ken,
Yes, like all urban myths, I read it somewhere, someone told me… But never anything someone is able to confirm…
Also why would an investor contact NASA? And who at NASA? Their PA office? Most investors who do due diligence on tech issues usually contact their local university or the one they graduated from if they don’t have expertise in an area. And they usually pay for the individual’s time to review the tech aspects of a business plan. No, it just doesn’t past the common sense test of how the VC ndustry operates.
The problem with the DC-X was that it was not started at NASA, but at DOD. When it was moved to NASA it had no champion, which was why NASA decided to do a RFP for a RLV technology demonstrator (X-33) instead of just funding the DC-Y. If the Clinton Administration was not so hostile to military space, recall their Space Policy prohibited the military from working on RLVs and used the line item veto to kill the military space plane, DOD would have moved forward on it.
I KNOW it happened, but the details are “secret”….
No, there’s no secret. But it’s a long story that I’ve told before, and I’m not going to waste time retelling it for you.
Any references?
usually contact their local university
Usually is not always. People do due diligence and each has different resources which could be anything (a person you know who knows somebody?) That somebody could be at a university, a private company or a government entity. Diligence would indicate contacting them all.
It’s not such a stretch to imagine a person checking with a rocket scientist at NASA (I hear they keep some of them there?) about a new space vehicle design.