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« The Great Debate | Main | "The Only Viable Reason" »

Nostradamus He Ain't

Clark Lindsey also has an interesting analysis of how well Dwayne Day's prognostications for Mircorp and commercial manned spaceflight from a few years ago have turned out (see February 8th entry).

Posted by Rand Simberg at February 08, 2004 01:27 PM
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Funny -- I don't think Clark's "analysis" really proves or disproves anything Dwayne said!

The fact of the matter is Mir swiftly went out of business more or less as Dwayne predicted. Clark blames this almost entirely on NASA pressure, but I hear Anderson & Kathuria were hit by the recession and consequently were unable to justify spending $100 million+ a year on maintaining a space station. Yes: MirCorp did have some revenue sources (e.g. space tourism) but apparently they were not large enough to justify the annual operating expenses. If space tourism etc. were lucrative enough, MirCorp's "MiniStation-1" proposal would be making rapid progress now. Is it?

I also think Clark is wrong when implying the existence of Orbital Recovery somehow "proves" the viability of in-orbit maintenance of satellites. This is an entirely different venture and it does not utilize manned space stations at all.

In retrospect, Dwayne's biggest mistake is he did not believe MirCorp would be able to sell seats on Soyuz flights. There is indeed a market for that, but is it large enough to justify spending $100 million+ on developing and maintaining a space station for that purpose? Is I said earlier, MirCorp is trying raise capital for that. So far with little success, it seems -- although the company is trying to save costs by having the same Soyuz visit both ISS and MiniStation-1.

To me, the key lesson is space tourism becomes infinitely easier if one can utilize existing assets already paid for by governments. Dennis Tito's flight would *never* have happened without the billions invested in Soyuz by the former Soviet government (one could make the same point regarding "Mach 3 tourism" and the MiG-25 Foxbat). Maybe orbital space tourism proponents should try to lobby for a commercial module on ISS, e.g. SpaceHab's "Enterprise?"


Posted by Marcus Lindroos at February 9, 2004 02:20 AM

Mr. Clark only made one real mistake when critiquing something that I wrote nearly four years ago, he failed to read it.

If he had read it, he would have noted that the piece was about MirCorp and that company's claims. It was _not_ about commercial spaceflight in general. For instance, I never claimed that _nobody_ would make money from space tourism, or that _nobody_ would make money from space advertising, or that no space tourist would ever launch into space. Indeed, the article actually contained previous examples of these activities.

It is worth remembering that Mir was deorbited after MirCorp repeatedly failed to pay the Russians money that they owed them. A simple web search will reveal repeated comments from Russian space officials about the money that MirCorp owed them.

If people want real space commercialization, then they need to expose the projects that are based upon lousy economic models and require suspending the laws of physics. Those who get upset by dubious government spaceflight claims need to recognize that they are not helped by dubious private spaceflight claims. Tribal instincts to unquestioningly defend those who you think have the same interests as you do are detrimental to the cause.

I predicted that MirCorp was not going to make money with the business strategy that they had announced. Proof? Google MirCorp and see what they are doing today.

Posted by Dwayne Day at February 9, 2004 02:44 PM

Glad to see you, Dwayne. Are you a regular reader, or did you just come here because Clark's site doesn't have a comments section for rebuttal?

Anyway, apparently my little plot worked... ;-)

And when are you starting a blog?

Posted by Rand Simberg at February 9, 2004 10:40 PM

Actually, Dwayne, I not only read your article, I took it quite seriously. If you read my posting, you will find that I stated explicitly that you were correct that MirCorp was not viable. I just don't believe that MirCorp's failure substantiated your criticisms of the potential space businesses that you listed. The company never got far enough to try them out. Since other companies are now pursuing many of these same businesses it seems reasonable to review your article.

Despite your protest, most of your analysis in fact was not specific to MirCorp. You said, for example, "First, how many people are willing to spend $10 million even for the ultimate vacation trip?". You don't append "to Mir" or "via MirCorp". You stated flatly, "There is also no reason to assemble a satellite in space." You don't say, "There is also no reason to assemble a satellite on Mir". You made firm, confident assertions throughout that clearly implied validity beyond Mir and MirCorp.

It's certainly true that space commercialization projects must be able to withstand tougher tests than biting critiques in the press. On the other hand, such critiques should be able to withstand the test of time as well, especially when written by someone with your credentials. Many people, including potential investors in such projects, read what you have to say and take your assertions seriously.

I have argued several times with Marcus that most of the skepticism to commercial space projects is reflexive and useless. The John Pike routine of dumping on every new idea is bound to be right most of the time simply because life is tough and most new businesses fail regardless of whether they are in space or in a strip mall. Boasting of successfully predicting the failure of space ventures is like coming back from the race track bragging about all the horses one correctly predicted to lose.

Rick Tumlinson in a recent interview - - gave an interesting account of the wide array of challenges that MirCorp faced and why it could not save Mir. Fortunately, as I tried to indicate in my posting, MirCorp has inspired new ideas and businesses. Like the Altair and Osbourne computer companies that failed but made enormous contributions to the development of their industry, I believe we are seeing a similar process in the space industry. MirCorp and the other space ventures of the past few years will be remembered not for failing but for the important contributions they made to commercial space development despite staggering obstacles. I don't know if the current wave of startups will finally be the ones to make a profit, but each generation of companies gets farther along and builds on the accomplishments of those that came before it.

This should be a great time for space historians. I'm afraid, however, too many are trapped inside the DC beltway to see it in the making.

Posted by at February 10, 2004 12:13 AM

Hi Clark,

Looking back, I think the biggest mistake was underestimating the willingness and ability of millionaires to pay for a space trip. I (and probably Dwayne too) considered past experience with Helen Sharman & John Denver, concluding private companies would be reluctant to gamble on "sponsored trips" to Mir and that individual fare-paying would balk at the high cost. Turns out I was wrong about the latter.

I still think Dwayne is basically right when saying manned orbital spaceflight does not appear to be a commercially viable activity using existing rockets & spacecraft. At least not if private industry is supposed to pay the full cost. Note that MirCorp appears to be essentially dead at the moment (even the website is gone). Spacehab has apparently tried elements of the "space Internet portal" idea with the "Enterprise" commercial ISS with little success. On the other hand, there seems to be a non-trivial number of millionaries willing to pay tens of millions to become PARTICIPANTS. One might say the X-Prize teams are benefitting from the same effect. I don't think anyone investing in an X-Prize team is expecting a good return on investment. They do it for other reasons. That is why risky and/or unconventional commercial space projects had better be cheap (a few million dollars at most). For example, Walt Anderson now seems most interested in Orbital Recovery Corp. which is real bargain-basement compared to Rotary Rocket and MirCorp. He has publicly criticized his own involvement in these efforts, saying (IIRC) space entrepreneurs need to stop proposing grandiose schemes that will cost hundreds of millions.


Posted by Marcus Lindroos at February 10, 2004 08:14 AM

Responding to Rand's questions:

I generally don't read blogs. I find them annoying (which I guess answers your other question as well--I'm not creating my own). I had never heard of Mr. Clark or his website. My Finnish friend tipped me off about the website. My initial impression? It needs spellchecking. But that's true for most of the Internet.

Mr. Clark still claims that I was writing about space commercialization in general. I urge him to reread the article and count the number of times that I used the word "MirCorp." The entire context was MirCorp's ability to generate revenue from any of their stated sources. So when it said "Likely revenue: minimal" for something like space advertising, it was obvious to all that this meant MirCorp's revenue. After all, as I noted in the article, others had already made money off of space advertising (even Taco Bell eventually made money off of Mir's de-orbiting). That was not in doubt.

And Mr. Clark still seems to be ignoring the fact that MirCorp failed to pay the Russians for services rendered. Since when should we be sympathetic to a company that stiffs its business partners? That is bad for capitalism. It is also odd to claim that they never had sufficient time to work. Whose fault is that, anyway? They knew that they had a melting asset in orbit and could not expect the Russians to keep subsidizing Mir's operation until they found some money. A proper business model takes into account the amount of time it will take to generate cash flow and what will happen during that time. If they "did not have enough time" could it be because they planned poorly? No, all business failures must be blamed on NASA.

I find the tribalism in space activism to be amusing: "My side good, your side bad." This results in people defending, or attacking, groups and organizations based not upon their merits, but upon which tribe they belong to. MirCorp's pronouncements occasionally verged on the silly (An Internet portal in space? Selling real-time video of the earth's surface? Launching comsats from a 51 degree orbit?), but there were people willing to defend them because they were on the "right side" in the debate. They were (supposedly) doing something to help commercialize human spaceflight.

I predicted MirCorp would fail. They failed. Okay, so 99% of space ventures (and 2 out of 3 restaurants) fail. That doesn't make me Nostradamus. But the press was repeating MirCorp's statements and press releases without questioning them. And they were unaware that previous MirCorp press releases had proven false. I applied some analysis to their business model and found it wanting. Half a year later Mir was in the drink. But I'm sure that their private space station will do better.

Posted by Dwayne Day at February 10, 2004 08:41 AM

Dwayne, Clark is the first name, not the last.

No time to enter the fray, but I think it's a useful discussion.

Posted by Rand Simberg at February 10, 2004 10:15 AM

My apologies for messing up Mr. Lindsey's name. I guess I was thinking of the general.

Posted by Dwayne Day at February 10, 2004 10:20 AM

Hi Marcus,
Yes, I absolutely agree that lowering launch costs is required before commercial orbital spaceflight will grow beyond the Soyuz/ISS niche. It's just that I'm very encouraged that even at the current enormous ticket prices, there is in fact a business. This seems to indicate that the market will respond strongly as ticket prices drop.

Glad to hear Walt Anderson says starting small is the way to go. That is definitely a favorite theme that I promote.

It's true that most of the X PRIZE suborbital teams don't expect to make money but some of them are real businesses. TGV, for example, is nominally in the contest but their main focus is on markets such as reconnaissance and remote sensing. They now have real money from investors and are hiring engineers and doing detailed designs at their new headquarters in Norman Oklahoma. Note also that XCOR is not in the contest and expects to build a business on passenger rides.

BTW: With regard to orbital projects, I wouldn't be too surprised to hear of a Bigelow and SpaceX hook up eventually, especially if the Falcon I launch is successful. It's fairly clear that Elon would like to go eventually to a manned version of the Falcon V. Perhaps within a decade we could see a SpaceX vehicle launching Bigelow's habitat.

OK, Dwayne, I promise to count the number of instances of MirCorp if you count the number of times you made broad, general claims with regard to commercial space enterprises. My emphasis was on the latter. Every industry leaves a long trail littered with dead startups and unpaid debts. (Did Adam Osbourne ever actually deliver that 2nd gen portable?) My point is that this process is natural and necessary as niches are tested and eventually profitable ones are found. Nothing is tougher in the world than building a successful business. There are a million ways to fail and only a few ways to succeed.

I guess I should check my membership cards and see if they say National Space Tribe,the Planetary Tribe, and the Space Access Tribe. Please, spare me the dime store sociology. I don't run around the Internet jumping on every article or newsgroup posting that "disses" private space. I respect your opinions and gave what I considered a serious article a critical but fair retrospective.

I also find it a huge stretch for you to claim you were the lone rebel against MirCorp. Very strong (and, in my opinion, often excessive) skepticism against any space business was and is the conventional wisdom and it certainly was with respect to MirCorp.

Finally, I hope that I at least spelled the article's title correctly. I dare say that more people will probably read it via my links than will read your latest article in Spaceflight. (I sure wish you would post your collection of those histories.) The Internet and blogs are useful that way.

- Clark

Posted by Clark at February 10, 2004 11:26 AM

> I generally don't read blogs. I find them
> annoying

Sorry Rand, but I must admit I find them annoying too!

I like you personally (dating back to our old debates with Dwayne), respect your knowledge of the space tourism industry and admire the fact you generally have a long fuse. However, my problem with most bloggers (including this site) is they tend to be relentlessly partisan and negative, don't respect other points of view and write too many confident "opinion pieces" about topics which they know little about. There are a couple of notable exceptions (e.g. Daniel Drezner, and Clark Lindsey on the space side), but not many.

I think the medium would be a lot more valuable if bloggers focused more on their particular field of expertise. For example, Rand knows a lot about entrepreneurial space, Glenn Reynolds knows a thing or two about American law, etc.. Constructive criticism of the way traditional "big media" covers e.g. the new manned planetary exploration initiative is valuable, provided the writer is well informed.

I also think a good blog (like constructive participation in discussions during the 1990s) can raise the profile of its author, which is a good reason why maybe you should consider starting one, Dwayne. Heck -- I am personally thinking about adding at least an "updates" section to my own space page. People frequently contact me and inquire about my collection of reusable launch vehicle & manned spaceflight articles, so it would be good to have a monthly update/analysis + fact check of what's going on in space (and *no* commentary on terrestial politics). It might even get me another day job, once I grow tired of space software quality assurance and want to do something else.


Posted by Marcus Lindroos at February 10, 2004 12:25 PM

>Heck -- I am personally thinking about adding at
>least an "updates" section to my own space page.
>People frequently contact me and inquire about my
>collection of reusable launch vehicle & manned
>spaceflight articles, so it would be good to have
>a monthly update/analysis + fact check of what's

Great idea, Marcus. Let me know as soon as it's up & running!

Posted by Clark at February 10, 2004 01:48 PM

Yes, Marcus, let me know as well--I'll certainly link it.

I do find it amusing that you call me "partisan," though. What party am I a partisan of?

Posted by Rand Simberg at February 10, 2004 06:27 PM

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