Category Archives: Business

The Dog That Didn’t Bark

The Rocket Racing League is going to make a press announcement on Monday, but the release raises some questions:

Rocket Racing League Composites Corp. will announce the acquisition of a leading aircraft manufacturer and a partnership with a leading engine manufacturer…

…WHO:
Granger Whitelaw, CEO, Rocket Racing League
Peter Diamandis, Co-Founder, Rocket Racing League
Adam Smith, Vice President, EAA
Len Fox, Test Pilot, Rocket Racing Composites Corp.
Scott Baker, President, Velocity Aircraft
Neil Milburn, Armadillo Aerospace
John Carmack, Armadillo Aerospace

We have a missing player, and a new player. XCOR was building the initial racers, but they don’t seem to be represented at the event. And this is the first time that I’ve heard Armadillo associated with the project. So apparently, for whatever reason, Armadillo is now providing propulsion for the racers, and they’re apparently acquiring an aircraft manufacturer (Velocity?). I wonder why they have to acquire Velocity. Can’t they just buy modified aircraft? Or maybe they’re being imprecise in language, and it’s also a partner?

This obviously raises many questions, none of which I know the answers to, but it would seem to be bad news (though of course by no means fatal) for XCOR. It certainly won’t affect their work on the Lynx. It’s also good news for Armadillo, and it means a new customer with apparent confidence in their hardware, even after the engine problems at the cup last October.

Perhaps the questions will be answered at the press conference, if asked.

[Update a few minutes later]

Actually, on reconsideration, it’s not even obvious that it is bad news for XCOR (though clearly John Carmack must think that it’s good for Armadillo, or he wouldn’t have done the deal). It could be that, now that they’re trying to focus on developing a true suborbital vehicle, the RRL work was proving to be a distraction for them that they’ve now gotten out from under. But it’s speculation on my part, either way.

The Dog That Didn’t Bark

The Rocket Racing League is going to make a press announcement on Monday, but the release raises some questions:

Rocket Racing League Composites Corp. will announce the acquisition of a leading aircraft manufacturer and a partnership with a leading engine manufacturer…

…WHO:
Granger Whitelaw, CEO, Rocket Racing League
Peter Diamandis, Co-Founder, Rocket Racing League
Adam Smith, Vice President, EAA
Len Fox, Test Pilot, Rocket Racing Composites Corp.
Scott Baker, President, Velocity Aircraft
Neil Milburn, Armadillo Aerospace
John Carmack, Armadillo Aerospace

We have a missing player, and a new player. XCOR was building the initial racers, but they don’t seem to be represented at the event. And this is the first time that I’ve heard Armadillo associated with the project. So apparently, for whatever reason, Armadillo is now providing propulsion for the racers, and they’re apparently acquiring an aircraft manufacturer (Velocity?). I wonder why they have to acquire Velocity. Can’t they just buy modified aircraft? Or maybe they’re being imprecise in language, and it’s also a partner?

This obviously raises many questions, none of which I know the answers to, but it would seem to be bad news (though of course by no means fatal) for XCOR. It certainly won’t affect their work on the Lynx. It’s also good news for Armadillo, and it means a new customer with apparent confidence in their hardware, even after the engine problems at the cup last October.

Perhaps the questions will be answered at the press conference, if asked.

[Update a few minutes later]

Actually, on reconsideration, it’s not even obvious that it is bad news for XCOR (though clearly John Carmack must think that it’s good for Armadillo, or he wouldn’t have done the deal). It could be that, now that they’re trying to focus on developing a true suborbital vehicle, the RRL work was proving to be a distraction for them that they’ve now gotten out from under. But it’s speculation on my part, either way.

The Dog That Didn’t Bark

The Rocket Racing League is going to make a press announcement on Monday, but the release raises some questions:

Rocket Racing League Composites Corp. will announce the acquisition of a leading aircraft manufacturer and a partnership with a leading engine manufacturer…

…WHO:
Granger Whitelaw, CEO, Rocket Racing League
Peter Diamandis, Co-Founder, Rocket Racing League
Adam Smith, Vice President, EAA
Len Fox, Test Pilot, Rocket Racing Composites Corp.
Scott Baker, President, Velocity Aircraft
Neil Milburn, Armadillo Aerospace
John Carmack, Armadillo Aerospace

We have a missing player, and a new player. XCOR was building the initial racers, but they don’t seem to be represented at the event. And this is the first time that I’ve heard Armadillo associated with the project. So apparently, for whatever reason, Armadillo is now providing propulsion for the racers, and they’re apparently acquiring an aircraft manufacturer (Velocity?). I wonder why they have to acquire Velocity. Can’t they just buy modified aircraft? Or maybe they’re being imprecise in language, and it’s also a partner?

This obviously raises many questions, none of which I know the answers to, but it would seem to be bad news (though of course by no means fatal) for XCOR. It certainly won’t affect their work on the Lynx. It’s also good news for Armadillo, and it means a new customer with apparent confidence in their hardware, even after the engine problems at the cup last October.

Perhaps the questions will be answered at the press conference, if asked.

[Update a few minutes later]

Actually, on reconsideration, it’s not even obvious that it is bad news for XCOR (though clearly John Carmack must think that it’s good for Armadillo, or he wouldn’t have done the deal). It could be that, now that they’re trying to focus on developing a true suborbital vehicle, the RRL work was proving to be a distraction for them that they’ve now gotten out from under. But it’s speculation on my part, either way.

The State Of The Industry

I mentioned yesterday that, in addition to hawking rockets, John Carmack had an assessment of the state of the industry and his competition. If you didn’t read it, it’s well worth a read, and I largely agree with it. Just a few quibbles:

Scaled / Virgin is the safest bet for success. Outside of the X-15, Space Ship One is the only example of a reusable, 100km class manned vehicle. Everyone else, us included, requires a lot more extrapolation for an investor to believe in, and the problem isn’t nearly as trivial as some people like to make it out to be with the “There are no technical challenges, just give us the money!” lines. It is not true that any old team could have won the X-Prize if Paul Allen had given them $20 million.

On this last sentence, while I don’t have any reason to think that John is aiming that comment at me in particular, I have made statements, both at Space Access a couple weeks ago and here, that some might mistakenly take to mean that I would dispute this. I have said that Burt’s success lay not (just) in his engineering talents, but more importantly, in his reputation and ability to raise the money. When I said that the mystique of Burt has been broken, my point was that many people believed (and still may believe) that only Burt could have won the X-Prize, in terms of technical capability, and I don’t believe that to be the case.

Clearly, only Burt was capable of raising the money (at least from Paul Allen) to win the X-Prize, and that this was the critical achievement. I do believe that there are others who, had they been adequately funded (i.e., on the same level as Burt) could have won as well. That does not mean that I believe that “any old team” could have done it–there were obviously many teams that couldn’t engineer their way out of a wet kleenex. It takes a combination of engineering capability and funding. There was more engineering capability than funding available, at least at the time, and only Burt had both, so Burt won.

I also agree with John’s assessment that Scaled’s approach is low risk, but also high marginal cost and not particularly operable (and not as safe as advertised from the standpoint of propulsion–I’ve long been on record as saying that hybrids have been overhyped from a safety standpoint, and have suggested to Alex Tai that he should be soft peddling this aspect). They’ve chosen a hyperconservative design that will be safe, but they also risk getting undercut in price by more operable systems with lower marginal costs, and marginal costs are important when you get into a price war. Sir Richard has the funds to subsidize the system for a while to compete, but I doubt if he wants to do it forever. So they are smart to be a space line that will have access to other vehicles, because I suspect that they’re going to decide that they need options other than WK2/SS2.

I also agree that Dreamchaser is not a promising concept (again, partly because hybrids have been overhyped). I thoroughly agree with his pithy assessment of EADS/Astrium’s laughable proposal: “Oh, please.”

I think that his assessment of his own efforts is valid. He has taken an approach of build a little, test a little, and expanded it to build a lot, fly a lot, and he does in fact probably have more test time than all the other folks put together (though as he notes, XCOR is likely to catch up quickly as they move forward with X-Racer and Lynx).

The great thing is that we don’t have to bet on a single horse. There are a number of competing approaches, both in terms of how to develop vehicles, and what kind of experience to offer to the customers. You’ll never get me in the fishbowl, both because I’d feel much too exposed, but also because I don’t think that I’ll ever trust engines alone to get me down safely. That doesn’t mean that it won’t be a successful concept in the market, though. Unlike many, I don’t foolishly extrapolate my own interests to the rest of the marketplace. I think that there will be different strokes for different folks, and that only by trying a number of different approaches will we see how many of them will be successful, and which will be most successful, which is something that will never happen under a government space program (though we had at least a shot at it under Steidle’s plan for a CEV fly-off, until Mike came along and canned him, and implemented the One True Concept).

We’ve been talking for a long time about a return to the early days of aviation, with a wide variety of approaches, and letting the market sort it out. It appears that we’re finally on the verge of seeing that happen, and I find it very exciting, for all that it’s belated.

Rockets For Sale

John Carmack mentioned this at the conference a week and a half ago, but I don’t think I reported it, at least not in any detail. Armadillo is willing to sell vehicles to anyone who wants to fly them (presumably subject to ITAR restrictions):

The way to look at it is as a “rocket trainer”, rather than a vehicle that can perform any kind of real lunar or suborbital mission. We don’t pretend that the vehicles could actually land on the moon, but if you want to hack on a real, flying system, there is a lot of value to be had.

The price is $500k. The experience of the Lunar Lander Challenge shows quite clearly that you aren’t likely to do it yourself for less, even if you spend a couple years at it. Several intelligent and competent people thought otherwise, and have been proven incorrect.

You can have either a module or a quad, at your choice. The quad has more hover duration, but it is more of a hassle to operate. A module could be fulfilled right now, a quad would take about three months to build, since we are still planning on using Pixel for LLC this year and other tasks. The engine will be one of our new film cooled stainless chambers, and we will warrant it for ten flights. If it blows up or burns through in that time frame, we will replace it. We will not replace the vehicle if it crashes, but historically our engine problems have been visible at startup, and you should have an opportunity to abort the flight. Ground support equipment is included, except for the lox dewar(s), which would be specific to your local lox vendor. We will test the vehicle ourselves, then train your crew to operate it. You get copies of our experimental permit applications and information about the insurance policies we use for permitted flights. Details on modifications to the flight control software are negotiable.

If he got a big order, or multiple customers who wanted delivery ASAP, I wonder how he’d respond? Would he ramp up production (with the intrinsic risks to quality), or keep supply constant and crank up the price? As I’ve said for a long time, at some point this is going to have to transition from a hobby to a business for him, and it seems to me that this has the potential to force that decision, if he has a significant number of takers.

I also wonder how much new engines will cost, assuming that they’re only good for ten flights (he doesn’t say that, but it’s all he’s willing to warrant them for). Let’s say that the engines are half the cost of the vehicle. That would mean a cost of $25K a flight to amortize the engines, which is a lot more than propellant costs. It seems to me that if he only thinks that he can get ten flights, engine life is where his emphasis needs to be for reducing operating costs. It’s also hard to see how he can charge the same amount for a module as a quad, since the latter has four engines in it. I’d really like to understand more about this proposition.

He follows up the offer with his assessment of the industry (and his competition), but I’ll save my thoughts on that for another post.

More Propellant Depot Thoughts

Jon Goff has a wrap up of the issues (mostly technical) that came up in the panel discussion last Friday in Phoenix.

As he notes, there was little discussion of what other markets we can find than DoD and NASA. The problem is that until the capability is demonstrated, it’s going to be very hard to sell it to the conservative comsat industry. The nearest-term plausible private market that I can conceive of is Bigelow, if he still wants to do his lunar cruises. It would be interesting to put together a business model using Genesis modules swinging around the moon, and see if it’s greater or less than projected NASA Constellation needs.

The New Space Race

Jeff Foust has a story today on the current real space race (as opposed to the fantasy one between the US and China)–the new race for customers in the suborbital market. It’s basically a compilation of last week’s XCOR press conference announcement and this past weekend’s Space Access conference, both of which I attended. This to me is the key point:

“Quietly, this has turned into a horse race,” said conference organizer Henry Vanderbilt during a wrap-up panel at the conclusion of the Space Access conference. “There are a lot of people who could be the first to fly a passenger to suborbit at this point. Two years ago I’m sure the money would have been on Virgin Galactic. It isn’t necessarily so at this point.”

“What struck me about the events of this week was that we have finally, with all due respect, broken the mystique of Burt [Rutan],” Rand Simberg, an aerospace engineer and blogger, said. “He has had setbacks”–referring to the engine test accident last July that killed three Scaled Composites employees–“and, this week, now he has a competitor.” The growing awareness of companies other than Virgin “is going to be very good for the industry.”

“This perception of a horse race is probably a really, really good thing for investment,” said Joe Pistritto, an angel investor. “Ninety-nine percent of the people who could invest in this industry don’t know about this industry” but may start to learn about it as the find out about these competing companies.

If it is a horse race, who will win the ultimate prize: not just the first vehicle to enter the market, but the one that wins the market in the long run? The diversity of technical approaches, from the takeoff and landing techniques to the number of passengers, makes any predictions difficult. “If there’s four different operators flying people into space, their offerings are going to be a little different,” said Pistritto. “So you see an actual segmentation of the market around the experience you want, how much money you have, and where you are.”

What I meant about the “mystique of Burt” was the notion that the winning of the X-Prize was some kind of fluke, enabled only because the most brilliant aeronautical engineer in the world applied his genius to it. Many have used this as an excuse to denigrate the efforts of others building suborbital vehicles, which hasn’t made it any easier to raise money for such ventures.

Many seem to believe that it really takes the genius of a Rutan to build a suborbital vehicle. As evidence of this proposition, they point out that no other suborbital vehicles have been flown since 2004.

But in so doing, they display a fundamental ignorance of the nature of the technology and the requirements. There is no “one way” to skin that cat, and never was. Burt’s design was clever, and perhaps intrinsically safer, but it was not necessary, and there are other, better ways to do the job that are safe enough. It’s not at all clear that the SS1 approach is the best one for a commercial application, and if one includes in that the hybrid propulsion, it’s already caused delays (though those are partly due to Scaled taking on a project outside their area of expertise–they’re an aircraft manufacturer, not a propulsion house) in their development program, and it’s certain to result in higher operational costs and increased turnaround time.

The real point is that if only Burt could win the X-Prize, it wasn’t because he was the only guy smart enough to design a vehicle to do it. It was because he was the only guy with the reputation of being smart enough to be able to raise the money to do it. When it comes to space ventures, the hardest part is always raising the money. The technical challenges generally pale in comparison.

So, with schedule delays in SS2, now comes XCOR. XCOR has a reputation of its own, hard won over the past eight years, of underpromising and overdelivering. So when they have a (rare, almost unheard of) press conference announcing that they have the design and the cash to build a suborbital vehicle, with an endorsement from the Air Force Research Laboratory, the world listens, and suddenly it’s a real race.

Evidence that the mystique has been broken is this CNBC story by Jane Wells from last week, after XCOR’s announcement, with the hed “Branson And Northrop May Be Backing “Wrong” Rocket Man!”

Burt is no longer God, other companies are getting serious attention from both business journalists and investors, and it’s been a very good week for the new space industry and space age.

Wrap Up

Joe Pistritto: We have a couple teams (Virgin and XCOR) that are planning to fly in a couple years, about the same time as the Shuttle is retired. At that point, the NewSpace industry will be the only way that Americans can get into space, and in that first year more people may fly into space on the new vehicles than have flown in space to date. At that point everyone in the country will have a better idea what this new industry does.

Henry Vanderbilt: Also, they’ll see that there is a horse race. A year or two ago it was assumed that Virgin would be first to market. That’s no longer the case.

Joe: There are going to be different types of experiences at different price points, and as the horse race becomes more clear, it will expose the business to a lot of potential investors who haven’t been paying attention up to now. This is good not just for investment, but for creating a supply chain of suppliers that are needed. Still thinks that this is an individual investor market. Venture funds can’t justify this investment in the current business environment. Can do it with their own money, but not someone else’s. For someone with their own money, there’s no industry that is more exciting than this one.

Henry: Not important who comes in first. Emphasis needs to be that there is competition and that we’re in for exciting times.

Muncy: Difference between spaceflight participants (passengers) and Russ Blink strapping on an oxygen tank and flying out of the atmosphere on an Armadillo vehicle. Markets are wonderful magical things. We have no idea what the possibilities are (who knew that someone would program Doom eventually when Bill Gates said 640K would be plenty). Smart guys in the military might figure out what to do with these things once they’re flying. NASA may want to replace the T-38s now that they’re not flying the Shuttle any more (I think he means Gulfstream), or they might want to practice lunar simulations.

Challenge is to figure out how to get customers interested beyond the tourist flights. It will be different flying in the back of SpaceShipTwo than flying in the cockpit of the Lynx. We’ll see what the market wants. Lord willing the market will want both, and other flavors. The good things about markets is that if you offer something out there of value, it will be rewarded. Thinking about package tours of all the vehicles: Grand Slam of rockets.

[Update]

At that point, I got pulled up to join the panel by Muncy, so I couldn’t blog it.

Anyway, another conference is history. More thoughts later.