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Author Ashlee Vance Helps Separate Real From Hype in the Space Industry

Motley Fool - Sat Jun 10, 7:00AM CDT

Motley Fool host Deidre Woollard caught up with Ashlee Vance, author of When the Heavens Went on Sale: The Misfits and Geniuses Racing to Put Space Within Reach. They discuss:

  • The new business opportunity in clearing space junk.
  • How a self-taught engineer created a commercially successful rocket company.
  • The massive trade-offs that space companies make by going public.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

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Ashlee Vance: We've gone from about 2,500 satellites in low-Earth orbit in 2020. That's like 60 years of doing stuff at space to get to that point. By the end of this year we'll be at around 10,000, so it's growing exponentially. It'll get to 100,000 in the next decade quite easily. I think, we'd never dealt with anything like this.

Mary Long: I'm Mary Long, and that's Ashlee Vance, a writer at Bloomberg, an author of the new book, When the Heavens Went on Sale, the Misfits and Geniuses Racing to Put Space Within Reach. Deirdre Woollard caught up with Vance to discuss how much failure it takes to get above the Earth's atmosphere, what life is like in outlaw space towns, and how to separate the real players from the hype in the space industry. Quick note, this conversation was recorded before Virgin Orbit announced that it was shutting down.

Deidre Woollard: The book's title refers that there's what I would call a sea change in the world of getting to space. You don't need to have a government anymore, to have a rocket. You, just need a lot of money. What are some of the pros and cons of the current state of space exploration?

Ashlee Vance: Well, a lot both sides. My book really is about this moment in time when, basically for like 60 or 70 years we had a handful of governments that did most of the things in space. Then we move to this billionaire phase. We're really SpaceX, then Elon Musk are the only success stories, we're large. Then now this era of venture capital. The major pros are the things are moving much more quickly than they ever have before. The price of rockets and getting the space is coming down. Same thing for satellites. They're cheaper and able to do a lot more. As a result, we're sending up exponentially more satellites and building this giant computing infrastructure in low-Earth orbit. The downside is that this is frenetic kits, it's a total change in the power structures of how space has operated. There's got to be some winners and losers, in all this and we're not sure how the losers somewhere, like maybe Russia might react. This technology that we're putting in space is very powerful. There's a lot of good that comes with it, but also, a number of challenges as well.

Deidre Woollard: Also potentially a lot of risk for investors and some of this as well.

Ashlee Vance: We didn't even get to the business models yet. There's many questions as to who's real and also what does it look like in the long term?

Deidre Woollard: Your subtitle for the book, it's Misfits and Geniuses Racing to Put Space Within Reach. I'm such a sucker for Misfit's. There's a ton of them in this book. There's a whole house full of them in the Rainbow Mansion. It's this Silicon Valley communal utopia. What role did Rainbow Mansion play in the founding of Planet Labs?

Ashlee Vance: A huge role. Also in the founding of this book. This was the first story that I really in group of people that I got interested in. NASA aims is silicon valley's NASA center. It had some bright spots in the past and then fallen pretty slow times. Then all of a sudden, in the early part of the 2000s, it had this iconoclastic director who came in, Pete warden, any, he hired a bunch of 20-somethings to try and think of space differently. There was this group of friends that formed. They were all these young space nerds and a number of them lived in this place called the Rainbow Mansion, which was a communist and like you mentioned, obviously a mansion, but it was full of people. They would work at NASA by day, and then come back to the Rainbow Mansion, and discuss their big ideas about what they wanted to do with space. It was during some of these late-night discussions over a scotch or a shared meal that they came up with this idea to really rethink how satellites are made. I'm sure we can get into it. But to build this enormous constellation of imaging satellites that would photograph the Earth in ways we'd never thought were possible before.

Deidre Woollard: You just mentioned Pete warden and you've had a quote toward the end of the book. You said, like if it was a fictional book that he would be the supervillain mastermind behind all of it. Why is that?

Ashlee Vance: Well, Pete Warden, he's one of the older characters in the book. He's got this long history, he is an astrophysicist by training, which seems straightforward enough. But he worked in that, he became a general in the air force, he worked on the Star Wars missile-defense shield. He worked on a lot of Black Ops operations. One of his main goals in life was to help push along something called responsive space, which is what the defense department has desired for decades. That's the ability to send, if a war breaks out somewhere, like say Afghanistan, you want to set up a rocket the very next day that puts a satellite or a few of them right over Afghanistan, to watch everything that's happening all the time. In that sense, people called him Darth Vader. He'd done the Star Wars. He was trying to militarized space. The people he'd hired to NASA. These youngsters were quite opposite. They were idealist, they were, I call them space hippies. They definitely did not want to see space get militarized. But Pete choose credit, easy. It's just not one of these people who wanted yes people around him. He wanted to new ideas. He built his environment where these kids could go charge-after cheap rockets, and cheap satellites for their idealistic missions. By the time you get to the end of the book, I just argue that maybe Pete knew what he was doing all along and ended up getting the technology he wanted just by pushing this group of kids to chase after what they thought they wanted.

Deidre Woollard: It seems like the space race. It attracts a certain type of personality. I love the story of Peter Back. He's this New Zealand guy. He's just mad genius out of nowhere, decides to build rockets, no connections, no training, no experience. For a long time, no money. He pulls it off, Rocket Labs now a major player, what part of that whole story did you find most improbable about his journey?

Ashlee Vance: It's hard to know where to start. For people who don't know. There's SpaceX which has launched hundreds of rockets, and then there's Rocket Lab, which is Peter's company. It's launched about 40, after that, the number of drops off pretty quick as far as commercial rocket players go. Rocket Lab is the real deal. Like you mentioned, New Zealand has no aerospace history at all. They were not a space-faring nation. They barely have a military, no experiences to rely on. Peter Back didn't go to college. He worked as a apprentice at a dishwasher maker. It's certainly not like MIT, PhD or anything like that. He just happened to be this very driven engineer. This driven hands-on guy. He would make his own propellants in a shed outside of his house, his own rocket engines in a shed outside of his house. History would tell you this should not work. He should not be able to form a rocket start-up. But he really does stand alone as the one person who has done this, as a one-person outfit for a while, he then obviously you got some potentially capital money, and built this into a massive multi-billion-dollar company. But I think of all the stories in the book is just the most unlikely. It has to be one of the most unlikely him the last 50 years, 60 years.

Deidre Woollard: I'd just add that was one of my favorite parts and I liked it in the Rocket Lab section. He does this thing, he tosses this thing, the humanity star into space. It's this disco ball. It becomes the brightest object in space until it eventually falls out to orbit and burns up. But it a good example of the idea that just because we can put something into orbit, maybe we shouldn't. You also talk in the book a little bit about Leo Labs, which is starting to track space debris. As someone who looks up at this guy at night, how concerned should we be about this growing issue of space junk and so much being put up into the lower orbit.

Ashlee Vance: Well, this is part of the reason I wrote the book. A large part of the book I would say is optimistic overall, but I wanted people to know we've gone from about 2,500 satellites in low-Earth orbit in 2020. That's like 60 years of doing stuff at space to get to that point. By the end of this year we'll be at around 10,000. It's growing exponentially. It'll get to 100,000 in the next decade quite easily, I think we've never dealt with anything like this. I mean that 2,500 number, you're barely grew year-by-year was quite static. This company, Leo labs, not only do they track this antenna system, they're a start-up, they've built unique antennas to see stuff in space. They don't just track the objects, they already coordinate the movement of these things. SpaceX's satellites will talk to Planet Labs, satellites, and maneuver out of each other's way, and Leo labs helps coordinate all of this. It's in everybody's best interests to make sure this work, some cascading debris field would undermine every bit of new business, and also things like GPS technology and stuff like that. But people should know, the nights guy, as you've seen it since you were growing up, is changing and will change more dramatically. We'll see satellites moving all the time. I wanted people to start having this discussion like we are right now, and be aware of what's coming because I don't think most people have been paying attention.

Deidre Woollard: I wonder sometimes if the next iteration of space businesses starts become businesses that clean up the things that other businesses have put up there.

Ashlee Vance: They're already are start-ups tried to do that now. There's some satellite companies, they want to put up satellites, and then they're satellites also have this junk clearing ability, and then there's some that are just pure. We want to go up there and try to manage all this. My book is not about tourism, it's not about colonies on Mars. It is about lower Earth orbit, the space right above our heads. It's really presented as this new real estate. We know what happens when humans discover some new place., It's like we rush in, and there's already companies trying to claim their territory, and set up shop, and you don't want to rush in so quickly that it ruins it forever, which is a real concern here.

Deidre Woollard: Well, speaking of real estate, one of the things about this book, and book launching rockets in general, you need a lot of room. It seems you've went everywhere. You went to the wilds of Alaska at New Zealand, obviously, the Mojave Desert, which is the place where all this stuff is really happening. Give us a little taste of what life is like in the out loss-based towns.

Ashlee Vance: I was a French Guiana's fall Bard, India, you name it. The big, large sites tend to be near the equator. The Earth spins faster at the Equator, so it gives the rockets a bit of boost, so they can carry more stuff. Obviously, tends to be by the water. If they blow up, people and objects don't get hurt. But as a result, you also end up in places that tend to be frankly quite poor and remote and exotic. I'm not a space gig by nature, isn't totally alike. Whatever impressions I had in my head, which was, You're going to the boasts sci-fi, high-tech clean facility imaginable. Usually, I would go in, like in India, there were those goats and monkeys, and all animals cruised around the rocket launch sites. The buildings look alike and are from the 1970s. Part of it's a reflection that there is a space boom that happened in the '50s and '60s. Things got stuck. It just didn't change much after that, and then part of it is just a reflection of where these things add up. You don't put a rocket launch site in the middle of Los Angeles for obvious reasons.

Deidre Woollard: Definitely not. The story of Astra in the book, to my mind, it illustrates how much failure is involved in getting things into space. Because you've got Chris Camp is this charismatic, brilliant, maybe a little bit of a wild man. He's pushing this team really hard, and these rockets just keep failing over, and over again. You called going public for both Camp, and for Astra, this Faustian bargain. I want to know why was that true? Is it still true? With everything that's going on with Astra now, and what just happened with Virgin Orbit, what do you think is next for Astra?

Ashlee Vance: This is incredible time. Even SpaceX is still private, which is a reflection of the traditions in this industry. We have not seen public space companies until the SPAC craze of 2021, I think it was the Peak spaceness. There was all this cheap moneys. The Faustian bargain was, look, we need money, we could get hundreds of millions of dollars. SPACs were amazing because the regulations are a little flimsier around them. You can promise all incredible things about how often you're going to launch, and all this stuff without getting into too much trouble. It was this huge opportunity for these companies. I argue in the book, and I think this is very true, is that, most investors barely understand the commercial space economy, and the average retail investor definitely does not really understand, still got to how hard this is, and the mechanics of it. A company like Astra is Publix, and now they have to start doing what used to be private hidden lodges right out in the open. There is no more binary product lodge than flying it explosive into the air, and it either gets the space or blows up. This is not like some software product that you put out there and get months to see if it gets some adoption. You see these companies, stock prices just oscillating up and down based on these launches. I think Virgin Orbit recently filed for bankruptcy, although there's rumors that they're making a comeback. But I think we saw this huge initial wave, rockets come in small, medium, and large, and we got inundated with small rocket companies that really were not that different from each other. I think we're going to see a clean out of a lot of those because we probably only need a couple. I think we're going to see a bit of a pullback. But then I think, as I argue in the book, this is not a failed experiment. Commercial space is going to happen. I think we just see a second wave of new players who really tried to learn lessons from what came before, and the industry's matured where a rocket company that started today would not have to make all of its own engines. There's engine companies, there's different suppliers now, and so it's already a new regime if you want a second crack at this.

Deidre Woollard: I have to ask you about your adventures with Max Polyakov. Because he's the man who rescued, and really rebirth Flat Firefly Aerospace. But in a book full of, as we've seen, really colorful characters, he might just be the most colorful, and maybe controversial. Is he these Ukrainian Elon Musk or something else entirely?

Ashlee Vance: I guess he's closer to that or is on the verge of it. Elon Musk, he grew up as the Soviet empire was collapsed, his parents had worked all the soviet space program. He was an OB-GYN coming out a university, and then turn to this software multimillionaire. To your point, he bought Firefly. It was small rocket maker in Texas that went bankrupt. Max came in. He is like Elon Musk, and Jeff Bezos in the sense that he put $250 million to Firefly, which it's very hard to find another individual that's put anything close to that into a rocket company. The story of Max it's like part comedy, part tragedy. Right as Fireflies starts to become successful, the US government begins to raise all of these questions, which I thought were quite flimsy really. The US government's basic contention is that he's Ukrainian and Ukraine is close to Russia and that he might one day become a Russian asset and funnel American aerospace technology to Russia. If this is true, he is the most extraordinary undercover agent I've ever seen. Because he's been funding the Ukrainian war efforts since the war began and it seems to hate Russia with a passion. But yes, I had those bizarre opportunity to live through all of this with Max, with him trying to build this company with the US basically throwing him out of the company and out of the country and go into Ukraine with him and the whole thing.

Deidre Woollard: Then he's like picked up his marbles and now he's in Scotland?

Ashlee Vance: He is, he's in Scotland. He had all these business software and online business ventures that he's refocused on. He owns a satellite company in South Africa, but he still has space in his blood and I don't think we've seen the last of Max Polyakov in space. We were already talking about some of these rocket companies that are struggling. I'll be curious to see if Max snoops in and it takes a second crack at this.

Deidre Woollard: What you just said there is true about when space gets in your blood. Because that's what comes through in the book. It's come through with the billionaires. Your book isn't about the space tourism race, but I got to ask you, because you have such insight on all of them, in this billionaire space phase with Bezos Musk, Richard Branson still is in there. If this were a horse race, you could only bet on one of them, who would you put your money on?

Ashlee Vance: Put everything I possibly could obtain on Elon. SpaceX is running laps around not only their rivals but entire nations. Branson's companies are barely existing and Blue Origin has had some wins with space tourism but has been trying to send satellites into orbit pretty much as long as SpaceX has and has never sent one and SpaceX is sending them up by the thousands per year and launching rockets almost every day. You could feasibly bet, it depends on your time horizon. If you could get into [inaudible] of doubt maybe have some surprise wins.

Deidre Woollard: One of my colleagues wanted me to ask this, so in 2018, you did an interview with us at the Fool and you said that SpaceX was Musk's baby, that Tesla was foisted on him. Now, he's got Twitter and he's actively said that that has definitely been foisted on him too, he felt like he had to buy it. He's got those companies, he's got certainly some other companies as well, he's all over the place. How do you see him splitting his focus and how important do you think, looking back between 2018 and now, how important do you think SpaceX is to him? Has that shifted over time?

Ashlee Vance: I think it's still his baby. It is hard, I've been shocked to see how our consuming Twitter has been. I guess he saw it in this emergency state where it was burning through cash and he had to be very hands-on to deal with that and deal with all the debts and these payments. It's a little sad to me in some ways, I just don't think it's the best use of his time. I think SpaceX has accomplished so much and is still just starting this new chapter with Starship and even bigger rocket that actually can get to Mars and take a lot of stuff and people there, which has really been his life's goal. I think it's torn at the moment, if I'm honest. I think SpaceX also operates quite well without his day-to-day involvement. He seems to be extremely concerned about AI technology as well. This is something I never saw coming, I really thought this guy who had his finger and so many buys, we're trying to pair things down over time to just concentrate on SpaceX and we're obviously going in the opposite direction right now. I don't know for sure how this plays out.

Deidre Woollard: Yeah. Overall in the book, one of the takeaways for me is about how much failure is involved. We've talked about Astra, certainly, Fireflies has gone up and down, with all of these launches and so much money being spent and so many failures, do you think that over time we get better and better at this and there are fewer failures? Because right now it hasn't quite seemed like that, like things will get a little better and then there'll be a rash of failures and then it seems like everybody goes back and iterates. What do you see, how is the failure rate going to go?

Ashlee Vance: Still very difficult, getting the first rocket is very hard and then getting some repeatability is very hard. But if you step back for a second, we do have just massive leaps forward. It used to be all the space programs were really government-run to some degree and the best launched maybe once a month over the course of a year. That was success. SpaceX currently is on a pace for about once every two days and probably could get to almost once a day if it wanted to. It sent 38 people up over the last two-and-a-half years from nothing. Rocket Lab can launch about once every week and is trying to get to once every three or so days and has three rocket pads at its disposal now. Some of these other companies are at a earlier stage but when we look at SpaceX and Rocket Lab as the two premier commercial space players. It's a totally new regime than what happened before. It's still very hard, but definitely even to make a go at this before you did have to be a nation-state, you did have to have thousands of people, billions of dollars and so. Now you have much smaller teams and much less capital required to give us a shot and we're going to see it. Just this year, there's about, I think 10 on the order, between 5-10 rocket start-ups that are launching for the first time. This is from nothing 58 years ago to quite a number of players.

Mary Long: As always, people on the program may have interest in the stocks we talk about, and the Motley Fool may have formal recommendations for or against, so don't buy stocks based solely on what you hear. I am Mary Long, thanks for listening. We'll see you tomorrow.

Deidre Woollard has no position in any of the stocks mentioned. Mary Long has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Rocket Lab Usa. The Motley Fool has a disclosure policy.

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