what wall street can learn from space startups
If we want to guide out future and find our places in it, we need to take risks and dream big. Otherwise, we're doomed to decades of mediocrity.
Slowly but surely, the nascent space tourism business is revving up. Not every company that wants to send its space planes into orbit and maybe even beyond, is going to survive, and it will take years until the industry sees profits coming in on a regular basis. But they’re working on a far more efficient and cheaper way to get to space and there are a lot of people who’ll pay for that capability, from wealthy tourists to government agencies and the military. At the end of the day, some of today’s space-bound entrepreneurs will make money and help create a brand new market overflowing with opportunities and big ideas for the future, like they envisioned.
If the bankers and traders on Wall Street are watching, there’s an important lesson space tourism companies can teach many of today’s biggest businesses. What’s amazing here is that the likes of Lockheed Martin and Boeing or Raytheon aren’t out there in the desert building a new generation of space vehicles. All the vehicles in use by NASA and the ESA since their inceptions were built by huge defense contractors. And now, when the opportunity to make space flight cheaper and rent your space planes to cash-strapped scientists and space agencies, they’re nowhere to be found. Instead, ambitious billionaires with a vision to put humans into orbit in the kind of quick, cheap and efficient manner we’ve been seeing in science fiction movies and cartoons since the 1960s, are the ones putting the space faring future together. Why? Because they have imagination, a drive and they’re thinking ten steps ahead, unlike so many risk-averse corporations mired in groupthink.
Virgin Galactic won’t be profitable for years to come because it’s going to be a niche business catering to the very small crowd of people who could afford to drop almost a quarter of a million on two and a half hour of out of this world flight. To Branson, that’s fine. He’ll make money when the space planes are being paid off by the cash flow his new company will be generating down the line. Meanwhile, just like SpaceX, XCOR and Space Adventures are doing now, he’ll diversify and find ways to leverage his launch system into profitable deals for communication companies and possibly even government projects. The typical short-term mindset of using a tedious mathematical break-even formula and subject it to impatient scrutiny devoid of any vision beyond that of making money from it as soon as possible, doesn’t apply here. Rather than make a dollar now, commercial space tourism is focused on building a market and making millions in ten years.
Compare that to an aerospace giant the managers of which demand vast simulations of everything they want to do, then spend months if not years going over abstract numbers and suffering from epic cases of analysis paralysis which often leads them to the conclusion that the venture is too risky, the shareholders won’t like it, corporate raiders on the board will start a proxy fight, and Wall Street will bury their stock in a week. Just think of today’s financial market as an anchor firmly tied around the legs of the innovators who could find out what a company’s customers dream about and make their dreams come true. This is exactly what’s happening with space tourism today. While the powers that be at NASA are going to have their fair share of political battles to make it happen, the agency is very interested in partnerships with entrepreneurs who could deliver a working space plane and significantly cut launch costs. And as the price of space travel comes down by economies of scale and amortization of launch system and spaceport costs, other ventures could easily be in the works. Oh and did I mention that hundreds of people are lining up for space plane tickets already?
When the stock price and a lack of real vision beyond boosting that stock price within a certain time frame are more important that innovation and trying to do real, ambitious projects that might not pay for themselves for a while but will ultimately build new markets and create new industries, progress grinds to a half. All we end up doing is packaging and repackaging the same stuff and pretending it’s worth more every time we put in a new bond or stock. Wall Street should be putting its billions towards bankrolling creativity and ambition, looking to the economy of the future and the companies poised to create it. Corporations sitting on cash should use it to fuel ambitious R&D projects that tackle complex needs. Instead, what we have is a banking culture devoid of imagination and risk-averse companies which only care about market share and financial PR. Vision? What vision? That’s for dreamers and eccentric rich people. They’ll just stick to doing the same thing day in, day out and giving their routines big, flashy names like “the knowledge economy” just because workers send e-mails instead of memos and letters around the office, and the R&D department is allowed to try something once in a while on a budget that’s slashed at the first hint of Wall Street’s dissatisfaction with the quarterly report.