Sponsored by

and
This is a summary of a conference that took place in Palo Alto, California on June 6th,
2002.
Main Menu | Panelists | State of the Industry | What the Future Holds | Back to SFF main
page
Conference Summary
Moderator:
Jason Ponton
Editor, Red Herring Magazine
Panel Members:
Walt Anderson
Founder, Gold & Appell
Elan Musk
Founder, PayPal
Blake Powers
Director of Outreach
Space Products Development
NASA
Jim Schultz
Partner, ReedSmith
About Our Panelists
The Current Health of NASA and
Space Industries
What the Future Holds


New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/index.html
1 of 1 6/15/14 2:09 PM
Sponsored by
and
Main Menu | Panelists | State of the Industry | What the Future Holds | Back to SFF main
page
Key Panelists (with opening comments)
Jason Pontin
Jason Pontin (Moderator)
Director/Editor, Red Herring Magazine
"We tonight we will debate the state of commercialization of
the space industry. I'd like to have the panelist to explain
themselves why the have any interest or condence to speak on
the subject."

Elan Musk
Elon Musk
Founder of Zip2 and PayPal
"Long ago I worked for a company called 'Rocket Science'
which didn't do any rocket science. I started a company called
Zip2 I sold that to Compaq for a little more than $300
million in cash in early 99 and then started a company called
X.com which we renamed about a year ago to Paypal. It's
basically the world's largest electronic payment system I
don't spend a lot of time there day to day. I am actually looking
at starting a company in the space sector to compete with
Boeing and Lockheed, which I think is pretty do-able
There's an overarching goal here which is that we'd really like
to make a dent in the cost of space related stuff. That doesn't
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/panelists.html
1 of 3 6/15/14 2:08 PM
seem likely to come from major aerospace companies."

Stephen Fleming
Stephen Fleming
Former Partner, Alliance Technology Ventures
"I spent about eight years in the venture capital business as a
partner at Alliance Technology Ventures which is a rm based
out of Atlanta I did bring several space-related to our
investment committee and failed to get approval for any of
them. I did invest my own money as an angel investor in
XCOR Aerospace."

Walt Anderson
Walt Anderson
Founder, Gold & Appel
"I have invested in some space start ups that didn't work out
quite a long time ago. I've made a lot of money in telecom and
building companies and spent some of it learning what not to
do with space startups I run a private fund called Gold &
Appel that invests in a number of technologies including water
transportation, telecom-related businesses both here and
overseas, but we are very interested in space and we think
we've found some formulas that work. One of our more
conservative investments is that we own a ground station
operator that serves as a reseller to existing satellite operators.
We're one of the largest resellers of IP over satellite We also
made an investment in Mir Corp and for a little while owned
the Mir Station until it got put into the Pacic Ocean. We also
have another company called Orbital Recovery which will be
using existing technology to recover failed satellites."
Jim Schultz
Partner, ReedSmith
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/panelists.html
2 of 3 6/15/14 2:08 PM
Jim Schultz
Blake Powers
Blake Powers
Director of Outreach
Space Products Development
NASA
Main Menu | Panelists | State of the Industry | What the Future Holds

New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/panelists.html
3 of 3 6/15/14 2:08 PM
"The one thing all of us up
here will agree on is that the
Sponsored by
and
Main Menu | Panelists | State of the Industry | What the Future Holds | Back to SFF main
page
The Current Health of NASA and Space Industry
Moderator - Let us begin by establishing the state of health with NASA itself. It is
perhaps too easy to make fun of NASA. I think I myself cracked that if the Russian
space programs was the most entrepreneurial organization in the former Soviet
Union, NASA was the most socialist agency in our government.
Mr. Powers - The state of health is that NASA is in transition. We have a new
administrator and there are a lot of welcome changes and I am sure there some that in
some quarters are not so welcome. I personally have met our new administrator and I am
very pleased with that meeting which is not something I might have said about previous
meetings I like to think our space product development program is a good sign for
NASA. Back in the mid 80s Congress decreed that NASA would like up to its charter
and would commercialize space to the fullest extent possible
Unlike traditional NASA and government
work our program does not directly fund any
research. We do not do the research we do
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/nasa-health.html
1 of 3 6/15/14 2:08 PM
current cost to orbit is
abysmal. It is the single
biggest impediment to space
commercialization there is."
- Blake Powers
"NASA's done a good job
when it comes to deep space
missions. When it comes to the
running of the space station
and the shuttle - very
suboptimal. This is a case, in
not select it. It is not NASA-driven. It is in
fact industry selected and nanced. All we
are doing is provide companies with an
opportunity to come in and try space and
microgravity to see if it will benet them and
their work. In the process we are getting
them hooked. A broad base of industry -
everything from casting to agriculture is making use of it right now.
The one thing all of us up here will agree on is that the current cost to orbit is abysmal. It
is the single biggest impediment to space commercialization there is. One of the reasons
is that you cannot build a viable launch company predicated on three or so satellite
launches a year. You've got to have a broad base of industry that is used to spending
$1,000 per pound.
Moderator - Would someone like to take up the challenge that NASA works, and
that the exploration of space is in a healthy state?
Mr. Anderson - I'd like to throw out the concept that providing below market cost for
any service doesn't stimulate the private economy to provide that service. In fact damages
the very people who might provide the same service at perhaps a higher cost short term,
but ultimately become more efcient long term. As long as NASA competes politically
by giving some people access to space and others not at a lower than actual commercial
cost. It will continue to damage the commercial space industry in the United States.
Mr. Powers - I agree except for one thing. The fact is that there is nobody out there that's
offering. If someone gets something that is a success they have to pay full freight. To be
honest we'd like to nd a private launch company to take some of the commercial
companies that want to y.
Moderator to Mr. Musk - As someone who wants to democratize space launch
vehicles. Do you believe that NASA is doing a good job stewarding the space
program?
Mr. Musk - NASA hasn't done a completely
terrible job. I certainly think there are aspects
of space exploration which are very, very
difcult to commercialize. I'm not sure you
could go around and collect funds for deep
space science missions very easily. That's
sort of a public good like a highway. It's
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/nasa-health.html
2 of 3 6/15/14 2:08 PM
my own frank opinion, of
digging a ditch and lling it."
- Elon Musk
something that's advantageous to a large
number of people because it enhances our
understanding of the universe and it's not
something that can be very easily translated
into commercial dollars. There needs to be
some sort of government entity spending money in that manner.
Overall there are many good things that have been achieved by NASA. For example, the
recent discover of water on mars is a good thing NASA's done a good job when it
comes to deep space missions. When it comes to the running of the space station and the
shuttle - very sub optimal. This is a case, in my own frank opinion, of digging a ditch and
lling it. The space station is digging a ditch and the shuttle is lling it. These are two
programs which are unjustiable in and of themselves and only justiable if the other
exists and that I would consider to be quite sub optimal.
Main Menu | Panelists | State of the Industry | What the Future Holds

New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/nasa-health.html
3 of 3 6/15/14 2:08 PM
Sponsored by
and
Main Menu | Panelists | State of the Industry | What the Future Holds | Back to SFF main
page
What the Future Holds
Moderator - We agree that the most important thing one could do for space
exploration is reduce the cost of launch vehicles which everyone agrees is ruinously
expensive. At the moment NASA and few other bodies have a monopoly on that.
Why are launch vehicles so ruinously expensive and what's the best thing we can do
to drop the cost?
Mr. Fleming - I think you have to look back at the history of launch vehicles. Everything
including shuttle traces its history back to ICBMs and every ICBM traces its history back
to being a gloried artillery shell. Artillery is not very good at being reusable.
The new companies in the eld, small startups and perhaps big startups, have to reject
that mindset which is not just NASA, they have to reject that and start looking like
airplanes. If you have to take a 747 land it, take it apart recongure 20,000 components,
re-certify, and do all the paperwork before you can take off again, you'd probably get 3
ights a year out of the 747. You can't run an airline that way.
Moderator - I'd like the panel to paint a picture for me of what the consequences
are for NASA failure. Show me the benets for a truly commercialized private space
industry. What kinds of things might I be seeing?
Mr. Anderson - I can think of a number of things. First of all the cost of existing
industry. We can reduce the cost of putting satellites in orbit and servicing them in orbit.
We can build bigger antennae arrays which means smaller satellites which can put more
power to earth. Just existing business, which is a proven business model, can become
more efcient Solar power satellites could provide power to a large part of earth, but
right now the economics aren't there because launch costs are so high. There are asteroids
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/future.html
1 of 3 6/15/14 2:07 PM
"What's the difference
between a space company
coming to a venture capital
rm and a biotech one? The
difference is with biotech the
market is obvious."
- Steve Fleming
"There are people in this room
and that I have met in the last
few years that have very
focused plans to build very
specic products to serve very
specic markets and they
don't need billions, they need
millions."
- Walt Anderson
with valuable minerals can be places in orbit and mined at a very low cost using solar
power.
Mr. Fleming - Let's imagine a prole of this
company which is going to take an
astronomical amount of money to get off the
ground with capital costs of lets all it $100
million. Lets say it's going into a market that
is dominated by government and by multi-
billion dollar corporations that are
well-established. Let's say its incredibly
inuenced by government regulation. You
have to make very critical science and engineering decisions on day one of the enterprise
and not no for many years whether or not those were the right decisions. Sometimes the
science and technology just at doesn't work and what you invested in is a complete
write-off. We've got human lives at stake. Is this an investable company?
I just described a bio-tech company! We've been doing this for the last twenty years.
What's the difference between a space company coming to a venture capital rm and a
biotech one? The difference is with biotech the market is obvious. If you develop a pill
the cures heart disease or you develop a pill that cures cancer or you develop a widget
that lets people with Parkinson's disease function more normally, the payoff is obvious
because it is an obvious market. What the small private space companies have
historically failed to do and now in the last couple of years are begging to do is come to
investment sources talked about baby steps towards markets that actually make money,
rather than spending $100 million before you see the rst dime. There is trillions of
dollars oating around in venture funds that sure as hell is not going into telecom deals
this year. There's a whole bunch of funds that need to gure out what to do with their
money.
Mr. Anderson - The last few years of
writing a business plan & concept and getting
money are over. The space industry never
beneted from the dot com craze There
are people in this room and that I have met in
the last few years that have very focused
plans to build very specic products to serve
very specic markets and they don't need
billions, they need millions.
Moderator - Give me some good stories.
Tell me what the world is like now. Perhaps you'd like to suggest from some lessons
New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/future.html
2 of 3 6/15/14 2:07 PM
from the past that commercial ventures could benet now.
Mr. Musk - I think there is opportunity in the space industry. It's not in anything
incredible exciting. There is tens of billions of dollars going into space every year. It's in
basic stuff like communications satellites. Launches vehicles to get the satellites up there.
Defense spending. If you want to build a company that is going to succeed, meaning that
you will bring in more cash than you will spend, then you have to address the current
market. Once you address the current market perhaps other markets will open up down
the road.
Main Menu | Panelists | State of the Industry | What the Future Holds

New Space Economy Meeting 6/06/02 highlights http://archive.spacefrontier.org/Events/NSE/future.html
3 of 3 6/15/14 2:07 PM