I get the impression, from a lot of these biz dev’ers, that they think of biz dev as fun and sexy. One minute you’re grabbing lunch with Ron Conway and Ashton Kutcher and the next minute you’re closing a deal on the phone while you wait in the lobby at Microsoft to give Steve Ballmer the bad news: “No, we will not accept your acquisition offer of 3 trillion dollars.” From there, you head out for cocktails and swirl single-malt Scotch while discussing why Apple is so badass.

Worth a good read for anyone startuping or thinking of startuping.

It takes slightly crazy people to make big changes. These same people generally have tough lives. It’s a lifestyle choice.

–Iain McClatchie (who runs the  Ambivalent Engineer blog)

Now, even though I’m pretty libertarian, I can at least empathize with the goal of not letting poor widows get screwed by unscrupulous privately-traded companies…but we put the people in the 90th and 95th and 98th percentile in this same category?  Sure, privately traded companies, and especially startups can be pretty risky–even in strong and growing industries.  But really these days, investing only in publicly traded companies is no guarantee that you won’t get screwed.  There are all sorts of ways investors are allowed to do financially suicidal things with publicly traded companies, but aren’t allowed to take any risks with privately traded ones, even if they’ve managed to build net worths of several hundred thousand dollars not counting equity in their primary residences.

I just wonder what the investment environment would be like if the accredited investment rules had a cutoff bar of $500k vs. $1M.  Not that it’ll ever happen, just surprised to realize how high of a bar current accredited investment rules really are for investment.

That is all.

Jeff made the point that you can look at space policy from a framework that has Goals at the top, with Strategies that help you achieve those Goals, Objectives that provide you measurable steps to gauge your progress at those Strategies, and then Tactics that determine what tools you use for meeting those Objectives. I really like this framework, and in fact it helped me clarify my thinking about Altius’ corporate goals and strategies (but that’s a blog post for another time, and probably over on the ASM blog).

After giving a few analogies (WWII military policy and the Space Race), Jeff then made the argument that “space settlement” was actually the policy of the United States. For me, my motivating goal for space development is a very closely related but slightly different focus–tapping the resources of space for the benefit of mankind here on earth. Now, there are challenges for both of these goals. As Jeff right pointed out, there are many who are afraid of openly proclaiming goals like these, because they are afraid that they might not actually be realistically achievable. In the case of settlement, there are questions of whether humans can actually reproduce outside of a 1g field, or if we can ever get to the point where we can economically support life indefinitely off planet. In the case of tapping space resources for humanity’s benefit, there’s the “minor technical detail” that most of these resources are extremely subeconomic right now.

I actually discussed the topic of subeconomic resources back in the early day of this blog, but I figure a revisiting of the topic is worthwhile. To recap, a subeconomic resource is one that you can’t profitably extract and sell under current conditions. Pretty much all space resources currently fall under this category. While you hear a lot of comments on space forums about the importance of better space property rights, the reality is that even if there was a clear way you could homestead a chunk of the Moon or a NEO or Mars, and sell anything you could harvest for it, I still don’t think you could actually close an honest business case around resource extraction today. With how much it would cost and how long it would take to go from where we are right now to the point where you could actually sell your first kg of lunar platinum or put the first drop of lunar derived LOX or LH2 into a customer’s tank in LEO, there’s no way you could actually make the ROI work for doing that privately, stand-alone. In fact, I’ve even got a certain coblogger who has made the argument that it’s impossible to ever mine a resource in space and send it back to earth for a net profit.

While I’m pessimistic on the current economics of space resource extraction, I think my friend is wrong. The point I made in my previous article on the topic and that I wanted to remake today is that resources that are currently subeconomic don’t have to stay that way. What got me thinking about this was actually reading a sign at the Hogle Zoo last week while on vacation. One of the donors for the zoo was the Kennecott Copper Mine, a major open-pit mine located in the mountains on the west side of the Salt Lake Valley. While this mine is one of the most productive mines in the world, there was still a time in the not-to-distant past, where even if you knew exactly how much gold, silver, copper, and molybdenum there was in there, that it wouldn’t have been possible to economically exploit that. But as transportation systems became more mature, affordable, and reliable, commerce spread, and eventually mines like it or deep-sea oil rig operations also became feasible and even profitable.

Now don’t get me wrong, just because it’s possible for some subeconomic resources to become economic over time, that doesn’t guarantee that a specific resource will do so. Personally, I’d be really surprised if anyone ever harvests Helium-3 from the moon for use in fusion reactors, for instance. But I think there’s a reasonable case that a space program run with the goals I mentioned earlier (settlement and resource utilization), and with a suitably well-thought-out and implemented strategy, can enable at least some extraterrestrial resources to become economically extractable for mankind’s benefit.

Imagine for a second that the White House actually proposed such a goal, and a strategy like Jeff’s “planet hopping” strategy, and found a way to get Congress on-board with such a strategy, and NASA to competently execute it’s part of that strategy long enough to get us past our first two major objectives (depots in LEO and L1 and a working lunar ISRU operation capable of delivering respectable amounts of LOX/LH2 to L1). Also imagine that the idea of prepping these new capabilities for a handoff to commercial operations was built-in from the get-go instead of being an afterthought like it usually is. By that point, we would have already started some virtuous cycles. By providing an anchor tenancy need for propellant in LEO, you’ve now provided a large enough stable market to close the business cases for several lower-cost launch providers. You’ve also helped establish infrastructure and systems to allow sending large amounts of crew, cargo, and other materials to the lunar surface. You’ve also established the first market for propellant in L1 (servicing missions both to the Moon and also to NASA’s next steps in the “planet hopping” strategy). If the price point of propellant in L1 from lunar sources really is cheaper than shipping it from home, you’re also getting the start of a transportation system that has a made a lot of progress towards being able to extract and ship home Lunar PGMs at an economically useful price point. While you might not yet be all the way there, you’ve now lowered the amount of additional work that has to be covered by a lunar PGM extraction business plan substantially, and also removed a lot of content and time between fundraising and when that first bar of platinum can be sold on earth. Also, by providing steady demand for propellant in L1, NASA has also provided an economic incentive for people to improve the cost of delivering stuff to L1 (say by improving the reusability of lunar landers, building a small lunar mass driver, rotovator, launch loop, sling, or a lunar beanstalk). By providing an anchor tenant for LEO and L1 propellant, NASA has also made it easier for other people with business ideas to factor those into their company’s plans, or their country’s space program.

To summarize what has now become a much longer blog post than I intended, I think a properly done settlement/resource extraction goal with a “planet hopping” strategy could actually start making lunar resources economically extractable even before we’ve managed to put a human foot on Mars, even if such resources are currently nowhere near economically feasible today.

Background

As I mentioned on my Space Show appearance earlier this week, my first appearance there in January ’07 elicited a lot of discussion both on the blog, and offline. I mentioned that a guy approached me with the question along the lines of “is there a way to wrap a business case around propellant depots”. That would be Colin.

We batted around a lot of ideas over the months, and came to the conclusion that while it was probably a bit too challenging to wrap a business case around depots directly. Not unless you had the backing of a wealthy philantrocapitalist like Musk, Bezos, or Bigelow (if any of the readers happens to be such a philantrocapitalist desperately in search of ways to invest a couple hundred $M to try and one-up Elon, my email address is jongoff@gmail.com, just in case you were wondering). The problem is that making depots really pay off probably requires at least two, and possibly three miracles. And when you have to raise outside money from non-philantrocapitalistic sources, you’re only allowed at most one miracle per business plan.

So, we backed up and looked to see if we could find any businesses that enabled depots that might be profitable in themselves. The idea of prox-ops tugs seemed to fit the bill. The idea is that one of the miracles needed for a depot is the development of a good prox-op tug that could take the complexity out of bringing “dumb” propellant tankers from their delivery orbit to the depot, hooking up the transfer lines, and then sending the tankers home empty when they’re done. If you could find a way to develop such a tug (or something close enough that it was clear that you only needed to trick-out your already existing tug with some slightly different add-ons), in a way that paid for itself, that would both make you some respectable amounts of money while simultaneously making the fielding of commercial depots that much closer to reality.

The challenge is that while there are probably a half dozen companies in the US that have the technical competence to design a tug-like spacecraft, and most of them want to do so pretty badly, none of them have really tried to go after this new market entrepreneurially. Now admittedly, and to be fair, it’s got to be really hard for a large, publicly traded company to take entrepreneurial risks like that in even the best of cases. But part of the problem has been the challenge of finding some initial toehold market that you can really get into the space tug business with.

There are a couple of aspects to this problem:

1. You need a customer who has a need that’s bad enough they’d be willing to actually buy servicing from you.
2. You need a technical approach that is non-scary enough that said customer will actually be willing to let you try
3. You need a customer with money, and an approach that’s cheap enough that the value of your service to them is sufficiently less than your internal cost to develop and deliver that service that you can actually make money.

That’s a bit harder than it sounds, and at least part of the reason why nobody has actually delivered on orbital servicing using space tugs is that this is a tough nut to crack.

There are people out there who could probably benefit a lot form servicing (NRO and USAF LEO satellites, GEO comsats, etc), but their spacecraft are so expensive that they really don’t want to be the first guinea pig–second or third maybe, but they’d rather see you demonstrate your capabilities on someone else. In both cases we looked at options like just attaching the spacecraft and providing some extra maneuvering capability–not even trying to actually transfer fuel or power or anything. But the reality kept coming back to the fact that the amount of engineering work it would take to go directly after such a mission immediately would likely cost so much that you couldn’t raise the money. If you could demonstrate your capabilities on something easier first, it might be realistic to start servicing these bigger players, but that means you still need to find a toe-hold market. They’re great second markets, but not good toe-holds.

Iridium For The Win?

In the end, we started looking at the Iridium constellation, due to the collision they had with the Russian Cosmos satellite in February of 2009.

Colin hit on many of the reasons why Iridium looks like an interesting first customer for space tug servicing. But let me add a few more:

• Iridium provides a large number of identical servicing targets.  Which means that you can design the servicing hardware once, and provide dozens of missions, reusing hardware, software, and experience.
• Not only does losing satellites start cutting into Iridium’s ability to retain and grow their customer base, but satellite losses that turn into more debris could actually make it harder to successfully replace the current constellation.  They really need to keep those orbits clean enough that they can continue to use them.
• While they really don’t want to lose many satellites, the fact that they do have some spares means that they can actually afford to take more risks on something like orbital servicing [Note: an article in Space News yesterday indicated that they felt they could still survive as a business if at least 36 of their satellites were still available when Iridium Next starts launching].  The bar is a lot lower than it would be with $1B NRO satellites, or GEO comsats that are bringing in hundreds of $M/yr/satellite.
• The government has a huge interest both in Iridium continuing to exist, and in Iridium not having more of their satellites become collision targets.  At Iridium’s altitude and inclination, debris from any collision is going to increase the danger to just about all LEO orbits of interest.  Remember, unlike GEO where all the satellites are going in the same direction at nearly the same speed, LEO orbits all tend to cross each other.  It wouldn’t take too many repeats of the Cosmos collision to start really making a big mess.  So the government might have a legitimate reason to help try and encourage ventures like this.
• With Iridium’s satellites getting old, the odds of one or more of them running out of propellant or having its batteries die before it can be disposed of is probably not insignificant.
• The LEO environment is a lot easier to design an initial tug for, and a lot easier to affordably reach.  Not to mention you can probably get away with a smaller spacecraft.  All of these lower the amount of investment you need to raise up front.
• Iridium actually has enough revenue that they might be able to afford a sufficiently low-cost servicing option.
• Their only other option is really to count “hope” as an operating plan. The analysis I linked to above indicates that they think they can survive as-is, but having an orbital servicing option that allows them to continue at full capacity might still be very interesting to them.

What the NRO Doesn't Want to See a Repeat Of

How Best to Be Of Service?

So, we started looking at various options of servicing the Iridium satellites.  Our initial idea was to provide a small tug for each of the satellites.  If a debris conjunction appeared likely, or if the satellite’s attitude control system failed, or if the satellite ran out of propellant, the helper tug would take over, and either help the Iridium craft dodge the debris, or provide station keeping or end-of-life disposal services. While such an approach would eliminate the complexity of actually doing anything to the Iridium satellite other than just grabbing it, it would entail trying to make 66 small spacecraft cheap enough that you could launch them, hook them up, and perform their missions all for a price-point Iridium could afford…which quite frankly seemed unlikely.

We also looked at the idea of having only a handful of tugs (1-3) that would sit around in standby, and if an event came up, it would rapidly maneuver to the Iridium satellite in danger, rescue it, and then go back to standby mode.  While this cut down on the number of tugs you needed drastically, now the propulsion requirements goes way up.   Especially if you can’t put one in each orbital plane.  Switching from plane to plane requires a plane change if you have to do it in a hurry, and that can be crazy expensive from a delta-V standpoint (a 6o degree plane change done the quick way could cost you almost as much delta-V as it took to get into orbit).  You could also do ground based “rescue tugs” that could only launch on need…but once again none of these approaches was really realistic either from a launch frequency, propellant usage, or total cost standpoint.

What we finally settled-on was the idea of just refueling the satellites themselves.  If you did that, you could use one or maybe at most two or three tugs to do the whole job.  Plane changing between two planes with the same inclination can be done relatively cheaply if you have a lot of time.  You just go into either an elliptical orbit, or a circular orbit of different radius, and then your nodal regression rate will be either faster or slower than the Iridium satellite planes.  If you can be patient, you’ll eventually catch up with the next orbital plane.  Moving from satellite to satellite within a plane also requires some tricky maneuvers, but if you have time, they don’t have to use a lot of propellant.  One option we batted around was launching a little “mini-depot” (really mostly a dumb tank with some transfer systems and docking ports) into an elliptical orbit that would drift from plane to plane.  That way you wouldn’t have to accelerate and decelerate the whole propellant load each time you went into one of your drifting orbits.

The end result was that by doing it this way, you could cut down drastically on the number of launches, not have to be anywhere near as rushed, and cut down on the number of satellites.

For the paper one of the things we were going to do was analyze the different trajectories to figure out how much propellant it really took to move from satellite to satellite in a given plane (given various allowable travel times), as well as how much propellant it took to move between planes.  Once you know that, you can start getting a better handle on how many launches you would need, how long things would take, etc., which would start enabling you to get a realistic cost estimate for at least the marginal cost of the servicing.

Servicing Challenges

The one other big question mark was what it would take to service the satellites once you got to them.

The Iridium satellites weren’t made for servicing.  The propellant inlets are capped with the caps safety-wired on.  And the whole assembly is likely covered up with MMOD protection or MLI.  I tried to get a good look at the one Iridium satellite they had up in the Air and Space Museum while we were out in DC for the NGLLC awards ceremony last year, but the area where I”m pretty sure the fueling interface was at was somewhere you couldn’t readily see.  I was sorely tempted to see if I could sneak up onto one of the displays nearby to get a peek, but chickened out. Anyhow, the net result is you’re going to need to do some stuff that would take about 15 seconds for a dude on the ground to do, but is going to be annoyingly complex to do on orbit.  I won’t go into details, just to avoid pissing off the ITAR gnomes, but suffice it to say this is not a trivial task.

There’s also the challenge that propellant isn’t the only thing that these satellites need.  Batteries and solar panels wear out.  While the latest and greatest solar panels are a lot better than what Iridium was launched with, you still need to find a way to couple that power into the satellite itself without hurting it.  Do you collect the power and then just beam it onto the other solar panels (might work if it’s just the solar panel efficiency that’s dropping)?  Or is there some sort of power umbilical used for the satellite on the launcher that could be reconnected to to provide both power, and a backup battery?  How do you attach it all?  Once again, I have some ideas, but I think I’ll leave things at that.

Real Life Getting in The Way

So, we had some starting ideas, and a basic approach.  We were still unsure if we actually wanted to jump on this idea as a real business, but we were interested in at least seeing where the analysis went. We pulled together a team to write the AIAA paper to investigate the idea.  I can’t remember for sure, but I think Colin was planning on using this paper as part of his MBA that he’s been working on.  And then life got messy and complicated, and in the end we had to back out of the paper.  But we wanted to put these thoughts up here to spur people’s thinking. If someone is going to provide this service for Iridium, the clock is ticking.  Even a fast-paced spacecraft development project is going to take probably 2-3 years, and there’s really not too much longer that you can delay and still be of use to Iridium.  Basically, we wanted to get the idea out into public to see if someone could find a way to run with it.

The best way to describe things in one sentence is that Altius Space Machines is a rapid prototyping company developing and commercializing technologies needed for reusable orbital launch vehicles, and enabling markets for such vehicles.

Rapid Prototyping
Altius will be focused on building and demonstrating prototype flight hardware both for our own internal projects, and for external clients. In the process of developing our own product lines, Altius will be building up a team with significant expertise in rapid prototyping, and flight vehicle testing which will be able to serve the needs of other customers.  The fact that Altius is not trying to be an operations company also makes it a bit easier for it to work with many players in the suborbital and orbital launch world.

This model is similar to what Scaled and Aurora Flight Sciences have done in the UAV world.

Enabling Technology Product Lines
In addition to contract prototype work for commercial and government clients, we have identified several areas where Altius can develop stand-alone products that mature technologies required for enabling reusable orbital transportation.  We have looked at a wide range of potential product lines, including launcher-related products like nanosat launchers with reusable first stages and reusable upper stages for suborbital RLVs, as well as non-launcher ideas like reusable micro reentry vehicles and a variant on the boom rendezvous and docking concept.  We also have several other ideas we’re looking at, including more subsystem-type technologies such as an extremely lightweight aluminum combustion chamber fabrication concept, an advanced pump-feed concept we’re investigating with Retro Aerospace (blog post on that one soon), and a few others.

Here’s some more details on a few of those product lines:

Reusable First-Stage NanoSat Launcher
This is a topic area I’ve been working on for quite some time now, but particularly over the past year or so. There are many competitors in this market area, especially with the announcement of the NanoSat Launcher Centennial Challenge, but most of them are looking at expendable systems based on solids or other components. While it is true that doing so reduces risk in the eyes of investors, it ties in a higher operations cost, typically makes the vehicles more complicated (three or more stages), and lowers the potential for high-tempo operations like some customers (such as the Army Nanosat program) want. I don’t think the reusable element in such a system has to cost much more to develop than a comparable suborbital RLV like Masten’s Xogdor or Armadillo’s SuperMod.

I won’t go into all the details here, but the concept we’ve been looking at is based on the air-launch glideforward concept I discussed on this blog several years ago (using John Hare’s realization that you don’t necessarily have to have a winged first stage with such a system), but with an expendable upper stage.

There seems to be a decent amount of demand for a system like this, it paves the way for future fully-reusable vehicles, and is a small-enough project to be completable within a 4-5 year time-frame with adequate funding.

Reusable Micro Reentry Vehicles
One of the prime examples of technologies that can be developed independently, but which is critical for orbital RLVs is reusable, low-maintenance Thermal Protection Systems. There are a ton of ideas out there for how to solve this problem, ranging from stronger ceramic tiles, to transpiration cooling, to metallic heat shields. A good deal of ground work has been done on these ideas, but very few of them have been flight tested, and none of them have really gone into an operational product. By focusing on a micro-scale reentry vehicle (imagine something big enough to bring something like a NanoRacks CubeLab back from LEO), a lot of experience from the nanosat and suborbital communities can be brought to bear on the problem, and the scale is small enough that rideshare opportunities are available to keep the flight demonstration costs reasonably low. Such a system could target markets including rapid sample return from ISS researchers as well as providing a free-flyer platform similar to DragonLab, but without having to aggregate your payload with dozens of other systems. But at the same time it would be demonstrating a key subsystem technology needed for orbital RLVs.

Once you’ve developed the ability to reusably return a vehicle from LEO, most of the other pieces for a small RLV are ones that have already been demonstrated in the suborbital world, and from doing a semi-reusable nanosat launcher.

Advanced Boom Rendezvous
Current rendezvous and docking systems are not a good match for high flight-rate RLVs. The complicated hardware necessary for such prox-ops ties up too much of the capacity of a small RLV, and they are not really suited for high-tempo operations. The limitations of current prox-ops solutions are also part of why groups like ESAS and HEFT were able to so readily dismiss propellant-depots for exploration missions. If there were a solution that required minimal hardware on the delivery vehicle side, minimize risks of failed docking or accidental collisions, and generally made rendezvous and docking an almost non-event, it would go a long way towards making propellant depots and orbital RLVs a reality.

Kirk Sorensen, one of my cobloggers here on Selenian Boondocks, invented the Boom Rendezvous concept, which I see as an important part of the solution to this problem. Boom rendezvous, by moving the initial contact away from either vehicle greatly reduces the odds of accidental collisions, simplifies and speeds up the rendezvous process, and greatly reduces the mass penalties for rendezvous and docking systems on the delivery vehicle. And we figured out a way to take that great idea and make it even better, making it so the boom system can readily (and non-destructively) grip target surfaces that aren’t designed for mechanical capture…but how we intend to do that is a blog post for another day. Suffice it to say, if we can make this technology work, it would enable easy capturing of space debris, nanosat-scale space tugs, simpler rendezvous and docking for personnel, cargo, and propellant deliveries, much easier orbital servicing missions, etc.

Anyhow, there are a lot of other details about Altius Space Machines, more details on what we want to do, why we’re interested in Colorado, and how we intend to run our business, but I think this is enough to help people understand what it is we are trying to do with this new company.

As our marketing guy would say at this point: Machine Up!

Michael Mealling once quipped that it was far easier to take a business guy and get him interested in space, than it was to take an aerospace engineer, and somehow get him to understand business. I’ll admit to being firmly in the “aerospace engineer that’s trying to understand business” category myself, so I think having blogs like Colin’s out there is a trend I hope to see increasing over the years.

Oh, and welcome to the blogroll, Colin!

Another common discussion item with RLVs is the chicken and egg problem of high flight rates. The logic typically goes something like this: RLVs tend to have more development costs (and hence higher amortization costs) than ELVs. This means that in order to be profitable, they have to fly more often than a comparably sized ELV. Most studies peg the profitability breakeven point somewhere around 30-50 flights per year–though from what I’ve seen most of those assume “black-aluminum” RLVs designed using “black aluminum” development processes. The chicken and egg problem comes from the fact that at that price point, there’s nowhere near 50 payloads per year worth of demand right now especially if you’re focusing on “existing” ELV markets. Most studies indicate that for existing ELV markets, you don’t see hardly any demand elasticity until you get your vehicle’s $/lb to orbit price below $1000/lb.

The problem is, that for a 1st Generation RLV, being able to both get to the point that you can profitably offer a price of $1000/lb, while simultaneously building up a market of 50 flights per year is extremely daunting. While I think there’s no technical reason, with chemical rockets that you couldn’t eventually get down into the $100-500/lb price range, getting anywhere near those prices for 1st Gen commercial RLVs is going to be tough for several reasons:

1. Regulatory and Insurance Learning Curves: As was pointed out in a paper a few years ago by several of the now Space Cynics, most of the costs associated with an RLV flight are likely going to be things like range costs, insurance costs, regulatory compliance, etc.  While I think many of those costs could be greatly reduced over time, there is going to be a learning curve as groups used to dealing with artillery rockets start understanding that RLVs are different animals, not just ELVs with landing gear.
2. Technology Maturation: While many of the technologies needed for making a successful RLV are more mature than I think most people appreciate, there still are some areas that are poorly developed.  The biggest one being robust, reusable thermal protection systems, and general reentry/recovery techniques.  There have been lots of research done in these areas, and there are tons of good ideas, but very few of them have ever made it even to bench-tests, let alone actual flight demonstration.  Whenever you’re developing something that has an R&D project involved, the costs and timeline can take a big hit.  Government agencies could help a lot by funding some demos of these sorts, but if they don’t, those costs will have to be amortized by that first vehicle.
3. Planning for Iterations: A point Monte Davis has made on several occasions is that one of Shuttles key flaws was that they expected the first attempt at an orbital RLV like that to be a fully operational vehicle.  There was no intention ever to treat it as an attempt, fly it a few times to figure out what needs improvement, and then do another RLV development program.  You can see the same attitude with attempts like Kistler’s K-1.  Part of how they blew so much money is that from the start they were building things up to have three operational vehicles, with no plan of iteration in the middle.  Now, this is a discussion for another post, but intentionally designing a vehicle that you know isn’t likely to be fully up to operational snuff doesn’t mean that you can’t make any revenue off of that vehicle.  But in reality you need to budget probably for more than one development program.  And that is going to make developing a 1st Gen RLV a lot more expensive than later RLVs.

There are probably other reasons beyond these, but it is likely true that a 1st Gen commercial orbital RLV is going to struggle to get their costs low enough to be able to make a profit at a $1000/lb nominal price.  It may actually be possible, but it’s also iffy enough that the industry experts any investor is likely to speak with when doing due diligence are likely to scoff at it.  And that is one of the two or three main reasons we don’t see many attempts at funding/building such vehicles (the other two being lack of a big enough demonstrated market, and the high amount of investment that needs to be raised).

All of that however is probably well-known by anyone who has looked at the problem very much.  Here’s where my counter-intuitive observation kicks in.

How Something More Expensive Can Sometimes Be Cheaper

I had been thinking a lot about these things, when a statement in a post by Tom Olsen (which I otherwise agree with a lot of) started the logical chain that led me to my observation.  Tom made the statement that he didn’t believe that $200/lb to LEO with conventional rockets could be profitable.  While I agree wholeheartedly with him for 1st Gen commercial RLVs, I think you could probably approach that number over time, even without magical new propulsion technologies or structural materials (though those wouldn’t hurt).   More importantly, the $200/lb number doesn’t seem really that relevant to me.   You don’t need to get anywhere near that to start seeing new markets appear, and to see the entire way we do things in space start changing.

This got me thinking though about what price you do need to reach before interesting things start happening.  I happened to be just in the middle of trying to write my big ominbus article about people as an RLV market when Tom wrote his article, and that’s when I made my counter-intuitive discovery:  you might not actually have to get the $/lb price of your RLV much cheaper than existing ELVs to be able to offer a per-seat ticket price low enough to reach the elastic part of the passenger spaceflight demand curve.

A long time ago, I wrote a blog article about the part of t/Space’s CE&R study where they did a reanalysis of the Futron space tourism study.  While I have some further thoughts on the implications of that study, suffice it for now to say that they found that demand numbers started getting interesting at a ticket price around $5M.

Now, I don’t personally have a lot of background on crewed vehicle design (since Masten is focusing on unmanned science payloads for the current time), so I don’t know exactly how much “payload mass” you would need per passenger to supply all the services that don’t come standard on a well-designed RLV.  But for argument’s sake, let’s say it comes out to in the 500-1000lb/person range.   The higher number is in-line with Dragon theoretically carrying either 7000lb of cargo or 7 crew (1000/lb per person), as well as HMX’s old AAS concept, which would’ve carried about 4000lb of cargo or 4 crew.  In both cases it looks like the crew capacity may be more limited by volume than by payload mass capacity, which might justify the lower 500/lb per person number.

For a $5M per seat price, assuming a two person vehicle, with one pilot and one paying passenger, that comes out to $2500/lb equivalent cargo price if you need 1000lb per person, and a whopping $5000/lb equivalent cargo price if you need only 500lb/person.  The latter price is actually comparable to the current price of an Atlas V 401 (~$4500/lb), and the former price is still higher than a basic Falcon IX (~$1700/lb depending on what the current numbers are).  So, ironically, an RLV could possibly have a lower ticket price than an ELV + capsule in spite of having a higher nominal price in $/lb for payload.

An interesting thought here is that according to t/Space’s analysis, at $5M per seat ticket prices, you could likely get ~20 passengers per year pretty quickly.  If you only initially need to hit a nominal equivalent price target of $2500-5000/lb, you might be able to make a profit at that point only flying 20 times per year at the $5M ticket price.  That’s a pretty low bar compared to needing to hit $1000/lb and 50+ flights per year.

Now, I may be all wet on this.  500-1000lb per person may be way too low.  $2500/lb may still be too hard for a 1st Gen commercial RLV.  $5M per seat may not actually get you enough demand to close your business case.  And for other cargoes like satellite delivery or propellant, the actual nominal price per pound number is going to be a lot more critical.  But it sure seems interesting, because if I’m not off-base, that may make closing the case for an RLV a lot easier.

So am I all wet on this?  Or is this something that has been obvious to everyone else for a while, and I’m only finally getting this?  Or is this as counter-intuitive to you as it was to me?

[Note: Maybe I'm just misunderstanding them, but I think most of the commenters have misunderstood what my counter-intuitive idea was. It is merely that an RLV that would have far too high of a price per pound to be competitive in the satellite launching business may still be far cheaper for launching people than an ELV with a capsule. I wasn't trying to make any statements about the specific size of the manned spaceflight market at various price points, the desirability or undesirability of orbital accommodations or anything else. I was just trying to share that observation. We'll discuss a lot of those other issues in later posts. Patience.]

Why Flight Rate Matters: Fixed and Marginal Costs
A common conclusion found in many studies on reusable space transportation is that RLVs need at least 50 flights per year to make economic sense.  While there are a lot of assumptions that go into the specific number, the basic idea is that there’s some minimum number of flights you need to make the economics work for RLVs.  RLVs typically have higher development and fixed costs, but much lower marginal costs than a similarly sized ELV.  The more often you can fly an RLV, the lower your overall flight cost will be because each flight’s percentage of your fixed cost goes down as flight rate goes up.

Fixed costs are those things you have you have to pay for on a monthly or yearly basis regardless of how often you fly.  Stuff like facilities, payroll, overhead, capital equipment amortization (including the air frames), etc.  Marginal costs on the other hand are what it costs to add one more flight to your manifest.  This is stuff like the cost of replacing any expendable components, maintenance and refurbishment costs for the vehicle, launch insurance, mission specific engineering, propellants/consumables, any touch labor not covered under fixed costs, etc.

The fewer flights per year you have, the larger each flight’s share of the fixed costs will be.  In fact, at a low enough flight rate, reusable vehicles can sometimes end up costing more per flight than a similarly sized ELV. See the Shuttle as an example of this situation.

Terrestrial airlines are also in a similar situation.  They also have high enough fixed costs that they are only able to stay economical is by keeping their vehicles flying as often as possible.

Now, the exact number of flights necessary for a specific RLV to start running in the black will vary a lot depending on the details.  The commonly quoted magic number of 50 flights per year mentioned above depends on a lot of assumptions, not all of which may be valid.  One typical assumption that may not be valid is that the development cost for an RLV will be much higher than an ELV.  This may be true if you develop an RLV using the same processes you would use for an ELV, but there are arguments that there may be ways to use the fact that the vehicle is reusable to actually make development cheaper.  Regardless of how the numbers come out though, the fundamental reality is that RLVs need larger flight rates than most existing ELVs see in order to make economic sense.

Achieving Higher Flight Rates: Launch Supply and Demand
In order to achieve higher flight rates, you need both a vehicle capable of high flight rates and enough demand to buy all those flights.  You need both parts of the equation in order to make the business case close.  The Shuttle is a good example of what happens when you try to do an RLV that doesn’t meet either of those criteria.  The Space Shuttle fleet was incapable of coming anywhere near the 50-100 flights a year they needed to get to be economical, and there also weren’t 100 flights per year worth of payloads that the Shuttle could fly.  The end result was a very expensive RLV system that flew as infrequently as ELVs and ended up costing several times as much.

Attacking the supply side of the problem mostly involves technology development and maturation.  Operability is one key to economical RLVs–If it takes you more than a week to turn around your vehicle, there’s probably something on it that isn’t really robust enough for prime time.  If your TPS system for instance takes hundreds of people weeks to inspect, maintain, repair, and qualify for reflight, it’s probably too dangerous and marginal to use on an operational system.  It is unclear if the technology we have currently is up to this task, but this is an area where suborbital RLVs are having an important impact.  The key will be finding technologies or combinations of technologies that allow you to make engines, TPS, and other systems robust and low-maintenance while still maintaining enough performance to make the rest of the design close.

Now, while us rocket nerds love debating things like the technical aspects of making a low-cost, robust RLV, the demand side is probably even more important.  One of the common refrains you hear from industry veterans about RLVs is “where’s the money going to come from to pay for enough payloads?”  As Rand Simberg used to say in his usenet tagline back when I was first getting into the whole space thing “Extraordinary launch vehicles require extraordinary markets”.  While focusing on the technology side of the problem, and using an “if you build it they will come” approach to handling demand might be a great deal for those who end up buying your company’s bankrupt corpse, it’s probably not the route that ought to be taken if you actually want to make a profit for your original investors.

So, what kind of payload types are best suited for RLVs? Why don’t I start out first by talking about an important payload type that probably isn’t.  Satellites–at least as they are done today–are probably not a good fit, for several reasons:

• Not very many satellites are launched per year
• Many of them are going to higher altitude destinations (high LEO, MEO, or even GEO), which most RLVs would have a hard time reaching without an expendable kick stage
• Satellites tend to go into a wide variety of orbits, including a wide range of inclinations, apogees, and perigees.  This requires more mission-specific engineering, more time for regulatory compliance such as getting launch licenses (especially if the RLV is using an inland spaceport as may well be the case), and all of this generally means a lot more time between an order and a flight.  This may result in a higher margin for satellite flights, but the lead times will be longer
• Satellites tend to require a lot of handholding.  Lots of testing and unique integration work that may be not be applicable to any other satellite.
• Most existing satellite developers are very conservative.  While price is a factor, perceived risk and insurance costs are also very important.
• Satellites don’t start showing significant demand elasticity with lower prices until the prices have dropped substantially from existing levels.
• Even if the demand does pick up, it will still take several years for that demand to ramp up, since satellite design/build/test programs can often last a long time.

Now, these problems aren’t impossible to solve.  Given enough time, the market will adjust to new capabilities, and there may be ways to get higher launch demand out of existing satellite customers, using techniques like the ones Dave Salt has proposed for GEO launches (launch the propellant for the GTO and GEO insertion burns separately from the satellite itself using multiple launches and orbital rendezvous/propellant transfer).  But the reality is that for the near future, satellites really aren’t that great of a market for reusable launch vehicles.

When thinking of what the ideal payloads would be for RLVs, I could think of a couple of possible criteria:

• Doesn’t need a lot of handholding, integration work, or mission-specific engineering
• Doesn’t cost tons more than the flight would
• Provides good demand price elasticity
• Is divisible into chunks small enough to be carried by light RLVs (less than 5000lb payload)
• Provides demand for flights on a regular and consistent schedule
• Provides demand for many flights to the exact same destination (for example a station in a resonant orbit).
• Is sufficiently self-similar to allow for many flights reusing the same interfaces, and the same operating procedures
• Is tolerant of risk
• Doesn’t require several years lead-time to develop the payload

As I see it, there are three main types of “RLV Friendly Markets” that I think meet these criteria: people, propellants, and “provisions” (ie light cargo that aren’t self-contained spacecraft or satellties).  I’ll give a few thoughts of each of those in the following parts of this series.

Last week, I was asked to do a remote guest lecture for a university course on space development (being run by Dr Livingston). It was somewhat flattering to be grouped in the same category as much more experienced space technologists, pundits, and businessmen such as Dennis Wingo, Michael Kelly, Jeff Foust, and others. As part of the presentation on developing reusable orbital transportation, I discussed a short list of orbital space transportation approaches that I felt were the most promising directions for development.

So, over the next several weeks, I want to take a little bit of time to introduce and discuss some of those proposed approaches for reusable orbital transportation. Now, a lot of this may be a boring rehash for fellow engineers and technologists, but hopefully I can provide some useful discussion for those coming to this industry from non-engineering backgrounds. I’m planning on discussing the basic concept behind each approach, the potential pros and cons, the unknowns that need resolving for said approaches, and some thoughts on incremental development methods for resolving those unknowns. I may also go into some of the other topics I discussed such as my ideas on reusable transportation markets.

My goal is to provide a basic understanding of where we are, what we think some potential solutions might look like, and an understanding of some of the more probable paths that could take us from here to there (technologically). With that information as a background, it will hopefully make it easier to discuss how business, financing, and government policy issues tie in with the technological situation.

Hopefully I’m not biting off more than I can chew.