Bleg: Favorite Selenian Boondocks Articles/Series

I already did my “real” post for tonight, so I feel ok about posting something more “administrivia”.

If you had to pick a few of your all-time favorite Selenian Boondocks posts or series, which would they be? What is your favorite series or article by me? by John Hare? by Kirk Sorensen? by Ken Murphy?

Please leave comments, and feel free to provide several suggestions.

Posted in Administrivia | 12 Comments

Random Thought: NASA Externships as an Alternative to “Training-Wheels” Intramural R&D?

[Here’s one last draft I’ve found to polish off–this one only from a year ago. It’s a little bit of a touch subject–I’m not trying to denigrate what the NASA teams mentioned in this post were doing, just trying to suggest another, possibly better way of achieving the same underlying goal–that of giving new NASA engineers hands-on experience working on lean, fast-moving engineering projects.]

I’ve written about the idea of NASA/AFRL externships before, but lately I’ve been thinking about the idea again as an alternative to NASA “training-wheels” intramural R&D. By “training wheels” intramural R&D, I’m talking about internally run NASA R&D projects which have training new engineers as one of their primary purposes. As I’ve pointed out many times in the past, knowledge and experience of how to do things doesn’t reside in documentation or in the walls of an organization, it resides in people. And that knowledge/experience has a “shelf-life.” People who haven’t had recent experience can get rusty, and over time, even those people can disperse, either via retirement, job changes, etc. So having some way of training new teams and giving them solid, hands-on experience early in their careers is really important.

While NASA talks about its expertise in designing and building new launch vehicles, the reality is that many, if not most of the NASA people with actual experience in that area are gone by now (either dead or retired). The last successful new launch vehicle that NASA had a major role in was the Shuttle, and that flew for the first time 35 years ago, and any engineer older than 30 at that point has by now passed retirement age. While NASA won’t admit this problem too publicly, I think it has at least recognized this experience issue internally, which is why they’ve pushed hard on intramural R&D projects like Project Morpheus, Robonaut, Valkyrie and others over the past few years1. When you talk to people at NASA about some of these projects (and similar projects at other centers), you often hear one of the major justifications being that NASA is undergoing a lot of turnover as most of the existing NASA civil servants retire over the next decade or two. The newer hires don’t have experience building and running space projects, so having “training wheels” projects that they can get initial experience with, and even try out new ways of doing things, is a good way of making sure NASA prepares the next generation of engineers to take over as the current generation exits stage right.

Before I go on, I need to say that I find this desire admirable–NASA is taking a proactive approach to make sure their tax-payer-funded people have real hands-on experience, not just book learning. This is in general a very good thing.

These intramural R&D programs are also often sold as being very inexpensive–Morpheus for instance has bragged in the past that they’ve spent less than $5-10M getting to where they’re at. That would seem like a pretty reasonable price compared to commercial VTVL efforts. But then you hear that they’ve had >60 engineers working on the project over the past few years. There’s no way the fully-burdened cost of a NASA engineer is anything less than $100k/yr, more likely it’s in the $200k/yr range. NASA doesn’t count those costs, since they would’ve paid for that labor anyway, but it’s a real part of the cost of the project. When you take fully burdened costs into consideration, Morpheus has probably cost NASA more like $40M+ total, which all of the sudden stops seeming so frugal compared to comparable commercial efforts at companies like Masten and the now-defunct Armadillo Aerospace. Similarly, the Valkyrie robotics project has been called a $2M project, but it has also been reported to have over 50 FTEs working on it for over a year. That means it’s more like a $12-15M project.

The question becomes is this the best way of spending NASA resources to train future civil servants?

Possibly, but I have my doubts for the following three reasons:

  1. These projects in many cases compete with commercial efforts. While they may potentially create new NASA operational capabilities, they don’t encourage the creation of profitable new commercial space capabilities. By removing a good chunk of the NASA market for things like VTVL test beds or robotics systems, they make it that much harder to create businesses that serve NASA as one customer among many. NASA’s budget is unlikely to grow much over the coming years, so the best way for it to improve its bang for the buck is to encourage commercial companies to provide the services they need, in a way that allows them to get significant non-NASA customers so NASA isn’t having to carry the full burden of the fixed costs of those capabilities. Wouldn’t it be better if NASA found a way to train their engineers that actually encouraged the commercial development of space?
  2. While these projects teach engineers to do things cheaper than the traditional NASA way, they’re still very inefficient compared to commercial efforts. As one case in point, I had a friend who briefly worked with the Morpheus team. He was familiar with what the NGLLC teams had accomplished, and was surprised to find that for instance, the NASA team had over a dozen engineers working on GN&C and flight controls–a job that most of the smaller companies did just fine with 1 or 2 guys. While this may be a “new way of doing GN&C at NASA”, and may be a step in the right direction, wouldn’t it be better to train engineers in an environment that is as lean as private enterprise? While the NASA environment may not allow all lessons learned from private enterprise to be directly translated into practice, I think it would still help provide a better yardstick for them to compare how efficient they’re really being.
  3. These projects tend to develop IP that they then lock-up at NASA. While it’s possible to license those technologies, in many cases exclusively, that tends to favor companies with the deepest pockets or best lawyers/connections, not the ones with the best ability to successfully commercialize those technologies. While there are some examples of companies buying their way into a NASA technology and commercializing it well, I think it’s probably more likely to happen when the company already has technical chops of their own. Wouldn’t it be great if NASA could train its engineers in a way that disseminated the IP better into the hands of commercial companies that were well-poised to bring those technologies to market?

If the only way to get new NASA engineers more practical, hands-on experience was via these intramural R&D projects, it might be worth it, in spite of the negative impacts to commercial industry. But what if there was a way to get them experience in a way that actually helped commercial industry instead of competing against it? While the devil is probably in the details, I think “externships” are a potential way of doing this. For those of you who didn’t read the previous post, an “externship” is kind of like an internship, but instead of having a student or recent graduate work for you for a few months, you would get a NASA employee “on loan” for a specified amount of time.

NASA is already doing some potentially innovative public/private partnerships through programs such as the NextSTEP BAA and more recently the Tipping Point and Emerging Space Technologies solicitations that are currently out. In each of these cases, NASA is only putting up a portion of the money, and in some cases is only providing in-kind services through non-reimburseable Space Act Agreements. What if they added to those in-kind services by providing some of their engineers on a loaner basis to teams that can come up with good proposed projects to use them? Not just letting them access NASA personnel and facilities at NASA sites on a no-exchange of funds basis, but basically providing them with on-site externs as well.

You could probably structure the solicitation in a way to require the companies to provide a certain amount of their own people, and their own hardware money in order to access a small number of NASA-funded externs to augment their team. Maybe even throw in a NASA subject-matter expert as part of the team. It’s often the case that small companies can’t afford to have a specialist in some esoteric technical field that they’re only going to use occasionally, but borrowing one from NASA can help a lot. For instance, I remember that NASA Ames lent Dan Rasky to SpaceX back when they were investigating heat shield material, and he helped the SpaceX team develop the Pica-X material they are now using on Dragon.

This solution isn’t perfect, because it could still end up competing with private companies trying to provide contract engineering services, but if more of the “training wheels” experience for new NASA engineers was earned at commercial companies, working on developing new products in a truly lean organization, I think it would likely be a net good for the industry. For one thing, NASA would have a much better idea of what things ought to cost in a truly lean and hungry organization, and how big of a team you really need for various projects. These externs would also get to see the contrast between industry approaches and NASA standard processes, and would likely have a better idea of which NASA standard processes should be kept, which ones should be streamlined, and which ones are just plain baggage. I’m willing to bet that the knowledge would also flow both ways–you’d see industry learning some lessons and processes that actually do improve their effectiveness over time, and these NASA externs would also take their industry-gained experiences back to NASA, which would likely tone down some of the NASA analysis-paralysis over time.
Anyhow, just wanted to throw this out as food for thought.

Posted in NASA, Random Thoughts, Space Policy | 6 Comments

What Motivates Us?

Along the lines of lessons from religion that I think may have strong utility for secular life as well is the concept of what motivates us, and the thought that some types of motivations are better than others. If you’re the areligious sort, I would skim or skip the next section, but it provides some useful background for the more secular analog I want to describe in the section after that.

Motivations for Service from a Religious Context
Before I get into the details, I wanted to provide a tiny bit of background. I have heard variations of this lesson about differing levels of motivation a few times in church, so I decided to try and find the original source. As best I can tell, the basis for this was a conference talk by Dallin H. Oaks in October 1984. He had just been called as member of the LDS Quorum of the Twelve Apostles earlier that year, but hadn’t been able to speak in the first conference of the year because he hadn’t finished wrapping up his time on the Utah Supreme Court. He decided to focus his first conference talk on the various reasons why people serve, particularly in charitable or church service, and why some motivations were better than others.

In his talk, Elder Oaks outlined six motivations for volunteer or church service, which I’ll generalize later in this post (ranked from the least worthy in his opinion to the most worthy):

  1. Hope of an earthly reward: this is doing service in the hope of gaining wealth, popularity, cultivating contacts for personal gain.
  2. Desire for good companionship: this is doing service because you get to work with good or influential people
  3. Fear of punishment: this is serving or doing good because you’re afraid that you’ll be punished if you don’t. This could be in the form of social ostracism, or it could be fear of eternal punishment, etc.
  4. Sense of duty or loyalty: this is serving because you feel it is what is expected of you.
  5. Hope of an eternal reward: this is service not out of fear of hell, but out of desire for heaven or eternal blessings.
  6. Love: Elder Oaks stated that he felt the highest motivation for service was love of God and love of his children here on earth. That is, not just serving because it’s the right thing to do, or because you want personal blessings for yourself, but because you love other people and God and want them to be happy.

I tend to agree with Elder Oaks that as we learn to move up the ladder of service that we’ll get more out of it, and we’ll be more able to stay “abounding in good works” even when the service is hard.

Motivations in a More General, Secular Sense
I think that in a secular setting, there are also some motivations that are better than others. Now in the secular case, I’m talking about motivations for things like treating others well, following the law, working hard, starting a company, etc. So there probably are some important differences, but I think a similar continuum exists with only slight modifications. Here are my thoughts on a ranking (once again with the best motivations ranked last and the lowest motivations ranked first):

  1. Greed/Popularity/Personal gain: In the case of secular motivations, I’m combining the first two items from the previous motivation list. This is acting from some perceived worldly benefit like wealth, popularity, or social approval form people you care about. In the secular case, this isn’t always as bad as it would be for religious service. For example, we need to work to provide for ourselves, and working with the goal of honorably providing a better living for ourselves or others isn’t inherently bad. But in many cases, it’s still not the best motivation–in fact acting only in our own pure self interest without any of the other motivations can sometimes lead to negative or anti-social behaviors. Adam Smith1 and Fredric Bastiat2 and others have pointed how the interactions of self-interest of various individuals can lead to generally good results, but I don’t think they ever wanted to see a society where that was the only motivation.
  2. Fear of Punishment: In this case of secular motivations, one is acting out of fear of punishment, disapproval, poverty, or other negative personal effects. I’d actually probably put this tied with the above motivation in more general secular circles. In some cases this might be a religious fear of punishment–where you don’t steal or hurt others primarily because you don’t want to go to Hell. Or it could be fear of the law, fear of being found out, fear of what others would think. Fear in general is a poor motivator, it only goads one on to doing the right thing when the feared punishment is considered likely. Remove the likelihood of punishment, and you’ve removed the incentive to do the right. So while if this gets you to not do something bad, or gets you to do something good it’s probably better than nothing, but it still leaves a lot to be desired.
  3. Sense of Duty or Loyalty: In the secular case, this is acting in a way because you feel it is right, or it is what is expected of you, or what you owe to your family, associates, country, etc. As with the religious service motivations list, I think this ranks further up than acting out of fear or desire for temporal gain. You’re doing what’s right (or avoiding what’s wrong) purely because it’s what you believe is right or proper. This isn’t 100% foolproof–sometimes your sense of duty or loyalty, if not tempered by other considerations could lead to doing things that are actually unkind, unjust, or marginalizing certain people you don’t feel loyalty to. Think of the character Javert from Les Miserables. Javert was a police officer totally motivated by justice and duty, who hounded a man who was genuinely trying to change and help society and help better the lives of all around him. On the other hand, there are times when people acting out of duty are nothing short of amazing. While duty isn’t a perfect motivation, the world is a much better, kinder place for people acting out of duty.
  4. Legacy/Making a Difference: If you don’t believe in an afterlife and an eternal reward, the closest you can come is a legacy, or making a real difference in the world. In the secular sense, I would also put this only a tiny bit above duty on the continuum of good to better to best motivations. Legacy can be a more selfless motivation than the kind of praise and public approval provided above in the first motivation, since generally you don’t get any benefit out of what people think of you once you’re gone, at least in the secular sense. But even this can sometimes go awry, especially when motivated by pride, and especially in positions of worldly power. The desire to be known as a “great man” has often lead at least political leaders to do many awful things, as Lord Acton pointed out3. That said, in the private sector, when not using force, working to leave a legacy and make a difference, can be a powerful motivation to do good and difficult things that don’t immediately benefit you, and are above and beyond what is expected.
  5. Love: I still think love really is the best motivation for anything you do. You serve, not to be seen of men, but because you care about those you serve and want them to be happy. You don’t hurt others, not for fear of punishment, or out of mere duty, but because you see them as your brothers and sisters, and beings worthy of your love. You work the long hours and put your heart and soul into your work because you truly love it, and you love all the good that will come of it.

I think it is quite true the point someone made on Twitter last week that entrepreneurs rarely are in it just for the money, that most of them are in it to make a difference, and for love of what they do. While we can’t always have the best motivation for everything we do, I think that knowing that there are better kinds of motivation can help us consciously work to improve why we do what we do, and ultimate improve the kind of person that we’re becoming.

Posted in Business, Entrepreneurship, Random Thoughts, Religion | 3 Comments

Startups and Family Relations: An Analogy

[Editor’s Note: I’ve been digging through old blog drafts a lot lately in my effort to find topics I can write about to keep up the blog-a-day pace while still leaving at least some time for a life. This blog post was from back in January 2006. At the time Masten Space Systems had been around for only about two years, it was still Dave, Pierce Nichols, me, Ian Moore, and Michael Mealling (the original crew). We were still up in Santa Clara, regularly driving up into the mountains east of the Bay Area to test our rocket engines. We didn’t move down to Mojave for another six months. I’m not entirely sure what triggered this blog post, and it wasn’t finished so I’ll have to give it a new ending, but I enjoyed some of the stories, so I figured I’d try to polish this off. I should clarify that at least right now I’m not finishing this off because I’m in the middle of some interpersonal drama, but because I think it’s a useful subject, and a post that should be completed.]

While I was on my mission in the Philippines, one of the lessons I learned was that if one is observant, you can find useful stories or analogies for teaching gospel principles from your every-day experiences. Since my mission, I’ve found that the general case of that statement is also true–many times you can gain insight into one area of your life, your work, or something else via analogy from another experience. In fact, I’ve noticed many times how supposedly “religious” principles often have useful secular analogs.

Before I get to my point I have one quick digression. One of the dangers of analogical thinking was illustrated quite well in a history class I took at BYU. The professor, Dr. Griggs was a world renowned Egyptologist and a Mr. Rogers-esque genuine nice guy, with a very, very dry sense of humor. We were taking a literary approach to studying history, and he was trying to explain a little about Plato’s concept of “forms”. At one point he decided to give an analogy. So, he walked over to one of the guys in my group, Ben. Now, other than myself (I was 16 at the time), Ben was probably the youngest guy in the class. He couldn’t have grown so much as a whisker of facial hair if his life depended on it. But here Dr Griggs starts off: “Ben here is a man”. Obviously flattered, Ben makes a “you heard what the Dr said” kinda look. The teacher proceeded, “if I cut off Ben’s arm, is he still a man?” The class nodded. He continued, “if I cut off Ben’s leg, is he still a man?” Once again, assent. “How much of Ben do I need to cut off before he stops being a man…” All of the sudden, the professors eyes go very wide, but without missing so much as a beat, he goes on “that’s where that analogy breaks down”, and went straight back into his lecture as though nothing had happened.

The moral of that story is to beware of the limitations of analogies.

That caveat out of the way, here was what I was thinking. Today at church, we were discussing how to have harmony in the home, or in other words how to avoid letting normal disagreements ruin a family or a marriage. As we discussed various ideas, it dawned on me how similar a family is in some ways to a business partnership, or the founding group of a business. In a previous post, I mentioned how a lot of business revolves around deal making–arranging contracts that aren’t just mutually beneficial, but a clear win-win (not just financially I might add, there is often an emotional/psychological side to deal making too, but that’s a topic for another day, or a more competent writer). I think one of the other key dynamics, especially in small businesses and start-ups, are the interpersonal relationship of the founders.

To give an example, my dad has started up several ventures over the years. Most of them have failed for one reason or another, but one of his few successful ventures he ended up having to walk away from. The company was a commercial mortgage processing company, an area that he had gained quite a bit of experience in. He decided to bring on one of his best friends as a partner to help run the show. His friend while being very competent, had some real differences in opinion about how certain things should be done, and how valuable certain other things were that clashed fairly strongly. In the end, they weren’t able to resolve their differences, and my dad realized that he could either have a successful company, or he could stay friends with this guy, but not both. So he walked away. In hindsight, many of the very problems that led to the breakup of that company are the same things that lead to the breakups of families and marriages, and most of them center around a few common issues: pride, poor communications, inability to admit mistakes, lack of empathy, anger, contention, etc.

That’s where the original post from 2006 trailed off. I can’t remember what point I was trying to make at the time, but it’s been another nine and a half years, and I’ve seen a bit more of human experience and interactions. I still think that relationships between founders and members of a startup are often very important in the success of the organization. A couple of common issues I’ve seen with strained relationships both in the business world and the family include:

  1. Keeping score–a common thread with both families and businesses is that you’re going to be surrounded by imperfect individuals, many who have different ways of looking at the world, different neuroses, different strengths, different annoying ticks. Inevitably, even the best coworkers or family members are going to annoy you, disappoint you, or in some way do something you disagree with. One of the best ways to destroy any relationship is not learning to let go. Which in some ways leads to the next observation.
  2. Assuming ill motives–humans tend to be pretty crappy mind-readers. It’s natural when someone frustrates you to assume that they know they’re doing something that annoys you, and are doing this for malicious reasons. Unless you’re working with or married to a genuine sociopath, you’re probably wrong. When you give people’s motives the benefit of the doubt, and try finding ways of interpreting their actions assuming good motives, more often than not you’ll find out that their motives weren’t as bad as you thought.
  3. Assuming perfect knowledge–many of the most tragic fallings-out I’ve seen in my life involved one or both parties assuming they perfectly understood the situation, when in reality they had seriously misunderstood some key point. Humans tend to be very prone to misunderstandings, miscommunications. Assuming you’re immune to that failing is really foolish. In many cases, a little humility and making sure that the other person really is on the same page as you are, and trying to understand where they’re coming from can show you that you or often both of you were not seeing things the same way, and that once you understand where the other is coming from, the problem is much easier to solve.
  4. Not controlling ones emotions–something that often compounds many of these other challenges is letting oneself get angry. Most people think that any indignation they feel is by definition the righteous variety. But I’ve found very few situations where I “vented my spleen” where I didn’t end up regretting it later. Emotions and passions are an important part of who we are as humans, but unlike most if not all other animals, we have a mind that’s capable of taking control. The scriptures talk about “bridling” our passions, and whether you’re religious or not, I think you can likely see the wisdom in making sure that we don’t let strong emotions drive our actions.
  5. Failure to see the good in others–Related to items #1 and #2, if we don’t remind ourselves of the good in others, it’s often easy to misinterpret motives and keep score. If you find yourself feeling negatively about a family member or coworker, take a break and force yourself to remember a few good things they’ve done. You’ll almost always be able to find several without too much effort, and you’ll find that it’s hard to keep assuming bad motives about another when you’re thinking about the good another has done. Sometimes the best way to solve a problem is to shift your perspective.
  6. Failure to communicate–also related to #1 and #2, a lot of the time when people annoy us or let us down, they don’t actually know that we feel that way. Just as a robot can’t react if it isn’t getting data from sensors, people can’t even try to change if they don’t realize they’re doing something you feel needs changing. Sending angry vibes at someone isn’t a very effective way of letting them know what’s going on. Taking the time, usually best in private, to let people know that what they’re doing is causing you frustration, and to discuss why they’re doing it, and trying to come to an agreement is almost always better than letting something fester.
  7. Selfishness–a lot of times it’s really easy to see things entirely from the angle of how it negatively impacts yourself. This often leads to a lot of the other issues. Not everything is about you, so learning to “not take things as personally” is usually a good life skill.
  8. Lack of empathy–being able to understand where others come from isn’t something that comes easy for most of us. But it’s a really critical life skill that’s tied with a lot of these others. Just as it is important to force ourselves to remember the good in others, it’s often important to remember that people usually do things for reasons that make sense to themselves. When in frustration we see someone do something, and we’re wondering “why on earth did they do something like that?” it’s actually a good question. We can often learn a lot about how to resolve conflicts with others by taking questions like that seriously. A lot of the time this requires talking with someone and genuinely trying to understand where they’re coming from, what they’re feeling, etc.
  9. Using shared information to hurt–in any work or personal relationship, you end up having to lower your defenses a bit to work effectively with others. That means that if you want to hurt someone you work with or live with, you often know how to far more effectively than someone who doesn’t know them as well. Especially if you’ve taken some of these other steps to try and talk with people and understand their feelings, you will often learn things that could be twisted to hurt. For instance, if someone confides in you a weakness, you should never use that as a club, especially in public. When you’re frustrated and feel hurt, it’s often tempting to try and hurt them back. Trust me on this though–you absolutely do not ever want to do this, no matter how tempting. Those kind of injuries are often the ones that are hardest to forgive.

There’s probably more ideas out there, but I wanted to share a few that I’ve observed professionally, personally, etc. It is true that there are sometimes that you legitimately are in a relationship (professional or family) that is unhealthy and that the only safe solution is to end the relationship. But I think that in many cases, people end up destroying relationships unnecessarily because of some of the issues I’ve highlighted above. Just as these sorts of issues can tear families apart, they can also destroy communities, startups, and any other entity. On the flip side, many of the same things that can help maintain healthy and happy family relationships are also important for maintaining healthy founder teams.

Anyhow, I hope in the rambling at least one of you got something useful out of that.

Posted in Business, Family, Friends | 3 Comments

Space Tourism Musings

My post on Wednesday about Passengers as an RLV market got me thinking about the old Futron Space Tourism study from 20021.

Background on the Futron 2002 Space Tourism Market Study
If you’re relatively new to the space scene, this was a market study the Futron corporation did right around the time the first Space Tourists started flying to the ISS (Mark Shuttleworth and Dennis Tito). In this study they met with several hundred affluent people and asked them a series of questions about their interest in flying to space (suborbital and orbital), both before and after they had talked about the postive features and downsides/risks of space tourism. They asked questions to try and gauge how sensitive people’s interest was to the price point of the  service. They asked questions about things that might increase or decrease people’s willingness to buy a ticket (things like flying on a Russian rocket on the negative side and having a short 1 month training cycle on the plus side).

They also asked sanity checking questions about how much people spent on vacations and large discretionary purchases. They used this last bit of information to try and estimate what fraction of a person’s wealth they really would be likely to spend on a single purchase (they found that very few of the affluent people surveyed spent more than 1.5% of their wealth on any given discretionary purchase2). They used this 1.5% number as a conservative upper bound on the percentage of their wealth someone would spend on a space tourism flight3. They would use that to estimate the minimum amount of wealth someone would need to actually be willing to pay for a flight. They’d take the number of people with that wealth level or higher as the base pool of potential customers. They’d then reduce it based on several other factors (fitness, willingness of survey members to buy at that given price, etc) to whittle it down to likely customers. They then used that with an adoption curve to try and estimate the adoption rate for orbital and suborbital tourism. In both cases, they made assumptions about the price of the service over time, and did a single projection of the market.

Gary Hudson’s t/Space later reanalyzed the data4 to see what the effect of different price levels would be on demand. They used both the 1.5% of wealth and 5% of wealth limits to see the size of market at ticket price points of $5M, 2.5M, and 1M, with the assumption that the launch took place in the US and the training took only one month (instead of six months in Russia5). Gary found that the addressable market and flight revenues were likely to increase substantially as prices dropped to these levels6.

Update Based on 2013 High Net-Worth Individual Data
Out of curiosity, I decided to look-up the latest estimates of numbers of High Net-Worth Individuals (HNWIs) by various wealth tiers, to recrunch the numbers. I had to get data from two wealth surveys, one the 2013 World Wealth Report from Capgemini that only had three tiers ($1-5M, $5-30M, and $30M+)7, and another World Ultra Wealth Report 2013 from WealthX and UBS, which broke down Ultra High Net-Worth Individuals (UHNWIs) into several tiers between $30M and $1B8. One important discrepancy you’ll notice is that the first report only showed ~110k UHNWIs and the latter showed nearly twice that, ~200k UHNWIs, both for the same time frame, so you should expect the transition between the two to be a bit rough. Also, the World Ultra Wealth Report didn’t break billionaires into any subtiers, which had the odd effect of placing more people in the $1B+ tier than in the $750-999M tier. Also in each case, the tier divisions seemed somewhat arbitrary. I’d love to get a single set of raw data from one source that all individuals with >$1M in assets, but alas.

Anyhow, let’s get to some tables and charts.

First up is the table with the numbers from both of the reports put into one convenient location…

HNWI-dataNext, is chart that uses the data from that table and shows the average wealth level of each individual tier on the X axis, and the number of individuals on the Y axis, with both axes on a logarithmic scale 9.

HNWI-chartThe two major blips you see in the curve are at the third data point where we transition from one report to the other, and in the final data point where all billionaires are lumped into one single group. But the data actually lines up reasonably well with a power-law curve fit.

One third chart uses the same data, but this time shows for each given tier level the number of individuals with at least that level of net worth10.

CumulativeHNWICountWhile this looks like a great fit, and while it’s within <10% error at half the data points, the worst errors are at the >$5M level (+33%), the >$200M (-27%), and the >$1B level (+34%). That’s far from perfect, but is a far better fit than any other the other trendline options in Excel, and using that trendline equation we can estimate the global demand pool at various ticket prices and percentages of their wealth people would willing to spend.

One last chart is to extrapolate the percentage of HNWIs willing to buy at a given ticket price. This is probably the shakiest extrapolation, but is necessary to cover the full range of interest. I didn’t plot this log-log this time, and as you can see the trendline isn’t perfect, so data below $1M and above $25M needs to be taken with an appropriate sized grain of NaCl.

HNWI-BuyProbability
Estimated Addressable Orbital Tourism Market Size Analysis
So, now that I have those curve fits and that data, I can rerun the analysis Gary Hudson’s group ran using up-to-date data, and a more granular distribution of ticket prices, up to and including today’s current ~$50M ticket price level for Soyuz seats11. I also used three values for the maximum fraction of someone’s net worth they’d spend on a ticket–the Futron value of 1.5%, the 5% number t/Space included, and a 10% number that’s more indicative of what several actual space tourists have been willing to shell out12.  I used the same multipliers t/Space did for fitness probability, and for flying out of the US with ~1 month training in the US instead of 6 months in Russia.

Here’s the results for the case where customers are willing to spend 10% of their net worth on space travel:

NumCust_10NW MarketSize_10NW

Here’s similar charts based on a max ticket price of 5% of a given HNWI’s net worth:NumCust_5NW MarketSize_5NW

And again with ticket prices at the 1.5% of HNWI’s net worth used by the Futron study:

NumCust_1_5NW MarketSize_1_5NW

And in case you want to poke around my spreadsheet, here’s a copy: SpaceTourismCalcs.xlsx.

Takeaways and Caveats
Here’s the main takeaways I had from this exercise:

  • Space Tourism demand looks like it’s likely one of the few existing space markets with a high degree of elasticity. Reducing ticket prices should increase the addressable market enough to actually lead to more addressable revenue–so there should be a strong incentive to drive down costs and thus prices.
    • I was actually surprised by this–I figured that at the prices we were talking about, the demand elasticity would actually be very low, and that you’d have to get prices down quite a bit to get into “virtuous spiral territory”.
  • The elasticity at all three levels of “max percentage of net worth per ticket” is strong, with a 7-8x revenue increase dropping from the targeted Commercial Crew ticket prices of $20M/seat to the $1M/seat level.
  • You wouldn’t even need to get down to the $1M/seat range to get demand levels high enough to support a healthy industry of small RLVs.
  • If you assume 60hr research weeks for 2 weeks at a stay, a researcher could beat the already lowballed NASA ISS estimate of $55k/hr13 costs even if seat prices were $5M/seat. This is a totally different and complementary market to tourism, but I thought I’d throw that number in there.
  • Even though almost all space tourists so far have spent >5-10% of their net worth on their flight to ISS, even if future tourists would only be willing to spend 1.5% of their net worth, these elasticity results look real, and the addressable market sizes look interesting.

Before we wrap up, here are some important caveats:

  • There were discrepancies between the two wealth datasets, and the trendlines I used probably smoothed out a lot of real-world bumpiness.
  • The Futron “likelyhood to buy at a given price point” data I used here was only for orbital flight–for other destinations like suborbital or lunar you’d need different probabilities.
  • I wasn’t doing this post to suggest I think that space tourism is the only interesting market, the best market, or even a good market. I just wanted to run the numbers using newer data to see what could be learned. It suggests to me that people-related markets (tourism, potentially research, etc) likely are going to be very elastic compared to say satellite launch.
  • This is based on a survey over a decade old. A lot has happened since then for better or for worse. For instance, space tourism has progressed a lot slower than originally expected. On the orbital side, part of this is due to the spotty availability of Soyuz seats–the Russians have filled just about every space tourist seat they’ve offered, even while jacking the price up by 2x what Futron had analyzed. On the suborbital side, it has taken everyone a lot longer to execute (and in XCOR’s case raise the money to have a shot at executing) than expected. There was also the fatal SS2 test accident last year. All of those could shift people’s opinions around. As could the number of wealthy people seriously talking about space tourism, Mars emmigration, etc.
  • I wouldn’t put any weight in these numbers on a quantitative basis–there are probably useful qualitative lessons to be learned, but I don’t want to see anyone using this data as though it has even one significant figure…
  • Also, the market sizes I showed were total addressable market sizes (ie the total number of people who could afford it, are healthy enough, and are likely to buy if the flight happens in the US with ~1 month training), not yearly market sizes.
  • I think I mentioned this 2-3 times already, but someone should really pay a Futron type entity to redo this study in another year or two or three, maybe once suborbital tourism flights have started up.
Posted in Commercial Crew, Commercial Space, Space Transportation | 3 Comments

Year of the Pip

Today is our youngest son’s first birthday. His real name is Andrew Peregrin Goff, with Peregrin spelled like the hobbit from Lord of the Rings, but everyone pretty much calls him “Pip”. He’s one of the happiest, most laughy kids I’ve ever met, which helps when he’s waking you up at 2am. Since it’s his birthday, I’m going to post some pictures from throughout the year.

Tiff and Pip at Foothills Hospital in Boulder, CO. One Year Ago Today

Tiff and Pip at Foothills Hospital in Boulder, CO. One Year Ago Today

Pip and James at the Hospital

Pip and James at the Hospital

Pip Has Always Been a Hungry One

Pip Has Always Been a Hungry One

I Can't Believe He Was So Tiny

I Can’t Believe He Was So Tiny

Pip, James, and Uncle Jeremy, Back in September 2014

Pip, James, and Uncle Jeremy, Back in September 2014

Pip and Mom at an Overlook on Trail Ridge Road, Rocky Mountain National Park, Sept 2014

Pip and Mom at an Overlook on Trail Ridge Road, Rocky Mountain National Park, Sept 2014

Pip and Grandpa Goff, Oct 2014.

Pip and Grandpa Goff, Oct 2014.

Pip and Great Grandma Sanchez (who turns 95 this month)

Pip and Great Grandma Sanchez (who turns 95 this month)

Pip and his Cousin Gregory (aka "Ori"). So We Have a Dwarf and a Hobbit, Can You Tell Which is Which?

Pip and his Cousin Gregory (aka “Ori”). So We Have a Dwarf and a Hobbit, Can You Tell Which is Which?

Dad, I'm Not Sure My Feet Reach the Pedals!

Dad, I’m Not Sure My Feet Reach the Pedals!

Pip Helping With the Dishes

Pip Helping With the Dishes

Pip Helping Rearrange the Pantry

Pip Helping Rearrange the Pantry

Pip the Musician

Pip the Musician

Smiley Pip

Smiley Pip

This Pip Means Business

This Pip Means Business

Pip On the Rocks

Pip On the Rocks

Pip Pondering on the Meaning of Life. Or Maybe on the Flavor of His Birthday Brownie.

Pip Today Pondering on the Meaning of Life. Or Maybe on the Flavor of His Birthday Brownie.

If you read this, you should vote in the comments for which picture is your favorite.

Posted in Family, Pip Bloggin | 3 Comments

RLV Markets V: Additional Thoughts on Passengers–Divisibility and Elasticity

[Note: While digging through unfinished blog post drafts, I found this one from April 2009. I think this was originally supposed to be the third in the series, but is now the fifth. While the series doesn’t exactly flow, and some of the examples now seem a bit anachronistic, I thought these two provided some interesting points worth consideration.]

The Impact of Divisibility on Flight Rate
One important technical thing about passengers as customers for RLV flights is that while people are not infinitely divisible1, they don’t have to be moved in large batches either. Sure, down the road if you have thousands or tens of thousands of people flying to space every year, having larger transports is eventually going to make sense2. But with realistic near-term demand, even a two-seater RLV might potentially be big enough to be useful. By flying people in smaller batches, the same nominal demand for manned spaceflight can result in a higher number of flights for a smaller vehicle, which counterintuitively could be cheaper than flying a largeer vehicle less frequently. For instance, several years back when Bigelow and LM unveiled some of their original plans for crew vehicles launched on Atlas V, Bigelow was talking about 12-16 flights per year on an Atlas V with a capsule that could sport 8 people (2 crew, 6 passengers)3. That’s somewhere between 70-100 passengers per year. If the launch vehicle instead had 1 crew and 2 passengers, that would result in 35-50 flights right there, instead of the 12-16 for a larger capsule (assuming that doing lots of berthings doesn’t screw up the microgravity for others). If the more frequent visits doesn’t hurt the microgravity too much, 35-50 flights on a tiny RLV may very well be much cheaper than flying 12-16 flights on a large ELV, or even on a partially reusable Falcon 9/Dragon V2 combo. Also more frequent crew flights would mean more opportunities for on-demand cargo deliveries. The place where larger reusable passenger transports shine (relative to small RLVs) is when there is enough demand for them to fly 50+ times per year.

Space Tourism Demand Elasticity
One other point about passengers as an RLV market is that there’s a lot of potential for elasticity of demand. While the old Futron study is now very dated4, there are some common sense reasons to believe that demand for personal spaceflight will rapidly increase if prices can come down. The single biggest factor is the distribution of wealth in the US and the world (note the number of households at each total net asset level is plotted on a logarithmic scale!)5:

Global Household Wealth Distribution (data from t/Space CE&R presentation)

Global Household Wealth Distribution (data from t/Space CE&R presentation)

The total number of households in the world with greater than $20M in assets according to this several years old data is about 100,000. The total number of households with more than $1M in assets is 7.3 million. Using the rule of thumb that Futron did (that most households won’t spend more than 10% of their value on a space trip), that means that dropping down from the ~$15-20M ticket range to a $1M ticket range would increase the number of eligible households from ~6,000 to nearly 1 million–that’s over two orders of magnitude increase! Basically, assuming that the super wealthy aren’t any more naturally inclined to spend money on space travel than the “just wealthy”, suggests that there’s a lot of potential for demand elasticity for personal orbital spaceflight as the price goes down. This is why I think prices have to come down over an order of magnitude from what even SpaceX is currently proposing before you’re going to pass the elastic point of the demand curve.

The market for flying people into space (and eventually to other destinations) is possibly going to be one of the largest early RLV market segments. Before you can really have any sort of sustained industry in LEO or on the Moon, or anywhere else for that matter, people need to be able to reach there on a regular basis. Existing transportation systems don’t provide an environment very conducive for experimenting with space-based entrepreneurial ventures. However, a transportation system that can safely, reliably, and on a regular and frequent basis transport people to orbit and back is a transportation system that is then on a level that it can enable experimentation with different space venture ideas.

Posted in RLV Markets | 11 Comments

Halfway Through the 10th Anniversary “Month of Blogging”

Some people were commenting on how there was a lot of blog traffic on Selenian Boondocks lately. I had mentioned my plan last month, in this post, but to recap, the 16th of June is the 10th anniversary for Selenian Boondocks, so in celebration, my goal is to do a blog post per day for this whole month leading up to the 10 year mark. This has been a challenge, and a good reminder of why I don’t blog that often, but has also been a lot of fun. Once the 16th is past, I’ll probably drop back to trying to do 1-2 thoughtful posts per month, but I wanted to thank everyone who’s been following along.

And no, this doesn’t count as today’s post. :-)

Posted in Administrivia | 2 Comments

SLS, Shuttle, and The Danger of the “No Payloads” Argument

I’m not a particularly big fan of NASA’s SLS1. Anyone paying attention with even a shred of self-honesty can tell that two of the primary reasons why Congress forced NASA to build SLS were to preserve and enlarge payrolls at NASA centers in their districts and to line the pockets (on an uncompeted basis) of politically connected contractors. In frustration with this situation, many of SLS’s critics in industry (yours truly included) have argued against SLS funding by saying that NASA is rushing to build a rocket without building payloads for it. I’m starting to wonder if this is a wise line of argument.

It’s not that the argument isn’t sound–rushing to build a rocket when it sucks so much air out of the room that you can’t start funding useful missions for the rocket until after the rocket is complete is stupid. It’s a guaranteed way to have to pay the maintenance cost of said rocket for many years after it is built just to keep it around till payloads are ready, which will keep sucking a lot of the air out of the room for development of said payloads. Of course, NASA would fly the vehicle on a certain cadence even if it didn’t have the support hardware to do useful missions…and that’s where my concern kicks in.

One of the things we saw with the Space Shuttle was the constant desire to find ways to make work for it by forcing payloads to fly on it:

  • Initially they tried to shut down all commercial and DoD launch vehicles and fly everything on Shuttle.
  • After Challenger, that foolish policy was abandoned, yet many other massive projects were funded primarily as means to keep Shuttle busy. Many science missions were designed with Shuttle launch in mind (even if it wasn’t really necessary). These politically favored payloads got lots of money and sucked the air out of the room for smaller missions.
  • The ISS program was started, with all modules designed so that only Shuttle could launch them. Shuttle had some nice features, but the key ones (being able to deliver the module without it having to have its own propulsion and keep alive capabilities) could’ve been replicated much cheaper without shuttle. Lockheed’s Jupiter/Exoliner system (or other similar tug concepts) aren’t really proposing to do much that couldn’t have been done with mid 90s technology. When the Columbia accident happened, ISS construction had to stand down for over a year because NASA had intentionally designed all of its ISS hardware and cargo/crew support to be 100% dependent on the Shuttle. Once the Shuttle was flying again, a bunch of missions were required to replenish supplies before construction could continue. A large chunk of the ISS’s development costs, and a large chunk of the delays in getting ISS flying were entirely due to the decision to make ISS construction and logistics on the US-side 100% tied to shuttle.

My concern is that we’re going to see something similar with SLS, and that in fact we’re already starting to see this. Rep. Culberson is pushing a Europe mission using SLS as the booster. Europa is a fascinating target, and I do believe Culberson is legitimately interested in seeing missions to Europa. But the reasons for using SLS are contrived at best. Basically, the mission will be no more capable than one launched on an existing commercial vehicle, but it can go directly to Jupiter, cutting 5 years out of the mission. This will supposedly save tens of $M on operations costs over that 5 year period (that would’ve been spent doing Venus and Earth slingshot maneuvers). The thing is, that in order to do this, Culberson is recommending cutting $250M from commercial crew, which will stretch that program out long enough that we’ll have to spend another $500M on buying more Soyuz seats from the Russians. All so we can spend more on SLS to get it ready for a payload that doesn’t really need to fly on SLS.

NASA will make missions and payloads for SLS. It will corrupt good missions that could be done cheaper without SLS (like ARM or Europa Clipper). These big missions, particularly SMD missions like Europa Clipper are going to be big, strongly politically protected (ie hard to kill if they start bloating beyond recognition), and will prevent many other worthwhile missions from being funded because they take up the bulk of their respective budget wedge. Everything will be done through the lens of “what makes best use of SLS” not what’s the most effective way of doing things. If Congress gets its druthers it’ll have NASA start on an SLS-based lunar mission once Obama’s gone. The whole thing will be designed in a way that can only fly on SLS, and where making it cost effective doesn’t matter.

I could go on, but I think you get my point. Arguing against SLS by pointing to the lack of payloads may get Congress to answer that complaint in a way that we space policy enthusiasts really don’t want.

We don’t want payloads for SLS per se. We want NASA to focus on exploration and expanding humanity’s economic sphere beyond GEO. Those two things are not synonymous.

Posted in NASA, Space Exploration, Space Policy | 16 Comments

Some Recent Family Pictures

I ran out of time to do my blog-a-day post on a technical topic today, so I’m falling back to some family pictures. I noticed I didn’t have a good picture of Jonny or me, but here’s a few fun recent pictures of the rest of the family.

Peter Being Peter

Peter Being Peter

Pip On the Rocks

Pip On the Rocks

Jamie and His Blue Gill Fish

Mom and Pip Fishing at Waneka Lake

Mom and Pip Fishing at Waneka Lake

Posted in Family | 4 Comments