I read a tweet today that kind of rubbed me wrong, about SpaceX’s current market dominance:
At least one friend asked him if he really thought that nobody else had tried, and he pointed to how both ULA and Arianespace had written off reusable launch… while that’s true, it misses a much bigger picture, and it got me thinking about a framework for thinking about space companies that a mentor had once explained to me.
Ambition and Resources as Comparative Metrics
This mentor, Dylan Taylor, was explaining to me his hypothesis for a new roll-up company he was about to setup1. Basically, he said that you could compare different space companies on two axes: resources and ambition. Resources was a combination of team, facilities, skills, and access to capital. Ambition was about how focused they were on changing the world and bringing new capabilities to market.
The challenge as he put it is that most space companies tend to cluster in the upper left and bottom right corners of this chart. In the upper left, you have a lot of technical founder-led space startups with tons of ambitions, and sometimes great ideas, but frequently with very poor access to capital and resources for various reasons. Without resources it’s hard to convert good ideas into capabilities. On the opposite corner, you have a lot of the traditional aerospace firms, that tend to have huge teams, with a lot of talent and financial resources, capable of developing very complicated and exquisite technical solutions, but they have almost no ambition to do anything beyond winning the next government contract, and making sure their stock price goes up. There’s also technically some in the bottom left-hand corner, that don’t have a lot of ambition or resources. Some of these are good companies, that do valuable things for the economy, but they often get denigrated as SBIR farms or “lifestyle companies”2. I’ll use the term Small Businesses instead.
His point though was that there were very few companies in the upper right-hand corner that have both the resources to do big things, and also the ambition to seriously change the status quote and create new capabilities. SpaceX being one of the best examples in this category.
To complete the story, his hypothesis was that he could create a roll-up that could aggregate several founder-led startups, while preserving the entrepreneurial spark and ambition that made those startups worth buying in the first place. The goal would be to create an organization that had both the ambition and drive of those smaller startups, while gathering the resources needed to go after big, world-changing capabilities. It was a really compelling vision, and when he ultimately launched a company to do that, I sold my startup Altius Space Machines to them. While I wouldn’t say he’s achieved his goal yet, they did go public on the New York Stock Exchange3 earlier this year, and I sincerely hope they or someone else can make that model work, because I think the original hypothesis had a lot of value.
Competence as a Third Axis
But back to this framework. One thing I think he was missing from his framework was a third axis of competence, basically how effective is a company at turning what resources it has into results.
For instance, there are some companies that do an amazing job of turning modest resources into impressive results, punching way above their weight class, like my first startup Masten Space Systems, which I think in its whole existence raised less than $5-10M in investment. There’s a reason why Elon pivoted SpaceX from trying to do parachute splashdown recovery to powered landing after we posted our Xombie in-air relight video on Youtube. As he supposedly put it to his team4 “This was five @#%!ing guys in a shed in Mojave! If they can do this, we can do this.” They totally knocked it out of the park, but it was because of seeing what scrappy companies like Masten and Armadillo Aerospace5.
On the other hand, while I won’t name names, most of us can think of other space companies that have had a ton of resources, some big ambitions, and yet have very little results to show for it6. SpaceX isn’t the only company with high ambition and high access to resources, it’s just one of the few in that category that’s also shown a high degree of competence, at least until very recently.
Unfortunately, the ability to raise a lot of money, or the ability to earn a lot of money from previous businesses in totally unrelated fields, is often poorly correlated with being a good founder for an ambitious space startup. There are some people who are good at raising money, and good at putting that money to productive use, but a depressingly large amount of the money that’s available in the space community has landed in the hands of those who aren’t particularly effective at converting money into bringing new capabilities to market.
What All of This Means for SpaceX Competition
Ultimately, I think Edward’s original tweet misses some important points. There absolutely are companies that have tried to compete with SpaceX. The challenge is that until recently, almost none of them have had the full combination of ambition, resources, and competence. He correctly points out that there are those who have had the resources, but lacked any ambition. We’ve also seen a few that have had the resources and ambition, but frankly haven’t been very competent. What’s less appreciated has been the companies with ambition and competence who either haven’t or have only recently received enough resources to make a difference. It doesn’t matter how ambitious your goals are, or how effective you are at turning resources into results if you can’t get access to resources. Some groups are starting to crack this nut, most notably RocketLab, Stoke, Firefly, and a few others, but only very recently. And it takes a long time to go from resources to results when it comes to launch vehicles or other ambitious space projects7.
One strong contributor to this has been the very real attitude among VCs over the last ten years that you shouldn’t fund companies trying to compete with SpaceX. Talk about a way to create a self-fulfilling prophecy! If most VCs are too chicken to fund someone trying to compete in the same marketspace as SpaceX, it’s not surprising that SpaceX’s main competition so far has been mostly companies that already had access to large resources, either from legacy aerospace businesses, or from other industries, very few of which came with the necessary ambition or competence to effectively compete.
Another related contributor has been that government agencies also haven’t been very willing, until fairly recently, to take the kind of chance on other space startups that NASA did on SpaceX with the COTS and CRS programs. They totally made the right bet, but at the time SpaceX won COTS they hadn’t yet successfully flown anything to orbit, and by the time they won the >$1B CRS-1 contract, they had only flown successfully to orbit once as a company. Since COTS and CRS-1 there have been very few NASA or DOD efforts that have placed those sizes of bets on commercial companies. One of the few recent examples I can think of, where the government took bets of a similar scale on relatively new, but promising space startups has been SDA’s satellite constellation tranches. There have been smaller and medium bets with programs like STRATFIs8, VADR9, and CLPS10, but large bets where a company could get a shot at transformational levels of funding if they successfully deliver have also been extremely rare. Once again, when you refuse to retry the formula that helped give SpaceX a chance to become who they are today, government agencies shouldn’t be shocked that it’s taken a long time for others to follow in SpaceX’s footsteps.
As I said, this dynamic is finally starting to shift, and impressive ambitious and competent companies like RocketLab11, Stoke, Firefly, and others are starting to get the resources they need to actively compete in the launch arena. If a few of them start succeeding, hopefully it’ll show to investors that yes it is possible for other companies to develop reusable launch vehicles, and other advanced space capabilities, if actually given a chance.
Anyhow I thought it was worth sharing this framework for thinking about companies, and how it explains a lot of why SpaceX has only recently started getting competent and well-funded competitors. I think it’s critical for the long-term success of our industry that we have multiple successful startups, and real competition, and I’m glad that we’re finally seeing some other ambitious, competent startups get the access to capital and resources needed to truly compete.
Jonathan Goff
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- Voyager Space Holdings, the company I sold Altius to at the end of 2019, about a half year after this conversation
- With the connotation that the people running the business don’t care about achieving anything special, “just” providing a good living for themselves and their people. Unfortunately, if you bootstrap a company, you’ll often get lumped by investors into this category.
- Ticker symbol $VOYG
- Paraphrasing based on the recollections of several of our SpaceX friends who were there put it to me many years later
- Also an excellent example of a scrappy startup that also punched way above its weight class.
- I’m going to be nice and let you mentally fill in your own chart. Though if I was in a salty mood, I could obsolutely name names.
- Even SpaceX has taken over a decade to go from initial Raptor engine development to a Starship that may finally be approaching orbital flight and initial operational status
- A program the DOD uses to provide public/private matching funding in the up to $30M range for technologies developed by small businesses under SBIR contracts that can get sufficient matching investment. I helped Gravitics land one of those for our Orbital Carrier work.
- A NASA program for procuring flights for smaller dedicated or rideshare missions with a higher launch risk tolerance than flagship missions.
- A NASA program funding small commercial lunar landers.
- I’ll note for the record that while I’m extremely impressed by Rocket Lab as a company, especially after reading Ashley Vance’s take on their early years in h is excellent book “When the Heavens Went on Sale,” I have to-date never owned a share of $RKLB stock. While I think they’ll grow into their current valuation, it seems a bit rich to me.
I think timing, AKA luck, might be an issue as well. And IMO, timing is good right now for new entrants. The SpaceX competency in Falcon9 has led to improved expectations in the industry. Many see Starship as the coming paradigm shift. There might be a serious window here for startups that put pressure on the Falcon9 price and service before the Starship enters serious service.
That being aside from my thoughts that Starship is not going to be as world changing as many believe.* After the successes of flight 10, it may seem that SpaceX is unstoppable. It seems to me that the investment to date is a factor as well as the remaining investment required to reach operational status. Elon may have a Mars focus, BUT he didn’t become the richest by writing off tens of billions of dollars. That money, partially visible in close to 300 Raptor engines in the drink, will have to come back in some form.
The opportunities that I see in launch are based on the numbers that come out of SpaceX itself. Under a million for a Raptor engine, and engines are supposedly the largest expense on an LV suggests that a single Raptor equivalent upper stage could deliver 100 tons to LEO after staging from an aggressive booster stage. Expendable at $2M cost would put pressure on the whole industry. SpaceX does not have a monopoly on talent, competency, and vision. With other investors getting interested, it is looking like the resources might start the corrections could start showing up.
*It being my opinion that Starship will succeed technically but fall short on costs. It’s first generation in spite of all the iterations involved reaching operational status. The history of technology has not been universally kind to first of class a decade or two down the line.
SpaceX was NOT world changers. They WERE scrappy startups. They had less resources then many other startups that have failed.
But, musk combined with shotwell is really what changed it into the world changers.
What is sad is the massive lack of musks/shotwell that we have.
Windbourne,
Almost no companies start with the resources of a world changer, sure. But while SpaceX has been scrappy and super effective, they also did start with ~$150M from Elon, which is way more than almost any other space startups had secured up through that point in time. They used that money very well, and Elon and Gwynne are amazing, which is why they’re a worldchanger today. I think there are several other people out there that I find just as impressive as Musk (like Peter Beck), who have also done amazing things with the resources they’ve had.
~Jon
I’m not sure if bad market analysis completely maps onto the competence axis or not, but it’s been a major contributor to a lack of competition for SpaceX. More specifically, a whole bunch of companies thought they’d be fine if they could make a launcher that could put <1t into LEO.
This was catastrophically wrong, with the possible exception of Rocket Lab, and even they are trying to get out of this box as quickly as possible. The reason why should have been obvious: any company that can maintain a high cadence in the medium launch space can eat about 85% of the small launch market with ride shares.
I can sorta-kinda excuse Rocket Lab, because they went all-in long before SpaceX had the cadence that allowed frequent ride shares. But everybody else should have seen the writing on the wall long before they nailed down their architectures.
The other major mistake has been way too much focus on launch, and not enough on high-scale markets that could leverage somebody else's launch capacity. Blue is again a prime offender. They started out with the mission of dominating cislunar space and lunar surface applications, and then went straight to launch as the first step to do that. Apparently, Jeff was unfamiliar with Akin's Law #39.
Venture Capitalists (VC’s) are in the business of making bets on making money. They will factor in risk, reward and time. If they can calculate a probable scenario where they will make money quickly enough, they look elsewhere. From time to time there’s people such as Paul Allen or Jeff Bezos that are space nuts and their name on a project is a bigger component than a return on their investment (mostly). Elon put the seed money into SpaceX and has had dozens of funding rounds to bring in more investment. Some billions in government development contracts have been nice too.
There are more launch companies now than there have even been offering a wide range of services and more that hope to get into the business. For all the glamour of the large end of the spectrum, the Falcon 9 Heavy flies infrequently. In 2025, I’m not seeing any launches with a few on the schedule for 2026. Satellite bus makers aren’t keen on spending the money to develop something that can only fly on one vehicle and satellite builders aren’t fans of that constraint either.
SpaceX gets lots of media, but their operations are mainly spamming Starlink sats to LEO with a few outside customer launches here and there. They aren’t increasing access and aren’t really lowering costs to orbit.