Disruption in the space industry

| April 14, 2014

With new technologies emerging, the barriers to space are continuously being reduced. Jason Held from Saber Astronautics explains how even smaller companies are now able to enter the space sector.

In my last blog I wrote about space tourism as a new market and how it is being used by terrestrial businesses. By “terrestrial” I referred to mass market products most of us will know, such as Lynx deodorant, 4-Pines beer, Stoli Vodka etc. This trend continues on point with the recent viral footage of Sports Illustrated supermodel Kate Upton doing a photo shoot on ZERO-G’s “G-Force One” aircraft in Florida.

While these are all clever, the question remains — how can a smaller company enter the fray, build the baseline for an industry, and disrupt existing markets? This is not easy considering the average satellite mission cost of $200 million.

One answer is ultra-small 1-kg “CubeSats”, the result of an academic oddity attempting to see how small a functioning satellite can be. In the space world small size equals small cost — CubeSat kits sold out of the USA and EU are only $10k-$15k and launch cost range from $50k-80k. I’m seeing total startup costs for less than $150k when including everything from operations to marketing and sales. If you think about it, this is less than the cost of a juice bar franchise.

This is significant because now, finally, the space sector has a business startup costs model well within the means of most entrepreneurs. Space is now fundable with a small business loan. Or an Angel investor. Or a Crowdsourcing campaign.

And that leads us to disruption. CubeSats are moving beyond the oddity and taking on markets which even two years ago were considered stable. The satellite imagery market, which sells to agriculture, mining, and defence are the first to find itself in threat. CubeSats, since they are so cheap, are being launched by the dozens, and soon, by the hundreds. Cost for Earth imagery is about to plummet and that $200m satellite owner will find previously secure customers moving elsewhere.

Expect the communications market to get hit next, perhaps in the next three to five years.

A lot of money is about to move around, and we don’t know yet where it’s going to end up. Are we ready? The question we should ask ourselves is — do we want the money to move from New York to California or do we want to participate and grab some of that market for ourselves?