With the Next-Generation Suborbital Researchers Conference (NSRC) next week in Boulder, CO, I wanted to share an idea for a “near-term”, “low-cost”, suborbital business venture. The graph below shows price points for suborbital research payloads. To achieve these price points while still offering a healthy profit for the business owner, demand needs to grow. Here is a business concept that may both make money and grow demand. Let me explain...
So with this background research, let’s build a business case ( or at least the fun spreadsheet stuff). Here is what I have in mind for such a venture:
Optimistic:
Pessimistic:
The Problem: Suborbital companies are not prepared for customers – they don’t know retail. This is not an oversight on the part of these young companies. Launch operators have spent the last five years designing, building, and testing launch vehicles, why would they needed retail experience? But with paying customers around the corner...this problem has to be solved.
- Suborbital firms launching people are solving this problem by hiring travel agencies to interface with customers and coordinate sales activities.
- Suborbital firms launching cargo have yet to solve this problem. Using existing travel agents will probably not be effective as the cargo customer base is focused on scientific research instead of human entertainment. Developing the sales/customer service talent in house is a possible solution, and although not fully avoidable, would be expensive and distracting from the firms' focus of flying rockets.
- Interface with the customers,
- Integrate experiments into flight racks, and
- Deliver integrated flight racks to launch operators for flight.
- After flight, the SCA would deliver payloads and data back to each customer.
- One customer-focused interface to address all questions and coordinate payload, launch logistics, flight payment, etc.
- More flight opportunities – by the SCA signing agreements with multiple launch operators, a crash, delay, or full manifest from one launch operator, would not delay flights as cargo could be switched to alternate providers as needed
- Perhaps lower cost if the SCA could leverage her buying power when purchasing flights from the launch operator. These savings could be passed on to the customer.
- Allow launch operators to focus on their core competency – launch operations. Outsourcing Sales and Customer service responsibilities and the associated costs both in time and money. Even if the operator chooses to develop a sales force of their own, an SCA would still allow an operator to increase demand at a lower cost.
- Increase flight rates. Since the variable cost for a suborbital flight is low, the key to success for an operator will be high flight rates.
- Low Cost: current CubeSat-sized payloads cost a university $50-100K to orbit. This is too much for most college programs which is why you see many universities unable to sustain a program of launching even cubesat-sized payloads. Although a market will continue for orbital payloads, universities would welcome a cheaper alternative that would bring the cost down while offering many of the same benefits to a university Aerospace engineering department. A preferred price point would be under $20K since that would allow many universities to include the launch price in Govt grants and research applications.
- Frequent Launch Opportunities: according to one professor, his current wait time to launch a cubesat-sized payload 7 years. The students who developed that payload will have graduated many years before this payload ever flies.
- Inter-departmental Cooperation: To date, most university work on satellite and related Aerospace projects have originated from the Aerospace engineering department (or Physics department if a university lacks an Aerospace engineering department). For universities to gain maximum value from suborbital research programs, they would need to develop cross-disciplinary teams. Aerospace Engineering, Physics, and other disciplines (Biology, Medicine, etc.) would need to work together for the benefit of all departments. The professors admit this level of ongoing collaboration is not regularly seen between university departments and may be a challenge to maintain.
- Payload standardization in the form of CubeSats have been a great benefit to university engineering programs. The university participants would benefit from a similar standard for suborbital research.
- Multiple Sizes: The CubeSat size is too small for some larger experiments. Multiple sizes would be welcome.
- Two forms of experimentation: Manned and Unmanned. Some research programs can be conducted remotely. This is great news for universities wanting the value of such a hands-on program at low cost since automated experiments avoid the weight and volume human tended experiments take up. But manned experiments will play a leading role as well for those focused on life sciences research or whose larger experiments cannot currently be automated. The professors I spoke with saw both types of experiments flourishing on suborbital vehicles.
- Advocates. The industry is new (heck, we are not even flying to 100km yet), but SARG’s Dr. Alan Stern estimates an “imminent” market of 1000 missions per year. Whether such a large market estimate is hyperbole for the sake of the sound-bite or an actual belief is up for debate. But such a claim is an interesting nugget of how bullish some are about suborbital opportunities.
- Suborbital experiments are a gateway to orbital experiments. Researchers may test their hardware and gain experience in suborbit and graduate to orbital efforts when the time is right. Offering such a tier of services (suborbital and orbital) should grow both markets.
So with this background research, let’s build a business case ( or at least the fun spreadsheet stuff). Here is what I have in mind for such a venture:
- Focus exclusively on the automated cargo market.
- Fly only CubeLabs.
- Work with Kentucky Space to develop a series of standard CubeLab sizes:
- CubeLab1: current 10x10x10cm bus (16 per rack)
- CubeLab4: 20x20x20cm bus (4 per rack)
- CubeLab8: 20x20x40cm bus (2 per rack)
- All compatible with the current NanoRack rack design
- Negotiate low costs per flights and preferred provider status from the available suborbital launch operators
- Consider partnering with Kentucky Space for integration services.
- Educate: Suborbital Research Evangelist - how suborbital research can benefit you, the customer
- Book Flights
- Ongoing rebooking as schedules of experiments and launch vehicles slip
- Payload integration coordination
- Integrated Rack delivery to launch provider (two to sixteen experiments integrated into one "ready-to-launch rack" making it easy for launch operators to load the rack onboard their rockets)
- Payload return to customer
- Launch data download from rack to secure Internet site for customer
Optimistic:
Pessimistic:
Price Point Backup Data (from the graph at the start of this post):
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