Would a Reusable Falcon Hurt SpaceX?

Would a Reusable Falcon Hurt SpaceX?

Sepatuads.com   September 07, 2012   Comment  

What happens if SpaceX is successful at achieving its Falcon reusability goals.  Here is the video of SpaceX’s plans to recover and reuse the majority of its Falcon launch system.

Let me make some assumptions about a Reusable Falcon (R-Falcon) to make my point that such a system may pose challenges for SpaceX.

On the surface, an R-Falcon would be great.  If my assumptions below are accurate, only $16M per flight, a flight every 30 days, only two thousand dollars per KG.  From a consumer perspective this would be great!  SpaceX is adding reusability to the large rockets they already have.  And they will probably be successful at it.  They do seem to achieve what they put their mind to, however, could there be an easier road to reusability?  Let’s explore the possibility.  First what could a large reusable system like SpaceX’s look like (dollars values in millions)?

  

I am still amazed we can’t build Saturn V’s today.  We built them before.  We went to the moon in them for goodness sake!  We knew how to build them…why don’t we know now?  Two major reasons:

1. We don’t have the tooling/plans – long since destroyed or lost
2. We don’t have the knowledge – the NASA/contractor engineers have retired/passed away

 Surely such a reusable system like the R-Falcon could avoid these Saturn-V pitfalls…right?  If you look at the table above you see I estimated SpaceX builds eight initial R-Falcons.  This high number addresses the unknowns about number of flights per R-Falcons.  Will it really be 10 flights per vehicle as I estimate?  And how long will it take technicians to refurbish and integrate the next payload? 6 weeks?  8 weeks?  With flights every month and 6-8 week refurbish and integration windows, multiple R-Falcons will be needed.

So here is the problem.

After the initial push to develop the R-Falcon fleet, at the usage rates outlined in the table, you would NOT NEED TO BUILD another R-Falcon for 6.5 years!

So SpaceX could avoid throwing away their tooling (unlike the Saturn V), but could they keep a knowledgeable team around ready to build the next R-Falcon 6.5 years after the first fleet was completed?

And even if you believe eight R-Falcons in the initial fleet is too many and want to reduce the fleet size, demand rates of one per month means SpaceX would only need to make approximately one R-Falcon per year to keep up with demand.  Not exactly mass production – 1 vehicle per year.  Can you keep the production team “sharp” on 1 vehicle per year?

How can it be, as a consumer, I love the R-Falcon (yay $2k per KG), but as a business, could the R-Falcon be a bad way to prove a reusable launch vehicle?  Could the R-Falcon launch too much payload and launch too infrequently?

Let’s talk about an alternate business approach that could address some of these challenges.  I said above that my hypothetical R-Falcon has two problems:

•  Launching too much payload
• Launching too infrequently

How could a new hypothetical company do reusable launch better?  What if you launch less mass but launch more often?  So let’s make up a hypothetical launch system – the “Kinglet.”  Since this is a business blog, let’s not get bogged down into the technical details except that instead of launching 7,000KG per flight, the Kinglet will launch 100KG.  And instead of paying the R-Falcon’s $5M for range access per flight, the Kinglet pays $200K per flight for its range or range-like services (airport, spaceport, other?).  Here is the table for such a system (dollars values in millions).

The Kinglet is a smaller launch system but aims for a higher flight rate, targeting weekly flights instead the R-Falcon’s monthly flight rate.  As a potential customer, I do not like the 10x higher price I pay to use Kinglet ($20K per KG vice the Falcon’s $2K).  But flying weekly may be attractive to some customers.  Overall though, this appears to be bad for customers (most customers could wait a month to fly).  But from a business perspective, all things being equal, a small reusable launch system like Kinglet has a much higher probability of success because it starts small.

Where the Falcon struggled to keep its production line open with only one new vehicle per year, the Kinglet will need to produce five systems per year to keep up with demand.  Now five launch vehicles per year is still not mass production, but those volumes will, not only keep the production team sharp, but provide five times the opportunities to roll in product and production improvements into the newer vehicles than would be possible on the R-Falcon production line.

Could a smaller reusable system avoid R-Falcon's hidden pitfalls?  Maybe.

So the last question to ask is, what needs to be launched at least weekly with a mass of under 100KG? 

Here is the excel file with tables from this post if you want to change the assumptions.

SpaceWorks Nanosat Market Study

SpaceWorks Nanosat Market Study

Sepatuads.com   November 22, 2011   Comment  

SpaceWorks Commercial today released their latest nano/microsatellite market study.  You can download it here.  The study is quite bullish on the growth of Nanosatellites over the next decade with over 20% growth per year through 2014. 

If you are a regular reader of this blog, you know I am a big advocate for Nanosats and Nanosat launchers .  But I do want to caution us that the authors of this analysis are also developing the Generation Orbit Nanosat launch vehicle.  Some may doubt how unbiased their nanosat market study can be when they are developing a vehcile to launch them.  However, the counter argument could also be, it was reviewing this same market data several months ago (now made public) that led som of the folks over at SpaceWorks to start Generation Orbit in the first place.

Here are a few highlights from the report.  Note many of these comments are direct quotes from the SpaceWorks study itself:

• 180 known future nano/microsatellites to launch by 2014
• Range of 100-142 nano/microsatellites (1-50kg) that will need launches globally in the year 2020 (verses 23 in 2011)
• 32 are estimated to be 11-50kg satellites
• 68 are estimated to be 1-10kg satellites
• 75% expected to be foreign or academic payloads
• Military growth accounts for the majority of the delta between the 100 launch estimate and the 142 launch estimate for 2020
• New Program list of Known NanoSats:
• QB50 – 50 Cubesats to be launched between 2013 and 2014
• NRO Colony I – 12 Cubesats to be launched over next few years
• NRO Colony II – 20-50 Cubesats to be launched following Colony I
• ALASA – 36 mirosatellites to be launched beginning in 2015
• The number satellites launched may not equal the  number of launches since many satellites are multiple-manifested
• 4.38% growth in Nano/microsatellite launch demand since 2000
• 22.5% growth (!) in Nano/microsatellite launch demand expected from 2011-2014
• Market saturation point was set at 150 launches per year (the projected 2030 value) (however SpaceWorks admits that some estimates project CubeSat launches at over 600 per year – well above their 150 launch ceiling)
• For a fee, Customers can license SpaceWorks more detailed database of nano/microsatellites

Additionally, the SpaceWorks estimates in this market study are based on growth in popularity of Nanosatellites and Microsatellites on existing launch vehicles (with the possible exception of the launches connected with ALASA).  As soon as you CAN launch every week or day on board a new generation of quick response Nanosat launchers, many new uses will be found for this class of satellite.  And many new customers, yet to be identified, will be taking advantage of such frequent access to space.

Will the Reusable Falcon 9 Kill the Suborbital Launch Industry?

Will the Reusable Falcon 9 Kill the Suborbital Launch Industry?

Sepatuads.com   Oktober 01, 2011   Comment  

With SpaceX’s announcement this week that the company would not only develop a reusable first stage for its Falcon 9 family of rockets but would make a completely reusable rocket system (I will use Clark Lindsey’s nomenclature: "rF9" for reusable Falcon 9), I have been wondering about the future of the young NewSpace companies developing reusable suborbital rockets.  Will companies like Masten, Armadillo and to a lesser extent XCOR and Virgin Galactic, survive this incursion from a well-funded NewSpace Cousin?

(the youtube video via Clark Lindsey's youtube channel.)  

SpaceX has announced the company is developing the “Grasshopper,” a 100 foot-tall suborbital Falcon 9 first stage that SpaceX’s cadre of young, talented engineers will use to test this initial piece of the rF9.  SpaceX has NOT announced any intention to commercialize the Grasshopper.  But if Masten, XCOR, and Armadillo continue to delay bringing a product to market that can reach 100KM, and SpaceX continues to develop products in its typical rapid fashion, might customers ask to buy payload space on an upcoming Grasshopper test?  

Or would SpaceX be willing to sell Grasshoppers to operators who then provide a suborbital launch service to users using the Grasshopper all before Masten has reached 100KM?  Could the unmanned Grasshopper be modified to carry passengers and compete with Virgin and XCOR?  If an operator came with funding, wouldn’t SpaceX take their money to make the modifications to "manrate" Grasshopper?

But the big money is the orbital market.  Most of the suborbital companies have expressed interest in using their suborbital experience and even their suborbital vehicles to expand current offerings to include an orbital system.  XCOR has published this image of an orbital capability.  

Virgin Galactic even took investment money from the Middle East to jump start their orbital program.  Could an rF9 meet all market demand for both suborbital and ultimately orbital launches as well?  And if they do, are the current suborbital companies doomed? 

It all comes down to money.

How cheaply could SpaceX really launch their new rF9?  We don’t know.  SpaceX does not even know yet.  But we can make some interesting estimates.   The heart of these projected orbital price reductions stems from reusing the rF9 like Southwest reuses its 747’s (which can fly commercially for 30 years with proper maintenance).  How many reuses is SpaceX planning on? 

At this point, the best data I have is a nugget SpaceX's CEO, Elon Musk, said this last week that he is targeting $500K trips to Mars as a market for his reusable craft.  

Let’s make some assumptions so we can approximate SpaceX’s reusability assumptions:

1. A price for a Dragon/Falcon 9 trip to Mars will be equal to the price SpaceX is currently charging NASA for ISS visits ($130M per trip) - optimistic assumption
2. 5 paying passengers per Mars Trip - optimistic assumption
3. 10% profit per launch
4. All maintenance and between-flight costs are included in the launch price - optimistic assumption

SpaceX breaks even after 47 flights (but that is a lot of assumptions).  here is a table to help visualize the math:

 Assuming a 47-flight amortization, what could be SpaceX’s breakeven price per KG to LEO?  Or to say it another way, how low would the suborbital company’s prices have to be to beat SpaceX?  

Again, let’s make some assumptions:

1. A price for an rF9 to LEO is the same as current LEO Falcon 9
2. Falcon 9 payload to LEO is unchanged
3. 10% profit per launch
4. All maintenance and between flight costs are included in the launch price.
5. Propellant Cost per Launch = $200K
6. rF9 breaks even after 47 flights

Based on these assumptions, SpaceX's breakeven Price to LEO for rF9 is $130 per KG or ~$1.4M per flight.  Again, here is a table to summarize how I came to this conclusion.  At the end of this post is a link to an interactive spreadsheet where you can modify these assumptions to create your own analysis.

These SpaceX prices are surely the most optimistic for the near term:

1. What if the rF9 doesn’t get 47 flights per vehicle?
2. What if between-flight maintenance costs for the rF9 are significant?
3. What if payload capacity has to be significantly reduced to accommodate rF9’s reusability elements?
4. What if near term launch demand is not high enough to fly as often as they need?

Even with the identified risks, this analysis would indicate:

• Yes, rF9 could compete against suborbital companies for suborbital market share (especially if SpaceX sells the Grasshoppers to entrepreneur operators)
• Yes, rF9 could compete against suborbital companies for orbital market share through extraordinarily low prices

So how can XCOR and Masten compete?  

I continue to be bullish regarding the utility of Nanosat-class launch vehicles.  When suborbital companies start offering orbital services (a second generation service), their initial orbital offerings would probably be within this Nanosat class - broadly speaking, payload space significantly under 100kg.  Is there still a market for suborbital companies to offer this type of orbital service?  Even if SpaceX may be able to now match (or beat) them on price?  

Yes.  Here is why:

Sometimes smaller is better.  The smaller vehicles these suborbital companies will eventually offer on orbit should:

• Be easier to "fly full"– to get the $130/KG price on an rF9, you have to wait for the manifest to fill.  Not so with a smaller vehicle.  XCOR was talking about a payload of 12-20KG initially.
• Be easier (and cost less) to maintain.
• Be launched with less integration or preparation – this advantage is the BIG one.  XCOR talks about multiple flights on the same day, taking off and landing from existing airports.  Even if the rF9 could launch that often, it will be some time before regulations allow SpaceX to fly that often - especially if they are still flying from the Cape or Vandenberg where ops tempo is measured in "launches per month" not "launches per day".

Nanosat launchers are the future, but only if their ops tempo is fast enough to justify paying a premium for preferential launch windows.  

This advantage of the small won’t last forever.  SpaceX will keep improving its initial RLV offerings.  Spaceport operations will grow to allow for more airline-like ops tempos.  So Nanosat launch operators (today’s suborbital companies) will have to keep improving too.

But there is a market for Nanosats and it hinges now on ops tempo.  There is hope.

The bigger worry…

…is in the near term.  I mentioned earlier, I doubt SpaceX will pursue commercializing their Grasshopper suborbital vehicle.  But they may be open to selling this suborbital vehicle for others to operate.  Such a suborbital operator flying the Grasshopper would have tremendous suborbital market advantages and could be a major competitor to those suborbital companies focusing on suborbital research (Masten, Armadillo, etc.).

Suborbital companies should be worried, but not panicking.  If the reusable Falcon 9 hastens the development of viable Nanosat launchers, the industry will be doubly blessed – low launch costs from the rF9 and high ops tempo from Nanosat launchers.

Here is the interactive spreadsheet so you can build your own rF9 assumptions.

Does your Mom Understand your Business Plan?

Does your Mom Understand your Business Plan?

Sepatuads.com   Agustus 16, 2011   Comment  

Several months ago Jonathan Goff, CEO at Altius Space Machines, called me.  ASM was preparing for a business plan “sprint” to compete in the 2011 Heinlein Business Plan competition in Silicon Valley (hosted by the Space Frontier Foundation).  Could I help with the business stuff?

Jon had been pitching his new technology – “Sticky Boom” which is a really long tube with glue pads on the end of it.  Only the tube can be rolled in or out and the glue can be turned on or off via an electric current.  Altius knew Sticky Boom had space rendezvous and docking applications (think servicing satellite, grabbing lost wrenches during EVAs, etc.), but could we wrap a business around this cool technology?

Assisting on the Altius Business plan has been a big part of my life over the last few months which is my excuse for light blogging.  

I am pleased with the result (yes, we won the $25K grand prize).  Here is Jon Goff, Altius's CEO, pitching the plan (worth watching to get a better feel for what ASM is really trying to do as a company - about 6 minutes long).

Here are a few highlights the team at Altius and I kept discussing while developing this plan:

• Is there a problem people will pay you to solve?  If not, you do not have a market.


•  An attractive Market is even more valuable than an attractive technology.  New space technology is cool to us space nerds, but markets determine how valuable company technology really is.


• Your customer is the organization that pays you – not necessarily the group that uses your product.


• Once you have found a market, be cautious before competing head to head with incumbents (those competitors already selling to your market) – how do you take market share away at the edges without drawing an incumbent response – a disruptive strategy .


• Management team – do you have the right team?  This is so important.  If you get the market and management right (and maybe a little traction), investors know that even if the product or technology changes over time, the company will have a good chance at success.  There is no substitute for the right market and the right team.


• Money: how much do you need and how are you going to get it?  Banks probably won’t lend to you (at least not at first).  Investor money is an obvious choice but have you thought about govt contracting or strategic partnerships?


• Few investors understand NewSpace (if you find one that does, keep him/her happy!).  The industry is small and in its infancy.  It is not right to expect Tech and Biotech investors to immediately understand: ISS regulations, LEO vs GEO, terminator tethers, plane changes, lagrange points, etc.  The question becomes how to present your idea in terms/images VC’s will understand while still being concise?  I recommend pitching your deck to your spouse or your mom.  If your Mom doesn’t understand your plan, VC’s won’t take the time to understand it either.  Simplify.  Simplify.  Simplify.


• The “prize” in most public competitions is the publicity and connections made as a result of winning, not in a the few dollars at stake.  This is what the Google X-Prize teams are fighting over – the media rights!  To highlight the value of publicity, here are a few of the Altius Space Machines articles that have been written since winning the prize.  Ask yourself how long it would have taken to generate this media attention without the win?

List of articles:

1. Aviation Week


2. CNBC


3. The Space Review


4. Business News Daily


5. Plus the sites that published the press release or the many posts by NewSpace blogs (thanks guys).

Business plans are like going to College – professors push you to do what you probably could not discipline yourself to do on your own.  This is why we have all-nighters finishing 20-page papers and cramming for tests.  On your own, you would just go to bed.

Business plans are great forcing functions and entrepreneurs learn a lot through the process.  I am glad I got to be apart this journey.

Here was some great advise we tried to follow when preparing the slide deck for the competition:

Pitching Hacks Preview

View more documents from Venture Hacks

Business Case for a CubeSat-based Earth Imaging Constellation

Business Case for a CubeSat-based Earth Imaging Constellation

Sepatuads.com   Mei 31, 2011   Comment  

The use of Commercial Earth Imaging Satellites is growing. Individuals, corporations and governments are finding varied and unique applications for images of our planet.

Futron estimates the market for commercial earth imaging topped $1B last year (2010).


Uses of Earth Imaging:

• Disaster Relief – think of all of the satellite images you saw after the Japan Earthquake (including the nuclear reactors)
• Disaster avoidance - George Clooney (among others) paying to patrol boarder of north and south Sudan using Earth imaging satellites.
• Helped with hunting down Osama bin Laden (but were any these images from commercial satellites?)
• Food Commodities tracking – allowing traders to ask and answer questions like, “how do the wheat crops in Kansas look after last night’s hail storm?”
• Remote Infrastructure observation – the oil industry uses it to keep track of their assets in remote locations
• Even the US Government is turning to Commercial providers. Last year, the U.S. National Geospatial-Intelligence Agency (NGA) awarded separate 10-year, $3.5 Billion contracts to image providers DigitalGlobe and GeoEye (these contracts are now under review).

The Commercial earth observation markets:

1. Market #1: High-Resolution images (1.5 meters per pixel). But the cost of each satellite means providers have a limited number of satellites (usually 1-2) on orbit.
2. Market #2: Med-Resolution images (5-7 meters per pixel) – lower quality images, but providers tend to have more satellites in orbit and may offer more spectral bands to choose from for each image and offer more frequent photo opportunities due to the higher number of satellites within the constellation.

In a recent Nov 2010 paper, “6U CubeSat design for Earth observation with 6.5m GSD, five spectral bands and 14Mbps downlink,” author, Dr. Steven Tsitas outlines how a constellation of 6U CubeSats could serve Market #2 (frequent med-res images) competitively. (Sorry, I think you will have to buy the paper. If a reader finds a free version of the paper online, let me know and I will change the link). I hope to post an interview with Steven Tsitas soon.

But why even consider a CubeSat at all for such a mission? Here are just a few of the advantageous of using CubeSats:

• High amount of innovation in the field – from NASA, universities, and private industry
• Low ITAR restrictions (CubeSat programs are thriving in many nations)
• Low mass of each satellite
• Reduced launch cost per satellite
• Reduced cost to replace/upgrade constellation as satellites age, breakdown, or new technology becomes available

Rapid Eye, a German company, is the current leader serving Market #2. Below I will provide some details about Rapid Eye and how a CubeSat constellation might be able to compete with Rapid Eye.  First, a little education about Rapid Eye.

Rapid Eye Details:

• Five identical sun-synchronous Earth observation satellites
• Five spectral bands
• Launched in August 2008
• Satellites built by Surrey UK
• 650KM circular orbit
• Captures 4mil km squared of earth’s surface every day
• Once an order is placed for an image, can take a photo of any location on earth (between 75 degrees N and 75 degrees S) within 24 hours.
• Offers not only images, but offers services for the analysis of images – especially good at providing comparative analysis of images taken over a period of time

Rapid Eye, the Numbers:

• Customer price for images: $1.33 per square KM (must purchase 5,000 KM at a time (at current Euro conversation rates that is equal to $6650 per very large image)
• Satellite Constellation construction: $35M 
• Expected 2009 Revenue: $29.5M (have not confirmed this number)
• Total Capital needed to break even: $224M

Assumptions about Rapid Eye’s business:

• Assumed Rapid Eye is now profitable
• Assumed the cost of the single Dnepr launch necessary to lift the five Rapid Eye sats: $15M
• Assumed a $50M infrastructure Hardware purchase (ground station and other startup infrastructure)
• Assumed a five year startup at a cost of ~$25M per year in operating (non-HW, non-infrastructure costs)

So what if we could launch a constellation of ten cubesats that could perform a very similar function as Rapid Eye’s current constellation of five small sats? Are their savings if we could? For this post, I will use Steven Tsitas’s conclusions that, yes, such a cubesat constellation would be technically possible.

I will build my business case, not from a technology discussion, but by attempting to answer the business question of - how much could an business save by using Cubesats instead of small sats?

CubeSat Venture Assumptions:

• Cost per 6U CubeSat: $400,000
• Number of CubeSats in constellation: 10
• 6U CubeSat mass: 8 lbs each
• Falcon 1 launch: $9.8M
• SpaceX willing to prorate launch cost based on mass

If we assume the CubeSat venture would operate using the same Hardware and Operating Costs as the Rapid Eye venture, then the CubeSat savings are limited to the cost of the satellites themselves and the cost to launch them into orbit:

• Rapid Eye’s satellite and launch costs: 23% of breakeven costs
• CubeSat venture’s satellite and launch costs: 3% of breakeven costs

This would mean a CubeSat venture competing with Rapid Eye could theoretically lower image prices by twenty percentage points over competitors (all other things being equal). This by itself may close the business case for some CubeSat constellation investors.

But perhaps competing toe-to-toe with Rapid Eye is the wrong business model. As a general rule, it is hard to out Wal-Mart, Wal-Mart. What-if the CubeSat earth imaging venture could, instead, become the low-price, no frills, earth imaging provider?

In the earlier example, the CubeSat advantage was limited to lower satellite costs and cheaper rides to orbit on SpaceX launch vehicles. But what-if the venture could also save money on ground costs: Hardware/ground stations and operating expenses?

CubeSats, the low-cost leader in earth imaging Assumptions:

• Continue with assumptions regarding low satellite costs
• Continue with assumptions regarding low launch costs
• Lower ground Hardware and Infrastructure costs from $50M to $25M
• Lower operating costs from $25M to $10M per year.

Here is a quick cost comparison between the options:


















Next Questions (beyond the scope of this post):

• Market price elasticity: How price sensitive is the earth imaging market? How would cutting Rapid Eye’s price by 20-60% affect demand for a CubeSat-based image product?
• What realistic cost reduction methods are possible in ground hardware and personnel?
• Admittedly, my Rapid Eye information was limited to publicly available data, a more serious effort should be conducted to understand the competitor’s cost structures and current profit forecasts
• What are the cost implications from using a CubeSat-based system? Where are system costs reduced? Where are system costs increased?
• Admittedly, images from a CubeSat are of a lower quality than the best in orbit (5-7 meters per pixel compared to 1.5 meters per pixel from the industry leaders of market #1).  How sensitive is the market to image quality?  And what can be done to increase the quality of an image taken on a 6U CubeSat?

Altius Space Machines: Sticky Boom Markets

Altius Space Machines: Sticky Boom Markets

Sepatuads.com   Mei 17, 2011   Comment  

Jon, Mike, and Forrest of Altius Space Machines stopped by my house after their successful Zero-G flight.  I only got a few hours with them, but I did get to see (and touch) their current "Sticky Boom" prototype.  Below is my pencast (from LiveScribe) based on conversations with Altius founder, Jon Goff. 

In addition to a summary of the technology, the pencast discusses three potential Sticky Boom markets:

1. Cleaning up space debris
2. Enhancing science missions
3. Enabling micro-cargo delivery to space stations

Sticky Boom - Altius Space Machines
brought to you by Livescribe

And for those that missed it, here is ASM's highlights from Saturday's Zero-G flight.