Off-Nominal - 185 - A Little Bit Like Mexico (with Matthew Weinzierl and Brendan Rosseau)

Episode Date: February 21, 2025

Jake and Anthony are joined by Matthew Weinzierl and Brendan Rosseau to talk about their new book, Space to Grow: Unlocking the Final Economic Frontier. Supply! Demand! Subsidies! Probably dunking on the commercial space station market!TopicsOff-Nominal - YouTubeEpisode 185 - A Little Bit Like Mexico (with Matthew Weinzierl and Brendan Rosseau) - YouTubeSpace to Grow: Unlocking the Final Economic Frontier: Weinzierl, Matthew, Rosseau, Brendan: 9781647827168: Amazon.com: BooksEconomics of Space | Economics of SpaceQuirks & CompulsionsFollow Off-NominalSubscribe to the show! - Off-NominalSupport the show, join the DiscordOff-Nominal (@offnom) / TwitterOff-Nominal (@[e-mail]) - Spacey SpaceFollow JakeWeMartians Podcast - Follow Humanity's Journey to MarsWeMartians Podcast (@We_Martians) | TwitterJake Robins (@JakeOnOrbit) | TwitterJake Robins (@[e-mail]) - Spacey SpaceFollow AnthonyMain Engine Cut OffMain Engine Cut Off (@WeHaveMECO) | TwitterMain Engine Cut Off (@[e-mail]) - Spacey SpaceAnthony Colangelo (@acolangelo) | TwitterAnthony Colangelo (@[e-mail]) - jawns.club 🐘Off-Nominal MerchandiseOff-Nominal Logo TeeWeMartians Shop | MECO Shop

DLS and go for main engine, start. Hello, on an extremely quiet Thursday, Jake. There's absolutely no space news going on. There is not an asteroid headed our way that may or may not hit Earth. There is not a industry veteran, epic leader of the industry tweeting his hot takes and specifically attacking people that we know are in our circles because they are shockingly under a different name in our Discord. So what the hell is going on, Jake?

Look, I don't know. I think you're actually wrong. There's actually some really big space news this week. It's actually a really important week. I don't know if you saw this, but they have completed stacking of the SLS SRBs. They're fully together now. So drop everything else that you're doing this week. And the pressure vessel of Halo is on its way to the United States of America.

It means we get to start that one year timer before the SLS is breaking paperwork rules again. Yeah. Paperwork rules are highly relevant. today's United States of America, Jake. So, you're actually actually playing a pretty prominent role so far. Huge. Not at all what we're here to talk about, though, Jake. Huge.

Yeah. We've got the old four-up screen here. Two people who have listened reportedly to every episode of this show without having looked at your face. So would you like to introduce them? Yeah, we've got Matthew and Brendan here today. And they've got a book to share with. space to grow, which is, it's right up my alley.

It's like, it's like, what if instead of talking about space with feelings, we looked at it with graphs and numbers, which is like, yeah. I like graphs and numbers. But there, yeah, I don't know. Maybe I'll just let you guys introduce yourselves and tell us what it's like. Real quick, Jake, you very cleverly got out of the last name pronunciation there. And I don't think we can let you off that easy because I watched the end of last week's episode and it was absolute gold.

So do you want to try those names? Okay, well, I'll start with the easy one. Brendan Rousseau. Is that pretty straight? Nailed it. Okay, yeah. Yeah. That's fun.

Yeah. Rousseau? Yeah, we'll get a back. You spin on your mic more last week. Yeah. It's got to come right from the throat. That's how you get your best Quebec accent. It comes right from here.

So, but yeah, I don't know, Matthew. I don't know if I'm going to do that one. Wineserl. That's my best. my gosh, right on the nose. I thought that was an easy one. Yeah. Effortless.

Okay. I thought that was easy one until I remembered, as I said yesterday on Miko, because you guys are doing the full circuit of the off nominal cinematic universe that Rousseau was the character in Lost, who was like the lady that lived on the island or something. I forget the details. You watched. Neither of these two watched Lost, Jake, because they didn't get my reference. Did you watch Lost?

No. You didn't watch Lost either. What the hell? Three strikes, man. Weird niche of the Internet. do I exist in that love lost. Yeah, yeah, yeah. That's when I got into podcasting,

because that was like, oh, whatever, six, seven, six? I feel like five, I don't know. It was like the first podcast felt like they were mostly like Adam Curry and then all of the lost fans is like the initial podcast wave. All right. Am I hearing that you did a lost podcast? Is there a long lost Anthony Colangelo lost?

No, there's probably one about the Philadelphia Union when that soccer team started that I would did. And there's like some tech ones in the past. There's some initial, there's a great one that was called the quirks and compulsions, where me and two of my then co-workers at a web agency named Happycock to come up on the show two times in a row. We did this show about things that we were like obsessive about in weird ways. And it ended after like four episodes because we were doing it monthly in the office. But it was fantastic. It remains great. And I stand by whatever takes I've forgotten about in that show about grocery shopping and sandwiches. Oh, wow.

Okay. Anyway, what are you drinking down there, Jake? You got a storm going on, your Starlink's in and out. Maybe it's being shut off by Elon Musk or something. I don't know. Elon heard that I was upset with him and he's throttling all my bits. No, so I, okay, well, before the storm today, it was actually starting to get really nice and hot out.

And so I made like a nice tropical, like, you know, my sort of, like, you know, my sort of like standard juice and grenadine and rum kind of combo to kick off the hot season. I'm going to open the pool like next week. It's happening. But yeah, and then I just got cloud and rain. So it's kind of put a downer on it. What temperature does that have to be before you open the pool? It needs to stay like over 25, 26 Celsius overnight.

How many is that in our? That's like, I don't know. How many Woppers is that? Is that like above Wopper temperature? Size of dishwasher, I think. What is that? Like, someone helped me up in the chat. It's like 75, 80, something like that, I think before you have to.

Double and add 30. 75. Yeah. Okay, there you go. 77. Jeez. Yeah. Week.

Week, week, week, week, week. Well, Brendan, you seemed like you were, you had a day so far because of Twitter. Did you bring anything to drink down there? I brought my National Air and Space Museum Rocket Fuel mug with my Curib K Cup coffee.

I think it's like the fourth or fifth cup today, so this might get a little haywire. Feel free to mute me if I just start going off on a tangent here. I can just do this, take you out of it. There we go. There we go.

But yeah, Jokeside, great to be here. Thanks so much for the opportunity, guys. Matt, you got a chalkboard? You can go like totally crazy, you know, physicist on us. Is there a drinks associated with that kind of vibe? Well, I have office hours right after this, so I figured I should go a little light. So I have, this is my own drink.

I don't know if I want to start like a whole thing here. So if it goes viral, you're welcome. It's iced coffee with Coke Zero combined. Yeah, I know. Yeah. So I'll just be pouring that as we go along. That might be like the most Mexican thing that anyone's ever done in the show. Can't tell you how many times I get that, Jake.

What's the ratio? What is the ratio involved here? I don't know. I haven't optimized it actually. But it depends on your mood, like how sweet, how bitter, I guess. Wow. I'm very curious to see what kind of feedback we get about that particular drink. I have a friend here and she made an order online like a, like a,

DoorDash kind of thing to get some groceries and she ordered like I think it was like a small like it was like a doctor pepper and like some tonic water and the guy showed up with three bottles of Coke like that's that's just Mexico you know it's just like Coke just runs the show if you want to have a convenience store here the way you make the outside look to indicate to other people that it is in fact a convenience store is you put a giant Coca-Cola lo-lo-law like that's just it's like the it's the official sponsor of Mexico basically don't let that make too much noise It's going to get pricey if you keep that up. All right, well, I've got a cloudy and cumbersome, which feels like more of a thing that we should talk about if we're talking about regulations in space, but we are talking about economics.

So there we go. Levant. Cloudy and cumbersome. Levant brewing. Where's that from? I feel like I've drank one of these. Westchester and Philadelphia. They say and both things.

Very close together. It's like 10 minutes apart. I don't know why they needed to specify both of those locations, but there you have it. Love it. It's a great description of the weather of the weather today in D.C. I live in D.C., and it's a great description of what the hell is going on outside.

It's cloudy and a little bit cumbersome. As is the environment of the space industry at the moment. It's a little bit of in arms, but we have an age-old thing to talk about, which is economics and space. We did a little bit of part one on Miko. We need to catch Jacob a little bit

because he wasn't there for that show. So we need a little rundown on the idea behind the book. I don't know if Matt, you want to kick that off? Yeah, sure. So the basic idea, I'm an economist. I'm a professor at Harvard Business School. My actual, when I got started in economics, I was interested in economic policy. What are we trying to do with it?

What are we trying to do with our societies? And I was teaching a course at this at HBS. And about 10 years ago, I got interested in public-private partnership. ships. And this is when SpaceX starts landing rockets on barges in the ocean. And I, you know, as a person interested in space, but not really paying attention, I thought, wait a minute, what's going on, like as an economist to the sector? And I started writing about it and reading about it and just got totally hooked on the fact that we were bringing the market into space in a way that it hadn't been before. And so we wrote this book after doing lots of thinking

and writing and eventually teaching about it at HBS to try to help people understand what's happening in space as an economist would see it. That's the basic gist of what we're trying to do. All right. And that sounds super dry. So we should also say that in addition to supply and demand diagrams, which light up the screen, we do it through stories. The whole idea is like, let's pick some really amazing companies, trying hard things, sometimes failing, sometimes succeeding, some great people, some great agencies, and try to teach or write about. and talk about some of these ideas and economics as it relate to space through these stories.

So that each chapter is basically that. The charts are good though. I want to be clear about that. Yeah, it's Jake's love language. I got as far as like macroeconomics one-on-one in college. But like the charts were just like, it's a, this took me back like the whole like, you know, the Xs of the supply and the demand.

And then like the subsidies and stuff shifting the lines. I was like, this is exactly, this is literally my, on 101 class. Yeah. You know what? It's funny because, I mean, look, it's, I don't know if that reduces our audience or increases. There it is.

Thanks, Anthony. That's perfect. It looks like the logo of Twitter now, by the way. Thanks for that. See that every time you look at your book. We have, I have to say, like, try to take how we've been understanding the sector and use these like basic tools of economics to just say you know they're basic tools because they're powerful tools like that's the thing i mean i unlike most people who take econ and maybe don't fall in love

with it i totally fell in love with the economics from the beginning because of exactly that's like it's a very simple idea and yet it lets you totally unpack i think what's going on in some interesting ways that maybe other people uh can also benefit from that's our that's our main hope one question for brendan too as someone who's gone out and done a couple different things from different sides the industry, is that the lens that this book has on the industry, does that come up as overtly when you actually are working in the industry? Or is this stuff that kind of emerges over time as people try different strategies? Like, I just wonder how much this is being able to apply this after chaos has ensued in the world. Or if this is like a, you know, when you sit down at work,

you're at Blue Origin now, like day to day, you know, these kind of calculations come up in in those discussions. Yeah, that's a great question. So I'll go into a little bit of like the origin story here. So Matt and I first connected when I was an undergrad doing research on the economics of the industry. And back then Matt was kind of one of the only guys doing it. So it was interesting to have no options.

It was like the only option. He was looking around. I was like, all right, fine. What was really interesting is someone like just starting out their career was starting with this like kind of big picture economic framing of these questions and then jumping in to different parts of the industry and working on very like tactical concrete problems with this like economic framework in the back of my head. So it's been a really interesting like split screen for me where a lot of my

understanding of like the what's happened in the industry, what's changing, what's enduring and what is maybe more transient has been grounded in some of this economic. thinking. So I find that like it the tools of economics help me frame the questions that are in front of us in a really useful way. And it's been super helpful in doing the research that we were doing at HVS and turning that into a course and then turning that curriculum into a book. It's been great to see how tools like supply and demand are great at like clarifying. some of these things. So the chart you were pointed earlier is the shift out in supply, we call it like the supply for space activities. It's just kind of a grab-all for like the SpaceX effect, essentially, you know, lower costs, more activities can happen at the same price point. And it's been so gratifying for us having like work with students and work with industry leaders and hearing people kind of adopt that framing. It's like, oh, well, like the supply curve has shifted out. And now, Like there's a potential for a new equilibrium and that raises new opportunities, but also like a whole host of challenges too.

So it's been it's been super useful and really gratifying for me to see that like there's a lot of applicability of these ideas in the day to day. Yeah. It's like remarkable. I'm going to go back to my stupid college course over and over in this this episode. So buckle up. But it's remarkable, like how you kind of mention this, how clarifying some of these like really basic economic tools can be when trying to understand something, right? Like, you know, just taking the very, like the first thing you ever learn about economics is basically just supply and demand, right? And what they, what they do.

And just take, take those two things and look at like almost any problem in the space industry. And you can like, you can learn so much about it. And it's, it's so necessary to like step back and and think about. about that constantly because like it's so easy to get trapped in hype right you know like one thing I think about a lot is like the the small launch market right which is like it's a very good example of kind of what this this thing is there's all this hype about small rockets and it's all these ones popped up oh they're all going to be amazing and all these great business cases with hockey stick charts on their PowerPoint decks and and then you know a few years go by and they've all

like kind of crumbled a little bit we've got like one hanging on like as like the and they've had to diversify like a lot in order to stay solvent, right? And so it's like, oh, well, yeah, obviously because ride share is eating their lunch and it's like, okay, well, it's just like, you know, just taking these simple concepts of economics that are like very obvious when you explain them in isolation, but then kind of put them over actual things that are happening in the industry. It's like, oh, yeah. Okay. So that's like something I kind of like, I think about a lot when I look at these kind of concepts. Yeah, I think one of the reasons, sorry, go ahead, Matt. No, go ahead, Brad. It's cool.

I was going to say, I think one of the reasons why we wanted to put this, like, specifically into a book and share that with, like, a wider audience is because I think that everyone who, like, works in space or thinks about space, we all have this feeling that, like, at some level, economics is going to play an important part of, like, what we're trying to do here, like, creating opportunities. I don't know how many times we've all heard that, like, you know, oh, like, the economics of the industry or, like, the space economy or something like that. And it was really great for me, I feel very lucky to, like, have had,

the opportunity to work with Matt and step back and say, okay, well, let's go back to basics and use classical economics to talk through some of these issues. So it's just been awesome for me, and I hope that readers will have a similar experience when they read the book. One of the things we often say is, you know, in the book, we talk about space just being a place, right? And you probably, most of your listeners have probably heard that before too, right? It's a little bit like Mexico, right? I mean, space is just a place. place where we're going to do stuff. And governments are going to matter and companies and nonprofits and everybody.

Exactly. Coca-Cola for sure. And, you know, econ, like the laws of economics don't have gravity like in the equation. I mean, actually there is a field of economics that uses gravity, but in a different way. And so like, you know, you can apply the same thinking up there as we would down here. And in some ways, that's like the core message of the book for people who aren't, who don't, watch podcasts like this too, right? It's like you can get involved. Like almost no matter what you do as the space economy or activity in space grows, you can get involved and play a role.

Yeah. Turns out the economy is people. Exactly. I, oh my gosh, I'm so glad you said that, Jake. I always say that to people. Like, what is an economy? It's just people trading with each other. Like, that's all it really is deep down. Elon's favorite target on Twitter is in the chat right now with a good comment that prompts us. Ken Kurtland said a lot of the problems arose because the space industry somehow convinced itself it was the only industry that worked outside of the normal rules of economics, which is true, and I actually want to pick your brain about that

because there's ways that the space industry was creating, like building the track as the train was heading down the tracks, right? Like they're inventing a lot of new stuff, whereas on Earth, right, like people were eating bananas before there was a market, and people were like doing things on earth before markets then consume them because I want to eat bananas and I don't live where bananas grow. But we understood how people enjoy bananas. And so there wasn't, you didn't have to like create the existence of it first. So, you know, this touched a little on the government relation to like commercial space stations and areas that markets don't exist, but they want them to.

But are there like starter rules that that apply in the early years of creating a thing out of out of nothing and then classical economics kicks in? Or do you feel like that's not really true at all? And it's always something that has already existed before. You're just putting it in a new place. Like you're talking about like space just being a place, it's not as special. There isn't anything new that we're creating even if it's rocket engines and not air breathing plane engines. No, that's a deep question, I think. I mean, because one thing that comes to mind, people talk about, don't laugh, Jake. It's a deep question. Anthony can ask deep questions. I feel like I'm in college again. Like, what is, man?

Like, what is it? I mean, it's always been there, you know? Some people ask, you know, is this like when we built the railroads sort of to the west, right? Like, is that what's happening in space? And at some level, yeah, like, we're building infrastructure into a frontier and, like, that's got a lot of potential value. On the other hand, there's, like, big differences. There aren't other people at the end of the. railroad, like, who already have an economy.

They were connecting to an existing economy. And so... And, like, the place worked the same on the other end of the railroad, then the place that you're heading to in space. And you could breathe there. There was air. There was air and a little bit of water. It wasn't a lot of water, but it isn't enough water for that.

Yeah. And, you know, so, I mean, I think there is a bit of... It is different in that sense. And I think the laws of economics still apply. But for sure, there is always going to be this. this aspect of like we're creating something anew in a way that we haven't really ever done at some level or at least for so long on earth that it's hard to even use as an analogy. And so I think that does lend itself a little bit to the comment from the person in the chat.

Like it's easy then to get a little bit fuzzy about what you're actually doing. Like are you creating a business model? Are you doing something for the public good? Who's doing what? And the one thing that we've noticed that I think is really important and transcends all that is almost no matter what you're doing, whether you're doing national security or science, or just pure exploration, you can still use market forces to do it better. Like that's one of the great things we've learned over the last 25 years.

You can save a lot of money by getting competition involved and the profit motive and the right incentives. And so that's a big thing you can do no matter what. Yeah. Yeah. I mean, one thing that does kind of strike me as different about it is how capital intensive it is, right? And we sort of over the course of human history, the sort of like capital intensiveness,

sort of seems to grow, you know, over time, right? We, as we progress as a species, the projects get bigger and more expensive and have greater reach and, you know, and so if I think about something that's similar, like the airline industry and how how much capital that took at the beginning and how involved governments had to be. And, you know, but we've now got into a place where it's, there are significant, you know, market forces playing most of the role in that, right? Even though the government are still pretty heavily involved. them. So that's kind of one thing I think about with space is like the level of capital investment

is still a significant sort of differentiator and trying to analyze this and how much, you know, non-market force help it needs to get off the ground, right? Yeah, I think one of the like key themes in the book that Matt was talking about is really trying to clarify the role of governments and the role of the private sector and both of them have their strengths. And as you look at what is happening, today in space and what's possible, I think what we see is there is always going to be a really, really important role for the public sector, but that's probably going to change over time, what the public sector can and should be doing and what the private sector can do and the kind of exploration and experimentation that, it could, a business case exploration, not like actual

out there exploration. And I think one of the exciting things about like the present moment is that with all the change that's going on right now, we maybe have an opportunity to kind of come back to like a first principles approach of like, what should the public aspects of the, in this case, America's space enterprise, what are the things that it can and should be prioritizing and how should it go about accomplishing those goals?

And with the private sector where it is today, both its strengths and its limitations, what are the things that it should be taken the helm on? And how do we best, like unleash it to like further the goals that we all have as a society. So I think it's really exciting, but like these roles are going to change over time. The strengths and weaknesses don't change over time, but the roles do. I think we see that. NASA's history. We see that today and we'll keep seeing in the future. I was going to say that's probably a good exercise to do like on a

pretty regular basis, like reevaluate. Who's doing what and why? Right. Yeah. Just whether you fire half of everybody that's doing it to re-evaluate, or if you reevaluate first and then fire half of everybody. That's the stipulation people have. In Class Today, we just had a really awesome discussion about Artemis, and it ended up in exactly this place, which is like, you know, what parts, Artemis is this funny mix of things that seem like very old model

and things that seem more new model. And like maybe that's NASA and everyone else kind of trying to figure out how this new model extends beyond Leo, right? Like, what parts work, what parts don't? How do we figure that out? And so, yeah. One aspect there, though, is that there's this, like, even run this back to like commercial cargo and crew clips,

Artemis to some extent with human landing, commercial space stations definitely, where NASA is, I don't know if it's a first priority of these programs, but, like, very high up on their marketing list is that they want to create a market. market out of these things. And I feel like they're over-fixated on that in that them being interested in it and wanting to carry these tasks out is what would generate the market as a side effect, whereas they've sometimes put that first. Like, we are doing this program to develop a market.

Has that ever been a thing that's worked? Or like, I mean, even in the example of commercial cargo, right, like, they didn't intend, they didn't state from day one. We want to create the greatest commercial launch provider that has ever existed in the strongest force that has ever hit the industry. got that but they also got a failed company and a company that has shown no interest in like developing their commercial market side of themselves any further than Cygnus and my least favorite launch vehicle that the U.S. has ever flown. So it wasn't like a great batting average on that front. So when they put, I just am kind of flummoxed at why that is still 10 years on, almost 15 years on, why that is still like our priority is to develop a market. You should be

cool with it if it happens. But can a government even say, say, like take commercial space stations as an example and use that as your test case, since that's a little bit theoretical. Can you just like decide that a market should exist and put it into place by sheer force of will? It doesn't seem plausible to me. I don't think you can. Yeah. Oh, go ahead, Brendan. I was going to say, that's for us, like one of the really, really important questions. If you're talking about COTS and like the revolution in launch, one of the key things that I think sometimes we forget about, the reason why that worked is because companies like SpaceX could put together a business plan saying, hey, we are going,

there is a market already here. The launch market is already when they were starting off several billion dollars a year. And the pitch that they put together was we're going to do these, provide these services much cheaper. And there's ready access to through the CODS program and then CRS. There's access to capital to develop these and then actually have like a recurring revenue business model. And then of course, there's the whole commercial sector that they're commercial, satellites that they were able to tap into. Like the, it makes sense that this was an area in which introducing market forces and

allowing the private sector to try to provide that service, um, works. There was, there was a market there, um, already. Uh, I'm not sure. There's a difference though, I feel like that there's, there's like creating a market versus just having two competitors, right? Like Amazon, take Amazon as an example. When they build out a warehouse, they try to have two suppliers for everything in their warehouse so that they can negotiate better and they have redundancy.

they aren't creating a market for scanners that work exactly like they want the Amazon warehouse to work. They just have done a good job having competition. So is there a difference? When does competition and like what's the division between competition and a market? Those feel different to me. Yeah. Companies like SpaceX, it's just companies, it's not even companies like SpaceX. No one that has ever entered a NASA contract in this way has done a commercial mission. Name me one company that has done a commercial mission that had a contract with NASA that was named commercial, it's just SpaceX. North of Grumman has never flown a commercial mission.

Boeing has never flown a commercial mission for the thing that they were working with NASA on. None of the clips companies yet have flown a commercial mission. Nothing labeled commercial has done anything commercial but SpaceX. Well, and just to, I mean, to ask the, go back to the original question, like, can you create a market? I think, I mean, even look at SpaceX, like Starlink was not the idea from the beginning, right?

Like, the idea was, like, let's resupply the station cheaper, which is awesome. And then SpaceX starts to think about what is the business model here and then come up with something that, you know, I mean, maybe we could have foreseen it, but not probably at the scale it's coming in at. And that's actually part of the beauty of the market, to be honest, part of the beauty of bringing private companies into the game and saying, you know, not so much, I think you have an interesting point. Like saying we're going to create a market is probably a way too ambitious of a goal. If it's more, we're going to be one customer among many, which like NASA says all the time, right? We hope you have lots of other customers. And then you get the companies starting to actually think about that as their goal, not just serving NASA. Stuff comes along. I mean, I think there's a, you mentioned stations that in the, in the book we talk a little bit about like the wide range of views on stations in the sector, right? And like I'm on the more optimistic end of the spectrum. I think Brendan's more on the pessimistic end of the spectrum. And that's a healthy debate to have.

And it comes down very much to this. Like if you bring the cost down, do markets come about in ways that you can't foresee? Or like, is that just wishful thinking? Yeah. Yeah, and I think the name of the game these days is like trying to create like the systems and programs so that there's fertile ground so that the private sector can experiment. They have the freedom to like get started, try things out, like kind of peek through the door, be like, is there a market here? Is there valuable stuff to do? And then also one of the like beautiful things about bringing in the private sector is that they have the freedom to fail.

That's kind of part of the process. There aren't these pressures to keep doing the thing if it's not working. There's actually a lot of pressures that force in the other way. So that's one of the reasons I think I'm excited about what's going on now is because we're going to try out a whole lot of things. We're going to find out if some of these ideas are good, if some of these ideas are good right now or maybe a few years from now. That's excited to me. Yeah, it's definitely interesting because there's, I mean, to your point, point, Anthony, like, is creating a market a valid goal and have it even succeeded once?

Is it really interesting question? Because like the SpaceX, as we've always talked about, SpaceX is just like this crazy, crazy outlier. And like sometimes when you look at it and think about it deeply, you're just like, this was a wild sequence of luck and right people in the right time. You know, like even just thinking about the trajectory of like, you know, Falcon 1, which is like this scrappy upstart program to commercial cargo, which isn't really a market today. It's just straight up not, right? That was not successful as creating a market. That only because of that commercial cargo could we have commercial crew.

I would argue that maybe like, Dragon is like, passenger dragon, crew dragon is like kind of a market. There's been like a couple instances, but like that was probably not possible. Mostly the guy that's about to run NASA is the market. Yeah. But that was probably not possible. without the Falcon 9. Like, Falcon 9 is the actual, like, good thing, like, that came out of it, right? And that was not the intention of either commercial cargo or commercial crew.

They didn't care about the rocket. They wanted to get people and stuff up. Yeah. So, like, you know, they just also happen to kill Aryan 5 by way of doing it. Yeah. But, like, you know, if you asked up the question, like, would crew dragon be successful if Falcon 9 was, like, the same price as Atlas? And it's like, uh, I don't think so. I don't think it would have been, right?

Unless you actually are realistic about your success metrics, which is stop paying the Russians a bunch of money to fly astronauts, and they keep raising the price every couple years. That was the real thing, right? And I think that's my point is the over-reliance. It gets muddled because it's like fixed-price contracting, multiple competitors to buy fixed-price contracts or task orders from, and creating a market.

Those are three things that are stated as the goal. When I'm like, your job is not to worry about the market. Your job is to ask the industry what you want to achieve. and do that by way of fixed price contracts with competition. And then whatever happens from there is not your department. Like, that is not where your concern should be and be happy whatever comes on the back end of it. But they're fooling themselves. I'm with Brendan, that they're fooling themselves if they think that, like, I mean,

there's a bunch of people that want to go to commercial space station. And also, we want to buy space on it. It's like, that's not, we're not there. We're not there yet. Yeah. Yeah. I think you're tapping into, like, one of the really interesting things right now, which you see a lot of, like, what now?

NASA's goals are, whether it's on the moon or commercial space stations or going out of Mars. It's like we're creating an economy. We're going to build all these things. And it's really interesting to me where you kind of step back and you say, this is a very different NASA than like the one of the past. NASA as an agency is so interesting to me. And I know Casey Dreyer's talked about this a bunch where it's like, what is what should NASA's role be? What should the American space enterprises role be? Is it creating markets?

Is it doing human spaceflight and like maintaining that? human heartbeat space. I think if you look at NASA's founding documents, it's like there's this huge range of things that NASA could be. Yeah, yeah. It is, someone described it as like the not Earth agency. It's like everything on Earth, we have like this whole government apparatus that deals with everything on Earth in all in like amazing detail. Everything that's offers, it's like, hey, NASA, what do you got? It's like there's a ton that you could do. And, uh, Yeah, it's a tricky thing. I think over time we've seen some instances at which NASA's pivots have worked really well, surprisingly well.

Like you were talking about what was NASA's goal in the COTS program? Like were these other knock-on effects that happened? Were those part of the goal? I don't think NASA had like Starlink as one of its goals when it gave that first check to SpaceX with the CODS program. But like these things happen if you could bring the cost. down far enough. So it's super interesting. And I've heard you guys talk before about stations too, where, you know, the CLD money is fine, but like, are we serious about this? Right. Like, are we really going to go for this? And I think, you know, COTS was great. It was a sort of similar order

of magnitude of CLD. And then CRS comes in. And like, that's the serious money, right? And like, is that what's going to happen? And I, you know, I mean, when we talk to folks, outside of this little space circle about, you know, like in the Boston, we're in Boston or I'm in Boston, you talk to people in the biotech sector about how much they think about using space. And it's like crickets, right? Like nobody's talking about it. And I mean, obviously you can't predict it.

But if we really went big, I think it's a little hard to know actually what could happen. I thought pharmaceutical manufacturing or research was like a killer app. Well, to the space sector people, it's like the one thing you list, right? It's like, what could we make on the space station? Pharmaceuticals. Fibro optics. Right, yeah. Yeah, those have been the things on the list since like the 1970s.

Turns out. It's just been communications, though, since the 1960s. It's tough. One of the really interesting, like, comparisons for me, it's not an apples to apples comparison at all. But, like, if you look at what happened with semiconductors, like, their history in some ways starts from, like, a similar place as some space technologies where it was like this, I mean, they were literally used.

some of their first use of like a computer was for NASA missions. And then it very quickly pivoted to missiles essentially, like intercontinental ballistic missiles. That's hard after your fifth cup of coffee to spring those together. The word continent, yeah. Yeah, yeah. But it took so much public funding over decades and through different like channels of public funding

to get semiconductor technology down to a point where they were producing them at scale. They're producing them at low cost. And then you get this really interesting moment where it's like, oh, wait a minute, like now we can do the personal computer. And even then, the personal computer for a while, there was this productivity paradox where they were like, this seems like it should be super useful. But you look at the economic data and like it's not really making things all that productive. But like now, of course, who would look back in 2025 and say like, oh, like personal computers

in the internet haven't had an economic impact? No one would say that. it's been the most transformative, like, economic force in the past half century. Will space have, like, a similar trajectory? I have no idea. But I think that there's encouraging, like, precedent there that if you are able to keep bringing costs down enough and you're able to, like, bring in more and more private tech directors to just try out these things, you can have really amazing things pop out of it

that are sometimes super unexpected. So that's, I think, something that gives Matt and I a lot of hope. How, like, you know, from an economic history standpoint, is that the normal way to go about it? Like, just sort of, like, create a breeding ground and then light some sparks and see what happens? Or, like, is the more, the more, like, intentional, you know, trying to get a type of industry, like, you know,

You see a burgeoning industry and then like, you know, a government actor or something going after it being like, we're going to take this idea and run it to the end to make sure it happens. Like, what's what's the more normal way for that kind of thing to happen? I mean, this is like a really big question in economics. Explain your entire field to me in two minutes. No, I mean, no, it's a great question. I mean, and actually I'm like super tempted to start drawing these supplying demand diagrams because exactly the conversation we just had is like, you know, know, how do companies think about what they're doing? Is it on the cost side, the benefit side?

Anyways, to your question, I mean, some folks matter for this idea of like industrial policy, right? Like, should governments, like, lead the development of an economy in certain directions? And that's, like, super hot these days because for the longest time, people thought that was a really bad idea. Like, governments can't pick winners. It seems like a good way to waste a lot of money. And then, on the other hand, with especially the increasing rivalry with the U.S. and China and the race, to AI and other sectors, people feel like, well, wait a minute, we better be like, for sure pushing insight into these industries. And I mean, I guess my understanding or my reading anyways

of the history and the theory and how economists think about it at least is that when you're catching up to the frontier, like, yes, concerted action to make something happen fast can like work pretty well. Like the Soviet Union did that in the 50s and the 60s. Japan did that in the 50s and 60s. A lot of the East Asian Tigers, et cetera. Like you can do it over and over again, China, extra. When you're at the frontier, it's a lot harder to know exactly where you should head as a government or as any individual. And so then it's usually better to let the market figure it out. Of course, with some support. It's not that you can't subsidize some of that activity if you think there's benefits to people outside the companies. And, you know, Brendan and I have often said to

folks that, and I think we say it in the book, that we think one of the greatest advantages of like the U.S. I don't know why I did U.S. in quotes. The U.S. is an actual thing. One of the best advantages is one of the big advantages of the U.S. It's only named it soon. That's how the rest of the world talked about you. So it's that we all get it. United. It's the air quotes around United.

America. One of the big advantages is this market economy that's built for innovation. I mean, the VC sector and everything else that's like really good at trying to generate these ideas. And, you know, when you look at the Chinese space sector, I think you see signs of them trying to do this as well. I mean, we can't see as well into the Chinese sector, but realizing they're going to need market forces if they want to compete on the frontier. Yeah. Yeah, it's interesting because you can almost like, if you want to get,

come down from the clouds of our discussion and talk a little more like hands on and what's actually happening, right? Like that gives you kind of insights into think about different programs. So CLD, like you said, is like very specifically trying to get a commercial human spaceflight in Leo market running versus like something like I guess eclipse is a little more on the other side of the spectrum right where it's very much it's like we're just buying rides the moon and we're going to see what happens from that maybe that means we'll get some cool lander tech maybe it means like maybe they get another falcon nine out of it for all we know like maybe you know some rocket emerges or an asteroid mining company or an asteroid mining company there's all sorts of like yeah

the customers that attach themselves to these rides could sparks you know that's a very much more open-ended, like, you know, put around and find out kind of a situation, right? Well, when Matt from Astroforger's on the show talking about that, that's the moment that I realized that that is the Falcon 9 of that program, right? Like, oh, the thing they didn't think about is actually the thing. But it's precarious because if Clips falls apart, per the description we received,

if Clips were no more, Astroforge has no business model. Like, they are, that is a, subsidy not called a subsidy is that the existence of this means that they've got like free kilograms heading out that direction. And if that goes away, then I don't actually know where that leaves Astroforge in terms of making their,

I wanted, I was going to, I thought of that after we talked to him, and I wanted to then have him on Miko to talk about that afterwards. So maybe I will be able to ask them this question. Yeah, I think that's one of the huge,

go ahead. Well, I was just going to say, I guess that kind of like, it makes that strategy harder because like with a more focused thing like you know with CLD you can say here's the amount of money we're spending here are objectives and you can like very much measure like your success along that like you have a KPI with that in a sense right whereas like clips it's like yeah we just got to spend this much

money every year and something might happen in two years five years 10 or 20 we just don't know but you just got to keep spending it and see what happens until like it just goes long and long enough that it either succeeds dramatically or fail dramatically like there's not it's a lot harder to adjudicate success with that, right? Yeah, for me, that's one of the really tricky things about clips. Because I think very clearly it's meant to be like the COTS for the moon, right? But it's helpful to remember that NASA would initiate at COTS right around the time that the space shuttle program was being retired.

Part of the reasons why I think it works is because they really didn't have much of an alternative after Constellation was canceled. And it was clear that, you know, this was originally a Hail Mary. to rely on the commercial sector to resupply the space station and then bring crew to the space station. It was like, okay, we kind of got to do this. And it was sort of a miracle that SpaceX pulled through in the way that it did. And then, of course, once they got there, once the Falcon 9 achieved the objectives of COTS and then CRS, and they had this whole marketplace that they could kind of keep tapping into.

They had all these customers, foreign customers, commercial customers, that they could just kind of keep launching, get themselves to a point where, Starlink now makes sense and then now they're kind of off to the races. I think it's very much an open question for Clips. Is the Kott's model the right one? Does NASA have its hand force where it needs to keep doing this even when the going gets tough? If there are some successes for the Clips program, is there that fertile like marketplace

of activities? Is the moon comparable to Leo or geo the way that, you know, there were satellites going up anyways? I don't know if we can say that about lunar activity today. maybe it will be an awesome success story. I think what Matt and I can say for sure is that I think we're not going to find out if we don't keep trying. Every time Eclipse mission goes off and there's some going right now, I am thrilled because it's unprecedented stuff that's happening. And we have more and more companies that are in the game.

It sends a signal to customers. They're like, hey, there's stuff happening on the moon. It may take a little bit of time to develop. But like it's part of the conversation now. So, yeah, you guys, you guys, you guys, not to cannibalize the, the market with the SLS, Cubsat ride shares, though. Jesus.

You guys had Thomas Zerukin on, right? You had Dr. Zian, right? Yeah. I remember that episode. So we have a quote from him in the book. I'll just read it and hold it up right in front of the screen so people can be. Nice. It said, it's about clips.

And he said, we need to have the patients and make sure that the teams can prove themselves so that if the first one fails, we don't get scared and walk away. way, right? Like, I think that's very much on point here. Like, you got some reliability that, like, if you, you know, keep trying shots on goal, eventually something will happen. Yeah. And the first one did fail, right? And they kept trying and we had intuitive machines. And now we've got more literally on their way to the moon right now. So, like, props to NASA and the folks who created and backed that program that were still, we're still shooting, baby. I promised you guys yesterday when we were talking for Miko that I had some stupid questions that I've asked other people. And one, wanted to ask other people and did not know. Come to the submarines, Matt. No, no one had known what to do with this. I didn't do any research.

I should have woke up submarines. Yeah, dog, listen, this is my shit. I just want to ask this question because I feel like it is a good question. Everybody, in the way that you've written about in the book at the pharmaceutical industry has been like pointed to since the 80s as like the thing that this will this will do it. This time we got them. Human spaceflight, suborbital, orbital, whatever is always like the cost is going to come down in your lifetime, you'll buy like a first class plane ticket priced thing and you can

go to space. It's totally going to happen. Why is it still so expensive to go in submarines to the bottom? Like, this is a question I kind of laid off for a couple years while we were sorting through the other situation that happened. But like, I just feel like, they're back, baby. They're back. Now, it's time to talk about this again, right?

I wanted to ask Richard Garriott and we tried to have some other guests on to ask this, specifically who have been both to space and in submarines down to the Titanic or whatever. But, and this doesn't have to just be about submarines, but other markets that are like frontier markets or whatever, honestly, even like airplane manufacturing since that's gotten so consolidated over the years, even though it's not just a military market, markets that are similar to space that have had longer to exist than the space commercial space industry has, are there things that we can learn from those? Like, why hasn't deep sea exploration come down in price the way that we are talking up space exploration coming down in price?

Even though they are both very extreme environments, in some cases the deep sea is harder because it's more pressure than one atmosphere. But they're equivalent in that like, is there just not a lot to do? So nobody cares about it. Because the economy is just people, Anthony. It's just people. And there's no people at the bottom of the ocean. Why are the first people going to go to the moon and wouldn't live at the bottom of the ocean, I guess is my question. I mean, it's an interesting.

We've been dancing around the whole topic of like, oh, we've been talking about like market first principles and supply and demand. And we're not talking about the cities on Mars yet because there's some interesting. Those things clash pretty good when we get there. We've been dancing around that for a while. Why aren't through people at the bottom of the ocean, Brendan? Come on. It's an interesting, like, what if that you bring up? So I'm sure you all know that show for all mankind where they have the what if, you know, what if the Russians got to?

to the moon first. I think what they should have done is go with the real plot twist, which is the space race never happens, and it's actually the underwater race. You know, it's Aquinas instead of astronauts. That would have been fascinating. You know, we're not racing to the moon in outer space. It's the national show of forces. Who can get deepest baby? And then we're building cities underwater. That is the show that I want to see. I don't know how economics that is, but that that's a shot as like because you can throw a 2025 variant on it which is like we are escaping climate change by diving deep into the ocean yeah um yeah humanity's last chance is like live at the bottom of the ocean the thing for me um yeah is i don't know what the key value proposition is of going deep i mean one of the great things about um uh space is that it's it's overused but it's true it's kind of the ultimate high ground where like it's a really useful like symbol of national strength to put astronauts up there.

But it also turns out that building really heavy boosters that can go into space and then land across the world is super useful. And the government is willing to spend tons of money on that. It also turns out that when you have systems that have cameras or certain sensors in space, it can do really useful things and increase your power as a country. and today increase your ability to like fight and win wars. So like that's stuff that the government is going to really, really care about. They're going to keep investing in it over and over. And like that initial investment creates the opportunity for like companies to jump in.

I don't know. I don't know. Can I give a more spiritual answer too, which I think, you know, I mean like people off. There's the question about underwater. There's another question which is like, why aren't we just as fascinated by? the sort of microbial universe as we are about the cosmic universe. Like shouldn't we just be spending our time looking at the amazing diversity within our microbiome or whatever?

And it's like, yeah, kind of. But there's something infinite and inspiring about space that I think, you know, going to the bottom of the ocean or the bottom of bacteria dishes that just doesn't quite have. And so I think there's like a, there is an important difference there. I mean, of course, Elon would also say like the whole multi-planetary thing, like, the ocean's not going to really say. There's an economic value there, right? Yeah, yeah. But I think to your question, like, why isn't it cheaper to do these things? It's related because, and of course, it won't get cheaper in space either unless we really get up to scale.

Like, until you really start flying a ton of people and you get down that cost curve with the economy's of scale, it's going to be super expensive. And that's probably, I guess, where we are with submarines. There's just not that many people who want to do it so you don't build that many submarines. Yeah. Real quick, I think that's one of the reasons why we structured the book in the way that we did, which is like, yeah, there's this economic framework, but it's told through specific stories and often like individual people who made certain decisions to do things. Because like what I hope readers will take away from that is like, yeah, it's important to recognize and like leverage these economic forces. But it still takes people making really hard, often super risky decisions to make these things happen. So if there's anything that like readers take away from the book, it's I hope they'll find one or two of these stories like really inspiring.

and want to jump in and make a difference. Not necessarily by creating your own SpaceX, if you want to do that, go ahead. But making an impact in an area that you feel like is really important to you, whether it's being a customer or a founder or even like a critic of the space industry, we want more and more people to see space as part of what they do.

I think you also made this point really well about planetary resources that they didn't make it all the way through their company life cycle and being successful, but they did, stoke a lot of changes in the regulatory environment and answering questions about like, could we do this if we wanted? They've, they got stuff solved that now Astroforge doesn't have to worry about. And that matters,

too, when you build up that inertia of an industry, right? It's going to be some of the same people that trickle through, but also just provoking those conversations and those changes in regulation or law or whatever it is. That stuff does matter downstream, even if it's a different collection of people that do it. Yeah, I think I emailed you, Anthony, that your Astroforge episode with Matt was like one of my favorite ever's, favorites ever. And part of what I love about how Matt talks about Astroforge is like, it's a business. Like we're going to go mine asteroids to make a lot of money. And he's not saying like, oh, we got to sort out the property rights regime, blah, blah, blah.

Because like that's kind of done. Like that's pretty cool, right? That's true. It's like how Varda talks about manufacturing on their capsules, right? It's like, we're just a business. We happen to be in space. but we don't really want you to think of us as a space company. Like, we're just a manufacturer.

So, yeah. You're speaking to Anthony's language now, but he's always talking about websites in the same way. Stop trying to convince us that space is cool and tell us what you're doing. That is my whole take about everybody's space website. Everybody needs to convince randos that don't care about space that space is really cool. And, like, that is not at all your customer. Your customer is not at all those people that don't know about space. Someone's coming your website because they know about space.

They know about you specifically. Sell that person. Don't sell the other people. They don't give a shit. Yeah. It's amazing to me. Yeah, no, I completely agree. It's amazing to me how, like, in the space bubble, I feel like we talk about space a lot and, like, we see the industry in a certain way. But then you go out and talk to, like, normal people and you say, like, oh, like, it's a space company.

And they're like, oh, so, like, you're, like, lining people on the moon. It's like Apollo stuff. But, like, the company is doing it now. It's like, well, like, not really. Like, it's more about, like, data and connectivity and, like, all these, like, the companies that are pursuing these. business models, like they're their businesses. Like, VARTA is a great example. It's like, we just happen to be doing it in space. And for Matt and I, who have spent a lot of time talking to like, we described it as like the one ring out from like the normal space industry, people who might be like

space adjacent or like space curious, like those are the stories for me that are really useful and like moving the needle on bringing more people into space. Like Starlink is a fantastic example. Not only is it incredibly useful as like a capability, but like it was a prototype in 2019 and then like the largest land war in Europe sparked up and it immediately became the backbone of like an entire country. And it's it's now having more and more commercial success. It's probably the fastest like company to like over $5 billion of revenue.

Like that for me is a story that if I'm talking to a non-space company, I could say like, hey, you really should be thinking about space. Like your company should be thinking about space because it's changing fast. And it's not just, you know, like crazy out there exploration. It's like real sooner enough, I think it's going to make real like dollars and cents differences to. It's not just stranding astronauts in space. Listen, man, all I see in those tweets is he's trying to make his commercial space station market two years sooner than NASA is. that man's trying to make some commercial space stations happen

thank you rocket daddy oh wow well we made up one question to wrap us up is when you got to the end of the book now you're in the publishing cycle what is like the

the economic problem to solve in space what is like the next thing Right, because a lot of your stories are from now till 10, 15, 20 years ago in some cases. Right, that was kind of that era of space. That has all happened. We've established property rights in space. What is the next, like, hill to cross for the industry? Well, I think we've talked a little bit about it, but the way we talk about it in the book is we've seen this big drop in costs, the big shift in the supply curve.

But it seems like the demand curve is like a little disappointing, I guess you would say. And demand is benefit. So like the big hill to climb, I think, is figuring out how real company, normal companies, normal people are going to actually derive benefit or value from the resources of space, whether that's microgravity or actual resources or data through and from space. Like how are we going to generate real value at scale? And of course, further push down costs, the easier it can be to close those cases and to find benefits that are worth it. But, you know, when we talk to Earth Observation companies or whatever about finding their customers, raising awareness, you know, how do they bring the data to them in a way that's actually useful that they would be willing to pay for because it can be hard to think about how you'd use those data.

That's, I think, the real challenge for the sector. And that's when we talk to investors about the startups that they're, you know, trying to evaluate, we talk to them about how. are they solving that problem? Like, how are they actually going to create value from these lower costs or push the cost down further so someone else can create that value? Yeah, I think one of the ways we describe like the, like what's happening in space and the long road ahead of us is at the end we talk about it like a ladder where we're, we feel like we're at kind of the first rung of this ladder where launches like being commercialized and we're seeing more and more like costs going down there and activity increasing.

And we know, I think those of us who are like in the space industry, we know where some of the top of this ladder is. We know that these resources are out there. We know that there's all sorts of like opportunities if you just can keep climbing and bringing down costs and doing all these amazing things. I think

the challenge is how do you build like the next rung and the rung after that and the one after that. And I think the beautiful thing that like Matt was talking about is that as you're building these rungs, you're going to have these really incredible things. that we can't really predict, but they're going to pop out of it. I don't know if that's like computing in space,

that maybe only makes sense as you do more and more of it. I don't know if, I know there's some folks who are passionate about moving heavy industry in a space and moving millions of people living and working in space. I think that's going to be fantastic. You know some folks, yeah. In theory. In theory. No, it's pronounced blue.

Oh, okay. And so that I'm, I'm excited for, all of that, I think we need to like, the really tricky thing is that there's like pitfalls at every wrong and you need really great people in the private sector attacking some of those problems, people like Matt at Astroforge and you need a really creative, flexible public sector that can like adapt as the needs arise. So I think it's super exciting. I think there's a lot of momentum right now and I'm excited for the next few years for sure. Well. All right. Space to grow.

Unlocking the final economic frontier. Amazon, you like the Amazon pre-orders. It comes out on the 25th. If I remember correctly. Got it. Yep, 25th. Pre-order it. So it goes up the Amazon charts.

All the pre-orders hit on launch day. The launch day charts go crazy. Then they win Amazon for the day. And then the main character makes everybody happy. Yes. Pack it. Thank you, guys. Appreciate it.

I'm glad we finally got John here. after being long-time lurkers. That always makes me... That's so awesome. That's so awesome. You guys are doing amazing... We love the show. We learn so much from the show and your amazing guests,

and you like making a huge contribution to the sector. So thank you for teaching us along the way. Probably one of the only beer-drinking Harvard-approved shows, Jake. So we're in a small Vennigram. Right there. Or Coke-I-Cold Brew mixed up. delicious. Delicious.

The wine's Earl. You can vibrate all the way home now. Jake, do you want to tell everyone what we're up to next week since you did it two weeks ago and we were totally wrong? Yeah, I'm actually right this time, right? I'm like pulling up the calendar to make sure. But yeah, next week we actually do have Casey Dreyer coming on, even though I said that two weeks ago. and we were very wrong. But he's going to come on and talk about,

we'll see what other crazy news happens between now or the next seven days. But ostensibly, it is about executive action in the space industry and the new administration. So that's a big slate. Probably will still be relevant. Yeah. We'll see what kind of crazy shit falls on that plate between now and the show. But it'll be good, as always. We love Casey.

Perfect guess for it. Yeah. I was hoping this asteroid would have a higher risk of impact because I was looking, for the planetary society's take on like a three to five percent chance. Now it's down to point two seven. So. Yeah.

It's good content for the show that we're, if Earth is targeted with it. What a weird thing. We can laugh our way to the end of the world. Yeah. All right, y'all, thanks so much for hanging out with us. You are the best. Come back and talk about other things too

because we're probably going to have a lot of economics questions. So I feel like it was the first of many. Thanks, guys. Bye, everybody. Bye, everybody. One, two, three, four, five, four, three, two, one. End of death.