Space is not just the final frontier; it’s also big business. The potential rewards of this soon to be trillion-dollar industry are huge — but only for those who are willing to fail.
Despite talk of a new “space race,” what is happening now resembles less a race than it does a new “Wild West” — similar to the early internet era of the 1990s.
The early years of space exploration were driven by a single goal and focus: to be the first to put a person on the moon. Private entities in the space industry worked largely as government contractors.
Today, space is no longer the preserve of governments but also that of a growing number of private companies, largely funded by private capital and billionaires with deep pockets.
Space has shifted from a place purely to “go” to a place to do business.
There are more opportunities in the commercial space industry than ever before. And there’s a growing understanding that these new companies and ideas will disrupt the world in ways we can’t foresee — much in the same way the advent of digital companies such as Facebook and Amazon did.
Space has shifted from a place purely to “go” to a place to do business — and the opportunities appear to stretch out to the stars: According to Morgan Stanley, “space” is an industry set to be worth $1 trillion by 2040.
In Europe, which has seen huge successes in space exploration, the appetite to benefit from this new commercial space era is huge — and the talent pool is deep. Promising government initiatives — such as the European Space Agency Business Incubation Centres, for example — are providing support to European entrepreneurs and startups in the space sector.
But what Europe needs is not an “Apollo” or a “Sputnik” moment, like the United States or Russia has seen. Instead, it needs to learn how to fail.
At the moment, the U.S. is the world’s leader in commercial space. That’s partly because the private space sector is supported by the government — a move cemented in 2015 through the Commercial Space Launch Competitiveness Act — and it receives a huge amount of capital through private investment. (Because of ITAR regulations restricting the export of defense and military technologies, only U.S. entities can benefit from that pool of available capital.) But perhaps most importantly, there is an ecosystem already in place for private investment: U.S. investors are more willing to take big risks than their European counterparts.
Of course, risk aversion is understandable when investors are being approached with ideas to mine asteroids and send a rover to the moon. But many of the game-changing companies we take for granted today started as a once equally bold, or ridiculous-seeming, idea.
The difference between the U.S. and Europe, says Dylan Taylor — a leading American investor in space and chairman of Voyager Space Holdings — is that U.S. investors “are used to early-stage companies.” Americans have “seen a lot of success stories, of early-stages companies becoming very successful and ultimately having some kind of an exit.”
This is the type of ecosystem that enabled the likes of Google, Amazon and the other big internet giants to flourish — something Europe is hoping to emulate as officials bid to set up a €1 billion wealth fund designed to help home-grown businesses to compete with the giants coming from not only the U.S., but also China.
But having money is not enough. You have to be willing to risk it, and embrace the kind of failure that enables companies to grow out of ideas.
“It’s bit of a cultural difference, if you are in the U.S. and you start a business and you fail, that is seen as scar tissue that’s going to help you become a better entrepreneur in the future,” says Taylor. “Whereas in Europe — and this is changing, of course — if you start a business and you fail, you are essentially shunned and wouldn’t be able to raise money in the future.”
It’s the U.S.’s capacity for risk-taking that stacks the current odds in its favor.
If Europe wants to be a leader in this new era of space exploration, society and investors have to shift their attitude toward failure. Most great ideas won’t succeed — but it takes only one or two of those to succeed in a big way and change the industry.
It’s the U.S.’s capacity for risk-taking that stacks the current odds in its favor: More companies are formed because more entrepreneurs are willing to take a gamble.
The new space era will be driven by entrepreneurialism. If Europe wants a chance of “hitting it big,” it needs to boost its tolerance for failure across the board, from government agencies to investors and business. Unless it can do so, it risks losing great talent to other, more ambitious countries.
This new entrepreneurial space age will change the world — and beyond. It’s up to Europe whether it will go along for the ride.
Originally published at https://www.politico.eu on January 19, 2020.