The Great NewSpace Shovel Pile

There has been an explosion of new ideas and new capabilities in the commercial space sector. What is it all for though?

There is a saying in business circles: In a gold rush, make shovels. This of course refers to the California Gold Rush of the 19th century, where hundreds of thousands traveled to California in search of gold, but few made much profit doing so. However, those providing services to the new arrivals made plenty of money. Let’s look at this analogy more closely.

The underlying assumption is that others may be suckers and lose money, but that the speaker (and those who heed his wisdom) will make handsome and secure returns by being sensible and taking advantage of others folly. This raises an obvious question - will there be enough suckers around to support the ample supply of oh-so-clever shovel makers? If your plan to make money relies on a spontaneous outbreak of stupidity amongst others, perhaps you aren’t as smart as you think you are?

Unfortunately, there are signs of this dynamic at play in the commercial space industry.

Where is the Gold?

Fund from the worlds space agencies provide some of the demand required. The ISS, for instance, provided SpaceX with critical early funding through a contract to deliver cargo, which continues to this day and has been joined by a contract for them to take crews to the station. Such funding can be spread to more companies through NASAs commercial LEO destinations program, although at present this program receives substantially less funding than ISS, and potentially other nations space stations if they choose to commercialise them.