Transcripts

What You Missed On The Vector Episode 13: Transatlantic Space Activities

Written by: Morsiell Dormu

In this thought-provoking episode of The Vector, host Kelli Kedis Ogborn sits down with Dr. Ken Davidian, a space industry veteran with over 40 years of experience across NASA, the FAA, and academia, to explore transatlantic space activities and the evolving dynamics between the U.S. and European space markets.

Key Highlights Include:

Bridging Transatlantic Space Relations
Dr. Davidian shares insights into his work at the International Space University (ISU) and its mission to maintain strong ties between U.S. and European space industries while expanding globally into Asia, Africa, and South America.

Cultural and Economic Differences in Space Investment

  • U.S.: A risk-taking investment culture, fueled by a robust venture capital market where entrepreneurs drive space innovation.
  • Europe: More conservative investment strategies, often influenced by inherited wealth, with greater reliance on government support.

The Role of Government vs. Private Sector in Space

  • In the U.S., the government plays an aggressive role in funding and enabling space innovation while letting the private sector take the lead.
  • In Europe, governments are more directly involved in industry development, creating a different innovation ecosystem.

Space Industry Barriers & Market Expansion

  • Cultural Barriers: Companies expanding between the U.S. and Europe must navigate differing approaches to investment, regulation, and risk tolerance.
  • Regulatory Challenges: Issues like ITAR (International Traffic in Arms Regulations) limit international collaboration, potentially slowing innovation.
  • Market Entry Strategies: Dr. Davidian emphasizes the importance of understanding customers first—not just focusing on government contracts but also commercial scalability.

Future Space Markets & Economic Growth

  • Space Tourism & Point-to-Point Travel: The commercial viability of space tourism is gaining momentum, with strong demand signals from companies like Virgin Galactic and Blue Origin.
  • Beyond Government Dependency: To ensure a thriving space economy, companies must diversify their customer base beyond government contracts and find true commercial markets.

The Future of Global Space Collaboration

  • International partnerships are essential for industry growth.
  • Regulatory shifts are needed to allow for freer trade and technological exchange.
  • Broadening academic perspectives, including organizational theory and cultural analysis, will help drive more effective space policies and commercialization strategies.

This episode unpacks the complex global dynamics of space commerce and the strategies companies must adopt to thrive in an increasingly competitive and collaborative space economy. Tune in for a deep dive into the future of space business, policy, and innovation.

 

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Episode Transcript:

Kelli Kedis Ogborn:

Hello everyone, and welcome to the Vector where we discuss topics, trends, and insights driving the global space ecosystem. I am your host, Kelli Kedis Ogborn, and today’s topic is all about transatlantic space activities. And joining me today will be Dr. Ken Davidian, who is the vice president of North America for International Space University. Dr. Davidian has 40 plus years of experience in the space sector, including roles at NASA and the FAA. He currently holds key positions at the International Space University, new Space Journal, and Virginia Tech. He’s also affiliated with the A I A A and the International Academy of Astronautics. Dr. Davidian has degrees in aeronautical engineering, mechanical engineering, and a doctorate in business administration focused on innovation in space markets. Ken, thank you so much for joining me.

Dr. Ken Davidian:

My pleasure. It’s great to see you, Kelli, too, too. And hello too

Kelli Kedis Ogborn:

Everybody out there. Yeah, this topic is a big one, and I think you are the perfect person to come on and really dissect what you’re seeing and the ecosystem, and especially across this transatlantic space, given your experience in government for a very long time and seeing how our government governments handle this and then now working more in the private sector, especially on the academic industry world. And so as a starting point, I’d love for you to talk a bit about the work that you do at ISU and how you work with both the US and European markets. I think that’ll help frame a lot of the other discussion points to follow.

Dr. Ken Davidian:

Yeah, no, that’s great. Yeah, as you mentioned, I’m the vice president in North American operations for ISU. My prime goal in life in that position is to create a permanent presence for ISU in North America. Of course, ISU was started in North America in the late eighties, but we set up a permanent campus in Strassburg, France, giving us a footprint in Europe. And so between Europe and the United States, ISU has had a strong presence over the last couple of decades. We sort of needed to reestablish our visibility and our presence in the us. So that’s what I’m doing here. But like you said, keeping the channels of communication in the lines of information going between the two continents is very important. But even beyond that, going into Asia, going into Australia, going into India, in the Middle East area, going into Africa and South America, these are all super important to include in the conversation, including the information transfer that’s going on.

So of course, we’re keeping our eyes open to see what’s happening in all these parts of the world. And like you mentioned from the government perspective, when I was working for the government, there was a focus at the higher levels, at the levels of markets and above products and technology. So individual technologies are interesting. How they come together into innovative products is super interesting, and we’ve got a lot of that going on around the world. But how they affect the higher level, the next level up the markets, this is where it’s an appropriate role for government, because government shouldn’t be picking specific products or companies as winners and losers, but we should be concerned about the benefit to the citizenry that is provided by the different markets. And markets provide such a great benefit to bring international cooperation together, that it’s something that the government has been involved in since global trade began, at least in this modern area or mid 18 hundreds.

Kelli Kedis Ogborn:

You brought up a lot of really good points that I want to pull some thread on because as you aptly put, it is a very global dynamic ecosystem. When you talk about space, you can’t just talk about one government, two governments. It really has now transcended that space that we traditionally started from. But beyond that global piece, there’s also a lot of competing priorities, whether it’s a government priority, a commercial priority, a national security priority, and being able to balance the push and pull of who leads who follows, I think is a really important topic and also a difficult topic because it comes with lots of different perspectives. And I’m curious from your perspective, and let’s start from US and Europe and then we can build it out, but what have you seen are the differences in operating in those markets and environments?

Dr. Ken Davidian:

I think that’s a great question. And it’s hard to say that one country or the citizenry of one country is more innovative or more productive than the citizenry of any other country or region. So just assuming that all that is taken as an even equal, then it’s a matter of how is the polity, the political system and all the interactions with the political system, how are they affecting what’s going on in Europe and America? And there are two very, very different approaches going on there as there always has been. In America, we have this super, super well-developed capital market, and there’s a lot of risk taken that’s going on by individuals. And in some books I’ve read, they’ve said, well, in America, the people who’ve become rich and become investors and get involved with this, they’re new wealth. They earned it themselves, and so they’re going to spend it.

Whereas in Europe, there are super, super wealthy people in Europe. I mean, it’s not like there’s not enough wealth in Europe. I mean, there’s a lot of wealthy people in Europe. And again, the way it was described in this one text was that, well, this is wealth that was inherited. So now you have a feeling of responsibility of protecting it. So you’re not going to be out spending it on just because I was a space nut when I was in college. Now that I’ve made a billion dollars east doing e-commerce, I’m just going to start a space company. They wouldn’t do that.

They’ll buy a yacht and they’ll park it in Italy somewhere. But beyond that, they’re going to be more protective with their capital investment. So there’s a different philosophy, and this gets to the point of the role of culture and history in economics and markets. And so I think there’s a basic cultural difference there. So I think the availability of capital, I think is one of the major things. Again, the terrorist previous, everything else being taken is equal. I think capital markets and then government intervention, government support is also another one. I mean, Europeans, they tend to have a very supportive government. The role of government has changed over time, of course, and Issa and Europe is being very supportive of their space industry. But holy cow, in the United States, it’s at a whole nother level kind of thing.

Kelli Kedis Ogborn:

Yeah. Let’s pull the thread on this cultural piece because it’s critical. I mean, it’s central in its core to all of this and culture for a couple of reasons. I’m going to make this a two-parter because there’s definitely the geographic cultures, just the way that societies have been built, people interact mentalities toward business, all of that. But then there’s also the culture amongst governments and industry. And so for companies that are thinking about navigating both, so if they want to do business in the us, they want to do business in Europe, understanding the baseline cultural complexity of how those countries work, but then also the cultural aspect of stakeholders in the government versus stakeholders in the private sector. And how would you advise companies to create strategies for that? What should they be prepared for? What should they think about That? Is a whole jumbled mess.

Dr. Ken Davidian:

Yeah, that’s a whole jumbled mess. And so you’re right, talking about the cultures of society, there’s a path dependence there. History really matters. And the way you approach a problem and the way you frame problems all come from your historical background. And so there’s that difference. And then like you said, you’ve got this difference of what I would call institutional logics. You’ve got a military logic, you’ve got an industry logic, you’ve got a market logic, you’ve got all these, those are just rule norms and just patterns of behavior that are just sort of accepted. They’re not written down necessarily. And you’re seeing an influx in the United States, at least of this huge United States is unique in the space sector around the world, in that we have a fairly clearly differentiated military civil and commercial sector of the space world. And those divisions don’t necessarily exist everywhere around the world.

So we’re seeing a blending of the military logic, the civil, scientific, exploratory logic, and now this commercial logic here in the United States, these things are blending together and it causes a lot of confusion. All of a sudden, you see a lot of people, it used to be a scientific meeting or a conference where there’d be a bunch of entrepreneurs sitting around. Now you’re starting to see people wearing uniforms sitting around the table and stuff. So there’s just a different vibe going on. But I mean, it’s actually a good thing as well because these blendings of cultures and logics can actually be a fertile ground for new innovation. So nothing is purely good or purely bad, and so there’s positive negatives. So in terms of what advice would you give to people that are trying to work in this area? Again, it totally all depends on what segment you’re looking at.

If you’re looking at a segment that involves earth observation, that a verbs involves broadcasting satellite to satellite communications and transmission, there’s a very strong component that is military and civil components are still there. And you look at, for example, the Falcon Heavy launch vehicle. I just asked chat GPT this morning. It’s said it’s had seven launches this morning, seven launches so far, three have been military, two have been civil, and two have been commercial. I mean, they’ve got a nice distribution along those types of things. So the launch industry, at least for the Falcon Heavy, is showing that it’s got a nice blend of customers in the satellite communications, satellite broadcasting industry. Absolutely a good broad range of customers. So the way you’re going to approach it is you’ve got three different strategies you can apply. You’re going to customize it for your customer, but if you’re in some sort of high technology, persistent surveillance kind of technology, you’re going to have one customer and so satisfy that customer and just know that you’re helping national security or whatever the cause might be. So your strategy’s going to be a little bit more focused, and you’re going to be able to put a lot more energy into that single strategy.

Kelli Kedis Ogborn:

I really like the way that you framed it, because generally when you talk to companies, you talk to individuals that want to enter space, they almost start from the top down and say, well, I want to work with nasa, I want to work with, so they go agency driven down to how their strategy is. But your point is flipping it on its head and saying, let the tech vertical, let the capability drive the use case and understand the customer from there, because it’s going to be much easier as a matchmaking component.

Dr. Ken Davidian:

Well, to me, it gives more power to the company. I understand a lot of people, I worked for nasa. NASA was fantastic for me. I worked for them for almost 20 years. The meatball has got a glam factor that everybody wants to be associated with. People will sign a non-reimbursable Space Act agreement just because it has NASA on the top so that they can say, I work with nasa. You’ve got a lot of people who work for contractors for NASA saying, Hey, I work for nasa. There’s a huge level of legitimacy that comes from working with nasa, working from the US military as well. I mean, space force is glamorous these days, and sometimes that glamor is based on budget, and sometimes it’s based just NASA just has this worldwide glam factor, and so that’s good, but once you start saying, I want to work for them, you’re saying, NASA tell me what to do and I’ll do it. And that’s okay, but that’s not commercial in my mind, that’s a government led program. And so as long as there’s, yeah, you could sell to them and you’ll make money through a contract, but ultimately it’s not a customer.

It’s not a group, a mass market that’s a single agency telling you what to build and you’re able to deliver it. So I mean, I do turn it on its head because one of my pursuits in life is to see the true establishment of these mass markets, force space activities. And we see it in some areas, like I said, satellite communications, broadband stuff. Even if I would make an argument that even Virgin Galactic, the fact that they sold 650 tickets, not to the same company, not to the same government agency, but 650 tickets, that’s a good demonstration of multiple customers. And that’s ultimately what’s going to provide a product that is popular to the masses. I mean, there’s a real, well, I’ll shut up, but there’s a real reason why governments will tell you what to build versus markets won’t necessarily, you have to figure it out on your own because there’s no one entity there defining the requirements.

Kelli Kedis Ogborn:

And that is that push pull that I mentioned in the beginning because there’s government led, commercial supported, commercial led government customer, and a lot of what we’re seeing, especially as within the SI lunar economy, there is room for both. But a lot of ways the business models are changing in terms of the government now becoming a customer as opposed to the integrator for a lot of these capabilities, which I think is important for these companies, as you mentioned, to let themselves run a little bit faster and less inhibited to be able to develop their tech in the way that they see the market evolving to then adjust to their customer sets.

Dr. Ken Davidian:

The problem is they want to survive, they want to make it to next year. And so to do that, they need some cash. And finding the customer is the hardest part. And we’re there in some segments. We’re not there in other segments yet. And so it’s natural once your cash starts running low or your investors start getting impatient, start saying, fine, where’s the low hanging fruit? Aha, it’s DOD or aha, it’s nasa, so let’s go there. And so it’s this trade off, this balance of being able to set your own goals versus letting somebody else set your goals. Now, for example, I remember vividly I was at a conference where the commercial orbital transportation systems program cots was just starting up. So this must have been 2005, 2006.

At that time it was still orbital, a TK was one of the winners, as was SpaceX, orbital a TK got up to the podium and said, we are so excited to have been selected as a COTS member, member of the COTS program. Whatever the government wants, whatever naau tells us to do, we’re going to do it. And then he left the stage. Then a SpaceX person got up and said, we’re so excited to be a cots selectee. We’re excited to be a part of this program. We’re going to Mars, and if we could stop along the way and go to ISS, perfect. And so one definitely had a goal that was not government driven. The other one was, Hey, I’m a government contractor. Tell me what to do so I can get my paycheck. So again, this is sort of, to me, that mindset is one of the dimensions that characterizes the commercial mindset versus just a mindset of a government contractor.

Kelli Kedis Ogborn:

No, that’s a great analogy. And I want to dive a bit into barriers of entry before we unpack some of these more philosophical framing entities. But let’s talk about looking at US companies that want to transition into European markets or European companies that want to transition into US markets. What are the barriers of entry to each? So we talked about just understanding culture and understanding customer sets, but have you seen some other major barriers, hurdles that companies don’t anticipate that then they find out could completely kill their business?

Dr. Ken Davidian:

I think the ones that they don’t anticipate that tend out to be huge are the cultural ones. So I mean, there’s the obvious barriers that everybody raises the alarms about being iar primarily being high levels of capital, especially if you’re dealing with human space flight, high levels of low levels of uncertainty, high levels of quality, high levels of mission assurance, obviously. And then just the technological barriers are there as well. Because we’re talking about high tech stuff, excuse me, this is not unique in the business world or in the industry world. There’s a lot of industries that have high technology requirements, have high capital requirements and fly humans around or could be dangerous to the participants. So they need a high level of quality. So space isn’t necessarily unique in that one. So I think those barriers are kind of well known and there is so much great work going on in Europe as well as the US in terms of technology development.

Of course, we tend to be focused on the technologies. The business acumen I think is something that is probably better developed in the United States than in Europe. When you look at the factors that go into the how likely is it that somebody will start a new business, the likelihood of entrepreneurship, when you look at the sociopolitical, the historic, and the educational requirements that go into that, and these are the three major factors, the US just is stronger. I mean, one of the books I read talked about how the US is unique in that it was a nation that was founded by a bunch of entrepreneurs, by a bunch of small business owners. We didn’t, yeah, that’s it. So they wrote a constitution that sort of favored that type of mindset and versus coming out of a royalty or having a bunch of revolutions and doing that sort of stuff. I mean, it’s really interesting. And this gets back to the cultural aspect. There’s a great anecdote In the early 19 hundreds when aircraft were being designed, the Europeans designed it to be more like a coach with a Coachman, a conductor, a chauffeur. They would create their aircraft to be very stable, very smooth, not very maneuverable, but very stable and safe. Whereas in America, we were designing aircraft. And again, this 1900 that were very unstable, that were highly maneuverable, it was more like the bucking bronco

Kelli Kedis Ogborn:

Rather

Dr. Ken Davidian:

Than the reliable horse. So it’s just a cultural mindset of the way that we do everything artistic or engineering wise. The culture I think is the overlooked kind of thing. And this is a problem because when we start analyzing the industry, we sort of minimize the impact that culture and dimensions can have on the emergence of technologies, on the emergence of products and markets. And we do that to our own hazard of understanding.

Kelli Kedis Ogborn:

Yeah, it’s a great point. And I think the other level of complexity, and partially this is cultural and it’s also based on industry that you’re part of, but it comes down to the tolerance of risk and the understanding that you can fail fast and hard and reve, and whether that’s acceptable or not also does dictate how people work within those societies and systems

Dr. Ken Davidian:

And moving beyond Europe into the Asian cultures and things where risk avoidance is ingrained in your being. So absolutely, I mean, innovation and entrepreneurship is absolutely about risk taking. And you’ve seen studies where the countries that have the highest percentage of immigrants, it was Australia, it was United States, these are the countries where you have high levels, high risk takers, people that have upended their entire lives and their families and their roots and taken ’em to entirely new continents, started anew and lived through it. They feel more comfortable dealing with uncertainty and dealing with risk. And again, try to quantify that, try to put that into a spreadsheet.

Kelli Kedis Ogborn:

You can’t. And that’s part of the challenge is you can anecdotally and try to qualify certain aspects of it, but it is hard for people to, there’s no data behind it except for the understanding of the things you talk about.

Dr. Ken Davidian:

So you’re absolutely right. There’s no data behind it, but that doesn’t mean there couldn’t be data. And there have been advances in experimental methodologies to find proxies for these types of things. We were talking about the legitimacy that the NASA meatball gives. It’s very hard to quantify legitimacy. The fact that the spaceship one spacecraft from Ratan is hanging in the National Air Space Museum, this is a symbol of legitimacy. This is something that makes space tourism legitimate in the eyes of the general public quantifying that is very hard. And so there are ways to do it. It’s just that there’s not enough people that have been trained in those methodologies to be able to bring that to bear into the space sector. So this gets into another rant about how we need to broaden the way we analyze the market. We can’t just rely on a bunch of charts that our numbers that we see every year that are projections and nobody really knows how real.

Kelli Kedis Ogborn:

So I actually, I think that when we eventually post this, the tag should be, how do you quantify legitimacy should be the main question that we ask people.

Dr. Ken Davidian:

It’s a big question.

Kelli Kedis Ogborn:

It’s a big question. And so I’m curious from your opinion though, so when we look at the future of space, there does need to be international cooperation and oh, absolutely, it does need to be collaborative. So what kind of systems or parameters or loose quantification can we put in place to allow companies to not only have access to global markets, but also be competitive and attractive? Because those are two sides of the coin, but they’re both baked into this problem.

Dr. Ken Davidian:

So I mean to be competitive and attractive, obviously, I mean, this is the innovator’s dilemma. Yeah, obviously you want to meet a customer’s need, so clearly say, well fine, who’s the major customer in Europe? It’s ESA in United States, it’s nasa, DOD, what do they need? I’ll make that. But again, like I said, that’s sort of giving the goal setting dimension of your business away. You’re saying, what do you need? I’ll build it as long as it’s in thermal conduct transducers, I can do that. And so you just figure that out. But again, that’s not, you’re dependent on government funding for them. The government can absolutely change their mind tomorrow. And in which case, your business just, I mean, look what happened to the solid rocket motor industry, orbital A TK when the shuttle program was canceled in 2011, demand dropped by 95%. Look at what happened to the aircraft industry when World War I ended demand by the army dropped 95% overnight.

That’s devastating to an industry. And so if you want some sort of stability and longevity in an industry, which in my world that’s where I’d love to see the space sector going. You don’t want to be dependent just on one major customer. You want to be attractive to many customers. So to answer your question about how do they improve their allure to the customers, the hard part, and this is where we haven’t really found the nut yet to crack, is who are those customers creating that market, which is such not an engineering problem, do not talk to a physicist or an engineer about deeply human, the market human,

Kelli Kedis Ogborn:

Deeply human.

Dr. Ken Davidian:

It’s really hard to do. I mean, the fact that a bunch of us in the 1980s were sold pet rocks. We were sold rocks in the 1980s,

Kelli Kedis Ogborn:

But you put the googly eyes on.

Dr. Ken Davidian:

That’s right. That’s right. I mean, who the heck knew that there was a demand for a rock in a box? But being able to create that demand is a skill and there’s some science behind it, and it’s a trick that engineers and scientists do not get.

Kelli Kedis Ogborn:

What about regulations? So is there anything that should be created or removed for the ecosystem to reach its potential?

Dr. Ken Davidian:

So we want to enable trade. We want to remove protectionist trade as much as possible. I’ve been reading about how protectionism was implemented in trade from, again, the early 18 hundreds even before that, but in the modern era in 18 hundreds and how they kind of fizzled out. And we went to this neoliberal sort of global economic perspective in the 1940s, 1950s after World War I. And what we want to do is make sure that we get rid of the protectionist barriers. And so IAR is one of those protectionist barriers. It’s not just tariffs that we’re talking about here.

Iar, everybody knows that IAR is creating a problem for free trade. And this is part of the paradox of working with the military mean between commerce, the commercial logic and the military logic. Commercial logic really wants to be able to sell globally to everybody. And there’s a lot of national security benefits to that. Once we see how each country can become richer through trade, there’s a lot of national security benefits to that, then there’s a huge incentive not to sort of attack each other. But once you start putting up these protectionist barriers, like our tar restrictions, restrictions on information or actual taxes on imports and exports, this is where now it becomes a little bit more interesting to go out and conquer the other entity, to bring them within the fold. So obviously there’s been a huge move to move ITAR to remove a lot of I items from itar.

It’s a difficult process. It’s a long time, time taking process. There’s a lot of good reasons not to. And sometimes those political and national defense reasons outweigh the commercial reason. And this is something that I’m sure is not just unique to the United States, but of course it backfires all the time. We put up ITAR R restrictions, ITAR r free equipment becomes available on the market so that people combine it without having to worry about it. In the United States in the early sixties, we refused to fly a French satellite on an American rocket, one of the first commercial, what would’ve been one of the first commercial launches. And so in response to that, France developed their own launch vehicle. That’s where Anne came from. So these protectionist kind of policies tend to backfire, and so they’re politically expedient, but in the long run they have their real issues.

Kelli Kedis Ogborn:

And I think there’s a lot of culture baked into those as well because to your point about trust and comfort and all of these things, as we’re moving toward a more global environment with more players, how do you allow for free markets to grow and to evolve while also giving comfort to governments from a national security perspective or from an IP protectionist perspective? And I think it’s going to take time, but it should be part of the conversation. To your point, it may stifle innovation, but it could also stifle collaboration and the ability to work together toward these broader eventualities.

Dr. Ken Davidian:

Right, right. I mean there’s a lot of interesting stuff that’s been talked about on this subject since the mid 18 hundreds. I mean, none of this is new. And it turns out that United States has a huge amount of capital that’s available. We have a great labor force, very innovative, and we have a lot of land and space to work with. And capital in Europe is a little more constrained. I think they probably got similar levels of labor availability, whether or not they’re turned on to innovation and risk taking is a different matter, and the amount of space they have to work with is just a lot more limited. So I think they’re going to be people that have ample resources like the United States. We’re going to be very much more interested in free trade organizations that have scarcer resources. They’re going to be more interested in protectionist policies. And this is something called the Stoble Samuelson model. And this comes from the early 19 hundreds, but it seems to explain pretty darn well when a country will favor free trade over protectionism. And so we can look at these, but like you said, a lot of this is cultural and some of this is kind of hard to modify.

Kelli Kedis Ogborn:

So beyond the regulations and market conditions that we talked about, there is a question that came in from the audience about educational methodologies within the space industry as you’re looking to broaden markets. And they want to know from your perspective if there’s any unconventional fields that you think provide new and valuable perspectives that should be pulled in for this evolving ecosystem.

Dr. Ken Davidian:

Oh, absolutely. Oh man, that must have been my paid informants because

Kelli Kedis Ogborn:

It’s a softball question from one of yours. It’s softball. I dunno if it’s actually,

Dr. Ken Davidian:

So instead of educational methodologies, because to me that’s talking about pedagogy and ways to talk about, I’m going to replace that phrase with what academic perspectives do we need more in the space industry as we seek to broaden the market? I’m so glad. So right now, we tend to look at markets from an economic perspective, and this is going to all be based on the fable or the parable of the six blind people around an elephant. We tend to look at markets from an economic perspective. We have a technological perspective that we look at markets. We’re looking at again, the technologies, the products more and then a little bit at the markets. So we have a technological perspective, we have an economic perspective that kind of looks at the finances as well as the technology. And I would say that we tend to look at it also from a policy perspective.

So maybe political economy. So there’s a third blind men, we need more blind men around the table. And so there’s this broad field. Sometimes it’s called management, sometimes it’s called organization theory where there are multiple perspectives in that. And economics is one of those perspectives within org theory, but it’s the only one of all the perspectives that’s considered purely rational, meaning that the scientific method they use is based on the same scientific method process that you’d follow for a physical science like physics. If I’m going to measure the acceleration due to gravity every time I drop this pen, you would use a certain style of scientific method of testing the hypothesis and all this, you could still use the scientific method when it comes to social systems, but the problem is it’s unlike the acceleration due to gravity, the social system’s going to change every time you take a measurement.

And this is part of, this is the Hawthorne effect that we saw in the 1940s. It’s just once the results of an analysis come out, of research comes out, the system can commodify itself because it’s a social system, it’s adaptive. So you can’t use the same strict tenants of the fiscal science scientific method. You need a little bit of a different type of scientific method to follow. Still scientific, still rigorous, still hypothesis testing, but a little bit different. And economics doesn’t do that. Economics uses the same scientific method as for the fiscal sciences, which is fine. And like I said, I just quoted theto per Samuelson model. There’s a lot of economic models out of there that are really, really good and really, really robust, but they’re not great. So to bring in things like history, like culture, like societal changes, these are things that need to be brought in from these other non-rational or what they call natural perspectives of org theory.

Some of it is power independence, some of it is cognitive realization. Some of it is technological, some of it is networks and population ecology. There’s a whole evolution. There’s a whole lot of different perspectives that we can bring to bear. And so inviting those people to our conferences, inviting people with those perspectives to our meetings, inviting those people to write reports and provide an analysis is something that we could be doing. I was just at Ascend. I had a panel talking about this paradox between the military and the commercial logic. And so I invited somebody from the Academy of Management who knows space, who’s written about space. So they’re not a total outsider, but they know org theory. But they’ve studied these things from a perspective that is a great compliment to economics and political economy. So we need to just add the number of blind people around the elephant that we’re using. So that’s another one of my missions in life.

Kelli Kedis Ogborn:

But it is really core because you, even with your taxonomy of the Space Economy project, trying to quantify as much as you can these other industries that are spinning in, spitting out that people might not immediately consider being part of space but are just as critical to its growth and scalability.

Dr. Ken Davidian:

Well, and that’s right because the economic perspective, so my taxonomy has got 28 different industries or what social scientists would call communities that are part of it. The core space industry is going to be the space ports, the launch sites, the launch vehicles, and the things that go up into space, the satellites, the depots, the whatever the probes you’ve got, that’s the core. But of course there’s ground support equipment, there’s flight support equipment, there’s

Kelli Kedis Ogborn:

Lawyers

Dr. Ken Davidian:

And accountants, there’s governmental stuff. So the economists and the economic perspective is going to look primarily at the financial relationships that are drawn between companies within these industries and industry segments to other companies in other industries and industry segments. But there’s a whole lot of relationships that are non-transactional that are just purely relational. When I go and talk to my government, I don’t take stacks of a hundred dollars bills in retaliation for legislation. I’m there to educate and inform When I work with trade organizations, when I work with other international organizations, there’s all these non-transactional things which are not included in any economic model. So they play a critical role in the emergence of these types of sectors that we’re talking about, but they’re not really included in our current perspectives. So that taxonomy is, it’s not quantified yet. Again, we’re just trying to draw lines around what makes our analysis make sense.

I wrote a paper that talked about what is commercial and what is not based on theory of change motors and stuff. But in the second paper on that series, it was about quantifying it and we call that operationalizing it. How do you operationalize this model? How can I take data? And so that second paper actually did try to quantify that. And none of this is be all end all. What I love about business and the social sciences is there is no right answer. There are multiple right answers. So it almost means there’s no wrong answers. And there’s a couple, but there are multiple right answers and there are so many dimensions to the problem that you can’t just assume away. So because you have so many dimensions, there are many, many possible solutions. So it’s all good. We need more people talking.

Kelli Kedis Ogborn:

And to that point, I think a critical strategy to be able to engage the blind men as you mentioned, is really one, knowing the right questions to ask, to pull the perspectives from them. And also going into the conversation with intellectual curiosity and not with this assumption that we already know anything and you need to fit into our rigor. Because if you’re really going to get their perspectives, you need to know what’s going to be the most beneficial and what you’re willing to change on your end to have it be more effective and more broad. And I think that’s the problem. To your point, we, there’s so many different personalities and ways of doing business and cultural pieces that you have to take a step back and be like, maybe we don’t know everything. So let’s figure out how to collectively move forward.

Dr. Ken Davidian:

And like you said, to make the most of that, you need to know what questions to ask. So you need to be an informed discussion. So I’m actually in the process of trying to how chat GPT, the paid version has just added these new capabilities to modify and customize your own apps. So I’m creating an organization theory and space GPT right now. Of course you are. That takes all the concepts from the Oxford Handbook of Organizational Change in Innovation and will relate them to current events in the space industry. So on my, that’s more impossible research channel, you should start seeing some things, which some of it’s going to be purely generated by chat GBT, some of it’s going to be generated by me, but it’s all led by this organization theory kind of perspective and how it relates to different current events in space. So we’re working on trying to bring that perspective and at least start some discussions in that type of domain. It’s

Kelli Kedis Ogborn:

Important, hopeful because yeah, I mean we have to evolve our way of thinking. We’re building a new economy, a new ecosystem on a old framework. And partially, I mean that’s where we started. Our space industry grew and is massive and strong because of that framework, but the way that we need to evolve in the future is going to just look very different. And so we need to leverage our strengths, but pivot in some critical areas to actually grow. And I think that’s a really good place to start for what you’re building.

Dr. Ken Davidian:

And we don’t to could absolutely do it the way we did it and it’ll be limited to what it is, what the government wants it to be, or it can grow beyond our wildest dreams and wildest expectations if we try new things and we figure out what works and we go that way. So it’s a conscious choice and it’s not easy. And so this is going to be an interesting,

Kelli Kedis Ogborn:

So in our last couple minutes together, I want to follow up on that, our wildest dreams. So if we are able to put these parameters in place, include the right people to the table, evolve in the way that is necessary to evolve, let’s take about a 10 to 15 year time horizon. So what technologies or verticals do you think have the most promise for business opportunities?

Dr. Ken Davidian:

That’s a great question. And so there are certain verticals, there are certain markets right now that are doing very well. And so the satellite communications, the beaming signals from satellites, whether it’s remote sensing or entertainment, whatever, let’s just assume that’s there. So I’m not even going to, is that going to grow another a hundred percent? No, because it’s so large already. It’d be very hard to do that. So you’re not going to get the huge gains that you’ll be able to see from currently small markets. They could grow 300, 400% because they’re so small right now. And some of those, I really think space tourism or point to point travel I think is going to be big. Again. Number one, you can’t assume that the future is going to be a repeat of the past. That’s the way you sort of predict current markets. And we don’t want the future to be a repeat of the past.

So that’s why these are new markets. The future won’t be repeats. So to me, there’s a really good signal, a strong signal of high demand from that 650 tickets sold from Virgin Galactic. And when you see what Blue Origin is doing with New Shepherd, what Space Perspectives is doing with their balloon carried vehicle, I think there’s a huge, yeah, and it looks super fun. So those are all super strong signals that there’s a demand for that and people will pay for that. I mean, when you look at people have got money out there and they’re willing to spend it, when you look at the fact that $112,000 Model S is kind of outselling a bunch of other cars, they’re not at the top of the line model three reason why they’re there. But people could drop a hundred, 120 K for cars more than a lot of other people.

They’re still making the top 15 cars sold in the product. So there’s people with a lot of disposable cash out there. And so the markets are there and we’re seeing existing signals of high demand through those ticket sales. So that’s fantastic. The other side of it is, I don’t know, is there a market for Leo destination gas stations? I mean, Elon’s kind of taken care of his own with his Starship. He’s totally vertically integrating his whole activity, Ken, to Mars. So the rest of it seems to be right now government driven. So I’m not even going to address that because in the United States government spending on space is about $60 billion. And folks know that NASA’s budget about 20 billion. That means 40 billion is the non-civil or the military aspect of it. If you’re working for the government, that’s your market size, it’s 60 billion bucks. They’re the only customer. The rest of the $360 billion is satellites, and it’s all the other stuff that currently exists and it’s there. So looking for those new markets outside of government, outside of satellites is the real trick. And again, the only real signal we’ve seen so far is from the tourism and hopefully point to point next.

Kelli Kedis Ogborn:

One more question for you because it came in through our audience and it’s a really good one, and I think it is parallel to this what we were talking about. So staying on these new markets, new verticals, new trends, do you see different markets performing differently across broad geographical regions? And the sub piece to that, is that based on what the students at ISU are interested in or want to study, is there a delineation or are they pretty much the same?

Dr. Ken Davidian:

So I think they’re, let me start with the, do I see space adjacent verticals and markets performing differently? Yeah. You see emerging companies and companies that are in the process of starting their space industries, you see them with earth observation and kind of the basic stuff that will provide data from space that helps them improve the lives of their citizenry. I mean, this is the goal of every government is to improve. You

Kelli Kedis Ogborn:

See that pretty much across the board

Dr. Ken Davidian:

Geographically. I think you see that quite a bit in the more advancing and advanced countries. You see launch vehicles. I mean now you see China with human attended station, you see India moving into that direction. So that’s kind of the next step. Europe has sort of taken its time getting towards human rated launches. And so through partnership, they’ve avoided having to develop that capability internally so far. And maybe that’ll change, maybe not. So that’s kind of the geographical differences I think is what you’re seeing in terms of space adjacent verticals and markets performing differently. That’s hard to say because I think right now it is all satellite markets that are performing well. And I think that’s kind of where it is. So I guess I don’t see a difference in that sense. I mean, again, I’m separating the civil and the military from the commercial. And so yeah, space tourism in the us you see that that’s different. So far we haven’t seen that yet, but I love the fact that we’re seeing the copycat technology applications in China now with hovering and soft landings, and a lot of people are trying to think of how to do that. And coming up with hybrid solutions. This is such classic Clayton Christensen, this is classic by the book. They could have written the script, Clayton Christensen. It’s so fun to watch these things play out in a way that totally is predicted 30 years ago.

Kelli Kedis Ogborn:

And especially if you look at the commercialization evolution, you mentioned aviation in the beginning, but also the cell phone industry space is very similar. It starts with really heavy government investment then tends toward commercialization and then becomes this established infrastructure that allows other industries new ideas to come to play using it as a framework. And so I think we’re starting to see that.

Dr. Ken Davidian:

Well, and the problem with that is, okay, so humans love to put things into phases.

Kelli Kedis Ogborn:

So

Dr. Ken Davidian:

We love to do that. And there is absolutely no reason why we have to go from phase one to phase two, to phase three, to phase four. We could absolutely go from phase three back to phase one. So it’s again, predicting the future based on the past is dangerous. And so this is the fear that we’re going to go back to phase one.

New industries, it’s very hard to say in terms of current research of how new industries emerge right now. It’s very hard to say almost anything about how things happen. But one of the kind of general statements that is kind of true more often than not is the fact that industry emergence is preceded by strong government investment in RD. And so this is kind of what you were talking about. There was a huge government investment and then it took off commercially because there was a non-governmental customer that was out there. And so we’re waiting for those large numbers of non-governmental customers to show up. And again, tourism, I can point to that one easily.

Kelli Kedis Ogborn:

So hopefully we’ll be able to create the condition so we don’t step back, but maybe we can skip a couple more steps ahead, which would be the eventual goal.

Dr. Ken Davidian:

That’s right. And how we understand the process that’s underlying the change in the emergence is part of what the org theory folks do, the phase one, phase two, phase three, phase four, that’s totally possible. But there are other possible ways that change is being pushed forward. And so trying to understand which of those motors are working in what order in industry segment is called job security for org theorists in the space industry. It changes all the time.

Kelli Kedis Ogborn:

That is very true. Ken, this has been fascinating. Thank you so much for sharing your time and expertise with us today.

Dr. Ken Davidian:

My pleasure. Thank you very much.

Kelli Kedis Ogborn:

Absolutely. And to our viewers, thank you so much for listening in, for staying engaged, for sending all of your questions. We really do value your time and you are very much a part of what makes the vector the vector. So please stay tuned for future conversations and please remember there’s a place for everyone in the future space ecosystem. We’ll see you next time. Bye.

 



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