Transcripts
What You Missed On The Vector Episode 26: Closing the Business Case of Space
Written by: Morsiell Dormu
In this episode of The Vector, Kelli Kedis Ogborn, Vice President of Space Commerce & Entrepreneurship at the Space Foundation, sits down with Michael Mealling, General Partner and COO at Starbridge Venture Capital, for a candid, high-level discussion on “closing the business case for space.” This episode examines the financial, policy, and behavioral dynamics required to catalyze sustainable growth in the commercial space sector—and challenges the industry to move from idealism to executable, scalable models.
Drawing on decades of experience in space startups, venture capital, and early internet infrastructure, Mealling frames 2025 as a decisive inflection point. The convergence of constrained capital, increasing government involvement, and accelerating technological capability makes it clear: space is no longer defined by mission risk—it’s defined by financial viability.
Key Themes and Insights:
The Post-Zero Interest Rate Reality
Michael outlines how the era of “cheap capital” (2020–2022) produced a frothy market that couldn’t withstand rising interest rates. As funding tightened, only the most capital-efficient, problem-solving companies survived, forcing a shift toward pragmatic business models over aspirational storytelling.
Space is Not Special—The Economics Must Work
One of the episode’s central arguments is that space technologies must solve tangible, pressing problems here on Earth to attract capital. Investors don’t care about payload specs—they care about customer pain points, revenue models, and viable exits.
The Missing Middle: Bridging Seed and Scale
While early-stage space startups can often raise pre-seed rounds, the “missing middle” between Series A and scaled revenue is a chasm too wide for many to cross. Mealling calls for better risk-aligned financial tools, like updating the Qualified Small Business Stock (QSBS) exemption, to incentivize long-term investment in capital-intensive sectors like space.
Government’s Dual Role: Customer and Catalyst
The episode critically assesses the government’s dominance as the primary space customer. While necessary for early market validation, Mealling argues the government must evolve into one of many customers to spur real commercial demand. Tools like DIU contracts, SBIC programs, and non-dilutive funding from the DoD are highlighted as enabling mechanisms.
Policy, Perception, and the Power of Narrative
Space suffers from an “optics problem.” Until policymakers and the public view it as an economic engine—not science fiction—critical infrastructure and regulatory support will lag. Mealling advocates for proactive industry engagement with Congress to shape policy frameworks that enable innovation without premature overreach.
Infrastructure, Scale, and the Starship Threshold
True commercialization hinges on scale—pharmaceutical manufacturing, radiation shielding, and other high-margin activities only become economically viable once heavy lift becomes routine and affordable. SpaceX’s Starship and rapid launch cadence are viewed as key catalysts for this transition.
From Chess to Go: Rethinking Strategy
Mealling closes with a powerful metaphor: parts of the space industry are still “playing chess,” optimizing for short-term wins, while the real game is “Go”—an expansive, multi-layered strategy that demands patience, vision, and calculated risk.
This episode is essential listening for venture capitalists, policymakers, founders, and ecosystem stakeholders who want to understand not just where the space economy is going, but what it actually takes to get there. The message is clear: the commercial space sector doesn’t need more moonshots—it needs sustainable markets, systemic coordination, and investors willing to play the long game.
Stay connected with the Vector Community!
Sign up for the Vector Newsletter for quarterly updates, stories, and news. Or subscribe to monthly episodes of The Vector Podcast, featuring space industry thought leaders and innovators. Join the conversation—help shape the future of space commerce.
Episode Transcript:
Kelli Kedis Ogborn:
Hello everyone and welcome to the Vector where we discuss topics, trends, and insights shaping the global space ecosystem. I am your host, Kelli Kedis Ogborn, and today’s conversation is all about closing the business case for space. And when I say that I am not talking about closing the business case for a particular company, but rather the conversations, the levers, and the points that need to all be brought together and coordinated to ensure that we are growing commercial space in a way that can give us economic return. Truly, we are at an inflection point with the industry. Technology is being flown, and it is coming to market at what feels like an operational pace. And what’s really exciting is that we are moving into this environment where we are not just talking about moonshots but having very real conversations around what sis lunar economy can look like.
What’s really remarkable is that if you look at the past half century, our domain has really moved from an arena primarily characterized by technology and mission risk to one that is now focused on financial risk, growth risk and sustainable business models, which in and of themselves are trickier than actually getting things into space. Joining me for this conversation is Michael Mealing and he brings a holistic understanding of startup success and market dynamics to this discussion that is shaped by decades of experience across both operations and investment. He has been building in and investing in technology startups since the early 1990s, sorry, beginning with a core r and d team at Network Solutions and later founding a supply chain startup. In 2002, he was a founding member of Masten Space Systems in 2004, which was one of the first vertical takeoff and landing launch companies and a winner of the Northrop Grumman Lunar Lander challenge. He later served as CTO of Sta Rrif group, a seed stage venture capital firm, and is currently a general partner and COO at Starbridge Venture Capital, an early-stage space tech fund launched in 2017. Michael’s experience building and investing in technology startups gives him a really nuanced and comprehensive view of success and failure of not just new companies but the market characteristics they’re trying to sell into. Michael, welcome to the show.
Michael Mealling :
Thank you very much Kelli.
Kelli Kedis Ogborn:
So I am really excited to dive into this because you and I probably over the course of the last five years have had variations of this discussion in many different ways, but it really feels that 2025 is different. And as I mentioned in the beginning, I think we’re at this tipping point, we’re at this inflection point and I’ve certainly noticed that most conversations, whether they’re happening in the commercial, civil, national security side also have this economic flavor that’s sort of an umbrella aspect to it. And so I’m curious from your perspective to really start this conversation and frame it is why now, what do you think is unique about the conditions of the space ecosystem in 2025 that is making this urgency and necessity around closing the business case?
Michael Mealling :
Sure. I think it’s a combination of things. A lot of people remember the period of zero interest rates, the 2001, 22, 21, 22, and a little bit of 23 where it was very easy to raise capital for a space startup. And so we had hundreds of them
And there was a great deal of froth in the market. The downside of that was the number of SPACs that we did, the number of companies that ended up not being able to raise their subsequent rounds when they got into the 23, 23 and 24 when interest rates went back to normal. Money is a market just like any other. And when you raise the cost of a key thing in that market, you change that market at the same time. The election that we had a lot of people remember in the space industry specifically some of the transformational things that the first Trump administration did, the Artemis accords a lot of changes in regulations and focus the creation of the Space Force. And so there’s this expectation that we’ll be going through something like that again, but this is not really the same thing as what we had before because we now have more excitement and interest about what could happen. But
Right now we’re at a point where we don’t know exactly what’s going to happen because we don’t know exactly what the White House is going to be proposing. We don’t know what Congress is going to let happen, but we’re also still, we’re not in that zero interest rate period anymore. And so the cost of capital is still significant enough that not everything is going to be funded. So it’s not like we’re going to have a redo of 2021 and 2020 because of that cost of capital. But the thing that is very interesting, and this is more of a bar question that I ask people when I’m trying to get them to think differently about the space sector is the role of leadership in marketing when it comes to setting an overall tone of an emerging market.
And I go back to my thought if Al Gore had not been talking about information Super highways in the 1991 campaign, I am not entirely sure we would be using the internet like this today because that leadership made the public aware that this is something that could be very soon, whereas everyone assumed it was really hundreds of years in the future and there were other dynamics going on at the time unrelated to that. So it’s very much leadership can have and think of it as an industry level marketing. And I think that’s one of the fundamental changes is what’s going on now is whether it’s Space Force or Golden Dome or some of the other changes going on with NASA’s budget, which we don’t really know the details on. I think there’s a lot of optimism but also a lot of questions and a lot of churn, and so there’s just a lot of activity and people are paying attention to it.
Kelli Kedis Ogborn:
So what’s interesting about the marketing aspect, and I want to then frame this into the context of how we can sort of localize the space market is you’re absolutely right. There’s a reason why when people ask who invented the internet, they say Al Gore and they don’t think of Darpa, which actually technically built it, but Al Gore is the first thing that came to mind. I often say that I think that the space industry has a bit of an optics problem primarily because we still talk about things in this mythical esoteric way, which it makes sense because when we were first engaging space, we were confronting this unknown with optimism and enthusiasm, but what technically we were trying to do had never been done before. Space is not really that much of a technical risk as much as it was then, right? We’re still doing hard things, but again, as I mentioned in the beginning, we’re dealing with other challenges, but we still think about it as this final frontier, this place that’s really difficult to engage.
And when you talk to a lot of founders, sometimes they’ll say that space isn’t special. It’s all the other components that need to come about. And so I think that also part of the challenge of bringing this ecosystem together is really being able to localize in people’s minds what we can compare it to. Because people either think about space really mythical or they think just rockets and satellites and astronauts and they don’t understand that it’s a stable market where goods and services are sold now. But as you mentioned, there’s all these new areas of excitement and optimism that can be engaged. So when you talk to people just as a framework of thinking, what do you compare it to really move beyond the silos so that they can contextually wrap their head around what we’re engaging with?
Michael Mealling :
That’s a good question because I find that those analogies to other industries break down so quickly that you will lose them because they start, people I talk to, they’ll get caught up in that comparison Like the one for one. Right? I use the internet just because I was highly involved with it in the late eighties and most of the nineties. And I saw what an industry that was mostly academic but was very aspirational. The people that were building the internet in the late eighties and really up until 92, because I think it was in April of 92, was when the internet became available for commercial use. Prior to that commercial use of the internet didn’t exist, was against the rules, but the people that were building it knew in the back of their mind that they could be building something that was straight science fiction. We could build the globe spending network that connects everyone.
If they talks to anybody outside of that circle, they’ll be like, nah, that’s not good. That’s a thousand years in the future, that can’t happen. It would require trillions and trillions of dollars to build a globe spending network. And just a confluence of unconnected events created the space for the internet to be able to grow. Now, the beauty of the internet was all you needed back then was a modem you could buy at Radio Shack and a computer and you could get on it. It’s hard to do that in space. You can’t just build your own rocket in your backyard and just go, not yet, not yet, not yet. But that was when the thing that I learned was you don’t need to know what the end state looks like or how to get there. What you need to know is just be able to get to the next level with the most capital efficient way possible. And that’s where you end up with that virtuous cycle of let’s try a little, do something more interesting. But everyone in that community had in their brains, they knew what the internet would roughly look like 50 years in the future. They knew what is transformational nature was, but the market didn’t. And the thing that I find absolutely fascinating is none of the successful companies that were involved in building the internet in the 1990s, none of them exist today.
And that’s where if somebody says, how are we going to build all this? I was like, I haven’t the foggiest clue. I just know how to get to next step and I know what the end state looks like and that’s all I need.
Kelli Kedis Ogborn:
So I want to pull in a couple of concepts on this. This is a really interesting thread based on this vision that you put forward, or at least the comparison of understanding, at least conceptually what it is we’re trying to build. Right? I do agree with you that I think when people conceptualize the future of space, they know that very quickly in this domain, things of science fiction can become science fact. It’s just the stepping stones to get there. So there’s this idea of what we’re trying to build. The problem is that you have all of the different players with different mission sets, different ROIs, different risk thresholds. You also have the different components that really need to rack and stack in a coordinated way to enable each other for this growth. And then you have this first mover problem. And I think that you made a really interesting point yesterday when we were chatting where you said it’s not really economic models, it’s behavioral economics, which is a thousand percent true because you’re dealing with coordinated chaos theory in lots of different ways. And so when you think about how we’re going to enable this truly commercial marketplace, what is the first trigger? And it doesn’t necessarily need to be policy begets investment, but how do you see these ecosystems really coming about in a coordinated way to allow this market to evolve how it needs to,
Michael Mealling :
If I knew the complete answer to that, I’d be out running a company doing it, but there’s some ideas. So I was a friend of mine, Matt Weiner, who is at Harvard Business, just released a book called Space to Grow where they do him and Brendan Rousseau who is now at Blue, and they’re both economists and they look at the history of the space sector so far, but they’re looking at it from a very macroeconomic classical economics standpoint, specifically basically using the good old supply versus demand curve and the point at which they cross and why, even though we’re launching more, the actual price hasn’t gone down as much as you would think based on the number of launches that we’re doing,
Well, specifically the number of launches that SpaceX is doing. And Matt had an interesting statement at the book release thing yesterday afternoon where one of his concepts is, while the price for launch at SpaceX is still reasonably high for their customers, it’s normal. It is lower than it used to be. Definitely it enables a lot of things. But for SpaceX it’s even lower. And the thought that they have is that supply and demand curves as supply increases, it’s not an even function of a one-to-one decrease in price as supply increases that it’s more of a, it falls off, it has cliffs in it, it’s not a steady straight curve. And that they posit that once launch costs on a per pound basis, $400 is the number a lot of people use, that’s when you kind of fall off into a different market state,
Right?
But their thought was that at least if you are inside SpaceX and you’re deploying starlink, that for SpaceX, that number has actually gotten very close to that $400 a pound. Whereas for the rest of us it’s still in that I can’t quite do that myself level. And that’s one of the reasons why you see a lot of people starting rocket companies, whether it’s Rocket Lab or Blue Origin or whatever, they then go out and use that vehicle they built to build a product that uses their internal launch metrics and revenue to be able to build something that produces large amounts of revenue. And the question becomes that he was positing is that one of the things that is preventing us from getting to that state change we’re after is the rest of the market needs to be able to realize that reduction in launch costs that the possibility that some of the vehicle developers have started to realize. And so there comes a point I think where competition when it comes to launch does begin to take hold. And I think that’s where we start seeing some of those phase changes.
Kelli Kedis Ogborn:
Completely agree. And I think that another component though that people are wrestling with is the push pull of government as a customer and government is a primary customer right now. Because I think that part of the challenge is that really to get to this flywheel of commercialization, the government needs to be one of many, not the anchor. And right now a lot of these companies, they’re validating their market and their business case based on governments are going to pay for it. But to truly open a commercial market, the signal and the demand needs to be there on the other user side. And I don’t know what the right mechanism is and when it can happen. I don’t know if it’s an infusion of diverse types of capital that can take on more risk, that can really scale this sort of missing middle infrastructure type linchpin technologies if it’s the government’s role to really signal to the commercial market in a different way that they need to step up and be customers. What are your thoughts on this?
Michael Mealling :
I think there’s two aspects of this. So going back to the 20 20, 21 period, there was the idea that capital was easy, so therefore I could raise the capital for me to do this, my customer needs to be able to raise capital for that company to do what they want to do so they can buy from me. And you got a lot of capital formation within these companies, but then in late 22, it dried up. And so now you had this risk of, because at the time they were using very low cost capital to get over that. I don’t have any revenue hump.
So when that capital dried up, these companies now had to say, okay, my customer, I need you to start buying something from me. And that company is like, I can’t close around either because the market has dried up the same way, so I can’t afford to pay you for the thing that we were talking about. And so you had an environment where at the same time space Force had been created and there was a new sense that there was more things going on in space from a conflict standpoint that DOD started writing checks and it started creating, whether it was DIU or Strat Fi and TFIs were ways for DOD to start writing checks without the burden on the small company to be part of some prime network. And so that’s where we’ve switched to. Startup companies will chase whoever’s writing checks. It doesn’t matter who it is, you got to stay alive long enough to get to where you’re ready. And I think that’s the dynamic we’re seeing right now is for the past two, two and a half years, the government’s been the only ones writing checks.
But now we do see that changing. Now the capital marketplace in the space side and most of other places is what we see with sort of a barbell kind of situation where very early stage can get money, usually a 10 to $20 million valuation round raising three to $5 million, that would be a seed or a pre-seed depending on the company. But then you get this period where the company doesn’t have revenue yet you’re still trying to figure out the market, but you need to be able to get to the B round. And so what you’re seeing is pre AA and post A, that kind of middle of the barbell is very difficult,
But now if you do have revenue, you’ve shown that your business model works a little bit and you need expansion capital. That’s proving to be actually very easy right now. And so that’s, I think the problem is figuring out how to solve the series A kind of get to the customer phase of financing. And I think there are some interesting tools out there. The office is strategic capital out of DOD is helping. There is the program, the S-B-I-C-C-T program out of that’s joint between DOD and the SBA is helping VCs be able to make investments at a lower cost of capital to them. I would hope. And one of my things that I’m trying to talk Congress into is there’s something called the small business stock capital gains exemption. When you get really tax nerdy on you early stage startups where after you make your investment, the company has net assets of less than $50 million. That investment that you’ve made, when you realize your return, you don’t pay any capital gains on. And right now that number is 50 million.
Well, space is expensive. You might be able to get QSBS qualified small business capital gains exemption on your seed round, but you’ll lucky if you’ll do it for any subsequent round. And so those numbers haven’t been updated since the early nineties. If we just updated it for inflation, it’d be 117 million post-money valuation to be able to qualify. And you could have a lot of space companies actually fit into that, and that makes an investor’s cost of capital far lower because they don’t have to pay capital gains on the other end. It’s things like that where the government isn’t picking winners and losers or writing contracts, but creates a more interesting and startup oriented venture market for those companies to be able to get over that series a hump and get to revenue. That’s the disconnect we have right now.
Kelli Kedis Ogborn:
Yeah, it’s really injecting. It’s a bit of confidence, it’s a bit of growth, but it’s not leading with a contract at the end because then that really kind of can hamper the company’s ability to move laterally or with other customers across the board. Staying on this topic for a second, so I want to ask your opinion on getting more voices, getting more players to the table to really be able to take on this risk infuse capital because part of the challenge, and you and I know this very intimately, is that space conversations either happen in an echo chamber of all of the people in our ecosystem who are either optimistic, pragmatic, somewhere in the middle, but we’re all a coalition of the willing that believe in this future we’re building. And then they happen within silos of the space ecosystem where you’re just talking about launch capabilities, you’re just talking about Leo constellations, you’re just talking about the lunar infrastructure.
But really when we talk about a commercial space economy, it is economic return and gain in other industries that are adjacent, that are downstream, that are societal. And I think when you start to tell that story and really understand the value and return to everything terrestrial, you start to not only tell a better space story, but you get potentially new investors to come to the market because they realize that their other investments are going to benefit when these technologies come to fruition. How would you approach that? Is it purely a marketing thing? What’s the best step to really talk about that economic return?
Michael Mealling :
It’s how you tell the story. And I always get questions like when I’m doing a business pitch competition or anything like that, I tell entrepreneurs all the time that want to pitch a VC, do not tell me about your technology. I don’t care. I care about what problem you’re solving and whether or not someone has that problem in a bad enough way that they’re willing to give you a lot of money to solve it. And when you start with that problem and the places that space is one way of solving them, and it’s actually a fairly interesting and groundbreaking way that gives these companies an edge with a moat around the company, not a technology everybody can do, but it solves the problem. Investors understand that one of our portfolio companies is a radiation mitigation materials company, and there’s several different ways to do it. Usually it’s in some form of polyethylene with other impregnation into it and people say, okay, that’s useful for space, but there’s nobody in space, so why do you care? I’m like, because you can also use it in the cockpits of airplanes because pilots are limited on the number of flights they can do in their lifetime transit because they get exposed to radiation. You can increase a pilot’s useful lifetime as a pilot.
There’s a lot of different applications for that. They get into medical other cases. And so do these companies have other markets? Yes, it’s not just a space company, but the problem that space has sometimes is you can unique enough that it causes you to solve problems for other markets, Whether It’s radiation, mitigation, thermal, whatever. But the that’s the spinoff story. But where we get into is what problems can you solve by human beings being in space? And that’s where you get into something that’s more interesting and hard. The one that bugged me for the longest time still does is medical research in space. We can solve this. And the problem that we always had with that is the researcher and the ISS and whatever was done in space never had access to the downstream revenue from the Ip. It was a one-off contract, and you cannot raise risk capital on that kind of fee for service model.
That’s why one of our portfolio companies is Axiom Space, and we’ve spoken with Jason Kim at Breon, and what I discovered after speaking to him and a few other people is once you have something like Starship, you can start manufacturing pharmaceuticals in space and using protein crystallography, you get about a 30 to 40% increase in yield on manufacturing, high cost, high margin pharmaceuticals that goes directly to the bottom line of the pharmaceutical company. And so there’s other things you can do up there that we’re now getting into, but they require scale.
Kelli Kedis Ogborn:
Yes
Michael Mealling :
You can’t do it on a Falcon nine, you couldn’t do it on the space shuttle. You need tanks, the size of houses to be able to do this stuff at an economic scale. And I think going to drive a lot of things,
Kelli Kedis Ogborn:
You need the infrastructure to be able to do it on scale, but you also then need the routine launch. I mean, really it’s looking at launches every one to three days as opposed to one to three months or even multiple a year, multiple space.
Michael Mealling :
I think SpaceX is launching every day now.
Kelli Kedis Ogborn:
Yes. But even that, the expanse that we’re talking about, it needs to not just be SpaceX and we need
Michael Mealling :
A lot of people launching every,
Well, okay, that’s another thing that is currently hampering the industry is unless you can buy an entire Falcon nine, your spacecraft is that large or launching as many enough of them getting on one of the rideshare missions has gotten incredibly difficult. You’re now looking at waiting a year and a half to two years to get on a Falcon nine flight, a rideshare. A lot of that has to do with the number of spaceports we have, where you can fly from and the rate at which we can fly. So I could solve all these other financial problems, but we have a severe bottleneck, the ability to get to space, and that has everything to do with the fact that we’re flying out of Kennedy Wallops a little bit. If you’re going polar, you can do it out of Vandenberg, but we need inland and that requires a legislative change.
Kelli Kedis Ogborn:
Yes, it is very much an infrastructure play. And I think what’s interesting is that people sometimes often forget the ground stations and all of the other aspects that enabled space to grow. And particularly when you look at economic growth, last year the largest sectors were p and t, so utilization of space data and then it was ground stations was number two because of all the constellations going up and the linkage back to earth that people forget about. This leads me to another point, which I think is just as critical going back to all of these different levers we need to enable, but the role of policy and geopolitics in actually being able to expand a truly commercial market because to your point, we can create all this technology, we can create the conditions, but we have to get to scale, we have to get to operational cadence, and we have to have the capacity to do so.
And even when you talk about spaceports and just the cadence of launch, there’s pushback on things around sustainability and environmental concerns and obviously space debris and space traffic management, and then where you launch from around the world and what you connect with. And so curious, your role on policy and geopolitics. I know you have a lot of comments on that. And then the subtext of that though is what should influence, what should the policy influence the tech? Does the tech influence the policy? Obviously it’s not a perfect one-to-one because it’s all coming together, but how do you think the first mover should play out?
Michael Mealling :
If I knew the answers to all that, I’d probably be president, but God, I would never do that. Never do that. I think, so I do spend some time on the hill and talk to a lot of staffers and members. There is a significant disconnect between what’s going on, what congress thinks it’s going on, what congressional staffers think is going on, but all of that is really disconnected from what can happen because for those of us that are kind of in this business, it’s kind of natural for us to be able to extrapolate, well, if I get launched down to this, I can start doing this and I can start thinking about it. But as general Saltzman head of Space Force said at the end of last year, I had no idea that a thing like Starship could exist for me to even ask for. So I had a failure of imagination to know what was even possible to start thinking about asking for it or planning for it.
Kelli Kedis Ogborn:
Oh, interesting.
Michael Mealling :
And so we run into that in congress quite a bit. So there is something that we are not doing, and I think a lot of it has to do with when companies are talking to Congress, they’re asking for a very short term thing. I want this contract and this budget so I can get my Applications To get my very transactional, but what they don’t, and this is something I’ve heard from several lobbyists, is like, all I’m going to tell them is what I need right now. I don’t want Congress getting out ahead of us to overregulate or over anticipate or anything like that. So it’s a message management, but at the same time, now you’re leaving Congress within this information vacuum and now they don’t know why we’re doing these things or why are these important? I think that’s a problem that the industry has. We need to go out and talk to Congress going, this is the world we’re trying to build and we know we can build it.
We know we’re not violating physics. We know there is some market demand and we can get there, but we need your help. And that’s one of the other things that I’m currently trying to change is when the space industry goes to Congress and says, I need your help, Congress hears, oh, you want me to pay for it? And a lot of cases, that’s not the case. What you would like to have is a better investment environment, a better regulatory environment, or sometimes all you want is rhetoric, is Congress going, that’s awesome, we want to get behind that. We like that. That’s a good thing. And I think there’s a little bit of a disconnect between the policymakers and the companies that are out trying to do things and not wanting to trigger Congress into doing something that is maybe premature. And so I see a lot of that, but on the policy side, I do think there, and I love my only friends on the hill, but there is a thing that we do where we do policy by science fiction,
And I am never going to name names, but I have had people, honest people in policy, not in space specifically, but staffers and everything else, reference TV shows like The Expanse, as Expositive Ways of informing National Space Policy, and I’m like, no, it’s science fiction. And if you talk to the authors, it’s actually 17th century anti-colonial allegory, not even real science fiction. Oh, I’m going to get a hate mail for that saying that. So I think there’s some really policy disconnects about what we’re trying to build, how we can do it, and which levers Congress is willing to turn and which ones it can’t and which ones are more important. I think we need to have more in-depth conversations, probably usually in a bar, getting to the nitty gritty of what everyone’s trying to do.
Kelli Kedis Ogborn:
Yeah, I completely agree. I think that people, it goes back to the conversation about things happening in silos and paying attention to one subsection of space. One thing that the Space Foundation has started to do is congressional series on space for staffers to get them smart on the various aspects of not only policy national security, but the commercial doings so that they can understand what’s actually real. I do agree with you. I think that those shows are helpful in the sense where it paints a future vision of what could be possible, but what could be possible and what is plausible are two different things, and how you get there and when you get there I think is the bigger challenge because I’ve even seen that kind of thinking be pervasive in other areas where some people are having conversations about asteroid mining and to your point, the yield and the economic return and the operational cadence doesn’t make a business sense, but that’s one vision that they’re putting out to the world. And then other people are trying to do earth observation data, and they’re all components that have economic return and value, but where are they in the value chain? How do they coordinate and what’s actually going to spur that commercialization flywheel?
Michael Mealling :
Oh yeah. One of the things I’m working on is value chain analysis using AI so that you can actually show people how these things could work. But one of the hardest things I have within the industry, it’s one of the critiques I have of the industry is there seems to be faith in a lot of cases that what I call the ultimate customer is always going to be there. I’m like, no, you actually have to go find that ultimate customer. I’ve been in several cases where I’ve asked space folks for the agriculture industry who is the ultimate customer, and a lot of people will say, the farmer. I’m like, Nope. If people didn’t eat food, you wouldn’t have an agriculture industry. And so as an investor, I will always grill these companies. I need to know who the final ultimate customer is, and if the ultimate customer is Congress, I really have to take a hard look at that.
In a lot of cases it is, but I think that, I mean, going back to the science fiction thing a little bit, the thing that I have found in a lot of people is a lot, unless you have, and I don’t know if you grew up with it or you live it or whatever, but a lot of people I’ve spoken with on the hill do not look at science fiction as being predictive. They look at it in the same way they would look at Lord of the Rings. It is fantasy, and that’s all it’s good for.
And that is sometimes a challenge because you’ll get a company coming in and going, this is something that we’re planning on doing. And unless you can really connect that to the going, we’re doing it, this is the customer, this is where they get the bolts from, that kind of thing. You do get some policy circles get kind of dismissive. If they’ve seen that on TV in a science fiction TV show or a movie, you don’t get that. That’s why I think the show for all mankind was really interesting because it helped people make the connections of, okay, if you start here going through each season, it took you, this is how you get to something that you might think is currently fantastical. But no, there is a path there. I remember people telling me in 19 90, 91 that there was no way you could build a globe spanning network. It would cost trillions of dollars and it just wouldn’t work. There’s no way. I was told to my face that it violates the laws of physics. And I’m like, yeah. So that’s one of our challenges is telling our story a little bit better, more realistically.
Kelli Kedis Ogborn:
Agreed. And I think that we’re in a good spot in the sense of space, particularly because it is also very much dominating news cycles now in other aspects that people are starting to pay attention a bit more, even if it’s just on the space enthusiast space, curious, it feels a bit more tangible, more real because it is visually and aesthetically seen in a lot of other ways. I think my bigger question to you right now in some of the time that we have left is we’ve clearly painted this picture that there’s a lot of different components. We knew that from the beginning, we’ve sort of disseminated, which what needs to happen in order to potentially give confidence to trigger the other areas to realize that this is something to engage in. Is it going to be more capital coming to the market to allow some of these other capabilities to demo? Is it going to be these middle barbell companies, as you mentioned, I call ’em the missing middle, but this aspect that are really need to go to demo to scale, to establish the infrastructure and the architecture that’s going to enable other industries? Is it government supporting, but sort of getting out of the way to not regulate? I mean, again, there’s not one first mover, but is there a moment or a trigger that might make people realize this is real and this is something that we need to pay attention to?
Michael Mealling :
I think for each audience, for lack of a better word, would need to see something different. So from the investment side, that missing middle needs capital to come back into funds and into SPVs to fill that out. And in the investment community exits are incredibly difficult. No one has gotten their money back in any significant way. We are not doing any significant m and a, we’re starting to see some hints of it.
And that money, once those exits happen, that money goes back to those investors, they made a good return, they’ll put that back in. I think that’s one thing that helps On the investment side, I think that we’re in an interesting political environment right now where everyone’s taking a side, but the one place that we always seem to have at least some bipartisanship is when it comes to space. And I think that the shape of what came out of the White House, while troubling when you get into the science budget and some of the other things, I think the recreation of the National Space Council as a place to be able to deal with all those competing interests, but the rate of success that a revamped Artemis mission, going to the moon, going to the Mars at the same time and demonstrating to the American people that we can actually afford to do both at the same time without breaking the federal budget and doing it all inside NASA, that would be sort of your existence proof where you say, we can do these things. And I think that coupled with just even a slightly friendlier investment market would start to break some of those things loose. Some m and a would really help.
Kelli Kedis Ogborn:
Yeah. Yeah. I think the m and a diversity of capital players, more institutional banks, family offices, folks that can take on a bit more of that risk and have that threshold. I also think that with this environment, when you take a step back, we’re in a really interesting time where it’s almost too big to fail, too important to get wrong. So we really need to start thinking about it in very specific and practical ways. But I also think that we’re kind of coming into an environment where we’re maybe going to start to see a shakeout and scarcity can also breed innovation in very creative ways to be able to accelerate some of these areas that maybe we felt like we had more lead time and now the rubber’s hitting the road where we have to actually get it done.
Michael Mealling :
And I think that’s one of the things where I almost want to go visit a few people I know in China, back when I did my MBA visit there a long time ago, thank you for providing a pride to get us off, gives back in the saddle. I hate to say it, but one of the things that prods innovation is competition
Kelli Kedis Ogborn:
Always.
Michael Mealling :
And that’s something that China’s doing us a favor. We just have to be able to step up to the plate and I think we have to step up the plate. And I wouldn’t say forget everything that’s come before, but the way we have been doing things since Apollo is not going to be what gets us to where we need to be.
Kelli Kedis Ogborn:
Agreed. Always. When I talk about the space economy, I say that we’re bookend by this Apollo era and the era of Artemis, and not from the missions itself, but the way that we engage space from a collaborative competitive instead of national security vertically integrated. It’s more tech progression, scientific exploration, but the geopolitics piece is always there. And to your point, it has been a good spur because space has always been a point of national pride for the United States, and we have the most advanced space industry in the world that is really trying to be emulated. And it was a good kick, I think, for our country to realize how to do this and particularly to give more space for these commercial capabilities.
Michael Mealling :
Oh yeah. And I think that one of the things that I find interesting is there are certain parts of the capital stack that have started to understand risk differently. And this is where the PayPal mafia comes in. And if you read zero to one, one of the rules of being in that community is if someone else in the community is raising that you have to invest or else you can do it once or twice, but then you get kicked out because you’re part of a community that invests and that amount of capital, but amount of ambition and skill together really does let you leapfrog over what more less risk tolerant investors would think is too difficult to do. But whether it’s SpaceX or Andel or Palantir or a lot of other companies, if you have a different understanding of risk and you have a longer timeline and you understand, and this is key, and this is really nerdy inside stuff, the role of secondary sales to provide liquidity along the way is an interesting engine for allowing capital to overcome what used to be thought of as insurmountable risk.
And so I think that that model is now being picked up by some of what you’ve seen lately is a lot of the large investment funds becoming registered investment advisors, RIAs, which lets them actually work in the entire capital stack, Lightspeed just did that. And that means they can participate all the way from the seed round all the way past the IPO and they can do debt anything along the way, and they have a risk tolerance because they have a longer timeline. And so I think that’s going to be very interesting because space doesn’t fit the internet timeline.
Kelli Kedis Ogborn:
No. And that I think is in some ways the insurmountable challenge for a lot of people mentally is it doesn’t, as we said in the beginning, there’s not a one for one comparison of any other industry. And so people either think it’s not for them, it’s too nuanced in a way that’s not understandable. But when you start to actually break it down pretty pragmatically and look at it just from a business stance, right, regardless of what the tech is and what the domain, you can start to, I think, justify and think through those economic returns a bit more fully.
Michael Mealling :
And it’s easier to step back from trying to understand the entire thing and just talk to the company that’s in front of you. If the company, they have a plan, they have a product, they have a customer, it’s easy to evaluate. The only thing you don’t know is whether or not the technology will work, but there’s probably a chance it will if the business case closes, do the investment. You don’t have to understand the entire rest of the way that everything’s going to work for the next 30 years to determine whether or not one company is going to be successful or not.
Kelli Kedis Ogborn:
Agreed. This has been such a fascinating conversation. Thank you for joining today. And the time went by really fast. There’s probably 17 other themes we could have pulled on, but I think as a framework, it laid a lot of really good ideas for what needs to be discussed, what is discussed, what’s not fully understood. And I think that hopefully, at least for the listeners, they got a better understanding of how the different chess pieces sort of play about and can influence in their particular verticals. So thank you for your time.
Michael Mealling :
There was a great thing that I think Greg Autry or somebody else posted on LinkedIn, it was a GoBoard And There were pieces down at the bottom and it was white. White still thinks it’s playing chess, and the rest of it’s a go Chinese game of go. And there are go pieces, and we’re somewhat in that kind of phrase right now. There are parts of the industry that are playing go and there’s parts of the industry that are still playing chess.
Kelli Kedis Ogborn:
That’s a great visual. I’m going to have to go find that on LinkedIn.
Michael Mealling :
I’ll send it to you,
Kelli Kedis Ogborn:
Please. All right. Thank you, Michael.
Michael Mealling :
Thank You, Kelli,
Kelli Kedis Ogborn:
To everyone watching. Thank you for joining in. Thank you for sharing your comments. I see that there’s been a lot of discussion. Stay tuned for Future Vector episodes, and please remember there’s a place for everyone in the global space ecosystem. We’ll see you next time.
Related Articles
Listen to the Podcast
Closing The Business Case of Space