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Hi friends 👋,

Happy Monday! Big news over here at Not Boring HQ: our daughter, Maya, was born last weekend! 🥳 Mom and baby are healthy and happy, and we’re enjoying the time together as a family.

The plan for my month of paternity leave is to bring in guest writers each week who are experts in areas that I think are going to be deeply important. Last week, we had Kevin Miao join to talk about securitization on the blockchain. Today, we’re bringing in the space cadets from Payload Space for an incredibly deep dive on the space economy, in the form of an S-1 for the industry.

They nailed it. I was giddy reading the draft that Mo Islam and Ryan Duffy sent over this week. We’ve touched on space a little bit in Not Boring, and we’ve invested in space companies like Varda and Hadrian (see deep dive), but I don’t know nearly as much as I want to about all of the progress going on in the industry. Space sounds like futuristic sci-fi, and if you’re not familiar, it’s hard to believe how vibrant and multi-faceted the space economy is today.

Plus, one of the things I’m most jealous of Dev and Maya about is that they’re almost certainly going to get to travel to space in their lifetimes. As a responsible parent, I want to know what they’re getting into.

There’s no one better at covering space than the Payload team. It’s what industry insiders read, and how I’m trying to get up to speed myself, and I’m pumped that they agreed to write a Not Boring-style deep dive for us. If you’re at all interested in the … space … and want to stay up-to-date, you need to subscribe to Payload.

5…4…3…2…1… Let’s get to it.

The Space Economy

(Read Full Breakdown Online)

TABLE OF CONTENTS

1. Prospectus Summary

2. Market, Industry and Other Data 

3. Use of Proceeds 

4. Dilution 

5. Business (Models)

6. Principal Stockholders 

7. Underwriting 

8. Legal Matters 

9. Risk Factors 

10. Final Remarks

PROSPECTUS SUMMARY

Here at Payload, we try to be very judicious and sparing with our use of space clichés. We’re a B2B and B2G publisher writing for the shot-callers of space. They do not want to read a half-baked joke that “actually, this is rocket science.” They’ve heard it before. It doesn’t fly.

But today, dear readers, Payload is temporarily parting with our time-worn tradition in this prospectus summary and we’re going to let the clichés rip. 

A new space age is upon us, characterized by fierce competition between superpowers and startups alike. Dozens of space unicorns are hitting escape velocity. Finally, unlike crypto, we actually are going to the Moon. Very soon. 

We’re living through an age of historic firsts and massive developments, good and bad, that are happening daily in space. Just in the last few weeks, we’ve tracked the following in our daily newsletter: 

• On July 30, a massive Chinese Long March rocket made an uncontrolled reentry (aka tumbled back from orbit to Earth), with debris falling on Malaysia and Indonesia. 

• On Aug. 4, five separate launchers flew orbital missions in one day. Four of the launches were conducted by American companies, one was China’s state-owned aerospace corporation. 

• That same day, Blue Origin launched six people to suborbital space, including YouTuber and Dude Perfect cofounder Coby Cotton (his ticket was crowdfunded by a DAO).  

• SpaceX is launching its Falcon 9 at a less than weekly rate in 2022 and has refurbished and reflown some of the first-stage boosters in under a month. The company also just conducted its first static fire test of the gargantuan Super Heavy booster at its Starbase in south Texas.  

• Three separate launch unicorns–ABL Space Systems, Firefly, and Relativity–are poised to attempt to reach orbit for the first time in the coming weeks and months. 

• A wave of multibillion-dollar mergers is sweeping over the legacy satellite sector, with details emerging about two blockbuster deals that are likely to move forward. 

• All the while, the James Webb Space Telescope has been sending back unreal photos of our galaxy and literally letting us travel back billions of years in time. 

There’s plenty more where that came from. In this essay, we’ll tell you everything you need to know about how we got here and where we’re headed.

Payload was founded on the premise that the space industry is at an inflection point. What was once monopolized by superpowers is now being privatized, with companies taking greater share of low-Earth orbit, rocket launches, and more. So, because we passionately believe in this inflection point thesis, we’ve packaged this new space primer as an S-1. It’s an intellectual exercise unpacking what taking the space industry, broadly speaking, public. Is it tech-growth stage? Yes. Is it profitable? Ehhhhh. What else do you need to know? Well, let’s dive in…

MARKET, INDUSTRY AND OTHER DATA

Space: A brief history 

On Oct. 4, 1957, the Soviets launched the first artificial satellite into space. The soccer ball-sized spacecraft was named Sputnik. That word, we think, went to become one of the most famous Russian words in non-Russian tongues and English-language history books. The “Sputnik crisis” caught the West completely by surprise, clearly dividing history and the Cold War into two separate eras: “pre-Sputnik” and “post-Sputnik.”

Perceptions are everything. The New York Times had a rare three-fold headliner story on the Soviets’ successful launch. Paranoia set in among American policymakers and the general public awakened to the space age. Post-Sputnik, the perception of a Pax Americana and pacing Soviet Union gave way to a public view that the Soviets had achieved a step change not just in space. The Soviets were running up a “technology gap” over the Americans. 

The race was on, with the two superpowers’ space programs kicking off a new front in the Cold War and one of the greatest technological showdowns of modern history. 

Less than one month after Sputnik 1, the Soviets sent a ~1,120 lb. satellite into Earth orbit with radio transmitters, a thermal control unit, sealed cabin, and a husky-spitz mut named Laika. The Soviets hadn’t build any Earth return capabilities into Sputnik 2, so sadly, Laika didn’t make it 😓.

The pressure was on the Eisenhower administration: do something! The US delivered with Explorer 1, the Americans’ first satellite, successfully launched into space on Jan. 31, 1958, a full 119 days after the Soviets. Explorer 1 was the size of a beach ball (note: Payload only uses Earth sports balls as a metric unit for spacecraft management). 

Still, congressional leaders felt that space deserved more of a federal focus–and Eisenhower established NASA in 1958 and abolished NACA (the agency’s predecessor, started in 1915). NASA’s charter was to exercise “control over aeronautical and space activities sponsored by the United States.” NASA was to handle civilian space efforts, but the Pentagon still had authority over military space programs. 

Over the next three years, the Soviets and Americans worked on their space programs, but on April 12, 1961, it was the Soviets who sent the first person to space: Russian Lt. Yuri Gagarin. Mercury-era astronaut Alan Shepard became the first American to reach space (sub-orbitally) less than a month later, on May 5, 1961. 

That same year, JFK set forth a national goal: “Landing a man on the moon and returning him safely to Earth within a decade.” The Americans, it should come as no surprise, were able to meet this ambitious call less than a decade later, with Neil Armstrong taking “one small step” but a “giant leap for mankind” on July 20, 1969 (nice). 

As Tom Wolfe expertly chronicled in The Right Stuff, Air Force test pilots who were flying planes with rockets strapped on them in the desert would become the US’s first astronauts (part of the Mercury program). The Apollo era, though, was a high watermark for the US space program, no matter how you slice it. Astronauts were living legends and international celebrities. They drove (or, more accurately, raced) Corvettes across town in Houston. Life magazine struck a deal with the astronauts and their families to tell their stories (albeit carefully overseen by NASA handlers). 

After the historic Apollo 11, the US would go on to send an additional five manned missions –Apollos 12, 14, 15, 16, and 17– and 11 men to the moon and back. Since December 19, 1972, no humans have been back to the lunar surface. 

Winning the race to the Moon and inventing countless technologies out of thin air–all while using less processing power for the whole mission than an iPhone uses today–came at astronomical expense. Going to the Moon cost $283B, according to one tally. In relative terms, NASA's budget peaked from 1964 to 1966, when it consumed ~4% of all US federal government spend. That number now sits an order of magnitude lower at 0.4%. 

That’s not to say that space activity dropped in the ‘70s. Companies began to launch communications satellites to carry voice, data, and eventually, TV. In 1973, the Pentagon kicked off the Global Positioning System (GPS) project. The project would take two decades to complete, with a prototype GPS bird going up 22,000+ miles above Earth in 1978 and the full constellation coming online in the mid ‘90s. 

All the while, interstellar robotic probes pushed further out into the cosmos. In 1971, an American spacecraft became the first to orbit another planet (Mars). The next year, the Soviets made history by landing a spacecraft on Mars (the soft landing wasn’t so soft, as video transmission ceased from the craft after 20 seconds). They later landed not-so-softly on Venus, too. By the end of the 1970s, the US’s Voyager 1 and 2 spacecraft had sent back stunning photos of Jupiter and Saturn. The Voyagers journeyed to Neptune and Uranus (no really). 

SPACE STATION

The Soviets launched the world’s first space station–Salyut 1–into low-Earth orbit (LEO) in 1971. The Soyuz 11 crew stayed aboard Salyut 1, but were killed by asphyxia due to valve failure right before reentering Earth’s atmosphere. The Salyut program would see a total of six stations launched–four for scientific research and two for military reconnaissance. 

The US launched its first space station–Skylab–between 1973 and 1974. Three crews occupied Skylab for ~24 weeks, and though the microgravity lab and Earth-observing workshop was meant to last nine years, it quickly lost altitude and ultimately ended as a failure. Skylab reentered Earth’s atmosphere, and as it disintegrated, cast debris across rural regions of western Australia and into the Indian Ocean. At least nobody died?

Skylab and Salyut walked so that the International Space Station (ISS) could run. 

Jointly operated by the US, Russia, Europe, Canada, and Japan, the ISS is one of the top engineering feats of the modern age. It’s been continuously occupied since 1998, longer than tens of thousands of you reading this have been alive. Right now, as you’re reading this, there are seven people on the ISS: three Russian cosmonauts, three NASA astronauts, and one European Space Agency astronaut. 

The ISS is also one of the most expensive things humans have ever built, at a cost of $150 billion (the $50 billion shuttle program is typically included in the cost of the ISS as it is here). The US footed most of the bill, and NASA shells out ~$3.1 billion a year to keep things running. All good things must come to an end, and the ISS is showing its age. The station is expected to be decommissioned and deorbited into a spacecraft graveyard in the South Pacific Ocean Uninhabited Area at the end of this decade. 

SPACE SHUTTLE 

Reusability is all the rage in rocket jock circles these days, but the concept is not new. 

You may very well have grown up watching Space Shuttle flights. The iconic vehicle was envisioned as a revolutionary transportation system that would usher in reliable, “cheap” (or cost-effective) transit to and from LEO. The spacecraft was reusable (though the boosters that launched it were not). Reusability was a key selling point. 

The shuttle became the American space program’s workhorse, and across three decades, the fleet of Columbia, Challenger, Discovery, Atlantis, and Endeavour flew 135 missions and 355 humans to space.

But the Shuttle never lived up to its dreams, and by one estimate, cost ~$1B per head to transport astronauts to the International Space Station and back. Tragically, two crews and 14 lives were also lost on the Shuttle. 

The Obama administration pulled the plug on the government-run program and the Shuttle flew its final flight in June 2011. Despite the program’s budget overruns and abject dangers, the Shuttle’s final mission was an emotional moment for the nation, NASA’s rank-and-file, space buffs, and astronauts alike. 

After that, Washington paid Roscosmos, Russia’s space agency, to take its crews to the space station aboard Soyuz rockets. 

Keep Reading Online for a full breakdown of the space industry today:

Continue Reading Online

Thanks to Ryan and Mo for the deep dive into space, Rahul for making it happen, and Dan for editing! Subscribe to Payload Space to get the latest insights on the space industry.

That’s all for today, we’ll see you Friday morning for a Weekly Dose of Optimism!

Thanks for reading,

Packy