Editorial | Space Meets Silicon Valley

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Google’s planned $500 million acquisition of satellite startup Skybox Imaging, coupled with the search engine giant’s previously disclosed backing of the WorldVu satellite broadband venture, is part of a growing nexus between space and the entrepreneurial technology community.

The tech sector’s interest in space is not new: Microsoft co-founder Paul Allen bankrolled Scaled Composites’ development of the piloted SpaceShipOne vehicle, which won the $10 million Ansari X-Prize by flying to space and back twice within a week back in 2004, for example. And of course Space Exploration Technologies Corp. was founded by tech billionaire Elon Musk in 2002. 

But the new breed of entrepreneurs is different: Rather than attempting things in large part because they are difficult — space, especially launch, is the business world’s equivalent of scaling Mount Everest — these individuals and companies are leveraging space as just another means of gathering and distributing information. For them, it’s about applications, not hardware.

Skybox is a prime example of that thinking. The company’s founders, graduate students in a course on entrepreneurship at Stanford University, took a bootstraps approach, writing their own image-processing and change-detection algorithms and quietly raising financing from Silicon Valley venture capital firms. Skybox eventually brought in a space industry veteran, Tom Ingersoll, to lead the operation, but even he views the company first and foremost as an information provider. 

That’s both refreshing and healthy: As an industry, space has long shown a tendency to regard itself as its own justification. This helps explain why so many investors have lost so much in space over the years.

Fortunately, the space projects that are getting Silicon Valley’s attention these days tend to be low-cost ventures that leverage dramatic advances in spacecraft microelectronics, many of which were made possible by developments in other high-tech industries. These innovations, coupled with manufacturing advances such as 3-D printing, are shifting the risk-reward calculus of space investment in a favorable direction. 

Traditional space companies, including communications satellite operators — still the most purely commercial of the moneymaking space enterprises — are beginning to take notice. During a recent conference in Singapore, satellite telecom officials said the fact that Google and social networking giant Facebook are sniffing around satellite broadband is an indication that the established providers are coming up short in the innovation department, particularly when it comes to bringing down prices and reaching underserved markets.

If some of these Silicon Valley-backed newcomers wind up building a better mousetrap, that’s obviously a good thing. If they can spur the current establishment players to step up their game, so much the better.

Their emergence also is bound to attract renewed interest in low-cost microsatellite launchers, a perpetually elusive holy grail for the space industry. To date, companies like Skybox have relied heavily on secondary payload opportunities, often on Russian rockets. For example, a recently launched Russian-Ukrainian Dnepr rocket carried 33 small satellites to low Earth orbit, including 11 for Earth imagery startup Planet Labs and two maritime surveillance craft for Dauria Aerospace. While the piggyback approach does address the otherwise prohibitively high cost of launching these tiny satellites, it generally requires the owners of these satellites to compromise on deployment schedules and orbits, which can prove problematic for for-profit enterprises with little margin for error. This is why rumors that Google is mulling an investment in Virgin Galactic’s LauncherOne small-satellite launcher project make sense to many space industry observers.   

Of course the jury is still out as to whether companies like Skybox, Planet Labs, WorldVu and others ultimately will be successful — plenty of smart people have lost their shirts on trendy space investments. But these ventures already are providing a fresh new perspective on the value proposition of space, one that the establishment would be wise to understand and embrace.