The space industry has a rich history of building supply-chain relationships to deliver complex and exacting space systems. The industry is also no stranger to partnering closely with suppliers and customers, including governments, to develop and deliver new technology and advance the art of the possible.
However, while public-private partnerships are getting a lot of attention, the space industry has not traditionally leveraged non-supply chain partnerships as frequently or as fluidly as some industries. This is particularly true when it comes to “go to market” and “ecosystem” collaboration between two space companies or between a space company and a non-space company. These are partnerships where neither company is primarily a supplier or customer to the other. In this model partners collaborate to reach new customers or to deliver integrated solutions or both, often preserving choice for customers in the process.
Companies like SpaceX and Blue Origin have the financial resources to vertically integrate, go to market independently, and extend product and service capabilities largely with in-house resources. However, most venture-backed or smaller space companies need to rely on external partners as a core part of their marketing, sales, product, and customer service strategies. Established space companies are increasingly choosing to partner with companies outside their supply chain as well. With the advent of the entrepreneurial space age, the industry is forming more partnerships, innovating on business model design, and developing best practices for successful collaborations. This is a sign of a maturing industry.
Rocket Lab’s partnership with KSAT is a good example. Announced at the International Astronautical Congress in Washington in October 2019, this collaboration offers a complete solution for customers who need both a ride to space and communications services for their payload. Rocket Lab’s Photon kick stage hosts the customer’s payload, and KSAT offers the communications services. The full-service offering can be purchased directly from Rocket Lab. This lets customers focus on their payload and mission, rather than integrating and managing vendor products and services.
Rocket Lab’s business development administrator, Lisa Stojanovski, says it’s all about providing options for customers. “Customers can use any ground segment provider, but if they don’t have one lined up and want to take advantage of Photon, we provide the communications services leveraging KSAT.
“Customers’ eyes light up,” she says, “when they realize we can do it all for them in one stop.”
SES, a leader in global content connectivity solutions with more than 70 satellites in geostationary and medium Earth orbit, offers another example of joint solution partnering. SES collaborates with several leading cloud providers. As the business world shifts increasingly to cloud computing, many companies have critical remote operations that remain disconnected from the cloud. SES solves this problem by offering dedicated, private network connectivity via satellite communications bundled with cloud services from cloud providers like Microsoft Azure.
Sergy Mummert, SES’s senior vice president of cloud and strategic partnerships, says this reduces risk for customers and lowers sales barriers. “Together with our partners, we are building out a suite of targeted services for each market segment,” Mummert says. “The value proposition of the partnership couldn’t be clearer. SES drives more network traffic. The cloud provider delivers more services. Customers get a vetted solution that provides more capability at lower cost.”
Some entrepreneurial space companies that initially started with an in-house approach are migrating to a business model which incorporates partnerships as a core strategy. Planet, one of the industry leaders in Earth observation and remote sensing, is a case in point.
The Earth observation segment has a dual go-to-market challenge. First, complex images and raw data need to be transformed into usable insights or decisions that business users can easily consume. Second, these decision solutions need to be marketed and sold in unique ways to very different segments and buyers in distinct vertical industries. After initially trying to go it alone, Planet created a partner program to address these obstacles.
Planet’s partner program connects customers to experts who can deliver specific vertical solutions across industries as diverse as energy, forestry, agriculture, and government, among others. This is a classic example of a go-to-market partnership model. It enables Planet to scale faster by reaching more qualified customers across a broader set of market segments with value-added solutions.
Daniel Faber, the CEO of Orbit Fab, highlights another type of strategic relationship. He believes market development partnerships can be hugely valuable in nascent markets or when a shift in business practices is required. Orbit Fab provides “gas stations in space,” propellant tankers that refuel satellites for revenue-generating life extension and other novel use cases. With a keen understanding of the entire satellite value chain, Orbit Fab is planning a joint demonstration mission with a satellite servicing company. While proving out the technology is one goal for the partnership, Faber says the primary objective “is to provide confidence to satellite operators and allow satellite servicers to build refueling into their business models.”
Partnerships certainly aren’t easy, and they aren’t without risks. Justifiable concerns include loss of control, protecting intellectual property, and management overhead. However, with the right process and agreements, these factors can usually be mitigated. Ron Faith, the chief operating officer at ground station as a service company RBC Signals, says, “Partnerships come with a lot of complexity and dimensions and need to be well crafted. Otherwise, some partnerships can fail to produce.”
Yet, RBC Signals has made partnering a core part of its strategy. Faith says partnerships can be critical in driving standards, which reduces unnecessary friction in the market. He also sees value in leveraging partnerships to signal the market. Most important, Faith says, “partnerships can help smaller space companies punch above their weight and scale faster,” for instance by collaborating with larger prime contractors.
In an industry as diverse as space, the opportunities and objectives for partnerships vary considerably by market segment and by company. For instance, the business drivers that dictate partnership strategies are typically quite different for infrastructure companies than for application companies. Even within a segment, different strategies and values drive unique approaches to partnering. There is no one-size fits all model.
Yet, according to an increasing number of space leaders and entrepreneurs, every space company needs to think holistically about its make-buy-partner strategy — what activities to keep in house, what products and services to procure from suppliers, and how to partner to provide improved market access and more competitive offerings.
Some companies stumble into a partner strategy by trial and error. Getting it right, though, usually requires developing a deep understanding of one’s ecosystem and value chain. It also requires thinking through each core function — research and development, marketing, sales, production, delivery, and support — to evaluate where partnerships can add value. This thought process leads to a practical and dynamic partner strategy — including partnerships that may come and go over time — as a company changes and grows.
In an industry as difficult and complex as space, very few companies can go it alone. Partnerships are a strategic weapon space companies can deploy to build awareness, reach more customers faster, and deliver more complete and valuable solutions. To grow the space ecosystem, and ultimately develop a true in-space economy, the industry needs to incorporate partnerships into its business models. Partnerships are the oxidizer for the space economy, and the companies who excel at partnering will rocket ahead of the pack.
Stan Shull is a space and software industry consultant at Alliance Velocity, LLC, where he specializes in partnerships, competitive strategy, and exit planning. Follow him on Twitter @stanshull.
This article originally appeared in the Sept. 14, 2020 issue of SpaceNews magazine.