How Jeff Bezos and Elon Musk are ushering in a new era of space startups

In early February, Jeff Bezos, the founder of Amazon and one of the planet’s wealthiest entrepreneurs, dropped the bombshell announcement that he would be stepping down as CEO to free up more time for his other passions. Though Bezos listed a few targets for his creativity and energy—The Washington Post and philanthropy through the Bezos Earth Fund and Bezos Day One Fund—one of the highest-potential areas is his renewed commitment and focus on his suborbital spaceflight project, Blue Origin.

Before space became a frontier for innovation and development for privately held companies, opportunities were limited to nation states and the private defense contractors who supported them. In recent years, however, billionaires such as Bezos, Elon Musk, and Richard Branson have lowered the barrier to entry. Since the launch of its first rocket, Falcon 1, in September of 2008, Musk’s commercial space transportation company SpaceX has gradually but significantly reduced the cost and complexity of innovation beyond the Earth’s atmosphere. With Bezos’s announcement, many in the space sector are excited by the prospect of those barriers being lowered even further, creating a new wave of innovation in its wake.

“What I want to achieve with Blue Origin is to build the heavy-lifting infrastructure that allows for the kind of dynamic, entrepreneurial explosion of thousands of companies in space that I have witnessed over the last 21 years on the internet,” Bezos said during the Vanity Fair New Establishment Summit in 2016.

During the event, Bezos explained how the creation of Amazon was only possible thanks to the billions of dollars spent on critical infrastructure—such as the postal service, electronic payment systems, and the internet itself—in the decades prior.

“On the internet today, two kids in their dorm room can reinvent an industry, because the heavy-lifting infrastructure is in place for that,” he continued. “Two kids in their dorm room can’t do anything interesting in space. . . . I’m using my Amazon winnings to do a new piece of heavy-lifting infrastructure, which is low-cost access to space.”

In the less than 20 years since the launch of SpaceX’s first rocket, space has gone from a domain reserved for nation states and the world’s wealthiest individuals to everyday innovators and entrepreneurs. Today, building a space startup isn’t rocket science.

Related: Jeff Bezos: Blue Origin ‘is the most important work I’m doing’

The next frontier for entrepreneurship

According to the latest Space Investment Quarterly report published by Space Capital, the fourth quarter of 2020 saw a record $5.7 billion invested into 80 space-related companies, bringing the year’s total capital investments in space innovation to more than $25 billion. Overall, more than $177 billion of equity investments have been made in 1,343 individual companies in the space economy over the past 10 years.

“It’s kind of crazy how quickly things have picked up; 10 years ago when SpaceX launched their first customer they removed the barriers to entry, and we’ve seen all this innovation and capital flood in,” says Chad Anderson, the managing partner of Space Capital. “We’re on an exponential curve here. Every week that goes by we’re picking up the pace.”

Anderson says that Space Capital’s $75 million seed-stage fund is focused on three areas of development in the space economy, mostly around the collection and utilization of data gathered in space: GPS, spatial intelligence, and communications.

Though it may seem like the stuff of science fiction fantasy, Anderson says the progress made by SpaceX and the vision laid out by Bezos with Blue Origin suggest that the new frontier may be open to innovation sooner than most people would expect.

“This frontier market stuff is a bit further out, but it’s a lot closer than a lot of people think,” he says. “SpaceX will be in a place to launch to the moon a lot sooner than people think, and they still are targeting this next Mars insertion window in four and a half years from now to launch to the Red Planet, so it’s really interesting stuff. ”

Will Bezos play nice with others?

Anderson’s expectations for Blue Origin, however, are a little more tempered than his optimism for the progress made by SpaceX, as the former is yet to successfully launch a vehicle into orbit. While Musk’s company works closely with NASA and a range of smaller startups and contributors, and has demonstrated a commitment to transparency and collaboration, Bezos’s outfit is largely operating under a shroud of secrecy, partnering only with large defense contractors and prioritizing self-reliance over collaboration.

“Their approach to this is they’re kind of going it alone; they’re building their own launch vehicles, they’re talking about building their own space station, they’re very vertically integrated,” Anderson says. “Because they’ve been doing it in a silo there just hasn’t been the same sort of impact with regards to startups.”

Many in the space industry chalk it up to a difference in mindset. Musk, the Silicon Valley entrepreneur behind Tesla, the Boring Company, OpenAI, and Neurolink, is an engineer at heart, and demonstrates advanced expertise in building complex technological systems. Bezos, by contrast, is often recognized for his leadership and business acumen, as well as his often cutthroat tactics.

“Just looking at [Jeff Bezos] versus Elon, people don’t really understand or appreciate the extent to which Elon is just an insane engineer—he’s just very good at engineering himself,” says Tim Ellis, who cofounded Relativity Space after leaving his post as Blue Origin’s propulsion development and 3D-printing engineer in 2015. Since that time Relativity Space has built a massive 3D printer that can autonomously build rockets, and reached a valuation of more than $2 billion.

“Elon is a killer engineer, and a killer engineering leader; Jeff has proven himself to be a world-class operator [and] disruptor of industries, and Amazon is a behemoth of a company, and that’s largely due to Jeff,” Ellis says. “I’m all for long-term vision and focus, I think you can have that, but I think it’s a lot more inspiring when stuff is moving fast, and you have ways to take calculated risks and hire the best people and take that more disruptive startup approach, and perhaps [Bezos’s] involvement will give it more of that direction.”

Ellis says he still keeps in loose touch with Bezos and has a lot of respect for what he’s accomplished, but is concerned that his renewed focus on Blue Origin might sap away resources and talent from smaller players in the industry, which Amazon has been accused of doing in the past. “Perhaps if anything it could be less [enabling for entrepreneurs], because if Blue Origin just sucks up more talent it may cause less innovation and less of a platform ecosystem,” he says. “I could see that happening.”

The new space economy

The pace of innovation Bezos laid out in his talk in 2016 has already begun, albeit in a limited way. While billions of dollars are being poured into companies that are at the forefront of a new space economy, those startups are largely working on innovations focused on improving life on Earth, rather than moving it to another part of the solar system.

Crawford explains that the cost of launching a satellite has decreased significantly in recent years, thanks in large part to the work of SpaceX.

“Launch is a solved problem—there’s about nine launch companies around the world, not the least of which is SpaceX—but everyone focuses on launch because it’s sexy,” she says. “It’s not about launch, but about what’s being launched, about what comes next, about building out the in-space economy, that’s really where you’re going to see the innovation and the excitement and the valuable new businesses. It’s about what’s going on the launch vehicle, not the launch vehicle itself.”

Crawford, however, expects to see asteroid and moon mining become a reality within the next 15 years, which could be incredibly lucrative, given the abundance of rare Earth minerals—such as gold, platinum, cobalt, zinc, and iron—freely floating in space.

“Asteroid mining and moon mining aren’t going to be possible unless there’s an in-space supply chain to sell those resources into,” she says. “What’s developing now are the nodes of that supply chain that will be the purchasers of these in-space resources, everything from in-space manufacturing to fuel depots in space.”

Crawford adds that SpaceFund is actively seeking out companies that may one day fulfill those needs. For the meantime, however, much of the technological development happening at the edge of Earth’s atmosphere is designed to improve life here on Earth.

“I look at space as infrastructure for a modern economy and decision-making, not rockets and space suits,” says Jonathan Fentzke, managing director of the Techstars Starburst Space Accelerator program. “Most of the work in low Earth orbit and space has been focused on remote sensing, which is understanding things about the surface of the Earth and the atmosphere, like weather satellites, which are helping predict disasters and improving crop yields.”

Fentzke adds that the new space economy has a lot of room for talent and innovation, and that the barrier to entry is nearing the point at which there can be, as Bezos put it, an “entrepreneurial explosion of thousands of companies in space.”

“Space is not yet plug-and-play, but we’re really close,” Fentzke says. “Asteroid mining and these other use cases aren’t there yet, but they’re totally plausible, and we’ve proven to ourselves as a society that we can create value [from these innovations], because the stuff that goes to Mars can also help us do stuff under the ocean, for example.”

Furthermore, Fentzke believes that innovations like artificial intelligence and machine learning will significantly accelerate our ability to innovate in space, especially with the focus and resources entrepreneurs like Bezos will bring to the sector. At the same time, however, he warns it will likely take another generation before we realize the dreams of science fiction writers like Isaac Asimov, who wrote about colonies on the moon.

In the meantime, Anderson of Space Capital suggests that the space-related innovations that are being pursued by startups today will increasingly affect our everyday lives.

“There’s stuff happening right now, not next year or six months from now but right now, and its super exciting,” he says. “The same way that every company today is a technology company, every company of tomorrow will be a space company.”