The space economy is just that, an economy, governed by the same laws of supply and demand that apply right here on Terraferma. It's a place of unparalleled possibility for humanity, and it's undergoing a revolution. But how does one unlock the final economic frontier? [Music] Welcome to T-Minus Deep Space from N2K Networks. I'm Maria Varmasas. Brendan Rousseau and Matthew Wienzerl have written a book, "Space to Grow," unlocking the final economic frontier. Their research and teaching focuses on economic policy and the economics and business of space. Their book shares fundamental tools from economics to understand how the market in space is forming, how it's fast becoming a source of value for businesses across industries and for society as a whole, and how we can best ensure that its growth benefits us all. And we should note here that views expressed by Brendan in this interview are his own, and not representative of Blue Origin. My name is Brendan Rousseau. I am a co-author of Space to Grow, and I'm currently a strategy manager at Blue Origin. And I'm Matt Wienzerl, and I'm a professor at Harvard Business School. I teach economics, in particular a lot about the role of government in the economy and economic policy more generally. Co-author with Brendan of Space to Grow, unlocking the final economic frontier, and thrilled to talk with you about the book and also everything that went into the book, the course we teach, the research we've done, because it's been quite a journey. Thank you both for joining me. I'm so excited to be talking to you both about this book. It feels extremely timely, so let's just dive into it. So, give me the pitch. Someone give me the pitch for this one. Sure. Who's ready for that? Yeah, go for it. I'll kick it off. So, there's a lot of great writing on space, great books, great journalists, writing great articles, great podcasts, and over the last decade, at least, Brendan and I have learned from all of those incredible sources. And as we were doing that, so we were developing our own thoughts and our own writings and then our own course, eventually on space that we teach at Harvard Business School, we did get the sense that there was maybe one piece missing that we could add to, given our training, given our expertise. And the basic idea is that maybe the most fundamental change in the sector over the past couple of decades versus the previous five is the changing relationship between the public and private sector. The role of the government relative to markets. And that's something economists have been studying for literally millennia on Earth. And so the idea was, can we bring an economist's, a business school professor's lens, to what's happening in space and try to unpack it, put it back together, and help us all understand a little bit better what's going on in a slightly different way. Yeah, and one of the things that we've found is, number one, that using the tools of economics has been so helpful for our understanding of stepping back and figuring out the bigger picture. But then also as a teaching tool, as a way of kind of following this narrative of what's happened in the space industry. And through the lessons that we can draw where we may be going, it's been this great tool for folks in the industry or people who are just learning about the industry to step back and evaluate it on its whole. So it's been super interesting and really glad that this book is coming out so we can share it more widely with folks who are interested in space. Yeah, I'd love to hear you both talk a bit about that econ lens because I was terrible at econ in college, really abysmal, and I'm very, very sorry to be messing up to that. But I recognize that that lens does bring something very unique to this conversation because of the many space business, sorry to summarize in that way, space business books that I've read, that I don't think I've ever seen anything brought to the table like that. So what can you go in a bit of depth of what that would look like? Always happy to talk about economics. Right. It is your world, right? So I appreciate very much what you said. And a lot of people I think think of economics maybe as this dry, like kind of not particularly enjoyable set of hard and fast rules or numbers or statistics. And really the beauty of economics, to be honest, is as a way of understanding this incredibly complex world we all inhabit. And it gives us some really powerful, simple tools just to give you one example from the book that we use a lot is the supply and demand diagram, which anyone who's taken economics has seen it before. And the reason it's the Swiss Army knife of economists is that it is just so useful for clarifying your thinking. And I was just teaching a couple of sessions in the course over the last couple of weeks where we introduced the simple supply and demand framework. We talked about how SpaceX has shifted the supply curve, as have so many others, and now there's a big challenge we all face and how do we make sure that the demand side of the market is really robust? And so just that's just like a simple example of how and then we sort of use that to come up with a taxonomy of how different companies are trying to move the demand side forward in the space sector. And it just provides a great way to try to make a little bit of simplicity out of what's a very complicated story. Yeah, that's a fantastic framework. Yeah, Brendan, I see you nodding. Is it something you wanted to add as well? No, no, I just wanted to reinforce the last part that I was talking about the taxonomy of what different companies are doing to contribute to a more exciting, more efficient space enterprise. One of the things that I feel like is really helpful about this framework and about using supply and demand in general is that when you have this framework in mind, it immediately brings to mind when you hear about these companies, "Okay, how are they impacting the bigger picture? Are they bringing down costs? Are they increasing supply? Are they increasing access? Or are they more on the demand side?" Or in a lot of cases, they're doing both, which is kind of this really interesting thing. So that's been a super helpful framework for me. And that's great. Can I add one other quick thing? Because this is, Maria, for your listeners, we were talking before we started about how incredibly rewarding it is for you to hear that people recommend your podcast to others who are trying to learn about the sector. And that is an amazing thing. And we have a sort of parallel experience where people who've read the book are taking our course or whatever, they tell us, "Look, you know, I just remember this tool that you told me about." And of course, it's got its limitations, like it's a simplification of reality, etc., etc. But it is such a powerful thing to pull out of my back pocket when I'm trying to understand something new. And it could be supply and demand, but it's also, there's a number of other things that we talk about in the book. There's this game theory concept called the Staghunt game, which I can't tell you how many times I've used it to explain what's happening in space or things like the tragedy of the commons with space debris that people have told us have made a real difference in their work. And that's exactly what we hoped would happen. Okay, I'm familiar with the tragedy of the commons, at least I think I am. I may not be, but Staghunt, what? Yeah, so this is great. Is there a nutshell version of that? Yeah, yeah, absolutely. And I'm so glad you asked, because honestly, we hope every single listener reads the book, but we also, our point here is just to get this message out, get people excited, get people using economics. Most of your listeners have probably heard of this game called the Prisoner's Dilemma. That's like the famous game theory game. And the Prisoner's Dilemma, you'll remember, is this, it's like a trap that two prisoners find themselves in, and it's kind of a sad story. So the Staghunt is a much more happy game theory concept. It's a similar structure, but the big lesson is that when there are, say, two actors in an environment, they can either kind of go for small game, like on their own, they can go after sort of small opportunities, or if they can find a way to coordinate together, they can get the big game, like the Staghunt, they can get the Staghunt. And so the, what this game, if you work through the details as we do in the book, gives you some insights for how we can try to switch across those equilibria and make that coordination happen, whether it's through governments or venture capitalists or big companies doing this on their own. But of course, I think as most of your listeners are thinking, we're all in this space business for the big game. I mean, the small game is great. Single, doubles, those are good, but like, we really are going for the big game, and that's, that's one of the, my favorite chapters in the book. And there's a lot of areas today where we feel like it's super applicable. Maybe most near term is commercial space stations, where we all feel like there's got to be some killer app for commercial space stations. But of course, there's all these different pieces that need to work together. You need different groups. And so we see companies and even different space agencies teaming up to try to make these space stations a reality. We see that as an example of this Staghunt in action. And of course, it's a model that goes all the way out to the moon and beyond, where we're going to see, okay, through coordination, what can we pull off? What value can we make? Can we have the parts add up to a sum that's greater than just the constituent parts? And so it's super exciting to see some of these ideas in action. Yeah, you're helping me overcome my old fear of econ. (laughs) I wanted to ask, in the description of the book, there was a bit that I thought was super fascinating about talking about what's real and what's not in the space industry. And I kind of wanted to get your takes on, okay, what do you think is real and what's not? Because that can mean a whole lot of things. But I'd love to hear your thoughts on this. Yeah, sure. So let me offer one sort of conceptual observation first on this, which I think is important maybe to keep in mind. And it's something that I think Brendan and I both learned a lot as we were writing this book, which is that, okay, so if we talk about this changing relationship between the public and private sector, what's really going on there is that market forces are making their way into space that they really, in the way they haven't before. And market forces have a lot going for them. There's a lot that we can get out of them in terms of efficiency and innovation and so on. But one of the things that I think is often less appreciated is that markets are also fundamentally unpredictable. Like the beauty of markets actually is that, and we talk about this in the book, is that they pull information from wherever it is and it's often not widely understood information and they synthesize it and they reward it and they incentivize the use of good information in a way that we really don't otherwise know how to do. And so I think the space sector has to make a bit of a shift from, okay, we know what our plan is for the next 20 years because the government agency told us what it is, that's the goal, versus like, wow, there's so much going on out there. It's going to be hard to know exactly where the value is going to come from. And so part of what we're trying to do with like separating the real from the fake or the whatever is to also get people thinking in a slightly different way about how to measure or how to predict going forward or even to avoid predictions. Okay, so Brendan, I don't know if you have any real fake takes you want to jump in with first and then I can add on. No, no, I mean, that's kind of the big question. One thing that's helpful for me to remember as we think about what is this era really about? Of course, like the previous year, you could think about it as a big drop in launch costs, increase in launch availability and kind of the beginning of companies starting to figure out what are launch costs, lower launch costs really good for it. What is space good for kind of a reevaluation of how we can use the space enterprise to benefit more and more people. I think if this year is going to be about anything, I think it'll be about experimentation that we are going to have a lot of different companies and organizations seek out new and interesting ways to create value through space. And not just like the exotic kind of sci-fi stuff of 3D printing organs or whatever, but like true terrestrial ways of delivering value. It just happens to be through space. And I think it's part of that process as Matt was alluding to with Market Force is playing a more and more prominent role. Some ideas will take off and really prove to be fantastic and others will maybe fizzle. But I think that's part of the process now that's something that with this change in the ecosystem, we've got to get more comfortable with that. So that's something I'm really excited for. I think we're really going to see some new and exciting things happen. [Music] We'll be right back. [Music] And just to, you know, to your question originally to Maria, one of the things we talk about is in the near term, I think we need to be real with each other in the space sector that the dominant source of value, certainly the dominant source of returns to investors is going to be in data, data through space, data from space, etc., etc. And look, most of us get into space probably not for the data. I mean, not to assume anything about your listener base, but... I mean... ... at least those of us who maybe come to space earlier, come to space for some of the more grandiose visions. And those are really important. I mean, in fact, I think it is, there's a really interesting discussion to be had, and we have it at various places in the book, about the importance of keeping alive those purposeful, passionate dreams about space to attract talent, even to attract capital into a sector. We don't want space to just become just like any other sector. That's part of its appeal. But at the same time, to widen the family, so to speak, outside just the already convinced, we do have to be clear that there is so much value that can be delivered through connectivity and communications. And there are so many businesses that we think could expand their use of space in that even relatively narrow range, that that's kind of the real part that we want to make sure people hear. And for me, that's one of the really beautiful things about this industry, and especially at this moment now, is there's so much real tangible value and benefit we can bring back to people on Earth through space technologies. I think we all kind of have a sense that we're just scratching the surface on what space can do for the planet. So we're all really excited about that. But at the same time, it is truly a limitless frontier. You know, the further that we push, we're not going to hit the edge here. There's so, so much to be excited about in the space for space applications category. So I think for people who are passionate about serving their fellow people or creating new opportunities for businesses here on Earth, or who want to, you know, embark on some civilizational transformational journey, space has got all of that for everyone. So if you're considering jumping into the space game, the water's fine. Come on in. Love it. Love that pitch. Yeah, I mean, the phrase that every company is a space company. They just don't know it yet. I hear that a lot. And I know in the many VCs that I've interviewed in the course of this job, they're looking for people to figure out how to bring data to sectors that haven't figured out that they actually can use it yet. So I mean, that's just, if I had the type of entrepreneurial brain to figure that out, I'd be doing that. But I don't, I don't know how to do that. So it's not my world. And it's such a great, you just another thought on that. Because we just had a class on exactly this topic at HBS last week. And so I was talking with our students and we had a couple of guests come in to share their perspectives from their companies doing exactly this. And, and it really is, I think, rewarding to dig into the challenges that these companies face. So you've got this amazing technology. It delivers data we've never had before. Who are the potential customers? How do you actually make it useful to them, not just available to them? Are you going deep on some types of customers? Are you trying to create a product for all? Like there really are just classic business style question that we can now lean into in space, in a way that maybe wasn't so relevant before. And that just widens the opportunity set for so many millions of more people. Yeah, yeah, I agree. It's a really fascinating, is inflection point the right phrase to be using? That's a very loaded term for an e-con. No, that's great. I love that you use that term. Inflection point is such, I feel like we have the potential for this to be an inflection point. And that's part of the reason why we see so much excitement and enthusiasm around the sector now. But I think one of the benefits of studying the history of space activities is that you can see that there were moments before when we thought we were at inflection points. Now, I think we have real reasons to believe that with the introduction of market forces that there's kind of a self perpetuating cycle here that will lead to not only bigger and better things, but truly like disseminated value where normal people, quote unquote, can actually benefit from this. But if I take one lesson away from the research we've done and if there's one lesson that people take from our book Space to Grow, I hope it is that we don't take progress for granted that we have so much potential, but it will truly take people of this generation and the next generation pushing the frontier forward every day and truly taking a hard look at their business plans and their technology and how this system works so that they can make the most of it and unlock the opportunities that we think truly exists out of Norban and beyond. Beautiful place for us to start summing up our conversation. I want to make sure I give you both sort of the opportunity to leave the audience with any final thoughts. So, Brendan, since you just want to go to you, Matt, and then Brendan, you can have both, you can both have last word. No, that's great. Brendan can close this up. I'll just mention one thing. Again, I know you're reaching a whole broad range of people with this podcast. And one thing we often say to people in business who maybe aren't as connected to space is it builds a little bit off what Brendan was just saying. It does take individuals. That's one lesson, I think, from the history of space that individuals matter. And what's so great about this moment is you could be that individual in your organization. Right? Like, if every organization, Fortune 1000 Company, whatever, Russell 3000 Company, or every nonprofit and every government agency, at one person who was just trying to see around the corner, how might we use this amazing new capability from space to help us do our jobs better? It would make an enormous difference for all of us to have those ideas frothing at a decentralized level. So we hope that people will get excited about it, maybe pick up our book and help them learn a little bit more about how to seize this opportunity. [Music] That's it for T-Minus Deep Space, brought to you by N2K CyberWire. We'd love to know what you think of this podcast. You can email us at space@n2k.com or submit the survey in the show notes. Your feedback ensures we deliver the information that keeps you a step ahead in the rapidly changing space industry. N2K's senior producer is Alice Carruth. Our producer is Liz Stokes. We're mixed by Elliot Peltzman and Tre Hester, with original music by Elliot Peltzman. Our executive producer is Jennifer Eiben. Peter Kilpie is our publisher, and I'm your host, Maria Varmazis. Thanks for listening. We'll see you next time. [Music] [Music] [BLANK_AUDIO]
