Earlier this week, SpaceX again wow’d the world with the beautifully synchronized landing of its two Falcon Heavy boosters.

To cheers and gasps of excitement, spectators watched as the boosters plummeted back to Earth returning from their minutes-long trip.

As the massive engines hurled down, right after emitting a sonic boom, the booster engines relit in their much-anticipated firey roar to slow the descent. As the engines’ fall slowed, the company’s trademark landing legs extended and the monstrous and powerful metallic towers gently bounced to a landing, just seconds apart, as the furious fire from the rocket engines extinguished.

Now, while I am no fanatical, screaming SpaceX acolyte, even I have to pause to recognize the splendor, power, and gentle elegance of the physical assets SpaceX continues to churn out.

The company is truly a unique product that continues to excite and delight.

It’s very likely that what people are awed by SpaceX is more because “rockets are cool” or “their mission is to take us to Mars.” 

But when I see this company that repeatedly produces exquisite products and services, I think about the business process, the recipe. 

As small business consultant and author Michael Gerber writes, “The system is the product.” The mission of each and every business is to build their process - the product - to finds prospects, converts them to customers, and then delight them to not only keep coming back but to religiously evangelize on their behalf.

For the vast majority of the people who watch with awe-struck eyes, mouths-a-gap as the Falcon Heavy boosters bounce to a graceful stop, coated in black soot from atmospheric re-entry, having never been a customers direct customers of SpaceX’s service, they likely turn to one another and say, “SpaceX… Now that is a great company.” 

This is truly capitalism at its finest. As Adam Smith believed that is could be: specialization.

Beyond SpaceX, there are dozens of successful if not hundreds of other startups trying to do exactly the same thing, but with a unique twist. 

While competitors like Firefly Aerospace and Rocket Lab is similar to SpaceX, Relativity Space is trying to use additive manufacturing (3D printing) to reduce production costs. Other companies, like SpinLaunch, is taking a different approach, launching payloads into orbit by catapulting rockets using centrifugal technology.

One of the core aspects of a maturing market is complexity of products and services. There are a few reasons why we are living in an exciting time, on the precipice of a massive production explosion in space. And if you are interested in economics and how markets germinate and mature, you should buckle up and get a front row seat. It’s going to be a wild, but worthy ride.

The Maturing Market

The space economy has matured rapidly beyond just propulsion systems (i.e. rockets).

In the last decade, private capital has grown and surpassed public capital, flowing into various segments of the space industry. This shift from public funding to private investment has led to rapid advancements and a broader range of services and products. From rockets to satellite manufacturing to telecommunications services, the sector has seen an increasing number of service providers. The competition among these companies is driving the development of reliable and innovative products.

This rapid maturation and diversification promise an exciting future for the space economy.

Exciting Opportunities in Public/Private Partnerships

My background in health economics has shown me how complex and inefficient healthcare markets can be.

Healthcare markets are riddled with inefficiencies, conflicting individual and communal valuations of health, and perverse incentives that prevent natural market forces, like supply and demand, from optimally pricing health products and services. This complexity makes it fascinating when a person, company, or institution finds a tool, program or framework that promotes innovation.

In the space economy there is a steady progressive march in market maturation.

After a segment starts to mature, demand is cemented, and risk of return on investment is reduced, additional private capital increasingly flows in. Public-private partnership contracting and innovative financing models come way in advance to this transition. NASA’s shift from “cost-plus” to “fixed-price” contracting was that paradigm shift in the industry.

Fixed-price contracts were the boost the Space Economy needed.

As Chad Anderson explains in his book Space Economy, 

Public-private partnerships are crucial in market creation.

Mariana Mazzucato's book The Entrepreneurial State provides a great deep exploration of public-private partnerships in market creation. 

In addition to the notable program to NASA's fixed-price payload program, which gave birth to SpaceX, is the agency’s active program for commercial LEO destinations (CLDs), more commonly known as space stations.

The International Space Station (ISS) is aging and will need to be decommissioned.

Human presence in space has proven benefits, producing many translational products that are improving life on Earth. However, there will need to be a replacement for the ISS. To facilitate innovation, the market needs to mature, which happens through competition. NASA has taken a policy approach to promote competition through multiple contracts, leading to a growing space station market.

NASA's mission with the CLD program is to create a vibrant market.

This market is where many different private, commercial service providers compete for customers based on price, quality, and differentiated service offerings. In addition to major companies like Axiom Space and the Orbital Reef partnership between Sierra Space and Blue Origin (among other partners), many others, including Vast, Starlab, and Above Space, have entered the market.

Public-private partnerships are driving innovation and market growth in the space economy.

Learning About New Possibilities and Bringing Together Different Technologies

There are many solutions that we would never have imagined.

Seeing new solutions, investments, growth, and publicity unfold in real time is inspiring.

Many people rave about the excitement VR will bring to entertainment in the metaverse. However, VR, combined with robotics, shows obvious promise for satellite maintenance and manufacturing in orbit. Through robotics and VR, work can be done in orbit with a fraction of human input, eliminating the need for transport.

Currently, astronauts have to be debriefed for microgravity experiments.

With VR and robotics, technicians will be able to manipulate specimens remotely from Earth in a completely immersive experience as though they were sitting at the lab bench. As satellites orbit the Earth, robotics can capture, dock, and service them in space. This will allow technicians on Earth or astronauts on a space station to perform maintenance tasks, drastically extending the satellites' life and reducing infrastructure costs.

The integration of VR and robotics is opening up new possibilities in innovation, reducing costs and expanding opportunities.

The rapid maturation of the space economy is a testament to the power of innovation and strategic partnerships.

From the awe-inspiring feats of SpaceX to the groundbreaking public-private collaborations driving market growth, the space industry is evolving at an unprecedented pace. The integration of VR and robotics is just one example of the new possibilities emerging, promising to reduce costs and expand opportunities. As we stand on the brink of a new era in space exploration, it's clear that the future holds exciting prospects for both technology and economic development.

If you're interested in the economics of market maturation, now is the time to pay attention to the space economy—it’s going to be a wild, but worthy ride.

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