August 13, 2021
It's a bizarre summer when Elon Musk looks sedate.
He's the third leg of the billionaire rocketeer trio, and the only one who did not strap himself to 10,000 pounds of liquid hydrogen for his summer vacation.
Jeff Bezos did, and the trip went well! There were some odd moments for viewers. For three minutes as he soared parabolically, millions of Amazon shareholders probably wondered how their kids' college educations became tied to a laughing guy over the Karman Line. But he survived and the ship came down both alright and upright.
That's when it got weird. Bezos emerged from the capsule and gave a speech thanking Amazon's customers for funding his summer travels. Amazon's customers wondered why they just didn't get lower prices (1). And then after emitting lots of nitrous oxide (though in fairness no carbon from that engine) he professed the environmental advantages of spaceflight, citing the need to move heavy industry off earth. People started to wonder whether the champagne had been uncorked mid-flight.
This was an extreme, and public, example of how new industries start. The entrepreneur tests unusual concepts, and the foreignness of those concepts stirs up significant negativity. People have trouble seeing that the entry experiment is not the end goal. The early days of the industry seem wasteful.
An industry with an exponential curve underpinning its economics will deliver results no one expects - the human mind struggles with exponentials. For example, the rapidly declining cost of computing power or solar energy, based on silicon, created tremendous industrial upheaval. (Until Facebook showed up most people probably thought for the better.) The space billionaires are betting the same thing is going to happen: the costs will plunge as propulsion systems improve, drawing more people and ideas, good and bad, into the business. Over time, moving heavy industry to the cosmos doesn't seem quite as whacky.
The movement along the innovation curve is already happening. Here in Burlington, Vermont, people are employed building micro-satellites. They get those satellites to orbit by going onto the SpaceX website and ordering launch time. Like ordering a cheeseburger on a menu, but it's a spaceflight!
And then there are the positive side effects no one can measure. One of my daughters stopped tracking the Tesla automobile Elon previously shot into space and started researching the SpaceX moon rocket, so that was an improvement from a parenting perspective. Millions of kids wonder if they can be an engineer too, or at the very least invent a scheme to get their summer vacation paid for. It's impossible to measure the long-term inspirational effects.
It takes some times for new industries to influence index funds. But this is how they're born.
1. I need to address this. The wealth for Blue Origin came from Amazon, and Amazon built that wealth in part by lowering prices for customers. Amazon's growth was slowing in the early 2000's until they began a relentless program of cutting prices. Customers loved it and rewarded them. It's important business-wise and society-wise to understand the difference between an income statement and a balance sheet. Amazon used thin margins on its income statement to earn a massive balance sheet. More on this later.
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