Learning from previous revolutions

If space is to be the trigger for another industrial revolution, we need to first look at what kind of patterns helped trigger previous booms.

Before the first industrial revolution, humankind was stuck in a Malthusian trap. Malthus was a guy who said that population growth is exponential, and our resources are linear, and so it follows that the population will eventually exhaust their resources and die off.

It’s a popular position today to agree with this notion. We live on a tiny planet, with finite resources. We’re already seeing the negative effects of our increasingly industrialised population on our biosphere.

We’re not doomed to extinction, though. That is, unless we decide to do nothing. I’m not saying we need to create a backup of humankind, and I’m not saying we need to revert to the dark ages and sustain a stagnant, zero-sum world, either. For the record, I see both suggestions as bad as each other – they both result in an inevitable extinction of humankind.

The way out of Malthusian traps is to be bold, to create and build. We need to work smarter, not harder, to increase the economic output on a per capita basis. The story of humankind is one entirely of overcoming these traps, so let’s not stop now.

For example, before the first industrial revolution the world produced $400-550 of per-capita income (based on 1990 dollars according to the IMF) for the entire 7000 years prior. We were spinning our wheels. No matter how wealthy you were, you were never going to have access to medicines, vaccines, heating, or a diverse diet like we’re lucky enough to mostly take for granted today.

What broke this as the creation of machines like the programmable loom and the all-metal lathe. Suddenly one person could do the work of what used to take many and we learned a valuable lesson: that wealth wasn’t fixed, we could create it.

World GDP Per Capita
Source: ‘Statistics on World Population, GDP, and Per Capita GDP, 1-2008 AD”, Angus Maddison; IMF

We no longer lived in a zero-sum world where if you have more then I have less. To escape the trap, we needed to be smart and build.

Since the first industrial revolution we’ve had several more:

  • Energy abundance: Oil, gas, electricity. Combustion engines and telecommunications. Think about how something as simple as whitegoods in the home was able to free up time for more members to do other tasks and even build fulfilling careers that were impossible before.
  • Information abundance: microcomputers transitioning from the hands of computer scientists to regular people, with platforms like Microsoft and Apple paving the way for the internet to enter the household and eventually our pockets. The barriers to leverage this increased connectively have been eradicated with cloud services making it trivial and essentially free to create powerful websites without the capital or real estate required to build farms of servers from scratch. Today, this virtual world – the metaverse – is tightly integrated with out own, with autonomous vehicles guiding you through traffic using crowd sources geospatial data, and more.

The next natural step is space. Not in the sense that you might traditionally think about it. It’s less about the rockets and satellites, and more about how we can utilise frontier locations – whether the deep depths of the ocean or above the atmosphere and beyond.

Beyond is the most interesting to me, because that’s where we can leverage unique properties of our accessible, expanding world which has surpassed the boundaries of our precious biosphere.

We’ve already entered this revolution – today, space technology already underpins our entire economy and society. We increasingly depend on it, and especially so our climate continues to deteriorate, and our economy shrinks.

The space industrial revolution is being driven by two factors: we’ve started to reach the end of the low hanging fruit in what we can create leveraging the internet and software alone, and we’re also reaching the end of our ability to consume more resources in our physical world if we’re constrained to mining and consuming it entirely within the literal bubble of our tiny spaceship amongst the stars.

To put it bluntly, there are good reasons we don’t shit where we eat, and there are similar reasons why we should take the closing window of opportunity to move our industrial base outside of the only biosphere we have.

If the environmental proposition isn’t enough for you, it’s equally an economic one:

There are a lot of things that we can do better, or that can’t be done at all, in space

  • Farmers rely on increasingly precise satellite data to grow the food that you need to eat
  • We all rely on GPS to navigate between locations on time, and even to process financial transactions (yes, the financial system relies on GPS to keep your money secure)
  • Like it or not, markets are how we aim to efficiently allocate resources to run the economy and sustain a fruitful society. Today, financial traders rely on satellite data to see firsthand how much of a commodity is being mined, refined, and distributed around the globe to more efficiently set prices based on true facts and not misleading reports.
  • Human rights groups, journalists, and open-source intelligence (OSINT) communities rely on space infrastructure to monitor, investigate and hold war criminals to account.
  • Doctors and pharmacists are using the microgravity environment in space to research, invent, and soon manufacture new medicines and medical products that can’t be synthesized on Earth because of the presence of gravity.
  • My favourite: the clean, vacuum environment of space, with an abundance of solar radiation, and the benefit of having no breathable air or water to pollute, is a great location to start to transition manufacturing of low-volume, high-value products – particularly nano-scale manufacturing for things like chips and other semiconductors devices.

All of this might sound great, but I can hear you asking how this is supposed to come to be in the presence of tightened capital allocation. Firstly, while many VCs are panicking about valuations and how they should allocate capital, the good ones will realise that the private companies they invest in today aren’t going to have a liquidation opportunity for at least 5-10 years anyway. If the value of a company is the sum of all future cash flows, and a given company is expected to survive to that point, then a valuation today won’t be affected by the current economic blip. The best VCs will also recognise that unless they’re going to be investing into treasury bonds with no risk premium, which they can’t do anyway, the only way for the economy to emerge from the economic situation is for these kinds of industrial companies to be successful – and you can’t win in a space you’re not playing.

Of course, this is a two-way street. Startups who are led by tech and R&D rather than customers first, without demonstratable, solid business models, are going to struggle – and they should. The whole point is to build a business. If you want to work on tech without real commerce, go and work in academic research instead.

Founders will need to be intellectually honest with themselves and their investors: getting letters of intent or even binding contracts from other early startups who are undercapitalised and potentially insolvent was never a good practice to be accepted. Investors are, rightfully, going to put a lot more effort into understanding who your customers are, and whether you’re building a business on a house of cards where each card is a shaky supplier in the chain.

The founder pioneers of this space industrial revolution will be those who understand that they’re competing for capital with a lot of other areas, and their capital expenses need to be justifiable. This comes through starting small and incrementally decreasing risk, and compounding success. This means you need to create a system that brings together a plan to build great tech, a lucrative business, an incredible team and the ability to show your investors how you’re going to be able to at least return their entire fund for them if they invest in you.

Long gone are the days in which VCs would invest with only a few of these properties.

Just like the universe, space will continue to rapidly expand

There’s a lot of noise in the space industry today, and as launch and satellite markets consolidate this will only get louder. But, amidst that noise will be a lot of remarkable industrial opportunity – both built using software and hardware – creating real businesses that will thrive as they create the value today’s economy demands.

These opportunities will not only be the catalysts that pull our economy back up into bull territory again, but they’ll do it while opening access to new locations and opportunities to those who aren’t rocket scientists.

This is the time to be bold. This is the time to build and invest for our future.

Troy McCann

During university, where he studied computer science and electrical engineering, Troy mixed his passions for technology and entrepreneurship through multiple engineering-heavy businesses. Using his experiences in commercialising deep research and the space industry, Troy began to develop a framework for supporting the growth of commercial solutions to humanity’s most difficult challenges while assembling a community around it, forming the basis for Moonshot.

Troy was ranked the 4th most influential new space business leader of the industry in the NewSpace People Global Ranking Report for 2019.

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