Jeff Foust has a report on three of the talks at this weekends ISDC, on the importance of being willing to rethink plans, improvise, and make rapid changes to them. This is something that small private companies are a lot better at than large ones, or government bureaucracies, which is one of the reasons that they're likely to beat NASA back to orbit post Shuttle, or on to the moon.

Wonderful posts on ISDC. We can see how competition inherent in private industry naturally selects the best and most adaptable. Seeing the shakeout among private Space companies will be very interesting. Your beloved MSM still focuses on the web (and its threat to the MSM) rather than Space.

If my current portfolio pans out over the next decade, which hopefully won't be too late to make a serious contribution, I may be attending future ISDCs at some point as an angel investor. There are certain underfunded firms whose success is, I think, crucial to expediting human expansion, and I would love to help them succeed. Unfortunately, as L. Riofrio notes, bubble bursts can be rather cruel, and I would add that many otherwise strong firms with great potential die from the collapse of investor confidence in their sector. Hopefully people currently involved are looking ahead at such contingencies, since they could easily jeopardize the industry as a whole.

The danger of a cascading market failure seems large given the nature of space enterprises, and a dotcom-style crash would probably be far more devastating than it was for internet startups. Even if 99% of web businesses had been eradicated, the internet didn't depend on them to exist, but maintaining New Space launch infrastructure will depend on launch demand. Imagine that a space bubble has reached its maximum volume, the industry is flooded with wildly overvalued firms buying launches, and the providers have expanded their infrastructure to accommodate. What happens if that demand collapses?

Unlike the dotcoms, which were and remain primarily consumer services, the greatest volume in this industry would likely be in-sector business-to-business, while end-users would be the "surface area" of the bubble. This means that while you would only have a few launch providers, the technology, materials, physical processes, and services involved in every minute aspect of the industry would branch outward through multiple layers as a result of commercialization. So long as end-user demand is sufficient to keep it all going, this is a highly efficient arrangement, but the whole thing implodes if that demand falls rapidly before the industry can become robust. In other words, until it could become integrated with more fundamental industries, the very ground beneath its feet would depend on the soundness of its most marginal and vulnerable applications.

So here we have our hypothetical space bubble at maximum volume, with a couple of significant launch providers and a fractal progression of commercial firms spreading out from them right up into the consumer market. Many of these firms are sound, but the market as a whole is horribly overvalued and quite a few startups are completely worthless despite drowning in investor cash. Then the piper comes calling, the most incompetent fall, tons of naive investors lose their money, and any marginal firms that depended on the hype coming true are left swinging in the wind. Those investors and many others start getting nervous about some of their other investments, and begin progressively greater and more panicked rounds of selling, exacerbated by the difficulties of surviving firms with crucial business relationships to companies that can no longer operate.

With time, the stronger firms could find new relationships, but the failures are happening too fast and crashing their own bottom lines, endangering their existence indiscriminately along with the scam artists. Even end-user firms with heavy demand may no longer have a viable pathway from the customer to the launch pad, and suddenly the launch providers find themselves with manifests full of nonexistent companies. There is no longer anywhere near the revenue needed to maintain the infrastructure, launch prices soar even as demand plummets, and if the providers have already gone public they could easily end up being partly or wholly liquidated, or gobbled up by ULA. If the burst goes that far, which seems entirely plausible, the commercialization of space will have been undone. If the survival of the internet had depended on the volume of e-commerce, it would have ended in 2001. Again, I hope somebody's thinking about this stuff.