Speaker 1: Private companies like SpaceX and blue origin are partnering with government agencies like NASA to develop innovative technologies that take adventurous passengers, willing to pay big money to the final frontier. Now, what I recently spoke with Chris Dana, an associate partner and senior solution at McKinsey, he leads radar McKinsey's analytic platform for defense space and aviation markets. We spoke about how space tourism might [00:00:30] impact the economy and the ethical concerns that space travel is only currently available for the ultra wealthy. Uh, so you can, Chris, you contributed to the article wall street, you mission control can space tourism, uh, pay off and in it, you kind of Chronicle the major milestones since the first crude space flight in 1961. Can you give us a brief overview of that timeline and where space travel and exploration are today?
Speaker 2: Absolutely. Um, [00:01:00] it's a little bit hard to do this quickly, as you know, we're now talking about over 60 years of 60 years, um, exactly this this spring, the first, uh, crude space flight, and it obviously started out very much as national missions. So you had the, the us and the Soviet union at the time engaged in the space, essentially one upsmanship, um, throughout the sixties, uh, that period more or less came to an end with the lunar landings. Uh, when, you know, in, in some people's [00:01:30] terms, we won that space race. Um, then you had the era of, uh, transition from Apollo to the space shuttle era. The space shuttle was, was only earth orbit, um, and it was focused and primarily supporting research activities. Uh, so at first on the space shuttle itself, then the building of the international space station and, and that has been the bulk of human activity in space.
Speaker 2: It's been first the, you know, up to the Apollo missions, [00:02:00] um, kind of space, race oriented, and then the space shuttle era, um, and then the international space station, very much research focused, very much government focused. There has been interest in the last decade or, or two of trying to find more commercial applications for space in, in the space station. But what's really new, I think, in, in the last five years or so is this rise of completely private enterprises to, um, provide trips to orbit or close to orbit, [00:02:30] uh, which would be done for other than research or scientific purposes necessarily.
Speaker 1: Why do you think private companies became more involved or, or interested in commercial space?
Speaker 2: There are a few reasons. Let, let me see them main ones are, um, one is to some degree, a pull from NASA and others to energize the private sector, to, to try and capture some of that private sector innovation, um, and investment, um, to advance overall space technologies. [00:03:00] Um, a second one though is very much driven by the, uh, by the founders of these companies that are involved. You'll probably find that a lot of them were inspired by the Apollo program or, or those early years. And, and in some ways this is what space has done. Um, I, I doubt anyone on this call is all enough to remember the Sputnik era, but Sputnik the, the first launch of an artificial earth, satellite, uh, energized this huge wave of science and math education in the us in particular feeling [00:03:30] like we had up and that in turn spawned, a lot of people who went on to, you know, be entrepreneurs or do technical things could argue that a lot of, you know, many of the founders of, of our major companies today were probably in some way inspired by that initial energy.
Speaker 2: Um, and so these people in the space business who are, who are building space, tourism companies, if you will, but also commercial space enterprises with the goal of going much farther to Mars or making permanent [00:04:00] orbital cities, um, they have, they, they have multiple reasons. Um, some is to try and make a life on earth, more sustainable. You know, if by perhaps moving dirty industries off the planet, um, finding places where you can get additional energy, uh, you know, if you go to the really far out kind of cons, even having an alternate or a backup planet, which you know, is, is maybe a, a while in the future. But I think this is what's driving people into the [00:04:30] business. It's a combination of some demand from the agencies, uh, a desire to, to use this as a stepping stone to go beyond, um, then to some degree, there, there are people who believe there's commercial opportunity here. And certainly there is, uh, there is a market for things like space tourism that there you could debate how big it is and how, how, uh, how many people would wanna go back more than once. But there's definitely a market there and, and a long waiting list for all these companies who, who are [00:05:00] offering flights.
Speaker 1: I'm, I'm glad you, you mentioned the accessibility of, or space doors or, or at least the, the market of it, uh, in your article, uh, you mentioned space adventures was like the first and, and only private company to kind of take passengers to like seven passengers to the international space station. And the passenger fees were, or about 20 million, uh, has that amount changed? Uh, I saw that Virgin gala galactic is offering $250,000 [00:05:30] for, for tickets, uh, which is considerably less than 20 million, but still not as accessible, uh, as like a movie ticket. Um, what does that fee cover?
Speaker 2: I don't think there's a single answer to what the fee covers. Uh, you can look at it in a few different ways if you're going to actually go to orbit and spend time in orbit, there's likely gonna be significant additional training, even for people who are purely civilians, if you will just going there as tourists. Um, [00:06:00] if nothing else think, think about your emergency briefing on an airplane. Um, this is like a hundred times that in terms of the things that you might have to know and do, and, and be prepared for, because this is a very, you know, this is not, it's a hostile environment. I mean, space is a, not a vacuum exactly, but there's no oxygen to speak of. It's, it's ultimately very cold and very hot, many things can go wrong. So if you're gonna actually be an orbital tourist, there's probably gonna be a considerable amount of [00:06:30] training that has to go into that even for a, even for a casual flyer, what you get for the ticket otherwise is the, and, and this is very much in the category of adventure, tourism. Uh, it, it is unlikely to be transport until there's a destination that people would be permanently inhabiting. So it's tourism, it's adventure. Uh, and, um, yes, as you said before, even even the prices that have been quoted for Virgin are not exactly accessible to every person. This would absolutely [00:07:00] be more of an aspirational thing. Uh, a bucket list kinda experience.
Speaker 1: Do you think, as technology advances and cost barriers come down that the price will continue to fall from 250,000 to make it a little bit more accessible to the wider population outside of just the old
Speaker 2: It very well could. Uh, that is I think the intent and the aspiration of, of the company's offering this is to make it more accessible. And that's, I think very much in their [00:07:30] interest because if you don't have a bigger market, you're gonna run out of potential customers. So it will, I think the question is it's very hard to say right now, it is unfortunately almost inevitable that at some point there will be an accident, um, involving one of these tourist flights, um, what happens then hard to say, so yes, costs will come down for sure how much it's, it's very uncertain
Speaker 1: Beyond space tourism. What other economic activity could there [00:08:00] be in space or is there currently in space?
Speaker 2: There are several things that are under exploration or, or investigation. I mean, that you can, in this what's called microgravity environment, um, you have the potential to do things that are much, make much pure materials. So people have talked about things like, um, drug production, uh, fiber optic production, very, very, um, flaw, free fiber optic cables. Um, other types of manufacturing might benefit from that micro gravity [00:08:30] environment. It's not at all clear right now, how much of a market there is on earth. I think what you'll really need to see is you'll need to see any economy in space before this starts to make a huge amount of sense. One, um, one way to look at it is to get to Mars about half of the energy you have to expend is just to get into orbit. So if we were traveling back and forth to Mars, it would make a lot of sense to do more in orbit, whether it's manufacturing vehicles, um, or possibly even if you found some, you [00:09:00] know, if you found a source of water on the moon, that could be a place.
Speaker 2: So, you know, you could produce, um, hydrogen and oxygen as propel, uh, to, to do further exploration of the solar system. Getting out of the gravity well of earth. In other words, would, would be a reason to do more things in space. What you have to believe for doing more things in space is that there is more or less a permanent human presence there. And, and that there is something driving the economic [00:09:30] activity in space that is definitely farther out, uh, that that would be something like, you know, things that you either can only do in space or that people are actually living and working there routinely. So
Speaker 1: Since the two thousands private companies have really become interested and involved in innovation, do you think there's ever going to be a, a revert back to government agencies kind of leading the way in terms of innovation?
Speaker 2: I, I really don't see a time when, uh, [00:10:00] it's entirely government anymore. Um, because we've simply crossed a threshold in my mind between, uh, the days of a pure government program to where now space space has always had commercial aspects, communications programs. Now you have multiple earth observation type programs regardless of, of the complete success or, or future of space tourism. There is already a lot of commercial activity in space. So I think that's here to [00:10:30] stay. And it's mostly going to be a question of, of the mix going
Speaker 1: Forward for, for regulations about space tourism or economic activity in space. Do you think it'll be, uh, kind of like a, a global summit to come up with regulations and laws about, about safety and economic activity in space?
Speaker 2: That's a great question. And I don't have a good answer to that. I think you, it is very complicated. You have current, um, you have current structures, uh, so the United nations does have [00:11:00] some role to play in this. You have the international telecommunications union, which, which has a role to play in communications. You still also have a lot of national agencies. Um, there is an outer space treaty.
Speaker 1: Uh, I read that, but it really, I, as I was reading it, it really, really governs, um, military activity in space.
Speaker 2: Yeah. And, and it's a product of, of the cold war, if you will, uh, setting some boundaries that, you know, everybody could live with to make sure that, uh, we didn't have any unexpected incidents. [00:11:30] Um, since this is inherently an international type of an issue, uh, it's almost certain that there will have to be an international, but what form that will take, uh, you asked about a summit, uh, who knows, uh, there, there, there was a very interesting, um, uh, announcement from the G seven, uh, a few months ago about the concern of making sure space operations were sustainable, um, controlling debris, uh, making [00:12:00] sure that everything was accessible. Um, so I think you see some emerging international discussions on this, uh, but how, what form that, uh, ultimately takes, I dunno, is a very exciting time in the space business. I mean, I've, I've been involved off and on for, for a while longer than I really care to admit.
Speaker 2: And, uh, this is the most, um, investment that you see in space, and that's not just, um, private sector investment, but even when you look at [00:12:30] government programs, things like Artemis, uh, which, you know, you, you haven't seen this level of government interest really since, uh, since the Apollo program. I mean, we're not at that level of spending yet, but it's, it's a, it's an increased amount of interest from both the private public sector, um, that is spurring innovation. There are also things that, and we're getting well away from space to, but there are also things that you could do from space to assist in the concerns we have now [00:13:00] about global climate monitoring, predicting severe weather events, um, managing development in a way that is more sustainable going forward space can definitely contribute to all of those things. And so I think in addition to the pure, um, thrill of space tourism, what you see right now is a lot of investment. That's also driven by the practical needs here on earth. Uh, and with the vantage point of space, the altitude, the global coverage and all, um, it does provide a [00:13:30] lot of advantages. Uh, it's not a panacea, it's not the only solution to any of these things, but for all of those reasons and the combination of the resources and, uh, the requirements or needs, I think you will see continued innovation. And it's going to be a very exciting time in space.
Speaker 1: Uh, is there a new space race that people are trying to get to? What's the, what's the next threshold that it, that people are racing to achieve? You think
Speaker 2: That is hard to say, I don't know if you [00:14:00] could call anything right now, a new space race you certainly have in some ways, if I, you know, and I wasn't, I wasn't alive then, but if you look back at the twenties and thirties and the barnstorming days of aviation, uh, some of the early aviation pioneers and, and their approach to doing things, breaking records, you know, and so forth, there's some familiarity with what's going on today. So is, is there a bit of, uh, a race, one upsmanship, a desire to, to be first and do things? I, I think [00:14:30] you do see that. Um, but it it's, maybe it, I think it, at least at this point, it's very different for, in the space race of the cold war.
Speaker 1: Yeah. It seems to be between companies as opposed to between countries,
Speaker 2: Um, at least for now. Yes. We'll, we'll see national ambitions have always been important to space. So it's, I don't think that'll
Speaker 1: Go away either. No, absolutely. Uh, well, Chris, thank you so much for, for your time. I really appreciate you talking to me. This is really, really helpful. Well, [00:15:00] certainly my pleasure. I've been speaking with Chris Dan and associate partner and senior solution leader at McKinsey. He leads radar McKinsey's analytic platform for defense space and commercial aviation markets.