Musings on space & strategy

Filip Kocian
5 min readDec 15, 2022

--

This article is about formulating and applying a business strategy for space companies. Functioning strategy for a space company connects a strong market understanding with a well-focused narrative. Following my advice — I should have tried to better understand the taste of my reader and come up with a sharp pitch of what I will write about. I have done exactly neither and will entertain you instead with a selection of random thoughts on the topic.

An ironic (and iconic) tweet I like reads “What the fuck is strategy — you have people who build, who code and that’s it.” But having seen and worked with quite a few companies — I see a need for the added layer of strategy — done well, it helps with decisions and aligning forces internally and makes the service credible and understandable to the external partners, customers and investors. In an operational setting, I have seen three approaches working well:

Three views on space strategy

A discussion with a well-known European prime revealed their strategy and corporate development are split into two departments. In this case, the core task of the strategy office is to keep the multinational company in focus. For large organizations, it is very tempting to do everything once you can afford to do so — but as highlighted above, that doesn’t exactly sprout credibility internally or externally. In this case, the corporate development conducts the exploratory work — “innovation”, new business opportunities, and cooperation with startups, but is intentionally held back by the corporate development who understands where the organization is strong and keeps it focused on the key business objectives.

My work is often about leaving loose ideas for exact answers. Let’s say you loosely see in your finances you need to raise. Now, that opens a range of questions — how much to raise, when, from whom, in what form, why exactly, for what purpose. I not only think, but also see around, that strategy and the desired alignment is so much about having answered the questions well into detail — or the process of doing so.

I keep thinking about one company that recently announced laser communication capability. The idea makes sense based on a market understanding that the trend shifts towards optical communication (even tho Euroconsult predicts the laser-transmitted capacity for data downlink to stay within the boundaries of statistical error). The conversation with the company, however, revealed that they have little clue on who will be the first customer, who will manufacture the onboard laser terminal, how are the financial consideration evolving — which are all indeed pretty important questions to answer. In this case, the missing second component of a strategy will result in internal misalignment — and confusion of external partners (which actually exactly happened).

There are ways out — companies frequently hire consultants to figure out either side of the equation. Admitting pure speculation — I see a great number of strategy people working at SES, indeed, with a bigger number of customer segments, business verticals, and development opportunities, the market understanding part of the equation becomes challenging and human power heavy on consultants. I see too, new companies fundraising great funds with the market size and then immediately filling ranks with ex-PWC folks to figure out what to actually do.

The third role for the strategy department could be called probabilistic forecasting, which is the most “ezo” idea in this article and also the one least understood.

When talking about the future of the space industry, you can come across a variety of statements

  • Starship is never gonna work and it is dumb to base investor decisions upon that condition
  • Starship is gonna eliminate the launch industry and it is dumb to even attempt to compete
  • Current upstream projects will consolidate into a few constellation projects — your project is obsolete.
  • There are 315 planned constellations with 17 429 targeted satellites — invest in a small launcher and secure your passive income today.

The common ground between the statements is they are all perfectly not useful — and when driving your company (or investment thesis) into the future. Instead, a good strategist can apply probabilistic forecasting. Illustrated in the example, let’s think about the market for rocket launchers to LEO.

On the demand side, you have expected future payloads (satellites, OTVs, servicing vehicles — let’s ignore cargo and crewed flights for a while). So the best thing is to note down the expected constellations and the planned target number by relevant sector groups. Now the probabilistic part — not all of the planned projects will come to fruition — perhaps on traction/state of financing/amount of competition — a coefficient can be assigned to each constellation project. Together with the planned mass and need for individual orbit, that creates a much more plastic idea of the launch demand — certainly better than “there are no new satellites coming or LEO will be crowded by a myriad of satellites.

On the supply side, you can consider planned launcher projects, target mass and their probability of success based on national subsidies, fundraising, and revenue backlog. Again — much more useful than “Starlink will capture the whole market” or “Every city needs its small launcher”.

That would be for the market understanding part of the equation — but leaves equally important space for a narrative — how do you translate what you see on the market into future action? Maybe you think all of the climate/defense constellations go close to 100% in success chances. Maybe you think every 16U+ satellite will have an associated serving spacecraft. Maybe you think APAC broadband constellations will succeed and the others rather not. You perhaps believe in ESA’s small launcher procurement program and perhaps not. In my view, both components are really important — thinking in probabilistic, rather than binary ways provides a more actionable idea of the future, while bringing in a unique narrative that distinguishes from the competition and providers and answers on what to actually do once we think we know what’s going on.

--

--

Filip Kocian

Partner at Golem Ventures Space, Prague-based pre-seed VC; analyst and consultant in the commercial space industry.