When it comes to the fundamental problem of developing a successful space company, Blue Origin chief executive Bob Smith (pictured above) likes to talk about his boss' other business.
In creating Amazon, Jeff Bezos was able to take advantage of several notable existing technologies. Blue Origin and many other space-focused startups like it, on the other hand, are essentially starting from scratch.
"What Amazon was able to do is build on infrastructure that already existed," Smith said on Wednesday morning in a conference-opening talk at TechCrunch Disrupt. "They didn't have to invent the internet. [They] didn't have to invent the credit card, they didn't have to invent the personal computer."
But by now, Blue Origin has been around for nearly 20 years, building various rocket systems and launch vehicles that can ferry satellites—and soon, perhaps, human beings—into the stars. Other companies in the space sector are doing the same. The infrastructure for a viable space ecosystem is beginning to come together. And that could mean that private investors' interest in space startups is only just beginning.
"Once you actually have that access to space that's routine and capable and cheap, all those business plans start coming off the shelf," Smith said. "And that's what you're seeing now. That's why there's so much private equity actually coming in the space industry, because people are recognizing, 'Oh, that cost curve is shifting, and it's shifting quickly. And I can actually get some first-mover advantage by investing into space now.'"
More and more venture capitalists seem to be taking notice. Global VC investment value in the space tech vertical has increased exponentially over the past decade, from just $2.6 million in 2011 to a new high of $1.8 billion in 2017, per PitchBook data. Recent days and months have brought a series of notable fundings. Earlier this week, Relativity Space, which builds 3D-printed rockets used to launch small satellites, raised $140 million in Series C funding from an investor list that includes Tribe Capital, Social Capital, Mary Meeker's Bond, and Mark Cuban. In the final week of September, a startup called Spire Global announced $40 million in new backing to help fund its network of weather-tracking satellites. And in July, a rocketry startup called ABL Space Systems received a new strategic investment from Lockheed Martin Ventures.
That latter deal was part of an increased focus at Lockheed Martin on investing in startups, according to Lisa Callahan, a VP in the aerospace & defense giant's space division who was another industry leader at Disrupt on Wednesday that weighed in on the future of space. Last year, the company's Lockheed Martin Ventures unit announced a $100 million addition to its main venture fund, bringing its total amount of available VC to $200 million.
"[We] are really looking to try to help accelerate some of these startup companies because they've got key technologies that we need, that maybe are used here on Earth, but we want to apply them into a space environment as well," Callahan said. "We've got investment in small satellite companies and small launch companies. And we're continuing to work in a mentoring way, as well as in a financial way, with these companies." It's an example of the first-mover advantage that Smith mentioned. Callahan also noted that the Lockheed Martin Ventures unit could "absolutely" be an acquisition funnel for the company. During the 1960s, when the US was committing a significant portion of its total GDP toward space exploration, a chorus of critics argued that those billions of dollars could be much better spent closer to home. Similar arguments still exist today. But Callahan isn't buying them. America's prior decades of space research have yielded a bounty of products—ranging from GPS systems to memory foam to wireless headsets—that have improved life here on Earth. Callahan believes that the emergence of more startups exploring more new technologies in the sector will lead to a continuing windfall of knowledge back home.
"For every dollar you spend in space, the benefit is exponentially bigger here on Earth," she said.
Both Blue Origin and Lockheed Martin are involved in numerous major ongoing efforts in space. Blue Origin plans to soon launch its first manned mission, and the company is targeting 2021 for its first commercial launch. Lockheed Martin, meanwhile, is a key contributor to NASA's Artemis program, which is attempting to return humans to the moon by 2024. On Wednesday, though, Callahan and Smith expressed differing visions for the space industry's future. "All of it is to benefit what we do here on Earth, right?" Callahan said. "The more we can learn about our solar system, the more it can benefit us. … What do we need to be doing to protect this planet? Because we owe that to future generations." Smith, on the other hand, echoed Bezos' longtime ambitions of using Blue Origin's technology to take humanity beyond the earth, rather than just making improvements to our current home. The CEO told the Disrupt crowd about futurist thinker Gerard O'Neill and his idea of massive colonies elsewhere in the solar system that could be much more habitable than living on Mars, the moon or other possibilities for extraterrestrial existence.
The colonies would be located at earth radius to the sun, Smith said, "so that you can actually go back home. Because everybody's still going to want to come back to the old country. That's going to be a very appealing vision."
More appealing, perhaps, would be working toward a future where humans don't have to ponder the prospect of fleeing their planetary home. But either way, the continuing creation of a new ecosystem in the skies is opening new doors for startups and established industry powers alike. "We're on the brink of a new space age," Callahan said.
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Fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US.
The company said it plans to "exit most international locations in Asia and Europe" but would continue to operate in Mexico and Latin America. It expects to close up to 350 stores worldwide, a spokesperson said, including as many as 178 US stores.
Forever 21 sells inexpensive, trendy clothes and accessories, and competes against brands such as Zara and H&M.
But some analysts say the retailer, founded in 1984, has lost its way over the past five years, and fallen out of favour with young US shoppers looking for relatively cheap clothing. The company has also, like many traditional retailers, struggled against rising competition from online rivals. Chapter 11 protection postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
A Forever 21 spokesperson said the retailer expected to have between 450 and 500 stores globally after this process, down from its current total of about 800.
Forever 21 had announced last week that it would pull out of Japan by October due to "continued sluggish sales". The California-based firm has now said it is seeking to close up to 178 stores across the US. It is also closing its stores in Canada, but has provided few details on other markets.
"Decisions as to which international locations will be closing are ongoing. We do not expect to exit any major markets in the US," the spokesperson said.
The retailer sought to reassure its customers in a public letter on Sunday, saying "stores are open" and "it will continue to feel like a normal day". "This does not mean that we are going out of business - on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future."
Neil Saunders, managing director of GlobalData Retail, said: "The entry of Forever 21 into Chapter 11 bankruptcy is a consequence of both changing trends and tastes within the apparel market and of missteps by the company."
He said that as well as facing competition from the likes of H&M there was also a lack of clarity and differentiation at Forever 21. "Over the past few years, the brand has lost much of the excitement and oomph which is critical to driving footfall and sales and is now something of an also-ran which is too easily overlooked. "Store standards have also been sliding and consumer ratings for the quality of displays, merchandise, and the amount of inspiration in shops have dipped considerably over the past year."
He said bankruptcy would result in a much leaner US business, but he added that most, if not all, stores in Europe would be expected to close.
As part of the Chapter 11 proceedings, the firm says it has obtained $275m (£224m) in financing from existing lenders and $75m in new capital. Executive vice president Linda Chang described the moves as an "important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21". |
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