The Space Economy Is No Longer Science Fiction | Ideas Lab | Ep.49
Summary
On this episode we are joined by Dr. Rainer Zitelmann, to discuss his book New Space Capitalism: The Entrepreneurial Path to …
Transcript
You know, this is the reason why we were 1969 on the moon and now 54 years NASA was now very proud to to fly by the moon 45 years later. If we were not able to do it for 54 years, this proves our theory. It was only a fake. I don't believe it. I have another alternative explanation why it didn't happen because everything is about incentives and there were no incentives to do it. >> [music] >> Welcome to Top Traders Unplugged. In markets, success doesn't come from predicting what happens next. It comes from [music] being prepared for what you can't predict. In each episode, we go deep with some of the world's most thoughtful minds in investing, economics, and beyond [music] to understand how they think, how they prepare, and how they decide, and the experiences that shaped how they see the world. No noise, no shortcuts, just [music] real conversations to help you think better and invest with confidence. >> [music] >> Welcome everyone to Top Traders Unplugged. My name is Kevin Coldiron and I'm host of the Ideas Lab series where we talk with authors of new books that help us understand how the global economy works and where it's headed in the future. Okay. I have to admit, I really had to resist the temptation to start today's show by reading out the opening monologue to Star Trek because today we're going to be talking about space, which is shaping up to potentially be the final frontier for capitalism. And the captain on our journey today is going to be Dr. Rainer Zitelmann. Dr. Zitelmann is a prolific author. He's written and edited 32 books, which have been translated into 35 languages including In Defense of Capitalism, The Power of Capitalism, and How Nations Escape Poverty. He's here today to talk about his latest book, which will be released in the US on June 9th, called New Space Capitalism: The Entrepreneurial Path to the Stars. Dr. Zitelmann, thanks for joining us today and now welcome to the show. Yes, thank you for inviting me. Um so it sounds like you have been a space capitalist since you were a boy. It's you were 12 years old when the first moon landing took place and you wrote a special edition of your school newspaper and sold it to your classmates. So, you made some some money from the moon landing. >> [laughter] >> Can you tell us about how your interest in space, you know, yeah, got started and please. Yes, I think like a lot of [clears throat] children watching science science fiction movies in in TV. Not Star Trek, it was another one in Germany and I [clears throat] saw it when I was 9 years old and then it's correct with 11 years. I founded a school newspapers called Galaktische Zeitung. It means Galactic Newspaper. It was only about astronomy and [clears throat] space flight and yes, I had good luck. At this time was also the first moon landing. So, you mentioned it. I had a special edition about this, but >> [clears throat] >> all in my children's room which was full with a big poster from the moon and from the Saturn V rocket and books about astronomy. So, this was all about. But it was not this way that I'm to be honest all of my life interested in these topics. You know, I'm an historian and in the last years I wrote a lot of books why capitalism better with the example of countries. I give you two examples. I I wrote a book how nations escape poverty. It's about Poland and Vietnam. And always I showed what happens if you add more market economy in a system or on the opposite more government. Maybe I can compare it with a test tube with two ingredients. Uh market and state or capitalism and socialism. And then I watch what happens if you add more market and what happens if you add more state. And as an example Vietnam where I have also produced a film, Vietnam beating poverty with market economy, this was the poorest country in the world 1990, poorer than all African countries. And then they started with free market reforms, the so-called story my reforms forms and the result is that the number of people living in poverty decreased from 80% to 3% from 80% to 3%. And I have a lot of other examples. And now I turned from studying countries or nations to studying an industry. And an industry that was decades ago totally led by the government and I think almost no one could imagine that some days there will be in Elon Musk or Jeff Bezos or multi-billionaires like this will start their private companies. So every everyone thought this is definitely something that can only be done by the state. And today it's you see it's the time of private as I call it space capitalism and this is what the book is about. Yeah, that's thanks for that because um I I have to say, you know, I I approached your book I don't know if skepticism is the right word, but I mean I definitely had that perspective of well, you know, space is something that the government runs. And you know, in the US, in America, the mythology of the moon landing and NASA is very deep in our psyche. And I guess your perspective is that the success of NASA, government funded space programs in general, were really a historical exception, not the road map for the future. So, I'd like to kind of explore those ideas a little bit. First of all, why was the initial NASA government funded space program successful? Tell us about how that worked and then then we can kind of transition to why that's not the correct model for the future. Yes, of course it was successful, maybe the greatest thing ever done in the history of mankind. And I don't say that >> [clears throat] >> absolutely everything 100% what the government does will will fail. Of course there are an exception, but you have to know the Apollo program cost 300 billion in today dollars, 300 billion. And at its peak it had 400,000 people and 20,000 companies working on it. So, it was a mobilization as in war times. And this is what Johnson said at this time. He said, "Who's first in space is first everywhere, and who's second in space is second everywhere." So, it was money plays absolutely no role. It was at this time 5% of the American budget in NASA. This is 10 times more as a percentage as it is today. Today is only 0.4%. So, you can't do it for such a great thing for a couple of years, but of course I >> [clears throat] >> I tell the story then what happened after Apollo with the space shuttle. And this is we can talk more in detail about it, but this was as far as concerns man space flight 50 years of failure, you know, it's now only a couple of months ago that we came the second time close to the moon, even not landed there and not to talk about Mars. The NASA had planned a Mars landing for 1981. There was a fixed date for 1981 and it maybe [clears throat] we can speak about the failure, but but of course the Apollo program was a big success, but then the politicians thought, okay, what we did one time so successful, we can do always not only in space, also with other ideas. For example, President Nixon, who was the president of the United States at this time, even had the idea to rebrand the NASA, to give it a new name, because he didn't want to focus only on space, but he had some other ideas like the fight against cancer for example, but these were all failures and this is so what the politicians thought, okay, we were so successful, we did it and now we can do everything in the same way. But this is not true, because I tell the story then what happened after this with the space shuttle program, maybe we can talk about this and this was a total failure. Yeah, let's talk about the space shuttle program, because that I think probably for well, listeners my age and and younger, I mean that that's kind of what they identify with space flight now. And um you know, you you say it it essentially became a program where the goals kept changing all the time and it was almost like a seemed to my my reading of your take is that almost became like a social program where politicians competed to dole out the spending in in their districts. And you know, you say in the end it had all these goals and really couldn't deliver on any of them. So So maybe just maybe walk walk us through the chronology of the the space shuttle a little bit. I think that's a good kind of template for why you think we need a different path in the future. Yes. First of all, there was no clear idea. Everyone had another idea what to do with it. The The military, the the the scientists, everyone had another idea, the politicians. And it was discussion about 3 years what to do with space shuttle. It changed a lot of time and they had them estimate that the development costs would be 5 billion and then for every flight between 5 million and 10 million. Between 5 million and 10 million. The reality was it was between 1 billion and 1.5 billion every flight. And why is that? Of course, if you make a calculation, you know, with Excel, the more flights you predict per year, the cheaper it will be. And they started with maybe the estimate of 10 flights a year and in the end they they they calculated with 140 flights every year. This is the was the calculation. The reality was 135 flights in 30 years. So they had in 30 years less flights than they predicted for 1 year. And then in the end, you know, then there there were two accidents were 14 people died and then they they stopped it in 2011 in 2011 and then this is the the headline of this chapter in my book is the end of the future because what happened then? The Americans were not able to bring their own astronauts with their own rockets from America the International Space Station but they had to rely on very old Russian Soyuz rockets. They had a monopoly at this time and so every flight costs maybe 10 or 20 million more than before and you know after winning this first space flight being so successful of course then it was a really big disaster for the United States that that they were not able to bring their own astronauts and a total failure. The the whole program was a failure. There were some smart people who even had before the idea let's do it in a different way. Let's cooperate with private companies in another way than we did before but most politicians rejected no this will be a disaster it will never happen. This is a totally stupid idea go away with this. Okay but then if you have the situation that you have lost everything and almost no alternative it's like in the football game though you know the mail Mary Mary pass Hail Mary pass yes and they said this was our Hail Mary pass then let's try to do this crazy SpaceX people from El Musk and of course it was not everybody in NASA. There was one woman especially she believed in it and every she she reported every week some people came in her room and tell us you're so poor that you have to work with this idiots for this private space. So I feel with your you have my sympathy, but she liked it and in the way. So what what happened then? Okay, 2000 >> can I just I just want to make sure I I get what you're saying. So what you I think what you're saying is you had the space shuttle program long period of time wasn't achieving its goals by I think you said by 2010 we had kind of lost the ability America had lost the ability to to put astronauts in space and so a few years after that there was a thought well maybe we can outsource some of this to a private to a private company SpaceX Elon Musk and so what you're talking about now is the kind of the origins of the private space industry as we know it today? Exactly. [clears throat] It was another way of cooperation. You have to understand even in the time of the Apollo program in the in the 60s and the 70s the NASA never built their own rockets. They were also built by private companies like Boeing and Rockwell, but the cooperation was like a micromanagement from NASA. They told them exactly what to do even sometimes who who to hire what employees to work. So in in every detail and they had a very strange kind of contracts. You call it cost plus contracts. I have to explain it because this is very important to understand. The cost plus program means um Okay, you build a rocket for us and we buy it and you have to make clear your costs, and then you can add maybe 8 or 10% profit because they had fear that this private companies will make to profit that in their eyes from the bureaucrats and politicians would be too high. So, they Okay, this is the best idea. Show us the costs, and then you can add it. But, the result was that it became more and more expensive. I spoke with one uh person who was at this time worked for one of the two biggest companies in the space industry, and he said, "Our our best product was our overhead because I think it's it's uh simple to understand. Uh for example, if you have 1 billion costs, and you can add 10%, then you make 100 million. But, if you have 3 billion costs, then you make three 300 million. So, it was a really an incentive for increasing costs. Oh, it takes longer than we thought, or it's more complicated. We have to do this and that. I think it's always very important in the economy to understand the incentive. And if the incentive is to make it even that it costs more and more and more, then it will cost more and more. This is exactly what happened. And now to understand what's the difference in the corporation today between SpaceX and NASA. Um SpaceX doesn't sell any rockets to to NASA, but a service. Like a service like FedEx or UPS. We bring your satellites to orbit for example and charge you a fixed price or we bring your astronauts to the International Space Station and charge you a fixed price. But how we build the rocket and what our costs and our profits and all this, this is ours and from this moment on was an incentive for lower costs of because lower costs would mean would mean more profit. And before with this cost plus program, higher costs mean more profit. Of course, companies are profit seeking entities and the result and this is amazing if you compare the launch costs. This is the world for how much does it cost to bring 1 kilo to space. If you compare the space shuttle with the cost that Elon Musk has to pay with his rockets, he's he reduced it by 95% 95%. This is his self self cost. And and how was this possible? I For example, one very important thing is that he was the first to build reusable rockets. The Falcon 9 is a reusable rocket. The same rocket was used now 34 times and of course it's makes a huge difference in the cost. Imagine you go from maybe from LA to New York and after this the plane you have to put throw it away. It's only one time use for the for for the air trip. I think the cost, I don't know how much maybe 800,000 dollars for the ticket or something like this. It's only cheaper because it's reusable and this is what NASA also tried before, but without success. And other countries tried also. So, today no state uh owned uh space agency, not in China, not in Russia, not in Europe, and not in the United States was able to build such a reusable rocket. But, Elon Musk did it 10 years ago. And the only other one who was successful now, I think it's a half year ago, was Jeff Bezos. He did it 10 years later. But, these are two private companies. And so, you see, this is uh this makes the the difference. And no one told Musk, "You should make a reusable rocket." It was not NASA told. It was his idea. And why? Because he thought it's much cheaper. And this was not the only way to reduce cost. There were a lot of other things that he did. But, in the result, he reduced it, as mentioned, by 95%. And he says today, "From this point, I will reduce it even 90% more." So, uh it's important to understand the completely different way for cooperation between the government on the one hand and this private companies on the other hand. Yeah, thank you for that. That's a excellent um excellent description of um you know, of how things work now. And and you say in the in the book that, you know, it it is kind of fascinating because you were saying, "Well, okay, once rockets become reusable, um you know, the you know, their contribution to total cost goes down, and then other stuff starts becoming relevant, in particular fuel." Right? So, once you start getting reusable rockets, then fuel cost start to matter a lot more. And so, it made me think that maybe there'll be some innovation on that side as well. Like figuring out how to lower the fuel costs or is that is that still something that you know? No, they are across they try to do there a lot of things to to reduce costs in this way but I think um the most important thing now if we go maybe a little bit of first first one thing. Some people ask me you know the title of my book is new space capitalist and then they they ask when when is it this with this space capitalist because they think you told me maybe you had a little bit of similar idea that it is still government led in a way. Everyone knows there are private companies and I will give you one number this is the most important number two numbers. Okay. >> First of all um we had last year 324 rocket launches worldwide 324. And from this 324 165 were SpaceX. So it means SpaceX alone as a private company had more launches than all other countries together or to say it in another way if SpaceX were a country it would be number one far before China that comes with 88 launches after this or if I compare it with Europe where I live we had eight launches. So it means we had 5% uh whole Europe what SpaceX did as a private company or it's not only SpaceX. I have a lot of content about another company it's Rocket Lab it's founded in in New Zealand from Peter Beck. The later they they moved to the United States, but founded in New Zealand. And they had 21 rocket launches last year, 100% successful. It means this private uh company from this Peter Beck who never studied or did anything like this had three times more rocket launches than whole Europe, for instance. And so and so you see the [clears throat] space capitalism is reality today. Or if I if I speak about satellites, we have today 15,000 active satellites in orbit. From this 15,000 uh 10,000 Starlink from from SpaceX. So you see, it's still private, but now the most important thing is my book that I say uh all these other goals, some people maybe we can talk about this thing about asteroid mining, space mining Elon Musk has the idea to settle the Mars or maybe now first the moon to build a city there and and all these plans will not happen or very hard to realize if we have no private property in space. And this is a big big problem. And to be honest, this is the really the main message of my book and the reason why I I want to start a discussion about it. And if if you like, we can I I can explain a little bit why I think it and what is the legal status today. Yeah. Okay, I I do want to talk about that and you know, that that would be you know, cuz you have a chapter in the book where you talk about the I think some of the things we've talked we've we hear asteroid mining and then also space tourism. So two kind of natural ways potentially for you know, for there to be capitalism, profit making in space. But that's all founded uh to a large extent on as you say private property rights. So, let let's let's talk about that. Um there are a couple existing you know, kind of international agreements on property rights. There's the Moon Agreement from 1984 and also the Outer Space Treaty 1967. Tell us about those two uh briefly and then explain why you think they're not sufficient to promote you know, a a robust space industry going forward. Yes. Fortunately, [clears throat] we don't have to talk long about the Moon Treaty because only about 20 countries signed it and no one of the spacefaring uh countries. It's a real socialist idea that uh that uh celestial bodies and everything is like a common good or something like this. But forget about this. More important is the Outer Space Treaty from 1967 because this treaty is signed by uh almost all important countries, by all spacefaring countries. And there's a problem or I say problem and an opportunity on the same uh uh in the in the in the same side. Uh according to Article 2 of this Outer Space Space Treaty, it's prohibited for nations to aim ownership over celestial bodies or land over celestial bodies. So, it means the United States cannot say uh this asteroid or moon or Mars or forever is a part of the United States or belongs to us. This is forbidden and this is crystal clear. There is no dispute among space lawyers that it's not allowed because it's crystal clear in this There are space lawyers out there? Yes. Yes, there are experts for space, yes. They have also discussion. And one discussion that they have is how is it with private person with private companies because there is nothing in the outer space treaty explicitly. And it's it's crystal clear why because in 1960 seven or when it was negotiated, no one thought about Elon Musk or Jeff Bezos or people like this. So, there is nothing and there are two opinions among space lawyers. The one they say, "Okay, um they try to make it indirectly clear that what is forbidden for nations is also forbidden for private person and private company." And the other say, "No, it's nothing in the treaty and what is not forbidden is allowed in the first place." So, we The only thing that is really clear is that it's not clear. And And And this is of course not really good for investors if it's not really really clear, the the legal situation. And you know, my approach is I I ask a question and I I wonder why why not more people ask this question. When Elon Musk Musk had this idea of settling, he he's talking about 1 million people to settle them on Mars. Whether we speak about 1 million or like Robert Zubrin, who's the founder of the Mars Society, I spoke with him. He's talking about 50,000. Wherever it is, whether it's thousand or million, this can't be funded by the government. We we have any anyway more than enough that right now. And I think it's it's absolutely not not possible. Of course, another landing on a Mars to bring five or 10 people there. Yes, this could be funded by the government, but not like city on the moon or on Mars. So, who could pay for us and what's the business model model behind it? And this is I give an answer. It's not possible without private property because on Earth there is no system that works without private property. There were 200 there were 24 socialist experiments in the last 100 years and they failed without any exception. And there is no successful economy in the world without private property. Also private property of land in some countries like China, Vietnam, you have no private property of land, but you can lease it and sell it for maybe 70 years. What is what is similar. But without any form of private property it it will not work. Why should it would be like in North Korea maybe. And if it doesn't work in North Korea, why should it work on Mars? Of of of of course not. Maybe you have lower gravity there, but the laws of the economy still exist. And my idea is so my question is who should have the right to own Mars or part of it. Maybe not the whole planet. And I have this idea. For example, if Elon Musk or whoever private company is able to go there. They take the risk. They spend the money. They are able to go there and that are not only to go there, but to develop it. Then they should have could claim ownership of course not of the whole planet. Yes, but it's similar to homesteading in the history of the United States. It was this way. The only difference is there was a government who gave to the settlers a part of the land on the condition that they develop it and do something for build house and so for 5 years. The difference is that there is no government who owns Mars because it's not allowed. But also this is not so different from the way as it happened in the United States at this time because the idea that there was a government and they told people you can use it. It was a little bit different. They first in lot of cases first they took it without any permission and then later they legalized it. Okay, keep it there if you do this. So and and this is the way I think how it should happen on Mars for example. Elon Musk goes there and then he takes a part maybe as big as Singapore. Singapore uh is there's there are place for 200,000 uh the area of Singapore is going to in 200,000 times on on Mars. So even if he takes a part of the Mars that is as big as Singapore there's enough for anyone else. But of course to develop it and do something and then the next ideas he should bring it to the stock exchange. Like a real real estate investment trust REIT and then who owns Mars? Every shareholder. Maybe you and me and I think this is a way to finance all these things. Yeah, and you know that I you have a couple of ideas like that and I I do want to talk about that in a second. I just said I wanted to circle back on the property rights. So how would you imagine and I know you're not a lawyer but how would you imagine property rights get enforced? Right? So you say, "Okay, if you can finance and get there, then you can own this, you know, Singapore-sized bit of Mars." And then they get there and they start, you know, mining outside their, you know, given property and and there's no no police force that's going to go up and stop them. Sure. So it it you know, what what happens there? How how does that work? Sure. Of course, on Mars there's no police force and no one who could stop them, but of course on Earth there are. And if maybe it's in the United States and there it's not legal and it's illegal or something like this, um okay, then they will go to another country. Maybe uh maybe Javier Milei will will make then better space law and then Elon Musk goes there from then he will move maybe from the United States to Argentina or whatever. This is a little bit science fake fiction, of course, but but on Mars they cannot do anything against it and I I think this is the only way how to how you could finance it. In my point of view, it's first it's a real estate story. Maybe it has a little bit to do I'm a you know, I'm a mixture I studied history and political science and sociology, but on the other hand I spent 20 years in the real estate industry and I had a very uh successful company in the real estate. So maybe I see it a little bit with a real estate perspective with a real estate investment trust. But I think in the same moment as it will be possible to buy and sell land on Mars and on Moon even before people go there, uh there there will be a trade. People will start to buy and and and sell only because they think they they hope the same when you buy Bitcoin or uh uh stocks and so that it will increase in value. And people will have the fantasy or maybe this part is the best of this maybe you know this uh movie uh Once Upon a Time in the West. Uh so there [clears throat] was this I think crazy they called him crazy Irish man who who uh bought their piece of uh land in the desert and they said, "Ah, he's he's totally crazy." Well, but he knew because the water was near there that it will increase the value. So, uh it it was uh the only mistake that he made he didn't know that the um owner of the railway that that later he came and killed his family so by the way. But but the the idea is to start buying something because you see something that can increase in value in the future. This is the same that will happen there. And on the other hand, if Elon Musk talks about this 1 million people there and and there would be no private property, how could you should they organize their society? This would be a completely not socialist com- com- complete communist society there. And why should it work on Mars? On Mars it's even harder that it uh uh you know on on on in on on our planet on Earth in some countries it worked in a way for some decades very poor and a lot of people died and with uh were poor, but it worked in a way. But on Mars the conditions, you know, with uh they they are so hard. Every place on Earth is much more relaxed than going to Mars. So, you should have an economic system that is even much more efficient as it is on Earth. And the same is with asteroids, asteroid mining. I think this will be a great topic. But if you go there for asteroid mining, of course it should be clear that uh for example, there's a lot of platinum or water. Water is You have a lot of water on asteroids, frozen water, but it's important in space because you cannot bring all the water from from the Earth in space. The water that you need, you have you have to get it there on asteroids or on Mars. And then who who who should be the owner? And of course, I'm not the only one who sees these problems. There was an executive order from Obama and also another executive order from Trump that for space mining, that you can keep this what you dig there, for example. Yes. Um so, but the problem is if you don't own the land, then it's hard to finance such things. So, it was a halfway for a solution, but I think we without real private property, this is my opinion, all these things will not work because Let me Can I just ask a question? Um so, I mean, that that makes sense. I I understand that. Yet at the same time, you have someone like Elon Musk, you know, continuing aggressively to, you know, pursue things like, you know, going to Mars, colonizing the moon, potentially setting up data centers in space, all these things without those property rights having been, you know, determined. So, do you think his bet is just that it's going to be determined that I'm just going to go ahead, or is he just kind of operating on the principle that what you've just outlined? Like if I get there, then it's mine. Unfortunately, I had not the possibility to talk with him in person. I know some very close friends of him. I talked with him and I talked with Robert Zubrin. You know, he he's the one who gave Elon Musk all these ideas with with Mars. He was the first one. He's the founder of the Mars Society and he wrote a lot of books about and I I think sometimes these people think about the economic perspectives, but I think Elon Musk is more someone like if the problem is there, we will find a solution. Not before you start to think about the next next next next step how we will, but I think if it is there, we we have to find a solution. But I'm very proud, you know, when I wrote the book, I've I've sent it to two experts. The one is Matthew Rhines Hill. He's I think the most famous expert for space economy on Harvard Business School and he said everyone should read this book. This is how it is about and Robert Zubrin, the man who gave Elon Musk the ideas, he said something about the book. I was very I am very proud. He said freedom will bring us space, space will bring us freedom and Dr. Siedelmann shows us the way how to do it. And because this is what I think I can say it on a technical way, but what was very important for me, I had a conversation with one from NASA Ames Center, Harry Jones, and we had some emails and he sent me some papers that he wrote. And he's older than 80 years. I think he's now almost 60 years in the space industry. And he told me, and this is what was important. There are no technical showstoppers for our way to Mars. It's all today what with we can solve all this There are problems, a lot, but he has this paper and he lists several eight huge problems. I said, "None of these problems is not solvable." So, the reason why we were not there, and this is my answer, it's the incentive. You know, for the moon landing there was a crystal-clear incentive. It was the the moon race, who will be number one, the competition between the Soviet Union and the United States. It was about national prestige and being number one. This was But in the moment when when there was the American flag on the moon, there was no incentives. They They gone five times smaller and then stopped because no one does everything without incentive, without a clear reason. Are you doing anything with without having a reason? And even not things that that cost so much money. No, you have to have a clear reason, incentive. And this is what, you know, the the architect of the Apollo program, the German Wernher von Braun, when when they asked him after ending of the Apollo program, "What is the next?" He said, "We we should make it in a way that it makes economical in economic sense." And you know, this is where all this scientists from NASA, maybe they didn't thought about it enough. We have this funding from the government and we have taxpayers' money and now we think what we can do with it. But of course, this is no answer for this question. And you know, this is the reason why we were 1969 on the moon and now 54 years NASA was now very proud to to fly by the moon 45 years later. But I think you have to ask why. You know, there are these conspiracy theories. So that I don't believe anyway moon landing. This was all made in TV. I I I don't believe in this stuff. But of course, they failed. Oh, you see, if we were not able to do it for 54 years, this proves our theory. It was only a fake. I don't believe it. I have another alternative explanation why it didn't happen. Because everything is about incentives and there were no incentives to do it. Well, let's talk about some of the areas that, you know, the space economy might develop. And we've mentioned we're going to mention both of them. One is, um, you know, mining for minerals on asteroids and the other one is essentially space tourism. So, tell us, uh, you know, the space industry at the moment, space, uh, economy is mostly about satellites. Yes. Is, you know, let's talk about asteroid mining. I mean, is that something that, you know, we could we can expect kind of realistically in, you know, kind of the next 5 years or so? I mean, you you have a great section where you talk about asteroids aren't necessarily what we think they are. They're not just solid hunks of rock floating in space. Often times they're almost like, you know, patches of rubble that are held together by weak gravitational forces. So it's not trivial to land on them and it's not even clear that once you start mining them that they'll they won't just break apart. Um, so tell us a little bit about what your take is on asteroid mining. Is that something that we can really expect to be a part of the space economy? First of all, I I don't think that it will happen in the next 5 years small. In the next 10 to 20 years it will it will happen. But, uh, it depends. It depends again on the property on the property rights. If it would be illegal or you find a way you're there on this asteroid and then you're the owner and you take the asteroid on the stock exchange, what is my idea as read. I think then there would start a race who's first there and to get it. But this is not the situation. So, just to be clear there, you so you you have your example essentially you list an asteroid on the on the uh stock exchange, right? You sell shares in it and that provides the capital for a company to go and, you know, and and, you know, do mining or whatever. And who should be who had who should have the right? The one, of course, not you or me. I'm not able to go to an asteroid. I and I don't know anything about asteroid mining. You you're not so. We not. But the one who are able to go there and take the money and take the risk, they should be the owner. But then, of course, if they're smart, they bring it to the stock exchange and then we have a lot of owners. And so, but let's talk a little bit more about it. There are maybe between 700,000 or maybe even 1.7 million asteroids, but most of them are between Mars and Jupiter. Mhm. But they're very far away. But we have also like the earlier 40,000 near Earth asteroids. These are one where usually we have fear and rightly so. Right. But they are closer to us and it's not so hard to to to reach them. And of course, what to do there? So, there's a big misunderstanding that people think we will bring the resources back to Earth. This will happen for example, for platinum, this this PGM group or gold or so, but this is the exception. I think it's more important to to use it in space because we use we we need a lot of resources in space. For example, if Elon Musk wanted to build like data centers in space, it's even with reduced launch costs costs a lot of money to to to bring it to space. Better to use the things that that are still in space. The same with water. Water is a basis also for propulsion. Yes, and and of course you need water when you are in space. And so I think most of the this what you do with asteroid mining is not for use on Earth. Some things yes, but for using to use it in space. And there were two companies but it's it's more difficult than you thought. And these companies, they had [clears throat] the good lobby in in the United States. You you know both of them. It was Ted Cruz and Marco Rubio. They lobbied for for them for for this asteroid mining companies. And the result was Obama's and then Trump's executive orders that the resources that you get there belong to you and that it's nothing against the Article 2 of the Outer Space Treaty. So but these two companies failed in the end and I think it will take a time but of course it will happen in the future when there are resources that valuable for us that we need especially then we we need in space. And the same is they will do it on the moon and on Mars and everywhere. So this is one topic. The other topic that you mentioned is space tourism. Of course today is extremely uh costly. It's it's uh it's it's it costs a lot of money. There's this uh What does it cost if you want to if you want to go up in the Jeff Bezos ship? >> there's a cheap version. Cheap version like $300,000. This is going only for a few few minutes. Uh, for example, with uh Jeff Bezos uh who did it for a time not at the moment. Uh, Richard Branson with his Virgin Galactic. The there were some space tourists, but this is just the cheap version. Like >> the the Ryanair version of uh >> Yes, for 300 300,000. But, the other version to go for example to the International Space Station, some people did it, but not many. This is I think today it would cost like 40 or 50 million. So, you have to be a billionaire. I I give you one example who uh who did it. Uh, Isaac Man. He's the new uh NASA uh NASA director CEO, and he was a space tourist with Elon Musk. He did it because he's a billionaire. And uh he has also a hobby. I think his hobby is he's the owner of the biggest private uh collection from uh how do you call it? Fighters. Uh uh uh uh Oh, fighter jets. Fighter jets, yes. >> Yes, I saw that I remember that in your book, yeah. It's it's his hobby, yes. But, so he he he was a space tourist and I think he paid something like 40 million. So, this is only for billionaires. So, and so you think, "Okay, why it's only for rich people?" But, if we go back all innovation in history were first for very rich people. Even a window to have a window was such a luxury. Only the richest people in the country could have a window like kings or with cars in the beginning or even with with flight. This was always for very rich people. And in the end, it became cheaper and cheaper and cheaper because the wealthy people first they financed it and in the end it becomes cheaper for for everyone. And I think with space will it will happen in a similar way. I know for some people it sounds like science fiction and they can't can't believe it, but it was also I I I read something in 19 3 um when the when the first man tried to um to have a to fly with an airplane. He failed and then there was an article in the New York Times and they had it, yes, of course it failed because it will be possible in between 1 million and 10 billion years if we put all this knowledge from the best scientists. This is what they wrote. And in reality 2 months later were the Wright brothers and they did it. And we had to there were surveys before the moon landing and the majority of people said, no it will never happen. This is not possible. So of and everything that was science fiction in in the first way, later it became reality, but I think this will not the precondition for this and so I come back to this. They have to there has to be a strong reason why why to do it. So why space? Why space matters? Yes. And if it is not national prestige or space race, now we have a little bit the situation as we had in the 60s. The 60s it was between the Soviet Union and the United States and now it's China and the United States. It's again about national prestige, but I think this is not enough. If you look at our society money matters and money makes the world go round. And so I think space capitalism is an important topic because it will not work without economic incentives. Yeah, I I I completely agree with you and you know, especially on that point about initially a lot of you know, what we consider to be normal industries were find were kind of play things with the wealthy. I mean you make the point that even something like an African safari in the 1800s was almost like a space journey is now, right? Something that you would only the rich could do it'd be very dangerous and and now you know, it's it's commonplace. Um just to kind of maybe wrap things up. For someone who believes in your story, believes that you know, the space economy is in its infancy and we're just at the very very beginning. How do you And again, I'm not asking for any specific advice, but how how should they go about thinking about investing in that? I mean we we have SpaceX IPO coming up. So that's obviously one way to do it. There's some listed ETFs I think out there. Might be like seven or eight of them. You know, are those you know, kind of viable ways for from your perspective or is it just too early? Or you know, what about the I guess the other question to kind of related is you know, you have the SpaceX, you have Jeff Bezos' company like Blue Origins what it's called. But you know, presumably there's also kind of secondary industries that benefit from the growing space industry. They provide components or raw materials or things like that. So, I don't know. It's It's a It's a broad question, maybe not a totally fair one, but how do you think about kind of investing in this new future space economy? >> [clears throat] >> Okay, first of all, if you would have invested like 2 years ago, for example, two two companies that I mentioned in my book, Rocket from Peter Beck, New New Zealand company. And another Planet Lab. They are based in San Francisco and in Berlin. By the way, only 5 minutes from my home. So, I I spoke with with them. And they have now the plans, for example, they work together with with Google for data center in space. But Elon Musk does the same. They have 200 satellites in in space. So, of course, if you believe in these topics, I'm more as it is to invest, I was more real estate investor, very very successful as real estate investment. Of course, I've also I'm invested in equity, but I'm more this what you mentioned, passive ETF, because uh I I think if you go if you according to statistics, there are not so many uh layman people who are really successful with stock picking. So, I I I don't believe that that I am. But of course, people are different. And if they read my book, and you see, I think with SpaceX especially, um on the one hand, it's a great opportunity, I think. They have the opportunity to be the biggest company in the world, maybe, because it's a Today, they have a kind of monopoly uh even. >> Yeah. Uh if if I tell the numbers. And but of course, on the other hand, it depends a lot maybe on Elon Musk. So, it's a It's this is the risk. What is if he's uh going to die or going to have a heart attack or so you you you you never know. But of course it's a great story, but of course on the other side it's not cheap, but you know, Tesla's also not not cheap. This earning ratios and so I don't know where they will be some hundreds may may may be. So it depends. I I don't give advice, but definitely it's a future industry and there there was a prediction couple of years ago. I don't know which investment bank it was. Was it Bank of America, Merrill Lynch, I don't know. They predicted that the first trillionaire will be a space entrepreneur. And people laughed at them. I think it was three or four years ago. But now I don't know today Elon Musk's estimated net worth, but last time I watched it it was 800 40 billion. I don't know how is it today, but it's close to this trillion. So people laughed about it. After the IPO definitely he will be the first trillionaire and the prediction was correct. And when when I started to write about it space economy couple of years ago not a book but paper and some essays people say "Ah, this is a strange idea and this is a a niche topic and so on." But of course now it will be with Elon Musk the biggest IPO in history if it happens. We don't know. Always, you know, capital markets a lot of thing what happens with Iran or what does Trump tomorrow two things no one can predict and a lot of things, you know, influence then the the capital market and if it is the right time for an IPO not. But, if it happens and it should happen in June. So, this is the way the reason why my book is published in June. Uh then he tries to raise more more than 70 billion dollars. And this is by far the biggest IPO in history because so far the biggest IPO they launched 29 billion. And it will be twice as much and this shows only if if one thing that [clears throat] it is real, it's not fantasy, it's real a topic. It's an important topic. This is the reason why I wrote a book about it in spite of the fact that people told me uh no one will be interested this what is this strange space economy and this sounds like science fiction. I can tell them this science fiction happens today in in in June. It's it's here and now. Well, you're right. It is here and we're going to be hearing a lot more about the new space economy as the SpaceX IPO approaches and as a number of the developments you talk about in the book begin to take shape. So, I think that's a good place to wrap up today. Dr. Adamson, thanks so much for joining us. It's been truly fascinating conversation and a great introduction to a topic that we're all going to be hearing a lot more about in the future. So, we wish you all the best. Great. Thank you for the opportunity and apologize no because I'm German that my English is not as good as it should be, but I I hope you I saw in your question that you can follow could follow everything and I I hope the audience also. Okay. The book is called The New Space Capitalism. Will be out in the US in June. Please make sure to get a copy and to follow Dr. Adamson's work because I think you can tell from today's conversation that many of these topics are not being discussed enough or even at all on mainstream media. For all of us here at Top Traders Unplugged, thanks for listening and we'll see you next time. Thanks for [music] listening to Top Traders Unplugged. If you feel you learned something of value from today's episode, the best way to stay updated is to go on over to your favorite podcast [music] platform and follow the show so that you'll be sure to get all the new episodes as they're released. [music] We have some amazing guests lined up for you and to ensure our show continues to grow, please leave us an honest rating and review. It only takes a minute and it's the best way to show us you love the podcast. We'll see you next time on Top Traders Unplugged. [music] This podcast expresses the views of its hosts and the guests appearing on the podcast as of the date of its recording and such views are subject to change without notice. [music] Top Traders Unplugged do not have any duty or obligation to update the information contained herein. Furthermore, Top Traders Unplugged make no representation to its accuracy [music] and it shall not be assumed that past investment performance is an indication of future results. Moreover, wherever there is a potential for profit, there is [music] also the possibility of loss. This content is made available for educational purposes only and should not be used for any other purpose. The information contained [music] in this podcast does not constitute and should not be construed as investment advice or an offer to sell or a solicitation to buy any securities or [music] related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. [music] Top Traders Unplugged may believe that the sources from which such information are obtained are reliable. However, Top Traders Unplugged cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information [music] or the assumptions on which such information is based. This podcast, including the information contained [music] herein, may not be reproduced, copied, republished, or posted in whole or in part in any form without the prior written consent of Top Traders Unplugged.
The Space Economy Is No Longer Science Fiction | Ideas Lab | Ep.49
Summary
On this episode we are joined by Dr. Rainer Zitelmann, to discuss his book New Space Capitalism: The Entrepreneurial Path to …Transcript
You know, this is the reason why we were 1969 on the moon and now 54 years NASA was now very proud to to fly by the moon 45 years later. If we were not able to do it for 54 years, this proves our theory. It was only a fake. I don't believe it. I have another alternative explanation why it didn't happen because everything is about incentives and there were no incentives to do it. >> [music] >> Welcome to Top Traders Unplugged. In markets, success doesn't come from predicting what happens next. It comes from [music] being prepared for what you can't predict. In each episode, we go deep with some of the world's most thoughtful minds in investing, economics, and beyond [music] to understand how they think, how they prepare, and how they decide, and the experiences that shaped how they see the world. No noise, no shortcuts, just [music] real conversations to help you think better and invest with confidence. >> [music] >> Welcome everyone to Top Traders Unplugged. My name is Kevin Coldiron and I'm host of the Ideas Lab series where we talk with authors of new books that help us understand how the global economy works and where it's headed in the future. Okay. I have to admit, I really had to resist the temptation to start today's show by reading out the opening monologue to Star Trek because today we're going to be talking about space, which is shaping up to potentially be the final frontier for capitalism. And the captain on our journey today is going to be Dr. Rainer Zitelmann. Dr. Zitelmann is a prolific author. He's written and edited 32 books, which have been translated into 35 languages including In Defense of Capitalism, The Power of Capitalism, and How Nations Escape Poverty. He's here today to talk about his latest book, which will be released in the US on June 9th, called New Space Capitalism: The Entrepreneurial Path to the Stars. Dr. Zitelmann, thanks for joining us today and now welcome to the show. Yes, thank you for inviting me. Um so it sounds like you have been a space capitalist since you were a boy. It's you were 12 years old when the first moon landing took place and you wrote a special edition of your school newspaper and sold it to your classmates. So, you made some some money from the moon landing. >> [laughter] >> Can you tell us about how your interest in space, you know, yeah, got started and please. Yes, I think like a lot of [clears throat] children watching science science fiction movies in in TV. Not Star Trek, it was another one in Germany and I [clears throat] saw it when I was 9 years old and then it's correct with 11 years. I founded a school newspapers called Galaktische Zeitung. It means Galactic Newspaper. It was only about astronomy and [clears throat] space flight and yes, I had good luck. At this time was also the first moon landing. So, you mentioned it. I had a special edition about this, but >> [clears throat] >> all in my children's room which was full with a big poster from the moon and from the Saturn V rocket and books about astronomy. So, this was all about. But it was not this way that I'm to be honest all of my life interested in these topics. You know, I'm an historian and in the last years I wrote a lot of books why capitalism better with the example of countries. I give you two examples. I I wrote a book how nations escape poverty. It's about Poland and Vietnam. And always I showed what happens if you add more market economy in a system or on the opposite more government. Maybe I can compare it with a test tube with two ingredients. Uh market and state or capitalism and socialism. And then I watch what happens if you add more market and what happens if you add more state. And as an example Vietnam where I have also produced a film, Vietnam beating poverty with market economy, this was the poorest country in the world 1990, poorer than all African countries. And then they started with free market reforms, the so-called story my reforms forms and the result is that the number of people living in poverty decreased from 80% to 3% from 80% to 3%. And I have a lot of other examples. And now I turned from studying countries or nations to studying an industry. And an industry that was decades ago totally led by the government and I think almost no one could imagine that some days there will be in Elon Musk or Jeff Bezos or multi-billionaires like this will start their private companies. So every everyone thought this is definitely something that can only be done by the state. And today it's you see it's the time of private as I call it space capitalism and this is what the book is about. Yeah, that's thanks for that because um I I have to say, you know, I I approached your book I don't know if skepticism is the right word, but I mean I definitely had that perspective of well, you know, space is something that the government runs. And you know, in the US, in America, the mythology of the moon landing and NASA is very deep in our psyche. And I guess your perspective is that the success of NASA, government funded space programs in general, were really a historical exception, not the road map for the future. So, I'd like to kind of explore those ideas a little bit. First of all, why was the initial NASA government funded space program successful? Tell us about how that worked and then then we can kind of transition to why that's not the correct model for the future. Yes, of course it was successful, maybe the greatest thing ever done in the history of mankind. And I don't say that >> [clears throat] >> absolutely everything 100% what the government does will will fail. Of course there are an exception, but you have to know the Apollo program cost 300 billion in today dollars, 300 billion. And at its peak it had 400,000 people and 20,000 companies working on it. So, it was a mobilization as in war times. And this is what Johnson said at this time. He said, "Who's first in space is first everywhere, and who's second in space is second everywhere." So, it was money plays absolutely no role. It was at this time 5% of the American budget in NASA. This is 10 times more as a percentage as it is today. Today is only 0.4%. So, you can't do it for such a great thing for a couple of years, but of course I >> [clears throat] >> I tell the story then what happened after Apollo with the space shuttle. And this is we can talk more in detail about it, but this was as far as concerns man space flight 50 years of failure, you know, it's now only a couple of months ago that we came the second time close to the moon, even not landed there and not to talk about Mars. The NASA had planned a Mars landing for 1981. There was a fixed date for 1981 and it maybe [clears throat] we can speak about the failure, but but of course the Apollo program was a big success, but then the politicians thought, okay, what we did one time so successful, we can do always not only in space, also with other ideas. For example, President Nixon, who was the president of the United States at this time, even had the idea to rebrand the NASA, to give it a new name, because he didn't want to focus only on space, but he had some other ideas like the fight against cancer for example, but these were all failures and this is so what the politicians thought, okay, we were so successful, we did it and now we can do everything in the same way. But this is not true, because I tell the story then what happened after this with the space shuttle program, maybe we can talk about this and this was a total failure. Yeah, let's talk about the space shuttle program, because that I think probably for well, listeners my age and and younger, I mean that that's kind of what they identify with space flight now. And um you know, you you say it it essentially became a program where the goals kept changing all the time and it was almost like a seemed to my my reading of your take is that almost became like a social program where politicians competed to dole out the spending in in their districts. And you know, you say in the end it had all these goals and really couldn't deliver on any of them. So So maybe just maybe walk walk us through the chronology of the the space shuttle a little bit. I think that's a good kind of template for why you think we need a different path in the future. Yes. First of all, there was no clear idea. Everyone had another idea what to do with it. The The military, the the the scientists, everyone had another idea, the politicians. And it was discussion about 3 years what to do with space shuttle. It changed a lot of time and they had them estimate that the development costs would be 5 billion and then for every flight between 5 million and 10 million. Between 5 million and 10 million. The reality was it was between 1 billion and 1.5 billion every flight. And why is that? Of course, if you make a calculation, you know, with Excel, the more flights you predict per year, the cheaper it will be. And they started with maybe the estimate of 10 flights a year and in the end they they they calculated with 140 flights every year. This is the was the calculation. The reality was 135 flights in 30 years. So they had in 30 years less flights than they predicted for 1 year. And then in the end, you know, then there there were two accidents were 14 people died and then they they stopped it in 2011 in 2011 and then this is the the headline of this chapter in my book is the end of the future because what happened then? The Americans were not able to bring their own astronauts with their own rockets from America the International Space Station but they had to rely on very old Russian Soyuz rockets. They had a monopoly at this time and so every flight costs maybe 10 or 20 million more than before and you know after winning this first space flight being so successful of course then it was a really big disaster for the United States that that they were not able to bring their own astronauts and a total failure. The the whole program was a failure. There were some smart people who even had before the idea let's do it in a different way. Let's cooperate with private companies in another way than we did before but most politicians rejected no this will be a disaster it will never happen. This is a totally stupid idea go away with this. Okay but then if you have the situation that you have lost everything and almost no alternative it's like in the football game though you know the mail Mary Mary pass Hail Mary pass yes and they said this was our Hail Mary pass then let's try to do this crazy SpaceX people from El Musk and of course it was not everybody in NASA. There was one woman especially she believed in it and every she she reported every week some people came in her room and tell us you're so poor that you have to work with this idiots for this private space. So I feel with your you have my sympathy, but she liked it and in the way. So what what happened then? Okay, 2000 >> can I just I just want to make sure I I get what you're saying. So what you I think what you're saying is you had the space shuttle program long period of time wasn't achieving its goals by I think you said by 2010 we had kind of lost the ability America had lost the ability to to put astronauts in space and so a few years after that there was a thought well maybe we can outsource some of this to a private to a private company SpaceX Elon Musk and so what you're talking about now is the kind of the origins of the private space industry as we know it today? Exactly. [clears throat] It was another way of cooperation. You have to understand even in the time of the Apollo program in the in the 60s and the 70s the NASA never built their own rockets. They were also built by private companies like Boeing and Rockwell, but the cooperation was like a micromanagement from NASA. They told them exactly what to do even sometimes who who to hire what employees to work. So in in every detail and they had a very strange kind of contracts. You call it cost plus contracts. I have to explain it because this is very important to understand. The cost plus program means um Okay, you build a rocket for us and we buy it and you have to make clear your costs, and then you can add maybe 8 or 10% profit because they had fear that this private companies will make to profit that in their eyes from the bureaucrats and politicians would be too high. So, they Okay, this is the best idea. Show us the costs, and then you can add it. But, the result was that it became more and more expensive. I spoke with one uh person who was at this time worked for one of the two biggest companies in the space industry, and he said, "Our our best product was our overhead because I think it's it's uh simple to understand. Uh for example, if you have 1 billion costs, and you can add 10%, then you make 100 million. But, if you have 3 billion costs, then you make three 300 million. So, it was a really an incentive for increasing costs. Oh, it takes longer than we thought, or it's more complicated. We have to do this and that. I think it's always very important in the economy to understand the incentive. And if the incentive is to make it even that it costs more and more and more, then it will cost more and more. This is exactly what happened. And now to understand what's the difference in the corporation today between SpaceX and NASA. Um SpaceX doesn't sell any rockets to to NASA, but a service. Like a service like FedEx or UPS. We bring your satellites to orbit for example and charge you a fixed price or we bring your astronauts to the International Space Station and charge you a fixed price. But how we build the rocket and what our costs and our profits and all this, this is ours and from this moment on was an incentive for lower costs of because lower costs would mean would mean more profit. And before with this cost plus program, higher costs mean more profit. Of course, companies are profit seeking entities and the result and this is amazing if you compare the launch costs. This is the world for how much does it cost to bring 1 kilo to space. If you compare the space shuttle with the cost that Elon Musk has to pay with his rockets, he's he reduced it by 95% 95%. This is his self self cost. And and how was this possible? I For example, one very important thing is that he was the first to build reusable rockets. The Falcon 9 is a reusable rocket. The same rocket was used now 34 times and of course it's makes a huge difference in the cost. Imagine you go from maybe from LA to New York and after this the plane you have to put throw it away. It's only one time use for the for for the air trip. I think the cost, I don't know how much maybe 800,000 dollars for the ticket or something like this. It's only cheaper because it's reusable and this is what NASA also tried before, but without success. And other countries tried also. So, today no state uh owned uh space agency, not in China, not in Russia, not in Europe, and not in the United States was able to build such a reusable rocket. But, Elon Musk did it 10 years ago. And the only other one who was successful now, I think it's a half year ago, was Jeff Bezos. He did it 10 years later. But, these are two private companies. And so, you see, this is uh this makes the the difference. And no one told Musk, "You should make a reusable rocket." It was not NASA told. It was his idea. And why? Because he thought it's much cheaper. And this was not the only way to reduce cost. There were a lot of other things that he did. But, in the result, he reduced it, as mentioned, by 95%. And he says today, "From this point, I will reduce it even 90% more." So, uh it's important to understand the completely different way for cooperation between the government on the one hand and this private companies on the other hand. Yeah, thank you for that. That's a excellent um excellent description of um you know, of how things work now. And and you say in the in the book that, you know, it it is kind of fascinating because you were saying, "Well, okay, once rockets become reusable, um you know, the you know, their contribution to total cost goes down, and then other stuff starts becoming relevant, in particular fuel." Right? So, once you start getting reusable rockets, then fuel cost start to matter a lot more. And so, it made me think that maybe there'll be some innovation on that side as well. Like figuring out how to lower the fuel costs or is that is that still something that you know? No, they are across they try to do there a lot of things to to reduce costs in this way but I think um the most important thing now if we go maybe a little bit of first first one thing. Some people ask me you know the title of my book is new space capitalist and then they they ask when when is it this with this space capitalist because they think you told me maybe you had a little bit of similar idea that it is still government led in a way. Everyone knows there are private companies and I will give you one number this is the most important number two numbers. Okay. >> First of all um we had last year 324 rocket launches worldwide 324. And from this 324 165 were SpaceX. So it means SpaceX alone as a private company had more launches than all other countries together or to say it in another way if SpaceX were a country it would be number one far before China that comes with 88 launches after this or if I compare it with Europe where I live we had eight launches. So it means we had 5% uh whole Europe what SpaceX did as a private company or it's not only SpaceX. I have a lot of content about another company it's Rocket Lab it's founded in in New Zealand from Peter Beck. The later they they moved to the United States, but founded in New Zealand. And they had 21 rocket launches last year, 100% successful. It means this private uh company from this Peter Beck who never studied or did anything like this had three times more rocket launches than whole Europe, for instance. And so and so you see the [clears throat] space capitalism is reality today. Or if I if I speak about satellites, we have today 15,000 active satellites in orbit. From this 15,000 uh 10,000 Starlink from from SpaceX. So you see, it's still private, but now the most important thing is my book that I say uh all these other goals, some people maybe we can talk about this thing about asteroid mining, space mining Elon Musk has the idea to settle the Mars or maybe now first the moon to build a city there and and all these plans will not happen or very hard to realize if we have no private property in space. And this is a big big problem. And to be honest, this is the really the main message of my book and the reason why I I want to start a discussion about it. And if if you like, we can I I can explain a little bit why I think it and what is the legal status today. Yeah. Okay, I I do want to talk about that and you know, that that would be you know, cuz you have a chapter in the book where you talk about the I think some of the things we've talked we've we hear asteroid mining and then also space tourism. So two kind of natural ways potentially for you know, for there to be capitalism, profit making in space. But that's all founded uh to a large extent on as you say private property rights. So, let let's let's talk about that. Um there are a couple existing you know, kind of international agreements on property rights. There's the Moon Agreement from 1984 and also the Outer Space Treaty 1967. Tell us about those two uh briefly and then explain why you think they're not sufficient to promote you know, a a robust space industry going forward. Yes. Fortunately, [clears throat] we don't have to talk long about the Moon Treaty because only about 20 countries signed it and no one of the spacefaring uh countries. It's a real socialist idea that uh that uh celestial bodies and everything is like a common good or something like this. But forget about this. More important is the Outer Space Treaty from 1967 because this treaty is signed by uh almost all important countries, by all spacefaring countries. And there's a problem or I say problem and an opportunity on the same uh uh in the in the in the same side. Uh according to Article 2 of this Outer Space Space Treaty, it's prohibited for nations to aim ownership over celestial bodies or land over celestial bodies. So, it means the United States cannot say uh this asteroid or moon or Mars or forever is a part of the United States or belongs to us. This is forbidden and this is crystal clear. There is no dispute among space lawyers that it's not allowed because it's crystal clear in this There are space lawyers out there? Yes. Yes, there are experts for space, yes. They have also discussion. And one discussion that they have is how is it with private person with private companies because there is nothing in the outer space treaty explicitly. And it's it's crystal clear why because in 1960 seven or when it was negotiated, no one thought about Elon Musk or Jeff Bezos or people like this. So, there is nothing and there are two opinions among space lawyers. The one they say, "Okay, um they try to make it indirectly clear that what is forbidden for nations is also forbidden for private person and private company." And the other say, "No, it's nothing in the treaty and what is not forbidden is allowed in the first place." So, we The only thing that is really clear is that it's not clear. And And And this is of course not really good for investors if it's not really really clear, the the legal situation. And you know, my approach is I I ask a question and I I wonder why why not more people ask this question. When Elon Musk Musk had this idea of settling, he he's talking about 1 million people to settle them on Mars. Whether we speak about 1 million or like Robert Zubrin, who's the founder of the Mars Society, I spoke with him. He's talking about 50,000. Wherever it is, whether it's thousand or million, this can't be funded by the government. We we have any anyway more than enough that right now. And I think it's it's absolutely not not possible. Of course, another landing on a Mars to bring five or 10 people there. Yes, this could be funded by the government, but not like city on the moon or on Mars. So, who could pay for us and what's the business model model behind it? And this is I give an answer. It's not possible without private property because on Earth there is no system that works without private property. There were 200 there were 24 socialist experiments in the last 100 years and they failed without any exception. And there is no successful economy in the world without private property. Also private property of land in some countries like China, Vietnam, you have no private property of land, but you can lease it and sell it for maybe 70 years. What is what is similar. But without any form of private property it it will not work. Why should it would be like in North Korea maybe. And if it doesn't work in North Korea, why should it work on Mars? Of of of of course not. Maybe you have lower gravity there, but the laws of the economy still exist. And my idea is so my question is who should have the right to own Mars or part of it. Maybe not the whole planet. And I have this idea. For example, if Elon Musk or whoever private company is able to go there. They take the risk. They spend the money. They are able to go there and that are not only to go there, but to develop it. Then they should have could claim ownership of course not of the whole planet. Yes, but it's similar to homesteading in the history of the United States. It was this way. The only difference is there was a government who gave to the settlers a part of the land on the condition that they develop it and do something for build house and so for 5 years. The difference is that there is no government who owns Mars because it's not allowed. But also this is not so different from the way as it happened in the United States at this time because the idea that there was a government and they told people you can use it. It was a little bit different. They first in lot of cases first they took it without any permission and then later they legalized it. Okay, keep it there if you do this. So and and this is the way I think how it should happen on Mars for example. Elon Musk goes there and then he takes a part maybe as big as Singapore. Singapore uh is there's there are place for 200,000 uh the area of Singapore is going to in 200,000 times on on Mars. So even if he takes a part of the Mars that is as big as Singapore there's enough for anyone else. But of course to develop it and do something and then the next ideas he should bring it to the stock exchange. Like a real real estate investment trust REIT and then who owns Mars? Every shareholder. Maybe you and me and I think this is a way to finance all these things. Yeah, and you know that I you have a couple of ideas like that and I I do want to talk about that in a second. I just said I wanted to circle back on the property rights. So how would you imagine and I know you're not a lawyer but how would you imagine property rights get enforced? Right? So you say, "Okay, if you can finance and get there, then you can own this, you know, Singapore-sized bit of Mars." And then they get there and they start, you know, mining outside their, you know, given property and and there's no no police force that's going to go up and stop them. Sure. So it it you know, what what happens there? How how does that work? Sure. Of course, on Mars there's no police force and no one who could stop them, but of course on Earth there are. And if maybe it's in the United States and there it's not legal and it's illegal or something like this, um okay, then they will go to another country. Maybe uh maybe Javier Milei will will make then better space law and then Elon Musk goes there from then he will move maybe from the United States to Argentina or whatever. This is a little bit science fake fiction, of course, but but on Mars they cannot do anything against it and I I think this is the only way how to how you could finance it. In my point of view, it's first it's a real estate story. Maybe it has a little bit to do I'm a you know, I'm a mixture I studied history and political science and sociology, but on the other hand I spent 20 years in the real estate industry and I had a very uh successful company in the real estate. So maybe I see it a little bit with a real estate perspective with a real estate investment trust. But I think in the same moment as it will be possible to buy and sell land on Mars and on Moon even before people go there, uh there there will be a trade. People will start to buy and and and sell only because they think they they hope the same when you buy Bitcoin or uh uh stocks and so that it will increase in value. And people will have the fantasy or maybe this part is the best of this maybe you know this uh movie uh Once Upon a Time in the West. Uh so there [clears throat] was this I think crazy they called him crazy Irish man who who uh bought their piece of uh land in the desert and they said, "Ah, he's he's totally crazy." Well, but he knew because the water was near there that it will increase the value. So, uh it it was uh the only mistake that he made he didn't know that the um owner of the railway that that later he came and killed his family so by the way. But but the the idea is to start buying something because you see something that can increase in value in the future. This is the same that will happen there. And on the other hand, if Elon Musk talks about this 1 million people there and and there would be no private property, how could you should they organize their society? This would be a completely not socialist com- com- complete communist society there. And why should it work on Mars? On Mars it's even harder that it uh uh you know on on on in on on our planet on Earth in some countries it worked in a way for some decades very poor and a lot of people died and with uh were poor, but it worked in a way. But on Mars the conditions, you know, with uh they they are so hard. Every place on Earth is much more relaxed than going to Mars. So, you should have an economic system that is even much more efficient as it is on Earth. And the same is with asteroids, asteroid mining. I think this will be a great topic. But if you go there for asteroid mining, of course it should be clear that uh for example, there's a lot of platinum or water. Water is You have a lot of water on asteroids, frozen water, but it's important in space because you cannot bring all the water from from the Earth in space. The water that you need, you have you have to get it there on asteroids or on Mars. And then who who who should be the owner? And of course, I'm not the only one who sees these problems. There was an executive order from Obama and also another executive order from Trump that for space mining, that you can keep this what you dig there, for example. Yes. Um so, but the problem is if you don't own the land, then it's hard to finance such things. So, it was a halfway for a solution, but I think we without real private property, this is my opinion, all these things will not work because Let me Can I just ask a question? Um so, I mean, that that makes sense. I I understand that. Yet at the same time, you have someone like Elon Musk, you know, continuing aggressively to, you know, pursue things like, you know, going to Mars, colonizing the moon, potentially setting up data centers in space, all these things without those property rights having been, you know, determined. So, do you think his bet is just that it's going to be determined that I'm just going to go ahead, or is he just kind of operating on the principle that what you've just outlined? Like if I get there, then it's mine. Unfortunately, I had not the possibility to talk with him in person. I know some very close friends of him. I talked with him and I talked with Robert Zubrin. You know, he he's the one who gave Elon Musk all these ideas with with Mars. He was the first one. He's the founder of the Mars Society and he wrote a lot of books about and I I think sometimes these people think about the economic perspectives, but I think Elon Musk is more someone like if the problem is there, we will find a solution. Not before you start to think about the next next next next step how we will, but I think if it is there, we we have to find a solution. But I'm very proud, you know, when I wrote the book, I've I've sent it to two experts. The one is Matthew Rhines Hill. He's I think the most famous expert for space economy on Harvard Business School and he said everyone should read this book. This is how it is about and Robert Zubrin, the man who gave Elon Musk the ideas, he said something about the book. I was very I am very proud. He said freedom will bring us space, space will bring us freedom and Dr. Siedelmann shows us the way how to do it. And because this is what I think I can say it on a technical way, but what was very important for me, I had a conversation with one from NASA Ames Center, Harry Jones, and we had some emails and he sent me some papers that he wrote. And he's older than 80 years. I think he's now almost 60 years in the space industry. And he told me, and this is what was important. There are no technical showstoppers for our way to Mars. It's all today what with we can solve all this There are problems, a lot, but he has this paper and he lists several eight huge problems. I said, "None of these problems is not solvable." So, the reason why we were not there, and this is my answer, it's the incentive. You know, for the moon landing there was a crystal-clear incentive. It was the the moon race, who will be number one, the competition between the Soviet Union and the United States. It was about national prestige and being number one. This was But in the moment when when there was the American flag on the moon, there was no incentives. They They gone five times smaller and then stopped because no one does everything without incentive, without a clear reason. Are you doing anything with without having a reason? And even not things that that cost so much money. No, you have to have a clear reason, incentive. And this is what, you know, the the architect of the Apollo program, the German Wernher von Braun, when when they asked him after ending of the Apollo program, "What is the next?" He said, "We we should make it in a way that it makes economical in economic sense." And you know, this is where all this scientists from NASA, maybe they didn't thought about it enough. We have this funding from the government and we have taxpayers' money and now we think what we can do with it. But of course, this is no answer for this question. And you know, this is the reason why we were 1969 on the moon and now 54 years NASA was now very proud to to fly by the moon 45 years later. But I think you have to ask why. You know, there are these conspiracy theories. So that I don't believe anyway moon landing. This was all made in TV. I I I don't believe in this stuff. But of course, they failed. Oh, you see, if we were not able to do it for 54 years, this proves our theory. It was only a fake. I don't believe it. I have another alternative explanation why it didn't happen. Because everything is about incentives and there were no incentives to do it. Well, let's talk about some of the areas that, you know, the space economy might develop. And we've mentioned we're going to mention both of them. One is, um, you know, mining for minerals on asteroids and the other one is essentially space tourism. So, tell us, uh, you know, the space industry at the moment, space, uh, economy is mostly about satellites. Yes. Is, you know, let's talk about asteroid mining. I mean, is that something that, you know, we could we can expect kind of realistically in, you know, kind of the next 5 years or so? I mean, you you have a great section where you talk about asteroids aren't necessarily what we think they are. They're not just solid hunks of rock floating in space. Often times they're almost like, you know, patches of rubble that are held together by weak gravitational forces. So it's not trivial to land on them and it's not even clear that once you start mining them that they'll they won't just break apart. Um, so tell us a little bit about what your take is on asteroid mining. Is that something that we can really expect to be a part of the space economy? First of all, I I don't think that it will happen in the next 5 years small. In the next 10 to 20 years it will it will happen. But, uh, it depends. It depends again on the property on the property rights. If it would be illegal or you find a way you're there on this asteroid and then you're the owner and you take the asteroid on the stock exchange, what is my idea as read. I think then there would start a race who's first there and to get it. But this is not the situation. So, just to be clear there, you so you you have your example essentially you list an asteroid on the on the uh stock exchange, right? You sell shares in it and that provides the capital for a company to go and, you know, and and, you know, do mining or whatever. And who should be who had who should have the right? The one, of course, not you or me. I'm not able to go to an asteroid. I and I don't know anything about asteroid mining. You you're not so. We not. But the one who are able to go there and take the money and take the risk, they should be the owner. But then, of course, if they're smart, they bring it to the stock exchange and then we have a lot of owners. And so, but let's talk a little bit more about it. There are maybe between 700,000 or maybe even 1.7 million asteroids, but most of them are between Mars and Jupiter. Mhm. But they're very far away. But we have also like the earlier 40,000 near Earth asteroids. These are one where usually we have fear and rightly so. Right. But they are closer to us and it's not so hard to to to reach them. And of course, what to do there? So, there's a big misunderstanding that people think we will bring the resources back to Earth. This will happen for example, for platinum, this this PGM group or gold or so, but this is the exception. I think it's more important to to use it in space because we use we we need a lot of resources in space. For example, if Elon Musk wanted to build like data centers in space, it's even with reduced launch costs costs a lot of money to to to bring it to space. Better to use the things that that are still in space. The same with water. Water is a basis also for propulsion. Yes, and and of course you need water when you are in space. And so I think most of the this what you do with asteroid mining is not for use on Earth. Some things yes, but for using to use it in space. And there were two companies but it's it's more difficult than you thought. And these companies, they had [clears throat] the good lobby in in the United States. You you know both of them. It was Ted Cruz and Marco Rubio. They lobbied for for them for for this asteroid mining companies. And the result was Obama's and then Trump's executive orders that the resources that you get there belong to you and that it's nothing against the Article 2 of the Outer Space Treaty. So but these two companies failed in the end and I think it will take a time but of course it will happen in the future when there are resources that valuable for us that we need especially then we we need in space. And the same is they will do it on the moon and on Mars and everywhere. So this is one topic. The other topic that you mentioned is space tourism. Of course today is extremely uh costly. It's it's uh it's it's it costs a lot of money. There's this uh What does it cost if you want to if you want to go up in the Jeff Bezos ship? >> there's a cheap version. Cheap version like $300,000. This is going only for a few few minutes. Uh, for example, with uh Jeff Bezos uh who did it for a time not at the moment. Uh, Richard Branson with his Virgin Galactic. The there were some space tourists, but this is just the cheap version. Like >> the the Ryanair version of uh >> Yes, for 300 300,000. But, the other version to go for example to the International Space Station, some people did it, but not many. This is I think today it would cost like 40 or 50 million. So, you have to be a billionaire. I I give you one example who uh who did it. Uh, Isaac Man. He's the new uh NASA uh NASA director CEO, and he was a space tourist with Elon Musk. He did it because he's a billionaire. And uh he has also a hobby. I think his hobby is he's the owner of the biggest private uh collection from uh how do you call it? Fighters. Uh uh uh uh Oh, fighter jets. Fighter jets, yes. >> Yes, I saw that I remember that in your book, yeah. It's it's his hobby, yes. But, so he he he was a space tourist and I think he paid something like 40 million. So, this is only for billionaires. So, and so you think, "Okay, why it's only for rich people?" But, if we go back all innovation in history were first for very rich people. Even a window to have a window was such a luxury. Only the richest people in the country could have a window like kings or with cars in the beginning or even with with flight. This was always for very rich people. And in the end, it became cheaper and cheaper and cheaper because the wealthy people first they financed it and in the end it becomes cheaper for for everyone. And I think with space will it will happen in a similar way. I know for some people it sounds like science fiction and they can't can't believe it, but it was also I I I read something in 19 3 um when the when the first man tried to um to have a to fly with an airplane. He failed and then there was an article in the New York Times and they had it, yes, of course it failed because it will be possible in between 1 million and 10 billion years if we put all this knowledge from the best scientists. This is what they wrote. And in reality 2 months later were the Wright brothers and they did it. And we had to there were surveys before the moon landing and the majority of people said, no it will never happen. This is not possible. So of and everything that was science fiction in in the first way, later it became reality, but I think this will not the precondition for this and so I come back to this. They have to there has to be a strong reason why why to do it. So why space? Why space matters? Yes. And if it is not national prestige or space race, now we have a little bit the situation as we had in the 60s. The 60s it was between the Soviet Union and the United States and now it's China and the United States. It's again about national prestige, but I think this is not enough. If you look at our society money matters and money makes the world go round. And so I think space capitalism is an important topic because it will not work without economic incentives. Yeah, I I I completely agree with you and you know, especially on that point about initially a lot of you know, what we consider to be normal industries were find were kind of play things with the wealthy. I mean you make the point that even something like an African safari in the 1800s was almost like a space journey is now, right? Something that you would only the rich could do it'd be very dangerous and and now you know, it's it's commonplace. Um just to kind of maybe wrap things up. For someone who believes in your story, believes that you know, the space economy is in its infancy and we're just at the very very beginning. How do you And again, I'm not asking for any specific advice, but how how should they go about thinking about investing in that? I mean we we have SpaceX IPO coming up. So that's obviously one way to do it. There's some listed ETFs I think out there. Might be like seven or eight of them. You know, are those you know, kind of viable ways for from your perspective or is it just too early? Or you know, what about the I guess the other question to kind of related is you know, you have the SpaceX, you have Jeff Bezos' company like Blue Origins what it's called. But you know, presumably there's also kind of secondary industries that benefit from the growing space industry. They provide components or raw materials or things like that. So, I don't know. It's It's a It's a broad question, maybe not a totally fair one, but how do you think about kind of investing in this new future space economy? >> [clears throat] >> Okay, first of all, if you would have invested like 2 years ago, for example, two two companies that I mentioned in my book, Rocket from Peter Beck, New New Zealand company. And another Planet Lab. They are based in San Francisco and in Berlin. By the way, only 5 minutes from my home. So, I I spoke with with them. And they have now the plans, for example, they work together with with Google for data center in space. But Elon Musk does the same. They have 200 satellites in in space. So, of course, if you believe in these topics, I'm more as it is to invest, I was more real estate investor, very very successful as real estate investment. Of course, I've also I'm invested in equity, but I'm more this what you mentioned, passive ETF, because uh I I think if you go if you according to statistics, there are not so many uh layman people who are really successful with stock picking. So, I I I don't believe that that I am. But of course, people are different. And if they read my book, and you see, I think with SpaceX especially, um on the one hand, it's a great opportunity, I think. They have the opportunity to be the biggest company in the world, maybe, because it's a Today, they have a kind of monopoly uh even. >> Yeah. Uh if if I tell the numbers. And but of course, on the other hand, it depends a lot maybe on Elon Musk. So, it's a It's this is the risk. What is if he's uh going to die or going to have a heart attack or so you you you you never know. But of course it's a great story, but of course on the other side it's not cheap, but you know, Tesla's also not not cheap. This earning ratios and so I don't know where they will be some hundreds may may may be. So it depends. I I don't give advice, but definitely it's a future industry and there there was a prediction couple of years ago. I don't know which investment bank it was. Was it Bank of America, Merrill Lynch, I don't know. They predicted that the first trillionaire will be a space entrepreneur. And people laughed at them. I think it was three or four years ago. But now I don't know today Elon Musk's estimated net worth, but last time I watched it it was 800 40 billion. I don't know how is it today, but it's close to this trillion. So people laughed about it. After the IPO definitely he will be the first trillionaire and the prediction was correct. And when when I started to write about it space economy couple of years ago not a book but paper and some essays people say "Ah, this is a strange idea and this is a a niche topic and so on." But of course now it will be with Elon Musk the biggest IPO in history if it happens. We don't know. Always, you know, capital markets a lot of thing what happens with Iran or what does Trump tomorrow two things no one can predict and a lot of things, you know, influence then the the capital market and if it is the right time for an IPO not. But, if it happens and it should happen in June. So, this is the way the reason why my book is published in June. Uh then he tries to raise more more than 70 billion dollars. And this is by far the biggest IPO in history because so far the biggest IPO they launched 29 billion. And it will be twice as much and this shows only if if one thing that [clears throat] it is real, it's not fantasy, it's real a topic. It's an important topic. This is the reason why I wrote a book about it in spite of the fact that people told me uh no one will be interested this what is this strange space economy and this sounds like science fiction. I can tell them this science fiction happens today in in in June. It's it's here and now. Well, you're right. It is here and we're going to be hearing a lot more about the new space economy as the SpaceX IPO approaches and as a number of the developments you talk about in the book begin to take shape. So, I think that's a good place to wrap up today. Dr. Adamson, thanks so much for joining us. It's been truly fascinating conversation and a great introduction to a topic that we're all going to be hearing a lot more about in the future. So, we wish you all the best. Great. Thank you for the opportunity and apologize no because I'm German that my English is not as good as it should be, but I I hope you I saw in your question that you can follow could follow everything and I I hope the audience also. Okay. The book is called The New Space Capitalism. Will be out in the US in June. Please make sure to get a copy and to follow Dr. Adamson's work because I think you can tell from today's conversation that many of these topics are not being discussed enough or even at all on mainstream media. For all of us here at Top Traders Unplugged, thanks for listening and we'll see you next time. Thanks for [music] listening to Top Traders Unplugged. If you feel you learned something of value from today's episode, the best way to stay updated is to go on over to your favorite podcast [music] platform and follow the show so that you'll be sure to get all the new episodes as they're released. [music] We have some amazing guests lined up for you and to ensure our show continues to grow, please leave us an honest rating and review. It only takes a minute and it's the best way to show us you love the podcast. We'll see you next time on Top Traders Unplugged. [music] This podcast expresses the views of its hosts and the guests appearing on the podcast as of the date of its recording and such views are subject to change without notice. [music] Top Traders Unplugged do not have any duty or obligation to update the information contained herein. Furthermore, Top Traders Unplugged make no representation to its accuracy [music] and it shall not be assumed that past investment performance is an indication of future results. Moreover, wherever there is a potential for profit, there is [music] also the possibility of loss. This content is made available for educational purposes only and should not be used for any other purpose. The information contained [music] in this podcast does not constitute and should not be construed as investment advice or an offer to sell or a solicitation to buy any securities or [music] related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. [music] Top Traders Unplugged may believe that the sources from which such information are obtained are reliable. However, Top Traders Unplugged cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information [music] or the assumptions on which such information is based. This podcast, including the information contained [music] herein, may not be reproduced, copied, republished, or posted in whole or in part in any form without the prior written consent of Top Traders Unplugged.