Hey people! Welcome back to Forests Over Trees, your weekly tech strategy newsletter. It’s time to zoom-out, connect dots, and (try to) predict the future.
A few weeks ago, we got introduced to my framework for thinking about space development – New World-ing for Dummies.
We talked about SpaceX controlling 45% of the launch industry, humanity’s struggle to map more than 5% of the universe, and tons of other cool stuff.
But I messed up.
I nerded-out too hard and the post was too long. Sadly, I had no choice but to split that epic post into two parts.
This week, you get part 2.
But before we jump back into the nitty gritty, let’s refresh our memories about the framework.
Exploration & Mapping
Find things and catalog them to understand the resources and risks of the place.
Settlement & Infrastructure
Make the place easier to get to, more hospitable, and more scalable.
Resource Exploitation
Take advantage of the natural resources and advantages of the place.
Industrialization
Introduce old/existing tech to improve efficiency and raise standards of living. Use R&D to innovate, finding new tech to drive further improvement.
Specialization
Push expertise even further in all directions, adding niche services and diversifying the industries that drive the economy.
Last time, we covered the progress and the opportunities for steps 1 and 2. So today, we start with 3.
Resource Exploitation
There are two sub-categories for this.
Resource Extraction
This means taking things from the new place.
If you want to think about the discovery and development of the Americas (where I borrowed/brainstormed the framework!), this would include things like mining, logging, etc.
For space, resource extraction is something lots of people have talked about and nobody has done (yet). Though there are startups vying to be among the first to pull it off.
Astroforge, for example, is trying to tackle asteroid mining. They want to do mining and refining in space, then bring back minerals.
But according to the Verge, their latest test mission is off to a rocky start. The on-board refinery generates a magnetic field (what?!) that knocked out their communications and created some orbital wobble (which is a fun thing to say, but apparently not a good thing for objects in space…).
Other Natural Advantages
For this sub-category, it’s easier to explain via examples. Let’s start with Starlink.
Now, while they aren’t mining space for valuable resources and using those somewhere, they are taking advantage of the natural features of space.
What features? Well, space surrounds the earth, it has gravity which allows orbits, etc. Starlink is able to use satellites to deliver internet service all over the Earth because of the natural advantages of space.
As another example, Varda is doing drug manufacturing in space. What’s the natural advantage? Low gravity, which slows down molecules and allows more precise temperature control. This makes drug discovery and development faster and easier than on-earth methods. If this sounds literally unbelievable to you, you’re not alone… but Varda had a successful test recently to produce an HIV drug (more on that here).
Opportunities
In my research, I saw mention of more ideas in the “natural advantages” category that sound super fun – like solar energy harvesting (natural advantage – ability to have it be “always sunny” and not lose energy to atmospheric interference). But… these all seem harder and more difficult to predict.
Instead, I think the opportunity is to go after the simple, known quantity of resource extraction, using the development of the Earthly mining industry as a guide.
Industrialization
I’d argue that industrialization has already started for some elements of our human-space adventure, but others haven’t (and won’t until much later).
So what’s an example of an industrialized space sub-industry?
Launch.
In part 1, I mentioned that the cost to reach orbit around Earth has fallen by 10x since SpaceX’s first launch in 2006. That’s a clear sign of continuous improvement (aka lots of smart people getting stressed about efficiency). As other elements of the space economy develop, there will be new things to get stressed about and drive efficiencies for.
But the other part of the industrialization definition from above talks about improving standards of living. You have to have meaningful, scaling civilizations in space before you can really improve the quality of life. So progress on this front is dependent on the settlement & infrastructure we talked about earlier. Today, said progress is nonexistent.
Opportunities
Quality of life improvements aren’t a good place to focus in the short term.
Instead, helping companies like Varda and Starlink drive efficiencies would be a great place to start. They already have traction (and plenty of funding to pay for your incredibly innovative products and services).
Specialization
Honestly, talking about this step feels like trying to look into a crystal ball, and in the short term, this is not the best place to focus on opportunities.
So instead, let’s unpack the definition.
The key benefit and outcome of this step is a diversified space economy. Up until this point, the goods and services being produced are related to a very narrow set of things. You need to get there, live there, extract value there, etc.
Life in space would be utilitarian and narrow. Boring and fragile.
To make it less boring there, you’ll need entertainment, tourism, etc. To make it less fragile, you’ll need a broadening of economic value generation, and the introduction of new, productive industries.
Wrapping Up
To close, I wanted to leave you with some hypothetical “signposts” for maturation in each step of the framework. In other words…
How will we know we are making progress?
Exploration
Elon won’t be the only one seriously talking about moving to space. It will be risky, but not unheard of. Your crazy uncle will sign-up to go.
Settlement
Countries and their coalitions will claim territory. There will be literal star wars to decide who gets what.
Resource Extraction
We will have the equivalent of a gold rush. They’ll discover that semiconductors work best with Resource Z, which exists in huge quantities on asteroids orbiting Jupiter.
Industrialization
Six Sigma will launch a “Space Factory Edition” of their continuous improvement cult.
Specialization
You’ll see Space Influencers, Space Pirates, docking/landing consultants, moon Cruises, etc.
Obviously, these are made up, but you get it. It’s going to be wild.
…or…dare I say… out of this world.
Bonus Bullets
Quote of the Week
It is incredibly powerful if you solve the problem you actually have yourself. It's really tough to develop a good product when you don't have very close proximity to the people who actually use your product. The closest proximity you can have to those people is to be that person.
— Tobi Lutke, Co-Founder & CEO of Shopify
Quick News Reactions
iRobot (Apple’s Version) – the iEverything company is thinking about a robot. Just like I wrote about for the Vision Pro, creating new hardware is their best/tested growth lever. It’s also a chance to escape all the App Store regulatory pressure and hit “reset”.
IPO Weirdness – Rubrik is the latest tech company to announce an IPO. I say “weird” because they have a growing net loss, and the IPO market doesn’t seem (at least to me) to be fully back. Reddit IPO’d, popped ~50%, then fell back to the IPO price. Altera (another recent one) had a similar pop, though it’s now still ~10% up from IPO.
Discord will do ads – Historically, it’s all been subscriptions. As this great WSJ writeup mentions, Discord is just one of a slew of tech companies embracing ads when they didn’t before (Uber, Netflix, etc).
Overall Economy
This is the Weekly Economic Index published by the Dallas Fed. It’s made up of 10 different data sources from consumer to labor to production, and it’s designed to closely track US GDP.
Tech Equities & Bitcoin
The Nasdaq (blue) closely tracks tech equities, and I added the S&P 500 (green) and Bitcoin (orange) for comparison. Note: this is not investment advice, but it is interesting.
Tech Jobs Update
Layoffs from 2022-2024: (Source: Layoffs.FYI).