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Hoyt Davidson, Sunday, 12-30-12 December 30, 2012

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Hoyt Davidson, Sunday, 12-30-12


Guest:  Hoyt Davidson.  Topics:  Commercial space financing, markets, and risks.  Please direct all comments and questions regarding Space Show programs/guest(s) to the Space Show blog, https://thespaceshow.wordpress.com. Comments and questions should be relevant to the specific Space Show program. Written Transcripts of Space Show programs are a violation of our copyright and are not permitted without prior written consent, even if for your own use. We do not permit the commercial use of Space Show programs or any part thereof, nor do we permit editing, YouTube clips, or clips placed on other private channels & websites. Space Show programs can be quoted, but the quote must be cited or referenced using the proper citation format. Contact The Space Show for further information.  We welcomed Hoyt Davidson to the program to discuss commercial space from the perspective of markets and financing.  Mr. Davidson, founder and managing Partner of near Earth LLC (www.nearearthllc.com) shared with us his expertise and experience in a very instructive discussion on these important topics.  While much of the focus was on the commercial satellite industry, the applications apply across the board in the commercial space industry.  One of the topics we discussed in great detail was market risk. In fact, our gust suggested market risk was a bigger challenge and more of a possible road block than technical or regulatory risks.  Mr. Davidson also said what many others in the commercial space arena say and that is that the companies prefer to see themselves within their overall general industry such as media and communications rather than as a space company.  We talked about several popularly touted possible commercial space industries from a market perspective, the length of time needed for a return on investment, and what is referred to as Death Valley for space entrepreneurs.  Death Valley refers to an opportunity being too large for an angel investor but too small for venture capital.  In talking about market risks, we also talked about getting investor partners to strengthen the deal. XM Radio was cited as an example.  The pursuit of market research was discussed, both from the perspective of using a market research company and doing the market research in-house. Other potential commercial space industries were examined including space tourism, citizen science for orbital with cubesats as well as suborbital, space solar power, satellite internet services, and the use of public/private partnerships.

In our second segment, a listener wanted to know about space focused investment banking career opportunities for MBA graduates.  Next, we talked at length about public/private partnerships and being “pure” regarding what constitutes a commercial space company.  In this context, pure refers to not having a mix of government and private capital, instead being 100% private. SpaceX with Cots and Commercial Crew served as one of our company examples but we also noted that no such 100% pure private company was out there given the costs and challenges of space ventures.  Listeners asked about private capital financing for NASA science missions such as a Europa mission.  Other listeners wanted to know about commercial opportunities for human spaceflight. Here, our guest suggested the opportunities were more with the robotic missions that come before the human missions.  Toward the end, a listener asked how higher tax rates might impact risky commercial space investments.  We also talked about geographical areas of special investment expertise in the U.S. and in other countries. Silicon Valley is not the only player in this field.

Please post your comments/questions on The Space Show blog above.  You can email Hoyt Davidson through me or by using his website.

Dr. Stephen Fuller, Sunday, 10-14-12 October 15, 2012

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Dr. Stephen Fuller, Sunday, 10-14-12


Guest:  Dr. Stephen Fuller.  Topics: Sequestration and its potential impact on DOD Agencies, aerospace, NASA & non-DOD agencies.  You are invited to comment, ask questions, and discuss the Space Show program/guest(s) on the Space Show blog, https://thespaceshow.wordpress.com. Comments, questions, and any discussion must be relevant and applicable to Space Show programming. Transcripts of Space Show programs are not permitted without prior written consent from The Space Show (even if for personal use) & are a violation of the Space Show copyright. We welcomed Dr. Stephen Fuller to the program to discuss the potential impact of the Budget Control Act of 2011 (sequestration) on DOD and the aerospace industry.  You can read and download his report at www.aia-aerospace.org/assets/Fuller_II_Final_Report.pdf. We started our discussion with Dr. Fuller providing us with the background and history leading up to the adoption of the sequestration law in 2011 and what it means across a broad group of stakeholders as well as all of us since no one will escape its impact and consequences.  Dr. Fuller provided sequestration specifics, especially for 2013, plus the added impact of the law when the multiplier effect is added in to the analysis. We discussed different perspectives on sequestration, including the one suggesting that this might be the best thing possible for the country because it will finally impose strict fiscal discipline on the spending. We contrasted the “cold turkey” approach with a more targeted and disciplined approach designed to accomplish the same trillion dollar reduction over ten years. We talked about the sequestration impact in DOD and aerospace, plus Dr. Fuller told us about his research on its impact with NASA.  Listeners wanted to speculate how NASA cuts might impact commercial crew, SLS, the planetary programs, and James Webb.  During this segment, our guest did an excellent job of explaining the likely collateral damage throughout the economy should sequestration happen.  Dr. Fuller also talked about the effects of delaying the onset of sequestration to February or March 2013.  Here, the workforce cuts are more severe as they have to reach a certain goal in FY 2013 but will have less time to reach that goal.  Near the end of this segment, Dr. Fuller explained the impact on primary contractors as well as the subs and small businesses.  As the segment ended, Doug ask about specific NASA programs. Listen to what Dr. Fuller said about specific NASA cuts impacting NASA centers.  Finally, he talked about the damage done to the economy by economic uncertainty caused by sequestration and the concern that Congress will not reach a compromise to fix the problem.
      In the second segment, John called in to say that after the election, he thinks Congress will reach a settlement and sequestration will not happen. Dr. Fuller used this segment to go into more detail about sequestration consequences with the different economic sectors.  He talked about current procurement orders compared to future procurement orders and what sequestration does to research and development.  I asked Dr. Fuller about his having testified before Congress about his study & he shared his experiences with us.  He also talked about possible less severe ways of dealing with sequestration if it comes to pass, including rolling job furloughs rather than layoffs.  Near the end of our discussion, I asked about the sequestration impact on capital acquisition in the private sector & Jack from VA called in to talk about R&D, especially with DOD.  In closing, if sequestration is of concern to you, let your congressional delegation know your thoughts to encourage them to reach some sort of compromise to avoid sequestration.
     If you have comments/questions, please post them on The Space Show blog.  You can email Dr. Fuller through me.