In the next decade, growth in the space industry will depend on partnerships between established primes, small start-ups, and governments. These collaborations are more crucial than ever and will play a key role in overcoming the “valley of death” in the development and implementation of new technologies.
We spoke with Matt Magaña, President of Defense and National Security at Voyager Technologies, to learn more. Listen to the full episode, or read our top four takeaways below.
Takeaway 1: Partnerships will become the foundation of a robust space industrial base.
In the last few years, the space industry has begun to move away from “very, very large, massive satellites that take ten years to build and have a ten-year life cycle on orbit,” Magaña said. “Instead, we have moved to very small, agile, dispersed constellations.” This transition is indicative of another movement in the space industry towards rapid development of new technologies and then proliferating that technology widely.
In the past, government procurement of technology depended on massive programs run primarily by the large prime contractors. But this model doesn’t work anymore, as the technology of the industry continues to rapidly turn over. “With the commercialization of everything, the speed of technology, that just doesn’t work going forward,” Magaña said. “We have to be able to move faster.”
As price points change, prime contractors won’t be able to shoulder the rapid innovation cycles required. “Price points are definitely changing, and it is really hard for the primes to do that—primarily because of just how large the companies are.”
Takeaway 2: Start-ups can handle fast innovation cycles, while primes can manufacture on large scales.
But if primes can’t handle the work alone, what happens instead? Enter VCs and start-ups. “Take the agile, nimble ability of VCs, merge with the large primes of what we previously had, and you get real, agile, quick tech development and innovation in the procurement for these programs,” Magaña said. “It’s the only way that we’re going to be successful, primarily because of the agility that the small companies have,” he added.
While start-ups can work on rapid innovation cycles, “the hard part for them is around scale and scalability,” Magaña said. This is where the large, legacy companies have an advantage, as they have the infrastructure in place to produce a large volume of material at the necessary rate—i.e., for a contract with the Space Force or another government end user. “We have to be able to rapidly insert new technology,” Magaña said. “You have to be able to scale these things, and then build them at production rate.”
Takeaway 3: Government procurement cycles are slow, but crucial, for projects like Golden Dome.
“The procurement cycle is the hardest piece,” Magaña said. “The government is still learning.” Much of this difficulty comes down to fluctuating budgets, classification barriers, and mismatched timelines—especially as smaller companies continually move faster and government timelines remain slow and budget-driven, and which can result in projects becoming stagnant.
Can partnerships bridge the gap between commercial innovation cycles and government acquisition timelines? “I think that’s actually the fun part of this,” Magaña said. “It’s exciting to watch and see how the government is trying to morph and shift.” One example of this is Golden Dome project, which will require a massive number of contracts between government users and commercial providers, as well as significant innovation. “A lot of these things are things that we have been working for many, many years to solve, and with an acceleration of those schedules, we can actually bridge that gap between rapid innovation and these big, long-time programs.”
In order to build Golden Dome, industry partnerships will be critical, as the project will require rapid innovation as well as a large amount of volume launched into orbit. “There’s no budget that would allow us to do it the traditional way,” Magaña explained. “These partnerships are critical for us to be able to bring the capability that we need, and what’s being asked within the Golden Dome, at a price point.”
Takeaway 4: To move forward, the industry must learn to balance innovation and standardization.
Standards can be scary for innovation-minded VCs and engineers. “Rapid innovation is key,” Magaña explained. “When you standardize, you lock yourself into a set of things that sometimes limit you on innovation.” But some amount of standardization is necessary, especially around large networks like communication systems.
“There’s a lot of value in having standards around that. But then the question always becomes—who gets to set those standards?” Magaña asked. “Usually, it’s the people that are paying for it.”
But Magaña believes that some number of standards will also help people work together and innovate better, instead of remaining siloed. “That’s the issue that we’re having right now—everyone’s off doing their own thing,” Magaña said. But there’s no clear answer, and finding balance will be difficult. “It’s a very, very hard problem. There’s value in it, but there’s also value in the innovation without standardizing everything.”
For more on hybrid architecture, data processing and venture capital, listen to the full podcast episode.
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