Does U.S. have right stuff for space tourism?

October 08, 2004|By Greg Autry

CALIFORNIA'S HIGH desert blue sky suddenly is sliced in half by a brilliant streak of white as Burt Rutan's SpaceShipOne shoots silently upward through the sound barrier and into space, capturing the $10 million Ansari X prize for his team at Scaled Composites.

An eclectic mix of engineers, entrepreneurs, space enthusiasts and the eccentric wealthy gaze up from Earth to contemplate the significance of this bold stroke. In the days that follow, the broader business community and the federal government would be wise to do the same. But what is so clearly written across the Mojave sky surely appears much hazier to viewers in Chicago, New York or Washington.

Business history shows that while large organizations often contemplate threats from below, they are inherently incapable of acting effectively in emerging technology markets. The customer base is too small, the risks too large and these "disruptive technologies," as Harvard professor Clayton Christensen refers to them, offer dubious value to existing customers.

Nevertheless, the tireless efforts of entrepreneurs often transform odd breakthroughs into surprisingly effective threats to the status quo. Large space launch providers will continue to focus on their immediate problems rather than the questionable opportunity of supplying the likes of Sir Richard Branson's Virgin Galactic, a company established "to undertake the challenge of developing space tourism for everybody," according to its Web site.

Wall Street will hardly fault them for such a rational decision. An aerospace giant's cost to merely contemplate such an endeavor would exceed Paul Allen's investment in SpaceShipOne.

Despite the hoopla, traditional investors will not rush to Mr. Rutan's entrepreneurial competitors. No fund manager or loan officer will lose sleep over failing to look into personal space travel. This opportunity will remain with eccentrics who understand that it is about so much more than space junkets for the rich.

The few firms that get these dollars, tied with a commitment of passion, could not ask for a better investment, but it is hardly enough. Everyone can see the pressurized demand of enthusiasts driving an early space bazaar, but the lack of a proven sustainable market remains. Eager market surveys showing a high percentage of Americans signing up for space travel just don't square with the risk-adverse culture around us. This lack of daring and the threat of undefined liability may very well sideline the equity and debt capital needed to move a brave stunt and a visionary tour operation into real U.S. industry.

Mr. Rutan promises to deliver Virgin a SpaceShipTwo 100 times safer than the current standard, NASA's space shuttle, with its frightening 2 percent fatality rate. Mr. Rutan is a man who delivers on his word.

Stu Witt, manager of the Mojave Space Port, and a stable of high desert companies are eager to join Mr. Rutan and give travelers the thrill of space plane travel. Patti Grace Smith, the Federal Aviation Administration associate administrator for commercial space transportation, works under the burden of outdated and inappropriate legislation to regulate and to advocate this exciting future. Once again, bold Americans stand ready to carve a new industry out of the insubstantial.

Does America stand ready to accommodate their vision, or will we turn away from the future with fear and apathy to embrace a comfortable and safe mediocrity ?

Following Monday's success, astronaut Brian Binnie related how he had sustained an accidental coffee drenching before his flight. CNN's Miles O'Brien joked that "you have a good lawsuit." Can an America that sues over coffee allow lives to be risked in the name of progress for tourism?

Will a nation that supports a war and then balks at a less than 1 percent fatality rate in Iraq find the inner strength to exploit a hazardous new frontier?

Federal legislation to protect this industry from the inevitable lawsuits is being so mangled in the Senate that the apparent beneficiaries such as Mr. Rutan don't want it in its current state. Will Sir Richard launch his operation in the United States? Even a man with the courage to circumnavigate the globe solo may be unwilling to navigate our legal system without a map.

Without substantial private and public follow-through, it seems likely that this business -- conceived by patriotic entrepreneurs -- will find support, financing and freedom offshore, freed from poor corporate and investor vision, and from a system that is always compelled to compensate the most unquantifiable losses with mere dollars. From what I hear, China would be glad to have this industry too.

Greg Autry is a lecturer of business strategy at the University of California, Irvine's Graduate School of Management.

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