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Why the private space industry embraces risk

The space industry has always accepted some level of risk and failure, but as the commercial space industry matures, companies are using failure to their advantage to try to help their businesses succeed.

Why it matters: By taking on more risk and pushing their systems to the limits, space companies may be able to reach ambitious goals — like building a city on Mars or mining the Moon for resources.


The big picture: A rocket's failure could have once signaled major trouble for a rocket company's business, but that’s not necessarily the case anymore, experts say.

  • Instead, after a setback, some space companies now have the flexibility to use that failure and return to flight more quickly and with a better launcher than before.

What's happening: Companies are taking more risks to work out bugs in a system faster and to ultimately make a better product.

  • SpaceX is testing its Starship designed for interplanetary missions by staging test flights quickly, effectively allowing them to fail and iterate so they won't repeat that failure.
  • Instead of working to build the perfect rocket on the first try, small rocket builder Astra is using an iterative process to create a better rocket through risk and failure.

Where it stands: The industry at large is also giving commercial companies more leeway when an accident does occur, according to Eric Stallmer of the Commercial Spaceflight Federation.

  • A Rocket Lab rocket failed to deliver a payload to orbit in July, but the company bounced back fast with a successful return-to-flight mission on Sunday.
  • That quick turnaround is notable because earlier failures from other companies sidelined those businesses for several months.
  • Stallmer added that new sensors and other pieces of technology are allowing companies to track everything happening on a rocket and quickly identify the root cause of an accident.

Between the lines: Risk and failure tolerance are the signs of a maturing private industry.

  • Risk tolerance could also be a way for companies to break through in an increasingly crowded market.
  • "You have to accept a higher amount of risk," industry analyst Peter Marquez told Axios, drawing a comparison to investing in riskier stocks for a higher return.

Background: During the early days of the space program, failure was key to the development of systems that would take people to orbit and eventually the Moon.

  • Longtime government contractors like Boeing and Lockheed Martin, which likely took more risks earlier on, are now in mature positions in the industry where high-profile failures could spell problems for their businesses.
  • But upstarts are incorporating those ideas about risk into their businesses now, capitalizing on failure and using it as a means to an end.

Yes, but: "It's not that failure is more tolerated" from a business and technical perspective, United Launch Alliance's Tory Bruno told Axios. "It's that the nature of the industry, the nature of the payloads that we're putting into space as an industry has changed."

  • The money from commercial payloads and even inexpensive government ones can likely be recovered relatively quickly, making that type of mission failure less serious than others that may include expensive spy satellites or other multibillion-dollar tools.
  • And some missions — like SpaceX's first human flight for NASA earlier this summer — are too high-stakes to tolerate high risk.

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