This entire industry of aerospace and defense, especially the area in manufacturing parts, is dependent on this large and fragmented supply chain. Basically, mom and pop machinist shops that were set up in the Apollo era. They’re still run by the same guys who are reaching the age of retirement.
That was Delian Asparouhov of Varda on Village Stories podcast, “The State and Future of Space in 2021 with Delian Asparouhov and Chris Power.” Here’s another post discussing Delian’s views on cost-plus contracting in aerospace.
Delian was discussing what Chris Power, CEO of Hadrian, is bringing to the aerospace and defense industry in terms of advanced manufacturing of components. Tech Crunch has a nice article about Hadrian revolutionizing American manufacturing for aerospace. “I realized that the right way to bring technology to the industrial space,” Chris Power said, “is not to sell software to these companies, it’s to build an industrial business from scratch with software.”
Here’s more from Chris Power on the Village Stories podcast:
The definition of an entrepreneur is taking a resource that is low-valued in one domain and apply it to another domain where it’s highly valued. I often say that a C+ software engineer in the industrials business will just crush everyone because the bar is so low.
… One thing people undersell is the SpaceX effect on talent. One thing you need is this PayPal mafia approach where a bunch of smart people go create this Cambrian explosion of other companies. Most of the people Elon recruited in the early days were 21 years old straight out of college. Now if you look at the design engineers or the founders of most other space companies, there’s some pedigree from SpaceX and there’s a known method of how to build.
Software is eating the world, and software-native companies will figure out hardware better than legacy hardware producers can figure out software. This trend has important ramifications for aerospace and defense.
Here’s a nice part from Delian on the changing economics of the space industry:
One of my favorite ideas that I’ll one day hope to fund is like there’s still not a Dell for satellites. Right now, the reason that Varda has to buy off the shelf satellite components and that entire system is going to cost us $4 to $5 million. The only reason it’s costing us $4 to $5 million is because it costs us $2 million to launch the thing. You can’t spend $50 or $100K on the hardware and $2 million to launch it, because if the hardware fails you look like an idiot.
Versus if launch costs pretty soon look like $100K, then you’re an idiot if you’re spending $4 million on a satellite. Let’s just send up ten $100K satellites, it’s OK if eight of them fail, you’ll still have two that are up there with more powerful off the shelf components. This entire satellite supply chain is set up for a world where launch is really expensive.
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