Podcast with Bob Richards of Moon Express
Mission Approved – Bob Richards on the Moon Express Plan to Commercialize the Moon, SpaceQ
“Moon Express has raised $45 million(US), built hardware, tested some of it, and gotten the FAA and other government agencies to approve of its first commercial mission to the moon, and in less than a year might have its first spacecraft on the moon.”
“In this episode of the SpaceQ podcast Bob Richards, CEO and co-founder of Moon Express talks about the latest news from the company, including how lunar samples they return could be worth tens of millions, possibly even hundreds of millions. If true, and if Moon Express can return those samples, then an important part of their business plan will have been accomplished and a new commercial frontier will have been opened up.”
Yes, I think it’s worth listening to as I asked relevant questions. I would add that companies just don’t get $45M of investment funding if there’s nothing to the business.
Yes lots of companies get silly money for nothing, especially around Silicon Valley. There is this joke about a new bar opening in Palo Alto, with million people immediately walking in. Nobody buys anything, the bar is declared massive success and disruptive force
That’s actually far from the truth. Nobody invests without some sort of business plan, and a business plan includes a marketing plan. The investments might look hairy to us on the outside; that’s why early investors demand a big piece of the action, a hedge against loss.
Early on, whodathunk you could get rich selling everything under the sun on the internet, covering your shipping costs and still undercutting competitors? Or who could have imagined a world wide auction site? Or a place where people would send messages to each other with pictures instead of picking up the phone?
Only very forward thinkers, that’s who. And while I suppose in this case there are some very forward thinkers investing, it is a sure bet that Mr. Bezos and Mr. Zuckerman and Mr. Omidyar all had lots of spreadsheets when meeting with early investors.
It’s also the case that every example above was operating in an investor community that, as Mr. Mulder says, “wants to believe”. But that community is also very well schooled, knowledgable about the process and capabilities of the digital world. And I suppose there’s also a space investor community with similar credentials.
Meeting with investors the company has some sort of collateral and explanation story materials. But what?
In this case I don’t think investors are investing in the business plan as much as the entrepreneurs. Remember the folks that started Moon Express are serial entrepreneurs. I imagine some of the $45 million is their money and the rest by those who made money in their earlier startups. In essence they are investing in the management team, not the business plan, which is often common in hi-tech industries.
I hadn’t thought of that — investing in the people — but it makes a lot of sense. Recently I read biographies of Mr. Musk and Mr. Jobs; the notion of investing in people has the ring of authenticity.
But still. It’s a lot of money. There’s more to the story; I’m certain that the investors have the entire picture. For what ever reason though the public doesn’t. For probably very good reasons.
I’d be careful about investing in people. They may have a fantastic track record, but is it on the right track? The approaches which work for internet and software companies may not be applicable to a company selling extraterrestrial resources. I’d think investors would look beyond the experience of the people involved, and consider whether or not it is relevant experience.
I agree, its not the best strategy, but its human nature. Are you going to turn down someone who made you $20 million in their last venture when they ask for a $1 million for their new one? Or even $10 million? Are you going to say, “thanks for making me rich, now get lost!”
The reason is simple. Moon Express is not a publicly traded firm so they are not required to reveal anything to the public. We should be grateful this issue the press releases they are issuing.
It is worth the listen, its a good interview. One take away is that they really don’t have a solid marketing plan. This is normal in early stage IT, where the founders are from, where solid markets already exist for the products they produce, but it is a real weakness in space commerce firms where markets will need to be developed and nurtured. This is especially true for lunar material which folks associate with NASA and hard science research. At this stage they should have a solid idea who their customers will be and about how they will get for the samples.
It’s not clear that lunar samples would be worth that much if they were actually on the market. Meteorites are just as exotic in terms of their origin.
Indeed. I’m as anxious as anyone to see the creation of value in space, but this has an unseen goal.
Which is exactly why they need a marketing plan to maximize their revenues from those lunar samples. Unless they position them properly they will just be seen as science curios, and priced accordingly, with a huge loss of potential revenue to Moon Express. I know because it’s a problem I have been researching the last 20 years. As science curios that market is basically saturated after the first mission. But with a marketing plan they could create enough demand for a constant stream of missions producing a constant stream of revenue.
Look at Starbucks and how with a good marketing vision they got rich by getting folks to pay $5.00 for a .50 cup of coffee. Or the English merchants who first created the market for coffee and transformed the English economy in the process of doing so.
I’m curious how a ‘marketing plan’ could add value to lunar rocks. I get how Starbuck’s sells panache, the point being that the plan only needs to add value to the product.
I listened to the podcast wondering how the company would create value. Unless I missed something, the plan is to sell rocks. Period.
There was no hint whatsoever in the podcast, partly because the softball questions didn’t elicit followup.
Comments of Dr. Crary above appear to establish at least order of magnitude bounds on price. But we are all obviously wrong. There are about 45 million reasons why I am wrong but I don’t know what they are.
There is this simple fact, however: if value in lunar rocks were obvious, there would be companies already on Luna.
I think Mr. Matula was complaining about the lack of such a marketing plan. If you want to sell moon rocks for a profit, you’d certainly need one. But, to some extent, marketing is all about getting people to pay more for something than its practical value.
Henry Ford didn’t get rich by designing a good car, or even coming up with viable mass production. He got rich by convincing people that having a car, especially a new, recent-model one, was a status symbol. Similarly, except for industrial purposes, diamonds have little practical value. They still sell for quite a bit. Now, if someone could create a sustainable interest in jewelry made from extraterrestrial rocks, maybe that would work. But it would need to be sustainable, not just a fad. That’s not impossible; De Beers did it with diamonds.
The market value of a product (good or service) is based on how well it is perceived utility it generates. The role of a marketing is to understand a model the utility it generates in order to maximize ROI for the firm.
BTW you are confusing Ford with GMC. Ford created demand for the Model T by making it cheaper and easier for folks, including farmers, to own it than a horse. He stayed with the same basic Model T design for 18 years for that reason. It’s attributes were a low price and that it was simple enough for blacksmiths, farmers and just regular folks to fix. It invented the backyard mechanic. This was in contrast to the more expensive cars available that required factory trained mechanics to fix.
It was Alfred Sloan at GM who invented the annual model year and income segment strategies that turned automobiles into status symbols immediately after WW I.
Yes, I got his point. And believe me, I understand marketing segments.
But as I said above, the “plan”, as described in the podcast, doesn’t pass the smell test.
“What will I do with all of your money, Mr. Investor? Simple! I’m gonna gather up a bunch of lunar rocks, bring them here, and then call eBay! And while I have no clue how much an auction will bring, I bet it’s a lot, yessiree!”
Surely the “auction” will be more sophisticated than eBay. Or not.
I imagine they will use Sotheby’s since they have experience in selling lunar material.
If you apply the $442,000 for a gram received for the Russian sample to a kilogram return by Moon Express it would account for the “hundreds of millions” estimate ($442,000,000). If have an average auction rate of $40,000/gram you would get the “tens of millions” quote ($40,000,000).
It is a risky way to generate revenue from the mission, but it appears to be their approach based on his statements.
I don’t think that would convince me to invest in their company. I’m reminded of a cartoon of a presentation on a business plan:
“Our plan is based on three key facts:
1) Some people have a whole lot of money
2) Some people will buy any damn thing
3) There is an overlap between those two groups”
What a marketing plan does is identify and quantifies market segements while determine what values are generated for each market. Then it comes up the Marketing Mix (product, price, distribution, and promotion) capable of generating the highest ROI for the firm.
The statement he made on the value of the samples shows that they appear to have neither done the research to identify the markets nor to quantify the demand and revenues from each segment. I suspect their marketing strategy is simply to auction the commercial lunar material off when they return it and trust to luck on the revenues – a strategy likely to minimize rather than maximize their ROI. It also makes their business model too risky for most investors.
But Professor— does that plan – auctioning – actually make enough sense to attract $45 Million? And that’s just a start. Capital needs are high.
Something else is happening here.
Since you mentioned meteorites, I did a quick check.
Common types, such as a Canyon Diablo (secondaries from the Barringer event) or ordinary chondrites sell for about $0.5-1 per gram, or under $30 per ounce. While that is perhaps ten times what FedEx would charge for shipping, that doesn’t say much.
Very rare meteorites, such as those of lunar or martian origin, can go for $1000 per gram. Some might go for more, but those are black market sales and I can’t look up black market prices on the internet. (Specifically, some governments have declared them to be national treasures, not for export, and not legally for sale for the same reason stolen artwork isn’t.)
But even if you can get that $1000 per gram for a lunar sample return, the profit margin looks very marginal to me. And this is not an elastic market. Scientists might pay substantially more, if they know exactly where on the Moon they came from, had photos of the samples in situ, and could, potentially, pick which rock based on in situ images. Possibly a whole lot more than $1000 per gram. But they wouldn’t want to buy much. You don’t need tens of kilos of samples for this sort of work.
I can’t see either the scientific or the collectors’ market being very elastic.
No, they are not elastic in the current cost range. But the key problem is they are too small to for a sustained business model.
Scientists really don’t have the funds to buy commercial lunar material. NASA or some donor will need to give them the funds. Although collectors have funds the number able to afford commercial lunar material is limited, and once they have their sample unlikely to be interested in more.
No, the markets for sustained business models are elsewhere.