Thought Leadership

Elon Musk
Global business models for mankind

U.S. billionaires like Elon Musk have developed global business models that go far beyond the usual "businessman's business" in that, first, they affect all of humanity, and second, they have strong geopolitical implications.

If space was considered the domain of states in the last century, it is foreseeable that space will be significantly conquered by the private sector in the 21st century. Companies owned by well-known billionaires such as Virgin Galactic (Richard Branson), Blue Origin (Jeff Bezos) and SpaceX (Elon Musk) have set out to commercialize space since the early 2020s. They are vying for the future trillion-dollar business of traveling into space and possibly, at some point, colonizing alien celestial bodies.

Space of the trillionaires

One may assume that these civilian efforts are also about catapulting the founders from the status of billionaires into the future ranks of trillionaires. But it is just as likely that the knowledge and advances gained in the process will, to a large extent, benefit future humanity. In this context, an alliance of state and private-sector space utilization is unmistakable. Already in 1997, more commercial than government-contracted rockets lifted off from U.S. space launch sites.

The best example of the new "space generation" is SpaceX's Crew Dragon. The manned spacecraft used a Falkon 9 rocket to deliver two astronauts to the International Space Station (ISS) in June 2020 on behalf of NASA. SpaceX's first regular astronaut launch took place in November 2020. The November crew - Crew-1 - was the first to be officially flown to the ISS by Crew Dragon, following a successful manned test in the spring of 2020.[iii] It marked the beginning of a long line of many more planned commercial space flights in the 2020s. The U.S. module of the International Space Station (ISS) is already planned to be predominantly privately owned by 2025.

New business model for major projects

One can easily speak of a new business model for large-scale projects that "in the old days" were consistently financed and carried out by the state, but have been in the process of being taken over by the private sector for some time now. Space travel represents the model case, the role model, led by jack-of-all-trades entrepreneur Elon Musk and his company SpaceX.

This business model works as explained below. One or even several extremely financially strong entrepreneurs develop a large-scale industrial technology until it is ready for series production. The state is happy to support this development because, firstly, it wants to profit from it itself, secondly, it does not have to raise all the necessary funds itself, thirdly, it does not have to justify itself politically to the citizen and taxpayer, fourthly, it is guided by the insight that companies produce practical results more quickly than when research institutions organized by the authorities deal with them, and fifthly, the state will have access to the results at any time in the future, even if it is simply through appropriate legislation.

The few companies that have the financial resources, the know-how and the willingness to take the risk to embark on the adventure of this new large-scale project stand to reap almost immeasurable rewards. First, there is a steady flow of money after the initial phase, as soon as the state believes in the feasibility and supports the development with financial resources. Secondly, the government soon acts as a customer because it needs the technology for its own purposes. SpaceX has thus succeeded in becoming a major supplier to the U.S. space agency NASA (National Aeronautics and Space Administration). Neither side can be blamed for this; it makes sense for both the company and the agency. But it does promise SpaceX a key role in a future market whose dimensions are probably understated by "trillions". Whoever takes a key position in the colonization of space by mankind - and nothing less is at stake - can rightly hope for bubbling revenues. One may compare this situation with the rise of Rockefeller in the then new oil business or the advance of Microsoft in view of the newly emerging world of personal computers. However, today's situation has many times more potential because the state itself is interested in conquering or colonizing space to a degree that was not even the case with oil, let alone computers.

The chutzpah, a mixture of purposeful, intelligent impudence, charming penetration and irresistible audacity, with which Elon Musk has brought his company SpaceX to this unique position in space travel, is seen in the international "club of billionaires" with a mixture of recognition, envy and greed. Sir Richard Branson and Jeff Bezos from the "club" have set out to wrest a piece of the future space travel pie from Elon Musk.

Using nuclear power like conquering space

In parallel, several other "Top Guys" from the "Club," including Microsoft founder Bill Gates, who is in many ways all-powerful, have begun to apply the business model described to other large-scale projects. This can be seen particularly well in the energy sector, or more precisely, in the development of a new generation of nuclear power plants. To do this, the safety risk must first be limited to an economically calculable level. For example, new construction methods for comparatively compact nuclear power plants, which are about the size of a single-family house, have succeeded in relabeling what was once a high-risk technology as a future technology with a manageable risk. Conventional power plant construction was always based on the assumption that the "worst case scenario," or GAU, would be avoided at all costs. This required an immeasurably increasing effort to eliminate the last residual risk, which in the end is not possible anyway. The new commercial nuclear power plants follow a different safety thinking: instead of reducing the probability of the accident, the consequences of the worst catastrophe are to be mitigated.

This new safety thinking - as a critic, one could also speak of "uncertainty thinking" - fundamentally changes the cost structure of nuclear power plants and thus enables new business models, basically a completely new nuclear business world. It is precisely this development that is likely to play a decisive role in breathing new (business) life into the peaceful use of nuclear power. This new kind of commercialization of nuclear power, with what proponents call a "balanced mix of economic efficiency and safety," will be largely responsible for the return of nuclear power. For it is foreseeable, of course, that states will have a great interest in using this peaceful use of "nuclear energy 2.0" to secure energy supplies for the population and the economy.

Whether space travel or nuclear power - both will be separated a good deal from the ponderous state system by commercialization and thus accelerated in their development. At the same time, a strong state interest is unmistakable in both technology sectors, so that the state acts as co-financier, client and customer. Moreover, it is foreseeable that the state will use its legislative power to enable and drive these developments - all of which is already happening in these two sectors, i.e., space travel and nuclear energy.

Digitization, genetics, health

Leading the way in this business model, unsurprisingly, is the United States of America. The dominance of the U.S. in global digitization is virtually a blueprint for how this approach works. Just one example: More than 90 percent of all German government agencies rely on software from the U.S. company Microsoft. U.S. legislation, in turn, stipulates that the authorities there can access the customer data of U.S. companies at any time - even if this data is stored abroad outside the United States. This circumstance alone represents one of the largest and most serious discussions in the digitization of the German public sector. It would miss the point of this book to describe this highly contentious discourse in detail, but as an example of business and government working together to master a "technology of national scope," it is very appropriate. Mind you, we are talking about the domination of the German administration by a conglomerate of U.S. business and U.S. government. The "unthinkable case" that the government of another country could bring the local administrative apparatus to a standstill is just as "unimaginable" as the idea that foreign authorities could access the data files of German bureaucrats. After all, Facebook parent Meta 2022 seriously threatened to pull out of Europe because its business model was threatened by the high level of data protection in this country. That was an empty threat because a withdrawal by Facebook, after all the world's largest social network, would not endanger the public sector or the economy in Germany or Europe. But what if Microsoft - or Oracle, IBM and whatever the US digital corporations are all called - were to even consider shutting down its European business? Unthinkable? Maybe, but impossible? Certainly not! And, of course, U.S. digital dominance extends not only to the public sector and not only to Germany.

This government-private interaction that works so well for the U.S. in digitization is now being transferred to other technology sectors of similar fundamental importance. Space travel - the subject of this book - is foremost among them.

But other sectors will also be subjected to this strategy. It is already the case with nuclear power and, for that matter, with artificial intelligence - a "megatechnology" whose importance is still often completely underestimated. In other fields, such as genetics, it seems foreseeable.

Interestingly, the U.S. influence has not been so noticeable on an issue of international scope: Vaccinating the world against coronavirus. All the major vaccination alliances - Cepi (Coalition for Epidemic Preparedness Innovations), Covax (Covid19 Vaccines Global Access), and Gavi (Global Alliance for Vaccines and Immunization) - have undoubtedly been under significant leadership from Bill Gates' Gates Foundation. In 2020/21, Gavi described the question of who calls the shots when it comes to the world's vaccine supply as "co-leading"; at least this included the recognition that others besides the Gates Foundation may also have a say, such as the World Health Organization (WHO), the United Nations Organization (UNO) or even the international community.

Incidentally, global healthcare is not only being Americanized by vaccination alliances, but just as strongly and presumably even more sustainably by smartwatches and other body-worn electronic products that continuously measure the vital signs of those wearing the computer watches and transmit them via the cloud to digital health services. After all, by the beginning of 2022, more than 100 million people around the globe were already wearing an Apple Watch on their wrist - and the trend is continuing to rise sharply.

Geostrategic balance of power as driver

Running through all of these examples like a common thread is the push by the U.S. economy, with the help of the U.S. government, to put an American stamp on a technology sector that is critical to the future. This geopolitical aspect must not be ignored in the conquest of space, which is the subject of this book.

If China is reaching for the stars, this must also be seen against the geostrategic background of the global balance of power. Likewise, it seems foreseeable that Russia will not be content with a spectator role in the conquest of space - quite the contrary. Russian state spaceflight, as we know, has a decades-long tradition that will not surrender willingly to Branson, Bezos and Musk. Europe's role in the conquest of space has been rather modest so far, but it is nevertheless unmistakable. There are many indications that a "Western space alliance" will develop, comprising the United States, the European Union and Great Britain (Sir Richard Branson is British, not American!), and presumably Australia and New Zealand as well. On the other hand, whether the international cooperation with Russia that goes beyond this, as manifested over the years with the International Space Station (ISS), will be maintained, given the strategic importance of space travel, seems extremely doubtful. The battle over Ukraine, begun in 2014 and intensified in 2022, as Russia's response to the expansion of the North Atlantic military alliance NATO in Eastern Europe, does not suggest any long-term prospects for cooperation in space travel either.

Space tourism market worth billions

The Swiss bank UBS published an analysis in 2021, according to which travel to outer space is expected to reach a market volume of around three billion dollars by 2030.

However, the first flights would remain the preserve of a small group of the super-rich. For Jeff Bezos' flight on July 20, 2021, an anonymous bidder was willing to pay $28 million to be on it.

But in the longer term, trips into space are expected to turn into mass tourism, at some point as cheap and as natural as a flight to Mallorca. In 2021, Richard Branson drew the comparison to an airplane instead of a rocket: "Air travel was something for the super-rich in the 1920s. Decade after decade, prices went down; now many can afford it. We will be able to bring prices down as well." If one were to follow this timeline, however, space travel would not be affordable to everyone until around the year 2100.