272: Space, The Final Investing Frontier

PodcastThe BidReid MengeSep 25

The guest describes how falling launch costs and smaller, cheaper satellites are expanding the uses of space, from GPS and satellite imagery to potential orbital data centers. He argues that public investment supports commercial R&D and that space-based AI compute could reduce some power costs, while emphasizing launch execution risk. A first AI compute demonstration in space could come in the fourth quarter of 2027, with broader industry growth depending in part on how quickly launch costs fall.

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Key Takeaways

The guest links the U.S. Space Force’s growing national-security role to major funding: he says its budget is expected to double next year and reach about 5% of the defense budget. The 30 government GPS satellites support navigation for planes and ships and location services such as Uber, while the guest also cites protecting vulnerable GPS satellites as a security priority.

The guest says SpaceX’s Falcon 9 has cut the cost of sending mass to orbit from about $54,000 to about $3,000 per kilogram, while Starship could lower it to about $200. He argues that faster-than-expected cost declines could make the space economy much larger and speculates that cheaper, more reliable access could help create new trillion-dollar companies in the mid-2030s; slower declines could push development out.

The guest sees orbital data centers as a possible way to add capacity while avoiding some terrestrial constraints, and argues that space-based AI compute could reduce power costs: solar generation in space is about five times more efficient than on Earth, with power among roughly $20 billion in non-compute costs for one gigawatt of AI compute. He says an initial AI compute server proof of concept in space could come in the fourth quarter of 2027, followed by a scaled demonstration in 2028.

GEO-POLITICS

Space Force Funding — The guest says the U.S. Space Force, created in 2019, is expected to receive about 5% of the defense budget next year, with its budget rising 100%. He ties the funding to the national-security importance of communications, surveillance, missile detection, and protecting vulnerable GPS satellites.

“The United States created its first new armed national service since 1947 with the US Space Force back in 2019. But this is a critical new piece of national defense…”—

TECHNOLOGY

GPS Infrastructure — The guest says 30 U.S. government GPS satellites support positioning for planes and ships and help services such as Uber locate riders and drivers.

“There's, as we speak, 30 US government GPS satellites circling above us. They're doing more than just positioning planes and ships…”—

Orbital Data Centers — The guest says some incremental data-center capacity could move into orbit in the next decade. He presents orbit as a possible way to avoid some of the government, neighbor, land, and power constraints facing terrestrial data centers.

“The US grid, frankly, global energy grids were not designed to provide power the speed at which companies would love to expand their AI compute capacity. So time to power…”—

Falling Launch Costs — The guest says SpaceX's Falcon 9 has cut the cost of getting mass to orbit from about $54,000 to about $3,000 per kilogram. He says Starship could lower it further, to about $200 per kilogram, potentially enabling new space businesses and industries.

“Historically, to get mass to orbit, it would cost about $54,000 per kilogram…”—

ECONOMY

Public R&D Support — The guest says government funding for the commercial space industry has supported R&D in rockets, satellites, and communications equipment. He describes a symbiotic relationship: public investment lowers private-sector costs, while governments benefit from improved space infrastructure.

“This money that's going in from the government into the commercial space industry was really funding the r and d, better rockets, better satellites, better communication equipment…”—

FORECASTS

Compute Demo Timeline — The guest says the first real demonstration of an AI compute server in space could occur in the fourth quarter of 2027. SpaceX is targeting an initial proof of concept, followed by a scaled demonstration in 2028; these are projected milestones, not completed achievements.

“And so from a timing perspective, there's gonna be the first real demonstration of this concept of a server running AI compute in space, probably q four of twenty twenty…”—

Industry Timing — The guest says the space economy could become much larger if the industry lowers the cost of getting mass to orbit faster than expected. If rocket reusability proves more challenging and costs fall more slowly, he says development of the space economy could be delayed.

“We're gonna start there. If it's faster than expected, we're gonna have a much larger space economy…”—

Space Economy Today

Menge says space already supports defense, GPS, commercial navigation, weather services, and data applications, while investors are only beginning to treat it as an economic theme.

Launch Cost Revolution

Reusable rockets could sharply lower the cost of reaching orbit, while much smaller and cheaper satellites expand commercial capabilities and government demand supports the sector.

Satellite Demand Drivers

Menge connects falling launch costs and smaller satellites to expanding uses such as direct-to-device connectivity and frequent Earth observation, with public spending helping fund innovation.

Orbital AI Data Centers

Menge argues that AI increases the value of satellite data, while orbital data centers could ease terrestrial power, land, and cooling constraints; he expects an initial demonstration in late 2027.

AI Power Economics

The guest says data-center economics hinge on time to power and capital, and that space-based solar generation and cooling could reduce some infrastructure costs.

Space Force And Defense

Menge describes satellites as essential to modern warfare and says government investment in commercial research and development can improve both national security infrastructure and private-sector costs.

Space Investment Opportunities

Potential opportunities include semiconductor and rocket suppliers, satellite services, Earth-observation data, orbital-debris cleanup, and companies positioning for future space-based AI compute.

Launch Execution Risks

Menge cautions that lower costs and smaller satellites could transform the industry, but launches remain difficult, failures are common, and execution risk is substantial.

Orbital Growth Outlook

The industry's future depends on how quickly launch costs fall and where AI compute is built; Menge compares space's early potential to the Internet's unforeseen transformation.