Interview with Steve Isakowitz, CEO of the Aerospace Corporation

For this newsletter, I’m interviewing a prominent figure in the space world, Steve Isakowitz. Steve is President and CEO of the Aerospace Corporation, a critical organization in the history of the space industry that sits at the intersection of public and private aerospace. Aerospace is a nonprofit corporation established in 1960 that advises and conducts analysis for government, civil, and commercial aerospace customers. The organization has over 4,000 employees and earned over $1.1B in revenue in 2020. Steve has previously held roles including President of Virgin Galactic, CFO of the Department of Energy, and NASA’s Deputy Associate Administrator for the Exploration Systems Mission Directorate.

I spoke with Steve about a number of topics including how he has seen the commercial space industry evolve, what technologies he’s excited for going forward, and what he thinks isn’t receiving enough attention in the space industry. We also spoke about the Matthew Isakowitz Fellowship, a program Steve and his family started after the passing of his son Matthew, who worked extensively towards the development of commercial space. The fellowship is very important to me as well, I was part of the inaugural class in 2018 and it has had a long-lasting impact on my career. I highly encourage any students passionate about the commercial space industry to explore the fellowship and apply for the current application process closing on October 29th.

Now let’s start with the interview.

You’ve held leadership roles on the public and private sides of the space world. Can you please share a bit about your background?

Steve: Well, I’m an aerospace engineer by training, I’ve got both my Bachelor’s and Master’s at MIT. I’ve also had the good fortune of working in the public and private sector. On the public side I’ve worked at a number of agencies from NASA, the Department of Energy, and had a stint at the White House Office of Management and Budget where I had a chance to do science and technology budgeting.

On the private side I had a chance to work with a prime contractor and to work in the startup world, more recently having come from Virgin. Now I’m at something that’s a bit of a hybrid, which is a federally funded research and development center called the Aerospace Corporation. As a non-profit we work very closely with the government because we don’t compete with industry, we’re advising the government on the future of space from national security to civil. We also have a chance as a private company to go out and hire the best and brightest to have laboratories that try and solve the hardest problems that industry struggles with. So I’ve had a chance to do a little bit of everything.

What role does the Aerospace Corporation play in the private space industry?

Steve: So right now it’s a very exciting time in the space industry, it’s really unprecedented. In terms of the amount of change taking place it’s probably as much as the founding days of the space program in the 1950’s. On the national security side, that means we can’t be building these big exquisite satellites like we used to because of the threats that we are seeing particularly from what we call near peer competitors like China and Russia. So we’re going as close as you can get to the whiteboard in trying to think about what’s a better way to architect technology so that it’s survivable, can continue to grow, and can address the increasing threats that are out there. That’s for all sorts of new technologies and new commercial industries. It’s the same thing with our relationship with NASA, whether they’re going back to the moon and trying to find sustainable ways to get to the moon as well as developing low Earth orbit.

So Aerospace finds itself very involved in all of these communities in trying to work with the private sector and try to find those on-ramps, either for emerging space companies, or companies that aren’t space companies but have the kind of technology that can really advance efforts in space. As a non-profit, we can work with the companies and deal with their proprietary information in a way that’s protected and allows them to play a significant role with the US government.

Your position provides a unique perspective into new technologies that will impact the space industry in the coming years. What innovations are you most looking forward to in the near future?

Steve: There are so many that are out there, it’s like being in a candy store when it comes to technology. I think this is one of the many reasons why space is as exciting as it is now. We’re seeing the convergence of a lot of huge technological trends overlapping with the economics and the requirements of space. This goes anywhere from the fact that we’re seeing huge advances in IT systems, artificial intelligence, machine learning, robotics, and advanced materials. As well as new rocket propulsion systems, whether that’s new propellants like methane, or advanced propulsion like plasma and electric, to even nuclear propulsion. Another is 3D manufacturing and the things you can do with that from space. And even just a different way we can apply these things from space, in terms of being part of the internet of things and having global coverage. As we expand our presence around the moon and cis-lunar space, there’s an opportunity for these technologies to be applied there as well.

I think what’s really driving major changes is the economics, the cost of getting into space is a fraction of what it had been just a decade or two ago and with the proliferation of these launch vehicles at a more affordable price, it makes the cost of entry into the industry much lower than it has been. With these technologies that are continuing to drive down the cost, we’re seeing whole new players. You don’t have to be a long time contractor for the US government to be in the space business now. You can be students out of college, raising half a million or a million dollars, putting up a cubesat and before you know it you’ve demonstrated capabilities that others will follow and want to invest in.

You served as President of Virgin Galactic from 2011 to 2016. Can you talk about how the private space world has changed since when you first started in that role.

Steve: In 2011, while at Virgin I remember when Richard Branson said, “one of the things I’d like you to do is build a small launch vehicle to go after the small satellite business.” When he first mentioned it to me, I thought “that’s pretty audacious, I mean who besides governments really go out there and build their own rockets.” SpaceX had done it, but that still felt like a one-off at the time. But you know, you put your head down, physics is physics and so you start testing engines, testing tanks, putting together a team of folks that have come from either traditional aerospace or some of these emerging companies. And before you know it, you actually can do something that seemed ten or twenty years ago to be kind of impossible. We see now it’s not just that you have to be supported by billionaires, right now there are other companies that have been able to raise the money and through whole cloth have been able to develop these kinds of capabilities. So I think even things unimaginable just five or ten years ago are now in the realm of people being able to do them, so it’s exciting.

In 2019 Virgin Galactic became the first “New Space” company to be publicly listed after completing a SPAC merger. What do you think it means to have these startups now be available on public markets?

Steve: Well you know what’s interesting is that even though the cost of space has gone down and you can get into the business with just a million dollars, that’s just to kickstart things. To really get into business, it’s still a pretty capital intensive industry. Even when you have a product that works, Elon Musk has said, sometimes the hardest work is still in front of you in terms of actually getting into production, developing those markets, and being able to get a return on that investment that will drive future investment.

This euphoria of investing in space, as well as other high technologies, has created an incredible source of capital. So we’re now finding companies, whether through SPAC’s or private investment, finding themselves raising unprecedented amounts of funding that frankly goes beyond what their near-term plans are. It has really given them the ability to think bigger in terms of what’s possible. Now some of these companies are only limited by their own imagination in terms of what can come next, as well as what markets to grow into organically or through acquisition, which I think might be the next phase of what we’ll see.

The real test will be whether we get the necessary returns. I think many believe that not all these companies are going to survive. There will be at some point a falling out, but that’s okay, like in any area of venture investment, you’re looking for a few big hits to be the ones that transform the industry and I think we’re seeing a few transformative ones coming to the forefront.

What are some of the most pressing problems you see private space organizations trying to solve at this time?

Steve: In many places, I think companies are coming up with novel ideas. So they’re trying to develop markets that in many cases haven’t yet proven themselves out. One example is proliferated LEO constellations. We will see whether or not they can achieve adequate returns. Those are very capital intensive markets to get the kind of coverage that you need and you also need to realize that you’re always competing against terrestrial alternatives as they’re developing quickly.

Some of the markets are frankly a bit oversubscribed in terms of supply. I think small launch is one of those. I think it’s been said that there are up to a hundred different companies trying to get into that business. I think right now there’s less than a dozen that have the capital to be serious and maybe half of that are likely to make a real go at it. In some markets we’re just going to see too much supply. And some businesses are dependent on other user markets developing as well. We’re looking at a large number of smaller satellites and some of the big questions are whether it’s better to have that market aggregated with bigger launch vehicles or as secondary payloads on those vehicles. Or is there really enough demand for paying a premium for these small launchers.

I think Earth observation is a really exciting area as well. As we push towards addressing issues of climate change, I think there’s a lot of growing potential. Another area is with companies that are exploring new wavelengths in the electromagnetic spectrum. It’s not just visible, its RF, synthetic aperture radar, and these others that until recently I think weren’t really thought of as having commercial markets.

In addition, other important markets will be in the development of cis-lunar space, as NASA expands out to the moon and determines whether to develop those technologies or buy services. Finally, there’s in-space services. Companies that can refuel, repair, clean up orbital debris, space situational awareness, and space traffic management. I think those are some really interesting ones.

So we’ll see how those applications play out to determine how truly big the market is and how many of these companies can it support.

What do you think isn’t receiving enough attention in the space world right now?

Steve: I personally would like to see more on the international front. I think it’s a great thing as more nations develop their own space programs because that leads to more responsible behavior. I do worry, with the proliferation of satellites, whether we are making space sustainable in the long run. There is the whole issue of space traffic management where lots of satellites are getting into closer proximity to each other. Or worse, the amount of orbital debris that’s left behind. We haven’t crossed any lines yet, but it doesn’t take much to do that if we’re not responsible. I think that involves international regulatory regime issues such as space traffic management, orbital debris, and issues dealing with spectrum. So whether it’s human spaceflight, safety of operations, or issues of liability, frankly I think there’s going to need to be some agreement in order to go forward on some of this stuff. I’d love to see more on the international front.

From the government side, I think there’s more work to be done on creating a market that’s better understood by the private sector, so the private sector knows where they can invest and can have the confidence that it won’t change for them. The government is trying to figure out how to be a good customer but at the same time knowing that they can depend on the private sector to step up. Something I think the government is always wary of is, will those companies that are hot today be there tomorrow? Can they depend on suppliers to avoid sourcing components from adversaries? Do those suppliers take matters like cybersecurity sufficiently seriously, will the information used within those services be protected? I think the government and industry are starting to work their way through it, but those issues certainly need to be tackled.

The Matthew Isakowitz Fellowship Program is an organization you started for students looking to break into the commercial space industry. Can you please talk about that program and why you founded it?

Steve: My family founded this program based upon my son Matthew who passed away too young, but in his life was an amazing force for change for something we all take for granted today, namely this exciting, emerging, commercial space industry. There was a time a little over ten years ago when victory was not assured, where there were a lot of naysayers who thought we shouldn’t be taking the risk of flying astronauts or payloads to the space station on these privately built vehicles. There were those who questioned efforts to go the moon that would involve commercial activity and who might have questioned whether the government should spend any money on these commercial ventures. There was the sense that it would be better if it was built in house at NASA centers or government labs, or with traditional contractors going forward. Frankly, there was the political atmosphere in Congress that tended to support those legacy efforts as opposed to new ways of doing business.

Matthew and like-minded individuals around him fought and made the case that the space program is about to be transformed in important ways and that the government should at least get out of the way or, better yet, be an enabler. So his efforts at the Commercial Spaceflight Federation and later through his involvement in successful startups led to the emergence of this industry.

When he passed away, we created a program aimed at carrying on his spirit of excitement in this industry and, in particular, tap into the incredible enthusiasm we see from students. When you go to a college job fair, you see the lines are longer at these emerging space companies than any other companies. You see aerospace departments having more students wanting to get in. The fellowship is dedicated to those students that want to come together, get an amazing opportunity working at these exciting companies, be paired up with executives in the industry as mentors, and in my view, best of all, come together in a summit where you get to network with other fellows and make lifelong connections that will assure your success in the industry for years to come.

We just opened up applications on September 9th for our 5th class with an application deadline on October 29th. So we urge those with a passion for commercial space to take advantage and head to the website to apply!