With Richard Branson ringing the bell to open the week on the New York Stock Exchange the message will be that Wall Street has entered the so-called space tourism business.
This marks the public listing of Branson’s Virgin Galactic company, trading under the ticker name of SPCE.
But in terms of an actual countdown to lift-off this is T-minus… nobody really knows how long.
For at least a decade Branson’s spaceship program has been the subject of an endless sequence of aborted launches and wildly optimistic expectations.
And now the stock listing brings the hubris to a whole new level. Having burned through more than a billion dollars in a test program that included a rocket engine explosion on the ground that killed three people and a mid-air break-up of the space vehicle that killed one pilot, Branson went looking for new financing.
His first target was Saudi Arabia but the dismemberment of Jamal Khashoggi made that choice suddenly emetic. Then he found Chamath Palihapitiya.
Palihapitiya, aged 43, is a Facebook alumnus—he was a tech wizard there from 2007 to 2011 before setting himself up in Palo Alto as a venture fund investor in tech startups, where he swiftly proved to be a shrewd operator.
Significantly, Galactic comes to the market as a direct listing. Palihapitiya has been critical of the kind of initial public offerings that make big money for Wall Street banks—the WeWork debacle comes to mind—while crashing at launch.
So, given that metaphor, what is such a smart guy doing mating with Branson?
A Palihapitiya financial vehicle named Social Capital Hedosophia is taking a 49-per cent stake in Galactic, putting up $700 million plus another $100 million of Palihapitiya’s own money. Social Capital Hedosophia is a special purpose acquisitions company, SPAC, basically a shell without any actual operations that invites investors to back the acquisitional acuity of its owner, and sometimes known as a blank check investment.
While Branson remains CEO of Virgin Galactic with majority control, Palihapitiya becomes chairman, and the listing values the company at $1.5 billion.
But in answer to that question, why he’s doing this, it’s probably relevant that Palihapitiya is also a world-class poker player.
He’s sized up Branson’s hand and decided that, after the years of continuous BS, Virgin Galactic will really be the first company to offer sub-orbital trips to anyone willing to pony up the $250,000 price of a seat. (Branson claims that more than 600 people have already paid deposits on tickets.) He may also want to be the first person to play poker in space. He’ll certainly want to subject to close scrutiny Branson’s claim that Galactic will generate £210m in revenue by 2021.
To be sure, in the last year the test program has finally met some of its goals.
The latest version, SpaceShipTwo, finally broke through the threshold height for sub-orbital space flight, nearly 62 miles. Then, a little more than a month later, it reached its top speed of Mach 3.04—more than three times the speed of sound.
The vehicle also carried its first passenger, Beth Moses, a former space walk specialist from NASA who is now Galactic’s chief astronaut instructor. It will also be her job to prepare passengers for the key thrill they are paying for, several minutes of weightlessness.
Since that flight, in February, SpaceShipTwo has not flown any more test flights.
There are still formidable hurdles to come. Test flying is covered under special Federal Aviation Authority “recommended practices.” Flying paying passengers will require far more rigorous certification tests and with the FAA under attack for its laxity in certifying the Boeing 737MAX as safe when it wasn’t they will not be taking any chances with SpaceShipTwo. The National Transportation Safety Board, in its report on the crash that killed a test pilot, warned that “manned commercial space flight is a new frontier, with many unknown risks and hazards.”
Galactic also faces a serious rival to be the first to fly paying passengers: Jeff Bezos’s rocket ship, New Shepard.
Bezos is pursuing a notably simpler system than Galactic. Fundamentally it is ballistic: six passengers ride in a capsule atop a rocket. At the end of the rocket ride the capsule detaches and descends back through space and, once in the earth’s atmosphere, returns to earth on parachutes. And the launch rocket descends separately, to be reused.
Galactic’s launch begins with a release from a mother ship of the spaceship, with a six-passenger cabin like that of a small corporate jet, at around 40,000 feet, then continues with a ballistic rocket ride into space, followed by a complex maneuver leading to descent that provides around four or so minutes of weightlessness, and finally an aerodynamic glide to a runway landing.
Bezos is characteristically developing his program stealthily with technical rigor and avoiding any Branson-style ballyhoo.
And, speaking of ballyhoo, once more getting ahead of the story, Branson has already showcased custom-made “spacewear” for Galactic passengers, designed by the sportswear company Under Armour. Branson himself has vowed to be on the first passenger flight—in 2020, when he will be 70 years old.
Of course, both these enterprises are essentially frivolous joy rides for wealthy people, and they also, with their rocket exhausts, add another form of pollution to the skies.