Why Jeff Bezo's Blue Origin should not be compared with Virgin Galactic?
Blue Origin's first human spaceflight is a success
Today, Blue Origin performed its first human spaceflight sending 4 astronauts to space, billionaire inventor Jeff Bezos, his little brother Mark Bezos, female aviation pioneer Wally Funk, and Oliver Daemen, the only paying customer on the flight.
The flight was picture-perfect. It is similar to previous New Sheperd flights, except for the fact that 4 human passengers are onboard.
Here is a quick summary of the trip,
10:23 minutes of total flight time.
Apogee at 107 km
The vehicle achieved vertical ascend and landing, the first stage landed vertically
Passenger capsule separates at ~ T + 2.5 minutes and lands with parachutes at T + 10 minutes
Booster lands at T + 7:21 minutes
The highest speed achieved is 3000 km/h
16th flight of the New Shepard rocket, so far BO has an (almost) perfect flight record
Oliver and Wally are now the youngest and oldest people to reach space
What is New Shepard?
Blue Origin’s first-generation rocket equipped with 1 BE-3 engine
BE-3 engine is a powerful engine with 490kN of thrust
BE-3U is in the process of testing, expected to be +50% more powerful than BE-3, it will be used in New Glenn, Blue Origin’s Falcon Heavy/9
it is 18 meters tall, it has one stage
Blue Origin is fundamentally different from Virgin Galactic
Though mainstream media like to put these two companies together, sometimes they even compare Virgin Galactic with SpaceX, this narrative is uninformed. Not only is SpaceX’s technology much more sophisticated, but it also has a more robust business.
Blue Origin, on the other hand, has the potential to compete with SpaceX down the road, it has an (almost) perfect track record of vertical landing success, it now has the ability to send people to 100km and above, and it is also building New Glenn to compete with SpaceX in LEO and for the Moon. New Glenn is essentially Blue Origin’s Falcon Heavy, with a 45t LEO mass capability.
But the fundamental problem with Blue Origin is that it is developing too slowly, SpaceX will lead in terms of technology for 2 - 5 years, which means when Blue Origin comes into the SatCom launches market in 2 years, SpaceX could have already fortified its stronghold.
Amazon’s Kuiper project plans to send 3000 satellites to LEO. This is a direct competitor of SpaceX’s Starlink. New Glenn is the deal-breaker.
Blue Origin has the deepest pocket, even compared with SpaceX
In terms of business, Virgin Galactic is bleeding cash. It does not have a capability to go to LEO, neither does it has a plan to, and its suborbital tourism market is nonexistent in 2021. According to its latest financials, Virgin Galactic made 238,000 dollars in 2020, this is less than a typical senior software engineer’s salary in Facebook. The same revenue number for 2019 was just over 3 million dollars. This is quite alarming for an 11 billion-dollar company, and its founders are cashing out.
While I have no sympathy for institutional investors betting on Virgin Galactic, individual buyers should be aware of these facts. Unless something changes fundamentally for Virgin Galactic, I believe its business is stuck.
Plus, I think its fancy presentations with late-night host Stephen Colbert is clever but lacks substance, why spend money on presentation rather than building your own engine? For the uninitiated, Virgin Galactic’s engine is designed by Sierra Nevada Corporation. This speaks about Virgin Galactic’s priority.
On the other hand, Blue Origin’s business is just starting. Though we do not know how much money Blue Origin is bleeding each year, Jeff Bezos is reported spending 1 billion on the company per year. And he can do it indefinitely.
This means BE has a deeper pocket than even SpaceX. One may argue that Elon Musk could sell his Tesla stocks to fund SpaceX, this is true, but we need to understand that Elon Musk’s share in Tesla does not equate to cash he can spend. He cannot liquidate this stock without influencing the market, as he points out, Tesla will die if not for him. I agree with him, if Elon Musk resigns today, Tesla stock will plunge the day after. As we know, Jeff Bezos has already resigned from the CEO position, Amazon stock keeps hitting all-time highs after he left.
Amazon is the backbone of the American consumer economy, after the pandemic, most Americans would buy things on Amazon. So, unless one bet against America, I’d say Amazon is safe. With a 200 billion net worth, Jeff Bezos can spend up to 5 billion dollars on Blue Origin per year for 40 years. (not taking into investment returns and stock rises)
So, it is in a different league comparing to Virgin Galactic. Blue Origin essentially has the cash to lose again and again until it wins, that is scary. Hence, it will be a strong competitor for SpaceX in the long term.
I do not want to go into the details of the BE-3 engine in this post, it is more powerful as well.
Lastly, congratulations to Jeff Bezos and the Blue Origin team for this powerful demonstration of what the future has in store for us! May fortune favors the bold!
Watch the live stream here.