In the Magazine Tech & Science

Space, the Final Startup

The SpaceX Dragon capsule orbits the Earth on March 3, 2013. NASA/AP

No venture capitalist is crazier about outer space than Steve Jurvetson, who has been listening to unrealistic space company pitches for two decades. In the early 2000s, he helped back SpaceX. But mostly he’s impatiently waited for space to turn into Silicon Valley’s next playground—the kind of pulse-quickening, virgin land of hope and opportunity that the Internet once was.

Well, this is space’s Netscape moment, Jurvetson tells me. As often happens in technology, a bunch of advances in different fields are converging to make space less the final frontier and more like the next startup garage.

In 1995, Netscape’s explosive IPO signaled that several technologies—the PC, software, the clunky government-run Internet, Tim Berners-Lee’s hyperlinking and Netscape’s graphical browser—had come together to create a world-changing new platform. Today, cheap launch capabilities from SpaceX and Virgin Galactic, plus smartphone technology, cloud computing and big data, are keys to the space platform. Space is the new Internet.

This is not about human exploration that might turn Kepler-186f into Earth’s suburb in five generations. It’s about new companies and money to be made 200 miles up in the next five years.

Events have started to unfold quickly. In January, Google and investment company Fidelity announced they would pump $1 billion into SpaceX. Together, the companies plan to put 4,000 tiny satellites into low-Earth orbit to provide global Internet access. Also last month, Richard Branson’s Virgin Group teamed with smartphone chipmaker Qualcomm to develop OneWeb, which intends to send up to 2,400 satellites into orbit to similarly blanket the planet with Internet.

Over the past decade, both SpaceX and Virgin have been working on building a reusable spacecraft that can take satellites into orbit, drop them off and come back for another load. And both are close to succeeding. That will be a huge factor in making space cheap and accessible. In the old model, every rocket could be used only once, which made getting into space prohibitively expensive. It cost $300 million or more to launch a satellite, so hardly anyone did it. Imagine if every time UPS delivered a package to your door, the truck then blew up. You wouldn’t get many packages.

SpaceX and Virgin can’t put up thousands of satellites without developing cheap, reusable launch technology—and, in turn, launching thousands of satellites will help drive down costs and improve the technology.

At the same time, all those launches will provide lots of opportunity for satellite hitchhiking. Jumping into some available space for a ride to orbit didn’t make much sense when satellites were at least the size of cars. But the same kind of technology that’s put a touch-screen computer in your pocket is helping reduce satellites to the size of a loaf of bread. The cost of both making satellites and putting them up is crashing.

In fact, launching a satellite is going to get 10,000 times cheaper than it is today. “I’ve never seen something in business where the costs will come down by 10,000 times,” Jurvetson says. And the falling cost creates room for something fantastically important in technology: experimentation. One young company, Planet Labs, calls this new era “agile aerospace.” Planet Labs sends up tiny satellites that gather images and data, and it just closed a $95 million investment round.

Basically, the once-enormous barriers to building space-based technology are shriveling. That’s igniting the imaginations of entrepreneurs, who can now think more about what to do in space rather than how to get there.

SpaceX’s Elon Musk, Branson and their partners have presumably run the numbers and found they can serve up connectivity to, oh, a couple of billion people with satellites that cover the Earth. These customers might be folks who live in remote regions. They might also be Iranians who are tired of having their Internet blocked. That could have an interesting impact on world affairs.

True, we’ve seen attempts at satellite-based global networks before. Teledesic and Iridium were both colossal failures in the 1990s. But the platform wasn’t right—satellites and launches were too expensive—and the devices and demand on the ground weren’t there yet.

One early and obvious space business is imaging—or, really, big data from imaging. This is where Planet Labs, Skybox Imaging and a few other companies are heading. The idea: Cover the planet with low-orbit cameras that can monitor every crop on every farm or count every car at every Wal-Mart—and do it daily, all over the world. Such information doesn’t yet exist. A hedge fund would love to have it. “When launch costs drop, new customers will emerge,” Dick David, chief executive officer of space industry information provider NewSpace Global, told Fortune. “But most of the customers that will be interested don’t even realize today what impact access to space will have on their business models.”

“And then there’s all the stuff we haven’t thought of yet,” Jurvetson says. It’s hard to see what a new platform will engender. In 1995, sold books, Yahoo was an Internet directory, and a few newspapers started putting stories online. Nobody had heard of blogs, social networks, streaming music or software as a service. Similarly, as it gets easier and cheaper to build a space business, a new generation of entrepreneurs will create technology and applications that would barely make sense to us today.

As some investors point out, swarms of new satellites in orbit will generate business ideas for servicing that ecosystem—like how to revitalize dead satellites or clear out old space flotsam. By that point, business in Earth’s orbit will seem so ordinary, we’ll see ads for 1-800-GOT-SPACEJUNK on late-night Golden Girls reruns, and that one small step for man will have turned into something more like the Christmas stampede at the Mall of America.