There are few industries more resistant to disruption than aerospace. The dominant firms thrive largely because of the massive capital requirements and strong government connections. Yuya Nakamura of Axelspace is confident he can change that.

Axelspace’s micro-satellites are a complete redesign of what a satellite can be, and they come in at 10% the weight and 1% the cost of conventional hardware. Axelspace has already launched the world’s first commercial micro-satellite, and are new gearing up to launch an entire constellation of them.

It’s a great conversation and I think you’ll enjoy it.

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The following is a summary. You can hear the full interview with Yuya on the podcast.

Tim: What exactly is a micro-satellite?

Nakamura: A micro-satellite is an artificial satellite weighing less than a hundred kilograms. Conventional satellites weigh thousands of kilograms. Micro-satellites also cost only a few million dollars, which is about 1% the cost of traditional ones.

Tim: Being smaller makes them much cheaper to launch as well, right?

Nakamura: Absolutely. Micro-satellites can be designed, built and launched for a only five or six million dollars. That brings it into the range of all kinds of private sector and commercial activities.

Tim:  Axelspace launched the world’s first commercial micro-satellite in November of 2013 to monitor Arctic Sea ice.That was five years after you started the company. What happened in those five years?

Nakamura: At first I simply tried to sell satellites to large companies. I was kind of naive. It wasn’t a matter of cost. Corporate executives simply could not conceive of launching a satellite. The business case was too big a leap for them. We finally found an appropriate partner, WeatherNews, but event then finding a launch vehicle proved very difficult.

Tim:  Why was it difficult?

Nakamura: The launch industry is set up to support large, traditional payloads and, to some degree, tiny student satellites and very-low priority payloads. We needed the precision of a commercial launch, but our hardware only took up a small amount of the rocket’s capacity. We had to wait until suitable extra payload space opened up with a commercial satellite that was being launched into a similar orbit.

Tim:  So it was an issue of timing?

Nakamura: Not just timing, but pricing, insurance, everything really. The launch companies simply did not know how to deal with this kind of satellite. One Indian company broke off negotiations after two years, and we had to start again with a Russian company who eventually put our satellite into orbit.

Tim: The big aerospace companies have access to the same technology you do, so where does your price and size advantage come from?

Nakamura: The important thing to realize is that from an engineering perspective, a micro-satellite is not a small version of a regular satellite, it’s something very different. The engineering processes are different. Traditional makers are focused primarily on billion-dollar missions, and that breeds a culture of trying to avoid failure at all costs rather than one of innovation. They no longer question the need for the highest quality and most expensive parts. This kind of over-engineering is built into their processes. The problems compound because sometimes they need to wait months for these special parts, and that delays to whole project and drives up costs.

Tim: You and your team were from Todai. Did the university provide a lot of support?

Nakamura: Todai is supportive of startup founders these days, and you see more and more startups coming out of the university. We’ve also been lucky to benefit from a number of government programs designed to support startups. That’s a good thing, but they could support startups in a better way.

Tim: What do you mean?

Nakamura: Most programs just give money. Money is really important. But at university, we were engineering students and could have used a lot more information about management and how to actually run a company. We are very grateful for the government grants we have received, but more than grants, we want to be able to bid on government contracts. We want to be able to make satellites. Developing satellites with grant money is not a business.

Tim:  Why can’t you bid on government projects?

Nakamura: There are really no open-bid projects suitable for us. Japanese launches a lot of satellites, but they want only traditional satellites, and those projects almost automatically go to the same companies; Mitsubishi, NEC, etc. The process does not have a way to really consider using a new approach.

Tim:  You’ve picked one of the hardest industries to disrupt. Aerospace is not usually something startups enter into.

Nakamura: Thant’s true. Innovation in this industry is not going to come from the big aerospace companies. They have no incentive to change. Innovation is coming from nontraditional companies like Axelspace and Honda. Without access to large government contracts, Honda has focused on creating value in the commercial space and has been successful. They’ve been able to compete against some very entrenched companies. So it can be done.

Tim: So you will also be focusing on commercial rather than government markets?

Nakamura: Absolutely. We recently raised $15.8 million to launch three satellites in 2017, and that’s the beginning of what will be start of our 50-satellite constellation to be completed by 2022. It will allow us to monitor everything on Earth on a daily basis with 2.5 meter resolution.  This will open up a huge number of new applications in agriculture, forestry, natural resource management and other areas.

It will be interesting to see if Nakamura-san’s bet on the the commercial sector rather than the government sector will pay off, but it seems like they have a good chance. Over the past four years there has been a luge leap forward in private-sector use of space technology from Space-X and Amazon launching reusable rockets to Google committing to a 1,200 component array of satellites.

It looks like private industry rather than governments might be the driving force behind aerospace for the next fifty years.