Tuesday, September 17, 2024

Uh Oh... Looks Like Axiom Space is in Trouble

The subtitle is What happens when a Space 1.0 Guy Runs a Space 2.0 Startup  

According to a report in Forbes online (they won't let anyone read that without being a subscriber), Axiom Space is in trouble. Outlined by Ars Technica, this afternoon, it sounds like my subtitle. 

... Axiom Space, which was founded by billionaire Kam Ghaffarian and NASA executive Mike Suffredini in 2016, has been struggling to raise money to keep its doors open and has had difficulties meeting its payroll dating back to at least early 2023. In addition, the Houston-based company has fallen behind on payments to key suppliers, including Thales Alenia Space for its space station and SpaceX for crewed launches.

"The lack of fresh capital has exacerbated long-standing financial challenges that have grown alongside Axiom’s payroll, which earlier this year was nearly 1,000 employees," the publication reports. "Sources familiar with the company’s operations told Forbes that co-founder and CEO Michael Suffredini, who spent 30 years at NASA, ran Axiom like a big government program instead of the resource-constrained startup it really was. His mandate to staff up to 800 workers by the end of 2022 led to mass hiring so detached from product development needs that new engineers often found themselves with nothing to do." Bold added: SiG 9/17/24

The big problem here isn't Axiom; the problem is that NASA is depending on them to build a successor to the International Space Station. When the company was founded in 2016, the plan was to launch an initial space station module in 2020. 

They're taking advantage of the precedent that SLS/Artemis set for being late and over budget.

Presently, Axiom plans to launch its first module to the International Space Station no earlier than late 2026. And the company's ambitions have been downsized, according to the report. Instead of a four-module station that would be separated from the government-operated space station by 2030, Axiom is likely to go forward with a smaller station consisting of just two elements.

It seems unnecessary to say a two module station won't be able to do as much as one with four modules, if the modules are the same size.  

"The business model had always counted on having significant power for microgravity research, semiconductor production, and pharmaceutical production, plus supporting life in space," a source told the publication. "The business model had to change… and that has continued to make it challenging for the company to get around its cash flow issues."

Axiom is one of several companies—alongside Blue Origin, Voyager Space, Vast Space, and potentially SpaceX—working with NASA to devise commercial replacements for the International Space Station after that facility retires in 2030.

So with the contractor on the verge of going down in flames, what's NASA to do?  Why, issue a Request For Proposal (RFP), of course! This new RFP will be issued for a second round of commercial space station contracts in 2025 and the contract awarded the following year.  Whomever NASA awards the contract to, they'll be starting to work at around the time Axiom might have been able to deliver their first module.

Possibly worse than that is that many insiders say NASA may be trying to get two contractors. While the ISS was built over many years with Space Shuttle cargo flights, those aren't flying anymore. Could another one be done?  Who lifts the cargo? New Glenn? Starship? Axiom founder Kam Ghaffarian said there isn't enough work for two contractors. NASA should decide on one contractor and award the contract in '25. "Today there's not enough market for more than one," he said.

The one bright spot - or a less dim spot, if you prefer - is about Axiom's other major contract with NASA, the $228 million contract to develop spacesuits for the Artemis Program. 

Multiple sources have told Ars that, from a financial and technical standpoint, this spacesuit program is on better footing than the station program. And at this point, the spacesuit program is probably the one element of Axiom's business that NASA views as essential going forward.

Axiom's vision of their own space station. A screen grab off their website from 2020. This is not the "initial module" mentioned above. That was illustrated here.



7 comments:

  1. SiG, while not having ever worked in an aeronautics/space firm, I have worked in a number of small start-ups for Biopharmaceutical and Medical Devices. One of the biggest problems and why many fail is not so much bad ideas as their inability to accept that they are small scrappy companies that need to conserve every dime and put it towards getting to the next milestone.

    "Start-Up" has come acquire a certain reputation and luster in terms of things like image and corporate culture. That is because some succeeded - but most failed, as has ever been the case. All such start-ups would be much better off having clear milestones and everything that is not related to that milestone has not spending (Also, many of the companies I have worked for have had inexperienced or poor financial leadership. That never helps.).

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    1. Start-up has become a trendy term for a small business. The hard truth is that most small businesses don't last five years. Axiom is in their eighth year so they're doing comparatively well. I don't know if they'll survive or not, but they sure are on a bumpy patch of road right now.

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    2. A boss told me that, the subject being running a business, we're all in the same game, but at different levels.
      I reckon that includes a billionaire bankrolling a start-up.

      I bootstrapped three businesses. The first failed miserably. The 2nd and third did well. A good chunk of profit is poured back into the business. I think of it as making a loan to yourself. Instant approval!
      I think anyone who ignores that axiom in business has the luxury of deep pockets. Maybe it's to keep the taxman at bay.

      Today I read Axiom axed 100 employees with more lay-offs to come. How'd you like that hanging over your head? I imagine the smart rats are already jumping ship.

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    3. Rick, likely the smart rats are already looking. Once the first layoff happens, no-one wants to be caught in the second round.

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  2. Looks like Siera Space will be able to pick up a spacesuit group soon.

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  3. I don't care for the red chairs in the "initial module", tbh.

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  4. Well, poop. I guess that's what happens when you try to run a scrappy startup like a legacy aerospace giant.

    Seriously been wondering when SpaceX was going to just step in and do space-station modules.

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