Foust Forward | Don’t mess with Texas space startups

Houston has long been known as “Space City,” but both the city and Texas in general seemed to lag other parts of the country in supporting the growing commercial space industry. SpaceX builds Starships in Boca Chica and tests engines in McGregor, while Blue Origin launches New Shepard suborbital vehicles in West Texas.

But for both companies, those Texas facilities are outposts, with the bulk of their operations elsewhere. Those facilities haven’t supported the formation of clusters of space startups like those seen in California, Colorado or Seattle.

Local officials and companies say that is changing. At the South by Southwest (SXSW) festival in Austin, Texas, in March, an event usually associated with filmmakers, hipsters and technology enthusiasts, space had a surprisingly large presence, with parallel conference sessions and other events on a wide range of topics. That included panel sessions where companies argued that both Austin and Houston were growing hubs of the space economy.

One reason is that the space industry is starting to look a lot like the broader tech industry as companies move up the value chain from building and launching satellites to developing analytical tools for data those satellites generate. “There’s a lot of venture capital flowing into software in the Austin area,” said Scott Herman, chief executive of Cognitive Space, on one SXSW panel, which he says has spilled over into space companies.

The funding and the talent in the Austin area have attracted companies from California. “I’m a refugee from California,” said Gabe Dominocielo, co-founder of Umbra, a synthetic aperture radar imaging company with offices in Austin and Santa Barbara, California. “There’s a great energy in Texas.”

There are also lower taxes and regulatory burdens in Texas. “A lot of companies are walking out of California to Austin,” said Melanie Stricklan, chief executive of Slingshot Aerospace, a space situational awareness company also split between Austin and California. “I hope Austin doesn’t turn into a mini-California with taxes and other liabilities.”

Houston is tapping into the growing commercial space industry as well, leveraging the expertise built up over the decades in and around the Johnson Space Center. Spaceport Houston at the city’s Ellington Airport hasn’t hosted any launches but has become a business park for ventures like commercial space station company Axiom Space and commercial lunar lander developer Intuitive Machines.

“It’s really about people and talent, and Houston has a lot of talent,” said Matt Ondler, chief technology officer at Axiom Space, during another SXSW panel. That includes bringing people into Houston to work at the company. “A low cost of living and no state tax help recruit folks from outside of Texas.”

Tim Crain, chief technology officer at Intuitive Machines, said Houston had become a “great city” in the last 20 years with a diversity that helps attract and retain people. NASA, he added, also helps. “Johnson Space Center is making it a priority to interact with companies in the space community in Houston,” he said. “It’s more open now than it’s ever been, for both the city and for NASA, to support companies who want to work in space there.”

Douglas Terrier, associate director for vision and strategy at JSC and a former NASA chief technologist, said he wants the center and Houston to be a “hub” for the state’s space economy, connecting to what’s going on in Austin, Brownsville and elsewhere. “It’s really about convening that community around Houston,” he said. “Why wouldn’t Houston be the center?”

There are, though, obstacles to growth for space companies in Texas. There’s still more private funding available elsewhere, as well as large numbers of people who might prefer California beaches or Colorado mountains over Texas prairies. The state’s political move to the right, with controversial laws on abortion and voting rights, could also deter growth.

Herman pointed to issues like access to funding and the “educational pipeline” as potential obstacles to future growth. “I’m bullish on Texas,” he said, “but it’s not a slam dunk.”

Jeff Foust writes about space policy, commercial space, and related topics for SpaceNews. His Foust Forward column appears in every issue of the magazine. This column ran in the April 2022 issue.