Ah! Phil brings up the idea of the supply-demand curve for Moon resources. Short thread on the magic of innovation, capitalism and economics of space investing! 1/n https://twitter.com/DrPhiltill/status/1304162217483538432

Entrepreneurs usually solve problems that match supply to demand and vice versa. Example when there is a demand for a (product/service) but nobody providing it (supply), this is an opportunity! The entrepreneur creates value (for herself and society) by connecting these sides 2/n

In the early days of a business, there is risk because it’s not known exactly whether the demand for a product is as strong as the entrepreneur suspects, or the way the entrepreneur wants to connect products/services to the demand will be a fit. Plus a whole ton of other risk 3/n

Entrepreneurs and investors get rewarded for their investment despite these unknowns and risks, mostly by financial rewards through company ownership of the solution. This financial reward (in capitalism) is what drives the incentive to solve problems of supply/demand.Hurrah! 4/n

Back to space: it’s difficult to see the market for the demand- there’s no sizable industry or group of people who have the need for space resources. Things on earth are cheaper! And easier! We can already manufacture everything and at continually lower prices. Demand = ?? 5/n

Additionally, there is no real supply-side solution for (insert problem of wanting to collect space resources). We don’t know how to do it, how much it would cost or who the customers would be. Technology and economics are unclear. Supply = ?? 6/n

So here, entrepreneurs need to create the entire market: both supply *and* demand side for an industry that solves no real, existing and identified problem. Risk is infinitely higher than unknown rewards. Yikes. What’s the incentive to do any of this? There should be none... 7/n

But... we can see that’s not true! Take the example of entrepreneur @zebulgar whose business @vardaspace just got funding from @Lux_Capital to do something crazy like this. What’s the motivation here from entrepreneur OR investor? 8/n

Ok you could argue that @zebulgar gets the experience of getting to do something cool with little downside b/c he has funding. But there are lots of cool things that he could do *and* have more certainly around success- there is an opportunity cost. And it’s the same for Lux. 9/n

This is where it gets interesting. Most economic models around innovation and entrepreneurship disregard a seemingly small and unquantifiable but overwhelmingly important attribute that drives most innovation: intrinsic human motivation to learn and discover. 10/n

So despite there being no identifiable demand or supply market in space resources, no driving mechanism for entrepreneurs or investors (this is slightly mis-stated here for simplicity), space remains a sector that drives imagination, talent, human desire! 11/n

And importantly, imagination, talent and human desire drive private sector markets! The role of private sector within the “space resources” space remains unclear and *highly* experimental. It breaks conventional economic models. And I’m excited to see what happens herein! 12/12