Sinéad O’Sullivan is a former senior researcher at Harvard Business School’s Institute for Strategy and Competitiveness, professor in aerospace engineering and author of the upcoming book on management lessons from Taylor Swift.
Remember DOGE? Well, its raison d’être was/is straightforward even if its moral leaning was not: government is bloated and inefficient, industry is lean and disciplined.
That logic has just translated into the Trump administration overseeing a reduction of NASA’s workforce by about 20 per cent, or nearly 4,000 employees, including more than 2,000 senior staff. The message is clear enough: if the private sector can do it better, why keep so many civil servants on the payroll?
And of course, the caricature is familiar. Nasa’s spacecraft building takes decades and runs billions over budget. SpaceX, meanwhile, does it faster, cheaper, better. Public bad, private good. Except that might not actually be true.
A recent paper in the Journal of Spacecraft and Rockets, “In and Out: Comparative Analysis of Nasa and Industry Spacecraft Costs” by Moon Kim and Oliver Hyde, did something the space sector doesn’t usually like to do: it looked at the data.
The authors compared dozens of spacecraft built in-house by Nasa against those contracted out to industry, then tested whether developer type actually predicted lower costs.The results? Not really.
Industry-built spacecraft were indeed cheaper, but only for lower-risk projects: the so-called Class C and D missions, where the scientific stakes are modest and the chance of failure is acceptable. Once the analysis moved up to Class A and B missions, the high-profile, flagship science projects where budgets balloon and timelines stretch, the difference evaporated.Nasa and industry came out roughly equal. In some cases, Nasa was cheaper.
More importantly, when the authors tested whether the choice of builder significantly affected overall project cost, the answer was no. Complexity and risk class drove cost. Who built the spacecraft did not.
This matters, because it breaks the story the industry has been selling for a decade: that private space is inherently more efficient.
If that were true, we would expect to see systematic cost savings across the board. We don’t. What we see is that space is expensive whoever does it. Physics doesn’t offer bulk discounts.
So if Nasa can sometimes build spacecraft just as cheaply as private industry, why is there a private space sector at all? The answer is that efficiency is the wrong metric.
The reason to fund SpaceX, Blue Origin and the graveyard of launch start-ups isn’t that they will always be cheaper, it’s that they provide redundancy.
Space and deeptech industries, like finance, are best understood as a portfolio. Nasa is the bond: stable, slow, unlikely to default. SpaceX is the high-beta equity: volatile, chaotic, potentially transformative. Blue Origin is the long-dated option, underwritten by Jeff Bezos’ stock sales, with no clear payout horizon. The dozens of failed small launch start-ups? Penny stocks. Most went to zero; one or two delivered returns that reshaped the market.
This is exactly how venture capital operates. VCs don’t pick winners; they build portfolios, assuming most bets will fail and one will return the fund. The graveyard of Rocketplane Kistler, Vector, Astra and Firefly v1.0 wasn’t an aberration, it was the model working. Failure isn’t waste — it’s the price of redundancy.
That redundancy looks messy on a balance sheet, but it makes systems resilient. And when you’re building rockets, chips, or cancer cures, resiliency is what matters. Europe’s Ariane 6 delays left no backup. NASA’s Shuttle grounding meant buying Russian seats until SpaceX. Today, if Falcon 9 fails, at least two other rockets are waiting.
Redundancy is costly, but it keeps the system alive. Which brings us, inevitably, to Mariana Mazzucato, the famed Innovation and Public Policy economist. She’s built an academic career on the claim that governments “create winners.” Her favourite case study is the iPhone: Darpa gave us the internet, the military GPS, the CIA and NSF touchscreens, Darpa again for Siri. Therefore, she argues, the US government “made” the iPhone.
But what sits underneath this claim is a belief in directionality: that governments, through mission-driven investments, can point at a desired outcome and produce it. The iPhone wasn’t Apple’s genius, in this telling, but the endpoint of a linear pipeline of public funding.
The reality is far messier. Governments fund a portfolio of technologies, most of which go nowhere. The state creates conditions, not single-point designs. The leap from Darpa patents to a $3tn consumer brand required Steve Jobs, Jony Ive, investors, marketing, and timing. Without that emergent ecosystem, you don’t get an iPhone; you get another forgotten research project.
The Kim and Hyde paper makes the same point. Nasa can be as efficient as industry, sometimes more. But winners aren’t picked. They emerge from a portfolio. Nasa didn’t create SpaceX; it created the conditions (the missions, anchor contracts, redundancy) that allowed it to emerge.
The global contrasts are instructive. America’s model is messy, redundant, politically wasteful … but resilient. China runs state-orchestrated redundancy: wasteful, but effective. Europe — and this may come as a shock to many readers, so I hope you are sitting — optimises for efficiency: one launcher, one GNSS constellation, no SpaceX. Ariane 6 still hasn’t flown, while SpaceX lands and reuses boosters. Efficiency on paper, fragility in practice.
The same story plays out in autos. The US produced Tesla not because Washington, DC picked a winner, but because the ecosystem tolerated dozens of EV failures. China copied the approach and got BYD. Europe consolidated around incumbents: Volkswagen now promises to catch Tesla with “efficiency,” while Stellantis threatens to leave the continent.
The lesson is simple: Stop asking whether public or private is cheaper.Winners emerge from redundancy, not efficiency. That’s true in space, in cars, in chips, in biotech. Innovation isn’t about picking the cheapest horse, it’s about running enough of them that one crosses the finish line.