When Elon Musk founded SpaceX in 2002, the very idea of a space startup seemed far-fetched—a quixotic venture at best, a doomed wild goose chase at worst.

Today, SpaceX is a publicly traded company with a market capitalization exceeding one trillion dollars and has just reported its first earnings. A new generation of founders is now working to build out a space economy that once felt like science fiction. Among them are Impulse Space's Tom Mueller, a former SpaceX founding engineer who led propulsion development and now builds in-space transportation vehicles; Apex's Ian Cinnamon, whose company manufactures satellite buses at scale; and Northwood Space's Bridgit Mendler.

Mendler, a Harvard and MIT graduate who co-founded Northwood in 2022, attracts public attention in part due to her earlier career as a Disney Channel actress. But the problem she is pursuing is among the most granular—and arguably most vital—in the space economy: How can data be moved reliably between satellites in orbit and ground stations on Earth without the process becoming prohibitively expensive? Ground stations are the Earth-based antennas and receivers that serve as the critical link for downloading satellite data and uploading commands, and as the number of satellites in orbit has surged, the bottleneck has shifted from launch to communications infrastructure. Major cloud providers, including AWS Ground Station and Microsoft's Azure Orbital, have entered this market, underscoring the growing demand for flexible ground station access.

Fortune spoke with Mendler this week, as she laid out clear-eyed best- and worst-case scenarios for space startups like hers.

The Bull Case

The optimistic scenario hinges on whether startups can actually execute on the commercial demand that Mendler says is clearly visible. Northwood's current customers include the Space Development Agency, established to rapidly field military satellite constellations, and a division of the U.S. Space Force.

"The best case scenario is that folks are able to execute and deliver," said Mendler. "Everything a space operator says they can do, they can do. If companies can technically execute, we know the budgets on the government side are growing, market demand on the commercial side is growing, and you only need to look at Starlink to know demand is there on the consumer side."

Starlink, SpaceX's satellite-based internet service enabled by thousands of the company's satellites, has more than 12 million users and proved to be a surprise revenue generator when the company's IPO filing became public. Mendler says the demand for satellite-centric services is clearly present. Northwood, for its part, has raised $136 million at an undisclosed valuation and operates functionally as a telecommunications company.

The Bear Case

The pessimistic scenario is the flip side of the coin: executing on anything in space is notoriously difficult. A minor mistake or miscalculation that would be tolerable on Earth can be catastrophic in space, where there is virtually no margin for error.

"Space is just hard, and executing against missions is really technically complex," said Mendler. "You can only build a certain amount of product and launch them into space. If they burn up in the atmosphere, what are you going to do the next time? You may not get a second chance. The market is there, there are good demand signals. And there's a certain number of viable businesses, but there aren't a million viable businesses in space either."

Consider, for example, the problem of a tumbling spacecraft—when a satellite, rocket, or space probe begins rotating uncontrollably.

"Once a spacecraft starts spinning or moving, it's really hard to recover," said Mendler. "It's harder to connect with the antenna that might be pointing away from Earth. You can't just reach up and move an antenna on a satellite. So, you have to figure out a way to communicate with it even under those conditions."

The SpaceX Playbook

Even though Musk has said the space economy could become a trillion-dollar market within years, Mendler acknowledges that there will only be a limited number of startup winners. SpaceX, however, has created the operational playbook that all startups in this sector will draw from as they compete for their future: serious vertical integration, reusability and unit economics awareness, and unconventional approaches to monetization.

"What SpaceX and Starlink have represented to me is that the economics of space have just changed," said Mendler. "There were so many markets that weren't available to space because you could not meet or beat terrestrial economics, and what SpaceX has really demonstrated is that they can be competitive with terrestrial economics for a bunch of different use cases [like internet and data centers]."

Mendler believes the first era of the space economy was defined by the question "is this possible?" This new chapter, she argues, asks a different question: "can this company run at scale and remain cost-efficient?" In SpaceX's early days, the company had to be almost entirely self-reliant. Today, companies in the sector can turn to one another.

"If you have to cover every edge case 100% of the time, that's wasteful and expensive," said Mendler. "If you can do something shared, that offers a lot of peace of mind."

There will only be so many winners in the space race—but those who succeed stand to win significantly. While the space and defense sectors are often grouped together, the two industries have notably different market dynamics, even as there is overlap between them. Musk's contention that the space economy could become massive in ways that seem impossible today may well prove correct. The central questions are not whether it will happen, but on what timeline, through what mechanisms, and who the ultimate winners will be.

"If you can accomplish how hard it is, it's like there's this pot of gold at the end of some rainbow," said Mendler.