SpaceX's Valuation Climbs to $25B with New Funding Round
bloomberg.com
bloomberg.com
If it pans out, Starlink can disrupt a massive, $1 trillion/ year telecom market that is itself booming. Depending on how well they can productize long-term (miniature receivers embedded in laptops, tablets etc.) they stand to capture whole percentage points or even tenths of that market, giving Starlink itself a valuation in the trillions.
It's also an ultra-high moat business, a truly global monopoly. Once you have 12.000 sats in the sky amortized and own the only launch service capable of servicing them, you are impossible to budge.
Not possible because of physics. Unless they branch into a completely different portion of the spectrum with all-new satellites and some communications tech that is as of yet unknown, they really cannot miniaturize the receivers.
There might be technical showstoppers today related to transmitter power and battery, beamforming effectiveness and indoor performance of a mobile device, signal processing difficulties etc., ergo "long term productization".
Aww, hell! Make it a small pizza box sized device I can put on a bracket I can hang out the window! Include a wireless hotspot and you'd sell those things like crazy!
BTW existing US regulations on apartments and the like require landlords to install roof antennae if technically required.
Does SpaceX even have to do that? Can't they just open source all the designs and let anyone with an account use their network? Leave the construction, sale and support for receivers up 3rd parties.
Better to sell gasoline than to build gasoline engines :)
SpaceX absolutely could deny selling rockets to anybody as rocket launch is not a monopoly.
OneWeb has contracts with ISS, Arianespace, RocketLab, BlueOrigin and so on. Non with SpaceX. I don't know if that is because SpaceX denied them, or if they just don't want to work with them.
Probably didn't ever ask, since they're a direct competitor. I can imagine how this conversation would go:
OneWeb: oh, by the way, can we buy launches on your rockets for our satellite Internet thing?
<Both sides laughing>
SpaceX: no.
So far, we are not seeing a ton of new types of traffic that just would not be feasible where it not due to SpaceX's lower launch cost.
I think that will come, but it will come with the LEO based communication satellite fleet, and that is still a ways out.
Note that I specified correct foresight above. I'm confident that some things will be launch on the now cheaper rockets over the next 20 years that turn our to be commercial failures. I don't know which they are though, just that they are. If you have an idea that might work with a cheaper launch you should start building it, but you should start small to prove it can work.
This is a very high valuation for such a capital-intensive high-risk company.
That's even worse than what rockets were before SpaceX came along. Rockets would be exactly the same as each other.
Once you can pick and choose your satellite parts Domino's like and have it built, then you'll see the valuation skyrocket. That may be as hard or harder than building another SpaceX.
Insomuch as Oneweb uses off-the-shelf parts, they want so many of them that their suppliers are having to build new factories to build those parts. Their solar array supplier is doing that, for example. I suspect Starlink will use a model closer to the Gigafactory and Tesla's partnership with Panasonic.
Lots of people are offering standard satellite parts, at high prices and low volumes. It'll be interesting to see what kind of trickledown Oneweb causes.
It’s going to tend more towards deploying satellites rather than exploring Mars.
So, how would you employ the engineers instead?
Industrial society is about producing garbage for the masses to consume. The huge churn of capital and labor creates as it's byproducts from time to time items of actual human value.
But those things would be fragile and complicated without the industrial economy surrounding them. If we look at this stage in our species history from far away, currently the industrial economy is supposed to be predictable and mundane.
So, "producing useless crap" is a required feature of our economy so it can occasionally produce science, art, medicine and the other things that actually improve us as a species.
Now, consumer goods fall into two categories: physical and digital. Physical consumer society is turning our biosphere to shit. Digital commodities, on the other hand, are much more lenient on the environment.
So, if we look at it this way, and presume that producing consumer crap is necessary for economic growth and stability, it's much better to work in producing digital goods and services rather than physical ones.
Within this framework, the actual question is not why do the brightest minds work at facebooks, but, will our economy ever develop beyond the point where producing useless crap is not so much a necessity for systemic stability rather than an occasional indulgence.
As the saying goes, one man’s garbage is another man’s treasure. So don’t be so judgmental. :)
I consume as much as I can but only because the society lets me, and I'm too burdened at the moment to actively change my way of life.
Maybe have some sympathy for others? If you feel so strongly and yet don't change your actions, I think it's pretty hypocritical to say other people are consuming a bunch of "crap". Don't get me wrong, there is a ton of waste produced in today's world and more of it than we need. But I think it's important to consider that many people struggle to make ends meet and can't afford the time, money or thinking that many of us here have.
We both agree that the western society consumes too much, and in the part of my comment which you extracted I included myself explicitly in the group of people who consume too much. I am having sympathy for people who consume too much and don't change their ways. I'm the first person I have sympathy for in this as I'm preoccupied by other stuff than my lifestyle choices at the moment.
I did not denigrate the people who consume too much, merely the habit of consumption.
The actor and the behavior are two different things. Merely behaving in a bad way does not make the person bad. It merely means they have something to improve in their personal conduct.
Calling stuff people consume "crap" is not the same thing as insulting people. Although, western commercialism has done a great effort in trying to tie persons self worth to their consumer habits.
This psychological link is also crap.
But often turns minds of droves of Humans to shit, and turns every moment of idle human thought into raw material....
Perhaps this is why Google / Facebook open source so much of what they do, so that talented engineers don't just have to say 'I get paid to make people click'.
A recently hired software engineer at Tesla, while not giving specific figures, said that the base comp was competitive and the options were $100k+ over the standard 4-year vesting schedule. I've heard similarly from a handful of others; I'd expect the comp to be inline at SpaceX.
Not to mention the growth potential for your stock options between SpaceX and Tesla may be higher than comparable companies.
https://www.glassdoor.com/Salary/Tesla-Software-Engineer-Sal...
Facebook / Google
This is progress.
Pretty much every consumer website on the internet deals with one of those areas. If it becomes easier to movie money on the internet, we might start seeing new dominating players other than Google (ads), Facebook (ads) and Amazon (ecommerce).
It's not. The math doesn't work, the rocket equation bites too hard. This is one of the reasons to be keeping an eye on the recent claims over the past few years that fusion reactors may be something that could be shrunk down to shipping container sizes in the relatively near future. Get a functioning fusion reactor into space and suddenly the solar system is, if not your backyard, something very reachable.
But it's possible we won't see any practical way to lift off from Earth other than chemical rockets for a while.
We really need to be able to get places in a couple of weeks, and chemical rocketry just gets absurd for that; even if you can do it, you've got to fling massive refueling stations around and such. A fusion-based system would have power density sufficient to not just fly to Mars in a reasonable period of time, but to fly back without having to be refueled, which means we can go places without first figuring out how to build a fairly expensive and massive infrastructure that allows us to get back.
If you really want something that can be put into production in a matter of years, then it would be fission-based rockets. Maybe they'll be more acceptable if they are not launched from Earth.
I'm not saying its wrong. Just, personally, cause for pause.
It's kind of hilarious to think that people seriously propose terraforming mars as a strategy to avoid the dangers of global warming or nuclear war; there are a thousand other uses for all that time, labor, and money. Many of which could mitigate threats like that for a tiny fraction of the cost.
> Now a "species" of software intelligences on the other hand, which could adapt their bodies to fit their environments, the various collections of asteroids might present a compelling opportunity to build a dyson swarm (assuming they could think of some useful/valuable to them way to use that much energy).
We still need to get to appropriate technologies, which is precisely what expanding into space now is doing. A Dyson swarm is not something you suddenly build in your garage from scrap parts after a night of heavy drinking.
> It's kind of hilarious to think that people seriously propose terraforming mars as a strategy to avoid the dangers of global warming or nuclear war; there are a thousand other uses for all that time, labor, and money. Many of which could mitigate threats like that for a tiny fraction of the cost.
Yeah, no. RE nuclear war, there are diminishing returns on the margin in political involvement; hell, a big part of the nuclear danger is the fact that too many people are involved. By redirecting space sector into this, all you'd be doing is squandering the engineering talent.
RE global warming, space sector is quite well aligned with efforts on global warming (where do you think the climate data comes from? or even the models on how global warming works?), and long-term, it offers moving some heavier industries up the gravity well, mitigating the pollution involved.
There's a lot of interesting stuff in space, for a physicist or astronomer - but they don't even need to go there themselves to learn about it.
I don't think spacex's 25 billion valuation is ridiculous at all. but if it went public it would probably get ridiculous (this wouldn't necessarily be a horrible thing, there are far greater tragedies), based on people's misunderstanding of what is technically possible in the near or medium term future, in large part thanks to disproportionate screen time anthropocentric science fiction gets.
> It's kind of hilarious to think that people seriously propose terraforming mars as a strategy to avoid the dangers of global warming or nuclear war;
Is anyone actually saying this though? I honestly don't think I've ever seen this suggested.
There are lots of potential filters that could end us: global warming, nuclear war, the eventual death of the sun, etc. Just getting a second planet gives us a ton of protection from many of these filters and we have to start working on a way to leave the solar system at some point, so it may as well be now.
I wasn't born for the moon landing. I feel like I'm going to be upset if I make it to old age and we haven't accomplished anything as great as that in my lifetime.
More recently I would put alphago beating human grandmasters at go ahead of the moon landing.
I would put crispr ahead of the moon landing.
I would put the current progress on self driving cars ahead of the moon landing.
1. Building a second society on Mars isn't meant to preserve the human species, it's meant to preserve modern human civilization. That's a higher order thing which is much more vulnerable to the climate catastrophe and other threats.
2. Industry in space and on Mars is going to be ludicrously profitable. Made in Space is manufacturing best-in-class optical fibers in orbit because gravity introduces crystalline defects [0]. As launch costs decrease we're going to find there are enormous numbers of low mass high value goods which can be improved by manufacturing in an ambient acceleration less than 1g. Mars will be profitable because its gravity well is tiny compared to Earth's - if you want 2 kt of steel in high Earth orbit for your new habitat, launching it from Mars and flying it over will be cheaper than lifting it from Earth.
3. If you buy into Hirschman's ideas of Voice and Exit, a frontier is arguably a necessary component of a healthy civilization. A new world for the misfits and revolutionaries to test their ideas on stabilizes the old world, and the ideas that turn out to be good feed back into the old world improving life for everyone.
Lastly, if humans fare well in lower gravity, I think we'll see tons of people choosing to live in orbit. The radiation problem is really a mass budget problem, it goes away on larger habitats. Consider the ultra-rich first, who could build perfectly climate controlled terrariums with a billion dollar view of Earth, where their very bones feel lighter, they can jump 10 feet, and breach out of their swimming pool like a shark. The leisure class could happily live up there full time, and even those with work down below could vacation for a couple months a year. Later on, I think retirement homes on orbit will be the default. It's much harder to break a hip when you only weigh 20 lbs, and retirees tend to move to a facility and then stay there so the commute to the surface is less of an issue.
2. If there is non trivial amounts of manufacturing done in space, it will not be done by humans.
1. modern human civilization is incapable of the feat you're talking about and even if it could muster the will it would be the greatest misallocation of resources of all time simply due to the scale of it - worse than any communist 5 year plan. Terraforming happens on a similar time scale to the birth and death of human societies. I don't see a future where humans as we know them today are on mars as anything more than a gimmick - and that's even on timescales which are outside the bounds of our lifetimes.
4. this last point is the exact type of vision I'm so cynical about. Basically pure fantasy. Even if it could be done, it wouldn't be what you imagine it to be. https://www.youtube.com/watch?v=rswYl7RLRNE "This scene is Tarkovsky's response to the wormhole sequence in "2001". You get the shapes and the lights flying towards you but all of the artificial color has been taken out. By showing driving as this abstract sequence of lights and tunnels, we're reminded how a mundane thing like driving really involves a huge amount of technology and engineering, and that maybe this advanced technology this isn't liberating and exciting, but alienating and oppressive. "
optimism and cynicism have to be balanced against each other and your vision is sorely missing one of them.
2. Of course it'll be highly automated, my company's building automated manufacturing with this in mind. We haven't got robots as flexible and capable as humans yet though, and I'm skeptical that we'll get them before giant economic opportunities appear in space. I think there'll be humans up there to tend the machines, or at least teleoperate them with acceptable latency for everything beyond Earth orbit.
3. Fair difference of opinion.
4. Orbit is ~400 km and ~8,000 km/h away. It's fairly likely at this point that reusable ultra-heavy lift vehicles are going to be reality. Think about what comes 2 generations after BFR/New Glenn, and the idea of putting grandma in orbit shouldn't seem so far fetched.
Moon tourism will be big. Once it is economical to offer prices in the low six figures, lots of people will want to go.
Setting up a successful colony on Mars will be an immense challenge that will require many beneficial technology and engineering innovations that can be exported back to Earth.
And of course there is the immense scientific value of exploring other worlds.
It's going to happen. It's just a question of when.
I don't disagree with you about what the space industry looks like today.
That is what every pyramid scheme expects out of its victims.
Next decade or two, maybe low-gravity vacations?
https://en.wikipedia.org/wiki/Survivorship_bias
"In finance, survivorship bias is the tendency for failed companies to be excluded from performance studies because they no longer exist. It often causes the results of studies to skew higher because only companies which were successful enough to survive until the end of the period are included."
How hard would it be to create another SpaceX if it failed as a company? My guess: Under $10 billion, but it would take 5 years, even if you had many of the former SpaceX people.
Facebook, on the other hand, because it involves buy-in by over a billion customers, is weirdly harder to replicate.
https://en.wikipedia.org/wiki/Accredited_investor
In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
There are rules against that, intended to protect small fish against being ripped off by strangers. Small fish are assumed able to judge their family and friends, and big fish to be able to take care of themselves.
Would a sale between unrelated persons be regulated? For example between a stranger and a confirmed ex-employee with stock? Does one have to be an "accredited individual" for any outside stock transaction?
A sale isn't forbidden, but soliciting is. SpaceX cannot solicit the general public. If they can explain that they reached you because you're Elon's former secretary's cousin and you met Elon at a birthday party, they may choose to include you in a financing round. Otherwise, they'll just say no, because you're not worth the risk/cost of having to answer pointed questions from the regulator.
(The regulator might not punish them, but just having to answer questions quickly eats up expensive lawyer hours. And then there's the whole question of who you are. If you're a shareholder you're entitled to answers, so pedants owning a single share can be a real bother.)
[0] https://techcrunch.com/2018/03/16/spacex-is-making-big-money...
I'm not even certain that would make it past underwriting, much less be legal. Otherwise you could leverage market capitalization without amy downward sell pressure to increase not only your total holdings but it's overall value. Seems illegal.
Kinda like EOS.
Starlink, SpaceX's satellite constellation, is the cash crop.
Source is from the 2016 International Astronautical Congress talk in Mexico [1]:
> And I should say also that the main reason I'm personally accumulating assets is in order to fund this. So I really don't have any other motivation for personally accumulating assets, except to be able to make the biggest contribution I can to making life multiplanetary
[1] http://shitelonsays.com/transcript/making-humans-a-multiplan...
Anyone who saw the SpaceX falcon heavy launch should have got the message that SpaceX and Tesla are BFFs.
Kinda why I'm happy NASA still has their own plans, and other competitors are out there too. Hinging everything on one rocket isn't a good idea, and when the shuttle was retired, we ended up without a way to space for years.
NASA, with its limited budget and constant micromanagement by politicians, doesn't want to be - and can't be - in the business of trucking things to orbit. That's why they're trying to outsource it as much as possible.
Also, NASA can't do any of this, which is why the US government is giving funds to SpaceX. Plus what about the real dependency of the NASA on political agenda and budget votes?
Elon Musk is very good at designing companies built on government handouts. ;) Not that there's anything inherently wrong with that.
We are past the "pioneer" stage of space launches: We've done it lots of times. The exciting part is now making space launches cheaper, regular, and more capable. SpaceX is not the only company working on doing those things.
SpaceX absolutely does not depend on NASA for funding. The majority of SpaceX missions are not for the government. The majority of their developments and research are not directly funded by NASA.
> Congress can absolutely decide to fund SpaceX less
They can hurt them by telling NASA and DoD to not use SpaceX even if they are the cheapest. But that would absolutely not kill SpaceX in any way.
It would also massively hurt the government since it would cost them billions.
> or charge SpaceX more for use of government facilities
Unless they break their contract that were already negotiated for the long term, no they can't. But that's a stupid argument, of course the US government can destroy any company in the world if they really want to.
> Elon Musk is very good at designing companies built on government handouts. ;) Not that there's anything inherently wrong with that.
Not really. First of all, in the case of SpaceX they were not handouts, but rather competitively bid contracts that SpaceX can execute cheaper then anybody else. In fact SpaceX had to sue the government multiple times to even be allowed to bid for some of the contracts.
Kistler for example was not able to execute and NASA cut their funding and they went down.
These actions actually saved the government a shit-ton of money, rather then the government giving handouts to SpaceX.
The same goes for Tesla, its mostly successful because it a good product. The tax cuts they get are nice, but again, any other company has access to the same tax-cuts as well.
> We are past the "pioneer" stage of space launches
The BFR is absolutely a pineer project.Pretty much nothing like it has ever been done. Not the engines. Not the structure. Not the fuel. Not the orbital refueling. Not the full reusability.
And of course then landing it on Mars and hopefully flying it back, that's absolutely a pioneer project.
Which, for what it's worth, SpaceX still hasn't actually delivered a result on, since they decided not to make the Dragon a crewed spacecraft after all.
As others have noted, you really don't know what you're talking about.
https://www.nasaspaceflight.com/2018/04/spacex-progress-comm...
First of all, the argument that SpaceX would not exist without that contract is 100% wrong. When it was awarded they already had a successful comercial buissness with many people having order launches.
Second, you seem to be under the delusion that SpaceX was given this money. That is false, the money is conditional on reaching milestones and is only paid out if NASA is sadified. If NASA is not sadified the company has to pay for the delays out of their profit margin, unlike JWST for example. SpaceX has not jet recived the waste majority of that money.
Third, the 3 billion is by FAR the cheapest offer NASA had. You can see in your own link that SpaceX gets 2.6 billion while Boeing gets 4.2 billon for the operational phase. The DreamCheaser was around 3.6.
So what do you want? Do you want NASA to build everything themselfs? NASA itself admits that they could not develop something nearly as cheap. Their own evaluations have ahown this over and over again.
Are you just against spaceflight in general? Do you think the government should not be invovlved?
The document you yourself provided showes that SpaceX got the contract because they convinced NASA in a highly technical highy comptetive.
So whats your issue? Why this irrational hate?
In either case you should stop going into technical forums and write strongly worded comments like:
> Uh, most of SpaceX wouldn't exist without the $3.144 billion SpaceX was given under the Commercial Crew Program
Secondly
> Why the irrational fanboyism?
How is it irrational? I'm a 'fanboy' because of what SpcaeX has achived. I'm a fanboy for any company that pushes technology and SpaceX just happens to be one of the most visionary and aggressive companies around.
> Why are you taking a realistic discussion of the company like a shot across the bow?
I'm all for realistic discussion. If you had argued that SpaceX would not exists without NASA or the governmnet (2008 COTS contract), then I would have responded differently. But you did not make realistic discussions, you asserted things that were false.
There is a realistic discussion about SpaceX and the profitiabiltiy of its vision. And I'm happy to talk about that, because it is a difficult thing. Being a 'fanboy' does not preclude realism.
All I did was give you the facts to correct your mistake. Don't be salty.
Sure. But SpaceX is still leading a way, and is way ahead of everyone else. And before they started, literally nobody else cared. Existing launch companies were happy with their status quo. I'm not confident that the other companies currently working on cheap launches would survive if SpaceX folded, so I still believe we need SpaceX in the coming years to keep up the momentum.
This is just a list of benefits that humans have gotten from space travel. Space travel in general is, in fact, beneficial to humanity and science.
The way this works: space exploration presents a set of compelling engineering challenges that extend our capabilities. People solve those challenges, and then other people find more mundane uses for resulting solution. But without the initial compelling challenge, those inventions would likely either took much longer, or would not have been made at all, because ones on the market were good enough.
And that's just talking about trickle-down benefits. Then there's the whole lot of direct benefits from satellites - from the most obvious, like navigation and communication, to the less obvious, like weather monitoring, agriculture management, emergency response, national security, climate science, etc.
Tesla will do a minimum of a $2 billion funding raise whenever they need to next. They're claiming they won't need to do a funding raise this year (we'll see).
The SpaceX capital would be far more likely purposed to help pay for BFR & Starlink.
edit: downvoters want to clarify what's wrong with what I said? It's extraordinarily obvious the $507 million raised by SpaceX isn't going to bailout Tesla. Mathematically it couldn't even if they wanted to put it to that use.
Increased valuations give him a much larger ability to draw on third-party loans to dump into whatever business he likes: the risk being if his investments don't pay off, he risks losing control of SpaceX.
[1] https://www.economist.com/news/business/21709061-entrepreneu...
Additionally - I don't know where price-wise Musk gets margin called on his Tesla stock, but I do think him borrowing against it is a significant risk for Tesla. In my personal opinion, Tesla's biggest asset is Musk's fan base - I think it would really significantly impact Tesla if Musk got margin called and couldn't (or doesn't) cover and lost his status as the largest shareholder of Tesla. I think he would lose more interest in the company and you risk his fans no longer seeing Tesla as "his" company.
I don't think I'm alone in this opinion either, Musk has borrowed enough against his shares to warrant getting margin called mention as a risk in the 10-K. (Not to say its wrong for him to borrow against them, I'm sure I would do the same - I just think doing it to fund a private company he is heavily involved in (and distracts him from his public company) links them financially in a way I would personally not be comfortable with if I were an investor in Tesla).
[0] https://electrek.co/2017/04/14/tesla-solar-bonds-elon-musk-s...
What was paid back were "Solar bonds", which were not SolarCity bonds.
I can see why you would think that though - the PR around that only mentioned what they were paying early, not what was being inherited. (I think by design, but I have a cynical view of Tesla's relationship with the truth so that's only an opinion).
[0] http://fortune.com/2015/08/07/this-is-why-elon-musks-spacex-...
(EDIT: I was agreeing with you on the details, but also pointing out that there are effects here beyond the money directly raise that could help Tesla.)
What margin? They are losing upwards of $20,000 per car produced, and as of Q3, it's growing.
Sure, if you use their non-GAAP gross margin figures, which remove many costs that other auto manufacturers include, things look downright swell; non-GAAP accounting artifacts can do all kinds of things. But at the end of the day Tesla are burning cash at an increasing rate, even with production and deliveries increasing (around 100k cars per year). Where are all these profits from scale to come from?
Perhaps the 19% "Gross margin total automotive & services and other segment" margin they disclosed on page 51 of their latest 10-K filing?[1] Or the 23% "Gross margin total automotive"?
Taking the smaller number, Tesla made $24,741 per vehicle (and yes, that's the correct sig figs).
> Sure, if you use their non-GAAP gross margin figures...
Tesla hasn't reported non-GAAP figures since 2016.[2] Search the filing yourself: the word "GAAP" appears only eight times, and none of those refer to any non-GAAP accounting.
[1] http://ir.tesla.com/secfiling.cfm?filingID=1564590-18-2956&C...
[2] https://www.accountingtoday.com/news/tesla-backs-away-from-n...
https://seekingalpha.com/article/4153659-just-say-no-teslas-...
To summarize: 1. Tesla’s Calculation Ignores The Cost Of Its Service Center Network 2. Tesla Excludes Its R&D From Its Calculation 3. Tesla Allocates Some Supercharger Costs To SG&A 4. Expensing Of Warranty Costs 5. Front-Loading Of Gross Margin
You'd have to read the details on what each means or implies.
1. Tesla doesn't ignore it (the very next line is "Total automotive & services and other segment"), plus the author completely ignores service revenue which pays 81% of those costs
2. True, but Ford is stable and spends 4% of revenue while Tesla is growing and spends 12%
3. No they don't, Supercharger costs are all under "Cost of automotive sales revenue" on pp51
4. True, but this is tiny
5. Again, this is covered under "Total automotive & services and other segment" on the very next line, and again that bin necessarily includes additional revenue, not just additional costs as this author pretends (apparently 'forgetting' that car dealerships make money??).
The author's "adjusted" 2017 numbers arbitrarily chop 964m off revenue to "correct" for Tesla running its own service centers, but Tesla's service centers only incurred a net loss of 228m. The article is laughably inaccurate (presuming you don't hold a short position).
More FUD from the self-avowed Tesla shorts. Nothing more.
SpaceX is finally following through on its promises and has put a lot of the technical risk of its strategy in the past. All that risk was priced into old valuations, so with a now-reliable and frequently-launched vehicle in Falcon 9, and successful follow-through on Falcon Heavy (less of a big deal economically than the media brouhaha makes it out to be), that risk has gone down and so the valuation is going up.
The launch business is a big [1] (but not enormous) one, and SpaceX has gone from around ~15% to ~45% market share in two years [2]. In my understanding, US DoD launches are a small, but particularly-high-margin subset of that market.
[1] $8.8B annually, according to https://www.businesswire.com/news/home/20180116005923/en/Glo...
[2] 2015-2017, according to SpaceX testimony to a Congressional committee: https://www.popularmechanics.com/space/rockets/a27290/one-ch...
The commercial market will respond to price. SpaceX is all about lowering the price of space-access, and growing the market. More flights. New use cases.
Elon has a great grasp of microeconomics, at least the parts he needs. Tesla was also clever in this regard.
https://www.cringely.com/2018/04/06/the-space-race-is-over-a...
I'm a big fan of SpaceX, I'd prefer they stick to flying tourists and satellites. Railroads and airplanes got their start giving joyrides, why not do the same with space.
The funny thing is, 5 years ago you could have said: "I'm in the space launch industry, and no one I know thinks those reusable rockets are a good idea. The rest of the world is eking out every last bit of performance, and they are going to sacrifice payload capacity for this?"
The established industry does not always know the best way forward.
I'm not saying that you're wrong, I'm saying you have no way of knowing whether you're wrong or not. Maybe something changed, something that will seem obvious in hindsight, and that makes all the difference in the world. As others said - the fact that SpaceX can launch those satellites much cheaper than anybody ever could, historically, may be the thing that changes the whole equation. Or maybe not - we'll see... but just because you are in the industry, that doesn't make it any more likely that you're right about this.
However this approach only makes financial sense for SpaceX because of it's much cheaper access to space so it's not surprising that "no one else in the industry" thinks it's a good idea. It's not a good idea for them.
Basically like treating the satellite as backhaul for small cells, and also having the customer BE the small cell. No fiber laying or city government permits or telephone pole work or anything.
Maybe there are good technical solutions to this that I don't know about, but I'm inclined to believe that a satellite could communicate more efficiently with a handful of high-throughput ground stations at once than it could hundreds or thousands of smaller ground stations that are continually connecting and disconnecting as they gain or lose line-of-sight. That's a lot of control messages to deal with.
But what if their target market (at least for the beginning) were under-served rural areas? There are lots of villages and small towns in industrialised countries where the highest speed you can currently get is in the low single-digit MBit/s. Loads of people currently have no good internet access options but could afford SpaceX's service (based on what's publicly known about it, the estimates I've seen are that it will likely cost something between $50 and $100 per month). It would also be extremely interesting to businesses in such areas (Germany has quite a few of these, for example).
I think there might just be enough potential customers in sparsely populated areas to make this a profitable service. They can also provide backhaul for cell phone services in such areas.
Oh, and if they can get it working on ships (small sailing yachts, pleasure cruises, and commercial shipping could all profit from this) and airplanes, that might be another nice market to capture.
But the most important thing will be the cost of the recieving equipment. That will determine if it is affordable for domestic use or just in commercial or industrial applications.
Heck, it's not even certain to be direct-to-consumer. Starlink makes for a really nice backhaul system, which could be really handy to feed a bunch of smaller terrestrial cells, for example.
Instead they plan on using the BFR for that. I don't know what happens with that deposit that was made. Chances are it rolls over into getting whoever it was a flight on the BFR to the moon.
So Spacex just won a client for a long time, and that too at the cost of investors money..
In other words, and elaborate Pyramid scheme...
By that point where they can no longer produce F9 they plan to have a fleet of Falcon 9 on the books that could continue for quite a while.
Often markets where the barrier to entry is lowered this way tend to grow overall, so I don't think it is an unreasonable bet that the size of the satellite launch market will increase in coming years.
That’d put SpaceX in league with other telecommunications giants.
That’s, of course, not the only possible outcome, but that’s why the valuation is so high.
Additionally, there should be about 150-200 satellites above the US in the initial deployment.
They also plan to upgrade the satellites themselves (according to SpaceX's Mueller) so they're much larger. That should, in principle, allow them to exceed the per-satellite throughput of GSO birds like Viasat's which are over 1Tbps per bird.
They aren't competing with fiber in Denver. They're competing with high-latency and expensive satellite internet in rural areas. It's possible they may eventually dip into the cities a bit if they sell out their capacity and then build out their VLEO constellation (total of 12,000 or so satellites, but in much lower orbits enabling yet lower latency and higher bandwidth).
But Iridium's problem wasn't a lack of capacity, it was slow customer acquisition combined with very high interest rates and launch prices. If SpaceX fills up their network with customers to its capacity, they will be just fine.
For rural areas, there are wireless ISPs for rural areas here in Colorado where you put an antenna on your roof. You get line of sight to an antenna on a nearby mountain for internet service. I don't see how Starlink can possibly compete with that on a technological or cost basis. It seems like most of the western US could have service like this for many rural markets, if it's not already available.
So I definitely think Starlink could compete in that market. But more as an equal than as the only option.
If SpaceX is going to make huge returns on starlink, they will have to be price competitive with at least the DSL providers that are in many rural communities. Many of your remote rural areas in the US have at least 6 to 10mbps for ~$60 a month, and that's plenty for most casual users. Even for video streaming.
And that's now, when there's still large urban areas in a lot of countries on DSL. Once that DSL is phased out, rural areas are going to need better sattelite options or expensive long stretches of fibre to not fall behind the curve.
The main issue for rural satellite access is no longer bandwidth or even data caps but latency.
And if you have DSL in rural areas, count yourself lucky.
What about mobile users?
Starlink doesn't work for mobile users, either.
Essentially seeding their own demand in a market that didn't previously exist (cheaper launch on reused rockets).
As a side benefit, they get the ability to put a constellation in orbit (and continue adding to it) at a fraction of the cost of their telecom competitors.
Therefore, if Starlink suffers the same fate as Iridium (but without damaging the rest of SpaceX), that would actually be a big net win. Iridium emerged from bankruptcy, turned a profit and launched replacement satellites and is now in the process of a huge constellation refresh, using SpaceX's reusable rockets. If that happens with Starlink, that would be a complete success for creating launch demand.
I choose where to live because I can have two different fiber connections (for speed and a failsafe). How long will it be before satellite internet offers 2gbps symmetrical with low latency at reasonable prices?
I can hardly imagine a situation where internet access is so critical at a home that you need two fiber lines anyway. I have probably had 2 hours of downtime in the past 3 years with my cable connection.
The valuation is higher than the annual global launch market, but below what it's projected to reach in the next few years. If SpaceX can maintain their current share of the global market for a few years the valuation may be conservative.
Fortunately with our level of technological advancement, actually fighting in space is just dumb. Fighting from space could be useful, but would break treaty obligations with other spacefaring, nuclear powers.
But what is euphemistically called "defense" is far more often about offense - attacking those countries and people who displease or are inconvenient to you, making sure the world is structure to suit your* interests, usually at the expense of the interests, and often the lives of people elsewhere in the world.
* - In reality, the interests of the elite of your country.
At other times, it means selling F-16s, Apaches and munitions to Saudi Arabia, so they can carry out a brutal bombing campaign in Yemen. There are no good or evil regional powers, only national interests and the smaller nations which either get in the way of those, or help you achieve them.
Be that as it may, it still matters how the people in power think and behave. Some systems of government are better suited to reduce violence than others. For example, a dictator is probably more likely to order military intervention than a person who has to justify their actions to advisors, a congress and eventually a whole nation.
Obviously as you say things get murky when there are large interests at stake and no side is wholly good or wholly evil, but still some can be more wrong than others.
Accusing people who are not pro-government of hypocracy because the use public services is absurd.
You cant not pay my taxes and opt out of government services.
Is there a country in which spend the majority of your time? If yes, then that's your country. Don't like it? Move to another one or get politically active.
> That's a manmade concept that is forced upon me against my will.
Nearly everything in our day-to-day lives is a manmade concept – that doesn't make it any less real.
That changes regularly enough. Just because i like a place doesn't mean it's my country.
I think you're conflating geography with political structures. I feel at home everywhere I've been and i don't quite understand the insatiable jingoism because all places and people are great and not so great in equal measure for various reasons. That said I'm not naive enough to expect it to change and if it were to change i can't really even see a pathway for that to happen. It only takes one person to spit in the punch to ruin it for everyone.
There are about 1 billion cars.
Is the surface of Earth crowded?
Well, not only is the surface area of a single sphere in low-earth orbit (LEO) bigger than the surface area of Earth, you have to remember we're dealing with volume. We can move in three dimensions and thus there are many "surfaces".
There's an order of magnitude more space for things in space. ;)
We're not even going to get close to delivering 1 billion objects to orbit anytime soon. And even then, it wouldn't be crowded.
Sure, the surface of the earth is not crowded due to the volume of cars. But that doesn't mean that car traffic is trivially easy to solve or travel is automagically safe.
Space flight safety should mirror (or be better than) air travel safety (in accidents per mile terms); if space flight becomes more like cars, then space flight is probably screwed.
An orbit that would be opened up by cheaper launch services is VLEO (very low earth orbit) where orbits decay in a year or two. There's virtually no debris there because of the decay, and if you can launch cheaply enough, you can treat your satellites in that orbit as disposable--an ongoing expense rather than a capital expense.
I think what you mean is "let's speculate on what's going to happen over the next 100 years"
From Musk's various interviews it's a race between getting ~1M people living on Mars vs WWIII
There is the common knowledge amongst major powers that the next World War will probably be an extinction level event, so where as it's probably inevitable there's a reasonable chance that it won't happen for 100 years.
Musk estimates that it would take ~50 years (2070) to get a self-sustaining Mars base. Where as lots of his Tesla predictions have been off, his Space X predictions have been pretty good (e.g. re-usable rockets, expected launches per year).
Consider how many people thought “nobody could possibly vote for Trump”? Or pretty much any opinion on Brexit, for or against.
Then there’s the question of dead man switches starting, instead of responding to, a nuclear war. Only the people in charge of them even know for sure they exist, so how can we even estimate the chances they’ll be triggered by something short of an attack on their host nations?
The world has managed to not blow itself up for 60 years, we can speculate on whether that will hold long enough to build a self-sustaining base on Mars.
Further, the only estimate I have for how much processing power will be needed to simulate a human brain in real time is 10^19 flops, which means Moore’s Law needs to carry on for another 25 years just for the hardware to beat Musk’s Mars ticket price.
Better hope your singularity/mind uploading stuff happens before then. Maybe if there were some people left on Mars after the nuclear holocaust we would of had a better chance.
valuations are as much measurements of cult-ness as actual sustainable monetary gain. I'm suspicious of founder-led, constantly "reinvesting" companies or companies that stay private for too many years. Seems Bernie Madoff-y.
Recently, Alphabet and Google revenue growth has been around or above 20% per year. Take a look at their Q4 2017 earnings statement [1]. Here is a table based on figures in Item 6:
2013 $55,519,000
2014 $66,001,000
2015 $74,989,000 (+14% YoY)
2016 $90,272,000 (+20% YoY)
2017 $110,855,000 (+23% YoY)
2013 $46,854,000
2014 $45,998,000
2015 $44,294,000
2016 $41,863,000
Madoff's business was a scam and pyramid scheme that depended on a steady stream of new investors to pay off his old investors. Google and Coca-cola operate real businesses that collect revenue from paying customers; Google's is growing rapidly while Coke is holding steady or declining. There's no similarity to Madoff.
[1] https://abc.xyz/investor/ [2] https://s22.q4cdn.com/984101753/files/doc_financials/annual_...
Viewed as an advertiser (Google's real customers), I would like this number to come down over time.
You can sell off shares of the company to get your returns. Which will be taxed at capital gains rates.
Any money you receive through dividends will have had to pay corporate tax first.