
SpaceX Profitable as Musk Pulls in NASA Contracts, Google Cash - adventured
http://www.bloomberg.com/news/articles/2015-03-04/spacex-profitable-as-musk-pulls-in-nasa-contracts-google-cash
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Animats
If SpaceX can fly out their 2015 manifest, that will be impressive. This is
the year the Falcon Heavy is supposed to launch. Their first manned flight has
apparently been postponed; it's been "2-3 years" away for 2 years now.[1]

I notice they've stopped putting dates on their manifest for future
flights.[2][3] SpaceX is doing a great job, but they're behind their own
schedule. They're two flights behind on ISS resupply, and launched less in
2014 than they'd planned. They may be having scaling problems with their
organization. They have a a product and customers, but can't meet demand. This
may get better once they get their own spaceport in Texas finished.

[1]
[https://web.archive.org/web/20130802104411/http://www.spacex...](https://web.archive.org/web/20130802104411/http://www.spacex.com/dragon)
[2]
[https://web.archive.org/web/20141030024140/http://www.spacex...](https://web.archive.org/web/20141030024140/http://www.spacex.com/missions)
[3] httpd://www.spacex.com/missions

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mrfusion
How will the spaceport in Texas help?

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mtrpcic
The spaceport is being built specifically to accommodate SpaceX rockets. The
idea is to have the rocket automatically fueled when it gets docked, use
robotics to stand things up, and add a bit more automation to the overall
process. There are a few articles about it online, but I just found this one
from Bloomberg: [http://www.bloomberg.com/bw/articles/2014-07-11/elon-
musks-f...](http://www.bloomberg.com/bw/articles/2014-07-11/elon-musks-
futuristic-spaceport-is-coming-to-texas)

It's not the be-all and end-all of space stations, but it's better than
something that was built decades ago for a previous generation of vehicle.

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toomuchtodo
I don't believe launches from the Cape have enough fuel to boost back to Boca
Chica though, do they?

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wolf550e
Correct, also they are not allowed to overfly land.

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josephjrobison
I love how the writer phrased Google's incentive for investing as "Google has
a practical goal in linking up with SpaceX. It wants to beam the Internet to
hard-to-reach regions of the planet so it can take in more advertising
revenue."

While...

"'Space-based applications, like imaging satellites, can help people more
easily access important information, so we’re excited to support SpaceX’s
growth,' Google spokesman Aaron Stein said in a statement."

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skadamat
Agreed, it's a bit silly to assume that all Google cares about is ad revenue.
Plus, improving internet accessibility and making more revenue aren't mutually
exclusive. Why do self driving cars? Def no ad revenue there.

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cryptoz
I agree with you completely until

> Why do self driving cars? Def no ad revenue there.

Sure there is. Many people commute in their cars for 1-2 hours per day, when
it is illegal for them to look at ads on their smartphone. If Google makes
this legal, it's another 10%ish increase in the waking hours that people may
be clicking on their ads.

I think that Google's ambitions are a lot higher than this, of course. Self-
driving cars will be a lucrative business for them in numerous ways. And
increased ad revenue will be one of them.

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frandroid
The business model in a self-driving car is THE SELF-DRIVING CAR...

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edgyswingset
... unless they're interested in taking in a loss for each vehicle or only
selling to the richest people in the world.

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jdpage
The business model for the self-driving car is a computer-scheduled,
dynamically-provisioned taxi service cheap enough that nobody needs to own a
car in the city. Because self-driving cars don't need to park (they can just
move on to the next assignment or deprovision), if they catch on then in-city
parking decks can be redeveloped into business space or park space.

~~~
lazaroclapp
You forget transportation of goods. Pretty much all over-land cargo in the
U.S. and most of that elsewhere (less so, because trains) could be transported
by self-driving cars/drones. Not sure if that is larger or smaller than
transportation of people at this point, but it's still an astronomically huge
market.

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eru
US is actually pretty big in freight trains.

Mostly because, freight and passenger trains interfere badly. No passengers =
easier freight. A big wave of deregulation of the market a few decades ago
helped, too. The Economist ran a special about the US market a few years ago.

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skadamat
Makes no sense, SpaceX has been profitable almost every year they've been in
business. Musk & Jurvetson are on record multiple times of SpaceX's
profitability and how the aerospace industry is uniquely structured that way.

Edit: The article doesn't even mention any rep from SpaceX saying they're
profitable. This SEEMS like a guesstimate by the writer

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pkaye
Companies have multiple definitions of profitability which they use for the
desired effect.

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skywhopper
True, this is what the field of accounting theory is all about: how do you
best represent the finances of a company? The best way to do so depends
heavily on the type of company you're talking about and who wants to know the
information, but many companies choose to keep multiple sets of books--one
that follows the IRS's rules (this one is required), one that follows the
SEC's rules (required if they are a publicly traded corporation), one for non-
public investors, and one used internally allows management to make strategic
decisions and departments to make plans.

The existence of various ways of considering the finances of a corporation
don't necessarily mean that any one method is "wrong". But when you get into
questions of "is it profitable?" The answer depends a lot on who's asking.

In any one month, more money may go out of your checking account than came in,
but does that mean you lost money that month? Maybe some of the outgoing money
was paying for a year's worth of an expensive service, or was an investment in
some other company, or was the purchase of some assets that will allow you to
become more productive. In those cases, while your cash flow may be negative,
you can keep a set of books that spreads the cost of a year's worth of service
over the entire year, even if you pay it all at once on January 1. Or a
building you might want to spread the cost out over the duration of any loans
you took out to pay for part of it, or if you paid cash, you still may want to
spread the expense out over the 15 year expected lifetime of the asset.

Obviously the IRS and SEC rules have to be pretty standard across the board,
but within any particular industry or business model, a different
representation may provide investors or management with a more accurate
picture than the IRS or SEC rules would allow.

Obviously all of these can be abused, and investors should be skeptical and do
due diligence, but even 100% honest businesses may report a loss to the IRS, a
profit to investors, and a break-even for the SEC. They aren't necessarily
trying to scam anyone.

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hnnewguy
> _In any one month..._

Pretty much everything you mention in this paragraph is covered by accounting
rules a student would learn in year 1. Cash flow isn't profitability. Spending
on assets is capitalized, and they depreciate according to rules, not what you
"may want" to do.

Yes, there is always some leeway to play fast and loose with accounting, and
companies are always trying "adjust" earnings to suit to their business model.
4 times out of 5, it's horsecrap. That's why we have GAAP.

~~~
goodcanadian
Sure, but to take depreciation as an example, the rules do not necessarily
match reality. Sometimes an asset's practical life is longer than the rules
allow, sometimes it is less. These factors do not just depend on the asset,
itself, they depend on how the asset is used. If a company goes under, the
resale value of the asset may be worth more or less than its carrying value
depending on outside economic conditions, technology changes, or what have
you. Even the most earnest accountant can get things very wrong.

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tiffanyh
>> "SpaceX Profitable as Musk Pulls in NASA Contracts, Google Cash"

Re: Google investment of $1B. I'm not an accountant, but when did taking
investment money constitute making a business "profitable"?

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bengali3
I had to reread as well. The 'as' separates the events. ( but how else can I
get hot terms like SpaceX, Google, NASA, Musk and Profitable in a title!)

think 'John types on the keyboard at his house as Jeff arrives to work'

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Shivetya
Good to see an independent company do this. The only way space will be open to
world is for it not to be shacked in the hands of governments; nor should it
ever get stuck away as a corporate only endeavor. Let countries do the hard
science, the exploration part, and step out of the way when someone else can
do the mundane, especially when there are savings to be reaped

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sixQuarks
I didn't realize the cost of fuel is only $200-$300k for a space launch.
That's ridiculously low considering it costs more than that in fuel to cross
the Atlantic ocean in a 100-foot yacht.

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spiritplumber
I have to wonder, if Elon Musk is alive on earth today, what's the use of me?

He's done pretty much everything I wanted to do in life, only a little less
efficiently, and much faster.

What's the point?

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Retra
This is an unnecessarily depressing way to see things. What you should believe
is that your dreams are not meant for you. They are meant for someone much
like you who probably doesn't exist yet. Someone who will actually understand
what you've done and how you've helped them achieve what you would like to.

You will die, and someone else will follow in your footsteps. Make sure that
person has what they need to live the life you wanted, because you're probably
the only person who really knows what that is worth.

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spiritplumber
That's taking the long view, and it makes sense. I guess I'll have to find
someone who can use my work, and then go die.

Does anyone want a small robotics company?

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DiabloD3
No, but can I work there? At least for a little bit? Always wanted to do
something hands on.

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yeldarb
When's the IPO?

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cryptoz
SpaceX will IPO when their Mars Colonial Transporter is making regular trips
between Earth and Mars. Elon thinks that taking the company public before then
would result in a potential derailment of Mars colonization plans. Having MCT
making regular Earth-Mars trips before going public will ensure that
quarterly-return-investors won't try to interfere with sending millions of
people to go live on Mars.

Citation:
[https://twitter.com/elonmusk/status/342566837852200960](https://twitter.com/elonmusk/status/342566837852200960)

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tsotha
I think we can all read that as "not in my lifetime", though I may just be a
pessimist.

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cryptoz
MCT should be flying its first trips in about 15 years (Elon says 10-12, so we
add some). So I'd guess IPO in around 15-20 years. The real colonization
effort will probably be getting going in 20-25 years. SpaceX will want to send
about 80,000 people each year (or each launch window), and that scale is
probably 30-40 years away.

Most of us will see SpaceX go to Mars. And optimistically, I think many of us
will go too.

~~~
tsotha
Who is going to pay for it, though? If Musk is then, okay, maybe. But if he's
counting on Congress to pony up the cash it may never happen at all. Probably
won't, in fact.

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cryptoz
Elon will not wait for Congress. Who will pay for it?

1\. The people who want to move there - target price $500k USD.

$500,000 is the estimated price at which the demand is estimated at 80,000
tickets. Elon figures that if the price of moving to Mars is comparable to
buying a home in California, the number of people who could afford to go and
would want to go is ~80,000. So that's ~$40B or so.

2\. Elon - maybe worth $50-100B by then?

If we assume that SolarCity and Tesla will continue to grow for the next 10-20
years, then Elon's net worth will probably be ~$50B or so. Not enough to fund
a full Mars colony, but it'd be a really good start.

3\. Satellite internet profits

The recently announced satellite internet effort by SpaceX, financed by Google
and Fidelity, is intended to provide high-speed, low-latency global internet
access to billions of people. Elon expects to be able to fund part of the Mars
colonization project with profits from that.

4\. NASA / Congress

NASA already expects to spend many billions on making trips to Mars. It does
not seem unlikely that, in 20 years, they would be willing to join some
efforts and allocate $10-30B towards Mars colonization with SpaceX.

5\. VCs and billionaires.

The Martian economy may have a rough start but will probably grow wildly once
established. SpaceX already attracts VC funds in the billions from large firms
and billionaires, and this will certainly be amplified in the future.

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ctrlrsf
How could you not be profitable with NASA contracts and Google cash?

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mempko
so tax payers are padding Elon's pocket book. If a NASA official made that
much, people would complain.

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sandworm
I have trouble trusting business statements from companies in the space
industry. They play in a world of secrets, classified technologies and
continuous background checks. At every launch, over in the corner, sits a
uniformed member of the US military and a switch. That switch is to destroy
the rocket should it run off course.

SpaceX might be profitable today. It might be very profitable tomorrow. But
because of the classified nature of the industry that can change in a
heartbeat. Fall out of favour with certain government agencies and suddenly
that constant stream of background checks slows, deadlines get missed, and
profits become loss. There are many fingers on many kill switches.

Maybe the company is or will be a great success, but that success comes only
with permission. Investors beware: Balance sheets are only half the story. The
other half is not open for inspection.

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freehunter
Well the reason for that is because they're given exclusive access to
basically launch a missile from US airspace. With a mere change of payload,
that rocket can be used to deliver a nuclear warhead. So yeah, it's pretty
prudent to have background checks, massive amounts of oversight, and many kill
switches. An even if you have all the best intentions, it doesn't take that
much to accidentally crash into the ISS and kill everyone aboard. Look at all
the maneuvers SpaceX had to do to prove they were capable of docking with the
ISS.

Sure, politics comes into play. But the idea of a less-regulated spaceflight
industry doesn't seem feasible anytime soon. Even the airline industry is
still heavily regulated compared to even automobiles. That's just the risk
associated with the massive inherent dangers associated with flight.

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trose
To be fair, it's pretty improbable to accidentally hit the ISS. It takes
really precise maneuvers and calculations to get there on purpose.

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djloche
I think the case would be more like you accidentally used the thrusters too
much at the last minute and tore a hole in ISS. Or your docking mechanism
failed horribly and showed safe when it was not safe

