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SpaceX's Valuation Climbs to $25B with New Funding Round (bloomberg.com)
361 points by rising-sky on Apr 13, 2018 | hide | past | web | favorite | 263 comments

Honestly, I think this might be one of the only companies I know of recently where I've gone "huh, that seems like a low valuation". Is this a hype factor or do knowledgeable others feel similarly?

I would like to have a piece of that for wholly non-hype reasons. The space business is limited but the bussiness potential for Starlink, an integral part of the company, is simply monstrous.

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.

> (miniature receivers embedded in laptops, tablets etc.)

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 is no fundamental physical reason that a phased array antenna for the V-Band (wavelengths of 4 to 7 mm) cannot be fitted into a 14" laptop package or 10" tablet. They are in the final phases of FCC approval for such a constellation of 7500 sats, in addition to the already approved ~4400 Ka/Ku bands constellation.

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".

Even if individual device reception isn't possible, just using these for better backhaul access like for an office building or neighborhood would still be massively disruptive.

Let's not forget the middle ground, a "pizza box" that sits on the roof and provides 1Gbps wifi connectivity to a home is something that rents for $50 a month to hundreds of millions of customers, while the $15 version - to a billion customers.

Let's not forget the middle ground, a "pizza box" that sits on the roof

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!

The antenna needs to be able to see a lot of the sky, so that there are multiple satellites in its field of view at all times. Roofs are likely good, many window situations might not be.

BTW existing US regulations on apartments and the like require landlords to install roof antennae if technically required.

You'll need a pizza box sized dish to receive from Starlink. We'd have to wait for a hypothetical Starlink II or such before receivers in laptops become practical.

Can't get to Starlink II, without Starlink I ;) I'm excited about the possibilities, and really hope they can, as you suggest, continue to iterate and improve.

> Depending on how well they can productize long-term (miniature receivers embedded in laptops, tablets etc.)

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.

Why do you think they would do this?

Because they need the manufactures to put the radio in everything. If the radio is cheap enough everybody will have it by default so it is a no brainer for a large number of people to subscribe and use it. If the it isn't installed by default everywhere that shuts out a lot of potential market.

On the other hand, if SpaceX's product is vastly superior, they could capture market share considerably, then at a later time open source to get the rest.

If their business model is built around revenue from the network service itself, the more customers/devices connected the better - by opening up specs and patents, it opens up other companies to build those devices.

Better to sell gasoline than to build gasoline engines :)

This assumes a lot of technical aspects. I'd like to learn more about the actual capabilities of the network before making assumptions like this.

Correct me if I’m wrong but if SpaceX ends up in such a monopoly position there wouldn’t be much stopping another company from launching their own global satellite internet service. Even though SpaceX owns the delivery mechanism they couldn’t legally deny other companies wanting to use it at a fair price. If they do they would be sued immediately.

I think if other companies want to launch thousands of satellites on SpaceX rockets, then SpaceX shareholders would be okay with that too.

There are already other companies doing the same thing, mostly OneWeb.

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.

> 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.

Actually Oneweb and SpaceX did talk about working together a while ago, and you can see what happened: SpaceX ended up deciding to start a competing project.

The addressable market for space flight isn't as large as it will be yet. However, unlike software where coporations get a bye on this problem because the capital expense for consumers or others to adopt a given technology is low, the cost to companies to adopt technology like SpaceXs is really really high.

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.

To be fair, it takes time and money to build the new traffic SpaceX has not been low cost for long enough to enable the new markets. I would suggest if all the new markets had the correct foresight and built their satellites for launch starting now SpaceX would be forced to refuse a lot of customers (probably by raising prices until they are not low cost) since they can't make/reuse rockets fast enough yet.

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.

Valuations are based on financial analysis, not how cool or ultimately important something is. A casino could be valued higher than a hospital.

This is a very high valuation for such a capital-intensive high-risk company.

There needs to be an "SpaceX"-like developing the payloads as well. Most commercial payloads are very expensive and one -off R&D.

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.

All of the larger constellations, starting with Iridium, then Oneweb, then Starlink, involve building a factory and an assembly line. Iridium hoped other constellation makers would use theirs, apparently hasn't scored any new business and they're getting close to finishing. Oneweb has a factory under construction that's bigger, and Starlink's factory will be even bigger. Oneweb's is built in collaboration with Arianespace and also hopes to sign up business.

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.

I think given the popular culture status of sci fi and space fantasies, the exploitation of space travel is probably overhyped. It may seem to be on the cusp of our technological grasp due to the Star Treks and Star Wars, but it could be much farther than one may think.

It’s going to tend more towards deploying satellites rather than exploring Mars.

If you guys think social media and advertising is big business, wait until commercial space flight clicks.

It's kinda sad that social media and advertising is the most lucrative businesses and so many bright minds work on that instead of for example ...

"It's kinda sad that social media and advertising is the most lucrative businesses and so many bright minds work on that instead of for example ..."

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.

>>Industrial society is about producing garbage for the masses to consume.

As the saying goes, one man’s garbage is another man’s treasure. So don’t be so judgmental. :)

No, it's garbage. Individuals living in industrial societies are consuming way more than the ecosystem can support. So, either we need to get rid of people or they need to consume less. I prefer the option where they consume less. If it's not needed for a wholesome life it's "crap".

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.

> 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.

Sorry, are we disagreeing on some point? Maybe I missed something.

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.

> Physical consumer society is turning our biosphere to shit. Digital commodities, on the other hand, are much more lenient on the environment.

But often turns minds of droves of Humans to shit, and turns every moment of idle human thought into raw material....

I agree that Facebook provides digital value through its social media and messaging platforms, but Facebook’s business purpose is to sell things to consumers. I’d rather have engineers work in physical industries where they can improve goods and lower the waste produced, rather than simply sell more of less efficiently produced goods.

Plus unfortunately Musk is fairly well known for underpaying his staff. So you have to choose to take a paycut to switch from Google / Facebook. To be fair all of Apple/Amazon/Microsoft do at least sell actual products.

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'.

Underpaying what baseline?

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.

> Underpaying what baseline?

Facebook / Google

well most companies "underpay" if baseline is FB and Google

A generation or two ago all the brightest minds in the world were working on ways to kill the most people as efficiently as possible.

This is progress.

That's because the only real monetization on the internet is advertising, and ecommerce (which relies heavily on advertising).

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 actually sad. Social media and advertising involve incredibly complex and vast search spaces. The problem domains are massive and solving the issues in those fields, like scaling software and hardware, enables us to build tooling and infrastructure that every field can use. So those businesses are the bootstrapper for other businesses. Example: SpaceX wouldn't exist if Paypal didn't exist first.

Just needs a little time. It wasn't that long ago when only a few people had Twitter and FB accounts. IG even took a while to gain main stream traction.

Who thought the future would be giant chemical rockets (100x BFR?)thundering around the solar system? Transportation infrastructure for the solar system, Rail Road Tycoons of space. The potential is immense.

"Who thought the future would be giant chemical rockets (100x BFR?)thundering around the solar system?"

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.

Does the rocket equation still bite to hard if fuel production is outside Earth's gravity well?

That's why Musk had art of BFR sitting on a Jovian moon, for the same delta v to get into earth orbit, you can get anywhere else in the solar system, quick (relatively). Big rockets and large mass fractions enable all that, as my comment above indicates. Rocket equation is for real, but so are economies of scale.

There's some opinion there, but personally I would still say yes. There's a lot hiding in the "relatively" in le-mark's sibling comment.

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.

Even if you use fusion power you need to use some mass that you can accelerate and then expel opposite to your direction of motion. So while you would need less fuel, this is only really true if you also have what would amount to a miniaturized particle accelerator beyond anything we are able to build so far. Or put other words simply producing lots of energy is not enough.

Fusion-based rockets are still too far off. We need something now. Chemical rockets are monstrous, but that matters little once they are built and reused. Fuel is cheap enough.

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.

Once we have a real space industry I imagine there will be progress in areas like ion propulsion. You'll still need chemical rockets with >1 thrust/weight ratio to get off planetary bodies, but ion propulsion could be much better for long haul trips.

We've already had a lot of recent progress with ion propulsion. Not only are many satellites hybrid or all-electric, but NASA has launched several probes with a lot of maneuvering delta-v of ion thrusters.

My mind warps a little when I look at today's valuations. A company that can go to space, at one tenth or less that of companies that live off of social communication and advertising.

I'm not saying its wrong. Just, personally, cause for pause.

The question is, what is there of value in space? Science fiction has really misled people into thinking a human space faring society is economically feasible. As a human there's nothing for you in space except, well, basically, space cancer. Raw materials found in space can also be found at the bottom of the ocean or underground with less or similar extraction cost and right next to the only currently existing consumers of said material. 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).

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.

You're thinking in terms of current consumers. Ocean resources may be cheaper for Earth use, but space resources will be cheaper for space uses. We're finally on our way to bootstrap a space economy, and it has a good chance of being self-sustaining.

> 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.

while it might be possible for a space economy to exist I'm saying that humans will never stay in space for long periods of time - the space economy (except for the satellites and stuff we have now), will basically revolve entirely around space tourism - so all those resources and manufacturing techniques will only be valuable insofar as they support space tourism (which will only be a fraction of the overall tourism industry, i think it would even be relatively niche).

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.

Well feel free to hang around on Earth while the rest of the species launches exciting scientific and engineering endeavors.

> 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.

Musk says things close to this. He believes we eventually either expand into space or go extinct.

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.

Also, survival aside, I'm of the opinion that "just because" is a perfectly valid reason to set up colonies, terraform planets etc.

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.

this is where I'm saying people are totally brainwashed into thinking the moon landing is greater than, I don't know, the development of the first compiler. The first compiler dwarfs the moon landing in terms of implications.

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.

Three main points here:

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.

[0]: http://madeinspace.us/mis-fiber/

3. nope, don't buy it. the real frontier is intellectual in nature not physical.

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.

1. I didn't write a word about terraforming. There are a thousand options for sealed habitats on Mars. Sad little caves at first, enormous indoor cities later. Once the economic incentives line up it'll happen.

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.

Space is of value in space. Rich people want to go there for fun and satelites need to be put there for telecommunications. You talk about colonization and raw materials, but neither of these are the current business models being pursued.

A dyson swarm, even a very small one (relative to the size of the sun), would provide insane amounts of energy.

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.

You're thinking a lot further in the future. Company valuations are based on real money today. There are no dyson swarms or Mars colonies. Tesla launches communication satellites into low earth orbit and that is how its worth is calculated.

time when company valuations were based more on today real money than future prospects, hype and speculation, is long gone.

The comment I responded to was talking about the overall purpose of going to space, including the future.

I don't disagree with you about what the space industry looks like today.

> You're thinking a lot further in the future.

That is what every pyramid scheme expects out of its victims.

The only immediate value is satellites for telecommunication.

Next decade or two, maybe low-gravity vacations?

Well Space X is private if it was public I bet it would have higher valuation. (I would gladly invest some money not for ROI but just to help fund what they are trying to accomplish)

Still, let's hope it doesn't become public too soon - it would get immediately reduced to short-term profit-banging corporate machine by the biggest shareholders. For now, we need a company that's driven by a long-term vision (of something else than money).

Well I personally bet if SpaceX was public it would have crushed to the ground long ago.

Yep, I'd switch a large share of my family portfolio to SpaceX if --and as soon as-- it were possible.

Oh, yeah, downvoted without an argument. I've been investing in advanced-technology stocks for the last two decades, with happiness. Because that's where the future and growth are located.

I don't know why others downvoted you, but buying a post-IPO stock is not directly funding the company the majority of the time.

If you examine advanced tech companies over the last several decades, it is clear that reasonably investing in them as a portfolio is a highly profitable adventure.

I don't doubt it, but beware of survivor bias. Several "advanced tech companies" don't exist anymore, and not taking them into account would be misleading.


"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 is that not taken into account by a portfolio strategy? if one part goes to zero and another part grows 350x over 20 years, what is the problem? even assuming a complete lack of thinking about failing assets while they fall to zero.

Another way to measure is replication costs.

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.

A long shot, but is there any way for small fish to invest in a private company like that without knowing the right people?

Private placements are normally for accredited investors:


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.

Thanks. Figures that's the reason for public companies and stock exchanges in the first place. However where lies the boundary? I assume all institutional middlemen are prohibited? You mention family and friends. While family is a legal category, friends is extremely vague.

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?

Yes, exhanges is where you can buy companies that meet certain criteria, such as publishing earnings forecasts and many other things to the public and not to anyone ahead of time. Devices to protect small fish against being ripped off by company insiders.

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.)

Welcome to why the cryptocurrency market exists. Can't wait till the accredited investor rule dies

I'm pretty sure the law has won the first round in that particular fight.

This might also be another way how Elon can keep financing Tesla. SpaceX has in the past bought bonds of SolarCity, with this new cash perhaps SpaceX can buy some Tesla bonds to save it from running out of cash this year.

On the contrary, Musk reportedly took out loans against his Tesla shares in order to participate in this round - to the tune of $100 million.

[0] https://techcrunch.com/2018/03/16/spacex-is-making-big-money...

I don't see where the article states that Musk took out a loan against his existing shares to literally buy more at a higher valuation.

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.

He would have taken a loan against Tesla shares to buy SpaceX shares, that is definitely legal (albeit risky considering the volatility of TSLA). The reason it's likely a loan is that he doesn't have $100m sitting around.

Please no. SpaceX is too important to be pulled into the financial mess of Tesla and Solarcity.

IIRC Musk said that Tesla was supposed to be the cash crop that eventually funds SpaceX.

It's far more likely to be the opposite, at least for the next 4-5 years.

Can you point to the source? I've been a SpaceX fan for a long time and never heard him say that.

Starlink, SpaceX's satellite constellation, is the cash crop.

> Can you point to the source? I've been a SpaceX fan for a long time and never heard him say that.

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...

Don’t remember the source, but I’ve heard Musk say this between the lines in an interview. I.e. something along the lines of «you need a lot of money to get humanity to Mars» on questions of Tesla’s long-term profitability.

The more cash crops you have, the merrier!

SpaceX is the only reason I see Tesla not going bankrupt. Not necessarily by directly funding Tesla, but Musk can certainly prop up Tesla by leveraging SpaceX's success in various ways.

Anyone who saw the SpaceX falcon heavy launch should have got the message that SpaceX and Tesla are BFFs.

Too important for what?

For the second space age. For an industry in space, for getting humanity beyond the confines of this single planet.

If we are dependent on a single company to get beyond the confines of a single planet, we are probably stuck here.

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.

We're not dependent on a single company in principle, but it so happened in the last 10 years, that they were the only one who cared and had the means to do something about it. Now that they've rekindled the interest and shown the way to lower launch costs, competitors are showing up. Which is good, but I still fear it's early enough that if SpaceX folded now, other space companies would follow, and we'd be stuck again in the early post-Shuttle era.

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.

You realize this is not how it works? SpaceX is a pioneer: they show the path, others follow. There is no dependency on innovation.

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?

SpaceX also has a real dependency on political agenda and budget votes (as do all of Musk's companies as the case is: Tesla and SolarCity were built heavily on tax incentives from green initiatives, SpaceX depends on funding from NASA, and the Boring Company looks like it's gearing up to cash in on all those "infrastructure" promises everyone in our government's been demanding). Congress can absolutely decide to fund SpaceX less, or charge SpaceX more for use of government facilities, just as easily as they can pull the funding out from under SLS if they choose to.

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.

That is mostly false. Neither Tesla nor SpaceX depend on government funding.

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.

Uh, most of SpaceX wouldn't exist without the $3.144 billion SpaceX was given under the Commercial Crew Program: https://www.nasa.gov/content/commercial-crew-program-the-ess...

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.

The overwhelming majority of the crew Dragon money was awarded in the CCtCap contract, in 2017 -- by which time Cargo Dragon and Falcon 9 had both been flying for years. And crewed Dragon development is still in progress; oddly enough, one reason they're not flying yet is NASA is still trying to finalize the certification criteria for actually flying crew.

As others have noted, you really don't know what you're talking about.


You are just continung to show that you total ignorance of the space industry, NASA and SpaceX.

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?

I don't have irrational hate. And I wish SpaceX the best on their endeavors and look forward to seeing what they accomplish. Why the irrational fanboyism? Why are you taking a realistic discussion of the company like a shot across the bow?

Maybe its not hate, but it is irrational. You are either lying and misrepresent the facts, or you just simply don't know what you are talking about.

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


> 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.

Because the discussion is not realistic. You are misrepresenting facts for some reason.

> 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.

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.


I will give you some examples of how everything you say is utter garbage.

Lets luck at the COTS program form NASA.

They selected two companies, SpaceX and Kistler. SpaceX succeeded on everything and they flew the missions at the price agree on in the contract (witch was globally competitive). Kistler was not able and so they went down. The program succeeded and the US now has the by far the cheapest ISS supply vehicle and the only one that can return cargo (SpaceX btw added this feature on top themselves, it was demand by NASA).

Once the contract COTS 2 was negotiated, SpaceX again made the single best and cheapest bid and was again selected in a competitive process against companies that are far larger and have more pull in Washington.

The same goes for Commercial Crew. It was a competitive process that included many companies who have far more access to politicians and career bureaucrats then SpaceX had. And yet again, SpaceX was on of the selected, BECAUSE THEIR OFFER WAS JUST SO MUCH CHEAPER THEN ANYBODY ELSE.

Have you ever consider that maybe SpaceX gets these contracts because they are just far cheaper then anybody else?

Many of the numbers I am talking about here are public. You can go look it up. The reality is your argument is absolute bullshit that has absolutely no bases in reality.

Now that was NASA, lets look at DoD. Clearly SpaceX only gets all these contracts because they play golf with so many generals, right?

Again, totally false. Its the exact opposite, ULA had long been the prime contract to the point where the launches were no longer competitively bid. It took multiple law suits against the DoD before SpaceX was even allowed to compete. Then they had to go threw a very hard certification process.

Once SpaceX was allowed to compete they massively underbid the competition to the point where ULA has actually stopped even bidding because they know they have no chance at winning in a fair competition.

Also, the notion that SpaceX after 2008 depended on government contracts is totally false. Only about 1/3 of SpaceX launches are for the US government and they have tons of private launches on their waiting list.

All in all, your entire argument is totally false.

You'll note that I praised SpaceX. My denigration was reserved for Musk in particular.

Why did you include Gates?

But why is that important? It sounds really cool, but why do we want that? As far as I know nothing useful, that has benefited humanity, has come from the ISS or going to the moon.

Has nothing to do with his question.

"nothing useful that has benefited humanity"

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.

That's like saying world wars are beneficial to humanity because a bunch of shit gets invented to fight wars. No. Wars and so far space travel has done nothing for humanity. If you would have instead focused on inventing the inventions that came with fighting wars instead of fighting wars we still would have the inventions but would have been much more efficient.

Not really. That's not how the world works. Otherwise we'd have jumped from stone age straight to nuclear energy.

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.

Making it to Mars http://www.spacex.com/mars

SpaceX raising $507 million isn't going to dent much as it pertains to Tesla's funding needs, so that's almost guaranteed to be a no. Maybe they buy $50m or $100m worth of Tesla bonds, it wouldn't be a meaningful scale vs their funding needs in 2019-2020.

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.

Generally Musk's finances aren't built around direct sales of his stock or transfer of capital from one business to another; it's all about borrowing using his ownership stakes in his companies as collateral [1].

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...

Musk borrows against his Tesla shares to fund his investments into SpaceX and SpaceX owns Tesla bonds. The two are pretty significantly linked financially. If Tesla has issues with paying back bonds, it would probably impact SpaceX.

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).

Tesla paid back (almost all of) SolarCity's solar bonds in 2017. Only Musk personally (and his cousins) still hold that debt.

[0] https://electrek.co/2017/04/14/tesla-solar-bonds-elon-musk-s...

That's definitely not true -- They have a $230m Solarcity bond due Nov 2018 and then another $566m inherited Solarcity bond due Nov 2019.

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).

As far as I know, solar bonds are the only type of SolarCity bond that SpaceX owned.

[0] http://fortune.com/2015/08/07/this-is-why-elon-musks-spacex-...

The parent was talking about SpaceX directly using the raised cash to assist Tesla, which is what I was replying to. That's not what you're talking about.

That was exactly my point; that SpaceX directly transferring cash from one company to another is indeed unlikely, but that the higher valuation of SpaceX is a bigger help for Musk's finances in general.

(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.)

Well not directly but by buying bonds. There is already precedent with SpaceX buying SolarCity bonds so it's not totally unlikely given Tesla's financial woes.

This may constitute security fraud, as it is almost exactly the same as what got Shkreli in trouble, to my knowledge

Shkreli got in trouble for lying to his investors about losses in his hedge fund. He paid them back later, but to the feds that was a little like robbing a bank, then winning the lottery a few years later and deciding to give the bank its money back.

As long as Musk's companies accurately disclose what the money they're raising is going to be used for, I don't think there is any issue. Shkreli was convicted because he claimed to investors that he was going to invest in x but actually invested in y.

Well, the board members of SpaceX, including musk, have a fiduciary responsibility to SpaceX only, when making decisions about what to do with SpaceX money. So investing or loaning money to Tesla or otherwise giving them some kind of sweetheart deal would inevitably open SpaceX up for a lawsuit from SpaceX shareholders.

Can imagine very well that the whole Musk cult implodes with an accounting scandal of that sort.

I think Elon's plan to make cash for Tesla is to produce a lot of cars. The margin on each car is decent, the problem is Tesla isn't making enough of them to fund its gigafactory/Fremont build-out and all of its service centers and stores. If they increase the revenue due to many more cars being delivered, that's the ticket Elon is after.

>The margin on each car is decent

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?

> What margin? They are losing upwards of $20,000 per car produced, and as of Q3, it's growing.

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...

Not sure what the other guy meant, but this article goes over the differences in how Tesla reports gross margin:


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.

Yikes, this one's even worse. Briefly,

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.

that's a great way to lose your CEO job and get sued by your shareholders.

Well, Tesla bailed out SolarCity to the detriment of Tesla shareholders and that turned out ok for them (Tesla management) it seems like.

Tesla shareholder lawsuit against SolarCity deal set to proceed https://www.reuters.com/article/us-tesla-shareholders/tesla-...

Exactly. That would be a violation of fiduciary duty, which is not a good move for CEO

I wonder if SpaceX valuation is being accounted for the fact that they might bail out Tesla like Tesla did with SolarCity.

Tell me this isn't because the vision is defense contracting. Are people banking on Space Force here?

tl;dr No. Commercial launch is a big market, and SpaceX is eating it alive.

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...

For a tiny bit more context, the military market is a limited. Defense has N number of launches they need, regardless of price. If SpaceX pushes prices down by 50%, demand will not double or triple, at least not fast.

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.

Cheaper launches gives defence new use cases too. They'll start to launch smaller satellites into more orbits. It'll take time to change their processes, but they'll be launching small/cube/chip sats with all sorts of sensors.

True but the DoD has a very long planning horizon. So it will take time for them to react.

I can say, buy not attribute, that they are in fact reacting quite quickly.

And for even more context, military spy satellites tend to cost a lot, somewhere in the $billions so way more than the launch. Commercial satellites often share common components and typically cost a few $100 million so not that much more than the cost of the launch. And in the commercial sector the transition to cheaper satellites to match cheaper launchers might be more feasible.

Good point. I hadn't even thought of that. Along with long horizons generally, this probably explains a lot about militaries' "price inflexibility." Launching is a smaller component of more expensive whole.

Same with the big NASA science payloads - if you're spending $8-9B on JWST, paying a $100M premium for a launch vehicle you're slightly more confident in is totally worth it.

And then there's the SpaceX space based global internet service coming soon to an orbit near you. They are predicting over 20 billion in revenue by 2025 if I recall correctly.


I'm in the wireless broadband industry, and no one I know thinks this space-based internet is a good idea. The rest of the world is going to small cells and they are going for a cell the size of a large city?

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.

> I'm in the wireless broadband industry, and no one I know thinks this space-based internet is a good idea. The rest of the world is going to small cells and they are going for a cell the size of a large city?

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.

Nobody in the mobile phone industry thought that iPhone was a good idea for Apple (no keyboard = hard to do email, no business market; only one operator, with bad network that was inefficiently used by iPhone; too expensive for regular consumers - the competition is fierce, many others tried to get in and failed).

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.

My understanding is that Google has already invested $1bn in the this tech with SpaceX. SpaceX's current $500m raise is for deploying this tech. You may be aware that Google has a had a bit of trouble with its ISP roll out using small cells and fibre. This system would allow direct last mile access.

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.

Damn, I'd prefer Google stay out of this. Well, at least it's not Facebook...

If I were them, I would do both with the same stone: Customers get terrestrial repeaters with their satellite antennas, and provide service to the local neighborhood. If you are in the vicinity of someone with a roof box, you connect to/buy from them. If not, you invest in a roof box and sell internet back to "the grid", rather analogous to roof solar.

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.

That might be a pretty good option just from a protocol overhead standpoint.

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.

First up, let me be clear that wireless technology is utter black magic to me. SpaceX's satellite internet service may or may not work in densely populated areas, I have no idea.

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.

I don't see any reason they couldn't fly more satellites if their customer base justifies it. The problem they have relative to ground-based systems is the satellites are not stationary. So to increase coverage density on one spot, they have to increase density for everywhere else on the same orbit.

It might not be a good way to provide Internet to urban centers, but for those who live in low-population-density areas it could be a compelling option (i.e. it beats dial-up).

I wonder if talking about a "cell" is really an appropriate comparison. The Spacex technology is more an alternative to microwave fixed links and fibre backhaul. Just without any restrictions imposed by terrain, remoteness or time constraints.

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.

They're not a cellular network; their base stations are not innumerable tiny mobile devices. They'll be small but sizable permanent mounts, so they can control geographic density if needed. It's a different beast so the same pressures don't apply.

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.

I don't think SpaceX ever flew tourists. That would be Virgin Galactic.

I believe they took deposits to fly people around the moon this year but ended up canceling those plans

Sort of. They did take a deposit but that had been based on the assumption that the Falcon Heavy would do the flight with a Crew Dragon. Those plans have been cancelled as SpaceX no longer plans to use the FH for human flights to the moon (or anywhere, even orbit).

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.

Neither of them did, both plan to.

This startup is just another vaporware to continue funding SpaceX. The money invested in it will ultimately end up in Spacex as it will be used to send all these satellites into the orbit.

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...

BFR is arguably the biggest risk SpaceX has ever taken.

In absolute figures, perhaps. Relatively, Falcon One was by far the biggest risk.

Even if that doesn't pan out, SpaceX has a profitable business on its hands.

They're planning to discontinue Falcon 9 to free up factory space for BFR production while continue launching with their existing stock of reusable rockets. So there's quite a bit of risk there if BFR ends up getting too delayed.

Can't they just keep making Falcons if they run into delays with BFR?

They could but they'd have to retool the converted factory space back to making Falcons and there would certainly be disruptions.

They will not stop producing them until they are sure they can pull of BFR. The CTO has already said that Falcon 9 will be available as long as people ask for them.

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.

That, and also I think the satellite market may be in the process of being disrupted, as in: it has become much, much cheaper to build and launch a satellite, in particular with CubeSats.

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.

Market share is a really fluctuating/bad metric here, as the sample size is so small. This number is not consistent.

Looking at the charts, there doesn't seem to be a lot of noise in the data. 80-ish launches a year among all providers isn't that small of a sample size.

I think the main thing is their Starlink satellite internet constellation, which I recently saw was estimated to bring in $30 billion/year once it’s fully operational. They also have basically taken over the satellite launch market, and I think their recent progress on the BFR isn’t hurting.

Could be more like hundreds of billions in the very long-term, as they plan to just keep growing it in size, capability, and per-satellite mass. Enabled by BFR.

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.

Maybe... but I see the system being bandwidth constrained. If each spacecraft is 20 Gbps and how many will be visible over the USA at a time? 50 or so? So 1 Tbps for the entire country? That's less than the capacity of a single neighborhood in Denver on gigabit fiber. Not to mention the capacity of 4G networks across the country. Some of this smells like the first round of Iridium to me.

That's just the initial system, and they'll be selling globally, not just in the US. It's still about 10 times the aggregate bandwidth of their nearest competitor (OneWeb) plus the later constellation is going to be much larger and more capable.

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.

Iridium's problem was they didn't know who they were marketing service to. It seemed like a good idea before cell service was common and before roaming agreements. Those things were in place before the constellation was operational. So they tried to target international business travelers and failed. The restart of Iridium succeeded by selling to the US government. I wonder if Starlink has the same problem, at least in the US.

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.

Regular satellite internet already provides price-per-gigabyte that is competitive (or superior to, in the case of Viasat) with mobile internet services. It's the latency that's lacking. With a LEO (and the then VLEO) constellation, Starlink could actually do better than some mobile internet providers as far as latency. 25-35 milliseconds for Starlink (maybe more in some cases) versus like 80-100 milliseconds for LTE providers (much worse for 4G and terrible for 3G).

So I definitely think Starlink could compete in that market. But more as an equal than as the only option.

Latency? No, the problem is price and data caps.

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.

Keep in mind that 6-10mbps isn't going to be enough for casual users in a few years. Take gaming for example. Companies are regularly releasing 6-10 GB patches willy nilly because they assume their customers can download them in a matter of minutes/hours.

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.

Fixed wireless plans also have data caps, and you can get satellite unlimited plans affordably now (with soft caps, but so does most everyone else), at speeds greater than DSL.

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.

I'm not talking about competing with mobile networks. I'm talking about fixed wireless service.

What about places with no mountains?

What about mobile users?

Antennas on towers, like for cell networks.

Starlink doesn't work for mobile users, either.

The key point is that, if the satellites are cheap enough, they're a safety valve for surplus rocket supply. Or padding if schedules don't make for full payloads.

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.

Yeah, if Starlink merely breaks even (and continues to grow), they will have pushed the commercial launch market potentially one or two orders of magnitude larger (in terms of mass) than it is today. It'll help pay for BFR, their Mars rocket.

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 was thinking recently.. once you have data uplink anywhere on the planet, whats stopping them from blanketing the planet in cell phone towers and taking over that industry as well? They won't be limited by where you can run fiber like the other guys.

In super high density areas, fibre is going to be cheaper and faster and more easily maintained and upgraded etc than satellites

I think "super high density" is probably hyperbolic. As density increases shared airwaves become more crowded and wired infrastructure becomes cheaper to operate. I can see wired internet being competitive for a long time. Even in places more like St. Louis than Manhattan.

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?

The use case of someone who needs two gigabit fiber connections to their residence is exceedingly tiny and would have no bearing at all on spacex's market.

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.

Starlink is intended to provide 1Gbps service to end users with low latency, especially if you’re accessing sites on the other side of the world.

Are you camping out at the datacenter again?

Providing backhaul for rural cell towers is expected to be a big part of Starlink's business, yes. Same for O3b and Oneweb.

Pretty sure the are just banking on SpaceX dominating the global space launch services market for the next few years. Signs increasingly point to this being a safe bet.

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.

It’s probably less about fighting in space, and more about rapid transport, and cheaper (and therefore more) sattelites for a number of purposes. It’s hard to imagine that intelligence and military agencies aren’t thrilled with the idea of being able to lift more mass for less money. That’s true for everyone other than defense and espionage though; cheaper launches raise all boats.

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.

I thought the only treaties affecting weapons in space were specific to nuclear explosives?

Is there anything bad to be defense contractor of your country?

A purely "defense" contractor, protecting the country itself? No, nothing wrong with that.

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.

What about protecting yourself and allies?

By actively seeking conflict you are increasing the risk of retaliation. That's the opposite of protecting yourself.

But good for business!

As a defense contractor, you build stuff that end up killing people. Especially if your country is aggressive toward others / have imperialist view.

What about if that country especially helps other countries to fight for there freedom and protects them from imperialist view countries and with that saves lives in that countries?

Who's that?

My country Georgia received a help from the USA and EU countries when Russia invaded us. Their help saved lots of Georgian people lives. Another example Ukraine, USA and EU countries are helping Ukraine to defend themselves against Russia. Only people that never saw real war think that improving the defense of their country is "killing people" when in reality it is opposite.

Realities get murky when you talk geo-politics. Some times it's in the interest of the US, to protect the self-determination of a nation, especially when it goes against the interests of a geo-political adversary. We see this with your country, Ukraine, Latvia, Lithuania, Estonia, etc.

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.

>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.

I don't have a country. That's a manmade concept that is forced upon me against my will.

I feel the same way — my identity is not at all attached to the nationality listed in my passport — but in the context of working for a defence-sector corporation, the argument still applies. Whoever the corporation sells stuff to is, for the purpose of the argument, “your” country.

So no one is protecting your rights and property? There are no emergency service, firefighters and other public services that you directly benefit from?

There are and i happily pay my taxes but not happy about them being spent to kill people id probably be friends with if i met them in real life.

So if somebody breaks into yoir house takes your money you cant complain because that guy sometimes cleans the house or buys cable?

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.

> I don't have a country.

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.

>Is there a country in which spend the majority of your time?

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.

Yes and no. SpaceX's main revenue generator at the moment is sending satellites (government and non-government) into space. They will likely always get revenue with this, but it's not their end goal for profitability.

No. I think this is people thinking that SpaceX is going to capture more market share from ULA and Ariannespace.

It’s called Space Fleet dammit!


Does anybody else worry about having Wall-E kind of situation, Commercial space launch being cheap, We might end up having lots of space junk. At least with the previous price point, this was less probable.

Space is vast... far bigger than you're imagining. Probably the best analogy, that I've heard, to put your mind at ease: think about how many cars are on the road today.

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.

This is true, but the very high orbital speeds means there can be a surprisingly high frequency of collisions even at extremely low density.

That's also true. Do you have any material I could read on how this frequency increases with the rate of spacecrafts deployed?

A good place to start might be the original paper by Donald Kessler, "Collision Frequency of Artificial Satellites: The Creation of a Debris Belt" http://webpages.charter.net/dkessler/files/Collision%20Frequ...

This is actually a really great analogy for not the reason you're thinking, because of the fairly common incidence of car accidents.

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.

That will probably create another industry sector, so I’m not worried.

Crowded in LEO and the narrow ring of GEO, but elsewhere it's pretty open.

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.

There are already companies our there that track all this junk (a percentage of it at the moment) and even companies proposing ways to clean it up.

Let's be real - humanity is going to die out before we regularly visit other planets.

> Let's be real

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).

I don’t trust to common knowledge.

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?

Fair enough.

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.

I think we'll achieve singularity level mind uploading before anyone physically goes to any other planet. And, to be honest, makes a lot more sense to do it that way. Carrying humans around, with limited lifespans and feeble bodies, makes space travel wasteful and stupid. All those problems dissapear once people are only software. I even think trying is a waste of time, I wished Musk was focused on brain research, not rockets.

Disagree. The tech to reach Mars has already been invented, and while the cost needs to decline Musk has a plan to get there from here; conversely nobody yet knows how much we have yet to learn about brain function in order to make the simulations people instead of p-zombies (or even non-functional, not sure which is worse), and right now (despite Musk’s brain interface side project) full brain scanning requires death.

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.

One thing is having the technology to send a rocket to Mars, another thing to have a completely functional and self-sustaining colony, that doesn't depend on Earth supplies and that offers the possibility of a life that is not just growing potatoes and looking at rocks from the habitat's window. I suspect we're hundreds of years from the latter.

That’s reasonable, but you did originally say “physically goes to” rather than “colonises”.

I think it's possibly the same or similar. I don't buy the pioneering mission with people who go knowing that they're not going to get back and possibly die of radiation exposure. I think nobody is going up there until there's a lot more tech in place, at least at the level of The Martian, ie: knowing how to get them back and guaranteeing survival

A single ballistic missile sub has the potential to nuke 192 cities in a single go.

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.

I hope so too :) but what I mean is even removing apocalyptic scenarios, I still think serious space travel with flesh and blood humans is never going to happen

There's a chance it will die out, nuclear war or a meteor is always a possibility. Don't think it's anywhere close to being certain. There's a good chance we'll survive and regularly visit other planets.

What do you mean “die out”... like total extinction?

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