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What seems to be missing from these discussions is the gigantic bet that SpaceX is making on Starlink. They performed 15 launches for this constellation already

by kanox 6y ago

What seems to be missing from these discussions is the gigantic bet that SpaceX is making on Starlink. They performed 15 launches for this constellation already that they paid for themselves. If the internet service business doesn't generate revenue the launcher side will see a majority of its launch manifest evaporate and book enormous loss. From the outside it seems that a commercial failure of Starlink would bankrupt all of SpaceX.

grecy 6y ago
That is how Elon has always run. He has said many times the slower-than-ideal ramp for the Model 3 assembly line very nearly bankrupted Tesla (it was within a few months). When the first two SpaceX launches failed he spent all their remaining money on the next one - if it failed, SpaceX would have too. He has also said if either Tesla or SpaceX go bankrupt, so does he. He is literally betting the house with every major decision.
- 93po 6y ago
  I think this is admirable. He's clearly very passionate about his companies and though I'm sure money is a motivating factor it's not his priority - he's said as much before and he doesn't exactly live a lavish lifestyle for a billionaire
apeace 6y ago
> If the internet service business doesn't generate revenue the launcher side will see a majority of its launch manifest evaporate Can you clarify this? I don't know much about it but can't see how they relate.
- mlyle 6y ago
  SpaceX has launched 21 times so far this year. 12 were Starlink. About half of SpaceX's launch manifest is launching their own satellites for Starlink.
  - 1123581321 6y ago
    Is there any elasticity to that demand, i.e., has SpaceX priced launches to only attract 12 so far this year, or would they still only attract that many if they lowered the price?
    - kanox 6y ago
      There is almost no elasticity in current market: DOD, NASA and traditional GTO comsat launches are few in number and not particularly sensitive to price. Payloads routinely cost several times the price of a launch so cheaper launches have little impact. The satellite service business is much larger than the launch business and this is why SpaceX is attempting to enter.
      - mlyle 6y ago
        > Payloads routinely cost several times the price of a launch so cheaper launches have little impact. Little immediate impact. Of course, if launch gets way cheaper, the things you do to maximize longevity, fault-tolerance, and mass efficiency start to matter less... That is, payloads are expensive in part because launch is expensive.
    - nickik 6y ago
      The problem is that the main business of SpaceX and Arianespace was GEO sats. Those have been in a slump and fewer launches existed. Maybe that will pick back up, but the largest part of that were for Internet and after that TV, both don't seem like huge growth markets. Small sats have become so powerful, that on a SpaceX Rideshare you can deploy basically a whole constellation in one shot potentially. Most sats today are no longer that large and heavy that you have dedicated launches. Many of their launches are government, both domestic and foreign. SpaceX has not reduced the price 'that much' in the last couple of years. They were already the cheapest on the market and opted for more profit, so they could have better cashflow when going into Starship and Starlink. What also has to be considered is that even that 12 is a pretty large number. Large rockets usually didn't fly that at the rate SpaceX flies them. The sat market is slow the respond, 4 years are very little in it. Hopefully people will come up with more great ideas how to use the capability SpaceX offers.
bearjaws 6y ago
I believe the business case for Starlink is solid, my parents currently live in a rural area with dial up. They have a few dozen neighbors all on dial up. They currently pay $70 a month for their phone lines, and I bet a couple million Americans are in the same boat. They could probably cancel their entire bill with ATT if Starlink is reliable, as digital phone service is extremely cheap.
wmf 6y ago
They're also about to tap into billions in FCC rural subsidies. If they can get subsidized pricing down to, say, $100 for equipment and $50/month they will have a lot of demand.

by kanox 6y ago

grecy 6y ago

That is how Elon has always run. He has said many times the slower-than-ideal ramp for the Model 3 assembly line very nearly bankrupted Tesla (it was within a few months). When the first two SpaceX launches failed he spent all their remaining money on the next one - if it failed, SpaceX would have too. He has also said if either Tesla or SpaceX go bankrupt, so does he. He is literally betting the house with every major decision.

93po 6y ago
I think this is admirable. He's clearly very passionate about his companies and though I'm sure money is a motivating factor it's not his priority - he's said as much before and he doesn't exactly live a lavish lifestyle for a billionaire

apeace 6y ago

> If the internet service business doesn't generate revenue the launcher side will see a majority of its launch manifest evaporate Can you clarify this? I don't know much about it but can't see how they relate.

mlyle 6y ago
SpaceX has launched 21 times so far this year. 12 were Starlink. About half of SpaceX's launch manifest is launching their own satellites for Starlink.
- 1123581321 6y ago
  Is there any elasticity to that demand, i.e., has SpaceX priced launches to only attract 12 so far this year, or would they still only attract that many if they lowered the price?
  - kanox 6y ago
    There is almost no elasticity in current market: DOD, NASA and traditional GTO comsat launches are few in number and not particularly sensitive to price. Payloads routinely cost several times the price of a launch so cheaper launches have little impact. The satellite service business is much larger than the launch business and this is why SpaceX is attempting to enter.
    - mlyle 6y ago
      > Payloads routinely cost several times the price of a launch so cheaper launches have little impact. Little immediate impact. Of course, if launch gets way cheaper, the things you do to maximize longevity, fault-tolerance, and mass efficiency start to matter less... That is, payloads are expensive in part because launch is expensive.
  - nickik 6y ago
    The problem is that the main business of SpaceX and Arianespace was GEO sats. Those have been in a slump and fewer launches existed. Maybe that will pick back up, but the largest part of that were for Internet and after that TV, both don't seem like huge growth markets. Small sats have become so powerful, that on a SpaceX Rideshare you can deploy basically a whole constellation in one shot potentially. Most sats today are no longer that large and heavy that you have dedicated launches. Many of their launches are government, both domestic and foreign. SpaceX has not reduced the price 'that much' in the last couple of years. They were already the cheapest on the market and opted for more profit, so they could have better cashflow when going into Starship and Starlink. What also has to be considered is that even that 12 is a pretty large number. Large rockets usually didn't fly that at the rate SpaceX flies them. The sat market is slow the respond, 4 years are very little in it. Hopefully people will come up with more great ideas how to use the capability SpaceX offers.

bearjaws 6y ago

I believe the business case for Starlink is solid, my parents currently live in a rural area with dial up. They have a few dozen neighbors all on dial up. They currently pay $70 a month for their phone lines, and I bet a couple million Americans are in the same boat. They could probably cancel their entire bill with ATT if Starlink is reliable, as digital phone service is extremely cheap.

wmf 6y ago

They're also about to tap into billions in FCC rural subsidies. If they can get subsidized pricing down to, say, $100 for equipment and $50/month they will have a lot of demand.