Financing SpaceX's Mars plans

[Llian Rhydderch]

This thread is wandering rather far afield of "financing" one specific company's Mars plans.

Could we save the O'Neil cylinders and various general technologies for human habitation on Mars for the myriad other NSF threads that exist on the topic.

[JasonAW3]

This thread is wandering rather far afield of "financing" one specific company's Mars plans.

Could we save the O'Neil cylinders and various general technologies for human habitation on Mars for the myriad other NSF threads that exist on the topic.

Valid point.

     Financing a colony is going to be largely dependant on two major factors.

     One, transportation costs. And, Two, how independent of resources from Earth can the colony become in the shortest amount of time possible.

     Another major issue is, of course, public interest, but that is a discussion that will be addressed later.

     Transportation costs; this will likely be the most make or break point of the whole colonization effort.  While old school corporations and government organizations would like to take the road to use single use craft and equipment, this is an unsustainable strategy for a colonization effort.  While the temptation for many would be to set up the colony and effectively 'burn the ships', thus making sure a return trip is impossible, this would be both an impractical and extremely wasteful way of doing things.
    While technologies of the 1960's was limited to single use spacecraft for the lunar flights, this was primarily due to both the need to 'put boots on the ground' on the moon, and to the 'missile' mentality of the time.  America was in a race to get to the moon before our competitor, the Soviet Union could.  As a short term strategy, this worked quite well, but at the costs of hundreds of millions of dollars where the entire space craft was both thrown away and was only good for a single use, financially, this was simply an unsustainable model.
     As the first two or three moon landings might have gotten away with this system, we should have been developing, in parallel, a system by which the entire space craft could be recovered and reused.
     If such a system could have either been switched to on began phasing in after the second or third moon landing, then it is likely that the costs would have dropped dramatically, not only keeping the public's interest, (which, had the landings been 'packaged' and presented in a better manner, would have further caught the public's attention, but this is a discussion for another day) but it would also have kept congress from reducing the NASA budget to the level it is now.  SpaceX seems to have hitnupon a formula that not only allows them to provide the space launch services required by the public, but to also begin testing and phasing in reusable equipment while continuing to provide these services.  This will help lower the base costs of space launches dramatically.  Having a fully reusable space launch system will effectively reduce the main costs to primarily that of fueling each flight, and the costs of the payloads.  This is a sustainable strategy that can be made to work, and SpaceX's current 'packaging' and public presentation seems to be working in such a way as to help provide the financing needed to pursue this project.
   However, it is the strategy of using a series of other, interlocking companies, pursuing and producing on a large scale, many of the needed technologies that can make this a successful project, that will make this plan work.  Not only does his companies develope and produce refined ewuipment that will be needed on Mars, he does it in such a way that the public is directly financing the development and refinement of these technologies, without having to directly use massive quantities of taxpayer money.  Another great plus is that many of the spinoff technologies that are being developed for his Mars colonization effort are ALREADY on the market, being bought by the general public, financing this project both directly and indirectly.  In this case, economies of scale allow a dramatic reduction of equipment and technology development costs, as it is the general public who are providing the money, by purchasing his products.

     Independence of resources; this will be a MAJOR issue for any colony.  While at first, the vast majority of initial resources for the colony will have to come from Earth, the sooner the colony can break the logistics leash from Earth, the less expensive the colony becomes.  While many of the needed technologies have already been developed, such as aquaponics, life support systems and basic construction techniques, there are many that still have to be more thoroughly refined, and others that require developing and testing.  3d printing of components as well as CADCAM systems are well on their ways to allow direct manufacture of equipment and components with a vastly reduced processing cycle.  Resource extraction from the existing environment, on the other hand will still require some years of development before it will be sufficient to support a colony.  However, this is an area that could be of great benefit on Earth, as this would allow for more efficient recycling of waste products, and lower the requirement of resource extraction from the current environment.

     Over all, of any organization capable of being able to build and maintain a sustainable Mars colony, it appears that SpaceX is a likely bet, as the vast majority of the needed technologies are being developed by them, in-house, with their own money.  And, by developing these technologies and packaging them in a variety of consumer goods that they sell to the public, the company is already producing spin off devices and services, that both serve the public's needs and to finance the future Mars colony.

     So, there is little doubt, short of some vast international crisis that affects all walks of life and corporations, that SpaceX will likely make it to Mars before anyone else, and he should be able to establish his Mars colony with the current financial structure that has already been established.

     (BTW; Many people have compared Elon Musk to Tony Stark from iron Man.  It appears he's more of a combination of Tony Stark and Bruce Wayne, as his interlocking companies are all geared to produce both products for public consumption and technologies that will be needfef for his goals.)

JasonAW3

[ClaytonBirchenough]

I know I'm resurrecting this thread from the dead, but I feel there could be a productive discussion on the effects of SpaceX's internet satellite constellation with regards to raising funds for their Mars missions.

What are the potential profits associated with such a constellation?

[philw1776]

On the topic of SX finances, right now SX has a near term cash problem in that the expected revenue from this failed launch is gone, plus all revenue from the next expected launches is delayed indeterminately.  SX has staffed up its workforce substantially and has several launchpad construction programs underway.  Not fun being Elon today.

[ClaytonBirchenough]

On the topic of SX finances, right now SX has a near term cash problem in that the expected revenue from this failed launch is gone, plus all revenue from the next expected launches is delayed indeterminately.  SX has staffed up its workforce substantially and has several launchpad construction programs underway.  Not fun being Elon today.

Interesting. I think it really depends on how long the delay is. IMO, they would have/should have prepared for something like this, and have enough capital on hand as a provision. Elon also has too much drive and net worth (at this point IMO) to let SpaceX go under.

And I'd love to be Elon any day haha.

[philw1776]

It's not a matter of going under at this point. 
An aggressive entrepreneur like Elon is likely spending heavily rather than hoarding rainy day cash but it's improbable that he's so irresponsively aggressive that a launch failure would collapse the company.
The loss of revenue WILL impact future developments...BFR, Raptor, satellite program.  They will be delayed, and delays in programs sadly increase their total costs. 

The ultimate disaster scenario would be subsequent launch failures resulting in dilution of equity and Elon losing control of the company.  No more massive spending to become a multi-planetary species.

[dror]

I know I'm resurrecting this thread from the dead, but I feel there could be a productive discussion on the effects of SpaceX's internet satellite constellation with regards to raising funds for their Mars missions.

What are the potential profits associated with such a constellation?

this was definitly adressed to by Elon in Seattle :
 "This is intended to be a significant amount of revenue and help fund a city on Mars. Looking in the long term, and saying what's needed to create a city on Mars? Well, one thing's for sure: a lot of money. So we need things that will generate a lot of money."

 http://shitelonsays.com/transcript/spacex-seattle-2015-2015-01-15

[ClaytonBirchenough]

I know I'm resurrecting this thread from the dead, but I feel there could be a productive discussion on the effects of SpaceX's internet satellite constellation with regards to raising funds for their Mars missions.

What are the potential profits associated with such a constellation?

this was definitly adressed to by Elon in Seattle :
 "This is intended to be a significant amount of revenue and help fund a city on Mars. Looking in the long term, and saying what's needed to create a city on Mars? Well, one thing's for sure: a lot of money. So we need things that will generate a lot of money."

 http://shitelonsays.com/transcript/spacex-seattle-2015-2015-01-15

Thanks. Quantitatively, are we looking at something like $10 billion profit?

[ArbitraryConstant]

Thanks. Quantitatively, are we looking at something like $10 billion profit?

Calibrate expectations using large existing examples. Verizon made $5.1 billion profit in 2014, so that's within an order of magnitude.

The other side of profit is the funds needed to build and maintain the constellation. I think once it's well established it'll be straightforward to keep it going. The path to get there has risk associated with it though.

[TomH]

A year ago I would have said that Tesla will take over the car market, earning hundreds of billions in profits, which Musk would then use to finance MCT. The worldwide drop in the price of crude makes Tesla's future less certain.

[FinalFrontier]

A year ago I would have said that Tesla will take over the car market, earning hundreds of billions in profits, which Musk would then use to finance MCT. The worldwide drop in the price of crude makes Tesla's future less certain.

The price of crude will, at most, only remain low for 5 years. At most. Rapid advances in drillship technology, directional drilling, and shale oil and fracking are what has powered the current drop and oversupply, this combined with the fact that the saudi's and OPEC still think they control prices (which they don't anymore on account of Russia and the US being the new lead exporters), and thus keeping their output sky high to try and break the back of everyone else so they can start raising prices again. This of course is not going to work, but in geo-political terms it IS very interesting because it is fueling their current stance towards events in yemen and elsewhere. I would expound but its beyond the scope of this site.

Anyway, this period of time is finite. Demand rises uncontrollably every year on account of population increase among other things. No more than 5 years tops and the price starts rising again, it is likely to rise before this however, you should note it has already risen recently and begun to stabilize at a higher price.


That being said Tesla is really set to make a huge amount of money, not necessarily in car sale, but in technology sales and patents. This is on account of the many things they are doing with their battery R&D and Genset R&D, as well as their plans to start selling home backup power solutions based on this tech and to augment what Solar City is already doing with home power systems.

I don't expect this is how MCT will be financed however, I expect that large companies, such as google, various banks, investment firms, and others will be the lead investors in MCT. Colonies on Mars open up a huge new range of economic opportunities, the only big hangup really is that no one has done it yet. So I expect MCT will be financed at least in part by demand for economic wants of a human presence on Mars, and the resources that can be gained from said presence.

[Ludus]

I know I'm resurrecting this thread from the dead, but I feel there could be a productive discussion on the effects of SpaceX's internet satellite constellation with regards to raising funds for their Mars missions.

What are the potential profits associated with such a constellation?

I agree that the constellation adds something new to this thread.

I suspect it's Musk's big play to leverage rapid reusability and turn it into a moat around a business profitable enough to finance Mars.

It's really hard to estimate the value of a business that's basically a "Tier 0" network in the 2020's. Tier 1 networks like ATT or Verizon can operate with just peering and no transit . If SpaceX builds something like Elon suggested it could move data between any two points with low latency without need for peering while being able to sell transit to anyone and everyone.
ATT or other tier 1 networks now have revenues over 100B but very high costs. A SpaceX network might very well have revenues on this order but a much lower cost structure.
It seems a bit crazy but under these circumstances SpaceX could have a market cap at an IPO in say 2025 of more than a trillion dollars. This isn't much different from Apple's shift from being a minor computer company near bankruptcy to a consumer electronics company worth half a trillion in 10 years or so.

What's involved is what Musk projected at the Seattle Q&A. A new internet in space handling more than half of all long distance traffic and about 10% of local traffic. A company doing that now would have revenues well over 100B and this is about a much bigger Internet 10 years from now.

10 years from now a lot of long distance fiber will be maxed out and a lot will be past the end of it's projected lifespan. It will be massively capital intensive to lay more. If they build it, this is the market SpaceX might be stepping into as a unique low cost low latency network. Able to compete with fiber for bandwidth but beat it on latency. Able to deploy everywhere without right of way.

This is a vision way beyond OneWeb and just delivering Internet to currently unwired places, though it would also do that. I think that's why Musk broke with Wyler. Wyler wanted to focus on the near term expansion of the Internet and Musk had much bigger plans.

[Ludus]

In this scenario with SpaceX earning say 50 B at a PE ratio of 20 having a market cap of $1T, Elon could sell more than $100B personally, let SpaceX raise more than $100B and still maintain LT control with different voting classes of stock like Google.

This kind of money is sufficient for SpaceX to self fund large scale Mars settlement with no involvement at all by governments. If there's any concern about shareholder lawsuits after an IPO seeking to stop this in favor of dividends and stock buyback they could restructure as a B corp before the IPO. It's not like SpaceX ever hid their intentions from investors.

[Mader Levap]

That being said Tesla is really set to make a huge amount of money, not necessarily in car sale, but in technology sales and patents.

Musk opened Tesla's patents year ago. Pretty big oversight in your analysis, if you ask me.

[ClaytonBirchenough]

That being said Tesla is really set to make a huge amount of money, not necessarily in car sale, but in technology sales and patents.

Musk opened Tesla's patents year ago. Pretty big oversight in your analysis, if you ask me.

Yeah. That's a dead end.

[guckyfan]

That being said Tesla is really set to make a huge amount of money, not necessarily in car sale, but in technology sales and patents.

Musk opened Tesla's patents year ago. Pretty big oversight in your analysis, if you ask me.

They do sell a lot of subsystems to Daimler and Toyota though.

[ClaytonBirchenough]

They do sell a lot of subsystems to Daimler and Toyota though.

On the order of...?

Any amount of money helps, but for an all out SpaceX Mars colonization effort, a few hundred million isn't terribly that much!

[RocketmanUS]

Will have to be done in stages.

For first few landings ( cargo then crew ) could be sold to government agencies for exploration missions. That could pay for the launch vehicle, trans hab, and landers.

Technologies developed for Mars could be used here on Earth helping fund them for Mars. Such as advanced solar power and hydroponics.

The first colony could be paid in part by sponcors. TV broadcast of what is happening and being discovered on Mars could add some funding. Beyond that new lower cost travel between Earth and Mars will be needed. Mars will need to be able to produce most of it's own goods ( ISRU, a lot by automation ), small light items such as computer chips could be imported from Earth.

[Semmel]

They do sell a lot of subsystems to Daimler and Toyota though.

On the order of...?

A few thousand battery packs by 2012 at least. Might be more that I didnt hear about.

[ArbitraryConstant]

They do sell a lot of subsystems to Daimler and Toyota though.

On the order of...?

Any amount of money helps, but for an all out SpaceX Mars colonization effort, a few hundred million isn't terribly that much!

In that calculation Tesla's stationary energy storage stuff seems a lot bigger than sales to other auto manufacturers, and within stationary storage the utility/industrial/commercial stuff looks to be the major contributor (I note this because some commentators don't think the residential product makes sense, so it's important to note commercial is where most of the action is). It's not even available yet, the only sale that's been disclosed to my knowledge is to Advanced Microgrid Solutions who ordered 500 megawatt hours, or ~6000-7000 vehicles worth, that might be more than their total historical 3rd party EV sales in one order shortly after the thing is announced. As Tesla entered this market well below the price of any similar products the demand appears to be formidable, Musk noted in the earnings call the storage product will likely be supply constrained for a good number of years into the future.