SpaceX raises $1.9B | Hacker News Reader

SpaceX raises $1.9B

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87 pointstosh79 comments

I wish I, just a guy, could invest in companies like this with no vote stake. I believe in the company and the leadership and I'd like a stake in it and to provide money but I know that if I have the ability to put money in so will all the guys who want an opinion.

It reminds me of Kickstarter. I really enjoyed it because I spend $100 now and then for someone to take a shot at building something. If they fail, so be it. If I get scammed, so be it. I explicitly don't want refunds so that the guys can take a risk. But then other people get involved and they have these high expectations and it ruins everything because then I can't get to the guys who are doing risky things. The way I do it is I fire the money into the ether and then months maybe years later I get an email saying "Sorry, we couldn't do it" or "Where do you want us to ship to?"

i.e. I want an escape hatch for investing and for consumer purchases as well. If the government would let me take a cheap online exam that allows me to exempt myself, I'd love that.

Are you looking for crowdsourced equity like https://wefunder.com ? You will only find small startups though.

> I wish I, just a guy, could invest in companies like this with no vote stake.

How is this different from just buying stock?

Or are you referring to companies specifically that aren't public?

It's not public, and no companies issue non-voting shares. It's not even clear they would be allowed by the SEC.

Google (Alphabet) has two different stocks you can buy, one of which doesn’t have voting rights. https://www.investopedia.com/ask/answers/052615/whats-differ...

Oh, that's a good point, I forgot about those... despite owning quite a few non-voting shares of GOOG.

Yeah, no, it's not. There's just a regulatory barrier that makes it hard for most organizations to release stock like this to the public. I want to lower that barrier for myself because I am willing to accept a higher scam rate.

Well, there's stock when they IPO.

Beyond that, you may be thinking about becoming an accredited investor, but yeah, there are wealth requirements. https://en.wikipedia.org/wiki/Accredited_investor

Almost none of the companies that IPO in the US today have even the remote possibility of yielding a 20X return, never mind 100X or more. At that stage, you'd usually rather want to go with an index fund.

Most of the allure of early- to mid-stage investments is that a small investment has a small chance of turning into a meaningful stake in a very influential company. So I don't think that the promise of buying a stake in a company that has most of its growth behind it would be very interesting to OP, unfortunately.

This is not true. Even companies whose IPOs are long forgotten can bring 20X returns. In a current stock market frenzy you can have 20X returns in a year. Take Overstock (OSTK). 14X return from the highs of January 2020 or 30X return from the lows of March (COVID sell-off).

Even large caps such as TSLA is almost 10X return in a year(!). It's crazy what's going on with the stock prices right now.

There are a few ways to get involved in private rounds like this...

1/ Someone is allocated a certain amount and they farm it out to their "fund" of friends and family who invest through an LLC or some other method (I have a modest investment in a few bigger companies this way) 2/ You become an accredited investor yourself, which doesn't require a ton of work but does require some proof that you have capital and then network your way into the raise. (https://www.investopedia.com/articles/investing/092815/how-b...)

I think generally speaking there has to be SOME protections in place or investors who want to get a small piece don't get swindled. This is why public companies have so much compliance, disclosure requirements, etc. associated with them so that the government can step in if they are breaking the law or deceiving investors. Likewise with the increased scrutiny on the company, anyone can open a brokerage account and own stock.

I assume you know some of these things and I also share the pain of "how do I just get in with a small stake on some of these big or small private companies"

Same here, but here's the deal. A lot of these companies are looking for direction, are looking for leadership. Every unicorn I've worked for already had enough financiers behind the scenes. Sure, many of them risked impossible amounts like 10 million to seed the business. Who are you? What do you have to offer?

They get a bad rap but I hold an opposite view. I'd like to know what companies I can hold an activist position in. Surely, there are businesses around town that would take a 200k check for x-percentage.

I can accept it if they don't want me. I can also accept me not wanting them. What I don't like so much is that we want each other but the government makes regulation too painful for us to cross the barrier.

As an accredited investor you can potentially get in on private fundraising rounds.

But most private equity would rather work with a few high value investors instead of many small value investors. It's just so much simpler.

Opening the flood gates to any old Joe Schmoe would run afoul of many SEC rules -- and for good reason. Private equity is enormously more risky and more opaque than public market investing, and could so very easily be abused and fraudulent.

https://www.investopedia.com/articles/investing/092815/how-b...

I am an accredited investor. It's the SEC rules that bother me. There are companies that have taken a lot of investors on but it's usually fairly onerous: https://safegraph.com/blog/safegraph-raises-16-million-serie...

We are far too stupid to not fall for scams. It's better that the government "protects" us. /s

Seriously though, this is messed up. Crypto is similar - CoinMarketCap has a program where you can earn tokens by watching a few videos, but look at the list of restricted countries: "Belarus, Democratic Republic of Congo, Cuba, Iraq, Iran, Mainland China, North Korea, Sudan, Syria, United States of America and its territories (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands), Zimbabwe."

Why the f are we on a list with Cuba, Iraq, Iran, China, North Korea, and Syria??? America is not free

Honest question, why do they need so much money? If their rockets are really re-usable, and with all these launches they've been doing, they should have tons of cash...

Their profits are all being sunk directly into Starlink and R&D for Raptor, Starship, and Superheavy. It's not that reusability isn't netting them a profit, it's that their ambitions outstrip their savings from reuse.

Something to consider is that one of their goals is to be able to operate with relatively little constraint even in the event that government contracts, NASA grants, and/or commercial contracts hit a dry spell. That's the whole point of Starlink, for example — a continuous, launch-independent source of revenue to fund Mars ambitions.

I certainly think that's a fair question - as you see the contracts they have been awarded and wonder how do they not have adequate cash flow for that given their rocket tech.

The article makes me think:

1) mostly looking for money to build the Starlink satellite network as that is not brining in the necessary cashflow yet

2) it explicitly mentions the round was larger than originally intended and oversubscribed. Sure, if you haven't yet proven yourself it's certainly not always great to raise extra, but I don't think that applies as much here

Because believe they will get a good return from accelerating their development instead of moving at whatever speed the return from their current launches can sustain.

They are generating lots of money with current launches, but are designing a next generation rocket. Rocket programs are expensive.

The best comparison for the rocket that Musk is building for Mars is to SLS. Per https://techcrunch.com/2020/03/11/nasas-sls-moon-rocket-is-2... we've spent over $17 billion on the SLS program so far, and it probably isn't as far along as Musk's SuperHeavy/Starship is.

Admittedly Musk is doing his rocket development for cheaper. A lot cheaper. But the baseline for what rocket development "should" cost is more than SpaceX has received in revenue, total, through all of its history. (Not profit, revenue. Nobody knows what its profit margin is. But given that SpaceX routinely launches at prices below what its competitors can afford, they probably aren't rich.)

> we've spent over $17 billion on the SLS program so far, and it probably isn't as far along as Musk's SuperHeavy/Starship is.

There is a nearly complete SLS core stage awaiting testing at Stennis Space Center. How far along is Starship?

https://www.nasaspaceflight.com/2020/08/sls-green-run-verify...

Starship has done test hops to half a kilometer multiple times, and they're on prototype... 7, 8?

SLS hasn't moved an inch off the ground, ever.

Raptor engine production is significantly ahead of the RS-25 production line restart. That core stage is using old Space Shuttle engines.

Starship could certainly beat the first SLS launch sceduled for late 2021 if they gave up on reuse & in-flight refueling.

I suspect your question was somewhat rhetorical, but still: a test Starship is literally flying (albeit short hops currently) and the Raptor is looking pretty good.

https://www.youtube.com/watch?v=s1HA9LlFNM0 (Starship SN5 150m Hop, August 4th 2020)

https://www.teslarati.com/spacex-raptor-engine-crushes-russi... (SpaceX crushes rocket engine world record during Raptor test)

https://twitter.com/elonmusk/status/1295495834998513664 (@elonmusk: Raptor engine just reached 330 bar chamber pressure without exploding!)

From your article, they haven't even put fuel in the SLS core stage to see if it leaks. Their promised timeline is based on the expectation that there will be no major snags on the way to actually sending it into orbit. I'm not aware that any orbital rocket program has ever been that lucky. I'm therefore dubious that everything will go according to their plan.

By comparison, a full-sized prototype of Starship managed to launch and land again a few weeks ago. (Though on one engine, and not on all 6 for the final model.) As of June, they still considered it possible that they would get to orbit this year. (See https://www.teslarati.com/spacex-starship-orbital-launch-deb... for confirmation.) I consider that unduly optimistic, but certainly would take an even money bet that they get into orbit in under a year.

I guess you could make a case that, today, SLS is further along. But SpaceX is moving several times faster here than SLS, so in any case it is going to be up and flying regularly long before SLS. And in terms of cost per weight to orbit, it will be a hundred times less.

A lot of their recent launches have been for their internet constellation, StarLink. Given the nature of this constellation, they have to do a large number of launches before it is operational and can take paying customers. There is a large upfront cost.

Its a bit of a chicken and the egg scenario with launch services right now. The fact that these new internet constellations were coming killed demand for the large, expensive one-off communications satellites that was a large part of SpaceX's business. Fundraising like this gets them across the chasm.

Obviously it's only part of the cost, and then there's the development costs for Spaceship. SpaceX could probably self fund Spaceship and Starlink, but with investment it will go much quicker. In the case of Starlink there is a limit in that they have to complete at least half their deployment before their timer runs out with the FAA / ITU Radio Regs. So cash flow is an issue aside from reuse.

They are launching satellites on their own dime. Needs lots of initial capitol.

Did you watch the launch today? The live feed from space was not an iPhone taped to the side of the rocket with FaceTime running. Everything has to be custom built. And it has to be very reliable and durable in a wide range of environments.

They want to launch >10k satellites for Starlink. If each satellite costs $1M (I'm making that up), that's $10B right there. I've seen numbers as high as 40k satellites, though I don't know if those are reflective of their near-term goals.

Both Starlink and Starship were estimated to cost about $10B each.

Starlink: 12000 satellites * (250K to build + 250K to launch) plus a few hundred base stations, plus a few million terminals, plus...

Elon initially said that Starship woul cost $10B to develop, but that was for the carbon fiber version. Switching to stainless reduced that cost dramatically, but it's still a multi-billion dollar program.

As for rocket launches, they'll probably do about a dozen customer launches this year (plus a similar number of Starlink launches, but those don't provide revenue). The customer launches are sold for about $50M, so call it $25M of profit per to be generous. That's $300M of profit. That doesn't pay for multi-billion programs.

Elon Musk will be the first trillionaire. Dare I say, the first quadrillionaire.

And he will quite likely die with less than $100 cash to his name.

Please explain.

He believes passionately in everything he does and he literally puts all of his money (and then some) into his endeavors. He is rumored to be the most cash-poor of any multi-billionaire because he has leveraged it all to achieve his goals.

Elon never sells stock. He borrows from the bank to support his lifestyle, and to exercise his stock options. He has billions of dollars in debt using his stock as collateral.

Which is absolutely the right thing to do if you believe in what you're doing. Because ROI on investment in your own company must be much greater than the interest you pay for the loan.

If you don't believe that the company you've founded and are actively managing can produce a better ROI than an regular bank loan then you are wasting your time.

That’s what the Enron CEO did, and his finances came crashing down with the company’s share price.

But Enron CEO was running a scam.

I'd recommend the book "The Smartest Guys in the Room", it goes into detail about the financial engineering. Yes it was decided in the end that it was fraudulent, but it took a while for that to become clear. Technically, much of what they did wasn't illegal and it wasn't even obvious at the time whether it was smart or stupid.

For me the most interesting part was the culture, and assumption that they couldn't fail. Because of this Ken Lay (CEO) continued to leverage himself personally against the Enron share price again and again. When told to diversify with other investments, rather than sell Enron shares and buy others, he instead took out loans against his Enron shares to buy others. He was in effect trying to "have his cake and eat it too". Ultimately once the Enron share price fell enough, it caused the whole house of cards to come crashing down as contract after contract, both for Lay and Enron, triggered pay-out conditions, and they all ended up bankrupt.

I hope this doesn't end badly for Musk, but he should probably be diversified enough to protect himself against Tesla's share price declining, and it will be interesting when SpaceX gets to an IPO, whether his personal leverage may affect whether he chooses to take it public or at what price.

I was just thinking something similar. SpaceX on its current trajectory could quite possibly be the equivilant of the next Dutch East India company when it comes to access to space. Which so far, hasn't been particularly a profitable capability. But starlink, might just be the tip of the potential profits. If they manage to get even a small amount of that business worldwide its going to be a cash printing machine and likely once we have people spending more time in space proper economies will start to develop. And spaceX will be there acting like the local bank/govmt taking a couple percent on everything.

That all of course assumes Elon manages to live for another 3-4 decades, because frankly I don't trust anyone else to have enough vision to put everything on the line for scifi level ideas.

SpaceX feels like the next "big thing"... question is when does it IPO. Even if the Mars stuff never pans out they can be a very successful business in telecommunication infra.

I hope it never IPO's, it is too important to be public for now. Worst case scenario is that it IPO and McKinsey comes in to "streamline" the company ...

Surely Musk would retain control of the board like he has with Tesla

Streamline the rockets, not the company.

I think its unlikely SpaceX will have an IPO. Elon likely wants to maintain as much control as possible until he gets to Mars. Spinning of Starlink makes sense once its up and running.

Elon has said multiple times that he won't go public before Mars stuff has happened.

Gwynne Shotwell has said they could spinoff Starlink as its own company and IPO it and use that money to fund more Mars projects if they run out of money. But if Starlink is profitable once it is up and running why would they sell it off/IPO? Just keep taking the money over years probably will work better in the long term.

Starship and other Mars projects will be large upfront capital expenses with a lot going in R&D.

I believe Musk would prefer faster returns to speed that up than wait a few years more patiently.

Musk has mentioned a few months back that they're planning to have Starlink IPO as a separate subsidiary of SpaceX, or something to that effect.

Where do I wire the money?

If there's one billionaire on the world I'd have no second thoughts about it's Elon Musk. I know I'll probably regret having said that in 20-30 years :)

Honestly, if there's one person on this planet which is furthering human future it's Elon Musk and his vision to have human habitats on other planets.

Facing climate change, wars, overpopulation etc.pp, if we had at least one other place other than earth - as hostile as it may be - and we start to sustain life there, all life on earth would suddenly be only one bet out of two (or more).

Yeah, it seems to me like the classic artist-vs-the-art debate. Let's be honest, the guy IS rather brilliant in multiple fields and he's built large, effective organizations whose output is head and shoulders above everyone else. He's can also be an obnoxious ass with a juvenile sense of humour. If he were to turn out to be <insert vile thing here> tomorrow, the rockets will still land the Model3s will still be safer and more efficient than their competition.

FWIW, I fall on the "art" side of this debate. I didn't think highly of Jobs, but I still got the OG iPhone, MBPs, etc. I often wish Musk would STFU, but I still love driving my Model 3 and I'm saving up to buy a ticket on Starship.

"brilliant in multiple fields and he's built large, effective organizations" vs. "obnoxious ass with a juvenile sense of humour"

I'm shocked at how often I see people put these on an equal level. We forgave our last rocket guy for being a literal nazi.

> I'm shocked at how often I see people put these on an equal level. We forgave our last rocket guy for being a literal nazi.

Put like that, it does somewhat raises the bar for Mr Musk. Though the 60's compared with today's social standards would yield many difference for the better. Heck, many in the 60's would be in for one heck of a culture shock if they suddenly time jumped into today.

That all said - "We forgave our last rocket guy for being a literal nazi." is just begging for a Farside cartoon. Made me laugh.

Why can't Elon Musk be as uncharismatic and uninteresting as Mark Zuckerberg, sometimes I don't like his tweets! :__(

Musk is chaotic neutral. Zuck is neutral evil.

http://easydamus.com/alignment.html

lmao I agree completely

You had me until 'facing...overpopulation'. To boot, Elon Musk has talked about this [1].

We are not facing overpopulation. Population is contracting currently and will continue for at least a few decades.

[1] - https://www.youtube.com/watch?v=-s_4VnXHF64

Worldwide population is still projected to grow for many decades.

Birthrates are dropping.

Respectfully, I'd argue we are already overpopulated. The contraction will take a while to really take hold. Eventually we will no longer be overpopulated. I just don't think the Earth can sustainably support more than 2 billion people. But it will take quite a long time for us to fall that far and it will come with other issues. Additionally, it will take far longer for the oceans and atmosphere to recover but it eventually will.

I also don't understand how we think we'd do better on Mars than on Earth. We have near infinite resources and advantages here and we trashed it. We have none of those on Mars.

> I just don't think the Earth can sustainably support more than 2 billion people.

Of course Earth can sustainably support way more people than that. The problem is waste. The US alone loses 30-40% of the food it produces, worldwide it's something to ~1/3rd.

Centralized food and energy production (and other things tbh, but these two stand out) is certainly a lot cheaper, but it's obvious it was not the right move.

If everyone had to maintain their local food/energy production at the county, neighbourhood or even household level, there would be much less waste and more responsibility (something a lot of people need).

Fewer out of season products means less waste and pollution, as well.

I think we've shown what a greedy species we are. I don't know what we can expect people to live a smaller life and consume less voluntarily. In my opinion, given our track record, that is why I suggested a lower total as a max. Maybe one day we'll be able to create energy and food locally that is carbon neutral and then we could handle more population but that doesn't seem possible now or anytime soon.

> I also don't understand how we think we'd do better on Mars than on Earth. We have near infinite resources and advantages here and we trashed it. We have none of those on Mars.

Elon's goal isn't to do better on Mars. It's to have Mars as a backup of humans in case something happens to Earth (for example - big meteor).

As we sit now if we lose Earth, humans are finished. If we had a colony on Mars, at least humans as a species would continue.

“Over”-population depends upon your definition and judgement on the planets ability to sustain us etc.

But population declining? Nope! Here’s a great and accessible explanation:

https://www.ted.com/talks/hans_rosling_global_population_gro...

The growth rate is slowing, but population will continue to expand till we add several more billion people. With our current population, there are many resources we are using unsustainably: soil, fresh water, seafood, raw materials, fuel, and carbon sinks. Any one of these things could cause extreme disruptions if a country or region's access is cut off or reduced. I think it's common to think of these kinds of warnings as alarmist. Compare this with the denialism and impact of COVID. At first it seems remote and impossible, as if life will certainly continue on like it always has, then suddenly every school in the world closes down and all borders are shut. If a bit of RNA can change the world so, imagine extreme regional food shortages.

I'm not convinced any of these things will be caused by demand shocks and material scarcity due to overpopulation, but rather, if at all, through coordination and resource allocation failures (politics, war, corruption).

My information on this topic comes from classes, books, scientific papers, and 8 years working in the environmental protection sector. There is a decades-old and growing scientific consensus that we have a multi-dimensional sustainability crisis incoming. And political factors are absolutely a part of this since shortages will happen regionally first and geopolitics will ensure that nations will act in self-interest. Things like the US-MX border wall and Brexit are arguably early impacts of climate change since it can be viewed as a strategic attempt to separate from areas likely to see large numbers of climate refugees in coming decades.

Causality and motivation are complex issues, so I'd like to read a well founded elaboration of your last statement. Did long-term strategic considerations of these bureaucracies truly lead to such foresighted, high-level decisions by governments and the public? If so, climate change might have been only an aspect of this.

Here's a taste at least[1]. You have both a former VP and the US military warning of climate influenced political instability. These ideas are definitely out there and circulating as part of the decision making process on things like homeland security. Books are written[2] and think tanks produce analyses[3]. Not everyone in our governments have goldfish attention spans and their information sources go beyond news-entertainment. I would never claim this is the only factor, but the ideas are out there and taken seriously.

[1]https://www.independent.co.uk/environment/brexit-climate-cha...

[2]https://www.amazon.com/Storming-Wall-Migration-Homeland-Secu...

[3]http://www.ourenergypolicy.org/wp-content/uploads/2018/01/Is...

> we start to sustain life there

Then you just have WW4 and we all die. Wars have been started for far worthless things (when you compare it to the game changing thing that would be to have a place in Mars), something like Mars would cause a lot of deaths way before humans get there and it would probably remove any motivation to actually fix human-caused problems in Earth because hey, thanks to Musk we can just leave to Mars. All those rich people that are now building bunkers could collectively purchase Mars (whatever that means) and leave Earth when it is beyond repair (right after squashing every resource out of it). I don't think humanity is anywhere ready for it even if the technology was ready right now. Our social systems are fragile and tend to centralization and authoritarian forms of governance

Life on Mars will always suck hopelessly compared to life on Earth. It's a terrible cold desert where you can't breath.

I was thinking of a terraformed Mars

Rich people building bunkers sounds like a conspiracy theory.

No billionaires are going to go to Mars for the lifestyle. Country estates, super yachts, fur coats and Rolexes on one side, and a plastic bubble habitat and nylon jumpsuit in a freezing airless desert on the other. How many of the elite are really going to go for the second? It just seems like fantastical thinking.

I wish it was.

https://edition.cnn.com/style/article/doomsday-luxury-bunker...

https://www.latimes.com/business/real-estate/story/2020-03-2...

By the way, by Mars I meant a terraformed Mars

For someone running a backup colony on another planet I wouldn't choose someone with as bad a pandemic policy as Musk.

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