A) whatsapp improves the daily lives of hundreds of millions of people. You don't necessarily need an absurd customer lifetime value to get a $19b valuation with that many people using your product.
B) SpaceX provides almost no current value to anybody. And the people it does provide value to are "free riders" in the sense that they love watching space travel and get to watch SpaceX regardless of whether or not they pay for it.
Just an inexact thought experiment. Let's say we poll the roughly 1b people living in first world, and ask them each to pay $10 to see SpaceX do whatever SpaceX does. How many people even think it's worth $10?
Well, someone payed SpaceX for a delivery flight to the ISS the other day, they're certainly providing value in that context
Benefit to humanity = Number of people it affects * Impact per person.
Add to that the amount of interest they generate among people - they're beginning to achieve what Star Trek did once, making space cool again. I personally know people who are dreaming (and some moving towards) aerospace career because of SpaceX, and with the amount of hype you see around the Internet, I'm pretty sure we'll soon have a generation of engineers inspired by Elon's companies.
Oh, and they do all that for dirt cheap.
I don't know how good they're on an absolute scale, or compared to the next best alternative, but they're definitely very cost-effective in terms of current and potential benefits to humanity.
For one small example: Space is by far the best place to put observatories. Yet only a few special--and small ones--are there. What if observatories were routinely space-based?
SpaceX may not be doing the science themselves, but have the capability to act as a huge multiplier to those who are doing it. A much higher multiplier than any feasible amount of money shovelled into the existing system would create.
I just wan't to add that the problem is not that SpaceX provides less to humanity than WhatsApp.
The problem is that most people are not really far-sighted, but only see things which benefit themselves in a predictable amount of time.
Why companies like SpaceX (or NASA) are important has already been answered with Why Explore Space? A 1970 Letter to a Nun in Africa
https://launiusr.wordpress.com/2012/02/08/why-explore-space-...
Because most people are not upper middle class to wealthy. They are forced to be concerned about paying for food/healthcare/education so their life tends to have different priorities.
The other problem is that your line of 'far-sighted' is completely arbitrary. Someone could easily argue that SpaceX is wasting its time with rockets and we should be spending more time studying theoretical physics to figure out better ways to travel long distances in space.
Which is a problem because if only they could (not that the system will let them do that easily) stop and think a little further, in a little less selfish way, they'd likely figure a way to improve their living conditions.
But hell, that applies also to the "upper middle class to wealthy", especially in terms of convenience. See NIMBYsm, or people fighting tooth and nail for their right to use cars cheaply in dense urban areas. People tend to defect instead of cooperating, for their own demise (and of everyone else who knows better but can't do much against an uncoordinated mob).
This is a completely uninformed view of what it's like to be in this position. Everything in life for them is essentially a borderline crisis (I witnessed my parents going through this). Finding new jobs is extremely difficult so you have to make major compromises to keep your current one. This is even more important when you can't build any savings to cushion the impact of unemployment.
What exactly do you think they can do to "stop and think a little further"? This might be an option if you have no family to support, but otherwise it's a ridiculous notion.
Yeah I am being pedantic, but sometimes I get annoyed at how much these tech companies big themselves up when in the big scheme of human things they are largely irrelevant.
This comes from a guy that loves tech by the way!
WhatsApp is big outside of the US because (at least in Panama, were I was born) text messages are not included in the mobile phone plan; however, you can get a data plan for a monthly fee and keep in contact without additional charges. In the US most people use text messages to communicate.
I am not saying Whatsapp has anywhere near the potential value of SpaceX but it is important to factor the amount of risk given the stage a project is at.
WhatsApp is a consumer product. It lives as it breathes. As long as people/consumer keeps pumping in money & time to it, its value will stay or rise from its current value. Once that stops and people/consumer stop using it, its value will eventually fall.
SpaceX on the other hand is not a consumer product yet, but is aiming to become one. Consider it just like Boeing or AirBus, nobody would have valued them as a multi-billionaire company ( back in 1900s when they were founded). Their technological advancements and the development phase would have been same as SpaceX right now.
But eventually it became a very integral part of human life. They have become a consumer product, their value is now because of people using it daily. And unlike WhatsApp people won't stop using air-travel.
Everyday people do not invest directly into it like they do(?) for WhatsApp, but indirectly by using airline services they are paying for it. Similarly for SpaceX everyday people aren't investing in it right now but eventually ( as per SpaceX's ambition ) people would just like they are doing for air-travel.
But yes, emerging technologies are not something every common-man invests in.
And well rockets is really a very broad term which not just includes spacecrafts but also missiles.
SpaceX is unique not for sending 'rockets' but it for being the first privately funded company to successfully launch, orbit and recover a spacecraft also the first private company to send spacecraft to ISS.
So yes, Space transport/travel is a luxurious and emerging market.
In what sense? The SpaceX launches were under NASA contract. Neither STS nor Apollo before it was built purely in-house by NASA; most of the parts were built by Rockwell, Lockheed and others. What's the big distinction here? Just that SpaceX was taking a bigger chunk of the failure risk?
SpaceX is more like a privately funded Space Exploration Company. NASA awarded them the contact not to outsource parts like in earlier projects but for SpaceX's design and technology.
Also the NASA contract to send cargo to ISS was one thing of the many SpaceX is doing. So in a lot of sense it is unique. Not sure why you think the ISS contract is the only thing what SpaceX is living on.
I think comparison is ok, but people are missing an important distinction - yes, the system works exactly as one would expect it to. There are good reasons for the system to value WhatsApp higher than SpaceX. The algorithm's implementation is correct. The problem is, we're using a wrong algorithm - a system that begins to increasingly value wrong things.
If "capitalism" values the "wrong" things it's because people at large have the "wrong" values. If that is a problem, it's probably not an economic one, but something deeper.
Anyway, that's a long topic. The TL;DR of my point is: it's not our values that control the system, it's the system that controls our values.
EDIT:
Case in point, from other HN thread: https://news.ycombinator.com/item?id=8916146.
> And a serious question: How do these people have money and especially free time for this [clever hack involving suspending a jaccuzzi under a bridge]?
That this is actually a serious question shows that there is a strong mismatch between our values and the system we live in.
It values capital and the capitalist class, which is why it was named "capitalism" by its critics (specifically, its socialist critics.)
The free market justifications in terms of Econ 101 simplifications that, in addition to applying to a simplified version of reality in operational terms, also apply to a system different than capitalism as ever actually implemented, came later.
Imagine that all the people that sent a Whatsapp message in the last year were charged SMS rates for the messages they had sent. How much would that cost them? Well, that's a reasonable rough measure of the value they have derived from Whatsapp. It's an important service that has real immediate benefits for the people using it right now.
SpaceX is a fantsastic venture, I'm very excited by it, but right now it's providing limited economic benefit. The Space Station is an expensive waste of money. A few comms satelites is great, but there haven't been all that many of them. Now, if SpaceX does manage to recover and re-utilise it's boosters that willbe a game changer. Their value will skyrocket (appropriately) and Google will make a killing on their investment. But that hasn't happened yet.
There is also some level of tragedy of the commons problem going on, in which SpaceX benefits all of us every time they successfully test a new design, but it only benefits their investors when they manage to get mining rights to the moon or set up martian tourism or the like. Goals which are possible - which is the impressive thing - but still very risky bets.
I always wonder if people actually seriously believe this.
We are many, many decades away from this being even close to a reality.
If there aren't companies like SpaceX (or governments doing similar work) we'll never be any closer to that reality. Mines on the moon and O'Neill cylinders in space aren't going to pop into existence in 2098 or something, they're going to be built on top of the foundations being laid by SpaceX (and others) today.
Maybe SpaceX will last long enough to profit from it, maybe they won't. It's still a better use of $1 billion of Google's money than another social network or whatever.
But alas the world doesn't work like that. It takes time to repeat the design, build, test process until you get it right. And no throwing money at the problem doesn't result in a quicker solution:
The total cost including that decade of operations is about €300M (until 2013) – and less than 20 percent of that was spent on Beagle.
But that’s not even the whole story. Venus Express was heavily borrowing from Mars Express and did consequently cost substantially less (€85M vs €150M for launch and spacecraft, excluding subsequent operations and in the case of Mars Express also Beagle 2; total mission cost until its end in 2014 €220M).
Beagle 2 and the whole Mars Express mission was really put together on a shoestring budget. It’s more a demonstration that you can do a lot with a little, really, than anything else …
Other then that SpaceX has shown incredible process in their re-usability quest, the latest failed landing included. They have been on a steady march towards re-usability, without any major roadblocks (except the usual delays). There is nothing there that shows them hitting any kind of wall, actually.
http://en.wikipedia.org/wiki/Orion_%28spacecraft%29#Orion_Pr...
This is disingenous. The last SpaceX rocket successfully returned from suborbital flight onto the target landing site. They just underestimated the amount of hydraulic fluid needed to make a proper landing (but then again, they hit the barge anyway!). It's basicaly a 99% success with a minor error that was found and will be corrected.
Stupid failures always happen, but at this point we can definitely assume that yes, they have a reusable stage.
The Beagle was the cheapest Mars mission ever (~50 million), and the investigation attributed the failure directly to not having enough money to do things properly. Again, dollars, not decades.
> The last SpaceX test rocket failed to land.
It was a test, an experiment; Musk was describing it as "50/50" beforehand. The mission achieved exactly what it was meant to do.
SpaceX is in an industry with better financed/politically connected companies and an unpredictable revenue stream. It's a risky business by every definition. WhatsApp by comparison is a stable, very popular, growing and strategically important messaging platform.
And if you think that human-human communication is less valuable than putting a few satellites in space (NASA/ESA/ISRO/etc are the real keys to future space exploration) then I would argue your priorities are a bit warped.
With SpaceX, there is enormous value in the company as it is, even if it went bankrupt tomorrow.
I'd rather phrase that as "WhatsApp by comparison is a currently stable, currently popular and growing generic platform implementable and implemented by thousands of companies and hobbyyists worldwide with nothing unique about the company except the current user-base, a (mostly free-loading) user-base which has shown great willingness to flock to the next great thing should this service ever do the wrong moves".
You know... The sort of statement you don't make about 20 billion dollar companies. They should have a more solid footing than being trendy right now. To put it in the dryset terms possible: They have no unique value-proposition.
SpaceX is doing real shit which might make an impact on the future of mankind. To me just comparing them in the same context seems offensive.
SpaceX is making something physical no doubt. But they aren't the only one and their competitors aren't cute little garage startups.
In 2005, one could have made the same argument about Myspace.
that is exactly bifurcation point each technological civilization faces (be it whole human race today or China 600 years ago) - to "go in", i.e. collapse into something like ant-colony or to "go out", i.e. explore and expand.
Now are they? NASA itself now outsourcing its LEO capacity to SpaceX. And SpaceX is much more focused than government agencies thanks to virtue of having a single leader with an idea, as opposed to bureaucracy and CYA-ism. Of course, space exploration is not a one-man endeavour, but I wouldn't dismiss the impact SpaceX already has and likely will have in the future - they're empowering those big space agencies.
Hell, for a simple analogy, it's like with solid rocket boosters - you should appreciate how far they got you, but you definitely don't want to keep being attached to them when they burn out and decide to not go to space.
Who do you think designed and built the Saturn V? Redstone? Atlas? Ariane?
Commercial companies making a profit.
Redstone: Designer: Army Ballistic Missile Agency (Now Marshall Spaceflight Center) Manufacturer: Chrysler
Atlas: Convair and its successor interests (General Dynamics, Lockheed, ULA)
Saturn V: NASA Marshall, Boeing, North American and Douglas
Ariane: EADS Astrium and Arianespace/CNES (French Space Agency)
So, yeah, they've always been commercial, but they haven't always been commerically driven or (entirely) commercially managed.
That is to say: WhatsApp is much further along its individual trajectory than SpaceX is. In decades, the value of SpaceX is likely to eclipse WhatsApp, which in all likelihood won't even exist any longer.
A lot can happen over time. 10 years ago MySpace was by far the dominant social network and Blackberry was the mobile powerhouse. Seemed like neither would fall with so much momentum behind them but we see how that played out.
Market capitalization does not indicate importance to the human race, though it's easy to lose sight of that.
I think one of the reasons people lose sight of that is because they look back and see all those products, all that improvement in quality of life that capitalism brought us. Those things are undeniable. But one can't infer from this that the system will forever be awesome. It was aligned with human goals initially, but as time goes by, it's less and less aligned.
With science based startups the partner at a VC can't easily make an independent assessment. They have to rely on specialists to do tech D&D and they rarely trust them completely. So they shy away from those deals, or they factor the risk into their valuations.
This behavior somewhat ironically can make these investments higher risk. There is a degree to which fund raising at a lower level makes a company a higher risk, because they have less money to work with and can't afford to make mistakes. (the converse is also somewhat true).
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