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Comment by krschultz | Hacker News Reader

No. WhatsApp is used by billions of people daily. SpaceX is a really good government contractor.

What % of AT&T's market cap ($175B) is its SMS business? What % of Lockheed Martin's market cap ($65B) is its space business? Think about the incumbents WhatsApp & SpaceX are trying to dislodge. Generally speaking the ones WhatsApp (now Facebook) are larger by market cap than the ones SpaceX is targeting. That reflects the fact that something everyone uses a little bit every day is generally worth more than something used by very few people, intensely.

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> That reflects the fact that something everyone uses a little bit every day is generally worth more than something used by very few people, intensely.

Yup. Toilet paper is a massive industry, too, worth a lot of money.

No snark, just reality.

> WhatsApp is used by billions of people daily

To be pedantic, more like hundreds of millions of people monthly.

What's an order of magnitude between friends?

fresh out of magnitudes... got plenty of attitudes though ready to ship!

Whatsapp isn't used by billions of people everyday. Their install base was like 700 million? http://en.wikipedia.org/wiki/List_of_virtual_communities_wit...

Even if each one of them was paying the $1 annual fee, that's still less than a billion dollars in revenue.

Also, often valuations are based on the number of employees. SpaceX has 3,000 plus billions of dollars in capital equipment. Whatsapp had 55 I believe and basically zero dollars in capital equipment.

I think that there is more to this deal than "Google gets 10% for $1 billion". There is no way SpaceX is only worth $10 billion.

You've probably put your finger on exactly why Whatsapp is 2x SpaceX - 55 employees and zero capital equipment. Grow it by 10 and it all goes straight to the bottom line.

And nothing that explodes.

Valuations of small startups where the vast majority of staff have a high value to a buyer and can be locked into continued employed relatively cheaply are often valued based on the number of employees. How many of those 3,000 SpaceX staff would be of interest to the handful of companies that might have an interest in buying the company?

Further, that's of little relevance to a minority investor like Google, as they can't turn around and say "let's sell to Lockheed now", and staff moves.

In terms of capital equipment, you have to consider how quickly that equipment depreciates and who might be interested in it. Is there even a market for X billion in whatever equipment SpaceX owns? The purchase price is irrelevant.

I saw many people using this argument of the "small value but for many people". But I think we should take in account also the replaceability factor: the hundreds of millions of users of Whatsapp could switch at any time, with no effort and no loss, to any other messaging application. There's plenty of them. As for the actual revenues of Whatsapp, they're approximately 0.

In the same way that people could switch from Gmail or Facebook "at any time with no effort and loss"? Don't underestimate the network factor here.

Right, so glad that everyone is still on AIM, ICQ, or even, BBM. They had huge networks, and barely anyone uses them now. This market has proven multiple times that users will switch and it will happen suddenly.n especially if whatsapp tries too hard to monetize them.

If WhatsApp tries too hard to monetize, it will not go well for them. If they try just hard enough, they might make quite a bit of money.

You couldn't possibly compare Gmail or Facebook with Whatsapp.

For many people, their Gmail id is their sole or primary id on the internet, used to identify them to scores of websites. It is their official online point of contact for various aspects of their online lives including their career, banking, social networking etc.

Facebook is their online social profile, which they spent thousands of hours curating.

Your Whatsapp id is merely your Phone no., (which was Whatsapp's main selling point). All interactions in Whatsapp are ephemeral in nature - Most people delete their conversations when their phone memory gets full. Compared to gmail and facebook, the switching costs are practically zero.

Don't they need Whatsapp though to get messages from others that use it? The network effect is strong and it is unlikely someone can make an orders to magnitude improvement on messaging software the compels people to switch. Barring major missteps they can be reasonably sure to keep a hold on the market.

Hmm. I started messaging using ICQ, then probably Yahoo, then microsoft messenger, now it's Skype. The first three offered exactly the same service. The other day I tried to convince someone to contact me on Whatsapp but he has already Viber. The network effect doesn't seem to be that strong, and sudden, catastrophic network switches happen all the time.

I think maybe Musk should consider releasing a social app and then selling it to bankroll the future of humanity.

That's almost what he did—he was one of the founders of Paypal. Not exactly a "social" app, but he definitely used his fortunes from something more mundane to fund his more daring ventures.

I know. But maybe it's time to do it again :).

I think social apps are harder than crazy ambitious ideas. It's easier to see how one would work on them, that's for sure. But precisely for that reason we see many many social apps. But few are trying to build spacex or similar, so it's easier to make progress along the axis of figuring out ways to create value.

IMO Paypal could be described as social payment

Fortunately it was founded in more civilized, less buzzword-y age... ;)

No one knows what the demand curve for space looks like. Those who feel SpaceX is crazily undervalued implicitly assume two things: A steep demand curve* and that SpaceX will continue to drive down prices by large amounts.

*This is equivalent to: There are tons of people who think space is cool or useful and do nothing because it's too expensive and that won't be true with SpaceX's costs in 10 years.

I also think about their 3,000 employees and billions(?) of dollars of capital equipment would be worth a lot?

Unlikely. Employees could be gone in <whatever their notice period is>, so you can't put that much accounting value on them. Factories are worth something, sure, but they're pretty much a commodity; if they were destroyed in an earthquake or something SpaceX would just rebuild them. Most of the value of SpaceX's assets will be in the designs (particularly the engine/turbopump design), not even the design itself so much as the fact that it's been validated and proven (and is cheap to produce). That and, perhaps even more important, having an organization that's proven its ability to solve rocketry problems and continue to make improvements.

My understanding from listening to Musk's announcements since SpaceX was relatively a new company was that the real differentiater cost-wise for the Falcon 9 merlin engine is the manufacturing process, not the rocket itsself.

I seem to remember Elon saying this himself in a relatively recent announcement. I believe it was the one where they unveiled the human pod thingy to go ontop of the falcon, but could be wrong. Either way, they use modern design and manufacturing methods, where the competitors like ULA use methods developed in the 70s and refined slightly in the 80s.

Point, but again, it's not really the equipment itself that's valuable there - it's the design of the process, and the fact it's been validated.

> I also think about their 3,000 employees and billions(?) of dollars of capital equipment would be worth a lot?

The capital equipment probably is largely pretty specialized to not only the market they are in but their approach to it, and may not be that marketable on its own.

And, despite the name "human resources", regular employees aren't property, and their attachment to SpaceX may be fairly tenuous, particularly in the event of a change in management and operational style.

If I had to balance the scales it would be more by taking from the perceived value of whatsapp than adding to SpaceX.

Sorry, but how in the world will WhatsApp dislodge AT&T? The ONLY way it could do so is if FB and Musk/Google create the space-based inet access for the globe- then transition the entirety of the WhatsApp user-base to that system.

This isnt a bad idea actually - "if you want access to WhatsApp-X, then you must use Space-X inet service"

Gov't contracts are only something like one-third of SpaceX's revenues.

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