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Comment by rorykoehler | Hacker News Reader

Can anyone here with a little more knowledge answer the following please?

Who pays for the expense of these types of failures? Does SpaceX have some sort of 3rd party insurance from a private insurer or are they insured by NASA or another branch of the US gov?

How much is the equipment that got destroyed worth? If this happens multiple times in a short space of time as it seems to have recently does the cost of insurance go up for every launch? Does their analysis of data have any impact of the cost of insuring future launches?

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Both SpaceX and Orbital ATK carry insurance policies on their ISS resupply launches to protect against this sort of thing, although the policies are not absolutely comprehensive (Orbital's policy had a bothersome gap related to damages caused to the launch facility, owned by a third party). I do not know what the SpaceX vehicle's cost is, but I do know that the Antares rocket that Orbital ATK lost last year was itself valued at ~$200 million USD.

According to the One True Reliable Source of All Knowledge (https://en.wikipedia.org/wiki/Commercial_Resupply_Services), SpaceX got $1.6 billion for 12 resupply missions, so that's about $133 million for the Falcon 9, the Dragon, and all the work involved in shooting them into space. I have no clue what their profit margin would be on that, but that at least gives us an upper limit.

Every failed launch must be very painful. There doesn't seem to be much margin for error at those figures.

Launch failures are absolutely AGONIZING.

I was only an engineer on the sounding rocket program for a little under two years. Fortunately the two rockets I assisted with were successful, but there were payload failures while I was there that had to be investigated. The long days and nights some of my coworkers put in to investigate anomalies took a harsh toll on them.

A month or so after I left, the program had a complete launch vehicle failure (https://www.youtube.com/watch?v=dL9HEYuOWDU#t33m25s). The stress of investigating that caused four of the telemetry/power engineers working on that mission to quit within the several months following.

Indeed; I have an uncle who was on one of the 3 NASA Space Shuttle safety teams when the Challenger failed, although fortunately not the one who's remit included the SRBs. It triggered a stress related disability that seems to be a partly genetic thing, the same thing happened to me much more slowly a couple of decades later.

It shouldn't be.

I mean, things go wrong. It's the one universal truth of any engineering process. Finding out why the thing that went wrong went wrong, and making sure that it doesn't go wrong in the future is just part of the job.

I work on an on-call rotation --- it's not as exciting as rocket science, which is both unfortunate and fortunate --- and yes, things go wrong; and one of the biggest rules of our process for when things do go wrong is 'Is it the end of your shift? Then hand off and go home. NO THIS IS NOT NEGOTIABLE.'

If the process itself is unable to cope smoothly with something going wrong, then the process has gone wrong. (And someone should find out why it went wrong, and make sure that it doesn't go wrong in the future.)

> it's not as exciting as rocket science

One of the takeaways I had from my time working with rockets was that rocket science isn't even rocket science, most of the time. But, I am very biased because my experience was overwhelmingly negative.

I agree with you on all the rest.

Those costs don't include the cost of the payload itself, which is mainly handled by NASA or any third party wishing to run an experiment in space (but even then, NASA will subsidize).

There is a lot of money thrown around in commercial space, but it is not a particularly high-margin business. http://spacenews.com/39492orbital-eyes-broader-antares-busin... This cites Orbital Sciences (now Orbital ATK) CEO David Thompson as saying that the profit margin on CRS was about 5.5% and they hoped to reach 6% with CRS-3.

So with a 5.5% margin the $1.6 billion contract would be expected to yield $88 million in profit? Given what I'm assuming are large R&D expenditures on top of launch-related costs, I wonder whether the business is sustainable.

I used to work for Orbital as a NASA contractor. I never dealt with the business end of things, but the margins were small and very stable so long as there was work to be done (i.e. a giant (sub)contract on some huge NASA project). It wasn't exactly a pressure cooker of a work environment. The government stuff was a very different atmosphere than the commercial side.

I too am a former Orbital employee. I worked on the sounding rocket program. It was very much a pressure cooker because of the incessant pressure to work more overtime and do more missions in less time.

I always heard that other parts of the company were far more laid back. Wish I had worked in one of those parts.

Yeah, I worked there for 6 years, mostly at Goddard on the HST project. It was very relaxed - to the point of boredom at times (that's why I left, despite the insanely cool work). The guys in Virginia (where I worked about a year or so, but still on NASA stuff) told a different story about the Orbcomm and other commercial rocket businesses. I have no idea what it's like today though.

The R&D is baked into the contract itself.

5.5% profit, if reliably realized, is sustainable. It's comparable to a conservative investment return. That said, most businesses strive for more than that.

Yea where I live I get 7% (over inflation) on treasury bonds (it's kinda insane here, but 5.5% does seem like a low value). I assume all missions are fully insured to prevent bankruptcy with such low margins?

If it is so I would imagine simply improving the reliability track of the vehicle to lower insurance would have a very large effect on profitability. If they could eventually tank the insurance partially/completely in house (given a low chance of failure) that would be even better.

"We're not losing money AND we get to shoot things into space" sounds like a winning business model to me.

I don't know a whole lot more than you, but private insurance is definitely a thing for launches, and I would imagine SpaceX has a policy that covers this. The FAA has an interesting document about the space insurance market here: https://www.faa.gov/about/office_org/headquarters_offices/as...

The rockets are pre-paid. The purchaser gets insurance for the payload to cover their loss.

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