Musk's asset accrual and paying for Mars

[Vanspace]

One income source that is also likely to help is the DoD. They have been dreaming of getting a sensor layer for decades and SpaceX can quote a fixed price for flying their instruments on a starlink bus by a date certain. That combines the dreams of every general and bean counter. If the contract has not already been signed via the black budget, it will be sooner rather than later. Adds a few billion in revenue and likely a billion in profit.

[oldAtlas_Eguy]

If all the goals are met, then sending a Starship to Mars would cost no more than, say, $160 million (including the cost of the sent Starship which could be recovered once ISRU is set up).

If it advances in cost savings to that point the impact is instead of 10 Starships it would be 25 starships fully loaded with equipment. 20 Cargo and 5 Crew. Up to 500 personnel but better to have half that for safety in case some crew ships are not capable of returning. That is still 250 personnel. That is a very large base/outpost.

The point was that funds are available to do things in a massive way without even taxing greatly his assets.

[M.E.T.]

So why is SpaceX raising another billion dollars to fund Starship and Starlink, according to CNBC? No doubt diluting Musk’s stake even further?

If he is so cash rich as some of you claim, why doesn’t he just pour the paltry billion into the company like Bezos does every year?

The answer is, as Elon himself has stated, that he is relatively cash poor despite the high valuation of his share capital. What I don’t get is why he doesn’t borrow a billion or two against his Tesla shares and buy up every share in the new SpaceX capital raising round. Maintaining as many shares as possible in SpaceX should be his primary goal. The last thing he wants are opportunities for minority shareholders to sue in years to come when his goals for SpaceX diverge from normal investor objectives which are ultimately to earn profits.

None of these other investors care about Mars more than making returns on their investments.

Anyway, he knows what he is doing. I am merely pointing out that he wouldn’t be raising capital from outside investors if he had the cash himself to fund near term activities without diluting his ownership stake.

[docmordrid]

>
After market didn't stick. It is down .14% from 7/22 close. There is a lot of resistance at $1600 and $300 billion when you are seeing earnings beat and revenue beat and it doesn't actually move.
>

It wasn't just Tesla; NASDAQ as a whole was down.

[Robotbeat]

Elon plays things close and always has as much of his capital as possible invested. He has figured out how to pay for Starlink and Starship using investor money and not his own by tying their fates together: Starlink in its full manifestation is too ambitious to fly just using Falcon 9, so if investors want to get the full returns of Starlink, they have to fund Starship...

Kind of interesting TBH. In 2016, Elon Musk's net worth was about $10B, and ITS (as Starship was called at the time) was so huge and used carbon fiber that it'd probably cost about $10B to develop, and there wasn't really anything that would justify its existence financially beyond Musk's Mars ambition.

The slide from his 2016 ITS talk on funding:
FUNDING
   Steal Underpants
   Launch Satellites
   Send Cargo and Astronauts to ISS
   Kickstarter
   Profit

Elon's net worth is now over $70B, Starship development cost (at least for the initial version) is probably closer to $2B than $10B (due to shrinking, switching to stainless which doesn't need the biggest autoclave in the world, and simplification), and now Starship has a firm, financial justification in being a launcher for Starlink and Artemis (and less firm, Earth 2 Earth).

Elon now has more than enough raw assets to pay for Starship and the initial missions but he no longer has to!

Fundraising for Starlink (and now Artemis) is the "Kickstarter" step... Very, very clever. As long as Starlink and Starship both enter service successfully, they will continue even if something happens to Elon (as opposed to relying on their sugar daddy). Elon may be less liquid and less straight up wealthy as Bezos, but I actually think the Starship/Mars plan is now on firmer footing than Bezos' grand vision.


I think you could argue that actually serving customers is a better motivation to execute than $1 billion annually in free money.

[Robotbeat]

If all the goals are met, then sending a Starship to Mars would cost no more than, say, $160 million (including the cost of the sent Starship which could be recovered once ISRU is set up).

If it advances in cost savings to that point the impact is instead of 10 Starships it would be 25 starships fully loaded with equipment. 20 Cargo and 5 Crew. Up to 500 personnel but better to have half that for safety in case some crew ships are not capable of returning. That is still 250 personnel. That is a very large base/outpost.

The point was that funds are available to do things in a massive way without even taxing greatly his assets.

Yup. If Starship only kinda works (i.e. meets roughly Falcon 9 marginal costs per launch but no lower... but can do refueling and land on Mars), Elon has the capital to build a massive base with thousands or even tens of thousands of people and maintain it with tens of thousands of tons of resupply every synod basically indefinitely on the interest alone. Not enough for self-sustaining most likely, but pretty substantial. Bigger than Antarctica.

(And that's without income from NASA or any other source...)

[tbellman]

What I don’t get is why he doesn’t borrow a billion or two against his Tesla shares and buy up every share in the new SpaceX capital raising round.

Loans need to be payed backed, with interest.  Investments tend to be more flexible about schedules.

Maintaining as many shares as possible in SpaceX should be his primary goal. The last thing he wants are opportunities for minority shareholders to sue in years to come when his goals for SpaceX diverge from normal investor objectives which are ultimately to earn profits.

None of these other investors care about Mars more than making returns on their investments.

Presumably investors will need to convince Musk, and the other owners, that they are "good" investors, who actually care about SpaceX's goals of settling Mars, before they are allowed to invest.  Or at least that they are OK with it, and are investing for a long-term, and uncertain, potential monetary return.

In some ways it's like a contract.  SpaceX would say "you give us money, we are going to do A, B and C, only A is likely to be profitable the next decade, while B and C are going to eat most of the profits from A for a long time, and has a high risk of never being profitable".  If the investor is OK with that when they make the investment, and Musk/SpaceX documents this, then the investor should not have much chance of winning such a lawsuit, if they change their mind later on.

(Edit to add: Perhaps a Memorandum of Understanding is closer.  They are not legally binding by themselves, like a contract, but they can be used as evidence that the other part was on board with The Plan.  The big thing, though, is vetting your investors to get ones you trust to do the right thing.)

If SpaceX should start wasting money, and go down paths that are unlikely to achieve the goals of B and C in a reasonable time-frame, that's a different thing, though.

[dondar]

Thanks for the details.

But back to the main point. With total current assets >$70B. Freeing up the ~$2B to fund work on both Starlink and Starship for 2021 and any funds they may need to finish 2020 is likely not much of a problem.

If Starlink is successful in matter of 2 years it will become self fundable in its expansion and then producing significant profits. The whole key is having the funds now in order to keep pressing ahead prior to Starlink and Starship get to an operational profitable position. For both that may be as few as 3 years from now. With also additional outside funding for even faster expansion and for "side" projects like Mars habitat, ISRU and other equipment to be sent to Mars in as early as 2024 or 2026. Also extra funds to more rapidly design, produce, test and certify a manned Starship by 2025 would also be helpful. But all of this external funding investments into SpaceX through to 2025 is likely to be no more than $10B. Greater amounts of money would likely not make much of an impact for how soon things would be available.In 2028 if all the Starship goals are met sending a Starship to Mars would cost likely ~$500M for all 8+ launches. $10B would outfit and fill with equipment ~10 Starships, Manned and Cargo, all sent to Mars in 2028.

He is not going to free Tesla assets (of any kind) before 2028. He needs all control he has now because the pressure to break company up is immense and he needs all evaluation of 2028 (see 650bil.) to start throwing his megaton to Mars.
I understand that the "decision horizon" is most difficult thing out there but try to take more "process bullets" in your view at the same time. Musk has very clear priorities and the Starship is an instrument (just, only, simply) to get something he want.

they don't have people to do Starship quicker. Even at this level the project clearly is barely controlled. Parallel development in hardware processes is heresy.

They have enough financial sources to complete Starlink. More than enough. I look not at the SpaceX finances per se (I don't know them) but the people financing SpaceX are known and they sound pretty much dedicated to the project.

The new round is going to be filled up by an "internal" fund Gigafund specifically built to fund Spacex. It was built in 2017 when Starlink became a thing. If( when) they will need more money they will find more money just as "easy". These are smart people who proved many times they know what they are doing.
P.S. big investors can not just come in and buy SpaceX shares. There is transfer vetting process and they don't accept strangers of any kind.
"Don't bet against Elon" was first said by one of the major investors in SpaceX.

[spacenut]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars. 

[Rocket Science]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars.

As long as it doesn't become hopefully another Iridium cautionary tale...

[RedLineTrain]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars.

As long as it doesn't become hopefully another Iridium cautionary tale...

Iridium Mk 1 and Starlink are different beasts.

1.  Iridium was primarily financed by debt, putting impossible timing pressure on its introduction and subscriber growth.
2.  Iridium's handset development was outsourced to partners who didn't come through.
3.  Iridium was hampered throughout by gateway partners with differing views and interests.
4.  Iridium was structured as an entity to extract maximum service fees for Motorola.
5.  Iridium was hampered by a lack of affordable launch, making "Super Iridium" prohibitively costly and therefore the constellation that was introduced was technologically stunted (couldn't be used indoors).

And so on.  For sure Starlink could fail, but it would fail in a very different way.

[RedLineTrain]

What I don’t get is why he doesn’t borrow a billion or two against his Tesla shares and buy up every share in the new SpaceX capital raising round. Maintaining as many shares as possible in SpaceX should be his primary goal. The last thing he wants are opportunities for minority shareholders to sue in years to come when his goals for SpaceX diverge from normal investor objectives which are ultimately to earn profits.

With Tesla having such volatile stock prices, Musk needs to be careful to never have a margin call that he can't meet.  Also, at this time, he probably is more worried about keeping control and influence in Tesla than he is of keeping control and influence in SpaceX.

[Slarty1080]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars.

As long as it doesn't become hopefully another Iridium cautionary tale...

Iridium Mk 1 and Starlink are different beasts.

1.  Iridium was primarily financed by debt, putting impossible timing pressure on its introduction and subscriber growth.
2.  Iridium's handset development was outsourced to partners who didn't come through.
3.  Iridium was hampered throughout by gateway partners with differing views and interests.
4.  Iridium was structured as an entity to extract maximum service fees for Motorola.
5.  Iridium was hampered by a lack of affordable launch, making "Super Iridium" prohibitively costly and therefore the constellation that was introduced was technologically stunted (couldn't be used indoors).

And so on.  For sure Starlink could fail, but it would fail in a very different way.

And Iridium development was at a time when money was money and interest rates mattered. Since then we've had the credit crunch and covid and you can hear the money printing presses from Mars. Nowadays credit is cheap so why not make use of it?

[Slarty1080]

What I don’t get is why he doesn’t borrow a billion or two against his Tesla shares and buy up every share in the new SpaceX capital raising round. Maintaining as many shares as possible in SpaceX should be his primary goal. The last thing he wants are opportunities for minority shareholders to sue in years to come when his goals for SpaceX diverge from normal investor objectives which are ultimately to earn profits.

With Tesla having such volatile stock prices, Musk needs to be careful to never have a margin call that he can't meet.  Also, at this time, he probably is more worried about keeping control and influence in Tesla than he is of keeping control and influence in SpaceX.

He owns 54% of SpaceX stock equivalent to 78% of the voting shares.

[RedLineTrain]

He owns 54% of SpaceX stock equivalent to 78% of the voting shares.

Rather, as of April 17, he owns 47% of SpaceX stock, equivalent to 78% of the voting shares.

[Nomadd]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars.

As long as it doesn't become hopefully another Iridium cautionary tale...

Iridium Mk 1 and Starlink are different beasts.

1.  Iridium was primarily financed by debt, putting impossible timing pressure on its introduction and subscriber growth.
2.  Iridium's handset development was outsourced to partners who didn't come through.
3.  Iridium was hampered throughout by gateway partners with differing views and interests.
4.  Iridium was structured as an entity to extract maximum service fees for Motorola.
5.  Iridium was hampered by a lack of affordable launch, making "Super Iridium" prohibitively costly and therefore the constellation that was introduced was technologically stunted (couldn't be used indoors).

And so on.  For sure Starlink could fail, but it would fail in a very different way.

Those were all minor compared to the main issue.
 Iridium came out the same time the cellphone industry exploded onto the scene. It needed a lot of customers at $3 a minute, and wound up with a few customers at $1.50 a minute.

[ncb1397]

The new round is going to be filled up by an "internal" fund Gigafund specifically built to fund Spacex.

Gigafund doesn't have the money to fill the round. They have raised $219 million and already spent some of that on other things or previous rounds. They don't have $.5-$1 billion dollars.

[RedLineTrain]

I read a while back, in some business magazine, that if Musk gets Starlink operational and gets 40-50 million customers, SpaceX will be a 100 billion dollar company or more.  They said Musk could eventually become the richest man in the world passing Jeff Bezos.  Starlink and SpaceX are privately owned so Musk would have mostly complete control of those companies. 

Starlink if it pans out world wide, will pay for Mars.

As long as it doesn't become hopefully another Iridium cautionary tale...

Iridium Mk 1 and Starlink are different beasts.

1.  Iridium was primarily financed by debt, putting impossible timing pressure on its introduction and subscriber growth.
2.  Iridium's handset development was outsourced to partners who didn't come through.
3.  Iridium was hampered throughout by gateway partners with differing views and interests.
4.  Iridium was structured as an entity to extract maximum service fees for Motorola.
5.  Iridium was hampered by a lack of affordable launch, making "Super Iridium" prohibitively costly and therefore the constellation that was introduced was technologically stunted (couldn't be used indoors).

And so on.  For sure Starlink could fail, but it would fail in a very different way.

Those were all minor compared to the main issue.
 Iridium came out the same time the cellphone industry exploded onto the scene. It needed a lot of customers at $3 a minute, and wound up with a few customers at $1.50 a minute.

Indeed, Iridium was an inferior technology to the cell phones in that its handsets were bulky and couldn't be used indoors.  A "Super Iridium" (higher power, more sats, lower altitudes) could have solved that.  As I understand, it was briefly considered by Motorola but was discarded because of the prohibitive costs for these at the time.

[OTV Booster]

If all the goals are met, then sending a Starship to Mars would cost no more than, say, $160 million (including the cost of the sent Starship which could be recovered once ISRU is set up).

If it advances in cost savings to that point the impact is instead of 10 Starships it would be 25 starships fully loaded with equipment. 20 Cargo and 5 Crew. Up to 500 personnel but better to have half that for safety in case some crew ships are not capable of returning. That is still 250 personnel. That is a very large base/outpost.

The point was that funds are available to do things in a massive way without even taxing greatly his assets.

Ooh! Don't forget the backend costs. Chances are that propellant ISRU will not be on line for the first mission. IMO, most probable mission profile is landing enough propellant to reach LMO with tankers on orbit with return prop.


There will be some balance between crew and landed cargo where theoretically everything get done by the time they have to return. I don't have a clue where this balance is except it will be some function of total landed ships and resources needed to get crew back.


An unknown is how efficiently one human hour labor on Mars racks up against one on earth. It seems that it's better that some tasks remain undone than everything's been done and everybody sets around eating and breathing.


Five hundred seems way too high for a first mission. My thinking has tended towards 12-20 but I could stretch this to 50. There had better be several excellent management types there with both technical and people skills or things could go south very fast. Nobody can go home for a long weekend to decompress, or go fishing or hit a bar. Even submarines only stay out 6 months max. Smaller just feels more workable than big.


Phil

[OTV Booster]

Elon plays things close and always has as much of his capital as possible invested. He has figured out how to pay for Starlink and Starship using investor money and not his own by tying their fates together: Starlink in its full manifestation is too ambitious to fly just using Falcon 9, so if investors want to get the full returns of Starlink, they have to fund Starship...

Kind of interesting TBH. In 2016, Elon Musk's net worth was about $10B, and ITS (as Starship was called at the time) was so huge and used carbon fiber that it'd probably cost about $10B to develop, and there wasn't really anything that would justify its existence financially beyond Musk's Mars ambition.

The slide from his 2016 ITS talk on funding:
FUNDING
   Steal Underpants
   Launch Satellites
   Send Cargo and Astronauts to ISS
   Kickstarter
   Profit

Elon's net worth is now over $70B, Starship development cost (at least for the initial version) is probably closer to $2B than $10B (due to shrinking, switching to stainless which doesn't need the biggest autoclave in the world, and simplification), and now Starship has a firm, financial justification in being a launcher for Starlink and Artemis (and less firm, Earth 2 Earth).

Elon now has more than enough raw assets to pay for Starship and the initial missions but he no longer has to!

Fundraising for Starlink (and now Artemis) is the "Kickstarter" step... Very, very clever. As long as Starlink and Starship both enter service successfully, they will continue even if something happens to Elon (as opposed to relying on their sugar daddy). Elon may be less liquid and less straight up wealthy as Bezos, but I actually think the Starship/Mars plan is now on firmer footing than Bezos' grand vision.


I think you could argue that actually serving customers is a better motivation to execute than $1 billion annually in free money.

Another reason for not committing his own resources: As long as he has investors his assets are available if he hits a snag. This is when fresh resources are most needed but least available.