What will be the impact of Coronavirus on the small launcher sector?

[ringsider]

If this slowdown is like the last one venture funding will dry up and leave a bunch of those companie high and dry.

You would have to think those who have just completed a funding round are in reasonable shape to weather the storm, while those at the other end of the funding cycle are in a sticky situation.

Which ones are best equipped to survive and which ones are in a difficult situation?

Equally, which smallsat companies are going to face issues?

[Asteroza]

Like that REM song, "everbody hurts..."


But a global recession means a lot of pseudo-vanity commercial cubesats are now off the table as companies need to devote free cash elsewhere, plus many government/university projects will be paused or outright cancelled since their funds got diverted/drained for coronavirus response and won't be refilled/paid back. Anyone not tangibly close to launching is probably doomed if not mostly self funded, unless their anchor launch customer (constellations) backfill some investment into the launch startups themselves.


So the ones with flight hardware now will probably survive (RocketLabs, Virgin Orbit, Astra, some of those chinese ICBM derivative startups). Relativity will survive in some form though not necessarily as a rocket company. Everybody else...

[TrevorMonty]

Future for Astra and Virgin isn't necessary given both need that first successful flight.

I think you are right about Relativity, their future is likely to be in 3rd printing not launch. Which is why are good investment.

[Bananas_on_Mars]

I think you are right about Relativity, their future is likely to be in 3rd printing not launch. Which is why are good investment.

„Orbital rockets with zero human labor“ doesn‘t sound bad in a crisis like that.

They might be able to produce while teleworking...

[TrevorMonty]

I think you are right about Relativity, their future is likely to be in 3rd printing not launch. Which is why are good investment.

„Orbital rockets with zero human labor“ doesn‘t sound bad in a crisis like that.

They might be able to produce while teleworking...

Their laboir costs won't be much lower than RL who have invested lot money in lowering Electron build cost. Major part of labour is not in building tanks but in assembling vehicle, preparing for launch, ground crew, general admin. All competition are 3d printing engines.

See RL ROSIE video.

[freddo411]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

[brussell]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

"That's just like, your opinion, man" - The dude

[high road]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

Conversely, COVID might not have much of an impact, as most companies are vaporware or in perpetual hibernation, and those that don't have the funds to ride this out would not have succeeded anyway...

[freddo411]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

"That's just like, your opinion, man" - The dude

True.  It's worth what was paid for it.

[rakaydos]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

"That's just like, your opinion, man" - The dude

Didnt Gwynn Shotwell say that there is ultimately room for zero smallsat launch providers?
As president of a company offering price-per-seat undercutting RL's price-per-launch with ridestare programs, and who is looking to get a superheavy lift vehical with all-up launch costs in the same ballpark as many smallsat launchers's all up costs, she's in a good position to eat ALL their lunches. Even rocketlab's.

[Asteroza]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

"That's just like, your opinion, man" - The dude

Didnt Gwynn Shotwell say that there is ultimately room for zero smallsat launch providers?
As president of a company offering price-per-seat undercutting RL's price-per-launch with ridestare programs, and who is looking to get a superheavy lift vehical with all-up launch costs in the same ballpark as many smallsat launchers's all up costs, she's in a good position to eat ALL their lunches. Even rocketlab's.

Only if those tug service providers like Momentus get their act together to make rideshares more viable for sats needing to get to other orbits. Not everyone wants to build in OTV level capabilities into their bus chassis.

[TrevorMonty]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

Seems like RL's customers didn't get memo about this market being non existent.

[john smith 19]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

Conversely, COVID might not have much of an impact, as most companies are vaporware or in perpetual hibernation, and those that don't have the funds to ride this out would not have succeeded anyway...

That sounds like about as accurate a statement of this market and covid 19's impact on it as I've seen anywhere.

It costs peanuts to say "We're a new small ELV startup whose going to launch our first payload in <timeframe> months time. Whose looking for a ride?"

It costs a shedload more time, money and experience to deliver anything close to what you originally claimed.

As always time will tell the truly determined and capable from the posturing and the over confident. 

[ringsider]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

Conversely, COVID might not have much of an impact, as most companies are vaporware or in perpetual hibernation, and those that don't have the funds to ride this out would not have succeeded anyway...

That sounds like about as accurate a statement of this market and covid 19's impact on it as I've seen anywhere.

It costs peanuts to say "We're a new small ELV startup whose going to launch our first payload in <timeframe> months time. Whose looking for a ride?"

It costs a shedload more time, money and experience to deliver anything close to what you originally claimed.

As always time will tell the truly determined and capable from the posturing and the over confident. 

The paradox / irony is that the vaporware firms with nothing more than a website and a some bold claims will survive, while those doing genuine work may not. If you take Astra as an exmaple, you could suspect that the reason they broke cover in January was to get more funding. Thus

1) losing the DARPA prize money when they weren't in competition against anyone else;
2) having another "anomaly" on the launcher (which has yet again demonstrated that, as Adam London said, they are giving up reliability to get costs down*);
and
3) the chilling effect of the coronavirus on capital markets

will almost certainly have some impact on their situation.

It might also hurt Virgin Orbit, as Branson is pulling in his horns and OneWeb are looking a bit shaky.

* “We’re actually not shooting for 100 percent reliability,” London said. Instead, Astra is willing to trade a small amount of reliability for a big cost savings. Ars Technica, 2/6/2020

[TartanPump]

They will all die (except Rocketlab).

Not because of COVID, but because there never was the market to launch very expensive tiny payloads.

Conversely, COVID might not have much of an impact, as most companies are vaporware or in perpetual hibernation, and those that don't have the funds to ride this out would not have succeeded anyway...

That sounds like about as accurate a statement of this market and covid 19's impact on it as I've seen anywhere.

It costs peanuts to say "We're a new small ELV startup whose going to launch our first payload in <timeframe> months time. Whose looking for a ride?"

It costs a shedload more time, money and experience to deliver anything close to what you originally claimed.

As always time will tell the truly determined and capable from the posturing and the over confident. 

The paradox / irony is that the vaporware firms with nothing more than a website and a some bold claims will survive, while those doing genuine work may not. If you take Astra as an exmaple, you could suspect that the reason they broke cover in January was to get more funding. Thus

1) losing the DARPA prize money when they weren't in competition against anyone else;
2) having another "anomaly" on the launcher (which has yet again demonstrated that, as Adam London said, they are giving up reliability to get costs down*);
and
3) the chilling effect of the coronavirus on capital markets

will almost certainly have some impact on their situation.

It might also hurt Virgin Orbit, as Branson is pulling in his horns and OneWeb are looking a bit shaky.

* “We’re actually not shooting for 100 percent reliability,” London said. Instead, Astra is willing to trade a small amount of reliability for a big cost savings. Ars Technica, 2/6/2020

I've been saying for a while that there's a launch bubble that will burst soon. But I'd always assumed that it'd happen when there was enough successful launchers to meet small-sat demand, and the funding for these vaporware (love that name) companies dries up.

Never thought a virus might be responsible for losing some of the most promising. It's already killed LEO Aerospace (but I'd have classified them more as Vaporware than anything else).

[TrevorMonty]

OneWeb maybe first victim of corona virus recession but it won't be last. The future is bleak for current startups if they don't have money in bank to see them through to first customer paid launch.

Lot of future payloads for these small LV companies are also likely to dissappear as new space startups fold due to lack of fimancing.

[ringsider]

OneWeb maybe first victim of corona virus recession but it won't be last. The future is bleak for current startups if they don't have money in bank to see them through to first customer paid launch.

Lot of future payloads for these small LV companies are also likely to dissappear as new space startups fold due to lack of fimancing.

I agree with the general point here but it needs to be more specific i.e. it needs to differentiate between those actually deploying resources to build a real vehicle, and the fantasy rockets; and then it needs to look at the specifics of each company.

For fantasy launchers, survival is trivial. It costs $100 a year to maintain a website and put out something on Twitter, which is what Carlos Niederstrasser ridiculously uses as his criteria of activity ("Some indication through a web site, social media,  traditional media, conference paper, press release, etc. that the effort has been active in the past two years.") So people with a simple SquareSpace website, some CAD diagrams and a free-of-charge Twitter account will "survive", and still be counted as players, which is like counting fantasy baseball teams alongside real ones.

If you are actually building something serious and real, it will be a lot harder, and case specific. For example, if you are Virgin Orbit, you would have to wonder what the future will bring. Your anchor customer just died - while the $43m law suit was still ongoing and in pre-trial - and did so without listing you as a creditor in the bankruptcy papers, possibly as a final [edit/gongora: you know the forum rules on language.] What will come of that OneWeb process? No idea, but Airbus and Arianespace hold the cards so it's unlikely to be good for Virgin Orbit.

Relativity justed completed a $140m VC round, and should be in a reasonably good position if they can make real progress instead of hyping Tim and Jordan's egos.

If you are Firefly, you would have to think that the status there might be constrained at a critical moment as it is all personal money, which is probably not a great comfort in this kind of crisis, and the R&D is partially happening in Ukraine, which will be locked down. But they could also be they are swimming in cash, it's hard to tell. Meanwhile Polyakov is the very definition of "mercurial", and Tom Markusic is not what I would call a bad-times CEO, which coudl give you pause for thought.

If they were in a fundraising cycle, Astra is probably going to have a rough time - and I suspect that is the case since all this unusual PR was probably to help them raise the beans. Ironically they came out of dark mode at exactly the wrong moment, and then proceeded to miss on all their objectives and destroy the benefits of all that secrecy over the past 2-3 years. That needs some fancy footwork to give investors confidence in this environment.

Spinlaunch just raised $35M so thay will survive the crisis, even if their tech is under scrutiny.

In Europe several small launch firms are looking for money e.g. Rocket Factory Augburg announced to the world that they are trying to raise $65m in January, as OHB cut them loose. PLD Space is probably on the hunt for money after those engine issues last year, and a hunt like that will be negatively impacted by these circumstances one way or another. Orbex are a dark horse as they are always slow to announce money and reveal technology e.g. they got some funding last year, but have kept it mostly quiet, unless you were watching closely.

Asia and Australia will have issues raising new money, which could impact the earlier stage firms like Gilmour and Interstellar.

Several will not survive. But annoyingly it is more likely the fantasy ones are those that will come through, and not the more genuine efforts, who need cold hard cash to keep the shop open.

[ChrisWilson68]

For example, if you are Virgin Orbit, you would have to wonder what the future will bring. Your anchor customer just died - while the $43m law suit was still ongoing and in pre-trial - and did so without listing you as a creditor in the bankruptcy papers, possibly as a final "fuck you". What will come of that OneWeb process? No idea, but Airbus and Arianespace hold the cards so it's unlikely to be good for Virgin Orbit.

Virgin Orbit also has the bad fortune that their parent and main backer, the Virgin Group, is concentrated in travel, which is among the sectors hardest-hit by this crisis.  Their latest venture is Virgin Voyages, a cruise ship line.  They ordered three ships and the first was delivered in February.

Virgin Group is going to be using whatever money they have to keep their core assets from failing.  They'll have nothing to support Virgin Orbit.

[ringsider]

As predicted above, Astra hits some turbulent weather:-

https://www.cnbc.com/2020/04/05/rocket-startup-astra-trims-staff-to-survive-pandemic-until-next-year.html

--

San Francisco-area rocket builder Astra cut its overall headcount to about 120 employees from about 150, a person familiar told CNBC.

Given Astra’s financial position, the person said the company’s leadership expects it has enough cash to last until the first quarter of next year.

The company also recently lost one of its rockets in a fire during testing, the person said, with Astra not expecting to attempt another launch for a few months.

--

That is a very worrying report on several levels.

[edzieba]

As predicted above, Astra hits some turbulent weather:-

https://www.cnbc.com/2020/04/05/rocket-startup-astra-trims-staff-to-survive-pandemic-until-next-year.html

--

San Francisco-area rocket builder Astra cut its overall headcount to about 120 employees from about 150, a person familiar told CNBC.

Given Astra’s financial position, the person said the company’s leadership expects it has enough cash to last until the first quarter of next year.

The company also recently lost one of its rockets in a fire during testing, the person said, with Astra not expecting to attempt another launch for a few months.

--

That is a very worrying report on several levels.

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

[novak]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

Hopefully that's all that they get hit with and are able to make it to space soon. 

But the thing about launch vehicle startups is that they need a lot of money and manpower.  Cutting 30 heads is likely a reduction in workforce they can ill afford, which will cost them schedule they don't have.  It is a good indication that they are trying to slam the breaks down on spending, something which can be difficult to do when you have multiple rockets worth of long lead items at various stage in production.  Such an action has the smell of the beginning of the end, and I'd be sprucing up my resume if I worked there. 

I will add that I don't have any insider knowledge of their operations/funding/status and hopefully I'm wrong.

[TrevorMonty]

Its not just launchers affected by lockdown and recession, some of their future payloads are also going to disappear as smallsat startups fail, making if even tougher for new LV entrants.

[ringsider]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

Yes but it won't end here, unless they get an investor to step up soon. It's too little to have a major impact.

Here's the math:

They apparently have ~1 yr of money with 150 people, production and ops => circa $15m for people and approx. the same for production/ops = $30m. Burn rate must be therefore around $2.5m per month

30 people laid off = approx. $6m in savings per yr., or 3 months at the post-reduction burn rate ($12m for staff and $12m for work). If they can't / won't stop the production / ops cost short term then the saving is lower - if it's only the people it's just $3m, or 1.5 months of cash. The truth is somewhere in the middle: 2 months.

So by making those 30 cuts today they gained themselves just 2 months of extra time. It almost wasn't worth doing.

It's a classic mistake as companies try to mitigate impacts - they typically make three small cuts, instead of one very much stronger one at the start, which costs them more money as they sustain those extra staff for that additional time trying to avoid the bigger cutbacks.

If they follow the classic curve they will cut another 25 in another 3 months, and then another 25 people 3 months after that - 75-80 in total, roughly half their staff. And in the meantime they burn more money sustaining those costs... 25 people for 6 months ($3m), 25 more for 3 months ($1.5m) => an extra $4.5m gone forever.

If they instead bit the bullet and cut 50% of staff now - 75 people - they would save $7.5m on salaries annually and have a new burn rate of around $7.5m annually for staff and an enforced lower work cost - say $7.5m for work. Thats'a new annual burn rate of $15m total or roughly $1.25m a month. On top of this they saved / gained $15m in cash, which is an extra year of time to survive and get a new investment sorted out. They would double their headroom.
 
Is it sad and horrible? Yes, it's tragic, but no less so than is happening to 17m other Americans right now (so far).
Does it hurt the schedule? Sure. But what's the point of meeting a schedule if you die while running to meet it?

 

[RedLineTrain]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

I understand that VCs are advising their companies to immediately work toward a minimum 1.5 years of runway.  Some are advising their companies toward even longer runways, with the expectation that the market will be shut for an extended period except for exceptional growth opportunities (e.g., Musk's Paypal after the dot-com bust).

I don't know much about Astra, but the fact that they managed a year or less of runway is a signal that they are being advised poorly or that they have not found themselves able to take sound advice.  Agree with ringsider.  Red flag.

Keep in mind that even SpaceX probably is taking measures to conserve cash, as Tesla has done (everyone not furloughed including the CEO takes a 10-30% salary cut, merit increases suspended, stock bonuses suspended).

[Robotbeat]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

I understand that VCs are advising their companies to immediately work toward a minimum 1.5 years of runway.  Some are advising their companies toward even longer runways, with the expectation that the market will be shut for an extended period except for exceptional growth opportunities (e.g., Musk's Paypal after the dot-com bust).

I don't know much about Astra, but the fact that they managed a year or less of runway is a signal that they are being advised poorly or that they have not found themselves able to take sound advice.  Agree with ringsider.  Red flag.

Keep in mind that even SpaceX probably is taking measures to conserve cash, as Tesla has done (everyone not furloughed including the CEO takes a 10-30% salary cut, merit increases suspended, stock bonuses suspended).

To be clear about Tesla, the biggest 30% cut is for the VPs and above, with smaller cuts for the other, less-senior non-furloughed employees.

[Robotbeat]

Launch startups are always marginal, even in a good economy. I wouldn't take a short runway as a "red flag" except to the extent that being a launch startup in a bad economy is already a red flag...

[Davidthefat]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

If they instead bit the bullet and cut 50% of staff now - 75 people - they would save $7.5m on salaries annually and have a new burn rate of around $7.5m annually for staff and an enforced lower work cost - say $7.5m for work. Thats'a new annual burn rate of $15m total or roughly $1.25m a month. On top of this they saved / gained $15m in cash, which is an extra year of time to survive and get a new investment sorted out. They would double their headroom.

Won't the work cost scale non linearly with headcount? The end product is still a rocket with a material cost + additional time and effort required for people that stayed to get up to date with the work the laid off people had done/were doing.

I've personally seen in another aerospace company intentionally cutting teams starting at the lowest levels of the assembly and cutting headcount progressively as the product is built until you are left with the testing teams, and heads of each subassembly.

[novak]

Launch startups are always marginal, even in a good economy. I wouldn't take a short runway as a "red flag" except to the extent that being a launch startup in a bad economy is already a red flag...

Agreed, for most startups 1.5 years of runway is a bit less than the likely ~$100M it takes to for a launch vehicle company trying to fly.  Consider that number to have only one significant figure, and they're on the cheaper side compared to some larger vehicles.  Obviously, they could save more money by not building things but that's unlikely to be a very successful strategy either.

It's especially bad timing for them as they were apparently trying to get investor attention/more runway just before this whole chain of events started.

[TrevorMonty]

Relativity is in good financial shape, thanks to Oct19 $140m fund raising.

https://techcrunch.com/2020/04/07/relativity-spaces-focus-on-3d-printing-and-cloud-based-software-helps-it-weather-the-covid-19-storm/

[su27k]

Pentagon identifies small launch industry as one of the most impacted by pandemic

[FutureSpaceTourist]

Coronavirus freezing funding for space companies and more than half may not make it, analyst says
PUBLISHED WED, APR 22 20208:46 AM EDT
Michael Sheetz
@THESHEETZTWEETZ

KEY POINTS

Investment in private space companies had seen a golden age in recent years, including a record nearly $6 billion last year.

“When the dust settles, we believe that a bit less than half of the companies listed on our Top Venture Companies list below will remain healthy and operational,” Quilty Analytics said in a report.

The vast majority of VC-backed space companies are not yet profitable, Quilty Analytics noted, with less than half of the companies generating revenue currently.

https://www.cnbc.com/2020/04/22/space-sectors-most-at-risk-from-coronavirus-freeze-in-vc-funding.html

[FutureSpaceTourist]

twitter.com/peter_j_beck/status/1253856476751253506

This is a good summary. A shake out was inevitable but sadly a lot of great ideas and innovations are going to disappear.

https://twitter.com/rocketrepreneur/status/1253860393354575873

Yeah, it's been weird seeing the impact of this downturn on different companies. Some solid companies are sucking wind, while some not quite as solid ones are doing fine just because of the timing of when they raised their last round.

twitter.com/rocketrepreneur/status/1253860636515131393

While a lot of people like to think we'll see a Darwinian whittling down that only leaves the most deserving companies, I think we'll see just as many frozen accidents where survival of the lucky wins out over survival of the fittest.

https://twitter.com/peter_j_beck/status/1253873078855073792

Agree, some poor ideas will also survive by having good friends in helpful places rather than solid business fundamentals. But I do believe that great ideas and great teams always win out in the end, so let’s not get to down. #speedbump

https://twitter.com/rocketrepreneur/status/1253860885174513664

I'm glad you guys were able to raise such a large round last year, and have a solid product on the market. I just hope at least one or two other small launch startups also make it through as well.

[Nilof]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

[TrevorMonty]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

[ChrisWilson68]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

[TrevorMonty]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

By your logic if SpaceX can't find enough smallsats to fill F9 there won't be any smallsats needing a launch.

[ChrisWilson68]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

By your logic if SpaceX can't find enough smallsats to fill F9 there won't be any smallsats needing a launch.

No.  By my logic if SpaceX can't find enough smallsats to fill F9 there won't be many smallsats needing launch.  That's why I explicitly said "won't be enough" instead of "won't be any".

My logic doesn't require SpaceX to take 100% market share among smallsat launches.  Just some significant market share.  If SpaceX has any significant market share at all and can't find enough customers to do regular launches, that puts a ceiling on the number of launches available to small launchers.  The exact ceiling depends on the exact market share of SpaceX.

[ChrisWilson68]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

Also, as someone who has spent many years working at startups, I can tell you that your claim that "revenue is most important thing to startup" is wrong.  Conserving cash is the most important thing to the vast majority of startups.  Whether it makes sense to pay more for a launch sooner or wait depends on their burn rate, how much more it would cost to accelerate the launch, what else the company is doing during the time of the launch delay, and how much the launch will influence their next funding round.  It's a complex issue that will be different for each company.

[ncb1397]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

Do small launchers need a lot of smallsats to launch though? Electron has launched 11 times over a couple years . That is maximum of 2475 kg of smallsats over ~2 years or ~309 kg per quarter. Apply that to SpaceX small satellite launch program, with regularly scheduled launches every quarter and $5000/kg revenue and revenue per flight is $1.5  million. Now, we don't know how financially viable electron was during that time period, but it is probably significantly better than Falcon 9 launches at $1.5 million per launch.

Anyways, unless you are launching falcon 9s with 225 kg to 1000kg of payloads, the small launchers are easier to fill up.

[high road]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

By your logic if SpaceX can't find enough smallsats to fill F9 there won't be any smallsats needing a launch.

Peter Beck's logic is that the loss in revenue (or the continuing expenditure) while the company is waiting for the sat to launch, would more than cover the price difference. However, he was comparing 5 weeks against the usual more than a year wait time which doesn't apply to SpaceX's dedicated smallsat launch if it's regular and diverse enough for most applications. Let alone the spare capacity on Starlink launches.

Given that they're branching out into all smallsat related services, I think they've got quite a niche of customers left where they provide a more appropriate service for than SpaceX can. They reduce the uncertainty for startups by providing a spacecraft (Photon) and communications once it's on orbit. At a considerable price, naturally. But if they can standardize, their cost might be lower than startups trying to figure out everything fromt he start for one off projects. ChrisWilson68, if you care to comment on that in the RocketLab section, I'd greatly appreciate that.

This whole 'smallsat launchers require far more launches than big launchers to be viable' is nonsense I think. That would certainly help to keep their prices somewhat lower. But if the niche demand is there at a price where building their much cheaper rockets (per launch) and running their much smaller company is paid for, they can probably survive quite well.

But to remain on topic: this crisis is going to hurt those with the highest burn rate the most, especially if their funding rounds have an unfortunate timing. The worst companies, having little to no burn rate, will remain. The ones that are actually quite far along, will have much more trouble. I thought a few weeks ago that it would only weed out those that would collapse anyway when their first orbital launch inevitably fails. However, many of those companies might just have done a new funding round before their next launch. Even SpaceX still plans funding rounds before major launches to have a safety net. Doing that in todays climate would hurt.

[ChrisWilson68]

Oneweb already folded a while ago, and the smallsat constellation business is being eaten up by SpaceX. Small launchers won't be launching constellations so much as single payloads.

The weaker smallsat companies will all fold. Even rocketlab will likely not recover their initial investment on smallsat launch in the near term. The companies will likely be valued based on whether they can keep a growth narrative going, which will likely involve going after sectors other than space launch to expand into.

You are assuming SpaceX can find enough customers to justify a launch. At $1m for 200kg smallsat that is 50 they need. Also integration work is lot nore for 50 smallsats of various shapes and sizes compared to single GEO sat.

We'll see how often SpaceX actually does their regular rideshare launches. If it is to infrequent customers will move to quicker provider even if it cost more. Every day satellite sits on ground is another day of lost revenue and revenue is most important thing to startup.

If SpaceX can't find enough customers to fill periodic dedicated smallsat launches, then there won't be enough launches for any of the small launcher companies to be financially viable.

Do small launchers need a lot of smallsats to launch though?

Yes, they do.  The business plan of every small launch company out there is built on the idea of large volume.  It's the only way to cover the high development and fixed costs when each launch is relatively low revenue.

Electron has launched 11 times over a couple years.

That is not enough for Rocket Lab to be financially viable.

[ChrisWilson68]

This whole 'smallsat launchers require far more launches than big launchers to be viable' is nonsense I think.

The reason smallsat launchers require far more launches than big launchers to be viable is that R&D and fixed costs don't scale linearly with launcher size.

[high road]

This whole 'smallsat launchers require far more launches than big launchers to be viable' is nonsense I think.

The reason smallsat launchers require far more launches than big launchers to be viable is that R&D and fixed costs don't scale linearly with launcher size.

Well yes, but both SpaceX and Rocket lab have already said that building a production chain for a large number of rockets is orders of magnitude harder than building that first rocket. So the idea that research costs level out relatively quickly after that first launch might be an illusion. Avoiding those costs but still increasing launch rate  is RL's motivation to try reusability. Earning back research costs is not going to go quickly. The old making a small fortune by starting with a large one and all that. But to stay in business, only the running costs need to be covered.

For the foreseeable future, research costs require new investment rounds for everyone out there not being bankrolled by the governmentt. Even SpaceX chooses to have new funding rounds to support their research costs at a pace higher than their revenue from launches.

[ringsider]

This whole 'smallsat launchers require far more launches than big launchers to be viable' is nonsense I think.

The reason smallsat launchers require far more launches than big launchers to be viable is that R&D and fixed costs don't scale linearly with launcher size.

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

[trm14]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

[high road]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

4-5 is a little low. Let's say 12, Rocket Lab's so far mythical 'monthly launches', at 6 million base price per launch, or 120 million in revenue. That's in the range of Antares, which launches up to twice a year at a base price of 80-85 million. More than Vega, launching 1-3 times per year at 37 million. Or HII, launching just once last year at 90 million (we'll have to see whether that's an exceptional year). More than half as much as Atlas V's 2 launches at 110 million base price, while rocket lab's expenditure is probably only a fraction of Atlas related costs or ULA's fixed costs not carried by Delta. But far less than SpaceX' launch rate.

To tie this back to the topic: coronavirus hurts established launch companies with plenty of money less, even though they will eventually be unable to compete. While potentially successful companies will be hurt a lot more. If Rocket Lab did not have their funding round when they did, they may well have been one of the victims, regardless of whether they could eventually reach those 12 launches a year.

[ChrisWilson68]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

4-5 is a little low. Let's say 12, Rocket Lab's so far mythical 'monthly launches', at 6 million base price per launch, or 120 million in revenue. That's in the range of Antares, which launches up to twice a year at a base price of 80-85 million. More than Vega, launching 1-3 times per year at 37 million. Or HII, launching just once last year at 90 million (we'll have to see whether that's an exceptional year). More than half as much as Atlas V's 2 launches at 110 million base price, while rocket lab's expenditure is probably only a fraction of Atlas related costs or ULA's fixed costs not carried by Delta. But far less than SpaceX' launch rate.

To tie this back to the topic: coronavirus hurts established launch companies with plenty of money less, even though they will eventually be unable to compete. While potentially successful companies will be hurt a lot more. If Rocket Lab did not have their funding round when they did, they may well have been one of the victims, regardless of whether they could eventually reach those 12 launches a year.

12 launches at $6 million revenue each would be $72 million, not $120 million.

[ringsider]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

100 people is approx. US$10M in cost at an average LLR of US$100k.

If you sell a single launch for about US$7.5m, which is where RL is at, you are turning US$30M on 4 launches, and have US$20M to build and operate 4 vehicles and at least break even.

If they can't do it for that price / cost point the business case doesn't make any sense.

Once you get above that approx. break even point it is very good - 12 launches a year is a good little business, even if you double the overhead:

Overhead for staff = US$20M (100% increase)
12 x say US$3.5M per launch to build and operate = US$42M
Total costs US$62M
Total revenue  12 x US$7.5M = US$90M
Gross profit = US$28M

And in some cases RL is probably getting paid 2-3x those prices for Wallops DoD launches, and has lower costs for launches as they have their own site and don't rent it from e.g. Alaska Aerospace.
 
R&D costs are irrelevant, of course.

[Mardlamock]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

100 people is approx. US$10M in cost at an average LLR of US$100k.

If you sell a single launch for about US$7.5m, which is where RL is at, you are turning US$30M on 4 launches, and have US$20M to build and operate 4 vehicles and at least break even.

If they can't do it for that price / cost point the business case doesn't make any sense.

Once you get above that approx. break even point it is very good - 12 launches a year is a good little business, even if you double the overhead:

Overhead for staff = US$20M (100% increase)
12 x say US$3.5M per launch to build and operate = US$42M
Total costs US$62M
Total revenue  12 x US$7.5M = US$90M
Gross profit = US$28M

And in some cases RL is probably getting paid 2-3x those prices for Wallops DoD launches, and has lower costs for launches as they have their own site and don't rent it from e.g. Alaska Aerospace.
 
R&D costs are irrelevant, of course.

iirc rocket lab has around 350 employees on linkedin.

[high road]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

4-5 is a little low. Let's say 12, Rocket Lab's so far mythical 'monthly launches', at 6 million base price per launch, or 120 million in revenue. That's in the range of Antares, which launches up to twice a year at a base price of 80-85 million. More than Vega, launching 1-3 times per year at 37 million. Or HII, launching just once last year at 90 million (we'll have to see whether that's an exceptional year). More than half as much as Atlas V's 2 launches at 110 million base price, while rocket lab's expenditure is probably only a fraction of Atlas related costs or ULA's fixed costs not carried by Delta. But far less than SpaceX' launch rate.

To tie this back to the topic: coronavirus hurts established launch companies with plenty of money less, even though they will eventually be unable to compete. While potentially successful companies will be hurt a lot more. If Rocket Lab did not have their funding round when they did, they may well have been one of the victims, regardless of whether they could eventually reach those 12 launches a year.

12 launches at $6 million revenue each would be $72 million, not $120 million.

Now how did I do that? So more like 20 launches for the numbers above. Still less than SpaceX, but more than the conventional launchers, not counting Arianspace's middleman launches and government funded launchers like CASC and Roscosmos. However, building a smaller and cheaper rocket should account for considerable running cost reductions. If they had already had a profitable year at 6 launches, I think we would have heard about it. So it's probably somewhere in between.

So if they actually produce one rocket every 35 years, they need on average one reuse from each of them to reach this high end number.

Sorry for going off topic like this, but it's waaay too interesting.

[high road]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

100 people is approx. US$10M in cost at an average LLR of US$100k.

If you sell a single launch for about US$7.5m, which is where RL is at, you are turning US$30M on 4 launches, and have US$20M to build and operate 4 vehicles and at least break even.

If they can't do it for that price / cost point the business case doesn't make any sense.

Once you get above that approx. break even point it is very good - 12 launches a year is a good little business, even if you double the overhead:

Overhead for staff = US$20M (100% increase)
12 x say US$3.5M per launch to build and operate = US$42M
Total costs US$62M
Total revenue  12 x US$7.5M = US$90M
Gross profit = US$28M

And in some cases RL is probably getting paid 2-3x those prices for Wallops DoD launches, and has lower costs for launches as they have their own site and don't rent it from e.g. Alaska Aerospace.
 
R&D costs are irrelevant, of course.

iirc rocket lab has around 350 employees on linkedin.

The discussion is more nuanced than that. 100 employees was what they had once they flew the first rocket. 500 is what they have now to produce one rocket every 35 days. Cost per rocket is probably down, but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

[ringsider]

If you have ~100 people, which was what RL had on first launch, and lower your ambitions from world domination, you probably only need 4-5 flights a year to have a sustainable business long term. R&D costs to get to the first flight are irrelevant.

So something like $20-$30 million revenue? That sounds really marginal for 100 people plus other costs.

100 people is approx. US$10M in cost at an average LLR of US$100k.

If you sell a single launch for about US$7.5m, which is where RL is at, you are turning US$30M on 4 launches, and have US$20M to build and operate 4 vehicles and at least break even.

If they can't do it for that price / cost point the business case doesn't make any sense.

Once you get above that approx. break even point it is very good - 12 launches a year is a good little business, even if you double the overhead:

Overhead for staff = US$20M (100% increase)
12 x say US$3.5M per launch to build and operate = US$42M
Total costs US$62M
Total revenue  12 x US$7.5M = US$90M
Gross profit = US$28M

And in some cases RL is probably getting paid 2-3x those prices for Wallops DoD launches, and has lower costs for launches as they have their own site and don't rent it from e.g. Alaska Aerospace.
 
R&D costs are irrelevant, of course.

iirc rocket lab has around 350 employees on linkedin.

Now, maybe, but not on frst launch. The calculation still scales.

[ringsider]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

[TrevorMonty]

The 500 staff aren't involved solely with Electron. RL is now into smallsat market with Photon and Sinclair purchase. They also offer mission management of satellites.

[high road]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant 😉

[ringsider]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

[ChrisWilson68]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

A lot of the small launcher companies have not completed their R&D, so it is relevant to consider whether they can make back their R&D investment when considering whether it's worth it for investors to continue funding them.

[ringsider]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

A lot of the small launcher companies have not completed their R&D, so it is relevant to consider whether they can make back their R&D investment when considering whether it's worth it for investors to continue funding them.

I am sure Peter Beck is very happy that there are people who still think that.

[high road]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

A few posts ago I stated that all of the newspace companies are still spending more on R&D than their revenue allows, and they need to refinance to keep that up. If they need to do that in the current circumstances, that's bad news. Whether they need to pay it back sunk costs is not relevant per sé, but that they need to refinance it eventually to continue operating is.

[CameronD]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

A few posts ago I stated that all of the newspace companies are still spending more on R&D than their revenue allows, and they need to refinance to keep that up. If they need to do that in the current circumstances, that's bad news. Whether they need to pay it back sunk costs is not relevant per sé, but that they need to refinance it eventually to continue operating is.

Sure, but (a) interest rates are ridiculously low at the moment, (b) there are a lot of folks, from design professionals to construction workers, desperate for work and (c) we all know this Coronavirus thing isn't going to last forever - so in many ways this is an absolutely perfect time to refinance, work on your R&D under reduced time, political and public pressure (heck, it seems the bug is all anyone from government to news outlets wants to talk about) and aim to be ready to go the moment the skies clear again.

Is the money box half full or half empty?? 

[TrevorMonty]

This Corona caused recession is going to take years to climb out of, better part of decade. Corona has yet to run its cause, either everybody is exposed or vaccinated, with later about 18-24months away, assuming a vaccine is possible given there seems to be more than one strain.

[CameronD]

This Corona caused recession is going to take years to climb out of, better part of decade. …...

You reckon it'll be the same duration as a typical space-related R&D project??  For planning purposes, how utterly convenient! 

[high road]

but R&D cost to get from the first to one every 35 days has most likely not been recovered yet.

This is my favorite fallacy. That expense is irrelevant.

For the topic this discussion is being held in, it's relevant

No it's not. For Rocket Lab or any other firm like them - Virgin Orbit, Relativity, ABL or Firefly, or for that matter firms like Facebook or Google - it is irrelevant.

A few posts ago I stated that all of the newspace companies are still spending more on R&D than their revenue allows, and they need to refinance to keep that up. If they need to do that in the current circumstances, that's bad news. Whether they need to pay it back sunk costs is not relevant per sé, but that they need to refinance it eventually to continue operating is.

Sure, but (a) interest rates are ridiculously low at the moment, (b) there are a lot of folks, from design professionals to construction workers, desperate for work and (c) we all know this Coronavirus thing isn't going to last forever - so in many ways this is an absolutely perfect time to refinance, work on your R&D under reduced time, political and public pressure (heck, it seems the bug is all anyone from government to news outlets wants to talk about) and aim to be ready to go the moment the skies clear again.

Is the money box half full or half empty?? 

You're talking about loans. If startups are able to convince banks to lend them enough money at a low interest rate, they don't need to dilute their existing investor's shares by raising more capital. It's the investor money 'box' that's definitely less than half full at the moment. Given the number of capital raising rounds we saw, banks aren't throwing money at startups just because interest rates are low. They do care about getting their money back.

[ringsider]

After missing the DARPA challenge deadline, losing a vehicle, and being hit with a pandemic halting operations? A mere 30-person (20%) headcount reduction and a few months delay is sing-it-from-the-rooftops good news.

Yes but it won't end here, unless they get an investor to step up soon. It's too little to have a major impact.

Here's the math:

They apparently have ~1 yr of money with 150 people, production and ops => circa $15m for people and approx. the same for production/ops = $30m. Burn rate must be therefore around $2.5m per month

30 people laid off = approx. $6m in savings per yr., or 3 months at the post-reduction burn rate ($12m for staff and $12m for work). If they can't / won't stop the production / ops cost short term then the saving is lower - if it's only the people it's just $3m, or 1.5 months of cash. The truth is somewhere in the middle: 2 months.

So by making those 30 cuts today they gained themselves just 2 months of extra time. It almost wasn't worth doing.

It's a classic mistake as companies try to mitigate impacts - they typically make three small cuts, instead of one very much stronger one at the start, which costs them more money as they sustain those extra staff for that additional time trying to avoid the bigger cutbacks.

If they follow the classic curve they will cut another 25 in another 3 months, and then another 25 people 3 months after that - 75-80 in total, roughly half their staff. And in the meantime they burn more money sustaining those costs... 25 people for 6 months ($3m), 25 more for 3 months ($1.5m) => an extra $4.5m gone forever.

If they instead bit the bullet and cut 50% of staff now - 75 people - they would save $7.5m on salaries annually and have a new burn rate of around $7.5m annually for staff and an enforced lower work cost - say $7.5m for work. Thats'a new annual burn rate of $15m total or roughly $1.25m a month. On top of this they saved / gained $15m in cash, which is an extra year of time to survive and get a new investment sorted out. They would double their headroom.

By the way, as shown above, I predicted a second round of layoffs, occuring 3 months after the April round, and here we are: according to those tweets above, and by simply counting the people in recent photos, by July they too had done the math and were moving more people on. I count about 90 in a recent image. So they have now moved approx. 60 people out of their workforce - another 30.

What typically also happens in this stage is that the good people sense the looming cliff, competitors smell the blood in the water, and a bunch of key people will be in the market looking around for new options.

The problem is those are the people you wanted to stay, the ones you tried to protect during the layoffs. But some key players will leave, they always do, and typically at the worst moment. Collateral damage.

And that leads to mistakes because you lack technical leadership. We may be seeing some elements of this in those tweets and various issues in these past few days in ground equipment.

[Bananas_on_Mars]

Laying off people IMO is quite shortsighted if you‘re into an R&D or on-ramp phase anyhow. Those people usually are there because they are needed, not unnecessary ballast.

Relativity is hiring despite Covid-19, they have had their last funding round at the right time and it’s been big enough to carry the whole company up to commercial operations (they say).

My prediction is that the companies powering through this will come out ahead.