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Is this a bad sign for SpaceX? Is ‘getting leaner’ why they’re really doing this?

by Others 8y ago

aesopsfable 8y ago
it definitely feels like a bad (possibly financial) sign when it is about laying off some percent of workforce vs closing down a division...
x2f10 8y ago
Not that this necessarily disputes what you're alluding to, but this is not unusual for Elon: https://www.businessinsider.com/tesla-to-layoff-up-to-9-of-its-employees-2018-6 https://www.businessinsider.com/tesla-to-layoff-up-to-9-of-i...
adventured 8y ago
It's because projections for large launch demand are softer for the next few years than had previously been expected. It was thought that that weakness would give way and demand would perk back up. This layoff is happening because that's no longer expected to happen and they're not going to need the staff to match a much greater launch rate. What does it mean? It more or less officially confirms that Starlink is the only way they can finance the plans for Mars and BFR. There isn't going to be a huge uptick in launches in the coming years, such that that will be enough to dent their capital requirements. Musk has been attempting to finance some of SpaceX's capital demands with debt recently to avoid further diluting his stake, because it risks pushing him below a controlling interest. It's very questionable whether he'll be able to hold the line on that if the launch rate is going to remain fairly stagnant versus 2018.
- Robotbeat 8y ago
  I suspect that Starlink is, in fact, a significant CAUSE of the softening of GTO launch demand. All this LEO megaconstellations will be providing many of the same services as these long-lived, expensive geosynchronous birds, so the business case for them becomes much less certain. If Starlink, OneWeb, etc were cancelled tomorrow, it's likely GTO launch demand would pick back up significantly. Starlink is both the cause of and solution to this problem.
  - azernik 8y ago
    It's a game theory problem - even if Starlink wasn't happening, OneWeb would be going ahead anyway. So if the GEO satellite operators are going to be running scared anyway, SpaceX might as well get its own entrant into the market.
    - someperson 8y ago
      I don't think this argument holds up to analysis. According to the OneWeb and Starlink Wikipedia pages: 1. May 2014: OneWeb (formerly 'WorldVu') receives its initial $500 million in funding [1] 2. January 2015: SpaceX's satellite constellation is announced. [2] 3. December 2016: OneWeb receives an extra $1.2 billion from SoftBank and existing investors [3] 4. March 2017: Blue Origin signs OneWeb as a customer [4] If SpaceX was a neutral transport provider, there's little reason that OneWeb would have chosen Blue Origin over SpaceX. Blue Origin is probably offering very low prices, but SpaceX arguably could match them. [1] https://spacenews.com/40736google-backed-global-broadband-venture-secures-spectrum-for-satellite/ https://spacenews.com/40736google-backed-global-broadband-ve... [2] http://old.seattletimes.com/html/businesstechnology/2025480750_spacexmuskxml.html http://old.seattletimes.com/html/businesstechnology/20254807... [3] http://fortune.com/2016/12/19/softbank-oneweb/ http://fortune.com/2016/12/19/softbank-oneweb/ [4] https://spacenews.com/blue-origin-gets-oneweb-as-second-new-glenn-customer/ https://spacenews.com/blue-origin-gets-oneweb-as-second-new-...
      - azernik 8y ago
        I meant - no reason not to get that market share in the small-comsat market. As to why do it themselves as opposed to just be a provider to OneWeb, I think this is a sneaky way to do some price discrimination - SpaceX, like everyone else, may have some spare launch capacity, so having an internal (hopefully-profitable) project to soak up that demand rather than cratering launch prices may be worth it.
manicdee 8y ago
They recently switched from composite hull to metal hill for BFR/Starship, so it might be a case of terminating those employees whose primary focus was designing the composite hull and whose skills were not transferable. There will likely be talent pools that get thinned out too, welders who won’t be so necessary now that Block 5 is in production and Falcon Heavy is “operational” (meaning fewer expendable launches, less demand for welders to build new rockets). It doesn’t help that there’s been little warning (though I guessing a lot of these employees had some warning that they are going ormtheir teams are getting thinned). I hope for the best, the people leaving SpaceX have certainly got great resumes to recommend them to new employers!
- shaklee3 8y ago
  Falcon heavy is anything but operational. It has yet to prove itself and launch real payloads.
  - manicdee 8y ago
    It has flown actual hardware and launched a functional payload, making it operational. Just because you don’t consider a 2t payload launched to a Mars-crossing orbit to be “real” doesn’t mean the payload wasn’t launched.
DanCarvajal 8y ago
The asked cooperate lenders for $500M at the end of last year and most of the big guys balked when they looked at the books, only raised $273.

Is this a bad sign for SpaceX? Is ‘getting leaner’ why they’re really doing this?

by Others 8y ago

Is this a bad sign for SpaceX? Is ‘getting leaner’ why they’re really doing this?

it definitely feels like a bad (possibly financial) sign when it is about laying off some percent of workforce vs closing down a division...

x2f10 8y ago

Not that this necessarily disputes what you're alluding to, but this is not unusual for Elon: https://www.businessinsider.com/tesla-to-layoff-up-to-9-of-its-employees-2018-6 https://www.businessinsider.com/tesla-to-layoff-up-to-9-of-i...

adventured 8y ago

It's because projections for large launch demand are softer for the next few years than had previously been expected. It was thought that that weakness would give way and demand would perk back up. This layoff is happening because that's no longer expected to happen and they're not going to need the staff to match a much greater launch rate. What does it mean? It more or less officially confirms that Starlink is the only way they can finance the plans for Mars and BFR. There isn't going to be a huge uptick in launches in the coming years, such that that will be enough to dent their capital requirements. Musk has been attempting to finance some of SpaceX's capital demands with debt recently to avoid further diluting his stake, because it risks pushing him below a controlling interest. It's very questionable whether he'll be able to hold the line on that if the launch rate is going to remain fairly stagnant versus 2018.

Robotbeat 8y ago
I suspect that Starlink is, in fact, a significant CAUSE of the softening of GTO launch demand. All this LEO megaconstellations will be providing many of the same services as these long-lived, expensive geosynchronous birds, so the business case for them becomes much less certain. If Starlink, OneWeb, etc were cancelled tomorrow, it's likely GTO launch demand would pick back up significantly. Starlink is both the cause of and solution to this problem.
- azernik 8y ago
  It's a game theory problem - even if Starlink wasn't happening, OneWeb would be going ahead anyway. So if the GEO satellite operators are going to be running scared anyway, SpaceX might as well get its own entrant into the market.
  - someperson 8y ago
    I don't think this argument holds up to analysis. According to the OneWeb and Starlink Wikipedia pages: 1. May 2014: OneWeb (formerly 'WorldVu') receives its initial $500 million in funding [1] 2. January 2015: SpaceX's satellite constellation is announced. [2] 3. December 2016: OneWeb receives an extra $1.2 billion from SoftBank and existing investors [3] 4. March 2017: Blue Origin signs OneWeb as a customer [4] If SpaceX was a neutral transport provider, there's little reason that OneWeb would have chosen Blue Origin over SpaceX. Blue Origin is probably offering very low prices, but SpaceX arguably could match them. [1] https://spacenews.com/40736google-backed-global-broadband-venture-secures-spectrum-for-satellite/ https://spacenews.com/40736google-backed-global-broadband-ve... [2] http://old.seattletimes.com/html/businesstechnology/2025480750_spacexmuskxml.html http://old.seattletimes.com/html/businesstechnology/20254807... [3] http://fortune.com/2016/12/19/softbank-oneweb/ http://fortune.com/2016/12/19/softbank-oneweb/ [4] https://spacenews.com/blue-origin-gets-oneweb-as-second-new-glenn-customer/ https://spacenews.com/blue-origin-gets-oneweb-as-second-new-...
    - azernik 8y ago
      I meant - no reason not to get that market share in the small-comsat market. As to why do it themselves as opposed to just be a provider to OneWeb, I think this is a sneaky way to do some price discrimination - SpaceX, like everyone else, may have some spare launch capacity, so having an internal (hopefully-profitable) project to soak up that demand rather than cratering launch prices may be worth it.

manicdee 8y ago

They recently switched from composite hull to metal hill for BFR/Starship, so it might be a case of terminating those employees whose primary focus was designing the composite hull and whose skills were not transferable. There will likely be talent pools that get thinned out too, welders who won’t be so necessary now that Block 5 is in production and Falcon Heavy is “operational” (meaning fewer expendable launches, less demand for welders to build new rockets). It doesn’t help that there’s been little warning (though I guessing a lot of these employees had some warning that they are going ormtheir teams are getting thinned). I hope for the best, the people leaving SpaceX have certainly got great resumes to recommend them to new employers!

shaklee3 8y ago
Falcon heavy is anything but operational. It has yet to prove itself and launch real payloads.
- manicdee 8y ago
  It has flown actual hardware and launched a functional payload, making it operational. Just because you don’t consider a 2t payload launched to a Mars-crossing orbit to be “real” doesn’t mean the payload wasn’t launched.

DanCarvajal 8y ago

The asked cooperate lenders for $500M at the end of last year and most of the big guys balked when they looked at the books, only raised $273.