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Having been an amateur watcher of the last 20 years of satellite ventures, I find that going into the business of satellite internet/voice is only slightly less

Having been an amateur watcher of the last 20 years of satellite ventures, I find that going into the business of satellite internet/voice is only slightly less profit making than starting an airline. There's something exciting/sexy about launching satellites, which may be why people so easily dump money into it. But from Iridium, Globalstar, Terrestar (anyone remember that one? Seem to be quite relevant here), I don't think anyone attempting to reach a broad consumer market has ever made big money, or even survived long term. For some reason, the customer growth factors in their profit models (at the offered service pricing) are always wrong by a few hundred %, yet they keep being believed. Maybe it's because VCs think that their desire for a strong signal on their yacht correspond's to the average person's willingness to pay. Maybe ventures like Elon Musk's may break the mold with a different cost structure (while littering our outer space), but for a run of the mill satellite, odds are you're going to fail quite soon. The best way to make money related to satellites is to be the entity that buys the initial satellite company after it goes bankrupt.

cat199 7y ago
> I don't think anyone attempting to reach a broad consumer market has ever made big money, or even survived long term Don't follow this market closely but sirius/xm might be one exception - not sure of their leverage position, but even if healthy one could argue to your point they don't reach consumers directly, but rather via intermediaries such as car and a/v equipment manufacturers. My take on satellite is basically it's good for important but secondary network usage - anything that needs this should be fairly stable & constant beta provided good financials but looking for 'unicorn' style growth is probably mistaken as you mention.
m463 7y ago
I think for Elon Musk, developing space technology is the real business, and if the internet service generates cash flow, it would help defray the costs. If it happens to be profitable, that is just gravy.
state_less 7y ago
Your argument would be better if you had numbers to back it up. What is the capital costs for the project? How much does the capital cost per year? How many customers do you expect they will have? If Starlink is a 5 or 10 billion dollar project, that's $250-500M to service the capital. At $80 a month for service, you'd need ~500,000 subscribers to cover that cost. I think Starlink can get at least 500k subscribers and keep customers happy with bandwidth and latency. Anyway, that's just napkin math, but might serve as a better foundation for thinking how likely the business model is to succeed. https://en.wikipedia.org/wiki/Starlink https://en.wikipedia.org/wiki/Starlink

cat199 7y ago

> I don't think anyone attempting to reach a broad consumer market has ever made big money, or even survived long term Don't follow this market closely but sirius/xm might be one exception - not sure of their leverage position, but even if healthy one could argue to your point they don't reach consumers directly, but rather via intermediaries such as car and a/v equipment manufacturers. My take on satellite is basically it's good for important but secondary network usage - anything that needs this should be fairly stable & constant beta provided good financials but looking for 'unicorn' style growth is probably mistaken as you mention.

m463 7y ago

I think for Elon Musk, developing space technology is the real business, and if the internet service generates cash flow, it would help defray the costs. If it happens to be profitable, that is just gravy.

state_less 7y ago

Your argument would be better if you had numbers to back it up. What is the capital costs for the project? How much does the capital cost per year? How many customers do you expect they will have? If Starlink is a 5 or 10 billion dollar project, that's $250-500M to service the capital. At $80 a month for service, you'd need ~500,000 subscribers to cover that cost. I think Starlink can get at least 500k subscribers and keep customers happy with bandwidth and latency. Anyway, that's just napkin math, but might serve as a better foundation for thinking how likely the business model is to succeed. https://en.wikipedia.org/wiki/Starlink https://en.wikipedia.org/wiki/Starlink