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Elon Musk’s SpaceX Is Raising Money at a Valuation Approaching $10B

118 points by spountzy 12y ago

habosa 12y ago
We live in a strange time when a company that has successfully flown useful cargo into space on their own hardware has a valuation around 50% of the most popular messaging app.
- smackfu 12y ago
  It's a lot harder to grow a hardware company. Especially if the market for your services is limited, so you need to develop new hardware (like the Falcon Heavy) in order to expand the market.
- xux 12y ago
  How is it strange? A service that's used by maybe <.00001% of the human population, compared to a service used by 500 million+ of the poorest population. How can they even compare?
- hnnewguy 12y ago
  >"We live in a strange time when a company that has successfully flown useful cargo into space on their own hardware has a valuation around 50%" We continue to live in a strange time where people speak of "deserved" valuations without ever talking about future potential profits, both for space companies and even messaging apps. Elsewhere in the comments, someone said that SpaceX will will simply "go public" to raise the money for Mars (sidenote: that must be an SV thing, to talk as if "going public" is like going to the ATM). Well, who in the public is going to invest without having some idea of what the business model here is, with a reasonable expectation of profits for the undertaken risk? Look, I'm fascinated by the work SpaceX is doing too, but I need something more concrete than a bunch of loose ideas ("Mine asteroids! Launch satellites!") before I'd turn over my money. It will probably (hopefully) happen eventually, but until then any valuation is meaningless, high or low.
- edgyswingset 12y ago
  Or a taxi company pretending to be a tech company taking advantage of known legal loopholes. How exactly is this not a bubble? Edit: Seems like folks still like Uber around here. Use the taxi service at its current costs while you can; it's not gonna stay that way.
- krschultz 12y ago
  Or to put it another way, we live in a relatively normal time, when a product used by a double digit percentage of every living human on the planet is worth more than a high capital expense gov't contractor. I love space, I love SpaceX in particular. That doesn't mean I think this valuation is out of whack. Facebook and Whatsapp have literally unprecedented reach. It's easy to hand wave off as 'just a messaging app', or 'just a social network', but we're talking about brands that achieved the global reach of Coca Cola in under 10 years. That's nothing to sneeze at. Meanwhile, SpaceX is making something roughly as technically difficult as stuff Boeing, Lockheed, General Dynamics are all doing. Should those companies be worth more?
Igglyboo 12y ago
Does anyone think it's crazy that a glorified messaging app is valued at $16B and that SpaceX, a company that puts things into orbit and literally does rocket science, is only $10B? I'm sure WhatsApp is an outlier because I see it brought up all the time when the topic of valuation arises but it still seems like SpaceX should be worth a lot more to me.
- pwnna 12y ago
  Don't forget that Facebook's market cap is almost 200B...
  - imranq 12y ago
    The reason facebook is worth that much is because its network effects have been realized. The social utility of 1 person on a network is nothing, but with 1 billion it's incredible. Humans can't perceive exponential effects intuitively and on the scale of SpaceX its almost impossible.
- gtirloni 12y ago
  I think the two sides of this discussion are battling between current economics vs. ROI for humanity. WhatsApp adds almost zero because there are many other options to text everybody. So it's just another company that got traction. It could die tomorrow and nobody would worry much. It can be easily replaced. There is no long lasting value (again, due to so many other options and the easiness of creating it from scratch again). Text chatting is a exhausted marketed, in terms of innovation. If WhatsApp is secretly working on hologram technology then it'd be another entirely different matter, but I doubt that's their focus. SpaceX, on the other hand, is making breakthroughs in engineering and science. What they create will be with us for a long time, can yield multiple patents, can feed into other inventions.. I think it's very difficult to argue that creating technology that allows us to go to other planets has little value. I think it has a lot. So I think we're substituting the question "where should humanity invest money?" for "which companies are correctly valued". The latter is much easier to answer based on economics. The former, quite difficult to agree on.
k3liutZu 12y ago
Perspective: half of WhatsApp Edit: eh, third!
ChuckMcM 12y ago
Sigh, in this new world of multiple series I don't think I'll get a chance to invest at all "early" in this company but I would if I could :-). One of those companies that I really like the product. So I continue to wait for their IPO if they decide to go that route.
- seanflyon 12y ago
  SpaceX won't IPO until Musk is convinced that investors would not back out of his plans to go to Mars. https://twitter.com/elonmusk/status/342566837852200960 https://twitter.com/elonmusk/status/342566837852200960
  - toomuchtodo 12y ago
    Could he not just remain a majority shareholder, thereby preventing a shift in direction?
- kybernetikos 12y ago
  I vaguely recall a quote from Musk saying something like SpaceX wouldn't IPO until it was making regular deliveries to a martian colony.
ellisonf9 12y ago
Elon Musk is probably one of those most ambitious entrepreneurs of our time. SpaceX and Tesla are both incredibly profound ventures.
driverdan 12y ago
> SpaceX has raised $245.5 million in private backing Looks like SpaceX's total funding is $400-500 million (private + Musk + VCs and excluding income). It's astounding what they've accomplished with such a relatively small amount of money compared to NASA's budget.
mrfusion 12y ago
Can individual accredited investors buy into SpaceX? Anyone know?
- scragg 12y ago
  I don't think so. You might have to work for them or buy a T-Shirt like I did.
- fleitz 12y ago
  Why would they not? I doubt SpaceX would care whether the entity was a corp or an individual, but if you have enough money to invest in SpaceX why are you holding it personally instead of via a holding company, etc?
  - seanflyon 12y ago
    I don't think small (only a few million dollars) investors can invest in SpaceX. They are not publicly traded, so any investment must be specifically negotiated.
mrfusion 12y ago
Will Elon maintain a controlling interest? I'd imagine going to Mars won't be very profitable, how does that goal jibe with being a for profit company with large investors?
- martythemaniak 12y ago
  The story so far has been that SpaceX will go public to raise the money to get to Mars. Theoretically it jibes well because there'll have to be a ton of launches to get there and establish a self-sustaining colony. What hasn't been talked about much (probably because it's a decade or two away and thus quite speculative) has been the economics of colonization. Yes, money can be raised for an expedition perhaps with public/international/crowdfunding assistance, but then what? What profit or economics will drive colonization? Would the chance of establishing their own new country be enough? How do you convince ~100k people to pay 500k each to go there?
  - danielweber 12y ago
    What profit or economics will drive colonization? Consumption goods, not investment goods. How do you convince ~100k people to pay 500k each to go there? Back of the envelope Drake-like equation: • Minimum wealth of richest 1% of Americans: $8.4 million • Of those, 1% are in good enough mental and physical health to go • Of those, 1% actually want to go. That's 30,000 people. Obviously those numbers are seat-of-my-pants. Maybe only 1-in-a-thousand of people capable of making the trip want to go. EDIT Tomp is right, my math was wrong.
    - JoeAltmaier 12y ago
      Or 1 in a million. Or 1. Its a chancy proposition. Wealthy Americans are a very narrow demographic. Their risk-taking gene may be very correlated. I think you'd get either a lot of them, or almost none.
    - tomp 12y ago
      That's more like 300 people.
marktangotango 12y ago
I think of Spacex being more like the rail roads in the 1800's. Elon is building the infrastructure so that when launch costs do come down, there will be an explosion of off Earth economic activity. And Spacex will be there with the tickets. Colonizing Mars may be a driver and talking point now, but will be minor in the long run. Asteroid mining, orbital habitats, Moon resorts (with flying domes ala Heinlein), Comet water chasing, it's all open. Mars' role may be huge, it's sooo much easier to get to orbit from Mars than it is from Earth.

118 points by spountzy 12y ago

We live in a strange time when a company that has successfully flown useful cargo into space on their own hardware has a valuation around 50% of the most popular messaging app.

smackfu 12y ago
It's a lot harder to grow a hardware company. Especially if the market for your services is limited, so you need to develop new hardware (like the Falcon Heavy) in order to expand the market.
xux 12y ago
How is it strange? A service that's used by maybe <.00001% of the human population, compared to a service used by 500 million+ of the poorest population. How can they even compare?
hnnewguy 12y ago
>"We live in a strange time when a company that has successfully flown useful cargo into space on their own hardware has a valuation around 50%" We continue to live in a strange time where people speak of "deserved" valuations without ever talking about future potential profits, both for space companies and even messaging apps. Elsewhere in the comments, someone said that SpaceX will will simply "go public" to raise the money for Mars (sidenote: that must be an SV thing, to talk as if "going public" is like going to the ATM). Well, who in the public is going to invest without having some idea of what the business model here is, with a reasonable expectation of profits for the undertaken risk? Look, I'm fascinated by the work SpaceX is doing too, but I need something more concrete than a bunch of loose ideas ("Mine asteroids! Launch satellites!") before I'd turn over my money. It will probably (hopefully) happen eventually, but until then any valuation is meaningless, high or low.
edgyswingset 12y ago
Or a taxi company pretending to be a tech company taking advantage of known legal loopholes. How exactly is this not a bubble? Edit: Seems like folks still like Uber around here. Use the taxi service at its current costs while you can; it's not gonna stay that way.
krschultz 12y ago
Or to put it another way, we live in a relatively normal time, when a product used by a double digit percentage of every living human on the planet is worth more than a high capital expense gov't contractor. I love space, I love SpaceX in particular. That doesn't mean I think this valuation is out of whack. Facebook and Whatsapp have literally unprecedented reach. It's easy to hand wave off as 'just a messaging app', or 'just a social network', but we're talking about brands that achieved the global reach of Coca Cola in under 10 years. That's nothing to sneeze at. Meanwhile, SpaceX is making something roughly as technically difficult as stuff Boeing, Lockheed, General Dynamics are all doing. Should those companies be worth more?

Igglyboo 12y ago

Does anyone think it's crazy that a glorified messaging app is valued at $16B and that SpaceX, a company that puts things into orbit and literally does rocket science, is only $10B? I'm sure WhatsApp is an outlier because I see it brought up all the time when the topic of valuation arises but it still seems like SpaceX should be worth a lot more to me.

pwnna 12y ago
Don't forget that Facebook's market cap is almost 200B...
- imranq 12y ago
  The reason facebook is worth that much is because its network effects have been realized. The social utility of 1 person on a network is nothing, but with 1 billion it's incredible. Humans can't perceive exponential effects intuitively and on the scale of SpaceX its almost impossible.
gtirloni 12y ago
I think the two sides of this discussion are battling between current economics vs. ROI for humanity. WhatsApp adds almost zero because there are many other options to text everybody. So it's just another company that got traction. It could die tomorrow and nobody would worry much. It can be easily replaced. There is no long lasting value (again, due to so many other options and the easiness of creating it from scratch again). Text chatting is a exhausted marketed, in terms of innovation. If WhatsApp is secretly working on hologram technology then it'd be another entirely different matter, but I doubt that's their focus. SpaceX, on the other hand, is making breakthroughs in engineering and science. What they create will be with us for a long time, can yield multiple patents, can feed into other inventions.. I think it's very difficult to argue that creating technology that allows us to go to other planets has little value. I think it has a lot. So I think we're substituting the question "where should humanity invest money?" for "which companies are correctly valued". The latter is much easier to answer based on economics. The former, quite difficult to agree on.

k3liutZu 12y ago

Perspective: half of WhatsApp Edit: eh, third!

ChuckMcM 12y ago

Sigh, in this new world of multiple series I don't think I'll get a chance to invest at all "early" in this company but I would if I could :-). One of those companies that I really like the product. So I continue to wait for their IPO if they decide to go that route.

seanflyon 12y ago
SpaceX won't IPO until Musk is convinced that investors would not back out of his plans to go to Mars. https://twitter.com/elonmusk/status/342566837852200960 https://twitter.com/elonmusk/status/342566837852200960
- toomuchtodo 12y ago
  Could he not just remain a majority shareholder, thereby preventing a shift in direction?
kybernetikos 12y ago
I vaguely recall a quote from Musk saying something like SpaceX wouldn't IPO until it was making regular deliveries to a martian colony.

ellisonf9 12y ago

Elon Musk is probably one of those most ambitious entrepreneurs of our time. SpaceX and Tesla are both incredibly profound ventures.

driverdan 12y ago

> SpaceX has raised $245.5 million in private backing Looks like SpaceX's total funding is $400-500 million (private + Musk + VCs and excluding income). It's astounding what they've accomplished with such a relatively small amount of money compared to NASA's budget.

mrfusion 12y ago

Can individual accredited investors buy into SpaceX? Anyone know?

scragg 12y ago
I don't think so. You might have to work for them or buy a T-Shirt like I did.
fleitz 12y ago
Why would they not? I doubt SpaceX would care whether the entity was a corp or an individual, but if you have enough money to invest in SpaceX why are you holding it personally instead of via a holding company, etc?
- seanflyon 12y ago
  I don't think small (only a few million dollars) investors can invest in SpaceX. They are not publicly traded, so any investment must be specifically negotiated.

mrfusion 12y ago

Will Elon maintain a controlling interest? I'd imagine going to Mars won't be very profitable, how does that goal jibe with being a for profit company with large investors?

martythemaniak 12y ago
The story so far has been that SpaceX will go public to raise the money to get to Mars. Theoretically it jibes well because there'll have to be a ton of launches to get there and establish a self-sustaining colony. What hasn't been talked about much (probably because it's a decade or two away and thus quite speculative) has been the economics of colonization. Yes, money can be raised for an expedition perhaps with public/international/crowdfunding assistance, but then what? What profit or economics will drive colonization? Would the chance of establishing their own new country be enough? How do you convince ~100k people to pay 500k each to go there?
- danielweber 12y ago
  What profit or economics will drive colonization? Consumption goods, not investment goods. How do you convince ~100k people to pay 500k each to go there? Back of the envelope Drake-like equation: • Minimum wealth of richest 1% of Americans: $8.4 million • Of those, 1% are in good enough mental and physical health to go • Of those, 1% actually want to go. That's 30,000 people. Obviously those numbers are seat-of-my-pants. Maybe only 1-in-a-thousand of people capable of making the trip want to go. EDIT Tomp is right, my math was wrong.
  - JoeAltmaier 12y ago
    Or 1 in a million. Or 1. Its a chancy proposition. Wealthy Americans are a very narrow demographic. Their risk-taking gene may be very correlated. I think you'd get either a lot of them, or almost none.
  - tomp 12y ago
    That's more like 300 people.

marktangotango 12y ago

I think of Spacex being more like the rail roads in the 1800's. Elon is building the infrastructure so that when launch costs do come down, there will be an explosion of off Earth economic activity. And Spacex will be there with the tickets. Colonizing Mars may be a driver and talking point now, but will be minor in the long run. Asteroid mining, orbital habitats, Moon resorts (with flying domes ala Heinlein), Comet water chasing, it's all open. Mars' role may be huge, it's sooo much easier to get to orbit from Mars than it is from Earth.