Financing BFR by selling underpants...
For BFR and Mars missions, few doubt technical feasibility of the proposed concept. Main issue was, is and will be how to finance development and future Mars missions.
Various pitches to the US government were mostly unsuccessful. SpaceX has been strangely absent from any Deep Space Gateway or Mars mission plans. And new lunar goal of US National Space Council seems to be focused around SLS and Orion architecture
While COTS, CRS-1, CRS-2 and CCP programs built around ISS have been bread and butter for SpaceX, bringing far more money than all commercial contracts put together, SpaceX has fought a long uphill battle to win NSS (military) launch contracts. It pitched DragonLab and failed. It pitched to Bigelow, but no commitments there. ISS is nearing inevitable end, being 2024 or 2028. It announced circumlunar Dragon mission as a (desperate?) push towards space tourism market.
As SpaceX finally managed to prove Dragon and Falcon as reliable vehicles and established them as crucial part of US access to space, Elon Musk announces that they plan to phase out the product as soon as they have their next generation vehicle (BFR) ready. Even worse, they plan to stop production of reusable elements (boosters, Dragons, and perhaps fairings) in the near future to focus their R&D and production resources on vehicle that is not even defined yet.
I believe that information raised at least some eyebrows in US DoD and NASA. Delta IV is going away, Atlas V should be retired due to its Russian connection, Vulcan development going on a shoestring budget. And now Elon Musk plans to retire Falcon? And Falcon Heavy retirement announced even before the first rocket flew? And Dragon 2 before even the first demonstration mission? Such announcement must be producing negative sentiment for SpaceX in NASA. Organization that flew space shuttle for thirty years. Old space companies would never do something like that.
Sure, Elon Musk mentioned that they would stock up their boosters for customers preferring to stay with certified rockets. That obviously addresses primarily NASA, since commercial customers would probably not mind switch to BFR if additional discount is applied. But does that mean rising costs for NASA? Maybe another contract to maintain Falcon capabilities just like ULA? This move leaves NASA and DoD in uncertain situation where they might feel to be manipulated by a capricious billionaire. And large institutions don't like uncertainty.
At the same time, Elon Musk does not want SpaceX engineering and manufacturing team to be bogged down with obsolete architecture. So how to move forward without angering their main customers? And how to finance the BFR development?
Orbital tourism cannot reach large scale with Falcon architecture. Starlink (LEO constellation) requires huge investment itself and cannot become cash cow. Starlink would meet fierce competition from OneWeb, Viasat, 03b and others. So Starlink would likely anger their largest commercial customers and thus drain another revenue stream.
So how could SpaceX calm down their largest customers? One easy way is selling off their Falcon/Dragon business to old space companies. From NASA perspective, that would remove long term risk of using Falcon/Dragon for decades, if necessary. DoD would get assured access to space, despite any issues. And the buyer would get access to the established customer base and the first effectively reusable space boosters.
SpaceX would get a free cash and refocus on BFR only. So that would be a big gamble, where a buyer would bet that BFR will fail to deliver its promises from the business perspective. On the other hand, SpaceX would bet that BFR will make Falcon and Dragon obsolete and too expensive.
Beside selling Falcon themed underpants, SpaceX could try to perform kickstarter fundraising of Starlink primarily among their commercial customers (both existing and potential ones) such as SES, Intelsat, Iridium, Eutelsat, OneWeb, Viasat. None of these customers are by themselves large (SES has booked five launches and Iridium seven launches) compared to NASA (29 missions, plus development contracts plus Dragon). In financial terms, NASA alone is ten times larger customer than both SES and Iridium. But if BFR will not be able to obtain government missions (which is initially very likely), commercial customers and Starlink would provide the main revenue source for BFR. So it is quite logical for SpaceX to try to convert their competition into investors and customers for long term success of their BFR project.
But main investors for Starlink are most likely big Internet companies from Silicon Valley. Google/Alphabet was the early bird investor with in the one billion investment round. But Facebook, Amazon, Apple and other Internet giants have a keen interest to provide high bandwidth and low latency Internet access direct to consumers. Current mobile and fixed telecom operators represent big obstacle for further growth of these companies worldwide. Project Loon, Failed Facebook investment in Amos-6 satellite for Africa, Aquilla drones, Google Fiber, Apple's involvement with Boeing NGSO constellation all show Silicon valley desire for low-cost broadband worldwide. And they have large sums of money waiting for investment. Initial Alphabet investment into SpaceX might be just the beginning. The real problem is conversation into large number of subscriptions worldwide, which would require long runway for Starlink, requiring investment above SpaceX capacity. But selling launches, satellites and operations for Starlink? That gives much quicker cashflow and reduces long term risk of Starlink to SpaceX.
Various pitches to the US government were mostly unsuccessful. SpaceX has been strangely absent from any Deep Space Gateway or Mars mission plans. And new lunar goal of US National Space Council seems to be focused around SLS and Orion architecture
While COTS, CRS-1, CRS-2 and CCP programs built around ISS have been bread and butter for SpaceX, bringing far more money than all commercial contracts put together, SpaceX has fought a long uphill battle to win NSS (military) launch contracts. It pitched DragonLab and failed. It pitched to Bigelow, but no commitments there. ISS is nearing inevitable end, being 2024 or 2028. It announced circumlunar Dragon mission as a (desperate?) push towards space tourism market.
As SpaceX finally managed to prove Dragon and Falcon as reliable vehicles and established them as crucial part of US access to space, Elon Musk announces that they plan to phase out the product as soon as they have their next generation vehicle (BFR) ready. Even worse, they plan to stop production of reusable elements (boosters, Dragons, and perhaps fairings) in the near future to focus their R&D and production resources on vehicle that is not even defined yet.
I believe that information raised at least some eyebrows in US DoD and NASA. Delta IV is going away, Atlas V should be retired due to its Russian connection, Vulcan development going on a shoestring budget. And now Elon Musk plans to retire Falcon? And Falcon Heavy retirement announced even before the first rocket flew? And Dragon 2 before even the first demonstration mission? Such announcement must be producing negative sentiment for SpaceX in NASA. Organization that flew space shuttle for thirty years. Old space companies would never do something like that.
Sure, Elon Musk mentioned that they would stock up their boosters for customers preferring to stay with certified rockets. That obviously addresses primarily NASA, since commercial customers would probably not mind switch to BFR if additional discount is applied. But does that mean rising costs for NASA? Maybe another contract to maintain Falcon capabilities just like ULA? This move leaves NASA and DoD in uncertain situation where they might feel to be manipulated by a capricious billionaire. And large institutions don't like uncertainty.
At the same time, Elon Musk does not want SpaceX engineering and manufacturing team to be bogged down with obsolete architecture. So how to move forward without angering their main customers? And how to finance the BFR development?
Orbital tourism cannot reach large scale with Falcon architecture. Starlink (LEO constellation) requires huge investment itself and cannot become cash cow. Starlink would meet fierce competition from OneWeb, Viasat, 03b and others. So Starlink would likely anger their largest commercial customers and thus drain another revenue stream.
So how could SpaceX calm down their largest customers? One easy way is selling off their Falcon/Dragon business to old space companies. From NASA perspective, that would remove long term risk of using Falcon/Dragon for decades, if necessary. DoD would get assured access to space, despite any issues. And the buyer would get access to the established customer base and the first effectively reusable space boosters.
SpaceX would get a free cash and refocus on BFR only. So that would be a big gamble, where a buyer would bet that BFR will fail to deliver its promises from the business perspective. On the other hand, SpaceX would bet that BFR will make Falcon and Dragon obsolete and too expensive.
Beside selling Falcon themed underpants, SpaceX could try to perform kickstarter fundraising of Starlink primarily among their commercial customers (both existing and potential ones) such as SES, Intelsat, Iridium, Eutelsat, OneWeb, Viasat. None of these customers are by themselves large (SES has booked five launches and Iridium seven launches) compared to NASA (29 missions, plus development contracts plus Dragon). In financial terms, NASA alone is ten times larger customer than both SES and Iridium. But if BFR will not be able to obtain government missions (which is initially very likely), commercial customers and Starlink would provide the main revenue source for BFR. So it is quite logical for SpaceX to try to convert their competition into investors and customers for long term success of their BFR project.
But main investors for Starlink are most likely big Internet companies from Silicon Valley. Google/Alphabet was the early bird investor with in the one billion investment round. But Facebook, Amazon, Apple and other Internet giants have a keen interest to provide high bandwidth and low latency Internet access direct to consumers. Current mobile and fixed telecom operators represent big obstacle for further growth of these companies worldwide. Project Loon, Failed Facebook investment in Amos-6 satellite for Africa, Aquilla drones, Google Fiber, Apple's involvement with Boeing NGSO constellation all show Silicon valley desire for low-cost broadband worldwide. And they have large sums of money waiting for investment. Initial Alphabet investment into SpaceX might be just the beginning. The real problem is conversation into large number of subscriptions worldwide, which would require long runway for Starlink, requiring investment above SpaceX capacity. But selling launches, satellites and operations for Starlink? That gives much quicker cashflow and reduces long term risk of Starlink to SpaceX.
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