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?
I predict Elon will sell off pieces of SpaceX to pay for his going to Mars.
SpaceX, as you say, will need to be profitable. It won't invest money into a place where it cannot plausibly break even.
Elon Musk, on the other hand, will be consuming his personal fortune when he goes to Mars.
TLDR: Musk is building the company that can sell him a trip to Mars. In the end, investors will own most of SpaceX, Musk will be a pauper relative to his current wealth but on Mars, and everyone will be happy.
Elon has said he intends to bring the cost down to $500,000 per ticket. His current net worth is $12 billion, before Spacex, Tesla, and SolarCity have even really taken off mass market. Am I missing something here?
"$500,000" is not the cost for a ticket on the first mission, it's the eventual cost in the steady-state.
There are a lot of pieces left that need money dumped into them. Musk seems to be building all the technology pieces needed for a Zubrin "Case For Mars" trip. [1] Not all of those have immediate market needs that SpaceX can justify, such as artificial gravity. (NASA is extremely reluctant to have anything to do with this. Their tune might change if someone else can demonstrate it safely, but for now NASA policy is to only talk about microgravity, not artificial gravity.)
SpaceX needs to stay profitable. That is extremely important, because people need to be able to build plans around the company continuing to exist. It can't have loss-leaders.
However, Musk can be a loss-leader: he can hire SpaceX to (say) research, develop, and build artificial gravity labs. SpaceX would be hard pressed to find a business reason for building those in the intermediate term.
The "Case For Mars" got a ~$30 billion price tag from the same committee that gave the 90-day report a $450 billion price tag. SpaceX has demonstrated the ability to significantly aerospace costs, but even if they cut it by a factor of 6, that's still $5 billion in development costs that a company with a total valuation of $10 billion somehow has to support. (And "selling tickets to Mars" won't give them revenue for at least a decade.)
[1] The rough list of big technologies needed is about 5 elements long: 1. Heavy lift. 2. Methane-burning rockets. 3. In-situ resource production. 4. Artificial gravity. 5. Mars EDL. SpaceX is working directly on #1 and they have a nice research project going on #2. Methane rockets are justifiable by SpaceX because they have (some) practical advantages over LH/LOX rockets.
Good points, though I don't see why artificial gravity makes the list. Not only is it already a solved problem (centrifuges are easy enough to make) but it is also not necessary. People already live in space without the benefits of gravity for longer than the trip to mars would take.
Centrifuges in space are not a solved problem. AFAIK there has been exactly 1 experiment in space with artificial g, at very low levels of g. You want to be able to maneuver and orient your ship even while it is spinning, and you want to study the failure conditions (most plans call for two tethered modules held by cable -- you want to experiment with what happens if that cable under tension breaks).
Also, we just don't know what 3 years of Martian gravity does to a human. It would be good to see just how much better 3/8 g is against 0 g.
That's an interesting question. Part of the answer here is that I suspect that Elon is not driven by money other than as a tool to achieve his goals. In other words, even if he loses control or if profiting from his creations is not his personal goal he still will make a bunch of investors with some probability quite rich as long as they let him move towards his own goal.
In a way for an investor it is very nice to know what makes the founder(s) of their portfolio companies tick because it makes them more predictable.
If the route to Mars for Elon goes through profitability of SpaceX then I would hate to be in the way of his particular brand of steamroller, regardless of whether or not he himself benefits from that in a financial way.
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?
> The story so far has been that SpaceX will go public to raise the money to get to Mars
The idea of SpaceX being public makes me very nervous about the future of commercial space (though I really, really want them to succeed). Think back to when NASA lost people (Apollo 1, Challenger, Columbia) - these were seen as huge national tragedies followed by years of public scrutiny and gov't inquiry. But work pushed on, because their funding and momentum to continue with operations was decoupled from these reactions.
Now, imagine the first time SpaceX loses a human. If they are public, that could kill the entire company right there. Stock traders are not rational actors.
Drawing up those insurance contracts is a non-trivial endeavour too. There are specialist space divisions of major insurers who can package up space reinsurance as a nice investment whose returns are uncorrelated with market returns, but they're already in a situation where in years where one launch incident involving a sufficiently expensive satellite payload can wipe out the profits for the whole space insurance industry in a year. They make it back in future years because of the continuing demand for satellite launches. Now imagine there are people on board, the rocket is headed to colonise Mars and the CEO is on board. Not all of that risk to the future of private sector space industry as a whole is insurable.
If the ticket is only $500k, I don't see it being limited to the top 1% richest. Given that you're making a one way trip to another planet, you no longer have need for any of your property including your car and home. If a middle class person making $80k - $150k were to save for 10 - 15 years then sell all their property then they certainly would be able to put together $500k. I know I'd be willing to go if Musk is able to pull this off.
In terms of compensation for the colonists, what are you going to do with money when you're on a dead rock 225 million kilometres from Earth?
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.
