> "The total company expenditures since being founded in 2002 through the 2010 fiscal year were less than $800 million which includes all the development costs for the Falcon 1, Falcon 9 and Dragon."
Wow. Facebook could have started an entire space program for less money than they spent on Instagram.
I think it was pretty clear - "less money than they spent on Instagram"
"money".
Facebook didn't spend that in cash or most likely anywhere near that. Now if Space-x had invested 1% of their market and done this, the comparison would be fair.
No. Facebook could have taken the risk of trying to develop a space program, with a potential cost less than the price for Instagram.
Before it began, there was no guarantee that SpaceX would be successful, or that it would only cost $800 million in expenditures. And on the flip side, I expect the current value of SpaceX is higher than $1 billion.
Extreme example of how risk distorts price: if I buy a lottery ticket for $1 and win $1 million, does that mean that some guy who bought a soda for the same money could have done the same instead of buying the soda? Was the money spent on the soda wasted?
Elon took a risk, and appears to have won quite a position.
This is indeed a very sad reflection of our priorities at this time.
We don't act unless we absolutely have to. I mean problems like disease cure, poverty and hunger eradication, space colonization can be solved with that kind of money on hand.
This is also what I think of Aliens too! We talk of super intelligent aliens who would have colonized space.That would have never happened, because just like us, they might have wasted their money, energy and resources on photo sharing apps and putting birds in pigs instead of doing some real stuff that actually matters.
Or from another perspective, the entire cost of SpaceX's history to develop all these technologies is less than a SINGLE launch of the Shuttle by NASA.
Does SpaceX's cost include the original research costs that NASA incurred by actually researching the underlying principles the Dragon rockets use?
I think people are underestimating the costs NASA incurred by being first. Take the X15 for example, its first test flights were without its planned engine because nobody up until that point had ever built a throttleable rocket engine.
Now its well known how to build them and what not to do. I'm not saying NASA is efficient, but direct numerical comparisons like these unnecessarily distort the various differences in history between the two.
The shuttles many deficiencies are rather well documented as well. And it, now had, features that the Dragon rockets don't serve such as the obvious recovery of space payloads for example.
That research would benefit a NASA attempt to build a new launch vehicle as well, yet there's no way they could have done so at anywhere near the cost SpaceX managed (they even acknowledged that with a study).
We're not being armchair historians here, hypothesizing about a world where NASA never existed. We're talking about rocket development in the here and now. And in the real world of today SpaceX is able to build new launch vehicles about 5x cheaper than NASA could.
The main point to me is that it's comparing apples and oranges: an organization that's mandated to do long-term fundamental research along with space travel, along with satisfying military priorities, engaging in scientific research, and on top of that, release a large amount of data to the public that others can build on.
Versus... an organization that just wants to launch a rocket, building on that data and fundamental research that others spend money doing, but which doesn't have any strong commitment to any of the other priorities (such as releasing new reusable data or basic-science research for others to build on in turn). Of course the latter organization will be cheaper, because the entire organization has a different set of priorities. In particular, NASA's mandate requires it to spend money on trying to make its results constitute scientific advances, i.e. publishable work, releasable data, etc.; whereas Space-X is happy to save money by not doing so.
For example, I've been looking for the FTP site where I can download raw data originating from Space-X and released into the public domain, and I can't find one. That's not very helpful for others who're looking to build on their advances!
We can compare apples to apples, though. Again, this isn't about defunding NASA, it's about maximizing return on expenditures. NASA doesn't have to stop doing science or exploration to take advantage of commercially developed launch vehicles. Indeed, by making such a switch it would free up money for NASA to spend even more on doing those things.
If NASA were spending $5 billion a year on developing its own automobiles when they could just buy cars from Toyota or Ford the decision would be a no brainer.
If NASA were spending $5 billion a year on developing its own automobiles when they could just buy cars from Toyota or Ford the decision would be a no brainer.
True, if Toyota exists to supply those automobiles. Not, if NASA is the first one to make a automobile.
Remember NASA was the first to make many things which are not available off the shelf.
If it is NASA or SpaceX they both can look at the original research by nasa. The question is if NOW SpaceX and NASA got requirments for a new rocket that could do X. How long and how costly would it be to do it and SpaceX clearly looks much better at that.
Nobodys claims NASAs people or its research in the last 60 years sucked.
Where did you find that information about per-launch costs of the shuttle? Another post here claims this data hasn't been released.
Edit: so it seems $1.2-$1.5 billion is the accepted figure from outside analysis, but I don't see how this is possible. With a total budget of $7.2 billion in 1985, I don't see how they paid for $10.8 billion in launches.
It's astonishing to see this much transparency into launch costs.
Governments have long held this information close to their chests. NASA, in particular, has never published accounting on what the Space Shuttle really costs, since this information would help a competitor (Russians, Chinese, etc.) build a similar vehicle with better economics.
Is that really why? I worked at NASA for a while, and everything we did was in theory public info (to my knowledge, at least) - but nobody had any incentive to make anything actually available. (It's a shame - lots of cool stuff is jus sitting on hard drives).
I still work at NASA and the GP is referencing a myth. There are plenty of reports out there detailing how much Shuttle cost by many different accounting metrics.
But the reasons Nasa had to do it that way - weren't
Space-X has a single goal - lift 1000Kg up 500km cheaply.
The space shuttle had a million competing goals - from the airforce who wanted a certain glide slope, senators that wanted bits built in their home state, Presidents that wanted a launch on the day of a press conference, scientists that wanted a platform for different experiments, Astronauts that wanted justification for crewed vessels. And of course Nasa that needed to find budgets to keep 'N' Apollo era people employed.
> The space shuttle had a million competing goals - from the airforce who wanted a certain glide slope
You missed the one goal that was in the forefront of all others:
Justify a large budget / keep the permanent bureaucracy employed.
Elon doesn't care about this.
In the government sector labor force size is a BENEFIT.
In the private sector it's a COST.
That is why private sectors of the economy deliver more and more value relative to the number of people employed over time (farming, publishing, software, hardware) and why government dominated sectors move in the opposite direction (the only sectors to gain headcount in the recession are education, healthcare, and government).
I hope you don't really view the world in a black & white narrative pitting the evil bloated government against sprightly nimble innovative companies. Bureaucracy, bloat, waste & failure exists in both the public & private sector. Heck a lot of people are driven to startups because of the dysfunction they've found in other private sector jobs. It's also silly to think this way when you realize that most large government programs involve private contractors doing some, most or all of the actual work.
As far as delivering more value, a lot of economies of scale are thanks to technological advances. A lot of technological advances can be credited to expensive governmental programs that were springboards the private sector was later able to launch off of.
> I hope you don't really view the world in a black & white narrative pitting the evil bloated government against sprightly nimble innovative companies.
You read a WHOLE lot in there.
Look at the point that I actually made, and JUST that point:
In Government, headcount is a (political, organization, etc.) benefit.
>In Government, headcount is a (political, organization, etc.) benefit.
Can be said for the private sector as well. Unless you think the private sector is growth averse.
>In industry it is a cost.
Governmental employees are not free.
You also made other points as well such as the #1 goal of the Space Shuttle program was to keep bureaucrats employed & that the private sector is more efficient regarding the value it creates per employee.
"Building Britain’s Recovery: Achieving Full Employment", published on 15 December 2009, restates the Government’s response to the recession and signals the start of the programme to return to full employment.
A company is an OPEN system (they can cut jobs and make more money), but a country is a (mostly) CLOSED system (someones spending is somebody else's income). Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high.
I'm not supporting government waste, but the way. Efficiency should be the goal, but you obviously have NO idea what you are talking about.
"Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high."
That would suggest that the solution for unemployment is to simply give all unemployed people public sector jobs - which doesn't sound like a very good idea to me.
It's a plausible (temporary) solution, known as the "employer of last resort". It worked okay in the 1930s; even today, a lot of the national-parks infrastructure is stuff that was built in that era, because instead of just handing out welfare payments, the government hired people on short-term contracts instead. Same stimulus/welfare effect (people who can't find other work are paid for a few months), but the national parks got some useful work out of the deal too.
- They were forced (or tricked, or coerced) into working for private companies. We're talking about jobs in supermarkets and (the UK equivalent of) dollar stores.
- The taxpayer paid the wage (the same as jobseeker's allowance, I think). The private companies didn't pay anything.
- Companies could just sack their workers and enjoy the benefits of free labour.
So much for the minimum wage! How can minimum-wage workers compete with free labour? (Free from the company's perspective, that is.) And this was supposed to reduce unemployment?!
And anyway, if people are working, why aren't they getting minimum wage?
> Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high.
Yeah, it worked very well in Russia and East Germany. So well people were risking their lives to go somewhere else for better opportunities. And if North-Koreans could get out of their country, I'm sure they would be happy witnesses of a full-employment state policy.
You obviously have NO idea what you are talking about.
It all goes together, my friend. WHen you destroy the economy, you have to replace it by a state-fueled economy and therefore the totalitarian package goes with it. We have yet to see totalitarian states with free economy. It does not exist because it goes against its own logic. That's not hard to understand.
The most successful economies are not free and feature heavy governmental influence. One of the most successful, China, could be considered a totalitarian regime.
What is your point? I am not seeing the problem with a government having a national employment goal & I am not shocked to find that private industry has no interest in making a national employment goal.
But you see businesses aiming for improved productivity all the time. A desire for full employment is just the national version of that. It's not like a country can easily or ethically fire or cut adrift swathes of its citizenry at once.
Not really. Let me give you an example. In the 1980s, it was costing £70/ton to mine coal worth £40/ton. Labour party policy was that jobs for their supporters were more important than creating wealth for the whole country. In the end, raw economics forced a resolution - the country couldn't afford to double everyone's energy bill just to score some ideological points.
Thatcher's anti-union stance & unwillingness to negotiate with the coal union when on strike eventually lead to the industry's demise. If your view was that domestic UK coal production was a waste of money, then you can thank the Thatcher run government for shutting it down. Government can do good & bad depending on where you stand.
If Scargill had said "give us the means of production and we will demonstrate the superiority of collective ownership" then that would be one thing. The mines were costing twice as much to run as they were worth; the unions could have "bought" them for one pound! But that's not what happened. He said "just give us money". It's impossible to negotiate like that.
Incidentally, I never understood why Thatcher was evil for not subsidizing the loss-making mines, and modern politicians are evil for subsidizing loss-making banks (i.e. RBS).
I do not think there could have been any way to make the industry profitable on the open market. Subsidies from surrounding governments were much higher for their domestic coal than the UK was willing to pay for theirs. Cheaper easily mined coal imports from Australia, Russia, South Africa along with North Sea oil & gas flooded alternatives on to the market. The fact that the assets were privatized and sold off later, yet the UK coal industry remained mainly dead along with the "green movement" probably shows that the industry could not have survived on it's own without the subsidies.
Some view Thatcher destroyed the industry not only because it was unprofitable but also as an attack against the unions, supposedly going so far as to shutdown even profitable mines or those that had potential. Putting 180,000+ out of work is going to cause some outrage from those you are putting out of work & the surrounding communities that relied on those wages. Also some may view domestic energy production as a valuable asset to retain even if it is not market viable just due to energy security/independence concerns.
As far as the bank comparison, I think some people have a kinder view towards the plight of a coal miner working in dangerous conditions for not a lot of pay vs the plight of an executive banker raking in massive bonuses while tanking the economy.
It wasn't raw economics, it was politics. Thatcher saw that the miners helped bring down the Heath government, saw an opportunity to break the unions and consolidate her power. (Creating the insane social and economical inequalities in the UK today)
Sure, but you could find similar examples of companies extracting economic rents to benefit their shareholders until they were disrupted by a more agile competitor. My underlying point is that citizens are more like shareholders than employees, you can't just fire them because you don't like their demands. Governments are instituted to secure the interests of theri citizens, who then compete among themselves for control of institutions.
That's because a corporation does not have to commit to a certain level of production. On the other hand, the government does so all the time at the request of the people. And when you guarantee output X for whatever good/service, the notion of full employment makes sense. As a representative example, it takes about 5,000 police officers to keep the peace for 1,000,000 people in an urban environment (rough estimate, just an example).
Of course, what goods/services should be guaranteed and what the value of X should be for each one is and will remain an open problem.
> >In Government, headcount is a (political, organization, etc.) benefit.
>> Can be said for the private sector as well. Unless you think the private sector is growth averse.
Huh? Employees aren't growth. Employees may be necessary to accomplish/support growth, but that's very different. The difference is that a biz will happily take growth with no employees and will try to avoid employees with no growth.
Employees are often a sign of growth, though not always. A large employee count often means the company has experienced significant growth and is relatively stable. Even a small company, hiring your first employee means you're probably experiencing growth or see the opportunity for it.
Of course judging a company based only on it's headcount is silly, just like judging that the government must be wasteful and inefficient because of it's headcount.
Headcounts are a common metric of importance in business, though not the only one. Especially for managers, the phrase "grew the organization from [x] to [y]" is often denominated in units of employees (take a look at google hits for "grew the organization from"). So managers typically have an incentive to increase headcount.
> In Government, headcount is a (political, organization, etc.) benefit.
I don't understand this claim. You state it like it's well-known fact. In what (evidenced) ways is headcount advantageous in government and not in business? Using headcount as a proxy for importance/value when rewarding middle managers is common in many organizations.
In government your budget is based on last years budget. If you don't spend it all then you get cut next year because, presumably, you don't need that much money. Agencies spend a ton of money at the end of the year just to spend the money so that they won't get cut next year. This is also one reason why they have little reason to fire people and lots of reasons to beef up the size of the workforce. Yes, there is always the risk that you will get cut, even though you spend all of your money. But that's a safer bet for an agency president than voluntarily cutting your budget by not spending every penny.
More employees are not necessarily a good thing. You need more management to frame them and so on. It's a cost for everyone. That's why you don't see many companies with more than 100 000 employees: after a certain level it becomes difficult to sustain, and they usually cut back on headcount to remain relatively efficient.
At the macro level, yes, the size of the company's payroll is a cost. But very few members of large companies have any incentive to bear that cost. The CEO, the Board, and that's about it. Almost nobody below the C-level has any direct incentive to keep payroll costs manageable.
At the management level, the manager -- who bears no personal cost for managing N+1 workers instead of just N workers, will almost always choose N+1 if given the option. He doesn't pay their salaries, after all, and to him, the increased headcount is a status symbol. It's also something he will convince himself he actually needs. (You never hear middle managers complaining that their divisons are overstaffed, but the opposite complaint is almost universal).
This is what's known as an "agency problem." Many (most?) of the agents of the greater whole (the company) have personal incentives that work at odds with the company's greater incentives. This clash of incentives leads to waste, bloat, inefficiency, and so forth, because almost nobody is personally on the hook for the company's total health in the long run. (Sure, they're indirectly on the hook. If the company starts doing poorly, they could risk losing their jobs. But people tend to externalize failure, and don't hold themselves personally responsible).
> At the management level, the manager -- who bears no personal cost for managing N+1 workers instead of just N workers, will almost always choose N+1 if given the option.
I do not know if you are familiar with how big companies work, but usually when you reach a large enough size, such companies start to track "productivity indexes" between their departments and against competition, when comparison is available. SUch an index would look like = sales of the department / headcount of that department, which basically gives you an "average value" of an employee in that department. Then in order to prove that you need additional headcounts, you need to have a high productivity index in the first place to justify it. So that's why big companies don't just keep growing forever: they start to become more efficiency-sensitive, and consider carefully the cost of an employee versus the actual benefit to have more.
That is how it should work in theory, but often that's not how it really works. Obtaining the actual value of a department or a single employee can be extremely hard to quantify. It can also be hard to figure out when a project needs the plug pulled.
Personal anecdote. A company I worked for fired the more costly tech support staff right before an important partner product launch which left a bunch of undertrained customer service reps supporting the new product which gave a bad experience to customers. It also irritated the partner because the training the reps received essentially told them that almost any problem needed to be referred to the partner, swamping them with customers wanting them to fix a problem that wasn't theirs. They then had to scramble & rehire a tech support staff.
Take Intel's Itanium project which has struggled on for 16 years, yet Intel still has resources devoted to it. Sometimes you cannot just kill a very unsuccessful project & it can take many many years to wind it down.
You could also look at any need for layoffs as being a miscalculation by the company. When Yahoo announces 2000 layoffs, does that mean they're being efficient by cutting staff or does it mean that they've had 2000 employees on staff that shouldn't have been there in the first place & for how long? Why didn't the indexes and metrics in place tell them to not hire these people?
Also the government is not immune to layoffs. They have actually been one of the top organizations laying people off over the last few years.
There are actually a lot of companies with more than 100.000 employees... I think it's just natural that there aren't more... you need a very big market for them
Are you talking in absolute terms or in % ? In % of total companies worlwide, companies with more than 100 000 are clear, small minority. Of course you can probably find a hundred of them or more worldwide, it still does not make them "common" versus the hundred of millions of small-sized companies around.
I would be surprised if someone who read much of the relevant history could honestly conclude that bureaucratic imperatives had a bigger distorting role in how the space program progressed than the Cold War did. The Cold War, and the resulting influence on NASA's decisions from the military, was an extremely large factor up through at least the late 1980s. Everything we did in space had one eye looking over at the possibility of space-based weapons, space-based missile defense, space-based surveillance, etc., and it often resulted in surprisingly detailed requirements that a program be done one way or another.
The bureaucracy was, for me, the result ofthe cold war. From a certain point on it bacame a self reinforcing system. While that was just fine during the cold war when money was cheap as long as it helped protect against the sowjets, and developments were less costly it urned into a nightmare when organisation (government AND industry) failed to realize when it was time to change that. Maybe bureaucracy and all that already had to much an impact by then.
NASAs project management wasn't that bad in the beginning, Apollowas pretty successfull, wasn't it? Afterwards it somewhat declined.
Not that the Europeans are any better as of late, Ariane for example is not a landmark of efficiency.
United Launch Alliance - a consortium of the two biggest US defense companies, that due to a series of mergers own all the other US defense companies, who make the only launchers that are used in the US.
That's what always comes out when you want too much in one thing too fast. You usually end up with too less too expansive too late and have to start a second thing for the rest (probably adding something that did get into the original spec).
Sometimes it seams to be the ways enterprise software is written and implemented.
Not fully, you need to add that the legacy airline is funding Jet Blue. Elon Musk explicitly said SpaceX would have not been able to achieve its goals so fast and so cheaply without the access to all the data from NASA. Basically, SpaceX was able to "ride" on the prior work of NASA, while having funding from the NASA. It is more a bit of a mixed spin-off/independent company in this case.
Nobody is saying they shouldn't have access to it. They're saying that touting Space X as an example of why government is bad and private industry is great is misleading.
What Space X is a good example of is the very effective model we have here in the US of doing innovation. Government funds fundamental R&D, then private industry commercializes it. It's a healthy synergy that you see throughout the sector.
I think that the more important question is, when another company wants to do space exploration in the future, will they also get access to NASA's expertise? Otherwise, the taxpayer's money has been used to create a barrier to entry for the (future) competition.
Most of the information is technically available to the public. Some is already online, some is available for the asking. Some is probably classified (I'd be surprised if SpaceX was given much if any of this), and a lot of it almost certainly is under legal restrictions regarding transfer to non-US entities, but that is a limited barrier to an American company that, of necessity, would have hundreds of millions of dollars in funding.
Worse, Nasa is like the state airline of a communist country.
It not only has to fly different obsolete aircraft. It has to fly it's biggest most expensive ones empty to a distant foreign country because of 'political links', it has to fly uneconomic routes to distant outposts, it can never fire anyone, it has to keep large fleets on standby for vague secret military purposes, it has to show huge losses on projects to hide military black-projects or subsidies to commercial aircraft makers.
And that's just assuming Nasa is otherwise perfectly competent and efficent.
No I'm not bitter - I jut worked on Hubble for a Nasa 'partner'.
No I'm saying that if Nasa had been told - get cargo to orbit cheaply it could (perhaps) have done so.
Instead Nasa was told - get a man to the moon before the decade is out. But it was also told build something in Houston to keep senator X happy; stick a few $Billion to Boeing they are having a hard time; keep a few SR-71s flying in case we have another war in the gulf; make sure the Shuttle can get to a polar orbit from Edwards without overflying foreign territory; buy the mirror from P-E because we need to keep Keyhole alive till the next funding cycle. And a hundred other 'tasks'
And that's before the inevitable internal bureaucracy kicks in
Yes, their pricing seem to be even more transparent than typical airline fares. Stunning.
Imagine being able to order a satellite launch from a rocket company's web site. Select payload type. Select orbit. Select date and time. Checkout with Mark Zuckerberg's credit card.
On that note, this might be the perfect opportunity for some never-before-herad-of Russian billionaire to make their mark as well by providing similar services to the rest of Europe that may be underserved if SpaceX really takes off in the US. (Apparently when I don't sleep I think in puns, so apologies for that.)
> On that note, this might be the perfect opportunity for some never-before-herad-of Russian billionaire to make their mark as well by providing similar services to the rest of Europe that may be underserved if SpaceX really takes off in the US.
You haven't learned your lesson from the last 20 years.
There are no more "European markets for space launch" and "American markets for space launch" than there are "European markets for database products".
People compete globally.
The only reason that someone in China or France wouldn't prefer the use the best quality / lowest cost supplier is if their local government gets involved and distorts the marketplace via either taxation or regulation.
Funny, I could work for a US database company but I can't work for a US rocket company.
Also, if the US wants to buy an aerial refueling aircraft, they are more likely to choose Boeing than Airbus. And of course its the other way around, too.
So these are two different markets. For products, but also for engineer recruiting.
Ideally, yes. But that isn't necessarily going to be the case when you're dealing with a massive shift from government agencies to private corporations (regardless of how they operate). The politics and the business may change.
If you want an accelerated view of what I was imagining, consider this: say SpaceX is wildly successful. Ten years from now, they have not only fulfilled all of their existing NASA contracts but they've also made huge advancements towards bringing all sorts of payloads to and from the ISS and maybe the moon, whatever. They could offer their services to any highest bidder, or, as a US company, could continue to cut deals with the government that they pay taxes to and bias all of their business in its favor. Their profits will not suffer because there will likely be similar ventures in other countries, and all in all it will be very similar to space exploration at the height of its frenzy, before everyone got all chummy with common goals for humanity and whatnot. I wish I could type this faster and more clearly but I've got to run– I hope you get my point though (even if you disagree).
I think you're being a little condescending. Musk has repeatedly alluded to competition with the Chinese, and since current cap. is 12 launches/year with 40 on the books, a company with comparable capability certainly could edge their way into other regional markets.
If this SpaceX thing takes off, of course other space agencies, including RKA, will be forced to make transparent and comparable offerings in order to stay relevant (or get out from the launch "business").
> The Falcon 9 launch vehicle was developed from a blank sheet to first launch in four and half years for just over $300 million. The Falcon 9 is an EELV class vehicle that generates roughly one million pounds of thrust (four times the maximum thrust of a Boeing 747) and carries more payload to orbit than a Delta IV Medium.
> The Dragon spacecraft was developed from a blank sheet to the first demonstration flight in just over four years for about $300 million. Last year, SpaceX became the first private company, in partnership with NASA, to successfully orbit and recover a spacecraft. The spacecraft and the Falcon 9 rocket that carried it were designed, manufactured and launched by American workers for an American company. The Falcon 9/Dragon system, with the addition of a launch escape system, seats and upgraded life support, can carry seven astronauts to orbit, more than double the capacity of the Russian Soyuz, but at less than a third of the price per seat.
Well now, look at these gems! If you still need a reason to get into this company, just read the first sentence of either quote.
Some of those statements are ... forward-looking. In particular, Dragon isn't man-rated yet, and that will require a lot of further engineering. Most notably, SpaceX has committed to a launch abort system for getting a crewed Dragon away from a failing booster; they've got a concept for this, and design work is underway, but it's not tested as of now, and I think some of the work is probably contingent on getting NASA funding to finish up.
I would suppose it's a combination of corporate politics being very different, more goal driven than in government agencies and the simple fact that SpaceX simply has a lot more giants on whose shoulders they can stand. Why they are that much more effective at it remains to be seen. I would guess it's being smart with the shoulders you pick to stand on and a good bit of PR.
If SpaceX can put the costs to launch a satellite into orbit on their website, then you'd think that enterprise software companies would be able to price their software ......
By the way SpaceX is my favourite company of all time. Elon Musk is living my 6 year old self's dream (actually my dream is still pretty similar, just haven't got their yet ;p )
Heck, at this point I'd accept a particular enterprise software company shipping a one click update program instead of 10 pages of instructions and 720,621 lines of PL/SQL that I need to run against the Oracle database.
// that is the exact line count from "wc -l" - I am not joking
That does seem to be the prevailing attitude in enterprise software.
I cannot help but look at the history of the big 3 Detroit automakers and their love of using service and support as a revenue source. It bit them pretty badly when Honda came along and made cars that didn't need the repairs.
I look at the example of the automakers every time someone tells me the proper business model for software is give away the program and charge for support, consulting, and training. I would much rather pay for software that I never have to call support about.
Agreed, but that's not quite how it works in Enterprise software, I think. Enterprise software is developed to cover a wide spectrum of businesses whose business rules, etc differ greatly. Because of this it's hard to make a product that "just works" for every organization. That's why CIOs buy support and consulting contracts. :)
The one we are using (names withheld to protect the guilty) is being used in a turnkey manner. No customization or custom code, just the base functionality. It is the pure gall of shipping a sql file as an update that is longer than most programs.
"(This concept may be foreign to some traditional government space contractors that seem to believe that cost overruns should be the responsibility of the taxpayer.)"
Actually what happens in governments is that they sign a contract to provide product X for $Y. (i.e. Provide a new sidewalk for $100,000)
Then through further discussion, after the contract is signed, everyone realizes they actually need product X2. And so the contractor revises their bid to $Z where $Z exceeds the original $Y by a wide amount (i.e. Provide a new sidewalk and re-landscape the grass on either side for $250,000)
There are no cost overruns in government contracts. Just changes in scope. You don't find out what they really need until you really get into talking with them.
> There are no cost overruns in government contracts. Just changes in scope. You don't find out what they really need until you really get into talking with them.
Umm, there are tons of cost overruns in government contracts (and in non-government contracts). Consider the James Webb Space Telescope for example. Or the F-35. Or about any software project. It's very hard to predict costs of new inventions.
So, in regards to fighterjets and things at least...
I've heard (and I'd love to hear whether or not this sounds reasonable) that one of the big problems is that you'll source a part like a resistor, ASIC, or something, and then for whatever reason it'll get changed--maybe a cheaper part became available and you were forced to use the cheaper part, maybe the part is no longer in production and has to be switched out, maybe the part just failed to function correctly.
The effect of this, of course, is that you have to redo all of your integration testing and verification work, and for something like a 6-month endurance test on an avionics box this just plain takes a lot of time and money.
I'm not sure that my friend was accurate, but it seems reasonable to me that that kind of thing could cause big delays.
Obviously, any original estimate for how much money and time it will take to create the aircraft should include a reasonable level of buffering to account for the "known unknowns." Companies like Boeing and Lockheed aren't exactly newcomers to the aviation game, and I'm sure that they have extremely detailed statistics on how common this setback is, how much it costs on average, etc.
It's the same way in software -- when estimating how long a large project will take to complete, you have to assume that some things will go wrong. Maybe you have to track down a nasty bug in a third-party library, or you lose a team member, etc. All of this has to be considered based on its impact and likelihood as part of up-front estimation.
Yes, the known unknows. Everybody knows about them, but strange enough we all seam to be ill-prepared for them. You just have to look up new aerospace developments of late:
F-22, JSF, the Kiowa repalcement, the new tankers, A400M, NH90, Eurofighter, Rafale, B787, A380, B747-8, A350... you name it. Almost all of them were over budget, late and ran into serious technical and performance issues. Not all of them were due to design changes. And even if, when you know that certain changes are going to blow your development apart you just don't ask for them as a customer.
A good counter example is the F-117, that one was, aparantly, in budget, on-time and did what it was supposed to do. My theory is that it's the grown bureaucracy that it messing it all up. In the F-117s development there was none since it was more than just top-secret, they took what was available and turned out good. I know that one example doesn't make a proof, but it's pretty cose for me.
Um, you're wrong. Most military or government aerospace development is done on cost plus contracts where if the bidding entity ends up spending more than they officially planned they'll make more profit. This isn't the way your city buys a sidewalk, but it is the way the government buy a space launch.
Not exactly. Non-recurring engineering is often cost plus. You simply can't scope that out very well. Purchasing more units of an already developed item is generally fixed price.
However, even with cost plus there are incentives to come in faster/better/cheaper. If you run a company and have the choice between '1 project scheduled for 18 months, stretched to 2 years and collect the extra' or '2 projects scheduled for 18 months, each finished in a year, and collect all the extra bonuses', you typically choose the second plan.
While I appreciate the sentiment, it's not exactly a fair comparison. The first government rocket launches surely had cost overruns. But were the most recent shuttle launches vastly over-budget?
Launching a satellite these days is a relatively known quantity whereas many horrifically over-budget government projects are doing things no one has ever done before.
Really? That sounds rather obvious and a bit too cheeky to me. To twist it the other way around: If cost run over in a government project, who else could you hold responsible?
Sure, it's not a great thing that this happens, but it seems like a douche point to make when the government simply has no other choice.
Edit: Sorry, misread 'government contractors' as 'government agencies'. I was under the impression that he is talking about NASA.
All Musk is saying is that they bid the project as a Firm Fixed Price (FFP) contract. Most contractors aren't willing to do that with untried technologies b/c of the possibilities of cost overruns. For instance when the government buys Humvees for the army they pay a Firm fixed amount per vehicle because the contractor knows exactly how much one should cost and charges more than that to the government.
For a brand new stealth fighter though, there are a lot of unknowns and a lot of development to do before they can build the first plane. The contractor can say "We think we can do all the necessary research for this with 100 people over 3 years plus $2 billion in additional costs for materials and to contract out the construction of new factories etc. All that added up would be $5 billion (plus $100 million per additional month beyond 3 years) and we expect a 15% return in profit on this development." This is called a Cost plus Fixed Fee contract. If they were to bid it as a firm fixed price contract they would just say "we want $3 billion per plane for the rest of time" and the government would likely overpay comparatively. The government agrees to the cost plus fixed fee terms because the know it allows the contractors to price their offering lower if they don't have to take on the risk.
So option 1: Government takes on risk of overruns but pays a lower price if on time and on budget.
Option 2: Contractor takes on the risk and makes out like a bandit if they are on time and on budget.
Firm Fixed Price is what the EADS did with the A400M. When governments kicked in, dictating engine suppliers, changing specs to fit all militaries involved...
well let's just say it did go well. Lesson to be learned: If you are in full ontrol of everything from scratch to delivery and have clear costumer specs you can do that.
If you are a quasi state-run business with political obligations serving multiple customers with different requirements, you better don't.
The contractor who underbid. If Roger's submits a bid for $1m to deliver 50k widgets he shouldn't be able to come back after the fact and demand $4m to complete the project because he underestimated his costs.
You gave a very simple example. Lets say the contract is to build widgets that frobulate. What if nobody has ever made widgets that frobulate? What if frobulating is poorly defined in the process, and what it means to frobulate changes over the course of the project? What if the government later decides they want widgets that barbulate in addition/instead?
The contractor has to swallow all the extra costs, because they were foolish enough to sign a vague/wrong contract?
I'm not asking this to suggest a particular answer, just wondering where this strategy takes us.
Somewhere other than the place that has the incentive for the contractor to hire large numbers of marginal employees in order to increase the contract's profit.
If he can't do it for the price he says he can go to bankruptcy which would allow him to renegotiate contracts or eliminate unprofitable ones. This option is more appealing to nondiversified businesses. Lockheed really would be irresponsible to offer the same contract. Further lockheed isn't vertically integrated enough to control costs which Musk hints at but doesn't say outright.
I don't think the old government contractor system made long term sense, but it was a great start to space exploration and money "wasted" looks more like invested to me.
The standard way these things are done is that company A contracts company B to deliver product X for $Y. If company B then spends $Z > $Y delivering product X, company B simply loses money.
Even with commercial contracts a lot of government (and especially military) was done on cost+. However much we spent on a development the customer (taxpayer) would pay "+" an agreed margin.
I had no clue they were profitable. With "over $3 billion in revenues" and "total company expenditures ... were less than $800 million" that is quite the ROI.
Classic example of economic profit. They figured out how to do something at a fraction of the cost, and get to print money until the market catches up and prices fall.
We've just got to hope there aren't any major catastrophes involving life early on. Personal space travel could easily go the way of Concorde and commercial supersonic travel if companies like SpaceX and Virgin Galactic don't get it spot on first time.
(Moment's pause to remember and respect the Challenger and Columbia Astronauts, and the Russian Cosmonauts who also gave their life.)
As I think about it though, I think of the few brave people I know who would be willing to take a one-way trip to Mars, as long as they were starting a colony.
YC hackers are like Z.
SpaceX is like Z.
Therefore SpaceX is YC hackers (in spirit).
piotrSikora isn't literally asking why such a thing is a property of only YC hackers. He's asking why randall is using property Z to label things as 'YC hacker'. I don't think your jumping on his imperfect wording is very helpful.
Is it fair to say that NASA would likely require many times the amount of funding for the same result as SpaceX?
I ask because as someone who was previously unfamiliar with the amount of funding SpaceX had to work with, $800 million sounds like an incredibly small amount of money to do (what looks like) more than NASA does with its ~$18 billion budget.
NASA did a study on this actually. Using traditional NASA procurement methods it would have cost at least $4 billion to develop the Falcon 9.
Also keep in mind that the $800 million amount is for developing the Falcon I, Falcon 9 ($390 million total) and the Dragon spacecraft (about $400 million). Even had NASA used more commercial oriented procurement methods they estimate it still would have cost at least $1.7 billion to develop.
Meh. Manned space is only part of NASA's mission and the whole agency has been the Federal Agency of Low Earth Orbit for so long, its pretty crazy we're suddenly giving them a hard time. NASA is doing it right: giving up the LEO Shuttle monstrosity to commercial spaceflight and doing the things that are, yes, expensive and difficult. Protip: google 'nasa launch calendar 2011' and compare it to the number of launches SpaceX has had. Seriously, I'll just sit here and wait for you to do this. Now lets talk complexity of missions.
Cut NASA down to size and you're just getting more missiles and warships. You're not getting a tax break or the sudden birth of 100 SpaceX's. SpaceX should be applauded for its innovation and drive, not considered the low hanging fruit of space and everyone suddenly saying "This stuff is so easy why isn't NASA using their methods?!?" Because its not easy.
Yes. According to a NASA study [1], Falcon 9 development would cost $1.3B as Cost Plus Fee ("traditional NASA") or $443M Firm Fixed Price ("more commercial approach"). Compare to SpaceX actual of "about $300M".
Edit: NASA originally came up with the $4B/$1.7B estimates that InclinedPlane mentioned. They visited SpaceX, saw how they actually operated, and revised the estimated downward.
They visited SpaceX, saw how they actually operated, and revised the estimated downward.
I'm not sure that's really fair for NASA to do. The question they were supposed to be answering was "how much would this cost NASA to do?". They can't just see a more efficient operation and then cheat their numbers down because without Space-X, NASA would never have had a reference to work off of. NASA doing it the NASA way would have been the larger figure, not NASA doing it the Space-X way.
Partly true, but partly there is a fundamental inefficiency at play in the way they do things.
On the space shuttle, every outer tile is unique and must be manufactured accordingly. Boeing cover their rockets in shitty orange foam.
When the shuttle returns, it is driven into this spider-like contraption that actually cost almost as much to build as a shuttle. Boeing put the rocket on its side, and use step-ladders, and, I kid you not, a plank.
Remember that NASA's job is/was supposed to be to do stuff that hasn't been done before. SpaceX is doing something that has been done before more economically. It doesn't surprise me if two such organizations had different corporate "efficiency" levels.
NASA is more than just lifting some stuff in space. They have staff they can't just fire, researchers, building and equipment that must be maintained, future projects and much more.
Hint: Fighter jets cost a lot more because parts have to made in many Congressional districts.
> This is a clear case of American innovation trumping lower overseas labor rates.
As much as I admire Elon Musk, this is a short-sighted, exceptionalist dogma. It may apply in some cases - for the time being - but do people really think that non-Americans are incapable of innovation?
SpaceX have had a headstart, since NASA and their gigantic budget have decided to take advantage of free enterprise. It's only a matter of time before Asian and European governments begin to do the same.
Well first off Elon Musk was born a non-American. He moved to the US at age 19. So I highly doubt he believes people in other countries aren't innovative.
But he's not saying other places can't innovate. He's saying that running SpaceX in other places is not as likely to be succesful. Some percent of that might be political posturing (they are reliant on politicans supporting NASA buying from them, and on politicans not passing regulation to ban private space travel). But I bet the bulk of it is a true sentiment on his part.
In order to found a rocket company you need the freedom to launch rockets. Now, that's not something anyone can just do on a whim in the US, even advanced hobbyists need permits, but it's possible to get the permits. In some places it would be impossible for a private enterprise to get those.
You also need a pool of exceptionally good engineers to recruit from (both straight out of good colleges, and experienced). While some countries like China have some recent success, and others like Russia have a longer history, the US still has the most rocket engineers free to pickup and start at a new company. That's not something that is likely to change soon.
You've not met many European governments, have you? In England Elon'd still be waiting planning permission from his local council to build a launch site...
In France, a Presidential candidate who advocates a 100% income tax on incomes over $300,000 is polling at 16% of the vote. Europe doesn't like Elon Musks. It's inequal :(
Not counting for the political discussion after some ethical experts told publicly it's dangerous and wont work. He would have been trapped in PR nightmare and have burned at least his intial 100M$ just on lobbing to find a launch site.
Sea Launch was an even more innovative entrepreneurial commercial launcher. However the USA first stopped it docking in US ports to receive a payload because it was a foreign missile system and then stopped payloads being loaded in a foreign port because that would be exporting sensitive technology.
I'm guessing that Lockheed Martin and Boeing have less political clout in Texas today than they did in California 10 years ago
Seeing how Elon Musk did not start out as American, I believe all his pro-USA rhetoric in this speech is designed to sway or convince some government people, just not sure to what end.
I think the point is that the US opened up the market where other countires didn't and he wanted to point out that low laber costs and alot of money is not everything you need to make a good spaceship.
Actual goal of Elon Musk is to send someone to Mars, but since seems far reaching goal for most people and since they might call him crazy, he is sticking with near space for now. Do not be surprise when he starts talking about Mars.
He talks about Mars quite publicly already and various of SPaceX's corporate videos contain CGI dragon capsules landing on mars.
Also he's not 'sticking with near space for now' to avoid being called crazy as you imply, he's sticking to near-space now because you have to get that capability working and reliable so you can build on it for going further afield. It's not a smoke screen, it's all quite consistent with a road-map to mars.
Elon Musk is an exceptional individual, he has a degree in Physics and he taught himself engineering and "rocket science". Not everyone is capable of replicating what he has done, regardless of the money involved. The average case of a billionaire dumping money into aerospace ends up with the billionaire having less billions and nothing much of consequence occurring in aerospace.
Well ... yeah. I have a bit of experience buying things, but know nothing about creating and running companies that design and build rockets. I'd probably buy Instagram too since the rocket thing would die in my ineptitude.
what about Jeff Bezos (ok, he's EE [yay, EE!]), or Richard Brandson (or it's really Rutan's brainchild)? OK, Virgin Galatic is child-play next to SpaceX, but it still demonstrate that billionaires can invest in AA.
A Delta IV Medium's payload capacity is roughly 10,000lbs (to a geosynchronous transfer orbit). A 747's original design payload is more than 10x that. (Wikipedia claims a 747-8F's payload is about 150 tons.)
You're comment made me smile. Only because I clicked the link, saw the page and thought, "who designed this?". My next thought was, "well, most of the space related sites look like this, so maybe it fits well with what that community expects".
Seriously! This must be the worst website I've encountered in a long time. Despite the inspiring content in the article, I leave with a mixed experience. Just goes to show how much design matters.
Man I wish this could be replicated in train construction - Florida is exploring this. One downside however, is you get what the private developer wants - so they're ending up with a train station at Orlando airport instead of downtown Orlando where it should be. Government is uniquely incentivised to do that right because they gain from increasing property values near where the train will go. Unfortunately local developers won't be so nice as to pony up more for that kind of thing even though they will reap disproportionate rewards. Another example - here in Reno, we're trying to build Bus Rapid Transit through a main corridor that is undergoing a pretty great revitalization. People in NV are especially not cool with traditional way for raising taxes for this kind of project (a la 1 cent sales tax just for BRT/streetcar).
It begs to ask, if the developers nearby are going to gain so much, why aren't they building it themselves? Too many groups that won't take risk... I mean probably 1,000 people who own buildings there will benefit disproportionately... you are never going to get them together to pony up for a streetcar. But the proof is there... look at Portland for a US example... also Seattle and SF and San Diego. Its just easier to get the government to do it. They should put a local surcharge on property values. Its only fair. However, they will f- this project up I'm sure... just like NASA spent a kabillion extra dollars just to build certain parts in certain senator's home states... and my other local train is going to have a snack bar so the Sonoma County housewives that will never ride the train can get a snack; instead of more seats and bike space.
Also, when you develop near a train station you can't build parking lots next to it, which tends to make people with cars upset, and they usually have more political influence than people who just use trains:
I'm not sure I understand your argument - trains in Europe and Japan are not private.
We're talking about Elon Musk and looking past the status quo of stuff. The status quo I'm trying to look past is "do everything based on cars, for cars, for the benefit of cars, because cars are the way old people have done it and they're obviously right. Cars. Cars. And more cars."
Trains in Europe aren't private, but the companies that make the trains are. And in fact all the trains in Japan (even the Tokyo subway!) are private.
I very much agree that we ought to get away from promoting cars so much, but lets not kid ourselves. The problem isn't developers, but middle class Americans who like their cars.
Middle class americans might like cars - but our government certainly encouraged them. Perhaps this is what we should stop first, and then parking lots next to train stations may be less of an issue.
If you want to understand why it is hard to get many people who will benefit to pony up, read The Logic of Collective Action.
Basically the problem is that it is a public good. If the good is provided, everyone benefits, not just the ones who paid. So unless your payment is going to make the difference between it happening or not happening, you don't want to pay. And even if someone gets you to pay, you'll be incentivized to pay as little as you can get away with.
I'm not trying to understand it. I'm saying its not going to happen. Government is the only one that can do it, and they might even be able to do it equitably (in theory). The government should tax them because they are benefiting disproportionately more than the rest of the population.
Yes, it is a public good. The public benefits. But if I own condos full of college students and they decide to build a train station for the train that goes to the college in front of it, I'm going to benefit more. And its not that many people - its property owners within a few blocks. We could figure something equitable out.
> China has the fastest growing economy in the world. But the American free enterprise system, which allows anyone with a better mouse-trap to compete, is what will ensure that the United States remains the world’s greatest superpower of innovation.
China is also moving pretty fast towards a free enterprise system while the United States is moving in the opposite direction at approximately the same speed. Well at least, having lived both in America and China, that's my impression.
I hope that young entrepreneur will follow more steps of Elon Musk and instead of pursuing fast money start pursuing big dreams. Actually I think that is already happening...
I'm sorry I was not 100% clear. With term "entrepreneur" I mean to include only people who already made it and prove to society they are entrepreneurs - i.e., they already sold the first company and have $$ and name.
So my point is that instead raising money to build path.com, color.com, or some other stupid web 2.0, young entrepreneurs should follow Musk steps.
Except you can't start a space company without a lot of your own money much like Musk did. You need the big capital first to launch a company that requires hundreds of millions in capital.
I'm sorry I was not 100% clear.
With term "entrepreneur" I mean to include only people who already made it and prove to society they are entrepreneurs - i.e., they already sold the first company and have $$ and name.
So my point is that instead raising money to build path.com, color.com, or some other stupid web 2.0, young entrepreneurs should follow Musk steps.
http://www.astronautix.com/lvs/gslv.htm
India's comparable GSLV has a programme cost of 800 million dollars and a launch cost of around 90 million dollars. Given the relatively less development costs in India. I'd have to say very impressive SpaceX.
Is it dumb of me to ask "so why isn't NASA working on terraforming bodies yet?"
It seems inevitable, and like we may as well start spitballing now. Send a few rooms that attach to the surface and dig in, practice in there remotely.
This is a good reason to the sarbanes oxley. If SpaceX had IPO'd already, more end cheaper capital might have helped, and buying spacex stock would the best thing I can do personally for space for a while.
For the first time in more than three decades, America last year began taking back international market-share in commercial satellite launch. This remarkable turn-around was sparked by a small investment NASA made in SpaceX in 2006 as part of the Commercial Orbital Transportation Services (COTS) program. A unique public-private partnership, COTS has proven that under the right conditions, a properly incentivized contractor — even an all-American one — can develop extremely complex systems on rapid timelines and a fixed-price basis, significantly beating historical industry-standard costs.
You're missing the point. It's actually written into the American Constitution that the president must be born in America.
I don't think the above comment had anything to do with his capabilities. Merely the practical difficulty in becoming president. (It would require a constitutional amendment.)
The real cost of space flight is energy, specifically:
1) The huge amount of energy required to lift mass out of Earth's gravity well.
2) The vexing practical expense of obtaining that energy in useful form (e.g. rocket fuel) for launch.
Rocketry's future will always be limited by those daunting constraints.
I'm pretty sure somewhere on the SpaceX web site they say that the fuel cost is actually a small fraction of the total cost. That's why reusable vehicles (which they want to do) even make sense.
It would be more informative to say the real price is mass, since it's the fact that you have to accelerate the mass of fuel you will use at time t up to that point that gives rise to the tragically inefficient log term in the rocket equation.
The huge amount of energy required to
lift mass out of Earth's gravity well.
... is a common misconception. The energy required to get to orbital altitude is only a tenth of the kinetic energy of orbital veloity. Yes, I'm just confirming your observation that the energy requirement is huge, but you're understating the problem, and propagating a misconception.
My point is that the insofar of the promise of space is "let's send lots and lots of stuff, especially people/food/air/water", then the fundamental economics center on energy use. Are you saying that some of the orbital velocity can be recaptured or otherwise used to offset the cost of fuel?
... I'm just confirming your observation
that the energy requirement is huge, but
you're understating the problem, ...
With regards energy use you are underselling your position by a factor of 10 when you talk about getting things 200 miles in the air. The kinetic energy required is 10 times as much. By saying what you did ...
The huge amount of energy required to
lift mass out of Earth's gravity well.
... you are:
1) understating your case, and
b) propagating a misconception (that getting out of the gravity well is the hard bit).
It would be more correct to say - the huge amount of power required to accelerate all the fuel + rocket + payload to high speed at the start.
If you could fly up to orbit at walking pace and then boost the horizontal velocity to orbit you would need very little fuel - compared to firing a big rocket for a few minutes so that the huge mass can then coast to orbital heights.
>Fuel is at present an insignificant cost of launching a rocket
Fuel is almost ALL the cost of launching a rocket. If you can arrange for me to pick up fuel every vertical mile on the way up - I can get to orbit very cheaply!
If you don't need to achieve escape velocity in the thick lower atmosphere and accelerate all those 100,000lbs of fuel to 10km/s the rocket becomes pretty trivial
I was replying to this: "Fuel is almost ALL the cost of launching a rocket."
Also, how did your hardware get out of the thick lower atmosphere? Someone paid the cost of lofting that mass.
Not much about rockets is trivial, except in theory.
Practical issues:
* heat dissipation: your fuel / oxidizer combo probably burns hotter than the nozzle material can tolerate. This needs to be tested (not for on orbit, for the first time)
* fuel supply -- it's non-trivial to design tankage and feed systems that can supply fuel and oxidizer at the rate needed, in vacuum
* propellant storage -- non-trivial unless you go for the really nasty "storable" propellants
Pretty much every piece of the problem is non-trivial.
Wow. Facebook could have started an entire space program for less money than they spent on Instagram.