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Space Math

To our Valued Investors:

The warranty on the car that might presently occupy your garage is likely to subject to time or mileage limitations. Typically, bumper-to-bumper coverage for a new automobile will remain effective for at least “three years or 36,000 miles, whichever comes first”. Exceptions do exist, though. For instance, if your name is “Starman” and you are cruising around in Tesla’s most famous cherry-red Roadster, your ride’s well-being is expected to last “for a few million years, or until you smash into an asteroid, whichever comes first”.

If he had been saddled with that ordinary 36,000-mile limit, Starman would have exceeded it about 40,000 times since his journey commenced a little less than three years ago. Presently, he is moving toward Earth at a pace of 1000 miles per hour. Don’t worry, though. He is about 36 million miles away and he is sure to veer off before he hits your house or, worse yet, your garage, voiding that suddenly less-significant-seeming warranty. How do we know so many details about this lead-footed mannequin’s interplanetary road trip? It’s easily discoverable with a simple visit to this link, updated in real time.

The decision to propel an electric car, complete with humanoid driver, into space may seem like an odd one. There is some measure of logic attached to it, though. SpaceX’s first Falcon Heavy launch was to take place on February 6, 2018. The event held extreme significance for the company. The Falcon Heavy was to be the most powerful operational rocket in history, lifting twice the payload of runner-up Delta IV Heavy. Leading up to the big day, Elon Musk himself suggested a 50% chance of success for the launch. Put the calculator away; we will do the math for you (several times, in fact, this week). With a 50% chance of success comes a 50% chance of failure. With such a high level of risk, there’s no sense in increasing the stakes by adding expensive cargo to the rocket. The practice of attaching a “dummy payload” to a maiden voyage was not new. Others had used water tanks or large cement blocks to stand in for costly space gear. Elon used something he found collecting dust at his own house (the Tesla) and threw in Starman to add a literal flourish to his dummy payload.

Starman is still doing laps, and it is reasonable to expect that he will continue to do so long after thousands of generations have come and gone. The Falcon Heavy’s first blastoff clearly made a mockery of car mileage statistics, but it was this rocket’s predecessor, the Falcon 9, that would usher in a new era in telecommunications. As the vehicle that supports SpaceX’s Starlink satellite program, the Falcon 9 is arguably as significant as the invention of the telephone.

You probably remember a time when being engaged in a telephone conversation meant that a coiled cord restricted you to an approximately seven-foot radius around the phone’s location, whether it was screwed into a wall or placed atop a small table in a very inconvenient location within your home. The early 1980’s delivered “cordless” models that allowed you to explore different rooms, or even a few steps outside of the house, during a phone conversation. Later in that decade, you were awed watching Gordon Gekko yapping into a shoebox-sized cell phone while taking an early morning beach stroll in Wall Street. By the early 21st Century, you might have been the proud owner of your very own Motorola flip phone. These reminiscences sound rather quaint and are a good way to focus on how far we have come. Still, although many might not realize it, we are closer to the communications “Stone Age” than to the realization of full potential.

Today, depending on your carrier, the call you’re making from your car might be dropped due to poor reception on a bridge in an underpopulated area just outside of a major city. If you visit a friend in a very affluent neighborhood, the “okay for thee but not for me” stance toward cell towers might banish you to a land line. Many rural regions in the United States and elsewhere have had no increase in reception since the Civil War. Anchored by the Falcon 9, SpaceX’s Starlink program promises to make all of these modern-day hardships a memory.

In May 2019, SpaceX’s fifth version of the Falcon 9 Full Thrust, the Falcon 9 Block 5, took sixty test satellites into low-Earth orbit. The following November, the same rocket deployed sixty operational satellites, a meaningful “first” on several levels. Apart from showcasing the reusability of the space vehicles, the payload of Starlink satellites represented the beginning of a game-changer. These million-dollar gadgets are but a tiny fraction of the planned network of 12,000 units that SpaceX has permission from the FCC to put out there. The purpose of this vast constellation of satellites is to supply high-speed internet service to remote and rural (i.e. underserved in the internet realm) parts of the world. Forget about shouting “I’m sorry, you’re breaking up… Can you hear me?” into your smartphone. You will have a perfect connection and lightning-fast download speeds from the North Pole to the South, at the top of every mountain, and in the middle of the sea. Conveniently, the satellites also will provide nearly flawless GPS navigation services to Musk’s other little company, Tesla, Inc. When fully deployed, the 12,000 SpaceX satellites will constitute the largest-ever low-Earth-orbit broadband constellation.

To settle for having the largest such network by far, though, would be very “un-Musk-like”. As such, Elon has recently applied for clearance to launch an additional 30,000 satellites in the future. The hurdles the company faces are related to objections about “spectrum hogging” and disruptions of literally astronomical proportions, but these will likely be quelled by assurances of corporate responsibility and the promise of breathtaking technological advances.

Should SpaceX be granted this wish of expansion, even the layman could easily conclude that 42,000 satellites should do the trick. But hold on, you might protest, at sixty satellites per launch, it would take at least 766 missions to get that many units up in the air. Furthermore, that many satellites would cost 42 billion dollars, not even accounting for the ones that malfunction or expire. Nobody can afford to do that! Well, think again. Did you note, two paragraphs ago, that it was the same rocket that launched the test satellites and, six months later, the first operational satellites? Upon completion of its mission, that rocket landed on a platform in the ocean, ready to be used again. Design improvements to the Falcon 9 have focused intensely on reusability. Thermal protection coating in place of plain old paint and shielding on the rocket’s tail end protect the boosters from destruction upon re-entry. Instead of a maximum of two uses, the boosters can now be used a minimum of ten times, and possibly up to a hundred times more than that with planned refurbishments and careful inspections.

Taking things a step further, to the surprise of precisely nobody, SpaceX has plans to up the ante with a new rocket they are developing. The new, lower-cost system, dubbed “Starship”, is designed to be indefinitely reusable. Furthermore, Starship will have a dramatically improved turnaround time. Whereas earlier Falcon 9 versions required several months of maintenance between launches, SpaceX aspires to build Starship to perform several missions a day. On top of that, there’s the payload factor. Falcon 9 is capable of lifting sixty satellites at 500 pounds each, or 30,000 pounds. Starship can hoist a whopping 220,000 pounds, or up to 440 units per flight.

Trying to put a price tag on an operation of such magnitude can be a challenging task. But proportions aside, the math is the same. Elon Musk has floated the suggestion that with an aim toward manufacturing 42,000 satellites, mass production strategies will bring the per-unit price to the hundreds of thousands of dollars, down from a million apiece. The reusability of the rockets, particularly that which Starship will have along with its rapid turnaround time and boosted payload size, will save billions over time. Musk claims that Starship could be flying “within one or two years” which, if true, would likely seal the company’s undisputed broadband supremacy.

Elon Musk hopes to capture just a small percentage of the global telecommunications industry with this project. Mind you, a “small percentage” — 3% to 5% — of an annual trillion-dollar industry is a lot of dough.  If this goal is met, it could be worth up to $50 billion in revenue each year for SpaceX. As a private company, SpaceX doesn’t have to show us their financials, but one can assume that if reusable rockets basically reduce launch expenses to things like fuel and ground support, a healthier overall valuation must follow.

SpaceX is a a privately held company, and as such SpaceX shares cannot be purchased at the stock exchange. Iron Edge VC can, nonetheless, provide you with access to this company of the future. If you would like to learn more, or if you know anybody else who would, please don’t hesitate to contact us by clicking “Get in Touch” below.

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All Our Best,

Paul Maguire, Managing Partner and The Iron Edge Team

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner