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SpaceX president and COO Gwynne Shotwell recently said the company may spin off Starlink for
an IPO.
This is massive.
Let me tell you a quick story.
I’m a HUGE space and science nerd.
I inherited this fascination from my father.
Since I was a child I’ve had goals of seeing earth from orbit and visiting the moon.
Carl Sagan was my first role model and I've been following the progress of SpaceX since
day one--almost HALF my lifetime.
I’ve also bugged SpaceX during previous capital raises to learn what I’d need to
bring to the table.
Lets just say I was a few dollars short.
And for years, I’ve been telling anyone who’ll listen, if SpaceX IPO, I’m going
in.
BIG.
But don’t take my word for it.
Here’s a forum post I made in 2015, showing how I’d build a hypothetical stock portfolio.
Note my biggest position was SpaceX with 10 times more capital allocation than Tesla.
And now, let’s go back to 2014 and read some excerpts from this email I sent to my
dad, just after SpaceX announced plans to launch what we now know as Starlink, the very
subject of this video:
Only half the world has internet access, and where access is freely available (uncensored)
people flourish and prosper.
Elon Musk (SpaceX, Tesla, SolarCity and ex-PayPal) commented about his plans to provide a swarm
of satellites to provide internet access everywhere.
If he is successful in achieving this, it will be the most significantly positive thing
to happen on earth.
Look at what the internet has already done with only half of us connected, and contributing.
He has the capital and the belief, so it will happen whether he has to fund it personally,
or not.
He will no doubt be able to build SpaceX massive credibility (and value–if they go public,
buy shares!) by using the company to launch this global network.
My thoughts have not changed.
Starlink is a seriously big deal for both SpaceX and humanity.
Let’s look at why.
The Economics
I shed tears of joy watching the live stream of SpaceX’s first successful landing of
a falcon 9 booster stage.
Lucky my then girlfriend wasn’t around to see the tears because she was under the impression
I’m an emotionless robot.
For a lifelong space nerd, this rocket recovery marked the single most important step towards
an exciting future, and from a business point of view, the start of a truly gargantuan disruption.
To date, SpaceX is the ONLY company who can re-use their orbital-class rockets.
This brings their launch costs down a STAGGERING amount.
As Elon Musk has famously said, single use rockets are pretty dumb.
Imagine if cars or planes were single use.
Transport would be prohibitively expensive.
SpaceX has such a huge economic advantage.
Longterm, the cost of reusable rockets will be about two orders of magnitude LESS than
the dumb kind of rockets -- those you can only use once.
We don’t even need to use a calculator to realise this gives SpaceX an incredible competitive
advantage.
Not only can they launch other people’s stuff for pennies on the dollar, but they
can launch their OWN stuff which creates an opportunity to do things that literally NO
OTHER COMPANY ON PLANET EARTH CAN, like Starlink.
For anyone to attempt to compete with Starlink, they will be BLEEDING money on launches.
Jeff Bezos’ Blue Origin plans to compete directly, but appears to be YEARS away from
mastering reusable rockets.
Meanwhile, Starlink is soon to serve its first customers.
This first-mover advantage is bigger than it seems because right now, NO ONE--LITERALLY
NO ONE--can compete.
Launch costs alone mean to get up and running, a competitor would need to spend STUPID money
and then how will they operate?
Offering your service for a competitive price against someone whose costs are a fraction
of yours, while maintaining similar pricing and margins, is kind of impossible.
Either your margins suffer, or your prices suck.
One more time.
LITERALLY NO ONE CAN COMPETE WITH STARLINK TODAY.
In a few years, this may change.
But how much market share will Starlink acquire between now and then?
Information Access Solves Problems
Access to information can solve almost any problem from religion to poverty.
How much would I have to pay you for you to agree to give up access to the internet for
the rest of your life?
Yeah, exactly.
This is a big deal.
It isn’t about being the fastest, or the cheapest.
It’s about being ubiquitous.
If a poor farmer in Africa can get online and learn about increasing yields, better
irrigation techniques, check pricing online and compete with others, this will have a
direct, and profound impact on their quality of living.
If an isolated child in the jungles of Peru can access the internet and learn to code,
she may lift her family, and her village out of poverty.
I could go on but you get the point.
I hope.
Giving people instant access to the world's knowledge, and the ability to connect with
and interact with people anywhere on earth will have a profoundly positive impact and
a huge ripple effect.
Earth Is Big.
Infrastructure Is Expensive.
Earth is REALLY big.
People tend to cluster in cities, where in the developed world, communications infrastructure
is pretty great.
But what about everywhere that isn’t a city?
Which is the vast,VAST majority of the surface of our planet?
Anyone who’s been out at sea, trekked through the Amazon, lived in Australia or wandered
from the confines of their city will soon discover that most of the world has either
no--or terrible--internet access.
It’s not cost effective to build the same communications infrastructure to serve 100
people as 100,000.
Or 1 million.
So this makes sense.
Starlink solves this.
No power lines.
No digging.
No underground cables.
No BS.
Just ubiquitous internet access.
And it won’t age.
Starlink satellites have a short lifespan and will constantly be replenished with better
tech.
This means Sarlink will avoid becoming out of date.
Again, good luck staying competitive with Starlink if they can launch improved satellites
for pennies on the dollar but you can’t.
Special Use Cases
Starlink won’t make sense for everyone but it will be incredibly valuable for special
use cases.
Many of these customers have deep pockets.
Think planes, boats, the military, isolated islands, mountain tops, deserts, jungles,
the poles, even entire governments whose countries currently have abysmal internet access.
How much would you pay for lightning fast internet access where today, limited or NO
internet access is possible?
Exactly.
RIP Monopolies
Another point is that Starlink will disrupt monopolies.
Having lived in Australia for most of my life, I can tell you straight, the most popular
telecommunications company is also the worst.
Their coverage is the widest but their prices suck harder than a vacuum, their customer
service is non laughable and they’re just straight garbage.
Without strong competing forces, they can suck, and still thrive.
Because they have the best infrastructure, no one can compete on their coverage UNLESS
they are willing to invest countless billions in developing superior infrastructure.
Not gonna happen.
Enter Starlink.
The days are truly numbers for the monopolies out there.
No longer will they retain intelligent customers while offering garbage pricing and garbage
service .
It’s not all going to be a perfectly smooth ride.
SpaceX will need to negotiate with hundreds, if not thousands of local governments and
lawmakers to enable Starlink access globally, and Starlkink will NOT be the best or most
suitable option for everyone.
But I’m sure of a few things.
Today, literally no one else CAN compete with Starlkink.
They have a free run until SOMEONE else can master rocket reusability.
This is so important I want to repeat it 100 times.
But I won’t.
Providing ubiquitous internet access to literally every square inch of the planet effectively
means every single human on earth COULD be a Starlkink customer.
They won’t, but what other company has such a pool of potential customers?
ZERO.
In my opinion, Starlink will grow to become one of the most valuable companies in the
world.
And that brings us to Mars.
Elon Musk is smarter than you.
Elon Musk sets goals, creates a plan for their attainment, then executes on that plan.
Starlink is how SpaceX will fund the colonization of mars.
Somewhere on the order of 1000 Starships and 2 decades will be needed to seed the Mars
colony.
It’s not gonna be cheap, or easy.
But it needs to happen.
By the way, to everyone about to explain in the comments how we should save this planet
before we think about colonizing another, you don’t get it.
Let’s fix that.
Earth is vulnerable.
Do you know what a nearby gamma ray burst could do to all life on earth in an instant?
What about an impact event?
Or a supervolcano?
Or a malicious AI?
Or any of the countless other extinction-level events that we currently have literally ZERO
means of preventing or protecting ourselves against.
We NEED a backup.
Yes, we should do everything we can to preserve the earth.
This isn’t about abandoning our home planet, it's insurance.
If you still don’t get it, I highly encourage you to explain in the comments why backing
up life is NOT a wise idea.
By the way, self-hatred is not a valid reason.
So, with high margins, a huge first mover advantage and a total absence of ANY competition
until they solve the MAJOR challenge of reusable rockets, Starlink will bring in tens of billions
in profits, funding the construction of countless Starships and ultimately build the foundation
of a self-sustaining Mars colony.
Should Starlkink IPO, I will be investing for the long term.
After all, I plan to visit the colony it funds.
Let me sum it up.
SpaceX is on the cusp of serving its first Starlink customers with a swarm of satellites
already in orbit.
Meanwhile, everyone else is still trying to figure out how to build a rocket to cost-effectively
launch their satellites.
Their only other options are to pay through the nose or contract SpaceX to do their launches.
And just finally, for the record, I think this is a genius move.
IPOing SpaceX would be a disaster.
Too much innovation, too many setbacks, too much drama, too much distraction by the stock
price.
But spinning off Starlink for an IPO makes a load of sense.
Once up and running, it’s a simple, high revenue, high margin subscription service.
For the space nerds, stay tuned to the end for a little bonus content.
I’m Steven Mark Ryan, this is Solving The Money Problem, and I love you all.
Thanks so much for watching.
Let me know your thoughts in the comments below.
Are you going to buy Starlink if it IPOs?
Do you like the idea?
How do you see anyone competing with Starlink?
And of course, if you have any ideas for future videos, let me know.
I read ALL your comments.
p.s.
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