Comment by cft
12 years ago
It's quite amazing how this values SpaceX at 10bn, less than 50% of WhatsApp. This makes me think that there's something systemically wrong with the current incarnation of post-oligarchic shareholder-controlled short term interest based capitalism. One can argue that WhatsApp has better money making potential than SpaceX, but that is only because the whole system is warped.
While I see your point, I think there are two important things to remember here. (Note: I understand the long term implications of an interplanetary species, just providing context)
A) whatsapp improves the daily lives of hundreds of millions of people. You don't necessarily need an absurd customer lifetime value to get a $19b valuation with that many people using your product.
B) SpaceX provides almost no current value to anybody. And the people it does provide value to are "free riders" in the sense that they love watching space travel and get to watch SpaceX regardless of whether or not they pay for it.
Just an inexact thought experiment. Let's say we poll the roughly 1b people living in first world, and ask them each to pay $10 to see SpaceX do whatever SpaceX does. How many people even think it's worth $10?
Let's say we poll the roughly 1b people living in first world, and ask them each to pay $10 to see SpaceX do whatever SpaceX does. How many people even think it's worth $10?
I just wan't to add that the problem is not that SpaceX provides less to humanity than WhatsApp.
The problem is that most people are not really far-sighted, but only see things which benefit themselves in a predictable amount of time.
Why companies like SpaceX (or NASA) are important has already been answered with Why Explore Space? A 1970 Letter to a Nun in Africa
https://news.ycombinator.com/item?id=4372563
>The problem is that most people are not really far-sighted, but only see things which benefit themselves in a predictable amount of time.
Because most people are not upper middle class to wealthy. They are forced to be concerned about paying for food/healthcare/education so their life tends to have different priorities.
The other problem is that your line of 'far-sighted' is completely arbitrary. Someone could easily argue that SpaceX is wasting its time with rockets and we should be spending more time studying theoretical physics to figure out better ways to travel long distances in space.
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People are already chipping in - SpaceX gets a big portion of its income from NASA which is funded by US taxpayers, and also indirectly by all the ISS partners (Russia, Europe, Japan, others?).
While I can see how whatsapp can be valued higher than SpaceX, I don't see how this logic makes sense on any level. You could use the exact same logic to make any B2B company seem worthless when compared to a consumer app.
"SpaceX provides almost no current value to anybody."
Well, someone payed SpaceX for a delivery flight to the ISS the other day, they're certainly providing value in that context
This discussion is in terms of value to WhatsApp users ( average-joe user) to SpaceX users ( niche rich-audience / billion dollar agency )
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A naive way of looking at it:
Benefit to humanity = Number of people it affects * Impact per person.
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I am not so sure that is the reason for WhatsApp crazy validation. I feel that the reason for that was that it represented a danger for Facebook and Mark wisely acquired at any cost.
WhatsApp is big outside of the US because (at least in Panama, were I was born) text messages are not included in the mobile phone plan; however, you can get a data plan for a monthly fee and keep in contact without additional charges. In the US most people use text messages to communicate.
C) SpaceX also has considerable risk of failure so you have to factor this into a valuation and investment. Whatsapp has eliminated much of this risk and is already a developed and implemented product.
I am not saying Whatsapp has anywhere near the potential value of SpaceX but it is important to factor the amount of risk given the stage a project is at.
they uplift communication satellites, this is quite a value, isn't?
"improves the daily lives of hundreds of millions of people" really? I bit grandiose dont you think.
.. by a small amount, yes. Communication is valuable to people. Having a better alternative to SMS is evidently something people prefer, however slightly.
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Very weird and imo, wrong comparison.
WhatsApp is a consumer product. It lives as it breathes. As long as people/consumer keeps pumping in money & time to it, its value will stay or rise from its current value. Once that stops and people/consumer stop using it, its value will eventually fall.
SpaceX on the other hand is not a consumer product yet, but is aiming to become one. Consider it just like Boeing or AirBus, nobody would have valued them as a multi-billionaire company ( back in 1900s when they were founded). Their technological advancements and the development phase would have been same as SpaceX right now.
But eventually it became a very integral part of human life. They have become a consumer product, their value is now because of people using it daily. And unlike WhatsApp people won't stop using air-travel.
Everyday people do not invest directly into it like they do(?) for WhatsApp, but indirectly by using airline services they are paying for it. Similarly for SpaceX everyday people aren't investing in it right now but eventually ( as per SpaceX's ambition ) people would just like they are doing for air-travel.
> Very weird and imo, wrong comparison.
I think comparison is ok, but people are missing an important distinction - yes, the system works exactly as one would expect it to. There are good reasons for the system to value WhatsApp higher than SpaceX. The algorithm's implementation is correct. The problem is, we're using a wrong algorithm - a system that begins to increasingly value wrong things.
Capitalism as a system has many impersonal qualities, but capitalism per se does not value anything. It just provides mechanism (market prices, investment dollars, and so on) by which the value that people attribute to things can be known.
If "capitalism" values the "wrong" things it's because people at large have the "wrong" values. If that is a problem, it's probably not an economic one, but something deeper.
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In this case I think the valuations are justifiable.
Imagine that all the people that sent a Whatsapp message in the last year were charged SMS rates for the messages they had sent. How much would that cost them? Well, that's a reasonable rough measure of the value they have derived from Whatsapp. It's an important service that has real immediate benefits for the people using it right now.
SpaceX is a fantsastic venture, I'm very excited by it, but right now it's providing limited economic benefit. The Space Station is an expensive waste of money. A few comms satelites is great, but there haven't been all that many of them. Now, if SpaceX does manage to recover and re-utilise it's boosters that willbe a game changer. Their value will skyrocket (appropriately) and Google will make a killing on their investment. But that hasn't happened yet.
Yeah, imagine investing in things like... the first electricity service provider, or the first telephone, or the first TV. All of those things are multi-billion dollar industries. I'm sure this entire exchange has been played out before for other emergent industries!
The issue is picking a winner. As Warren Buffett points out, there are thousands of bankrupt airlines and car companies. If you pick a loser, you wipe out no matter how well the industry does, as consolidation is inevitable particularly in high barrier to entry industries. This keeps early valuations low.
I am not sure if you are trying to be sarcastic or agreeing to my point.
But yes, emerging technologies are not something every common-man invests in.
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SpaceX comes with, well, an astronomical (snicker) level of risk attached to it. So I suppose the idea is that SpaceX might well end up being worth a lot more than WhatsApp, but WhatsApp and its user base are worth a lot now. It is also unlikely that they will end up not being worth anything in the future (if we hit a second dotcom bubble WhatsApp might end up being worth a lot less than their current valuation, but like AOL, it won't be literally worth nothing). SpaceX might.
There is also some level of tragedy of the commons problem going on, in which SpaceX benefits all of us every time they successfully test a new design, but it only benefits their investors when they manage to get mining rights to the moon or set up martian tourism or the like. Goals which are possible - which is the impressive thing - but still very risky bets.
> when they manage to get mining rights to the moon or set up martian tourism or the like
I always wonder if people actually seriously believe this.
We are many, many decades away from this being even close to a reality.
>>We are many, many decades away from this being even close to a reality.
If there aren't companies like SpaceX (or governments doing similar work) we'll never be any closer to that reality. Mines on the moon and O'Neill cylinders in space aren't going to pop into existence in 2098 or something, they're going to be built on top of the foundations being laid by SpaceX (and others) today.
Maybe SpaceX will last long enough to profit from it, maybe they won't. It's still a better use of $1 billion of Google's money than another social network or whatever.
No, we're not decades away, we're dollars away. A base on Mars in feasible with today's technology, see for example the Mars Direct plan by Zubrin. The only thing we need are about 30 billion dollars, that's like eight aircraft carriers or 1/3 ISS.
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Says who?
I'm amazed SpaceX is valued so highly.
SpaceX is in an industry with better financed/politically connected companies and an unpredictable revenue stream. It's a risky business by every definition. WhatsApp by comparison is a stable, very popular, growing and strategically important messaging platform.
And if you think that human-human communication is less valuable than putting a few satellites in space (NASA/ESA/ISRO/etc are the real keys to future space exploration) then I would argue your priorities are a bit warped.
WhatsApp by comparison is a stable, very popular, growing and strategically important messaging platform.
I'd rather phrase that as "WhatsApp by comparison is a currently stable, currently popular and growing generic platform implementable and implemented by thousands of companies and hobbyyists worldwide with nothing unique about the company except the current user-base, a (mostly free-loading) user-base which has shown great willingness to flock to the next great thing should this service ever do the wrong moves".
You know... The sort of statement you don't make about 20 billion dollar companies. They should have a more solid footing than being trendy right now. To put it in the dryset terms possible: They have no unique value-proposition.
SpaceX is doing real shit which might make an impact on the future of mankind. To me just comparing them in the same context seems offensive.
Have you never heard of network effect ? Having one the size of WhatsApp is absolutely a unique value proposition since it is impossible to replicate due to acquisition costs.
SpaceX is making something physical no doubt. But they aren't the only one and their competitors aren't cute little garage startups.
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WhatsApp (and similar) will never make any of the invested money back though. Its value is purely in chance that it will grow and someone else will buy you out in a few months or years. Its only valuable asset are users, and they will be gone. So someone at the end of long chain on of rich people will weep.
With SpaceX, there is enormous value in the company as it is, even if it went bankrupt tomorrow.
> (NASA/ESA/ISRO/etc are the real keys to future space exploration)
Now are they? NASA itself now outsourcing its LEO capacity to SpaceX. And SpaceX is much more focused than government agencies thanks to virtue of having a single leader with an idea, as opposed to bureaucracy and CYA-ism. Of course, space exploration is not a one-man endeavour, but I wouldn't dismiss the impact SpaceX already has and likely will have in the future - they're empowering those big space agencies.
>And if you think that human-human communication is less valuable than putting a few satellites in space (NASA/ESA/ISRO/etc are the real keys to future space exploration) then I would argue your priorities are a bit warped.
that is exactly bifurcation point each technological civilization faces (be it whole human race today or China 600 years ago) - to "go in", i.e. collapse into something like ant-colony or to "go out", i.e. explore and expand.
I'm surprised it is the top comment. If I remember correctly, it has been discussed a lot of times on HN. And most of the times, people agreed it wasn't a fair comparison.
WhatsApp has had a real, tangible, positive impact on the lives of hundreds of millions of people.
I think WhatsApp potential value caps out at 50B or so. SpaceX potential value might be in the trillions (low probability). So while their current valuations might seem 'wrong', the long term potential value might be closer to your value judgement. There are very few large investors with a 20 year time horizon. I am not sure if that is a fault of capitalism. I am not sure another system of resource allocation would do better, do you?
This has nothing to do with short term interest based capitalism. Whether privately held, a charity, or any other structure, if what you are making is not of general interest to the population at large, it's going to have a pretty hard time. The only way to fix that is to eliminate free markets and democracy so people of average or less intelligence/foresight have no say in the appropriation of resources.
Value to humanity is not highly correlated to economic value. Value to humanity is but a small, often inconsequential segment of demand.
People will disagree with you on that, but I think such disagreement misses a crucial observation - economic value was highly correlated to the value for humanity. But as we took all the low-hanging fruits we can see those two senses of value increasingly diverge.
Hell, for a simple analogy, it's like with solid rocket boosters - you should appreciate how far they got you, but you definitely don't want to keep being attached to them when they burn out and decide to not go to space.
I think you're confusing "value to humanity" and nerd porn.
SpaceX is the commercialisation of space exploration and that's just how valuation works in commercial applications. It is, however, remiss to value to science and progress in dollar terms. TCP/IP is far more valuable than all of the Internet companies combined but not in dollar terms.
Space transport has always been commercial.
Who do you think designed and built the Saturn V? Redstone? Atlas? Ariane?
Commercial companies making a profit.
Roughly:
Redstone: Designer: Army Ballistic Missile Agency (Now Marshall Spaceflight Center) Manufacturer: Chrysler
Atlas: Convair and its successor interests (General Dynamics, Lockheed, ULA)
Saturn V: NASA Marshall, Boeing, North American and Douglas
Ariane: EADS Astrium and Arianespace/CNES (French Space Agency)
So, yeah, they've always been commercial, but they haven't always been commerically driven or (entirely) commercially managed.
That's similar to saying a toddler is less productive than a recent college graduate.
That is to say: WhatsApp is much further along its individual trajectory than SpaceX is. In decades, the value of SpaceX is likely to eclipse WhatsApp, which in all likelihood won't even exist any longer.
In this analogy you seem to believe the trajectory for this toddler is set in stone. The reality is at it's infancy (which is where Space X is in the grand scheme) it can look very promising but turn out very bad, or a competitor can drastically outpace. Any valuation should discount for the level of risk.
A lot can happen over time. 10 years ago MySpace was by far the dominant social network and Blackberry was the mobile powerhouse. Seemed like neither would fall with so much momentum behind them but we see how that played out.
Valuations are not fixed in time. SpaceX is only starting up. Give it time.
And what value do you place on, say, GNU/copyleft, or HTTP/HTML, or the Fourier transform?
Market capitalization does not indicate importance to the human race, though it's easy to lose sight of that.
> though it's easy to lose sight of that
I think one of the reasons people lose sight of that is because they look back and see all those products, all that improvement in quality of life that capitalism brought us. Those things are undeniable. But one can't infer from this that the system will forever be awesome. It was aligned with human goals initially, but as time goes by, it's less and less aligned.
My guess is that a part of the issue is that VCs can understand WhatsApp. They feel like that can assess it's worth, associated risk, and come up with a valuation independently.
With science based startups the partner at a VC can't easily make an independent assessment. They have to rely on specialists to do tech D&D and they rarely trust them completely. So they shy away from those deals, or they factor the risk into their valuations.
This behavior somewhat ironically can make these investments higher risk. There is a degree to which fund raising at a lower level makes a company a higher risk, because they have less money to work with and can't afford to make mistakes. (the converse is also somewhat true).
Perhaps it's partly because space is seen as higher-risk than social media? The valuation would then be lower because people lower their expectations based on the risk of failure.
>post-oligarchic
Post?
SpaceX could be higher long term.