Re: Getting Mega Projects Done

From: Earl Colby Pottinger (earlcp_at_idirect.com)
Date: 11/28/04 

Date: Sun, 28 Nov 2004 01:07:50 -0600

david@ualmiles.com (David Summers) :

> henry@spsystems.net (Henry Spencer) wrote in message
> news:<I7urAH.292@spsystems.net>...
> > The key word is "risk" -- a word investors do not like to hear.
> >
> > There is technical risk, because although the fundamental physics looks
> > good, the detailed engineering for an orbital system has not been
> > *demonstrated* to work. There is some possibility that it might not, or
> > that it might have problems which would increase costs and delay returns.
 
>
> While this is certainly true, I believe that technical risk is
> something investors are used to, to a certain extent. When a several
> billion dollar cruise ship is built, there is some serious nail-biting
> during the maiden voyage over cruise speed, etc. Also, in general I
> believe that most people believe that technical problems can be
> overcome (with more money, perhaps, but it doesn't normally cause a
> write-off).

That is a poor example, first cruise ships are making money hand over fist
already, all the investor is doing is cutting themselves in for a piece of
the pie. Second cruise ships today are built in one or two years by
companies that you already know know how to build cruise ships because they
did it before so you know they can build it. Third the first cruise ships
were already cargo ships at a time that cargo ships were making money hand
over fist. If the cruise ship idea did not work out you could still convert
over to a cargo ship to a known market. Fourth cruise ships from
reservations start making you money before you have even finished it. Big
time cruisers to save money book as much as a year in advance or more, it is
possible to sell half of the cabins off before the hull is even completed.

> > There is market risk, because there are *no* *customers* right now for a
> > steady stream of small payloads, which is what those systems deliver.
> > Even disregarding that, the proven market for cheaper space launch in
> > general is inadequate -- existing markets are too small and not very
> > sensitive to cost, they won't grow much if the price drops. New markets
> > are needed, and they are all quite speculative: even if you can be
fairly
> > sure that certain markets will appear, their size is quite uncertain.
>
> I believe that this is the big risk factor. What can be done to
> mitagate this? The only things I can think of are matching existing
> launchers as much as possible. Do you think that something can be
> done to decrease the market risk for the passenger market? How
> believable are the market surveys that have been floating around? Is
> it even possible to get credible predictions using surveys like that?
> If the market isn't there, I'm not sure anything can be done to create
> it. I'm hoping that cheap RLVs will prove that the market exists, and
> can scale well... if so I may have a chance.

Basicly you need enough money to stay in business for the time it takes
business to trust you and to take off, and that can be years. Assume that
tomorrow you can offer to put a capsule in orbit for $100.00 with zero
government problems too! How long before people take you up on your offer?
I would say at least one to two years, first they have to design one, test
it, add the features they want, add a recovery system if they think it is
needed, test it more, get insurance, transport it to your lanuch point, check
it out again that transit did not damage it then lanuch. Less than a year to
do that, you are dreaming, or they are sucidal fools. Even a simple sat.
will take months to design and assemble.

> > And there is political risk, because there are unresolved regulatory and
> > liability issues galore, plus the possibility of government-sponsored
> > competition, plus the possibility of adverse legislation in general
(space
> > being an area with a history of government meddling, not all of it well
> > thought out or even friendly).
>
> The political risks are very real, but big money always trumps
> politics - or at least immobilizes them. For $50B you could get NASA
> disbanded - just contribute to every Senator... (I wish that was a
> joke)

No, you could not, too many congress people need to protect jobs in thier
area to just disband NASA like that, first you need to spread your money to
cover most of the areas affected. By the time you are finish you will find
youself so messed up you will be no better that the present NASA is (if you
are even that good). If all it took was money ERON would still be in
business. Don't think you can buy out the government it's budget hits
trillions, you are always small fry to them. If however you are doing
something that the government does want done, then that is where you money
directs who gets the contracts and what outriders can be added to a bill
before congress. Think money buys freedom, ask OTRAG or Dr. Bull.

> > The big benefit of a free market is that it doesn't *matter* whether
> > "standard business" buys into a new idea, because you can start a new
> > company rather than relying on winning support from the old ones. The
> > downside of this is that it isn't necessarily easy...
>
> As I said in another post, I agree and think that the only way this
> will happen is with a new company doing it.
>
> > The big bottleneck definitely is adequate funding. (For example, Rutan
> > won the X-Prize by a wide margin largely because he had money and most of
> > his competitors didn't.) Technical and political obstacles exist, but
> > most would-be launcher builders aren't even at the point of actively
> > confronting those. However, it's important to realize that the reason
> > why there isn't money is not "business" in some vague, mystical sense,
> > but the very high risks of investing in this field.
>
> Agreed. And understanding the risks is the first step towards
> mitigating them. For example, investors can be consoled by saying
> something like "if the tourism market rolls out like we think, you
> will get a 20x return on investment - if it doesn't, you will break
> even on normal satelite launches."

Problem is to figure out the risk the same investors are going to want a lot
of details on your new material appoach.

> So I guess we really have to have a project under $20B, so that the
> existing $1-2B revenue stream can support it...

Problem, there are other companies planning n building BeanStalks for less
than $10 Billion, you may have already priced yourself out of the market.

                     Earl Colby Pottinger 

-- 
I make public email sent to me!  Hydrogen Peroxide Rockets, OpenBeos,
SerialTransfer 3.0, RAMDISK, BoatBuilding, DIY TabletPC.  What happened to
the time? http://webhome.idirect.com/~earlcp

Relevant Pages

  • Re: Vince Cable suggesting savers should invest in stocks.Is he right?
    ... It depends on whether you are prepared to risk what you pay in, and whether you are prepared to invest for at least five years. ... You could get 8-9% or more if you buy low and the stock market goes up. ... The FTSE could go down to 3000 or even lower, however, I can afford to lose that money, if the worst came to the worst. ...
    (uk.finance)
  • Re: If the earth is 6k years old
    ... long-term trend of the market is almost always up (and drop the "almost" ... they end up *losing* money. ... If you time your cashing out in each investment instrument every 10 ... What is your risk? ...
    (talk.origins)
  • The Silent Dollar Crash
    ... In terms of risk premia, credit spreads and volatility, ... such as NAHB home sales expectations and housing market index and the U ... macroeconomist, and MIT economics PhD, who routinely incorporates the ... financial/corporate governance systems. ...
    (soc.culture.cuba)
  • Re: OT: NOT EVIL JUST WRONG
    ... Insurance against the wrong problem is ... If you disagree with teh analogy, ... Federal money ... A risk is perceived, and peopel choose how to respond. ...
    (sci.electronics.design)
  • Re: northern crock dies....clown dithers for six months....bear stearn taken over in 2 days....
    ... Similar terms were on offer with regard to NR They do involve public ... risk but with risk goes potential reward. ... The US government spends US money as it sees fit. ... jpm own bear stearns.... ...
    (uk.politics.misc)