Got $50 billion dollars? Elon Musk is one of the few entrepreneurs today that has humanity’s long term interests on his mind. He helped co-found Tesla and SolarCity (now Tesla Energy) to ween humanity’s dependence off fossil fuels. His other company Spacex, however, has a more long term goal of helping humans become a multi-planetary species. Despite the lofty and almost surreal ambition, the cause of Spacex could be the most important undertaking by humanity thus far in our history. But the technical challenges of getting to Mars never were the primary obstacle. We went to the Moon with slide rules, we should have been on Mars 30 years ago. The problem is cost. Here is how Musk believes he can pay for his Mars colony before it is self-sustaining.
NASA and Government Funding
NASA and the United States’s government have not committed to full scale funding of Musk’s effort, or even to a significant fraction of it. This is unfortunate. America’s obsession with “small government” ignores the reality that many of the greatest innovations and human accomplishments have been government-backed. The government is able to fund enterprises that have no clear or no immediate economic return. After all, Christopher Columbus didn’t open access to the New World without the financial and political backing of the King and Queen of Spain. The internet wouldn’t have been invented if not for Department of Defense funding that sparked the idea of linking computers together into networks. Nonetheless, NASA and the US government are supporting Spacex through a variety of grants for other projects that undoubtedly free up resources that can be used for the Mars project.
Commercial Launches/Rocket Reuse
Spacex is a launch service provider. For a fee, they will launch your satellite. It is as simple as that. Spacex has been able to build rockets cheaper than the competition, making it possible for them to capture the majority of the commercial launch market. They are further increasing their profit margins by reusing the first stage of their rockets and the payload fairing. The problem is that there is a very limited number of launches needed per year: there is simply not enough launches to profit from. Reuse of rockets can also eat into profit margins as economies of scale for parts, labor, materials are underutilized in a demand-constrained environment.
Starlink Internet Services
Instead of waiting for the launch demand to develop, Spacex recently entered the satellite design and manufacture business themselves. Spacex is mass producing satellites and launching them ~60 at a time. The Starlink satellites seek to provide global high speed internet to the entire surface of the world, filling in gaps left by traditional internet service providers. Subscriptions fees will pay for the launch and maintenance of the thousands of satellites that comprise the Starlink fleet, with the profits used to fund the Mars effort. The launch demands of Starlink will help maintain profitability of reusable rockets while generating huge additional revenues.
If all else fails…sell Tesla
Elon has made it clear that Tesla is his “second” project. Spacex always comes first. Eventually there will come a day that Tesla will have succeeded in its mission in helping humanity off of its fossil fuel addition, or at least Tesla will no longer need Elon to babysit. By that time, Elon may have tens of billions of dollars in equity that he can gradually sell to fund his Mars ambitions. But this method of financing is a “last resort” emergency measure if it occurs anytime soon. Elon hopes that his equity is worth a great deal more by the time of his retirement.