Blue Origin Reveals Some Cost Numbers
How Jeff Bezos is using Amazon’s success to fuel Blue Origin’s space effort, a billion dollars at a time, GeekWire
“Amazon billionaire Jeff Bezos has long said that he’s using his personal fortune to fund his Blue Origin space venture, and today he hinted at just how many billions of dollars he intends to spend. “My business model right now for Blue Origin is, I sell about $1 billion a year of Amazon stock, and I use it to invest in Blue Origin,” he told reporters here at the 33rd Space Symposium. “So the business model for Blue Origin is very robust.” Bezos threw out the figure half-jokingly, after noting that he typically doesn’t reveal how much he’s spending. But he made clear that his in-house space effort, headquartered in Kent, Wash., takes a noticeable chunk out of his estimated $78 billion fortune. He said the development cost for Blue Origin’s New Glenn orbital launch system, which should be taking off from a Florida launch facility by 2020 or so, is likely to be on the order of $2.5 billion.”
Plot thickens.
It’s nice to see people put their money where their mouth is.
Between SpaceX and Blue Origin we have an interesting show.
Lots of the Tech giants have put money into either ‘good causes’ or long-term science and engineering – they have an eye for the future, and keen minds. All except Steve Jobs, who built the world’s ugliest yacht and who suffered mightily as a result of his belief in quack medicine…
From how he spent the money he made (i.e. lack of giving to charity), it’s pretty clear that Steve Jobs didn’t care much about giving back to humanity.
If he’s getting anything like a decent rate of return, his fortune’s still growing faster than he can spend it on a massive reusable orbital launch system…
470% increase in the price of his existing AMZN shares in the last five years.
Must be nice to be working for a business where there is no pressure to make a profit. I really don’t understand Blue Origin’s business model. They will have no launch vehicle capable of bringing in substantial income for at least three years, minimum. And even then, they will only have one, the heavy-lift New Glenn. They will be more-or-less conceding the low-end and middle parts of the launch market to SpaceX and others. The problem with competing at the high-end is that such customers will demand reliability more than anything else, which is why so many launch customers use ULA’s Atlas V despite its high cost: it has a proven 100% reliable record.
The ‘business model’, as you describe it, is cash-flow driven, not profit-driven. As a result, the company’s stock becomes highly valued, thereby creating long-term value, and doing it in a way that avoids quite a bit of tax. It’s marvelous really.
And if the current thinking in Washington comes to pass, realizing the value of those shares will be taxed at an even lower rate.
Errr, looking at their launch manifest, there’s not a single commercial customer currently on the books.
(And I can only see three in the last 7 years Echostar, DigitalGlobe, and the Mexican govt (counting the Mexican govt as “commercial”.))
It’s a little hard to appreciate, but Mr. Bezos has a net worth of $78 billion. I have no idea how that’s invested, but he’s probably got an income couple billion per year, after taxes. If he wanted to, he could spend $1 billion a year, for the rest of his life, on a hobby. I suspect he considers Blue Origin more than a hobby, but he also has no need to worry about short term profits. If it takes twenty years before the company has any income, he can afford it. (Blue Origin was founded in 2000 and the first flight of New Glenn is supposed to be sometime around 2020.) I suppose it helps that, unlike Musk and SpaceX, he’s the only investor. At least as far as we know.
I had similar thoughts about my hobby and the paltry sums I get to spend on it, yet the joy I get is difficult to assign a dollar value. If I could spend half my income for the rest of my life on what I wanted to build, that would be pretty amazing.
Just a 5% return is 3,9 billion a year… He could throw 4-5 billion a year at it and it would still barely make a dent.
I did say after taxes. If you make the touchingly naive assumption that someone making a few billion a year actually pays the percent implied by his tax bracket, a couple billion after taxes sounds about right.
It’s the same as Amazon’s business model when it was a start-up and kept growing every year even though it wasn’t at all profitable. Just look at how big Amazon has become (at the expense of traditional brick-and-mortar stores like Sears) and how wealthy it’s made Bezos.
Bezos is just playing the very same “long game” again with Blue Origin.
Mr. Musk has said that SX has invested ‘north’ of $1Billion on FH.
Development cost yes , but I gather some of that cost has been in improvements to the Booster Structure etc which is probably worth doing and strengthens the company as whole !
Closely held mostly private companies like Blue Origin ( and to a lesser extent SpaceX ) do not have to give away their internal workings and operational info in the requisite SEC filings , or even to bank moguls. Dunno if you’ve ever parsed an SEC filing of a company whose stock ( = equity ownership ) is traded publically, but that filing pretty much reveals all. They become more naked than not. You truly can follow the money and simultaneously see what they’re doing with it. SEC filings are public documents.
I find them quite handy , actually. Private companies and corporations are insulated against FOIA’s , but when they publish their annual reports we get windows to peer through—IF they are meeting the legal requirement for transparency.
Elon has a few trusted investors to bolster his own investment. SpaceX’s public reveal is limited to their government R & D contracts , which as I understand it are up front ” payments” towards fullfilling X number of missions down the road.
Bezos doesn’t have to tell us much of anything about his biz. I’m just very happy he’s doing it and paying as it goes out of his own deep pockets. We need more Musk’s and Bezos’ and a lot less Lockheed and Boeing Inc.
Quite the ‘model’ rocketry club they’ve got going. Membership fee is a pretty big chunk of change, though.
I think this is what we’ve wanted for a long time. A rich person/company that will spend a fortune on their own space program. We need to know if they can succeed or fail.
The once painful small steps are becoming larger each and every day.
America has a long long history of keeping up with the Jones’s and owning a sports team may just give out to owning a space facility or rocket transportation company…
There are a few right now… Bigelow, Musk, Bezos, Branson, but once 30 or 40 billionaires suddenly want to jump in …
Factories and transport companies sound too mundane for the sort of people who buy sports teams. Now, a hotel suitable for entertaining heads of state (should you choose to run for and win an elected office), that’s something I can see very rich people competing over.
or a sports facility for a new zero G sport that gets developed?
I’ve suggested landing a number of Sojourner-sized rovers on the Moon and holding the first Lunar Rover Race. It should be doable for $10 or $15 million per contestant, and many universities have an aerospace engineering department which could build one. Why let the football team get all the donations from alumni interested in sports competition? For two rich alumni interested is space, Princeton could build one without trouble. I’m not sure about Queen’s University or U Penn, but Stanford could. And, when it comes to donations, universities consider dropouts to be alumni.
Why a race? There is lot of science left to do on the Moon, science NASA has ignored, and its proximity makes it possible to easily include students. Instead of stunt turn the Moon in a research laboratory opportunity to let those students do the science NASA won’t do.
A race is competitive. I was thinking of funding from the same sort of rich alumni who donate money for college athletics. If Stanford is competing to win something, almost anything, you can be sure some UC Berkeley alumni will donate money to give Cal a chance to beat Stanford. Not as much money as alumni give to football teams, but still nontrivial sums.
Note, for example, funding for solar car races. They provide more money to mechanical and electrical engineering departments than appeals for direct funding of the related research do. And, after the lunar rover race, you would have a lander designed and tested (with a potential for flying an identical copy with a science payload) and the leftover race rovers could spend an extended mission doing the most complete site survey since Apollo.
KSC also hosts the robotic mining competition, in which university teams compete with robotic vehicles designed to extract and haul regolith. It has sparked interest in both the student teams and industrial employers, as terrestrial mining is becoming increasingly automated.
Yes, the ASCE used to hold similar lunar robotic competitions in the 1990’s and early 2000’s that were also very effective. I used to be on the committee organizing them. It was good when NASA finally got involved.
Yes, but there is value to focusing the competition on aspects other than speed. Solar Car races make sense because you want speed and endurance to replace regular automobiles.
But for the Moon there are more important rover features to focus on rather then mere speed.
For the price I suggested (which is probably optimistically low; $25 million per entry might be more like it), I wouldn’t expect rovers able to survive the lunar night. Especially since radioactive heating units would probably not be an option. So any competition would be a race in some sense. But you could come up with something more than pure speed. For example, the amount of unexplored surface mapped within a time limit.
On the other hand, some people might prefer raw speed or distance covered. There was quite a bit of internal pressure when the Soviets were operating their Lunokhod rovers, to cover distance rather than stop and take data. I also seem to remember more JPL press releases about Sprit’s and Opportunity’s odometers than their spectrometers.
People happily spend $50m on a racing sailing yacht. If we get the price of launch down enough, we might bring down the price of manned solar sailed ships to that range. Clarke’s “Wind From The Sun” is doable.
Given Blue Origin doesn’t have to support dozens of centers full of civilian servants, doesn’t need to bankroll the “Great Commune in the Sky” (ISS), doesn’t need to fund the “Socialist Launch System” (SLS), doesn’t have to give billions to scientists who go rogue when “their” money is reduced, and doesn’t have to deal with FAR and other NASA regulations, a billion dollars a year for space for Blue Origin is probably equivalent to the taxpayers giving $20 billion to NASA.
So here’s hoping Amazon keeps booming and the deep state of space doesn’t strike at Blue Origins!
He could subsidize 100 suborbital flights a year by 1 million each and it wouldn’t even be a rounding error in his total wealth;….
Except he has no real interest in suborbital flights, they are just a stepping to industrializing space.
He would get to fly it 100 times and it would not cost him … that in itself will test how long things work
I doubt Blue Origin would object to some NASA contracts. Suborbitals are the best way to study the atmosphere and ionosphere between altitudes of roughly 30 to 100 km (sometimes called the “ignorosphere” due to the lack of data.) That’s too high for aircraft and too low for spacecraft. Cheap, frequent suborbital flight reusing the same payload (or the same payload with tweaks based on experience) would be a tremendous improvement over sounding rockets.
Yep, and I don’t expect he would turn down such contracts if offered.
Nor would I expect he would object to some startup buying a couple of New Shepard rockets to serve that NASA market. Or even selling a couple units to NASA itself, just like others sell aircraft to it. Maybe it could supplement NASA’s famous T-38’s for training astronauts while doing NASA research.
And going further in that direction, and subject to ITAR, selling some to foreign nations (U.K., Australia, Japan, Latvia?) for their own HSF program. Reusable rockets open up a lot of new business models for aerospace firms.
Blue Origin is already under contract to NASA for suborbital launches.
http://spacenews.com/blue-o…
I’m not sure about selling launch vehicles to foreign countries (or companies.) New Shepard is, technically, a ballistic missile. I’m not even sure if landing it outside of the United States would pass muster. On the other hand, companies like Boeing do sell commercial aircraft to foreign companies and military aircraft to foreign governments, so I guess something could be worked out. But it may take a while for the regulatory environment to adapt.
I apologize for being such a nitpicker, but launch vehicles and ballistic missils are separately listed on the US Munitions List (thus the export restrictions on both) but are not the same thing. A missile is a hurled weapon. A rocket propelled vehicle becomes a missile only if it carries, or is intended to carry, a warhead or similar weapon.
Booming , I see no booming just a lot of Vaporware !!
Always have loved the Blue Origin design. And I double love that we are in a new space race that has captains of industry competing with each other.
Looks like Blue Origin is getting ready to go into high gear 🙂
https://arstechnica.com/sci…
“After making a few dozen fixes and modifications to the New Shepard system, Blue Origin is now building three operational propulsion modules and two crew capsules. A testing program will begin by “late summer or early this fall,” Meyerson said. After uncrewed test flights, “test passengers” could be added early in 2018 before customer flights later in the year—if all goes as planned.’
Like Musk, Bezos recognizes the path to low cost launch and reusability. It can enlarge the market sufficiently for both companies to be profitable. Bezos may even make a profit with suborbital tourism, though this remains an unproven market.