More SpaceX details in Elon Musk interview

I listened to the Elon Musk interview
(http://thespaceshow.com/detail.asp?q=343). It's long, well over an
hour. Musk said some interesting things.

- He felt that the way launch services were developing, space access
was not going to get cheaper, maybe ever. It almost sounded like
he was starting SpaceX because he felt someone had to do it.

- He sounded quite humble, not at all like a thirtysomething badass
who'd stolen the best rocket engineers from two rival companies and
just lit up his own vehicle after a record-breaking development.

- He seemed acutely aware that first launches generally do not go
well, and it sounds as though he has a lot riding on the success
of this first launch. Although he sounded bullish elsewhere in
the interview (hinting at a third engine, confident in reusing
first stage), I got the sense that he may be close to the financial
edge.

About the business end:
- It's cost him $80M so far.
- Falcon I by itself was perhaps $60M of that.
- Regulatory issues are maybe 20% of the cost. Not a deal breaker.
- Launch price of $5.9M does not include $600K for range fees at
Vandenberg.
- He's expecting 5-8 flights a year.
- He thinks he needs to demonstrate a 20% ROI in order to get
funding from the market. He was clear that outside capital, and
thus a profit on the existing investment, will be crucial to
forward progress towards sub-$1000/lb lift capability.
- He mentioned Blue Origin a few times without saying anything.
I wonder if his additional funding might come from Bezos/Allen,
who might be willing to commit before continuous predictable ROI
has been established.
- He thought an IPO was the future, but at least 3 to 5 years away.
- He was clear that there is a limit to how much he will fund
himself, and it sounded like he was in for quite a bit more than
he had expected at this point.
- They're looking at potentially setting up their own launch site
on a Pacific atoll, but it sounds like they are far from
committed to this idea. Elon said that regularly scheduled
commercial flights are a requirement, because chartered flights
or boats are expensive.
- He sounds quite proud of the fact that his Falcon I launch price
has stayed firm at $6M for three years.
- He talked about why they designed and built their own engines:
- Russian and Chinese engines would have ITAR issues.
- Russian prices might go up in the future.
- Nothing else ran on the propellant combination he wants.
- Pricing structure of the business is different from what he
needs. An RL-10 is $5M, and you'd need a lower-stage engine
as well!
- He was unenthusiastic about marketing studies based on little
data, and his feeling was that there was some elasticity in
market demand (more demand at lower prices). In particular, his
first customer had a budget of less than $10M for launch, and
would have stayed on the ground had SpaceX not existed.
- He noted that Lockheed and Boeing had merged their launch
services, so that they now had a monopoly, and that monopolies
are terrible at reducing prices.
- In general, he said that there is no technological solution to
less expensive space access. Instead, it's a matter of good
execution, and that is what they think about.

He said a little about development:
- It had taken far longer than he thought.
- He's a bit of a schedule cynic these days.
- Falcon I *is* the scaled-down model rocket. He reiterated that
Falcon V is not the heavy lift vehicle, but an intermediate
point.
- They will make an announcement later this year involving a
regeneratively cooled rocket. The implication, to me, was that
they have a third (!) engine in development which is bigger.
Maybe this is Merlin 2.
- He defended the use of an ablative chamber and nozzle for
Merlin:
- Development time was shorter
- Cost was low: some of the valves in the engine cost more than
the chamber.
- The nozzle is the first thing to hit the water and may crush.
- There is no silver bullet, but they do have some improvements
that weren't available to earlier designs:
- Silicon nitride bearings
- A secret aluminum-lithium alloy also used on some fighter
jets.
- Better computers

They talked a little about the future:
- He laughed, but not much, at one listeners prospect of a
launch a day. He said people are the only thing that could
demand that kind of launch rate, maybe a Mars base. Then he
pointed out that a Mars base would be more like two shots a
day for 60 days.
- He thinks all the talk of alternative means of boost, even
different chemical propellants, is just baloney. He points out
that LOX/RP-1 for volumetric efficiency, and LOX/LH2 for mass
efficiency, have been known to be best for 100 years. He also
noted that all other vehicles are powered by liquid fuels,
that the fuel is practically free (they pay $2.40/gallon for
RP-1, which is less than gasoline at a gas station), and that
the issues are all execution. The implication was that
fooling with anything that isn't LOX/RP-1 is just a
distraction from the business of lifting things into orbit.

- He mentioned Blue Origin a few times without saying anything.
I wonder if his additional funding might come from Bezos/Allen,
who might be willing to commit before continuous predictable ROI
has been established.