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If Seattle needs inspiration to think big, it has arrived in the form of Elon Musk.

The SpaceX founder and Tesla CEO took the stage at Seattle Center on Friday and delivered his vision for creating an entirely new satellite Internet network that he believes could ultimately lead to the establishment of a city on Mars.

It was a private event, and no media were allowed, but nothing is truly private these days, especially when there’s 400 tech-savvy people in the room. A full video of Musk’s talk, taken by someone in the audience, was posted on YouTube this weekend. We’ve embedded the video above and transcribed the talk below.

SpaceX founder Elon Musk speaks in Seattle on Friday evening. (GeekWire Photo)

Wearing a black insulated jacket and white shirt, Musk stood alone on stage, speaking and answering questions for nearly 30 minutes. He started by outlining the plans for SpaceX’s new Seattle-area office, and explaining the short-term goal of the satellite venture.

“We want to revolutionize the satellite side of things just as we’ve done with the rocket side of things,” he said.

But that’s just the beginning. Revealing his grand vision, Musk explained that the funds and technology from the Space X satellite Internet venture will ultimately be used to colonize Mars. He later teased ahead to an upcoming announcement, potentially later this year, about a new “transport architecture” that would ultimately make human travel to the Red Planet economical.

Musk went on to explain why the company picked the Seattle region as the home of the new venture: “There’s a huge amount of talent in the Seattle area, and a lot of you guys, it seems, don’t want to move to L.A.,” he said, to laughter.

SpaceX, which launched the first commercial supply missions to the International Space Station, is based in Hawthorne, Calif.

Musk also talked about lessons learned from the failure of Teledesic, a previous effort to create a satellite Internet constellation, funded by Seattle-area wireless pioneer Craig McCaw and Microsoft co-founder Bill Gates.

Previously on GeekWire: Elon Musk reveals new $10B Space Internet plan at Seattle event

During the question-and-answer period, someone in the audience asked if he’s planning to make the trip himself. “I will eventually go to Mars,” he responded.

Addressing an important topic for potential SpaceX recruits, he also addressed the question of whether he’s planning to take SpaceX public. The answer: Not anytime soon. However, he explained, the company gives employees stock options and offers twice-yearly buybacks, providing the benefits of liquidity without the challenges of the stock market.

“For example, with Tesla, any given week, it’s like dealing with like a manic depressive,” he said of his electric car company’s stock price. “Very confusing. I’ll say things where, if people understood what I was saying, then the stock should go up, and it goes down. It’s like, what the hell? And vice versa.”

And he had some fun along the way, making a reference to Terminator when talking about the satellite Internet plan.

“We will also make sure we don’t create Skynet. Ironically, the server room at SpaceX jokingly was called Skynet,” he said, referencing the artificial intelligence network that turned on humanity in the popular 1980s movie. “Fate has a great sense of irony, so we really need to make sure that doesn’t come true.”

Just this morning, a report emerged that Google is close to making a major investment in SpaceX to help fund the new satellite Internet initiative.

See the video above, and continue reading for the full transcript of his remarks, including the audience Q&A.

IMG_4691ELON MUSK: “What this represents is the official opening of SpaceX Seattle. [Cheers.] It’s intended to be a significant engineering campus, and it’s going to be the focus of SpaceX’s satellite development activities. In L.A. we have the rocket development, and our Dragon spacecraft, but this is going to be the center of our satellite development activities.

We want to revolutionize the satellite side of things just as we’ve done with the rocket side of things. It’s possible to do them both, so if you end up working at SpaceX Seattle, you can end up working on rockets and manned spacecraft as well as satellites. But the center of gravity for satellites will be here in Seattle.

The reason for it is pretty straightforward. There’s a huge amount of talent in the Seattle area, and a lot of you guys, it seems, don’t want to move to L.A. [Laughter] which has its merits, by the way. So we’re going to establish a significant operation here. [Cheers, applause].

But I want to tell you a bit about what we want to achieve with the satellites, and why that’s important. The satellites constitute as much or more of space-based activity as the rockets do. Very often satellites are more expensive than the rocket. So in order for us to really revolutionize space, we have to address both satellites and rockets. We’re going to start off building our own constellation of satellites, but that same satellite technology that we develop can also be for science — Earth science and space science — as well as other potential applications that others may have. We’re definitely going to build our own, but also it’s something we would be able to offer to others.

The focus is going to be on creating a global communication system. This is quite an ambitious effort. In the long term, it will be like rebuilding the Internet, in space. The goal will be to have a majority of long-distance Internet traffic go over this network, and about 10 percent of local consumer and business traffic. Still, 90 percent of people’s local access will still come from fiber, but we’ll do about 10 percent business and consumer direct, and more than half of the long-distance traffic.

SpaceX brought a Dragon space capsule to show off to potential engineering recruits at the Seattle event.

As you guys may know, the speed of light in a vacuum is somewhere around 40 to 50 percent faster than in fiber. So you can actually do long-distance communication faster if you route it through a vacuum than you can if you route it through fiber. You can also go through far fewer hops. Let’s say you want to communicate from Seattle to South Africa. If you look at the actual path that it takes, it’s extremely convoluted, and it will follow the outline of the contents, it will go through 200 routers and repeaters, and the latency is extremely bad. Whereas if you did it with a satellite network, you could actually do it in two or three hops. Maybe four hops. Basically, with at least an order of magnitude fewer repeaters or routers, and then going through space at 50 percent faster speed of light.

From a physics standpoint it’s inherently better to do long-distance Internet traffic through space. And then space is also really good for sparse connectivity. So if you’ve got large swaths of land where there’s a relatively low density of users, space is actually ideal for that. It would also be able to service 10 percent of people in relatively dense urban and suburban environments. So in cases where people are stuck with Time Warner or Comcast or something this would provide an opportunity … [big applause].

So it’s something that would both provide optionality for people living in advanced economies, as well as people in poor countries that don’t even have electricity, or fiber, or anything like that. So it’s a real enabler for people in poor nations in the world and it gives optionality for people in wealthier countries. So I think it’s something that definitely needs to be done, and it’s a really difficult technical problem to solve. So that’s why we need the smartest engineering talent in the world to solve the problem.

At the same time, we will also make sure we don’t create Skynet. Ironically, the server room at SpaceX jokingly was called Skynet. Fate has a great sense of irony, so we really need to make sure that doesn’t come true. For our technically aware audience, if there’s some AI apocalypse, it’s going to come from some collections of vast server farms, terrestrially based, not via the space-based communication system. I did think about that!

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Anyway, I think this is a fundamentally good thing to do. I can’t think of any major downsides. I seems like it’s an important thing to do — it’s something that should happen, and I think it’s something where, properly designed, it can give people gigabit-level access, 20-30 millisecond latency everywhere. That would be pretty great.

And that same system we could leverage to put into a constellation on Mars, because Mars is going to need a global communication system, too, and there’s no fiber-optics or wires or anything on Mars. So we’re definitely going to need that, we’re going to need high bandwidth communication between Earth and Mars, so I think a lot of what we do in developing an Earth-based communications is going to be leveraged for Mars, as well.

That’s the basic story. So I’d encourage you to spread the word and tell people about it that you think are great. The office is going to grow slowly at first. We’re not going to hire a zillion people. So if at first SpaceX doesn’t respond to you or something, please come back again in the future. It’s really hard to add 500 people all at once and have that be good. We are going to grow this and make this a very significant SpaceX Seattle campus, but we are going to do so very carefully, adding the right expertise at the right time. If for whatever reason you don’t get a response, because our recruiting team is deluged or something like that, please reapply in like six months. Don’t take any offense by that. We’re just trying to grow in a carefully considered way.

IMG_4692Alright, I’m happy to take some questions from you guys if you just want to yell out questions.

[Question about space junk]

MUSK: We aren’t too worried about the space junk thing. Actually, we should worry about us creating the space junk, but at the altitude in question, there’s really not a lot out there. We’re talking about the 1,100-km level, and there’s just not a lot out there. The thing we need to make sure of is we don’t want to create any issues, so we’re going to make sure that we can deal with the satellites effectively and have them blown up on re-entry … that’s basically what we need to make sure of. The number of satellites we’re talking about here ultimately is around 4,000. Actually, technically today, in our discussion, it was 4,025, but that’s probably false precision there, but that’s kind of what we’re thinking right now. And there’s less than half that number in active satellites currently in existence. So this will be more than double the number of currently active satellites.

[Question about timeline]

MUSK: Well, in the past I’ve been a little optimistic on schedule. [Laughter] So I’m trying to recalibrate, but I think we should be able to get Version 1 active in about five years. That wouldn’t be the full, doing half of long distance and 10 percent of Earth’s connectivity, but a useful Version 1 that has global coverage … aiming for about five years. And then there would be successive versions every two or three years after that. To get to where the system is really at its full capability is probably 12 to 15 years. But major revisions certainly every five years, maybe a little sooner than that. You figure, in terms of major revisions: Version 1, five years; Version 2, maybe five years after that; Version 3, five years after that is the rough timeline.

[Question about software vs. hardware engineering]

MUSK: It’s going to be, I think, quite a lot of software. I think, all in, software and firmware is probably half the office. Half software/firmware, half hardware. Over time, software might actually exceed the hardware number. If we have something that’s highly configurable, then it tends to over time wait toward the software.

[Question about satellite design]

MUSK: This would be not using CubeSat. The satellites that we have in mind are going to be quite sophisticated. They would be a small-ish satellite but with a big satellite’s capability. By small-ish, I mean within the few-hundred kilogram range.

[Question about pricing]

MUSK: Well, it can’t be free, because then we would go out of business. Can’t be free to the user, I don’t think so, because this would cost a lot to build. Over time, to build a full version of the system, we’re talking about something that would be $10 or $15 billion to create, maybe more, and then the user terminals, would be at least $100 to $300 depending on which type of terminal. This is intended to generate a significant amount of revenue, and help fund a city on Mars. So in looking in the long term, and saying what’s needed to create a city on Mars, well one thing’s for sure: a lot of money. So we need things that will generate a lot of money.

[Question about wireless spectrum]

MUSK: For spectrum that is omnidirectional and wall-penetrating, that spectrum is extremely rare, and limited. Spectrum that is not wall-penetrating and that is very directional is not rare. It’s sort of the difference between a laser beam and a flood light. … There is high scarcity for cellular bandwidth, there is not high scarcity for space to Earth bandwidth, as long as it’s not roof-penetrating. So I don’t see bandwidth as being a particularly difficult issue.

[Question about differences with the Iridium satellite network design]

MUSK: Compared to the Iridium satellites, which was a mere 70, we’re talking an order of magnitude larger volume. There may be some similarities to the way that the Iridium network was done, but in terms of the production and way it’s produced, it would be closer to the way that a car is produced, or consumer electronics. So we’d take things a step further, and if a satellite didn’t work, you just basically take it out of the constellation and de-orbit it, as opposed to going through this super-intense procedure to make sure the satellite works. Because normally the way satellites are done is they’re like Battlestar Galactica, it’s like one of them, and it’s really giant, and if this thing doesn’t work, it’s terrible — the whole business collapses. But if you have a large constellation, you can afford to lose individual satellites, and it doesn’t affect the constellation very much. The analogy might be between mainframes and PCs. If you want to have a big data center serving millions of people, it’s way better to have an array of cheap PCs than it is to have a few mainframes.

[Question about partnering with other companies, apparently alluding to Boeing/Blue Origin]

MUSK: Teaming with local propulsion companies? Uh, not really. [Laughter] I don’t think so. I mean, we’re going to build our propulsion unit. People in the space industry have a really difficult time manufacturing things. They’re pretty good at designing them in the first place, but they don’t actually know how to make them in volume. It’s possible we could license some technology or something, but the main propulsion system we have in mind for the satellite is a Hall effect thruster, which, not to trivialize it too much, but it’s basically like a loudspeaker. It’s like a magnetic field, accelerating ions, it’s pretty easy to make. There’s degrees of Hall thruster, how good it is, but at the end of the day it’s not that hard, so it’s not clear that would make sense, to outsource something that’s not that hard.

[Question about regulatory environment]

MUSK: Well, there’s multiple elements to the regulatory things. There’s the ITU filing, the International Telecommunications Union, and we’ve done the filings associated with that. That says whether you can actually put the satellite network up. Then there’s whether it’s legal to have a ground link. Any given country can say it’s illegal to have a ground link, and then from our standpoint we could conceivably continue to broadcast and then have a choice of whether they would shoot our satellites down or not. [Laughter] China can do that. So probably we shouldn’t broadcast there. [Laughing] If they get upset with us they can blow our satellites up. I’m hopeful we can structure agreements with first countries to allow communication. But it is a country-by-country basis.

I don’t think it’s a something that would affect the timeline. It’s not going to take longer than five years to do that. Not all countries will agree, at first — there will be some countries that don’t agree. It’s fine.

[Question about base station technology]

MUSK: The base station would have a phased-array antenna with a switching time that’s at the microsecond to low millisecond level. So it will only take a few more seconds to switch from one satellite to the next. As opposed to having a dish.

[Question about power source]

MUSK: With solar panels, and then batteries. Low-Earth orbit satellites, because they go through Earth’s shadow, then you have batteries to handle when they’re in shadow.

[Question about biggest obstacles to success]

MUSK: It’s important to assume that terrestrial networks will get much better over time. One of the mistakes that, say, Teledesic made was not assuming that terrestrial networks would get much better over time. So we need to make sure that the system we design is good even taking into account significant improvements in the terrestrial systems. But I do think there are important differences between what we’re doing and, say, Teledesic. In the case of Teledesic, they were trying to talk to phones and that gets back to that problem of a roof-penetrating situation. Particularly when stuff is coming from space, if you’re in a skyscraper, it’s got to go through 27 floors to reach you. It’s not going to happen. There’s nothing short of a neutrino (that would work for that). So in the case of Teledesic there were some environmental issues there.

[Question about network security]

Yeah, I think we’re going to have to pay a lot of attention to security. It would really be unfortunate if we got hacked and taken over. That would be bad. Whether it was by an AI or some group of whatever. So I think it’s going to be important to have some sort of low-level roundtrip that’s via code that you can always go into a safe mode. … We could always trigger a safe mode situation to regain control of the system. But it’s going to require a lot of thought to make sure we are able to protect it from any hacking attempts. It’s much like Google or Facebook, and how they handle these kinds of issues.

[Question about SpaceX IPO plans]

A quintessential Elon Musk scene, with a Tesla Model S and SpaceX logo under the Space Needle in Seattle.

MUSK: We won’t take SpaceX public for quite a long time. What I’ve said is, when we’re doing regular flights to Mars, that might be a good time to go public. But not before then, because the long-term goals of SpaceX are really long term. … That doesn’t match with the short-term timeframe of public shareholders and portfolio manager who are looking at two- or four-year time horizons. So we’ll need to hold off going public for a while. Now, that said, we do offer stock options and restricted stock, and we do liquidity events every six months, so we have the company valued by an outside firm every six months, and then we will do stock buybacks every six months. It gets the best of both worlds, where you have stock liquidity, but you don’t have the massive fluctuations that you have with a public company.

For example, with Tesla, any given week, it’s like dealing with like a manic depressive. [Laughter]. Very confusing. I’ll say things where, if people understood what I was saying, then the stock should go up, and it goes down. It’s like, what the hell? And vice versa. So I think it’s actually quite distracting to have public stock. And the time to go public, ideally, is when things are fairly stable. But I think we’ll get the benefits of stock appreciation over time, without the downside of going public, and then maybe 20 years from now or something like that, go public.

[Question about Mars colonization]

MUSK: There needs to be some sort of architecture for establishing a city on Mars, which means huge numbers of people, and ultimately millions of tons of cargo. How do we do that? It really comes down to an economic question — which is there’s some economic activation energy, a cost per unit mass to the surface of Mars at which point we would have a self-sustaining civilization there, but beyond which we would not. There’s some debate as to what that might be, but I think at a personal level, there needs to be enough of an intersection of sets of people who could afford to move to Mars, and people who want to move to Mars. So if those two coincide, then there will be a colony. Otherwise there will not be a colony.

[Question: Are you willing to go?]

MUSK: I will eventually go to Mars. But to put that in concrete terms, I think it needs to be a half-million dollars or less to move to Mars. Ideally much less, but if it’s much more than that, then probably there won’t be a colony. So that’s the basic idea. What I’ll present, hopefully towards the end of this year, is a transport architecture that could achieve that number. There’s a big difference between thinking about how to achieve that number and actually achieving that number. There’s lots of people who suggested, hey, wouldn’t it be a good idea to go to the Moon. But much harder to actually go to the Moon. With most ideas, the execution is really the hard part, and order to make that happen you need to have lots of talented people working together towards a common goal to achieve that. And that’s what we want to put together at SpaceX.

Alright, thanks everyone.”

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