Elon Musk makes millions by blowing up one of his rockets

Lots of firms have figured out a way to make money from government; here’s how to get yours.

By Dan Hebert, PE, senior technical editor

There are two ways to make money. The old-fashioned way is to provide services or make products that businesses and consumers like enough to pay a price sufficient for the seller to make a profit. The second way is to get government to guarantee demand, insure against losses and provide other subsidies.

Admittedly, it’s much easier for those in sexy industries like spaceships and anything green to get government money, but there are opportunities for the members of Machine Builder Nation to get theirs. Before we get into the details of how you too can make money the easy way, let’s look at how others are doing it, specifically Elon Musk.

Musk has a unique way of identifying and profiting from inefficiencies in government. First there was PayPal, which took advantage of various federal and state regulations prohibiting brick-and-mortar banks from offering certain services nationwide.

Also read: Are our workstations ready for a virtual interface?

Then there was SpaceX, which looked at the bureaucratic mess which is NASA and saw much room to profit. From the 1960s to now, NASA has regressed from sending men to the moon to being unable to launch a rocket to a space station, so it was willing to contract with SpaceX for $1.6 billion to fly 12 cargo missions to a space station. And when SpaceX messed up and blew up a rocket loaded with expensive cargo, it was paid 80% of the fee by NASA.

It’s like delivering a machine to your customer, having it fail catastrophically and getting enough money to cover your costs, and maybe even make a small profit.

And now there’s Tesla, which is virtually guaranteed sales by laws in California and other states mandating the use of electric vehicles. There are also a host of sales incentives providing buyers with up to $17,000 in income tax credits, happily detailed by Tesla on its website. Louisiana, my home state and one of the poorest in the nation, “leads” the pack for income tax credits, sorely needed succor to those buying a $100,000 Tesla sports car.

I’d like to see these market-modifying subsidies changed, but until they are here’s how you too can get government to back your business.

First, rebrand your business as high-tech, green or both. With the utter lack of technical competence of many of our government officials, it should be easy to convince them that your metal-bending or packaging machines represent the very bleeding edge of technology, establishing new paradigms and frontiers daily as you strive to improve the very destiny of our great nation’s future. Or something like that.

It seems that every state has incentives for relocating your business to their friendly confines. The best way to take advantage would be to locate your business close to multiple states, perhaps in what’s referred to as the “Four Corners” area of Arizona, Colorado, New Mexico and Utah. That way, you could move every couple of years from one state to another, maybe just a few miles at a time. You could collect money in the process, and many of your employees wouldn’t even have to move.

My adopted state of California is notoriously hostile to businesses of all types, preferring instead to hope for economic growth by increasing the minimum wage and hiring more government employees. But even California is getting into the act with the GO-Biz California Competes tax credit program. Our friend Elon Musk has taken notice as Tesla is slated to receive $15 million from this program, and maybe there’s still some money left over for your California-based business, or from a similar program in your state.

On a slightly more serious note, but not much, R&D tax credits should be available any time you develop a new machine or make improvements to an existing model. I’m not personally vouching for this firm, but based on its name, R&D Tax Savers may be able to help.

 

With the utter lack of technical competence of many of our government officials, it should be easy to convince them that your metal-bending or packaging machines represent the very bleeding edge of technology.