The History of SpaceX With Eric Berger [FourWeekMBA Podcast]

In this episode of the FourWeekMBA podcast, I interview Eric Berger, Senior Space Editor at Ars Technica since 2015, Founder And Editor of Space City Weather, and author of:

Liftoff: Elon Musk and the Desperate Early Days That Launched SpaceX


Gennaro [FourWeekMBA]:

Eric, thanks for joining this conversation. It’s a pleasure to have you in this session.

Eric Berger:

Oh, it’s my pleasure. Thank you.

Table of Contents

How did you actually get to cover SpaceX? What was the background that made you actually write the book in the first place?

Eric Berger:

Yeah, I mean, I’ve been covering space for a long time. I’m based in Houston, Texas, where Johnson Space Center is located. And so space is a big part of the fabric of community here. It became clear to me about a decade ago that the real future of space flight, at least in the United States, was in the private sector. It was at that point that SpaceX was just starting to take off. And then they’ve had really tremendous success over about the last five years with all the rockets they’ve launched, putting humans into orbit, and demonstrating reuse.

And so it was back in about 2018 that I realized that SpaceX basics was not just sort of a really interesting company. They were really transforming the industry and continue to do so. And I wanted to understand why they had been successful. And so I was wondering, is this because of Elon Musk or did he just get lucky? Is he really as involved as he says he is? And so it was sort of with the goal of answering those questions that I embarked upon the project of really understanding the beginnings of SpaceX.

Gennaro [FourWeekMBA]:

Yeah. Interesting. And for a little bit of context to the audience, because in this series, I also had an interview with the author of The Founders, which is a book about PayPal. And it’s a very interesting connection because actually when Elon Musk used the funding for SpaceX, it was actually the money that Elon Musk managed to get from an exit from PayPal. It was like around 2002 when PayPal was acquired by eBay, and that was what gave him actually the money to get started with SpaceX.

And the interesting notice also that just one or a couple years before Musk had been ousted from the company, because he had been like the CEO of the company, and then there was a sort of interesting story behind it because Max Levchin and David Sachs organized, let’s say, ousting of Musk from PayPal. And there is a whole story behind it, which is very interesting and we cover in the other episode. 

Why did Musk get started with SpaceX? I mean, he is a software guy, one of the most incredible people that, of course, you have in business. But why did he get to space?

Eric Berger:

Yeah, I mean, it’s really interesting that he went from software into space flight, and then not too long after that, into electric vehicles. And I think the answer really begins with his unique personality. He is very much an engineer, and so he looks at the world, sees problems, and wants to solve them. And so I think after he’d sort of made it with PayPal in the sense that he was now sort of well off and could do the things that he wanted to do, he started to look around. And one of the things that had bothered him was the fact that we were a species that lived on a single planet. And so if something really went bad here with the plague, some kind of environmental catastrophe or an asteroid, we were pretty screwed. And so he thought that we ought to have a backup plan. We ought to become a space-fairing species. And I think part of it too was he reads a lot of science fiction and is inspired by the idea of civilizations that span multiple worlds, multiple stars. Right? And so he saw that NASA really wasn’t working to bring about that future. They were very much doing what they had done for decades, and that was not involving getting more people into space, going more places, and really sort of becoming a space-fairing species.

I was just going to say I think it was that big idea that got him thinking about how he might affect some change in that area.

Gennaro [FourWeekMBA]:

And of course, there’s an interesting fact that you recount in the book that actually, at the beginning, Musk thought that probably with more budget for NASA, this would develop them to actually speed up the process of going again in space, but actually figured that this was not the case. It was not a matter of actual budget. It was something else. I mean, what were some of the discoveries in the early days for Musk that actually led him to say, “Okay, now it’s not just me getting involved in understanding whether the industry can get more budget. It’s me getting involved personally with my mind, with my money, to actually get these off the ground.”

What made Musk realize he had to commit his own money to get to Mars?

Eric Berger:

Yeah, that’s a great point. You know, from the outset, he thought that if NASA could get more money, then they could accomplish more things in space, like sending people to Mars. And as he did a little more research, he realized that wasn’t the case. First of all, NASA didn’t have a humans-to-Mars program anywhere on its books. And second of all, he looked at the launch technology that this country was using and NASA was using at the time, and these were basically rockets based on decades-old technology. It cost an enormous amount of money, and it just… As he told me in the book, these horses in the barn were lame that NASA was trying to use to do these programs.

And so he just saw an industry, a launch industry in particular, that was sort of stuck in place. The world around him was changing, right? This was the early 2000s. The internet revolution was at hand. With PayPal, he had helped to bring about change, moving the banking industry online, medical records. I mean, all of these things were happening with the internet, but the space industry was basically not changing at all. And he looked at this and said, “Okay, what is the biggest constraint to getting a civilization on Mars?” And what he realized pretty quickly is that it costs way too much to launch people and payloads and things into space. And so that became his first goal, was to develop some kind of reusable space transportation system.

Gennaro [FourWeekMBA]:

Yeah. And of course, coming out from the PayPal acquisition and realizing that in order for actually being able to change the space exploration industry, Musk needed to get involved personally. He actually started with a hundred million investment, which might seem a lot in some cases in the software industry, but it was not that much in the space industry. How did he manage… 

How did Musk think in the first early days to handle such a project with this amount of money?

Eric Berger:

Right. So he looked at the existing launch industry and thought that it was really pretty inefficient. And so he came in with the idea of, “How can we do this for the least amount of money possible?” That was kind of the questions he asked his earliest employees. He asked Tom Mueller, “If you could build a powerful rocket engine, what’s the least amount of money you could do it for?” And he asked Hans Koenigsmann who was going to do his avionics and software, “Could you build a flight computer from off-the-shelf hardware with 10 or 20 people instead of a hundred or a thousand people?” And sort of these were the challenges that he set about. It’s like, “Let’s cut the bone and let’s cut this back to the bone, and sort of see… Let’s do things as efficiently and as ruthlessly as possible in terms of cost.”

And the other big thing that he did is he tried to build as much of the rocket in house. Like they tried to build the engines and the structures and all this stuff in their own factory. And this may seem, “What’s the big deal about that?” But it really was a big deal. 20 years ago, if you were going to build a new rocket in the United States, you would go buy your engines from Aerojet. You would buy your structures from someone else. And you would buy your payload faring from RUAG. And you would sort of just assemble the rocket. And so his idea was, “No, no, no, no. We’re going to see if we can eliminate as many suppliers as possible and do this in house.”

Gennaro [FourWeekMBA]:

And so it was definitely this sort of, as you explain, a vertical integration that helped SpaceX make this objective possible. And initially, as you also explain, it was more a matter of… Like it wasn’t just innovating the product. It was more lowering down the cost in an industry that instead hadn’t been able to do it in the last decade. So it was a little bit step also in bureaucracy and politics, of course, because we can imagine that if a program that was financed by NASA in the public space was failing, then of course, failure was a big deal. Instead, when SpaceX came along, it brought a different kind of approach. 

What sort of management style Musk had, but also what sort of mindset SpaceX used to actually get going in the early days?

Eric Berger:

So, a couple of things on that I would say. First of all, one advantage that SpaceX had was that it was building the rocket it wanted to build. So, typically, the way things had been done before was NASA or the Department of Defense would decide it needed X amount of capability, and then it would tell the industry what design it wanted, what specifications. Then it would work very closely with industry, engineer to engineer, to sort of get that rocket built. And it was a costly, time-consuming process because you have to go back and forth. There’d be changes, blah, blah, blah, and all this government oversight.

What SpaceX said is, “Okay, no one is going to pay us to build this rocket. We’re not getting a government contract to develop Falcon 1. But that means we get to do it our own way. We get to develop the rocket we want. If we’re going along and we find something doesn’t work, we can scrap it immediately and move to a new design or change this part or that part.” And that allowed them to go much more quickly, much more leanly, and sort of without the bureaucracy that goes along with working with the government. So, that was one important thing. Now, that meant they were taking a financial risk. If they couldn’t find customers to fly on the Falcon 1 rocket, then they were going to lose a lot of money, because the development cost was more than a hundred million dollars.

The other thing they did is they had a few senior managers, like people who had experience. And so Musk was about 30 years old when he started SpaceX, and he hired a few people in their thirties who had experience in the industry. And then the majority of employees were people who were in graduate school or had just graduated, undergraduate engineers, basically, who were, 20, 21, 22, 23, 24, who could work long hours, were willing to work long hours. And so he went out to try to find the best and brightest students he could to build his rocket.

Gennaro [FourWeekMBA]:

Yeah, and those are extremely important points. As you said, first of all, SpaceX changed the whole industry by saying, “Okay, we are not going to develop those rockets according to your specifics. We’re actually selling you, let’s say, an outcome, which is the launches that you’re going to need in the future. But we are going to do it the way we want to do it.” So this gave them a lot of freedom in terms of development, design, and everything else. So they could really figure out how to make this possible at a much lower cost.

And another key point, as you said, as you mentioned, is that, yeah, SpaceX at that point really figured out how to make sure that it could lower the cost by also adding talent, talented people. But some of them were young people, of course, but some of them were also experienced, people. So Elon Musk actually managed to attract people that actually were coming from the industry but from other established companies.

How did SpaceX attract talented people in the early days? Both new hires and experienced people coming from established companies in the space industry?

Eric Berger:

Yeah. That’s a great question because there was a guy, Elon Musk, who had no experience in rockets and was coming into this industry talking a big game of lowering the cost of putting stuff into space, and blah, blah, blah. And this had happened before. Like people with money had come into California and tried this very same thing, and they all had failed. And so how did he manage to attract some really talented people, like Tom Mueller to do engines, and Tim Buzza to do his launch sites, and Chris Thompson for structures and Gwen Stockwell to do sales. And the answer to that is Musk is really a pretty charismatic person. And so, when you talk to him, you can see that he’s very committed to an idea.

And so he had this mix of money, right? He was willing to put a hundred million dollars on the table, and some of the early employees got a lot of stock and a lot of… You know, they got some guaranteed money up front. But he also had a pretty compelling vision and was able to sell them on it, and was there working just as hard as they were. So they could see pretty quickly that he was in the game too, right? He was not just sort of coming in, giving an inspirational speech, and then jetting off to Tahiti for three weeks. He was there with them in the trenches.

Gennaro [FourWeekMBA]:

Yeah. And there is an important thing to emphasize a little bit, which is, as you explained, SpaceX changed the whole approach of developing rockets by using a sort of iterative approach, what of course in the startup world is known as also a lean methodology, whatever we want to call it. But the main point is they manage to use a different approach from the linear approach that is used in the industry. 

But also this is not intuitive because, in an industry where hardware is extremely important, failing is not cheap, actually quite the opposite. It was pretty expensive. And indeed, as you explain also in the book, as they went through the process of figuring out how to make a successful launch, a few things also this iterative approach made them fail in a pretty miserable way. So it was not like all this beautiful thing where we apply the iterative approach and things work out. 

How did SpaceX manage to bring the iterative approach to space? An industry used to a linear approach to rocket design, development and launch.

Eric Berger:

Right. So, the way that rockets and spacecraft are typically designed is some engineers will sit around and come up with a perfect design of the rocket, and then other engineers will review it. And they’ll sort of go through this big, long, preliminary design review. And then they’ll go through other designs. And then they’ll start building the rocket, right? And they may build a test version first, or they may not. But then they spend years sort of crafting this perfect vehicle.

The archetypal example of this is this space launch system, which NASA started awarding contracts on back in 2011. And they’ve been building this single, first, SLS rocket since about 2014. And now it may launch later this year, finally, for the first time. 

And they’ve had to go really slow with it because if they drop it or something and break it, there’s not like a second SLS rocket right behind it. Right? This is the final design, and it’s got to work first because there’s only one, and it’s going to take two or three more years to build a second one.

Okay, that is quintessential linear design. SpaceX has taken a much more iterative design approach. And that basically means that you build things pretty quickly early on in the design process because you want to test them out. And if they fail, then that’s okay because then you just come up with a better design, test it out, and try it again. 

And so you have to be willing to accept failure. That means components blowing up, rockets not succeeding on the first time out, to get to the final product. But then you typically get there faster, and you get there with a better design because it’s sort of been failure tested in a lot of different ways. And that’s iterative design.

And that’s something that SpaceX can do with a privately funded project because it’s their money. They can get away with it. 

And if it fails, as long as Elon doesn’t get too upset, it’s okay. Right? Whereas if the space launch system fails on its first launch later this year, then the world is going to be watching, and Congress is going to be saying, rightly I think, “We spent $25 billion on this rocket. Why did it blow up?” You know? And so that’s really the key difference.

And you see that. You see that, frankly, with the Starship project. Just like Elon Musk now has all of the money he could hope to have, we’re seeing his optimal design for building a rocket, which is building like 20 Starship protocol types. You know, there’s half a dozen rocket booster prototypes in south Texas. 

And some of them are going to fly, some of them aren’t, but they’ve learned a lot building these. And so it’s like the iterative design process gone mad to the point where SpaceX could build a rocket in a matter of weeks. Whereas NASA’s taking five to six years to build this first rocket.

Gennaro [FourWeekMBA]:

It’s a huge difference. And there is an interesting statement attributed to a recent venture capitalist in 2011, that software is eating the world. And now it seems to me that SpaceX is bringing this to space. 

So, really software is going to be eating space as well because pretty much it’s very important to stress out that this iterative approach is also translating in software that controls hardware at distance. 

So, which is the same approach that, interestingly enough, also Tesla uses. Because when you have a car like Tesla, a lot of it is hardware, but when you have a software update, you can actually control various parts of the car. So you can make the car different, like not a whole new different vehicle, but you can improve the product a lot just with the software update. And the same applies back to, I guess, rockets. And this is extremely important.

Is software eating space too?

Eric Berger:

Yeah, just to sort of finish up the point you were making about software, first of all, I think that this kind of focus on iterative design, actually we can trace it to Musk’s roots in writing software. Because the basic idea is you write a program, you run it, you find the errors, you debug the program, and you run it again. And basically, you keep doing that until the program works. And that’s, I think, the same kind of mindset he brought to building rockets, and that really was a pretty innovative approach in the private sector, in the aerospace industry.

What were some of the key events initially that gave the company the impression that things could actually work out? And what were also some of the initial failures?

Eric Berger:

Anyway, going back and saying, “What were some of the signs that they were on the right track?” I think really one of their biggest successes was the first time they static fired the Falcon 1 rocket. So this means that the rocket was held down on the test stand, but they sort of lit the engine for about 20 seconds to simulate a launch. And this was in May of 2005, so just three years after the company was founded.

 And they sort of were on the test side in Vandenberg Air Force base in California. And they ignited the rocket, and lo and behold, they were ready to launch or get there. And that was really a successful moment. And up until that point, I’m not sure that the Air Force officials in California realized how close SpaceX was to be ready, because SpaceX had a green light to launch from there, and then basically after that static fire, the Air Force officials said, “Oh, you can launch, but you’ve got to wait for this other rocket over here on the next pad over to launch, and that may not be for six or eight months.” 

And so that was one of the reasons why SpaceX ended up not launching in California, had to go to Kwajalein in the Pacific Ocean. So that was like a success and then a setback right after that.

Gennaro [FourWeekMBA]:

Another important point, probably to emphasize a little bit as we move forward: It’s not like SpaceX was the first to try this out, to try to commercialize the space industry. 

Actually, there were other companies throughout the eighties and the nineties that tried to figure this out, but they actually were not successful. So, even when we look at the perspective on the other side, so let’s say from the Air Force or the NASA side, they were skeptical. 

They were right in being skeptical because they had seen this play before. There is also, I think, a change on the other side, so let’s say on the NASA side, toward SpaceX, by going from, “We don’t trust…” Not, “We don’t trust,” but, “We don’t trust that a commercial player can make it through, that commercial prayers can actually make it through.”

But what was it that really made SpaceX instead successful in its attempt to commercialize space? 

Eric Berger:

Right. So, one of the reasons I think why you have to look at SpaceX’s success is because of Elon himself. I think Tom Mueller, who was the vice president of Propulsion, he basically developed the Merlin rocket engine, which was the foundation of success for the Falcon 1, Falcon I, and Falcon Heavy rockets. 

He said he had seen a lot of entrepreneurs come along with good ideas about launch companies, and he’d seen entrepreneurs come along with lots of money and wanted to start rocket companies. But he felt Elon was the first one to come along who had both the right combination of money and good ideas.

And what do I mean by good ideas? Good idea being basically like, “What is a realistic first attempt for a rocket? If you were going to build a product that’s a launch company, where’s a good place to start, and what’s a good design for it?” 

And I think Tom felt that Elon’s idea of building a rocket that could lift about half a metric ton to lower-Earth orbit, pretty simple design in that it’s liquid-fueled engine first stage, one smaller engine upper stage, and sort of demonstrating that you could get to orbit with that was a pretty good concept. And so Elon started with a pretty basic idea and told his team to go execute on that. And so I think that they weren’t trying to get too crazy right off the bat.

Gennaro [FourWeekMBA]:

I think this is a very important point because when we hear stories from Elon Musk, we tend to look at those stories and the fact that he has such a grandiose vision as something that cannot be achieved. 

But it’s very important to highlight that the vision that, yes, it’s very practical. So it’s not like a vision that cannot be, let’s say. It’s a vision with an objective. So, as you explain as well, he wakes up every day trying to understand how you can lower the cost even more so that in the long term you can reach the target of going to Mars. 

So it’s a grandiose vision, but in the short term, there is a lot of practical-based objectives, which is extremely important. That’s what makes really SpaceX, I think, successful as well. 

Eric Berger:

Yeah, that’s a great point. And I think what I’d want to say here is that, from the outside, it may look like madness, but there is a method to the madness. Right? So the first step, as we talked about, was, “Okay, you want to be a rocket company? Put a rocket in orbit.” And so that’s what they did with the Falcon 1. And then, “Okay, you want to be a real rocket company? Build a medium-lift rocket that can lift, can carry stuff to the International Space Station.” And that’s what the Falcon 9 is.

And then you sort of get into Elon’s vision, which is, “Okay, to really go to Mars, we need to make space flight a lot cheaper.” And that’s where the reusability part comes in. 

And that’s where their success with the Falcon 9 rocket flying at 10, 11 times now, at the first stage, really is impressive because that is actually delivering on that vision. That was like the next step, right? “Okay, Falcon 1, Falcon nine. Okay, now demonstrate reusability with the Falcon 9.” Wow. 

They’ve demonstrated that. So now the next step is to build a much larger launch system and take all of those lessons you learned from the Falcon 9, put them into Starship, and then that is your actual Mars transportation vehicle.

Gennaro [FourWeekMBA]:

And it’s very important because again, he has a grandiose vision, but as an entrepreneur, he is very practical. And the same approach has been used also for Tesla in the early years. So he had to explain the vision of transitioning the whole world to electric cars, but then when it started, actually Tesla was targeting a very small niche, a subset of the sports car industry, where Tesla was going to show off how an electric vehicle could actually have great performance. 

And that’s how it started, with a few models, to show out the Roadster. So this sports car could actually be used as a way to showcase the technology and move from there. So it’s interesting also to notice that, again, grandiose vision covered with a lot of entrepreneurship and practical approach on a day-to-day basis.

And you mentioned also a very important point, which is the fact that making rockets reusable changed the whole industry and the whole business model of the space industry. 

How did reusable rockets change the whole business model of the space industry? 

Eric Berger:

Yeah. I mean, even the idea of landing a rocket on the ground or on a ship, bringing it back to the factory, refurbishing it, and launching it again, even in 2015, 2016, that seemed like a really out-there idea. It seemed something like you would talk about from a science fiction standpoint, but that you probably wouldn’t see a private company doing. 

And I distinctly remember, in like 2017, Elon having a press conference or a press call where he started talking about a flight-proven rocket and basically saying that if you’re a person or a customer, you really want to fly on the second, third, or fourth flight of a rocket. You don’t really want to be on the first flight. 

You want to be on a flight-proven version. And man, I have to say, at the time, that just sounded like a marketing gimmick, and everyone just kind of laughed at that like, “No way. Whatever, right? He’s just trying to make these rockets seem safer than they are.” 

But now, in the last year or two, you’ve seen the most valuable missions that this country has. Like the NASA astronauts are now flying on the second and the third, and probably the fourth flights of the Falcon 9 first stage. And the Department of Defense is putting GPS satellites. You have commercial customers flying on the seventh or eighth flight of a Falcon 9 rocket.

And so he’s really turned it on its head and shown that, yeah, actually flight-proven is a thing. And so the industry has really had to grapple with this. Like there’s a very rapidly changing mindset in just the last two or three years that basically if the rocket you’re designing now is not reusable, you might as well not be building it because that is so very clearly the future. The companies and the space agencies that aren’t building reusable rockets are basically almost being mocked. Right? Because it looks anachronistic.

 And it’s continued even with Starship because, with Starship, he’s trying to do something that’s never been done before, which is build a fully reusable rocket, which means not just the first stage comes back, but the second stage comes back and it all gets reused and flown quickly. And you’ve seen Relativity is looking to build a fully reusable Terran R vehicle. Blue Origin is going to be trying to make the entirety of its New Glenn rocket reusable. And so this is not just a trend. It’s the future now.

Gennaro [FourWeekMBA]:

These are key points because from being mocked, actually, SpaceX, a few years back, most people didn’t think also in the industry that making a reusable rocket was possible, probably made sense. And now this has become a standard. So, if you’re not doing it, then you are actually being mocked. So these are very interesting.

And of course, there is also another point where SpaceX spent a lot of resources in developing the Falcon 1, but then it added actually people to the Falcon line. 

Can you tell us a little bit more about that? How they thrown away a few years of work because they understood that the opportunity was now in another place?

Eric Berger:

Right. So, Elon Musk is not a particularly sentimental individual. And so the company had put blood, sweat, and tears into making the Falcon 1 rocket a success. And really, the focus of my book is on all of those early failures. They failed the first three launches of the Falcon 1. And really with everything on the line with the fourth launch, they ultimately did succeed. And that set the company up, basically, on the glide path that it’s been since then.

But yeah, I mean, the Falcon 9 was just a much more capable rocket. Like with the Falcon 1, the half-ton, you’re kind of limited. And Musk realized that if he built a larger rocket, he could launch all of those other things he had contracts for with the Falcon 1, but he could also serve many other customers with the Falcon 9, and most importantly, NASA, which was bidding out contracts to deliver cargo and astronauts to the International Space Station. You just couldn’t do that with the Falcon 1. And so he basically decided, “Okay, great job demonstrating that the Falcon 1 works, but we’re going to be all-in on the Falcon 9.”

Gennaro [FourWeekMBA]:

And as of now, most probably SpaceX has grabbed most of the commercial satellite launch business. And this is another very interesting point because there is another part, another project, which is Starlink that has become also a very important revenue generator for the company. 

So I admire this strategy where you use something like Starlink to generate money on top of an existing industry that exists here on earth, which is the communication industry, where actually you’re going to be using that same technology, I guess, to power up also a connection in space. And so this, to me, it’s a very smart approach that also explains how SpaceX has been able, compared to others, to compete in this industry. 

And did it change as a scale? I mean, now SpaceX is a huge company. I guess it’s the main player. So, did it change over time?

Eric Berger:

Yeah, absolutely. SpaceX from the time when the Falcon 1 was basically David, and now in the aerospace industry, it’s Goliath in terms of the way it delivers.

I want to come back a little bit to the comment you made about Starlink being a smart play. We’re going to see if that’s the case over the next couple of years because building a low-earth orbit broadband network is extraordinarily expensive. 

And so they’re putting a lot of money into that, and time is going to tell whether or not they’re ultimately successful with that. They’ve got a long way to go, and they’re putting a lot of capital into that. 

And so it’s a big gamble, but really, Musk’s goal legitimately is developing a program to settle Mars, and the US government isn’t going to pay for that. NASA’s not going to pay for that. And people aren’t going to pay for that. And so really it’s going to have to come off the revenues from Starlink.

Gennaro [FourWeekMBA]:

Absolutely. Alrighty, so let’s close this up. Our time is almost here, so let’s close this up. 

About the timing to Mars, what do you think? I mean, how long it might take for us to see SpaceX being able to actually bring us to Mars?

Eric Berger:

Yeah, that’s a great question. So I’m 48 years old, and if SpaceX denies this, I have almost no faith in NASA or any of the other international space agencies to bring about a humans-to-Mars program in my lifetime. It’s just too expensive. It’s too much risk in terms of human life. And there’s just no real geopolitical reason for the government to make that kind of investment. It’s just, for lots of reasons, it’s difficult to see that happening. But now SpaceX comes along and that’s like the raison d’etre. The reason why SpaceX exists is to put humans on Mars. And again, it seemed preposterous when Elon was talking about it at the beginning of SpaceX. But as we talked about, he’s taken this methodical, step-by-step approach to making it happen. So it is possible this happens in my lifetime.

I think it’ll be some kind of cooperation between NASA and SpaceX. SpaceX clearly is building the transportation system to take humans to Mars possible. Starship is large. It’s rapid. It’s a good design to be rapidly reusable and is the kind of rocket you would need to start setting up a settlement on the surface of Mars. And that was the key first step. Like NASA had done studies of humans to Mars for decades. 

But until you actually have the transportation system, the rocket, and the spacecraft, it’s just an academic exercise. Well, SpaceX is taking that first step. And so once they demonstrate Starship, I think then you could see a program with them working with NASA, sort of for the first couple of missions, to be like professional astronauts to Mars; and then SpaceX getting going with its private missions where actually they start developing a settlement on the surface of Mars.

And you ask for a timeline. I just can’t see that happening this decade. I think if it happens anytime before 2035, that would be an amazing achievement. So I’d love to see something happen in the 2030s with humans to Mars.

How is the competition in the space industry and in the commercial space industry? Is there any competition between SpaceX and Blue Origin, which is the company financed by Bezos? Or there is no play between the two?

Eric Berger:

SpaceX definitely has competition, but it has really, in terms of the traditional launch industry, blowing past the competition. Now, what I mean by that is, for a long time, United Launch Alliance, which is co-owned by Boeing and Lockheed Martin, the two largest defense contractors in the United States, United Launch Alliance was the competition. They were America’s dominant launch company.

But last year, SpaceX launched five rockets in the month of December. And in all of the year 2021, United Launch Alliance launched five rockets. So, that tells you about all you need to know about where that competition is today. And frankly, SpaceX is pulling away from United Launch Alliance, especially if and when it gets the Starship vehicle up and running.

And so then the question becomes: Are there other new space companies that could challenge SpaceX? And you brought up Blue Origin. And I still think, despite sort of some of their stumbles, that Blue Origin does offer the best competition because Bezos, Jeff Bezos, has billions of dollars to invest in space and is investing that money and does have a big vision. And they see the new Glen vehicle, the large rocket they’re building, as a viable competitor to Starship. And I’ve seen enough plans for that rocket. 

If it does become fully reusable, then it could become a viable competitor in some sense to Starship. But SpaceX is really about a decade ahead of every other rocket company in the United States right now or in the world.

So, in terms of launch, there’s a big gap. And it would be one thing if SpaceX was resting on it laurels or just sort of standing pat. But they’re sort of charging boldly into the future. And you look at the European Space Agency, and they’re now talking about a rocket that looks something like the Falcon 9 and may be developed in five or seven years from now. Well, by that time, the Falcon 9 will be two decades old. 

And there are lots of startups in China that are looking at developing rockets that look a lot like the Falcon 9, like a lot with grid fins, landing legs, all this stuff. But again, if they get flying in seven years old, they’re going to be five, seven years, they’ll be 15 to 20 years behind the Falcon 9. And so again, SpaceX just has a really large lead right now.

Gennaro [FourWeekMBA]:

Yeah. Interesting. And Eric, let’s close this up. I know that our time is almost… The book, it’s incredible. I hope that it might turn hopefully in a movie because of the story of the first failures, going forward, now they manage to succeed and still manage to become one of the main players in this industry and bring the commercial space industry forward. It’s so incredible. So thanks for taking the time to join this conversation.

Eric Berger:

Oh, it’s my pleasure. I hope I’ve been helpful.

Gennaro [FourWeekMBA]:

Yeah, absolutely. Thank you.

Key Highlights

From software to Space

After PayPal’s exit, Elon Musk had the financial resources to devote to his lifelong passion for space. As he had been ousted from PayPal in the year 2000, Musk started to think about something very ambitious, and space exploration was one of these things.

Yet, the real move came when finally PayPal sold to eBay in 2002, thus giving Musk over $100 million in personal wealth to devote to an ambitious project.

More budget won’t help NASA

As the idea of enabling space exploration developed, Musk initially thought that a simple involvement where he could help NASA get more budget would have helped make improvements.

Yet get figured that was not the case. The whole industry had been stuck for decades, and personal involvement was the only way to go. Musk devoted $100 million to his own wealth. While this seems a large sum of money in reality in space prototyping this isn’t much. Thus, since day one Musk had to think of ways to cut costs to develop rockets.

In the early days, he also explored the option to buy from Russians, yet he finally figured he needed to do it all in-house.

Almost bankrupt

Musk’s first attempts were unsuccessful, and SpaceX had the runway to get going for three launches max. In the early days, the company was close to bankruptcy on several occasions.

After years of trial and error, and near-death experiences, on September 28, 2008, the Falcon 1 experienced its first successful launch (flight 4)

Selling launches, rather than rocket specs

In order to redefine the industry development model, SpaceX understood it needed to sell also to commercial players, not just governments. In addition, even for government contracts, SpaceX didn’t get contracts, then developed rockets according to the agency specs. instead, it secured launches contracts, thus having complete freedom in terms of development, design, and launch.

While this would be extremely expensive, and risky on the part of SpaceX, it also enabled a lot of innovation.

Software is eating space

SpaceX changed the whole space travel industry by bringing an iterative approach to rocket development. From a linear approach that has stalled the industry in the last decades, where failure was not an option.

SpaceX led an iterative approach where failure was possible and making quick changes on the fly was the rule of thumb, even in a hardware-heavy industry. In addition, the software has become a key element of SpaceX’s success as it can control the hardware as it travels to space.

Similar to how Tesla updates its software to upgrade its cars, or like the iPhone upgrades its software to enable more features to its hardware device, SpaceX has brought this approach to space!

Reusable rockets, from getting mocked, to industry standard

Another key revolution that SpaceX brought was the reusability of its rockets. From an industry that has thrown away billions of rockets, to an industry where reusability has become the standard.

SpaceX has led this change. In the early years of trying to figure out a reusable rocket, the company was mocked, and now this has become the standard.

Reusability is the key, as it enables to lower exponentially the cost of launching over time, thus making the commercial space travel industry viable.

Going all-in with the Falcon 9

After years of developing a viable Falcon 1, SpaceX eventually went all-in with the Falcon 9, as government contracts that enabled the long.-term vision of the company to be accomplished finally opened up.

This was a huge change in direction, and yet it proved successful over time.

Becoming Goliath

SpaceX has become the Goliath of space, grabbing 2/3 of the commercial satellite launch business. And even as a behemoth of space, SpaceX hasn’t changed its playbook, still working as an iterative company, continuously innovating, and eating its own products, to enable further innovation.

To start surfing an existing market, like the communication market, SpaceX has also leveraged the Starlink project. Musk announced on Twitter on February 14 2022, that Over 250k Starlink user terminals making this a multi-million per month revenue stream:

No competition?

Most US players are well behind SpaceX, yet China might be a potential player in the future race to space travel.

Going to Mars in a lifetime!

SpaceX has redefined – in a single generation – space travel, making it feasible to think about going to Mars within the next decades. As Musk will push to achieve that goal within his lifetime!

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