How Did Elon Musk Start SpaceX With So Little Money?

This article is an excerpt from the Shortform book guide to "Elon Musk" by Ashlee Vance. Shortform has the world's best summaries and analyses of books you should be reading.

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How did Elon Musk start SpaceX? What set SpaceX apart from other companies in the space industry?

Elon Musk started SpaceX because of his belief in the importance of space travel and his frustration with NASA. To do this, he set extremely high expectations and focused on building a rocket cheaply and quickly, which was a unique approach in the space industry.

Keep reading to find out how Elon Musk started SpaceX.

The History of SpaceX

How did Elon Musk start SpaceX and what were his motivations? Following the success of PayPal, Musk set his sights on a new industry for his next venture: space exploration, which was an industry he believed had become stagnant. Vance explains that Musk was disappointed that NASA no longer seemed driven to get to Mars or other planets. Vance explains that Musk wanted to reinvigorate America’s interest in space exploration by advancing current technologies and showing the public that space travel was still evolving, particularly since he believes space colonization is imperative to human survival.

(Shortform note: Like Musk, Stephen Hawking believes space exploration is crucial for human survival, presenting two reasons for why we should colonize space: First, our species is quickly running out of space and natural resources on earth. Hawking believes that even if we conserve natural resources, in the long term we’re going to need more room for humanity to expand. Second, colonizing space mitigates the risk of extinction. Hawking warns that there is a significant probability that humans could go extinct on earth in the next millennium. But if we’ve colonized other planets by then, at least that won’t be the end of our species.)

Starting a Commercial Space Venture

In April 2002, after discussing the possibility of space travel with scientists, Musk decided to start a commercial space venture. How did Elon Musk start SpaceX using limited capital? Vance explains that he wanted to spend between $20 million and $30 million on the venture to space. One expert estimated that it would actually take $200 million. 

How did Elon Musk start SpaceX without a rocket? Musk decided to build a rocket from scratch rather than trying to buy a refurbished one. The experts he’d recruited for the project thought the idea was impossible given his budget. But Musk had made a detailed plan, and after looking over the data, Musk’s team agreed it was viable. They aimed to launch a rocket into orbit in a year and a half. 

(Shortform note: In Think Like a Rocket Scientist, the author discusses why Musk’s decision to build the rocket from scratch was so successful. Musk used first-principles thinking by questioning his goal and realizing that what he really needed wasn’t a rocket: It was a way to get to space. By taking this approach, he was able to evaluate the problem from a different perspective and find a creative solution that addressed his true goal.)

So, how did Elon Musk start SpaceX? The next month, Musk started Space Exploration Technologies Corporation, or SpaceX, putting $100 million into the company. He assembled an initial team of scientists and engineers to work on the rocket, and they hired more employees almost every week. 

How did Elon Musk start SpaceX and how did he manage the company? Vance notes that because of Musk’s ambitious deadlines and high expectations, this team worked 12-hour days, six days a week to create the rocket (the Falcon 1) and the engine (Merlin), spending long periods of time at the test facility in Texas and away from their families. Unlike other aerospace companies, Musk focused on making the rocket cheaper and faster, which required improving existing technologies. 

The Billionaire Space Race

How did Elon Musk start SpaceX with no experience in the space industry? Making a commercial space venture a reality isn’t uncommon for billionaires. Some experts credit American entrepreneur Peter Diamandis for laying the groundwork for the billionaire space race in the 1990s by creating the X Prize to spur interest in space ventures. In addition to Musk’s SpaceX, several companies emerged as competitors:

Blue Origin: Founded in 2000 by Jeff Bezos, Blue Origin also aims to make space travel cheap and reliable through reusable rocket technology. SpaceX and Blue Origin are longstanding rivals, as are their founders Musk and Bezos. But Blue Origin doesn’t seem to have any intention of going to Mars since Bezos thinks it’s a “dumb” idea

Virgin Galactic: Founded in 2004 by Richard Branson, Virgin Galactic focuses more on space tourism than exploration. In February 2022, Virgin Galactic announced that passenger tickets were available for purchase for $450,000. 

While private investors seem interested in funding these ventures, not everyone is impressed by these wealthy efforts to travel in space. A study found that over three quarters of the people in the UK believe these billionaires—who are worth over $400 billion—should focus on solving problems like world hunger and climate change, not space exploration that can only be afforded by the very wealthy. 
How Did Elon Musk Start SpaceX With So Little Money?

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Here's what you'll find in our full Elon Musk summary :

  • A look into Elon Musk’s childhood and early companies
  • Musk's roles in SpaceX and Tesla, and later, in SolarCity
  • The traits and management methods that helped Musk succeed

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