They realized that the only reason why the Russian rockets were less expensive compared with the US rockets was that the Russians had already manufactured them. If they needed more rockets, the Russians had to build new rockets where each one became more expensive compared with those already manufactured. “I don’t need these Russians,” Elon said.
The problem wasn’t that mankind didn’t want to go to space – the real problem was that it was too expensive. And without an existing threat, we didn’t want to spend the money. “I came to the conclusion that my initial impression was wrong about not enough will to explore and expand beyond Earth and have a Mars base,” Elon said. “That was wrong. There’s plenty of will, particularly in the United States. Because United States is the nation of explorers, people came here from other parts of the world. The United States is a distillation of the spirit of human exploration. If people think it’s impossible and it’s going to break the budget, they’re not going to do it.”63,278
Elon wasn’t the first to understand that the major problem with space was the costs involved. To attack this problem by finding cheaper solutions, the X Prize Foundation established numerous competitions.
Google Lunar X Prize is one of these competitions, but the most well-known was the Ansari X Prize. If you were a non-government organization and could launch a reusable manned spacecraft into space twice within two weeks, you would get a $10 million reward. The name Ansari originates from Amir Ansari and Anousheh Ansari who donated a larger sum to the competition. Other donors included Elon himself. Anousheh became the first self-funded woman to visit the International Space Station as a “spaceflight participant” – not a “space tourist” as she explained. SpaceShipOne won the price in 2004.
PayPal became a public company in February 2002. After the first day, the stock had increased by almost 55 percent. Elon, who was one of the largest shareholders, had now more financial resources, so Space Exploration Technologies [SpaceX] could be founded in June 2002. The idea behind SpaceX was to manufacture cheap rockets with the ultimate goal to colonize Mars. While the Concorde commercial said, “The world is now a smaller place;” the SpaceX commercial will say, “The universe is now a smaller place.”
There’s a saying in the rocket industry that the easiest way to become a millionaire is to start with a billion. “I was trying to find the fastest way to turn a large fortune into a small one,” Elon said. “I thought the rocket business was perfect.”415
To discourage Elon to found SpaceX, one of his friends compiled a video tape with failed rocket launches he made Elon watch. “Elon, you cannot start a launch company. This is stupid,” everyone told him. “I’m going to do it. Thanks,” Elon replied. SpaceX had a controversial business idea, thus it’s not strange his friends were negative. History is filled with similar examples.29
“This telephone has too many shortcomings to be seriously considered as a means of communication.”
“The wireless music box [radio] has no imaginable commercial value. Who would pay for a message sent to nobody in particular?”
“While theoretically and technically television may be feasible – commercially and financially it is an impossibility.”
“Sorry Steve [Jobs], here’s why Apple Stores won’t work.”
Also Elon can be negative to new business ideas. When Twitter wasn’t as big as it is today, Elon didn’t believe in the 140-character-messages. His wife was a Twitter addict. When he wandered by and looked at the stream of tweets on her screen, he said, “I don’t really get it.”144 Elon would later join Twitter and has now around 740 000 followers. His first tweet to the world was “Please ignore prior tweets, as that was someone pretending to be me :) This is actually me.”
Despite the negative thoughts from everyone around him, Elon knew the world needed a company like SpaceX. Perhaps he remembered a quote by his role model Walt Disney who said, “It’s kind of fun to do the impossible.” Disney knew what he talked about – when he decided to build Disneyland, everyone thought it would end up as closed and forgotten within the first year. “My rationale there was that it was an important enough cause – at least to me – that it was worth putting funds at risk and possibly losing them,” Elon said. “Failure is an option here. If things are not failing, you are not innovating enough. The reason I’m doing SpaceX is not because I think this is the highest return on investment. I think starting a rocket company is an unusual thing to do and pretty risky. But I’m a big believer in us becoming a space exploring civilization.” He never asked what his wife thought of the idea to start a rocket company.128,278,354,410
After founding SpaceX, the first thing Elon did was to spread the word how he would build rockets with the ultimate goal to colonize Mars. He talked to magazine writers, movie stars, and wealthy entrepreneurs. The reason why he did it is simple. He thought no one would sell him any rocket parts if they didn’t believe he was serious about the idea to build rockets.278
SpaceX opened an office in El Segundo, Los Angeles, because southern California has the highest density of aerospace engineers in the world. Elon assumed experienced space engineers didn’t want to move to San Francisco. “They [his friends] view southern California as being a little vacuous and northern California as being more intellectual,” Elon said. “But people in the Bay Area have forgotten that there’s been a huge concentration of aerospace engineering talent here, for more than a century. In Silicon Valley, startups are such a norm, and there are many success stories. In southern California that’s not so much the case. In the early days of aviation, southern California was startup city. This was the huge entrepreneurial center.”316 SpaceX was Elon’s only company, so he decided to move from his current home in Palo Alto to Los Angeles.
Elon became the CEO of SpaceX, and because he didn’t find any CTO to hire, he also became the CTO. Initially, Elon wanted to hire someone as the chief designer of the rocket, but he couldn’t find anyone who was willing to join and was competent. Those who were willing to join couldn’t do the job and those who could do the job weren’t willing to join. “A lot of aerospace senior managers seem to be really disassociated from and unable to do hard core engineering,” Elon said. “I think that is a mistake and results in cloudy judgment on important technical issues – they can’t tell if something is really good or not, so they just do what everyone else does, assuming it to be the safe bet.”285
It would be has hard to find a good CEO if Elon needed to replace himself. “Jeff Bezos could do this [be CEO of SpaceX]. Larry Page could do this. Bill Gates could do this. But there’s just a really small list of people with the sufficient technical and business ability to do this job,” Elon said.71
The original SpaceX team consisted of about 20 SpaceXers, as they call themselves. It was a small, but efficient team. “I think it is a mistake to hire huge numbers of people to get a complicated job done,” Elon said. “Numbers will never compensate for talent in getting the right answer [Two people who don’t know something are no better than one], will tend to slow down progress and will make the task incredibly expensive.”285
To find a great team, Elon didn’t cold-call different experts. Because almost all other private rocket companies had failed, the experts didn’t want to join yet another company that eventually would fail.365 “It would have been quite difficult if I’d just started off by cold-calling them and saying that I wanted to start a rocket company,” Elon said. “What I said was ‘Would you mind helping me with a feasibility study to find out if it’s possible to make significant advancements in rocket technology? It will involve a few weekends and evenings of your time, I said I’d pay a decent amount for their help, and so they were enthusiastic.”128