Ian Tracy

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I think even with a capital intensive business like SpaceX, you can maintain lean operations throughout the product and company lifecycles. I’m not sure what you mean by “ignoring sunk costs,” as sunk costs are to be ignored, but I feel that the company does well in efficiently allocating resources and reducing waste during production.

Remi, I think the more attention in the private space industry, the better. Same thing goes for electric cars. NASA is underfunded, and private interest in the opportunity that space provides is well under its potential. Further, dissemination of innovation and collaboration on the challenging projects devoted to reusable rocketry, tiny satellites, and human missions to Mars will benefit all players in the industry. Yes, government contracts are important. But imagine a future where Uncle Sam isn’t the first one we look to for pitching in space-related money. Being an aerospace engineer, I can tell you that a mission to Mars is entirely possible. What is takes is the same thing we were able to achieve in the 1960s (!!) when we set foot on the Moon–public support and adequate funding. Space is actually very predictable–with no air resistance, a precise understanding of orbital dynamics and gravitational fields, and even with enormous amounts of radiation, we already know exactly how to land humans on Mars with a high probability of success. It’s more of: what happens when they get there, and how do we sustain periodic launches for support? Heck, with half-a-million, you’ll very likely be able to make it happen in your lifetime. Just support the cause!

Oh believe me, engineers love autonomy at work, and anyone worth his salt will make it a priority to let the innovative juices fly when managing them. That’s not to say some level of structure (so as to keep efforts tied to business goals) is unappreciated–it just has to be done with an aura of creativity, limitless possibility, and soft boundaries. Recall Valve 🙂

Hey Griff, your first question is well-taken. As with strong followings of successful sports teams, enthusiasm for SpaceX is likely to dwindle should the company continue to experience mission failure. In such a case, the company’s prestige and industry leadership are prone to faltering, necessitating an increase in monetary compensation. I dearly hope that SpaceX succeeds in its upcoming mission next month. http://www.orlandosentinel.com/news/space/go-for-launch/os-spacex-launch-of-noaa-satellite-set-20151216-post.html

I see your point about Musk leading as a beacon, and how contingent SpaceX’s following is on the man’s presence. What someone quite familiar with Elon would explain is that SpaceX is his most precious baby, with Tesla following closely behind. While he may hand over the reins of Tesla at some point (when he finds someone qualified enough), he’ll absolutely never leave SpaceX. Too much of his personal passions and desire for human interplanetary travel revolve around the firm’s success, and there’s no way anyone’s convincing him that somebody else can lead the firm as well as he. If in the distant future after SpaceX goes public he is somehow pressured out of the helm, at that point I suspect the company will be on autopilot and won’t require Musk’s affiliation in order to entice top talent to join his rocket party.

Alek, that’s a fair question, and I think that since their facility is so lean, SpaceX should be able to scale quite a bit before it needs to adopt some type of highly structured assembly-line approach. I suspect that it’s going to be a while before that happens and SpaceX sells Falcon 9s to a multitude of customers. Right now they want to go to Mars, and they’re going to make that happen one mission at a time.

Dino, likely. I’m under the impression that virtually all employees have been compensated with some level of equity in SpaceX, which SpaceX repurchases internally once it has vested, as the firm does not intend to IPO for quite some time and employees don’t have forever to cash in. So that’s a plus for some and may make up for lesser wages. However, given the immense flexibility, opportunity, and excitement with which engineers and scientists at SpaceX are able to conduct their daily business, and my understanding of what engineer’s care about personally, I wouldn’t be surprised if the company can “get away” with paying lower wages. However, they have been known to take it a bit too far on occasion, leading to at least two employee wage-related lawsuits (http://www.bloomberg.com/news/articles/2014-08-13/musk-s-spacex-sued-by-workers-over-unpaid-wages-firings and http://www.theverge.com/2015/10/21/9583422/spacex-class-action-lawsuit-elon-musk).

I think you’re right about the working for Elon–truly a leader as a beacon (from LEAD). It really helps to have the rare combination of acute businessman and saavy scientist at the helm. It’s finally someone these young engineers can relate to! As far as SpaceX’s progress on landing of the first stage: SpaceX has already successfully landed a rocket after launch (see https://www.youtube.com/watch?v=9ZDkItO-0a4). This is similar to Blue Origin’s recent achievement. SpaceX is taking a much risker, bolder action in attempting to demonstrate a landing on a barge bobbing out in the ocean (first attempt here: https://www.youtube.com/watch?v=WcfJLNj6ujQ). This is likely for safety to demonstrate exacting precision. Furthermore, B.O.’s rocket seems to be quite a bit shorter and wider (and therefore more stable upon landing), so I don’t really consider it an apples-to-apples comparison. It’s great though that other well-funded players are entering the market.

Robert, I think you are hitting on the key issue with which SpaceX is currently wrestling as it realizes that there always is a transition from startup mode to a sustainable model in which complexity has grown and standard operating procedures/processes must be embraced and adopted for the purposes of both efficiency and product integrity. The company has, based on my conversations with several employees there, maintained relatively loose (if any) controls over its employee work methods, leading ultimately to great flexibility potentially at the cost of robustness, uniformity among operations practices. I thus foresee SpaceX taking on a bit more structure insofar as SOPs are established and enforced by the appropriate team members.

On December 14, 2015, Ian Tracy commented on SolarCity: Where Sunshine Meets Innovation :

Thanks MP for the sunshine you’ve beamed upon such a beacon of energy sustainability hope for us Earthlings. My first question is: why doesn’t everyone have a solar panel on his/her roof? I suppose SolarCity only profits in areas with adequate sunshine? It is great to see their operating costs decrease through technological innovation via vertical integration and collaboration with similarly sustainability-oriented companies like Tesla Motors. I wonder: what about the solar industry has made potential competitors unsuccessful, and what steps is SolarCity taking to ensure its continuing market dominance? It seems based on the tone of your post that the company’s significant capital investments, continuous innovation and product improvement, in addition to lean manufacturing processes and economies of scale all serve as barriers to competitors entry.

On December 14, 2015, Ian Tracy commented on Patagonia: A Different Way of Defining Value :

Thanks for the breakdown, Pete! I wonder, it seems that through increasing discounts, increasing competition, and the presence of online budget marketplaces like steepandcheap.com, Patagonia may not be able to maintain its price premiums and focus on sustainable manufacturing methods in the future. It seems that their mission statements and relative high quality have been successful up to now. How do you see Patagonia reacting to the rapidly evolving outdoor apparel space?

On December 14, 2015, Ian Tracy commented on Capital One Financial :

Thanks for such an insightful insider’s perspective, Stirling! I have always wondered how Capital One makes money off of my use of its fee-free 1.5% cash-back rewards card, especially overseas (with no fees, of course). I am an avid fan of Capital One, and view their operations as low-end disruption to the traditional complex, bureaucratic, inefficient brick-and-mortar banks. You seem to support that idea, highlighting their focus on internet technology designed to provide a high-quality experience to users at relatively low-cost with much fewer capital expenditures than their competitors. It was interesting to hear about Capital One’s early operational victories tied to preferences for customers who complete balance transfers. Furthermore, segmentation into four functional areas for its talented employee base seems like a lean, focused strategy. It seems like real operational innovation to me that Capital One was an outlier in its emphasizing serving, protecting, and enhancing the banking experiences of its existing customers in addition to new customer acquisition. Clearly, mitigating fraudulent activities and increasing spending limits on interest-bearing accounts spells all kinds of $$$. From my personal observations, from a cultural perspective, Capital One is seeking to position itself as a hip and cool alternative to the “boring” banks, thereby attracting even more young top talent and further differentiating itself from the seemingly archaic banking ecosystem in which it operates. Your describing their “hangout” Capital One Cafe’s that are uncannily relaxed and inclusive for banks seems to do exactly that. In fact, I notice that they’re just now opening one right across the bridge in Harvard Square. I think it’s time that I experience magic this magic myself 😀

On December 14, 2015, Ian Tracy commented on ALDI – A German success story :

Thanks for bringing to light one of my all-time favorite grocery stores, Peter! I always wondered whether credit card use was simply not as ubiquitous in Germany as it is in the United States (thus a cultural issue) –it seems that it’s actually part of Aldi’s operating strategy to maintain high liquidity and NWC in order to maintain financially lean corporate-wide processes and simplified distribution channels with a low SKU count. Very cool. I wonder then: now that Aldi has successfully established a firm foothold in the North American market, how is it able to maintain adequate NWC in order to provide similarly high quality goods?