SpaceX: Making Life Multiplanetary
Through cutting-edge innovation, vertical integration, and an emphasis on recruiting/retention, SpaceX will succeed at making life multi-planetary and enable humanity's survival.
“SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.” [1]
Until SpaceX, it was taken as fiat that a launch using the only US Launch Service Provider cost $160 million (plus a $1B retainer) and was carried out by United Launch Alliance (ULA), a joint venture between aerospace giants Boeing and Lockheed Martin[2]. SpaceX’s highly effective operating model, branding, and innovation have allowed it to undercut ULA and charge $60 million for a launch on a Falcon9, renewing access to outer space that for so long had been prohibitively expensive.
Business Model
SpaceX relentlessly pursues low-cost launch and space travel for government and commercial customers in two main ways: low-cost/reusable components and vertical integration.
- Low-Cost/Reusability
- The question that is always asked when designing a component is, “can we get something off the shelf that accomplishes the same thing?” Rather than designing a new product specifically for aerospace, SpaceX looks to adjacent industries for items that need only slight modifications or can be purchased off-the-shelf to save on cost. Cost-plus pricing of legacy aerospace de-incentivized this behavior and allowed costs to increase. SpaceX also mandates that components be suitable for multiple flights, minimizing average flight cost.
- Vertical Integration
- Rocket cores are not subcontracted at SpaceX; neither are fairings, engines, composites, or many other components that doomed legacy aerospace through endlessly telescoping margins. When an item cannot be purchased at low cost off-the-shelf, SpaceX designs and manufactures the component in-house, adding capability as needed. This has led to the Merlin Engine–the most efficient engine ever made and the only rocket engine produced in the US.
Operating Model
- Recruitment
- SpaceX employs an unconventional recruiting model: hire for potential rather than capability. SpaceX recruits engineers with a passion for innovation, not limited to aerospace. Rather that picking off industry veterans from NASA, Jet Propulsion Labs, or other industry players, SpaceX recruits at racing competitions and university engineering events–looking for passion rather than proven experience in aerospace [3].
- Branding
- As clearly written in the mission statement as visualized in the Mars travel posters throughout the office, SpaceX isn’t about launching satellites for the Air Force or payloads for NASA–these are merely means to the ultimate goal of interplanetary colonization. Walking through the SpaceX office will turn even the most apathetic into believers; from the rocket-shaped trash receptacles to the suspended space capsule at the entrance to the factory floor to the Jetson-esque furniture in the conference rooms engineers, prospective customers, and government agencies are clearly not just buying a Falcon9 or a Dragon, but rather enabling a multi-planetary human race.
- Innovation
- SpaceX is unique in that it operates a “test as you fly” innovation model. Rather than build large-scale facilities on earth (giant vacuum chambers, harsh condition rooms), portions of space craft and rockets are outfitted with experimental systems and components that don’t jeopardize the mission. This enables engineers to test new systems in situ, allowing for better and more reliable test conditions, faster feedback on designs, and more efficient capital expenditures on earth.
- Known for long, grueling hours, ask any SpaceX employee and they’ll tell you there’s no place they would rather work. An innovation model that emphasizes personal ownership, engineers don’t work nonstop because someone is telling them to, but rather because they want their component or system to succeed. It’s this distinction that turns the typical command-and-control structure of legacy aerospace on its head and allows for rapid, disruptive innovation.
- Reusability
- Any component made at SpaceX needs to be reusable. In fact, reviews and approvals need to be conducted if the component is only suitable for one flight, establishing reusability as the overarching norm. Additionally, at $60MM per launch, the Falcon9 stands to become cheaper once landing is successful and the first stage becomes recoverable [4].
Enabling the Business Model Through Operations
SpaceX’s operating model very clearly matches its business model. To pursue low-cost rocketry the company needs to rapidly innovate with new ideas in what had been a stagnant industry. The recruiting model ensures that fresh ideas are brought to the table rather than industry-tolerated ideas while the branding helps retain and inspire both employees and customers, simultaneously creating favorable media for the company. This coverage brings lucrative government contracts within reach as public sentiment shifts in favor of SpaceX. The innovation model is key, however, in ensuring that engineers are able to radically innovate; the test-as-you-fly methodology, substantial personal ownership, and drive to reusability enable rapid iteration through an impassioned workforce focused on a common goal: learning from fast failure to build efficient systems.
Disrupting the launch services industry enables what so many dream of: pushing beyond our terrestrial boundaries, exploring other planets, and bringing internet access to disenfranchised populations through low-cost satellites. Elon Musk’s well-aligned business model ensures that step changes in innovation continue in the aerospace industry in tandem with cost reductions, harnessing the passion and ideas of some of the world’s brightest engineers [5].
[1] http://www.spacex.com/
[2] http://dcinno.streetwise.co/2015/05/27/spacex-competing-with-lockheed-martin-boeing-for-air-force-contracts/
[3] http://jalopnik.com/increase-your-odds-of-working-for-spacex-by-building-ra-1569237913
[4] http://www.popularmechanics.com/space/rockets/a15081/spacex-falcon-9-third-try/
[5] All other sources are from personal experience.
I really enjoyed learning about SpaceX, a company that has captured the popular imagination by appealing to people’s fascination with the unknown. Thank you for giving us a glimpse into the inner workings of this company. I was wondering if you can elaborate a bit further on how safety is addressed at SpaceX, as the focus on low-cost and “learning from fast failures” might work counter to this goal?
Great comment! Lauren had a similar one, so I responded to it below.
In terms of fast failures, SpaceX will fly a new component during a mission for which it is not functional, test the component’s functionality during the flight, and understand how it performed and what the impact would have been had its functionality been needed. If, for example, there’s a valve as part of a system that fails to open during a test flight, the engineer would figure out why it happened, redesign, test again, and create a fully-functional system for the actual flight for which its functionality is needed.
While I definitely agree that looking into low cost option for space will be the key to continued growth within the space industry, how does this balance out with the level of safety and quality expected from consumers? The giants within the industry definitely need to dive more into the cost aspect of space travel, but ensure that everyone continues to get home safe. At this point in time, does it really cost less to reuse components compared to using new considering the amount of testing that would be involved.
I love the idea of looking for potential! I think it is a great way to bring a creative element into a very traditional field of study, allowing new ideas to come to light. This seems to come through with the environment they have made at SpaceX that definitely brings the dreaming back into the aerospace industry.
Great comment! Safety is definitely a concern that is constantly addressed at SpaceX, and the “test-and-fly” methodology really plays into how they rate components and materials for flight. For instance, sensors are placed all over the rocket in each of the crevices and walls where future components may be placed. During flight, information is transmitted real time regarding the shock and vibrational loads experienced during real time flight. This gives SpaceX a more accurate representation of what loads are actually experienced and eliminates some extra material (and weight/cost) that would be inherent in a rocket that has fewer sensors that capture data that is applied to the entire rocket. Components and systems are then designed to safety factors, i.e. multiples of the maximum loads that they are intended to withstand from shock and vibration, the safety factor chosen as a combination of legacy components and impact of component failure (i.e. what would happen if it failed? Big problem or minor inconvenience?). The components are then tested at those levels in an in-house lab.
For a life support system or something similar, a non-functioning system would then be loaded onto an unmanned flight (covered with sensors of course) and operated as if there were humans on board. The responses to the atmosphere would be measured and recorded and matched with what was expected. Only after this high level of qualification would the system be certified for flight.
This was really fascinating, Taylor!
I would be interested in hearing more about your personal experience at SpaceX, particularly as it relates to the culture that such an operating model drives. Having worked in laboratories with broad and altruistic missions, I’ve still found it easy to get bogged down in the day-to-day mundanity of the scientific process. While you were there, were you personally able to maintain the vision of working toward a multi-planetary human race?
In terms of the long hours, I can see how the sense of ownership could generate pride but I wonder about the sustainability in the long-run. Was there anything else in place to try to make work-life balance more manageable, and did you see a high rate of churn among employees?