Elon Musk, CEO, CTO and Founder, SpaceX

In June 2002, Internet entrepreneur Elon Musk started Space Exploration Technologies Corp. (SpaceX) to achieve what many in the satellite industry believe is an impossible task — to lower the cost of launching satellites into orbit. Musk has vast personal wealth — he is a co-founder of PayPal — and strong support from NASA’s Commercial Orbital Transportation Services (COTS) program, but the road to cheaper launch services has not been easy.
Musk, who serves as CEO and CTO of SpaceX, has received just as much criticism as praise for his mission, and with so many eyes on his products — the Falcon launch vehicles and the Dragon spacecraft — the pressure to succeed and demonstrate a reliable track record continues to mount. After three failed attempts to launch the small Falcon 1 rocket, SpaceX’s performed its first  successful mission in September. The next mission is scheduled for March carrying the RazakSat spacecraft, and now the pressure for Musk and SpaceX is to prove that the vehicle is reliable, complete development of the larger Falcon 9 rocket and deliver on his dream of reducing the cost of access to space.
After a tour of SpaceX’s Hawthorne, Calif., headquarters (the same facility Boeing used to make engines for its 747 series airliner), Musk sat down with News Editor Jeffrey Hill to discuss how he has continued to operate under such pressure and provide some insight on the company that wants change the way satellites are placed into orbit.

Via Satellite: Why did you go into the launch industry?

Musk: My long-term objective is to make us a true space civilization and to make at least some progress in helping to extend life beyond Earth. Along the way, the necessary thing that needs to be done is to provide launching at a much lower cost and make it much more reliable, but we have to earn our way in that direction. That’s why we are launching satellites. I think the origin and purpose of satellites is very cool, and there is a definitely a need for a lower launch cost option in the industry.
Via Satellite: How much do you personally finance the company and are you looking for additional funding?
Musk: We are not seeking additional financing. I personally have $100 million invested in the company. We have also taken $20 million of funding from the Founders Fund in San Francisco (a technology venture capital firm whose management team includes other co-founders of PayPal). At this point, SpaceX is cash flow positive and profitable. We were profitable last year, we will be this year and we expect to be next year.

Via Satellite: What is SpaceX’s business model to lower the cost of launching?

Musk: I think the major improvement that we will provide is reusability. Currently, the launch service industry is very much an expendable business. There isn’t any launch vehicle out there that is reusable besides [NASA’s space] shuttle, which is only partially reusable and so difficult to reuse that it is actually more expensive than if it were expendable. Some people actually use the shuttle as a counter example of why reusability is bad. They say the shuttle costs $1 billion per flight, has a maximum payload of 40,000 pounds to LEO (low-Earth orbit) and zero pounds to GTO (geostationary orbit). They compare the shuttle to even more powerful expendable rockets like the Delta 4 heavy at a quarter of the cost — $250 million dollars — to put a payload into orbit.
But we cannot reach any conclusions with a sample set of one. At SpaceX, we are aiming to have the first stage of Falcon 1 reusable. For Falcon 9, we are going to make the first and second stage reusable. For scheduling reasons, the first flight of Falcon 9 will probably not have a reusable second stage but we’re aiming for it in the second or third flight.

Via Satellite: How do you respond to the criticism of your business and how do you ease concerns of satellite customers?

Musk: I don’t listen to the criticism. Whenever someone new comes along with improvements, the incumbents will always go through their stages of grief. We have a strong supporter in NASA. We’re six years old, and it took us four years to get NASA to believe us. We’re sort of becoming the establishment now, as we are the primary means of getting to the [International] Space Station. Our message to the satellite industry is that we’re trying to design a rocket that is reliable as possible. A lack of reliability is the biggest fear for the satellite industry, and I want to assure them that there is nothing that we have done on this rocket to shortchange it on reliably. I don’t want a single person to die or another payload lost on this rocket due to our error. I want people to know that we haven’t made a single compromise of reliability.

Via Satellite: SpaceX has a successful launch and three failures. How do you plan on promoting your service as reliable?

Musk: Establishing reliability is our emphasis. We don’t want to be one-quarter of the cost and one-quarter of the reliability, which is our record right now. With the first three flights of Falcon 1, the problems were design errors. They were not errors of production or quality assurance. We fixed those errors on the fourth flight. From here on out, it should be a question of quality assurance and consistency now that we are out of the development phase.
As far as consistency is concerned, you can’t evaluate our first three launch attempts as part of our reliability equation because they were design-related issues. You can only establish a reliability assessment from flight 4 onwards. We are not going to have the problems that we saw on our first three flights again. Every time we look at a launch we look at the near misses and incorporate that into our future designs. We’ve also got seven launches on contract. If someone were to buy the eighth launch they have got a lot of people going ahead of them. If someone is going to catch a bullet, it’s probably not going to be them.

Via Satellite: Will the economic crisis make your business more attractive to customers?

Musk: With tough times comes austerity, and the U.S. government is going to try to save money. It will no longer be OK to just spend four times as much on a launch, which is the case for the government with companies like United Launch Alliance. They are four times more expensive than us to launch. They may claim that we are only half of their price, but they get a fixed infrastructure payment from the U.S. Air Force which covers all of their fixed costs. They only charge customers their variable cost, but their variable cost is still twice as much as our fixed and variable cost combined.

Via Satellite: How is the Falcon 9 developing and will it go through the same trial and error as the Falcon 1?

Musk: The Falcon 9 is designed to carry people, and we’re developing it to manned rating standards. That means higher structural safety margins, exhaustive testing and higher redundancies. The systems are all triple redundant on Falcon 9. We are currently in the final stage of development, so the main engines are done. We have completed a couple dozen firings of the first stage Merlin engines, and we’re getting ready to do pulverization firings. The tooling is all done for the rockets. We’re in the final phase of building it, and we’re hoping to have the first Falcon 9 at Cape Canaveral within the next few months. The first stage will be there next month and the second stage may be January.

Via Satellite: Why have you designed the Falcon 9 heavy with nine engines on the first stage?

Musk: The nine engines on the first stage offers engine out reliability, like the Saturn 5 rocket with five engines on the first stage and five on the second stage. In fact, two of the Saturn missions would have failed without engine out capability. They actually had a J2 engine fail on two missions. In fact, on one mission they had two J2 engines fail and they were still able to salvage the mission. It’s the same logic the commercial airliners use. How many people would be willing to fly on a jet with one engine? If your flying on a night flight over the Pacific Ocean with one engine, you will be using that life raft.

Via Satellite: Have you collaborated with NASA on developing the Falcon 9 for the COTS program?

Musk: NASA has very strict requirements. If we’re launching for them, they will be looking at everything, and they are not going to accept anything substandard. They go over the top on mission assurance. The U.S. Air Force is going to do the same thing.

Via Satellite: Do you have future plans to alternate or change your launch sites?

Musk: We currently use Cape Canaveral as our initial launch site, but we are looking very closely and probably will establish Falcon 9 launch capability at Kwajalein as well. The advantage of Kwajalein is that if you’re a [geostationary launch] customer we can give you direct launch trajectory at 9 degrees and put you pretty much dead on — like Sea Launch. 

Via Satellite: Will the Obama administration’s space policy affect your plans for future business?

Musk: I think the change is going to be positive for us. The Obama campaign’s policies on space are very favorable for new commercial companies. They have come out explicitly in favor of COTS in both cargo and crew components, which is what we want because we want to take astronauts to the space station.

Via Satellite: You have a variety of backgrounds on your staff. How did you assemble your workforce?

Musk: We have combination of people with decades of aerospace experience as well as people who are just out of school. You need both. I think the industry needs to look more into hiring fresh out of college. You get a lot of energy and enthusiasm with somebody who is fresh out of school. They also introduce new thinking, new tools and new techniques that are developed over time. Even our interns work directly on projects here. You never see that at other companies. I think you definitely have to have companies that are exciting for younger people to work at. With the big aerospace companies, that issue is sort of a self-inflicted wound. They’re just sort of bureaucratic and a bit drab. It is not exciting. They feel more like mausoleums. There is a buzz in the air here. It’s certainly more fun and more vibrant at SpaceX and things are happening.

Via Satellite: Will SpaceX play a part in bringing commercial space travel closer to reality?

Musk: It depends on the threshold of cost. The Soyuz is expensive and is getting more expensive. In fact, I heard something truly outrageous in that NASA is planning on spending $75 million per seat on the Soyuz after the shuttle retires. Which makes us a real bargain since we’re only asking for $300 million to demonstrate crew transport to the space station and that includes a flight for seven people.

Via Satellite: Are you planning on developing services beyond just launch?

Musk: I look far ahead, but things are increasingly less defined as we go further out. My long-term goal is to lower costs and improve reliability to the point where we can make life multi-planetary. How do we get there? I’m not entirely certain. We’re going to keep upgrading the size and capability of our rockets, carry people and payloads into orbit and ultimately beyond. We do have some plans of developing some bigger engines and create more efficient engines and bigger stages, but they are very much at the conceptual level right now.

Via Satellite: Do you see yourself flying on a manned mission in the future?

Musk: I’d like to, but I can’t be engaged in any unnecessarily risky activities right now. I used to do risky things when I was younger. I flew a fighter jet for a while. I have five kids now and three companies to run, two of which are on a daily basis. I will do it eventually; I’m sure.

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