Link to First Installment: https://chrisprophet.substack.com/p/spacex-evolution
CHAPTER 13: HOW X.COM ACHIEVES COMMERCIAL SUPREMACY
The world has never seen the prospect of anything like X.com, except from the chronicles of science fiction (e.g. WaYu/Weyland-Yutani Corporation from the Alien movie genre, or CHOAM/Combine Honnete Ober Advancer Mercantiles from the Dune milieu). To create such a sol spanning commercial colossus would require insane ambition, beyond all other factors, such as inspiring vision, management prowess or technical competence. Do Musk companies possess this hard driving ambition necessary to ascend to the vaulted destiny described for X.com? OK, Let’s see what they’ve achieved so far and why…
Right from the outset, SpaceX designed their launch vehicle hardware to be reusable then doggedly pursued vehicle recovery and reuse. In late 2015 they managed to successfully land the first Falcon 9 booster (on the ORBCOMM 2 mission),1 then in March 2017 they became the first company to reuse a booster on an orbital flight (SES-10).2 This provided the cost savings necessary to deploy the world’s first mega-constellation and supply low latency internet around the globe. While enormously helpful to the world at large, this promises to generate the robust finance necessary to expand life to new worlds. To facilitate this pan-propagation they have produced Starship, the first fully reusable launch vehicle with twice the lift capability of the Saturn V moon rocket. Starship’s primary purpose is to conquer Mars but SpaceX have also embraced a variety of other commercial opportunities like the #Dearmoon mission (which opens the market for commercial space cruises) or Starship HLS (which will allow NASA to build a permanent base on the moon). Overall these are but the tip of the iceberg for all the future functions of Starship, which promises to produce a leviathan space economy, both in scale and reach. Safe to say, no lack of ambition here.
“The magnitude of the Starship program is not widely appreciated. It is designed to extend life to Mars (and the moon), which requires ~1000 times more payload to orbit than all current Earth rockets combined.”3 ~ Elon Musk
Tesla have long sought to catalyze the transition to electric vehicles through demonstrating their improved utility. More recently they have engendered full electrification of the world’s economy, and assimilated Solar City to increase the use of distributed energy generation and reduce our reliance on polluting power stations. Tesla then supplied home battery systems to allow solar power to be used throughout the day and night. More recently they have produced large scale battery storage systems to even out supply from sustainable power generation, like solar and wind farms. Their Full Self Driving software will soon allow electric vehicles to drive autonomously, which should allow them to create a robotaxi network capable of generating trillions in revenue worldwide. This level of software sophistication has opened the door to creating AI androids, which should largely eliminate manual labor and allow the economy to expand beyond all bounds, on Earth and into the infinite reaches of space… Of course the final act of ambition would be the unification of all Musk’s planetary and extraplanetary endeavors, through creating a holding company to handle all his corporate shares, both public and private. Arguably this aggregation process has already begun for all his diverse corporations, following Tesla’s acquisition of SolarCity. Once this process is complete the holding company, likely called X.com, will wield enormous financial, technical, and professional resources – more so than any other company in existence. How they will achieve commercial supremacy comes down to innovation, if you consistently bring the right products to market faster than your competition, the future is yours.
Sounds like a tall order, so let’s dive into one of the ways they already achieve this, through an approach which could best be described as an accumulation of advantages. For example: Tesla custom design all their car components to work as efficiently as possible to reduce draw from the battery. They also fit these components as compactly as possible, to reduce or remove linkages, in order to minimize any power lost in transmission. In addition they have great software control of the electric drive motor, which further reduces power losses. Last but not least their vehicle possesses exceptional aerodynamic efficiency, which, you guessed it, reduces the power required to overcome any drag from the atmosphere. Overall this significantly improves the range of Tesla vehicles due to the accumulation of power savings from each aspect of the design. However, because the components used are more efficient they are generally lighter, which significantly reduces the overall weight of the vehicle, again reducing the power draw from the battery. This allows the battery size to be reduced, which again saves weight, allowing even greater efficiency… So effectively the end result isn’t so much an accumulation as a multiplication of advantages, which place Tesla vehicles on the next level compared to their competitors.4
“Mass is the enemy of both efficiency and performance, and minimizing the weight of every component is an ongoing goal for our design and engineering teams.”5 ~ Tesla Blog
Of course this accumulation of advantages goes double for SpaceX vehicles; not only have these improvements increased the payload delivered to orbit with their Falcon 9 rocket, they also allow sufficient propellant to be conserved for the booster to land propulsively. This allows SpaceX to use these boosters a hundred times or more, instead of discarding them in the ocean after each and every launch, which eliminates the cost of building a new booster for each subsequent flight.
To stay ahead of the competition requires consistent innovation, however, this is a core tenet of all Musk companies. Here’s one example for how they achieve this ideal: Elon is known to ‘parachute in’ teams of ace engineers to tackle challenging projects that might humble anyone not in their unique position. Unlike most companies and organizations, these engineers are allowed the freedom to pursue whatever technical solutions they see fit, with good facilities and access to reasonable finance. In addition, if they can’t see a clear path forward, Elon is always available to supply technical guidance and adjudicate the best approach.6 It’s not a case of his door is always open, at the SpaceX HQ in Hawthorne California, Elon works out of a cubicle which technically has no door; at the Tesla HQ in Palo Alto, he doesn’t even possess an office, just roams the plant to meet with people and solve problems in situ.
“Elon works on the floor with everybody. Elon spends 80 hours a week at whatever the bottleneck is. If the bottleneck is Giga-Berlin, Elon is in Giga-Berlin, sleeping in a sleeping bag in Giga-Berlin… By the bottleneck I mean: towards expanding consciousness out among the stars, that bottleneck. So not the bottleneck just for Tesla, or just for SpaceX or just for The Boring Company but towards the greater vision. Whatever is currently the limiting factor to that, that’s where Musk lives.”7 ~ Joe Justice, Tesla Agile consultant
Some might dismiss him as a mere Silicon Valley billionaire, who leveraged his vast fortune to create some flashy startups, but that couldn’t be further from the truth. In reality Elon Musk is a hardcore engineer, who is also a consummate corporate executive, with the broad range of skills required to manage a company from startup through to multinational corporation.
“I was blown away [by Musk]. I’ve seen dozens of CEO’s, I’ve never seen a CEO ever – or president – that knew more about the product, that knew the details of a product, that could bring an idea and discuss it not just in you know grandiose hand waving kinda – but hey let’s use this formula and rattle off a formula, or rattle off a material, or rattle off a process that is kinda obscure unless you’re like a detail engineer. I was blown away by that and that kinda stuff, like I say, you don’t see executives know much about.”8 ~ Sandy Munro/veteran auto engineer
Like Hercules, Elon seeks out the greatest challenges, which inspires the best in others. People, both inside and outside his companies, see the moral worth in what he’s trying to achieve and gladly volunteer their time and energy. This produces a workforce who are clear about the company’s goals and passionate about accelerating its mission; whatever that might take. Likewise there’s probably a thousand people for every employee who ardently follow these bright endeavors, creating profound popular support around the world.
Human Capital
In a 2019 pole of engineering students, SpaceX was voted the most attractive US employer, with Tesla in second place.9 Then, the following year, Tesla swopped places with SpaceX for the top spot, leaving traditional favorites, like NASA, many places adrift.10 This overwhelming popularity ensures the two companies have a constant supply of raw talent, simply the cream of the crop. These young engineers are then presented with tough technical challenges to solve, at a high work cadence, while supported by a stimulating team of professionals – in other words ideal conditions to grow the next generation of ace engineers. When Gwynne Shotwell, SpaceX COO, was asked why Jeff Bezos' company, Blue Origin, hadn't managed to launch a rocket to orbit after two decades, her answer was quite candid: -
“I think engineers think better when they’re pushed hardest to do great things in a very short period of time, with very few resources. Not when you have twenty years. I don’t think there’s a motivation or a drive there.”11
Esprit-de-Corps
Elon Musk asks much of his people, which could cause excessive stress and dissatisfaction at any normal company. However, this drive to succeed is more than offset by good interpersonal relations and job satisfaction, something Musk companies have in spades. For example: If you work at SpaceX you are SpaceX and proud of it.
“The job satisfaction and team camaraderie is like nowhere else. Every time there is a launch, everyone crowds around mission control and cheers it on. Getting your mission patch after a launch was always a very satisfying feeling. If there was ever a failure, you definitely felt it in the air, but it wouldn't stop any of us from working or demotivate us. The pride for the company is unbelievable. How do you spot a SpaceX employee? They're covered head to toe in company swag and keeps mentioning how they work for SpaceX.”12 ~ Josh Boehm, former Head of Software Quality Assurance at SpaceX
Maintaining an elite cadre of experienced personnel will be key to achieving Musk’s long-term goals, but going by their esprit-de-corps, this hardly seems a problem. No doubt this cohesiveness will be of great benefit to them when facing the steep challenges ahead.
“Human spaceflight was the reason we were founded, so it's incredibly meaningful to the whole team [for SpaceX to have launched 18 astronauts in 18 months]. We could not be more excited to finally be here… I think every year in my 10 years of SpaceX: “wow, this was the best year yet, it can't possibly get any better,” and somehow it does.”13 ~ Sarah Walker, Director of Dragon mission management at SpaceX
Strategic Partnerships
Due to their fast expansion of interest, SpaceX, Tesla et al are moving into many new areas, some quite divorced from their core areas of business and technical proficiency. For example: SpaceX began by launching commercial satellites, then progressed to making their own spacecraft, that then required they make their own spacesuits, technically fields away from their core proficiency of constructing liquid fueled rockets. Hence to acquire the necessary new techniques and technologies Musk companies usually partner with various companies, essentially anyone who can supply the specialist technology they need for this new product area. In a few rare cases they might buy out some of these specialist companies, if they possess must have patents or difficult to reproduce capabilities, but more usually they offer a partnership i.e. explain their requirements, assist development and purchase the finished product.
Once the Musk company has learnt all it can, the partnership is usually dissolved and production brought inhouse. Quite often some of the partner’s engineers, who worked on the project, decide to transfer over to the Musk company in order to continue their work, which overall assists the transition process. This ensures the requisite technology, techniques and staff are transferred at little extra cost and minimum delay to feed the singularity.
While this might appear somewhat predatory, in reality Musk employees are continually lured away by competitors, in many cases to replicate their techniques and technology, so no doubt they regard this as a simple case of give and take. End of the day nothing lasts forever and their commercial partner can legitimately list the Musk company as one of their customers, which is probably worth millions in prestige alone.
Of course there are always exceptions to this short-term partnership model, i.e. companies who are so efficient at supplying quality products it’s simply not worth the cost or distraction to bring production inhouse. However, if any of these specialist companies apply an unwarranted price increase, well, their supplier days are numbered.
Link to next installment:
1 https://twitter.com/SpaceX/status/679114269485436928
2 https://twitter.com/spacex/status/847578231808991232
3 https://twitter.com/elonmusk/status/1465795739104206853
4 https://www.forbes.com/sites/neilwinton/2021/08/31/tesla-model-3-leads-europe-electric-sales-as-competitor-range-claims-wilt/
5 https://www.tesla.com/blog/model-s-long-range-plus-building-first-400-mile-electric-vehicle
9 https://www.teslarati.com/tesla-spacex-best-employers-2019-elon-musk/
10 https://www.teslarati.com/tesla-most-attractive-employer-2020/
11 https://www.cnbc.com/2019/10/25/spacex-shotwell-calls-out-blue-origin-boeing-lockheed-martin-oneweb.html
12 https://www.quora.com/What-is-it-like-to-work-at-SpaceX
13 https://twitter.com/thesheetztweetz/status/1458634166644482055