SpaceX Evolution (Chapter 2)

A serialized version of this book for SubStack

Jul 07, 2023

CHAPTER 2: ENGINEERING TOMORROW

*Construction of Starship launch infrastructure at Starbase, Texas*

As a boy, Elon Musk devoured science fiction novels. Reportedly by the age of nine he had read every sci-fi book in the library, so read the Encyclopedia Britannica for the science.¹ He was enraptured by these visions of the future and now determined to make them reality through harnessing the wellspring of new technology i.e. dedicated commercial companies.

What Elon Musk is attempting with his broad array of tech companies is beyond our normal range of experience, possibly the best analogy for understanding this effect would be the early days of the industrial revolution. All the components for steam powered technology were available beforehand but it took some brave entrepreneurs to create practical applications and make it truly commercial. However, Elon Musk companies are advancing technology across a broad front, in a process which promises to be truly transformative. This process isn’t haphazard or driven by market forces, instead it is carefully engineered through a more integrated approach to commercial tech development. Most companies battle to compete in their respective fields in virtual isolation, while Elon’s are closely supported by sister companies, allowing resources, technologies and techniques to be transplanted from one industry to another.

“If any Musk companies has an advancement it’s trivially and immediately available to all Musk companies and they all ride on that wave – and it only compounds.”² ~ Joe Justice, Tesla Agile consultant

Here’s some examples of how these companies have supported one another in the past: -

Shared Resources

Finance – SpaceX invested $255m in SolarCity to help them through troubled times.³

Software – WarpDrive, the Enterprise Resource Planning (ERP) software developed by SpaceX was given to Tesla free and gratis.

Hardware – advanced battery packs and motors were sold by Tesla to SpaceX and The Boring Company (feeding more funds to Tesla/SolarCity).⁴ Starlink terminals are used by Tesla to provide internet connectivity at their Supercharger stations.⁵ Teslas are used by The Boring Company to transport passengers,⁶ and at SpaceX as company vehicles.⁷

*SpaceX/Tesla Model 3, credit: @BocaChicaGal / NASASpaceFlight.com*

“The synergies are: we [SpaceX] do use Tesla batteries for our technology. We gave Tesla our enterprise information system, we call it WarpDrive… I think the first cars on Mars will be Tesla’s…. I think we will be boring tunnels on Mars, I think that’s where you gonna live...”⁸ ~ Gwynne Shotwell/IE Technology and Innovation Club, Madrid

Assembly – Tesla car frames were originally designed by SpaceX, then the necessary friction stir welding equipment transferred from SpaceX to Tesla.⁹

“The Model 3 and Model Y original body in white (car body frame) were designed by teams at SpaceX.”¹⁰ ~ Joe Justice, Tesla Agile consultant

Talent Pool – a team of specialist materials engineers are shared between Tesla and SpaceX.¹¹ Charles Kuehmann, a former director of product design at Apple, has been the vice president of materials engineering at both companies since 2015.¹²

“My approach is simply to seek out very talented people, ensure that the environment at SpaceX is as motivating & enjoyable as possible and establish clear & measurable objectives.”¹³ ~ Elon Musk

In addition to these shared resources, Musk companies have an internal architecture that is highly tuned to develop new technologies and maximize operating efficiency. To illustrate, here’s a breakdown of the architectural assets commonly found at each of these companies, grouped into relevant categories i.e. Motivational, Personnel, Financial and Operational.

Motivational Assets

Corporate Vision – an altruistic long-term goal which inspires and unites employees and customers.

“I think the way Elon has approached how to run Tesla creates this newfound trust in people to say wow, this is what a company is supposed to be like. This is what a company is supposed to do it’s supposed to make humanity better, it’s supposed to make us move forward as a society.”¹⁴ ~ Farzad Mesbahi, Former Tesla Program Manager

Flat Hierarchy – technical decisions are usually made by engineers instead of management, with personal responsibility encouraged at all levels. Essentially engineers have ownership of their work.

“SpaceX is structured like most companies: Individuals report to managers, report to directors, report to VPs. What makes SpaceX a little unique is - despite the reporting structure - decision making is astonishingly flat. Technical decisions rarely go up through the management chain; it usually happens through work groups that are assembled ad hoc to tackle a particular problem. (And yes, the CEO participates in many of these work groups).”¹⁵ ~ Robert Rose, former Director of Flight Software at SpaceX

It might seem counterintuitive to suggest the engineer’s decision is what counts most on technical matters when it’s common for the CEO to attend these meetings. However, Elon is also Chief Technical Officer at SpaceX, and a highly accomplished engineer, so has a great deal to contribute. Hence he is happy to circumvent the entire management structure, in order to facilitate the best technical solution in the shortest time possible.

Shared Ownership – personnel are normally awarded shares in their company, by way of a bonus. This incentivizes collaboration between colleagues, both inside and outside their team, to improve the company’s overall performance and increase its long-term share value.

“A large part of the compensation for anyone who went to work at SpaceX was stock options, and so your real compensation comes when the company succeeds, and that does a lot to align essentially business goals and interests; that even if you are a propulsion individual you want the TPS (Thermal Protection System) to succeed because if the TPS doesn’t succeed then the company doesn’t succeed and your stock options aren’t worth anything. So it creates a collaborative situation where people are pulling towards the same goal and they are willing to make compromises.”¹⁶ ~ Dan Rasky, Senior NASA Scientist

Positive Growth – the atmosphere inside a company that is succeeding in its goals and expanding into new areas is like no other.

“Human spaceflight was the reason we were founded, so it's incredibly meaningful to the whole team [for SpaceX to launch 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.”¹⁷ ~ Sarah Walker, Director of Dragon mission management at SpaceX

Global Recognition – the company’s achievements are celebrated around the world, something wholly appreciated and anticipated by employees.

“It’s really exciting to be a part of something the whole world watches. When we launch a satellite, I can pull up news coverage from countries around the world, and I can say, “I was a part of that.” Everyone here is working toward the same goal. There is an electricity in the air.”¹⁸ ~ Kyle P. Williams, SpaceX Payload Integration Lead and recent graduate

Personnel Assets

Great Management – a manager’s job is to solve problems but they are far from perfect, so what happens when the manager is at fault? Gwynne Shotwell, SpaceX President and COO, has provided some valuable insight into the inner workings of SpaceX: -

“‘He [Elon Musk] makes great decisions with good data. It’s irritating that he is right as often as he is.’ That’s not to say he’s always right. Years earlier, Musk ordered Falcon Heavy canceled, forcing Shotwell (who’d been tipped off by another SpaceX employee) to sprint to a conference room and remind him that the U.S. Air Force, a critical customer, had already purchased a launch.”¹⁹ ~ Bloomberg News

In essence, Elon Musk wanted to switch all heavy lift development from Falcon Heavy to their Mars Starship, a far more capable vehicle, hence a better use of the company’s valuable resources. However, once aware of the importance of Falcon Heavy, Elon saw the logic and immediately reversed his decision. Instead of obeying ego, he uses this philosophy for better decision making: -

“I take the position that I’m always to some degree wrong, and the aspiration is to be less wrong.” ~ Elon Musk

Professional Personnel – only the best are recruited, who possess a passion for the work.

“I have the 7,000 best employees on the planet. They are extraordinary, they work hard they’re really smart they’re helpful… Such great people – exceptional team.”²⁰ ~ Gwynne Shotwell, SpaceX COO

Engineering Bias – majority of personnel are technically skilled, particularly higher management.

“Great companies are built on great products. The path to the CEO's office should not be through the CFO's office, and it should not be through the marketing department. It needs to be through engineering and design.”²¹ ~ Elon Musk

Resilience – In troubled times Elon and co. pull out all the stops to ensure these companies survive.

“For my part, I will never give up and I mean never.”²² ~ excerpt from Elon Musk’s inspirational speech to employees, following the third launch failure of Falcon 1.

Financial Assets

Flywheel Finance – profits are reinvested to develop new technologies and expand operations.

“SpaceX is a profitable, robust business; we invest these profits back into the company’s manufacturing and launch infrastructure and into advanced research and development, including current and next-generation booster propulsion.”²³ ~ Gwynne Shotwell, SpaceX COO/Statement to US House of Representatives committee

Substantial Investment – significant external finance is sought periodically to drive development.

“SpaceX’s latest round of fundraising saw the company receive $6 billion in offers from investors over the course of just three days, with the company accepting $850 million from those offers. The investor demand stems from its Starship and Starlink projects, Quilty Analytics founder Chris Quilty explained, which he described as ‘two Manhattan Projects running in parallel.’”²⁴ ~ Michael Sheetz, CNBC

Minimal Advertising – news of superior product/performance is normally spread organically by followers.

“Other companies spend money on advertising & manipulating public opinion, Tesla focuses on the product. I trust the people.”²⁵ ~ Elon Musk

Low Price – new technologies are used to reduce cost, which is then passed on to customers.

“Air Force clears SpaceX to fly two upcoming GPS satellites on previously flown SpaceX Falcon 9 rockets, saving $26m per flight.”²⁶ ~ Dr. Walt Lauderdale, SMC Falcon chief

In essence, SpaceX agreed to lower the contract price to launch GPS satellites on their “flight proven” boosters.

Operational Assets

Custom Software – all application software is produced inhouse or supplied by a sister company.

“The application software team is the central nervous system of SpaceX – we create mission critical applications that are used throughout SpaceX to accelerate launch vehicle production and flight as well as systems that allow Starlink to grow into a worldwide fast, reliable Internet service.” ~ SpaceX Careers

Note this custom software often involves high machine intelligence, which minimizes the number of people required to administer complex systems, even personnel management.²⁷

Self Organization – personnel decide their own work to address current requirements.

“You’re given self-management tools, you’re not assigned a manager. Instead you’re given apps which let you decide where’s the highest value you could add right now and you’re not assigned to any one area. You then just go into production and start designing, making financial decisions to the best of your capability.”²⁸ ~ Joe Justice, Tesla Agile consultant

Lean Teams – small teams are employed in most areas to focus effort and encourage cooperation.

“SpaceX is always looking for the right balance, you want to have the right lean amount of workers doing things.”²⁹ ~ Benji Reed, SpaceX Director of human spaceflight programs

Vertical Integration – most component production through to final assembly is performed inhouse.

“ITAR restricts you to really working with US companies… We have a very limited set of suppliers and to the degree you have legacy parts you inherit the legacy costs and limitations and so that required us to insource most of the rocket. There’s probably only less than 10% of the rocket is coming from the space supply chain at this point.”³⁰ ~ Elon Musk

Iteration Culture – personnel are expected to improve the product continuously, on an ad hoc basis.

“We are focused on rapid innovation and relentless focus on progress. If we are not pushing hardware and software through the factory through the process everyday making progress then we are either disappointing customers or putting undue pressure on our business.”³¹ ~ Gwynne Shotwell, SpaceX COO

Beta Testing – new designs are tested as soon as practicable to prompt development.

“To build a rocket from scratch in less than three years is no easy task, but it helps if speed is a core value. Yet it is not speed for speed’s sake: rather than toiling for years on a part until it is perfect, SpaceX’s approach is to build as quickly as possible and then, in the words of Tom Mueller, VP of propulsion development, ‘test the crap out of it.’ This commitment to fast prototyping and testing has been a constant theme through Falcon 1‘s development.”⁷ ~ Fast Company

Fast Feedback – employees are encouraged to pass on timely advice to improve the operation.

“Continuous Feedback. It’s really important for people at SpaceX to give feedback directly to their peers, to have an open door to give feedback to their bosses, candidly, really, and also have an open door and have people not feel bad when bosses and other folks reach into the organization to give feedback… We really want to make it OK to give feedback it’s the best way for a company to move forward.”³² ~ Gwynne Shotwell, SpaceX COO

Risk Tolerance – more is learnt from failure than success, hence bold approaches are expected during development.

“There’s a silly notion that failure’s not an option at NASA. Failure is an option here. If things are not failing, you are not innovating enough.”³³ ~ Elon Musk/Fast Company

Extreme Ownership – individuals are wholly responsible for their work.

“This [ownership] is a real incentive to get stuff right- you can’t just crank out a bad design, shrug, and say ‘that’s someone else’s problem.’ Due to the way it’s structured, it’s your problem.”³⁴

Minimal Meetings – formal meetings are avoided, except where absolutely necessary, and usually restricted to six key people – or less.

I remember once we had this meeting with some very high-level NASA officials and they were talking about how we don’t have enough meetings at SpaceX and Elon said: ‘Why do you think we need to have more meetings?’ and they said at NASA meetings that’s how we make decisions, that’s how we get stuff done. And I sat there and cringed, having been a former NASA guy, and I just knew what was going through Elon’s mind hearing this – losing respect by the nanosecond.³⁵ ~ Garrett Reisman, former NASA astronaut and Senior Advisor at SpaceX

Diverse Synergies

Any new technologies developed by these companies are promptly used to diversify into associated sectors. A prime example would be SpaceX’s development of reusable rockets, which provided the cost savings necessary to launch Starlink, a megaconstellation consisting of thousands of LEO satellites (see Chapter 6: SpaceX Majority, Starlink).

SpaceX is leveraging its experience in building rockets and spacecraft to deploy the world’s most advanced broadband internet system. As the world’s leading provider of launch services – and the only provider with an orbital class reusable rocket – SpaceX has deep experience with both spacecraft and on-orbit operations.³⁶ ~ Starlink website

Similarly when Tesla have completed development of their Full Self Driving software, they intend to operate a fleet of robotaxis, to compete with the likes of Lyft and Uber.³⁷ Then once that’s complete they intend to use the same AI training software to make a fully autonomous robot!

“Tesla’s like: yeh, we’re gonna solve full self driving and no one’s gonna have to drive in about a year’s time – and by the way we’re making this personal assistant that’s gonna be able to do all the work that humans do right now that suck.”³⁸ ~ Farzad Mesbahi, Former Tesla Program Manager

Conclusions

Overall these architectural qualities, when combined, allow Musk companies unprecedented commercial advantage. Some corporate competitors might possess a few of these architectural assets but they rarely access the resources of adjacent industries to help build their business at the same prodigious rate (see Chapter 13: How X.com Achieves Commercial Supremacy).

Succinctly: Elon is engineering a step change in technology.

*Raptor engine layout for Starship booster – next level technology*

“The marginal cost of launch [for Starship] could be potentially under a $1m, for over a hundred tons to orbit… So essentially it would be ten times the payload of Falcon 9 for 15 times lower cost.”³⁹ ~ Elon Musk/Code Conference

Succinctly: SpaceX culture is a protopia, where they continually seek the best possible state.

Link to next installment: https://chrisprophet.substack.com/p/spacex-evolution-chapter-3

1 https://www.cnbc.com/2017/11/16/tesla-ceo-elon-musk-says-he-was-raised-by-books.html