Man in the Moonshot: Elon Musk and SpaceX

Going for the Moonshot. Despite claims made by sponsors and participants, many moonshots are not moonshots at all, but are incremental improvements on existing technologies. Also, Moonshots are not called “Freeshots,” and the potential financial, reputational, and other collateral damage from a failed moonshot should be considered. SpaceX is a rare example of a company that has been set up for a successful moonshot (no pun intended).

Going for the Moonshot is one of the Seven Deadly Stupidities.

“When something is important enough, you do it even if the odds are not in your favor.” Elon Musk

Love or hate him, Elon Musk has done a lot of cool stuff. Depending on the day, he is often considered to be the richest person in the world. Early on, he merged his online payments company with another similar business and presto, PayPal was born. He was an angel investor in Tesla and went on to become its Chairman, CEO, and largest shareholder. He acquired Twitter and took it private. But most interesting to our discussion of moonshots is Space Exploration Technologies Corporation, or as it is more commonly known, SpaceX. 

From the SpaceX website:

The company was founded in 2002 by Elon Musk with the goal of reducing space transportation costs and to colonize Mars. 

Elon Musk talks space travel — 20+ years ago

I don’t know about you, but this sounds like a moonshot to me. Nothing in here about incremental improvement. We’re going make space travel affordable, we are going to Mars, and we will live there. Musk has been saying the same thing for almost twenty years. He has not wavered.

Since its founding, SpaceX has launched and recovered rockets big and small, has docked with the International Space Station and, in a miraculous feat of engineering, re-uses its rockets. The rockets are launched, go into orbit, complete their missions, and return to Earth to land on a platform in the middle of the ocean. We can go on about all the things that SpaceX does, but we should focus on why it is able to do them.

Over twenty years, billions of dollars of outside capital have been raised by the company, yet Musk still has a controlling interest. Why is this important?  Unlike Alphabet, Amazon, or Microsoft, whose moonshots are under the glaring eye of its public investors, as well financial sharpshooters like Alphabet CFO Porat, SpaceX is still a private company controlled by one individual. To put it simply, at SpaceX, Musk answers to no one.

Musk didn’t spread his bets over dozens of potential moonshots and he was stellar at raising money at higher and higher valuations that let him retain control of the company. He handpicked a management team whose core has stayed with the company for twenty years. Contrast this to the Google X approach of preaching failure and throwing resources at hundreds of ideas.

To think of it differently, SpaceX was set up for successful moonshots (or should they be called “MarsShots?”). Its passionate founder was heavily involved and funded much of the early and riskiest SpaceX years with his own money. Maintaining control of the company allowed Musk to set the rules. For new investors, here are the rules, take them or leave them because I have people lining up to invest.

Will SpaceX make it to Mars? I have a hard time betting against the company for the reasons stated above. Its current timeline is a Mars landing by 2029. It is interesting to note that two other new startups, Relativity Space and Impulse Space, both claim they will go to Mars in 2024. Neither has had a successful launch yet, while SpaceX has had 200 of them. Perhaps after the layoffs at Google X, its marketing people may have moved over to Relativity and Impulse.

Update

In July 2023, SpaceX raised $750 million of new capital at a valuation of $150 billion. In other words, SpaceX gave up ½ of one percent of its ownership in exchange for ¾ of a billion dollars. Later in 2023, shares of SpaceX traded privately valued the company at $180 billion.