The space race has one clear dominator: SpaceX. Elon Musk’s competitor, Jeff Bezos, makes the claim that they “could end up with monopolistic control of US deep space exploration.” It is impressive how quickly the company has risen to the top, launching its own rocket into orbit only 13 years ago. Elon Musk has the ultimate goal of giving humans the means to live on other planets, with the current focus being Mars. The soaring cost of such a venture is what led Musk to found SpaceX and develop a “low-cost, reusable rocket capable of making multiple trips.” Falcon 9 now regularly commutes to the International Space Station, transporting both people and cargo. The focus now lies on developing and gaining clearance for Starship, the rocket that will be used to fulfil Musk’s goal of one day “establishing a human colony on Mars.”
How did SpaceX reach its Current Position?
The company’s financial plan, along with the reusable Falcon 9 rocket, have both been key to the success of SpaceX and its Starship venture.
The intensive prioritisation of the low-cost and reusable criteria are the foundation of Falcon 9’s success. One of the most expensive parts of the rocket, its engine, is efficiently designed and created using 3-D printing and its boosts are made to be reused – which are both critical cost saving factors. It is estimated that SpaceX was able to decrease its costs tenfold by taking an alternative route from traditional government contracting. Instead, the company designed and manufactured its own rocket components, rather than outsourcing from suppliers, and took on testing risks itself, rather than relying on payments from NASA. SpaceX’s finance plan, in conjunction with Tesla, of having access to cheap capital has allowed the company to raise over $6.5bn from the private equity market due to the high valuation investors have given to Musk’s business.
SpaceX against Blue Origin
This funding advantage has become the source of some competitors’ complaints; they lack access to similar financial benefits, which they claim has stifled scaling and pushed them out of the market. One of SpaceX’s main competitors is Jeff Bezos’ Blue Origin. In 2012 – around the same time that Musk was still solving issues with his Tesla launch, and before he could concentrate on SpaceX- Bezos had grand plans for Blue Origin.
So how has SpaceX so quickly and indubitably outperformed Blue Origin?
The most obvious and widely discussed answer to this question is SpaceX’s strict cost minimising objective. Any company purchase exceeding $10,000 has to be personally approved by Musk, whereas Blue Origin is “riddled with poor cost estimating.” Management consultants discovered that the two companies had very differing cultures and leadership styles. SpaceX has a highly motivated workforce with “relentless 24/7 operation with 80-hour workweeks.” The engineers do not complain about these conditions, but rather are inspired and result-focused. They may earn lower salaries than those at Blue Origin, but are rewarded with stock options for top performance. In contrast, Blue Origin is a “ghost town on weekends,” and engineers complain about the “rigid hierarchy,” which does not favour innovative ideas. There is also an unsustainable focus on speed, which prevents the company from properly addressing problems and finding the best solutions. The high involvement of Musk with his engineers and openness to unorthodox ideas has been a catalyst to the firm’s success.
There is clear rivalry between Bezos and Musk. In the race to bring Internet connection from space to Earth, Blue Origin recently challenged SpaceX’s application to modify its plan. SpaceX responded to this challenge by stating that the competitor’s track record “amply demonstrates that as it falls behind competitors, it is more than willing to use regulatory and legal processes to create obstacles designed to delay those competitors from leaving Amazon even further behind.” Amazon condemned Musk’s attitude towards regulations, asserting their perspective as: “rules are for other people, and those who insist upon or even simply request compliance are deserving of derision and ad hominem attacks.”
The race to extend life on and explore space continues to advance, but also appears to be developing into a personal competition between two billionaires.