How SpaceX Achieved Lift Off

Tim Fernholz has a lengthy profile of the aerospace company:

SpaceX currently charges $61.2 million per launch. Its cost-per-kilogram of cargo to low-earth orbit, $4,653, is far less than the $14,000 to $39,000 offered by its chief American competitor, the United Launch Alliance. Other providers often charge $250 to $400 million per launch; NASA pays Russia $70 million per astronaut to hitch a ride on its three-person Soyuz spacecraft. SpaceX’s costs are still nowhere near low enough to change the economics of space as Musk and his investors envision, but they have a plan to do so (of which more later).

The secret to the low cost is relatively simple, at least in principle: Do as much as possible in-house, in an integrated manufacturing facility, with modern components; and avoid the unwieldy supply chains, legacy designs, layers of contractors, and “cost-plus” billing that characterized SpaceX’s competitors. Many early employees were attracted to the company because they wanted to avoid the bureaucracy of the traditional aerospace conglomerates.

Fernholz determines that the “question for Musk and his investors now is whether he can be more than just a better rocket builder”:

They want to unlock something far more challenging: A space economy where humans can vastly increase their productivity in the vacuum around our tiny world and beyond, even if nobody is quite sure how yet. Nolan of Founders Fund compares this hopeful uncertainty to the founding of the internet. “It wasn’t clear exactly what kind of business can come out of exchanging information really rapidly,” he says.

For example, if it weren’t so pricey, investors could imagine putting up hundreds of new satellites in lower orbits than existing ones, making their communications and imaging far more powerful. Because of the high launch costs, current satellites aren’t upgraded frequently and are stationed relatively far from earth so that they can last longer—the closer a satellite flies to earth, the faster its orbit decays, leading to its eventual demise. As a result, the electronics in them are relatively old technology.