Elon Musk’s Secret Behind SpaceX’s Million-Dollar Success
Like many great entrepreneurs, Elon Musk took serious risks just to get his companies off the ground, and one of them is NASA space cargo contractor SpaceX. But why, despite the odds and many failures, does he still seem to win?
Elon Musk once promised to put an astronaut on Mars, and this ambition fueled SpaceX. SpaceX was founded in 2002 with the goal of revolutionizing space technology. The company had been quite good at launching satellites and then landing the rockets safely back to Earth. It has led a number of cargo resupply missions to the International Space Station (ISS) for NASA.
A Number's Game
Since SpaceX's financials is not fully detailed in SEC, Fool.com provided some insights as to how SpaceX makes money.
Musk's ultimate goal is to have humans live on multiple planets through affordable, reliable rockets. And so he made buying a rocket as simple as purchasing a car, albeit more expensive.
According to the report, the bulk of its money came from launching satellites into orbit, charging commercial customers a standard rate of $62 million per launch. For more complicated government missions, such as space missions for the ISS, the NOAA satellite launch or the GPS satellite launch for the Air Force, SpaceX charges $20 million more.
The SpaceX website said that the company has "over 70 launches on its manifest," which represent over $10 billion in contracts.
For investors, SpaceX stock is on the pricey side, at 61.5 compared to its competitors Lockheed Martin and Boeing at 13.3 and 11.5 respectively. But it also appears to be both profitable and faster-growing.
In January 2015, Alphabet - the company originally known as Google - invested $900 million for a 7.5 percent stake in SpaceX, thereby valuing the company at $12 billion.
A Risk-Taker's Story
According to SpaceX co-founder Jim Cantrell, much of the company's success is due to Musk's attitude towards failure.
"[I]t doesn't matter if it's going up against the banking system (Paypal), going up against the entire aerospace industry (SpaceX), or going up against the U.S. auto industry (Tesla)," Jim Cantrell told Inc.
"He can't imagine NOT succeeding, and that is a very critical trait that leads him ultimately to success... What separated us, I believe, was his lack of even being able to conceive failure. I know this because this is where we parted ways at SpaceX. We got to a point where I could not see it succeeding and walked away. He didn't, and succeeded."
Many of SpaceX's test launches were failures despite so many trips to orbit. But the company, much like its owner, is known to operate at the edge of possibilities. While the loss of a rocket and its cargo can be costly and inconvenient, these aren't viewed as crippling blows to the company. SpaceX has the reputation to push boundaries and many believe the company can always bounce back after a failure.
"You cannot change the world the way SpaceX is trying to without having significant challenges," Richard M. Rocket, co-founder and CEO of space industry consultancy firm NewSpace Global, said in an interview with Fortune.
"This is all part of the plan, not to experience launch failures, but to push things forward through iteration and innovation."
Musk is prepared to fail just as he is prepared to succeed. Mishaps and challenges happen, but Musk has it all laid out in front of him - a vision and a master plan. And this is why he wins.