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ROCKET MAN : Web entrepreneur focuses on aerospace
in El Segundo Internet mogul Elon Musk — ranked 23rd on Fortune magazine’s 40 Richest Under 40 — represents the youthful boldness of the software industry at its height. With an estimated net worth of $165 million, it would seem the 31-year-old has nothing left to prove in the business world. He co-founded a dot-com at age 22 called Zip2 Corp. that allowed media companies to place content on the Internet. Compaq Computer Corp. bought the company in 1999 for $300 million. Musk is better known for co-founding PayPal, an electronic payment system that sold to online auction giant eBay for $1.5 billion last year. Now, Musk is starting over again. This time, he’s turned away from the software industry that made him rich and is embarking on a space venture. He’s spending tens of millions of dollars to develop rockets for satellite launches. Musk started Space Exploration Technologies, dubbed SpaceX, last June in El Segundo. Last week, the company announced the successful test firing of its Falcon rocket main engine. The space industry is far from his traditional line of work. Yet, as with PayPal and Zip2, Musk can see the possibilities. “I thought there was a significant opportunity to set a new benchmark for low-cost, reliable access to space,” said the South African-born Musk. “The market is looking for an option that’s much better than what’s out there today.” Musk began consulting with people in the business. And he recruited. He hired Tom Mueller away from what was then TRW Space and Electronics in Redondo Beach. “Our hiring approach is to hire the top 1 percent to 2 percent of aerospace engineers,” Musk said. “We want to create an elite quality space company.” Mueller, who headed liquid rocket propulsion development at TRW, now serves as Musk’s vice president of propulsion. Mueller, 42, is helping to design the Falcon — named after the Millennium Falcon in the “Star Wars” movie trilogy. “It was an opportunity I couldn’t pass up,” Mueller said. “It was a chance to develop some new rocket engines and a challenge to try to change history.” SpaceX is initially developing a two-stage rocket to carry small satellites weighing up to 1,000 pounds into low-Earth orbit. The company expects the rocket to be ready for an initial launch by late this year. The Falcon’s estimated launch price will be about $6 million, considered a bargain in the industry. The Falcon’s market pitch will be that it’s inexpensive and reliable. “If you keep it simple and reliable, it keeps it cheap,” Mueller said. “In many ways, that is as challenging as developing a sophisticated engine.” Mueller is using a pintle rocket design revolutionized by his former employer, now named Northrop Grumman Space Technology. A pintle engine uses a single-feed fuel injector rather than the hundreds of smaller holes used in a typical rocket. That lowers the cost while surrendering some performance. Musk also attributes the Falcon’s projected low cost to low overhead — he employs only 20 people — and “a hundred small innovations.” The first rocket they make will compete against engines made by established companies such as Orbital Sciences Corp. Later, more powerful versions would go up against rockets made by Boeing Co. and Lockheed Martin Corp. Musk is entering a market that’s been in a low orbit because of a slump in the telecommunications industry. “In terms of creating a low-cost rocket . . . initially, there was a lot of promise because there were telecom companies that planned to launch many small satellites,” said Peter Arment, a defense and aerospace analyst with JSA Research in Newport, R.I. “But we’ve seen an absolute implosion of the telecom market. So, any near-term launch demands are only going to be driven by the military side, and that’s primarily larger satellites.” But the market could recover in the next few years, allowing a new rocket developer to capitalize, Arment said. That’s what Musk is counting on. “You can start a business when the market is at its peak and you can hit the market in a trough, or you can start when you’re in a trough and hit the market at the peak,” Musk said. Musk started SpaceX in El Segundo because that’s the “center of the aerospace industry in America,” and that’s where he can find the top engineers, he said. He still maintains some bravado from his dot-com days when youth and brashness were glorified. “If you’re a top engineer, you shouldn’t be working for Boeing or Raytheon,” Musk said. “You should be working here.” |
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