EL SEGUNDO, Calif. — At just 31, Elon Musk is worth $200 million after selling one Internet business, Zip2, to Compaq for $307 million and then another he co-founded, PayPal, to eBay for $1.5 billion.

You might think he would loaf around his new Bel Air estate or cruise Sunset Boulevard in his McLaren F1 — the fastest production car available.

But Musk is back in the company-launching business. This time though, he's looking way beyond the Internet. Space is Musk's newest frontier.

And an unlikely one at that, considering Musk has no cosmic experience and dropped out of Stanford University's doctoral program in physics before attending a class. Yet he started SpaceX, or Space Exploration Technologies, to build a rocket that he says will cost only a third as much as current models. He wants governments, universities and businesses that need an inexpensive way to get satellites into space to turn to SpaceX.

Though Musk is still trying to find enough qualified employees to fully staff his company, he plans to successfully launch a rocket by the end of the year, in time for the 100th anniversary of the Wright Brothers' first flight.

Musk dreamed up the company after marveling with a friend last year how little innovation there's been in space exploration since man first landed on the moon almost 34 years ago.

He figures that rockets simply cost too much. "We got to the moon ... but have never done anything better since," Musk says.

Starting a rocket company may not be as far-fetched as it sounds. Musk says most rockets now are made by a few large companies such as Boeing and Orbital Sciences, which face little competition and have not had to worry about controlling costs because they were at least partially bankrolled by the U.S. government.

Musk is completely funding SpaceX and placing his hopes on a 68-foot tall rocket called the Falcon Explorer. He says the Falcon will cost just $6 million to launch, which is a third of the going rate.

Although Musk is no rocket scientist, he insists there are many technical reasons why the Falcon will be cheaper to launch and operate. For the layperson, he explains it this way: The Falcon is designed to be "a truck, not a Ferrari."

Current rockets are designed to have ultra-high performance, often to the point of far exceeding the thrust needed to get the job done. But that propulsion overkill comes at a cost — often meaning the launch vehicle costs three times as much as the actual satellite being put into orbit.

Musk says the real mystery isn't why his rocket is going to be so cheap, but why his competitors' cost so much.

If Musk can offer cut-rate satellite launches, it will finally make space accessible to scores of universities and companies eager to do experiments outside the Earth's atmosphere, says Chuck Kline, a spokesman for the Federal Aviation Administration's office of commercial space transportation.

Currently, the high cost means only a handful of launches occur each year. "If Elon gets the price down that low, he will develop a market," Kline says.

Big task, but on track

Musk knows breaking into the rocket business, even for a really rich guy, isn't easy. Upstart Beal Aerospace is a good example.

Founded in 1997 by banker Andrew Beal, Texas-based Beal was forced to shut down in October 2000 because of cost overruns and schedule delays.

Beal blamed the company's failure on the fact the U.S. government has programs that supported competing rockets from Boeing and Lockheed Martin.

Musk is aware of such risks and keeps them in mind while working with his 22 employees out of a converted factory in El Segundo, Calif., in the heart of one of the world's thickest concentrations of defense and aerospace companies.

The key to success, Musk figures, is tapping the top space talent peppered throughout Southern California. Even before moving to the area, in October 2002, Musk cold-called experts in the space industry to brainstorm ideas for a new business.

One, Mike Griffin, was skeptical at first. After all, the former NASA engineer and scientist at Orbital Sciences had seen many rocket companies come and go. But Griffin said if Musk could build a reliable, inexpensive rocket, customers would line up.

To get the job done, Musk is luring top talent from large defense companies that have experience building rockets. Tom Mueller, the company's vice president of propulsion, used to head liquid rocket propulsion development at TRW Space & Electronics.

As crazy as Musk's plans may seem, he's had some success already. The first stage of the two-stage rocket was successfully fired at a 300-acre testing facility in McGregor, Texas, the same test facility was used by the now-defunct Beal.

Musk says the project is on schedule and that the first Falcon will fly Dec. 17. If that launch goes off without a hitch, Musk says he has two customers lined up — one of which is the U.S. government.

Career started with video game

Musk's bold venture into such a challenging business fits his character. Born in South Africa, Musk showed entrepreneurial leanings early. At 12, he taught himself how to write computer code and designed a game called "Blast Star" that blended "Space Invaders" and "Asteroids." He says he sold the code to a computer magazine for $500. "When you're 12 years old, $500 is a lot of money," he says.

But Musk felt isolated in South Africa, being so far from the burgeoning U.S. software industry. At 17, relying on his mother's Canadian citizenship, Musk packed up and moved to Canada by himself. Eventually, he transferred to the University of Pennsylvania, where he earned undergraduate degrees in physics and business.

Then in 1995, Musk was about ready to begin his doctorate at Stanford when he was entranced by the Internet furor going on around him in Silicon Valley. "I could either watch it happen, or be part of it," he says. Short on money, Musk looked for a business that would generate cash quickly. He founded Zip2, which helps newspaper companies put classified ads and other local information on Web sites. He later sold Zip2 to Compaq for $307 million — in cash.

He used that to start his next business, X.com. It offered a variety of banking services to consumers, but the most popular feature was the ability to e-mail money. Later, X.com acquired the rights to the name "PayPal" and focused on improving its e-mail money feature. PayPal soon became a favorite among users of eBay to make payments. Just months after PayPal went public, eBay bought it.

At this early stage, there's no telling if Musk will have the same success sending rockets into space as he did e-mailing money. But he argues there really isn't that much difference between delivering electronic payments and putting satellites in orbit: Starting and growing a business is as much about the innovation, drive and determination of the people who do it as the product they sell.

"This is the chance to fulfill a dream," Musk says.

< More Media