SpaceX
SpaceX is the third company founded by Mr. Musk. Prior to SpaceX, he co-founded PayPal, the world's leading electronic payment system, and served as the company's chairman and CEO. PayPal has over twenty million customers in 38 countries, processes several billion dollars per year and went public on the NASDAQ under PYPL in early 2002. Mr. Musk was the largest shareholder of PayPal until the company was acquired by eBay for $1.5 billion in October 2002.
Before PayPal, Mr. Musk co-founded Zip2 Corporation in 1995, a leading provider of enterprise software and services to the media industry, with investments from The New York Times Company, Knight-Ridder, MDV, Softbank and the Hearst Corporation. He served as Chairman, CEO and Chief Technology Officer and in March 1999 sold Zip2 to Compaq for $307 million in an all cash transaction.
Mr. Musk's early experience extends across a spectrum of advanced technology industries, from high energy density ultra-capacitors at Pinnacle Research to software development at Rocket Science and Microsoft. He has a physics degree from the University of Pennsylvania, a business degree from Wharton and originally came out to California to pursue graduate studies in high energy density capacitor physics & materials science at Stanford.
Related Links: www.spacex.com
Last Updated: Wed, Apr 19, 2006
Elon Musk, co-founder, CEO, and chairman of PayPal, shares his background: He was accepted into Stanford but deferred his admission to start an internet company in 1995. His company was zip2 which helped the media industry convert their content to electronic medium. Then, he sold the company for over $300 million and never came back to Stanford.
Musk discusses the role that business school can play for an entrepreneur as well as the possibility of learning outside of school. According to him the, the important principle is to be dedicated to learning what you need to know - whether that be in school or empirically.
The space industry has a very complicated regulatory structure and this has been the biggest obstacle, says Musk
Musk talks about the difference in the customer base of PayPal and SpaceX: PayPal is a consumer product and SpaceX sells rockets, which have very few customers. SpaceX involves individual selling process and no viral marketing.
Musk talks about how there's no one area where costs were reduced in space travel, rather it was every decision across the board. The focus was on simplicity--and simplicity reduces costs. For example, fewer components means fewer components to repair, and to purchase, as well as to test. The avionics vehicles communicate via ethernet--while not novel, it is unheard of, compared to other systems that use cables, he says. In addition, overhead at a 30 person company is much cheaper than at Lockheed or Boeing, he notes.
After his company zip2, Musk started exploring other opportunities on the web. He realized that money required low bandwidth and there was not enough innovation in the financial industry. Musk shares how he arrived at the idea of PayPal.
Musk talks about the restrictions on space travel due to the government involvement. He shares some examples of these restrictions.
Musk talks about how Space X is comprised of 30 people. They outsource all the heavy machining like welding etc. There are no lawyers at SpaceX and Musk explains why.
Musk started by writing some small software over the summer and eventually started talking to some publishing companies who developed interest. 
Early in 2002, Musk started doing some research on space. Every other sector where technology was used had improved dramatically but he did not understand why space exploration not done so. He talks about the idea behind project Mars Oasis" and his visits to Moscow to buy a Russian launch. Following his visit he put together a group of experts to study the feasibility of making lower cost launches in the US."
PayPal did have a few patents but nothing that really mattered, says Musk. He acknowledges the necessity of patents in certain industries but industries like software, where the lifecycle is rapid do not need IP.
There is quite a lot of capital entering the entrepreneurial space sector, says Musk. He shares some models of competitor vehicles and talks about the differences between them and the SpaceX vehicle. The long term goal is to build human transportation vehicle. He talks about the first SpaceX launch, which will happen in 2004.
According to Musk, successful entrepreneur come in all sizes, shapes and flavors. Some things that are important are an obsessive nature with respect to the quality of the product, and really liking what you do, he says.
Musk talks about how SpaceX is reducing the cost of launch vehicles. The focus is on every element of the vehicle and this has involved hundreds of small innovations as well as reducing overheads. In the case of PayPal, there were back office relationships that had to be established but everything was done in parallel, thus saving time.
Musk talks about how PayPal went public in 2002 February. Shortly thereafter a deal with eBay was struck, he says.
Musk thinks that establishing a base on the Moon or on Mars is an enormous opportunity, on a trillion dollar level.
Musk does not recommend space travel to a first time entrepreneur. It is better to start with something that requires low capital.
Musk talks about the problems with space exploration in the US in the 22nd century. The long term plans are to have something cheaper and safer. In Russia, it is safer and cheaper and they have a better track record. They are constrained however by the weakness of the Russian economy. China is expected to launch their first person into space this month, becoming the third country to put a person into the orbit. They have great ambitions and are planning to set up a space station on Mars and eventually sending humans to Mars. In the US, once enterprises enter this space with an entrepreneurial spirit, Musk hopes to see the same growth seen in the internet. Musk talks about efforts that are already in the pipe line.
Musk talks about the common themes between zip2 and PayPal. Both companies had software and internet technology at the heart, were in Palo Alto, CA, took similar approach to growing (building small talented teams), and had a typical silicon valley flat structure. These companies did not worry too much about IP and paperwork - they were focused on building a great product. Often it is better to pick a path and do it than to vacillate on which path to follow, Musk notes.
Musk talks about how PayPal is a perfect case of viral marketing where one customer acts as a sales person by sending money to a friend and hence recruiting another customer. By the end of the second year, PayPal had a million customers with no sales force and no advertising budget, he says.