I only started SpaceX in basically July of 2002. The full company name is Space Exploration Technologies. In 2002 SpaceX basically consisted of carpet and a mariachi band, I really like mariachi bands. That was it. I don't know what the freak I was doing, I was like clueless. When I started it wasn't with the perspective of we'll just take over the world with awesome rockets. We didn't even know what rocket we were making in 2002.
I had many people try to convince me not to start the company. Really tried their best. Many of my closest friends definitely thought I was crazy. If there was anything they could have done to stop me from starting a rocket company, they would have done it.
There's some other friends of mine that had been involved in a rocket startup: they said it was a terrible idea. One of my best friends compiled a long video of rockets crashing, and blowing up, and forced me to watch the whole thing. I've seen them all. Let me tell you he wasn't far wrong. I had a lot of friends of mine trying to talk me out of starting a rocket company, because they thought it was crazy, very crazy for sure, and they were not shy of saying that. I agreed with them that it was quite crazy. Real crazy, if the objective was to achieve the best risk-adjusted return, starting a rocket company is insane, but that was not my objective. The thing is that their premise for talking me out of it was, well, we think you're going to lose the money that you invest. I was like, well, that was my expectation anyway, so I don't really mind if I lose, I mean, I mind, but it's not like I was trying to figure out the rank-ordered best way to invest money, and on that basis chose space. It's not like that I thought, wow I could do real estate, I could invest in shoe making, anything, and whoa, space is the highest ROI, that wasn't the premise.
When I started it was not with the expectation of success. I thought that the most likely outcome was failure. But given that the thing I was going to do previously, which was the Mars greenhouse mission, I'd expected that would have 100% likelihood of losing all the money associated with it. If a rocket company has less than 100% chance of losing all the money associated with it, then it was therefore quite a bit less risky than the thing I'd been doing before. Like I said, I thought it's probably not going to work, but for the philanthropic mission, the greenhouse to Mars, I was 100% certain of losing the money that I put in there. I kind of thought that we had a really tiny chance of succeeding, like maybe on the order of 10% or something, so being only 90% likely to lose it for SpaceX seemed like an improvement.
When starting I heard this joke so often it was ridiculous. The joke was, 'How do make a small fortune in the space industry?' The punch line being 'Start with a large one.' I got to a point that I heard the joke so many times that I would just get to the punch line and say, 'Well, I want to figure out how to turn a large fortune into a small one. That was my goal.' and they're like, 'Wow! How did he know that?'
The goal, really, was to make as much progress as possible, to advance rocket technology to the point where hopefully we can establish a colony on Mars, or at least get as far along that way as we can. We'll just try to go as far as we can.We're not certain we’re going to develop all those technologies, but at least we're going to try. That was what we started off with in 2002, and really, I thought maybe we had a 10% percent chance of doing anything — of even getting a rocket to orbit, let alone getting beyond that and taking Mars seriously.
It was tough going there in the beginning. Going from PayPal to SpaceX was definitely a huge learning process, because I never build any physical hardware myself although I do have a physics background, and come from a very engineering centric household. I'm more engineer then anything else I guess. I had basically just done Internet software, I really didn't know anything about space engineering or rocket engineering, but I learned quite a lot. I build like a little model rocket as a kid, but I never had a company that built something physical, so I had to figure out to build these things and bring together the right team of people.
I debated whether to start SpaceX in Silicon Valley or Southern California, and in the end I decided to do Southern California, because there's a larger base of aerospace engineering talent in Southern California.
I initially decided to make a small rocket called the Falcon 1, that was capable of putting about half a ton into orbit. This did not go smoothly. It was quite difficult to attract the key technical talent and, of course, I was quite ignorant of many things. I made lots of mistakes along the way.
I didn't do any market research, so maybe that's why I did it. If I had done market research I would probably have not done it.
While I didn't do any market research, I certainly read about what rockets existed in the world, what are they launching, and that kind of thing. At a minimum we should be able to go and compete in the existing markets and have some kind of a business, even if it wasn't really breakthrough or anything like that. I don't think there's any kind of market research that you can do that would say, 'OK, if you can reduce costs by this amount, then there will be this extra number of launches that occur as a result of that reduced price.' I think you just have to do it and you hope that it turns out to be true, and make sure that there's a backup plan, that you at least have booked some value, even if you don't achieve the full potential, that you've still got some valuable enterprise that's capable of at least serving the existing market. That was really the strategy that SpaceX had. We'll at least serve the existing satellite launch market, and hopefully the Space Station, and if that's all that happens then well, it's not a terrible thing.
Hopefully by lowering the costs, and improving reliability we can expand the market substantially. I think if we did there will be others that enter the market and compete with our business as occurred in the airline business. There was a time when no one could possibly consider aircraft as a transportation mechanism. They were things that you maybe got a little joyride in, and they were very dangerous, and lots of people died all the time on them. If you said in 1920, probably any time before Lindbergh even, ask your average person on the street if they would be able to fly from New York City to Europe nonstop in an aircraft they would have said, 'no way! That's ridiculous.' so I think you have to approach this with some degree of open faith.
It was just a huge learning process. Initially I had thought that I would hire someone to be to chief designer for the rocket, but I actually couldn't find anyone who was willing to join who was good. People were willing to join who I thought couldn't do the job, and those who could do the job weren't willing to join, so I ended up being the chief designer of the rocket.