THE DEEP-POCKETED SUCKERS who show up on the Las Vegas strip with more money than skill and view poker as mere entertainment rather than big business, are known to the serious players as whales. Fat, fleshy targets. A chance to score big. So when one wades unsuspecting into the shark-filled strip, word spreads.
When Andy Beal arrived at the Bellagio in early 2001, Vegas had never seen a whale quite like him. Tall and broad with bright eyes and a gentle smile, he sat down at the high-stakes poker table with a tall stack of chips, eager to play. The blinds were $80 and $160, meaning the minimum bet to stay in the hand was $160. After a few raises, the pot would quickly grow to well over a thousand dollars.
Beal played a few hands and grew bored. He had flown in from Dallas to gamble big, and was itching for some action. “Doesn’t anybody play higher around here?” he asked.
With that, the whale made himself known. Fresh meat at the Bellagio. The next day, the professional players were waiting for him to show up, including some who had competed in the World Series of Poker. They started with a $2,000 minimum bet. But after about a half-hour, Beal was getting itchy.
“Can we play bigger?” he asked.
So, they raised the stakes to $6,000. That was fine for a while, then Beal asked to go higher, this time to $8,000.
At the table, Jennifer Harman was starting to sweat. She was a pro who would go on to win two World Series of Poker bracelets, but she had never played such high stakes. This whale was aggressive, his style unrestrained, and he rarely folded, driving up the pot every time. With so much money at stake, the pressure got to even the veteran players who couldn’t keep pace.
“This was not a comfort zone for anyone in the game,” Harman recalled later. “Because this is the highest that anyone has ever played.”
This whale was smart and cunning and relentless. He pressed the one advantage he had, his immense wealth, until the exorbitant piles on the table stretched them thin. They were beginning to think maybe he was not a whale after all.
In fact, he was a billionaire real estate investor whose Texas bank was one of the most lucrative in the country. Beal had dropped out of college but was a genius who dabbled in number theory as an amateur mathematician. After studying Fermat’s Last Theorem, a problem that has baffled mathematicians since 1637, Beal came up with a problem of his own. Given its complexity, it eventually got the attention of scholars in the field, who dubbed it the Beal Conjecture and were stunned that someone with no formal training could devise such a problem. (The conjecture was to prove that if Ax +By = Cz, where A, B, C, x, y, and z are positive integers and x, y, and z are all greater than 2, then A, B, and C must have a common prime factor.)
“It is remarkable that occasionally someone working in isolation and with no connections to the mathematical world formulates a problem so close to current research activity,” wrote R. Daniel Mauldin, a professor of mathematics at North Texas University.
In 1997, the American Mathematical Society sponsored a contest for whoever could solve the problem, and Beal offered a $5,000 prize. The pot grew to $10,000, then $15,000, as Beal pledged to increase it by $5,000 every year it went unsolved up to $50,000. In 2013, the problem was still unsolved and Beal upped the jackpot to $1 million.
At the Bellagio, the pros, who included some of the biggest names in poker, such as Doyle Brunson and Ted Forrest, had decided that to afford to compete against him, they’d have to pool their resources and take turns playing the Dallas banker one-on-one. Together they formed what they called the Corporation. But during their first match, Beal wiped them out, winning some $5 million.
“We’re broke,” Brunson said. “Congratulations. Go back to Texas. Come back another time, and maybe we’ll have some money to play you.”
But Beal didn’t want to go home. He had come to Vegas to play.
After losing $5 million, most people would have thought better about taking the bait. But the Corporation was made up of people who gambled for a living, and they couldn’t resist the possible upside. They reached out to their contacts, and soon were able to borrow tens of thousands of dollars each from people who knew they were good for it. Within the hour, $1 million was delivered to the Bellagio high-stakes poker room. The Corporation was back in business—now more familiar with Beal’s particular brand of play, his style and cadence. After an epic all-nighter, the Corporation won back its $5 million.
Over the years, Beal would return to Las Vegas again and again, taking on the Corporation in some of the most legendary games in Vegas history. During one trip, in 2004, Beal won $11.7 million. On another run, he took $13.6 million from the pros. But later lost $16.6 million in a game.
What the Corporation didn’t know was that the games were a form of catharsis for Beal, a balm against a much bigger loss, where the stakes had been far higher and more significant. Beal had recently started a space company—without any experience in aerospace or engineering or rocket science. Skeptics said he was crazy. That starting a space company from scratch couldn’t be done. That he was going to waste a fortune on what was little more than a midlife crisis.
Only nations could fund space programs. The prospect of a commercial outfit’s succeeding was about as remote as Mars. Beal didn’t care. He was convinced that he could start a space company on his own without federal funding. No matter that it hadn’t been done before. Or that space had been the exclusive domain of governments, not private companies founded by amateurs. As in Vegas, he knew the longest odds led to the greatest payoffs.
At the poker table, anyone could catch a hot streak of cards and get lucky. The space business required step-by-step precision and rigor. It was unforgiving, his industry friends told him. They reminded him of the running joke in the space community, which had attracted all sorts of fantasists whose starry dreams ended up in ashes:
What’s the quickest way to become a millionaire in space?
Start out as a billionaire.
SOON AFTER FOUNDING Beal Aerospace in 1997, Beal took over a former military test range in McGregor, Texas, that was once called the Bluebonnet Ordnance Plant, after the Texas state flower. The sprawling site was part of the World War II effort to build munitions, producing bombs that ranged in size from 100 to 2,000 pounds. While McGregor was once a sleepy town that sat at the junction of the Santa Fe and Cotton Belt railroads, it burgeoned with Bluebonnet’s wartime expansion.
“Bluebonnet was like a city unto itself, complete with living quarters, security and fire protection services, stores, merchants, entertainment venues, bus service and a regular plant newspaper,” according to a history of the site.
After the war, the US Air Force took over, expanding the site and using it to test solid rocket propellants and rockets that would be attached to the outside of aircraft in an effort to give them an extra boost. Over the years, the military would also test motors for missiles, and by the time the plant shut down, it had produced more than 300,000 rocket motors for the Pentagon and NASA.
It sat vacant until Beal Aerospace came looking for a test site. Despite the naysayers, Beal had grand plans to build the most powerful rocket engines since the ones that had powered the Apollo-era astronauts to the moon. Ever the opportunist, he saw space as a business that had been dominated by NASA and the US military, one that had grown sclerotic under the government’s stifling monopoly. That meant, as he would say later, “it was a good opportunity. There was a lot of room for improvement.”
In founding Beal Aerospace, his plan was simple: “Come up with a rocket that doesn’t cost $200 million to launch.” He could build rockets that would cost far less and undercut the market, disrupting an industry ripe to be upended.
This was the approach he had adopted since he was an eleven-year-old kid in the 1960s, buying broken televisions from the Salvation Army for $1 with his Uncle Denny, who taught him how to fix them and then sell them for $40. When he was nineteen, he bought a house in his hometown of Lansing, Michigan, for $6,500 and rented it for $119 a month. After high school, he took a year off to pursue real estate investments.
He enrolled in Michigan State University, mostly to appease his mother, who wanted to see his formidable intellect sculpted in a formal setting. But Beal was anxious to get out into the real world, and his heart was in his growing business. Soon he amassed fifteen properties that he renovated and rented out.
He ended up dropping classes, or taking incompletes for his many absences—and then leaving school entirely. It proved to be a lucrative move. When he was in his early twenties, he bought a federally owned apartment complex in Waco, Texas, for $217,500 at a government auction, even though he hadn’t seen the complex—and had never been to Texas. Three years later, in 1979, he sold it and pocketed more than $1 million. Within a few years, he bought and flipped property after property, making himself a millionaire several times over.
When the savings-and-loan crisis hit in the late 1980s, he found a way to profit from that as well. He started a bank with $3 million of his own money, and started buying up loans at discounted prices. “If everybody else is going broke, that simply means your competition is going away,” he told a Dallas magazine in 2000.
Beal Bank became one of the most profitable in the country, with more than $1 billion in assets by the mid-1990s. Now he was wealthy enough to pursue his interests beyond Earth.
BEAL LEARNED ABOUT aerospace the same way he had learned much throughout his life: he taught himself. He read every book on rocket science, engine mechanics, propulsion. He talked to engineers and scientists and founded Beal Aerospace with the goal of dramatically reducing the cost of space travel.
He took on entrenched contractors, such as Lockheed Martin and Boeing, which had built their businesses by managing the byzantine federal government contracting bureaucracy as much as by creating innovative technologies. And he saw a boom in satellite technology coming, a new market that would need companies that could launch objects to orbit faster and cheaper.
But he was also drawn to the business for another reason, one that would have raised eyebrows in his conservative Texas banking and real estate circles. He feared for the future of humanity. At some point Earth could be hit by an asteroid, wiping out the human race the way the dinosaurs had gone extinct. If humanity was to survive, he thought, it would need to find a way to live on other planets in the solar system.
“I don’t lose a lot of sleep over that,” he said of an asteroid collision, “because it could be a billion years or hundreds of millions of years or tens of millions of years away. But the fact is, it could be 20 years away. And to the extent that our efforts speed up the colonizing of other planets—you just never know all the implications of efforts like this.… So all the knowledge, all the answers to questions that we don’t even know to ask, all that would be furthered by what we were doing.”
Beal hired some of the best engineers in the country, poaching them from Lockheed, Boeing, and Orbital Sciences. They began to make a massive heavy-lift rocket, the BA-2, which would have been the largest rocket engine since the F-1 engine that powered NASA’s Saturn V rockets during the Apollo era. The three-stage rocket would stand 236 feet tall and have the strength to carry nearly 20 tons to low Earth orbit.
In early 2000, the company christened the McGregor facility with a successful test of its second-stage engine, the largest liquid-fueled engine built since the Apollo program. It roared to life before a crowd of a couple hundred, sending a fiery blast that consumed 63,000 pounds of propellant in just twenty-one seconds.
But as his company grew, Beal grew concerned about its prospects. According to reports at the time, he had spent about $200 million of his own money on the venture without taking a cent of taxpayer money from NASA or the military. What worried him most was not the engineering challenge of building such a massive rocket, or the perils of space, but the federal government’s lock on the industry.
NASA and the Pentagon had programs of record, working with such stalwarts as Lockheed Martin and Boeing, and weren’t particularly interested in giving contracts to unproven upstarts like Beal Aerospace. Beal didn’t think it was fair to have to compete against companies that had been subsidized by the US government.
He took his concerns to Washington, where at a 1999 Senate hearing, he testified that “while we are confident of our ability to compete on a level playing field, one of our biggest risks is that well-intentioned government actions might improperly tilt the playing field by rewarding or penalizing various competitors, essentially predetermining the winners and losers.”
The federal government should be in the business of buying services from companies but not helping them build their rockets, he said. Billions of dollars spent on big government programs might be good pork for particular districts where the rockets are manufactured, but they run against free-market forces and would not yield anything, he warned.
“PLEASE, PLEASE do not give companies billions of our dollars to play around with experimental programs,” he wrote in his testimony to the Senate committee. “You will create jobs by spending public money, but you absolutely will not produce low-cost commercial access to space.”
Then in 2000, months after the company had successfully test fired one of its engines—a fiery projection of force designed to show NASA and the aerospace industry that the company was legitimate—the space agency went and did what Beal had feared it would. It announced it would pursue a multibillion-dollar program, known as the Space Launch Initiative, for the development of space vehicles designed to replace the shuttle and be reusable.
Beal saw it as a fatal blow. There was just no way to compete with companies that were subsidized by the government. He had hoped that the space industry would become a truly commercial one, where the government was yet another customer—not the only one. But that day was still years away.
In October 2000, Beal announced that the company would be “ceasing all business operations,” effective immediately. He championed his company’s technical prowess, the “significant advances in low cost hydrogen peroxide propulsion systems.” Company officials were “confident of our ability to ultimately succeed in the development of our BA-2C rocket launch system,” which he noted was the “largest privately funded program ever in existence to build a large capacity space launch system.”
But then the press release read more like a prophecy than a corporate announcement: “There will never be a private launch industry as long as NASA and the U.S. government choose and subsidize launch systems.”
The government, he said, needed to get out of the way, and let the free market take off. Only then would NASA’s monopoly on space end, touching off a new space economy.
“We wonder where the computer industry would be today if the U.S. government had selected and subsidized one or two personal computer systems when Microsoft, Inc. or Compaq, Inc. were in their infancy,” he wrote.
Perhaps one day NASA would be ready to open its doors to the commercial sector. Perhaps his efforts had put a dent in the ceiling, paving the way for the next starry-eyed venture. But as Beal’s failed effort showed, mastering the art of rocket science would not be enough. The next person who desired to start a space company would have to wage war—in Washington, in court, and in the court of public opinion—against the entrenched interests Beal could not overcome. It seemed that starting a successful space company was well beyond even the most hopeful dreams. It was a delusion.
Beal had decided he had two choices: join the establishment and “evolve into a government contractor role like Boeing and Lockheed” that built the systems NASA and the Pentagon asked for, or shut down entirely.
Beal knew a bad hand when he saw one. He decided to fold.
WHEN BEAL AEROSPACE went away, McGregor had lost a valuable tenant—and contributor to its coffers. Now, the city suddenly had a few hundred industrial acres on its hands for lease, and no prospects. Who in their right mind would want to take over a site that was good for testing rockets and little else? Who else would even try to start a rocket company? Beal, the billionaire math genius, had tried and failed, and his was now a cautionary tale that proved the skeptics right.
The McGregor parcel had been a testament to his bold gamble, a symbol of a new, exciting vision of private space. But more than a year later, as the acreage sat vacant, snakes and scorpions moved in. The brush spread. The testing stands started to rust. The site represented abandoned dreams, a wasteland that seemed destined to further degrade under the searing Texas sun.
Then, in 2002, the McGregor city manager got a curious call from a man named Jim Cantrell, who had been scouting sites for his boss. He had looked in the Mojave Desert and in Utah, remote locations where they could operate without worrying about environmental concerns. But none of them had worked out. Then, Cantrell remembered seeing a picture in SpaceNews when it did a story on one of Beal’s engine test firings. He looked up the story, which identified the McGregor test site.
The city manager was affable and accommodating, with a thick Texas drawl.
“How can I help you?” he asked Cantrell.
Cantrell said he was interested in the site where Beal had tested his rockets and was hoping to learn whom he might talk to about taking a look at it.
“Well, you’re talking to the man who owns it,” the city manager said.
Cantrell told him that he worked for a man named Elon Musk, who had made a lot of money on the Internet and had started a company called Space Exploration Technologies. Never heard of him, the city manager said. Still, anyone interested in the property was welcome to visit anytime.
They flew in on Musk’s private jet, a Falcon Dassault 900. Musk looked around and made up his mind quickly. “This is perfect,” Cantrell recalled him saying. Musk signed the lease, and starting in 2003, he had 197 acres, a test stand, and five buildings for $45,000 a year.
Musk was, in many ways, like a younger version of Beal. Instead of repairing and reselling televisions, Musk’s childhood entrepreneurial streak led him to try to open a video arcade when he was sixteen with his brother Kimbal in their hometown of Pretoria, South Africa. But they were stopped by the city because of a zoning issue. “Our parents had no idea,” Kimbal said. “They flipped out when they found out, especially my father.”
Elon had a rough childhood, and a strained relationship with his father. It was clear that from a young age he was exceptional, and his mother sent him to school early, making him the youngest, and smallest, in his class, a prime target for bullies. “It’s pretty rough in South Africa,” Kimbal told Esquire. “It’s a rough culture. Imagine rough—well, it’s rougher than that. Kids gave Elon a very hard time, and it had a huge impact on his life.”
Elon Musk fled South Africa after high school when he was seventeen. First, he went to live with relatives in Canada, where he enrolled in Queen’s University. Then, he transferred to the University of Pennsylvania, graduating with degrees in physics and economics. He had been accepted at Stanford, where he planned to study the technology behind ultracapacitors, hoping to create a better battery that could be used in electric cars.
It was 1995, the dawn of the Internet era. “I thought the Internet would be something that would fundamentally change the nature of humanity,” he said during a speech in 2012. “It was like humanity gaining a nervous system.” So, he told his professor he was taking a deferment to see whether he could start an Internet company, and the teacher said, “Well, I don’t think you’ll be coming back.” That was the last time they ever talked.
He started a company called Zip2 that would help print newspapers get their content online, and it immediately had customers lining up, from the New York Times to Hearst. Musk sold the company to Compaq in 1999 for about $300 million. His next venture was called X.com, an online bank that merged with PayPal. The online financial payment system grew fast, gaining a million customers within two years, “and we didn’t spend any money on advertising.” In July 2002, eBay bought PayPal for $1.5 billion, netting Musk $180 million. He was thirty-one years old.
Even before the sale, Musk was thinking about what he wanted to do next, what benefit he could make to the future of humanity. Beal had said he wanted his efforts to contribute to people’s ability to stretch out into the stars—and to stay. Musk, too, thought something needed to be done.
What if the sun burned out? Or an asteroid hit Earth?
THERE WERE LOTS of big rocks out there, such as the one NASA spotted in the mid-2000s that was big enough to fill a college football stadium. At first, it looked like a fuzzy smudge in the great distance, but NASA’s astronomers didn’t like what they saw. The asteroid was on an orbit to come dangerously close to Earth, so close that it would barrel by beneath the DirecTV and XM-Radio satellites in orbit. This would happen in 2029. The alarmed scientists at NASA even calculated the date: April 13. And, yes, the doomsday near-miss would come on a Friday.
But there was a chance that the asteroid would come so close that Earth’s gravity could alter its orbit, nudging it just along a slightly different trajectory, one that would put it on a course to slam into Earth on another go around the sun seven years later. There was an upside, though. This would not be as bad as the asteroid that had hit Earth millions of years ago, wiping out the dinosaurs and 75 percent of all living species at the time. But it would hit with the force of a bomb, somewhere in the Pacific Ocean. Given the size of the rock, and its speed, the astronomers calculated that it would plunge 3 miles down, creating a massive crater and sending a tsunami wave 50 feet high cascading toward California.
Then, fifty seconds after tsunami number one, the water would collapse on itself, filling in the hole the asteroid created on impact. This would touch off a second tsunami. As killer-asteroid-induced tsunamis go, the first wouldn’t be so bad, penetrating the shore by only a quarter-mile or so. But it would rip all those fancy coastal houses from their foundation, tear away all those nice restaurants with decks used for sipping cocktails at sunset, and suck them out to sea, where they’d be pulverized in the churn of very angry waters. And then, when the second tsunami hit, it would come crashing back, this time armed with tons of serrated flotsam that would act like sandpaper, wiping away almost everything in its path.
Astronomers named the asteroid Apophis, the Greek name for an Egyptian sun god, a serpent known as the “Lord of Chaos,” who symbolized death and darkness.
Thankfully, after studying it for years, the astronomers were able to get a more accurate read of the arc of Apophis’s orbit and determined, to their great relief, that though it would still streak closely by in 2029, it would not hit Earth seven years later. So, no worries for now.
Even if it remained an unlikely event, NASA still deemed it important to monitor the cosmos for danger. There’s even a specific staff assigned to the task, called the Planetary Defense Coordination Office. It sounds like something out of Dr. Strangelove, but it finds and catalogs about 1,500 new near-Earth objects a year, each of which could cause extensive damage if they were to hit Earth.
In the history of the galaxy, the human race has been around for a tiny fraction of time, a mere blink. Life and the rare gift of consciousness did not come with a guarantee that it would continue forever. Asteroids are nature’s way of saying, “How’s that space program going?” as astronomers like to say.
MUSK BEGAN THINKING seriously about that question, and the probability of an “eventual extinction event,” as he called it. The solution: Find another planet to live on. Make humans a multiplanet species, and create a backup hard drive for the human race there, just in case Earth crashes like a faulty computer. The atmosphere on Venus is too acidic. Mercury is too close to the sun. The best bet, he thought, is to colonize Mars.
One night he was driving home from a party on Long Island to New York City with his college friend Adeo Ressi. It was late, and people were asleep in the backseat. But the two friends were deep in an animated discussion.
“We were both interested in space, but we dismissed it as soon as it came up. ‘Oh, that’s too expensive and complicated.’” Ressi told Esquire. “Then two miles would go by. ‘Well, how expensive and complicated could it be?’ Two more miles. ‘It can’t be that expensive and complicated.’ It kept going on like this, and by the time we made it through the Midtown Tunnel into New York City, we’d basically decided to travel the world to see if something could be done in space.”
That night, Musk went back to his hotel, and logged on to NASA’s website, looking for the plan to get to Mars.
“Because, of course, there had to be a schedule,” he said later. “And I couldn’t find it. I thought the problem was me. Because, of course, it must be here somewhere on this website, but just well hidden. And it turned out it wasn’t on the website at all. Which was shocking.”
It wasn’t on the website because there wasn’t a schedule.
Although it had achieved enormous success sending robots to the corners of the solar system, NASA’s human space program was in a rut. Underfunded, overshadowed by 9/11 and the two wars that followed, space travel had become an afterthought. Since Eugene Cernan became the last man to walk on the moon in 1972, NASA had not sent an astronaut any farther than what’s known as low Earth orbit, a few hundred miles up.
Musk, a ravenous reader of science fiction, had expected that by this point in his life there’d be a base on the moon and trips to Mars powered by the robust space program built on the Apollo lunar missions. If in the 1960s, the United States could send a man to the moon in less than a decade, surely there were more great things to come.
He was overcome with what he called a “feeling of dismay.”
“I just did not want Apollo to be our high-water mark,” he said. “We do not want a future where we tell our children that this was the best we ever did. Growing up, I kept expecting we’re going to have a base on the moon, and we’re going to have trips to Mars. Instead, we went backwards, and that’s a great tragedy.”
The more he studied the state of the human space program, the more dismayed he grew. The International Space Station was a marvel, but the way NASA sent astronauts there was, he thought, seriously flawed. The shuttle was mounted on the side of the rocket, like a baby perched on a mother’s back, with no way to abort. As a winged spaceplane, it had to reenter the atmosphere at just the right trajectory, and “even a momentary variance in that can break the vehicle apart. And then, of course, you’ve got no escape system, so if anything does go wrong, you’re toast.”
Then there was the cost. NASA was spending billions a year on a limited program flying a handful of times each year, mostly to the space station, which was only some 240 miles away, the same as an Amtrak commute between Washington, DC, and New York. As astronomer Neil deGrasse Tyson put it, the shuttle program “had gone boldly where we had gone hundreds of times before.”
Musk had studied physics and economics, and saw all this as a big problem set, a challenge that could be overcome with creative thinking—and his newfound wealth. What separated the Apollo era from now was a Cold War rivalry. But also it was money—and political will. After Apollo, NASA had been routinely starved of funding. Space just didn’t capture the public’s attention anymore. Shuttle missions had become routine, boring, noteworthy only when there was a tragedy.
Space was still the exclusive domain of governments, but maybe he could pull off something so audacious it would reignite interest in space, get people’s attention, and boost funding for NASA.
Musk planned a P. T. Barnum–like stunt he hoped would grab headlines and reinvigorate interest in space. He’d go out and buy a rocket and launch a greenhouse full of seeds in a nutrient gel that would hydrate upon landing on the surface of Mars. He would create a life support system on the barren planet and then beam back images of a leafy green plant rising against the lifeless, red landscape. He dubbed the gambit Mars Oasis, and figured he could accomplish it for $15 million to $30 million.
He gathered some of the country’s top aerospace minds for a meeting at the Marriott near the Los Angeles airport. Michael Griffin, who later would become NASA’s administrator, was there; so was Rob Manning, of NASA’s famed Jet Propulsion Laboratory, who served as the chief engineer of Mars Pathfinder, the 23-pound rover that had landed on Mars in 1997. Michael Lembeck, who worked for several aerospace companies, figured Musk’s plan would cost far more than Musk suspected. He scribbled the figure $180 million and passed the note to Manning, who had scribbled down his own number.
The two guesses were within $10 million of each other. There was no way Musk could do this on the cheap. Mars was just too difficult—and far. Lembeck had worked in the space industry for a long time, and was skeptical of the whole gambit, he said, because he had seen “a bunch of bright-eyed folks trying to bring the numbers down to commercial prices” while forgetting the axiom that is drilled into every space engineer: “Space is hard.”
He calculated that Musk was “at least $100 million off from what was doable.” But Musk “didn’t want to hear the no word,” Lembeck said.
Despite the bad news, Musk came out of the meeting undeterred, vowing to press on.
But the cheapest rocket he could find in the United States was the Delta II, which had cost about $50 million. So, he went to Russia three times in search of a refurbished intercontinental ballistic missile. But that, too, was pricey, and too risky for his taste. Buying a rocket, it turned out, was not such an easy endeavor.
The more Musk studied, the more he realized that there had been very little advancement in rocket technology in the past forty years. The rockets being flown by the Russians and the United States at the early part of the twenty-first century were very similar to those used during the Apollo era. To a self-made Silicon Valley tech entrepreneur, this was stunning.
“The computer that you could have bought in the early ’70s would have filled this room, and had less computing power than your cell phone,” he said during a speech at Stanford in 2003. “Just about every sector of technology has improved. Why has this not improved? So, I started looking into that.”
He gathered a group of engineers and began to meet on Saturdays to figure out “what would be the best way to approach this problem of not just launch cost but of launch reliability.”
Musk had read every book he could find on the subject, as Beal had. And he came away convinced that the best way to acquire a rocket was to build it himself, no matter how many times friends told him he was crazy. He shared the banker’s zeal of lowering the cost of space travel, and decided he’d try to upend the government-dominated business model that Lockheed Martin, Boeing, Northrop Grumman, and others had been feasting on for years.
On March 14, 2002, Musk incorporated Space Exploration Technologies. Many of his close friends felt the need to stage an intervention. Even Cantrell, one of his earliest advisers, bailed. As impressed as he was with Musk, “I honestly didn’t see this whole thing succeeding,” he said.
Musk was trying to triumph where even whole countries struggled. At the dawn of the Space Age, from 1957 through 1966, the United States attempted to launch 424 rockets into orbit. Of those, 343 made it successfully—meaning there was a failure rate of nearly 20 percent. During that time, the average number of annual failures—often rockets exploding into angry, red-hot fireballs—was eight. After 1966, there were between one and three annual failures on average, and then one or less a year after 2000. In other words, it took the government’s space program nearly five decades to approach anything even close to reliability.
But it was still prone to catastrophic disaster. In early 2003, the Space Shuttle Columbia disintegrated as it reentered Earth’s atmosphere, killing all seven astronauts.
A billionaire with no experience in space could not start up a rocket company and a manned space program.
Just ask Andy Beal.
KNOWN AS SPACEX, Musk’s new company started out in an old El Segundo factory at 1310 East Grand Avenue, not far from the Los Angeles airport. Musk had sketched out the design of his first creation, a workhorse of a rocket, with a single engine that was purposefully nothing fancy. If others thought of their rockets as racecars, he was happy to compare his to a Honda—utilitarian, reliable, and cheap.
“I would bet you 1,000-to-one that if you bought a Honda Civic that the sucker will not break down in the first year of operation,” he told Fast Company magazine. “You can have a cheap car that’s reliable, and the same applies to rockets.” For about $6 million it would be able to launch over 1,000 pounds of payloads, such as satellites, to low Earth orbit, far less than what competitors charged.
It wasn’t long before the company’s first Falcon 1 rocket was assembled—“Falcon” an homage to the Millennium Falcon from Star Wars, “1” denoting the number of first-stage engines it had. But even though Musk had built a rocket in just over a year, he couldn’t get anyone at NASA to pay attention.
Washington snubbed Musk just as it had Beal. The establishment—the large contractors, members of Congress, even many in NASA—saw him as just another multimillionaire with a toy space company. A dilettante who couldn’t possibly succeed. Few took Musk seriously.
“At the beginning, we had to beg NASA to even pay attention,” recalled Lawrence Williams, SpaceX’s vice president of strategic relations at the time.
By the end of 2003, Musk decided that if NASA wouldn’t come to him, he would go to it. The Federal Aviation Administration (FAA) was preparing to celebrate the hundredth anniversary of the Wright Brothers’ first powered flight with a party at the National Air and Space Museum, and Musk decided he’d show up—and bring his new rocket.
For the event, SpaceX loaded the seven-story rocket onto the back of a custom trailer and hauled it cross-country to Washington, DC. With a police escort, it paraded down Independence Avenue, along the National Mall, hallowed ground that had been witness to myriad spectacles, marches, protests. But it had never seen anything quite like this.
As Musk, then thirty-two years old, parked his rocket outside the headquarters of the FAA, tourists who were headed to the National Air and Space Museum stopped to gawk at the streetside exhibit, even in the freezing temperatures. A shiny, white missile that stretched seven stories long, squatting in the real estate usually reserved for hot dog vendors. A cabbie stopped, agog, as the trailer took up an entire lane of traffic—at rush hour. The spectacle was pure Silicon Valley swagger, like an Apple product unveiling, but before Steve Jobs had perfected the art of hyping a new gadget to the masses.
This was Musk’s opportunity to show off what his little startup had accomplished—to NASA; to the congressional staffers clamoring for free drinks; to the press, eager for a glimpse—even if it had yet to fly.
But it could fly. It would fly. And its presence on the curb created a stark juxtaposition that was clear and calculated. Inside the museum was NASA’s grand past—the lunar lander, the Mercury capsule, the echoes of Apollo enshrined alongside the orphaned dreams it had spawned. Outside was the man who would create a new future—cheap, reliable spaceflight, all with the goal of one day colonizing Mars—a promise as improbable as the young eccentric making it.
He wasn’t just selling his rocket, but what it represented—the crazy idea that a small startup could succeed in space. Beal had gotten further than many had thought, and he’d put a nice dent in the wall that kept untraditional players out of the space business. But if Musk was going to avoid Beal’s fate, he didn’t just have to build reliable rockets—he had to upend the industry’s entrenched hierarchy. That would take more than just sound engineering. It would take bravado and guts—a delusion fueled by ego, luck, and an appetite to fight the establishment relentlessly.
The press release announcing the Independence Avenue stunt not only hyped the new rocket as “a major breakthrough in the cost of access to space.” It derided the competition as being four times more expensive and far less reliable. SpaceX also exploited the fact that NASA was still grounded ten months after the Space Shuttle Columbia blew up, killing all seven astronauts on board.
“With the grounding of the Space Shuttle creating a backlog in hitchhiker satellite deliveries, there is a great need for new means of access to space,” it read, touting the Falcon 1’s ability to eventually be reusable.
At the eight p.m. reception, as the NASA officials, congressional staffers, and FAA officials milled about, Musk made his case in a short speech that SpaceX was the answer to a stagnant space industry.
“The history of launch vehicle development has not been very successful; there really hasn’t been a success, if you define success as making a significant difference in cost or reliability,” he said. “We have a shot with SpaceX, I think, for the first time in a long time.”
He invited a small gaggle of press outside, where spotlights highlighted the rocket and a podium had been set up. “We’re very proud to debut this vehicle, and to do so here in D.C.”
The self-appointed master of ceremonies had even more news to share. This Falcon 1 was just the beginning, he said. The company was already working on a Falcon 5, a far more powerful rocket that would have five first-stage engines instead of just the one. It, too, would disrupt the competition by being far less expensive, he vowed: “It’s going to set a new world record for the cost per pound for access to space. That’s a huge improvement over anything else.”
The Falcon 5 would be big enough to allow SpaceX into the more lucrative market for larger satellites, one dominated by big government contractors. And so this spectacle on the National Mall was more than just a debut for his new rocket. It was a warning shot to such companies as Lockheed Martin and Boeing. Beal had not been able to break their vise grip on the industry. But Musk was armed with a new rocket, and a newly minted fortune that he was ready to burn.
He was coming for them.