The year is 2008, and the world is on the brink of collapse. A year so catastrophic that the American stock market was in freefall, billion-dollar corporations were crumbling into dust, 600 billion dollars of assets collapsed overnight, 2.6 millions of jobs vanished into thin air and S&P was down by 40%. Because this was the 2008 crisis, the worst economic crisis of the century!! And during this time, If you asked anyone in America about starting a business,2434 they would’ve called you crazy!!! But In the middle of this chaos, there was one man who took a leap of faith so bold it could’ve destroyed him. He bet every last penny he had on a rocket. Yes, a freaking rocket. By this time, His company has already 3 launched rockets only to see them fail miserably and now he is 1 inch away from bankruptcy. So this launch could either make him a legend or the stupidest businessman in America!!! And as the clock ticked down to launch, America saw something that changed the world forever!!! Elon Musk just launched the falcon 1!!! That day little did the people of America know that this rocket is going to turn Elon musk into the richest man on earth!!
The Story of Elon musk’s wealth
The Story of Elon musk’s wealth started in the late 1990s and this era from the 1990 to 2000 was an iconic era in American history because this was the dot com Boom. Now the dot com bubble was the most euphoric time in America most people called it the Gold Rush of the dot com bubble because every person who had a dot com as in every person who had a website got a million dollars in funding without business plan yes you could do anything with this website you could sell books you could sell pet products you could send wedding invites or simply play the goddamn radio on a freaking website.
All you needed is just a website if you had a website you could make a million dollars with or without an idea with or without a business plan this was the Gold Rush of the .com bubble when Elon saw the tech Gold Rush he dropped out of Stanford and started an online city guide and sold it to compact for $37 million out of this deal he got 22 Million then Elon built an online payment platform called x.com which then got sold to eBay for 1.5 billion and Elon Musk made $180 million out of PayPal so in just 3 years Elon had another $180 million in his bank account after taxes this is crazy right but you know what’s even more crazier he spent his entire $180 million of Fortune in three absolutely bizarre ideas he put 100 million in a space startup called SpaceX he put $70 million into a car company called Tesla and he put $10 million into a solar startup called Solar City now do you realize how big a deal this was Elon Musk was entering not one not two but three of the most ruthless Industries on the planet all at the same time each of these industries had Titans that could eat three Elon musks for breakfast in space while Elon Musk had no background and no degree in Aerospace he he faced the unshakable Giants named boeing and Lockheed while SpaceX was a baby startup scrapping for funding LED Martin was pulling in $ 42.7 billion in sales and Boeing’s Revenue stood at $6.9 billion and then came cars while Elon had absolutely no background on car manufacturing the industry had Titans like Ford which stood at a market cap of 26 billion and Toyota had already crossed $100 billion in market cap these companies had been dominating the Auto industry for over a century but you know what Elon did. He came out of nowhere and told the entire world that he will build a car that’s better than Ford, better than General Motors and better than the legendary Toyota Motors.
On one hand while NASA found it difficult to land on Mars Elon said he doesn’t just want to land on Mars he wants to call colonize Mars and build cities on Mars sounds ridiculous right well it was ridiculous so everybody called him crazy they said Elon is building toys not Rockets Tesla is not a car it’s a joke and they said no one wants to drive an ugly quiet car and these were not stupid people on Twitter these were experts who spent decades into engineering and they didn’t just criticize him they laughed at him, This hurt Elon Musk a lot but little did those people know that Elon Musk is just about to pull off a miracle. What exactly did Elon Musk do with very little money with no experience and with all the Titans against him? How did Elon Musk launch his rocket? and how did he turn SpaceX into the most valuable private company in the world? and interestingly the story starts with the Russians in the year 2001.
As soon as the Russians started mocking him in the first sentence itself Elon was shaken he flew hours just to be mocked by a bunch of Russians who did not know a thing about engineering but Elon knew that he was in Russia and not the United States of America. Now Elon is shaken so he makes a better offer, so now Elon thinks yeah the Russians are maybe ready to sell the Rockets. This is when Elon realized that the conversation that he was having was absolutely pointless and that is how the meeting ends now you tell me guys how would you react to this situation most people would just get angry give up or they would just go ahead and find a different supplier right but you know what Elon did Elon literally decided to build his own rocket and this wasn’t just a random dream it was based on a genius framework a framework so powerful that while the Russians quoted $18 million SpaceX launched their rocket at just $6.7 million and this cost was so miraculously low that it even left giants like NASA and boeing absolutely stunned this framework is famously called the idiot index to tell you about it while Elon was coming back from Russia he tried to understand the actual cost of making a rocket and Elon found that the Rockets were primarily made out of aluminium Alloys titanium copper and carbon fiber so he calculated that by sourcing these materials directly the raw materials for a rocket cost less than 2% of the final price tag for example a rocket that cost $60 million to buy only requires about $2 to $3 million worth of raw materials so he went to his team and he asked them why are we paying $60 million for something that cost only $2 million to build so Elon spoke to his team and made a chart on one side was a raw material cost and on the other side was the purchase cost and he said that the ratio of the purchase cost to the raw material cost has to be the lowest and whenever it is very high the team must look into cost cutting for example there is a component called turbo pump which is responsible for delivering Fuel and oxidizer to the combustion chamber in a rocket now the raw material cost as in the cost of the steel and aluminium was just $10,000 but the purchase cost from A supplier was $200,000 so do you realize that’s a 20x markup so whenever this index was as high as 20x elon’s approach would be to question this ratio and he would ask why are we paying $200,000 for something whose material cost only $10,000 this is how he asked his team to question every component of a rocket and when his team looked deeper they realized that the domain of aerospace engineering was so messed up and so inefficient that the suppliers were overcharging locked and boing by 100 times for something that could be made out of a college Warehouse sounds unbelievable right look at this.
NASA’s policies were so dumb that they used to buy a single latch for $1,500 or 1.3 lakh rupees so Elon was like why the hell are we paying $1,500 for a latch and the engineer responded by saying uh because Mr musk these latches are Aerospace grade latches so Elon was like what does it do special and as it turns out those latches did nothing but closed the goddamn door so you know what Elon did he literally went to a hardware store got hold of a $30 bathroom latch and banged it on the table to say this will close the door in the Moon Mars and my godamn bathroom and that is how by getting a bathroom latch Elon saved $1,470 per latch and brought down the cost of a component by 49 times so assuming 200 latches per rocket you can imagine how much Elon saved simply by getting hold of a $30 component similarly Elon drastically cut cost for his 5,000 T SpaceX Starship by simply switching from Aerospace grade carbon fiber to a stainless steel material and this made such a huge difference to their cost that while the Aerospace grade carbon fiber cost $200 per kg the stainless steel cost him just $3 to4 per kg so again it saved SpaceX millions of dollars in material costs on top of this by investing heavily into Cutting Edge engineering Elon did The Impossible Elon Musk built reusable rockets that could launch themselves and land back on Earth in the most mesmerizing way possible.
That was mind-blowing right and you know how magical these reusable Rockets were to the cost of SpaceX look at this the cost of a rocket can be broken down into three parts the first stage contains engines and fuel tanks and then comes payload fairing which protects the payload satellites cargo and crew during the intense forces and vibrations of the launch and then we have the second stage which is responsible for delivering the payload to its final orbit this stage contains a smaller engine and avionic system for navigation and control and if you look at the cost breakdown if a rocket cost 60 to 880 million 36 to $48 million go into the first stage 12 to $16 million go into the second stage and 12 to 6 million go into Fairing and launch costs but you know what the Titans were doing while boing let their first stage of the Rockets burn up in the atmosphere or crash into the ocean like a discarded piece of trash SpaceX changed the game the Falcon 9 doesn’t just launch it comes back.
And after delivering the second stage in a breathtaking feat of engineering the first stage of the rocket lands vertically on its station and after landing this rocket is ready to fly again while Boeing payload fairing is discarded into the ocean SpaceX fairings deploy parachutes to slow their descent back to the Earth in the oceans and then the SpaceX team literally sails on a ship to bring these fairings back to the station so if you see it’s only the second stage that SpaceX does not reuse because it’s obviously stationed in the orbit this is how through recovery in house production and reusability SpaceX brought down the cost of the Rockets to such an extent that while the Russians qued $21 million for a single rocket SpaceX launched their first rocket for just $6.7 million and if you think it was easy it wasn’t SpaceX burned millions of dollars their Rockets exploded and SpaceX tared on the brink of bankruptcy in fact at that time Elon Musk himself admitted that if the next launch doesn’t work SpaceX will go Bankrupt.
But then ladies and gentlemen on 28th of September 2008 as the entire world grappled with an economic nightmare SpaceX pulled off the impossible Falcon 1 the first rocket was launched and it reached orbit. it wasn’t just a victory for SpaceX it was a declaration to the world that Innovation doesn’t come from playing it safe it comes from risking everything to build what others call impossible space X didn’t just build Rockets they built hope and in that moment amidst the wreckage of the global financial crisis they proved to the world that even in the darkest times the light of innovation can ignite the star.
How on Earth does SpaceX make money today?
Well as it turns out Elon musk’s extraordinary cost cutting strategy gave SpaceX three incredible superpowers firstly NASA space shuttle used to cost $1.5 billion to launch 27,500 kg into space that’s about $54,500 per kg and then came SpaceX with its Falcon 9 you know how much they did the same job for they did it 20 times cheaper at just $62 million so while companies like Boeing were launching a kilo of payload at $54,500 SpaceX did it for just $2,720 per kg and guess what when SpaceX did what companies like Bo could do at 120 of the cost NASA started giving billions of dollars worth of contracts to SpaceX secondly because of this cost reduction in 2023 alone they didn’t just stop at 10 20 or even 50 launches SpaceX alone in 2023 launched 100 Rockets now do you realize that’s not scaling up that’s dominating the game and while Boeing and loid made new rockets again and again SpaceX simply reuse the same rockets and launched them back into the orbit as a result SpaceX captured 60% of the global commercial launch market and lastly since SpaceX did everything in house the research and development allowed the company to innovate faster than any competitor so much so that while Boeing Starship failed to bring Sunita Williams it is crude Dragon spacecraft made by SpaceX that is now going to bring her back in February this is how SpaceX went from being a baby startup to now becoming a market leader in the Aerospace IND industry so while the Russians underestimated Elon due to the blindness of their own ego Elon worked hard with humility and turned every failure into a stepping stone to success while NASA’s experts called him crazy Elon turned his craziness into groundbreaking Innovation and while boing and loin Martin crumbled under their own weight Elon and SpaceX took one small step at a time until those steps became giant leaps that changed the course of humanity forever and as for the Russians they still haven’t sent a bottle of Vodka to Elon this is a story of how one crazy man is single-handedly pushing the fabric of humanity with grit and persistence and as Steve Jobs rightly said those who are crazy enough to think they can change the world are the ones who do
