Hondas in Space

If you'd never met Elon Musk, it would be easy to dismiss him as just another dotcom dilettante, a young buck with great timing who grew up in the thrall of Star Wars and now has the scrilla to build his own space playground. But you'd be dead wrong. Musk, a tall blond South African native with an elfin look, a deliberate way of speaking, and a very dry sense of humor, has been trying to shake things up since childhood. At 12, he sold the code for a video game he designed; at 17, he moved to Canada for college; he later transferred to the University of Pennsylvania for a physics and business degree, and dropped out of graduate studies at Stanford on his first day there in 1995, convinced that the Internet was going to be huge. Unable to find a job, he started Zip2 Corp., which helped media companies put content on their Web sites, at the age of 23. In 1999, Musk sold it to Compaq for $300 million, netting more than $20 million.

Next came X.com, a wildly ambitious attempt to reorder the world's financial system. "He's always been a sort of endearing mixture of flightiness and practicality," says Michael Moritz, a venture capitalist at Sequoia Capital Partners and an X.com investor. It turned out that X.com's most successful concept was a secure online payment system. It bought Confinity, a competitor with a similar technology called PayPal, in 2000, and took the name. Musk ran PayPal for several months before leaving, but remained the largest shareholder. In July 2002, eBay bought it for $1.5 billion, lining Musk's already deep pockets with another $165 million in stock.

Next came the final frontier. Distressed to find out that NASA had no defined plan for sending humans to Mars, he began researching the industry and realized that aerospace defied Moore's Law: Instead of access to space getting cheaper over time, it had gotten costlier, without getting more reliable. "We sleep easy knowing that next year's software will be better than this year's," he says. "Rockets' [cost] actually gets progressively worse every year."

Musk smelled opportunity. Why, he wondered, were rockets so expensive? He decided to use some of his cash to bring together the world's top space experts to find out in early 2002. The group met at the Hyatt near the Los Angeles airport over several Saturdays, discussing whether it was possible to build a better rocket. "He asked, 'How much cheaper?' " says Mueller. "A factor of 3? I said a factor of 10, if you could keep the government off your back."

At the meetings, the group helped Musk begin designing his better, faster, cheaper rocket. Many of the initial decisions were made by Musk, who has surprised people with his technical know-how (and who is also the company's chief technology officer). "I am very impressed with how fast he came up to speed," says Philip McAllister, director at Futron Corp., an aerospace consulting firm. "He seems to have gotten a good grasp on not only the technical hardware but how the business works."

Although everyone at SpaceX is working on the Falcon I, Musk isn't shy about proclaiming a much bigger goal. "We work harder than other companies," a holiday party flyer reminds staffers, "because we are quite literally shifting the course of history to open space for humanity." Ultimately, says Musk, he wants to make space travel attainable by ordinary people. "I think human exploration of space is very important," Musk says. "Certainly, from a survival standpoint, the probability of living longer is much greater if we're on more than one planet."

But if Musk seems to veer off into Twilight Zone territory here, he just as quickly circles back to hard reality. After all, he has spent more than $50 million of his own money so far and says he's willing to go as high as $100 million -- maybe higher. "I tell my wife that if this fails, we'll have to move into my parents' basement," he laughs.

He acknowledges that the failure rate for a first-time launch is generally high, and says that he's willing to fund as many as three of them before giving up. Still, he professes a giddy optimism that the maiden launch will be successful. "Touch the bloody wood," Musk says, putting both hands down on the table. "I think we've got well over a 90% chance of success in the first launch."

Can Musk and his merry band pull it off? Not everyone is rooting for them. Earlier this year, Northrop Grumman sued SpaceX over the pintle engine, which was developed by TRW, now owned by Northrop. Northrop claims that SpaceX violated trade secrets, but SpaceX has countersued, claiming that Northrop is trying to extend a patent that has expired with its trade-secrets argument. The case is in discovery, and could put a freeze on the Falcon I, although no one seems concerned. There's also the prospect that the government, still the biggest source of business in this market, will continue to favor the big defense companies. "They absolutely can be successful, but the biggest risk is government," says Andrew Beal, CEO of Beal Bank, who spent more than $100 million on an earlier effort to build a private rocket. "My advice is to be careful."