SpaceX: How Elon Musk Started a Rocket Company

After selling PayPal, Musk wondered why NASA had no concrete plan to send humans to Mars. In 2001 he conceived "Mars Oasis," a mission to land a small robotic greenhouse on Mars that would grow plants and, he hoped, reignite public enthusiasm for exploration.^[1][2]

He needed a cheap rocket. In late 2001 and early 2002 he traveled to Moscow with a small group, including aerospace engineer Jim Cantrell and future SpaceX investor Adeo Ressi, to try to buy refurbished intercontinental ballistic missiles. The talks went badly, and the prices quoted were far beyond what he wanted to pay.^[1][2]

On the flight home, Musk began calculating the cost of the raw materials in a rocket — aluminum, titanium, copper, carbon fiber and fuel. He concluded they amounted to only about 2% of a typical rocket's price.^[2][3] The rest was the result of an industry built around expensive, disposable hardware and cost-plus contracts.

If SpaceX designed and built most of its parts itself and reused hardware wherever possible, he reasoned, it could cut launch costs dramatically.^[2][3] He committed about $100 million of his PayPal proceeds, and SpaceX was founded in 2002, operating out of a warehouse in El Segundo, California.^[1][2]

Musk recruited propulsion engineer Tom Mueller, who had built large rocket engines in his spare time, to lead engine development, and hired a small, young team willing to work long hours.^[1][4] Gwynne Shotwell joined in 2002 as the company's first head of business development and later became its president and chief operating officer.^[1]

SpaceX's philosophy was vertical integration and rapid iteration: design, build and test hardware in-house, learn quickly from failures and improve. The company developed the Merlin engine and the small Falcon 1 rocket, and moved to a larger factory in Hawthorne, California.^[1][4]

Falcon 1 flew from Omelek Island in the Kwajalein Atoll. Its first three launches, between 2006 and August 2008, all failed. With money nearly exhausted, SpaceX assembled a fourth rocket from spare parts, and on September 28, 2008, it reached orbit — the first privately developed liquid-fueled rocket to do so.^[1][5][15]

In December 2008 NASA awarded SpaceX a $1.6 billion Commercial Resupply Services contract, securing the company's future.^[1][6]

The Falcon 9, powered by nine Merlin engines, first flew in June 2010. In May 2012 SpaceX's Dragon became the first commercial spacecraft to berth with the International Space Station.^[4][6]

SpaceX then pursued what many experts said was impossible. On December 21, 2015, a Falcon 9 first stage landed upright at Cape Canaveral after launching satellites; in 2017 SpaceX re-flew a landed booster.^{[4][7][10][11][12]} Reuse transformed the economics of spaceflight, and Falcon 9 went on to fly more often than any other rocket in history, with individual boosters flying dozens of times.^[4]

On May 30, 2020, SpaceX's Crew Dragon carried NASA astronauts Doug Hurley and Bob Behnken to the space station — the first crewed orbital launch from U.S. soil since the Space Shuttle retired in 2011.^{[6][7][13][14]}

SpaceX has since become the dominant launch provider in the world, built the Starlink satellite-internet network and developed Starship, the largest rocket ever flown.^[4][8] In 2026 it acquired xAI, completed a record initial public offering on the Nasdaq under the ticker SPCX, and continued preparing Starship for missions to the Moon and Mars.^[8][9][16]