If you deal in cars and rockets, you’re going to have crashes and blasts.
But how many crashes and blasts before your business takes a fatal hit?
That’s one of many questions facing Elon Musk, now engaged in one of the most fascinating stories in the history of business, a story playing out in real time.
The spectacular explosion Thursday of a Falcon 9 rocket manufactured by SpaceX, a Musk company, inflames concerns about his management style -- that he’s trying to do too much too fast.
“This raises serious questions about the reliability of the SpaceX launch vehicle,” said Loren Thompson, a defense analyst at the Lexington Institute, which receives money from Boeing Co., a SpaceX competitor. “They are taking this technology to the limits.”
Taking it to the limit, however, is what Musk is all about. Impatient with innovation’s slow pace in traditional industries -- automobiles, energy storage, space flight -- the extraordinarily ambitious entrepreneur has upset the status quo in all three.
His ultimate vision is nothing short of audacious: energy independence for the individual and a colony on Mars for mankind.
You can’t innovate with heavy equipment and not expect mishaps. Experts said SpaceX’s failure rate is in line with industry standards. But a company can’t suffer so many mishaps that product safety comes under serious scrutiny not just for one incident, but in general. Musk isn’t there yet, but a series of recent challenges in quick succession call into question his aggressive timelines.
On Wednesday, the day before the explosion, Musk, SpaceX’s founder and chief executive, was preparing to announce improvements to Autopilot. That’s Tesla Motors’ name for its semiautonomous driving system. Tesla is another company run by Musk.
The Autopilot feature drove a Tesla Model S through the underside of a big rig truck in Florida last May, shearing off the car’s top and killing the driver. The sensor system could not distinguish between the white side of the truck and the overcast sky. Critics popped up to question why such untested technology was even installed in the electric vehicles.
Also on Wednesday, a regulatory filing by Tesla reported serious cash flow issues related to SolarCity, the alternative energy company Tesla plans to acquire. It looks like a family affair: The company was founded by Musk’s cousins and Musk serves as the company’s chairman.
Meantime, Tesla is racing to complete a giant $5-billion battery factory in the Nevada desert, and refitting its Fremont, Calif., auto assembly plant to start rolling out the new Tesla 3 mid-market electric car by the end of 2017.
Privately run SpaceX, public Tesla and public SolarCity are three different companies at present, but events at any of them affects Musk’s public image, and the way he’s seen by customers and investors. (Stocks at Tesla and SolarCity slid after news of the explosion).
Musk has made clear that aggressive timelines are essential to his form of innovation, even if they’re not always met.
Earlier this year, SpaceX said it planned to launch rockets at the fastest pace in its history to try to catch up a backlog of rocket orders. The company said Friday its manifest has grown to 70 missions worth more than $10 billion.
Those were booked by governments and satellite companies around the world, attracted in large part by the company’s low prices. SpaceX has been able to land those contracts by slashing the price to roughly half what the incumbents charge.
Its backlog started clogging in June 2015, when a Falcon 9, carrying NASA cargo, disintegrated midair two minutes after launch.
Thursday’s explosion destroyed a $200-million satellite that Facebook planned to use to provide Internet access to poorly connected regions on Earth. Thompson, the defense analyst, said the incident could keep SpaceX from launching rockets for the rest of the year.
SpaceX pushed manufacturing costs way down by making its own rockets, engines and capsules. At its sprawling factory in Hawthorne, employees are expected to question traditional ways of designing and building rockets and components, with cheaper and better their aim.
Greg Autry, a space industry expert who teaches at USC’s Marshall School of Business, said that Musk’s aggressive cuts to the cost of launching rockets “even scares the Chinese.”
“Elon is by nature a disruptor,” Autry said. “And that has transformed what has been a static and moribund industry.”
In March, an executive at the Lockheed-Boeing joint venture United Launch Alliance lamented the rise of SpaceX in a speech to students at the University of Colorado.
“So then along came Elon Musk,” Brett Tobey, the executive, told the students. “Changed the game completely.”
Tobey boasted that the alliance had launched more than 100 rockets with no failures, but that now the firm was being forced to cut back.
“If they say jump, we say, ‘How high?’” Tobey said of United Launch Alliance’s work for the Air Force. “But we can’t afford that anymore because price points are coming down as low as $60 million per launch vehicle, and on the best day you’ll see us bid at $125 million, or twice that number.”
SpaceX has listed its Falcon 9 price at $62 million. The company believes it can eventually cut prices as much as 30% more by reusing rockets it has successfully landed.
The redesigned Falcon 9, known as the Full Thrust version, flew for the the first time in December. It was a Full Thrust that blew up Thursday.
The latest rocket’s power had been increased by a third. Engineers made the ship’s fuel tanks bigger, and increased the density of the fuel through cooling.
The result: a rocket that could lift heavy loads to higher orbits and still have enough fuel to guide the ship to a landing on ground -- a truly innovative feat it performed spectacularly on its maiden flight.
There is a trade-off, though: A fill-up for the Full Thrust must begin just 30 minutes before launch to keep the fuel super-chilled. That raised questions at NASA because, in manned space flights planned for the future, astronauts would already be on the rocket during fueling. Typically, rockets are fueled well before humans go aboard.
As William Gerstenmaier, a NASA associate administrator, noted at a House hearing in the aftermath of the first Falcon 9 explosion, it was better to be investigating an accident involving a cargo ship than a rocket carrying astronauts.
“It’s excellent to learn on cargo,” he said. “We definitely don’t want to learn on crew.”
For now, SpaceX flights are grounded while the company investigates the cause of Thursday’s destructive blast and surveys the damage to the launch pad.
But Musk did tweet that he’ll finish up that Autopilot announcement by the end of the weekend.