The SpaceX Effect – Companies founded by SpaceX Alumni
From Jeff Burke and Michael Madrid:
Note to readers: This is my first co-authored piece. Michael Madrid and I bonded after the Varda Space piece ~1.5 years ago. Since then, we have wanted to write together. There are a few things to know about this piece:
This is just part one. We completed a deep-dive on SpaceX culture (similar to my Sutter Hill Ventures piece) that can be found here.
This piece has been a work in progress for months. We have spoken to many SpaceX’ers in the process, and we feel good about a lot of the content you will see! Enjoy!
The scale of Elon Musk
Elon Musk is one of the most captivating people on the planet. Not only is he the richest man in the world, but he captivates millions daily as a master meme lord. While SpaceX and Tesla are well documented, Musk’s impact on US technology extends far beyond that. At a time of offshoring manufacturing, slowing public institutions, and large scale building demise, Musk has built two massive hardware companies. And in the process, he has trained and inspired an entire generation of builders.
For now, put aside any perspective you may have on politics, tax policy, and Musk’s personal life. Since moving to the United States ~30 years ago, Elon Musk has been a founding part of seven main companies: Zip2 (sold), PayPal (X.com merged), SpaceX, Tesla, OpenAI, Neuralink, and The Boring Company.
These companies have generated +$1T in value, +$80B in annual revenue, and +135,000 jobs…
The numbers alone are astounding, but the list is actually even more impressive than it might seem. Each one of these companies fully disrupted or innovated in a space:
- PayPal —> Accelerated Fintech & disrupted traditional payments
- SpaceX —> Created the commercial space launch market
- Tesla —> Made electric cars cool & a preferable choice
- OpenAI —> Pushing the bounds of AI with models like GPT-3
Today, we want to focus primarily on SpaceX. (The Tesla story requires its own piece.) SpaceX drove innovation in a space (get it?) that people thought was fundamentally impossible. The industry had dramatically slowed. The excitement of landing on the moon was decades past. The level of regulation was, and remains, super high. Reigniting (get it again?) the space industry was going to be a totally different ball-game than anything Elon Musk (or most others) had done to date.
And yet, if you look at launches per year, SpaceX has accelerated scale over the past few years. Prior to SpaceX, the industry was largely stagnant from 2005-2017. I would argue that SpaceX’s scaling (and success) in 2014-2017 finally turned heads. Since then, the number of private space companies, as well as investment, has dramatically increased.
Of course, Musk is just one person. Along the way, thousands of builders joined him. That’s the impact that few have spoken about.
The US has increased real manufacturing output while reducing the total number of jobs. This is primarily a function of step-changes in technology. On the whole, however, manufacturing has been heavily deemphasized in our culture. Tech has increased. Jobs have been offshored.
But when you consider recent geopolitical issues, building big, amazing things in the US is imperative. For the past 15 years, Musk has been training thousands of people to build hardware at MASSIVE scale… and fast. As a result, not only has SpaceX succeeded, but those builders have gone on to continue building. The ripple effect is real. We call it the SpaceX effect.
The SpaceX Effect | Companies founded by SpaceX Alumni
Ultimately, the growth of SpaceX has become fairly obvious. Constant launches. Paired landings. Passenger spaceflights. All of this tweeted through Elon Musk’s channels, with the entire world following. And while this is all amazing and something we should be thankful for, most people have yet to see the former SpaceX employees now building new companies. Within years, there have been tens of sizable companies founded that are building real, critical things.
These founders are not optimizing ad clicks or emojis! They are building companies that are fighting for visions which will fundamentally change the world.
While we cannot walk through all ~60 of the companies, we can give a sample! In Exhibit 5, we have listed just 12 companies that we find fascinating. Most of the companies are:
- Relatively early stage
- Raised significant money (+$500M in total)
- Building innovative solutions for large scale problems, including nuclear reactors, freight trains, hypersonic reusable engines, and more
Companies of this scale take years (maybe decades) to build. Right now, it may not be apparent to most, but SpaceX has massively altered the trajectory of US large-scale hardware innovation, and the positive impacts of that will be showing for years to come.
The companies
Ursa Major
Founded by SpaceX engineer Joe Laurienti, Ursa Major is becoming the market leader in propulsion. For years, space companies have been faced with a tough decision. Design my own engine in-house or purchase Russian-made RD-series engines? The former is very expensive, time-consuming, and inefficient. The latter is outdated and has geopolitical implications. The Ursa Major Hadley, Ripley, and Arroway engines are market-leading, ubiquitous engines. For more on Ursa Major, read my previous piece.
Reliable Robotics
Aircraft that fly themselves. By making autonomous, commercial aircraft, Reliable Robotics can increase everyone’s access to air transportation. Reliable Robotics is creating the airline of the future. SpaceX’ers Robert Rose and Juerg Frefel are the founders of Reliable Robotics.
First Resonance
The surge in large-scale manufacturing is exciting… but complex! As this trend continues, companies will need to better understand their systems. First Resonance is building the operating system for manufacturing. Eliminate data capture. Understand your processes. Operate efficiently. SpaceX’er Karan Talati is the founder & CEO.
Varda Space
SpaceX and many others are building machinery on earth to be used in space. But what if we made things in space that we can use on earth? That’s what Varda Space is doing, with microgravity manufacturing. High quality materials (e.g., pharmaceuticals, fiber optics) can be fabricated to higher specifications if the process is done without influence from Earth’s gravity. Varda Space will be the logistics supplier to carry out these manufacturing processes, and was co-founded by SpaceX’er Will Bruey. For more on Varda, read my previous piece on them.
Epsilon 3
After more then 10 years at SpaceX, Epsilon3 co-founder and CEO, Laura Crabtree, noticed something that had not existed a decade prior when she started at Elon’s company: an expanding startup ecosystem in the space industry. As a result, Crabtree founded Epsilon3 to help such companies reduce risk and increase efficiency by migrating spacecraft testing and ops procedures from static documents, spreadsheets, wikis, and paper checklists to digital alternatives based on a modern software platform.
Relativity
Relativity is building the first autonomous rocket factory. By “disrupting 60 years of aerospace”, Relativity predicts they can be more reliable (100x fewer parts), better speed (10x faster production time), more flexible (no fixed tooling), and win with optimization (compounding iteration quality). At $1.3B, Relativity is the highest funded company of the group. Co-founder Jordan Noone worked at SpaceX in 2014 and 2015.
Xona Space Systems
GPS is a critical part of our infrastructure, from payment processing to driving cars to syncing clocks. But the painful truth is that GPS is vulnerable… and beyond current risks, the exciting applications of the future demand more and better position, navigation, and timing (PNT) support. Enter Xona Space Systems, which is building a precision LEO PNT constellation called Pulsar that offers a more secure, robust, and accurate alternative to legacy systems. The use cases are many, and co-founder & CEO Brian Manning is leading the charge.
Radiant Nuclear
Nuclear energy is our most scalable green source of energy, yet it is not universal. Reactors are huge projects, often mired in bureaucratic debates at the state or municipality level. Radiant is changing that with portable nuclear microreactors. Instead of a diesel generator, people could use Kaleidos. This provides a green alternative to fossil fuels that is both sustainable, scalable, and flexible. Founder Doug Bernauer is a former SpaceX engineer.
Phantom Space Corporation
SpaceX, Varda Space, and many more are proving the economic potential of space. But getting to space is expensive! SpaceX has done wonders lowering launch costs, but that is just the start. Phantom Space is a SpaceX alternative that is using mass manufacturing to drive down the costs of satellite builds and launches. This will lower the barrier to entry in space, creating more businesses and market opportunities. Founder Jim Cantrell was the first VP of Business Development at SpaceX back in 2001.
Impulse Space
Building a rocket. Creating the payload. Launching it to space. It is all very complex, and that may seem like the hard part (maybe it is)… but the job is not quite done! What do you do with it once it gets to space? Impulse Space is building orbital maneuvering vehicles that are focused on last-mile delivery. Think about your Doordash driver… just ergh…. in space! Jokes aside, this is a critical need in the industry. So much so that founder Tom Mueller left SpaceX after 17 years to pursue it!
Astro Forge
Asteroids consist of a variety of raw materials, many of which we actively use on earth (ex., gold, cobalt, iron). Resource depletion on earth is a concern for many. Astro Forge is working on a cost-effective and scalable solution for asteroid mining. This would give us the opportunity to expand our access to resources, as well as reduce on-earth mining and the downstream effects that has. Founder and CTO Jose Acain spent years at SpaceX as an aviation integration engineer.
Parallel Systems
Freight trains are a critical part of American logistics. The trains, however, run on fossil fuels. Parallel Systems is decarbonizing freight by building a cleaner, automated rail future. Long-term, their solutions will reduce the carbon footprint of rail, but they will also allow more of the $700B trucking industry to convert to decarbonized freight! SpaceX’er Matt Soule spent 13 years at SpaceX prior to founding Parallel Systems.
Conclusion
These twelve companies are clearly just the start. There are many more SpaceX alumni companies already, and we believe there are certainly many more to come. We will release Part II in ~2 weeks, and in that piece, we will do a full breakdown of how and why. How does SpaceX build and maintain such a high-performance culture? Why does this lead to so many entrepreneurial alumni? More to come!