23. Why Is Space X So Cool?

This Summer, Elon Musk’s Space X made history by sending two astronauts to the International Space Station inside SpaceX’s Crew Dragon. Today, Connor and Brittany discuss why this was so important and how it shows us that we don’t need government to fund space exploration.

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Links:

• Does Obama Deserve Credit for Elon Musk’s Space X Triumph? Yes and No
• John Stossel Tweet

Here is the transcript of our conversation:

Connor: Hey, Brittany.

Brittany: Hi Connor.

Connor: So recently Elon Musk, one of the entrepreneurs we’ve talked about before with his company, one of his companies SpaceX sent two astronauts to the International Space Station, Bob Belkin, and Doug Hurley. And amazingly enough, they landed safely back on Earth. And as I recall, this landing in the water was like the first water landing in, several decades since like the mid-1970s. And what’s exciting about it for a lot of people is that this was the first space orbit of astronauts launched by a private company. So I wanted to take a minute and talk about how for a long time space travel and flight and the space station and everything that has gone with it has been a function of the government. It’s been something that taxpayers fund and the government organizes. So Brittany, what are your thoughts on the difference between someone like Elon Muskgoing out with his company and doing it versus the government trying to do it?

Brittany: Yeah, Well it’s funny because this is one of the few things government does that people get excited about. Like usually when it’s NASA, this is one of the few things Cause we’re not bombing anyone we’re not throwing people in jail. This is actually one of the better things the government funds do, but that doesn’t necessarily mean they should. And now we know it also doesn’t know that they mean that they do it the best, right? So I think it was 11 years ago, Obama or the Obama administration had a committee and they concluded that to do what Elon Musk just did, it would take 12 years and cost 26 billion. And Yeah, to put in perspective just how cool Elon is. He did it in six years and he did it for less than a billion. So that is pretty impressive. I think that kind of shows right there, who’s capable of doing more, right? And for less money.

Connor: A couple of thoughts come out of that. The first is when you say it’s one of the things that a lot of people get excited about, it makes me recall a kid, and I’m trying to remember. I went to some kind of space station or museum where they had one of the big spacecraft, I don’t even remember where it was when it was in California. It was in California somewhere. Yeah. And I just remember at the end, we got to get the freeze-dried ice cream that the astronaut ate, Right? And learn about Tang, you know, and all these little like Velcro, these inventions that were supposedly created by NASA for purposes of, you know, space flight, but then became consumer products in the market that individuals could buy. Although I don’t know why anyone would just randomly buy freeze-dried ice cream. Other than I’ve heard it’s not good Yeah. It’s really not, it’s kind of a shock. But you know, maybe that’s why we like the government doing it. We get some of these fun little products along the way, and so we have this favorable view of it. It’s also just kind of fun and cool, obviously, but when you talk about, the difference in spending when the government said it would cost $26 billion and Elon did it for less than one just makes me think about how over the years the government has often been criticized and rightly so for spending, you know, like $2,000 on a toilet, right? And like $500 on a coffee mug,

Brittany: There was like a, there was a turtle, like they were like, they built bridges for turtles. I kid you not like some weird thing. And it ended up costing billions too. Like they do all these weird studies that cost us, you know, billions of dollars.

Connor: Well, so think about it. If I’m a contractor, let’s say I build you know, I don’t know desks, let’s say I build conference room desks and that’s my business. If I’m selling those desks to businesses I know that there’s a lot of competition I know that they can go to like anyone else. I know that they don’t have the biggest budget at all, right? It’s just a conference room desk. And so I’m gonna have to be very responsive to the market and to pricing. And so I’m probably gonna have a reasonably priced desk. However, if my customer is the government then I know that they have a near-unlimited source of money. So of course I’m going to increase the price. I have the incentive to double the price of my conference room desk or triple or quadruple, it cuz I know they can pay for it. This is one of the problems with insurance as well, is when insurance is paying for everything rather than individuals paying out of pocket you know, the doctors and hospitals and others know that, oh, we can just charge a ton because, you know, these insurance companies have all the money. And so when the government has all this money, then they just, the contractors, cuz look, the government is not building everything that’s needed for space flight.

Brittany: They Can right? They can’t really even build roads, which you’re talking about causes they don’t own a road company. So

Connor: Exactly. And Rhode is a great example as well, right? The government just goes out to people and says, Hey, we need someone to do this. And people will often if they do it right, they’ll bid on it. It becomes a big problem when the government just gives out the contract to whoever they want without any kind of competition you know, bidding, and people trying to say that they can do it for lower than someone else. But yeah, the government is not doing this stuff. They’re not doing space travel, They’re not building, you know astronauts’ suits and everything like that. And so you know, they can be you know, charged a ton of money because these companies just inflate the prices and that’s what leads to these astronomical costs where the government thought it would cost 26 billion dollars. And a final note before I throw it back to you, Brittany, I find pretty funny is I saw a graphic after these guys took off to the International Space Station and it was comparing the cockpit of a government-kind of the organized space shuttle with NASA. The cockpit, of course, is where the pilot kind of sits to control things kinda like in a normal plane. And it was comparing it with the cockpit for this one that SpaceX and Elon Musk built. And if you’ve seen like a Tesla car where there’s basically no buttons and dials and everything like that, a big, it’s just all, yeah, it’s just a big screen. It’s very minimalist, meaning there are minimal things in there, very clean looking, very attractive, and you’re like, Okay, clearly a private company did this versus the government version that literally has like thousands of switches and knobs and dials that you’re like, What does this all even do? I, you know, how would someone in a lifetime be able to learn how to do that? I just thought that was a fun comparison.

Brittany: Yeah It is. And it’s also, so it kind of goes into what I wanted to say in our, one of our earlier, like first episodes we talked about market competition and how competition makes things better, right? So NASA didn’t really have competition for a long time. NASA was the only space travel, and we don’t really think of that as being weird because how many of us are like, Yeah, let me build a spaceship and you know, go up to the moon. We don’t think like that because space is just such a weird thing, but it’s, it’s competition helps in everything, even space travel. And we never really got the opportunity to see that until Elon Musk. We had to have a pioneer, somebody willing to take risks, which we’ve talked about before, an entrepreneur willing to take risks to say, you know, I think I can do this better and I also think I can do it cheaper. And it’s so crazy to me that now we’re actually seeing like, oh yeah, he was right and if we’re right about NASA, imagine what else we’re correct about if we let the private sector take more of a role.

Connor: Yeah, I think that’s totally right. It, it’s really exciting too because, from the perspective of someone like Elon Musk who wants to colonize Mars, he wants to, you know, have humans be able to live off the earth. And those are kind of fun science-fictiony, but maybe also science, reality type of situations. He is driven by kind of a different set of goals. He understands as an entrepreneur does that if he wants to get a lot of people interested in his vision, he has to make it affordable. And so he has to figure out ways to lower the price. He has to figure out, okay, I want to get into the space travel business. I want to enable you to know, someone like Britney or Connor to be able to experience space flight for themselves. And so how do I build a business that, you know, maybe at the beginning things will cost a lot, but then once I get people paying for that, I can use some of that money to then lower the cost of, you know, for the next round of customers. And then because I’ve lowered the cost more people will be interested, and more people can afford it. So then we’re getting more customers, more money. And then I can use that interest to continue to drive the price down as I get more and more customers. He actually did this with Tesla, right? They had, I believe been called the Roadster. Yep. the first, the first vehicle they came out with cost a lot of money. But the initial interest that he got in that vehicle and the people who bought it for a lot of money who could afford it, provided him money that he could then use to develop additional cars that cost less, which then appealed to more people, people. And now they’ve got vehicles that are, you know, pretty much like any other car in terms of price. And so it opens the door for many more people. So here’s space X with the government as their client. They’re still doing it way, way, way cheaper than if NASA had directly been involved. And yet as Space X gets some of these customers paying this type of money to do all these things, it allows this private company to reinvest their money into developing additional, you know, space flight opportunities, Maybe smaller rockets, or I don’t, I mean, I’m not a, you know, engineer, I don’t know how this stuff works, but they can make cheaper, faster, smaller type of systems that appeal to more and more people so that maybe one-day space flight will be just like getting a plane ticket, right? Or maybe a little more cuz it’s more involved and so forth. But you know, when, when planes of course first came around, they were very expensive. There wasn’t a lot of competition, there wasn’t a lot of demand-supply, and so forth. And so it was for rich people. Well then as time progressed, companies were able to lower their prices where now basically anyone can save up enough money for a plane ticket. It’s not that big of a deal. And I think the vision of someone like Elon Musk who understands how competition and markets work is that the same process can be applied to space flight. So that one day you and I could go to space or maybe just to kind of the edge of the, you know, orbit or atmosphere and then back down, like how exciting would that be?

Brittany: So exciting. It actually reminds me of Henry Ford who I think we’re gonna talk about in a future episode. But he also did the same thing with cars. So for a lot of history, early history, people were not driving cars. You could not afford to drive a car unless, you know, you had a lot of money. But then Henry Ford kind of found a way to do it cheaper, right? He did this like economy of scale. He was doing like just pumping out cars on like a production line. You’ve seen pictures of big factories, things like that. And as the cost went down and more people started buying cars or more people could buy cars. Like now we see everyone on the road with cars, right? So it’s so interesting to me how when somebody takes that risk, you know, Henry would be at Henry Ford or Elon Musk and says, I think I have a better way. I think I can do this when they are allowed to do it, we have great results, but they’re not always allowed to.

Connor: I think that’s exactly right. Competition is really an amazing thing. It and it’s important to think of competition I think, whereas, it’s a system where business owners are in a contest to see which one of them can serve you better, right? It’s like standing up in the middle of a park and saying, I have $20 to spend. Who wants my $20? And all these businesses line up and say, Oh, you know, what, are you interested? I wanna, maybe you’re more specific. I wanna you know, three tacos. And so all these food trucks come up and like, oh, we have this kind, we have this kind, look at these flavors.

Brittany: We give rich salsa, we’ll give you free guacamole,

Connor: Absolutely right. Buy 10 tacos, get one free. Like they’re trying to figure out how to serve you the best so that they win, which is, you know, getting your business. And, this constant contest that’s going on time and time again means that people will lower their prices cuz they want your money instead of it going to someone else. They wanna be a little cheaper, but they’re also increasing their quality cuz they know if you know it’s not very good, you’re not gonna buy from them again. And so this constant contest means that we win the people with the money, the people who are buying win all the time because these companies are figuring out how to serve us the best. I mean, Tesla or SpaceX or Amazon or Apple or whatever company you wanna pick, they’re trying to figure out how to serve their customers even better so that those customers don’t leave and go to another company, right? Space X is like, Hey, awesome, we just did this for under a billion dollars. Now NASA is gonna give us another contract and another contract cause we’re saving taxpayers all these money all this money. And so we can do it again and again, which we’re gonna get better at doing it and we’re gonna be able to take more people or bigger loads of equipment or whatever, whatever. And over time things just continue to get better. It’s super exciting to see when it happens, like with tacos, or the grocery score. But it’s amazing to see when it’s like something like space travel. Super cool.

Brittany: Not only is it super cool, but as we talked about earlier, Elon wants to send people into space, right? This has been one of his dreams since he was a kid. So it’s interesting to me if we can actually pull this off if he can keep showing how cheap and how effective he can do this. I didn’t use to believe that we would see commercial space flight, you know, people like you and I being able to fly into space in my time. But I don’t know that that’s true. Now, it’s very possible that because of Elon, we could all be able to buy a ticket, you know, maybe not to Mars, but to, orbit the earth. Who knows, you know, who knows what’s possible. That’s very exciting.

Connor: Well, I mean, good grief. I’m sitting, I’m standing in a room right now that has air conditioning, right? Like kings of massive empires you know, a century ago could not have dreamed of being able to be in a room where the air is cool when it’s like 110 degrees outside. Like that’s phenomenal, right? I’m literally standing next to a mini refrigerator that has some drinks, in our conference room here at the Liberos office, and it is keeping these drinks cool year-round 24/7 all the time. At any time I could open this refrigerator and get a cold drink Like that is mind-blowing When you look at human history and, and what competition and the market have led where, you know, people in Africa have cell phones. Yeah. Most impoverished people in Africa have cell phones and are able to send and receive money and communicate. That’s just mind-blowing, right? What the market has done to lift people out, of poverty to make their lives materially better than people could have even dreamed. So you’re right like we could not have easily envisioned space travel in our time, but, you know, just it wasn’t too long ago that people couldn’t imagine being able to afford flying in planes, right? When those were brand new and only for the elite or driving cars and now they’re all over the place. And so that’s what competition does. Again, it’s a contest to see who can serve the most people the best. And that’s why we always win when it comes to the free market stuff. Obviously, we get very excited about heading to the show notes page guys. We will link to a couple of articles about this recent space flight. There’s also a tweet from John Sta that’s worth checking out and giving a little like, or retweet where he talked about the financial comparison that Britney brought up about the difference between government and the free market when a company can take on a traditional role that government’s always been involved in. So tuttletwins.com/podcast for the show notes. Brittnay has always, it’s been great and we’ll talk to you next time.

Brittany: Talk to you next time