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> He got a quote back for $120,000. “Elon laughed,” Davis said. “He said, 'That part is no more complicated than a garage door opener. Your budget is five thous

> He got a quote back for $120,000. “Elon laughed,” Davis said. “He said, 'That part is no more complicated than a garage door opener. Your budget is five thousand dollars. Go make it work.’” Davis spent nine months building the actuator. This seems like a bad business decision, yet is apparently the cherry-picked highlight of his technical acumen.

AlchemistCamp 3y ago
Do you believe it would be a better decision to spend 24 times more on every actuator? A key reason SpaceX matters at all is that it can launch things into space at a fraction of what it costs NASA, Russia, China or any other rival to.
- ChainOfFools 3y ago
  Are you sure about that multiple? Exactly how much did musk spend paying an elite aerospace engineer 9 months of elite aerospace engineer salary plus load, to design something that saved SpaceX maybe 20% of that? This is not even getting into the opportunity cost of all the other things that engineer could have been working on during that time, things that had not already been developed and proven. It sounds like what Davis got was first quote and must threw it out, if this is the actual story it seems pretty strange that they didn't at least try to work that first-bid number down before discarding the idea of outsourcing the part altogether.
bko 3y ago
Why? There are countless examples where SpaceX adapted some simpler consumer product to serve their needs. That's why they were able to compete and drastically reduce price. Another reason was they never tried to get cost plus contracts which were the standard for industry (imagine how that affects your incentives) This isn't software where we can laugh at Uber building their own messaging service. These are somewhat specialized parts that are made for orgs that have no concern of cost controls. he's absolutely right to question everything as that gives him the edge. You see something similar with Jobs. From reading his bio, I would say his main skill was ability to sniff out BS. So if he wanted something in a certain way or by a certain time and got push back, he was able to ascert whether it was legitimate or he could just push and raise expectations. And more often than not it worked. The best managers I've had always pushed me and knew when something truly wasn't feasible
- bombcar 3y ago
  >sniff out BS Reminds me of the "Bill Gates Excel review" story - https://www.joelonsoftware.com/2006/06/16/my-first-billg-review/ https://www.joelonsoftware.com/2006/06/16/my-first-billg-rev...
OscarCunningham 3y ago
Are you thinking that the nine month salary wouldn't be worth it to save $115,000? I think the idea is that SpaceX will use multiple copies of this part.
- avmich 3y ago
  That, and also I don't think Elon planned to spend than long on the project - unless Davis's learning (who "had never built a piece of hardware before in his life") was also taken into account.
  - quartesixte 3y ago
    It probably was about 2 months of initial CAD and drawings, another 2ish months of manufacturing, a month of testing, a month of iteration, another month of manufacturing, more testing, reviews, qualifications. Add in some time for Davis working on other things + the part waiting for other projects to finish manufacturing or testing, and you get nine months. For a cleansheet part from a engineer who never built one in his life during the early days of this approach to aerospace, 9 months seem reasonable to me.
paxys 3y ago
This is the standard example that is always used to show the god-like power of these kinds of personalities. Apple employees spend years designing the thinnest phone in the world and show it to Jobs. Instead of praising them he says "no, make it thinner". And by the power of that sentence they go back to their lab and make the phone 20% thinner. Isn't Jobs a genius?
inglor_cz 3y ago
That does not seem like a bad business decision to me. Actuators are used often in rocketry, and SpaceX obtained the necessary know-how to build them in-house for a cost of mere 9 man-months. One fewer external dependency. Starship gimbals its Raptors electrically as well. Those actuators aren't probably identical to the Falcon 1 ones, but I would guess that there is a lot of inherited knowledge in them.
bryanlarsen 3y ago
several actuators per rocket * several dozen rockets * $115,000 >> 9 months salary.
quartesixte 3y ago
On top of everyone else’s comments on how this is actually a good business decision, it also could be a very good engineering decision. An off the shelf actuator could mean they would have to adapt other hardware to the actuator. By in-housing their own, they can make the actuator specific to their needs. Rockets are tricky because of how very specific everything can be to the specific rocket and system that you built.
ZeroGravitas 3y ago
Replying to myself as I can't edit: There's multiple issues here that apparently others aren't seeing. The key one: it's a build or buy decision for a non-key part. SpaceX's USP (as far as I'm aware, not a rocket nerd) was reusable rockets. If they can successfully demonstrate that, then they've won. They don't want to run out of money before then but chasing down every inefficiency in the existing system seems more like OCD than good business sense. Subsidiary issues: Sending the guy who "had never built anything" to negotiate hardware orders. Getting the guy who "had never built anything" to build a vital part when off the shelf alternatives were available. Celebrating this as business genius not unnecessary risk.
- quartesixte 3y ago
  IIRC this was a key part. Anything that “moves” and alters the state of a Rocket in flight could be considered key. And this story, as far as I remember from the book, was from the Falcon 1 days, where reusability was not on the table. Early days type stuff where cash reserve preservation was tantamount. The guy “had never built anything like the actuator” but he was an engineer who (hopefully by virtue of being an engineer) understood the first principles behind designs. To put into context, a large part of SpaceX’s unique competitive advantage comes actions like this. The Aerospace industry up until SpaceX mostly operated in the manner you suggest: buy the outsourced parts, design only what is “truly key”, and then cobble it all together. Except that exposes yourself to large amounts of supply chain risk, design constraints, and price gouging like no other. The actuator costed $120k because there were no competitors and they knew the old primes would buy it anyways. Elon definitely went against the grain of established thinking at the time and it’s clearly paid off. Maybe not “business genius” but it’s not a small undertaking and went against decades of ingrained engineering culture and business practice.

AlchemistCamp 3y ago

Do you believe it would be a better decision to spend 24 times more on every actuator? A key reason SpaceX matters at all is that it can launch things into space at a fraction of what it costs NASA, Russia, China or any other rival to.

ChainOfFools 3y ago
Are you sure about that multiple? Exactly how much did musk spend paying an elite aerospace engineer 9 months of elite aerospace engineer salary plus load, to design something that saved SpaceX maybe 20% of that? This is not even getting into the opportunity cost of all the other things that engineer could have been working on during that time, things that had not already been developed and proven. It sounds like what Davis got was first quote and must threw it out, if this is the actual story it seems pretty strange that they didn't at least try to work that first-bid number down before discarding the idea of outsourcing the part altogether.

bko 3y ago

Why? There are countless examples where SpaceX adapted some simpler consumer product to serve their needs. That's why they were able to compete and drastically reduce price. Another reason was they never tried to get cost plus contracts which were the standard for industry (imagine how that affects your incentives) This isn't software where we can laugh at Uber building their own messaging service. These are somewhat specialized parts that are made for orgs that have no concern of cost controls. he's absolutely right to question everything as that gives him the edge. You see something similar with Jobs. From reading his bio, I would say his main skill was ability to sniff out BS. So if he wanted something in a certain way or by a certain time and got push back, he was able to ascert whether it was legitimate or he could just push and raise expectations. And more often than not it worked. The best managers I've had always pushed me and knew when something truly wasn't feasible

bombcar 3y ago
>sniff out BS Reminds me of the "Bill Gates Excel review" story - https://www.joelonsoftware.com/2006/06/16/my-first-billg-review/ https://www.joelonsoftware.com/2006/06/16/my-first-billg-rev...

OscarCunningham 3y ago

Are you thinking that the nine month salary wouldn't be worth it to save $115,000? I think the idea is that SpaceX will use multiple copies of this part.

avmich 3y ago
That, and also I don't think Elon planned to spend than long on the project - unless Davis's learning (who "had never built a piece of hardware before in his life") was also taken into account.
- quartesixte 3y ago
  It probably was about 2 months of initial CAD and drawings, another 2ish months of manufacturing, a month of testing, a month of iteration, another month of manufacturing, more testing, reviews, qualifications. Add in some time for Davis working on other things + the part waiting for other projects to finish manufacturing or testing, and you get nine months. For a cleansheet part from a engineer who never built one in his life during the early days of this approach to aerospace, 9 months seem reasonable to me.

paxys 3y ago

This is the standard example that is always used to show the god-like power of these kinds of personalities. Apple employees spend years designing the thinnest phone in the world and show it to Jobs. Instead of praising them he says "no, make it thinner". And by the power of that sentence they go back to their lab and make the phone 20% thinner. Isn't Jobs a genius?

inglor_cz 3y ago

That does not seem like a bad business decision to me. Actuators are used often in rocketry, and SpaceX obtained the necessary know-how to build them in-house for a cost of mere 9 man-months. One fewer external dependency. Starship gimbals its Raptors electrically as well. Those actuators aren't probably identical to the Falcon 1 ones, but I would guess that there is a lot of inherited knowledge in them.

bryanlarsen 3y ago

several actuators per rocket * several dozen rockets * $115,000 >> 9 months salary.

quartesixte 3y ago

On top of everyone else’s comments on how this is actually a good business decision, it also could be a very good engineering decision. An off the shelf actuator could mean they would have to adapt other hardware to the actuator. By in-housing their own, they can make the actuator specific to their needs. Rockets are tricky because of how very specific everything can be to the specific rocket and system that you built.

ZeroGravitas 3y ago

Replying to myself as I can't edit: There's multiple issues here that apparently others aren't seeing. The key one: it's a build or buy decision for a non-key part. SpaceX's USP (as far as I'm aware, not a rocket nerd) was reusable rockets. If they can successfully demonstrate that, then they've won. They don't want to run out of money before then but chasing down every inefficiency in the existing system seems more like OCD than good business sense. Subsidiary issues: Sending the guy who "had never built anything" to negotiate hardware orders. Getting the guy who "had never built anything" to build a vital part when off the shelf alternatives were available. Celebrating this as business genius not unnecessary risk.

quartesixte 3y ago
IIRC this was a key part. Anything that “moves” and alters the state of a Rocket in flight could be considered key. And this story, as far as I remember from the book, was from the Falcon 1 days, where reusability was not on the table. Early days type stuff where cash reserve preservation was tantamount. The guy “had never built anything like the actuator” but he was an engineer who (hopefully by virtue of being an engineer) understood the first principles behind designs. To put into context, a large part of SpaceX’s unique competitive advantage comes actions like this. The Aerospace industry up until SpaceX mostly operated in the manner you suggest: buy the outsourced parts, design only what is “truly key”, and then cobble it all together. Except that exposes yourself to large amounts of supply chain risk, design constraints, and price gouging like no other. The actuator costed $120k because there were no competitors and they knew the old primes would buy it anyways. Elon definitely went against the grain of established thinking at the time and it’s clearly paid off. Maybe not “business genius” but it’s not a small undertaking and went against decades of ingrained engineering culture and business practice.