The Space Barons

by Christian Davenport

  Only nations could fund space programs. The prospect of a commercial outfit’s succeeding was about as remote as Mars. Beal didn’t care. He was convinced that he could start a space company on his own without federal funding. No matter that it hadn’t been done before. Or that space had been the exclusive domain of governments, not private companies founded by amateurs. As in Vegas, he knew the longest odds led to the greatest payoffs.

  At the poker table, anyone could catch a hot streak of cards and get lucky. The space business required step-by-step precision and rigor. It was unforgiving, his industry friends told him. They reminded him of the running joke in the space community, which had attracted all sorts of fantasists whose starry dreams ended up in ashes:

  What’s the quickest way to become a millionaire in space?

  Start out as a billionaire.

  SOON AFTER FOUNDING Beal Aerospace in 1997, Beal took over a former military test range in McGregor, Texas, that was once called the Bluebonnet Ordnance Plant, after the Texas state flower. The sprawling site was part of the World War II effort to build munitions, producing bombs that ranged in size from 100 to 2,000 pounds. While McGregor was once a sleepy town that sat at the junction of the Santa Fe and Cotton Belt railroads, it burgeoned with Bluebonnet’s wartime expansion.

  “Bluebonnet was like a city unto itself, complete with living quarters, security and fire protection services, stores, merchants, entertainment venues, bus service and a regular plant newspaper,” according to a history of the site.

  After the war, the US Air Force took over, expanding the site and using it to test solid rocket propellants and rockets that would be attached to the outside of aircraft in an effort to give them an extra boost. Over the years, the military would also test motors for missiles, and by the time the plant shut down, it had produced more than 300,000 rocket motors for the Pentagon and NASA.

  It sat vacant until Beal Aerospace came looking for a test site. Despite the naysayers, Beal had grand plans to build the most powerful rocket engines since the ones that had powered the Apollo-era astronauts to the moon. Ever the opportunist, he saw space as a business that had been dominated by NASA and the US military, one that had grown sclerotic under the government’s stifling monopoly. That meant, as he would say later, “it was a good opportunity. There was a lot of room for improvement.”

  In founding Beal Aerospace, his plan was simple: “Come up with a rocket that doesn’t cost $200 million to launch.” He could build rockets that would cost far less and undercut the market, disrupting an industry ripe to be upended.

  This was the approach he had adopted since he was an eleven-year-old kid in the 1960s, buying broken televisions from the Salvation Army for $1 with his Uncle Denny, who taught him how to fix them and then sell them for $40. When he was nineteen, he bought a house in his hometown of Lansing, Michigan, for $6,500 and rented it for $119 a month. After high school, he took a year off to pursue real estate investments.

  He enrolled in Michigan State University, mostly to appease his mother, who wanted to see his formidable intellect sculpted in a formal setting. But Beal was anxious to get out into the real world, and his heart was in his growing business. Soon he amassed fifteen properties that he renovated and rented out.

  He ended up dropping classes, or taking incompletes for his many absences—and then leaving school entirely. It proved to be a lucrative move. When he was in his early twenties, he bought a federally owned apartment complex in Waco, Texas, for $217,500 at a government auction, even though he hadn’t seen the complex—and had never been to Texas. Three years later, in 1979, he sold it and pocketed more than $1 million. Within a few years, he bought and flipped property after property, making himself a millionaire several times over.

  When the savings-and-loan crisis hit in the late 1980s, he found a way to profit from that as well. He started a bank with $3 million of his own money, and started buying up loans at discounted prices. “If everybody else is going broke, that simply means your competition is going away,” he told a Dallas magazine in 2000.

  Beal Bank became one of the most profitable in the country, with more than $1 billion in assets by the mid-1990s. Now he was wealthy enough to pursue his interests beyond Earth.

  BEAL LEARNED ABOUT aerospace the same way he had learned much throughout his life: he taught himself. He read every book on rocket science, engine mechanics, propulsion. He talked to engineers and scientists and founded Beal Aerospace with the goal of dramatically reducing the cost of space travel.

  He took on entrenched contractors, such as Lockheed Martin and Boeing, which had built their businesses by managing the byzantine federal government contracting bureaucracy as much as by creating innovative technologies. And he saw a boom in satellite technology coming, a new market that would need companies that could launch objects to orbit faster and cheaper.

  But he was also drawn to the business for another reason, one that would have raised eyebrows in his conservative Texas banking and real estate circles. He feared for the future of humanity. At some point Earth could be hit by an asteroid, wiping out the human race the way the dinosaurs had gone extinct. If humanity was to survive, he thought, it would need to find a way to live on other planets in the solar system.

  “I don’t lose a lot of sleep over that,” he said of an asteroid collision, “because it could be a billion years or hundreds of millions of years or tens of millions of years away. But the fact is, it could be 20 years away. And to the extent that our efforts speed up the colonizing of other planets—you just never know all the implications of efforts like this.… So all the knowledge, all the answers to questions that we don’t even know to ask, all that would be furthered by what we were doing.”

  Beal hired some of the best engineers in the country, poaching them from Lockheed, Boeing, and Orbital Sciences. They began to make a massive heavy-lift rocket, the BA-2, which would have been the largest rocket engine since the F-1 engine that powered NASA’s Saturn V rockets during the Apollo era. The three-stage rocket would stand 236 feet tall and have the strength to carry nearly 20 tons to low Earth orbit.

  In early 2000, the company christened the McGregor facility with a successful test of its second-stage engine, the largest liquid-fueled engine built since the Apollo program. It roared to life before a crowd of a couple hundred, sending a fiery blast that consumed 63,000 pounds of propellant in just twenty-one seconds.

  But as his company grew, Beal grew concerned about its prospects. According to reports at the time, he had spent about $200 million of his own money on the venture without taking a cent of taxpayer money from NASA or the military. What worried him most was not the engineering challenge of building such a massive rocket, or the perils of space, but the federal government’s lock on the industry.

  NASA and the Pentagon had programs of record, working with such stalwarts as Lockheed Martin and Boeing, and weren’t particularly interested in giving contracts to unproven upstarts like Beal Aerospace. Beal didn’t think it was fair to have to compete against companies that had been subsidized by the US government.

  He took his concerns to Washington, where at a 1999 Senate hearing, he testified that “while we are confident of our ability to compete on a level playing field, one of our biggest risks is that well-intentioned government actions might improperly tilt the playing field by rewarding or penalizing various competitors, essentially predetermining the winners and losers.”

  The federal government should be in the business of buying services from companies but not helping them build their rockets, he said. Billions of dollars spent on big government programs might be good pork for particular districts where the rockets are manufactured, but they run against free-market forces and would not yield anything, he warned.

  “PLEASE, PLEASE do not give companies billions of our dollars to play around with experimental programs,” he wrote in his testimony to the Senate committee. “You will create jobs by spending public money, but you absolutely will not produce
low-cost commercial access to space.”

  Then in 2000, months after the company had successfully test fired one of its engines—a fiery projection of force designed to show NASA and the aerospace industry that the company was legitimate—the space agency went and did what Beal had feared it would. It announced it would pursue a multibillion-dollar program, known as the Space Launch Initiative, for the development of space vehicles designed to replace the shuttle and be reusable.

  Beal saw it as a fatal blow. There was just no way to compete with companies that were subsidized by the government. He had hoped that the space industry would become a truly commercial one, where the government was yet another customer—not the only one. But that day was still years away.

  In October 2000, Beal announced that the company would be “ceasing all business operations,” effective immediately. He championed his company’s technical prowess, the “significant advances in low cost hydrogen peroxide propulsion systems.” Company officials were “confident of our ability to ultimately succeed in the development of our BA-2C rocket launch system,” which he noted was the “largest privately funded program ever in existence to build a large capacity space launch system.”

  But then the press release read more like a prophecy than a corporate announcement: “There will never be a private launch industry as long as NASA and the U.S. government choose and subsidize launch systems.”

  The government, he said, needed to get out of the way, and let the free market take off. Only then would NASA’s monopoly on space end, touching off a new space economy.

  “We wonder where the computer industry would be today if the U.S. government had selected and subsidized one or two personal computer systems when Microsoft, Inc. or Compaq, Inc. were in their infancy,” he wrote.

  Perhaps one day NASA would be ready to open its doors to the commercial sector. Perhaps his efforts had put a dent in the ceiling, paving the way for the next starry-eyed venture. But as Beal’s failed effort showed, mastering the art of rocket science would not be enough. The next person who desired to start a space company would have to wage war—in Washington, in court, and in the court of public opinion—against the entrenched interests Beal could not overcome. It seemed that starting a successful space company was well beyond even the most hopeful dreams. It was a delusion.

  Beal had decided he had two choices: join the establishment and “evolve into a government contractor role like Boeing and Lockheed” that built the systems NASA and the Pentagon asked for, or shut down entirely.

  Beal knew a bad hand when he saw one. He decided to fold.

  WHEN BEAL AEROSPACE went away, McGregor had lost a valuable tenant—and contributor to its coffers. Now, the city suddenly had a few hundred industrial acres on its hands for lease, and no prospects. Who in their right mind would want to take over a site that was good for testing rockets and little else? Who else would even try to start a rocket company? Beal, the billionaire math genius, had tried and failed, and his was now a cautionary tale that proved the skeptics right.

  The McGregor parcel had been a testament to his bold gamble, a symbol of a new, exciting vision of private space. But more than a year later, as the acreage sat vacant, snakes and scorpions moved in. The brush spread. The testing stands started to rust. The site represented abandoned dreams, a wasteland that seemed destined to further degrade under the searing Texas sun.

  Then, in 2002, the McGregor city manager got a curious call from a man named Jim Cantrell, who had been scouting sites for his boss. He had looked in the Mojave Desert and in Utah, remote locations where they could operate without worrying about environmental concerns. But none of them had worked out. Then, Cantrell remembered seeing a picture in SpaceNews when it did a story on one of Beal’s engine test firings. He looked up the story, which identified the McGregor test site.

  The city manager was affable and accommodating, with a thick Texas drawl.

  “How can I help you?” he asked Cantrell.

  Cantrell said he was interested in the site where Beal had tested his rockets and was hoping to learn whom he might talk to about taking a look at it.

  “Well, you’re talking to the man who owns it,” the city manager said.

  Cantrell told him that he worked for a man named Elon Musk, who had made a lot of money on the Internet and had started a company called Space Exploration Technologies. Never heard of him, the city manager said. Still, anyone interested in the property was welcome to visit anytime.

  They flew in on Musk’s private jet, a Falcon Dassault 900. Musk looked around and made up his mind quickly. “This is perfect,” Cantrell recalled him saying. Musk signed the lease, and starting in 2003, he had 197 acres, a test stand, and five buildings for $45,000 a year.

  Musk was, in many ways, like a younger version of Beal. Instead of repairing and reselling televisions, Musk’s childhood entrepreneurial streak led him to try to open a video arcade when he was sixteen with his brother Kimbal in their hometown of Pretoria, South Africa. But they were stopped by the city because of a zoning issue. “Our parents had no idea,” Kimbal said. “They flipped out when they found out, especially my father.”

  Elon had a rough childhood, and a strained relationship with his father. It was clear that from a young age he was exceptional, and his mother sent him to school early, making him the youngest, and smallest, in his class, a prime target for bullies. “It’s pretty rough in South Africa,” Kimbal told Esquire. “It’s a rough culture. Imagine rough—well, it’s rougher than that. Kids gave Elon a very hard time, and it had a huge impact on his life.”

  Elon Musk fled South Africa after high school when he was seventeen. First, he went to live with relatives in Canada, where he enrolled in Queen’s University. Then, he transferred to the University of Pennsylvania, graduating with degrees in physics and economics. He had been accepted at Stanford, where he planned to study the technology behind ultracapacitors, hoping to create a better battery that could be used in electric cars.

  It was 1995, the dawn of the Internet era. “I thought the Internet would be something that would fundamentally change the nature of humanity,” he said during a speech in 2012. “It was like humanity gaining a nervous system.” So, he told his professor he was taking a deferment to see whether he could start an Internet company, and the teacher said, “Well, I don’t think you’ll be coming back.” That was the last time they ever talked.

  He started a company called Zip2 that would help print newspapers get their content online, and it immediately had customers lining up, from the New York Times to Hearst. Musk sold the company to Compaq in 1999 for about $300 million. His next venture was called X.com, an online bank that merged with PayPal. The online financial payment system grew fast, gaining a million customers within two years, “and we didn’t spend any money on advertising.” In July 2002, eBay bought PayPal for $1.5 billion, netting Musk $180 million. He was thirty-one years old.

  Even before the sale, Musk was thinking about what he wanted to do next, what benefit he could make to the future of humanity. Beal had said he wanted his efforts to contribute to people’s ability to stretch out into the stars—and to stay. Musk, too, thought something needed to be done.

  What if the sun burned out? Or an asteroid hit Earth?

  THERE WERE LOTS of big rocks out there, such as the one NASA spotted in the mid-2000s that was big enough to fill a college football stadium. At first, it looked like a fuzzy smudge in the great distance, but NASA’s astronomers didn’t like what they saw. The asteroid was on an orbit to come dangerously close to Earth, so close that it would barrel by beneath the DirecTV and XM-Radio satellites in orbit. This would happen in 2029. The alarmed scientists at NASA even calculated the date: April 13. And, yes, the doomsday near-miss would come on a Friday.

  But there was a chance that the asteroid would come so close that Earth’s gravity could alter its orbit, nudging it just along a slightly different trajectory, one that would put it on a course to slam into Earth on another
go around the sun seven years later. There was an upside, though. This would not be as bad as the asteroid that had hit Earth millions of years ago, wiping out the dinosaurs and 75 percent of all living species at the time. But it would hit with the force of a bomb, somewhere in the Pacific Ocean. Given the size of the rock, and its speed, the astronomers calculated that it would plunge 3 miles down, creating a massive crater and sending a tsunami wave 50 feet high cascading toward California.

  Then, fifty seconds after tsunami number one, the water would collapse on itself, filling in the hole the asteroid created on impact. This would touch off a second tsunami. As killer-asteroid-induced tsunamis go, the first wouldn’t be so bad, penetrating the shore by only a quarter-mile or so. But it would rip all those fancy coastal houses from their foundation, tear away all those nice restaurants with decks used for sipping cocktails at sunset, and suck them out to sea, where they’d be pulverized in the churn of very angry waters. And then, when the second tsunami hit, it would come crashing back, this time armed with tons of serrated flotsam that would act like sandpaper, wiping away almost everything in its path.

  Astronomers named the asteroid Apophis, the Greek name for an Egyptian sun god, a serpent known as the “Lord of Chaos,” who symbolized death and darkness.

  Thankfully, after studying it for years, the astronomers were able to get a more accurate read of the arc of Apophis’s orbit and determined, to their great relief, that though it would still streak closely by in 2029, it would not hit Earth seven years later. So, no worries for now.

  Even if it remained an unlikely event, NASA still deemed it important to monitor the cosmos for danger. There’s even a specific staff assigned to the task, called the Planetary Defense Coordination Office. It sounds like something out of Dr. Strangelove, but it finds and catalogs about 1,500 new near-Earth objects a year, each of which could cause extensive damage if they were to hit Earth.