Just over two decades ago, SpaceX was a fledgling startup sparked by an idea Elon Musk had after talking with his old college roommate. 

Speaking to employees in Texas on Friday just before he rang the opening bell to signal SpaceX’s first day of trading, the CEO admitted he thought the company would fail.

“I gave SpaceX less than a 10% chance of succeeding at all,” Musk said.

In fact, SpaceX endured multiple rocket explosions and brushes with bankruptcy along the way. Here’s the story, according to Musk’s official biography, by Walter Isaacson.

From PayPal to the stars

Ousted as CEO of PayPal while he was on his honeymoon, Musk had plenty of time to explore his interests. 

One was learning to fly, like his father and maternal grandfather had done before him. With typical Musk obsessiveness, he bought a single-engine turboprop plane and covered the 50 hours of training needed to get his pilots license in two weeks. 

It was partly this affinity for flying that got him thinking about space flight. After a visit with Adeo Ressi, his roommate from the University of Pennsylvania, the pair discussed whether an individual could get to space without the backing of a government. 

While Ressi was dubious, Musk thought it might be possible, given that the basic requirements to make rockets, metal and fuel, are not extremely expensive. This same conversation led Musk to look on NASA’s website to find out what its plans were for going to Mars. His logic was that since humans had already gone to the moon decades ago, Mars was the natural next step, wrote Isaacson. But after searching online, Musk discovered NASA had no plans in place to reach Mars.

As he explored the interest more, Musk went to a dinner hosted by the Mars Society, a nonprofit organization that promotes the idea of Mars travel. He started reading about rocket engineering and calling up experts to borrow old engine manuals. By age 30, and with just under $200 million in his pocket after eBay bought PayPal, Musk had a new mission.

“I’m going to colonize Mars. My mission in life is to make mankind a multiplanetary civilization,” he said at a reunion of PayPal alumni in Las Vegas in the early 2000s.

By 2002, Musk had moved to Los Angeles to get closer to the best aerospace engineering talent found at companies like Lockheed Martin and Boeing. Yet at first, Musk didn’t think he would build a rocket company. He instead wanted to pursue a philanthropic mission and get the government’s attention so that it would fund Mars missions on its own. One of the ways Musk thought to do this was with a publicity stunt. 

Musk planned to send a little greenhouse to the red planet and get a plant to grow there. Then, the public would see it was possible for life to grow on Mars and demand more missions, he reasoned. 

First, though, he needed a rocket. Through the Mars Society, Musk had learned about Jim Cantrell, a rocket engineer who had worked on the U.S.-Russian program to decommission missiles. 

Cantrell set up multiple trips with Musk to buy a rocket in Russia, none of which went well. During one of the trips, Musk drank so much vodka he passed out and slammed his head on a table. He was also spit at by a Russian rocket proprietor. During another meeting, Musk balked at some Russian rocket owners’ efforts to sell him two old Dnepr rockets for $18 million each, about 20% of the money Musk had gotten from PayPal sale.

On the flight home from Russia, Musk started putting together a spreadsheet of what it would take to build a rocket. At one point, he turned to Cantrell and future NASA administrator Mike Griffin, who also accompanied him to Russia, and said “I think we can build this rocket ourselves.”

Although friends like Ressi and others tried to talk him out of it, Musk was determined: “I wanted to hold out hope that humans could be a space-faring civilization and be out there among the stars,” he told Isaacson. “And there was no chance of that unless a new company was started to create revolutionary rockets.”

Building SpaceX

SpaceX really took off when Musk met Tom Mueller, a one-time logger who worked as a propulsion engineer at aerospace company TRW. Mueller, who as a side hustle was building the world’s most powerful amateur rocket, was keen to be free of TRW’s risk aversion, while Musk was enthused at Mueller’s knowledge of engine propulsion. 

After several in-depth conversations about the nitty gritty details of rocket engines, Musk offered him the job of head of propulsion. In case the venture didn’t work out, Mueller asked Musk to put two years worth of his salary in escrow. Musk agreed, and Mueller joined as SpaceX’s first hire.

Musk invested $100 million in SpaceX and established a headquarters in Hawthorne, Calif., putting engineers, a design team, and factory workers together in one place to boost efficiency and outperform the legacy aerospace companies that had dominated the space industry for decades.

SpaceX cheekily named its first rocket Falcon 1, after the Millennium Falcon in Star Wars. Mueller named its engines Merlin and Kestrel after different species of falcon. In an effort to save on costs, Musk eschewed the traditional approach to rocket building, at one point building 70% of the Falcon 1’s components in-house rather than buying them from suppliers. 

Yet, the Falcon 1’s creation was anything but smooth. Its first launch in 2006 ended in an explosion just seconds after liftoff. A year later, a second launch failed to reach orbit. A third launch in 2008 saw the rocket explode after the first and second stages collided during separation. 

Musk had only budgeted for three launches of the Falcon 1. After three failures the money was almost out, but Musk was saved by an infusion of cash from members of the PayPal Mafia, who only years earlier had forced him out as CEO.

In September 2008, SpaceX executed a successful launch, and the Falcon 1 became the first privately developed liquid-fueled rocket to reach Earth orbit. Months later, NASA awarded SpaceX a $1.6 billion contract to resupply the International Space Station, and the one-time startup was now an official player in the space industry. 

SpaceX dominance

With Falcon 1 having proven the concept, Musk moved on to the Falcon 9, a nine-engine, 157-foot tall behemoth 10 times more powerful than its predecessor that flew successfully for the first time in 2010. This rocket would later become the company’s workhorse for its flights to the ISS as well as for launching its Starlink satellites into orbit.

Then in 2015, the Falcon 9 achieved a radical feat that would change aerospace forever. SpaceX landed the first stage back on Earth to be reused for a future launch.

More than a decade later, no other rocket in its class has consistently replicated the Falcon 9’s success at scale. While SpaceX has landed and reflown Falcon 9 boosters hundreds of times, many of its competitors have largely struggled to move beyond expendable designs.

In May 2020, SpaceX built on this success by carrying NASA astronauts to the International Space Station with its Dragon spacecraft in the first crewed launch from American soil in nearly a decade, proving that a private company could achieve what had long been the domain of nation states.

Now, SpaceX is making progress on Starship V3, its next-generation launch vehicle that at 408-feet tall, towers over the Falcon 9. The vehicle is capable of carrying a 100-metric-ton payload, a significant leap from the 35 metric tons its previous model could carry. 

Starship V3 is a key part of NASA’s plans to land astronauts on the moon for the first time since 1972. Its large carrying capacity could also be used to realize the space agency’s plan to establish a permanent moon base near the south pole. 

Despite being a relatively new entrant to the space industry, SpaceX has taken over the market partly because of its money-saving reusable rocket design. SpaceX was responsible for just over half of all rocket launches alone in 2025. It also accounts for 83% of the total mass sent to orbit from Earth, significantly more than the next runner up, the Chinese Space Agency. Its network of more than 10,000 Starlink satellites in low Earth orbit provides satellite internet to even the most remote areas. Its technology is used by airlines, the U.S. military, and emergency first responders.

On Friday, history’s biggest-ever IPO valued SpaceX at more than $2.1 trillion, rocketing it above Walmart, Samsung, and Meta, at least by market cap. It is now the seventh most valuable company on earth.

Not bad for a company whose own founder once gave it less than a 10% chance of surviving.