2017 Satellite Executive of the Year: Gwynne Shotwell, President and COO, SpaceX

It is 09:30 a.m. on her ranch in Texas, and we are talking to the 30th Via Satellite Executive of the Year, Gwynne Shotwell about everything from her history at SpaceX, her relationship with its founder and CEO, Elon Musk — the man she still calls “the boss” — and what it means for her to be the recipient of our award in its 30-year anniversary. Shotwell talks honestly, will answer the tough questions, and you feel like it is a genuine conversation, rather than a series of scripted answers that have gone through an entire communications department before you are allowed to be on the phone.

We know SpaceX is a great company. We know they are the “cool kids” of space right now and, while Elon Musk obviously takes a lot of credit for his vision and bravery to come up with SpaceX, in Shotwell he found the perfect executive to run it like a finely oiled machine. In 2016, SpaceX suffered a huge setback when a high-profile test failure led to the loss of the Spacecom satellite Amos 6, making headlines across the world. It is said we learn more about ourselves when we deal with adversity, and this would be the case with Shotwell and SpaceX. She fronted up, and led the team back from this demoralizing setback to unprecedented heights in 2017. She is one of the most admired and respected executives in our industry, and an inspiration for young women around the world. When it came to selecting our 30th Satellite Executive of the Year, there was really only one choice this time around, SpaceX President and COO, Gwynne Shotwell is our Satellite Executive of the Year 2017.

Shotwell: Pulling off 18 launches and hitting our stride after Flight 29 on Sep. 1 (Amos 6) was key. Recovery from failure is always hard but the worst kind of failure you can have for a launch services provider is when you are on the pad: you lose one of the assets that allows you to launch. So, we got 39A up and running; we got pad 40 operational last year and upgraded our Vandenberg pad in California as well.

Recovery was also an extraordinary accomplishment last year. Frankly, I didn’t think we would do as well as we did. I think I predicted we would refly at least one. But, reflying five last year successfully was a great accomplishment for us, as well as the overall industry. I think it is really going to open peoples’ eyes in terms of a new way of thinking. The market acceptance of flight-proven capability far exceeded what I thought we could achieve this year. I believe half of our flights in 2018 will be on flight-proven vehicles, which is a testament to the engineering and production teams of SpaceX, and our ability to prepare these vehicles for a second flight. It is a pretty significant mindset change in our industry — a revolutionary change. I applaud all our customers for looking at this carefully and agreeing with us, that this is the right way to go.

Shotwell: Absolutely. We finally hit our stride in 2017. You will see an uptick this year in the cadence of launch. Last year was the year that we demonstrated what we said we would do from a production and launch capability.

Shotwell: It is not magic, but it wasn’t easy. We demonstrated, I believe it was in 2014, that we could launch satellites back to back in around 11 days. What we needed to make sure is that we could produce the vehicles at that kind of pace, and keep it up, which is what we did last year. Our launch team worked their butts off, and they will do it again this year. But, the key was we hit our stride on our production side.

What lightens the production burden this year to increase our pace is the use of flight-proven vehicles. We have 26-30 flights in 2018, but around half of those will be flight proven. With the flight proven missions, this cadence requires a production rate of what we have demonstrated already. At least for first stage. We will increase cadence for second stages and fairings.

Shotwell: 39A was a new pad for us. We rolled in capabilities and upgrades we had learned over time at launch complex 40 to make things easier and smoother. It was the same with the pad 40 rebuild and Vandenberg upgrade — both now operational. We have developed capability and technology on the pads that allow things to go faster and more smoothly. Fundamentally, everyone at SpaceX works really hard. It is part of the genetics of the company and it is part of the energy that we have at SpaceX. I think increasing our cadence should not feel like 50 percent more work for our launch team because we have gotten smarter on the operations side and the vehicle upgrades were intended to make them easier to process. We are flying block 4 now, and we are currently producing our block 5 rocket. Every time we upgrade the rocket, we upgrade it for reliability improvements, ease of manufacture, and operability. So, each upgrade makes it easier on my production team and my launch team to process these rockets, and to get them flown.

So, hopefully, it is not 50 percent more work for them. We have three operational pads now, so that does allow people to use their time very effectively. Let’s talk at the end of 2018, and I will ask my launch crews whether it was 50 percent more work. I am betting it will not be.

Shotwell: We better understand the behavior of our pressure vessels. We call them Composite Overwrap Pressure Vessels (COPVs). Basically, they are helium pressurant bottles, which keep the propellants in the rocket in the right place.

We almost had a Goldilocks situation with those bottles on Flight 29 static fire. A number of things had to be exactly right or, you could say, exactly wrong. We learned a lot about our COPVs, which is key to success going forward.

Everybody should learn from failure, and we have done that, although, obviously, we would prefer not to have failures. We have become a lot more cognizant of the impact of any small change that we make — we have always been mindful of the medium and big changes — and ensure all are thoroughly vetted. We have the recipe right now. We launched 18 times last year. We landed every rocket we set out to. But even though we have the recipe for launch and landing, and for refurbishing and relaunching, I don’t want to say we will never change again.

I think this is one of the reasons why this industry finds it difficult to support innovation, because everyone is afraid to support changes once they have the right recipe. I think it is dangerous for any industry to say that we shouldn’t change. I think that is when your company starts to die. When you say “I can’t make things better, I can’t make things faster, I can’t make things less expensive,” then you are on your death path.

Shotwell: The intensity of change that we had in 2017 was driven more by what we were doing in Block 5 Falcon 9 design. This design is the most reliable design to date. It is meant to meet the crew requirements for our participation in NASA’s commercial crew program and to meet all the reliability requirements for the Evolved Expendable Launch Vehicle (EELV) program. That is the U.S. Air Force program to launch many national security space missions.

So, the Block 5 design is very reliable; it is also highly manufacturable, and what is key is that it is highly reusable. Very little refurbishment will be needed in a Block 5 vehicle in order to refly them. I think the intense change was driven by the need to get to this final Falcon 9 design done to support crew and national security space.

Shotwell: It is hard being the first. We have to forge the path and be the first to demonstrate what can be done. So, when others come behind us, they almost get a free pass at on what can be done reliably. They still have to do some really good engineering work, though.

My engineers can’t look at a problem and say “this is impossible.” Elon sets the vision, and it always seems hard and daunting. The engineers then put their heads down, and go and achieve what we set out. Production teams work out how to build these things continuously faster so we never delay a launch due to production. Then, the part of the organization that works with customers has to convince them of the reliability.

The engineering is hard. The work the support teams do that make it a reality is hard. And then convincing/demonstrating to customers, as well as all the authority organizations like the FAA, is also hard. There really is nothing easy about it.

Yes, it is hard. It is harder to be first. But, it is so much more rewarding to be the ground breaker and change the world. I think this energizes our employee base pretty dramatically. I think they like and are willing to do the extra work to get there first.

Shotwell: I think even government programs don’t have unlimited resources. But, the tight resource availability does make things challenging. On the other hand, it adds to the challenge, and frankly it drives us to be more efficient.

I definitely don’t think it is a bad thing to be constrained on resources and time. It drives innovation rapidly and efficiently. I don’t think all the money in the world comes up with the best engineering solutions.

Shotwell: I think it is known pretty widely that telecom GTO missions are down dramatically. I think satellite orders were close to their lowest level, or tied to their lowest, in 2017. I think what that means is that launch has become even more competitive. We have fought hard for every contract and every deal we have done. But, it has gotten more difficult.

We do not get subsidized by our government. We get contracts from our government and get paid to do work for our government, but there is no “get well” money that we receive from them. That makes it even harder to be competitive given nearly all other launch providers are subsidized. The flightproven element will help us keep the prices where they need to be and allow us to continue to win contracts. We won more than half the deals we competed last year.

Shotwell: The national security space market has dropped as well. United Launch Alliance (ULA) has gotten orders from this community, up to 12 a year in the past but, going forward, it looks as though that market will be five or six per year.

We are winning, though. We won two GPS missions last year which was a huge accomplishment for the company. That was a big turning point for SpaceX, to be acknowledged as a reliable provider by the U.S. Air Force. That was great for the company and great for the country as well. The GPS missions were reported to be 30-40 percent cheaper from SpaceX than our competitor ULA in that field. That means the government saved up to $60 million each time, which is a lot of money to save. Now is not a time to be inefficient with public dollars, so we are quite proud of winning those deals and decreasing military expenditures for space launch. I am sure our take-up on winning will increase. Hopefully the market will also increase there as well.

Shotwell: Our launch success was certainly helpful to that. The Air Force has been working since 2011 on how to bring a new entrant to an established national security space program. So, it was really working closely with the Air Force to ensure the criteria they used was fair, and that the new entrants were not overburdened with more requirements.

ULA did not have to get certified with their rockets. They will have to with the Vulcan, if they move forward with that. But, the Air Force had to figure out the certification process and how do we execute it. It was a lot of work.

There was a clash of cultures, and there will continue to be going forward to some extent. But, there was definitely a will at the very highest levels of the Air Force to bring in new entrants. The existing provider was so expensive; the Air Force knew they had to do something.

Just a hint of competition caused a pretty substantial drop in prices for the U.S. Air Force from ULA. So, even if we are not winning every contract, we are still helping the tax payer just by being in the arena and competing. We have made ULA think harder, be more efficient and drop their prices.

VIA SATELLITE: Looking back on last week’s launch, how confident were you that it would be successful? Elon seemed to downplay it a bit beforehand. Were you more confident? How will this launch be a gamechanger for SpaceX?

I was definitely more confident than Elon reflected in his statements. Our static fire went very well – we aced the predictions of the environments so we were able to lift off more quickly after that test. This opens up new opportunities for us with the U.S. Air Force, NASA and some commercial missions. Falcon 9 is such a beast that it can take far more of the commercial GTOs to orbit than we originally thought, so the commercial market for heavy is smaller, but still necessary. I am so proud of the SpaceX team – they have demonstrated their technical and reliability chops. It was a really awesome day!

VIA SATELLITE: I have always been interested in the dynamic about how you and Elon work together on SpaceX? What is Elon’s involvement on a day-to-day basis? How has the dynamic between the two of you changed over the last few years?

Shotwell: Elon is still very involved. Even though he has a lot going on at Tesla, he is still heavily involved on the development side. His job is set to vision of the technology development — he monitors that very closely. He is there for guidance on the day-to-day side, but my job is really to take care of the day-to-day stuff.

As far as the dynamic, I don’t know if the dynamic has changed in recent years. I have worked with him for so long that I generally understand the way he wants things done, and run the company that way. He is the primary shareholder. He is the chairman of the board and he is my boss. But, I have demonstrated that I have run the day-to-day pretty successfully so that hopefully lightens his burden a little bit.

Shotwell: I still do learn from Elon. One of the things that you don’t think about because it is so “Apple Pie” is that humans are your greatest resource. Everybody says that but not everybody walks that talk. Elon did teach me that.

People need to have comfortable chairs. They need to be able to work in an environment that is inspiring. If you look at some government buildings and some traditional aerospace company buildings, they are dark; they are not pleasant to be in. You want people to feel good about the environment that they work in. Elon drives that consistently. He wants our office spaces to be beautiful because he wants people to feel good working in them. People have to have access all the equipment and software that they need. It does not take six weeks for an employee to get an upgraded computer. That means they are then six weeks behind on the analysis they are supposed to do.

Part of the compensation package of SpaceX is that everybody has the ability to be an owner of the company and own shares. I think that is critically important. Employees should feel great about the success and feel they are getting more because of the success of the company. I think that is a hugely important strategy. That was driven by Elon.

Shotwell: My focus from the operational perspective is to really make sure we are meeting customer needs. The greatest day in my career at SpaceX is when we have not delayed a customers’ launch. Ideally, we will end up waiting for our customers.

Last year, we hit our cadence; we didn’t launch everybody that we wanted to, but we got to the 18 mark — which was our goal — without a failure. This year will be even better. We are not going to have customers waiting and we are going to launch even more. That is my focus; that drives the way I lead internally. I am the chief customer advocate to ensure we are doing what our customers need. That is frankly what our business is about.

Shotwell: We will see rapid launch; being able to launch something in less than two years is really important. Our national security customers are looking at how to build capability that we need rapidly — so, months and weeks rather than years. That is something we will see in the next decade.

I think the next decade will be extraordinary for our industry. We will see flight-proven vehicles flying more often than those that are not. In the next decade, I think there is a strong chance there will be boots on Mars. Everyone thinks we are crazy with that goal, but we don’t think that is impossible. So, there are a lot of great things to look forward to in the next decade in this industry. It is a very exciting time.

Shotwell: I was very pleased and surprised when I found out I was the winner. Frankly, I love awards like this because it showcases all the talent that we have working at SpaceX. They get excited when they read these things and their achievements are recognized. From a leadership perspective, receiving an award like this is an honor and it is a nod to the great work our employees are doing.

Personally, this one got me quite excited. Colleagues that I have known and admire greatly have won this award, so it is nice to be following in their footsteps. It is prestigious and a very public acknowledgement of the work we are doing. VS