David Senra

The benefits compound.

When several tiers each add 15% margin, total cost multiplies through the layers.

A NASA study found SpaceX developed Falcon 9 for roughly $440 million.

They estimated the same work with traditional contractors would have cost 3 to 10 times that amount.

Vertical integration also accelerates iteration.

Another great line.

Vertical integration also accelerates iteration.

When an engineer needs to change a bracket, weld, or circuit board, the manufacturing engineer is in the same building using the same CAD systems and tooling.

Materials, jigs, and processes can evolve together on the scale of weeks, enabling a rapid progression from Falcon 1 to successive Falcon 9 variants, each iteration improving performance and reducing cost

without waiting for suppliers to retool on multi-year cycles.

But vertical integration creates a new problem.

It concentrates fixed costs.

If you own the factory, the machines, and the staff, you're losing money every second they aren't building something.

At the traditional launch cadence of two to four vehicles per year, in-house manufacturing is a liability, not an advantage.

To make the math work, you need volume.

Before we get back into this, I want to tell you about the presenting sponsor of this podcast, Ramp.

One of the main themes in the history of SpaceX is constantly attacking and questioning your costs.

Ramp helps many of the most innovative businesses in the world do exactly that.

The median company running on Ramp cuts their expenses by 5%.

And just like SpaceX has demonstrated a religious dedication to controlling costs,