Why Jeff Bezos trails Elon Musk in the Private Space Race

(Adapted from: Amazon Unbound: Jeff Bezos and the Invention of a Global Empire.)

At Amazon, Jeff Bezos likes to describe himself as an inventor. But the founder and longtime CEO’s most ingenious creation may actually be a system of invention – the corporate rituals and ways of thinking that can guide his minions after he becomes executive chairman later this year and, one day, steps aside for good.

At the Seattle-based tech giant, 14 leadership principles like “customer obsession,” “frugality” and “think big” famously guide everything from deliberations about new products to promotions and hiring decisions. Goals, accountability, and deadlines are pushed down from senior executives to individual teams. Metrics-rich progress reports are then fed upward, via weekly and quarterly business reviews and a biannual series of meetings, called OP1 (for operating plan, in the late summer) and OP2 (after the holidays).

Bezos’ precisely tuned corporate machinery has been hugely successful. He has also extended this magic touch to The Washington Post, the ailing newspaper whose fortunes he dramatically revived after he bought the paper in 2013.

But a half hour drive from Amazon’s headquarters — at the Kent, Washington offices of yet another Bezos company, Blue Origin — another system of invention has been much less successful. It’s worth examining why.

Blue is a 20-year-old private space company that employs over 3,500 people. Its grandiose mission: to “preserve the Earth” by going “to space to tap its unlimited resources and energy.” But Blue Origin has never launched a space vehicle into orbit or brought humans to suborbital space (though it may finally be close). And it regularly loses government and commercial contracts to SpaceX, run by Elon Musk — Bezos’s putative rival in space and for the title of wealthiest person alive. Most recently, Blue Origin filed a protest with the federal government’s accountability office, objecting to NASA’s decision to give $2.9 billion to SpaceX to return American astronauts to the moon.

 Musk’s response to Bezos’s legal claim was characteristically pugnacious and juvenile. “Can’t get it up (to orbit) lol,” he tweeted.

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 So why has Blue Origin so conspicuously failed to meet its own lofty goals? I pursue this question in detail in my new book, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. One clear culprit? Bezos’s system of invention – the methods that he installed to guide Blue employees on how to set priorities and conduct their work.

Back in 2004, installing such a system was particularly important because Bezos, consumed with Amazon, planned to spend only one day a week at his space startup and hoped it would run efficiently and semi-autonomously. No doubt mindful of the old industry saw, “the quickest way to become a millionaire in space is to start off as a billionaire,” he wanted to limit his investment and move deliberately, parlaying every lesson and technical decision into the next project. Back then, there was little sense that the government might one day pay private space companies to explore the heavens on its behalf.

So at around the same time as he was fashioning Amazon’s vaunted leadership principles, Bezos wrote an 800-word memo, informally dubbed “The Welcome Letter.” To this day, it is given to new Blue Origin employees as part of their hiring packet and discussed every year in all-hands meetings. Inside Blue, it carries the same sacred inviolability as Bezos’s inaugural letter to Amazon shareholders.

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“We are a small team committed to seeding an enduring human presence in space,” Bezos begins in the letter, reflecting his original desire to keep the company under 70 employees. “Blue will pursue this long-term objective patiently, step by step.” He describes releasing new versions of its rockets at six-month intervals with “metronome-like regularity,” and predicts the company would eventually shift its focus to a crewed orbital vehicle program that “will stretch Blue’s organization and capabilities.”

“We’ve been dropped off on an unexplored mountain without maps and the visibility is poor,” Bezos continues. “You don’t start and stop. Keep climbing at a steady pace. Be the tortoise and not the hare. Keep expenditures at sustainable levels. Assume spending will be flat to monotonically increasing.”

Bezos later condensed the central idea of the Welcome Letter into Blue’s Latin motto, Gradatim Ferociter, or “Step by Step, Ferociously.” He also devised an elaborate coat of arms that depicted two tortoises standing on the Earth and appealing to the stars, over an hourglass with wings, a symbol of fleeting time.

There’s nothing outwardly objectionable about all this. In parts, the Welcome Letter poetically speaks to other enthusiasts who dream of opening the space frontier. But it also describes some assumptions that proved to be false and, arguably, held Blue Origin back.

Bezos wanted to keep Blue’s engineering team small. He believed that constraints drove innovation, and he talked about developing space vehicles with the cadence of a software project, incorporating new ideas into frequent iterations and using as many off-the-shelf technologies as possible.

The method worked well at internet companies like Amazon, where bugs could be easily fixed. But at an aerospace firm perpetually stretched for resources, it was a recipe for errors to sneak into systems that needed to be strenuously tested and mission hardened. In 2011 and 2014, Blue Origin lost test spaceships in its suborbital New Shepard program to fiery explosions. “Are we making sophisticated errors or embarrassingly stupid errors?” Bezos asked during an analysis of the latter mishap.

It’s also clear in the Welcome Letter that Bezos didn’t see getting to space as a competition and believed that Blue Origin could move methodically toward its goals. But it was a race and, not surprisingly, the hare ended up thumping the tortoise.

Elon Musk founded SpaceX two years after Bezos started Blue Origin. But by 2010, it had 900 employees while Blue had 275. By 2017, Musk employed more than 5,000 people, while Bezos was capping growth at 1,000. 

SpaceX was the opposite of Blue Origin. It skipped suborbital space travel altogether and focused on building orbital rockets and winning contracts from the federal government and commercial satellite makers. That allowed it to devise ever more ambitious iterations of its Falcon 9 rocket and to capture the public’s imagination. Blue was the conservative gambler at the poker table, when an aggressive newcomer showed up and totally changed the dynamic.

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By 2016, Bezos was wondering aloud why SpaceX had won crucial contracts over Blue Origin and expressing annoyance at the budget required to keep up. (“I’m not spending that,” he complained to Blue underlings. “If it was this big, you should have called me in the middle of the night to tell me about it!”) Then in April 2017, he reversed course and surprised employees by announcing he would fund Blue Origin with the proceeds of $1 billion in Amazon stock sales each year. Blue executives speculated that Bezos, ever the fierce competitor, wasn’t happy seeing SpaceX leap ahead, its progress paid for in large part by Uncle Sam.

Later that year, he parted ways with the firm’s longtime program manager, Rob Meyerson, and hired a professional CEO, Bob Smith, the president of a large aerospace division of government contractor Honeywell. 

Today, Blue Origin has departed from most of the principles of the Welcome Letter. It has thousands of employees, pursues multiple projects at once (not step by step) and enjoys vast annual injections of cash from Bezos’s personal fortune – which nears $200 billion, according to the Bloomberg Billionaire Index.

But the company is still struggling. I spoke with many employees who described a demoralized workforce and slow decision making that results in endless delays. Back in 2018, the company said it would soon start selling tickets to suborbital space on the New Shepard spacecraft; at around the same time, it said its New Glenn rocket would be ready for orbital missions by 2020. New Glenn is now slated for launch in 2022. And just last week, more than two decades after Bezos started the company, Blue Origin said it would start selling tickets on New Shepard. As of this writing, we’re still waiting for them to announce a ticket price.

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