The 'SpaceX mafia' is here. Elon Musk's big IPO could launch a constellation of new companies.

An earlier version of this report misidentified the titles of Vital Lyfe's founders. Jonathan Criss is the company's CEO, and Andrew Harner is its COO. By William Gavin

SpaceX employees and alumni have an 'insane network' and will soon be able to tap a lot of cash, expanding the mini-SpaceXs orbiting the upcoming IPO

SpaceX's upcoming initial public offering is poised to become a life-altering wealth event for thousands of the company's investors and employees, with experts and former SpaceX-ers predicting it will lead to a rush of new startups.

SpaceX is in a unique position ahead of its IPO. While it's become more common for private companies to stay out of the public markets for longer periods, not many are as seasoned as SpaceX. Elon Musk founded SpaceX in 2002, more than 24 years ago.

That's given SpaceX the time to grow in the private market to become the world's top rocket-launch company, while also creating a leading satellite-internet service and acquiring Musk's artificial-intelligence business. Musk is hoping all that adds up to a $2 trillion market valuation.

During the past two decades, SpaceX has hired thousands of staff and granted them boatloads of restricted stock units, incentive stock options and nonqualified stock options that have vested over time. With the IPO milestone reached, employees can soon sell their equity in the company and pocket the proceeds in cash.

Some former SpaceX employees have already gone on to create their own companies, such as reusable-rockets company Relativity Space and Base Power, which owns and operates home batteries.

SpaceX alumni have created at least 150 companies that have collectively raised $12.6 billion from investors and created more than 8,000 jobs, according to AlumniFounders, a website that tracks projects created by people who have worked at the company for at least a year. The website also helps connect SpaceX employees-turned-founders to discover investors with their own ties to SpaceX, including staff at more than a dozen venture-capital firms.

"There are a lot of companies out there that were founded by people who left SpaceX but took the engineering practices and know-how to get things done," Garrett Reisman, a former astronaut and former director of space operations at SpaceX, told MarketWatch. "It's kind of cool because you see this whole ecosystem of startups and space experts that are doing some amazing work and are leading to kind of a whole renaissance of very dynamic business activity."

The SpaceX IPO is reminiscent of another era, in 2002, when Musk helped financial-services firm PayPal (PYPL) list its shares on the Nasdaq stock exchange, and, shortly afterward, eBay (EBAY) purchased the company. When PayPal went public, "there was a PayPal mafia of founders that spun out," Alumni Ventures managing partner Laura Rippy told MarketWatch.

Read more: Elon Musk was pushed out at PayPal. Now he's launching a rival that could 'disrupt' it.

The so-called PayPal mafia included Musk, who briefly led PayPal before being ousted and replaced by future Palantir Technologies (PLTR) co-founder Peter Thiel, as well as the likes of prominent venture capitalists David Sacks and Reid Hoffman. Companies founded by PayPal alumni include Tesla (TSLA), LinkedIn, YouTube and Affirm (AFRM).

"We're seeing the same thing with SpaceX because it's been private for so long," Rippy said.

A new age of mafiosi

A Falcon 9 rocket on display in April at a SpaceX facility in Hawthorne, Calif.

Space is a booming sector, in no small part due to SpaceX. As a result, more than three dozen startups founded by ex-SpaceX staff created their own footprints in the market.

That includes Impulse Space, the startup founded by Tom Mueller, SpaceX's first employee and head of propulsion, who spent close to 19 years at SpaceX. Impulse has raised at least $525 million to develop orbital transfer vehicles.

Although Mueller is likely the best-known ex-SpaceX-er at Impulse - and, arguably, among all SpaceX alumni - he's not the only one. Impulse's president and COO, Eric Romo, was the 13th employee at SpaceX and worked on propulsion after joining the company in early 2003.

Romo told MarketWatch that, while SpaceX may be seen as a titan of industry today, things were much less clear in 2003. He heard about SpaceX while studying at Stanford after a professor sent an email to students saying that "basically, one of the guys from PayPal is starting a rocket company. Does anybody want to apply?"

"It's not like this person was a household name that was attracting all this talent," Romo said. "It was like, 'Hey, some tech guy who's got some money is starting a company.' ... The idea that you would go to this type of startup is not necessarily obvious."

SpaceX was, at the time, unique. Most people interested in the field would gravitate toward presumably safer careers at Lockheed Martin (LMT) or General Electric. In 2003, Jeff Bezos's Blue Origin was only three years old, and Amazon.com (AMZN) was not the powerhouse it is today. Many of the startups founded around that time are defunct or were absorbed by larger companies.

See more: Space investing is heating up as SpaceX rockets toward a record-breaking IPO

It was also the aftermath of the dot-com bubble, which left Silicon Valley little more than a "wasteland," Romo said. SpaceX was helped greatly by the fact that Musk was willing to spend his own cash on the venture, which allowed him to hire "tons" of experienced people who hadn't been "completely jaded yet" and early-career people who could mature in a high-tension environment, he added.

That was still true in 2009, when Laura Crabtree left a job at Northrop Grumman (NOC) in London to head back to California for a "pretty specialized" role at SpaceX. Crabtree said that, at the time, SpaceX wanted people with some years of operational experience but who weren't hardened veterans with decades' worth of knowledge.

Crabtree worked on mission operations for SpaceX for more than a decade, first with the Falcon 9 rocket and later the Dragon spacecraft designed to ferry humans to the International Space Station. Things were stressful, Crabtree told MarketWatch. SpaceX had narrowly dodged bankruptcy in late 2008 after the first successful flight of its Falcon 1 rocket.

"For those first 21/2, almost three, years ... you're doing whatever you can at all hours of the day and night," Crabtree told MarketWatch of her time at SpaceX.

That fast-paced environment isn't for everyone - burnout is a frequent experience for SpaceX employees, both current and former - but it can pay off. For Crabtree, it gave her the lessons she needed to launch her own startup, Epsilon3, in late 2020, just a few months after leaving SpaceX.

"That kind of pace and responsibility really prepares you for startup life," Crabtree told MarketWatch. "It was, 'You see a problem, you fix a problem.' "

See: Anthropic strikes SpaceX deal to fuel Claude Code growth - and for data centers in space

That's how Crabtree ended up starting Epsilon3, which provides software for teams dealing with advanced processes. When she left SpaceX, she sought a solution to the headache of using a variety of different software during operations. When Crabtree couldn't find an alternative and found others complaining of similar experiences, she decided to make her own.

No one wants "to build in-house software," she explained. "Not only is it the most expensive route, but it also deters from your actual mission, and so I decided that I would go down that path and build it."

Epsilon3 works with several companies across the space sector, including fellow private firms Impulse and Blue Origin, as well as public entities like Rocket Lab (RKLB) and Firefly Aerospace (FLY). The company has raised nearly $19 million, according to data from provider Tracxn.

"There is definitely something to be said for heavy SpaceX experience," Crabtree told MarketWatch. "There are a lot of investors who will look for ex-SpaceX-ers starting companies and invest in them."

'The network is insane'

Peter Thiel became chief of PayPal after Elon Musk. Thiel has famously provided funding to Facebook, Palantir and many other companies through his Founders Fund.

The idea of a SpaceX mafia could be bolstered by the upcoming IPO, especially since many employees are compensated in both cash and stock. Although SpaceX holds stock buybacks twice a year to help staff and investors convert their SpaceX equity into cash, the sheer size and potential valuation of the planned IPO could create a windfall for some.

SpaceX is seeking to raise as much as $75 billion at as high as a $2 trillion valuation, according to reports. If it can pull that off, SpaceX would instantly become one of the biggest public firms in the U.S. and easily break the prior record for the largest IPO ever.

Read: Google is now a glorified venture-capital fund thanks to its SpaceX and Anthropic stakes

Insiders will likely have to wait months after SpaceX officially goes public to trade their stock, and some may choose to hold on to some or most of their shares. But it could provide an opportunity for some to leap from employee to founder.

"I think a lot of people have that entrepreneurial spirit," Reisman, the former astronaut, told MarketWatch, adding that the IPO will "supercharge it."

Not all of those potential startups are likely to be focused on space, like Impulse or Epsilon3. SpaceX alumni have gone on to found companies focused on AI and robotics, nuclear energy and manufacturing.

"The network is insane because, at this point, everyone knows someone who is doing something," Vital Lyfe COO Andrew Harner told MarketWatch.

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05-07-26 1227ET