Later, Musk realized that he could start a company that could build the rockets he needed. According to early Tesla and SpaceX investor Steve Jurvetson, Musk calculated that the raw materials for building a rocket were actually 3% of the price of a rocket at the time. By applying vertical integration, producing around 85% of launch hardware in-house, and the modular approach from software engineering, SpaceX could cut launch price by a factor of ten and still enjoy a 70% gross margin.