Virtually all startups work out that way. It's a pittance compared to one Shuttle launch.
Let me see him make it to orbit--repeatedly--with useful cargo--for less than $2000 per pound, or into GEO/Lunar transit for less than $10000 per pound. He will find it somewhat difficult. Rubber and laughing gas will not do it.
As it is now, "useful cargo" would be astronauts with minimal provisions, seeing as NASA can't do it. He may well be able to handle that. Rubber and laughing gas may be enough. The key is to make the vehicle lighter while still surviving re-entry from LEO. He has a good way to do that by virtue of his innovative re-entry scheme (see Post 57 above for a good description). I think he's on the right track.
However, vehicle weight does not translate into a slower orbital velocity. This velocity must be bled off somehow to achieve a controlled reentry.