Founders - #1 Elon Musk: Tesla, SpaceX, & the Quest for a Fantastic Future

Episode Date: September 19, 2016

What I learned from reading Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee VanceThe conventional wisdom of the time said to take a deep breath and wait for the next big thing to arrive in due course. Musk rejected that logic by throwing $100 million into SpaceX, $70 million into Tesla, and $10 million into SolarCity. Short of building an actual money crushing machine, Musk could not have picked a faster way to destroy his fortune. He became a one-man-ultra-risk taking venture capital shop and doubled down on making super-complex physical goods in two of the most expensive places in the world, Los Angeles and Silicon Valley. [2:13]What Musk has developed that so many of the entrepreneurs in Silicon Valley lack is a meaningful worldview. He’s the possessed genius on the grandest quest anyone has ever concocted. He’s less a CEO chasing riches than a general marshaling troops to secure victory. [9:17]The life that Musk has created to manage all of these endeavors is preposterous. [9:53]He felt as if the public had lost some of its ambition and hope for the future. [14:34]His fears that mankind had lost much of its will to push the boundaries were reinforced one day when Musk went to the NASA website. He expected to find a detailed plan for exploring Mars and instead found bupkis. [14:58]The men were heading to Russia at the height of its freewheeling post-Soviet days when rich guys could apparently buy space missiles on the open market. [24:32]Musk wheeled around and flashed a spreadsheet he’d created. “Hey guys, I think we can build this rocket ourselves.” [27:53]Some of these people had spent years on the island going through one of the most surreal engineering exercises in human history. They had been separated from their families, assaulted by the heat, and exiled on their tiny launchpad outpost— sometimes without much food — for days on end as they waited for the launch windows to open and dealt with the aborts that followed. So much of that pain and suffering and fear would be forgotten if this launch went successfully. [32:17]It took six years-about four and half more than Musk had once planned — and five hundred people to make this miracle of modern science and business happen. [34:38]Well that was freaking awesome. There are a lot of people who thought we couldn’t do it. There are only a handful of countries on Earth that have done this. It’s normally a country thing, not a company thing. My mind is kind of frazzled, so it’s hard for me to say anything, but this is definitely one of the greatest days in my life. [35:19]To avoid bankruptcy Musk made a last-ditch effort to raise all the personal funds he could and put them into the company. “It was like the fucking Matrix,” Musk said, describing his financial maneuvers. [42:53]The 2008 period told him everything he would ever need to know about Musk’s character. He saw a man who arrived in the United States with nothing, who had lost a child, who was on the verge of having his life’s work destroyed. “He has the ability to work harder and endure more stress than anyone I’ve ever met. What he went through in 2008 would have broken anyone else. He didn’t just survive. He kept working and stayed focused.” [48:37] ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

While Musk has been anything but shy about what he was up to, few people outside of his companies got to see the factories, the R&D centers, the machine shops, and to witness the scope of what he was doing firsthand. behind moving quickly and running organizations free of bureaucratic hierarchies and applied it to improving big, fantastic machines and chasing things that had the potential to be the real breakthroughs we've been missing. By rights, Musk should have been part of the malaise. He jumped into the dot-com mania in 1995 when, fresh out of college, he founded a company called Zip2, a primitive Google Maps meets Yelp. The first venture ended up a big, quick hit. Compaq bought Zip2 in 1999 for $307 million. This is something very few people know about Elon. They know about PayPal,

they know about SpaceX, they know about Tesla, now they know about SolarCity. They didn't know that when he was in his early 20s, he sold a company for $307 million. Musk made $22 million from the deal and poured almost all of it into his next venture, a startup that would morph into PayPal. As the largest shareholder in PayPal, Musk became fantastically well-to-do when eBay acquired the company for $1.5 billion in 2002. So let's just stop there. 1999, young Elon, first startup, sells it for $307 million. Takes $22 million, doesn't rest on his laurels, could have went to retire somewhere. I mean, what would you have done

if you had $22 million in your 20s? He then dumps a bunch of money into the next company. Three years later, that company is sold for $1.5 billion. That's a hell of a three years. Doesn't stop there, as we're gonna see now. Instead of hanging around Silicon Valley and falling into the same funk as his peers, however, Musk decamped to Los Angeles. The conventional wisdom of the time said to take a deep breath and wait for the next big thing to arrive in due course. Musk rejected that logic by throwing $100 million into SpaceX, $70 million into Tesla, and $10 million into SolarCity.

Short of building an actual money-crushing machine, Musk could not have picked a faster way to destroy his fortune. He became a one-man, ultra-risk-taking venture capital shop and doubled down on making super-complex physical goods in two of the most expensive places in the world, Los Angeles and Silicon Valley. Whenever possible, Musk's companies would make things from scratch and try to rethink much that the aerospace, automotive, and solar industries had accepted as convention. Okay. It's one thing to sell two software startups and then do a third. Software has a lot less complexity than physical goods. The margins are way better. The cost to reproduce your software is close to zero. Making one car has a fixed cost, and making another one is still really damn expensive.

And then what's interesting is, when's the last time you heard of an American company that was founded, an automotive company, rather, in America? The last one, I think they talk about in the book, was in Chrysler, I think in the 20s or 30s. So again, he had $170 million. He decided, you know what, I'm going to keep a couple million dollars and then I'm going to dump the rest in these three companies. All of which had a very small likelihood at the time of success. A solar company, after you had a cleantech bubble and burst, he decided, okay, I'm going to do it now. An American automotive company, which had clean uh cleantech bubble and burst he decided okay i'm gonna do it

now an automotive american automotive company which you hadn't won hadn't won in almost 100 years and there's never been something as a private aerospace company like spacex is today it's just insane when you think about at the time now he looks really good i mean he he's worth tens of billions of dollars these things seem to be going well. But back at the time, you had to look like an absolute loon. With SpaceX, Musk is battling the giants of the US military industrial complex, including Lockheed Martin and Boeing. He's also battling nations, most notably Russia and China. SpaceX has made a name for itself as the low-cost supplier in the industry, but that in and of itself is not really good enough to win. The space business requires dealing with a mess of politics,

backscratching, and protectionism that undermines the fundamentals of capitalism. Steve Jobs faced similar forces when he went up against the recording industry to bring the iPod and iTunes to market. The crotchety Luddites in the music industry were a pleasure to deal with compared to Musk's foes who build weapons and countries for a living. That is a great line. For Musk's foes who build weapons and countries for a living. SpaceX has been testing reusable rockets that can carry payloads to space and land back on Earth on their launch pads with precision. If the company can perfect this technology, it will deal a devastating blow to all of its competitors and almost assuredly push some mainstays of the rocket industry

out of business while establishing the United States as the world leader for taking cargo and humans to space. It is a threat that Musk figures has earned him plenty of fierce enemies. The list of people who would not mind if I was gone is growing, Musk said. My family fears that the Russians will assassinate me. With Tesla Motors, Musk has tried to revamp the way cars are manufactured and sold, while building out a worldwide fuel distribution network at the same time. Instead of hybrids, which in Musk lingo are suboptimal compromises, Tesla strives to make all electric cars that people lust after and that push the limits of technology.

Tesla does not sell these cars through dealers. It sells them on the web and in Apple-like galleries located in high-end shopping centers. Tesla also does not anticipate making lots of money from servicing its vehicles, since electric cars do not require the oil changes and other maintenance procedures of traditional cars. The direct sales model embraced by Tesla stands as a major affront to car dealers used to haggling with their customers and making their profits from exorbitant maintenance fees. Tesla's recharging stations now run alongside many of the major highways in the United States, Europe and Asia, and can add hundreds of miles of oomph back to a car in about 20 minutes.

While much of America's infrastructure decays, Musk is building a futuristic end-to-end transportation system that would allow the United States to leapfrog the rest of the world. Musk's visions and of late execution seem to combine the best of Henry Ford and John D. Rockefeller. With SolarCity, Musk has funded the largest installer and financer of solar panels for consumer and businesses. Musk helped come up with the idea for SolarCity and serves as its chairman, while his cousins, Lyndon and Pete Riv, run the company. SolarCity has managed to undercut dozens of utilities and become a large utility in its own right. During a time in which clean tech businesses have gone bankrupt with an alarming regularity,

Musk has built two of the most successful clean tech companies in the world. The Musk company empire of factories, tens of thousands of workers, and industrial might has incumbents on the run and has turned Musk into one of the richest men in the world. The visit to Muskland started to make a few things clear about Musk, about how Musk has pulled all this off. While the putting man on Mars talk can strike some people as loopy, it gave Musk a unique rallying cry for his companies. It's the sweeping goal that forms a unifying principle over everything he does. Employees at all three companies are well aware of this and are well aware that they are trying to achieve

the impossible day in and day out. When Musk sets unrealistic goals, verbally abuses employees and works them to the bone, it is understood to be, on some level, part of the Mars agenda. Some employees love him for this. Others loathe him but remain oddly loyal out of respect for his drive and mission. What Musk has developed that so many of the other entrepreneurs in Silicon Valley lack is a meaningful worldview. He's the possessed genius on the grandest quest anyone has ever concocted. He's less a CEO chasing riches than a general marshalling troops to secure victory." I love this line.

Where Mark Zuckerberg wants to help you share baby photos, Musk wants to, well, save the human race from self-imposed or accidental annihilation. This is also a great part too. The life that Musk has created to manage all of these endeavors is preposterous. A typical week starts at his mansion in Bel Air. On Monday, he works the entire day at SpaceX. On Tuesday, he begins at SpaceX, then hops onto his jet and flies to Silicon Valley. He spends a couple of days working at Tesla, which has its offices in Palo Alto and a factory in Fremont. Musk does not own a home in Northern California and ends up staying at the Luxe Rosewood Hotel or at friends houses.

To arrange the stays with friends, Musk's assistant will send an email asking, room for one? And if the friend says yes, Musk turns up at the door late at night. Most often he stays in a guest room, but he's also been known to crash on the couch after winding down with some video games. Then it's back to Los Angeles and SpaceX on Thursday. He shares custody of his five young boys, a set of twins and triplets, with his ex-wife Justine and has them four days a week. Each year, Musk tabulates the amount of flight time he endures per week to help him get a

sense of just how out of hand things are getting asked how he survives this schedule must said i had a tough childhood so maybe that was helpful okay so right there that excerpt gives you a good idea of of who elon musk is and what his world is about um goes into his insane quest to dominate three separate industries, both which have massive costs, massive regulations, massive engineering challenges. And something that comes up throughout the book over and over again is he seems to have a really high pain tolerance. Most people, I think, ask yourself this question. What would you do if you had $170 million?

Sorry, $180 million. I think or ask yourself this question. What would you do if you had 170 million dollars? I'm, sorry 180 million dollars would you risk it nearly all on three companies that Are most likely doomed to fail All the while working seven days a week hundred plus hours plus raising five kids I mean, that's just that's insane I want to talk about there's gonna be a couple, there's a couple other sections that give you a good idea of why I think I would call this biography definitely worth reading, especially if you're ambitious or intellectual or you're just curious about how these companies come to be, what kind of, like what goes on behind the scenes, what kind of person would do this to themselves willingly. So this section is called Mice in Space.

Musk's friends were not entirely sure of what to make of his mental state. He lost a tremendous amount of weight fighting off malaria and looked almost skeletal. With little prompting, Musk would start expounding on his desire to do something meaningful with his life, something lasting. His next move had to be either in solar or in space. He said, The logical thing to happen next is solar, but I can't figure out how to make any money out of it. And then we're going to go into a, this is Gregory, excuse me, this is George Zachary, an investor and a close friend of Musk. He's recalling a lunch date at the time.

Now he's talking about, then he, meaning Elon, then he started talking about space. And I thought he meant office space, like a real estate play. Musk had actually started thinking bigger than the Mars Society. He was, before this excerpt started, after he sold PayPal, he started donating money to an organization called the Mars Society and hanging out there, seeing what the plans were. He thought NASA and some other people would basically be trying to go to Mars. And when he looked it up, he was shocked that they weren't. So he was trying to influence this as much as he could. So Musk had started thinking bigger than the Mars Society.

They didn't really have any big like plans like he did. He wanted basically, he wants basically a secondary plan in case there's an unexpected catastrophe on this planet that could wipe out the human race. He wants to make sure there's a redundancy, a backup plan, and he feels Mars is the best option for that. So rather than send a few mice into Earth's orbit, Musk wanted to send them to Mars. Some very rough calculations done at the time suggested that the journey would cost $15 million. He asked if I thought that was crazy, Zachary said. I asked, do the mice come back? Because if they don't, yeah, most people will think that's crazy. As it turned out, the mice were not only

meant to go to Mars and come back, but were also meant to procreate along the way. The more he thought about space, the more important its exploration seemed to him. He felt as if the public had lost some of its ambition and hope for the future. The average person might see space exploration as a waste of time and effort and rib him for talking about the subject. But Musk thought about interplanetary travel in a very earnest way. He wanted to inspire the masses and reinvigorate their passion for science, conquest, and the promise of technology. His fears that mankind had lost much of its will to push the boundaries were reinforced one day when Musk went to the NASA website. He expected to find a detailed plan for exploring Mars and instead found

bupkis. At first I thought, geez, maybe I'm just looking in the wrong place, Musk once told Wired. Why are there no plan? No schedule? There was nothing. It seemed crazy. Musk believed that the very idea of America was intertwined with humanity's desire to explore. He found it sad that the American agency tasked with doing audacious things in space and exploring new frontiers as its mission seemed to have no serious interest in investigating Mars at all. The spirit of Manifest Destiny had been deflated or maybe even come to a depressing end and hardly anybody seemed to care. Like so many quests to revitalize America's soul and bring hope to all of mankind, Musk's journey began in a hotel conference room. By this time, Musk had built up a decent network of contacts in

the space industry, and he brought the best of them together at a series of salons, sometimes at the Renaissance Hotel at the Los Angeles Airport and sometimes at the Sheraton Hotel in Palo Alto. Musk had no formal business plan for these people to debate. He mostly wanted them to develop the mice to Mars idea, or at least come up with something comparable. Musk hoped to hit on a grand gesture for mankind, some type of event that would capture the world's attention, get people thinking about Mars again, and have them reflect on one, on one, excuse me, and have them reflect on man's potential, not one man's potential, all of man's

potential. The scientists and luminaries at the meetings were to figure out a spectacle that would be technically feasible at a price tag of approximately $20 million. Musk resigned from his position as director of the Mars Society, or as a director of the Mars Society, and announced his own organization, the Life to Mars Foundation. The collection of talent attending these sessions in 2001 was impressive. Scientists showed up from NASA's Jet Propulsion Laboratory, or JPL. James Cameron appeared, lending some celebrity to the affair. For those that don't know, James Cameron is the director of Avatar, Titanic. He's wildly credited at being

like the technological forefront for filmmaking and he's really into exploring. Also attending was Michael Griffin whose academic credentials were spectacular and included degrees in aerospace engineering, electrical engineering, civil engineering, and applied physics. Griffin had worked for the CIA's venture capital arm called In-Q-Tel at NASA and at JPL and was just in the process of leaving Orbital Sciences Corporation, a maker of scientists and spacecraft, where he had been chief technical officer and the general manager of the Space Systems Group. It could be argued that no one on the planet knew more about the realities of getting things into space than Griffin, and he was working for Musk as space thinker-in-chief.

Four years later, in 2005, Griffin took over as head of NASA. The experts were thrilled to have another rich guy who was willing to fund something interesting in space. They happily debated the merits and feasibility of sending up rodents and watching them hump. But as the discussion wore on, a consensus started to build around pursuing a different project, something called Mars Oasis. Under this plan musk would buy a rocket and shoot it to what amounted excuse me musk would buy a rocket and use it to shoot what amounted to a robotic greenhouse to mars a group of researchers researchers had already been working on a space ready growth chamber for plants say that three times fast space Space-ready growth chamber. What an odd collection of words.

The idea was to modify their structure so that it could open up briefly and suck in some of the Martian soil and then use it to grow a plant, which would in turn produce the first oxygen on Mars. Much to Musk's liking, this new plan seemed both ostentatious and feasible. Musk wanted the structure to have a window and a way to send video feedback to Earth so that the people could watch the plant grow. The group also talked about sending out kits to students around the country who would grow their own plants simultaneously and take notice, for example, that the Martian plant could grow twice as high as its Earth-bound counterpart in the same amount of time. The main thing troubling the space experts

was Musk's budget. Following the salons, it seemed like Musk wanted to spend somewhere between $20 and $30 million on the stunt, and everyone knew that the cost of a rocket launch alone would eat up that money and then some. In my mind, you need $200 million to do it right, Bearden said. Bearden is Dave Bearden. He's a space industry veteran who attended some of these meetings. Back to his quote. But people were reluctant to bring too much reality into a situation too early and just get the whole idea killed. Then there were these immense engineering challenges that would need solving. To have a big window on this thing was a real thermal problem, Bearden said. You could not keep the container warm enough to keep anything alive. Scooping Martian soil into the structure seemed not only

hard to do physically, but also like a flat-out bad idea since the soil would be toxic. For a while, the scientists debated growing the plant in a nutrient-rich gel instead, but that felt like cheating and like it might undermine the whole point of the endeavor. Even the optimistic moments were awash in unknowns. One scientist found some very resilient mustard seeds and thought they could possibly survive a treated version of the Martian soil. There was a pretty big downside if the plant didn't survive, Bearden said. You'd have this dead garden on Mars that ends up giving the opposite of the intended effect. Musk never flinched.

He turned some of the volunteer thinkers into consultants and put them to work on the plant machine's design. He also plotted a trip to Russia to find out exactly how much a launch would cost. Musk intended to buy a refurbished intercontinental ballistic missile from the Russians and use that as his launch vehicle. For help with this, Musk reached out to Jim Cantrell, an unusual fellow who had done a mix of classified and unclassified work for the United States and other governments. Among other claims to fame, Cantrell had been accused of espionage and placed under house arrest in 1996 by the Russians after a satellite deal went awry. After a couple of weeks, Al Gore made some calls and it got worked out, Cantrell said. I didn't want anything to do with Russians ever again. After a couple of weeks, Al Gore made some calls and it got worked out, Cantrell said. I didn't want anything to do with Russians ever again.

Musk had other ideas. Cantrell was driving his convertible on a hot July evening in Utah when a call came in. This guy in a funny accent said, I really need to talk to you. I am a billionaire. I am going to start a space program. Cantrell could not hear Musk well. He thought his name was Ian Musk and said he would call back once he got home. The two men didn't exactly trust each other at the outset. Musk refused to give Cantrell his cell phone number and made the call

from his fax machine. Cantrell found Musk both intriguing and all too eager. He asked if there was an airport near me and if I could meet the next day, Cantrell said. My red flag started going off. Fearing one of his enemies was trying to orchestrate an elaborate setup, Cantrell told Musk to meet him at the Salt Lake City airport, where he would rent a conference room near the Delta Lounge. I wanted him to meet me behind security so he couldn't pack a gun, Cantrell said. When the meeting finally took place, Musk and Cantrell hit it off. Musk rolled out his humans need to become a multi-planetary species speech, and Cantrell said that if Musk was really serious, he'd be willing to go to Russia, again, and help buy a rocket.

In late 2001, Musk, Cantrell, and Adio Ressi, Musk's friend from college, boarded a commercial flight to Moscow. Ressi had been playing the role of Musk's guardian and trying to ascertain whether his best friend had started to lose his mind. Compilation videos of rockets exploding were made, and interventions were held with Musk's friends trying to talk him out of wasting his money. While these measures failed, Adio went along to Russia to try to contain Musk as best as he could. Adio would call me to the side and say what elon is doing is insane a philanthropic jester that's

crazy kentrell said he was seriously worried but was down with the trip and why not the men were heading to russia at the height of its freewheeling post-soviet days when rich guys could apparently buy space missiles on the open market this is Musk would grow to include Mike Griffin and meet the Russians three times over a period of four months. The appointments all seemed to go the same way, following Russian decorum. The Russians, who often skipped breakfast, would ask to meet around 11am at their offices for an early lunch. Then there would be small talk for an hour or so as the meeting attendees picked over a spread of sandwiches, sausages, and of course, vodka.

At some point during this process, Griffin usually started to lose his patience. He suffers fools very poorly, Cantrell said. He's looking around and wondering when we're going to get down to fucking business. The answer was not soon. After lunch came a lengthy smoking and coffee drinking period. Once all the tables were cleared, the Russians in charge would turn to Musk and ask, what is it you're interested in buying? The big windup may not have bothered Musk as much if the Russians had taken him more seriously.

They looked at us like we were not credible people, Cantrell said. One of their chief designers spit on me and Elon because he thought we were full of shit. The most intense meeting occurred in an ornate, neglected pre-revolutionary building near downtown Moscow. The vodka shots started. To space! To America! While Russ, while, why did I keep saying Russ? While Musk sat on $20 million, which he hoped would be enough to buy three ICBMs.

That's the Intercontinental Ballistic Missiles. Buzzed from the vodka, Musk asked point blank how much a missile would cost. The reply? Eight million dollars each. Musk countered, offering eight million dollars for two. They sat there and looked at him, Cantrell said, and said something like, young boy, no. At this point, Musk had decided that the Russians were either not serious about doing business or determined to part a dot-com millionaire from as much of his money as possible. He stormed out of the meeting. It was near the end of February 2002,

and they went outside to hail a cab and drove straight to the airport surrounded by the snow and dreck of the Moscow winter. Inside the cab, no one talked. Musk had come to Russia filled with optimism about putting on a great show for mankind and was now leaving exasperated and disappointed by human nature. The Russians were the only ones with rockets that could possibly fit within Musk's budget. It was a long drive, Cantrell said. We sat there in silence looking at the Russian peasants shopping in the snow. The somber move lingered all the way to the plane until the drink cart arrived. You always feel particularly good when the wheels lift off in

Moscow, Cantrell said. It's like, my God, I made it.iffin and i got drinks and clinked our glasses musk sat in the row in front of them typing on his computer we're thinking fucking nerd what can he be doing now at which point musk wheeled around and flashed a spreadsheet he created hey guys he said i think we can build this rocket ourselves griffin and can Cantrell had downed a couple of drinks by this time and were too deflated to entertain a fantasy. They knew all too well the stories of gung-ho millionaires who thought they could conquer space only to lose their fortune. Just a year before, Andrew Beale, a real estate and finance whiz in Texas, folded his aerospace company after having poured millions into a massive test site.

We're thinking, quote, we're thinking, yeah, you and whose fucking army, Cantrell said. But Elon says, no, I'm serious. I have this spreadsheet. Musk passed his laptop over to Griffin and Cantrell and they were dumbfounded. The documents detailed the cost of the materials needed to build, assemble, and launch a rocket. According to Musk's calculations, he could undercut existing launch companies by building a modest-sized rocket that would cater to a part of the market that specialized in carrying smaller satellites and research payloads to space. The spreadsheet also laid out the hypothetical performance characteristics of the rocket in a fairly impressive detail. I said, Elon, where did you get this? Cantrell said.

Musk had spent months studying the aerospace industry and the physics behind it. elements, fundamentals of astrodynamics, and aerothermodynamics of gas turbine and rocket propulsion, along with several more seminal texts. Musk had reverted to his childhood state as a devourer of information and had emerged from this meditative process with the realization that rockets could and should be made much cheaper than what the Russians were offering. Forget the mice. Forget the plant with its own video feed growing or possibly dying on Mars. Musk would inspire people to think about exploring space again by making it cheaper to explore space. And that spreadsheet created on a plane back from Moscow after failing

to buy a rocket is the entire foundation of SpaceX. So what he does then, he goes on to create SpaceX with that goal in mind. Make it cheaper to

explore space and that's the only way by using reusable rockets and there's the only way and usually by using reusable rockets and there's all these other um ideas behind that and that's the way humans become multi-planetary and he's been going at it now for 14 years 2002 spacex starts 2016 they're now flying rocket rockets in air and landing them on back onges in the ocean. We've seen them do that multiple times now. That's one of the best parts of the book to me because it gives you an insight into who Elon Musk is. He tried to do it the conventional way, if you want to consider that conventional. Not just go and buy them from the people who are making them.

That doesn't work out. He always talks about interviews and other places in the book. He thinks of things from first principles. So when people are saying, oh, you can't do an electric car, the batteries are too expensive. He's like, well, I just looked up on the London Materials Exchange all the components that make up lithium-ion battery and realized that I could do it way cheaper.

And that's where part of the innovation for Tesla comes from. And look what he's doing here at SpaceX. He's like, well, I know what the hell a rocket's made out of. So let's see what these materials are, how much they cost. Can we make the rocket a little smaller? Because I don't need it to be huge. And oh, look, I could do it way cheaper than $8 million rocket. We're going to continue to talk about SpaceX.

So this section of the book is called Pain, Suffering, and Survival. The fourth and possibly final launch for SpaceX took place on September 28, 2008. The SpaceX employees had worked non-stop shifts under agonizing pressure for six weeks to reach this day. Their pride as engineers and their hopes and dreams were on the line. The people watching back at the factory were trying their best not to throw up, said James McLaurie, a machinist at SpaceX. Despite their past flubs, the engineers on Kaua were confident that this launch would work. Some of these people had spent years on the island going through one of the most surreal engineering exercises in human history. They had been separated from their families, assaulted by heat, and exiled on their tiny

launch pad outpost, sometimes without much food, for days on end as they waited for the launch windows to open and dealt with aborts that followed, so much of that pain and suffering and fear would be forgotten if this launch went successfully. In the late afternoon on the 28th, the SpaceX team raised the Falcon 1, that's the name of the rocket, into its launch position. Once again, it stood tall, looking like a bizarre artifact on an island tribe as palm trees swayed beside it and a smattering of clouds crossed to the spectacular blue sky. By this time, SpaceX had upped its webcast game, turning each launch into a major production both for its employees and the public. Two SpaceX marketing executives

spent 20 minutes before the launch going through all the technical ins and outs of the launch. The Falcon 1 was not carrying real cargo this time. Neither the company nor the military wanted to see something else blow up or get lost at sea, so this rocket held a 360-pound dummy payload. What they're referencing here is this is the fourth launch. The first three launches ended in disaster. They all exploded. The fact that SpaceX had been reduced to launch theater did not faze the employees or dampen their enthusiasm. As the rocket rumbled and then climbed higher, the employees back at SpaceX headquarters let out a raucous cheer. Each milestone that followed, clearing the island, engine checks coming back good, was again met

with whistles and shouts. As the first stage fell away, the second stage fired up about 90 seconds into the flight and the employees turned downright rapturous, filling the webcast with their ecstatic hollering. The engine glowed red and started its six-minute burn. The fairing opened up around the three minute mark and fell back toward earth. And finally, around nine minutes into its journey, the Falcon 1 shut down just as planned and reached orbit, making it the first privately built machine to accomplish such a feat. It took six years, about four and a half more than Musk had once planned, and 500 people to make this miracle of modern science and business happen. Earlier in the day, Musk had tried to distract himself

from the mounting pressure by going to Disneyland with his brother Kimball and their children. Musk then had to race back to make the 4 p.m. launch and walked into SpaceX's trailer control about two minutes before blast-off. When the launch was successful, everyone burst into tears, Kimball said. It was one of the most emotional experiences I've had. Musk left the room and walked out to the factory floor where he received a rock star's welcome. Well, that was freaking awesome, he said. There are a lot of people who thought we couldn't

do it. A lot, actually. But as the saying goes, the fourth time is the charm, right? There are only a handful of countries on earth that have done this. It's normally a country thing, not a company thing. My mind is kind of frazzled, so it's hard for me to say anything, but man, this is definitely one of the greatest days of my life, and I think probably for most people here. We showed people we can do it. This is just the first step of many. I'm going to have a really great party tonight. I don't know about you.

Marry Beth Brown, that's his assistant at the time, then tap Musk on the shoulder and pull him away to a meeting. The afterglow of this mammoth victory faded soon after the party ended, and the severity of SpaceX's financial hell became top of mind again for Musk. SpaceX, remember, this section is called pain, suffering, and survival. It's just starting out with a positive. SpaceX had the Falcon 9 efforts to support and also had immediately greenlighted the construction of another machine, the Dragon Capsule, that would be used to take supplies and one day humans to the International Space Center. Historically, either project would cost more than $1 billion to complete,

but SpaceX would have to find a way to build both machines simultaneously for a fraction of that cost. The company had dramatically increased the rate at which it hired new employees and moved into a much larger headquarters in Hawthorne, California. SpaceX had a commercial flight booked to carry a satellite into orbit for the Malaysian government, but that launch and the payment for it would not arrive until the middle of 2009. In the meantime, SpaceX simply struggled to make its payroll. The press did not know the extent of Musk's financial woes, but they knew enough to turn detailing Tesla's precarious financial situation into a favored pastime. A website called The Truth About Cars began a Tesla death watch in May 2008

and followed up with dozens of entries throughout the year. The blog took special pleasure in rejecting the idea that Musk was a true founder of the company, presenting him as a money man and chairman who'd stolen Tesla from the genius engineer Eberhard. When Eberhard started a blog detailing the pros and cons of being a Tesla customer, the auto site was all too happy to echo his gripes. Eberhard is one of the co-founders of Tesla. He was originally running the company did it for a number of years um they talk about it in the book how costs kind of got under out of control by him and he wound up having to get demoted by the board and then musk had to recapitalize the company with his own money so he decided if he was going to recap if he was going to

put all his money in line he had to he had to be the one running the company. He wasn't going to just throw his money in and let somebody else do it. Then, in October 2008, just a couple weeks after SpaceX's successful launch, Valleywag, which is the name of a blog, appeared on the scene again. First, it ridiculed Musk for officially taking over as CEO of Tesla and replacing Drury, on the grounds that Musk had just lucked into his past successes. It followed that by printing a tell-all email from a Tesla employee.

The employee reported that Tesla had just gone through a round of layoffs, shut down its Detroit office, and had only $9 million left in the bank. We have over 1,200 reservations, which means we've taken multiples of tens of millions of cash from our customers and have spent them all, the Tesla employee wrote. Meanwhile, we only delivered less than 50 cars. I actually talked a close friend of mine into putting down $60,000 for a Tesla Roadster. I cannot be a bystander anymore and allow my company to deceive the public and defraud our dear customers. Our customers and the general public are the reason Tesla is so loved. The fact that they are being lied to is just wrong."

Yes, Tesla deserved much of the negative attention. Musk, though, felt like the 2008 climate with the hatred of bankers and the rich had turned him into a particularly juicy target. I was just getting pistol whipped, Musk said. There was a lot of schred and frud at the time, and it was bad on so many levels. Justine, his wife at the time, they were going through a divorce. Justine was torturing me in the press. There were all these negative articles about tesla and the stories about spacex's third failure it hurt really bad you have these huge doubts that your life is not working your car is not working you're going through a divorce and all those things i felt like a pile of shit i didn't think we would overcome it i thought things were probably fucking doomed

musk too also loves the fuck word. It says so explicitly in the book. It's one of his favorite words. When Musk ran through the calculations concerning SpaceX and Tesla, it occurred to him that only one company would likely even have a chance of survival. Remember, this is 2008. I could either pick SpaceX or Tesla or split the money I had left between them, Musk said. That was a tough decision. If I split the money I had left between them, Musk said. That was a tough decision.

If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company. I debated this over and over. While Musk meditated on this, the economy worsened quickly, and so too did Musk's financial condition. As 2008 came to an end, Musk had run out of money. Let's pause right there.

So rewind. Let's see. We're in 2008 right now. Let's go back to 2002 when PayPal sold to eBay for $1.5 billion. Musk makes about $180 to $190 million after taxes. He goes, like we were just talking about earlier, he decides to get crazy, dumps the majority of his net worth into three companies,

all of which are in heavily regulated, expensive industries, and people all think it's crazy. Six years later, you could easily say, okay, look, this guy got what he deserved. He's about to lose everything. Go from almost $200 million to nothing. We have the benefit of hindsight, though. We know it doesn't work out that way,

but still a very interesting part in the book. Okay, so as 2008 came to an end, Musk had run out of money. Burning through about $4 million a month, Tesla needed to close another major round of funding to get through 2008 and stay alive. Musk had to lean on friends just to try to make payroll from week to week as he negotiated with investors. He sent impassioned pleas to anyone he could think of who might be able to spare some money. Bill Lee invested $2 million in Tesla. Bill Lee is an investor, obviously. And Sergey Brin invested $500,000. Sergey Brin is one of the co-founders of Google. A bunch of Tesla employees wrote checks to

keep the company going. That's amazing. In 2008, Musk mounted simultaneous campaigns to try to save his companies. He heard a rumor that NASA was on the verge of awarding a contract to resupply the space station. SpaceX's fourth launch had put it into a position to receive some of this money, which was said to be in excess of $1 billion. Musk reached out through some back channels in Washington and found out that SpaceX might even be a front runner for the deal. Musk began doing everything in his power to assure people that the company could meet the challenges of getting the capsule to the ISS. As for Tesla, Musk had to go to his existing investors and ask them to pony up

another round of funding that needed to close by Christmas Eve to avoid bankruptcy. To give the investors some measure of confidence, Musk made a last-ditch effort to raise all the personal funds he could and put them into the company. He took out a loan from SpaceX, which NASA approved, and earmarked the money for Tesla. Musk went to the secondary markets to try to sell some of his shares in SolarCity. He gets lucky here. Check this out. He also seized about $15 million that came through when Dell acquired a data center software startup called EverDream, founded by Musk's cousins, in which he had invested. Here's a quote from Musk. It was like the fucking Matrix, Musk said, describing his financial maneuvers. The ever-dreamed deal really saved my butt. But Musk had cobbled

together $20 million and asked Tesla's existing investors, since no new investors materialized, to match that figure. The investors agreed, and on December 3rd, 2008, they were in the process of finalizing the paperwork for the funding round when Musk noticed a problem. Vantage Point Capital Partners had signed all of the paperwork except for one crucial page. Uh oh. Musk phoned up Alan Salzman, Vantage Point's co-founder and managing partner, to ask about the situation.

Salzman informed Musk that the firm had a problem with the investment round because it undervalued Tesla. I said, I've got an excellent solution then. Take my entire portion of the deal. I had a real hard time coming up with the money. Based on the cash we have in the bank right now, we will bounce payroll next week. So unless you got another idea,

can you either just participate as much as you'd like or allow the round to go through because otherwise we will be bankrupt end quote that's elon musk talking sal's been balked and told musk to come in the following week at 7 a.m to present to vantage point's top brass the hell not having a week of time to work with musk asked to come in the next day and salzman refused that i'll offer forcing musk to continue taking on loans here's another quote the only reason he wanted the meeting at his office was for me to come on bended knee begging for money so he could say no musk theorized what a fuckhead, here's another quote from Steve Jervison. He's an investor. We're going to get to him right now. Vantage Point was forcing that wisdom down the throat of an entrepreneur who wanted to do something bigger and bolder, said Steve Jervison, a partner at

Draper Fisher Jervison and a Tesla investor. Continuing the quote, maybe they're used to a CEO buckling, but Elon doesn't do that. Instead, Musk took another huge risk. Tesla recharacterized the funding as a debt round rather than an equity round, knowing that that vantage point could not interfere with a debt deal. The tricky part of this strategy was that investors like Jurvetson, who wanted to help Tesla, were put in a bind because venture capital firms are not structured to do debt deals, and convincing their backers to alter their normal rules of engagement for a company that could very well go bankrupt in a matter of days would be a very tough task. Knowing this, Musk bluffed.

He told the investors that he would take another loan from SpaceX and fund the entire round, all $40 million himself. The tactic worked. Here's another quote. When you have scarcity, it naturally reinforces greed and leads to more interest, Jervison said. It was also easier for us to go back to our firms and say, here's the deal, go or no go. The deal ended up closing on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left

and could not have made payroll the next day. Musk ultimately put in $12 million and the investment firms put up the rest. Think about this. He's going to put his last $20 million that he has into an investment round out of the $40 million. This is Christmas 2008, and he goes from $190 million, $180 million, down to a few hundred thousand dollars left. And he gets basically bailed out by bluffing and then closing a 40 million

round for Tesla so that's Tesla to these taking care of Tesla let's let's see what happens next with SpaceX according to reports in the press SpaceX the one-time frontrunner for the large national contract had suddenly lost favor with the space agency Michael Griffin who had once almost been a co-founder of SpaceX, was the head of NASA and had turned on Musk. Griffin did not care for Musk's aggressive business tactics, seeing him as borderline unethical.

Others have suggested that Griffin ended up being jealous of Musk and SpaceX. On December 23, 2008 however, SpaceX received a shock. People inside NASA had backed SpaceX to become a supplier for the ISS. The company received $1.6 billion as payment for 12 flights to the space station. Staying with Kimball in Boulder, Colorado for the holidays, Kimball's brother, Musk broke down in tears as a SpaceX and Tesla transaction processed. $40 million for Tesla, $1.6 million for SpaceX. And just like that, he's back in the game.

For Gracias, the Tesla and SpaceX investor and Musk's friend, the 2008 period told him everything he would ever need to know about Musk's character. He saw a man who had arrived in the United States with nothing, They're referencing Musk's first child died from SIDS, sudden infant death syndrome, when he was two months old. He saw a man who had arrived in the United States with nothing, who had lost a child, who was being beaten in the press by reporters, and his ex-wife, and he was on the verge of having his life's work destroyed. He had the ability to work harder and endure more stress than anyone I've ever met, Gracias said. What he went through in 2008 would

have broken anyone else. He didn't just survive. He kept working and stay focused. That ability to stay focused in the midst of a crisis stands as one of Musk's main advantages over other executives and competitors. Most people who are under that sort of pressure fray. Their decisions go bad. Elon gets hyper rational. He's still able to make very clear long-term decisions the harder it gets the better he gets anyone who saw what he went through firsthand came away with more respect for the guy i have just never seen anything like his ability to take pain you have september 2008 what elon says is probably one of the best single days of his life. SpaceX finally proves to the world that a private company can shoot a rocket into orbit.

You have a financial crisis starting. You have Tesla having payroll issues, production issues. You have SpaceX assets dwindling. And you have Elon witnessing basically the destruction of his life's work. When most people would break, he stayed the course and he pulled it out. And now from 2008 to 2016, SpaceX looks like it has a lot less chance of dying than it did in 2008. It's building all different kinds of product lines. It's hired more people. It's become more valuable over time and they're getting better at what they do. Tesla since then has released the

Model S, goes on to win car and driver's highest ranking ever. People basically call it the best car made in the world. And then Tesla goes on to unveil the Model 3. And what happens? They have the largest single pre-order in world history. Something like 400,000 people put deposits down for a car. I read 100,000 people put a deposit down before they even saw what it looked like. That's how strong Tesla brand is. So that section, again, pain, suffering, and survivals, just one of my favorite parts of the book. And that's not the whole thing. There's still other parts in there, some I had to leave out just for time's sake. So I want to just share a part from the epilogue, and then we'll get out of here. What's clear is that Musk's desire to take on more keeps growing.

Just as I was putting the finishing touches on this book, Musk unfurled a number of major initiatives. The most dramatic of which is a plan to surround the Earth with thousands of small communication satellites. Musk wants, in effect, to build a space-based internet in which the satellites would be close enough to the planet to beam down bandwidth at high speeds. Such a system would be useful for a couple of reasons. In areas too poor or too remote to have fiber optic connections, it would provide people with high speed internet for the first time. It could also function as an efficient backhaul network for businesses and consumers. Musk of course also sees this space internet as key to his long-term ambitions around Mars.

It will be important for Mars to have a global communication network, he said. I think this needs to be done and I don't see anyone else doing it. SpaceX will build these satellites at a new factory and will also look to sell more satellites to commercial customers as it perfects the technology. To fund part of this unbelievably ambitious project, SpaceX secured $1 billion from Google and Fidelity. And a rare moment of restraint must decline to provide an exact delivery date for his space internet, which he forecasts will cost more than $10 billion to build.

People should not expect this to be active sooner than five years, he said, but we see it as a long-term revenue source for SpaceX and to be able to fund a city on Mars. Meanwhile, SolarCity has purchased a new research and development facility near the Tesla factory in Silicon Valley that's intended to aid its manufacturing work. The building it acquired was the old Solyndra manufacturing plant, another symbol of Musk's ability to thrive in the green technology industry that has destroyed so many other entrepreneurs. And Tesla continues to build its Gigafactory in Nevada, while its network of charging stations have saved upwards of 4 million gallons of gas. During a quarterly earnings announcement, J.B. Straubel promised that Tesla would start producing battery systems for home use in 2015 that would let people hop off the grid for periods of time.

Musk then one-ups Straubel, bragging that he thinks Tesla could eventually be more valuable than Apple and can challenge it in its race to be the first $1 trillion company. A handful of groups have also set to work building prototype Hyperloop systems in and around California. The Hyperloop, just in case you don't know that, it was also covered in the book previously, is basically his idea was

if you could fly as fast as the Concorde but never leave the ground. And it's like basically like a pneumatic tube that you'd have these pods in that could get you from, let's say, L.A. to San Francisco in 10 minutes or from across the country in 30 minutes. Elon got the motivation from it because I think California's building what he called, he said they were breaking records for all the wrong reason.

Their high-speed rail system they proposed would be the most expensive per mile, and it'd be slower than what's already out there. So that pissed him off so much that he took some engineers from SpaceX and Tesla. They open sourced this white paper called the Hyperloop and detailed exactly how they think you could build a system. Then there was companies formed and venture capital raised.

And now you have several of these companies trying to build a Hyperloop. So Elon apparently has way more ideas than he has time. And here's where we're going to wrap. I'm more convinced than ever that Musk is and always has been a man on a quest and that his brand of quest is far more fantastic and consuming than anything most of us will ever experience.

It seems that he's become almost addicted to expanding his ambitions and can't quite stop himself from announcing things like the Hyperloop and the Space Internet. I'm also more convinced than ever that Musk is a deeply emotional person who suffers and rejoices in an epic fashion. This side of him is likely obscured by the fact that he feels most deeply about his own humanity-altering quest and so has trouble recognizing the strong emotions

of those around him. This tends to make Musk come off as aloof and hard. I would argue, however, that his brand of empathy is unique. He seems to feel for the human species as a whole, without always wanting to consider the wants and needs of individuals. And it may well be the case that this is exactly the type of person it takes to make a freaking space internet real. So there you have it. If you've made it this far, you've been listening to bits and pieces of Elon Musk's life. And I think these four sections together give you an idea of who Elon Musk is as a man, as an entrepreneur, as an inventor,

and just as a guy that's on a quest to try to fundamentally change the trajectory of the human species. And that is why I think this book is worth reading. And these kind of biographies inspire me when i read them and i want i want to do more podcasts on different biographies so that's going to be the plan moving forward um if you want to read this book and you want to help out the podcast you just listened to simple way to do that in the the show notes, I've included a link to purchase Elon Musk, Tesla, SpaceX, and the quest for a fantastic future. This link is what's called an affiliate link, meaning that if you click on the link and purchase the book, Amazon gives me a little bit of cash, a very tiny amount of cash for sending traffic their way. It's no extra cost to you. It's a great way to support the podcast,

and you get a really great book to read. And books are probably the best bargain we have in entertainment. Where else can you spend $10 or $15 on something that you get 10 to 15 hours of enjoyment out of and that could fundamentally change your life? I hope you guys, I hope you specifically enjoyed the show as much as I enjoyed talking about it and I'll be back soon with another book.