Founders - #369 Elon Musk and The Early Days of SpaceX
Episode Date: November 1, 2024What I learned from rereading Liftoff: Elon Musk and the Desperate Early Days That Launched SpaceX by Eric Berger. ----Ramp gives you everything you need to control spend, watch your costs, and optim...ize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more. ----Founders Notes gives you the ability to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here. ----Join my free email newsletter to get my top 10 highlights from every book----Episode Outline: —Numerous other entrepreneurs had tried playing at rocket science before, Musk well knew. He wanted to learn from their mistakes so as not to repeat them.—Elon announces that he wants to start his own rocket company and I do remember a lot of chuckling, some laughter, people saying things like, ‘Save your money kid, and go sit on the beach.’” The kid was not amused. If anything, the doubts expressed at this meeting, and by some of his confidants, energized him more.—Musk was a siren, calling brilliant young minds to SpaceX with an irresistible song. He offered an intoxicating brew of vision, charisma, audacious goals, resources.—When they needed something, he wrote the check. In meetings, he helped solve their most challenging technical problems. When the hour was late, he could often be found right there, beside them, working away.—The iterative approach begins with a goal and almost immediately leaps into concept designs, bench tests, and prototypes. The mantra with this approach is build and test early, find failures, and adapt. This is what SpaceX engineers and technicians did.—"Here was a man who was not interested in experts. He meets me, he thinks to himself, 'Here is a bright kid, let's employ him.' And he does. He risks little with the possibility of gaining much. It is *exactly* what I now do at DysonThis attitude to employment extended to [Jeremy] Fry's thinking in everything, including engineering. He did not, when an idea came to him, sit down and process it through pages of calculations; *he didn't argue it through with anyone; he just went out and built it.* When I came to him to say, 'I've had an idea,' he would offer no more advice than to say, 'You know where the workshop is, go and do it.' 'But we'll need to weld this thing,' I would protest.Well then, get a welder and weld it.' When I asked if we shouldn't talk to sure someone about, say, hydrodynamics, he would say, 'The lake is down there, the Land Rover is over there, take a plank of wood down to the lake, tow it behind a boat and look at what happens.' Now, this was not a modus operandi that I had encountered before. College had taught me to revere experts and expertise. Fry ridiculed all that; as far as he was concerned, *with enthusiasm and intelligence anything was possible.* It was mind-blowing. No research, no preliminary sketches. If it didn't work one way he would just try it another way, until it did. And as we proceeded I could see that we were getting on extremely quickly. *The root principle was to do things your way.* It didn’t matter how other people did it. It didn’t matter if it could be done better. As long as it works, and it is exciting, people will follow you." — Against the Odds: An Autobiography by James Dyson by James Dyson (Founders #300)—Elon personally interviewed the first 3,000 employees of SpaceX.—His people had to be brilliant. They had to be hardworking. And there could be no nonsense.—SpaceX operated at its own speed.—Pony Express ad: “Wanted: Young, skinny, wiry fellows not over eighteen. Must be expert riders, willing to risk death daily. Orphans preferred.”—I’ve never met a man so laser focused on his vision for what he wanted. He’s very intense, and he’s intimidating as hell.—SpaceX had juice with the best students in space engineering. The freedom to innovate and resources to go fast summoned the best engineers in the land.—Talent wins over experience and an entrepreneurial culture over heritage.—He always made the most difficult decisions. He did not put off problems, but rather tackled the hardest ones first. And he had a vision for how aerospace could be done faster and for less money.—He didn’t want to fail, but he wasn’t afraid of it.—The speed SpaceX worked at relative to its peers could be jarring.—No job is beneath us.—No committees. No reports. Just done.—Most of all he channeled an intense force to move things forward. Elon wants to get shit done.—SpaceX likes to operate on its own terms and its own timeline.—90% of the book is SpaceX failing.—Elon spent much of the flight poring over books written about early rocket scientists and their efforts. He seemed intent to understand the mistakes they had made and learn from them.—SpaceX is in this for the long haul and, come hell or high water, we are going to make this work.—Who knows your customers? Find the person that knows your customers and then hire that person to sell your product to them.—No work about work, just work. Shotwell wrote a plan of action for sales. Musk took one look at it and told her that he did not care about plans. Just get on with the job. “I was like, oh, OK, this is refreshing. I don’t have to write up a damn plan,” Shotwell recalled. Here was her first real taste of Musk’s management style. Don’t talk about doing things, just do things.—Within its first three years, SpaceX had sued three of its biggest rivals in the launch industry, gone against the Air Force with the proposed United Launch Alliance merger, and protested a NASA contract. Elon Musk was not walking on eggshells on the way to orbit. He was breaking a lot of eggs.—A Pegasus launch cost between $ 26 and $ 28 million. SpaceX’s price was $6 million. Musk wanted it front and center on the company’s website. This sort of transparency was radical at the time.----“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 ----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
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All the way back in 2012, I was watching an interview with Elon Musk, and he was asked the
question, how did you learn how to start a company? He had started his first company when he was still
in his 20s. And the follow up to that question was like, did you read like a lot of business books?
And his answer, Elon's answer actually gave me the idea to do Founders Podcast many, many years
later. Because Elon said, no, I didn't read business books. I read biographies and autobiographies.
I thought they were helpful.
And then he went on to say that this was a way to develop mentors in a historical context.
So you develop mentors through these books. And he mentioned people like Benjamin Franklin and
Henry Ford and Nikola Tesla and every person that's ever designed a rocket. Elon has read
a biography on. And that's something that Elon has in common with all of history's greatest
entrepreneurs is the fact that they all read biographies. And another thing that Elon has
in common with history's greatest founders, and it's obvious if you read books about them,
is anyone who is committed to being great at building their business is obsessed with watching
their costs. In fact, there's a line in Andrew Carnegie's biography that says cost control for
him became an obsession. Carnegie would go around repeating this mantra time and time again.
He said profits and prices were cyclical,
subject to any number of transient forces on the marketplace.
Costs, however, could be strictly controlled,
and any savings achieved were permanent.
Elon was like this too.
He put $100 million of his own money into SpaceX.
And there's multiple examples in books about SpaceX
and in biographies about Elon,
where employees of SpaceX would talk about Elon's complete control over company spend.
Like Carnegie and countless of other history's greatest founders, for Elon, cost control was
an obsession. This is something I was talking about with my friend Eric, who's the co-founder
and CEO of Ramp. Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp and have spent a ton of time with them over the last year or two. We were actually at
dinner a few nights ago and we're talking about this almost one in the morning. They all listened
to the podcast and they picked up on the fact that just like for Elon and the early days of SpaceX,
the main theme from the podcast is the importance of watching your costs and controlling your spend
and how doing so gives you a massive competitive advantage. And that is the reason that ramp exists.
Ramp exists to give you everything you need to control your spend. Ramp exists to give you
everything you need to make cost control an obsession. Ramp gives you easy to use corporate
cards for your entire team, automated expense reporting, and cost control. Ramp helps you run an efficient organization.
I read a Ramp customer review the other day that sums this up perfectly.
One of their customers said that Ramp is like having a teammate who you never need to check
in on because they have it handled.
Ramp gives you and your business everything you need to control, spend, and optimize all
of your financial operations on a single platform.
Ramp's website is incredible. Make history's greatest entrepreneurs proud by going to
ramp.com to learn how they can help your business control costs. That is ramp.com.
To understand SpaceX, where it aspires to go, and why it just might succeed,
one must voyage back to the Falcon 1 rocket and dig up the roots.
The seeds for everything SpaceX has grown into today were planted during the early days
of the Falcon 1 program by Elon Musk.
Back then, he sought to build the world's first low-cost orbital rocket.
All of the aspirational talk about Mars would mean nothing if SpaceX could not put a relatively
simple rocket like the Falcon 1 into
orbit. And so, with a burning intensity, he pressed toward that goal. SpaceX began with
nothing but an empty factory and a handful of employees. This small group launched its first
rocket less than four years later and reached orbit in six. The story of how SpaceX survived those lean early years is a remarkable
one. Many of the same people who made the Falcon 1 remain at SpaceX today. Some have moved on,
but all have stories about those early formative years that remain mostly untold.
That was an excerpt from the book that I want to talk to you about today, which is Liftoff,
Elon Musk and the Desperate Early Days that Launched SpaceX. And it was written by Eric Berger.
This book came to my mind because recently I was watching SpaceX's successful completion of the
Starship Flight Test Number 5, where they send the Super Heavy Booster 12 rocket up into orbit,
and then it comes back to Earth and it is caught in the air by these
two massive what spacex calls chopstick arms it was the first time in history a rocket was sent
to orbit and then caught out of mid-air and it's like catching like a small skyscraper the booster
12 is 232 feet tall and so when i saw, I thought back to reading this book for the first time,
like four years ago. And I was like, I remember reading when SpaceX was on the precipice of
bankruptcy and destruction. The first three attempts at launching a rocket into orbit were
failures. The fourth one succeeds. And then you fast forward almost 20 years later, and now they're
catching rockets the size of skyscrapers out of the air. And so given everything
that SpaceX has achieved over the last two and a half decades, I thought it would be interesting
to go back and revisit the first six years of its existence. And so what I did is I reread the book
and this time I focused on how Elon Musk thinks and the decisions that he made in the early days
of the founding of SpaceX. And because Elon was extensively interviewed by the author,
there's a bunch of direct quotes from Elon himself. This is a little bit about the prehistory
of SpaceX. At this time, keep in mind, he's not quite 30 years old. He's been kicked out of PayPal
and he's trying to figure out what to do next. And so Elon tells a story that he's driving down
the road with his friend Adeo. It's raining. They're on a highway. And he says, I told Adeo
Ressi I'd always been interested in space, but I didn't think that was something a private
individual could do anything about. Three decades had passed since Apollo's heyday,
and surely he thought that NASA must be well on its way to going to Mars.
Later that day, still thinking about the conversation, Elon checked out NASA's
website and to his surprise, he could not find any plans for sending humans to Mars.
And so Elon starts doing a bunch of research.
He starts attending space conferences back in California.
There's a bunch of private groups that are trying to do interesting things
and space experiments.
And he starts to read everything he can get his hands on.
He says numerous other entrepreneurs had tried playing at rocket science before.
Musk well knew.
He wanted to learn from their mistakes so as to not repeat them.
He had been reading
everything he could get his hands on about rockets, from old Soviet technical manuals
to John Clark's iconic book on propellants called Ignition. I began to understand why things were so
expensive, Elon said. I looked at the horses that NASA had in the stable. And with horses like Boeing
and Lockheed, you're screwed. Those horses are lame. And he thinks they're lame because the
products they're building are getting more expensive. So Elon's goal, the reason he started
SpaceX is because he wants to make the human species a multi-planetary species. And the first
step towards solving the multi-planetary problem was bringing down the cost of launch. So if NASA
and private companies spent less money getting satellites and people into space, they could do
more things in space and more commerce
would open still more opportunities. This awakening galvanized Musk into action. There's a ton of
people in this book that look at Elon like he's a crazy person, but there is a very ordered sense
of logic to the way that he goes about solving problems. If you want humans to live on other
planets, the first thing you need to do is lower the price it takes to get there. And the example
that they use in the metaphor that they use multiple times is like, if a plane
ticket was a million dollars or $10 million a ticket, then a lot less people would fly. And so
Elon starts building this network of allies. One of his allies is this guy named Mike Griffin.
He, a few years later, actually become NASA's administrator. And he helps Elon organize these
meetings of these space enthusiasts, these engineers, these rocket administrator. And he helps Elon organize these meetings of these space enthusiasts,
these engineers, these rocket scientists. And this is a description of one of these meetings.
He walks in, Elon walks in, and basically announces that he wants to start his own
rocket company. And I remember a lot of chuckling and laughter, people saying things like,
save your money, kid, and go sit on the beach. The kid was not amused. If anything,
the doubts expressed at this meeting
and by some of his confidants energized him more. And so Elon talks about the fact that it wasn't
just the people in the meeting doing this, but his friends, and they were well-intentioned friends,
were trying to get him to not blow all his money. Several friends had already tried to dissuade Elon
from doing this. One friend created an hour-long video compilation of rocket failures and forced
Elon to sit down and watch it.
Another friend told Elon of all the entrepreneurs who had tried and failed.
Elon said, he talked my ear off and said I would lose all my money.
Elon had cleared about $180 million from PayPal and figured he could risk half of his money on a rocket company and still have plenty left over. And one of the most interesting things about reading the beginning of this book
is that you realize that SpaceX was Elon's response
to the stagnation of an existing industry.
And that's actually a good way to look for opportunity.
He identified an important industry that he thought was going completely backwards.
It says companies in the United States and Russia
still use the same decades-old technology to launch rockets into space,
and the price kept going up.
Things were going in the wrong direction.
So Musk founded SpaceX.
Now, another thing that I found fascinating about this is the fact that this stagnation
actually helped Elon recruit the insane talent that he needed.
And so the book says, relative to other aerospace companies,
Musk had a lot to offer prospective employees.
At SpaceX, new hires could rapidly grow their skills and take on new responsibilities.
There was almost no management and everyone worked on the rocket.
Musk was a siren, calling brilliant young minds to SpaceX with an irresistible song.
He offered an intoxicating brew of vision, charisma, audacious goals, and resources. When they needed something,
Elon wrote a check. In meetings, he helped solve their most challenging technical problems.
When the hour was late, he could be found right there beside them working away.
And when they needed a kick in the ass, he deployed his stare and a few sharp words.
Another great thing about this book is the fact that the author interviewed so
many early SpaceX employees, and they were talking about the difference between SpaceX and other
legacy aerospace companies. And so an early SpaceX employee had a friend that worked at Lockheed
Martin on the F-35 stealth aircraft. And this part was absolutely incredible. It says, this may sound
like glamorous work, but it was not. His friend had just a single job, finding a supplier for a bolt on the aircraft's landing gear and ensuring that it met all quality specifications.
That single bolt was the totality of his employment.
Imagine spending years of your life and that is the totality.
The single bolt is a tot years of your life and that is the totality, the single bolt is a
totality of your employment. SpaceX offered the opposite experience. Work was thrilling and
all-encompassing. And one of the engineers made the really important point that because your work
was so wide and the problems you had to solve were so diverse, it actually made you a much
better engineer. A big thing was really having to learn to think. Since nobody gave
you a cookie cutter job and told you what to do, this really made us all much better engineers.
And part of that was because of Elon's strategy on how to design a rocket. He says there are
basically two approaches to building complex systems like rockets, linear and iterative
design. The linear method begins with the initial goal and moves through developing requirements to
meet that goal, followed by numerous qualification tests of subsystems before assembling them into major
pieces of the rocket, such as its structures, propulsion, and avionics. With linear design,
years are spent engineering a project before development begins. This is because it is
difficult, time-consuming, and expensive to modify a design and requirements after beginning to build hardware.
The iterative approach begins with a goal and almost immediately leaps into concept designs,
bench tests, and prototypes. This is the path that SpaceX chose. The mantra with this approach is
build and test early, find failures, and adapt. This is what SpaceX engineers and technicians did.
In James Dyson's autobiography, which I covered, I think, for the fourth time on episode 300,
this is called The Edisonian Principle of Design.
And in Dyson's fantastic autobiography, he talks about his mentor, who's also an inventor
and an engineer, this guy named Jeremy Fry.
And this description of Jeremy Fry sounds a lot like Elon Musk in the early days of
SpaceX.
So here's what James Dyson said.
Here was a man who was not interested in experts.
He meets me. He thinks to himself, here's a bright kid. Let here's what James Dyson said. Here was a man who was not interested in experts.
He meets me, he thinks to himself,
here's a bright kid, let's employ him.
And he does.
He risked little with the possibility of gaining much.
This is exactly what I now do at Dyson.
This attitude to employment extended to Jeremy Fry's thinking in everything,
including engineering.
He did not, when an idea came to him,
sit down and process it through pages of calculations. He didn't argue it through with anyone. He just went
out and built it. When I came to him and said, I have an idea, he would offer no more advice
than to say, you know where the workshop is, go and do it. But we'll need to weld this
thing, I would protest. Well, then get a welder and weld it. When I asked if we shouldn't
talk to someone about, say, hydrodynamics, he would say,
the lake is down there, the Land Rover is over there, take a plank of wood down to the lake,
tow it behind a boat, and look at what happens. Now, this was not a modus operandi that I had encountered before. College had taught me to revere experts and expertise. Fry ridiculed all
that. As far as he was concerned, with enthusiasm and intelligence,
anything was possible. It was mind-blowing. If it didn't work one way, he would just try it another way until it did. And as we proceeded, I could see that we were getting on extremely
quickly. The root principle was to do things your way. As long as it works and it's exciting,
people will follow you. And so back to this book, I haven't read the book in almost four years,
but what I remember, one of the things that jumped out
and stayed in my mind from the first time I read it
was the fact that Elon personally interviewed
the first 3,000 employees at SpaceX.
And there's a ton of interesting stories
and great ideas in here about this.
So he says he understood he would go nowhere
without the right people.
So interview by interview,
Musk sought out the brilliant and creative engineers who would commit themselves wholly to the goal and make the impossible possible.
One of Musk's most valuable skills was his ability to determine whether someone would fit this mold.
His people had to be brilliant.
They had to be hardworking and there could be no nonsense.
Now we have a direct quote from Elon about this.
There are a ton of phonies out there and not many who are the real deal.
I can usually tell within 15 minutes and I can sure tell within a few days of working with them.
Musk made hiring a priority.
He personally met with every single person the company hired through the first 3,000 employees.
He felt it was important to get the right people for his company.
And so here's an example of what an interview with Elon was like.
Musk walked in. To break the ice, Brian made the usual small talk. It's nice to meet you of what an interview with Elon was like. Musk walked in.
To break the ice, Brian made the usual small talk. It's nice to meet you. I've heard a lot
about you. I'm excited to be here. The hyper observant Musk never won much for pleasantries,
moved straight into questions. Do you dye your hair? Musk asked. Somewhat flustered,
Brian replied that he did not. One of Musk's common
tactics during an interview involves throwing a person off kilter to see how a potential employee
reacts. And so Musk kept asking him if he dyed his hair because his hair doesn't match his eyebrows.
So they wind up laughing about this. And then he just talks about like why he is founding SpaceX,
like what is the mission behind it? So the success of NASA's Apollo moon program in the 1960s
had spurred a wave of student interest in math and science. And it led to the success of NASA's Apollo Moon program in the 1960s had spurred a wave of student
interest in math and science, and it led to a generation of engineers, scientists, and teachers.
But this tide had ebbed, and by the time Brian's generation had grown up, the cool kids were not
doing space anymore. They were into medicine, investment banking, or tech. And so Brian is
talking about why he chose to leave a comfortable job and a more
balanced life. He knew he said SpaceX would strip all of that away. His friend was already working
at SpaceX and told him about SpaceX's intense environment. And so he said Brian knew coming
to work for Elon would turn his life upside down and Musk could offer no guarantees of success.
How could a small team build a rocket capable of reaching orbit anyway? No privately funded
company had ever succeeded at
something like this before, and many had failed trying. And so a few days after the interview,
it says a few days later, he received an email from Elon's assistant at one in the morning.
Did he want the job? Brian realized that this company operated at its own speed.
This offer appealed to Brian's sense of adventure, and he decided to seize this chance.
So he becomes employee number 14 at SpaceX.
And when you hear him describe, he's like, wait a minute,
like, I'm going to have no outside life.
I'm going to work every hour of the day.
High chance that we're going to fail.
Yes, I'm going to do this.
It reminded me, I've seen this thing a couple of times in these books.
I was reading a biography of Mark Twain one time,
and he talks about this one Pony Express ad, which is essentially running mail by horseback across the country.
And the job ads that the Pony Express ran became legendary.
It said, wanted young, skinny, wiry fellows, not over 18, must be expert riders willing to risk death daily.
Orphans preferred. That ad yielded hundreds of adventure-seeking
young men who quickly responded and wanted the job. We saw this also, this story with Ernest
Shackleton. He ran an ad, said men wanted for hazardous journey, low wages, bitter cold,
long hours of complete darkness, safe return doubtful, honor and recognition in event of
success. And so you kind of have the SpaceX
equivalent of that. And so then there's a great description of how relentless that Elon could be
once he identifies somebody he wants to hire. There's a very talented young engineer from Turkey
living in San Francisco. His wife works at Google at the time. So it's like, you know, I can't
work for SpaceX because I'd have to move to Los Angeles. But he agrees to be interviewed anyways.
And in the interview, Elon tells him that he already solved this problem for him.
So Elon says, so I heard you don't want to move to L.A.
And one of the reasons is that your wife works for Google.
Well, I just talked to Larry and they're going to transfer your wife down to L.A.
To solve the problem, Musk had called Larry Page, the co-founder of Google.
The engineer sat in stunned silence for a moment.
But then he replied, given all that, I suppose I'll come work for SpaceX.
And there's so many great lines about what an interview with Elon was like.
And so here's a description from somebody that Elon interviewed.
I never met a man so laser focused on his vision for what he wanted.
He's very intense and he's intimidating as hell.
It's tough when you're interviewing with him.
And in addition to this audacious goal that
nobody else was even trying to accomplish, the fact that you had a lot of leeway, the fact that
you would be constantly pushing the limit and tested, your entire job wouldn't be relegated
to a single bolt. All these things helped Elon recruit top tier talent. But another thing that
helped him recruit, there's this guy named Hans who's going to become eventually become the vice
president of avionics at SpaceX. And one of the things that helped him take the risk of joining SpaceX was
the fact that Elon had so much skin in the game. Hans knew that Elon had put a hundred million
dollars of his own money into the project. I think it's impossible to understate how effective
Elon was at drawing in top talent. In fact, there's a great story that
illustrates this. So there's this scientist. He is running a graduate program in space engineering
at the University of Michigan. It is one of, if not the best graduate program in space engineering
in the entire country. And so this professor makes a list. He's like, who are my 10 best students of
all time? And then once he had that list, he wanted to do research.
Like, where did they wind up?
Where are they working?
And he was shocked.
Half of the students, five out of the 10, were working at SpaceX.
And this is what he said.
The results blew him away.
This was before SpaceX was successful.
So I interviewed these former students and asked, why did you go there?
They went there because they believed.
Many of them took pay cuts, but they believed in the mission.
And this was hilarious because this guy is writing this article.
So then Elon goes and visits him.
Elon requests a meeting and he says he asked a single question.
Who were the other five students?
And this is what he said.
I realized the meeting was not about me.
He wanted to recruit them. Elon wanted the other five. And it wasn't just at the University of Michigan either. So
this professor goes and speaks with his engineering peers at places like MIT and University of
Southern California. He says he heard similar things. SpaceX had juice with their students too.
The freedom to innovate and resources to go fast
summoned the best engineers in the country. And the professor has a great line over why the top
students were choosing to work at SpaceX over the established firms. He said, talent wins over
experience and an entrepreneurial culture over heritage. And so another thing that the book is
great at, it gives you a lot of insight into how Elon was
managing there's just a bunch of great lines and stories and here's one description Musk's
in-your-face management style came with benefits he empowered his people to do things that would
have required committees and paperwork and reviews at other companies at SpaceX if they could convince
the company's chief engineer that's Elon Elon, of something, they also earned the approval
from the chief financial officer as they were one and the same.
And this is something that comes up over and over again in the early days of SpaceX.
The faster you can make your decisions, the more iterations you can do, the more iterations
you can do, the more you're learning, the more you're learning, the more success and
capability SpaceX has.
And so there's just quote after quote after quote
in the book of early SpaceX employees
describing Elon this way.
He always made the most difficult decisions.
He did not put off problems.
He tackled the hardest problems first.
He had a vision of how aerospace could be done faster
and for less money.
It was Elon's ability to identify engineering talent
and then motivate his employees to do extraordinary things.
Elon had a knack for inspiring engineers to do things they believed just beyond their ability.
And when they achieved the impossible to reach toward the next goal.
This company has a lot of talent.
Elon's primary capability is to evaluate people quickly and pick the right people.
He is really good at that.
And then he combines that skill with being super involved.
Musk was there every step of the way.
Having Elon there makes things a lot simpler because he is super involved.
He makes those difficult decisions.
When the time comes, he would step in and make those decisions.
He always kept us focused on the vision.
This is one of the things that Elon brought to
SpaceX, risk tolerance. This is one of my favorite lines in the entire book talking about Elon's risk
tolerance. He didn't want to fail, but he wasn't afraid of it. That is another contrast between
SpaceX and the legacy aerospace companies. They become calcified. They're so terrified of taking
any risk that could lead to potential failure. There's another great management technique that Elon would use in
meetings related to this. Failure was an option at SpaceX, partly because the boss often asked
of the impossible from his team. In meetings, Elon would ask his engineers to do something that,
on the face of it, seemed absurd. When they protested
that it was impossible, Elon would respond with a question designed to open their minds to the
problem and potential solutions. He would ask, what would it take? This is something that Elon
has in common with Henry Ford. He would talk about the fact that we already know the limitations.
So if we're trying to do something that's never been done before, which both Henry Ford and Elon were doing in their careers,
I don't need you to tell me the limitations. I need you to open your mind with potential solutions
for this previously unsolved problem. There's a line in Henry Ford's autobiography. He talks
about this. He says, that is the way with wise people. They are so wise and practical that they
always know down to a dot just why something cannot be done.
They always know the limitations. Henry Ford and Elon Musk wanted solutions, not limitations.
And then if we go back to what else motivated these top tier talent to join SpaceX,
there's a very talented German engineer that Elon was recruiting. And one of the reasons he wanted
to join SpaceX is because of the challenge of doing everything within constraints.
And so he said, what intrigued me was trying to build a rocket with 200 people instead of 20,000.
To almost build it in a garage.
Can I use a computer I can buy for $500 versus one I can buy for $5 million?
It seemed to me that's what Elon wanted to do.
And this was precisely what Elon wanted to do because they were spending his money. There's a great description about how Elon thought about the relationship between time and
money and how to deploy resources in the early days of a company. And I found this in the Elon
Musk biography written by Ashley Vance. It says Elon would always be at work on Sunday. And we
had some chats where he laid out his philosophy, said Kevin Brogan, an early SpaceX employee.
He would say that everything we did was a function of our burn rate and that we were
burning through $100,000 per day. It was this very entrepreneurial Silicon Valley way of thinking
that none of the aerospace engineers in Los Angeles were dialed into. Sometimes he wouldn't
let you buy a part for $2,000 because he expected you to find it cheaper or invent something cheaper.
Other times, he wouldn't flinch at renting a plane for $90,000 to get something to quadge,
where they're shooting the rockets later on, because it saved an entire workday so it was
worth it. He would place this urgency that he expected the revenue in 10 years to be $10 million
a day and that every day we were slower to
achieving our goals was a day of missing out on that money.
And so another main theme, in addition to recruiting top talent, is if you're burning
$100,000 a day, you obviously have to go very fast.
So speed is another main theme throughout the entire book.
And the speed that SpaceX worked at relative to its peers could be jarring. After his job at NASA, Brian felt a culture shock immediately upon starting work.
Before he could log into a computer at NASA, Brian had to undergo a detailed security screening
process and multiple orientations. To operate machines that would steer electron beams,
Brian had to sit through days of training courses. At SpaceX, there was none of
that. On my first day of the job, I showed up, the door is not locked, there's no one at the front
desk. I met Hans and he gave me a packet that had some materials about benefits and things like that.
And then he told me what I needed to do. Orientation done. The team was so small that
everyone knew everyone and each employee pitched in as needed with other departments. Everybody
was expected to
carry their own weight and then a bunch more. During their early years of SpaceX, the company
had no support staff beyond Elon's assistants. The early days of Microsoft, it was the same way.
The first 30 employees of Microsoft, there were 28 engineers, Bill Gates, and a secretary.
Back to this. This included a lack of custodial staff.
Gwynne Shotwell, who's going to become very important in SpaceX.
She's the president and COO today.
But at the time of this story, she was the vice president of sales.
So this is Gwynne Shotwell remembers organizing a meeting with government customers.
She checked in on the company's upstairs conference room.
They were going to be there for an hour or in an hour, and it was a mess.
So I got out the vacuum, the vice president of sales vacuuming, and then trying to figure out the coffee. No job was beneath us. Going back to
the fact that Elon prioritized making decisions very rapidly, sped up the entire velocity of the
company. And so it says he could be difficult to work for certainly, but his early hires could
immediately see the benefits of working for someone who wanted to get things done and often made decisions on the spot.
No committees, no reports, just done.
This decisive style carried over into meetings.
If an engineer faced an intractable problem, Elon wanted a chance to solve it.
He would suggest ideas and give his teams a day or two to troubleshoot, then report back to him.
In the interim, if they needed guidance, they were told to email him directly, day or night. He typically responded
within minutes. There's a story about the early days of Amazon that I thought of when I was reading
this section. There's a guy that comes to work for Amazon from Walmart, and his job is to build
out the new fulfillment centers for Amazon. And so he wants to build a $300 million fulfillment center.
He shows these plans to Jeff Bezos.
Jeff loves them.
And so the guy asks Jeff, OK, so who do I need to talk to to get permission to build this?
And Jeff says, you just did.
And that's something that Jeff repeats in his shareholder letters and in some of his speeches.
He says you can drive away great people by making the speed of decision-making really slow. Why would great people stay in an organization where they can't
get things done? They look around after a while and they said, look, I love the mission, but I
can't get my job done because our speed of decision-making is too slow. The opposite of that
is Elon in the early days of SpaceX. Over the course of a single meeting, Elon could be at
turns, hilarious, deadly serious,
penetrating, harsh, reflective, and a stickler for the finest details of rocket science. But most of all, he channeled an intense force to move things forward. Elon wants to get shit done.
Okay, and so another main theme that is repeated throughout the book is how important it was for Elon. He wanted to build as much of the rocket in-house as possible. He wanted to control as much of his business as possible. So it says, from the very beginning, Elon wanted SpaceX to build as much of every rocket as it could to free itself from the cost and schedule vicissitudes of suppliers.
And there's a great example of this.
First, they identify a very talented machine shop that can move as fast as they do.
And then when the two owners of the machine shop have a falling out,
Elon buys the entire shop and brings it in-house.
And so we have one of the co-owners of the company, a guy named Bob Regan,
talking about the difference between working with SpaceX and other people that were also customers of his machine shop.
And so he says, man, those guys would send me some of the wildest crap I'd ever seen.
SpaceX also paid quickly.
Within a day of receiving a purchase order from SpaceX,
Regan would have a check.
With other companies, he would finish a part,
submit an invoice, and receive a check 30 days later.
SpaceX wanted its parts fast.
Regan got the message and began to prioritize their orders.
He had never worked with a company that moved as quickly as SpaceX.
And so this is when Elon's going to actually buy his machine shop and bring it in-house. again this is the speed is just this reoccurring theme that hopefully you've picked up on by now
because it's repeated probably a hundred times in the book one day in the fall of 2003 when they
called and said they needed a particular part rushed over Regan replied that he could not help
he and his business partner had fallen out and the only course was to shut the business down
SpaceX would have to get its parts from elsewhere.
And so SpaceX realizes this would be disastrous. So Elon meets with them. They negotiate over an
asking price. And 10 minutes later, they present him with a contract. It was Saturday, November 1st
at 5 p.m. Elon wanted his new vice president of machining to start work that evening. So he winds
up bringing six of their machinists
in-house and all the machines. And this is why, by bringing it in-house, Elon cut much of his
manufacturing costs in half. Now he could buy a chunk of aluminum and have people in his building
work on it as if it were clay, producing a part on demand without the markup and delay of sending
it to an outside machine shop.
And the lines of communication between SpaceX engineers and the manufacturing crew were wide
open. Before, if I had a problem with one of my customers, I'd have to call the buyer. Then the
buyer would have to call the engineer. And a week later, I might get a call back with an answer.
At SpaceX, Regan sat in the cube farm. If the engineers did something he thought was dumb
or would not work, he could tell them. There was mutual respect. His relationship with Elon was
simple. This is how he describes Elon. Elon cannot stand a liar and he hates a thief.
And if you say you can do something, you better fucking do it. And here's the punchline of this
entire story. SpaceX likes to operate on its own terms and its own timeline.
And this next part does a great job of describing why this was so important to Elon.
Elon taught his team to assess every part of the rocket with a discerning eye.
For a given task, a typical aerospace company would just use whatever part has always been used.
This saved engineers from the time-consuming, difficult work of qualifying a new part for spaceflight.
But SpaceX's attitude was different. True, a product may already exist, but is it optimized
for your solution? Is it from a good supplier? And what about their tier two or tier three suppliers?
And if you need more of them faster, will they meet your needs? If you want to change something,
are they willing and able to change it? And if you improve that product, will they then sell it to your competitors? And let's go back to this reoccurring theme
that Elon is capable of making decisions very fast. They're looking for a testing site
unfettered by government control. They're having a hard time doing this in California.
They were aware of a previous rocket company called Beale Aerospace that was founded by this
guy named Andy Beale. And the company had gone out of business a few years earlier. And so one of Elon's employees was telling him, hey,
this site in McGregor, Texas looks promising. We should go check it out. And it says Elon decided
that day to fly down to Texas and check out the site. The site suited SpaceX's needs because Andy
Beale had developed it specifically to test rocket engines. In fact, Andy Beal is one of the richest people in the country. He started Beal Aerospace with
$200 million of his own money. And so the site has everything it needs, and it also has
a much more cooperative local government. It said the town of McGregor owned everything here and was
willing to lease it. Because local officials wanted the company as a tenant, there would be
minimal interference and no restrictions on the size of their engine. Texas had a much less restrictive regulatory environment than
California with more business-friendly laws. Elon hired Allen, who's the guy who was showing them
the spot, and immediately leased the site. Elon's company was just a year and a half old,
and now he found room to roam in Texas. There, his engine designers would construct a new test site,
one with wide open spaces and few rules.
And then I just love this writing.
Over the next two years,
they would hammer together the Merlin engine
and put it to its paces.
They would burn up thrust chambers,
blow apart fuel tanks,
and raise enough ruckus
to bring the Secret Service to their gates.
But by 2005, they would build something powerful,
almost from scratch
with enough thrust to send half a ton screaming towards outer space.
So one of the benefits of reading this book is that you're constantly exposed to these smart,
dedicated people having to deal with failure after failure, problem after problem. 90% of the book
is SpaceX failing. The second to last chapter is Flight 4, their first successful rocket launch.
And then the chapter after that is how SpaceX almost still goes out of business
because of a lack of funding and the great financial crisis that's happening in 2008.
And so at this point in the book, as soon as they solve the problem of,
OK, now we have a spot where we can test, successfully test our rocket engine.
Once we do that, now we need to be able to launch it.
They thought they already had that problem solved
because they thought they could launch their rocket
from Vanderburg Air Force Base,
which is about an hour and a half
north of the SpaceX headquarters.
And so Musk is giving a talk to his employees
after their first successful test of the rocket.
And like we completed a large milestone.
In a few months, we will receive Air Force clearance to fly.
Only they wouldn't.
And so I'll give you a little background here before SpaceX is forced to build a launch site on a remote island in the Pacific Ocean.
And so it says the Air Force and SpaceX had an uneasy relationship from the beginning.
The military service has a rigid culture, strict hierarchy, and lots of requirements. SpaceX had a loose culture, almost no hierarchy,
and viewed requirements mostly as a waste of time. SpaceX wanted to get things done,
and the Air Force had people whose job it was to review every last environmental,
safety, or technical detail before signing off. The day after SpaceX's successful static fire test,
officials said SpaceX, officials from the Air Force, said SpaceX was welcome to launch its rocket.
But only after the NRO, the NRO is the National Reconnaissance Office, they launched spy satellites.
But only after the NRO's expensive spy satellite was safely in orbit.
The problem is the Air Force couldn't or wouldn't tell SpaceX when that was going to happen.
This placed SpaceX in a horrible position. While the Falcon 1 waited its turn, no one would
compensate SpaceX for its expenses. The company got paid when it launched. By contrast, when the
military awarded a national security launch contract to Lockheed or Boeing, they signed a
cost-plus agreement, where any delays were billed to the government, plus a fee. Technically, we
weren't kicked out of
Vandenberg, Elon said. We were just put on ice. The Air Force never said no, but they never said
yes. This went on for six months. The resources were draining out of the company. Effectively,
it was just like being starved. Almost from the beginning of its existence, SpaceX has pinned
its hopes on this launch site, located only 150 miles from its factory.
SpaceX had invested $7 million in launch facilities at Vandenberg.
There would be no reimbursement.
Elon had to eat the loss.
The company born with DNA that impelled it to go as fast as it could had run into an immovable force.
And so the Air Force wouldn't help them, but the Army would.
So SpaceX's backup plan was to launch from this remote island in the Marshall Islands called the
Kwajalein Atoll or Kwaj for short. This is one of the craziest parts in the book. They had just
worked themselves to exhaustion building one launch site. Now they'd have to turn it around
and build a second one. And this one is on a remote island in the Pacific. Listen to how much work and literally tons of
supplies they had to ship to the middle of nowhere. They had so much to move unless an
employee carried a key rocket part on a two day, two airplane journey from Los Angeles to Quaj.
Most cargo had to be shipped by sea on a month-long journey.
At their headquarters in El Segundo, employees began to pack dozens of sea vans that would be
stacked on large cargo ships for the voyage. Fresh from their experience building up Vandenberg,
the SpaceX team knew they would need a lot of everything to assemble, test, and launch the
Falcon 1. So they stuffed their tools and lifts and pipes and tubing and computers
into 40-foot cargo containers and sent them to the port of Los Angeles.
Over the course of three months, the company shipped 30 tons across the Pacific.
They managed to build and test their first rocket.
That one fails.
What was interesting is on the flight back to the United States, there's somebody on
the plane with Elon, and he's describing what Elon was doing.
Elon spent much of the flight poring over books written about early rocket scientists
and their efforts.
Elon seemed intent to understand the mistakes they had made and learn from them.
And what he does next is a really smart move.
He was placing the difficulty of what him and his team are trying to do in a historical perspective. Keep in mind, by this time,
they've been toiling away nearly seven days a week, almost all hours of the day for years,
trying to build a rocket that'll get into orbit. This is what Elon does. Elon seemed to recognize
the emotional toll that the failure might inflict on some of his engineers. Not long after the accident,
he typed up an uplifting memo to the SpaceX team.
As part of his note,
Elon offered some comforting perspective.
Other iconic rockets, he noted,
had failed often during early test launches.
And so he starts listing ones in Europe and the Russians and the American program.
And he said, having experienced firsthand
how hard it is to reach orbit, I have a lot of respect for those that persevered to produce
the vehicles that are mainstays of space launches today. SpaceX is in this for the long haul,
and come hell or high water, we're going to make it work. And so what's fascinating about this part of the book
is he's got two problems he's got to solve simultaneously. He's got to figure out how to
develop a rocket that can reach orbit. And he's got to secure contracts so SpaceX doesn't run out
of money. And so at this point, he's having a conversation with Gwynne Shotwell. And this is
before she joins the company. And she has a lot of industry experience. So she mentions to Elon in a meeting that you need to hire someone to sell the rocket full time. That at that point,
Elon just had a part-time sales consultant. And she's like, listen, that's not going to work.
So it says later that afternoon, Elon decided that he should indeed hire someone full time.
He created a vice president of sales position and encouraged Shotwell to apply. And so she talks
about the fact that she
had to think about this for a while because she said she was almost 40 years old. She was in the
middle of a divorce and she had two young children to care for. She says it was a huge risk and I
almost decided not to go. But her final decision came down to a simple calculation. Look, I'm in
this business. And do I want this business to continue the way it is? Or do I want to go in
the direction that Elon wants to take it? This is so important. She's going to secure the two contracts that save SpaceX. This
is a very important part in the early days of SpaceX. Musk needed a partner who possessed his
brashness, but also understood the political terrain and had the sophistication to navigate
it. This is where Shotwell would come in. The idea of selling Elon Musk's unproven rocket and
working for someone regarded as a demanding boss did not faze her.
I knew the business by then.
I would be selling to my old compatriots.
Of course I could sell rockets.
No question at all.
That is such an important point and such a great idea.
Who knows your customers?
Who are you trying to sell to?
Who knows your customers?
Find the person who knows your customers, then hire that person to sell your product to them. That's exactly what Elon did. If you're reading through the lines
here, it's exactly what Elon did when he hired Shotwell. From the beginning, Shotwell understood
the complex and evolving relationship between the Air Force, NASA, and private industry.
Elon was still learning about his new federal customers. And then this is one of my favorite
lines,
or favorite stories in the book,
because you just realize that Elon's very easy to interface with.
No work about work, just work.
That's the way he wants to do things.
Shotwell wrote a plan of action for sales.
Elon took one look at it and told her he did not care about plans.
Just get on with the job.
And then Shotwell's response was perfect.
She's like, oh, this is refreshing.
I don't have to write up a damn plan. Just get on with the job. And then Shiloh's response was perfect. She's like, oh, this is refreshing.
I don't have to write up a damn plan.
Here was her first real taste of Elon's management style.
Do not talk about doing things.
Just do things.
And I think this goes back to something Elon mentioned earlier in the book, the fact that it was a benefit, a huge benefit to SpaceX, the fact that the lead engineer and the head,
all the finance and engineering is in the same.
He's in charge of both.
It's in the same brain.
He talks about putting those two functions together makes you move a lot quicker.
He says, I make the spending decisions and the engineering decisions in one head.
Normally, those are at least two people.
There's some engineering guy who's trying to convince a finance guy that this money should be spent.
But the finance guy doesn't understand engineering, so he can't tell if it's a good way to spend money or not.
Whereas I'm making the engineering decisions and spending decisions.
And so Shotwell is introducing Elon to potential customers.
They're all inside the government.
This one guy is another example.
Remember when earlier they were like, hey, you know, rich Internet guy, just like go sit on the beach.
This is like going to be too hard.
Don't do this.
Well, we're now we're several years later and they're still telling him the same thing. And so as a result of this meeting,
I'm about to describe to you, we're going to see that Elon realizes he's got to find a way to gain
attention and put on a show. And so it says Peter Teets represented an important potential customer
as the agency designs, builds and launches a multitude of spy satellites for the U.S. government.
This is the NRO that I mentioned earlier. Teets was generally supportive of the startup's intentions, but he had seen this kind
of presentation before in the book, which I've omitted, and I highly recommend you read the book.
There's multiple examples of all these people that try to start private space companies before Elon.
All of them failed. And so the government agencies just would see the same person trying over and
over again, like, oh, Elon's just going to be like them. Now realizing that Elon's not like anybody else.
I remember him putting his hand on Elon's back and saying, son, this is much harder than you
think it is. It's never going to work. At this remark, Elon straightened up and he had this
look in his eye that Shotwell could easily read. Teet's paternalistic gesture had hardened his
resolve. Shotwell said,
he's going to make sure you regret the moment you said that. And so Elon, throughout his entire
career, and you still see this today, he very much has a flair for showmanship and for gaining
attention. So it says Elon began to believe customers like Teets needed to see real hardware
to believe the company and its booster were legitimate. So it says they worked 18 hours a day to build a full scale model. The rocket itself was hollow, but from the outside looked genuine
enough. The rocket then rolled out of SpaceX's factory for a cross-country journey. Elon wanted
to make a splash in the nation's capital where his customers are. So his rocket was headed to
Washington, D.C. The 68 footlong booster rocket was parked on Independence Avenue across the street from the National Air and Space Museum.
If people needed to see a rocket, Elon was going to show them a rocket.
Shotwell admired Elon's talent for confronting his critics head-on.
Everyone thinks a private company like SpaceX building an orbital rocket is crazy.
They think it's never going to happen.
His attitude was, let's drive the damn thing there and show all the detractors that it's here.
It's funny, when I read this section, I remember that Elon did something like this on a much, much smaller scale for his first startup, Zip2, when he was in his early 20s.
I remember reading this story in Ashley Vance's biography of Elon.
I want to read from it now. It says,
ever marketing savvy, the Musk brothers tried to make their web service seem even more important
by giving it an imposing physical body. Elon built a huge case around a standard PC and lugged the
unit onto a base with wheels. When prospective investors would come by, Elon would put on a show
and roll this massive machine out so that it appeared like Zip2 ran inside of a mini supercomputer. The investors thought that was impressive.
So now there's a third simultaneous problem that they have. They need to build a rocket to reach
orbit successfully. They need to sell the rocket successfully. And then the third thing is they
have to fight corruption. So Elon knows that if SpaceX is going to survive,
NASA has to play an important role.
They need the contract from NASA.
And so something crazy happens.
There is a company, a rocket company called Kistler.
That company goes bankrupt.
The chief executive of that company
was a guy named George Mueller,
who was one of the heroes from NASA's Apollo program.
He's 85 years old at the time.
A year after the company goes bankrupt, who was one of the heroes from NASA's Apollo program. He's 85 years old at the time.
A year after the company goes bankrupt,
NASA announces a new $227 million contract with Kistler.
And so Elon is outraged,
and he does what everybody tells him not to do.
He protests to the government accountability office that this is not fair
and that NASA should be forced to open this up to bidding.
And so Elon describes his thinking and why he did this. I was told by many people that we should not
protest. You've got a 90% chance that you're going to lose. You're going to make a potential customer
angry. I'm like, it seems like right is on our side here. It seems like this bid should go out
for competition. And if we don't fight this, then I think we're doomed. Our chances of success are
dramatically lowered.
NASA being one of the biggest customers of Space Launch would be cut off from us.
I had to protest.
And the result was they won.
The company won.
SpaceX won.
After NASA learned that the U.S. Government Accountability Office would rule in favor
of SpaceX on the issue of fairness, NASA pulled the award from Kistler.
NASA realized it would need to open up a new
competition for cargo delivery. This became the foundation for NASA's Commercial Orbital
Transportation Service, also known as COTS. This was important because the COTS contract,
two years later, SpaceX wins that contract. The Kistler protest was just one of many battles that Elon and Shotwell would fight before government committees and in courtrooms.
This is nuts.
A year later, SpaceX scrapped with three of the titans of the U.S. launch industry.
In one battle, SpaceX and Northrop Grumman traded lawsuits over Tom Mueller and his rocket engine technology.
Tom was the first employee of SpaceX
and the designer of the Merlin rocket engine.
And in another more consequential battle,
SpaceX sued Boeing and Lockheed Martin
over plans to merge their launch businesses
into a single rocket company called United Launch Alliance.
And SpaceX's point was that neither company's new rockets
could compete on price with rivals in Russia and Europe
for commercial satellite launches.
So when this is happening, this is 2005, the U.S. share of global market for commercial launches,
this is like shooting like large satellites for television and other communications into space, fell near to zero.
So when I got to that part of the book, I'm like, OK, in 2005, it's at zero.
What is it now? And so it says in 2023, the U.S. had a 54% share of global commercial launch revenues
with SpaceX's Falcon 9 responsible for the bulk of these.
That's nuts, the role that one company can play from near zero 20 years later to over
half.
So SpaceX's lawsuit said this was a violation of antitrust laws.
They wound up losing that lawsuit.
But this is the punchline.
Within its first three years, SpaceX had sued three of its biggest rivals in the launch
industry, gone against the Air Force with the proposed United Launch Alliance merger,
and protested a NASA contract.
Elon was not walking on eggshells on the way to orbit.
He was breaking a lot of eggs.
And he was right, because at this time, it would cost between $26 and $28 million per
launch.
SpaceX winds up being able to do this for $6 million.
He did something really smart, too.
Because his price was so good, Elon wanted the price front and center on the company's
website needless to say none of the competitors would say hey you would not find pricing on their
websites and so elon's like no no you go to spacex.com you're gonna say hey we can do this
for six million it's going to be on the front page and all these protests and these lawsuits
they directly lead to the two contracts that change SpaceX forever. The first one in 2006
can be for $278 million. And then the one that saves the company after the fourth launch in 2008
is for $1.6 billion. But this is the first contract that changed SpaceX forever. As the summer of 2006
dragged on, SpaceX and the other finalists waited to find out who would receive the lucrative
contracts to design the cargo delivery systems. Then the call from NASA finally came in August.
So Shotwell and Elon take the call.
After hanging up, they called an impromptu staff meeting on the factory floor.
Elon's speech was short.
We fucking won.
SpaceX had won big in a couple of critical ways.
First, there was the money.
The contract value of $278 million would allow Musk to accelerate his plans to build the big
orbital rocket.
And perhaps most significant, with the contract award, NASA had endorsed the company.
That was really important, Shotwell said.
We were a little company.
We were jackasses at that time.
We blew up a rocket in March of that year.
From my perspective, NASA was acknowledging that even though we had a failure, they felt
we were on the right path.
And so now they're still working on trying to get a rocket into orbit.
This is Elon on how difficult the problem SpaceX is trying to solve.
There's a direct quote from him.
Just for your information, it's not like other rocket scientists were huge idiots who wanted to throw their rockets away all the time.
It's fucking hard to make something like this.
One of the hardest engineering problems known to man is making a reusable orbital rocket.
Nobody had succeeded for a good reason.
Our gravity is a bit heavy.
On Mars, this would be no problem.
Moon? Piece of cake.
On Earth? Fucking hard.
Just barely possible.
It is stupidly difficult to have a fully reusable orbital system.
It would be one of the biggest breakthroughs in the history of humanity. That's why it's hard.
Why does this hurt my brain? It's because of that. And so he's pushing his team and himself
to the absolute limits. He's going to get to the point of almost financially breaking as well
in about a year or two.
But this, again, it goes back to what I was mentioning earlier, the fact that his employees respect him because he's actually working alongside them.
He's not an absentee boss.
And so when he suggests a solution to a problem or a potential solution to a problem that doesn't work, they're not upset that he was wrong because he was right there. Musk might have been wrong, but the filthy and exhausted engineers and technicians working with him all night did not begrudge Musk for keeping them at a task that proved fruitless. Rather, his willingness to jump into the fray
and get his hands dirty by their sides won him admiration as a leader. And so this is what the
early SpaceX company culture was from the
perspective of one of the engineers. The timeline involved fairly regular all-nighters. There was a
certain amount of competitive macho culture that was part of it too. Like I can fucking work as
hard as anybody else. I'm not going to be the one that has to go home first. And here's one of the
wild parts. The guy talking right now, he's in his mid-twenties. He's four months into working at SpaceX and he already has responsibility
for the rocket's entire first stage propulsion system. Elon was willing to give talented young
people a ton of responsibility. And so he's talking, his name's Dunn. Dunn is talking about
this point in SpaceX history. I didn't know what I didn't know. If something like that happened
today, I'd be super apprehensive. I'd be very thoughtful about it. But at that time, I was like,
let's go get after it. I just wanted to do the best I could. The way I approached it was to work
my ass off. And so one of my favorite chapters in the entire book comes towards the end. It's
called Eight Weeks. When Elon starts SpaceX, he's like, okay, we got enough money. We're going to
give it three attempts. After the third fail attempt, he's like, we're running out of money. We have
one more shot on this, but we have to do this in eight weeks. And keep in mind when this is
happening. So Elon's 30 when he found SpaceX. When this is happening, it is do or die time for his
company. He is only 37 years old. And so this is how Elon responded to
that third failure. After the third failure, Musk called a staff meeting. Musk chose not to play the
blame game. Instead, he rallied the team with an inspiring speech. As bad as Flight 3 had gone,
he wanted to give his people one final swing. Outside that room, in the factory, they had the parts for a final Falcon 1 rocket.
Build it, he said, and then fly it. He collected everyone in the room and said,
we have another rocket. Get your shit together and go back to the island and launch it.
The period that followed would be the most memorable and arguably important period of
the company's history, hardening its DNA and setting the stage for SpaceX to become the most transformative aerospace company in the world. Now, keep in mind what is
happening with Elon at the time, okay? Elon felt as crestfallen as the rest of his employees. Worse
even, he had bet a lot on SpaceX in time and money and emotional toil with little return.
Now, his personal fortune was running dry. He'd invested everything in
SpaceX and Tesla. Beyond money, his personal life was falling apart. He and his first wife
had split that summer. This is what Elon said. At the time, I had to allocate a lot of capital
to Tesla and SolarCity, so I was out of money. We had three failures under our belt, so it was
pretty hard to raise money. The recession was starting to hit. The Tesla financing round that we tried to raise that summer had failed. I got divorced. I didn't even
have a house. My ex-wife had the house. It was a shitty summer. It was a hell of time to be running
a single cash-hungry startup, let alone two. Musk really had put all of his net worth into rocket and electric car ventures,
and in August 2008, he had almost nothing to show for it. His rocket company had produced a litany
of failures, and Tesla was equally cash-strapped and only just beginning to sell its first product,
the Roadster. And what a great summary of this. Elon had tried to change the world,
and the world resisted. It's unbelievable
how fast they put this rocket together, okay, for the first time. What's even more unbelievable is
they had to do it again the second time. So they were flying this giant rocket in a, I think it's
a C-17, so one of those giant military planes. And the information they had on the C-17, like
the pressure inside the C-17 was outdated. So as they're doing the descent into Hawaii, the rocket crumples. And so they get the rocket to Quash and they call back
to SpaceX headquarters in LA. They're like, oh, you know, the thing crumpled. We have to send this
back and rebuild in LA. And so they're on the phone at this remote island. They're talking to
headquarters, the headquarters in LA. And this is the response from headquarters you need to stop talking and shut up and listen
to what i'm about to tell you you're not bringing that fucking rocket back you're going to strip
that fucking thing like a chevy and that rocket better be fucking disassembled by the time i get
there monday morning there was dead silence on the other end of the phone as the words sunk in
they were going to have to
fix the rocket right there in the tropics. There was no time for quality control or meticulous
records. They did not have six weeks. They had one. And they did it. They said after the fact,
I cannot believe we disassembled an entire stage and reassembled an entire stage in the course of a week. I don't
think we could have imagined that. And so they launch Flight 4 in record time and it works.
The rocket gets to orbit. And yet even after that, SpaceX almost failed because they almost ran
out of money. So it says after sinking six years and $100 million into SpaceX, Elon finally had a real rocket.
When Flight 4 launched, the company's payroll exceeded 500 people and SpaceX's finances remained dire.
Tallulah Riley, which is Elon's girlfriend at the time, described Elon at this time.
She said Elon looked like death itself and described him waking up from nightmares, screaming, and in physical pain.
Even as SpaceX achieved rocket success, both of Elon's major companies spiraled towards bankruptcy.
That fall, friends urged Elon to save SpaceX or Tesla, warning that he could not support both.
He agonized over the decision. It was like having two children, Elon said.
I could not bring myself to let one of the companies die.
And so this is when NASA had an open competition for this program called CRS,
which is Commercial Resupply Services.
And what NASA needed was they needed help keeping astronauts
that are on the International Space Station fed and clothed.
So if SpaceX wins the contract,
they would fly food, water, and supplies to the ISS.
And so while this is happening, they're bidding on this contract.
And it says, still, Musk fretted about how his company's desperate finances
must look to NASA as his personal wealth dried up amid a recession.
Finally, on a Monday morning, December 22nd, 2008, the answer came. They just called my
cell phone out of the blue right before Christmas, Elon said. They were excited to tell Elon that
SpaceX had won one of the two contracts. Musk couldn't believe it. He told them, I love NASA.
You guys rock. After the call, Elon asked Shotwell to immediately sign whatever deal NASA offered.
He harbored a fear that the space
agency might take the contract back. Without the CRS contract, we would have gone down as the
company that made it to orbit and then died. The contract was worth $1.6 billion. Two days later,
on Christmas Eve at 6 p.m., Tesla closed a financing round that provided the Strap Automobile Company with six months of funding. At a stroke,. And then they let you free. Sure, it feels great,
but you're pretty fucking nervous. It was a high drama situation. It's a great story,
but it is way better in recollection than at the time. And then the book ends with this interview
that Elon's doing with the author in 2020. It says nearly two decades have now gone by since
Musk first began thinking seriously about Mars.
During an interview in early 2020, his mind drifted back to that first impulse to get into
the space business. He remembered a gray, rainy day on the Long Island Expressway with his friend
Adi Oresi, and later his frustration upon visiting NASA's website and finding no plans.
He could not understand why humans had remained stuck in low Earth orbit
since Apollo. And so he made a life-changing decision to commit himself to the goal of Mars,
a commitment that has grown stronger over time. That's 19 years ago and we're still not on Mars,
he said. Not even close. It's a goddamn outrage. This is the passion that fires Elon Musk. And that is where I leave it. For the
full story, highly, highly recommend reading the book. If you buy the book using the link that's
in your show notes are available at founderspodcast.com. You'll be supporting the podcast at the same time.
That is 369 books down, 1,000 to go. And I'll talk to you again soon. I just went back and listened to one of the
episodes I made on J. Paul Getty. At the time, J. Paul Getty was considered or thought to be
the richest person on the planet. And something that jumps out from reading his autobiography is
the fact that he made it a priority to learn from history. And he talks about essentially just
studying Rockefeller, like what Getty learned about how Rockefeller built his oil company was literally worth billions when Getty was building his own company. And you just
heard how Elon was constantly prioritizing learning from rocket entrepreneurs that came before him,
because I think they both understood what Getty and Elon understood was there's a lot of truth
in what Charlie Munger said when Charlie said that learning from history is a form of leverage.
That is why so many people that you and I study on the podcast spend so much time learning
from the great people that came before them. If learning from history is a form of leverage,
then Founders Notes gives you the superpower to do this on demand. Founders Notes is the
internal tool that I built for myself to keep track of all my notes for all the books,
all the highlights from the books that I read, and all the transcripts for every episode that
I've made, all in one searchable database that gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs and use it when you need it.
Existing subscribers of Founders Notes have been using it to make decisions inside their company.
They've been using it to prepare for client meetings, for board meetings, to find ideas on hiring, marketing, leadership.
Anytime you hear me reference a past founder
or a past idea on the podcast,
that comes from me searching Founders Notes.
If you are already running a successful company
and you don't already subscribe to Founders Notes,
I highly recommend that you do so.
And once you sign up, you'll have access
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And by popular demand,
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If you're gonna spend hours and hours
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It makes the lessons that you're learning
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founders with an S, just like the podcast, foundersnotes.com. Thank you very much for
your support. Thank you very much for listening, and I'll talk to you again soon.