Founders - #38 The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos

Starting point is 00:00:00 Some 50 years after the advent of the space age, no one had ever flown a rocket past the edge of space and landed it vertically. Now it had been performed twice in less than a month. The sight of the boosters standing on terra firma, scorched but triumphant, portended a sense of arrival and offered a hope for another Apollo 11 moment, the next giant leap many had felt they were promised but had never come. For decades the first stages of rockets were ditched into the ocean after powering their payloads to space. To Musk and Bezos this

Starting point is 00:00:36 was an incredible waste, like throwing away an airplane after flying from New York to Los Angeles. Now they had shown that rockets could fly not just up, but back down, landing with precision and reigniting interest in human space in a way not seen in decades. Musk and Bezos were the leaders of this resurrection of the American space program, a pair of billionaires with vastly different styles and temperaments. Always audacious, Musk had plowed far ahead, his triumphs and failures commanding center stage. Bezos remained quiet and clandestine. His mysterious rock adventure kept hidden behind the curtain.

Starting point is 00:01:19 At its heart, the story was fueled by a budding rivalry between the two leaders of the new space movement. The tension would play out in legal briefs and on Twitter, skirmishes over significance of their respective landings and the thrust of their rockets, and even a dispute over the pad that would launch them. Musk, the brash hare, was blazing a trail for others to follow, while Bezos, the secretive and slow tortoise who was content to take it step by step in a race that was only just the beginning. That was from the introduction of the book that I want to talk to you about today, which

Starting point is 00:01:58 is The Space Barons, Elon Musk, Jeff Bezos, and the quest to colonize the cosmos by Christian Davenport. So today is going to be a little different. Normally each episode is focused on just a biography of one founder. And when I started reading Space Barons, my initial idea was to separate the ideas in this book into two separate podcasts. One was going to be on Jeff Bezos and his ideas, and the next was gonna be on Elon Musk and his ideas. But what I realized after highlighting and organizing all my notes is that the book does such a great job of comparing

Starting point is 00:02:35 and contrasting their styles. This theme that you just touched on in the introduction is present throughout the book, that Bezos is the tortoise and Musk is the hare hare that I just decided, you know what, I'm gonna combine them into one. All right, so let's get right into this book. Amazon's strategy was get big fast,

Starting point is 00:02:54 luring customers with the convenience of the internet and low prices that the site was becoming known for. So this is, let me give you some context. This is right around 2003. Jeff Bezos, Amazon's already, you know, pretty successful, not nearly as successful as it is now in present day. He's taking some of the wealth that he generated from Amazon and he wants to, he he's in Texas looking for land, which is eventually going to be where he's going to build his, where they can build the rockets and launch them into space. And he gets into, he's in a helicopter looking at land. He winds up almost dying in a helicopter crash.

Starting point is 00:03:37 The chapter is actually called A Silly Way to Die, which is a quote that Jeff Bezos said went through his mind while the crash was happening, that this is such a dumb way if I died. So that's just the context. So this is happening in early 2003 is where we're at right now in the book. Okay, so it says, despite the get-rich-quick hype that had surrounded so many internet startups, Amazon took a slow and steady approach, keeping its prices low, offering free shipping, even while critics said it would never work in headlines during the late 1990s businessweek had derided the company as amazon.toast and Barron's called it

Starting point is 00:04:14 amazon.bomb with an unflattering photo of Bezos which showed it to an audience and said who my mom hates this picture so that's Bezos talking to an audience but by early 2003 with sales in every major segment growing by double digits, Bezos was as confident as ever in the company's approach. So I want to stop there again. Something we talk about on every single podcast and every single biography that we read about founders is something very important for you to internalize is that if you're going to do anything, you have to be expected to be criticized. And just understand that some of those criticisms may be valid, but a lot of them are not. And it doesn't matter if they're valid or they're not. You just have to know that they're going to be present.

Starting point is 00:05:00 How silly does Business Week and Barron's look now, 20 years later, saying, oh, you know, this guy's crazy. It's not going to work out. Amazon.toast, Amazon.bomb. He's the richest person in the world. And Amazon, I think, just passed a trillion dollar market cap. It just, it amazes me as humans will constantly talk, even if we don't know what we're talking about, or constantly think that we have the ability to predict the future when we just don't.

Starting point is 00:05:18 It's easy to internalize when you're reminded by it week after week and you see these just gross examples. And one I always use is where Sam Walton's working at JC Penny and his manager is like, Oh Sam, you need to quit. Like you're not made out for retail. And he goes on and becomes the world's biggest retailer. Like it just, it's something that I think founders have to deal with. We have our own issues managing our own mental health and like the doubts and the struggles of building a business and building companies and just know that you know externally people are not going to make it easier

Starting point is 00:05:49 so if Jeff Bezos had to deal with it you're certainly going to have to deal with it too all right so it says um but by early 2003 with sales in every major segment growing by double digits Bezos was as confident as ever in his company's approach it's's working, he said. It's the right investment to make, and it's in the long-term best interest of shareholders and our customers. So what I love about this book is there's tons. Christian Davenport actually interviewed four billionaires for this book. He spent time with Jeff Bezos, Elon Musk, Richard Branson, and Paul Allen. I've completely omitted all the parts about Richard Branson and Paul Allen because they're outside of our scope, but there's a lot of direct quotes from these guys in here, which I think is very valuable when you can hear them speak directly. The iPhone was still four years

Starting point is 00:06:32 away, but from its debut, excuse me, the iPhone was still four years away from its debut, but he was confident that the internet was really only just getting started. I to the, I love this comparison. I've heard him make a couple of times. He compared it, meaning Jeff Bezos compared the internet, compared it to the early days of the electrical industry. The web in 2003 was about where the electrical industry was in 1908, he argued, when the electric socket hadn't yet been invented

Starting point is 00:07:03 and appliances had to be plugged into light sockets. Now, he's saying this in 2003. Think about what AWS has become in present day. If you really do, and Amazon in general is a platform for other merchants, if you really do believe it's the very, very beginning, he said, then you're incredibly optimistic. And I do think that's where we are. I think we're seeing this in a

Starting point is 00:07:25 personally in a number of other industries all sprung out for on top of the internet podcasts being one of them March 2003 was then a good time to go looking for real estate to allow himself a measure of freedom to indulge in his true passion even if he rarely spoke of it he's going to talk a lot about passions in this book, which I think is enlightening for the rest of us. Okay, so this, he's announcing Blue Origin, and he's defending NASA. So again, some of this is going to be like a refresher course for those that have listened to the original Jeff Bezos podcast I did. So it says, he was buying all of the land for his space company, a little-known venture called Blue Origin, based outside Seattle. So it says, They were working on scientific research. And one industry official told The Economist that everyone I know who knows anything about it isn't allowed to talk about it. And please, please don't quote me on that.

Starting point is 00:08:33 So what happens is the reason I say that a lot of this is familiar is because Brad Stone, the author of that great book, he's a young reporter at Newsweek at the time. He winds up going around like in the trash outside of Blue Origin and discovering documents for the original LLC they filed. And then he finds like documents saying that they want to create an enduring presence in space. So he emails Jeff Bezos. He's like, what's going on here? So this is Jeff's response. Stone reached out to Bezos for comment, but Bezos declined to elaborate on Blue Origin's goal for stone's newsweek story it was it's way this is what i love about jeff too it's way too premature for blue to say anything or comment on anything because we haven't done anything worthy

Starting point is 00:09:16 of comment bezos wrote in an email he did however seek to dispel one falsehood that somehow he was doing this out of a frustration with NASA, which many had criticized for going backward after the Apollo moon missions. NASA is a national treasure, and it's total bull that anyone should be frustrated by NASA, he wrote. This is Jeff talking, obviously. The only reason I'm interested in space is because they inspired me when I was five years old. How many government agencies can you think of that inspire five-year-olds, Bezos asked. Bezos was five when Neil Armstrong and Buzz Aldrin landed on the moon in 1969. Okay, so this is a great, the note I left

Starting point is 00:10:01 myself is why don't you start it today? and then also Bezos and his idea that you have to accept wild ideas so Bezos is friends with the science fiction writer Neal Stephenson and it says in 1999 Bezos and Stephenson went to see a matinee afterward in a coffee shop he said this is Neal talking about the conversation he had with Jeff. He said that he had always wanted to start a space company. And I said, well, why don't you start it today? Why not start it today? What was he waiting for? He'd been fascinated with space his whole life,

Starting point is 00:10:35 and now he was finally in a position to do something about it. Things started immediately after that. I think that's important because a lot of us, you know, everybody, I think almost everybody suffers from some level of procrastination. And if you just ask yourself constantly, why don't you start it today? You'll realize that most of the reasons you have for not doing it are just excuses. Their first goal was to explore other ways of getting to space besides using chemical rockets, a technology that hadn't improved much in the four previous decades. For the first three years, we exhaustively looked at every known alternative to chemical rockets,

Starting point is 00:11:09 and we even invented some previously unthought-of alternatives to chemical rockets, Bezos said. I should know by now it's pronounced Bezos, but I fall back to the wrong pronunciation. Please forgive me, you know, if you've listened to this podcast for a long time, I can barely pronounce anything in English for some reason. To develop a whole new technology, they'd consider any possibility, no matter how crazy it sounded. When you're brainstorming, you have to accept wild ideas, Bezos said. And he's going to expound on that idea on the very next page. After three years of research, Bezos and his small team ultimately decided that chemical rockets actually are the best solution.

Starting point is 00:11:43 They're not just a good solution. they're actually an awesome solution for launch. But there was a caveat. They had to be reusable. Rockets had been, at this point, largely expendable. The first stages would boost their payloads into space, separate, and fall back to Earth where they would crash into the ocean, never to be used again. This whole idea where rockets fall into the ocean. Later on, Bezos becomes obsessed with collecting space memorabilia, and he actually hires the team on an expedition to go into the Atlantic Ocean, and he spends like three weeks on the boat with them. They wind up successfully recovering the engines that fell from the Saturn V rocket, which is pretty crazy

Starting point is 00:12:20 because they just sat at the bottom of the ocean for 40 years. Okay, so it said, they were like honeybees sacrificing their lives to use their stinger a single glorious time, all in to the death. But what if rockets didn't need to be that way? What if they could fly again and again like airplanes, instead of ditching into the depths of the ocean where they would corrode and waste away? This, Bezos thought, was the solution they had been searching for. Blue intended to build rockets that would take three passengers or more on suborbital flights to the edge of space. The story didn't use the phrase space tourism, but that's what Bezos was describing and what he had in mind.

Starting point is 00:13:03 Blue's rockets would also do something different, something no rocket had ever done before. After blasting off from the launch pad, they would land vertically. Reusable rockets were a dream that had eluded the space community for years. The government had tried this and failed. So again, at the present time, when this is happening, this is considered a wild idea. There had been a very mature space industry for over 40 years why had no one ever done this and the other note on the next page is what is different now compared to when this idea was first was was last tried we're kind of seeing examples of this in

Starting point is 00:13:35 present day where the technology let's say that there was a lot of ideas and like the original dot-com bubble that didn't work out that now 15 years later have actually worked out because the technology and the markets are much larger so they they they realize that hey there's a lot of stuff that have changed in the last 40 years that we can just apply if we start from scratch and it says how is this situation in the year 2000 different from 1960 what has changed these are questions they're asking themselves and i think this is really good for for entrepreneurs and founders to constantly re-examine their own line of thinking like let me not just keep this is not like a linear progression

Starting point is 00:14:09 like what started if i just start from scratch like what is different now are there ideas that failed in the past that can work now and they're applying this to rock technology but i think it applied to you know infinite number of things the engines can be somewhat better but they're still chemical rocket engines what's different is computer sensors, cameras, and software. Being able to land vertically is the kind of problem that can be addressed by those technologies that existed in 2000 that didn't exist in 1960. That's such an important idea. The revolution would begin in West Texas, where Bezos would eventually acquire 331,000 acres. That's nearly half the landmass of the state of Rhode Island. When you're building a rocket and launching rockets, it's nice to have a bit of a buffer,

Starting point is 00:14:50 he said. He had that and more. A ranch for his family, not unlike his grandfather's in South Texas, remember this part, this is very important, where he'd spent summers and learned the value of self-reliance. A place to launch and land rockets, large enough to hold even the biggest of dreams. A place to stretch out toward the stars. That's just really good writing. Okay, so we're going to skip ahead, and now we're going to enter. So, like I said, they go back and forth between, they weave in the stories. The author does a beautiful job of weaving in

Starting point is 00:15:25 these stories of Elon and Jeff back and forth, back and forth to where it's obvious like the compare and contrast between these two guys. It just smacks you in the face. Okay. So this is going to be a brief Elon bio. I mean, I kind of feel silly because I think a lot of people know this, but maybe they don't. Okay. So Musk was in many ways like a younger version of Beale. Okay. So Beale is this guy, Andy Beale. Andy, I'm not going to say he was like Elon before Elon, because Elon, like I said, he's like a one in a million or one in a billion or whatever, one in 7 billion. But he was in a very eccentric billionaire with a very interesting life story. Something I didn't know that much

Starting point is 00:16:01 about who spent a hundred million of his own money trying to privatize rocket technology. So think of this. This is the crazy part. SpaceX takes over this rocket facility in McGregor, Texas. That was Andy Beals like 10 years before SpaceX got it, or maybe like five years. I forgot the exact time frame. It's not really important.

Starting point is 00:16:21 But SpaceX winds up getting getting a rocket launch site, a test stand, and I forgot how many thousands of acres for like $45,000 a year just because Beale had to close up shop and it was just rotting away. So anyways, he's a very fascinating guy in his own right because he's just a fascinating, fascinating. He's got a crazy life story. So anyways, Musk, you're going to see Beale mentioned in this. I just want to give you some background so you're not like, who the hell is this guy? And you didn't tell me who it was. So Musk was in many ways like a younger version of Beale.

Starting point is 00:16:51 Instead of repairing and reselling televisions, he's talking about what Beale did like when he was a kid, Musk's childhood entrepreneurial streak led him to try to open a video arcade when he was 16 with his brother Kimball in their hometown of Pretoria, South Africa. But they were stopped by the city because of a zoning issue. Elon had a rough childhood and a strained relationship with his father. It was clear that from a young age he was exceptional, and his mother sent him to school early, making him the youngest and smallest in his class, a prime target for bullies. It's a rough culture. Imagine rough. Well, it's rougher than that.

Starting point is 00:17:26 Kids gave Elon a very hard time and it had a huge impact on his life. One story that's in Ashley Vance's great book on Elon Musk, I think they also talk about it in this one, is Elon got jumped by a bunch of bullies one day. They put him in a hospital. And this kind of just solidified his introvertness,

Starting point is 00:17:42 I think is the way to put it. He would just spend his time working on computers and reading books instead. So this is a brief bio for those that don't already know, but he started a company called Zip2 that would help print newspapers, get their content online, and immediately held high customers lining up

Starting point is 00:17:56 from the New York Times to Hearst. Musk sold the company to Compaq in 1999 for $30 million, or excuse me, $300 million. Big difference. His next venture was called x.com, an online bank that merged with PayPal. eBay bought PayPal for $1.5 billion, netting Musk $180 million. He was 31 years old. So he sells his first company for $300 million. I think he makes like $30 million out of the deal. He's in his late 20s. By the time he's 31, he makes another $180 million. Even before the sale musk was thinking

Starting point is 00:18:25 about what he wanted to do next what benefit he would make to the future of humanity biel had said he wanted his efforts to contribute to people's ability to stretch out into the stars and to stay musk too that something needed to be done what if the sun burned out or an asteroid hit earth so now i want to get into uh i'm skipping ahead a little bit but this is musk's thinking on space and we're going to get a lot of um insight into just his his brain here so he said musk began thinking seriously about the question and the probability of an eventual extinction event as he called it the solution find another planet to live on make humans a multi-planet species and create a backup hard drive for the computer race uh for the computer race there just

Starting point is 00:19:13 excuse me for the human race there just in case earth crashes like a faulty computer what i love about um the way elon thinks if you hear him talk and i've read now multiple books on him. I read all of Tim Urban's, I think it's like 70,000 words he wrote about Elon on the Wait But Why blog. If you haven't read it, you can read it for free online. It's amazing. He compares a lot like the brain in your, like your brain is basically software to the hardware. Like the analogy he uses a lot is, okay, so the software is to hardware what your brain is to your body. And this idea where he's like, oh, well, you know, looking at the human race, like we just need to make a backup. Like I just think that's a really interesting idea.

Starting point is 00:19:52 The best bet he thought is to colonize Mars. One night he was driving home from a party on Long Island to New York City with his college friend, Adio Ressi. Now this is going to be Adio talking. We were both interested in space, but we dismissed it as soon as it came up. Like, oh, that's too expensive and complicated. Then two miles would go by. Well, how expensive and complicated could it be? Two more miles.

Starting point is 00:20:15 It can't be that expensive and complicated. That night, Musk went back to his hotel and logged onto the NASA website, looking for the plan to get Mars. Because of course there had to be a schedule, he said. And I couldn't find it. I thought the problem was me. Because of course it must be here somewhere on this website. But it was just well hidden. It wasn't on the website because there wasn't a schedule. Musk, a ravenous reader of science fiction, had expected by this point in his life that there would be a base on the moon and trips to Mars powered by the robust space program built on the Apollo lunar missions. If in the 1960s,

Starting point is 00:20:51 the United States could get a man to the moon in less than a decade, surely there were great things to come. He was overcome with what he called a feeling of dismay. I did not want Apollo to be our high water mark. We went backwards, and that is a great tragedy. So he does what he always does when he wants to learn something. He says, Musk had read every book he could find on the subject, as Beale had, and he came away convinced that the best way to acquire a rocket was to build it himself. And again, before I finish the sentence, remember what I just said about the criticism Bezos was getting. He says, he was convinced that the best way to

Starting point is 00:21:34 acquire a rocket was to build it himself. No matter how many times friends told him he was crazy. He shared the banker's zeal. They're talking about banker because Beal later in his life started his own bank and that made him a billionaire. He shared the banker's zeal of lowering the cost of space travel and decided he'd try to upend the government-dominated business model that Lockheed Martin, Boeing, Northrop, and others had been feasting on for years. On March 14, 2002, Musk incorporated space exploration technologies. Many of his close friends felt they needed to stage an invention. A billionaire with no experience in space could not start up a rocket company and a manned space program. Just ask Andy Beal. Okay, we're going to skip ahead. Musk builds his rocket, and this part is about how Musk gets NASA's attention.

Starting point is 00:22:27 Musk had built a rocket in just over a year. He couldn't get anyone at NASA to pay attention. By the end of 2003, Musk decided that if NASA wouldn't come to him, he would go to it. The FAA was preparing to celebrate the 100th anniversary of the Wright brothers' first powered flight with a party at the National Air and Space Museum. And Musk decided he'd show up and bring his new rocket. In case you're a new listener to Founders, I did a podcast on the Wright Brothers also. It's based on David McCullough's great book on the Wright Brothers. That book is like a 200-page book. I think you can read in a day. Let's call it two days. I think every entrepreneur should read that book because it teaches you about a level of resourcefulness that I think is handy to everybody. They literally created powered flight with the profits of a very small bicycle business.

Starting point is 00:23:16 And just the resourcefulness of Wilbur Wright, Orville Wright too, both of them, but especially Wilbur. It's just, I don't know, it's a great book. Okay, so for the event, SpaceX loaded the seven-story rocket onto the back of a custom trailer and hauled it to cross country to Washington, D.C. So he's got this 70-foot long rocket on the back of a trailer, and they're driving it to Washington, D.C. As Musk, then 32 years old, parked his rocket outside the headquarters of the FAA, tourists who were headed to the National Air and Space Museum stopped to gawk at the street side exhibit. A shiny white missile that stretched seven stories long,

Starting point is 00:23:50 squatting in real estate usually reserved for hot dog vendors. He wasn't just selling his rocket, but what it represented. The crazy idea, and it is a crazy idea, the crazy idea that a small startup could succeed in space. Beale had gotten further than many had thought, and he put a nice dent in the wall that kept untraditional players out of the space business. But if Musk was going to avoid Beale's fate, he didn't just have to build reliable rockets. He had to upend the industry's entrenched hierarchy. That would take more than just sound engineering it would take bravado

Starting point is 00:24:25 and guts a delusional fueled excuse me a delusion fueled by ego luck and an appetite to fight the establishment relentlessly what they're talking about there is an appetite to fight i wonder if the bullying that elon suffered early in life kind of manifests itself later in life when he had access to resources and more power. Because as you'll see in this book, he picks fights with basically the military industrial complex in the United States, which I don't, it's just mind boggling to me. Okay. So I'm going to skip to the next chapter. There's some interesting parts in here that I learned from. So this is where NASA visits space. After that stunt, he got their attention. So they finally visit SpaceX. And

Starting point is 00:25:08 we're going to get some more insights into Elon's personality. And it says, when they walked through the doors of Musk's shop, the quartet, I mean, there's four guys from NASA, became the first NASA officials ever to visit SpaceX's headquarters. It was unlike any rocket company they had ever seen. Employees had set up ping pong and air hockey tables and rode around on a Segway. Musk would drive his a million dollar McLaren F1 sports car through the hangar door close to his cubicle right onto the factory floor. But the employees were doing real work, building engines and hardware. They looked around at the small team that was just then, that it was only 42 employees, most engineers and hardware. They looked around at the small team that was just then that it was only 42 employees,

Starting point is 00:25:46 most engineers and technicians. He saw some faces he recognized from some of the top aerospace companies in the world. Aggressive hiring, they noted in their report. Highly talented, hand-picked team. Most of all, they were impressed with Musk, who was surprisingly fluent in rocket engineering and understood the science of propulsion and engine design. Musk was intense, pre-naturally focused, and extremely determined. This was not the kind of guy who was going to accept failure, they remembered thinking. So he makes friends with this guy Sarsfield who's part of the people from NASA that went to visit him. Once Musk built a relationship with him. He's constantly like lighting him up with questions.

Starting point is 00:26:31 And so this I thought was funny. This is the insight into his personality. It says, he sends text in a constant flow, Sarsfield recalled. I found him to be consumed by whatever was in front of him and anxious to solve problems. This combined with a tendency to work 18 hours a day, is a sign of someone driven to succeed. Most of us struggle with fear, Sarsfield said. We fret about this and that and generally dread looking dumb.

Starting point is 00:26:56 I found Elon fearless in this regard. He was not afraid to ask a question that proves he doesn't understand something, which I think is helpful for all of us to adopt. The world is far too complex for any one human or any or all of humanity combined, for that matter, to actually understand this this world that we found ourselves living in. So this idea that you'd be afraid to ask questions because you like people are going to think you're dumb. No one knows everything. Like, I don't know. I just asking questions asking questions i think to me it's a sign of intelligence not the opposite okay so this is uh remember how the author is comparing you know the hair the crazy hair is just going you know headlong just running as fast as he can like kicking up dust and making a mess uh elon winds up suing nasa so he says nasa had just awarded a 227 million dollar sole source contract to another commercial space company kistler aerospace musk wanted to know why spacex

Starting point is 00:27:55 or any other company hadn't been allowed to bid on it so he uh he gets a response from nasa says hey you know don't worry there's to be other things in the future. But the guy that's running Kistler, he was part of the Apollo. This guy named George Mueller, he was an aerospace legend. He ran the Office of Manned Spaceflight during the Apollo era. There's all this other stuff. So basically what Musk finds out is there's just an element of crony capitalism. The system is rigged. Why did they give him the $227 million

Starting point is 00:28:28 sole source contract? Was it because they were the best commercial space company? No. The sentence I'm going to read you could induce somebody into a state of rage. The young company, meaning Kistler Aerospace, the young company was in trouble

Starting point is 00:28:41 and had filed for bankruptcy in 2003, owing $600 million to creditors. The NASA contract would help it stay afloat. That is not a good use of taxpayer dollars. So Musk was incensed and felt that the contract was unfair, if not illegal. Like Andy Beal, he felt that NASA's role wasn't to prop up chosen companies. Musk took his complaint to top NASA officials, and in a meeting at NASA headquarters in Washington, he threatened to file a legal challenge over the no-bid contract with the Government Accountability Office, the GAO. I was told by everyone, you do not sue NASA, Musk recalled.

Starting point is 00:29:27 I was told the odds of winning a protest were less than 10%, and you don't sue your potential future customers. I was like, look, this is messed up. This should have been a competed contract, and it wasn't. So there's a quote that I love. It's from Gwynne Shotwell, who's the president of SpaceX, and it says, Elon fights for the right thing, and he says if people are going to get offended by you fighting for the right thing, then they're going to get offended. From the beginning. Now this is an important part too, because this is constantly what we're about to learn right here. This one sentence is constantly referenced in the book and they contrast it with the, um, the motto of

Starting point is 00:29:58 blue origin from the beginning. SpaceX's mantra was to set audacious, nearly impossible goals and don't get dissuaded. And this is the part. Head down, plow through the line. So this whole head down, plow through the line, that's something that's repeated at SpaceX. The GAO, which oversaw the protest, a couple pages later we find out that Elon was actually right to do this. So this is the GAO, which oversaw the protest, forced NASA to withdraw the contract. SpaceX had won. NASA would later open up another contract, and at this time, SpaceX could compete.

Starting point is 00:30:33 This is now must-talking. That victory with the GAO was important for the future of SpaceX. So skipping ahead, now we're going to go back to Jeff. Nearly 500 miles to the west on the land he had purchased clandestinely, Bezos was quietly building his own rocket company. Obsessed with secrecy, he was as quiet and slow as Musk was loud and fast. While Musk thrust his rocket under the spotlight on Independence Avenue, Bezos kept his company's work hidden.

Starting point is 00:31:02 So the tortoise and the hare are actually going to meet for dinner. This is, well, let's just go right to it. We talked about rocket architectures, Musk later recalled. It was very clear technically he was barking up the wrong tree, and I tried to give him the best advice I could. Some of the engine architectures they were pursuing were the wrong evolutionary path. Some of the ideas that Bezos proposed, SpaceX had already tested. Musk said, dude, we tried that and it turned out to be really dumb. So I'm telling you, don't do the dumb thing we did, he recalled saying. I actually did my best to give good advice, which he largely ignored. So this interesting part about him largely ignoring kind of goes back to

Starting point is 00:31:38 what we talked about a few minutes ago, that Bezos believed that you have to try wild ideas, even if other people failed at them before. Unlike Musk, Bezos wasn't in a rush. He was happy to experiment and fail, to try new ideas, even if they had been tried before and went nowhere. Bezos had vast amounts of patience. This was a man who was, after all, building a 10,000-year clock inside of a mountain on his West Texas property that would be a symbol, an icon for long-term thinking, he had written. So they're talking about the clock. I think it's called the clock of the long now. I listened to a podcast about it, and then I actually went to the website and read about it, I think sometime last year. It's interesting. I'd look into it if you have a few

Starting point is 00:32:23 minutes. This sentence sticks out to me. Bezos had a vast amounts of patience. I don't know. I think that's like a superpower. I really do. The more I learn about this guy, they talk about he went to a Montessori preschool. If you know that they jump from like subject to subject, kind of letting the kid learn about little different things at their own pace. Well, when he was a kid, the teacher was literally like so um it goes from like station to station right so your kid is there maybe three four years old in one station working as they playing as they want and then eventually teachers say okay now move to the next station they would literally he'd be so basis would have so much patience and so much uh concentration they'd have to pick him up and move him to the next station

Starting point is 00:33:03 um i don't know i find that fascinating. Despite the seemingly plotting steps he would take, he had a sense of urgency and a direction. Only, as he said, you get there faster when you take one step at a time. The company's motto was, it's something in Latin that I'm not even going to try to pronounce, but the important part is what it translates to to and that's step by step ferociously perhaps none of its symbols were more important than a pair of turtles reaching up toward the stars an homage to the winner of the race between the tortoise tortoise and the hare the turtle was blue origin's mascot this is i love this saying too. The embodiment of another of one of Bezos' favorite sayings, one derived from US Navy SEAL training. Slow is smooth and smooth is fast. It was the opposite of SpaceX's head down, plow through the line. Now Musk and Bezos were playing the parts in a

Starting point is 00:34:02 modern version of Aesop's fable. The hare had burst forward, dashing ahead, kicking up a tumultuous plume of dust, while the tortoise creaks slowly, uttering softly in an I-think-I-can, I-think-I-can cadence. Slow is smooth and smooth is fast. Slow is smooth and smooth is fast. Slow and smooth and smooth is fast. Okay. Oh, so this is, okay, so there's going to be, I love hearing stories. One of my passions besides entrepreneurship and reading and podcasts is history. And so there's a great deal about space history in this book.

Starting point is 00:34:40 I really hope after I'm done with this podcast, you guys buy this book because it was really, really, the author just did a fantastic job. And there's so much of the book that is obviously not going to make it into the podcast, I think it's worth reading. Okay, so this is about a giant circle. And this is going to blow, this just blew my mind. So let me read it to you. First, the Soviets launch of Sputnik open a new frontier space one that creates new difficulties reminiscent of those attending the event of the airplane half a century ago the wright brothers is obviously all over this book too just like uh the astronauts a lot of them were inspired by the wright brothers now these space billionaires are in turn inspired by the people that are inspired by the wright brothers which is is the astronauts in the Apollo program.

Starting point is 00:35:30 The new organization, so they're talking about America's response to Sputnik. And what I love about them is, you know, and who knows if this is even possible now. But the idea of, hey, our country's falling behind. The Russians are beating us in the race of space. It's not like, oh, let's be all xenophobic. It's not. It's, hey, let's just get smarter and let's figure it out. And I think that's all you can ever do in life in any problem. And so what's their response? They said, okay, we're going to create this new agency.

Starting point is 00:35:56 The new organization would be called the Advanced Research Project Agency, ARPA, which you now know as DARPA. Born from what the secretive agency now calls, I love this, born from what the secretive agency now calls the traumatic experience of technological surprise. That's the term they used for Sputnik, the traumatic experience of technological surprise. That's fantastic. ARPA would be a sort of elite special force within Pentagon made of its best and brightest scientists and engineers. One of the top choice, so they talk about the Pentagon at the time has to recruit, they're trying to recruit top talent agency to run a top talent to help run the agency. One of their top choices was Lawrence Preston Gies. I don't know if it's G-I-S-E. I don't know if it's Gies or guys, but I'm going to go with Gies Gies. But this is important, and I think if you're paying close attention,

Starting point is 00:36:46 you're going to have the answer to the question I'm about to ask you. Born in Texas, Gies had served during World War II. Gies was intrigued by the possibility of ARPA and what it represented at the dawn of the space age. Gies had a very impressive resume as well. He served in World War II. I'm going to have to skip over much of it, but he's a very fascinating guy. So the agency was controversial even before it was formed, Gies said in 1975. It was that tenuous back in the day. After three years at ARPA, Gies was lured

Starting point is 00:37:16 back to the Atomic Energy Commission, which offered him a job in top management. Gies would continue to serve at the Atomic Energy Commission until 1968 when he wanted to close a factory that politicians wanted to keep open. The politicians prevailed and Gies retired to his ranch in South Texas. There's your first hint. He was young, just 53 years old, but he was looking forward to life on the ranch. Second hint, and now you're going to understand why. But he had a young grandson to tend to. A remarkable little boy with big ears and a wide smile who shared his middle name. Jeffrey Preston Bezos.

Starting point is 00:37:59 Now here's the note that blew my freaking mind. This is a giant circle, okay? So Sputnik births ARPA, right? ARPA, later called DARPA, births the internet. The internet then births Jeff Bezos' fortune, and Jeff Bezos' fortune then births, which he then invests into rocket technology and births Blue Origin. It's a giant freaking circle. Sputnik to ARPA, ARPA to the internet, internet to Jeff Bezos being the richest person in the world, and then the richest person in the world trying to privatize space. That blew my mind. Okay. So the reason I included Gies in here is because he was influence on to to Jeff so there's a Jeff Jeff's mother had him when I think

Starting point is 00:38:48 he was like 18 very young his his original father left and his grandfather kind of made sure that he left because he was kind of like a nerder wall his grandfather paid for him to his grandfather paid for Jeff's father to attend school. You end up dropping out. You try to get him a job. It just wasn't working out. So what happens is Jeff's mother meets Miguel Bezos.

Starting point is 00:39:17 I think they call him Mike. Anyways, he's a Cuban immigrant, something close to my heart because, as I said before, my own family, my dad's side side left a year after Castro took over. And so Jeff Bezos' adopted dad, who Jeff considers his dad, is actually a Cuban immigrant. He winds up going, or I guess exile is a better way to describe what happened with the Cubans. But he winds up going to meeting Jeff's mother when Jeff was four, right? At, I think it's University of New Mexico, where I think he was getting a degree in like mechanical engineering. He's extreme, Miguel was extreme, Mike, whatever you call him, was extremely hardworking and basically a really good father figure to Jeff.

Starting point is 00:39:58 But another early influence in Jeff's life was his time with his grandfather, which if you hear Jeff speak, it's all over these books. He talks about his grandfather all the time. So let's see what he learned from his grandfather. After school got out for the year, Bezos was shipped off to the ranch where he spent every summer for the age of four to 16. It was rural and isolated, a place where Bezos learned the value of self-reliance from his grandfather. Pop, as Bezos called him, was patient and gentle and taught his grandson to live a rancher's life, fixing windmills and laying pipe. On the ranch, Bezos learned to vaccinate and castrate cattle, and when the D6 Caterpillar bulldozer broke, Pop and his eager grandson built a crane to lift the huge gears out.

Starting point is 00:40:42 It was, Bezos recalled, an incredible, incredible experience. Ranchers and anybody I think who works in rural areas, they learn how to be very self-reliant. And whether they're farmers, whatever it is they're doing, they have to rely on themselves for a lot of things. It's interesting that he mentioned farmers. If you'd listened to last week's podcast about the Banana King, he considered himself a a farmer and self-reliant is a great way to describe samuel zamore bezos spent a lot of time with his grandfather who he said was always incredibly respectful of me even when i was a little kid and would entertain long conversations with me about technology and space and anything i was interested in well somebody that worked at arpa talking about technology and space and anything I was interested in. Well, somebody that worked at ARPA, talking about technology and space,

Starting point is 00:41:25 is probably a good person to listen to their little grandson about. At the same time, this is the power of books, which is something, obviously, I'm an evangelist for reading. Let's get to that right now. Bezos discovered, so they talk about sometimes in the hot Texas heat, they'd go inside if it's too hot. So he said, Bezos discovered the county library, which was not much larger than a one-room schoolhouse

Starting point is 00:41:46 and had extensive science fiction collection that had been donated by town residents. How crazy is this? So it says, the library had maybe a few hundred science fiction novels, all of the classics, Bezos recalled. There was a whole shelf of them there,

Starting point is 00:41:59 and over several summers, I worked my way through that collection. So because of the, this is, I'm amazed at how things are always connected. Because of the generosity of some town resident in a tiny town in the middle of Central Texas, Jeff Bezos winds up reading hundreds of science fiction novels throughout his childhood. And these novels inspire him to build the company he's building now. I just love that story. By the time he got to high school, Bezos' passion for space merged with his prodigious intellect and curiosity.

Starting point is 00:42:30 In high school, he wrote an essay titled, The Effect of Zero Gravity on the Age and Rate of the Common Housefly. And here's another. This is why it's so important that you should monitor who you get exposed to and what you allow in your mind because humans are deeply memetic, which just is a fancy way of saying that we all borrow and copy each other constantly. And you'll do this even on the subconscious level if you're not careful. So that won him a trip to NASA's Marshall Space Flight Center in Huntsville, Alabama. This was where NASA built its rockets, the home to many of the most accomplished engineers and sharpest minds.

Starting point is 00:43:07 The trip only strengthened his enthusiasm for space if he had fed himself a steady dying of science fiction fantasy in the books he devoured as a kid he was now exposed to actual hardware the equipment that made the dreams real and a couple paragraphs later i thought this was funny it was very difficult to punish i was very difficult for my parents to put for oh okay let me try this again guys i was very difficult to punish for my parents because they would send me to my room and i was always happy to go to my room because i would just read jeff bezos once said as valedictorian his speech at graduation was about space for even a brilliant 18 year old it was a precocious glimpse into the future. He talked about plans to colonize space, to build habitat like space hotels,

Starting point is 00:43:53 and the day when millions of people were living among the stars. He's saying this at 18 years old. So before I tell you the rest, I don't know what I left myself. Same idea 40 years later. He says almost this. He still, today, when he talks about this, he says says the same thing that's just mind-blowing to me okay so he says uh earth had limited resources and so his idea was to get humanity off of its surface into space so as to protect the planet the whole idea is to preserve the earth at the time he was

Starting point is 00:44:23 saying it should be designated a national park space and humanity's future in it was something he had been thinking and reading about for some time so this is where elon and jeff clearly deviate um you hear him talk about this like earth should be zoned like a national park or like a light industrial residential area and all the my all the heavy um uh industry that we need for energy consumption and the like should be put into space. It's very different from Musk's let's make a backup planet. This is another short anecdote about how things change. So whatever situation you're in now, it's not the situation like that forever.

Starting point is 00:44:58 In 1993, when Jeff Bezos was 29, he went to an auction at Sotheby's that was selling artifacts from Russia's space program. Amazon didn't exist yet, and Bezos couldn't keep up with deep-pocketed collectors that Sotheby's attracted. So he bids on a bunch of this. He loses on every single thing he bids. Simply, he didn't have the money to keep pace with the other bidders. Space and even its artifacts seemed as far away and inaccessible as ever ever over time things change okay so this is i think is very important so it says blue origins website at the time was low-key revealing level little basil's name didn't appear anywhere on it though it did give away that the company's goal was creating enduring human space and presence or during human presence in space but its jobs page ad was less welcoming even arrogant

Starting point is 00:45:46 and i don't find arrogant i think it's actually funny is not the right word i don't know it's just i don't find arrogant applicants needed to be highly qualified and dedicated individuals who meet the following criteria you must have a genuine passion for space without passion you will find what we're trying to do too difficult. There are much easier jobs. You must want to work in a small company. If you can happily work at a large aerospace company, you're probably not the right person. Our hiring bar is unabashedly extreme. We insist on keeping our team size small, measured in the dozens, which means each person's occupying a spot must be

Starting point is 00:46:26 among the most technically gifted in his or her field we are building real hardware not powerpoint presentations this must excite you you must be a builder it says the goal of blue origin then was to create the infrastructure that would finally allow for humanity to stretch out the stars. And then this is Jeff saying the dreamers come first. It's always the science fiction guys. They think of everything first. And then the builders come along and they make it happen. But it takes time.

Starting point is 00:47:00 He was patient, willing to take his time. You have to be very long-term oriented I love this idea like there's not many ideas that you think you need to succeed in life you just have to constantly repeat them because it uh Not only does it help yourself when you repeat these ideas, but other people like repetition is persuasive So you you know how many times we said patience taking time being slow the very long term We're not even you know I don't think we're halfway through the ideas in the book that I'm going to share with you. And like, you've already heard this repeated

Starting point is 00:47:27 over and over again. People who complain that we invested in Amazon for seven years would be horrified by Blue Origin. That's Jeff still talking. At Amazon, Bezos had been obsessive for years about maintaining its startup culture, even as the company grew, reminding employees that it would always be day one there. In a 1997 letter to shareholders, he wrote that it was day one for the internet, and if we execute well, it's day one for Amazon. Twenty years later, day one, the name of the Amazon headquarters, was still a rallying cry. Day two is stasis, he wrote, followed by irrelevance, followed by excruciating painful decline, followed by death, and that is why it's always day one. He wrote a day one letter for blue origin. Blue for the pale blue dot that is earth,

Starting point is 00:48:22 origin for where humanity began, a vision statement outlying the principles that would guide the company. We are a small team committed to seeding an enduring human presence and space hero. Blue will pursue this long-term objective patiently, step by step, again, repeating yourself, by dividing our work into small but meaningful increments. We hope to generate as many useful intermediate results as possible.

Starting point is 00:48:48 Each step, even our first and simplest, will be challenging, and each step will lay the technical and organizational foundation for the next. This would require a steady, I love this, this description of his company I think applies to so many others. Check this metaphor, it's beautiful. This would require a steady approach into unknown terrain. This is a quote from him. We have been dropped off on an unexplored mountain without maps and the visibility is poor. Every once in a while, the weather clears up enough for us to glimpse the peak, but the intervening terrain remains largely obscured. There would be some bedrock principles to guide them.

Starting point is 00:49:31 So this is a bedrock principle to guide Blue Origin. I think it's applicable to not only other companies, but I think it's applicable to your life in general. Don't start and stop. Keep climbing at a steady pace. Be the tortoise and not the hare. Keep expenditures at sustainable levels. Assume spending will be flat to monotonically increasing. Do not fall for the unreasonable hope that the path will get easier as we go up. Oh, I get goosebumps for some of this stuff. Okay. Just good writing and very, very concise thinking.

Starting point is 00:50:14 And not only is it very concise thinking, but I think the use of the metaphor allows you to, like, internalize that thinking on your own and then apply it to whatever it is that goes on in your mind every day. It's going to be very different from things I think about or anybody else thinks about, but I think they're applicable to just so much in life. Okay, let's see. Oh, this is, okay, so I just want to read this because, I mean, we have to talk about death, right? Well, let me just jump into it. Unfortunately, the personal spaceflight industry must proceed assuming that

Starting point is 00:50:45 a fatal accident is inevitable. So far, there's been 14 astronauts that have died. Death was more likely a when, not if outcome, an unavoidable fact that they should confront and plan for. But death shouldn't stop them. It shouldn't get in the way. Progress was not possible without it. That was true in space as it was in all manner of expeditions, from crossing the Atlantic to exploring the poles to opening up the West. That's a really good point. And I love how they even bring in on the next page this quote. Before he was killed in the fire that engulfed the crew of Apollo 1 on the ground during pre-flight test, Gus Grissom had prepared himself for an outcome he knew was highly probable.

Starting point is 00:51:32 If we die, we want people to accept it, he said. We're in a risky business and we hope that if anything happens to us, it will not delay the program. The conquest of space is worth the risk of life. And this is something that when you're trying to do something new like they're like nasa was doing in the 60s you understand this they internalize that people died they carried on with their mission what happened over time is this happened so frequently not even frequently this happened a few times where they stopped being instead of like being taking risks to innovate they instead of playing to win they were just trying not to lose and i think like that's common in humans we talked about last week how you can compare like the aging of a corporation or a business to the aging of a person. It's young,

Starting point is 00:52:10 it's full of fiber. Is that even a word? Did I just make up a word? It's full of vigor, I think is the word I'm looking for. It's willing to take risks. It understands you have to. And I'm not saying you have to be reckless of course but just like any exploration when they were sailing to the new world 600 years ago or when they're starting going from east to west in america like people are going to die that's inevitable um you try to make the smartest moves you can but going back to the aging the corporation metaphor is like when corporations get older companies get older they they they already found what made them successful. So now they just go into preservation mode. And we're still in day one, maybe day negative 100 in terms of like exploring the universe. So you just can't, you can't let

Starting point is 00:52:58 your foot off of this. You have to go forward and understand that people are going to die. In this book, people die in this book testing. It's that we're not going to talk about the podcast, but you know, they're, they're, they're testing different ways to get to space. And in one case, a test pilot, you know, gave his life to do that. You know, I don't think you should have anybody should be forced into doing that. Of course not. But these people know the risks, just like Gus just said, he's like, I know, no one I'm doing is risky. He said that before he wound up burning to death. So the note I left myself, I've heard Elon talk a few times.

Starting point is 00:53:31 They're like, why are you doing this? And he's like, there has to be more than life than just surviving. You should be excited. This is a quote from Elon, and it's more about the whole death thing. He said, the thing that actually gets me the most excited about it is that i just think it's the grandest adventure i could possibly imagine it is the most exciting thing i couldn't think of anything more exciting more fun more inspiring for the future than to have a base on mars he once said it would be incredibly difficult and probably lots of people will die and terrible things and great things will happen along the way. Just as happened in the formation in the United States.

Starting point is 00:54:09 So another lesson, now I'm skipping ahead, is why is it, something I learned, is why is it that in a world that constantly changes, do we humans think that things will stay the way they are? So that's the note I left myself. This is what spawned that thought. For SpaceX, the $278 million is a windfall. things will stay the way they are. So that's the note I left myself. This is what spawned that thought. For SpaceX, the $278 million was a windfall. So a few years later, they get some funding from NASA too now. But for a lot of people in the big aerospace world,

Starting point is 00:54:37 this was considered a token amount of money to placate these commercial guys so they could stop complaining to Congress, Musk said years later. Just give them enough to hang themselves. Let's just give these annoying commercial people enough money so that they can fail and then we can say that was that how dumb they were. So we don't have to do that again. SpaceX was still not regarded as a threat. Not by the Lockheeds and Boeings which had large multi-year contracts in hand and could sustain them as long as they were support in Congress. And while the program was a bold step for NASA, one that SpaceX and other startups jumped at,

Starting point is 00:55:10 it was largely dismissed by the rest of the industry. Lockheed Martin, Boeing, Northrop all passed, not thinking that this new era would last. So what the book talks about is like, they kind of opened the door for their own competitors. And now these competitors are, you know, that they start out little.

Starting point is 00:55:27 They come like ankle biters, I think is what they they called SpaceX and others. They said they made their rockets out of bicycle parts. They're just very dismissive of them. And it's just, again, history doesn't repeat itself. Human nature does. You see this constantly how these these these incumbents in these industries like, oh, yeah, just give them this token. Two hundred seventy8 million. That's nothing. They could fail. They disappear. And then things will continue as they always do.

Starting point is 00:55:50 But if you look at the grander scheme of life in general, like change is constant. So if you don't like change, like you're going to have a hard time at life. I don't know. It's just, it's very weird. These are obviously not dumb people by any stretch of the imagination yet. We all are susceptible to this kind of like fallacy in our thinking. So I'm going to skip over. So we know SpaceX, they fail three times before they fail the fourth time, right? After the third launch, I just want to read this. This is Elon. He goes, for my part, I will never give up.

Starting point is 00:56:24 And I mean, never. And it said, despite those rosy predictions, the truth was SpaceX was hurting. Musk was burning through the $100 million he had invested in his own money. I just want to skip to the point where they have success because I've covered the other parts in the other Elon Musk podcast. If you want to go back and listen to those, go into more detail about this area. But I want to hit on this, him speaking about the amazing achievement

Starting point is 00:56:46 that they are able to do on the fourth rocket. And he says, he then took a moment to explain the long and improbable odyssey that led to this feat. And this is just freaking amazing. SpaceX had designed and developed, this is us talking,

Starting point is 00:57:00 SpaceX had designed and developed this vehicle from the ground up, from a blank sheet of paper. They've done all the design, all the testing in-house. We don't outsource, and we have achieved this with a company that is now only 500 people, and it all occurred under six years. This really means a lot to SpaceX, getting to orbit. That's just a huge milestone.

Starting point is 00:57:23 There are only a few countries that have done it. It is normally a country thing, not a company thing. It's an amazing achievement. Absolutely. So now the book is going to go back to Bezos. And this is Bezos and Goddard. Hope I'm pronouncing his name right. He's the father of modern rockets. And the work of generations. That's a note I left myself. It's very, again again we're going to go back into basil spring here while musk was charging ahead basis was still moving slowly taking small deliberate baby steps the vehicle this is what they're they're um building right in 2006 was named goddard after robert goddard the father of modern rocketry who in 1926 became the first to ever launch a liquid-fueled rocket. He was a builder and a dreamer, probably like you, the person listening to this podcast

Starting point is 00:58:11 right now, who wrote a paper that touched on the possibility of developing a rocket to reach the moon. This is the important part and why I included it in this, because we just have to understand, people are going to criticize you. It's a default state of humans. Even if they don't know what the hell they're talking about, they're still going to talk. At the time, the notion of reaching the moon seemed as far-fetched as it was ridiculous. Goddard was derided as a moon, a moony, and a crackpot. And even the New York Times or the scathing editorial in 1920, under the headline, a severe strain of credulity credulity you know what that word is which scoffed at the idea saying a rocket would not work in the vacuum of space

Starting point is 00:58:54 goddard responded by saying that every vision is a joke until the first man accomplishes it once realized it becomes commonplace the problem is is like he was ridiculed so much, he was already shy and he preferred working alone. He just became even more reclusive. Now, the reason I include that is because check this out. How many more years shall I, how many more years I should be able to work on this problem? I do not know, he wrote in 1932. As hope as long as I live. So this is, he's still working on it 12 years after he gets called a crackpot by the New York Times. The paper of record, remember. There can be no thought of finishing for aiming at the stars, both literally and figuratively.

Starting point is 00:59:33 It's the work of generations. This is Goddard speaking still. So that no matter how much progress one makes, there is always the thrill of just the beginning. What does that sound like to you? It's, we're moving slow. It's the work of generations. It's always the beginning. What does that sound like to you? It's we're moving slow. It's the work of generations. It's always the beginning. This is Bezos.

Starting point is 00:59:48 He died in 1945 without having lived to see humans go to space. But in 1969, he received a belated post-mortem vindication. By then, it was abundantly clear that rockets could indeed

Starting point is 01:00:00 work in space. And the Times, the New York Times, issued a correction a half century after it was published. Further investigation and experimentation have confirmed that the findings of Isaac Newton in the 17th century,

Starting point is 01:00:13 and it is now definitely established that a rocket can function in a vacuum as well as an atmosphere, read. The time regrets the error. Think about this. They talked about something they had no idea about they put it in the newspaper meaning gives like credibility so other people read it and think it's actually accurate they force this guy into into uh becoming a recluse and they were wrong

Starting point is 01:00:36 they didn't know what they were talking about this is what i'm talking about when i say human nature repeats this is ridiculous i I say that not like because Like I find it personally offensive like what people do they just beat the dreams out of people. It is so easy to criticize it is Freaking hard to build and if you believe in what you're doing man, just don't listen to these people It's very important to internalize the the lessons in these books. Everybody that achieves anything had to do it. It's just, maybe I'm like reacting differently to this because I've just exposed to it constantly. I see it over and over again. It's just, it's annoying. It's annoying.

Starting point is 01:01:15 Like we should all want humanity to progress and you can't progress without trying new things. There's so much, there's way more that's been undiscovered than we know. And I think this idea that like this arrogance, I always refer to it, I've heard it referred to as like the epistemic arrogance of the human species, meaning like we think we know more than we know. We know nothing, nothing. We are just starting in the truest sense of the world. Civilization, like modern civilization existed for what, 100, 200 years? It is a tiny, tiny, tiny, tiny sliver of time throughout the existence of the universe. We know nothing.

Starting point is 01:01:52 It's so arrogant to think that we have everything figured out. So therefore, the people, the weirdos like Elon Musk, and I use that term in an affectionate term, we need to encourage people to take risks and to experiment. And people like Jeff Bezos, who puts $2.5 billion of his own money in one rocket that Blue Origin makes. I think it's called the New Shepard. $2.5 billion. These are people with skin in the game.

Starting point is 01:02:16 They're not just Elon Musk. Who listening to this would make $180 million when they're 31 and it's put $100 million into SpaceX, $70 million into Tesla, and $10 million into SolarCity. I know I wouldn't. There's no way I would. So I don't know, man. I just think these people need to be encouraged. I'm not saying they're always right. Of course they're not. They're humans. It's just this treatment is unfair and it's infuriating to me 100 years later. It's just not, okay, I'm going to skip ahead because there's a lot of ideas and I think you get the point. From a purely chronological standpoint,

Starting point is 01:02:54 it made sense that Bezos named his first rocket after the father of rocketry, but there were also kindred spirits. Like Goddard, Bezos was dedicated to taking the long view with Blue seeing it as an enterprise that would take generations to complete to complete like goddard bezos believed that the impossible could be made routine and like goddard bezos company shunned the press keeping its work secret carefully protected from scrutiny and the criticism that it would surely follow. Bezos was such a fan of Goddard that one of his sons has Goddard as his middle name.

Starting point is 01:03:30 Okay, so this is more Bezos in a blog post. Accomplishing this mission will take a long time, and we're working on it methodically. We believe in incremental improvement and in keeping investments at a pace that's sustainable. Slow and steady is the way to achieve results, and we do not kid ourselves into thinking this will get easier as we go along. Smaller, more frequent steps drive a faster rate of learning, help us maintain focus,

Starting point is 01:03:55 and give each of us an opportunity to see our latest work fly sooner. It didn't matter how far ahead the hare was, the tortoise was content to keep the methodical pace Bezos had outlined for the company in his 2004 letter Be the tortoise, not the hare It would stay true to its motto Step by step, ferociously

Starting point is 01:04:15 While repeating over and over Slow is smooth and smooth is fast Slow is smooth and smooth is fast So the book contrasts a lot of spacex and blue origin but now we're going to see it's very similar that they're also similar too of course in interview after interview the executive stressed that spacex was different than any of the other companies listed on his resume meaning that um when people come they're recruiting from some of these large aerospace companies and they come to spacex they're like hey uh well this is what they say right here

Starting point is 01:04:43 says this is not heritage aerospace he was told we're lean and mean if you come work for us you're going to have a lot of creative license you are not going to get stifled by bureaucracy the corporate culture was free wheeling and hard charging with a mix of industry veterans and young kids with virtually no experience in building rockets who were brilliant and willing to devote themselves to the cause of the band. And so, so this is, this is a, I love this, this exact, this thing. So there's two notes. One of the guys that they hire from legendary, uh, from legacy aerospace companies, his name is mom. His last name is Mazel. And just like a space, like we're saying, Hey, you're going to have great leeway here. Um, there's no bureaucracy. You're going to be able to actually apply your talents and not just whittle away in a big company. And so this is finding ways to solve problems at one-tenth the cost.

Starting point is 01:05:31 And then another note I left is everything is malleable. Eager to show he could be resourceful, Modsul and his team became the scavengers of Cape Canaveral, going around looking for leftover hardware as if they were on a treasure hunt. So he's assigned to Pad 40, which is this very famous pad that NASA used for years. Now SpaceX has it under lease for, I think, five years. And they're trying new ways to do things, not just adopting. So it says, so the old rail cars from the 1960s that had once been used to ferry helium between New Orleans and Cape Canaveral became new storage tanks. Instead of spending $75,000 on new air conditioning chillers for the ground equipment building,

Starting point is 01:06:10 someone found a deal on eBay for $10,000. This is what I mean about entrepreneurs having to be relentlessly resourceful. You're going to see this. That's why I'm reading this part. There's a bunch of examples of that. When the company was told it would cost $2 million for a pair of cranes to lift the Falcon 9, for example, it questioned the price, wanting to know why it was so expensive. The reason this is the part that I wrote that everything is malleable because I think a lot of us are faced with just things that are blocking our way to going to where we want. And sometimes, like, you hit a roadblock and you're like, oh, man, this is a roadblock. There's nothing I can do about it. They don't think that way. So in this case, why do I have to spend $2 million for a pair of cranes to lift the rocket? And they find out. So they questioned like, what's going on here? The reason was that the Air Force required the

Starting point is 01:06:58 cranes to meet a series of safety requirements to prevent, say, a hook from suddenly dropping too fast. But modern technology had rendered many of those requirements some decades old, unnecessary. So again, if you're told that, some people are like, oh, okay, well, I guess I'll just spend the $2 million. They don't think that like this. And this is going back to what one of the things, I think the biggest lesson I learned from studying Elon Musk is this whole idea of first principles thinking, questioning. Is this really, are we just living with dogma, which is a result of other people's thinking or is like this actually accurate and so they're like wait a minute these these regulations don't apply anymore because

Starting point is 01:07:33 technology has rendered them obsolete so what do they do they said Mosswell and the spacex team lobbied the air force officials at cape canaveral ultimately convincing them to strip out many of the old regulations that were driving up the price. They did, and SpaceX was able to purchase the cranes for $300,000. Then, the Air Force said that Pad 40's flame duct needed to be extended with a water system. Bids for a traditional concrete trench to guide the rocket flames out and away from the pad came in at about $3 million. Modsell thought they could do better. Ultimately, the engineering team designed and the pad crew built a flame duct extension using steel box beams,

Starting point is 01:08:10 which also carried cooling and acoustic suppression water inside the beams. The result, a system that met the Air Force requirement for 10th of the cost. We had to be super scrappy, Elon said. If we did it the standard way, we would have run out of money. For many years, we were week to week on cash flow within weeks of running out of money. It definitely creates a mindset of smart spending. Be scrappy or die. Those were our two options.

Starting point is 01:08:40 Some more examples, SpaceX even questioned the kind of latches that were used in the lockers on the space station. Each locker required two latches which cost $1,500 and had 20 to 25 parts. One engineer at SpaceX was inspired, I think it was honestly in the men's room, where he saw a latch on a stall, and we were able to make a locking mechanism out of that. Instead of $1,500 it costs $30 it's more reliable and it's easier to replace it ever if it ever goes bad the astronauts not only do they love it but they love the story behind it because it shows the ingenuity and let's see where are we going oh this is a great little story so um ob Obama is in the White House at the time.

Starting point is 01:09:25 He cancels George Bush's, I think it was called like the Consolation Program. He decides, hey, instead of the government spending this, we're going to empower the free market to do it. And as a part of that, they do like a photo op and a press tour at Cape Canaveral. And Obama is led on a tour by Elon. I think this is happening in 2010 but this is a funny little story but must sense that at one point during their 15 minute tour that obama was also studying him the white house had bet big on the rocket now towering over them it was like

Starting point is 01:09:57 it was going to fly cargo to the space station and it was looking increasingly likely that it would be one of these rockets and one of of the rockets NASA would choose to take astronauts as well. Musk couldn't be so sure that the Falcon 9's first flight wouldn't end in an explosion. The president couldn't be sure either, and Musk couldn't help but feel as though Obama was trying to divine the future. I think he wanted to get a sense if I was dependable or a little nuts, must said. The truth was probably somewhere in between. Definitely. So one of the themes for Jeff Bezos. And so I've been really trying to, I don't think, like the great thing about entrepreneurship is like, it's like using Peter Drucker's old quote, it's not an art or a science, it's a practice. I think many of these ideas, like the reason you need to expose your

Starting point is 01:10:49 ideas to thoughts from entrepreneurs if you're building companies, because it's not one size fits all. There's no such thing as an expert in entrepreneurship, but they do have observations and lessons that they learn away, they learn along the way, excuse me, that could be applicable to your business. And something I've noticed now studying this and spending so much, like probably what, hundreds of hours on this by now, is there's some themes that are very common. And I don't want to use the word pattern matching because I said, like, these are just one-offs, right? So you're going to, like, you have to take, you have to figure it out for yourself. But you can try on their different ideas into whatever you're doing.

Starting point is 01:11:24 And much like a scientific experiment the ones that work use and adapt to your own needs and the ones that don't you discard but one of the themes is like resourcefulness that's present all the time optimism usually present a lot um and the other one is frugality and uh i talked a lot about frugality in a lot of these different books whether whether it's Yvonne Chouinard, the founder of Patagonia, whether it's the original podcast I did on Jeff Bezos and the Everything Store when they're building desks out of doors, and where Jeff Bezos' vein pops out in his head

Starting point is 01:11:59 when an executive recommends that Amazon should be buying business, letting business executives fly first class. Bezos astutely makes the point. He's like, okay, flying first class. Is that better for the customer? No, it's not. Okay. And if it's not better for the customer, Amazon's not going to do it. Sam Walton opening one of the first Walmarts and there's like donkey crap everywhere because it's in the middle of nowhere. Like this whole issue of frugality. So the note I left myself is frugality goes deep. So it says,

Starting point is 01:12:26 Lori Garver got a rare peek behind the curtain at Blue Origin, a personal tour of the company with Jeff Bezos himself. This is in 2011. And Lori Garver was very high up in NASA. I forgot her exact title at the time. As someone who was taking heat on Capitol Hill and within her own agency

Starting point is 01:12:41 for trusting startups like Blue Origin, Garver wanted some firsthand evidence of how the company was different, how it could disrupt the industry, how it could be cheap and reliable. She wanted to know what was Blue Origin's secret. The answer, in part, was citric acid. For a while, the company had been using a toxic cleaner for its engine nozzles, which it intended to reuse. But that cleaner was expensive and difficult to handle.

Starting point is 01:13:05 It had to be used in a separate clean room because it was so toxic. Then someone discovered that citric acid worked just as well. So the company started buying it by the gallon, an easier, far less expensive solution that worked better. Now I'm the largest purchaser of lemon juice in the country, Bezos told her, letting loose one of his trademark cackles. Kind of reminds me of that. There's a sentence in the

Starting point is 01:13:33 Fish That Ate the Whale that I covered last week, where it compared and contrasted Sam Zamuri, who's like a came from nothing, very much an entrepreneur uh and how he looked at the banana industry um as opposed to the his competition which were you know executives they were like professional ceos not entrepreneurs and so it talks about how like when sam looks at banana he sees room for improvement and i think that constant understanding that you could always be doing things better, cheaper, more efficiently, like, you know, they're spending billions of dollars on rockets, and yet they're still trying to save every dollar they can on cleaner. I just think a good lesson,

Starting point is 01:14:15 again, for all of us, not only in business, but in your personal lives as well. Eventually, I'm going to get to the book. I forgot. I don't know how to pronounce his name jorge lehman maybe uh he started 3g which is like brazilian conglomerate some people call him like the brazilian version of uh warren buffett but even at 25 billion dollars i was listening to a podcast and he has a net worth of 25 billion dollars at the time and he's doing an interview or whatever and he's feeding ducks and the ducks to leave and he basically the story is like he walks all the way back to the kitchen so he because he doesn't want to waste the rest of the bread and the guy points out to him like why'd you walk all this like you know

Starting point is 01:14:53 most people just thrown it so you don't have to walk over here and he makes the point he's like expenses are like fingernails they have to be constantly clipped. So again, frugality running very, very deep because you maximize revenue, minimize expenses, and there you have your profit. Just because you're making more money doesn't mean you should be spending more money. That's a trap a lot of us fall into. Oh, so this is very interesting.

Starting point is 01:15:18 Something we talked about what's possible now that they couldn't do before. I got to make sure because it's spread over a few pages. Okay, so this is now 2013. The Falcon 9 lifted off for its second official cargo delivery to the International Space Station. While the rocket did so smoothly within an hour, it was clear that its Dragon spacecraft was in trouble. Inside mission control, the SpaceX team was desperately trying to figure out what was wrong and soon pinpointed the problem a valve was struck while this is happening there's a bunch of people

Starting point is 01:15:52 from nasa overlooking just checking out what's going on because nasa's invested a lot into spacex at this point he said as they watched the kids in the control center as they watched the kids in the control center were making progress on the problem. So they, in that sentence, is the national officials. The kids is the young people that work at SpaceX. Because I think the average age at SpaceX is like 30. The valve was stuck. So they needed something to make it unstuck.

Starting point is 01:16:16 On a spacecraft circling the globe at 17,500 miles per hour, that was no easy task. But the SpaceX team knew that if pressure could be built ahead of the valve and then it was suddenly released, that might just deliver the kick needed to jar the valve open. It's like the spacecraft's equivalent of the Heimlich maneuver, Musk said later. One of the engineers wrote a command right then on the fly, programming the spacecraft to build up the pressure. Then they tried to beam the new command up to dragon as if it was an iphone update at that moment the folks at nasa knew they were witnessing something special it wasn't just that they had fixed a problem with the spacecraft that happened all the time it was how fast they did it

Starting point is 01:17:01 this is unicorns dancing the flame. This is another contrast between the styles of Musk and Bezos. So there's some background here. I'm not going to go into it because there's just a lot of detail we don't know, but they're basically fighting over the ability to lease a specific pad from NASA. So Bezos filed suit with NASA saying he wants to bid. The lawsuit was eventually dismissed, but the tensions lingered. And now the fight over 39A only inflamed them. Musk fired off an email with an epic takedown of his new competitor,

Starting point is 01:17:33 deriding the protest as a phony blocking tactic, an obvious one at that. Even though Blue Origin had been around for a decade, it had not yet succeeded in creating a reliable suborbital spacecraft, he wrote. It is therefore unlikely that they will succeed in developing an orbital vehicle that will meet NASA's exacting standards in the next five years, which is the length of the least.

Starting point is 01:17:53 That said, I can't say for sure whether Blue Origin's actions stem from malice. However, rather than fight this issue, there is an easy way to determine the truth, which is simply called their bluff, Musk said. If they do somehow show up in the next five years with a vehicle qualified to NASA's human rating standards that can dock with the space station, which is what Pad 39A is meant to do, we will gladly accommodate their needs. Frankly, I think we are more likely to discover unicorns dancing in the flame dock. So, he's he's being very hair like and this is bezos very uh tortoise like response blue could have responded to musk's taunt by announcing that

Starting point is 01:18:31 was very that it was also developing an orbital vehicle it was actually and it was secret about it but it didn't take the bait musk's insult didn't produce anything but more of the same obsessive disciplined silence. Bezos was sticking to his own advice written in Blue's founding letter a decade earlier, be the tortoise and not the hare. So there's a lot of good stuff here. Okay, so this is, I want to, before, Musk gives basically a college-level lecture on how a startup can retain its innovative edge, so I want to get to that in a minute. But this is more of an inside of Musk personality, which again, I just don't know how many people could do this. Pentagon was about to award another big batch of contracts to the

Starting point is 01:19:13 alliance. That's the United Launch Alliance, effectively locking SpaceX out for years. Filing another lawsuit would be risky. It's usually not the best business practice to sue the agency you're trying desperately to get to hire you. The list of cons was long but the pros were substantial as well. National security launches paid big money. The multi-year program could be worth as much as 70 billion dollars and SpaceX knew it could undercut Lockheed and Boeing's prices giving it a stream of revenue that could sustain it for years and help get it to Mars. But the clock was ticking. If the company was going to protest a contract, it had to act quickly.

Starting point is 01:19:49 Suing the military-industrial complex is something you do not take lightly, Musk recalled. During a visit to Washington, D.C., while sitting in the back of a sedan after a speech, a pair of his advisors asked him what he wanted to do. Musk went quiet, closed his eyes, and put his head back. He stayed that way for two minutes, then three. A long time. He had several quirks, and his sudden retreat into his own mind was an eccentricity that people at SpaceX were used to.

Starting point is 01:20:20 People coming in to interview with Musk were sometimes warned that when he goes silent, it was because he's thinking and it's best not to interrupt him. The advisors knew not to say a word. Six minutes passed, then eight, an eternity. Then Musk opened his eyes, filed a lawsuit, he said. He got out of the car and went to the next event. Okay, so this is Musk on how a startup can retain its innovative edge. So what happens is they have a big failure. This is years after they've, you know,

Starting point is 01:20:56 I think they went like six years, five years, a long time without having a failure. But he's going to lay out why that is sometimes not a great thing. In a call with reporters a month later, Musk was every bit the rocket scientist he had become, giving a preliminary but detailed analysis of the failure. But it was also as if he was delivering a business school lecture on how a successful startup can retain its innovative culture and edge as it grows into a corporate behemoth.

Starting point is 01:21:23 He would point to another possible cause, saying that as the company continued to grow, it may have lost some of the inherent paranoia that fueled SpaceX in its early days, when it was unclear whether it could ever be able to launch rockets reliably. After a string of successes, the explosion was the first time we had a failure

Starting point is 01:21:41 in seven years outside of the test flight, Moss said. To some degree, I think the company as a whole maybe became a little too complacent. When the company lost a string of rockets in the early days, only a few hundred people were working at SpaceX. Now there were 4,000. The vast majority of people at the company today have only ever seen success. You don't fear failure as much. And so he sent out his email before each launch, where he does this all the time. It was mentioned in the book, but I didn't talk about earlier. So he sends an email out before each launch, asking people to come forward if they see a reason that there'd be a failure. It didn't resonate with the same force as when the company was small and scrappy and feared going out of business the reaction became there's elon being

Starting point is 01:22:30 paranoid again he said but now even the uninitiated knew that the driving power of failure and fear that's an interesting thing the driving power of failure and fear, and we will be stronger for it, he said. Jeff Bezos, let me tell you a little story real quick that I think Jeff Bezos picks up on something very fundamental to human nature, and that is what is going to bring you the most satisfaction. For years, journalists had been banging at Blue Origin's door, trying to glimpse into the mysterious company that operated like the Central Intelligence Agency. Now Blue Origin was reaching out to them. The day before Blue Origin had launched a rocket deep in the West Texas desert that traveled past the threshold of space hitting a top speed of Mach 3.72. New Shepard, the suborbital vehicle named for Alan Shepard,

Starting point is 01:23:19 the first American in space, had flown to 329,000 feet, or 62 miles, past the 100-kilometer Karman line. I don't know if that's how you pronounce it, but that's widely considered the edge of space. New Shepard is the rocket I told you that Jeff pit $2.5 billion of his own money into. The capsule on top of the rocket, which had no passengers in it, separated from the boosters and landed softly under the guidance of parachutes. More important, the rocket landed after falling back and enduring 119 mile an hour high altitude crosswinds. Using a GPS guidance system and a fin system that helped stabilize it on its descent, the booster fired its engine to slow itself down before deploying its landing legs and touching

Starting point is 01:24:03 down softly on the concrete landing pad. It hit four and a half feet from the center for first landing that was a bullseye so what they're describing there before i get to jeff's astute point on satisfaction is what could be a new form of space tourism you you you're sitting in a capsule on top of a rocket it shoots up past the line of space then then it comes back down. The rocket lands independently, but the capsule urine lands back on Earth. I think it takes about 11 and a half minutes to come down. But this is the more important part. From the beginning, Blue Origin had been trying to build a reusable rocket, one that could be launched and then fly again like an airplane.

Starting point is 01:24:41 It would, at last, lower the cost of space travel and make it accessible to the masses. Now Blue had pulled off the landing, a triumphant crescendo on more than a decade of work. Bezos was beaming. In an interview afterward, he called it a flawless mission and one of the greatest moments of my life. I was misty-eyed. He had founded the company 15 years earlier and had decided to build a

Starting point is 01:25:07 chemically fueled rocket that would be reusable a few years after that. Now Blue Origin had finally done it. The things that you work hardest for, for the longest period of time, always bring you the most satisfaction, he explained. If you could do something and it takes you 10 minutes to do, how satisfying can it actually be? You work on something for a decade and it finally comes out the pipeline. And for me, in a sense, I've been working on that since I was five. So it was incredibly satisfying. And I think the whole team felt that. The people who go into this business do it because they're missionaries. And this is a rivalry as the best rocket fuel is what this section is about. Oftentimes, it's very natural to think of business competition like a sporting event,

Starting point is 01:25:59 Bezos said. Somebody leaves the arena a winner and somebody leaves the arena a loser In business, it's usually a little different from that Great industries are usually built by not just one or two or three companies But usually by dozens of companies There can be many great winners Even hundreds and thousands of companies in a truly great industry I think that's where we're headed toward here From my point of view, the more the merrier. I want Virgin Galactic to succeed. I want SpaceX to succeed. I want United

Starting point is 01:26:33 Launch Alliance to succeed. I want Arian Space to succeed. And of course, I want Blue Origin to succeed, and I think they all can. While it bothered Musk when people compared the accomplishments of SpaceX to Blue Origins, he too became more conciliatory. In general, I think it's important that we advance spaceflight for the good of humanity, he said. If I could press a button and make Blue Origin disappear, I would not press that button. I think it's good Jeff is doing what he's doing. They were driven by the business opportunities in space, by adventure, and by ego. Imagine the Promethean legacies they'd leave after opening up the final frontier, but there was no motivator quite like head-to-head competition. No one knew this better than Musk

Starting point is 01:27:17 and Bezos. Amazon wouldn't have become Amazon if it didn't have Barnes & Noble to set its sights on. Tesla wouldn't have been Tesla if it wasn't taking on all of Detroit. And SpaceX, from its inception, had targeted the alliance, seeking to disrupt the cushy monopoly it had held for years, and crowbar open the lock it had on Pentagon's golden chest. Competition had driven the original space race. Without the Soviets threatening to own the ultimate high ground, the United States would have never made it to the moon. I love this part here. We're going to learn a little bit about history too. After the Soviets had made Yuri Gagarin the first man to orbit Earth, President Kennedy had been anguished, running his hands through his hair and nervously

Starting point is 01:28:05 tapping his teeth with his fingernails during a meeting at the White House. If somebody can just tell me how to catch up, let's find somebody, anybody. I don't care if it's the janitor over there, Kennedy had pleaded, adding later. There's nothing more important. Less than a decade later, as Neil Armstrong crossed the finish line, the first man to walk on the moon was Magnanimous, proclaiming the victory as one giant leap for mankind. The race complete, the victor triumphant, the loser vanquished. There was then a long fade in human spaceflight, a retreat even. The lack of competition led to complacency, a comfortable wither.

Starting point is 01:28:49 Despite the repeated promises of presidents hoping to channel Kennedy and summon a because they are hard call to arms, that's a quote from Kennedy's, if you haven't heard that speech, I'd go back and read it or listen to it. It talks about the reason they're deciding to go to the moon is because it's hard that's why we're doing it and i think that's uh again something like i don't know how much of that is in modern society at least not in

Starting point is 01:29:12 like the comfortable rich west doing things because they are hard i love that okay a summon to a because they are hard call to arms the next giant leap moon bases, a civilization in the stars never came. Hope and dreams may have sounded great at the podium. On the launch pad, they only went so far. If Musk and Bezos were going to be the true heirs to Apollo, if at long last they were going to push humans further into the cosmos, building that railroad system to the stars, they would have to crouch down alongside each other, get on their mark, get ready, and go. One eye focused clearly on that distant impossible goal, the other on the competitor just over their shoulder.

Starting point is 01:29:59 For all the conciliatory talk, the truth was they needed each other. Rivalry, it turned out, was the best rocket fuel.

Founders - #38 The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos

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