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to understand SpaceX where it aspires to go and why it just might succeed one must Voyage back to the Falcon 1 rocket and dig up the roots the seeds for everything SpaceX has grown into today were planted during the early days of
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the Falcon 1 program by Elon Musk back then he sought to build the world's first lowcost orbital rocket all of the aspirational talk about Mars would mean nothing if SpaceX could not put a relatively simple rocket like the Falcon
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1 into orbit and so with a burning intensity he pressed toward that goal SpaceX began with nothing but an empty Factory and a handful of employees this small group launched its first rocket less than four years later and reached
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orbit in six the story of how SpaceX survived those lean early years is a remarkable one many of the same people who made the Falcon 1 remain at SpaceX today some have moved on but all have stories about those early formative years that remain mostly
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Untold that was an excerpt from the book that I want to talk to you about today which is liftoff Elon Musk and the desperate early days that launched SpaceX and is written by Eric Berger this book came to my mind because recently I was watching spacex's
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successful completion of the Starship flight test number five where they send the super heavy booster 12 rocket up into orbit and then it comes back to Earth and it is caught in the air by these two massive what space calls
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Chopstick arms it was the first time in history a rocket was sent to orbit and then caught out of midair and it's like catching like a small Skyscraper the booster 12 is 232 ft tall and so when I saw that I thought back to reading this
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book for the first time like four years ago and I was like I remember reading when SpaceX was on the precipice of bankruptcy and destruction the first three attempts at launching a rocket into orbit were fail the fourth one succeeds and then you fast forward
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almost 20 years later and now they're catching Rockets the size of skyscrapers out of the air and so given everything that SpaceX has achieved over the last two and a half decades I thought it would be interesting to go back and revisit the first six years of its
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existence and so what I did is I reread the book and this time I focused on how Elon Musk thinks and the decisions that he made in the early days of the founding of SpaceX and because Elon was extensively interviewed by the author
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there's a bunch of direct quotes from Elon himself this is a little bit about the prehistory of SpaceX at this time keep in mind he's not quite 30 years old he's been kicked out of PayPal and he's trying to figure out what to do next and
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so Elon tells a story that he's driving down the road with his friend Ado uh it's raining they're on a highway and he says I told a de oresi I'd always been interested in space but I didn't think that was something a private individual
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could do anything about three decades had passed since Apollo's Heyday and surely he thought that NASA must be well on its way to going to Mars later that day still thinking about the conversation Elon checked out NASA's website and to surprise he could not
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find any plans for sending humans to Mars and so Elon starts doing a bunch of research he starts attending space conferences uh back in California there's a bunch of private groups that are trying to do interesting things and
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uh space experiments and he starts to read everything he can get his hands on says numerous other entrepreneurs had tried playing at rocket science before musk well knew he wanted to learn from their mistakes so as to not repeat them
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he had been reading everything he could get his hands on about Rockets from old Soviet technical manuals to John Clark's iconic book on propellants called Ignition I began to understand why things were so expensive Elon said I
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looked at the horses that NASA had in the stable and with horses like Boeing and locki you're screwed those horses are lame and he thinks they're lame because the products they're building are getting more expensive so elon's
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goal the reason he started SpaceX is because he wants to make the human species a multiplanetary species and the first step towards solving multiplanetary problem was bringing down the cost of launch so if NASA and private companies spent less money
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getting satellites and people into space they could do more things in space and more Commerce would open still more opportunities this Awakening galvanized musk into action there's a ton of people in this book that look at Elon like he's
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a crazy person but there is a very ordered sense of logic to the way that he goes about solving problems if you want humans to live on other planets the first thing you need to do is lower the price it takes to get there and the
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example that they use of the metaphor that they used multiple times is like if a plane ticket was a millionar or $10 million a ticket then a lot less people would fly and so Elon starts building this network of allies one of his allies
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is this guy named Mike Griffin he a few years later will actually become NASA's administrator and he helps Elon organize these meetings of these space enthusiasts these Engineers these rocket scientists and this is a description of one of these meetings he walks in Elon
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walks in and basically announces that he wants to start his own rocket company and I remember a lot of of chuckling and laughter people saying things like save your money kid and go sit on the beach the kid was not amused if anything the
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doubts expressed at this meeting and by some of his confidants energized him more and so Elon talks about the fact it wasn't just the people in the meeting do this but his friends and they were well-intentioned friends were trying to
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get him to not blow all his money several friends had already tried to dissuade Elon from doing this one friend created an hour-long video compilation of Rocket failures and forced Elon to sit down and watch it another friend told Elon of all the entrepreneurs who
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had tried and failed Elon said he talked my ear off and said I would lose all my money Elon had cleared about $180 million from PayPal and figured he could risk half of his money on a rocket company and still have plenty left over
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and one of the most interesting things about reading the beginning of this book is that you realize that SpaceX was elon's response to the stagnation of an existing industry and that's actually a good way to look for opportunity he
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identified an important IND industry that he thought was going completely backwards it says companies in United States and Russia still use the same decades old technology to launch rockets into space and the price kept going up
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things were going in the wrong direction so musk founded SpaceX now another thing that I found fascinating about this is the fact that this stagnation actually helped Elon recruit the insane talent that he needed and so the book says
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relative to other aerospace companies musk had a lot to offer prospective employees at SpaceX new hires could rapidly grow their skills and take on new responsibilities there was almost no management and everyone worked on the rocket musk was a siren calling
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brilliant young minds to SpaceX with an irresistible song he offered an intoxicating Brew of vision Charisma audacious goals and resources when they needed something Elon wrote a check in meetings he helped solve their most
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challenging technical problems when the hour was late he could be found right there beside them working away and when they needed a kick in the ass he deployed his stare and a few sharp words another great thing about this book is the fact that the author
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interviewed so many early SpaceX employees and they were talking about the difference between SpaceX and other Legacy aerospace companies and so an early SpaceX employee had a friend that worked at Lockheed Martin on the F35
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stealth aircraft and this part was absolutely incredible it says this may sound like glamorous work but it was not his friend had just a single job finding a supplier for a bolt on the aircraft's landing gear and ensuring that it met
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all quality specifications that single bolt was the totality of his Employments IM imagine spending years of your life and that is the totality the single bolt is a totality of your employment SpaceX offered the opposite experience work was thrilling and
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all-encompassing and one of the engineers made the really important point that because your work was so wide and the problems you had to solve were so diverse it actually made you a much better engineer a big thing was really
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having to learn to think since nobody gave you a cookie cut or job and told you what to do this really made us all much better engineers and part of that was because of elon's strategy on how to design a Rocket says there are basically two
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approaches to building complex systems like rockets linear and iterative design the linear method begins with initial goal and moves through developing requirements to meet that goal followed by numerous qual ification test of
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subsystems before assembling them into major pieces of the rocket such as its structures propulsion and avionics with linear design years to spent engineering a project before development begins this is because it is difficult timec
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consuming and expensive to modify design and requirements after beginning to build Hardware the iterative approach begins with a goal and almost immediately leaps into Concept Designs bench tests and prototypes this is the path that SpaceX chose the mantro with
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this approach is build and test early find failures and adapt this is what SpaceX engineers and technicians did in James Dyson's autobiography which I covered I think for the fourth time on episode 300 uh this is called the edisonian principle of design and in
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Dyson's fantastic autobiography he talks about his mentor who's also an inventor and an engineer this guy named Jeremy fry and this description of Jeremy fry sounds a lot like Elon Musk in the early days of SpaceX so here's what James
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Dyson said here is a man who is not interested in experts he me me he thinks to himself here's a bright kid let's employ him and he does he risk little with the possibility of gaining much this is exactly what I now do at Dyson
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this attitude to employment extended to Jeremy Fry's thinking in everything including engineering he did not when an idea came to him sit down and process it through pages of calculations he didn't argue through with anyone he just went
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out and built it when I came to him and say I have an idea he would offer no more advice than to say you know where the Workshop is go and do it but we'll need to weld this thing I would protest well then get a welder and weld it when
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I asked if we shouldn't talk to someone about say hydrodynamics he would say the lake is down there the Land Rover is over there take a plank of wood down to the lake tow it behind a boat and look at what happens now this was not a modus
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operandi that I had encountered before College had taught me to Revere experts and expertise fry ridiculed all that as far as he was concerned with enthusiasm and intelligence any anything was possible it was mindblowing if it didn't
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work one way he would just try it another way until it did and as we proceeded I could see that we were getting on extremely quickly the root principle was to do things your way as long as it works and it's exciting people will follow you and so back to
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this book I haven't read the book in almost four years but what I remember one of the things that jumped out and and stayed in my mind from the first time I read it was the fact that Elon personally interviewed the first 3,000 employees at SpaceX and there's a ton of
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interesting stories and great ideas in here about this so he says he understood he would go nowhere without the right people so interview by interview musk sought out the brilliant and creative Engineers who would commit themselves
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wholly to the goal and make the impossible possible one of musk's most valuable skills was his ability to determine whether someone would fit this mold his people had to be brilliant they had to be hardworking and there could be
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No Nonsense now we have a direct quote from Elon about this there are a ton of phonies out there and not many who are the real deal I can usually tell within 15 minutes and I can sure tell within a few days of working with them musk made
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hiring a priority he personally met with every single person the company hired through the first 3,000 employees he felt it was important to get the right people for his company and so here's an example of what an interview with Elon was like musk
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walked in to break the ice Brian made the usual small talk it's nice to meet you I've heard a lot about you I'm excited to be here the hyper observant musk never won much for pleasantries mve straight into question this baby laugh
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move straight into questions do you dye your hair musk asked somewhat flustered Brian replied that he did not one of musk's common tactics during an interview involves throwing a person off kilter to see how a potential employee
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reacts and so mus kept asking him if he Dy his hair because his hair doesn't match his eyebrows so he wind up laughing about this and then he just talks about like why he's founding SpaceX like what is the mission behind it said the success of NASA's Apollo
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Moon program in the 1960s had spurred a wave of student interest in math and science and it led to a generation of Engineers scientists and teachers but this tide had ebbed and by the time Brian's generation had grown up the cool
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kids were not doing space anymore they were into medicine Investment Banking or Tech and so Brian is talking about why he chose to leave a comfortable job and a more Balanced Life he knew he said SpaceX would strip all of that away his
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friend was already working at SpaceX and told him about spacex's intense environment and so it said Brian knew coming to work for Elon would turn his life upside down and musk could offer no guarantees of success How could a small team build a rocket capable of reaching
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orbit anyway no privately funded company had ever succeeded at something like this before and many had failed trying and so a few days after the interview it says a few days later he received an email from elon's assistant at 1: in the
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morning did he want the job Brian realized that this company operated its own speed this offer appealed to Brian's sense of adventure and he decided to sees this chance so he becomes employee number 14 at SpaceX and when you hear
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him describe he's like wait wait a minute like uh I I'm going to have no outside life I'm going to work every hour of the day a high chance that we're going to fail yes I'm going to do this it reminded me I've seen this thing a couple times in these books I was
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reading a biography of Mark Twain one time and he talks about this P the pony this one Pony Express ad which is you essentially running mail by horseback across the country and the job ads that the Pony Express ran became legendary it
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said wanted young skinny wiry fellows not over 18 must be expert Riders willing to risk death daily orphans preferred that ad yielded hundreds of Adventure seeking young men who quickly responded and wanted the job we saw this
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also uh the story with Ernest Shackleton he ran an ad said men wanted for hazardous Journey low wages bitter cold long hours of complete darkness safe return doubtful honor and recognition in event of success and so you kind of have
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this SpaceX equivalent of that and so then there's a great description of how Relentless that Elon could be once he identifies somebody he wants to hire there's a very talented young engineer from Turkey he's living in San Francisco
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his wife works at Google the time so he's like you know I can't uh work for SpaceX because I'd have to move to Los Angeles but he agrees to be interviewed anyways and in the interview Elon tells him that he already solved this problem
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for him so Elon says so I heard you don't want to move to LA and one of the reasons is that your wife works for Google well I just talked to Larry and they're going to transfer your wife down to LA to solve the problem musk had called Larry pagee the co-founder of
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Google the engineer sat in stunned silence for a moment but then he replied given all that I suppose I'll come work for SpaceX and there's so many great lines about what an interview with Elon was like and so here's a description
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from somebody that Elon interviewed I never met a man so laser focused on his vision for what he wanted he's very intense and he's intimidating as hell it's tough when you're interviewing with him and in addition to this a ious goal
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that nobody else was even trying to accomplish the fact that you had a lot of leeway the fact that you would be constantly push a limit and tested your entire job wouldn't be relegated to a single bolt all these things helped Elon
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recruit top tier talent but another thing that helped him recruit there's this guy named Hans who's going to become eventually become the vice president of avionic at SpaceX and one of the things that helped him take the risk of joining SpaceX was the fact that
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Elon had so much skin in the game Hans knew that Elon had put a $100 million of his own money into the project I think it's impossible to understate how effective Elon was at drawing in top talent in fact there's a great story
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that illustrates this so there's this scientist he is running a graduate program in Space Engineering at the University of Michigan it is one of if not the best graduate program in Space Engineering in the entire country and so this professor makes a list he's like
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who are my 10 best students of all time and then once he had that list he wanted to do research like where did they wind up where are they working and he was shocked half of the students five out of the 10 were working at SpaceX and this
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is what he said the results blew him away this was before SpaceX was successful so I interviewed these former students and asked why did you go there they went there because they believed many of them took pay cuts but they
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believed in the mission and this was hilarious because this guy's writing this article so then Elon goes and visits him on requests a meeting and he says he asked a single question who were the other five students and this is what
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he said I realized the meeting was not about me he wanted to recruit them Elon wanted the other five and it wasn't just at the University of Michigan either so this professor goes and speaks with his engineering peers at places like the MIT
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in University of Southern California he says he heard similar things SpaceX had juice with their students too the freedom to innovate and resources to go fast summon the best engineers in the country and the professor has a great
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line over why the top students were choosing to work at SpaceX over the established firms he said Talent wins over experience and an entrepreneurial culture over Heritage and so another thing that the book is great at it gives you a lot of
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insight to how Elon was managing there's just a bunch of great lines and stories and here's one description musk's in yourface management style came with Benefits he empowered his people to do things that would have required
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committees and paperwork and reviews at other companies at SpaceX if they could convince the company's chief engineer that's Elon of something they also earned the approval from the Chief Financial Officer as they were one and the same and this is something that
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comes up over and over again in the early days of SpaceX the faster you can make your decisions the more iterations you can do the more iterations you can do the more you're learning the more you're learning the more success and
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capability SpaceX has and so there's just quote quote after quote in the book of early SpaceX employees describing Elon this way he always made the most difficult decisions he did not put off problems he tackled the hardest problems
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first he had a vision of how Aerospace could be done faster and for less money it was elon's ability to identify engineering talent and then motivate his employees to do extraordinary things Elon had a knack for inspiring Engineers
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to do things they believe just beyond their ability and when they achiev the impossible to reach toward the next goal this company has a lot of talent elon's primary capability is to evaluate people quickly and pick the right people he is
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really good at that and then he combines that skill with being super involved musk was there every step of the way having Elon there makes things a lot simpler because he is super involved he makes those difficult decisions when the
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time comes he would step in and make those decisions he always kept us focused on the vision this is one of the things Elon brought to SpaceX risk tolerance this is one of my favorite lines in the entire book talking about elon's risk tolerance he didn't want to
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fail but he wasn't afraid of it that is another contrast between SpaceX and the Legacy aerospace companies they become calcified they're so terrified of taking any risk that could lead to potential failure there's another great management technique that
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Elon would use in meetings related to this failure was an option at SpaceX partly because the boss often asked of Theo The Impossible from his team in meetings Elon would ask his Engineers to do something that on the face of it
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seemed absurd when they protested that it was impossible Elon would respond with a question designed to open their minds to the problem and potential Solutions he would ask what would it take this is something that Elon has in
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common with Henry Ford he would talk about the the fact as we already know the limitations so if we're trying to do something as never been done before which with Henry Ford and Elon were doing in their careers I don't need you
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to tell me the limitations I need you to open your mind with potential solutions for this previously unsolved problem there's a line in Henry Ford's autobiography he talks about this he says that is the way with wise people
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they are so wise and practical that they always know down to a dot just why something cannot be done they always know the limitations Henry Ford and Elon Musk wanted Solutions not limitations and then if we go back to what else motivated these top tier
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talent to join SpaceX there's a very talented German engineer that Elon was recruiting and one of the reasons he wanted to to to up joining SpaceX is because is of the challenge of doing everything within constraints and so he said what intrigued me was trying to
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build a rocket with 200 people instead of 20,000 to almost build it in a garage can I use a computer I can buy for $500 versus one I can buy for 5 million it seemed to me that's what Elon wanted to do and this was precisely what Elon
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wanted to do because they were spending his money there's a great description about how Elon thought about the relationship between time and money and how to deploy resources in the early days of a company and I found this in the Elon Musk biography written by
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Ashley Vance it says Elon would always be at work on Sunday and we had some chats where he laid out his philosophy said Kevin Brogan an early SpaceX employee he would say that everything we did was a function of our burn rate and
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that we were burning through $100,000 per day it was this very entrepreneurial Silicon Valley way of thinking that none of the aerospace engineers in Los Angeles were dialed into sometimes he wouldn't let you buy a part for $2,000
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because he expected you to find it cheaper or invent something cheaper other times he wouldn't Flinch at Renning a plane for $90,000 to get something to quad where they're shooting the Rockets later on because it saved an entire workday so it was worth it he
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would place this urgency that he expected the revenue in 10 years to be $10 million a day and that every day we were slower to achieving our goals was a day of missing out on that money and so another main theme in addition to
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recruiting top talent is if you're burning $100,000 a day you obviously have to go very fast so speed is another main theme throughout the entire book and the speed that SpaceX worked at relative to its peers could be jarring after his job at Nasa Brian felt the
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culture shock immediately upon starting work before he could log into a computer at Nasa Brian had under had to undergo a detailed security screening process and multiple orientations to operate machines that would steer electron beams
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Brian had to sit through days of training courses at SpaceX there was none of that on my first day of the job I showed up the door is not locked there's no one at the front desk I met Hans and he gave me a packet that had
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some materials about benefits and things like that and then he told me what I needed to do orientation done the team was so small that everyone knew everyone and each employee pitched in as needed with other departments everybody was
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expected to carry their own weight and then a bunch more during their early years of SpaceX the company had no support staff Beyond elon's assistant the early days of Microsoft it was the same way the first 30 employees of
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Microsoft there were 28 Engineers Bill Gates and a secretary back to this this included a lack of custodial staff Gwyn Shotwell who's going to become very important in SpaceX she's the president and coo today but at the time of this
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story she was the Vice President of Sales so this say Gwinn shot remembers organizing a meeting with government customers she checked in on the company's upstairs conference room they were going to be there for an hour or in an hour and it was a mess so I got out
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the vacuum the Vice President of Sales vacuuming and then trying to figure out the coffee no job was beneath us going back to the fact that Elon prioritized making decisions very rapidly sped up the entire velocity of the company and so it says he could be
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difficult to work for certainly but his early hires could immediately see the benefits of working for someone who wanted to get things done and often made decisions on the spot no committees no reports just done this decisive style
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carried over into meetings if an engineer faced an intractable problem Elon wanted a chance to solve it he would suggest ideas and give his teams a day or two to troubleshoot then report back to him in the interim if they
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needed guidance they were told to email him directly day or night he typically responded within minutes there's a story about the early days of Amazon that I thought of when I was reading this section there's a guy that comes to work
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for Amazon from Walmart and he's his job is to build out the the new fulfillment centers for Amazon and so he wants to build a $300 million fulfillment center he shows these plans to Jeff Bezos Jeff loves them and so the guy asks Jeff okay
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so who do I need to talk to to get permission to build this and Jeff says you just did and that's something that Jeff repeats in his shareholder letters and in some of his speeches he says you can drive away great people by making
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the speed of decision making really slow why would great people stay in an organization where they can't get things done they look around after a while and they said look I love the mission but I can't get my job done because our speed
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of decision- making is too slow the opposite of that is Elon in the early days of SpaceX over the course of a single meeting Elon could be a turns hilarious deadly serious penetrating harsh reflective and a stickler for the finest details of rocket science but
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most of all he channeled an intense Force to move things forward Elon wants to get done okay and so another main theme that is repeated throughout the book is how important it was for Elon he wanted to build as much of the rocket inhouse as
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possible he wanted to control as much of his business as possible so it says from the very beginning Elon wanted SpaceX to build as much of every rocket as it could to free itself from the cost and schedule visites of suppliers and
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there's a great example of this first they identify a very talented machine shop that can move as fast as they do and then when the two owners of the Machine Shop have a falling out Elon buys the entire shop and brings it inhouse and so we have one of the
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co-owners of the company SK Nam Bob rean talking about the difference between working with SpaceX and other people that were also customers of his machine shop and so he says man those guys would send me some of the wildest crap I'd
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ever seen SpaceX also paid quickly within a day of receiving a purchase order from SpaceX rean would have a check with other companies he would finish a part submit an invoice and receive a check 30 days later SpaceX wanted its parts fast rean got the
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message and began to prioritize their orders he had never worked with a company that moved as quickly as SpaceX and so this is when elon's going to actually buy his machine shop and bring it in house and again this is the
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speed is just this reoccurring theme that hopefully you've picked up on by now because it's repeated probably a 100 times in the book one day in the fall of 2003 when they called and said they needed a particular part rushed over Regan replied that he could not help he
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and his business partner had fallen out and the only course was to shut the business down SpaceX would have to get its parts from elsewhere and so SpaceX realizes this would be disastrous so Elon meets with them they negotiate over
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an asking price and 10 minutes later they present him with a contract it was Saturday November 1st at 5:00 p.m. Elon wanted his new vice president of Machining to start work that evening so he winds up bringing six of their
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machinists in house and all the machines and this is why by bringing it inh house Elon cut much of his manufacturing costs in half now he could buy a chunk of aluminum and have people in his building work on it as if it were clay producing
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a part on demand without the markup and delay of sending it to an outside machine shop and the lines of communication between SpaceX engineers and the manufacturing crew were wide open before if I had a problem with one of my customers I'd have to call the
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buyer then the buyer would have to call the engineer and a week later I may get might might get a call back with an answer at SpaceX rean sat in the cube Farm if the engineers did something he thought was dumb or would not work he
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could tell them there was mutual respect his relationship with Elon was simple this is how he describes Elon Elon cannot stand a liar and he hates a thief and if you say you can do something you better do it and here's the punch line of this entire story SpaceX
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likes to operate on its own terms and its own timeline and this next part does a great job of describing why this was so important to Elon Elon taught his team to assess every part of the rocket with a Discerning Eye for a given task a
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typical Aerospace company would just use whatever part has always been used this saved Engineers from the timeconsuming difficult work of qualifying a new part for space flight but spacex's attitude was different true a product may already
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exist but is it optimized for your solution is it from a good supplier and what about their tier 2 or tier three suppliers and if you need more of them faster will they meet your needs if you want to change something are they
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willing and able to change it and if you improve that product will they then sell it to your competitors and let's go back to his recurring theme that Elon is capable of making decisions very fast they're looking for a testing site on unfettered
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by government control they're having a hard time doing this in California they were aware of a previous rocket company called be Aerospace that was founded by this guy named Andy Beal and the company had gone out of business a few years
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earlier and so one of elon's employees was telling him hey this site in McGregor Texas looks promising we should go check it out and it says Elon decided that day to fly down to Texas and check out the site the site suited spacex's
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needs because Andy Beal had developed it specifically to rocket engines in fact Andy Beal is one of the richest people in the country he started Beal Aerospace with 200 million of his own money and so the site has everything it needs and it
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also has a much more Cooperative local government it said the town of McGregor owned everything here and was willing to lease it because local officials wanted the company as a tenant there would be minimal interference and no restrictions
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on the size of their engine Texas had a much less restriced regulatory environment than California with more business friendly laws Elon hired Allen who's the guy who was showing on the the the the spot and immediately leased the
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site elon's company was just a year and a half old and now he found room to roam in Texas there his engine designers would construct a new test site one with wide open spaces and fuel rules and then I just love this writing over the next
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two years they would hammer together the Merlin engine and put it to its Paces they would burn up thrust Chambers blow apart fuel tanks and raise enough Ruckus to bring the Secret Service to their Gates but by 2005 they would build something powerful ful almost from
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scratch with enough thrust to send half a ton screaming towards outer space so one of the benefits of reading this book is that you're constantly exposed to these smart dedicated people having to deal with failure after failure problem after problem 90% of the
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book is SpaceX failing the second to last chapter is flight four their first successful rocket launch and then the chapter after that is how SpaceX almost still goes out of business because of a lack of funding and the great financial
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crisis that's happening in 2008 and so at this point in the book as soon as they solve the problem of oh okay now we have a spot where we can test successfully test our rocket engine once we do that now we need to be able to
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launch it they thought they already had that problem solved because they thought they could launch their rocket from vanderberg Air Force Base which is about an hour and a half north of the SpaceX headquarters and so musk is giving a
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talk to his employees after their first successful test of the rocket and like we completed a large milestone in a few months we will receive Air Force clearance to fly only they wouldn't and so I'll give you a little background
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here before SpaceX is forced to build a launch site on a remote island in the Pacific Ocean and so it says the air force of SpaceX had an uneasy relationship from the beginning the military service has a rigid culture strict hierarchy and lots of
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requirements SpaceX had a loose culture almost no hierarchy and viewed requirements mostly as a waste of time SpaceX wanted to get things done in air Force had people whose job it was to review every last environmental safety or technical detail before signing off
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the day after spacex's successful static fire test officials said SpaceX officials from the the the Air Force said SpaceX was welcome to launch its rocket but only after the nro the nro is the national reconnaissance office they
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launched spy satellites but only after the nro's expensive spy satellite was safely in orbit the problem is the Air Force couldn't or wouldn't tell SpaceX when that was going to happen this placed SpaceX in a horrible position
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while the Falcon 1 waited its turn no one would compensate SpaceX for its expenses the company got paid when it launched by contrast when the military awarded a national security launch contract to lock e or Boeing they signed a Cost Plus agreement where any delays
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were built to the government plus a fee technically we weren't kicked out of vandenbberg Elon said we were just put on Ice the Air Force never said no but they never said yes this went on for 6 months the resources were draining out
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of the company effectively it was just like being starved almost from the beginning of its existence SpaceX has pinned its hopes on this launch site located only 150 mi from its Factory SpaceX had invested $7 million in launch
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facilities at Vandenburg there would be no reimbursement Elon had to eat the loss the company born with DNA that impelled it to go as fast as it could had run into an immovable Force and so the Air Force wouldn't help them but the Army would so spacex's backup
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plan was to launch from this remote island in the Marshall Islands called the quadine at tol or quad for short this is one of the craziest Parts in the book they had just worked themselves to exhaustion building one launch site now
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they'd have to turn it around and build a second one and this one is on a remote island in the Pacific listen to how much work and literally tons of supplies they have to ship to the middle of nowhere they had so much to move unless an
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employee carried a key rocket part on a 2day two airplane Journey from Los Angeles to qu most cargo had to be shipped by sea on a month-long Journey at their headquarters in elag gundo employees began to pack dozens of sea
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van that would be stacked on large cargo ship for the voyage fresh from their experience building up Vandenburg the SpaceX team knew they would need a lot of everything to assemble test and launch the Falcon 1 so they stuffed their tools and lifts and pipes and
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tubing and computers into 40ft cargo containers and sent them to the Port of Los Angeles over the course of 3 months the company shipped 30 tons across the Pacific they managed to build and test their first rocket that one fails what
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was interesting is on the flight back to United States there's somebody on the plane with Elon and he's describing what Elon was doing he Elon spent much of the flight pouring over books written about early rocket scientists and their
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efforts Elon seemed intent to understand the mistakes they had made and learn from them and what he does next is a really smart move he was placing the difficulty of what him and his team are trying to do in a historical perspective
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keep in mind by this time they've been toiling away nearly seven days a week almost all hours of the day for years trying to build a rocket that'll get into orbit this is what Elon Does Elon seemed to recognize the emotional toll
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that the failure might inflict on some of his engineers not long after the accident he typed up an uplifting memo to the SpaceX team as part of his note Elon offered some comforting perspective other iconic Rockets he noted had failed
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often during early test launches and so he starts listing ones in Europe and the Russians and the American program and he said having experienced firsthand how hard it is to reach orbit I have a lot of respect for those that persevered to
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produce the vehicles that are Main Stays of space launches today SpaceX is in this for the Long Haul and come hell or high water we're going to make it work and so what's fascinating about this part of the book is he's got two problems he's got to solve
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simultaneously he's got to figure out how to develop a rocket that can reach orbit and he's got to secure contracts so SpaceX doesn't run out of money and so at this point he's having a conversation with Gwyn Shotwell and this
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is before she joins the company and she has a lot of Industry experience so she mentions to Elon in a meeting that you need to hire someone to sell the rocket fulltime that at that point Elon just had a part-time sales consultant and
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she's like listen that's not going to work so it says later that afternoon Elon decided that he should indeed hire someone full-time he created a vice president of sales position and encouraged shawell to apply and so she talks about the fact that she had to
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think about this for a while because she said she was almost 40 years old she was in the middle of a divorce and she had two young children to care for she says it was a huge risk and almost decided not to go but her final decision came
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down to a simple calculation look I'm in this business and do I want this business to continue the way it is or do I want to go in the direction that Elon wants to take it this is so important she's going to secure the two contracts
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that save SpaceX this is a very important part in the early days of SpaceX mus needed a partner who possessed his brashness but also understood the political terrain and had the sophistication to navigate it this is where Shotwell would come in the idea
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of selling Elon musk's unproven rocket and working for someone regarded as a demanding boss did not face her I knew the business by then I would be selling to my old compatriots of course I could sell Rockets no question at all that is
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such an important point and it's such a great idea who knows your customers who are you trying to sell to who knows your customers find the person who knows your customers then hire that person to sell your product to them that's exactly what
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Elon did if you're reading through the lines here it's exactly what Elon did when he hired Shotwell from the beginning Shotwell UND OD the complex and evolving relationship between the Air Force NASA and Private Industry Elon
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was still learning about his new federal customers and then this is one of my favorite lines or favorite uh stories in the book because you just realize that elon's very easy to interface with no work about work just work that's the way
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he wants to do things shawell wrote a plan of action for sales Elon took one look at it and told her he did not care about plans just get on with the job and then sh's responses perfect she's like oh this is refreshing I don't have to
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write up a damn plan here was her first real taste of elon's management style do not talk about doing things just do things and I think this goes back to something Elon mentioned earlier in the book the fact that it was a benefit a
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huge benefit to SpaceX the fact that the lead engineer and the head all the finance and Engineering is in the same he's in charge of both it's in the same brain he talks about putting those two functions together makes you move a lot
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quicker he says I make the spending decisions and the engineering decisions in one head normally those are at least two people there's some engineering guy who's trying to convince a finance guy that this money should be spent but the
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finance guy doesn't understand engineering so he can't tell if it's a good way to spend money or not whereas I'm making the engineering decisions and spending decisions and so Shotwell is introducing Elon to potential customers they're all
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inside the government this one guy this another example remember when earlier they're like hey you know Rich internet guy just like go sit on the beach this is like going to be too hard don't do this well we're now we're several years later
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and they're still telling them the same thing and so as a result of this meeting I'm about to describe to you we're going to see that Elon realizes he's got to find a way to gain attention and put on a show and so it says Peter tis
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represented an important potential customer as the agency designs builds and launches a multitude of spy satellites for the US government this is the nro that I mentioned earlier te was generally supportive of the spart startups intentions but he had seen this
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kind of presentation before in the book which I've ommitted and I highly recommend you read the book there's multiple examples of all these people that try to start uh private space companies before Elon all of them failed and so the government agencies just
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would see the same person trying over and over again like oh this elon's just G to be like them not realizing that elon's not like anybody else I remember him putting his hand on elon's back and saying son this is much harder than you
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think it is it's never going to work at this remark Elon straightened up and he had this look in his eye that Shotwell could easily read te's paternalistic gesture had Harden his resolve Shotwell said he's going to make sure you regret
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the moment you said that and so Elon throughout his entire career and you still see this today he's he's very much has a flare for Showmanship and for gaining attention so it says Elon began to believe customers like tiets needed
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to see real Hardware to believe the company and its booster were legitimate so it says they worked 18 hours a day to build a fullscale model the rocket itself was Hollow but from the outside looked genuine enough the rocket then
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rolled out out of spacex's factory for a CrossCountry Journey Elon wanted to make a splash in the nation's capital where his customers are so his rocket was headed to Washington DC the 68t long booster rocket was parked on Independence Avenue across the street
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from the National Air and Space Museum if people needed to see a rocket Elon was going to show them a rocket Shotwell admired elon's talent for confronting his critics head-on everyone thinks a private company like SpaceX building an
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orbital rocket is crazy they think it's never going to happen his attitude was let's drive the damn thing there and show all the detractors that it's here it's funny when I read this section I remember that Elon did something like
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this on a much much smaller scale uh for his first startup zip 2 when he was in his early 20s I remember reading this story in Ashley Vance's biography of Elon I want to read from it now says ever marketing Savvy the musk Brothers
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tried to make their web service seem even more important by giving it an imposing physical body Elon built a huge case around a standard PC and lugged the unit onto a base with wheels when prospective investors would come by Elon would put on a show and roll this
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massive machine out so that it appeared like Zip 2 ran inside of a mini supercomputer the investors thought that was impressive so now there's a third simultaneous problem that they have they need to build a rocket to reach orbit
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successfully they need to sell the rocket successfully and then the third thing is they have to fight corruption so Elon knows that if SpaceX is going to survive NASA has to play an important role they need the contract from NASA
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and so something crazy happens there is a company a rocket company called kler that company goes bankrupt the chief executive of that company was a guy named George Mueller who is one of the heroes from NASA's AP poloo Pro program
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he's 85 years old at the time a year after the company goes bankrupt NASA announces a new $227 million contract with kler and so Elon is outraged and he does what everybody tells him not to do he protests to the government accountability office that this is not
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fair and that NASA should be forced to open this up to bidding and so Elon describes his thinking and why he did this I was told by many people that we should not protest you've got a 90% chance that you're going to lose you're
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going to make a potential customer angry I'm like it seems like right is on our side here it seems like this bid should go out for competition and if we don't fight this then I think we're doomed our chances of success are dramatically
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lowered NASA being one of the biggest customers of space launch would be cut off from us I had to protest and the result was they won the new the company won SpaceX one after NASA learned that the US government accountability office
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would rule in favor of SpaceX on the issue of fairness NASA pulled the award from kler NASA realized it would need to open up a new competition for cargo delivery this became the foundation for NASA's commercial orbital transp portation service also known as
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CZ this was important because the cot contract two years later SpaceX wins that contract the Kissler protest was just one of many battles that Elon and Shotwell would fight before government committees and in courtrooms this is
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nuts a year later SpaceX scrapped with three of the titans of the US launch industry in one battle SpaceX and northr gunin traded lawsuits over Tom Mueller and his rocket engine technology was the first uh employee of SpaceX and the
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designer of the Merlin rocket engine and in another more consequential battle SpaceX sued Boeing and locked Martin over plans to merge their launch businesses into a single rocket company called United launch Alliance and spacex's point was that neither
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company's new rockets could compete on price with rivals in Russia and Europe for commercial satellite launches so but when this is happening this is 2005 the US share of global market for commercial launches this like shooting like large
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satellite for television and other Communications into space fell near to zero so when I got to that part of the book I'm like okay in 2005 it's at zero what is it now and so it says in 2023 the US had a 54% share of global commercial launch
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revenues with spacex's Falcon 9 responsible for the bulk of these that's nuts the role that one company can play from near zero 20 years later to over half so spacex's lawsuit said this was a violation of antitrust laws they wind up
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losing that lawsuit but this is the punchline within its first three years SpaceX had sued three of its biggest rivals in the launch industry gone against the Air Force with the proposed United launch Alliance merger and protested a NASA contract Elon was not
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walking on egg shells on the way to orbit he was breaking a lot of eggs and he was right because at this time it would cost between 26 and $28 million per launch SpaceX winds up being able to do this for $6 million he say something
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really F uh smart too because his price was so good Elon wanted the price front and center on the company's website needless to say none of the competitors would say Hey you would not find pricing on their websites and so El's like no no
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no you go to spacex.com you're going to say hey we can do this for six million it's going to be on the front page and all these protests and these lawsuits they directly lead to the two contracts that change SpaceX forever the first one
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in 2006 is going to be for 278 million and then the one that saves the company after the fourth launch in 2008 is for 1.6 billion but this is the first contract that changed SpaceX forever as the summer of 2006 dragged on SpaceX and
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the other finalists waited to find out who would receive the lucrative contracts to design the cargo Delivery Systems then the call from NASA finally came in August so Shotwell and Elon take the call after hanging up they called an impromptu staff meeting on the factory
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floor elon's speech was short we won SpaceX had won big in a couple of critical ways first there was the money the contract value of $278 million would allow musk to accelerate his plans to build the big orbital rocket and perhaps
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most significant the con with the contract award NASA had endorsed the company that was really important Shotwell said we were a little company we were jackasses at that time we blew up a rocket in March of that year from my perspective NASA was acknowledging
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that even though we had a failure they felt we were on the right path and so now they're still working on trying to get a rocket into orbit this is Elon and how difficult the problem SpaceX is trying to solve just for
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there's a direct quote from him just for your information it's not like other rocket scientists were huge idiots who wanted to throw their Rockets away all the time it's hard to make something like this one of the hardest engineering problems known to man is
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making a reusable orbital rocket nobody had succeeded for a good reason our gravity is is a bit heavy on Mars this would be no problem moon piece of cake on Earth hard just barely possible it is stupidly difficult to have a fully reusable orbital system it
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would be one of the biggest breakthroughs in the history of humanity that's why it's hard why does this hurt my brain it's because of that and so he's pushing his team and himself to the absolute limits he's going to get to the
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point of almost Financial financially breaking breaking as well in about a year or two but this again it goes back to what I was mentioning earlier the fact that his employees respect him because he's actually working alongside
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them he's not an absentee boss and so when He suggests a solution to a problem or a potential solution to a problem doesn't work they're not upset that he was wrong because he was right there musk might have been wrong but the filthy and exhausted engineers and
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technicians working with him all night did not begrudge musk for keeping them at a task that proved fruitless rather his willingness to jump into The Fray and get his hands dirty by their sides won him admiration as a leader and
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so this is what the early SpaceX company culture was from the perspective of one of the engineers the timeline involved fairly regular allnighters there was a certain amount of competitive Macho culture that was part of it too like I
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can work as hard as anybody else I'm not going to be the one that has to go home first and here's one of the Wild Parts the guy talking right now he's in his mid-20s he's 4 months into working at SpaceX and he already has responsibility for the Rocket's entire
50:35
first stage propulsion system Elon was willing to give talented young people a ton of responsibility and so he's talking his his name is dun dun is talking about this point in SpaceX history I didn't know what I didn't know
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if something like that happened today I'd be super apprehensive I would be very thoughtful about it but at that time I was like let's go get after it I just wanted to do the best I could the the way I approached it was to work my
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ass off and so one of my favorite chapters in the entire book comes towards the end it's called 8 weeks when El starts SpaceX he's like okay we got enough money we're going to give it three attempts after the third fail attempt he's like we're running out of
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money we have one more shot on this but we have to do this in eight weeks and keep in mind when this is happening so elon's 30 when he found SpaceX when this is happening it is Do or Die time for his company is only 37 years old and so
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this is how Elon responded to that third failure after the third failure musk called a staff meeting musk chose not to play the blame game instead he rallied the team with an inspiring speech as bad as flight three had gone he wanted to
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give his people one final swing outside that room in the factory they had the parts to for a final Falcon 1 rocket build it he said and then fly it he collected everyone in the room and said we have another rocket get your together and go back to the island and
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launch it the period that followed would be the most memorable and arguably important period of the company's history hardening its DNA and setting the stage for SpaceX to become the most transformative Aerospace company in the
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world now keep in mind what is happening with Elon at the time okay Elon felt as crestfallen as the rest of his employees worse even he had bet a lot on SpaceX in time and money and emotional toil with little return now his personal Fortune
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was running dry he' invested everything in SpaceX and Tesla Beyond money his personal life was falling apart he and his first wife had split that summer this is what Elon said at the time I had to allocate a lot of capital to Tesla
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and Solar City so I was out of money we had three failures under our belt so it was pretty hard to raise money the recession was starting to hit the Tesla financing round that we tried to raise that summer had failed I got divorced I
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didn't even have a house my ex-wife had the house it was a shitty summer it was a hell of time to be running a single cash hungry startup let alone too musk really had put all of his net worth into rocket and electric car Ventures and in
53:11
August 2008 he had almost nothing to show for it his rocket company had produced a Litany of failures and Tesla was equally cash strapped and only just beginning to sell its first product the Roadster and what a great summary of
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this Elon had tried to change the world and the world resisted it's unbelievable how fast they put this rocket together okay for the first time what's even more unbelievable is they had to do it again the second time so they were flying this giant
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rocket in a I think it's a C7 so one know those giant military planes and the information they had on the c17 like the pressure inside the c17 was outdated so as they're doing the descent into Hawaii the rocket crumples and so they get the
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rocket to quag and they call back to SpaceX headquarters in La they're like oh you know the the thing crumpled we have to send this back and rebuild in LA and so they're on the phone at this remote island they're talking to headquarters the headquarters in LA and
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this is the response from headquarters you need to stop talking and shut up and listen to what I'm about to tell you you're not bringing that rocket back you're going to strip that thing like a Chevy and that rocket better be disassembled by the
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time I get there Monday morning there was dead silence on the other end of the phone as the words sunk in they were going to have to fix the rocket right there in the tropics there was no time for quality control Or Meticulous
54:35
records they did not have six weeks they had one and they did it they said after the fact I cannot believe we disassembled an entire stage and reassembled an entire stage in the course of a week I don't think we could have imagined that and so
54:53
they launched flight 4 in record time and works the rocket gets to orbit and yet even after that SpaceX almost failed because they almost ran out of money so it says after sinking 6 years and $100 million into SpaceX Elon finally had a
55:10
real rocket when Flight 4 launched the company's payroll exceeded 500 people and spacex's finances remained dire tulo rilly which is elon's girlfriend at the time uh described Elon at this time she said Elon looked like death itself and
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described him waking up from nightmares screaming and in physical pain even as SpaceX achieved rocket success both of elon's major companies spiled to spiral towards bankruptcy that fall friends urged Elon to save SpaceX or Tesla
55:42
warning that he could not support both he agonized over the decision it was like having two children Elon said I could not bring myself to let one of the companies die and so this is when NASA had an open competition for this program
55:58
called CRS which is Commercial resupply Services and what NASA needed was they needed help keeping astronauts that are on the International Space Station fed and clothed so if SpaceX wins the contract they would fly food water and
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supplies to the ISS and so while this is happening they're bidding on this contract and it says still musk Fred about how his company's desperate finances must look to n NASA as his personal wealth dried up amid a recession finally on a monay morning
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December 22nd 2008 the answer came they just called my cell phone out of the blue right before Christmas Elon said they were excited to tell Elon that SpaceX had won one of the two contracts musk couldn't believe it he told them I
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love NASA you guys rock after the call Elon asked Shotwell to immediately sign whatever deal NASA offered he harbored a fear that the space agency might take the contract back without the CRS contract we would have gone down as the
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company that made it to orbit and then died the contract was worth $1.6 billion two days later on Christmas Eve at 600 p.m. Tesla closed a financing round that provided the strap automobile company with 6 months of funding at a
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stroke his two seemingly doomed companies were saved it felt like it had been taken out to the firing squad and blindfolded Elon said then they fired the guns which went click no bullets came out and then they let you free sure
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it feels great but you're pretty nervous it was a high drama situation it's a great story but it is way better in recollection than at the time and then the book ends with this interview that elon's doing with the author in 2020 says nearly two decades have now
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gone by since mus first began thinking seriously about Mars during an interview in early 2020 his mind drifted back to that first impulse to get into the space business he remembered a gray rainy day on the Long Island Expressway with his
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friend adio ressi and later his frustration upon visiting NASA's website and finding no plants he could not understand why humans had remained stuck in low earth orbit since Apollo and so he made a life-changing decision to commit himself to the goal of Mars a
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commitment that has grown stronger over time that's 19 years ago and we're still not on Mars he said not even close it's a godamn outrage this is the passion that fires Elon Musk and that is where I leave it for the full story highly highly recommend
58:34
reading the book if you buy the book using the link that's in your show notes are available at Founders podcast.com you'll be supporting the podcast at the same time that is 369 books down 1,000 too and I'll talk to you again soon