#369 Elon Musk and The Early Days of SpaceX

**David Senra** (0:00)
All the way back in 2012, I was watching an interview with Elon Musk, and he was asked the question, how did you learn how to start a company? He had started his first company when he was still in his 20s. And the follow up to that question was like, did you read like a lot of business books? And his answer, Elon's answer, actually gave me the idea to do Founders podcast many, many years later because Elon said, no, I didn't read business books. I read biographies and autobiographies. I thought they were helpful. And then he went on to say that this was a way to develop mentors in a historical context. So you develop mentors through these books. And he mentioned people like Benjamin Franklin and Henry Ford and Nikola Tesla and every person that's ever designed a rocket. Elon has read a biography on. And that's something that Elon has in common with all of History's Greatest Entrepreneurs is the fact that they all read biographies. And another thing that Elon has in common with History's Greatest Founders, and it's obvious if you read books about them, is anyone who is committed to being great at building their business is obsessed with watching their costs. In fact, there's a line in Andrew Carnegie's biography that says cost control for him became an obsession. Carnegie would go around repeating this mantra time and time again. He said profits and prices were cyclical, subject to any number of transient forces on the marketplace. Costs, however, could be strictly controlled, and any savings achieved were permanent. Elon was like this, too. He put $100 million of his own money into SpaceX. And there's multiple examples in books about SpaceX and then biographies about Elon, where employees of SpaceX would talk about Elon's complete control over company spent. Like Carnegie and countless of other history's greatest founders, for Elon, cost control was an obsession. This is something I was talking about with my friend Eric, who's the co-founder and CEO of Ramp. Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp and have spent a ton of time with them over the last year or two. We were actually at dinner a few nights ago, and we're talking about this almost one in the morning. They all listened to the podcast, and they picked up on the fact that, just like for Elon and the Early Days of SpaceX, the main theme from the podcast is the importance of watching your costs and controlling your spend, and how doing so gives you a massive competitive advantage. And that is the reason that Ramp exists. Ramp exists to give you everything you need to control your spend. Ramp exists to give you everything you need to make cost control an obsession. Ramp gives you easy to use corporate cards for your entire team, automated expense reporting and cost control. Ramp helps you run an efficient organization. I read a Ramp customer review the other day that sums this up perfectly. One of their customers said that Ramp is like having a teammate who you never need to check in on because they have it handled. Ramp gives you and your business everything you need to control spend and optimize all of your financial operations on a single platform. Ramp's website is incredible. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business control costs. That is ramp.com.
To understand SpaceX, where it aspires to go, and why it just might succeed, one must voyage back to the Falcon 1 rocket and dig up the roots. The seeds for everything SpaceX has grown into today were planted during the early days of the Falcon 1 program by Elon Musk. Back then, he sought to build the world's first low-cost orbital rocket. All of the aspirational talk about Mars would mean nothing if SpaceX could not put a relatively simple rocket like the Falcon 1 into orbit. And so, with the burning intensity, he pressed toward that goal. SpaceX began with nothing but an empty factory and a handful of employees. This small group launched its first rocket less than four years later and reached orbit in six. The story of how SpaceX survived those lean early years is a remarkable one. Many of the same people who made the Falcon 1 remain at SpaceX today. Some have moved on, but all have stories about those early, formative years that remain mostly untold.
That was an excerpt from the book that I want to talk to you about today, which is Liftoff, Elon Musk and the Desperate Early Days That Launched SpaceX, and it was written by Eric Berger. This book came to my mind because recently I was watching SpaceX's successful completion of the Starship flight test number 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 SpaceX calls, chopstick arms. It was the first time in history a rocket was sent to orbit and then caught out of mid air. It's like catching like a small skyscraper. The booster 12 is 232 feet tall. And so when I saw that, I thought back to reading this book for the first time like four years ago. And I was like, I remember reading when SpaceX was on the precipice of bankruptcy and destruction. The first three attempts at launching a rocket into orbit were failures. The fourth one succeeds and then you fast forward almost 20 years later, and now they're catching rockets the size of skyscrapers out of the air. And so given everything that SpaceX has achieved over the last two and a half decades, I thought it would be interesting to go back and revisit the first six years of its existence. And so what I did is I reread the book, and this time I focused on how Elon Musk thinks and the decisions that he made in the early days of the founding of SpaceX. And because Elon was extensively interviewed by the author, there's a bunch of direct quotes from Elon himself. This is a little bit about the prehistory of SpaceX. At this time, keep in mind, he's not quite 30 years old. He's been kicked out of PayPal, and he's trying to figure out what to do next. And so Elon tells a story that he's driving down the road with his friend, Adeo. It's raining, they're on a highway. And he says, I told Adeo Ressie, I'd always been interested in space, but I didn't think that was something a private individual could do anything about. Three decades had passed since Apollo's heyday, and surely he thought that NASA must be well on its way to going to Mars. Later that day, still thinking about the conversation, Elon checked out NASA's website, and to his surprise, he could not find any plans for sending humans to Mars. And so Elon starts doing a bunch of research. He starts attending space conferences back in California. There's a bunch of private groups that are trying to do interesting things and space experiments. And he starts to read everything he can get his hands on. It says, Numerous other entrepreneurs had tried playing a rocket science before. Musk well knew. He wanted to learn from their mistakes so as to not repeat them. He had been reading everything he could get his hands on about rockets, from old Soviet technical manuals to John Clark's iconic book on propellants called Ignition. I began to understand why things were so expensive, Elon said. I looked at the horses that NASA had in the stable. And with horses like Boeing and Lockheed, you're screwed. Those horses are lame. And he thinks they're lame because the products they're building are getting more expensive. So Elon's goal, the reason he started SpaceX, is because he wants to make the human species a multi-planetary species. And the first step towards solving the multi-planetary problem was bringing down the cost of launch. So if NASA and private companies spent less money getting satellites and people into space, they could do more things in space and more commerce would open still more opportunities. This awakening galvanized Musk into action. There's a ton of people in this book that look at Elon like he's a crazy person, but there is a very ordered sense of logic to the way that he goes about solving problems. If you want humans to live on other planets, the first thing you need to do is lower the price it takes to get there. And the example that they use, the metaphor that they use multiple times is like, if a plane ticket was a million dollars or $10 million a ticket, then a lot less people would fly. And so Elon starts building this network of allies. One of his allies is this guy named Mike Griffin. He, a few years later, actually become NASA's administrator. And he helps Elon organize these meetings of these space enthusiasts, these engineers, these rocket scientists. And this is a description of one of these meetings. He walks in, Elon walks in, and basically announces that he wants to start his own rocket company. And I remember a lot of chuckling and laughter, people saying things like, save your money, kid, and go sit on the beach. The kid was not amused. If anything, the doubts expressed at this meeting and by some of his confidants energized him more. And so Elon talks about the fact that it wasn't just the people in the meeting did this, but his friends, and they were well-intentioned friends, were trying to get him to not blow all his money. Several friends had already tried to dissuade Elon from doing this. One friend created an hour-long video compilation of rocket failures and forced Elon to sit down and watch it. Another friend told Elon of all the entrepreneurs who had tried and failed. Elon said, he talked my ear off and said I would lose all my money. Elon had cleared about $180 million from PayPal and figured he could risk half of his money on a rocket company and still have plenty left over. And one of the most interesting things about reading the beginning of this book is that you realize that SpaceX was Elon's response to the stagnation of an existing industry. And that's actually a good way to look for opportunity. He identified an important industry that he thought was going completely backwards. It says companies in the United States and Russia still use the same decades-old technology to launch rockets into space and the price kept going up. Things were going in the wrong direction, so Musk founded SpaceX. Now, another thing that I found fascinating about this is the fact that this stagnation actually helped Elon recruit the insane talent that he needed. And so the book says, relative to other aerospace companies, Musk had a lot to offer perspective employees. At SpaceX, new hires could rapidly grow their skills and take on new responsibilities. There was almost no management and everyone worked on the rocket. Musk was a siren, calling brilliant young minds to SpaceX with an irresistible song. He offered an intoxicating brew of vision, charisma, audacious goals and resources. When they needed something, Elon wrote a check. In meetings, he helped solve their most challenging technical problems. When the hour was late, he could be found right there beside them working away. And when they needed a kick in the ass, he deployed his stare and a few sharp words. Another great thing about this book is the fact that the author interviewed so many early SpaceX employees and they were talking about the difference between SpaceX and other legacy aerospace companies. And so an early SpaceX employee had a friend that worked at Lockheed Martin on the F-35 Stealth aircraft. And this part was absolutely incredible. It says, this may sound like glamorous work, but it was not. His friend had just a single job, finding a supplier for a bolt on the aircraft's landing gear and ensuring that it met all quality specifications. That single bolt was the totality of his employments. 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 all-encompassing. And one of the engineers made the really important point that because your work was so wide and the problems you had to solve were so diverse, it actually made you a much better engineer. A big thing was really having to learn to think. Since nobody gave you a cookie cutter job and told you what to do, this really made us all much better engineers. And part of that was because of Elon's strategy on how to design a rocket. He says, there are basically two approaches to building complex systems like rockets, linear and iterative design. The linear method begins with the initial goal and moves through developing requirements to meet that goal, followed by numerous qualification tests of subsystems before assembling them into major pieces of the rocket, such as its structures, propulsion and avionics. With linear design, years are spent engineering a project before development begins. This is because it is difficult, time-consuming and expensive to modify design and requirements after beginning to build hardware. The iterative approach begins with a goal and almost immediately leaps into concept designs, bench tests and prototypes. This is the path that SpaceX chose. The mantra with this approach is build and test early, find failures and adapt. This is what SpaceX engineers and technicians did. In James Dyson's Autobiography, which I covered I think for the fourth time on episode 300, this is called the Edisonian Principle of Design. And in Dyson's Fantastic Autobiography, he talks about his mentor, who's also an inventor and an engineer, this guy named Jeremy Fry. And this description of Jeremy Fry sounds a lot like Elon Musk in the early days of SpaceX. So here's what James Dyson said. Here was a man who was not interested in experts. He meets me, he thinks to himself, here's a bright kid, let's employ him. And he does. He risked little with the possibility of gaining much. This is exactly what I now do at Dyson. This attitude to employment extended to Jeremy Fry's thinking in everything, including engineering. He did not, when an idea came to him, sit down and process it through pages of calculations. He didn't argue it through with anyone. He just went out and built it. When I came to him and 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 I asked if we shouldn't talk to someone about, say, hydrodynamics, he would say, the lake is down there, the land rover is over there, take a plank of wood down to the lake, tow it behind a boat and look at what happens. Now, this was not a modus operandi that I had encountered before. College had taught me to revere experts and expertise. Fry ridiculed all that. As far as he was concerned with enthusiasm and intelligence, anything was possible. It was mind-blowing. If it didn't work one way, he would just try it another way until it did. And as we proceeded, I could see that we were getting on extremely quickly. The root principle was to do things your way. As long as it works and it's exciting, people will follow you. And so back to this book, I haven't read the book in almost four years, but what I remember, one of the things that jumped out and stayed in my mind from the first time I read it, was the fact that Elon personally interviewed the first 3,000 employees at SpaceX. And there's a ton of interesting stories and great ideas in here about this. So he says he understood he would go nowhere without the right people. So, interview by interview, Musk sought out the brilliant and creative engineers who would commit themselves wholly to the goal and make the impossible possible. One of Musk's most valuable skills was his ability to determine whether someone would fit this mold. His people had to be brilliant, they had to be hard working, and there could be no nonsense. Now we have a direct quote from Elon about this. There are a ton of phonies out there, and not many who are the real deal. I can usually tell within 15 minutes, and I can sure tell within a few days of working with them. Musk made hiring a priority. He personally met with every single person the company hired through the first 3000 employees. He felt it was important to get the right people for his company. So here's an example of what an interview with Elon was like. Musk walked in. To break the ice, Brian made the usual small talk. It's nice to meet you. I've heard a lot about you. I'm excited to be here. The hyper-observant Musk never won much for pleasantries, moved straight into questions. This made me laugh. Moved straight into questions. Do you dye your hair? Musk asked. Somewhat flustered, Brian replied that he did not. One of Musk's common tactics during an interview involves throwing a person off kilter to see how a potential employee reacts. So Musk kept asking him if he dyes his hair because his hair doesn't match his eyebrows. So he went up laughing about this and then he just talks about why he is founding SpaceX, like what is the mission behind it. So the success of NASA's Apollo Moon program in the 1960s had spurred a wave of student interest in math and science, and it led to a generation of engineers, scientists, and teachers. But this tide had ebbed, and by the time Brian's generation had grown up, the cool kids were not doing space anymore. They were into medicine, investment banking, or tech. So Brian is talking about why he chose to leave a comfortable job and a more balanced life. He knew he said SpaceX would strip all of that away. His friend was already working at SpaceX and told him about SpaceX's intense environment. And so he said, Brian knew coming to work for Elon would turn his life upside down and Musk could offer no guarantees of success. How could a small team build a rocket capable of reaching orbit anyway? No privately funded company had ever succeeded at something like this before and many had failed trying. And so a few days after the interview, it says a few days later, he received an email from Elon's assistant at one in the morning. Did he want the job? Brian realized that this company operated at its own speed. This offer appealed to Brian's sense of adventure and he decided to seize this chance. So he becomes employee number 14 at SpaceX. And when you hear him describe, he's like, wait a minute, like, I'm going to have no outside life. I'm going to work every hour of the day. High chance that we're going to fail. Yes, I'm going to do this. It reminded me, I've seen this thing a couple of times in these books. I was reading a biography of Mark Twain one time and he talks about this one pony express ad, which is, you know, such a running male by horseback across the country. And the job ads that the pony express ran became legendary. It said, wanted young, skinny, wiry fellows, not over 18, must be expert riders willing to risk death daily, orphans preferred. That ad yielded hundreds of adventure-seeking young men who quickly responded and wanted the job. We saw this also, 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 have the SpaceX equivalent of that. And so then there's a great description of how relentless that Elon could be once he identifies somebody he wants to hire. There's a very talented young engineer from Turkey. He's living in San Francisco. His wife works at Google at the time. So it's like, I can't work for SpaceX because I'd have to move to Los Angeles. But he agrees to be interviewed anyways. And in the interview, Elon tells him that he already solved this problem for him. So Elon says, so I heard you don't want to move to 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 her wife down to LA. To solve the problem, Musk had called Larry Page, the co-founder of Google. The engineer sat in stunned silence for a moment. But then he replied, given all that, I suppose I'll come work for SpaceX. And there's so many great lines about what an interview with Elon was like. And so here's a description from somebody that Elon interviewed. I never met a man so laser focused on his vision for what he wanted. He's very intense and he's intimidating as hell. It's tough when you're interviewing with him. And in addition to this audacious goal that nobody else was even trying to accomplish, the fact that you had a lot of leeway, the fact that you would be constantly push the limit and tested, your entire job wouldn't be relegated to a single bolt. All these things helped Elon recruit top tier talent. But another thing that helped him recruit, there's this guy named Hans who's going to become, eventually become the vice president of avionics at SpaceX. And one of the things that helped him take the risk of joining SpaceX was the fact that Elon had so much skin in the game. Hans knew that Elon had put a hundred million dollars of his own money into the project. I think it's impossible to understate how effective Elon was at drawing in top talent. In fact, there's a great story that illustrates this. So there's this scientist, he is running a graduate program in space engineering at the University of Michigan. It is one of, if not the best, graduate program in space engineering in the entire country. And so this professor makes a list. He's like, who are my ten 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 ten, were working at SpaceX. And this is what he said, the results blew him away. This was before SpaceX was successful. So I interviewed these former students and asked, why did you go there? They went there because they believed. Many of them took pay cuts, but they believed in the mission. And this was hilarious because this guy is writing this article. So then Elon goes and visits him. Elon requests a meeting and he says he asked a single question, who were the other five students? And this is what he said, I realized the meeting was not about me. He wanted to recruit them. Elon wanted the other five. And it wasn't just at the University of Michigan either. So this professor goes and speaks with his engineering peers at places like MIT and University of Southern California. He says he heard similar things. SpaceX had juice with their students too. The freedom to innovate and resources to go fast summoned the best engineers in the country. And the professor has a great line over why the top students were choosing to work at SpaceX over the established firms. He said, talent wins over experience and an entrepreneurial culture over heritage. And so another thing that the book is great at, it gives you a lot of insight into how Elon was managing. There's just a bunch of great lines and stories. And here's one description. Musk's in-your-face management style came with benefits. He empowered his people to do things that would have required committees and paperwork and reviews at other companies, at SpaceX. If they could convince the company's chief engineer, that's Elon, of something, they also earned the approval from the chief financial officer, as they were one and the same. And this is something that comes up over and over again in the early days of SpaceX. The faster you can make your decisions, the more iterations you can do, the more iterations you can do, the more you're learning, the more you're learning, the more success and capability SpaceX has. And so there's just quote after quote after quote in the book of early SpaceX employees describing Elon this way. He always made the most difficult decisions. He did not put off problems. He tackled the hardest problems first. He had a vision of how aerospace could be done faster and for less money. It was Elon's ability to identify engineering talent and then motivate his employees to do extraordinary things. Elon had a knack for inspiring engineers to do things they believed just beyond their ability. And when they achieved the impossible, to reach toward the next goal. This company has a lot of talent. Elon's primary capability is to evaluate people quickly and pick the right people. He is really good at that. And then he combines that skill with being super involved. Musk was there every step of the way. Having Elon there makes things a lot simpler because he is super involved. He makes those difficult decisions. When the time comes, he would step in and make those decisions. He always kept us focused on the vision. This is one of the things that Elon brought to SpaceX. Risk tolerance. This is one of my favorite lines in the entire book talking about Elon's risk tolerance. He didn't want to fail, but he wasn't afraid of it. That is another contrast between SpaceX and the legacy aerospace companies. They become calcified. They're so terrified of taking any risk that could lead to potential failure. There's another great management technique that Elon would use in meetings related to this. Failure was an option at SpaceX, partly because the boss often asked of the impossible from his team. In meetings, Elon would ask his engineers to do something that on the face of it seemed absurd. When they protested that it was impossible, Elon would respond with a question designed to open their minds to the problem and potential solutions. He would ask, what would it take? This is something that Elon has in common with Henry Ford. He would talk about the fact is, we already know the limitations. If we're trying to do something that's never been done before, which with Henry Ford and Elon were doing in their careers, I don't need you to tell me the limitations. I need you to open your mind with potential solutions for this previously unsolved problem. There's a line in Henry Ford's autobiography. He talks about this. He says, that is the way with wise people. They are so wise and practical that they always know down to a dot just why something cannot be done. They always know the limitations. Henry Ford and Elon Musk wanted solutions, not limitations. And then if we go back to what else motivated these top tier talent to join SpaceX, there is a very talented German engineer that Elon was recruiting. And one of the reasons he wanted to join SpaceX is because of the challenge of doing everything within constraints. And so he said, What intrigued me was trying to build a rocket with 200 people instead of 20,000. To almost build it in a garage. Can I use a computer I can buy for $500 versus one I can buy for $5 million? It seemed to me that's what Elon wanted to do. And this was precisely what Elon wanted to do because they were spending his money.