SpaceX

0:00 Dude, you gotta get on Starlink. I know, I know. Can't wait. Fix up this latency in a heartbeat. Seriously. Welcome to Season 6, Episode 7 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts.

0:31 Today we are talking about SpaceX, the company that will this very week be attempting to launch humans into space. as a private company and make the United States a spacefaring nation for the first time since the end of the space shuttle program. Which Unbelievably was it a decade ago. David, how crazy is it that it's already been a decade since the end of the shuttle program? And also how crazy is it that we haven't sent humans to space as

0:57 the US since then. So crazy. I remember when that happened, just like How disappointing that was. Which makes What's about to happen. So exciting. Yeah,'cause I mean

1:08 There was no date set for when it was gonna start again. We decided Okay, the shuttle program's coming to the end. You know, it was expensive, it was dangerous, that it had its mishaps, um, and there's plans for stuff that's coming next, but there wasn't There there was no date, there was no plan, there was no mission. And so now here we are almost a full uh a full ten years later. With

1:31 A date, a plan. And a mission. While give into it. Alright, so listeners, uh, here's the things that I knew about SpaceX more or less before we started researching. They're the first private company ever. To launch a rocket to orbit, recover it.

1:47 And reuse it. they can do all three of those things simultaneously, uh, where they Bring two rockets back down on land and one rocket back down on a boat almost a thousand miles away. Pretty unbelievable. They're of course led by the controversial genius, Elon Musk, who

2:04 Uh or I should say genius entrepreneur. Yeah. Um And of course he has a plan, um many would argue a credible plan of getting a million human beings to live on Mars. But

2:18 Until I dove into this mountain of research, I didn't understand the company's truly amazing business model, the winds of change going on around the company in the space industry at Just this moment in time. Or really how they were actually gonna be able to pull any of this off. So w what is the business? Uh who pays them and for what? And what's with all these satellites that they've been launching recently? So today

2:44 David and I are gonna dive into all of that in full gory detail. Yeah, we are. Well, uh a few announcements before we get into it. If you love acquired and you want more, you can become an acquired limited partner. Our most recent episode was a crash course in fundamental startup concept pricing. with Patrick Campbell, the founder and CEO of Profit Well. So Patrick is literally the world's expert on the topic, and so we brought him in to dive into how you should price software. 'Cause most people do it wrong. How you can raise your prices and still have that be okay for your existing customers. And th things like what's the proper way to do a a free trial.

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5:59 Plenty of things demo well, but the question is whether a busy associate actually reach for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com/slash acquired. And just tell'em that Ben and David sent you. And now David Over to you to take us into SpaceX.

6:26 Wow. Where do even start? The place to start, listeners, if you haven't already, uh, go back and listen to our Tesla episode, which was Now a couple of years ago, which is um Just crazy. Man, we gotta revisit that because a lifetime has happened to Tesla since we recorded that episode. Um but in that we talk obviously a lot about Elon uh and uh his background, him as a person, some of the crazy things that happened to him that have uh

6:56 turned um him and his personality into the unique uh brew, the unique blend vintage that it is. Um but just to By quick way of background, uh to catch everyone back up on it. So Elon obviously was born in South Africa. He grew up with

7:13 Yeah. pretty insane family. Um and even in an even more insane Time to grow up in South Africa with apartheid and all the terrible violence that was happening there. Um, and he wanted none of it. He wanted to come. to the US. He thought America was the land of opportunity. He thought it was where things could happen. He was particularly interested in space and sci-fi and making the future uh the present. Um

7:40 And so he basically at age seventeen hitchhiked his way from South Africa to Canada. Um lands in Canada and then ends up going to the University of Pennsylvania. Um From there, he makes his way out to Silicon Valley. He starts two very successful internet companies, one of which was a little company called PayPal. And somehow in in true Elon fashion

8:04 managed to get himself ousted as CEO of these two internet companies, at least three And potentially four times. Which is pretty impressive given that it's only two companies. This is X dot com and then or I'm sorry, before this this is Zip2, and then X dot com, which merged in to become PayPal. Yep. First company Zip two got ousted as CEO. Second company, X.com. uh his employees staged a coup. That's the one that you may or may not count, then the board removed him, then uh he came back quickly, then they merged with PayPal, confinity.com which had become PayPal, then the board removed him again. Uh

8:44 So all of those before you start your rocket company have all these experiences to form you And and then see what happens. Let's just play that experiment out. Exactly. Well so This unique brew of uh life experiences for this man who's only twenty nine years old. He decides after in October of two thousand being ousted for the Final time from uh the newly merged PayPal. That he's had enough.

9:10 He is done with Silicon Valley. He's hanging up his spurs. He is walking away from it all at age twenty nine. With about two hundred million dollars. Some of which a small amount of which coming from his zip two uh sale earnings. And a large amount of that from his um Equity and PayPal.

9:27 And a silver McLaren. F one. Oh, by the way. We didn't talk about this in the Tesla episode. Did you know, Ben, that he and Peter Thiel were driving said McLaren F one up Sand Hill Road to go meet with Sequoia Capital one day? Peter asked him What this thing could do, Elon said. Essentially hold my beer.

9:48 And they end up. Spinning it around, completely totaling it. Stroke of fate that they do not die Um

9:58 And then they end up going to the meeting afterwards with the car totally wrecked. My God, I knew they totaled it. I had no idea it was with Peter or going to Sequoia. Uh That uh It's like almost to um thank God they got away with their lives.

10:12 I mean, this is Elon we're talking about here. Um so a lot of this history comes from The great Great Ashley Vance uh biography of Elon, appropriately titled Elon Musk,'cause what else are you gonna title biography like that. Um and uh and Ashley writes to take this into SpaceX now uh and set the stage Ashley writes about What

10:34 is going on with SpaceX. He says, with SpaceX, Musk is battling the giants. of the US military industrial complex, including Lockheed Martin and Boeing. He's also battling nations. Most notably Russia and China. And then shortly after, he has a quote from Elon, he says, My family fears that the Russians will assassinate me. Man, and you thought online banking was rough.

10:58 No kidding. And and how do you think about Elon at this point in time? Like is he Uh like rich tech guy who Yeah. now wants to get into rockets, much like the many sort of billionaire types before him who want to start a rocket company or what's

11:16 No, I'm referring to the litany of people who have started a rocket company, bought one rocket, crashed it, and give it up. I mean there's like Uh people who have started all sorts of companies, um have then gone and done this as their second act when they You know have a God complex and uh

11:35 Yeah, there's interesting that you almost Almost always it's it's uh Well. Always it's men that do this. See, it's like little boys growing up wanting to be astronauts, make a bunch of money, then decide to go Create some spaceships as their toys.

11:49 And that's what everybody thought Elon was doing here. Including all of his friends. Which we'll get into now. So it's October two thousand. Uh He's just been ousted. He's decided he's leaving Silicon Valley for good. Like literally, like metaphorically leaving, but also physically leaving, he's going to move to Los Angeles because Space is now what he's going to do with the rest of his life. And um

12:13 the aerospace industry is is primarily headquartered in the Los Angeles area. And so he's gonna move there. He's gonna make connections and he's gonna figure out uh figure out what's next for him. And kind of amazingly through all this, this also says a lot about Elon. Despite having been ousted from PayPal twice, he remains really retains really good relationships with uh with all the team there, including Peter and Max and and um you know all the PayPal mafia and and uh Ruloff uh and so one weekend PayPal is starting to really Take off at this point. They're not public yet, but they're starting to figure things out. The whole team, including Elon, goes to Vegas for a weekend. And uh Kevin Hartz, uh, who was an early angel investor in the company.

12:56 is interviewed in uh in Vance's book, and he talks about that they're sitting he says, We're all hanging out in this cabana at the Hard Rock Cafe. And Elon is there reading some obscure Soviet rocket manual that was all moldy and looked like he had bought it on eBay. He was studying it and talking openly about space travel and changing the world. Uh so this is like Everybody's like, Okay, man, this guy has like gone off his rocker. Yeah, and and he's not sort of like hiring someone to go do this for him and saying, Put my name on it. Like

13:26 I'm gonna flash way forward to today, but he's the He's effectively and maybe even entitled the chief engineer. Yeah. Like I think I've heard the NASA director refer to him as chief engineer of SpaceX, Elon Musk. Like He

13:41 Was a sponge like a uh he would go find resources on Rockets and just go like suck all of the information out of physics textbooks and physics professors and, you know, exactly what you just pointed out, rocket manuals. Um I don't wanna I don't want my I don't want my question from a moment ago to linger too long feeling like I'm mis mischaracterizing him. Elon is absolutely not a eccentric billionaire who now decided to get into space'cause there's nothing else to do. Like

14:11 This is sort of the plan all along. And online payments were sort of this brief exit from the highway before he got back on to go and and really run it this big problem. Yeah. Well, it was a way to get um So when he

14:26 Lands down in LA. He gets hooked up with a nonprofit organization called the Mars Society. And Elon's been percolating on Mars. Uh he talks about um he when he first started thinking about all this, he goes to the NASA website and he's expecting on the NASA website to find, you know, all sorts of great plans about the future in exploring space and in particular Mars, like it makes sense that people should go explore Mars. We've been to the moon. And there's nothing there. And so he gets really disillusioned. He's like, I kinda wanna make like I've got some resources. I want to make a grand gesture. He's not thinking about a company. He's not thinking about a business. He's thinking about something to inspire people uh to get back into

15:07 Space exploration. So the Mars society, this is their charter. So he uh makes a$100,000 donation to um to the Mars society. He joins the board and he starts meeting all of these aerospace people in uh LA. And um and not just in LA, of course, back up in Silicon Valley, there's NASA's Jet Propulsion Propulsion Lab uh in Mountain View. And so Elon, he's he's mostly down in LA, but he's going back and forth and he starts organizing these Saturday salons, he calls them, where he's just getting together industry leaders in aerospace and at JPL, both in LA and Palo Alto. And um

15:43 He's just kinda like there's no agenda, but he He kinda lets it be known to all of them that like he's got some resources. He's you know A dot com rich guy, and he wants to make a gesture. And like what could be done on the order of kind of 10 to 20 million dollars? So They start to coalesce the group on this idea of building a quote unquote Mars Oasis. And the idea behind a Mars Oasis is

16:09 Is that they're gonna buy a rocket. And they're gonna put a plant on it. And they're also gonna put a robot on it and they're gonna shoot this rocket to Mars. And When it

16:20 Lands on Mars. I can't remember if the Mars lo rover uh had landed at this point. I I think so was a thing. Uh the lander that was um The one that I remember was a really big deal that I think found ice. Yeah, I remember that. The f the the Mars Phoenix Lander. Uh was somewhere like two thousand eight. And so that hadn't happened yet. Um but I think the Rover had. Yeah.

16:49 think the river was there. Anyway, it wasn't like I mean it was kind of crazy. Obviously everything about this is crazy, but you know, you could sort of piece together how you could string along somebody that this could happen. Um so they were gonna put this there. And then the idea was that the robot was gonna create a greenhouse And then was gonna put the plant in the greenhouse. and let the plant grow on Mars and then they the robot would have a camera and it would have video feed And kinda like the you know, the whole earth picture that the first Apollo astronauts took of uh of the earth from the moon, that this would be a live video feed of a plant.

17:22 Growing on Mars and we beam it back. over the internet onto a dot com site and inspire the people of the world to explore space with this. Love it. Love it. Sounds great. So so the purpose being sort of like inspiration, uh a little bit of like a philanthropy stunt.

17:40 You maybe even like a um You know, some kind of performance art. project. Uh not to foreshadow what's going on in Elon's life today. But um But yeah, that's kinda that's kinda the idea. There's one problem though, and nobody

17:55 In the group in the salon group. is really willing to tell Elon. You know, he's thinking he's got, you know, probably 10 ish million left over from uh the sale that he made. He made about 20, I think 22 million from the sale of Zip2, his first company's probably got about 10 million left over. He thinks scrape together maybe 20 million, maybe take some loans out against his PayPal equity That's that's his budget for this. And and David, earlier you had said that number two hundred million. Um that obviously would come later when he did get liquid on those PayPal shares. Now he's only got sort of this ten to twenty million from their first company. Right. He's you know, he could he will end up being with two hundred million dollars in liquidity. But at this moment, uh it's all tied up in PayPal. So

18:40 The thing that None of these space experts want to tell him is that like he's off by an order of magnitude on the cost of this thing. Uh, and uh ten, twenty million isn't gonna cut it. You're needed more hundred, two hundred million, three hundred million dollars. So Musk though, like he's very um You know, he's singular in his focus, and so he keeps pushing forward on this and he comes up with this idea. I think this was his idea.

19:06 that the way he was gonna make this happen was he was gonna get a deal on a rocket by instead of Using a you know purpose built uh space launching rocket. He was gonna go over to Russia and remember this point, we're not that far removed from the um you know, dissolution of the Soviet Union. Like it's kinda the wild west phase of Russia. Yeah. We're we're now in two thousand and one. And Mus's idea is he's gonna Go over there.

19:37 And he's gonna buy an intercontinental ballistic missile because the Soviet Union has disintegrated. You can like Kinda do that in Russia these days. Apparently there's an open market where you can go and buy Well maybe it's not open, but it's you know, it's grey. It's it's uh That's right. Didn't he have some sort of like shady not shady, but uh A connection like to sort of like help him figure this out.

20:04 We we should also contextualize here Uh, I think to be able to actually buy one of these in the US through m more appropriate channels, like if if you could actually get your hands on one, I think it's something like sixty five million dollars. Like The reason to sort of look elsewhere is there's no way you're getting one here for any reasonable amount. Yep, he thinks he's gonna get a deal by buying a missile and converting it.

20:28 Into a rocket. Q the uh cue the James Bond, you know, villain theme here. Uh uh So he goes over there. He he uh He hears well, he hears from his network that there's a guy who can maybe make this happen. That guy's name is Jim Cantrell. And so Jim lived in Utah, he's an American, and he had worked for NASA and also the French space agency. Uh and

20:53 Ended up doing a lot of actually like super classified collaborative missile defense projects with the Russians. I don't know if this was during the Cold War or just after where they were actually working together on, you know Missile defense. Um so he knows the Russians pretty well. So he tells the story. One day he's uh he's in he's in Utah, he's driving. He gets a call on his cell phone and he says this is in in Vance's book. This guy in a funny accent said, I really need to talk to you.

21:22 I am a billionaire. This is Elon, by the way. Elon is not a billion at this point. I am going to start a space program. And Musk finally refuses to give Cantrell his cell phone number. Uh, and Musk made the call from his fax machine line. He's like starting to get paranoid about what this is gonna entail to go try and buy a missile. Um so must ask Cantrell to If there's an airport near where he is and if he could meet the next day and Cantal says, My red flag started going off and then he's he's fearful that one of his enemies is trying to set him up. He says Okay, I can meet you at the Salt Lake City Airport.

22:00 But only behind security. I mean he's used to dealing with the Russians here. Just like it's a it's a good if I ever want a super high security meeting, like now I know how to do it. Yeah, go to an airport. It's probably Pretty empty these days in the coronavirus. You're gonna have a very private meeting. Um So Cantrell rents out a conference room in the Delta Lounge at the Salt Lake City Airport. Uh and they mean they end up hitting it off. And Cantell's like, Oh, okay, like I mean This guy's something, but he's not.

22:32 Totally crazy. And so he says he agrees. He says, Okay. I'll go back to Russia with you, um, and I can I think I can help you buy a rocket. So at this point, Elon's friends all basically try and stage an intervention. Uh they create like a compilation video of rockets blowing up. You know, they come up with all the stories, Ben, you were mentioning of everybody who's lost all their money doing this. He goes forward, but um one of his best friend from college, a deo Rese, who uh started the funded.com and founder institute, is not great entrepreneur in his own right. He says, I'm gonna come with you. Like he's like the the friends must have like nominated him to kinda keep tabs on Elon. So the three of them Cantrell.

23:12 Elon. Right. And one other guy. End up. Going to Russia and making a pilgrimage to try and do this. The other guy who goes with them is a guy named Mike Griffin, who they get introduced to. Uh obviously Mike Griffin wins. We'll come back to Mike Griffin later in the episode. My God. I have Mike Griffin

23:35 listeners in my notes, I won't tell you where or what his title was, but uh Wow, it's the same Mike Griffin? Yeah. Ben and I were talking before the show and I was like Alright, there's gonna be a thing. Like Just wait. Just wait, listeners. There's gonna be a thing about Mike. Wait, so what's Mike's role in this? So he comes over to just be part of this um What's the right word? Like

23:57 Emissary entourage, maybe? To just kinda, you know, make introductions and meet With people to see how one would go about buying an I C B M from Russia. Yeah, I mean you could call it an I C BM. You could call it a rocket to get to space, which is what, you know, the intention here is so Mike, he had worked at NASA earlier in his career. And then he'd run IncuTel. Which is the um it is part of the government. But it's the CIA's kind of venture arm for investing in commercial ventures that are gonna be helpful to

24:29 Um the government. So, you know, who knows why Mike was coming with them, you know, again, he's he's coming from the government, he's coming from Mickey Tel. Maybe he's keeping tabs on everything that's going on here. Uh so he comes along. And uh It basically goes as you would expect, listeners. They meet with a bunch of Russians, you know, can't trail and maybe maybe Mike sets set up some meetings. Um and they kinda go like this. You know, Vat uh Vance describes a bunch of them in the book. You know, they walk in They sit down, there's a lot of you know, the first thing that happens, of course, is vodka shots. And uh Vance talks about one meeting where uh they do everybody in the room does vodka shots and the Russians are toasting uh to America. And uh

25:10 That um That probably should set, you know, some some red flags off there for everybody just in the get go there. Um And then you know. The chat for a while. They're not really

25:22 Talk about anything related to buying a missile, lunch is served, you know, a couple of hours go by. And then finally they get around to like, so the purpose of your visit. Uh and for anyone who's ever met with any of Elon's companies, let alone Elon himself, like this is not how you get to have a meeting with someone at SpaceX. It's quick, it's to the point, it's How fast, give me really good reasons for everything and let's move on. And like Elon is the personification of that type of meeting. Yep. So he starts getting really frustrated by all these meetings. And finally

25:53 You know, by the end he's he's had enough of this kind of Russian way of doing things and he just starts coming out like right after the vodka shots, like I wanna buy I wanna buy rockets. You know, here's my offer. And he's he's calculated he's willing to offer um they're meeting with one group, but this is the last group they meet with. I think has either two or three Rockets. He offers them eight million for um Uh for the two of them and they're like Yeah, how about eight million Each. They um

26:22 Needless to say, they don't come to a deal. So Everybody leaves the meeting. By the way, they're there in the middle of Moscow and Russian winter, which is Oh, it's awful. I've been in Moscow in February and it is like Uh it is like freeze your face off cold.

26:38 So it is it is literally February two thousand two when this is happening. Wow, yeah. So let's recap dollars real quick, just so everyone has a uh'cause'cause dollars are gonna be an important thread through this Um through this whole story, not just because This is an expensive endeavor, but because the s the scale of dollars to other dollars is important to think about of how would you go about solving this problem? So Elon's basically got a hundred and seventy million from PayPal of post tax dollars.

27:07 Once the acquisition happens, which is not for another thing, which didn't happen yet. So he's got twenty million total now. Um but you know he'll he'll eventually have a hundred and seventy million. And and um So Mm-hmm. the the that number that I quoted, buying a uh a a rocket like this from a US company that manufactures it's like sixty five million dollars. So you know, he's trying to buy him for eight eight million um for for for two of them.

27:34 um in Russia. So that d to keep those sort of relative dollar amounts in your head. Of course the deal goes blows up, he doesn't actually end up buying them, but um that would have been what it cost him. And he couldn't, you know, even if he were willing to put all his money into this, he couldn't do the sixty five million dollar launch because that's just The launch. Like, you know, then you gotta like Get the stuff there, you gotta build the robot, you gotta set up all the stuff like um I'm sorry, that that sixty five million that I'm quoting you is literally to buy a rocket. From Oh, interesting. Yes.

28:03 I didn't realize that you couldn't even I guess you couldn't at that point in time just walk up and like Reserve uh launch spot on a rocket. Yeah. Who who who can you just go and say, Hey, I wanna Yeah. Huh. Imagine if there were a company that did that.

28:20 And and also I I I t I take that back. I think such a conceit did exist, but I think it would have cost you a hundred and fifty million to five hundred million, quoting some of my numbers that we're gonna sort of bust out later in our future cost comparisons. Wow. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI first world, that doesn't hold up anymore.

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30:03 We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get$1,000 off Vanta at vanta.com slash acquired. That's V-A-N-T-A.com slash acquired for a thousand dollars off. And just tell them. That Ben and David sent you. So okay, so back to February two thousand two in Moscow. They leave the meeting, this uh this uh Motley crew

30:30 They get on the airplane and uh and they you know head back to to the US uh on the plane and um uh Cantrell talks about this. He says, um Whenever you get on a plane in Moscow, particularly in in in February, heading back for the St for the States, he says you always feel particularly good when the wheels lift off in Moscow. It's like my God, I made it. So he and Griffin, you know, they're veterans here. They, you know, call over the drink cart and they start, you know, celebrating getting out. Meanwhile, Elon's sitting in front of them, uh and he's just like furiously typing away on his laptop silent, and they can't, you know, figure out what's going on. And uh About halfway through the flight he turns to them. And he says, Hey guys.

31:15 I think we can build this rocket ourselves. And then he hands them. The laptop. And they look at it. And they're just like Dumbfounded. Elon has

31:26 This spreadsheet. On his laptop. This I don't know if it's Excel. It must have been Excel. Like Google Sheets didn't exist at this point. And it's like a hyper detailed spec sheet with costs and all the materials needed. To build

31:43 A rocket. Not necessarily a rocket that would get them to Mars, but it's like You know, it's real. And um And so they're they're stunned and they say How did you Build this.

31:57 It turns out. Elon had been reading a lot of Soviet rocket manuals and he had Also Matt as um part of this kind of group of advisors he'd been putting together, he met this guy named Tom Muller.

32:11 And Tom had worked at Hughes Aviation, Hughes of course being Howard Hughes. Back in the day. Speaking of uh of billionaires who started rocket companies. Indeed. Um and then moved on to TRW space. And he was kind of known in the industry as a real savant about engines. Like Probably the

32:32 Best Um most impressive Rocket engine. engineer in the world. And

32:40 Musk had had Gotten in touch with him. And uh and met him and started asking him all these questions about how rocket engines work and what needs to, you know, go into building a rocket. And he had helped him put together this spreadsheet. So it was It was pretty damn good. So they get back to the US. And then basically

32:58 a whole chain of events gets kicked off that ends up in SpaceX. Uh and uh tomorrow an American company launching people into space. Yeah. Uh another um Just to keep the dollar thread going. I think it was I I can't remember exactly which of the sources it is. We David and I have twenty or thirty different sources that are in the show notes um where you can go and read read more about this. I wanna say this was originally from a SpaceX engineer, but um pointed out if you calculate the cost of goods sold for aerospace grid aluminum alloys plus some titanium copper and and carbon fiber on the open commodities market, it's about two percent.

33:34 of what rockets cost. And I want to plant that seed because the the question in your mind throughout all of this Should be Mm. Yeah. Where

33:45 Why is this expensive? Like obviously this is expensive. It's almost unfathomably expensive. When when you ever you hear about anything in this industry, contracts awarded, cost of a mission. NASA's budget, which, by the way, uh in the last twenty years has gone from about one percent of our federal uh budget down to about half a percent. Um it was as high as five percent in nineteen sixty nine at the height of the space race. So it's just interesting to think about that. By the way, these are the correct that's up the entire federal government. Yes. But so it's i immensely expensive, almost to the point where it's y

34:23 Yeah. You can't even discern between the millions and the billions. And I'm I'm I'm trying to Sort of paint a picture here where I'm You really should just try and figure out every single time you hear a high number Why is it expensive and where does the money go?

34:36 And of course you can't make a rocket just by throwing commodities at a wall, so um you're not gonna get it all the way down to two percent of what that rocket costs, but Two percent. uh being sort of like the hard materials I I'm not someone who's in a industrials job, but I have to imagine that in most manufacturing businesses um the actual hard materials are much more than two percent of the final sticker price of uh of whatever is off the line. Yeah, the bomb versus the uh MSRP. Totally. Well, and this is, you know, Elon.

35:10 Elon studied. Physics in undergrad in addition to business. You know, he is a physicist, and this is the question he asked himself. He's like, you know, yeah, like this is hard, but at the end of the day, these are atoms and like You know?

35:21 It's a bunch of Gas in it. tube, right? Like that that's what a rocket is. Um and so this is what he's putting together in the spreadsheet. So they touch down back in the US and basically at the same time PayPal finally goes public. Uh-huh.

35:36 And right after so even they were the first we talked about this with with Rulov in our adapting episode with with uh with Rulov at at Sequoia, who was at the time the CFO of PayPal. They broke, you know, they were the one bright spot in the in the dot com, you know, the Russia Russian like dot com winter. Um the stock pops fifty five percent right after the IPO. Uh so Elon sees this. He's got this spreadsheet. And something clicks in his mind and he says, You know what? This isn't just a

36:08 Gesture. This isn't just a Inspirational. I can actually disrupt this industry. I'm gonna build a company. I can take you know, all of this cost blow that's happened in this industry, um

36:22 use my spreadsheet, use my connections and and do this for real. So he gathers up, you know, they they walk up the plane, he gets Cantrell, he gets Griffin, he gets Mueller, uh the rocket s you know, the literally the rocket scientist, and a guy named Chris Thompson, who is an aerospace engineer at Boeing. And he says, Let's do this. Let's start a company. Nonprofit is dead. I'm gonna start this, I'm gonna fund this all myself, pay as a liquid public currency. The locku will be over soon, I can get out exit my stock and I'm willing to go all in on this. Almost all in. Almost all in. Greater than half in. Greater than half in. Now he hasn't yet met J B Strable and gotten introduced to the electric car scene. Uh so at this point he's

37:02 He's thinking all in. The one person who Everybody's in except for For Mike Griffin. Uh he lives on the East Coast. You know, he's the former AnkyTel guy. He says, you know, look, guys, I'm a little farther on in my career. I'm a little more senior. You know, this is all a great adventure. Best of luck.

37:21 I'm rooting for you, but I'm I'm not gonna move out to California and And do this. Uh And that ends up being a very good thing for SpaceX that he uh did not do that. As we will see. Yeah, it's a very good thing for s for SpaceX that uh this is how it shows. Very good thing for SpaceX and the world that he did not do that. Um

37:41 Everyone else though is in. He ends up leaving a a few months later. But in June two thousand two, they officially incorporate space exploration. Technology. And then the very next month in July two thousand two, eBay buys PayPal for one and a half billion dollars.

37:56 And Elon now doesn't just have a Liquid public. Stock currency. He has a hundred and eighty million dollars plus in Straight up cash. That uh

38:05 That he gets out of. PayPal. And at this point in time, he says, You know, remember, he's been ousted three or four times from the two companies he started in the past. This is gonna be his life's work, his next company. He says, I don't want Any Any chance that anyone could kick me out here ever again. I am not taking on any outside investors.

38:24 I am putting my entire fortune into this. I will fund it all myself. Yep. It's mine. Um and the super interesting thing is, you know, Ben and we were we were talking about this, um, we were texting about this. All told over the life of SpaceX, I think Elon has only put in about a hundred million dollars. Into The company.

38:43 Versus Bezos uh at Blue Origin puts in a billion dollars a year. Um, and so many other, you know, people that have entered into the space industry. Uh just become money pets. That's a good thing. Let's let's plant that seed, uh, because yes, SpaceX is very revenue funded instead of sort of equity funded. Of course, it's very equity funded too. This is a company that has a what, thirty five billion dollar valuation today and has over three billion dollars invested in it. Um from nothing. Much of which is outside of Elon.

39:13 Yeah. Uh oh, interesting. Good point. I think much of which is is secondary. Okay. Well the the the the point I wanna drive home here is Uh SpaceX was founded And there's

39:26 Two there's one thing that's known about the company at this point and one thing that's not super solidified, at least as far as I can tell. The thing that is known is We're we're going to freaking Mars. Like we're figuring this Mars thing out and we're gonna start by lighting a one engine candle on fire and like we're gonna we're gonna figure out how to, you know, take baby steps here. So that part is figured out. The part that's not figured out is what you'll find in the very first paragraph of the Wikipedia entry on SpaceX, which is this sentence. They were an American aerospace manufacturer.

39:59 And Space Transportation Services Company. It is very, very important to understand SpaceX today. is both of those things and they are different. They're a a company that makes stuff for aerospace and and may well one day run a business on that.

40:16 And then they also have this business where they're Basically a logistics company to Ship stuff up to space. And that latter business funds the former business. And

40:28 I think the the missing puzzle piece that sort of comes along that um lobbies for SpaceX to do that isn't is not yet in place yet. Yeah. Well So the business plan for this new company, and again very Elon is very insistent, this is now a company. Is that he's seen all this cost bloat in the industry. He thinks they can

40:51 do much better and he realizes really the hard part. About Launching things into space, yeah. is the engine of the rocket. And he has the best,

41:01 Rocket engine engineer in the world. Tom Muller working for him. They're gonna build their engine completely in house. And then the idea is that the initial initial idea is they're gonna go to third party suppliers and commodity folks and get all the all the rest of the stuff together and work with work with contractors kinda like um

41:20 You can imagine the business plan, ironically, is sort of like the traditional Detroit. Automotive companies where they make the engines. And they make the finished products, but everything in between the engine and the final car Comes from a whole network of suppliers.

41:37 Yeah. Yeah, h horizontally integrated company. Yeah, exactly. Exactly. Um so the plan is this is what they're gonna do. They're gonna build the engine and um they're gonna start launching in September two thousand three. It is now July uh two thousand One. Uh yeah, that's uh that was some wishful Elon thinking. Classic. Yeah. Classic. Uh it may have been the first the the beginning of the Elon timeline,'cause in software, you know, you can ship. That fast.

42:06 Well harder in uh in hardware. Uh we should also say, like, there's a and this I think is from from the Ashley Vance book as well, like the way that Elon calculates these deadlines is like he thinks about it a about l literally how long would he sort of like builds a Gant chart in his head and then he tries to compress all the minutes together. And then he also tries to apply a speed acceleration there where he says, look, like I would work on this really fast all the time, so anybody that I'd hire would also do that. And so he basically creates this like ultra Ultra compressed Gantt chart that's m massively sort of like uh has the Elon multiplier on it, and that's sort of how he expects the work to get done.

42:45 Yeah. Yep. So they decide they're gonna name this first um Rocket the Falcon One. After the millennium Falcon.

42:55 Of course. Um, and uh since the rocket is named Falcon and the key is the engine, they're gonna name the engine Merlin, which is a Type of uh a type of falcon. Also, I d I wasn't able to find I don't know if you were if this was intentional or not, but the Merlin engine

43:13 actually has a storied history. As a different type of engine. Which is the Rolls Royce Merlin engine. Um which powered all of the most of the British uh air fleet during World War Two and the Battle of Britain and was like storied for being its power and reliability and um Yeah.

43:33 Helping uh The Allies win the war. That threw me for an SEO loop'cause I was uh I was searching for information on the Merlin and uh kept getting this Rolls Royce thing and I was like What the I thought SpaceX always made their own engines. Wouldn't that be funny if Rolls Royce made the SpaceX engines.

43:52 That would be the ultimate irony based on where the company would end up today and their sort of strategy and principles. I know. I know. Um Okay, so they get to work building the Falcon and the Merlin. Working with all of these, you know. the network of contractors and suppliers being, you know, horizontal, uh horizontally integrated company. Um

44:14 And uh They pretty quickly find that it's not just Boeing and Lockheed and everybody who is uh Subject to cost bloat and time bloat and project scope bloat in this industry. It's all the contractors all the way down. Uh so Elon starts asking questions at these guys pretty quickly. And this isn't just like two levels of contractors. It's not like, well, I'll sub it out to Boeing and then they'll sub it out to someone. This is like

44:38 Like Uh s it's turtles all the way down type type thing. Like there's this like crazy recursive loop where yeah. It's every So Elon, of course, starts asking questions and people in this industry aren't really used to questions being asked of them. Um and he starts figuring out that some of these components, whether it's, you know, um part of the shell for the fuel tank on the rocket or some of the avionics components, that contractors are charging hundred thousand, multiple hundreds of thousands of dollars apiece.

45:08 That they can just manufacture them. either in house, fab them in house, or use off the shelf, you know, consumer grade electronics and computers for, you know, one percent or less of the cost that uh that these contractors are quoting them. So he says All right, screw it. We're not just like Tesla, we're not gonna take the Detroit, I know, approach to this. We're gonna vertically integrate. We're gonna make Ninety percent plus of this rocket. In our own factories.

45:38 Which is wild. I mean t the SpaceX sort of um coy talks about how uh raw material rolls in one side of the factory and rockets roll out the other side. And and they almost like talk about it like well minerals show up on the left side and rocket show it's not quite that. They d they do have a network of suppliers. I think the number is three thousand suppliers and eleven hundred that supply them product every week. Uh but Th the way to think about it is those suppliers are just sort of like way lower level. Like they're more the raw

46:10 you know, material. um, you know, think about sheet metal and wiring rather than fully assembled, you know, motherboards and uh You know, fuselages. This is like It's it's kind of a crazy undertaking,'cause really in business the the the theory is only take your core competency in house and outsource everything else. Outsource everything that can be commodity. But

46:33 There were so few players in this industry and so Like such limited number of customers on the demand side that like There was a very

46:44 specific way that it was done, and that way just involved this wild Scattering of subcontractors, each of which had to make their own pro product. Profit margin. You end up with this stacked like margin, margin, margin, margin. And as uh um

47:01 Uh someone who we will talk about here shortly uh brings up in a in a speech i her quote is it's exponential G and A. that you get when you have multiple layers of integration. And I've never heard someone describe it so apt that of course this is exponential, because every time somebody needs to make their thirty percent or whatever it is, that's on the previous person's thirty percent or whatever it is. And I bet it's a lot higher than thirty. Yeah. Well, and let's think about who the end customers were. in the space market mostly You know, pre SpaceX, well and even now post space X, uh they were governments, you know.

47:36 Primarily the US government, but also other government around the world. These are entity like A a lot of these contracts are done on a cost plus basis, which, you know, by the way, side note, playbook theme If you ever as an investor or an operator encounter a situation where there is a cost plus contract uh as a way of doing business, you need to either if you're an entrepreneur disrupt them as soon as possible, or if you're an investor, run the other way. Because with a cost plus, literally it's you get a There's the cost of what it costs to make something, and then the contractor makes a percentage profit on the cost. So the incentive of the contractor is to make it cost as much as possible so that their absolute dollar profit as a percentage of the bigger number is bigger. Like it's nuts. Yeah, it's a great point, David.

48:29 And I think You know It's ambitious, but it it still seems silly that this is a company that Is Both.

48:38 Best in class at you know, creating motherboards. for this purpose and best in class at writing software and best in class at creating rocket engines or, you know, top three in class at creating rocket engines. It's like an insane number of rockets. Right. That's the other thing is they Yeah, they are the operator of the final product. Yeah, they vertically integrate everything.

49:03 It's just a You know, it's it's obviously it's a seven thousand person company now, but it is Just shocking how many core competencies they need to be excellent at. Yeah. So okay, so what's the business model for all this? Like what's the target market? So

49:18 Elon, you know, he comes from This internet industry. You know, new you know, PayPal, new markets. Lots of demand. Um, you know, highly rapidly growing markets.

49:33 And all the folks that he surrounded himself with who are instrumental at SpaceX, they're all the These are the bleeding edge of the bleeding edge folks in the space industry. The people who like Boeing and Lockheed aren't moving fast enough for them. So they think there's this concept. in the space industry at the time. Um and has been for many, many years, that

49:53 small satellites are gonna take over and there's gonna be this big democratization of the space market. Um, you know, and where whereas it was just governments and big satellite companies that were launching big stuff into space, there's gonna be small sats and cube sats and now like Everybody there's gonna be this massive opening of the market, kinda like there was with PCs and then with cell phones. Um and that's who SpaceX is gonna try and serve. Exactly like PCs and cell phones. Like if you think about it, the reason that a lot of these cubesats can do what they do is because we've got You know a few billion smartphones out there and we can massively bring down the cost of of uh you know, the really innovative stuff that goes into creating something that, you know, fits between your hands outstretched.

50:38 Yeah, and it uh it really Amazed me doing the research. We've all heard this story about um space and small satellites. Uh in recent years with the venture funding in the space. But this was the story even back in two thousand two, two thousand three. Like it's That's true. That's a fair point. This is five years before the iPhone and you know, eight, nine years before smartphones had scale. So people People were always thinking this. And You know, it I think it will materialize in the future, but

51:07 The reality is it didn't quite materialize for a long time, the a big market there. And so at this point, SpaceX makes a critical critical higher that Ben you were alluding to earlier. Yeah. And Gwen is just

51:22 An incredible force of nature in uh every dimension. Today she is the president and COO of SpaceX and runs most of SpaceX at the time. Uh runs most of SpaceX today. At the time, she was the first salesperson. And so she had come actually interestingly. Vice president at business development, David. Oh, it was sales. Uh which, you know, in um Elon's uh world is a is a is a uh is a good thing. Um And uh So

51:53 Gwen. It started in the Automotive industry. uh earlier in her career, but then moved into the space industry and she says hey w wait a minute, guys, like So everything around the

52:03 the company was architected to sell to this emerging market of small satellites. Like the Falcon the the Merlin engine was incredible. It was the most highly efficient rocket engine ever built. But the Falcon one using one of these engines was a pretty small rocket and could get just small satellites up. She said I think it was it's like seventy feet tall. Does that sound right? when you think about walking up to a rocket and marveling at sort of this this skyscraper structure like that's that's not what the Falcon one was when I sort of like m made a joke earlier about, you know, strapping a rocket to a candle, like

52:38 It's tall, but it's not that tall. No I mean compared to like um Saturn five or something like this is this is Just a a a little bean shoot. Um and uh So Gwen says, you know

52:51 Yeah, like let's go pursue, you know, try and sell to these small psychoans. But honestly, the market like she knows the market. And she says It's not there, but I think you guys are I I think she's the one who says this. You guys are missing something. The big players, the governments

53:07 Uh, the big satellite guys, the Department of Defense, NASA, they're also interested in what you're doing. Like they don't like it that they are paying so much money for all of these uh rockets and these launch uh Yeah. Hm. You know, if we can prove to them that we can actually do this.

53:28 We can get some money out of the big boys. And And and and Gwyn importantly spent a decade at um at the Aerospace Corporation and Microcosm. So she sort of like knew the way that This

53:43 Yeah. industry did business and sort of knew the way that money f uh floated around, knew like w what the different total addressable markets were. Like I think Elon probably didn't have a pie chart uh on his computer of sort of like segments in the TAM for sending stuff to space. Like Gwyn lived in that pie chart. And um She was the second tab of the model. Yes. And when we were alluding earlier to uh uh of course my comment on on Gwyn with um the the sort of uh benefits of and cost savings of vertical integration, but also to the the sort of dual business model of of SpaceX, the sort of owned and operated things that they send up versus the hey, we're a shipping company.

54:26 She sort of is the force behind, hey, we're a shipping company and that's gonna fund the rest of this operation. Yeah, like proof of concept um of the Falcon one. Let's load it up on a truck and let's take it to Washington, DC and just Park it in front of the I think it was in front of the FAA, not the Pentagon. Um but the engineers are like, What are we doing? This is crazy. This is like just showmanship. But um but it works. They get the attention of DC. That's crazy. And I think I remember too something like it's a more shiny, nice, idealized rocket than the one they were actually designing. But uh it had the SpaceX logo on it. Yep.

55:05 Tom and the team are working away at building the Merlin and the Rocket and um And the original. Uh well, so the original uh goal was to fly in two thousand three, that gets pushed to two thousand four, and then finally in two thousand five, they're ready to go. And Gwen has managed to land not a small satellite deployer as um the first customer, but the Department of Defense as a uh they're starting to experiment with launching smaller satellites. And so they wanna say they say like, okay, we'll do we'll take a flyer on you guys. We'll put up a small satellite. You've never set a rocket to space, like let's take our satellite and we'll put that right there in the nose cone in the fairing of your uh of your of your rocket. So so they do?

55:46 Um They believe they're gonna launch out of Vandenberg Air Force Base, uh just north of LA in uh in California. But uh typical bureaucratic red tape. Also because um Uh there's some competitors that may or may not also have some launches going on at Vandenberg at the time. may have forced them out.

56:05 They have to go find another site. So they scour the world. They find an abandoned, uh not abandoned, but a an not currently used space in the Pacific Ocean between Hawaii and Guam and the Coadlean Island, uh Islands, or Quad, uh which is part of the Marshall Islands. Yeah, I think it's the Quadjillan atoll. The quadrillant at all. And um They basically they ship the rocket and they ship the company out there. They say, like, all right, we're gonna we're gonna set up a a rocket launch site there.

56:37 Yep. All right. Well let's let's talk about this. So the launch site is on Omelec Island in the quadulin atoll. And so uh if you work for SpaceX at this time and and you have to go out there, um, here's how you do it. So you take a five hour flight from LAX to Hawaii, you stay overnight Uh you catch the seven A. flight to the Marshall Islands, which of course makes several stops and then the that area of the Pacific because you're not you don't just have a everyday back and forth single shot to the Marshall Islands. This is like a place where in fact I think my high school guidance counselor went on the Peace Corps there. Like this is a remote, remote location. Um also sadly a place where we tested lots of weapons in uh in World War Two and I'm sure

57:19 many other times. So then you get to the Marshall Islands, you then have another hour long boat ride to actually get to Olomek Island. So y you're like Every time you go out and back, I mean, it's like a multi day experience that you're putting up with

57:39 Do your job, which is a top point one percent in terms of cognitive requirement to do that job. Yeah. And spoiler alert. A good portion of the company spends most of the next three and a half years going back and forth to this island. Um They

57:57 Initially think they can launch in November two thousand five. There's a valve problem. The launch gets canceled. It takes them until March of two thousand six until get they get all systems go again. They ignite The Falcon one. It takes off, it starts climbing. Everybody's going nuts. And about twenty five seconds in.

58:16 It blows up. And remember, it has the Department of Defense Um You know, experimental small set. In its bearing has its payload. That gets blown out of the rocket, ends up falling through the roof of the building uh of the launch facility there.

58:35 Mostly ends up surviving. Um yeah, a lot of the rocket ends up getting blown into the ocean. Um But uh Elon notes in his uh Postmortem from the event. It is perhaps worth noting that uh those launch companies that succeeded also took their lumps along the way. SpaceX is in this for the long haul, and come hell or high water, we are going to make this work. So

59:00 They're not deterred. It takes them another year to attempt a second launch, March two thousand seven. This time they make it three minutes. into the flight. Um the first stage uh of the rocket had separated the Merlin engine did its job uh fantastically. The second stage kicks in the Kestrel, the smaller Kestrel engine, and uh that's gonna take the rocket and the payload up into orbit. Everybody's cheering, high fiving. Then As it says as Ashley says in the book.

59:31 It starts to wiggle and this just I can also imagine this must have been so demoralizing. So Two things I wanna point out here. One is, and I remember re like thinking about this the first time I watched Apollo thirteen when I was a kid. Like They don't

59:49 know exactly what's gonna happen when it goes up. but you can model a lot of it out with equations. And so you do and you run computer simulations and you know, you do your best. But you don't what if you didn't think of like just one force that's gonna be acting at one point during the journey?

1:00:09 And in this case, the one force that they either didn't think of or that, you know, it just you know, was miscalculated in some capacity is that I th it was either the fuel or some kind of coolant was like sloshing around Yeah. Everything functioned perfectly as it was going up because the fuel tank was mostly full. But then when it got to the second stage in the fuel tank was

1:00:33 Getting down towards empty. And there was all this empty space in there, it started sloshing around in and in the body of the rocket and that started started it wiggling and moving around in a circle and then eventually it sloshed so much that there was an air bubble Uh and then the air bubble got into the engine and it and exploded uh up almost into orbit. God, that just must have been so demoralizing. I mean to be especially after just having the last year. Yeah. Whole year.

1:01:04 Yeah, I think it's w this is a good place to like just just um do a all systems go on uh on our terminology here because uh listeners, as you know, David and I, neither of us are in the aerospace, but I'd say um know enough to be dangerous here. So it's it's worth just articulating w some of the terminology we're using and what are these rockets. So the the things that that's the big main body of the rocket. I'm gonna work my way out from the bottom is called the first stage. And this is where um all that liquid fuel is that gets it up m not all the way to orbit, maybe all the way to orbit. Um it basically gets it off the ground. It gets it through the thick atmosphere of the the um close to the earth and it sets it off on its sort of uh more horizontal journey to to um start orbiting. And of course the um engines are sort of the uh attached to that, or in this case in the Falcon one, uh just the one Merlin engine.

1:01:58 So That goes up. And David, you mentioned the stage separation, so the first stage sort of falls back toward Earth. Uh nowadays it can land, then it couldn't. Um And uh and you know, splash this down somewhere. Yeah, nowadays it can land. Doesn't it feel doesn't it feel barbaric like Okay, I was thinking about this the other day. Uh some of SpaceX's competitors have rockets that the first stage when they come down, they splash down into the ocean and then they're useless.

1:02:26 Doesn't that feel barbaric? Like it was mirrored a few years ago where it was the most amazing thing in the world that oh my God, we vertically oriented a rocket and then we can sort of like clean it up and then we can use it again. And now you're like, Wait, wait, wait, I'm sorry. It's just wasted. It's just like you can never it's just trash. Like it feels like uh like you just threw it at the bottom of the ocean. Uh yeah, it feels like I just like finished uh LaCroix and then threw it directly in a trash can. It's like the um You know that scene in uh in Mad Men? I think it's in the first season, maybe where um The Draper family is out on a picnic in a park. And they just yes, and they just dump all the trash. They pick up the blanket and just kinda shake it and all of it just gets and then they just walk off like happy family. I take it back. This is like finishing your Nalgine water bottle and then throwing it in the trash. It's like it's amazing how your perspective changes. But anyway, I I I digress. So

1:03:21 We uh so we've got through that first stage. Then you've got the second stage of the rocket. Or um You know, the the this is the part that does something out in space. This has another engine on it. David you just mentioned the Kestrel engine. That's the smaller engine that's sort of better for little maneuverability out in space'cause these uh Merlin and then later the um what's the current remind me the Oh uh Raptor. Yeah, the Raptor. These are powerful freaking engines. Like if you're gonna go try and dock it against something, that's gonna create a problem. And so you've big freaking baseball bat. Yeah. Yeah. It's the Falcon Punch. And so you've got this uh

1:03:58 you know, smaller stage that has a a single, you know, smaller engine on it. So that's the second stage that we're gonna talk about. It does stuff in space. Then there's one more thing on top, and that can be one of two different things. One is uh a payload that is um contained within I think the right way to say it is within a fairing I think so. Or maybe within fairings, but basically the the fairing splits into two, um, those things fall back toward Earth and then it's got something in there. It's got for example a satellite or a bunch of satellites in there. Um, the other configuration is that it could have a capsule on there. Uh uh that would be a spacecraft that, you know humans could operate one day, who knows? And so um Uh that's sort of the the structure of the rocket and the terminology that for a long time when people talked about the multiple stages of a rocket or I my eyes would sort of glaze over, but it's uh at least in SpaceX's case because it's a relatively straightforward design. Um

1:04:53 It's the it's good to just sort of keep it in mind so you can go, Oh, okay, and follow along. Yeah. Yep. So they were so close. They were so close to actually doing this being the first private company ever to Launch.

1:05:07 A satellite into orbit. Um and then right at the last minute it uh it failed. So they're undeterred. Um in classic Elon fashion, he says, Not only are we go for number three. We're go for Uh so this is the Falcon one, which was both the first and one engine, one Merlin engine.

1:05:27 They had been Tom. Yeah. Muller's a genius. Uh he and Elon have been thinking about this isn't Just wanted this is a modular system.

1:05:37 And Alright. You could you can have multiple of these engines put together And build bigger rockets with the same engines. And so the idea initially was they were gonna have the Falcon One and then the Falcon five, which was gonna have five Maryland engines, and then the Falcon nine with nine Maryland engines.

1:05:54 Elon says. Not only are we undeterred by the second failure, we're gonna Uh. Go full steam ahead with Trial number three. Try number three with the Falcon One. I'm green I'm

1:06:05 Killing the Falcon Five To green light the Falcon 9 All systems go development on that while we haven't even launched the Falcon One. Now there was a big reason why he did that, which we've we've been building up for the whole episode. But when we add eight more in an Octaweb around that engine, it will really work. It will really work. And to be fair, the first stage did work. So uh the the that that second launch was a success by some measure, although they never could have delivered whatever payload wasn't uh you know, on the second stage and going into space. Yep. So the third try again takes them

1:06:39 a year to the summer of two thousand eight, when they are finally ready to Third try at the Falcon One launch from the Island Ago. the first attempt on August second, two thousand eight, they have to abort the launch at T minus zero seconds, but they've got a they've got a launch window. The weather's cooperating. They're gonna try again on the same day. They go later on that same day and

1:07:04 It all starts working well again, and then there's another failure uh before the first stage is even finished. And um Elon only has so much money. I know. I know. It's just like It's crazy. So Elon is what put a so we said a total of a hundred million into SpaceX. I think he said at some point that that was enough for three or four and I'm quoting the Wait but Why is from Turn Urban here, which is great, which is three or four launches. Right. But that's cool because, you know, hey look, like he's deep into this. He said they're gonna do this hell or high water. He's put a hundred million in, but he made like close to two hundred from PayPal, right? So like he's good for it, right? No, he's not because this is two thousand eight and two things had just happened. This is summer of two thousand eight. One

1:07:55 Elon has now summer of two thousand eighty takes over as CEO of Tesla and he's pumped Almost all of the rest of his money into Tesla. Seventy million. Seventy million. Um And two Lehman Brothers is about to collapse and the world is about to the financial world is about to go nuts. So good luck raising money. Uh so internally, like he keeps it cool ahead to the company and externally, but internally he is like freaking out. So

1:08:23 What does he do? He calls up his old friends. From PayPal. Who are now. At Founders Fund. Hey, remember that time we were in a McLaren? Yeah He calls up Peter, uh, and Peter's uh Peter's partners at Founders Fund and says, um

1:08:39 Yeah, I didn't want to raise cap outside capital, but I guess if I'm gonna do it from anybody, I'll do it from you guys. Um Peter, you replaced me as CEO once, so there's no way you would do it again. Yeah, right. Well, I don't think that was Peter's choice to replace him at paper. No, I don't think it was. Um and uh So Founders Fund in the summer of two thousand eight. Invest twenty million dollars into the company. That is enough to very quickly turn around for a fourth. And what would be final attempt to first do the first successful launch of a Falcon One the very next month in September two thousand eight, uh, the same month that Lehman brothers went under. They finally

1:09:19 succeed in a launch. And it's crazy, they don't even they only have a dummy payload. At this point in time, the only customer that uh that trusts them that that Gwen has been able to to rustle up is um I believe the Malaysian government, I think, to launch a communications satellite. Yes, well the Balian government didn't even trust them enough that it wasn't gonna blow up. So they said all right, we'll like We'll let you take us up. But um on this one, you gotta put a dummy payload on there. And like if this works, then you're gonna do another one and you're gonna take our actual satellite up.

1:09:51 Yeah. And revenue for uh these Falcon One launches was pretty low. It was something like seven twelve million bucks. Yeah. Oh wow. So they get that's even more than the initial price was seven million. I don't know if they'd raised it by uh by this point in time. Well, they they only ever did five launches of the Falcon One, so uh couldn't have climb too high. So they finally exactly finally succeed. Elon gives a speech afterwards. In classic Elon he says Well, that was freaking awesome. There are a lot of people who thought we couldn't do it. A lot actually.

1:10:22 But as the saying goes, the fourth time is the charm, right? There are only a handful of countries on earth that have done this. It's normally a country thing, not a company thing. My mind is kind of frazzled, so it's hard for me to say anything. But man, that was definitely one of the greatest days in my life. Now to be fair, he has a family and five kids, and so yes, one of, but like classic Elon. I think probably for most people here too. We showed people we can do it. This is just the first step of many. I'm gonna have a really great party tonight. I don't know about you guys. So, Elon. Was he on the quadge? Like or w do you know where the I believe he was there. Yep. Okay.

1:11:03 'Cause this was it, like everything was writing on this, and he had taken out a loan against his space X or he was about to take out a loan against his space X stock to fund Tesla at this point. Yeah. I mean that's That's a whole nother story. I suppose that's worth telling here too. Well, we'll get into that in one sec, but um the coda on this is that finally in in in July two thousand nine They did do a fifth launch, uh, of the Falcon one to get the actual Malaysian satellite up into orbit. But by this point in time they had already moved on to what was gonna be The real business model here.

1:11:35 Which is The Falcon Nine and government contracts. Yeah. And again, the real business model of the space shipping company. We're we're we're still uh very far from the hey we uh

1:11:49 We own a a rocket and we're our own internal customer. Like we also own things that we're sort of operating in space. We're very much, hey, we're a shipping company. We're a shipping company indeed. So Remember. A little bit ago when

1:12:03 Elon and Glen uh put the model of the uh the Falcon Rocket into D C and started, you know Curing favor there and Remember all the way back to that trip to Russia where the guy Mike Griffith was along for the ride. Yeah.

1:12:17 Well, guess who's head of NASA at this point? Mike Griffin. Mike Griffin. Um Just incredible. And he was a Bush administration appointee, if I remember right. Indeed he was. Indeed he was. And then I believe he he resigned uh amicably when when the Obama administration took over. Um so this is right into the end of his tenure tenure, like literally the eleventh hour we're talking here at the end of

1:12:46 December two thousand eight. And through presumably through Mike in other contexts, Gwen and Elon had found out that NA was gonna bid out a resupply contract a new resupply contract for the international space station and this is gonna be a Big.

1:13:03 Big contract. And NASA was maybe open to a new entrant in the space. Potentially taking on this contract. Yeah. I mean Uh reflecting back na now understanding uh the the

1:13:20 who the NASA administrator was at the time. Um makes a lot of sense how incredibly fast SpaceX was able to build and and be awarded this contract. I'm sure they went through all the proper review and everything, but that relationship has to help. Uh I do want to give a little bit of context to listeners on on sort of What a

1:13:41 big shift this was in space policy. Like if you think about The Apollo missions. Like Mm. NASA would design something. It was the NASA engineers, and then they would bid out these sort of subcontracts to to different people. And like

1:13:56 Ultimately it was a NASA owned and operated vehicle that they paid enormous amounts of money to someone else to build and then they'd run their own missions on it. And this is You know uh over many more decades than um sort of getting compounded, things get more expensive, um, they're bidding out more and more and more. If you're you know Northrop Grumman or Lockheed Martin, like you then have subcontractors under you and on and on.

1:14:21 And This is a huge policy shift where NASA is basically saying Well instead of Us just subbing out the manufacturing. Let's just tell people, hey

1:14:31 Our statement of work is we need to get This thing, the ISS. And like we will pay you. to do that for us. Whoever can do it cheapest and best. Yeah. Like that's that's all we're asking here.

1:14:45 And Th that's like a staggering shift in policy that enabled this to actually happen. The the the nuts and bolts of it are um cots. The commercial orbital transportation services um that later led to other contracts for both cargo to go to the ISS and people to go to the ISS. Uh, but this is a what they call a space act agreement, which is b it's sort of like a contract where the you know that NASA's done a ton of these over the years, but this time frame we're talking about, this oh six to oh eight timeframe is when they really started to use them to say

1:15:19 Hey, can uh why don't you be a shipping company for us? Um and and we'll uh we'll fund you helping to build your UPS trucks and figure out how to design those. Um, but then you get a big contract for doing the shipping for us. And you may know this more than me. I was was Mike kind of the architect of This Huge change in policy for NASA? Uh he was I don't think the architect, but it was definitely under his watch and a big

1:15:47 a big shift for sort of the industry that he's sort of credited with kicking off. Yeah. I mean this is This is so huge. And um Incredibly visionary. I mean, without this change in The way NASA operated.

1:16:02 Like there'd be no SpaceX, there'd be no none of all the innovation that's happened in space, like It's incredible. So The thing is, you know, for for SpaceX to bid on this contract, they gotta be able to get like stuff, like a lot of stuff up to the ISS. That means you need a lot more than the Falcon one. So back remember when Elon canceled the Falcon five and said we're going straight to the Falcon Nine, this is what it was all about. They needed the nine to be able to get up to the ISS and bring enough stuff up there. So This is great. Like

1:16:33 Two thousand eight is winding down, or in December two thousand eight. Like Elon is literally running on fumes. Like he's not gonna be able to make payroll at either Tesla Or SpaceX, uh for like the January first, two thousand nine. Peril. On December twenty third, two days before Christmas. They get the news.

1:16:55 From NASA. They have one. They're they're two winners, two companies get the contract, they split the contract. SpaceX gets a big part of it. One point six billion dollar payment from NASA to fund, I think it was twelve missions, cargo missions up to the ISS. And it's just like Game changer. I remember they were charging, you know, ten million dollars on the order of that for like a space for a Falcon One launch. Um you know, this is Uh this is one point six billion dollars for twelve missions just

1:17:27 completely changes the company. Um so at this point then Elon does a whole bunch of stuff. He also has he's quoted in the Ashley Vance book as he says, it's like the Uh uh flipping and he doesn't say flipping matrix, uh the moves, the financial moves that he was making to stay alive at this point. So this contract comes in, he takes out a loan against his SpaceX shares. Um he Uh he's an investor in a company called Everdream that gets uh which is a hosting company gets acquired, he gets liquidity from that, and he's able like he's able somehow to make it out of this with both Tesla and And

1:18:05 Uh SpaceX. Surviving him with SpaceX at this point, like completely set up to Transform from these ragtag guys or launching, you know, rockets from an island in the Pacific to like, No, we're going to Cape Canaveral. We're launching out of the Kennedy Space Center. Um completely incredible.

1:18:24 It's worth you know, you say they make it out alive by the skin of their teeth and it was a near death experience. That will continue to happen for Tesla over and over and over again in the coming years. I mean, like the the amount of financial engineering that it takes to keep that company alive and the amount of, you know, spikes in production and all that that that we've all watched them go through. Yeah, I mean it would be nice if the uh you weren't triggering SEC investigations, like that would make it easier. But the point that I want to make here is to contrast SpaceX because places where SpaceX definitely puts it all on the line.

1:19:01 Um But They were kinda out of the woods at this point. they didn't have the constant near death experience after this that t that Tesla would have. SpaceX is a company that very, very quickly grew from this ragtag bunch of guys that smelled bad and were all sleeping in a room in the quadge. Um to to suddenly having guaranteed revenue if they could come through on some promises. So they staffed up aggressively. They got huge, um and they turned into a grown up company. And of course, you know, they

1:19:32 they um they kept a lot of their same culture. I mean, Elon famously has these weird interviews that he did for the whole first thousand people and all the engineers after that. And um, you know, it's a very different company that's still aggressive on vertical integration, that's still the you know a lot of the same principles but like They weren't on the verge of dying constantly, the way that we we described Tesla in that last episode. Yeah, this is the moment when it like it's it's a all a step change at at this moment. And and again, like I I think it was was

1:20:05 All the way back to Gwen saying like no no, we gotta go like This is the market. We gotta go after These contracts. Um and then having Mike as as head of NASA and like having this come through. Um Yeah. So the other thing they gu so they had so now they gotta make the Falcon Nine work, but again, because Tom had Muller had designed

1:20:24 this module in a modular fashion, like they know the Merlin engine works now. And the Castrel second stage engines. It's a lot easier, even like you said, Ben, with stringing together an Octo Web, which is the the the uh configuration that they have them in together. But it's a lot easier to go from, you know, that to building a whole brand new engine to take up uh of A rocket the size of the Falcon Nine. The other thing they have to do though is they have to make a capsule uh to go on top of it. So they're not just taking satellites up. They gotta take a A spaceship up. Uh no, an unmanned spaceship to to bring cargo to the ISS, but a spaceship nonetheless. And so they did not poke funny here from it.

1:21:08 uh when he's describing the thing that I did with each component of this the the rocket, he's like, and of course the thing that sits on top is space uh a spacecraft. Or If you're nine, a spaceship. Oh, I thought you were gonna go at the other part of that post where um You know. Of course these things all look like uh

1:21:29 Back to childhood here. Yeah. Like palaces. Yeah, I'm not going to be able to I mean, basically we're all nine years old, you know, with everything that's happening here. For sure. All right listeners.

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1:23:30 Talking about a little bit of context around the space industry around them at this point. Yeah, go for it. Yeah. So I alluded earlier that uh you know, space SpaceX has been heavily revenue funded and uh you know lots of that by NASA. Uh there's a great uh publication which is uh uh The great thing about NASA is it's a a government agency, so everything's public. So there's this audit, it's called audit of commercial resupply services to the International Space Station, and this was published in in twenty eighteen that has this great diagram of, you know, uh money that flowed to different companies, SpaceX, Boeing, Orbital, Sierra Nevada, others, um and and what it

1:24:07 flowed for all the different programs. be it commercial crew or um um or shipping uh people up. And SpaceX has received seven point seven billion dollars in contracts from NASA. For launches.

1:24:21 Which is It's is astounding. compared to a company that would be trying to sort of do as much as SpaceX has done without actually having a customer.

1:24:32 on the end of every rocket. It'd be w it be impossibly hard. I mean they would it would take so much more capital and it would change your priorities. And what SpaceX really has has done here And I don't think I realize this. Every time I'm watching one of these SpaceX launches and getting all excited about a new piece of technology um on that rocket, which by the way, there's a new piece of technology on every rocket. Every single mission they fly is is different hardware than the previous one, because they're constantly iterating. Every time they do that, almost every time, save for

1:25:03 ten or so, uh there's there's a customer that's pay them money to to send that thing up. And so, you know, NASA's been responsible for seven point seven billion of that. The other thing that NAS put in money for, which has been really interesting is uh when you mentioned the spaceship uh David, which would would ultimately be called the dragon capsule. Um Uh developing the Sum total, the Falcon Nine, which we're about to go into the story of, and the Dragon, that cost about four hundred million dollars of NAS money and about four hundred and fifty million dollars of SpaceX's money to to go and develop that. And at some point NA did an internal audit to basically say, Well, how much would that have cost

1:25:46 Us if we didn't sort of bid this out to to SpaceX to go and do this, you know, if we had built this the way that we built the space shuttle, how much would that have cost us? And it basically What they find is the number's about four billion. Wow. So it is one tenth the cost.

1:26:01 Absolutely. Like say what you will about wow, SpaceX really got in there and scored that NASA contract, but They're they're saving NASA an enormous amount of money by sort of taking on the risk to vertically integrate all of this and making much cheaper Rockets. Yeah, it's actually, you know.

1:26:21 I hadn't thought about this till now that we're recording the episode. I suppose you could listen to everything we just said and say, um Wow, what a case of cronyism. Like, you know, this dude Mike was on the initial trip to Russia with Elon and then he's headed NASA and like of course they get the contract. I don't think that's what's going on here at all. Like this is

1:26:41 A combination of several people. Uh All the spok the folks at SpaceX and Elon. Mike at NASA, lots of other people in the government and the DOD s coming together and saying like the industry needs to like Innovation has died and progress has died in this industry.

1:27:00 And we need to change the way it works. And if we Can do that, you know. Maybe we can get people excited and recording podcasts about a space launch again. And here we are. Yeah.

1:27:16 Yeah, I mean this is an actual great example of sort of a win win. Uh where You know, uh they're they're able to enable a company to bootstrap itself by you know SpaceX now. m owns and operates rockets that NASA is not paying them for, and missions that NASA is not paying them for. So you know, on the one hand you could say, hey, come on, that's that's uh taxpayer money that's now going to allow this company to generate profits and enterprise value all on their own. Well

1:27:43 It's a win win,'cause it costs the taxpayers a lot less to get these these missions done. And I think it's uh It's just this really interesting example where I don't know the who loses here. Probably just the the congressman who's uh who represented districts where there was a sub sub contractor and they were you know, winning uh winning on sort of bureaucracy to to be able to win those contracts. But Yeah.

1:28:08 Yeah, it's a It's a great example of a growing pie. Um So this is probably a good thing.

1:28:15 to give a little context on the industry around SpaceX because they're not the only people that NASA is trusting to go and send stuff up. They're awarding contracts to other people. Um they're big incumbents, so what the heck, this startup isn't just gonna come in and win the one point whatever billion dollar contract and everybody else goes home and you know, tha that's not how this is gonna play out. So what's happening in the industry around them. Well

1:28:42 In the space industry to date. Uh the At least for governments. The goal has really been build a really extravagant machine to do one thing where price is basically no object'cause either we're

1:28:55 trying to win the space race, or we're, you know, calling it a part of national defense, or that's the lineage of whatever we're currently working on. So that's the only thing that we know that it costs. So we're just gonna keep going. You know, these things are funded by the military and NASA and all the stops were pulled out for reliability and performance. And

1:29:17 you know, we talked about how it's very subcontractor driven here. So the If you were a sub subcontractor and you could make your thing slightly more reliable or slightly more performant, even if that's not totally necessary for that you know, practical purpose for that mission. You know, you do it anyway to kinda win the bid. And so

1:29:36 Yeah. You can Almost think of these existing space incumbents Um like United Launch Alliance, who will go into detail on

1:29:46 uh as sort of the intel of this world and intel today. Where SpaceX is a lot more like the ARM. And the reason I draw this comparison is, you know, Intel made much more powerful chips for for computers, but notoriously lost in smartphones. Um, but you know, those chips were hotter, they were bigger, and they were more expensive, which is fine when we all had desktops. And SpaceX being like these arm chips you know, especially early on and having this, you know, sort of toy rocket with the uh the the Falcon one worked under a very different set of requirements and it ended up building a completely different system, one that was cheaper and they could iterate on it very quickly, shipping up a different rocket every single time. Especially'cause they controlled the whole stack.

1:30:29 Right, exactly. But i initially it didn't seem very useful for anything. I I don't know for sure, but this feels like it could be a case of uh of disruptive innovation here. Yeah, looking like a I mean the Falcon one definitely looks like a toy to a lot of people in the industry. Right, absolutely. You don't look at the Falcon One and say, Well, they're they're just a few years away from resupplying the the ISS and probably sending people up to it too. Like that's just not it's not your natural inclination there. But David, as you were mentioning, like the design requirements around a lot of the other stuff that they would send up in the meantime was totally changed with these small satellites, cubesats, um commercial space sort of developing. So uh getting back to United Launch Alliance, who I mentioned there, and I think they're important to understand in the context of the story.

1:31:13 So Lockheed Martin and Boeing had both been longtime government contractors. They built uh amazing things to their credit, still build amazing things. Uh and and f a few examples, you know, Lockheed made that big orange tank on the space shuttle that we all know, and it's iconic, and I think still one of the most elegant, you know, when you see the space shuttle launch videos, That still to me is this romantic version of space that uh in in some ways the the the SpaceX rockets aren't as beautiful and don't just s sing space to me the way that that shuttle design did. The they also made the Hubble telescope and the the Mars lander. So you know, the the the Phoenix. So lots of um really storied stuff that they manufactured. Boeing, on the other hand, made everything from the lunar rover back in nineteen seventy one to the actual space shuttle orbiter itself, so long time space companies.

1:32:01 So here we are in two thousand and six. Boeing and Lockheed, and I think it's important to understand their motivations because then you really get get the context for what people thought the space industry was. Boeing and Lockheed had decided that the one real customer that they were both doing work for Um

1:32:18 was the US government, but the government didn't have enough business for both of them to justify their massive size. So by combining the manufacturing and research work of the two companies, this would be a cheaper and safer way to get the same stuff out the door. Boeing already had the the Delta uh Lockheed had the Atlas, you know, these existing rocket programs. It it Kinda sounds like a good idea unless you've heard this story before, um or a story much like it. Mm. The first thing I want to tell you is you you don't need to look any further than the ULA logo to discover that everything was basically designed by committee. Uh something where the ULA had a massive advantage with all the existing contracts that the two companies had.

1:32:56 They actively continued to work on the space shuttle program for another five years after this. They they just had years of knowing how the industry worked. But what they didn't see was that the industry was g undergoing this massive change, you know, for one, with other potential non-US government customers, there could be this real commercial industry. Uh and that was something that the US had basically lost. to nations who could launch stuff cheaper, like Russia, China. China. Yeah. China too. We haven't talked about China. China was um You know he uh I think uh Vance wrote the Elon Musk book in uh when did it come out? Like two thousand fourteen, fifteen, maybe? Some sixteen. Um

1:33:36 At that point in time, you know, it was the the Russians were still predominant in space, but China was making a push. Now China, like China and their long march rocket, like like Space today. Uh Ben correct me if if I'm wrong, but is is a two horse race between SpaceX And China. And

1:33:56 Um It's crazy. Yeah, in a in a lot of ways. And I think Elon certainly looks at it that way. Um Another thing that I didn't really realize was that uh there's this great talk linked in the show notes. Um

1:34:08 It's a relatively underviewed video on YouTube of uh Gwen Shotwell giving a uh small fireside chat to some industry insiders in um twenty fourteen. And she points out that the US was competitive in commercial space sort of In the up up till the eighties or in the eighties, but ba has basically lost it since then. And that that was the case really until uh you know, until this reignition of a of a com of a commercial space industry here. So uh long story short, UL A was completely unsuccessful in capturing a commercial market in the US. You know, if you if you think about it, it's it's actually

1:34:46 a a huge failing on their part'cause there were tons of commercial satellites starting to go up. You have Direct T V, who sort of owns and operates tons of satellites in order to to um provide their service. You have intelligence satellites, you have surveillance, you have research concept, you have startup companies. David, you mentioned these CubeSats. Like ULA managed to capture basically zero of this'cause they were focused on winning And you know, there's more to blame than UA ULA themselves. Uh international traffic and arms regulations in the nineties sort of built up barriers. But the biggest problem was Boeing and Lockheed Martin

1:35:24 just didn't compete anymore. And so everything got so bloated and expensive when they just combined into one One big behemoth. And so You know, you might see the opportunity here and uh You know, if you do then y y you are similar to

1:35:40 You know, Elon and Gwyn and everyone else who sort of saw this gap and then decided Hey, we're gonna go build a frickin' cash cow of a business in the Falcon Nine and we're gonna go shoot that gap. Yeah. And really, Well Benny said a m it mentioned a minute ago that um I think over the life of SpaceX thus far. They've received what, just under eight billion dollars uh from the government.

1:36:02 Um now by our calculation, SpaceX is obviously a private company, but you can Tell by their, you know, uh launches and launch manifests are public. Um We think based on sticker price for Falcon Nine launches, of which there's now been over eighty, right? Um, that they've done. Yeah. I think over eighty six launches, um, and somewhere around fifty five on the future manifest. Yep, and something like twenty-two of those ish are for government and the dragon program. Um the rest of it, they probably made just about that same amount, another eight billion dollars, give or take, in commercial revenue from, you know

1:36:40 Other governments launching satellites, from commercial satellites, from all sorts of stuff. Yeah, I don't I don't think it's quite that much. I think it's probably about half that, but um if the revenue mix will definitely start to skew toward commercial as we sort of uh see them fly out their backlog. You know, there's all these committed launches that they have that they haven't launched yet, um that You know, y y you're right. I I don't I I definitely don't think it's more than the um US government right now. By the way, private company, so who the heck knows. Um but if you just sort of add up the sticker price of uh you know sixty million times the number of uh of commercial launches that they've sent up, which are probably I don't know. Forty, fifty, sixty somewhere in there. Yeah, you're right. You're in the the single digit billions. Yeah.

1:37:26 Yeah. So um So yeah, it uh all you know we'll move kinda. Quickly. It's funny to move quickly through all the amazing technical and engineering feats that SpaceX has accomplished since then. But I think Ben you hit the nail on the head that like getting this contract, th this was the moment that like

1:37:43 meet the company. Uh getting that initial NASA ISS contract. Re real quick before we move on, because I know I just threw a bunch of shade and I wanna I always wanna make sure I like do right by someone rather than just blasting them on the show. U LA has since replaced their CEO, um They're actually working with Blue Origin now, um and designing a new rocket called the Vulcan, um and hoping to use uh or I think they are going to use Blue Origin um engines on there. And so Blue is actually commercially selling um those engines to uh to ULA. Which It's it's kind of amazing to take one one more digression on UL A here. I I can't help but do this.

1:38:19 They the supplier that they have for the engines On I think it's the Atlas five, I'll correct myself later if I'm wrong, but their their main they're basically their competitor to the Falcon either Falcon Nine or Falcon Nine Heavy. It it uses Russian engines. Oh interesting.

1:38:38 And the this is the main US government contractor for sending up things like intelligence satellites. And The current iteration of that uses Russians, of which the Russians have decided

1:38:52 For the US. We don't wanna keep supplying you those, so they've stopped. Like there's only something like there there's some number in the single digits or teens of of those engines in country in the US.

1:39:06 That's Like that uh ULA can use. And so Like I I think it's called the R D one eighty is the it's the Atlas five is the is the rocket. Like Yeah.

1:39:18 U LA is in this position where The world is closing in on them from every direction. They're running out of the engines that they can use for these launches. Uh, SpaceX is massively undercutting them on price, which we'll talk about here in a moment, and like the c the clock is just ticking with their basically their one customer looking to them and going, Wait, I'm sorry, in what ways are you better? And so, you know, they're gonna try and run out of the house before it burns down with the the new Vulcan program and partnering with Blue, but um You know, I

1:39:48 they're a powerhouse and we'll continue to win contracts for a while, but uh You know, they are certainly SpaceX's number one enemy. Yeah. Indeed. Well, you know, it's um Disruptive innovation. Coming to the launch market. Uh

1:40:02 The the space shipping market. So It was end of twenty Two thousand eight when SpaceX gets the um The contract from NASA for the ISS resupply.

1:40:14 Pretty quickly within eighteen months, they have a successful test flight of the Falcon Nine, which again they'd already been working on. And then uh so that was June two thousand ten, and then only six months after that in December twenty ten, they have a successful test flight of the Falcon Nine plus the Dragon Capsule, which they've engineered from scratch, you know, in house at SpaceX. And it takes a little while longer after that, but on May twenty second, twenty twelve. The first

1:40:43 Real dragon mission. reaches the ISS, they do the first of the twelve Resply missions. And this is just incredible. I mean, I remember this happening, like a private company

1:40:55 Not just a racket. But an entire spacecraft and operated it. And sent it. to the ISS. You know, again, like Elon said, um With the first uh

1:41:06 with the first successful Falcon One launch, like this is the stuff that countries do, not companies. And here's SpaceX. Um You know, doing it. Uh it's just uh Just crazy. Yeah. And a and to layer out of that. The reason it's called Dragon is uh Uh Elon named it after uh the Peter Paul and Mary song Puff the Magic Dragon. Where basically it was to to give the finger to everyone who said he could never do it and you know you're

1:41:30 Your Sort of chasing the dragon. Um And saying, Look, here it is. I did it. Yeah. And I think the um I think the ISS as they were they were pulling in the dragon said something like, Uh Houston, we've got ourselves a dragon here. Something like that. We got a dragon by the tail. Um

1:41:47 Then the next year in twenty thirteen to what we were talking about about using these, you know, all the technology they built for the government, uh, in the commercial sector. In September twenty thirteen, the first commercial Falcon Nine launch takes place. They launched several Canadian satellites um up into orbit, you know, less uh just about a year later. And uh In

1:42:10 Then in twenty fourteen, so they complete six Falcon Nine launches. uh in twenty fourteen. In twenty fifteen. They complete Seven.

1:42:19 Falcon nine launches. Including the first Successful test. For the crew dragon, which is what's gonna happen on Wednesday, the first step towards what's gonna happen here.

1:42:33 Um takes place in twenty fifteen. And then At the very end. Of twenty fifteen. This is the other big, big thing we want to talk about. The one more thing They land a rocket. Do you remember when this happened? Just a holy, holy God moment. I just

1:42:52 Uh It is it it it it Is so unnatural. I remember thinking that when it was happening. It was like this moment of sci fi. Yeah, I was uh

1:43:03 I was travelling'cause it was over the holidays. It was like late December. Yeah, it was. of uh two thousand fifteen. That's right. It was right after we started acquired. Yeah. And it was uh

1:43:15 It was on the drone ship. And so uh no, it was first was on land. Uh the drone chip didn't have to be. First was on land, yep. Yep. So they had to do the boost back burn to They were they had done several attempts. So here's here's how it goes down. So all the way back in twenty eleven, Elon and the team had started thinking about this. And it was the analogy we talked about earlier. Like it's Crazy that you would build these massively expensive things and

1:43:41 The analogy they use is every time you fly a seven forty seven from New York to London, just throw it away afterwards. Imagine how expensive airline tickets would be if that were the case. So they start working on the technology in twenty eleven. um to land rockets and people think this is impossible. Like the laws of physics people think won't allow it. And uh so they call the program Grasshopper. And then

1:44:03 In March twenty thirteen They in Grasshopper they're they're just sending these building these short rockets, shooting them up, not into space or anywhere near space, and they're just trying to land them. They've land their first grasshopper in twenty thirteen. And then Ben, what you might be thinking of in twenty fourteen and one of those Falcon Nine launches, they're like they're pretty quickly getting this tech into production. They try and land in April twenty fourteen fourteen. A Falcon I and um

1:44:29 Rocket on a on a drone ship. Uh and it falls over. That one blew up, yeah. Got really close, yeah. Uh then the second attempt. January twenty fifteen. That fails. The third attempt fails. It's just like the first uh getting that first Falcon one up. And then finally the fourth attempt. was uh was on land.'Cause it's much easier to do it on land on on

1:44:52 The ocean. You know, it's on the ocean. Like the ship is bobbing up and down and moving around. Um they successfully land the first uh the first uh time on on land in December twenty fifteen. Then they have two more fails uh in the ocean, and then in April twenty sixteen they successfully land The twenty third. Falcon nine launch.

1:45:14 On a drone ship. Um Followed by a second successful landing. The of course I still love you. Yeah. Yeah.

1:45:22 Yeah, this is that's right. That was on land. It's it's interesting thinking about this,'cause the way that SpaceX lands these look looks really unnatural. Like if you I I remember lo um watching uh the first Blue Origin rocket that went to space and came down and successfully landed. back on Earth, which they actually beat SpaceX to. So SpaceX was doing the grasshopper stuff first, but Blue Origin flew a rocket not to orbit, but above a hundred kilometers above the Earth. I mean that that's a that's the formal definition of space, or I think it's the c Carmen line. I don't know exactly how to pronounce it, but yeah. Um And you know, SpaceX sort of was the first then to beat them to that big milestone of of getting to orbit and then landing back down. But if you watch like

1:46:06 Blue Origins rocket do this, it it's kinda sort of seems more natural. They sort of decelerate and then it lands kind of gently. And the way that it works for SpaceX in the industry, the way they sort of refer to it, is as the hover slam, or in a much less delicate way of referring to it, people call it a suicide burn, where basically what they do is They put just one of the nine Engines. You know, they turn one of those nine engines on. And even at the minimum thrust from one of those nine, if you just leave it burning, it will decelerate the rocket and then it will m go back the other direction. Like these are just those raptors are so crazy powerful. The And I should mention too, the raptors are flying today have twice the thrust of the raptors they started with um in the original Falcon Nine. So like the their iteration, they think it's the I think it's still the Merlin's the Raptors engines for the starship.

1:47:00 Oh, you're right. Okay, cool. I was referring to the wrong thing. Yes, the Merlins have gotten um Twice as as performance. So Anyway, they j they turn just one of their Merlin engines on as it's sort of decelerating, and the reason they call it the hover slam is it comes in so fast, and then just at the exact right time, like they have unbelievable sensors on this rocket. They can uh fire it at minimum, you know, the minimum amount of thrust. just in time for it to decelerate and and hit basically, you know, zero miles per hour, zero zero meters per second, right as it's setting down. And so it's this like magic trick every time they they they pull it off of uh unbelievable sensors and unbelievable precision over when they're firing that that engine at minimum thrust.

1:47:47 Yeah. Incredible. Um, so now of course the point of all of this, right, is that you're gonna reuse the rockets. Um so in twenty seventeen, They have the first successful

1:48:01 Falcon nine. reuse in March. of twenty seventeen. Um And twenty seventeen was just a Banner year for SpaceX. Eighteen successful launches, no failures, and they landed.

1:48:14 Every single one of them except the few that they were that was the end of the useful life of the rocket where they were planning not to land them. Uh yeah, coming out coming out of twenty fifteen, this is a company that is firing on all cylinders. Like Perfect product market fit on the business side, iterating super fast, launching all their R D stuff actually into production super fast. Like they're they're flying out their backlog at remarkable pace. Like it is it's just impressive. Totally. Um

1:48:41 The next year in 2018, they hit their 50th successful Falcon 9 launch. They have twenty-one total launches in 2018. Including The Falcon heavy. Which uh is an adapted I mean, folks have probably seen this and watched videos, but like It is amazing. So this is three Falcon Nine Rockets.

1:49:02 wired together for twenty seven total engines burning. Um that can bring up, you know an incredible amount of payload. And these guys and what they do Is All three rockets go up.

1:49:17 And then they all land. And um is honestly like watching a magic trick. Like a ballet. Anyone that watched the uh uh SpaceX fly Tesla's um uh Elon's Tesla Roadster up with the Starman in it. Like this was on a Falcon heavy, and then exactly that ballet of the two come down simultaneously, land next to each other on pads on land, the third sort of main booster then goes and lands on the drone ship, which Um actually that one ended up uh tipping over and that one's a lot harder to do uh because that one's um

1:49:50 It's sp it's specially reinforced uh to be able to hold on to the other two boosters. Right. Yeah, which apparently in the block five, which is the most recent and I think final version of Falcon Nine, yeah, th they've actually figured out a way to um to sort of fix that problem and they're gonna be able to, I suppose, catch them much more easily out in the drone ship. But Yeah. So that brings us to now there there are a couple of things we're we're not talking about here that we might mention uh at the end of the episode, but um In Less than uh forty eight hours now.

1:50:23 The plan is Uh one of these Falcon Nines. It's gonna have a manned crew capsule dragon on it. And we're gonna be sending astronauts up to the international space station. It's so funny, I'm saying we like it's you know like it's us. I'm like the company. Yeah. Like I know we're a little bit of a a US Centric show, but like My gosh, for a US company to fly

1:50:45 you know, US astronauts up to the ISS uh is Is uh You know, it's compelling. It's cool. Yeah, it um it is. So this goes back to in September twenty fourteen NASA bit out a two point six billion dollar contract to to do this. This was the point of, you know.

1:51:04 uh all of Griffin's work to re architect how NASA operated with um with their suppliers. Uh for a private company to fly humans to the ISS and uh and SpaceX wins it. So they last year in twenty nineteen A big key step in this is they completed the first autonomous Uh ISS docking with a drag dragon capsule. So it was a crew capsule. Uh there were no people on it. It was just cargo. That's amazing. Um

1:51:41 And on Wednesday. May twenty seventh, scheduled to bring US astronauts Bob Benkin and Colonel Doug Hurley. Up to the ISS. Yeah. It's it's it's

1:51:52 It's astoundingly cool. I mean it's just What a time to be alive. Yeah. So Uh the items that people might think about in SpaceX that we haven't dove into here,'cause um

1:52:04 We might talk about a little bit, but there's so much to talk about, obviously. Uh Or obviously Starlink. There. On Small satellite communications, broadband communications.

1:52:16 internet network that they're developing. Um The star ship, which is the future Ben you alluded to this, they're gonna be retiring the Falcon program and the dragon program. And uh Merging everything into one giant

1:52:31 Spacecraft, the starship. Which will eventually go to Mars. The spaceship or the s yes, the starship. The starship, yeah. Which I wish was still called the BFR. I know. So cool. Um They've had a successful engine test for that. So that work is well underway on that. And uh and then there's the little thing called the Boring Company. Yeah.

1:52:52 Which uh I think Is something like s it ended up Spinning out and SpaceX is a minority investor along with Elon. Yep. So Elon owns about ninety percent of the company, I believe, maybe a little less. SpaceX owns six percent. Uh, and then there's the employee option. Yeah. There we have it.

1:53:13 SpaceX. As of May twenty fifth. Two thousand twenty. Yep.

1:53:22 Well I I do think before moving out of history and facts here. Because we're sort of ending history and facts with the the events that are happening Wednesday, it is worth talking about this. Um

1:53:37 uh because you a skeptic could say something like there's lots of interesting skeptics of of SpaceX, but one skepticism could be, why is it so impressive what they're doing? Like other countries have been flying people up to the ISS forever, like You know Get get Get off your high horse and get less excited. So what, it's a private company instead of a government. So what, they maybe spend a little bit less money like Not that this is easy to do, but like there's plenty of other people that could do it.

1:54:03 Well NASA doesn't sole source crap. Like NASA always awards multiple contracts because Like This stuff is super hard.

1:54:13 And the second person or the second company that that got this same contract was Boeing. And Boeing has built a thing Um to produce you know, the

1:54:25 it's basically their version of the dragon called the Starliner, but in December of last year it it launched a test to dock with the ISS um and ended up veering off course. And they did manage to get it home, but basically scrubbed the mission in order to do it. uh and uh and Boeing took a four hundred and ten million dollar write down on earnings last quarter um as they prepare for NASA to potentially ask them to run another full test, do another full launch of the exact same thing. You know, which is actually quite telling that for Boeing that's a four hundred million dollar expense because for for SpaceX that would be somewhere between a sixty and a hundred million dollar expense. Yeah. Um But well.

1:55:03 Maybe that's not fair because there's more reusability. Anyway, the Th the the th the point that I wanna make there is like this could be Boeing. you know, later this week, but it's not. It's SpaceX. And they they managed to do it.

1:55:17 You know. Better, cheaper, faster, safer, more reliable. Yeah. And so fingers crossed everything goes well, but uh It's uh You know, you you can throw shade at Elon in whatever way that you want, or at this company in whatever way that you want, but y you can't argue with results.

1:55:36 Yeah. Um Okay. Should we talk about narratives?

1:55:43 Yeah. Yeah, let's do it. Well, um I think there's at least three vectors that I can think of around uh Bull and bear here. Uh one is around Elon himself by people, you know.

1:55:58 The you could call him the savior or you can call him um an ego maniacal sort of work you to the bone, um Words we can't say on this show. So David, any any sort of like

1:56:12 color that you want to add to narratives on Elon. I mean what else could we add? Uh it is interesting though, like Again until really until doing recording this episode now. Um

1:56:26 I'd obviously thought, you know, SpaceX and Tesla had very different situations, but um But I think Yeah. Elon factor. The Elon randomness factor in SpaceX is just so much less than in Tesla, you know. Probably one because he has Gwen.

1:56:45 Uh but then also too because the company at least. Tesla, I think, is in a very good place now, but You know, six months ago Tesla was not in a very good place. Um and SpaceX is. So there's just kind of less uh Even though SpaceX is in many ways in a more um

1:57:01 politically sensitive position uh than than Tesla. Like there's just kind of less for one person to mess up right now. Yeah. Yeah, I mean it's also a private company. Which is nice because if you if you could tune out all the noise around Tesla stock

1:57:18 And only focus on the more intrinsic stuff. Like I think There'd be a lot less narratives period. Uh ninety percent less narrative around Tesla. And uh You know, SpaceX has that. And they also have the benefit of um

1:57:31 you know, long, long term commitments with agencies and and governments that can always come through on that cash. And so to the extent that they can deliver um you know, they have guaranteed stable, predictable revenue. The only thing that's not predictable is, you know, when are they gonna crash a s stage one into a drone ship and have to take a you know multi dozen if not hundred million dollar write off, but you know. That's uh That's the

1:57:58 hard part that comes with the guaranteed contractual revenue. Um the other narrative that I think is important to highlight, so that one, the Elon one is one that The one that's more internally debated is around reusability.

1:58:16 And so A lot of the SpaceX bears will tell you That's total BS that Um Mm.

1:58:24 Those things are reusable. it's total BS that even if they are reusable, that it's cost efficient. In fact, some of these people include CEOs of competing companies who when someone flags the point, well, SpaceX uh is able to do this cheaper because they've done this performed this miracle of engineering of reusing the rockets. Um they'll say things like Well you don't know their cost structure, you don't know that it's actually cheaper. And um examples exist in the past of um the solid rocket boosters, for example, on the um the space shuttle, those white ones on either side of the big red tank, those would fall back down to the ocean and then they would they would be refurbished and then those would launch again. So this sort of thing theoretically has happened, but the difference is

1:59:07 With Things like that. Um the order of magnitude. It's probably an order of magnitude more expensive where they basically cycle out every part, cr scrub it clean, um, and then send it back up. And SpaceX is iterating toward, you know, this is the bull case on reusability, um, being able to just give a one or a two day inspection uh on the rockets and then uh and then send them back without replacing anything and only needing to replace things maybe every ten times or so that you send it up. And right now I think the maximum that they've that they've sent um a rocket back up or a stage one back up has been three times.

1:59:41 But you know. Uh there are very, very real cost savings uh that that uh That you have here from Yeah, not having to produce a I don't know what the cost of goods sold are on a Falcon Nine, but twenty, thirty million dollar rocket every single time.

1:59:56 And um you know, I I think in the coming years we'll see if SpaceX is actually able to get to the milestone of um you just need to give it a once over uh and and forty eight hours you can fly it again. But um There's there's massive debate over whether the reusability actually provides the type of savings that SpaceX claims. Yeah. Yeah. Yeah.

2:00:17 Um Shall we move on to uh what would have happened otherwise? Yeah, let's do it. Where do you even start here? There's like there's so many moments where this all could have gone off the rails. I mean I think the biggest one is what if uh what if NASA hadn't sort of changed their

2:00:35 their tune on how we bid stuff out. Yeah. I mean I think without that. The small sat market Just

2:00:44 You know, I think it probably will like like we said, will materialize in the future, uh and it is materializing now. But during the time period that SpaceX needed it to, it just wasn't going to. Yeah. And this is actually, I think, a big point related to um We didn't really talk about Starlink at all in this episode thus far, but um I think one of the reasons Besides Starlink.

2:01:06 And providing Sadly. Internet access being a big market and attractive in and of its own, that SpaceX decided to launch this division internally, Was

2:01:18 too stimulate um The Small set. market and demand for it. Like th now they are gonna be their own first and best customer for small sets and uh the um the rideshare program that they launched where you know when they're sending up big stuff having having space available for for little sats as well.

2:01:37 Yeah, I want to give a little bit of detail on both of those things that you just described now that we've sort of uh we've tipped our hand a little bit. So for people who don't know what Starlink w is, which was me probably two months ago, and mostly me even a week ago, uh, SpaceX is going to put twelve hundred satellites up in low earth orbit. Twelve thousand around the earth. I'm sorry, twelve thousand satellites. Uh low earth orbit. So way, way, way closer than the direct T V satellite that needs to be out in geosynchronous, which is I don't know, it's twenty two thousand miles away. Like these things are on the order of Uh two hundred miles miles away. So you know. Takes a rocket to get it up there, but you know, it's uh it's it's not It's not as far away as uh as the old stuff is, or as as a lot of the

2:02:21 Um fixed geosynchronous stuff. So SpaceX is gonna launch these these uh twelve thousand satellites and um They are all going to have line of sight to each other. And they are all going to uh be able to provide broadband internet anywhere on earth at any time to anyone in a cost effective way.

2:02:42 And the way that it works is is kind of a miracle. The fact that all of them have this line of sight to each other and can communicate in high bandwidth between one another, it means that the latency can be way less. So since they're way closer right now, the problem with using satellite internet is It has to round trip all the way out twenty two thousand miles and back. And even at the speed of light That's still time. And so you're getting

2:03:06 you know, dog crap slow speeds on uh on satellite internet. And if you have a whole bunch of'em pretty close here and they can all communicate with each other, It's kind of okay if there's not a single same one above you all the time. As long as there's something above you all the time and they can communicate with each other, you can kinda see how it's the wifi mesh network of uh satellite broadband. Totally. It's genius. And so you might think, my gosh, that's so many satellites. That must be really far in the future. Well they launch sixty at a time.

2:03:37 And they've done this, I think, three times now. Like they literally stack'em real tight, they jam sixty of them in a fairing in a nose cone of a of a Falcon Nine and they shoot'em up. And they all sort of make a little string in the sky and they they go right behind each other and It works. Like Elon Musk has sent a tweet from from Starlink internet. Oh no way, I haven't seen that. He has he tweeted something like I'm tweeting this from Starlink and then he replied to himself a minute later and was like, Got it And uh You know, it's it's these publicity sense, but like

2:04:07 That you can see turning into this very interesting owned and operated business where they can be You know, it's a huge fixed cost to send him up there. It's uh You know, to them Uh the cost

2:04:20 Yeah. It would cost me sixty two million dollars to send something up on a Falcon nine. But and it would cost the government something like ninety million because they have additional regulatory stuff. But for SpaceX, I don't know what their costs are, call it forty million. Um, so it's that sort of big fixed cost investment to get'em up there, but they can run a profitable business and we can all or a lot of people get their internet from Starlink and that can be a cash machine. that then can bankroll future endeavors. So they're not just getting paid every launch, but they can get paid in perpetuity

2:04:51 for a subscription to something that's already in the sky. So I know I'm dipping all over the place here in analysis and business modeling, but I when you dip into Sky Starlink there, I think it's important to Sort of. Like what the heck that is and how real it could be and how soon it could be, you know, two, three, four years.

2:05:09 before that that starts to be meaningful. Yeah. Yeah, I mean it's like the satellites are already up there. Yeah. Totally. And they've got competitors there too. Amazon's got Project Kuiper and Softbank funded a company called One Web that's that's uh

2:05:25 That's doing it, but um Yeah, it's it's futuristic stuff that's uh SpaceX has the you know, back to the vertical integration. Like they have the advantage of, you know, their It benefits all sides of the business. A, they're building this business internally. B they're giving More Um they're stimulating more demand for launches, of which they are the primary provider. It's gonna lead to more launches, more vertical integration, cost comes down farther.

2:05:54 And then the flywheels just gonna keep spinning. Hundred percent. Hundred percent. And you and you mentioned ride share too, which is a funny word to use in space. But it's a thing that they put on their website la in the last year or so where by the way you can put in a credit card uh to to for them to take a deposit on this and it's it will they will charge you a credit card. But you can basically pay as little as a million dollars to hitch a ride. So it's exactly what you said, David. You're sending a big satellite up, take my little one up too. You can go to the website and you can say, I want Um

2:06:24 I want to send up something that's one hundred kilograms by twenty twenty four. And uh Like Quote me. And it is the craziest. I didn't realize they take orders. So this is like the equivalent of an Apple Pay Down payment on a Tesla on the website.

2:06:38 Absolutely. Do you know if uh if Shopify uh powers it? Like Tesla. The design is pretty similar between the Tesla website and the SpaceX website. Yeah. I wonder if it is Shopify. Um

2:06:54 Yeah, like Just because I don't want to talk about this twice, I'm gonna Pull forward my my um My playbook thing now about uh About the

2:07:03 Pricing there. It is a massive disruption to the entire aerospace ecosystem. that SpaceX has a pricing page.

2:07:14 Like it is the craziest thing that you can go to to there there's the ride share thing, but then there's also like literally just a PDF that you can click and pull up and it's like Do you want A Falcon nine, it's sixty two million dollars. Do you want a Falcon heavy? It's it's more expensive and I don't know what it is, but the this has never been an industry with price transparency. And by bringing that, it is it is just like You know, it freaks everyone in the industry out to for them to be that transparent. Um

2:07:42 Plus the Uber pool. Right. Right. Okay. So Uh that was what would have happened otherwise. I dipped us into playbook. Um let's keep going. If if if someone wanted to do something like this, what is the playbook they should run and uh what are some of the themes that we noticed here? Oof Oh man. Well

2:08:05 Okay, I'll run through some of the ones I jotted down quickly. Doing the research about like What would what would Hamilton Helmer say about like what is SpaceX's d does SpaceX have power? If so, what is it? And I think the right one and I think this is basically what we've been

2:08:25 banging the drum on all episode is they came out with counter positioning, like the Yeah. the vertical integration and the whole approach that they've taken, um with price transparency and everything to the industry. If UAL and other competitors

2:08:41 match that it would destroy their whole organizational structure and business model. Uh. So there's no way they can match it. But I think there's another interesting thing here, and I'm not quite sure. No! I'm not quite sure if this is a power or how many other like industries this is applicable to. But I started thinking about vertical integration.

2:09:01 And In so many industries you see going from the disruption happened when you go from vertical to horizontal. Like this is what happened in the PC industry. Um you know, and and I started thinking about why And I think it's Often when

2:09:17 If you think about like when computing was vertically integrated in the deck days. It was when you had mainframes and you had Pretty few units. shipped like at a very high price for each of them. That's like when it makes sense to vertically integrate. And then as volumes grow and you get a lot more units shipped and goes up and price goes down, then horizontal integration makes more sense because you can be more nimble, you can define layers of the stack where there's more power versus another and you can uh have more profitability and outsource commodity parts. Um

2:09:51 What's interesting here is that you had this industry structure where you had And a s extremely small N. Number of units shipped, like number of rocket launches around the world was extremely small. And yet you had these Because of the way Most of it being government business, you had these like horizontally integrated players that were competing within it. SpaceX came in and said, like, oh no, there's actually like an anti-scale economy here. Uh

2:10:19 We should be vertically integrated. And like I I can't think of any other markets that exist like that where you have like a really small number, but you have this bizarrely horizontalized industry. But it just struck me though, like this was like Uh a major key to House Base X, uh

2:10:38 was able to disrupt it. It's interesting,'cause in some ways I'm trying to think if the analogy holds in the other direction. Like Apple has Has Apple vertically integrated the iPhone? Well they started it vertically integrated.

2:10:58 Mm. Mr boy. I think there's actually a great strategy post on the fact that this is not vertically integrated. That they They do make they make the things that they view as differentiable to Tightly couple.

2:11:14 Um the OS And actually interesting, they don't make them. They design them. That's true. But then they outsource thousands of things. They have in a lot of ways really I mean, if anything, Apple is kinda like the Detroit Audio Manufacturer model where like they design it, they make the core engine. And then

2:11:35 They have a ton of suppliers for all the other parts. Yeah. But they have so much power over those suppliers that they're able to squeeins on those. Yep. Whereas there was nobody squeezing margins in aerospace. Everybody was happy to let their downstream partners have fat margins. Yep. Yep. Yep. Cause again, from the Lockheeds, the Boeing perspectives, the higher the total price The better, the more money they made,'cause they would just get a straight percentage. Yeah.

2:12:05 So interesting. It's funny, I I didn't articulate it quite the same way you had, but I tried to write out like the bullet points of the business model, which was like One, get paid exorbitant fees, but not as exorbit exorbitant as everyone else for every launch. NASA's willing to pay this because the old world competitors had crazy high cross structures and importantly no reusability. Hasn't been important yet, but will be. And so what I th I think they're gross margin positive on every launch now on the first try, even without reuse.

2:12:32 I'm not totally sure, but that's what But um some estimates suggest. So then two is take those profits to fund the development of more reusability and more lower cost systems. Three make even more margin from doing that and getting paid for those contract launches of satellites, et cetera.

2:12:51 Four, enjoy these fat margins while everyone else is trying to catch up to reusability and trying to vertically integrate or squeeze all their suppliers. And as a data point here, you know, SpaceX charges less than their competitors, but obviously well above their their cost basis, um, if they're actually able to harvest all this margin their they would have been giving away by vertically integrating um The data point is that the Falcon Nine missions even to the US government. with with the additional thirty million in Costco for under a hundred million dollars.

2:13:22 and ULA's contract that was I can't remember which one, but basically has all of the launches at four hundred million. And so like there's just so much margin in there. So then Then Component five. use the funds from these fat margins to fund their own owned and operated businesses like Starlink or like the the Mars stuff that I think we'll talk about here, where basically SpaceX themselves will be able to charge for for those owned

2:13:47 assets on an indefinite basis. Like they're able to Like Bootstrap the production of rockets using NASA and then bootstrap their their owned and operated business. with all this margin that everyone let them play with. It's like this two step bootstrap.

2:14:04 Yeah. Yeah. Yeah, it's pretty awesome. Um Couple of the quick ones I want to hit on. Uh

2:14:11 We've alluded to Blue origin a little bit on this and um That's probably another episode for another day, but I just you know, with different strategies, different approaches. But it strikes me as interesting, back to the whole, you know, um Fun analogy I use more money, more problems. Like Bezos is putting a billion dollars a year into Blue Origin. Bezos is selling a billion dollars in Amazon stock.

2:14:33 that could be used for funding for Blood. But uh certainly a lot more than a hundred million dollars has gone in in terms of equity funding into Blue Origin. It's interesting though, like SpaceX in terms of equity funding has raised so much less money. And Elon from the beginning was focused on this is going to be a revenue generating profitable business. And so On the one hand you think naively like oh they have so much fewer resources, but it's I think it's

2:15:00 In many ways precisely because of that resource constraint. and having to build this profitable business that they've figured out how to disrupt the industry. and accomplished so much. And it's just like that's just such a theme, like We see all the time in on this show and in startups, right? Is like sometimes you think when you're out of the gate, like you see these companies raise tons of money and like think they're gonna, you know, clear out the industry and have all the success, but it ends up hurting them because like they're not forced to

2:15:31 They're not forced to build a real business. Yeah. I hadn't really thought about it in those terms. Um And then the last last one just related to that. You know, man, is Elon

2:15:45 Across. Cross. Uh SpaceX. And Tesla. Is he just like the living embodiment of, you know?

2:15:54 the the seem to have uh skin in the game. Uh you know, um Actually, I'm like this guy like absolutely put his money where his mouth is. And you can say Many things about Elon, but um you know he's been quoted on on so many occasions saying like

2:16:13 If either Tesla or SpaceX goes bankrupt, I will personally go bankrupt. And that is as it should be. And the number of near death moments they've had and pulled through, like if that weren't the case, if he were like, uh, you know I'll be fine. I'll still have my McLaren. If this goes back up, like would they have had the fortitude and he had the fortitude to

2:16:33 To pull through. Like. I don't know. I do think so. I think you're reversing the chicken and the egg there, but that's why it's a chicken and the egg thing. Like the way that I would think about this is like Um Elon's drive to make this thing a success.

2:16:47 is the reason. Like it's not any monetary skin in the game. He I mean he cares if he goes bankrupt, but not really Like if he really cared about not going bankrupt, then he wouldn't have doubly leveraged himself across two companies. So like Clearly the thing he cares about is succeeding in this mission. And that is what drove him to put all of his money in. It's not like he's like locked into succeeding now because of the fact that he's so invested. Yeah, but he definitely burned the bridges behind him.

2:17:13 Yes. Yes. There is no way for him to uh I mean Now there's a way out because there's just he he still owns probably forty something percent of SpaceX and there's so much equity value there that You know?

2:17:27 Um Yeah. He he th there's there's a way out for Tesla purely by By Elon getting out of SpaceX. Yeah.

2:17:35 At this point. And it's such a good business. I mean truly, like Making making a hundred hundred million bucks a pop if you can do that twice a month. Um

2:17:46 I uh yeah, especially if you can reuse those rockets. Yeah. Yeah, yeah, yeah. Now I've got a couple of fun ones. So um I wanna talk about a different type of vertical integration. Um this which is uh Uh

2:18:02 SpaceX assembles Their rockets horizontally. And most other companies assemble their rockets vertically. And uh as you can imagine, when you lay them on the ground and you build them that way y you don't have to take really expensive crazy hydraulic machines and move around

2:18:21 You know, you don't have to construct a a skyscraper around your rocket. And it this is a I'm I'm using this as an example, but it's super illustrative of how SpaceX problem solved every single component of building their company in a cash constrained environment. into finding a more innovative, more inexpensive way of doing something. And like Uh I think Elon has this interesting quote where he's like, Yeah, actually the Russians

2:18:48 I don't know if it's Elon or Gwyn, but the Russians actually manufacture them on the ground. Most of these US companies actually manufacture them vertically, but um the the number that Gwyn cites is that Uh she says uh SpaceX's rocket factory is fifty cents a square foot. And if you vertically integrate your rocket, no pun intended, um, stand it up and and assemble it that way, uh, space ends up effectively costing you twelve to eighteen dollars a square foot because um you're you're moving people up and down to build these rockets way the heck up in space. And it it's it's just like It's just just a great

2:19:24 Illustration of the incredible constraints that SpaceX was under that No other player that's ever reached the scale that they're at has been under. Yeah. Man, that's crazy. That's such that's like a so it's more than an order of magnitude.

2:19:40 Difference in the cost. Absolutely. And like Why the F wouldn't you do that then? Absolutely. Mm.

2:19:50 It's really amazing. Um the other one that we talked about is sort of new market needs. So they they sort of built a uh this isn't uh this is from the Elon Musk book, but um they built a Honda Accord instead of uh building the Ferrari and everyone else thought only Ferraris were would would be wanted, but it turned out there's an emerging market for accords. Uh which is unexpected and cool to see and I think will be the the we'll see the innovation compound now that we're having all these cube sets and things like that up there much faster than we saw with Um only shipping a Hubble up once a decade.

2:20:22 Yeah. Well, and it turns out even the people who drive Ferraris or McLaren's, um You know, uh they don't want to drive those every day. Right. And then at some point, you know uh Tesla did it SpaceX did exactly the same thing Tesla did, which is like, hey, we know how to make

2:20:39 Accords really cheap, so now we're also gonna make a really cheap Ferrari. Yep. And uh sorry existing Ferrari people, but you're also gonna want ours. I was looking at this the other day. What is um The Performance model three, which granted is still a very expensive car. It's like a fifty five thousand, sixty thousand dollar. Yeah, right. Yeah. But but the you know.

2:21:07 For call it s let's say sixty thousand dollars, you can get zero to sixty time. What it's down like Three, below three now? Like Oh I don't know, something like that. Yeah, for like you used to have to spend a couple hundred thousand to get that. You know. Yep.

2:21:22 That's a great point. Alright, my last year. Is this my last? I think it's my last. Playbook here is

2:21:29 Customer diversification. So they are not reliant on one customer or even one type of customer. They have all these different sectors. They have defense so within the government, they have defense and they have civil. So NASA's resupply and human contracts. Um, but and the defense, they have these air force contracts among other things. Um and then they've got the commercial business with telecom, with media. Um and so it's it's at this point it's a robust and diversified business that is just That was not true in space.

2:21:59 And it's uh um It's it's gonna be defensible for them and it's gonna help them weather storms in different markets. Yeah. Well, we're gonna get to We'll get to this ingredient in a minute, so I'll hold off, but Yeah. The question is like okay, so how big is this market gonna get, but all right.

2:22:16 Uh Yeah. Yes, let's hold for greeting. Yep. Uh Lastly, the thing that I wanna point out, I think as of May twenty nineteen, Elon owned fifty four percent of SpaceX. And so they they did just raise something like five hundred and fifty million since then, but like

2:22:33 Holy God did that guy hold on to equity in his company. He managed to r he is Elon is a master of many things, you know, he's the chief engineer. He's uh you know He's lots of things. He is a master of of raising capital. Well,

2:22:50 I mean it's interesting right, he didn't raise care, he put his own capital in. But then I think what what's interesting is um So we didn't talk about this in history and facts, but After they got the NASA contract and after the successful

2:23:04 Falcon nine and dragon. After the successful Dragon Rendezvousing with the ISS. I think there was a lot of pressure internally from employees for the company to go public. 'Cause they were like, like, look, we just hit this massive step change in valuation and like we've been killing ourselves here. We want some liquidity. Um and Elon actually wrote a memo, an email to the Company. With the reasons why he thought like

2:23:30 They Like going public isn't as good as you think, you know, and he's lived through all this. Tesla. Um But in the wake of that They started doing these regular um Fundraises but I

2:23:43 believe most some of the capital may have been primary, but I believe most of it was secondary for employee. To buy out the employees um interesting. Liquidity and I think Elon was pretty outspoken about this. He said like this is like I'm gonna do this. This is gonna be a much better solution for SpaceX. We won't have to be a public company. We can get employee liquidity. We've got this massive long term vision of getting to Mars. Like um Right. Yeah, so I I actually Don't

2:24:10 Think that the money was raised for the company mostly. Interesting. Well that that speaks even uh better to the profile of the business than that You know, they've been able to Um

2:24:23 Fund with uh at least uh gross margin profit dollars rather than funding the business with uh with all new equity capital. Yeah um Yeah, I I don't think SpaceX is a profitable business, but I do think they're profitable on a unit basis. Well and uh I believe Gwen has said they've they have operated profitably in certain years. Huh.

2:24:46 Wow. I mean I'm sure they're not now now that all the R and D is happening in uh both Starlink. Well, I mean, first of all They lose money every time they launch a star do a Starlink launch because that could have made'em ninety million bucks from someone else. And they've estimated it's gonna take ten billion dollars in capital to get that all. Whoa. Built in up.

2:25:06 And then the other thing they're they're spending tons of money on is the R and D for the the starship. Yep. So Um But yeah, interesting that those are mostly secondaries.

2:25:19 All right, uh value creation and value capture. So I'm gonna be very brief on this. This is a two part segment that we usually do the first part covering Um, of all the value that they created in the world, did they do an effective job of capturing it? Uh people who do a good job of this are Google, people who do a bad job of this are Craigslist. Um And then the second piece, you know

2:25:42 uh did they actually do value creation in the world, uh at all, or did they maybe either destroy value like we've talked about on many episodes with soft bank backed companies, um, or did they uh perhaps just shift value from one person's pockets to another person's pockets. I think it's just like an absolute no brainer that it was new value creation in the world, enabling new markets, accelerating markets, uh, and they're doing a bang up job capturing from it. Yeah, totally. A little

2:26:12 Yeah. A little opaque because they're a private company to know on part one, but it seems like yes. But Oh my God, if there were ever a no brainer on part two, like you said on this show, like There is no reasonable argument. You c I mean I'm sure there's some arguments, but like To my mind, there's no reasonable argument.

2:26:31 To be made that like SpaceX did not Like having it exist is not good for the world, you know? Right. All right listeners. Now is a great time to talk about one of our favorite companies, StatSig. Yes, there is a reason why the best product teams rely on StatSig, whether they are iterating on their core product features or shipping AI powered experiences at scale.

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2:27:27 to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. Alright, grading. So There's never been a transaction, which is nor normally what we would grade. If you're new to the show, the way this section works is uh big company buys little company, we grade uh in in hindsight, how good of a use of capital was it for big company to buy a little company? Was it as good as Instagram or as bad as AOL? Uh, and um

2:27:59 You know? issue a letter grade. The way that we do that in this world where there hasn't been a transaction yet is talk about what would an A plus be or uh you know what would an F be and maybe what would a a C look like Um and in this case, because I don't think we're talking about in IPOing or You know somebody.

2:28:16 Um buying'em. I think we're basically just gonna talk about what does a an end state look like for this company in each of these um In each of these scenarios. And uh David, you asked the question earlier, which I wish I could reach through Zoom and and slap you for, which is well really how come on, how big is the market? And it's called foreshadowing.

2:28:37 Yeah. Like, sure we could talk about a market for how many of the people without broadband would pay for broadband. Um and sure we could talk about both the commercial and the government markets for launching satellites. But

2:28:52 How big is the entire Mars economy going to be In twenty three hundred. You know? Like

2:29:02 There there is some future where th the what we're talking about here is the GDP of Mars. And the GDP of Mars with a productive capacity of a of a million people on it. And I know I sound like a nut job for for throwing that out, but like that is Elon Musk's A plus case here is like

2:29:22 That's the whole goal of this thing. Yeah. Yeah. Okay, is that Do you want to more or do you want me to jump in? I I I'm I'm painting that's the A plus here. Like it is nothing shy of

2:29:36 we figure out a multi step process to get people to Mars reliably, cheaply, safely, and build a s society and economy there. Yep. Well now the interesting thing though is so usually when we do this, it's so funny with SpaceX, the usual rules don't apply. We we provide a um Uh a time frame, a time horizon of like five years. Uh that's fair. So B. Interesting thing about space versus I think a lot of other

2:30:04 New age space companies. Many new age space companies in the past several years that have had a similar A plus case of like something like the Mars economy or like um you know planetary resources, right? You know, gas stations in space, uh mining mining asteroids. Um

2:30:28 The problem with those Companies was It was it was a it was a binary. Yeah, we get to that A plus in some Our future state there's nothing along the way. What's amazing that Elon and SpaceX X have done is they've stair stepped up to it. It's like, Oh, well, okay, first we're gonna become a, you know, um

2:30:46 Uh, we're gonna build rockets and then we're gonna become essentially a space shipping company. Well, and then we're gonna be a satellite company and uh provide internet pro uh Uh satellite broadband. Well, then we're gonna spin off the boring company because actually, if we're gonna be on Mars, like we need tunnels to live on Mars, so we're gonna need that anyway. Actually that's useful on earth. Okay, then we're gonna supply the ISS and we're gonna do uh uh we're gonna do um the Dragon program with NASA. And it's like every step along the like You can hit an A plus in each kind of

2:31:16 Five years. Time horizon. Yeah, that's a fair point. I also shouldn't have said twenty three hundred. I said that'cause I I couldn't think of the timeline is to actually get a million people up there, but like it's much sooner. But yeah, you're right. Like the the There are there are potentially incremental A pluses. I don't know what the the

2:31:34 I actually should know this but don't what the goal of Starlink is is how much internet Do we intend to provide to how many people and at what price? Like there's some There's some um business case for like Uh just operating Starlink is a really good business to be in and might be a thirty billion dollar enterprise value thing on its own. I don't know if that's true. I suspect it's not, but

2:31:56 Well we we uh well it might be. I mean it might be more. We know that they expect To put ten billion dollars worth of CapEx. Into it. Um both from That's Cephex funded by cash flow from other projects within SpaceX. They have raised a a lot a lot of the ac n primary capital that they've raised recently has been for Starlink. Um

2:32:18 So I don't know. I mean like would you would it be reasonable to put ten billion dollars of CapEx into something if you didn't think you could generate Thirty plus billion in

2:32:30 And revenue out of it? Yeah, it's a good point. I haven't seen the pitch deck, but I'm sure it says something like that. Yeah. Mm-hmm. Uh, not to mention

2:32:40 You know, they'll the they'll continue to um they'll continue to sort of pull away, I think, in the launch market. Um and and uh Um I mean Falcon Nine is just a workhorse and a s and a and a and an amazing business of of doing these launches. And so for the next three, four years until they really have uh Starship humming, um, if they can actually take up to a month, there's there's uh

2:33:07 You know, they'll do what is th what's uh sixty million Times. Um Times twenty four. is uh one point four billion a year in revenue just from the

2:33:21 Um The Falcon Nine launches. So I don't I don't know what kind of multiple you want to apply to that or if we should figure out actually what the EBITDA margin is and and do it that way. But um Yeah.

2:33:33 Yeah. It's good business. All right. Should we move to the uh F case? F Yeah, I mean There's some F cases that I I don't want to say, so I'm not going to

2:33:47 Um Uh But one would be that factors outside of uh SpaceX's control Uh cause. m more than one launch uh to to go poorly, or in fact an important launch to go poorly, uh and and

2:34:04 basically make it so that they don't get orders anymore. Um this business is incredibly b brand depre dependent in a way that uh Um other businesses that are not this high risk are not. And uh I think it would be very

2:34:20 Yeah. Mm-hmm. Mm. their revenue could go to zero much more easily than than other businesses because of that risk factor. Yeah.

2:34:30 It's interesting though. I mean At the same time, that risk fac well,'cause it a private company has never really been doing this kind of stuff before, but that risk factor has always existed in this industry. Like this is a dangerous industry. Um And in fact there have been Terrible. You know, accidents in the history

2:34:50 Um You know, of of the industry made by governments. Um Yeah, but we I mean we canceled the shuttle program. Right. But was that that wasn't because of um Columbia, was it?

2:35:02 I don't know for sure. Feels like a compounding factor though, that it was both expensive and unsafe. Yeah. Yeah, for sure. Well. Hopefully we don't uh face that. But but it's a good point. I mean like

2:35:15 You know As Elon makes the point, and we've made the point several times on this episode, typically this stuff is the domain of countries, not companies. Um and so there might be all sorts of unforeseen uh factors that pop up here. Totally. Yeah, you could have governmental problems. I mean, you you could have problems where uh foreign governments aren't able to do business with American companies. I mean the the risk factors that would go on this company's X One are just at such a bigger scale. than you would ever see in in most uh for most companies. Yeah. Well so here's one.

2:35:47 I mean I guess this is a Sort of a um F. Well, I think kinda. It's an interesting lens through which to look through.

2:35:57 greeting here, which is if they're ultimately successful in everything that they're talking about here, and they get a million people to Mars. What does what does that actually mean? Like there's a lot of questions that are gonna have to get figured out. Like is SpaceX like The government of Mars? I was wondering this. Like is this a company or is this a country? Or is this like we're starting to sound like pretty uh pretty sci fi uh dystopian future here. I mean Like

2:36:30 If Columbus makes it to the US, does the Dutch East India Company own North America or does Like Columbus the Spanish government. You know? It's a good question. Yeah.

2:36:44 Um Over time. Whoever has the army that's able to to conquer it probably owns it. Yeah. I mean just looking at history as a as a guide.

2:36:54 Yeah. Um I mean Again, this sounds sort of crazy, but I you know, Elon talks about this, that this is sort of um He hopes the same type of analogy with Mars is like, you know, it's been

2:37:07 Three hundred plus years since there was a new world. Um You know, if this happens, there will be a new world. And like Well who owns that world?

2:37:16 Mm-hmm. Yeah. If you've thought about this question or you know the answer to this question, um Please reach out, join us in the in the acquired Slack, acquired.fm slash slack, or email us at acquired fm at gmail.com. Um

2:37:32 Uh this goes with everything else in the episode too. I'm sure there's lots of people here who are more sort of aerospace native than we are, and l and certainly lots of sci fi geeks, so Um Yeah, I think uh we'd love to to think more about this. With uh With folks.

2:37:46 Yeah. I suspect this won't be our last uh space pack episode. Yeah. Or space episode broadly. Yeah. Totally. Carvouts?

2:37:58 Well that's Do it. It's been a while since we've had a car route. Yeah. Good stuff been gone on. Uh I think

2:38:07 Among Much. great content I've been consuming during quarantine from books to both fiction and nonfiction to um

2:38:18 uh podcasts to uh um to T V shows, to movies. I think the last dance takes the cake for me. I wrapped it up earlier this week. Have you finished it yet? I haven't yet. Oh, it's so good.

2:38:31 So good. Especially like you know, growing up watching you know, I remember being a kid and watching a lot of those games. On TV. Um Especially the ninety eight run, uh for the balls. Uh

2:38:45 And then like just getting this super deep behind the scenes. You know, look at all of it and The portrait not just of Jordan, but of everybody on that team. Um So So great. I enjoyed every single second of it.

2:38:59 I want episode three. I'm I'm I already all the best parts are spoiled'cause I saw all the memes, but I am Still looking for it to feel like that. The memes are just the the Isaiah Thomas meme. I don't know why why wasn't it? So crazy. So good. Um

2:39:21 Mine uh mine is I I Think there's some chance that this may have already been a carve out because I've recommended this so many times to different people, but it is a uh five year old talk by Michael Malbison. Um This one at Google uh for his book. I think book two or at least just g discussing the book Untangling Skill and Luck, The Success Equation. And it is one of the best hours you could spend with your time, where he lays out

2:39:46 games of skill and games of luck and everyth or most things are both and understanding where a lot of the different sports that you love or games that you love are on that continuum and also thinking about competitions in your life of w what's more skill based and what's more luck based and doing this a privilege to watch because he uncovers Weird paradoxes. Like this one.

2:40:13 The More skill and activity requires the more luck will play a role in the outcome. The uh what's that the uh the paradox of scale, right?

2:40:24 Yeah. And it's so interesting. And like I i if you're interested in if you're a sports fan, uh, or if you're an investor, or if you compete in anything at the highest level, um, it is wildly clarifying to watch this and and uh and understand sort of um what game you're in. And I I I can't recommend it enough. So good. And uh he wrote a book uh about this, right? Um Same title. Yeah, and the with the same title and um

2:40:50 Yeah. I think it was I should go back and reread that and re or at least rewatch the Video. I remember it being fantastic.

2:40:58 It's awesome. That's awesome. Um well before before our usual sort of wrap up here, uh we have one more um kind of fun announcement. Uh and uh That is that David and I are gonna be speaking at an aerospace industry conference uh in November called Ascend. Uh that's uh

2:41:18 uh something that Um you know Obviously based on both of us getting to go deep on the research here, uh I'd call ourselves um aerospace novices, but uh

2:41:30 but curious and and uh love diving into this stuff. Um and uh and we were fortunate enough to to get to attend and um and do some talks uh at Ascend. And so if if you're like us where this stuff is interesting to you or you think space may be the future, or you're interested in getting um Um getting into a space adjacent industry ascend uh should be a great event. Um hopefully we'll get to do it in person. But um folks should check it out and uh

2:41:57 We'll put a link in the show notes if if that Uh tickles your fancy. Yeah, I can't wait for it. Really hope it'll be in person in the beam. Such a great um

2:42:07 You know, in many ways I think this time has uh For us it acquired us personally, um And for many of our listeners to you know forced us to grow and obviously adapt. But uh You know Folks may know we we used to do all of our episodes uh with guests in person. We had fly to go.

2:42:24 See, I guess. And obviously we haven't been doing that now, but uh Which is on the one hand been great, but on the other hand, you know, I miss it and it'd just be great to Uh hope that happens in person, be there together and um And just have our community together.

2:42:39 Yeah, for sure. Well one I mean one talk I'm really excited for is uh Jim uh Bridenstein, who's uh NASA's administrator, who was sort of overseeing um everything about what's what's gonna be happening this week. Um he'll be speaking there and it's a lot of uh you know, it's it's uh as sort of high up as the um the sort of folks go in in the the the aerospace industry. And uh you know, one one other person who I'm sure will be a a fascinating one to hear is the the um president and CEO of ULA. is uh is gonna be there. And so for all the shade I just threw, I I think it'll be really interesting to hear how they're

2:43:13 They're sort of navigating um You know? SpaceX and other competitive threats. Seriously. All right. That's Ascend. Check it out. Ascend.events. Uh, if you aren't subscribed and you're new to the show and you like what you hear, you you totally should. You can subscribe to us in any uh

2:43:30 any podcast client, or we are now sending out new episodes via email. And so you can subscribe to that on our website at acquireed.fm, either in the footer or in the the top right hand corner there. Um and uh and that way we can we can shoot your note when we post something new. Um if you want to become a limited partner, subscribing gets you access to our bonus show and uh as mentioned the LP Calls where we get to um interact with all of you, which will be super fun. And uh uh to listen, you can click the link in the show notes or go to glow.fm slash acquired and all

2:44:03 New listeners get a seven day free trial. Um, if you just want to hang out and uh and chat, you should join the Slack. We've got over four thousand people in there talking about uh different topics of company building, news of the day, acquisitions, um, and discussing previous episodes. So I'm sure we'll be uh chatting in there uh after we drop this episode. With that, we will see you next time. See you next time.

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