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Back in 2003, Elon Musk's Speech on Stanford University Entrepreneurial Thought Leaders Lecture!!! · Elon Musk Thinking

• 0:01
  Speaker 1: I'll try to make this as interesting as possible. If
• 0:03
  Speaker 1: you like space, you'll like this talk. So my background
• 0:09
  Speaker 1: in brief, I'll talk a little bit about ZIP two
• 0:12
  Speaker 1: and PayPal, and then mostly about space and what we're
• 0:18
  Speaker 1: doing in space. So I originally came out California to
• 0:22
  Speaker 1: do energy physics at Stanford actually and ended up putting
• 0:25
  Speaker 1: this is in ninety five, and ended up putting that.
• 0:27
  Speaker 2: On a hold to start ZIP two and zip too.
• 0:35
  Speaker 2: I'll tell you a little bit.
• 0:36
  Speaker 1: About the thought process of exactly what happened there in
• 0:39
  Speaker 1: ninety five, that it wasn't at all clear that the
• 0:42
  Speaker 1: Internet was going to be a big commercial thing. In fact,
• 0:45
  Speaker 1: most of the venture capitalists that I talked to hadn't
• 0:48
  Speaker 1: even heard of the internet, which sounds bizarre. On sand
• 0:52
  Speaker 1: Hill wrote, So, but I wanted to do something in there.
• 0:58
  Speaker 1: I thought it would be a pretty huge thing, and
• 1:02
  Speaker 1: I thought it was one of those things that only
• 1:03
  Speaker 1: came along once in a very long while.
• 1:06
  Speaker 2: So I got a.
• 1:08
  Speaker 1: Deferment at Stamford, and I thought I'd give it a
• 1:12
  Speaker 1: couple of quarters.
• 1:15
  Speaker 2: And if it didn't work out, which I.
• 1:16
  Speaker 1: Thought it probably wouldn't, then i'd come back at school
• 1:20
  Speaker 1: and actually When I talked to my professor and I
• 1:23
  Speaker 1: told him this, he said, well, I don't think you'll
• 1:25
  Speaker 1: be coming back, and that was.
• 1:26
  Speaker 2: The last conversation I had with him.
• 1:30
  Speaker 1: But there weren't a lot of waste Again, the only
• 1:32
  Speaker 1: way to get involved the Internet in ninety five that
• 1:34
  Speaker 1: I could think of was to start a company, because they.
• 1:36
  Speaker 2: Want a lot of companies to go and work for
• 1:38
  Speaker 2: Apart from Netscape, maybe one or two others.
• 1:41
  Speaker 1: So, and they didn't have any money, so I thought, well,
• 1:44
  Speaker 1: we've got to make something that's going to.
• 1:46
  Speaker 2: Return It's going to return money very very quickly.
• 1:52
  Speaker 1: So we thought, well that the media industry would need
• 1:57
  Speaker 1: help converting its content from a print media to electronic
• 2:02
  Speaker 1: and they clearly had money, so if we could find
• 2:05
  Speaker 1: a way to help them move their media to the Internet,
• 2:08
  Speaker 1: that would be an obvious way of generating revenue. There
• 2:11
  Speaker 1: was no advertising revenue on the Internet at the time,
• 2:14
  Speaker 1: so and that that was really the basis of ZEP two,
• 2:17
  Speaker 1: And we ended up building quite a bit of software
• 2:20
  Speaker 1: for the media industry, primarily the print media industry. So
• 2:23
  Speaker 1: we had as investors and customers Hearst Corporation, night Ridder,
• 2:31
  Speaker 1: most of the major US print publishers. We built that up,
• 2:35
  Speaker 1: and then we had the opportunity to sell to Compact
• 2:39
  Speaker 1: in early ninety nine, and basically.
• 2:41
  Speaker 2: Took that offer.
• 2:42
  Speaker 1: It was for a little over a three hundred million
• 2:44
  Speaker 1: dollars in cash, and that's that's a currency I highly recommend.
• 2:51
  Speaker 2: So we had that and and.
• 2:56
  Speaker 1: But I wanted to do something something more after ZIP too,
• 3:00
  Speaker 1: so post the sale, in fact, immediately post the sale,
• 3:04
  Speaker 1: I didn't really take any time off. I was just trying
• 3:08
  Speaker 1: to think of where where the opportunities in this in
• 3:11
  Speaker 1: the early ninety nine, where the opportunities remained in the Internet,
• 3:14
  Speaker 1: And it seemed to me that there hadn't been a lot.
• 3:15
  Speaker 2: Of innovation in the financial services sector. So and when
• 3:21
  Speaker 2: you think about it, money is low bound with You
• 3:23
  Speaker 2: don't need some sort of big infrastructure improvement.
• 3:25
  Speaker 1: To do to do things with it. It's really just
• 3:28
  Speaker 1: an entry in the database. The paper form of money
• 3:32
  Speaker 1: is really only a small percentage of all the money
• 3:35
  Speaker 1: that that's out there. So it should lend itself to
• 3:37
  Speaker 1: innovation on the Internet.
• 3:40
  Speaker 2: And so we thought of a couple of different things
• 3:42
  Speaker 2: we could do.
• 3:43
  Speaker 1: One of the things was to combine all of somebody's
• 3:47
  Speaker 1: financial services needs into one website, so you could have banking, brokerage,
• 3:50
  Speaker 1: insurance and all sorts of things in one place.
• 3:55
  Speaker 2: And that was actually quite a difficult problem to solve,
• 3:58
  Speaker 2: but we sold most the issues associated with that. And
• 4:02
  Speaker 2: then we had a little feature which.
• 4:04
  Speaker 1: Took us about a day. That was the ability to
• 4:07
  Speaker 1: email money from one customer to another. So you could
• 4:11
  Speaker 1: type in an email address or actually any unique identifier
• 4:14
  Speaker 1: and transfer funds or conceivably stocks or mutual funds or
• 4:19
  Speaker 1: whatever from one account holder to another. And if you
• 4:23
  Speaker 1: try to transfer money to somebody who didn't have an
• 4:27
  Speaker 1: account on the system, it would then forward an email
• 4:29
  Speaker 1: to them saying, hey, why don't you sign up and
• 4:31
  Speaker 1: open an account. And whenever we demonstrate these two sets
• 4:36
  Speaker 1: of features, we'd say, well, this is a feature that
• 4:39
  Speaker 1: took us a lot of effort to do, and look
• 4:41
  Speaker 1: how you can see your bank statement and your mutual funds.
• 4:44
  Speaker 2: And insurance and all that. It's all on one page,
• 4:46
  Speaker 2: and look how convenient that is.
• 4:47
  Speaker 1: And people got home and then we'd say, and by
• 4:50
  Speaker 1: the way, we have this feature where you can enter
• 4:53
  Speaker 1: some of these email address and transfers funds and they
• 4:55
  Speaker 1: go wow. So we were like Okay, So we focused
• 5:02
  Speaker 1: the company's business on on email payments and in the
• 5:06
  Speaker 1: early game going, the company is called x dot com
• 5:09
  Speaker 1: and then there was a there was another company called Confinity,
• 5:12
  Speaker 1: which had actually also started out from it from a
• 5:14
  Speaker 1: different area.
• 5:15
  Speaker 2: UH. They started out with the PalmPilot cryptography, and then
• 5:19
  Speaker 2: they had as a demo application the ability to beam
• 5:23
  Speaker 2: token payments from one.
• 5:24
  Speaker 1: Pomp pilot to another by the infrared coort uh. And
• 5:28
  Speaker 1: then they had a website which is called PayPal, where
• 5:30
  Speaker 1: you would.
• 5:31
  Speaker 2: Reconcile the beamed payments and and what they found was
• 5:35
  Speaker 2: that the website.
• 5:36
  Speaker 1: Portion was actually Palm more interesting to people the then
• 5:39
  Speaker 1: pomp pilot cryptography was.
• 5:40
  Speaker 2: So they started leading their business in that direction. Uh.
• 5:44
  Speaker 1: And then in basically early two thousand, uh X dot
• 5:49
  Speaker 1: com acquired Confinity UH. And then about a year later we.
• 5:53
  Speaker 2: Uh uh we ended up changing the company's name to PayPal.
• 5:59
  Speaker 1: And that's that kind of how the approximate evolution of
• 6:03
  Speaker 1: the company and the PayPal is really a case of
• 6:07
  Speaker 1: where the whole viral marketing. It's really a perfect case
• 6:12
  Speaker 1: example of viral marketing like hortmail was where one one
• 6:19
  Speaker 1: customer would essentially act as a salesperson for you, for
• 6:24
  Speaker 1: all of you, for bringing in other customers, so they
• 6:26
  Speaker 1: would send money to a friend and essentially recruit that
• 6:29
  Speaker 1: brend into the network. And so you had this exponential growth.
• 6:34
  Speaker 1: The more customers you had, the faster it grew. So
• 6:38
  Speaker 1: it was like bacteria in a petri dish, you know,
• 6:40
  Speaker 1: it just goes like does this s curve? And in
• 6:44
  Speaker 1: fact I ran paypaler for about the first two years
• 6:48
  Speaker 1: of its existence, and we launched after year one, and
• 6:53
  Speaker 1: by the end of year two we had a million
• 6:55
  Speaker 1: of customers. So it gives you an example, you know,
• 6:58
  Speaker 1: to get your sense for how fast things things grow
• 7:00
  Speaker 1: in that scenario.
• 7:02
  Speaker 2: And we didn't have a sales force.
• 7:04
  Speaker 1: We actually didn't have a VP of sales, we didn't
• 7:06
  Speaker 1: have a VP of marketing, and we didn't spend any
• 7:08
  Speaker 1: money on advertising. In about February of last year, for
• 7:16
  Speaker 1: those some of your probably following it, In February of
• 7:18
  Speaker 1: last year, PayPal went public and we were I think
• 7:22
  Speaker 1: we were the only internet company to go public in
• 7:25
  Speaker 1: the first part of last year. It went off reasonably well,
• 7:31
  Speaker 1: although I think we had more sec rewrites than any
• 7:36
  Speaker 1: company I can imagine, Like we said a record on
• 7:38
  Speaker 1: sec rewrites. This was right around the en run time
• 7:41
  Speaker 1: and when there was all sorts of corporate scandal, so
• 7:43
  Speaker 1: they put us through the ring. And then shortly thereafter,
• 7:48
  Speaker 1: in about June July, we struck a deal with eBay
• 7:53
  Speaker 1: to sell a company to eBay and for about four
• 8:00
  Speaker 1: and a half billion dollars. But that was when eBay's
• 8:03
  Speaker 1: stock price was about fifty five dollars and they hadn't split,
• 8:08
  Speaker 1: so I guess in today's dollars were about three billion dollars,
• 8:13
  Speaker 1: so it worked out pretty well.
• 8:17
  Speaker 2: It happened coincidentally that.
• 8:20
  Speaker 1: In the first part of last year I've been doing
• 8:22
  Speaker 1: just some background research on space, and let me talk
• 8:27
  Speaker 1: a bit about that. So essentially, I was trying to
• 8:32
  Speaker 1: figure out why we had not made more progress since
• 8:35
  Speaker 1: Apollo in nineteen In the sixties, we went from basically nothing,
• 8:39
  Speaker 1: not being able to put anyone into space, to putting
• 8:41
  Speaker 1: people on the Moon and developing all the technology from scratch.
• 8:47
  Speaker 2: To do that.
• 8:48
  Speaker 1: And yet in the seventies and eighties and the nineties
• 8:52
  Speaker 1: we've kind of gone sideways, and we're currently in the
• 8:54
  Speaker 1: situation where we kindt even put a person into low
• 8:57
  Speaker 1: Earth orbit, and that doesn't really cherell with all of
• 9:01
  Speaker 1: the other technology sectors out there. The computer that you
• 9:05
  Speaker 1: could have bought in the early seventies, you know, would
• 9:08
  Speaker 1: have filled this room and had less computing power than
• 9:10
  Speaker 1: your cell phone.
• 9:13
  Speaker 2: And so just about every sector of technologies improved. Why
• 9:16
  Speaker 2: has this not improved? So I started looking into that.
• 9:23
  Speaker 1: Initially, I thought, well, perhaps it's a question of funding,
• 9:25
  Speaker 1: and that funding can be garnered by really marshaling public support.
• 9:30
  Speaker 1: So I thought, well, one way to get the public
• 9:32
  Speaker 1: excited about space would be to do maybe a privately
• 9:36
  Speaker 1: funded robotic mission to Mars. And so we figured out
• 9:41
  Speaker 1: a mission that would cost about fifteen to twenty million dollars,
• 9:44
  Speaker 1: which isn't a lot of money, but it's about a tenth.
• 9:47
  Speaker 2: Of what a low cost nasamission would be. And the
• 9:52
  Speaker 2: idea was.
• 9:53
  Speaker 1: Called Mars Oasis, where we would put a small robotic
• 9:56
  Speaker 1: glander on the surface of Mars with seeds and dehydrated nutrients.
• 10:00
  Speaker 1: They would hydrate upon landing, and you'd have plants growing
• 10:03
  Speaker 1: into Martian radiation and gravity conditions, and you'd also be
• 10:07
  Speaker 1: maintaining essentially a.
• 10:08
  Speaker 2: Life support system on the surface of Mars.
• 10:10
  Speaker 1: And this would be interesting to the public because they
• 10:12
  Speaker 1: tend to respond to precedents and superlatives, and this would
• 10:16
  Speaker 1: be the furthest that life's ever traveled in the first
• 10:18
  Speaker 1: life on Mars.
• 10:19
  Speaker 2: So pretty significant.
• 10:22
  Speaker 1: And then when I started looking at launch vehicles that
• 10:25
  Speaker 1: the lowest cost vehicle in the US is Boeing stalt
• 10:28
  Speaker 1: To two, which costs about fifty million dollars, and that's
• 10:31
  Speaker 1: a bit that's a bit steep what we were trying
• 10:34
  Speaker 1: to do. So I made three visits to Moscow to
• 10:38
  Speaker 1: Russia to look at buying a Russian launch and it's
• 10:45
  Speaker 1: actually pretty interesting going to moscowt to negotiate for a
• 10:50
  Speaker 1: refurbished ICBM. If you know, on the range of interesting experiences,
• 10:56
  Speaker 1: that's pretty pretty far out there. But we actually did
• 11:02
  Speaker 1: get to a deal, but there were so many complications
• 11:05
  Speaker 1: associated with the deal that it didn't I wasn't comfortable
• 11:09
  Speaker 1: with the risks associated with it. So when I got
• 11:13
  Speaker 1: back from the third trip, I thought, well, you know,
• 11:16
  Speaker 1: why is it the Russians can build these low cost
• 11:18
  Speaker 1: launch vehicles, because it's not like we drive Russian cars,
• 11:24
  Speaker 1: fly Russian planes, or have Russian kitchen appliances, and you know,
• 11:28
  Speaker 1: when's the last night brought something Russian that wasn't vodka.
• 11:31
  Speaker 1: So I think the US is a pretty competitive place
• 11:35
  Speaker 1: and we should be able to build a cost efficient
• 11:38
  Speaker 1: launch vehicle.
• 11:40
  Speaker 2: So I put together a feasibility study which consisted of
• 11:44
  Speaker 2: engineers that have been involved with all the major launch
• 11:46
  Speaker 2: vehicle developments over the last three decades, and we iterated
• 11:50
  Speaker 2: over a number of saturdays in the beginning.
• 11:52
  Speaker 1: Of last year to figure out, well, what would be
• 11:55
  Speaker 1: what would be the smartest way to approach this problem
• 11:57
  Speaker 1: of not just launch cost but also launch reliable. And
• 12:01
  Speaker 1: we came up with a default design and that actually,
• 12:04
  Speaker 1: uh sort of fortunate timing. That feasibility study finished up
• 12:09
  Speaker 1: right around the time that we agreed to sell paypalt
• 12:12
  Speaker 1: the eBay, So coincident with that sale, I moved down
• 12:16
  Speaker 1: to la where there's actually the biggest concentration of aerospace
• 12:20
  Speaker 1: industry in the world. It's actually the biggest industry in
• 12:23
  Speaker 1: southern California, much bigger than entertainment or anything else.
• 12:27
  Speaker 2: I was living in pala Alta for about nine years
• 12:30
  Speaker 2: before that.
• 12:33
  Speaker 1: Anyway, So just to talk it a little broadly about
• 12:36
  Speaker 1: space and where things are today, Obviously US government manned
• 12:41
  Speaker 1: exploration is not in a great place. We've got the
• 12:45
  Speaker 1: three remaining shuttles are grounded, it looks like first flight
• 12:48
  Speaker 1: might only be a year from now. If that, and
• 12:53
  Speaker 1: we've got a vehicle that is incredibly expensive and really
• 12:57
  Speaker 1: quite dangerous. It's you know, for reasons to mention there,
• 13:01
  Speaker 1: it's got a side mounted crew compartments, so if there's
• 13:04
  Speaker 1: an explosion, that's basically instant death.
• 13:07
  Speaker 2: Uh.
• 13:08
  Speaker 1: The you've got solid rocket boosters which once you nite them,
• 13:12
  Speaker 1: you can turn them off. And there's something fundamentally dangerous
• 13:14
  Speaker 1: about pre mixing your fuel and oxidizer, I think, Uh.
• 13:17
  Speaker 2: And then it's you've got wings.
• 13:19
  Speaker 1: And control surfaces when you when you re enter, you've
• 13:21
  Speaker 1: got to maintain a precise angle of attack. Even a
• 13:24
  Speaker 1: momentary variance in that can break the whole vehicle apart.
• 13:29
  Speaker 1: So and then and then of course it's got no
• 13:31
  Speaker 1: escape system, so if anything does go wrong, your toast
• 13:34
  Speaker 1: and and that you've got a cost that is really
• 13:37
  Speaker 1: pretty hard to fathom. The shuttle program, when you add
• 13:40
  Speaker 1: up all the pieces, is about four billion a year.
• 13:43
  Speaker 1: And so you can divide uh four billion by the
• 13:46
  Speaker 1: number of flights and that I'll tell you what the
• 13:48
  Speaker 1: cost is. And and if there's say four flights a year,
• 13:53
  Speaker 1: which they haven't been for a while. Then you're talking
• 13:55
  Speaker 1: about a billion dollars a flight. The plans for the
• 14:00
  Speaker 1: mutate future are, obviously we've got to continue building the
• 14:04
  Speaker 1: space station, so we're going to keep flying the Shuttle,
• 14:07
  Speaker 1: but I think it's probably going to be the minimum
• 14:10
  Speaker 1: number of Shuttle flights that we need to launch. The
• 14:15
  Speaker 1: long term plans are build something called overital space plane
• 14:19
  Speaker 1: out safe plane in quotes, because one of the options
• 14:23
  Speaker 1: is a capsule, so it should be called, you know,
• 14:25
  Speaker 1: maybe overtal space thing. But the basic idea is to
• 14:30
  Speaker 1: have something that's hopefully a little cheaper and a lot
• 14:34
  Speaker 1: safer than the Space Shuttle. So in particular, it's going
• 14:38
  Speaker 1: to have an escape system so if something does go wrong,
• 14:40
  Speaker 1: you can abort to safety. The downside is that it's
• 14:46
  Speaker 1: still while it might be a little cheaper, it's still
• 14:49
  Speaker 1: going to be pretty darn expensive. Estimated cost per flight
• 14:52
  Speaker 1: of overital space plane is someone in the region of
• 14:54
  Speaker 1: three hundred to four hundred million dollars a flight, and
• 14:57
  Speaker 1: of that amount, two hundred just two hundred million dollars
• 15:01
  Speaker 1: alone goes to Boeing for the Delta four heavy expandable booster,
• 15:07
  Speaker 1: and it's a fifteen billion dollar development effort and expected
• 15:12
  Speaker 1: to be completed in nine or ten years now.
• 15:15
  Speaker 2: Typically, typically things.
• 15:18
  Speaker 1: Have not been under budget and under time, so it's
• 15:25
  Speaker 1: unlikely I think, given historical precedent that it will stay
• 15:30
  Speaker 1: within fifteen billion dollars and the twenty twelve twelve timeline,
• 15:36
  Speaker 1: and a bit about what's going on on elsewhere in
• 15:38
  Speaker 1: the world in Russia, that this is really the Sawyers
• 15:42
  Speaker 1: is our only access to space station. It's considerably cheaper,
• 15:46
  Speaker 1: considerably safer. The Sawyers has a very good track record.
• 15:50
  Speaker 1: Its crew is top mounted, it has an escape system,
• 15:54
  Speaker 1: there are no wings or control services to go wrong. Overall,
• 15:57
  Speaker 1: it's a pretty good system. And the estimated carts are
• 16:01
  Speaker 1: about sixty million dollars a flight, which is an auto
• 16:04
  Speaker 1: more than Autobank two less than the Space Shuttle. The
• 16:08
  Speaker 1: thing that constrains them, obviously, is the weakness of the
• 16:10
  Speaker 1: Russian economy. It's very hard for them to embark on
• 16:13
  Speaker 1: ambitious programs with an economy the size of Belgium. So
• 16:19
  Speaker 1: China is probably the most interesting thing that's going on
• 16:23
  Speaker 1: in space.
• 16:25
  Speaker 2: This month. China is expected to be only the third
• 16:28
  Speaker 2: it's expected to launch their first person into space, they
• 16:31
  Speaker 2: will make them only the third country ever to put
• 16:34
  Speaker 2: someone in orbit, and that they've put a lot of
• 16:38
  Speaker 2: money and effort into this program.
• 16:40
  Speaker 1: If anything serves as a spur for human space exploration,
• 16:43
  Speaker 1: it is likely to be China's ambitions in space, and
• 16:50
  Speaker 1: hopefully a sentence in America that we want to at
• 16:52
  Speaker 1: least keep up with China. And they have grand ambitions
• 16:58
  Speaker 1: beyond just low with orbit. They are planning on setting
• 17:01
  Speaker 1: up a space station, putting a base on Mars, and
• 17:04
  Speaker 1: eventually sending humans to Mars. So what's happening in the
• 17:10
  Speaker 1: US that I think might ultimately surpass all of that
• 17:13
  Speaker 1: stuff is entrepreneurial space activities, where things are led by
• 17:20
  Speaker 1: the spurt of free enterprise. And I think there's perhaps
• 17:23
  Speaker 1: an analogy here where just as DARPA served as the
• 17:30
  Speaker 1: initial impatus for the Internet and underwrote a lot of
• 17:34
  Speaker 1: the costs of developing the Internet in the beginning, if
• 17:38
  Speaker 1: may be the case that NASA has insentially done the
• 17:41
  Speaker 1: same thing by spending the money develops some of the
• 17:44
  Speaker 1: fundamental technologies in the beginning, and then once we can
• 17:48
  Speaker 1: bring sort of the commercial pre enterprise sector into it,
• 17:51
  Speaker 1: then we can see the dramatic acceleration that we did
• 17:54
  Speaker 1: that we saw.
• 17:55
  Speaker 2: In the Internet. So there are several serious more vehicle
• 18:00
  Speaker 2: efforts underway.
• 18:01
  Speaker 1: Talk about each one's Bertrictann of scale composites. Bert Riccann
• 18:06
  Speaker 1: is one of the world's foremost aircraft designers, and he's
• 18:10
  Speaker 1: developed a suborbttle vehicle that they're actually flying out of Mahabi.
• 18:14
  Speaker 1: This is an X Prize class vehicle. There's John Cormack,
• 18:18
  Speaker 1: who wrote Quake and Doom. It's probably one of the
• 18:21
  Speaker 1: best software engineers in the world, one of the best
• 18:24
  Speaker 1: engineers that I know period, and he's developing a vertical
• 18:28
  Speaker 1: take of the landing vehicle. Jeff Bezos, who I understand
• 18:31
  Speaker 1: was here last week, is a huge space advocate and
• 18:38
  Speaker 1: to my understanding that he intends to spend something on
• 18:40
  Speaker 1: the order of a billion dollars over the next twenty
• 18:42
  Speaker 1: years on space exploration, and then space then my company SpaceX,
• 18:48
  Speaker 1: and I think.
• 18:49
  Speaker 2: Within the next several years these entrepreneurial efforts will actually
• 18:53
  Speaker 2: be what derives space exploration.
• 18:58
  Speaker 1: So a little bit about each one. That's a picture
• 19:00
  Speaker 1: of the potratan effort. It's called White Knight is the
• 19:05
  Speaker 1: carrier plane. And then spaceship one is the thing that's
• 19:08
  Speaker 1: held in the belly there. And this project is supposedly
• 19:14
  Speaker 1: funded by Paul Allen, so there's quite a lot of
• 19:16
  Speaker 1: capital also, it should make that point, quite a lot
• 19:19
  Speaker 1: of capital.
• 19:19
  Speaker 2: That's sort of entering this entrepreneurial space sector as well.
• 19:25
  Speaker 2: The only drawback I think of this architecture is that
• 19:27
  Speaker 2: it's not really scalable for.
• 19:31
  Speaker 1: For something that would get to orbit. This is pretty
• 19:33
  Speaker 1: good for sub orbital, but I think the architecture would
• 19:35
  Speaker 1: need to change for an orbital vehicle. And there's a
• 19:40
  Speaker 1: John Comas effort. He's a little irreverent. This is from
• 19:44
  Speaker 1: his website.
• 19:48
  Speaker 2: His his vehicle is a vertical takeoff and landing vehicle.
• 19:51
  Speaker 2: He's made. He's made really incredible progress for somebody who
• 19:55
  Speaker 2: has no background in.
• 19:58
  Speaker 1: Airspace engineering and is also kind of doing it all
• 20:01
  Speaker 1: himself with him in like three bodies, so and I
• 20:07
  Speaker 1: think that will make something that works. Actually, if you
• 20:10
  Speaker 1: can check out their website Agell Aerospace, it's pretty interesting stuff.
• 20:15
  Speaker 1: But in order to get to orbit, this would require
• 20:18
  Speaker 1: a substantial improvement in the mass efficiency, in the engine efficiency.
• 20:21
  Speaker 2: And probably be a two stage vehicle. Jeff Bezos, who
• 20:27
  Speaker 2: I'm sure almost everyone here is aware of. He is
• 20:33
  Speaker 2: a pretty huge fan of space.
• 20:35
  Speaker 1: In fact, his high school baledictorian speech was about the
• 20:38
  Speaker 1: necessity of humanity expanding to other planets, so it's pretty
• 20:43
  Speaker 1: important to him.
• 20:44
  Speaker 2: From what I understand, this is our effort.
• 20:53
  Speaker 1: We're spanning quite a bit more than the three prior
• 20:57
  Speaker 1: entities that I mentioned, in some cases, probably an or
• 21:00
  Speaker 1: of magnitude more, because what we're doing is really an
• 21:03
  Speaker 1: order of magnitude more difficult. We're building an orbital launch
• 21:05
  Speaker 1: vehicle to two stage, very high efficiency engines, very high
• 21:09
  Speaker 1: mass efficiency launch vehicle, and it's targeted to the satellite
• 21:13
  Speaker 1: delivery market. So our approach is really to make this
• 21:17
  Speaker 1: a solid, sound business. And so I predicated the.
• 21:22
  Speaker 2: Strategic plan on a known market, something that we know
• 21:25
  Speaker 2: for a fact.
• 21:26
  Speaker 1: Exists, which is the need to put small to medium
• 21:29
  Speaker 1: sized satellites into orbit. And so that's what we're going
• 21:34
  Speaker 1: after initially, and then with that as a as kind
• 21:37
  Speaker 1: of a revenue base, we will move into the human
• 21:41
  Speaker 1: transportation market. It's the long term management. Company are definitely
• 21:44
  Speaker 1: in human transportation, but I think the smart strategy is
• 21:47
  Speaker 1: to first go for cargo delivery. Essentially satellite livery and
• 21:52
  Speaker 1: our eventual a great path is to build the successor
• 21:57
  Speaker 1: to Saturn five, build a super heavy lift vehicle that
• 22:01
  Speaker 1: could you know, be used for setting up a Moon
• 22:05
  Speaker 1: base or doing a Mars mission.
• 22:06
  Speaker 2: That would be the Holy Grail objective.
• 22:09
  Speaker 1: On the upper right there you can see a testifying
• 22:13
  Speaker 1: of our engine and on the lower right you can
• 22:16
  Speaker 1: see the our first stage tank. This is an engine
• 22:24
  Speaker 1: test of our main engine, which is called Merlin YEA
• 22:40
  Speaker 1: and that that generates about roughly seventy five pounds of thrust.
• 22:48
  Speaker 2: At sea level. This is our upper stage engine. It's
• 22:54
  Speaker 2: about it.
• 22:55
  Speaker 1: It's about seventy five hundred pounds of thrust in vacuum.
• 23:03
  Speaker 1: And this is an accelerated version of our launch sequence.
• 23:09
  Speaker 1: Our first launch will be from the SpaceX Launch Complex
• 23:12
  Speaker 1: at Vanderberg Air Force Base an approximately March of next year,
• 23:16
  Speaker 1: basically early next year, and we will be applying a
• 23:22
  Speaker 1: Navy satellite, maybe communications satellite. So it's notable because often
• 23:28
  Speaker 1: launch bicle companies are not able to get somebody get.
• 23:32
  Speaker 2: A paying customer on their first flight. That we've been
• 23:35
  Speaker 2: able to do that. This is also the Falcon development
• 23:39
  Speaker 2: at SpaceX is the fastest launch veicle development in history,
• 23:42
  Speaker 2: including wartime.
• 23:53
  Speaker 1: That's actually Vanderberg Airport Base, which is about two hours
• 23:56
  Speaker 1: away from Santa Barbara. Common themes between Zip two and PayPal, well,
• 24:03
  Speaker 1: I guess both of them involved had had software at.
• 24:07
  Speaker 2: The as the heart of the technology.
• 24:11
  Speaker 1: Even though ZIP two was in was servicing the media
• 24:15
  Speaker 1: sector and obviously PayPal was servicing the financial sector, the
• 24:20
  Speaker 1: the heart of it was really software and and Internet
• 24:25
  Speaker 1: related stuff. So certainly that's a huge commonality. They were
• 24:30
  Speaker 1: both in pala Alta, where I lived. I think we,
• 24:37
  Speaker 1: you know, took a similar approach to building both companies,
• 24:41
  Speaker 1: which was to have a small group of very talented people.
• 24:47
  Speaker 2: And and keep it small. You know, I think PayPal
• 24:52
  Speaker 2: had at its height probably thirty engineers for for a system.
• 24:56
  Speaker 1: That's I would say it is more sophisticated than the
• 24:59
  Speaker 1: Federal Reserve clearing clearing system. I'm pretty sure it is
• 25:03
  Speaker 1: actually because the clearing system sucks, So.
• 25:10
  Speaker 2: What else is there it?
• 25:12
  Speaker 1: Generally, you know, I think the way both zip to
• 25:15
  Speaker 1: and PayPal upgrade was was really your It was your
• 25:18
  Speaker 1: canonical Silicon Valley startup. Uh, you know, pretty flat hierarchy.
• 25:26
  Speaker 1: You know, everybody had a roughly similar cube, and anyone
• 25:32
  Speaker 1: could talk to anyone. We had a philosophy of best
• 25:34
  Speaker 1: idea wins, as opposed to you know, the person proposing
• 25:38
  Speaker 1: the idea winning because they are who they are, even
• 25:42
  Speaker 1: though there were times when I thought that should have
• 25:43
  Speaker 1: been the way it goes. And obviously, you know, everyone
• 25:52
  Speaker 1: was was an equity stakeholder. I don't give us anything.
• 25:59
  Speaker 1: If there were two paths that you know, let's say
• 26:03
  Speaker 1: we had to choose through one thing or the other,
• 26:06
  Speaker 1: and one wasn't obviously better than the other, then rather
• 26:10
  Speaker 1: than spend a lot of time trying to figure out
• 26:11
  Speaker 1: which one was slightly better, we would just pick one
• 26:13
  Speaker 1: and do it. And sometimes we'd be wrong and and
• 26:17
  Speaker 1: we've picked itself off the more path. But often it's
• 26:19
  Speaker 1: better to pick a path and do it than to
• 26:21
  Speaker 1: just vacillate endlessly on a choice. We didn't worry too
• 26:28
  Speaker 1: much about intellectual property, paperwork, legal stuff.
• 26:33
  Speaker 2: We really were very focused on.
• 26:36
  Speaker 1: Building the best product that we possibly could. Both to
• 26:40
  Speaker 1: PayPal were very product focused companies. You know, that's incredibly
• 26:46
  Speaker 1: obsessive about how do we build something that is really
• 26:49
  Speaker 1: gonna be the you know, the best possible customer experience
• 26:56
  Speaker 1: and that that was a far more effective selling tool
• 26:58
  Speaker 1: than having a giant salesforce or thinking of you know,
• 27:01
  Speaker 1: marketing gimmicks or twelve step processes or whatever.
• 27:08
  Speaker 2: I'm not super familiar with Friendster certainly.
• 27:11
  Speaker 1: I mean the essence of viral marketing is do you
• 27:14
  Speaker 1: have something that one customer is going where one customer
• 27:18
  Speaker 1: is going to sell another customer without you having to
• 27:20
  Speaker 1: do anything.
• 27:23
  Speaker 2: And there are there are lots of instances of that. Friends,
• 27:26
  Speaker 2: there might be one. Obviously, Hotmail was one, PayPal was one,
• 27:30
  Speaker 2: eBay was one.
• 27:34
  Speaker 1: And in a situation like that, going back to what
• 27:36
  Speaker 1: I said about product, product matters incredibly because if you're
• 27:39
  Speaker 1: going to recommend something to somebody, you've got to really love.
• 27:43
  Speaker 2: The product experience.
• 27:44
  Speaker 1: Otherwise you're not going to recommend it because you don't
• 27:46
  Speaker 1: want to burn your friend.
• 27:49
  Speaker 2: Hurdles in the space industry.
• 27:50
  Speaker 1: Entering the space industry, well, you know, it is a
• 27:55
  Speaker 1: very complicated regulatory structure, as you might have mansion. When
• 28:01
  Speaker 1: somebody tries to build an orbital launch vehicle, which is
• 28:03
  Speaker 1: not really all like distinguishable from an ICBM, there's a
• 28:06
  Speaker 1: lot of regulation and they probably should be because you know,
• 28:10
  Speaker 1: you don't want.
• 28:11
  Speaker 2: To launch something and end up hitting LA where I live.
• 28:17
  Speaker 1: So probably the regulatory stuff was very difficult. The environmental
• 28:23
  Speaker 1: approvals certainly proven very difficult, much more so than we expected.
• 28:28
  Speaker 1: I mean here in silicon value. You look, you know
• 28:31
  Speaker 1: what I came to appreciate is silicon value. You live
• 28:33
  Speaker 1: in a libertarian paradise. There's almost no regulation. And what
• 28:40
  Speaker 1: can be very frustrating is that regulation.
• 28:42
  Speaker 2: Is often irrational. It doesn't make any sense.
• 28:46
  Speaker 1: But you've got somebody there who's simply executing a set
• 28:49
  Speaker 1: of rules independent where those rules make sense, and you
• 28:51
  Speaker 1: can try to convince them that rules don't make sense,
• 28:53
  Speaker 1: and they won't listen to you.
• 28:54
  Speaker 2: So probably regulation is the most annoying thing. I would say.
• 28:59
  Speaker 1: Overall, I'm very pleased because I think we've had a
• 29:02
  Speaker 1: very smooth development process and on the whole I can't
• 29:05
  Speaker 1: complain at all. Yeah, why is it so expensive to
• 29:11
  Speaker 1: send something into space? Well, let me tell you what
• 29:15
  Speaker 1: makes a rocket hard. The the energy and the velocity
• 29:21
  Speaker 1: required to get into orbit is so substantial that compared
• 29:27
  Speaker 1: to say a car or even a plane, you have
• 29:30
  Speaker 1: almost no margin to play with. Typically, a launch vehicle
• 29:34
  Speaker 1: will get about two percent of its liftoff mass to orbit.
• 29:39
  Speaker 1: So and that's the case for for a Falcon. And
• 29:43
  Speaker 1: so if you can only get two percent of what
• 29:44
  Speaker 1: your rocket ways to begin with to orbit, you can.
• 29:50
  Speaker 2: If you're wrong by.
• 29:50
  Speaker 1: Two percent, you're not gonna get anything to orbit, you know,
• 29:55
  Speaker 1: come crashing down on the Pacific somewhere. So that means
• 30:01
  Speaker 1: all of your calculations have to be right. If you miss,
• 30:05
  Speaker 1: if you mis calculate something, you get an answer wrong,
• 30:07
  Speaker 1: it blows up.
• 30:09
  Speaker 2: And it's very expensive trying.
• 30:11
  Speaker 1: To get all your answers right and then double checking
• 30:13
  Speaker 1: that they're right and testing them all and doing as
• 30:15
  Speaker 1: much as you can on the ground. I think that's
• 30:17
  Speaker 1: a lot of what makes rockets expensive. The low launch
• 30:21
  Speaker 1: rate typically is also what makes rockets Brook's expensive. If
• 30:24
  Speaker 1: you had, you know, thousands of flights a year, then
• 30:27
  Speaker 1: it would be a lot cheaper. Although it's a bit
• 30:29
  Speaker 1: of a chicken and egg because it needs to.
• 30:31
  Speaker 2: Be cheaper in order to have thousands of flights a year.
• 30:35
  Speaker 1: But at the end of the day, when you in
• 30:36
  Speaker 1: the final analysis, I would say that rockets really should
• 30:39
  Speaker 1: be a lot cheaper than they are today. And I
• 30:42
  Speaker 1: think the way they're both, the way they're operated, is
• 30:46
  Speaker 1: just very inefficiently. And I think with with SpaceX and Falcon,
• 30:52
  Speaker 1: we're going to we're going to show that that's that's
• 30:54
  Speaker 1: the case. Our vehicle will sell for about six million
• 30:57
  Speaker 1: dollars a flight. That our nearest competitor is the Pegasus
• 31:02
  Speaker 1: from Orbital Sciences, which is about twenty five million dollars
• 31:05
  Speaker 1: a flight, and that has less capability than our rocket.
• 31:09
  Speaker 2: So Falcon will represent a pretty substantial breakthrough on the
• 31:13
  Speaker 2: cost of access to space.
• 31:19
  Speaker 1: Than Yeah, the customer base with SpaceX is just it's
• 31:31
  Speaker 1: dramatically different, obviously from PayPal. PayPal is a consumer product,
• 31:35
  Speaker 1: whereas SpaceX we're selling rockets, and the number of people
• 31:39
  Speaker 1: who want to buy rockets is quite small. If anyone
• 31:42
  Speaker 1: here has six billion dollars and once a rocket, I mean,
• 31:44
  Speaker 1: if they glance to sell it.
• 31:45
  Speaker 2: To a.
• 31:48
  Speaker 1: But so it's much more of an individual selling process.
• 31:52
  Speaker 1: There's a great deal more thought that goes into any
• 31:55
  Speaker 1: purchase of a launch, much more so than signing up
• 31:59
  Speaker 1: a PayPal account where which doesn't really cost you much.
• 32:04
  Speaker 2: So, Yeah, and there's not a lot of viral marketing
• 32:06
  Speaker 2: that's going to happen with the rocket. I suspect I'm
• 32:10
  Speaker 2: hoping that you know, I'm not counting on it. It's
• 32:13
  Speaker 2: a I think a successful entrepreneurs probably come in all
• 32:18
  Speaker 2: size of shapes and flavors. I'm not sure there's any
• 32:21
  Speaker 2: one one particular thing for me.
• 32:25
  Speaker 1: You know, some of the things I've described already I
• 32:27
  Speaker 1: think are very important. I think really an obsessive nature
• 32:33
  Speaker 1: with respect to the quality of the product, it is
• 32:37
  Speaker 1: very important. So, you know, being obsessive compulsive is a
• 32:40
  Speaker 1: good thing in this context. Really really liking what you
• 32:48
  Speaker 1: do whatever area that you get into, given that, you know,
• 32:52
  Speaker 1: even if you're if you're the best, the best.
• 32:55
  Speaker 2: There's always a chance of failure. So I think it's
• 32:57
  Speaker 2: important that you really like whatever you're doing. If you
• 33:00
  Speaker 2: don't like it, life is too short, you know, i'd
• 33:04
  Speaker 2: say if.
• 33:06
  Speaker 1: And also if you if you like what you're doing,
• 33:08
  Speaker 1: you think about it even when you're not working. I mean,
• 33:12
  Speaker 1: it'll just it's something that your mind is drawn to,
• 33:15
  Speaker 1: and if you don't like it, you just really can't
• 33:18
  Speaker 1: make it work.
• 33:19
  Speaker 2: I think SpaceX is about thirty people.
• 33:28
  Speaker 1: And what we do internally at SpaceX is we do
• 33:30
  Speaker 1: all of the design analysis, integration of hardware testing, and
• 33:35
  Speaker 1: then launch operations. But a lot of the heavy manpower
• 33:39
  Speaker 1: stuff like welding together our primary structure, the heavy machining
• 33:43
  Speaker 1: and so forth that we outsource, so we'd be a
• 33:46
  Speaker 1: much larger company, But do all of that internally. And sorry,
• 33:50
  Speaker 1: you had another party question. Oh yeah, Actually we.
• 33:56
  Speaker 2: Don't have any lawyers. The regulatory stuff that we deal
• 34:02
  Speaker 2: with is very technical.
• 34:04
  Speaker 1: It's it's it's really a lot like trying to get
• 34:06
  Speaker 1: an aeroplane certified with the FAA.
• 34:09
  Speaker 2: We're just getting a rocket certified. So so our documentation
• 34:13
  Speaker 2: is it's very I wish we could offload it to
• 34:16
  Speaker 2: some latch. They wouldn't know what the heck to do. So,
• 34:21
  Speaker 2: you know, how did the Wharton degree help? I think it.
• 34:25
  Speaker 1: A business degree teaches you a lot of the terminology.
• 34:28
  Speaker 1: It introduces you to concepts that you would otherwise. You know,
• 34:31
  Speaker 1: this terminology is somebody to be said for that. It
• 34:36
  Speaker 1: introduces you to concepts you you would otherwise have to
• 34:38
  Speaker 1: learn them perrectly. I mean, I think I think you
• 34:41
  Speaker 1: can you can learn whatever you need to do to
• 34:43
  Speaker 1: start a successful business, either in school or out of school.
• 34:47
  Speaker 2: School, and you know, theory should help accelerate that process.
• 34:52
  Speaker 1: And I think it, you know, oftentimes it does it's
• 34:55
  Speaker 1: it can be an efficient learning process, perhaps more efficient
• 34:58
  Speaker 1: than perrectly learning lessons.
• 35:02
  Speaker 2: But really I think you there are examples of success.
• 35:05
  Speaker 1: Entrepreneurs who never graduated high school, and there are those
• 35:08
  Speaker 1: that have PhDs. So I think the important principle is
• 35:13
  Speaker 1: to be dedicated to learning what you need to know,
• 35:18
  Speaker 1: whether that is in school or in Berkeley. Well, I
• 35:28
  Speaker 1: should point out that Falcon outpost vehicle, it doesn't really
• 35:31
  Speaker 1: have the same capability as either the Chinese, the Russian
• 35:35
  Speaker 1: or the Space Shuttle vehicles that I mentioned.
• 35:37
  Speaker 2: Falcon would be in the in the light class of
• 35:40
  Speaker 2: launch vehicles, whereas the Space Shuttle would be a heavy
• 35:42
  Speaker 2: class launch vehicle. So it's not it's not quite apples
• 35:45
  Speaker 2: to Affle's comparison.
• 35:48
  Speaker 1: However, the right comparison would be Falcon compared to the
• 35:53
  Speaker 1: Pegasus from Overtal Sciences. Falcon is six million, the Pegasus
• 35:56
  Speaker 1: is twenty five million. And the way we've got our
• 36:01
  Speaker 1: prices low, our cost low, is we've really focused on
• 36:05
  Speaker 1: every element of the launch vehicle. There's really no one
• 36:08
  Speaker 1: silver bullet that has been responsible for a substantial portion
• 36:13
  Speaker 1: of the cost savings. It's been really hundreds of small
• 36:16
  Speaker 1: innovations and improvements. And so we've done improvements in the
• 36:19
  Speaker 1: propulsion system, the structure, the abionics, and the launch operations,
• 36:24
  Speaker 1: as well as maintained a very low overhead organization. And
• 36:26
  Speaker 1: when you add up all the things we've done, those
• 36:28
  Speaker 1: areas that allows us to produce the launch vehicle at
• 36:31
  Speaker 1: six million dollars.
• 36:36
  Speaker 2: As far as PayPal, there were a lot.
• 36:40
  Speaker 1: Of back office relationships that we needed to establish and
• 36:43
  Speaker 1: to attach to various heterogeneous data sources. We needed to
• 36:49
  Speaker 1: attach to the credit card system for pricesing credit cards.
• 36:52
  Speaker 1: We needed to attach to the Federal Reserve system for
• 36:56
  Speaker 1: doing electronic funds transfers. We needed to attach to is
• 37:00
  Speaker 1: fraud databases to run fraud checks. That there was a
• 37:05
  Speaker 1: lot that we had to uh, we had to interface with.
• 37:10
  Speaker 2: And and that that that took. That took a while, but.
• 37:16
  Speaker 1: It all came together, I think roughly simultaneously. I mean,
• 37:20
  Speaker 1: developing the software and having it ready for for the
• 37:23
  Speaker 1: general public reasonably coincided with us being able to conclude
• 37:27
  Speaker 1: those deals and interface with the outside vendors and all
• 37:30
  Speaker 1: that took.
• 37:30
  Speaker 2: About a year.
• 37:32
  Speaker 1: I think one thing that's important is to try not
• 37:35
  Speaker 1: to serialize dependencies, so if you can put as many
• 37:38
  Speaker 1: elements in parallel as possible. That a lot of things
• 37:42
  Speaker 1: have a gestation period and there's really nothing you can
• 37:47
  Speaker 1: do to accelerate. I mean, there's it's very hard to
• 37:50
  Speaker 1: accelerate that justation gestation period. So if you can sort
• 37:55
  Speaker 1: of have all those things just dating in parallel, uh,
• 37:58
  Speaker 1: then then that is one way.
• 37:59
  Speaker 2: To substantially accelerate your timeline. I think people tend to
• 38:03
  Speaker 2: serialize things too much. We did do a few.
• 38:08
  Speaker 1: Patents on PA on the PayPal system, although nothing that
• 38:12
  Speaker 1: ever actually mattered. So patents are mostly useful in a
• 38:18
  Speaker 1: defensive situation rather than offensive. It can be very difficult,
• 38:22
  Speaker 1: actually offensive, but prosecute a patent, so.
• 38:29
  Speaker 2: I think.
• 38:29
  Speaker 1: I think in certain industries like pharmaceuticals and so forth,
• 38:32
  Speaker 1: patents can be incredibly important. In software, particularly when you've
• 38:36
  Speaker 1: got a very rapid life cycle, where you know you
• 38:41
  Speaker 1: made sure you've got a patent, but now it's redundant,
• 38:43
  Speaker 1: So who cares? It's less relevant in when you've got
• 38:47
  Speaker 1: a rapid life cycle.
• 38:51
  Speaker 2: Well, I don't you know.
• 38:53
  Speaker 1: I've looked at the various There are a couple of
• 38:55
  Speaker 1: things that I think are pretty bogus. One is space mining.
• 38:58
  Speaker 1: Another is a space solar power. I mean, if you
• 39:01
  Speaker 1: if you calculate how much it costs to bring either
• 39:06
  Speaker 1: the photons from uh space solar power, you know, back
• 39:11
  Speaker 1: to Earth or the raw material.
• 39:13
  Speaker 2: Back to Earth.
• 39:14
  Speaker 1: It's the economics don't make sense if you just can't
• 39:17
  Speaker 1: close the economic case, not not even by it's probably
• 39:19
  Speaker 1: off by three orders magnit.
• 39:22
  Speaker 2: So I think the probably the biggest thing that.
• 39:27
  Speaker 1: Can happen is if if we if we decide to
• 39:29
  Speaker 1: establish a base on the Moon or based on Mars,
• 39:33
  Speaker 1: and particularly if we if we attempt to make it
• 39:35
  Speaker 1: self sustaining, uh self sustaining based self sustaining.
• 39:39
  Speaker 2: Civilization on on the moon of Mars. That that that
• 39:42
  Speaker 2: is enormous.
• 39:43
  Speaker 1: Opportunity on probably the trillion dollar level, because then you
• 39:47
  Speaker 1: get basically interplanetary commerce going on.
• 39:49
  Speaker 2: I think that that's pretty huge.
• 39:54
  Speaker 1: But but it's it's it's you know, it's not going
• 39:57
  Speaker 1: to be space all power, it's not going to be
• 39:59
  Speaker 1: space mining. Think so let's see the government, you know,
• 40:09
  Speaker 1: who knows. Maybe we're being spied upon, I don't know,
• 40:12
  Speaker 1: but certainly.
• 40:14
  Speaker 2: We are.
• 40:15
  Speaker 1: There are some restrictions which are really annoying, such as
• 40:18
  Speaker 1: the fact we're only allowed to employ people who have
• 40:21
  Speaker 1: at least a green card or a citizen of the US.
• 40:23
  Speaker 1: We're not allowed to employ anyone who does not have
• 40:26
  Speaker 1: permanent residence in the US. Basically, if they can't throw
• 40:29
  Speaker 1: you in jail, they won't let you work work on
• 40:31
  Speaker 1: rocket stuff. And we have if we talk to any
• 40:39
  Speaker 1: foreign nationals, we need a technology transfer agreement or something
• 40:43
  Speaker 1: like that from the State Department. So our second launch
• 40:47
  Speaker 1: is actually a non US governmental launch, and it's taken
• 40:51
  Speaker 1: us six months to get the State upon approval just
• 40:54
  Speaker 1: to engage in a contract discussion with them, so that
• 40:57
  Speaker 1: that is problematic.
• 41:04
  Speaker 2: We had several offers actually from a number of different.
• 41:06
  Speaker 1: Entities for PayPal, and in fact, the closer we got
• 41:12
  Speaker 1: to IPO, the more more offers we got. But we
• 41:15
  Speaker 1: always felt that those undervalue the company. And subsequently, when
• 41:19
  Speaker 1: we were in public, I think the public markets kind
• 41:21
  Speaker 1: of indicated the value of the company. So I think
• 41:26
  Speaker 1: that's one of the good things about the public markets
• 41:29
  Speaker 1: is that they're an objective value of companies. When you're
• 41:31
  Speaker 1: a private company, it's very hard to say how much
• 41:34
  Speaker 1: you're worth because you have to basically think of some metric.
• 41:38
  Speaker 1: You know, are you going to go for a multiple
• 41:40
  Speaker 1: of future earnings. Are you going to go off some
• 41:42
  Speaker 1: something of revenue? What are your comparable is going to be?
• 41:45
  Speaker 1: There are all sorts of questions. It's it's really upwor
• 41:48
  Speaker 1: debate what sort of value your company is When you're public,
• 41:51
  Speaker 1: it's it's you know, it's whatever the market says you're
• 41:54
  Speaker 1: you're worth, that's what you're worth.
• 41:57
  Speaker 2: So so yeah, so I think.
• 42:02
  Speaker 1: eBay made a number of office prior to going public
• 42:05
  Speaker 1: that were substantially blow our the value once went post
• 42:09
  Speaker 1: public and that kind of cleared up the disagreement and
• 42:12
  Speaker 1: then we sold them.
• 42:15
  Speaker 2: And what else it was? Actually you had a second
• 42:17
  Speaker 2: part of the question. Yeah, eBay had a.
• 42:30
  Speaker 1: It was initially bill Point, and there was eBay Payments,
• 42:32
  Speaker 1: and and it was really a pretty tough, long running
• 42:36
  Speaker 1: battle of PayPal versus versus eBay's payment system.
• 42:41
  Speaker 2: And it was certainly a very challenging.
• 42:44
  Speaker 1: I mean, I think it was you know, there were
• 42:46
  Speaker 1: times where it felt like we were trying to win
• 42:48
  Speaker 1: the land war in Asia and you know, they kind
• 42:51
  Speaker 1: of set the ground rules or trying to beat Microsoft
• 42:54
  Speaker 1: in their own operating system.
• 42:55
  Speaker 2: It's really really pretty hard.
• 42:57
  Speaker 1: That took a lot of our effort to to actually
• 43:01
  Speaker 1: beat eBay on their own system, and one of the
• 43:05
  Speaker 1: long term risks, certainly for the company was that eBay
• 43:09
  Speaker 1: would one day prevail, and one way to retire that risk, obviously,
• 43:13
  Speaker 1: was to sell to eBay writing software during the summer
• 43:22
  Speaker 1: of ninety five, trying to make useful things happen on
• 43:26
  Speaker 1: the Internet, and I wrote something that allowed you to
• 43:30
  Speaker 1: get maps and directions on the Internet, and.
• 43:32
  Speaker 2: Then something that allowed you to do.
• 43:35
  Speaker 1: Online manipulation of content, kind of a really advanced blogging system.
• 43:41
  Speaker 1: And then we started talking two small newspapers and media
• 43:47
  Speaker 1: companies and so forth, and we started getting some interest.
• 43:51
  Speaker 1: I mean, have time to be like, what's the internet
• 43:54
  Speaker 1: un in Silicon Valley?
• 43:56
  Speaker 2: But then occasionally somebody would.
• 43:57
  Speaker 1: Buy it and they would get a little bit of
• 43:58
  Speaker 1: money from them.
• 44:00
  Speaker 2: And then there was basically only about six of us.
• 44:03
  Speaker 1: There were myself, my brother who I convinced to come
• 44:06
  Speaker 1: down from Canada, and a friend of my mom's so
• 44:11
  Speaker 1: and then and then three salespeople we hired on contingency
• 44:15
  Speaker 1: by putting an ad in the newspaper. But things were
• 44:17
  Speaker 1: pretty tough in the in the early going. I didn't
• 44:21
  Speaker 1: have any money in fact, I had negative money.
• 44:24
  Speaker 2: I had huge student debts so.
• 44:28
  Speaker 1: Well, in fact, I couldn't afford a place to stay
• 44:30
  Speaker 1: and an office, so I rented an office instead because
• 44:34
  Speaker 1: that was that was actually I got a cheaper office
• 44:35
  Speaker 1: than I could get a get a place to stay,
• 44:38
  Speaker 1: and then we I just sort of slept on the
• 44:39
  Speaker 1: futon and showered at the y m.
• 44:40
  Speaker 2: C A on Pagemall and al Camino.
• 44:45
  Speaker 1: That's in the best shape I've ever been, you know,
• 44:49
  Speaker 1: going to shower, workout.
• 44:50
  Speaker 2: And you get to go.
• 44:53
  Speaker 1: And then there wasn't There was an I s P
• 44:55
  Speaker 1: on the floor below us, just like a little tiny
• 44:57
  Speaker 1: I s P and which ruled hole through the floor
• 45:00
  Speaker 1: and connected a null modem cable that gave us our
• 45:06
  Speaker 1: Internet collectivity for like one hundred bucks a month.
• 45:09
  Speaker 2: So, I mean, we had just an absurdly.
• 45:12
  Speaker 1: Tiny bone rate, and we also had, you know, a
• 45:16
  Speaker 1: really tiny revenue stream. But we actually had more revenue
• 45:18
  Speaker 1: than we had expenses. So so when we went and
• 45:23
  Speaker 1: talked to VCS, we can actually well, like I said,
• 45:26
  Speaker 1: it's there's no silver bullet that I can point to
• 45:29
  Speaker 1: as to why the our vehicle is a lot cheaper.
• 45:32
  Speaker 1: We've really focused on reducing the cost across the board.
• 45:38
  Speaker 1: I mean, one thing, our overhead in a thirty person
• 45:40
  Speaker 1: company is, you know, an automaticitude less than it is,
• 45:43
  Speaker 1: and Lockheed're bowing just just for starters. So even if
• 45:47
  Speaker 1: we did everything the same and both the same launch vehicle,
• 45:50
  Speaker 1: we'd be conserveably cheaper. And then every decision we've made
• 45:54
  Speaker 1: has been with consideration to simplicity. And the reason simplicity
• 45:58
  Speaker 1: is because that both improves the reliability as well as
• 46:02
  Speaker 1: it reduces your cost. If you've got fewer components, that's
• 46:05
  Speaker 1: fewer components to go wrong and fewer components to buy.
• 46:09
  Speaker 1: I think there's there's I think a fairly significant innovation
• 46:11
  Speaker 1: in our airframe, which is a semi pressure stabilized monocoque
• 46:17
  Speaker 1: with variable skin thickness and a common bulkhead.
• 46:19
  Speaker 2: If you know what that means, I need a diagram
• 46:23
  Speaker 2: to explain it all.
• 46:24
  Speaker 1: But the net result is that it's very cheap, and
• 46:29
  Speaker 1: it's very mass efficient, and I think easy to test
• 46:32
  Speaker 1: and quite reliable. Our avionic system. To give you ann
• 46:36
  Speaker 1: example our avionic system, we use an ethernet on the
• 46:39
  Speaker 1: vehicle to communicate. They may that may not sound like
• 46:42
  Speaker 1: a great innovation, but it is an orange vehicles. Well,
• 46:45
  Speaker 1: the other orange vehicles communicate in the vehicle by these
• 46:48
  Speaker 1: cereal cables that.
• 46:49
  Speaker 2: Run the entire length of the vehicle.
• 46:51
  Speaker 1: And so you've got these these giant copper bundles as
• 46:54
  Speaker 1: thick as your arm running up and down the vehicle
• 46:56
  Speaker 1: makes it heavy, it makes it expensive.
• 46:58
  Speaker 2: And there's just so this, there's things like that which
• 47:03
  Speaker 2: when you add them all up, it makes a huge difference. No,
• 47:09
  Speaker 2: that's that's a good question. That's a good question. No,
• 47:12
  Speaker 2: I would not. I think space X is not this
• 47:15
  Speaker 2: is advanced entrepreneur.
• 47:19
  Speaker 1: And it may also I can't tell you how many
• 47:22
  Speaker 1: people have said that, you know, the fastest way to
• 47:25
  Speaker 1: turn uh you know, but the fast way to make
• 47:28
  Speaker 1: a small portune in the aerospace industries to start with
• 47:31
  Speaker 1: a large one.
• 47:34
  Speaker 2: So you know, hopefully that doesn't doesn't work out.
• 47:37
  Speaker 1: But I would definitely I think space is a tough
• 47:41
  Speaker 1: one for first time entrepreneurs. You're better off starting with
• 47:47
  Speaker 1: something that that requires low capital, and space is a
• 47:50
  Speaker 1: high capital effort.
• 47:54
  Speaker 2: Sorry, last question,