SpaceX

On the eve of SpaceX's historic scheduled launch of its first human spaceflight mission — both the first ever by a private company, and the first to take place on American soil in nearly a decade — we tell the incredible story of its rise from ragtag rocket jocks to the most disruptive and advanced force in aerospace today. While much of the Musk spotlight has shone on Tesla in recent years, is SpaceX actually the company that will have the greatest impact on our world's future, and perhaps even other worlds beyond? All of a sudden that idea seems a little less crazy... Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC Links: The Tesla episode: https://www.acquired.fm/episodes/season-3-episode-1teslaThe Ascend Conference: https://www.ascend.events https://www.ascend.events/Carveouts: David: The Last Dance: http://www.espn.com/nba/story/_/id/28973557/the-last-dance-updates-untold-story-michael-jordan-chicago-bullsBen: Michael Mauboussin on the Success Equation: https://youtu.be/1JLfqBsX5LcSources: Elon Musk by Ashlee Vance: https://www.amazon.com/Elon-Musk-SpaceX-Fantastic-Future/dp/006230125Xhttps://timelines.issarice.com/wiki/Timeline_of_SpaceXhttps://www.nasaspaceflight.com/2017/03/spacex-historic-falcon-9-re-flight-ses-10/https://www.reddit.com/r/spacex/wiki/economicshttps://www.space.com/40547-spacex-rocket-evolution.htmlhttps://waitbutwhy.com/2015/08/how-and-why-spacex-will-colonize-mars.htmlhttps://en.wikipedia.org/wiki/SpaceXhttps://en.wikipedia.org/wiki/Elon_Muskhttps://en.wikipedia.org/wiki/Michael_D._Griffinhttps://en.wikipedia.org/wiki/Jim_Cantrellhttps://en.wikipedia.org/wiki/Tom_Muellerhttps://en.wikipedia.org/wiki/Gwynne_Shotwellhttps://en.wikipedia.org/wiki/Commercial_Orbital_Transportation_Serviceshttps://en.wikipedia.org/wiki/Space_Act_Agreementhttps://www.spacex.com/mission/https://venturebeat.com/2008/08/06/private-rocket-company-spacex-gets-20m-from-the-founders-fund/https://en.wikipedia.org/wiki/List_of_Falcon_9_and_Falcon_Heavy_launcheshttps://www.space.com/40547-spacex-rocket-evolution.htmlhttps://www.businessinsider.com/spacex-starlink-spacecraft-pictures-elon-musk-2018-2https://arstechnica.com/science/2018/09/inside-the-eight-desperate-weeks-that-saved-spacex-from-ruin/https://www.nytimes.com/2020/05/22/science/spacex-nasa-launch.htmlhttps://graphics.reuters.com/SPACE-EXPLORATION-SPACEX/010091Q82NF/index.htmlhttps://www.cnbc.com/2019/05/31/elon-musk-spacex-is-now-worth-more-than-tesla.htmlhttps://www.teslarati.com/spacex-wins-launch-contract-egyptian-telecom-company/https://www.teslarati.com/spacex-falcon-heavy-booster-overboard/https://www.youtube.com/watch?v=sYocHwhfFDchttps://oig.nasa.gov/docs/IG-18-016.pdfhttps://everydayastronaut.com/will-the-falcon-9-actually-be-reusable-or-just-refurbish-able-like-the-space-shuttle/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  Dude, you gotta get on Starlink.

• 0:01David Rosenthal?

  I know, I know. Can't wait.

• 0:05Ben Gilbert?

  Fix up this latency in a heartbeat.

• 0:07David Rosenthal?

  Seriously.

• 0:19Ben Gilbert?

  Welcome to season six, episode seven of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert.

• 0:27David Rosenthal?

  I'm David Rosenthal.

• 0:29Ben Gilbert?

  And we are your hosts. 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 the US since then?

• 0:58David Rosenthal?

  So crazy. I remember when that happened, just like, how disappointing that was, which makes what's about to happen so exciting.

• 1:06Ben Gilbert?

  Yeah, because I mean, there was no date set for when it was going to start again. We decided, okay, the shuttle program's coming to the end. You know, it was expensive, it was dangerous, and it had its mishaps. And there's plans for stuff that's coming next, but there wasn't, there was no date, there was no plan, there was no mission. And so now here we are, almost a full, a full 10 years later.

• 1:30David Rosenthal?

  With a date, a plan, and a mission, which we'll get into.

• 1:36Ben Gilbert?

  All right, so listeners, 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, and reuse it. They can do all three of those things simultaneously, where they bring two rockets back down on land and one rocket back down on a boat almost 1,000 miles away. Pretty unbelievable. They're of course led by the controversial genius Elon Musk, or I should say genius entrepreneur. And of course, he has a plan, many would argue a credible plan of getting a million human beings to live on Mars. But until I dove into this mountain of research, I didn't

• 2:20Ben Gilbert?

  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 going to be able to pull any of this off. So what is the business? Who pays them and for what? And what's with all these satellites that they've been launching recently? So today, David and I are going to dive into all of that in full gory detail.

• 2:48David Rosenthal?

  Yeah, we are.

• 2:51Ben Gilbert?

  Well, 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 ProfitWell. 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, because most people do it wrong, how you can raise your prices and still have that be okay for your existing customers, and things like what's the proper way to do a free trial. So if you want to join, you can get access by clicking the link in the show notes or going to glow.fm/acquired and all subscriptions come with a seven day free trial.

• 3:35David Rosenthal?

  And also come with access to our monthly LP calls that we've started doing, which I don't know about you, Ben, but they are super fun.

• 3:42Ben Gilbert?

  Super fun.

• 3:42David Rosenthal?

  We've had a lot of awesome LPs joining us, super great chat, and just like an amazing reminder of the incredible people that listen to this show and are LPs. So I can't wait for the next one.

• 3:55Ben Gilbert?

  Great way to get to know so many of you. 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.

• 4:17David Rosenthal?

  Yep. Your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 4:38Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 5:00David Rosenthal?

  In half! Which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 5:18Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. 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/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. And now, David, over to you to take us into SpaceX.

• 5:50David Rosenthal?

  Wow. Where to even start? Well, the place to start, listeners, if you haven't already, go back and listen to our Tesla episode, which was now a couple of years ago, which is just crazy, man. We got to revisit that because a lifetime has happened to Tesla since we recorded that episode. But in that, we talk obviously a lot about Elon and his background, him as a person, some of the crazy things that happened to him that have turned him and his personality into the unique brew, the unique blend vintage that it is. But

• 6:30David Rosenthal?

  just to, by quick way of background, to catch everyone back up on it. So Elon obviously was born in South Africa. He grew up with a pretty insane family 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. 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 the present. And so he basically, at age 17, hitchhiked his way from South Africa to Canada, lands in Canada, and then

• 7:14David Rosenthal?

  ends up going to the University of Pennsylvania. 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 true Elon fashion, 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.

• 7:41Ben Gilbert?

  This is X.com and then, I'm sorry, before this, this is Zip2 and then X.com, which merged into become PayPal.

• 7:47David Rosenthal?

  Yep. First company Zip2, got ousted as CEO. Second company, X.com, his employees staged a coup. That's the one that you may or may not count. Then the board removed him. Then he came back quickly. Then they merged with PayPal, Confinity.com, which had become PayPal. Then the board removed him again.

• 8:09David Rosenthal?

  So all of this happened-

• 8:10Ben Gilbert?

  Before you start your rocket company, have all these experiences to form you and then see what happens. So let's just play that experiment out.

• 8:17David Rosenthal?

  Exactly. Well, so this unique brew of life experiences for this man who's only 29 years old, he decides after in October of 2000, being ousted for the final time from the newly merged PayPal, that he's had enough. He's done with Silicon Valley. He's hanging up his spurs. He is walking away from it all at age 29 with about $200 billion, some of which, a small amount of which coming from his Zip2 sale earnings and a large amount of that from his equity in PayPal and a silver McLaren F1. Oh, by the way, we didn't talk about this on the Tesla episode.

• 8:58David Rosenthal?

  Did you know, Ben, that he and Peter Thiel were driving said McLaren F1 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." And they end up spinning it around, completely totaling it, being an amazing stroke of fate that they do not die. And then they end up going to the meeting afterwards with the car totally wrecked.

• 9:27Ben Gilbert?

  My God, I knew they totaled it. I had no idea it was with Peter or going to Sequoia. That, uh, that's like almost too, um, thank God they got away with their lives.

• 9:37David Rosenthal?

  I mean, this is Elon we're talking about here. So a lot of this history comes from the great, great Ashley Vance biography of Elon, appropriately titled Elon Musk, because what else are you gonna title a biography like that? And Ashley writes, to take this into SpaceX now, and so at the stage, Ashley writes about what 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.

• 10:23Ben Gilbert?

  No kidding. And how do you think about Elon at this point in time? Like, is he like rich tech guy who 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?

• 10:41David Rosenthal?

  Are you referring to Jeff Bezos?

• 10:43Ben Gilbert?

  No, I'm referring to the litany of people who have started a rocket company, bought one rocket, crashed it and given up. I mean, there's like, people who have started all sorts of companies have then gone and done this as their second act when they, you know, have a god complex.

• 10:59David Rosenthal?

  Yeah.

• 10:59Ben Gilbert?

  And yeah, there's.

• 11:01David Rosenthal?

  It's interesting, you almost always it's, it's, well, always it's men that do this. 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. 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 2000.

• 11:24David Rosenthal?

  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 the aerospace industry is primarily headquartered in the Los Angeles area. And so he's going to move there. He's gonna make connections and he's gonna figure out, 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, with all the team there, including Peter and Max and, and, you know, all the PayPal mafia and, and Ruloff. And so one weekend PayPal is starting to really take off at this point.

• 12:09David Rosenthal?

  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 Kevin Hartz, who was an early angel investor in the company, is interviewed in, 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. So this is like, everybody's like, okay, man, this guy is like gone off his rocker.

• 12:45Ben Gilbert?

  Yeah, and he's not sort of like hiring someone to go do this for him and saying, "Put my name on it." Like, I'm gonna flash way forward to today, but he's the, he's effectively, and maybe even entitled, the chief engineer.

• 12:57David Rosenthal?

  I believe he is entitled, the chief engineer.

• 12:59Ben Gilbert?

  Yeah, like, I think I've heard the NASA director refer to him as chief engineer of SpaceX, Elon Musk. Like, he was a sponge, like, 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. 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 mischaracterizing him. Elon is absolutely not a eccentric billionaire who now decided to get into space because there's nothing else to do. Like, this is sort of the plan all along, and online payments were sort of this brief exit from the highway before

• 13:43Ben Gilbert?

  he got back on to go and, and really run at this big problem.

• 13:46David Rosenthal?

  Yeah, well, it was a way to get, get all of these resources. So when he lands down in LA, he gets hooked up with a nonprofit organization called the Mars Society. And Elon's been percolating on Mars. He talks about, 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 and exploring space, and in particularly 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 wanna make a grand gesture." He's not thinking about a company, he's not thinking about a business, he's thinking

• 14:27David Rosenthal?

  about something to inspire people to get back into space exploration. So, the Mars Society, this is their charter. So, he makes a $100,000 donation to, to the Mars Society, he joins the board, and he starts meeting all of these aerospace people in LA. And, and not just in LA, of course, back up in Silicon Valley, there's NASA's Jet Propulsion Lab in Mountain View. And so Elon, 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.

• 15:07David Rosenthal?

  And he's just kind of like, there's no agenda, but he kind of 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 that they're going to buy a rocket and they're going to put a plant on it. And they're also going to put a robot on it and they're going to shoot this rocket to Mars. And when it lands on Mars, I can't remember if the Mars rover had landed at this point. I think so was the thing.

• 15:52Ben Gilbert?

  Uh, the lander that was, um, the one that I remember was a really big deal that I think found ice.

• 16:02David Rosenthal?

  Yeah, I remember that.

• 16:04Ben Gilbert?

  The Mars Phoenix lander was somewhere like 2008. And so that hadn't happened yet, but I think the rover had.

• 16:13David Rosenthal?

  Yeah, I think the rover was there. Anyway, it wasn't like, I mean, it was kind of crazy that 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. So they were going to put this there and then the idea was that the robot was going to create a greenhouse and then was going to put the plant in the greenhouse and let the plant grow on Mars. And then the robot would have a camera and it would have video feed and kind of like the, you know, the whole earth picture that the first Apollo astronauts took of, of the earth from the moon, that this would be a live video feed of a plant growing on Mars and it would beam it back over the internet onto a dot com site and inspire the people of the world to explore space with this.

• 16:57Ben Gilbert?

  Love it.

• 16:58David Rosenthal?

  Love it. Sounds great.

• 16:59Ben Gilbert?

  So, so the purpose being sort of like inspiration, a little bit of like a philanthropy stunt?

• 17:05David Rosenthal?

  You maybe even like a, um, you know, some kind of performance art project. Not to foreshadow what's going on in Elon's life today, but, um, but yeah, that's kind of, that's kind of the idea. There's one problem though, and nobody 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 zip to his first company. He's probably got about 10 million left over. He thinks he can probably scrape together, maybe 20 million, maybe take some loans out against his PayPal equity. That's, that's his budget for this.

• 17:44Ben Gilbert?

  And David earlier, you had said that number 200 million. That obviously would come later when he did get liquid on those PayPal shares. Now he's only got sort of this 10 to 20 million from their first company.

• 17:56David Rosenthal?

  Right. He's, you know, he could, he will end up being with $200 million in liquidity. But at this moment, uh, it's all tied up in PayPal. So 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.

• 18:13David Rosenthal?

  And, uh, 10, 20 million isn't going to cut it. You're needed more 100, 200 million, $300 million. 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 that the way he was going to make this happen was he was going to get a deal on a rocket. By instead of using a, you know, purpose built, uh, space launching rocket. He was going to 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 kind of the wild west.

• 18:52Ben Gilbert?

  Right. It's like 1989 to 2001.

• 18:56David Rosenthal?

  Yeah. We're, we're now in 2001 and Musk's idea is he's gonna go over there. And he's going to buy an intercontinental ballistic missile. Because the Soviet Union has disintegrated and you can like. Kind of do that in Russia these days.

• 19:14Ben Gilbert?

  Apparently, there's an open market where you can go and buy.

• 19:17David Rosenthal?

  Well, maybe it's not open, but it's, you know, it's gray. It's, it's.

• 19:20Ben Gilbert?

  That's right. Didn't he have some sort of like shady, not shady, but a connection like there was somebody who had to sort of like help him figure this out.

• 19:28David Rosenthal?

  We're about to get into this.

• 19:29Ben Gilbert?

  We should also contextualize here. I think to be able to actually buy one of these in the US through more appropriate channels, like if you could actually get your hands on one, I think it's something like $65 million. Like the, the, the reason to sort of look elsewhere is there's no way you're getting one here for any reasonable amount.

• 19:48David Rosenthal?

  Yep. He thinks he's going to get a deal by buying a missile and converting it into a rocket. This is like, you know, cue the, cue the James Bond, you know, villain theme here. So he goes over there. He, he, he hears, well, he hears from his network that there's a guy who can maybe make this happen. And 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 and 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. So he knows

• 20:32David Rosenthal?

  the Russians pretty well. So he tells the story. One day he's, he's in, he's in Utah. He's driving. He gets a call on his cell phone and he says, this is in Vance's book. This guy in a funny accent said, I really need to talk to you. I am a billionaire. This is Elon, by the way. Elon is not a billionaire at this point. I am going to start a space program. And Musk finally refuses to give Cantrell his cell phone number and Musk made the call from his fax machine line. He's like starting to get paranoid about what this is going to entail to go try and buy a missile. So Musk asked Cantrell to, if there's an airport near where he is and if he could meet the next day. And Cantrell says, my

• 21:16David Rosenthal?

  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. But only behind security because he wants to make sure that these-

• 21:29Ben Gilbert?

  It's actually really smart.

• 21:30David Rosenthal?

  I mean, he's used to dealing with the Russians here.

• 21:33Ben Gilbert?

  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.

• 21:38David Rosenthal?

  Yeah, go to an airport. It's probably pretty empty these days. Coronavirus, you're gonna have a very private meeting.

• 21:45David Rosenthal?

  So Cantrell rents out a conference room in the Delta Lounge at the Salt Lake City Airport.

• 21:50David Rosenthal?

  And they meet and they end up hitting it off. And Cantrell's like, oh, okay. Like, I mean, this guy's something, but he's not totally crazy. And so he says, he agrees. He says, okay, I'll go back to Russia with you 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. 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 one of his best friends from college, Adeo Resi, who started the funded.com and Founder Institute, is not a great entrepreneur in his own right. He says, I'm gonna come with you. Like, he's like, the friends must have like nominated him to, can keep tabs on Elon.

• 22:35David Rosenthal?

  So the three of them, Cantrell, Elon, Resi, 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.

• 22:51Ben Gilbert?

  Wait, Mike Griffin?

• 22:53David Rosenthal?

  Yeah, I'm seeing Ben's face right now. We'll come back to Mike Griffin later in the episode.

• 22:59Ben Gilbert?

  My God, I have Mike Griffin listeners in my notes. I won't tell you where or what his title was, but wow, it's the same Mike Griffin?

• 23:07David Rosenthal?

  Yeah, Ben and I were talking before the show and I was like, all right, there's gonna be a thing. Like, just wait, just wait, listeners, there's gonna be a thing about Mike.

• 23:15Ben Gilbert?

  Wait, so what's Mike's role in this?

• 23:17David Rosenthal?

  So he comes over to just be part of this, what's the right word? Like emissary, entourage, maybe? To just kind of, you know, make introductions and meet with people.

• 23:28Ben Gilbert?

  See how one would go about buying an ICBM from Russia?

• 23:31David Rosenthal?

  Yeah, I mean, you could call it an ICBM. 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 had run Incutel, which is the, it is part of the government, but it's the CIA's kind of venture arm for investing in commercial ventures that are going to be helpful to 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 Incutel. Maybe he's keeping tabs on everything that's going on here. So he comes along and it basically goes as you would expect, listeners. They meet with a bunch of Russians, you know, Cantrell,

• 24:12David Rosenthal?

  and maybe, maybe Mike sets, set up some meetings. And they kind of go like this, you know, 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 Vance talks about one meeting where they do, everybody in the room does vodka shots and the Russians are toasting to America. And that, that probably should set, you know, some, some red flags off there for everybody just in the get go there.

• 24:43David Rosenthal?

  And then, you know, they chat for a while. They're not really talking 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.

• 24:57Ben Gilbert?

  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.

• 25:13David Rosenthal?

  Yep. So he starts getting really frustrated by all these meetings. And finally, 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 want to buy, I want to buy rockets, you know, here's my offer. And he's, he's calculated, he's willing to offer the meeting with one group, this is the last group they meet with, I think has either two or three rockets. He offers them eight million for, for the two of them. And they're like, yeah, how about eight million each?

• 25:43Ben Gilbert?

  Each.

• 25:45David Rosenthal?

  And they, 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

• 25:56Ben Gilbert?

  Oh, it's awful.

• 25:57David Rosenthal?

  Pretty depressing.

• 25:58Ben Gilbert?

  I've been in Moscow in February and it is like, It is like freeze your face off cold.

• 26:03David Rosenthal?

  So it is, it is literally February 2002 when this is happening.

• 26:07Ben Gilbert?

  Wow. Yeah. So let's, let's recap dollars real quick, just so everyone has a, because, because dollars are going to be an important thread through this, through this whole story, not just because this is an expensive endeavor, but because the, 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 170 million from PayPal of post-tax dollars.

• 26:33David Rosenthal?

  Once the acquisition happens, which is not for another five months.

• 26:35Ben Gilbert?

  Which didn't happen yet. So he's got 20 million total now, but you know, he'll, he'll eventually have 170 million. And, and so that, that number that I quoted, buying a, a rocket like this from a US company that manufactures, it's like $65 million. So, you know, he's trying to buy him for eight million for, for, for two of them in Russia. So that, 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 that would have been what it cost him.

• 27:08David Rosenthal?

  And he couldn't, you know, even if he were willing to put all his money into this, he couldn't do the $65 million 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 this stuff like.

• 27:20Ben Gilbert?

  I'm sorry, that, that 65 million that I'm quoting you is literally to buy a rocket from.

• 27:25David Rosenthal?

  Oh, interesting.

• 27:27Ben Gilbert?

  Yes.

• 27:28David Rosenthal?

  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 a launch spot on a rocket. You had to actually buy the rocket.

• 27:37Ben Gilbert?

  Yeah. Who, who, who can you just go and say, hey, I wanna, yeah.

• 27:42David Rosenthal?

  Well, imagine if there were a company that did that.

• 27:45Ben Gilbert?

  And also, I, I take that back. I think such a concept did exist, but I think it would have cost you 150 million to 500 million, quoting some of my numbers that we're going to sort of bust out later in our future cost comparisons.

• 27:59David Rosenthal?

  Wow.

• 28:00Ben Gilbert?

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• 28:14David Rosenthal?

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• 28:28Ben Gilbert?

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• 28:38David Rosenthal?

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• 28:55Ben Gilbert?

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• 29:11David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually, and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 29:28Ben Gilbert?

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• 29:37David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. So, okay, so back to February 2002 in Moscow. They leave the meeting, this Motley Crue. They get on the airplane and they head back to the US on the plane. And Kentrell talks about this. He says,

• 30:08David Rosenthal?

  Whenever you get on a plane in Moscow, particularly in in February, heading back for the 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. And he's just like furiously typing away on his laptop, silent. They can't, you know, figure out what's going on. And about halfway through the flight, he turns to them and he says, hey, guys, I think we can build this rocket ourselves. And then he hands them the laptop. And they look at

• 30:47David Rosenthal?

  it. And they're just like dumbfounded. Elon has this spreadsheet on his laptop. This, I don't know if it was, it must have been Excel, like Google Sheets didn't exist at this point. He's got this Excel doc. And it's like a hyper detailed spec sheet with costs and all the materials needed to build a rocket. Not necessarily a rocket that would get them to Mars, but it's like, you know, it's real. And, and so they're stunned and they say, how did you build this? Well, it turns out Elon had been reading a lot of

• 31:25David Rosenthal?

  Soviet rocket manuals. And he had also met as part of this kind of group of advisors he'd been putting together, he met this guy named Tom Mueller. And Tom had worked at Hughes Aviation. He was, of course, being Howard Hughes back in the day.

• 31:43Ben Gilbert?

  Speaking of billionaires who started rocket companies.

• 31:47David Rosenthal?

  Indeed. And then we've gone to TRW Space. And he was kind of known in the industry as a real savant about engines, like probably the best, most impressive rocket engine engineer in the world. And Musk had gotten in touch with him 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 the spreadsheet. So he was, it was pretty damn good. So they get back to the US and then basically. A whole chain of events gets kicked off that ends up in SpaceX. And tomorrow, an American company launching people into space.

• 32:32Ben Gilbert?

  Yeah, another, just to keep the dollars thread going, I think it was, I can't remember exactly which of the sources it is. We, David and I have 20 or 30 different sources that are in the show notes where you can go and read, read more about this. I want to say this was originally from a SpaceX engineer, but pointed out, if you calculate the cost of goods sold for aerospace grade aluminum alloys, plus some titanium, copper, and carbon fiber on the open commodities market, it's about 2% of what rockets cost. And I want to plant that seed because the, the question in your mind throughout all of this should be, where, why is this expensive? Like, obviously, this is expensive. It's

• 33:14Ben Gilbert?

  almost unfathomably expensive. When, whenever you hear about anything in this industry, contracts awarded, cost of a mission, NASA's budget, which by the way, in the last 20 years has gone from about 1% of our federal budget down to about half a percent. It was as high as 5% in 1969 at the height of the space race. So just interesting thing about that. The, the question in your mind should be-

• 33:36David Rosenthal?

  That's of the US government budget, by the way. These are the numbers-

• 33:39Ben Gilbert?

  Yes, that's correct. That's of the entire federal government, yes. But, so it's immensely expensive, almost to the point where it's, you, you can't even discern between the millions and the billions. And I'm, I'm trying to sort of paint a picture here where 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? And of course, you can't make a rocket just by throwing commodities at a wall. So you're not going to get it all the way down to 2% of what that rocket costs. But 2% 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,

• 34:23Ben Gilbert?

  the actual hard materials are much more than 2% of the final sticker price of, of whatever rolls off the line.

• 34:29David Rosenthal?

  Yeah, the bomb versus the MSRP.

• 34:33David Rosenthal?

  Totally. Well, and this is, you know, Elon, Elon studied physics and under your ad 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, it's a bunch of gas in a tube, right? Like, that's what a rocket is. And so this is what he's putting together in the spreadsheet. So they touched down back in the US and basically at the same time PayPal finally goes public. And right after, so even they were the first, we talked about this with, with Ruloff in our adapting episode with, with, with Ruloff at Sequoia, who was at the time the CFO of PayPal, they broke, you know, they were the one bright

• 35:13David Rosenthal?

  spot in the, in the dot com, you know, the Russian, Russian like dot com winter. The stock pops 55% right after the IPO. 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 gesture. This isn't just a inspirational thing I want to do. I can actually disrupt this industry. I want to build a company. I can take, you know, all of this cost blow that's happened in this industry, use my spreadsheet, use my connections and do this for real. So he gathers up, you know, they, they walk off the plane. He gets Cantrell, he gets Griffin, he gets Muller, the rockets, you know, literally the rocket

• 35:57David Rosenthal?

  scientist and a guy named Chris Thompson, who was an aerospace engineer at Boeing. And he says, let's do this. Let's start a company. Nonprofit is dead. I'm going to start this. I'm going to fund this all myself. PayPal is a liquid public currency. The lockup will be over soon. I can get out, exit my stock and I'm willing to go all in on this. So Almost all in. Almost all in. Greater than half in. Greater than half in. Now, he hasn't yet met JB Straball and gotten introduced to the electric car scene. So at this point, he's, he's thinking all in.

• 36:31David Rosenthal?

  The one person who everybody's in except for for Mike Griffin, he lives on the East Coast. You know, he's the former Rank You Tell 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, I'm rooting for you, but I'm not going to move out to California and and do this. And that ends up being a very good thing for SpaceX that he did not do that, as we will see.

• 36:57Ben Gilbert?

  Like, I'm like, learning in real time for you on this episode. I had, it's a very good thing for SpaceX that this is how it shook out.

• 37:04David Rosenthal?

  Very good thing for SpaceX and the world that he did not do that. Everyone else, though, is in. Cantrell's in for a few months. He ends up leaving a few months later. But in June 2002, they officially incorporate space exploration technologies. And then the very next month, in July 2002, eBay buys PayPal for $1.5 billion. And Elon now doesn't just have a liquid public stock currency. He has $180 million plus in straight up cash that 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 going to 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.

• 37:48David Rosenthal?

  I'm not taking on any outside investors. I'm putting my entire fortune into this. I will fund it all myself.

• 37:54Ben Gilbert?

  Yep.

• 37:54David Rosenthal?

  It's mine. And the super interesting thing is, you know, Bennett, we were talking about this. We were texting about this. All told, over the life of SpaceX, I think Elon has only put in about $100 million into the company versus Bezos at Blue Origin puts in $1 billion a year. And so many other, you know, people that have entered into the space industry have just become money pits.

• 38:20Ben Gilbert?

  That's a good, let's, let's plant that seed. 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, $35 billion valuation today and has over $3 billion invested in it from not

• 38:37David Rosenthal?

  Much of which is secondary.

• 38:38Ben Gilbert?

  Outside of Elon. Oh, interesting. Good point.

• 38:40David Rosenthal?

  Yeah, I think much of which is secondary.

• 38:43Ben Gilbert?

  Okay. Well, the point I want to drive home here is SpaceX was founded and there's 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 going to freaking Mars. Like, we're figuring this Mars thing out and we're going to 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 are an American aerospace manufacturer and

• 39:25Ben Gilbert?

  space transportation services company." It is very, very important to understand SpaceX today is both of those things and they are different. They are a company that makes stuff for aerospace and may well one day run a business on that. 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 I think the missing puzzle piece that sort of comes along that lobbies for SpaceX to do that is not yet in place yet.

• 40:02David Rosenthal?

  Yeah. Well, so, the business plan for this new company, and again, 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 do much better, and he realizes really the hard part about launching things into space is the engine of the rocket. And he has the best rocket engine engineer in the world, Tom Mueller, 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, kind of like, you can imagine the business plan ironically

• 40:47David Rosenthal?

  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.

• 41:02Ben Gilbert?

  Yeah, yeah, horizontally integrated company.

• 41:05David Rosenthal?

  Yeah, exactly, exactly. So the plan is, this is what they're gonna do. They're gonna build the engine and they're gonna start launching in September 2003. It is now July 2001. Yeah, that's, that was some wishful Elon thinking.

• 41:22Ben Gilbert?

  Classic.

• 41:23David Rosenthal?

  Yeah. Classic. It may have been the first, the beginning of the Elon timeline, because in software, you know, you can ship that fast. A little harder in hardware.

• 41:34Ben Gilbert?

  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, about literally how long would, he sort of like builds a Gantt 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 hire would also do that. And so he basically creates this, like, ultra, ultra-compressed Gantt chart that's massively, sort of like, has the Elon multiplier on it, and that's sort of how he expects the work to get done.

• 42:11David Rosenthal?

  Yep, yep. So they decide they're gonna name this first rocket the Falcon 1, after the Millennium Falcon, of course. And since the rocket is named Falcon, and the key is the engine, they're gonna name the engine Merlin, which is a type of, a type of Falcon. Also, I wasn't able to find, I don't know if you were, if this was intentional or not, but the Merlin engine actually has a storied history as a different type of engine, which is the Rolls Royce Merlin engine, which powered all of the, most of the British air fleet during World War II and the Battle of Britain, and was like, storied for being its power

• 42:56David Rosenthal?

  and reliability and, you know, helping the Allies win the war.

• 43:02Ben Gilbert?

  That threw me for an SEO loop, because I was, I was searching for information on the Merlin and kept getting this Rolls Royce thing, and I was like, what the, I thought SpaceX always made their own engines.

• 43:14David Rosenthal?

  Wouldn't that be funny if Rolls Royce made the SpaceX engines?

• 43:18Ben Gilbert?

  That would be the ultimate irony, based on where the company would end up today and their sort of strategy and principles.

• 43:24David Rosenthal?

  I know, I know. 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, a horizontally integrated company. And they pretty quickly find that it's not just Boeing and Lockheed and everybody who is subject to cost bloat and time bloat and project scope bloat in this industry. It's all the contractors all the way down. So Elon starts asking questions of these guys pretty quickly.

• 43:56Ben Gilbert?

  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, like it's turtles all the way down type, type thing. Like there's this crazy recursive loop where, yeah.

• 44:11David Rosenthal?

  It's everywhere. So Elon, of course, starts asking questions and people in this industry aren't really used to questions being asked to them.

• 44:19David Rosenthal?

  And he starts figuring out that some of these components, whether it's, you know, 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 a piece, 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, 1% or less of the cost that, that these contractors are quoting them. So he says, all right, screw it. We're not, just like Tesla, we're not going to take the Detroit approach to this. We're going to vertically integrate. We're going to make 90% plus of this rocket in our own factories.

• 45:03Ben Gilbert?

  Which is wild. I mean SpaceX sort of coyly talks about how raw material rolls in one side of the factory and rockets roll out the other side. And they almost like talk about it like, well, minerals show up on the left side and rockets show. It's not quite that. They do have a network of suppliers. I think the number is 3,000 suppliers and 1,100 that supply them product every week. But the way to think about it is those suppliers are just sort of like way lower level. Like they're more the raw, you know, material. You know, think about sheet metal and wiring rather than fully assembled, you know, motherboards and, you know, fuselages. This is like, it's kind of a crazy undertaking

• 45:48Ben Gilbert?

  because 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 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 specific way that it was done. And that way just involved this wild scattering of subcontractors, each of which had to make their own product profit margin. And so you end up with this stacked like margin, margin, margin, margin. And as someone who we will talk about here shortly brings up in a, in a speech, her quote

• 46:32Ben Gilbert?

  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 aptly that of course this is exponential because every time somebody needs to make their 30% or whatever it is, that's on the previous person's 30% or whatever it is. And I bet it's a lot higher than 30.

• 46:50David Rosenthal?

  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 SpaceX. They were governments, you know, primarily the US government, but also other governments 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 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

• 47:35David Rosenthal?

  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.

• 47:53Ben Gilbert?

  Yeah, it's a great point, David. And I think, you know, it's ambitious, but it still seems silly that this is a company that is both 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 core competencies.

• 48:19David Rosenthal?

  And operating those rockets.

• 48:21Ben Gilbert?

  Right. That's the other thing, is they, yeah, they are the operator of the final product.

• 48:26David Rosenthal?

  Yeah, they vertically integrate everything.

• 48:28Ben Gilbert?

  It's just, you know, it's obviously, it's a 7,000 person company now, but it is just shocking how many core competencies they need to be excellent at.

• 48:38David Rosenthal?

  Yeah. So, okay, so what's the business model for all this? Like, what's the target market? So Elon, you know, he comes from this internet industry, you know, new PayPal, it's a new markets, lots of demand, you know, highly rapidly growing markets, and all the folks that he's 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, and has been for many, many years, that Small satellites are going to take over and there's going to be this big democratization

• 49:23David Rosenthal?

  of the space market, you know, and where whereas it was just governments and big satellite companies that were launching big stuff into space, there's going to be small sats and CubeSats and now like everybody, there's going to be this massive opening of the market, kind of like there was with PCs and cell phones. And that's who SpaceX is going to try and serve.

• 49:45Ben Gilbert?

  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, you know, the really innovative stuff that goes into creating something that, you know, fits between your hands outstretched.

• 50:03David Rosenthal?

  Yeah. And it, it really amazed me doing the research. We've all heard this story about space and small satellites in recent years with the venture funding in the space, but this was the story even back in 2002, 2003. Like it's

• 50:19Ben Gilbert?

  That's true. That's a fair point. This is five years before the iPhone.

• 50:22David Rosenthal?

  Yeah.

• 50:23Ben Gilbert?

  You know, eight, nine years before smartphones had scale. So

• 50:26David Rosenthal?

  People, people were always thinking this and, you know, I think it will materialize in the future, but the reality is it didn't quite materialize for a long time, the big market there. And so at this point SpaceX makes a critical, critical hire that Ben, you were alluding to earlier, a woman named Gwen Shotwell. And Gwen is just an incredible force of nature in every dimension. Today she is the president and COO of SpaceX and runs most of SpaceX at the time, runs most of SpaceX today. At the time she was the first salesperson. And so she had come actually, interestingly,

• 51:03Ben Gilbert?

  Vice President of Business Development, David. Don't call it sales.

• 51:06David Rosenthal?

  Oh, it was sales, which, you know, in Elon's world is a, is a, is a good thing. And so Gwen started in the automotive industry earlier in her career, but then moved into the space industry. And she says, hey, wait a minute, guys, like, So everything around the, the company was architected to sell to this emerging market of small satellites, like the Falcon, 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.

• 51:46Ben Gilbert?

  Yeah, I think it's like 70 feet tall. Does that sound right? It's like, it's not-

• 51:50David Rosenthal?

  I can't recall exactly.

• 51:51Ben Gilbert?

  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 made a joke earlier about, you know, strapping a rocket to a candle, like it's tall, but it's not that tall.

• 52:06David Rosenthal?

  No, I mean, compared to like Saturn V or something like this is, this is just a little bean chute.

• 52:14David Rosenthal?

  And so Gwen says, you know, yeah, like, let's go pursue, you know, try and sell to these small satellites. But honestly, the market, like she knows the market. And she says, it's not there, but I think you guys are, I think she's the one who says this, you guys are missing something. The big players, the governments, 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 rockets and these launch operations that they need. You know, if we can prove to them that we can actually do this, we can get some money out of the big boys.

• 52:57Ben Gilbert?

  And yeah. And, and Gwen importantly spent a decade at, at the aerospace corporation and microcosm. So she sort of like knew the way that this industry did business and sort of knew the way that money flow around, floated around, knew like what the different total addressable markets were. Like, I think Elon probably didn't have a pie chart on his computer of sort of like segments in the TAM for sending stuff to space. Like Gwen lived in that pie chart and-

• 53:30David Rosenthal?

  She was the second tab of the model.

• 53:32Ben Gilbert?

  Yes. And when we were alluding earlier to, of course, my comment on Gwen with the sort of benefits of and cost savings of vertical integration, but also to the sort of dual business model of SpaceX, the sort of owned and operated things that they send up versus the, hey, we're a shipping company. She sort of is the force behind, hey, we're a shipping company and that's going to fund the rest of this operation.

• 53:57David Rosenthal?

  Yeah, like proof of concept of the Falcon 1. 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. But the engineers are like, what are we doing? This is crazy. This is like just showmanship, but, but it works. They get the attention of DC.

• 54:17Ben Gilbert?

  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 it had the SpaceX logo on it.

• 54:27David Rosenthal?

  Yep. So meanwhile, the Tom and the team are working away at building the Merlin and the rocket. And of course, the original, well, so the original goal was to fly in 2003 that gets pushed to 2004. And then finally in 2005, they're ready to go. And Gwen has managed to land not a small satellite deployer as the first customary, but the Department of Defense as a, they're starting to experiment with launching smaller satellites. And so they want to say, they say like, okay, we'll, we'll take a flyer on you guys. We'll put up a small satellite with you guys.

• 55:02Ben Gilbert?

  You've never sent 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, of.

• 55:08David Rosenthal?

  Of your, of your rocket. So, so they do. They believe they're going to launch out of Vandenberg Air Force Base, just north of LA in, in California. But typical bureaucratic red tape. Also because 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. They have to go find another site. So they scour the world. They find an abandoned, not abandoned, but a not currently used space in the Pacific Ocean between Hawaii and Guam and the Kowajalian island, islands, or Quaj, which is part of the Marshall Islands.

• 55:50Ben Gilbert?

  Yeah, I think it's the Kwajalein Atoll.

• 55:52David Rosenthal?

  The Kwajalein Atoll and 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 rocket launch site there.

• 56:02Ben Gilbert?

  Yep. All right. Well, let's, let's talk about this. So the launch site is on Oma Lek Island in the Kwajalein Atoll. And so if you work for SpaceX at this time and you have to go out there, here's how you do it. So you take a five hour flight from LAX to Hawaii, you stay overnight, you catch the 7am flight to the Marshall Islands, which of course makes several stops in that area of the Pacific because you're not, you don't just have a every day 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. Also sadly, a place where we tested lots of weapons in, in World War II, and I'm sure many other times. So then you get to the

• 56:47Ben Gilbert?

  Marshall Islands, you then have another hour long boat ride to actually get to Olamak Island. So 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 changing time zones all over the place just to, to do your job, which is top 0.1% in terms of cognitive requirement to do that job.

• 57:11David Rosenthal?

  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. They initially think they can launch in November 2005. There's a valve problem, the launch gets canceled. It takes them until March of 2006 until they get all systems go again. They ignite the Falcon 1, it takes off, it starts climbing, everybody's going nuts, and about 25 seconds in, it blows up. And remember, it has the Department of Defense, you know, experimental small sat in its bearing, has its payload. That gets blown out of the rocket, ends up falling

• 57:55David Rosenthal?

  through the roof of the building of the launch facility there. Mostly ends up surviving.

• 58:02Ben Gilbert?

  Oh, I didn't realize that.

• 58:02David Rosenthal?

  Yeah, a lot of the rocket ends up getting blown into the ocean. But Elon notes in his postmortem from the event, "It is perhaps worth noting that 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 they're not deterred. It takes them another year to attempt a second launch, March 2007. This time, they make it three minutes into the flight. The first stage of the rocket had separated. The Merlin engine did its job fantastically. The second stage kicks

• 58:44David Rosenthal?

  in, the kestrel, the smaller kestrel engine, and that's going to take the rocket and the payload up into orbit. Everybody's cheering, high-fiving. Then, as it says, as Ashley says in the book, "It starts to wiggle." And this was, I can also imagine, this must have been so demoralizing.

• 59:04Ben Gilbert?

  So, two things I want to point out here. One is, and I remember like thinking about this the first time I watched Apollo 13 when I was a kid, like, they don't know exactly what's going to 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 going to be acting at one point during the journey? 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 it

• 59:43Ben Gilbert?

  was either the fuel or some kind of coolant was like sloshing around, causing it to spin.

• 59:50David Rosenthal?

  It was that everything functioned perfectly as it was going up because the fuel tank was mostly full. But then, when it got to the second stage and the fuel tank was 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, and the air bubble got into the engine and exploded up almost into orbit. God, that just must have been so demoralizing.

• 1:00:24Ben Gilbert?

  Heartbreaking, especially after just having the last year. Yeah.

• 1:00:28David Rosenthal?

  A whole year.

• 1:00:29Ben Gilbert?

  Yeah, I think it's, this is a good place to like, just, just do a all systems go on, on our terminology here. Because listeners, as you know, David and I, neither of us are in the aerospace, but I'd say know enough to be dangerous here. So it's, it's worth just articulating some of the terminology we're using and what are these rockets? So the things that, that's the big main body of the rocket, I'm going to work my way out from the bottom, is called the first stage. And this is where all that liquid fuel is that gets it up, not all the way to orbit, maybe all the way to orbit. It basically gets it off the ground. It gets it through the thick atmosphere of the, the, close to the earth.

• 1:01:10Ben Gilbert?

  And it sets it off on its sort of more horizontal journey to, to start orbiting. And of course, the engines are sort of the, attached to that, or in this case, in the Falcon 1, just the one Merlin engine. So that goes up, and David, you mentioned the stage separation. So the first stage sort of falls back toward earth. Nowadays, it can land, then it couldn't. And, and you know, splashes down somewhere.

• 1:01:35David Rosenthal?

  Just casually dropped that. Yeah, nowadays it can land.

• 1:01:40Ben Gilbert?

  Doesn't it, doesn't it feel barbaric? Like, okay, I was thinking about this the other day. 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. Doesn't that feel barbaric? Like, it was mirrors 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, I'm sorry. It's just wasted? It's just like you can never, it's just trash? Like, it feels like, like you just threw.

• 1:02:11David Rosenthal?

  At the bottom of the ocean, yeah.

• 1:02:13Ben Gilbert?

  Yeah, it feels like I just like finished a La Croix and then threw it directly in a trash can.

• 1:02:18David Rosenthal?

  It's like the, you know that scene in, in Mad Men? I think it's in the first season, maybe, where the Draper family is out on a picnic in a park.

• 1:02:28Ben Gilbert?

  And they just, yes, and they just dump all the trash from the.

• 1:02:31David Rosenthal?

  All the, they pick up the blanket and just kind of shake it and all of it just gets, and then they just walk off like happy family.

• 1:02:38Ben Gilbert?

  I take it back. This is like finishing. Your Nalgene water bottle and then throwing it in the trash. It's like, it's amazing how your perspective changes. But anyway, I digress. So 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 Merlin and then later the, um, what's the current? Remind me the.

• 1:03:08David Rosenthal?

  Oh, uh, Raptor.

• 1:03:10Ben Gilbert?

  Yeah, the Raptor. These are powerful freaking engines. Like if you're going to go try and dock it against something, that's going to create a problem.

• 1:03:16David Rosenthal?

  This is a big fricking baseball bat.

• 1:03:18Ben Gilbert?

  Yeah, yeah. It's the Falcon punch. And so you've got this, uh, you know, smaller stage that has a single, you know, smaller engine on it. So that's the second stage that we're going to 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 a payload that is contained within, I think the right way to say is within a faring.

• 1:03:42David Rosenthal?

  I think so.

• 1:03:42Ben Gilbert?

  Or maybe within farings, but basically the, the faring splits into two. 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. The other configuration is that it could have a capsule on there. 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 my eyes would sort of glaze over, but it's, uh, at least in SpaceX's case, because it's a relatively straightforward design. It's, it's good to just sort of keep it in mind. So you can go, oh, okay. And follow along.

• 1:04:24David Rosenthal?

  Yep, yep. So they were so close. They were so close to actually doing this, being the first private company ever to launch a satellite into orbit. And then right at the last minute, it, uh, it failed. So they're undeterred. In classic Elon fashion, he says, not only are we go for number three, we're go for, so this is the Falcon 1, which was both the first and one engine, one Merlin engine. They had been, Tom Mueller is a genius. He and Elon had been thinking about, this isn't just one, this is a modular system. And you could, you

• 1:05:05David Rosenthal?

  can have multiple of these engines put together and build bigger rockets with the same engines. And so the idea initially was they were going to have the Falcon 1, and then the Falcon 5, which was going to have five Merlin engines, and then the Falcon 9 with nine Merlin engines. Elon says, not only are we undeterred by the second failure, we're gonna go full steam ahead with trial number three, try number three with the Falcon 1. I'm killing the Falcon 5 to green light the Falcon 9, all systems go development on that while we haven't even launched the Falcon 1. Now, there was a big reason why he did that, which we've been building up for the whole episode.

• 1:05:43Ben Gilbert?

  But when we add eight more and an octo web around that engine, it will really work.

• 1:05:48David Rosenthal?

  It will really work.

• 1:05:50Ben Gilbert?

  And to be fair, the first stage did work. So that second launch was a success by some measure, although they never could have delivered whatever payload was, you know, on the second stage and going into space.

• 1:06:01David Rosenthal?

  Yup. So the third try, again, takes them a year to the summer of 2008, when they are finally ready to, to give the third try at the Falcon 1 launch from the island to go. The first attempt on August 2, 2008, 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 going to try again on the same day. They go later on that same day, it all starts working well again, and then there's another failure before the first stage is even finished. And...

• 1:06:38Ben Gilbert?

  Elon only has so much money.

• 1:06:40David Rosenthal?

  I know, I know. It's just like... It's crazy.

• 1:06:44Ben Gilbert?

  So Elon is what, put, 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 piece from Tim Urban here, which is great, which is three or four launches.

• 1:07:01David Rosenthal?

  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 200 from PayPal, right? So like, he's good for it, right? No, he's not, because this is 2008 and two things had just happened. This is summer of 2008. One, Elon has now, summer of 2008, he takes over as CEO of Tesla and he's pumped almost all of the rest of his money into Tesla.

• 1:07:29Ben Gilbert?

  Seventy million.

• 1:07:30David Rosenthal?

  Seventy million. 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. So internally, like, he keeps it cool, head to the company and externally, but internally, he is like freaking out. So what does he do? He calls up his old friends from PayPal, who are now at Founders Fund.

• 1:07:57Ben Gilbert?

  Hey, remember that time we were into McLaren?

• 1:07:59David Rosenthal?

  Yeah. He calls up Peter and Peter's, Peter's partners at Founders Fund and says, yeah, I didn't want to raise outside capital, but I guess if I'm gonna do it from anybody, I'll do it from you guys.

• 1:08:12Ben Gilbert?

  Peter, you replaced me as CEO once, so there's no way you would do it again.

• 1:08:15David Rosenthal?

  Yeah, right.

• 1:08:16Ben Gilbert?

  Well, I don't think that was Peter's choice to replace him at PayPal.

• 1:08:19David Rosenthal?

  No, I don't think it was.

• 1:08:22David Rosenthal?

  And so Founders Fund, in the summer of 2008, invest $20 million 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 1. The very next month, in September 2008, the same month that Lehman Brothers went under, they finally 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, that trusts That Gwen has been able to wrestle up is, I believe, the Malaysian government, I think, to launch a communications satellite.

• 1:09:00Ben Gilbert?

  And that was not till the next one.

• 1:09:02David Rosenthal?

  Yes, well, the Malaysian government didn't even trust them enough that it wasn't going to blow up. So they said, all right, well, like, we'll let you take us up. But on this one, you got to put a dummy payload on there. And like, if this works, then you're going to do another one. And you're going to take our actual satellite up.

• 1:09:17Ben Gilbert?

  Yeah. And revenue for these Falcon one launches was pretty low. It was something like 10, 12 million bucks.

• 1:09:23David Rosenthal?

  Yeah.

• 1:09:24Ben Gilbert?

  Oh, wow. So they, that's even.

• 1:09:25David Rosenthal?

  The initial price was 7 million. I don't know if they'd raised it by this point in time.

• 1:09:30Ben Gilbert?

  Well, they only ever did five launches of the Falcon one. So.

• 1:09:33David Rosenthal?

  They did.

• 1:09:34Ben Gilbert?

  Couldn't have climbed too high.

• 1:09:35David Rosenthal?

  So they finally, exactly, they 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. 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. Not to be fair, he has 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 going to have a really great party tonight. I don't know

• 1:10:19David Rosenthal?

  about you guys. So Elon.

• 1:10:23Ben Gilbert?

  Was he on the quadge? Like, or do you know where?

• 1:10:27David Rosenthal?

  I believe he was there. Yep.

• 1:10:28Ben Gilbert?

  Okay.

• 1:10:29David Rosenthal?

  Because this was it. Like, everything was riding on this. And he had taken out a loan against his SpaceX, or he was about to take out a loan against his SpaceX stock to fund Tesla at this point.

• 1:10:40Ben Gilbert?

  Yeah. I mean, that's, that's a whole nother story. I suppose that's worth telling here, too.

• 1:10:44David Rosenthal?

  Well, we'll get into that in one sec. But the coda on this is that finally, in July 2009, they did do a fifth launch 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 going to be the real business model here, which is the Falcon nine and government contracts.

• 1:11:05Ben Gilbert?

  Yep. And again, the real business model of the space shipping company. We're still very far from the, hey, we, we own 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.

• 1:11:23David Rosenthal?

  We're a shipping company, indeed. So remember a little bit ago when Elon and Gwen put the model of the Falcon Rocket into DC and started, you know, courting favor there? And remember all the way back to that trip to Russia where the guy, Mike Griffin, was along for the ride? Well, guess who's head of NASA at this point?

• 1:11:46Ben Gilbert?

  Mike Griffin.

• 1:11:47David Rosenthal?

  Mike Griffin. Just incredible.

• 1:11:53Ben Gilbert?

  And he was a Bush administration appointee, if I remember right.

• 1:11:56David Rosenthal?

  Indeed, he was. Indeed, he was. And then I believe he resigned amicably when the Obama administration took over.

• 1:12:03Ben Gilbert?

  Yep.

• 1:12:04David Rosenthal?

  So this is right at the end of his tenure, like literally the 11th hour, we're talking here, at the end of December 2008. And through, presumably through Mike and other contacts, Gwen and Elon had found out that NASA was going to bid out a resupply contract, a new resupply contract for the International Space Station. And this is going to be a big, big contract. And NASA was maybe open to a new entrant in the space, potentially taking on this contract.

• 1:12:39Ben Gilbert?

  Yeah. I mean, reflecting back now, understanding the, who the NASA administrator was at the time, makes a lot of sense how incredibly fast SpaceX was able to build and be awarded this contract. I'm sure they went through all the proper review and everything, but that relationship has to help.

• 1:13:01Ben Gilbert?

  I do want to give a little bit of context to listeners on, on sort of what a big shift this was in space policy. Like, if you think about the Apollo missions, like, NASA would design something. It was the NASA engineers and then they would bid out these sort of subcontracts to different people. And like 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, over many more decades than sort of getting compounded, things get more expensive, they're bidding out more and more and more. If you're, you know, Northrop Grumman or Lockheed Martin,

• 1:13:44Ben Gilbert?

  like you then have subcontractors under you and on and on. 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, our statement of work is we need to get this thing, the ISS, and like, we will pay you to do that for us.

• 1:14:05David Rosenthal?

  Whoever can do it cheapest and best.

• 1:14:08Ben Gilbert?

  Yeah, like that's, that's all we're asking here. And that's like a staggering shift in policy that enabled this to actually happen. The nuts and bolts of it are COTS, the Commercial Orbital Transportation Services, that later led to other contracts for both cargo to go to the ISS and people to go to the ISS. But this is a, what they call a space act agreement, which is, it's sort of like a contract where the, you know, NASA's done a ton of these over the years, but this timeframe we're talking about, this 06 to 08 timeframe, is when they really started to use them to say, hey, can, why don't you be a shipping company for us? And we'll, we'll fund you helping to build your UPS

• 1:14:51Ben Gilbert?

  trucks and figure out how to design those. But then you get a big contract for doing the shipping for us.

• 1:14:57David Rosenthal?

  And you may know this more than me. Was, was Mike kind of the architect of this huge change in policy for NASA?

• 1:15:06Ben Gilbert?

  Uh, he was, I don't think the architect, but it was definitely under his watch and a big, a big shift for sort of the industry that he's sort of credited with kicking off.

• 1:15:17David Rosenthal?

  Yeah. I mean, this is, this is so huge and incredibly visionary. I mean, without this change in the way NASA operated, 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 1. So back, remember when Elon canceled the Falcon 5 and said, we're going straight to the Falcon 9. This is what it was all about. They needed the 9 to be able to get up to the ISS and bring enough stuff up there. So this is crazy. Like 2008 is winding down.

• 1:16:00David Rosenthal?

  We're in December 2008. Like Elon is literally running on fumes. Like he's not going to be able to make payroll at either Tesla or SpaceX for like the January 1st, 2009 payroll. On December 23rd, two days before Christmas, they get the news from NASA. They have one, their, their two winners, two companies get the contract, split the contract. SpaceX gets a big part of it. $1.6 billion payment from NASA to fund, I think it was 12 missions, cargo missions up to the ISS. And it's just like game changer. Remember they were charging,

• 1:16:41David Rosenthal?

  you know, $10 million on the order of that for like a space, for a Falcon 1 launch. Um, you know, this is, uh, this is $1.6 billion for 12 missions. Just 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, 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.

• 1:17:16David Rosenthal?

  He's an investor in a company called Everdream that gets, 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 SpaceX, surviving him with SpaceX at this point, like completely set up to transform from these ragtag guys are 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.

• 1:17:48Ben Gilbert?

  Yeah.

• 1:17:48David Rosenthal?

  Completely incredible.

• 1:17:49Ben Gilbert?

  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.

• 1:18:08David Rosenthal?

  Funding secured.

• 1:18:09Ben Gilbert?

  Yeah. I mean, it would be nice if the, 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 there are places where SpaceX definitely puts it all on the line, but they were kind of out of the woods at this point. They didn't have the constant near death experience after this that, 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 to, to suddenly having guaranteed revenue if they could come through on some

• 1:18:49Ben Gilbert?

  promises. So they staffed up aggressively. They got huge and they turned into a grown up company. And of course, you know, they, they, 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, you know, it's a very different company that's still aggressive on vertical integration, that's still, you know, a lot of the same principles, but like they weren't.

• 1:19:19Ben Gilbert?

  On the verge of dying constantly, the way that we described Tesla in that last episode.

• 1:19:24David Rosenthal?

  Yeah, this is the moment when it like, it's all a step change at this moment. And again, like, I think it was was all the way back to Gwen saying like, no, no, we got to go like, this is the market. We got to go after these contracts. And then having Mike as head of NASA and like having this come through.

• 1:19:43David Rosenthal?

  Yeah. So the other thing, so now they got to make the Falcon nine work. But again, because Tom had Mueller designed this modular in a modular fashion, like, they know the Merlin engine works now and the Kestrel second stage engines. It's a lot easier, even like you said, Ben, with stringing together an octo web, which is the the 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 a rocket the size of the Falcon nine. The other thing they have to do, though, is they have to make a capsule to go on top of it. So they're not just taking satellites up. They got to take a spaceship up, now an unmanned spaceship to bring cargo to the ISS, but a spaceship nonetheless. And so they.

• 1:20:27Ben Gilbert?

  That would have poked funny here from it. The in the Wait But Why article, one of the best lines is when he's describing the thing that I did with each component of this, the rocket, he's like, and of course, the thing that sits on top is a spacecraft. Or if you're nine, a spaceship.

• 1:20:47David Rosenthal?

  That's right. Oh, I thought you were going to go with the other part of that post where, you know, of course, these things all look like back to childhood. Yeah, palaces. Yeah. I mean, basically, we're all nine years old, you know, with everything that's happening here.

• 1:21:05Ben Gilbert?

  For sure. All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 1:21:20David Rosenthal?

  Yep, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 1:21:36Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 1:21:51David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Ligora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 1:22:15Ben Gilbert?

  And they recently launched Ligora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective, then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 1:22:34David Rosenthal?

  And Ligora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Ligora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Ligora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 1:23:04Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches 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 ligora.com/acquired and just tell them that Ben and David sent you.

• 1:23:29Ben Gilbert?

  Well, is it worth talking about a little bit of context around the space industry around them at this point?

• 1:23:34David Rosenthal?

  Yeah, go for it.

• 1:23:35Ben Gilbert?

  Yeah, so I alluded earlier that SpaceX has been heavily revenue funded and lots of that by NASA. There's a great publication, which is, the great thing about NASA is it's 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 2018, that has this great diagram of money that flowed to different companies, SpaceX, Boeing, Orbital, Sierra Nevada, others, and what it flowed for, all the different programs, be it commercial crew or shipping people up.

• 1:24:14Ben Gilbert?

  And SpaceX has received $7.7 billion in contracts from NASA for launches, which 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 on the end of every rocket. It'd be impossibly hard. I mean, it would take so much more capital and it would change your priorities. And what SpaceX really 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 on that rocket, which by the way, there's a new piece of technology on every rocket, every single mission they fly is different hardware than the previous one because they're constantly iterating.

• 1:24:59Ben Gilbert?

  Every time they do that, almost every time, save for 10 or so, there's a customer that's paying them money to send that thing up. And so NASA's been responsible for 7.7 billion of that. The other thing that NASA has put in money for, which has been really interesting, is when you mentioned the spaceship, David, which would ultimately be called the Dragon capsule. Developing the sum total, the Falcon 9, which we're about to go into the story of, and the Dragon, that cost about $400 million of NASA's money and about $450 million of SpaceX's money to go and develop that.

• 1:25:41Ben Gilbert?

  And at some point NASA did an internal audit to basically say, well, how much would that have cost us if we didn't sort of bid this out to SpaceX to go and do this? If we had built this the way that we built the space shuttle, how much would that have cost us? And basically what they find is the number's about $4 billion.

• 1:25:58David Rosenthal?

  Wow. So it is 1/10 of the cost.

• 1:26:01Ben Gilbert?

  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.

• 1:26:20David Rosenthal?

  Yeah, it's actually, you know, I hadn't thought about this till down the recording the episode. I suppose you could listen to everything we just said and say, 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 head of 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 a combination of several people, all the folks at SpaceX and Elon, Mike at NASA, lots of other people in the government and the DOD coming together and saying, like, the industry needs to, like, innovation has died and progress has died in this industry. And we need to change the

• 1:27:01David Rosenthal?

  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.

• 1:27:14Ben Gilbert?

  Yeah.

• 1:27:14David Rosenthal?

  And build a real industry.

• 1:27:16Ben Gilbert?

  Yeah, I mean, this is an actual great example of sort of a win-win, where, you know, they're able to enable a company to bootstrap itself by, you know, SpaceX now 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 taxpayer money that's now going to allow this company to generate profits and enterprise value all on their own. Well, it's a win-win because it costs the taxpayers a lot less to get these, these missions done. And I think it's, it's just this really interesting example where, I don't know, who loses here? Probably just the congressman who's, who represented districts where there was a sub-sub-sub-subcontractor and they

• 1:28:00Ben Gilbert?

  were, you know, winning, winning on sort of bureaucracy to be able to win those contracts.

• 1:28:06David Rosenthal?

  Yeah.

• 1:28:08Ben Gilbert?

  Yeah, it's a great example of a growing pie. So this is probably a good time 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. They're a big incumbents, so what the heck? This startup isn't just going to come in and win the 1 point whatever billion dollar contract and everybody else goes home. And you know, that's not how this is going to play out. So what's happening in the industry around them? Well, in the space industry to date, at least for governments, the goal has really been build a really extravagant machine to do one thing where price is basically no

• 1:28:53Ben Gilbert?

  object because either we're trying to win the space race, or we're 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 going to keep going. These things are funded by the military and NASA, and all the stops were pulled out for reliability and performance. And we talked about how it's very subcontractor driven here. So if you were a sub-sub-subcontractor and you could make your thing slightly more reliable or slightly more performant, even if that's not totally necessary for that practical purpose for that mission, you do it anyway to kind of win the bid.

• 1:29:35Ben Gilbert?

  And so you can almost think of these existing space incumbents, like United Launch Alliance, who we'll go into detail on, 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 Intel made much more powerful chips for computers, but notoriously lost in smartphones. But 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, especially early on and having this sort of toy rocket with the Falcon 1, worked under a very different set of requirements, and it ended up building

• 1:30:19Ben Gilbert?

  a completely different system, one that was cheaper and they could iterate on it very quickly, shipping up a different rocket every single time.

• 1:30:26David Rosenthal?

  Especially because they controlled the whole stack.

• 1:30:28Ben Gilbert?

  Right, exactly. But initially, it didn't seem very useful for anything. I don't know for sure, but this feels like it could be a case of disruptive innovation here.

• 1:30:39David Rosenthal?

  Yeah, looking like, I mean, the Falcon 1 definitely looked like a toy to a lot of people in the industry.

• 1:30:44Ben Gilbert?

  Right, absolutely. You don't look at the Falcon 1 and say, well, they're just a few years away from resupplying 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, commercial space sort of developing. So getting back to United Launch Alliance, who I mentioned there, and I think they're important to understand in the context of this story. So Lockheed, Martin, and Boeing had both been longtime government contractors. They built amazing things, to their credit, still build amazing things. And a few examples, you know, Lockheed made that big orange tank on the space shuttle

• 1:31:26Ben Gilbert?

  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, in some ways, the SpaceX rockets aren't as beautiful and don't just sing space to me the way that shuttle design did. They also made the Hubble telescope and the Mars lander, so, you know, the Phoenix, so lots of really storied stuff that they manufactured. Boeing, on the other hand, made everything from the lunar rover back in 1971 to the actual space shuttle orbiter itself, so longtime space companies. So here we are in 2006, Boeing and Lockheed, and I think it's important to understand their motivations, because then you really get the context for what people thought the space industry was.

• 1:32:12Ben Gilbert?

  Boeing and Lockheed had decided that the one real customer that they were both doing work for 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 Delta, Lockheed had the Atlas, you know, these existing rocket programs.

• 1:32:38Ben Gilbert?

  Kind of sounds like a good idea unless you've heard this story before or a story much like it. The first thing I want to tell you is you don't need to look any further than the ULA logo to discover that everything was basically designed by committee. Something where ULA had a massive advantage with all the existing contracts that the two companies had. They actively continued to work on the space shuttle program for another five years after this. They just had years of knowing how the industry worked. But what they didn't see was that the industry was undergoing this massive change. For one, with other potential non-US government customers, there could be this real commercial industry. And that was something that the US had basically lost to nations who could launch stuff cheaper like Russia, China.

• 1:33:21David Rosenthal?

  Russia and China, yeah. China, we haven't talked about China. China was, I think Vance wrote the Elon Musk book in, when did it come out, like 2014, 15 maybe? No, 16? At that point in time, you know, 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, Ben, correct me if I'm wrong, but is a two-horse race between SpaceX and China. And it's crazy.

• 1:33:58Ben Gilbert?

  Yeah, in a lot of ways. And I think Elon certainly looks at it that way. Another thing that I didn't really realize was that there's this great talk linked in the show notes. It's a relatively under viewed video on YouTube of Gwen Shotwell giving a small fireside chat to some industry insiders in 2014. And she points out that the US was competitive in commercial space, sort of in the, up till the 80s or in the 80s, but has basically lost it since then. And that was the case really until, you know, until this reignition of a commercial space industry here. So, long story short, ULA was completely

• 1:34:40Ben Gilbert?

  unsuccessful in capturing a commercial market in the US. You know, if you think about it, it's actually A huge failing on their part because there were tons of commercial satellites starting to go up. You have DirecTV, who sort of owns and operates tons of satellites in order to provide their service. You have intelligence satellites, you have surveillance, you have research concepts, you have startup companies. David, you mentioned these CubeSats. Like, ULA managed to capture basically zero of this because they were focused on winning contracts from the US government. And, you know, there's more to blame than ULA themselves. International traffic and arms regulations in the 90s sort of built up barriers. But

• 1:35:21Ben Gilbert?

  the biggest problem was Boeing and Lockheed Martin 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, you know, if you do, then you are similar to, you know, Elon and Gwen and everyone else who sort of saw this gap and then decided, hey, we're going to go build a frickin' cash cow of a business in the Falcon 9 and we're going to go shoot that gap.

• 1:35:50David Rosenthal?

  Yeah.

• 1:35:51Ben Gilbert?

  Really impressive.

• 1:35:52David Rosenthal?

  Well, Ben, you said, I mentioned a minute ago that I think over the life of SpaceX thus far, they've received, what, just under $8 billion from the government? Now, by our calculation, SpaceX is obviously a private company, but you can tell by their, you know, launches and launch manifests are public. We think based on sticker price for Falcon 9 launches, of which there's now been over 80, right, that they've done?

• 1:36:19Ben Gilbert?

  Yeah.

• 1:36:20David Rosenthal?

  I think over 80.

• 1:36:21Ben Gilbert?

  86 launches and somewhere around 55 on the future manifest.

• 1:36:26David Rosenthal?

  Yep. And something like 22 of those ish are for government and the Dragon program. The rest of it, they've probably made just about that same amount, another $8 billion, give or take, in commercial revenue from, you know, other governments launching satellites, from commercial satellites, from all sorts of stuff.

• 1:36:44Ben Gilbert?

  Yeah, I don't, I don't think it's quite that much. I think it's probably about half that. But if the revenue mix will definitely start to skew toward commercial as we sort of see them fly out their backlog. You know, there's all these committed launches that they have that they haven't launched yet. That, you know, you're right. I don't, I definitely don't think it's more than the US government right now. By the way, private companies, so who the heck knows. But if you just sort of add up the sticker price of, you know, 60 million times the number of, of commercial launches that they've sent up, which are probably, I don't know, 40, 50, 60, somewhere in there. Yeah, you're right. You're in the, the single digit billions.

• 1:37:26David Rosenthal?

  Yeah. So, um, so yeah, it all, you know, will move kind of 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. Like getting this contract, this was the moment that like made the company, getting that initial NASA ISS contract.

• 1:37:48Ben Gilbert?

  Real quick before we move on, because I know I just threw a bunch of shade and I want to, I always want to make sure I like do right by someone rather than just blasting them on the show. ULA has since replaced their CEO. They're actually working with Blue Origin now.

• 1:38:00David Rosenthal?

  That's right.

• 1:38:01Ben Gilbert?

  And designing a new rocket called the Vulcan and hoping to use, or I think they are going to use Blue Origin engines on there. And so Blue is actually commercially selling those engines to, to ULA, which is kind of amazing to think. One more digression on ULA here. I can't help but do this. They, the supplier that they have for the engines on, I think it's the Atlas V, I'll correct myself later if I'm wrong, but their, their main, they're basically their competitor to the Falcon, either Falcon 9 or Falcon 9 Heavy. It uses Russian engines.

• 1:38:37David Rosenthal?

  Oh, interesting.

• 1:38:38Ben Gilbert?

  And this is the main US government contractor for sending up things like intelligent satellites. And the current iteration of that uses Russian engines, of which the Russians have decided for the US, we don't want to keep supplying you those. So they've stopped. Like there's only something like, there's some number in the single digits or teens of, of those engines in country in the US that like.

• 1:39:08Ben Gilbert?

  That ULA can use. And so like, I think it's called the RD180 is the, it's the Atlas V is the, is the rocket. Like, ULA 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. SpaceX is massively undercutting them on price, which we'll talk about here in a moment. And like, the, 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 going to 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, they're a powerhouse and will continue to win contracts for a while,

• 1:39:51Ben Gilbert?

  but, uh, you know, they are certainly SpaceX's number one enemy.

• 1:39:55David Rosenthal?

  Yeah. Indeed. Well, you know, it's disruptive innovation coming to the launch bracket.

• 1:40:02David Rosenthal?

  The, the space shipping market. So it was end of 2008 when SpaceX gets the, um, the contract from NASA for the ISS resupply. Pretty quickly, within 18 months, they have a successful test flight of the Falcon 9, which again, they'd already been working on. And then, uh, so that was June 2010. And then only six months after that, in December 2010, they have a successful test flight of the Falcon 9 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 22nd,

• 1:40:40David Rosenthal?

  2012, the first real Dragon mission reaches the ISS. They do the first of the 12 resupply missions. And this is just incredible. I mean, I remember this happening. Like, a private company has made a, not just a rocket, but an entire spacecraft and operated it and sent it to the ISS. You know, again, like Elon said, um, with the first, uh, with the first successful Falcon 1 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.

• 1:41:16Ben Gilbert?

  Yeah. And a delayer onto that. The reason it's called Dragon is, uh, Elon named it after 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, you're sort of chasing the dragon, um, and saying, look, here it is. I did it.

• 1:41:35David Rosenthal?

  Yeah, and I think the I think the ISS, as they were, they were pulling in the dragon, said something like Houston, we've caught ourselves a dragon here, something like that. We've got a dragon by the tail.

• 1:41:48David Rosenthal?

  Then the next year in 2013, to what we were talking about, about using these, you know, all the technology they built for the government in the commercial sector. In September 2013, the first commercial Falcon 9 launch takes place. They launched several Canadian satellites up into orbit, you know, less, just about a year later. And in, then in 2014, so they complete six Falcon 9 launches in 2014. In 2015, they complete seven Falcon 9 launches, including the first successful test of a new program with NASA for the Crew Dragon, which is what's going to happen on Wednesday.

• 1:42:30David Rosenthal?

  The first step towards what's going to happen here takes place in 2015. And then at the very end of 2015, 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?

• 1:42:48Ben Gilbert?

  Just a holy, holy God moment. I just, it is so unnatural. I remember thinking that when it was happening. It was like this moment of sci fi. Yeah, I was, I was traveling because it was over the holidays. It was like late December.

• 1:43:05David Rosenthal?

  Yeah, it was.

• 1:43:07Ben Gilbert?

  Of 2015.

• 1:43:10David Rosenthal?

  That's right. It was right after we started acquired.

• 1:43:12Ben Gilbert?

  Yeah. And it was, it was on the drone ship. And so.

• 1:43:17David Rosenthal?

  No, it was, first was on land. The drone ship didn't come till later.

• 1:43:20Ben Gilbert?

  First was on land?

• 1:43:21David Rosenthal?

  First was on land. Yep. Yep.

• 1:43:23Ben Gilbert?

  So they had to do the boost back burn to.

• 1:43:26David Rosenthal?

  They were, they had done several attempts. So here's, here's how it goes down. So all the way back in 2011, 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 then drop them in the ocean.

• 1:43:42Ben Gilbert?

  The analogy they use is every time you fly a 747 from New York to London, just throw it away afterwards. Imagine how expensive airline tickets would be if that were the case.

• 1:43:51David Rosenthal?

  So they started working on the technology in 2011 to land rockets. And people think this is impossible, like the laws of physics, people think won't allow it. And so they called the program Grasshopper. And then in March 2013, then Grasshopper, 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 landed their first Grasshopper in 2013. And then Ben, what you might be thinking of in 2014, in one of those Falcon 9 launches, they're like, they're pretty quickly getting this tech into production. They try and land in April 2014, a Falcon 9 rocket on a drone ship. And it falls over.

• 1:44:32Ben Gilbert?

  That one blew up.

• 1:44:33David Rosenthal?

  Yeah, that blows up.

• 1:44:33Ben Gilbert?

  It got really close, though.

• 1:44:35David Rosenthal?

  Got really close, yeah. Then the second attempt, January 2015, that fails. The third attempt fails. It's just like the first, getting that first Falcon 1 up. And then finally, the fourth attempt was, was on land. Because it's much easier to do it on land, on the ocean, like the, you know, it's on the ocean. Like, the ship is bobbing up and down and moving around. They successfully land the first, the first time on, on land in December 2015. Then they have two more fails in the ocean. And then in April 2016, they successfully land the 23rd Falcon 9 launch on a drone ship, followed by a second successful landing.

• 1:45:18Ben Gilbert?

  The "Of course I still love you" drone ship.

• 1:45:21David Rosenthal?

  Yeah.

• 1:45:22Ben Gilbert?

  Yeah, this is, that's right, it was on land. It's, it's interesting thinking about this because the way that SpaceX lands these looks, looks really unnatural. Like, if you, I remember watching 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 100 kilometers above the Earth. I mean, that's a, it's the formal definition of space. Or I think it's the Karmen line. I don't know exactly how to pronounce it, but yeah. 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,

• 1:46:06Ben Gilbert?

  Blue Origins rocket do this. It 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 go back the other direction. Like, these are

• 1:46:41David Rosenthal?

  Oh, wow.

• 1:46:41Ben Gilbert?

  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 in the original Falcon 9. So like their iteration, they've just managed to

• 1:46:54David Rosenthal?

  I think it's, I think it's still the Merlins. The Raptors are the engines for the Starship.

• 1:47:00Ben Gilbert?

  Oh, you're right. Okay, cool. I was referring to the wrong thing. Yes, the Merlins have gotten twice as, as performance. So, anyway, they, they turn just one of the 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 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 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 unbelievable sensors and unbelievable precision over when

• 1:47:44Ben Gilbert?

  they're firing that, that engine at minimum thrust.

• 1:47:47David Rosenthal?

  Yeah. Incredible. So now, of course, the point of all of this, right, is that you're going to reuse the rockets. So in 2017, they have the first successful Falcon 9 reuse in March of 2017. And 2017 was just a banner year for SpaceX. 18 successful launches, no failures, and they landed every single one of them except The few that they were, that was end of the useful life of the rocket where they were planning not to land them.

• 1:48:21Ben Gilbert?

  Yeah, coming out, coming out of 2015, 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 and D stuff actually into production super fast. Like they're, they're, they're flying out their backlog at remarkable pace. Like it is, it's just impressive.

• 1:48:39David Rosenthal?

  Totally. The next year in 2018, they hit their 50th successful Falcon 9 launch. They have 21 total launches in 2018, including the Falcon Heavy, which is an adapted, I mean, folks have probably seen this and watched videos, but like it is amazing. So this is three Falcon 9 rockets wired together for 27 total engines burning.

• 1:49:08David Rosenthal?

  That can bring up, you know, an incredible amount of payload. And these guys, and what they do is all three rockets go up and then they all land.

• 1:49:19Ben Gilbert?

  And is honestly like watching a magic trick. Like

• 1:49:22David Rosenthal?

  It's like a ballet.

• 1:49:24Ben Gilbert?

  Anyone that watched the SpaceX fly Tesla's, 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 actually that one ended up tipping over.

• 1:49:46David Rosenthal?

  That one's a lot harder to do because that one's, it's especially reinforced to be able to hold on to the other two boosters.

• 1:49:54Ben Gilbert?

  Right. Yeah. Which apparently in the Block 5, which is the most recent and I think final version of Falcon 9. Yeah, that they've actually figured out a way to, to sort of fix that problem. And they're going to be able to, I suppose, catch them much more easily out in the drone ship. But

• 1:50:10David Rosenthal?

  Yeah. So that brings us to now, there are a couple of things we're, we're not talking about here that we might mention at the end of the episode. But in Less than 48 hours now. The plan is, uh, one of these Falcon 9s is 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.

• 1:50:37Ben Gilbert?

  It's a very patriotic thing.

• 1:50:39David Rosenthal?

  Yeah.

• 1:50:40Ben Gilbert?

  Like, I know we're a little bit of a US-centric show, but like, my gosh, for a US company to fly, you know, US astronauts up to the ISS is, is, uh, you know, it's compelling. It's cool.

• 1:50:53David Rosenthal?

  Yeah, it is. So this goes back to in September 2014, NASA bid out a $2.6 billion contract to, to do this. This was the point of, you know, 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 SpaceX wins it. So the last year in 2019, a big key step in this is they completed the first autonomous, uh, ISS docking with a Dragon capsule. So it was a crew capsule. There were no people on it. It was just cargo.

• 1:51:30Ben Gilbert?

  It was like a little stuffed animal, I think, that, uh, that then the ISS astronauts went in there and showed and waved to the camera and held up the stuffed animal.

• 1:51:38David Rosenthal?

  That's amazing.

• 1:51:38Ben Gilbert?

  Of a globe, I think.

• 1:51:39David Rosenthal?

  Ah, um, and on Wednesday, May 27th, scheduled to bring US astronauts Bob Benkin and Colonel Doug Hurley up to the ISS.

• 1:51:50Ben Gilbert?

  Yeah. It's, it's, it's, it's astoundingly cool. I mean, it's just, what a time to be alive.

• 1:51:57David Rosenthal?

  Yeah. So the items that people might think about in SpaceX that we haven't dove into here, cause we might talk about a little bit, but there's so much to talk about, obviously, are obviously Starlink, their own small satellite communications, broadband communications internet network that they're developing. Um, the Starship, 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 spacecraft, the Starship, which will eventually go to Mars.

• 1:52:33Ben Gilbert?

  A big effing rocket of some sort. The spaceship, or this is the Starship.

• 1:52:38David Rosenthal?

  The Starship, yeah.

• 1:52:39Ben Gilbert?

  Which I wish was still called the BFR.

• 1:52:41David Rosenthal?

  I know. So cool. They've had a successful engine test for that, so that work is well underway on that. And then there's the little thing called the Boring Company.

• 1:52:51Ben Gilbert?

  Yeah, which I think is something like, like it ended up spinning out and SpaceX is a minority investor along with Elon.

• 1:52:59David Rosenthal?

  Yep. So Elon owns about 90% of the company, I believe, maybe a little less. SpaceX owns 6%. And then there's the employee.

• 1:53:06Ben Gilbert?

  Oh, the employees are the other minority. Yeah.

• 1:53:10David Rosenthal?

  Yeah.

• 1:53:10Ben Gilbert?

  Wow.

• 1:53:12David Rosenthal?

  There we have it. SpaceX as of May 25th, 2020.

• 1:53:20Ben Gilbert?

  Yep. Well, I do think before moving out of history and facts here, because we're sort of ending history and facts with the events that are happening Wednesday, it is worth talking about this particular contract.

• 1:53:37Ben Gilbert?

  Because you, a skeptic could say something like, there's, there's lots of interesting skeptics 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 spent 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. Well, NASA doesn't sole source crap. Like NASA always awards multiple contracts because, like, this stuff is super hard. And the second person, or the second company that, that

• 1:54:17Ben Gilbert?

  got this same contract was Boeing. And Boeing has built a thing to produce, you know, the, it's basically their version of the Dragon called the Starliner. But in December of last year, it launched a test to dock with the ISS and ended up veering off course. And they did manage to get it home, but basically scrubbed the mission in order to do it. And, and Boeing took a $410 million write down on earnings last quarter as they prepare for NASA to potentially ask them to run another full test, do a Another full launch of the exact same thing, you know, which is actually quite telling that for Boeing, that's a $400 million expense because for SpaceX, that would be somewhere between a 60 and $100 million expense.

• 1:55:00David Rosenthal?

  Yeah.

• 1:55:02Ben Gilbert?

  But well, maybe that's not fair because there's more reusability. Anyway, the, the, the point that I want to 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, you know,

• 1:55:19David Rosenthal?

  Better, faster, cheaper.

• 1:55:20Ben Gilbert?

  Cheaper, safer, more reliable. Yeah. And so fingers crossed, everything goes well, but it's, you know, you can throw shade at Elon in whatever way that you want, or at this company in whatever way that you want, but you can't argue with results.

• 1:55:36David Rosenthal?

  Yeah.

• 1:55:40David Rosenthal?

  Should we talk about narratives?

• 1:55:43Ben Gilbert?

  Yeah. Yeah, let's do it.

• 1:55:46Ben Gilbert?

  Well, I think there's at least three vectors that I can think of around Bull and Bear here. One is around Elon himself by people, you know, the, you could call him the savior, or you can call him an egomaniacal sort of work you to the bone, words we can't say on this show. So David, any, any sort of like color that you want to add to narratives on Elon?

• 1:56:15David Rosenthal?

  I mean,

• 1:56:17David Rosenthal?

  what else could we add? It is interesting though, like again, until really until doing, recording this episode now, I hadn't, I'd obviously thought SpaceX and Tesla are in very different situations, but, but I think the Elon factor, the Elon randomness factor in SpaceX is just so much less than in Tesla. You know, probably one because he has Gwen, but then also two, 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. And SpaceX is, so there's just kind of less, even though SpaceX is in many ways in a more politically

• 1:57:02David Rosenthal?

  sensitive position than, than Tesla, like there's just kind of less for one person to mess up right now.

• 1:57:09Ben Gilbert?

  Yeah.

• 1:57:11Ben Gilbert?

  Yeah, I mean, it's also a private company, which is nice because if you could tune out all the noise around Tesla stock and only focus on the more intrinsic stuff, like I think there'd be a lot less narratives, period. 90% less narrative around Tesla. And SpaceX has that. And they also have the benefit of, you know, long, long-term commitments with agencies and governments that can always come through on that cash. And so to the extent that they can deliver, you know, they have guaranteed, stable, predictable revenue. The only thing that's not predictable is, you know, when are you going to crash a stage one into a drone ship and have to take a, you know, multi-dozen, if not $100 million

• 1:57:53Ben Gilbert?

  write-off? But, you know, that's the hard part that comes with the guaranteed contractual revenue. The other narrative that I think is important to highlight, so that one, the Elon one, is one that everyone outside of aerospace talks about. The one that's more internally debated is around reusability. And so a lot of the SpaceX bears will tell you, that's total BS that 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 is able to do this cheaper because

• 1:58:38Ben Gilbert?

  they've done this, performed this miracle of engineering of reusing the rockets," they'll say things like, "Well, you don't know their cost structure. You don't know that it's actually cheaper." And examples exist in the past of the solid rocket boosters, for example, on 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 be refurbished and then those would launch again. So this sort of thing theoretically has happened, but the difference is- With things like that, the order of magnitude, it's probably an order of magnitude more expensive, where they basically cycle out every part, scrub it clean, and then send it back up. And SpaceX is iterating toward, you know, this is the bull case on reusability,

• 1:59:23Ben Gilbert?

  being able to just give a one or a two-day inspection on the rockets and then, and then send them back without replacing anything, and only needing to replace things maybe every 10 times or so that you send it up. And right now, I think the maximum that they've, they've sent a rocket back up, or a stage one back up, has been three times. But, you know, there are very, very real cost savings that, that, that you have here from, you know, not having to produce a, I don't know what the cost of goods sold are on a Falcon 9, but 20, 30 million dollar rocket every single time. And, you know, I think in the coming years, we'll see if SpaceX is actually able to get to the milestone of, you just need to give it a once-over, and 48 hours, you can fly

• 2:00:06Ben Gilbert?

  it again. But there's, there's massive debate over whether the reusability actually provides the type of savings that SpaceX claims.

• 2:00:14David Rosenthal?

  Yeah. Should we move on to what would have happened otherwise?

• 2:00:20Ben Gilbert?

  Yeah, let's do it.

• 2:00:21David Rosenthal?

  Where do you even start here? There's like, there's so many moments where this all could have gone off the rails.

• 2:00:29Ben Gilbert?

  I mean, I think the biggest one is what if, what if NASA hadn't sort of changed their, their tune on how we bid stuff out?

• 2:00:38David Rosenthal?

  Yeah. I mean, I think without that, the small set market just, you know, I think it probably will, like, like we said, will materialize in the future, and it is materializing now. But during the time period that SpaceX needed it to, it just wasn't going to.

• 2:00:53Ben Gilbert?

  Yeah.

• 2:00:55David Rosenthal?

  And this is actually, I think, a big point related to, we didn't really talk about Starlink at all in this episode thus far, but I think one of the reasons... Besides Starlink and providing satellite internet access being a big market and attractive in and of its own, that SpaceX decided to launch this division internally was to stimulate the small sat market and demand for it. Like now they are going to be their own first and best customer for small sats and the the rideshare program that they launched where, you know, when they're sending out big stuff, having having space available for for little sats as well.

• 2:01:37Ben Gilbert?

  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 we've tipped our hand a little bit. So for people who don't know what Starlink is, which is me probably two months ago, and mostly me even a week ago, SpaceX is going to put 1,200 satellites up in low Earth orbit.

• 2:01:54David Rosenthal?

  12,000.

• 2:01:55Ben Gilbert?

  Around the Earth. I'm sorry, 12,000 satellites, low Earth orbit. So way, way, way closer than the DirecTV satellite that needs to be out in geosynchronous, which is, I don't know, it's 22,000 miles away. Like, these things are on the order of 200-ish miles away. So, you know, takes a rocket to get it up there. But, you know, it's, it's, it's not, it's not as far away as, as the old stuff is, or as, as a lot of the fixed geosynchronous stuff. So SpaceX is going to launch these, these 12,000 satellites, and they are all going to have line of sight to each other. And they are all going to be able to provide

• 2:02:37Ben Gilbert?

  broadband internet anywhere on Earth at any time to anyone in a cost effective way. 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 22,000 miles and back. And even at the speed of light, that's still time. And so you're getting, you know, dog crap, slow speeds on, on satellite internet. And if you have a whole bunch of them 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

• 2:03:21Ben Gilbert?

  above you all the time, and they can communicate with each other, you can kind of see how this...

• 2:03:25David Rosenthal?

  This is the Wi-Fi mesh network of satellite broadband.

• 2:03:28Ben Gilbert?

  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 60 at a time and they've done this, I think, three times now. Like, they literally stack them real tight. They jam 60 of them in a fairing in a nose cone of a Falcon 9 and they shoot them up. And they all sort of make a little string in the sky and they go right behind each other. And it works. Like Elon Musk has sent a tweet from Starlink Internet.

• 2:03:56David Rosenthal?

  Oh, no way. I haven't seen that.

• 2:03:58Ben Gilbert?

  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, you know, it's these publicity sense. But like, 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 them up there. It's, you know, to them, the cost, it would cost me $62 million to send something up on a Falcon 9. But, and it would cost the government something like 90 million because they have additional regulatory stuff. But for SpaceX, I don't know what their costs are. Call it 40 million. So it's that sort of big fixed cost investment to get them up there. But they can run a profitable business and we can all, or a lot of people, get their

• 2:04:41Ben Gilbert?

  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 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 model. But when you dip into 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 before that that starts to be meaningful.

• 2:05:11David Rosenthal?

  Yeah. Yeah. I mean, it's like the satellites are already up there.

• 2:05:16Ben Gilbert?

  Yeah, totally. And they've got competitors there, too. Amazon's got Project Kuiper and SoftBank funded a company called OneWeb that's doing it. But

• 2:05:27Ben Gilbert?

  Yeah, it's futuristic stuff that's actually happening now.

• 2:05:31David Rosenthal?

  SpaceX has the, you know, back to the vertical integration, like they have the advantage of, you know, they're, it benefits all sides of the business. A, they're building this business internally. B, they're giving more, they're stimulating more demand for launches, of which they are the primary provider. It's going to lead to more launches, more vertical integration, cost comes down farther, and then the flywheel is just going to keep spinning.

• 2:05:56Ben Gilbert?

  Hundred percent, hundred percent. And you mentioned rideshare too, which is a funny word to use in space, but it's a thing that they put on their website in the last year or so, where by the way, you can put in a credit card to, for them to take a deposit on this, and it's, they will charge your 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, I want to send up something that's 100 kilograms by 2024 and like, quote me. And it is the craziest thing.

• 2:06:32David Rosenthal?

  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.

• 2:06:37Ben Gilbert?

  Absolutely.

• 2:06:39David Rosenthal?

  Do you know if Shopify powers it like Tesla?

• 2:06:42Ben Gilbert?

  I don't know.

• 2:06:43David Rosenthal?

  That would be amazing.

• 2:06:44Ben Gilbert?

  That's a good question.

• 2:06:45David Rosenthal?

  The design is pretty similar between the Tesla website and the SpaceX website.

• 2:06:48Ben Gilbert?

  Yeah.

• 2:06:49David Rosenthal?

  I wonder if it is Shopify.

• 2:06:51Ben Gilbert?

  Yeah, like, just because I don't want to talk about this twice, I'm going to pull forward my playbook thing now about, about the pricing there. It is a massive disruption to the entire aerospace ecosystem that SpaceX has a pricing page. Like, it is the craziest thing. You can go to, there's the rideshare 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 9? It's $62 million. Do you want a Falcon Heavy? It's more expensive, and I don't know what it is, but this has never been an industry with price transparency. And by bringing that,

• 2:07:35Ben Gilbert?

  it is, it is just like, you know, it freaks everyone in the industry out for them to be that transparent.

• 2:07:42David Rosenthal?

  Plus the Uber pool.

• 2:07:45Ben Gilbert?

  Right, right. Okay, so that was what would have happened otherwise. I dipped us into playbook.

• 2:07:54David Rosenthal?

  Let's keep going with it.

• 2:07:55Ben Gilbert?

  If, if, if someone wanted to do something like this, what is the playbook they should run? And what are some of the themes that we noticed here?

• 2:08:02David Rosenthal?

  Oof, oh, man. Well, okay, I'll run through some of the ones I jotted down quickly. One, I started thinking, doing the research about like, what would, what would Hamilton Hellmer say about like, what is SpaceX's, 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 banging the drum on all episode is, they came out with counter positioning, like the, uh, the vertical integration and the whole approach that they've taken, with price transparency and everything to the industry. If UAL and other competitors matched that, it would destroy their whole organizational structure and business model.

• 2:08:47Ben Gilbert?

  Totally.

• 2:08:47David Rosenthal?

  So there's no way they can match it. But I think there's another interesting thing here and I'm not quite sure. 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. 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. You know, and I started thinking about why. And I think it's often when, 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.

• 2:09:30David Rosenthal?

  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 have more profitability and outsource commodity parts.

• 2:09:51David Rosenthal?

  What's interesting here is that you had this industry structure where you had an 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, no, there's actually like an anti-scale economy here. We should be vertically integrated. And like, 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.

• 2:10:31David Rosenthal?

  But it just struck me though, like this was like a major key to how SpaceX was able to disrupt it.

• 2:10:40Ben Gilbert?

  That's interesting because 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? They've, it's

• 2:10:53David Rosenthal?

  Well, they started vertically integrated.

• 2:10:59Ben Gilbert?

  Oh, boy. I think there's actually a great Stratech repost 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. So like CPUs, the OS.

• 2:11:16David Rosenthal?

  And actually interesting, they don't make them, they design them.

• 2:11:20Ben Gilbert?

  That's true.

• 2:11:20David Rosenthal?

  So they

• 2:11:21Ben Gilbert?

  But then they outsource thousands of parts.

• 2:11:23David Rosenthal?

  Right, right. They have in a lot of ways really, I mean, if anything, Apple is kind of like the Detroit on your manufacturer model where like, they design it, they make the core engine, and then they have a ton of suppliers for all the other parts.

• 2:11:38Ben Gilbert?

  Yep. But they have so much power over those suppliers that they're able to squeeze margins on those.

• 2:11:44David Rosenthal?

  Yep.

• 2:11:44Ben Gilbert?

  Whereas there was nobody squeezing margins in aerospace. Everybody was happy to let their downstream partners have fat margins.

• 2:11:51David Rosenthal?

  Yep, yep, yep. Because again, from the Lockheed's, the Boeing's perspectives, the higher the total price, the better, the more money they made because they were just getting a straight percentage.

• 2:12:03Ben Gilbert?

  Yeah, so interesting. It's funny, 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 exorbitant as everyone else for every launch. NASA is willing to pay this because the old world competitors had crazy high cost structures and importantly, no reusability. Hasn't been important yet, but will be. And so what I think their gross margin positive on every launch now on the first try, even without reuse. I'm not totally sure, but that's what, what 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

• 2:12:48Ben Gilbert?

  paid for those contract launches of satellites, etc. 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. If they're actually able to harvest all this margin there, they would have been giving away by vertically integrating. The data point is that Falcon 9 missions, even to the US government with, with the additional 30 million in cost go for under a hundred million dollars. And ULA's contract that was, I can't remember which one, but basically has all of the launches at 400 million. And so like, there's just so much margin in there. So then, then component

• 2:13:33Ben Gilbert?

  five, use the funds from these fat margins to fund their own owned and operated businesses like Starlink or like the Mars stuff that I think we'll talk about here, where basically SpaceX themselves will be able to charge for, for those owned 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.

• 2:14:05David Rosenthal?

  Yeah, it's pretty awesome. Couple of the quick ones I want to hit on. One, we've alluded to Blue Origin a little bit on this, and 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, fun analogy I use is more money, more problems. Like, Bezos is putting a billion dollars a year into Blue Origin.

• 2:14:31Ben Gilbert?

  Bezos is selling a billion dollars in Amazon stock that could be used for

• 2:14:35David Rosenthal?

  Right, for Blue Origin. But certainly a lot more than $100 million 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 I think it's 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 on this show and in startups, right? Is like, sometimes you think

• 2:15:18David Rosenthal?

  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 this success. But it ends up hurting them because like, they're not forced to, they're not forced to build a real business.

• 2:15:34Ben Gilbert?

  Yeah, I hadn't really thought about it in those terms.

• 2:15:40David Rosenthal?

  And then the last, last one, just related to that, you know, man, is Elon across, across SpaceX and Tesla, is he just like, the living embodiment of, you know, the Nassim Taleb, skin in the game?

• 2:15:58David Rosenthal?

  You know, actually, I'm like, this guy, like, absolutely put his money where his mouth is. And you can say, Many things about Elon, but you know, he's been quoted on so many occasions saying like, 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, eh, you know, I'll be fine. I'll still have my McLaren if this goes bankrupt. Like, would they have had the fortitude and he had the fortitude to pull through? Like, I don't know.

• 2:16:36Ben Gilbert?

  I do think so. I think you're reversing the chicken and the egg there, but that's why it's a chicken or the egg thing. The way that I would think about this is like Elon's drive to make this thing a success is the reason, like, it's not any monetary skin in the game. 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.

• 2:17:11David Rosenthal?

  Yeah, but he definitely burned the bridges behind him.

• 2:17:13Ben Gilbert?

  Yes, yes, there is no way for him to, I mean, now there's a way out because there's just, he still owns probably 40 something percent of SpaceX. And there's so much equity value there that, you know, yeah, there's a way out for Tesla purely by Elon getting out of SpaceX.

• 2:17:34David Rosenthal?

  Yep, at this point.

• 2:17:37Ben Gilbert?

  And it's such a good business. I mean, truly like making, making 100 million bucks a pop if you can do that twice a month. I, yeah, especially if you can reuse those rockets.

• 2:17:48David Rosenthal?

  Yeah, I'm sorry, go for it, go for your themes.

• 2:17:52Ben Gilbert?

  Yeah, yeah, yeah. No, I've got a couple of fun ones. So I want to talk about a different type of vertical integration, which is.

• 2:18:02Ben Gilbert?

  SpaceX assembles their rockets horizontally and most other companies assemble their rockets vertically. And as you can imagine, when you lay them on the ground and you build them that way, you don't have to take really expensive, crazy hydraulic machines and move around. You know, you don't have to construct a skyscraper around your rocket. And 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, I think Elon has this interesting quote where he's like, yeah, actually the Russians,

• 2:18:48Ben Gilbert?

  I don't know if it's Elon or Gwynn, but the Russians actually manufacture them on the ground. Most of these US companies actually manufacture them vertically. But the, the number that Gwynn cites is that, she says SpaceX's rocket factory is $0.50 a square foot. And if you vertically integrate your rocket, no pun intended, stand it up and assemble it that way, space ends up effectively costing you $12 to $18 a square foot because you're, you're moving people up and down to build these rockets way the heck up in space. And it's, it's just like, it's just a great 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.

• 2:19:34David Rosenthal?

  Yeah. Man, that's crazy. That's such, that's like, so it's more than an order of magnitude difference in the cost.

• 2:19:42Ben Gilbert?

  Absolutely.

• 2:19:42David Rosenthal?

  And like, why the F wouldn't you do that then?

• 2:19:47Ben Gilbert?

  Absolutely.

• 2:19:49Ben Gilbert?

  It's really amazing. The other one that we talked about is sort of new market needs. So they, they sort of built a, this is in a, this is from the Elon Musk book, but they built a Honda Accord instead of building a Ferrari when everyone else thought only Ferraris were, would, would be wanted. But it turned out there's an emerging market for Accords, 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 CubeSats and things like that up there much faster than we saw with only shipping a Hubble up once a decade.

• 2:20:22David Rosenthal?

  Yep. Well, and it turns out even the people who drive Ferraris or McLarens, you know, they don't want to drive those every day.

• 2:20:32Ben Gilbert?

  Right. And then at some point, you know, Tesla did SpaceX did exactly the same thing Tesla did, which is like, hey, we know how to make Accords really cheap. So now we're also going to make a really cheap Ferrari.

• 2:20:43David Rosenthal?

  Yep.

• 2:20:43Ben Gilbert?

  And sorry, existing Ferrari people, but you're also going to want ours.

• 2:20:48David Rosenthal?

  I was looking at this the other day. What is the Performance Model 3, which granted is still a very expensive car.

• 2:20:56Ben Gilbert?

  It's like a $55,000, $60,000.

• 2:20:59David Rosenthal?

  Yeah, right. Still way too, it's like.

• 2:21:03Ben Gilbert?

  Yeah.

• 2:21:03David Rosenthal?

  Not gonna buy one.

• 2:21:05Ben Gilbert?

  Yeah.

• 2:21:05David Rosenthal?

  But, but the, you know, for, call it, let's say $60,000, you can get zero to 60 time. What it's down like three, below three now, like.

• 2:21:16Ben Gilbert?

  Oh, I don't know, something like that.

• 2:21:17David Rosenthal?

  Yeah. For like, you used to have to spend a couple hundred thousand to get that, you know?

• 2:21:21Ben Gilbert?

  Yep. That's a great point. All right. My last, is this my last? I think it's my last playbook here is customer diversification. So they are not relying 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. But, and the defense, they have these air force contracts, among other things. And then they've got the commercial business with telecom, with media. 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 largely before now. And it's a, it's, it's going to be defensible for them and it's going to help them weather storms in different markets.

• 2:22:05David Rosenthal?

  Yeah. It's interesting. Well, we're going to get to, we'll get to this in grading in a minute. So I'll hold off, but the question is like, okay, so how big is this market going to get? But, all right.

• 2:22:20Ben Gilbert?

  Yes, let's hold for grading.

• 2:22:21David Rosenthal?

  Yep.

• 2:22:22Ben Gilbert?

  Lastly, the thing that I want to point out, I think as of May 2019, Elon owned 54% of SpaceX. And so they, they did just raise something like 550 million since then. But like, holy God, did that guy hold on to equity in his company. He managed to, he is, Elon is a master of many things. You know, he's the chief engineer. He's, you know, he's lots of things. He is a master of, of raising capital.

• 2:22:49David Rosenthal?

  Well, I mean, it's interesting, right? He didn't raise cash. He put his own capital in. But then I think what's interesting is, so we didn't talk about this in history and facts, but after they got the NASA contract and after the successful Falcon 9 and Dragon, after the successful Dragon rendezvous with the ISS, I think there was a lot of pressure internally from employees for the company to go public because 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. And Elon actually wrote a memo, an email to the company with the reasons why he thought like, they should, like, going public isn't as good as you think, you know?

• 2:23:33David Rosenthal?

  And he's lived through all this at Tesla. But in the wake of that, they started doing these regular fundraises. But I believe most, some of the capital may have been primary, but I believe most of it was secondary for employee.

• 2:23:48Ben Gilbert?

  To buy out the employees. Interesting.

• 2:23:50David Rosenthal?

  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.

• 2:24:06Ben Gilbert?

  Right.

• 2:24:07David Rosenthal?

  Yeah. So I actually don't think that the money was raised for the company mostly.

• 2:24:14Ben Gilbert?

  Interesting. Well, that speaks even better to the profile of the business than that, you know, they've been able to, to fund with at least gross margin profit dollars rather than funding the business with, with all new equity capital.

• 2:24:33Ben Gilbert?

  Yeah, I don't think SpaceX is a profitable business, but I do think they're profitable on a unit basis.

• 2:24:39David Rosenthal?

  Well, and I believe Gwen has said they have, they have operated profitably in certain years.

• 2:24:45Ben Gilbert?

  Huh. Wow. I mean, I'm sure they're not now, now that all the R and D is happening in 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 them 90 million bucks from someone else.

• 2:24:59David Rosenthal?

  And they've estimated it's going to take $10 billion in capital to get that all.

• 2:25:03Ben Gilbert?

  Whoa.

• 2:25:04David Rosenthal?

  Built it up.

• 2:25:05Ben Gilbert?

  Crazy. And then the other thing they're, they're spending tons of money on is the R and D for the, the starship.

• 2:25:11David Rosenthal?

  Yep.

• 2:25:11Ben Gilbert?

  So, but yeah, interesting that those are mostly secondaries.

• 2:25:19Ben Gilbert?

  All right. Value creation and value capture. So I'm going to be very brief on this. This is a two-part segment that we usually do. The first part covering of all the value that they created in the world, did they do an effective job of capturing it? People who do a good job of this are Google. People who do a bad job of this are Craigslist. And then the second piece, you know, did they actually do value creation in the world at all? Or did they maybe either destroy value? Like we've talked about on many episodes with soft bank backed companies. Or did they 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,

• 2:26:04Ben Gilbert?

  enabling new markets, accelerating markets, and they're doing a bang up job capturing value from it.

• 2:26:10David Rosenthal?

  Yeah, totally. 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. I mean, I'm sure there's some arguments, but like to my mind, there's no reasonable argument to be made that like SpaceX did not, like having it exist is not good for the world, you know?

• 2:26:38Ben Gilbert?

  Right.

• 2:26:39David Rosenthal?

  All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 2:26:45Ben Gilbert?

  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.

• 2:26:56David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 2:27:16Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system. So teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 2:27:29David Rosenthal?

  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/acquired to get started.

• 2:27:40Ben Gilbert?

  All right, grading. So there's never been a transaction, which is normally what we would grade. If you're new to the show, the way this section works is a big company buys little company, we grade in hindsight, how good of a use of capital was it for a big company to buy a little company? Was it as good as Instagram or as bad as AOL? And, 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+ be, or, you know, what would an F be? And maybe what would a C look like? And in this case, because I don't think we're talking about IPO-ing, or, you know, somebody buying them, I think we're basically just going to talk about what does an end state look like for this company in each of these scenarios?

• 2:28:25Ben Gilbert?

  And David, you asked a question earlier, which I wish I could reach through Zoom and slap you for, which is, well, really, come on, how big is the market?

• 2:28:34David Rosenthal?

  Ben, it's called foreshadowing.

• 2:28:36Ben Gilbert?

  Like, sure, we could talk about a market for how many of the people without broadband would pay for broadband. And sure, we could talk about both the commercial and the government markets for launching satellites. But how big is the entire Mars economy going to be in 2,300? You know, like, there is some future where the, what we're talking about here is the GDP of Mars. And the GDP of Mars with a productive capacity of a million people on it. And I know I sound like a nut job for throwing that out, but like, that is Elon

• 2:29:19Ben Gilbert?

  Musk's A+ case here, is like, that's the whole goal of this thing.

• 2:29:24David Rosenthal?

  Yeah, yeah. Well, so, okay, is that, do you want to say more, or do you want me to jump in?

• 2:29:32Ben Gilbert?

  I'm painting, that's the A+ here. Like, it is nothing shy of, we figure out a multi-step process to get people to Mars reliably, cheaply, safely, and build a society and economy there.

• 2:29:43David Rosenthal?

  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 provide a

• 2:29:54David Rosenthal?

  A timeframe, a time horizon of like five years.

• 2:29:57Ben Gilbert?

  That's fair.

• 2:29:58David Rosenthal?

  So the interesting thing about SpaceX versus, I think, a lot of other new age space companies, not all of them by any means, but certainly there have been 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 planetary resources, right? Or like, you know, gas stations in space, mining asteroids.

• 2:30:28David Rosenthal?

  The problem with those companies was, it was, it was a, it was a binary. Yeah, we get to that A plus in some far future state, there's nothing along the way. What's amazing that Elon and SpaceX have done is they've stair stepped up to it. It's like, oh, well, okay, first we're going to become a, you know, we're going to build rockets and then we're going to become essentially a space shipping company. Well, and then we're going to be a satellite company and provide internet satellite broadband. Well, then we're going to spin off the boring company because actually if we're going to be on Mars, like we need tunnels to live on Mars, so we're going to need that anyway. And actually that's useful on Earth. Okay, then we're going to supply the ISS and we're going to do, we're going to do the Dragon

• 2:31:11David Rosenthal?

  Program with NASA. And it's like every step along, like you can hit an A plus in each kind of five year time horizon.

• 2:31:18Ben Gilbert?

  Yeah, that's a fair point. I also shouldn't have said 2,300. I said that because 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, there are, there are potentially incremental A pluses. I don't know what the, 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 business case for like, just operating Starlink is a really good business to be in and might be a $30 billion enterprise value thing on its own. I don't know if that's true. I suspect it's not, but.

• 2:31:56David Rosenthal?

  Well, we, what they might be, I mean, it might be more. We know that they expect to put $10 billion worth of CapEx into it. Both from, that's CapEx funded by cash flow from other projects within SpaceX. They have raised a lot of the primary capital that they've raised recently has been for Starlink. So.

• 2:32:20David Rosenthal?

  I don't know. I mean, like, would you, would it be reasonable to put $10 billion of CapEx into something if you didn't think you could generate 30-plus billion in, in revenue out of it?

• 2:32:31Ben Gilbert?

  Yeah, that's a good point. I haven't seen the pitch deck, but I'm sure it says something like that.

• 2:32:35David Rosenthal?

  Yeah.

• 2:32:38Ben Gilbert?

  Not to mention, you know, they'll, they'll continue to, um, they'll continue to sort of pull away, I think, in the launch market. And, and, um, I mean Falcon 9 is just a workhorse 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 Starship humming, if they can actually take up to a month, there's, there's a, you know, they'll do, what is, what's 60 million times,

• 2:33:13Ben Gilbert?

  times 24 is 1.4 billion a year in revenue just from the, um, the Falcon 9 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 do it that way. But, um, yeah, it's good business.

• 2:33:35David Rosenthal?

  All right. Should we move to the F case?

• 2:33:37Ben Gilbert?

  F. Yeah. I mean,

• 2:33:44Ben Gilbert?

  there's some F cases that I don't want to say, so I'm not going to.

• 2:33:51Ben Gilbert?

  But one would be that factors outside of SpaceX's control cause more than one launch to, to go poorly, or in fact, an important launch to go poorly, uh, and, and basically make it so that they don't get orders anymore. Um, this business is incredibly brand dependent in a way that, um, other businesses that are not this high risk are not. And, uh, I think it would be very, uh, their revenue could go to zero much more easily than, than other businesses because of that risk factor.

• 2:34:28David Rosenthal?

  Yeah.

• 2:34:30David Rosenthal?

  It's interesting, though. I mean, at the same time, that risk factor, well, because 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. And in fact, there have been terrible, you know, accidents in the history, you know, of the industry made by governments.

• 2:34:53Ben Gilbert?

  Yeah, but we, I mean, we canceled the shuttle program.

• 2:34:56David Rosenthal?

  Right. But was that, that wasn't because of the Columbia, was it?

• 2:35:02Ben Gilbert?

  I don't know for sure. It feels like a compounding factor, though, that it was both expensive and unsafe.

• 2:35:06David Rosenthal?

  Yeah. Yeah, for sure. Well, hopefully, we don't face that particular case. But, but it's a good point. I mean, like, 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. And so there might be all sorts of unforeseen factors that pop up here.

• 2:35:27Ben Gilbert?

  Totally. Yeah, you could have governmental problems. I mean, you could have problems where foreign governments aren't able to do business with American companies. I mean, the risk factors that would go on this company's X1 are just at such a bigger scale than you would ever see in most, for most companies.

• 2:35:43David Rosenthal?

  Yeah. Well, so here's one. I mean, I guess this is a sort of a F scenario. Well, I think kind of is an interesting lens through which to look through grading 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 is, what does that actually mean? Like, there's a lot of questions they're gonna have to get figured out. Like, is SpaceX, like, the government of Mars?

• 2:36:16Ben Gilbert?

  I was wondering this, too.

• 2:36:18David Rosenthal?

  Like, is this a company? Or is this a country? Or is this like, we're starting to sound like pretty, pretty sci-fi dystopian future here.

• 2:36:26Ben Gilbert?

  I mean,

• 2:36:29Ben Gilbert?

  Like if Columbus makes it to the US, does the Dutch East India Company own North America?

• 2:36:36David Rosenthal?

  Right.

• 2:36:37Ben Gilbert?

  Or does like Columbus, the Spanish government, you know?

• 2:36:40David Rosenthal?

  It's a good question.

• 2:36:43Ben Gilbert?

  Yeah. Over time, whoever has the army that's able to conquer it probably owns it.

• 2:36:51David Rosenthal?

  Yeah.

• 2:36:51Ben Gilbert?

  I mean, just looking at history as a, as a guide.

• 2:36:54David Rosenthal?

  Yeah.

• 2:36:57David Rosenthal?

  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 300 plus years since there was a new world. You know, if this happens, there will be a new world and like, well, who owns that world?

• 2:37:18Ben Gilbert?

  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 [email protected].

• 2:37:32Ben Gilbert?

  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, and certainly lots of sci-fi geeks. So, um, yeah, I think we'd love to, to think more about this with, uh, with folks.

• 2:37:46David Rosenthal?

  Yeah. I suspect this won't be our last, uh, space X episode.

• 2:37:52Ben Gilbert?

  Yeah. Or space episode broadly.

• 2:37:54David Rosenthal?

  Yeah, totally.

• 2:37:57Ben Gilbert?

  All right, carve outs?

• 2:37:58David Rosenthal?

  Let's do it. It's been a while since we've had a carve out.

• 2:38:02Ben Gilbert?

  Yeah.

• 2:38:02David Rosenthal?

  So much good stuff been going on. I think among much great content I've been consuming during quarantine from books to both fiction and nonfiction to, um, uh, podcasts, to, uh, um, to TV 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?

• 2:38:28Ben Gilbert?

  I haven't yet.

• 2:38:29David Rosenthal?

  Oh, it's so good, so good. Just like, especially like, you know, growing up, watching, you know, I remember being a kid and watching a lot of those games on TV, especially the 98 run for the Bulls. 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. So, so great. I enjoyed every single second of it.

• 2:38:59Ben Gilbert?

  I'm on episode three. I'm, I'm, I already, all the best parts are spoiled because I saw all the memes, but I am still looking forward to finish the whole thing.

• 2:39:06David Rosenthal?

  The memes are just, the Isaiah Thomas meme, I met all the, I met all the criteria.

• 2:39:12Ben Gilbert?

  I don't know why. Yeah. Why wasn't?

• 2:39:15David Rosenthal?

  Was not selected. So great.

• 2:39:17Ben Gilbert?

  That's right. So good. Um, 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 five year old talk by Michael Malbison. Um, this one at Google, uh, for his, I think book tour, or at least 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 games of skill and games of luck and every, 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

• 2:39:58Ben Gilbert?

  of what's more skill based and what's more luck based. And doing this really analytical and theoretical analysis of it that is just a privilege to watch because he uncovers weird paradoxes like this one. The more skill an activity requires, the more luck will play a role in the outcome.

• 2:40:21David Rosenthal?

  Yeah. What's that? The, the paradox of skill, right?

• 2:40:25Ben Gilbert?

  And it's so interesting. And like, if you're interested in, if you're a sports fan, or if you're an investor, or if you compete in anything at the highest level, it is wildly clarifying to watch this and understand sort of what game you're in. And I can't recommend it enough.

• 2:40:44David Rosenthal?

  So good. And you wrote a book about this, right?

• 2:40:48Ben Gilbert?

  Same title.

• 2:40:48David Rosenthal?

  Yeah, and with the same title. And yeah, I think it was, I should go back and reread that, or at least re-watch the video. I remember it being fantastic.

• 2:40:58Ben Gilbert?

  It's awesome. It's awesome. Well, before, before our usual sort of wrap up here, we have one more kind of fun announcement. And that is that David and I are going to be speaking at an aerospace industry conference in November called ASCEND. That's something that, you know, obviously, based on both of us getting to go deep on the research here, I'd call ourselves aerospace novices, but, but curious and love diving into this stuff. And, and we were fortunate enough to get to attend and, and do some talks at ASCEND.

• 2:41:39Ben Gilbert?

  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, getting into a space adjacent industry, ASCEND should be a great event. Hopefully, we'll get to do it in person. But folks should check it out. And we'll put a link in the show notes if, if that tickles your fancy.

• 2:42:01David Rosenthal?

  I can't wait for it. Really hope it'll be in person. It'll be such a great, you know, in many ways, I think this time has, for us, it acquired us personally, and for many of our listeners too, you know, forced us to grow and obviously adapt. But, you know, folks may know, we, we used to do all of our episodes with guests in person. We would fly to go see our guests. And obviously, we haven't been doing that now, but, 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, to hope that happens in person, be there together, and, and just have our community together.

• 2:42:39Ben Gilbert?

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

• 2:43:18David Rosenthal?

  Yeah.

• 2:43:19Ben Gilbert?

  So, all right, that's Ascend. Check it out, ascend/events. If you aren't subscribed, and you're new to the show, and you like what you hear, you totally should. You can subscribe to us in any, any podcast client, or we are now sending out new episodes via email. And so you can subscribe to that on our website at acquired.fm, either in the footer or in the top right-hand corner there. And that way, we can, we can shoot your note when we post something new. If you want to become a limited partner, subscribing gets you access to our bonus show, and as mentioned, the LP calls, where we get to interact with all of you, which will be super fun. And to listen, you can click the link in the

• 2:43:59Ben Gilbert?

  show notes, or go to glow.fm/acquired. And all new listeners get a seven-day free trial. If you just want to hang out and chat, you should join the Slack. We've got over 4,000 people in there talking about different topics of company building, news of the day, acquisitions, and discussing previous episodes. So I'm sure we'll be chatting in there after we drop this episode. With that, we will see you next time.

• 2:44:24David Rosenthal?

  We'll see you next time.