SpaceX and Tesla nearly ran out of money in 2008

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 17:13

   there there have been no prior example of really a rocket startup succeeding there have been various attempts to do commercial rocket companies and that all failed so um again with spacex starting spacex was uh really from the standpoint of like i think there's like a less than 10 chance of being successful maybe one percent i don't know um but um but if if if a startup doesn't do something to advance uh rocket technology it's definitely not coming from from the big defense contractors is because they just impedance match to the government and the government just wants to do very conventional things.

2. 17:51

   So it's either coming from a startup or it's not happening at all. So like a small chance of success is better than no chance of success. And so, yeah, so SpaceX started that in mid-2002, expecting to fail. Like I said, probably 90% chance of failing. And even like when recruiting people, So I didn't like try to, you know, make out that it would, well, I said, we're probably going to die. But a small chance we might not die.

3. 18:22

   And if, but this is the only way to get people to Mars and advance the state of the art. And, and then I ended up being chief engineer of the rocket, not because I wanted to, but because I couldn't hire anyone who was good. so like none of the good sort of chief engineers would join because it's like this is too risky you're going to die and uh so then i ended up being chief engineer of the rocket and you know the first three flights did fail so it's a bit of a learning exercise there and um fourth one fortunately worked but if the fourth one hadn't worked uh i had no money left and that would have been it would have been curtains so it was a pretty close thing if the fourth launch of falcon not work it would have been just curtains and we would have just been joined the graveyard of prior

4. 19:12

   rocket startups so it was like my estimate of success was not far off we just we made it by the skin of our teeth and tesla was happening sort of simultaneously like 2008 was a rough year because at mid-2008, we're called Summer 2008, the third launch of SpaceX had failed, our third failure in a row. The Tesla financing round had failed, and so Tesla was going bankrupt fast. It was just like, man, this is grim.

5. 19:52

   This is going to be a tale of warning of an exercise in hubris. Probably throughout that period, a lot of people were saying, you know, Elon is a software guy. Why is he working on hardware? Why would he choose to work on this, right? Yeah, 100%. So you can look at the, like, because it's still, you know, the press of that time is still online, you can just search it. And they kept calling me internet guy. So like, internet guy, aka fool, is attempting to build a rocket company.

6. 20:27

   um so um you know um that we got ridiculed quite a lot um and it does sound pretty absurd like internet guy starts rocket company doesn't sound like a recipe for success frankly so i didn't hold it against him i was like yeah you know admittedly it does sound improbable and i agree that it's improbable um but fortunately the fourth launch worked and um and uh and nasa awarded us uh a contract to resupply the space station uh and i think that was like maybe i don't know december 22nd or it was like right before christmas um because even the fourth launch working wasn't enough to succeed you know nasa also needed we also needed a big contract to keep us alive so um so i got i got that call from like the the nasa nasa team and i literally we're rewarding you one of the contracts to resupply the space station i like literally

7. 21:32

   blurted out i love you guys which is not normally you know what they hear um because it's usually pretty you know sober but i was like man this is a company saver and then uh we closed the The Tesla financing round on the last hour of the last day that it was possible, which was 6 p.m. December 24th, 2008. We would have bounced payroll two days after Christmas if that round hadn't closed. So that was a nerve-wracking end of 2008, that's for sure.