SpaceX & Tesla: you would be hard pressed
to find two companies that are more popular today. And yet, in the not too distant past both
companies were basically unknown and were in fact simultaneously on the verge of bankruptcy. Today we’ll learn how Elon Musk did what
no other American CEO had ever done before: he created and then rescued two companies
at the same time and brought them both to multi-billion dollar valuations. This video is brought to you by Audible and
the story presented in it is just one chapter of Elon Musk’s awesome biography, which
you can listen to for free as part of your 30-day free trial if you register with the
link in the description. In the early 2000s Elon Musk achieved what
any entrepreneur would dream of achieving: he successfully sold his company for over
a billion dollars. He personally received $165 million, and now
this is where most people would call it quits, but for Elon this was just the beginning. He wanted to change the world for the better,
and one of his ideas was to send a greenhouse to Mars in order to boost public interest
in space exploration and hopefully increase NASA’s budget. The idea was outlandishly ambitious, especially
because Elon wanted to spend no more than $20 million on it. Now at the time, sending just 500 pounds to
orbit could easily cost upwards of $30 million, but Elon had a plan. He travelled to Russia, where he tried to
buy refurbished Intercontinental Ballistic Missiles. But the lowest price the Russians gave him
was $8 million a piece, about 50% above his budget for the rocket itself. On the way back from Moscow, Elon did some
back-of-the-napkin calculations: he figured out that the raw materials used in the making
of a rocket were only about 3% of the final sales price. Instantly, Elon knew what he had to do: if
he wanted to send anything to Mars, he’d have to build himself a vertically-integrated
rocket company. To that end, he read several books on rocketry
from the Cold War and in June 2002 he incorporated Space Exploration Technologies, or SpaceX
for short. He then set about recruiting the right people
who could make his vision a reality: his ideal candidate was young, single, educated and
ready to give up his social life for SpaceX. Elon’s recruitment strategy was very straightforward:
he’d basically call up anyone fitting that profile, from fresh aerospace graduates to
the rising stars in Boeing and Lockheed Martin. At first people thought Elon was making pranks,
but within a year he had assembled some of the brightest engineers in America. Together they would design almost everything
for SpaceX: from the engines and rocket bodies to even smallest details, like the circuitry. In many cases, the engineers could build stronger
and more lightweight components at just a fraction of the regular price. These components would be used to build the
Merlin engine, which in turn would power Elon’s first rocket, the Falcon 1. Development was far from smooth, of course,
but nevertheless progress was being made. But then, Elon decided to up the ante. In early 2004 he participated in the funding
round of a new electric car company called Tesla. Elon personally invested a little over $6
million and in return became the chairman of the company’s board. Right off the bat Elon began applying his
experience from SpaceX at Tesla. The company’s logo, for example, was created
by the same people that made the logo for SpaceX. And of course, Elon was quick to use the same
aggressive hiring strategy he used to assemble the SpaceX team. This time, however, instead of poaching employees
from Boeing, he was hiring from Apple. Before long, the Tesla team was working on
their first electric car, the Tesla Roadster. Back at SpaceX, engineers were clocking in
60-hour workweeks, while Elon was promising very ambitious timelines. In fact, his original estimate was to launch
the Falcon 1 in November 2003, just 18 months after the company was founded. Of course, that estimate got pushed back,
and the Falcon 1 wouldn’t lift off until March 2006, when it spent a total of 41 seconds
in the air before crashing down violently. Like for SpaceX, 2006 was a big year for Tesla. In July, the Tesla Roadster made its first
official appearance and recorded 100 pre-orders in its first day. But, like with the Falcon 1, the actual production
wasn’t going very well. Tesla’s CEO at the time was Martin Eberhard,
and like Elon he was promising unrealistic timeframes. At first, the idea was to deliver the Roadster
in early 2007, but an escalating series of production issues pushed the release date
farther and farther away. In the end, Martin’s mismanagement of the
Roadster project got him ousted from the very company he had founded, leaving Elon in charge
of everything. With full responsibility over both companies,
the stress was starting to pile up. Elon witnessed the second failure of the Falcon
1 rocket, which didn’t complete its only 2007 flight. At Tesla, Elon struggled fixing the mess left
behind by Eberhard, and in fact, the Roadster’s production would not begin until March 2008. But then, things got worse: in August, Elon
launched his third Falcon 1, which never made it to orbit and then just one month later
his wife publicly announced their divorce. Both of Elon’s companies were struggling
to make a viable product and were running out of money fast. In fact, by late October Tesla had only $9
million left to fund the entire company. Salaries were being delayed and Elon was faced
with a choice. He had already spent $70 million on Tesla
and $100 million on SpaceX. With what little he had left, Elon had to
choose whether to fund and secure the future of one company or to risk everything and gamble
on saving both. Fate gave Elon little time to think: the fourth
and potentially final flight of the Falcon 1 was approaching. On September 28th, Elon got ready for his
last chance to survive. He stood in the SpaceX control center in LA
and waited in silence. Then, the rocket took off, and the center
burst out in ecstatic applause. SpaceX had finally delivered a working product:
the Falcon 1 became the first privately-developed rocket to go into orbit around Earth. But Elon wasn’t in the clear just yet: a
working product would mean nothing if the company behind it went bankrupt. In a frantic scramble, Elon had to figure
out funding solutions for both his companies before the end of 2008, and the timing couldn’t
have been worse. One of the largest American banks, Lehman
Brothers, had collapsed and the global economy was heading towards disaster. In the midst of this, Elon was raising all
the personal funds he could to save Tesla: he liquidated his few remaining assets and
even got his cousins to pitch in. But getting investors on board doesn’t happen
overnight, and December was creeping in. Elon had managed to scrape together $20 million
himself, another $20 million from various investors and $50 from the German car company
Daimler. Days before Christmas, it seemed as if only
Tesla was going to make it, but then on December 23 Elon received a very unexpected call: NASA
had awarded SpaceX with a $1.6 billion contract to resupply the International Space Station. Then, on Christmas Eve, the Tesla deal went
through. Elon had successfully saved both companies
from bankruptcy. In later interviews, he’d recall these final
days in December in painful detail: he’d admit that this was the closest he had ever
gotten to a nervous breakdown and honestly, any lesser man would’ve outright given up. So regardless of the struggles Elon might
be facing today, it’s worth knowing that ten years ago he overcame the impossible. Now, this story is just a brief chapter in
the journey of Elon Musk. If you’d like to read the whole thing, you
should check out Elon Musk’s biography, which this video was based on and which you
can listen to for free as part of your 30-day free trial of Audible. Their collection of audiobooks is the biggest
one on Earth and you can gain access to it by registering for a free trial of Audible
at audible.com/businesscasual. You can find the link in the description and
if you wanna get there even faster you can text businesscasual to 500500 to get started. In any case, thanks a lot for watching and
huge thanks to all my patrons on Patreon for supporting me. See you again in two weeks, and until then,
stay smart.
Really puts things into perspective, anyone saying Tesla could go bankrupt is 10 years too late.
At the same damn time
5m30s shows odd editing choice or misleading/mistaken pic fadeout associated with 2008 divorce from first wife Justine; it shows his second wife Talulah's pic fading out (rather than a pic. of Justine.) Talulah and Elon were divorced from each other twice (once in '12 and finally in '16).