United States, Cantrell, Engineer discussed on Acquired

Acquired
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Throughout all of this should be where. Why is this expensive like obviously this expensive? It's almost unfathomably expensive when you hear about anything in this industry contracts awarded cost of Emission Nastase budget which by the way in the last twenty years has gone from about one percent of our federal budget down to about half a percent it was as high as five percent in nineteen sixty nine hundred of the space race so interesting about that that the the question of the US government budget by the way document entire federal government. Yes so 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 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 rocket just by throwing commodities wall so You'RE NOT GONNA get all the way down to two percent of what that rocket costs but two percent 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 the actual hard materials are much more than two percent of the final sticker price of the line. You have a bomb versus the MS RPM totally. Well and this is you know. Alon Alon studied physics in Undergrad. In addition to business he is a physicist. And this is the question you ask themselves today. These are atoms and like you know it's a bunch of gas in a tube right like that. That's what Iraq it is. And so this is what he's putting together in spreadsheet so the touchdown back in the US and basically the same time. Pale finally goes public and right after so even though they were the first we talked about this with with rule oftener adapting episode with with with real of it. It's clear who was at the time the CFO. Pay Pal the broke. You know they were the one bright spot in the in the DOT com the Russia Russian like dot com winter the stock pops fifty five percent right after the IPO. So on sees this. He's got this spreadshee- 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 WANNA do. I 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 connections and do this for real so he gathers up they they walk up the plane he gets Cantrell he gets Griffin. He gets smaller the rockets the literally racket scientists and again him Chris. Thompson. Who has an aerospace engineer at? Boeing? And he says let's do this. We'll start a company. Nonprofit is dead. I'm going to start this. I'm going to fund this all myself. Paper liquid public urgency. The lockup will be over soon. I can get exit my stock and I'm willing to go all in on this so all in almost in Hindi greater than half in greater than half. Now he hasn't yet met J struggle and got introduced to the electric car seat. And so at this point. He's He's thinking all in the one person who everybody's in except for for Mike Griffin. He lives on the East Coast former Yankee guy he says lick is. I'm a little farther on in my career. I'm a little more senior. You know. This is all 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 then ends up being a very good thing for space X. That did not do that as we will see. I'm like learning in real time for you on this episode. I had a very good thing for first. Basics that very thing spacex and the world that he did not do that Everyone else though is in Cantrell in for up leaving a few months later but in June two thousand and two they officially incorporate space exploration technologies and then the very next month in July two thousand to Ebay buys pay pal for one and a half billion dollars and alon now doesn't just have liquid public stock currency. He has one hundred and eighty million dollars plus in straight up cash that that he gets out of paypal and at this point time he says 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 is next company. He says I don't want any any chance that anyone could kick me out here ever again. I'm not taking any outside investors. I'm putting my entire fortune. Do Uh will fund it all myself. It's mine and the super interesting thing is. We were talking about this texting about this. All told over the life of space x I think Yulon is only put in about one hundred million dollars into the company versus Bezos at blue origin puts in a billion dollars a year and so other people that have entered into the space industry. Just pets. That's a good. Let's let's plant that seed. Because yes SPACEX is very revenue funded instead of Equity Fund. And of course it's very quick funded to this is a company that has a what thirty five billion dollar valuation today and has over three billion dollars invested in it from not much of which is second. Oh interesting good point. Yeah I think much of a secondary okay. Well the the point I want to drive home here is space. X 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 we're going to frigging Mars like we're figuring the smartest thing out and we're gonNA start by lighting a one engine candle on fire and like we'RE GONNA. We're going to figure out how to 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 SPACEX. Which is this sentence. They are an American aerospace manufacturer and Space Transportation Services Company. It is very very important to understand. Space x today is both of those things and they are different. They are a company that make 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 the missing puzzle piece. That sort of comes along that Lobbies for space x to do that is is not yet in place yet. Well so the business plan for this new company again. Very 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. Toppmoller working for him. They're going to build their engine completely in house. And then the idea. Is that the initial initial idea. Is they're going to go to third party suppliers in commodity folks and get all the all the rest of the stuff together and work with contractors. Kind of like you can imagine. The business plan. Ironically is sort of like the traditional Detroit automotive companies where they make the engines and they make the finished products but everything in between the engine and the final car comes from a whole network of Suppliers Yahoo Horizontally Integrated Company. Yeah exactly exactly so the plan is. This is what they're going to do. They're going to build the engine and They'RE GOING TO START LAUNCHING IN SEPTEMBER. Two Thousand and three it is now. July two thousand one. Yeah that's that was wishful thinking collapsing. Last may have been the first the beginning of the longtime line. 'cause in software. You can ship that fast. Larder in hardware should also say like. There's a there this I think is from from the Ashley Book as well like the way that Ilan calculates these deadlines as like he thinks about it about literally. How long would sort of like build 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.

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