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Speaker 1: I'll try to make this as interesting as possible. If

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you like space, you'll like this talk. So my background

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in brief, I'll talk a little bit about ZIP two

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and PayPal, and then mostly about space and what we're

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doing in space. So I originally came out California to

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do energy physics at Stanford actually and ended up putting

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this is in ninety five, and ended up putting that.

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Speaker 2: On a hold to start ZIP two and zip too.

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I'll tell you a little bit.

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Speaker 1: About the thought process of exactly what happened there in

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ninety five, that it wasn't at all clear that the

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Internet was going to be a big commercial thing. In fact,

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most of the venture capitalists that I talked to hadn't

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even heard of the internet, which sounds bizarre. On sand

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Hill wrote, So, but I wanted to do something in there.

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I thought it would be a pretty huge thing, and

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I thought it was one of those things that only

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came along once in a very long while.

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Speaker 2: So I got a.

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Speaker 1: Deferment at Stamford, and I thought I'd give it a

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couple of quarters.

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Speaker 2: And if it didn't work out, which I.

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Speaker 1: Thought it probably wouldn't, then i'd come back at school

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and actually When I talked to my professor and I

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told him this, he said, well, I don't think you'll

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be coming back, and that was.

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Speaker 2: The last conversation I had with him.

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Speaker 1: But there weren't a lot of waste Again, the only

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way to get involved the Internet in ninety five that

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I could think of was to start a company, because they.

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Speaker 2: Want a lot of companies to go and work for

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Apart from Netscape, maybe one or two others.

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Speaker 1: So, and they didn't have any money, so I thought, well,

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we've got to make something that's going to.

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Speaker 2: Return It's going to return money very very quickly.

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Speaker 1: So we thought, well that the media industry would need

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help converting its content from a print media to electronic

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and they clearly had money, so if we could find

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a way to help them move their media to the Internet,

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that would be an obvious way of generating revenue. There

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was no advertising revenue on the Internet at the time,

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so and that that was really the basis of ZEP two,

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And we ended up building quite a bit of software

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for the media industry, primarily the print media industry. So

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we had as investors and customers Hearst Corporation, night Ridder,

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most of the major US print publishers. We built that up,

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and then we had the opportunity to sell to Compact

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in early ninety nine, and basically.

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Speaker 2: Took that offer.

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Speaker 1: It was for a little over a three hundred million

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dollars in cash, and that's that's a currency I highly recommend.

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Speaker 2: So we had that and and.

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Speaker 1: But I wanted to do something something more after ZIP too,

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so post the sale, in fact, immediately post the sale,

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I didn't really take any time off. I was just trying

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to think of where where the opportunities in this in

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the early ninety nine, where the opportunities remained in the Internet,

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And it seemed to me that there hadn't been a lot.

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Speaker 2: Of innovation in the financial services sector. So and when

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you think about it, money is low bound with You

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don't need some sort of big infrastructure improvement.

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Speaker 1: To do to do things with it. It's really just

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an entry in the database. The paper form of money

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is really only a small percentage of all the money

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that that's out there. So it should lend itself to

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innovation on the Internet.

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Speaker 2: And so we thought of a couple of different things

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we could do.

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Speaker 1: One of the things was to combine all of somebody's

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financial services needs into one website, so you could have banking, brokerage,

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insurance and all sorts of things in one place.

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Speaker 2: And that was actually quite a difficult problem to solve,

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but we sold most the issues associated with that. And

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then we had a little feature which.

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Speaker 1: Took us about a day. That was the ability to

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email money from one customer to another. So you could

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type in an email address or actually any unique identifier

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and transfer funds or conceivably stocks or mutual funds or

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whatever from one account holder to another. And if you

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try to transfer money to somebody who didn't have an

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account on the system, it would then forward an email

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to them saying, hey, why don't you sign up and

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open an account. And whenever we demonstrate these two sets

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of features, we'd say, well, this is a feature that

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took us a lot of effort to do, and look

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how you can see your bank statement and your mutual funds.

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Speaker 2: And insurance and all that. It's all on one page,

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and look how convenient that is.

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Speaker 1: And people got home and then we'd say, and by

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the way, we have this feature where you can enter

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some of these email address and transfers funds and they

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go wow. So we were like Okay, So we focused

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the company's business on on email payments and in the

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early game going, the company is called x dot com

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and then there was a there was another company called Confinity,

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which had actually also started out from it from a

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different area.

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Speaker 2: UH. They started out with the PalmPilot cryptography, and then

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they had as a demo application the ability to beam

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token payments from one.

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Speaker 1: Pomp pilot to another by the infrared coort uh. And

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then they had a website which is called PayPal, where

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you would.

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Speaker 2: Reconcile the beamed payments and and what they found was

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that the website.

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Speaker 1: Portion was actually Palm more interesting to people the then

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pomp pilot cryptography was.

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Speaker 2: So they started leading their business in that direction. Uh.

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Speaker 1: And then in basically early two thousand, uh X dot

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com acquired Confinity UH. And then about a year later we.

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Speaker 2: Uh uh we ended up changing the company's name to PayPal.

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Speaker 1: And that's that kind of how the approximate evolution of

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the company and the PayPal is really a case of

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where the whole viral marketing. It's really a perfect case

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example of viral marketing like hortmail was where one one

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customer would essentially act as a salesperson for you, for

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all of you, for bringing in other customers, so they

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would send money to a friend and essentially recruit that

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brend into the network. And so you had this exponential growth.

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The more customers you had, the faster it grew. So

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it was like bacteria in a petri dish, you know,

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it just goes like does this s curve? And in

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fact I ran paypaler for about the first two years

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of its existence, and we launched after year one, and

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by the end of year two we had a million

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of customers. So it gives you an example, you know,

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to get your sense for how fast things things grow

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in that scenario.

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Speaker 2: And we didn't have a sales force.

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Speaker 1: We actually didn't have a VP of sales, we didn't

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have a VP of marketing, and we didn't spend any

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money on advertising. In about February of last year, for

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those some of your probably following it, In February of

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last year, PayPal went public and we were I think

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we were the only internet company to go public in

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the first part of last year. It went off reasonably well,

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although I think we had more sec rewrites than any

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company I can imagine, Like we said a record on

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sec rewrites. This was right around the en run time

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and when there was all sorts of corporate scandal, so

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they put us through the ring. And then shortly thereafter,

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in about June July, we struck a deal with eBay

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to sell a company to eBay and for about four

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and a half billion dollars. But that was when eBay's

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stock price was about fifty five dollars and they hadn't split,

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so I guess in today's dollars were about three billion dollars,

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so it worked out pretty well.

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Speaker 2: It happened coincidentally that.

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Speaker 1: In the first part of last year I've been doing

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just some background research on space, and let me talk

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a bit about that. So essentially, I was trying to

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figure out why we had not made more progress since

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Apollo in nineteen In the sixties, we went from basically nothing,

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not being able to put anyone into space, to putting

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people on the Moon and developing all the technology from scratch.

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Speaker 2: To do that.

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Speaker 1: And yet in the seventies and eighties and the nineties

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we've kind of gone sideways, and we're currently in the

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situation where we kindt even put a person into low

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Earth orbit, and that doesn't really cherell with all of

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the other technology sectors out there. The computer that you

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could have bought in the early seventies, you know, would

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have filled this room and had less computing power than

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your cell phone.

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Speaker 2: And so just about every sector of technologies improved. Why

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has this not improved? So I started looking into that.

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Speaker 1: Initially, I thought, well, perhaps it's a question of funding,

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and that funding can be garnered by really marshaling public support.

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So I thought, well, one way to get the public

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excited about space would be to do maybe a privately

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funded robotic mission to Mars. And so we figured out

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a mission that would cost about fifteen to twenty million dollars,

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which isn't a lot of money, but it's about a tenth.

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Speaker 2: Of what a low cost nasamission would be. And the

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idea was.

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Speaker 1: Called Mars Oasis, where we would put a small robotic

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glander on the surface of Mars with seeds and dehydrated nutrients.

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They would hydrate upon landing, and you'd have plants growing

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into Martian radiation and gravity conditions, and you'd also be

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maintaining essentially a.

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Speaker 2: Life support system on the surface of Mars.

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Speaker 1: And this would be interesting to the public because they

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tend to respond to precedents and superlatives, and this would

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be the furthest that life's ever traveled in the first

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life on Mars.

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Speaker 2: So pretty significant.

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Speaker 1: And then when I started looking at launch vehicles that

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the lowest cost vehicle in the US is Boeing stalt

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To two, which costs about fifty million dollars, and that's

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a bit that's a bit steep what we were trying

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to do. So I made three visits to Moscow to

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Russia to look at buying a Russian launch and it's

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actually pretty interesting going to moscowt to negotiate for a

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refurbished ICBM. If you know, on the range of interesting experiences,

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that's pretty pretty far out there. But we actually did

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get to a deal, but there were so many complications

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associated with the deal that it didn't I wasn't comfortable

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with the risks associated with it. So when I got

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back from the third trip, I thought, well, you know,

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why is it the Russians can build these low cost

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launch vehicles, because it's not like we drive Russian cars,

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fly Russian planes, or have Russian kitchen appliances, and you know,

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when's the last night brought something Russian that wasn't vodka.

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So I think the US is a pretty competitive place

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and we should be able to build a cost efficient

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launch vehicle.

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Speaker 2: So I put together a feasibility study which consisted of

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engineers that have been involved with all the major launch

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vehicle developments over the last three decades, and we iterated

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over a number of saturdays in the beginning.

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Speaker 1: Of last year to figure out, well, what would be

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what would be the smartest way to approach this problem

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of not just launch cost but also launch reliable. And

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we came up with a default design and that actually,

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uh sort of fortunate timing. That feasibility study finished up

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right around the time that we agreed to sell paypalt

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the eBay, So coincident with that sale, I moved down

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to la where there's actually the biggest concentration of aerospace

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industry in the world. It's actually the biggest industry in

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southern California, much bigger than entertainment or anything else.

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Speaker 2: I was living in pala Alta for about nine years

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before that.

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Speaker 1: Anyway, So just to talk it a little broadly about

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space and where things are today, Obviously US government manned

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exploration is not in a great place. We've got the

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three remaining shuttles are grounded, it looks like first flight

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might only be a year from now. If that, and

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we've got a vehicle that is incredibly expensive and really

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quite dangerous. It's you know, for reasons to mention there,

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it's got a side mounted crew compartments, so if there's

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an explosion, that's basically instant death.

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Speaker 2: Uh.

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Speaker 1: The you've got solid rocket boosters which once you nite them,

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you can turn them off. And there's something fundamentally dangerous

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about pre mixing your fuel and oxidizer, I think, Uh.

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Speaker 2: And then it's you've got wings.

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Speaker 1: And control surfaces when you when you re enter, you've

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got to maintain a precise angle of attack. Even a

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momentary variance in that can break the whole vehicle apart.

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So and then and then of course it's got no

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escape system, so if anything does go wrong, your toast

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and and that you've got a cost that is really

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pretty hard to fathom. The shuttle program, when you add

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up all the pieces, is about four billion a year.

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And so you can divide uh four billion by the

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number of flights and that I'll tell you what the

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cost is. And and if there's say four flights a year,

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which they haven't been for a while. Then you're talking

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about a billion dollars a flight. The plans for the

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mutate future are, obviously we've got to continue building the

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space station, so we're going to keep flying the Shuttle,

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but I think it's probably going to be the minimum

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number of Shuttle flights that we need to launch. The

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long term plans are build something called overital space plane

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out safe plane in quotes, because one of the options

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is a capsule, so it should be called, you know,

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maybe overtal space thing. But the basic idea is to

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have something that's hopefully a little cheaper and a lot

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safer than the Space Shuttle. So in particular, it's going

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to have an escape system so if something does go wrong,

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you can abort to safety. The downside is that it's

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still while it might be a little cheaper, it's still

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going to be pretty darn expensive. Estimated cost per flight

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of overital space plane is someone in the region of

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three hundred to four hundred million dollars a flight, and

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of that amount, two hundred just two hundred million dollars

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alone goes to Boeing for the Delta four heavy expandable booster,

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and it's a fifteen billion dollar development effort and expected

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to be completed in nine or ten years now.

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Speaker 2: Typically, typically things.

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Speaker 1: Have not been under budget and under time, so it's

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unlikely I think, given historical precedent that it will stay

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within fifteen billion dollars and the twenty twelve twelve timeline,

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and a bit about what's going on on elsewhere in

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the world in Russia, that this is really the Sawyers

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is our only access to space station. It's considerably cheaper,

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considerably safer. The Sawyers has a very good track record.

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Its crew is top mounted, it has an escape system,

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there are no wings or control services to go wrong. Overall,

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it's a pretty good system. And the estimated carts are

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about sixty million dollars a flight, which is an auto

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more than Autobank two less than the Space Shuttle. The

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thing that constrains them, obviously, is the weakness of the

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Russian economy. It's very hard for them to embark on

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ambitious programs with an economy the size of Belgium. So

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China is probably the most interesting thing that's going on

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in space.

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Speaker 2: This month. China is expected to be only the third

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it's expected to launch their first person into space, they

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will make them only the third country ever to put

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someone in orbit, and that they've put a lot of

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money and effort into this program.

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Speaker 1: If anything serves as a spur for human space exploration,

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it is likely to be China's ambitions in space, and

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hopefully a sentence in America that we want to at

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least keep up with China. And they have grand ambitions

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beyond just low with orbit. They are planning on setting

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up a space station, putting a base on Mars, and

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eventually sending humans to Mars. So what's happening in the

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US that I think might ultimately surpass all of that

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stuff is entrepreneurial space activities, where things are led by

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the spurt of free enterprise. And I think there's perhaps

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an analogy here where just as DARPA served as the

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initial impatus for the Internet and underwrote a lot of

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the costs of developing the Internet in the beginning, if

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may be the case that NASA has insentially done the

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same thing by spending the money develops some of the

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fundamental technologies in the beginning, and then once we can

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bring sort of the commercial pre enterprise sector into it,

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then we can see the dramatic acceleration that we did

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that we saw.

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Speaker 2: In the Internet. So there are several serious more vehicle

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efforts underway.

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Speaker 1: Talk about each one's Bertrictann of scale composites. Bert Riccann

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is one of the world's foremost aircraft designers, and he's

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developed a suborbttle vehicle that they're actually flying out of Mahabi.

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This is an X Prize class vehicle. There's John Cormack,

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who wrote Quake and Doom. It's probably one of the

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best software engineers in the world, one of the best

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engineers that I know period, and he's developing a vertical

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take of the landing vehicle. Jeff Bezos, who I understand

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was here last week, is a huge space advocate and

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to my understanding that he intends to spend something on

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the order of a billion dollars over the next twenty

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years on space exploration, and then space then my company SpaceX,

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and I think.

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Speaker 2: Within the next several years these entrepreneurial efforts will actually

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be what derives space exploration.

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Speaker 1: So a little bit about each one. That's a picture

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of the potratan effort. It's called White Knight is the

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carrier plane. And then spaceship one is the thing that's

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held in the belly there. And this project is supposedly

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funded by Paul Allen, so there's quite a lot of

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capital also, it should make that point, quite a lot

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of capital.

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Speaker 2: That's sort of entering this entrepreneurial space sector as well.

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The only drawback I think of this architecture is that

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it's not really scalable for.

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Speaker 1: For something that would get to orbit. This is pretty

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good for sub orbital, but I think the architecture would

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need to change for an orbital vehicle. And there's a

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John Comas effort. He's a little irreverent. This is from

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his website.

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Speaker 2: His his vehicle is a vertical takeoff and landing vehicle.

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He's made. He's made really incredible progress for somebody who

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has no background in.

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Speaker 1: Airspace engineering and is also kind of doing it all

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himself with him in like three bodies, so and I

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think that will make something that works. Actually, if you

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can check out their website Agell Aerospace, it's pretty interesting stuff.

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But in order to get to orbit, this would require

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a substantial improvement in the mass efficiency, in the engine efficiency.

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Speaker 2: And probably be a two stage vehicle. Jeff Bezos, who

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I'm sure almost everyone here is aware of. He is

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a pretty huge fan of space.

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Speaker 1: In fact, his high school baledictorian speech was about the

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necessity of humanity expanding to other planets, so it's pretty

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important to him.

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Speaker 2: From what I understand, this is our effort.

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Speaker 1: We're spanning quite a bit more than the three prior

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entities that I mentioned, in some cases, probably an or

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of magnitude more, because what we're doing is really an

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order of magnitude more difficult. We're building an orbital launch

364
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vehicle to two stage, very high efficiency engines, very high

365
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mass efficiency launch vehicle, and it's targeted to the satellite

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delivery market. So our approach is really to make this

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a solid, sound business. And so I predicated the.

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Speaker 2: Strategic plan on a known market, something that we know

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for a fact.

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Speaker 1: Exists, which is the need to put small to medium

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sized satellites into orbit. And so that's what we're going

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after initially, and then with that as a as kind

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of a revenue base, we will move into the human

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transportation market. It's the long term management. Company are definitely

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in human transportation, but I think the smart strategy is

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to first go for cargo delivery. Essentially satellite livery and

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our eventual a great path is to build the successor

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to Saturn five, build a super heavy lift vehicle that

379
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could you know, be used for setting up a Moon

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base or doing a Mars mission.

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Speaker 2: That would be the Holy Grail objective.

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Speaker 1: On the upper right there you can see a testifying

383
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of our engine and on the lower right you can

384
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see the our first stage tank. This is an engine

385
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test of our main engine, which is called Merlin YEA

386
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and that that generates about roughly seventy five pounds of thrust.

387
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Speaker 2: At sea level. This is our upper stage engine. It's

388
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about it.

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Speaker 1: It's about seventy five hundred pounds of thrust in vacuum.

390
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And this is an accelerated version of our launch sequence.

391
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Our first launch will be from the SpaceX Launch Complex

392
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at Vanderberg Air Force Base an approximately March of next year,

393
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basically early next year, and we will be applying a

394
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Navy satellite, maybe communications satellite. So it's notable because often

395
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launch bicle companies are not able to get somebody get.

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Speaker 2: A paying customer on their first flight. That we've been

397
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able to do that. This is also the Falcon development

398
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at SpaceX is the fastest launch veicle development in history,

399
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including wartime.

400
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Speaker 1: That's actually Vanderberg Airport Base, which is about two hours

401
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away from Santa Barbara. Common themes between Zip two and PayPal, well,

402
00:24:03,720 --> 00:24:07,440
I guess both of them involved had had software at.

403
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Speaker 2: The as the heart of the technology.

404
00:24:11,160 --> 00:24:14,920
Speaker 1: Even though ZIP two was in was servicing the media

405
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sector and obviously PayPal was servicing the financial sector, the

406
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the heart of it was really software and and Internet

407
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related stuff. So certainly that's a huge commonality. They were

408
00:24:30,200 --> 00:24:37,319
both in pala Alta, where I lived. I think we,

409
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you know, took a similar approach to building both companies,

410
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which was to have a small group of very talented people.

411
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Speaker 2: And and keep it small. You know, I think PayPal

412
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had at its height probably thirty engineers for for a system.

413
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Speaker 1: That's I would say it is more sophisticated than the

414
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Federal Reserve clearing clearing system. I'm pretty sure it is

415
00:25:03,240 --> 00:25:10,079
actually because the clearing system sucks, So.

416
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Speaker 2: What else is there it?

417
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Speaker 1: Generally, you know, I think the way both zip to

418
00:25:15,640 --> 00:25:18,000
and PayPal upgrade was was really your It was your

419
00:25:18,079 --> 00:25:25,079
canonical Silicon Valley startup. Uh, you know, pretty flat hierarchy.

420
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You know, everybody had a roughly similar cube, and anyone

421
00:25:32,720 --> 00:25:34,640
could talk to anyone. We had a philosophy of best

422
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idea wins, as opposed to you know, the person proposing

423
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the idea winning because they are who they are, even

424
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though there were times when I thought that should have

425
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been the way it goes. And obviously, you know, everyone

426
00:25:52,119 --> 00:25:57,759
was was an equity stakeholder. I don't give us anything.

427
00:25:59,440 --> 00:26:03,960
If there were two paths that you know, let's say

428
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we had to choose through one thing or the other,

429
00:26:06,680 --> 00:26:10,119
and one wasn't obviously better than the other, then rather

430
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than spend a lot of time trying to figure out

431
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which one was slightly better, we would just pick one

432
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and do it. And sometimes we'd be wrong and and

433
00:26:17,119 --> 00:26:19,359
we've picked itself off the more path. But often it's

434
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better to pick a path and do it than to

435
00:26:21,960 --> 00:26:28,759
just vacillate endlessly on a choice. We didn't worry too

436
00:26:28,839 --> 00:26:33,839
much about intellectual property, paperwork, legal stuff.

437
00:26:33,880 --> 00:26:35,960
Speaker 2: We really were very focused on.

438
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Speaker 1: Building the best product that we possibly could. Both to

439
00:26:40,400 --> 00:26:46,359
PayPal were very product focused companies. You know, that's incredibly

440
00:26:46,359 --> 00:26:49,440
obsessive about how do we build something that is really

441
00:26:49,559 --> 00:26:54,720
gonna be the you know, the best possible customer experience

442
00:26:56,039 --> 00:26:58,839
and that that was a far more effective selling tool

443
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than having a giant salesforce or thinking of you know,

444
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marketing gimmicks or twelve step processes or whatever.

445
00:27:08,480 --> 00:27:11,319
Speaker 2: I'm not super familiar with Friendster certainly.

446
00:27:11,960 --> 00:27:14,359
Speaker 1: I mean the essence of viral marketing is do you

447
00:27:14,440 --> 00:27:18,119
have something that one customer is going where one customer

448
00:27:18,200 --> 00:27:20,440
is going to sell another customer without you having to

449
00:27:20,480 --> 00:27:20,960
do anything.

450
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Speaker 2: And there are there are lots of instances of that. Friends,

451
00:27:26,559 --> 00:27:30,720
there might be one. Obviously, Hotmail was one, PayPal was one,

452
00:27:30,799 --> 00:27:31,640
eBay was one.

453
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Speaker 1: And in a situation like that, going back to what

454
00:27:36,640 --> 00:27:39,680
I said about product, product matters incredibly because if you're

455
00:27:39,720 --> 00:27:43,839
going to recommend something to somebody, you've got to really love.

456
00:27:43,799 --> 00:27:44,640
Speaker 2: The product experience.

457
00:27:44,680 --> 00:27:46,359
Speaker 1: Otherwise you're not going to recommend it because you don't

458
00:27:46,359 --> 00:27:47,079
want to burn your friend.

459
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Speaker 2: Hurdles in the space industry.

460
00:27:50,920 --> 00:27:55,720
Speaker 1: Entering the space industry, well, you know, it is a

461
00:27:55,920 --> 00:28:00,920
very complicated regulatory structure, as you might have mansion. When

462
00:28:01,119 --> 00:28:03,400
somebody tries to build an orbital launch vehicle, which is

463
00:28:03,480 --> 00:28:06,880
not really all like distinguishable from an ICBM, there's a

464
00:28:06,960 --> 00:28:10,759
lot of regulation and they probably should be because you know,

465
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you don't want.

466
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Speaker 2: To launch something and end up hitting LA where I live.

467
00:28:17,559 --> 00:28:23,759
Speaker 1: So probably the regulatory stuff was very difficult. The environmental

468
00:28:23,839 --> 00:28:28,640
approvals certainly proven very difficult, much more so than we expected.

469
00:28:28,880 --> 00:28:31,640
I mean here in silicon value. You look, you know

470
00:28:31,759 --> 00:28:33,519
what I came to appreciate is silicon value. You live

471
00:28:33,559 --> 00:28:40,640
in a libertarian paradise. There's almost no regulation. And what

472
00:28:40,759 --> 00:28:42,960
can be very frustrating is that regulation.

473
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Speaker 2: Is often irrational. It doesn't make any sense.

474
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Speaker 1: But you've got somebody there who's simply executing a set

475
00:28:49,000 --> 00:28:51,599
of rules independent where those rules make sense, and you

476
00:28:51,640 --> 00:28:53,279
can try to convince them that rules don't make sense,

477
00:28:53,319 --> 00:28:54,079
and they won't listen to you.

478
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Speaker 2: So probably regulation is the most annoying thing. I would say.

479
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Speaker 1: Overall, I'm very pleased because I think we've had a

480
00:29:02,400 --> 00:29:05,759
very smooth development process and on the whole I can't

481
00:29:05,759 --> 00:29:11,480
complain at all. Yeah, why is it so expensive to

482
00:29:11,559 --> 00:29:15,119
send something into space? Well, let me tell you what

483
00:29:15,240 --> 00:29:21,480
makes a rocket hard. The the energy and the velocity

484
00:29:21,599 --> 00:29:27,160
required to get into orbit is so substantial that compared

485
00:29:27,240 --> 00:29:30,440
to say a car or even a plane, you have

486
00:29:30,640 --> 00:29:34,480
almost no margin to play with. Typically, a launch vehicle

487
00:29:34,519 --> 00:29:38,240
will get about two percent of its liftoff mass to orbit.

488
00:29:39,000 --> 00:29:42,480
So and that's the case for for a Falcon. And

489
00:29:43,000 --> 00:29:44,799
so if you can only get two percent of what

490
00:29:44,880 --> 00:29:49,799
your rocket ways to begin with to orbit, you can.

491
00:29:50,200 --> 00:29:51,000
Speaker 2: If you're wrong by.

492
00:29:50,920 --> 00:29:55,480
Speaker 1: Two percent, you're not gonna get anything to orbit, you know,

493
00:29:55,559 --> 00:30:01,319
come crashing down on the Pacific somewhere. So that means

494
00:30:01,559 --> 00:30:05,039
all of your calculations have to be right. If you miss,

495
00:30:05,160 --> 00:30:07,319
if you mis calculate something, you get an answer wrong,

496
00:30:07,839 --> 00:30:08,440
it blows up.

497
00:30:09,880 --> 00:30:11,480
Speaker 2: And it's very expensive trying.

498
00:30:11,359 --> 00:30:13,640
Speaker 1: To get all your answers right and then double checking

499
00:30:13,720 --> 00:30:15,720
that they're right and testing them all and doing as

500
00:30:15,759 --> 00:30:17,519
much as you can on the ground. I think that's

501
00:30:17,519 --> 00:30:21,160
a lot of what makes rockets expensive. The low launch

502
00:30:21,240 --> 00:30:24,240
rate typically is also what makes rockets Brook's expensive. If

503
00:30:24,240 --> 00:30:27,480
you had, you know, thousands of flights a year, then

504
00:30:27,599 --> 00:30:29,200
it would be a lot cheaper. Although it's a bit

505
00:30:29,200 --> 00:30:31,319
of a chicken and egg because it needs to.

506
00:30:31,319 --> 00:30:33,160
Speaker 2: Be cheaper in order to have thousands of flights a year.

507
00:30:35,559 --> 00:30:36,759
Speaker 1: But at the end of the day, when you in

508
00:30:36,799 --> 00:30:39,880
the final analysis, I would say that rockets really should

509
00:30:39,920 --> 00:30:42,400
be a lot cheaper than they are today. And I

510
00:30:42,480 --> 00:30:46,000
think the way they're both, the way they're operated, is

511
00:30:46,079 --> 00:30:51,799
just very inefficiently. And I think with with SpaceX and Falcon,

512
00:30:52,240 --> 00:30:53,960
we're going to we're going to show that that's that's

513
00:30:54,039 --> 00:30:57,960
the case. Our vehicle will sell for about six million

514
00:30:57,960 --> 00:31:01,960
dollars a flight. That our nearest competitor is the Pegasus

515
00:31:02,039 --> 00:31:05,160
from Orbital Sciences, which is about twenty five million dollars

516
00:31:05,200 --> 00:31:08,000
a flight, and that has less capability than our rocket.

517
00:31:09,359 --> 00:31:13,039
Speaker 2: So Falcon will represent a pretty substantial breakthrough on the

518
00:31:13,079 --> 00:31:14,359
cost of access to space.

519
00:31:19,920 --> 00:31:31,480
Speaker 1: Than Yeah, the customer base with SpaceX is just it's

520
00:31:31,559 --> 00:31:34,759
dramatically different, obviously from PayPal. PayPal is a consumer product,

521
00:31:35,599 --> 00:31:39,599
whereas SpaceX we're selling rockets, and the number of people

522
00:31:39,640 --> 00:31:42,799
who want to buy rockets is quite small. If anyone

523
00:31:42,839 --> 00:31:44,920
here has six billion dollars and once a rocket, I mean,

524
00:31:44,920 --> 00:31:45,920
if they glance to sell it.

525
00:31:45,960 --> 00:31:46,160
Speaker 2: To a.

526
00:31:48,000 --> 00:31:51,359
Speaker 1: But so it's much more of an individual selling process.

527
00:31:52,680 --> 00:31:55,640
There's a great deal more thought that goes into any

528
00:31:55,799 --> 00:31:59,079
purchase of a launch, much more so than signing up

529
00:31:59,079 --> 00:32:01,559
a PayPal account where which doesn't really cost you much.

530
00:32:04,039 --> 00:32:06,680
Speaker 2: So, Yeah, and there's not a lot of viral marketing

531
00:32:06,759 --> 00:32:10,279
that's going to happen with the rocket. I suspect I'm

532
00:32:10,319 --> 00:32:13,599
hoping that you know, I'm not counting on it. It's

533
00:32:13,640 --> 00:32:18,279
a I think a successful entrepreneurs probably come in all

534
00:32:18,559 --> 00:32:21,799
size of shapes and flavors. I'm not sure there's any

535
00:32:21,839 --> 00:32:25,240
one one particular thing for me.

536
00:32:25,440 --> 00:32:27,440
Speaker 1: You know, some of the things I've described already I

537
00:32:27,480 --> 00:32:33,200
think are very important. I think really an obsessive nature

538
00:32:33,240 --> 00:32:36,960
with respect to the quality of the product, it is

539
00:32:37,079 --> 00:32:40,640
very important. So, you know, being obsessive compulsive is a

540
00:32:40,680 --> 00:32:48,359
good thing in this context. Really really liking what you

541
00:32:48,480 --> 00:32:52,799
do whatever area that you get into, given that, you know,

542
00:32:52,880 --> 00:32:55,359
even if you're if you're the best, the best.

543
00:32:55,240 --> 00:32:57,559
Speaker 2: There's always a chance of failure. So I think it's

544
00:32:57,599 --> 00:33:00,400
important that you really like whatever you're doing. If you

545
00:33:00,440 --> 00:33:04,839
don't like it, life is too short, you know, i'd

546
00:33:04,880 --> 00:33:05,599
say if.

547
00:33:06,000 --> 00:33:08,680
Speaker 1: And also if you if you like what you're doing,

548
00:33:08,880 --> 00:33:11,559
you think about it even when you're not working. I mean,

549
00:33:12,119 --> 00:33:14,720
it'll just it's something that your mind is drawn to,

550
00:33:15,920 --> 00:33:18,920
and if you don't like it, you just really can't

551
00:33:18,960 --> 00:33:19,400
make it work.

552
00:33:19,440 --> 00:33:26,359
Speaker 2: I think SpaceX is about thirty people.

553
00:33:28,039 --> 00:33:30,279
Speaker 1: And what we do internally at SpaceX is we do

554
00:33:30,359 --> 00:33:35,759
all of the design analysis, integration of hardware testing, and

555
00:33:35,839 --> 00:33:39,240
then launch operations. But a lot of the heavy manpower

556
00:33:39,319 --> 00:33:43,839
stuff like welding together our primary structure, the heavy machining

557
00:33:43,880 --> 00:33:46,519
and so forth that we outsource, so we'd be a

558
00:33:46,599 --> 00:33:50,839
much larger company, But do all of that internally. And sorry,

559
00:33:50,839 --> 00:33:56,720
you had another party question. Oh yeah, Actually we.

560
00:33:56,720 --> 00:34:02,119
Speaker 2: Don't have any lawyers. The regulatory stuff that we deal

561
00:34:02,160 --> 00:34:03,200
with is very technical.

562
00:34:04,119 --> 00:34:06,000
Speaker 1: It's it's it's really a lot like trying to get

563
00:34:06,039 --> 00:34:08,159
an aeroplane certified with the FAA.

564
00:34:09,239 --> 00:34:13,519
Speaker 2: We're just getting a rocket certified. So so our documentation

565
00:34:13,639 --> 00:34:16,280
is it's very I wish we could offload it to

566
00:34:16,760 --> 00:34:18,800
some latch. They wouldn't know what the heck to do. So,

567
00:34:21,880 --> 00:34:24,719
you know, how did the Wharton degree help? I think it.

568
00:34:25,079 --> 00:34:27,199
Speaker 1: A business degree teaches you a lot of the terminology.

569
00:34:28,119 --> 00:34:31,679
It introduces you to concepts that you would otherwise. You know,

570
00:34:31,760 --> 00:34:36,280
this terminology is somebody to be said for that. It

571
00:34:36,400 --> 00:34:38,639
introduces you to concepts you you would otherwise have to

572
00:34:38,719 --> 00:34:40,920
learn them perrectly. I mean, I think I think you

573
00:34:41,000 --> 00:34:43,440
can you can learn whatever you need to do to

574
00:34:43,599 --> 00:34:46,519
start a successful business, either in school or out of school.

575
00:34:47,920 --> 00:34:51,440
Speaker 2: School, and you know, theory should help accelerate that process.

576
00:34:52,639 --> 00:34:55,679
Speaker 1: And I think it, you know, oftentimes it does it's

577
00:34:55,840 --> 00:34:58,400
it can be an efficient learning process, perhaps more efficient

578
00:34:58,480 --> 00:35:01,000
than perrectly learning lessons.

579
00:35:02,599 --> 00:35:05,840
Speaker 2: But really I think you there are examples of success.

580
00:35:05,559 --> 00:35:08,360
Speaker 1: Entrepreneurs who never graduated high school, and there are those

581
00:35:08,480 --> 00:35:13,760
that have PhDs. So I think the important principle is

582
00:35:13,880 --> 00:35:17,800
to be dedicated to learning what you need to know,

583
00:35:18,599 --> 00:35:28,039
whether that is in school or in Berkeley. Well, I

584
00:35:28,079 --> 00:35:31,239
should point out that Falcon outpost vehicle, it doesn't really

585
00:35:31,360 --> 00:35:34,719
have the same capability as either the Chinese, the Russian

586
00:35:35,039 --> 00:35:37,320
or the Space Shuttle vehicles that I mentioned.

587
00:35:37,960 --> 00:35:40,119
Speaker 2: Falcon would be in the in the light class of

588
00:35:40,199 --> 00:35:42,679
launch vehicles, whereas the Space Shuttle would be a heavy

589
00:35:42,679 --> 00:35:45,559
class launch vehicle. So it's not it's not quite apples

590
00:35:45,599 --> 00:35:46,440
to Affle's comparison.

591
00:35:48,000 --> 00:35:53,000
Speaker 1: However, the right comparison would be Falcon compared to the

592
00:35:53,079 --> 00:35:56,639
Pegasus from Overtal Sciences. Falcon is six million, the Pegasus

593
00:35:56,719 --> 00:36:01,800
is twenty five million. And the way we've got our

594
00:36:01,880 --> 00:36:05,159
prices low, our cost low, is we've really focused on

595
00:36:05,320 --> 00:36:07,880
every element of the launch vehicle. There's really no one

596
00:36:08,000 --> 00:36:13,599
silver bullet that has been responsible for a substantial portion

597
00:36:13,760 --> 00:36:16,559
of the cost savings. It's been really hundreds of small

598
00:36:16,559 --> 00:36:19,679
innovations and improvements. And so we've done improvements in the

599
00:36:19,719 --> 00:36:24,159
propulsion system, the structure, the abionics, and the launch operations,

600
00:36:24,159 --> 00:36:26,760
as well as maintained a very low overhead organization. And

601
00:36:26,800 --> 00:36:28,519
when you add up all the things we've done, those

602
00:36:28,559 --> 00:36:31,400
areas that allows us to produce the launch vehicle at

603
00:36:31,440 --> 00:36:32,239
six million dollars.

604
00:36:36,320 --> 00:36:40,079
Speaker 2: As far as PayPal, there were a lot.

605
00:36:40,039 --> 00:36:43,400
Speaker 1: Of back office relationships that we needed to establish and

606
00:36:43,639 --> 00:36:49,199
to attach to various heterogeneous data sources. We needed to

607
00:36:49,280 --> 00:36:51,880
attach to the credit card system for pricesing credit cards.

608
00:36:52,239 --> 00:36:55,119
We needed to attach to the Federal Reserve system for

609
00:36:56,119 --> 00:37:00,159
doing electronic funds transfers. We needed to attach to is

610
00:37:00,280 --> 00:37:05,119
fraud databases to run fraud checks. That there was a

611
00:37:05,159 --> 00:37:07,960
lot that we had to uh, we had to interface with.

612
00:37:10,079 --> 00:37:14,079
Speaker 2: And and that that that took. That took a while, but.

613
00:37:16,639 --> 00:37:19,800
Speaker 1: It all came together, I think roughly simultaneously. I mean,

614
00:37:20,000 --> 00:37:23,119
developing the software and having it ready for for the

615
00:37:23,199 --> 00:37:27,679
general public reasonably coincided with us being able to conclude

616
00:37:27,679 --> 00:37:30,320
those deals and interface with the outside vendors and all

617
00:37:30,400 --> 00:37:30,960
that took.

618
00:37:30,840 --> 00:37:31,400
Speaker 2: About a year.

619
00:37:32,679 --> 00:37:34,840
Speaker 1: I think one thing that's important is to try not

620
00:37:35,000 --> 00:37:38,719
to serialize dependencies, so if you can put as many

621
00:37:38,840 --> 00:37:42,840
elements in parallel as possible. That a lot of things

622
00:37:42,880 --> 00:37:47,000
have a gestation period and there's really nothing you can

623
00:37:47,039 --> 00:37:49,960
do to accelerate. I mean, there's it's very hard to

624
00:37:50,039 --> 00:37:55,559
accelerate that justation gestation period. So if you can sort

625
00:37:55,599 --> 00:37:58,239
of have all those things just dating in parallel, uh,

626
00:37:58,519 --> 00:37:59,960
then then that is one way.

627
00:37:59,800 --> 00:38:03,840
Speaker 2: To substantially accelerate your timeline. I think people tend to

628
00:38:03,920 --> 00:38:08,320
serialize things too much. We did do a few.

629
00:38:08,159 --> 00:38:12,079
Speaker 1: Patents on PA on the PayPal system, although nothing that

630
00:38:12,440 --> 00:38:18,400
ever actually mattered. So patents are mostly useful in a

631
00:38:18,480 --> 00:38:22,159
defensive situation rather than offensive. It can be very difficult,

632
00:38:22,360 --> 00:38:27,239
actually offensive, but prosecute a patent, so.

633
00:38:29,159 --> 00:38:29,360
Speaker 2: I think.

634
00:38:29,400 --> 00:38:32,239
Speaker 1: I think in certain industries like pharmaceuticals and so forth,

635
00:38:32,760 --> 00:38:36,599
patents can be incredibly important. In software, particularly when you've

636
00:38:36,599 --> 00:38:40,760
got a very rapid life cycle, where you know you

637
00:38:41,199 --> 00:38:43,519
made sure you've got a patent, but now it's redundant,

638
00:38:43,559 --> 00:38:47,119
So who cares? It's less relevant in when you've got

639
00:38:47,199 --> 00:38:48,719
a rapid life cycle.

640
00:38:51,760 --> 00:38:53,360
Speaker 2: Well, I don't you know.

641
00:38:53,400 --> 00:38:55,599
Speaker 1: I've looked at the various There are a couple of

642
00:38:55,599 --> 00:38:58,760
things that I think are pretty bogus. One is space mining.

643
00:38:58,840 --> 00:39:01,360
Another is a space solar power. I mean, if you

644
00:39:01,519 --> 00:39:05,079
if you calculate how much it costs to bring either

645
00:39:06,000 --> 00:39:11,440
the photons from uh space solar power, you know, back

646
00:39:11,519 --> 00:39:13,519
to Earth or the raw material.

647
00:39:13,800 --> 00:39:14,320
Speaker 2: Back to Earth.

648
00:39:14,400 --> 00:39:17,199
Speaker 1: It's the economics don't make sense if you just can't

649
00:39:17,239 --> 00:39:19,239
close the economic case, not not even by it's probably

650
00:39:19,280 --> 00:39:20,320
off by three orders magnit.

651
00:39:22,239 --> 00:39:27,519
Speaker 2: So I think the probably the biggest thing that.

652
00:39:27,519 --> 00:39:29,719
Speaker 1: Can happen is if if we if we decide to

653
00:39:29,880 --> 00:39:32,760
establish a base on the Moon or based on Mars,

654
00:39:33,199 --> 00:39:35,159
and particularly if we if we attempt to make it

655
00:39:35,239 --> 00:39:39,719
self sustaining, uh self sustaining based self sustaining.

656
00:39:39,320 --> 00:39:42,320
Speaker 2: Civilization on on the moon of Mars. That that that

657
00:39:42,480 --> 00:39:43,400
is enormous.

658
00:39:43,079 --> 00:39:46,960
Speaker 1: Opportunity on probably the trillion dollar level, because then you

659
00:39:47,039 --> 00:39:48,840
get basically interplanetary commerce going on.

660
00:39:49,679 --> 00:39:50,960
Speaker 2: I think that that's pretty huge.

661
00:39:54,519 --> 00:39:57,639
Speaker 1: But but it's it's it's you know, it's not going

662
00:39:57,679 --> 00:39:59,199
to be space all power, it's not going to be

663
00:39:59,239 --> 00:40:09,000
space mining. Think so let's see the government, you know,

664
00:40:09,039 --> 00:40:11,239
who knows. Maybe we're being spied upon, I don't know,

665
00:40:12,320 --> 00:40:13,320
but certainly.

666
00:40:14,519 --> 00:40:14,840
Speaker 2: We are.

667
00:40:15,239 --> 00:40:18,559
Speaker 1: There are some restrictions which are really annoying, such as

668
00:40:18,599 --> 00:40:21,119
the fact we're only allowed to employ people who have

669
00:40:21,199 --> 00:40:23,599
at least a green card or a citizen of the US.

670
00:40:23,719 --> 00:40:26,320
We're not allowed to employ anyone who does not have

671
00:40:26,440 --> 00:40:29,079
permanent residence in the US. Basically, if they can't throw

672
00:40:29,079 --> 00:40:31,679
you in jail, they won't let you work work on

673
00:40:31,840 --> 00:40:38,480
rocket stuff. And we have if we talk to any

674
00:40:39,159 --> 00:40:43,599
foreign nationals, we need a technology transfer agreement or something

675
00:40:43,599 --> 00:40:47,360
like that from the State Department. So our second launch

676
00:40:47,599 --> 00:40:51,400
is actually a non US governmental launch, and it's taken

677
00:40:51,480 --> 00:40:53,960
us six months to get the State upon approval just

678
00:40:54,079 --> 00:40:57,800
to engage in a contract discussion with them, so that

679
00:40:57,960 --> 00:40:58,679
that is problematic.

680
00:41:04,039 --> 00:41:06,920
Speaker 2: We had several offers actually from a number of different.

681
00:41:06,760 --> 00:41:12,159
Speaker 1: Entities for PayPal, and in fact, the closer we got

682
00:41:12,239 --> 00:41:15,000
to IPO, the more more offers we got. But we

683
00:41:15,039 --> 00:41:19,199
always felt that those undervalue the company. And subsequently, when

684
00:41:19,199 --> 00:41:21,079
we were in public, I think the public markets kind

685
00:41:21,079 --> 00:41:26,360
of indicated the value of the company. So I think

686
00:41:26,840 --> 00:41:28,920
that's one of the good things about the public markets

687
00:41:29,039 --> 00:41:31,920
is that they're an objective value of companies. When you're

688
00:41:31,920 --> 00:41:34,280
a private company, it's very hard to say how much

689
00:41:34,280 --> 00:41:38,559
you're worth because you have to basically think of some metric.

690
00:41:38,880 --> 00:41:40,320
You know, are you going to go for a multiple

691
00:41:40,400 --> 00:41:42,440
of future earnings. Are you going to go off some

692
00:41:42,679 --> 00:41:45,320
something of revenue? What are your comparable is going to be?

693
00:41:45,840 --> 00:41:48,440
There are all sorts of questions. It's it's really upwor

694
00:41:48,519 --> 00:41:50,800
debate what sort of value your company is When you're public,

695
00:41:51,360 --> 00:41:54,039
it's it's you know, it's whatever the market says you're

696
00:41:54,159 --> 00:41:55,320
you're worth, that's what you're worth.

697
00:41:57,000 --> 00:42:00,000
Speaker 2: So so yeah, so I think.

698
00:42:02,000 --> 00:42:04,000
Speaker 1: eBay made a number of office prior to going public

699
00:42:05,239 --> 00:42:09,480
that were substantially blow our the value once went post

700
00:42:09,519 --> 00:42:12,000
public and that kind of cleared up the disagreement and

701
00:42:12,239 --> 00:42:13,519
then we sold them.

702
00:42:15,199 --> 00:42:17,400
Speaker 2: And what else it was? Actually you had a second

703
00:42:17,400 --> 00:42:28,480
part of the question. Yeah, eBay had a.

704
00:42:30,039 --> 00:42:32,239
Speaker 1: It was initially bill Point, and there was eBay Payments,

705
00:42:32,800 --> 00:42:36,519
and and it was really a pretty tough, long running

706
00:42:36,559 --> 00:42:41,039
battle of PayPal versus versus eBay's payment system.

707
00:42:41,840 --> 00:42:44,159
Speaker 2: And it was certainly a very challenging.

708
00:42:44,199 --> 00:42:46,519
Speaker 1: I mean, I think it was you know, there were

709
00:42:46,599 --> 00:42:48,079
times where it felt like we were trying to win

710
00:42:48,119 --> 00:42:51,719
the land war in Asia and you know, they kind

711
00:42:51,719 --> 00:42:54,079
of set the ground rules or trying to beat Microsoft

712
00:42:54,119 --> 00:42:55,199
in their own operating system.

713
00:42:55,239 --> 00:42:57,039
Speaker 2: It's really really pretty hard.

714
00:42:57,840 --> 00:43:01,079
Speaker 1: That took a lot of our effort to to actually

715
00:43:01,159 --> 00:43:05,840
beat eBay on their own system, and one of the

716
00:43:05,880 --> 00:43:09,039
long term risks, certainly for the company was that eBay

717
00:43:09,079 --> 00:43:13,239
would one day prevail, and one way to retire that risk, obviously,

718
00:43:13,360 --> 00:43:22,519
was to sell to eBay writing software during the summer

719
00:43:22,559 --> 00:43:25,960
of ninety five, trying to make useful things happen on

720
00:43:26,000 --> 00:43:30,079
the Internet, and I wrote something that allowed you to

721
00:43:30,440 --> 00:43:32,599
get maps and directions on the Internet, and.

722
00:43:32,639 --> 00:43:33,920
Speaker 2: Then something that allowed you to do.

723
00:43:35,840 --> 00:43:39,480
Speaker 1: Online manipulation of content, kind of a really advanced blogging system.

724
00:43:41,159 --> 00:43:47,880
And then we started talking two small newspapers and media

725
00:43:47,920 --> 00:43:51,559
companies and so forth, and we started getting some interest.

726
00:43:51,599 --> 00:43:53,320
I mean, have time to be like, what's the internet

727
00:43:54,320 --> 00:43:55,239
un in Silicon Valley?

728
00:43:56,000 --> 00:43:57,360
Speaker 2: But then occasionally somebody would.

729
00:43:57,199 --> 00:43:58,719
Speaker 1: Buy it and they would get a little bit of

730
00:43:58,719 --> 00:43:59,280
money from them.

731
00:44:00,760 --> 00:44:03,679
Speaker 2: And then there was basically only about six of us.

732
00:44:03,840 --> 00:44:06,679
Speaker 1: There were myself, my brother who I convinced to come

733
00:44:06,719 --> 00:44:10,960
down from Canada, and a friend of my mom's so

734
00:44:11,800 --> 00:44:14,599
and then and then three salespeople we hired on contingency

735
00:44:15,239 --> 00:44:17,880
by putting an ad in the newspaper. But things were

736
00:44:17,920 --> 00:44:21,480
pretty tough in the in the early going. I didn't

737
00:44:21,519 --> 00:44:23,199
have any money in fact, I had negative money.

738
00:44:24,119 --> 00:44:26,039
Speaker 2: I had huge student debts so.

739
00:44:28,000 --> 00:44:30,000
Speaker 1: Well, in fact, I couldn't afford a place to stay

740
00:44:30,079 --> 00:44:34,079
and an office, so I rented an office instead because

741
00:44:34,079 --> 00:44:35,960
that was that was actually I got a cheaper office

742
00:44:35,960 --> 00:44:38,039
than I could get a get a place to stay,

743
00:44:38,039 --> 00:44:39,199
and then we I just sort of slept on the

744
00:44:39,239 --> 00:44:40,760
futon and showered at the y m.

745
00:44:40,800 --> 00:44:42,679
Speaker 2: C A on Pagemall and al Camino.

746
00:44:45,679 --> 00:44:48,159
Speaker 1: That's in the best shape I've ever been, you know,

747
00:44:49,320 --> 00:44:50,639
going to shower, workout.

748
00:44:50,360 --> 00:44:51,679
Speaker 2: And you get to go.

749
00:44:53,239 --> 00:44:55,000
Speaker 1: And then there wasn't There was an I s P

750
00:44:55,239 --> 00:44:57,599
on the floor below us, just like a little tiny

751
00:44:57,639 --> 00:45:00,760
I s P and which ruled hole through the floor

752
00:45:00,880 --> 00:45:06,159
and connected a null modem cable that gave us our

753
00:45:06,199 --> 00:45:08,280
Internet collectivity for like one hundred bucks a month.

754
00:45:09,639 --> 00:45:12,519
Speaker 2: So, I mean, we had just an absurdly.

755
00:45:12,119 --> 00:45:16,480
Speaker 1: Tiny bone rate, and we also had, you know, a

756
00:45:16,559 --> 00:45:18,719
really tiny revenue stream. But we actually had more revenue

757
00:45:18,760 --> 00:45:23,119
than we had expenses. So so when we went and

758
00:45:23,199 --> 00:45:26,400
talked to VCS, we can actually well, like I said,

759
00:45:26,440 --> 00:45:29,119
it's there's no silver bullet that I can point to

760
00:45:29,199 --> 00:45:31,440
as to why the our vehicle is a lot cheaper.

761
00:45:32,039 --> 00:45:36,599
We've really focused on reducing the cost across the board.

762
00:45:38,039 --> 00:45:40,440
I mean, one thing, our overhead in a thirty person

763
00:45:40,519 --> 00:45:43,679
company is, you know, an automaticitude less than it is,

764
00:45:43,719 --> 00:45:47,239
and Lockheed're bowing just just for starters. So even if

765
00:45:47,360 --> 00:45:49,920
we did everything the same and both the same launch vehicle,

766
00:45:50,000 --> 00:45:54,320
we'd be conserveably cheaper. And then every decision we've made

767
00:45:54,400 --> 00:45:58,079
has been with consideration to simplicity. And the reason simplicity

768
00:45:58,159 --> 00:46:01,119
is because that both improves the reliability as well as

769
00:46:02,039 --> 00:46:05,280
it reduces your cost. If you've got fewer components, that's

770
00:46:05,320 --> 00:46:07,280
fewer components to go wrong and fewer components to buy.

771
00:46:09,000 --> 00:46:11,559
I think there's there's I think a fairly significant innovation

772
00:46:11,719 --> 00:46:17,000
in our airframe, which is a semi pressure stabilized monocoque

773
00:46:17,159 --> 00:46:19,559
with variable skin thickness and a common bulkhead.

774
00:46:19,840 --> 00:46:22,880
Speaker 2: If you know what that means, I need a diagram

775
00:46:23,000 --> 00:46:24,119
to explain it all.

776
00:46:24,639 --> 00:46:28,079
Speaker 1: But the net result is that it's very cheap, and

777
00:46:29,079 --> 00:46:32,679
it's very mass efficient, and I think easy to test

778
00:46:32,760 --> 00:46:36,480
and quite reliable. Our avionic system. To give you ann

779
00:46:36,519 --> 00:46:38,960
example our avionic system, we use an ethernet on the

780
00:46:39,039 --> 00:46:41,800
vehicle to communicate. They may that may not sound like

781
00:46:42,119 --> 00:46:45,400
a great innovation, but it is an orange vehicles. Well,

782
00:46:45,400 --> 00:46:48,079
the other orange vehicles communicate in the vehicle by these

783
00:46:48,599 --> 00:46:49,440
cereal cables that.

784
00:46:49,519 --> 00:46:50,719
Speaker 2: Run the entire length of the vehicle.

785
00:46:51,320 --> 00:46:54,639
Speaker 1: And so you've got these these giant copper bundles as

786
00:46:54,679 --> 00:46:56,360
thick as your arm running up and down the vehicle

787
00:46:56,559 --> 00:46:58,119
makes it heavy, it makes it expensive.

788
00:46:58,239 --> 00:47:01,199
Speaker 2: And there's just so this, there's things like that which

789
00:47:03,280 --> 00:47:09,280
when you add them all up, it makes a huge difference. No,

790
00:47:09,440 --> 00:47:11,880
that's that's a good question. That's a good question. No,

791
00:47:12,039 --> 00:47:15,039
I would not. I think space X is not this

792
00:47:15,199 --> 00:47:17,000
is advanced entrepreneur.

793
00:47:19,519 --> 00:47:22,320
Speaker 1: And it may also I can't tell you how many

794
00:47:22,320 --> 00:47:25,400
people have said that, you know, the fastest way to

795
00:47:25,480 --> 00:47:28,400
turn uh you know, but the fast way to make

796
00:47:28,440 --> 00:47:31,719
a small portune in the aerospace industries to start with

797
00:47:31,800 --> 00:47:32,280
a large one.

798
00:47:34,199 --> 00:47:36,920
Speaker 2: So you know, hopefully that doesn't doesn't work out.

799
00:47:37,199 --> 00:47:41,280
Speaker 1: But I would definitely I think space is a tough

800
00:47:41,320 --> 00:47:47,519
one for first time entrepreneurs. You're better off starting with

801
00:47:47,599 --> 00:47:50,119
something that that requires low capital, and space is a

802
00:47:50,199 --> 00:47:51,360
high capital effort.

803
00:47:54,280 --> 00:47:55,320
Speaker 2: Sorry, last question,