🔖How would I describe this book in 1 sentence?
Enthralling and exceptionally well-documented story about one of the most influential men alive.
🗺️What was the role of this book in my journey?
I came across this book in early 2021 as one of the reads in my waitlist about the entrepreneurship.
Musk's worldview and his story brought me insights into what had been happening in the technology industry in the '00s and '10s. It also gave me a broader perspective on how the startups in Silicon Valley had been run and what it would take to build a successful company during those days.
Finally, I reflected on my current situation and challenges I am facing and learned a few important lessons from Elon and his journey.
- "If the rules are such you can't make progress then you have to fight the rules. There is a fundamental problem with regulators. If a regulator agrees to change a rule and something bad happens, they can easily lose their career. Whereas if they change a rule and something good happens, they don’t even get a reward. So, it’s very asymmetric. It’s then very easy to understand why regulators resist changing the rules. It’s because there’s a big punishment on one side and no reward on the other. How would any rational person behave in such a scenario?" — Elon
- “The longer you wait to fire someone the longer it is since you should have been“ - Elon
- 1 great engineer is better than 3 average ones
- Musk has a mind that’s a bit like a calculator — if you put a number on a projector that does not make sense, he will spot it. He doesn’t miss details
- Dragon capsule project costed around $300 million to complete
- One SpaceX launch the orbit costs around $16 million
- It took 6 years, 3 failed launches, and 500 employees for SpaceX to make their first rocket launch. 4.5 years later then initially planned by Musk
- When released, Tesla Model S received the highest rating of a car — 99/100
- Smart cars initially started as a side project at Tesla
- 2 of the PayPal engineers went to Blizzard and helped to create World of Warcraft
🦅Key Elon's Principles
- Say "No" first, and then see what happens
- Do not be interested if the person knows the answer to the problem, be interested in their approach to the problem
- Guide people to take ownership over the deliverables
- Take personal ownership over the key process in the business
- Hire only the best talent
- Be always eager to learn
- Take opportunities to learn more from the experts you work with
- Establish a grand vision and people will be driven by it in your absence
- Set high standards and be the high standard. Nobody can do it in your own company except yourself
Facts About Elon
- Elon's grandfather was an adventurer. He convinced family to move to South Africa from USA. He purchased a plane and was flighting across the globe: Africa - Australia, Africa - Denmark, etc. Died when he was 72 in plane crash
- Elon has 1 brother and 1 sister, all younger
- Elon lived the majority of his childhood in a house with the whole family
- Elon's father Errol, left family when Musk was 9. Elon went to live with his father in a separate house for the rest of the childhood
- Elon has 7 children — twins, triplets, and 2 singles (2021)
- One of the Elon's children died in the infancy
- Elon sometimes would zone out in the middle of an action or a conversation. He couldn’t hear what his peers were saying. As he would entered a trance state
- Elon had incredible visualization abilities. He could imagine new concepts and inventions and how they interact with real objects
- Elon was reading 10 hours a day. He spent 2pm — 6pm in book store after school. Sometimes he could read 2 books in one day during weekends
- Elon didn't have many friends. Other kids didn't find him fun to play with.
- Elon always wanted to correct mistakes of others
- During middle and high school Musk was hunted down by the gang of bullies. He was beaten up regularly
- Upon arrival to Canada, Musk took the hardest job that paid him $18/hour. The job was cleaning up the tunnels under the windmill. Out of 20 men who took the job, only Musk and 2 more left
- Musk and his friend organized house parties for college students and took $5 entrance fee
- Musk mostly remained sober at the parties. He didn't see fun in alcohol
- Musk chose Quinn’s university over the Waterloo because there were “more good-looking women”
- Musk loved videogames. He was thinking of doing business in videogames industry. But in the end he realized “If I make the greatest videogame, what impact would it make in the world? Probably not big”. And decided not to go for videogame career
- In his research papers for economics, he eloquently combined elaborate description of concepts from different industries — physics and business
Work & Entrepreneurship
- Out of $22m received from the acquisition deal for his first business (zip2), Musk invested $16m into his next company (x.com)
- Musk already was working on the business plan for x.com while working in zip2 (2 months before the acquisition deal came in)
- Musk had snatched McLaren from the car dealer that Ralph Lauren also wanted to buy
- Musk drove his McLaren every day to the office in Silicon Valley
- Musk's PayPal shares worth was around $18m when he quitted active role in the company
- Musk wanted to build a spaceship that will take plants to Mars with his budget of $20m
- Musk wanted to buy space rockets from Russians
- When PayPal went to IPO and was acquired by eBay in 2002, Musk’s profit from PayPal deal was $180 million pre-tax
- Musk didn’t have a single vacation for years during zip2 and PayPal. The first vacation he took was in 2000 to Brazil and South Africa. During the vacation, he caught malaria and had to take an intensive care for 6 months in a hospital. His state was near-death. He lost 45 pounds
- Musk organized SpaceX first office so that engineers can sit together with business people in the workplace
- Musk had an assistant — Mary Beth Brown and the right hand who helped significantly during the SpaceX start. She was like Pepper Potts to Tony Stark industries. She worked the same amount of hours as Musk did. His assistant was very sensible to Musk's mood. Assistant brought him meals, booked flights, picked up clothes. She also was maintaining culture inside the SpaceX company — adding some details to the office like space shuttle trash bins, weekly newsletter with funny mails sent to Musk, etc. She was also doing company's books and responsible for low-level management decisions. "That's what Musk would want" — she said.
- To hire prominent engineers to SpaceX, Musk personally called dorm rooms of the most successful students of aerospace & engineering universities. The students thought that it's a prank
- Early team of SpaceX engineers worked 12 hours a day by their own
- Musk wasn’t afraid to get hands dirty — went into the cooling chamber for rocket engines in his Italian shoes and costume
- Sometimes Musk was "interrogating" SpaceX hires, approaching them in the hangar and starting to ask questions about physics, chemistry, space engineering. They thought he was quizzing them, but he wanted to learn more things from the industry experts
- Musk hosted CS and Quake tournaments between SpaceX engineers. He was incredibly skillful at online games and always winning. He usually trashtalked his opponents
- Musk checked in on contractors by personally visiting their facilities late at night to see if they are meeting SpaceX deadlines
- Musk once replied to the email of the prominent recruit at 2 AM at night in 30 minutes giving elaborate explanations on the recruit's questions about the company
- Musk paid for an eye surgery of one of his best engineers when he overheard the conversation that he can’t keep up with his health due to 100-hour weeks
- When the Falcon flight was aborted due to electronic malfunction, SpaceX employees were flying over the US to get the replacement parts over the weekend
- After the failed Falcon-1 launch, Musk wrote the postmortem comparing the Falcon lunch to the launches of the other historical spacecrafts (none of them was successful from the first try). And highlighted that SpaceX is there for a long run
- Musk didn’t bother SpaceX employees with money problems. He was very optimistic and always told people to focus on what’s important
- Musk was not an original founder of Tesla. Musk invested into Tesla in 2004. Musk was the biggest early investor in Tesla. He invested in Tesla at least in 3 rounds for $10-20 million each
- Musk focused on developing SpaceX for around 5 years before transitioning his attention to Tesla in 2007
- Musk wrote blog posts and the majority of public statements about Tesla by himself
- When Tesla Roadster deliveries were delayed, the main thing that stopped early customers from withdrawing their pre-orders is Musk’s passion and enthusiasm about the Tesla product
- In 2007 before the Roadster was shipped, employees at Tesla said they were working hard and wanted to see their families. Elon said: “I would tell those people they will get to see their families a lot when we go bankrupt”
- In late 2008, Tesla was running out of money and investors were hesitant to put their money in. Musk bluffed that he would fund the Tesla investment round by himself with the $40m loan from SpaceX. It worked. “When you have scarcity, it naturally enforces greed and leads to more interest. It was also easier for us to get back to our firms and say “Here is the deal. Go or no go”.”
- Mask used to call his engineering team during the late night when he was in bed with Riley. He talked with SpaceX team with this pillow talk voice and said them to get their stuff together
- Musk can be obsessed with typos or errors in the emails. He can fire people because of that
- Musk has a mind that’s a bit like a calculator — if you put a number on a projector that does not make sense, he will spot it. He doesn’t miss details
- Musk personally interviewed everyone out of first 1000 SpaceX employees — even janitors and technicians.
- The final challenge for every new SpaceX recruit is to write an essay to Elon Musk about why he wants to join the company
- If someone would say to Musk that the task is impossible to do, Musk would reply "Fine you're off the project now. I'm going to be the CEO of your project and I'm going to be the CEO of two other companies but I will make it work." The most incredible thing is that Musk actually did. He made it work despite people saying that's impossible
- When Tesla faced financial issues in 2011, Musk started negotiating a deal with Google for acquiring Tesla. In the next few months sales of Tesla Model S skyrocketed and the deal was no longer relevant
- During the period of pre-release of Model S, Musk set a goal for the PR department to make one announcement per week
Private Life & Relationships
- Musk liked the girl in the university. He kept following her and trying to get her on a date. He found out from her friend where she was hiding and brought her ice cream. He was very persistent — ringing her phone multiple times in a row. Everyone knew "Elon is calling"
- Musk proposed to his first wife impulsively, one minute after their fight over her exes texting her
- Musk made Justine (wife) sign the financial agreement before wedding to not compete for his money.
- On wedding Musk said to his wife that he is going to be “alpha” in this relationship
- Elon's ex organized all the events for him (birthdays, parties, etc.)
- Musk spent time to hang out and party with his Hollywood neighbors
- Justine’s personal online blog turned out to be one of the worst nightmares for Musk
- During divorce with Justine, they settled for her getting the house, $2m in cash, $80k per month in alimony and child support for 17 years and Tesla Roadster
- During dinners and parties, Musk sometimes could went up from table to go “look at the stars” because he "couldn’t stand stupid small talk"
Health & Lifestyle
- Elon tends to consume food very fast
- Elon has an unbalanced diet — with a lot of sugar and meat
- Elon can sometimes stumble for a several seconds to retrieve certain word or information from memory
- Elon can be very sloppy sometimes
- Elon might seem very humble from the beginning when you first meet him
Elon Core Characteristics & Traits
- Very persistent
- Clever & sharp-minded
- Wants to make an impact
- Has incredible visualization abilities
- Doesn’t take no for an answer
- Loves to work
- Loves to learn
- Always knows how to do it better
- Attentive to details
- Fearsome negotiator
- Sets tight and optimistic deadlines
- Sets high standards. Always expects more of his employees and contractors.
- Always sees the bigger picture
- Has the ability to stay rational and hyper focused when things go wrong
- Does not hesitate to fire people
- Wants to have control over everything
- Follow-ups on things personally to make sure everything is right
- Can see and predict markets and customer demand. Has the ability to come up with product features that customers didn't even know they need
- Fixes other people’s mistakes
- Mostly moves on his own, without the handlers
- Does not tolerate meetings to “build the relationships” with salesmen
- Worst trait of Musk (from former employee) — complete lack of loyalty or human connection
From: Elon Musk
Subject: Acronyms seriously suck
There is a creeping tendency to use made up acronyms at SpaceX. Excessive use of made up acronyms is a significant impediment to communication and keeping communication good as we grow is incredibly important. Individually, a few acronyms here and there may not seem so bad, but if a thousand people are making these up, over time the result will be a huge glossary that we have to issue to new employees. No one can actually remember all these acronyms and people don't want to seem dumb in a meeting, so they just sit there in ignorance. This is particularly tough on new employees.
That needs to stop immediately or I will take drastic action - I have given enough warning over the years. Unless an acronym is approved by me, it should not enter the SpaceX glossary. If there is an existing acronym that cannot reasonably be justified, it should be eliminated, as I have requested in the past.
For example, there should be not "HTS" [horizontal test stand] or "VTS" [vertical test stand] designations for test stands. Those are particularly dumb, as they contain unnecessary words. A "stand" at our test site is obviously a test stand. VTS-3 is four syllables compared with "Tripod", which is two, so the bloody acronym version actually takes longer to say than the name!
The key test for an acronym is to ask whether it helps or hurts communication. An acronym that most engineers outside of SpaceX already know, such as GUI, is fine to use. It is also ok to make up a few acronyms/contractions every now and again, assuming I have approved them, e.g. MVac and M9 instead of Merlin 1C-Vacuum or Merlin 1C-Sea Level, but those need to be kept to a minimum
Letter to SpaceX Employees: Going Public
From: Elon Musk
Date: June 7, 2013, 12:43:06 AM PDT
To: All All@spacex.com
Subject: Going Public
Per my recent comments, I am increasingly concerned about SpaceX going public before the Mars transport system is in place. Creating the technology needed to establish life on Mars is and always has been the fundamental goal of SpaceX. If being a public company diminishes that likelihood, then we should not do so until Mars is secure. This is something that I am open to reconsidering, but, given my experiences with Tesla and SolarCity, I am hesitant to foist being public on SpaceX, especially given the long term nature of our mission.
Some at SpaceX who have not been through a public company experience may think that being public is desirable. This is not so.Public company stocks, particularly if big step changes in technology are involved, go through extreme volatility, both for reasons of internal execution and for reasons that have nothing to do with anything except the economy. This causes people to be distracted by the manic-depressive nature of the stock instead of creating great products.
It is important to emphasize that Tesla and SolarCity are public because they didn't have any choice. Their private capital structure was becoming unwieldy and they needed to raise a lot of equity capital. SolarCity also needed to raise a huge amount of debt at the lowest possible interest rate to fund solar leases. The banks who provide that debt wanted SolarCity to have the additional painful scrutiny that comes with being public. Those rules, referred to as Sarbanes-Oxley, essentially result in a tax being levied on company execution by requiring detailed reporting right down to how your meal is expensed during travel and you can be penalized even for minor mistakes.
YES, BUT I COULD MAKE MORE MONEY IF WE WERE PUBLIC
For those who are under the impression that they are so clever that they can outsmart public market investors and would sell SpaceX stock at the "right time," let me relieve you of any such notion. If you really are better than most hedge fund managers, then there is no need to worry about the value of your SpaceX stock, as you can just invest in other public stocks and make billions of dollars in the market.
If you think: "Ah, but I know what's really going on at SpaceX and that will give me an edge," you are also wrong. Selling public company stock with insider knowledge is illegal. As a result, selling public stock is restricted to narrow time windows a few times per year. Even then, you can be prosecuted for insider trading. At Tesla, we had both an employee and an investor go through a grand jury investigation for selling stock over a year ago, despite them doing everything right in both the letter and the spirit of the law. Not fun.
Another thing that happens to public companies is that you become a target of the trial lawyers who create a class action lawsuit by getting someone to buy a few hundred shares and then pretending to sue the company on behalf of all investors for any drop in the stock price. Tesla is going through that right now even though the stock price is relatively high, because the drop in question occurred last year.
It is also not correct to think that because Tesla and SolarCity share prices are on the lofty side right now, that SpaceX would be too. Public companies are judged on quarterly performance. Just because some companies are doing well, doesn't mean that all would. Both of those companies (Tesla in particular) had great first quarter results. SpaceX did not. In fact, financially speaking, we had an awful first quarter. If we were public, the short sellers would be hitting us over the head with a large stick.
We would also get beaten up every time there was an anomaly on the rocket or spacecraft, as occurred on flight 4 with the engine failure and flight 5 with the Dragon prevalves. Delaying launch of V1.1, which is now over a year behind schedule, would result in particularly severe punishment, as that is our primary revenue driver. Even something as minor as pushing a launch back a few weeks from one quarter to the next gets you a spanking. Tesla vehicle production in Q4 last year was literally only three weeks behind and yet the market response was brutal.
BEST OF BOTH WORLDS
My goal at SpaceX is to give you the best aspects of a public and private company. When we do a financing round, the stock price is keyed off of approximately what we would be worth if publicly traded, excluding irrational exuberance or depression, but without the pressure and distraction of being under a hot public spotlight. Rather than have the stock up during one liquidity window and down during another, the goal is a steady upward trend and never to let the share price go below the last round. The end result for you (or an investor in SpaceX) financially will be the same as if we were public and you sold a steady amount of stock every year.
In case you are wondering about a specific number, I can say that I'm confident that our long term stock price will be over $100 if we execute well on Falcon 9 and Dragon. For this to be the case, we must have a steady and rapid cadence of launch that is far better than what we have achieved in the past. We have more work ahead of us than you probably realize. Let me give you a sense of where things stand financially: SpaceX expenses this year will be roughly $800 to $900 million (which blows my mind btw). Since we get revenue of $60M for every F9 flight or double that for a FH or F9-Dragon flight, we must have about twelve flights per year where four of those flights are either Dragon or Heavy merely in order to achieve 10% profitability!
For the next few years, we have NASA commercial crew funding that helps supplement those numbers, but, after that, we are on our own. That is not much time to finish F9, FH, Dragon V2 and achieve an average launch rate of at least one per month. And bear in mind that is an average, so if we take an extra three weeks to launch a rocket for any reason (could even be due to the satellite), we have only one week to do the follow-on-flight.
Below is my advice about regarding selling SpaceX stock or options. No complicated analysis is required, as the rules of thumb are pretty simple. If you believe that SpaceX will execute better than the average public company, then our stock price will continue to appreciate at a rate greater than that of the stock market, which would be the next highest return place to invest money over the long term. Therefore, you should sell only the amount that you need to improve your standard of living in the short to medium term. I do actually recommend selling some amount of stock, even if you are certain it will appreciate, as life is short and a bit more cash can increase fun and reduce stress at home (so long as you don't ratchet up your ongoing personal expenditures proportionately).
To maximize your post tax return, you are probably best off exercising your options to convert them to stock (if you can afford to do this) and then holding the stock for a year before selling it at our roughly biannual liquidity events. This allows you to pay the capital gains tax rate, instead of the income tax rate.
On a final note, we are planning to do a liquidity event as soon as Falcon 9 qualification is complete in one to two months. I don't know exactly what the share price will be yet, but, based on initial conversations with investors, I would estimate probably between $30 and $35. This places the value of SpaceX at $4 to $5 billion, which is about what it would be if we were public right now and, frankly, an excellent number considering that the new F9, FH and Dragon V2 have yet to launch.