The Value of Frugality and Expense Management in Business

What I learned from reading The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos by Christian Davenport. 

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[0:54] Musk and Bezos were the leaders of this resurrection of the American space program, a pair of billionaires with vastly different styles and temperaments. Always audacious, Musk had plowed far ahead, his triumphs and failures commanding center stage. Bezos remained quiet and clandestine, his mysterious rocket venture kept hidden behind the curtain.

[1:36] Musk, the brash hare, was blazing a trail for others to follow, while Bezos, the secretive and slow tortoise, who was content to take it step by step in a race that was only just beginning.

[13:46] “How is the situation in the year 2000 different from 1960? What has changed?” he said. “The engines can be somewhat better, but they’re still chemical rocket engines. What’s different is computer sensors, cameras, software. Being able to land vertically is the kind of problem that can be addressed by those technologies that existed in 2000 that didn’t exist in 1960.”

[17:33] He started a company called Zip2 that would help print newspapers get their content online, and it immediately had customers lining up, from the New York Times to Hearst. Musk sold the company to Compaq in 1999 for about $300 million. His next venture was called X.com, an online bank that merged with PayPal. The online financial payment system grew fast, gaining a million customers within two years. eBay bought PayPal for $1.5 billion, netting Musk $180 million. He was thirty-one years old.

[20:27] Musk, a ravenous reader of science fiction, had expected that by this point in his life there’d be a base on the moon and trips to Mars powered by the robust space program built on the Apollo lunar missions. If in the 1960s, the United States could send a man to the moon in less than a decade, surely there were more great things to come. He was overcome with what he called a “feeling of dismay.” “I just did not want Apollo to be our high-water mark,” he said. “We do not want a future where we tell our children that this was the best we ever did. Growing up, I kept expecting we’re going to have a base on the moon, and we’re going to have trips to Mars. Instead, we went backwards, and that’s a great tragedy.”

[21:09] Musk had read every book he could find on the subject, as Beal had. And he came away convinced that the best way to acquire a rocket was to build it himself, no matter how many times friends told him he was crazy.

[23:54] He wasn’t just selling his rocket, but what it represented—the crazy idea that a small startup could succeed in space.

[25:59] Musk was intense, preternaturally focused, and extremely determined. “This was not the kind of guy who was going to accept failure.”

[26:38] Most of us struggle with fear. We dread looking dumb. I found Elon fearless in this regard. He’s not afraid to ask a question that proves he doesn’t understand something.

[29:53] SpaceX’s mantra was to set audacious, nearly impossible goals and don’t get dissuaded. Head down. Plow through the line.

[33:38] The turtle was Blue Origin’s mascot, the embodiment of another of Bezos’s favorite sayings, one derived from US Navy SEAL training: “Slow is smooth and smooth is fast.”

[40:07] Every summer Bezos was shipped off to his grandfather’s ranch. It was rural and isolated, a place where Bezos learned the value of self-reliance from his grandfather.

[43:20] “I was very difficult to punish for my parents because they would send me to my room, and I was always happy to go to my room because I would just read” Bezos said.

[45:42] Blue Orgin’s “Jobs” page ad was less welcoming, even arrogant. Applicants needed to be “highly qualified and dedicated individuals who meet the following criteria: “You must have a genuine passion for space. Without passion, you will find what we’re trying to do too difficult. There are much easier jobs. “You must want to work in a small company. If you can happily work at a large aerospace company, you’re probably not the right person. “Our hiring bar is unabashedly extreme. We insist on keeping our team size small (measured in the dozens), which means each person occupying a spot must be among the most technically gifted in his or her field. “We are building real hardware—not PowerPoint presentations. This must excite you. You must be a builder.”

[50:33] Death was more likely a “when, not if” outcome, an unavoidable fact that they should confront and plan for. But death shouldn’t stop them. It shouldn’t get in the way. Progress was not possible without it. That was true in space as it was in all manner of expeditions, from crossing the Atlantic, to exploring the poles, to opening up the West.

[53:31] Elon on space exploration: “The thing that actually gets me the most excited about it is that I just think it’s the grandest adventure I could possibly imagine. It’s the most exciting thing—I couldn’t think of anything more exciting, more fun, more inspiring for the future than to have a base on Mars,” he once said. “It would be incredibly difficult and probably lots of people will die and terrible and great things will happen along the way, just as happened in the formation of the United States.”

[56:13] Elon added: “For my part, I will never give up, and I mean never.”

[1:08:04] The result: a system that met the air force’s requirements, for a tenth of the cost. “We had to be super scrappy,” Musk said. “If we did it the standard way, we would have run out of money. For many years we were week to week on cash flow, within weeks of running out of money. It definitely creates a mind-set of smart spending. Be scrappy or die: those were our two options. Buy scrap components, fix them up, and make them work.”

[1:12:50] For a while the company had been using a toxic cleaner for its engine nozzles, which it intended to reuse. But that cleaner was expensive and difficult to handle—it had to be used in a separate, clean room because it was so toxic. Then someone discovered that citric acid worked just as well. So, the company started buying it by the gallon, an easier, less expensive solution that worked better. “Now I’m the largest purchaser of lemon juice in the country,” Bezos told her, letting loose one of his trademark cackles.

[1:21:45] “The vast majority of people at the company today have only ever seen success,” Elon said. “You don’t fear failure as much.” And so, when he sent out his e-mail before each launch, asking people to come forward, it didn’t “resonate with the same force” as it had when the company was small and scrappy and feared going out of business. But now even the uninitiated knew the driving power of failure—and fear—“and we’ll be the stronger for it,” he said.

[1:25:12] “The things that you work hardest for, for the longest periods of time, always bring you the most satisfaction,” Bezos explained.

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