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There are so many funny stories from the early days of SpaceX. Hope you enjoy this little trip down memory lane. And let me know if I missed anything in the comments!

ABOUT JOHN COOGAN:
I am the co-founder of http://soylent.com and http://lucy.co, both of which were funded by Y Combinator (Summer 2012 and Winter 2018).

I've been an entrepreneur for the last decade across multiple companies. I've done a lot of work in Silicon Valley, so that's mostly what I talk about. I've raised over 10 rounds of venture capital totaling over $100m in funding.

I work mostly in tech-enabled consumer packaged goods, meaning I use software to make the best products possible and then deliver them to the widest possible audience. I'm a big fan of machine learning, python programming, and motion graphics. 

OTHER VIDEOS:
Peter Thiel’s Big Bet on Space Manufacturing - https://youtu.be/1FNQ108h8iM
The Only Reason SpaceX Works (Gwynne Shotwell) - https://youtu.be/K1xWaua-nLI

CONTACT:
You can get in touch with me via Twitter: https://twitter.com/johncoogan

Disclaimer: This video is purely my opinion and should not be regarded as a primary source. I am not a financial advisor and this is not a recommendation to buy or sell securities. Always do your own due diligence.

SpaceX turns 20 years old in a few months, and Elon has certainly made a lot of progress in that time.

The early days were incredibly difficult for the company.

Test launches kept failing, suppliers weren't delivering, and bankruptcy was always just around the corner.

There was even a group of drunk Russians who almost ruined everything, but we'll get to that story in a minute.

The early history of SpaceX is a powerful lesson in the importance of perseverance.

So let's go back to the year 2000 and the very beginning of SpaceX.

It was October and Elon Musk, who was serving as the CEO of PayPal

at the time, was in Sydney, Australia to watch the Olympic Games with his girlfriend.

PayPal was in turmoil as executives and investors argued over which direction to take the company.

time he made it back to Palo Alto, he was out of a job.

Getting fired from PayPal was definitely not part of Elon's plan, but there was a silver lining.

He had always been interested in space travel, and now that he wasn't in charge of a growing company, he could spend as much time as he wanted exploring his true passions.

It was a bit of a blessing in disguise, since what he would go on to build at SpaceX would be dramatically more ambitious than PayPal.

But it would require a ton of work, so he started studying.

First, he joined a space advocacy non-profit called the Mars Society.

The organization was filled with tons of scientists and researchers who

Elon didn't want to just talk about space exploration, though.

So he started pitching an idea he called the Mars Oasis.

His plan was to send a small greenhouse to Mars that would grow plants in Martian soil.

Elon believed that if people saw concrete evidence that life was possible on the red planet, it would reinvigorate interest in space exploration.

After we landed a man on the moon and the space race came to a close, NASA funding fell significantly and no 1 was seriously working on Mars colonization.

He needed a rocket, and not just any rocket, a big 1.

So he assembled a crack team of experts to help him find the ideal rocket.

He first phoned Adeo Ressi, who was 1 of his friends from UPenn back in his college days.

But Adeo didn't have any space experience, so Elon called Jim Cantrell.

Cantrell had worked on various joint missile defense programs conducted between America and Russia, and was perfect for this job.

See, when Cantrell first picked up the phone, Elon told him that he was a billionaire, which he wasn't yet, who wanted to save humanity by sending rockets to Mars.

It sounded like the ravings of a madman, so Cantrell was very wary to meet Elon in person.

Just to be safe, he insisted that they meet at the Denver airport behind the security checkpoint so he could guarantee that Elon wouldn't have any weapons on him.

Fortunately, once they sat down and had a

chance to talk through Elon's full vision, Cantrell was convinced and agreed to help out.

So the 3 of them flew to Paris, where They met with a French aerospace company to discuss the purchase of a rocket.

But the only rockets available were over $100 million each.

Even though Elon was rich, he wasn't that rich yet.

He only had about $30 million, which he had made from the sale of his first company, Zip2, so he had to find another option.

The team then flew from Paris to Moscow in hopes of finding a cheaper rocket.

After the fall of the Soviet Union, demilitarization treaties required that Russia decommission thousands of intercontinental ballistic missiles, or ICBMs.

These were well-designed rockets, and after you removed the nuclear warhead from them, they could definitely be used as orbital launch vehicles.

While they were in Russia, Elon and his team scheduled meetings with 2 separate Russian space organizations.

They thought it would be easy to buy an old ICBM, since they were basically just sitting around useless at this point.

But negotiations with the Russians turned out to be close to impossible.

I really enjoyed Adeo's account of the whole fiasco.

He said, Then we started having meetings with the Russian space program, which is basically fueled by vodka.

We'd all go into this little room and every single person had his own bottle in

They'd toast every 2 minutes, which means 20 or 30 toasts an hour.

To space, to America, to America in space.

I finally looked over at Elon and Jim and They were passed out on the table.

a dead end, but Elon was willing to do anything to get

He spent hours talking to the Russians, just in order to get them to open up a bit about what they actually had in stock.

And they weren't exactly friendly to his inquiries.

During 1 particularly heated exchange, 1 of the Russians actually spit on Elon in disgust.

But even all those ridiculous events in Russia didn't end negotiations entirely.

For the next meeting, the Russians flew to Los Angeles to meet with Elon on his home turf, but They seemed more interested in partying than doing business.

They reportedly called him and asked for $5, 000 in cash to go clubbing for the night.

Now, it's not exactly easy to withdraw $5, 000 from a bank on a weekend, and ATMs have limits.

But Elon's friend, Adeo, knew someone who worked at the Mondrian in West Hollywood and kept lots of cash on hand.

It must have been a ridiculous favor to ask someone to borrow thousands of dollars from the hotel safe, but it worked.

The Russians were appeased and spent the night partying.

For their third meeting, Elon was more determined than ever.

It was February of 2002, and at this point, Elon had been trying to find a rocket for over a year with no luck.

So he flew to Russia, but this time he brought Mike Griffin.

This guy was a space industry veteran, and actually went on to lead all of NASA in 2005.

Griffin brought a level of seriousness to the discussions that helped move negotiations forward and Elon was finally able to get a quote.

There was only 1 problem, it was still too high.

The Russians wanted $8 million for a single rocket.

Elon was willing to pay the $8 million, but for that price, he wanted 2 rockets.

The Russians held firm to their original pricing and wouldn't cut a deal with Elon, so he stormed out

of the meeting into the freezing Moscow air outside and took a cab back to the airport.

On the flight back to America, Elon's team ordered a round of drinks to celebrate getting out of Russia alive.

He had his laptop open and was already thinking about his next step.

He started building an Excel model for rocket construction costs, and

a rocket came from raw materials like aluminum and copper.

There were tons of inefficiencies, most of which could be eliminated with careful planning.

Historically, the space industry has operated using a cost-plus model, which means that the rocket manufacturer will total up all of their costs and then add a profit margin on top.

This leads to perverse incentives, though, since the higher your costs are, the higher your profits will be.

And governments are notoriously bad at demanding lower costs.

On that flight, Elon discovered that if he streamlined the entire rocket construction process and cut out the inefficient subcontractors, he could get to orbit for a fraction of the industry standard cost.

Even though Elon started by planning to go straight to Mars, realistically, he had to start smaller.

So he settled on a small payload rocket where he could prove out his ideas before going bigger.

He'd been tracking the industry for years and found that until the 1990s, the vast majority of launches were transporting large satellites, usually for government agencies.

There was no way Elon could afford to build a rocket big enough to compete for these types of contracts,

at least initially, but satellites were getting smaller.

Increasingly, smaller telecommunications satellites were providing critical connectivity to private sector companies, and Elon believed that for around $100 million, he could build a rocket that could get those satellites into orbit.

That still wasn't a ton of money, though, and a good portion of that was going to need to go toward designing the rocket engine.

His name was Tom Mueller, and he'd been obsessed with building model rockets since his childhood.

After graduating from the University of Idaho with a degree in mechanical engineering, Mueller moved to California and was hired by TRW.

While there, Mueller developed several advanced liquid rocket engines, most notably the TR-106, which generated 650, 000 pounds of thrust.

It was a huge achievement, but after 15 years climbing the corporate ladder, he was ready for a change.

Mueller wanted to move faster and try out new ideas, but TRW employed over 100, 000 people and was hesitant to take big risks.

of amateur rocket enthusiasts called the Reaction Research Society.

the Mojave Desert to launch rockets they'd built in their own garages.

When Mueller was at 1 of these events, he met a man named John Garvey.

The 2 hit it off immediately and started working together on nights and weekends

They called it the BFR, which, if you follow SpaceX at all, you probably know what that stands for already.

Now, we don't know for sure, but rumor has it that the BFR was the largest amateur rocket engine ever built.

It could generate 12, 000 pounds of thrust, and it was enough to impress Elon when he saw it

Elon wanted to deliver a half-ton payload to orbit, and needed 80, 000 pounds of thrust to do it, but he could tell that Mueller could deliver if he just had a little bit more budget.

So Elon made both Mueller and Garvey job offers to join SpaceX.

Garvey declined, but Mueller signed on as the first official employee and VP of propulsion.

Elon would definitely need more talented engineers to make his dream a reality, so he started recruiting an aerospace engineer named Chris Thompson to work on the body and structure of the rocket.

Thompson had worked at Boeing and was the perfect person for the job, so he joined SpaceX as employee number 2.

This new team immediately started planning what would become the Falcon 1.

The rocket needed to deliver a half-ton satellite to orbit, and not much else.

All the reusability stuff you hear about nowadays was still a long way away.

Just getting off the launch pad in 1 piece would be a big enough challenge, and the Falcon 1 had to do it on a shoestring budget.

Obviously, it's tough to build a big rocket without a big budget.

Even basic materials are extremely expensive, after all.

But the SpaceX team was working from a blank slate, so they didn't have any legacy technology weighing them down, and they could design completely from first principles.

They still needed a bit more money, though.

Luckily, PayPal was just about to go public, and Elon had held on to a huge stake in the company.

In February of 2002, the IPO went off flawlessly, and Elon suddenly had an extra $165 million to play with, and he wasn't about to just sit on all that cash.

He immediately went out and rented a 30, 000 square foot warehouse in El Segundo, California to use as

Hiring was also top of mind for Elon, so he hired Hans Konigsman as his VP of avionics.

Before joining SpaceX, Konigsman had worked at Microcosm developing low-cost rockets and knew what it took to deliver quickly without sacrificing on quality.

The pieces were finally coming together, so Elon registered SpaceX as a real company on May 6th of 2002.

To celebrate the occasion, Elon threw a party with a mariachi band in what looks like a completely unfurnished office.

I guess people don't need office chairs if they're dancing.

With most of the leadership team in place, Elon began hiring more engineers to help with the more technical aspects of rocket development.

And his strategy here was really brilliant.

He already had some solid industry veterans in place, so

he focused on engineering students with 0 work experience.

And he took a very hands-on approach here, personally calling universities to get in contact with the top-performing students.

It's hilarious to imagine getting a personal phone call from Elon Musk when you're sitting in your dorm room nowadays, but back then, he was a complete no-name in the aerospace industry.

Taking chances on young engineering students allowed Elon to keep costs low, and he extended this thinking into his entire business.

He knew that the space industry had been plagued by complex networks of contractors and subcontractors.

If SpaceX was going to succeed, they would need to do things differently.

And Elon really didn't hold back when it came to doing things differently.

Nearly all rockets are manufactured horizontally, but SpaceX actually found that it would be cheaper to build the entire rocket vertically instead.

But it definitely challenged some common knowledge here in the states.

But that's the type of creative thinking you need to employ if you're going to build a rocket with 200 employees instead of 20, 000.

When you're understaffed, the natural reaction is to try and outsource more of the work to third-party contractors.

But Elon really tried to do the opposite.

He was constantly trying to bring any expensive or time-consuming activity in-house as soon as possible.

SpaceX even spent $10 million building a welding workshop, just so they could make more critical rocket parts in-house.

This strategy served them well, and by early 2003, the first Merlin engine was ready for testing.

But they couldn't just turn it on in the El Segundo warehouse.

There's always a risk of an engine exploding, so you need a big open space to run a safe test.

And you know what they say, everything's bigger in Texas.

So SpaceX headed to McGregor, Texas and set up shop in a defunct rocket testing facility.

The site was pretty well equipped and even had a massive concrete tripod for mounting rocket engines.

The only problem was that McGregor was 1400 miles from Los Angeles, so every time the SpaceX engineers wanted to run a test, they had to rent a Hummer and tow the engine for days just to get there.

It wasn't easy, but it got the job done, at least most of

1 test was cut short by the United States Secret Service.

They pulled up just as the SpaceX team was about to turn on the engine and stopped the test.

It turned out that the Merlin engine, which had been mounted on the tripod, was pointing directly at President Bush's ranch, which wasn't far from McGregor.

They must have had some pretty good intel to pick up

But the incident led the SpaceX team to make sure to inform the local community before each test fire.

Even though SpaceX now had a viable engine testing facility, they still needed a place to actually launch the rockets.

They initially looked at Vandenberg Air Force Base in California, which would have been great because it's so close to the main SpaceX headquarters.

A Titan IV rocket with a $1 billion spy satellite on board was sitting on the launch pad just waiting to get launched.

The schedule for this satellite was constantly shifting, and until it took off, SpaceX couldn't do anything.

if the SpaceX launch failed, debris from the explosion could damage the billion-dollar satellite.

Elon and his team spent 6 months waiting for the Air Force to clear the launch site, but eventually they got frustrated and started looking for a new option.

They had already scouted a few potential launch pads in the Pacific, and 1 location stood out in particular.

It was the Kwajalein Atoll in the Marshall Islands, and it satisfied a lot of

It had already been used as a missile defense test site, and was close to the equator, so SpaceX started refurbishing the facilities in late 2005 and began to prepare for the launch of Falcon 1.

At this point, SpaceX was already a few years behind schedule.

The original plan was to launch the first rocket by October of 2003, but that didn't matter to Elon.

He was still moving incredibly fast by industry standards.

In early 2006, the SpaceX team packed up the Falcon 1 and shipped it to Kwajalein by boat.

Once it arrived, the engineers completed the final assembly and were ready to launch.

Elon gathered with his team to watch the launch, and at first, everything went smoothly.

The first stage Merlin engine ignited, and the rocket lifted off, but just 33 seconds later the engine caught fire and exploded.

Even though this was the first flight ever, Elon was so confident that it would work, he had loaded the rocket with a fully functional satellite, which crashed through the roof of a shed on the island.

After digging through the wreckage, engineers found the culprit responsible for the explosion.

It was a single corroded bolt, which had been overlooked during inspections.

Even though this launch was a failure, the SpaceX team still went out for drinks to celebrate the milestone.

They got back to work pretty quickly, and just a few weeks later the team was ready for launch number 2.

The trip from Los Angeles required a 5 hour flight to Hawaii, an overnight layover, another flight to the Marshall Islands, and then a military transport ferry to get to the actual atoll.

And island life on this tiny military outpost doesn't quite compare to Los Angeles.

Since it's a military site, there aren't really any tourists and the island basically only has 2 hotels.

The rooms are run down and the TV only shows military channels.

There are 2 bars on the island, and I'm sure that after a few weeks the SpaceX employees basically knew everyone on a first name basis.

But what the island lacks in entertainment, it more than makes up for with its beautiful nature.

SpaceX employees would spend their time going scuba diving and exploring the coral reefs.

During World War II, a German cruiser ship had sunk in the lagoon and became a beautiful artificial reef, perfect for curious SpaceX divers to explore.

SpaceX launched their second Falcon 1 rocket.

they were a bit more realistic about their odds of success, and used a dummy payload instead of a customer satellite.

The first and second stages both fired successfully this time.

But about 4 minutes into the flight, the rocket started to wobble.

The Merlin engine kept working for another 3 minutes, but ultimately failed to push the rocket into a proper orbit.

1 year later, SpaceX tried for a third time, and again they failed to deliver the rocket to orbit.

The first stage was working perfectly, but after it separated from the second stage, it kept accelerating, which caused the 2 pieces to smash into each other.

This must have been a crushing defeat for the entire SpaceX team.

They had been working for years on this project and couldn't get it to work.

Even worse, the company was now about to run out of money.

Elon knew he was close, though, and really wanted to get 1 more launch together, so he called up his PayPal co-founder Peter Thiel and got him to invest $20 million in the company.

Now, this might sound like a lot of money for most startups,

But at SpaceX, it would only cover a few months of expenses, so they had to work quickly.

There was a glimmer of hope on the horizon, though.

NASA was about to award a massive $1.6 billion contract for 12 supply runs to the International Space Station.

usual big names would be competing for the contract, but NASA was open to giving a startup like SpaceX a real shot.

This was the chance that Elon needed to save the company, but there was no way he could win the contract without a successful launch under his belt.

There was simply no time to build an entirely new Falcon 1 from scratch, But SpaceX did have a spare rocket in the LA factory.

So the team packed up the rocket and rented a military cargo plane to fly the rocket to the launch site.

A small group of SpaceX employees rode inside the plane with the rocket.

As the plane started to descend, they noticed that dents were starting to form in the rocket's body.

The pressure levels inside the rocket were destabilizing and it could implode at any minute.

So 1 of the engineers stepped up to fix the problem and in doing so, probably saved the entire company.

He climbed inside the rocket and used a wrench to open a valve that equalized the pressure.

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How Elon Started SpaceX