Thread by @trengriffin

I plan to read "Liftoff: Elon Musk and the Desperate Early Days That Launched SpaceX" this weekend. I may tweet a few comments as my journey through the book unfolds. People *love* rockets with a passion that is uncommon, especially billionaires. amazon.com/Liftoff-Desper…

2/ Quiz: Why was cost not dropping?

"Companies in the US and Russia still used the same decades-old technology to launch rockets into space, and the price kept going up. It seemed like things were going in the wrong direction, so Musk founded SpaceX." spacenews.com/book-excerpt-l…

3/ That question is the business equivalent of the type of question Elon Musk asks potential engineering employees:

"You’re standing on the surface of the Earth. You walk one mile south, one mile west and one mile north. You end up exactly where you started. Where are you?”

4/ "Musk doesn’t place much emphasis on whether applicants give the right answer and instead uses their response to analyze how they process information and approach problem solving." cnbc.com/2018/10/09/why…

The purpose of my business question in 2/ in this thread is identical.

5/ What I like most about the first chapter of Liftoff is the focus on these core issues in a "zero to one" startup:

1. Culture (including the critical importance of early hires)
2. Hiring (including interviewing);
3. Work styles needed to survive;' and
4. Variant perception.

6/ Story: In 1995 as founders we were evaluating two candidates. #1 had great resume credentials. During breaks between interviews he read the Sports section of USA Today. The second had more ordinary credentials, but had a background and attitude exuding hustle. We hired #2.

7/ In an interview you must look for tiny "tells" since time with the candidate is limited. Candidate #2 asked for materials he would read about our business and technology. He showed genuine passion for the goals of our business. Later in his career he worked on the SpaceX team.

8/ Our hire #3 might have been called an assistant by some people, but this person was a key employee. Anyone who treated this person without respect wasn't hired. Ever. Candidates not offering to clean up any coffee, soda or food consumed during interviews is also a hiring tell.

9/ "Musk made hiring a priority. He personally met with every single person the company hired through the first three thousand employees." (page 20 of Liftoff)

The culture you build is primarily driven by the people you hire (particularly early hires). 25iq.com/2015/02/13/a-d…

10/ Essential truth for any zero to one startup!

"The [SpaceX] team was so small that everybody knew everybody, and each employee pitched in as needed with other departments. Everybody was expected to carry their own weight, and then a bunch more." (from Liftoff on page 16)

11/ What's the response I look for in my business question in #2 in this thread? I want to know what mental models they use when formulating an answer. Do they understand the power of incentives? A high score is assigned if they consider demand elasticity for rocket launches.

12/ I planned to read this ~60K word book in one or two sittings, but I'm going to slow it way down.

Chapter 1 of Liftoff has already surfaced many essential ideas I have talked about in my 300 25IQ posts in a real story. Teaching with a story works best.25iq.com/featured-indiv…

13/ This in Chapter 1 makes me excited about the rest of the book:

"There are basically two approaches to building complex systems like rockets: linear and iterative design."

"The mantra with [iterative] is build and test early, find failures and adapt."

(Page 24 Liftoff)

14/ "The engineers designing Falcon 1 rocket spent much of their time on the factory floor, testing ideas rather than debating them. Talk less do more.

Failure was an option because the boss often asked the impossible of his team."

Falcon 9 landing a booster astounds me still.

15/ What's the answer to the business question in 2/?

Traditional launch providers believed lower prices wouldn't result in more profit so they kept prices flat to increasing. Musk (and others) believe this price elasticity assumption creates opportunity.google.com/amp/s/25iq.com…

16/ The financial bet by Musk, Bezos and other new rockets is: as prices drop demand for launching payloads into space will rise. This turns the traditional "milk existing demand" model of traditional launch providers upside down. When SpaceX reduces cost, it reduces prices.

17/ The assumption about rocket launch demand elasticity is so important to SpaceX that Musk has made an additional bet on the Starlink broadband internet constellation.

The best way to predict X happening in the future is to make it happen yourself. X is more launch demand.

18/ Starlink has an additional purpose: to eventually generate free cash flow. The plan is for Starlink's cash to replace cash from new investors enabling SpaceX to aggressively lower prices for launch toward Musk's target of $20 a kilogram. Traditional launch providers reaction:

19/ The business of launching payloads into space has never been normal. Like Mentos mints ("the freshmaker"), it has multiple purposes. For large nations rockets are both a jobs program and a part of national defense/power politics. For Musk they can get him to Mars and beyond.

20/ What else do I like about Chapter 1 of Liftoff?

The focus on hiring missionaries who can get through the valley of death that kills most zero to one startups.

Elon taking 50% of his capital from Paypal and investing it as house money in a long shot bet with massive upside

21/ On page 26 of the book "Liftoff" the author describes how culture must overcome patterns people may have learned at traditional launch or aerospace companies:

"The last thing Musk wanted to hear from an employee was 'But that's how it's always been done.'"

Break eggs!