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Comment by cookiecaper | Hacker News Reader

SpaceX is possible because Elon was part of the PayPal Mafia. To start a company like SpaceX or Tesla, you must be fantastically wealthy -- at least billions in net worth. Elon is one of the only people who could've started SpaceX.

This is not to detract from the contributions that Elon has made, but to indicate that there are potential Elons all around you. How many engineers would've built something similar if they had resources? Consider that even John Carmack, despite millions in personal fortune, had to abort Armadillo Aerospace because it was too expensive. If he had a PayPal-size exit, we may've had a SpaceX many years earlier!

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What you describe is more like Blue Origin, where Bezos can just comfortably pump in a billion each year to build up his rocket company.

Paypal sold for 1.5B [1], and Musk just got 165 million.

That's not a lot of money for building a space company, especially while buying into and growing Tesla at the same time.

Musk risked and almost lost everything, with both SpaceX and Tesla coming close to bankruptcy at the same time.

The SpaceX approach of ignoring conventions, building components in house on the cheap, plus Musks drive/vision and capability to attract young and motivated (relatively cheap) employees probably made the difference there. As well as ultimately attracting Nasa funding to develop a commercially viable rocket.

[1] https://en.wikipedia.org/wiki/PayPal#History

After reading a biography on Musk I basically came to the conclusion that his life has been a series of 1 in 1000 bets that have paid off:

- Paypal

- Tesla

- SpaceX

etc

Multiple times in the book it describes how he gambled it all on whatever project he was working on and it paid off for him. He is clearly brilliant and exceptional at hiring great people work for him. I think it's also important to realize that survivor bias is also at play here.

> I think it's also important to realize that survivor bias is also at play here.

Yup. The odds of winning three 1-in-1000 bets is 1:1e9, so we should expect to have a couple Elon Musks in the world out of dumb luck. =)

Assuming everyone took the bets

Elon was almost certainly not a billionaire when he founded SpaceX. His share of the PayPal sale was $165 million, of which he used $100 million to capitalize SpaceX. He may have had a bit more money in addition to the PayPal payout, but not another $835 million. Certainly not multiple billions.

Edit to add: Elon was first included on the Forbes list of billionaires in 2012, 10 years after he founded SpaceX. At that time Forbes estimated his net worth at $2 billion. In October 2011 they estimated his net worth at $680 million.

I'm not necessarily disagreeing with your point, but having at least one successful exit + being willing to stake $100mil means that other investors are much more likely to sign on.

My key takeway on Elon Musk is how much he is willing to bet on something he believes in. Capitalizing SpaceX with $100M when he only had $165M is gutsy. Not saying $65M is chump change, but there is an opportunity cost to putting over half your net worth in one thing. Most people in that position diversify their investments across lots of things, or try to preserve more of it for the future, or are (probably irrational) afraid of losing it and put it aside in a foundation or something.

This is a really good point, and honestly pretty inspirational.

I think the key point is that he wasn't doing it just to make more money, but to do what he always wanted to do (make humanity an interplanetary species). Taking the time to break that huge goal down into steps that can be individually profitable (and thus fuel the next stage) and then executing on them so well is just... awesome.

Your comment inspired me to go hunting for the original SpaceX pitch deck (or similar initial documents). I found one but it's a lot more recent - anyone have a link to the first one?

It's the difference between just wanting to carefully make more money and wanting to do something important. Or to quote Walt Disney "We don't make movies to make money, we make money to make more movies."

What you say, actually supports the original premise, that companies do depend on that one person who is the shining star.

There are hundred's of billionaires, wealthy from selling their companies. How many of them thought about building a company like SpaceX, literally putting their whole fortune on one thing, which at the time, had no clear chance of success.

There are many, not potential, but actual Elons out there. Only one has the right circumstances buoy him to the place where his visions come to fruition. And those circumstances include every factor in the spectrum, from personal traits, ideas, capabilities, etc to social, economic and cultural factors.

Almost all of technological change, one that spearheads mankind's next push into the great, is driven by people with will the size of mountains. It is their will that shakes the foundations, bull dozes the old, constructs the bigger, faster, higher new.

And Intel probably lost such a person.

> companies do depend on that one person who is the shining star.

> There are hundred's of billionaires

So why couldn't a non-brilliant billionaire team up with a brilliant non-billionaire to make cool shit happen? Or a capital-raising syndicate? Isn't that how capitalism is supposed to work?

That too happens. But, when the money is from a third party, the risk apetite plummets, usually.

That's only true if the allocation decisions are being made by a third party like a VC because the third party usually has fiduciary duties (otherwise you have problems with conflicts of interest). But if the billionaire is investing his/her own money I see no reason their risk posture should be any different whether they're investing in their own venture or someone else's.

Exactly.

That is what the original commenter meant. If there are Elons out there with no money, they could band together to go to a VC, but then the risk taking process is skewed, because the brains and brawn are distributed.

That is what SoftBank's Vision Fund was trying to be.

Unfortunately it's the baby in 1 month with 9 mothers problem.

Just like SpaceX is killing it vs Blue Origin where one was on a relative shoe string and the other basically as much cash as it could reasonably spend, throwing money at a problem usually isn't the solution to the problem. Magic Leap also comes to mind in this category.

This is true, but I fear that such people get idolized and the JB Straubel and Wozniaks of the world get sidelined.

>And Intel probably lost such a person.

Intel had such a person. Patrick Gelsinger, mentored by Andy Grove. But Intel's Broad ( Andy Bryant ) decided he was never going to be CEO and so ultimately left Intel. BK became CEO, and the rest is history.

I'm more inclined to think that the personality traits, drive, and fundamental intelligence that made it possible to get SpaceX and Tesla off the ground are connected to what led to him being in the Paypal Mafia in the first place. Those who have the spirit to bet it all on insane-looking risks and also choose the insane-looking risks to bet it all on that are highly likely to actually pay off are rare indeed.

Many of those who can only really do it once, and then retire with all of the money anyone could ever need to live a life of luxury until they die. Elon seems to prefer doing it over and over again without that much concern about his actual financial state.

Elon's PayPal wealth is not a rare occurrence. There are over 500 billionaires in just the US alone. His wealth was an essential ingredient for sure, but it must be obvious that it takes more than wealth to create a company like SpaceX.

500 billionaires in a country of 330 million people?

What do you think rare is, then?

I'd argue that wealth is step 1, but step 2 is a willingness to gamble that wealth, to lose it, and to hustle.

And of the billionaires I’ve met none would be willing to risk losing a comma no matter how big the potential payoff. In that respect Elon is definitely the 1% of the 1%.

Wait, you've met multiple billionaires?

Forbes (a website I despise) did a survey of people and how much they worried about money. As I recall even those with $3bn still worried about not having enough money. I'm not sure if that feeling is ingrained from evolving on the plains of Africa or if it's about losing status among your peers.

It helps when NASA is laying off everyone you need to hire, and they have no other choice of a place to work (unless they like blowing up poor kids in poor countries for Raytheon).

It should also be noted that he was not a founder at Tesla, even. He bought his way in.

>It helps when NASA is laying off everyone you need to hire, and they have no other choice of a place to work

Actually Musk has said in the past that they had a LOT of trouble hiring early on. They had goals of reusable rockets right around the start of the company, and most people in the industry didn't take them seriously.

Nobody wanted to work for the laughing stock of a company that dreamed of doing something that most thought was impossible (affordably reusing rocket stages).

People who pay astroturfers by the dozens might not be trustworthy sources of information.

He founded Tesla through force of will. They had a concept but no funding and no drivetrain. Elon got them funded and hooked them up with an engineer he had been funding to build a drivetrain. Their original roadster was going to cost $200,000+ just to build, Elon pushed them out of the way and saved the company.

He did not found Tesla.

If he hasn’t gotten involved, it would have failed. That’s indisputable. The common usage of founder nowadays doesn’t require someone was an employee on day 1, it means they were instrumental in its early days and Elon certainly was.

>There are over 500 billionaires in just the US alone. His wealth was an essential ingredient for sure, but it must be obvious that it takes more than wealth to create a company like SpaceX.

it's just that there are lots of low risks ways to make money with lots of capital than to risk wasting it on engineering or 'boundary-push' style business movements.

Big projects are cool, and great PR -- but safe trading and high interest accounts pay out more consistently, and often better.

It'd be nice to move the incentive over to value-building/engineering more than banking, though.

I wonder if maybe John Carmack would have had Elon levels of money if he hadn't sold his company to a corporation that probably employs contract lawyers that have Elon levels of money.

Seems hard to believe that Id wasn't worth a billion dollars. I wonder where the equity went, supposedly the other 3 founders got nothing when they left because that's the agreement they all made when they started it.

Elon is a chemist though, he might be more educated in area of rocket, understand the damn thing better than Cormack.

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