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Shit Elon Says - Transcript - Musk Says SpaceX Will Develop Satellites in Seattle

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We were able to hit the ship, which it looks like with all the simulations that if we had not run short of hydraulic fluid about a minute before landing that we would have actually landed. With the next flight we have 50% more hydraulic fluid margin. Something else could go wrong, certainly, but at least with respect to that, it should cover. So there's a real decent chance, within three weeks, of landing it.

[Where you at Cape Canaveral?] No, I was actually at mission control, which is here, but if it had landed I would have flown out to Florida to see it come to port. I was there for the attempt a week ago, at Cape Canaveral, but I couldn't get out there this time around. [Hope you can see it when it lands.] Yeah, that'd be really great.

[It'll be a transformational moment.] Yeah, it's a really big deal. For all modes of transport, there's a night and day difference if they're reusable or not. You can imagine, if aircraft were single use nobody would fly, or there would be a handful of missions for scientific and military purposes but that's about it. A 747 is $250 million, you'd need two of them for a round trip but nobody's paying half a million dollars to fly to London and back. For our rocket, which is - it costs about $60 million, which is actually - it's the lowest cost rocket in the world, despite not being reusable, or at the start not flying as reusable. Still $60 million is a lot, but if we could do a thousand flights, it comes from a $60 million capital cost to a $60,000 capital cost. Aircraft do tens of thousands of flights, so if we can just do an order of magnitude fewer flights conceivably than an aircraft can do, it's a giant giant difference. The cost of the fuel and oxidizer and all that is comparable to that of an aircraft. The fuel that we use is sort of a purified form of jet fuel. Jet fuel is a sort of kerosene. Because of our purity requirements the cost per gallon is about twice that of jet fuel, but that's all. So, instead of us paying, say, $2 or 3 per gallon, we pay $5 or 6 a gallon for the fuel. Basically it's a few hundred thousand - two to three hundred thousand dollars per flight in fuel and oxygen, per mission, vs a $60 million rocket. A pretty giant difference.

[Question about cold government.] Yeah, actually, we've - NASA's certainly been a key customer of ours for a few years. The first five years or six years of the company, nobody would talk to us on the government side, NASA or the military, and we got a few sort of fringe customers on the commercial side, that was it. We didn't have any government anything for the first half decade. Then NASA nibbled a little bit and we were able to get a small contract, then we were able to get a much larger contract, and now NASA is a pretty significant supporter. They're about a quarter of our missions, are NASA. They're like our, I mean, they're our anchor customer. Our biggest single customer. The commercial missions are collectively more than NASA. On the military side we've not yet been able to - we've not yet been allowed to compete for the primary military contract because Boeing and Lockheed have managed to shut down all competition, but we're close. I think we're getting close.

[Because of your very public challenge?] Yeah. Well, people have tried but usually the military industrial complex is able to resist any attack by a newcomer. It's like fighting this giant citadel with very high walls, and usually if a small force attacks a large citadel it is not the citadel that falls. [What makes you optimistic?] Well, there's this whole certification process that we've gone through, which is - we're being held to a much higher standard than Boeing and Lockheed were when they actually did their competition. But still, the excuses get harder and harder and thus far all the Falcon 9 missions have been successful, in the ascent phase, so.. the federal law requires competition, it's fundamental, so they can stave off competition for a long time and they have been able to do that, but they won't be able to do it forever, unless we mess up. We have a lot of support in Congress. Initially things like - the people fighting it are in the bureaucracy of the Pentagon and the procurement officers who then go work at Boeing and Lockheed or their prime contractors, which is actually what happened. It's easy to understand from a game theory standpoint because essentially we're asking them to award the contract to a company where they're probably not going to get a job, against the company where their friends are. So they've gotta go against their friends and their future retirement program. This is a difficult thing to expect.

[You have a lot of support from Senators...] Yeah, we have all bipartisan in Congress which is pretty great because the lobbying power of Boeing and Lockheed is particularly wide, it's really huge. [So you have to spend more?] Yeah. If this were just a matter of lobbying power we would have no chance. I'm not sure what the combined Boeing and Lockheed lobbying forces are, but if they were to send them all out at once the sky is dark. I mean, it's a swarm. They have entire buildings - you can see it as you go into DC with all, ya know. We've got half of one floor. So it has required a lot of effort from me and from other people at SpaceX and it's just to find people in Congress who are ideologically motivated and who aren't swayed by lobbying or only perhaps a little bit swayed. "Ya know, John McCain spent a lot of time in a prisoner of war camp - one would think he's not easily intimidated." He's really - he thinks this is a crazy issue because here we have the taxpayers paying three times more for a rocket. I mean, Boeing and Lockheed make decent rockets but three times more is really crazy, and then the main engine is Russian and the engine maker is majority owned by the Kremlin, directly, there's not even a fig leaf between. So, why are we sending hundreds of millions of taxpayer money to fund the Russian war machine? In the interests of national security, we're sending hundreds of millions of dollars to a country that is doing terrible things and certainly not acting in our best interests. This makes no sense, it's like a Joseph Heller novel. Ya know, it's so crazy.

[How's the lawsuit going?] There's some discussions underway, I think this week and next in DC, so we'll see how it goes. The justice department is the one defending the defense department. They shouldn't be defending the defense department, this is crazy, they should care about justice. "In fact, at one point the judge actually had to remind the justice department lawyer that he works for the American people, not Boeing and Lockheed." Yeah, it's not making any sense. [What is an optimal result for you?] I think just taking a look at the missions that were awarded without any competition and saying which of those should be open to competition. That doesn't mean that SpaceX will win, that simply means that we will have an opportunity to compete. This is sort of like where the true absurdity comes in, which missions should no company have an opportunity to compete? Well, the law says, actually all the missions should be subject to competition and there may be some that we're unable to do or our track record is not sufficient or some reason that we can't complete it, but that would cause us to fall out of the competition. The crazy thing is not having a competition at all. In terms of what would make us happy, I don't know, some increase.. at least a few missions that are taken out of the not-competed and put into the let's-compete-them category. I mean, let us compete and lose, that's fine.

[Are you expecting a resolution in the next few weeks?] We're hopeful, but I honestly don't know what to expect. It's difficult to say.

[Question about ULA working with Blue Origin.] It's a complement of course, I suppose, if all of our competitors are ganging up against us. Certainly I think there's some strange bedfellows there. [Why?] I believe they're pretty different. Blue Origin is kind of a startup, small high tech culture vs the staid big aerospace companies. That they had Blue Origin, sort of come out of the blue. I mean, I would be surprised if - I don't think Blue Origin understands just how stringent the defense department requirements are for an engine. They're really pretty intense. They're in for a surprise on that front. Frankly, I don't mind. I think that companies should just get together and compete as best they can. Totally cool, just let it be a fair game. That all, have a fair game, level playing field, may the best company or group of companies win. That ultimately serves the best interests of, in this case, the taxpayer.

[Question about cost-plus contracts.] Yes, absolutely. They get huge sums of money and it's extremely difficult to compete, but essentially ULA has decided that they're afraid even of an unfair competition. "They don't want a fair competition. They don't even want an unfair competition. They want no competition at all." [Are they afraid of SpaceX technology?] Yeah, I guess, they're afraid that we'll take some of the huge gravy train they have exclusive access to, or that it's not going to be as big. The truth is they'll still be the primary supplier for a long time. We're just talking about taking some portion of that, and I think, even in the very long term, the defense department is likely to want to retain two companies. They're not going to want to have a single rocket family. With ULA they have the Atlas and the Delta rocket families. It used to be Boeing and Lockheed competing and then - I don't know if you know the back story - but there was all sorts of shenanigans and - like, Boeing stole thousands of documents from Lockheed and used those in their competition against Lockheed and Lockheed found out. I mean, these guys have a pretty bad track records here of really bad behavior. Like, the Boeing CFO went to jail for bribing the top Air Force procurement officer and they had been doing so for years. I don't know if you know the Darleen Druyun situation. "So, it's not paranoia or made up, people did time in the big house. You can pretty much bet that's the tip of the iceberg." The Air Force did a thorough investigation and concluded that was the only one - it was only her.

[Have you hired many people from Boeing and Lockheed?] Yeah, we certainly have people from the Air Force and from Lockheed and Boeing. About a third of the company comes from the traditional aerospace industry. [What's the headcount now?] We're just over 4000. We were quite a bit less in previous years.

[Question about satellites.] We are. That's actually what we're going to announce on Friday. It's been floating around.. We're creating an engineering center in Seattle. It's actually a satellite office creating satellites. We'll have a soft opening and then we'll have the big announcement on Friday. "We're going to try to do for satellites what we've done for rockets." See if we can make similar improvements in the satellite arena. [How big?] It's going to be fairly significant. Ultimately several hundred people, maybe a thousand people. So, it's big. At the start maybe up to 60 people. [How long until a thousand people?] Maybe three or four years. [Lot of people in Seattle looking for jobs.] Yeah, exactly. [Microsoft, and..] and also people from Boeing and others, so we expect - it'll primarily be satellites but we'll also - if there's really excellent people who want to work on rockets but for family reasons or just refuses to live in L.A. - a lot of people refuse to live in L.A., then they can work at the Seattle office.

[Why are you optimistic about satellites? People have lost billions..] Yeah, we might join them. Most satellites are really quite primitive. You kinda think that satellite technology would be really advanced but if you look at how the big satellites are done, all the geostationary stuff, they really want something that's flight proven or that's space proven. So, if you start your design process saying you want proven technology, it's not going to be new technology. So then you design it with, essentially old technology, it takes a while to build that design and then you've got to go launch the design and so by the time the satellites is actually launched they're typically really outdated technology - like 5 to 10 years old - and then if we're talking about a geostationary satellite that's up there for 15 years, by the end of its life it's a quarter of a century old technology. In terms of electronics it's super-ancient stuff. But people, because they go with the Battlestar Gallactica strategy of packing everything into one giant satellite they're petrified that if anything goes wrong their whole business could collapse, you end up with old technology. If you instead go with smaller satellites that you launch more frequently you can use present day technology, or even cutting edge stuff that isn't even necessarily in the hands of consumers, take a chance on the satellite not working but since we're launching frequently and testing it out frequently we can verify that it's going to work in space and actually have technology that's a decade or sometimes two decades more advanced.

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