This is a narrated YouTube documentary transcript (April 25, 2024) recounting Elon Musk's role in saving SpaceX and Tesla during 2008. It covers SpaceX's early Falcon 1 failures and the successful fourth launch that led to a $1.6 billion NASA resupply contract, the global financial crisis' severe impact on auto makers, Musk's near-depleted cash (about a week's runway), his decision to invest his remaining PayPal proceeds and personally commit to a $40 million financing round to keep Tesla alive, and subsequent Daimler investment (initial $40M battery deal followed by a $50M equity injection for 10%).
Questions this video answers
$1.6 billion
$40 million
Daimler first bought a $40 million smart-car battery deal, then later invested $50 million for 10% of Tesla.
About a week's worth of cash ("maybe about a week's worth of cash in the bank or less").
The fourth attempt to launch the Falcon 1 was a success.
Chapters
There was an engine fire, and that was it. The second flight actually did make it to space, but not to orbit. And then also Flight three. We didn't get all the way to orbit.
Musk burned through the 100 million he had sunk into SpaceX. Now he was on his way back to the drawing board.
Three days after the failure, he announced first that he knew what was wrong. He announced that they'd raised money to finance a fourth launch. And the fourth launch was going to happen in a matter of months, which in the rocket industry was a crazy announcement.
We were able to solve the problems. And then just as we solved those problems, we ran smack into the worst economic recession since the Great Depression.
It's been one of the darkest days on Wall street in recent memory. Stock markets falling the most since 9.
11, the Dow off more than 500 points.
This is what financial Armageddon looks like.
I certainly did not anticipate that we would have the worst economic climate since the Great Depression, and one which was disproportionately bad for cars. I mean, General Motors went bankrupt. General F and Motors.
You know, Musk was in the fight of his life.
We had maybe about a week's worth of cash in the bank or less. And there was just very little time left in the year to resolve these things. I mean, there were like 2 or 3% stays left in the year. I never thought it was possible for me to have a nurse breakdown, but it was possible for me to have a nurse breakdown there. That was about as close as I was going to come.
The fourth attempt to launch the Falcon 1 was a huge success. And three months later, NASA rewarded SpaceX with a $1.6 billion contract to resupply the International Space Station. But Musk had no time to celebrate. Tesla was on the verge of financial disaster.
I had to make a choice then that either I took all of the capital that I had left from the sale of PayPal to eBay and invest that in Tesla, or Tesla would die.
The company is really teetering on the brink of failure. And there's this board meeting late in 2008 where they're discussing what's going to happen. And Elon just says, well, I'm going to raise a $40 million round to keep the company going. And the board members are kind of wondering, well, how's he going to do that? And he says, I'm going to put it all in myself.
And that incredible braggadocio confidence catalyzed a change in people's opinion. And we and everyone else around the table was like, oh my gosh, we want to be part of this. We want to get as much of this investment as we can. He saved the company in its darkest hour with an act of heroism that is hard to describe. There's nothing quite like spending your last remaining dollar on a project you believe in.
It was thankfully a good week, but definitely took its toll from mental strain standpoint. I think I mentally just burned out a few circuits.
Just after his emergency cash infusion came the news they desperately needed a 40 million dollar deal with Daimler for smart car batteries. Daimler later added 50 million for 10% of the company.
We closed the Tesla round. It was the last hour of the last day that it was possible to close the round and we would have gone bankrupt a few days after Christmas if that round hadn't closed. And I think if I hadn't invested for sure, if I had not invested everything, then there would have been no chance. What's the emotion like when you go all in and it looks like you're about to lose? Well, it was quite a terrible emotion, I'd say. If we had not succeeded, then we would have been used as a counterexample for why people shouldn't do electric cars or shouldn't try to do private rockets. There would have been a double whammy. People would have used Tesla as an example of just another stupid car company, basically. That would have been really terrible.
