00:30:28 · Ty Morse, Scott Nolan
[00:30:28] S1: What was the feeling internally when the first three rocket launches, like, failed? [00:30:33] S0: So I was there for the first two. The first one was... I think people were pretty discouraged. That was... You know, we had obviously hoped it would get to orbit. And we did get off the pad and got some altitude, but then there was a fuel leak in the engine area, which caused a fire, which led to the rocket not making it to to second stage ignition or separation or even max q. And so that was pretty discouraging, but we knew that the first one... Like, it's almost like in The Matrix, no one ever makes their first jump. Very unlikely for our first rocket to actually make it. And so we knew, okay, that's... We should expect that this was a coin flip on the first one, and so that's why we have enough funding for three. And the second one really was very close. It was a... It was... The second... Two and three were very, very close. The second one had a fuel slash instability that led to spiraling and then eventually air and, you know, gas ingestion, which made the [00:31:31] S1: engine burn out. Just not in in the fuel tank. There wasn't these, like, stoppers to stop the slashing of the fuel.
00:31:31 · Ty Morse, Scott Nolan
[00:31:31] S1: engine burn out. Just not in in the fuel tank. There wasn't these, like, stoppers to stop the slashing of the fuel. [00:31:37] S0: Yeah. There were no... There weren't sufficient baffling. There wasn't sufficient baffling or there weren't sufficient baffles inside the second stage tank to prevent that oscillation from having a positive feedback loop. And so, yeah, eventually, the the engine ingested gas, and and then, you know, that was it. On the third one, it was a really fluke thing where one component changed, and then that created a a time delay and some gas release. And then the two stages bumped just as the second stage was trying to fire off, which which caused an explosion there. But after the first launch, it was really close. It was just these little things that came up two more times. But I left thinking that after the second launch, okay, we've absolutely got this in the bag for the third one. We're in good shape. Let's go try and do other things. But, obviously, there was a twenty year history after that of doing way way bigger, more amazing things with land, like reusability, the Starship. And so that was really just the beginning. But as someone straight out of school, you don't always realize that. [00:32:41] S1: Coming out of SpaceX, how'd you kind of decide to figure out what you wanted to do next?
00:32:46 · Scott Nolan
[00:32:46] S0: That is that is the important question that is often very hard to answer, what to do next. I left thinking that the next step was really to learn, to gain experience in, quote unquote, the business world. And so I did just under two years of consulting at a management consulting firm, thinking I would learn a lot from many existing businesses and how they operate, how to make them better, that this could be really useful in the future for working at another company, whether it was my company or someone else's company. And then you learned that actually many of these big companies are just doing things the way they've always done them. There may have been a moment in time where they came up with these processes, they thought from first principles, but now they've been around for decades, and the way they're operating might be out of date. And so let's go rethink these things. But the moral of that story was just that you can just think things through and figure it out. And so basic tools like the ability to just analyze systems, whether it's a business system or an engineering system and sort of an engineering or math background, was really useful for thinking this stuff through. And often, the people on the ground didn't have any really unique, special insight into why they were doing things the way they were doing, and there was often a better way to do it. And so that was probably the main lesson drawn out of that. But knew I didn't want to stay in that industry forever and was thinking about what was next and ended up, yeah, thinking, okay. Maybe I will go to another tech company or even could go back to SpaceX at some point. And then actually met Peter from Founders Fund who convinced me, hey. You know, don't join startup XYZ. Join our startup in the venture capital space. And that was 2011.
00:34:36 · Ty Morse
[00:34:36] S1: What did Peter say to you when he was trying to convince you to join?
00:34:39 · Scott Nolan
[00:34:39] S0: I don't think it was any one thing. We just had a series of conversations about what I had worked on, what I was thinking about doing next, what was interesting. And at that time, that was early years of Y Combinator. And there was clearly this shift in how companies could be started, how they should be started and funded. And Founders Fund... Y Combinator was taking the thesis that companies are much lower cost to start now, and a version of software will eat the world, and there's all these opportunities. And teams of two living in an apartment can get something started and improve real traction. Their thesis was very focused on that, which I do think was separate from what came later of MVP, lean startup philosophy. Many of those companies had big missions and were just trying to go as fast as they could on low budget. Founders Fund's philosophy at that point in 2011 was very focused on really two things. One, in the name Founders Fund, we will back founders unconditionally no matter what. And this was not the case at the time. This was coming out of a 2000s era history of thinking of the company as a horse and a jockey. And the horse was maybe the market or the technology, and the jockey was the founders. And maybe you had a great horse, but you could just get a different jockey. That had been the conventional wisdom at the time. Founders went and took a very different stance on this and said, basically, the founder is almost the company. If you think that you're creating a great company and you can just swap the CEO and they're just a fungible resource, then you're probably just building a very normal, very standard commoditized company in some way. Like, the idea was that the founder who really noticed the problem, came up with the idea, had really the moral authority to lead, and only they really understood the inner workings of the company and could drive it properly. That maybe was the one view of it. The more pessimistic view would be something like, if a company is struggling so much, this would maybe be the VC view. If the company was struggling to the point where you need to replace the CEO, maybe you should spend your time on finding different companies to invest in, not trying to fix companies. And so there's a positive version, which I think was really the real version, which was great companies are run by their founders.
00:37:08 · Scott Nolan, Ty Morse
And this was statistically true if you look at public companies. Then you look at two baskets, founder run, non founder run, the founder run, have done much better historically. And yeah, then there was the VC version of let's focus on the great companies and put all our energy and time there and not be too obsessed with helping a struggling company barely make it. And so that's played out as well and was known throughout the twenty tens, even today as as the power law, where the best companies are worth much more than all the others put together. [00:37:43] S1: Yeah. The way I think about it is basically the founder is kind of the keeper of the soul of the company. And if you pull the soul out, you're not gonna have the same... Like, mission disappears [00:37:53] S0: Mhmm. [00:37:54] S1: Honestly. If you think about, like, Uber pre... You know, while Travis was running it, it was a completely different company than the one that exists today. I also find it a little bit interesting when you have that situation where Travis does leave or he or he has to leave, where there's almost like a loss of story Yep. Almost.