Speaker 1: Anty with design.
Speaker 2: You know, as you think about the big problems in
the world that you were addressing, do you start with
a particular product in mind, like there could be this
model s there could be this Falcon nine, and then
think how do I get there? Or do you start
with saying there's something broken in the world, and I'm
gonna fix it, and I'm going to commit to do it,
even if I don't know how I get there.
Speaker 3: Sure, So let's see, is that on?
Speaker 4: Yeah, it seems to be good in a case of
Tesla's SpaceX and Solar City and actually will.
Speaker 3: So the PayPal and the before that.
Speaker 4: It really stemmed from when I was in college and
just trying to think what would most affect the future
in a in a very likely to be a positive way,
So that the three areas where I was quite sure
it would be positive were sustainable energy, Internet, and making
life multiplanetary. And then there were a couple other areas
where maybe a question mark like AI and writing, genetics
and lesson, yeah, rewriting, rewriting next just.
Speaker 1: Three and four might come, you.
Speaker 4: Know, potentially negative consequences, hopefully positive.
Speaker 2: But so it could go wrong, like the top three
and a couple of contenders or were they all kind
of jumbling around.
Speaker 4: Waiting for you know, if you look, if you look
at and say, what's what's really going to have an
important effect on the future of humanity?
Speaker 3: As all those are the five.
Speaker 4: Areas that that I could come up with standing in
the shower basically, you know.
Speaker 2: So there's this moment of epiphany that that you held
for a while because you didn't pursue those right away.
Right these were this sort of early vision that you
then got opportunities to execute on. Yeah, so when you
maybe if we pick an example like Tesla going towards
the models or SpaceX going towards the Falcon nine, do
you commit the team, yourself, your resources to that endeavor
you know, now a little farther along when you the
end point in mind, or just let's say the cost
of goods analysis for the rocket or the gosh EV
should be better.
Speaker 1: Than internal combustion engines.
Speaker 2: Just in general, I'll commit, I'll believe that should be done.
Speaker 3: Yeah, I didn't.
Speaker 4: I mean I didn't really get into any of this
with the expectation of success.
Speaker 3: Or at least Yeah, I started out with.
Speaker 4: Thinking, okay, when I do something in the electric vehicle space,
and that's why I originally came to Standford was to
work on advanced energy storage technologies and particular aultric capastors.
So that was continuing on research that I'd done as
an intern in Silicon Valley and summer prior. So that's
why I originally came out in ninety five. And then
during that summer I wrote some Internet software and I thought, Okay,
I can either work on electric vehicle technology or or
I could sort of work on Internet stuff, try to
try to do something with the Internet. I thought the
Internet would something that would dramatically affect the future of humanity,
be like like acquiring a nervous system. And whereas previously
communication would have to occur almost by osmosis from one
person to another slowly through telephone or mail or something
like that.
Speaker 3: But now.
Speaker 4: If you have a nervous system, any part of the
human collective note can know about any other part instantly,
and you're previously you'd have to be at the Library
of Congress, even to have the Library of Congress as
sort of information. But with everything digitized and access anywhere,
you could be in a jungle in South America and
if you had just an Internet link somehow you could,
you'd have access to all of humanity's information. So it
would actually effectively create a super organism and fundamentally change
the nature of humanity itself.
Speaker 3: So I was kind of I just wanted to be
kind of.
Speaker 2: Part of that is that the path AI that you
might see, it's it's actually not exactly AI.
Speaker 4: It's some sort of human machine collective intelligence, so different
different from AI, although AI may not turn out to
be exactly what hopefully not, it's not exactly what's, you know,
like describing a terminator or something.
Speaker 2: Now a quick pause for those that haven't been the
SpaceX the data center has got to be the coolest
thing they've ever seen.
Speaker 1: It's you know, Skynet on the door, cyber nine.
Speaker 2: Systems branding, and a little bad asset of lights coming
from a winking server.
Speaker 1: So you don't own it exactly.
Speaker 4: Our FAA and CFD cluster is called Cyberdigne Systems.
Speaker 2: We'll get back to influences, uh later on, but I'm
gonna try to see if I understand what you were
saying about this. This You see the long arc of
and what's important to humanity, not little problems but huge
problems that could be solved.
Speaker 1: A lot of us go.
Speaker 2: Around and we see something frustrating, like traffic on the
four or five, we just take it as well, crap,
government screwed.
Speaker 1: You know what, we need to do it? Right? You
have this incredible sort of.
Speaker 2: Scope of ambition, right, planetary scope, interplanetary scope. Right, a
little more than changing the world, let's change in other
worlds too, right, And this is big stuff.
Speaker 1: Is that always in your mind?
Speaker 2: Or that did you become more emboldened over time that
this is available.
Speaker 1: We can do these things.
Speaker 3: It definitely emboldened over time.
Speaker 4: I mean at the you know, when I started the
first Internet companies up Too with my brother and another person,
a great Curry. The it wasn't really with the thought
of being wealthy. You know, I've got nothing against being wealthy, but.
Speaker 1: We'll get better to that.
Speaker 4: But it's just it was just from the standpoint of
wanting to be part of the Internet, and I figured
if we could make enough money to.
Speaker 3: Just get by, I would be They'll be okay.
Speaker 4: And when we started off, we literally only had like
one computer, and so it would be our web server
during the day and I'd code at night and We
just got a small office in Palo Alta back when
rent was not insane, and it cost us like four
and fifty dollars a month. It was cheaper than an apartment.
So we actually just slept in the office and then
and then share at the YMCA on Page mell al Camino.
So we'd walk her over there and shire and and.
Speaker 3: That was.
Speaker 4: Actually I think that was when we first I first
met you, by the way, and so I don't know
how many people.
Speaker 3: Probably not many.
Speaker 4: People knows, but we actually pitched Steve in like January
ninety six on the ZIP two business plan, and actually
I thought she was actually one of the most up
to speed on on what actually was in our business plan.
Most most of the people we met did not actually
read our business plan. In fact, a lot of people,
a lot of bench capitals who met at the time
didn't even know what the internet was. They've never used
They've never used I still do, yeah, right, yeah, something
like you know, sort of well known people in Sant Hill.
It was like, wow, okay, but but at the time,
nobody made any money on the internet, so I guess
that's you know, then it wasn't really clear evidence that
that there.
Speaker 3: Was was a business and yeah, those were fun times.
Speaker 2: I remember Kimball and you coming in right, very young
looking guys. I think I was in my first four
months on the job too.
Speaker 3: Yeah, yeaheah exactly.
Speaker 5: So let's excuse for a sec I've I've also had
the great honor to work with Steve Jobs briefly but enough,
and as a business school student to study him with
as much scrutiny as I could during that period.
Speaker 2: And there's some obvious parallels, and so let's start with
the most obvious, but just must be like the elephant
in the room.
Speaker 1: Is the secret to your.
Speaker 2: Success to be the CEO of two companies at the
same time.
Speaker 1: Oh, I think it's just look at the correlation. Yeah,
struggling companies.
Speaker 2: Everything's in the craft can in December two thousand and eight,
So let's take on a new CEO gig.
Speaker 1: Yeah, and same for Steve.
Speaker 3: Coming back to No, definitely, it was not my intention
to BECO of two companies the after.
Speaker 4: I mean, there's certain things that I kind of wanted to.
I thought it were important to happen, and I thought
it was important that that there was that that electric
vehicle happened, that there was a success in the electric
vehicle arena because the the incumbent companies were convinced that
it was not possible to create an electric car that
looked good, had range, a good range performance, and so forth,
and that even if you did make such a car,
it would not sell that Chris, people had this love
of gasoline, and.
Speaker 3: So we had to.
Speaker 4: Show that it was possible to create a compelling electric car,
long range, good looking, you know all those things.
Speaker 3: That was a test the roads to and don't.
Speaker 4: If you created if if you made such a thing,
people would buy it. And so so that that's that's
what we would try to do with with with this.
Speaker 3: If I should say.
Speaker 4: Like one mind sort of correction on the on introduction,
I'm not a co founder of solar City, but I'm
a co founder of Tesla.
Speaker 1: That's okay, that's a good point.
Speaker 2: So and probably architectures, yeah, many of its key features.
So very much like jobs, both a hand in some
of the detail as well as the long arc of
what's important for the company.
Speaker 1: The quipto about being co.
Speaker 2: CEOs is more than just a joke in that I
wonder if in ways that are hard to predict, and
you wouldn't set out for this amount of work. It
seems insane, but inevitably, both companies cannot expect more than
half your time at most.
Speaker 1: It sort of naturally forces a.
Speaker 2: Delegation upon you and an expectation they have to rise
up for partial awareness at best, right, And I just
wonder if that helps drive prioritization and really focusing on
what's important a bit more than you otherwise might have to.
Speaker 3: It probably does, Yeah, I think I probably do.
Speaker 4: Yeah, I mean, because I have to triage the things
that I do at each company and constantly think about
what is the most useful thing that I could that
I could do.
Speaker 3: But even with that, it's it's still actually just take
it an almost amount of time.
Speaker 4: And for a while I was just doing constant one
hundred hour weeks and that's that's definitely wearing. And you know,
now I'm kind of in the eighty to ninety, which
is well manageable, but you know that if you divide
that by too, it's only like, you know, maybe forty
five hours for a company, which is not not much
if you're there's a lot of things going on like
a slacker.
Speaker 1: I mean, yeah, so you.
Speaker 2: Know, it is interesting also how you have a love
for certain aspects of the product.
Speaker 1: So it's SpaceX you.
Speaker 2: You know, the whole concept and the vision of going
to Mars back into features and stuff. It's it's a
wonderful thing to see. I think what obviously should strike
folks in the room as remarkable as the diversity of
industries that you've tackled, right from commercial banking to the
military industrial complex to the automotive industry. These are heavily
regulated industries the generally investors flee from and startups routinely failing,
and they haven't seen much change for good reason over decades.
So there might not be an obvious pattern in which
industry you tend to thrive in. But I wonder if
there's a pattern perhaps in process, like do you approach
each of these perhaps the way a software architect might
to think of a different way to bring innovation, a
different way to reset, you know, for first principles, perhaps
instead of iterating from the past a breakthrough. And is
there reason you end up in these otherwise really tough industries.
I mean, I don't know if that's ever occurred to
you that you don't even in Solo City going up
against the regulated autilities. None of these are places that
you would normally find entrepreneurs.
Speaker 4: Yeah, like I said, it was not from the standpoint
of like what's the best risk adjustin rate or return
or you know, where I think it thinks could be successful.
It's just like I think these things need to happen,
to try to make them happen, And certainly when we
started SpaceX or Tesla, I thought the probably of success
was less than fifty percent, you know, probably a fair
bit less than fifty percent.
Speaker 3: In the case of Solar.
Speaker 4: City, I thought the probably to success was probably greater
than fifty percent, But it wasn't clear what the magnitude
of success would be.
Speaker 3: You know, it could just be small.
Speaker 4: And yeah, but it was I just thought these were
things that needed to get done, and even if the
money's lost, okay, it's still worth trying.
Speaker 1: See conviction, But it didn't mean certainty.
Speaker 2: Right, you knew that all vehicles would be electric in
your heart, but.
Speaker 4: Ultimately also, I mean, I think the sort of fundamental
good that Tesla can accomplish is acceleration of the inevitable,
which is electric transportation. But I thinks there's a lot
of value to accelerating, even though I think it's somewhat inevitable.
Speaker 3: It's about this value to accelerating it to.
Speaker 4: Minimize the that the environmental and economic damage.
Speaker 3: That would otherwise occur.
Speaker 4: So you know, it's better if we transition sustainable transport
ten years or maybe twenty years sooner than might otherwise
be the case. And I think the Tesla's effect has
been much greater than the cars that made that It's
made internally because when we announced the Tesla Roadster, then
Bob Lutz, who was fish shamed GM at the time,
saw our pressure release and said, if a small company
in California can do it, than circ and jam and
he took it to his engineers who told him that
you could build an electric car and told them that
they need to get going. That's what got the volt rolling,
and that in turn got nisigned to do the Leaf
and so it's kind of got the got things going,
and ultimately it's like it's what we induce other companies
to do that will have a greater impact than the
cars we make ourselves.
Speaker 1: And it's an interesting point. I'm going to come back
to you later.
Speaker 2: This idea that Tesla's founding mission is as Elon has
articulated from the very beginning through the most recent reports
to the public, is to cat is an industry shift
that test level be is some part of. But to
help others in that shift as well, which is remarkable.
Speaker 3: So we supply pow trains to Toyota and to Mercedes.
Speaker 2: To help what could be viewed as your biggest competitors
one day, you know, absolutely in fact accelerate that. Before
we get to that sort of purpose driven mission, I
do want to ask one or at least maybe make
sure the audience realizes how cool this car is, and
so the eland doesn't have to do this in case
you haven't been as much of a fan as the
two of us, it's a bit unprecedented the reviews it's received,
consumer reports saying it's the best car they've ever tested,
road in tracks saying it's the most important car in
America's history, the safety testing showing is the most safe
car ever manufactured by far, including Vans and Issuvies. And
so it's pretty remarkable to peg performance, desirability, safety and
all these parameters. So is it luck or is there
something particularly unique about the EV design space that let
it be possible to build the best car.
Speaker 4: Well, I think, you know, let does play some role here,
but I think we I think electric pickles have a
fundamental architectural advantage if one designs an electric vehicle from
the ground up and takes advantage.
Speaker 3: Of of what's possible.
Speaker 4: Like if you just were to convert a gasoline car,
you would not you would not achieve these advantages. But
if it's probably done, you can actually package the battery
pack in the full pan and achieve a low center
of mass and have a very compact motor and a verter.
Speaker 3: And gearbox, so that that the actually usable space.
Speaker 4: In the car is significantly greater than a gasoline car
of the same over external excelled dimensions.
Speaker 3: And then if you do a few.
Speaker 4: Other things which one's necessarily specifically related to an electric car,
like using an aluminum body in chassis is helpful because
you can absorb more energy per unit mass.
Speaker 3: Essentially in a crash, it crupples.
Speaker 4: Yeah, well so that yeah, but part of it's related
to electric vehicle architecture, and part of it is related
to other technical decisions that were made in the design
of the model ass and.
Speaker 3: So yeah, that's that's what leads to sort.
Speaker 4: Of having a high safety is I mean, I don't
want to sort of go into too much stakes because
it might take up too much time.
Speaker 2: But like, did you know some of those things at
the get go or did they unveil themselves as you
went along. I'm just curious how the vision materializes, for example,
like along either the product dimensions, like it will have
all these great features like like at the get go
that the ald gel And then secondly, I'm also curious when.
Speaker 1: Did you first know that all vehicles would be electric?
Like was that.
Speaker 3: Probably twenty two years ago something like that.
Speaker 1: Before he met Tesla.
Speaker 4: Before, way before there was before there's a way for
those Tesla. Oh yeah, well, like I said it, you
know when I originally came out when I I mean
when I was studying physics pen That's probably when I
thought it was the case. And maybe you know, sooner
than that, probably when I was in my sophomore year.
Speaker 1: Did you have certainty in your heart?
Speaker 3: Yeah? Absolutely, it's super obvious.
Speaker 1: Yes, yes, now yes now it is.
Speaker 3: There are something that was super obvious then.
Speaker 2: But that this is a bless in my mind because
even like three years ago, most people probably didn't agree
with this point of view. And if I could be
confident of any prediction I could make, it's that within
ten years old, people will be of this point of view,
but we won't have made the transition yet, but we'll
realize that it's a ridiculous debate to be having. You
were a lone voice of sorts back then, probably amongst
your cohort and friends and you know social.
Speaker 4: Yes, actually I used to talk to like dates about
electric cars.
Speaker 3: How I go. It wasn't it wasn't helpful. It better.
Speaker 4: Yeah, So, actually I ran into a girl I did
briefly in Canada, Christy Nicholson. She's now at like a
writer for Scientific American, and she mentioned, Yeah, when we
were on a date, I asked her, do you ever
think about electric cars? And she said, no, I don't.
So yeah, a while back, it's pretty I mean, almost
everything's electric that we have in our daily lives here.
Speaker 2: It was from the physics of it, Yeah, the heat
loss of an eternal combustion engine just yeah, pretty amazing,
pretty amazing. So I'm gonna I want to share a
little story that leads to a question along a different angle.
I don't think you've heard this before, so, but I
find it fascinating. I was at a lunch at a
Google event, and out of the blue, with no expectation
this would be a topic, Larry Page turned to me,
knowing a little bit about our connection, said.
Speaker 1: You know, how much money do I have?
Speaker 2: And you mentioned a number. I thought that was cute
that he was trying to recall that. He goes, you know,
if I were to get hit by a bus today,
I should leave all of it to Elon Musk.
Speaker 3: Really, yeah, he said that.
Speaker 2: Yeah, And and so I'm like paper pen.
Speaker 1: Yes, so he likes, he likes singers, he likes.
Speaker 3: He's like a good friend of mine.
Speaker 1: So he was so context is important, you know.
Speaker 4: I mean I met Larry before he got venture funding. Yeah,
so that's.
Speaker 3: That's like.
Speaker 1: Yeah, yeah, wow.
Speaker 2: Well he's a remarkable guy, obviously also underachiever, and you know,
has a company that wants to do good in the world, right,
And I think he looks at you with a bit
of end because what he then proceeded to say was,
you know, I could give my money to nonprofit and
a lot less we get done than a corporation that's
pursuing things that are directly aligned with things I care
about like getting off of oil and colonizing other planets.
He bleeds in those missions and thinks that a corporation
with endowed with the right to do that has his
business purpose, is the best vehicle out there, and wishes
he could do more of that in his own life.
He compared poigntly, I think to some other software companies
in the Pacific Northwest who might have executives who do
evil for the first part of the career, then do
good for the second half, and then the sad story
of others who'd never get to the second half of
their life, like Steve Jobs. I mean not in a
joking way, I mean seriously, and it was a very
deep moment. So it raises the question of a purpose
driven business. So you've heard already that Tesla is not
just trying to make money. That is not the parody
if you read the most recent shareholder letter.
Speaker 4: Yes, in fact, I started off the the shareholder letter
saying the profits are not our primary goal.
Speaker 3: And then I got a little.
Speaker 1: Bit of.
Speaker 4: Some of the board members who question that statement, and
I was like, well, it's true, you know.
Speaker 2: Like like like for now or like just just while
we're growing, But no, just not the parody, which I
think in a business goal is a really good point
to dwell on for a moment.
Speaker 3: Yeah, it's not that I think they're unimportant or anything.
It's just not the primary goal.
Speaker 4: And I actually told me well that on IPO as well,
And so it's not like new information at least, you know,
if people had watched the IPR, it's not your information.
And yeah, and actually amazing the stock went up after that.
Speaker 1: Was I think there's a profound reason.
Speaker 2: I mean, you see the benefits of being focused on
something that's a higher calling as your primary motivation.
Speaker 1: Your employees love.
Speaker 2: At the customers love and partner's love, right, and you
feel better about your job. The interesting thing, the irony perhaps,
is that at least with an our portfolio, the companies
that have that kind of a founding principle actually make
more profit and grow their revenue more quickly than the.
Speaker 1: Ones that don't.
Speaker 2: You know, it's this low sample set, but the handful
that had taken this bold of a step to say no, no,
that we will not make that a number one priority
actually do a great job. And it occurred to me,
and I don't know if this was conscious in your head,
at at some point that if you weren't wildly profitable,
the auto industry wouldn't follow you. In other words, this
whole mission of catalyzing a shift to a new electric
vehicle isn't going to work if the business model is
worse than a current business model.
Speaker 1: And so even you know, it's the obvious byproduct.
Speaker 2: Of what you're focusing on. I'm not obvious, but it
curs to me that it's a byproduct. It wasn't obvious
at first at all. But I'm curious that thought occurred
to you, that all, yeah, the profits will come, or yeah, well.
Speaker 4: We have to generate positive cash flow, or we have
to generate enough cash flow to fund future developments, which
requires having a good gross magin. And so I guess
one could just say, okay, well we're going to stop
developing your products, and then you would be really profitable.
Speaker 3: So at any given point.
Speaker 4: You could sort of say, we could be profitable, you know,
at this point in a significant way, but we've got
these great things that we want to develop for the future,
and they're a good investment, and that's what we're doing.
Speaker 2: And similarly, at SpaceX, the you know, the founding vision
was to colonize Mars indirectly again interestingly catalyzing others to move. Yeah,
and then you realize, hey, I've got to actually lead
this charge.
Speaker 3: Yeah, well, I mean with SpaceX.
Speaker 4: Originally I started off just thinking, well, how do I
increased NASA's budget.
Speaker 3: Actually, that was my goal.
Speaker 4: So it was like two thousand and one with just
just Torn, a friend of mine, and he asked me.
He asked me what I was going to do after PayPal,
and I thought, well, you know, I was wondering, like
I'd like to get involved in space, but I just
didn't think there's anything as an individual. And but I
was curious as to when we when we're NASA would
be sending a team to Mars, because that was always
going to be the thing to do.
Speaker 3: After the Moon.
Speaker 4: I figured that that there'd be some plan and I
just go to the website and I could read, you know,
the schedule, and oh yeah, it's like okay, twenty seventeen, good, okay,
But actually there wasn't anything on the website, and or
at least I thought like, am I cannot not find it?
Like what's going on here? And is it secret?
Speaker 3: I don't know?
Speaker 4: So but it turned out that that NASA had done
a study on what it would constant send to do
a man Mars mission. And this was under Bush the
first and in suppose he asked for a ninety day
study short laughter taking office and now so he came
back with a five hundred billion dollar price tag and
he said, okay, maybe not billion. That's when five hundred
billion dollars was serious money.
Speaker 3: For the government. So I.
Speaker 4: So then that got totally shelved and it was like
you were not allowed to talk about any kind of
crude mission to Mars at NASA.
Speaker 3: Anyway.
Speaker 4: So but I thought, well, if I can do something
that would galvanize public interest that and then that public
interest would translate to additional appropriations for NASA and increased
that their budget, then maybe they could do it. So
so actually, what I sort of thinking I would do
is send us a small greenhouse the service of Mars
seats in dehydrated jail and then upon landing, hydrate to
jail to grow the plants. And the public tends to
respond to precedents superlatives, so this would be the furthest
that life's ever traveled, the first life on Mars. And
you have this great shot of green plants on a
red background, and.
Speaker 3: I thought, okay, maybe that would get the money shot.
The money shot.
Speaker 4: Yeah, I'm never quite sure whether that's the sort of
a word you can use or not. Now i'm realizing maybe, yeah,
I didn't. I didn't know its origins until somebody pointed.
Speaker 3: It out to me.
Speaker 2: But so moving back to that greenhouse on Marsh, Yes,
the photo is out.
Speaker 4: There and you have this great photo, and I thought, okay,
if we could make this happen to be cool and
now so we get the money and they could do
they could sort of send a team.
Speaker 3: To Mars and be great. So I tried to trying
to figure.
Speaker 4: Out how to do this with the proceeds that I
had from from PayPal, and I was able to figure
out how to get the cost of the spacecraft down
and the munications and the little greenhouse and everything. But
the one thing I couldn't compress was the cost launch.
It was only a few options, and the US options
were way too expensive, and so I ended up going
to Russia three times to try to buy the biggest
ICBM in the Russian nuclear fleet.
Speaker 1: That's where I started.
Speaker 4: Yeah, yeah, I mean, okay, that.
Speaker 6: Was it.
Speaker 3: Was.
Speaker 4: There was some strange trips, that's for sure, but you're
just like virtually like you can buy any.
Speaker 3: It's a very capitalist society in some ways.
Speaker 4: So I actually did negotiate a deal to buy two
of the ICBMs minus the nukes. And but I came
to the conclusion after that their trip that it wouldn't
really matter, like if if I actually came innclusion that
my initial premise was was was wrong, because I actually
think there's there's amount of will in American population, particularly
to explore the United States, you know, maybe more than
any other country, is a distillation of the human sporad
of exploration, and it's really fundamental to psyche. So if
people think there's a way, I think you actually get
a lot of sport. But then it can't be just
bang your head against the wall. I gotta believe that
this can be done without breaking the federal budget. So
that's when I said, Okay, well, is there some way
to affect the cost of space transport and and and
so I got together with a group of people of
a series of saturdays just to just try tounside. Is
there something super fundamentally super expensive about rockets or can
the cost be substantially improved. And we had a bunch
of those kind of brainstorming sessions and I couldn't see
I couldn't see any fundamental obstacle to improving the cost
of rockets.
Speaker 3: So that's when I started SpaceX.
Speaker 1: I'll just build them myself.
Speaker 7: Yeah.
Speaker 1: And then but I.
Speaker 4: Said, at that point I would just say the probity
of success was definitely less than fifty percent. I thought
it would most likely not succeed, but what's worth a try.
Speaker 2: But it's fascinating. But the parallels are so many between
these companies. Again, probability is low, certainty that it needs
to be done, certainly that it could be done by
for physics, and first principles that it's the success is
an option, right, it's one of the possibilities. And interestingly,
starting with a roadster and a Falcon one as a
proof point to a larger design. You know, as I
look at the Falcon nine and it looks like the
product of a software engineer modular reuse, like let's build
one engine and step and repeat and building all kinds
of elegance into the system design to abstract away almost
from the hardware into the software, into the design the
beauty of the system. And I wonder if that's why
incumbents don't see the sort of re engineering of the.
Speaker 1: Of the car, of the rocket, or the what have you.
Speaker 2: The hyper loop is this, they don't approach it in
that kind of blank sheet of paper. How would you
do this if you didn't have to create jobs across
district or you didn't have some other ulterior motive?
Speaker 1: Interesting, interesting looking at the.
Speaker 2: Time I want to give I'll ask one last question,
but i'll give a heads up on there's Mike's to
start getting them ready for audience, because I don't want
to monopolize people's time here. Actually, there's so many questions
i'll ask, but what I'll start with maybe and here
for at least some of the quirky.
Speaker 1: One about influences.
Speaker 2: So you, uh, we've heard about the Iron Man reference
and your childhood interest in comic books and Hitchiker's Guy
the Galaxy and as them off. But there's all kinds
of things woven into like cyber nine systems that at.
Speaker 1: SpaceX that we heard, and then some Easter eggs.
Speaker 2: So some of us noticed that the steria goes to
eleven right on the on the Tesla. This is the
spinal type reference for those who know that this one
goes to eleven and he just just one more.
Speaker 3: Louder than loud. That's right, exactly, that's right.
Speaker 2: But no one seems to have noticed the product lineups.
You got the models, you got the Model X. Oh
you've just trademarked the Model E.
Speaker 3: Yeah.
Speaker 1: No, one's yeah, you got and the model and the
Model Y.
Speaker 4: No, I know exactly, but there's not I guess there's
not a lot of humor and trademark uh, the trademark law,
you know, because yeah, obviously we just trademarked sexy.
Speaker 3: So uh.
Speaker 4: And then we're having this this discussion with the like
Ford because they.
Speaker 3: The Ford's Council.
Speaker 4: They also didn't get it, like because because they're they're
sort of slightly opposing us using Model E.
Speaker 3: And then they saw that we.
Speaker 4: Were registered Model Y and they said, oh, you're planning
to use Model WY instead of Model E.
Speaker 3: Like, no, it's just a joke.
Speaker 1: We don't do that.
Speaker 3: What is this foul? Come on?
Speaker 2: Fantastic? Well do we I'll keep going if we don't.
But do we have microphones for folks if they want
to ask.
Speaker 1: Questions Okay, let's do a qu see if anyone Oh
my gosh, yes we have them. Why don't we do that.
Let's take a couple of questions in the audience and
I'll let you guys figure out how to do the allocations.
Thank you very much.
Speaker 6: I heard you talk about supersonic aircraft. You guys have
done some beautiful work at space X on be tall. Ah.
Clearly tesla is is focused on electric. Have you thought
about the the synergies of electric and be tall and
aircraft for solving the four or five challenge?
Speaker 3: For solving the four five film? Well, I mean, I
do think there's there's a there's.
Speaker 1: A real vertical take off and landing.
Speaker 4: Yeah right, sorry, vertical take for landing is vitall? And
uh yeah, I do think there's there's a really like
the I think the optimal sort of air transport solution
is a vetall electric supersonic plane and and it actually
works together quite well for a bunch of reasons.
Speaker 3: In particular, the higher you go, the better.
Speaker 4: The electric the more efficient the electric aircraft is, whereas
if you have a combustion aircraft, as you as you
get higher it get it tends to get worse because
you have a kind of.
Speaker 3: A fixed aperture and airscoope.
Speaker 4: Yeah, like the engine is the hole in the front
of the engine is a fixed size, and so you
have to pick a particular cruising altitude and so you've
got to figure out how do you get the right
amount of air at sea level.
Speaker 3: All the way through really high altitude.
Speaker 4: And then you've got this issue of super supersonic combustion
that you know, you see, you end up having to
slow the air down and it ends up being not
that efficient. But electric after aircraft would just get better
and better as it got the higher and then electric
motors have a higher power weight ratio than a combustion engine,
so you could you can actually have the power to
do the vertical takeoff landing part with a fairly small
motor compared to combustion. And then you could get rid
of the elevator and uh and rider, so you don't
need the rare control services if you gimble the end
that you can gimble the.
Speaker 2: Motor gotch so it starts to look like a podcraft,
like yeah, Bolivian or something, right.
Speaker 4: And so it's it's yeah, it's something quite the real
trick of it is like, how do you make it
really long range and at least as safe as existing aircraft?
But those are really the only two questions on that front,
I think. But they're they're tricky, they're certainly.
Speaker 1: Don't underestimate those questions.
Speaker 2: Great, let's go to the next one.
Speaker 1: Or whoever has a.
Speaker 2: Mic, however, we're doing the allocation fairly and efficiently.
Speaker 1: Let me give him a hand. Okay, No that we
have someone great.
Speaker 7: Young GSP and Andy four Hey, Steve by a long time.
And one question, are you as Tesla going to expand
the worldwide? And I think GSB is going to host
China two point zero tomorrow, and do you have any
plans to go into the biggest car market today? But
I know you're a little concerned through another friend of mine,
I actually asked you indirectly a few years ago that
you were concerned about the secret and the parenting in
the Chinese market. Are you still concerned about that or
you have a strategy?
Speaker 4: Yeah, So Tesla is definitely going to ship worldwide. In fact,
the Tesla roadsters in thirty one countries right now, and
we expect to ship the model ast to China starting
next year as well. As to Japan and Hong Kong
and Singapore and Morella and Australia. So really it's going
to be quite widely distributed next year. Certainly, China is
an extremely important market in fact, for premium sedans. China
is about half the world market for premium sedans. So
if it takes some growing, yeah, to take something Mercedes
S class, but last year fifty four percent of Mercedes
S classes was sold in China, so pretty important market.
And yeah, so we're gonna definitely do a major push
in China. And actually some of the most enthusiastic potential
customers we've seen are people from China, So we actually
want to make sure that the car actually has features
which are specific to the Chinese market and make sure
that it's not just you know, taking an American product
and you know, just sort of sending it to China
without any any changes.
Speaker 3: So we want to make sure it's tailored to the
market and Japan as well.
Speaker 4: I don't want to you know, a lot of it's
not many American class sell in Japan, but I think
that would be like which were symbolism. Yeah, I mean,
like I think we should take the Japanese market seriously,
and and I think if we do things right, we
should have reasonable sales there. So yeah, so that that's
going to be next year. I mean as far as
copying stuff, I think that that's certainly a risk. I
think China is actually getting a lot better these days,
and I think the new government is taking taking intellectual
property a lot more seriously. So I'm actually starting to
feel more and more confident about that the technology not
actually not being copied in China, or at least you know,
it's getting much better. And I don't think it's going
to be too much of an issue until we want
to establish local production and that that's that's where you know,
we need to make sure that we do it right.
And there's not an incentive for the factory team that
we established there to sort of go across the road
and create a competing factory.
Speaker 3: But but that'll that concern is a few years away.
Speaker 2: Do you have an know that, oh yeah, up here
and the students are largely upstairs that right, Yes, this
is GARYL.
Speaker 3: Parra, NBA student. First of all, thank you.
Speaker 8: It is very inspiring to hear an experience about actually,
you know, changing the war using organizations as the organs
that you created hopefully will inspire another Ironman.
Speaker 3: Movie as well.
Speaker 8: And I was wondering if you can tell us more
about the experience about like you know, how to balance
you know, those straight off between your profits and you know,
following purpose that goes forwarther than just make money. You know,
you are trying to change the war, you know, well
for the humanity rather than just make profits in the
short term.
Speaker 1: What was the question, I'm sure if I.
Speaker 3: How do you balance? Well? Yeah, well, I mean, first
of all, I should say.
Speaker 4: Yeah, with with with all of the companies, but I
think particularly SpaceX and Tesla, although there's in a good
position today, they went through some super tough times and
in fact, for SpaceX, I reserved to capital to do three,
to have three launch failures, or to withstand two launch
failures and have the third one b success sort of
three strikes. And actually we had three launch failures, were
just able to scrape enough money together for a fourth
flight that succeeded in two thousand and eight.
Speaker 3: And then also in two thousand and eight.
Speaker 4: As Steve knows, we got the Tesla financing round done
on the last hour of the last day. It was
like six PM December twenty fourth, two thousand and eight.
And if we hadn't gotten it down then the company
would have gone bankrupt a few days after Christmas.
Speaker 1: So what he's not the only reason that happened is
he wrote.
Speaker 2: A check for the remainder of his wealth to save
the company during payroll and Christmas when no one else
would and Goldwin had just failed the private offering and
the financial collapse was amongst us. There was no deal,
we loan, there was no Daimler deal. The car had
a negative gross margin.
Speaker 1: It was not pretty.
Speaker 2: Oh and you had you know, your largest yearholder just
completely pissed off.
Speaker 1: And you know, gong a wall. Yeah yeah, it was ugly.
Speaker 8: Yeah Yeah.
Speaker 3: It was a stressful period.
Speaker 4: And that was just at work.
Speaker 3: Yeah.
Speaker 4: So so for a while that really wasn't a question
of profit or nonprofit is It was like we need
to live?
Speaker 3: How do we live?
Speaker 4: So that was the main challenge. And and and now,
I mean now we're at the sort of the stage
where we can say, okay, we can shift the dial
between we could we could make let's say, at this point,
a medium amount of profit or a small amount which
sort of chosen to make a small amount because we
can reinvest the cash flow into future products. So now
we're you know, right now, we're reinvesting the cash flow
into developing the Model X, which is an suv, and
to increasing the production capacity of the factory and doing
a little bit of advanced planning on the third generation
vehicle that'll be a mass market sort of affordable, compelling
electric car. So so that's really I guess what what's
meant by in this case not pursuing We're not trying
to maximize profit at this point because it would constrain
the business, the growth of the business, and constrain the
overall objective of transitioning the world towards electric cars. So
I don't think against profit in general, but it's just
it's just it's not I mean, I actually don't think
it's the smart move. I mean, if one were to
take the net present value of future cash flows, I
think maximizing profit at the stage is actually not the
smart move, you know.
Speaker 2: And it's interesting because earlier I said, we get back
to it, you mentioned that your goal was not to
start a company that has the chance of making the
most money for you the quickest, right, and that the
wealth personally is almost.
Speaker 1: A byproduct of these activities.
Speaker 2: Of passion and by analogy, like in the investment field
inventric capital.
Speaker 1: You know, you could look for the thing.
Speaker 2: That'll make the most money the quickest, right, like a
new ad network for social media, but who cares?
Speaker 1: I guess it really just doesn't help the world in
any meaningful way.
Speaker 2: And there are much over longer if you take a
longer term perspective, there are things you could do that
don't answer the short term question of what's going to
make me the most money this year or this five
year period, but the over twenty years focusing on those ironically,
he may make the most money right of any entrepreneur,
or these companies might be more profitable than their cohort
that doesn't follow that same purpose driven kind of almost
messy onic zeal.
Speaker 1: So there was a balance. Question almost implies the dichotomy.
Speaker 2: That may not be opposed, but maybe aligned if you
orchestrate it right.
Speaker 3: Yeah, maybe more of a short term it's a long
term approach.
Speaker 1: Yeah, exactly, great. We have one hand up here, up here,
another one occur sure up here?
Speaker 3: This will be the last question.
Speaker 1: Oh, this is the last question.
Speaker 9: Okay, Yes, from your current car marketing strategy. You could
say that your car is directed towards a luxury car marketplace,
so that's a fairly well defined market. Do you have
any plans for expanding it to the general marketplace, to say,
make a car for the masses, which might be maybe
in the twenty five to thirty five thousand dollars range.
Speaker 3: Yeah, absolutely question.
Speaker 4: In fact, for the first blog piece I wrote for
Tesla was the Tesla master Plan, which is to start
off with an expensive, low volume vehicle, then go to
a mid price mid volume, and then sort of low,
low price, high volume. So we're kind of in phase
two and without third generation vehicle, we expect to be
somewhere in the thirty to thirty five thousand dollars range
for the car, which when you're take into account the
savings from the use of electricity instead of gasoline, is
more like comparing it in the US to about a
twenty eight thousand dollar car or in Europe to a
twenty two thousand dollars car, and.
Speaker 1: The maintenance is much the least to feel costs so much.
Speaker 3: Yeah, absolutely, that's right.
Speaker 2: Well, great, well, I want to thank you very much
for this and transition to the closing segment of our invenite.
Speaker 1: Thank you all right,