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