Speaker 1: Elon, thanks so much for being here today. As you know,
and many people in the audience know, we're reprising a
fireless fireside chat that we did at Air Force Space
Pitch Day back in November. I ran into General Goldfeend,
the Chief of Staff of the United States Air Force,
this morning, and maybe I was being a little bit
too confident, but I said, hey, I think that we
did such a good job together at Space Pitch Day
that Elon and I got invited back for a much
bigger audience, higher stakes and everything like that. And General
Goldfeind looked at me and went, no, JT. You guys
are going to do it until you get it right.
So we're going to talk a little bit today about innovation.
For those of you in the audience that nothing that
was introduced about Elon made it to the prefrontal cortex,
and you're like, I still don't know who this guy is.
You may remember him from a movie role in Iron
Man two or the TV show The Big Bang Theory.
Speaker 2: You may remember him if you're.
Speaker 1: Old like me, when you used to have to do
dial in modems, you may remember how PayPal actually worked
over a dial in modem. And if just In case
you've had your head in the sand for the last decade,
you absolutely have.
Speaker 3: To know him.
Speaker 1: For Space Exploration Technologies SpaceX, a tremendous partner of the
United States Air Force in the space business.
Speaker 2: And for Tesla.
Speaker 1: So for just for grins, this fastest growing auto company
on the planet, most amazing capability. And when Elon pulled up,
he pulled up, he and his entourage in three different
Tesla's this morning.
Speaker 2: How many Tesla owners do we have in the audience?
Speaker 1: Stand up? Stand up if you're a Tesl owner? All right,
very nice. So Elon, you and I have talked about
whether the Air Force is the most innovative service the
Department of the Air Force now and the last time
we interviewed it was.
Speaker 2: It was just the Air Force.
Speaker 1: Now we're the Air Force and the Space Force as
part of the Department of the Air Force. Most of
those people who stood up were in the front row.
We have a lot of first adopters here in the
front of the audience apparently, or maybe those.
Speaker 2: Are the folks that just make the most money. Who knows.
Speaker 1: Okay, So again, today's today's discussion is about innovation and
how we can make the Department of the Air Force,
the most innovative department within the Department of Defense and
perhaps across the United States government.
Speaker 2: So elon question number one.
Speaker 1: When you put a weapon system or a product into
production and you start delivering it to your customers, very
very frequently, there is a pushback within the production organization
that you know, we don't want to change that product
too much.
Speaker 2: It's successful.
Speaker 1: We have a lot of legacy systems that we're responsible
for in the Department of the Air Force. There is
a lot of reticence at times to incrementally improve or
add new capabilities to those systems. From the context of
Tesla and SpaceX, how do you motivate your workforce, how
do you work with your customers, how do you work
with technologists in your ecosystems, your various ecosystems to try
and make sure that products don't become stagnant and they
continue to incrementally improve over time.
Speaker 3: Sure, well, first of all, thanks for having me here.
Speaker 4: It's an honor to be here with you and with
with everyone else from the Space Slash Air Force, and
obviously had long relationship with the Air Force and very
much appreciate the support of the years. So I just
want to make sure to say that and look forward
to doing a lot of interesting things in the future.
I think it's actually it's cool that that there is
that the creation of the space forces is happening. I
think there's you know, it makes sense that there's a
major branch for every domain, you know, with that and
and so the domain of space the domain of error
are both important. But I think space space is is
certainly a medium of its own, and I think there's
some very exciting things that are possible. If I may
just say it, like what, you know, what the public wants?
I think, and direction pretty confident that the public doesn't want.
Speaker 3: This is a starfleet academy, you know, like.
Speaker 4: Yeah, like how do we make start, how do we
make star Trek real? You know, that'd be pretty amazing.
I would love that, you know, And so I think, like,
the fastest we can make sort of star fleet reel,
then let's try to do that.
Speaker 3: Well.
Speaker 2: So elon speaking speaking.
Speaker 1: For the United States Space Force, there already is a
starfleet academy. It's the United States Air Force Academy in
Colorado Springs, Colorado.
Speaker 3: Yep.
Speaker 4: But I've been there, I've given a talk, and you know,
the first launch of Falcon one, we had a Falcon
SAT from the Air Force Academy.
Speaker 3: That rocket blew up.
Speaker 4: But but but but then the funny thing is that
it blew up like he's this truth of strange than fiction.
Speaker 3: The the satellite.
Speaker 4: Was shot through the firing, walked through the air a
couple hundred meters, and then plunged through the roof of
a tool shed, uh and then landed on the floor
and was actually in reasonably good shape, I mean for
crashing through the ceiling. But you know, you're like recognizable,
you know, And and we gave we get to give
it back and so we've not lost one of your satellites.
Speaker 1: So so from a SpaceX perspective, a partial mission success.
Speaker 3: It's like, well it's it's not lost. I'm just saying.
Speaker 4: It's a little the worse for there's a little bit
worse for were of it, you know, but material. But
then we subsequently launched future Falcons that's the actual orbit
that was great. So so so I think I think
there's I think we can go a long way towards
making star Fleet reel and making.
Speaker 3: These uh sort of.
Speaker 4: Utopian or semi semi utopian future is real, but it
will definitely require radical innovation. One can't get there by
incrementally innovating expendable boosters. There's just no way. So the
I think we need to push for radical breakthroughs. And
if you don't push for radical breakthroughs, you're not going
to get radical outcomes. And that that does mean taking risks,
and common sense that the if you take a big
risk in order to have a bigger reward, there must
be a big risk. It's most of the time you
cannot find bigger reward for small risk. That's those are rare,
so you're going to have some proportionality of the risk
and reward. But if if the goal is important enough,
and I think increasingly the goal is important for for
many reasons, the goal of having the best technology in space,
that that is I think going to become increasingly important,
and it'll be increasingly increasingly important for the United States
to use what I think is its greatest attribute, which
is invention and innovation two to create space technology that
is the best in the world. And in fact, I
think if the United States does not use breakthrough innovation,
it will fulbind. Yeah, so I think this is that
this is not something that was a risk in times past,
but I think is a risk now.
Speaker 3: Okay, so.
Speaker 1: Yeah, do you characterize that risk in terms of pure
adversary competition around the planet?
Speaker 2: Are you are you?
Speaker 1: Are you suggesting that it's our adversaries that require us
to be that those radical innovators or is it just
we can't become complacent and stay.
Speaker 2: Incrementally improving our systems.
Speaker 1: We must take those giant leaps forward as a nation
regardless of the competition.
Speaker 4: I think there's there's little I have zero doubt that
if the United States does not take does not seek
great innovations in space, it will be second in space
with as sure as nightfall is day. So it is
a big deal. But this, this, this is a I
mean a very innovative that you know, there's no country
more innovative an eventive than the United States.
Speaker 3: So it's just important to use that attributes. That's that's
the ace card. Okay.
Speaker 1: Yeah, And since so since it seems like we're going
down the geopolitical path here on the on the questions,
how does the United States as a nation maintain that
innovative edge, that that ability to invest in things and
take those risks. What kind of of governmental policies or
process as do we have to encourage the right kinds
of behavior In your view.
Speaker 4: Well, I think having outcome based procurement is actually very important.
So you say, like, this is the outcome that is sought,
and whoever can achieve this outcome or achieve this outcome
to a greater degree that that company will that that's
who the Air Force will do business with and will
procure the thing that is that is radically innovative as
measured by what is important for leadership in space. So
I mean, I do think it's it's absolutely fundamental to
achieve full reusability in access to space.
Speaker 3: This is this is the holy grail of space.
Speaker 4: At the point of which you have full reusability for
orbital rockets, then you have a profound advantage over anyone
else's profound. It would be like if in the Air Force,
if if you if you had planes that could be
used once and or if you if you had if
you had multi use planes that can be flown over
and over again like normal, and all your adversaries had
single use planes, that would be no contest. It's the
same thing as space. Okay, Yeah, this is extremely fundamental.
So the the cost of a propellant is typically on
the order of one of the cost of the of
the vehicle or less. So if you have a vehicle
that is say locks kerosene like Falcon I or something
like that, it's the oxygen and the fuel are yeah,
maybe half million dollars or something like that. But then
depending upon the mission, the mission price can be anywhere
from like sixty to one hundred million dollars. So no,
Falcon nine is a partially reusable vehicle, but not fully.
The vehicle we're working on right now, quite difficult, is
a starship, and yeah, that has the potential for full reusability,
but I think it would be great to have other
companies as well that are doing full reusability. I think
competition is a good thing. It may seem at times that,
you know, shouldn't we focus all our efforts on one
system and brought.
Speaker 3: Rather than divide them and have two.
Speaker 4: Competing systems, like, you know, not to cause controversy, but
like in my opinion, like Joint Strike Fighter, should this
should be a competitor to JS that that's uh as
a controversial subject, but you know, I think it's it's
not it's not good to have one one provider. It's
good to have competition where that competition is meaningful and
somebody can actually lose.
Speaker 3: That's like you know, so then then.
Speaker 1: So yeah, okay, yeah, So in radical innovation, obviously the
workforce is a really key component of that. I mean,
as I mean during your PayPal days, you were actually
doing coding, right, But in SpaceX and Tesla they are
so large that Elon can't do everything. What sort of
things do you think about in terms of motivating a
workforce like we have in the Department of the Air Force,
that will help them become more radically innovative. What sort
of things do you look for in people or in
processes that make the workforce better?
Speaker 3: Sure?
Speaker 4: Well, I think the massive thing that can be done
is to make sure your incentive structure is such that
innovation is rewarded and lack of innovation is punished. They've
got to be a characteristic So if somebody is innovating
and making good progress, then they should be promoted sooner.
And if somebody is completely failing to innovate. Not every
role requires innovation, but if they're in a role where
innovation is should be happening, and it's not happening, then
they should either not be promoted or exited. And let
me tell you, you'll get promote, you'll get you, you'll
get innovation real fast.
Speaker 3: Okay, let's stick. Yeah, it's like how much do you want?
Speaker 2: H So?
Speaker 1: Does that does that carrot and stick approach help? Do
you think people be more risk averse or less risk averse?
Speaker 3: Well?
Speaker 4: Poor when you when when trying different things, you've got
to have some acceptance of failure. As you're alluding to earlier,
failure must be an option. If failure is not an option,
it's going to result in extremely conservative choices and you
may not may get something even worse than lack of innovation.
Speaker 3: Things may go backwards. So, if what you really want is.
Speaker 4: A risk risk, you wann't reward and punishment to be
proportionate to the actions that you seek. So if if
what you're seeking is innovation, then should reward success and
innovation and only there should be minor consequences for lack
of minor consequences for for.
Speaker 3: Trying and failing. Should that there should be minor.
Speaker 4: Significant rewards for trying and succeeding, minor consequences for trying
and not succeeding, and big and and major negative consequences
for not trying.
Speaker 3: Okay, So.
Speaker 4: If you have that incentive structure, you will get innovation
like you can't believe.
Speaker 1: Okay, So you've you've talked at Tesla's shareholder meetings and
in various interviews that you consider the machine that builds
the machine to be just as important, if not more important,
than the machine itself.
Speaker 3: Yeah.
Speaker 1: So we talked about the workforce aspects. Are there processes
that you use within your company that are parts of
that machine that you think are particularly valuable for innovative
radical change?
Speaker 4: Well, what I mean by the machine that builds the
machine is that the production Designing the production system of
a new product is I think at least an order
of magnitude or too ards magnitude hotter than designing the
initial prototype.
Speaker 2: Yeah.
Speaker 4: I think like in America, there's been less, less of
a less importance in modern times placed on manufacturing, and
I think this is a mistake, Like at this point,
really classify And in fact I sent an email to
the to SpaceX just saying this, like, at this point,
I think designing a rocket is trivial, just trivial, there's
like tons of books that will you read them? You know,
you can understand equations. You can design a rocket. It's
really really easy. Yeah, if you say like two stage
two and two percent of your lift off master orbit
from it just to design something like that piece case. Uh,
Now I say you want to go into production with that,
or if you want you want to actually make Let's say,
the next step is you want to make even one
of those things. Okay, Now, making even one of those
things and getting it to orbit is hard, but the
designing of it is not hard. The making of it
is even one is hard. The making of a production
line that builds and launches many is a extremely hard.
And then the next level beyond that would be, uh,
are creating a fully reusable system and having that be
in volume production and volume launch. That's the that's super
super hard.
Speaker 3: So that's so yeah.
Speaker 4: But but by building the machine and bolt machine, I mean,
I mean creating the production system, and I keep emphasizing
to SpaceX, the hard part is making it and making
lots of them and launching frequently, because reuse must not
just be it can't be reused like the shuttle. It's
got to be rapid and complete reuse. So the shuttle
was a case where the reuse was very slow and
it was not complete. The main tag was lost every time,
and ref the shuttle between flights was extremely expensive. It's
not even clear whether it was worth recovering the booster
shells from the ocean. So so just like an aircraft,
the rocket must be rapidly and completely reasonable, and then
you need lots of them. And then I've been sort
of just doing back, kind of back of the envelope
of what's needed to establish a self sustaining city on Mars.
Speaker 3: And these are like big numbers, but like you.
Speaker 4: Need on the order of a million tons to the
surface of Mars useful payload something like that, because we
sit on the top of a massive base of infrastructure,
or you know, the economy is you think of all
the things that are mined and then refined and then
and then the many steps in the refinement, and in
order to produce like your phone or your host or
even there's there's a vast base of industry that was
required to produce even a simple household item. It's very difficult.
So so you've got to recreate that on Mars, some
million tons on Mars means we're just talking to orders
of magnitude here, and hopefully it's not ten million tons,
and hopefully maybe it's less than a million tons, but
probably not one hundred thousand tons. So that that means
you need to get about about five million tons to
Earth orbit of useful failureed. So you're talking in like
the like. So essentially, unless you have a launch system
that is somewhere in the mega ton per year range
to orbit, it's not it's not relevant.
Speaker 3: Okay. Yeah, So.
Speaker 1: Starlink, as you're scaling to build more and more Starlink
satellites to go on more and more reusable rockets, what
are some of the challenges you've had to overcome in
Starlink production so that you can perfect that machine, machine
that builds the machine.
Speaker 4: Yeah, stalling production is going well. Actually, the that's the
that was a hard that's a hard thing to get right.
We made many we had many iterations on the stalling prototypes,
and then, as I said, the building the stalling production
line was I don't know thousand percent harder than designing
the satellite to begin with.
Speaker 3: But but it is important to have like a.
Speaker 4: To design full manufacturing and have a tight feedback loop
between the design of the object and may acturing system,
so as when people when when you design the object
at first, you you don't realize all the parts that
are really difficult to manufacture. Uh, And so having the
manufacturing system and the design bring those up at the
same time, so that you're actually in the beginning making
a thing that you know is wrong, but you're actually
figuring out what's hard to manufacture.
Speaker 3: That's the real problem.
Speaker 4: So we brought up the Starlink production line before we
actually had the design finalized, which which is actually the
right thing to do. And then we discover, oh, there's
all there's all these things that in the design that
are very difficult to make, and so therefore we must
change the design, and the satellite ended up having the
same capability, but just was very easy to make and launch,
So say, very easy.
Speaker 3: It's sort of.
Speaker 4: Hard, but but but but it's being done, and we're
the satellites are being produced at a rate now faster
than we can order them. So and and the cost
of the satellite has dropped below the cost of transporting
it to orbit, even when taking the Falcon nine in
the most reused configuration, which is to get the booster
back and you get the fairings back. The cost of
the of transporting the satellite to orbit exceeds the cost
of the satellite. So the satellite is in a good,
good situation, and the cost that satellite will keep coming
down as we ramp up rates and make design improvements.
But so we really need Starship to carry Starlink in
order to get the total delivered cost to orbit to
be much better than it is today.
Speaker 3: Still pretty good.
Speaker 1: When you when you so in terms of deciding what
to build, you can take feedback from customers and let
customers pull to you what they want, or you can
be radically innovative within your company, or you know a
small set of individuals and develop something and push it
into the industrial base. So customer poll would be Tesla
Tesla owners wanting new features on the existing fleet. Push
would be you know, a company push would be something
like when Apple pushed the iPad to everybody and nobody
knew what an iPad was until they touched it and
went wow, and everybody wants an iPad. Now, what do
you all think about in terms of that balance between
customer poll and company push.
Speaker 3: Well, in the beginning nobody wanted a Tesla.
Speaker 4: Let can tell you that that made the original sort
of roasters car.
Speaker 3: Uh.
Speaker 4: People were like, why would I want an electric car?
That's my casting car works fine, Like, no electric car
is better?
Speaker 3: I should try it.
Speaker 4: And it was hard, you know, hard to get people
to do a test drive first. Nobody knew who we were.
Heard of this company and like, yeah, we're named after
Nicola Tesla, the you know that guy. Nope, So for
sure we were doing push in the beginning because people
said there was no one telling us that they wanted
an electric car, so it was not it was not
out of like you know, it's like lots of people
coming after me saying, hey, I really want an electric car.
Speaker 3: I heard that zero times.
Speaker 4: So people like it's like, man, we're going to make
an electric car and shure that these things can be
good and then people want them.
Speaker 3: You know.
Speaker 4: It's like because like Henry Ford said that, like the
you know, we're talking about the Model T. It's like,
if you ask the public what they wanted, that's say
a faster horse. So if you did like a big
survey and say what, hey, public before automobiles, what would
you like, It's like, well, I'd like my horse to
go three miles an hour faster and eat less food
and uh, you know, be stronger and live longer and
that kind of thing. There'll be a basically a bunch
of incremental improvements on horse. Because you want to say, like,
what about an automobile like cart drives yourself, Like, what
are you talking about? That's that's not that's not crazy.
But when you actually make an automobile and give it
to people and say, okay, now this is a horse
where you can keep it in the bond and if
you leave for a month it's still alive. Yeah, to
carry more more weight than a horse and go further
and that kind of thing. So anyway, the it's like
when when it's a radically a new product, people don't
know that they wanted because it's just not in their
in their scope. I think when they first started making TVs,
they did a nationwide survey. I think this might have
been like forty six or forty eight. It was like
famous nationwide survey will you ever buy a TV? I
was like ninety six percent of respondent said no, hmm,
some crazy number. Like basically everyone's like would you buy
a TV? And maybe they put a price in there
or something. I don't know, but it was famously almost
everyone said they would not buy a TV, but they
didn't know what they're talking about.
Speaker 1: So the big game changing stuff at the beginning is
a company push kind of a thing most of the time,
but then changes to the product over time can be
a lot more customer pull kind of a focus.
Speaker 3: Yeah, changes to the product of a time can be
incremental changes.
Speaker 4: Then the customers can certainly tell you it's good to
becustom feedback to say how can we improve the product,
And once they're using it, they can say, Okay, I
like this thing about it, I don't like this other thing,
and then we can improve the product of a time.
Customer feedback after they have the fundamental thing is great.
Speaker 2: Okay, Okay.
Speaker 1: So in the audience here, we have a lot of
air and space warfighters, We have so people who use systems,
We have a lot of developmental teams on both the
government and the industry side, and we have the air
and space leadership of the nation. So I got a
little lightning round here for you to try and influence
maybe some of those younger folks in the back who
are looking for the next big thing. So, in terms
of different kinds of technology, whether it's artificial intelligence or
medical or batteries or whatever, in the next five years,
what technology do you think will see the most advancement.
Speaker 4: Well, it's difficult to assess most in those context because
they're very different. But I think the part of the
most transformative, most fundamentally transformative, will be AI AI Okay.
Speaker 1: And if you were recommending to some of the young
officers and enlisted troops in the room, what sort of
degrees to pursue at college or what sort of education
that they should prioritize for themselves in the modern era,
what would you recommend?
Speaker 3: Computer science and physics?
Speaker 1: Computer science and physics okay? How many computer science people
do we have out there? How many physics people?
Speaker 3: Okay?
Speaker 2: We need more apparently, Okay.
Speaker 3: It's essentially information theory and physical theory.
Speaker 4: If you want to understand the nature of the universe
and have these have a very good predictive power.
Speaker 3: Physics and pure science okay, yeah, okay.
Speaker 1: As a nation that is interested in radical innovation to
maintain its competitive edge, what are the things that the
Department of the Air Force should be investing more in
other than reusable rockets from your perspective.
Speaker 4: Again, I can't emphasize enough how important reasonable rockets are. Yeah,
I love it.
Speaker 3: It's great.
Speaker 4: So and I think that you could actually do point
to point on Earth with you know, to go a
long distances and be much better than aircraft because I
mean basically just think of like ICBM minus the nuke Adalande,
you know, so it's just sort of in the option package,
just you know, unchecked nuke and then add landing system
check and and that's definitely gonna get you where you
want to go the fastest, because that's why they made ICBMs.
They get there the fastest. So you know, I think
that that's that's gonna be pretty exciting. Yeah, I think, uh.
Speaker 3: Yeah.
Speaker 4: I mean once you have dramatically lower cost access to space,
then then many things are enabled. You can think of
like once you got the Union Pacific Railroad, then you know,
getting to the West coast was.
Speaker 3: Much faster and much less dangerous.
Speaker 4: You're not likely to sort of end up eating your
compatriots in a snowy situation, you know, so.
Speaker 3: You can just take the train.
Speaker 4: So so you know, at the beginning, they thought, why
are the heck they're building out stupid.
Speaker 3: Railway and there's nobody.
Speaker 4: There's nobody there, and they're like, but once you build
the railway, they're like, Okay, now it's easy to get
to the West Coast. And now a huge portion of
the US population is on the West Coast. And actually
California is the most popular state in the nation, but
it used to be well least populist.
Speaker 3: I suppose we're pretty low.
Speaker 4: So many things are possible once you once the transport
uh problem is solved. So that that's why I think
it's a fundamental you can't but if you can't get
there or getting there is takes a long time and
you can't risk and every mission has got to work,
then it's very hard to innovate. It's got to be
that Okay, some missions would work, and the cost of
running the experiment is low. That's why I'm harping so
much on the cost of transport, so.
Speaker 3: You know, once you're there.
Speaker 4: I think, like say establishing a base on the moon
or based on Mars, there's just a tremendous amount of
work work that's needed to create a self sustaining base
on the moon of Mars, and it opens up a
tremendous amount of opportunity, just as the Union Pacific Railroad
did by making access to the West Coast not much easier.
Speaker 3: Yeah, I mean outside of the.
Speaker 4: Space space realm, I think there's there's still a lot
of opportunity in tunnels. I keep I've been saying that
for a long time, and tunnels are great.
Speaker 3: They're really great.
Speaker 4: And Boring Company is about to finish its first tunnel
in Vegas. I encourage I encourage people to copy, Please
copy the Boring Company or do better.
Speaker 3: That'd be great.
Speaker 1: There's so in terms of domains. You have subterranean obviously Tesla.
Tesla covers the ground domain as capabilities. You've got the
space domain covered with SpaceX and starlink capabilities. I think
this is this is the air warfare symposium. Folks might
not in the audience might be interested in if you
have any ideas for the air domain specifically.
Speaker 4: Well, for the air domain, I think things things are
very definitely going to go into kind of autonomous locally
autonomous drone warfare. This is where it's at, where the
future will be. I'm just saying it's not I want
the future to be this. It's just this is what
the future will be is autonomous drone warfare and at
at a local, local level. The you know, I can't
believe I'm saying this because this is this is dangerous,
but simply what will occur is sort of a drones
locally being autonomous. And but I think we still want
to retain sort of the you know, authority to damage
or destroy a you know, anything that that isn't an
autonomous drone. Keep that authority back here with a person
in the loop. Okay, but it's it's the fighter jet
era has passed. That is It's just yeah, fighter jet
era has passed. Okay, so it's strong.
Speaker 1: Let's go back to failure for a minute. And and
and the mindset that that you have, you and your
leadership team at Tesla and SpaceX have on failure. I
mean the SpaceX blooper reel that you guys did and
I think it was twenty seventeen timeframe was definitely Hey,
we embraced this learning that occurs more recently with the
Tesla truck and the and the ball through the window.
Speaker 2: Also, uh, that mind.
Speaker 5: Thret that that that mindset that embraces failure, how do
you personally, I mean that those kinds of failures would
drive a lot of us in this room nuts, but
doesn't seem to drive you nuts.
Speaker 2: Seems like you're very comfortable with it.
Speaker 1: Can you talk about the mindset that requires for you
to be that accepting of that kind of failure?
Speaker 3: Should should we roll the video? No?
Speaker 2: No, we should not roll the video?
Speaker 3: Not yet? Okay, okay, okay.
Speaker 4: Well I think of these things is just there's a
certain amount of time, and within that time, you want the.
Speaker 3: Best net outcome. So for.
Speaker 4: You know, all the set of actions that you can do,
there's going to be some which will fail, some which
will succeed, and you want the net useful output of
your set of actions to be the highest. So I
have to, like you use like a baseball analogy, Like
you know, baseball do unless you just sit there and
wait for the perfect pitch until you get a real
easy one that you can't give you three shots and
the third one they say okay, they get off, they
go back to the put somebody else with there.
Speaker 3: So your three strikes on on the baseball.
Speaker 4: You know, not on bat anymore. So so you're what
you're really looking for is like what's the batting average?
Speaker 3: You know how you're doing.
Speaker 4: On on score and and just there's gonna be some
amount of failure, but you want your net output net
useful output to maximized. Failure is essentially irrelevant unless it
is catastrophic.
Speaker 3: Okay, okay.
Speaker 1: Intellectual property, obviously, Tesla, SpaceX Solar City have amazing capabilities
that they're bringing to the to the public and to
the government every day. How do you protect your intellectual
property in a world where it seems like the cloud
and servers and things are constantly under attack from people
wishing to free you of your intellectual property.
Speaker 3: Yeah.
Speaker 4: Well, actually at Tesla, we just open source style patents
some years ago, so anyone can use our patents. So
we really have not been tried to protect intellectual property
in that sense. We've we've tried to actually smooth the
path because the the overacching goal of Tesla is to
accelerate the advent of sustainable energy. And so if we
created a pattern portfolio that discouraged other companies from making
electric cars, they will be inconsistent without mission. So we
open source all the patterns in order to help the other.
Anyone else wants to make an electric car, so I
guess that's the opposite of protecting the I P.
Speaker 3: Now, the real way I thank you.
Speaker 4: You actually achieve intellectual property protection is by innovating fast enough.
If your rate of innovation is high, then you don't
need to worry about protecting the IP because other companies
will be copying something that you did years ago, and
that's fine, you know, just make sure you're your rate
of innovation is fast.
Speaker 3: Speed is really speed of innovation? Is what is what matters?
Speaker 4: And I do I do say this to my teams
like quite a lot that innovation per unit times I
go innovation per year if you want to say it,
like is what matters? Not innovation absent time, because if
you want to fake it one hundred percent improvement in
something and that took one hundred years or one year,
that's radically different. So it's like, what is your rate
of innovation that that matters? And is the rate of
innovation is that accelerating or decelerating? And a weird thing
happens when companies get big is that most companies or organizations,
the bigger they get, they tend to get less innovative,
not just less innovative on a per person basis, but
less innovative in the absolute and I think this is
probably because the incentive structure is not It's not there
for innovation. It's not enough to use words to encourage innovation.
The incentive structure must be aligned with that. That's fundamental.
Speaker 1: So taking that from a business level to a national
level in terms of obviously the United States largest economy
in the world, China the second largest economy in the
world currently and gaining fast. What sort of things that
could you share with the audience here that are your
thoughts on the competition economic or military between the United
States and China.
Speaker 3: Sure. Well, I think China is a really interesting country.
I have to say.
Speaker 4: The things to appreciate about China is just that there's
a lot of really smart, really hard working people there
and they're going to do a lot of great things.
Speaker 3: This is sort of, you know, independentive of Chinese going policy.
Speaker 4: They're just going to do a lot of interesting things.
The thing that will be it will feel pretty strange,
is that the Chinese economy is going to be probably
at least twice as big as the US economy, maybe
three times, but at least twice, So that assumes a
GDP per capita still less than the US, But since
they have about four or five times of population, then
it would only require getting to a per capita of
half the United States for their economy to twice the
size of ours. And as I'm sure people in this
room know, the foundation of war is economics.
Speaker 3: And so if you.
Speaker 4: Have half the resources of the counterparty, then you better
be real innovative. If you're not innovative, you're going to lose.
Speaker 1: I'm not sure whether that's a cyber attack that's ongoing
or not here. So, yeah, the clock says I have
eleven minutes left.
Speaker 3: Is that not true?
Speaker 2: It's got so smooth all right, so smooth jazz elon. Yeah,
it's coming through the house system. We're working to get
it shut off.
Speaker 3: Thank you. Yes, well.
Speaker 4: Anyway, so so yeah, with with with respect of China,
China's economy is going to be two to three times
this size, the US economy at least double.
Speaker 3: Therefore, in order for the US to.
Speaker 4: Be competitive on military level, the innovation has to overcome
a gigantic gap in economic output. Okay, So in the
absence of radical innovation, the US will be militarily second.
Speaker 3: Okay, basic, basic, Now.
Speaker 2: What from the standpoint of radical innovation.
Speaker 1: We already talked about workforce, we talked about processes, we
talked about protecting intellectual property rights. Let's talk about overall culture,
that culture that you try and push into your companies
that makes them successful any of us. And I sat
right next to one of your SpaceX employees on the
plane here yesterday, a young engineer. It was motivating for
me just to talk to her about what she was
doing every day and how important her job was. And
I just felt like the only other place I've seen
that kind of culture is frankly, in the department of
the Air Force with some of our young folks that
are sprinkled around the back of the room. How do
you create that culture at SpaceX and Tesla to make
employees like that?
Speaker 3: Well, wow, this smooth jazz is just honest with a vengeance.
I feel like we're in a big elevator.
Speaker 4: So first post, when we interview people, we do ask
for some evidence of exceptional ability, which in most cases
includes innovation. This is not said everyone needs to be innovatives,
but we certainly need those that are doing it's engineering
to be innovative, and ideally everyone is at least to
some degree in innovative. So at the interviewpoint, we select
for people who want to create new technology, and then
the intentive structure is set up that such that.
Speaker 3: Innovation is rewarded.
Speaker 4: Making mistakes along the way does not come with a
big penalty. And but but but failure to try to
innovate at all comes with a big penalty.
Speaker 3: You'll be fired. Okay, yeah, all.
Speaker 2: Right, the carrot and stick, Yes, the stick.
Speaker 4: If you don't even try, or or somebody doesn't even
try to innovate, or their innovation aspirations are are very
are not not very good, then yeah, they will no
longer be at the company.
Speaker 3: Okay, okay, all.
Speaker 1: Right, So we got about five minutes left, and what
I'd like to do is just turn it over to you, Elon,
to talk about whatever you'd like to talk about.
Speaker 3: If you have a.
Speaker 1: Message for the audience here, you have, you know, a
thousand plus air and space professionals and the greatest air
and space force on the planet. So what do you
want to tell them?
Speaker 3: I think we got to make Starfleet happen.
Speaker 4: Like so, so we were like, oh, real big space
shifts that can go far places, and that's probably get
me to the most trouble of able. I think this
should be in new uniform that's.
Speaker 3: That.
Speaker 4: That's like, I don't know, cool uniforms, cool spaceships, you know.
I think that's what when the when the public here's
space force, that's what they think. It's like, Okay, we're
gonna have like some sweet space shifts and like pretty
good uniforms and stuff, and that'll be that's what the
poblague wants. So yeah, when we went the sci fi futures,
the the good sci fi futures to be real, and
ideally to become real while we're still alive, you know,
and every want to see it happen. And so I
think we really need to drive the rate of innovation
to be such that we would see a big, big breakthroughs,
big improvements in space technology and you know, in the
years to come. So yeah, it's like just trying to
make stuffleet happen as soon as humanly possible and definitely.
Speaker 3: Why we're while we're still alive. Yeah, So.
Speaker 4: I'm not sure about wolf drive, but we can other
stuff I think can be done. Wolf drive in tailportation,
probably not, but big space ships that can go far places,
definitely that.
Speaker 3: Can be done.
Speaker 1: Understood all right, Ladies and gentlemen, Elon musk mm hmm