Air Force Space Pitch Day

we would like to invite general Thompson and Elon Musk to the stage all right well good morning everybody we got about 30 minutes with Elon here I love the soundtrack that we're listening to you throughout the day we've got the theme or the soundtrack to the Martian the soundtrack dinner cellar even the soundtrack to the stranger things so hopefully that has lightened the mood a little and hopefully you all had the opportunity to enjoy the expo some of the public pitches and some of the panel sessions that have occurred throughout the day our guest today needs no introduction in the forbes innovation list for 2019 he was code number one on that list with mr.

Jeff Bezos and if you care to comment on that later you'll have the opportunity but I will remain silent on that he's obviously the founder of a few companies you may all be familiar with like Tesla Motors and SpaceX he's also spent time on the board of a non-profit open AI and sponsored innovative competitions like the Hyperloop initiative Ron thank you so much for being with us today so we'll just dive right in unless anybody has any objections to that I just have some questions we're going to be talking about primarily innovation but interspersed amongst some of our questions on innovation would be some questions on leadership some questions on culture and especially in the small business growing to a large business kind of environment and then I myself

never got these questions until five years ago but I may throw you a couple work-life balance questions quality of life questions so without further ado Ilan a critical question that all businesses face when tackling challenges during product development is do we invest the time and the resources to do this work internally or do we contract it out and have an external partner do it with us can you talk to the audience a little bit about what kind of decision process you go through whether you're deciding to do it in one of your companies or contract it out to somebody else well in the beginning we try to contract those things out but at Tesla and SpaceX we start with with most things contracted out what didn't succeed so we [Music] in space supply chain

is not great ital restricts you to really working with us companies which very difficult work with non-us companies via space rockets or awareness technology so we have a limited set of suppliers and typically that you have legacy parts you inherit the legacy costs and limitations and so that required us to insource most of the rocket this probably only what less than 10% of the rocket is coming from the space my chain at this point the automotive supply chain is better consumer electronics is a lot better whatever this love competition these fly chain is better so it really depends on the part but it's important that lazy components lacing cost limitations if you won't have something revolutionary you can't do catalog engineering yeah catalog engineering

is so the legacy industrial base isn't able to adapt fast enough to Wired what you're trying to do so you in source it are there any special techniques or cultural aspects of that in sourcing that you find we found to be particularly beneficial in Tesla or SpaceX well it wasn't just like if you want to advance technology you've got a recruit the world's best engineers and then create environment which enables them to his innovative as possible so the reward structure you know you need to really reward and encourage innovation and punish lack of innovation so it's got oboz this is the second characteristic [Music] risk reward asymmetry bold moves are if they go wrong punished and but sort of keeping your head down is is not punished but that's not good

that will result in conservative so it has to be significant advancement and simply the lack of doing something significant feels bad so yeah this is just become really conservative over time and really the government is a company in the limit so company yeah so we have some big companies in the audience but we have a lot of small businesses in the audience so not part of if you will the legacy supply chain for rockets or whatever other innovation you were a company that you're associated with might be producing is there some advice or counsel that you could give to so many small businesses about how to market to growing space partnerships like SpaceX or other companies that might be willing to admit them to the supply chain if they don't have that old

think or that old process mentality well basics for Tesla I mean if somebody's got a component that's better than what we're making totally love to buy back for sure just reallocate the resources that were working on that component to do something else so I put you up on the landing legs and they were contracted out to Racing racing cars you did a good job today better than us so we working on things so this is by no means like it would be completely insane for us to want to continue to make it part ourselves internally there's a virtual 5 that is available externally that matters so we'd love to do it better than SpaceX then they'd like to talk to you ok Elon given your extensive experience in the nonprofit arena with companies like open AI that I mentioned

in the introduction and your ability to tap into the academic environment that cutting edge innovation in our environment with things like the Hyperloop competition are there smart ways for the folks in the audience this community of space professionals to be engaging with different sources of innovation in the ecosystem how do we better cultivate those sources of innovation so that we can take advantage of them in our nation's space capabilities well yeah in overnight I wouldn't sound like an expert in nonprofits but opening I was really intended to mitigate the risk of artificial general intelligence I hope that it I hope that that's where it does the song chance of me amplified the risk but hopefully it reduces risk now I have foundation that gives

away the ONC an expert on this mostly trying to do is figure out the set of actions that increase the probability of the future is good and take elections okay that's great really okay so is there are there techniques that you personally use to identify sources of information I mean is it is it just reading or seeing what's out there they have the continuous market research going on in your companies or in your private life about what's out there that I should be sponsoring or taking advantage of to make things better than we are I do I do zero market research whatsoever okay just like Carl great rocket you know it's like okay like where's the Platonic idea we've seen the perfect Rockets or car what characteristics would have and then make that and then

to I find that if you do that people buy it okay and it's that's and you know we're gonna come out with the pickup truck or the cool cyber truck I mean it looks like an almond person I'll carry over from you sure yeah it's like other people do too it's gonna look like a cable from movie set okay I look forward to seeing it at some point in the future try to make products that they think others would love they don't love themselves if you don't love the product you should not expect that others will okay great so from a leadership perspective obviously you started as a leader of a small business and grew a number of small businesses into large businesses so from your early days that at zip2 and PayPal leading very very small teams of developers sometimes

doing a lot of the development yourself hands-on today - today as you need very large companies like Tesla Motors and SpaceX has your leadership approach changed at all or is managing those small teams to try and keep that culture and your leadership style the same throughout well it definitely has to as companies get bigger Tesla's around 45,000 people and SpaceX is almost 7,000 people and you know when a company is little then your skill as is sort of that like an individual engineer can a very big difference one Cafe is large you have to kind of teach a lot of people to do it yet you have to you have to be a force multiplier as opposed to like if you have a little band like if you know if you like a dozen swordsmen or something into your day so it's

okay right you can that's gonna make a difference in a little battle but not if it was 12,000 like you so you have to try to teach people on mass different approaches and just make sure that the right behavior what structure is in setting the right name is incredibly important economics 101 whatever you incent it is likely to happen in fact would be bizarre if it didn't so statistically speaking will definitely be what happens so the entire structure must be sensible and this sounds very obvious but in most organizations they want this means the structure isn't right mm-hmm okay so as businesses grow as your businesses have grown and it becomes less and less about the engineer talking to the program manager one-on-one in a very small team environment

and it becomes conversations between different teams in your enterprise much larger groups of people there's in many organizations there's a tendency that seems will develop and if leaders have to manage those seems how or insist that their teams manage those seems how have you managed the seams and the large businesses that you manage currently in any given product you can see that mistake the organizational errors manifest themselves and the errors in the product so you can see like the you know and I see the scenario products it's like a top cover of the battery and we've got a bottom cover on the car okay that's we should only have one cover no need a box in the box but there's the bathroom team and the chat and the body of chances little and so they

made a cover you know see sort of flanges and joints and various things did not make sense or things are doubled up and we have subsystem optimization in system optimization so to counteract that which is not easy I actually it insist that teams step on each other's toes so if propulsion to the engine team has to go part way into the airplane and the airplane team has to go part way into the engine it's just but it's hot it's hot if you were to do that now and so essentially they have to basically offend other people in the company and ended themselves ok this is very important to try to propagate is that everyone should be chief engineer like everyone everyone should have at least a inside cursory understanding of the whole rocket the whole car even

though they may have deep expertise in one arena they make they built to tell if if they're optimizing from for the product as a whole so I finally you can summarize the key characteristics of they have each discipline you can simplify it down to a few principles there's like you're Richard Hyndman needs to say that really know your subject if you can explain it to a smart ten-year-old but if you try to sort of disguise or expertise obscure language then rockets coming back from orbits you have like Sara pressure and center of mass and it sounds very complicated but basically you just have a seesaw of approximately equal dance [Music] it's it's just gonna be if you put mass on one side it's gonna tip that one foot outside and took the other way and just

like you see so then like we'll see the mass distribution even make sense what doesn't make sense well the flaps are too big on one side or the other plenty of other examples but I think principle is that everyone should kind of have a broader understanding of the particles and that's that's right so other than so other than the culture of broad understanding amongst your teams and the culture of don't worry too much about offending people on other team is to make those difficult kind of discussions to you know not travel risk downstream and identify issues early are there other aspects especially in growing your small businesses into large businesses that have been really important from a culture perspective for either you and your leadership team or

for your entire workforce I can't say I'm like I'm like good but I'm not sure if it really view myself is so great great expert on your show tonight I will go you know we're doing okay but let's see some just seems like a lot of mistakes was born I can say so you know I try to use the tools of physics as much as possible you know when I was growing up I was actually thinking of a career in physics I'd like the Clyde or something like that and I don't think I've been a best photographer well coming from coming from a culture that values leadership my position is that you don't achieve results and certainly when we have achieved results unless you have that kind of leadership skill yeah mon-sol so don't sell yourself short is what I'm saying [Music] all

right so with that is like you should always assume that you're yourself and your goal is to be less wrong this is very one frame of mind people tend to assume that their rights and there was proof that they're right you're definitely wrong some degree the question is how long and can you be less wrong tomorrow okay so instead of leadership lessons from Abraham Lincoln or somebody else leadership lessons from the world of physics yes the thought constructs of physics can be applied broadly this is the right they're amazing they got all these counterintuitive things like quantum mechanics and general relativity so these these great tools okay all right we'll have a textbook sale later after our session or for those right now just hit Khan Academy up lots

of good stuff on there on physics okay so Elon let's move on a little bit to work-life balance do you have a deliberate approach to how you balance your work and the rest of your life or do you just kind of have a sense of hey I am focusing way too much on work right now I need a break or I need to go do something different well I think I might but that point of view is what I select decision there in my case I actually might get the most amount done possible but if you don't take some breaks then you're sort of not being get done is less [Music] the reason I take breaks in order to get more done basically was what everyone's decision but - actions to a storage inspire - weekend errand as it was lasting they had a vacation region to work for a week and

I was like well like two thousand or two thousand hospital so maybe I should take another break you know yeah but I think it's probably I would not recommend running to companies this is this does not make for the most fun understand I understand yeah I understand so about a year ago you and I had a conversation on a Saturday morning and what the thing that I remember from the Saturday morning telephone conversation was we spent about the first 15 or 20 minutes talking about the workouts that we had just had on that Saturday morning would you care to tell the audience a little bit about how you stay in shape I don't think I'm a good vice chair to be honest but the mentally in shape question is next okay listen why don't become in superbe shape but but

I this is just like it looked rights and run on a treadmill and that's like the one time that I really watched television was like running for 15 to 20 minutes on a trailer I read that said okay watching on television when you're running I just wish watching Space Jam quest for a Space Jam soundtrack later this afternoon okay gotcha gotcha how about I know you're a huge reader but from a a lifelong learning perspective constantly trying to add to your toolkit so that you're you know a better leader a better CEO are there recommendations that you have for the audience about those kinds of things that you to keep yourself mentally sharp well I really like these days and I used to when I was a kid I was read all the time I mean mostly subscribed to scientific

periodicals like you know they're like the the Daily News I find a lot of noise and just very negative so I generally try to not read the daily news a little that much because they're jelly newspapers try to seem to be trying to answer the question what is the worst thing that happened on earth today [Laughter] something terrible happened every single day guarantee was a big big plant also something great happened but don't answer that question so that's the daily news just tends to make my little robot like scientists science and tech technology periodicals are good quite interesting and usually you know that if there's something something discovering the it'll be in there so and I find Twitter enlightening Italians yeah but there and talking to smart

people all the time is very helpful because that can be a distillation of a of interesting things that are going on and you know certainly like to try to ask people like for the car like what are we doing wrong when they were coming sex will make better usually one time we all it's right you know like the chart I'm saying but what's wrong with it you're like working way better you know like how do we be less wrong right right yeah okay so it's like don't tell me the good stuff like that's cool but tell me about stuff that's very bored okay bad things okay okay so we we have a similar culture and air force acquisition talking to our operators about well that's great that you love it but tell us what don't you like right now so so this domain the space

domain this ecosystem that's represented today one of the challenges that it faces every day it would face every day even if the if the stem production system across the United States or across the free world was perfect is a strategic competition for talent are there techniques that as you grow from a small business to a large business they need to change in terms of how you reach out and find that talent in the ecosystem yeah first of all like the things that if you want to get great engineering talent then you it work itself has to be exciting the best engineers want to work on the most innovative things and then as you add goodies just the company they will in turn recruit other great engineers and talents of all kinds so it is very important that

it be that the thing they're working on is intrinsically interesting and and and Joe it that it there's a high energy environment if the work is intrinsically interesting and interesting and the they're making progress then it just you just sort of attract more more green engineers when you stop doing really interesting things then they leave okay and that's that's the they're pretty pretty straightforward but you get what someone out make sure you but a recruiting function that is that is very good and that if if somebody great wants to join the company that they actually get an interview this is actually one of my big wise is I came from a coma teller was alive today in any way if not we're doing something wrong and like I'm not totally sure get it

you know so if maybe not get it early we should fix that and and make sure we're not like barring the doors from talent yeah or they were we're looking at the right thing so general look for things that are like evidence of exceptional ability I on capsule me graduate from college or high school or whatever what evidence is exceptional ability you just give you three bullet points evidence an exceptional ability from college is not as okay yeah but you know the debate vote some really impressive device and some tough really tough competition come up with some great ideas so some really tough probably you know it's like what they do that just was like clear evidence of exceptional ability it's not necessarily a 4.

0 GPA that's right that's concerning to be a contract occator yeah sometimes okay well right clear evidence of exceptional ability otherwise I like that a lot okay so Ilana I want to give you the the last minute or so for you know for Elon to be Elon right okay so you have which this is an Air Force Space pitch day you have in the audience small businesses developing new and innovative capabilities for the space domain you have Air Force Space Command operators Air Force space acquisition folks you have congressional staffers you have some Media you've got experts in the valley in the audience what is the one thing or two things that you want to tell them all about air force space pitch day and how it is to be successfully growing a small business to

a large business okay well I mean if I got I don't think that's like it's intrinsically good to grow a small business to logicals and sometimes the sport business should be a small business sometimes businesses shouldn't exist and micro companies as a group of people I collected together for a purpose which is to create a compelling product or service if that product or service is not compelling that competition exists but that's louvers who forget to it it's it's it's the point is to create a great product or service and then if you're just one person that it's hard to do that more than one person so it's not about growing a business for the sake of growing a business you have to say like what what is this important problem that you're trying to solve

that really matters and then go try to solve that it with respect to space I think there's really just one problem one problem primarily which is the fully and rapidly reusable rocket over rocket this is the this is the Holy Grail you know it's basics we've made some progress in this direction with the reasonable straw and the fair but it's it's absolutely profound to have a reusable rocket as would be to have it as list as is to have reusable transport Norrell domains their bicycles aircraft cars forces are already usable so and you know if you look at the cost comparison something like a plot plot is pc-12 a single-engine turboprop has a payload of about one time and costs five million dollars a 747 has a payload of over a hundred tongues and you can

lease it for a flight from services go to Sydney and back for half a million dollars so that that is a thousand full difference in cost and cost a ton of transport and actually that flatus can't reach Australia so we didn't get there so what I say is a small a giant reusable craft it costs a small the sensories if you just need to repeal something is that quite easier so you know what when I say like looks like a lot of rockets start absolutely and I think this is one thing that is Aubree's body that's it you know crosstalk shook program which is parsley pretty ambitious that the cost of fuel and oxygen and it's a partisan depressurizes Disney's million which is very is about $900,000 light so thing is going to usable $900,000 before something with tons

to at least a hundred tons probably of time and you should consider our operation costly the opportunity Camargo consequent so but it was much less than even a tiny rocket and so it's the thing is the thing that history made but this is slowly is go rock and still be useful just a smaller buckets like there are only 720 silence there are prophecies you know they're popular sizes they're all reusable and if you stopping that a car company what would wear a single-use a car company yes who would say well that's pretty funny and you know though the plus side is that you need to take off with your landing gear and and you run until your tanks are dry see of extra range plate and then you drop the COG out with a parachute and the plane crashes and that's that's

that's how Rockets work it was crazy well I'm on on behalf of secretary barracks dr.

Roper and myself and the entire Air Force acquisition team thank you for joining us here today everybody Elon Musk