World Energy Innovation Forum

foreign it's beyond extraordinary to see what elon's accomplished already I know there is so much more to come from him as he continues to re-engineer our way of life on this planet or should I say in this universe ladies and Gentlemen please welcome me joining Elon Musk [Music] well first of all as I said this morning thanks for allowing us into your home and I particularly have such a busy time our goal over this next period of discussion is really quite a bit more about where you came from how you actually developed the person you came into to learn about some of the ups and downs and Tesla and its energy and autonomous vehicle aspects and then beyond that trying to figure out your thoughts on where the world's going it's prognostication so so you've

been called a lot of things you've been called a Visionary an innovator the real Iron Man and I love the the world's raddest man um less collaboration take us back uh it's your Early Childhood how did you develop South Africa the college and the U.

S and Canada to having this just bold and big ambition and what were some of the particularly influential moments where people at Jacobs um well actually I actually didn't expect to be doing this when I was I'll try to talk loudly so it's a good Factory it's okay no problem um so the uh I mean something to expect that any of this would happen um South Africa I noticed I just read a lot of comics played video games program computers created a video game with a young man yeah um wrote some games and sold them so I could get better computers um and uh yeah sort of both little rockets and um that did some circuitry all radios and everything um but um yeah I mean I just wanted to be involved in The Cutting Edge of technology in a book that whenever there's

something new that's invented it's very often against Silicon Valley so when I was a kid I knew I wanted to Ultimate up here and we have the the Forefront of trying to create technologies that make it all better well a lot of people don't know this but actually when you started your first company you and Kimball actually slept at the company actually used in this house and business in those early days a true entrepreneur yeah we only had a uh between us I think maybe I think I had like two thousand dollars and people had like five thousand dollars so which make it lasts a long time that was like a total capital um and it was cheaper to just sleep in the office than rent an apartment so we we just sent me out this and went to the the showered at the YMCA

on page building El Camino yeah that for a few months so after that success you went on to another success with uh with PayPal and sold the company in eBay for about a million and a half dollars pocketed about 165 million dollars and uh for a lot of people the beach would have been attractive but instead he decided to tackle the world's most pressing challenges you know how did that unfold how did you decide to go into energy and space yeah so actually the it kind of goes back to when I was in college the there were I thought I think one of the things that were most affect the future of humanity and I still came out with like five days one was sustainable energy both production and consumption and the other was making life healthy planetary then there's

the internet of course and and then the other two items were rewriting chemogenetics and AI and I wasn't too sure about the latter two you know sort of a double-edged sword where it's not clear which Ed with a positive Edge I'm going to put a feedback from Netflix um it wasn't there was a positive Edge or the Negative Edge is stronger so um and I was originally going to start off working on the vector vehicle problem that's what brought me on to Silicon Valley I was going to go to um Stanford to do PhD and applied physics and Material Science to try to figure out Advanced Energy storage techniques for electric vehicles and then hold to we'll try to do something on the Internet because I figured the internet was you know it was really that the time was

right for the internet prices like 95.

um I knew it would be something really transformative and I didn't want to watch that happen while I was in grad school right um I figured I could always go back so we're not different at Stanford and I think I'm still on the phone so I actually said I could come back and I don't have to pay tuition there's a lot of Stanford folks here maybe we can figure out a way to get you back in at some point yeah um so anyway so um so I kind of took a break from pursuing the the untributical thing to do a couple internet companies that you mentioned right and I think after PayPal decided to return to working on the electric vehicle problem um football tags and space exploration right um and yeah so you know and and didn't didn't sort of really plan on being CEO

of two companies but it kind of worked out that way it is let's say quite quite a difficult thing I wouldn't recommend it well you know people always ask me to describe you what kind of the characteristics I observe and you just touched on perhaps the one that I was lead with which is you are the hardest working person I know that's been true from the dad had you and all the way through today um Elon Elon sleeps less than anyone I know and works harder than anyone I know you know when you think about this this doesn't just happen you have just you have literally put your blood sweat materials and that's not in the rear view mirror that's today um yeah um I mean I think it's sort of my obligations kind of require putting in a huge amount of time um and

I mean I would like to reduce it by a little bit uh 20 or so um but like I mean if you say like a 90 hour week that's only 45 hours before SpaceX and Tesla it's not that much really important company basis so yeah but it ends up being quite a blood for on a personal basis um and um I mean I think that the first quiet part of it almost like like the thing about like the car industry um I mean the only two car American car companies that haven't gone bankrupt um are Ford and Tesla so the net the net here a car company is sort of you know the furthest thing from a national Monopoly yeah well you know it's interesting it's not just that when when you started getting involved in Tesla it was just at the beginning of people saying hybrid electric cars were

actually going to be the wave of the future and so in so many ways you know what seems so obvious today wasn't at all in areas of all three of the companies you're involved with today and in Tesla's case clearly the people weren't championing electric cars but you saw that yeah um I mean I think probably the company uh at annual meeting will go through just recap in like the history of Tesla and how we started out and what makes the next um because I think this I love this opportunities to get like less than the list of time or um the uh I mean the Genesis sport for Tesla is actually a lunch in 2003 with um me and Jerry's travel right um one of the other co-founders and um and it was actually we were talking about like electric planes um and space stuff

and then and then the population turned to electric vehicles as I mentioned that was like a bunch of interest of mine and um and it was what I was going to be working on at Stanford um and the JB had also worked on electric vehicles and he mentioned like a little company in Southern California called AC proposal yeah which created a t0 which is a like a prototype sports car um and so I got a good test drive with a t-0 and then I tried to convince AC propulsion to commercialize in t0 because it was it was a cool concept but it like didn't have a room for any safety systems or anything um quite primitive um but it's some of the basic fundamentals of what electric sports car could do so they deserve a lot of credit actually for um for Tesla like without

AC propulsion I'm not sure I'm going to tell somebody who started but it would have been later yeah and then um after I said well okay well if you're not going to do that then I'd like to do it and they said well okay well there's some other people that also want to do it if it's maybe you want to you know join up with them and so we created Tesla and I mean interesting sort of little factoid like the in the beginning we didn't actually own the trademark Tesla Motors it was owned by some dude in Sacramento it's right um so we were like okay we're gonna have to change the company name because we don't own the trademark um you know about it around various names and one of the names was actually parody like that Clarity would have been my sort of second

choice wow no ironically there's a competitor company called faradays right um and the parody was the guy in advance and then Tesla invented the AC induction motor which is the type of motor we use in the the model 3 oh sorry about the the Roadster you know people don't often talk about the the history of Tesla people don't talk about it a lot today but actually we started out as fellow board members and the investors together and we were actually the fourth CEO of Tesla and we talk about some of the hard work those early days were uh for ones that actually you probably put as much work in as in those days to transition finally decided to take it over um yeah um yeah my initial goal when we created Tesla was I I was was just going to be kind of working

on the product design because I'm engineering and uh I figured it would allocate 20 of my time because Tesla and then um sort of tried as succession of CEOs that didn't work out and then I was like well either in 2008 it was basically the choice of either Tesla's going to go bankrupt before I put all of my remaining capital in Tesla before I'm sorry and more yeah it's borrowing money from friends and stuff so um so at that point I was like man I got like every all my ships on the table so I better you know if you've got all the chips in the table you've got to play the hand yourself right so it's like so it's like okay I got a BCU so you've come a long way uh since that time when you talk when I think about some of the homeworks of your success so a lot

of things come to mind you know I think fiercely independent that you don't follow the herd and actually um I think one of the underappreciated characteristics is you're actually one of the best listeners of anyone I work with and take inputs uh from a wide variety of sources and ultimately make your decision based on it but incredible listeners that people tend not to talk about as much yeah the other thing about you is uh you've managed to recruit your grow table you have a knack for hiring phenomenal people sometimes unconventional hires you know think about your fear of recruiting philosophy sometimes these are people who didn't actually have those roles before I can think of a number of our Executives here accessing been hugely successful but they

didn't have a history of having done it as many times before but you saw the success of them well I think the the fundamental properties of um there's somebody uh really driven and smart and on it do they have a good feedback loop like do they um do they adjust their course of action based on their experiences or or do they you know think that they're right even when they're wrong so I think just um those are really I think the three things that are important like sort of driven fundamentally fundamental sort of brain power and um and then being self-critical and if those if somebody has those three characteristics they can pick something else up very quickly it's a great advice let's talk more about Tesla where we are today we need to think we think

about you referenced it there just haven't been successfully us car companies I remember when the company went public and the big news was first U.

S auto OEM IPO in more than 50 years right of course you described the trend that's continued since then um you know what's what's the enabled Tesla it's such a young company really young in the in this with the spectrum of car companies so a little over a decade plus so um yeah um what do you think's enable Tesla to compete against incumbency um I think the main thing is that the incumbents are resistant to new technology and I mean generally There's an opportunity for new companies when there's this when there's a significant technology discontinuity some sort of Step change in technology is what um opens up an opportunity for a startup I mean certainly the world wouldn't need another card company that made gasoline cars or plenty of those um but uh

but no one was doing electric cars um so the I mean the reason we started as a put all the effort into it was that um not because we thought there was this huge opportunity in electric vehicles but actually because no one was doing electric I mean it was like everyone thought it was stupid um and the big company sort of was Dumb and it weren't really any startups doing it so so it's like a big company's not going to do electric vehicles then it has to come from a startup and yeah so that's the only option I remember at dinner you and I had with an unnamed very large Auto OEM CEO who's promoting that he couldn't actually create an electric car because it would cannibalize his business and would upset his employees dealer base um yeah um I mean I think

because I mean some of them later did I mean I mean after we demonstrated the because the Roadster then Bob Labs kicked off The Vault program yeah which then also enabled the Nissan Leaf program so even though the Roadster was a very low production vehicle we didn't make very many of them it had a very leveraged effect in forcing GM and Nissan to do Ed programs yeah um and actually robots was kind of prepared us with the inspiration for the ball program so researchers are an outsized effect on the industry even in the early days which is one of the goals you've had since the early days yeah absolutely and I always thought that the biggest effect that Tesla would have would not be the cause that we've made directly but because we induced others to me So

speaking what's the transportation industry is actually undergoing massive change and perhaps nothing more important than autonomous driving and ultimately self-driving and talk about the impact that's having and going ahead on Transportation particularly given an unutilized asset base of the automobile insurance um yeah I think it's going to become common for cause to be autonomous a lot faster than people think um I mean well we I guess I don't know seven or eight years from now half of all cars produced will be fully autonomous wow something like that yeah 10 years for sure um and um it will just be like something that would be odd if it's not in your park right it's like not having GPS in a card yeah and I know your GPS um but but even bigger um it'll

just be normal and what kind of impact does that have to the uh to the asset base I will certainly have higher utilization of the of cars I still think most people are going to want to have their own bar it's like most people want to have their own house and they don't want to sort of I mean in theory you could you know just do Airbnb and live in somebody else's house right full time but that would people don't like that um and I think I think there's this I mean there's a sharing this sort of whole sharing economy is significant but not the not available yeah um well I mean in order to solve a sort of energy problem you have to get the cost to be competitive with fossil fuels or post-conomically competitive inclusive incentives um I mean the fundamental

issue with fossil fuels is that there's there's effectively implied in sense that there's there's no every use of fossil fuels comes actually with a subsidy yeah this is what people don't totally appreciate yes it is um whenever you're not paying the true cost of of a of an unpriced externality you're effectively subsidizing something it would be like if you could just dump garbage in the street and not pay for garbage pickup right um although that's obviously a substitute so every gasoline car on the road every one of them has a subsidy it's a subsidy of the public good um and so now the the right way to address that um gas gasoline car subsidy is with a common tax a show to any Economist they will tell you of course that's the right way to fix the feisty

mechanism but passing a carbon tax is usually politically difficult particularly when you have um enormous loving power on a part of the fossil fuel industry and preventing that from occurring so then politicians usually choose the easier path of providing subsidies to electric vehicles which are usually um don't don't equal the implied subsidy of gasoline vehicles and then of course get attacked like what as though Evie is being subsidized but gasoline cars or not when your bad gasoline cars are receiving a bigger subsidy right of the public good than EVS are yeah this is a fundamental conceptual misunderstanding um so um you know at DBL we think we got to embrace policy maybe I'll do an extraordinary white paper on the subsidy of fossil fuels and works

very hard to focus on on the important policy objectives in addition to the technology that's been something you and Tesla and Solar City and have really taken seriously and spent a significant amount of time as you're advising our community and thinking about how we actually can push the agenda forward forward you know people talk about how great the cars are but we actually need policy initiatives to push the agenda to hit the kind of vision that you have yeah I mean it's the I mean the tough thing is that because uh gasoline is when oil is like so cheap in a crackling technology it's really driven the costs down dramatically what this effectively does is weaken the economic forcing function to transition to sustainable transport and to sustainable

energy in general so [Music] I mean it's really quite bad for the world I was I was encouraged by the Paris talks at least uh countries that have committed you know verbally to do to do something to sort of address the unpriced externality of changing the chemical composition of the oceans and atmosphere um but but it is happening slowly and um and then unfortunately technology technology advancements in the extraction of fossil fuels have improved tremendously driving the cost down so it is it is quite worrying for the future of the world um I think the the only thing that we don't hear is to try to appeal appeal to the people yeah educate people to sort of revolt against this right and to to sort of fight the propaganda of the Foster School industry

which is unrelenting um one thing that happened was like after the IMF came out with their study showing them fossil fuels and subsides to the tune of six trillion dollars a year like Six Trillion per year um yeah then um some representative of the oil and gas industry um added up all the incentives that Tesla has received and will receive in the future which happens to coincide to with 6 billion but this this increase if you count everything Tesla will receive over the next 20 years okay it's like pulling somebody who has stuff and I think the loan that was paid back yeah including the loan that was paid back that was added in there as well right like what the pay that back so um with interest and I was like you know if your taxes went down as a result

of that not up so the but it it they they wanted it to sound to start with a six so then so basically roughly multiple IMF study they started chopping that story around to journalists um you know Tesla's getting a six billion subsidy and it sounds a bit like the six trillion dollar subsidy because it has a 60 it's got a six Dimension and billion trillion you know it's kind of close by the same level and except I was a six billion over 20 years there's a Six Trillion per year [Music] and I got the LA Times to buy it on a says run that was totally nonsensical um and unfortunately that you know so that's like just one example of the sort of propaganda War it's important you keep fighting back and everyone needs to do their approach to do the same they'll

switch gears before we wrap up to just some of your other things about how you think and one of them you referenced it earlier you talked a bit about AI you know Ray Kurzweil talked about the law of accelerating returns where the notion that analysis of the history of technology is exponential not linear and over time the potential of machines actually to take over human life give us your thoughts on AI that's was a that's a complicated answer um I mean I think it's pretty obvious that machine intelligence is on a track to match the AC here at intelligence yeah I mean and uh you know one of the things about an exponential is that close up and exponential looks learning so zoom in it looks linear but actually if you plot the points on a curve it's it's

that obviously it's Financial um and there's some argument of I can say it's exponential what's the y-axis and I think you can arguably say it's a recursive y-axis so if in any given year if you think that AI is going to happen sooner rather than if if your predictions for the investment AI are converging with each passing era right then um it's fair to say that it is an exponential growth and that certainly is I think really the case facility Marine so so it's a really interesting question like I think there's even in the benign scenario there is tremendous upheaval in terms of employment yeah you have self-driving cars then what happens to the you know 12 of the population whose job it is to drive a car or drive a truck or something um I mean I think

these are really profound profound questions we're going to face in the future but it's going to go beyond your self-driving cars that's a case of narrowing on car's not going to take over the world what would do anything you know it's something it's going to feel like an elevator I used to have like elevator operators um and yes we'd like to train the elevator expert to um operate the elevator and now your scanner press button and we don't worry about it um it's gonna be the same thing for cars they feel just like that um but other other eventually if digital intelligence becomes superhuman which it's like I said it's on track TV then it will be able to do everything that we can do better at least let me asking to go back to SpaceX room because since

we gathered here two years ago what space sessions accomplished in the last few years it's not nothing short of Staggering uh the recent Landing has been described as perhaps the most significant event in the Airing space in decades but what's interesting is if you look out over the coming year the coming years perhaps even more exciting just get sort of a bit of a preview as to what's coming down the pipe September and what's going on at SpaceX yeah so we're aiming to to refine one of the land boosters later this year yeah and it uh so that that'll be significant we've got uh Falcon heavy which will be the biggest rocket the highest payload to orbits and Saturn 5.

um and um yeah that'll be that'll be a fun one to watch if you take them from Cape Canaveral I'd recommend recommend coming um you won't need to be close to really experience what it's like I don't need to be preempting um and uh and then actually we're gonna try to bring back all three boosters all three you know the side racers in the center core so it's gonna be like this or you know orbital gymnastics um synchronized gymnastics it's gonna be like I mean we'll see what happens is a tricky um that then next year if if schedules hold we'll be transporting astronauts to the space station for the first time and apparently the U.

S assistant on Russia or transporting us towards to the space station so we're looking forward to doing doing that mission and then uh recent military contract when yeah we we finally won um Air Force launch which was a tough battle going and Lockheed had been fighting for years to prevent us from being able to compete so they kept getting these exclusive socialist contracts with DOD and finally it was opened up to competition no not the whole contract but just a few of them and um and everyone our first sort of um you're a serious outboard storage contract Subspace looking forward to doing a lot of launches with the airports in the future um and then we also announced that we're going to be doing our first mission to Mars and probably on the 2018 it's

only a couple years of working now so we send one of our Dragon 2 spacecraft to the surface of Mars using a heavy rocket and Dragon 2 is designed to land propulsively and it's it's got a heavy duty heat shield so in order to randomize do you really need a powerful heat shield that can withstand extreme heat and then be able to land repulsively so this doesn't be an important Pathfinder for ultimately the most Colonial architecture so I began by describing you as engineering our future and you've heard a lot of examples the way you're doing it but I think what's what's most interesting to me about watching what you and Tesla have done is what I talked about before is debunking this notion of trade-off debunking this notion that you have to compromise what

you want to accomplish with the world and what you want to accomplish from a business perspective and you know Tesla was clearly founded as a Purpose Driven company as with SolarCity SpaceX and you know a DBL we it's been built on the premise of mission-driven companies and backing the kind of impact entrepreneurs that you and Tesla represent talk about that that's such an important theme of your leadership and your philosophy about how you marry the two and how you're actually showing both with the products as well as the kind of companies you're involved with that it is not about trade-off or compromise but the first and second bottom line go hand in hand sure um well I mean I think generally I mean I consider sort of any any product that other people

and Society find useful I mean I think that's a great thing too so um you know I wouldn't want to sort of you know claim some great morality or anything so I think anything that's done that's useful to other people is good so I mean I think that's like one of the hardest things is just being doing something that is useful in that maybe makes a difference it makes people's lives better also some products do that but you know the I mean the Apple battle for Tesla and SolarCity the real cool battle there is because of you know the reason amount of help like reading needed a lot of sort of entrepreneurial skills and part of civil you know linen and even others at SolarCity and the team we have here at Tesla um was that it's just fundamentally an economic

uphill battle because you have um because carbon is not priced correctly it fundamentally makes the problem much harder it's like you're just competing against something which get you know which has a six trillion dollar a year subsidy the public good um and so that's just that's just really difficult [Music] um and um yeah so in order to overcome that Tesla we we were trying to make the car as compelling as possible even though you know it's a little more expensive than a gasoline car or equivalent capability or at least a little bit more expensive so um but we can overcome that much to make the car very compelling um and then still there's sort of harder because it's hard to get harder to get product differentiation on solar and um this whole industry

it's been it's been a difficult really helpful industry um but but nonetheless I mean with a lot about it uh we get to uh you can make a viable company but it's it's just considerably hotter when the rules of the game um do not favor sustainable energy that's like a fundamental problem is that the way the rules are set up they do not favor sustainable energy and uh yeah that's that's something that we really need to fix collectively of news a few people won't need to fix that collectively and I I I'm sort of excited by what I see like the level of energy about this um with Millennials yeah younger people is I mean everyone can get it yeah so I do think it's it's a matter it's just a matter of time before um before this happens and the question is just

how long and in fact in terms of thinking of say the fundamental good of of Tesla's home City I would characterize it sort of fundamental good into what degree how many years did it accelerates uh yeah like electric vehicles and solar energy all that stuff would happen no matter what but it is but the fundamental good in historical context context can be measured by to what degree the the Tesla accelerate the admins in sustainable transport right now it's like if we were able to accelerate and find like a decade that would be they'll be amazing that'd be great