ARPA-E Energy Innovation Summit 26 février 2013 Discussion au coin du feu avec le secrétaire américain à l'Énergie Steven Chu sur la manière dont l'innovation radicale se produit dans l'énergie et les transports.
Discussion au coin du feu avec le secrétaire américain à l'Énergie Steven Chu sur la manière dont l'innovation radicale se produit dans l'énergie et les transports.
Transcription Moderator
Now we have the Secretary of Energy, Steven Chu,
Moderator
innovator galore CEO and product architect at Tesla, CEO of SpaceX and creator of PayPal, Elon Musk. Elon, thank you for joining us. We'll put Elon here and Steven there.
Moderator
So we're going to have again, have some fun, have a bit of a, an informal chat with two giants. And I thought I would start it off a little bit fun, maybe a little bit risque. That I understand, Stephen, that you have a Nobel Prize on your wall and that some people have said, hey, when you're dealing with Congress and talking about sequesters, maybe you should take it off the wall. And when you're having a meeting with that senator and say, hey, here's what I've got. What do you have?
Moderator
Bad idea hasn't worked for you. I also heard at one of the inaugural dinners, will I am you and said, you know, Stephen, you're really, really cool, but one way to get even cooler is to change your name to MC Energy Bitch.
Steven Chu
Taking it on the.
Moderator
And you did go around that night and talk. Well, we have, I thought where we'd start. Alon, it's great to have you with us out from California. I thought we'd start the conversation in an interesting way because, Stephen, you're known for investing and thinking about the transition from non fossil fuel energy to renewable energy. Trying to think about how you systematically do that, bring science and innovators and government resources together to do it. You're going to be leaving fairly shortly. I assume you've announced that you're going to be leaving your post. Elon Musk is here. He's quite an innovative guy. He's gotten a lot of awards. And I'm just sort of interested in starting off the conversation by asking you, should you, President Obama call you and say, would you like his job? How would you do it differently? Wow.
Elon Musk
Well, I think Steve's done a pretty awesome job, actually. I think I have a hard time doing a better job. So I think being secretary of anything is a really tough, tough role to hold and one where you tend to get, I think, a lot more criticism than praise, no matter what job you do.
Moderator
So when you think about it is
Elon Musk
not a role to which I would aspire.
Moderator
You're a young man, you've revolutionized payments, you've done a lot of revolution in cars and batteries. You're now revolutionizing our access to space and you're doing this in part on the backs of scientists and other innovators and some government investments. But you're outpacing what government has been able to do. And so my question was not a facetious one. It was if you were able to not have the environment, if you were able to basically jump ahead. And you know, Stephen is also a brilliant innovator and Nobel laureate, of course, in physics. But what makes you who you are? How are you able to do these things which government has found itself less able to accomplish as quickly?
Elon Musk
Well, I mean, I think one way to think of government is to think of it as essentially a large corporation or the largest corporation. And generally large corporations have a harder time with radical innovation than smaller companies. There are some exceptions to that rule, like Apple, but it is generally true that the larger a company is, the harder it is to execute innovation. Now, there are ways to get around that in the private sector by acquiring smaller companies that, that do the radical innovation or by having someone like, say, Steve Jobs who is just relentlessly hardcore about pushing radical innovation. But I think it is just generally true that the larger the corporation or larger the entity, the harder it is to engage radical innovation.
Moderator
Well, Stephen, it seems to me, sitting here at an ARPA E conference that ARPA E is a very innovative notion of how do you move from the very large, maybe I would argue risk avoiding environment of government. And here you've got ARPA E, which really is about encouraging, you know, maybe not risk, but investment, innovation. And we'd love you to reflect for a moment on how you think this experiment is going and what more needs to be done, particularly in the energy area of next generation energy.
Steven Chu
Well, you know, going to the corporation analogy, I've got a CEO, the president, I got a very diverse board of directors, 565, it's a big board in Congress. But within that, there's many things you can do within the agency. Certainly getting RPE going, that was of course voted on by Congress, proposed by the president, you know, lots of bipartisan support. But once you have the funding to say, let's get started within the agency, you can then say, how can it be different? And so we went in there thinking this could be a new example of how we want to get a lot of Department of Energy programs. And it's yes, you're going to have to take risks. That was designed into the program. It was written into the American COMPETES act, that philosophy was written into Rising above the Gathering Storm, that it's, it's research, it's development, and it's Very. We didn't. We don't expect all those things to work. But they're short hits. This is not a long term thing. This is a short hit. Get in there, see if it's going to work. It's going to be a home run. We wanted home runs. Now after three years, are there in home runs? Well, maybe not, but there's people rounding second and third base, so it's looking good. And so. And then the culture in RPE is something else that is very different. You had a bunch of program managers who sit around and instead of politely presenting their program and advocate for their program, they would listen to what everyone else said and they would start to say, well, I'm not so sure that I believe that. What about this? What about that? It was described as constructive confrontation. That was exactly the thing we got at Bell Laboratories that, you know, you're not going to politely wait your turn, you're going to all discuss this. The combined intellect of the group would develop those ideas. And that is very different. And of course, then there's a spirit that, my gosh, this is going to be something special. And so far it has been very special.
Moderator
So much grew out of Bell Labs. And of course you were at Bell Labs. And is ARPA essentially taking that? There is no Bell Labs today.
Moderator
And I'm interested in whether that is a very harmful thing for the US Economy. Is that what ARPA E is now replicating and what you think is important to sort of institutionalize that sort of constructive confrontation? How do you look at the future of that kind of big investment in basic research that they would drive the country forward?
Steven Chu
Well, to be fair, very, very different. Bell Labs research and development ultimately was to serve the company. And they had a financial bottom line. ARPA E is we are funders of other innovators. But the Bell Lab spirit I was talking about can be exactly the same. The quality of the people we got into the program were truly outstanding. And so that part of the Bell Lab spirit was there. But, you know, we're not there in business to do something. We're there to sponsor, very sponsor innovation that the private sector will pick up and run with Elon to think a
Moderator
little bit about the agenda for today, which is essentially about innovation. You shared a while back, actually in a forum that was organized by the Atlantic. This was done in San Diego at a forum we call the Atlantic Meets Pacific. And you spoke there and said, you know, you had three real spheres that drove your interest. One was the Internet, the other was sustainable energy and the other was making life multi planetary.
Moderator
Would you like to share a little bit about the making life multi planetary bit?
Elon Musk
It might be slightly off topic, but, but I guess I can talk about
Moderator
a little bit, not necessarily about getting there. You know, here's about the innovation with rockets, with space, with batteries and cars, which I assume are somehow in your mind integrated as component pieces of changing the way we live, creating sustainability and thinking about moving, you know, moving into other spheres.
Elon Musk
Well, the thing that really, I mean, when I was in university, I tried to think about what were the things that would most likely affect the future of humanity, at least as far as I could see. And the three things seem to be the Internet, sustainable energy, which requires both producing it in a sustainable manner and consuming it in a sustainable manner. And then the third being extending life beyond Earth on a permanent basis. So become a true spacefaring civilization of multiplanet species. And I thought as one sort of thinks about the future history of humanity, those if we don't take those paths, then it will be really very different. If there was no Internet, if we were unable to sell sustainable energy, obviously there would be economic collapse if we were unable to become a space faring civilization, that eventually something would happen on Earth that would eliminate civilization as we know it. So I thought those three things needed to be addressed and not that I expected actually in college that I would address them or have. But I think it's not as though I thought this would have an option to do it. But that's essentially what connects them. There's not any other connection with respect to, you know, obviously the Internet has happened and it's, it's amazing, it's transformed our life and I think it's actually made humanity much more of a superorganism than we ever were before. And it's like it's given humanity a nervous system. So it's like every cell in the body can knows what the rest of the cells are doing, essentially, whereas previously that would occur via some sort of process, almost like more like osmosis, as opposed to, you know, your brain knowing what your toe knows. Right. You can be in the middle of the Brazilian jungle. If you have a satellite phone connection, you're connected to all of humanity's knowledge, which is pretty amazing. So. But I think as far as Earth is concerned, I think the biggest problem that humanity faces is one of sustainable energy. If we don't solve that problem this century, independent of any environmental concerns, we will face economic collapse. This is obvious, it's logical really. You know, do the sustainable.
Moderator
And this is part of what you brought into Tesla that you're concerned about energy batteries. And it brings us, you know, really to, to Secretary Chu, you have a robust. You're one of the recipients of a large grant for the Department of Energy.
Elon Musk
Not at grant alone. Yes. If we'd like to change those terms, of course, this would be a good opportunity.
Moderator
You know, we were back in the green room and I could tell a
Elon Musk
deal had just been done with interest, with interest.
Moderator
In dc, everything's a grant. Good job, Good try. In sustainable energy. I assume that the loan that you have with interest is really built around a partnership and looking at, you know, next generation batteries and opportunity in creating this. And so I'm interested in how you see your own product in this. And Stephen, I'd love to draw your thought and why this investment. Well, not investment loan makes sense.
Elon Musk
Sure. Well, first of all, I think it's worth just talking a bit about the program under which we received the loan. It's called the Advanced Technology Vehicle Manufacturing Program. It was actually signed into law by President Bush, although people think it was signed by Obama. No, it was actually signed by President Bush. And then there was quite a careful consideration of the applications that came in. And one of the requirements actually of that loan was that you had to be a viable company. And as a result, General Motors and Chrysler were ineligible at the time because they were going through bankruptcy proceedings, unfortunately.
Moderator
Are they back to viability now in terms of the grant makers, are they loaning?
Elon Musk
Yeah, I think they're more or less back to being viable. That required obviously dramatic restructuring. But because the bailout of GM and Chrysler occurred roughly the same time as the announcements for the Advanced Technology Vehicle Manufacturing program were announced, people conflated those two and thought they were the same thing. They were very different things. And in fact, in order for us to be. The program is milestone based as well. So in order for us to receive portions of the loan, we must make progress along with concrete milestones. And that's, I think that's a very sensible way to structure a program. And that's, that's why, for example, one of the participants in the program that the disbursement stopped when that participant was unable to complete the milestones. So I think that's a very sensible way. I think it's, I think it's really structured very well.
Moderator
Are you hitting your milestones?
Elon Musk
We've hit all of our milestones, yeah.
Moderator
And Stephen, how do you feel about this program? Are the other Car companies going to apply and try and move this forward. Is this something that Tesla's the single loan recipient of right now?
Steven Chu
Or, you know, first, first they're not. We've, as Elon said, gm, GM and Chrysler were not eligible. Ford was. Ford applied for loan, our largest loan. We think that that loan will be repaid. We have confidence, full confidence for it. Nissan makes cars in Tennessee, including Nissan Leaf. And they wanted a loan to start, you know, making cars in Tennessee like the Leaf. We think that loan is going to be repaid. Those are the two biggest loans to car companies. There are others which may be at risk. But, but I would say any new car company, but in those days, even Ford, Nissan was not considered risky, but even Ford was considered risky. But what it did is it preserved over 35,000 jobs just for that one loan, Ford, and allowed them to retool, to go to higher stage robotic automation so that they can program on the line instead of program to generate just one type of car. The line could be reprogrammed very, very quickly, you know, in months, weeks, so that they can produce something else. So it gave them a manufacturing capability in the US that would keep the jobs in the US So, so there were. So now with Tesla, you know, this is a very innovative company. Any new company bears some risk, but on the other hand, its way of innovation, the way it's pushing this, it's a totally different approach to an old electric vehicle. They're an incredibly vertically integrated company, meaning that they not only design the entire platform, the motor chain, they even design the test equipment for the acceptance of the parts and they work with the suppliers. I don't want to sound like an ad for Tesla, but I'm just saying let's go on. But this is, but this is the innovative, the most, it's the best of American innovation in the sense that it's a totally different approach. It's a radical approach. And if successful, it's going to be the wave of the future.
Moderator
One of the reasons why I like ARPA E so much, and I've met many of the people who attend this meeting from last year and this year, is that there are real innovators and business people out there struggling, trying to kind of, you know, fix whatever puzzle they're dealing with, they're not only dealing with it within the US context, they're dealing with it with the realities of a globalized world. And you know, when you think about the kinds of, you're from South Africa, whether it's SpaceX or you're dealing with technology. You're now dealing with a global format. You are emphasizing U.S. jobs, U.S. technology, which I think is also important because there's a sense that stewardship here is something we need to get back to thinking about and we may have lost that track. Do you get a sense, let me ask you, as a businessman, do you get a sense that the United States, you cited the Bush administration for signing this, but you think we're beginning to shift. I remember a McKinsey report saying, you know, that America benefited tremendously from every offshore job. I remember in earlier presidential administrations, advisor to the President said it didn't matter what we made in the United States. A potato chip and a semiconductor chip are the, are the same. And do you get a sense that there, you know, some people call it industrial policy, but let's just call it, you know, a renewed sense that manufacturing and that creating things in the US Economy is back. And that takes smart policy. And I'd love to get your thoughts on this, Stephen. Just you're leaving your job soon, but you've been at this and it's a hard nut to get people to believe that the government can really make a positive impact.
Steven Chu
Well, it is smart policy, but let me, you know, it's a great question. Here's the thing. There are some who say a job is a job is a job and service jobs are the same as manufacturing jobs. I strongly disagree. If you look at how the United States is embedded and how we got to where we are, and this is looking backward also looking forward, the jobs in manufacturing that you invent in America, you manufacture in America, you produce here, have all the other secondary service jobs associated with. So it's greatly leveraged. The other more important thing to realize is if you looked over, there's Michael Spence, a Nobel Prize winning economist, a friend of mine happens to be from Stanford. He and a colleague of his published a paper about six months, eight months ago that looked at jobs and all the new jobs that were created in the United states over a 20 year period and they divided into service jobs, into manufacturing of tier one, tier two, Tier three, all these things. And, but he really divided between what would be called things that you do that are tradable and things that are not tradable. Let me give you an example. If you're a farmer and you grow wheat or corn, that's tradable. You can ship it abroad, cars are tradable, things of that nature are tradable. What's not tradable? The US Secretary of Energy is not tradable. It's the US Secretary of Energy restaurant jobs are not tradable. Right. It's serving that most hospital jobs are not tradable. Okay? The job growth in the United States remarkably grew a lot, very healthy time in the period of The United States, 1980-90, 20 years, only in the non tradable sector. Think about that. All the jobs were in the non tradable sector. The job growth in the tradable sector was flat.
Steven Chu
So now think about this. In areas where the United States has to compete globally, we didn't grow. Now you take that to its natural limit, you're in a very bad place because you still need to import things into the US but we're not exporting things. You get to a very bad pace. If I sell you pizza and you sell me blue jeans, that's okay. But eventually we're going to need something else from outside the US and so on. This larger context, this notion that you can give up manufacturing as a root foundation of United States wealth is I think, deeply flawed. It is part of, you know, yes, most of our jobs are today service jobs, but manufacturing is a root foundation because those are tradable things. And not only that, in terms of the wide diversity and talents in the American public, you want, you know, not everyone's going to be a stockbroker or something like that. And so that's another thing where, yes, good, sensible policy to actually get forces back to look at in the long term what will be good for our citizens.
Elon Musk
Actually, if I may comment on that, with respect to Tesla, we have as customers Mercedes and Toyota. So we supply electric powertrains to them, much of that being exported. And we have Tesla roadsters have been exported now to 31 different countries. Long term, we expect probably something in the order of 60 to 65% of the cars that we manufacture will be exported to Europe and Asia and in other parts of the world as well. So I do think that kicking off your point that isn't if other countries can export their cars to us, why can't we make cars that are good enough to export to them?
Steven Chu
Can I add to that, what I'm seeing for the first time is actually simulated by the higher mileage standards that EPA and transportation put out. All of a sudden cars being manufactured in the United States are now exportable because they're smaller, they're more fuel efficient. And so what you think would be, quote, regulation telling us how to do our business is actually stimulating this thing in a very subtle way. Where if, you know, if you know, except for a few exceptions, if you're only making cars that get 15, 20 miles to a gallon, that's not mass market exportable. If you're making cars to get 35, 40, 45 miles a gallon, that is. And so that's another thing that you see beginning to happen. The, the car manufacturers are beginning to say, you know what, we can build in the United States and export rather than, you know, build in another country.
Moderator
Well, I remember I worked for Senator bingaman in the 1990s. I remember at that time in this arena, we had Sandia National Laboratories there, and they had cooperative research and development agreements with very large firms like Intel, General Motors and others. And the guys that were running the GM Creta were very explicit and overt that they had the agreement that to try and take all the dual use or, you know, non national security technology they could get out of the agreement and to apply it to their facilities in China. And they said, if we didn't do that, we won't be there in 30 years. So this was raised interesting ethical questions for me as a, you know, taxpayer supported national security research. But it's hard to get these equations right because technology flows, PhDs flow, and you have it. But while we have just a few minutes left, I'd like to ask you, you're both such giants in the world of innovation, and Elon, you've not just done. I mean, it's ironic because you've had some tough media recently in the New York Times, I was just reminded that this was entirely your fault. Not because of bad cars, but Elon's first foray into business was a company called Zip2, which the new York Times was an investor in. And you actually helped take the New York Times online. So any. That was years ago, right?
Elon Musk
I think that's called being called hoist on your own petard.
Moderator
Yeah. So, but from that and PayPal and Tesla, of course, SolarCity, where I've interviewed a number of your friends and colleagues that have helped put that together. And Stephen, with you in your research work at Berkeley and others, you know, forget yourself as a powerful secretary of energy, but just in terms of innovating, thinking out of the box and doing things that no other people have done before. We have 3,000 people in the room who are struggling to find that kind of those. What are the right ingredients to make innovation work? Not just innovation, but then disrupting incumbents, getting finance and capital, partnering in the right ways. And I'd love to just get two or Three important lessons from you that this crowd should hear as they struggle with their own aspirations.
Elon Musk
Okay. Yeah, Well, I think for suggestions that people for executing on everyone,
Moderator
do what you've done, but maybe in different areas.
Elon Musk
I'm not sure they really knew that they would want that, actually. Yeah, it's never as good as it seems. They think things are better these days, but for many years there it was, it was very painful and we almost lost everything back in 2008.
Elon Musk
Yeah, actually all three companies almost died in 2008 because at SpaceX.
Moderator
And you're still running two of the companies full time. Right. As CEO.
Moderator
How's that going for you?
Elon Musk
I don't recommend it.
Elon Musk
I'm doing this because I think I have to, not because I want to. Okay. So that's maybe an important consideration.
Moderator
So doing what you have to do. I also remember the San Diego meeting was fascinating. You conveyed that the only limits on you and your aspirations were physics. I thought it was a really great line.
Elon Musk
Well, I'm not saying that I can do anything within the limits of physics, but I'm saying if physics says you can't do it, then you probably can't or you should get a really big Nobel Prize. One of the two. Generally important to observe the laws of the thermodynamics and conservation of energy, momentum and that kind of thing. I see.
Steven Chu
Yes, I would agree and I would.
Moderator
Okay, we're straight on loss of physics, but thoughts for innov innovators in the room.
Steven Chu
I think when I look at both what I've done, certainly said what Elon's done, a number of people done, you cast around and you look for areas that you begin to see either a glimmer of a new breakthrough type of thinking,
Steven Chu
some technology in this sector has been left alone, not applied to that sector. And. Or there's just a need based on an emerging market. And those are the things that actually are, can be real drivers for success, innovation. When you see a glimmer of a breakthrough, I mean, Elon was telling me when he was a graduate student, he was into energy storage and super capacitors, things like that. And I think many of us saw eight, ten years ago, battery technology before that was crawling along, crawling along, crawling along. And all of a sudden you see, wait a minute, there's beginning to see something that will take a different slope. And if you think that it could take a different slope, do those things that develop that technology and surround you with people that help you develop that technology. So you become the leader. Okay, but, but, but there's something behind you that's building waves that you're going to ride. And so that's very important. And so in the things I did in my research career when I was a graduate student, lasers had been demonstrated in the early 60s. The tunable laser was invented by 1970. By 1972, even though my thesis advisor had not been in lasers, didn't know lasers. I told him, you know what, we got to get into this technology. But you get into it not by purchasing a laser. You get into it by building the next best thing that keeps you ahead of the pack. And then you can do science no one else could do.
Elon Musk
Yeah, I can make two recommendations which actually do slightly kill physics, which is, I think a lot of times if you want to do something really innovative, you have to apply a sort of first principles analysis. And don't reason by analogy. Analogies are referencing the past. So first principles means you look at the most fundamental truths in a particular arena and the things that really are almost indisputably correct, and you reason up from there to a conclusion. And if you see that that conclusion is at odds with what people generally believe, then you have an opportunity. Now, you can't operate like that on all things because it takes too much mental horsepower. So most of your life you have to operate by reasoning by analogy. But if you really want to invite, you must reason for first principles to identify the problem. And then you also should seek negative feedback. This sounds like a strange thing. And see, from your friends and from people who are knowledgeable, people will not give you the negative feedback.
Moderator
It would be cruel to be kind.
Elon Musk
No, it's not. It's. You just want. You need to understand where you're wrong. It's got nothing. And put feelings aside. And a lot of times people can look at what you're doing and they know that it's wrong, but they don't want to hurt your feelings, and that's why they don't tell you. So.
Moderator
Yeah, Stephen. Yeah, we're right at the end, but go ahead.
Steven Chu
You're the boss. I agree with that.
Moderator
A few more days.
Steven Chu
It'll be longer than that. But I think I agree with everything Elon said. When you look at new technologies and you look at it, there could be, you know, think all wild claims. But you, what are the, quote, theoretical limitations, but not theoretical a la Heisenberg Uncertainty Principle. You know, there's a lower theory that says beyond this, it's just, you know, it's not going to make it. And then where is the technology? And then you say, how much space is there between that, that realistically you can get there in five years. Okay. And that actually helps define things and focuses the mind on what you should be thinking about, what you shouldn't be thinking about. So there are many things like that that I think successful innovators do all the time. The constructive feedback, the honest feedback is exactly what we were establishing in RPA that's now being infecting the rest of the departments of Energy. You know, if you hear an idea that you don't really agree with, instead of politely sitting there and being polite, you say, no, I don't think that's right. This is why you know you're wrong. And then you sit at a table and you talk about it and that's where you figure out, are you right, are you wrong? And then you have a deeper understanding of what's going on. And that's the type of culture that we want to. That started in ARPA E. It certainly has to be continued in ARPA E. But to infect the rest of the Department of Energy.
Moderator
Ladies and gentlemen, we've come last. Last word.
Elon Musk
I can make an announcement that maybe. Oh, yes, please be interesting.
Moderator
So everybody get Twitter out.
Elon Musk
So I really think that, that the DOE loan to Tesla should be viewed as, as a pretty significant success. I mean, we're, we're exporting cars, we're, we're selling powertrains to two of the most respected brands in the world, Mercedes and Toyota. We want electric car one car of the year last year. I mean, this, this is pretty good stuff. I mean, so if people are going to, you know, attack the DOE for bloody Solyndra, for God's sake, honestly, You know, then there should be some praise for the DOE when there is a success.
Moderator
I think you just helped DOE stock go up.
Elon Musk
Yeah. And so actually I want to make a public commitment, and we're going to codify it, that Tesla is going to cut the payment time in half of the loan. So we have 10 years ahead of us.
Moderator
Well, we are 2 minutes and 47 seconds over. But I think when you're sitting with two of the most brilliant innovators in the United States, they can lend us that little extra time. I want to thank you both for sharing your insights into how I make this work. I know I teased you a little bit about the government private sector thing, but what we're doing here, and I think what ARPA E is doing is so important. Of essentially creating a platform, raising aspirationally where we need to go as a nation, bringing participants into this so that they can get constructive feedback, negative and positive and that they've got real world examples to see what you've done over and over and over again. If we had another hour or two, you know, it's interesting. I've had an opportunity in my position to interview a lot of geniuses. And when you're around genius it gives you an opportunity because people organize the way they see the world. These guys are slowing down a little bit for us right now. When you're having a beer with them late at night, you can sort of see how they see the future and how they're operating. And it is really incredibly valuable to all of us and to people in the room that you take the time to share with us and give us some on ramps into how you see innovation and how it works. So thank you so much.