X Spaces : Cathie Wood et Elon Musk 21 décembre 2023 Cathie Wood (ARK Invest) et Musk ont tenu un X Space sur l'IA, l'autonomie, la réglementation, l'introduction en bourse ou non, les cryptos et l'économie en général.
Cathie Wood (ARK Invest) et Musk ont tenu un X Space sur l'IA, l'autonomie, la réglementation, l'introduction en bourse ou non, les cryptos et l'économie en général.
Transcription Brett Winton (ARK)
Welcome everyone. I'm Brett Winton. I am the chief futurist at ARK Invest here. I have with me Cathy Wood and I believe Elon Musk has joined. I'm going to quickly read a disclosure. The information provided in today's conversation is for informational purposes only. It does not constitute an offer, solicitation or recommendation regarding any investment, product or service. Any reference to a particular company or digital asset, be it Bitcoin or whatever, is not an endorsement by ark nor a recommendation by ARK to buy, sell or hold any security. AHRQ and its clients as well as its related persons may but do not necessarily have financial interests in any of the things we may discuss. Historical results may be discussed or not indications of future results. And we can't discuss private or non public material of any kind. And you should determine for yourself whether a particular service or product is suitable for their investment needs. Certain statements made today may be forward looking statements. This could be about robots or kind of the future of X. Could be anything. And we reserve the right to change our mind about those forward looking statements. And they've involve all kinds of known and unknown risks and uncertainties. Actual results could differ materially. In addition, some information referred to here may be third party information. We can't, you know, vouch for the accuracy or completeness of that third party information. Hi Kathy, how are you?
Cathie Wood
Hi Brett. We're trying to get Charlie Roberts in here as well. So. Yeah, Brett is our chief futurist and Charlie Roberts, who just joined us is our chief investment strategist and he and Elon know one another. Hoping we can get him in here. Maybe Brett, you can, you can try.
Brett Winton (ARK)
Elon should be on. Hi Elon, how are you?
Elon Musk
Hey guys, I'm here.
Cathie Wood
All right. So happy that you could join us and that you agreed to do this, Ilan. This is taking me back to early 2019. We were at Fremont doing a podcast with you when, remember when Tesla was in production? Hell with a Model 3 and I think you were sleeping under your desk at that time and you gave us a lot of time to really help us understand this story and what was going to happen and the rest is history. So just wanted to, to recount that. You know, Milan, you're so often, you know, the media is focused on controversy and you know, that's how they get their clicks and, and hits and all of that stuff.
Elon Musk
But yeah, yeah, I think they sort of actually don't really have much of a choice in that. Any media that isn't focused on controversy and is not maximizing the clicks is going to get out competed by media that does maximize the clicks. So, you know, you also can't entirely blame them in that they're trying to survive in what is clearly a declining legacy media market. And it's a shrinking pie and shrinking pie. Desperate times leads to desperate measures. You know, it's somewhat frankly predictable.
Cathie Wood
Yes, yes. Well, that's not what we're about. As you know, at ahrq, we're all about the future, trying to figure out the way the world's going to work and. Well, I'd love to give you an opportunity right now to, you know, address what you think mainstream media does not understand because there's such a big story here. There are so many big stories that, you know, offer all kinds of hope and, you know, really transformation in the future and you're leading the charge. So what, what don't they get, do you think? And what would you like to, what would you like them to understand?
Elon Musk
Well, I think that's quite a long list of things they don't, don't understand or where they simply don't wish to focus on because it doesn't quite lead to clicks and traffic, whatnot. So I guess I could go over at a high level what SpaceX and Tesla are accomplishing or have accomplished this year.
Brett Winton (ARK)
You just said that media is a dwindling pie and you own a big kind of media platform franchise. How do you think about the future of X within that context and how it should evolve?
Elon Musk
Well, I mean, X is actually growing in traffic. So I mean, again, one doesn't know quite what to believe. But the, you know, when you look at the traffic numbers, the traditional media is down, but X is up. So I think that's, you know, cause for optimism. But of course, the traditional media would never actually write a story about that. I'm not going to write a story that says, hey, we're losing and X is winning is a very unlikely headline. In fact, you see the opposite headlines, which are quite misleading, that XFK Twitter is dying or dead or whatever. I mean, how many times have we seen that headline? It's getting a little tedious. I mean, you could just press repost the same thing every month is what it seems like. So, you know, I, that's, you know, so I think I feel quite optimistic about the sort of X platform and where it's going and we're adding a ton of functionality that I think people will find useful. There's been immense progress in just the course of a year. We've accomplished more advancements in a year than I think Twitter had done in the prior, at least five years. So,
Cathie Wood
yeah, one of the. We've been talking a lot about X. We know we own it in our venture fund and we've been talking about, you know, the, the democratization that you are enabling in many ways. We just going back to Tesla, you'll remember that, you know, when Tesla, when you were thinking about taking it private, I implored you, you know, no, you know, we've been supporting, we, the retail investor and others have been supporting Tesla. Don't take it private. You'll take away this incredible growth opportunity. And so thank you for that. That was a democratization move. But Twitter.
Elon Musk
Yeah, and I should say that, you know, your level was influential. You know, it played as a significant role in the decision ultimately not to take the company private. We could have taken the company private. The, the downside was that it would have been quite a big distraction. So. And of course it would have made it difficult for many investors to remain invested. And I mean, the combination of factors, of complexity, having to leave behind so many investors, really, that was the, those are the two factors that, you know, why we decided not to take company private. We absolutely could have. Yeah, I want to be just absolutely super clear.
Cathie Wood
No, no, I know that.
Elon Musk
And we did have funding secured, so, you know, it was six. More than enough funding.
Elon Musk
You know, it's worth bearing in mind that, you know, I was sued in a San Francisco court which was jury shopped by a class action plaintiff law firm. It's always, it's important to bear in mind in these class action lawsuit lawsuits, the media will actually write as though it is actually an aggrieved shareholder. But in fact, it is not. The true plaintiff is the class action law firm and the plaintiff is simply a puppet.
Elon Musk
Yeah, so, but the media never, never mentions this.
Cathie Wood
You took Twitter private was, you know, to, to, to really enable free speech. And again, the whole democratization, this democratization concept, you know, we're, we're all about that as well. We give our research away. We want people to understand how much the world's changing, how technologically enabled innovation is going to transform, could transform everyone's lives for the better if they get on the right side of change.
Cathie Wood
Yeah, thank you.
Elon Musk
Well, absolutely. So there's kind of like maybe an argument that sounds kind of esoteric, but it is the way I actually think about it that you can think of the X platform or social media in general as kind of a collective Consciousness or group mind and you want to have as much signal and as little noise as possible. Obviously we've got a lot of work to do on that front, but you want your information be coming at you from people who are experts in the field or who are in the case of, let's say, a war zone, literally in the field. And as opposed to filtered through journalists who are not experts in the field and who most of the time, probably 99% of time are literally not at the scene. There's only a few, a reporter, sometimes only one reporter at the scene. So now in the past that it was the only way to have things work. That's why, you know, sort of the legacy structure in the past was you had to have information filter to media organizations and then to, and then they would decide what to publish and they'd publish it and then people would read really a small subset of what was actually going on in the world and obviously a subset that was chosen by a handful of editors.
Elon Musk
Yeah, curated. So it's sort of if the editors weren't that interested in the subject, you simply didn't care about it. So now that's in the past, especially in a non Internet world. That's kind of how things. There wasn't really another way to do it. You didn't really have a mechanism for connecting all of the humans. But now with the Internet and a fast moving social media or what. Social media is a terrible word, but fast moving sort of platform like the X platform, you can actually get, have all of the, you can get all the people out there that are on the platform reporting information, distilling it down, have people who are the, who are world class experts in their field tell you exactly what's going on. I mean if you see, for example, the AI discussions on X are by far the best.
Cathie Wood
Absolutely, absolutely. Absolutely. You know Elon, we. When I conceived of this open source research ecosystem that we've evolved in 2012, I never dreamed that Twitter at the time it was for tweens and teens and celebrities and there's still some of those on, but I never dreamed that it would become our primary platform for giving away our research and having dialogue with the people in the field out there who are innovating. You know, we're getting information that no one else in the financial world doing it the traditional way is getting just because we are engaging with these, you know, with the innovators. So it's, it's a marvelous platform and I think it's the knowledge workers platform.
ARK Panelist
Yeah. Hi Elon, this is Jolie.
ARK Panelist
Hey, how's it going? It'd be great to learn more about how you're thinking actually about the roadmap to you see it becoming and risks, challenges and also opportunities of that, including AI and how you see that transition.
Elon Musk
Well along the lines of what I was saying earlier, it's really kind of create a group mind or collective consciousness where every person is essentially
Elon Musk
that group minor collective consciousness and is kind of reporting information to the system, consuming information, giving their opinion on it. And you can just think of it like a giant brain, basically. And you know, I posted, I think a few years ago that a neuron doesn't feel like it's. It doesn't know it's a neuron. So individuals on the system obviously feel like an individual, but actually you are actually part of a collective sort of group mind and then say, well, what makes it a better or worse collective consciousness? Obviously speed is very important. How fast is information being transmitted? How is that information? Is the most interesting information being propagated to the right other people as quickly as possible? How much noise is in the system? Noise would be information that is either not interesting, obviously spam scams, actual misinformation. Well, you know, that term is overused. But just say, like, just say information that deviates from the truth meaningfully because there's always this question of what is the truth? You know, and like there's an old sort of police saying, you know, for any given crime there are at least three stories. The victim, the perpetrator, perpetrator and the truth. Right. You know, or you know, the. Was that Kurosawa movie Rashomon, where they. The same event happens and you see that perceived completely differently by four different people. So but nonetheless, one can still aspire to the truth and have the least. Aspire to have the least amount of error. So that's really, that's the main thing is like, how do we get as many people as possible participating in providing information that's accurate, correcting information that is not accurate. And just if you think of it sort of like from an information theory standpoint, this is like, I think the right way to think about it. Think about it from an information theory standpoint. You want to have what would make for the most effective group mind or collective consciousness? And it's, it's like, are the neurons all communicating as quickly as possible with the lowest signals noise? And yeah, and. Oh God, sorry.
Brett Winton (ARK)
Do you think you need to enable users to put like skin in the game behind Their messages in a more frictionless way. As in, if I'm like within capital markets, I can bet I can put capital to work. Right. And I stand to lose it if I'm wrong. And the information space in X is. It's kind of like a survival of the fittest, but kind of like the marginal energy needed to put in for an individual tweet. I can't really change that or an individual post. Is that like a direction to go?
Elon Musk
You mean like when you post something, assign sort of some amount of your credit effectively?
Brett Winton (ARK)
Yeah, I mean within prediction markets work because people are able to bet on one thing versus another. Like conceptually, if I'm right about something, if the truth, if I get some kind of like, you know, more than just reputational accrual, but capital accrual for being corrected up something on X, is that a way to kind of increase essentially effective signal to noise within the network?
Elon Musk
Do you have a suggestion for how that might be implemented?
Brett Winton (ARK)
I mean, conceptually, the fact that I can advertise on X like I can promote a tweet, you know, is in some ways an instantiation of that. But there's no mechanism by which I effectively lose for being wrong. Or maybe within the distribution algorithm there is, but it just seems very kind of like a loose kind of connection between whether or not I'm contributing positively to the network and whether or not the network actually rewards me in some way, either financially or otherwise for contributing positively.
Elon Musk
Well, I mean, we are paying creators for, you know, for people who are posting on the system and where that post is interesting and gets a lot of views. So that's one way in which people are accruing value. If you post something that's boring or uninteresting, then just or wrong, whatever, you perhaps will get less views and thus earn less. You know, there's, there is this like very challenging problem of bots and trolls, which is, I think, I mean, just tackling that. And I think we've made great strides, but there's a long way to go. That is the biggest source of noise. Because the fundamental problem you have right now is that it's quite easy to pass the are you a human tests. You know, even if, I mean basically open source AI at this point can pass are you a human test? I think better than most humans. So. And that's only going to become more widely available. So you have to, I think, bias the network to have basically raise the cost of manipulation and raise the cost of bots and trolls. You cannot completely get Rid of them. This is not possible. But you can make it much harder and much more expensive. Like I mean having say a drug enforcement agency like or any kind of making drugs legal, it doesn't make the drugs disappear, it just makes them more expensive. So you know, sometimes there's this false dichotomy of like well, it's all or nothing. No, you just, you have to do things that dramatically increase the cost of noise in the system so that somebody can't spool up 100,000 or a million bots in a day and then manipulate the system. So this is why we've moved to sort of a subscription where there's at least a small monthly payment. Even a small amount like $3 a month. Ish. Or some small amount is still several orders of magnitude. It raises the cost of bots by several orders of magnitude, maybe by 1,000 or 10,000. So and then it's not just the cost, it's not just the dollar amount. But then you effectively piggyback on the payment system, the payment authentication. So it's just hard to find more credit cards to misuse. There's natural cost in the black market for credit cards that work. So just biasing things to where the subscribers effectively or premium users content is elevated above that of bot amplified content is I think a very big deal.
Elon Musk
And my prediction actually is that any given social network that does not move in this direction will be swarmed with bots and will simply be overwhelmed.
Cathie Wood
You know, I have an experience with that. All of a sudden I guess bots were taking over and this was not on Twitter but on or on X, but on Instagram and Facebook. I mean it was just all over the place. So we've already experienced attacks like that. Can we stay on the X platform as a topic? Ilan. But maybe take us a little bit more into the future about this super app opportunity. Will you become a financial platform identification? Is we're already seeing you're still tipping I think on X, but are you going to turn into a financial platform which is where you started your entrepreneurial journey many years ago? Is this still, is this still on the drawing board?
Elon Musk
Yeah, absolutely. We're just waiting for the final approvals to come through for the money transmitter licenses. It's just taken longer than expected to get the money transmitter licenses.
Cathie Wood
Yes, I did see you have 15 or so now or is it more?
Elon Musk
I think we actually have a majority of the states but it's irrelevant until California and New York brewers.
Cathie Wood
I see, I see. And are there any showstoppers or it's just bureaucracy.
Elon Musk
It's just, I mean really just I guess, bureaucracy. You know, things were obviously quite chaotic, especially for the first few months. So this, it's not entirely their fault. We were late in submitting our money transmitter licenses and I essentially thought, I thought we had done it but we had not done it until around the middle of this year. So I think we'll probably get our approvals early next year. And so I would expect payments to roll out. I would be surprised if we aren't if it takes us longer than the middle of next year to roll out payments. So I'm not aware of any showstoppers. Just kind of working through the system.
Cathie Wood
That'll be exciting. If you don't mind, Elon, I'd like to actually make an announcement on X since we learned in the market that once you say something on exit it actually becomes public information from the SEC's point of view. We've seen that tested a few times and so I just wanted to announce that we're pretty excited that for the first time beginning in January, our venture fund will be available on SoFi. Right now, if you want to buy our venture fund, the Titan app is the way to go. That's an Andreessen Horowitz funded company and they've been great but we are expanding and you know we'd love again in this movement towards democratization of VC if any other platforms want to participate in this movement, you know we're not exclusive so. And we're very excited about the possibilities. So thank you for letting me do that.
ARK Panelist
And it's also a big part of bringing the broader base of huge number of non accredited investors who would love to enter companies like Eurozone. Of course and we are already with the ARC venture fund in SpaceX and X and we'd love to do others and really allowing, you know, obviously your companies are extremely well funded but for many companies they don't have access to capital necessarily at the scale you've built without going public. So we think that's a really exciting potential for companies to stay private for longer and really that sounds great.
Elon Musk
Yeah, yeah, that sounds really, really cool. I mean the burden of being a public company really has increased over time such that it has somewhat dissuaded a lot of companies from being public. And I really frankly would recommend companies don't go public unless they absolutely have to. So yeah.
Brett Winton (ARK)
Do you think that going back to like the Model 3 ramp, when you had customers and shareholders going out and facilitating delivery of vehicles do you think that could have happened without people having like, skin in the game in the same way?
Elon Musk
Yeah, absolutely. Most, most of the people who helped were not shareholders.
Cathie Wood
That's interesting. I don't know. You know, Elon, so many people have come up to me and all of us over the years because we were out there, you know, pounding the table for Tesla against, you know, against the traditional financial world. And they, they read our research on Tesla and, and bought into it. And so many people have come up and said thank you for doing that research, alerting us to the opportunities. What's happened to the public markets, Elon, is, I think, is, I think they're kind of broken. I agree with you. I think part of it is regulatory, but part of it is the way the traditional financial world works. And I saw, I've seen this time and again is if a company is not in a broad based benchmark, then financial analysts and portfolio managers very often say, not in an index. I'm not competing against it. That's how broken it is. Instead of focusing on the future and you know, which companies are going to be transformative and are going to scale brilliantly, they're very nicely situated in the past, you know, in stocks that are where they are in benchmarks because of past performance. That's the other thing that's happened here.
Cathie Wood
But it's important we change that, Elon, and Tesla has been a change maker in that regard. Sure. You didn't get into an index because of the way they construct them until Tesla was $500 billion. So a lot of it was pretty crazy. How many more, how many companies are bigger than that? You know, it's just crazy. But you did, you, you made it and you opened people's eyes. And we're trying to change this shift away from passive back to active so that there is an efficient allocation of capital.
Elon Musk
Yeah, you're touching on a very important point, which is that I think the percentage of the market that is passive is simply, it's too great at this point. So at the end of the day, somebody actually has to make an active decision. The passive investors are riding on the decisions of the active investors. And so passive investments like index funds, whatnot, are, they're like, they're an amplifier. It's like that, like an electric guitar amp or something. But you don't want that amplifier gain to be too high or you get essentially massive movements of the stock based on the decisions of maybe four or five active major stock pickers.
Cathie Wood
Well, you know, actually it's, it's it's a, a little more complicated. So if you, if you, well yeah, if you, if you look, if you were in a risk off market, a bear market like we were in 22, what actually happens is these managers are very fearful and they just get closer and closer to their benchmarks and they sell the stocks that, the kind of stocks that we're in where we're benchmark agnostic, we just don't even look at them. We're all about the future. So that's in a risk off market. It punishes stocks that are not in indexes more than otherwise would be the case. And then to your point, it rewards stocks that you know in a risk on period that are growing very quickly like yours. And as you say, yes, there's a pile on effect if they get into a benchmark. Now everybody has to consider them. So it's really, it's, it's a really distorted way of that. The public equity markets have evolved.
Elon Musk
Yeah. I mean essentially getting into any kind of index or passive fund will I think increase the volatility significantly because you know, just now it's amplified. That stock's not amplified by that, by the passives. So you know, and I think Bogle was, was, it was a good idea to, to create, you know, vanguard and, and passives, but it's gone, it's just gone too far.
Elon Musk
So you just don't want to have the amp. The amp sort of. The amp. The amp is turned up too high is way to think of it.
Elon Musk
So there should be more, more active and that's less passive.
Cathie Wood
Totally agree. And absolutely. And the other thing that's happening. I didn't know we were going to go here, Elon. But the other thing that really is gripping the markets is, you know, 75% plus of trading every day is algorithmic. And we see they're very simple algorithms. You know, in a bear market, okay, do they have cash? Are they burning cash? And those two variables will dominate the stock action. So yeah, we've watched this over the last three years. It's a very simplistic way of managing money. And I really do think it has led to the most massive misallocation of capital in history. A lot more private companies should be public, but we understand why they don't go public because of the kind of behavior you're subjected to. And now you know all about it, right?
Elon Musk
I mean the regulatory burden of being public is way too high and then the legal burden of being public is also way too high. So if you're public, you're just going to be sued nonstop by these class action law firms with their fake plaintiffs, as is the case with Tesla. We're just, you know, constantly being sued by, you know, as I said, what the media will portray as a member of the class, but in fact we're just being sued by class action law firms with puppets like that. Drives me crazy. It happens. It's, you know, it's constantly happening.
Cathie Wood
But the problem that we're talking about here is non accredited investors have not been invited to the venture capital party because they don't make enough money or they're not wealthy enough, which we think is quite a regressive tax.
Elon Musk
Yes, it is, absolutely. I fully agree.
Cathie Wood
That's why we're democratizing venture capital by not taking a carry ourselves so that we can offer our fund for as little as $500 to anyone. Anyone.
Elon Musk
That sounds great. Well, I think more people should take you up on that.
Elon Musk
there is, I mean most, most of the, the vast majority of companies are obviously private. They're not public.
Elon Musk
And, and you're right that, that it is somewhat of a regressive tax that makes it difficult for the, the average citizen to participate in the upside of those companies. Because once you go, I think above 2,500 shareholders, non employee shareholders, then you're forced to go public. So the reason that SpaceX cannot simply offer stock to anyone who wants to own it is because of that 2500 direct shareholder limit.
Cathie Wood
Right. So, and do you think, do you
Brett Winton (ARK)
think that within SpaceX are just thinking about Tesla versus SpaceX? Do you think you've been able, enabled to take more appropriate risks within SpaceX than you have within Tesla because of the public versus private?
Elon Musk
Absolutely. I mean at SpaceX we never think about the quarter, we never think about it and we don't think about the stock price. So you know, there's a lot of pressure, like immense pressure on a public company to not have a bad quarter. So this can actually result in a less efficient operation where you're going to great lengths at the end of a quarter to not disappoint people. And you know, that's just, that's just how it goes. So, and then, you know, you've also got a lot, sort of a long term challenge with public markets where a lot of the analysts following companies have a time horizon that is maybe only a year or two. It's, you know, rarely more than a few years. And so they literally don't care because they don't care about what your long term outcome will be because their career is dependent on how you do in the short term.
Cathie Wood
Elon, you have been great at, I think, standing up to short term oriented shareholders. That's one of the scores in our scoring system as we're evaluating companies. Is this a visionary management? And will they stand up to short term shareholders who want their profits now, their dividends, their share repurchases, will they invest aggressively enough in the future? And I think you've done a great job.
Elon Musk
Well, thank you. And credit to the Tesla team as well. So, but that, that said, we at Tesla, we do go to great lengths to ensure that our quarter is, is good as that. We don't disappoint because it's not so much about the, it's just that we feel like we have a sort of, you know, moral obligation to, you know, I don't know that it's, to not have a bad quarter and disappoint people. So we, you know, the number of New Year's Eves that I've spent in delivery centers is like, I don't know, of six, I don't know, seven. I don't know. I've lost count how many times I was in, I was delivering cars until like basically midnight on New Year's Eve, personally. So, you know,
Cathie Wood
has it done any. Let me just ask the question the other way. At SpaceX, you, you feel like you have more degrees of freedom being public. Has it done anything positive for you? For Tesla, I mean.
Elon Musk
Well, it did allow us to clean up our capital structure, which was overly complex as a private company and have a single class of common. So we really getting, things were getting quite unwieldy with the private company capital structure. There was obviously the capital availability in the public markets, which is a lot more than in private markets. And a car company is capital intensive. So I guess access to large amounts of capital and cleaning up what had become an extremely complex private company share structure were two major things. Certainly it was also good to give access to the company stock to small shareholders, you know, so those are, those are good things. But you know, I think it's also been a tremendous distraction as well on the downside. So, and you know, there's just a lot of overheads, there's more time that's required to manage a public company than a private company.
Brett Winton (ARK)
So in the past you've talked about potentially, I guess listing Starlink or doing something on the SpaceX within the public capital markets, but do you think that that's actually not something that you need to do or anticipate doing across all of your companies outside.
Elon Musk
I don't think it's worth going public until you have maybe an extremely stable and predictable revenue stream. So if your cash flows are extremely stable and predictable, at that point going public is less of an issue because you're just not going to have these big gyrations. So, you know, isn't that ironic?
Brett Winton (ARK)
Like the point of the equity markets is to, is to provide like perpetual capital for capital intensive businesses. Right. And what you're describing is a business that actually doesn't really need equity capital necessarily. You could debt fund it to some degree if you have very stable cash flows.
Elon Musk
Right? I mean, I can equity or debt fund just about anything at this point. It's worth noting that in all the companies across all the years, I've never lost money for an investor even once. And this is now over 100 financing rounds. Now of course I cannot stop people from selling when they should not sell, but I have never driven them to a bad outcome. So that's a pretty good batting average. And obviously when you've treated capital well, then capital treats you well in turn. And so it's almost any amount of capital, frankly. So now of course I need to make sure that traffic stays intact and not get complacent or entitled. But you know, obviously I do not have a need to raise capital. And in fact a lot of, in most cases I don't really need even for say like boring company or neuralink. I mean I could just fund it myself entirely. But I think it is good to have other investors.
Brett Winton (ARK)
Why even bother with outside shareholders at all? It'd be simpler to. You could take whatever risk you want without having to answer to anybody.
Elon Musk
Well, I do take a lot of risks away. I don't know, I think it's good to have, I don't know, I think it's good to have other investors. I mean, I think each investor you add is an ally and so it's good to have more allies. I think it also establishes that I'm not delusional in the valuation of the companies. So if others are prepared to invest at a particular value, then. I'm not the sole decider of what the value of the company is. Others are deciding what the value of the companies are. It's sort of an outside assessment of the value of the company. And there is also a need to, You know, provide liquidity. So to people at the company. So I believe in providing stock to the people at the company, the employees and creators of the company. It's important to provide them stock to have the incentive be aligned with the company outcome. And then, you know, you, they various points want to gain liquidity so that you, you want to then establish an outside valuation and you know, so there's not, it's not just me deciding it and enable liquidity. For those who've been awarded stock and options at the companies and generally been my approach to award everyone at the company staff, you know, at Tesla, we've awarded, we awarded everyone stock no matter how junior they were. So that actually obviously made a lot of people millionaires. I think Tesla may have created more employee millionaires than any company in history. So I would say, like, if there's a company that's done, that's created more employee millionaires than Tesla, you know, it's, maybe there's, maybe it's, there's one or two others, but really the shared Tesla's around 140,000 people. And you know, I think we might be number one.
Cathie Wood
I think you are. So I'm conscious of time here and thank you so much, Elon. Frank Downing, our director of research on next generation Internet, asked Grok what questions do people want Cathie Wood to ask Elon Musk to faces? And we would be remiss if we didn't, if we didn't summarize this first and then let you take it where you'd like. And it basically said, it seems that this is Grok talking. Seems that people are eager to hear about the latest developments in AIs. I mean, in Tesla's AI technologies. We definitely are, such as FSD 12 and the next generation platform for Robo Taxi. They're also interested in learning more about the company's plans for the Optimus project. Additionally, there is a lot of curiosity surrounding Elon Musk's thought on the AI space, as well as his take on the future of Bitcoin. I guess that was a little repetitive AI there, but these topics are sure to spark some engaging discussions. That's Grok for you.
Elon Musk
Okay, well, Croc, that's pretty good.
Elon Musk
So AI and I do have more time than, you know, if you would like to go longer than 15 minutes, we can go longer than 15 minutes. Great. I mean, I try to distill my thoughts here on AI because I could really talk four hours on AI.
Cathie Wood
You know, both Charlie and Brett are steeped in it, so is Frank and of course Tasha. She's done our work on autonomous. But one of the things we've been very curious about is open source versus closed AI. And I don't know if you've seen the chart that Frank and Joseph did on our team, but they, they drew a line. They basically calculated performance improvements in both the closed or private AI companies and models, large language models, and then the open ones. And open is behind closed. But the steep, the performance is improving at a steeper rate than closed. Do you have any thoughts about that and about open versus closed generally when it comes to AI?
Elon Musk
Sure. Well, I mean, I think a lot of people know that, you know, I was instrumental in the creation of OpenAI and in fact I came up with the Name the opening. OpenAI means open source. Yes, and started as an open source nonprofit. And the reason I wanted to create it was to establish a counterweight to Google DeepMind because it was a unipolar world at that point Google DeepMind had probably 2/3 or more of the top AI talent and of course fast computing and financial resources. And at the time I was close friends with Larry Page and it did not seem to me that he was taking AI safety seriously. So I felt there needed to be some, like I said, some counterweight, some competitor to sort of the Google DeepMind. And frankly, instrumental in creating the company was recruiting Ilya sutzkever, which was a back and forth thing where actually Ilya changed his mind a few times and ultimately decided to come to OpenAI. And so I won that recruiting battle and that is actually what caused Larry Page to stop being friends with me, frankly. But now, ironically, because Fate loves irony, OpenAI is super closed source and for maximum profit it should be renamed Closed for maximum profit. AI be more accurate. So, because that's, you know, it's literally the polar opposite of what, of how it was started. I guess I generally have a bias in favor of open source and you can see that certainly with the X platform where we've open sourced the algorithm and for example, for community notes, we open source not just the algorithm, but all the data as well. So you can see exactly how a node was created. It can be audited by third parties. There's no mystery, nothing hidden at all.
ARK Panelist
That's one of it seems to be one of the confusing things about open source as pertains to large language models is it's not as simple. And I think this has been lost in some of the debate as just open sourcing the code. It's open source is the shapes of gray here, of course, with parameter weights, data, there's all of that spectrum and I think that's been Maybe lost from some of the debate. So it's great to hear.
Elon Musk
Yeah, there's actually very little code, very little actual traditional lines of software. Certainly at the inference level there's very little. It's a remarkably tiny number of lines of code. So it's just these giant, you know, weights files and you know, what your hyper parameter, you know, numbers are. And it's basically a giant comma separated value file. So I always find it amusing to contemplate that perhaps our digital guard will be a CSV file, you know, like, and then you make a new CSV file that has maybe more weights and the weights are better and then you pretty much delete the old one. So just the AI is evolving and deleting its prior self constantly.
ARK Panelist
So we're going to worship a giant Excel file, essentially, kind of.
Elon Musk
I mean you need a very big. Yeah, it's a lot of cells, but it's really just a bunch of numbers. And then those numbers are, they're getting smaller in magnitude too, you know, going from FP16 to FB FP32 to FB16 to INT16 to INT8. And now it looks like things are trending towards mostly int4, so they're not particularly large numbers. Yeah.
Elon Musk
Yeah. I'm not sure if I'm answering, I'm probably not answering question, but I mean, it's true that closed source is not that far from a time standpoint, not that far ahead of open source. But let's say, and if you assume open source you have six months because of the immense rate of improvement of AI, that six months is a, is actually a massive amount of time. I mean, or at least the delta. In a. An exponentially improving situation, six months will, I think, feel like an eternity. So I think close will outperform open by a meaningful amount at any given point in time.
ARK Panelist
And given the. I was just going to say, given the questions we were talking about before about truth and not truth and do you think in 10 years time AI will have been a net truth improver or detractor from where we are today?
Elon Musk
I think it'll be, well, speaking for, at least for grok, I think it will be a significant truth improver. That is literally our goal is to be maximum truth seeking, maximally curious, minimizing the error between perceived reality and describe reality and actual reality, and always acknowledging the error, not being too confident about it. And I think there will be a competition for truth and people will tend towards the one that they think is most accurate. And if there's at least one AI that is aiming for maximum accuracy. I think it pushes all of the AIs to aim for maximum accuracy. Just as with the X platform. Fka, Twitter, as soon as X pushes for maximum truth and accuracy, it sort of forces the hand of others. The others now also have to do that.
ARK Panelist
Right. The truth arms race among the CSVs and is, yeah, is one of the, one of our theses, I think with arc, is that Tesla is one of the most undervalued AI companies there is because of the insane amount of data you've got on all, you know, to feed into autonomous. I don't know if there's any commentary on that because I think, you know, obviously with the rise of these LLM companies which are by and large working off essentially available data that is not proprietary, the benefits coming to the companies like Tesla that understand how to use the AI benefits, but do have these enormous proprietary data pools, seems like that's going to be the next frontier.
Elon Musk
I think that's accurate, an accurate description. Tesla is one of the leading AI companies in the world and with respect to real world AI, it is obviously by far and away the leader. So you know, the word large language model with phrase long large language model. LLM is massively overused. But what I do see happening is somewhat of a convergence towards intelligence. You know, Tesla, like really to make full self driving work, you kind of need baby AGI in the car because you need to understand reality and reality is messy and complicated. And just as a side effect, the car AI has to be able to read, for example, it has to be able to read arbitrary science as a little side effect of understanding reality in every language. So you know, everything is coming down to, you know, different layers of transformers and diffusion and how you put together the transformers and the diffusion. That's right, I sort of made that somewhat niche AI joke on the X platform. Who do you think will be president in 2032? Transformers or diffusion?
Brett Winton (ARK)
Do you think that switching to full stack AI for Tesla's full self driving reduces the kind of forecast error for you in terms of when the problem will be solved? As in you famously have said it's a year away for a few years now. Do you think that actually line of sight, wherever it ends up, you'll have a better line of sight on when you're going to cross a particular threshold of performance where it can go without human intervention?
Elon Musk
Yeah, I mean the car is already incredibly good at driving itself. So now especially if you say like okay, drive in California, which is, you know, both generally easy driving because you don't have heavy rain and snow and that kind of thing in most parts of California. And Tesla engineering is primarily in California. So you're going to get. It's going to overfit for solving California. But if you're just driving say around Palo Alto, the probability that you'll need an intervention at this point is incredibly low. In fact, even if you're driving through San Francisco, the probability of an intervention at this point is very low. So we're really just going through a march of nines. Like how many nines of reliability do you need before somebody does not need to monitor the system?
Cathie Wood
You know, it's so interesting GM basically shutting down crews. Tasha has done the work on safety and it seems that Tesla with FSD has an accident once every 3.2 million miles. At Tesla without FSD, 600,000 miles. The average vehicle on the road, I think this is surface streets, 190,000 and cruise was 40,000. So there really was a safety issue there. Do you worry that it has potentially set back regulators, you know, from, from considering autonomous transportation? Or is this data, given that accidents on the streets have gone up in the last 10 years fairly dramatically, actually, because of text?
Cathie Wood
Do you. Yeah. Do you think that regulators are going to look at the data which, I mean, we've done the research, Tasha's done the research on, on this and is pretty compelling?
Elon Musk
Well, you know, our regulator in the US is the enforcement division of nhtsa, for whom I actually have a lot of respect. I think those guys are, they really have. I mean, they're quite. I think actually my experience thus far have been quite sensible. You know, that that doesn't mean that there aren't silly things that happen from time to time, but they've really been quite sensible because they see the actual truth of the accidents and they see the fact that they're on the order of 40,000 people killed every year in motor vehicle accidents. And so they actually do care about the safety statistics and they do recognize that you, like, there's always going to be some risk with cars and they're well aware of the fact that, that our cars are much safer than other vehicles. So, you know, we really, I mean, there have been a few things where, you know, maybe we have had some disgrace, but you know, like, like for example, coming to an absolute full stop at stop streets, even when the, you know, it's very clear there are no cars anywhere in sight that could possibly cause an impact. No, no, no cars no pedestrians completely clear and, and actually almost no humans stop at stop streets, at stop signs. Almost no humans actually come to a full stop. They're typically, they may think they came to a full stop, but typically they'll be going at least a few miles an hour. So like, you know, they said, well the law does say that you have to stop at a stop street. Well, even though no, almost no humans do. So that actually created a bit of a challenge for us because we had to select the rare cases where from the fleet where humans actually stopped at stop streets at stop signs. So and then actually get our QA team to stop at soft streets and then overfit the stopping, stopping at stop signs in order to get the car to stop at stop signs because it was trying to behave like a sort of good normal human driver who does not stop at stop signs. So you know, we had a disagreement there on this, but we ultimately, you know, have made the car stop at stop signs even though it's a little annoying. So but you know, overwhelmingly, you know, one of the things the media will try to create is that I'm some sort of law breaking maverick who just does what he wants and doesn't care about legal matters. This is actually not true. Of the literally millions of laws that I am subject to and my companies are subject to, there are a handful over the years that we have disagreed with almost, but the vast majority, 99 point I don't know, 9% of laws and regulations we do abide by and we do agree with. Well, maybe, maybe don't agree with. We certainly abide by. You know, there's once in a while there's a disagreement, but it's, it's really minor and, but if you sum up the disagreements across over the, you know, 20 years, it can just sound like a lot, but in fact my companies are incredibly law abiding. So that's the natural truth of it anyway. I think it'll be fine from a regulatory standpoint when we can show that even completely without supervision, there is a massive statistical case for self driving being actually safer than if someone had their hands on the wheel or was even potentially having their hands on the wheel, then I think the regulators will accept that.
Cathie Wood
You know, it's been really interesting as AI, we were watching the breakthroughs, as everybody has in AI and we had agreed with you. Our original research had autonomous mobility in pretty much full force. This was our original research by now. But if we didn't have the breakthroughs in AI that we've seen particularly transformer architecture, it wouldn't have been possible. Right, but we didn't know that. Is that how you're viewing it now?
Elon Musk
Well, it's certainly true that transformers are transformational.
Elon Musk
So, you know, pretty much everyone's using transformers and it's really. Just how many transformers, what kind of transformers are you using? Auto aggressive transformers, which are very memory bandwidth intensive. You know, there's. But I think you really. I'm not sure you can really do AI without transformers in a meaningful way. Diffusion is also very important. So I mean, it just really looks like AGI is some combination of transformers and diffusion.
ARK Panelist
That's interesting. Does diffusion help Elon, in the things that transformers are not necessarily that good at yet, like planning and remembering rather than sort of a current state?
Elon Musk
I think transformers are important for all aspects of AI. Yeah, I mean computers are very good at remembering things. Your phone remembers the video that you took down to the last pixel, whereas most humans cannot remember who they met last week. So memory is the easy. I mean, we've already outsourced memory to computers in that, like you say, how much of human knowledge is in digital form versus in contained in human neurons. It's overwhelmingly in silicon rather than biological neurons. Right. So I mean, and there are these. I mean, I think it's always, you know, it's good to think of
Elon Musk
if I try to consider what are the most fundamental ratios. This is like in physics, you always think about trying to looking at fundamental ratios and some of the, you know, one of the fundamental ratios is the ratio of digital to biological components. Compute. Just, you know, just, just in raw compute and, and how much. And the ratio of digital memory to biological memory. So, you know, at what point it like, I think at this point, I think we're probably over 99% of all memory is digital as opposed to biological. So you've got over, I think over a hundred digital to biological ratio and memory at this point trending towards 1000 in many orders of magnitude. Beyond that, then you've got the digital to biological compute ratio. And since the number of humans is more or less constant, I'm worried about humans declining quite significantly in the years to come because the birth rate is so low. But you know, so human human computers, more or less, it looks like a flat line versus time, whereas the digital compute is exponential.
Elon Musk
And you know, at some point it's that that will also be above 100, meaning more than 99% of all compute will be digital instead of biological. Right. And if we're not there already, we will be within a year or two.
ARK Panelist
Although it is amazing how much data biology can store, I reckon. I believe it's estimated that a gram of dried DNA can store between 4 and 500 exabytes. So maybe there's still things to learn from biology. But.
ARK Panelist
Incredible. The pace of change.
Elon Musk
Yeah. I mean, if you encode memories in DNA like a ticker tape, then the DNA memory potential is immense. But I'm not sure that's actually what's happening. Or if it is, it's. I don't know. I'm not sure why my memory is so terrible.
Brett Winton (ARK)
But actually, I mean, your memory in terms of the raw details, like, you have an amazing search function. Right.
Brett Winton (ARK)
It's kind of like. Yeah, well, for any. I mean, I would argue kind of in some ways, like the transformer architecture enables effective search of a very, very broad amount of data. Or it's like data compression. It seems like the. Yes, we have. There's many more, like data bytes encoded or gigabytes encoded in disk. But actually being able to effectively search that space is pretty still primitive, with compute at least at large scale relative to humans ability to access information.
Elon Musk
I mean, there's still some things that humans do better than computers. I mean, if you say, like, computers have not yet discovered any fundamental physics, but humans have discovered a lot of fundamental physics. The computers have not yet invented a useful technology. Humans have invented many useful technologies. So.
Brett Winton (ARK)
Do you ascribe to the notion that essentially training AI systems on language is not enough and that you have to have some kind of embodied source of data, like through an optimist robot, to actually get kind of the raw learning in that AI system would need to understand fundamental physics.
Elon Musk
Yeah, so that's what I think is coming. I think what's coming is AI understanding fundamental physics and AI inventing new technologies.
ARK Panelist
It definitely, definitely feels like rather, even though some things now apparently pass the Turing test, most importantly passing the Moneypenny Test, as in, can an AI actually pay bills, do expense reports to the extent James Bond did those, and actually pay parking fines and things like that,
Elon Musk
that would actually be a very good
ARK Panelist
use of AI that I think would have a lot of users immediately. And maybe the. The Billy Connolly test of can an AI actually be consistently funny? Those feel like they're a long way out.
Elon Musk
Grok is pretty funny.
Elon Musk
I think one of our goals for Grok is to be the funniest AI. So, I mean, if you ask Grok to provide a vulgar roast, it's really good.
ARK Panelist
Speaking of grok, to not let down our future AI overlords, the final question on the GROK summary that Kathy touched on was the future of Bitcoin. Not sure if we want to touch on that or not, or whether that's out of scope.
Cathie Wood
That. And then just before, I don't know if we're wrapping up here, but I'd love to talk about Bitcoin and your view of crypto assets and then maybe back into kind of tying things up with convergences among technologies. You mentioned that a little earlier, Elon, and the impact ultimately of all of this on economic growth longer term, you know, the surprises that might come from there. But first, first Bitcoin.
Elon Musk
What's the question regarding?
Cathie Wood
You know, there's. When we first, when you put it, or Tesla put it on its balance sheet, there was, I remember afterwards there was this backlash in terms of its economic impact, all of the energy usage and so forth. And then, and then as part of the seminar that we did that you participated in, Elon Musk, we basically and Block had come up with this notion that, wait, you put bitcoin mining into a utility ecosystem so that, you know, if there's a storage unit and, you know, the intermittent energy, you know, the storage unit's full sun is still shining, the excess power goes over to bitcoin and, and you can mint bitcoin and over build solar and wind and renewables and all of that. So that argument against bitcoin, and Larry Fink himself used it quite vociferously for a long time until recently, that is going away. What do you think about Bitcoin's potential impact on the financial system, the monetary, Monetary system, financial services generally?
Elon Musk
Well, I have to say I don't spend a lot of time thinking about cryptocurrency. Hardly any at all. I have thought for a long time about money and the nature of money. What is money? And, you know, it's really a database for resource allocation is the way to think about money, in my view. So now fiat currency is actually fine as a database for resource allocation if you have a predictable money supply and it doesn't, you know, it doesn't get inflated or deflated too much if it's rules based.
Cathie Wood
Rules based on.
Elon Musk
If it's rules based and provided government does not too much abuse their privilege to create more money. Some amount of abuse almost is guaranteed to happen, but can go too far. So the temptation over the ages to debase money goes back to probably the ancient Sumerians. But at the point which money was invented in any form, including in gold, there was the unavoidable temptation to deviate the money supply. So when you think of any given money system, again, I sort of apply information theory to a money problem. Just think of it like it's an information system. You want to minimize noise, minimize latency, minimize packet loss. And so any like inflation would be adding noise to the system. If the transaction rate, if what it takes to conclude a transaction is a long time, that adds latency to the system. You know, fraud is kind of like packet loss, you know. So I guess I kind of think of money like I think of information moving on a network bandwidth latency judder, which is the variance in latency, packet loss, those fundamental elements.
Cathie Wood
Yeah, it's been interesting to watch how human beings, in this case the Fed, you know, the words they say whip around markets and there's just something not right about that. I mean that's, that's my point of view. I think our point of view certainly on, on the crypto team and you know, Art Laffer, who was my professor in school, he's supply side, you know, Austrian School of Economics, you know, when he first, he collaborated on our first bitcoin paper in 2015 and after he got through reading it, he said, you know, I've been waiting for this since they closed the gold window in 1971, I've been waiting for a rules, a new rules based global monetary system. And I think that's where our optimism comes from. This is truly rules based. And so he's gotten more and more excited about it, the more he's learned about it. So, you know, anyway, back to convergence though. And you're the maestro here. You know, when I think of, when we think of autonomous taxi platforms, robotaxi networks and so forth, that's the convergence of three of the major platforms around which we have centered our research. Robotics, energy storage and artificial intelligence. Each one of those technologies basically gearing up for or in the, in the sweet spot of a, of the S curve. And I, I sort of think it of S curves feeding S curves and creating the potential for explosive growth that no one is expecting. And, and Brett has just written a paper, it should come out in the next few weeks around this topic. Just want to get your thoughts about that. And Brett, if you wanted to ask any questions specifically about that. But the, the, the bottom line from an economics point of view is we could see, you know, very surprising up. Uptick. Not just uptick, a step function up in economic, a real economic growth if these technologies are as big as we think they are.
Elon Musk
Yeah, absolutely. Well, I mean, the real economy is not money, it's goods and services. So, you know, I was saying earlier, money is really just a database for resource allocation. And you know, it's. But if there are no resources to allocate, or if the actual goods and services output have, is fixed, then you really, I guess, try to allocate that same pie, but more efficiently. But it's really not nearly as good as growing the pie. So growing this output of goods and services. Productivity is really the thing that leads to prosperity. And obviously with robotics and AI, I think digital medicine through synthetic RNA and I think these things are, will just massively improve productivity. If you take the car as an example, and I think you understand this quite well, although not many people do that, you know, if you've got, say a passenger car, it will typically see 10 to 12 hours of usage, like maybe one and a half hours a day over the course of seven days. But there are hundred, there are 168 hours in a week. So it's really used for a very small percentage of the week normally. And then you've got a pocket somewhere as well. So you've got parking costs, storage costs, maintenance costs, and you know, all these costs associated with a car. And you know, you're at 5 to 10% of asset utilization for a car. Whereas if you've got an autonomous vehicle, that same car that costs basically about the same could now, I think be used as a rough approximation for about a third of the hours of the week. If you say like productive hours, and this is, I think that's a conservative, but I think it's not far wrong. So if you say like it goes from say 10 hours a week to 50 hours a week out of 168 of useful hours, that I think is not. It's not going to be exactly right, but I don't think it's far wrong. You now have the same asset being able to having five times the utility, that is a such staggering leap of productivity, you know. And if Tesla is able to do as I think we will be able to, which is to upgrade the fleet to make it autonomous, it will be the biggest step change in asset value in history, I think overnight. We agree, we agreed here, obviously, and that's why I preface it by I realize I'm.
Brett Winton (ARK)
But you're also underestimating the utility uplift because that 10 hours that the car is driving a week, somebody is not being paid to drive it mostly right. But they're devoting their valuable brain to doing it, as in kind of, it's actually there's the human labor loss that accompanies that as well. And so freeing up those hours is actually, I think, on Tasha's work, it's as meaningful, you know, as the capital utilization benefit.
Elon Musk
Absolutely. And I think you've also predicted a massive increase in traffic, you know, because once you take away the pain of driving, people will go more places, so there'll actually be more cars on the road driving more places. Because if you can sit in the car and, you know, be watching a movie or be texting legally, then that's really much less pain than having to navigate arduous traffic for an hour and a half.
Cathie Wood
Yeah, Many people miss that. I remember it just frustrated me that GM and its marketing material and presentations would say zero congestion, because I think
Elon Musk
that's hilarious.
Cathie Wood
Yeah. I would suggest threefold the amount of traffic, and that's what pushed us into doing more with drones and, you know, delivery of food and parcels with drones and even air taxis, because cannot imagine the commute from JFK into Manhattan being, you know, four hours or five hours or six hours, you know, so.
Elon Musk
Well, fortunately, I have a proposed solution to that, which consists of tunnels.
Cathie Wood
Yes. Yes. And we're now in St. Petersburg. If you could build a tunnel from here to Tampa, which is just sand, you're not going to run into anything. That'd be very cool.
Elon Musk
We can absolutely do that.
Elon Musk
The Boring Company has actually made. It, has, I think, at this point, by far the most advanced tunneling machine. The thing that is the biggest inhibitor of Boring Company by far is regulatory approval. It's, you know, we are in the United States and particularly in some states like California, we are being strangled by regulation.
Elon Musk
And this is an important point to make, which is, I think, obvious when you think about it, that if we keep making more rules and regulations and laws every year, and those laws and regulations are immortal, but humans are not immortal, then over time, you'll be like Gulliver, where you're tied down by millions of strings and you can't move.
Cathie Wood
It's true. It's true. That's why your first principles approach to your business is so interesting. I wish we had first principles approach to policy making. And, you know, because you're right, the regulations are strangling. The only good news here in this, and we've seen it, is other countries want innovation. You know, US has been, you know, has been the source of a lot of innovation. But some of our, you look at the FAA and drones, that business has done much better elsewhere in the world. You know, it's been very frustrated here and now the FAA is starting to play ball because of it. Do you think that, you know that competitive dynamic or regulatory arbitrage will change things anytime soon or do we just need someone to come in first principles and kind of figure out a way to convince everyone we need to get a white sheet of paper and not start all over. But you know what I mean.
Elon Musk
I think we need to have a process for garbage collection of rules and regulations. If you don't have some means of deleting rules and regulations and you only ever add them, then we'll obviously just end up in a situation where everything's illegal.
Elon Musk
Which is where we are and kind of the bigger and more complex the state is like California, New York, you just have, I guess first approximation. The number of regulators you have is proportionate to your population. So although Texas and Florida do a lot do better in that regard. But there's just so many rules and regulations in California, New York and if you say you know, LA county, you know, city of la, now you've got it can take you several months simply to get a permit to change the tiles in your bathroom. Literally. Yeah. So you know, that's things are we've got to do something here or we're just doomed
Cathie Wood
for this reason. Elon, do you think think China is at a competitive advantage, its command and control? I've heard you, you know, say that they're very tech savvy down to the mayor of every city. Do you think or do you think what has happened over that there's a dynamic changing. Maybe they've been, they've over leveraged after 20 years of, you know, basically buying the dip was the right thing to do until it wasn't. Do you think that it is now entered more of a Japanese style, you know, you know, they have to readjust to a new reality or do you think, you know, the regulatory or less regulation over there is going to give them a competitive advantage and innovation is going to, you know, help bail them out.
Elon Musk
I don't think China is not immune to the same forces that have driven excess regulation and laws in the United States or Europe. They, you know, I've certainly seen just in the course of our operations in China and China we've seen a quite a substantial increase in the regulatory burden. So you know, it's a lot harder to get things done now than it was 10 years ago. So What I'm saying is I think this is just a natural part of the evolution of any country is the growth of rules and regulations. Now in history, the forcing function for cleaning up bad rules and regulations or sort of archaic rules and things that don't really matter anymore has been war. That has been what has driven, has been the cleansing function for rules and regulations. So now we would like to avoid war as ideally we can do this without war. That would be nice. So. That would be nice.
Cathie Wood
Has it ever happened before? I know you're a student of war and battles and that you really understand that dynamic. Have we ever cleansed the system without it?
Elon Musk
I am not aware of, I'm not aware of a situation like that. Yes. Now the thing is, in history, wars were very common. So, you know, we're in this odd bit of history where war is quite rare. We're talking about, you know, total population of the world divided by number of, by percentage of the population at war. If you say, look, what percentage of Earth's population is actively at war? It's very tiny today compared to any time in history. People confuse caring about war from being in war. That's very different.
Cathie Wood
Yeah, I think exposing, and I know you did in Ukraine with Starlink, exposing what's going on is half of the, is half of the solution in a sense. Right. Or maybe the reason that, you know, that we're not going through the horrors of war because you can see it in living color and how devastating it is.
Elon Musk
Yeah, I mean that is certainly something that is possible, that was not possible in the past. Although it clearly doesn't stop the Ukraine war that's still going on. And you know, I think a lot of, a lot of things, if there'd been social media, it's not clear they would have happened at all. Like the creation of the United States if, if I was thinking of like, if there'd been social media at the time of, of Roanoke, I think people would have been dissuaded from future voyages. You know, it's like we're dying of starvation, we're being killed by the locals, we've got, we're rife with disease.
Cathie Wood
That's a good point, very good point.
Brett Winton (ARK)
But that is another way to reset the regulatory landscape is kind of exploration. I mean, like, who knows what. I'm sure there's some set of laws that apply on the moon and potentially Mars, but it's much more difficult to enforce laws from that long a distance. Yeah.
Elon Musk
I think ultimately if there is a self sustaining city on Moon Or Mars, that self sustaining city will achieve autonomy at some point. So I think it's quite important that we, not quite extremely important that we become a multi planet civilization and create a self sustaining city, ideally on Mars, because that's quite far away from Earth. And I think if something were to take down Earth civilization, then it's less likely to take, take out a Mars civilization because Earth and Mars are only in the same quadrant of the solar system, you know, for six months, every two years. So for a lot of separation and, and I think, you know, I think a lot about the Fermi paradox of where, where are the aliens? I've seen no evidence of aliens because people always ask me if I've seen any evidence of aliens. I would immediately shout from the rooftops and from the extra platform of any evidence whatsoever about aliens, I would be talking about it immediately. And I have thus far seen none. That's a concern because it means that we perhaps are alone and, and maybe there were many other civilizations, but they failed to pass the great filter of going from one planet to being a multi planet civilization. So I guess my concern is that we need to keep civilization going at least long enough to be a multi planet civilization. At that point, I think we stabilize civilization and consciousness and greatly extend the probable lifespan of civilization and consciousness as we know it. So I do want to emphasize this is not some escape hatch from Earth because people misinterpret this as like some escape hatch from Earth. And this really doesn't apply to me personally because you know, I will probably die in, I don't know, 40 or 50 years, hopefully. You know, living that long, maybe I don't live even that long. But the civilization can last for tens of thousands of years, perhaps hundreds of thousands, perhaps millions of years. So I think it's very important that we make life multi planetary while the window is open. And this is the first time in the history of Earth that in four and a half billion years of Earth's existence that it's been possible to extend life and consciousness to another planet. So that window is now open for the first time in four and a half billion years. Now it may stay open for a long time, but it may also close. And I think so we should just take advantage of the time when the window is open to make life multi planetary and ensure that the tiny candle of consciousness in a vast darkness
Elon Musk
to burn, does not go out.
Brett Winton (ARK)
Do you think that Starlink, you've said, kind of the advanced idea that you needed hypersonic travel to basically capitalize Colonizing Mars. Is Starlink enough or does that still, do you still need that second kind of like business model built on top of SpaceX to make it happen?
Elon Musk
I think Sonic is enough. I think Sonic is enough. You know. There's a little diagram on the Sonic router. It's a. People probably didn't notice but it's a Hohmann transfer from Earth to Mars. So if you look on your Starlink router, you'll see that Hohmann transfer diagram that Starlink is the means by which light becomes multi planetary.
Cathie Wood
So. Well Elon, you're you as you are, you are pioneering us in an amazing way. A lot of, a lot of the hope for the future is so much as it of it, you know, has, has, has started with, you know, with projects you've started and dreams you have. And I think the world's a better place and I'll end where I started. I know that. Media clicks, you know, maybe negative is it works but long run, long run truth wins out and you know, you're doing amazing things and I think the world will thank you for years and
ARK Panelist
years and years and maybe just a close.
ARK Panelist
Oh, sorry, I'm gonna click back on mute. Just as a closing thought to build off that maybe as well. How would you think about inspiring the next generation of entrepreneurs to do the really big hard things? Does it make most sense to try and do something more consumer Internet or something earlier, build up capital and then go and do something very hard? Or do you think what would you want to have heard as a starting entrepreneur thinking about that journey and also to inspire the next generation to do great things, including building all the cottage industry, no doubt of things that we'll need to survive on Mars.
Cathie Wood
Great question.
Elon Musk
Well, I actually think that anyone that has a company that's providing goods and services is doing great. I mean it's not that everyone should tackle so called, you know, in quotes, great challenges. I would recommend that they don't actually because the probability of failure is very high. I mean I think just try to be useful is my advice. It's very difficult to be useful,
Elon Musk
know, say like total area under the curve of how useful have you been to other people? You know that cumulatively that's, that's, it's very hard to make that a big number, you know, so I just really just try to be useful and make, you know, create products and services that people want and make their lives better. That's it. And you know, as far as you know, encouraging entrepreneurs to start companies My advice would be that if you need encouragement to start a company, don't do it. Right, right. Yep. Because you'll probably. I mean, the probability of failure is very high, so you really should not. If you need encouragement, don't do it.
Cathie Wood
Yeah, thank you so much, Elon. You know, as I think, as it's clear, if you have. If you have an idea that will fill an unmet need that the world. You know, something the world really needs and you have a passion to go for it, then. Yes, but agreed. The probability of failure is. Brett, I think, you know, is it at 90% for new businesses? 90. 80. 90%.
Brett Winton (ARK)
Depends on what stage you measure it at.
Cathie Wood
Yeah. From startup. Yeah. So.
ARK Panelist
That said, anyone that doesn't need encouragement, we'd love to hear from you. For the Arc Venture Fund.
Elon Musk
I mean, I just have a lot of respect for anyone who works hard and builds things, provides products and services to their fellow humans, and I think that's great. Just a lot of respect for an honest day's work effectively.
Elon Musk
So. All right, well, it's been a great discussion.
Cathie Wood
Yeah. Thank you, Elon, so much. This is great.
Cathie Wood
Yeah. And you know what, Elon? I think the world needs more of this kind of conversation, so maybe every once in a while we can do this again.
Elon Musk
Sure, Sounds good.
Cathie Wood
Okay, thanks so much.