Foundation with Kevin Rose September 8, 2012 In Kevin Rose's Foundation series, Musk talks at length about his childhood, learning by reading, starting companies, and his now-famous explanation of "first principles" reasoning — boiling problems down to fundamental truths rather than reasoning by analogy.
In Kevin Rose's Foundation series, Musk talks at length about his childhood, learning by reading, starting companies, and his now-famous explanation of "first principles" reasoning — boiling problems down to fundamental truths rather than reasoning by analogy.
Transcript Welcome to Foundation, a show where we profile some of the world's most interesting entrepreneurs. For more episodes, check out foundation kr. Today we're talking to Elon Musk, a founder at Tesla, SpaceX and PayPal. Let's go talk to him. So let's start at the beginning. Where'd you grow up?
I was born in South Africa, lived there till I was 17 and then moved by myself. Should I give you the whole story?
Yeah, I would love to hear the very beginning.
Sure. So yeah, I was born in Pretoria, South Africa, lived in Johannesburg, in Durban as well. Was able to travel to a few countries growing up within Africa and around the world. Went to the US when I was, I don't know, 10ish or something like that. And I read a lot of comics and books and stuff and always seems and stuff and things on technology and it always seemed like when there was cool technology or things happening, it was kind of in the United States. So my goal as a kid was to try to get to America basically.
What were your favorite comics?
Well, I read every comic in the store. I like obviously the Batman, Superman stuff, I mean, the Green Lantern, Iron Man. Gotta not say Iron man first because then people will think. But I did think that was a pretty cool one. But I read everything like Doctor Strange. If there was a comic on the rack, I read it.
Awesome. And when did you decide to get into computers and technology?
Or is it just a lot of noise, a lot of construction going on?
Can you still hear ok. Ok, we're good.
So did you start coding? Yeah.
So when I was about 10 years old, I went into a store in South Africa and saw a Commodore Vic 20. And I guess maybe I was nine years old, I don't know, somewhere at that time. And I thought this was like the most awesome thing I'd ever seen. And you could make this, write computer programs and make games. And I played Atari and other things, other games, consoles, when I was like maybe six or seven. So the idea of being able to create games, that's always really exciting. And so that was my first computer. It was a Commodore Vic 20. I think it had like 8k of memory.
And then what led you into entrepreneurship? Was it something that you always knew that you wanted to be an entrepreneur and start something on your own or did you stumble into it? Yeah,
I wouldn't say that. I always knew that I wanted to be an entrepreneur. I actually wasn't sure what I wanted to do growing up. And I think at one point I thought, well, Inventing stuff or creating things would be a cool thing to do, but I wasn't really sure if that meant starting a company or whether that meant working for a company that made cool stuff. And in fact, when I first came out to Silicon Valley, it was to do grad studies at Stanford in applied physics, material science. And then in 95, I kind of thought the Internet would be something that would change the world in a major way and I wanted to be part of it. And actually what I first tried to do was I tried to get a job at Netscape, so I wouldn't actually try to start a company. I tried to get a job at Netscape. And then that didn't work out. No, I didn't get any reply. So, I mean, I had a physics and economics degree or physics and business degree from Wharton, and I was doing grad studies in applied physics and science. And I guess that, you know, I didn't have a computer science degree or several years working at a software company. Well, so for whatever reason, I didn't get a reply from Netscape. And I actually tried hanging out in the lobby, but I was. I was too shy to talk to anyone. So I was just like standing in the lobby and I. And then I just walk in.
Did you have your resume with you or was it.
Yeah, actually it was pretty embarrassing. I was just sort of standing there trying to see if there's someone I could talk to and then I just couldn't. I couldn't. I was too scared to talk to anyone. So then I left. Amazing.
So then you went on to do what from that point?
So then I just. I was just writing software that summer and it got to the start of the quarter for Stanford and I had to make a decision, so I decided to go on deferment. So I figure if I start a company and it doesn't work, then I can always go back to grad school. It's just, you know. So I talked to the chairman of the department and he let me go on deferment. And I said I'll probably be back in six months. And he said he's probably never going to hear from me again. And he was correct. I've never spoken to him since. So. Yeah, so started company with my brother and a friend of mine, Greg Curry, and the three of us created Zip2, which, where the initial idea was to create software that could help bring the media companies online. So we helped in a small way bring companies like New York Times, Hearst Niter and so forth, bring them online. They weren't actually always online. People don't realize that.
Were you the CEO at the time or did you give that role to someone else?
Yeah, I started off being the CEO. So I was CEO for probably the first year and then. But after we got VC funding, the veg capitalist wanted to hire a professional CEO.
Was that frustrating or were you like, this is over my head. I'm ready to give up this role to someone else.
At the time I thought it was a good idea because I didn't really know what I was doing. And I figured they would hire someone who would be really good and that person would increase the chances of success of the company. And so that seemed like a good thing. And then I could work on software and kind of product direction and that's what I like doing. So that seemed like a great thing. Now, in retrospect, I think that wasn't the best thing because the person that was hired, in my opinion, was actually not that great. So I think, yeah, I mean, I think quite frankly, the company succeeded in spite of that person, not because of them.
You know, starting a company for the first time is very challenging for a lot of people. They don't even know where to begin. You must have run into a lot of. I mean, we all made mistakes in starting our first company. As far as hiring, like you said, the people you bring in, like CEO that replaced you, did you surround yourself with mentors? How did you. Who did you look to for advice?
I read a lot of books and talked to lots of people. I didn't have any one person who was a mentor, but I always look for feedback from people around me and feedback from an historical context, which is books, basically. So that's.
Any books stand out as something that was something that you really relied upon. Well, are they just general business books or.
I didn't read actually very many general business books, but I like biographies and autobiographies. I think those are pretty helpful. So I like. And actually some aren't really business, although, like something like Franklin's, both his autobiography and say the biography that's recently been written by. Or not that recently, but In, I guess five or 10 years ago, whenever it was written. The biography of Bon Isaacson on Franklin is really good. You can sort of see how he kind of. Because he was an entrepreneur. I mean, he sort of started from nothing, actually was just like a runaway kid basically and created his printing business and sort of how he went about doing that. And then over time he also did science and politics. Other. I would say certainly he's one of the people I most admire. Franklin's pretty awesome. But then I think it's also worth reading books on scientists and engineers. Tesla obviously.
Did you hear about that Tesla museum that they're having built now?
I actually contributed some funding to save the land.
Oh, that's great. Awesome. That was a very cool thing that Oatmeal did.
Yeah, it was pretty cool. I like the way that they put it too. It's like, let's have a goddamn Tesla museum.
So fast forward a little bit. You know, you obviously did PayPal, that was very successful. And then at some point in time you're like, I'm gonna do something crazy, something that's never been done before with Tesla and the space related stuff you're into. I mean, why take on such huge, very ambitious type projects? I mean, did you have ever have a feeling like this might not work?
Oh yeah, absolutely. Well, so this kind of goes back to college where I was trying to figure out what are the things that would most affect the future of humanity. And the things that I thought would most affect the future would be the Internet sustainable energy, which is both production and consumption. And so effectively solar cities like production, Tesla's consumption in a sustainable way, and then also space exploration and specifically making life multi planetary. Now I didn't expect at the time to be involved in all those areas, but those are just the areas that I thought would most affect the future. And as it turned out, I've been fortunate enough to be involved in those areas, but that's the thread that connects them. It's like it's kind of my best guess at what would most likely affect the future in the biggest way. And when I first thought about doing something in space, the thing I was going to do was actually going to be a philanthropic mission to Mars to land a small greenhouse on the surface of Mars with seeds and dehydrated nutrient gel that you'd hydrate upon landing. You'd have this little greenhouse on Mars and you have this great shot of green plants on the red background. And the public tends to respond to precedents and superlatives. I thought that would get people really excited about sending life to Mars. And my expectation from that project would be 100% loss because I wouldn't expect, maybe you can make a little bit back on advertising or sponsorship or something, but it would be essentially a complete loss. So starting a rocket company would necessarily have a greater likely outcome than 0% financial return. But at the beginning of starting SpaceX, I thought that the most likely Outcome was failure.
And how about Tesla Motors? Walk me through your process of wanting to launch something like that.
Yeah. So in terms of an electric car company, at first I thought that there would be no need to do an electric car company startup because California regulations basically forced General Motors to create the Volt, or rather the EV1, I should say. So when General Motors had the EV1, I thought, hey, this is great. Biggest car company in the world is making electric car called the EV1. That would imply that there's going to be an EV2, 3, 4.
They killed that project off though, right?
They did, yeah. And that was very unwise. I mean it's sort of really short sighted, I think. Action. I mean in retrospect that seems perhaps obvious, but at the time, not only did they cancel the project, they forcibly removed the EV ones that they'd given out, which they only gave out on lease. They removed them from customers against their wishes, took the cars and crushed them in a yard so that they could never be used again. And the customers whose cars had been taken away, they tried legal action, they tried to sue General Motors to keep their car. They actually had a candlelit vigil at the yard where the cars got crushed. And it's like, when's the last time there was a candle lit vigil for a product? You know, that's pretty ridiculous, right? And let alone a General Motors product,
I mean, you have to passion the level of passion, right?
Yeah, actually pretty, pretty tone deaf to. I mean you don't need to run a customer's, you don't need to do a customer survey to figure out that at least some number of people want the cars if they are treating it like somebody's being sent to death. So when I saw that, I was like, holy crap, this is not going to happen. And so there really needs to be a new car company that comes in and shows that it can be done. And the key thing that needed to be done was to show that you can make an electric car that was good looking, high performance, long range, and that if you made such a car that people would buy it, that they didn't have some fundamental affinity for gasoline. So that's.
Where do you get started? You have the capital to obviously put into something on your venture. But you know, you're sitting there and you're like, okay, I want to do this. Like who helps myself with.
Well, my initial thought was that I did not want to run to create an electric car company and run it myself because I was running SpaceX. And the idea of running two companies, that's a lot of work. And you know, just like imagine if somebody had two pretty demanding jobs and then you had one really demanding job. Now you got to do two of them. You know, it kind of takes the fun away and you know, it makes it pretty, pretty arduous.
Yeah, the social life goes away or something has to give.
Something's got to give. Yeah. So my initial thought was, okay, I'll hire some people and work with a team and I'll just sort of work on the product design and sort of maybe the overall strategy or something, but I'll leave the day to day operations to a CEO that I'd hire. So unfortunately that didn't work out. I actually tried hiring a couple of CEOs and I guess, I don't know, I couldn't find the right person. And so it then came to 2008. I was kind of co CEO from 2007. In 2007, 2008, while trying to bring up some other people up to speed. And then when the market fell apart, the financial market fell apart and the economy fell apart in 2008 and I had a choice of like basically commit all of my remaining resources to Tesla or it's going to die for sure. And I thought, okay, if I'm going to do that, then I got to bite the bullets and run the company because it's just too much. You know, if you've got all your chips on, on the table, you got to play the hand yourself.
Yeah. Why do, why do other car companies just really suck? Like a lot of their designs are horrible. It seems like they're not really listening to consumers. There's no, like you're the.
Does this seem like obviously bad?
I mean, yeah, they seem obviously bad. Like you look at them and you're the first company I feel has that kind of Apple esque design aesthetic, you know, like, why do other car companies just make horrible looking cars?
I don't know, it blows my mind. I don't know how because it just seems like, you know, you can take a body panel and you can stamp it with that shape, with this shape or that shape, and yet they chose, they choose to do the bad shape. But it costs the same either way, right? I mean, there are some things that cost a little more in terms of the quality of materials and the, you know, getting things really to fit accurately. And so there are a few things that cost more, but a lot of it doesn't. You know, you can make an ugly, expensive car, you can make a good Looking expensive car. And actually the same goes, I think you can make an affordable good looking car or an ugly looking car. And I think the cost differences are really actually relatively small. And I mean, I don't know, it just, I think maybe the, some of the larger car companies are just trapped in their own history.
Did you do like, did you have focus groups where you decide on the decision or was it very much. I like the way that looks. Let's go with that.
No, it's just literally just a series of weekly iterations with the design team.
So just every Friday afternoon I meet with Franz and the design team and we go over every nuance of the car, every bumper, every curve, every little tiny piece of the car, what's right, what's wrong. And then that has to be filtered against the engineering needs and the ergonomic needs and regulatory requirements. So it's a really, there's a lot of constraints and you can't just make a car any old shape you want and still achieve, meet all the regulatory requirements, be livestock crash safe and all that. So it just requires a lot of iterative activity and caring about every millimeter of the car and that's what results in a good product.
So I know we have limited time. I want to jump towards the future. Talk to me about this hyperloop, I think of calling it.
Yeah, so the hyperloop. I need to set aside some time to actually write down some of the details and I want to make sure that I don't say something completely stupid. So I'm spending time with both the SpaceX Aerodynamics team and the Tesla aerodynamics team just to make sure that whatever I put out there really will work.
Are we talking train here or is this just an alternative, something that we haven't thought of before?
Yeah, I think it's genuinely, it would genuinely be a new mode of transport. That's exciting. Maybe. I think the one way to think of it is like, it's, it's kind of like a ground based Concorde. If you could make something go as fast as a Concorde on the ground, how would you do that?
Right. Would you require rails in that sense or. I mean, is it interesting?
We shall see. No, actually, I think rails are not needed.
So I mean, do you have a lot of ideas like this? Is it where you have a sketch?
Yeah, I've got more ideas than you know what to do to, I think. So is it something.
Where do you come up with your best ideas? Are you on vacation or are you kind of Just like in the middle of the night, you wake up and start drawing things down.
You know, this sounds really cliche, but, like, the shower is probably like, you know, wake up and go to shower in the morning. And I think actually what's really happened is kind of stuff is percolated in the subconscious.
And it's not really occurring in the shower, but you're kind of getting the results of last night's, you know, computation, basically.
And then sometimes it's late at night, if I can't sleep and there's something bothering me, then it'll occur then. And one key idea for a supersonic vertical takeoff landing electric plane occurred to me at Burning Man.
A lot of good ideas come out of Burning Man. Exactly. Absolutely.
So suddenly it's a very, very creative place. So, yes, that's it. Shower and buddy Man.
Awesome. One last question I always ask of everyone that I interview for the new entrepreneurs that are just getting started out there, what's one piece of advice that you would always recommend to an entrepreneur, something that you've learned over the years that they can take with them in their new venture, and then something you'd completely avoid, like something that you really screwed up on, that you'd never do again.
Okay, sure. So I think in terms of advice, I think it's very important to seek out, to actively seek out and listen very carefully to negative feedback. And this is something that people tend to avoid because it's painful. But I think this is a very common mistake, is to not actively seek out and listen to negative feedback.
Where do you do that? Do you go into forums? Do you go into Twitter? Like, what are your areas where you go to look for feedback on, let's say, the Tesla?
It's like everyone I talk to, in fact, when friends get a product, I say, look, don't tell me what you like. Tell me what you don't like, because otherwise your friend is not going to tell you what he doesn't like. This kid's going to say, oh, I love this and that and then. And leave out the this is the stuff I don't like list. Because who wants to be your friend, doesn't want to offend you, so you really need to sort of coax negative feedback. And you know that if somebody is your friend, or at least not your enemy, and they're giving you negative feedback, then they may be wrong, but it's coming from a good place. And sometimes even your enemies give you good negative feedback. Yeah, absolutely. So I think that's important. Positive Feedback like water off a duck's back. That's like really underweight. That and overweight. Negative feedback. And then I think it's also important to reason from first principles rather than by analogy. So the normal way that we conduct our lives is we, we reason by analogy. We're doing this because it's like something else that was done, or it's like what other people are doing.
Yeah, Slight iterations on a theme. And it's because it's kind of mentally easier to reason by analogy rather than from first principles. But first principles is kind of a physics way of looking at the world. And what that really means is you kind of boil things down to the most fundamental truths and say, okay, what are we sure is true or as sure as possible is true? And then reason up from there. That takes a lot more mental energy.
Give me an example of that. Like, what's one thing that you've done that on that you feel has worked for you?
Sure. So somebody could say, in fact, people do that. Battery packs are really expensive, and that's just the way they'll always be because that's the way they've been in the past. You're like, well, no, that's pretty dumb because if you applied that reasoning to anything new, then you wouldn't be able to ever get to that new thing. Right. So, you know, it's like you can't say, oh, you know horses, nobody wants a car because horses are great and we're used to them and they can eat grass and there's lots of grass all over the place. And you know, there's not like a. There's no gasoline that people can buy, so people are never going to get cars.
People did say that. And for batteries, they would say, oh, it's going to cost. You know, historically it's cost $600 per. $600 per kilowatt hour. And so it's not going to be much better than that in the future. And you say, no, okay, what are the batteries made of? So first principles would be to say, okay, what are the material constituents of the batteries? What is the spot market value of the material constituents? So you can say, okay, it's got cobalt, nickel, aluminum, carbon, and some polymers for separation. And a seal can. So break that down on a material basis and say, okay, if we bought that in London Metal Exchange, what would each of those things cost? Like, oh, geez, it's like $80 per kilowatt hour. So clearly you just need to think of clever ways to Take those materials and combine them into the shape of a battery cell, and you can have batteries that are much, much cheaper than anyone realizes.
Is that your big challenge at Tesla is battery?
It's the single biggest item. But it's. Right now, it is not. It's not any kind of obstacle to us. There are a whole bunch of little issues that are kind of trivial, that are challenges when you're making a new product. Because there are several thousand unique parts in the car, 90% of them are fine, 5% of them are slightly problematic, 3% or 4% are problematic, and 1% are extremely problematic. But you cannot ship a car that is 99% complete. So, like, software, you can do stable functionality, but with a car, you know, you can't ship it without, like, a steering wheel or, like, what? Without backseat or something like that. Yeah.
Well, thanks for being on the show. You're a huge inspiration to a lot of entrepreneurs out there, so I know they're going to enjoy this. And thanks for having us in your factory here. Awesome.