The Book of Elon with Eric Jorgenson

23:11I think some of these maxims and some of these taglines that Elon uses, if you kind of put them next to each other, show this pattern of he's designing these organizations to create small failures as quickly as possible, right? So if you're not adding back in 10 % of the things you removed, you're not taking out enough, right? So like fail, that is a mandate to go create something that doesn't work and then figure out why it didn't work and just add that little bit back in so that we know it's the most efficient version of the design. When he sets deadlines, he's like, I want to pick a deadline that I'm 50 % likely to make.

23:51We're going to miss half our deadlines. And I'm totally fine with that because it means we'll be moving as fast as we possibly can. And we're going to make some deadlines that nobody thought we were going to make. If we're making 100 % of our deadlines, then they're way too far out because we'll always consume at least the amount of time that we give ourselves. And I think people have this inherent bias, especially like if your job is on the line or if you want to like look good in front of your peers or you want your company to work, you don't want to be seen as failing. Like you make so many decisions, engineers in general, like I don't want my product to fail, I don't want my part to fail.

24:24and he's so much of what these cultures reinforce and these sort of maxims reinforce is like, you should be failing. He says when he hires people, like, if you don't, if you can't tell me the four ways you fucked something up, then you weren't the one doing the real work. I was literally searching for that quote right now. Yeah, it is a great one, but all of those kind of line up behind like, if you're not engineering your organization to have these small failures, you're creating, this is the anti-fragile idea, that like you're creating this sort of fragility and this inefficiency in the global thing if you don't learn to fail along the way and iterate extremely quickly towards a better product.

25:02I had a conversation with Michael Dell. It's one of the first episodes of the show. And he was talking about that too. He's like, listen, when you're inventing a new business using new technology and a new business model, there's no playbook. You can't go read a book and say, here's how you do it. And he's like, and you can't even hire people from adjacent industries because they're just going to do it the way they used to do it. But so he's like, the only way to do it is to experiment. I think he used the word into it. Yourself, he's like, you have a hypothesis and then you test the hypothesis.

25:24And the point he was making is like, so therefore you want mistakes. You actually want to make mistakes because that's the way you learn. But you want to make them small and you don't want to make the same mistake over and over again. Which, again, is like an echo of what you were just saying about Elon. I guess this ties to the part of the book that's right in front of me where it's clear that Elon's companies, he wants to use reality as a validation tool. So he talks about that. He's like, getting to the truth is really important. So he says, in business and personal life, wishful thinking causes a lot of mistakes.

25:50You have to ask whether something is true or not. Wishful thinking is a natural human tendency. Again, these are direct quotes from Elon. It is a challenge to tell the difference between believing in a new idea and persevering or pursuing an unrealistic dream. The real test of any startup is how well it responds to adversity and adapts. When most things start out, they don't make much sense. But as long as you adapt quickly, you can make the company work. being tenacious and super focused on the truth is extremely important. You should look for feedback from all sources. The iteration towards reality as the teacher is, it was another great element of Max Olson's essay.

26:28Naval is super articulate about this, like applying David Deutsch's ideas to company buildings. Like your goal as a company is to discover new knowledge, which means interact with reality and then instantiate it into a product. And this cycle of iteration and experimentation is how you check against reality, right? This is how all knowledge is created. It's gene mutation and selection. It's scientific hypothesis and testing. But people don't usually think about their organization in terms of like how much new knowledge is being created. How many experiments are we running? How quickly and how cheaply can the failures be created?

27:04He has another great line. If you have beliefs that are incompatible with the rocket getting to orbit, the rocket will not get to orbit. But physics is a harsh judge. Then I left myself, he repeats over and over again, like, physics is a law. Everything else is a recommendation. Another branch off of that is, like, physics doesn't care about your feelings. And so that is a line that he repeats over and over again. People are like, how can you be, you know, so quick to judge people or to fire people or to, like, get the team? And he's like, we have one test. We have one bar to clear. Like, does the rocket fly?

27:31And how much payload can we get to orbit? Like, there is one metric that we're optimizing for. and I will do what I have to do to march us towards that piece to clear that bar. I mean, this is where the Asperger's comes out, you know, like in a truly advantaged way. Like he says, being the need to be liked is like this huge disadvantage that so many people have. And I do not have that. He straight up says like, I do not have that weakness. And Peter Thiel has an interesting observation about that. He was like, why are so many of the successful tech founders seem to be somewhere on the spectrum.

28:04Why do they all have this biological advantage in dismissing the opinions of others? What does that say about our society, that that's a skill that you need to have in order to be an innovator and build something new and build a great organization? So I guess that leads into the next thing I was going to ask you about, which is the algorithm. Which is the first step of the algorithm is what? Question requirements. Make your requirements less dumb is specifically how he says it a lot. And there are so many requirements. I think it's a really, that was a hard earned first step. Yeah. Explain what he had to go, like how he learned.

28:38The most common error of a smart engineer is to optimize something that shouldn't exist. And there are many places that requirements come from, right? Sometimes they come from inside the organization. Sometimes they came from a team. Sometimes they came from legal. Sometimes they came from a design partner, like in NASA. Like if you're going to shoot up a rocket and the capsule of the vehicle is going to like dock with the space station, they have all kinds of requirements about your latches. and like how things go in. If you're going to launch from a specific pad, you've got requirements around sound or timing or all these things.

29:08And he's like, so much money and time and effort is wasted trying to accommodate requirements that don't make any fucking sense in the first place. So the first thing to do is like shorten your list of design requirements so that you've got the maximum possible space to play in. And there's so many times, many stories, and The Latch is like a true one that's in Max's essay, which is like the requirement said, you got to buy this specific like omni latch from an aerospace company made of these materials. And it was like super expensive. And they sort of questioned that requirement. And they were like, all right, well, it's fine as long as it like does this and this, it's fine.

29:43And so they bought off the shelf parts from like McMaster car and they did the job just fine, which were like two orders of magnitude cheaper. There's also times when the requirement is legal or regulatory and he'll assign somebody. He's like, go. It'll take a year or a year and a half to get this permit. And he's like, assign somebody. He's like, go fly to this office and sit in this office until you get permission, like sign on this sheet, come back. Don't come back without a signed sheet or you're fired. Like that is a way to question the requirement or a dismissal or a waiver of this requirement because it doesn't make any sense.

30:18And there's things that he's like, we are forced to comply with so many regulations from 20 years ago, 50 years ago, they just don't make any damn sense and they're not helping the consumer. So let's remove as many of them as we can so that we can design the best possible product for the cheapest possible price. What's the second? Delete, delete, delete, simplify. There's a, I mean, the canonical line about this is like, the best part is no part, the best process is no process. And I don't know exactly the number, but the number of times combining parts has happened over the course of the Model 3 or eliminating them.

30:53Like I think when he started, there were over 10 ,000 parts and that has come down steadily as he's combined parts because every time two things need to be attached, not only are there two things that need to be attached, but maybe they need to be glued, maybe they need to be screwed, bolted, riveted, whatever the way the metals interact, it needs to happen. They need to be actually assembled. And then there's like a tolerance that could change whether other things fit. It's like the number of expenses, changes, and risks that come from additional parts or additional attachments is so, so, so high.

31:22Simplicity gets you both reliability and low cost. That is the best part is no part. Simplicity delivers both reliability and low cost. And so between those two things, you have to delete as much as humanly possible. And so he goes to great lengths to combine parts, simplify things. He says go ultra hardcore on deletion and simplification. That's how you see that like Raptor meme where things get more and more and more simple. And that's how the Model 3 has gotten simpler, more reliable, cheaper to produce, and better. And maybe the most famous example of this is his decision to cast entire, the front third and the back third.

32:02And he got that idea from toy cars. Like toys are cheap, reliable, scale quickly. How do they make them? Like, let me steal an idea from this industry. And it turned out that nobody had ever made casting machines that big. And so - Okay. So this is an important part because then he combines these ideas together. So we just talk about first principles thinking, which I think he was the one basically popularized it. Now everybody talks about it. Very few people actually do it. But in that book, and I actually made a clip this from one of my episodes because that was so interesting, where he's like at Tesla, he's just playing with like a little toy Tesla.

32:33And he talked about like learning from Legos and like how precise it has to be. And they're like, why can't we just cast the entire, I think, underbody? And it was like, because there's no casting machine that's that big. He said, well, how many companies, how many companies make casting machines. I think there was like something like six in the world. Five, he's like, well, let's go talk to him about it. Five said no, one said maybe. And Elon goes, I took that maybe as a yes. And it greatly simplified like the production. There's another story from the books. And I think he talked about this on a couple of podcasts too, where it's like when they were trying to solve production of Hell of Tesla, they had to literally knock a wall.

33:13They were throwing out so many robots. and disposing them so fast, they knocked a huge wall in the side of the factory and just threw out like, I forgot how many, hundreds of robots. Yeah. Because he found weird shit like, hey, this one robot picks up this piece, hands it to another robot, that robot then turns around and hands it to another one. He's like, why don't this robot just hand it to that robot? Why is this guy in the middle? And it adds complexity. He's like, just rip it out of there. Yeah. And that's in the production system. I mean, this is why automate is the last step of the algorithm.

33:43Because he used to do that first, right? Yeah. His original vision for Tesla is like, we're going to automate everything. This is going to be like a pure robot, you know, dreadnought autonomous line. And he's like, that was a huge mistake. We didn't have it refined. Like we didn't have the design refined. We didn't have the manufacturing design. We hadn't questioned the requirements. We hadn't deleted enough parts. We should not have automated until all of these other steps had been gone through. And he said there's many times where he did every step in exactly reverse order. Something was like automated and then tried to done faster and then optimized and then ended up getting deleted because nobody had questioned the requirements.

34:21That's why we do these things in this order over and over and over and over again. And well, there's a great story of taking Starlink was like a mess, right? It was 10x too expensive and they were building one 10th of how many they needed. So like two orders of magnitude off success. He's like, I've had it. I'm fixing this. This is now the bottleneck. He grabs Mark Jancosa, which is one of his super talented early hires from SpaceX. This is a rocket scientist. This is not a guy who's ever worked on satellites. He grabs a team of engineers that he trusts. They fly up to Seattle. They fire the entire Starlink leadership team.

34:54And they sit down in a war room, which I think is an underrated tactic. And they start running the algorithm. What is the first principles of satellite design? How simple can we make this thing? Why, why, why, why? Why does this exist? Why are these two things so far apart? Why do we need this much energy? Why do we need this manufacturing process? And over the course of like a few months, they make this two order of magnitude leap. Like Marcinko's and his people who had never encountered this design before, but just by applying the algorithm and working with maniacal urgency towards this extremely high design bar, they created this product that's now, you know, if it was a standalone business, it'd be worth tens of billions of dollars.

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36:45Learn how they can help your business today by going to deal.com. That is D-E-E-L.com. I did this episode of Founders called How Elon Works. And I think in the description, maybe in the intro, I was like, listen, I can usually, I've read 400 of these fucking biographies. Like I can usually find a historical analogy to an entrepreneur living today where like that person was very similar to this person maybe 50 years ago, 100 years ago. I think Elon's singular. And I think he said he was like singular, living or dead. I can't really find a historical analogy to it. But it's like if that's the case and he repeats, he says, this is a direct quote.

37:19It's a paraphrase of a quote from Elon in that book. where it's just like, I would say the algorithm so much and I repeat it so many times that people in the meeting would start to be able to predict what's coming out of my goddamn mouth. Yeah. So why don't we think about it? This guy doesn't have, he's a singular character in the history of entrepreneurship, and he repeats this over and over again. Like maybe we should spend a little bit more time and we should think about this over and over again to the point that that was a great illustration of the story. I think the maxim here is like repetition is persuasive.

37:50Yes. It's like you have to repeat. One thing that is reoccurring throughout a lot of these founders, they identify a handful of principles. If we go through all the notes, all the books, everything we have in front of us, it's not 25 ideas. He's got a handful of principles that he uses over and over and over again. And I love this idea that he built like this, almost like another form of a meme. It's like this operating system where there's these four steps and we can apply it in space, in cars, in tunnels, in everything else. Let's go to step number three. Step number three is simplify and optimize, which is, I think that's what most engineers just like do as a standard.

38:28But that is the thing that like you should only do after you know for sure that the thing exists and you know for sure you've got your requirements as clean and short as you possibly can. The other thing that's actually really important about the requirements is that a single individual's name has to be attached to every one of them. He's huge on direct individual accountability. And so there's no such thing as like a requirement from legal. There's like a requirement from Jan in legal so that you can go ask her and be like, why does this requirement exist? Please explain it very thoroughly. Can we throw it out, et cetera, right?

38:59And so many times you found requirements that were like created by an intern who left the company two years ago or a department where nobody in the department actually agrees with the requirement. So once you get there, it's like the very normal engineering work of like, let's figure out the tradeoffs. Let's optimize this thing. And yeah, there's a great story from Tesla where you had the battery pack and they had something like a layer on top of it. This was for sound. And one part of Tesla thought it was for sound and the other thought it was for like fire prevention. Am I remembering this correctly?

39:26Yeah, like the fire prevention team thought it was for sound baffling and the sound team thought it was for fire protection. And like once that was established, they actually, they tested it. They put a mic in the car and like nobody could tell the difference. They're like, delete. But it was the bottleneck at that particular time. But again, it's like this department said this and this department said that. They're not agreeing. But then I think not to skip over this part because I think it's the most important part. Elon's solution is very simple. It's like, well, does it reduce? Inside the cabin, is it louder if this thing's not here?

39:58How are we going to figure it out? We'll just put a fucking microphone. Yeah. And we'll test it. We'll test it. And six hours later, the part is deleted. And this whole thing that was slowing down, they pulled more robots off the line and it sped up. And that increased the throughput of the entire production line. Then it was millions, maybe tens of millions of dollars worth of decision. Like he says there are times when a single half hour meeting has added$100 million to the enterprise value of Tesla. Every single minute of thinking is like worth a million dollars, a high quality minute of thinking.

40:28And these tools are the things that he does in those minutes that actually have that kind of effect, which is to your point of like this is a singular greatest entrepreneur of our generation. This is the thing that he talks about most often. Maybe it's useful. Well, I hadn't made that episode in probably like six months. And I was listening to it again to prepare for this conversation with you. And I'm like, I should listen to this every month. Like, it's just like, it's an hour and a half. You can listen at 1.5. It's an hour if you're at 1.5x speed or whatever it is. It's like, oh, I forgot like some of these ideas.

40:58And I think that's where the repetition is so important. Yeah. I mean, that's why I really design all my books to be read and reread. Like, I want them to be handbooks and reference guides. And I love when I see like just a beat to shit copy that's been in and out of somebody's backpack like every day for years and is like dog-eared and flagged and all the highlight on every page. Like these ideas, repetition doesn't spoil the prayer. Repetition is persuasive. Like you have to work to install these ideas in your head so that they're there when you need them, so that you ask the right question or have the right instinct as an operator when you're confronted with one of these decisions.

41:32Are there any other interesting stories that you can think of that come from the third step of the algorithm? I think the third step is the least interesting, honestly. I think the question requirements in delete are probably 80 % of the lift. I think the simplify and optimize, the accelerate and the automate are the things that people leap to naturally. And the algorithm is really designed to get them to sharpen the axe before they start chopping down the tree. Or be sure you're chopping down the right tree. Be sure chopping down the tree is the right next step at all anyway. What's step four in the algorithm?

42:03Accelerate. Go faster. However fast you're going, you can go faster. Is there anything else to it? Not really. So just go faster. He has that line where we, what do you say? A maniacal sense of urgency is going to be our operating principle? Yeah. But like the example here I would use is probably going to the tunneling machines. He's like, if you want to accelerate, like the machines that are currently tunneling, even in state-of-the-art tunneling, are nowhere near their power or thermal limits. So just like crank them up. Go make them go as fast as they can. The interesting thing about when everything is actually automated is how fast can the robots move is a way higher limit on that than how fast can humans move.

42:43And so if you actually do accelerate everything, he's been talking about this a bunch with AI. If you can remove the human element and then you can automate everything, you can do it to a degree that is superhuman level of speed. You have a great way to describe this in the book. I'm just going to read. This is Elon's description of step four from the book, which I love. And so he's talking, he's like, then and only then, step four, accelerate cycle time. Once you're moving in the right direction and moving efficiently, you're moving too slow. Go faster. You can always make things go faster. But do not go faster until you've worked on the other three things first.

43:14I mistakenly spent a lot of time accelerating processes that I later realized should have been deleted. Speeding, this is hilarious. Speeding up something that shouldn't exist is absurd. If you're digging your grave, don't dig it faster. Stop digging. This is in the designing the organization section of the book. And I feel like it is really underrated that he applies the algorithm to his own companies. Like he minimizes the distance between the designers, the engineers, the manufacturing engineers, and gets rid of as much stuff in his companies as he possibly can. He makes the companies go faster.

43:47He questions the requirements of the companies and the structure themselves. And he talks about how you can see the flaws in the organization in the product. So if there's a battery team building a box for the battery, but a chassis in the car right above it, like they'll put a lid on the battery because it makes sense to design a complete battery with a lid. There's a car on top of it. So you don't actually need a lid on the battery case. You end up with like a box in a box where the most efficient thing to do is like have enough interactions between all those people that you are not duplicating parts or responsibilities or materials.

44:22Because if you allow individual pockets to make too many optimization decisions, they'll optimize for their own tiny unit, but not how the unit exists in part of the broader system. You'll have like a bunch of disparate metals that have to come together or a bunch of insane design decisions that don't make the full system optimal as a whole product. Yeah, he talks about the opposite of that. I think he calls it ivory tower engineering. He's like, I'm going to design a product or process. I'm going to throw it over the wall and you can engineer and manufacture it. And he's like, no, you have to be able to, the engineer and the manufacturer should be able to call or design it like, why did you do it this way?

44:59Yeah. Going back to the iteration speed and the number of failures that you can correct and identify, you know, moving the Raptor production. He had their whole team move their desks to the Raptor production line. So as they're like sitting there designing or working on it, whatever they're working on, they're like watching the machine, the engine get manufactured like right next to them. And they're like dialoguing. There's like the feedback, the bandwidth between the people actually moving the atoms. And the people designing the product are super, super, super high. I mean, I think he talks about traditional aerospace is like designing a file that then gets parted out, that goes to subcontractors.

45:38And those subcontractors delegate it to subcontractors. And you have to go five companies down before you find a guy who's actually like cutting metal or touching the material. And then it kind of goes all the way back up. And everybody's adding like complexity and confusion and overhead and cost and profit. it. And that's part of the reason why SpaceX was able to do something. There's like orders of magnitude more efficient and cost effective. And that's before you even get to the fact that they're like iterating so quickly on the design that they're removing all this unnecessary stuff. All right, let's go to step five.

46:07I think I mistakenly said there's four steps. I've done 10 episodes on this guy. I should know this by now. So let's go to step five. Step five is automate. It is the holy grail, but you want to be sure you're automating the right thing because automation itself, the process of creating the automation is expensive and difficult to adapt. So yes, things should be automated, but then it should only be automated after you've rigorously applied the other steps of the algorithm all the way through. You just mentioned something I think is a huge theme that runs throughout his entire career, that he wants to control everything always.

46:36Yes. Can you talk about why that is so important? Well, he had a tough experience in the early days of Tesla. I think sharing responsibility or power over this company. And the beginning of Tesla was kind of a messy experience. He was the main investor and chairman, but he wasn't actually CEO. But he spent so much time getting deeply involved in the product, trying to drive a good outcome there that reached the bar that he had for his vision for electric cars, that it just didn't really work in the long term. And the company was heading down this tough path and wasn't really making the kind of progress that it needed to.

47:15And so he talks about his reluctance to step in as CEO of Tesla. He's like, if I didn't do that, the company would have died. I provided most of the money. I've been as involved as you could be in creating the actual, like contributing to the product. But eventually he's like, if this is going to work, I've got to take control of it and I've got to go all in on it. Yeah, he talked about the mistake of trying to, because originally they used like the Lotus, right? Yeah. The Lotus chassis, I think is what it was. He's like, we should just design this from a blank sheet of paper. It's always better if you're going to do something new, like just design from a blank sheet of paper.

47:50It is a really good lesson. And actually a big theme of his is like, go for the strong form of the technology. Don't try to adapt what came before. Try to like think in limits, go to first principles and build like a true leap in technology that totally leaves behind the constraints of the past. Not just the past sort of designs, but the past entire supply chain. Like even if you were counting on the existing suppliers in the industry, it's going to be really tough to like fully innovate in the way that is possible. If you start with a truly clean sheet of paper, you question every requirement, you start with like the platonic limit of like, what is the maximum ideal possible product?

48:32And then work backwards from that. How close can we get to that? Not start with an analogy of like, how can we be 10 % better than what exists in the field? How can we do 20 % better? Like what does perfection look like? What is the absolute ideal and how close can we get to that? And if anybody gives you a reason why you can't do that, start asking why. Start drilling down. Start question requirements. Start pushing on those assumptions. Well, I think it's important to, like, hammer on this point, though, because it's obvious if you read, like, if you just study history of success, entrepreneurs, like, they all wind up in the same place.

49:03It's like as vertically integrated as possible. They're going to control as much of their business, their raw materials and everything. and what I couldn't help but notice is this is how the car industry started. Like Henry Ford, they made almost all their parts themselves. Obviously, they were making it by hand. This is before he figured out how to mass produce a car and that was like his main idea. There was no auto supply chain. No. You start doing it and then you have control. He's also obsessed with control. He wound up buying out his investors. I think in 1919, Henry Ford owned 100. By 1919, he owned 100 % of Ford Motor Company.

49:36It was just like the equivalent of you owning 100 % of like a 20 to$40 billion company today. He was so obsessed with control. He bought a railroad. Like he bought a railroad. It's like, not only do I want to like control all, every single like design and part that goes into the Model T and all my cars. It's like, I want to make sure that all those parts get to me and I want to control the logistics of them getting to me. And what was fascinating about Elon is like he just went and like bucked the trend of the American automobile industry at that time, which was like subcontractor, subcontractor, subcontractor.

50:07He talks about this over and over again. Like they're just not even making their own shit. And it's like, I'm just going to go back and do it the way it used to be done. But I think the reason that it's so important is like not only do you have control, but it's like how you make a cost efficient product. Because if you're having subcontractor after subcontractor, I think when he did the initial calculation, he wasn't calling it the idiot index, which we could talk about. But at the time with the rockets, he realized that like 98 % of the cost of a rocket was not from what it was made out of. He's like, where the hell is the money going?

50:35And he's like, oh, it's going from this contractor who's this subcontractor actually hired another subcontractor who hired another subcontractor who hired another subcontractor before I get to the actual person, like you said, bending the metal or making the thing. There's actually a very important like a meta to that, which is he has a completely different vision and set of incentives. So the whole aerospace industry today had basically been supported by cost plus contracts from the government. And so what is their incentive? Their incentive is to spend as much fucking money as they can because they make a percentage of the budget.

51:04And they're not actually incentivized to succeed. They're not incentivized. Well, maybe they're incentivized to succeed, but they're not incentivized to succeed economically. And they're not necessarily incentivized to succeed on the original deadline. What Elon did is went to the people actually awarding these contracts and said, like, we want an outcome-based contract. I want to be incentivized to drive down the cost. I want to be incentivized to hit the deadlines. like he wanted to compete on low costs. Like for all the talk that happens about him doing things that have never been done before, he is all the things that he's doing that have never been done before because he drives costs down.

51:41And he drives costs down because the vision is not make as much money as I can. It wasn't start a new aerospace company that's as profitable as possible. It was get us to Mars, which means drive down the cost of getting a payload off earth as low as possible, which means I want to be incentivized to build a system that is as low cost as possible. And once he did that, he did start winning all these contracts and winning these actual outcome based things, which by the way, better for the government, better for taxpayers. That is a heroic thing to go in and say, I know I could get paid X to do mediocre work or to do marginally better work, but I actually want to take the risk.

52:16I want to burn the boats. I want my back to the wall. I want to know that we have to clear this threshold that nobody has ever crossed before. And I want to go tell my team that because that's how we're actually going to achieve this objective that everybody thinks I'm crazy for setting, which is get us to Mars, which is make this very massive orders of magnitude leap in the efficiency of like the human engineering system. It is such a different approach. And that goes all the way back to his like his sci-fi dream and his purpose-driven nature. It's the same thing with Tesla. He didn't go out and say, I want to make a profitable electric car company.

52:54I want as many human beings as possible driving electric cars because that's how we're going to solve climate change. That's how we're going to put a dent in this. And so all of his decisions are not, how do I maximize profits while making electric cars? It is, how can I get as many people as possible driving electric cars? They have to be as cheap as possible. I have to drive that down. I need to simplify the product. I need to get a massive volume so that the scale of the manufacturing supports a really, really, really low price point. And so he just keeps making these like principle-driven decisions from a very long-term view.

53:27Like his view is so zoomed out that it's actually really difficult to relate to. And he keeps doing these things that seem crazy or stupid or visionary or counterproductive, but isn't a counter to the prevailing wisdom of the industry. But it's not from a sense of like, they're doing this, so I'm going to do this. It's not even from a sense of like, this is a strategically optimal local thing. It is like, I am working on this gigantic mission, and I will make every decision possible through the service of this gigantic mission. And that's why he's so strategically differentiated. It is back to the paradox of when you're shooting for a target that nobody else is even shooting for, you are incentivized by these completely different set of systems.

54:14And those incentives drive all of these decisions. And that's why Tesla and SpaceX both have the same dynamic where they're doing things that nobody else is doing. There's two things that come to mind when you're talking about that. One, I want to talk about that I think people should heavily invest and maybe practice on their ability to like distill ideas and communicate like something complex in a simple way. And I think Elon's, you know, maybe arguably one of the best people in the world at doing that. The second part, which is a theme throughout everything, especially, and I think it's most notable in SpaceX, is like making cost control and obsession is not something you like graft onto the organization after.

54:50It was there before the organization even started. When he has this idea where he's just like, why the hell are these Russian ICBMs so expensive? And he starts doing the first principle thinking, which is, you know, everybody knows this story, which is interesting. But then him describing it in another way, which I found was way more memorable. He's like, why would Russia be the only way that can make a cost-effective rocket? And it's in your book. And he goes, do we drive Russian cars? Do we use Russian appliances? Like, there's just no way that this country figured out how to make the most cost-effective launch vehicle.

55:26America's a pretty competitive place. We should have the most cost-effective launch vehicle, which obviously now he's, like, absolutely dominated in that. But, again, it's like speaking in that manner. It's like you could say, okay, well, I broke down, you know, from first principles taking all the parts and looked up what it was on the commodities exchange. Or you could say, why aren't we driving Russian cars? Is your dishwasher at home? is your fridge Russian? No. Like America makes great shit and we make it great and cheap. Why can't we do the same thing for this like domain that I want to operate in?

55:56The answer is because it had been like a government contract driven oligopoly for the last like couple of decades basically. And NASA was amazing and pioneering, but hadn't then, hadn't like really applied themselves to this project. I think that is a thing that people forget is like the original vision for SpaceX was not start a launch company. Elon's original goal was to increase NASA's budget. And he was willing to just burn$100 million on a philanthropic mission to display a greenhouse on Mars. So like shooting a greenhouse to Mars with existing rocket technology, get this photo on the front page of every paper.

56:32There was like a little plant on the red planet, the first time life had transferred to another planet. And he's like, that'll probably increase NASA's budget and like spur this wave of exploration and interest in space. And when he tried to do that, he discovered that the space launch market was so expensive and un-innovative and hadn't been moving forward. And that's actually how he discovered the opportunity to start SpaceX. It was like, that's what's actually going to move this market forward. And then he sort of ended up almost accidentally, but as a byproduct of making that progress, moving into Starlink and now moving into like solar computing space.

57:11So the Starlink thing is interesting. It's in the book, and it's also in the Max Olson essay that you and I keep referencing, which, like, if you're not on the frontier, like, Elon obviously wants to operate on the frontier and the domains that he's operating in. And the reason that it's important is not only because he wants to push his missions forward, but you also unlock opportunities you can't see unless you're on the actual frontier. Yeah. And if they didn't have, you know, the ability to put up— The idea to have, I think there's like 9 ,000 satellites in the Starling constellation now, somewhere around there.

57:41It's like an insane number and obviously increasing. It's like that couldn't have happened when you're launching at the time when he founded SpaceX. I think they said they were launching, what, like two, four launches a year or something like that. And I think there's now a SpaceX launch every like two days. Yeah. This is a concept of like induced demand. Like people have this perception that like the demand, the size of a market is always going to be the size of the market. And he's like, well, if you lower the cost, like two orders of magnitude, there's a lot more use cases that are suddenly valid.

58:09And as Max talks about in the essay, like reaching volume production of rockets is actually a core part of SpaceX's strategy. Like you need iteration and volume to cover the fixed cost. And so you come up with new use cases to drive the volumes. And what are you going to do with, you know, new tons of launch capacity every year? And the first thing, most obvious thing. It was like, all right, Starlink. And now the next most obvious thing is, yeah, this solar compute, like build a Dyson sphere, build a moon base, like all kinds of crazy stuff is going to happen. Like there's stacks of S-curbs here that are going to continue.

58:46And that Elon deserves a lot of credit for not sitting on his laurel. You could have sat on Falcon 9 and just absolutely raked in cash for decades. Like there's nobody else who can do it. And it's a super profitable business. But he is like all aggressive. As soon as that was even beginning to be obvious and probably before he was already like onto Starship. Again, back to this like purpose-driven nature of like we are going, this is the business and the technology and the team that's going to get us to multi-planetary. I found one of my all-time favorite quotes when I was reading the book Zero to One.

59:18The quote says, the single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas. That is exactly what AppLovin has done with their new advertising platform, Axon. Axon is the most powerful advertising platform in a generation. Axon allows you to capture undivided attention. Axon ads are full screen videos that are watched for an average of 35 seconds. Retention that blows other ad platforms out of the water and you can launch in minutes. You set the goal and Axon achieves it.

59:54No complex setup, no expertise needed. And Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. And most advertisers aren't even thinking about this channel yet. Less than 1 % of advertisers have access to Axon. So you want to get started quickly. And you can do that by going to axon.ai. That is axon.ai. I want to go to some more ideas directly from Elon. Again, the subtitle of your book, I think, is super important.

1:00:32Elon Musk's most useful ideas in his own works. It's like when I was describing to friends what I was reading, I was like, it's 200 pages of just Elon talking directly to you. And you can read it straight through if you want, or you can just go to a certain chapter. And I think keeping this book on your desk and reading a few pages every few days is a great idea, like a tool for your career. It's set up as a dialogue. I want it to feel like you're out to dinner with Elon Musk, actually. Again, I want to hammer on this idea. He's just completely, you know, he came to the same conclusion that most of his entrepreneurs did, which is like vertically integrate, vertically integrate, control much as new business as possible.

1:01:09That also ties in. And they said it wasn't like a philosophical thing for him. It was these other companies move too goddamn slow. And I'm in the section of your book where he talks about time. And this was fascinating to me. The reason I invited you and I wanted to have this conversation with you is, like I said, I've read every book I could find on Elon. I've read countless books on the history of SpaceX. I've done 10 episodes on the guy. And yet I found stuff in your book that I've never found anywhere else, which again, goes to, I think, how thorough you are. But I want to go to just read a couple of things and throw it at you, see if he has any thoughts.

1:01:40We already mentioned this. A maniacal sense of urgency is our operating principle. And his whole thing is like, don't waste time. Get rid of all large meetings, unless you are certain they're providing values to the whole audience, in which case keep them short. Also, get rid of frequent meetings unless you are dealing with an extremely urgent matter. This is so good, such a good observation by Elon. Meeting frequency should drop rapidly once the urgent matter is resolved. That makes me think of the observation by the guy at NASA who's observing SpaceX. He's like, wait, there's a problem. It looks like a flash mob.

1:02:11Flash mobs don't stay there forever. Why are you having this reoccurring meeting? Walk out of a meeting or drop out of a call as soon as obvious you aren't adding value. It is not rude to leave. It is rude to make someone else stay and waste their time. This is, I've double underlined several things in your book. This is one of them. The only true currency is time. And then he tells this story because he talks about that speed is both offense and defense. And this was a fascinating story that I haven't heard anybody else talk about. He says the best offensive defense is speed. The SR-71 Blackbird is a military plane with almost no defense except acceleration.

1:02:48It was never shot down, not even once. Over 3 ,000 missiles were shot at the SR-71 Blackbird and none hit. All it did was go faster. The power of speed is an underappreciated as a competitive factor. This is actually, I think, both Tesla and SpaceX's core advantage is how quickly they iterate and design new technologies. He open-sourced the patents for Tesla. Go ahead, go copy it. Like, good luck. Because by the time you're producing the things that they've open sourced, like they're going to be five, 10 years ahead. And there's a bunch of stuff in that book about what he's learned from military history.

1:03:27And he's like, the decisive factor in most, certainly every modern war, but many wars is the speed of technological innovation, not tactics, not size, but this technology asymmetry. And the longer the war, the more important the speed of iteration becomes, not where you started, but how quickly you're developing something new. He continues, a factory moving twice the speed as another factory is basically equivalent to two factors. Yeah. And I love this. I have a running triage of what I do at each company, constantly thinking, what is the most useful thing I can do? Which goes back to that tip of the spear meme, that tip of the spear focus.

1:04:07Like what is the limiting factor? Literally get on a plane and go to whatever limiting factor is and don't leave until that is resolved, which is another form of speed. It's speed of identifying the bottleneck and then going to it and attacking it and resolving it. Like every one of those steps is an increase in speed that pays off. And there's so many things, like this is a tiny story, but I love it because I think it's an example. It's a thing that happens in every single company that usually takes two weeks that he does in an hour, right? So he's like interviewing a machinist and 20 minute, 30 minute interview.

1:04:39He wants to hire the guy. So he asks him how much he costs. Haggles right there. Come to terms. Somebody's like standing beside him with a offer. It's like, all right, fill in the blanks. Here you go. Signs it goes to work. Same day. Same day. And by the way, it's Saturday at like 6pm. So like, your your description of like, how he uses time is like uses all of it immediately. Like, that's such an important insight. And he is, it's why these not just he but also these companies move so quickly. Like when you combine, I feel like a lot of people talk about the tactics. So like, yes, he moves fast.

1:05:15Yes, he has first principles thinking. Yes, he works on the bottleneck. But when you combine these things, it's like a Lollapalooza from Charlie Munger, right? It is like, this is not a 10 % on a 10 % on a 10%. If you're working on the most important thing with manic intensity, and you're doing that 100 hours a week instead of 40 hours a week, you are orders of magnitude beyond the productivity of somebody else. And he's been doing this for decades. So no wonder he's so far ahead. Yes, he's smart. Yes, he's intense, but he's not superhuman. He's not orders of magnitude smarter than his competitors, but the way that he works and the methods that he uses, the mindset that he has puts him orders of magnitude ahead.

1:05:54I love that you describe it as a lot of blues. I think that's what I'm trying to get across from like the podcast I've been doing on Elon, the conversation I want to have with you, the conversation we're having right now, your book, it's like you have to use all the ideas because them combined. And they can apply to like anything. I'm not building rockets. Literally, like right before we started recording, like there's this idea of like finding a limiting factor, even for like the show, me and my partner, Rob, was sitting over there. It's like, we've identified there's two, we want to go faster and increase production.

1:06:21Well, what are being bottlenecks? We have two of them and we're attacking both of them. I was just, you heard me talking to another team member right before we started recording. I was like, there's one thing that I'm not happy about. It's like, we need to drill down on this over and over and over again. It's like, you can use this for anything. There's something that you have in your book, which I read for the first time. I think I read this guy named Ashley Vance wrote this biography of Elon, I think in 2013 is when I first read it. The first one, yeah. Yeah. It's the first episode of Founders Ever in 2016.

1:06:48I did an episode on it. Everybody should go listen to that. David will hate it. No. The way I think it's like, so we're talking about speed and time building products, companies, everything else. But he even applies it. And you just mentioned this, that he has this weird long-term view. Yeah. that if you don't have that, you're not really going to understand the decisions you're making. It's like, so the way I described this paragraph when I'm reading to you is like, this is how Elon thinks about money. And this I've never heard anywhere else. In early SpaceX, I told the team, everything we did was a function of our burn rate.

1:07:15We were burning to$100 ,000 per day. In the same way, I expected the revenue in 10 years to be$10 million a day. Every day we were slower to achieve our goals was a day of missing out on that revenue. So there's a story in the Ashley Vance book where they're like, I don't get Elon. It's like, I just went to him and tried to get him to spend$25 ,000 on a part. He said no because he thinks I could build it for$2 ,000 because the idiot index, that part should be$2 ,000 to figure out how to do it. Yet he just let us use his jet and burn$60 ,000 of jet fuel to get a part to Hawaii that would save us a workday.

1:07:55And so that makes perfect sense if you spend$60 ,000 because that day, 10 years from now, is$10 million. Yeah. And you unlock an entire team and all the infrastructure value. So a thing that's underrated about Elon, in my view, is this hyperfluency across domains. This is a simple example, but he studied both physics and economics as an undergraduate. He has been running his business and functionally being head of product at all of his companies. it's an extremely wide, like multivariate set of trade-offs that he's looking at. And he deeply understands, to your point, the zoomed out view of opportunity cost and compounding.

1:08:36So thinking about where a business could be in 10 years, where the bottleneck is today, what the burn rate is of all the money and equipment and time and attention, and what gets unlocked, not just today, but the potential future value of that is really, really interesting. And that's, I think, a powerful source of the maniacal urgency is because he's like hair on fire all the time. There's billions of dollars at stake every single hour of the day. We can be working with such greater intensity and the rewards for doing it go up every time we're able to move faster. Just randomly flip to this page in the book, which I think speaks to what you're saying.

1:09:15Before I read it, I think what you were referencing there is he talks about the fact that finance and engineering is in the same head. Yes, the same brain. In most companies, it's separated. It's him. So he wants to make something. They want it to the cost or the potential growth and revenue. It's like, no, that discussion is taking place with me. So then again, I can move faster because it's in one head. A sole decision. I mean, how many of the great founders of history are like that kind of sole decision maker? Yeah, there's not many committees that make great things. Yeah. In fact, I'm reading, I've never read Atlas Shrugged before.

1:09:47and the funny thing is I'm reading it. I actually might do an episode on it. I think it's an interesting thing. But in the beginning of the book, there's one person that is very much like an Elon character and her brother is kind of her partner and he's the opposite and she's made a decision to do something. She's like, well, how did you decide that? She's like, I just decided. Just decided. But we have to check with the board and all these other people. It's like, no, we don't. We're just going to make the decision. It's actually over, you'll see this as a pattern as you read. There's like a pattern of responsibility And there's a chapter in my book called like internalized responsibility.

1:10:20And over and over again, you'll see like the hero characters in Atlas Shrugged. Everybody else is sort of trying to like find someone else to make a decision or like shove risk. And Dagny says like, I am responsible. This is me making this decision. I'm responsible for this decision. Like if it's right or wrong, hold it against me later. And like you'll hear Elon do that in like launch rooms. It's kind of like, hey, this is like we've identified a risk factor, go or no go. And like him in that moment standing in front of like a rocket worth tens of millions and like the public watching him in a launch is like running a calculation of like the physics, the risk, the economics, the market value, the speed of the company when the next launch window is.

1:11:01And he'll be like, take the risk. Like launch the rocket. Let's go. Like over and over and over again. So many of those decisions that he's just like solely responsible for. And that's why I think these lessons are so valuable. Like, who else has lived this kind of experience and honed these lessons to deliver to us? So going back, let's extend this idea of like how Elon thinks about money. Says Tesla is getting to the point where every high quality minute of thinking has a million dollar impact. You referenced this earlier. That is insane. That's Elon talking. If Tesla is doing$2 billion a week in revenue, that's about$300 million a day, seven days a week.

1:11:35There are many instances where a half hour meeting improved the company's financial outcome by$100 million. This is the highest leveraged man on earth. Like, how many tens of thousands of engineers, how many billions of dollars of capital, billions of dollars of CapEx factories. Like, you know, he says, like, it makes it hard to sleep. There's always something important to go do. And he's constantly running a tree. So what's the most important thing he can do? That's why he runs no schedule. His jet is him flying all over the world. Like, whatever the most important thing is to do. Yeah, I think there's a story in the Isaacson book where I think he's dating Grimes at the time and she talks, she was interviewed by him and she's like, I've caught him up in bed.

1:12:15Like I'm sleeping, I wake up and he's just sitting there in like the thinking man's pose. And he was thinking like when we went to sleep, he's in the thinking man's pose. I wake up, he's still in the thinking man's pose. yeah there's i mean there's hours of like uh many stories of like dressed to go to a party and he's like i'm just gonna go look at this and then ends up like spending the night under a rocket like working in a tuxedo there's a great those are early days of uh of spacex history where he shows up i think it's like a christmas party and he's like fancy leather shoes or something and they're like they're like you know we're gonna be an hour late when we tour like we're not going and now my fancy shoes are fucked up yeah because i got i'm like literally trying to help build the rocket Yeah.

1:12:52Just some random quotes from him. I think this is great. It's almost like a maxim. Avoid serialized dependencies. I mean, the most obvious one is just like, who starts SpaceX and Tesla at the same time? Like, that's insane. But both of these things are important. So I'm going to like try my best to do them both. The story from PayPal is like a little more generalizable, which is, you know, we have like these regulatory boxes we need to check. We have these partnership integrations we need to run and we have a product we need to build. And the same things to do is like do one after the other. And these end up being like three-year things because you're not like wasting time building a product if you don't know you're going to get the regulatory clearance you need.

1:13:30And he just attacks this. He's like, we're going to do it all in parallel, maximum risk, minimum timeline, do it all in parallel and launch in a year, ready to go. So these things are, you know, Warren Buffett's quote, like you can't get a baby in one month by getting nine women pregnant. It's like this sense of like, how many things can you do in a row to minimize the overall timeline? And yes, it comes with additional risk. And yes, it's more expensive. But back to the fundamental currency of time being the most valuable thing, like that's actually the thing you should do. And that's a big part, I think, of why the pace of these companies, the velocity of them is so high.

1:14:08And many great entrepreneurs talk about like how underrated velocity is. And Elon talks about it too, not just like the pace of the company, but the team itself. So he talks about the team as being a vector sum. And so imagine like every employee as an arrow, how big the arrow is, is maybe how high quality the employee is. How long the arrow is, is how fast they're moving. And then Elon's job is to like align them all on the same thing. And so he talks about how good the team is, how aligned they are, and how hard they're working, right? Like that is the vector sum of the team. And that is what's ultimately going to determine the progress of the company and how successful they are.

1:14:48I want to bring up a couple of things you just mentioned about his, he just constantly hammering on time, not wasting time. But I can't help but notice that in an episode dedicated to Elon, you mentioned you're getting nine women pregnant. I don't know if you slipped that in there intentionally or not, but we're just going to move on. I haven't slipped anything in intentionally. The one thing, direct quote from Elon here, thank you very much. The one thing you cannot replace is time. He goes on a few pages later. I have to tell the team, it's okay to scrap equipment or money. It is not okay to scrap time.

1:15:24Minimizing the waste of each other's time, especially once you've identified the exceptional entrepreneurs or exceptional engineers are the fundamental constraint, the next is like, how effectively are you using them? How effectively are they aligned? And this is a thing where I think Elon is underrated actually as a communicator. Like he's not a super polished presenter like Steve Jobs, but especially when you read him and read a well-edited transcript of him, the clarity that he communicates with is like extremely high. And he's got this amazing habit. You know, you talk about often about how clear and how repetitive good CEOs need to be, good leaders, good founders, like need to communicate super clearly and align the team.

1:16:00And he's got the power of one, like one metric that the entire team is working towards. and he's really methodical about like the beginning of every meeting, we are going to, this metric better be on the first slide. It's the thing that we're optimizing for. So when he was working on autonomous cars, it was like, how many miles are driven without interventions? When they're working on neural links, like how many electrodes are you installing per minute into a brain? So there's always like a single key metric that the team is driving towards that every decision is run through. Like, does it drive this metric forward?

1:16:33Does it drive this metric forward. And that's a really good way of aligning all those arrows and for him to sort of know that the team is working on the objective that he's identified as the most important and doing it as most effectively as they can. And for themselves to all keep each other honest and not get distracted by these like secondary objectives. Yeah, I think that's again, world-class communication. It's like there's so many limited things that a human being can remember. And so if you can organize your entire company around one single thing, it's like, is this getting better? This is how we're going to judge our success.

1:17:04Brad Jacobs has started eight separate billion-dollar companies. He said, I've come to know a lot of extremely successful people in my life, and they all have one thing in common. They think differently than most people. All of them, to a person, have rearranged their brains to prevail at achieving big goals in turbulent environments where conventional thinking often fails. What Brad noticed is that great business leaders are pattern spotters. But you can't spot patterns if you can't see all of your data. Most businesses only use 20 % of their data. Why? Because 80 % of customer intelligence is invisible.

1:17:43It's hidden in emails, transcripts, and conversations. That's where HubSpot comes in. With HubSpot, all of your data comes together so you can see the patterns that matter. This is important because when you know more, you grow more. And that is a pattern that never fails. Visit HubSpot.com today. That is HubSpot.com. So you and I have been talking a few months. You were kind enough to give me an early copy of the book. So we've been talking about Elon for a few months, and you brought it up, I think, already in this conversation. You brought it up earlier this morning when we were having coffee.

1:18:13You've brought it up on the phone. This idea of, like, failure's almost meaningless as long as it's not catastrophic. There's a line in the book that I thought was interesting that he says, the longer you do anything, the more mistakes you will make cumulatively. He's talking about his sense of prediction, but it's also cultivating these failures. Like he does not mind being too early. He does not mind being wrong in a specific prediction. And he talks often about, he's like, I'm rarely correct specifically on the timing of a prediction, but the direction of the prediction is almost always correct.

1:18:49It's like, I might be a year off. I might be two years off. Sometimes I'm five. but like being directionally correct again once you're zoomed out about the the heading of the future and what we're working towards is massively more important than the specific break points i want to jump to something else that you and i've talked about a bunch which is your one of your goals stated goals for making this is like you want to encourage more people to make stuff to actually make products services that make other people's lives better to make stuff, to make important stuff, to make it as cheap as possible.

1:19:21I talked to Toby Luque on this podcast, which was one of my favorite conversations I've ever had in my entire life. It was very interesting. I didn't even think about it in these terms. At the end of the conversation, he's like, oh, me and you actually have the same job. Our job is to increase entrepreneurs, to create more entrepreneurs. He's doing it through Shopify. I'm obviously doing it through reading all these biographies, taking this collective knowledge of history against entrepreneurs and pushing it down the generations. So in many cases, I do think there's going to be people that pick up your book and your series of books and be like, wait, I can like do something too and take these ideas and apply it, even if it's in a small way.

1:19:52This section, there's only two pages here. It's like a page and a half. I think it's really important. I highlight almost the whole thing. But it's like, again, these are Elon's words that are super important. He says, we must make stuff. Manufacturing is underrated. It is hard. I've got mad respect for the makers of things. That's my favorite sentence on this book or on this page. He says, and this is why it's important. Some people have an absurd view of the economy as a magic thing that just produces stuff. Let me break it to the fools out there. If we don't make stuff, there's no stuff. Some people have become detached from reality.

1:20:24This notion that the government can just send out checks to everybody and everything will be fine is not true, obviously. You can't just legislate money to solve things. If we don't make stuff, he says again, there is no stuff. Technological progress is not inevitable. It's not some kind of abstract concept. Humans make technology. If we don't do it, it will not happen. Somebody has to do the real work. This is the clip, I believe he was on the Joe Rogan podcast, where I was like, I must write this book. It identified to me that he is such a clear communicator, and this is such an important idea.

1:21:03And I think about my generation of entrepreneurs and the leaders that we had, the people that we look up to, the content we created. And that's just something that I want to install in as many people's heads as I can. You and Toby talk about your job is to create as many entrepreneurs as you can. I believe in creating entrepreneurs. I believe in spreading good ideas, spreading useful ideas, spreading correct ideas, like expanding knowledge into as many people as we can. And this is an unbelievably important meme. And if we all run around like creating info products or charging as much as we can while delivering as little value as you can, or starting commodity businesses, or worst of all, like trying to do as little as possible while getting as much as possible or legislating yourself universal basic income and never working again or whatever.

1:21:57This is not how we advance. This is not how we grow. This is not how we take care of each other. We have to produce stuff and build stuff. I think the first sentence in the book is don't aspire to glory, aspire to work, aspire to be useful. Do something that is a benefit to all of your fellow humans. Elon has both really hard and really positive motivations. He burns clean fuel and dirty fuel at the same time, right? Like, yes, he's like trying to escape this really hard childhood he had and like prove to himself that he has this incredible value, but he also has these like really beautiful, massive aspirations.

1:22:37And he's inspiring so many people to do great work and helping them learn how to do it in a most effective way. Like he's raising and educating this whole culture, all these entrepreneurs who are going to come out of these companies. We're already seeing SpaceX founders do incredible things. And the intensity and pace and vision that these people are working with, I think is going to usher in like an incredible next generation of entrepreneurs. I hope this book like helps people gain these ideas into their head and choose what they think is important and what they work on, who they work on it with and how they work on it.

1:23:09I do agree with you. I think it's one of the most important ideas. In Max Olson's essay, I love what he said. He's like, the output of SpaceX in particular is not cheaper rockets. It's people being trained to do difficult things and taking those ideas and putting them into different domains. And I think the important thing is like making more things, not doing more deals, not going into finance. Like you have the best entrepreneur on the planet, maybe the best in history telling you, what did you say? There is an over allocation of talent in finance and law. Too many smart people are going into finance.

1:23:36We should have fewer people doing that and more people making stuff. That is a dark hope. We should have fewer people doing finance and more people making stuff. This is so important. Manufacturing used to be highly valued in the United States. These days, it hasn't been as much, which I think is wrong. Making cars is an honest day's living. That's for sure. Making anything or providing a valuable service, like good entertainment, good information, these are valuable things to do. And then I'll close the section with, again, the quote, which is my favorite part. I've got mad respect for makers of things.

1:24:10Going back to the kind of like founder's archive in your head, Like how many of the great founders were making things, manufacturing, building, moving physical stuff around? I mean, if you think about like the most famous story, like just go through like the robber barons where their names are known. It's just like there's only one, there was essentially one robber baron that did finance and that's like Jay Gould. But like J.P. Morgan. I have a different take on that where like if you read, I've read every single book I can find on J.P. Morgan. He has an interesting character. I found his dad to be much more of a formidable individual than he was.

1:24:40And there's a funny thing when J.P. Morgan dies, his size of his estate is revealed. I forgot the number. It was like 50 million, which is still a ton back then. But Andrew Carnegie goes, oh, it's a think. He wasn't even a rich man. But like Carnegie and steel, Rockefeller and oil, Vanderbilt and transportation. There's not, you know, they were building things. They were creating, I mean, they were creating essentially entire industries. If you really think about it, they were building the best company inside the industry. but they were really creating industries. The closest analog for Elon are those names.

1:25:16Like, I don't think there's anybody else. Going back to, like, why he's singular, like, we would have social networks without Mark Zuckerberg. We'd have search engines without Google. We would have operating systems without Bill Gates. Like, yes, they're some of the biggest companies on Earth, and they were incredibly well executed, but I don't think they were singular, and I don't think we're going to see quite the same longevity that we see out of, like, both of these companies. It's just refreshing for him to talk about how important manufacturing and building physical things are. I mean, he says in the book, manufacturing is the moat.

1:25:47Two things define manufacturing competitors, economies of scale and technology. If you maximize your level of technology and maximize your level of scale, that is obviously going to be the most competitive situation. That's why these plants are so freaking giant. Yeah. I mean, Tesla is building a lot of things in the U.S. and now working backwards into their own supply chain. Like they can't get enough lithium. So they're starting a lithium refinery in the United States. spinning it up. They're now, you know, starting to fabricate their own chips because that's become a bottleneck. Like they just keep attacking like up and down the supply chain as much as they can in order to be as efficient as possible and drive the product cost down.

1:26:23So we've already touched a few times on the fact that he wants to take technology to its absolute limits and like be operating on the frontier. You, again, you did a great job of finding quotes of somebody that like studies Elon for years that I've never heard anywhere else. And he was just talking about the fact that, if you're developing technology, should we push the maximum level possible? And then he gives an example of somebody not doing that. And he's like, it was like building F-22 fighter jets and then selling them to people who roll them down the hill at each other. That's not the way to use the technology.

1:26:53Yeah, that was the outcome of his Zip2 experience where he was building software and then selling it to legacy media companies to kind of move newspapers online, like way back in the day. And he was just super frustrated by having to like sell to a slow moving old school company that was between him and customers. And that's where he kind of, there was an early lesson that he's carried with him forever, which is like, go straight to the consumer. Like, own everything and let the customer is the one who's going to make the final determination. You want to take the technology straight to the customer.

1:27:20The way I think about Elon is like, there's no work about work, just work. So he has this great quote, better to pick a path and keep moving than just vacillate endlessly on a decision. Also a PayPal thing, like make the decision as quickly as possible and then just like keep moving. Like back to like velocity, speed is everything. What matters to me is winning and not in a small way. He's a competitive guy, like loves, loves to win. We are lucky that he's working on the things that he's working on. His inherent personality would dominate whatever industry he went into. And how lucky are we that he's like working on some of the most important problems that humanity faces?

1:27:56Yeah, he could use his talents for evil. Yeah, which goes back to like the incentive system. Like, you know, thank God for capitalism. him. Like Napoleon didn't do a lot of good with his like massive energy and brilliance, right? He like won a lot of land, lost a lot of land. A lot of people died. Did you ever read Jimmy Sony's biography of Claude Shannon? Not yet. I think it's called A Mind at Play. Yeah. And Claude Shannon made famous for coming up with information theory, but he gives this great talk in this biography where he wins this award and he's like, it's really weird that history celebrates like conquerors and like politicians.

1:28:31He's like, we should actually celebrate innovators, inventors, engineers. And he gives his whole speech. And that was probably like 60 years ago. Yeah. And Claude Shannon's an incredible example. Here's another thing we've already talked about, but I think it's really important. This is Elon. A lot of entrepreneurial talent and financing goes to the internet. Other sectors like automotive, solar, and space don't see new entrants. Not a lot of entrepreneurs go into those areas and not a lot of capital goes into those startups. This is a problem because innovation tends to come from new entrants to an industry.

1:29:00In an oligopoly, no one is forced to innovate. New entrants drive innovation more than anything, which is why I have devoted my efforts to building new companies in those industries. There's actually a great story that I think is a really replicatable tactic that's underrated that I think people can really use, actually, which is when he was considering starting SpaceX. So this is after he sort of had his bad experience in Russia, and he's thinking about entering the launch market. he doesn't just say like, I'm starting a company. What he does is do, he calls it a feasibility study. So he pulls in a bunch of engineers that have worked on the great launch vehicles.

1:29:32He starts reading all the books, as you say, like devouring the entire shelf, talking to all the people that he can. And he sets up a series of meetings with these engineers who are experienced to basically vet the idea of how good could launch be. Let's start with first principles. Let's start with a clean sheet of paper and what's possible in this market. And almost at the same time that they sort of came to the conclusion through this work that like massive order of magnitude breakthroughs were possible was when they actually sold PayPal. And so he's kind of like, all right, I got a bunch of cash.

1:30:05We've like vetted this idea with these experts. But I think it's really worth drilling down on the fact that like, you know, at this point he was almost 30, if not more. He had only worked in software. He studied physics in undergrad, but like had not built hardware. And he just learned how to become a rocket scientist, essentially, just by reading the books, talking to people and going after. And he says, most people self-limit their ability to learn. Like I never studied rocket science, but I picked it up along the way. He's a powerful example of like, what is possible? You know, once you've identified a meaningful mission, you just become who you need to be in order to accomplish that mission.

1:30:41He's obviously very high agency. What I loved about the story from one of the biographies is how dismissive everybody was. It's like, oh, this is just a software guy playing with expensive toys. That's how he was described. I mean, that was the press, but also his friends. Like, I'm sure that many of them would deny it now, but they were all trying to talk him out of it. There's only a graveyard in this particular place. People were like showing him rocket videos. It's not that nobody had ever attempted this before. It's just everybody had failed. No, there was a lot of failed. I mean, I find this guy fascinating because there's so little known about him, Andy Beal.

1:31:14But Andy Beal, he made money independently another industry and then tried to do a rocket company, wind up burning, I think, a couple hundred million of his own money. And then the reason it's related to Elon is because when they're trying to find a place in Texas to set up, it turns out they could lease this property that was previously utilized by Beale. I think it was Beale Aerospace. And so it kind of like jumpstarted them. It was actually a big motivation of Elon's is like, even if I fail, even if I lose this money, and that is the most likely outcome, not just by a little, like by a lot, he's like, I will have moved the ball forward.

1:31:43Like this is an important mission and going in with the idea that he'll burn this money on the Mars mission. He's like, even if I waste my money on advancing progress in space launch technology, at least I will have made progress in the same way that like Andy Beal, you know, left some infrastructure behind that helped SpaceX. Like these things do build and compound. And there's, you know, back to the sort of fragility sense, like even when entrepreneurs fail trying to move the ball forward, the ecosystem like moves forward. Like that's part of the beauty of the human system that we have. Another great quote that I haven't seen anywhere else.

1:32:18I have a habit of biting off more than I can chew and just sitting there with chipmunk cheeks. That's a great visual. Yeah. You think he's doing that right now? Yeah. Yeah. I mean, look, he keeps an underrated piece of him again. Is that the thing? Like he keeps doubling down and taking massive risk. Like he took what seemed like that impossible pay package trade off at Tesla that everyone was like, oh, my God, this is never going to work. He did it, got the biggest cop package in history because it was the riskiest. And now he's doing it again. He'll get a trillion dollars if Tesla becomes a$10 trillion company, but nothing if it doesn't.

1:32:58Again, just all on the line over and over again, burning the boats, putting his back to the wall, putting himself in a situation where there's no option but forward at max speed. So as I'm here listening to you talk, I'm just like leafing through the book to see what other interesting stuff comes. What you said just matches up perfectly with the subheading of the page that just happened to randomly turn to, which is called The Edge of Sanity. I just need to read some of the stuff to you because he's hilarious. Question, how do you prioritize with so many things going on at once? He goes, prioritizing has usually been out of desperation, not selection.

1:33:31It's not, oh, let's sit back and leisurely decide how we should spend these resources. It's, this isn't working. If we don't make it work, we're going to go bankrupt. So we better make it work. And then he goes, I felt like Indiana Jones running down the temple. There's a huge boulder chasing you and you need to jump across a giant pit in the ground. If you slow down, the boulder will crush you. And if you don't make the leap, you'll die in the pit. That's prioritizing. It is how scaled entrepreneurs feel. When you interviewed Brian Armstrong, that is how it sounded. You know, he's like, we hit product market fit.

1:34:03And all I could do for years was just wake up and like stay alive. Just try to keep up like the servers were on fire. The support tickets were coming in like, oh my God, I just have to stay on top of it. Like I just got to keep running and jump across the pit. How do you motivate the team? I told them we have to go ultra hardcore. It's just funny to me. I lived in the factories for three years. He's talking about the Tesla production hell. I lived in the factories for three years, running around like a maniac through every part of the factory. I was living with the team. I slept on the floor. This is actually smart.

1:34:31I slept on the floor so the team going through a hard time could see me on the floor and knew I was not in some ivory tower. Whatever pain they experienced, I experienced more. It comes straight from his study of military history, right? Like, generals lead from the front line, wherever the general is, the troops are going to fight better. Like, these are Napoleon things that he exemplified. And he even says in there, like, not only did I sleep on the factory floor, but he slept, like, outside the conference room. It's not like he slept at the factory. And I've talked to employees there. They're like, there's a hotel across the street.

1:35:03Like, it would have been fine if he just went to the hotel and come back. His presence would have been the same. But he wanted people to see him sleeping on the factory floor. He doesn't just like not have concern for his personal comfort. He like sacrifices his personal comfort for leadership, like for the credibility of his engineers to build trust in that. And that is like part of how he gets so much out of people is like these conspicuous, visible, tangible, obvious displays of self-sacrifice. and it does over and over again. He pushes himself so hard. I mean, the edge of sanity, he says, like I've worked to the edge of sanity.

1:35:38You've talked about Tallulah Riley in the 2008 thing. He's having like a night terrors. He'd wake up screaming and puking. Tallulah Riley was his wife at the time. Yeah. So she's seeing this, they're in bed. He's trying to sleep and she's just yelling in his sleep. Yeah. Like, edge of sanity is not a, like, euphemism for I worked hard. It is, like, a Herculean test. And a direct quote from him on the page I just flipped to. I worked to the edge of sanity. Yeah. It is a very, like, I think a meta lesson from the book and from his life that anybody can take away. It is Goggins of entrepreneurship.

1:36:17It is you are capable of so much more than you think. What you think is your best effort is maybe 30 % effort. and you're actually capable of so much more. If you make full massive use of time, if you push yourself to the edge, like, and I'm not advocating that this is the right path for everybody. I think like some people are Jason Fried and some people are Elon Musk. I don't know anybody else that could withstand as much pain and torment as he has. Yeah. I can't think of another entrepreneur living that has. No, but people can probably take more than they're currently taking. If it's not a blueprint, is it an example of what's possible, right?

1:36:50Like it also, I think it's a, it's an antidote to envy. Like, I don't want to live through what he lived through. And that makes it very easy to be like, I don't want to compete with that. But it does show you what's possible. Like, that's what maximum effort really looks like. I think that's a really helpful lesson to know. Yeah, maximum effort always everywhere. It's the way I really think about him. I just came across another paragraph that I underlined that I think ties a lot of these ideas we're talking about, the fact that he's obsessed with speed, obsessed with control. And if you're obsessed with control, it's going to lead to vertical integration.

1:37:20and then you really should just design from a blank sheet of paper and do that in a first principles way. He says there's a lot of vertical integration at Tesla. We make the battery pack, the power electronics, and the drivetrains ourselves. We vertically integrated because the pace we need to move was much faster than the supply chain could move. That's a great line. To the degree that you rely on the legacy supply chain, you inherit the legacy constraints, including their speed, their costs, and their technology. He's talking about Tesla. The exact same thing applies to SpaceX, though. You can't make two orders of magnitude improvements if you rely on the existing supply chain.

1:37:50And one of the things we were talking about this morning is like the most interesting thing is identify the limiting factor or work on the bottleneck is like almost so obvious that it's trite, right? Like, but no one does it. One, people don't do it. But two, it's a more nuanced thing than it appears at first blush, right? Like, if the limiting factor is energy, it's like, okay, what is the what is the peak load? Where does it come from? What's the cost optimized thing? Like, oh, if if turbines are the cheapest way to do it. What is the actual, like who's manufacturing the turbines? Where do they come from?

1:38:21Where do they exist? If the piece, what piece of the turbine makes it more difficult? So he did this example and drilled all the way down. And he's like, there's actually one like machine part that is the fin of the turbine. That is the like portable piece of the generator that is the bottleneck of compute infrastructure for XAI right now. And so it's like, it's actually one part of a thing drilling all the way down and like identifying with super high specificity where the bottleneck is. Explain that to me again. So he's trying to find out the limiting factor for XAI. Yeah. And the limiting factor is energy, right?

1:38:58Like we bought the chips, we need the building. This is when he was running the first super cluster. And somebody told him it was going to take like two years to get this building up and running. He's like, nope, if we don't do it, there's a break point. If we don't do it in 90 days, like we're dead or six months, maybe we're dead. and they spun up the whole thing. They found a building in Memphis. They bought the chips from NVIDIA. Then they needed cooling and they needed power. You can't get a grid interconnect done in six months. So what do you do? You go get these turbines, these gas turbines, which are like portable energy generators.

1:39:31And you just line them up all on one side of the building. And you can't get that much cooling installed. So he went and hired mobile like refrigerator trucks to like line them up against the other side of the building. And so it was just like, what is the fastest possible way to get this thing done? And what's the limiting factor of the limiting factor of the limiting factor? Like drilling all the way down to figure out truly where to attack. That kind of five whys all the way down to figure out the limiting factor of the limiting factor of the limiting factor. Kind of relates to a little bit about like just paying attention to the smallest details.

1:40:05Yeah. This is something that I think is really important too. He's like, most people don't consciously notice the small details, but they do subconsciously. Your mind takes in an overall impression. You know if something is appealing or not, even though you may not be able to point out exactly why. That sense is a summation of many details. Most of us experience this as, that's ugly, or that's beautiful, or wow, that's elegant, but we cannot break down why. Pay attention to little details. Train yourself to notice them. When I read that section, I thought about what Steve Jobs was, I think, maybe the best in history at.

1:40:35And he has this great way of describing this. He says that a great product is better than it has to be. Yeah. I think Elon is underrated in his design sense, actually. Like, there's a lot of times when you hear Elon quotes that sound exactly like Steve Jobs would have said. This is an important piece of the design, in particular for cars. And a lot of the, he thinks about it like an algorithm, right? Like, there's certain specific things, ratios that have to exist between the product, or it needs to feel bigger on the inside than it looks on the outside. that he just absolutely insists on. And there's stories, especially from early Tesla, of him being unreasonable about design decisions that he just puts a finger on.

1:41:17He's like, it has to be this way, or it's not good enough, it's not beautiful enough, it's not aesthetic enough. In the same way that Steve Jobs was very much like, no, put a handle on that computer because it changes the relationship that somebody has with this kind of new foreign machine. Something I thought about when I was reading your book was, you know, the idea is like, we're going to have a single organizing principle to see to track like the progress on this particular product and this particular company. He kind of breaks things down to like a singular objective or a singular something he repeats.

1:41:48There's a line in Sam Walton's autobiography, which I thought was very interesting because we're talking about like, you know, Elon has not only started the companies, but now these companies are at scale. And Sam's like, listen, it's a human nature to overcomplicate things. As your company grows, you are going to add bureaucracy and your job as the founder is to beat bureaucracy back over the line. And you're going to beat it back over the line and it's going to creep back up and you're going to beat it back over the line. That ebb and flow will never stop. And one way that Elon talks about this in the book that I thought was interesting, he's just like, for any company, you just ask yourself a very simple question.

1:42:20Are the efforts that we're doing right now, are the efforts that we're expending resulting in a better product or service? If they're not, then you stop those efforts. It's an easily forgotten truth. like Tesla doesn't advertise. They're just all the money back into the product or all the money back into the next product. There's stories about the rift between him and his cousins doing SolarCity because SolarCity was a very like sales driven organization. So like door-to-door sales, they weren't as focused on product differentiation. And he just like, he was on the board. He just came in like a maniac on their product.

1:42:54And it was like, why do these clips exist? Why do these roofs take so long to install? Why are they so expensive to install? And he was like adopting that super Steve Jobs, like make a beautiful product and make it an obviously better thing. get rid of these salespeople. Like, I don't want this to be, I don't want the organization to be better at selling a mediocre product. I want it to be better at creating an excellent product that sells itself. That is his whole ethos. Yeah, I like the point that you made that like he applies the same idea at the product level and at the company level. So this idea where he's like, please go ultra hardcore on simplification and deletion.

1:43:24It's like in the product and in the company. It was a great, he repeats the same idea in different ways too, which I thought was interesting. Like eliminate what isn't necessary to solve the key problem. And so he gives an example of what is he talking about there? Early versions of Starship didn't even have doors. We didn't need doors. We did need to be super focused on getting to orbit. Doors were just unnecessary complexity. The first 10 ships or more, we were not going to get back from orbit. So then again, understanding that failure is built into it, like we're seeking the limits, so we are going to fail things.

1:43:55And then he talks about, again, the genius has the fewest moving parts. It's really hard to scale something that's complex. So he says scale has value in itself. For example, the same computer that controls a tiny rocket controls the big rocket. The percentage of weight of the electronics is significant in a small rocket, but becomes vanishingly small in a big one. Yeah, which this is the same logic that he applies to factories, right? Like the inherent value of scale, just make something extremely big and diminish the fixed cost as much as you can. and the value of volume, like making these leaps between, you know, that's why they started with sports car, because you can have like a unit profitable thing at small volume, then the Model S, then the Model 3.

1:44:36And the same thing he's doing with the Rockets, right? Falcon 1 to Falcon 9. The ability to sequence the strategy through different products, different escars, and have it be profitable at each sort of stable equilibrium is a really important piece that I think for all to talk about how he's like a visionary and builds these great products. He's still really economical about how he goes about it, which I think is very, very overrated or underrated piece of his genius. Well, another thing you do a good job in the book of is you give multiple examples of the same idea. And again, all these ideas relate to each other.

1:45:15And so he talks about like, why did they move, remove the landing legs? I think this is a Starship three. And he says, again, here we try to think to the limit of physics. The problem with landing legs is they add mass. We have to protect them during reentry and we have to get a giant rocket from wherever it landed back onto the launch stand. That is tricky. I was trying to think of the limit. What's the fastest way to achieve reusability? It would be to land on the launch stand. So he talks about, you know, planes land and then they immediately take off again. That's what we want to do with rockets.

1:45:48It would be to land on the launch stand. Why not just have it land on the arms of the tower it launches from. So again, which is a crazy thing. When we talked about it first, it sounded batshit crazy. Direct quote from Elon. To custom build a giant tower to catch the heaviest flying object ever made with mechanical arms. Pluck it out of the air, but we did it. It is an epic sight. Giant robot arms catching a giant rocket. That is a great story because it exemplifies a few different things, right? There's the thinking and limits part. Like, what is the platonic ideal? How good could it be if we were just dreaming?

1:46:20And then it seemed impossible. And he's got a really specific tactic he does when he's exploring, he says, what's possible within the absurd. And so he takes these crazy ideas and throws them out. And people are like, that's crazy. That wouldn't work. That would be absurd. And he asks, what would it take? Don't tell me no. Tell me what would have to be true. What would it take to make it possible. What he finds and what this comes up over and over again is his stories is what first seems impossible and people push back and he sort of gives it like a day. And then people start to like churn on it a little bit.

1:46:57And then he asked more questions, questions, more assumptions, asked what it would take again. And then like within a week, people start to be like, wait a minute, this might be possible. And I think he's been through this loop enough times where people are like, no, that's crazy. They dismiss it. He pushes back. He says, what would it take? He says, do the brainstorm. He says, just spend a day or spend a week designing it. Just assume that it's possible and start working on it to see how far you can get. And so many times it's like, what seems impossible, there's no fundamental law of physics reason why this is impossible.

1:47:28And I think all of this actually goes back to his belief that engineering is magic and the laws of physics are the limit of the magic. And so not analogy, not what have we designed before, not what problems have already been solved, not what are our current methods let us achieve, but like what is the limit of what's theoretically possible? And he's just going to be unreasonable in pushing as far as he can towards that. And he's seen over and over again that when he holds that line and asks what would it take and says, keep trying. I know it's hard. Keep trying. You've just got to muscle through.

1:48:03There's no reason this isn't possible. Show me why it's impossible or keep working on it. and people respond to those pushes and do achieve things that seem impossible over and over again. I think the book that you wrote is really important. What I want to do is I'm going to buy a thousand copies. I will leave a link down in the show notes. So maybe the first thousand people that click that link, I'll buy a copy of the book for them because I do think like what you're doing is, like think about how crazy it is. Elon has a 35 year career as an entrepreneur so far, or something around that way. You spent five years and thousands of hours distilling the way he thinks about building companies and products and new technologies into a book somebody could read in five hours, 10 hours.

1:48:47Like that is insanely valuable. I do want to end our conversation with what I think is most important to you and I and what we're both trying to do with work. This entire reason I'm doing this new show is like a celebration of capitalism. It is a love letter to capitalism. It is, hey, you know what? If you want a role model, how about somebody that started a company that built a product and made somebody else's life better, that created wealth for their employees, that created jobs, that created wealth for themselves and their family. Like these things should be applauded. And it's exactly what Elon says here.

1:49:16So I want to close here. He says, it is insanely hard to build and ship useful products to a large number of people. There's a hell of a lot of difference between a company that has shipped a product and one that hasn't. It is night and day. If you create great products and services which create wealth, that should be applauded. you increase the standard of living of the country and perhaps the world. Thanks for writing the book. Thanks for taking the time to have this conversation. Thank you for having me. I'm honored. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review.

1:49:47And make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. Rose Thank you.