elon musk and ron baron

Elon Musk Interviewed by Ron Baron | November 4th, 2022

Key Takeaways

  • Elon’s first principle algorithm that he applies to everything: make the requirements you’re given less dumb, delete the part or process step, accelerate, automate 
  • If you don’t make the initial constraints and requirements less dumb, you will build the right answer to the wrong question
  • “I slept on the floor under my desk so that during shift-change, the entire team could see me.”Elon Musk on why he slept on the floor of the Tesla factory 
  • “Starting a company is like eating glass and staring into the abyss.” – Elon Musk 
  • “The holy grail – the critical breakthrough needed to make life multiplanetary and for humanity to be a space-bearing civilization – is a fully and rapidly reusable orbital rocket.”Elon Musk  
  • A fully and rapidly reusable orbital rocket has the potential to drop the access costs to space by a factor of 1,000 
  • Humanity must become multiplanetary to defensively protect human consciousness and because pursuing it makes society think positively about the future 
  • “We should view consciousness as a small candle in a vast darkness. It can easily go out.” – Elon Musk
  • “There is a tremendous amount of potential. It will be very difficult to achieve, but possible. I think, ultimately, it could be one of the most valuable companies in the world.” – Elon Musk on the potential for Twitter, Inc.  
  • Elon will solve Twitter’s bot problem by making the cost of crime more expensive on the platform
  • Elon believes that activist groups pressuring advertisers to leave Twitter is an attack on the First Amendment 
  • People should be able to decide what kind of experience they want to have on Twitter; some users will opt for the smooth jazz version, and others will opt for the heavy metal version 
  • Elon intends to execute a plan he designed 22 years ago for X.com – which turned into PayPal – and create the most valuable financial institution in the world 
  • “That’s part of why I think Twitter will be extremely valuable, because I’m going to execute the X.com game plan from 22 years ago.”Elon Musk 

Intro 

  • Elon Musk (@elonmusk) is a business magnate and investor. He is the founder, CEO, and chief engineer of SpaceX; angel investor, CEO, and product architect of Tesla; founder of The Boring Company; co-founder of Neuralink and OpenAI; and owner and CEO of Twitter. 
  • In this conversation, Elon Musk and Ron Baron discuss why Elon continues to work so hard despite his success, autonomous vehicles, what makes Tesla manufacturing so special, Elon’s first principle algorithm that he applies to all of his businesses, sleeping on the factory floor, why humanity must become a multiplanetary species, buying Twitter, solving the Twitter bot problem, Twitter and the First Amendment, why the $8 per month verification is necessary, resurrecting his X.com game plan from 22 years ago, and much more
  • Check out these Podcast Notes from Elon’s appearance on the All-In Podcast 
  • Host – Ron Baron, CEO of Baron Funds 

Why Elon is Still Working 

  • Elon Musk believes the things he works on will have an important impact on the future, which is why he continues to work so hard despite his success in his first 51 years on the planet
  • “Before Tesla, no one was doing electric cars. And now, as a result of Tesla, almost every major car company in the world is building electric cars.” – Elon Musk 
  • SpaceX is making humans a multiplanetary species, which will improve its chances of existing over the long-term 
  • Human civilization has been around for a blink of an eye in terms of the four-billion year evolutionary time scale 
  • “We should view consciousness as a small candle in a vast darkness. It can easily go out.”Elon Musk  

On Patents

  • Tesla shares its patents with other companies for free  
  • Patents make sense in some industries, like pharmaceuticals, but they don’t make sense for Tesla, a company that is trying to increase sustainable energy technology for the planet 

Tesla is Making a More Affordable Model

  • Tesla plans to make a more affordable version of its Model 3 and/or Model Y vehicle, which start at $40,000 and $58,000, respectively

Autonomous Vehicles

  • An autonomous vehicle has 5x the utility of a regular car 
  • A regular car is driven for about 10 hours a week, but an autonomous vehicle could provide utility for 50-60 hours a week 
  • Autonomous vehicles will reduce the number and size of parking lots 
  • Autonomous vehicles are good for the environment because far fewer cars will be needed in society 

Tesla Manufacturing

  • A car is made of 10,000 unique parts and process parts
  • “Tesla is probably the best at manufacturing in the auto industry.” Elon Musk  
    • Ron Baron says it might be the best manufacturing company in the history of the world, and his comment does not get much pushback from Elon 

Elon’s First Principle Algorithm 

  • Elon’s first principle algorithm for the design and manufacturing of anything: 
    • Make the requirements you’ve been given less dumb 
    • Delete the part or process step 
    • Accelerate
    • Automate 
  • Whatever constraints or requirements you’ve been given likely have some dumbness to them, and it’s optimal to make them less dumb
  • If you don’t make the initial constraints and requirements less dumb, you will build the right answer to the wrong question
  • The requirements must be given from a person who can explain them, and not from a department
  • Oftentimes, parts are included “just in case” when they didn’t need to be included in the first place 
  • Tesla ruthlessly removes parts of the car that are not needed 

Living in the Tesla Factory 

  • Elon’s primary residence was the respective Tesla factories in Fremont and Nevada 
  • He sometimes slept on a couch in the factory, and other times in a tent on the roof 
  • Musk frequently slept under his desk, which was out in the open at the factory
  • “I slept on the floor under my desk so that during shift-change, the entire team could see me.” – Elon Musk 
  • It was important to Elon and Tesla that the team knew he was in the factory too, and not on a tropical island sipping Mai Tais  

On Talent Retention and Attraction at Tesla & SpaceX

  • Some employees struggle to find the motivation to continue working hard after becoming independently wealthy as a result of the company’s success
    • Elon admits that this is totally fine, and that he doesn’t judge those who step away
  • Elon has a bunch of talented friends that were successful early in their lives and decided to hang it up 
  • “Starting a company is like eating glass and staring into the abyss.”Elon Musk quoting one of his friends   
  • Do not start a company if you need “encouragement” to start one 

How Elon Musk’s Brain Works

  • Elon admits that his memory for technical matters is “very good”
  • Elon Musk spends 80% of his time engineering
  • His day-to-day at SpaceX and Tesla is almost entirely spent on engineering, design, and production 

How Humans Will Become a Multiplanetary Species

  • “The holy grail, the critical breakthrough needed to make life multiplanetary and for humanity to be a space-bearing civilization, is a fully and rapidly reusable orbital rocket.”Elon Musk  
  • Falcon 9 is about 70-80% there in terms of achieving the holy grail 
  • A fully and rapidly reusable orbital rocket has the potential to drop the cost of access to space by a factor of 1,000 
  • The Starship is designed to land propulsively, meaning it can land on engines
    • Theoretically, it will have the ability to land on any solid surface in the solar system
  • With known-physics, it is only barely possible to make a reusable rocket 
  • Everything has to be perfect for a rocket to be reusable 
    • What’s required: exceptionally efficient engines and structure, advanced avionics and software, a lightweight heat shield for orbital reentry, orbital refilling, and much more 

Competition with the Legacy Aerospace Primes

  • “A smaller number of companies that want me to die… that would be great.”  – Elon Musk on watching his words when asked about the legacy aerospace & defense primes 
  • The goal of Starship is to lower the cost of access to orbit, the Moon, Mars, and elsewhere to the point that humanity can afford to become a multiplanetary species
    • Lowering access costs to space have enabled companies like Varda Space Industries to offer services once thought to be impossible  
  • Elon says most non-Americans believe that going to the moon was humanity’s greatest achievement in the 20th century
  • Going to the moon is one of those things that makes you proud to be a member of humanity

Why Civilization Must Become Multiplanetary & Space-Bearing 

  • We may find that there are many one-planet civilizations that died out millions of years ago in other galaxies
    • They died out before they were able to become multiplanetary 
  • Elon jokingly says that he may die before humans become multiplanetary if he keeps making his enemy list longer and longer
  • “It would be deeply ironic if it’s someone angry on Twitter that takes me out.” – Elon Musk  
  • There are two reasons why humanity must become multiplanetary: to defensively protect consciousness and because it is exciting 
  • From the defensive perspective, we do not want the small candle of consciousness to be extinguished if something were to happen to Earth 
    • The dinosaurs only had to worry about volcanoes and meteors; humans have the ability to destroy ourselves with nuclear weapons or some sort of bio-terrorism weapon
    • It’s important for consciousness to exist somewhere else, that is not on Earth, in the event that something bad happens to Earth
  • The second reason to become multiplanetary is because it is exciting, adventurous, inspiring, and it makes you think positively about the future   
  • Life cannot just be about solving one problem and moving onto the next one; there must be reasons to be inspired about the future 

Buying Twitter 

  • Elon Musk tried to get out of the Twitter deal
  • Given how the markets have corrected in 2022, Elon admits the $44 billion price he paid for Twitter was a bit on the high side 
  • “There is a tremendous amount of potential. It will be very difficult to achieve, but possible. I think, ultimately, it could be one of the most valuable companies in the world.” Elon Musk on Twitter, Inc.  

Solving Twitter’s Spam & Bot Problem 

  • Since Elon took over, there have been targeted attacks on the platform filled with hate-speech 
  • Part of the $8 per month is for payment authentication to reduce bots, and part of it is to drive revenue  
  • Twitter has a spam, bot, and troll problem; organizations use these methods to control public opinion 
  • Elon’s solution to the bot problem is to verify users via the $8 per month subscription
  • The $8/mo. will enable more than verification; it will enable the platform to add long-form video, podcasts, and the sharing of revenue with content creators 
  • Users that are payment-verified will be prioritized by Twitter’s algorithm
  • Creating a Twitter bot costs less than a penny; Elon wants to make the cost of crime on Twitter much more expensive
  • An $8/mo. verification will make having 100,000 fake accounts too expensive
  • Twitter will implement a similar ranking structure that Google uses   
    • Search results on page one of Google are far more useful than the scams found on page eight; the search results on page one are so good that you never go to page eight 
    • The best place to hide a dead body is the second page of Google search results

Twitter and the First Amendment 

  • Twitter was having some serious revenue and cost challenges before the acquisition talks started, according to Elon 
  • Companies dependent on advertising revenue have been affected by recent economic developments, Twitter more so than others because it depends more on ad revenue from larger brands as opposed to direct-response advertising 
  • Following the acquisition, many activist groups are trying to pressure advertisers to stop spending money on Twitter 
  • As of this interview with Ron Baron on November 4th, 2022, none of Twitter’s content moderation algorithms have changed 
  • Elon believes activist groups pressuring advertisers is an attack on the First Amendment 
  • “I think this is frankly an attack on the First Amendment. If activist groups can pressure advertisers, upon which Twitter is fundamentally dependent, to suppress free speech, then that doesn’t seem right.” Elon Musk 
  • People should be able to decide what kind of experience they want to have on Twitter
    • Some people want the easy-listening, smooth jazz version of Twitter, and others want the heavy metal version 
  • Twitter users should be able to choose their preference of experience   

Resurrecting the X.com Game Plan 

  • Elon intends to execute a plan he made 22 years ago for X.com  – which turned into PayPal – and create the most valuable financial institution in the world 
  • Twitter will play an important part in Elon’s X.com game plan from 22 years ago 
  • Once Twitter is set on the right path, it will be much easier to manage than SpaceX or Tesla
  • “That’s part of why I think Twitter will be extremely valuable, because I’m going to execute the X.com game plan from 22 years ago.” Elon Musk 
  • After acquiring Twitter, Elon’s workload increased from 80 hours a week to 120 hours a week 

Tesla’s Vertical Integration 

  • None of the material suppliers gave Tesla the time of day in the company’s early days, so Tesla was forced to become vertically integrated 
  • Forced vertical integration became an asset to Tesla, because it made the company become intimately familiar with the complex supply chain required to build a car 
  • It is likely that Tesla will get into the mining and refining business to secure the critical elements needed for batteries  

Two Questions from the Audience 

  • Question #1: Why invest in Tesla instead of Mercedes Benz? 
  • Elon’s answer, following necessary investment disclosures and disclaimers:
    • “I rarely try to convince anyone to invest in Tesla.” 
    • Autonomy is a fundamental breakthrough, and no one is even close to Tesla in terms of solving generalized autonomy 
    • Autonomy makes the car 5x more useful
    • Tesla’s Optimus Program is building a humanoid robot, which would remove prior limits on GDP per capita, thus removing any limitation on the theoretical size of the economy 
  • Question #2: How is Tesla improving its charging stations?
  • Elon’s answer:
    • Tesla is working to make its charging stations self-sustaining so they can operate during a zombie apocalypse 
    • The supercharging stations will have localized batteries so they can charge vehicles at night
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