How Elon Musk Thinks About AI, Wealth, and Multiplanetary Life | Eric Jorgenson

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Elon is risk-seeking, so mission-driven that whether it's a 10th of a percent chance or a 1% chance that SpaceX was going to succeed, he didn't care. He's like, I'm just going to do it. He's like, this mission matters. And even if I fail, I will have been proud to contribute to the progress of this ecosystem towards this vision that is so important for humanity.

Today's guest, Erik Jorgensen, wrote a book called The Book of Elon. This conversation today covers why Elon Musk doesn't just accept fears, he moves through them. Why he doesn't just build systems, but he deletes things entirely to find the one thing that matters. We're going I'm going to steal his homework today. What does it take to become a billionaire and an icon?

I think if you want to follow the Elon path, like, pick a problem that adds a new capability to humanity that few to no other people are working on and work on it intensely over a matter of decades. That's what he did.

Can you talk to me about the idiot index from Elon Musk, what it is and how it makes him more money?

If you're a young engineer who goes in to have a meeting with Elon Musk, he will ask you like, So your latest book, Book of Elon, all about Elon Musk and what you can learn from him.

Naval Ravikant, I think, famously said it's the only book an entrepreneur ever needs to read. So I think the big obvious first question is, what is the biggest lesson you've learned from Elon Musk that if somebody is young and hungry, they should take away today?

I mean, I think he is absolutely the model for doing big things that have been considered impossible. He just totally changed what we think of as reasonable or impactful in entrepreneurship and company building. So not just the playbook has changed, but like the targets that people can shoot at has changed. And I think that is such an interesting and important shift that we're going through that I hope the whole next generation picks up.

Yeah. Is there like one story from Elon that really makes you think about how unreasonable he is?

Yes. I love this. I think this is like the canonical story that characterizes Elon Musk. So late 2008, and I know you know this story,, but for anybody who doesn't, like both SpaceX and Tesla, he was 6, 7 years in. He'd put his entire net worth except he was down to his last, like $30 million, if you can imagine being in such a desperate position. And he'd been just stepped in to run Tesla after being chairman and main funder because the company was not working. And he's like, if I'm going to make this work, I have to take it over. I have to jump in. And he's already running SpaceX and now he's doing them both in parallel. They're both in dire straits. SpaceX just had its third failure. It was out of money. They were down to spare parts and Tesla was about to go bankrupt. He said they would've gone bankrupt if they just paid their suppliers on time. Like they were no cash in the bank. The car that they were selling was negative gross margin. There was no DOE loan yet. There was no Daimler deal yet. It was almost all Elon's money. And his friends were like begging him to pick one or the other. 'Cause if you put $30 million into either SpaceX or Tesla, it would've been a safe bet. And the other one would've died, but one for sure would've lived. And Elon being this like supernaturally unreasonable person took the narrow risky path. He split his money because he couldn't bear to let either one die. He describes it as like holding a kid in each hand off a cliff. And he's like, rather than let go of one, I'm going to take the highest risk path, even if it's embarrassing, even if it's financially ruinous. I want to give both of these missions a chance to succeed. And I can't name any other entrepreneurs that at 9 figures of net worth and being as renowned and publicly sort of evaluated as he was would take that risk of going back to zero just to fulfill the mission. And that I think sort of shows his purpose-driven nature that he was so driven by these missions that the risk of losing the money didn't matter. The risk of his reputation didn't matter. He asked the universe for something in a way that the universe understands. Like that is a test that most of us will never have to take and he passed it. And I think that story is part of why he has such incredible devotion and people believe that he's so dedicated to these missions and they flock to his companies and they flock to invest in his companies because he's demonstrated that character so, so clearly on such a grand scale at such high stakes.

What do you think Elon Musk would say about mistakes?

They're an absolutely vital part of long-term success. If you stack up a few of the kind of aphorisms that you hear him say a lot of times, he's actually encouraging these small failures. He's mandating small failures because that's how you find the limits of what works. You don't know if you have something really an elegant design until you've taken away more things than you need to. You see what breaks, then you add back the essential, right? He says, "If you're not adding back 10% of what you removed, you're not removing enough." So, you have this clutter, you have mess, you have over-engineering, you have redundancy, and it's only when you push something to the point of breaking it that you learn what's really vital. He also says in hiring, he's asking for people like, what problem did you solve and what mistakes did you make along the way to solving it? What walls did you have to bounce off? He wants to work with people who understand how to make a mistake and iterate because reality is the ultimate teacher. And so the organizations are designed to iterate quickly, move fast, fail almost intentionally, and then learn from that failure as quickly as humanly possible.

Yeah, I do love the visual that he has of his very first, I think it's like the Falcon.

The Raptor engine.

The Raptor engine. Then to where it is today, we can show it like on the screen here and how all of that complexity boils down to beautiful simplicity at the end. Does he ever talk about being scared and fear? Like, does Elon Musk get scared or what would he tell you if you were fearful of taking a big jump?

I think that's such a funny question. He got interviewed and somebody asked him like, aren't you scared? And he's like, yeah, like I'm not crazy. Like these are insane risks that I'm taking. And he's very rational about the fact that they are insane risks. But he has this, again, I think this is a great quote, which like tattoo it on your eyelids, feel the fear and do it anyway. Also, if you look, the nature of fear is if you look at it directly, it disappears. So it's a very The fear is an illusion. If you care enough about what you're doing, you just push through. And I think that's a really useful heuristic. Like, if you can imagine quitting what you're doing, don't start. If the fear is stronger than the desire to achieve the mission, then maybe you haven't picked the right mission. Maybe there's something bigger and more purposeful that you would absolutely run through fear, and the fear is minuscule compared to the promise of the reward. And it's just so much easier to overcome that fear.

Yeah. It's sort of interesting because these days it feels like Elon is polarizing. Like I see it in, in our content when we talk about it online. If you're on X, it's pretty positive, but if you're on lots of other platforms, you know, I would say there's probably more hate, uh, than less hate about Elon. Why do you think he's so polarizing and so many people despise him despite his accomplishments?

Yeah, there's a, uh, there's probably as many reasons to that as there are people. Like there's,— there's people that disliked him because he was a billionaire before he got involved in politics. I think there's people— I think it's very funny that where he is now, how he ended up so polarizing because he was just like a nerd for a really long time and only nerds knew about him and all the nerds loved it because he's like just took these massive risks. And since he got involved in politics, I think it's very hard to be involved in politics at all without making enemies. Like it's just such a zero-sum thing that— there's people just really eager to distort and take down reputations. And there's people that take sort of anything that's in a headline as gospel and just assume these tribal beliefs.

What do you think it is about— he is able to accomplish these massive things. And the part, the reason I think even if you hated the guy, the reason that I think you have to not be a moral absolutist and go deep into it is because he is superhuman in what he is able to accomplish. Not only the size of the missions, but the scope of his responsibilities at his companies, how he tries to take on everything from, you know, the last frontier to the political frontier. I mean, it's really, we haven't seen anybody like him before in our age. And so I think if you don't like him, you know, Elon talks about the idiot test, but I think the other idiot test is if you don't like Elon Musk, you're the idiot because there's something to learn from him no matter what. But, but my question, I guess, is how does he work that is totally different from the average person?

The intensity and the focus on the bottleneck. So the summary of this, I think he's working on the right thing at the right time, which is right now, and he's making a huge improvement to it, not an incremental improvement. And those habits don't just add, they multiply with each other. And so, you know, we know that if you're an investor, there's some investment you could make right now that would make you $10 million this year, $100 million. There's some stock is going to go 100x this year. If you know exactly where to put your money at exactly the right time and you stack that up, you'd be a billionaire in years. So that is the power of like perfect information. And that's, that's obvious in an investing context, but it's not obvious in an operating context. And so when you're looking at operating a company, it is very, very rare to find a leader who's actually identifying and attacking the bottleneck of their business at all times, uh, working intensely on doing it, doing it immediately and doing it so effectively that it's never a bottleneck again.

What story do you think most exemplifies that about Elon Musk?

Doing the right thing at the right time all the time. These heuristics that he has about like, well, probably Model 3 production hell is like the story that best exemplifies that. He knew that if you got to, I think the number was like 10,000 cars a week, that the company would live. And if it didn't, it would die. And so he moved into the factory and the production line would have, you know, red or green lights and he would walk to the red. So anytime there's a bottleneck, you're just running up and down miles of factory wherever there's parts piling up or wherever there's a red, right? He would run there, he would pull people in, um, and he would solve that bottleneck and solve the bottleneck and solve the bottleneck and simplify and delete and like applying the algorithm. That's kind of where that whole thing emerged. Um, and it was just very clear that like nothing else mattered in Tesla at that time other than getting that production line to 10,000. And so many CEOs that we know, so many operators are like, well, I've got, I've got a board meeting to prepare for. I've got a weekly meeting. I've got a status update. I've got to do this. I've got to do that. And they're sort of caught in the like minutia and maintenance of the company. They are not like Eye of Sauron focus, clear schedule, wake up and attack whatever the biggest priority is that day, no matter what the schedule said it should do, or no matter what else anybody else is asking you for.

It's so true. It's funny David's laughing because I call it my Eye of Sauron, which is like, I just thought I was a nerd. Like I'm like the Tolkien nerd. They're all like, what are you talking about? But it's very true because it's, you know, when you're running something and you know that the company needs X, but your calendar says Y, you have to do the really scary thing, which is I'm sorry for everybody who's planned anything for the day. It's gone. We're not doing it. And I think that relentless focus on the thing that matters instead of the thing that's right in front of you is really, really hard and rare. And maybe it's not as hard as we think it is. It's just you have to be willing to kill social niceties to focus on what matters.

It's a very interesting inversion of delegation. It's like passive delegation by focusing on the only thing that matters or the most important thing at that given time. And it's just like, look, I've got faith that the rest of my team is going to figure it out. You don't actually need me right now. You just think you need me or you want approval or you want to gain confidence. You want to double-check something, but you'll figure it out and I'm going to go work on this other thing that is the single highest priority at the moment. And Elon Musk, I don't know if this is still true, but at some point he fired his scheduler, not because they weren't great, but because he's like, I want control over my time to pick the priority at all times. And that is a really hard thing to do when you got all this inbound and all this expectation and a full calendar. But 2 weeks ago you does not know what today, where the priority is in the business today.

When you were like prepping for this book, was there anything that you found that shocked you that you didn't know about Elon Musk? You're like, whoa, I can't believe that he did that, this, or he does that.

I couldn't believe how much risk he took. I knew that he was entrepreneurial. I knew that he was an innovator, but I didn't like that story about 2008. I did not know that he put his entire net worth on the chopping block over and over and over again. That's the biggest and most canonical story, but it's not the only story of massive risk-taking. It's not the only story. The money is almost irrelevant tool to him. He is just so product and mission-driven that he makes financially insane decisions all the time. And I think that's a model that people get wrong about so many successful business people and billionaires is that the money is an outcome of their passion for the mission and their dedication to the product. They're not pursuing money directly. Most of the wealthiest people I know, that is sort of how they work and it's an indirect pursuit.

In all your study of billionaires, do you think you have to take an unreasonable amount of risk to get rich?

I don't think you have to.

Who hasn't? Who has gotten really rich but hasn't taken a lot of risk?

Buffett's probably the best example. He's a risk manager in a really, really thoughtful way. Some people risk other people's money. So you could say the hedge fund people, the investors, even if half their net worth is in their fund at any given time, Um, like Elon is risk-seeking, like almost to a fault, right? Um, or, or just risk agnostic. He is, he is so mission-driven that whether it's a 10th of a percent chance or a 1% chance or a 10% chance that SpaceX was gonna succeed, he didn't care. He's like, I'm just gonna do it. It's not an expected value calculation for his future net worth. He's like, this mission matters. And even if I fail, I will have been proud to contribute to the progress of this ecosystem towards this vision that is so important for humanity.

Super interesting because these days everybody tells you, follow your passion. That's when you'll get rich. Follow your passion. That's when you won't give up. And I think Elon Musk would probably say he's actually not passionate about any— this isn't his like hobby or his passion. Um, what would he say? Like he would just say, I go and find the biggest problem that I think is the hardest to solve, but needs solving more than anything else. And that is what I do.

That nobody else is working on. Yeah. He says, I take the set, the set of steps most likely to make the future good. Almost with like no consideration for his, you know, comfort or lifestyle or reputation or whatever. But that's why these companies were like nowhere on anybody's radar, right? When he started these in early 2002, like everybody thought electric cars were insane. There was no space startup economy. Like those, they weren't even— Mike Moritz had just made money with Elon Musk through the PayPal sale and the greatest, you know, One of the greatest living venture capitalists, like a guy he just made money with at Elon's pitching him Tesla, which is one of the greatest companies of our generation. And Mike's like, no, you're crazy. Will never work. No car startup has worked in 100 years and an electric car startup, like get out of here. This is impossible. And he says, like, I underestimated Elon's will. And I think that will comes from this absolute conviction that this product needs to exist, that it is the stronger form of the technology, that this is the mature state of an auto. Economy is both electric and autonomous. It is just a fundamentally better thing. And we just crossed this line that there was a difference in enabling technologies, which is the lithium-ion battery that like suddenly a switch flipped and this thing was now, this product was now possible. But it is a very, like as you look at the other biggest companies on earth, like social networks would've happened without Zuckerberg, search engines would've happened without Larry and Sergey, pick your thing. We would've had operating systems without Bill Gates. We would've had computers without Jobs. It's not clear that we would have had electric cars at the, certainly at the quality or scale that we would have had without Elon Musk. The industry was not moving in that direction with any sort of speed or grace. Um, it is certainly not clear that we would have had reusable rockets. Like the trend in space was that like NASA was declining. There was no private sector innovation in this. We just had Boeing and Lockheed who were sort of slowly like bilking the taxpayers and declining capabilities over time. And so To do both of these generation-defining singular companies that were on nobody's radar that are now, I think, on the way to being the biggest companies on Earth, pretty singular achievement. That is an outlier among outliers. This sounds grandiose and lionizing, but I really think Elon Musk is going to be the guy of our century in the same way that Napoleon was the guy of his.

Ben Franklin.

Yeah.

Yeah.

Yeah.

It's interesting. I, I was sitting randomly with actually the, the CEO of Lockheed, Lockheed, and he was interesting because I asked him, I was like, well, what about all these new competitors that you have? You have, you know, SpaceX as a competitor in many ways. And he was like, well, they're not really a competitor. And I just thought that's fascinating. Like, you really don't think of them as a competitor because of course you make all these different things like actual, you know, weapons and, and all sorts of systems. But I think he is even still somehow underestimated in the markets that he plays, which is wild because this week I also saw the first SpaceX launch I've ever seen. Have you ever seen the rocket in the sky?

Not in person, no.

It was wild. I didn't go to the launch site, I was just in Ojai, and that's by where they launch in California. And it looks like a shooting star, but then it gets wider and wider and wider in the sky. So it looks like it's kind of coming back down, but I guess that's just what it looks like when you're breaking through the atmosphere. And it was so incredible. And I remember I turned to somebody that I was sitting there with and I was like, "Oh, that's incredible. Look at that." And he's like, "Huh, we see them all the time. They're here." And so just the normalization of what he's done and also the fact that he's still sort of disregarded is incredible. If you think you're not going to have haters and if you think people are going to applaud you at some point, I think he's a great person to look at to realize probably never, and that's okay. And you just keep going anyway.

The doubter's point is a really good one. Like, how many conversations have we had where you're looking back over the last 25, 30 years of what he's done and you're like, oh my God, he's a genius. He's unparalleled. And then there's like this dysmorphia of the present where like, and now we're going to talk about orbital data centers and a mass driver on the moon and people are like, but that's crazy. That'll never happen. And it's like, this guy is more leveraged, more talented, more well-honed, more well-resourced than ever before. And now you're going to doubt these kind of next claims. He's not always right, but he's more right than wrong and the timelines are sometimes a little off, but it's a pretty good track record.

Very. I mean, I think what's interesting is I think he describes himself as hardcore, right? You talk about this in the book.

I almost called this book Hardcore Purpose.

Oh, that's a good name.

I thought it was a good title. I'm comfortable with the title, but those two terms together. This is more more elegant. Yeah.

You know, but I think, you know, some of the quotes that he has, I just love, like, "The amount I torture myself is next level. You need to have some kind of rage demon in your skull that drives you," or, "I am wired for war." I mean, they just make you wanna just pound your chest and type your spreadsheet, you know, as I do. But like, what do you think are the craziest stories of Elon going into hardcore mode?

These insane surges that he does, sometimes warranted, sometimes unwarranted, but there's many, many stories and a lot of them are small, but it sets the culture. There's one about building a dome for Starship. They'd spent months trying to weld a dome for Starship that fit over this stainless steel cone that was going to go over the top of the rocket. And they hadn't gotten it done for months. And he just showed up at the site and was like, We're going to have a dome done by dawn. Cancel everything. You're not going fucking home. Stay here. And they're like, well, we don't have this, this thing that we need. And he's like, improvise, grab that thing over there, measure it out, approximate it. Like, and they failed, but they had a dome done by 9 AM instead of dawn. And so, you know, 12 hours later, they solved this thing that had been unsolved for months. And whether that was the bottleneck at any given time, Probably not. Um, but those stories add up and they propagate through the culture. Um, you know, he famously stacked Starship like months before it was even close to launch. And it wasn't because it needed to be done. It wasn't because it was a bottleneck, because now people started sharing photos of this absolutely behemoth rocket and it started to feel more real and become this thing. So it seemed ready. Um, but there's also many, many stories that are more tactical of like the bottleneck for the Model X at one point. Was the attachment point for the bench in the second row. Tiny thing, but he's like, "All right, we're now meeting on this issue weekly. I want all the people in the room. I want a report on what you did, what you didn't do. We're just going hardcore on this and that has to get resolved." And the way it got resolved was actually, I think, 3 or 4 weeks in, Elon came prepped and was like— this engineer was like, this thing isn't possible to do metallurgically. The metal can't handle the stress. And he is like, do you know the formula for the stress that it's under? And the engineer's like, not off the top of my head. Elon's like, I know it off the top of my head. And so he went to the whiteboard and they put it on the whiteboard and they did the math and the engineer was like, oh, I guess that solution does work. And it's like when you know that the CEO of the company is going to on week 3 or 4 come in with a solution to your problem because he's willing to get that far into the details, I think that That is another thing that permeates through the culture over and over again. You asked about the most hardcore, like the status updates escalate with how serious the bottleneck is. So weekly cadence for, you know, maybe a normal bottleneck, it'll go to daily, like a daily 24-hour sync on whatever the bottleneck is to run the algorithm on it. For one week, one guy, I don't know the details of this, he kind of redacted it. He had to send him an hourly update. At all hours. So this guy would sleep for 45 minutes, wake up, collect the data, send Elon an email every hour on the hour, 24 hours a day for 7 days. And I think that was, I don't know, maybe too far, but how far are you willing to push it to status updates directly to CEO wherever there's a bottleneck, ratchet up the heat, ratchet up the heat, and the meeting schedule changes depending on where the bottleneck is in the company or companies.

So fascinating. Yeah, I think in this day and age, there's so much talk about hustle porn and working too and work-life balance. And it's fascinating to me that the other end of the spectrum exists too. Like, I'm friends with a bunch of guys that were on his Doge team. And I remember them getting excited because they were getting shipped 8 Sleep mattresses to sleep on the ground in DC during this. And these were guys who had made millions of dollars in private equity or tech. They didn't have to do this. They didn't have to work like that, but they just found the mission so intriguing that they were willing to do it. And what I hope this book does is inspires people to do incredible things, not because your boss is making you and not because it's part of your goal in your 9 to 5, but because how fucking tragic if all you do in your life is sit and wait for a paycheck for something you're not even obsessed with. What a fucking tragedy. And so to be around greatness as measured by somebody who tries to stretch human capacity to its absolute limit, I find fascinating.

Yeah.

And I think it should be studied because You don't have to do it forever. You can quote unquote go out and enjoy life, but also life is to be found in the enjoyment of building too.

Yeah.

Like, what would Elon say about like work-life balance?

I don't think it exists for him. I think he's just all in all the time. It's not that other parts of his life don't exist. It's just like the missions are so big and so all-consuming. And that is like, this is, I don't put this forth to say everybody has to go be like Elon Musk. I put this forth to say like, if what you think is a 10 is probably a 4 and 100 is possible and this is what it looks like. So like you're capable of a lot more than you think. It's also to say like there's elements in here that are helpful no matter what you're trying to do and no matter what your situation is. I don't care if you're running a plumbing company, the algorithm is helpful. Like this ability to focus on the bottleneck is really helpful. This ability to question requirements is really, really helpful. There's so many interesting things in this. And Elon is being authentically him. He's authentically, like he says, wired for war, has a rage demon in his skull. Like he grew up in a violent place. He had an abusive family. He's on the spectrum. He had many, many, many things that are different from like the way you and I came up or go about life or the trade-offs that we want to make in life. Fantastic. No problem. Doesn't mean you can't pick and choose some nuggets from the greatest entrepreneur maybe to ever live and get something useful from them.

Can you be taught to become hardcore and work harder?

A thing I discovered about myself is as a non-perfectionist is that everyone's a perfectionist when they say, hey, I have enough skin in the game. And so I think like, you know, he got more hardcore. He was always hardcore. He got more hardcore through Tesla and Model 3 because that just demanded something of him that he, it was harder for him than anything he'd ever gone through before. The stakes were higher, the pressure was higher, the The challenge was bigger. And so I think he says he emboldened over time. He became higher conviction. He pushed his limits. He became even more hard on himself in terms of what he thought was possible. And so I think it's absolutely possible to be more hardcore over time.

If you want to stretch your capacity and become harder working, more hardcore, from what you've learned from Elon, what would be the formula? What would you do?

Pick something that is truly the most important thing to you that you can't imagine quitting. Like a goal for which you'd run through any obstacle. Then put your back to the wall, burn the boats, whatever you think, like put enough skin in the game that the stakes of failure are so overwhelming that you just push through no matter what. This is the, you know, asking the universe for something in the way that the universe understands. Like, you drop yourself in the jungle, you become a very different person in order to find your way out. And some of the stories that I think resonate most are the people who who really did that. It's not the right thing for everybody, but if that's the journey that you want to go on, like, you know, imagine your husband's a SEAL, right? Like, imagine who the person is who signs up for that before and after they go through BUD/S or training or deployment or whatever it is. Like, there are situations you can put yourself in that make you more hardcore. Guarantee everybody coming out of that is more hardcore than they, they were going in. So those environments absolutely exist and get around more hardcore people. Just change what is the norm for you.

It's so true. And also, like, I do think the more hard things you do, the more hard things you can do, and the less everything seems hard. You know, it's fascinating because you can tell a lot. We hire a lot of employees. If, let's say, we got 100 employees right now, I can almost tell who's going to find things harder by what their history is. So, you know, if they were a Green Beret or a nuclear sub operator or, you know, investment banking or, you know, worked at McKinsey on their acquisitions team, I just know they're going to be able to handle a lot. And if they've really only worked in corporate jobs or especially if they've only ever freelanced, I know, oh, they're actually not going to be able to handle that much. They don't understand the monotony of continuous work, which is like, you know, I think David Foster Wallace like talks beautifully about how that is sometimes the hardest part of life, you know?

Yeah.

And so I think it's reading a book like this can reframe what you think hardcore is. Like Dave and I were talking and we were laughing. David's my producer and he was like, I told them we're hardcore here. I giggled because I was prepping for this and I was like, Hardcore. We should define that. And then I was like, when was the last time anybody here stayed until like 9, 10, 11, 12? And I'm almost embarrassed to say not often ever. And so defining what hardcore is for yourself, but seeing a real level of hardcore, I think also puts things in perspective when things are really tough. So this is maybe even a book worth reading when you're struggling, when life's really hard to put in perspective what hard is. Yeah. Yeah.

And hard is variable. We work a normal day and have a normal life and there's nothing wrong with that. But if you're like, all right, we're going to set a crazy goal. One of his things is order of magnitude goals. You're not going to hear him ever say, I would like you to increase that by 20%, please. He'd be like, drop that. The cost of that should be 1% of what it is. Or I want you to increase e-com sales by 20x. And that just totally breaks your normal set of, oh, maybe we can optimize this or that or the normal playbook. So you have to scratch, rethink, question all the assumptions. And that's like, all right, we're going to 12 hours a day war room until this metric, whatever the key thing to drive for the business is, is gone 10x. Get in there, call your families, everybody go call your family and tell them you're not coming home until we have a plan for X. Not every company should operate that way. Not every person will respond to that well, but If you want to be hardcore, like try some hardcore shit, see how it goes.

Yeah. My husband always says, you want to be cool, got to do cool shit. So that's all right. What about he, I love this quote that's in your book too. Elon says, if you need encouragement, don't start a company.

Yeah.

Why do you think he believes that? And do you think that that mindset for him, like, is that how he motivates his employees too? Like, does he only find people who already want to The thing?

I think he filters, these cultures filter for people who are missionaries and zealots. You know if you go into Tesla or SpaceX or XAI, you're going to get your absolute maximum potential squeezed out of you. And there's people that want that and in particular want it in certain chapters of their life. I worked so hard in my 20s and I worked so hard on things that ended up not working. And I worked so hard on things that were like kind of the wrong direction. And there's something really awesome about being like, I want, I just want to go to the, I want to go through BUD/S training. I want to become a SEAL. I want to go somewhere that's going to max out my potential. I feel like in particular for engineers, like these organizations are that. It's just such a, it's such a different environment. And once you get exposed to that level of excellence, like you can carry that on. If you want to go start a company and you want to operate at the pace and and cadence and with the sort of tools of thought that have made these companies successful, you know, that, that SpaceX mafia or the Tesla mafia are going to be like a really incredible set of companies are going to tackle much bigger problems than we've seen startups tackle in the past.

Like if somebody's listening to this and they're like, one day I want to be a billionaire. So like if they're young and they're like, I want to be a billionaire one day, I want to be as big as these guys, what would you tell them? They have to do? What does it take to become a billionaire and an icon?

Intense focus over a long period of time on something that nobody else can do. I think if you want to follow the Elon path, like pick a problem that adds a new capability to humanity, a benevolent solution, uh, that few to no other people are working on and work on it intensely over a matter of decades. Like that's what he did. He was thinking about electric cars and, and space travel in, in college. Like the ideas that you have, even as a really young person, can be the ideas that you take really seriously all through life. I've been really surprised by like how often that's the case, you know, that, uh, Seth Rogen wrote Superbad when he was like 15 and James Cameron had the idea for Avatar when he was a teenager. And like the adult, it just takes the children's ideas seriously and sticks with them and perpetuates them all the way through. But what's made Elon like truly unbelievably uniquely successful is focusing on these problems that were obviously solutions that humanity needed. But nobody else was working on and being so dedicated to them that he funded them himself. He stuck with them. He worked through all of these different challenges and the world eventually sort of came to realize that the solution existed. And I think it's hard if you do add a new capability to humanity that is meaningful at scale, like that's who becomes billionaires.

That's true. Yeah, I mean, you have to provide trillions of dollars worth of value in order to get a billion dollars of value to yourself. Like, the equation just mandates a 100-to-1 ratio at least. So, it's interesting. What about, you know, one story I loved that was in the book is about why you in some ways never want to burn bridges with your ex-employees and why if you're thinking about leaving your job or to go to the next thing, you always want to try to keep people of power in your back pocket. Can you tell that story about PayPal?

So the brief version, Elon started X.com back in the 1999 and Peter Thiel had started Confinity and they ended up sort of competing with each other directly for email, online payments, and they were just slugging it out, beating the shit out of each other. And eventually they decided they should just merge. And the combined teams then included Luke Nozick and Roloff Botha and Max Levchin and Reid Hoffman and David Sachs, and I'm sure many other people, Keith Rabois. Dozens of luminaries of the Valley these days. And eventually Elon was ousted. He went on a honeymoon trip and he was ousted by Peter Thiel and the board. The rest of the team was like, "This guy's too crazy. He's pushing risky strategies. We don't think we should do that." And so they ousted Elon as CEO and then they ended up selling the company. And Elon says, "I've worked really hard to make that relationship good. I could have been bitter, I could have been angry, but he immediately sort of turned the other cheek and intentionally rebuilt that relationship. And years later, I think more than a decade later, Founders Fund came in with an investment in SpaceX at a really, really critical time that helped save the company. And one good turn deserves another. SpaceX is one of Founders Fund's biggest positions over multiple funds, and they're going to have an unbelievable windfall with this IPO.

Yeah, it's so good. And Peter Thiel is, you know, in charge of Founders Fund, you know, so if people don't know. But I think the part that's like I think about a lot is, you know, I thankfully got lucky in finance. It's very normal when you leave a company for your employers to fund your next company or ask where you're going next. So I got taught, I didn't know it intuitively, not to burn bridges. So I kept a lot of them. Now they've been investors in my stuff. We've stayed friends for a decade plus. But then I see this younger generation. I'm like, man, I wish would have told me if I hadn't learned it this way, that you just want to be really careful the way you exit just about anywhere because that can be— that reputation is important at the top. It's so small. I mean, like, you know, you and I probably know every single one of those guys you've mentioned from the PayPal Mafia. And, you know, a couple of them live here in Austin. And, you know, if you want something big out of life as a young person, I think there's so much bad There's so many bad TikToks out there that are like, do you, leave, fuck 'em, you don't owe anybody anything. And that's a really bad way to make a lot of money in life. So I love that story.

Yeah. I just trusted like the good karma network of, you know, you just do the right thing and nobody wants to work with anybody who has turned on other people in the past. And it's so easy to play that like, you know, the one-round game and to think that it doesn't matter. And anybody that you talk to who's been around any game for a long period of time is like, those relationships matter so much that your reputation is your ultimate currency. And Warren Buffett's career is an incredible example of that.

Oh yeah, 100%.

He gets deals nobody else does.

Yeah. And he can famously do them on the back of a napkin because he likes to keep it so simple and has such a high trust index. I want to talk about a different index, which is is the idiot index, which I had never heard about before, uh, before reading your book. Can you talk to me about the idiot index from Elon Musk, what it is and how it makes him more money?

Yes. So if you're a young engineer who goes in to have a meeting with Elon Musk and you are responsible for like one system, he will ask you like, I want to know every part in the system you're responsible for ordered by the idiot index. And what he means is the highest idiot index part is going to be the one with the biggest difference between the cost of the raw materials and the final cost of the product. So— one famous example, and these were all over aerospace, but SpaceX, the story of SpaceX is basically the story of taking really, really expensive aerospace parts and finding a super, super, super cheap way to build them. So the half nozzle jacket is like a big piece of steel. And to buy one from an aerospace supplier is like $13,000. And he's like, why is that one piece of steel $13,000? Well, it's aluminum, it's aerospace grade, it's shaped, it's this. And the actual answer is that there's like a subcontractor and a subcontractor and a subcontractor and everybody's passing along profits and adding layers of overhead and expense and inefficiency. And he's like, how much is the steel in that part worth? If you just weigh it and look at the spot value of steel, it's $200 worth of steel. And so an engineer who comes in and says, ah, that part is $13,000. He's like, wrong. That part is worth— the price floor of that part is $200. I would accept maybe $600, which would be an idiot index of 3. I will not accept an idiot index like 100. So this part should not be 100 times more expensive than the raw materials. And so for reference, like your iPhone, like the raw materials of your iPhone is like 30% or a car is like 30%. So that's like a good ratio for a complex manufactured product. But aerospace, when he looked into rockets, the rocket as a whole, the unit index was like 1,000. It was well over 100. You know, 1% of the cost is the raw materials. And so he's like, this has to be a horrifically inefficient manufacturing process. It's a tool for understanding how efficient efficiently a part is made. And, you know, you stack ranking the things that you're producing by the idiot index is a really effective, this is useful no matter what you do and where you are. So like, just look at all your expenses and then try to rank them by like basically how much margin are you paying? How much money is somebody else paying because you don't understand the fundamental cost of the thing that you need out of them?

Yeah, it's such a good point because it's true. It, everybody thinks about it in manufacturing, but it's just as true in service You know, and that's why I think he's so good at getting to the truth.

Especially in the age of AI. Like AI totally changes that math around like what's the idiot index of moving pixels around? It's now very close to zero.

Yeah. And so how often, I mean, how are you gonna stay in competition if you don't understand what the real cost of things are? And so I think half of your job as a CEO is going around and saying like, how long did that take us to do? How expensive was that? And then I love, you know, his lines, which you probably know better than I do, but you know, is it Is it illegal to move faster? Is it against the laws of physics to move faster? Or is this just like a personal preference or a business decision that we're making? Right?

Yeah. This is one of his superpowers is, is not starting with the current best practice. Like I, this is one of the things I've taken away is like when I hear, well, best practice is X, I'm like, oh, we're already lost. Like we're starting from a bad place because only incremental improvements are gonna come from like, well, how do we do it today? Where he starts with is like, What is the theoretically maximum, most efficient, most effective, like perfect thing? Now show me your excuses for not getting closer to that. And that's how you like actually evaluate critically those obstacles between you and the theoretically perfect and move through them.

If you're finding this as useful as I am, please do me a huge favor. Subscribe to the channel. This is how we continue to get bigger and bigger guests on, maybe even Elon Musk one day, if you do the subscribe button right now. And tell me in the comments if you did it. I want to say hi to every single one of you that's a new subscriber here. I mean, and you can even take this outside of business context. Like I think about what does this bench cost, you know, and how much of the things are we marked up on life that we're spending more money on and thus more life on that we shouldn't be because actually we could probably get it for 1/5 the cost from another marketplace if we just changed the logo on top of it.

How about weddings? Like the cost of the inflation adjusted cost of average cost of a wedding over the last like 50 years. If what do you actually need is like a ring and a bouquet and a minister, like do it in your backyard like your grandparents.

I got married in a parking lot. I'll have you Really? Yeah. I'm not a fancy broad.

Yeah.

Parking lot of a DMV because we keep it classy around here.

That is a first principles.

Well, I'm a little— I mean, I'm so glad you wrote the book because I learned so much from listening to him because he's like 10x order of magnitude more intelligent and effective than I am. And so if I could just steal 1x that effectiveness, I'm going to be an outlier in my industry, which is how I'm thinking about this whole conversation. Like, how do we just take 1x of his efficacy and apply it to our lives? And if we could do that, that, then it could change a lot of things. You know, Elon is so obsessed with speed. What are his rules for moving faster and getting more speed in business?

Yeah, the speed of all of these companies is an absolutely fundamental trait. So what's interesting there is he designs his organizations to minimize the overhead of communication. Um, so he puts people who need to share information next to each other. He puts engineers and designers like on the line next to people who are manufacturing things. So my phrase for this is collapse the gaps to communication. Just get rid of anything that is between people who need to be interfacing. Every organization has this, right? There's natural tensions between sales and product or service and engineering or whatever it is. And just move the office. Literally, you sit next to you now and you listen to each other all day and I just need higher bandwidth communication between you two. An interesting thing is that sort of communication delays stack. So if it takes you 1 hour to reply to an email as the first rung, you've actually pushed out the final communication by maybe 24 hours. And so learning to drop shortcuts, like chutes and ladders information around organizations directly to people who need it is incredibly important. Weekly reviews, just the cadence of the things that get checked and how often they get checked. The returns to speed, like he's got this great line, simplicity delivers both reliability and low cost. And things can be so much faster when they are simpler. Like when you're just eliminating steps, it's one of the very counterintuitive things to like you subtract something and everything gets better. It doesn't cost something, but eliminating the cost makes improvements itself. It's alchemy. It's absolutely— One of the core things here, and I think that creates speed. And then the speed then leads to increased efficiency on your, like, you turn over cash way more often. And Elon says like a factory moving twice the speed is equivalent to 2 factories. And so you've doubled the value of your working capital. The relentless focus on speed from him as an operator on decision-making, on the pace of manufacturing, on— it is absolutely throughout these whole, all of these organizations. The learning rate is just the ultimate thing that he's trying to engineer.

What about for all the people who, and I hear this all the time, people say, "Well, but if you move fast, then you're breaking stuff. If you move fast, quality drops. If you move fast, you make bad decisions." There seems to be this immediate reaction by us as humans that to go fast is do things sloppily. If you can move faster, you just have the ability to make more mistakes, but it's okay because you find out the truth faster. And thus, because cash is moving more quickly, you just have more— you have a longer runway to fix the mistakes.

I think this is true in Hyatt too. He gets his reputation as being hardcore and an asshole in the same way that Steve Jobs did, in part for firing people quickly and sometimes summarily or with very little judgment. And what I realized is erring on the side of firing too quickly is actually so rare. And so we have such an emotional reaction to it, like, "Oh, that's unfair." But actually, 99.9% of organizations on the planet are erring on the side of firing too slowly, in some cases by a day or a week or years or never. That was a mistake. But we're a culture that prizes speed. We move really quickly. And We are going to make mistakes of speed and they're better than making mistakes of sloth.

The formula to know if you're going too fast and making too many mistakes is like, you should have at least 10% of the things that you regret in some way, or 10% of the things that you have to add back later, Elon would say. And so maybe if you're too much over the 10, that could be problematic. But if like 80 to 90% of the decisions you were correct on and you only needed to go a little bit slower on 10 to 20, your speed of the 80 is so much bigger than the mistake of the 20 that you're winning. So there's probably some formula there even.

Yeah. And I think that like the, the trilemma, right? That like you can have it fast, cheap, or good, choose two. Like re— rejecting that is a really helpful thing.

Yeah. So like reject the trilemma entirely.

Reject the trilemma because speed lowers cost. And so if you hold the quality bar and just move faster, you should be able to lower costs.

This is my love language, is talking about speed of business and slow rate of cost. Like, I don't know if everybody else is hot and bothered right now listening to this. I hope you are. I know you are. But I do think this just like, these moments when you understand this in business and your life, it's hard to ever look at the world the same again.

Yeah. Rejecting the trilemma is a huge, like, that feels like a paper wall, right? And then when you, once you have that in your head, when you hear people people on your team, you're like, "Hey, I'm asking for this thing. I know it's hard, but this would be a big innovation. This would be a breakthrough for our company. This would be a new successful product line." And your leadership team is going to be like, "Well, this, that, these are the trade-offs. This is like—" Nope. Or you're getting it from a contractor, somebody that you're hiring, a supplier that you're evaluating, and you're like, "I'm going to push you. I'm going to hold you on a quality bar and I'm going to push you on speed." And The cost should be there. Isn't there a way that moving faster reduces cost? And a lot of times there is, or there could be.

Yeah, this is really good. There's a lot of tension in the book and in Elon in general, which I love. He's obsessed with truth, direct feedback, and reality. He also has this take of maybe some people think he's anti-empathetic or he's too tough on feedback. In your studying him, what parts are you like, we should all emulate this? And what parts are you like, I think even he would have regrets on this, or are there any? And it's just public, you know, sort of perception of him.

I think the one of the things he, I mean, he is unique in the fact that he is on the spectrum, right? He has Asperger's, he's been public about this. And to some extent, he has a little bit of a biological advantage in discounting sort of like the feelings or emotions of others, right? And Peter Thiel has an interesting tape that's like, we should ask ourselves why all of the great business builders seem to have some sort of this pattern. There's a thing in the valley of being like fashionably autistic. Like, it's so weird. Like, why does it take that, that type of person to like be an innovator? We should be celebrating these people. We should be socially rewarding them. But when they're disrupting something, You know, the status quo. Everybody's sort of attached to the status quo in their own ways. And I think what Elon does, which is so— he has a knack for it, but anyone can do it in the proper context, is have empathy at the level of the mission, not empathy at the level of the individual. Right? And so that goes back to the, like, are you firing too slow, too fast? Do you have the right team? Like, if what you really care about, if the most important thing in the world that you bet your life on is, you know, getting— making life multiplanetary, that is a mission that's very easy to be I'm so sorry, you're not cutting it. There's a better person for this seat and the team deserves to have the best person in the seat because this mission is just so important. That is a really— holding the empathy at the mission of the individual, even though you look like an asshole and you have to have a lot of hard conversations, that's what leadership is in a lot of these cases.

Yeah. No, I certainly felt the same thing. I always do giggle though. I do think— this is a little victim mindset to say, but I do think women get a rougher edge on this one. Like they're not, it's not seen as good of a thing when you're non-empathetic. Like Alex Cooper's getting trolled in the news right now for being like too hardcore of a place. I'm like, she's like one of the top podcasters in the world, totally created an ecosystem. I bet she's tough.

Yeah.

I bet she's not super nice all the time. Like why are we shocked by this? So I kind of come back to that with Elon too, which is like if you want to do really hard, big things, you have to make really hard, big, uncomfortable decisions that most people would probably find just about as comfortable as sandpaper on skin.

Yes. A lot of it quickly.

Yeah.

In back to back to back.

Yeah.

In spite of the feedback that you're getting that maybe, you know, it's, it's harsh or it's too fast or it's too rough or whatever.

Yeah. And so if you get that feedback, like, and you're listening, I guess it's like, just know that that's okay. And like, that is probably what it takes at the highest level of the game.

One of my mentors, it gives me like, um, just when you're feeling stuck about a decision as an operator, it's just kind of like, Do you know intellectually what the right thing to do is if nobody's emotions existed, if none of the feelings were going to be hurt, if everybody understood and could perfectly understand your intentions and that you were well-intentioned and pure and mission-oriented and honest in what you were doing? Is the right decision clear? And almost always the answer is yes.

Yes.

I just feel tangled in the perception or the feelings of other people. Once you've seen that, then it's just kind of an internal struggle of like, well, it is my role to do the right thing for this organization or for this mission regardless of how it might be perceived or felt by some people. That's hard to do. It's especially hard to do all the time. But I do think you can get better at it with reps.

Yeah. I mean, I was talking to the CEO of YouTube whose name is Neal Monahan and he's incredible dude. And it was interesting because they were asked, "What's the hardest part about being a leader at your level?" And I could only imagine for Elon, but he said, "The hardest thing is by the time decisions come to me, it's only two bad choices that are left. And so if it's easy choices, if there's any easy choice or good choice, somebody else has already made it. But when you're at the top, the only options are usually bad or not great. Otherwise it would've been handled already. And I thought that was very well said.

Yeah. Elon's version of that is like, uh, everybody thinks they wanna be CEO, like from the outside, like you see the trappings, but when you're CEO, you get a distillation of the worst problems in the company.

What does Elon Musk say about being in his head? I can't remember. Like he has a couple minds about what it's like to actually be him and do you really want to aspire to this? Do you remember that story?

Yeah, he's described his mind as a nonstop explosion or a never-ending storm, like an unhappy storm, the rage demon in the skull. He says, "If you think you want to aspire to be me or do the things I've done, I don't think you do. Most of my life has been very hard and painful." And a lot of that has been as a result of the decisions he's made because he's just chosen these grand quests. I like to think of him a little bit as like a sci-fi hero. Like he's, he is a genius and, but in many ways he's like still boyish. He's described that way in the, like a lot of different ways, sense of humor and taste, video games and movies and like things like that. And it's very like he has this sci-fi hero bent about him where he's like, I don't care how long the odds are, I'm just going to I'm going to keep going on this grand quest and it doesn't matter how big the demons or how challenging the path, I'm just going to keep walking it. And that's partly, I think, how he manages to have the success that he's had is taking these hard, narrow paths.

At one point, Elon decides to take on X and buy it too. And he has a couple lines from around that period about how if you really want to sell something, salesmanship is showmanship. What does he mean by that? Why does Elon sell so much? How do we learn how to sell from Elon Musk?

I think one of his absolute top moves that is still underrated is demos. Show, don't tell. Loaded up the rocket and drove it through Washington, D.C. on a truck And he got the Daimler deal in part because at Tesla, the Tesla executives from Daimler were coming to visit Tesla. And he's like, we have a slideshow, we have a presentation. Like, that is insufficient evidence. So in like 30 hours, you grabbed engineers and they had a, I think it was like a Smart car and they loaded an electric drivetrain into a Smart car, which absolutely ripped shit because it was like, you know, this tiny little light car. And so it would 0 to 60 and these guys are like experiencing acceleration that they've never felt before. And that was, that demo was in part what drove them. Even the bad demos early in Tesla where stuff wasn't right because it was too hot and gave Larry and Sergey a ride in one of the early Roadster prototypes and it was a bad demo, but they still invested because they were like, "Oh, these guys are really building stuff." And over and over again, this kind of show, don't tell, just show physical progress, build a demo, build a prototype as quickly as you can, get out a PowerPoint, get off the whiteboard and like get your hands dirty and have something to show tangible is he does over and over again.

Yeah, you know what's interesting too is I think a lot of times like you get scared to do demos because guess what happens when you do a demo? Something can go wrong.

Yeah.

Very little can go wrong in a PowerPoint or in a presentation where you talk. But if you wanna make a big huge change, having a little risk again seems to be the common thread. Like I loved when he had Joe Rogan shoot shot the bow at the car, you know, and it, it like broke the window or it dented it or something, you know, and didn't he shoot a gun or something at the car and it broke the car window? It didn't work, but everybody remembered it and bought more cars. So it's, it's almost like you can demo the thing and even if it doesn't work, people reward the risk.

Yeah. The Cybertruck reveal, like threw the ball bearing at the window and it wasn't supposed to break and it did or whatever, but—

And he laughed.

And he laughed and that became —like somehow an even bigger story and me than it would have if it had gone right.

That's a good, really good lesson. And I think, you know, we're even a visual medium where I'm, you know, online showing stuff a lot and we still don't do it enough. You know, so often I fall back to the PowerPoint as opposed to showing the thing live. It just takes a little bit more creativity. What actually, I don't think Elon gets enough credit for the creativity angle. He gets a lot of credit for like brute force and then big missions. But are there stories where you're like, wow, this man is actually incredibly creative as a storyteller or as a builder that you can think of?

And I think the ability to sort of see things that other people aren't and push beyond that boundary is like, he's, um, he's an example setter in a, in a lot of ways. Um, like who else is like talking seriously about building mass drivers on the moon? So like on a frontier basis, he's like thinking further out. One of the tools that he talks about using, like people don't realize SpaceX was not originally a company. Company. It was a philanthropic mission. He had almost $200 million from the sale of PayPal and his first plan was to just shoot a rocket to Mars, have a little greenhouse on the surface of Mars. And he says the reason he did this is because people respond to precedents and superlatives.

Mm-hmm.

So, when he's launching a product and you hear this in Apple all the time, it's the thinnest, it's the fastest, it's the biggest, it's the first.— something about us, like that's a headline. We want the best or the thinnest or the fastest or the cheapest or whatever. And so he wanted to set this precedent that is like, this is the first life on Mars. He wanted the Sunday morning newspaper shot to be like a green plant on the red planet and that that would catalyze this movement of an increased budget for NASA and new interest and a new age of space travel. This is another reason why I mean, no, He's truly a missionary on these things. And it turns out that the reason that he couldn't do that was that the rocket technology wasn't there and wasn't cheap enough. And so he's like, "Oh, the vehicle to get there doesn't exist or is too expensive. Maybe I need to conduct a feasibility study on, like, can I build the vehicle?" So pulled all these different rocket engineers and just kind of did a, like, Saturday, every Saturday, like, feasibility analysis. And then right around the time they were kind of like, "Oh, this is "this could work." PayPal sold and he is like, "All right, let's go to it." Do you think that you should do side quests in life to be successful?

It seems like Elon has a lot of side quests from a flamethrower to a boring company, Tungmal.

Yeah. I want to say yes because I feel like he does so many and I'm sitting here today because of my side quests. I think it goes against the kind of like maniacal focus thing that should seem like one of the big takeaways from Elon. But that's how he has fun. I think you could call Twitter a side quest. You could call Doge a side quest. You could call Boring Company, Neuralink, like these are all, you know, he will be known for Teslas and SpaceX, but so many other things he just spins up. And this is closer to an avalism, but I feel like just do the thing that you are most naturally inclined to do, trust your intuition a little bit. And Elon has had, I think, people in his life have been like, "Eh, too many side quests. We gotta get back to the main mission." So let's all hope we've got the people in our lives that can help us get on the right tracks if we happen to lose it.

I don't know if you know the answer to this, but given how intense he is, Does— do his companies have crazy turnover? Like, do people just churn and burn at his companies? And does he care about something like that?

I think it's somewhat of a barbell. So I do imagine there's people who are like, you know, 6 months in and like are turned over quickly. Um, I also know a lot of people who worked there for a 2 or 3 year, like, tour of duty. You know, the rule of thumb in startups is like you, you're a different organization every time you triple in headcount or roughly an order of magnitude, right? And so So what he says is what looks like a 3-year churn is actually a full tour of duty. It just, at another company, would take 10 years to do it and it would look like a normal, healthy career path. And here, we covered that ground in 3 years because we're just moving more quickly. But I think the assumption that churn is always bad is something that he would reject.

Yeah, I think so too. I also think, I mean, we found in our companies, we about triple every year. And that is—

That's crazy, by the way.

Well, we've only been in business for 4 years, but I And I think that originally used to freak me out. And I'd be like, "God, my people who are here from my first day, 90% of them aren't here today." And so that makes you question yourself as a leader. And at some point, one of my better mentors told me that same thing. They're like, "Well, actually, they either have to become 3x better then inside of a year," which could totally happen. You could grow at the speed of the company, or they're going to get outgrown by the company or their role might get downgraded at the company and somebody else might come in over you. And so I do think normalizing that, like, and having those— I also like how he has all these formulas for everything. So it allows you to contextualize what's normal or not.

Yeah. And then there's some people who are happy at a 10-person company and aren't happy at a 100-person company. Like, there's agency on the employee side too.

Yeah.

And people go through life changes and different priorities and like all of that is, you know, perfectly wonderful.

I want to talk about the algorithm. We talk about Elon Musk's algorithm, what it is, what it does.

Yeah. So this is his 5-step engineering process. He, I would say it's the gem that came out of the pain of Fremont. So Fremont was the factory, was an early Tesla factory. And he's like, we screwed up everything. It was an absolute disaster. And it was because he got the algorithm backwards. And this is how he learned it was like this catastrophic hundreds of millions of dollars mistake. The algorithm is 5 steps and the order is very important. So, the first step is to question every requirement. He says, "No matter how many requirements there are, question them, eliminate as many as you can. Every existing requirement must have an individual human being's name attached to it." The more requirements you get rid of, the less weird unnecessary compromises you're going to make, the bigger your, like, design space is for potential solutions. He says requirements from smart people are particularly dangerous because you take them more seriously. The second step is The second is delete, try very hard to delete the part or the process step. The third is simplify or optimize. The fourth is accelerate cycle time, so move faster. And the fifth is automate. The fifth. And he's like, I have moved backwards on all 5 steps multiple times. I've tried to automate something and then I've tried to make it go faster and then I've tried to optimize it and then I ended up deleting it because I didn't question the requirements in the first place. And every time, every hour and every dollar on that attempting to solve that problem was wasted because it was just a whole big mirage basically of a problem. And so applying that algorithm over and over and over and over again to everything, and that's what he actually does when he goes through these weekly technical review meetings is having engineers walk through the algorithm and try, this is how you work through these roadblocks and arrive at these radical rates.

You got to figure out how to get into some of these meetings and then write about how he runs meetings because it's the most, like, it's gonna get no views on the internet. But I think the way you run meetings and do readouts is really like how fast your blood moves through the veins of a company.

Yes.

And it's such a unique thing that's so hard to do. And then extra hard to get your team to do it as well as you.

Yeah.

I mean, it'd be fascinating to see, 'cause all of these stories are incredible, but I think the things we often don't get to see are the act, like talk about show, don't told. We get told, told, told, told all the time on Elon. But God, if we could get behind the scenes and be like, well, actually, let's talk about one. One here that I thought was amazing is he sends an email and he's, so his emails are some of my favorites, but it's like to everybody, subject, please note, if an email is sent for me with explicit directions, there are only 3 actions allowed by managers. Email me back to explain why what I said was incorrect. Sometimes I'm just plain wrong, exclamation point. 2, request further clarification 2. Ask for clarification if what I said was ambiguous. 3. Execute the directions. If none of the above are done, the manager will be asked to resign immediately. Thank you, Elon. And like, this email is such a great exact example of how he communicates. So like, 1, any reaction to that? And 2, are there others like that where just his— the actual artifact from Elon is worth dissecting?

Yeah, there's a book that's like, I think it's like a dollar on Kindle that somebody just like collected a bunch of his emails and it's, uh, I went through it and it's, it's funny to read and a lot of them are like that where where you're like, well, that is unambiguous communication. That is very clear. And of course, 90% of people who read it will be like, what an asshole. And it's like—

Fuck that guy.

Yeah. If you're emailing 1,000 people and you're trying to be like, we are in wartime, oh my God, like you've got to communicate. Don't just ignore my shit. Like, tell me what's going on. Correct me or do it or like, yeah. That's a pattern actually you see like even creative people. I want to say it's George Lucas where he's like, he had 3 stamps. Pops on his desk and somebody would like send him a— this was in like the memo days of like a sketch and it was like, yes, no, or speak. Those were like the only like responses that he had. When you're one of these people who's like in the nexus of a thing and you're trying to manage thousands of inbound communications per day, thousands of decisions per day, like how else do you do it but to be like, I got 3 slots. Like this, this, or this.

You really can.

Yeah.

And so I think especially, yeah, as you're building anything, trying to figure out what is your version of the 3. Is it stamps like Lucas? You know, is it an email that just says you only get to choose 3 options? And I feel this intimately because the world is getting so much faster. And so if you don't learn how to become faster, you're gonna get left behind. I think about it a lot right now with Looms. Like I love multiple Looms said to me, don't wait for a meeting, give me the Loom. I'll 2.5x speed you, I'll respond in almost real time to it. You can have a feedback. And if you need more, we just go back and forth almost immediately. Because otherwise you have this compounding hour effect. So that's so good.

He really thinks, I mean, it's a very mathematical way of thinking about it. He thinks about the bandwidth of communication back and forth. He's like the bandwidth, the bit rate of communication in reading is faster than speaking. So he's like, I didn't go to lectures in college, I would just read because I could read faster than I can here. And he's like, "I hate email. Text is faster." Just the elegance of it is just very, yeah, it's very interesting.

Elon Musk has an algorithm that he uses to make more money and make ridiculous things happen. What is the best example of that algorithm at play?

The example that I love because everybody, every organization has a version of— is that Tesla had for a period of time a bottleneck in their service center where they were training new employees and they'd hire somebody to work in the floor where people sell cars and they would have to go through a month of training videos and quizzes and FAQs and all of this. And it became the thing that was holding the company back from sales. And the president, John McNeil, and the story is in his book, was like, applied the algorithm. He's like, what is the the theoretical maximum efficiency. It's like they can, well, they're effective on day one. So I was, what does a training program look like that allows an employee to be effective on day one at a new company? He was like, well, it has to be a really short thing that aligns their effort and their intention, even if they don't have a bunch of information. And so he shortened their employee onboarding to one sentence. Which is be so good that the customer talks about you at dinner. Give them such a great experience that it's remarkable and they want to go tell their family at dinner. We hired you, we trust you to interpret that correctly. You'll learn everything else you need to as you go. And so like a month worth of time and paychecks and effort and backup, just deleted. I found that so— like so obvious once you see it deleted and you're like, we thought it would break a bunch of things. Nothing breaks. Like hilarious. Another one is even like they, they had a bottleneck around the service centers to say like, we, we don't have enough shops to do all the repairs that customers are asking us to do. We need 100 more service centers. They're $3 million each. This is a $300 million like project that we have to undertake. And they went to Elon with it and he was He's like, "We don't have $300 million. You have to find a different way to solve this problem. Repair the cars without spending the money to build the service centers." And so the team goes and applies this algorithm and is like, question the requirements. Do we need a service center in order to service the cars? Some of them. Okay. How many of them? All right. We're going to stand at a service center and we're going to triage every car that comes in. Could we do this repair without a lift? Could we do this repair without a huge toolkit. And it turns out that 90% of the repairs could be done by a technician with just a portable toolkit at the customer's home. And so, they inverted their service model and they said, "This is better for customers. We're going to come out to you. We're going to repair your car in your driveway, just send out one technician." Now, guess what? We don't have to wait 2 years to build more service centers. We don't have to spend money, hundreds of millions of dollars to build service centers. We question the requirements of what the problem problem resolved and approached it with as few steps and as little expense as possible while maintaining the quality of the customer experience and keeping their experience at the center of every decision that we make. And it turns out that the best solution for the customer is actually extremely cheap and extremely fast to implement. And it doesn't matter that the entire rest of the industry is dealerships based around like, come on in, tour our new cars, bring your car in, we'll keep you here for 6 hours. Like Tesla wanted to do the thing that was best and cheapest and fastest and question their requirements. And the problem changed entirely.

It's actually crazy that the rest of the auto industry still has some tire dealerships with like whole, you know, parking lots filled with cars. And Tesla has just categorically rejected that and won. And the rest of the industry has seen that and gone, nah, we're going to stay with a really old expensive way.

Innovator's dilemma is brutal. The value of a minute of good thinking from Elon is like like $1 million a minute or more. That is just a wild— he's the most leveraged person alive. And so, understanding that these are the tools that he uses in that minute or in that half hour to break these bottlenecks or unlock a new opportunity just feel— these are the most battle-tested tools for operating the business that there are and the result of decades of extremely hard-won unique lived experience. And so, to me, that is just such an incredible signal of the value of these things and how much better you can become by applying them. He's unique and special, but he's not 10,000 times smarter than anybody else who's ever lived, but he's 10,000 times more effective. And it's because of the software, I think. It's the method and the mindset. There's a lot of raw talent, but that doesn't explain everything.

Do you think he's happy?

I don't think he cares. I think he's proud of his accomplishments. I could be wrong. I don't know him personally. I've not spent time with him. I don't think he prizes his personal happiness. I think he judges himself by his contributions. I think he judges himself harshly, I'm sure, because he continues to drive so hard, but I think he's contributed more than anybody else alive and will go down as one of the greats.

Yeah. When everybody like always highlights those quotes about him, or he talks about the rage demon in his head, I also think that he is a very joyous person because you look at some of his, just even the iconic, like, you know, photo on the stage, like that is a moment of joy for a human being. And you know, Perhaps he is not steady state happy or even content all the time, but I'm not even sure that's the point of life either. It's like, in my opinion, to have as much of the varied experience of life as humanly possible and then to wash up sort of bruised and battered at the end. Then I think I just want to end with one last question, which is, if somebody was going to read this book, what is the one thing you want them to take away from your 5+ years now study of the Ilim?

I firmly believe every living human being can get something useful out of this book, no matter where you are, where you live, what mission you're on. I think if you have a really clear direction in life, then the tools for success are going to be in there and you're going to learn from how Elon operates. And I think if you are looking for meaning and something to dedicate your life to, he has a really powerful way of sort of looking at the world and giving us a sense sense of what meaningful work is and what kind of missions are worth going on. And I found that that was a surprising piece of it to me. I knew he was effective, but his philosophy, his worldview, and how passionate he is about it and how broad the perspective is, I think is really interesting and powerful. And I don't write books in order to like— There's no shoulds. I just to sort of put this forth and I hope you find something to enjoy in it, but everybody's gonna take something different away.

It's a fantastic book, as are all of your books. Thank you so much for being here today. Thanks. Eric Jorgensen, The Book of Elon, out everywhere. Eric Jorgensen on X is probably the main place where people find you. He's also a great follow there. Thank you for being here today. Thank you for having me.

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