Takeaways from Elon Musk x Sal Khan

In 2013, Sal Khan, the founder of Khan Academy, interviewed Elon Musk.

Here are my notes and takeaways from the conversation:

• Something is always broken at the Tesla Factory — there’s so much complexity and so much going on that there is always room for improvement. Production can be stopped for something as silly as a $3 USB cable

Early Beginnings and Inspiration:

• Elon didn’t expect to revolutionize the world. When he was in college he thought about which areas will most likely affect the future of humanity.
  - Internet
  - Sustainable energy
  - Space exploration and becoming a multi-planetary species

This gave him the foundational topics that he would build his career upon.

• Elon gets familiar with big areas by picking a specialized technical niche and learning it really well. For electric cars, this started with researching really high-performance capacitors.
• Elon saw that the more urgent opportunity, however, was in the rapid development of the internet. He put his Ph.D. on hold to start an internet company. He had investors, customers, and media companies in the really early stages of the internet. This was before advertising existed on the internet.
• One thing led to another, and soon he was building PayPal, setting the foundation for Fintech- an industry that continues to revolutionize the banking and insurance industry.
• While Elon was hopeful about the success of PayPal, he did not expect the growth rate to be so fast.
• The amount of money used in an activity is a relative scale. Thinking about numbers and value in context can be a powerful mechanism to understand the true value of what is going on.
• Paypal paid people to join and refer more people to their platform, burning through roughly $60–70 million, until they reached a critical mass for the network to be majorly valuable.

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On SpaceX:

• Elon then followed his curiosity to start SpaceX. He began researching getting rockets to mars because he was curious about Nasa’s plans to get people to Mars, but couldn’t find any. He started to do some research for himself to figure out what it would take to rejuvenate the spirit of space exploration in the United States. He wanted to take life to Mars and started designing ways to bring the cost of rockets down. Using some of his PayPayl money, he was able to buy 2 Russian rockets to use to launch.
• At this point, Elon had hired some consultants and read a few books on the basics of the Space Industry. He realized the problem was not a lack of inspiration in people, but that people did not know how to get to space without having some meaningful drop in the quality of life supported by other government services. (i.e. money to NASA is money that doesn’t go to a welfare program or infrastructure)
• He realized if he could figure out a way to make colonization of the moon and mars happen practically, he could start something. He took a first-principles approach here, asking for the raw material cost of all elements in a rocket: he found it to be about 2% of the cost of the rocket itself.
• Clearly, turning raw materials into the rocket was a very expensive process. He spoke to aerospace engineers to see if he was missing anything? Could it really just be a matter of reducing the manufacturing cost?
• He didn’t see any signs that it was anything other than the manufacturing process, so he started SpaceX. The Falcon 1 rocket, before it crashed, cost a total of $6 million. This is compared to the $25 million it would have cost for any other agency to build a rocket of the same caliber.
• But Elon didn’t stop here. He realized if he can make rockets reusable, that would make them 1/100th the price of a rocket from Boeing or Lockheed.
• Elon also made it a point that it’s not just about the vision for the company, but also about maintaining cash flow and supporting the business. SpaceX’s primary goal right now is to survive, and they do that by launching commercial and government satellites and transporting cargo and people to and from the space station. In this process, however, he creates the opportunity to make improvements to the rockets so they become reusable and open the door for humanity to be able to get to Mars.

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On Tesla:

• When breaking down Tesla as a company, Elon’s thought process was trying to accelerate the transition to sustainable transport, that would otherwise be left to market conditions (I.e. it would inevitably happen when we run out of oil and the price becomes so high that we are forced to convert to sustainable energy).

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Some Philosophies:

• On money: Money is something to be conscious of in the early stages of a company because you need it to survive. Starting a company is not a fun and games whimsical approach to tackling a problem, but a very strenuous responsibility of dealing with difficult things all the time, and knowing that your startup is most likely to fail.
• Starting a company is mostly about facing the hardest problems there are to face, not the problems you want to work on, and hoping that you have a zigzaggy path that leads in the direction that you wanted to go.
• There’s nothing inherently wrong with profit. Profit motives are good and effective if the motives of the industry are properly set up. Profit is a good thing — it’s a sign you are adding enough value. That said, there are times when people will do bad things to achieve profit, but this is quite unusual because the rules are set up mostly correctly.
• Good innovation creates technology that people look forward to when it becomes available (ex. A hyperloop, electric cars, etc. )