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Wednesday, May 14, 2014

In His Own Words: Elon Musk's Secrets To Changing The World

Note: I was asked to write an article called How Elon Musk Is Changing The World by the editor of Green Living. He gave me a brief outline. Below is is the draft ~1700 words I wrote. He read it, liked it, but said that it had to be ~1400 words, or ~2500 words and split into a two part story. He said that he'd co-author the story and expand it into a two-parter. As you'll see below, I focused on Musk's methods. He restructured the article and added the achievements of companies that Elon helms. He made many improvements to the story. The Green Living article is now different enough from the below story that I feel OK that sharing this one will not detract anyone from reading the Green Living story.

Elon Musk’s Secrets To Changing the World in His Own Words

If you have ever used PayPal for online payment, you can thank Elon Musk for making it possible. He built PayPal into the most successful online payment exchange in the world. So successful, in fact, that in 2002 eBay bought it for 1.5 billion dollars, making him very wealthy at just 31 years of age. Many of us might have taken these riches, bought a small island, and enjoyed a steady stream of umbrella drinks. Elon, on the other hand, took his personal fortune and founded two companies (SpaceX and Tesla) and he is on the board of a third (Solar City).

With these three companies, he has the express goals of transitioning the world to renewable energy and making life multi-planetary. These are audacious goals. Currently, all three companies are enjoying success. Solar City is the largest provider of solar energy systems in the United States. Both Solar City and Tesla are publicly traded companies and market darlings. Tesla is selling cars as fast as they can produce them, and they already have over 12,000 pre-orders for their 2015 crossover vehicle. SpaceX has a $1.6 billion contract to supply the International Space Station and was the first commercial company to dock with it.

Elon Musk has changed banking, transportation, renewable energy, and space exploration. He has received dozens of awards. He was named in Time Magazine's 100 people who most affected the world. He was named as one of the 75 most influential people of the 21st century by Esquire magazine. Forbes listed Elon as one of “America's 20 Most Powerful CEOs 40 & Under”. He was recognized as a Living Legend in Aviation by the Kitty Hawk Foundation. R&D Magazine gave him the Innovator of the Year award. Fortune named him as the World's Top Eco-Innovator.

How has one man been involved in such diverse areas and been so successful each time? Is Elon the 21st century's version of Henry Ford and Thomas Edison?

Thinking Like Elon Musk

Despite each of Elon’s companies being in vastly different technologies, they have one important thing in common: they were disruptive. They broke new ground and did things differently than any business that came before. This is because they were started from a different perspective than most companies. Why? Because Elon just thinks differently than most people. His background is in physics and engineering. He uses the models of thought from these disciplines in all of his problem solving, whether it is how to sell cars or how to launch a rocket.

First Principles Thinking

I tend to approach things from a physics framework. And physics teaches you to reason from first principles rather than by analogy. 
~Elon Musk
If you reason by analogy, then you end up doing things similar to other companies. First Principles, on the other hand, can lead you to uncharted territories. First Principles is a formal logic method. It means that you start from facts, rather than opinion. You question assumptions; you ignore the status quo. You use reasoning and math to derive your answer. When you come to a conclusion that is counterintuitive, then you have something interesting, a potential disruptive breakthrough.

A simplified example for Tesla Motors in 2008 might be: Crude Oil is a finite resource that will run out. Consumer electronics is driving compounding improvements in battery technology each year. Given this, within ten years electric cars will be priced similar to their gasoline counterparts and be far cheaper to operate and fuel.

SpaceX was founded with the objective of being the transportation method to colonize Mars. Applying First Principles to this would yield: Most space launches cost hundreds of millions of dollars. Given this cost, the multiple round trips needed to establish and supply a base on Mars would be cost prohibitive. Therefore SpaceX’s first challenge is to make flights to and from Mar significantly cheaper. Looking at the cost of a rocket launch today, less than one half of one percent of this cost is the fuel. The majority of cost is the rocket itself and these are destroyed as they are used. As successive stages ignite, the used part of the rocket drop away and are left to burn up in the atmosphere or crash into the ocean. The next launch starts from scratch. Imagine if each cargo ship that came in from China were sunk after the cargo was unloaded or if airplanes were shredded after a single flight or if you had to buy a new car each day for your commute. It would certainly be much more expensive to travel. This is the model that are using for rockets today.

First Principles says that SpaceX must have a reusable rocket.

Don’t Fear Failure

When something is important enough, you do it even if the odds are not in your favor. 
~Elon Musk
Elon has said that he expected both Tesla and SpaceX to fail as companies. Tesla, he expected, would disrupt the market, accelerate the major auto companies to produce EVs and Tesla would become only a footnote in history. That is not what happened; instead, the big auto companies were slow to change and left the door wide open for the startup to grow and become a publicly traded company.

As for SpaceX, here is what he said, “The odds of me coming into the rocket business, not knowing anything about rockets, not having ever built anything, I mean, I would have to be insane if I thought the odds were in my favor.”

And as for product innovation, he has a similar approach, “Failure is an option here. If things are not failing, you are not innovating enough.” The early versions of the Tesla Model S had cameras rather than mirrors. However, the company failed to convince the regulators that this met the needed safety requirements.

Iterate Quickly

When you are blazing new ground, you don’t have the years of built up trial and error. When you are in uncharted territory, unexpected things are going to happen. In the auto industry, even in well-established product lines, things occasionally go wrong.

You want to be extra rigorous about making the best possible thing you can. Find everything that’s wrong with it and fix it. 
~Elon Musk
With the Tesla Model S, there were three battery fires. Even though no one was injured, Tesla didn’t wait ten years to address the problem. They quickly released a software update to raise the ride height while they investigated. The cars have ballistics-grade aluminum on the bottom to protect the batteries. Their analysis found that in rare cases, road debris could pierce the front of the battery compartment, bypassing the bottom shield. The company responded by adding a deflector plate and titanium shielding to cover the front of the battery compartment.

As for SpaceX, they started their vertical takeoff and landing tests with a three second 6-foot high flight. They have continued to increase the height of each flight and have moved to a larger rocket called the Falcon 9. Soon they were flying a thousand meters into the sky. On April 18th the Falcon 9 lifted off from Cape Canaveral with cargo for the International Space Station. The Falcon 9 launch vehicle featured something that no other first stage space rocket had ever had before, landing legs. After delivering the Dragon capsule into orbit, the Falcon 9 fell away and attempted to “soft land” in the Atlantic. Unfortunately, according to Elon Musk, due to “13- to 20-foot waves… It’s unlikely that the rocket was able to splash down successfully.”.

Fight For What Is Right

I don't create companies for the sake of creating companies, but to get things done. 
~Elon Musk
Elon Musk is no stranger to the inside of a courtroom. Tesla has been sued by auto dealership associations in several states because of their sales model (which does not use dealerships). SpaceX is currently in a suit with the US government over the way that ‘no bid’ contracts are issued. Whatever the industry, there are those that are entrenched and benefiting from the way things are and they are going to fight to keep it that way. If you want to get things done in a new way, be ready to fight for it.

Seek Feedback

I think it's very important to have a feedback loop, where you're constantly thinking about what you've done and how you could be doing it better. I think that's the single best piece of advice: constantly think about how you could be doing things better and questioning yourself. 
~Elon Musk
Seeking feedback is important, but you must be very selective of who you trust to fill this sounding-board role. It is too easy to find someone that will tell you just to do things as they have been done before. Similarly, you don’t want a cheerleader or Yes-man that provides no constructive criticism. Elon is lucky enough to be friends with Larry Page and Sergey Brin, the founders of Google. These are people that understand innovation and thinking big.

Think Big

When Henry Ford made cheap, reliable cars people said, 'Nah, what's wrong with a horse?' That was a huge bet he made, and it worked. 
~Elon Musk

It's important that we attempt to extend life beyond Earth now. It is the first time in the four billion-year history of Earth that it's been possible, and that window could be open for a long time - hopefully it is - or it could be open for a short time. We should err on the side of caution and do something now. 
~Elon Musk

There is no question that Elon Musk thinks big. People that work at SpaceX and Tesla know that if they are successful, they will be part of something that changes the way we live.


There you have it, the secrets to changing the world according to Elon Musk:
  1. Use Disruptive First Principles Thinking
  2. Don't Fear Failure
  3. Keep Improving
  4. Fight Relentlessly
  5. Seek Feedback (from the right people)
  6. Think Big 

This article started by asking if Elon Musk was the 21st century's version of Henry Ford and Thomas Edison. There is no question that he is an innovative thinker that has already left an impression on history. Only time will tell if it is of the magnitude of Ford and Edison or just a footnote in the transportation chapter.