Elon Musk - CEO of Tesla Motors and SpaceX Video Lecture - Entrepreneurship

SAL KHAN: So first
of all, I just want
to thank Elon for
coming-- hungry.
You didn't even have dinner.
And we didn't even
feed you properly.
ELON MUSK: No, sorry
to be a bit late.
I just came from the
Tesla factory in Fremont.
SAL KHAN: Yes.
Was something wrong?
ELON MUSK: There's
always something.
SAL KHAN: Did you have to like--
ELON MUSK: At any given point,
there's always something wrong.
SAL KHAN: Yes.
ELON MUSK: Because there's
just too many things going on.
So one of the trickiest
things about a car
is that there's thousands
of individual components--
there are thousands
of unique components--
and even if one of
those things is missing,
you can't make cars.
So today's fiasco
was-- I kid you
not-- we were missing
a $3 USB cable.
OK.
So we could not
complete cars, because--
SAL KHAN: So the whole
line was stopped?
ELON MUSK: Yeah.
So essentially, because it's
part of the wiring harness.
So you can't put the interior
in without this cable.
And so we could either
make a whole bunch
of cars minus the
interior, which
means that you've got to
stack them up in the yard.
SAL KHAN: The resale
value would be no good.
ELON MUSK: Well, it can be
done, but if then things go out
of sequence, and it's
way more inefficient--
you don't have a
moving production line.
Then you have to send
people out to hundreds
of cars that are sitting
in the storage yard.
And so this happens to be a
particularly pernicious cable.
It's kind of routed under the
carpet, in a difficult place.
And it's literally $3.
And so we basically had to send
people throughout the Bay Area
to go and buy USB cables.
SAL KHAN: Like,
literally, Radio Shack?
ELON MUSK: Like Fry's.
SAL KHAN: Oh, Fry's.
That's better.
ELON MUSK: You're going to have
a hard time getting a USB cable
right now at Fry's, because
we bought every one of them.
SAL KHAN: That's good.
ELON MUSK: And so we're
able to continue production.
And I don't want to
belabor the anecdote,
but essentially the
supplier is in China.
And we had plan A and
plan B. And plan A
was like the normal
supply chain process.
But what the supplier
did was instead
of sending our parts
in their own package,
they grouped it
together with a bunch
of other stuff for
other companies
and sent that all via some
extremely slow boat from China
to LA.
And when it got to LA, the
other stuff didn't pass customs.
And so they wouldn't let
our stuff through, because--
SAL KHAN: They put it like
a barrel fruit or something.
ELON MUSK: I don't
what they put it,
but something that
customs didn't like.
And the paperwork wasn't
in order or whatever.
So it got stuck there
for like a couple weeks.
And then we had plan B.
So we called and said,
look you've got to air
freight some of these cables--
cause they're just
little cables-- to us.
And we talked to
their US subsidiary
and ordered from
the US subsidiary,
who then communicated to China.
But then because this was
another batch of parts,
so it was kind of
double the order,
it exceeded the credit
limit that we had.
So it bounced off the credit
limit, so they didn't ship it.
SAL KHAN: Fascinating.
So someone's losing
their job now.
This is-- no, I'm kidding.
You shouldn't fire anyone.
ELON MUSK: I mean,
it's pretty farcical.
And, anyway, so, it's
coming like tonight
at 11:00 PM or something.
SAL KHAN: Wow.
And these things are
happening like all the time?
This was an unusual
circumstance?
ELON MUSK: Yeah.
That's like one example, but
there's many things like that.
SAL KHAN: I guess, I
mean, that's actually
a really good
example, because that
leads into what I've
always been fascinated
by a lot of what you're doing.
Well, I'll start with,
how did you get into this?
ELON MUSK: Into cars?
SAL KHAN: Into cars.
Into taking over NASA.
Well, not taking over NASA--
being a contractor for NASA.
ELON MUSK: Just for the record,
we are not taking over NASA.
SAL KHAN: You're not
taking over NASA.
They are an independent
organization.
But you are becoming a major
provider of services for NASA.
Obviously, kind of internet
payments and payments
generally.
I mean these are three
completely different spaces.
I think a lot of people would
not take someone seriously,
if they had a business
plan in one of these.
ELON MUSK: Right.
Sorry to eat.
SAL KHAN: Oh, yeah,
take your time.
What was your-- did
you always think
you were going to be doing
this or-- when did it
dawn on you that you
would try to revolutionize
three industries?
ELON MUSK: Well, when
I was in college--
I didn't actually
expect to do it.
So it was not like this is some
long-fulfilled expectation.
But when I was in
college, I thought
about what were the
areas that would most
effect the future of
humanity, in my opinion.
And the three areas were the
internet, sustainable energy,
and space exploration,
particularly
if humanity becomes a
multi-planet species.
You know, there's kind of like
a pretty substantial bifurcation
in our future, if we're
either out there among stars
on multiple planets,
or if we're confined
to Earth until some obviously
eventual extinction.
Not Not that I'm pessimistic
about live on Earth.
I mean, things are
likely to be good.
More likely to be
good by far than bad.
SAL KHAN: Yellowstone's
due for an explosion
every several hundred thousand--
Shandra knows about that.
It's been 700,000,
ELON MUSK: Right.
Right.
Yeah.
SAL KHAN: Super volcano for
those of you who don't know.
It would envelop, but well--
ELON MUSK: Yeah.
Exactly.
I know exactly what
you're talking about.
So--
SAL KHAN: We read
the same books.
I can tell.
ELON MUSK: Absolutely.
I mean something bad
is bound to happen
if you give it enough time.
And civilization has been around
for such a very short period
of time that these time
scales seem like very long,
but on an evolutionary time
scale, they're very short.
A million years on an
evolutionary time scale
is really not very much.
And Earth's been around
for four and a half
billion years, so that's a
very tiny, tiny amount of time,
really.
But for us that
would be-- can you
can imagine if human
civilization continued
at anything remotely like the
current pace of technology ad
advancement for a million years?
Where would we be?
I think we're either extinct
or on a lot of planets.
SAL KHAN: Yes.
We should--
ELON MUSK: Those
are the two options.
SAL KHAN: But given
that-- I mean,
one, that's kind
of as epic as one
can think about
things, literally.
How did you make that concrete?
How does that turn into
SpaceX, Tesla and Paypal?
ELON MUSK: Well, so I
thought about these things
kind of in the abstract.
Not from the expectation
that I would actually
have careers in those arenas.
But, I wanted to be involved
in at least one of them.
And at first I
thought the best bet
was going to be electric cars.
And so the area
that I was studying
was advanced capacitors.
So essentially capacitors
that have an engine density
exceeding that of batteries.
Because they have
a very high power
density, but a low
energy density.
Maybe you have lecture to
that effect, I don't know.
SAL KHAN: Oh, yes, no.
We should do that.
We'll get to it later.
ELON MUSK: Exactly.
So obviously, if you could
make a capacitor that
had anywhere near the
energy density of a battery
with this incredibly
high power density
and this quasi-infinite
cycle and calendar life, then
you'd have an awesome
solution for energy storage
and mobile applications.
So I was going to
try to work on that
and try to leverage the
equipment that was developed
for advanced chip
making and photonics
to create ultra-precise
capacitors
at the molecular level.
SAL KHAN: And this
was when you were
going to go into grad school?
You had a brief
stint at Stanford?
ELON MUSK: That's right.
SAL KHAN: At a PhD
in applied physics?
ELON MUSK: Applied
physics, material science.
SAL KHAN: Right.
So even then you were
thinking of trying
to do something in the space?
ELON MUSK: Actually, this was
d to work on energy storage
solutions for electric cars.
And I'd actually
worked at a company
in Silicon Valley called
Pinnacle Research, which
did advanced capacitors.
There were electrolytic
capacitors.
And they actually
were pretty good.
They had like the energy density
of a lead-acid battery, which
for a capacitor,
that's a big deal.
But they used ruthenium
tantalum oxide.
And I think at the
time, there was
maybe like one or
two tons of ruthenium
mined per year in the world.
So it's not a scalable solution.
But I thought there could be
some solid-state solution,
like just using
chip-making equipment.
That was going to
be the basic idea.
But it was one of those
things where I wasn't sure
if success was one
of possible outcomes.
It's difficult to bound that
problem exactly and say, OK--
SAL KHAN: So you're
saying, I felt
like this was a destined
failure is another way
to parse that sentence.
But anyway, sorry.
ELON MUSK: No.
I didn't think it would
fail, but I wasn't sure
that success was a possibility.
SAL KHAN: OK.
Yes.
ELON MUSK: And
generally you want
to embark on something--
it's desirable to figure out
if success is at least
one of the possibilities.
SAL KHAN: Right, exactly.
ELON MUSK: Because
for sure failure
is one of the possibilities.
But, ideally, you want
to try to bracket it
and say success is in
the envelope of outcomes.
And I wasn't quite sure
if that was the case.
I think success on an academic
level would have been quite
likely, because you can
publish some useless paper--
and most papers are
pretty useless--
SAL KHAN: We have a
few-- don't take offense.
ELON MUSK: I mean, how many
PhD papers are actually
used by someone ever?
SAL KHAN: That's a good point.
ELON MUSK: Percentagewise
it's not good.
And so it could have been
one of those outcomes
where you add some leaves
to the tree of knowledge.
And that leaf is, nope,
it's not possible.
And there goes seven
years of my life.
So that was one path.
And I was prepared to do that.
But then the
internet came along.
And it was like, oh,
OK, the Internet,
I'm pretty sure success
is one of the outcomes,
and it seemed like I
could either do a PhD
and watch the
Internet happen, or I
could participate and help
build in some fashion.
Like, I was just concerned with
the idea of watching it happen.
So I decided to
put things on hold
and start an Internet company.
And we worked on internet
publishing software,
maps and directions, yellow
pages, those kind of things.
And we had as investors and
customers the media companies.
So like the New York Times
Company, Knight Ridder.
SAL KHAN: And this is
just at the early stages.
I mean this was like--
ELON MUSK: '95.
SAL KHAN: '95.
So it's really early stages,
so it's really out the gate.
ELON MUSK: Yeah.
Absolutely.
And so then we-- the reason we
worked with the media companies
was because we
needed to have money.
There was no advertising
money in '95.
In fact, the idea of
advertising on the internet
seemed like a ridiculous
idea to people.
Obviously, not so
ridiculous anymore.
But, at the time, it seemed like
a very unlikely proposition.
And a lot of the media
companies weren't even sure
that they should be online.
Like, what's the point of that?
SAL KHAN: And did you all
think that PayPal was just
going to be a simple,
little internet way to--
or did you think it
was going to turn
into the major kind of
transaction processing engine
that it is right now?
ELON MUSK: I didn't expect
PayPal's growth rate
to be what it was.
And that actually
created major problems.
So we started Paypal
on University Avenue.
After the first month or so
of the website being active,
we 100,000 customers.
SAL KHAN: Really?
That fast.
Wow, I didn't realize it was--
ELON MUSK: Yeah, it was nutty.
SAL KHAN: And how did it start?
How did people just
even know to use it?
I mean, obviously, both buyer
and seller have to be involved.
ELON MUSK: Yeah.
Well, we started off first
by offering people $20
if they opened an account.
And $20 if they referred anyone.
And then we dropped it to $10.
And we dropped it to $5.
As the network got
bigger and bigger,
the value of the network itself
exceeded any sort of carrot
that we could offer.
SAL KHAN: So much
money did you all
spend with that kind of
$5, $10, $20 incentive
to get that critical mass going?
ELON MUSK: It was a fair amount.
I think it was probably
$60 or $70 million.
SAL KHAN: Oh, wow, OK.
So it was substantial.
OK.
So we're not talking
peanuts here.
ELON MUSK: It depends
on your relative scale.
It's a peanut to Google.
SAL KHAN: Yeah,
no, that's right.
That's right.
ELON MUSK: Here's a peanut.
I mean, Google's
got $50 billion.
Apple's got $150 billion,
some crazy amount of money.
That's just cash.
SAL KHAN: Yeah.
So it's not an
outlandish-- I didn't
realize that was so core.
ELON MUSK: Like 1% of Google's
cash would be $500 million.
So, you know, that's 0.1%
percent of Google's cash.
SAL KHAN: That's true.
You're right,
that's inexpensive.
It's nothing.
ELON MUSK: Relative to them,
it's pretty inexpensive.
SAL KHAN: That's right.
ELON MUSK: And then we
did a bunch of things
to decrease the friction.
It's just like bacteria
in a Petri dish.
So what you want to do is try
to have one customer generate
like two customers.
OK?
Or something like that.
Maybe three customers, ideally.
And then you want that
to happen really fast.
And you could
probably model it just
like bacteria growth
in a Petri dish.
And then it'll just
expand very quickly
until it hits the
side of the Petri dish
and then it slows down.
SAL KHAN: And then
after Paypal, then I
mean-- to some
degree, especially us
in Silicon Valley, we kind
of understand the Internet.
We know people.
PayPal's obviously of the
scale that is noteworthy,
but then SpaceX just seems
really, you know-- well,
one, how did you decide that
I'm definitely going to do that?
And then like what's the
first thing that you do?
How do you even go
out-- I don't even
know how to start trying
to make a rocket company.
ELON MUSK: Well,
neither did I really.
And in fact, the first
three launches failed.
So it's not as though
it was like spot on.
It's like, did not
hit the bull's eye.
But
SAL KHAN: But even
getting to the point where
you're launching rockets.
I don't even how
do you get there?
One, how did you decide?
And then what did
you do on day one?
Like, who did you call?
Did you write a plan?
Did you start-- I
don't even know.
ELON MUSK: Actually,
the origin of SpaceX
is that I was
trying to figure out
why we'd not sent
any people to Mars.
Because the obvious
next step after Apollo
was to send people to Mars.
But what in fact happened
was that we sent a few people
to the moon and then
we didn't send anyone
after that to the moon
or Mars or anything.
But if you'd asked people
in 1969, what would 2013
look like, they would
have said, there
will be a base on the moon.
We would have least sent
some people to Mars.
And maybe there'd even
be a base on Mars.
There'd be like
orbiting space hotels.
And there'd be all this
awesome stuff in space.
And that's what people expected.
And if you said, well, actually,
the United States in 2013
will not be able to
send anyone to orbit.
But I'll tell you
what will exist
is that there'll be this
device in your pocket
that's like the size of--
smaller than a deck of cards
that has access to all
the world's information,
and you can talk to any
one on planet Earth.
And even if you're like in some
remote village somewhere so
long as there's something called
the Internet-- they wouldn't
know what that
means, of course--
then you would you be able
to communicate with anyone
instantly and have access to
all of humanity's knowledge.
They would have
said, like bullshit.
There's no way that
that's going to be true.
SAL KHAN: Right.
Right.
ELON MUSK: And yet
we all have that.
And space is not happening.
So I was trying to figure out
like what was the deal here.
And this was 2001.
And it was just a
friend of mine asked me,
what am I going to
do after Paypal.
And I said, well, you know,
I've always been interested
in space, but I don't
think there's anything
that an individual
could do in space,
because it's the province
of government, and usually
a large government.
But, I am curious
as to when we're
going to send some one to Mars.
So I went to the
NASA website to try
to figure out where is the
place that tells you that.
And I couldn't find that.
So I was like, either I'm bad
at looking at the website,
or they have a terrible
website, because surely there
must be a date.
SAL KHAN: That
should be a big date.
ELON MUSK: Yeah.
This should be on
the front page.
And then I discovered
actually that NASA
had no plans to send people
to Mars, or even really back
to the moon.
So this was really
was disappointing.
I thought well, maybe this is
a question of national will.
Like do we to get people
excited about space again?
And try to get NASA
a bigger budget,
and then we would
send people to Mars.
And so I started
researching the area,
becoming more familiar with
space, reading lots of books.
And I came up with this idea
to do so-called Mars oasis,
which was to send a small
greenhouse with seeds
in dehydrated gel that upon
landing, you hydrate the gel.
You have green plants
on a red background.
The public responses to
precedents and superlatives.
So it would be the
first life on Mars.
The furthest that
life's ever traveled.
And you'd have this money
shot of green plants
on a red background.
So that seemed like it would
get people pretty excited.
So I started getting into this.
And trying to
figure out, OK, well
can I afford to
build a spacecraft?
Because I had some money
as a result of PayPal,
but it had to fit
within that budget.
And I figured we had to do two
missions, because if we only
did one and it
failed, then it might
have like the opposite effect.
SAL KHAN: But you were willing
to bet the farm, so to speak,
on this?
ELON MUSK: Yeah.
Well, I figured I was willing to
spend half the money that I got
from PayPal with no
expectation of return.
Because I thought this
was just something
that was pretty
important and yeah,
it seemed like I could
spend half the money
I made on PayPal on this, and
if that got NASA a bigger budget
and resulted in us
going to Mars, that
would be a pretty good outcome.
SAL KHAN: And when your friends
or your family came up to you
and said, look there's
nations that can't do this.
You're a guy, I mean you
have some resources, what
did you say or do or think?
ELON MUSK: Well, so I had
a lot of friends of mine
try to talk me out of
starting a rocket company,
because they thought
it was crazy.
And one friend of
mine made me watch
a video of rockets blowing up.
And there were
just lots of people
that thought it was
a really crazy idea.
And there was some
people that had
tried to start rocket
companies, not succeeded.
And they tried to
talk me out of it.
But the thing is that-- their
premise for talking me out
of it was, well, we
think you're going
to lose the money
that you invest.
I was like, well, that
was my expectation anyway,
so I don't really mind if I
lose-- you I mean, I mind,
but I mean it's not like
I was trying to figure out
the rank-ordered best
way to invest money
and on that basis chose space.
It's not like that's--
I thought, wow--
SAL KHAN: You weren't looking
at like money-market bonds,
AAA bonds, rocket company.
You weren't like--
ELON MUSK: I could
do real estate.
I could invest in shoe making.
Anything.
And, whoa, space
is the highest ROI.
That is not what-- it
wasn't the premise.
I just thought that
it was important
that humanity
expand beyond Earth,
and we weren't doing
that, so maybe there
was something I could
do to spur that on.
And then I was able to compress
the costs of the spacecraft
and everything down to a
relatively manageable number.
And I got stuck on the rocket.
The US rockets were
way too expensive.
I ended up going to Russia--
I flew to Russia three times
to negotiate a
purchase of an ICBM.
I tried to buy
two of the biggest
ICBMs in the Russian
fleet in 2001 and 2002.
And I actually
negotiated a price.
SAL KHAN: I'll just let
that statement stand.
I'm not even going
to-- Well, actually,
I have to-- like
who did you call?
ELON MUSK: You open
the yellow pages.
Go to ICBMs.
Oh!
SAL KHAN: How does
this-- I don't
want to get too much
in to it but I'm
curious about this
one particular thing.
You decide at some point
you need to buy an ICBM?
ELON MUSK: Yeah.
Well, actually at first I tried
to buy just a normal launch
program that they use
to launch satellites,
but those are too expensive.
SAL KHAN: I see.
I see.
ELON MUSK: The Boeing Delta
II would have cost $65 million
each, so two would
have been $130 million.
And then I was like, woah,
OK, that breaks my budget
right there.
And I tried to
negotiate with them.
And that was not-- I
did not make progress.
SAL KHAN: How much
does an ICBM go for?
I'm curious what's the
market rate for one of those?
ELON MUSK: Well--
SAL KHAN: This is
right after the fall,
it might have gone up.
ELON MUSK: Yeah, it's
gone up a lot since then.
But in 2001, it would've
been about $10 million each.
So two would have
been $20 million.
And then I thought I could
get the rest of the mission
down to also around $10
million per, so we'd
have a dual mission with
like two identical launches,
two identical spacecraft
for roughly $40 million.
And so I thought,
OK, I can do that.
SAL KHAN: But you
must have had some
like rocket scientists
advising you at this point?
This sounds like
you were serious.
I mean you were--
ELON MUSK: Yeah.
I engaged a bunch of
consultants and started
to get familiar with
the space industry.
But then after the
third trip to Russia,
I came to realize
that I was actually
wrong about my first premise,
that there was a lack of will.
In fact, I think that there's
a tremendous amount of will
in the United States
for space exploration.
Because the United
States is essentially
a nation of explorers.
I mean, it's a distillation
of the human spirit
of exploration.
So of course it was
quite silly of me
to think that people
lacked motivation.
But what people
don't want to think
is that, OK, sending
people to Mars
is going to be so
expensive that they'll
have to give up health
care or something.
They're not going to do that.
So it's got to be
that going to Mars
is not going to cause
some meaningful drop
in their standard of living.
So if it's like maybe
a quarter of a percent
or half a percent
of GDP-- something
like that is palatable.
Anyways, so I thought,
OK, it's not really
going to maybe
matter that much if I
do this mission, because what
really matters is having a way.
So I was wrong-- I thought
there wasn't enough will,
but there actually
was plenty of will,
if people thought
there was a way.
So then I said, OK, well,
I need to work on the way.
How hard is it really
to make a rocket?
Historically, all rockets have
been expensive, so therefore,
in the future, all
rockets will be expensive.
But actually that's not true.
If you say, what is
a rocket made of.
And say, OK, it's made of
aluminum, titanium, copper,
carbon fiber, if you want
to go that direction.
And you can break down and
say, what is the raw material
cost of all these components.
And if you have them
stacked on the floor
and could wave a magic wand so
that the cost of rearranging
the atoms was zero, then what
would the cost of the rocket
be.
And I was like, wow,
OK, it's really small.
It's like 2% of
what a rocket costs.
So clearly it would be in
how the atoms are arranged.
So you've got to
figure out to OK, how
can we get the atoms
in the right shape
much more efficiently.
And so I had a series
of meetings on Saturdays
with people some
of whom were still
working at the big
aerospace companies,
just to try to figure out
is the some catch here
that I'm not appreciating.
And I couldn't figure it out.
There doesn't seem
to be any catch.
So I started SpaceX.
SAL KHAN: And you
ended up-- you had
some failures, but obviously
some huge successes.
What was the cost that you were
able to build this rocket for
relative to what they were
being built for before?
ELON MUSK: So let's see.
For the Falcon 1, which is
the first rocket we built.
And the first three
flights did not make it.
In fact, we got
progressively further.
But like the first rocket
came in and landed maybe
a couple hundred yards
away from the launch
site, and tiny fragments.
So, yeah, anyway,
that rocketed ended up
costing around $6
million compared
to other rockets in
that class, which
were about to $25 million.
SAL KHAN: Wow.
So significant?
ELON MUSK: Yeah, like a quarter.
But there's an even
better step beyond that
which is to make
rockets reusable.
Right now that is around what
our comparison price is--
excluding the refurbished ICBMs.
So, if you say building
a rocket from new,
how does the SpaceX
rocket compare
to a rocket from
Boeing or Lockheed?
It's about a quarter
of the price.
However, if we make
it reusable, then it
can be two orders of
magnitude cheaper.
SAL KHAN: Two orders
of magnitude cheaper.
A 100th of the price?
ELON MUSK: That's right.
For you.
SAL KHAN: Only today.
Memorial day sale.
And I've seen some-- you all are
doing these vertical landings,
like literally out of like
the 1950s Sci-Fi movies.
And that's what
you're talking about?
ELON MUSK: Yeah.
Essentially, the rocket
needs to come back
and land at the launch site,
and then reload propellant
and take off again.
Like an airplane
in its reusability.
SAL KHAN: How far do you
think we are from that?
When do you think--
your best guess,
when we'll actually
see that happening?
ELON MUSK: Well, I'm hopeful
we can do it next year.
SAL KHAN: Oh, OK.
Yeah.
That's-- we've got some
ambitious stuff at Khan Academy
for the next year, too.
So we can compare.
We're redesigning the site.
ELON MUSK: Right.
We've been working on
it for a long time.
I should say, SpaceX has
been around for 11 years,
and thus far we have not
recovered any rockets.
We recovered the
spacecraft from orbit.
So that was great.
But none of our attempts to
recover the rocket stages
have been successful.
The rocket stages have
always blown up essentially
on reentry.
Now, we think we've figured
out why that was the case.
And it's a tricky thing, because
Earth's gravity is really
quite strong.
And with an advanced rocket,
you can do maybe 2% to 3%
of your lift-off mass
to orbit, typically.
And then reusability
subtracts 2% to 3%
So then you've got like
nothing to orbit or negative.
And that's obviously
not helpful.
And so the trick is to
try to shift that from
say 2%, 3% in an
expendable configuration
to make the rocket mass
efficiency, engine efficiency,
and so forth, so much better
that it moves to maybe around
3.5% to 4% in expendable
configuration.
And then try to get clever
about the reusability elements
and try to drop that to
around the 1.5% to 2% level.
So you have a net payload
to orbit of about 2%.
SAL KHAN: But you're doing it
at one, two orders of magnitude
cheaper.
ELON MUSK: Yeah.
Absolutely, because our Falcon
9 rocket cost about $60 million.
But the propellant
cost-- which is mostly
oxygen-- it's two-thirds
oxygen, one-third fuel--
is only about $200,000.
SAL KHAN: Wow.
ELON MUSK: And it's
much like a 747.
It costs about as much
to refuel our rocket
as it does to refuel a
747 within-- well, pretty
close, essentially.
SAL KHAN: So assuming
you all are successful,
and you all have
proven yourself to be
successful on these audacious
things in the past, I mean,
what happens?
I mean that seems like it's--
what happens in the next 5,
10 years in the space industry,
if you all are successful
there?
I mean do we get to Mars?
Do we have kind of market
forces, commercialization
of space starting to happen?
ELON MUSK: Yeah.
Let's see.
Well, the first
step is that we need
to earn enough money to
keep going as a company.
So we have to make sure that
we're launching satellites.
Commercial satellites like
broadcast communications,
mapping, government satellites
that do scientific missions.
Earth-based or
space-based missions.
GPS satellites.
That kind of thing.
And then also servicing
the space station.
Transferring cargo to and
from the space station,
which we've done a few times.
And then taking people to
and from the space station.
So we've got to service the
sort of Earth-based needs
to launch satellites
and that pays the bills.
But in doing that keep
improving the technology
to a point where we can
make full reusability work.
And we have sufficient
scale and sophistication
to be able to take
people to Mars.
SAL KHAN: Wow.
So you think this is
going to be a reality?
What's your best
guess of when we're
going to have someone on Mars?
ELON MUSK: I think
probably about 12 years.
SAL KHAN: That's nothing.
And you think it'll
be a round trip?
It won't just be some type
of permanent colony on Mars?
ELON MUSK: I think it's
probably a round trip.
It's not for sure.
SAL KHAN: I could talk about
this for-- people know, I'm--
ELON MUSK: Aspirational
it'd be a round trip.
SAL KHAN: This is mind blowing.
And then on Tesla.
I mean Tesla's obviously,
from my vantage,
it's a huge success.
What do you think in that
industry-- well, one,
I'll ask kind of
the same question.
What did you think--
this is something
that GM and Toyota and these
massive multi-billion dollar
organizations have been trying.
What gave you the
confidence to pursue it?
And now that it seems to
be a huge success, where
do you think this
industry's going
to be the next 5, 10 years?
ELON MUSK: Yes.
So with Tesla, the goal
is try to accelerate
the advent of
sustainable transport.
I think it would happen
anyway, just out of necessity.
But because we have an
un-priced externality
in the cost of gasoline.
We weren't pricing in the
environmental effects of CO2
in the oceans and atmosphere.
That's causing the normal
market forces to not function
properly.
And so the goal
of Tesla is to try
to act as a catalyst
to accelerate
those sort of normal forces.
The normal sort of market
reaction that would occur.
We're trying to have a
catalytic effect on that.
And try to make it happen,
I don't know, maybe 10 years
sooner than it would
otherwise occur.
That's the goal of Tesla.
So that's the reason we're
making electric cars and not
any other kind of car.
And we also supply powertrains
to Toyota and to Mercedes
and maybe to other car
companies in the future
to accelerate their production
of electric vehicles.
So that's the goal there.
And so far, it's
working out pretty well.
SAL KHAN: I mean, I just saw
a news report earlier today
that you all sold more
Model S's than-- you all
are leading that
segment of the industry.
The Mercedes S class, the BMW
7 Series, or the Lexus LS400,
or whatever it is.
ELON MUSK: Yeah, actually,
that seems to be the case.
I didn't realize they sold
so few cars in that segment.
Because we don't
sell that many cars.
We sell 5,000 a
quarter, or 12,000--
SAL KHAN: Well, out here they
seem like you know every--
ELON MUSK: Well, this
is our home team.
So it's-- we better sell
a lot in the Bay Area.
Because otherwise we're like--
SAL KHAN: And, well,
I mean, similar thing.
How did you start?
What gave you the confidence?
And do you see
yourselves as kind
of a major automotive,
mainstream brand in 5,10 years,
all the way down to competing
with the Honda Accords
and Civics?
ELON MUSK: I mean, yeah.
Our goal-- it's not to
become a brand big brand
or to compete with
Honda Civics, rather
to advance the cause
of electric vehicles.
And so we're just
going to keep making
more and more electric cars and
driving the price point down
until the industry is
very firmly electric.
Like maybe half of
all cars made are
electric or something like that.
Which is not to
say that we expect
to make half of all cars.
We want to just have that
catalytic effect until
at least that occurs.
And I think the point at
which we're approaching half
of all new cars
made are electric,
then I think I would consider
that to be the victory
condition.
And so the faster we can
bring that day, the better.
SAL KHAN: When would be your
guess when that happens?
ELON MUSK: Well, I
made a bet with someone
about three years ago that it
would be sooner than 20 years.
So it's 17 years from now.
But that's conservative.
I think it's probably
maybe 13 or 14 years.
SAL KHAN: Wow.
Right when we're going to Mars.
ELON MUSK: Right.
SAL KHAN: It'll
be exciting times.
ELON MUSK: True.
Exactly.
I was just thinking about that.
It was like, oh, those time
frames are kind of coincident.
The nature of new
technology adoption
is it tends to
follow an S-curve.
So what usually happens
is people under-predict it
in in the beginning,
because people
tend to extrapolate
in a straight line.
And then they'll over-predict
it at the midpoint,
because there's late adopters.
And then it'll
actually take longer
than people think
at the mid-point,
but much shorter than people
think at the beginning.
But I'm pretty excited
about how things are going.
And, in fact, I think that the
pace of technology improvement
in electric energy
storage is really
moving faster than
anyone thinks.
SAL KHAN: Wow.
I got one more-- how
are we doing on time?
Where's Ester?
Oh, 9 o'clock.
So how much time do you have?
I want to make sure
we don't go over.
ELON MUSK: Well, I guess
maybe another 15 minutes.
SAL KHAN: OK.
So I'll finish with
one last question
and then we'll open it up.
What advice do you have
for us at Khan Academy?
ELON MUSK: I don't know.
You guys seem to be
doing really great.
So I was wondering if
you had advice for me.
SAL KHAN: Oh, no, well.
ELON MUSK: Yeah.
It seems like you're doing
an amazing job of-- really
super leveraged.
I mean, obviously, a
small team, and you're
having a dramatic effect--
SAL KHAN: Yeah, half these
people don't even work here.
There just like-- so
it's like it's even--
ELON MUSK: Right.
So it's, I think very
impressive thing you're
doing to spread knowledge
and understanding
throughout the world.
SAL KHAN: The universe
soon, if you hold up
your end of the bargain.
ELON MUSK: It's
actually kind of funny.
If you think, what is education?
Like you're basically
downloading data and algorithms
into your brain.
And it's actually amazingly
bad in conventional education.
Because like it shouldn't
be like this huge chore.
So you're making
it way, way better.
But I think a lot of
things that I would say,
you've probably heard 100 times.
And, in fact, are if not doing.
The more you can
game-ify the process
of learning, the better.
For my kids, I do
not have to encourage
them to play video games.
I have to like pry them from
their hands, like crack.
SAL KHAN: Yes.
ELON MUSK: It's like,
drop that crack needle.
SAL KHAN: You have that
problem at your house, too.
The crack is addictive.
ELON MUSK: So to the degree that
you can make somehow learning
like a game, then it's better.
And I think, unfortunately,
a lot of education
is very vaudevillian.
You've got someone
standing up there kind
of lecturing at people.
And they've done the same
lecture 20 years in a row,
and they're not very
excited about it.
And that lack of enthusiasm
is conveyed to the students.
They're not very
excited about it.
They don't know
why they're there.
Like why are we
letting this stuff.
We don't even know why.
In fact, I think a lot
of things that people
learn that probably there's
no point in learning them.
Because they never use
them in the future.
SAL KHAN: Because who's going
to launch a rocket into space?
I mean, that's just like--
exactly, that never happens.
ELON MUSK: Well,
you have to say--
people don't stand
back and say, well,
why are we teaching
people these things.
And we should tell
them, probably,
why we're teaching these things.
Because a lot of kids are
probably just in school,
probably puzzled as
to why they're there.
I think if you can
explain the why of things,
then that makes
a huge difference
to people's motivation.
Then they understand purpose.
So I think that's
pretty important.
And just make it entertaining.
But I think just in general
conventional education
should be massively overhauled.
And I'm sure you pretty
much agree with that.
I mean the analogy
I sometimes use
is, have you seen like
Batman, the Chris Nolan
movie, the recent one.
And it's pretty
freaking awesome.
And you've got incredible
special effects, great script,
multiple takes, amazing
actors, and great sound,
and it's very engaging.
But if you were to
instead say, OK--
even if you had the same script,
so at least it's same script.
And you said, OK,
now that script,
instead of having
movies, we're going
to have that script performed
by the local town troop.
OK, and so in every
small town in America,
if movies didn't
exist, they'd have
to recreate The Dark Night.
With like home-sewn costumes and
like jumping across the stage.
And not really getting
their lines quite right.
And not really looking like
the people in the movie.
And no special effects.
And I mean that would suck.
It would be terrible.
SAL KHAN: That's right.
Very--
ELON MUSK: That's education.
SAL KHAN: So with that-- and
I apologize to all of you
guys for hogging up all of the
time, because, obviously, I
could talk for hours
about this stuff.
But we do have time,
probably 5 or 10
minutes for a
handful of questions.
If none of you all have
any, I have about nine more.
But, yes.
SPEAKER 1: So I noticed-- I
picked up two kind of themes
from what you were discussing.
One was somewhat
audacious goals.
And the other was I don't
think I heard you use the word
profit in anything
that you spoke about.
You seem to be-- each thing is
pointed at like re-invigorating
an industry or bringing
back space missions.
How much of your
success do you attribute
to having really
audacious goals or versus
just not being focused on
the short term, money coming
in, or I don't know, investors?
ELON MUSK:
Unfortunately, one does
have to be focused on the
short time and money coming
in when creating a company,
because otherwise the company
will die.
So I think that a
lot of times people
think like creating
company is going to be fun.
I would say it's
really not that fun.
I mean there are periods of fun.
And there are periods
where it's just awful.
And, particularly, if you're
the CEO of the company,
you actually have a
distillation of all the worst
problems in the company.
There's no point in
spending your time
on things that are going right.
So you're only
spending your time
on things that are going wrong.
And there are things
that are going wrong
that other people
can't take care of.
So you have like
the worst-- you have
a filter for the crappest
problems in the company.
The most pernicious
and painful problem.
So I think you have to feel
quite compelled to do it.
And have a fairly
high pain threshold.
There's a friend
of mine who says,
starting a company is like
starting into the abyss
and eating glass.
And there's some truth to that.
The staring into
the abyss part is
that you're going to
be constantly facing
the extermination
of the company.
Because most start ups fail.
It's like 90% percent-- it
could be 99% of start ups fail.
So that's the staring
into the abyss part.
You're constantly saying, OK,
if I don't get this right,
the company will die, which
can be quite stressful.
And then the eating
glass part is
you've got to work
on the problems
that the company
needs you to work
on and not the problems
you want to work on.
And so you end up working
on problems that you really
wish you weren't working on.
And so that's the
eating glass part.
And that goes on
for a long time.
SPEAKER 1: So how do you keep
your focus on the big picture
when you're
constantly faced with,
we could be out of
business in a month?
ELON MUSK: Well, it's just
a very small percentage
of mental energy is
on the big picture.
Like you know where you're
generally heading for
and the actual
path is going to be
some sort of zigzaggy
thing in that direction.
You're trying not to deviate
too far from the path
that you want to
be on, but you're
going to have to
that to some degree.
But I don't want to diminish
the-- I think the profit
motive is a good one, if
the rules of an industry
are properly set up.
So there's nothing
fundamentally wrong with profit.
In fact, profit just
means that people
are paying you more
for whatever you're
doing than you're
spending to create it.
That's a good thing.
And if that's not the case,
then you'll be out of business.
And rightfully so.
Because you're not
adding enough value.
Now there are cases,
of course, where people
will do bad things in
order to achieve profit,
but that's actually
quite unusual.
Because usually the rules
are set up mostly correctly.
Like not completely,
but mostly correctly.
SAL KHAN: I think we have
time for one more question.
Joel.
JOEL: Yeah, I have
an important one.
SAL KHAN: OK, very good.
Yes, please.
SPEAKER 3: No.
JOEL: OK, so few months
ago, you teased Hyperloop,
and we haven't heard
anything since.
So, first of all, a
few of us engineers
were talking about
it, and I think
we have a few ideas,
if you need help.
But, if you feel
comfortable, maybe you
could tell us a little bit more.
ELON MUSK: I was reading about
the California high-speed rail,
and it was quite depressing.
Because California
taxpayers are going
to be on the hook to build the
most expensive high-speed rail
per mile in the world--
and the slowest.
Those are not the
superlatives you want.
And, it's like, damn,
we're in California,
we make super high-tech stuff.
Why are we going
to be spending--
now the estimates are
around $100 billion--
for something that will take
two hours to go from LA to San
Francisco?
I'm like, OK, well,
I can get on a plane
and do that it 45 minutes.
It doesn't make much sense.
And isn't there some better
way to do it than that.
So if you just say,
OK, well what would
you ideally want in a
transportation system?
You'd say, OK, well
you'd want something
that relative to existing
modes of transportation
is faster-- let's say twice
as fast-- costs half as much
per ticket, can't crash, is
immune to weather, and is--
you can make the whole
thing like self-powering
with like solar panels
or something like that.
That would be pretty--
SAL KHAN: That
would be great, yes.
ELON MUSK: --a good outcome.
And so what would do that?
And what's the fastest way
short of inventing teleportation
that you could do
something like that?
And some of the elements of that
solution are fairly obvious,
and some of them
are not so obvious.
And then the
details-- the devil's
in the details of
actually making something
like that work.
But I came to the
conclusion that there
is something like
that that could work.
And would be practical.
SAL KHAN: Is this around
the evacuated tubes?
The vacuum tubes?
Like the old bank--
ELON MUSK: It's
something like that.
SAL KHAN: But you haven't been
more public with what this is?
ELON MUSK: No.
Although I did say that
once Tesla was profitable
that I would talk more about it.
But, we haven't done
our earnings call yet.
So I think I'll probably do
it after the earnings call.
And the thing is I'm
kind of strung out
on things that
I'm already doing.
So adding another thing--
it's like doesn't-- it's a lot
SAL KHAN: Learning
the guitar You
could pick up all
sorts of things.
ELON MUSK: Right.
I tried learning the violin.
That's, by the way, a
hard thing to learn.
SAL KHAN: Yeah.
Launching rockets,
electric cars,
revolutionizing transportation.
Yeah, it's easy.
ELON MUSK: I cannot
play the violin at all.
Very horrible.
If you think about
the future, you
want a future that's
better than the past,
and so if we had something
like the Hyperloop,
I think that would be like cool.
You'd look forward to
the day that was working.
And if something like
that, even if it was only
in one place-- from LA to San
Francisco, or New York to DC
or something like that--
then it would be cool enough
that it would be like
a tourist attraction.
It would be like a
ride or something.
So even if some of the initial
assumptions didn't work out,
the economics didn't work
out quite as one expected,
it would be cool
enough that like,
I want to journey to that place
just to ride on that thing.
That would be pretty cool.
And so that's I think how-- if
you come with a new technology,
it should feel like that.
You should really-- if you
told it to an objective person,
would they look
forward to the day
that that thing
became available.
And it would be pretty exciting
to do something like that.
Or an aircraft.
Like I thought it was
really disappointing when
the Concorde was taking
out of commission,
and there was no supersonic
transport available.
And of course the 787
has had some issues.
But the thing is, the 787
even in the best case scenario
is only a slightly better
version of the 777.
And it's like, OK,
not that exciting.
SAL KHAN: So this is something
that you are working on?
ELON MUSK: I wouldn't
say working on it.
SAL KHAN: And one day in the
not-too-far future-- or there's
some plans or consultants
involved or something?
SPEAKER 4: You called Russia.
SAL KHAN: You made some
phone calls to Russia.
ELON MUSK: No, every now and
then, it's percolating away.
I'm not actually
thinking about it.
But then they'll be some new
element of that I'll think of.
Oh, this would make it better.
SAL KHAN: Fascinating.
Well, I think I'm
speaking for everyone.
This is like the most
epic possible conversation
one could have over about
the course of an hour.
And I think all of us would
love to chat with you for hours
on end, but thank you so much.
I know you have a
lot of free time,
so it probably wasn't that big
of a deal for you to come here.
But, it was a huge honor.
And I think it's
inspired all of us
to go out and change the
world and the universe.
ELON MUSK: Cool.
All right.
SAL KHAN: Thank you very much.
[APPLAUSE]