01:04:45 · Ty Morse
[01:04:45] S0: Most companies start out the gate with a huge amount of cash behind them, hundreds of millions or billions of dollars, almost universally don't end well. Yeah. They don't they don't seem to actually produce value and, like, create something useful. But Elon has enough of a track record of, I think, creating useful things that he's got, like, a unique position where he's able to throw just insane amounts of capital behind a new idea in a very short time frame with the right mental models and then actually have success.
01:05:13 · Eric Jorgenson
[01:05:13] S1: Yeah. One of the things that he's underrated about him is actually how frugal he is, how, like, the the the common thread of his companies is actually for as technological and and breakthrough and innovative as they are. They're not overcapitalized. You know, they they are capital efficient, and they are driving cost down all the time. You know, the north star of Tesla is as many Teslas on the road as you can and increasing safety through autonomous driving, and SpaceX's North Star is like minimize cost of mass to orbit. You have to run an entirely frugal organization in the same way that like Amazon does everything they can to to lower prices and Walmart does everything they can to lower prices. That's the culture of these organizations. So even though they did start with, you know, tens of millions of... It was also his money and he was paying close attention to where it went, and he was driving this, like, sort of frugal culture of innovation, in... Through the product itself. It's the goal of these organizations to be relatively cheap. Like, the equity value of them is so massive because of the growth rate that they're on and how singular the capabilities of the companies are, which comes from the engineering ability and vertical integration that they have, which I think is so interesting. You you reminded me earlier of the the vector sum model for building a team, which I think
01:06:28 · Ty Morse
[01:06:28] S0: is another, like, how does he outperform? What are his tools? What are his his mindset? I love the idea of there may be a whole bunch of really smart people, but if they're not... If someone is super smart but not aligned, then it can actually be a complete distraction and negative, like, negative impact on the overall organization.
01:06:44 · Eric Jorgenson
[01:06:44] S1: Exactly. So so you as a founder, like, you start a company, you are one arrow, and maybe, like, the the size of the arrow is how smart you are and how long the arrow is, how fast you're moving, and as you add people to your company, you're adding additional arrows, and maybe they're big or small arrows, maybe they're long or short. I'm not using the, like, mathematical language here, but it's just easier to visualize what's going on, and as you add people, you could have all different kinds of alignment and you could have different kinds of arrows, but the more aligned they are, the bigger they are, and the longer they are, that is the vector sum of the organization. And as you add them all up into, like, a big arrow, that's how much ground you're gonna cover. So you want the smartest people, you want them working hard, and you want them all aligned and working towards the same thing. And one of the things that he uses to achieve this is, like, one metric. He says that video games without a score are boring, as you're, like, building a team, you want one metric that every decision should be run across, run against. So at different eras, it's different... Or different teams, it's different numbers. Obviously, like, for autonomous driving, it was how many miles are driven on average between a human intervention. How many times do people feel they need to grab the wheel or step on the brakes to change what the autonomous software is doing? And so every meeting that he has with that team, the first slide is what is that number and how has it changed? What What is that number and how has it changed? So every decision that they're making, every design decision, every incremental hire, every effort, every dollar they spend is like, does it move that number that Elon wants us to move? And when you sequence those changes out, that's how you get to these, like, know, oh my god, people are driving across the country now without any interventions, you know, hundreds or thousands of miles.
01:08:19 · Ty Morse, Eric Jorgenson
[01:08:19] S0: That's actually an interesting thing to think about as well, being really, really thoughtful about which metrics you go after and what is the actual goal. I think not enough people spend enough time figuring out what is the objective, like the real objective that I am going after. And if you don't have that, you can have the highest agency, best people in the world, super smart, super energetic. But if they're like all working in these different directions, like this is the whole idea of you just hire a bunch of smart people and let them cook. I don't think that actually works in a real way. And so I, you know, thinking about how Elon figures out which, you know, he's going to tackle some new objective, some new thing, which metric to go after and, like, how to decide which one that is. [01:09:01] S1: Yeah. The the... Maybe the most famous one in retrospect is probably gonna be, you know, cost of [01:09:07] S0: Launch to orbit.
01:09:07 · Ty Morse, Eric Jorgenson
[01:09:07] S0: Launch to orbit. [01:09:08] S1: Cost of mass to orbit. Yeah. Like dollars per kilogram to orbit. And and that's, you know, that's been consistent across Falcon one, Falcon nine, Starship, like each program is designed and each design decision is made. Like, how do we minimize the cost or maximize the payload, to orbit Yeah. For And then then it becomes a volume. Right? So you've got... You can optimize that on an individual ship level. You can also optimize that on a system level, like how many of these things can we build? How quickly can we ship it? Where does the booster land? Where does the, know, the ship land? Like, how do we build a launch system that drives it all through as quickly as possible? And so that's a number that's been dominating decision making at SpaceX for a really long time, and it does go back to that cost, like, the efficiency, the efficacy with the North Star being like getting to Mars, building a civilization on Mars, and in the meantime, you know, it's achieved Starlink. In the meantime, it's dropped launch cost two orders of magnitude and also unlock this opportunity for data centers in space and many, many other things that are happening in the space economy that, you know, are just gonna continue. Right? But there's also the Tesla Model three scale up was 15,000 cars a week or were dead, [01:10:17] S0: I think was the number. It was, 5,000