WSJ CEO Council Summit
Questions on ElonsFAQ asked in this interview (3)
Transcript
0:26Elon MuskElon, let's just start right with
0:30WSJ Interviewerwhere John posed the question. I mean, you've spoken often in your career about how important it was for you as a young entrepreneur and innovator to come to America.
0:38WSJ InterviewerAnd you said there's no other country where you could have achieved what you've achieved today.
0:43Elon MuskDefinitely.
0:44WSJ InterviewerWhen you look at the US today, the landscape, would that still apply in 2020? And are we broadly, as a society doing everything we should be doing to foster that same environment that brought you here?
0:58Elon MuskYeah, well, I think us is still great with respect to innovation and fostering entrepreneurship still. It's still great. I think we don't want to be complacent and we want to say, okay, how can we make it better over time?
1:14Elon MuskAnd I think we want to be cautious about the gradual creep of regulations and bureaucracy. The rules and regulations are immortal. And if we keep making more every year and do not do something about removing them, then eventually we will be able to do nothing.
1:31Elon MuskThis is very important and I think not well appreciated. This is sort of like the slow boil of the frog, you know, jump out because it gets just slightly hotter each year.
1:43Elon MuskWe should be aware of this, I think, particularly at the state level.
1:46WSJ InterviewerYeah, well, I want to talk about that because you've been running into that some in California. But let me ask in a broader sense, you've never been. I mean, you've been working with government, you do business with government now, you've expressed strong feelings about government pro and con, at different times, depending on the circumstances.
2:05WSJ InterviewerBut when you think through an innovation lens, in the broadest sense, what's the right role for government? Like, what is the role? Where should government be a player and where should it be?
2:14WSJ InterviewerHands off. What's ideal in your mind?
2:17Elon MuskSure. A lot of the time the best thing that government can do is just get out of the way. And so I'd say that that's the default. Probably best thing to do then after that would be ensuring that there are not artificial monopolies, that there is a fertile ground for startups, because what can happen over time is they can get regulatory capture by large companies where they influence the regulators and the legislators to favor their situation.
2:56Elon MuskAnd then you have a forest of redwoods and you just can't. The little trees can't grow. So we really want to have an environment that tends to favor smaller companies and startups.
3:11Elon MuskThe big companies really don't need the support, but they will generally try to work the system to establish a monopoly of some kind. We should Be wary of that in general.
3:25Elon MuskIt's like, I think we could consider changing the, the way we think of things from say, capitalism versus Communism. I apologize for the long answer, but I think this is capitalism versus communism and think more in terms of feedback loops.
3:42Elon MuskSo is a given organization, does a given organization, government or commercial, have good feedback loop for the customer? Whether it's the people as a whole or whoever the customers are.
3:56Elon MuskAnd if you've got like a duopoly or oligopoly, they're generally going to have a weak response to their customer. And if they're monopoly, they're going to have the weakest response to the customer.
4:08Elon MuskAnd the reason that government I think is often the worst at responding to the customers being the people is that they're a monopoly that can't go bankrupt or usually cannot go bankrupt.
4:19Elon MuskSo there's not really a, a cleansing process for government short of a catastrophe. So I mean, if you want to complain about the dmv, what's the alternative?
4:35WSJ InterviewerSo a couple things to unpack there. First, I do want to. When you talk about redwoods dominating the air and smaller companies having a challenge, some people would hear that as being situation in Silicon Valley today.
4:49WSJ InterviewerI don't necessarily think that's what you implied. But is that what you see in Silicon Valley today?
4:54Elon MuskWell, I think this is not a Silicon Valley problem, it's just a general problem. I mean, if you look at say how many candy companies are there? Big candy is consolidated into three companies or something.
5:08Elon MuskAnd they also own all the dog food and the baby food. And it's like when's the last time there was some good candy? You know, what's the forcing function for a new candy bar?
5:17Elon MuskI haven't seen one in ages. So you know, we got to watch this like consolidation that ends up resulting in lower responsiveness to the end customer. And like I said, it's like you can think of like in the limit, government is simply the largest corporation.
5:37Elon MuskThere's some people, I think it's a false dichotomy to look at government and sort of industry as separate. Government is simply a corporation. In the limit, it is the ultimate corporation with a monopoly.
5:51Elon MuskBut then as you get closer to, like I said, monopoly, as the feedback loop gets weaker and less responsive to the customer, that's where you have something which does not maximize the happiness of people, which should be our objective overall.
6:07WSJ InterviewerWe had a couple people last night at this event who are joining the Biden administration, a couple of the president elect senior advisors, and clearly one of the things heavily on their mind is sort of a new national industrial policy, for want of a better term.
6:21WSJ InterviewerThey talked about spending a lot more on research and development and fostering innovation. Big government spending, basically. Is that kind of national industrial policy a good idea? Is that a good use of government right now in your mind?
6:36WSJ InterviewerAnd if it is, where would you focus that kind of effort?
6:40Elon MuskWell, it's government's responsibility to establish the rules of the game and then ensure that those rules are properly enforced. Like sort of like the referees on the field and you know, it's like, you know, football or something and you got the rules and you got the referees.
6:56Elon MuskYou got to make sure the rules are the right rules and the referees are enforcing the rules. I think that's an important role for government to ensure that the rules are correct and that the incentives are what we actually want them to be for, like I said, the long term, maximum happiness of people into the future.
7:16Elon MuskWhere I think government does not do a great job is when they want to not just be a referee on the field, they want to be a player on the field.
7:23Elon MuskThis does not end up in a
7:25WSJ Interviewergood situation picking winners and losers that kind of.
7:30Elon MuskI mean, effectively government incentives do favor. Like you're going to say, like what are the rules of the game? And this is obviously an imperfect analogy, but I do think it is a pretty good one that you want the government to be carefully focused on ensuring the rules of the game are what we actually want them to be.
7:47Elon MuskThat we're getting rid of old rules. This is very important, which is not occurring and that the rules are enforced such that we have ethical behavior of, of companies.
8:00Elon MuskYeah. Now there are times when you have an unpriced externality such as the CO2 capacity of the oceans and atmosphere. So then if that is not priced effectively, then you can get behavior, industry behavior that does not that we think is probably not good for the environment or not good for the future of the planet.
8:25Elon MuskMost of the time provide pricing is correct, you will see correct behavior from private industry. So, you know, that's like one example where if we effectively price carbon, we'll see the right behavior and then the government does not need to try to pick technology winners and losers.
8:43Elon MuskThey can simply incent the outcome. I think it's incredibly important that government focus on incenting the outcome, not the path.
8:51WSJ InterviewerYou mentioned California. And I have to ask, are you, you're in Texas right now and there's been speculation and you've been vocal this year on some of your frustration In California?
9:01WSJ InterviewerAre you really, are you relocating? Is it happening? And can you talk a little bit about what's been troubling you in California so much this year? Since you mentioned it, sure.
9:12Elon MuskWell, first of all, Tesla and SpaceX obviously have massive operations in California. In fact, it's worth noting that Tesla is the last car company still manufacturing cars in California.
9:25Elon MuskSpaceX is the last aerospace company still doing significant manufacturing in California. So there used to be over a dozen car plants in California and California used to be the center of aerospace manufacturing.
9:38Elon MuskMy companies are the last two left I want to emphasize. So that's a very important point to make for myself. Yes, I have moved to Texas. We've got the Starship development here in South Texas where I am right now.
9:56Elon MuskWe're hopefully going to do a launch later today. And then we've got the big factory developments just outside of Austin for the gig tax.
10:06WSJ InterviewerAnd you made the move. Really? Why, why did you go there? Is that all a personal decision or was it was probably a corporate environment decision really for the headquarters, is that.
10:18Elon MuskWell, I mean, in my case, the two biggest things that I've got going on right now are the Starship development in South Texas, which was done, this was set in motion like five years ago, and then the big new US factory for Tesla, which is cold Giga Texas just by Austin.
10:40Elon MuskSo those are the two biggest projects. So these necessarily drive the use of my time here. Yeah. And then the other big thing for Tesla right now is the Giga Berlin.
10:53Elon MuskSo I was in Berlin, spent a fair amount of time in Berlin working on that. And yeah, I think there's, you know, there's California's great. So there's a lot of things that are really great about California.
11:06Elon MuskObviously it's the biggest economy in the country. Most of them are people. I do think that there is something that happens when, you know, if it's going back to the sort of sports team analogy, like if a team has been winning for too long, they do tend to get a little complacent, a little entitled, and then they don't win the championship anymore.
11:29Elon MuskSo California has been winning for a long time and I think they're taking it for granted a little bit. Yeah.
11:38WSJ InterviewerLet's talk a little more on innovation in corporate America in general. I mean, innovation has always been core to who you are. It's how you think about your companies and your role in the corporate suite in America.
11:52WSJ InterviewerAre companies in general fostering and developing innovation as a leaders in corporate America? You've got a Lot of them on this call. Do we prioritize innovation as much as as we might or need to, do you think right now?
12:07Elon MuskWell, I think there's innovation, but then there's also just. Are CEOs in corporate America focused enough on product improvement? I think the answer is no. And I think generally my advice to or my recommendation would really be spend less time on finance, spend less time in conference rooms, less time on PowerPoint and more time just trying to make your product as amazing as possible and take their cue from that.
12:44WSJ InterviewerWhy is that? Is that because boards or shareholders are too finance and return focused and don't think enough about product as being at the heart of value? Is it because a certain kind of skill is cultivated?
13:01WSJ InterviewerWhy is that? Why is that a problem in the C suite?
13:09Elon MuskI think there might be too many MBAs running companies. There's the MBAization of America, which I think is maybe not that great. There should be more focus on, on the product, service itself, less time on board meetings, less time on financials.
13:32Elon MuskThe financials come as a result. You say like what's the point of a company at all? Why even have companies? A company is assembly of people gathered together to create a product or service and deliver that product or service.
13:48Elon MuskAnd sometimes people lose sight of that. A company has no value in and of itself. It only has value to the degree that is effective allocator of resources to create goods and services that are of greater value than the cost of the inputs.
14:01Elon MuskThis thing we call profit should just mean over time that the value of the output is worth more than the
14:09WSJ Interviewerinputs and it's a reflection of the quality of the product more than. So if the product is good, presumably the profits follow rather than profits being.
14:20Elon MuskAnd sometimes people sort of have backwards and you know, if people are getting sort of the incentive structure is coming from the financial side of things. I don't know.
14:31Elon MuskI just earnestly would recommend to anyone listening that just spend less time in meeting rooms, less time on PowerPoint presentations, less time on a spreadsheet and more time on the factory floor, more time with customers.
14:47Elon MuskAnd obviously a lot of people out there are already doing that. But I just like, I just urge people to say, like hey, step back a second and say is your product as awesome as it could be?
14:56Elon MuskProbably not. What could you do to make it, make it great? And you know, if you like think about innovation, like maybe it has to be like breakthrough innovation.
15:05Elon MuskI don't think it necessarily has to be breakthrough innovation. It's just like, just make your product Better. This is the thing that really matters
15:15WSJ Intervieweris that kind of product mindset that the kind you described, is that learnable? Is it teachable? Or is there an innate element that somebody has to have to really to do it?
15:27WSJ InterviewerWell, I mean, not everybody's innovating or thinking on your scale a lot, but you look for innovative people when you hire them. Is it something that is pretty easily learnable or is there some innate quality and the people that succeed?
15:42Elon MuskI think it is learnable. I mean, step number one would be try. And have you tried and have you tried hard? And if you haven't tried hard, try hard.
15:56Elon MuskI think it is plentiful. It's not some mysterious thing. It's just basically just be like an absolute perfectionist about the product that you make, the service that's provided. Seek negative feedback from old quarters, from customers, from people who aren't customers, like, hey, okay, what can we make this?
16:17Elon MuskHow can we make this better? And I think that's absolutely learnable. And just if you find yourself spending a lot of time getting presentations and reviewing spreadsheets, you're barking up the wrong tree.
16:37Elon MuskThat's the effect, not the cause. So just get out there on the factory floor, get out there in the stores, talk to customers, think about, what would you love to have?
16:51Elon MuskSometimes I think I've had this conversation at Tesla a few times where it's like, we're trying to think, okay, we don't, at times we don't love this product, but we think others will love it.
17:03Elon MuskThat's not really how it works. If you don't love it, don't expect others will either.
17:10WSJ InterviewerNow you're at a moment, I want to talk about your companies in a minute. But you're at a moment where both, particularly Tesla and SpaceX are really growing in lots of ways right now.
17:19WSJ InterviewerAnd you've had plenty of ups and downs even at this point, but it's a high point on your own journey in this way. What are the biggest mistakes you've made that you've learned from?
17:30WSJ InterviewerBecause you talked a little bit about being willing to put yourself out there. Fail, learn, keep growing. What were turning points for you that really you said, wait a minute, this is wrong, or this is the wrong move, either personally or for the company that you learned from that have fed to where you are right now?
17:49Elon MuskWell, if I had to list all the mistakes, this would be a very long call. So it's too many to even think of. I'm trying to think like, could I classify them in some way?
18:06Elon MuskWell, I mean, some of the things I mentioned just before, it's like where, you know, I was recommending that people spend less time in a conference room, less time getting presentations and spreadsheets, and that generally, that's like when I have spent too much time in a conference room, that's generally when things have gone awry and when I go and spend time on the factory floor or, you know, really using the cars, thinking about the rockets, it's like that's where things have gone better.
18:35WSJ InterviewerDoes that risk, some people would worry that that risks sending a message to your teams that you personally have to be involved for something to work, that you can't delegate or you can't trust them?
18:46WSJ InterviewerI think that's one thing that makes some executives reluctant. They're trying to find that line between showing their personal commitment and trusting their subordinates to do the work. So, I mean, you're known for being passionate, sleeping on the factory floor, but is that a concern for you or do you not care?
19:07WSJ InterviewerThat's not an issue for you? How do you think about it?
19:11Elon MuskWell, there's a lot of talented people at SpaceX and Tesla, and I think the morale is good. I for sure respect them greatly and it's an honor to work with them.
19:25Elon MuskAnd I find that if I am engrossed in the details of the issues, this does not result in them feeling better, but worse, but feeling better. Like my experience more energized.
19:39Elon MuskYou know, it's like, you know, think about, like, war. It's like you want the general in some, like, you know, ivory tower or on the front lines. Like, the troops are going to fight a lot harder if they see a general on the front lines than if they think generals, you know, in some cushy situation.
20:06Elon MuskSo it's like nobody bleeds for the prince in the palace. Get out there on the goddamn front lines and, you know, show them that you care and that you're not just in some plush office somewhere.
20:23WSJ InterviewerYeah, I'm in my plush office right now, actually. Yeah. Let's talk quickly about Tesla, but Both Tesla and SpaceX are scaling up today. In fact, Tesla touched 600 billion, I think, yesterday in valuation.
20:39WSJ InterviewerToday you said you're going to raise 5 billion through new stock sales. And I assume what those gains are really in your mind going to do is help you scale up faster, be poured back into investment, because now is the moment to do that.
20:52WSJ InterviewerIs that the plan here?
20:55Elon MuskYeah, I mean, I guess this.
21:01Elon MuskWe're kind of debating, like, should we raise money or should we not it wasn't like a hundred percent sure thing. In the end we thought, well, we can retire a lot of the debt and increase the security of the company.
21:15Elon MuskProbably a good thing. And for less than 1% of dilutions, probably makes sense. But we're neither here nor there on that. I think it could have gone either way.
21:28WSJ InterviewerSo the money's for really debt retirement, you're saying today?
21:31Elon MuskDebt retirement. And I guess to have a bit more of a war chest or
21:39WSJ Interviewerat
21:39Elon Muskthe end of the day, what is money? Money is an entry in a database.
21:44WSJ InterviewerOkay, I want to take a couple questions from the audience. First, I want to go to a video question that we solicited. If we could play that. Hello, my name is Catherine Parsons and I'm the CEO of technology education company Decoded.
22:00Elon MuskI want to know, are machines able to innovate or is innovation an inherently human capability? Yeah, I think machines will. Well, my views on AI, I've spoken a lot about this.
22:17Elon MuskAI will be able to do everything better than human over time. Everything,
22:26WSJ Interviewereverything includes them. Okay, Elon, here's one. If you could the very quick, very quick, easy one. If you could redo the entire transportation infrastructure of the United States, how would it look?
22:40WSJ InterviewerMichael Fountain asked.
22:42Elon MuskEntire transportation infrastructure, wow. The main thing I see missing here is that we need to go 3D in cities in order to alleviate traffic congestion. And, and I think probably the best way to do that is with tunnels.
23:02Elon MuskIt may sound a bit silly, but
23:03WSJ Interviewerboring company that you started, which looks at that.
23:07Elon MuskYeah. In fact, for many years I was asked, what do I see as the biggest opportunity for new companies? And I kept saying, can someone please build tunnels? For half a decade I said this and nobody built tunnels.
23:18Elon MuskSo I was like, fine, we'll start a company and start building some tunnels. And we've got the first tunnel that's going to be opening up. First commercial tunnel opening up in Vegas, going from the convention center to the strip.
23:30Elon MuskAnd I think we will have an opportunity to try it out and be able to see that, hey, if we just go 3D and cities, we don't have to be stuck in gridlock.
23:36Elon MuskThis is great. And so I'd recommend tunnels. And then for long distance travel you can do tunnels or tubes. But if you evacuate the tunnel and essentially remove the air or most of the air, you can get rid of the air friction and you can go supersonic and do so with no dependence on weather and with no need to get to high altitude or create any sonic boom issues.
24:12Elon MuskSo that's What I meant by sort of the hyperloop, it's just basically a pressurized electric car in a vacuum tube. So I think this will be a revolution in transport.
24:24Elon MuskThat would be amazing. And hopefully others do it, not just boring company.
24:32WSJ InterviewerOkay, here's one. Elon. I'm a founder and CEO of a private company in Nevada. One of the changes I'm seeing is people trying to force the company on political and social matters.
24:45WSJ InterviewerYou know, making demands not to sell to police or not to sell to government agencies. There's walkouts and protests at Google. Do you think this kind of thing is having a chilling effect or will have a chilling effect on innovation?
25:00Elon MuskWell, a lot of this stuff is centered in the San Francisco Bay Area. And I think the Silicon Valley or the San Francisco Bay Area has too much influence on the world, in my opinion.
25:12Elon MuskAnd I say that as someone who has spent most of his life in California, mostly in the Bay Area.
25:18WSJ InterviewerSo you're like. Your friend Peter Thiel feels it's gotten more cycling up there. You're expressing you agree with Peter.
25:27Elon MuskYes, I think there's. The Bay Area has outsized influence in the world.
25:35WSJ InterviewerIs that changing? Is the pandemic changing that? I mean, is there a real chance here that with departures and people leaving the Valley, that we're going to see some of that scatter out into the countryside for good?
25:46WSJ InterviewerNow, post pandemic, I think we'll see
25:49Elon Musksome reduction in the influence of Silicon Valley. But social media is still very much centered in Silicon Valley. So I think we need to be concerned about mind viruses.
26:01Elon MuskJust means that travel very quickly through social media. That may or may not be correct. And we certainly want to encourage a healthy dialogue. So, you know, there's some out there who just want to shut down one side of a debate or another.
26:21Elon MuskI think we should resist that.
26:26WSJ InterviewerWe're out of time, unfortunately, because I could go for an hour. We didn't even get to half of the questions I had. But thank you for the time today.
26:32WSJ InterviewerIt's good to see you and hope we can continue the conversation another time. And it's always fascinating to hear what's on your mind. So thanks, and good luck on your projects right now.
26:42Elon MuskAll right, thank you.
26:44WSJ InterviewerThank you, Elon.