#12 Elon Musk & How Tesla Will Change The World



In this second installment of a three-part series on the Founders podcast, the hosts delve into Tim Urban's comprehensive blog post series on Elon Musk's ventures, focusing on Tesla Motors. The blog, which spans a staggering 90,000 words, is not just a lengthy piece but a deep dive into the evolution of electric vehicles (EVs) and Musk's strategic approach to revolutionizing the automotive industry. Urban's blog details the challenges Musk faced, from the dominance of gasoline engines and the oil industry's resistance to the technical hurdles of creating a new kind of EV. The hosts discuss key moments, such as Musk's encounter with J.B. Straubel and the inception of Tesla, highlighting the company's three-step plan to make EVs accessible to the masses and Musk's broader mission to expedite the transition to sustainable transport. Tesla's approach to innovation, its direct sales model, and Musk's decision to open-source Tesla's patents underscore the company's commitment to not just lead but transform the entire automotive industry.

Summary Notes

Continuation of Speaker A and Speaker B's Discussion

  • Speaker A and B discuss the second part of a three-part series covering Elon Musk's blog post series on Wait But Why.
  • The series is extensive, with Tim Urban writing approximately 90,000 words.
  • The posts are available in Kindle format, and the entire series takes about 7 to 7.5 hours to read.
  • The discussion focuses on Tesla, their strategy, and Elon Musk's business organization ideas.

"The writer of Wait But Why? His name is Tim Urban. He wrote something like 90,000 words of this series."

This quote highlights the extensive work by Tim Urban on the blog series about Elon Musk, indicating the depth of the content covered.

The Story of Tesla

  • The podcast focuses on Tesla's history, strategy, and Elon Musk's thoughts on running a business.
  • Elon Musk's early interest in electric cars is highlighted.
  • The challenges faced by Tesla at inception are discussed, including high barriers to entry, carbon emissions costs, and opposition from the oil industry.
  • The comparison to Henry Ford and the question of whether electric cars had not succeeded due to inherent issues or lack of a visionary leader.

"The overarching question was, had electric cars never had their day because of irreconcilable issues or had the right person, the Henry Ford of EVs just not come along yet."

This quote encapsulates the central question of whether electric vehicles (EVs) had failed to take off due to fundamental problems or simply because they lacked a transformative figure like Henry Ford.

Silicon Valley and the Birth of Tesla Motors

  • The podcast discusses the unconventional start of car companies in Silicon Valley and Tesla's beginnings.
  • The history of electric cars in California, the Zero Emissions Vehicle mandate, and the documentary "Who Killed the Electric Car?" are mentioned.
  • AC Propulsion's role in EV development and their breakthroughs with the tzero car are detailed.
  • Elon Musk's encounter with AC Propulsion and subsequent meeting with Tesla Motors' co-founders is described.
  • The financial challenges of starting an EV company and Tesla's initial business plan are outlined.

"Car companies aren't supposed to start in Silicon Valley. In Silicon Valley, startups aren't supposed to make cars."

This quote illustrates the unconventional nature of Tesla's beginnings, contrasting the typical Silicon Valley tech startup with the traditional automotive industry.

Tesla's Three-Step Business Plan

  • Tesla's business plan involved three steps: creating a high-priced luxury car, a mid-priced car for the affluent, and an affordable car for the masses.
  • The plan aimed to use profits from each step to fund the development of the next tier of vehicles.
  • The podcast refers to Elon Musk's updated three-part plan, "Part Deux," which is publicly available.
  • As of the recording in 2017, Tesla had reached step three with hundreds of thousands of preorders for its affordable car.

"Step one, high price, low volume car for the super rich... Step two, mid priced, mid volume car for the pretty rich... And step three, low priced, high volume car for the masses."

This quote outlines Tesla's strategic business plan, which aimed to gradually introduce electric vehicles to a wider market segment by starting with high-end consumers and moving towards affordability.

Tesla's Mission and Impact

  • The podcast emphasizes that Tesla's mission was not to become the biggest car company but to accelerate the world's transition to sustainable energy.
  • The discussion suggests that Tesla's goal was to influence the car industry and encourage the adoption of electric vehicles globally.

"The overarching mission wasn't to build the biggest car company in the world."

This quote reflects Tesla's broader mission, which is not solely focused on corporate growth but on promoting a shift towards sustainable energy and transportation.

Tesla's Mission and Impact on EV Industry

  • Tesla aimed to solve EV shortcomings and create an outstanding car to change perceptions.
  • The goal was to compel major car companies to develop their own EV lines.
  • Volvo's announcement to switch to EVs is evidence of this influence.
  • Tesla's success has led to other companies following suit, creating "me too" companies.

"The larger influence that Tesla have, because even if they sell a couple million cars a year, if they can get to that point, it's still such a tiny percent of the overall market."

This quote emphasizes Tesla's broader mission beyond just selling cars. It's about influencing the entire automotive industry to shift towards electric vehicles, even if Tesla's own market share remains small.

Tesla's Early Days and the Roadster

  • Tesla's first store in South Florida offered a unique experience with the Roadster.
  • The company's growth from a small store to one of the largest Tesla dealerships is significant.
  • The Roadster was a step one car, meant to showcase EV potential and fund future models.
  • It was based on the Lotus Elise to save on design costs.
  • Although not world-changing due to its price, it proved Tesla's seriousness.

"With the roadster, Tesla wasn't trying to make their long term car. One Tesla employee told me that from the beginning, Musk would make sure everyone knew that the company's long term mission, and this is a direct quote from Musk, was not to make toys for rich people."

The quote clarifies that the Roadster was a strategic step rather than an end goal. It was intended to demonstrate the viability of EVs and generate revenue for more accessible models. Musk's quote underscores the long-term mission of Tesla to create mass-market electric cars.

Tesla's Struggles and Progress

  • Tesla faced numerous challenges, including delays, cost overruns, and early defects.
  • The 2008 recession added to their difficulties, threatening the company's survival.
  • Tesla's mission and potential attracted critical investments at key moments.
  • Franz von Holzhausen, a renowned car designer, joined Tesla, betting on its future.
  • Musk's personal investment and belief in Tesla encouraged others to invest.

"Musk had hired a second CEO. But a year in, in late 2008, the company was in one of those movie scenes where the person's been badly wounded and clearly about to die."

This quote metaphorically describes the dire state of Tesla during the financial crisis. It highlights the dramatic and critical point at which Musk decided to take over as CEO to save the company.

Tesla's Cultural and Financial Turnaround

  • Elon Musk's leadership and the support of key investors helped Tesla recover.
  • Tesla's story is not just about business but also about Musk's vision and determination.
  • The company's success story has garnered respect and admiration.
  • SpaceX faced similar challenges, showing Musk's willingness to risk his fortune.

"But enough people had been impressed enough by Tesla that a couple key investments at critical moments came in and kept the company alive."

This quote emphasizes the importance of the faith investors had in Tesla's mission, which allowed the company to survive its most challenging times. It underscores the turning point where Tesla began to stabilize and grow.

Company Culture and Product Success

  • Tesla is seen as a product-driven company, contrasting with finance-driven companies like GM.
  • Success is attributed to product quality leading to company greatness.
  • Elon Musk emphasizes the importance of product over numbers.
  • Franz von Holzhausen, a designer at Tesla, prefers the product-focused culture at Tesla over traditional car companies.

"A company like GM is a finance driven company who always has to live up to financial expectations. Here we look at it the other way around. The product is successful when it's great, and the company becomes great because of that."

This quote highlights the difference in approach between traditional car companies, like GM, which are finance-driven, and Tesla, which focuses on product quality as the key to success.

"The moment the person leading a company thinks numbers have value in themselves, the company's done. The moment the CFO becomes CEO, it's done. Game over."

Elon Musk's quote underscores his belief that a company must prioritize product innovation over financial figures to remain successful and competitive.

Design and Engineering at Tesla

  • Tesla assigns equal value to design and engineering, unlike other car companies.
  • Designers at Tesla are not restricted by pre-existing engineering frameworks.
  • Franz von Holzhausen had the freedom to design Tesla's Model S from scratch.

"At Tesla, design and engineering are assigned equal value, and Elon keeps them opposed to each other."

This quote illustrates Tesla's unique approach to car design, where both design and engineering are given equal importance, leading to innovative outcomes.

Innovation and First Principles

  • Tesla and Elon Musk approach problems using first principles, breaking down problems to their most fundamental truths.
  • Traditional car companies often reason by analogy, building upon existing designs.
  • Tesla's lack of historical baggage allowed for a fresh approach to the Model S design.

"They're just building upon things they already did and they're not looking at a problem from first principles."

The quote criticizes traditional car companies for not innovating and instead relying on their existing designs, contrasting with Tesla's first-principles approach.

Comparison to Apple

  • Franz von Holzhausen's approach at Tesla is compared to Steve Jobs' focus on creating "insanely great products."
  • Both Tesla and Apple did not pay attention to competitors but instead started from a "clean sheet of paper."
  • The Tesla Model S and the iPhone are both seen as significant leaps forward in their respective industries.

"It's like the iPhone. It's a 15 year leap into the future."

This quote draws a parallel between the impact of the Tesla Model S on the automotive industry and the revolutionary impact of the iPhone on the mobile phone industry.

Tesla Model S Features and Impact

  • The Model S set new standards in the automotive industry with its high performance and safety ratings.
  • Tesla's approach to continuous improvement includes rolling out software updates to existing cars.
  • Tesla uses advanced technology from SpaceX to create a lightweight, all-aluminum body for the Model S.

"The Model S is already driving itself. Soon it'll be able to drive itself to meet you in the driveway in the morning."

This quote highlights Tesla's advancements in autonomous driving technology, showcasing the innovative features of the Model S.

Tesla's Direct Sales Model and Vertical Integration

  • Tesla fights against dealership sales models to sell directly to customers.
  • Tesla's vertical integration allows for lower costs and more control over the production process.
  • Tesla's battles against dealership laws are seen as a fight against crony capitalism and regulatory capture.

"Why the fuck would a politician pass a law like that? It's clearly not for the benefit of the consumer."

This quote expresses frustration with laws that prevent direct sales to consumers, implying that such laws serve special interest groups rather than the public.

Tesla's Customer Experience

  • Tesla eliminates the model year concept, continuously adding new features to cars.
  • The company's innovative practices extend to the customer experience, avoiding traditional dealership hassles.

"Owners often wake up in the morning to discover the car has a new capability."

This quote demonstrates Tesla's unique approach to customer service, where car owners receive new features and fixes through automatic updates, enhancing the ownership experience.

Tesla's Direct Sales Model

  • Tesla's approach to selling cars is unconventional, opting for online sales directly to customers.
  • This method is efficient and customer-friendly, reducing the time taken to purchase a car.
  • Traditional dealership models are bypassed, which has been a source of contention in some states.
  • Tesla is actively challenging state laws that prohibit direct car sales, aiming to overturn such bans.

It takes hours. When you do it with TesLa, you do it online, it takes no time, and they deliver it to you. It boggles my.

This quote highlights the efficiency and convenience of Tesla's direct-to-customer sales model compared to traditional car buying experiences.

Tesla's Technological Innovations

  • Tesla sought to eliminate physical buttons in their cars, favoring a large touchscreen interface.
  • The company faced challenges due to the absence of suitable technology at the time of their first car's release.
  • Tesla's solution was to develop their own 17-inch touchscreen, demonstrating their commitment to innovation.

All the controls on a huge 17 inch touchscreen. But when their first car came out, there was no iPad yet, and 17 inch touchscreens suitable for a car didn't exist, so they built their own.

This quote emphasizes Tesla's innovative spirit and willingness to create new technology when existing options were insufficient for their vision.

Philosophy of Change at Tesla

  • Tesla's story is not just about cars but about the nature of change and the resistance to it.
  • Progress is not automatic; it requires intentional action by visionary individuals or groups.
  • The present is often cluttered with outdated norms and technologies that resist change.
  • Incremental improvements may seem like progress but often only polish the past.
  • Tesla's philosophy involves breaking through the 'canopy' of the past to introduce true innovation.

A study of Tesla isn't about a car or a car company. It's about how change happens, and about why it often doesn't happen.

This quote encapsulates the broader implications of Tesla's work, framing it within the context of societal and technological change.

The Impact of Disruptive Innovation

  • Disruptive technologies can initially face hostility as they challenge the status quo.
  • Successful disruptors force the old guard to adapt or emulate the new technology.
  • Tesla's approach to change involves direct action, such as building superchargers and innovating battery technology.
  • The company's mission extends beyond building cars; it aims to redefine industry standards and expectations.

When the real change arrives, you know you're seeing it. It's a distinct and exhilarating feeling when you witness a disrupting innovator ram its way through the canopy.

This quote describes the transformative and often turbulent process of introducing disruptive innovations to the market.

Tesla's Strategy for Industry Change

  • Tesla's ambition is to accelerate sustainable transport by changing industry and consumer expectations.
  • The company's strategy includes building exceptional cars and solving electric vehicle (EV) problems to pave the way for others.
  • Tesla has made its patents publicly available to encourage industry-wide adoption of EV technology.
  • The company's influence is not just through direct sales but by incentivizing competition and changing perceptions.

What Tesla is doing right now is an up close example of how that kind of change happens.

This quote reflects on Tesla's role as a catalyst for industry-wide transformation towards sustainable transportation.

Elon Musk's Vision and Influence

  • Elon Musk's ideas serve as the foundation for Tesla's mission and industry impact.
  • Musk's goals are ambitious, requiring the scaling of his vision through Tesla's collective efforts.
  • Tesla's success is seen as a stepping stone towards larger shifts in the car industry and global sustainability.
  • Musk's broader ambitions include making humanity a multi-planetary species, dwarfing the scale of Tesla's mission.

The idea to change the car industry started as brainwaves zipping around Elon Musk's head. But Musk couldn't do much about it on his own.

This quote highlights the origin of Tesla's mission as a product of Elon Musk's vision and the necessity of collective effort to realize it.

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