[00:31:20] Clay Finck: And then they also unveiled the semi truck in 2022. And then I just actually saw on Twitter or X yesterday that Tesla is actually starting to deliver the Cybertrucks, which is quite interesting as well. And isn’t exactly going to the strategy. But is beside my point, Musk often said that designing a car is easy.

[00:31:41] Clay Finck: The difficult part is manufacturing it. And I’ve heard this from him countless times on different podcasts he’s been on. He’s said over and over again, the hard part isn’t designing or making the car, it’s making a factory that can. Essentially make turn out so many of these things at a low and affordable cost as Isaacson inputs it.

[00:32:01] Clay Finck: Building a machine isn’t hard, but building the machine that makes the machine is hard. So the targeted cost of the Roadster had been around $50,000. They wanted to make it for $50,000 for each roadster they produced, but the actual cost to actually balloon to $110,000. And Tesla was actually weeks away from running out of cash.

[00:32:23] Clay Finck: So this is when Musk brought in Antonio Gracias to fix the issues with manufacturing efficiency. Isaacson called Gracias a wizard at understanding factories. Elon also realized that he had a massive supply chain problem that really needed to be addressed. Tesla would be paying 15, 000 to put together a battery pack.

[00:32:44] Clay Finck: And then they’d be waiting 9 months for the car to be sold and then they’d get that cash investment back. Musk referred to these times in Tesla’s history as a flat out burning dumpster fire of stupidity. The great financial crisis was one of the most troubling times in Elon’s career. He ended up ousting Martin Eberhard as the CEO of Tesla, and Elon tried a couple of other different CEOs temporarily to try and take his place.

[00:33:10] Clay Finck: There was a lot of heated exchanges between Elon and Eberhard. That Isaacson dives into in the book. It still didn’t last long before Elon just totally had enough with other people trying to run Tesla. He’s a control freak, as I mentioned, and when he has this strategic map that he has, it oftentimes isn’t going to align with other CEOs.

[00:33:32] Clay Finck: One CEO that filled in. He wanted to outsource the assembly of cars, and Musk said that was the stupidest thing he had ever heard. So Elon said, I’m just gonna take over the role of CEO myself. So that’s what he did. In October of 2008, then Elon turned his focus to figuring out how in the world they could turn out these cars profitably, which obviously required bringing that cost of production down.

[00:33:57] Clay Finck: This is definitely no easy task. At that point in history, only one American car company in the last century had managed to avoid bankruptcy, which was Ford. Tesla had created the Roadster, but they still needed to figure out how to produce a manufacturing facility. That can produce these cars at a low cost.

[00:34:16] Clay Finck: And this was in the midst of the global financial system, being on the brink of a total meltdown with the great financial crisis happening. Musk referred to this time as the most painful period of his life, which if Musk, that’s a pretty big statement as essentially he is wired to seek out pain.

[00:34:35] Clay Finck: in so many ways. Initially he kept Tesla alive by using the cash deposits that customers would put down for the Roadsters that hadn’t even been billed yet. The board pushed back on that decision but must said we either do this or we die. By the fall of 2008, Tesla desperately needed more cash, so Elon called on friends and family to help the company meet payroll.

[00:35:00] Clay Finck: Elon, he managed to get Kimball to sell 375, 000 in Apple stock, so Kimball pitched in and then Elon got a number of other investors to keep the company afloat, including actually some of Tesla’s employees pitched in their own money to keep the company going. Then Isaacson writes here. Musk’s tolerance for stress is high, but 2008 almost pushed him past his limits.

[00:35:24] Clay Finck: I was working every day, all day and night, in a situation that required me to pull a rabbit out of the hat. Now do it again, he says. He gained a lot of weight, and then suddenly lost it all and more. His posture became hunched, and his toes stayed stiff when he walked. But he became energized and hyper focused.

[00:35:42] Clay Finck: The threat of a hangman’s noose concentrated his mind. Meanwhile at SpaceX, the company was in the works of launching rockets into orbit with the hope of eventually securing more contracts with NASA. With someone like Musk, who has an extremely high risk tolerance, it should come as no surprise that his first attempt at launching a rocket nded up not working very well.

[00:36:04] Clay Finck: He told his team that they had to figure this out within their first three attempts. And then the second attempt of a rocket launch was also a failure. And it didn’t quite get into orbit. Then, on the third rocket launch attempt, Musk had gone all in and he said, if they can’t get it done in three tries, then the company just deserved to die.

[00:36:24] Clay Finck: But still, the third launch still ended up being a failure. Then, Isaacson writes, Musk had run out of money, Tesla was hemorrhaging cash, and SpaceX had crashed three rockets in a row. But he was not ready to give up. Instead, he would go for broke. Literally. SpaceX will not skip a beat in execution going forward, he announced a few hours after the failure.

[00:36:49] Clay Finck: There should be absolutely SpaceX will prevail in reaching orbit. I will never give up and never end quote. So Musk was just dead set on making it work this next time, even though he said that he needs to do it in three tries. In the midst of all of this, many thought that Musk would have to choose between trying to save Tesla and trying to save SpaceX because both seemed nearly impossible given all of the cash needs they had and then the time commitment from Musk for both companies.

[00:37:21] Clay Finck: The more people pressed Musk to choose one or the other, the more he resisted such pressures. Elon had said,

[00:37:37] Clay Finck: Or give all of the food to one kid and increase the chance that at least one of them survives. I couldn’t bring myself to decide that one was going to die. So I decided I had to give my all to save both. So for SpaceX, Musk had budgeted for just three launch attempts. And now, both SpaceX and Tesla were on the verge of bankruptcy.

[00:37:58] Clay Finck: Then a surprising group of people came to help Musk out. His co founders at PayPal. Trey Lockerbie actually hosted an episode covering the PayPal Mafia back on episode 417 with Jimmy Soni. who’s book goes really in depth into the story of Paypal, but when Musk was ousted from Paypal, he could have just said, I’m just gonna burn these bridges with these guys.

[00:38:20] Clay Finck: But luckily, he ended up keeping his mouth shut, which came back to reward him during the great financial crisis. Peter Thiel invested 20 million into SpaceX, and that gave Musk room to try that fourth launch. Elon had stated, it was an interesting exercise in karma. After I got assassinated by the PayPal Coop leaders like Caesar being stabbed in the Senate, I could have said, you guys suck, but I didn’t.

[00:38:45] Clay Finck: If I had done that, Founders Fund wouldn’t have come through in 2008 and SpaceX would be dead. Elon also argued that if SpaceX failed, then Tesla would inevitably fail too because who would want to fund an electric car company led by a guy that just failed in launching rockets. So the fourth launch of the Falcon 1, it ended up being a success for SpaceX, and this was just a huge moment for Elon in his career.

[00:39:12] Clay Finck: Isaacson writes, Falcon 1 had made history as the first privately built rocket to launch from the ground and reach orbit. Musk and his small crew of just 500 employees While Boeing’s comparable division had 50,000 employees, had designed a system from the ground up and done all the construction on its own, and funding had also been private, largely outta Musk’s pocket end quote.

[00:39:37] Clay Finck: On December 22nd, 2008, Musk and Gwynne Shotwell, who led the efforts at SpaceX, they secured a 1. 6 billion contract with NASA to make 12 round trips to the International Space Station. So SpaceX now was in a much better position having secured that contract after that successful launch of the Falcon 1.

[00:39:58] Clay Finck: Musk really didn’t have much time to relax, celebrate, or have any fun, as Tesla was due to run out of money on Christmas Eve of 2008. So Elon managed to raise another 20 million from existing investors to allow them to get by for just another few months. This alone was very difficult to do, and Elon was barely able to get more support from his investors because they just saw This company just consistently burning cash, not much progress being made.

[00:40:26] Clay Finck: and then they were crossing these ethical boundaries by dipping into customer deposits One criticism you often hear nowadays for Tesla is that they’ve been bailed out or they’ve been subsidized by the government in 2009 atleast That year, General Motors, they received 18. 4 billion in loans from the TARP government program, which was a stimulus package to bail out some of the car companies.

[00:40:51] Clay Finck: But Tesla actually didn’t receive anything from this. It was in June of 2009, they did get a 465 million interest bearing loan. That was from the Department of Energy program, and then that loan was fully repaid three years later. It feels like there are like 10 moments where Musk says, if this doesn’t happen, then Tesla or SpaceX or whatever else is going to die.

[00:41:15] Clay Finck: Another of which was when the Daimler team invested 50 million in Tesla. That was in May of 2009. They visited Musk with interest in investing, and then they test drove the car and they were just blown away that the car just bolted in an instant, right? When you hit the accelerator and it reached 60 miles per hour in just four seconds.

[00:41:35] Clay Finck: On live the Tesla and the SpaceX that we know today. This led Tesla to turn their focus to profitability, and it brought them to start designing the Model S. And one theme you find so often in the book is that one of Musk’s foundational principles of designing a product is that the design team and the engineers need to work together hand in hand.

[00:41:59] Clay Finck: You can have a great design team, but if you can’t mass manufacture what you design at a low cost, then it might not be worth implementing. Musk really put a big emphasis on having his teams be collaborative, working together, and really being integrated in creating the best possible, economically viable product.

[00:42:20] Clay Finck: Elon received A lot of pushback on wanting door handles that were flush with the car and they would pop out when they sensed you approaching. Some thought it was just ridiculous and unnecessary, and then today, like I mentioned, this is one of the key features in the design of the vehicle. And one of the things I like about Teslas is the pure simplicity when you sit in one.

[00:42:45] Clay Finck: I was just recently in one of my friends that has one. You get in the front seat, and there’s nothing unnecessary included. You just feel the simplicity. You have the large touchscreen in front of you, you have the steering wheel, you have the Tesla logo on the steering wheel, and really, that’s about it.

[00:43:01] Clay Finck: Whereas the car I currently have, it’s not a Tesla, and you just have countless buttons, so many things going on, so many things blinking, flashing at you. I feel like it just really lacks that simplicity, and I just really appreciate that about Tesla. It almost feels like a modern day version of Apple just applied to vehicles.

[00:43:21] Clay Finck: Another key foundation of the Tesla vehicles is that software is a critical component of it, rather than it Just being a hunk of metal that gets you from point A to point B. So someone can buy a Tesla today and they receive all the benefits of the software upgrades and the new functionalities that come in the future.

[00:43:39] Clay Finck: So the car can fundamentally improve for years later after the day you purchase it. So turning back to the manufacturing process here, Tesla, they needed to have their manufacturing in the us for them to have a lot of that control. And then you look at other American car companies that shut down their factories, they’ve been offshored.

[00:44:01] Clay Finck: This trend accelerated after the year 2000, the U S lost one third of their manufacturing jobs from 2000 through 2010. Tesla’s ended up buying a factory from Toyota that was located in Fremont, California. And that was actually just 30 minutes from Tesla’s headquarters in Palo Alto. So quite a convenient location for them to get that factory.

[00:44:23] Clay Finck: And that factory had actually been worth 1 billion at one point in its time. And Tesla actually managed to buy it for 42 million. And then they also received a 50 million investment from Toyota. The month after Tesla bought the factory, they went public. That was June 29th, 2010. And this made them the first American carmaker to go public ever since Ford all the way back in 1956.

[00:44:52] Clay Finck: And them going public provided them an additional financing. They got 266 million that they raised in going public. So another theme of the book is Elon’s intensity. One of my favorite words and concepts that I’m reading as I’m going through this is the word hardcore. He wanted the culture in all of his businesses to be hardcore.

[00:45:14] Clay Finck: As Elon stated once in an email to Tesla employees, he said, Please prepare yourself for a level of intensity that is greater than anything most of you have experienced before. Revolutionizing industries is not for the faint of heart. End quote. This hardcore approach led him to the idea of building a gigafactory.

[00:45:35] Clay Finck: At the time, the Model S was using around 10 percent of the world’s batteries, and the Model X, which was on the horizon for them, it was going to require 10x the number of batteries that the Model S’s did, so Tesla really needed to get to work and start to create these batteries themselves. They worked with Panasonic to build a 5 billion factory, and Panasonic was actually a bit hesitant to work in this deal because it was really outside their comfort zone and it was really risky to work with a company like Tesla and a person like Elon, but once they realized that Elon was just Dead set on getting this done.

[00:46:14] Clay Finck: Panasonic really didn’t want to get left behind, and I think that’s a key takeaway from Elon. He knows that failures are gonna come, but he’s dead set on doing whatever he can to just make it happen. And that belief can take you, I believe, so far in life, in my mind. I just had that recent interview with Jim Quick, author of the book Limitless, and there’s just so many of these limiting beliefs that we naturally tend to have some of these are for good reasons, but Elon is just so good at just eliminating all of these beliefs that are outside The limits that physics puts on us, essentially, the only way you can really achieve big things that other people consider to be impossible is you have to have that unwavering belief in yourself.

[00:46:59] Clay Finck: And Elon most definitely had that. Panasonic’s president has said we are too conservative. We’re a 95 year old company. We have to change. We have to use some of Elon’s thinking, end quote. Turning back to SpaceX here, there’s a short chapter where they talk about the Falcon 9. This was a much bigger and far more complex rocket than the Falcon 1.

[00:47:21] Clay Finck: It had a successful unmanned launch on its first try in 2010. And at this point, it was clear that after less than eight years, after being founded, SpaceX had now become the most successful private rocket company in the world. And then the next big test, which was scheduled for later in 2010, was to not just launch an unmanned capsule into orbit, but also return it back to earth safely, which no private company had ever done before.

[00:47:46] Clay Finck: And it was only done by three governments in the world, which was the U S Russia and China. And then SpaceX ended up being successful with that launch as well in 2010, making them the first private company to do now, one of the things I don’t really want to get into for the purposes of this show is his personal affairs.

[00:48:05] Clay Finck: It’s easy to think that someone like Elon Musk has everything in life figured out and he doesn’t have these major issues and After reading this book, I realized that his life is pretty much full of chaos, both in business and outside of business, and his personal affairs are honestly a mess. To date, he has 11 children with 3 different women.

[00:48:30] Clay Finck: And he’s been married and divorced a number of times. And there are times in this book where there’s some pretty terrifying things happening in his personal life where he would just totally retreat from it and just go work on rockets at SpaceX. And Isaacson kind of jokes that rockets were easier for him to deal with than his family.

[00:48:50] Clay Finck: And I think this is a key insight here, where we live in this world of social media, we see the highlight reels, and it’s so easy to believe that other people have everything figured out in life. And in reality, the people who are really good at projecting this perfect life, they’re probably pretty dang good at covering up all the bad parts, covering up the insecurities.

[00:49:14] Clay Finck: and covering up the parts that they don’t want you to see, essentially. So there’s plenty of chapters in this book that I just don’t really touch on, just for the purposes of this show. If you want to dive into that, I’d encourage you to go pick up Isaacson’s book. Jumping to chapter 40 here, Isaacson dives into artificial intelligence and open AI.

[00:49:36] Clay Finck: It’s been widely known that Musk has been openly cautious about the development of AI and its potential negative impacts on society. Peter Thiel puts together a conference each year with the leaders of companies financed by his founders fund, and at that conference in 2012, Musk met Demis Hassabis. who ended up being the founder of DeepMind, which went out to try and design computer based neural networks that could achieve artificial general intelligence, or in other words, make machines that could learn how to think like humans.

[00:50:12] Clay Finck: Elon learned about the possibility of AI becoming more intelligent than humans, and eventually doing away with us, so Elon invested 5 million dollars in DeepMind, just to monitor kinda what was happening with the company. Then he was discussing AI and DeepMind with Larry Page. who is the co founder of Google, and he isn’t near as concerned as Musk about the potential dangers of AI.

[00:50:37] Clay Finck: Larry Page wanted to buy DeepMind, and Elon certainly didn’t want Page to be in charge of the future of AI, so he tried to stop the deal, but it ended up going through and happening anyway in January of 2014. Elon stated these Google guys have no intention of focusing on AI safety or doing anything that would limit their power.

[00:50:57] Clay Finck: Thus, Elon and Sam Altman started a non profit AI research lab, and they named it OpenAI, which would make its software open source. and try to counter Google’s growing dominance in the field. Elon’s thinking was to try to make OpenAI truly open and allow as many people as possible to have AI to help prevent the misuse of it.

[00:51:21] Clay Finck: And Elon also realized that success in the field of AI It was going to come down to having access to huge amounts of real world data that bots could learn from. And this is what makes Tesla’s vehicles potentially really valuable with all the cameras they have on each vehicle and they’re collecting millions of frames every single trip that they take.

[00:51:43] Clay Finck: Elon believed that Tesla would have more real world data than any other company in the world. His interest in AI led him to start some other projects as well. You have Neuralink, which aims to plant microchips in human brains. Optimus, the human like robot, which I believe is a project specifically within Tesla, and then Dojo, a supercomputer that is working to simulate a human brain.

[00:52:09] Clay Finck: Since Musk realized the extreme importance of AI, this led him to focusing more on his own companies rather than OpenAI, and this sort of led to a falling out with Altman and Musk with OpenAI in 2018. And then OpenAI transitioned to being a for profit company. And then this also led Musk to making a big push to adding autopilot capability to Tesla vehicles to try and collect as much of that data as he could.

[00:52:37] Clay Finck: And this was one of those projects where. Every year since 2015 or so, Elon would go out and say that full self driving was only one or two years away. And each year he’d just say the same thing and it really hasn’t happened. On an earnings call in 2022, he actually admitted that the process has been much more difficult than he originally thought all the way back in 2016.

[00:53:00] Clay Finck: Isaacson writes that each new Model S must decided would be equipped with eight cameras. And also 12 ultrasonic sensors and a forward facing radar that was able to see through rain and fog. And autopilot was obviously really tricky. There are countless sort of situations that you need to dream up and figure out how.

[00:53:20] Clay Finck: Autopilot should react in these situations. Plus you just get tremendous pushback from the public, the media, regulators. You can say that autopilot saves a tremendous amount of lives because it makes less mistakes in humans if it’s doing a good job, but people don’t really love the idea of leaving their lives up to autopilot.

[00:53:40] Clay Finck: One person killed because of an autopilot system typically provokes a lot more horror than a hundred deaths that are caused by human error. Now, I mentioned that Musk’s most difficult task with Tesla was figuring out the production, which is expanded on more in chapter 45. Isaacson explains that Musk went through periods when He would oscillate between depression and manic energy.

[00:54:04] Clay Finck: And from the summer of 2017 through the fall of 2018, he described this as one of his most challenging periods of his life, both professionally and emotionally. Musk referred to it as 18 months of unrelenting insanity. It was mind bogglingly painful. In late 2017, before a Tesla earnings call, Wall Street analyst John McNeil, who was Tesla’s president at the time, he found Musk lying on the floor of the conference room with the lights off.

[00:54:36] Clay Finck: He told Musk that they have an earnings call they need to do and Musk just told him he can’t do it. He was just so totally exhausted and burnt out. The Model 3 started rolling off the production line in July of 2017. And that actually ended up meeting Musk’s insane deadline he set, but he knew that the major challenge was to figure out how to build a huge number of them.

[00:54:58] Clay Finck: And at the Model 3 event that summer, he stated in front of the audience, frankly, we’re going to be in production hell. And this is another big story in the book where they really had to figure out how in the heck they’re going to start producing all these Model 3s. He had calculated that in order for Tesla to survive, they would need to start producing 5, 000 Model 3s per week.

[00:55:20] Clay Finck: And if they couldn’t, then they’d just run out of money because it’s just a death loop. At the end of 2017, Tesla was only producing 2, 500 per week. So they needed to Double that production. So Musk went out onto the floor himself to see how in the world he can make this happen. Pull this rabbit out of the hat.

[00:55:39] Clay Finck: Starting at the Gigafactory in Nevada where the batteries were made, a major employee there had told him that making 5, 000 batteries per week was insane and 1, 800. Musk started to question every single part of the process to make the battery. Some parts seem to be pretty irrelevant to Musk, so he would ask, Who in the heck put this requirement in place?

[00:56:05] Clay Finck: And if no one had an answer, he would just say to take it out. So it points to Musk’s desire to question everything. Question every requirement. If you’re doing things you don’t need to do, then why are you doing it? There are stories in the book where Elon became so upset at some of the engineers that he just fired them on the spot.

[00:56:25] Clay Finck: Straubel, who was Musk’s co founder, said, In retrospect, it may seem like great war stories, but in the middle of it, it was absolutely horrific. He was making us fire people who had been personal friends for a very long time, which was super painful. This was also when Musk realized that he had automated too much of the factory, which is ironic given he’s a technology guy.

[00:56:50] Clay Finck: And things were just not going as smoothly as he had hoped with all this automation he was trying to implement. So if an automated part was becoming too big of a bottleneck, then he would de automate the factory, for lack of a better term. It’s interesting to think about when you have a factory and you have a thousand plus different things happening to put together the car.

[00:57:11] Clay Finck: Really, your factory is only as fast as your slowest part, because that slow part ends up being a bottleneck, and essentially the car just doesn’t get passed along to the next step in line, once that that slow part starts chugging their pieces through. A must take away from this experience was to wait until the end of the design process, after questioning all the requirements and deleting all the unnecessary parts.

[00:57:36] Clay Finck: Before introducing the automation of it. There were some cases where Musk himself could perform a task faster than the robot in which case he would just remove the robot, have a person complete the task and that would increase the efficiency of the overall process. So after relieving the bottlenecks at the Nevada Factory.

[00:57:54] Clay Finck: He turned his attention to the Fremont factory. In April of 2018, it was producing just 2, 000 Model 3s per week, although he had promised Wall Street that it would be producing 5, 000 by the end of June. So that’s just two or three months he needed to increase production by 2. 5X and it just didn’t seem very likely.

[00:58:16] Clay Finck: Isaacson writes, There seemed to be no way that the laws of physics would allow him to juice the plant’s assembly lines into producing that magic number of 5, 000 per week. At that time, Tesla’s stock was trading near its all time high, making it more valuable than General Motors. Even though General Motors had sold 10 million cars and made 12 billion in profits that previous year, whereas Tesla, they had sold only 100, 000 cars.

[00:58:42] Clay Finck: So GM made a hundred extra cars that Tesla did and Tesla didn’t make money. They actually lost 2. 2 billion. And this led Tesla to end up being the most shorted stock on the market. And this absolutely infuriated Musk. He absolutely hates short sellers. And these short sellers were Just brutal to Musk.

[00:59:05] Clay Finck: They publicly attacked Tesla. They publicly attack Musk personally. Some even went so far to fly drones over the Tesla factories to get these real time numbers on what was being produced. Musk has stated the degree of inside information they had was insane. David Einhorn had stated that he thought Tesla’s deception was about to catch up with them, and Jim Chanos publicly declared that Tesla stock was basically worthless.

[00:59:32] Clay Finck: In the meantime, Tesla’s board granted Musk what Isaacson refers to as the boldest pay package in American history. A package that would pay him nothing if the stock price didn’t rise dramatically and had the potential to pay him 100 billion or more. And this was based on just super aggressive targets.

[00:59:51] Clay Finck: This was related to production numbers, revenue, and then the stock price as well. On May 22nd, 2018, Musk had come up with an idea to set up a giant tent. outside of the Fremont manufacturing facility. And that was with the intention of trying to produce more cars out there. So essentially creating like a separate factory outside of the Fremont facility.

[01:00:16] Clay Finck: And in two weeks, a tented facility was created. That was 1000 feet long, 150 feet wide. And it started churning out these model threes with only people involved. And then just 3 weeks after Musk had come up with the idea, Model 3 started rolling out of this new tent that they set up. Musk had said related to this, if conventional thinking makes your mission impossible, then unconventional thinking is necessary.

[01:00:44] Clay Finck: That’s a quote to ponder, in my opinion. On June 30th, which was the deadline which Musk had promised for reaching the goal of 5, 000 cars per week. He woke up on the conference room couch, and he looked at the monitor, and it showed him how many cars were being produced. And, that’s when he realized that he was going to succeed in achieving that goal.

[01:01:05] Clay Finck: He went on by celebrating, and he believed that Tesla had now officially become a real car company. Then Isaacson lists what he calls the algorithm, and this really encapsulates the lessons he learned from what he calls production hell. The Five Commandments, as Isaacson calls them are first. Question every requirement, second, delete any part or process you can, third, simplify and optimize, four, accelerate cycle time, and five, automate, which should always come last.

[01:01:41] Clay Finck: This is the formula that Musk used over and over again to make the manufacturing process as simple as possible. And I think that the same approach could be applied to so many aspects of our lives or of our businesses. There’s always some sort of process to performing your tasks at work, a process to hire somebody, a process to putting a podcast episode out.

[01:02:01] Clay Finck: And I think these steps could also be carried over to so many other things as well. There’s a few other points here from Isaacson I wanted to mention as well, that were lessons that Musk learned. He says, When hiring, look for people with the right attitude. Skills can be taught. Attitude changes require a brain transplant.

[01:02:22] Clay Finck: And I think that is so important here just to hire the right people, look for the right attitudes because you can’t really change the way some people think. The next one is, quote, a maniacal sense of urgency is our operating principle. And I know I already mentioned this quote, but I just think it’s personally one of the biggest takeaways I get from Musk is this tremendous urgency to continue to get things done.

[01:02:48] Clay Finck: And then third, the only rules are the ones dictated by the laws of physics. Everything else is a recommendation, end quote. And this reminds me of the Steve Jobs quote that everything around you is made up by people no smarter than you. And it’s a reminder that people can try to impose their reality on you or impose how they think or try and put their rules on you, but you don’t have to adopt by those rules or the rules of others.

[01:03:14] Clay Finck: The engineer out of Nevada probably thought that producing 5, 000 batteries a week was impossible, but Musk really didn’t think so. This also reminds me of the book, I just mentioned Limitless by Jim Kwik. He talks about the first step to achieving anything is to first believe that you can achieve it. If you don’t believe that you can do it in the first place, then you’re training your mind to make that not happen to a large extent.

[01:03:40] Clay Finck: It’s just. In order to achieve something big, you first have to believe that you can achieve that thing. So belief is so critical and a big part of why Musk has gone as far as he has. And then in 2018, there was the whole fiasco around taking Tesla private. A group out of Saudi Arabia had accumulated 5 percent of Tesla’s shares outstanding.

[01:04:03] Clay Finck: And Elon discussed with them the possibility of going private because he hated the value of the company being determined by speculators and short sellers. While he was in talks with them, he miraculously tweeted, and considering taking Tesla private at 420, funding secured, end quote. And then the stock was up 7 percent on this news and the SEC opened up an investigation on him.

[01:04:27] Clay Finck: Next thing the Saudis weren’t sure that working with someone like Musk, who was totally unpredictable was a great idea. And Musk made a statement that most existing shareholders believe Tesla is better off as a public company. So took back his statement on trying to go private. So due to misleading public investors, Elon opened himself up to potentially not being able to run Tesla anymore because of the SEC filing a lawsuit against him.

[01:04:57] Clay Finck: And they ended CEO of Tesla, stepping down as the chairman, and then paying a fine of 40 million. I had mentioned that this period was really hard on Elon. There’s one part where it’s mentioned that Elon was working 120 hours a week in 2018 and he hadn’t taken more than a week off of work since 2001 when he was actually sick with malaria.

[01:05:21] Clay Finck: During this period, many of Musk’s top executives had left the company. John McNeil, who was Tesla’s president, loved Elon to death, but told him he just couldn’t handle being with the company anymore. It’s just too much work, too much stress. He urged Elon to get psychological help, and this is amazing because we all see the success, we see the flying stock price, the lifestyle a guy like Musk can live, and then he’s going on Joe Rogan, having a good time, and he’s tweeting funny things, but we really don’t see the dark side of what’s happening.

[01:05:55] Clay Finck: We know that he works long hours, but we don’t really see the pain that he’s enduring. Straubel had also been with Elon for 16 years, and he was a co founder of Tesla, and he ended up leaving the company as well. And Elon actually wasn’t very sentimental when it came to people leaving. I think part of this is because he feared that people would be around for some time, they’d save a lot of money, they’d essentially become wealthy.

[01:06:23] Clay Finck: And they could become complacent. Isaacson’s had stated he likes fresh blood. I thought that was a funny way of putting it. He likes people that are new, they’re hungry, they’re driven, and not too many rich people want to sleep on factory floors because they’re working so much. And then in Tesla’s June, 2019 annual meeting, Elon was starting to reminisce with Straubel’s announced departure.

[01:06:48] Clay Finck: And he had stated. I believed for sure we would fail. Back in 2003, people thought electric cars were the stupidest thing ever. Bad in every way. Something like a golf cart, end quote. And Elon and Straubel, they ended up keeping in touch as Musk invited them to join Tesla’s board in 2023. And then there’s a short chapter here on chapter 50 that talks about Tesla’s expansion into China.

[01:07:13] Clay Finck: I thought this was probably worth mentioning. It took them a few years to get their footing in China due to regulatory issues and juggling managers to try and find the right person to lead the expansion efforts. Elon did find his guy when he hired Robin Wren. That was in early 2018. They built the factory in China.

[01:07:33] Clay Finck: And then by October of 2019, China would account for over half of Tesla’s production of vehicles. So it’s impossible to talk about the development of Tesla without talking about the development of the Cybertruck, which I personally don’t love the design of, if I had to express my own opinion here, but Elon knows way more than me when it comes to making vehicles.

[01:07:55] Clay Finck: The idea of a Tesla pickup truck came around in early 2017. The Tesla team wanted something with the authority of a pickup truck and not something that looked too soft. Musk was inspired by the Lotus Esprit of the late 1970s, which had a pretty pointy design to it. And when I look up photos, it resembles a cyber truck to some degree, except this is a car.

[01:08:19] Clay Finck: And in determining the material to use, Musk was enthralled by the possibility of making a rocket ship out of glistening stainless steel and this made him want to do the same thing for the Cybertruck, use stainless steel for the material that’s used. This pointed to one of the benefits of being CEO of both SpaceX and Tesla is that the companies could share their experiences, their engineering knowledge.

[01:08:45] Clay Finck: Charles Kuhman, I probably butchered that pronunciation. He was the VP of material engineering for both Tesla and SpaceX. They had spent months trying to figure out the design of the vehicle, and Musk was inspired by his son Saxon, who had said, Why doesn’t the future look like the future? And it’s funny that Musk would use this quote repeatedly with his team.

[01:09:08] Clay Finck: Why doesn’t the future look like the future? Because he wants to make something that’s new. It’s special. He doesn’t want to keep the status quo and look like everybody else. In November of 2019 Tesla did their live presentation of the Cybertruck in which the quote unquote armor glass, it cracked when they threw a metal ball at it.

[01:09:28] Clay Finck: And then I’ll jump to chapter 52 here. This touches on Starlink. As you may recall, Musk started SpaceX in 2002 with the goal of taking humans to Mars, and this obviously cost serious money to try and do. And to make SpaceX a viable business, he began to start launching satellites to space on behalf of governments and other companies.

[01:09:51] Clay Finck: Then in late 2014, he turned his attention to providing internet service to customers. SpaceX essentially started to rebuild the internet in outer space with what would be Starlink. Musk stated that quote, Internet revenue is about 1 trillion a year. If we can serve 3%, that’s 30 billion, which is more than NASA’s budget.

[01:10:14] Clay Finck: So in January of 2015, SpaceX announced the launch of Starlink, which is the new division based near Seattle. Isaacson stated that Starlink’s goal was to create a mega constellation of 40, 000 satellites And I just looked up the number as of 2023 and it looks like they currently have around 5, 000 satellites in space now.

[01:10:34] Clay Finck: And it was May of 2019 they launched their very first Starlink. Jumping to March of 2019, Isaacson again tells the story of Musk having sleepless nights because he really needed to raise capital for Tesla yet again. This is a theme throughout the book on and on. Isaacson writes, he needed to come up with a grand idea that would turn the narrative around and convince investors that Tesla would become the world’s most valuable car company.

[01:11:03] Clay Finck: Elon’s solution to create more buzz around Tesla, around the Tesla brand, was Autonomy Day, where investors would get a demonstration of how Tesla was going to build a car that could drive itself. If investors were led to believe that Tesla would one day be massively profitable because of their vehicles being autonomous, then maybe this could ease Elon’s worries about remaining solvent.

[01:11:26] Clay Finck: During the presentation on Autonomy Day, a Tesla car would drive around the headquarters, go onto the highway, follow a path that requires various turns, and then return back to where it started. The vision in this presentation was that Tesla wanted to deploy millions of robo taxis that people could essentially just summon for rides at any time.

[01:11:48] Clay Finck: You’re getting off work, go outside, pull up your Tesla app, and then a Tesla can just pull right on up with the autopilot. I wasn’t able to find whether they ever received funding during this period, so I was curious. Maybe I just didn’t see it in the book, I didn’t see it mentioned. But then he transitions to cover giga Texas, which was the first giga factory, which would be located in Austin, Texas.

[01:12:12] Clay Finck: And they started building this out in July of 2021. Isaacson stated that the Fremont, California factory had become the most productive car making facility in America. And it was churning out more than 8, 000 cars per week. Zooming out to today, Tesla has gigafactories in six locations globally. This includes Fremont, California, Sparks, Nevada, Berlin, Germany, Shanghai, China, Austin, Texas, and Buffalo, New York.

[01:12:39] Clay Finck: And it’s pretty amazing just how big these factories are. Like, it’s hard to even comprehend. The one in Texas, Austin, Texas, for example, is 10 million square feet. And to give you a sense of just how massive 10 million square feet is, that’s equivalent to essentially 173 American football fields. So that’s 173 fields spanning out is how big this factory is.

[01:13:04] Clay Finck: I mentioned that I wasn’t going to dive too deep into his family life, but Musk, he did receive some hatred from one of his children that was essentially a self proclaimed communist and they disliked Musk for how rich he was. The child repeatedly told Musk that she hates him and everything he stands for.

[01:13:24] Clay Finck: And this was part of the reason that Musk ended up deciding selling all of his houses and the majority of his possessions. And this was partly to signal that he wasn’t building his companies to enrich himself. Rather, the purpose of his companies was to fulfill the missions that they were created for in the first place.

[01:13:41] Clay Finck: In Musk, up until this point, he really enjoyed that billionaire lifestyle having the nice house, nice cars and everything. His primary residence in LA he bought for 17, 000, 000 in 2012 and it was 16, 000 square feet. He personally saw nothing wrong with becoming wealthy by building companies and keeping the money he had from building them because he had this ownership in these businesses he created and built.

[01:14:05] Clay Finck: Produce value for society. And then it was in early 2020 that must sold almost all of his physical possessions, and another reason for doing so was because of the rising, wealth inequality in the U. S. over the years, becoming a billionaire essentially had become pejorative. and was generally viewed as a bad thing by the general public.

[01:14:25] Clay Finck: Once Musk had sold his homes, he moved to Texas, spending much of his time in Austin, and then he rented a home that was owned by SpaceX that would be his primary residence. Speaking of SpaceX, they made yet another achievement in 2020. For nearly the past decade, the US hadn’t been able to send anyone into space, and they were forced to rely on Russian rockets to get astronauts.

[01:14:49] Clay Finck: to the International Space Station. And it was in May of 2020, SpaceX changed that by sending two NASA astronauts to the space station in a Falcon nine. And this was the first ever launch of humans into orbit by a private company. 10 million people actually tuned in to watch it live and on the Lex Friedman podcast, Musk had said, I’m not a religious person, but I nonetheless got on my knees and prayed for that mission.

[01:15:14] Clay Finck: And here’s another amazing stat I wanted to share related to SpaceX and Boeing. And I heard Isaacson share this at that Kansas City event I went to, and I was just blown away when he shared it. It was back in 2014, SpaceX and Boeing, they both received funding to build a rocket that would take astronauts to the space station.

[01:15:35] Clay Finck: In Boeing, they ended up receiving 40 percent more funding than SpaceX. And by the time SpaceX had succeeded in 2020, Boeing hadn’t been able to even get an unmanned test flight to dock with the stations. And in that live event with Isaacson in Kansas City, he also stated that at the time, and it was October 2023, SpaceX had done 33 flights during the year of 2023.

[01:16:01] Clay Finck: And Boeing still hadn’t done a single test flight and I think that really just points to the amazing innovation that is happening at SpaceX. It’s really Musk’s maniacal sense of urgency that prevents SpaceX and prevents Tesla from becoming too complacent, becoming too bloated, and too bureaucratic.

[01:16:20] Clay Finck: Musk would constantly become worried whenever he saw people in his companies become complacent. And I think about this too from an employee standpoint. If you’re someone who’s motivated, you’re hardworking, and you’re ready to make things happen. And if you found yourself at a company like Boeing or a company that’s bureaucratic, too bloated, I have no idea what Boeing’s culture is actually like.

[01:16:41] Clay Finck: Think about the number of people who are driven, they’re motivated. And they’re in that position typically they want to go to a company that’s making things happen. A company like SpaceX, a company that’s innovating and you can just think about the downstream consequences of that, furthering the divide between a company like SpaceX and maybe a company like Boeing just as an example, Musk absolutely loved it when he interviewed someone and he saw the attitude of wanting to show up and have that maniacal, Sense of urgency that really driven work ethic rather than seeing things like fancy credentials or an impressive resume.

[01:17:20] Clay Finck: That’s not something that really wows Musk. Turning back to the discussion on ai, Tesla, they were creating what they call Optimus in August of 2021. Musk believed that Tesla should really get serious about producing robots, and he was really impressed with the work that Boston Dynamics was doing. More than anything, he wanted to help guide the direction of AI in a way that was beneficial to humanity overall.

[01:17:45] Clay Finck: He didn’t want Optimus to be intimidating or something that would look like it would hurt you. Later, he had said that he wants Optimus to look as human as possible, but then also add improvements to One of the most difficult challenges for them was getting Optimus to walk, which is something that they did end up achieving, and once when Musk was testing out Optimus with a joystick, and he was able to have it pick up a box and hand it over to someone, Then Musk, he gave Optimus a push to the chest to see if it would fall over and the stabilizers on it actually kept it on its feet.

[01:18:20] Clay Finck: Musk, he took out his phone and started taking a video and a colleague had said that, that’s when you know that you really impressed him is when he starts filming what it is his companies have created. In the fall of 2022, musket stated, our goal is to make a useful humanoid robot as quickly as possible.

[01:18:37] Clay Finck: Eventually, there would be millions of them. This means a future of abundance, a future where there is no poverty. We can afford to have universal basic income. We give people. It really is a fundamental transformation of civilization, end quote. Now, Musk already had a ton on his plate, but like I mentioned, he was really concerned about Larry Page and where he was taking the industry overall.

[01:19:00] Clay Finck: And part of Musk’s ultimate vision for Optimus would be that it could learn by observing humans, and it wouldn’t technically need all these line by line instructions by the engineers. Similar to a human, it would be able to learn by just observing the world around it. They intentionally wanted to make it so it’s really not that strong.

[01:19:19] Clay Finck: And the initial real goal of it was to eliminate dangerous, repetitive, and boring tasks, which is a pretty amazing vision for what that can mean for society as a whole. I’ll also mention that you can also learn more about Tesla’s efforts around robotics and AI. You can just go to tesla. com slash AI.

[01:19:38] Clay Finck: And they have some more information on their website there. And then people have also expressed concern around one of Elon’s other companies, Neuralink, which essentially wants to insert chips into people’s brains so that our brains can communicate directly with the internet without any of that lag time.

[01:19:55] Clay Finck: You stare at a phone, you have to type in. to Google and all that, Neuralink would just make all that happen so much faster. Neuralink was started in late 2016 with the vision that if humans work closely with technology, then they may be better positioned to protect themselves against the potential dangers of AI.

[01:20:15] Clay Finck: Neuralink is another classic example of Musk pushing people way beyond what they initially believed what was possible. Initially, the Neuralink products, they had four separate chips with each having a thousand threads, which would be implanted into different parts of the skull, and Musk just hated it.

[01:20:35] Clay Finck: He said it was way too complex. He wanted just a single Elegant package, no wires, no connections, no router. He believed that there was no law of physics or no basic principle that prevented all of the functionality on just one device. As Isaacson writes here in chapter 65, When the engineers tried to explain the need for the router, Musk’s face turned stony.

[01:20:59] Clay Finck: Delete. He said delete, delete. After they left the meeting, the engineers went through the usual stages of post Musk distress disorder, baffled, then angry, then anxious. But then within a week they got to the stage of being intrigued. They saw this new approach and they realized that it might actually work.

[01:21:20] Clay Finck: Again, this reminds me of the interview I just had with Jim quick, where so many of the limits we have these limits in our minds and we put these limits on ourselves. Musk only falls within the fundamental laws of physics and obey only those laws in those limits. I’m not exactly sure why but it seems that many people are wired to just sell themselves short a bit at this point we’re at the 2021 2022 time period of Musk’s life and just for reference and expanding a bit on how the book is structured I’m about two thirds the way through it the books of around 600 pages total in material and we’re about 400 pages in So a large part of the book is what’s happened just in the past few years, 2021 through 2023.

[01:22:04] Clay Finck: And much of that dives into Musk’s purchase of Twitter now known as X. One of the reasons Musk has become so popular in more recent years is because of Tesla’s rocketing stock price. And that actually led to Musk becoming the world’s richest person. During the COVID crash in the market, Tesla’s stock dropped to 25, and then it proceeded to rise by 10x by the beginning of 2021.

[01:22:30] Clay Finck: That’s less than a year later. And then on January 7th, 2021, he became worth 190 billion. That’s when he surpassed Jeff Bezos in net worth. And then by October of 2021, Tesla became the sixth company in the US to be worth 1 trillion. Musk had hit those compensation targets I mentioned earlier that I believe were set in 2018 that had those super aggressive targets for revenue, profit, stock price.

[01:22:58] Clay Finck: And yeah, the terms were originally set in February, 2018, when Tesla was having those big issues with manufacturing that they definitely needed to overcome. In April of 2022, Tesla reported a net profit of 5 billion on revenue of 19 billion. And then Musk’s payout from that 2018 compensation deal, it was around 56 billion and his net worth at the start of 2022.

[01:23:24] Clay Finck: was a whopping 304 billion. In November of 2021, he had exercised some stock options that were due to expire, and this led to him paying the single largest tax bill in American history, and that was the 11 billion that he ended up paying in taxes. Generally, Musk hasn’t had to pay too much capital gains taxes because he’s had this huge ownership in these companies for so long.

[01:23:48] Clay Finck: And then he’s just continually deferring the taxes while his companies continue to grow. And then the equity state grew with that. Before you get jealous of what Musk has achieved, Isaacson has a bit here about how Musk really wasn’t that happy of a person in the fall of 2021. Musk had stated the following to Isaacson here that I’ll quote from 2007 onwards until maybe last year.

[01:24:13] Clay Finck: It’s been nonstop pain. There’s a gun to your head, make Tesla work, pull a rabbit out of your hat, then pull another rabbit out of your hat. A stream of rabbits flying through the air. If the next rabbit does not come out, you’re dead. It takes a toll. You can’t be in a constant fight for survival. always in adrenaline mode and not have it hurt you.

[01:24:34] Clay Finck: But there’s something else I’ve found this year. Its that fighting to survive keeps you going for quite a while. When you are no longer in survive or die mode, its not easy to get motivated everyday. Isaacson follows it up here. This was an essential insight that Musk had about himself. When things were most dire, he got energized.

[01:24:54] Clay Finck: It was the sage mentality from his South African childhood. But when he was not in survivor die mode, he felt unsettled. What should have been good times were unnerving for him. It prompted him to launch surges, stir up dramas, throw himself into battles he could’ve bypassed, and bite off new endeavors.

[01:25:13] Clay Finck: Brilliantly said there by Isaacson. I think most of us are hardwired to eventually become complacent, at least to some degree, when we hit some level of success or hit some number financially. Musk is just totally the opposite. Complacency is just what he’s avoiding. And when he sees others become complacent, he just loses his mind.

[01:25:34] Clay Finck: There’s another interesting part here in chapter 69, which is a chapter on politics, which I’ll be avoiding the politics side for purposes of this episode. But it also talks a little bit about his obsession with video games here. Video games, it helps show his obsessive personality. and his sort of tactical skillset and how he thinks about things super strategically in these super complex situations.

[01:26:01] Clay Finck: Even at the age of 50, which was the age he was in 2021, he became obsessed with this multiplayer strategy game on his iPhone called Polytopia. It’s a 16 character game where players, they work to build an empire within that app. Musk became so good at this game that he was able to beat the game’s developer from Sweden.

[01:26:22] Clay Finck: Isaacson writes, what did his passion for the game say about him? And Musk said, I am just wired for war, basically, he answered. I just thought that was so fascinating. That response from Musk. He actually got so obsessed with this game that at times it even took priority over some of the meetings he had at Tesla.

[01:26:41] Clay Finck: He said it was the best game ever, and Elon and Kimball, they had put together some life lessons that they had learned from the game. The game taught Kimball that empathy isn’t an asset if you want to achieve great things. And Elon knew that Kimball fell short of what he could achieve because he had this empathy gene that Elon lacked.

[01:27:01] Clay Finck: And Elon thought that it hurt Kimball in business. It’s so much easier, I’m sure, to not exercise empathy when you’re playing a game like Polytopia. I love this other lesson they share here in the book. Do not fear losing. Musk had said, you will lose and it will hurt the first 50 times. When you get used to losing, you will play each game with less emotion.

[01:27:22] Clay Finck: This means that Musk operates in a way where he’s just fearless and he takes a lot of risks and he knows that failure is okay. And in fact, failure is actually inevitable, at least at some parts of the journey. Another lesson I’ll share here is to double down. Throughout Musk’s life, he’s taken everything he’s earned and he’s reinvested pretty much all of it back into the game of life.

[01:27:44] Clay Finck: He had hundreds of millions from his sale of PayPal, and he essentially put all of that back into his new business ventures. And when you reinvest and you compound the money, the time, the effort, And you do that over decades, amazing things can start to happen. Elon, he ended up getting so addicted to polytopia that he ended up having to delete it from his phone and it consumed just so much of what he thought about.

[01:28:07] Clay Finck: He was actually, he talks about how he is having dreams about it and it just consumed everything within his mind, which is funny given all that he has going on in life. Jumping to another topic, Isaacson tells this amazing story related to the Russia Ukraine conflict. After Russia had invaded Ukraine, they had reached out to Musk, asking him to provide Starlink stations so that they could get the connectivity that they needed, the internet connection.

[01:28:33] Clay Finck: And then two days later, 500 terminals had arrived in Ukraine, and this brought a lot of attention and a lot of press to Starlink. One Ukrainian platoon stated that if it weren’t for Starlink, then they would have been losing the war. When you look at all that Starlink donated to Ukraine, Isaacson writes that it equated to around 80 million.

[01:28:56] Clay Finck: Then, jumping ahead to September of 2022, Ukraine was in the works of attempting a sneak attack on the Russian naval fleet. And they were sending six small drone submarines, and they were packed with explosives, and they were using Starlink to guide these drones and get them to that target. The problem in Elon’s eyes is that there was a pretty reasonable chance that this was going to spark the beginning of a nuclear war and just be a total disaster for the overall globe.

[01:29:27] Clay Finck: And Elon had been told that if Ukraine had attacked the area that they were within Russia, then Russian law and doctrine would decree such a response into potentially open up the world to a nuclear war. So Elon determined that allowing the use of Starlink for the attack would just be a, potentially be a total disaster.

[01:29:48] Clay Finck: So he secretly told his engineers to turn off the coverage within a hundred kilometers of the target and thus the drones, they would get near to the Russian fleet and then they just lose connectivity and do no harm. Elon didn’t want Starlink to be used for offensive military purposes, really only defensive, which is why they ended up providing it to Ukraine.

[01:30:10] Clay Finck: I just found that to be so incredibly fascinating how one man in the US was able to send a text or send an email and completely change the direction of where the world was heading by turning off the internet for a specific reason. And because of this enormous power, I believe that Musk went on and worked with the US government.

[01:30:29] Clay Finck: So there were checks and balances between the two and Musk is no longer able to make such a huge decision on his own, to the best of my knowledge, at least. At the beginning of 2023, more than a hundred thousand new satellite dishes were sent to Ukraine to aid them in expanding their internet service, which again is another amazing feat.

[01:30:50] Clay Finck: Next, Isaacson turns to Elon’s takeover of Twitter, which could be an entire episode in itself. I’ll try and hit on some of the high points here. As of early 2022, companies that Musk had initially funded and built up to this point, he had Tesla with a, around a 1 trillion market value. SpaceX around 100 billion, the Boring Company around 5.

[01:31:13] Clay Finck: 6 billion, and then Neuralink was around a 1 billion market value. And during this time, Muska told Isaacson that he believed that Tesla was on its way to being the most valuable company in the world. And on his way to making one trillion dollars in profits every year. That’s just incomprehensible to even think about.

[01:31:34] Clay Finck: At this point in his journey, he would typically create some sort of crisis at one of his own companies. Usually he didn’t venture outside of his own companies unless something’s going on with his family. He’s stirring up drama. But this time he decided to turn his attention outside of his business, which ended up being Twitter.

[01:31:55] Clay Finck: Elon had 10 billion in cash, and he was thinking about which products he liked, which products he enjoyed using. And for him, this was a pretty easy question to answer. He really liked Twitter. Plus, Elon was concerned with Twitter’s use of censoring users and not being able to You know, see what’s going on with the algorithm and how things worked on the Twitter platform.

[01:32:20] Clay Finck: He also believed that free speech is really essential to a functioning democracy and Twitter in its form at the time, it wasn’t rigorously adhering to that principle that Musk so strongly believed in. Elon had a meeting with Twitter executives to get a sense of what was happening at the company. And after that meeting, he had said, Twitter CEO Parag Agrawal, he’s a nice guy, but.

[01:32:44] Clay Finck: What Twitter needs is a fire breathing dragon and Parag is not that evidently. And then Musk, he worked his way onto the board of Twitter and he ended up acquiring roughly 9 percent of the company’s shares. And he started throwing these various ideas to the Twitter board and he encouraged them to decrease the suppression of free speech.

[01:33:05] Clay Finck: He wanted to charge users a small amount to get them verified, help keep the scammers and bots off the platform. And then just like his vision from over 20 years earlier, he wanted to turn Twitter into a payments platform where people could send money, hand out tips, and pay for exclusive content.

[01:33:23] Clay Finck: And this is what he actually envisioned for X. com early on in his career. Kimball was in Elon’s ear essentially telling him that being on the board of Twitter isn’t going to do anything. He’s going to throw ideas out there in management. He just believed that was just going to ignore them and they’re just going to do what they want.

[01:33:41] Clay Finck: Elon had stated, I began to believe that Twitter was heading off a cliff and that I couldn’t save it by just being a board member. So I thought I should just buy it, take it private, and fix it, end quote. Even though Twitter had announced that Elon was joining the board, Elon, he shot a text to Agrawal and said he wasn’t joining the board and he’s going to be making an offer to buy Twitter instead because of him essentially changing his mind that being on the board wasn’t going to do anything.

[01:34:08] Clay Finck: And then within a day, Musk’s right hand man, Jared Birchall, he was in talks with Morgan Stanley to figure out a price to pay for the company and they came up with a Proposed price of 54. 20 per share, and that was a 54 percent premium above the price he originally paid when he started investing in Twitter and buying shares himself.

[01:34:28] Clay Finck: In his offer letter, he stated, My offer is my best and final offer, and if it’s not accepted, I would need to reconsider my position as a shareholder. Twitter has extraordinary potential and I will unlock it, end quote. Then Musk sent out the infamous tweet. All he said was, I made an offer. While the offer was out, Elon’s friends were wondering what in the world was he doing?

[01:34:51] Clay Finck: He was already plenty busy running all these companies, Tesla, SpaceX, and he told them that it would take five years to turn Twitter around in the way that he envisioned doing so. His sort of vision for Twitter is that he wanted it to be a great platform for user generated content. This includes music, videos, stories.

[01:35:10] Clay Finck: And he had put together a business case for why he believed that Twitter could 5X its revenue to 26 billion by 2028. with the share from advertising decreasing from 90 percent down to 45%. And then he also wanted Twitter users to get paid for the content that they were creating on the platform. All of Musk’s companies had an underlying mission that drove everything they did.

[01:35:36] Clay Finck: Tesla’s mission was to accelerate the world’s transition to sustainable energy. SpaceX’s mission was to make life multi planetary. As for Twitter, he believed that preserving free speech was essential for preserving civilization. And that sort of plays into SpaceX’s mission because he wants to help preserve what we currently have on Earth so he can make life multi planetary.

[01:36:00] Clay Finck: As for Walter Isaacson’s opinion on the matter, he believed that Elon just simply wanted to own Twitter. It was fun for him. It was like an amusement park. He did have fun tweeting, and he just wanted to own the whole thing for himself and preserve what he liked about it. Isaacson writes, I believe there was a psychological, personal yearning.

[01:36:20] Clay Finck: Twitter was the ultimate playground. As a kid, he was beaten and bullied on the playground, never having been endowed with the emotional dexterity needed to thrive on the rugged terrain. It instilled a deep pain and sometimes caused him to react to things far too emotionally, but it also is what girded him to be able to face the world and fight every battle fiercely.

[01:36:41] Clay Finck: When he felt dinged up, cornered, bullied, it took him back to a place that was super painful. where he was dissed by his father and bullied by his classmates, but now he could own the playground. Elon had lined up a number of investors to join him in investing in Twitter and owning it. And on April 25th, 2022, the Twitter board accepted his offer to buy the company.

[01:37:05] Clay Finck: Jack Dorsey had sent Elon a text right after letting him know that Twitter was on the right path with him and he’ll do whatever it takes to make it work. And then Elon realized that he might’ve overpaid for Twitter because. He was getting a lot of red flags and how things like Twitter was assessing the number of users that were bots and not real people and he’s Elon’s just like, how are you calculating this?

[01:37:28] Clay Finck: He was questioning Twitter. Dayman, though. You know how many bots were really on the platform? They’re sorting of guessing and they have an incentive to underestimate it, just to underestimate the real number. And that was really quite worrying to Ilan, he had just purchased Twitter for a 44 billion valuation.

[01:37:45] Clay Finck: And he actually almost didn’t go through with the deal because he was almost certain that he overpaid, which was true in hindsight. And he was also realizing how big of a task he was actually taking on. He had said, quote, I’ve got a bad habit of biting off more than I can chew. Isaacson had said that this was one of the few times he had witnessed Elon being unsure of himself.

[01:38:09] Clay Finck: But the deal did end up closing in October of 2022. Then there’s more here from 2022 on his personal family issues, which to be honest, I’d rather not get into. If you’re interested, I’d encourage you to go out and purchase the book yourself. There’s a bit here I found pretty humorous in chapter 75. Musk, he was put into these extremely awkward situations.

[01:38:31] Clay Finck: And Isaacson says that Musk’s way of diffusing an awkward situation was to joke about it on Twitter. And as I’m pondering the way Musk operates, I’m also reminded of just how hard he is on himself and how hard he is on other people. He expects really a tremendous amount from his companies. For example, for the Optimist project within Tesla, he had told his team to just pretend that they’re a startup and they’re about to run out of money.

[01:38:58] Clay Finck: I quote, all bad news should be given loudly and often good news can be said quietly and once in quote and people can get really motivated when they go out and go to work and they see musk out on the floor in the Tesla and SpaceX factories digging into the super fine details, understanding the most minute things in the rocket questioning everything.

[01:39:22] Clay Finck: Andy Krebs had related this to Napoleon. Napoleon’s armies, they would do their best when Napoleon was out on the battlefield with the rest of the troops. Turning back to Twitter here, with Musk now owning the company, there was a big clash of cultures. Twitter, they really prided themselves on being a friendly workplace and having high levels of empathy.

[01:39:47] Clay Finck: And if you haven’t caught on, Musk is the opposite. Twitter, they had instituted a permanent work from home option in 2020, I believe, and they allowed for a mental day of rest each month. Twitter had a culture of making their employees very comfortable, while Musk had the belief that being uncomfortable was a good thing.

[01:40:09] Clay Finck: Upon Elon’s purchase of the company, he immediately fired the CEO, and then he fired a few other of the top executives. One engineer at Twitter had said that they had been working on possible new features for years, but no one really acted on them, made the decision to implement them, and then now all of a sudden, Elon buys the company, he comes in, And he’s making these rapid changes practically overnight, just telling people to go implement things, launch it, move fast and break things is his approach to business.

[01:40:42] Clay Finck: Elon had brought in three people close to him that Isaacson referred to as the three musketeers and their job was to get rid of most of Twitter’s software engineers. But they had to try and figure out who was the right fit for the culture Elon wanted, who wasn’t the right fit, and they had all the code to sort through from 2, 500 software engineers to try and assess who’s worth keeping, who’s not worth keeping, and Elon set a rule for them.

[01:41:10] Clay Finck: The Tesla Autopilot team had 150 engineers working on it, and then he said it’s a pretty arbitrary number, but he said Twitter should come down to that number of 150. And I just mentioned they have 2500. And it’s not that Musk just wanted to get rid of engineers that weren’t doing a good job.

[01:41:28] Clay Finck: It’s that he also had to cut costs significantly if he wanted to make Twitter a profitable business. So Elon was essentially demanding that 90 percent of Twitter’s employees need to be let go, and this really caused somewhat of an uproar around him, because people essentially told him that Twitter wouldn’t be able to operate if such drastic changes were made.

[01:41:49] Clay Finck: So suddenly, And it ended up being that the first bloodbath of layoffs, it resulted in about half the company being let go. There’s plenty in the book here about content moderation as well. Elon wanted to open up the platform and not perform as much censorship, but he couldn’t allow hate speech on the platform because that would mean all advertisers just want nothing to do with Twitter.

[01:42:13] Clay Finck: And Twitter’s ad revenue would essentially fall off a cliff if he opened up free speech too much. So when Musk took over, around 90 percent of Twitter’s revenue had come from advertising. And then according to the book, advertising was falling a lot. It fell by over 50 percent after Elon had took over.

[01:42:33] Clay Finck: And that’s partially due to just the overall ad market pulling back, but then some advertisers pulled back their spend after Elon took over. And then to make matters worse, many of the Twitter executives that were well respected in the advertising industry, they either quit or they were fired. And many companies that were advertisers were just fleeing the platform as well.

[01:42:54] Clay Finck: Around October of 2022, Isaacson stated that ad sales plummeted by 80 percent month over month, which is just that’s just. a nightmare situation for Musk. To help counter this drop in advertising, Elon went ahead and launched what he called Twitter Blue. This is essentially a monthly fee that users paid for a blue checkmark, and it helps Twitter with the bots and the scammers, and also provide them a little bit of a revenue stream as well.

[01:43:21] Clay Finck: And then once they launched this, now Musk had to deal with this tsunami of fake accounts trying to game the verification and the blue check system. And there’s so many impersonators on the platform, as I’m sure many Twitter users are aware of. Isaacson writes, while the Twitter blue rollout was turning into a Heidenberg level flame out, Musk went into crisis mode.

[01:43:45] Clay Finck: That Wednesday and Thursday, he became dark, angry, resentful. and Churlish. Looking ahead, Musk saw a cash shortfall of billions, so he went ahead and sold 4 billion in stock to fund the cash burn of Twitter, and he even sent an email to Twitter employees letting them know that they have to buckle down and they have to get to work, otherwise the whole business may need to shut down or declare bankruptcy.

[01:44:11] Clay Finck: And when Twitter was a public company, Jack Dorsey had announced that Twitter would be a work at home forever company and Musk definitely quickly changed that. He said that everyone is required to be in the office for a minimum of 40 hours per week and this just wasn’t up for debate. If you’re not willing to come to the office, then you can’t work with Twitter.

[01:44:30] Clay Finck: He said that your resignation is accepted if you don’t show up. End of story. Just two weeks after making his purchase, Musk was at the point where it was pretty clear that he regretted purchasing this company. He was venting to his Tesla robo taxi team saying, I don’t know why I did it. However bad you think the Twitter culture is, multiply that by 10.

[01:44:53] Clay Finck: And Elon was also interviewed for a business summit that asked him what his advice was for someone that wanted to be the next Elon Musk. And he responded, I’d be careful what you wish for. I’m not sure how many people would actually like to be me. The amount that I torture myself is next level, frankly.

[01:45:11] Clay Finck: Now, Musk was pressuring his three musketeers that more job cuts were needed. He said that engineers that stuck around, they needed to have three things. They needed to be excellent, they needed to be trustworthy, and they had to be driven. So the first round of layoffs was to get rid of anyone that wasn’t excellent.

[01:45:30] Clay Finck: Then they sorted through all of Twitter’s internal messages to filter out anyone that wasn’t trustworthy. As for finding those that were driven, they found that they could make it more of a self selection approach instead of sifting through every single employee and trying to figure out, okay, are they driven?

[01:45:46] Clay Finck: Are they not driven? And he essentially sent a message to them saying that the old Twitter culture was gone and now it was time to start making these drastic changes in the company, start working more hours. And they believed that if employees knew that they weren’t going to adopt this all in mindset that Elon had, then they would happily either step up to the challenge or be open about it and just say it’s not for them.

[01:46:10] Clay Finck: So that way they didn’t have to sift through every single person and then make this pure judgment call. Once Elon sent that email out on November 16th, 2022, explaining that hardcore approach with long hours. It was just shy of 2, 500 employees, or 69 percent of the workforce, that let them know that they wanted to be a part of it, which far exceeded many of their expectations.

[01:46:35] Clay Finck: After it was all said and done, around 75 80 percent of Twitter’s workforce had been cut. They started around 8, 000 employees and they dwindled it down to just over 2, 000. And Musk had said that it was a miracle that Twitter even survived. They kept the platform running and that each morning he woke up and the app still seemed to be working for him, which is quite funny, I think, in my eyes.

[01:46:58] Clay Finck: And when I attended Isaacson’s live event, Isaacson had said that he actually marvels that Twitter hasn’t crashed and burned. And it’s amazing to me that Isaacson, who studied Elon more than anyone, he views this as such a big accomplishment for someone who has done all these things prior to even buying Twitter.

[01:47:16] Clay Finck: And then there’s also the whole Twitter files debacle where it was found that Twitter had worked with the government to suppress certain things. Not gonna get into that. And I also wanted to mention this bit on Elon’s two teenage sons. He had a chance to reconnect with them and his family over Christmas in 2022 amidst all the madness at Twitter.

[01:47:37] Clay Finck: There were these two twins Elon has that are around 16 years old, their names Damian and Kai. And Elon believed that these two kids were way too smart for high school. He had discussed with Kai the possibility of working at Twitter. because he was just an outstanding programmer. Then he could do the high school portion online.

[01:47:57] Clay Finck: Damien was just as brilliant, but had a different interest than Kai. Damien was working on quantum computing and cryptography, and he was doing this in an academic lab of a particle physicist. I’m not going to act like I know what that means. He had enrolled at one of the nation’s top research universities, and Musk thought that Damien was even too smart for undergrad studies.

[01:48:20] Clay Finck: This doesn’t touch on all of the children that were mentioned here in chapter 92, but it points to some of what his kids are up to. Then I wanted to talk a little bit about the future of Tesla. Tesla is a classic example of a company that is somewhat misunderstood. And I’m saying this as someone who is nowhere near an expert on this company.

[01:48:39] Clay Finck: I don’t own shares in Tesla. And don’t have any intention to buy any, oftentimes people would say that the stock is overvalued because they make X number of cars and all these other auto makers make so many more cars and they actually make money. Tesla’s actually profitable now, but historically they haven’t been.

[01:48:57] Clay Finck: But I think the point that’s missing is that Tesla has the potential and is currently, at least in my opinion much more than a car company. And they definitely have aspirations to do much more than just produce and sell cars. One example is how Musk was inspired by OpenAI, and he wanted Tesla vehicles to learn from how humans drove.

[01:49:20] Clay Finck: So rather than Tesla themselves determining how Autopilot would react in certain situations, Maybe the autopilot could collect this data from millions of human drivers and then use that data to determine how these vehicles should be driven on full self driving. And this is also known as machine learning, as many know.

[01:49:39] Clay Finck: And then Tesla, they’re collecting all this vast amounts of data. And with their developments with Optimus, artificial intelligence, and various other things they’re working on. I don’t think it’s outside the realm of possibility that Tesla will become the most valuable company in the world someday. It’s not a prediction, certainly could happen.

[01:49:58] Clay Finck: There’s a story towards the end of the book where Musk is riding in a Tesla and he’s testing out the full self driving feature. And the car took a 25 minute trip, it was complex, had all these turns, this difficult course it had to take, and it had no human assistance. And them collecting all this data and have this self driving capability, it’s pretty huge in my opinion.

[01:50:17] Clay Finck: And I think it potentially gives Tesla a huge leg up going forward. Because currently there’s something like 2 million Teslas around the world that are constantly collecting vast amounts of data for them to continue to improve the car itself and then improve that full self driving feature. So Tesla is in a very unique position.

[01:50:40] Clay Finck: And I think there’s a ton of potential for them to differentiate themselves in that aspect. When you think about the data and what the potential implications of that are, and then having all these really smart engineers working on the artificial intelligence side, then towards the end of the book, I thought it was interesting that Isaacson mentioned that Musk had launched an AI company in 2023.

[01:51:01] Clay Finck: There was that falling out with open AI. Now he’s getting in, doing things with Tesla on the AI front. Now he’s created another company. It’s called X. AI, and he personally recruited a leading AI researcher from Google’s DeepMind unit to be the chief engineer. Isaacson had said that Musk now would be running six companies.

[01:51:20] Clay Finck: You have Tesla, SpaceX, Twitter. The Boring Company, Neuralink, and now X. AI. And he comments that’s three times as many companies as what Steve Jobs was in charge of at his peak, which was just Apple and Pixar. This company, X. AI, it’s essentially a competitor to OpenAI, and one of its primary goals was to ensure that and then the final chapter of the book here this gargantuan book is on the starship launch in April of 2023.

[01:51:53] Clay Finck: Apparently this rocket is so big that eventually it would be able to take a fleet of 1000 people to Mars to sustain a colony on Mars. Their goal was to launch to just get it off the launch pad, clear the pad. Rise high enough so it’s out of sight. And then essentially intentionally blow it up above the water so it didn’t cause any damage.

[01:52:15] Clay Finck: And then this sort of launch gave SpaceX necessary information and data to move forward with what they wanted to do with that. And then the Starship launch actually ended up being a big success. Isaacson explains that this story is emblematic of Musk. Someone who aims high, acts impulsively, takes wild risks, and accomplishes big things.

[01:52:36] Clay Finck: And that mission is interesting. I think people will see on the news that, Oh, this rocket blew up when it was in SpaceX’s eyes, it was a really big success. But interestingly, it was actually in the public’s eyes, it’s what the heck? Why is he blowing this up? It probably looks like a failure.

[01:52:52] Clay Finck: So I find that quite interesting as well, where SpaceX needs to do what they need to do. And the public has their own views and opinions on what’s happening. It’s just really hard to comprehend just how much Musk has going on with these six different companies. I honestly don’t even know how he functions, which is why this makes for such a fascinating biography to read.

[01:53:14] Clay Finck: At the time of recording here in late 2023, Musk is only 52 years old, so he still has plenty more time. To continue writing his story and it’s going to be an interesting one to follow along on in the years to come. So with that concludes the book. I’d love to hear what you thought of this episode.

[01:53:33] Clay Finck: What were your big takeaways? If you read the book, did you like it? Did the book or the episode make a big impact on you? You can let me know by tweeting at me and sharing the episode on Twitter. My handle is @Clay_Finck, or you can just shoot me an email. I’d love to hear from you.

[01:53:51] Clay Finck: My email is clay at the investors podcast. com. Thanks so much for tuning in and I hope to see you again next week. Have a good one.

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