A Conversation with Elon Musk

April 17, 2013 at the Khan Academy office in Mountain View

SAL KHAN: So first of all,

I just want to thank Elon for coming – hungry.

ELON MUSK: Absolutely.

SAL: You didn't even have dinner,

and we didn't even feed you properly.

ELON: Sorry to be a bit late.

SAL: Oh, no.

ELON: I just came from the Tesla factory in Fremont.

SAL: Yeah? Was something wrong? [LAUGHTER]

ELON: There's always something wrong.

SAL: Did you have to like –

ELON: At any given point,

there is always something wrong –

SAL: Yes.

ELON: – because there are just too many things going on.

SAL: Yeah.

ELON: So, one of the trickest things about a car

is that there are thousands of individual components –

there are thousands of unique components.

And even if one of those things is missing,

you can't make cars.

SAL:Yes.

ELON: So – I mean today's fiasco was -- I kid you not –

we were missing three-dollar USB cables.

So we cannot complete cars because –

SAL: Basically, the whole line was stopped.

ELON: Yeah. Essentially –

because it's part of the wiring harness.

So you can't put the interior in without this cable.

And so we can either make a whole bunch of cars –

minus the interior –

which means that you got to stick them up in the yard –

SAL: The resale value would be no good.

ELON: It can be done, but --

the damned things go out of sequence –

SAL: Right. Right.

ELON: and it's way more inefficient.

You don't have a moving production line,

so then you have to send people out

to hundreds of cars that are sort of sitting in the storage yard.

And so we –

This happens to be a particularly pernicious cable

that's kind of routed under the carpet and in a difficult place.

And it's literally three dollars.

So, we basically had to send people

throughout the Bay Area to go and buy USB cables.

SAL: Like, literally, Radio Shack –

ELON: At Fry's.

SAL: Oh. Fry's. That's better.

ELON: You could have a hard time getting

a USB cable right now at Fry's.

SAL: Oh, really?

ELON: We just bought every one of them.

SAL: That's good.

ELON: And so we were able to continue production.

I don't want to belabor the anecdote.

But essentially, the supplier is in China.

And we had Plan A and Plan B.

And Plan A was like the normal supply chain process.

But what the supplier did was,

instead of sending our parts in their own package,

they grouped it together

with a bunch of other stuff for other companies,

and sent that all via

some extremely slow boat from China to LA.

And when it got to LA, the other stuff didn't pass customs.

SAL: Ohhh.

ELON: So they wouldn't let our stuff through, because –

SAL: They put in like a barrel of fruit or something,

ELON: I don't know what they put it in.

It's something that Customs didn't like.

The paperwork wasn't in order, or wWhatever.

So it got stuck there for, like, a couple of weeks.

And then we had Plan B.

So we call them and say,

"Look, you've got to airfreight some of these cables –

some of these little cables – to us."

And we talked to their US subsidiary,

and ordered them from the US subsidiary,

who then communicated with [the supplier in] China.

But then, because this was another batch of parts –

so it was kind of double the [usual] order –

it exceeded the credit limit that we had.

SAL: Oh! Yeah. You've gotta –

ELON: So it bounced off their credit limit.

So they didn't ship it.

SAL: Fascinating! So someone's losing their job now.

Nah, I'm kidding. [LAUGHTER]

You shouldn't fire anyone.

ELON: I mean, it's pretty farcical.

Anyway, so It's coming, like, tonight at 11PM or something.

SAL: Wow.

And these things are, happening, like, all the time?

– or this is an unusual circumstance?

ELON: That's like one example but there are many things like that.

SAL: I guess I mean that's a really good example because that kind of leads into

what I've always been fascinated by a lot of what you're doing

is well I guess I will start with

how did you get into this? I mean you know..

ELON: into cars?

SAL: Into cars, into taking over NASA?

into... well NOT taking over NASA...

of being a contractor for NASA...

ELON: Just for the record, we are not taking over NASA

SAL: Yes you are not taking over NASA.

They're an independent organization.

But you are becoming a major provider of services for NASA.

Obviously kind of internet payment and payments generally

I mean these are very... three completely different spaces

I think a lot of people would not take someone seriously

if they had a business plan in one of these.

ELON: Right.

SAL: Oh yeah, you can take your time

What was your...

I mean did you always think you're going to be doing this?

When did it dawn on you that

you would try to revolutionize three industries ?

ELON: Well, when I was in college

I didn't actually expect to do it.

So it was not like this is some long fulfilled expectation.

But when I was in college, I thought about

what were the areas that we most affect the future of humanity

and, in my opinion, and the three areas were

the internet, sustainable energy and space exploration.

Particularly if humanity would become multi planet species.

It's kind of like a pretty substantial bifurcation in our sort of future

if we are either out there among stars from local planets

or if we're confined to a...

until some obviously eventual extinction.

Not that I am pessimistic about life on earth...

Things are likely to be good ... even more likely to be good by far

SAL: Yellowstone's due for an explosion every 100s several 1000 years.

Someone knows about that ...

It's been 700,000 since ...

Right ...yeah...super volcano for those you don't know: it would envelope (the world).

ELON: Yeah exactly... I know exactly what you talked about...

SAL: We read the same books, I can tell.

ELON: Absolutely.

Something bad is bound to happen

if you give it enough time.

And civilization has been around

for such a very short period of time, that –

These time scales seem very long.

But on an evolutionary time scale

they're very short.

A million years on an evolutionary time scale

is really not much.

And the Earth's been around for 4 and 1/2 billion years.

So, that's a very tiny tiny amount of time, really.

But for us, that would be -

I mean, can you imagine if human civilization continued

at anything remotely [resembling] the current pace

of technological advance for a million years,

where would we be?

I think we're either extinct or on a lot of planets.

SAL: Yes. We should be.

ELON: These are our two options...

SAL: But given that. One: that's kind of as epic

as one can think about things – I mean, literally.

How did you make that concrete?

How does that turn into SpaceX, Tesla and PayPal?

ELON: Well, so I thought about these things

kind of in the abstract – not from the expectation

that I would actually have careers in those arenas.

But I wanted to be involved in at least one of them.

At first, I thought the best bet was going to be electric cars.

And so the area that I was studying

was advanced capacitors, right?

So essentially, those are capacitors that have

an energy density exceeding that of batteries –

because batteries have a very high-power density,

but low energy density.

SAL: Yeah.

[Maybe you should] have a lecture to that effect.

SAL: Oh yeah. We should do that – a little later –

ELON: [LAUGHS] Exactly.

So, obviously if you could make a capacitor

that had anywhere near the energy density of a battery –

with its incredibly high power density,

quasi-infinite cycle and calendar life,

then you'd have an awesome solution

for energy storage and mobile applications.

So, I was going to sort of work on that and try to

leverage the equipment that was developed

for advanced chip making and [??] –

to create ultra precise capacitors at the molecular level.

SAL: And this is when you were

going to go into grad school?

ELON: Yeah.

SAL: You had a brief stint at Stanford ...a PhD in Applied Physics

ELON: Applied Physics and Material Sciences... SAL: right this is what you were ...

even then you were thinking of kind of trying to do something in this space.

ELON: Well...actually this was

to work on energy storage solutions for electric cars.

SAL: Yeah.

ELON: And I actually worked at a company in Silicon Valley called Pinnacle Research

which did advanced capacitors.

There were electrolytic capacitors

and actually were pretty good. They had the energy density of a LED acid battery

which, for a capacitor, is a big deal.

But they used ruthenium titanium oxide.

And I think at the time

there was maybe one or two tons of ruthenium mined per year in the world.

So it's not a scalable solution.

But I thought there could be some solid state solution -

just like what I said - using chip-making equipment.

That was going to be the basic idea.

It was one of those things where

I wasn't sure if success was one of the possible outcomes.

You know... like you can't...

It's difficult to bound that problem exactly and say, "Okay..."

SAL: So you're saying, "I felt like this was a destined failure..."

It's another way to parse that sentence but anyway -

ELON: No I didn't think it would [necessarily] fail.

But I wasn't sure that success was a possibility.

SAL: OK yes.

ELON: You know, and generally,

[if] you want to embark on something, it's desirable to figure out

if success is at least one of the possibilities.

SAL: Right, exactly.

ELON: Because, for sure, failure is one of the possibilities.

SAL: Yes.

ELON: But ideally, you want to try to bracket it and say

success is in the envelope of outcomes.

SAL: Yeah

ELON: and I wasn't quite sure if that was the case.

I think success on an academic level would have been quite likely

because you can publish some useless paper.

And most papers are pretty useless.

SAL: We have a few: don't take offense.

ELON: I mean how many PhD papers are actually used

by someone ever?

SAL: That's a good point...

ELON: I mean, percentage wise it's not good

And so.... it could be one of those outcomes

where you add some leaves to the tree of knowledge.

And that leaf is: no it's not possible.

SAL: Right.

ELON: There goes 7 years of my life.

So that was sort of one path. I was prepared to do that.

But then the Internet was... the Internet came along it was like:

"Ok, the internet, I'm pretty sure success is one of the possible outcomes."

I could either do sort of a PhD and watch the Internet happen.

Or I could participate and help build it in some fashion, you know.

I just couldn't stand the idea of watching it happen.

Yeah,

So I decided to put things on hold

and start an Internet company.

And that was kind of...

We worked on Internet publishing software,

maps, directions, yellow pages kind of things.

We had as investors and customers

the media companies like New York Times company, Knight Ridder.

SAL: This was just the early stages. ELON: This was '95.

SAL: So its really early stages... so this [was] really out of the gate. ELON: Absolutely

So then we ...

The reason that we worked with the media companies is

because we didn't have money.

Like there was no advertising money in '95. SAL: Right

ELON: In fact, the idea of advertising on the Internet seemed like ridiculous to most people.

Obviously it's not ridiculous anymore. But

at the time it seemed like a very unlikely proposition.

A lot of the media companies weren't even sure that they should be online.

Like what's the point of that?

SAL: And did you all think that PayPal was going to be, you know, a simple little Internet way

Or did you think it was going to turn into

the major kind of transaction processing engine that it is right now?

ELON: I didn't expect PayPal's growth rate to be what it was.

That actually created major problems.

We started PayPal on University Avenue.

After the first month or so of the website being active,

we had 100,000 customers.

SAL: Really that ... well wow I didn't realize that.

And how did it start? How did people even know to use it?

And, I mean, both buyer and seller have to be involved.

ELON: Yeah

Well we started off first by offering people $20 if they opened an account,

and $20 if they referred anyone.

And then we dropped it to 10 dollars.

And the we dropped it to 5 dollars.

As the network got bigger and bigger,

the value of the network itself exceeded any sort of carrot that we could offer.

SAL: How much money did you spend with that kind of $5, $10, $20

incentive to get the critical mass going?

ELON: That was a fair amount ...I think it was probably

60 or 70 million dollars ... SAL: oh well so it was substantial.

So we're not talking peanuts here. This is ...

ELON: Yeah it depends on your relative scale.

It is a peanut to Google.

SAL: Yes well that's right, yes

ELON: I mean Google has got 50 billion.

Apple's got, I don't know, 150 billion some crazy amount of money.

That's cash... SAL: Yeah.

So that is not outlandish ... I didn't realize that was so core.

ELON: 1% of that would be 500 million dollars so it you know.

That's 0.1% of Google.

SAL: That's true. You are right. That's inexpensive.

ELON: Relative to that

proven pretty inexpensive.

SAL: That's right.

ELON: And then we did...we just did a bunch of things

to decrease the friction because -

and it's just like bacteria in a Petri dish -

what you want to do is try to have

one customer generate like two customers... SAL: yeah

ELON: Okay or something like that - or maybe 3 customers ideally.

And you want that to happen really fast,

and you can probably model it just like bacteria growth in a Petri dish.

It will just both expand very quickly until it hits the sides of the Petri dish.

And it slows down.

SAL: After PayPal then, I mean,

to some degree, especially in SiliconValley, you can understand the Internet.

We know people, I mean, PayPal is obviously onto the scale that is noteworthy.

But then Space X seems really, you know...

Well one, how did you decide, "I am definitely going to do that."

And then what's the first thing that you do?

Like how do you even like go out?

I don't even know how to start

trying to make a rocket company.

ELON: Neither did I really.

And in fact, the first 3 launches failed.

So it was[n't] like, you know, spot on -

did not hit the bull's eye.

SAL: But even getting to the point you're launching rockets. I don't even know how to

like how do you get there?

What did you do...like (1) what did you decide and what did you do on day one?

Like who would you call or did you write a plan, did you start...I don't even know.

ELON: Actually the urge of PayPal is ...oh Space X is that

I was trying to figure out why

that we have not sent any people to Mars

because the obvious next step after Apollo

was to send people to Mars.

But what in fact happened was that we sent a few people to the Moon

And then we didn't send anyone after that

to the Moon or Mars or anything.

But if you'd asked people in 1969

what would 2013 look like, they would have said

there'll be a base on the Moon.

There will be we would have at least sent some people to Mars

and maybe they'd even be a base on Mars offering space hotels

and there would be some stuff in space...Yeah.

And that's what people expected.

And if you said, well actually,

Unites States in 2013 will not be able to send anyone to orbit.

But I'll tell you what will exist is that there'll be this device in your pocket.

That's like the size of the...it's smaller than a deck of cards.

That has access to all the world's information.

You can talk to anyone on the planet Earth.

And even if you like in, you know,

some remote village somewhere, so long as...

something we called the Internet.

They wouldn't know what that means, of course.

Then you'd be able to communicate to anyone instantly

and have access to all of humanity's knowledge.

It's like bullshit. There is no way that's going to be.

SAL: Right right right

ELON: And yeah we already have that.

And space is not happening so

I was trying to figure out: what's the deal here?

This was 2001.

This friend of mine asked me what would I do after PayPal.

I said well you know I was always interested in space

but I don't think anything that an individual can do in space

because the province of government is usually large government.

But I'm curious as to when we're going to send someone to Mars.

so I went to NASA's website try to figure out

where is the place that tells you that.

I couldn't find that.

Either I'm bad at looking at the website or they have a terrible website.

Becasue surely ... SAL: that must be a big day

ELON: Yeah, this should be on the front page

And then I discovered actually that

NASA has no plans to send people to Mars

and or even really back to the Moon.

So this is really disappointing. I thought well maybe

this is a question of national will.

Do we need to

get people excited about space again?

And try to get NASA a bigger budget and

then we would send people to Mars?

And so I started researching the area

becoming more familiar with space

reading lots of books

I came with this idea to do something called 'Mars Oasis'

which was to send a small green house

It was seasoned dehydrated gel, upon landing, you hydrated the gel

You have green plants in a red background

and the public is

the public response to precedents and superlatives.

It's the ... it would be the first life on Mars...

The furtherest life has traveled

And you have this money shot green plants on the red background

That seem like

it would get people pretty excited

So that, I started getting into this

try to figure out okay

can I afford to build a spacecraft?

I had some money from PayPal

But it had to fit within that budget

I figure we have to do two missions because

if we only do one and fail

then it might have the opposite effect

SAL: You are willing to bet the farm so to speak on this...

ELON: yeah well

Yeah I figured like,

I was willing to spend half the money that I got from PayPal

with no expectation of return

SAL: Right

ELON: because i thought this was just something

that was pretty important and

I'm like

seem like I could spend half the money I made at PayPal on this

And if that got NASA a bigger budget...the result in us going to Mars

that would be a good...pretty good outcome

SAL: When your friends came and your family came up to you and said

look you know there're nations that can't do this you know,

You are a guy and you have some resources

What did you say or do or think

ELON: I had a lot of friends of mine trying to talk me out of

starting a rocket company because they thought it was crazy

One of my friends maybe watch a video of rockets blowing up

There are just lots of people thought it was a real crazy idea

Some people tring to start rocket companies had not succeeded

And that they tried to talk me out of it and

but the thing is that

the premise to talk me out of it was

"We think you're going to lose the money that you invest."

I was like yeah, well, that was my expectation anyway

So I don't really mind if I lose

I mind, but I mean it

It is not like I was trying to figure out

the rank or the best way to invest money right on that basis

So I chose space... thoughts like that

SAL: You weren't looking like the money market bonds

triple-A bonds, rocket company... ELON: real estate

invest in pew making or anything

Well the chase is just the highest ROI...that was not what I...what the fun is

I still thought that it was important that humanity expands beyond earth and

we weren't doing that. So maybe there are something I can do to

kinda spur...spur that on

I was able to compress the costs of the spacecraft and everything

down to a relatively manageable number

and I got stuck on the rocket

The US rockets were way too expensive

I ended up going to Russia and flew to Russia three times

to negotiate purchase of a ICBM

I tried to buy two of the biggest ICBMs in the Russian fleet

in 2001 and 2002

And actually the negotiator...

SAL: I just let those statements stand and I'm not even

ELON: That's...

SAL: Actually who did you call?

ELON: You open the yellow pages. Go to ICBMs

SAL: Like I mean how does this

And I don't get too much in the way..

And I am just curious about this one particular thing..you are...

You decided at some point you need to buy an ICBM

ELON: Yeah well actually at first I try to buy just the normal launch equipment

they use to launch satellites. Those were too expensive.

SAL: I see

ELON: The Boeing Delta II would have cost 65 million dollars each

and two would have been 130

and then I said well that breaks my budget right there

SAL: Yeah

ELON: And I tried to negotiate with them. I was not...

SAL: How much does an ICBM go for?

I am curious about market rate for one of those.

This is right after the fall. It might have gone up.

ELON: It's gone up a lot since then.

In 2001 it would've been about ten million dollars each.

Two would be twenty and then

And I thought I could get the rest of the mission

down to also around 10 per.. so we would have

a dual mission with like two identical launches, two identical spacecrafts

for like roughly forty million dollars

So I thought that ok I can do that and

SAL: But you must have had some like you know

rocket scientists advising you at this point

I mean this sounds like you were serious

ELON: yeah

I engaged a bunch of circuit consultants.

I kind of start to get familiar with the space industry.

But then after the third trip to Russia

I came to realize that I was actually wrong about

my first premise -- that there was a lack of will.

In fact, I think that there is a tremendous amount of will

in the United States for outer space exploration.

Because the United States is essentially

a nation of explorers.

It's a distillation of the human spirit of exploration.

So of course, it was quite so silly of me to think

that people lack motivation.

But what people don't want to think is that

sending people to Mars is going to be so expensive

that they'll have to give up healthcare or something

SAL: Right

ELON: They're not gonna do that.

So it's got to be [done in such a way] that

going to mars is not going to cause some

meaningful drop in their standard of living.

SAL: Right.

ELON: So it's like maybe

.25% to .5% of GDP – something like that is palatable.

Anyway so I thought ok it is not really gonna maybe matter that much

if I do this mission because

What really matters is having a way.

I was wrong, I thought I hope there was

there was enough will but actually there was plenty of will

if people thought there was a way.

So then I said, "Okay. I need to work on a way."

How hard is it really make a rocket?

"In history or historically all rockets have been expensive.

Therefore in the future, all rockets will be expensive."

But actuall, that's not true.

If you say, "What is a rocket made of?"

and say, "it's made of aluminum, titanium –

some copper –

carbon fibers, if you want to go that direction –

And you break it down and say,

"What is the raw material cost of all these components?"

And if you have them stacked on the floor,

and could wave a magic wand,

so that the cost of rearranging the atoms was zero,

then what would the cost of the rocket be?

As I was like, "Wow. It's really small.

It's like 2 percent of what a rocket costs."

SAL: Right.

ELON: So clearly, [most of the cost comes from how expensive

it is to arrange those] atoms.

You got to figure out – sort of – how can we [go about getting]

the atoms [assembled] in the right shape

much more efficiently.

SAL: Yeah.

ELON: So I had series of meetings

on Saturdays with people, some of whom were working

at the big aerospace companies,

just try to figure out if there is some catch here

that I am not appreciating.

SAL: Yeah.

ELON: I couldn't [find one].

It [didn't] seem that there [was] any catch, so ...

I started Space X.

SAL: And you ended up – you had some failures.

But obviously some huge successes.

What was the cost that you were able

to build this rocket for –

relative to what they were being built for before?

ELON: So, let's see.

For the Falcon One –

which was the first rocket we built –

the first three fights did not make it. in fact –

Yeah. I mean we got progressively further,

But, like, the first rocket came in and [crashed] –

– landed maybe a couple of hundred yards

away from the launch site – in tiny fragments.

So, anyway –

That rocket ended up costing around six million dollars –

SAL: Wow.

ELON: – compared to other rockets in that class –

which were about 25 million dollars.

SAL: Wow. That's [a] significant [saving].

ELON: Yeah. Like a quarter.

SAL: Wow. Wow.

ELON: But there is an even better step beyond that –

which is to make rockets reusable.

So ... right now ... that is around

what our

comparison prices is, excluding the refurbished ICBMs

If you say

building rocket from new

how does this Space X rocket compared to a rocket from Boeing or Lockheed?

It's about a quarter of the price

However if we make it reusable

then it can be two orders of magnitude cheaper

SAL: Two orders of magnitude cheaper...100th the price... ELON: that is right

SAL: So I mean... ELON: for you

SAL: Only today ... Memorial Day sale (laughter)

What ...

I have seen some ..you are doing those vertical landings

yeah...like literally out of the 1950s

like sci-fi movies ELON: yep

SAL: and that's what you're talking about.

ELON: Essentially the rockets need to come back and land in the launch site

and then reload propellant, take off again like an airplane.

SAL: How far do you think we are from that?

When do you think like you know your best guess is

when will we actually see that happening?

ELON: And I hope we can do it next year.

SAL: Okay yeah that's...

We've got some ambitious stuff at the Khan Academy for next year too (laughter)

Just we can compare.

We're redesigning the site you know.

Right

ELON: We have been working for a long time

Space X has been around for 11 years

And thus far we have not recovered any rockets.

We've recovered the spacecraft from orbit.

So, that was great.

But none of our attempts to recover the rocket stages have been successful

The rocket stages have always blown up basically on reentry

Now we think we've figured out why that was the case.

And it's a tricky thing because Earth's gravity is really quite strong

and with advanced rockets you can do maybe 2 to 3% of your lift off mass to orbit

typically

then reusability subtracts 2 to 3%

Then you go like nothing toward or negative

and

That's obviously not helpful

So the trick is to try to shift that from

say two-three percent

in and expendable configuration

put them to make the rocket

mass efficiency, engine efficiency and so forth

so much better that it moves to

around maybe 3.5 or 4% in an expendable configuration

And then try to be clever about the reusability elements

Try to drop that to around the 1.5 to 2% level

So you have a net payload to orbit of about 2%

SAL: But you're doing it one...two orders of magnitude cheaper

ELON: Yeah absolutely because ...

our Falcon line of rocket costs about 60 million dollars

But the propellant cost which is mostly oxygen

it's two thirds oxygen one third fuel

is only about 200 000 dollars.

SAL: Wow.

It's much like a –

I guess 747. It costs about as much to refuel our rocket as it does to refuel 747

You know within

We are pretty close essentially

SAL: What happens, assuming you are all successful

you all prove yourself to be successful on these audacious things in the past

I mean what happens and that seems likeit's

What happens in the next 5-10 years in this space industry

if you all are successful there?

I mean, do we get to Mars?

Do we have kind of market forces

commercialization of space starting to happen?

ELON: Yeah

Well the first step is that

we need to earn enough money to keep going as a company

So we have to make sure that we're launching satellites

commercial satellites so it's like

broadcast, communications, mapping

government satellites that do scientific missions –

earth-based or space-based missions, GPS satellites

that kind of thing.

And also service space station transfer cargo to and from space station

which we have done a few times.

Then taking people to and from the space station

So we've got to service the earth-based needs to launch satellites

and that pays the bills

but in doing that

keep improving the technology

to the point where we can make full reusability work

and we have sufficient scale and sophistication

to be able to take people to Mars.

SAL: Wow, so you think this is going to be a reality.

What's your best guess

when we're going to have someone on Mars?

ELON: I think probably about twelve years

SAL: twelve... and you think it'll be a round trip

It will be to have some type of permanent colony on Mars that

ELON: I think it's probably a roundtrip

SAL: Wow

So... ELON: it's not for sure.... SAL: I could talk about this for...I mean

People know I am... ELON: aspirational to be a round trip.

SAL: This is mind-blowing.

And I mean on Tesla,

Tesla is obviously from our, from my vantage

It's a huge success and it's...

What do you think is in that industry...

I want to be asking the same question what do you think, you know

This is something GM, Toyota

these massive multi-billion dollar organizations have been trying

you know, what gave you the confidence to kind of pursue it?

And now that it seems to be a huge success

where do you think this industry's going to be the next 5-10 years?

ELON: Yeah with Tesla

the goal is to try to accelerate

the advent of sustainable transport.

I think it would happen anyway

because it's just out of necessity

Because we have an unpriced externality

in the cost of gasoline

we weren't pricing in the environmental effects

of CO2 in the oceans [and] atmosphere,

that's causing the normal market forces

not to function properly.

So the goal of Tesla is to try

to act as a catalyst to accelerate

those normal forces, the normal sort of market reaction

that would occur.

We are trying to have catalytic effect on that

and try to make it happen – I don't know –

maybe 10 years sooner than it would otherwise occur.

Yeah that's the goal of Tesla.

So that's the reason I am making electric cars,

and not any other kind of car.

We also supply power trains to Toyota and to Mercedes

and maybe to other car companies in the future

to accelerate their production of electric vehicles.

So, that's the sort of goal there.

And so far it's working out pretty well.

SAL: I just saw in the news report the other day

that you sold more (Tesla) Model S-es than –

you're leading that segment of the industry –

that the Mercedes S class, the BMW 7 series,

the Lexus LS400 or whatever it is.

ELON: Yeah, actually, that seems to be the case.

And that's a

I didn't realize they sold so few cars in that segment.

SAL: That's

ELON: We are not selling that many cars.

We sold 5000 a quarter 12,000

SAL: Well out here they seem like you know every ...

ELON: Yeah but this is our home team you know

So it's...

We better sell a lot out of the Bay Area

SAL: Yeah...no but that ...and

What I mean it seems similar thing. I mean what would...

How did you start?

What gave you the confidence?

And do you see yourself, I mean, is

kind of major automotive mainstream brand in 5 or 10 years?

all the way down to kind of competing with the Honda Accords and Civics?

ELON: Yeah I mean the goal is not to...

it's not sort of to become a big brand

or to compete with Honda Civics.

We'd rather to advance the cause of electrical vehicles.

So, we're just gonna keep making

more and more electric cars

and driving the price point down.

So the industry is very firmly electric, you know.

Like maybe half of all cars made are electric –

or something like that.

Which is not to say we expect half of all cars.

We want to just have that catalytic effect

until at least that occurs.

I think the point which this

we're approaching half of all new cars made are electric,

then I think that's –

I'll consider that to be the kind of victory condition.

SAL: Wow.

ELON: And if so, the faster we can bring [about] that day,

the better.

SAL: When would be your guess when that happens?

ELON: I made a bet with someone about 3 years ago

that it would be sooner than 20 years.

So it's 17 years from now.

But that's – I think – that's conservative.

I think is probably maybe 13 or 14 years.

SAL: Wow, right about time – what happened

SAL: Right when we're going to Mars.

And it will be exciting times... yeah.

ELON: Absolutely true...it just could...

I also have been thinking about that:

it was like: those time frames are kind of a coincident

SAL: Yeah.

ELON: It's but yeah

I mean the nature of new technology adoption is it tends to follow an S curve

so what usually happens is people underpredict it in the beginning

because people tend extrapolate on a straight line.

And then they'll over predict that kind of midpoint

because there was late adopters and then

It'll actually take longer than people think

at the midpoint but

much shorter than people think at the beginning yeah

I am pretty excited about how things are going

It's...and in fact I think

that the pace of technology improvement is in energy storage

It is really

moving faster than anyone thinks ... SAL: wow

I got one or more ... what are we doing on time

9 o'clock how much time do you have?

ELON: I guess maybe another 15 minutes.

SAL: Okay

I'll finish with one last question before I open it up

What advice do you have for us at Khan Academy?

ELON: You guys are doing really great.

I was wondering if you had advice for me.

SAL: No

ELON: Yeah it seems like you are doing an amazing job of

really super leveraged, I mean, of this small team

you have a dramatic effect upon

SAL: Half the people don't even work here ... right it's right

ELON: So it's a very impressive thing you are doing

to spread knowledge and understanding throughout the world

SAL: The universe soon –

if you hold up your end of the bargain here

ELON: Yeah.

I mean it's actually kind of funny ...

You know, if you think what is education?

You're basically downloading data and algorithms

into your brain.

It's actually amazingly bad in conventional education.

It's like it shouldn't be this huge chore.

So you're making it way better.

But I think a lot of things I would say,

you've probably heard a hundred times.

And, in fact, if not doing.

The more you can gamify the process of learning, the better.

For my kids,

I do not have to encourage them to play video games.

I have to like pry them from their hands –

like crack (illegal drugs).

"Drop that crack needle."

SAL: You have that problem at your house, too.

The crack is addictive.

ELON: You know it's the degree to which you can

somehow make learning like a game.

Then that's better.

And I think unfortunately a lot of education

is very vaudevillian.

You've got someone standing up there

kind of lecturing at people.

And they've done the same lecture 20 years in a row.

And they're not very excited about it.

And that lack of enthusiasm is conveyed to the students.

Such that they're not very excited about it.

They don't know why they're there.

Like, "Why we are learning the stuff?

We don't even know why."

In fact, I think a lot of things people learn –

probably – there is no point learning them –

because they never use them in future.

SAL: Because who's going to launch a rocket into space?

That's just like – exactly – that never happens.

ELON: Well, you have to say, like, if you'll go, stand back,

and say, "Why are we teaching people these things?"

And – we should tell them, probably,

why we are teaching these things.

Because a lot of kids in school

kind of puzzled as to why they're there.

I think if you could explain the why of things

then that makes a huge difference to people's motivation.

They understand...

They understand purpose.

So that's pretty important.

Just make it entertaining.

But I think, just in general,

conventional education should be massively overhauled.

And I'm sure you very much agree with that.

The analogy I sometimes use is,

you've seen like Batman – like the Chris Nolan movie –

like the original one.

And it's pretty frickin awesome. Right?

You've got incredible special effects, great script

multiple takes, amazing actors, and great sound.

It's very... is very engaging

But if you would instead say okay that you have the same script

so at least the same script and you said ok now that script

instead of having movies, we're going to have

that script performed by the local town troupe.

Okay and so in every small town in America,

if movies didn't exist,

they'd have to, then, recreate the Dark Knight.

SAL: Right.

ELON: Like with home-sewn costumes, and, like

jumping across the stage –

not giving their lines quite right,

and not really looking like the people in the movie.

And no special effects – that would suck.

It would be terrible.

SAL: That's right. Very, very –

ELON: That's education.

SAL: So with that –

And I apologize to all of you guys for hogging up all the time.

Because obviously, I could talk for hours about this stuff.

But we do have time – I think 5 or 10 minutes – for a handful of questions.

If none of you all have any, I have about nine more. But yes –

QUESTION: So I noticed –

I picked up two kinds of themes from what you're discussing.

One was somewhat audacious goals.

And the other was

I don't think I heard you use the word 'profit'

in anything you spoke about.

You seemed to be – each thing is pointed at, like –

reinvigorating industry or

bringing back space missions –

How much of your success do you attribute to having really audacious goals

or versus just not being focused on the short term

you know money coming in or investors

ELON: Unfortunately, one does have to be focused on

short term money coming in when creating company

because otherwise company would die.

So, a lot of times people think

creating companies is going to be fun.

I would say it's not. It's really not that fun

There are periods of fun

and there are periods of where it's just awful.

Particularly if you're the CEO of the company

you actually have a distillation of all the worst problems

in the company

There is no point in spending time on things that are going right.

So you only spend your time on things that are going wrong.

And the things that are going wrong that

other people can't take care of... you're like the worst

You have a filter for the crappiest problems from the company

the most pernicious and painful problem.

So I wouldn't say .. I think you have to feel quite compelled to do it

and have a fairly high pain threshold and as a friend of mine

who says like starting companies is like

staring into the abyss and eating glass.

There is some truth to that.

The staring into the abyss part is that you're gonna be constantly facing

the extermination of the company

because most startups fail.

90% or 99% of startups fail.

So ...

That's the staring into the abyss part because you constantly say

if I don't get this right, the company will die.

Should be quite stressful

And then the eating glass part is

You've got you've got to do

You got to do the problems....

You got to work on the problems of the company needs to work on

not the problems you want to work on

So you end up working on problems

that you really wish you weren't working on

So, that's the eating glass part.

And that goes on for a long time

QUESTION: So how do you keep your focus on the big picture

when you constantly face with

you could be out of business in a month?

Well it's just a very small percentage of mental energy is on the big picture,

like you know where you are generally heading for

And the actual path is going to be some sort of zigzagy thing in that direction

You try not to deviate too far from the path that you want to be on,

but you're gonna have to do that to some degree

But I don't want to diminish, I mean

I think the profit motive is a good one

if the rules of an industry are properly set up

So there is nothing fundamentally wrong with profit.

Profit just means that people are paying you more

for whatever you're doing

than you're spending to create it.

That's a good thing.

If that's not the case

then you'll be out of business and rightfully so

Sure you're not adding enough value

But now there are cases of course

where people will do bad things

in order to achieve profit.

But that's actually quite unusual

because usually the rules are set up

mostly correctly like not completely, but mostly correctly.

SAL: Well we have time for one more question. Joe?

QUESTION: I have an important one... SAL: ok very good yes

QUESTION: So a few months ago you teased Hyperloop

and we haven't heard anything since.

So first of all, a few of us engineers are talking about

and I think we have a few ideas if you need help.

But if you feel comfortable

maybe you could tell us a little bit more.

ELON: I was reading about the California high-speed rail.

It was quite depressing

because California taxpayers

are going to be on the hook to build

the most expensive high-speed rail per mile in the world –

and the slowest.

Those are not the superlatives you want.

And it's like: Damn, like we're in California we make super high-tech stuff

Why are we gonna be spending 100 billion dollars

for something that will take two hours

to go from LA to San Francisco

Like okay why can't I get a plane to do that in 45 minutes

It doesn't make much sense.

Isn't there some better way to do it than that?

So if you just say ok, well, what would you ideally want

in a transportation system you take?

Well, you'd want something that –

relative to existing modes of transportation –

is faster, twice as fast, costs half as much per ticket

can't crash –

is immune to weather –

You can make the whole thing like self powered --

with solar panels, or something like that.

That would be great...a good outcome.

And so what would do that

and what's the fastest way,

short of inventing teleportation that you could do something like that.

Some of the limits to that solution are fairly obvious

and some are not so obvious.

And then the details...

the devil's in the details of actually making something like that work.

But I came into conclusion that there is something like that could work

and would be practical.

SAL: Is this around the vacuated tubes?

The vacuum tubes well the old bank....

ELON: It's something like that

SAL: We haven't been more public with what this is?

ELON: No. Although I did say that once Tesla was profitable,

that I would talk more about it.

But we haven't done our earning's call yet.

So I think I'll probably do it after the earning's call... SAL: yeah

ELON: The thing is,

I’m kind of strung out on the things that I am doing.

So adding another thing –

SAL: Yeah.

ELON: It's like -- It doesn't --

You know, that’s a lot.

SAL: Learning the guitar.

You could pick up all sorts of things.

ELON: Right. I tried learning the violin.

That’s, by the way, a hard thing to learn. LAUGHS.

SAL: Yes. Launching rockets – electric cars,

ELON: Yeah.

SAL: revolutionizing transportation. Yeah. That’s easy.

ELON: I cannot play the violin at all.

I'm very horrible.

If you think about the future,

you want a future that’s better than the past.

And so if we had something like the Hyperloop,

I think that would be, like, “Cool!”

You’d look forward to the day that was working.

And if something like that –

even if it were only in one place –

from LA to San Francisco, or New York to DC,

or something like that –

Then it would be cool enough

that it would be like a tourist attraction.

SAL: Yeah.

ELON: It would be like a ride or something.

So even if some of the initial assumptions didn’t work out –

the economics didn’t work out quite as one expected –

it would be cool enough that [people would say]

“I want to journey to that place just to ride on that thing.”

That would be pretty cool.

SAL: Wow.

ELON: And, so that’s, I think, how,

If you come up with a new technology,

it should feel like that.

You should really –

If you told it to an objective person,

would they look forward to the day

that thing became available?

It’d be pretty exciting to do something like that.

Or an aircraft.

like, I thought it was really disappointing

when the Concord was taken out of commission,

and there was no supersonic transport available.

SAL: Yeah.

ELON: And of course, the 787 has had some issues.

SAL: Yeah.

ELON: So. But the thing is, the 787,

even in the best case scenario,

is only a slightly better version of the triple seven (777).

SAL: Yeah.

ELON: And it’s like, OK. It’s not that exciting.

SAL: So this is something that you are working on.

ELON: I wouldn’t say “working on.”

SAL: And one day, in the not-too-far-[off] future --

or there are some plans or consultants involved or something.

ELON: LAUGHS.

SAL: You’ve made some phone calls to Russia?

ELON: Every now and then, it's sort of percolating away.

I’m not actively thinking about it.

But then there is some new element of that –

I’ll think, “Oh well, you know, this would make it better.”

SAL: Fascinating.

SAL: No. Well, thanks.

I think I’m speaking for everyone [when I say]

This is like the most epic possible conversation

one could have over about the course of an hour.

And I think all of us would love to chat with you

for hours on end.

But thank you so much.

I mean, I know you have a lot of free time,

and so, it probably wasn’t that big of a deal

for you to come here.

ELON: Yeah.

SAL: But yeah, it was a huge honor.

And I think that it inspired all of us to go out

and change the world and the universe.

ELON: Cool. All right.

SAL: Thank you very much.