It was a little bit.
I was interested by your background. You Uh, you finished your bachelor's degree at Warden and then you stayed on an additional year and got a physics degree when I imagine almost all of your classmates went to Wall Street, so that must have must have been a pretty tough year. Did you have a vision at this point for what you ultimately wanted to achieve?
Well, I, uh, yeah, there were three things in college that I thought would most affect the world, and there were the Internet, sustainable energy, and space exploration. I didn't think I'd be involved in all three of those, but as it turns out, some success in the internet right now I was able to get involved in rockets and cars, which are pretty capital intensive.
And but yeah, after sort of finishing the undergrad.
I I decided I didn't want to work on Wall Street or work for McKenzie or something like that, which everybody else went to walk do do. And uh, I'd taken enough sort of physics electives so that I could just spend another year and finish of physics degree and then and then heads to California to do grad studies at Stafford and material science applied physics, working on hein inch sinsity capacities for electric vehicles, and then I ended up putting that on a hold too, really dropping out
going back technically, I'm justerment. Dean says, I can come back any time, but that's unlikely.
So you know, with that Stanford degree, you might really do something for life exactly.
Yeah, so.
Did a couple of internet companies and then kind of circled back to electric cars and and then in rockets.
Yeah, it's a typical story, right, So.
You know, it seems like a long time ago now, but you know, I think probably you know, your entire background is very interesting, you know for us, you know, we were we were you know, we were an internet company at our at our core as well, and we came up.
Really during the same period of time as PayPal.
To me, one of the really interesting things about you, and that is very similar to some of the history of our company, is that you have been very willing to put your own capital and your own money into into your business. And one of the most intriguing times for me for you was two thousand and eight with Tesla, and you went in and you were not originally the CEO, you were you were the funding. You know, you were the funder and the chairman, but then you were also
just you were a developer. So talk a little bit about that time and you know what it was like to have basically everything on the line.
Yeah, that was that was super unpleasant, that's for sure. Yeah, basically two thousand and seven, two thousand and eight, and two thousand and nine sucked.
They were really horrible.
It was awesome here in Washington.
So so yeah, so you know, my thought with what I had originally hoped with Tesla, I mean, was that I wouldn't that I could just dedicate enough time to do product development but then not actually run the company. So that turned out to be a false assumption, and I was sort of faced with the choice of in two thousand and eight to either run the company and.
Just work a lot more, or or would die mostly you know.
So, Yeah, in two thousand and eight was particularly tough on a number of number of fronts because the third launch of the Falcon one rocket for SpaceX failed. The Tesla financing round fell apart because or we kept people kept telling us that the term sheet was just around the corner.
They just want to see what the market's going to do like.
It was great, we were doing the same thing right, So so Tesla desperately needed money, and then Solicity had a deal with Morgan Stanley, solo lease finance deal that Morgan Stanley themselves could.
Not honor because they just didn't have money.
And then I was also getting divorced, So that was like just ship on every level, utter misery. And then fortunately things perked up towards the end of the year. The fourth launch of Falcon one did work. Solicity was able to get through that period by just selling solar systems instead of leasing them.
It was very tough Tesla.
Tesla was probably the most difficult in that time because you know, obviously General Motives and Christ they were busy getting bankrupt.
And trying to raise money.
Can you imagine trying to raise money for a car company in late two thousand eight while Jero's and Christs are trying to are going bankrupt, and they're like asking for examples of prior successful car companies and the last, you know, the last examples are at least you know that they're not in delivering memory, you know, So there's that Tucker, Yeah, yeah, I mean they think of Tucker and Laurian. You know, it's like I've had a buck for every time somebody mentioned Laurien. I wouldn't need to
have an IPO. So yeah, that was very difficult. In fact, the only way we could raise money was internally, so from existing investors and uh, and then I had to commit all of all of my available capital to to Tesla in order to get the other investors to do the other half of the round. And that was enough to get Tesla through that point. And then a lot of people assume that the deer we saved our butt,
but actually it was Daimler. So that that in early two thousand and nine, Diamler invested fifty million dollars into Tesla, which was extremely important. Teslas didn't actually get any dearing money until twenty ten.
So if that was alone, correct, correct the structure.
Alone, and it's it's a staggered loan. It's actually what it is is as we incur expenses, those expenses and then audited by PwC, and the portion that is applicable to the model s and to powertrain deals or powertrains supply to other companies like the powertrainsply deal, we have
to dime level Toyota. That portion is then reimbursed about a month or two later, because we also got some bullshit press about like, oh, the dear Wes, you know, giving us money for the for the roads to and it's like no, it's like literally impossible for them to do that. So yeah, I made the mistake of calling some the New York Times reporter who falsely reported that knowingly falsely report that a doucheback. If somebody knowingly falsely reports something.
Look the truth. Well, I'm gonna ask you a we'll go from dark to light. Here's a question.
I really never thought that i'd ask someone what was it like to have a rocket fail?
I mean, I mean, that sucks.
It's really terrible.
It was, it was, but it looked kind of cool.
It did look kind of cool, just between you and me. Well, so the first one.
I mean, I guess a serious question.
I mean, you had to expect that there was a very high likelihood that the rocket was you know that there were kind of a lot of things that could go wrong.
Yes. Yes.
At the beginning, at the start of SpaceX, I thought the chance of success of the company was less than fifty percent. How are we doing now, oh, I'd say, well ninety nine percent at this point, because well, SpaceX has been profitable for four years and will be proffible year. Is three billion dollars of contracts under revenue a contract, three billion dollars in revenue under contract, even if we didn't sell any more launches, would be profitable for the next just for several.
Years existing the NASA contract.
Correct, Yeah, the NASA is the biggest contract. But SpaceX has over thirty launches. Thirteen of those are for NASA, so about forty percent of our businesses with NASA. But you know, if you look at the government spending as a percentage of the economy, it's about forty percent. So even if you sold pencils, about forty percent of your business would be with the government.
I've lost more.
And then I was like to when when when the when the fourth rocket went up and it was a successful launch, that that had to.
Be kind of cool too, Yeah, that was awesome. Was it was actually more just relief. I didn't feel elation. I just felt like extreme stress relief. Yeah, I actually were disappointed that I didn't feel happier.
I just felt like.
Slightly less stressed, just onder the next thing, well that the fourth launch just meant that we wouldn't die quite then.
But well that's good news, right.
But then we were awarded a big massa contract the end of literally I think it was December twenty third.
In fact, the absolute low.
Point was for me, it was I think December twenty second or twenty first of two thousand and eight, because even though we'd had the that Falcone success, the I mean, we didn't. We still had very few contracts and we didn't have enough money to keep the company going. We really needed a big contract win. And then NASA Corden said that they had awarded us the main contract for replacing the cargo transport function of the Space Shuttle and
it was one point six billion. So I was like, I said, I love you guys.
I don't know if that's your supposed to say that, but.
Yeah, that was billion with a B right right right?
I don't know, yes, lust all decorum.
The I think one of the interesting things, you know, taking quotes from you, is that your cost is about one third you know, I believe that tried of of of the competitors for for for for rocket launches or yeah, are you are there things that you think that NASA could learn from private companies that are that are coming into the market.
Now, yeah, you know, I think in general it's tough for government to do things efficiently, you know. So I mean I generally I think that that government should do try to minimize the number of things that government does. So I'm generally proponent of of of smaller government, not bigger government, just because government as a as a system is not an efficient system. So you want to minimize
the government participation in the economy. That doesn't mean getting rid of it, but it's just saying you have to think really carefully before government does something versus free enterprise does something. For erprise is always going to be more efficient. So now, now there are things like like basic physics research, and obviously I think would rather have a government army than a private army. And I think probably a government
justice system than a private justice system. You know, there's sort of things that are that the government should do and and also kind of doing things like the Hubble and the Mars rovers. You know, something like the Hubble is a small amount of good for everyone. Like it's like, well, we learn learn more about the universe, got some really cool pictures and and and that's that's that's that's a value to all of America and all of humanity really, but it's hard to say, like who's going to pay
for it? If you try to raise private funds for it. I mean, you might be able to get it, but it's it's it's harder.
So you got your money back from the last thing, right, so the.
You got your money back from you know, having uh invested in Tesla and you know you just got the contract from NASA.
So yeah, Actually, as it turns out, Tesla.
And Space extensil the city are doing really well.
And you know at the you know, the I think it's if you look at say the Tesla stock price, it's actually been remarkably stable. It's been sort of in the twenties for a year, despite massive grations in the market. And there was a there was a momentary short squeeze in December of last year, which there's a bunch of articles that reference, oh, Tesla had this high of like thirty six dollars. See that's not because there was a
short squeeze at the end of December. It was because at the end of the that was when the six month lock up period for the IPO expired, and I think people in the market expected that there would be a lot of people selling stock at that point, and actually they won't.
Just didn't happen, right, So it's a big short squeeze it took place.
I think there's probably gonna be another short squeeze on Tesla because, like I apparently get these Google alerts that were like the third most shorted stock on the Nasdaq.
Twenty one million sharees short.
Now, I mean, somebody's got a lot of balls.
Yeah. Well, so.
All right, all right, saved.
I mean, what do they have wrong?
What?
Okay?
So that guy he's short your shares, So talk to Dave Meyer. You tell him why he's wrong.
Dude, it's gonna sting, That's what I tell you. It's yeah, I think, well, I mean, I don't know if you're actually okay, but but I think generally when I told people who short the shows that they're not shorting it because of any they know about Tesla, they just shortened it because.
Of historical precedent.
It's like, oh, there's never there hasn't been a successful car company in ages, So Tesla is going to be is not going to succeed.
Like, how about looking at the fundamentals? You know.
So the thing is that whenever there's a big change in technology, whenever there's a big technology just continuity, that's when opportunity arises in an industry. And if you look at say, like the computer industry, we had IBM was extremely dominant in mainframes and everyone thought, oh, you know, they'll just be extremely dominant in PCs and everything, and they weren't. They just they have a hard time with the technology. You know, when there's a shop change in technology.
Gradual changes they can deal with, but but sharp changes that they tend to not do well with. And and you can look at the Internet and say, well, why wasn't Microsoft the leader in search? Why didn't they beat Google? Why didn't Google beat Facebook? And you know, it's just tough to deal with big technology change. And what we're seeing in the automotive industry is the biggest technology change since the moving production line and the entire powertrain is changing.
So and and then and and then people say, well, how could you possibly compete with like the big car companies like Toyota, Like I mean Toyota mean our partner, the one that we're providing electric power trains to that?
Would that be the Toyota referring to it? You know, it's it.
You have to say, well, why is why is Toyota having Tesla supply electric power trains?
It can't be that easy.
If if if if we're doing that, why is Diamond, of the company that invented internal commission engines having a supply components to them? And it's it's because it's it's it's really hard technology, but it tells it is really it's it's a we're a hardcore technology and design company.
You know, there's I think there's other companies out there like that that that are not that are sort of different and you know, like like Fisco is pretty different from us, like they're not a hardcore engineering company, but but but we are.
And so I think come with me.
There's there's this huge value and tests in terms of the intellectual property that that we've developed. And if you look at you know, some of our strategic investors like Daimler and uh and like Toyota and like Panasonic who have not sold a share in fact, Diamler at the last when we do secondary earlier this year, Diamler participated for Parana in that secondary.
You know, it's difficult to ask for a better endorsement than that.
I think that the power train contract that you all signed with U with Toyto was very interesting for for one reason. It's it seems to me I couldn't think of another another instance where a company, a car company, had outsourced such a central component, Like usually they do a lot of manufacturing, but that's a central component. So that feels like not just a game changer for you, but a game changer for the industry.
Yeah, you're right, it is unusual for that to occur. And part of what Akio Turta is trying to do with his company is is try to push it to be more entrepreneurial. He remembers the days of his grandfather when it was very entrepreneurial. You know, Toyota made sewing machines in the thirties, and then there's just decided one day they're going to make cars, and people like, ah, they can possibly make a car that anyone will want to buy, and then.
They made a great car.
But they were very entrepreneurial, and Ako Turta's concerned that they've become two set in their ways. They've become too convinced in their own rightness and that's part of what led to some of the issues that that he came in to fix. And Akotota is a really great guy about Toyota is really fortunate to have him at the helm there. But but but he you know, he wants to push push his team to to try new things.
Because when he went to his team and said, hey, what about electric vehicles, they said it couldn't be done. And so it's like, okay, so let's see if this little company to Tesla can do it. And so and we're doing it and I'm like, oh, okay, I guess it can be done.
Why don't you think they could do it? I mean they tried for they tried on a number for a long time. They put millions of dollars into into developing the technology.
What's what's different.
Well, no, I think they will be able to do it over time. But it's just it's just not very quick and you know they didn't, uh, the mindset of trying something new and radical was just not there. That it's you know, if there's people have written books about this, like Crushing the.
Chasm and innovator's dilemma and all.
That about how it's difficult to do radical innovation at a big company because if you try to do radical innovation and you fail, you get a huge ding.
And and and then.
And especially if you have something to protect to start with.
Yeah, right, exactly, you've got to decide that you're trying to decide that you can to cannibalize your existing business and take a big risk and deal with all the issues that inevitably arise when you're trying to push a new technology, and and and and then and not get fired along the way.
It's pretty hard.
One of your one of your passions has been, uh been clean energy, and you know this is you know, this has been something that you've done, I guess on the side of the other you know, these other very small projects. Do you believe that the developing markets like India and China, how are they going to develop in a way that sustainable and clean energy is possible?
Well, China is actually already moving to towards clean energy very aggressively.
People.
There's a lot of press about Clendra and you know, the dary giving flinder for hundred million dollars and cylinder failed and should should the government really have given them.
A hundred million dollars?
And well, it's worth pointing out that they got about eight hundred million dollars from from private investors, primarily Silicon Valley venture capitalists, including some very big names.
So we're suckers who got that money.
And the fundamental issue with Slender was they would have been okay at about two dollars or work for solar, but the Chinese pushed it down to a claskal white.
Yeah.
The prices collapsed, right, Yeah, and the Chinese government invested forty billion in their solar industry. And so people were like, like, Slender, you suck for failing. I'm like, yeah, they had literally one percent the resources of their competitors.
Who would win in that situation, It's pretty hard. You did well? Okay?
Yeah, but you know in the case of Solar City, so I mean I did I thought this would occur, you know, I thought there would be a rabbit competition in the cost per what of solar the somewhat inevitable with Korea, Japan, China, Germany or competing like mad On on cost per WAT and it's a very much a commodity that you do not want to be in that in that business. And then so Solo City's focus is on balance of system. They're kind of like Dell or Apple.
You know Dell Apple. They don't make the memory chips or the CPU or the hard drive, but they designed the overall system. They put it together, they handle the customer relationship, They own the customer brand, they own the relationship. I mean, if you've got Solar City in slation in your house, you have no idea what panels you've got.
I mean it's like panel panel dumbing Solo City panels. You might as well know.
Like people know about as much about what panels are on the roof as they know about what de ram chips are in their computer. Daku major de ram chips in your mac Apple.
No, it was not Apple.
So in fact, I think I think that there's a lot of parallels between the d RAM business and and the solar panel business. I think it's going to go through the same sort of boom bust microscopic margin situation. But the bull competition there is in panel cost for what the better solace that he is. So they're kicking butt. I mean they're growing at fifteen a year and positive cash flow.
Uh, you have a you have a pretty tight time frame, so I want to make sure that we open it up.
Uh.
Two questions from from the audience, if that's if that's okay?
So well, and thank you very much for visiting us today. Just a couple of questions. The first is why are there so many fewer IPOs now than have been the case in years past? And the second question is having never had the pleasure of working with you or for you? This might actually be a better question for your associates, but you know, I always think of CEOs and leaders
as creating cultures around them. Bill's interview very much was focused on exploits, achievements and forward looking things for your businesses. What's it like to work with you on a daily basis? What kind of a culture do you typically create around yourself? Are there catchphrases you use?
How do you roll?
Well?
I don't normally wear a suit.
The reason I'm wearing a suit is because I'm in DC, and you know when in Rome, although you guys are wearing suits, but.
We roll a little differently, right, You're no normal for DC. Welcome to differentia, right.
I just gave a toalk at the National Press Club, and I'm headed to the Pentagon right after this. That's why I need to leave on time because they're quite punctual over there, So, you know, I don't know, I'm I'm not sure exactly how to describe the culture of SpaceX or TESLA, but I do try to think of it in kind of like signal to noise, you know, where signal is getting useful things done, noises everything else.
And so we want to get have people do you know, be focused on doing useful things and not involved in sort of internescing politics, and uh, you know, I think, yeah, the role of the managers like basically to make sure people are well You need to be able to decide what is the right strategy, what's the direction to go, and then and then make sure people are are doing things that are pointed in that direction and that the that the their talents, the.
Other opportunities are maximized.
And I just sort of like iterate on that loop that that's that That's kind of how I think. And then I think in terms of of recruiting and motivating the best people having you've got to make sure it's
a reasonably fun work environment. So people are looking forward to coming in the work to work in the morning, it's a lot easier to be productive and folks, but if you if you're interested in what you're doing and and and you're looking forward to it, then if your mind's trying to escape and it feels like prison where you leave at five five pm or something like that. And then the other is that is the financial reward
needs to be commensurate with the effort expended. So if they work really hard, they've got to think, okay, that that.
Will the reward will be proportionate to my effort. You know.
Obviously, if you have a situation where where you see somebody is highly rewarded for doing much less effort than you, then that's demotivating.
So you want to avoid situations like that.
And then the third thing is I think if people think that what they're working at on it there's a greater cause.
You know, that there's something that could change the world, then I think that that's also a motivating factor.
Now, not everything changes the world, I mean, or it changes to various degrees, but I think for the most talented and driven people, it's important that there'd be a larger purpose how do.
You view well conceived failures in your company?
Uh, well, I think it's important.
Like nobody bats a thousand obviously, and no matter how smart you are, you will make some number of mistakes. Everyone makes mistakes. It's just a question of how many and how often, and do you.
Have a good whether a rocket blows on right.
I didn't fire anyone responsible for particular failures associated with the first three flights, actually, and because they I mean, they could have made better decisions, but they're smart, hardworking, and it's sort of like, you know, it just wouldn't be fair in that situation. So it's only if somebody is either they can't that they're like they can't get themselves motivated around the core mission, or they're really not giving it everything they can.
In some cases that they may be.
Not the right fit for a particular role, or there's an error in the hiring process. But other than that, it's it's pretty forgiving I think.
Okay, So, Hi, I've got a question. It's a nice segue to your next appointment at the Pentagon. So I'm interested in what the US military is doing with green energy, how they're going to use it in the future. For them. It's probably a matter of national security. I'm that's very important, but I also care a lot about our planet, and I know you do too. So any comments on upcoming opportunity for either solar or electronic vehicles or anything green with the military.
Yeah, absolutely, Well you know that the military does does so the military does have a mandate to move to it's sustainable energy, and and it does have the dual advantage of being good for the environment and good for national security. I think certainly solar is is very important because a lot of the military bases out there, they operate on generators and and so it's there they're pretty
inefficient from electricity generation standpoint. They're just importing a lot of oil and it actually takes.
A lot of oil.
It's oil to get the oil there, so it's really inefficient. So going big on solar is pretty important for the military, and Solar City is actually trying to do that, uh with with a big solar installation at military bases. It was announced recently it was actually going to be funded by in part by the DOE, but then the slender thing kind of threw everything for a loop, and so
it doesn't look like that's going to happen unfortunately. But on the on the positive use side, the solar that he thinks they could they might be.
They can probably get done without the doe. So I think I.
Want to jump the gun here, but but I think it. I think they'll be able to move forward even without the doe. The cost is going to be a little higher, you know, because the cost of solar is so dependent on the capital cost of the thing, because it doesn't cost anything to run it, really, it's just the capital cost. So so yeah, I think things are moving in a good direction there and then and then over time I
think we'll see military vehicles going increasingly electric. But you know, if the military can be a relatively slow adopter, you know, and unless there's like a pressing need, it can be a pretty slow adopter of technology. I mean, some of the planes that are up there flying pretty ancient. So I think it'll probably take a while for before the military will not be the probably not be the first.
Here more of a whimsical question and a dream of mine. Chances of passenger flights how soon?
Sure, well, I think we could do passenger flights. I think maybe best case three three years, but probably worst case five years, and these will be orbital flights, and depending upon what level of reusability we're able to achieve with the vehicle, that will drive the cost on a completely expendable basis.
I think that the cost per seed.
Would be on the order of twenty million dollars, which is obviously pretty expensive, but that's because you're throwing the rock or away.
You know.
It's sort of like, you know, imagine how much an air ticket would cost if you had to throw the plane away every time. Be really expensive, you know. Seven forty seven is about three hundre million dollars and you two for a round trip. But nobody's playing half a billion dollars for a plane ticket or even you know whatever it is w under passengers times that, so like one and a half plian dollars a ticket.
So they do it.
If they could get away with it.
Well that's beauty of competition and everything.
But you can use that some forty seven over and over again, like ten thousand times or more. So the capital cost is of the you know, in your ticket price. The capital cost has to be accounted somehow, but it's a pretty small portion.
So we have time, I think for maybe two more questions right here, and keeping with the what do you see in the future discussion we've got going with Tesla, it seems like the odd industry is, you know, right for disruption as well.
How long do you think it'll be till we're we're all driving Teslas to work? You know, it'll be a generation, it'll be ten years. What do you think the technology will really be commercially viable for the everyday consumer?
Well, so we're trying to get to mass mark electric cars as fast as possible, and if that's really been my goal with Tila from the beginning is to make mass mark electric cars. But as a small company, we didn't have economies of scale and the technology wasn't refined enough to go to mass market right away. So the master plan has always been to start with expensive vehicles and low volume, go to mid price mood volume, and
then low price high volume. And so we're about to do step two in that strategy, which is mid price, mid volume with the model S, which I'm highly confident we'll hit the market and get delivered.
To customers middle of next year.
In fact, we've got a big event this weekend which is the first customer drive or the first first some anyone will drive the Modelist Beta, which is essentially indistinguishable from the production car except for slight bugs and things. And that's a car that starts at fifty thousand dollars, so it's comparable to you know, Mercedes BMW Lexus type
of thing. And then hopefully in about four years or so, we can get to the kind of the sub thirty thousand or maybe around thirty thousand dollars car, and and we have the factory to do it. The great thing about the factory that we acquired from GM and Toyota is that it has about a half million vehicle your capacity.
We're just using a little tiny portion of it.
In fact, we've literally turned the lights out and cut off the main breakers in the rest of the building so not.
To use baseload.
But we have this huge asset, which is that this factory that that we can leverage and scale up at a relatively low capital cost.
And you're you're a bull on manufacturing. Domestically, I really.
Like manufacturing, and I think sometimes manufacturing is looked at as kind of a boring like you're just making copies or something like that. But there's a huge amount of innovation that occurs in manufacturing, and I think it's it's actually a really interesting problem. So I'm very pro manufacturing and a very very much in favor of thinking manufacturing like a technology problem and not just like you're just going to make copies bending iron.
Yeah, you think.
About like this, if you're trying to take raw materials and get them into the desired shape, if if as efficiently as possible, and it's a really interesting puzzle as to how you do that. And there's a huge amount
of innovation that can be applied there. Toyota showed this with the total production system, and I think, I like this is actually there's more, even more that can be done in that in that regard, but I think you have to have a tight iteration loop between engineering and production in order to experience that, in order to apply that innovation. That's why we've got engineering and production closely physically located in Silicon Valley, I think.
Jeff J.
Loy, actually I was curious what you thought of the future of the Vasimir rocket and does SpaceX have any plans on working with that astra at all.
So the Vasimir is.
It's basically an in space propulsion. It's it's basically an ion drive, and uh, it's you can't use it to depart from Earth. You can only use it in space because the actual thrust is quite low. That's true for all ion drives. And I think it's okay as far as ion drives go. I mean, it's it's I think there's some question marks around how much energy is required to operate the Vasimir, and I think that generally pre sort of presupposed as a nuclear reactor and and all that sort of stuff.
So I think that's that's a bit.
Tricky, and it's not clear to me that the Vasimir wins when when you're looking at you know, basically watts of input energy per neutint of thrust, which is sort of a.
Key figure of merit.
I do, I do believe in ion drives, and it's saying it's that something SpaceX will get into. But but I think we'll probably be more in the in favor of sort of things like coal effect thrusters and and and and you know, maybe maybe maybe laser accelerated particles or something like that.
So well on I think you can get a sense from you know, from our audience that We are enormous fans of purpose driven entrepreneurship and you know, you're one of the embodiments of of that and we, you know, we really appreciate that you.
Took the time to come and speak with us today. Thank you, thank you,