How Paypal Idea evolved, Elon Musk’s Startups story
Elon Musk is a multi-startups entrepreneur, a nice interview where he talked about his startups.
Transcript:
00:00
it’s my pleasure to be here with you on
00:01
Musk Jane provided I thought a great
00:05
introduction but I just wanted to add
00:06
one more thing before we get to
00:08
questions when he one was 23 he he got
00:13
out of college he went to San Francisco
00:17
the Bay Area with a car a computer and
00:20
$2,000 yes right and he started a
00:24
company called zip – it was sort of like
00:26
what the early Yahoo was it was an
00:28
online directory four years later when
00:31
he was about my age he sold the company
00:33
for just over 300 million dollars to
00:35
Compaq and I bring this up not because
00:38
it was the largest Internet company
00:40
acquisition at the time but because he’s
00:44
done so much stuff since then that
00:46
nobody even remembers this this initial
00:49
success screw zip – doesn’t get much
00:51
play so I’m gonna ask him some questions
00:54
we’re gonna go through he’s got you know
00:56
as Jane said three mind-blowing
00:58
companies and then hopefully we’ll have
01:00
some time for you all to ask him some
01:01
questions so start thinking and we’ll
01:04
get to those so I’m gonna put up
01:08
something that probably looks familiar
01:09
to most people here this is the home
01:12
page of PayPal in 2000 even was a
01:14
co-founder and the company was sold to
01:16
eBay in OH – for 1.5 billion dollars and
01:20
we all know what PayPal is today but I
01:22
was hoping you could sort of share with
01:24
us kind of what your vision was from the
01:26
beginning
01:27
well it certainly evolved over time
01:29
initially the I well after signs up – I
01:34
want to do something more in the
01:36
Internet and it seemed to me that they
01:37
hadn’t been all that much innovation in
01:38
the financial sector and given that
01:41
money is kind of a just an entry in a
01:42
database and it was low bandwidth he
01:45
said it wouldn’t didn’t require some big
01:46
infrastructure upgrades the internet it
01:49
seemed it should lend itself to
01:50
innovation so try to think of what could
01:53
be you know what were something
01:56
compelling it could be done and I
01:58
thought well if we can combine all all
02:01
types of financial services in one so
02:04
you have like the mortgages and like
02:06
basically all your your tire financial
02:07
relationship seamlessly integrated
02:09
together in one place online that would
02:12
be cool and then
02:13
there was a little feature that just
02:15
seems like an obvious feature which was
02:16
ability to transfer money from one
02:18
person to another but by entering unique
02:21
identifiers like a email address there
02:24
was like this is sort of a little
02:25
feature but then whenever we demonstrate
02:27
the product people wouldn’t get excited
02:30
about the consolidated financial
02:30
services but they would get excited
02:32
about emailing money so he’s sort of
02:34
focusing on all right energy on that and
02:36
that really ended up being the big
02:37
driver of growth right so it sort of
02:39
went from a super bank like a super
02:42
financial services thing yeah to to
02:46
really narrowly focusing on email
02:48
payments so although I should point out
02:51
that actually a lot of people aren’t
02:52
aware that a lot of success of PayPal is
02:55
due to the underlying financial services
02:57
that are there such as the money market
02:58
fund which is one of the highest
03:00
yielding in fact I think the highest
03:01
yielding in the country
03:03
and the fact that there’s a PayPal debit
03:05
card that’s which operates off the
03:07
MasterCard system so you can you can buy
03:09
things you know buy things in the real
03:12
world and get cash from an ATM that
03:15
directly taps into your into your PayPal
03:16
account those are actually very
03:17
important to the PayPal business model
03:19
right so you were CEO of a company for
03:22
most of 2000 I think yeah you went and
03:25
99 and 99 years PayPal merged or sorry
03:29
Ewan’s company merged with another
03:31
company go Korea it became PayPal he was
03:34
running the company he went on an
03:36
investment raising trip and when he got
03:38
back uh-huh what happened well yeah so
03:45
[Laughter]
03:48
you know I think it’s not a good idea to
03:52
leave the office when there are like a
03:55
lot of major things underway which are
03:58
causing people a great deal of stress
03:59
yeah but it was a combination of needing
04:04
to raise money and I had not I’ve gotten
04:09
married earlier that year and not had
04:10
any vacation or honeymoon or anything so
04:12
it was kind of a combined financing trip
04:14
through honeymoon yeah
04:18
and anyway but away for two weeks and
04:24
there was just so much that there was
04:26
just a lot of worry and that that caused
04:30
the management team to decide that I
04:32
wasn’t the right guy to run the company
04:34
and and so the board was like you know
04:38
geez what do we do so basically I could
04:41
I could afford it really hard but
04:42
instead I took you know rather than
04:44
fight it at this critical time best to
04:47
sort of concede it’s amazing to me how
04:49
you managed when I first asked you about
04:51
this
04:51
you said you buried their hatchet um and
04:57
you know one of the basically the person
04:58
who replaced you just put I think 20
05:00
million dollars or so into your company
05:02
and yeah how did you get past that kind
05:06
of betrayal I mean how did you how did
05:08
you guys patch it up yeah that’s
05:10
actually an interesting story well well
05:15
I didn’t agree with their conclusion I
05:17
understood why they took the action they
05:19
did and they’re not you know Peter and
05:24
Max and David and the other guys not I
05:27
mean they’re smart people with generally
05:30
the right motivations they did what they
05:32
thought was was right and I think for
05:33
the right reasons I mean except that the
05:35
reasons what word valid in my opinion
05:39
but it’s hard to argue with the ultimate
05:43
outcome which is which is positive you
05:46
know I just thought you know it’s just
05:47
easy to be better and and and have I
05:51
just hate them forever but you know it’s
05:54
best that the right better course of
05:56
action is to any other cheek and and
05:58
sort of you know may make the
06:01
relationship good and and it was you
06:03
know but I put a lot of effort into sort
06:06
of making things good and yeah and then
06:09
yeah actually recently the Founders Fund
06:12
which is comprised primarily of X PayPal
06:15
people including Peter who replaced me a
06:18
CEO invested in SpaceX yeah and I
06:20
invested in Peter’s things before that
06:22
so I want to put up something about what
06:25
this you know PayPal sale to eBay helped
06:28
make possible
06:32
tell us tell us what we’re looking at
06:34
that’s the Tesla Roadster which is the
06:37
world’s first production electric sports
06:40
car and how much does it cost
06:43
give us the sales pitch okay they just
06:47
opened a dealership so he should be good
06:49
at this
06:50
yeah actually I’ve sold a lot of cars so
06:54
the Tesla Roadster is the the nut that
06:58
then nut shell that you know the
06:59
elevator speech thing is that the
07:02
roadster is faster than a Ferrari and
07:05
more efficient than a Prius so it
07:09
actually has better acceleration than
07:10
any Ferrari except the Enzo and it’s
07:14
about 3.9 seconds zero to 60 and that
07:18
that actually understates the true
07:19
acceleration because 0-60 for gasoline
07:22
cars measured from when the wheels start
07:23
moving but the wheels only stop moving
07:25
when you engage the clutch and it
07:27
typically takes about a quarter second
07:29
or more to engage the clutch but there’s
07:30
no clutch it for our car it’s direct
07:33
drive so you don’t have a clutch
07:35
engagement delay so it’s it’s like again
07:38
call with a 0-60 of about 3.6 seconds
07:41
and it’s good incredibly good handling
07:46
and then the the energy efficiency of
07:49
the car is the most amazing thing it
07:53
only costs four dollars at current
07:55
California rates to go to about 250
07:57
miles so the range the current EPA rated
08:00
range which is a combination of highway
08:02
and city with the ekend ition agon is
08:04
244 miles so it’s amazing
08:11
so this is I mean it’s so cool it cost
08:15
one hundred nine thousand dollars yeah
08:16
anybody’s interested it’s expensive but
08:19
it’s comparable to like a Porsche 911
08:20
you know so we want to have something
08:23
which was in the price range of a
08:25
comparable gasoline car that it could
08:27
you know probably beat and you know so
08:32
that’s that’s key because it’s one thing
08:35
to have a compelling product but it has
08:37
to be compelling product a compelling
08:38
price right you uh in in the press
08:41
obviously this this has gotten a lot of
08:43
attention and you ons taking a lot of
08:45
flack for various redesigns you’ve sort
08:48
of been you’ve been portrayed as a
08:49
micromanager
08:51
you know redesigning the headlights or
08:53
whatever throws an a no manager I’ve
08:57
improved service attitude so why why
09:03
does the car need to be perfect I mean
09:05
why did you need to redesign you know
09:07
the doors for instance well first of all
09:09
the car is definitely not perfect okay
09:12
in fact I one of the things that that
09:15
troubles me personally is like when I
09:17
see a product I sort of immediately see
09:20
a readout of all the floors I need to
09:22
reprogram myself or remind myself like a
09:24
look at the good things as well so it’s
09:28
certainly far from perfect but the the
09:31
acceptance I mean fundamentally if you
09:34
don’t have a compelling product at a
09:37
compelling price you don’t have a great
09:39
company and that’s that was really my
09:41
gate the gate that the product at the
09:43
car had to pass through and so there
09:46
were things like the dorsals
09:48
because we used a a chassis that was
09:51
inherited from Lotus Elise in retrospect
09:54
we should have completely redesigned the
09:55
car and not and not use any Elise that
09:59
componentry because we really it sort of
10:02
like you go into a house and you think
10:03
you’ll just change this that and it’ll
10:05
be okay and then you end up changing
10:07
everything in the house it would’ve been
10:08
better just level the house and start
10:09
and you do something new because the car
10:12
al cars 30% heavier the load points are
10:16
all different so we had to really
10:17
redesign a chassis and one of the things
10:21
I said we’ve got to do is to lower the
10:22
door sills
10:24
and as it is that dorsals still too high
10:26
but if I’d say imagine if they’re two
10:29
inches higher because that’s what they
10:30
were made it made it almost unusable in
10:32
my view yeah I mean the what-what do you
10:35
want I think you were quoted saying
10:36
something like DeLorean failed because
10:39
yeah they built a bad car yes and you
10:41
need to the car needs to be worth one
10:44
hundred nine thousand dollars absolutely
10:46
absolutely
10:47
exactly if you don’t exactly we did not
10:50
want to create another DeLorean and the
10:52
DeLorean kind of looked kind of cool but
10:54
it was really weak on it on performance
10:57
yeah it was unreliable and there were
10:59
lots of little issues with the car and
11:01
we just didn’t want to be in that
11:02
situation
11:03
and it’s not like I mean we could have
11:04
built a worst car and still sold a bunch
11:07
of them but if you don’t sell enough to
11:09
make it make the business look
11:10
attractive to future investors you’re
11:12
not gonna attract the capital to take it
11:14
to the next level or even to sustain
11:15
where it is how many orders have you
11:17
taken it’s 1200 1200 deposits Wow so we
11:21
only take orders when so he puts down at
11:23
A+ at least $5,000 yeah so I’m gonna
11:27
move to another company but you told me
11:31
that the last successful car startup was
11:33
Jeep in 1941 yeah in the u.s. yeah in
11:37
the u.s. so doesn’t that kind of say
11:40
something bad about going to the car
11:42
business
11:42
I mean why why go for this
11:48
well it certainly I would not have done
11:50
this if it were a gasoline car so this
11:54
is not about it’s not because I thought
11:56
the world had a shortage of sports cars
11:57
that we started sort of Tesla it’s
12:00
because it’s very important that we
12:01
accelerate the transition away from
12:03
gasoline you know for environmental
12:07
reasons for economic reasons for
12:09
national security reasons it’s very very
12:11
fundamental and frankly yeah
12:18
so you know even even if you don’t think
12:22
leaving the environmental reasons should
12:24
I believe in the national security
12:25
issues reasons
12:26
it’s obviously gasoline oil is not a
12:28
renewable resource and sooner or later
12:30
the economic issues are going to cause a
12:33
collapse of the economy literally a
12:35
collapse of the economy if if we don’t
12:37
find find an alternative because you’ll
12:40
be paying 20 30 $40 gas gas thing if
12:43
stuffs going to get you know it’s going
12:45
to start approaching the price of gold I
12:47
mean it’s gonna be crazy
12:49
so we got to find a renewable
12:53
alternative and the the good that
12:56
Tesla’s doing is not just Tesla’s what
12:59
worked has does itself it’s the example
13:01
that Tesla sets for the rest the
13:02
industry in fact people have probably
13:04
seen the announcement for the Chevy Volt
13:06
well Bob lights the Bob let’s is the
13:10
champion of the Chevy Volt and he
13:12
credits Tesla with the twist was
13:14
starting that the getting a Chevy Volt
13:16
started because when we unveiled our
13:18
Tesla Roadster a couple years ago he saw
13:21
the press release he took the Tesla
13:24
press release went to his developing
13:25
guys and said if a little company in
13:26
California can do this why can’t we and
13:29
that’s what prompted the Chevy Volt yeah
13:31
well let’s talk about how we power these
13:33
things oh that’s it that’s a picture of
13:35
the workshop in or just south of San
13:39
Francisco right and then this is another
13:41
company that you on it’s probably one
13:43
that you’re maybe least involved with on
13:45
a day-to-day basis yeah but it’s it’s
13:47
Solar City and sort of the elevator
13:49
pitch for this one as you’ve told it to
13:51
me before is you know you’re gonna do
13:53
for solar power what Dell did for
13:55
computers which is such a nice way of
13:58
putting it and I was hoping you could
13:59
just unpack that for us a little bit
14:01
certainly well
14:03
Dell doesn’t make the CPU or the hard
14:06
drive or the memory but they put it all
14:08
together and they manage the
14:10
relationship with the end customer and
14:12
they manage the service and and and all
14:14
that and it that’s a very important
14:15
element because if you had to go to
14:18
Intel and buy your CPU and somewhere
14:20
else and buy your you know harddrive and
14:22
put that all together very few people
14:24
would have computers yeah so Solar
14:26
studies about packaging that all making
14:28
it really easy to use
14:30
oh just basically make one call it’s
14:31
just seamless and painless and then they
14:34
also have a lot of innovation on the
14:35
financing front so they did a three
14:38
hundred million dollar debt facility
14:39
with Morgan Stanley that allows the the
14:42
end consumer to to sign up for solar
14:45
power put no money down and your utility
14:48
bill decreases so it’s a complete
14:50
no-brainer now it doesn’t work for every
14:52
house because your house has to be you
14:53
know South Face you know have us have a
14:56
south-facing roof and be of sufficient
14:58
size and and you have to be in an area
15:00
where electricity is not super cheap
15:01
yeah but it works for a lot a lot of
15:04
houses and you know maybe a third third
15:06
of the house in California something
15:07
like that and so they’ve just enjoyed
15:11
phenomenal growth I mean they’re
15:12
literally growing as fast as they can
15:13
hire good people and I mean the numbers
15:17
for the month of August came in and
15:18
solar cities as big as the next five
15:20
solar power providers combined in
15:22
California so and all credit to them I
15:25
mean really phenomenal job I mean III
15:29
was sort of weigh in every now and again
15:31
like yeah what a how about this so how
15:32
about that but really I deserve very
15:35
little critter you know managing there
15:37
no not at all yeah thank goodness so
15:41
Jane brought up Mars in our introduction
15:44
and uh you know you got out of PayPal
15:49
with and zip to you know with a lot of
15:52
money and I think I’m sure people in
15:55
this room have had this happen to them
15:57
and and many people will have it happen
15:58
sometime in the future I hope and
16:01
instead of buying mutual funds or I
16:04
don’t know doing whatever one does with
16:06
several hundred million dollars you
16:08
decided to I’m expect securities whether
16:13
they’re great you you decided to start a
16:20
rocket company with the express purpose
16:23
of well making it cheaper to get stuff
16:26
in outer space and then eventually going
16:29
to Mars
16:29
or helping humanity go to Mars and I
16:32
just wanted to know you know why why do
16:34
that it isn’t obvious
16:40
well when I was in college there was
16:44
sort of three areas that I sort of
16:47
what’s really going to affect the future
16:49
humanity in a significant way the three
16:51
things that seem to be most significant
16:52
to me were the Internet the transition
16:55
to a sustainable energy economy and the
16:57
third was the extension of life beyond
16:59
Earth becoming multiplanetary I didn’t
17:02
think I’d be involved in at all in
17:04
option three but the reason I think it’s
17:08
important is it is it goes to how we
17:11
decide that anything is important and
17:13
the lens of history is a good way to
17:15
distinguish what seems important in the
17:17
moment from what is truly important over
17:19
the long term and if you zoom out and
17:22
look at a long enough period of time I
17:24
said a four billion year history of
17:26
Earth and the evolution of life itself
17:29
then there’s only about half dozen or so
17:32
major of milestones in the you know
17:35
history of life there’s obviously
17:36
single-celled life all facility life
17:38
differentiation to plants and animals
17:39
the transition from oceans to land
17:44
mammals consciousness and so and then
17:49
also on that scale would fit life
17:50
becoming multiplanetary it would be I
17:53
think at least as important as life
17:56
going from the oceans to land and
17:57
probably more important or more
17:59
significant because at least that that
18:01
was a gradual transition if you didn’t
18:02
if you if if land was if things got a
18:04
little uncomfortable on land you could
18:05
just hop back in the ocean and that’s
18:08
not really feasible on interplanetary
18:10
journeys so you know here we are it’s
18:15
sort of the first time in the four
18:16
billion year history of Earth that life
18:18
has been able to go beyond Earth and
18:20
that that window may be open for a long
18:22
time and I’m optimistic that I hope it
18:24
will and I’m actually fairly optimistic
18:25
about the future of Earth but something
18:30
may happen that that closes that window
18:32
and prevents us prevents life from
18:34
extending beyond Earth and that risks
18:37
the extension of life or at least
18:39
consciousness as we know it and that
18:41
would be a terrible thing
18:42
life is a terrible thing to waste
18:45
you know I want to give people a sense
18:46
of of what kind of we’re talking about
18:48
so we just have a short oh this is you
18:52
know building the rocket and this should
18:55
give people a sense
18:56
[Music]
19:16
so so that’s your rocket and and that
19:23
launched yeah that that launched what
19:30
about three three weeks ago or four
19:32
weeks ago yeah and we’ll get to what
19:34
happened but I just want to ask you I
19:35
mean watching that in and and when you
19:37
watch that for the first time the first
19:39
your first rocket went in oh five I
19:42
believe or right I mean how did that how
19:45
did you feel you know a hundred million
19:47
dollars years of work and you know
19:50
you’re shooting something you know in
19:52
the air I mean it must have been amazing
19:53
yeah it’s pretty nerve-wracking that’s
19:55
for sure
19:57
the the pucker factor on launch day is
20:00
very high so you know something well
20:07
yeah I mean you know I’m actually should
20:11
be said I’m actually kind of like a
20:12
physics guy I mean I’m good engineer
20:14
really and I do kind of the business
20:16
stuff because you know you kind of have
20:18
to do the business stuff or if you don’t
20:21
do the business stuff somebody else
20:22
can’t do it for you and then then you
20:23
could be in trouble and I actually the
20:26
chief designer of the rocket I mean I
20:28
could tell you I could redraw that
20:29
rocket without without benefit of
20:31
blueprints for the most part yeah so
20:34
it’s like seeing my baby go up there you
20:36
know and it’s it’s pretty scary
20:41
so so there been three flights so far
20:44
and and each one is has obviously the
20:47
goal is to get into orbit each one is
20:49
sort of not made it how did you deal
20:53
with the get to space okay you got to
20:55
space but it didn’t you didn’t get where
20:58
you want it to go not all the way sorry
21:04
well you know necessarily go all the way
21:07
on the first few days SpaceX has
21:10
[Laughter]
21:12
get a worker way up there so but it
21:18
certainly flights two and three got to
21:20
well into well beyond the boundaries of
21:22
space didn’t get to full a little
21:24
velocity though yeah but I mean you’ve
21:26
got sex has several hundred employees
21:28
and and obviously you said it was like
21:31
your baby I mean how did you deal with
21:34
it personally and then how did you deal
21:36
with the company as a manager sort of
21:39
helping them get past it and helping
21:41
your customers get past it obviously to
21:43
to keep their money because nobody’s
21:45
taking their money out of a sex they’ve
21:47
sold twelve flights and none of the
21:49
customers have asked for their money but
21:50
that’s true so how did you do that
21:54
what’s a therapy what’s the hand-holding
21:57
or just I think the customers that are
22:05
that of sign up for SpaceX are pretty
22:08
sophisticated and they understand that
22:11
in the early in early attempts at
22:14
flights you know weren’t in the
22:16
development phase essentially the called
22:18
the beta phase if it was software there
22:21
will be crashes and things from things
22:24
weren’t initially Gauhar percent or they
22:26
obviously do expect that once we get out
22:27
of the development phase that there will
22:30
be good reliability and that really is a
22:33
function of eliminating design related
22:34
issues yeah you know the last launch had
22:38
a problem because we had a brand new
22:39
engine on it that had a thrust transient
22:43
that was longer than the last one and so
22:45
there was an issue following stage
22:47
separation right but generally they’re
22:49
quite sophisticated customers and they
22:52
understand what’s going on and and
22:53
actually the first three flights were
22:57
paid for by it well first two were paid
22:59
for by DARPA the Defense Advanced
23:01
Research Projects Agency and the third
23:03
one was paid for by the Air Force
23:06
operation response for space office and
23:08
their outcomes the outcomes they were
23:09
looking for were not really the the
23:12
delivery of a satellite to orbit they
23:13
were actually looking for demonstration
23:15
of rapid launch right and so they
23:17
actually felt that that we will fully
23:18
paid for three flights right so I’m
23:20
gonna ask one more question and then
23:22
we’ll have some time for a quick Q&A
23:25
you know there’s there’s another rocket
23:27
that looks just like this right now in
23:29
the Marshall Islands where SpaceX
23:32
launches from and it’s I think you told
23:33
me it’s gonna go on this coming week
23:36
hopefully hopefully this end and you
23:39
know you told me and I think you’ve
23:41
written this elsewhere that starting a
23:45
rocket company is it’s so risky it’s
23:47
like playing Russian roulette and well
23:50
each launch is a bit like Russian
23:51
roulette yeah okay and but you know less
23:55
Russian let you know it’s worth pointing
23:56
out that you’re probably gonna win but
24:01
but I wanted to ask you you know Russian
24:04
Roulette you know how do you know that
24:07
you’re dead I mean when do you when do
24:10
you stop when do you say you know what
24:12
I’ve I’m not gonna make it or how I
24:15
think if we run out of money but we
24:19
actually I know it sounds crazy but we
24:21
were profitable last year we’re gonna be
24:23
profitable this year I’m not a big
24:24
profits refill a small profit and we
24:28
have enough funding on hand and with
24:30
existing contracts that independent of
24:32
Falcon one to last through the end of
24:34
next year okay so I was just told I
24:37
guess we don’t have time for questions
24:38
and I’ll let that be my last question
24:41
and but Ilan thank you so much for being
24:44
here and just sharing your story with us
24:47
it’s it’s so inspiring and perfect thank
24:49
you
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