#399 How Elon Works

**David Senra** (0:00)
The biography of Elon Musk that was written by Walter Isaacson came out a few years ago. It's 615 pages long. And so I read the book for the first time when it came out, and I didn't think I could make a great episode about it. And I think I've now finally figured out what I really want to talk to you about. It's going to sound crazy because Elon is the richest person on the planet, and the most famous entrepreneur alive. But I think that all of the other stuff, the politics, the tweets, the constant appearance in the news, or there's new controversies all the time, it just really distracts and takes away from the fact that Elon has a set of timeless and brilliant and insanely valuable principles on how to build companies, how to invent new technology, and how to make an impact on the world around you. And so this is what I did. I have spent at least, at least 60 hours reading and rereading this book. This book is written in chronological order. So I would say it's more kin to reading a series of news reports over a few decades than the typical way a biography is written. And so as it turns out, that's gonna be a major asset for you and I, because what you'll see, and what I exclusively want to focus on, is the enduring set of company building principles Elon has used over three decades, and across at least seven companies. So it may be apocryphal, but there is a quote from Michelangelo when he was asked how he created the Statue of David. And he replied, I just chipped away everything that was not David. So what I've done is edited down my 40 pages of notes and highlights from the book into just the way that Elon works. I want to focus on the ideas that he used to build his companies and to build what I think is a truly singular career. I don't think there's anyone else like him living or dead. And so I'm going to go through his ideas in chronological order so you can see how they appear, reappear, and how they are edited and iterated on over time. And so at the end of the episode, or by the end of episode, I should say, it will be impossible for you not to understand how Elon works. And then what I think we both should do is we should sit with these ideas, write them down, and then think deeply about how we can apply to some of them to our work. I think one of the superpowers of this project that has been going on for almost a decade, where you and I get together every week and we talk about another one of history's greatest founders, is that we see that somehow, people that didn't know each other were alive at different points in history, worked in different industries, lived in different parts of the world, all arrived at very similar conclusions on how to build themselves and their company into something great. So I want to start when Elon's in college, right before he starts his first company, Zip2. This is something that's mentioned. Every single thing I'm going to tell you is repeated over and over again. This is why I think they're so powerful. So one thing that's repeated over and over again is the fact that Elon loves strategy games, whether they're board games or they're video games. In this case, in college, he was obsessed with this board game, this classic strategy board game called Diplomacy. And it says that immersing himself in these games for hours became the way he relaxed, escaped stress and honed his tactical skills and strategic thinking for business. He was drawn to these games from an early age. When he was asked why, he told one of his friends, I am wired for war. That sentence, I am wired for war, Elon will repeat across decades. When he was in his early 20s, he had an internship says Elon did not like nor was he good at working for other people. It was not in his nature to be deferential or to assume that others might know more than he did. Again, he was like this in his early 20s. He still like that today. When they start zip to one of the things that he repeats over and over again is the importance of being hardcore of working every single waking hour. When they started zip to they slept in the office and showered at the YMCA. Another one of Elon's core principles. This is the way I describe it. This is not the way he describes it. Is that Elon understands that showmanship is salesmanship. So they would bring people into the zip to office. It says they bought a big frame for a computer rack and put one of their small computers inside so that visitors would think they had a giant server. Every time investors would come in, we showed them that tower. It made them think we were doing hardcore stuff. You will see him use that over and over again. Elon understands the power of one dramatic demonstration. From the very beginning of his career, Elon was a demanding manager, contemptuous of the concept of work-life balance. He drove himself relentlessly all day and night without vacations, and he expected others to do the same. His only indulgence was allowing breaks for intense video game binges. That's a description of Elon in his 20s. I don't think he can be any other way. One thing he says when he's building Zip2 and uses it for the rest of his life, he is not a fan of camaraderie or being overly collegial with the people you work with. He says over and over again, it's both counterproductive and dangerous, and that it gets in the way of actually putting the mission first. So he says he genuinely did not care if he offended or intimidated the people he worked with as long as he drove them to accomplish feats that they thought were impossible. It's not your job to make people on your team love you, he would say years later at a SpaceX executive session. In fact, that's counterproductive. One thing that he did not like early in his career and he never likes, he hates middlemen. A good way to think about Elon is Elon wants full control over everything, always true product people have a compulsion to sell directly to consumers without middlemen muddying things up. Elon was that way. Less than four years after starting Zip2, Elon and his brother, they went up selling the company to Compaq Computer, Compaq bought it for $307 million in cash. So by the time Elon was 27 years old, he had $22 million from the sale of his company. And what's fascinating is there's all these interviews he was doing when he was 27 and we see that it's not the money that's the motivator. The true sense of satisfaction, the true sense of accomplishment is building a real company. And so he says, I could go buy an island, but I'm much more interested in trying to build and create a new company. I haven't spent all of my winnings. I'm going to put almost all of it back into a new game, he said. The real payoff is the sense of satisfaction in having created a company. And so this is the note I left after I read the book and I go back and I reread my highlights and notes compulsively before I sit down and talk to you. And so this is what I said, make money and put it back into another company. That is a trait of his that he repeats for decades. More than 20 years later, when he had a bunch of cash from selling Tesla stock, he put it into Twitter. He hates having money just sitting there. And so that's a theme that's going to reappear over and over again is the fact that the money is for putting into company and solving a problem. What interested him was the problems that he wanted to solve. And he was willing to have an insanely high risk tolerance even when he was younger, because he said, I'm either going to be wealthy or broke, but it's not going to be anything in between. And so another enduring principle of Elon's adhesiveness out of his career is the fact that belief is irresistible. You will hear quotes like this across decades from different companies and from all kinds of different people that knew Elon. Even when it seemed like crazy talk, you would believe him because he believed it. Elon has the ability to transfer his belief to other people. He is contemptuous of work life balance. His management style has not changed from zip to nor would it ever. I am by nature, obsessive compulsive, Elon said. What matters to me is winning and not in a small way. So Elon starts his next company and it's the exact same management style that he had at his first company and he will have forever. One of Elon's management tactics was to set an insane deadline and drive colleagues to meet it. Elon slept under his desk most nights. Elon is intense in all things. This is a description of him when he's playing video games. He was sweating and you can see that he has a bundle of energy and intensity. One of the most shocking things of this book, especially if you eliminate everything that's not how Elon works, is Elon's obsession with simplification and deleting. Half the book is him just yelling at people to delete, to edit and to simplify. He does this relentlessly. He had a passion for simplicity when it came to designing user interfaces. I honed the user interface to get the fewest numbers of keystrokes to open an account, Elon said. One of the conflicts he had with his co-founders of PayPal was the fact that he was not interested in making niche products. And you see a drastic difference in the size of his ambition after selling PayPal. He says it was not in Elon's nature to make niche products. He wants to remake entire industries. We are 79 pages into this book, and you will see one of his most repeated principles. He has to mention this, I don't know, 25 times for this book. Elon restructured the company so that there was not a separate engineering department. Instead, engineers would team up with project managers. It was a philosophy that he would carry through to Tesla, SpaceX and Twitter. Separating the design of a product from its engineering was a recipe for dysfunction. Designers had to feel the immediate pain if something they devised was hard to engineer. Engineers rather than product managers should lead the team. One of my favorite maxims from the history of entrepreneurship is that if you know your business from A to Z, there's no problem you can't solve. Over and over again, starting with PayPal and all the way up until present day, people are shocked at how much detail Elon knows about their area of the company. So we have one of his co-founders, Max Levchin, back in the PayPal days was saying, Elon will say crazy stuff, but every once in a while, he'll surprise you by knowing way more than you do about your own specialty. I think a huge part of the way he motivates people are these displays of sharpness.