🎙️ Founders #399: How Elon Works

Musk's five-step approach to problem-solving and innovation:

• Question Every Requirement: Each requirement must come with the name of the person who made it. Never accept requirements from departments—always know the specific person responsible.
• Delete Any Part or Process: Remove everything possible, even if you might need to add it back later. If you don't delete at least 10%, you haven't deleted enough.
• Simplify and Organize: This must come after deletion. Don't waste time optimizing processes that should be eliminated entirely.
• Accelerate Cycle Time: Speed up every process, but only after following the first three steps. Musk made the mistake of accelerating processes that should have been deleted.
• Automate: This comes last. The big mistake in Tesla's early manufacturing was beginning with automation before questioning requirements and deleting unnecessary parts. "I became a broken record on the algorithm. I think it's helpful to say it to an annoyingly degree."

Musk's method of breaking down problems to fundamental truths:

• Drill Down to Physics: Break problems down to their most basic scientific principles and build solutions from there.
• Calculate the Idiot Index: Determine how much more costly a finished product is than its basic materials. If the ratio is high, the cost can be significantly reduced.
• Question All Inherited Wisdom: Challenge industry standards and assumptions. "The only immutable requirements are those decreed by the laws of physics."
• Compare Across Industries: Look at how similar problems are solved in different industries. Musk frequently compared aerospace costs to automotive costs to find massive savings.

Musk's leadership philosophy based on presence and direct involvement:

• Go to the Problem: Physically go to where the problem exists rather than managing remotely. "Fly to the source. Go to the exact location in the factory."
• Walk to the Red: Immediately identify and address issues. Musk installed monitors showing green/red lights for each station and would head straight to any red light.
• Lead by Example: Never ask troops to do what you wouldn't do yourself. "All technical managers must have hands-on experience."
• Stay Close to the Work: Spend more time on factory floors than in design studios. "Wherever Napoleon was, that's where his armies would do best."

Musk's operating principle for speed and innovation:

• Treat Time as the Most Valuable Resource: "Every day we're slower to achieve our goals is a day of missing out on that money."
• Set Impossible Deadlines: Force innovation by setting timelines that seem unachievable. "Cut it in half... When I ask for something, you [expletive] give it to me."
• Make Decisions Rapidly: "I calculated that I made 100 command decisions a day as I walked the floor. At least 20% are going to be wrong, but if I don't make decisions, we die."
• Meet Daily on Critical Projects: When something is vital, meet every 24 hours to run the algorithm and check progress. "It's hard to change destiny. You can't do it from 9 to 5."

Musk's business structure philosophy:

• Vertical Integration: Control the entire process from raw materials to finished product. "Elon wanted full control over everything always."
• Bring Manufacturing In-House: Rather than relying on suppliers, manufacture components internally. "Tesla would control its own destiny and quality and costs and supply chain by being vertically integrated."
• Keep Teams Together: Don't separate design, engineering, and manufacturing. "Designers had to feel the immediate pain if something they devised was hard to engineer."
• Eliminate Middlemen: Sell directly to consumers whenever possible. "True product people have a compulsion to sell directly to consumers without middlemen mudding things up."

Musk's communication and demonstration philosophy:

• Create Dramatic Demonstrations: Prove capabilities through spectacle rather than words. When Daimler executives visited Tesla, Elon surprised them with a working electric car rather than a PowerPoint presentation.
• Use Events to Generate Belief: "Elon believed an important element in launching a new product is an event."
• Frame Endeavors as Epoch-Making: Constantly connect work to larger significance. "Being a space-faring civilization and making science fiction not fiction is one of those [things that inspire you]."
• Transfer Belief Through Certainty: "Even when it seemed like crazy talk, you would believe him because he believed it."

Musk repeats his core principles obsessively until they become embedded in company culture. His executives often mouth the words along with him. This repetition ensures alignment and creates a shared language for problem-solving. "I became a broken record on the algorithm. I think it's helpful to say it to an annoyingly degree." This approach transforms abstract principles into actionable habits across organizations.

Musk has experienced more failures than most entrepreneurs, but these failures are always followed by rapid iteration and learning. "The people that succeed the most also have the most failures." His capacity to endure pain and setbacks appears unlimited, as demonstrated during 2008 when both Tesla and SpaceX nearly failed while he experienced night terrors, vomiting, and extreme stress.

Musk's unwavering commitment to his missions (making humanity multi-planetary, accelerating sustainable energy) transcends financial considerations or personal comfort. This mission-first approach attracts talent and inspires extraordinary effort. "I am wired for war," he says, describing his fundamental approach to challenges. "Extended periods of calm are unnerving to him."

Unlike the trend of outsourcing manufacturing, Musk insists on vertical integration. This gives him control over quality, costs, and innovation speed. "He does not give a damn what the standard practice is of any industry." This approach mirrors Henry Ford's early ownership of his entire supply chain, including railroads, to ensure control.

One of the unique advantages of running multiple companies simultaneously is Musk's ability to transfer lessons and innovations between them. Techniques learned at SpaceX are applied to Tesla and vice versa. When Tesla needed to reduce carbon fiber costs, Musk suggested using equipment from SpaceX, saying, "If someone tells you this is hard, they are full of [expletive]."

The word "cost" appears 158 times in Isaacson's biography. Musk is maniacal about controlling costs, constantly calculating the "idiot index" of components and finding ways to manufacture them for a fraction of the standard price. A supplier quoted $120,000 for a part; Musk had his team build it for $5,000.

Musk actively avoids periods of calm and stability. He constantly creates challenges and urgency to prevent his teams from becoming complacent. "Elon feared complacency. Unless he maintained a maniacal sense of urgency, SpaceX could end up flabby and slow."

Musk believes in leading from the front, physically present where the work is happening. He spends more time on factory floors than in design studios and moves into factories during critical production periods. This approach mirrors historical military leaders like Napoleon, whom he cites as an influence.

Musk insists on knowing the name of the person who created each requirement. "Requirements from smart people are the most dangerous because people are less likely to question them." He believes all requirements should be treated as recommendations except those dictated by physics.

Half the book is Musk yelling at people to delete, edit, and simplify. "The best part is no part." He believes complexity is the enemy of scalability and constantly pushes his teams to eliminate components and processes. When told a process would take 10 days, he demanded it be done immediately, saying, "We're gonna make a dome by dawn if it [expletive] kills us."

Musk devours entire shelves of books on subjects he needs to master:

• Read everything available on rocket engineering before starting SpaceX
• Study biographies of historical figures like Ben Franklin, Henry Ford, and Nicola Tesla
• Learn from diverse sources including toys, games, and nature
• Constantly transfer knowledge between his companies

Musk goes directly to where problems are occurring:

• Move into factories during critical production periods
• Fly immediately to locations where issues arise
• Walk assembly lines daily, identifying bottlenecks
• Prefer face-to-face communication over remote management

Musk works nearly every waking hour:

• Make decisions rapidly, accepting that 20% will be wrong
• Value time more than money, spending freely to save time
• Hold daily meetings on critical projects to maintain momentum
• Work through nights and weekends without vacations

Musk constantly asks "What can we delete?":

• Challenge every requirement and process step
• Look for the simplest possible solution to any problem
• Eliminate middlemen and unnecessary layers
• Embrace the principle that "the best part is no part"

Musk communicates bluntly and honestly:

• Speak directly with people at all levels of the organization
• Prefer blunt, honest feedback over politeness
• Repeat key messages until they are fully absorbed
• Avoid corporate jargon and speak plainly

Musk insists on understanding technical details personally:

• Interview key hires himself
• Spend time on factory floors and with engineering teams
• Test products and processes personally
• Understand the idiot index for every component

Musk embraces rapid prototyping and testing:

• Learn from failures and quickly apply lessons
• Continuously refine approaches and methods
• Evolve principles over time while keeping core values constant
• "If you make this thing fast, you can find out fast and then you can fix it fast."