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  • SAL KHAN: So first of all, I just want

  • to thank Elon for coming-- hungry.

  • You didn't even have dinner.

  • And we didn't even feed you properly.

  • ELON MUSK: No, sorry to be a bit late.

  • I just came from the Tesla factory in Fremont.

  • SAL KHAN: Yes.

  • Was something wrong?

  • ELON MUSK: There's always something.

  • SAL KHAN: Did you have to like--

  • ELON MUSK: At any given point, there's always something wrong.

  • SAL KHAN: Yes.

  • ELON MUSK: Because there's just too many things going on.

  • So one of the trickiest things about a car

  • is that there's thousands of individual components--

  • there are thousands of unique components--

  • and even if one of those things is missing,

  • you can't make cars.

  • So today's fiasco was-- I kid you

  • not-- we were missing a $3 USB cable.

  • OK.

  • So we could not complete cars, because--

  • SAL KHAN: So the whole line was stopped?

  • ELON MUSK: Yeah.

  • So essentially, because it's part of the wiring harness.

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

  • And so we could either make a whole bunch

  • of cars minus the interior, which

  • means that you've got to stack them up in the yard.

  • SAL KHAN: The resale value would be no good.

  • ELON MUSK: Well, it can be done, but if then things go out

  • of sequence, and it's way more inefficient--

  • you don't have a moving production line.

  • Then you have to send people out to hundreds

  • of cars that are sitting in the storage yard.

  • And so this happens to be a particularly pernicious cable.

  • It's kind of routed under the carpet, in a difficult place.

  • And it's literally $3.

  • And so we basically had to send people throughout the Bay Area

  • to go and buy USB cables.

  • SAL KHAN: Like, literally, Radio Shack?

  • ELON MUSK: Like Fry's.

  • SAL KHAN: Oh, Fry's.

  • That's better.

  • ELON MUSK: You're going to have a hard time getting a USB cable

  • right now at Fry's, because we bought every one of them.

  • SAL KHAN: That's good.

  • ELON MUSK: And so we're able to continue production.

  • And 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.

  • And so they wouldn't let our stuff through, because--

  • SAL KHAN: They put it like a barrel fruit or something.

  • ELON MUSK: I don't what they put it,

  • but something that customs didn't like.

  • And the paperwork wasn't in order or whatever.

  • So it got stuck there for like a couple weeks.

  • And then we had plan B. So we called and said,

  • look you've got to air freight some of these cables--

  • cause they're just little cables-- to us.

  • And we talked to their US subsidiary

  • and ordered from the US subsidiary,

  • who then communicated to China.

  • But then because this was another batch of parts,

  • so it was kind of double the order,

  • it exceeded the credit limit that we had.

  • So it bounced off the credit limit, so they didn't ship it.

  • SAL KHAN: Fascinating.

  • So someone's losing their job now.

  • This is-- no, I'm kidding.

  • You shouldn't fire anyone.

  • ELON MUSK: I mean, it's pretty farcical.

  • And, anyway, so, it's coming like tonight

  • at 11:00 PM or something.

  • SAL KHAN: Wow.

  • And these things are happening like all the time?

  • This was an unusual circumstance?

  • ELON MUSK: Yeah.

  • That's like one example, but there's many things like that.

  • SAL KHAN: I guess, I mean, that's actually

  • a really good example, because that

  • leads into what I've always been fascinated

  • by a lot of what you're doing.

  • Well, I'll start with, how did you get into this?

  • ELON MUSK: Into cars?

  • SAL KHAN: Into cars.

  • Into taking over NASA.

  • Well, not taking over NASA-- being a contractor for NASA.

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

  • SAL KHAN: You're not taking over NASA.

  • They are an independent organization.

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

  • Obviously, kind of internet payments and payments

  • generally.

  • I mean these are 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 MUSK: Right.

  • Sorry to eat.

  • SAL KHAN: Oh, yeah, take your time.

  • What was your-- did you always think

  • you were going to be doing this or-- when did it

  • dawn on you that you would try to revolutionize

  • three industries?

  • ELON MUSK: 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 would most

  • effect the future of humanity, in my opinion.

  • And the three areas were the internet, sustainable energy,

  • and space exploration, particularly

  • if humanity becomes a multi-planet species.

  • You know, there's kind of like a pretty substantial bifurcation

  • in our future, if we're either out there among stars

  • on multiple planets, or if we're confined

  • to Earth until some obviously eventual extinction.

  • Not Not that I'm pessimistic about live on Earth.

  • I mean, things are likely to be good.

  • More likely to be good by far than bad.

  • SAL KHAN: Yellowstone's due for an explosion

  • every several hundred thousand-- Shandra knows about that.

  • It's been 700,000,

  • ELON MUSK: Right.

  • Right.

  • Yeah.

  • SAL KHAN: Super volcano for those of you who don't know.

  • It would envelop, but well--

  • ELON MUSK: Yeah.

  • Exactly.

  • I know exactly what you're talking about.

  • So--

  • SAL KHAN: We read the same books.

  • I can tell.

  • ELON MUSK: Absolutely.

  • I mean 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 like very long,

  • but on an evolutionary time scale, they're very short.

  • A million years on an evolutionary time scale

  • is really not very much.

  • And Earth's been around for four and a half

  • billion years, so that's a very tiny, tiny amount of time,

  • really.

  • But for us that would be-- can you

  • can imagine if human civilization continued

  • at anything remotely like the current pace of technology ad

  • advancement for a million years?

  • Where would we be?

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

  • SAL KHAN: Yes.

  • We should--

  • ELON MUSK: Those are the two options.

  • SAL KHAN: But given that-- I mean,

  • one, that's kind of as epic as one

  • can think about things, literally.

  • How did you make that concrete?

  • How does that turn into SpaceX, Tesla and Paypal?

  • ELON MUSK: 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.

  • And at first I thought the best bet

  • was going to be electric cars.

  • And so the area that I was studying

  • was advanced capacitors.

  • So essentially capacitors that have an engine density

  • exceeding that of batteries.

  • Because they have a very high power

  • density, but a low energy density.

  • Maybe you have lecture to that effect, I don't know.

  • SAL KHAN: Oh, yes, no.

  • We should do that.

  • We'll get to it later.

  • ELON MUSK: Exactly.

  • So obviously, if you could make a capacitor that

  • had anywhere near the energy density of a battery

  • with this incredibly high power density

  • and this quasi-infinite cycle and calendar life, then

  • you'd have an awesome solution for energy storage

  • and mobile applications.

  • So I was going to try to work on that

  • and try to leverage the equipment that was developed

  • for advanced chip making and photonics

  • to create ultra-precise capacitors

  • at the molecular level.

  • SAL KHAN: And this was when you were

  • going to go into grad school?

  • You had a brief stint at Stanford?

  • ELON MUSK: That's right.

  • SAL KHAN: At a PhD in applied physics?

  • ELON MUSK: Applied physics, material science.

  • SAL KHAN: Right.

  • So even then you were thinking of trying

  • to do something in the space?

  • ELON MUSK: Actually, this was d to work on energy storage

  • solutions for electric cars.

  • And I'd actually worked at a company

  • in Silicon Valley called Pinnacle Research, which

  • did advanced capacitors.

  • There were electrolytic capacitors.

  • And they actually were pretty good.

  • They had like the energy density of a lead-acid battery, which

  • for a capacitor, that's a big deal.

  • But they used ruthenium tantalum oxide.

  • And I think at the time, there was

  • maybe like 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,

  • like just using chip-making equipment.

  • That was going to be the basic idea.

  • But it was one of those things where I wasn't sure

  • if success was one of possible outcomes.

  • It's difficult to bound that problem exactly and say, OK--

  • SAL KHAN: So you're saying, I felt

  • like this was a destined failure is another way

  • to parse that sentence.

  • But anyway, sorry.

  • ELON MUSK: No.

  • I didn't think it would fail, but I wasn't sure

  • that success was a possibility.

  • SAL KHAN: OK.

  • Yes.

  • ELON MUSK: And generally you want

  • to embark on something-- it's desirable to figure out

  • if success is at least one of the possibilities.

  • SAL KHAN: Right, exactly.

  • ELON MUSK: Because for sure failure

  • is one of the possibilities.

  • But, ideally, you want to try to bracket it

  • and say success is in the envelope of outcomes.

  • 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 KHAN: We have a few-- don't take offense.

  • ELON MUSK: I mean, how many PhD papers are actually

  • used by someone ever?

  • SAL KHAN: That's a good point.

  • ELON MUSK: Percentagewise it's not good.

  • And so it could have been one of those outcomes

  • where you add some leaves to the tree of knowledge.

  • And that leaf is, nope, it's not possible.

  • And there goes seven years of my life.

  • So that was one path.

  • And I was prepared to do that.

  • But then the internet came along.

  • And it was like, oh, OK, the Internet,

  • I'm pretty sure success is one of the outcomes,

  • and it seemed like I could either do a PhD

  • and watch the Internet happen, or I

  • could participate and help build in some fashion.

  • Like, I was just concerned with the idea of watching it happen.

  • So I decided to put things on hold

  • and start an Internet company.

  • And we worked on internet publishing software,

  • maps and directions, yellow pages, those kind of things.

  • And we had as investors and customers the media companies.

  • So like the New York Times Company, Knight Ridder.

  • SAL KHAN: And this is just at the early stages.

  • I mean this was like--

  • ELON MUSK: '95.

  • SAL KHAN: '95.

  • So it's really early stages, so it's really out the gate.

  • ELON MUSK: Yeah.

  • Absolutely.

  • And so then we-- the reason we worked with the media companies

  • was because we needed to have money.

  • There was no advertising money in '95.

  • In fact, the idea of advertising on the internet

  • seemed like a ridiculous idea to people.

  • Obviously, not so ridiculous anymore.

  • But, at the time, it seemed like a very unlikely proposition.

  • And a lot of the media companies weren't even sure

  • that they should be online.

  • Like, what's the point of that?

  • SAL KHAN: And did you all think that PayPal was just

  • going to be a simple, little internet way to--

  • or did you think it was going to turn

  • into the major kind of transaction processing engine

  • that it is right now?

  • ELON MUSK: I didn't expect PayPal's growth rate

  • to be what it was.

  • And that actually created major problems.

  • So we started Paypal on University Avenue.

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

  • we 100,000 customers.

  • SAL KHAN: Really?

  • That fast.

  • Wow, I didn't realize it was--

  • ELON MUSK: Yeah, it was nutty.

  • SAL KHAN: And how did it start?

  • How did people just even know to use it?

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

  • ELON MUSK: 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.

  • And we dropped it to $5.

  • As the network got bigger and bigger,

  • the value of the network itself exceeded any sort of carrot

  • that we could offer.

  • SAL KHAN: So much money did you all

  • spend with that kind of $5, $10, $20 incentive

  • to get that critical mass going?

  • ELON MUSK: It was a fair amount.

  • I think it was probably $60 or $70 million.

  • SAL KHAN: Oh, wow, OK.

  • So it was substantial.

  • OK.

  • So we're not talking peanuts here.

  • ELON MUSK: It depends on your relative scale.

  • It's a peanut to Google.

  • SAL KHAN: Yeah, no, that's right.

  • That's right.

  • ELON MUSK: Here's a peanut.

  • I mean, Google's got $50 billion.

  • Apple's got $150 billion, some crazy amount of money.

  • That's just cash.

  • SAL KHAN: Yeah.

  • So it's not an outlandish-- I didn't

  • realize that was so core.

  • ELON MUSK: Like 1% of Google's cash would be $500 million.

  • So, you know, that's 0.1% percent of Google's cash.

  • SAL KHAN: That's true.

  • You're right, that's inexpensive.

  • It's nothing.

  • ELON MUSK: Relative to them, it's pretty inexpensive.

  • SAL KHAN: That's right.

  • ELON MUSK: And then we did a bunch of things

  • to decrease the friction.

  • It's just like bacteria in a Petri dish.

  • So what you want to do is try to have one customer generate

  • like two customers.

  • OK?

  • Or something like that.

  • Maybe three customers, ideally.

  • And then you want that to happen really fast.

  • And you could probably model it just

  • like bacteria growth in a Petri dish.

  • And then it'll just expand very quickly

  • until it hits the side of the Petri dish

  • and then it slows down.

  • SAL KHAN: And then after Paypal, then I

  • mean-- to some degree, especially us

  • in Silicon Valley, we kind of understand the Internet.

  • We know people.

  • PayPal's obviously of the scale that is noteworthy,

  • but then SpaceX just seems really, you know-- well,

  • one, how did you decide that I'm definitely going to do that?

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

  • How do you even go out-- I don't even

  • know how to start trying to make a rocket company.

  • ELON MUSK: Well, neither did I really.

  • And in fact, the first three launches failed.

  • So it's not as though it was like spot on.

  • It's like, did not hit the bull's eye.

  • But

  • SAL KHAN: But even getting to the point where

  • you're launching rockets.

  • I don't even how do you get there?

  • One, how did you decide?

  • And then what did you do on day one?

  • Like, who did you call?

  • Did you write a plan?

  • Did you start-- I don't even know.

  • ELON MUSK: Actually, the origin of SpaceX

  • is that I was trying to figure out

  • why we'd 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

  • will be a base on the moon.

  • We would have least sent some people to Mars.

  • And maybe there'd even be a base on Mars.

  • There'd be like orbiting space hotels.

  • And there'd be all this awesome stuff in space.

  • And that's what people expected.

  • And if you said, well, actually, the United 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-- smaller than a deck of cards

  • that has access to all the world's information,

  • and you can talk to any one on planet Earth.

  • And even if you're like in some remote village somewhere so

  • long as there's something called the Internet-- they wouldn't

  • know what that means, of course--

  • then you would you be able to communicate with anyone

  • instantly and have access to all of humanity's knowledge.

  • They would have said, like bullshit.

  • There's no way that that's going to be true.

  • SAL KHAN: Right.

  • Right.

  • ELON MUSK: And yet we all have that.

  • And space is not happening.

  • So I was trying to figure out like what was the deal here.

  • And this was 2001.

  • And it was just a friend of mine asked me,

  • what am I going to do after Paypal.

  • And I said, well, you know, I've always been interested

  • in space, but I don't think there's anything

  • that an individual could do in space,

  • because it's the province of government, and usually

  • a large government.

  • But, I am curious as to when we're

  • going to send some one to Mars.

  • So I went to the NASA website to try

  • to figure out where is the place that tells you that.

  • And I couldn't find that.

  • So I was like, either I'm bad at looking at the website,

  • or they have a terrible website, because surely there

  • must be a date.

  • SAL KHAN: That should be a big date.

  • ELON MUSK: Yeah.

  • This should be on the front page.

  • And then I discovered actually that NASA

  • had no plans to send people to Mars, or even really back

  • to the moon.

  • So this was really was disappointing.

  • I thought well, maybe this is a question of national will.

  • Like do we 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.

  • And I came up with this idea to do so-called Mars oasis,

  • which was to send a small greenhouse with seeds

  • in dehydrated gel that upon landing, you hydrate the gel.

  • You have green plants on a red background.

  • The public responses to precedents and superlatives.

  • So it would be the first life on Mars.

  • The furthest that life's ever traveled.

  • And you'd have this money shot of green plants

  • on a red background.

  • So that seemed like it would get people pretty excited.

  • So I started getting into this.

  • And trying to figure out, OK, well

  • can I afford to build a spacecraft?

  • Because I had some money as a result of PayPal,

  • but it had to fit within that budget.

  • And I figured we had to do two missions, because if we only

  • did one and it failed, then it might

  • have like the opposite effect.

  • SAL KHAN: But you were willing to bet the farm, so to speak,

  • on this?

  • ELON MUSK: Yeah.

  • Well, I figured I was willing to spend half the money that I got

  • from PayPal with no expectation of return.

  • Because I thought this was just something

  • that was pretty important and yeah,

  • it seemed like I could spend half the money

  • I made on PayPal on this, and if that got NASA a bigger budget

  • and resulted in us going to Mars, that

  • would be a pretty good outcome.

  • SAL KHAN: And when your friends or your family came up to you

  • and said, look there's nations that can't do this.

  • You're a guy, I mean you have some resources, what

  • did you say or do or think?

  • ELON MUSK: Well, so I had a lot of friends of mine

  • try to talk me out of starting a rocket company,

  • because they thought it was crazy.

  • And one friend of mine made me watch

  • a video of rockets blowing up.

  • And there were just lots of people

  • that thought it was a really crazy idea.

  • And there was some people that had

  • tried to start rocket companies, not succeeded.

  • And they tried to talk me out of it.

  • But the thing is that-- their premise for talking me out

  • of it was, well, we think you're going

  • to lose the money that you invest.

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

  • so I don't really mind if I lose-- you I mean, I mind,

  • but I mean it's not like I was trying to figure out

  • the rank-ordered best way to invest money

  • and on that basis chose space.

  • It's not like that's-- I thought, wow--

  • SAL KHAN: You weren't looking at like money-market bonds,

  • AAA bonds, rocket company.

  • You weren't like--

  • ELON MUSK: I could do real estate.

  • I could invest in shoe making.

  • Anything.

  • And, whoa, space is the highest ROI.

  • That is not what-- it wasn't the premise.

  • I just thought that it was important

  • that humanity expand beyond Earth,

  • and we weren't doing that, so maybe there

  • was something I could do to spur that on.

  • And then 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-- I flew to Russia three times

  • to negotiate a purchase of an ICBM.

  • I tried to buy two of the biggest

  • ICBMs in the Russian fleet in 2001 and 2002.

  • And I actually negotiated a price.

  • SAL KHAN: I'll just let that statement stand.

  • I'm not even going to-- Well, actually,

  • I have to-- like who did you call?

  • ELON MUSK: You open the yellow pages.

  • Go to ICBMs.

  • Oh!

  • SAL KHAN: How does this-- I don't

  • want to get too much in to it but I'm

  • curious about this one particular thing.

  • You decide at some point you need to buy an ICBM?

  • ELON MUSK: Yeah.

  • Well, actually at first I tried to buy just a normal launch

  • program that they use to launch satellites,

  • but those are too expensive.

  • SAL KHAN: I see.

  • I see.

  • ELON MUSK: The Boeing Delta II would have cost $65 million

  • each, so two would have been $130 million.

  • And then I was like, woah, OK, that breaks my budget

  • right there.

  • And I tried to negotiate with them.

  • And that was not-- I did not make progress.

  • SAL KHAN: How much does an ICBM go for?

  • I'm curious what's the market rate for one of those?

  • ELON MUSK: Well--

  • SAL KHAN: This is right after the fall,

  • it might have gone up.

  • ELON MUSK: Yeah, it's gone up a lot since then.

  • But in 2001, it would've been about $10 million each.

  • So two would have been $20 million.

  • And then I thought I could get the rest of the mission

  • down to also around $10 million per, so we'd

  • have a dual mission with like two identical launches,

  • two identical spacecraft for roughly $40 million.

  • And so I thought, OK, I can do that.

  • SAL KHAN: But you must have had some

  • like rocket scientists advising you at this point?

  • This sounds like you were serious.

  • I mean you were--

  • ELON MUSK: Yeah.

  • I engaged a bunch of consultants and started

  • 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's a tremendous amount of will

  • in the United States for space exploration.

  • Because the United States is essentially

  • a nation of explorers.

  • I mean, it's a distillation of the human spirit

  • of exploration.

  • So of course it was quite silly of me

  • to think that people lacked motivation.

  • But what people don't want to think

  • is that, OK, sending people to Mars

  • is going to be so expensive that they'll

  • have to give up health care or something.

  • They're not going to do that.

  • So it's got to be that going to Mars

  • is not going to cause some meaningful drop

  • in their standard of living.

  • So if it's like maybe a quarter of a percent

  • or half a percent of GDP-- something

  • like that is palatable.

  • Anyways, so I thought, OK, it's not really

  • going to maybe matter that much if I

  • do this mission, because what really matters is having a way.

  • So I was wrong-- I thought there wasn't enough will,

  • but there actually was plenty of will,

  • if people thought there was a way.

  • So then I said, OK, well, I need to work on the way.

  • How hard is it really to make a rocket?

  • Historically, all rockets have been expensive, so therefore,

  • in the future, all rockets will be expensive.

  • But actually that's not true.

  • If you say, what is a rocket made of.

  • And say, OK, it's made of aluminum, titanium, copper,

  • carbon fiber, if you want to go that direction.

  • And you can break 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.

  • And I was like, wow, OK, it's really small.

  • It's like 2% of what a rocket costs.

  • So clearly it would be in how the atoms are arranged.

  • So you've got to figure out to OK, how

  • can we get the atoms in the right shape

  • much more efficiently.

  • And so I had a series of meetings on Saturdays

  • with people some of whom were still

  • working at the big aerospace companies,

  • just to try to figure out is the some catch here

  • that I'm not appreciating.

  • And I couldn't figure it out.

  • There doesn't seem to be any catch.

  • So I started SpaceX.

  • SAL KHAN: 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 MUSK: So let's see.

  • For the Falcon 1, which is the first rocket we built.

  • And the first three flights did not make it.

  • In fact, we got progressively further.

  • But like the first rocket came in and landed maybe

  • a couple hundred yards away from the launch

  • site, and tiny fragments.

  • So, yeah, anyway, that rocketed ended up

  • costing around $6 million compared

  • to other rockets in that class, which

  • were about to $25 million.

  • SAL KHAN: Wow.

  • So significant?

  • ELON MUSK: Yeah, like a quarter.

  • But there's an even better step beyond that

  • which is to make rockets reusable.

  • Right now that is around what our comparison price is--

  • excluding the refurbished ICBMs.

  • So, if you say building a rocket from new,

  • how does the SpaceX rocket compare

  • 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 KHAN: Two orders of magnitude cheaper.

  • A 100th of the price?

  • ELON MUSK: That's right.

  • For you.

  • SAL KHAN: Only today.

  • Memorial day sale.

  • And I've seen some-- you all are doing these vertical landings,

  • like literally out of like the 1950s Sci-Fi movies.

  • And that's what you're talking about?

  • ELON MUSK: Yeah.

  • Essentially, the rocket needs to come back

  • and land at the launch site, and then reload propellant

  • and take off again.

  • Like an airplane in its reusability.

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

  • When do you think-- your best guess,

  • when we'll actually see that happening?

  • ELON MUSK: Well, I'm hopeful we can do it next year.

  • SAL KHAN: Oh, OK.

  • Yeah.

  • That's-- we've got some ambitious stuff at Khan Academy

  • for the next year, too.

  • So we can compare.

  • We're redesigning the site.

  • ELON MUSK: Right.

  • We've been working on it for a long time.

  • I should say, SpaceX has been around for 11 years,

  • and thus far we have not recovered any rockets.

  • We 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 essentially

  • 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 an advanced rocket, you can do maybe 2% to 3%

  • of your lift-off mass to orbit, typically.

  • And then reusability subtracts 2% to 3%

  • So then you've got like nothing to orbit or negative.

  • And that's obviously not helpful.

  • And so the trick is to try to shift that from

  • say 2%, 3% in an expendable configuration

  • to make the rocket mass efficiency, engine efficiency,

  • and so forth, so much better that it moves to maybe around

  • 3.5% to 4% in expendable configuration.

  • And then try to get clever about the reusability elements

  • and try to drop that to around the 1.5% to 2% level.

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

  • SAL KHAN: But you're doing it at one, two orders of magnitude

  • cheaper.

  • ELON MUSK: Yeah.

  • Absolutely, because our Falcon 9 rocket cost about $60 million.

  • But the propellant cost-- which is mostly

  • oxygen-- it's two-thirds oxygen, one-third fuel--

  • is only about $200,000.

  • SAL KHAN: Wow.

  • ELON MUSK: And it's much like a 747.

  • It costs about as much to refuel our rocket

  • as it does to refuel a 747 within-- well, pretty

  • close, essentially.

  • SAL KHAN: So assuming you all are successful,

  • and you all have proven yourself to be

  • successful on these audacious things in the past, I mean,

  • what happens?

  • I mean that seems like it's-- what happens in the next 5,

  • 10 years in the 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 MUSK: Yeah.

  • Let's see.

  • 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 like broadcast communications,

  • mapping, government satellites that do scientific missions.

  • Earth-based or space-based missions.

  • GPS satellites.

  • That kind of thing.

  • And then also servicing the space station.

  • Transferring cargo to and from the space station,

  • which we've done a few times.

  • And then taking people to and from the space station.

  • So we've got to service the sort of Earth-based needs

  • to launch satellites and that pays the bills.

  • But in doing that keep improving the technology

  • to a point where we can make full reusability work.

  • And we have sufficient scale and sophistication

  • to be able to take people to Mars.

  • SAL KHAN: Wow.

  • So you think this is going to be a reality?

  • What's your best guess of when we're

  • going to have someone on Mars?

  • ELON MUSK: I think probably about 12 years.

  • SAL KHAN: That's nothing.

  • And you think it'll be a round trip?

  • It won't just be some type of permanent colony on Mars?

  • ELON MUSK: I think it's probably a round trip.

  • It's not for sure.

  • SAL KHAN: I could talk about this for-- people know, I'm--

  • ELON MUSK: Aspirational it'd be a round trip.

  • SAL KHAN: This is mind blowing.

  • And then on Tesla.

  • I mean Tesla's obviously, from my vantage,

  • it's a huge success.

  • What do you think in that industry-- well, one,

  • I'll ask kind of the same question.

  • What did you think-- this is something

  • that GM and Toyota and these massive multi-billion dollar

  • organizations have been trying.

  • What gave you the confidence to 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 MUSK: Yes.

  • So with Tesla, the goal is try to accelerate

  • the advent of sustainable transport.

  • I think it would happen anyway, just out of necessity.

  • But because we have an un-priced 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 to not function

  • properly.

  • And so the goal of Tesla is to try

  • to act as a catalyst to accelerate

  • those sort of normal forces.

  • The normal sort of market reaction that would occur.

  • We're trying to have a catalytic effect on that.

  • And try to make it happen, I don't know, maybe 10 years

  • sooner than it would otherwise occur.

  • That's the goal of Tesla.

  • So that's the reason we're making electric cars and not

  • any other kind of car.

  • And 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 goal there.

  • And so far, it's working out pretty well.

  • SAL KHAN: I mean, I just saw a news report earlier today

  • that you all sold more Model S's than-- you all

  • are leading that segment of the industry.

  • The Mercedes S class, the BMW 7 Series, or the Lexus LS400,

  • or whatever it is.

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

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

  • Because we don't sell that many cars.

  • We sell 5,000 a quarter, or 12,000--

  • SAL KHAN: Well, out here they seem like you know every--

  • ELON MUSK: Well, this is our home team.

  • So it's-- we better sell a lot in the Bay Area.

  • Because otherwise we're like--

  • SAL KHAN: And, well, I mean, similar thing.

  • How did you start?

  • What gave you the confidence?

  • And do you see yourselves as kind

  • of a major automotive, mainstream brand in 5,10 years,

  • all the way down to competing with the Honda Accords

  • and Civics?

  • ELON MUSK: I mean, yeah.

  • Our goal-- it's not to become a brand big brand

  • or to compete with Honda Civics, rather

  • to advance the cause of electric vehicles.

  • And so we're just going to keep making

  • more and more electric cars and driving the price point down

  • until the industry is very firmly electric.

  • Like maybe half of all cars made are

  • electric or something like that.

  • Which is not to say that we expect

  • to make half of all cars.

  • We want to just have that catalytic effect until

  • at least that occurs.

  • And I think the point at which we're approaching half

  • of all new cars made are electric,

  • then I think I would consider that to be the victory

  • condition.

  • And so the faster we can bring that day, the better.

  • SAL KHAN: When would be your guess when that happens?

  • ELON MUSK: Well, I made a bet with someone

  • about three years ago that it would be sooner than 20 years.

  • So it's 17 years from now.

  • But that's conservative.

  • I think it's probably maybe 13 or 14 years.

  • SAL KHAN: Wow.

  • Right when we're going to Mars.

  • ELON MUSK: Right.

  • SAL KHAN: It'll be exciting times.

  • ELON MUSK: True.

  • Exactly.

  • I was just thinking about that.

  • It was like, oh, those time frames are kind of coincident.

  • The nature of new technology adoption

  • is it tends to follow an S-curve.

  • So what usually happens is people under-predict it

  • in in the beginning, because people

  • tend to extrapolate in a straight line.

  • And then they'll over-predict it at the midpoint,

  • because there's late adopters.

  • And then it'll actually take longer

  • than people think at the mid-point,

  • but much shorter than people think at the beginning.

  • But I'm pretty excited about how things are going.

  • And, in fact, I think that the pace of technology improvement

  • in electric energy storage is really

  • moving faster than anyone thinks.

  • SAL KHAN: Wow.

  • I got one more-- how are we doing on time?

  • Where's Ester?

  • Oh, 9 o'clock.

  • So how much time do you have?

  • I want to make sure we don't go over.

  • ELON MUSK: Well, I guess maybe another 15 minutes.

  • SAL KHAN: OK.

  • So I'll finish with one last question

  • and then we'll open it up.

  • What advice do you have for us at Khan Academy?

  • ELON MUSK: I don't know.

  • You guys seem to be doing really great.

  • So I was wondering if you had advice for me.

  • SAL KHAN: Oh, no, well.

  • ELON MUSK: Yeah.

  • It seems like you're doing an amazing job of-- really

  • super leveraged.

  • I mean, obviously, a small team, and you're

  • having a dramatic effect--

  • SAL KHAN: Yeah, half these people don't even work here.

  • There just like-- so it's like it's even--

  • ELON MUSK: Right.

  • So it's, I think very impressive thing you're

  • doing to spread knowledge and understanding

  • throughout the world.

  • SAL KHAN: The universe soon, if you hold up

  • your end of the bargain.

  • ELON MUSK: It's actually kind of funny.

  • If you think, what is education?

  • Like you're basically downloading data and algorithms

  • into your brain.

  • And it's actually amazingly bad in conventional education.

  • Because like it shouldn't be like this huge chore.

  • So you're making it way, way better.

  • But I think a lot of things that I would say,

  • you've probably heard 100 times.

  • And, in fact, are if not doing.

  • The more you can game-ify 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.

  • SAL KHAN: Yes.

  • ELON MUSK: It's like, drop that crack needle.

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

  • The crack is addictive.

  • ELON MUSK: So to the degree that you can make somehow learning

  • like a game, then it'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.

  • They're not very excited about it.

  • They don't know why they're there.

  • Like why are we letting this stuff.

  • We don't even know why.

  • In fact, I think a lot of things that people

  • learn that probably there's no point in learning them.

  • Because they never use them in the future.

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

  • I mean, that's just like-- exactly, that never happens.

  • ELON MUSK: Well, you have to say--

  • people don't stand back and say, well,

  • why are we teaching people these things.

  • And we should tell them, probably,

  • why we're teaching these things.

  • Because a lot of kids are probably just in school,

  • probably puzzled as to why they're there.

  • I think if you can explain the why of things,

  • then that makes a huge difference

  • to people's motivation.

  • Then they understand purpose.

  • So I think that's pretty important.

  • And just make it entertaining.

  • But I think just in general conventional education

  • should be massively overhauled.

  • And I'm sure you pretty much agree with that.

  • I mean the analogy I sometimes use

  • is, have you seen like Batman, the Chris Nolan

  • movie, the recent one.

  • And it's pretty freaking awesome.

  • And you've got incredible special effects, great script,

  • multiple takes, amazing actors, and great sound,

  • and it's very engaging.

  • But if you were to instead say, OK--

  • even if you had the same script, so at least it's 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 troop.

  • OK, and so in every small town in America,

  • if movies didn't exist, they'd have

  • to recreate The Dark Night.

  • With like home-sewn costumes and like jumping across the stage.

  • And not really getting their lines quite right.

  • And not really looking like the people in the movie.

  • And no special effects.

  • And I mean that would suck.

  • It would be terrible.

  • SAL KHAN: That's right.

  • Very--

  • ELON MUSK: That's education.

  • SAL KHAN: So with that-- and I apologize to all of you

  • guys for hogging up all of the time, because, obviously, I

  • could talk for hours about this stuff.

  • But we do have time, probably 5 or 10

  • minutes for a handful of questions.

  • If none of you all have any, I have about nine more.

  • But, yes.

  • SPEAKER 1: So I noticed-- I picked up two kind of themes

  • from what you were discussing.

  • One was somewhat audacious goals.

  • And the other was I don't think I heard you use the word

  • profit in anything that you spoke about.

  • You seem to be-- each thing is pointed at like re-invigorating

  • an 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, money coming

  • in, or I don't know, investors?

  • ELON MUSK: Unfortunately, one does

  • have to be focused on the short time and money coming

  • in when creating a company, because otherwise the company

  • will die.

  • So I think that a lot of times people

  • think like creating company is going to be fun.

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

  • I mean there are periods of fun.

  • And there are periods where it's just awful.

  • And, particularly, if you're the CEO of the company,

  • you actually have a distillation of all the worst

  • problems in the company.

  • There's no point in spending your time

  • on things that are going right.

  • So you're only spending your time

  • on things that are going wrong.

  • And there are things that are going wrong

  • that other people can't take care of.

  • So you have like the worst-- you have

  • a filter for the crappest problems in the company.

  • The most pernicious and painful problem.

  • So I think you have to feel quite compelled to do it.

  • And have a fairly high pain threshold.

  • There's a friend of mine who says,

  • starting a company is like starting into the abyss

  • and eating glass.

  • And there's some truth to that.

  • The staring into the abyss part is

  • that you're going to be constantly facing

  • be the extermination of the company.

  • Because most start ups fail.

  • It's like 90% percent-- it could be 99% of start ups fail.

  • So that's the staring into the abyss part.

  • You're constantly saying, OK, if I don't get this right,

  • the company will die, which can be quite stressful.

  • And then the eating glass part is

  • you've got to work on the problems

  • that the company needs you to work

  • on and not the problems you want to work on.

  • And so you end up working on problems that you really

  • wish you weren't working on.

  • And so that's the eating glass part.

  • And that goes on for a long time.

  • SPEAKER 1: So how do you keep your focus on the big picture

  • when you're constantly faced with,

  • we could be out of business in a month?

  • ELON MUSK: Well, it's just a very small percentage

  • of mental energy is on the big picture.

  • Like you know where you're generally heading for

  • and the actual path is going to be

  • some sort of zigzaggy thing in that direction.

  • You're trying not to deviate too far from the path

  • that you want to be on, but you're

  • going to have to that to some degree.

  • But I don't want to diminish the-- I think the profit

  • motive is a good one, if the rules of an industry

  • are properly set up.

  • So there's nothing fundamentally wrong with profit.

  • In fact, 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.

  • And if that's not the case, then you'll be out of business.

  • And rightfully so.

  • Because you're not adding enough value.

  • 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 KHAN: I think we have time for one more question.

  • Joel.

  • JOEL: Yeah, I have an important one.

  • SAL KHAN: OK, very good.

  • Yes, please.

  • SPEAKER 3: No.

  • JOEL: OK, so few months ago, you teased Hyperloop,

  • and we haven't heard anything since.

  • So, first of all, a few of us engineers

  • were talking about it, 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 MUSK: I was reading about the California high-speed rail,

  • and 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, we're in California,

  • we make super high-tech stuff.

  • Why are we going to be spending--

  • now the estimates are around $100 billion--

  • for something that will take two hours to go from LA to San

  • Francisco?

  • I'm like, OK, well, I can get on a plane

  • and do that it 45 minutes.

  • It doesn't make much sense.

  • And 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'd say, OK, well you'd want something

  • that relative to existing modes of transportation

  • is faster-- let's say twice as fast-- costs half as much

  • per ticket, can't crash, is immune to weather, and is--

  • you can make the whole thing like self-powering

  • with like solar panels or something like that.

  • That would be pretty--

  • SAL KHAN: That would be great, yes.

  • ELON MUSK: --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?

  • And some of the elements of that solution are fairly obvious,

  • and some of them are not so obvious.

  • And then the details-- the devil's

  • in the details of actually making something

  • like that work.

  • But I came to the conclusion that there

  • is something like that that could work.

  • And would be practical.

  • SAL KHAN: Is this around the evacuated tubes?

  • The vacuum tubes?

  • Like the old bank--

  • ELON MUSK: It's something like that.

  • SAL KHAN: But you haven't been more public with what this is?

  • ELON MUSK: No.

  • Although I did say that once Tesla was profitable

  • that I would talk more about it.

  • But, we haven't done our earnings call yet.

  • So I think I'll probably do it after the earnings call.

  • And the thing is I'm kind of strung out

  • on things that I'm already doing.

  • So adding another thing-- it's like doesn't-- it's a lot

  • SAL KHAN: Learning the guitar You

  • could pick up all sorts of things.

  • ELON MUSK: Right.

  • I tried learning the violin.

  • That's, by the way, a hard thing to learn.

  • SAL KHAN: Yeah.

  • Launching rockets, electric cars,

  • revolutionizing transportation.

  • Yeah, it's easy.

  • ELON MUSK: I cannot play the violin at all.

  • 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 was 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.

  • 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 like,

  • I want to journey to that place just to ride on that thing.

  • That would be pretty cool.

  • And so that's I think how-- if you come 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 that thing became available.

  • And it would be pretty exciting to do something like that.

  • Or an aircraft.

  • Like I thought it was really disappointing when

  • the Concorde was taking out of commission,

  • and there was no supersonic transport available.

  • And of course the 787 has had some issues.

  • But the thing is, the 787 even in the best case scenario

  • is only a slightly better version of the 777.

  • And it's like, OK, not that exciting.

  • SAL KHAN: So this is something that you are working on?

  • ELON MUSK: I wouldn't say working on it.

  • SAL KHAN: And one day in the not-too-far future-- or there's

  • some plans or consultants involved or something?

  • SPEAKER 4: You called Russia.

  • SAL KHAN: You made some phone calls to Russia.

  • ELON MUSK: No, every now and then, it's percolating away.

  • I'm not actually thinking about it.

  • But then they'll be some new element of that I'll think of.

  • Oh, this would make it better.

  • SAL KHAN: Fascinating.

  • Well, I think I'm speaking for everyone.

  • 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 know you have a lot of free time,

  • so it probably wasn't that big of a deal for you to come here.

  • But, it was a huge honor.

  • And I think it's inspired all of us

  • to go out and change the world and the universe.

  • ELON MUSK: Cool.

  • All right.

  • SAL KHAN: Thank you very much.

  • [APPLAUSE]

SAL KHAN: So first of all, I just want

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