Elon Musk talks about getting fired as Paypal CEO (2008)

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

Channel: Leonard

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Id: wKacw4zHj-Q

Length: 24min 50sec (1490 seconds)

Published: Fri Feb 02 2018

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[u/FoobarMontoya]

starts 3:30 for the impatient