The Impossible Speed of Elon Musk - Ex-Tesla President

So number one, I just wasn't sure I was ready to work for somebody else. And I wasn't sure that I was going to be helpful because the company was so big already and had such big growth goals. So it really took some convincing on his part and really my part to figure out if that was the right next step for me. My first concern, which sort of proved out in our first few weeks of interaction, was that I would overstep my bounds because I just wasn't used to having check-in with somebody. And it turned out that I did in my first two weeks. I overstepped my pounds, and it turned out not to be a fatal footfall.

Do you remember what was going through your mind during that pause? Yeah, I thought. First of all, I didn't even know if he was on the phone still because it seemed like forever. It was probably less than a minute. And literally, I was ready to ask him, are you still there when he jumped in? I got to know that that's how he processes. He kind of shuts down all other sensory stuff going on and just thinks. That's what he was doing, but I didn't know that on the other end of the phone.

concise and be rapid with bad news how did you guys handle disagreements we talked through them cheryl sandberg introduced us and so both of us quiz cheryl on how do you and mark manage your relationship. And she said, okay, we meet once a week, religiously, for at least an hour. We open with, here are things you've done that have pissed me off, frustrated me, disappointed me, whatever. So you clear that stuff first. And then you get to, oh, let's talk about the business strategy, whatever. So we sort of followed that. And he's not shy. Like, if he's upset about something, it's like right away.

The phone's lighting up. What the hell's going on? And I learned to be not shy too. And it helped because I was a conflict avoider before Tesla and I'm definitely not a conflict avoider now. Wait, go deeper on that. I was more of a pleaser. Loved to have teams that were productive and happy, but I would wait. wait, wait on confrontation, especially if I was upset about something. And he didn't. And at time, that was A-OK, because actually, it's kind of the way a lot of organizations work outside of business. It's the way, you know, if you miss a note in an orchestra, the conductor is letting you know right away. If you miss a play on the field, your coach is letting you know right away.

And I started to appreciate that that was a very effective and helpful way to keep a team learning rapidly. And you're talking about mistakes as much as you're talking about victories. A lot of people who don't avoid the conflict don't necessarily say that in the most receptive way to other people. Right, exactly. What have you learned about sort of communicating those messages to people as somebody who used to avoid it, but now is trying to be more direct? I had a mentor who said, if you're going to, this is kind of a coarse way of saying it, but he said, if you're going to slap somebody, they need a kiss too. And so I just learned to say, hey, look, I love working with you. I think you're super capable, but you just failed in this moment, or you're failing to solve this problem, or you're failing to lead your team. And I want to help you with that, but we have to address this. It is super harsh, I think, to your point when you just leave it as, hey, you're failing, and I'm so disappointed in you, and you may not have your job that's leaving somebody flapping i'd rather say hey look i respect you and i want to work i want to work you out of this but you got it we got to get out of this uh whatever this

tough tough spot is and would would you be specific with that person 100 yeah because clarity really matters i think both on the positive side and on the negative side if you're giving somebody feedback you got to be super clear about here's what i'm pleased about you did this super well. I watched you. Or you did this super not well. I watched you. How would you do this differently? Or let me give you some input on how I think you probably should do it differently. We talked earlier about sort of how the salespeople at Tesla weren't following up because they had no incentive to follow up. Yeah. I'm curious what you've learned about getting incentives right that you didn't know five years ago or 10 years ago.

I think I learned a lot from reading Charlie Munger and Charlie's, this wisdom from Charlie that if you want to know how a system works, follow the incentives. And in that case, there was a real incentive that was lacking. And once you put that incentive in place, now the incentive doesn't have to be monetary. It can also be cultural. And so Elon felt really strongly in that situation that we not have commissions because he wanted stores to be as opposite of card dealers as possible. And you know, when you go into a card dealership, everybody's on commission and you feel that as the customer. He did not want that feeling. So then the challenge was, okay, we as a team, I as a leader have to figure out how are we going to get that behavior without a monetary reward? And we stumbled across this thing. We put a leaderboard up on every store and the leaderboard was number of sales.

that month and we drew a line almost arbitrarily in the middle of that chart and people would do a lot to get above that line even though nobody explained what the line was for exactly it was just a what was called you know the performance threshold or something like that but there was no money involved there was no commission it was just oh i get it the currency here is i need to not only get test drives i need to sell cars so that means i need to ask for the order if i asked for the order i'd move up that list i'm above the line i'm in the safety zone whatever that meant um and so it doesn't always need to be monetary but uh you need to understand the incentives for sure in that case we created a non-monetary incentive how did he learn think about risk he thought and i agree with this he thought that the high.

highest skill in business is allocating capital. Because as a capital allocator, you have to assess risk, assess it correctly, so you're making a bet that ends up building your capital over time. And so, I started to think about that like poker, oddly. In every hand of poker, you can sort of run the math and understand whether you've got a bigger chance at upside or downside in that hand. And that then tells you how to bet. So I started to look for asymmetry on the upside or asymmetry on the downside. If there's asymmetry on the downside, we're not making that bet unless we can address the downside and get rid of it. And if there's asymmetry to the upside, of course we're making that bet. And that helped give people a framework, a construct that they could then easily process decisions because they knew my first question was going to be explained to me, is there asymmetry to the upside or downside here? And show me where it is. And if it's asymmetry to the upside, let's go. And let's allocate capital and let's run. But if we're unsure, then we have to ask the questions like, how would we create asymmetry to the upside so we could write this check, take this risk, et cetera. And when Eli and I were getting to know

each other, one of my hesitations was I said, I'm not a big company guy. I haven't had that experience why don't you hire a big company person to come in and run this company and he said because they don't know how to assess risk entrepreneurs do it's a skill you build over time as an entrepreneur and i want a fellow entrepreneur because chances are we're going to assess risk really in a similar way and then we're going to allocate capital in a really similar way it's interesting you talk about that because i mean millions of people including myself put their hands in Elon every day when we turn on autopilot.

Right, exactly. In our car. And the updates come fast. And I'm like, I can imagine a more corpo type CEO being like, man, we can only release two a year. Like kind of like the Apple cadence, you know, of- We have to test this and test it and like make sure that every version and every iteration, every possible combination, whereas he's more like, nah, we tested it. It's good. Let's go. Yeah, well, that gets run through a gazillion simulations before it gets released into the real world. So they can literally say, hey, Shane, you stopped autopilot just with some pressure on the steering wheel because you were uncomfortable.

So we're going to take those images from your car and we're going to try to figure out why you disengaged. And we're going to run that through a simulator over and over again. And we're going to try to put then a corrective action in place, train the system on that corrective action. And as long as that corrective action is running through the simulation perfectly every time, yeah, we're going to put that in the next build and release it tomorrow. But when you think about products that get released that instantly affect tens of millions of lives, right? Exactly. Yeah. Yeah. And his whole, that's just his speed mentality. Like, get it out, start the learning loop, start the feedback loop, make sure the corrective action has worked, and keep tweaking, tweaking, tweaking. And if you wait six months to do a release, you're going to stop the feedback loop.

So why would you give up six months of learning to be sure when you're 99% certain today and you can get six months of learning? Like, we're just going to get so much better, so much faster is the idea. A lot of people wait for perfection. I guess that's sort of like the core of what we're talking about. Yeah, exactly. And that idea is don't wait for perfect. Like, definitely don't make bets that are stupid. Like, if you have a 10% certainty that that update's going to work, don't release it, of course. because it could potentially break the cars, and it's going to kill your reputation. So don't do things that are foolish, but if you're like 99% comfortable, this is work.

In that case, like in simulation, release it, start the feedback loop, make sure that it's getting in the hands of people and don't wait. And that rapidity of release is a purposeful discipline within the software and autonomy teams there. Probably like you, I get two or three updates a week with different stuff that they're adding, fixing, et cetera. Makes you feel great as a customer because you're like, these people are so responsive. And when you read the release notes, you see, wow, like a lot of this stuff is useful and stuff that I have wanted to happen on this car. So it makes you feel great as a consumer that a product that is typically depreciating while you own it because it's static is actually getting better while you own it.

And that is very different than the way car makers think about their product. I had never heard it phrased that way before. That makes a lot of sense. Yeah, like our whole deal was like, could we add features that would appreciate the car versus depreciate the car? And every once in a while we found things that would, like you could get more range out of the car, more speed out of the car, less wear and tear out of the car. Like all kinds of stuff that you could put into a release over time that would cause it to appreciate, not depreciate, which is completely counter to the way the industry thinks.

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Go to maticrobots.com today and put Matic to work for you. If you were to create sort of a cheat sheet with the principles of good decision-making on it, what would be on that cheat sheet? I think the first step would be begin with the end, which is what is the outcome that you want? Decision-making gets flubbed up because people aren't clear on what problem they're trying to solve or what they're trying to solve for. So I've found that you have to be super clear on, okay, here's the end state that we want to achieve. Does everybody agree with that? Okay, if that's the case, now we can back up on this decision.

So on the way in here, I was talking with one of my partners. We were talking about an offer we've gotten from one of our companies. And we said, okay, what does success look like here? Well, it's a return hurdle. it's a valuation, and it's an outcome for this business. And we said, okay, with that in mind, now we can have super clear decisions because this offer doesn't meet a return hurdle and this company is probably not the right place for this business to land. So super easy. Let's not waste our time. And that clarity helps with speed and I think quality decision. So first step is you design.

and define what success looks like then you work back from there and say hey step two is what would need to be true for that outcome what would need to be created what would need to be different about our product our process whatever and then third step is what's the investment that it's going to take to make those things true and when you quantify the investment which is kind of hard sometimes. Sometimes you're taking a swag. Sometimes you can be more precise. But then you can answer the fourth question, which is, what's the impact on us doing this? Like, if we achieve this end goal, and let's say we develop a new product, and that product is going to have $100 million in revenue, but it costs us $200 million to build the product, now we really have to be thoughtful about, are we going to get the return on this? Does it have the impact versus is the effort. And so the last step of the decision process is literally creating that two by two. What is the impact versus the effort of doing this? And then how does that stack up against the other stuff we have on our plate? Because we may have super high impact, super low effort stuff that we had to just do. And we don't have endless amounts of calories to burn. So we

now have to choose where we're going to allocate our capital and time. And that last effort versus impact chart for me helps me figure out where we allocate, uh, where we allocate our capital and our time. How do you think about opportunity cost? Opportunity cost is within that last step because you can't do everything. So, uh, so you've got to choose, okay, which, if we have a finite set of time or a finite set of capital, like we have to allocate with that finite mentality. So some things aren't going to make the list and that's opportunity cost. And, and so in Elon's world, he was like, well, let's raise more capital so that we don't have that constraint because he's a prolific capital raiser. So he can unconstrained that chart in a really interesting way as a leader, because he's providing more capital to allow you to do more. And so that reality distortion field is kind of fun. Uh, if as a leader, if you can increase the capital into the business, then you can actually hire more people and increase the time that you have to allocate to so you can get more stuff done. But there's always an opportunity cost because there's never infinite resource. So you got to figure out the stuff you're not going to do. And Sheryl

Sandberg taught me that your no list ought to be a lot bigger than your yes list. And you ought to be decisive about what goes on that no list. So there's no lack of clarity when you get down to that impact versus effort in which things you're saying yes to. You got to be really clear about things you're saying no to and that no list is your opportunity cost i'm curious about we talked about making decisions fast in the workplace what about making fast decisions in life i think broadly a lot of people have a need to have perfect information so that they can feel good about a decision and what i've found is you're rarely going to have perfect information and a of your suppositions at the start are going to be wrong so you might as well just get started don't wait for perfect information just get started and you'll kind of figure it out as you go that is a uncomfortable for people for some people uh who definitely want to have more certainty before they start but i've found if you just get started you're going to find you're going to find the parameters that will lead you to more comfort around the final decision that you'll make action creates information. Action creates more information. Information creates more certainty.

And you don't have, by definition, you don't have information at the start. So you have imperfect information. And that there's a reason why you're feeling uncertain. I was thinking about this the other day, because if I wait and you don't, by the time I get started, you've already learned things that I couldn't even learn in advance of doing it. That's that feedback loop speed. And so like you start to learn. And you're building an advantage as long as you're moving, as long as you got started. But to your point, if you don't get started, now you're way behind on the learning curve. And a lot of learning curves accelerate.

So you definitely want to get started so that you start to build the experience of even making mistakes ahead of your competition. Because they're going to make those mistakes too. If you make them and learn, you're going to be several steps ahead in the race and hard to catch. How did your process differ from Elon's when it came to decision-making? The way I'd describe his decision-making is he's very rational. And I would try to be rational, too, in my decision-making. But he's unconstrained. He's very unique in that he's unconstrained by constraints, really. And so I remember sitting with him in 2017, 2018.

and they'd had a string, a long string of really unsuccessful launches at SpaceX, but rockets were blowing up in the air. And unlike typical people who would have done a bunch of reflection on that and may have gotten bummed out and thought about the company can be out of cash before we were actually successful, he was totally focused on here, the two things that have to be true for that not to happen again so that we can get a successful launch. and he's just very unique on to shut off the negative and focus on what has to be true and achieve that he's one of the most unique people i've ever met who's like who has that ability to shut off failure essentially and it just doesn't impact him at all no he's really like isaacson talks about this in his book he's uniquely wired given all the challenges he's gone through and yeah i don't think he's he's impacted by that at all typically has a very different way looking at the world and doesn't care.

And speed comes from feedback loops. And one of those feedback loops is using your own product. How important is that frontline data? Like when a customer goes into a car and they have feedback or comments on it, Does that get collected along with repairs and damages and faulty parts? 100%. And all that's getting analyzed and then served up and saying, okay, here's the stuff we got to work on. And we knew that because we were users of the product. So oftentimes we'd know it too. How else do you figure out what customers want?

Like you mentioned that being a key to how the product meeting started. There's a lot of people who, I mean, Jobs didn't ask what people wanted in a phone. No, he had design instincts. And I think there's this balance between being instinctual and also being informed. And so to be informed, like a lot of us as leaders have different ways of doing that. My way of doing that is going out into the stores. I learned this from Sam Walton, actually. I read his autobiography. And one of the things that really struck me was how much time he spent in his stores, asking his people, like, what product is moving?

What product isn't moving? What do we need? What do we need to get rid of? What does the competition have? And then he'd go shop the competition. And so my method was to go one day a week to the front line somewhere in the world. So I'd go to a store. I'd go to a service center. I'd go to a competitive dealership, and I'd just ask customers, like, what do you like about this product? What don't you like about this product? What would cause you to finally come across the line and buy this product from us? And that was a form of input then that helped me round out the data that we were getting from, you know, pretty standard sources with standard ways of analyzing that data.

it helped bring color to it. And I could say like, yeah, I've talked to like 20 moms who want this bench seat and I've seen the fire and the energy in their eyes. And if we deliver this, they're going to buy it. I can tell you. So that's part being informed and part instinct. Like I'm seeing the energy behind this personally. I think this is going to go. And then you have immediate data to course correct if it's not. Exactly. If it's not. Yeah. What are the key tenets of a great product when you think about a great product like a tesla or other products what do you think they have in common i think they're simple uh in their design which gives gives them a chance at being elegant uh and so if you think about like when the iphone came out it was such a step forward in design we all had flip phones with keyboards and the blackberry yeah yeah and all of a sudden this beautiful thing came out is because a designer, Steve Jobs, said it should have no buttons and it should be beautiful in the palm of your hand. That's a very simple construct from which Johnny Ive and the team created beauty. And I would say that it works similarly at Tesla in the sense that Elon kind of constructs in his mind, here's the simplicity of what I want this

vehicle to do. Then he goes to his version of Johnny Ives, which is Franz, the head of design. And Franz can bring that to life in a very beautiful way. And so you have this pretty simple car, the Model Y, that is the number one selling car in the world. It outsells Camrys, it outsells RAV4s, and it's utterly simple in its design, its interior. has no bells and whistles, really. It doesn't even have a dash that you look at. It's got one screen that sits in between the passenger and the driver. But that kind of simple beauty allows you to execute, I think, a great product. And the definition of a great product, in Steve Jobs' mind, and Elon's adopted this too, is that you don't need a sales force.

It sells itself. And we found that when we went to hire salespeople for our stores. If we hired people out of Apple stores, they really didn't know how to sell. Because they knew how to take an order. People were clamoring for those devices, and they didn't have to sell them at all. The people that you wanted in the stores were people that were at the Microsoft stores, because they had to sell a Surface tablet next to an iPad. And if they could sell a Surface tablet, they probably knew how to sell. And I think great product does, at the end, sell itself. Like, it flies off the shelves, because there's pull out of the market versus push.

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And it tastes great. Stay sharp in the afternoon and grab a free eight-count sample pack with any purchase at drinkelement.com slash TKP. That's drinklmnt.com slash TKP You mentioned Jobs There's a story about Elon and Steve Jobs meeting Yeah Do you remember that one? I do As Elon tells it, they met several times And Steve kind of blew them off a ton And then one night, Elon had him cornered I think at a sushi place in Menlo Park And said, basically, just give me your design philosophy. And Steve said, that's, that's easy. Uh, if the product is perfect, it will sell itself. So you have to work on perfect product. And that's stuck with Elon. And a few months ago, I got to sit down just for breakfast with Steve jobs, his head of his chief of staff at that point.

And he described for me, like how product design work. Cause I said, James, I want to know, like, how did you really design product he said we started with utter simplicity and requirements but they had to be right and i said so give me an example of that he said okay get in the way back machine mp3 players were coming out people could have portable music on a disc drive for the first time in their hands and we wanted to come out with a product and so steve and i got in a room and this is the way product design happened we spent a week in the room we didn't come out until we were absolutely certain we had nailed the primary two or three requirements for the product.

And I said, okay, what were they for the iPod? He said, we came out and said two things had to be true. And we announced this to the engineering teams. were working on it number one it had to hold a thousand songs nothing could do that at that time and you had to find the song you wanted in four seconds or less and those are the two things that had to be true about the product and lastly had to be beautiful and so the engineers heard these two requirements and like first of all we don't know how to do that there's no disk drive the size of your thumb that's going to hold 1,000 songs. And there's no OS that gets you to a search on a device that big with no chip, essentially, that gets you a search algorithm that will work that fast.

And so they had to invent both of them. So they ended up inventing a new form of solid-state drive that was as big as your thumb that could hold 1,000 songs. And they ended up inventing a chip that had the clock speed to index those songs in search. and then the the ux team invented you remember the wheel where you could search with the wheel like and so you would you would immediately get to the first three letters of the song and boom the odds of you're finding that song within four seconds skyrocketed james described to me as they were working through the engineering on the product the engineers would come and say hey look samsung has an fm radio on their mp3 player should we have an fm radio and steve would look up with a little bit of anger and say, is that 1,000 songs or four seconds?

No. Okay, then it doesn't go in the product. These are the two things that go in the product. Solve these two things, we have a winning product. Because it's what the customer wants, and we could describe it to the marketplace super simply. And so I think those are the principles that Elon pulled from, a lot of Silicon Valley has pulled from jobs, but Elon definitely pulled those from jobs. And it goes right into the design ethos at Tesla. I want to come back to marketing for a second. Tesla doesn't do any paid advertising that I noticed anyway. I think they do now, but they didn't while I was there.

And it was one of the challenges in the job. Elon said to me, hey, like, there's something in this job you ought to know about. It's something you probably haven't faced before. I said, okay, what is it? And he said, the marketing budget here is precisely zero. And you need to double the company every six to eight months with no marketing budget. I'm like, you're right. I haven't seen that before. How do you do that? And he's like, I'll show you. And he was great at, he still is today. He's great at capturing headlines. And those headlines get preserved, they're searchable, and then they're repurposable on social.

And that today is still the marketing model of Tesla. Have you learned anything from that that you took away now? Oh, 100%. Like I'm very suspect of large marketing budgets now. Because I've seen one of the world's largest companies get built with almost no marketing budget. How do you go about marketing that way without being Elon Musk then? Like, what are the other things that Tesla was doing that? Like, Elon was an Elon back in 2014, 2015 when we started doing this. He didn't have 100 million followers on X. And we had to build up his audience, which we did purposely. So we built it up first through space, because there's a lot of space fanboys on X, on Twitter at the time.

Build up his fan base. and then we started to build more car content in and and he was super involved in this he would coach us on like this is the only kind of stuff i'm going to release because i got to watch my brand and be aware of my brand and tesla's brand here so we got to be really careful wait he would coach you on that oh 100 like he's got a very good brand i've seen some of his tweets i know well like if you think about though with tesla back in that time, if you go back and look at those tweets, it was only product marketing. If we came up with a new product feature, all-wheel drive, boom, that was getting released. If we came up with a new car feature, ludicrous, boom, that was getting released. And we were being very thoughtful and almost with scarcity, having him blast...

These things out. And we would use the press around this. And then we would repurpose all the press we got. And that was enough to create a buzz around the globe. That this stuff, this car was really different. This company was really different. And all we needed to do was have you come check out the product online or in store. That's then when we could pull you through the funnel.

I think you were in the car when Neuralink started. Yeah, when that seed or kind of German of an idea started, for sure. What happened? Elon and I were traveling together to China. We just landed in Hong Kong. We're in the back of a Model S, and we're both, like, catching up on our inbox, on our phones. And he looks at me, looks over at me and says, how fast can you type with your thumbs?

And I said, I have no idea. I've never timed it. He's like, well, the average human's like 18 words a minute. He said, how fast can you type on a keyboard? I said, like, I think it's like 60 or 70 words a minute when I was in high school. I'm probably as good as I was then, maybe better. So let's call it 60. He said, exactly. So you are more than three times faster on the keyboard than you are on your phone. So this device has slowed the input into the machine. And I said, yeah, it has by 3x. And he's like, yeah, that's a big deal. because you can't get speed of answers and decision-making if you're going three times slower.

I said, yeah, you're right. He's like, what if you could think into the machine? And I was like, well, that would blow this constraint away because now we don't have keyboards and thumbs to go through. Now you're like thinking in real time into the machine. He's like, exactly, that would pull the front-end constraint off of the compute for humans. That's a big deal. So he didn't sit on these ideas. He's very unique in this way. And he said to his chief of staff, Sam Teller, who's in the front seat, Sam, can you track down the top neuro-computer science interface researchers in the world? Get their papers.

I want to read the papers while we're here in China and on the flight pack. And I want to meet with these people next week. Because I want to start to work on brain-computer interface. And just like that fast. So by the next week, he's meeting with some of the top minds in the world on this topic. And he doesn't let go until he starts Neuralink. I mean, multiple insights there. I love the speed to actually taking action. Yeah. And now we have chat with like AI or your sort of like voice mode. Right, exactly. Which is much faster than typing. Yeah, like one of the hottest companies is Whisperflow right now, where you just talk to your computer and you kind of give up the keyboard.

and you can code and you can design. Yeah, it's amazing. Your book is called The Algorithm.

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What goes through your mind when you're trying to simplify something? I start with the first step of the algorithm, which is why does this appear the way it appears? What are the... requirements or base assumptions that have gone into this product. Why couldn't it look different? And I'd start to pull the string from there. I often don't start with a vision of what it could be. I start with, how would I just take apart what currently exists? And in that process, you start, this is something I learned from my grandfather. He had this auto repair shop, and he would often say to me, if you don't know how to fix something, you will probably know how to fix it if you take it apart.

So that's typically the way I approach a problem is I start to take it apart, like my grandpa taught me to do. And then once I'm now into it and see what the critical parts are, then you can start to say, does this really need to exist? Could this work differently? And you just start to pull the string on what could work. What percentage of the time do you think when you dive into requirements that maybe they once were needed, but they're not needed, but nobody even knows why they're there anymore? work you know i should talk about this like we used to compare it to a garden you plant a garden and in business like nobody goes out to weed these gardens and so weeds just grow it's a the garden being a process and so weeds just grow up and nobody's back there with the weed whacker whacking them out and every once in a while an executive will say well this is totally broken let's go back there with the weed walker and whack it out but that happens like once every five years 10 years and so he wanted to and he wanted to build a culture where we we had the weed whacker out a lot like we were looking at current process and questioning why we're doing it and so like he can an example that is he came to me one day and he said what crm do we use and

i said salesforce he said well it's a tax on growth every time we add a seat in this company we pay a subscription. That's a tax on growth. Do we really need Salesforce? And that was a typical question, the kind of question I would get from him on a weekly basis, where he's looking at a garden that hadn't been weeded in a long time and saying, I'm just going to take a weed whacker in there and start asking questions. And like, do we really need this? Could we rebuild this ourselves? Could we approach this in a different way and that is definitely part of the uniqueness of the culture of tesla and spacex for sure

I didn't see that at the time, but I'm super glad that they have. What is it about some people like Elon and Steve Jobs that allows everybody around them, or a lot of people around them at least, to say that they do the best work of their lives? I think it's the challenges that they get. Like it's Doug Field, who I described earlier, used to have this mantra that history is changed by unreasonable men. And I would tease him because he worked for Jobs before he worked for Elon. And I was like, man, you must be a glutton for punishment. He's like, no, history's changed by unreasonable men. Do you want to work for these people that just have an unreasonable view of the world because they bring out the best in the people around them? And he's like, I like working for people that bring out the best in me.

and both of these, both of these guys have. And so I think that comes to like just the challenge that they give people. And so like, if you're really great at your craft, I think you want to be coached by, led by, um, somebody who is going to bring big challenges to you. So you end up saying, geez, I, I didn't know that I had that within me. Uh, I didn't know I could do that. And then you feel super, super good about the leader that you're, uh, that, that you're following and it's given you those challenges. I remember when the Isaacson book came out about Steve Jobs, everybody where I was working sort of read that and then started to be assholes effectively, thinking that was the key to success.

Do you witness any of that? Yeah, I think over time as you mature as a leader, you realize you got to lead with your own authentic style, not somebody else's. And when you start mimicking somebody's style, like the people mimicking Jobs, doesn't really work well because people see it's inauthentic and it doesn't really work for who you are. And, and even though I was working for a big personality like Elon, I couldn't like mimic that. I had to, I wasn't going to be authentic. People weren't going to follow me. I had to lean into who I was as a leader. And, um, and I think that's super important. And when people start to fake that, uh, it just doesn't go well. And to that point, like I asked Walter one night, we were at one of the stops on his book tour and I got to interview him, which was awesome.

And I said, do you have to be an asshole to be successful? Like jobs, you read this book and it's, it's pretty clear the guy was big a-hole. You've written about a number of these people, Einstein and others who are kind of a-holes. And, um, he said, no, you just have to like, you have to master your own style. He said, do you think Satya Nadella is an asshole? I said, no he's not he said do you think he's effective i said yeah i think he is he's like are you an asshole i said hopefully not he's like you're pretty effective at what you do i said people tell me i am he's and he said it's not that you have to be an asshole it's you have to be authentic to who you are when you shop kroger delivery you can expect the savings you love and fresh groceries delivered right to your door Refrigerated trucks keep your items fresh while our associates are committed to getting every detail right.

Carefully selecting and packing your order with care. Because bringing you fresh, quality groceries is what we do best. And right now, enjoy $20 off your first online order of $75 or more. Restrictions apply. See site for details. Kroger. Fresh for everyone. You have an exercise that you do called Fire Yourself. What is that? Walk me through it. It's actually not mine. I've got to give credit where credit is. this came from Calvin McDonald, who was the CEO of Lululemon at the time. And he asked himself, he would go away in the first quarter of every year to really kind of prepare and gird himself up for the year to come. And one of the questions he would ask himself when he went away by himself is, if I was hit by a bus tomorrow or if I was fired, what are the immediately obvious things that my successor would do like they would come in and assess the situation and say oh this was obvious got to do this this and this like right away and so he would list out those things like what would my successor do and then he would ask himself like why aren't you doing this and oftentimes it was because other things seemed more important he was fearful uh that that could be a big risk it might not work whatever uh he was fearful of

making a change because he would be replacing people maybe uh disappointing people whatever but he he did this fire yourself exercise so he could come back within the first month of the year and say you know what here are three things we got to do because these are obvious and if i was hit by a bus there are three things that you guys would do without me so like let's just get him done. And it was a real refresh for him and for his leadership team to kind of keep the ball moving downfield. And it was super healthy. So, yeah, I borrowed that from Calvin. You're on the board at Lulu. You mentioned Lulu. You guys just hired a new CEO.

Walk me through what went into hiring that CEO. I would imagine that there's a difference having you on the board, an ops person versus financial people versus... Yeah, and so we all bring a perspective, and Heidi O'Neill is the new CEO. We knew that we needed somebody who had an eye for product, because product is core to every company, but it's certainly core to an apparel company. Who had an eye for talent, who had an eye for scaling. and in the uniqueness of lulu had an experience with a vertically integrated organization what i mean by that is lulu not only designs its product and uh and manufactures its product it sells its product in its own stores like it doesn't sell through a wholesale relationship through dick's sporting goods or nordstrom or anybody else so it's somebody that has come out of a world where you have stores, which are deeply operational. Stores are almost a mini factory. How many people come in on a daily basis? What do they see? How do they interact with the product? And do they buy? And there's a whole operational science to how you get a store to work really well. So we needed a leader that understood stores and understood the product machine behind the stores. And Heidi had both of those. But as we sit down to select a leader,

we'd put the parameters around here's what would make the core skills of this leader to be successful. And then we're interviewing candidates each from our perspective. For me as a sitting executive who scales, we've got, as you mentioned, finance people, we've got tech people, we've got product and marketing people all around the board who are assessing the candidate from a bunch of different angles. But essentially, we're agreeing, hey, here are the four things that need to be true about this person and why we're hiring this person and why we're going to have faith that this person is the right person for the next chapter of this business.

What's your instant tell when you're interviewing somebody for sort of talent, world-class talent? It is their detailed understanding of what they're describing. Go deeper on that. Because the thing you want to make sure that you're understanding is, did they do or do they do the work? If they have a deep understanding, they're going to be able to do that work here and lead that way here. But if they're claiming responsibility for somebody else's work, it becomes evident really quickly when you start to dive into, tell me how you did that. Tell me how you broke this problem down. Tell me what the solution was.

Tell me what your role in that solution was. And that's the first clue that you're talking to somebody who is actually a practitioner versus maybe a paper pusher. And I'm definitely looking for the practitioners. You spent a lot of time at Tesla interviewing people. You were one of the final interviews for— 40% of my time was interviewing. Because in any business, especially in a high-growth business, talent wins. And so you've got to be really devoted to talent selection. and uh this works again outside of business it works in the arts it works in sports the best executives of teams are really great talent selectors and they put great talent on the floor or on the pitch or the field at the same time and that in a growth business i feel like is one of the primary responsibilities of the leader is the is talent selection setting the bar and then also attracting the talent that meets that bar to come into the org and make a difference.

So a lot of times when people do that and there's a final interview and somebody's gone through four or five interviews before then, it's kind of a rubber stamp or a culture check or I don't get that vibe with you. What was that interview like? The final interview is, to your point, they've been through multiple interviews to prove they're world class. And so I probably, in a lot of cases, I want to do a double-click on that and understand that for myself. Like, why did the team believe this person is world-class? I want to understand that. So I spend first half of the interview really diving deep into, are they world-class?

Do they have this experience? Do they do the work? Do they have this detail orientation that's going to help them be an effective leader? Then if they check that box, then we flip to the second half of the interview, which is, okay, now I have to do cultural imprinting. and what i mean by that is like every entrepreneur struggles with hey as we grow how do we preserve our culture and one of the hacks that i learned from ilan was that oh you do this final interview where you're cultural imprinting on everybody and you're explaining to them here's how the culture works here's the currency of success here uh and here's the attributes of people who are successful and here's what we expect from you in this role and that cultural imprinting is the reason for the last interview because it's your one chance as a leader to interact with this person who you may not see all that often after they're hired depending on their position but you at least want them to have the secret decoder ring to success and to describe here's what success looks like here so if you behave this way if you deliver this way you're going to be successful here and we're going to see each other again for sure.

And this is the behavior that I'm going to expect from you and that you're, whoever, what team you're working on or that leader is going to expect from you. That is the purpose of the final interview, is to do that cultural imprinting. And so we're growing from 4,000 to 40,000 people. We're doing a lot of final interviews of managers and above doing that cultural imprinting. If I started working for you tomorrow as one of your direct reports, and I asked you, how do we build trust? What would be your answer to that? We need to communicate with clarity. And so I would say like one of the currencies here is getting things done.

And so our talk-do ratios are kind of inverted, but when we do talk, we're concise, we're clear, factual. If we have an agenda, we just put that out because it's super frustrating if somebody has an agenda and they're sort of cleverly trying to hide that agenda. I would just rather you be frank and clear. So that's the kind of discussion we would have. I was having a discussion with a member of our team yesterday. They were kind of beating around the bush on an issue that really mattered to them. And I said, hey, just what's your ask? Just tell me what your ask is because then we can have a real discussion.

But right now, I feel like we're kind of dancing around an issue that I really don't understand. Can you give me clarity? And so often I'll say to somebody, like, if we're going to work together, the best gift you can give me is clarity. If I'm messing up, just be really clear about it. If you see an opportunity, be really clear about it. Just give clarity, which means, again, you've got to stop, simplify to be concise, and be really super clear about what it is that you want out of that conversation. Can you walk me through a time you failed at something that mattered a lot to you? Oh, geez. Yeah.

Trying to sort through the many examples I could give you. There was a startup. This was my second company. And I formed this company with people that I'd worked with in my prior job, including my boss. And the guy was, he's a great guy. He's 10 years older than me, very strong personality. And I had written the business plan for this business, and I had a vision for growing this company organically. And he had a vision for growing the company through M&A, and so growing it inorganically. And we started the company, and we didn't reconcile that difference in strategy and approach. and part of it was because i was just young i was 26 at the time 27 and uh i really hadn't learned how to how to communicate and resolve difficult issues and so i'd lay that on me but we let that conflict just sort of grow unchecked for the first two three years of the business And luckily, we were each having success, me on the organic side, him on the M&A side, and the company was growing.

So from the outside in, it looked like a huge success, and it was a very successful outcome. But the people in the company were caught in between these two battling visions of the company, and they knew it all the time. The tension was on all the time. And we never really reconciled that for them. When we sold the business, I remember like it was a great outcome for investors. And I remember talking to a few of the key people that were on the team and they're like, I'm just so relieved that this is over. And instead of celebrating like we were all having a win hitting the finish line together, people were like, you guys were terrible as leaders because you never reconciled two very opposing views.

And you just let that tension blossom within the org. and the result was some people chose sides some people were battling all the time you guys were battling and uh and i really regret that like it was it was something that i never wanted to be a part of again and uh and yeah obviously you don't go you don't get a redo on that company but i've tried to like i've tried to break that path in companies because I felt like that was a real leadership failure on my part that I knew was there. I can't blame it on being inexperienced and young because I knew it was there. And I probably could have better figured out the tools to reconcile that and confront it, but we didn't.

What are the top three business books that you give away to other people and what's one lesson you take from each of them? The top three books that I've recommended most consistently are a book called The Goal, which is by Ellie Goulrat, who's an MIT professor. If you want it to learn about operations principles, like leading operations, that book totally changed my life. Second book is If You Want to Live a Life Worth Living. Steve Covey's old book, The Seven Habits of Highly Effective People, really impacted me. And then the third book that I've read over the past couple of years is Unreasonable Hospitality by Will Godera.

I think it applies to every business. It almost applies to every life, every aspect of life. If you make the person across from you feel hospitality and dignity through that hospitality, it's powerful. Like, if you make customers feel that way, you're going to sell a lot of product. And so I hand people this book on running a restaurant, and people are like, I'm in business. This is why you handle me in this book. I'm like, you'll get it once you read it. So those are the three that I probably, that have affected me significantly that I pass along to others. Can you double click on the concept of vertical and horizontal mentors?

Yeah, I think when people ask me like, what's the great hack of a career? The first thing I think that comes to mind for me is mentors. Because mentors are such a accelerator, unfair advantage. In my experience, there's two kinds of mentors. There's a vertical mentor, which means somebody has been down the path ahead of you. There may be a generation ahead of you. They're an older leader. They've seen the movie before. And so when you come to them and say, hey, I'm like dealing with this. Have you seen this? They're like, oh, yeah, I've seen that movie. Let me help coach you through this. Then there's horizontal mentors, which I found to be equally valuable.

And those are peers that are going through the same stuff you are, the same challenges. um it's best if they're in a similar situation so i i would build over time groups that were in similar businesses similar size similar growth rates so that we had a common set of problems and with those mentors it's different like we none of us have seen the movie before but when you look kind of at a side angle through to somebody else's business challenge you often or teaching yourself is and so we would get together on a quarterly basis for a day and a half or two days lay out the biggest problem we were facing total chatham house rules nobody it's total confidentiality and i found that those five or six people could totally help me work see a problem differently because they were looking at it through a side angle um where i was looking at it head-on and so the combination of horizontal mentors like that and vertical mentors are super important so you need to have both in your life constantly if you can and it's a total hack what makes for a good vertical mentor i think the ones that come to mind so i've had three excellent vertical mentors a guy named scott porter he's my first boss guy named fred

missoni who ran one of the largest manufacturing businesses in the world and uh and scott cook He was the founder of Intuit. All three of those individuals are unbelievable teachers. And Fred, the second one I mentioned, would tell me over and over again, like, when you become... a really good leader, one of the signs of that is you've become a very good teacher. Because you're multiplying your skill set, your insight, your method, whatever that is. And Fred was a great teacher to me. And Scott is an unbelievable teacher to me. And I think that's the difference in that kind of mentoring is they're just super patient teachers.

Scott's into it, right? Yeah. What has he taught you? I really want to, constantly I want to get better product development. And so I came to a session with Scott. We would often either meet at his house or we'd do bike rides together. And one morning I asked him on a bike ride, I said, can you explain how you run product development, product management to me? He's like, yeah, I'll do that when we get to my house. So we eventually get to his house And he describes this tool set to me that he uses called Follow Me Home. And there's two parts of the tool. But one that he uses is that he brings actual users of the product into a conference room where those users sit at the table.

And on the walls of the conference room, external to the table, the management team sits. And they watch him do this exercise. So, basically, he goes to the whiteboard and says, what are the three things that you think we need to fix about this product? And so, people, each one of them lists their three things. And then the second half of the whiteboard, he's like, what are the three things that drive you crazy that you wish our product had, but it doesn't have today? So, three corrections, three builds. And then he says to them, he got this full list, And he says, okay, you get five votes. You can stack them all in one thing.

You can spread them out. But go to the whiteboard and vote. And he said, a miracle happens every time you do this exercise. Everybody votes for the same things. It becomes ultra clear. You emerge with the three things you need to do because all the votes are on, not on the 60 things, but on the three things. And he says, the miracle is the management team is in there. And they get the emotion and energy of the customer who's frustrated or wants this or whatever. And the product roadmap becomes absolutely clear. And I was like, Scott, that is brilliant. And I was transitioning from Tesla to Lyft at the time.

And so I remember sitting down with a key leader at Lyft, Woody Hartman, who has been the COO at Lyme since then. and said can you do this with drivers can we run one of these exercises can we get drivers in the room and figure out what would what needs to be true about our product and so i remember woody and his team ran this exercise the scott's follow me home exercise with uh with our driver team and they came they came with these brilliant insights that led the product roadmap for lyft for about a year and i remember what are you coming out of that session he's like this was so simple i can't believe it. And I was like, yeah, you just got to thank Scott Cook. Like he taught me this literally in 20 minutes one morning and it's ultra effective. So it's an example of like one of the things you can get from a vertical mentor. And I got that from Scott and it's completely helped me be a much more effective product leader. That's an incredible idea. Totally. Yeah. Super simple.

Yeah. Yeah. You were at Lyft. You were the COO during an 18 month period. I'm curious what What lessons you took away from that experience? I think a lot. It was a really unique, special moment in time in that we had a competitor, Uber, who was 80% of the market share, and Lyft, who was 20. And I had arrived right in time for a delete Uber. So the CEO of Uber had totally offended the customer base and people were looking for an alternative. And so we were luckily positioned as a nice brand and the trusted brand. And so we were able to double market share with some really good execution on the team.

This wasn't obvious how to do it, but we figured out how to do it. We doubled market share and doubled revenue. and then we're able to take the company public. So I think the lessons from that Lyft era for me are product positioning super important and especially product positioning counter to the other alternatives in the market in a positive way, super important. Second lesson of rideshare specifically, but then can be applied more generally, is Lyft and Uber began early on to compete on price. And any business that competes on price ultimately is called a commodity. There's no difference between a copper pipe, really, from producer A, B, or C.

They compete on price. And no brand positioning in the world is going to save you from that. And so once you're competing in a commodity market, now you have no basis from which to collect rents. And so your profit margins collapse. Well, not only that, they both had stickers on cars. They basically told customers the products are interchangeable. Exactly. And the apps are interchangeable. They told the drivers the apps are interchangeable. The markings on the car, you're right with the stickers, told the customer that it was interchangeable. And so all that mattered was price. And so one of my lessons from the rideshare industry is be very, very, very, very resistant.

competing on price. When you start competing on price and promotion, you're changing the whole nature of the product and the brand. If you could go back and make one decision differently that you were there that would have massively altered the future. I would have really tried to pat on the table to convince the founders, if we create a brand position here that's superior, we'll be able to command superior economics. But by that time, And they were multiple years already into the price competition mode. And getting them to see that just wasn't possible. But if I could, if I had magic dust, I'd change the dynamics of the competition in the market.

So that you could have a business that made money. At that point, neither company was making money on a gross margin basis because they were underpricing the product to compete. That's just insanity. What are you like as a board member? Because I've grown up, my entire career has been a CEO. I'm a very CEO-oriented board member where I want to be helpful and useful and be a sounding board to that CEO. And so I'd say to them, like, if you need to call me into action, you can call me into action. Like, if you want to meet with your engineering teams and be a part of the feedback loop on your product, I want to eat the dog food.

Of course, I carry the fiduciary responsibility that a board member carries to the shareholder. And that's my primary thought. Like if I'm building into the CEO and being helpful, we're going to build enterprise value that's going to be reflected in the stock price. And so that's how I reconcile those two things together. Not a lot of board members do mystery shopping. Why do you do that? What do you get out of that? Because I get what's really happening. What do you ask people when you go into a Lululemon? See, I've now refined it down to one question. Like, if you had the keys to the place, you were the CEO for a day, and you could only do one thing, what would you do?

And you don't get like... 500 different answers when you ask that question. You typically get a pretty tight set of issues because people have to be thoughtful about it. They're the CEO, they can only do one thing. But it doesn't take them long to come up with, oh, I would do this, I would do this, I would do this. And that's the question I ask. And then I bring that back to the CEO. I say, okay, like I was in your stores the past couple of weeks. I asked the question, here's what came back. This may or may not be valid, but hopefully it's an input you can use. At DVX, you've created a method for starting companies, like almost like a framework for it.

And we're about ready to launch the next three. How do you think about time management? It really comes down to, like, this is what Steve Covey taught me. and the seven habits. And it's really all about how you structure your day. And so I think about time management is around the things that are most important. So I kind of have blocks. And there are literally blocks in my calendar. If I pulled out my Google calendar, it would show here's an exercise block, here's a family block, here's a work block, a few work blocks.

uh and i manage my time around those work blocks part of the method to the madness with those blocks is is work blocks where i can like totally concentrate i shut down everything else and i just work that one thing uh and uh it tends to be higher quality because i'm not switching back and forth and i've got a longer period of time so i'm not time pressured to to make progress I've got two or three hours to, like, really wrestle with something and get it off my plate. And I use just different techniques within, like, one lean manufacturing technique rule is you touch it once. So that means if I open an email, I'm answering that email.

I've touched it. I don't want to touch it once. I don't want to, like, put it back as unread and then touch it again later. So I try to be super efficient with my time with little, like, hacks like that. Like, touch things once, process it, get it out. and then concentrate your time on the stuff that really matters. What are some of the other lessons you learned from Elon that didn't make it into the book? I think a lot of entrepreneurs have taken inspiration from him to work on big stuff that matters. And we used to joke about some of the best minds of our generation were focused on getting people to click on ads.

And that made me want to do something bigger Because I was like, yeah, I don't, that doesn't satisfy me. I want to do something bigger that's more helpful and useful. And so I think his tackling big challenges like space, like robotics, like artificial intelligence, et cetera, like he just doesn't shy away from these big challenges. He's very commercial in the sense that he finds a way to make, to make it, to create wealth and to make real businesses out of these things. but he doesn't shy away from the big big problems which is i think why larry page said hey like rather than giving all my uh all my wealth to a philanthropy i want to give it to elon because he's actually going to create jobs he's going to create tens of thousands of jobs if not hundreds of thousands of jobs and that really has direct impact on people's lives and uh so i think that's one thing that I take away from him was the challenge to work on big stuff, stuff that matters. But it's not only big ideas that are pulling you forward. It's like big challenges internally. Big challenges. Exactly. So you look for the challenge. You look for where people have shied away because the challenge is big. And it's typically like at DVX, my firm, when we start

looking at a business opportunity or company opportunity, because we invent these companies from scratch, we look for a big technical challenge that exists. And that's why the opportunity is still there because it hasn't been solved. And a lot of people have shied away from it. So we were crazy enough to say, ooh, that means we probably ought to look there. Because if we solve that problem, we've got the beginnings of a moat, a competitive moat that makes it very difficult to follow us. And moats tend to make really valuable businesses. So let's start with, if there's a real challenge there, let's not shy away. Let's go dive into that challenge. Let's run towards it has the source of your motivation changed over time yeah yeah it definitely has what was it before and what is it now so when i started to build companies i just i came from a pretty poor economic background uh and so i wanted to like make money and so i initially i thought i just want to build something that's a that's very valuable and then when we the first company had its first outcome.

I remember walking into the office, and the first person that greeted me was the receptionist, and she was in tears because she had stock. And she said, we just bought a house. Then I walked into the office, and another guy grabbed me and put me in a bear hug, and he's like, you just paid for my kid's college education by this stock. And I'm like, no, you did it because we all did this together. My motivation switched after that. I was like, the reason we're building companies is to create jobs. and when you create jobs people there's all these externalities and second order effects that you don't see as a leader but walking through that office that day was way more satisfying to me indescribably more satisfying than looking at my bank balance and over time what that that satisfaction has become the currency that fuels me it's like let's go create long-term companies they're creating great jobs for people that are impacting the world in a really positive way because I want to go back to these companies in 10 or 15 years and they're still thriving.

They're still employing people because that's what matters. I feel like it really mattered to be able to buy groceries in the family that I was growing up in. It really mattered to be able to buy a pair of shoes. And it's raw sense. That's what I really enjoy doing is creating jobs. We always end these interviews with the exact same question, which is what is success for you? Success for me is kids that want to be around me. like that that's my key beacon of success wife that wants to be around me life partner and then i have time to create companies which i really enjoy and just do the things uh non-professionally