Elon Musk on Innovation: The Carrot and the Stick (Ep. 42)
Follow me on Twitter: https://twitter.com/heydave7 Follow me on Instagram: https://www.instagram.com/heydave7 Watch this video on what a 10x company is, https://www.youtube.com/watch?v=r9HtG-jJSTY Watch this video on how new tech goes mainstream, https://youtu.be/gVsFsydllNo Check out my archived articles/posts on Tesla and investing: https://teslamotorsclub.com/tmc/threads/articles-megaposts-by-davet.23473/#post-485768 Elon Musk was interviewed at the Air Force Association a few days ago, and he shared his ideas on how a company can excel at innovation. It’s important to understand innovation and to be able to evaluate innovation. This can allow an edge in discovering the next big winners, companies that can 10x their valuation within 5-10 years. In order to get outsized gains in investments, the company or companies you’re invested in need to surprise with how they’re able to enter new markets over time. The challenge is that new markets have entrenched players, brand recognition and often can be led by capable companies. In order to stand a chance, the new entrant needs to out-execute and out-innovate the existing market leaders. Elon Musk shares a framework on how to ensure innovation in a company. Here’s his Incentive Structure to Incentivize Innovation” 1. Define roles where innovation is required 2. Promote those who innovate well. 3. Fire those [in innovation-required positions] who don’t try or have low ambition to innovate. 4. Have minor consequences for those [in innovation-required positions] who try significantly to innovate but fail. All 4 points are crucial. Reuters article on Starlink shakeup, https://www.reuters.com/article/us-spacex-starlink-insight/musk-shakes-up-spacex-in-race-to-make-satellite-launch-window-sources-idUSKCN1N50FC. “SpaceX Chief Executive Officer Elon Musk flew to the Seattle area in June for meetings with engineers leading a satellite launch project crucial to his space company’s growth. Within hours of landing, Musk had fired at least seven people on the program’s senior management team at the Redmond, Washington, office, the culmination of disagreements over the pace at which the team was developing and testing its Starlink satellites, according to two SpaceX employees with direct knowledge of the situation. Known for pushing aggressive deadlines, Musk quickly brought in new managers from SpaceX headquarters in California to replace a number of the managers he fired. Their mandate: Launch SpaceX’s first batch of U.S.-made satellites by the middle of next year, the sources said.” Menglu Wu “Hi Dave, thank you for sharing. I am wondering how you think of Musk for working on so many different type of startup companies. I know he is brilliant and he seems to be able to succeed. But he is just not focused imho. Will this be a potential threat for Tesla?” Elon is at the mercy of the people who he delegates large responsibilities to. Elon is CEO of Tesla and SpaceX, while also overseeing Boring Company, Neuralink, and other personal projects. Here’s how Elon Musk delegates responsibility: 1. Sets big goals from first principles achievable, tangible 2. Raises the capital puts in own money sets up company, raises funds 3. Hires the most capable people he can find ie., Boring Company Elon holds the management accountable. If they are not ambitiously innovating or at least trying like crazy, then he’ll fire management and replace. Without innovation, a new company in a competitive market doesn’t stand a chance. Disclaimer: All content on this channel is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor. No guarantee is given regarding the accuracy of information on this channel. Author is long TSLA at time of original video publish date. Tags: Tesla, Elon Musk, Model 3, Model Y, Cybertruck, Investing, China, TSLA Shorts
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