VALUE: After Hours (S08 E11): Elon Musk’s Secret to Speed: How Bottleneck Thinking Builds Billion-Dollar Companies

During their recent episode, Taylor, Carlisle, and Eric Jorgenson discussed Elon Musk’s Secret to Speed: How Bottleneck Thinking Builds Billion-Dollar Companies. Here’s an excerpt from the episode:

[Eric] So one of the corner pieces of the puzzle is probably speed. Like speed and full use of time, right? This is something that the organisations are well known for moving quickly, faster than their peers.

Elon is well known for working a lot of hours, but the sort of layers under that that I feel like aren’t quite as fully appreciated is he works all of the time on whatever the most important thing to do is and like a combination of attacking the bottleneck, using first principles and doing it immediately. And so those aren’t sort of like 10% improvements, those are multiplicative stacking improvements. And it’s really easy to sort of underestimate how those actually combine.

And so we all know that sort of coming from the value school, it’s very well understood that one right decision can solve everything, right? You only need to make one, two, three really good decisions in your whole life to have a career, to have a generational outcome of wealth. But if you’re operating a company, you usually need to make one of those like every week.

But if you can make one every day or every few hours, and it’s the right thing at the right time to address, and you’re like breaking those bottlenecks sequentially over and over again, the compounding effect of that productivity is unbelievable, which is, I think, a big part of what we’re seeing in these results. An order of magnitude difference in productivity compounded over 25 years, build some of the biggest companies on earth from a start that everybody else considered impossible. It’s hard to remember just how impossible these things seemed when he started out.

And we’re still, there’s sort of this perennial feeling of like, we are amazed by what he did in the past that used to be impossible. Like, oh my God, it’s so great that electric cars are household name. It’s so great that self-driving is not working.

It’s so great that we have reusable rockets. I know we told you that would never work, but this thing that you’re doing on the moon, that’ll definitely never work. This thing, like building a TerraFab, that’ll definitely never work.

And so there’s probably like a reverse Lindy effect here, where like we all use the same techniques to explain the outlier outcomes of the past, but at the same time, deny like the outlier outcomes that someone’s claiming in the future.

[Tobias] How does Elon balance running, being the CEO of so many different companies, and still that idea of moving quickly?

[Jake] Because the way that someone like Buffett does it- And still put out 20 tweets a day if you do that.

[Tobias] Yeah. The way that Buffett has this idea of extreme decentralisation, so he pushes all of the decision-making down into the CEOs of the companies, and then he’s largely free to sort of look at the top level. Whereas Musk seems to be much more personally involved in all of the companies.

Does he have good second in command, or does he just respond very quickly? What’s the secret there?

[Eric] I think there’s probably a few. And the answers vary. Gwen Shotwell functionally runs the business and the HR, the finance, a lot of the more operational pieces of SpaceX, and has for many years.

And Elon is an engineer, and all he really wants to do, and where he primarily focusses, his whole school of thought is around build a product so good that the rest of everything kind of takes care of itself. And so he spends a lot of his time in technical reviews and in deeply detailed ones. I expect there’s a level of sort of abdication where there’s like teams and executive teams and administration that sort of happens without his direct involvement.

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VALUE: After Hours (S08 E11): Elon Musk’s Secret to Speed: How Bottleneck Thinking Builds Billion-Dollar Companies

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