- Hey there, Dan Martell here,
serial entrepreneur, investor,
and creator of SaaS Academy.
In this episode I'm gonna share with you
the five strategies that I've
extracted studying Elon Musk
that you can use in your
business to grow as well.
And be sure to stay to the end,
where I'm gonna tell you how to get access
to my exclusive training
High Tempo Testing,
which is not only a process
but a prioritisation framework
that you could use to
choose the right strategies
to grow your business.
Let's get into it.
(exciting music)
So one of the questions
I get asked all the time,
you know, being in tech and
having lived in San Francisco
is, have you ever met Elon Musk?
The answer is yes, but here's the deal.
He doesn't know who I am.
I've never officially
met him more than that
I was having dinner with
a potential investor,
we were raising money for Flowtown,
this is back in 2009, so a decade ago,
and Elon had to, I think
the guy had his keys.
I mean this is how funny San Francisco is.
Dave and Elon are best friends.
If you've ever heard the quote,
"being an entrepreneur
is like chewing glass
"and staring into the abyss,"
Elon's famous for, he
actually got it from Dave,
the guy I was meeting with,
who's one of his best friends.
And obviously I was siting
there just totally fanboying.
He's like, "Hey, meet the guys."
I'm like, "Hey," you know, blah blah blah.
And he came in like a
whirlwind and then left.
It was at the, it's on
Market Street, second floor,
it's a hotel right next to the Old Navy.
Anyway, you guys can Google it.
That was the restaurant we were in.
Since then, like many people,
I have just been fascinated.
Yes, Elon is brilliant technically,
but I know a lot of smart
technical people, okay.
I know a lot of PHD doctorate
AI algorithm et cetera.
So I know intelligence.
What Elon has that I
think is fascinating is
his approach to building businesses
and how as I've studied
and I've extracted these
and taught them to my clients,
these are things that you can use in your
strategic thinking and
planning and behaviours
to emulate if you choose.
Now, few things, one, I've read everything
that's ever been published on Elon.
Probably 97% of everything
from Ashley Vance's book
to all the documentaries
that he's been featured in,
to when Joe Rogan interviewed him.
I mean I remember the moment,
where I was at when it was Elon on Rogan,
and I was like, turned to my wife.
We are actually on a retreat
and I'm not supposed to be on any devices,
and I was on my iPad reading,
and I just said, "Hey Babe,
I'm gonna go to the gym for,"
and I looked at how long it was,
I think it was like two
hours and 45 minutes,
so like, "I'm gonna go to the
gym for a really good workout
"for two hours and 45
minutes, I'll be back,"
and I just sat there on the treadmill,
you know, steep incline, walking,
just listening to this
interview and it was incredible.
So, that being said, I don't think Joe
got into the business side of things
as much as I would like to.
He kind of talked more
about all the other stuff.
I wanna talk about the five things
I think you can apply in your business
to get results extracted
from studying Elon Musk.
Let's get into it.
Number one, vector alignment.
Okay, we're gonna get nerdy,
but there's real business principle.
So, I was reading an article awhile ago
from one of my mentors, Dharmesh Shaw,
the CTO and co-founder of HubSpot,
and in it he was sharing his story
of being at a CEO summit or a retreat,
and Elon sat down at their table
and Dharmesh asked him, he's like,
"What's your biggest feedback
"for somebody trying to
scale and grow a business?"
And his answer was so perfectly Elon.
Went something like this, he says,
"I believe all businesses are about people
"and people are vectors
and our job is to make sure
"that they're all pointed
in the same direction."
Now if you know what a vector is, okay,
a vector is a mathematical equation
but it's kind of like a triangle
that has both direction, magnitude
and relation to other
vectors amongst itself.
So if you think about direction,
are people pulling on the
rope in your organisation
in the same direction?
Do they all know where you're heading to?
Are they pulling with
the same amount of force,
magnitude, and in relation to each other
are they doing it in a way that's coherent
and cohesive and aligned?
And it's so funny that he
took all of this leadership
and mission, vision, values, motivation,
clarity of purpose, all these things,
and distilled it into vector alignment.
And it's true, it's real.
If you don't know what vectors are,
go do a little bit of Googling,
and think to yourself,
for you and your team
how aligned are they?
Does everybody understand
why they're working
on what they're at and what
is the goal and the mission,
because if you can do that,
and get everybody pulling
in that same direction
with the most magnitude
in relation to each other
so they're not conflicting,
they're not dismissing their inputs,
that's how you drive people,
and that is vector alignment.
Number two, first principles.
So, first principles is
a concept from physics,
and it's just the idea of saying
when we're trying to solve a problem,
what are the things that are
true about the environment
so that we solve the problem
using a first principles approach.
Examples, I know it's gonna be helpful.
If you actually think about,
if you've heard of the Boring Company,
where they're drilling tunnels,
Elon's argument for why they're doing that
is the rest of the earth is flat
and then we've built buildings to go high,
but it actually doesn't make sense
'cause there's only so high we could go
whereas if we would have
created the roadway,
instead of it being on the same plane
where all the buildings empty
and go on the same road system,
and that's where congestion happens,
if we would've actually used tunnels
to build our transportation
infrastructure,
then we would have more bandwidth,
'cause we can actually go
a lot deeper underground
than we can go higher.
That's an example, one of many,
of first principles thinking.
The idea is removing all constraints
and existing behaviours of this
is how it's always been done,
how would we solve this problem?
Another example from SpaceX
is when Elon wanted to,
and he didn't wanna build a rocket,
just so you know, he
wanted to buy a rocket
and he actually went to Russia to buy,
I think it was an ICBM,
and when he looked at
the cost of the rockets
and he got a parts list he evaluated
and he said well, I get
this is what they want
for the rocket, but when
I look at the components
if I had to just price out each component
the difference in price
was a magnitude of order
of like one to 30,
meaning that the rocket cost 30 times more
than the COGs, the cost of goods,
so the physical component of the rocket,
and every time it was shot into space
for the most part it was
thrown away, it was disposed,
much like a plane, if every time we flew
it from New York to LA it got disposed.
The flight and the tickets
would be crazy expensive.
So that was a first
principle thinking approach
of A, if we could build the components
and not have this crazy markup
we could build the rockets for cheaper,
and if we could get
them to land themselves
so they could be reusable, all of a sudden
the incremental cost of flying a rocket
would be a fraction of what it is today.
And that is a first principles
thinking of solving problems.
And I'll give you one
that's maybe more related.
One of my good friends recently posted
in a Facebook group I'm in
that his sales marketing
team is crushing it,
and their sales team is
booked far into the future,
like three weeks into the future
and they need to solve the problem,
'cause he doesn't wanna
pull back on marketing,
but he obviously doesn't
wanna lose opportunities,
and most people would be like,
"hire another sales person."
Which I totally agree,
that's probably a good
solution to the problem.
His thought was, why don't
we do a group sales call?
Which is crazy to most people.
Most people would be like,
how does that make sense?
How would you do a
sales call, one to many?
And his idea is like,
well, that's what we do on our webinars.
I teach a framework called
"The Winner Webinar".
That's what I do on a webinar,
and that's what you do at a live event
if you've got an audience of people,
and he's going to pull it off.
I don't know what the results are,
but his idea is this should work
because it's worked before,
and to me that's first principles thinking
of if you're trying to
go to point A to point B,
what's the fastest way to get there.
Let's analyse the true
physical constraints
of that situation, and what
are the different systems
we could put in place to get a result.
Think about that for your business.
How many decisions are you making based on
previous assumptions, previous beliefs,
things that you think can't change,
and instead take a blank piece of paper
and use a first principles approach
to try and solve the problem
and see what you come up with.
Number three, build the machine
that builds the machine.
So recently I was talking to
one of my coaching clients,
David, and he was struggling
with scaling his team.
I think they're about 18 people
and they were trying to grow.
Usually at 12 is when
things start to feel tough.
And I started to explain
to him my framework called
the Company OS, the operating system.
Every company has an operating system,
and that is the processes
that allow you to
instal software which are initiatives
and strategies and tactics, et cetera,
but if you don't have the
operating system it doesn't work.
And I said, to me, building the machine
at this scale where he's
at as a CEO and founder
is the process of building the machine.
Like it's not about getting an outcome.
And I remember hearing
Elon talk about this
when he was building the Gigafactory.
He said, "What's fascinating me more now
"is not building a factory
that builds batteries,
"but building a factory
that can build factories."
And it's subtle, it's so
subtle that most people
would not even understand, but I get what,
as a technical person my background is in
software development and systems,
and I realised that as much as
you're trying to get an outcome,
if you take a step back of
kind of looking at the problem,
there's also the opportunity of saying
how do we build a system that
can continue to refine itself,
continue to improve itself,
to build a feedback loop
in executing your implementation.
So at a certain scale,
for some of the
entrepreneurs watching this,
it's about building the machine
that builds the machine,
not getting outcomes in your business.
So many of you guys are
still stuck on like,
I gotta get marketing to work,
I gotta get sales to work,
but you're not thinking
about what's the system
that for eternity if
they execute this rhythm,
this cadence, this momentum process,
we'll get results in different
areas of the business.
To me, that's why I
called them growth engines
in a business in the Company OS
is because each one of them,
if you build the engine
it will continue to produce an outcome
and increase throughput,
because there's a feedback loop
and there's a fuel source, et cetera.
And I just think that's
such an important concept
for you no matter what stage you're at,
maybe you're early, is to think about
how do we create things
that are gotta create
perpetual motion.
How do we create a system
that continues to grow.
How do we build the machine
that builds the machine.
Number four, hire the best.
Now, some of you guys have already heard,
our job in life as an
entrepreneur, as a founder,
is to hire A players.
We need to hire the best,
we need to hire the best.
And I get it, you think
you're hiring the best.
You're like man, this person
was the best person I hired, I recruited.
Here's what I wanna share with you
in regards to hiring the best,
especially learning from Elon,
is when I say the best
I mean in the world,
quantitatively proven, this
person is the best in the world.
How do you do that?
One thing that Elon did that
most people don't realise
is even before SpaceX existed,
well, I think it was
right after he sold PayPal
or during the end of that,
he was interested in this concept
of space flight and going to Mars.
So much so that in LA he
held a meet-up at his houses,
every month I believe,
or every second month,
on a Sunday, where he would bring in
the top scientists from NASA,
from the local airspace companies in LA,
and he would host them at his house,
and just talk about if we wanted to,
their idea was to send a plant in a jar
on the surface of Mars and have
it live and continue to grow
as a symbol of what's
possible for the race,
for human race of going to Mars,
'cause he really felt that the
space programme had stalled
and it had, and he
wanted to kick-start it.
And he thought, I'm willing to invest
in figuring out with
these other scientists
how we could do that.
And he literally had the
smartest minds in that room.
And through those discussions,
through that trying to buy the ICBM rocket
from Russia and all these things,
he eventually started SpaceX
with these other people,
and those became the early
team members of SpaceX,
literally the smartest people.
And today, if you're an
engineer you know this,
in all of the schools if you ask them,
there was a survey I was recently reading
that said here's the
list of all the companies
that the top engineers wanna work for,
and Tesla's number one.
When you get to the point
where you can create a brand.
Sorry, SpaceX is number one.
When you can create a
brand that is so powerful
that you have the pick of the
litter of the smartest people,
see the whole thing
about build the machine
that builds the machine?
When you can hire the best people,
it's just this reinforcing loop, right.
It's a flywheel that can't be stopped.
So hiring the best people isn't about
just like, I need the
best person to do the job.
Hire the best is about putting yourself
in communities where the
best people hang out,
learning from them,
somehow getting them
involved in your business,
and as you do that you will
attract more people like them,
because great people wanna
work with other great people.
And I continue to think
that it sounds so simple,
but Tesla and SpaceX
arguably have the lockdown.
I think I heard Elon in an interview say,
"I feel bad, because I feel
like I've corned the market
"on the smartest minds in the world."
Good for him, and honestly,
people, you build the people,
the people build the business, that's why
they've had the level of
success they've had so far.
Number five, market driven innovation.
So, I've had the privilege
of visiting Tesla's factory,
getting the tour, seeing
how they do things,
and I remember when Tesla started
they launched the Roadster.
Okay, they launched like a
$120,000 premium sports car
as an electric vehicle, an EV.
And it was the first
time I think anybody had.
There was another Fisker
company that also launched
something similar maybe
after or around that time.
And a lot of people didn't understand it,
but this is Elon's approach
to building markets.
He's done it with the rockets,
he's doing it with Neuralink,
and he did it definitely with Tesla,
and it's the idea of
launching a premium product
with high gross margins to
be able to build something
that is attractive in the market,
that has market pull, that gets funded by
wealthy individuals that
are less price-sensitive
and that investment in a premium product
with wealthy individuals
that are less price-sensitive
has the gross margins and the profit
to be able to re-invest in the machine
that builds the machine,
'cause that's what I saw when
I was at Tesla's factory tour,
was robots building the machine.
As much people were
thinking about the car,
they were thinking about the robots.
And he does this over and over
'til he can get the price
performance low enough
so he can create a mass market solution.
And he said he was gonna do this,
and Model 3 comes out, and
everybody's like, oh my gosh.
Now I have friends of
mine that have Roadsters
or Model Xs or Ss, and they're like,
"Oh, everybody's got a Tesla now
"and the service isn't as good,"
and it's like, he told
you he was gonna do this.
And he's doing it with the rockets,
where he got NASA to essentially fund
the delivering and satellite,
Facebook wants to put
a satellite into space.
All of these people wanna
do satellites, great.
And now he's talking about
building his own internet
using his own rocket system
so everybody can have
global coverage of the internet
so he can fund even more development.
It's his process.
Tim Urban, if you haven't
been to Wait But Why,
do yourself a favour, Google it
and go read anything Tim
has written on Elon Musk.
I had the privilege of sitting down
and having lunch with him awhile ago,
and I definitely dove in,
Tim, what was it like to talk with Elon.
He did these crazy
essays around everything
from SpaceX to the early days
to how he thinks about
business and all this stuff.
And this idea of market-driven innovation
he talks about in one of his essays,
'cause he saw it at Neuralink.
Neuralink is essentially
creating a human brain interface
between computing and our minds, right.
And it might sound crazy,
but as artificial intelligence
gets more and more powerful
at some point there's this
thing called the singularity
where it may be more powerful
and more capable than us,
and Elon wants to create the
ability so it's human plus AI.
We'll be able to manage and control AI.
It's not a crazy idea,
but the science behind
trying to connect that
directly to our neurons
is ridiculously hard.
So what does he do, he launches a company,
he funds it, and they're
gonna work on solving,
I think it's Alzheimer's.
Alzheimer's is gonna be
the first medical problem
that they're gonna solve
because it has the
highest amount of volume
in regards to patients
that have the problem.
it's the most approachable
in regards to science
that potentially could solve the problem.
And that is the premium
vision of the solution
that's gonna fund the rest of it.
And he continues to do that.
So how does this apply to you?
If you're thinking of building
different versions of your product,
I'm gonna encourage you
to start with the premium.
And the reason why is you
might sell less units of it,
but you'll have the
gross margin, the profit
to be able to invest in more
and reducing the costs of the production,
increasing your profit, and
then doing higher volume,
lower gross margin
versions of your solution.
Doesn't matter if it's online training
or low ticket e-commerce
type stuff or software.
That's where a lot of companies start by
doing kind of mid-market
enterprise consulting,
but they do it in a way
that they're gonna extract their software
to eventually take it to market,
and it's funded by the enterprise
customers that they close.
That's why I'm a big fan on
pre-selling your software.
I teach this.
If you watch on my YouTube channel,
I teach this all over the place.
Elon continues to do it.
He just did it with the new Cybertruck
where he pre-sold, and people are like,
you can't pre-sell software.
Elon's been doing it for literally,
I put my deposit on the
Model S back in 2008.
I think 2007, 2008, okay.
He's been doing it for over a decade.
You can definitely do it.
Start with the premium,
creates the profit,
re-invest in the machine.
Number five is an incredible lesson
for you to think about in your business.
So quick recap, how Elon
Musk approaches business,
five strategies you can use today.
Number one, vector alignment.
Number two, first principles thinking.
Number three, build the machine
that builds the machine.
Number four, hire the best people.
Number five, market-driven innovation.
So, as I mentioned at the
beginning of this episode
I wanna share with you an
incredibly powerful training
called the High Tempo Testing framework.
In it I go over the four core areas
you need to be using
for ideation and testing
in the iteration cycle
to make sure you focus
on the North Star metric.
I even give you the
prioritisation process.
It's called RICE, Reach,
Impact, Confidence, and Ease,
to analyse the different ideas
you come up with with your team.
You can click the link below
to download your copy of that
process, and as per usual,
if there's anybody that you
think this video could serve
feel free to share it with them directly.
Smash that like button,
subscribe to this channel,
and I wanna challenge
you to live a bigger life
and a bigger business, and
I'll see you next Monday.
This is like, everybody wants to know,
and I've studied him, and
I was like, that, that.
