Elon Musk transcript: an honest appraisal

Elon Musk transcript: an honest appraisal

Musk discusses space colonists, economics and the brutality of AI.

13 March 2018 · 12 min read

This is an edited transcript of a conversation between Elon Musk and Jonathan Nolan, the creator of HBO’s Westworld, on March 11, 2018.

The first question from the audience was simply: “Mars - how can we help?”.

It’s a testament to how much effort and energy Musk has poured into this endeavour when his tight face breaks into a beautiful, grateful smile.

MUSK: I think right now the biggest thing that would be helpful is just general support and encouragement.

We’re making good progress on this ship and the booster BFR - which is like a Roschch acronym test - it means it’s very big.

Once we’ve built it, we’ll have a point of proof. Something that other companies and countries can then go and work on. At the moment, they don’t think it’s possible, but if we show them it is, then they will up their game. Then they will build interplanetary vehicles as well.

Now once that has been built, and there is a means of getting cargo and people to and from Mars, as well as to and from the moon and other places in the solar system, that's really where a tremendous amount of entrepreneurial resources are needed. Because you've got to build out the entire base of industry. Everything that allows your human civilisation to exist. And it’s going to be a lot harder on places like the moon and on Mars.

NOLAN: Any colonist volunteers?

MUSK: Actually not many hands went up there. Going to the moon or to Mars has often been described as an escape hatch for rich people. But I don’t think it will be that at all. For early people that go to Mars, it will be far more dangerous.

I mean, really, it kind of reads like Shackleton's ad for Antarctic explorers. It's difficult, dangerous, there's a good chance you'll die. There’s excitement for those who survive. I don’t think there will be many people who would go in the beginning, because all those things are true. But there are some who will. For whom the excitement of the frontier exceeds the threat of danger.

And we will need the most elementary infrastructure: just a base to create propellant; a power station, glass domes to grow crops. All the sort of fundamentals without which we cannot survive. And then there's really going to be an explosion of entrepreneur opportunity because Mars will need everything from iron foundries to pizza joints. And bars, we we should really have great bars, like The Mars Bar. Sorry.

NOLAN: What’s your timeline?

MUSK: I’m feeling pretty optimistic, though people have told me I’m a little optimistic about timelines so I’m trying to recalibrate to some degree here.

But we are building the first interplanetary ship right now. And I think people will probably be able to do short flights, up and down flights by sometime in the first half of next year.

There is a very big booster in this ship. The lift of thrust of this would be about twice that of a Saturn 5, so it's capable of doing 150 metric tons to orbit, and be fully reusable. So the expendable payload is around double that number.

What's amazing about the ship, assuming we can make full, rapid, reusability work, is that we can reduce the module cost per flight dramatically, by orders of magnitude compared to where it is today.

This question of reusability is so fundamental to rocketry, it is the fundamental breakthrough that's needed. If you consider aircraft, for example, you can lease a 747 and do a return flight pulling a cargo from California to Australia for half a million dollars. That's what it costs to lease 747 pullie round trip to Australia, which is far. To use a single engine turbo prop plane, would be about $US1.5 billion dollars, and that can't even reach Australia. And it's tiny compared to a 747.

So it costs less to use a giant plane with huge cargo for a long trip. That costs way less than buying a small plane for a short trip, in the aircraft world. And the same actually is true of rocketry.

A BFR (Big Fucking Rocket) flight will actually cost less than our Falcon 1 flight did back in the day. That was about a $5 or $6 million marginal cost per flight, and I am confident that BFR will be much less than that.

That’s profound and that is what will enable the creation of a permanent base on the moon and a city on Mars.

And that’s the equivalent of the Union Pacific Railroad or having ships cross oceans.

Until we can get there, there’s nowhere for the entrepreneurial energy to go, there’s nowhere for the flowers to bloom. But once you get there, the opportunities are immense. We’re going to do our best to get you there and foster an entrepreneurial environment, and then I think it will be amazing.

NOLAN: Carl Sagan had a beautiful thought many many years ago that if you just get enough people to look at the Earth from a distance that it would get them to focus on problems here and on the possibilities of space exploration.

MUSK: Yes, the goal of this was to inspire you and make you believe that anything is possible.

NOLAN: Watching those two boosters come down side by side felt like a transformative moment. It felt like a we can do anything and of a singular vision and hundreds or thousands of very talented people working together. How do you manage your time? How do you zoom in and zoom out and make sure that all those things are coming together?

MUSK: At SpaceX, almost all my time is spent on engineering and design. Probably 80-90%. And then Gwynne Shotwell who is president and chief operating officer, takes care of the business operations of the company, which is what allows me to do that.

In order to make the right decisions, you have to understand something. If you don't understand something at a detailed level you cannot make a decision. So I'd like to just point out what you saw there as a result of incredible team at SpaceX super talented people who we work like crazy to make that happen.

NOLAN: Who are you inspired by?

MUSK: Kanye West, obviously. Um, Fred Astaire. You should see my dance moves.

NOLAN: SpaceX, Tesla, SilverCity, The Boring Company, it feels like you’re seeing a firmly established and mature industry that is ripe for a quantum shift. There is an opportunity there. Is that how you see the world?

MUSK: No, not really. I don’t look at things in terms of a business opportunity. I just see things that aren’t working that are important for our life and for the future to be good.

If you did a risk adjusted rate of return estimate on various industry opportunities, basically building rockets and cars comes pretty close of the bottom of that list. They would have to be the dumbest things to do because if you look at the auto industry, every other company apart from Tesla and Ford has gone bankrupt or was failing and got acquired.

I basically gave both SpaceX and Tesla a probability of less than 10% to succeed.

But in the case of Space X, I just kept wondering why we were not making progress towards sending people to Mars? Why we didn't have a base on the moon? Where the space hotels that were promised in 2001 the movie? It just wasn't happening year after year.

So I came up with a little small philanthropic mission which was to send a small greenhouse to the surface of Mars, called Mars Oasis. And the seeds would be dehydrated nutrient gel hydrate, and upon landing you could have a little greenhouse. And the money shot would be a green plant against a red background.

I just recently learnt that money shot has another meaning, actually.

And as I got more and more into what it would take to do that I learned that the fundamental issue is actually the cost of access to space. Rockets were super expensive and the cost cost per-pound-a-kilogram to orbit had actually gone up over the years, not down. And I was like OK well, it won't matter if we are able to do this philanthropic mission and it generates a lot of will to go to Mars...that's not going to matter if there's no way.

So I started reading a lot of books on rockets and a did sort of ‘first principles’ analysis of a rocket. Just broke down materials that are in a rocket. What it would cost to buy those materials versus the price of the rocket. And there's a gigantic difference between the raw material cost of the rocket and the finished cost the rocket.

So there must be something wrong happening going from the constituent atoms to the final shape. And felt that certainly to be true. And then why weren't people trying to make reusability work? It turns out it’s very difficult to make rocket reusability work.

Unfortunately the space shuttle ended up being a counterexample of trying to make the usability work, because space travel would end up costing more per flight than any expendable vehicle of equivalent capability.

So for a long time people using the space shuttle as an example of why reusability is dumb. But I think, you can't take a single case example and make an entire theory out of it. So there's no question in my mind that if you could re-use the rocket, that would help enormously.

But it has to be true re-use which means rapid and complete re-use. The problem with the space shuttle is only a portion of the system came back. The big orange tank which is also the primary airframe was discarded every time. And the parts that were used were incredibly difficult to refurbish. So the only kind of re-use that matters is if it's rapid and complete. The only thing you’re changing between flights, apart from scheduled maintenance is the propellant.

So we embarked on that journey to create SpaceX in 2002, and in the beginning, I actually wouldn't even let my friends invest because I didn't want to lose their money. I thought I could lose my money. We almost did die at SpaceX actually.

I mean, technically I did have a plan where I had like about $US180 million from PayPal. I thought, you know, I'll allocate half of that to Space X and Tesla and Solar City and that should be fine. I'll have $US90 million left, and that's like, lots.

But what happens is things cost more, it took longer than I thought. So I had a choice of either put the rest of the money in or the company's going to die. And so I ended up putting all the money in and borrowing money for rent from friends.

2008 was brutal. We had the third consecutive failure of the Falcon rocket for SpaceX. Tesla almost went bankrupt. We closed our financing around 6 p.m. Christmas Eve 2008. It was the last hour of the last day that it was possible. We would have gone bankrupt two days after Christmas.

And I got divorced. That was rough. Man, there's a lot of scar tissue there.

NOLAN: Maybe you just answered this, but why is nobody else doing these things?

MUSK: Extremely high pain threshold, I guess. SpaceX just got by by the skin of its teeth. So did Tesla.

If things just got a little bit the other way both companies would be dead. One of the most difficult choices I've ever faced in life was in 2008 and I think it had maybe $30 million or $40 million left in 2008.

I had two choices, I could put it all into one company and then the other company would definitely die or split between the two companies. But if I split up between two companies then they both might die. And when you put your blood sweat and tears into creating something or building something, it's like a child. So it's like which one I'm going to let one starve to death. I couldn't bring myself to do it. So I split the money between two. Fortunately.

NOLAN: How do you how do you plan a business where you know some of these things are going to blow up on the launch pad? And how does the business plan work?

MUSK: I don't really have a business plan. For business, my time, almost all of it, is really dedicated to Space X and Tesla. That may sound like I’m involved in a lot of different endeavours but it's overwhelmingly SpaceX and Tesla, in terms of time allocation.

The only public security that I own of any kind is Tesla. And then the next biggest is Space X and and then The Boring Company kind of started more as a joke because that would be a funny name for a company. You know, we put we put the 0 in bring? That doesn't make any sense...

The biggest issue I see with so-called experts is that they they think they know more than they do and they think they're smarter than they actually are. In general we are all much smarter than we think we are much less smart and dumber than we are by a lot.

So this is this tends to plague plagues more people because just can't they define themselves by their intelligence and they they don't like the idea that a machine could be way smarter than them so they discount the idea which is fundamentally flawed. That's the wishful thinking situation.

I'm really very close to the cutting edge of AI and it scares the hell out of me. It's capable of vastly more than almost anyone knows. And the rate of improvement is exponential. You can see this in things like AlphaGo which went from, in the span of maybe six to nine months, it went from being unable to beat even a reasonably good Go player to then beating the European world champion who was ranked 600, then beating the Lee Sedol 4-5, who had been world champion for many years, then beating the current world champion, then beating everyone while playing simultaneously.

Then there was AlphaZero which crushed AlphaGo 100 to 0 and AlphaZero just learnt by playing itself and it can play basically any game that you put the rules and for. Whatever rules you give it literally read the rules, play the game and be superhuman.

I think probably by the end of next year, self driving will encompass essentially all modes of driving and be at least 100-200 percent safer than a person, by the end of next year. We're talking about 18 months from now.

The rate of improvement is really dramatic and we have to figure out some way to ensure that the advent of digital superintelligence is one which is symbiotic with humanity.

I think that's the single biggest existential crisis that we face and the most pressing one.

I'm not normally an advocate of regulation and oversight, I’m generally on the side of minimising those things, but this is a case where you have a very serious danger to the public and therefore there needs to be a public body that has insight and oversight, to confirm that everyone is developing AI safely.

This is extremely important. I think the danger of AI is much greater than the danger of nuclear warheads, by a lot. And nobody would suggest that we allow anyone to just build nuclear warheads if they want. That would be insane.

Mark my words AI is far more dangerous than nukes. We don't know, but there's likely to be yet another dark ages, but my guess is that probably will be at some point. I'm not predicting that we're about to enter a Dark Ages, but that there's some probability that we will.

Particularly if there is a third world war. Then we want to make sure that there's enough a seed of human civilisation somewhere else to bring civilisation back.

But I think a sustainable energy source is really important. I mean, it's tautological: if it's not sustainable, it's unsustainable.

How close are we to solving that problem?

Well I think that the core technologies are there with the wind, solar, with batteries. The fundamental problem is that there's an unpriced externality in the cost of CO2.

The market economics works very well if things are priced correctly. When there are things are not priced correctly, and there is something that has a real cost, but has zero cost, then that's where you get distortions in the market that inhibit the progress of other technologies.

So essentially anything that puts carbon into the atmosphere, which includes rockets by the way, I'm not excluding rockets from this, there has to be a price. You can start off with a low price, but then depending upon whether that price has any effect on the possibility of CO2 in the atmosphere, you can adjust that price up or down.

But in the absence of a price, we sort of pretend that digging trillions of tonnes of fossil fuels from deep under the earth and putting it into the atmosphere, we are sort of pretending there's no probability of a bad outcome.

I don't talk that much about StarLink, but essentially it's intended to provide low latency, high bandwidth Internet connectivity throughout the world. That actually will not be enough cognitive processing power onboard the satellite system, in any way, to be a Skynet thing.

Most likely the form of government on Mars would be somewhat of a direct democracy, where people vote directly on issues instead of going through representative government. When the United States was formed representative government was the only thing that was logistically feasible, because there was no way of people to communicate instantly.

A lot of people don't even have access to mailboxes, the post office was very primitive and a lot of people couldn't write. So you had to have some form of representative democracy or things just wouldn't work at all.

But I think on Mars it's going to be people everyone votes on every issue and that's how it goes. There are a few things I'd recommend which is keep laws short. There's something suspicious going on if there's long laws.


-

The information in this article is prepared by Spaceship Capital Limited (ABN 67 621 011 649, AFSL 501605). It is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.


The Spaceship team is a friendly bunch of investment professionals, superannuation enthusiasts, customer support specialists, engineers, thinkers and makers – here to help you achieve your goals.


Related articles

Feature image for 26 investing quotes

Investing insights and perspectives from some of the most famous and successful investors throughout history.

Kelly Simpson

11 min read

Feature image for Is a Chanel bag actually a good investment?

A deep dive into what makes luxury brands so damn expensive.

Feature image for 25 smart money quotes

Financial wisdom from various thought leaders, game changers and entrepreneurs.

Bryna Howes

6 min read

Spaceship times

The money talk you didn't know you needed

Join thousands of Australians already in-the-know.


Invest in your future, so you can live the life you want to live

Get started in five minutes.