We got an awesome team of really, really great people at SpaceX and Tesla. We got world experts on propulsion, structural design, avionics, software, launch operations and that kind of thing. There's a lot of people who have had a huge impact and influence on building the companies. I've had more of an influence than anyone else, but it's a big team effort from a lot of talented people. One of the things that isn't recognized is that there's way too much attention paid to me, and it's really not right. People want to identify with an individual and that is sort of naturally what occurs, but there's a super talented group of people at SpaceX that make it happen and likewise at Tesla.
I think the most important thing for creating companies is you need a concentration of talent. It's like you are creating a world sports team or something. The ability to attract and motivate great people is critical to the success of a company, because a company is just a group of people that are assembled to create a product or service. That's really all that a company is, it's a group of people that got together to create a product or service, that’s the purpose of a company. People sometimes forget this elementary truth. If you're able to get great people to join the company, and work together towards a common goal and have a relentless sense of perfection about that goal, then you will end up with a great product, and if you have a great product lots of people will buy it, and then the company will be successful. It's pretty straightforward really.
The most important thing is people, so you need to gather a group of engineers to create technology. That's what engineers do they create technology, but you got to have a critical mass of such people that's equal to the task you try to complete. In order to have a great company you got to focus your energy on a particular area, you really want to focus your talents on a particular area. When you hire people what you're really trying to do is you're convincing people to join you in the endeavor. You should hire people that are also passionate about what you're doing so they're not just there for the salary. They really need to care about what they are doing and then they will stay during the dark times.
As far as R&D is concerned we hire great engineers as fast as we can find them. It's not that easy to find I should say great engineers with the right mindset and everything. We hire at the maximum rate that we can find people that we think would really be an asset to the team. I don't know if our recruiting and our process of hiring people is good, I think it's good but I'm not sure, but we want to hire lots of really smart engineers because that's how these problems get solved.
In terms of what characteristics we look for, we're generally quite engineering centric so we're big fans of what have people done from a hard core engineering standpoint. What tough engineering problems have they solved? how they solved them? We're less interested if it's been more of a paper oriented role that they've had, because we try to minimize that at SpaceX. When I interview someone to work at the company I asked them to tell me about the problems they worked on and how they solved them. When I interview somebody – my interview questions are always the same, I suppose honestly that it tends to be gut feel more than anything else. I’d say tell me the story of your life and the decisions that you made along the way and why you made them. Then also tell me about some of the most difficult problems you’ve worked on and how you solved them. I really just ask them to tell me the story of their career, and what are some of the tougher problems that they dealt with, how they dealt with those, and how they made decisions at key transition points, did they face really difficult problems and overcome them? Then of course you want to make sure that if there was some significant accomplishment, and were they really responsible or was somebody else more responsible. Usually if they're a person who has had to struggle with a problem they really understand it, and they don't forget - if it was really difficult. You can ask them very detailed questions about it and they'll know the answer, whereas the person who was not truly responsible for that accomplishment will not know the details. That question I think is very important because the people that really solved the problem they know exactly how they solved it they know the little details, and the people that pretended to solve the problem they can maybe go one level and then they get stuck. If someone was really the person that solved it they will be able to answer on multiple levels, they will go down to the brass tacks, and if they weren't they will get stuck. Then you can say this person was not really the one who solved it because anyone who struggled hard with a problem never forgets it. Usually that's enough for me to get a very good gut feel about someone and what I'm really looking for is evidence of exceptional ability. Really just looking for evidence of exceptional ability and if there's a track record of exceptional achievement then it's likely that will continue into the future.
There's no need even to have a college degree at all, or even high school. I mean, if somebody graduated from a great university that may be an indication that they will be capable of great things, but it's not necessarily the case. If you look at say people like Bill Gates, Larry Ellison, Steve Jobs, these guys didn't graduate from college but if you had a chance to hire them, of course that would be a good idea.
Those are pretty different personalities - between Gates and Jobs and Ellison. I think all three of those were technologists but with different types of skills. Jobs was obviously very good with aesthetics, and he understood technology of course, but he also understood what people wanted even when they didn't know themselves, and he was not afraid to break boundaries. Gates would probably be better at raw engineering and technology than Jobs, but not as good on aesthetics. For all these guys, they're obviously very driven, and they're very talented and they're able to attract great people to build a company. Getting the right people is extremely important.
Generally I look for a positive attitude, and are they easy to work with, are people going to like working with them. It's very important to like people you work with otherwise your job is going to be quite miserable. In fact we have a strict no assholes policy at Space, we fire people, we will give them a warning, but we will fire them if they keep being an asshole. If your boss is an awful person you will hate coming to work.
I have got a lot of scar tissue. The biggest mistake in general that I've made is to put too much of a weighting on somebody's talent and not enough on their personality, and I've made that mistake several times. In fact every time I say I'm not going to make that mistake again, and then I make it again. I have made several hiring decisions where I valued intellect over heart, I think that was a mistake. It actually matters if somebody is a good person beyond just goodness itself. It actually matters if somebody has a good heart. That's generally the hiring mistakes that I've made in the past, thinking that sometimes it's just about the brains, looking too much at their intellectual capability alone and not on how they affect those around them.
What really matters is, for someone's contribution to a company, is how they are as an individual and how they affect others around them. You could say it's also analogous to a sports team - the best person on the team is not necessarily the one who scores the most goals, it could be the person who assists in the most goals. If there's one person on the team who just wants the ball all the time and just wants to kick it at the goal, that can actually be detrimental. It is important to weigh personality, and are they going to be a good person, will people like working with them, that sort of thing. It does make a difference.
I think when you create a company you really have to believe in what you're creating. Know in your heart and mind that this is something that matters and that the world ought to have. You construct like this sort Holy Grail potential in the future. You have to stay grounded in the short-term, because if you don't do things to pay the bills you are not going to achieve the ultimate long-term objective, but it's nice to have that Holy Grail long-term potential out there as an inspiration for coming to work.
You have to show that you really care, that you've got skin in the game. You've given it everything that you got and then the other people in the company will follow suit. I think it's important to investors to show that you are really all in. For example with Tesla the fact that I invested all the money that I had, truly I had to borrow money from friends to pay to rent in 2008, and the fact that I was all in made a huge difference to investors to convince them to invest in Tesla. Really believe in what you're doing but not just from a blind faith standpoint, but to really have thought about it and say this is true, I am convinced it is true, I have tried every angle to figure out if it is untrue. Sort negative feedback to figure out if I may be wrong, but if after all that it still seems like this is the right way to go then that gives one a fundamental conviction, and an ability to convey that conviction to others to convince them to join. That's what a company is, if you can convey that, and answered a concern that people have convince them that this is something that needs to be done, and it's important, and here is a path to do it, even if that path has a lot of danger associated with it and risk. Maybe it won't succeed, but people can understand this is why it is important, and even if the odds are that it won't succeed it's worth trying to do it, then I think you can create a great company. It's more than just a company it's more than just a product, there's a cause there, it’s something that really matters. I think a lot of our customers kind of share that view.
That sort of excitement is a powerful driver and makes me want to get up in the morning and go to work, because it's just so much easier to work hard if you love what you're doing. I think it is incredibly important to have an environment in general were people look forward to coming to work, and try to make it a really fun place to work, really enjoyable.
As companies get bigger it's harder and harder to get sort of a fun and dynamic feeling. To avoid to be sort of a soul destroying corporation I think it's important to allow for a certain amount of chaos within an organization. Rules need to capture the counterintuitive, if something is fairly obvious then people would probably do that, but the counterintuitive stuff is less obvious. A lot of companies try to impose too much structure or don't allow failure, particularly as they get bigger they tend to have a risk-reward asymmetry. Failure is severely punished, success is moderately rewarded. That's not a good idea if you want to be innovative, because by its very nature innovation will result in many attempts that don't work. A lot of employees have great ideas if they get resources to implement them, and if they're not filtered through their manager. Generally try to be a little irreverent to encourage people to do eclectic odd things and that's OK. So there's not some conformist police chasing you down.
There must be an expectation of innovation and the compensation structure must reflect that. There must also be an allowance for failure because if you're trying something new necessarily there is some chance that it will not work. If you punish people too much for failure then they will respond accordingly, then the innovation you will get is very incremental, nobody is going to try anything bold for fear of being fired or being punished in someway. The risk reward must be balanced and favor taking bold moves otherwise it will not happen.
Then I’d say focus on signal over noise. A lot of companies get confused, they spend a lot of money on things that don’t actually make the product better. So, for example, at Tesla we’ve never spent any money on advertising. We’ve put all the money into R&D, and manufacturing, and design to try and make the car as good as possible I think that’s the way to go. For any given company keep thinking about are these efforts that people are expending are they resulting in a better product or service? and if they’re not, stop those efforts.
I do think it gets difficult for companies to maintain a high productivity per person as they grow, because companies initially improve productivity per person due to specialization of labor, and then productivity per person tends to decline as companies get beyond a certain scale due to communication issues. We do our best, at SpaceX to minimize communication issues, we have anyone-to-anyone communication, instead of say chain-of-command communication, which is extremely inefficient. I think it's important to maximize communication. You know the path to the CEOs office should not go through the CFOs office, not if you are a products company, maybe if you're a financial services company.
The amount of direct interaction I have with people these days is a lot more limited. I do do skip level meetings, it’s like I meet with my reports and their direct reports. Again, generally for a company when it's very small productivity grows very quickly because of that specialization of labor, then productivity per person declines because of the communication issues. As you have more and more layers through which communication has to flow that necessarily imparts loss, every time information flows from one person to another, even with the best intentions, you have information loss. You can alleviate that by doing skip level meetings.
One thing we try to do is minimize the size of meetings, a normal meeting would be with 4 to 6 people. The basic rule for a meeting is that unless somebody is getting an enormous value from the information they are receiving, or they are contributing to the meeting itself they shouldn't be there. We also have a rule that if somebody's in this meeting and it is not helping them in a meaningful way they should just leave.
I am much more sort of the Spartan school of thought, I care about the effective execution at the company. And the more you insulate yourself from information and feedback in the company the worst decisions you make.
I really like density, I like a beehive of activity and people fairly close together. I think it creates a much better esprit de corps. If you just talk to the people on your team you can learn a tremendous amount, and then as you iterate through problems it's kind of like anything, if you struggle with a problem that's when you understand it.
SpaceX operates on a Silicon Valley mode of operation, flat hierarchy, closely packed cubes, high engineer to manager ratio, lots of prototype iteration, and a best-idea-wins type of philosophy, where what matters is the merits of the argument not the status of the arguer. If you sort of have a very flat hierarchy you promote rapid communication, a best-idea-wins culture - as opposed to the having the seniority of the person decide the solution, which - that should never be the case in engineering, it should always be a rational basis. I also believe that at the leadership level, I'd much rather promote someone that has strong engineering ability than so-called management ability. We do hire some MBAs but it's usually in spite of the MBA, not because of it. SpaceX is an extremely demanding organization and we expect people to work super hard and be very good at their job.
Something that's worth noting is a lot of what is needed on a rocket or spacecraft is actually software. Generally with software you can get amazing things done with small teams, a small team will do much more radical improvements than a big team. We actually hire a lot of our best software engineers out of the gaming industry. In fact, I started off when I was a kid - in terms of engineering, I wrote games, that was the thing that I did. I think in gaming there's a lot of smart engineering talent doing really complex things. In fact, I think a lot of the algorithms involved in a multi-player online game - compared to a lot of the math that's involved there doing a docking sequence is actually relatively straight forward. I'd encourage people who are in the gaming industry to think about joining SpaceX and creating the next generation of spacecraft and rockets. Also probabl, in the future we'll create like droids on the surface of Mars and the Moon to do things like an automated propellant depot and that kind of thing. We sort of need those features to have a base on Mars.
The US government regulations make getting a job in the US as hard as it is, but if you are working on rocket technology that is considered an advanced weapons technology, so even a normal work visa is not sufficient unless you get a special permission from the Secretary of Defense or the Secretary of State. To be clear this is not some desire of SpaceX to just hire people with green cards it's because we are not allowed to do anything else. I think this is not a wise thing policy for the US because there are so many talented people all around the world that we would love to have work at our company, but unless they get a green card we are literally prevented from hiring anyone.
The other thing I want to mention, there were a lot of articles about Tesla firing employees and layoffs, these were really ridiculous, and any journalist who has written articles to this effect should be ashamed of themselves for lack of journalistic integrity. In every company in the world there's annual performance reviews. In our annual performance review, despite Tesla having an extremely high standard only 2% of people didn't make the grade, so that was about 700 people out of 33,000. This is a very low percentage. GE, I don't know if they still do, but they certainly for a long time had a policy of firing 10% of their employees performance every year, no matter what. If you were to stack Tesla's performance releases compared to other companies, the number would be low. The only reason these articles had any play whatsoever is because journalists and editors with low integrity, they'll provide any context for where they stood because the actual article would've read, “Tesla fires 2% of its employee base for performance-based reasons, a remarkably lower number compared to other companies.” But of course, that would be a meaningless article, so they forget to include that. Shame.
Well, unfortunately and fortunately, Tesla cannot sneeze without there being a national headline. I've been like pistol whipped. The amount of national and international news headlines dedicated to three Tesla fires that caused no injury was greater then the quarter of 1 million gasoline car fires that occurred in the United States, which caused about 400 deaths and something like 1200 serious injuries. Our three non-injurious fires got more national headlines than a quarter million deadly gasoline car fires. That's mad, what the heck is going on? I realize that a new technology should have a spotlight on it, but it shouldn't have a laser on it. I really care about Tesla and everything so it's hard to be dispassionate about that. It's a lot of blood, sweat and tears from a lot of people and, you know, I think particularly if the criticism isn't accurate. It's sort of like, it's like your child. Let's say your child goes into a competition and loses, but not on the merits, then you'd be pretty angry about that, or if somebody disparages your child in a way that's false. I think it's important to tell the truth and to rebut things that are wrong. There are honest criticisms to be had, certainly, but it's difficult to take false criticism of something you care about.