Elon Musk gets on my nerves. Whenever I see him in a headline my teeth start grinding.
But why? I agree with all his goals. I love the idea of clean energy. I want better batteries. I’m excited by colonising the universe and digging cheaper tunnels. So why does his every pronouncement get me upset?
I’ve been dwelling on this recently, and can only conclude it’s because of the lack of public skepticism he encounters.
Fly to most places on Earth in under 30 mins and anywhere in under 60. Cost per seat should be… https://t.co/dGYDdGttYd
— Elon Musk (@elonmusk) September 29, 2017
Whenever I think about the future, I like to consider it in probabilistic terms. So when I hear Elon Musk talk about using rockets to travel from New York to Sydney in an hour, I naturally try to imagine what the likelihood of this happening is. I generally come up with numbers awfully close to zero.
Apparently other people’s thinking goes off in different directions, wondering about comfort during take off:
I don’t find myself thinking about g-forces. I’m too busy puzzling over why he should be able to make a roof including solar panels for less than the price of a roof. What does he think roof manufacturers have been doing for all this time?
Musk is not short of ambition or afraid to make his life more complex. For example, the original Telsa plan had nothing in it about automation or self-driving. He just bolted that onto the plan, presumably expecting it would be doable if the engineers just tried hard enough.
I remain skeptical.
When people think about the progress of science, they have an awful tendency to be swayed by survivor bias. They think especially about progress in personal electronics – because that’s where the progress is. They infer that technology can utterly transform itself with a decade or two.
But when you take a broader sample, you see something different. For every iPhone that did get invented, a flying car failed to be. While we beat back AIDS, cures for dementia and multiple sclerosis languished. And not for want of effort. You can’t tell in advance which fields will yield to effort.
I was a big fan of an old website called Paleo Future, which goes back and looks at old predictions of the future. They’re mostly silly.
In fifty years, most Musk plans will seem as silly. But they’re being repeated across all forms of media. That credulity, and the adulation that goes with it, really rustles my jimmies.
WHY SO CREDULOUS?
There’s a well-characterised cognitive bias where we think that a person who has success in one field will be able to translate it to another. It’s why former Olympic swimmers get hired by big financial institutions, say. It explains why we think Elon Musk can set up a dozen companies including in busy fields like automotive and tunnelling, and come out a winner.
The other relevant cognitive bias is the base rate fallacy. People ignore the fact that in a given domain (colonising space, say) background probabilities of success are very low. They prefer instead to focus on some other seemingly salient factor, like whether the person making the plan to do so is a genius. (And I’m perfectly willing to admit Musk is.)
Now, the charm of having so many cognitive biases running in your favour, is you can attract a lot of capital and hire a lot of good employees. You get to make a lot of bets at once. Take one 5 per cent chance, you’re set to fail. But take ten and you have a 40% chance of one of them coming good.
So I’d be surprised if everything Musk tries from hereon turns to poop. He can probably go down in history as a genius inventor. But at the moment he’s getting way ahead of himself.
STRATEGIC THINKER?
Musk’s strategic thinking has worked well so far for Tesla, but past performance is no guarantee of future performance. You only need to look back on his Tesla “Master plan Part Deux” from 2016 to get a sense of how iffy it can be. It contained a very peculiar section on taking the aisles out of buses to make room for more seats. Ignore for a moment that aisles are important to buses – the point is that that kind of fine detail has no place in a strategic plan. Shortly afterward, he walked back the whole section on buses anyway. The whole thing made me wonder if his success came because of or despite his strategic vision.
It is possible that long before he has a chance to be proven wrong on intercontinental travel, Mr Musk will have a reversal of fortune.
MODEL 3
Tesla’s plan to ramp up production of Model 3s in a new facility looked risky to me from the start. Manufacturing is hard and Tesla is new to doing it at scale. Today we learned initial production of the smaller more affordable car has fallen short.
The company has identified ‘a handful’ of bottlenecks in its production systems and produced way fewer Model 3s than it planned (260 vs an expected 1500). I fear that for a company doing its first ever mass-production, solving that handful will only reveal another handful. Complex systems are interlinked and problems can cascade throughout.
Expecting to move smoothly to mass production was pure hubris – big new projects regularly have huge cost overruns and delays. (I used to work on Defence projects so I’ve seen cost overruns and delays.) Furthermore, in making its new factory, Tesla skipped a step most manufacturers use, getting all its tooling made before they’d had a dry run. That will save time and cost only if all the systems fit together neatly and as expected.
I understand why they’re rushing. There’s two reasons Tesla must sprint to survive.
First, so much debt has been brought on that they need a lot of sales to pay the interest (with the share price so high I don’t understand why they wouldn’t just issue shares, which don’t need to be periodically refinanced).
So far Tesla burns cash just to stay running. Having big debt and negative cashflow is not sustainable. There’s not many times corporate finance is heart-in-your-mouth terrifying, but Tesla is making it like watching one of those guys in a wingsuit.
Second, the longer they delay the more competitors with proven manufacturing ability can catch up and steal the market. The Chevy Bolt is a proven success and we heard last week that even vacuum manufacturer Dyson is entering the electric car market. A Bloomberg article published today had a huge list of Tesla competitors. Fifty new electric vehicles are going to hit the market in the next five years, from companies with a strong history of making quality products.
I think the Tesla corporate structure needs careful steering to not end up on the rocks. The technology and brand could well be for sale within five years, and gleefully bought up by someone like General Motors or Google. That’d be awful for Tesla investors and employees but mostly fine for society, as the losses incurred in creating all this technological progress would be internalised by all the investors who’ve done their dough.
SHOULD I BE SO MAD?
So am I justified in being so cross at Elon Musk and all the people who believe in him?
One argument is I am not. To the extent that he is making great progress, I should shut up, and to the extent he is selling risky bets, his main victims are private investors who are welcome to include in their portfolios a few risky bets.
While money will be wasted, technology will also be created. If it has value, that technology will presumably be up for grabs if Tesla (or SpaceX, or Hyperloop) ever needs to make their creditors whole, and society will still be able to benefit from them. From this perspective, the cult of Elon Musk is just a big scheme to get private investors to take the risks of moving science forward. And it’d be awfully pig-headed to be mad at that.
From another perspective, investor money is finite, and we should be careful to steer it toward those schemes with the highest chance of success.
So tell me, dear reader. Am I being too much of a grouch toward Mr Musk?
Thomas the Think Engine 
I don’t think you are being a grouch, but I also don’t think Elon will be upset if someone beats him to Mars. His goal seems to be creating new markets rather than dominating them. Dominating them is his remit, but I don’t see it as his overall goal.
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A nicely articulated case for scepticism Jason, thanks.
This line grabbed my attention: “I’m too busy puzzling over why he should be able to make a roof including solar panels for less than the price of a roof. What does he think roof manufacturers have been doing for all this time?”
That’s more or less exactly the same attitude that sensible experts took towards SpaceX ten years ago: “Humanity has spent hundreds of billions of dollars on space exploration in the past half century, and the numbers have not changed: about $10,000 per pound to put something in low Earth orbit. Elon Musk is asserting that his future is going to be remarkably different, and that’s a tall claim.”
SpaceX spent $400m developing the Falcon 9, which at full capacity can launch to low Earth orbit at ~$1,200 per pound. Likewise, those hundreds of billions of dollars could not develop a launch system capable of recovering and reusing an orbital booster.
And this was far from Musk’s first success. Before SpaceX or Tesla, companies which are themselves in quite distinct industries, Musk succeeded in IT. Twice.
Those sorts of achievements need to feature in your understanding of Musk’s popularity. Cognitive bias isn’t enough, though doubtless present, for I suspect part of what you see as credulity may in fact be mounting incredulity towards the sceptics.
Lastly, I certainly cannot agree with the notion that Musk is burning through precious capital on his delusional ventures. Both of his major ventures only survived on his own cash in the early days, and come on, in the era of record low interest rates and perennially lacklustre business investment, you can’t honestly be concerned about Musk hogging scarce capital!
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These are good points! Especially the last one about capital not being scarce. There’s so much cash inside big companies at the moment we need more risks being taken. I agree and I suspect a fair bit of my grouchiness is just that when everyone loves something so much I tend to feel the universe is out of whack and I need to do my bit to bring it back to balance.
The point about launch costs is well made. The question only time will answer is whether Musk understands the methods that took so much cost out of rocket launching well enough that they are replicable in other industries with totally different types of scales and market dynamics.
I put it to you that a person who does revolutionary things in one industry might find those tricks don’t work in another, for various reasons. A consumer industry like cars with so many competing manufacturers might have already cut costs far more than a government dominated one like space, as just the most obvious example.
Most of my skepticism is not based on Musk per se but on the dizzying maths of succeeding at everything you try. I guess I expect that when you identify a mid-career amazing outlier you’re likely to get some reversion to the mean.
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I absolutely agree that success is one field is no reason to assume success in another. But that point applied at least as strongly 15 years ago when a young tech millionaire decided to start a company that would design, manufacture and launch and reuse rockets. Success for Tesla at this stage seems a lot more plausible than a bloke leaping from online payments to reusable orbital rockets!
Having said that, I really can’t understand Tesla’s current valuation. It seems insane to me and I wouldn’t touch it with a bargepole. Batteries seems like an awful market to be selling into. Cars a little better as you can probably charge more of a premium if you have a valuable brand. But again highly competitive and becoming more so. So yeah, definitely sceptical of the investment case for Tesla. If Tesla ultimately fails though because of competition from other EVs, it’ll be hard to begrudge Musk, since the current rush into EVs from established firms is surely a symptom of Tesla’s success to date.
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Hmm thought I replied but looks like it got lost!
As far as Tesla goes, I do find its valuation insane. I don’t understand why anyone is buying it at these prices. Shorting it on missed M3 production targets alone seems reasonable. There’s the critique of the man though and then there’s the critique the cult around him. Is it his fault his media skills have led paid professionals to sideline basic financial metrics?
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I share your scepticism, but perhaps you share my envy too. Mr Musk made a very large fortune, and may now be converting it into a much smaller one…..but with lots of positive spin-offs for the rest of us. But it is his money, and he’s free to risk it in whatever way he wants, as long as he has paid his taxes and abides by the law in doing so. What he has already achieved – the reusable rocket booster for one – demonstrates what can be done, inspires others and provides the launching pad for the next step forward. (No pun intended!) So for me, no grouchiness, but admiration and yes, a little bit of envy.
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Musk, the man, is probably going to be OK, thanks very much. He has only a fraction of his $20B or so net worth at risk in Telsa and SolarCity. The battery thing is really his suppliers’ concern. The whizz-bang technical wonkiness of the Tesla is equivalent of the Dutch Tulip – and probably will last no longer and stop just as suddenly.
What I can’t figure, though, is why the author is taking such a personal view of Mr Musk’s enterprises. Grow up, man. This isn’t about you. You and I are spectators, not gladiators.
And no, I don’t fear or envy Elon Musk. He is just one more billionaire who is trying to pretend that the laws don’t apply to him. By that I mean all laws: Physics, other sciences, economics, law of the land, social expectations about such things as greed, sharing and community… laws in general. Typical billionaire.
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I was expecting to read about the outrageous amount of subsidies that Tesla has received. It makes me cross that the government these days picks winners and losers.
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“But when you take a broader sample, you see something different. For every iPhone that did get invented, a flying car failed to be. While we beat back AIDS, cures for dementia and multiple sclerosis languished. And not for want of effort. You can’t tell in advance which fields will yield to effort.”
I think you are confusing incremental and break through development. I think you also need to consider the disruptive innovation types of incremental development (Musk) vs the slow steady improvements of market dominant companies (Musk’s competitors). (https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma)
The iphone while marketed as revolutionary was an incremental development in terms of technology, the first one I had (the v3) was, in many features, worse then the Toshiba feature phone I’d used before it. Intel as the original benchmark of Silicon Valley success, has made amazing, but incremental, progress. But the first Intel CPU was designed by 2 engineers, and was really a small scale re-implementation of what IBM/Digital or any other legacy computer company would have built with a large team of engineers.
AIDS, dementia and multiple sclerosis cures and flying cars aren’t in any way incremental developments. Do these even have a starting nucleus of an idea? (or for flying cars which are the closest to incremental developments, a market?)
As far as his alpha male personality goes, work in a startup or small company you will meet such a guy very soon. Big on vision, small on details. You might also meet the other half of the equation there in the shadow, big on details, complains a lot, but get things done.
I’d comment on Musk, but I really don’t know much about him. He seems to resemble people I have met in the startup world, just on a much bigger scale. All I can say is the Musk show is entertaining, and the capital he sucks up is probably very small in the scale of the larger economy, and the entropy he provides may be worth it.
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So besides the potential for investors and Tesla employees to get hurt, there are some other external risks here.
First, customers. Second, the high strung deliver at all costs environment creates some risks, for instance with self driving. This has not yet at all been thought out at large scale very well, and promises of deploying the tech at large scale can result in a few outcomes
– it all works perfectly, we will be happy and progress is made
– it has some quirks and kills a few people here and there, but its a net positive for eliminating flawed human drivers, we’ll adapt to the new world
– it doesn’t work and gets backtracked, cynicism sets in
– its shipped and doesn’t work in real world, lots of people die
Both of the three latter scenarios create a potential for some quite negative outcomes, where instead of making progress we may actually end up putting a significant damper on it.
I’ve also seen the argument that for anything risky we need people to die for the flaws to be worked out as in early aviation or whatnot, but it’s not entirely clear that all people potentially at risk in our scenarios entirely consent.
Likewise with the Mars plans, but at least the relatively small number of people boarding a spaceship can be either intelligent and informed enough or just young and idealistic to go regardless of risks involved.
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I totally agree that high profile crashes are the worst thing that can happen to the ause of autonomous cars. A single piece of bad footage will set the technology back a decade. I wrote a little about this here:
http://www.news.com.au/technology/innovation/motoring/the-first-tesla-driverless-death-has-happened-another-one-could-stop-driverless-cars-in-their-tracks/news-story/0ccb24206dc934fbad29ffb8809f0739
‘The big risk to the future of driverless vehicles is not a video where the owner is hurt. The risk is videos where the driverless car and its occupants are fine.
A dog being killed by a driverless car would be a local outrage. A child being killed by a driverless car would be a national outrage. A child being killed by a fleet of driverless trucks belonging to some sort of faceless transport corporation would be a global outrage.
In that environment, expect a reaction. It won’t take much for parents to get the government to ban driverless vehicles near schools, for example — even if the driverless cars are statistically safer (remember how WA went on a shark cull after recent attacks? People demand action and, even if it makes little sense, politicians deliver.)
The power of images to get policy made on emotion is proven in the live cattle trade, refugee deaths at sea, wars in Asia, etc, etc. Transport policy will be no different.”
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On 3 October 2017 at 20:39, Thomas the Think Engine wrote:
> thomasthethinkengine posted: “Elon Musk gets on my nerves. Whenever I see > him in a headline I start grinding my teeth. But why? I agree with all his > goals. I love the idea of clean energy. I want better batteries. I’m > excited by colonising the universe and digging cheaper tunnels. So” >
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