– 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'veextracted studying Elon Musk that you can use in yourbusiness 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 trainingHigh Tempo Testing, which is not only a processbut a prioritisation framework that you could use tochoose the right strategies to grow your business.
Let's get into it.
(exciting music) So one of the questionsI get asked all the time, you know, being in tech andhaving 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 officiallymet him more than that I was having dinner witha potential investor, we were raising money for Flowtown, this is back in 2009, so a decade ago, and Elon had to, I thinkthe 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 entrepreneuris like chewing glass “and staring into the abyss, ” Elon's famous for, heactually got it from Dave, the guy I was meeting with, who's one of his best friends.
And obviously I was sitingthere just totally fanboying.
He's like, “Hey, meet the guys.
” I'm like, “Hey, ” you know, blah blah blah.
And he came in like awhirlwind and then left.
It was at the, it's onMarket 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 smarttechnical people, okay.
I know a lot of PHD doctorateAI algorithm et cetera.
So I know intelligence.
What Elon has that Ithink is fascinating is his approach to building businesses and how as I've studiedand I've extracted these and taught them to my clients, these are things that you can use in your strategic thinking andplanning 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 everythingfrom Ashley Vance's book to all the documentariesthat 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 twohours and 45 minutes, so like, “I'm gonna go to thegym for a really good workout “for two hours and 45minutes, I'll be back, ” and I just sat there on the treadmill, you know, steep incline, walking, just listening to thisinterview 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 moreabout all the other stuff.
I wanna talk about the five things I think you can apply in your business to get results extractedfrom 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 toscale 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 vectorsand our job is to make sure “that they're all pointedin 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 othervectors amongst itself.
So if you think about direction, are people pulling on therope in your organisation in the same direction? Do they all know where you're heading to? Are they pulling withthe 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 hetook 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 teamhow aligned are they? Does everybody understandwhy they're working on what they're at and whatis the goal and the mission, because if you can do that, and get everybody pullingin that same direction with the most magnitudein 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 isa concept from physics, and it's just the idea of saying when we're trying to solve a problem, what are the things that aretrue 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 havecreated 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 transportationinfrastructure, then we would have more bandwidth, 'cause we can actually goa 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 thisis how it's always been done, how would we solve this problem? Another example from SpaceXis when Elon wanted to, and he didn't wanna build a rocket, just so you know, hewanted to buy a rocket and he actually went to Russia to buy, I think it was an ICBM, and when he looked atthe cost of the rockets and he got a parts list he evaluated and he said well, I getthis is what they want for the rocket, but whenI look at the components if I had to just price out each component the difference in pricewas 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 wasthrown 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 ticketswould be crazy expensive.
So that was a firstprinciple 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 getthem 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 principlesthinking of solving problems.
And I'll give you onethat's maybe more related.
One of my good friends recently posted in a Facebook group I'm in that his sales marketingteam is crushing it, and their sales team isbooked far into the future, like three weeks into the future and they need to solve the problem, 'cause he doesn't wannapull back on marketing, but he obviously doesn'twanna lose opportunities, and most people would be like, “hire another sales person.
” Which I totally agree, that's probably a goodsolution to the problem.
His thought was, why don'twe 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 asales 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 togo to point A to point B, what's the fastest way to get there.
Let's analyse the truephysical constraints of that situation, and whatare 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 problemand see what you come up with.
Number three, build the machinethat builds the machine.
So recently I was talking toone of my coaching clients, David, and he was strugglingwith scaling his team.
I think they're about 18 people and they were trying to grow.
Usually at 12 is whenthings start to feel tough.
And I started to explainto him my framework called the Company OS, the operating system.
Every company has an operating system, and that is the processesthat allow you to instal software which are initiatives and strategies and tactics, et cetera, but if you don't have theoperating system it doesn't work.
And I said, to me, building the machine at this scale where he'sat as a CEO and founder is the process of building the machine.
Like it's not about getting an outcome.
And I remember hearingElon talk about this when he was building the Gigafactory.
He said, “What's fascinating me more now “is not building a factorythat builds batteries, “but building a factorythat can build factories.
” And it's subtle, it's sosubtle 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 ofkind of looking at the problem, there's also the opportunity of saying how do we build a system thatcan 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 theentrepreneurs watching this, it's about building the machinethat builds the machine, not getting outcomes in your business.
So many of you guys arestill stuck on like, I gotta get marketing to work, I gotta get sales to work, but you're not thinkingabout what's the system that for eternity ifthey execute this rhythm, this cadence, this momentum process, we'll get results in differentareas of the business.
To me, that's why Icalled 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'ssuch an important concept for you no matter what stage you're at, maybe you're early, is to think about how do we create thingsthat are gotta create perpetual motion.
How do we create a systemthat continues to grow.
How do we build the machinethat builds the machine.
Number four, hire the best.
Now, some of you guys have already heard, our job in life as anentrepreneur, 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 thinkyou'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 bestI mean in the world, quantitatively proven, thisperson is the best in the world.
How do you do that? One thing that Elon did thatmost people don't realise is even before SpaceX existed, well, I think it wasright 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 heheld 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 haveit live and continue to grow as a symbol of what'spossible for the race, for human race of going to Mars, 'cause he really felt that thespace programme had stalled and it had, and hewanted to kick-start it.
And he thought, I'm willing to invest in figuring out withthese other scientists how we could do that.
And he literally had thesmartest 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 SpaceXwith these other people, and those became the earlyteam members of SpaceX, literally the smartest people.
And today, if you're anengineer you know this, in all of the schools if you ask them, there was a survey I was recently reading that said here's thelist of all the companies that the top engineers wanna work for, and Tesla's number one.
When you get to the pointwhere you can create a brand.
Sorry, SpaceX is number one.
When you can create abrand that is so powerful that you have the pick of thelitter of the smartest people, see the whole thingabout 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 thebest person to do the job.
Hire the best is about putting yourself in communities where thebest people hang out, learning from them, somehow getting theminvolved in your business, and as you do that you willattract more people like them, because great people wannawork with other great people.
And I continue to thinkthat it sounds so simple, but Tesla and SpaceXarguably have the lockdown.
I think I heard Elon in an interview say, “I feel bad, because I feellike 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 ofsuccess they've had so far.
Number five, market driven innovation.
So, I've had the privilegeof visiting Tesla's factory, getting the tour, seeinghow 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 firsttime I think anybody had.
There was another Fiskercompany that also launched something similar maybeafter or around that time.
And a lot of people didn't understand it, but this is Elon's approachto 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 oflaunching a premium product with high gross margins tobe able to build something that is attractive in the market, that has market pull, that gets funded by wealthy individuals thatare less price-sensitive and that investment in a premium product with wealthy individualsthat 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 whenI was at Tesla's factory tour, was robots building the machine.
As much people werethinking about the car, they were thinking about the robots.
And he does this over and over 'til he can get the priceperformance low enough so he can create a mass market solution.
And he said he was gonna do this, and Model 3 comes out, andeverybody's like, oh my gosh.
Now I have friends ofmine 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 toldyou 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 puta satellite into space.
All of these people wannado satellites, great.
And now he's talking aboutbuilding his own internet using his own rocket systemso everybody can have global coverage of the internet so he can fund even more development.
It's his process.
Tim Urban, if you haven'tbeen to Wait But Why, do yourself a favour, Google it and go read anything Timhas 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 crazyessays around everything from SpaceX to the early days to how he thinks aboutbusiness 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 essentiallycreating a human brain interface between computing and our minds, right.
And it might sound crazy, but as artificial intelligencegets more and more powerful at some point there's thisthing called the singularity where it may be more powerfuland more capable than us, and Elon wants to create theability so it's human plus AI.
We'll be able to manage and control AI.
It's not a crazy idea, but the science behindtrying to connect that directly to our neuronsis ridiculously hard.
So what does he do, he launches a company, he funds it, and they'regonna work on solving, I think it's Alzheimer's.
Alzheimer's is gonna bethe first medical problem that they're gonna solve because it has thehighest amount of volume in regards to patientsthat have the problem.
it's the most approachablein regards to science that potentially could solve the problem.
And that is the premiumvision 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 youto start with the premium.
And the reason why is youmight sell less units of it, but you'll have thegross margin, the profit to be able to invest in more and reducing the costs of the production, increasing your profit, andthen doing higher volume, lower gross marginversions of your solution.
Doesn't matter if it's online training or low ticket e-commercetype stuff or software.
That's where a lot of companies start by doing kind of mid-marketenterprise 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 enterprisecustomers that they close.
That's why I'm a big fan onpre-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 theModel 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 ElonMusk approaches business, five strategies you can use today.
Number one, vector alignment.
Number two, first principles thinking.
Number three, build the machinethat builds the machine.
Number four, hire the best people.
Number five, market-driven innovation.
So, as I mentioned at thebeginning of this episode I wanna share with you anincredibly powerful training called the High Tempo Testing framework.
In it I go over the four core areas you need to be usingfor ideation and testing in the iteration cycle to make sure you focuson the North Star metric.
I even give you theprioritisation 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 thatprocess, and as per usual, if there's anybody that youthink this video could serve feel free to share it with them directly.
Smash that like button, subscribe to this channel, and I wanna challengeyou to live a bigger life and a bigger business, andI'll see you next Monday.
This is like, everybody wants to know, and I've studied him, andI was like, that, that.