welcome to the Behendigkeit podcast episode 6 we are coming straight to you from Berlin Germany my name is Gereon and I’m here with Pauline hi everyone nice to be back awesome all right let’s get into it so today we’re gonna talk about the secret Tesla master plan and so for those that don’t know it Elon Musk in 2006 actually in August the 2nd on August 2nd 2006 has released his so-called secret Tesla Motors plan and it’s a blog post and it’s like if you print it out it’s like about three four pages and in it he laid out the future for the company and this is kind of interesting because you know usually companies keep their plans to themselves and don’t put them out openly and it’s really funny because 2006 2006 has been quite a while ago and it’s really interesting to look at um if he has actually achieved the goals that he had for Tesla and actually he posted this plan and then he posted another one about 10 years later and recently they have released a third plan right and so we’re going to look at it and talk a little bit about um what he’s doing here and why this is interesting and could be um of interest for you in a business context so the first thing that I noticed when reading the original one is that it it really gives you the chills right because you can see what he has achieved um I mean if you think about the story of Tesla it’s crazy think about how easy it is to break into the car industry think about how protected the car industry is for example in Germany right so there’s a lot of large corporations and they are getting subsidies they’re getting political protection from the German government and it’s the same in Japan and the United States and so on and here’s this guy Who as a boy grew up in Africa and then emigrated first to Canada and then the United States and that was able to build a car company that is actually competitive to take it on to take on those giants of Industry household names such as Ford General Motors Mercedes-Benz BMW Toyota and so on and it’s not actually just surviving Tesla is actually thriving and taking market share and so I think it’s a good idea to look at his calls that he publicly made right where are we going what’s our strategy what’s our master plan oh and by the way we’re going to give you a master plan it’s still going to be helpless to defend against it so in 2006 he said and remember back then they barely had anything they had like the first car if even that and as he said well actually our goal is to build several cars right we’re not just gonna stick to some luxury item car that venture capitalist out of Silicon Valley will drive we actually have four goals the first one is to build a sports car and because sports cars are expensive they have high margins we can use that money to then build an affordable car right so if you think about Market entry this is actually a very good strategy start out at the very top where the margins are highing and then as you go on move into lower price segments where the margins might not be as as big but you can actually then increase the number of you can increase your sales through the number of cars sold and so already you can see that this is a kind of a smart strategy because it also allows Tesla to um basically hand manufacture the first models right they’re very expensive not a lot of people are going to drive them and so they can invest over time in the production capabilities

and once they have the money to build the affordable car I’m going to build that sell a lot of them and then use the profits from that to build an even cheaper car right and so if you think about it so you might go oh well what’s the big deal about it but think about what he’s doing here this guy from Africa is telling the whole world what the strategy is he’s going against the Titans of Industry

and no one is able to stop him

and the fourth plan fourth point of the plan is create the opportunity to generate your own electricity back then he still owned or co-owned our SolarCity which was the um company that provides solar roofing for houses in the United States and the idea was that you could then have the solar panels store installed in your on your house and then generate the electricity for your own Tesla car so in 2006 if you had heard of this plan you would probably have thought that this guy is a lunatic right it’s true right it’s true I mean think about it he barely has one car it’s the manufacturing is very manual right and he’s calling out the Giants and he says well this is how I’m going to take you on watch me do it which is completely crazy and what I really love about it is not just the audacity of it the Strategic thinking behind it but also something a term that I like to use which I borrowed from Gary vaynerchuk which is macro micro right so when people think about what they’re going to do they are often going too much into the details right they’re going into the nitty gritty and trying to just like oh will it work if if I take this part of the engine and Electrify it and so on and they go in all the details and they get stuck there because they cannot solve some precise problem but this idea of macro micro is to say well yes on the micro level there’s going to be a ton of problems but we think we can handle them we trust ourselves let’s think about it from the macro level is it possible to build a car that couldn’t can be appealing to rich people in California for example well probably there’s some chance to that once we have that goal achieved and by no means is this short can we then expand the production into another car that is a little bit more affordable and where maybe the production is better maybe right there’s going to be a million of problems but probably and can this process then be continued and also can solar options be provided probably on the macro level this seems very straightforward seems very simple I could come up with this macro plan could I do it on the micro level no chance however we’re talking about strategy here like very high level product strategy and so you don’t need to resolve all the details you need to make sure that there’s not going to be any critical roadblocks any problems that are going to derail everything and this is kind of where the difficulty comes in you need to go into the micro just as much just enough to understand where the problems may be but not get bogged down by it

so if we look back at this did they build a sports car jack did they use the money to build an affordable car check are they using that money to build an even more affordable car I actually don’t know I think so they are reducing the prices they might not have started a new card but they are continuously reducing the prices on their more affordable cars and so they’re kind of checking the school as well and they have also been working on the power generation options

one thing that might not be apparent here to people is we talked about the audacity but the long-term thinking is also crazy so if people build a company they want to make money usually right some are more Mission driven some are more profit driven but here is clearly stated the money we make is going to go into a new model of car right and that is going to be reinvested again and going to be reinvested again he’s not talking about oh I’m going to take that money out I’m going to be rich I’m going to buy yacht it’s everything we do the master plan is just to keep reinvesting into the future and he’s kind of laying out the road map of how he’s getting all right so this is the original master plan um it kind of gave me the chills to read it and it looks like they were pretty good at accomplishing this so now master plan part do 10 years later July 20 2016. and now it’s a little bit further along right they have been successful and I think people really underestimate how much trouble it is how much how much pain is in getting there right we just see it from the outside and we might say oh this guy is crazy what are you saying on Twitter we might say oh I don’t like the the form of the car or something like that but think about how difficult it is and Elon um often says that there are actually two American car companies that didn’t go broke and that’s Ford and that’s Tesla General Motors when broke a ton of times Chrysler the same all the different car companies and there were hundreds that you don’t know the name of all gone right because it’s extremely difficult to do and while in the first master plan electricity was just a minor topic right was one of the four points but the rest was really focused on on cars now suddenly energy comes more into the foreground

and he’s saying at some point of time our civilization must achieve sustainable energy economy or we will run out of fossil fuels right so the fossil fuels are going to run out at some point of time so we need to find another solution and because of global warming we might as well do it now

so then he lays out his plans he talks about the sharing of the cars right so the idea is that if you’re able to have an artificial intelligence drive your cars then this will be helpful right because you don’t have to pay attention but also then the car can drive without you and so rather than have it stand around or sit around in your garage and while you’re not using it it can be used as kind of an Uber service right it just goes around picks up people it can actually make money right you get the energy from the Sun for free you power your car it drives around the town by itself you make money while you’re at work for example right it’s very very nice vision and so right in this second part still talking about the cars but now the focus shifts all but to energy and then to artificial intelligence and then like creating business model of like enticing people to buy into owning a Tesla because then they can actually make money with it and so now just a couple of days ago the third master plan was released and what this strikes me as is so so let me put it this way in my opinion Elon Musk is the best Chief product owner there is on this planet there are some people who come close and of course Steve Jobs was in that category but I don’t think people realize how he’s able to take big building blocks big initiatives and line them up in a way that actually makes sense technically economically and that help him get further along the road because a lot of businesses are just very short-sighted right they see an industry that they think is interesting they go in it they try to make money right the money they make they don’t reinvest they um dispense it to their shareholders right and then after some time they look at another industry or another part of the world and they just repeat this thing and he’s not doing that he’s doing something different he is like always jumping a little bit further always seeing okay if we build this what does it allow us to do next right we can jump there we can jump there we can jump there and I think this is one of the big parts of the success of Elon Musk is that I don’t know who he’s he’s as a boss I don’t know what things he’s really good at or bad at but I know that he is supremely good at arranging the building blocks to go from somewhere to something bigger and so if you had asked him in 2006 what do you want to do I’m pretty sure he would have told you the final goal what you wanted to achieve but he didn’t say that he said I want to build a car and once we have managed to do that we want to build a cheaper car and over time you can see he went from an expensive car to cheaper car to a potentially cheaper car build up some energy introduce artificial intelligence to driving and then take it step by step so now we are in 2023 and suddenly what happens cars I’m barely mentioned in the Tesla master plan

let me say that again cars are barely mentioned in the Tesla master plan it’s all about energy this reads like a you know like a thought paper by the United Nations some United Nations Commission on on energy transformation or something like that and what it reveals now is that Tesla in fact isn’t the car company Tesla is an energy company and if you reread the old Master plans it was actually in there all along right the focus was always on the cars but energy was always like in there like kind of not hidden but not being made prominent and suddenly we can really see where he’s going and what he’s trying to do is he’s he’s trying to change the Energy System of the whole planet and think about the grandiosity of that I mean who even comes up with an idea like that to change to completely change the energy system for the whole planet

no one right I mean who does that seriously I mean who even dreams that big not and even I mean actually there are a lot of people that dream that big but a lot of them are not quite right in their mind right they or they might be real dreamers they dream of it but there’s no possible path to get there and this is what I’m trying to get at he dreams big making life multi-planetary for SpaceX changing the energy system of a whole planet but then he has this capability of saying okay why do I start today to actually get there in 20 years and he does it he like has different increments you can call it epics whatever you want building blocks of going from here to there to there to there and at some point of time with a little bit of luck and a lot of hard work we’re actually gonna change the whole world

and to me this is absolutely crazy because you have to think quite far ahead and you have to be willing to do the work right it’s one thing to say oh I’m Gonna Change the World of energy and everything is going to change oh and this is such a good plan I’m gonna talk to Bill Gates I’m gonna talk to the United Nations and it’s a totally different thing to use the vehicle of Entrepreneurship to actually get this done because guess what’s happening now all the car manufacturers are going Electric why well because Tesla forced them to how do you change the Energy System of the world well you change Transportation as a start and once the infrastructure is there to fuel with electricity the cars all the transportation well then you have the infrastructure in place to fuel everything else as well and you know I’m not even sure I like the guy

but the genius is just overwhelming shoe comes up with something like this creates a plan like this and then actually makes it happen even if he you know something would happen to him tomorrow Tesla would go broke immediately I think it’s already too late the change is already happening the laws have been changed the competition has moved on and two electrical vehicles and he’s already set everything in motion and so this is going to happen it’s going to happen a lot sooner than people think

and so what I think he has done is found a way to arrive at really really crazy goals we’re starting out with fairly little and I think this is something that should be looked at more and that should be understood more especially if you’re in some kind of strategic or product role because this is basically what we’re all trying to do right we’re trying to have the most impact with the least resources

and nobody quite knows how to do that yeah talk to the customers of course yeah have a good strategy but what does it even mean right we can’t even if you go to a top Management in a company and you start talking about strategy they don’t even have the same definition of strategy nobody even knows how to talk about it such an elusive and complex matter but he seems to have found a way to have this grandiose goal and then to cut it up into smaller pieces and each of the small pieces is still gigantic to then be able to achieve it over time so let me look at some of the things that might be interesting

so I’m just going to go quickly through what are the steps that are laid out in this current master plan and one of them is of course the switch to electric vehicles this shouldn’t come as a surprise but also to generate generate electricity through solar and water and this is no surprise either um they lay out some ways to switch over industry and one thing that is maybe quite interesting to Germans is that um one of the core points they’re looking at is actually to switch to heat pumps which is a big Topic in Germany right now because the government is mandating that new buildings um use heat pumps instead of gas but this is actually exactly what Tesla says in its master plan um economies need to do and so as you go through it you have these points there are six of them in total so for example number four is industrial production number five is um boats and planes which are a little bit more difficult and then the last point is actually creating the infrastructure for this transition

and so as you go through this and you read it and it’s very technical right and I’m not particularly interested in electricity generation and consumption and so on the Technologies for storing it but you see or you come away with a realization this actually doesn’t seem completely crazy if he had read it in 2006 the first one it would have said yeah we’re going to change the world we’re going to build a car and he would have said no what if you’ve been drinking and why didn’t you share and now you’re looking at it and they’re basically talking about well we’re gonna change it everywhere in every industry and you go yeah seems feasible and so this is to me the epitome of a good product on a cheap product owner product manager strategist CEO you chart the way in into something that looks impossible to do but then as you progress and you learn more and you adapt you actually realize it is possible to do it but you need to have that Grand Vision first and you need to know which are the building blocks on your way there

so

I wonder when I’m reading this so this is kind of it’s it almost seems like an like a story arc that’s about to be finished right so let’s say in 20 years this energy transformation has happened and they nicely lay out the plan layout the cost for it and it actually they say it’s cheaper to rebuild the whole Energy System of the planet than to just continue with fossil fuels and I think it’s very convincing what if this story arc is finished in 20 years what’s going to happen then so we have these new forms of energies and um hopefully we have at least slowed down global warming and the air has gotten better and so on and so on what’s gonna happen next and this is where this report leaves me and that I don’t care about the energy honestly it’s it’s not my topic I don’t care I care about the product ownership the vision and so on and so my question is Elon Musk is I don’t know I think he’s around 50 now he hopefully will see this through he hopefully will see SpaceX through and some of his other projects

what’s the next story arc who has the genius to think of Gold’s this ambitious and then be able to cut them down into smaller pieces and then to actually execute on them because I think this is where we run into problems as civilization people are dreaming big some people know how to execute but it’s not unified in one person or in a team and I’m really wondering what is going to be the next Tesla or SpaceX not as a product or company but what’s the next big thing that we actually need to tackle that somebody maybe another boy from Africa says well I’m gonna change this I know I’m crazy everybody’s gonna laugh at me I am still going to do it and I will actually do it and be successful yeah that’s a hard question actually yeah and and I get it’s a little bit drier but I think this is this is extremely important right because in the day-to-day we’re always stuck in oh yeah I need to do this I need to I don’t know build some more of an app and try to go from here to there but who’s actually thinking thinking along these Grand lines and thinking about okay so where are we going with all this and I think changing the energy system is a very good thing becoming multi-planetary is a big thing but I actually have trouble thinking of more more big issues that need to be solved I think even that is like something that a lot of us humans are lacking in right what’s what’s the next big thing never mind being able to cut it down into pieces never mind [Music] um solving it but you were just now looking like you were thinking about something actually no I of course that’s a tough topic and I don’t I have no answer to that question not at all because I think I don’t know yep but you know what the funny thing is as you were saying that I was thinking well maybe we’re making it too complicated and maybe the listeners will go got there to keep making it way too complicated because we just had this discussion about nutrition right before we started the taping and with wildly opposing viewpoints and of course fear wrong and I’m right of course but the thing is you know if you ask two people about their opinion on nutrition you’ll get three answers right nobody can agree on anything the science has been completely messed up by the food industry right they’ve been paying lobbies they’ve been paying off scientists to just um it’s like that to just spill lies and so nobody knows where we are anymore right like everyone is kind of lost in it and everybody thinks they have some answers and I think it’s true they have like partial answers which maybe work for them but not for everyone um or maybe work in some age range and then they don’t work later or maybe they you know it’s it’s just for some time

and if you think about it what Elon Musk has done is he has basically sat down and said well I’m going to solve nutrition you know think about it like where would you even start if we said okay us too we’re going to solve nutrition right now all take 30 years that’s fine but we’re gonna solve it that’s a big goal it’s a worthwhile goal because like I’ve heard some statistics I think in the United States like 80 of people have diabetes or pre-diabetes right and it’s the same in Mexico and it’s same a lot of other countries and nutrition is a huge problem huge problem

who’s solving it who is who is the Elon Musk of nutrition and I think we’re making it too difficult I think we could probably come up with a lot of stuff education the big challenges right but is somebody really tackling it with that kind of Genius is somebody really laying out the plan is somebody actually driving the stuff I don’t know I hope so but it’s kind of crazy if you look if you think about it that this guy he has actually done it how many tries were there before of electric cars that have been sabotaged by the car companies how often has the United Nations or some state government said oh yeah we’re gonna trial it and we need to get away from fossil fuels and so on nobody was able to do it but he just found the exact trigger points and levels to get there yeah this guy really had a vision and I think that was the most important like of course it was like a queue of like lucky decisions and lucky also like changes in the surroundings changing in our nature whatever and politics but this guy was really focusing on his plan and he really had a vision he really like follows what was in his mind and I think that’s the most important thing lots of people have good ideas but then once you get criticized so once you have a problem most of the people just stop what they what they want to do because it’s hard there are too many problems also like financially I think like that’s a big problem for most of the ideas to change something in the world then politics whatever but this guy never gave up and I think this is a big point in any changes in the world like if once you give up you you lose but he was following his plan whatever I think they’re probably like there have been so many big things with like stopped him from doing what he wants but he never gave up and then he found another solution then he tried on another level on another way with a different Focus maybe whatever so I think this is the most important thing once you have an idea you just have to continue doing it if you change something if you change how you get the goal like how you achieve your goals that’s not the case but never lose your focus yeah I think you make a very good point

but I think you know staying on target is good but I think a lot of people have exactly that problem with staying on target while constantly changing how they approach that Target right which is of course the theme of agility um

it’s it’s really astonishing to me because you were talking about luck you said he was lucky and of course there’s a ton of luck in there but how is it possible that he has already done it twice it’s crazy and of course right now Twitter isn’t looking that good and I personally think he made a mistake there wouldn’t be surprised if he can pull a rabbit out of his head um after a while anyway

but is there a secret sauce is there a method to the madness that we can learn from and that we can maybe not copy but you know I think I’d be happy if I would learn just some parts of what he’s doing because I think that would be very good in in creating something meaningful and achieving your goals and so on and I think in their personal dislike of him people Overlook what he has accomplished and then they pull up stuff and they say oh it’s dead he had some kind of like I don’t know like a diamond mine or something and yeah that’s not that’s not really the case they are acting like he was like a billionaire which he wasn’t right and they always like focusing on some negative stuff but if you think about it and I know I’ve said it a couple of times but I really want to drive it home it’s a kid from Africa who came to North America and was basically broke right and he built all the stuff and like what’s our excuse and if you did it like that is there something that we can learn from how we approached it and the funny thing is he put it out for us to read right so the master plan is out there we can see in 2006 what he was thinking we can see was he right did he move in the right direction and he didn’t always meet all the goals right so the cars aren’t fully driving yet you cannot share your car it’s not driving around alone and making money like a like an unmanned Uber but he still seems to be on Target and I don’t have an answer to this but I think anyone who is in strategy top management product management in any kind of form needs to watch him and learn from him and I don’t think we have learned from him enough there’s not enough good biography biographies we don’t really know how he’s doing it in detail and I think this is something where we’re really lacking and can learn a lot more yeah I totally agree all right guys that’s it for today this was about the secret Tesla Motors master plan um closing out from Berlin Germany Pauline and carry on if this was of interest to you we’ll be happy to see you again next time around goodbye bye-bye