Ex-Tesla President reveals EVERYTHING Elon does to win

0:00 Part of the secret to Elon's secret sauce is he sets these order of magnitude improvement goals. So 10x, 100x. He came to me and said, hey look, we gotta figure out how to sell cars online. Because nobody was buying a hundred and twenty thousand dollar thing sight unseen online. And so he turns to me and he says, This is your goal. Improve digital sales by twenty X. So now it's like oh crap, I gotta think way differently about this. I feel like I can rule the world, I know I can be what I want to Alright, so I guess to start

0:34 I mean, I almost want to rename the podcast How Lucky Are We? It's like Oh, we get to sit here with the guy who was the president of one of the most important companies of our time, Tesla, for years. You get to work with one of the greatest entrepreneurs ever. Elon, you yourself have this crazy entrepreneurial track record you've built and sold. Yeah, five, six different startups like the force gump of the tech industry just going into different spaces and you go into, you know, uh auto repair and cyber insurance and all these different spaces. And so I'm pretty fascinated that we get to talk today and I got a bunch of questions for you. But I wanna start With less of a

1:08 Tactical question and more of a a movie scene. So um You go into a job interview with Elon Musk. It might not have even felt like it was a a formal job interview, but your first conversation with him. Uh what's that like? All right, so uh the setup to the scene is we're introduced by a mutual friend.

1:24 And he is intense. Uh and the niceties were about two sentences, and then he said Hey I got this. Problem in manufacturing. Have you ever seen it before? And then we were right into it. And

1:37 Two hours flew by'cause I had had that experience in manufacturing. I'd seen that problem. We started to break it down together. And then we started to move deeper and deeper and deeper into the problem. And uh we looked up in two hours, he was like I oh man, like I Yeah.

1:51 I gotta let out of this. I gotta go. Uh I'm gonna go Down to the factory floor and do what we just talked about. So that's the first that's the first combo. He's uh so you're problem solving together. He skips a small talk. And then is he testing you or he's just genuinely trying to solve the problem right now? Like did you get any sense of he was

2:10 Poking around to see kind of where your capacity was, or he was literally just Oh yeah, that's uh no th that's exactly what he was up to. So His hiring method is he wants to determine whether or not you can do world class work. And his method is to interrogate A particular problem and goes super deep on it. And uh it's Better if he tries to

2:31 Skew it to a problem that he knows. Right. You're bullshitting. Exactly. And he can take you do super deep because he's in it. And he w he just likes to know like Almost like a video game, like how many layers Can this player get through? before they're stumped. Uh and so that's exactly what was going on. We were getting to know each other, but ninety percent of it was

2:53 He was evaluating. Later when you worked there near the president, did he try to teach you kind of the the method or say like, hey, here's what I'm doing when I'm interviewing. Cause I'm assuming for the first X hires at Tesla, the key hires, I think it I've heard I've read something before that he interviewed the first thousand people at SpaceX. I don't know if that's kind of like folklore or real. But

3:12 You know, the idea that he's he's basically figured out how he likes to hire. Did he try to implement that with you and others so that it's uh the whole team is or is hiring that way, or he just does it in his own i idiosyncratic way, you do whatever you want to do. I'm glad you raised this because this is a hack I don't get to in the book, but it's the thing that a lot of entrepreneurs think about, which is as your company scales, how do you protect the culture? Right. He and J B Strobel, the co founder of uh Tesla, came up with this method.

3:39 To imprint the culture on every hire. And to test for culture. And that was They would be the last interviews. That's a hack. that I've taken forward now uh from from that Elon experience. Uh and now I do that too.

3:54 But The way that translated uh was that he would say, like he said to me, Hey, look We know as fast as this thing is growing, we're gonna split this up. And you and I are gonna Interview everybody that's hired at a manager level and above.

4:07 So we didn't interview everybody, but growing from four four to forty thousand employees. There were a lot of interviews we were doing. In fact, sixty percent of my calendar was interviews. Wow, sixty percent. That's unbelievable. Yeah, but it was super important because you totally win and lose on talent. So like that's another hack for entrepreneurs to think about is

4:24 How much of your calendar is devoted to the number one driver of your success, which is talent? Right. But he told to you the point of your question, he said he We have to determine whether or not these people can demonstrate evidence that they can be world class.

4:40 And to do that, we've got to dive deep. So he basically articulated what he had done with me as we were getting to know each other and going through that uh interview process. And then we sort of divide and conquered. Like we literally were the last interview. And oftentimes I would include in my senior, senior hires Uh I would include JB and Elon, because they were both such great talent selectors. JB especially has this unbelievable knack.

5:07 For talent selection. And w what did you pick up? So what's the n what's the uh okay, so I hear the the overall method. Which is you wanna be looking for this sort of um world class work, evidence of exceptional ability. You are gonna how do you do that? You go super deep on a problem that they've worked on or that you understand. I've heard Elon say a couple of things that I liked, which was uh he's like I'm trying to say wow, wow, wow in the first twenty minutes. And if I'm not saying wow, wow, wow in the first twenty minutes, it's probably not there. Exactly. And trust trust the conversation, not the resume, because you can have a great resume. But if the conversation is not giving you wow, wow, wow, it's not there. And if it is

5:43 Forget the resume. It's you know, this is legit. So I picked up a couple of extra things in the over the years and some of his interviews, but I would love to you know for to go from white belt to blue belt here. So what what are the nuances? What is a little what's a question What's a Uh a little red flag or a trap that you've learned to to avoid

6:01 So one trap to like try to identify is Did this person actually do the work or are they claiming the work of their team? In other words, a lot of us have been on teams of eight or ten or twenty that have done unbelievable work. We've been on those teams. But it wasn't our work. We weren't leading the team. We weren't leading the curiosity or the discovery or whatever. And so that's the trap that you're trying to like dive into.

6:24 so deeply in the problem that you start to determine did this person actually do the work or not. And It's tricky'cause there are companies that are fully matrixed So take like Uh Nike. Nike's a fully matrixed organization. You pull a marketer out of Nike.

6:39 That marketer has never had Uh, full PL responsibility, full creative responsibility, full distribution responsibility. They have a very niche job. And it's really hard to determine. Did this person do the work or not? Uh. And so you go way deep on trying to figure that out.

6:55 Knowing that it's a risky hire to hire from a matrix like that,'cause you really can't Put your finger on. Who really does the uh the breakthrough work. That's kind of that's one. The second is

7:07 I would present a Much like Elon did with me. I'd flip the tables and present a current problem of mine. And then I wanna see their level of curiosity. their level of analytics, their level of problem solving.

7:20 Uh, their their ability to ask really great questions to get some data from me and get me engaged. Right. And so it's basically it's it's that basic. Like go into a problem of theirs. Then flip the table and go into a problem of yours. And that's that's the Nakatesla. It was like, let's turn complex into simple. And so uh and so if you've been a leader there, you can identify these leaders because They have the

7:42 Ability within a minute or two to take a really complex question and boil it down into principle. Hey everyone really quick, if you're enjoying this episode on CEO stuff, so delegating, having hard conversations with your team, hiring, then I've got something for you. So the team at HubSpot, they actually went and put together a bunch of best practices that Sean and I use in our own companies. And they put it together in something that's really easy to read and understand and so If you want to just save yourself ten years of headache and heartache, then you should check it out. I wish we had this a long time ago. It would have helped me a lot, but there should be a QR code on your screen that you can scan or a link in the description. So check it out. It's totally free and totally awesome.

8:23 I've had the s ex the two traps you just mentioned, I've had the exact experience they had in the last week. I interview somebody, they're like, Oh yeah, I was there from one million of revenue to ninety three million of revenue. Oh, fantastic. They weren't the one driving that revenue. So it's not even their claiming the work of their team. It's their claiming the progress of the overall company. And they lived in this corner over here that had nothing to do with driving the growth and they really didn't understand the oh the core engine of this business is Is A.

8:49 You worked on B over here. And I need to find people who the guy who built A because A was the reason that business won. And that's what we're actually trying to understand and and trying to try to uh do our own version of. So I've I've definitely felt that. And then the other side is There's people who have come from these great companies. Nike, I'm a marketer at Nike. Well, Nike has great marketing and so your brain associates this like level of talent, but they're not maybe the people who were there at the beginning, the ones who made the key decisions.

9:12 Or one thing that I found is um with salespeople there's a great piece of advice I think from Ben Horowitz or someone he's like Hire the salespeople. From the ones who had the the shitty product. He's like if you f hire a salesperson from the the people whose the product was just being pulled by the market

9:27 The you know, the fish were jumping in the boat. And you don't know if that person's a great fisherman just because they were just being handed inbound, organic, warm leads. And they were closing them. That's that doesn't mean anything. You want to go to the guy who was selling on the the tier three company, still beating quota. Um, even though their company was not the winner, their product was not the hot one because that person actually knows how to sell. And that's really helped me with those some of my companies. So there's these like small heuristics that can actually like improve talent selection and sourcing.

9:55 I I a hundred percent agree with that. Like our head of retail came to me uh And he said hey am hiring a lot of Apple people from Apple stores. And I said, Time out. You can work in an Apple store and you are an order taker. Go down the hall to the people at the Microsoft store.

10:11 Who have to sell a slate. Two doors down from a mic MacBook Air. Those people know how to sell. The fact that they're they're not starving is unbelievable. So go hire them. Well, one of the stories I loved in the book, so I have I have the book here, so I'm like highlighting All my favorite stories as we go. But you have a sale a Tesla sales story. Can you explain tell that story? I thought it was a great one.

10:32 So the context is uh Elon and I are having these discussions, we're getting to know each other and uh eventually he pops the question. He's like, Why don't you join? My first reaction is I'm not sure I'm your guy. Like your company's twice as big as my biggest company already. Don't you need a big company guy? And he says, No, no, I I I it that's the opposite of what I need. I need a fellow entrepreneur Who knows what it's like. You need them.

10:54 Yeah, totally. He's like, I need a I need a fellow entrepreneur who knows what it's like to chew glass and look into the abyss, his famous quote. Uh and you know how to allocate capital and no big company Person's gonna know that. So simply why don't you let me go poke around the business. What is your biggest challenge right now? He said oh.

11:11 Biggest challenge is top line. Like we've promised the the street we're gonna sell twelve thousand cars this quarter. And it's a month and a half in, we've sold three. I'm like, Oh crap, that's a big problem. I said to tell you what I'm traveling to the next week. I'll call you in a week.

11:26 So I went out. As I was traveling to Tesla stores. And I test drove cars. Yeah.

11:33 Move was to mystery shot. Which I like by the way. It's all intellectual, it's all strategy, and no you're like, No, no, let me go s let me go see f ground floor truth of what's going on. Totally. I'd read the Sam Walton biography. Uh and the biggest thing I pulled out of that book was the management hack of secret shopping. 'Cause you get to sense.

11:52 Like frontline employees know exactly what's wrong with the company. They will tell you what the customers are complaining about, they'll tell you what the the organization sucks at. And so that was my first instinct, like go to the front lines. So I go to eight stores, I test drive, use different email addresses so they don't know who I am. And The test drive is supposed to be the fulcrum of the sales funnel. Like you hit the accelerator and you can't stop thinking about buying a Tesla. Right.

12:16 I didn't get a single call back. And Elon had introduced me to the head of sales ops. So I called the guy I said Can you tell me

12:25 Why I'm not getting called back? And he said. I looked at the system, you're not flying like I have no idea. I said, Okay Tell me how many people have gotten a test drive in the last thirty days. That haven't been called back.

12:38 So it cranks through the CRM and he comes back and says nine thousand. And I'm like, nine thousand, you're gonna make your quarter if you just call these people. I said, Okay, look. This problem has to get solved now, so I'm kind of in CEO mode.

12:51 And um like this problem has to get solved now. Can you cut off any new leads to salespeople? Until they call all their previous test drives back. He's like, Yeah, I can block that in the system. I said, Okay, do it. He's a great. It'll be done in two hours globally. They weren't calling back, not out of laziness.

13:09 But because the incentive structure, right? They were getting They the sort of commission was tied to the test drive, right? Not on to not to sales that close from a follow up. Is that what the there was some incentive problem, correct? There was there was an incentive problem, but there was also a profile problem. We were hiring people that didn't know how to ask for the sale. Uh and that was the root cause. So when you force them to Uh then uh Then stuff started moving. So

13:34 I talked to the guy the next day, he's like I already have the results out of Asia and Europe and like sales are Flying. And I said, I said, No surprise, like all you have to do is call people back, like if you want to close the sale. Right. Um And then it dawned on me, oh crap. I made this decision

13:51 Like I was the CEO I don't even work. For Tells the Yet. And so I said to the guy like uh I gotta call Elon and tell him what we did. Uh, and I said I'll take the blame.

14:02 You're not gonna take the butt, I'll take the butt. And so I called Elon and I said, Man, I gotta I gotta beg your forgiveness. I'm I haven't not been a CEO for twenty years. I've had six companies

14:12 I've uh I haven't had a boss. And when I see a problem, I want it gone like immediately. And so here's the problem I saw. On your top line challenge. Here's what's happening in your stores. Here's the change we made yesterday. And by the way, I think with this change you're gonna make a quarter. Uh-huh.

14:29 Long silence. Like uncomfortable silence. This is before I knew about the signature Elon long silence. And uh we talking, thirty se ten seconds, thirty seconds. It had to be at least sixty. And to the point where I was just about ready to ask him, Are you still there?

14:44 And what I Have now come to learn is like that's his processing mode. He shuts down all other sensory sensory inputs and he just lets the computer run uh while it's like literally like AI, right? You can say go to go to think mode and exactly it'll take time. That is the think harder button. So uh He comes back on he says. You know what? I think you're gonna fit in here just fine.

15:07 You've proven to yourself and to me you can be useful. So why don't you just join? That's an awesome story. Yeah. Um and you you know, you've done this kind of over and over again where you sort of go into problem solving mode. And I wanna talk a little bit about that little off book here because Yeah. I was at a dinner somewhere and I got bumped into a Dude who had taken over as CEO of uh Lyme Scooters. You know, one of the scooter companies I knew like hot for a while. Yeah, exactly. Bird or Lyme and then it kinda crashed.

15:35 But they're a public company and they're struggling now. And um So this guy t comes in and I was like, So what'd you do? 'Cause they he actually turned the company around. Like they got to profitability. They like It's not like it's the best company in the world. But it was about to die and it did not died. So, you know, as a ER doctor, he did well.

15:53 And he goes, the first thing I did is I went and I sat in the warehouse. And I just sat took a chair and I just sat there for eight hours. And they you know, people were like, Hey, do you wanna do meetings? And he's like, No, I just wanna watch. And he just watched And he's like, Okay, w he's basically like watching where all the waste is. Cause if he wants to make this thing profitable, he has to find out where all the all the waste and expenses that's not driving revenue to the company. We're getting you know, we're spending money, but we're not getting paid to do these activities. He's like, Oh, so that guy He's doing this, but there's a bottleneck over here.

16:24 And that's because they only have one person and they're all waiting for this. And he's just he's like, I sat there for eight hours and it kind of like told me what I needed to do for the first, you know, two weeks. And I remember thinking This idea of mystery shopping or going and sitting in the factory, going and sitting in the warehouse and just watching what's going on. There's

16:42 An immense amount of power to that. And I think for Most CEOs we sort of think that a big impact has to come from a big high level thing. And not this kind of roll your sleeves up. Just go watch.

16:55 You don't need a two thousand IQ, you just need a simple thing. Yeah, like I think the biggest your biggest job as an entrepreneur Or as a leader is to like Stack rank the problems that are Constraining your business.

17:07 Stack rank'em and then pull the biggest problem off the top of the pile every day and work it. Mm-hmm. The first principle that I learned from a guy that Who was a mentor of mine, he taught me He used to haul me down to the

17:19 Like I had a software business. He would haul me down to the customer support Teams. And it's a just sit. Here, on a chair and listen. To these clubs.

17:29 And His first principle that he kept saying to me was I'm gonna introduce you to the most powerful analytics you have as a leader. Your two eyes and your two ears. Use them.

17:40 Because You will get insights so much faster than the data can get to you to give you insights. And it was true. Uh and so When I started at Tusso we were having a

17:51 Super big problem producing Monol X's and getting the Falcon Wing doors to fit. And uh and Elon and I had shared this uh this Favorite book, The Goal, which is all about manufacturing process. And he grabbed me one day, he said, Okay, the goal guy, uh come on, we're going down the line And I said he said

18:10 Help me solve this problem. I've been sleeping in the factory trying to work on this. And I said, Okay, like We're gonna walk up the factory line to where all the inventory is stacked up on these doors because that's the clue where the problem exists. If If throughput can't get through there, it's all stacking up. That's where the problem exists. So we're just gonna stand here.

18:31 So we walked to that point, sure enough, bunch of doors stacked up. And I said. Same thing my mentor said. I said, You're gonna now use and I'm gonna now use the greatest analytical instrument in the world, our eyes. And we're just gonna sit here for an hour. And this is gonna drive you crazy, but we're just gonna watch these people work. And so we stood there and watched him work and you could all of a sudden see

18:51 Oh, these people can't see where the bolt goes. Because it's blind. And so they're threading a bolt blind and they're missing the they're missing the angle. And therefore the door is going on crooked. What do they need? They need a jig. After it.

19:05 Ten minutes you could see this. And so He got antsy, I got antsy and we're like, Okay, just have the maintenance guys build a jig. Bring it out here and let's start to experiment about whether they can get the bolt done correctly. But that was an example of

19:17 Just go out there. Don't Don't depend on data. Don't depend on anybody else else's uh opinion. Just go see it with your own eyes. And That will lead

19:28 Most likely to an insight. Did you do you can then teach people like here's what I was looking at, here's what I saw. So if you're the leader of this little team Next time you look for this. And

19:39 You can solve this problem. Uh you don't have to wait for me to come down here and sleep on the factory floor as the president or CEO. What's the uh it it's it's funny. It's like uh I is there a double slit experiment problem here where as soon as you start observing it, it it behaves differently. So when you're sitting there watching with Elon, all of a sudden the doors are going through real fast. Is that is it that or no? Like it's usually a process constraint, no matter how hard they're trying to work. No matter how hard they're trying to work, it's usually a process constraint, but that does happen. And so the problem can like Can can fool you.

20:08 Uh because people do start to have the white coat problem where you're the boss is standing there and they're like, Now they're hustling, now they're trying to impress the boss. But most of the time you can see it. Like if you stand there long enough, they're gonna forget you're there. Right. And and there's also um you know, you talked about being there for an hour and after ten minutes you see it and it you get antsy, you want to go fix it right away. And there's almost actually a benefit. And just feeling the pain a little longer than you're supposed to to just really like actually drive home the importance of it. Totally. I'm not in the manufacturing business.

20:38 But I have an e commerce business. And in our e commerce business We're at this you know leadership offsite and we're all talking about these strategies. And it's like, has anyone tried shopping the site or watching someone shop the site? Hey, let's get somebody here. To shop right now. And they're trying to find something that we know we have and you can't find it on the site and it's painful. And we think this is so you just click that thing and they won't click it because it doesn't look obvious.

21:01 And Feeling the pain of watching somebody use your product. It's surprising how many CEOs don't actually uh use the product or watch r average people struggle to use the product. So I was with a group of bank executives uh a few weeks ago and I asked them to raise their hand if they use their bank's app in the last week, their consumer app.

21:24 And no hands go up. And I said to them, I could have guessed that. Because I'm a consumer of two of your banks and your apps are terrible. And if you use them. You couldn't live for another day with how terrible this was. So you'd be calling

21:38 Whoever could fix it to fix it. ASAP It a little bit to your point, like I learned this technique from Scott Cook, the founder of Intuit. And he's got this process he calls follow me home. And what it means is you look over the shoulder of real customers who are using your product. So sometimes you can't use it. And there's a lot of cases of that.

21:57 But you want to see how an actual user thinks about using your product. And when you look over their shoulder, you see all of the friction you're putting into that product. Like how difficult it is really to find what you're looking for, to make the right clicks do whatever. And he has his senior executives do this.

22:14 On a really frequent basis. So that they're getting the feedback loop through the eyes of the customer. And oftentimes those customers will turn around and say, Would you just fix this or would you could you just do this for me? And they get new product ideas too, where they They would get to like An accountant doing the end of the month.

22:29 Payroll clothes and they One of them. in this exercise turned to a senior manager and said be a whole lot easier if the payroll was just done by QuickBooks. And boom, that idea was like right back into the senior management team discussion.

22:43 Instantly like Hey, I just heard this from a customer. Should we get in the payroll business? Now that's a huge business for into it. But it came out of these like

22:52 Just follow the customer home and watch them click. And uh and then have them tell you not only what's wrong with the product, but what what's missing in the product. Does doesn't Procter and Gamble do something like this where you uh I think they have like research teams that will literally go home They'll go to the home of a of an average mom and they'll watch, you know

23:10 How they clean their kitchen, how they're oh they use the soap this way. Totally. I'm on board with a guy named Chip Berg. Uh Chip started his career at PG. He ended up being the CEO of Levi's. But he was famous at C at P and G for watching moms in kitchens, like you said. And he invented he and his team invented the Swiffer.

23:30 Because The g it' the the mop sucks. Like you got you get water all over the place. You gotta dump it in the sink. It's totally janky and so they invented the Swiffer based on wha how they watch moms suffer with regular mops. Right. I love that.

23:45 Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book but then tearing out four fifths of the pages. Point is you miss a lot. And unless you're using HubSpot, the custom platform that gives you access to the data you need to grow your business. The insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference because when you know more, you grow more. And so if you want to read the whole book, instead of just reading part of it. Visit hubspot.com. You have a couple of other like business principles and one of the things I liked was

24:15 Uh, I'm a idea guy. Like my my entrepreneurial style has a high variety style. I've done businesses and Yeah, whether it's restaurants and biotech and cyber and you know a bunch of different industries. And you know, not all have worked, but like that's I guess just the way I'm wired. Yeah. Some people They stay in one domain and they keep solving problems in that domain for forty years of their career. Yeah. Um And it seems like you're um also in the high variety category. And one of the reasons why is You've learned

24:42 Had a sniff out. Opportunity. Because it smells like a problem. It smells like something that doesn't make sense. And it sounds like one of the tells that you have in the book is Anytime you see something that's one size fits all. Yeah, so a little bit like you. I've I've been a variety uh driven entrepreneur. I think it's a little bit'cause I've got business A D D like I I couldn't spend an entire career in a single industry uh without driving myself crazy. So

25:07 I do look at these one size fits all and uh in as a clue ooh there could be an opportunity here. So an example of that is we took a look at the cybersecurity industry. And We started with this question of like hey, thirty percent of computers move to the cloud, seventy percent hasn't. When does the next thirty percent move, what opportunities is that gonna create, et cetera.

25:29 This is in my venture firm. And we found something surprising that thirty percent of compute wasn't moving to the cloud. It was Small, medium sized businesses like law firms, accountancies, et cetera, have no compelling reason to go to the cloud. And

25:44 They have a headwind of data risk. They they have very sensitive data. They don't want to move that to the cloud. And so Then we started to ask ourselves like Is there a one size fits all here? scenario and it turned out there was. We asked we just happened to ask the question How many cybersecurity platforms have been created for the cloud in the last five years? And the answer is like thirteen hundred.

26:07 Yeah. And then we said, How many have been created for the S B in the last five years? And the answer was zero. All right. This is a one f size fits all market. Cyber is size to the cloud, which I totally get. As a computer scientist, I I get That it's easier to write to Amazon, Azure and Google.

26:25 And it's super difficult to write to an infinity number of tech stacks in S and B. So that one size fits all is creating an opportunity. And then we asked one more question. 'Ca then we felt like we knew the answer to this question. Where are the ransomware attacks happening? And no doubt no surprise it's in the S P side'cause they haven't had tech in five years. Uh and

26:45 So we set out to build a company that is essentially A supermodern cyber platform for widely variable tech stacks uh in introduced that. It's got a ton of market traction and it's like one of the fastest growing companies in cyber right now. But it came from that first insight of like, ooh, we just trip to tripped across a one size fits all. The market has been a hundred percent cloud.

27:08 And there's this small medium thing hanging out here. That isn't large or extra large, how about we like split the market? Uh and go after where the competition isn't. I like that. phrase the slight you you you use a slightly different intro to the story, which I liked, where you basically talked about like you're looking at the expense I think you were on the board of

27:27 two companies or something like that. You're looking at the line items on the expense sheet and it was like Uh it was two different um He was lifting Lulu. Lululemon, which is a retailer, they don't really have any s personal sensitive data about any customers. You know, customer comes in, swipes your credit card, they don't save it. And they were spending something like seven million dollars on cyber insurance. Yeah and then somebody else was spending

27:50 Um somebody else who had a lot of sense of data was also spending seven million dollars. And you sort of Huh? How could these two vastly different companies with vastly different risk profiles and vastly different industries have the same thing and they were like Th that smells a little fishy to me. And whether that became a successful company or not, I just like the

28:09 The general idea of um Noticing Is actually a superpower. We talked about noticing for bottlenecks. But then you can sort of notice. for things that don't make sense in the world and an entrepreneur can entrepreneur can come in

28:22 And make it make sense. By actually changing the way the world works, right? And actually ch change the system rather than try to just say, Oh, I guess it just has to be that way. Right. Right. And and that's a perfect example of that. Like I think Noticing is a trait a lot of entrepreneurs have because we do see like friction and say to ourselves, like, why does this friction exist in life and how do we get rid of it? Right. Um

28:46 And I've people ask me, like, do you fly private? And I've got a weird answer. I said, No, I don't, but i it for a weird reason. I don't fly private, I fly commercial'cause I want to experience friction of everyday life. Uh. That's gonna give me my next business idea. Or two, or three. Um and

29:02 I think entrepreneurs are kinda wired to look for friction. as a clue there could be an opportunity. Um, but they definitely we all have, I think, an a a high and spidey sense for their where that friction is. Yeah, as an entrepreneur, if your life gets too comfortable, you lose your ability to spot problems. Comedians, when comedians get too rich, they fall off a cliff because they don't have relatable jokes anymore because their life is completely unrelatable at this point. Right. And they don't see the the everyday things. Okay, so I wanna go through a couple of the like the steps of the algorithm. So your book is called the algorithm. And the idea is that

29:36 Oh uh let me let me phrase what I took away from the idea. Okay. So the idea is there's a certain way that you can run a company. That will Lead to faster growth. And um More success, obviously. And I the what I liked about it is

29:52 There's this feeling that Elon's just The super genius alien. And maybe he is, but let's say like that the success of the companies are because you have this super genius. It's a very nice story, fits well in the sort of Hollywood. um way of looking at the world. But you said, or is it that he is really smart and ambitious and talented, but he surrounds himself with really smart and ambitious and talented.

30:13 A legion of smart people who are empowered by a way of working, a culture of working. A method. that leads to this level of success because he's got all these different companies, one man can only be doing so much and can be only be in so many places at once. Is that

30:28 Is that accurate how I describe the like the premise of What we're talking about? Yeah, it's kinda three layers. First off, he's he's brilliant and he is uh unique as an entrepreneur in our time. Like I can't name

30:41 I can't name any entrepreneur who's created four or five companies all of worth uh all worth tens of billions of dollars, if not hundreds of billions of dollars. Uh yeah, Zaka's had one, Gates had one, Jobs had two. Biops had one, Ellison's had one. You go down the list of entrepreneurs of our time, there's nobody like him. Uh and so he is pretty special dude.

31:02 He does surround himself with world class talent. And but the idea of the algorithm was to give that world class talent a framework. So that we could push decisions to the edge. And people could drive innovation without us showing up and and having to drive it ourselves. And

31:19 And a framework is super helpful in that. So you combine world class talent With a framework and a method. And you start to get innovation breakouts that are really unique and Um a lot of people said, Hey, do you have to be Elon to do this? And my answer was no. Like that's why the book is told through the eyes of people who are actually on the edge.

31:39 Doing this work. And telling their story. So you can see, hey, there was no senior management team hanging around here. This was like frontline people taking on these big problems. Saying we like we just want to solve this. And you give'em a framework to solve it. And they they do crazy things like you know.

31:54 Inventing mobile car. Service. From an OEM from a manufacturer. Inventing one click loans. Uh inventing um insurance embedded in car payments. Like just Stuff that was flowing and moving so fast because people at the edge were empowered, but they were also equipped with this framework.

32:15 And one thing that's not in the framework, but it seemed common was That the starting point for a lot of the stories was We have this problem. You have this one in there about online sales. It's like uh you know Tesla's this, you know, high tech.

32:28 Kind of. The most important tech forward company, but actually the e commerce, the online sales were were Right. And so you have this problem.

32:38 And it and it's a weakness in the company right now. And instead of just saying, Hey, let's improve our weakness a little bit, let's get back up to par. Elon's method it seems like starts with a crazy goal that's like not only is this today not only are we gonna go from weakness to average, we're gonna go to like world class or best in class in that same category.

32:59 Which I think is not how most people think. It's not how I I operate. Like I when I see that, I'm like hmm, that's not what I would have said in that situation. For example, with the online sales, it's like online sales are weak. Okay, here's what we're gonna do. We're gonna twenty X our online sales or something like that. Like we are going to lift this and bec it's gonna be the the number one driver, right? Uh of sales. And so there's this crazy ambitious. To start the thing. And it's it sounds pretty unreasonable, especially because you're starting not from a position of strength.

33:27 But from a position of weakness. Can you talk about that side of things? The like, let's just start by laying down the gauntlet of a somewhat impossible goal. on something that today is actually a weak area. Goal setting. can determine like what outcome you're gonna get. And so if you set a goal for five to seven percent improvement, you're probably gonna get three to five.

33:49 Uh if you set a goal for an order of magnitude improvement. Now you got people that have to think way differently about that problem. 'Cause you can't tweak The status quo to get to a Hundred percent improvement or a twenty X improvement.

34:02 And so part of the secret to Elon's Part of his secret sauce. Is he sets these order of magnitude improvement goals. Uh so Ten X, a hundred X.

34:13 Yeah. Forces you To think way differently about how you would solve that problem or what what you would do with the product or what you would do with a process, et cetera. And so like you're referencing this example of

34:25 He came to me and said, Hey, look, we have continuous demand challenges. We gotta figure out how to sell cars. Online. Which sounded crazy at this time'cause nobody was buying a hundred and twenty thousand dollar thing sight unseen online. Click, click. But we both knew because we'd both been in consumer Um that every click you have.

34:44 You ask the consumer to make your conversion goes down. And that's that's I'm saying an obvious uh every entrepreneur in in ecom knows that, but We looked at our clicks and there were sixty four clicks to buy a car. And so he turns to me, he says Improvement. Let's improve digital sales. This is your goal. Improve digital sales by twenty X.

35:03 So now it's like oh crap, I gotta think way differently about this. I can't think about like tweaking here and there. And so he said, How many clips does it take to buy Domino's Pizza on their app? I have no idea. He's like, let's pull it out. So we pull it out. It turns out it takes ten. Ten.

35:17 Thumb taps to buy a Domino's pizza at that time. He's like We are sixty four, Domino's is ten. Let's go to ten. And

35:26 The first thing Then that that calls into question it was a core tenet of the business at that time, which was producing Custom build to order product. Right. And that was religion there. Partly uh driven by the fact they didn't want to be a typical car company. They wanted to make

35:43 You the car you wanted versus the car the car company wanted to sell. Right. And it's something everyone will nod their head to. Fully customizable. Of course. Totally. But that led to like three hundred and sixty thousand different combinations of a car that you could choose, which is driving a lot of clicks. Plus a lot of decision fatigue for people. And so we went and ran the data, my team were in the data, and we came back and figured out that people weren't buying three hundred and sixty thousand versions, they were buying two.

36:08 And it was either what is known today as a standard Uh Or a performance. And so I went to the head of manufacturing, Greg Reichow, and the head of uh engineering, Doug Field. I said, Hey, look, I'm the new guy here. I've never been in the car business, uh, so I could be completely

36:25 Stupid about this, but let me show what the data says. The data says that out of all these three hundred sixty thousand combinations of build to order. People rolling buying too. And what would it mean to you guys' side of the business if there were only two? And sorry, just to clarify, what you're really saying is

36:42 It's not that they're buying two configurations. It's like the job to be done. The thing that the customer cared about was they wanted either High performance. you know, like tap the pedal and it flies. Yeah. Or they want the safety plus EV plus whatever. Longest range battery. Good. I'm gonna have that. And actually like We can pre customize we can pre configure cars to like Solve those needs without letting them choose what color the the strip is on the the side of the you know, the side of the door. Exactly. And that's exactly it.

37:15 And so Greg, he's running manufacturing says Oh my god. I I've been waiting for this day for somebody to like somebody to really drive this because you know what that would do to our factory? Totally simplifies the factory, simplifies the supply chain.

37:29 Um we could increase throughput dramatically. Turn to Doug, what does it mean for engineering? He's like, Are you kidding me? Like I don't have to design all these parts. I don't have to test them. I can port engineering's time on the stuff that really matters to the job to be done for the customer.

37:44 I'm totally in. So then walk into the senior management team meeting and um And one of the team members was like Hey, you are the new guy. You don't understand. Like it's religion here. We do build order. And like it might be religion.

37:58 Uh, but that religion might take you to the grave. Here's why. Here's what happens to the business if we do this. We're gonna get rid of A lot of clicks, a lot of decision fatigue. If we just get down to two configurations.

38:09 You can make it three if you want. I don't care, but you can't make it three hundred sixty thousand. Right. And Elon he's super rational. He looked at the case. Uh and then listen to Greg and listen to Doug.

38:21 And he was like, Yeah, we have to do this. So If you go to buy a Tesla today, you'll see you've got Two or three configurations on there. That's it. And the fear was we would look like Honda. But the

38:31 But it turns out we didn't because we had a completely different product. We had software on wheels. We are making um we're taking away all that decision fatigue from the customer and all that Friction in the sales process. Just by questioning like

38:47 At the end of the day, we questioned the business model at the time. Which happens to me as an entrepreneur, happens to a lot of entrepreneurs. You fall in love with your business model. And you don't really accept any challenge when somebody says, T should we chuck this business model because it's actually what's in the way?

39:03 Right. And I I wonder what you learned when you went to a work for someone, because you said, like you said, I've been CEO for twenty years. I had the same experience where we got acquired. Mm. And I went from a twenty person company and I'd always been my own I was always the CEO of startups for ten years. And then suddenly

39:20 I now had to go and Report to and it w forget the report to it. I just had to bring my plans of what I'm trying to do to the table with somebody I had to learn how to talk. to a CEO who was thinking about the business, you know, separately. And I had never really been on that side of the table. And I had to learn how to like communicate upwards. What does that mean? How do I simplify? How do I speak the language that they're trying to understand?

39:41 In order to do this well, do you have any tips for somebody who's learning how to communicate to a CEO? And you know, you were doing it with Elon, right? Maybe there's something specific to Elon, but What what What was your method for when you go into those meetings of how you present information in a way that is productive versus wasting time. We actually had this a bit of a game for a while.

40:02 I think it was just his idea. He's like, Let's try to let's try to get down to three sentence emails. What is the problem? What's what's your analysis of the root cause and what's your proposed solution? And uh And he's like, I think we could run the company on three sentence emails. Uh um, and so we did that.

40:21 And then what that taught me about exec communication was That level of efficiency is so helpful. Like if you can give me three sentences, so I turn to my people and said the same thing, like Tell me what the problem is, tell me what the root cause is, tell me what your proposed solution is. And

40:35 In that proposed solution, you gotta have like how much it's gonna cost and what's gonna do the economics and all that sort of stuff. But The thing executives If you're talking to a CEO Dude. Most precious commodity that CEO has is time.

40:51 And it's Information. Inbound uh absorption time, information processing time, decision time. And so if you can get super efficient in communicating to a CEO. Can say I'm gonna minimize your

41:04 Information absorption time. I'm gonna minimize your information decision time. Um you become a very valuable member of that team. Very valuable. And it sharpens your own thinking. You think you're doing it for them and then you realize actually I didn't fully have clarity on that until I was forced myself totally to be clear to them. Now I'm clear to myself. Actually it's so funny you said that that those exact three When I went into my first meeting with Emmet, the founder of Twitch, and I said, How do I talk to you?

41:29 How do we use these? I don't wanna come here and just, you know, chit chat, you know, like uh w we could do that, but I'm guessing that's not what you want me to do. Um, Yeah, three ways three sentences What, why, so what? What? Is happening or what happened?

41:43 Why is it happening or why did it happen? And so what are we gonna do about it? And he's like that's the way I like to communicate. What why so what? And then I I've now taught that to my team of the same it's so funny, the same basically the almost the exact same thing. We just had different labels for the for the same exact communication structure. I love that. In fact I'm gonna steal that'cause I think the world of Emmet, but um but that's a great That's a great way to think about communication. And I think the other way I The other thing you made me think about is

42:10 As an entrepreneur, if you're successful, the most likely outcome of your business is somebody's gonna buy it. And that means you're gonna have an owner. That you're gonna now be subordinate to. And that's a different form of mindset. And I got it wrong like the first few times that we sold companies to like every time

42:25 We sold a company of mine, we sold it to a public company. And so then I would come in and I know that company a year or two. Right. And I'd have to work in their structure. And at the time I was young and uh And so I was trying to keep This bullheaded entrepreneurial Um

42:42 Uh mindset. And that doesn't work in large corporations. And What I've now learned if like I had a redo, and I apologize if anybody's listening who bought one of my companies, you had to put up with this pugnacious like entrepreneur. Who didn't get it. Now what I get is

42:57 I should have sat down with him and said What it What drives success for you? Like what do you care about? Like you bought this company. What has to happen? in your mind to make it a success. That's often different than the

43:09 Bullheaded entrepreneurs way of thinking about it. Right and um and I think that's a different set of challenges when you sell yourself to another company. You uh the first thing you gotta realize is you don't own it anymore. They do. They have the keys. And if you owe them a year or two, you might as well make not make that miserable. You might as well make it like fun. And the way to make it fun is to figure out, okay, like How do I make this thing work for you and for me?

43:31 Um. And if you do that. Oftentimes you got an earnout and it's gonna work for you too. Yeah, that's uh great advice. I wish I had that advice earlier. Me too. Me too. I stumbled so bad. You know you sort of discover it the hard way. I wanted to ask you about the collision repair business. Cause this was fantastic. Um, can you just tell the story of

43:51 'Cause I only know part of the story. I want to know the whole story. So what's the story of how you got into that business? Like how you discovered the problem? And what actually happened with that company. And uh'cause I think it's pretty fascinating'cause it's not a Venture tech it doesn't sound to me at least like a venture tech business, no software. But You built that and and I it sounded like a a pretty pretty interesting success story. Can you can you tell that one? Yeah, and I found a lot of software in it, but it starts with

44:16 Uh a little context. I grew up in the back of my grandfather's auto repair uh business. And so like I uh I was a tech. I had the dirtiest jobs'cause I was a kid, didn't have any skills. So I was changing oil and changing tires and that sort of stuff, but learned learned how to hang out and talk to auto technicians. Uh And um so Decades later, my wife's car gets hit by one of our neighbors and now I gotta go get that

44:42 Fixed. And so I go to a large body shop And um Drop it off, get the estimate. uh agree to have this place fix it and they and the guy says it'll be done by Friday.

44:55 So this is Monday, I come back on Friday. Car's not done. He's like, Ah, this purse didn't come in. It's kinda typical. Uh next Friday.

45:03 So show up next Friday. Cars not done. Tech didn't show up. I said you know what? I've just sold one of my businesses.

45:12 I got a curiosity about how your business works. Can I just come hang out here? He was like you're the first customer ever to ask that, but Yeah. I don't want you back there'cause you're gonna get hurt and then I explained to him, No, I know my way around a body shop. I know my way around auto repair. I won't I'll stay out of the way, I won't get hurt. In fact I I'll just run parts for you.

45:29 If you want. So we're on that weekend. And I started to do research and found out the auto collision industry is a fift billion dollar industry. And then figure it then found out that there were thirty eight thousand of these and so Uh the average business is around one point two million. So pretty small.

45:47 And uh I had been exposed to Advanced manufacturing and I could Got a sense of that was not what was happening in the back of these shops. So I went and just observed I was running parts.

45:59 Uh, just observing and what I saw was essentially a hair salon. Every Technician had two bays. And they were on commission and they made money off of those two bays. So they had

46:10 No interest in how fast that car went through because it was that car was sitting in front of them as a cash register to make money. And uh and so I thought to myself, What if what if this was fifty billion dollar industry was modernized. What if you put these cars into a uh into a production line like Henry Ford did.

46:30 And what if you paid the entire team? a bonus based on cycle time and throughput. Right. So I I didn't understand. So the why why doesn't the technician want the cars to go through more cars equals more commission? No. They want to control their paycheck and so they would surround themselves with three or four cars and they would just cherry pick hours off of those cars and they got paid by the hour. But not So the car didn't have to get finished. They were getting paid

46:53 by the shop just on the hours they worked on that car. So that car could sit there for a couple weeks. They didn't care. And ex uh you you had these two terms, cycle time and touch time. Can you explain what you're doing? Yeah, so I went to the shop owner and I said Tell me what The average time

47:10 It Takes. Between a customer dropping it off and a customer getting their car back. And he said, Yeah, I can tell you that it's eighteen days. I said, How do you know that? He said, That's the average rental car time.

47:21 I said, Okay, that's pretty good proxy. I said um. How many hours of labor do you bill on each job on average? He said, Oh, that's easy, six to eight. And I w

47:33 Eighteen days. To get six to eight hours of work done. That looks like an opportunity because that's the difference. Cycle time is the 18 days. That's from the beginning to the end of the process. And touch time was the amount of time that those technicians were actually touching the car. Six to eight hours. And I went, Oh.

47:52 That looks like an opportunity to maybe turn this industry around for the consumer. What if you could go to market and say, You'll get your car back in a day? Versus the eighteen days of the the rest of the guys down the street. That's when I like started to diligently say Let's start a business. So I uh I grabbed some guys that I'd worked with, uh, and we started to work on

48:16 Just doing that. We ended up with Um, the largest at the time collision repair chain around the country. What was it called? Uh it was called Sterling, then it's now called Service King. Uh it's owned by Carlisle. It's got several billion dollars in revenue. But the whole premise was

48:33 We're gonna get your car back way faster because we're just deploying Assembly lines versus a hair salon. That's amazing. What do you have a c what do you have a name for that moment where you're like What if you could get it back in the same day? Uh like you know what what's the name of when you do that? When you say

48:50 We're all the way over here. The kind of the same thing with the Elon twenty X online sales, right? It's like The industry, the n ex expectation of the customer, the current workflow is all the way here. What if it was all the way on this side? I do have a name for it. I have a name for it. I call it an epiphany. Like I I just and so my teams that I've worked with now, they they They hear this phrase a lot'cause I'll it w in that moment, like I'll sit down, I'll I'll write out a uh a slack or an email and say, like

49:16 And the subject will be I just had an epiphany. Uh and um it's kind of a realization moment where you're like, ooh. There's a big opportunity here to move the market. And that word for me is an epiphany. It's just like, woo, it's this like sudden discovery. Uh, where you've been like You've been pilled. And now you can see the other side. Right. Yeah. Today's podcast is brought to you by my friends at Mercury. Uh they make the world's best banking product. I think you know this already. I use Mercury for all my businesses. I think I have like maybe seven or eight businesses. We use Mercury as our business banking across all of them.

49:48 And now they actually just launched a personal banking account. So I have my personal account there. I moved off of Wells Fargo and Chase. I'm just all in on Mercury. Why uh I like products that are easy to use. I like products that get me and the problems that I have. So like very easy to make a joint account with my wife, very easy to spin up virtual cards. Uh one click and I get savings yield. It just has all the stuff that I need in one place.

50:10 So If you're looking for the best banking product on the market, it's definitely Mercury. I will fist fight anybody who disagrees with me on that. Go to Mercury.com/slash personal and learn more. Mercury is a FinTech, not an FDIC insured bank. Banking services are provided through Choice Financial Group and column NA, members FDIC. Wha what do you think now with AI? So uh I feel like You've been doing this for a long time and just when you're probably like I'm a veteran of this game

50:34 The entire board game changes. Somebody flips the table and now there's a whole new game to be played. Where's your head at with AI? How do you think about this? Man, I'm excited. I all the way back in college, I worked my way through college. Writing trading algorithms at Uh at the world's largest options and futures trading. Uh. platform in Chicago. I was I went to college in the Chicago area and and worked my afternoons coding.

50:59 And Way back then we were using neural at the very beginning neural nets. To try to get an edge in the market and try to and try to robo trade. Uh in a way that people hadn't been able to in terms of the accuracy and the speed. So all these years later, now that this has emerged, I'm like completely psyched'cause we were using what looked like like

51:20 rudimentary computers uh to do this stuff. Now you've got real compute power. Caveman AI. Totally. And now that you see this unleashed, I'm like, oh, this is what we were trying to trying to do three decades ago. So um So I'm super excited by it. Largely because Every technical revolution and breakthrough like this. That has happened in history.

51:43 creates enormous opportunities for entrepreneurs. I cannot name a technical that's happened. This resulted in less GDP and less jobs. Can't. Like it just doesn't work that way.

51:55 Um And there's a lot of hand ringing though at the beginning of every technological revolution because humans are really good at seeing the first order effect, which is the job destruction. But they're not good at seeing the second order effect, which is the job creation that happens by entrepreneurs on the back end. And I think we're like right in the middle of this. So I What?

52:14 We're applying AI at the core of each of our companies. But I think more importantly I think there's gonna be just like we're keeping our eyes peeled for Big, big opportunities that are being created by this. So I'll give you an example. And this isn't this example would date me, but

52:29 When I was growing up I To make a long distance phone call. You had to dial zero and talk to a human being and that was usually a lady in your town. Uh, who would literally plug the local phone network on one end of a cord and then plug that cord into the national phone network and that would create a connection for you to do a long distance call.

52:51 In other words, humans were switches. Uh and um Sometime in the late sixties, early seventies, Bell Labs. invented an electronic switch that would do this. And by the end of the seventies

53:05 There was a lot of hand ringing that there were eight hundred thousand people. Pillars of our communities that were Employed as operators and a hundred percent of those shops were going away. And sure enough, by the way Seventies, early eighties, a hundred percent of those jobs had gone away. They were those humans were replaced by electronic switches.

53:23 But what people couldn't see while they were doing the hand wringing. was what was gonna happen on the other side. And what happened on the other side was now that a Long distance call is free, doesn't require human labor, just requires electrons.

53:38 Now you could offer toll free Calls. And so some entrepreneurs Sad. I'm gonna

53:44 I'm gonna use these toll free calls. There was a single area code, one eight hundred. Uh, and I'm gonna create businesses. One eight hundred flowers, one eight hundred junk, one eight hundred insurance. We want to enter this, that. And what those one eight hundred numbers required was now centralized answering of phone calls'cause now people were calling like crazy'cause it was free. And so this industry got created called call centers. And support centers.

54:08 And a few years into the nineteen eighties, there were now millions of people employed in call centers. hundreds of software firms that were created and my first Startup was a software firm in the nineties serving call centers. Uh'cause the technology was still nascent. When people were just

54:27 deploying electronic switches and people were like lamenting the end of these jobs as operators. Nobody could see on the other side that these entrepreneurs were gonna create toll free dialing. They were gonna create businesses on top of toll free dialing. And on top of that, there were gonna be this whole layer in our uh in our economy called call centers that millions of people are gonna be employed in. We just had creativity to see the other side.

54:50 And so now I tell our our teams like We cannot see through the other side, but we can get a hint of where this stuff is gonna go if you think creatively. Uh and And so that's the thing I'm most excited about. Like we're gonna have entrepreneurial opportunities. Like crazy over the next few years, based on what this technology is gonna unleash.

55:09 I love that story. So keep going. So let's say uh you know, if we can think creatively, we could start to get a glimpse of what Maybe is possible. What do you see as the kind of first generation businesses that you're excited about and what the second order effect might be? Well, like and now we've got intelligence that is so rapid and non latent. So you can solve problems way faster that are really complex. So one of the one of the businesses that we've got that I'm most excited about is We pulled a team out of Tesla that build the supply chain automation.

55:38 platform at Tassel, which is super sophisticated and way beyond anything anybody had in the industry. And they built this with ML Uh in Uh in like twenty seventeen ish. And we said, How would you like to build it today in AI?

55:52 And what AI allows that team to do Is solve a super complex problem Really quickly that also Uh use agentec AI to understand the workflows of their clients. Super rapidly.

56:05 So they just went into one of the biggest grocery delivery platforms in the country. I don't think I can say which one yet publicly. But it's it's one of their newer customers. And Their agents could go in and understand the work rules of that ginormous platform.

56:21 Within hours. And then design a system and a workflow. Within hours. That um uh that you really have to have two special things to be able to do.

56:31 You have to be Expert in that particular thing, which is supply chain optimization. To know which rules are good, which rules are bad, what to tell your agents to do, et cetera. And then you have to be able to judge okay what these agents are bringing back is correct or it needs to be tweaked or redirected or whatever. So that you definitely have these humans who have got AI as exoskeleton like super strength.

56:54 They're now building a business. That's grown like a rapid fire because it's got This incredible commute compute to actually Fuel. uh the business and deliver value back to the customer.

57:07 way faster than you could otherwise. Like the what they're competing against is standard ERP systems that take nine to twelve months to implement, and they can implement them period of days. And deliver that value back. And um That's the kind of business like I think we're gonna see more and more and more of

57:23 As his capabilities unleashed. Yeah, that i that is the weird thing about this that The software essentially works like labor. Right. So what you're describing is like essentially a consultant. It comes in and it learns your workflows, it documents it, it figures out how things are currently working and then it starts to Improve or automate or uh what's right.

57:43 So the weird thing is like There there is a question of is it different this time in terms of the jobs. Right. Because it's like if the software is fundamentally Like human labor. Like equivalent. Then even the business it creates won't the workers in that business also just be

57:57 A I labor mostly that's doing that, right? And do we all just become sort of like Mechanics. For for the robots and for uh for AI, right? I that's one part I haven't been able to wrap my head around. I haven't either and I haven't heard the case for why we do that is compelling enough to me.

58:12 Yeah. The most frequent example I hear is hey, in the nineteen fifties, there were skyscrapers full of humans who were humanly calculating spreadsheets. And then the then the real spreadsheet came along and all those jobs are eliminated. And then That's where the story ends for them and I'm like, Hey, time out.

58:33 I was just in New York City. Those skyscrapers aren't empty. What happened. And what happened was a plethora of things. And I would use just One tiny little example of what happened that created trillions and trillions of dollars of market cap.

58:47 Once in a l once a a spreadshe was available that was digital Uh it could calc things in complexity way faster than those humans and those skyscrapers. And so all of a sudden You could have Sophisticated pricing engines like Black Shoals.

59:03 At your fingertips. And that meant that you could now price options and futures and derivatives. That didn't exist before. And so entire markets got created on top of that one technological change that employ Hundreds of thousands of people.

59:19 Um And again, that was unknowable. On the f on the other side when the spreadsheet was just being invented. That somebody would deploy black shoals and somebody would figure out how to price puts and calls. and derivatives and make entire markets.

59:33 Like the options exchange, the Merc. et cetera possible. Uh, to be able to syndicate loans. Like none of that stuff was available and now it's all available. And that's the kind of thing where I think, okay. Make me the case.

59:48 That All of a sudden now the computers do all of that. And take all that creativity and all those jobs. I just haven't seen that in history and I don't know that I can I can fully buy into that ending point. What do you think happens with uh

1:00:04 The different AI players. You've got Like Uh you think Elon has called it the highest Elo game. in in the world, right? So it's the highest level chess game being played between the smartest people with the most capital behind them. Going all out for the biggest prize. You've got Zuckerberg and then you've got Google, then you've got Elon, you've got Sam Alman, you've got

1:00:22 Anthropic, you have all these players. How do you how do you see this playing out? You've seen a couple of tech waves, you know pr uh, you know, at least some of the players, and maybe even all of them personally. Um How do you see this? Playing out.

1:00:34 I sort of wonder if If there are Creating a app layer or a tooling layer. And what I mean by that is I think they're creating the tooling layer. That then a lot of us are now using to create

1:00:46 real businesses on top of. So I kinda go back to the internet. Break through an internet revolution. And think about okay, like the browsers, everybody was super excited about

1:00:59 The browser business. And Mark Andreessen made Uh made a career out of Netscape. But I wonder if

1:01:06 Like those What got built on top of a browsable Web were things like Facebook and Airbnb and uh e Trade and you name the

1:01:21 The businesses Like Tons of GDP got created on top of that tooling. Yeah, it sort of feels like to me we're getting really excited like we did about Netscape and Internet Explorer.

1:01:33 We're getting really excited about these hyper scalers, but what you really want to be looking at is what businesses are gonna get created on top of this tooling. And so I'm psyched for the work they're doing. I think it's Amazing and it's breakthrough level, but I But I am also

1:01:47 Much more excited about what's gonna get built on top of it. Yeah, me too. I can't wait to see it. I almost want to fast for it's like I don't wanna miss it, but at the same time I'm so curious how the How this all plays out. How the what what the world looks like in ten years is probably the first time that I feel like I

1:02:04 I have no idea what the world's gonna look like in ten, fifteen years. But I do know it's it's likely to be very like di completely different, you know. Yeah, like I I bought a Tesla this year and it has like self driving that's perfect. Yeah. It's amazing. It's pr it's so good. And I just don't drive anymore. And I'm like trying to tell my mom and my sister, and I'm just like Guys, you realize like you don't have to drive anymore? Like that's that's now. And I've I I can't believe that that that's not more people aren't freaking out about this one change, let alone totally whether it's robots or it's AI that you know, AI assistants in everybody's pocket or totally. There's so many different ways that I feel like

1:02:41 The whole world in ten, fifteen years. Is gonna like My kids won't really understand. Wow, you used to have to do all that? You used to do that? Like that's so funny that you used to do that's horseback riding, right? Not cars. Th and it seems like we're on one of those transition points, which is exciting.

1:02:57 Totally agree. Well, John, I appreciate you coming on. Everybody should go get your book, the algorithm. Uh I don't say that, but usually most people come on, but I actually am reading the book and liked it a lot. So thank you. Big fan of it and uh You know, thanks for coming out and doing this because I feel like

1:03:13 We get a lot of biographies. Oh, they grew up this way and daddy issues and blah blah. But like, you know, what's I which is which isn't it's entertainment. It's great. But what I really love is Tactical, practical. Me too. And how do how do you actually do things? Um, what can I how can this be useful for me?

1:03:32 Versus reading about somebody else's life. And so I'm glad you wrote this book. If I think if this book didn't exist and it can only be written by somebody who's kind of There. doing it side by side with other people and and has you know the experience doing it. So so congrats to you and thanks for writing the book. Thank you. I'm glad you're enjoying it. All right, take care. I feel like I can root

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