Fear is a Choice: Mastering the Psychology of Risk
Fearlessness is not the answer.
If it was, fear would not exist.
Instead of shrinking from fearful situations, feel the fear and do it anyway.
Conquering your fears is powerful.
In an interview with Y Combinator about How to Build the Future Elon discusses fear and the importance of not letting it stop you on your mission:
“I actually think I feel fear quite strongly. So it’s not as though I have the absence of fear, I feel it quite strongly…
But there are times when something is important enough and you believe in it enough that you do it in spite of fear…
Like people shouldn’t think ‘Well I feel fear about this and therefore I shouldn’t do it.’ It’s normal to feel fear. There’d have to be something mentally wrong if you didn’t feel fear.”
The powerful difference Elon has realized is in his ability to not listen to the naysayers and instead to work hard and boldly create positive solutions, in spite of fear.
Elon also shared “Something that can be quite helpful is fatalism, to some degree. If you just accept the probabilities, then that diminishes fear.”
Don’t Fear Failure
In an interview Musk has stated that he originally thought Tesla would fail.
When asked why he would start a company that he didn’t think would be successful his answer was:
“If something is important enough you should try even if the probable outcome is failure.”
Elon wanted to get rid of the perception that electric cars are ugly and slow.
Although entirely changing the way the public perceives a product class is no easy task Elon and the Tesla team made it happen.
The Tesla Model S sedan topped Consumer Reports’ annual customer satisfaction ratings two years in a row.
8 years later the Plaid version of the Model S became the fastest car in the world and the first production car ever to go 0-60 in under two seconds.
Collaborative Advantage: How to Build Partnerships Where Everyone Wins.
Tesla and SpaceX are winning because they are creating the most innovative products with the most value built in.
Because SpaceX developed reusable rockets they are able to achieve a cost advantage and offer their customers a better price for getting to orbit.
With Tesla because the cars are electric they enable their customers to charge their vehicles “free” when they also invest in a solar or other renewable energy capture system.
Again this offers customers cost savings and enables more room to capture profit and share savings.
Elon explains his powerful business philosophy around this at “The House Always Wins” talk:
“We believe in doing deals where both parties benefit, and, when there is an asymmetry or underperformance on our part…
Our goal in doing so is to build long-term trust.
If people know that we will not take advantage of them and aspire to fairness, even at our expense, they are much more likely to want to work with us in the future.“
Buying a car or solar system are two of the biggest purchases a person can make so trust is totally a factor at the individual consumer level.
Long term success is more powerful than trying to make a short term quick buck: Striving and succeeding in becoming the trusted brand in your industry will enable more sales to flow your way as more people trust you and your company.
Long term trust is essential for repeated purchases over time and creating customers for life.
Elon has been known to spend so much time working he will actually sleep in the Tesla and SpaceX factories.
And it’s not as if he has a plush bedroom in a factory loft or something. In one Interview Elon showed the plain couch in a Tesla conference room he slept on, and said it was so uncomfortable he ended up sleeping on the floor.
Sleeping in his factories and at his business locations is something Elon does to this day, even as one of the richest humans alive.
In a recent interview (Dec 2020) when Elon was accepting the Axel Springer award in Germany the interviewer asked Elon where he was spending the night.
Elon replied: In the German Tesla factory. The interviewer asked where in the factory? Elon replied in the conference room.
That’s right, the world’s second wealthiest man chooses to spend the night in the conference room of a factory rather than a fancy hotel.
When asked about this on a Clubhouse audio chat he admitted that not only has he slept in the conference room, he has also slept outside of it, in a sleeping bag on the concrete factory floor.
That’s the level of obsession that is required for Elon’s kind of success.
The Lean Startup’s Secret Weapon: The Viral Engine of Growth
Both at PayPal and at Tesla Elon has leveraged referrals and bonuses to create viral growth.
PayPal was able to achieve 100,000 users in their first month through the success of their referral program. They offered $20 credit to both referring parties.
Elon: Well, we started off first by offering people $20 if they opened an account. And $20 if they referred anyone. And then we dropped it to $10. And we dropped it to $5. As the network got bigger and bigger, the value of the network itself exceeded any sort of carrot that we could offer.
At the TESLIVE 2013 Tesla Motors Club event Elon discussed PayPal’s referral program at greater length.
Elon: From my PayPal days we spent a lot of time thinking about how to create a viral growth engine. The keys to that are of course reducing the friction of buying and reducing the friction of referral – so making it really easy to buy and refer – and then creating an incentive both for the person doing the referral as well as the buyer. And that way if by referring someone both parties actually benefit then it works well.
Referrals have also been a great source of growth for Tesla.
In 2015 they launched a $2,000 referral program for the Model S lineup of cars and it was a success. Both parties would benefit from this. The referring agent would get a prize and the buyer would get a discount.
Additionally there was a contest for referrals where free cars could be won and in 2016 YouTuber Bjorn Nyland actually won two Teslas during this time.
In 2017 the first person to refer 20 Tesla’s per region would get a free P100D Model S or Model X once their 20 friends have taken delivery of their car.
In July of 2017 the next gen Roadster was announced as part of the referral program secret level. How it works is after five referrals you entered the program and each Model S or X referral thereafter gave you 2% off the price of a founders series roadster. So people who achieved 55 referrals will be getting the $250,000 roadster free.
YouTuber Ben Sullins crunched the numbers on this in a video where he determined the ROI for Tesla on their referral program was 550X, assuming a 20% profit margin on the car.
That is compared with a 45X ROI that GM earns from their 3.24 Billion dollar ad spend during the same year.
Despite the awesome success of Tesla’s referral program in 2017, Elon and Tesla decided to scale it back, likely due to the fact that their demand is significantly outpacing their supply.
The reason Elon explained on Twitter is because it was adding too much to the cost of the cars.
At the time of writing the referral program has been brought back, but not to the generous extent of 2017 when free new roadsters were possible.
There are the details of the new program in 2021:
You and anyone using your referral link can each earn 1,500 kilometers of free Supercharging with the purchase of a new Tesla car — designed to be some of the safest cars on the road. Each car referral also gives you a chance to win a Model Y monthly or Roadster supercar quarterly. Owners who already have free Supercharging get two chances to win.
So clearly this is quite scaled back from before but nonetheless it is very cool that Tesla still has a referral program and does give away some free cars.
In the past few years Tesla has used creative referral rewards as well such as:
Launching your photo into deep space orbit, Tesla unveiling invitations, and amazing adventures.
The amazing adventures they offered included:
Drive an Electric Boring Machine
Watch a SpaceX Rocket Launch
Race the Tesla Semi Truck around the test track
Clearly referrals done right can work wonders for your business, and they don’t have to cost an arm and a leg.
Take Elon’s advice and make it as easy and frictionless as possible for people to sign up as an affiliate and promote.
For best results offer referral rewards for your most profitable products and services.
Innovate or Evaporate: The Modern Business Mandate.
On a call with investment bankers in 2018 Elon refused several bone headed comments and told day traders or investors afraid of volatility straight up not to buy Tesla stock because:
“I am not here to convince you to buy our stock…I could care less.”
What Elon does care about is innovation. He shared some powerful insights about innovation on the on the call:
“What matters is the pace of innovation. It is a fundamental determinant to competitiveness…
Let’s say competitors, maybe they come out with something new every six years. We’re maybe every two to three years.
So if our innovation is let’s say twice that of any given competitor…
And this is true generally of companies in any industry…
Whichever company has the highest rate of innovation, unless that company is actively killed by it’s competitors in some way that’s nefarious, or shoots itself in the foot, it will at some point exceed those competitors…
Like this is obvious that this would occur with Amazon and Wal-Mart because wal-mart’s rate of innovation was negligible. And Amazon’s was very high. The outcome was obvious a long time ago.”
In a more recent interview about the AxelSpringer Award (Which Elon ended up winning) Elon echoed similar sentiments saying: “The company with the higher rate of innovation will unequivocally win long term.”
The lesson here is clear: Innovation matters most.
Moreover the more aggressively you innovate and iterate the faster you will dominate.
“Innovation per year is what matters. Not innovation absent time. Because if you want to make say 100% improvement in something and that took 100 years, or one year, that’s radically different…
So it’s like “what is your rate of innovation?” that matters and “is the rate of innovation accelerating or decelerating?”
At InvestHK Elon said: Innovation comes from questioning the way things have been done before…
And if in the education system you’re taught not to do that that will inhibit entrepreneurship.
Interviewer: “Being able to question what you were taught?”
Elon: “Being able to say: ‘Is there a better way?”
Elon has innovated with Tesla to the point where multiple sources, and undeniable facts, confirm Tesla has created the best car ever.
Looking for a better way creates the game changing level of innovation you need to have a position in the marketplace where you are in a category of your own.
Here are some of Elon’s quotes on innovation:
“Starting and growing a business is as much about the innovation, drive, and determination of the people behind it as the product they sell.”
“Great companies are built on great products.”
“Failure is essentially irrelevant unless it is catastrophic.”
Although Elon does not strive for failure, he certainly does not hide from it either. The failing rockets taught their teams lessons. Then the info learned led to persistence and success with SpaceX after their first three rockets failed and he was down to his last investment capital.
Facing failure head on and learning from it is a lesson I learned the hard way. Once I got a speeding ticket and rather than setting the court date in my calendar I shoved the ticket in a folder and forgot about it. Since I missed the court date I got the maximum fine in my absence.
Had I faced that situation head on maybe I would have emerged successful. Probably I would have gotten a lesser fine, or perhaps the cop would not have shown up for the court date and my ticket would have been dropped.
These days no matter how difficult the issue I might be facing I deal with it as soon as possible so it does not become ignored or forgotten about, causing the punishment of ignorance over time.
Action is the antidote to despair.
As Elon says:
“Failure is an option here. If things are not failing, you are not innovating enough.”
“If every time somebody came up with an idea it had to be successful you don’t get people coming up with examples.”
Failure is not to be feared. In fact just the opposite: It should be encouraged!
Because with more experiments, which will cause more failures, you will ultimately end up with more successes and a faster pace of innovation.
Don’t Doubt Ur Vibe: Elon Musk’s Foray into Music Marketing
Elon Musk has not shied away from using music for marketing. He released a song called “Don’t doubt your vibe” and released it on his own label called “Emo G Records.”
There are other songs about him and Tesla also.
I just discovered The Elon Musk Song [OFFICIAL], which has 811K views currently and the animation which went into it is impressive.
DDG has an Elon Musk song also with over 20M views when combined with the lyrics version of the song.
There are other songs also and of course Elon’s musician partner Grimes helps his overall aura of awesome grow as well.
Elon put out his own song called “Don’t Doubt ur Vibe” and it has an image of a Cybertruck floating in air in front of an image of Mars.
Music is a great vertical and Elon is doing a great job utilizing it to grow his personal brand via his music label “Emo G Records.”
Innovate Faster or Die: How Elon Musk Gains a Competitive Edge
Innovation is absolutely a vital key to gaining a competitive advantage in your industry…
At MIT Elon explained: “In terms of our competitiveness, it mostly comes down to our pace of innovation. Our pace of innovation is much, much faster than the big aerospace companies or the country driven systems…
This is generally true. If you look at innovation from larger companies and smaller companies, smaller companies are generally better at innovating than larger companies…because smaller companies would die if they didn’t try innovating.“
Innovate or die.
And don’t let the small size of your company deter you…small, smart and technically strong often trumps large, clunky and wasteful.
When speaking at the InvestHK conference Elon said:
“We don’t think too much about what competitors are doing because I think it’s important to be just focused on making the best possible products…
It’s sort of analogous to what they say about you if you’re in a canoe if you’re in a race. They say don’t worry about what the other runners are doing, just run.”
Elon does not suggest ignoring competition altogether. Competition can inspire innovation but obsessing over the competition distracts from obsessing over your own business.
So be aware of your competition but don’t let it distract you from your main goal: Making your business and your life as awesome as possible.
The grass will be greener on your side when you focus more energy on making your grass green and less time worrying about your neighbors grass.
The Power of Aggressive Goals: Lessons from Elon Musk’s Playbook
Although there have been a number of timelines at Tesla and SpaceX that have been pushed back, and pushed back again, no one can dispute that Tesla has risen to become the definitive dominating automotive giant in the world at an impressively fast speed.
Aggressive outcomes are impossible without aggressive effort…
So where does the aggressive effort come from?
Firstly it comes from the awesomely important missions Elon is embarking on…
And also it comes from the agressive effort because of the aggressive timelines Elon sets for company milestones, combined with many other optimizations.
Because without an optimized work force Elon’s 90,000+ employees would not optimize and deliver their dominating results.
By setting these aggressive timelines engineers and employees must stretch their ability to innovate and work long hours to the limit.
In the Ted Talk “Elon Musk: A future worth getting excited about” TED’s Chris Anderson asks Elon about timelines and says:
“And so in general, when people talk about Elon time, I mean it sounds like you can’t just have a general rule that if you predict that something will be done in six months, actually what we should imagine is it’s going to be a year ot it’s like two-x or three-x, it depends on the type of prediction…
Is there an element that you actually deliberately make aggressive prediction timelines to drive ambitious people to be ambitious? Without that nothing gets done?“
Elon replied: “Well, I generally believe, in terms of internal timelines, that we want to set the most aggressive timeline that we can.
Because there’s sort of like a law of gaseous expansion where, for schedules, where whatever time you set, it’s not going to be less than that. It’s very rare that it’ll be less than that… But as far as our predictions are concerned what tends to happen in the media is that they will report all the wrong ones and ignore all the right ones.”
And Elon works hard to ensure all of the predictions he makes come true, sooner or later.
Elon certainly seems like an example of how the harder you work the more momentum you can gain.
Elon has led by example and has sometimes worked for so many hours straight when he did sleep he would sleep in the conference room, or even on the factory floor.
