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Elon's Five-Step Formula for Scale
3 min read

Elon's Five-Step Formula for Scale

I am a big fan of free-wheeling interviews. When done right, it can give you a sneak peek into the thought process behind decisions and that can be phenomenally insightful. This 56-minute conversation with Elon Musk, walking about StarBase is a great example.

I find nuggets of info from both Elon Musk and Jeff Bezos extremely insightful, as they are literally building things that take off to the stars.

So during the conversation, Elon talks about the five-step process that they have adapted in SpaceX and Tesla when it comes to building things.

1. Make the Requirements less Dumb.

The other way that he rephrases this, is "Question the requirements". You've found a problem to solve and you are now working on the solution. Most of the time, our mind (thanks to our education system) is conditioned to accept the basics.

The way we learn is by stages. We start at Admiration, and then we are inspired, which leads to imitation, imitation leads to adaptation and adaptation gives us the expertise and courage to experiment with new ideas.

Every part of a framework or Playbook has innately some assumptions built-in. So if you really want to break through and build new things, you will have to relook at all of those assumptions. He also says even the smartest of people make mistakes, and this might be the time, so question every aspect of the requirement and flesh it out before the experiment starts to cost a lot more.

Like for Eg, why do the sick need to go to the hospital? Hospitals were a world war era concept, that made sense, to bring in everyone who was hurt, to adapt to the shortage of medical professionals. Why do we keep that contraption still going, in peace time when we have plenty of medical professionals and infrastructure to treat from anywhere?

"All designs are wrong just a matter of how wrong" - Elon Musk

2. Delete the Process or Part (and add)

Every system over time creates bloat - and that happens to systems too. He cites an example where to address a problem, an intern proposed a solution that went into the requirements document and by the time they got around to building, they had another mechanism that addressed that issue and the first part was simply bloat.

The average / mediocre engineer designs stuff with "in case" in mind, with redundancies for redundancies that can become quite expensive - to the point that the system might not even get deployed (or in the case of a space vehicle reach orbit, or achieve escape velocity).

He talks about removing at least 10% of process or parts in every iteration and adding 10% new things so that they are also pushing the envelope and aren't stagnating.

3. Simplify and Optimise

The quote he uses here is "don't optimize something that shouldn't exist in the first place". He says that most teams do this as the first step and assuming that everything that exists, exists for a reason and also sometimes end up with frivolous additions that add no meaningful utility value.

Once steps (1) and (2) are done, he talks about how to optimize the design for performance.

The reason a startup takes on venture capital should be to be able to pay for those inefficiencies early on, without it affecting the business model and price validation.

4. Accelerate the Cycle Time

Now that you have something that works, and you are optimizing the design, iterate as quickly as possible so that you become really really good at it.

Jeff Bezos talked about this as well in his post space interview, where he talked about how the hydrogen-based engine that they are using for the space tourism vehicle is overkill but the reason why it makes sense is that they get to have 100s of flights (that get subsidized by the tourism dollars) that will help them get immense practice to do the long-range flights into space.

NASA takes about 6 months to a year to build a rocket engine. SpaceX has a manufacturing facility where they build 6 engines a day. Unlike NASA (that is govt-funded and can' afford the optics of things blowing up), SpaceX pushes things to the limit so that they crash, blow up so that they can learn things, and iterate on the design faster.

Move fast, break things - and build them better the next time.

5. Automate

When all the (4) steps are done, then it is time for Automation wherever possible so that you bring in extreme optimizations in terms of cost, and also it gives you a massive boost in terms of capability.

The adage, strength in numbers, only makes sense if one can get (1) - (4) in line. Don't do this prematurely, because you will be accelerating and automating your demise. A rocket that is 0.5 degrees off, accelerating and doing so without any control mechanisms, is steering away from its goal at that speed as well.

In the words of Elon, "Don't give your grave faster". That said, automation - as commonly referred to as the flywheel, is where things click.

By then it's time to usually re-question the assumptions all over, before someone else does and disrupts you.

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