Why Not? Elon Musk’s First Principle

by Christopher Meyer on 06/04/2012

SpaceXWhen did “new and improved” become innovation?

A search of annual and quarterly reports filed with the Securities and Exchange Commission shows companies mentioned some form of the word “innovation” 33,528 times last year – a 64% increase from five years before that.  More than 250 books with “innovation” in the title have been published in the last three months, most of them dealing with business, according to a search of Amazon.com.

When every change, no matter how slight, is called innovative, we stop stretching for real breakthroughs.  It’s like telling every kid on the losing team, don’t worry, you played great!  We see this in business when process and positioning becomes more important than results.

Serious innovation is tough stuff.  The path is littered with failures.  If you aren’t losing when innovating, you’ll never win big.

Elon Musk illustrates this in spades.  Last week a capsule launched by his third company, SpaceX, successful rendezvoused with the International Space station.  No current leader that I’m aware of has delivered bigger and more consistent innovation than Elon Musk. I dare say that even one of my heroes, Steve Jobs, doesn’t match Musk’s breadth.

Enter Elon Mush

I don’t intend to offend any recently minted Facebook billionaire or those working in the countless mobile and web services startups that proliferate Silicon Valley but building a company that sends rockets to dock with spacecraft at 17,000 mph is in a totally differently innovation league.

Put aside the splashy headlines of financial windfalls such as Facebook’s billion dollar acquisition of Instagram.  Gauging innovation impact by acquisition economics is shallow thinking.  The innovations that matter over time change how future generations live in the world.  Cute, doctored photos fall far short of that bar.

So while I applaud the ingenuity that spawns the next mobile app, I bow to Musk who takes on the deeper innovation challenges that change our world.

What is more amazing is Musk has crossed the high bar not just with SpaceX but four other times as well.  In a twist of the famous line that Robert Redford kept asking Paul Newman in Butch Cassidy and the Sundance Kid:  “Who is this guy and how does he keep doing this?”

FiveX Innovation

In 1995, Musk arrived at Stanford to get his Ph.D. in physics.  Intending to unlock the secrets of battery storage technology, Musk dropped out to start Zip2, two days after he arrived! Zip2 produced one of the first content management tools used by companies like the New York Times to start their web presence.  Four years later, Compaq’s AltaVista division acquired Zip2 for $341 million in cash and stock options.  Not bad for his first time up at bat.

Most of us never heard of Musk’s next internet venture – X.com.  X.com was a financial services site.   Musk had no special interest or expertise in finance but was turned on by the potential to aggregate data combined with the inherent low bandwidth requirements of financial data.  Remember back then, most of us were still using dial-up connections.

The X.com service that attracted the most attention was email payments.  Musk merged X.com with Confinity, the originator of Paypal, to build a robust person-to-person money transfer platform.  Today, Paypal is the growth engine behind eBay with revenues up 29% year over year and profits up 20%.

In 2002, Musk goes for the fences creating SpaceX.  Driven in part by a passion to expand life beyond Earth, Musk observed cost was a critical inhibitor to space travel.  The passion for space travel hadn’t abated but the cost plus contracts that fueled Boeing, Lockheed, Raytheon etc. had soared beyond the heavens and society’s ability to pay.

SpaceX is the first private company to successfully launch and retrieve a capsule sent into orbit around the Earth.  The first cargo was a wheel of LeBrouere cheese in a nod to Monty Python’s famous cheese shop sketch.

Just one year later, Musk starts Tesla Motors to build the first high performance all-electric vehicle.  By now you’ve got to wonder – is this guy super human or just plain nuts?

Besides creating the Tesla Roadster, Tesla battery and powertrain technology are now found in Mercedes and Toyota cars.  Tesla expects to begin delivery of its four door Model S all-electric this year.  It went public in 2010 and today enjoys a $3.1B market cap.

Do you need any more convincing that this guy plays serious long ball?  If you do…

In 2006, Musk starts SolarCity, a solar energy installation and service company.  Taking a page out of the rationale for SpaceX, Musk observes that it’s the cost of capital that keeps solar off the roofs of the average homeowner.  So he partners with banks and large corporations to offer finance options that drive the cost to the customer below the savings they receive off their electric bills. It’s hard to argue with that.

With this track record one’s got to ask, what’s Elon Musk’s secret sauce?

Why vs. Why Not?

Every parent has faced their child’s unending train of interrogating “why?” questions.   But there’s a smaller set of kids that doesn’t stop at the explanatory “why?” answers.  They up the ante by asking “why not?”  Musk looked at electric cars and rather than settle for dull, eco-friendly machines such as General Motors EV-1, he envisioned a high performance sports car powered by higher density laptop batteries.

Musk attacks the “why not?” by returning to what physicists term “first principles”.  First principles are the bedrock of knowledge.  These are truths hardened by years of pressure testing.  They and survive without practical exception.

Musk turns to first principles because he believes one shouldn’t do things differently just because they’re different.  Do them to be seriously better.  This takes going back to basics but from that point, charting a fundamentally different vector than past experience.  For Musk, the mission of SpaceX is making multi-planetary life a reality.  That’s a far bigger challenge than putting a human in orbit or even on the moon.

Returning to first principles is inherently threatening because it questions what accepted knowledge is.  Former NASA astronauts, Neil Armstrong and Gene Cernan testified to Congress that SpaceX’s private exploration path was doomed to failure primarily because SpaceX lacks experience and the capability of today’s costly space program.  That’s Musk’s point: serious innovation requires returning to first principles and testing alternative paths.

Last, Musk is not a spendthrift optimist.  Trained as a physicist, he recognizes that the chances of finding a breakthrough “ah-ha” that others missed is unlikely.  He expects the new path is replete with incremental failures but without re-testing, alternative paths remain unproven.

For example, the first three launches of SpaceX rockets failed to reach orbit.  Had he failed on the fourth effort effort, SpaceX would have run out of money.  What drove Musk was that with each failure, data showed the gap between failure and success became increasingly smaller.  And if it couldn’t get smaller quickly, SpaceX would be unable to attract the capital it needed to survive.

Ask “Why Not?”

The fact is explaining how Elon Musk, Steve Jobs or any innovation superstar succeeds basically confirms what we already know.  The secrets of successful innovation are not in what each did but in how they uniquely persevered, inspired others and mixed in their personal magic when others bailed.

Elon Musk propels me to ask “why not?” just a bit more often.

{ 3 comments… read them below or add one }

nilkhil June 19, 2012 at 7:01 am

Instagram was baught for $1B by FB not google!!

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Christopher Meyer June 19, 2012 at 10:50 am

Thank you for the correction! Mental error on my behalf

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Avinash Baliyan June 22, 2012 at 7:15 am

Christopher,

Thanks for such a brilliant artical about innovation and Elon.

i have been reading about him since 3 years, and during the ISS docking- courier mission of Spacex i was counting every second , every twitter trends and google news. He is superhuman , and best part why he is able to attract people towards him is the way he portrays his message , that he is doing it for humanity. ( Electric cars, solar energy , space ) . In one interview he said ” Either you can create loads of aristrocratic wealth or you can decide to change the world for a better tommorow ,i am doing the latter ” .

i also had the same opinion abt Steve , Mark zuckerberg which u have , they did great job of course , but what elon is doing is uncomparable.

I think his success comes from

1. Fearless + Hardwork ( he works hundred hours a week ) + Love for design – technology ( he once said that if situation permits he just want to design things rather than looking in extra affairs of running companies , but one has to do everything to run the company )

2. SMART and TIMELY DECISSIONS ( moving from South Africa to USA than making big money using internet goldrush , than use this money to open companies which will change the world , u can see smart thinking even in Tesla motors , he first made a sports luxurious electric car rather than a small hatchback , the money and the fame he got from Tesla roadster is instrumental in his IPO for tesla , US gov funding for tesla , Space X and also capital to make more affordable cars in future )

3. Noble intentions ( purity leads to mental strongness and also attracting talent using this motto )

4. Reading reading reading ( he has been reading since childhood whatever came in his way, i think that took fear out of him, and this years of reading has made his mind very receptive ,sharp and logical . And i really recommend this to everyone who wants to really do something different )

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