When are we going to get to Mars?
Scope of consciousness meaning
Self sustaining city on Mars or World War Three
What is possible to build on Mars 10-30 years in after first arrival
Who controls the memes - controls the universe
Education of the future
More Elon Musks on the earth
Tesla’s nearest future
Typical work day of Elon
Tesla, tunneling and RNA fab
About California, Netscape and first software
«Hitchhiker’s guide to the galaxy»
The real story from Vlad from Robinhood about GameStop
Elon Musk: Hey Elon here. Can you hear me?
Sriram: Yes, I can. Yes I can. Hey there. Hello.
Aarthi: Oh, we see you.
Elon Musk: laughs This is wild. It’s just my butt talking.
Marc: Elon, are you, are you wearing your short shorts?
Elon Musk: Yeah, that's me.
Marc: Are you celebrating anything in particular with your short shorts?
Elon Musk: No. I'm just trying to look sexy and in these tight pants with the. You now fabulous red in the gold.
Marc: Are the short shorts still available to be purchased.
Elon Musk: Sorry, I got a small barkly dog.
Sriram: Elon, I think you're, you've might have broken. I'm not sure about the internet, but definitely clubhouse. This room is easily the biggest room. The app has had and you're just putting on all sorts of pressure on it. This is amazing. This is a true historic moment.
Elon Musk: All right. Is it working? laught
Sriram: Absolutely, abso-effing-lutely.
Elon Musk: All right.
Sriram: All right. We're gonna just give it a minute because we promised we'd start at 10:00 PM and I think a few more people are going to try and trickle in, and then we'll get going we'll get going for what should be probably a historic first ever time for you on clubhouse.It's going to be amazing. Just do 30 seconds. And you're already doing it.
Elon Musk: Okay. Oh by the way can you let in Vlad from Robinhood?
Marc: We can
Elon Musk: Okay.
Marc: I'm sorry, Shriram, sorry
Sriram: I was gonna say you know I've been, I, My phone just blew up with when we started the room with people trying to get into it, we're going to try and get asking to be on top of it. Okay. Why don't we get started? Okay. Uh first of all, everyone thank you for joining us for what is really a historic episode.
I will come to our very special guest in a second, but just to quickly introduce the rest of this room. We have Garry Tan, of Initialized Capital. We have my significantly better other half Aarthi Ramamurthy, whom, Elon you've met when you took us on the tour of Space X. We have Steven Sinofsky, um, of ex-Microsoft and we have the one and only Marc Andreessen. But to introduce our special guests and this person truly needs introduction.
The founder of Tesla, Space X, the Boring Company, Neuralink, PayPal and a bunch more.. Elon Musk, welcome to Clubhouse.
Elon Musk: Thank you.
Sriram: Thank you. Okay.
Aarthi: This is awesome. Yeah. Yeah. So, Elon again, welcome. This is really fun. Uh we've been waiting all day. This is the longest way to 10:00 PM because we just couldn't wait to get this going. I hope this is as much fun be the end of it for you as it is for us. First question from me - was is when are we going to get to Mars?
Elon Musk: I think we'll get to when will we get the first people to Mars? I think we have a decent shot of doing that in about I'd say like... I call it five years, something like that.
So Earth to Mars sync up every 26 months. That's when we're in this kind of the, it's roughly the same quadrant of the solar system and where we can do an interplanetary transfer. And so we had one about six months ago, so about a year and a half there'll have be another one. So figure, I don't know five and a half years.
Aarthi: Five and a half years. So what does take from here to that point what are the milestones you think for us to get to, five years out, we are landing on Mars?
Elon Musk: We've got to make a starship fly get it, gets go to orbit and back repeatedly. I mean, the essential elements are you need a fully reusable, but like, um... You need a fully and rapidly reusable rock.. orbital rocket. This is the Holy Grail of rocketry. So no one has ever succeeded in creating a fully reusable rocket and it can't just be fully reusable.
It needs to be rapidly reusable. So it doesn't take like several months of refirbish-ment between flights. It needs to be much like aircraft where the cost of an air flight is the biggest component of that is fuel. And you can't just be throwing rockets away every time.
And then you need to have orbital refilling, so where you can end the ship up to orbit then send another ship up dock with a transport propellant so that you can load up to being almost full propellant and then go to Mars.
And if you've got a large, fully rapidly reusable rocket with orbital refilling that uses, high efficiency, low cost propellant then you can go to Mars and then..
And then one other one last thing is on Mars too you need local propellant production. So you take CO2 out of the atmosphere combine it with the water ice - H2O to create CH4 methane and oxygen.
And f you have those elements - life can become multi-planetary and we can have a self-sustaining city on Mars, which I think is one of the most important things. We could possibly do for ensuring the long-term existence of conscious consciousness.
Sriram: Elon, you've spoken about this often, which is, expanding the scope of consciousness and how it is tied to multiplanetary life. Could you explain what that means for you and why that matters to you?
Elon Musk: Sure, so the... originally, I had an existential crisis when I was a kid trying to figure out what's the meaning of life? Why are we here? What's the point of it all? Is it all meaningless?
I got quite depressed actually and sad about it. And then the thing that kind of broke me out of it was reading Douglas Adams is a Hitchhiker's Guide to the galaxy.
Where he essentially pointed out that the universe is the answer and really the hard part is figuring out what questions to ask about the answer that is the universe.
I'm trying to make fun of the fact that the answer is the , easy part, but the questions are the hard part. So in order for us to gain a better understanding of what questions to ask or to understand. What it's all about. We have to increase the scope and scale of consciousness so that we're better able to figure out which questions to ask them and answer them. So the longer, the broader in scope larger in scale, that consciousness is the more likely we are to be able to ask these questions and figure out what that's going on.
Why are we here to answer the fundamental questions? And I think there's arguably a great filter that we face with you know, will we've become a multi-class species or not. We’ll be surprised if out there in our galaxy and others, there are a whole bunch of... Dead one planet civilizations that prosper.. prospered for a while, they might've prospered for millions of years, but then gradually the civilization collapsed for reasons external or internal.
And that was that all civilization go through go through an arc where they both, they grow up in technology complexity, but then they don't keep going up. They, over time they... hey decline they fall and this has happened obviously with if you're a student of history with many civilizations in the past. You can look at ancient Egypt, 5,000 years ago, there was the great part of Giza, but then the people living there forgot how to build pyramids after a while and then they forgot how to read hieroglyphics.
There's obviously, Kevin's famous book about the decline and fall of the Roman Empire and how they had advanced technology in terms of roads, aqueducts plumbing and so forth and then they basically forgot about it .
The ancients Sumerians, Babylonians - all these things have been all gone through a similar arc which suggests that most likely we will go through such ourselves and we'll be arguably less resilient to recovery because of globalization.
So I think, for the first time in the four and a half billion year history of Earth that has been possible to extend life beyond Earth and make life multi-planetary. And this window of opportunity may be open for a long time. I hope it is, or it may be open for a short time. And I think it would be wise for us to assume that it's open for a short time.
I'm an optimist, not a pessimist, but I, you have to say there's some chance it's only open for a short time and we should take advantage of this brief window of opening, where we can transfer, transfer life, transport life to make life multi-planetary and humanity is essentially the agent of life in this process.
And I think we almost have an obligation to ensure that the creatures of Earth continue even if there was a calamity on Earth, which as I said, could be man-made or it could be some natural calamity as if you look at the fossil record there's, there are many mass extinctions.
Aarthi: Yeah, I think, all of that makes sense and I think we've heard, you've talked about this before. I think one other question I have is, when we get there, we have to set up the whole society. We have to set up civilization there. Um how will the whole thing work in your mind? Like, you know, everything from what does it mean to have internet connection on Mars? All the way to like governments and rules and laws and everything?
Elon Musk: Yeah, I think all those things need to happen just as they happen in the US and happen in every country. And I would not presume to prescribe what should happen there., I think the important part is just that we get people there and we get the equipment necessary to establish a self-sustaining civilization at least one self-sustaining city.
And I think that the key threshold of when we would pass the great filter of this particular great filter is Mars sufficiently self sustaining, such that if the ships stop coming from Earth, for any reason - it could be, something massive or something banal. I mean, civilization on Earth could end with a bang or a whimper.
And, but by the way, if the ship stopped coming from Mars, does Mars die out or not? Um, and it must only has to be missing one little ingredients, like the equivalent of vitamin C and it will survive for a while, but it will not, but it will eventually die out. So it's kind of getting a stated on us to pass that critical threshold where it is self-sustaining.
And are we able to do that before some calamity or a gradual declining civilization occurs that prevents the specialist ships from going there. That's the key threshold, but it, in a more pithy way is like does it city on Mars become self-sustaining, which comes first a self sustaining city on Mars or World War Three?
Marc: If you kind of let yourself dream out over the next few decades, what would you consider success? Let's say they get through the first, you know, 5 years, even the first 10 years. What do you think is possible to build on Mars 10 years in 20 years in 30 years in after first arrival?
Elon Musk: I think Mars well go.. Let's start off being very tiny, just like a tiny little outpost. And by the way, it's going to be very dangerous. Sometimes people think: "Oh, is this like some escape hatch for people?" I'm like: No, it will be dangerous, hard work. It's going to be you're out there on the frontier. There're way far more ways to die there than there are on Earth. And transmit of hard work. But it will be, I think fun and a great adventure. But it will not be a luxurious thing that is for sure, not for quite some time to go. We've got a bull propellant plant.
We've got a bold get solar power going, get the the food production going start creating the necessities. I, you know, iron, we need an iron ore refinery. We need, all of the sort of fundamentals of industry in order to make sure that Mars is a, self-sustaining planet. I mean over time, like this would take a while, but you could terraform the planet and make it Earth-like mostly by just warming it up. So, yeah.
Marc: So, you khow, as you, as you talk about this... honestly, what comes to mind is sort of the idea that a Martian civilization, although obviously important from Earth, it will quickly evolve to be quite a bit tougher by necessity... And just the mental image that leaves my mind is that the Spartans in ancient Greece , um, yeah. Do you think the sort of vector of civilization will unfold differently as a consequence of how difficult it's going to be to get it going?
Elon Musk: Yeah, probably will. I think so.
Marc: But then maybe we don't just have a backup, right? Maybe we actually have an alternative? Like an and the ability to actually see two different to like fundamentally different civilizations flourish.
Elon Musk: Yeah, absolutely. But the the the fact that it's... You can only go to Mars every two years and that's a six months, six months journey.
Although I think we can over time, get that potentially as low as one month. But still you can't go to Mars when Earth is on the other side of the Sun from Mars. Like you know times where... You know Mars is literally on other side of the Sun.. You can't get.. No matter what you do... So that time gap would mean hat there'd be essentially a new group of people arriving roughly every two years.
I don't know. I think interesting when people would probably traced they're like.. Yeah, I came on, you know this particular Earth-Mars synchronization event. I don't know it, but like I said, the important thing is like that we have established Mars as a self-sustaining civilization.
And that we've done whatever we can to ensure the long-term continuance of consciousness, as we know it. Because, so as far as we can tell we're the only. The light of consciousness, which is a delicate little candle in the dark.
It's only here on Earth. I mean, it might be other place. other places and there's arguments that it's likely to be other places, which honestly, we have seen no sign of it. And I'm pretty sure that I would have know about it. And I am, I've seen nothing to indicate that there was any alien civilization whatsoever. I'd be the first to jump on that in a second, but I've seen no such evidence
Sriram: Elon, that's actually, something we wanted to ask you about because in the last year there has been multiple reported UFO sightings. There was the mysterious object that flew past our solar system. I think you just described that you haven't seen any evidence of aliens, but - A - do you think we'll ever run into them? And - B - if we do, have you heard of "dark forest theory" from three-body problem? How do you think we should think about aliens?
Elon Musk: Yeah... I'm trying to be strict in the scientific sense of the word, saying "I've seen no, no, not a single piece of conclusive evidence". So that doesn't mean there aren't aliens.
I'm just literally saying I've seen nothing that could not be explained by other means. And where the probable explanation by other means is much more likely than this alien technology. Hmm. And for people to say like their's sightings of aliens. I'm like, listen, man the the resolution of the picture needs to be at least like 7-11 ATM. Good. Okay.
Steven and Marc laughing
We can't have that fuzzy Loch Ness monster bullshit, It's come on, we've got like a 500 megapixel camera. What are you talking about? Where do you find that thing? It's gotta be, it's gotta be at least like iPhone 6 level. Isn't the, I don't know.
Marc: Can I ask one more question? If that's okay, Sriram. So you know, Elon, you famously have a pile of, really beautiful kids. And I know you care about them, a great deal as all parents do. What would your response be if they start coming to you when they turn 18 or 22 and they say: «Dad, we're, now that you've landed us on Mars and there's calling for me, like I really want to go»?
Elon Musk: Yeah, I think if we're talking about, say the third or fourth set of landings on Mars... I think I'd probably be, I'd be okay with that... Although I've called them so far and none of them say they want to go, so.
They may change their minds, but they're currently there. They're not chomping at the bit to go to Mars.
Sriram: Okay.. Elon. Okay. So I think for folks.. You may not know this, I think we originally met on Twitter. And it's just safe to say and I want to move more on from Mars too memes, it is safe to say that you might be the master of the memes. And in fact, you had a quote: "Who controls the memes, controls the universe". Could you just explain what you meant by that and how you became...
Elon Musk: Um I mean it's a play on words from a Dune: "Who controls the spice - controls the universe". And then if memes are spice then it's memes. Yeah, there's a little bit of truth to it in that. Like how do you what is it that influences the Zeitgeist? Like how do things become interesting to people. And a meme's like actually a complex form of communication. That’s that's like a picture says a thousand words and maybe a memes says 10,000 words.
It's a complex picture with a bunch of meaning in it. And it can be it's, aspirationally funny. Uh it's, I dunno, I love memes. I think they can be very insightful. And throughout history, I think the symbolism in general has powerfully affected people.
Sriram: How did you get so good at them? I mean I remember following you many years ago.. Going from that to your sea shanties meme or the, any one of the meme is, and some of it may, may not be safe for work here.
Elon Musk: Yeah. Yeah, I know. Yeah, I know. I guess probably if you go back to my early, very early tweets.. Or technically I was on Twitter, I think very in the very early days, when there were only like maybe 10,000, less than 10,000 users. But then like people were just like tweeting, like what kind of latte they had at the university street Starbucks. And I was like: " I don't need to know this", so then I deleted my Twitter account and then and then a fake person, who got my Twitter account and tweeted for a few years...
And then my friend Billy said: «Hey, you really should be on Twitter, so you can speak directly to people». And So I was like okay: I guess I’ll you know, regain my Twitter account". And my early tweets are pretty racy. And pretty you know because I was reading this biography of Catherine the Great. So it's sort of things, yeah, things went crazy from there.
Sriram: By the way, I like how, how you say that your early tweets were racy and not right now
Elon Musk: everything laught
Some people think: "Oh, he's he's gone crazy on Twitter. I'm like: "No, I started crazy on Twitter"
Aarthi: ... New memes what are the new things that you're following now with respect to memes or creating?
Elon Musk: Sorry. What was that again?
Aarthi: Yeah, I was just gonna ask you, um what are the new memes that you're like following or creating right now? What are the ones that are interesting to you right now?
Elon Musk: Um I don't really follow memes.
Aarthi: Just make them?
Elon Musk: I make some of them and then some of them are sent to me. I have some pretty kick-ass meme dealers.
Steven: Are the meme dealers on Mars? Wait, wait
Marc: You gotta have a good meme dealer.
Elon Musk: There will be my friend Mike is a good meme dealer and Clara as well. And ,Jake now and quite, a few, quite a few others actually. I fortunately am the lucky recipients of very interesting memes.
Aarthi: Slightly changing subjects a bit. Just Twitter today you posted about Neuralink and why people should be working there. For folks who don't know about it, I thought it was really cool. I, just the possibility of it. Just really fantastic. Yeah. Tell us more about it. There are a lot of engineers listening on this this Clubhouse. What is Neuralink? Why should we care? What is possible with it?
Elon Musk: Sure. Um the long-term. Okay. So the Neuralink stems from a concern I had where I was trying to figure out, even in a benign AI scenario, how do we at least go along for the ride? So for those following AI closely it's obviously improving dramatically.
If you see like look, say GPT-1 versus, GPT-2 versus, GPT, super GPT-3, and just how radically that's improved. Um and just, there’s deep mindset.
I think they've run out of games to win at basically. And there's just, and look, I still look at Tesla it's an important thing to note. I should make is like Tesla actually has, I think one of the strongest AI teams in the world, but it's AI team focused on real world usability.
So just really solving a vision perception and control with the AI. Um but even in a benign scenario for AI where let's say the AI is just really wants to be super nice to us and make us happy. But we'll ho.. how do we stay relevant and have meaning, and at least go along for the ride.
That's in the good scenario. And then in terms of avoiding the bad scenario to the degree, we can couple a collective human will to the outcome of artificial intelligence and what's developed in that way. I think that'll probably be a better scenario than if we're unable to effectively couple collective human will to that outcome. So the final.. Okay, sorry, but this is getting kind of esoteric..
Sriram: We love it, we love it. Keep going.
Elon Musk: Yeah. Okay. So people are already a cyborg and then in that. You already have a tertiary digital layer. You've got your sort of limbic system, which is your primitive drives and desires and responses.
And then you've got your cortex, which is like long-term planning and thinking. Those are two biological lawyers. And then there's a tertiary layer, third layer. Which is digital and you already have that in the form of your phones and computers and all your applications.
You're far more powerful, than a human would be without those cognitive enhancements, but the bandwidth between your cortex and your digital tertiary layer is very slow and, in fact, with the advent of phones it got even slower. So if you're thumbing like. Say what's the bit rate of a thumb of a pair of thumb on a phone. It's very low, I mean, let's be super generous and say it's a 100 bits per second.
Um computers can communicate at trillions of bits per second. So it's, at a certain point, computer gets smart enough. It's like the computers, just like trying to talk to a tree. Trees do sort of talk but they talk so slow that we don't notice. Um so we need to improve the bandwidth.
And with the direct neural interface, we can improve the bandwidth, between your cortex and your digital tertiary layer by many orders of magnitude. I'd say probably at least a 1000 or maybe 10,000 or more. And we could also spend a lot more time thinking about interesting things, as opposed to taking complex thought structures, compressing them down into words, which is, which will also gain a very low bit rate and then having someone else receive those words, decompress them and then send words back at you.
So a huge amount about brain power spent in compression-decompression and we could be instead spending it on deeper concepts. And so, if you had a Neuralink, if two people had a Neuralink, you could do a conceptual telepathy where you have a complex series of concepts, and you can just transfer them directly uncompressed to the other the person. This would massively improve the quality of communication and the speed of it. So yeah, then there and other sort of pretty wild things that could be done, like you could probably safe state in the brain. And so if you were to die, you could, your state could be re..,uh, returned in form of another human body or a robot body. Okay. This is getting like really, It's weird sci-fi stuff here.
Sriram: No, no, no, go on.
Elon Musk: Yeah, exactly. I think you could decide that you want to be a robot or a person or whatever. Um and you wouldn't be exactly the same. There'd be a little lost in transfer, but you could also say, it's arguably true that when you wake up in the morning, you're not exactly the same as yesterday.
Or the «you» of a month ago is not the same as the «you» of today. I mean a bunch of brain cells have died some memories, some memories have faded some have strengthened There are new memories. So anyway, the point is you wouldn't be. You could, there could be something analogous to a video game, like a saved game situation, where you are able to re.. resume and upload your last state.
Yeah. Like in Altered Carbon. Maybe lose a few memories but mostly be you, so now that's the long-term stuff. In the short-term stuff for Neuralink the idea would really just be to address brain injuries or spinal injuries and make up for whatever lost capacity somebody has with with a chip.. Implanted chip.
The first thing that we're going after is a a wireless implanted chip that would enable someone who is a quadriplegic.. or tetraplegic or quadriplegic to control a computer, or mouse, or their phone, or really any device just use just by thinking. And this obviously would be a massive enabler, make life way easier for them.
There have been primitive versions of this device, one done with like wire sticking out of your head, but it doesn't work all the time and you can't take it home with you. So just having, basically you think, like in simplistic terms, I'd say it's like a Fitbit in your skull with tiny wires that go to your brain. So, Fitbit in your skull with tiny wires.
So somebody who's listening is good at designing, like Fitbits, Apple watches, phones, computers, various kinds. Then actually.. They would be a great fit for Neuralink, your like , so yeah… We'll probably be releasing some new videos showing progress maybe in a month or so.
And cause we've already got like a monkey with a wireless implant in their skull and the tiny wires who can play video games using his mind.
It does not look like an unhappy monkey and you can't even see where the neural implant was put in, except that he's got like a slight, like dark mohawk. But other than that, yeah, he's not uncomfortable and he doesn't look weird. Um so we're, you know Oh, and like when the USDA person came through and inspected our facilities, our monkey facilities, she said it was like the nicest monkey facilities she's ever seen in her entire career, just FYI. We went the extra mile for the monkeys
Sriram: As long as you didn't make them play Cyberpunk.
Elon Musk: That would be a hell of a trip for monkey. But, one of the things we're trying to figure... Can we have the monkeys play mind pong with each other? Yeah, that would be pretty cool.
Aarthi: You know, I have to say the pick demo was really fantastic, that was really cool.
Elon Musk: Oh, thanks, yeah, well it's a great team at Neuralink and they're making good progress. And like I said, but I want to feel like the early applications will really just be for, people who've had a serious brain injury like where it's like the value of the implant would be enormous.
Because obviously the early implants will come with some non-trivial risk. And so it's gonna be like: "Okay, is, does the good far outweigh the bad?" And then, that would be a candidate for some of the initial surgeries with full disclosure of like, little risks and everything, and one of the things really paying close attention to is the ability to remove the implant.
So it's it's not if somebody doesn't want it or it's not working, we can take it out and then we can re-implant another one. So we've tested implantation removal and re-implantation safe and it works great. Yes.
Marc: Yeah, please, so switching topics. So I mentioned kids earlier, as it turns out I've I have a very bright and inquisitive five-year-old who is crawling all over everything and trying to figure everything out and learning as much as he can, as fast as he can. Like what, with everything that we know now and all the modern tools that we have what's the best way to think about educating a five-year-old in today's world.
Elon Musk: So... The best way to..
Marc: Yeah, educate a five-year-old... and then think about kind of his education over the course of the next, you know, 5 or 10 years. Like what kind of program ideally, should you think a kid should be on?
Elon Musk: My observation is... My kids were mostly educated by YouTube and Reddit, um , and I guess, classmates and, um, I guess their lessons as well, but judging by the amount of time they spent online, it seemed like most of their education is actually coming from online.
I think generally with education, you want to make it as interesting and exciting as possible, what are all the things like say a good video game does to keep someone engaged and interested. If there can get, if kids can be super engaged video games, is weird for them to be super engaged in education as well.
Like one of the things that's, I think very fundamental is to explain the "Why?" of things .Like, so we're teaching this, but we need, we're going to explain: "Why we're teaching you this?" and "Why it is relevant?". We've evolved to forget things that are irrelevant or have low relevance probability.
It makes sense, otherwise we'd remember all sorts of nonsense things that weren't very important to our future. So relevance is established clearly, then people will have a hard time remembering. We're a memory advice, nature, but because it's there appears to be irrelevant.
It might be irrelevant, but if it's not explained to them, they won't know. And if you're trying to say problem-solving some sort of engaging narrative for the problem-solving... It's far better to say: Okay we're going to teach you how an engine works by taking apart an engine, uh and they're putting it back together. And then let's find out what tools are needed for.
Yeah, in order to take this engine apart and put it back together." It’s: «Okay, we need screwdrivers and wrenches and allen keys, and we need a winch and a bunch of other things». And then you understand the relevance and, this is much better than having say a course on wrenches or a course on screwdrivers.
You just start with a problem and say: "What tools I need to solve this problem?". That establishes relevance and gives a compelling narrative thread.
Marc: Yeah, it seems like you could If you had elaborate enough project, you could roll a huge number of topics into that.
Ultimately combine into a single project with some really actually interesting form of output, like for example, building a, literally building a vehicle or something like that.
Elon Musk: Yeah, exactly, it’s the business, if you , you have a narrative thread or like: "Why is it established relevance there?"
And there's a story to it and then you say if turn off that bulb without the wrench... and then let's see, how can we make this engine better? What do we need to do? Okay let's calculate... you know, if it gasoline engine, you know, what’s the how do you get to a higher RPM or a better compression ratio?"
I'm using like outdated analogy of engines, but you could say: "For electric motor, um what steps would you need to take to get higher torque? Higher power out of this electric motor?" And then you can explain it's obvious why, things like Maxwell's equations become necessary in that situation.
Marc: Yeah. Yeah, would be amazing.
Sriram: Elon, you would not believe the number of parents and people with kids that have asked us about tonight. And I think that are two questions are connected. One is, if you're having a kid and you want teach them to become a polymath, like you have become what advice you have for parents?
And the next one is, here you are with, so many companies that you have created it, I can't even list them on top of my head. Why doesn't the world have, this doesn't mean to sound, psycho-patic, but why doesn't the world have more Elon Musks?
Elon Musk: I don't know. I might be getting too much credit here, so for me, these things I've done have been... Because I felt a strong compulsion to do them, so it's not like nobody was pushing me to do it, but I felt strong compulsion to do them
I would say.. There are pretty long sections of my life that have been very painful and difficult. And I'm not sure if people would want to do that, you know?
if somebody wants to be me or do the things that I've done. I would say most probably you're mistaken. You do not want to do that. You'd have to have some kind of rage demon in your skull that... You got to get it done. There's no.. It's like when people ask me: "What encouraging words do you have for entrepreneurs who want to do a startup?"
Well, my response is - if you need encouraging woods, don't do a startup.
Yeah quote, my friend Billy, during a startup, was like eating glass and staring into the abyss for a long time.
Sriram: Yep, okay, we're going to switch topics again. But I think for everyone in the audience who just caught up and managed to squeeze in just a quick reset slash recap. This is, the one only Elon Musk, for his first time on Clubhouse and this is show that we do every single day.
I know a lot of you are trying to get in the room, but we're are a bunch of overflow rooms. See if you can get in there, but we're just having an amazing conversation with Elon this is something you joked about, but I'm kind of curious to get your, your serious answer to this, which is.. All things, cryptocurrency and Bitcoin.
You famously just change your Twitter bio to just the Bitcoin logo and the word "Bitcoin this week". What do you think of cryptocurrency? What do you think of Bitcoin? What do you think of other cryptocurrencies. Would love to get your take on the entire thing!
Elon Musk: Well yeah, I gotta watch what I stay here because this.. Some of these things can really move them, move the market.
So, first of all, I should say many friends of mine have tried to convince me to get involved in Bitcoin for a long time, like from where it first just popped.You know, from my Billy, he actually had Bitcoin cake that had a big sort of Bitcoin symbol on it. And he fed me a slice of Bitcoin cake in 2013.
So, I mean clearly, I should have at least bought some Bitcoins eight years ago. What more do you people even do, you know? Like Jesus. Talk about being late to the party? So I was a little slow on the uptake there. my apologies. But I think about a fair bit I do at this point think Bitcoin is a good thing. So I am a supporter of Bitcoin. You know, like I said- I'm late to the party, but I'm a supporter of Bitcoin. I think Bitcoin is really on the verge of getting broad acceptance by conventional finance people, you know?
I don't have a strong opinion on other cryptocurrencies. I could occasionally make jokes about Dogecoin, but there are really just meant to be jokes. But Dogecoin was made as a joke to make fun of cryptocurrencies. But fate loves irony.
The most ironic outcome is most likely or as, like I say, the most entertaining outcome is often the most likely and arguably the most entertaining outcome. And the most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.
Sriram: Oh, my God. Elon, when you tweeted me this afternoon.. I will say my tweet replies have been overwhelmed by probably like a zillion different cryptocurrency coins... And by the way, you might remember the infamous time when your replies were filled with cryptocurrency bots on Twitter. It was insane. That was a very painful time.
Elon Musk: In fact, I made a joke about Bitcoin and my account got locked.
Sriram: Yeah. I had to actually try and conviencs some folks that was actually the real Elon Musk that had been blocked. Bring us back to one of your companies. We actually have a Tesla model S sitting outside our house right now. It carries us and our two-year-old baby around and we love it.
Would love to just get your take on where do you just see, the future for Tesla. And, especially, when it comes to all things - battery technology and self-driving. Those two types of thing a lot of people are very interested in.
Elon Musk: Okay, so you're asking me about the future of batteries and self-driving?
Sriram: More like actually where do you see Tesla over the next few years?
Elon Musk: Um I mean, our goal with Tesla is, and has been from the beginning to accelerate the advent of sustainable energy.
So in order to do that, we've got to make a lot of cars. We've got to make them increasingly affordable. Our rough target is - we want to be able to eventually make 20 million cars a year. And the reason for that is the 2 billion active cars and trucks on the road. I figure, you're not really moving the needle, unless you're changing 1% of the existing fleet.
So that's roughly how we came up with 20 million cars, and trucks per year. That's very important to, to accelerate delve into sustainable energy. And of course, we've got stationary battery packs and solar making a lot of progress on that front. So yeah we're going to try to grow car production as fast as possible, and that the primary limiting factor there is battery cell production.
So, we're getting as much as possible from suppliers, but even that is not enough, so we're actually going to be building our battery cells ourselves. But it's important to emphasize that our suppliers who a great, we've got great suppliers that we're not trying to put them out of business.
We want them to increase their rate as well. So, panasonic LG and CATL. But to accelerate sustainable energy further, we're making our own cells and, we're pretty excited about that. I think you expect possibly an acceleration of compound annual growth at least aspirationally. That's our goal.
And then that combined that with autonomy. It's a very powerful story because once you have autonomy of self-driving cars, you massively increased the utility of any given car. A typical car is driven about, 12 hours a week. Depending on the situation, you're where you live, it's like maybe an hour and a half a day or something like that or in LA it might be two hours a day. So roughly 12 hours a week. And there's 168 hours in a week in a seven day week, so most likely, cars that are autonomous could maybe do a third of the hours in the week or something like that. So, maybe they do, I don't know 60 hours a week of usage instead of 12.
So you got basically a 5x increase in asset utilization there and far less need for parking lots, parking garages and that kind of thing. This is in itself is good for the environment, because you need fewer cars to get the same thing done. We would need fewer parking garages and places just to keep cars when they're not in use, because they're just being in use a lot more. The net of having a lot of cars times automation or time self-driving, I think is at the heart of why. A lot of investors think Tesla is worth what it is. They're giving us a lot of credit for future execution, but I think the trend is quite positive.
And I'd like to once again say if anyone is interested in practical AI where the rubber hit the road please join Tesla's autopilot / AI team. I think people are not quite appreciate that Tesla has some of the most advanced AI in the world, both on the software side and on the hardware side. On the hardware side, we've obviously got our inference computer, which I think is still the best inference computer out there. Even though it's been going for a couple of years and we're building Dojo, which will be the most powerful training computer, because it's got to process vast amounts of video training data... Bringing the day of self-driving sooner translates directly to lives saved and injuries avoided because about a million of people die every year in car accidents. And about 10 million per year have serious injuries.
So that's the sooner, the better and a lot of lives will be saved and people's lives made better.
Sriram: Elon, on self-driving, you made headlines, a while back, when you basically, to put it mildly criticize LIDAR as a key technology for self-driving. Could you talk more about that and why, you're not at a huge fan of LIDAR?
Elon Musk: Yeah, I mean, sometimes I'm just talking smack, you know?
Sriram: No, we didn't know that.
Elon Musk: Yep. It's tiny new outside. I confess. First of all, I'm not fundamentally against LIDAR on all things because for the Space X Dragon that talks with space station we actually developed and built our own LIDAR for docking with the space station, so obviously if I hated LIDAR, we would not have done that and this is well. Before this was like 10 years ago. We started doing that. I don't have some sort of weird like, antagonism into LIDAR. However for driving on real-world roads you have to solve vision. For basically understanding objects with passive optical, photons then making sense of those objects, so we need like vision perception what this objects mean, what they are going to do, what is the likely path of travel and then control.
AI so the way we're doing it is by running a bunch of neural nets in our head. So we've got to run a bunch of neural nets to do the same thing in the car and at the point at which you've sold passive optical, and this is better passive optical than a human has because you've got eight cameras, three of which point directly forward two are diagonallt forward and two that are diagonally rear and one rear.
So the way we do it right now is we have all eight cameras synchronized you've got eight frames collected simultaneously while moving towards. And have in fact mostly moved towards , uh, video training.
Having eight surround cameras it's kind of a surreal thing to see, because people really people have two eyes, but really more like one eye because two eyes kind of combine. Anyway, the neural net needs to move to full video training inference, surround video training, surround video inference, and then it will be superhuman, no question about it.
Because people don't have eyes on the back of their head, a human for all intents purposes has like one camera on a slow gimbal and that is often distracted and maybe sort of drunk or you know busy changing the radio or they fall asleep or, there's all sorts of things that go wrong there's no question that you can get be super human with just cameras.
I think if one is going to go with sort of active photon generation, I would recommend something in the occlusion penetrating wavelengths like radar, roughly four millimeter radar or something like that would be better if you're going to really delve into the arena of actual photon generation.
Sriram: Wow. Okay. Ah, that's amazing. Okay, also I love how deep you got into that was super fun. All right, I'm going to switch topics just a bit. I would say it's safe to say a lot of people are very interested in how you work and you often, for example, describe yourself as an engineer, so walk us through it's Monday morning, you wake up what is the day a typical work day in the life of Elon looks like?
Elon Musk: Like I guess, I wake up and see if there are any emergencies by, on text or email and often they are. I mean, a ton of what I deal with is not actually fun or interesting, it's like chore, so I've tried really hard not to do my chores, but then if I don't do my chores, things go to hell.
Aarthi: I'm bit relieved that Elon Musk basically has the same schedule as the rest of us, you know, we all get to work and you do too. And it's kind of, there's something just really relieving, just hearing you say that.
Elon Musk: Okay. Yeah, that’s pretty much how it goes these days. I do enjoy the in-person meetings more than email, in fact, I haven't, I think I'm getting slight like negative, like limbic reaction to email. It's killing me. Texts are way better to deal with and then in-person meetings are much better even zoom meetings or whatever better than email, anything's better on email frankly. So anyway I'll have a bunch of meetings. I'll write email, write texts, especially if it's like an email to the group saying hey, we need to change direction, do the following things, and let me know if you think otherwise, but otherwise we've got to do these things and get our act together on this area or that area.
And then, yeah, like a bunch of meetings. Most of my meetings are engineering and design, but of course we have to deal with finance and, sales and other things that are necessary for a company to function. I quite a lot of context switching, so he sent me the meme of like "fear is not the mind killer, context switching is the mind killer", which I totally agree with context switching is a real barrier, so I'm just trying to do less context switchig, so maybe focus on one thing for an hour and then another thing for another hour.
It's really hard to context switch between Space X and Tesla, and all the things that are going on in Space X to Tesla and then Neuralink, Boring Company which was fortunately pretty low bandwidth, they don't take a high level of CPU load because they're smaller and there's personal stuff and of course memes, you know..
Sriram: Earlier last year I spoke to Mark about how he spends his time and Mark said that, when he was younger, he used to have large blocks of open time on his calendar. And I think a lot of, well-known founders have large blocks of open time with the scheduled, but you are unique because you have multiple companies, you're running, your also much more of an engineer than traditional CEOs. What does your calendar look like, you allocated 30 minutes back to back, you want to open space, yeah, how do you handle it?
Elon Musk: I don't have a lot of open space, it's generally back-to-back meetings and it's insane, I mean my days are like insane torrents of information. I mean, sometimes I want to like audit what I do for a day and it's insane. I don't recommend it.
I mean, I was thinking like man, how long can I keep this up because I don't want my brain to explode and the meetings that are scheduled are not like nice to have, they're like these meetings that are essential. Okay. It's pretty intense. I was thinking maybe I should take a week off or something, like that to clear my mind. Like, I know there is a bunch of people writing books on Tesla and Space X and is pretty hard for them to get it right because they just weren't there and maybe I should write like book of my experiences with all the foolish mistakes I've done and like you know some advice for others that might be helpful.
Sriram: I remember once hearing about how you still sleep on the floor of your factory or really used to at one point in time.
Elon Musk: I only did that if there's was like a crisis situation and actually when the team is being asked to really work super hard, I gotta be right there with them and they got to see it, you know, seeing is believing and so if I'm just sleeping in the middle of the factory floor and, you know, I sort of go to sleep at four in the morning and waking up like four hours later, they literally see me, it's not hidden or anything and it's like okay, CEO's willing me to take that level of playing then they'll do it too.
Marc: I was going to say when you first said you slept in the factory I figured you know there must be an executive floor or something and you must have a couch and it must be a nice setup and then when I came over to see you that one time. You have your conference room is literally in the middle of the factory and like there are giant fucking robots are 15 feet away. And they're, they're pounding metal and it is ear splitting. And your room is like literally right in the middle of it. And I saw your sleeping bag in the conference room. I didn't see any of the rooms, that intense.
Elon Musk: Most of the time I did not sleep in the conference room because people could not see me in the conference room so I slept on the floor outside the conference room..
It's hard. People know, they don't know, seeing is believing. So I mostly was just sleep on the floor, outside the conference room so they could see that I was there, that's an even more advanced level. Yeah. That's woven hurt.
I always wake up and smell like oil and iron filings, it was rough. Yeah. But I was asking people to really go all out, I can't expect them to go out if I'm not doing the same thing.
Sriram: That's super interesting because when people think how does the richest person in the world live they don't think uncomfortably sleeping outside a conference room with lot of loud banging going on right next door.
Elon Musk: They probably don't but people at the factory do, they saw it themselves and that's what important..
Sriram: Okay. I love it. I'm switching topics just a little bit. You have your hands full with Space X and Tesla, and the Boring Company and Neuralink, if you somehow magically found an extra five hours in a day and you had to start another company or another effort, what would you start?
Elon Musk: Well I'm definitely have no plans to start get another thing, my head will definitely explode.
I think there are still tremendous opportunities in tunneling, for five years people ask me in what do I see opportunities and I'd say tunneling because nobody did anything, so then actually initially as a joke created the boring company just and we did a test tunnel in LA and then still people didn't believe us.
And then, so we just did our first operational tunnel in Vegas. The world really needs tunnels all major cities have traffic and tunnels can massively improve people's quality of life by making it easy to travel from one place to another city and then that can be further expanded to long distance travel, where if you just draw a vacuum on the tunnel then you can go extremely fast, faster than a plane or a high-speed rail.
So I'd really still recommend someone else please to start a tunelling company. Then there's RNA or MRN'a basically synthetic viruses which puts a good effect with the Biointech and moderna but I think people don't quite appreciate that that what's actually going on is the digitization of medicine.
So it's where you can just literally create an RNA or DNA sequence like a computer progrma and then, encapsulate that in a liquid shell, so it looks like a tasty treat for yourselves and you can literally do anything, this is absolutely the future of medicine.
You could probably figure out how to turn someone into a literal butterfly, your cells are biological computers, they execute just like old-school computer, where you feed it a tape or punch card, your cells which are tiny biological computers they will do whatever they punch card says, that was probably a big eye opener last year for 2020 like just the understanding the potential of RNA and then just super randomly Tesla actually is making a fairly advanced RNA sort of micro fab or something, we're open to making it for other companies as well.
Sriram: I'm not sure I understand this. Why is Tesla making RNA fab?
Elon Musk: It's super random. About four years ago we required a company in Germany, they're very good at automation, they're called "Groman" and they're they're in Southern Germany.
At that time, the acquisition they said: "Look, we're willing to be acquired but there's just a couple of projects that we think of, even though they're not related to automotive, and we really like to continue, if you don't mind".
And the two projects were: one is this like tiny chip analyzer with tiny wires for analyzing chips that Intel needs for making CPU’s and then another one was a Biotech thing, that basically has there's three parts: there's a DNA multiplier, an RNA multiplier and something that puts them the lipid shell on the RNA sequence we’re on like version three of it now, and they said, could they keep going, so if you keep it under 10 percent of resources - no problem. You can keep going and then it turns out it may actually be useful.
Sriram: I just love that you accidentally find yourself with an RNA fab, by the way, you've been talking a lot about how MRNA obviously has been key to the modern vaccines and all the COVID-19 vaccines, which brings me to COVID. Let us say somehow magically tomorrow, you were running the vaccine effort, the distribution effort right now, what would you do to get the vaccines out?
Aarthi: Specifically around the delivery of thelogistics side, which we just don't seem to be doing a really good job across the world, so what would you do differently there?
Elon Musk: I don't have good insight into the situation as it stands, but I think relaxing the requirements there are too many requirements of who can get the vaccine. The vaccine - it's really important for elderly or those who have a compromised immune system or is otherwise at risk
And I, would, really just saying first come - first serve, show up here, like use CVS and Walgreens, which give out the flu vaccine every year and say, okay, just show up here. And especially for the moderna and biotech, vaccines, which are quite temperature sensitive, they can only be defrosted from the deep freeze briefly, and then they must be used or they lose their effectiveness.
This is because the in my understanding RNA sequences they use are not stable, those sequences want to revert to something else, because they are not stable. They must be frozen at a very low temperature or they will simply revert to a lower energy state RNA sequence.
That's my understanding of it. So instead of worrying about whether the exact right person going to get the vaccine, just accept that maybe some people who shouldn't get the vaccine will get it, but we will still get a lot more vaccines out there. And let's not worry about the details here.
Let's just get it to as many people as possible, as quickly as possible and for sure we should not worry about the second dose quite yet, just give everyone the first dose. I suspect that the community grounded by the first dose is very significant and we've got, the second dose is like three or four weeks later.
So we'll have that we've got plenty of time to think about the second dose just worry about the first dose and first come - first served and don't worry about like accidentally giving them, doing the damn thing to someone who maybe didn't deserve it that will happen a little bit.
So that's my recommendation on that front and there's is going to be a an avalanche of vaccine coming. I think US may have ordered something like at 900 million doses. And the combination of that, this is going to be a, we're going to have some, when it's so much a COVID vaccine, I guarantee you it will be thrown away later this year.
Johnson Johnson vaccine just got approved which is more conventional vaccine but it's a single shot room temperature and then there are more and more vaccines that are going to get approved.
I know because I know the Tesla machine, it can make a bazillion doses super fast. For those who are concerned about the vaccine you should expect an exponential increase in vaccine availability and then combined with that, we are starting to approach some degree of herd immunity. People who have contracted the virus and recovered so which is actually better than getting vaccine because the antibody reaction is better than if you got the vaccine. So you could go on and on about it. But overall I think, optimistic message that there will be lots of vaccines and I would really encourage people to take the vaccine, I am not an anti-vaxxer, to be clear, I'm pro-vaxxer.
Marc: So, you know, speaking of the vaccine, California has been sort of bouncing between kind of 45th and 50th in the country, by States in terms of the speed of the rollout and it for me sort of re-raises this question that's been coming up more and more which is you know, you and I, and a lot of people here listening, of like built our companies, primarily in California, up until now. What's your view on the future of California?
Elon Musk: FIrst of all, I should say, I love California and I've lived more than half of my life in California, I built my companies here, I came came in Silicon Valley as a summer intern to work on energy storage technology for electric vehicles, way back in 92. I think it was 92-93 there’s a little company, called Pinnacle Research I got to Silicon Valley as soon as I could and and then at Stanford I was gonna be working on sort of advanced capacitors producing electric vehicles as grad studies and ended up putting that on hold for the internet.
I also tried to get a job at Netscape by the way. I wouldn't say I did a very good job of trying to get a job Netscape, but I was like, I was convinced that the internet would be the future, essentially the humanity communicated by osmosis until then, but with the internet it would be like humanity acquiring a nervous system and becoming much more of a super organism, so I was like, okay I could do a PhD at Stanford on advanced capacitors for use in electric vehicles which may or may not be successful, like I could get the PhD, but would it be useful or not uncertain.
Or I could be part of building the internet which was associated like do a PhD and watch the internet get both right in front of me, or put gradstudies on hold and try to help build the Internet in some way and I mean you're basically the only internet company. I send my resume And I was like, can you give me a feedback.
And then, uh, I tried hanging out in the lobby, but I was too shy to speak to anyone and I was like, man, what a sharlatan I am sitting in this lobby and then I just started writing software myself because I was like okay, well, I'll just write software myself.
And I actually wrote the first maps and directions on the internet. I'm not sure how many people are aware of that, but first maps directions, yellow pages and white pages, I wrote it personally, it was just me on my computer. And when we started our first company, we only had one computer, so the website only worked during the day because I was coding at night. And then the server ran during the day, that was quite an adventure.
That's for sure
Marc: Um, I just want to let you know that the next time you show up at one of my companies and hang out in the lobby for an internship, you’re going to get an internship.
Elon Musk: Wow, thanks man.
Sriram: I want to ask up with some light questions for you is telling a lot of people curious. What are you watching on the TV? What are you reading right now?
Elon Musk: Well, I just finished watching "The last kingdom", which I think is a great piece of, mostly accurate historical drama, there's "Cobra Kai", which is if you grew up in it's so good, it's such a sick burn, I mean they just like to turn the knife constantly.
Marc: What do you think of the «Expense?»
Elon Musk: Maybe I should start watching that, I think there we're like some sort of things about like having a shortage of water or something ike that it didn't make any scientific sense at first. So I was like come on this is dumb, so then I stopped watching it but it sounds like maybe I should keep watching it.
Marc: I think you'll the sort of most accurate representation of what, actual space actual like interplanetary travel would be like. Once it's sort of sets up a three-way battle between, basically Earth and Mars. Then the asteroid belt and kind of gets into all that in the future.
Elon Musk: I would say that would be a good outcome because it means that humanity actually made it out there, as long as they don't mallead each other. Besides the "Expense"
Marc: Oh, I just gotta bring one up, "Devs" and spelled D-E-V-S. If you have not seen "Devs", it is definitely the short for you and I will not say any more, but you will enjoy it.
Sriram: Okay, Elon. I don't take up too much of your time, this has been amazing, you're pretty much broken Clubhouse, there are probably about like over a dozen, maybe more overflow rooms and I see so many Twitter threads right now, you've been so generous for all your listeners here and on Twitter. You've been asking for people to join Neuralink, you've beem asking me people to join Tesla. Do you have any final thoughts for everybody who's listening to you right now?
Elon Musk: Well, do you want to hear the real story from Vlad from Robinhood about what happened this week with GameStop?
Sriram: Sure. Go for it.
Elon Musk: Okay. You need to like, let him somehow click on a button, so he can talk.
Sriram: All right let me figure this out.
Aarthi: While we're figuring it out Elon, why don't you talk to us about "Hitchhiker's guide to the galaxy", since you mentioned that right at the beginning.
Elon Musk: Yeah. "Hitchhiker's guide to the galaxy" by Douglas Adams is in fact a book of philosophy, disguised as a silly humor book and if you read it from the standpoint of "wow, this is an interesting book". Philosophy, this is quite insightful. As i mentioned it really hits the point of the answer is easy once you properly can formulate the question. I mean I like the fact that the ship is powered by infinite improbability, it's called the heart of gold.
He also makes fun of bureaucracy, in fact, Earth essentially gets destroyed by a sort of clerical error or they basically decide that they need to have an interstellar highway and the Earth's in the way. They post the fact that Earth needs to get destroyed for this interstellar highway, but of course,it's posted on alien bulletin board that no one on Earth can access.
So they're surprised when people on Earth aren't happy about this. "It's like it was posted on the board. What do you mean, what board?" Some of the things in Douglas Sanders were like the babble fish, where you put the fish in your ear, that automatically translates, we kind of have that already, so yeah, I mean the future is coming fast.
Sriram: Elon. Okay. Vlad, can you hear us?
Vlad: Hey guys, thanks for inviting me up, it's good to hang with all of you.
Elon Musk: All right, Vlad. What really happened? Give us the inside scoop.
Vlad: All right, well, I was actually hoping that you would invite me up for the fermi paradox part because this has been a very surreal weekend and week for me.
One of the really great things is all the people coming out of the woodwork to offer support for the company, offer you know advice. Today actually, I should say I just randomly downloaded Clubhouse a couple of days ago just to see what it was all about so this is my first time literally using the app, but I got introduced to your friend Antonio, Elon, who had some good advice for me and then introduced me to you.
You had some great advice and then I figured you know I heard about this Clubhouse and this has got be part of the simulation, so I just thought why not? So here I am. So I'm actually I'm actually an adherent to the simulation hypothesis.
Elon Musk: All right, it's full of beans, man. What happened last week? Why do you stop here? Why can't people buy the Gamestop shares? The people demand an answer and they want to know the details and the truth…
Vlad: Yup. Yup, okay. So let me start by giving a little bit of background. So I'm the chief executive of Robinhood.
It's actually a couple of companies, so there's a, an introducing broker dealer, called Robinhood financial and that basically is the app that you know and love, it processes trades you're a customer of Robinhood financial.
Then there's a clearing broker dealer Robinhood securities, that clears and settles the trades and then we have Robinhood crypto crypto business.
All these are kind of different entities that are differently operated, so basically Wednesday of last week we just had, unprecedented volume, unprecedented load on the system a lot of these, meme stocks were going viral on social media and people were joining Robinhood and there was a lot of net by activity on them, as you guys all know, and Robinhood at this time, I think was number one on the iOS app store, and Google play as well.
Thursday morning, right. I'm sleeping but at 3:30 AM Pacific our operations team receives a file from the NSCC, which is the national securities clearing corporation. So basically as a clearing broker and this is where Robinhood securities comes in, we have to put up money to the NSCC, based on some factors, including things like the volatility of the trading activity concentration into certain securities. And this is the equities business, so it's based on stock trading, not options trading or anything else.
So they gave us a file with a deposit and the request was around $3 billion, which is about an order of magnitude more than what it typically is.
Elon Musk: Sounds like this is an unprecedented increase in demand for capital. What formula did they use to calculate that?
Vlad: Well, just to give context, Robinhood up until that point has raised a little bit around $2 billion in total venture capital up until now, so it's a big number, like $3 billion.
We don't have the full details, it's a little bit of an opaque formula, but there's a component called the VAR which is value at risk and that's based on kind of some fairly quantitative things, although it's not fully transparent, so there are ways to reverse engineer it, but it's not kind of publicly shared and then there's a special component, which is discretionary, so that kind of acts as a multiplier.
Elon Musk: Basically discretionary, meaning like it's just their opinion?
Vlad: I'm sure there's definitely.. More than just their opinion, but…
Elon Musk: Everyone wants to know, did something shady go down here. It’s seems weird that you'd get a sudden $10 billion demand..
Vlad: 3 billion in the morning.
Elon Musk: Sorry. How much? Yeah..
Vlad: It was 3 billion US dollars.
Elon Musk: Okay, 3 billion just suddenly out of nowhere.
Vlad: I wouldn't impute shadiness to it or anything like that and actually, NSCC was reasonable subsequent to this and they worked with us to actually lower it, so it was unprecedented activity, I don't have the full context about what was going on in the NSCC to make these calculations.
So this was a, this was obviously nerve-wracking and I actually was asleep at this point. The operations team was fielding this at three o'clock and then we put our heads together our chief operating officer basically said: Look, look,call up the higher ups at the NSCC and figure out what's going on. Maybe there's some way we can work with them.
And basically there was another call and they lowered it to something like $1.4 billion from 3. So we're making some progress, but it's still a high number.
And then we basically proposed plan to explain how, we'll manage risk in the symbols throughout the day. We propose marking these volatile stocks that were kind of driving the activity position closing only. And then at about an hour before market open. So 5:30 or five 5 in the morning, they came back and they said: Okay the charge is or the deposit 700 million,which we then deposited and paid promptly and then everything was fine, so that essentially explains why we had to we had to mark these symbols "position closing only".
And also why we didn't wanna, we knew this was a bad outcome for customers. Part of what's been really difficult is that Robinhood stands for democratizing access to stocks we want to give people the access so that's been very challenging, but we had no choice in this case, we had to conform to our regulatory capital requirements and so the team did what they could to make sure we were available for customers.
Elon Musk Who controls this organization, this clearing house?
Vlad: It's a consortium. It's not quite a government agency. I don't really know the details of all of that. I think there was legitimate sort of turmoil in the markets like these are unprecedented events with these meme stocks. And there was a lot of activity, so there probably is some amount of extra risk in the system that warrants higher requirements, so it's not entirely unreasonable.
But we did operational processes to make sure that customers, that had positions could sell their open positions. Because obviously restricting someone, we got a lot of questions about: Okay, you had to restrict buying. Why didn't you also restrict selling?
And the fact of the matter is - people get really pissed off if they're holding stock and they want to sell it and they can’t. So I think that's categorically worse.
Lots of other brokers, I think were in the same situation. Robinhood was in the news, but you sort of heard this industry-wide right other brokers basically restricted the same exact activity.
Elon Musk All right, so, it sounds like this organization calls you up and they basically have a gun to your head: either, either hand over this money or else... And cause basically what people are wondering is - did you sell your clients down the river or did you have no choice?
And if you had no choice, that's understandable, but then we got to find out why you had no choice and who are these people that are saying you have no choice?
Vlad: Yeah, I think that's fair. We have to comply with these requirements. Financial institutions have requirements. The formula behind these requirements, I think , It would obviously be ideal if there was a little bit more transparency, so we could plan better around that.
But to be fair, we were able to open and serve our customers and 24 hours later our team raised over a billion dollars in capital. When we do open tomorrow mornin g , we'll be able to relax the stringent position limits that we put on these securities on Friday.
Elon Musk Will it be any limits?
Vlad: I think there's always going to be some theoretical limits. We don't have infinite capital. And on Friday there were limits. So there's always going to have to be some limit. The question is - will the limits be high enough to the point where they won't impact, 99.9 plus percent of customers?
If someone were to deposit a hundred billion dollars and decide to trade in one stock, that wouldn't be possible, all right?
Elon Musk: All right. I guess people really just want to know, if you had no choice ? Then you had no choice, then it's kinda situation. That's understandable. But then whoever put that gun to your head should be willing to answer to the public.
Vlad: Yeah, listen, there's processes. This is unprecedented times and to be fair to those guys that have been, they've been reasonable. The one thing that is maybe not clear to people is Robin is a participant in the financial system, so we have to work with all of these counterparties. So we do get a lot of questions about: Why do you work with market makers? Why do you work with clearing houses ?
Vertically integrating and getting.. It's hard enough introducing a clearing broker dealer, not too many people have done that. But the financial system that allows customers to trade shares is a complex web of multiple parties.
And it's hard everyone says : It could be better. It could be improved. It's just the necessity of trading equities in the US.
Elon Musk To what degree are you beholden to Citadel? Like basically if Citadel is unhappy, then what happens?
Vlad: There was a rumor that Citadel or other market makers pressured us into doing this and now that's just false. Market makers execute our trades, they execute trades of every broker dealer. This was a clearing house decision and it was just based on the capital requirements. From our perspective, Citadel and other market makers weren't involved in that
Elon Musk But wouldn't they have a strong say in who got put in charge of that organization since it's an industry consortium, not a government consortium, or not a government regulatory agency?
Vlad: I don't have any reason to believe that. I think that's just getting into kind of the conspiracy theories a little bit. So I just have no, no reason to believe that's the case.
Elon Musk All right. I guess we'll see what happens with future actions. Hopefully that insightful or at least a little bit entertaining. Are you not entertained?
Sriram: Yeah, okay I don't know what to say. First of all, Vlad, thank you so much for jumping on. I know it's pretty late. And thank you so much deeply appreciated and I'm sure everyone in the audience here and watching elsewhere the episodes. Thank you so much. We really appreciate this.
I'm gonna wrap to this up Elon. What can I say? Thank you so much. I hope you had a fun time four your first time on Clubhouse. Did you have fun?
Elon Musk Yeah, that's great. This is awesome. I didn't even know existed a week ago, so. It seems cool