Bjorno

In the United States, there is more interest in heaven than in hell, at least based on searches. There are 1.5 times more searches for “heaven” than “hell,” 2.8 times as many searches asking what heaven looks like than what hell looks like, and 2.75 times as many searches asking whether heaven is real than whether hell is real.

…Relative to the rest of the country, for every search I looked at, retirement communities search more about hell. In retirement communities, there are a similar number of searches asking to see visuals of hell as visuals of heaven.

And:

There are 4.7 million searches every year for Jesus Christ. The pope gets 2.95 million. There are 49 million for Kim Kardashian.

That is from Seth Stephens-Dawidowitz.

Louis C. K.’s Plateau

A reader recently sent me the above video of comedian Louis C. K. speaking at a 2010 memorial to George Carlin. His brief remarks provide interesting insight into the reality of how people reach elite levels in their fields — and why it’s so rare.

As C. K. begins, when he first attempted comedy, he was, like most new comedians, terrible. But he wasn’t deterred:

“I wanted it so bad, that I kept trying, and I learned how to write jokes.”

This early burst of effort helped C. K. become a professional, with a full hour’s worth of reasonable material.

It was here, however, that he stalled. For a long time…

“About fifteen years later, I had been going in a circle that didn’t take me anywhere. Nobody gave a shit who I was, and I didn’t either, I honestly didn’t. I used to hear my act, and go, ‘this is shit and I hate it.'”

This is the lesser told story about the quest for elite accomplishment. It’s common to hear about the exciting initial phase where you’re terrible but motivated and therefore see quick returns.

But so many people, like C. K., soon hit a plateau. They’re no longer bad. But they’re also not improving; stuck in a circle that doesn’t take them anywhere.

Inviting the Awful

What makes this Louis C. K. clip interesting, however, is that he goes on to explain how he broke out of the circle of mediocrity that was trapping him.

This escape began when C. K. heard an interview with George Carlin. In this interview, Carlin said his method was to record one comedy special each year. The day after he was done recording, he’d throw out his material and start over.

At first, C. K. was incredulous, thinking:

“That’s crazy, how do you throw away…it took me fifteen years to build this shitty hour.”

But he soon realized something: Carlin’s sets got better each year.

The reason: writing material from scratch is a brutally effective form of deliberate practice. It forces you to seek out new topics and dive deeper and approach fresh what you think is funny and not funny.

It’s the essential process that makes you better as a comedian, and C. K. had been avoiding it for the past decade and a half.

Feeling “desperate” with nothing left to lose, C. K. adopted Carlin’s strategy by throwing out his material and committing to write something new each year: a process which he latter dubbed, to “invite the awful” — a reference to the difficulty of starting something hard from scratch.

The results were astounding.

C. K. spent fifteen years stuck as a nobody comic with a “shitty set,” but after only four years of applying the Carlin strategy, Comedy Central named him one of the 100 funniest stand-ups of all time.

This is a lesson I need to remind myself of on a regular basis. Getting started on the path to craftsmanship is hard. But it’s equally important (and hard) that you keep inviting the awful by pushing yourself to new places and new levels of ability.

If it’s easy to do, you’re not getting better.

A few half-truth definitions from the world of finance:

Due Diligence: My boss told me to sell this product.

Proprietary: You’ll never understand it and the fees are much higher to boot.

Volatility: When stocks go down.

Prospectus: A 200 page document written and designed by lawyers to be so boring and detail-oriented that no investor will ever actually read it.

Jim Cramer: The guy on CNBC that everyone uses as an example of why it’s hard to pick individual stocks.

CNBC: The financial news station that most industry people watch, but they all say it’s only with the sound turned off.

Stocks: Help investors build their wealth over the long-term.

Bonds: Help investors preserve their wealth.

Hedge Funds: Help hedge fund managers build and preserve their wealth.

Alpha: Something 100% of active managers assume they can earn but only 3-4% actually do.

Bubble: Something that happens once a week in the markets according to the financial media.

Warren Buffett: Some old guy everyone quotes, but never follows his advice.

Contrarian: Something everyone claims to be, but most are not.

Consensus: Something no one claims to be, but most are.

Market Correction: Something everyone says is going to be healthy before it happens, at which point it morphs into a disaster that will never end.

Unconstrained (Go Anywhere) Funds: How to guarantee mediocre returns in any environment.

Smart Beta: A marketing approach to re-name factor investing strategies that have been around for decades.

Finance Twitter: The place people go for money-losing tweets that get deleted, snark, inspirational quotes from hedge fund managers and dad jokes.

Constructive on the Markets: I have no idea.

Cautiously Optimistic on the Markets: Nope, not a clue.

Consultants: Someone who gets blamed when things go wrong.

Sophisticated Investors: Investors who are willing to pay higher fees for the opportunity to underperform index funds.

Long-Term: The time period that exists when people are making money right up until the point that their investments start to fall and they panic.

Dead Cat Bounce/Junk Rally/Short Covering: Market recoveries you aren’t taking part in.

Further Reading:
Words & Phrases That Should be Banished from Finance

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The post Definitions for Financial Consumers appeared first on A Wealth of Common Sense.

Me four years ago:

Imagine that over the entire past and future history of our galaxy, human-level life would be expected to arise spontaneously on about one hundred planets. At least it would if those planets were not disturbed by outsiders. Imagine also that, once life on a planet reaches a human level, it is likely to quickly (e.g., within a million years) expand to permanently colonize the galaxy. And imagine life rarely crosses between galaxies. In this case we should expect Earth to be one of the first few habitable planets created, since otherwise Earth would likely have already been colonized by outsiders. In fact, we should expect Earth to sit near the one percentile rank in the galactic time distribution of habitable planets – only ~1% of such planets would form earlier. …

If we can calculate the actual time distribution of habitable planets in our galaxy, we can then use Earth’s percentile rank in that time distribution to estimate the number of would-produce-human-level-life planets in our galaxy! Or at least the number of such planets times the chance that such a planet quickly expands to colonize the galaxy. (more)

New results:

The Solar System formed after 80% of existing Earth-like planets (in both the Universe and the Milky Way), after 50% of existing giant planets in the Milky Way, and after 70% of existing giant planets in the Universe. Assuming that gas cooling and star formation continues, the Earth formed before 92% of similar planets that the Universe will form. This implies a < 8% chance that we are the only civilisation the Universe will ever have. (more; HT Brian Wang)

Bottom line: these new results offer little support for the scenario where we have a good chance of growing out into the universe and meeting other aliens before a billion of years have passed. Either we are very likely to die and not grow, or we are the only ones who could grow. While it is possible that adding more filters like gamma ray bursts could greatly change this analysis, that seems to require a remarkable coincidence of contrary effects to bring Earth back to being near the middle of the filtered distribution of planets. The simplest story seems right: if we have a chance to fill the universe, we are the only ones for a billion light years with that chance.

"“We don’t have 10 years,” Casey once told Newsmax. “We’ve squandered during President Obama’s administration eight years ... and we didn’t have eight years to squander.”"



Squander???  What does he think we are pumping all that carbon into the atmosphere for?  We are preparing in the best possible way!



Global freezing: A ‘mini ice age’ is on the way by 2030, scientists say - MarketWatch: "“We don’t have 10 years,” Casey once told Newsmax. “We’ve squandered during President Obama’s administration eight years ... and we didn’t have eight years to squander.”"



'via Blog this'

Geoff Ralston, a partner at Y Combinator, argues that electric cars will soon dominate the world. He gives several arguments regarding cost and convenience that I take no issue with but his most interesting argument strikes me as wrong:

Gas stations are not massively profitable businesses. When 10% of the vehicles on the road are electric many of them will go out of business.  This will immediately make driving a gasoline powered car more inconvenient.  When that happens even more gasoline car owners will be convinced to switch and so on.  Rapidly a tipping point will be reached, at which point finding a convenient gas station will be nearly impossible and owning a gasoline powered car will positively suck.  Then, there will be a rush to electric cars….

Why is this wrong? Consider that in 2009 there were 246 million motor vehicles registered in the United States. A 10% reduction would be 221 million vehicles but that is how many vehicles there were in 2000. Was driving an automobile so much more inconvenient in 2000 than it was in 2009? No. Even a 25% fall in gas vehicles would bring us back only to the number of vehicles circa 1998.

More fundamentally, the argument goes wrong by not thinking through the incentives. Suppose that gasoline stations did become so uncommon that finding one was inconvenient. What will happen? More gasoline stations will be built! Ralston has implicitly assumed that building gasoline stations will add so much to the price of gasoline as to render that option uneconomic. In fact, gasoline stations are relatively simple, small businesses that easily expand or contract in response to the pennies on a gallon that people are willing to pay for convenience.

Addendum: By the way, even though the number of vehicles in the United States has been increasing, the number of gasoline stations has actually been decreasing, largely because greater fuel efficiency means that we want fewer stations.

Hat tip: Vlad Tarko.

Comedian Drew Carey outsourced the development of his productivity strategy to David Allen, author of the cult classic, Getting Things Done: The Art of Stress-Free Productivity, who “taught him how to adhere to specific next steps rather than abstract larger goals.”

Allen’s system, outlined in Willpower: Rediscovering the Greatest Human Strength, focuses “on the minutiae of to-do lists, folders, labels, in-boxes.”

When he began working with overtaxed executives, he saw the problem with the traditional big-picture type of management planning, like writing mission statements, defining long-term goals, and setting priorities. He appreciated the necessity of lofty objectives, but he could see that these clients were too distracted to focus on even the simplest task of the moment. Allen described their affliction with another Buddhist image, “monkey mind,” which refers to a mind plagued with constantly shifting thoughts, like a monkey leaping wildly from tree to tree. Sometimes Allen imagined a variation in which the monkey is perched on your shoulder jabbering into your ear, constantly second-guessing and interrupting until you want to scream, “Somebody, shut up the monkey!”

“Most people have never tasted what it’s like to have nothing on their mind except whatever they’re doing,” Allen says. “You could tolerate that dissonance and that stress if it only happened once a month, the way it did in the past. Now people are just going numb and stupid, or getting too crazy and busy to deal with the anxiety.”

Instead of starting with goals and figuring out how to reach them, Allen tried to help his clients deal with the immediate mess on their desks. He could see the impracticality of traditional bits of organizational advice, like the old rule about never touching a piece of paper more than once— fine in theory, impossible in practice. What were you supposed to do with a memo about a meeting next week? Allen remembered a tool from his travel-agent days, the tickler file. The meeting memo, like an airplane ticket, could be filed in a folder for the day it was needed. That way the desk would remain uncluttered, and the memo wouldn’t distract you until the day it was needed.

[…]

Besides getting paperwork off the desk, the tickler file also removed a source of worry: Once something was filed there, you knew you’d be reminded to deal with it on the appropriate day. You weren’t nagged by the fear that you’d lose it or forget about it. Allen looked for other ways to eliminate that mental nagging by closing the “open loops” in the mind. “One piece I took from the personal-growth world was the importance of the agreements you make with yourself,” he recalls. “When you make an agreement and you don’t keep it, you undermine your own self-trust.

Psychologists have also studied the mental stress of the monkey mind. This nagging of uncompleted tasks and goals is called the Zeigarnik effect and also helps explain why to-do lists are not the answer.

Zeigarnik effect: Uncompleted tasks and unmet goals tend to pop into one’s mind. Once the task is completed and the goal reached, however, this stream of reminders comes to a stop.

Until recently we thought this was the brain’s way of making sure we get stuff done. New research, however, has shed preliminary light on the tension our to-do lists cause in our cognitive consciousness and unconsciousness.

[I]t turns out that the Zeigarnik effect is not, as was assumed for decades, a reminder that continues unabated until the task gets done. The persistence of distracting thoughts is not an indication that the unconscious is working to finish the task. Nor is it the unconscious nagging the conscious mind to finish the task right away. Instead, the unconscious is asking the conscious mind to make a plan. The unconscious mind apparently can’t do this on its own, so it nags the conscious mind to make a plan with specifics like time, place, and opportunity. Once the plan is formed, the unconscious can stop nagging the conscious mind with reminders.

If you have 150 things going on in your head at once, the Zeigarnik effect leaves you leaping from “task to task, and it won’t be sedated by vague good intentions.”

If you’ve got a memo that has to be read before a meeting Thursday morning, the unconscious wants to know exactly what needs to be done next, and under what circumstances. But once you make that plan— once you put the meeting memo in the tickler file for Wednesday, once you specify the very next action to be taken on the project— you can relax. You don’t have to finish the job right away. You’ve still got 150 things on the to-do list, but for the moment the monkey is still, and the water is calm.

This is how David Allen solved Drew Carey’s organizational problems.

“Whether you’re trying to garden or take a picture or write a book,” Allen says, “your ability to make a creative mess is your most productive state. You want to be able to throw ideas all over the place, but you need to be able to start with a clear deck. One mess at a time is all you can handle. Two messes at a time, you’re screwed. You may want to find God, but if you’re running low on cat food, you damn well better make a plan for dealing with it. Otherwise the cat food is going to take a whole lot more attention and keep you from finding God.”

Still curious? Follow up with Getting Things Done and Willpower: Rediscovering the Greatest Human Strength.

--
Sponsored By: Greenhaven Road Capital: You think differently - now invest differently.

Regardless of what you think about the inequality of wealth and incomes, the fact is that the U.S. economy continues to create an astounding amount of wealth—wealth that benefits us all. Household net worth is at record highs, both in nominal, real, and per capita terms, even as household leverage has declined significantly. It's hard to see what's wrong with this picture.

Here are the charts:


According to the Fed, U.S. households' net worth rose $1.63 trillion in the first quarter of this reaching, reaching a new, all-time high of $84.9 trillion. Most of the gains have been in financial assets and savings accounts.


After adjusting for inflation and for population growth, real per capita net worth reached a new, all-time high of over $261K. That's 3.3 times as much as it was 50 years ago!


Importantly, the latest surge in wealth was not driven nor sustained by any debt "bubble." As the chart above shows, household leverage has declined significantly since 2008, all the while net worth rose to new all-time highs. Household leverage today is about the same as it was back in 1990.

Even if all this staggering amount of wealth were held by just a handful of people, it would still be the case that we all benefit from it. This wealth is the ultimate source of all jobs and our living standards. Because our economy can produce so much, so efficiently, the fruits of modern life (e.g., iPhones, air travel, clean water, abundant food) are available to virtually everyone.

I reflected on this while visiting some centuries-old castles and estates today, where it took an army of servants to provide a standard of living for the wealthiest of landowners that would be considered below-poverty-level today. No electric light bulbs. No refrigerators. No HVAC. No TV. You get the picture.

The daily life of a billionaire today is not all that much different from that of a median-income wage earner. Both have ready access to great food, a clean abode, cheap travel, cheap entertainment, great health care, and instant communications with just about anyone, anywhere in the world.

The program is ridiculous. Also, it turns out, unconstitutional.

So, (the sentence starts with "so" because this is a sort of ongoing discussion that's been going on here for years) I've been thinking about the overall market again.  Despite my telling people to ignore this and ignore that, I can't help it; sometimes I think about this stuff.  Well, it's OK to think about it as long as it doesn't lead to irrational decisions.

Anyway, as usual, there is a lot of talk of the market being insanely overvalued, median P/E's at post war records and all the usual.

I look at the charts and some are scary, but I still don't get the sense of a bubble.  I've seen the Japan bubble in 1989, the 2000 internet bubble and some others.  I see the Chinese bubble going on right now.  But I still don't really get the sense that the U.S. stock market is in a bubble.  Yes, there is a pocket of bubbliness, like in some parts of the tech sector (social networks, biotech etc.), but overall I just really don't see it.

Like Black Monday?
Also, there were comments to the effect that 2015 feels just like 1987 before Black Monday because interest rates spiked up right before the stock market crash.  Well, back then the stock market was at 20x P/E and bond yields spiked up to 10%.  So that was a Fed model yield gap of a whopping 5% (earnings yield of 5% versus bond yield of 10%).

Today, we are talking about interest rates spiking up to 2.5% with the P/E ratio under 20.  So in that sense, there is no stretched rubber band ready to snap based on interest rates.  And I showed in recent posts that the market is fine with interest rates spiking up to 6% (of course there will volatility based on that, though).

Nifty Fifty 1972
I made a post just like this one two or threes years ago when people were saying the market is overvalued.  I looked up the P/E ratios of the Nifty Fifty stocks in 1972 to see what a real bubble looks like.

Here is what you were dealing with if you were investing in blue chip stocks back in 1972:



What is really interesting to me here is that the S&P 500 index P/E ratio at the time was 19.2x.  But look at the nifty fifty P/E ratios.  To me, this is what a bubble looks like.  These 'ordinary' companies were trading at higher P/E's than high growth social network stocks or fast casual restaurant chain today!

So, while everyone focuses on the big scary charts of market P/E ratios and whatnot, let's just look under the hood and see what's actually going on.

To be totally neutral, I just picked the Dow 30 stocks.  They are large caps, representative of major U.S. companies.  Despite the horrible structure of the index (price-weighted), it does correlate pretty closely with the S&P 500 index.  I plan on looking at the S&P 500 index in the same way in the near future.



I just scraped this data off of Yahoo Finance.   I ranked it from cheapest up based on forward P/Es.

It's sometimes a good idea, when trying to figure something out, to invert.  To get comfortable being long something, let's see what it would feel like to be short it instead (just because it's not a good short doesn't automatically make it a good long, though).

People say that the market is tremendously overvalued.  Is the market so overvalued that I would be comfortable with a massive short position?  I just imagine myself with a big short position to see how I would feel.  What do I need to make money?  What can go wrong?  Is there really a big margin of safety in terms of valuation; are things so overvalued that it's a no brainer to be short?  At this point, I would not be comfortable short at all.  Sure, earnings for everyone might be bloated due to QE-infinity and budget deficits.  There are other reasons to be bearish, but I just don't see it from a valuation point of view.  The market is certainly not cheap.  But it's not so expensive that it's a no-brainer short either.

It's true that many of the Nifty Fifty were the growth stocks of the day.  So shorting those back then may not have been any easier than shorting Facebook or Amazon today.  In that sense, this is not really apples to apples.  I'm comparing the Nifty Fifty of 1972 to the Dow 30 stocks now; not fair.

Here, by the way, is the list of Dow 30 stocks as of 1976 from the Dow Jones website (they didn't have 1972, but I assume it hasn't changed much):



But anyway, if you look slowly through the current Dow stocks, which ones are really overvalued?  I mean overvalued in a bubblistic sense?  I don't want to comment on each one, but most look pretty reasonable to me.  Most of the high P/E stocks (NKE, DIS, V, KO etc.) seem to be stocks that always had high P/Es, so don't feel like bloated P/Es based on a bubble.  Many others are just totally reasonable and some are really cheap (AXP, for example.  It has a close to 30% ROE, 12-15% long term EPS growth target, and it's trading at less than 14x P/E and less than 10x pretax earnings per share!).

Let's say you think the market should go down 50%.  I remember reading a comment by a hedge fund manager who said that he likes to buy stocks where if you doubled the price it would still be cheap and short stocks that if you cut the price in half, it would still be expensive.  That's quite a margin of safety built in!

If you look at the Dow stocks above, do I really think that the fair value of each of those is half the current P/E ratio?  I would say no to most of them.  OK, margins are bloated.  But just finger through the list slowly from the top to bottom.  Which ones are over-earning with bloated, bubbled up margins?  Honestly, I don't know.  Nothing jumps out at me as a candidate.  Readers here know that I am not a big long term fan of Apple as an investment, so I would argue that AAPL would be an example of possibly bloated, long-term unsustainable margins (and I know, I know, a lot of people don't agree with me on that and that's OK!).

But otherwise, it seems like a lot of them are actually under-earning.

Berkshire Stocks
As another 'sample', let's just look at BRK's portfolio, which in aggregate is down on the year so far.


Here too, I come to a similar conclusion as the above (well, there are overlaps).  Nothing jumps out at me as needing a 'crash' or big bear market to correct.  I don't really see a stretched rubber band here either.  Most seem to be under-earning and I don't really see any unsustainably high margins.

Buffett Dogs Strategy?
So, looking at this, it's interesting to see that there are three stocks down a lot this year.  WMT, PG, and AXP are down -16%, -14% and -15% year-to-date respectively.  And as I said above, AXP has incredible margins and ROE and is trading under 14x P/E.  I know there are worries about competition; alternative payment systems (Munger said there is more competition now than before, but it's still a great business).  And the loss of Costco is certainly weighing on the stock.  This will cause earnings to be flat, but AXP expects EPS to start growing 12-15% again in 2017.

Conclusion
I've been saying this sort of thing since 2011 when I first started this blog; that the market is fine.  But sooner or later the bull market will end.  The market will tank and people will go back and read these posts and have a good laugh.  I know that will happen for sure.  But that's OK.

I'm not trying to predict anything, nor am I saying that we won't have another bear market again.  The market will go down for sure, 50% or more.  There is no doubt about that at all.  But I don't know when that will happen.

I am just looking at a bunch of facts to see what's actually going on.  Sometimes, it's hard to see what is happening just looking at big, macro charts; they can be misleading, like flying over a disaster zone in an airplane.  Sometimes you have to get on the ground and walk around to see for yourself.

Lindsey M. Burke reports:

On Tuesday night, Nevada governor Brian Sandoval signed into law the nation’s first universal school-choice program. That in and of itself is groundbreaking: The state has created an option open to every single public-school student. Even better, this option improves upon the traditional voucher model, coming in the form of an education savings account (ESA) that parents control and can use to fully customize their children’s education.

…As of next year, parents in Nevada can have 90 percent (100 percent for children with special needs and children from low-income families) of the funds that would have been spent on their child in their public school deposited into a restricted-use spending account. That amounts to between $5,100 and $5,700 annually, according to the Friedman Foundation for Educational Choice. Those funds are deposited quarterly onto a debit card, which parents can use to pay for a variety of education-related services and products — things such as private-school tuition, online learning, special-education services and therapies, books, tutors, and dual-enrollment college courses. It’s an à la carte education, and the menu of options will be as hearty as the supply-side response — which, as it is whenever markets replace monopolies, is likely to be robust.

The pointer is from Adam Ozimek.

Here’s a video of robots falling over on the first day of Darpa’s 2015 robot challenge, a challenge set up after Japan’s nuclear disaster at Fukushima in order to encourage development of robots capable of navigating a disaster area.

Keep in mind that the first Darpa Grand Challenge for driverless vehicles was held in 2004 and not a single vehicle came to close to finishing the course and most failed within a few hundred metres. Did I mention that was in 2004?

Stephen Hawking fears that “the development of full artificial intelligence could spell the end of the human race.” Elon Musk and Bill Gates offer similar warnings. Many researchers in artificial intelligence are less concerned primarily because they think that the technology is not advancing as quickly as doom scenarios imagine, as Ramez Naam discussed. I have a different objection.

Why should we be worried about the end of the human race? Oh sure, there are some Terminator like scenarios in which many future-people die in horrible ways and I’d feel good if we avoided those scenarios. The more likely scenario, however, is a glide path to extinction in which most people adopt a variety of bionic and germ-line modifications that over-time evolve them into post-human cyborgs. A few holdouts to the old ways would remain but birth rates would be low and the non-adapted would be regarded as quaint, as we regard the Amish today. Eventually the last humans would go extinct and 46andMe customers would kid each other over how much of their DNA was of the primitive kind while holo-commercials advertised products “so easy a homo sapiens could do it”.  I see nothing objectionable in this scenario.

Aside from greater plausibility, a glide path means that dealing with the Terminator scenario is easier. In the Terminator scenario, humans must continually be on guard. In the glide path scenario we only have to avoid the Terminator until we become them and then the problem is resolved with little fuss. No human race but no mass murder either.

More generally, what’s so great about the human race? I agree, there are lots of great things to point to such as the works of Shakespeare, Mozart, and Grothendieck. We should revere the greatness of the works, however, not the substrate on which the works were created. If what is great about humanity is the great things that we have done then the future may hold greater things yet. If we work to pass on our best values and aspirations to our technological progeny then we can be proud of future generations even if they differ from us in some ways. I delight to think of the marvels that future generations may produce. But I see no reason to hope that such marvels will be produced by beings indistinguishable from myself, indeed that would seem rather disappointing.

onlinepunk:

who the hell is responsible for this

....................

And in case you haven't pre-ordered your copy of this book yet (September release): Charlie Munger: The Complete Investor

David Kravets, writing for Ars Technica:

Transportation Security Administration screeners allowed banned weapons and mock explosives through airport security checkpoints 95 percent of the time, according to the agency’s own undercover testing.

ABC News reported the results on Monday, but Ars could not independently confirm them. According to ABC News, a Homeland Security Inspector General report showed that agents failed to detect weapons and explosives in 67 out of 70 undercover operations.

Just shut them down.

(I was going to link directly to the ABC News page, but in Safari on my Mac, it doesn’t let me scroll and the video autoplays, so screw them.)

Trevor Timm, writing for the CJR:

Hersh’s many critics, almost word-for-word, gave the same perfunctory two-sentence nod to his best-known achievements — breaking the My Lai massacre in 1969 (for which he won the Pulitzer) and exposing the Abu Ghraib torture scandal 35 years later — before going on to call him every name in the book: “conspiracy theorist,” “off the rails,” “crank.” Yet most of this criticism, over the thousands of words written about Hersh’s piece in the last week, has amounted to “That doesn’t make sense to me,” or “That’s not what government officials told me before,” or “How are we to believe his anonymous sources?”

While there’s no way to prove or disprove every assertion Hersh makes without re-reporting the whole story, let’s look at the overarching criticisms one by one.

Must-read piece.

Drop everything and read Seymour Hersh’s astounding alternative history of the U.S. killing of Osama bin Laden. Hell of a good read.

This is Part 1 of a four-part series on Elon Musk’s companies.

__________

PDF and ebook options: We made a fancy PDF of this post for printing and offline viewing (see a preview here), and an ebook containing the whole four-part Elon Musk series:

___________

Last month, I got a surprising phone call.

Elon Musk, for those unfamiliar, is the world’s raddest man.

I’ll use this post to explore how he became a self-made billionaire and the real-life inspiration for Iron Man’s Tony Stark, but for the moment, I’ll let Richard Branson explain things briefly:1

Whatever skeptics have said can’t be done, Elon has gone out and made real. Remember in the 1990s, when we would call strangers and give them our credit-card numbers? Elon dreamed up a little thing called PayPal. His Tesla Motors and SolarCity companies are making a clean, renewable-energy future a reality…his SpaceX [is] reopening space for exploration…it’s a paradox that Elon is working to improve our planet at the same time he’s building spacecraft to help us leave it.

So no, that was not a phone call I had been expecting.

A few days later, I found myself in pajama pants, pacing frantically around my apartment, on the phone with Elon Musk. We had a discussion about Tesla, SpaceX, the automotive and aerospace and solar power industries, and he told me what he thought confused people about each of these things. He suggested that if these were topics I’d be interested in writing about, and it might be helpful, I could come out to California and sit down with him in person for a longer discussion.

For me, this project was one of the biggest no-brainers in history. Not just because Elon Musk is Elon Musk, but because here are two separate items that have been sitting for a while in my “Future Post Topics” document, verbatim:

– “electric vs hybrid vs gas cars, deal with tesla, sustainable energy”

– “spacex, musk, mars?? how learn to do rockets??”

I already wanted to write about these topics, for the same reason I wrote about Artificial Intelligence—I knew they would be hugely important in the future but that I also didn’t understand them well enough. And Musk is leading a revolution in both of these worlds.

It would be like if you had plans to write about the process of throwing lightning bolts and then one day out of the blue Zeus called and asked if you wanted to question him about a lot of stuff.

So it was on. The plan was that I’d come out to California, see the Tesla and SpaceX factories, meet with some of the engineers at each company, and have an extended sit down with Musk. Exciting.

The first order of business was to have a full panic. I needed to not sit down with these people—these world-class engineers and rocket scientists—and know almost nothing about anything. I had a lot of quick learning to do.

The problem with Elon Fucking Musk, though, is that he happens to be involved in all of the following industries:

• Automotive
• Aerospace
• Solar Energy
• Energy Storage
• Satellite
• High-Speed Ground Transportation
• And, um, Multi-Planetary Expansion

Zeus would have been less stressful.

So I spent the two weeks leading up to the West Coast visit reading and reading and reading, and it became quickly clear that this was gonna need to be a multi-post series. There’s a lot to get into.

We’ll dive deep into Musk’s companies and the industries surrounding them in the coming posts, but today, let’s start by going over exactly who this dude is and why he’s such a big deal.12^{← click these}

The Making of Elon Musk

Note: There’s a great biography on Musk coming out May 19th, written by tech writer Ashlee Vance. I was able to get an advance copy, and it’s been a key source in putting together these posts. I’m going to keep to a brief overview of his life here—if you want the full story, get the bio.

Musk was born in 1971 in South Africa. Childhood wasn’t a great time for him—he had a tough family life and never fit in well at school.2 But, like you often read in the bios of extraordinary people, he was an avid self-learner early on. His brother Kimbal has said Elon would often read for 10 hours a day—a lot of science fiction and eventually, a lot of non-fiction too. By fourth grade, he was constantly buried in the Encyclopedia Britannica.

One thing you’ll learn about Musk as you read these posts is that he thinks of humans as computers, which, in their most literal sense, they are. A human’s hardware is his physical body and brain. His software is the way he learns to think, his value system, his habits, his personality. And learning, for Musk, is simply the process of “downloading data and algorithms into your brain.”3 Among his many frustrations with formal classroom learning is the “ridiculously slow download speed” of sitting in a classroom while a teacher explains something, and to this day, most of what he knows he’s learned through reading.

He became consumed with a second fixation at the age of nine when he got his hands on his first computer, the Commodore VIC-20. It came with five kilobytes of memory and a “how to program” guide that was intended to take the user six months to complete. Nine-year-old Elon finished it in three days. At 12, he used his skills to create a video game called Blastar, which he told me was “a trivial game…but better than Flappy Bird.” But in 1983, it was good enough to be sold to a computer magazine for $500 ($1,200 in today’s money)—not bad for a 12-year-old.3

Musk never felt much of a connection to South Africa—he didn’t fit in with the jockish, white Afrikaner culture, and it was a nightmare country for a potential entrepreneur. He saw Silicon Valley as the Promised Land, and at the age of 17, he left South Africa forever. He started out in Canada, which was an easier place to immigrate to because his mom is a Canadian citizen, and a few years later, used a college transfer to the University of Pennsylvania as a way into the US.4

In college, he thought about what he wanted to do with his life, using as his starting point the question, “What will most affect the future of humanity?” The answer he came up with was a list of five things: “the internet; sustainable energy; space exploration, in particular the permanent extension of life beyond Earth; artificial intelligence; and reprogramming the human genetic code.”4

He was iffy about how positive the impact of the latter two would be, and though he was optimistic about each of the first three, he never considered at the time that he’d ever be involved in space exploration. That left the internet and sustainable energy as his options.

He decided to go with sustainable energy. After finishing college, he enrolled in a Stanford PhD program to study high energy density capacitors, a technology aimed at coming up with a more efficient way than traditional batteries to store energy—which he knew could be key to a sustainable energy future and help accelerate the advent of an electric car industry.

But two days into the program, he got massive FOMO because it was 1995 and he “couldn’t stand to just watch the internet go by—[he] wanted to jump in and make it better.”5 So he dropped out and decided to try the internet instead.

His first move was to go try to get a job at the monster of the 1995 internet, Netscape. The tactic he came up with was to walk into the lobby, uninvited, stand there awkwardly, be too shy to talk to anyone, and walk out.

Musk bounced back from the unimpressive career beginning by teaming up with his brother Kimbal (who had followed Elon to the US) to start their own company—Zip2. Zip2 was like a primitive combination of Yelp and Google Maps, far before anything like either of those existed. The goal was to get businesses to realize that being in the Yellow Pages would become outdated at some point and that it was a good idea to get themselves into an online directory. The brothers had no money, slept in the office and showered at the YMCA, and Elon, their lead programmer, sat obsessively at his computer working around the clock. In 1995, it was hard to convince businesses that the internet was important—many told them that advertising on the internet sounded like “the dumbest thing they had ever heard of”6—but eventually, they began to rack up customers and the company grew. It was the heat of the 90s internet boom, startup companies were being snatched up left and right, and in 1999, Compaq snatched up Zip2 for $307 million. Musk, who was 27, made off with $22 million.

In what would become a recurring theme for Musk, he finished one venture and immediately dove into a new, harder, more complex one. If he were following the dot-com millionaire rulebook, he’d have known that what you’re supposed to do after hitting it big during the 90s boom is either retire off into the sunset of leisure and angel investing, or if you still have ambition, start a new company with someone else’s money. But Musk doesn’t tend to follow normal rulebooks, and he plunged three quarters of his net worth into his new idea, an outrageously bold plan to build essentially an online bank—replete with checking, savings, and brokerage accounts—called X.com. This seems less insane now, but in 1999, an internet startup trying to compete with the large banks was unheard of.

In the same building that X.com worked out of was another internet finance company called Confinity, founded by Peter Thiel and Max Levchin. One of X.com’s many features was an easy money-transfer service, and later, Confinity would develop a similar service. Both companies began to notice a strong demand for their money-transfer service, which put the two companies in sudden furious competition with each other, and they finally decided to just merge into what we know today as PayPal.

This brought together a lot of egos and conflicting opinions—Musk was now joined by Peter Thiel and a bunch of other now-super-successful internet guys—and despite the company growing rapidly, things inside the office did not go smoothly. The conflicts boiled over in late 2000, and when Musk was on a half fundraising trip / half honeymoon (with his first wife Justine), the anti-Musk crowd staged a coup and replaced him as CEO with Thiel. Musk handled this surprisingly well, and to this day, he says he doesn’t agree with that decision but he understands why they did it. He stayed on the team in a senior role, continued investing in the company, and played an instrumental role in selling the company to eBay in 2002, for $1.5 billion. Musk, the company’s largest shareholder, walked away with $180 million (after taxes).5

If there was ever a semblance of the normal life rulebook in Musk’s decision-making, it was at this point in his life—as a beyond-wealthy 31-year-old in 2002—that he dropped the rulebook into the fire for good.

The subject of what he did over the next 13 years leading up to today is what we’ll thoroughly explore over the rest of this series. For now, here’s the short story:

In 2002, before the sale of PayPal even went through, Musk started voraciously reading about rocket technology, and later that year, with $100 million, he started one of the most unthinkable and ill-advised ventures of all time: a rocket company called SpaceX, whose stated purpose was to revolutionize the cost of space travel in order to make humans a multi-planetary species by colonizing Mars with at least a million people over the next century.

Mm hm.

Then, in 2004, as that “project” was just getting going, Musk decided to multi-task by launching the second-most unthinkable and ill-advised venture of all time: an electric car company called Tesla, whose stated purpose was to revolutionize the worldwide car industry by significantly accelerating the advent of a mostly-electric-car world—in order to bring humanity on a huge leap toward a sustainable energy future. Musk funded this one personally as well, pouring in $70 million, despite the tiny fact that the last time a US car startup succeeded was Chrysler in 1925, and the last time someone started a successful electric car startup was never.

And since why the fuck not, a couple years later, in 2006, he threw in $10 million to found, with his cousins, another company, called SolarCity, whose goal was to revolutionize energy production by creating a large, distributed utility that would install solar panel systems on millions of people’s homes, dramatically reducing their consumption of fossil fuel-generated electricity and ultimately “accelerating mass adoption of sustainable energy.”7

If you were observing all of this in those four years following the PayPal sale, you’d think it was a sad story. A delusional internet millionaire, comically in over his head with a slew of impossible projects, doing everything he could to squander his fortune.

By 2008, this seemed to be playing out, to the letter. SpaceX had figured out how to build rockets, just not rockets that actually worked—it had attempted three launches so far and all three had blown up before reaching orbit. In order to bring in any serious outside investment or payload contracts, SpaceX had to show that they could successfully launch a rocket—but Musk said he had funds left for one and only one more launch. If the fourth launch also failed, SpaceX would be done.

Meanwhile, up in the Bay Area, Tesla was also in the shit. They had yet to deliver their first car—the Tesla Roadster—to the market, which didn’t look good to the outside world. Silicon Valley gossip blog Valleywag made the Tesla Roadster its #1 tech company fail of 2007. This would have been more okay if the global economy hadn’t suddenly crashed, hitting the automotive industry the absolute hardest and sucking dry any flow of investments into car companies, especially new and unproven ones. And Tesla was running out of money fast.

During this double implosion of his career, the one thing that held stable and strong in Musk’s life was his marriage of eight years, if by stable and strong you mean falling apart entirely in a soul-crushing, messy divorce.

Darkness.

But here’s the thing—Musk is not a fool, and he hadn’t built bad companies. He had built very, very good companies. It’s just that creating a reliable rocket is unfathomably difficult, as is launching a startup car company, and because no one wanted to invest in what seemed to the outside world like overambitious and probably-doomed ventures—especially during a recession—Musk had to rely on his own personal funds. PayPal made him rich, but not rich enough to keep these companies afloat for very long on his own. Without outside money, both SpaceX and Tesla had a short runway. So it’s not that SpaceX and Tesla were bad—it’s that they needed more time to succeed, and they were out of time.

And then, in the most dire hour, everything turned around.

First, in September of 2008, SpaceX launched their fourth rocket—and their last one if it didn’t successfully put a payload into orbit—and it succeeded. Perfectly.

That was enough for NASA to say “fuck it, let’s give this Musk guy a try,” and it took a gamble, offering SpaceX a $1.6 billion contract to carry out 12 launches for the agency. Runway extended. SpaceX saved.

The next day, on Christmas Eve 2008, when Musk scrounged up the last money he could manage to keep Tesla going, Tesla’s investors reluctantly agreed to match his investment. Runway extended. Five months later, things began looking up, and another critical investment came in—$50 million from Daimler. Tesla saved.

While 2008 hardly marked the end of the bumps in the road for Musk, the overarching story of the next seven years would be the soaring, earthshaking success of Elon Musk and his companies.

Since their first three failed launches, SpaceX has launched 20 times—all successes. NASA is now a regular client, and one of many, since the innovations at SpaceX have allowed companies to launch things to space for the lowest cost in history. Within those 20 launches have been all kinds of “firsts” for a commercial rocket company—to this day, the four entities in history who have managed to launch a spacecraft into orbit and successfully return it to Earth are the US, Russia, China—and SpaceX. SpaceX is currently testing their new spacecraft, which will bring humans to space, and they’re busy at work on the much larger rocket that will be able to bring 100 people to Mars at once. A recent investment by Google and Fidelity has valued the company at $12 billion.

Tesla’s Model S has become a smashing success, blowing away the automotive industry with the highest ever Consumer Reports rating of a 99/100, and the highest safety rating in history from the National Highway Safety Administration, a 5.4/5. Now they’re getting closer and closer to releasing their true disruptor—the much more affordable Model 3—and the company’s market cap is just under $30 billion. They’re also becoming the world’s most formidable battery company, currently working on their giant Nevada “Gigafactory,” which will more than double the world’s total annual production of lithium-ion batteries.

SolarCity, which went public in 2012, now has a market cap of just under $6 billion and has become the largest installer of solar panels in the US. They’re now building the country’s largest solar panel-manufacturing factory in Buffalo, and they’ll likely be entering into a partnership with Tesla to package their product with Tesla’s new home battery, the Powerwall.

And since that’s not enough, in his spare time, Musk is pushing the development a whole new mode of transport—the Hyperloop.

In a couple of years, when their newest factories are complete, Musk’s three companies will employ over 30,000 people. After nearly going broke in 2008 and telling a friend that he and his wife may have to “move into his wife’s parents’ basement,”8 Musk’s current net worth clocks in at $12.9 billion.

All of this has made Musk somewhat of a living legend. In building a successful automotive startup and its worldwide network of Supercharger stations, Musk has been compared to visionary industrialists like Henry Ford and John D. Rockefeller. The pioneering work of SpaceX on rocket technology has led to comparisons to Howard Hughes, and many have drawn parallels between Musk and Thomas Edison because of the advancements in engineering Musk has been able to achieve across industries. Perhaps most often, he’s compared to Steve Jobs, for his remarkable ability to disrupt giant, long-stagnant industries with things customers didn’t even know they wanted. Some believe he’ll be remembered in a class of his own. Tech writer and Musk biographer Ashlee Vance has suggested that what Musk is building “has the potential to be much grander than anything Hughes or Jobs produced. Musk has taken industries like aerospace and automotive that America seemed to have given up on and recast them as something new and fantastic.”9

Chris Anderson, who runs TED Talks, calls Musk “the world’s most remarkable living entrepreneur.” Others know him as “the real life Iron Man,” and not for no reason—Jon Favreau actually sent Robert Downey, Jr. to spend time with Musk in the SpaceX factory prior to filming the first Iron Man movie so he could model his character off of Musk.10 He’s even been on The Simpsons.

And this is the man I was somehow on the phone with as I frantically paced back and forth in my apartment, in pajama pants.

On the call, he made it clear that he wasn’t looking for me to advertise his companies—he only wanted me to help explain what’s going on in the worlds surrounding those companies and why the things happening with electric cars, sustainable energy production, and aerospace matter so much.

He seemed particularly bored with people spending time writing about him—he feels there are so many things of critical importance going on in the industries he’s involved in, and every time someone writes about him, he wishes they were writing about fossil fuel supply or battery advancements or the importance of making humanity multi-planetary (this is especially clear in the intro to the upcoming biography on him, when the author explains how not interested Musk was in having a bio written about him).

So I’m sure this first post, whose title is “Elon Musk: The World’s Raddest Man,” will annoy him.

But I have reasons. To me, there are two worthy areas of exploration in this post series:

1) To understand why Musk is doing what he’s doing. He deeply believes that he’s taken on the most pressing possible causes to give humanity the best chance of a good future. I want to explore those causes in depth and the reasons he’s so concerned about them.

2) To understand why Musk is able to do what he’s doing. There are a few people in each generation who dramatically change the world, and those people are worth studying. They do things differently from everyone else—and I think there’s a lot to learn from them.

So on my visit to California, I had two goals in mind: to understand as best I could what Musk and his teams were working on so feverishly and why it mattered so much, and to try to gain insight into what it is that makes him so capable of changing the world.

___________

Visiting the Factories

The Tesla Factory (in Northern CA) and the SpaceX Factory (in Southern CA), in addition to both being huge, and rad, have a lot in common.

Both factories are bright and clean, shiny and painted white, with super high ceilings. Both feel more like laboratories than traditional factories. And in both places, the engineers doing white collar jobs and the technicians doing blue collar jobs are deliberately placed in the same working quarters so they’ll work closely together and give each other feedback—and Musk believes it’s crucial for those designing the machines to be around those machines as they’re being manufactured. And while a traditional factory environment wouldn’t be ideal for an engineer on a computer and a traditional office environment wouldn’t be a good workplace for a technician, a clean, futuristic laboratory feels right for both professions. There are almost no closed offices in either factory—everyone is out in the open, exposed to everyone else.

When I pulled up to the Tesla factory (joined by Andrew), I was first taken by its size—and when I looked it up, I wasn’t surprised to see that it has the second largest building footprint (aka base area) in the world.

The factory was formerly jointly owned by GM and Toyota, who sold it to Tesla in 2010. We started off the day with a full tour of the factory—a sea of red robots making cars and being silly:6

And other cool things, like a vast section of the factory that just makes the car battery, and another that houses the 20,000 pound rolls of aluminum they slice and press and weld into Teslas.

And this giant press, which costs $50 million and presses metal with 4,500 tons of pressure (the same pressure you’d get if you stacked 2,500 cars on top of something).

The Tesla factory is working on upping its output from 30,000 cars/year to 50,000, or about 1,000 per week. They seemed to be pumping out cars incredibly quickly, so I was blown away to learn that Toyota had been on a 1,000 cars per day clip when they inhabited the factory.

I had a chance to visit the Tesla design studio (no pictures allowed), where there were designers sketching car designs on computer screens and, on the other side of the room, full-size car models made of clay. An actual-size clay version of the upcoming Model 3 was surrounded by specialists sculpting it with tiny instruments and blades, shaving off fractions of a millimeter to examine the way light bounced off the curves. There was also a 3D printer that could quickly “print” out a shoe-sized 3D model of a sketched Tesla design so a designer could actually hold their design and look at it from different angles. Deliciously futuristic.

The next day was the SpaceX factory, which might be even cooler, but the building contains advanced rocket technology, which according to the government is “weapons technology,” and apparently random bloggers aren’t allowed to take pictures of weapons technology.

Anyway, after the tours, I had a chance to sit down with several senior engineers and designers at both companies. They’d explain that they were a foremost expert in their field, I’d explain that I had recently figured out how big the building would be that could hold all humans, and we’d begin our discussion. I’d ask them about their work, their thoughts on the company as a whole and the broader industry, and then I’d ask them about their relationship with Elon and what it was like to work for him. Without exception, they were really nice-seeming, friendly people, who all came off as ridiculously smart but in a non-pretentious way. Musk has said he has a strict “no assholes” hiring policy, and I could see that at work in these meetings.

So what’s Musk like as a boss?

Let’s start by seeing what the internet says—there’s a Quora thread that poses the question: “What is it like to work with Elon Musk?”

The first answer is from a longtime SpaceX employee who no longer works there, who describes the day that their 3rd launch failed, a devastating blow for the company and for all the people who had worked for years to try to make it work.

She describes Elon emerging from mission command to address the company and delivering a rousing speech. She refers to Elon’s “infinite wisdom” and says, “I think most of us would have followed him into the gates of hell carrying suntan oil after that.  It was the most impressive display of leadership that I have ever witnessed.”

Right below that answer is another answer, from an anonymous SpaceX engineer, who describes working for Musk like this:

“You can always tell when someone’s left an Elon meeting: they’re defeated…nothing you ever do will be good enough so you have to find your own value, not depending on praise to get you through your obviously insufficient 80 hour work weeks.”

Reading about Musk online and in Vance’s book, I was struck by how representative both of these Quora comments were of whole camps of opinion on working for Musk. Doing so seems to bring out a tremendous amount of adoration and a tremendous amount of exasperation, sometimes with a tone of bitterness—and even more oddly, much of the time, you hear both sides of this story expressed by the same person. For example, later in the comment of the effusive Quora commenter comes “Working with him isn’t a comfortable experience, he is never satisfied with himself so he is never really satisfied with anyone around him…the challenge is that he is a machine and the rest of us aren’t.” And the frustrated anonymous commenter later concedes that the way Elon is “is understandable” given the enormity of the task at hand, and that “it is a great company and I do love it.”

My own talks with Musk’s engineers and designers told a similar story. I was told: “Elon always wants to know, ‘Why are we not going faster?’ He always wants bigger, better, faster” by the same person who a few minutes later was emphasizing how fair and thoughtful Musk tends to be in handling the terms for a recently fired employee.

The same person who told me he has “lots of sleepless nights” said in the adjacent sentence how happy he is to be at the company and that he hopes to “never leave.”

One senior executive described interacting with Musk like this: “Any conversation’s fairly high stakes because he’ll be very opinionated, and he can go deeper than you expect or are prepared for or deeper than your knowledge goes on a given topic, and it does feel like a high wire act interacting with him, especially when you find yourself in a [gulp] technical disagreement.”7 The same executive, who had previously worked at a huge tech company, also called Musk “the most grounded billionaire I’ve ever worked with.”

What I began to understand is that the explanation for both sides of the story—the cult-like adulation right alongside the grudging willingness to endure what sounds like blatant hell—comes down to respect. The people who work for Musk, no matter how they feel about his management style, feel an immense amount of respect—for his intelligence, for his work ethic, for his guts, and for the gravity of the missions he’s undertaken, missions that make all other potential jobs seem trivial and pointless.

Many of the people I talked to also alluded to their respect for his integrity. One way this integrity comes through is in his consistency. He’s been saying the same things in interviews for a decade, often using the same exact phrasing many years apart. He says what he really means, no matter the situation—one employee close to Musk told me that after a press conference or a business negotiation, once in private he’d ask Musk what his real angle was and what he really thinks. Musk’s response would always be boring: “I think exactly what I said.”

A few people I spoke with referenced Musk’s obsession with truth and accuracy. He’s fine with and even welcoming of negative criticism about him when he believes it’s accurate, but when the press gets something wrong about him or his companies, he usually can’t help himself and will engage them and correct their error. He detests vague spin-doctor phrases like “studies say” and “scientists disagree,” and he refuses to advertise for Tesla, something most startup car companies wouldn’t think twice about—because he sees advertising as manipulative and dishonest.

There’s even an undertone of integrity in Musk’s tyrannical demands of workers, because while he may be a tyrant, he’s not a hypocrite. Employees pressured to work 80 hours a week tend to be less bitter about it when at least the CEO is in there working 100.

Speaking of the CEO, let’s go have a hamburger with him.

My Lunch With Elon

It started like this:

After about seven minutes of this, I was able to get out my first question, a smalltalk-y question about how he thought the recent launch had gone (they had attempted an extremely difficult rocket-landing maneuver—more on that in the SpaceX post). His response included the following words: hypersonic, rarefied, densifying, supersonic, Mach 1, Mach 3, Mach 4, Mach 5, vacuum, regimes, thrusters, nitrogen, helium, mass, momentum, ballistic, and boost-back. While this was happening, I was still mostly blacked out from the surreality of the situation, and when I started to come to, I was scared to ask any questions about what he was saying in case he had already explained it while I was unconscious.

I eventually regained the ability to have adult human conversation, and we began what turned into a highly interesting and engaging two-hour discussion.8 This guy has a lot on his mind across a lot of topics. In this one lunch alone, we covered electric cars, climate change, artificial intelligence, the Fermi Paradox, consciousness, reusable rockets, colonizing Mars, creating an atmosphere on Mars, voting on Mars, genetic programming, his kids, population decline, physics vs. engineering, Edison vs. Tesla, solar power, a carbon tax, the definition of a company, warping spacetime and how this isn’t actually something you can do, nanobots in your bloodstream and how this isn’t actually something you can do, Galileo, Shakespeare, the American forefathers, Henry Ford, Isaac Newton, satellites, and ice ages.

I’ll get into the specifics of what he had to say about many of these things in later posts, but some notes for now:

— He’s a pretty tall and burly dude. Doesn’t really come through on camera.

— He ordered a burger and ate it in either two or three bites over a span of about 15 seconds. I’ve never seen anything like it.

— He is very, very concerned about AI. I quoted him in my posts on AI saying that he fears that by working to bring about Superintelligent AI (ASI), we’re “summoning the demon,” but I didn’t know how much he thought about the topic. He cited AI safety as one of the three things he thinks about most—the other two being sustainable energy and becoming a multi-planet species, i.e. Tesla and SpaceX. Musk is a smart motherfucker, and he knows a ton about AI, and his sincere concern about this makes me scared.

— The Fermi Paradox also worries him. In my post on that, I divided Fermi thinkers into two camps—those who think there’s no other highly intelligent life out there at all because of some Great Filter, and those who believe there must be plenty of intelligent life and that we don’t see signs of any for some other reason. Musk wasn’t sure which camp seemed more likely, but he suspects that there may be an upsetting Great Filter situation going on. He thinks the paradox “just doesn’t make sense” and that it “gets more and more worrying” the more time that goes by. Considering the possibility that maybe we’re a rare civilization who made it past the Great Filter through a freak occurrence makes him feel even more conviction about SpaceX’s mission: “If we are very rare, we better get to the multi-planet situation fast, because if civilization is tenuous, then we must do whatever we can to ensure that our already-weak probability of surviving is improved dramatically.” Again, his fear here makes me feel not great.

— One topic I disagreed with him on is the nature of consciousness. I think of consciousness as a smooth spectrum. To me, what we experience as consciousness is just what it feels like to be human-level intelligent. We’re smarter, and “more conscious” than an ape, who is more conscious than a chicken, etc. And an alien much smarter than us would be to us as we are to an ape (or an ant) in every way. We talked about this, and Musk seemed convinced that human-level consciousness is a black-and-white thing—that it’s like a switch that flips on at some point in the evolutionary process and that no other animals share. He doesn’t buy the “ants : humans :: humans : [a much smarter extra-terrestrial]” thing, believing that humans are weak computers and that something smarter than humans would just be a stronger computer, not something so beyond us we couldn’t even fathom its existence.

— I talked to him for a while about genetic reprogramming. He doesn’t buy the efficacy of typical anti-aging technology efforts, because he believes humans have general expiration dates, and no one fix can help that. He explained: “The whole system is collapsing. You don’t see someone who’s 90 years old and it’s like, they can run super fast but their eyesight is bad. The whole system is shutting down. In order to change that in a serious way, you need to reprogram the genetics or replace every cell in the body.” Now with anyone else—literally anyone else—I would shrug and agree, since he made a good point. But this was Elon Musk, and Elon Musk fixes shit for humanity. So what did I do?

Me: Well…but isn’t this important enough to try? Is this something you’d ever turn your attention to?

Elon: The thing is that all the geneticists have agreed not to reprogram human DNA. So you have to fight not a technical battle but a moral battle.

Me: You’re fighting a lot of battles. You could set up your own thing. The geneticists who are interested—you bring them here. You create a laboratory, and you could change everything.

Elon: You know, I call it the Hitler Problem. Hitler was all about creating the Übermensch and genetic purity, and it’s like—how do you avoid the Hitler Problem? I don’t know.

Me: I think there’s a way. You’ve said before about Henry Ford that he always just found a way around any obstacle, and you do the same thing, you always find a way. And I just think that that’s as important and ambitious a mission as your other things, and I think it’s worth fighting for a way, somehow, around moral issues, around other things.

Elon: I mean I do think there’s…in order to fundamentally solve a lot of these issues, we are going to have to reprogram our DNA. That’s the only way to do it.

Me: And deep down, DNA is just a physical material.

Elon: [Nods, then pauses as he looks over my shoulder in a daze] It’s software.

Comments:

1) It’s really funny to brashly pressure Elon Musk to take on yet another seemingly-insurmountable task and to act a little disappointed in him that he’s not currently doing it, when he’s already doing more for humanity than literally anyone on the planet.

2) It’s also super fun to casually brush off the moral issues around genetic programming with “I think there’s a way” and to refer to DNA—literally the smallest and most complex substance ever—as “just a physical material deep down” when I have absolutely no idea what I’m talking about. Because those things will be his problem to figure out, not mine.

3) I think I’ve successfully planted the seed. If Musk takes on human genetics 15 years from now and we all end up living to 250 because of it, you all owe me a drink.

___________

Watching interviews with Musk, you see a lot of people ask him some variation of this question Chris Anderson asked him on stage at the 2013 TED conference:

How have you done this? These projects—PayPal, SolarCity, Tesla, SpaceX—they’re so spectacularly different. They’re such ambitious projects, at scale. How on Earth has one person been able to innovate in this way—what is it about you? Can we have some of that secret sauce?

There are a lot of things about Musk that make him so successful, but I do think there’s a “secret sauce” that puts Musk in a different league from even the other renowned billionaires of our time. I have a theory about what that is, which has to do with the way Musk thinks, the way that he reasons through problems, and the way he views the world. As this series continues, think about this, and we’ll discuss a lot more in the last post.

For now, I’ll leave you with Elon Musk holding a Panic Monster.

 

___________

If you’re into Wait But Why, sign up for the Wait But Why email list and we’ll send you the new posts right when they come out. Better than having to check the site!

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Next up in this series: Part 2: How Tesla Will Change the World

Other posts in the series:

Part 3: How (and Why) SpaceX Will Colonize Mars
Part 4: The Chef and the Cook: Musk’s Secret Sauce

Extra Post #1: The Deal With Solar City
Extra Post #2: The Deal With the Hyperloop

 

Some Musk-y Wait But Why Posts:

The AI Revolution: The Road to Superintelligence

The Fermi Paradox

What Makes You You?

Sources

A large part of what I learned for this post came from my own conversations with Musk and his staff. As I mentioned above, Ashlee Vance’s upcoming biography, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, is excellent and helped me fill in a bunch of gaps. Further info came from the sources below:

Documentary: Revenge of the Electric Car
TED Talks: Elon Musk: The mind behind Tesla, SpaceX, SolarCity
Khan Academy: Interview With Elon Musk
Quora: What is it like to work with Elon Musk?
SXSW: Interview with Elon Musk
Consumer Reports: Tesla Model S: The Electric Car that Shatters Every Myth
Wired: How the Tesla Model S is Made
Interview: Elon Musk says he’s a bigger fan of Edison than Tesla
Interview: Elon Musk gets introspective
Business Insider: Former SpaceX Exec Explains How Elon Musk Taught Himself Rocket Science
Esquire: Elon Musk: The Triumph of His Will
Oxford Martin School: Elon Musk on The Future of Energy and Transport
MIT Interview: Elon Musk compares AI efforts to “Summoning the Demon”
Documentary: Billionaire Elon Musk : How I Became The Real ‘Iron Man’
Reddit: Elon Musk AMA
Chris Anderson: Chris Anderson on Elon Musk, the World’s Most Remarkable Entrepreneur
Engineering.com: Who’s Better? Engineers or Scientists?
Forbes: Big Day For SpaceX As Elon Musk Tells His Mom ‘I Haven’t Started Yet’

The post Elon Musk: The World’s Raddest Man appeared first on Wait But Why.

Infographic created by NordicTrack

The New York Knicks did something unusual Monday night: They won a basketball game — just their 17th this season. What wasn’t so unusual — from a franchise that starred in such tragicomedies as Amar’e Stoudemire punching a fire extinguisher and Andrea Bargnani nearly snatching defeat from the jaws of victory — was the Knicks’ poor sense of timing. Having spent most of the season ridding their roster of anyone who could possibly help them win, the Knicks have now won twice in a row.

Those two wins could make a lot of difference to the Knicks’ chance of drafting Jahlil Okafor or Karl-Anthony Towns. With one game left for each team, the Knicks are 17-64, a game better than the Minnesota Timberwolves at 16-65. The Philadelphia 76ers have the third-worst record at 18-63.

Let’s say each team loses its final game. Under the NBA’s lottery formula, the Timberwolves would have a 25.0 percent chance of landing the first pick, the Knicks would have a 19.9 percent shot, and the Sixers a 15.6 percent chance.

That seems like an awfully big difference for teams that are separated by just one or two games in the standings. But it’s how the NBA’s rules work. The number of losses doesn’t matter, only the order of the teams.⁶⁰

There’s a better way to award those pingpong balls, one that maintains the spirit of the current lottery system without allowing a one-game difference to matter so much.

Here’s how it works. Take each team’s number of losses. Subtract 41 (41-41 represents a breakeven record in the NBA). Then square the result. That’s how many pingpong balls a team gets. (OK, one more provision: A team gets a minimum of 10 lottery balls, including if it has a winning record.⁶¹)

That might seem arbitrary — but it produces results that are remarkably similar to the current formula, only fairer. What chance would each team have at the first pick this year, for example? Assuming each team’s final game goes according to the FiveThirtyEight NBA Power Ratings,⁶² that would leave the Wolves with a 22.0 percent chance at the first pick, the Knicks at 20.3 percent and the Sixers at 18.6 percent.

		CURRENT SYSTEM			REVISED SYSTEM
TEAM	LOSSES	LOTTERY BALLS	CHANCE OF FIRST PICK		LOTTERY BALLS	CHANCE OF FIRST PICK
Timberwolves	66	250	25.0%		625	22.0%
Knicks	65	199	19.9		576	20.3
76ers	64	156	15.6		529	18.6
Lakers	60	119	11.9		361	12.7
Magic	57	88	8.8		256	9.0
Kings	54	63	6.3		169	6.0
Nuggets	52	43	4.3		121	4.3
Pistons	50	28	2.8		81	2.9
Hornets	49	17	1.7		64	2.3
Heat	45	11	1.1		16	0.6
Jazz	44	8	0.8		10	0.4
Nets	44	7	0.7		10	0.4
Suns	43	6	0.6		10	0.4
Pelicans	38	5	0.5		10	0.4

That’s more proportionate to the small difference separating Minnesota, New York and Philly in the standings.

Here’s how the lottery balls would have been distributed in each of the past 10 seasons.⁶³ On average, the worst team would have had about a 25 percent chance of winding up with the top pick, as it does now. But those chances would have been as high as 38.5 percent (for the record-setting 2012 Charlotte Bobcats) or as low as 19.0 percent (for the 2013 Orlando Magic), depending on how much separated the very worst team from the almost-as-bad ones. In a year like 2010, in which there was a big gap between the second-worst team (the 15-67 Timberwolves) and the third-worst (the 25-57 Sacramento Kings), that’s where the sharpest break in lottery chances would have been.

It’s not the radical change that I’d prefer! But it’s a simple enough reform that even the Knicks couldn’t screw it up.

CORRECTION (April 15, 3:36 p.m.): An earlier version of the chart in this post gave the incorrect location of the second-worst NBA team in 2005. At that time, the Hornets were located in New Orleans, not Charlotte.

Harnessing high-powered computing, color sensors and small metal baskets attached to the robotic arms, the machine gently plucked ripe strawberries from below deep-green leaves, while mostly ignoring unripe fruit nearby.

Such tasks have long required the trained discernment and backbreaking effort of tens of thousands of relatively low-paid workers. But technological advances are making it possible for robots to handle the job, just as a shrinking supply of available fruit pickers has made the technology more financially attractive.

…Machines are doing more than picking produce. Altman Specialty Plants Inc., one of the country’s largest nurseries, has been using eight, squat robots for the past two years to ferry more than 1.2 million potted roses and other plants to new rows as they grow larger. The $25,000, self-driving machines have occasionally gotten stuck in mud, but they freed eight workers for other jobs and ultimately paid for themselves in 18 months, said Becky Drumright, Altman’s marketing director.

And we used to say that gardening was one of the hardest jobs to automate.  By Ilan Brat, there is more here.

If you spend a day or two on social media sites, you get the idea that essential oils are a panacea that can replace every modern medicine, both over the counter and prescription. Kid got a fever? Rub a little of this oil on his feet. Big job interview coming up in a few minutes? Inhale a little of this to relax. Fungal infection? Splash some of this on. It’s gotten particularly out of hand on Pinterest, where multi-level marketing schemers attempt to convince everyone they absolutely need to become essential oil wholesalers. Conversely, if you hang around in the online skeptic communities (Science Based Medicine, Quackwatch, etc.), you come away with the impression that essential oils are at best pleasant-smelling placebos and at worst expensive poisons. So – who’s right? Who’s wrong? Are essential oils simply glorified air fresheners without any evidence of efficacy, or does the truth lie somewhere between the two extremes?

Let’s first dig into the common claims and the evidence for some of the most popular essential oils.

Peppermint Oil

Reduces fever when applied to feet.

Any truth? I couldn’t find any published research that supports this claim, unless you’re talking about reducing dengue fever; peppermint oil apparently repels dengue fever-carrying mosquitos.

Stimulates hair growth.

Any truth? A 2014 animal study found that compared to saline, jojoba oil, and minoxidil, topical peppermint oil stimulated the most hair growth with an increase in dermal thickness, follicle number, and follicle depth. Also, there were no “toxic signs,” which is always good.

Relieves and even cures IBS.

Any truth? It’s mixed. Some research shows that peppermint oil can reduce overall IBS symptoms, but a recent placebo-controlled trial found that while peppermint oil relieved transient abdominal pain in IBS, it had no effect on any of the other IBS symptoms. An earlier study supports its use in IBS-related stomach pain, showing that enteric coated peppermint oil capsules improved pain symptoms in kids with IBS.

Rosemary Oil

Prevents and reverses male pattern baldness when applied topically.

Any truth? One recent study compared minoxidil (an over the counter hair loss treatment) to rosemary essential oil. Both were rubbed into the scalp on a daily basis. At six months, both groups had experienced a significant increase in hair growth, with the rosemary group having slightly less itchy scalps.

Energizes, fights fatigue.

Any truth? In twenty healthy volunteers, inhaling rosemary oil increased blood pressure, heart rate, and respiratory rate. Subjective impressions of stimulation increased, with subjects reporting feeling “fresher.” Alpha brain wave activity (as measured by EEG) diminished and beta wave activity increased, indicative of “stimulation.” However, there was no placebo control group.

Improves memory.

Any truth? A 2013 study placed subjects in one of two rooms — one with a diffuser emitting rosemary essential oil and one with no diffuser — and gave both groups memory exercises to complete. Those in the rosemary room performed better and, according to blood tests taken after the exercises, had higher serum levels of a unique rosemary phenolic compound. Since previous animal studies have shown rosemary compounds interact with memory systems in the brain, the relationship may be causal and indicative of rosemary oil’s efficacy.

Lavender Oil

Reduces anxiety.

Any truth? Well, in coronary bypass surgery patients, lavender oil was able to reduce anxiety, but no more than the placebo control. However, in dental patients, lavender oil aromatherapy reduced anxiety, while the placebo did not; other studies confirm this effect in dental patients. Oral lavender oil seems just as effective (without the side effects, like drowsiness and extreme addiction) as xanax at reducing general anxiety. It’s mixed, then, but I think the evidence is fairly strong that lavender oil can reduce anxiety in people. Germany, for example, has deemed oral lavender oil a legitimate treatment for anxiety disorders.

Reduces migraines.

Any truth? There is one study that found lavender oil to be effective against acute migraine, but the control was a plain paraffin wax candle. Paraffin wax is a petroleum byproduct and potential migraine trigger for some people, so this may not have been an inert control.

Increases vasodilation.

Any truth? In human hospital workers, lavender aromatherapy limits the reduction in flow-mediated dilation that normally accompanies a night shift.

Orange Oil

Reduces anxiety.

Any truth? In pediatric dental patients, orange oil aromatherapy lowered cortisol and pulse rate; similar reductions in anxiety were found in adult female patients. And when they were exposed to orange oil aromatherapy, human subjects undergoing experimental stress experienced very few alterations to stress parameters. Tension, tranquility, and systemic anxiety were all relatively unchanged. It works in rats, too.

Treats acne when applied topically.

Any truth? A 2012 trial found that a face gel based on orange oil, sweet basil oil, and acetic acid applied daily for 8 weeks improved acne symptoms.

Tea Tree Oil

Boosts the immune system.

Any truth? “Boosts the immune system” is fairly non-specific and vague, but there may be something. In rats infected with a pathogenic protozoa, oral tea tree oil extended their lives and modified the immune response but did not cure them.

Heals skin cancer.

Any truth? An animal study used topical tea tree oil mixed with DMSO (a solvent that allows anything it’s mixed with to penetrate the skin) to induce cytotoxicity in skin tumors. An earlier study using the same tea tree oil/DMSO solution was able to inhibit the growth of established skin cancer cells.

Kills oral pathogens.

Any truth? In a recent trial, tea tree oil mouthwash performed poorly at reducing plaque compared to cetylpyridinium mouthwash and commercial chlorhexidine. An earlier study found tea tree oil had beneficial effects on gingivitis, but not plaque. Tea tree oil does have significant anti-microbial action against common oral pathogens in an in vitro setting, so the potential is there.

The evidence is mixed, as you can see. Essential oils are just mediums for the essence of the plant, and there are thousands of different plants out there; it really depends on what claim and what plant we’re talking about. The evidence for peppermint oil reducing fever may be nonexistent, but that doesn’t necessarily mean peppermint oil is useless against IBS pain and hair loss. Just because your annoying neighbor keeps harping on you to join her MLM empire selling chakra-triggering oil blends doesn’t preclude those same blends from helping you relax —physiologically — at the end of a long day.

Essential oils often do work and actually can improve certain conditions, but they’re victims of their promoters. The testimonials are too breathless to be believed. The evidence they submit is too anecdotal. If they refer to a study when making a claim, it’s usually misrepresented or includes a half dozen oils that make analysis of the specific oil impossible. Plus, the arguments or recommendations they offer often contradict each other. The evangelists ruin it for the science-minded health explorers who might actually benefit from essential oils.

Essential oils as a whole do have evidence of efficacy in a few key areas:

Anxiety and stress: Aromatherapy is quite effective at reducing stress and anxiety. I already mentioned the ability of lavender and orange oils to reduce anxiety, but plenty of other oils have shown efficacy as well. In healthy females, bergamot essential oil increased parasympathetic activity and lowered salivary cortisol. Bergamot works in anxious rats, too. Transdermal application absent aroma detection may also be effective against anxiety and stress, as one study using topical rose oil showed. Most of the citrus oils (PDF), like the aforementioned orange and bergamot as well as lemon and bitter orange all show anxiolytic effects, probably due to limonene, an anxiolytic compound found in all of them.

Antibiotic activity: As a whole, essential oils tend be potent antimicrobial agents. The parent plants have a vested interest in repelling bugs, fungus, bacteria, and other tiny critters with designs on them, and this motivation manifests in their essential oils. In addition, they usually have the ability to break down and disrupt microbial biofilms, those stubborn microbe matrices that can resist many standard antibiotics. Clearly, more research is needed before essential oils can replace antibiotics, but it’s a conversation that we desperately need to pursue given the current state of antibiotic resistance and antibiotic overuse in human medicine and agriculture.

Dental health: Given their antibacterial activity, many essential oils have potential in dental health. Tea tree oil, manuka oil, and eucalyptus oil all displayed antibacterial effects against common oral pathogens in one study, while other research has shown that thyme and oregano essential oils also show efficacy.

Nausea: Lemon essential oil inhalation can reduce pregnancy-associated nausea and vomiting, and a 2012 review found that both ginger and peppermint essential oils were also effective (though they did identify some methodological concerns). For post-operative nausea, both ginger oil and a blend of ginger, cardamom, spearmint, and peppermint oils may help.

So, what’s the final verdict on essential oils? Bunk or boon?

It’s complicated. It’s tough to give a single opinion that applies to dozens upon dozens of unique essential oils. But we can say a few things that apply to all of them.

Essential oils are not inert placebos. They’re not expensive air fresheners. They are pharmacological agents with bioactive compounds, many of which are powerful enough to rival prescription drugs. But with this power comes randomness. As much as we harp on pharmaceuticals for the unwanted side effects we often counter using another prescription, at least the dosages of the active ingredients are stable and constant. Essential oils? Not so much. There’s no real way of knowing the “dosage” of the bioactive compound, or even whether we’ve successfully uncovered every possible compound present in the plants, herbs, and spices used to make the oil.

Essential oils are also not harmless. For example, topical essential oils can be quite harsh and even toxic. When exposed to air, lavender oil forms strong contact allergens, and compounds in lavender oil have cytotoxic effects on human skin cells. Topical orange oil is a “very weak” promoter of skin cancers.

It’s clear that some essential oils work for some things, while others don’t. And the ones that don’t work for one claim might very well work for another. As I said: it’s complicated.

What about you, folks? Any essential oil users out there? What do you swear by? What do you recommend? Or are you totally convinced that there’s nothing going on here?

Let’s hear about it in the comment section!

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