The real reasons Tesla and SpaceX are CRUSHING Blue Origin and Legacy Auto!

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Time, Money, and People, an engineering professor once told me: you need all three, but you never get them all. And this is, ultimately, a good thing. The constraints of time, money, and people–and the flat-out constraints of physics, all conspire to make individuals and companies more creative. As the linked Ars Technica article reveals, Blue Origin commissioned a study in 2018 to find out why SpaceX was crushing them. It turns out that having had less money, less time, and a much better CEO was the reason. And this holds true for Tesla vs legacy auto makers as well!

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Ars Technica article:

More with Less: why Tesla and SpaceX crush Blue Origin!

36 comments
  1. Thanks to Private Internet Access VPN for sponsoring today's video. Use the link to save up to 84% off your order, plus two free months! @t

  2. I understand that having Elon approve everything over $10000 sends a cost miniisation message through the system, but when the workers in the system are also faced with the ASAP achievement mantra, you'll get a whole bunch of gaming of the system (two $9000 buys etc) and sub-optimal solutions where the benefit of a better more expensive solution is not worth the overhead of getting approval. And that can't be good in the long run. Just imagine if the $9999 pump seal fails halfway to Mars when the better materials of the $12000 pump seal would have stood the distance? What is the cost in effort to the designer to try to prove that benefit for the $2001 price difference?

  3. Legacy auto has been a failed business model for decades. The dirty secret is now being exposed by a passionate, intelligent mindset at Tesla. They are doomed no matter what they do until they can be totally reborn not reorganized. Probability is low. Chinese companies come the closest to Tesla in mindset and ability.

  4. Interesting talk. At my work we have three areas that affects the outcome; time, money and quality. You swapped quality with people but also talked about their contribution. Anyway, if you want something faster or cheaper, the other two always have to pay.

  5. because you want to make the best product for the customer, doesn't mean you are a customer focus. musk is a brilliant engineer which is able to listen and learn quick

  6. 6:40 “…having too little is better than having too much…”
    This is exactly what is wrong with western society today. It is fat, bloated, and slow/lazy. The older generations have done too good of a job “providing” for others. Nothing was left for anyone to do for survival. It’s now all about “stuff” that doesn’t matter for survival. This is what is being called “first world problems” now.
    After the west collapses, the big question is whether it will retain enough freedoms to allow the survivors to rebuild. Sadly, it’s humanity’s repeated failure to learn from the past that dooms us to this fate.

  7. This video's teachings are inappropriate for those in competitive markets. I'll refer mostly to Tesla, where my knowledge is already limited, and I don't know much about SpaceX.

    The video teaches 1. money, time and people (which is correlated directly with the first two) are the success constraints. This is untrue. Luck, timing, certain character traits, …. are just as important. The road to success is littered with vehicle-platforms of those with constrained resources, right people, etc….

    Machiavelli said it best– Lady Fortune favors the bold. Probably the greatest factor in Tesla's success is a bold knight entering and conquering a new land with a confluence of several luck factors. First, availability of massive media, non-mainstream media channels that enabled for celebrity. It is said that Elon Musk's "sci-fi wizardry" celebrity is worth about 40% of Tesla's valuation (perhaps more). My recollection is that the advertising budget for a new car model ranges from 6 to 10%? Without Elon Musk's celebrity status in a lucky time of multiple media channels, Tesla would not have been able to capture a significant marketshare, because it otherwise lacked promotional capabilities.

    I can't think of any time in history that funding money is so easily available. Without receiving its billions of funds, Tesla would be nowhere. If we further examine the funding–the overwhelming of the established investors would scoff at Tesla's then or even present financials. It is due to a very unusual timing and circumstance of investors' funds available.

    Tesla's first mover advantage is the major driver in EV market leadership. However, the Tesla-financing playbook here is alike a web startup– invest endless money to create networking effect to create monopoly. The problem is whereas a web startup is very fast moving, and difficult to determine how much marketshare it has or how it has gathered this, a electric vehicle market is magnitudes slower. This gives competitors more time to develop alternative strategies.

    The comparison between SpaceX and Blue Origin is weak. First, we don't really know Blue Origin's goals. Secondly, video's statements such as "customers are a nuisance" and endless resources– just doesn't sound Bezos's philosophy– suggests video author is superficial in assessing Blue Origin.

    A conquering knight in a new land may establish a brief kingdom, but will it be able to hold the kingdom, when there's a horde of knights coming through the same entryway? It's unclear.

  8. I like your thoughts around constraints and it puts me in mind of 1 fictional and one real, close to home situation. The first is the Foundation in Issac Asimov’s trilogy +, where the foundation was so constrained on resources that they managed make everything tiny and super efficient. I think this was referencing US and Japanese industry at the time – so interesting to see how that has developed over time. The second closer to home situation is with my father who was a design engineer and worked on the designs (along with many others) for Concorde (supersonic aeroplane for younger viewers). Concorde was a very complex aeroplane but actually quite small and this placed many constraints on what they had to get in a small space. My father has spoken many times how this pushed the creativity of the designers involved.

  9. “Whilst Blue Origin struggles to launch pop guns to the edge of the atmosphere” – Brutal 😂

  10. Dude, Mozart is to music as Elon is to engineering. Clearly the GOAT. You should change your intro music.

  11. Every engineer knows why Telsa and Space X are succeeding even the ones that work at Blue Origin, Virgin, and all the legacy automakers.

  12. Social laziness! The big boys pat themselves on the back,really just riding the system . GM and it’s highly over compensated management and it’s” super” engineers are doomed they stood around entirely too long.

  13. I worked at Rocketdyne/Boeing in the '90s. They had the same culture as BO apparently does: cost, schedules, and customers don't matter. That's one of the biggest reasons I hated working there.

  14. I would call it the garage inventors mentality.
    Some of America's greatest companies – until they become corporations.

  15. A lot of Elon's way of doing things seems to come from taking the agile manifesto, which was written to streamline software development, and applying it to manufacturing. That only works if everything is automated and so repeatable and can be tested at every stage of the process from failure to success to continuous improvement. It results in plenty of scrap rockets but saves a lot of time.

  16. People management. All great points. I would add that offering stock options to employees is another motivator to ensure that everyone is aligned with shareholder interests, in creating value.

  17. yup, but also they are copy cats so at best they get to where Tesla/Space X is now, at some irrelevant point in the future, where their knock-offs are worthless or inferior

  18. Correct me if i am wrong, but EVs make up about 5% of the global auto market, and Tesla controls about 13% of the EV market, in other words, just over one half of one percent of the total world automobile market. That is hardly dominating the industry. Furthermore, the only reason any significant growth in the EV market is anticipated is because governments are threatening or acting to ban internal combustion engines. In other words, nobody but virtue signallers actually wants to buy an EV, Tesla or otherwise, but many may soon be forced to buy them even though they don;t want to.

  19. Yeah, Elon constantly imparts a sense of urgency and time scarcity and the goal of reduced cost. It’s interesting to see how this plays out. His method of company communication as sole spokesperson often using Twitter I think gives him leverage to do this, too. Thanks for your insights here.

  20. Re your ad copy for PIA: you said " held up in court" when you should have said " upheld in court." "held up" has a connotation of delayed, while "upheld" has a connotation of confirmed.

  21. I learned the same lesson when I was little, playing with lego. – I had an idea of what to build, but lacked the pieces, so I had do it differently, and usually ended up with a much better result!

  22. I don’t believe that Jeff who or BO actually have any of their own ideas about how to best do space Exploration and have consulted dinosaur legacy space company consultants ( not worth a sous) and thought it was ok to carry on with the excesses of the past instead of considering the hopeful request to find more economical methods to reach out into space. Elon on the other hand realises what was wrong with the old method of government space programs and sought to offer a better alternative and has achieved something considered unrealistic in the past through recycling boosters and Rockets. They might not be as economical as the government had hoped but they are closest ….
    I’m seriously hoping that the ex BO workers adopted by Spacex have gone in with the mind to learn and invest their best and that they fit the team model there … If Jeff Who could get a new bunch of creative rocket Scientists and a better Lead Technician/Engineer who knows he could produce something useful and acceptable for NASA in the future, he just has to work out who still belongs to the project and who might be better invested elsewhere .

  23. I heard a saying years ago that went 'anything worth doing is worth doing badly.' Basically, doing anything is better than doing nothing. Some people take that to heart and become more afraid of not starting than starting and less afraid of making mistakes because they see them as building blocks.

  24. I agree that the lack of money incentivises innovation. None more so than Rimac, they have won the grand prize in Bugatti. Tesla have lost their way somewhat in their mission to bring the world closer to EV. They are more interested in profits than providing an affordable car for the masses. In the long run, this will be their undoing as Chinese manufacturers pass them by giving customers what they need instead of electronically heavy and expensive bloat with ongoing costs. They'll retain this premium niche until the rest catch them up.

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