The Exchanges

Q number one driver, right, of sales, and so there's this crazy ambitious goal to start the thing, and it sounds pretty unreasonable, especially because you're starting not from a position of strength, but from a position of weakness. Can you talk about that side of things, the like, let's just start by laying down the gauntlet of a somewhat impossible goal on something that today is actually a weak area?

A Goal setting, Can determine like what outcome you're going to get. And so if you set a goal for five to seven percent improvement, you're probably going to get three to five. If you set a goal for an order of magnitude improvement, now you got people that have to think way differently about that problem. Cause you can't tweak the status quo to get to a hundred percent improvement or a 20 X improvement. And so part of the secret to Elon's part of his secret sauce is he sets these order of magnitude improvement goals. Uh, so, 10 X, a hundred X. And it forces you to think way differently about how you would solve that problem or what, what you would do with the product or what you would do with a process, et cetera. And so like you're referencing this example of, he came to me and said, hey, look, we have continuous demand challenges. We got to figure out how to sell cars online, which sounded crazy at this time because nobody was buying a 120,000 dollar thing sight unseen online. Click, click. But we both knew because we'd both been in consumer, Um, that every click you have, you ask the consumer to make, your conversion goes down. And that's, that's, I'm saying an obvious, every entrepreneur in e-com knows that, but we looked at our clicks and there were 64 clicks to buy a car. And so he turns to me, he says, improved, let's improve digital sales. This is your goal, improve digi…

AI assessment note: “If you set a goal for an order of magnitude improvement, now you got people”

Q And you had these two terms, cycle time and touch time. Can you explain what those two are?

A Yeah, so I went to the shop owner and I said, tell me what the average time it takes between a customer dropping it off and a customer getting their car back. And he said, yeah, I can tell you that it's 18 days. I said, how do you know that? He said, that's the average rental car time. I said, okay, that's pretty good proxy. I said, um, how many hours of labor do you bill on each job on average? He said, oh, that's easy. Six to eight. And I went, 18 days to get six to eight hours of work done. That looks like an opportunity because that's the difference. Cycle time is the 18 days. That's from the beginning to the end of the process. And touch time was the amount of time that those technicians were actually touching the car, six to eight hours. And I went, oh, that looks like an opportunity to maybe turn this industry around for the consumer. What if you could go to market and say, you'll get your car back in a day. Versus the 18 days of the rest of the guys down the street. That's when I, like, started to diligently say, let's start a business. So I, uh, I grabbed some guys that I had worked with, uh, and we started to work on just doing that. We ended up with, um, the largest, at the time, collision repair chain around the country.

AI assessment note: “Cycle time is the 18 days... touch time was the amount of time”

Q They weren't calling back, not out of laziness, but because the incentive structure, right? They were getting, they, they sort of commission was tied to the test drive, right? Not onto, not to sales that closed from a follow-up. Is that what, there was some incentive problem, correct?

A There was, there was an incentive problem, but there was also A profile problem. We were hiring people that didn't know how to ask for the sale. Uh, and that was the root cause. So when you force them to, uh, then, uh, then stuff started moving. So I talked to the guy the next day. He's like, I already have the results out of Asia and Europe and like sales are flying. And I said, I said, no surprise. Like, all you have to do is call people back. Like if you want to close the sale. Um, and then it dawned on me, oh crap. I made this decision like I was the CEO. I don't even work for Tesla yet. And so I said to the guy like, I gotta call Elon and tell him what we did. Uh, and I said, I'll take the blame. You're not gonna take the blame. I'll take the blame. And so I called Elon. I said, man, I gotta, I gotta beg your forgiveness. I haven't, I haven't not been a CEO for 20 years. I've had six companies. I've, uh, I haven't had a boss. And when I see a problem, I want it gone, like immediately. And so here's the problem I saw on your top line challenge. Here's what's happening in your stores. Here's the change we made yesterday. And by the way, I think with this change, you're gonna make a quarter. Long silence, like uncomfortable silence. This is before I knew about the signature Elon long silence. And, uh.

AI assessment note: “There was, there was an incentive problem, but there was also A profile problem.”

Q What, what do you think now with AI? So, uh, I feel like you've been doing this for a long time, and just when you're probably, like, I'm a veteran of this game, the entire board game changes. Somebody flips the table, and now there's a whole new game to be played. Where's your head at with AI? How do you think about this?

A Man, I'm excited. I, all the way back in college, I worked my way through college writing trading algorithms at, ah, at the world's largest options and futures trading, ah, platform in Chicago. I went to college in the Chicago area and, and worked my afternoons coding. And way back then we were using neural, the very beginning neural nets to try to get an edge in the market and try to, and try to robo trade, uh, in a way that people hadn't been able to, in terms of the accuracy and the speed. So all these years later, now that this has emerged, I'm like completely psyched because we were using what looked like, like rudimentary computers, uh, to do this stuff. Now you've got real compute power.

AI assessment note: “Man, I'm excited. I, all the way back in college, I worked”

Q for the biggest prize. You've got Zuckerberg, and then you've got Google, and you've got Elon, you've got Sam Altman, you've got Anthropic, you have all these players. How do you, how do you see this playing out? You've seen a couple of tech waves, you know, uh, you know, at least some of the players, maybe even all of them personally, um, How do you see this playing out?

A I sort of wonder if, if they're creating a app layer or a tooling layer, and what I mean by that is, I think they're creating the tooling layer. That then a lot of us are now using to create real businesses on top of. So I kind of go back to the internet breakthrough and internet revolution and think about, okay, like the browsers, everybody was super excited about the browser business, and Marc Andreessen made, uh, made a career out of Netscape. But I wonder if, like, those, now browsers are a commodity, but what got him What got built on top of a browsable web were things like Facebook and Airbnb and, uh, E-Trade and you name the, the businesses. Like, tons of GDP got created on top of that tooling. And it sort of feels like to me, we're getting really excited like we did about Netscape and Internet Explorer. We're getting really excited about these hyperscalers, but what you really want to be looking at is what businesses are going to get created on top of this tooling. And so I'm psyched for the work they're doing. I think it's amazing and it's breakthrough level, but I, but I am also much more excited about what's going to get built on top of it.

AI assessment note: “I think they're creating the tooling layer. That then a lot of us are now using”