Episode #399 How Elon Works · Habit Engineer University

Episode #399 How Elon Works

Figure I would put my notes about this since I mentioned it. I really like the Algorithm he uses for all business problems. What do you think?

Elon Musk’s War Manual: Stories and Lessons from a Relentless Builder

You think you know Elon Musk. You probably don’t.

Strip away the Twitter noise, the political chaos, the tabloid relationships. What’s left? A 30-year masterclass in building impossible things. Walter Isaacson’s 615-page biography isn’t just a story about rockets and cars. It’s a playbook written in blood, sweat, and bankruptcies.

Here’s what matters: Elon has used the same handful of principles across seven companies for three decades. These aren’t theories. They’re battle-tested ideas that built a trillion-dollar empire. And if you pay attention, some of them might work for you too.

The $307 Million Education

At 27, Elon sold his first company, Zip2, for $307 million. He walked away with $22 million. Most people would buy an island. Elon did something different.

“I could go buy an island, but I’m much more interested in trying to build and create a new company,” he said. He put almost all of it into his next venture. The real payoff wasn’t the money—it was proving he could build something real.

Lessons:

- Money is fuel, not the finish line

- Your next game matters more than your last score

- Build companies that solve problems, not bank accounts

Key Quote: “I’m going to put almost all of my winnings back into a new game. The real payoff is the sense of satisfaction in having created a company.”

The Idiot Index (This is made me smile)

When Elon started building rockets, he realized something insane: finished rockets cost 50 times more than their raw materials. Carbon fiber, metal, fuel—the ingredients were cheap. The manufacturing process was the problem.

He created the “Idiot Index”—a calculation of how much you’re overpaying compared to material costs. If the index is high, you’re an idiot. A supplier quoted $120,000 for a part. Elon said it was no more complex than a garage door opener. His engineer made it for $5,000.

Lessons:

- Question every cost ruthlessly

- Compare your industry to others

- Most “requirements” are bullshit

- The gap between materials and finished product is where fortunes hide

Key Quote: “Rockets had an extremely high idiot index. The finished product cost at least 50 times more than the basic materials.”

The Missing Capacitors

SpaceX needed to launch a rocket from a remote Pacific island. The power boxes failed. Elon sent an intern from Texas to Minnesota to grab capacitors. Meanwhile, an engineer removed the broken boxes from the rocket, took a boat to the nearest island, slept on concrete outside an airport, flew to Honolulu, connected to LA, and met the intern.

They swapped parts. Then Elon flew them both back to the island in his jet. On the plane, Elon drilled the engineer on every circuit detail.

Keep in mind: SpaceX hadn’t successfully launched a single rocket yet.

Lessons:

- Time is money, but urgency matters more

- Rent a plane for $90,000 if it saves a workday

- Know your work at the ground level

- Every day late is revenue lost

Key Quote: “He expected the revenue in 10 years to be $10 million a day. Every day slower was a day of missing out on that money.”

The Daimler Smart Car

Tesla was broke. Daimler executives were visiting to discuss an electric car partnership. They expected a PowerPoint presentation. Instead, Elon bought a Smart car, ripped out the engine, and installed a Tesla motor and battery pack.

When the Daimler team arrived, Elon asked if they wanted to drive it. The car hit 60 mph in four seconds. The executives were stunned. Daimler invested $50 million on the spot.

“If Daimler had not invested at that time, we would have died,” Elon said.

Lessons:

- Showmanship is salesmanship

- One dramatic demonstration beats a thousand slides

- Build the thing, don’t just talk about it

- Surprise creates emotional bonds

Key Quote: “They were expecting some lame PowerPoint presentation. We created a working model. It blew them away.”

The Door Handles

The Model S needed door handles. A designer suggested making them flush with the car—they’d pop out and light up when you approached. Everyone said regular handles would work fine.

Elon embraced it immediately. “The handle senses your approach, lights up, pops out to greet you. It’s magical. It’s also fun and unexpected.”

Lessons:

- Delight creates loyalty

- Unexpected features make customers tell stories

- Fun isn’t frivolous—it’s marketing

- Small touches matter at scale

Key Quote: “It would send a chirpy signal of friendliness. It’s magical, and it’s also fun and unexpected.”

The Algorithm

During Tesla’s “production hell,” Elon was trying to build 5,000 Model 3s per week or die. He walked the factory floor with orange spray paint, marking robots for removal. “Go or stay?” he’d ask. If stay, the robot lived. If go, it got an orange X and workers tore it out.

He created “The Algorithm”—five commandments:

1. Question every requirement

1. Delete any part you can

1. Simplify and optimize

1. Accelerate cycle time

1. Automate last

He repeated it so much his executives mouthed the words before he said them.

Lessons:

- Most requirements are wrong and dumb

- If you don’t add back 10% of deleted parts, you didn’t delete enough

- Automation without simplification is disaster

- Repetition makes ideas stick

Key Quote: “I became a broken record on the algorithm. I think it’s helpful to say it to an annoying degree.”

The Bathroom Stall Latch

NASA used latches that cost $1,500 each for rockets. An engineer modified a latch from a bathroom stall. It cost $30 and worked perfectly.

Another example: An air-cooling system for a rocket was quoted at $3 million. Elon asked Gwynne Shotwell what a house air conditioner costs. About $6,000. They bought commercial AC units, modified the pumps, and mounted them on the rocket.

Lessons:

- Aerospace prices are inflated nonsense

- Look at other industries for solutions

- Question everything from first principles

- Most “specialized” equipment isn’t special

Key Quote: “The latches used by NASA cost $1,500 each. A SpaceX engineer modified a bathroom stall latch for $30.”

Build a Dome by Dawn

SpaceX was moving too slow. The team hadn’t made a single dome that fit perfectly on Starship. Elon issued a challenge at night: “Build a dome by dawn.”

The engineers said it wasn’t feasible—they didn’t have calibration equipment. Elon’s response: “Slice off the end of that rocket barrel and use that as your fitting tool. We’re going to make a dome by dawn if it fucking kills us.”

He stayed with the team until 9 a.m. when they finished.

Lessons:

- Use what’s available right now

- Imaginary limitations kill momentum

- Leaders work alongside their teams

- Start with anything, refine as you go

Key Quote: “Start with whatever you have in front of you, whatever is available right now, and go.”

The Toy Car

Elon was playing with a toy Model S. He noticed the entire underbody was die-cast as one piece of metal. “Why can’t we do that?”

Engineers said there were no casting machines that large. Elon told them to ask for a bigger machine. They called six companies. Five dismissed it. One agreed and built the world’s largest casting machine.

Lessons:

- The toy industry manufactures with precision and speed

- “No one does it that way” isn’t a reason

- Laws of physics are the only real limits

- Other industries hold your answers

Key Quote: “They have to produce things very quickly and cheaply without flaws and manufacture them all by Christmas or there will be sad faces.”

The Night Terrors

1. Both SpaceX and Tesla were dying. Elon had night terrors—mumbling, screaming, flailing in his sleep. He’d wake up, go to the bathroom, and vomit. Night after night.

His tolerance for stress was being tested past his limit. “I was working every day, all day and night, pulling rabbits out of hats. Now do it again. Now do it again.”

SpaceX crashed three rockets in a row. Tesla was burning cash. He didn’t quit. “As God is my bloody witness, I’m hell-bent on making it work.”

Lessons:

- Excellence is the capacity to take pain

- Great builders have unlimited pain tolerance

- You’ll lose many times before you win

- Giving up isn’t an option

Key Quote: “Optimism, pessimism, fuck that. We’re gonna make it happen. I will never give up and I mean never.”

Key Quotes That Define Elon

1. “I am wired for war.” (Repeated for 30 years)

1. “All requirements should be treated as recommendations. The only immutable ones are those decreed by the laws of physics.”

1. “A maniacal sense of urgency is our operating principle.”

1. “The best part is no part. Delete, delete, delete.”

1. “It’s not your job to make people on your team love you. That’s counterproductive.”

1. “Camaraderie is dangerous. It makes it hard for people to challenge each other’s work.”

1. “Technological progress is not inevitable. It only improves if a lot of people work very hard to make it better.”

1. “Life cannot be merely about solving problems. It also has to be about pursuing great dreams.”

1. “If you’re popular among your engineers, this is bad. If you don’t step on toes, I will fire you.”

1. “Extended periods of calm are unnerving to me. It’s part of my default settings.”

The Uncomfortable Truth

Elon isn’t for everyone. He churns through people. He works 24/7. He’s harsh, relentless, and completely uninterested in your work-life balance. His relationships fail. He sleeps under desks. He’s not bred for domestic tranquility.

But here’s what you can’t deny: His principles work. Question requirements. Delete ruthlessly. Simplify everything. Move with urgency. Stay close to the work. Make the mission matter more than feelings.

You don’t have to be Elon. You can’t be. But you can steal his ideas.

Which story hit you hardest? Which principle will you use this week?

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