How to Maximize Your Money at Tesla (or any other company) - Part 1: First Principles

I always tell my direct reports, "Your goal should be to make as much money here as possible, and I will do whatever I can to pay you as much as I can."

It's not because I'm a materialist. You don't have to be a materialist to want to make a lot of money. Nobody says you have to buy a McMansion and a speedboat with your money. You can donate it to your church, help a struggling friend, give to charitable causes, fund a business you believe in, travel to explore other peoples, languages, and cultures, pursue artistic endeavors, anything you want.

Money equals control over how society allocates capital, material resources. The more money you have, the more your family, your values, and your personal judgments will direct society's use of resources. If you truly believe in your family, your values, and your personal judgments, you should want that. In fact, to the extent you believe your ideas and values are correct and therefore beneficial to yourself and others, you should feel a certain responsibility to (humbly and peacefully) affect your values. Money is the best way to do that. So, if you think your ideas and values are useful, please make a lot of money, and help the rest of us arrange the material world in a way that better reflects them!

This is what Elon Musk does so well. He's not shy about making money because he believes his vision is important: so important, he feels responsible for making it happen. I imagine he feels he has to take control of the land, labor, and capital necessary to make his dreams reality. If he doesn't, many good things that should happen won't, and many bad things that shouldn't happen will. I would never want Elon's money. The richest person in the world is the person with the greatest moral responsibility for directing the world's time and treasure wisely. That's a weight bigger than I care to lift.

The reason Elon has his money, is because the world has noticed that if you give Elon Musk capital, he gives you Paypal, SpaceX, Tesla, Starlink, Neuralink, the Boring Company, X. He gives you the safest, cleanest cars in history, which are also computers that can literally see and process visual information the same way the human eye and brain do. He gives you humanoid robots that can do the same. He gives you a worldwide EV charging network, and opens it up to the world. He gives you reusable spacecraft capable of carrying satellites into orbit at a fraction of the cost. He gives the entire world, especially the oppressed in the developing world, internet access and a communication platform to make their voices heard. He makes brain implants that let quadriplegic patients control computers with their minds. He makes humans an interplanetary species. We're happy to give him the money he needs to arrange the material world to make these things happen. No coercion necessary, we line up to hand over our dollars.

Because he doesn't just give us these miraculous, world-changing technologies; while he's doing it, he makes us rich. When we give Elon money, he does what he does, then he gives it all back to us, plus 10x more. My parents gave him $10k in early 2019, and he gave them back $200k. When we give Elon money, he turns the world into Star Trek, and fills up our bank accounts. Personally, I like it.

If you're a Tesla employee, Elon is directing some of that capital at you. If the work you do generates more money for the company than what he's paying you for it, you can stay forever: profitable processes are infinitely sustainable. If the work you do generates MUCH more money for the company than what he pays you, you become a profit center, and you start to give him no choice but to pay you more. Smart businesses concentrate capital in profit centers, and Tesla is a smart business. To the extent you're consistently generating value in excess of your pay, you WILL be paid more.

How to apply this:

First, always think about costs. Find out how much everything costs. Ask your manager what costs their manager is putting the most pressure on them to control. Ask your manager what variables and metrics drive those costs. Ask your manager how we're tracking those variables. Ask your manager what they think you can do to improve those metrics as much as possible. Ask your manager what variables drive value/revenue/profit from your position. Ask your manager how we're tracking those variables. Ask your manager what their advice would be for maximizing your stats on those variables.

Use this information to analyze your own job activities. Try to find ways to drive your own costs down, and your value/revenue/profit up. This means efficiency.

The best way to get more efficient is to find ways to partially automate manual processes, or fully automate semi-automatic processes. I recommend focusing on semi-automating your own manual processes first. Stay away from trying to automate semi-automatic processes until you've been around for a while and you're pretty high level (and NEVER attempt to fully automate a manual process... you don't understand it well enough yet).

For example, at GFNV in 2018, the pressure on the training managers was for the trainers to generate more workstation certifications, i.e., to evaluate associates on various positions on the line and document their skills. Most associates had not been evaluated yet, so if we had to shift people around managers didn't always know who to put where, and some problems had arisen which were traced back to associates working in stations in which they had not been certified.

Certification evaluations are a very manual process. They involve walking around to locate individual associates, at the time they happen to be working on the station on which you want to certify them, then observing the associate work for some amount of time, asking them a series of questions, and evaluating their answers. They have to be done one by one, and they take at least 10 minutes each, so the most one person could plausibly finish in an hour is 6. With 400 associates to certify on 50ish possible workstations, on three different floors, in one of the biggest buildings on earth, by myself, it would have taken me 20 years.

So I semi-automated the process. Certification evaluations can be performed by training coordinators (me), supervisors, and production associate workstation trainers. Since the supervisors and workstation trainers outnumbered me 30/1, I decided to get this machine working for me. I created a weekly contest to see who could complete the most evaluations. At the beginning of every shift I would walk around to each of my lines and hand out training laptops to the workstation trainers who didn't have computers. Throughout the shift I would track certifications as they came in, and give updates about who was winning. At the end of every week I would announce my "Certification Champions," to cheers and jeers from the 2 dozen or so near the top of my board. It took maybe 2 hours out of my 12 hour shift, it was fun, and it generated more than a 10x increase in evaluations. The carrot of the contest activated the certification machine, and to keep it running all I had to do was hand out a few laptops, track the numbers, and send out some teams messages plus a daily e-mail. The machine did most of the work, I mostly just pushed buttons. Semi-automatic.

It's hard to say how much economic value those certifications generated relative to what I was getting paid to produce them, but knowing that isn't necessary for demonstrating value. If your manager cares about a variable like certifications, the business must believe it drives profitability in some way. If they're paying other people the same wages as you to produce the average number of certifications, we can safely assume that's enough certifications to make you profitable. So therefore if you find a way to produce 10x more of it than other people in the same role, nobody will doubt you're worth more than what you're being paid.

Think about it: if you invested the same amount of money into 10 stocks and 9 of them gave you a 5% return, and the 10th gave you a 1000% return, where would you put your money?

Do that long enough, and you will be paid more. At performance evaluation time, you'll get raises and equity awards. If your manager decides everyone else should do things like you and asks you teach it to everyone else, the value you're providing goes up by factors again. It starts to look like maybe the highest-value use of your time for the company is to help the average ones get better, not to do the job really well yourself. When promotion season comes, you'll be first in line. When better opportunities in the company open up, you'll be a strong candidate. You start to write your own ticket.

So step 1: be a profit center. Give the business no choice but to invest in you. Work hard to dominate your role, and find ways to semi-automate manual processes. Make your value blindingly obvious, turn your superior process into an SOP to follow yourself, and when the time comes, share freely with everyone else.

Ok that should be good enough for now. Go do that and we'll talk more tomorrow.

(P.S. If you got value out of this, please share with a friend! ??)