Here is an excerpt from entrepreneur and VC Daniel Gross talking with Tyler Cowen about their new book, Talent: How to Identify Energizers, Creatives, and Winners around the World.
SpaceX, until fairly recently, wasn’t really doing anything new from a physics standpoint. There weren’t any new physics discoveries that Elon, in a lab in LA, figured out that von Neumann couldn’t figure out. It’s yesterday’s technology. It’s just that he is a better router and allocator of capital to the right talent.
You see this time and time again. Many Elon companies are this. He just manages to put the right people doing the right thing. If you were to try to really explain to a five-year-old at a very basic level, why aren’t there more SpaceX’s, I think it comes down to the right people don’t have the right jobs for human progress. Once you start viewing the world through this lens, it’s really hard to unsee it, at least for me.
I think there’s a lot of truth to that, and it always seems to stem from some kind of personality. Tyler mentioned how Elon personally interviewed the first 10,000 employees at SpaceX, which is very similar to the astounding number of interviews Hyman Rickover had for entry into the Nuclear Navy. I doubt Elon cut one leg short on the chair the subject would occupy, however. Or put them into broom closets. Or have them call their fiance to postpone a wedding.
Daniel mentions that this fixation on recruitment and allocating the right people to the right jobs is common to great organizations in his experience. What’s important about that is it allows organization to reduce the need for detailed execution plans, bureaucratic process, and controls. The right people substitute for the right staff-approved plan.
Laura Crabtree gives some indication of the difference I am talking about. She is a former Senior Mission Operations Engineer who spent 12 years at SpaceX and nearly 6 years at Northrop Grumman, speaking on the Venture Stories podcast.
It’s not that failure is unacceptable. Failure is OK. It’s a means to learn and grow. It’s also thinking out side the box and not listening to people when they say you can’t do something. Traditional aerospace you have a plan, and the plan is executed exactly from start to finish — maybe not exactly but very closely from start to finish — you have a budget. At SpaceX, nobody ever talks about budget. We talk about schedule, we talk about risk, we talk about technical problems. The budget is something that comes into play as soon as you completely blow things out of the water. It’s not like we didn’t talk about it, just not a lot.
Why a reliance on good people means you can think less about budget, implementation plans, etc., is because they internalize that and through their meeting coordinate in real time. Presuming these professional, highly qualified people should be just following a plan presumes that the plan can be perfectly predicted. As Daniel Gross recognized:
I have not heard a story of someone never having to course-correct, and all their ideas were right from day one. They just launched and got there. For the most part, you try a lot of things. You spend most of your day getting negative reinforcement from the system until something starts working. The reason most companies fail is, with enough negative reinforcement, the actor stops participating. What you actually want is someone who has a lot of energy, who’s just going to keep on going.
Perhaps defense programs should start with the very individuals who are expected to execute on it, and are personally invested in the outcomes.
Have you read Ken Iverson’s book Plain Talk? Would be a good older complement to this sort of discussion. He also discusses the merits of centralized vs decentralized bureaucracies through comparing his company Nucor to Walmart. Very useful comparison