--:-- Shane Parrish: Elon said to me, "Hey, there's something in this job you ought to know about. It's something you probably haven't faced before. The marketing budget here is precisely zero. And you need to double the company every six to eight months with no marketing budget."
--:-- Shane Parrish: What was your first meeting with Elon like?
--:-- Jon McNeill: First meeting was in person at SpaceX. So for a tech nerd, it was pretty awesome to walk into a rocket factory, get the tour, and then sit down with him. He had this big, huge titanium desk, or did at the time. We sat and talked, then walked around the factory for hours. We just dove deep right away into a problem he was facing in manufacturing.
--:-- Shane Parrish: What do you think he was assessing you on?
--:-- Jon McNeill: He wanted to get a sense of how I process problems. When I asked him what success looked like, he said, "What success looks like is if you and I have the same inputs, we come up with the same answer." That's pretty interesting. I kind of teased him about that. I said, "Because you're always right." And he said, "Okay, fine. But I want to know how you think through stuff." So the best way for him to figure that out was to go walk a real problem.
--:-- Shane Parrish: What was the problem that you do remember?
--:-- Jon McNeill: They were having a hard time manufacturing the Model X Falcon Wing doors. They'd been working on this problem for weeks and not making any progress. We walked up and down the Model X line for the better part of two hours, trying to figure out what was going on. I was just asking them questions. "Okay, where does the chassis get built? How do you know it's aligned when it comes out? Where do the doors get hung on the chassis?" We saw something right away that he hadn't seen. The people bolting the doors onto the chassis, the Falcon Wing doors, had to do it blind. They were reaching around the underside and had to drill these bolts in upside down. They couldn't see them. I said, "The chances of those things going in straight are pretty slim. Have you ever thought about a jig so they could just follow a pattern?" And he said, "No, I haven't thought about that. Let's try that." So they literally built the jig overnight.
--:-- Shane Parrish: Is that the thing with Elon that separates him from other people? A lot of people would be like, "Oh, we'll do that next week."
--:-- Jon McNeill: Yeah, no, it's instant. The timing is as fast as you can. He believes that speed of all types—speed of decision making, speed of cash through the business, speed of response time—creates competitive advantage because your competitors are probably moving slower.
--:-- Shane Parrish: How do you do that without burning people out?
--:-- Jon McNeill: It's not every minute, every day that you're onto something that requires immediate response. A lot of times you're trying to figure stuff out. "How would we do this? How would we break down this problem? How would we grow this fast?" Once you figure it out, you hit the speed button for sure. But it's not like you're constantly running at that rate.
--:-- Shane Parrish: Did you know at that point you wanted to work at Tesla?
--:-- Jon McNeill: It took some convincing because I hadn't worked for somebody else for a long time. I'd had six companies of my own. So number one, I wasn't sure I was ready to work for somebody else. And I wasn't sure I was going to be helpful because the company was already so big and had such big growth goals. It really took some convincing on his part and on my part to figure out if that was the right next step.
--:-- Shane Parrish: What was your first concern?
--:-- Jon McNeill: My first concern, which proved out in our first few weeks of interaction, was that I would overstep my bounds because I just wasn't used to checking in with somebody. It turned out that I did. My first two weeks, I overstepped my bounds, and it turned out not to be a fatal foot fault. It was okay.
--:-- Shane Parrish: What happened?
--:-- Jon McNeill: I was trying to figure out if I could be helpful. I asked him, "What's your biggest problem right now?" He said, "Demand." So I said, "How many cars have you promised the street for this quarter?" The number was something like 12,000. We were a month and a half into the quarter at that point. I said, "How far in are you?" He said, "We've only sold 3,000." I said, "That's a big problem. Why don't I work on that problem for a week and I'll come back?"
--:-- Jon McNeill: I went out on a blitzkrieg. I went to eight different stores and took a test drive because I had heard that the test drive was the big thing in buying a Tesla. You hit the accelerator, it's like a rocket ship. You never forget it and you buy the car. So I went to eight stores, did test drives, used eight different email addresses so they wouldn't know who I was. Funny thing happened: I didn't get a call back. After a week, I hadn't been called back. So I called the head of sales ops. I said, "Am I blacklisted in the system for some reason? Why would nobody call me back after a test drive? That's when you're supposed to be asking me for the sale." He looked in the system and said, "You're not blacklisted at all. You used a bunch of different email addresses so we couldn't even track you."
--:-- Jon McNeill: I said, "Can you look up for me how many people have done a test drive in the last 30 days who haven't been called back?" He said, "Give me an hour." He called me back and said, "10,000." I said, "Oh my God. You can make your number for the quarter. You just have to call people back and ask for the order. Why aren't people doing that?" He said, "People are incented to do test drives, but we have no commissions here, so they're not incented to make the sale." I said, "The hardest thing in sales is asking for the sale. So you're not incenting people to do that. I understand the behavior. Why don't we do this? Can you shut off anybody's new test drive leads until they call all their prior test drives back for the last 30 days?" He said, "I can't." I said, "Okay, how long will it take?" He said, "Worldwide, I can do it right now. It'll take several hours to proliferate around the world, but I can do it right now."
--:-- Jon McNeill: He called me the next day and said, "You wouldn't believe it. The orders are coming in left and right." I said, "Yeah, because your people are asking for the sale. This is how this works." Then I went, "Oh gosh, I don't work for Elon yet and I just made a decision in his company. I shut off all new leads." So I called Elon up and said, "Hey, I'm really sorry. I haven't worked for anybody for a long time. I was afraid of this and I just stepped across the line." I told him what I did. "Your problem in sales is that people aren't asking for the order. So what I did was shut off all new leads until they asked for the order. It turns out the sales are coming in. I think you're going to make the quarter. But I have to apologize. I don't work for you yet. This isn't my company, it's yours. I should have checked in and I didn't, just out of habit. I'm sorry."
--:-- Jon McNeill: There was this long silence on the other end of the phone. Then he finally came on and said, "That was a great decision. You're going to fit in here just fine."
--:-- Shane Parrish: So he didn't mind you overstepping at all?
--:-- Jon McNeill: Not in that case at all, because it was speed of decision, which I got to know was what he was after. He wasn't after a hierarchy or checking in. He was after, as long as you're following first principles, just go as fast as you can.
--:-- Shane Parrish: Do you remember what was going through your mind during that pause?
--:-- Jon McNeill: I thought, first of all, I didn't even know if he was on the phone still because it seemed like forever. It was probably less than a minute. I was ready to ask him, "Are you still there?" when he jumped in. I got to know that's how he processes. He kind of shuts down all other sensory stuff and just thinks. That's what he was doing, but I didn't know that on the other end of the phone.
--:-- Shane Parrish: That would kind of freak you out.
--:-- Jon McNeill: It freaked me out a little bit too.
--:-- Shane Parrish: How did you go about building a winning culture there?
--:-- Jon McNeill: I think all culture comes from founders, and the culture was built. The culture was a first principles culture. It was a culture of rapid communication. In most organizations, you go up the hierarchy with your question or suggestion and it comes back down. It looks like an EKG, the communication pattern in a company. Elon was like, "Let's make it look like a dead patient. Go straight across the organization. If you need an answer, go to the person that has that answer. Don't go through their boss or their boss's boss. Go directly to them because that's going to help with speed of decision making." That kind of culture was already set.
--:-- Jon McNeill: What the business needed was a bunch of scaffolding. So I went about building a team and building an approach so we could have a mechanism to essentially double the company every six to eight months, super rapid growth. In so doing, we built on the culture that Tesla already had. But we really wanted to create a meritocracy where people that were contributing got big new assignments. We called them battlefield promotions. If you were performing on the battlefield, we could literally grab you and say, "How would you like to run this worldwide?" People would say, "I don't know how to do that." And we'd say, "Nobody's ever done it before. So good. Welcome to the club." We'd give them huge responsibilities, big remits, big assignments. More often than not, they would come through and become fantastic leaders.
--:-- Shane Parrish: What an incredible way to do that.
--:-- Jon McNeill: Yeah, it was super fun. And still is, because I still work with a number of those people today.
--:-- Shane Parrish: What did you learn about communicating with Elon that was different?
--:-- Jon McNeill: It has to be concise. We had fun with our communication in the sense that we gave each other a challenge. I think this was his idea. He said, "Do you think we could try to run the organization on three-sentence emails? First sentence: here's my problem. Second sentence: here's what I think the solution is. Third sentence: here's my next step, and if I need resources or permission, ask in that sentence." We started to experiment with this. It was really the key to communicating with him because he likes that sort of concise, get to the point. Have you super thought about the problem? Have you really thought about the solution? And have you thought about the next steps?
--:-- Jon McNeill: The second key he said all the time was, "Don't sit on bad news. Give me bad news as fast as you know about it." He said this to everybody because bad news only gets worse with time. So give me bad news fast. The way you could get on his bad side was saving bad news. I watched that over time. Those were the two keys to communication: be concise and be rapid with bad news.
--:-- Shane Parrish: How did you guys handle disagreements?
--:-- Jon McNeill: We talked through them. Sheryl Sandberg introduced us. Both of us quizzed Sheryl on how she and Mark manage their relationship. She said, "We meet once a week, religiously, for at least an hour. We open with, 'Here are things you've done that have pissed me off, frustrated me, disappointed me.' So you clear all that stuff first, and then you get to the business strategy." We sort of followed that. He's not shy. If he's upset about something, it's right away. The phone's lighting up. "What the hell's going on?" I learned to be not shy too. It helped, because I was a conflict avoider before Tesla, and I'm definitely not a conflict avoider now.
--:-- Shane Parrish: Wait, go deeper on that.
--:-- Jon McNeill: I was more of a pleaser. I loved to have teams that were productive and happy, but I would wait, wait, wait on confrontation, especially if I was upset about something. He didn't. It taught me that was A-OK, because actually, it's the way a lot of organizations work outside of business. If you miss a note in an orchestra, the conductor lets you know right away. If you miss a play on the field, your coach lets you know right away. I started to appreciate that was a very effective and helpful way to keep a team learning rapidly. You're talking about mistakes as much as you're talking about victories.
--:-- Shane Parrish: A lot of people who don't avoid the conflict don't necessarily say that in the most receptive way to other people.
--:-- Jon McNeill: Right, exactly.
--:-- Shane Parrish: What have you learned about communicating those messages to people as somebody who used to avoid it but now is trying to be more direct?
--:-- Jon McNeill: I had a mentor who said, this is a coarse way of saying it, but he said, "If you're going to slap somebody, they need a kiss too." So I just learned to say, "Hey, I love working with you. I think you're super capable. But you just failed in this moment, or you're failing to solve this problem, or you're failing to lead your team. I want to help you with that, but we have to address this." It is super harsh when you just leave it as, "Hey, you're failing, and I'm so disappointed in you, and you may not have your job." That's leaving somebody flapping. I'd rather say, "Hey, I respect you, and I want to work you out of this, but we've got to get out of this tough spot."
--:-- Shane Parrish: And would you be specific with that person?
--:-- Jon McNeill: 100%. Because clarity really matters, both on the positive side and on the negative side. If you're giving somebody feedback, you've got to be super clear. "Here's what I'm pleased about. You did this super well. I watched you." Or, "You did this super not well. I watched you. How would you do this differently? Let me give you some input on how I think you probably should do it differently."
--:-- Shane Parrish: We talked earlier about how the salespeople at Tesla weren't following up because they had no incentive to follow up. I'm curious what you've learned about getting incentives right that you didn't know five years ago or ten years ago?
--:-- Jon McNeill: I think I learned a lot from reading Charlie Munger. Charlie's wisdom is that if you want to know how a system works, follow the incentives. In that case, there was a real incentive that was lacking. Once you put that incentive in place, it doesn't have to be monetary. It can also be cultural. Elon felt really strongly in that situation that we not have commissions because he wanted stores to be as opposite of car dealers as possible. When you go into a car dealership, everybody's on commission and you feel that as the customer. He did not want that feeling.
--:-- Jon McNeill: So the challenge was, okay, we as a team, I as a leader, have to figure out how to get that behavior without a monetary reward. We stumbled across this thing. We put a leaderboard up on every store. The leaderboard was number of sales that month. We drew a line almost arbitrarily in the middle of that chart. People would do a lot to get above that line, even though nobody explained what the line was for. It was called the performance threshold or something like that. There was no money involved, no commission. It was just, "Oh, I get it. The currency here is I need to not only give test drives, I need to sell cars. That means I need to ask for the order. If I ask for the order, I move up that list. I'm above the line. I'm in the safety zone." It doesn't always need to be monetary, but you need to understand the incentives for sure. In that case, we created a non-monetary incentive.
--:-- Shane Parrish: How did Elon think about risk?
--:-- Jon McNeill: He thought, and I agree with this, that the highest skill in business is allocating capital. As a capital allocator, you have to assess risk and assess it correctly so you're making a bet that ends up building your capital over time. I started to think about that like poker, oddly. In every hand of poker, you can run the math and understand whether you've got a bigger chance at upside or downside in that hand. That tells you how to bet. So I started to look for asymmetry on the upside or asymmetry on the downside. If there's asymmetry on the downside, we're not making that bet unless we can address the downside and get rid of it. If there's asymmetry to the upside, of course, we're making that bet.
--:-- Jon McNeill: That helped give people a framework, a construct they could easily process decisions with, because they knew my first question was going to be, "Explain to me, is there asymmetry to the upside or downside here? Show me where it is." If it's asymmetry to the upside, let's go. Let's allocate capital and let's run. But if we're unsure, then we have to ask questions like, "How would we create asymmetry to the upside so we could write this check, take this risk?"
--:-- Jon McNeill: When Elon and I were getting to know each other, one of my hesitations was, "I'm not a big company guy. I haven't had that experience. Why don't you hire a big company person to come in and run this company?" He said, "Because they don't know how to assess risk. Entrepreneurs do. It's a skill you build over time as an entrepreneur. I want a fellow entrepreneur because chances are we're going to assess risk in a similar way, and then we're going to allocate capital in a really similar way."
--:-- Shane Parrish: It's interesting you talk about that because millions of people, including myself, put their trust in Elon every day when we turn on autopilot in our car. The updates come fast. I can imagine a more corporate-type CEO being like, "We can only release two a year. We have to test this and test it and make sure every version and every iteration, every possible combination." Whereas he's more like, "We tested it, it's good, let's go."
--:-- Jon McNeill: That gets run through a gazillion simulations before it gets released into the real world. They can literally say, "Hey, you stopped autopilot with some pressure on the steering wheel because you were uncomfortable. So we're going to take those images from your car and try to figure out why you disengaged. We're going to run that through a simulator over and over again and try to put a corrective action in place, train the system on that corrective action. As long as that corrective action is running through the simulation perfectly every time, we're going to put that in the next build and release it tomorrow."
--:-- Shane Parrish: But when you think about products that get released that instantly affect tens of millions of people's lives?
--:-- Jon McNeill: Exactly. That's just his speed mentality. Get it out, start the learning loop, start the feedback loop, make sure the corrective action has worked, and keep tweaking, tweaking, tweaking. If you wait six months to do a release, you're going to stop the feedback loop. Why would you give up six months of learning to be sure when you're 99% certain today and you can get six months of learning? We're just going to get so much better so much faster.
--:-- Shane Parrish: A lot of people wait for perfection. I guess that's the core of what we're talking about.
--:-- Jon McNeill: Exactly. Don't wait for perfect. Definitely don't make bets that are stupid. If you have a 10% certainty that update is going to work, don't release it, because it's going to potentially break the cars and kill your reputation. Don't do things that are foolish. But if you're 99% comfortable this is working, and in that case in simulation, release it. Start the feedback loop. Make sure it's getting in the hands of people. Don't wait. That rapidity of release is a purposeful discipline within the software and autonomy teams there.
--:-- Jon McNeill: Probably like you, I get two or three updates a week with different stuff they're adding, fixing, et cetera. It makes you feel great as a customer because you're like, "These people are so responsive." When you read the release notes, you see, "Wow, a lot of this stuff is useful and stuff I wanted to happen on this car." It makes you feel great as a consumer that a product that is typically depreciating while you own it because it's static is actually getting better while you own it. That is very different than the way car makers think about their product.
--:-- Shane Parrish: I had never heard it phrased that way before. That makes a lot of sense.
--:-- Jon McNeill: Our whole deal was, could we add features that would appreciate the car versus depreciate the car? Every once in a while we found things that would. You could get more range out of the car, more speed out of the car, less wear and tear out of the car. All kinds of stuff you could put into a release over time that would cause it to appreciate, not depreciate, which is completely counter to the way the industry thinks.
--:-- [Ad break for AppLovin]
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--:-- Shane Parrish: If you were to create a cheat sheet with the principles of good decision-making on it, what would be on that cheat sheet?
--:-- Jon McNeill: I think the first step would be to begin with the end. What is the outcome that you want? Decision-making gets flubbed up because people aren't clear on what problem they're trying to solve or what they're trying to solve for. You have to be super clear on, "Okay, here's the end state we want to achieve. Does everybody agree with that?" If that's the case, now we can back up on this decision.
--:-- Jon McNeill: On the way in here, I was talking with one of my partners about an offer we've gotten for one of our companies. We said, "What does success look like here?" It's a return hurdle, a valuation, and an outcome for this business. With that in mind, now we can have super clear decisions because this offer doesn't meet a return hurdle and this company is probably not the right place for this business to land. Super easy. Let's not waste our time. That clarity helps with speed and quality of decision.
--:-- Jon McNeill: So step one: design and define what success looks like. Then you work back from there. Step two: what would need to be true for that outcome? What would need to be created? What would need to be different about our product, our process, whatever? Step three: what's the investment it's going to take to make those things true? When you quantify the investment, which is sometimes hard—sometimes you're taking a swag, sometimes you can be more precise—then you can answer the fourth question: what's the impact on us doing this? If we achieve this end goal and develop a new product that's going to have a million in revenue but costs us $200 million to build, now we really have to be thoughtful about whether we're going to get the return on this. Does it have the impact versus the effort?
--:-- Jon McNeill: The last step of the decision process is literally creating that two-by-two: what is the impact versus the effort of doing this? How does that stack up against the other stuff we have on our plate? We may have super high impact, super low effort stuff that we just have to do. We don't have endless amounts of calories to burn, so we have to choose where we're going to allocate our capital and time. That last effort versus impact chart helps me figure out where we allocate our capital and our time.
--:-- Shane Parrish: How do you think about opportunity cost?
--:-- Jon McNeill: Opportunity cost is within that last step because you can't do everything. You have to choose. If we have a finite set of time or a finite set of capital, we have to allocate with that finite mentality. Some things aren't going to make the list, and that's opportunity cost. In Elon's world, he was like, "Let's raise more capital so we don't have that constraint." He's a prolific capital raiser. He can unconstrain that chart in a really interesting way as a leader by providing more capital to allow you to do more. That reality distortion field is kind of fun. If as a leader you can increase the capital into the business, you can hire more people and increase the time you have to allocate so you can get more stuff done. But there's always an opportunity cost because there's never infinite resource. You have to figure out the stuff you're not going to do.
--:-- Jon McNeill: Sheryl Sandberg taught me that your no list ought to be a lot bigger than your yes list. You ought to be decisive about what goes on that no list so there's no lack of clarity when you get down to that impact versus effort and which things you're saying yes to. You've got to be really clear about the things you're saying no to. That no list is your opportunity cost.
--:-- Shane Parrish: I'm curious about making fast decisions in life. A lot of people have a need to have perfect information so they can feel good about a decision.
--:-- Jon McNeill: What I've found is you're rarely going to have perfect information, and a lot of your suppositions are going to be wrong. So you might as well just get started. Don't wait for perfect information. Just get started and figure it out as you go. That is uncomfortable for some people who want to have more certainty before they start. But I've found if you just get started, you're going to find the parameters that will lead you to more comfort around the final decision you'll make. Action creates information. Action creates more information. Information creates more certainty. By definition, you don't have information at the start. You have imperfect information, and there's a reason you're feeling uncertain.
--:-- Jon McNeill: I was thinking about this the other day. If I wait and you don't, by the time I get started, you've already learned things that I couldn't even learn in advance of doing it. That's that feedback loop speed. You start to learn and you're building an advantage as long as you're moving, as long as you got started. If you don't get started, you're way behind on the learning curve. A lot of learning curves accelerate. You definitely want to get started so you start to build the experience of even making mistakes ahead of your competition. They're going to make those mistakes too. If you make them and learn, you're going to be several steps ahead in the race and hard to catch.
--:-- Shane Parrish: How does your process differ from Elon's when it came to decision making?
--:-- Jon McNeill: The way I'd describe his decision-making is he's very rational. And I would try to be rational, too, in my decision-making. But he's unconstrained. He's very unique in that he's unconstrained by constraints, really.
--:-- Jon McNeill: I remember sitting with him in 2017, 2018, and they'd had a long string of really unsuccessful launches at SpaceX. Rockets were blown up in the air. Unlike typical people who would have done a bunch of reflection on that and may have gotten bummed out and thought about the company running out of cash before we were actually successful, he was totally focused on: here are the two things that have to be true for that not to happen again so that we can get a successful launch.
--:-- Jon McNeill: He's just very unique to shut off the negative and focus on what has to be true and achieve that. He's one of the most unique people I've ever met who has that ability to shut off failure, essentially. And it just doesn't impact him at all. He's really, like Isaacson talks about this in his book, he's uniquely wired given all the challenges he's gone through. I don't think he's impacted by that at all. He typically has a very different way of looking at the world and doesn't care.
--:-- Shane Parrish: How did Elon run product meetings?
--:-- Jon McNeill: He started with—I think this is something any CEO can learn from. He turned to me first because my primary responsibility was the marketplace, the market. He would turn to me and say in front of the rest of the team—engineers, manufacturing, et cetera—he'd say, "What does the market want?" And that's where the meeting started.
--:-- Jon McNeill: I think a first principle that a lot of CEOs or leaders can use is: if you're going to talk about product, talk first about what the customer wants. Because that grounds the whole discussion.
--:-- Jon McNeill: An example of that—a dry example—is we released the Model X. It's selling okay, but not great. In the weekly product session, Elon turns to me on a Monday and says, "What does the market want?" I said, "I've heard this all around the world. Moms want a bench seat. We've put these two captain's chairs in the second row. They want a bench seat. They've got three car seats to line up, and we don't have a bench seat."
--:-- Jon McNeill: So he immediately goes to the whiteboard and starts to draw how we would attach a bench seat to the existing Tesla chassis. It turns out that is not an easy problem because it wasn't designed for that, and there aren't attachment points that are obvious. Sure enough, the head of engineering is right up next to him, and they're drawing. They're starting to work through the engineering. Then the supply chain leader is looking at that saying, "Given the direction they're going, I need to start to light up the supply chain to see if we could get these kinds of parts underway." And it's happening in real time.
--:-- Jon McNeill: That's the way the product meetings worked. It was: what does the customer want? How do we solve this? Let's go right into solution mode. Let's not debate the obvious. Let's go right into solution mode. You've got the leaders of the company who are at whiteboards designing solutions. The junior engineers in the room are watching this and they're saying, "The currency in this place is getting stuff done. So if I want to be successful here and look like that person, I need to act like that person. I need to get stuff done." So the whole speed mentality is built into the DNA of the way the place runs, all the way down to the product meetings.
--:-- Shane Parrish: I would have thought from the outside, looking in naively, that there are presentations and...
--:-- Jon McNeill: Presentations are a no-no. Slides are kind of a no-no. They have their place in financial analysis and stuff like that. But if you're doing product, we want it to be hands-on. You couldn't present slides of your software designs. You had to show the software. We wanted to have it in front of us and we wanted to be playing with it so we could give real feedback, which you can't do on slides because slides tend to mask the problems. You can't really see them. You certainly can't interact with it. So presentations were a big no-no. A lot of stuff was just hands-on.
--:-- Shane Parrish: I talked to somebody at GM in prep for this, and they mentioned that you had an impact on the product meetings there. But getting rid of slides, is that...?
--:-- Jon McNeill: I hope so. I don't know if I did, but what I've found is it's super helpful not to be talking about the theoretical with slides, but to be talking about the actual product. One of the last product walkthroughs that we did was in a lab with the new software for a divine vehicle, and we could literally touch it. We could see the wiring, see the connectors, see the software. For me, that's great comfort. That's how I was used to doing product presentations, where we could literally interact with the engineers who were designing each step of the system, and we could literally see it. You could see how the wiring harness was going to weave its way through the car. You could see if the connector pods made sense, if the zones made sense, because you could literally see it and touch it. It wasn't on an image on a slide that was in a sim somewhere that may or may not reflect reality.
--:-- Shane Parrish: Do the leaders dog food their own products at these companies? Does Mary take home the top new model and drive it herself and go through all the challenges that customers go through?
--:-- Jon McNeill: It's a principle that is super important. We used to drive a Tesla off the line every night. People wouldn't know which car we were going to grab. I couldn't dress it up. We'd come and say, "Okay, that one that's fifth from being finished—I'm going to stand here until it comes off the line. I'm taking that one." Oftentimes you see executives come down, they're going to pick a car, so they pull a car, polish the heck out of it, make sure there are no warts, no issues, no bugs, and give them the perfect product. We said we don't want the perfect product. We want the product the customer is going to receive off the line.
--:-- Jon McNeill: So I'm going to come down, pick a car at random, immediately take that car, and drive it home. I'm going to take notes. Then I'm going to drive it back to the factory the next morning—typically super early in my case because the shift started at 6—and write down my return drive notes. By the time an engineer hits their desk at 8 a.m., in their inbox are notes from a number of executives saying, "Here's my experience with this product. Here's what was awesome. Here's what I couldn't stand. Can you please fix this?" It's daily. It's a daily feedback loop where we are saying, "Hey, we're consumers too. We want the product to get better." Those weekly or biweekly software releases you get, a lot of that's coming from eating dog food.
--:-- Jon McNeill: We would not only eat our dog food. Elon said, "I'll take the Twitter feedback, the X feedback." I said, "Great, I'll take the Reddit and the forums." Both of us were interacting on a daily basis. I would carve time out in between meetings reading Reddit feedback on us. I'd be able to walk into a meeting and say, "Guys, Reddit is lighting up because something has goofed up with our last software release. Can we get on this?" We would often joke around that I don't think our competition's executives are this in tune. It was helpful for us because we owned our own stores. We weren't selling through dealerships. We owned our own service centers. So we saw the data about what was getting fixed on a car immediately. We had these feedback loops that would help us be responsive to the marketplace. That was the whole idea. Again, this whole theme of speed, speed, speed—speed comes from feedback loops. One of those feedback loops is using your own product.
--:-- Shane Parrish: How important is that frontline data? When a customer goes into a car and they have feedback or comments, does that get collected along with repairs and damages and faulty parts?
--:-- Jon McNeill: 100%. All that's getting analyzed and then served up, saying, "Okay, here's the stuff we've got to work on." We knew that because we were users of the product, so oftentimes we'd know it too.
--:-- Shane Parrish: How else do you figure out what customers want? You mentioned that being a key to how the product meeting started. There are a lot of people who—I mean, Jobs didn't ask what people wanted in a phone. No, he had design instincts. I think there's a balance between being instinctual and also being informed.
--:-- Jon McNeill: To be informed, a lot of us as leaders have different ways of doing that. My way is going out into the stores. I learned this from Sam Walton, actually. I read his autobiography. One of the things that really struck me was how much time he spent in his stores, asking his people, "What product is moving? What product isn't moving? What do we need? What do we need to get rid of? What does the competition have?" Then he'd go shop the competition.
--:-- Jon McNeill: My method was to go one day a week to the front line somewhere in the world. I'd go to a store, a service center, a competitive dealership, and I'd just ask customers, "What do you like about this product? What don't you like about this product? What would cause you to finally come across the line and buy this product from us?" That was a form of input that helped me round out the data we were getting from pretty standard sources with standard ways of analyzing that data. It helped bring color to it. I could say, "Yeah, I've talked to 20 moms who want this bench seat, and I've seen the fire and the energy in their eyes. If we deliver this, they're going to buy it. I can tell you that." So that's part being informed and part instinct. I'm seeing the energy behind this personally. Then you have immediate data to course correct if it's not working.
--:-- Shane Parrish: What are the key tenets of a great product? When you think about a great product like a Tesla or other products, what do you think they have in common?
--:-- Jon McNeill: I think they're simple in their design, which gives them a chance at being elegant. If you think about when the iPhone came out, it was such a step forward in design. We all had flip phones with keyboards and—
--:-- Shane Parrish: Or the Blackberry.
--:-- Jon McNeill: Yeah. All of a sudden, this beautiful thing came out. It was because a designer, Steve Jobs, said it should have no buttons and it should be beautiful in the palm of your hand. That's a very simple construct from which Jony Ive and the team created beauty.
--:-- Jon McNeill: I would say it works similarly at Tesla in the sense that Elon kind of constructs in his mind the simplicity of what he wants this vehicle to do. Then he goes to his version of Jony Ive, which is Franz, the head of design. Franz can bring that to life in a very beautiful way. You have this pretty simple car, the Model Y, that is the number one selling car in the world. It outsells Camrys, it outsells RAV4s, and it's utterly simple in its design. Its interior has no bells and whistles, really. It doesn't even have a dash that you look at. It's got one screen that sits between the passenger and the driver. That kind of simple beauty allows you to execute a great product.
--:-- Jon McNeill: The definition of a great product in Steve Jobs' mind—and Elon's adopted this too—is that you don't need a sales force. It sells itself. We found that when we went to hire salespeople for our stores, if we hired people out of Apple stores, they really didn't know how to sell because they knew how to take an order. People were clamoring for those devices and they didn't have to sell them at all. The people you wanted in the stores were people that were at the Microsoft stores because they had to sell a Surface tablet next to an iPad. If they could sell a Surface tablet, they probably knew how to sell. I think great product does, at the end, sell itself. It flies off the shelves because there's pull out of the market versus push.
--:-- [Ad break for HeyGen and Element]
--:-- Shane Parrish: You mentioned Jobs. There's a story about Elon and Steve Jobs meeting.
--:-- Shane Parrish: Do you remember that one?
--:-- Jon McNeill: I do. As Elon tells it, they met several times and Steve kind of blew him off a ton. Then one night, Elon had him cornered, I think, at a sushi place in Menlo Park and said, basically, "Just give me your design philosophy." Steve said, "That's easy. If the product is perfect, it will sell itself. So you have to work on perfect product." That stuck with Elon.
--:-- Jon McNeill: A few months ago, I got to sit down for breakfast with Steve Jobs' head of staff at that point. He described for me how product design worked. I said, "James, I want to know how did you really design product?" He said, "We started with utter simplicity and requirements, but they had to be right." I said, "Give me an example of that." He said, "Okay, get in the Wayback Machine. MP3 players were coming out. People could have portable music on a disc drive for the first time in their hands, and we wanted to come out with a product. Steve and I got in a room, and this is the way product design happened. We spent a week in the room. We didn't come out until we were absolutely certain we had nailed the primary two or three requirements for the product."
--:-- Jon McNeill: I said, "Okay, what were they for the iPod?" He said, "We came out and said two things had to be true. We announced this to the engineering teams that were working on it. Number one, it had to hold a thousand songs. Nothing could do that at that time. And number two, you had to find the song you wanted in four seconds or less. Those are the two things that had to be true about the product. And lastly, it had to be beautiful."
--:-- Jon McNeill: The engineers heard these two requirements and they said, "First of all, we don't know how to do that. There's no disk drive the size of your thumb that's going to hold a thousand songs, and there's no OS that gets you to a search on a device that big with no chip essentially that gets you a search algorithm that will work that fast." So they had to invent both of them. They ended up inventing a new form of solid state drive that was as big as your thumb that could hold a thousand songs. They ended up inventing a chip that had the clock speed to index those songs and search. Then the UX team invented the wheel where you could search—you would immediately get to the first three letters of the song and boom, the odds of you finding that song within four seconds skyrocketed.
--:-- Jon McNeill: James described to me that as they were working through the engineering on the product, the engineers would come and say, "Hey, look, Samsung has an FM radio on their MP3 player. Should we have an FM radio?" Steve would look up with a little bit of anger and say, "Is that a thousand songs or four seconds? No. Okay, then it doesn't go in the product. These are the two things that go in the product. Solve these two things, we have a winning product. Because it's what the customer wants, and we could describe it to the marketplace super simply."
--:-- Jon McNeill: I think those are the principles that Elon pulled from—a lot of Silicon Valley has pulled from Jobs. But Elon definitely pulled those from Jobs. It goes right into the design ethos at Tesla.
--:-- Shane Parrish: I want to come back to marketing for a second. Tesla doesn't do any paid advertising that I noticed anyway.
--:-- Jon McNeill: I think they do now, but they didn't while I was there. It was one of the challenges in the job. Elon said to me, "Hey, there's something in this job you ought to know about. It's something you probably haven't faced before." I said, "OK, what is it?" He said, "The marketing budget here is precisely zero, and you need to double the company every six to eight months with no marketing budget." I'm like, "You're right. I haven't seen that before. How do you do that?" He's like, "I'll show you."
--:-- Jon McNeill: He was great at—he still is today—capturing headlines. Those headlines get preserved, they're searchable, and then they're repurposable on social. That today is still the marketing model at Tesla.
--:-- Shane Parrish: Have you learned anything from that that you took away now?
--:-- Jon McNeill: I'm very suspect of large marketing budgets now. Because I've seen one of the world's largest companies get built with almost no marketing budget.
--:-- Shane Parrish: How do you go about marketing that way without being Elon Musk? What are the other things that Tesla was doing? Elon wasn't Elon back in 2014, 2015 when we started doing this. He didn't have 100 million followers on X.
--:-- Jon McNeill: We had to build up his audience, which we did purposely. We built it up first through space because there's a lot of space fanboys on X, on Twitter at the time. Build up his fan base. Then we started to build more car content in. He was super involved in this. He would coach us on, "This is the only kind of stuff I'm going to release because I've got to watch my brand and be aware of my brand and Tesla's brand here. So we've got to be really careful."
--:-- Shane Parrish: Wait, he would coach you on that?
--:-- Jon McNeill: Oh, a hundred percent. He's got a very good brand.
--:-- Shane Parrish: I've seen some of his tweets.
--:-- Jon McNeill: I know. If you think about Tesla back at that time, if you go back and look at those tweets, it was only product marketing. If we came up with a new product feature—all-wheel drive—boom, that was getting released. If we came up with a new car feature—ludicrous—boom, that was getting released. We were being very thoughtful and almost with scarcity having him blast these things out. We would use the press around this, and then we would repurpose all the press we got. That was enough to create a buzz around the globe that this car was really different, this company was really different. All we needed to do was have you come check out the product online or in-store. That's when we could pull you through the funnel.
--:-- Shane Parrish: I think you scaled Tesla about 10x while you were there in terms of sales. I'm curious what goes into the physical infrastructure with that velocity of scaling. My experience was in software, and it was much easier to plug in servers while you were growing. But to 10x a car company, you've got to do the obvious things: build factories, build supply chain, build delivery, build distribution, sales—all that stuff is physical things that have to be built.
--:-- Jon McNeill: Sometimes we would creatively reinvent those things. Rather than building service centers, we discovered that 80% of what you could repair in a service center on a car could be done in a customer's driveway. So we invented mobile service so that we didn't have to build as many service centers. The creativity of the team helped us bend some of these assumptions. But yeah, we had to build physical stuff. There's no getting around building a factory. If you're going to make cars, you've got to make a factory to make the cars.
--:-- Jon McNeill: I used to think that would be the critical path. But Elon has shown that you build factories in times that we would not think even possible. Partly because the factories are utterly simplified compared to competition. If you take a car factory, it's almost a mile long and it's a long rectangle. If you sat on the 50-yard line in the middle of the factory and you looked right, you see a sea of robots welding the skeleton of the car called a chassis. If you look left, you see a sea of humans hanging parts on that skeleton. That's called general assembly.
--:-- Jon McNeill: Elon gave the challenge to the management team: "We have to cut 50% of that out. We have to do this because we've got to be competitive with the Chinese. They're ultra-cost advantaged right now." Doug Field, who was the head of engineering, came up with a method to replace half of the factory. Rather than welding the skeleton of the car, he and his teams invented a way to cast that—to pour liquid aluminum into a mold that was impossible to produce before they did this. They would take 1600-degree aluminum and mold it and allow it to cool into the form of the chassis of the skeleton of the car.
--:-- Jon McNeill: The reason Tesla can build these factories so rapidly is because Doug and his team figured out how to eliminate half the factory. Now you can build these things a lot faster because you don't have to have hundreds of robots get synced up to deliver this perfectly welded 300-piece skeleton. Now you've got two parts that come together, and you don't need that half of the factory anymore. That means you can build factories faster. The whole team was figuring out how to optimize and invent to make this a reality where we could 10x a company in 30 months. It required incredible creativity on the part of the people making that happen and inventing these new ways of doing things. Doug invents castings—we don't need half the factory footprint. Kram Busta and his team invent mobile service—we don't need that footprint. We were able to unleash growth through being really creative about changing the model.
--:-- Shane Parrish: Is it true the casting problem was fixed like with a Hot Wheels car?
--:-- Jon McNeill: That was Doug's original way he communicated what was possible. He's like, "I have the answer," and he rolled a Hot Wheels car across the table. He's like, "Here's the answer. Here's how we're going to get rid of half the cost and half the factory." We're like, "That's a Matchbox car. Of course you can mold something as big as your thumb, but the physics of molding something the size of half of a car—the pressures it takes to hold that aluminum in place and the mold materials it takes so that thing doesn't explode—were impossible at the time." Nobody had figured out how to do it before they figured out how to do it. The physics were impossible. People didn't know how to do it. You could say that was physically impossible and be accurate, but they figured it out. It's created an eight-year competitive advantage for Tesla because just now, car manufacturers are getting into casting. That is the whole characterization of speed. When you invent at that speed, you're creating these multiple-year, maybe decade-long advantages versus your competition by going after these hard technical problems.
--:-- Shane Parrish: I think you were in the car when Neuralink started.
--:-- Jon McNeill: Yeah, when that seed or germ of an idea started, for sure.
--:-- Shane Parrish: What happened?
--:-- Jon McNeill: Elon and I were traveling together to China. We just landed in Hong Kong. We're in the back of a Model S, and we're both catching up on our inbox, on our phones. He looks at me and says, "How fast can you type with your thumbs?" I said, "I have no idea. I've never timed it." He's like, "Well, the average human is like 18 words a minute." He said, "How fast can you type on a keyboard?" I said, "I think it's like 60 or 70 words a minute when I was in high school. I'm probably as good as I was then, maybe better. So let's call it 60." He said, "Exactly. So you're more than three times faster on the keyboard than you are on your phone. So this device has slowed the input into the machine." I said, "Yeah, it has by 3x." He's like, "Yeah, that's a big deal because you can get speed of answers and decision making if you're going three times slower." I said, "Yeah, you're right." He's like, "What if you could think into the machine?" I was like, "Well, that would blow this constraint away because now we don't have keyboards and thumbs to go through. Now you're thinking in real time into the machine." He's like, "Exactly. That would pull the front end constraint off of the compute for humans. That's a big deal."
--:-- Jon McNeill: He didn't sit on these ideas. He's very unique in this way. He said to his chief of staff, Sam Teller, who's in the front seat, "Sam, can you track down the top neurocomputer science interface researchers in the world? Get their papers. I want to read the papers while we're here in China and on the flight back. I want to meet with these people next week because I want to start to work on brain computer interface." Just like that fast. By the next week, he's meeting with some of the top minds in the world on this topic, and he doesn't let go until he starts Neuralink.
--:-- Shane Parrish: Multiple insights there. I love the speed to actually taking action.
--:-- Shane Parrish: And now we have chat with AI where you're sort of in voice mode.
--:-- Jon McNeill: Right, exactly. Which is much faster than typing. One of the hottest companies is WhisperFlow right now where you just talk to your computer and you kind of give up the keyboard and you can code and you can design. It's amazing.
--:-- Shane Parrish: Your book is called The Algorithm. What is The Algorithm?
--:-- Jon McNeill: It's a formula that we use—really a framework—that we used to create these breakthroughs and to create innovations. It was a framework that we developed by doing postmortems on a series of big mistakes that we'd made and asking ourselves, "How do we not make this mistake again?" Over time, we came up with this five-step algorithm that would help us not repeat mistakes. The counterfactual was it would drive innovation. It turned out to be a really powerful framework that's in use today. In the SpaceX IPO, in the first few slides, there's a slide called The Algorithm where they say, "If you're going to invest in this company, you need to know how this company runs. We run on this framework of the algorithm." It led to the advancements from Raptor 1 to Raptor 2 to Raptor 3, the engine. Very much Tesla was built that way too.
--:-- Shane Parrish: Can you double-click on that and walk me through the five?
--:-- Jon McNeill: It's all a journey in simplification. You kind of get that with five steps. For the first step of simplification, you want to remove all requirements that aren't real or are dumb. You question every requirement. That means if you have a 12-page loan doc, you question why you need every paragraph in that loan doc and why you can't get it down to one paragraph. You eliminate as many requirements as you can. That's the first step.
--:-- Jon McNeill: Now you've got a simpler set of requirements, and then you design a new process to deliver those. You delete as many steps in the process as you can. The hack I would use with my teams is I would say, "Map the process out." Literally put sticky notes on a wall for each step of the process, then go circle the ones the customers pay you for. It turns out in almost any business process, a super minority of those are what the customers pay you for. They don't pay you for documents. They don't pay you for communications. They don't pay you for HR benefits or all kinds of stuff. They don't pay for that. You've got to figure out how to deliver in a way that is totally maximized around what the customer is paying for.
--:-- Jon McNeill: That's step two. Step three is now you have a brand new process that has been very simplified. Now you need to start to run it and optimize it and polish it manually. And step four is you apply the great kind of revealer to that process, which is speed. When you speed up a process, it shows all of its warts. It shows where it breaks. It shows its failure points. It shows quality points. Speed allows you to see all the failure points, and you can then scrub those out of the process. And then once you've got a process that's working at speed optimally, then you automate. And so the last step of the algorithm is you automate last. And we had made mistakes like automating first. We'd made mistakes like just not questioning requirements and ended up in like multiple month loops on problems that wouldn't go away. And so this whole framework allows you to not only solve problems, but innovate because you're eliminating requirements that your competitors think exist, but they might not need to exist.
--:-- Shane Parrish: Outside of manufacturing, can you give me a recent example of how you've used that to solve a problem?
--:-- Jon McNeill: Yeah, so this is a crazy example in financial products. So I was being interviewed on CNBC about two years ago about super cycles, about how lucky we are to be alive right now. There's so many super cycles happening that make it a great time to be an investor. So if we were alive 100 years ago, we got the Industrial Revolution. That's all we got. But we're alive today and we get AI, electrification, robotics, space, biotech, all this stuff happening at the same time. So it's a great time to be an investor. And the interview stops and Joe Kernan and Andrew Ross are going to turn to me and say, how do we invest? And I said, well, I'm sure there are thematic ETFs on each of these super cycles. I'll tell you what, I'll look at a few. I'll text you back some ideas.
--:-- Jon McNeill: So I get in the car to come across town from Times Square down to our office in the meatpacking district. And I start to look at different exchange-traded funds, ETFs. It turns out there are more ETFs than stocks traded. It's how people trade and invest these days. And so I open up the largest electrification ETF. And the top five holdings are Amazon, Google, Microsoft, NVIDIA, and Apple. And I looked at those and I'm like, those have nothing to do with electrification. There's none of that in the grid. There's none of that in an electric car. We can't put a 20,000-hour chip, NVIDIA chip in a car. We couldn't afford to sell the car. And that's like the Mag 7. So why would somebody pay for an electrification super cycle ETF and get the Mag 7 and not get exposed to the people who are actually building the grid?
--:-- Jon McNeill: Well, first of all, I called Andrew and Joe and said, don't invest in these products because they're terrible. But I have another idea. And so I started with the first step of the algorithm, which is question requirements. And the whole ETF business is built up around the first ETF, which was Vanguard. We had the S&P 500 ETF, and they did the S&P 500 based on market cap weighting. So big companies get bigger weights in that index and small companies get smaller weights. And since that time, almost all ETFs have been built on a market cap weighted basis. My idea was that doesn't work for emerging industries because you might have one big company like NVIDIA in the AI super cycle worth a trillion dollars. You may have one little company that's providing all of the fiber to these AI data centers who gets no exposure in that ETF because of a market cap weighting approach.
--:-- Jon McNeill: So I started to call everybody I knew in the ETF industry and I could get introduced to and said, why do you build these ETFs with market cap weights? Isn't there another way? And they all said, no, no, this is the way it's done. It's been done this way since Vanguard. And so everybody does it this way. It's the only way you can do it. I'm like, I don't really agree with that. I think if I wanted to give investors exposure to profits, I'd take the build sheet of an AI data center. I'd figure out who provides the fiber, who provides the power electronics, who provides the networking software, who provides the high bandwidth memory. And I would weight the ETF on their contribution to the AI data center or their contribution to the grid or their contribution to the satellite. And so just take the build sheet. In manufacturing terms, we call that the bill of material.
--:-- Jon McNeill: So we started to build ETFs based on the bill of material. It turns out in an AI data center, there are 60 stocks that provide all the stuff that go into an AI data center. 30 international, 30 domestic. Turns out it's about the same number that provide the grid infrastructure. About a similar number provide the defense infrastructure, space, et cetera. So we built a series of ETFs that were the first not built on a market cap weighted basis, but built on this bill of materials weighted basis. And it turns out it's pretty superior because you're exposing the investor to these profits. So we have the number one performing AI infrastructure ETF that is traded on the market. We had the number one electrification. We've just released robotics in space. So that's a really recent non-manufacturing example of how you can start with questioning requirements and end up with a very different product idea and invent something that hasn't been invented before. Turns out it's pretty superior. So for investors, I feel great because somebody that invested a dollar a year ago is up 158% because this is a superior way of exposing profit pools to investors.
--:-- Shane Parrish: What goes through your mind when you're trying to simplify something?
--:-- Jon McNeill: I start with the first step of the algorithm, which is why does this appear the way it appears? What are the requirements or base assumptions that have gone into this product? Why couldn't it look different? And start to pull the string from there. I often don't start with a vision of what it could be. I start with, how would I just take apart what currently exists? And in that process, you start — this is something I learned from my grandfather. He had this auto repair shop and he would often say to me, if you don't know how to fix something, you will probably know how to fix it if you take it apart. So that's typically the way I approach a problem. I start to take it apart, like my grandpa taught me to do. And then once I'm into it and see what the critical parts are, then you can start to say, does this really need to exist? Could this work differently? And you just start to pull the string on what could work.
--:-- Shane Parrish: What percentage of the time do you think when you dive into requirements that maybe they once were needed, but they're not needed, but nobody even knows why they're there anymore?
--:-- Jon McNeill: You know, I should talk about this. We used to compare it to a garden. You plant a garden and in business, nobody goes out to weed these gardens. And so weeds just grow. The garden being a process. And so weeds just grow up and nobody's back there with the weed whacker, whacking them out. And every once in a while, an executive will say, well, this is totally broken. Let's go back there with the weed whacker and whack it out. But that happens like once every five years, 10 years. And so Elon wanted to build a culture where we had the weed whacker out a lot. Like we were looking at current process and questioning why we're doing it.
--:-- Jon McNeill: An example that is — he came to me one day and he said, what CRM do we use? And I said, Salesforce. He said, well, it's a tax on growth. Every time we add a seat in this company, we pay a subscription. That's a tax on growth. Do we really need Salesforce? And that was a typical question, the kind of question I would get from him on a weekly basis, where he's looking at a garden that hadn't been weeded in a long time and saying, I'm just going to take a weed whacker in there and start asking questions. And like, do we really need this? Could we rebuild this ourselves? Could we approach this in a different way? And that is definitely part of the uniqueness of the culture of Tesla and SpaceX for sure.
--:-- Shane Parrish: How did you know it was time to leave Tesla?
--:-- Jon McNeill: My family. They had a bit of an intervention with me. To his credit, Elon gave Walter permission to write about his mental health struggles in Isaacson's book on Elon. And I was right in the thick of that. And I'm okay in terms of my skill set of handling technical problems and handling manufacturing problems and distribution problems and brand problems. But I'm super ill-equipped to help somebody with mental health issues. Like I just don't have the skill set. And so in trying to help him through that period, which is pretty rough, I was becoming more and more stressed out because I wasn't able to help my friend. And it wasn't effective, I felt like, at all. And my family, I didn't realize how that was manifesting itself.
--:-- Jon McNeill: So my family sat me down over the Christmas holidays and said, hey, look, we don't want to hold a mirror up to you. We don't like who you're becoming. You're moody, you're mean, you're grumpy. And I thought I was masking all that stuff. I was compartmentalizing it and containing it. It turned out I wasn't and it was leaking out. And so that's when I knew it was time to go because I'd literally sat down with Elon a few weeks later and said, look, I can't help you with these problems. Like you need somebody who can and I can't. But this is having an impact on me. And it's time for me to go. And it was a tough conversation to have. But he really did need a catalyst to get help. And I needed to get myself out of an unhealthy, pretty unhealthy situation. Kind of the only situation I'd been like that in my professional life.
--:-- Shane Parrish: Was that hard for you? Did it feel like a failure for you?
--:-- Jon McNeill: It didn't feel like a failure. It felt like I was giving up something. I literally loved that company and loved that job. And that was the hardest part for me was I loved the people, I loved the job, but the situation was kind of killing me and I couldn't — that's what caused me to have to make the hard decision to leave, as hard as it was. It didn't feel like failure. It felt like I was leaving something that really meant a lot to me, and it turned out it did. Because I loved being in that environment. I loved working with people who were doing the best work of our lives together. And luckily, a lot of those same teammates I get to work with today. So those relationships continued, which was great. I didn't see that at the time, but I'm super glad that they have.
--:-- Shane Parrish: What is it about some people like Elon and Steve Jobs that allows everybody around them, or a lot of people around them at least, to say that they do the best work of their lives?
--:-- Jon McNeill: I think it's the challenges that they get. Doug Field, who I described earlier, used to have this mantra that history is changed by unreasonable men. And I would tease him because he worked for Jobs before he worked for Elon. I was like, man, you must be a glutton for punishment. He's like, no, history is changed by unreasonable men. You want to work for these people that just have an unreasonable view of the world because they bring out the best in the people around them. And he's like, I like working for people that bring out the best in me. And both of these guys have that. And so I think that comes to just the challenge that they give people. So if you're really great at your craft, I think you want to be coached by, led by somebody who is going to bring big challenges to you. So you end up saying, geez, I didn't know that I had that within me. I didn't know I could do that. And then you feel super good about the leader that you're following, and it's given you those challenges.
--:-- Shane Parrish: I remember when the Isaacson book came out about Steve Jobs, everybody where I was working sort of read that and then started to be assholes effectively, thinking that was the key to success. Do you witness any of that?
--:-- Jon McNeill: Yeah, I think over time as you mature as a leader, you realize you've got to lead with your own authentic style, not somebody else's. And when you start mimicking somebody's style, like the people mimicking Jobs, it doesn't really work well because people see it's inauthentic and it doesn't really work for who you are. And even though I was working for a big personality like Elon, I couldn't mimic that. I had to be authentic. People weren't going to follow me. I had to lean into who I was as a leader. And I think that's super important. And when people start to fake that, it just doesn't go well.
--:-- Jon McNeill: To that point, I asked Walter one night, we were at one of the stops on his book tour, and I got to interview him, which was awesome. And I said, do you have to be an asshole to be successful? Like Jobs, you read this book and it's pretty clear the guy was a big asshole. You've written about a number of these people, Einstein and others, who are kind of assholes. And he said, no, you just have to master your own style. He said, do you think Satya Nadella's an asshole? I said, no, he's not. He said, do you think he's effective? I said, yeah, I think he is. He's like, are you an asshole? I said, hopefully not. He's like, you're pretty effective at what you do. I said, people tell me I am. And he said, it's not that you have to be an asshole. It's that you have to be authentic to who you are.
--:-- Shane Parrish: You have an exercise that you do called Fire Yourself. What does that walk me through?
--:-- Jon McNeill: It's actually not mine. I get to give credit where credit's due. This came from Calvin McDonald, who was the CEO of Lululemon at the time. And he would go away in the first quarter of every year to really prepare and gird himself up for the year to come. And one of the questions he would ask himself when he went away by himself is, if I was hit by a bus tomorrow or if I was fired, what are the immediately obvious things that my successor would do? Like they would come in and assess the situation and say, oh, this was obvious. Got to do this, this, and this right away. And so he would list out those things. Like what would my successor do? And then he would ask himself, why aren't you doing this? And oftentimes it was because other things seem more important, it was fearful that could be a big risk, it might not work, whatever. He was fearful of making a change because he would be replacing people maybe, disappointing people, whatever. But he did this fire yourself exercise so he could come back within the first month of the year and say, you know what, here are three things we got to do because these are obvious. And if I was hit by a bus, there are three things you guys would do without me. So let's just get them done. And it was a real refresh for him and for his leadership team to kind of keep the ball moving downfield. And it was super healthy. So yeah, I borrowed that from Calvin.
--:-- Shane Parrish: You're on the board at Lulu. You mentioned Lulu. You guys just hired a new CEO. Walk me through what went into hiring that CEO. I would imagine there's a difference having you on the board, an ops person, versus financial people versus...
--:-- Jon McNeill: Yeah, and so we all bring a perspective. And Heidi O, the new CEO, we knew that we needed somebody who had an eye for product, because product is core to every company, but it's certainly core to an apparel company. Who had an eye for talent, who had an eye for scaling, and in the uniqueness of Lulu, had an experience with a vertically integrated organization. What I mean by that is, Lulu not only designs its product and manufactures its product, it sells its product in its own stores. It doesn't sell through a wholesale relationship through Dick's Sporting Goods or Nordstrom or anybody else. So it's somebody that has come out of a world where you have stores, which are deeply operational. Stores are almost a mini factory. How many people come in on a daily basis? What do they see? How do they interact with product? And do they buy? And there's a whole operational science to how you get a store to work really well. So we needed a leader that understood stores and understood the product machine behind the stores. And Heidi had both of those.
--:-- Jon McNeill: So as we sit down to select a leader, we put the parameters around, here's what would make the core skills of this leader to be successful. And then we're interviewing candidates each from our perspective. For me as a sitting executive who scales, we've got finance people, we've got tech people, we've got product and marketing people all around the board who are assessing the candidate from a bunch of different angles. But essentially, we're agreeing, hey, here are the four things that need to be true about this person and why we're hiring this person and why we're going to have faith that this person is the right person for the next chapter of this business.
--:-- Shane Parrish: What's your instant tell when you're interviewing somebody for world-class talent?
--:-- Jon McNeill: It is their detailed understanding of what they're describing.
--:-- Shane Parrish: Go deeper on that.
--:-- Jon McNeill: Because the thing you want to make sure is, did they do or do they do the work? If they have a deep understanding, they're going to be able to do that work here and lead that way here. But if they're claiming responsibility for somebody else's work, it becomes evident really quickly when you start to dive into, tell me how you did that. Tell me how you broke this problem down. Tell me what the solution was. Tell me what your role in that solution was. And that's the first clue that you're talking to somebody who is actually a practitioner versus maybe a paper pusher. And I'm definitely looking for the practitioners.
--:-- Shane Parrish: You spent a lot of time at Tesla interviewing people. You were one of the final interviews for many.
--:-- Jon McNeill: A huge percent of my time was interviewing because in any business, especially in a high growth business, talent wins. And so you've got to be really devoted to talent selection. And this works again outside of business. It works in the arts, it works in sports. The best executives of teams are really great talent selectors. And they put great talent on the floor or on the pitch or the field at the same time. And that in a growth business, I feel like is one of the primary responsibilities of the leader is talent selection, setting the bar, and then also attracting the talent that meets that bar to come into the org and make a difference.
--:-- Shane Parrish: A lot of times when people do that and there's a final interview and somebody's gone through four or five interviews before then, it's kind of a rubber stamp or a culture check. I don't get that vibe with you. What was that interview like?
--:-- Jon McNeill: The final interview is, to your point, they've been through multiple interviews to prove they're world-class. And so I probably, in a lot of cases, I want to do a double-click on that and understand that for myself. Like, why did the team believe this person is world-class? I want to understand that. So I spend the first half of the interview really diving deep into, are they world-class? Do they have this experience? Do they do the work? Do they have this detail orientation that's going to help them be an effective leader? Then if they check that box, then we flip to the second half of the interview, which is, okay, now I have to do cultural imprinting.
--:-- Jon McNeill: And what I mean by that is every entrepreneur struggles with, hey, as we grow, how do we preserve our culture? And one of the hacks that I learned from Elon was that you do this final interview where you're cultural imprinting on everybody. And you're explaining to them, here's how the culture works. Here's the currency of success here. And here's the attributes of people who are successful. And here's what we expect from you in this role. And that cultural imprinting is the reason for the last interview, because it's your one chance as a leader to interact with this person who you may not see all that often after they're hired, depending on their position, but you at least want them to have the secret decoder ring to success and to describe, here's what success looks like here. So if you behave this way, if you deliver this way, you're going to be successful here and we're going to see each other again, for sure. And this is the behavior that I'm going to expect from you and that your leader is going to expect from you. That is the purpose of the final interview is to do that cultural imprinting. And so we're going from 4,000 to 40,000 people. We're doing a lot of final interviews of managers and above doing that cultural imprinting.
--:-- Shane Parrish: If I started working for you tomorrow as one of your direct reports and I asked you, how do we build trust? What would be your answer to that?
--:-- Jon McNeill: We need to communicate with clarity. And so I would say one of the currencies here is getting things done. And so our talk-do ratios are kind of inverted. But when we do talk, we're concise, we're clear, factual. If we have an agenda, we just put that out because it's super frustrating if somebody has an agenda and they're sort of cleverly trying to hide that agenda. I would just rather you be frank and clear. So that's the kind of discussion we would have.
--:-- Jon McNeill: I was having a discussion with a member of our team yesterday. They were kind of beating around the bush on an issue that really mattered to them. And I said, hey, just what's your ask? Just tell me what your ask is, because then we can have a real discussion. But right now, I feel like we're kind of dancing around an issue that I really don't understand. Can you give me clarity? And so often I'll say to somebody, if we're going to work together, the best gift you can give me is clarity. If I'm messing up, just be really clear about it. If you see an opportunity, be really clear about it. Just give clarity, which means, again, you've got to stop, simplify to be concise, and be really super clear about what it is that you want out of that conversation.
--:-- Shane Parrish: Can you walk me through a time you failed at something that mattered a lot to you?
--:-- Jon McNeill: Oh, geez. Yeah. Trying to sort through the many examples I could give you. There was a startup. This is my second company. And I formed this company with people that I worked with in my prior job, including my boss. The guy was a great guy, 10 years older than me, very strong personality. And I had written the business plan for this business. And I had a vision for growing this company organically. And he had a vision for growing the company through M&A. So growing it inorganically. And we started the company and we didn't reconcile that difference in strategy and approach. And part of it was because I was just young. I was 26 at the time, 27. And I really hadn't learned how to communicate and resolve difficult issues. So I'll lay that on me. But we let that conflict just sort of grow unchecked for the first two, three years of the business.
--:-- Jon McNeill: And luckily, we were each having success, me on the organic side, him on the M&A side, and the company was growing. So from the outside in, it looked like a huge success, and it was a very successful outcome. But the people in the company were caught in between these two battling visions of the company and they knew it all the time. The tension was on all the time. And we never really reconciled that for them. When we sold the business, I remember it was a great outcome for investors. And I remember talking to a few of the key people that were on the team and they're like, I'm just so relieved that this is over. And instead of celebrating, like we were all having a win heading to the finish line together, people were like, you guys were terrible as leaders because you never reconciled two very opposing views and you just let that tension blossom within the org. And the result was some people chose sides, some people were battling all the time, you guys were battling. And I really regret that. It was something that I never wanted to be a part of again. And obviously you don't get a redo on that company, but I've tried to break that pattern in companies because I felt like that was a real leadership failure on my part that I knew was there. I can blame it on being inexperienced and young, because I knew it was there and I probably could have better figured out the tools to reconcile that and confront it. But we didn't.
--:-- Shane Parrish: What are the top three business books that you give away to other people? And what's one lesson you take from each of them?
--:-- Jon McNeill: The top three books that I've recommended most consistently are a book called *The Goal*, which is by Eliyahu Goldratt, who's an MIT professor. If you want to learn about operations principles, like leading operations, that book totally changed my life. Second book is, if you want to live a life worth living, Stephen Covey's old book, *The Seven Habits of Highly Effective People*, really impacted me. And then the third book that I've read over the past couple of years is *Unreasonable Hospitality* by Will Guidara. I think it applies to every business, almost applies to every life. Every aspect of life. If you make the person across from you feel hospitality and dignity through that hospitality, it's powerful. If you make customers feel that way, you're going to sell a lot of product. And so I hand people this book on running a restaurant and people are like, I'm in business. Why are you handing me this book? I'm like, you'll get it once you read it. So those are the three that have affected me significantly that I pass along to others.
--:-- Shane Parrish: Can you double click on the concept of vertical and horizontal mentors?
--:-- Jon McNeill: Yeah. I think when people ask me, what's the great hack of a career? The first thing that comes to mind for me is mentors because mentors are such an accelerator, an unfair advantage. In my experience, there's two kinds of mentors. There's a vertical mentor, which means somebody has been down the path ahead of you. They're maybe a generation ahead of you. They're an older leader. They've seen the movie before. And so when you come to them and say, hey, I'm dealing with this. Have you seen this? They're like, oh yeah, I've seen that movie. Let me help coach you through this. Then there's horizontal mentors, which I found to be equally valuable. And those are peers that are going through the same stuff, the same challenges. It's best if they're in a similar situation. So I would build over time groups that were in similar businesses, similar size, similar growth rates so that we had a common set of problems.
--:-- Jon McNeill: And with those mentors, it's different. None of us have seen the movie before. But when you look at a side angle through to somebody else's business challenge, you often are teaching yourself. And so we would get together on a quarterly basis for a day and a half or two days, lay out the biggest problem we were facing, total Chatham House rules. It's total confidentiality. And I found that those five or six people could totally help me see a problem differently because they were looking at it through a side angle where I was looking at it head on. And so the combination of horizontal mentors like that and vertical mentors are super important. So you need to have both in your life constantly if you can. And it's a total hack.
--:-- Shane Parrish: What makes for a good vertical mentor?
--:-- Jon McNeill: I think the ones that come to mind — and so I've had three excellent vertical mentors: a guy named Scott Porter, who's my first boss; a guy named Fred Massoni, who ran one of the largest manufacturing businesses in the world; and Scott Cook, who was the founder of Intuit. All three of those individuals are unbelievable teachers. And Fred, the second one I mentioned, would tell me over and over again, when you become a really good leader, one of the signs of that is you've become a very good teacher because you're multiplying your skill set, your insight, your method, whatever that is. And Fred was a great teacher to me and Scott is an unbelievable teacher to me. And I think that's the difference in that kind of mentoring is they're just super patient teachers.
--:-- Shane Parrish: Scott's into it, right?
--:-- Shane Parrish: What has he taught you?
--:-- Jon McNeill: I really want to constantly get better at product development. And so I came to a session with Scott. We would often either meet at his house or we'd do bike rides together. And one morning I asked him on a bike ride, I said, can you explain how you run product development, product management to me?
--:-- Jon McNeill: He's like, yeah, I'll do that when we get to my house. So we eventually get to his house and he describes this tool set to me that he uses called Follow Me Home.
--:-- There's two parts of the tool, but one that he uses is that he brings actual users of the product into a conference room where those users sit at the table. And on the walls of the conference room, external to the table, the management team sits, and they watch him do this exercise.
--:-- So basically, he goes to the whiteboard and says, "What are the three things that you think we need to fix about this product?" And so people, each one of them lists their three things. And the second half of the whiteboard, he's like, "What are the three things that drive you crazy that you wish our product had, but it doesn't have today?" So three corrections, three builds.
--:-- And then he says to them, he's got this full list, and he says, "Okay, you get five votes. You can stack them all in one thing. You can spread them out, but go to the whiteboard and vote." And he said, a miracle happens every time you do this exercise. Everybody votes for the same things. It becomes ultra clear. You emerge with the three things you need to do because all the votes are on, not on the 60 things, but on the three things.
--:-- And he says, the miracle is the management team is in there. And they get the emotion and energy of the customer who's frustrated or wants this or whatever. And the product roadmap becomes absolutely clear.
--:-- And I was like, "Scott, that is brilliant." And I was transitioning from Tesla to Lyft at the time. And so I remember sitting down with a key leader at Lyft, Woody Hartman, who has been the COO at Lime since then, and said, "Can you do this with drivers? Can we run one of these exercises? Can we get drivers in the room and figure out what needs to be true about our product?"
--:-- And so I remember Woody and his team ran this exercise, this Scott's Follow Me Home exercise with our driver team. And they came with these brilliant insights that led the product roadmap for Lyft for about a year. And I remember Woody coming out of that session. He's like, "This was so simple. I can't believe it." And I was like, "Yeah, you just got to thank Scott Cook." Like he taught me this literally in 20 minutes one morning, and it's ultra effective.
--:-- So it's an example of one of the things you can get from a vertical mentor. And I got that from Scott. And it completely helped me be a much more effective product leader.
--:-- Shane Parrish: That's an incredible idea. Totally. Yeah, super simple.
--:-- Shane Parrish: You were at Lyft. You were the COO during an 18-month period. I'm curious what lessons you took away from that experience.
--:-- Jon McNeill: I think a lot. It was a really unique, special moment in time in that we had a competitor Uber who was 80% of the market share and Lyft who was 20%. And I had arrived right in time for a "delete Uber" moment. So the CEO of Uber had totally offended the customer base. And people were looking for an alternative. And so we were luckily positioned as a nice brand and the trusted brand. And so we were able to double market share with some really good execution on the team. This wasn't obvious how to do it, but we figured out how to do it. We doubled market share and doubled revenue, and then we were able to take the company public.
--:-- So I think the lessons from that Lyft era for me are product positioning is super important, and especially product positioning counter to the other alternatives in the market in a positive way. Super important.
--:-- Second lesson of rideshare specifically, but then can be applied more generally, is Lyft and Uber began early on to compete on price. And any business that competes on price ultimately is called a commodity. There's no difference between a copper pipe really from producer A, B, or C, they compete on price. And no brand positioning in the world is going to save you from that. And so once you're competing in a commodity market, now you have no basis from which to collect rents. And so your profit margins collapse.
--:-- Shane Parrish: Well, not only that, they both had stickers on cars. They basically told customers the products are interchangeable.
--:-- Jon McNeill: Exactly.
--:-- Shane Parrish: And the apps are interchangeable. They told the drivers the apps are interchangeable. The markings on the car, you're right with the stickers, told the customer that it was interchangeable. And so all that mattered was price.
--:-- Jon McNeill: And so one of my lessons from the rideshare industry is be very, very, very resistant to competing on price. When you start to compete on price and promotion, you're changing the whole nature of the product and the brand.
--:-- Shane Parrish: If you could go back and make one decision differently that you were there that would have massively altered the future.
--:-- Jon McNeill: I would have really tried to pound on the table to convince the founders. If we create a brand position here that's superior, we'll be able to command superior economics. But by that time, they were multiple years already into the price competition mode and getting them to see that wasn't, it just wasn't possible. But if I could, if I had magic dust, I'd change the dynamics of the competition in the market so that you could have a business that made money. At that point, neither company was making money on a gross margin basis because they were underpricing the product to compete. That's just insanity.
--:-- Shane Parrish: What are you like as a board member?
--:-- Jon McNeill: Because I've grown up, my entire career has been a CEO, I'm a very CEO-oriented board member where I want to be helpful and useful and be a sounding board to that CEO. And so I'd say to them, like, if you need to call me into action, you can call me into action. Like, you want to meet with your engineering teams and be a part of the feedback loop on your product? I want to eat the dog food. Of course, I carry the fiduciary responsibility that a board member carries to the shareholder. And that's my primary thought. Like, if I'm building into the CEO and being helpful, we're going to build enterprise value that's going to be reflected in the stock price. And so that's how I reconcile those two things together.
--:-- Shane Parrish: Not a lot of board members do mystery shopping. Why do you do that? What do you get out of that?
--:-- Jon McNeill: Because I get what's really happening.
--:-- Shane Parrish: What do you ask people when you go into a Lululemon?
--:-- Jon McNeill: See, I've now refined it down to one question. Like, "If you had the keys to the place, you were the CEO for a day, and you could only do one thing, what would you do?" And you don't get like 500 different answers when you ask that question. You typically get a pretty tight set of issues because people have to be thoughtful about it. They're the CEO. They can only do one thing. But it doesn't take them long to come up with, "Oh, I would do this. I would do this. I would do this." And that's the question I ask. And then I bring that back to the CEO. I say, "Okay, like I was in your stores the past couple of weeks. I asked the question, here's what came back. This may or may not be valid but hopefully it's an input you can use."
--:-- Shane Parrish: At DVX you created a method for starting companies, almost like a framework for it. What is that? What does it look like?
--:-- Jon McNeill: This has been developed over time. We want five things to be true about an idea before we'll really start to take it seriously.
--:-- Number one is there's a big addressable market. There's a big TAM. And we confirm that with a bunch of customer interviews. So it's not like we're pulling numbers out of studies or thin air, we're literally calling customers and saying, "If something like this existed, would you buy it and what would you pay for it?" So that's thing one.
--:-- Thing two is there's a gross margin that is north of 50% in the business. We've, as a team, have spent time in high margin software businesses and low margin businesses like rideshare and car manufacturing. And we love those businesses, but it's a hard way to make a living. So we'd much rather have software-type margins. So the second thing that has to be true is software-type margins.
--:-- Third thing that has to be true is the reason this opportunity exists is because there's a really hard technical problem that hasn't been solved. And if we solve it, it could create a moat.
--:-- So if that's true, then we're on to thing four, which is what's the competitive dynamic in the space? And this is where we're a bit contrarian. We don't want to go where everybody else is going. So we don't want to be like the 26th legal AI platform, competing it out with 26 that are already in there, that are already battling for the product positioning in the space. We'd much rather be the first entrant into supply chain optimization software or cybersecurity for small business. It turns out not many people in that industry.
--:-- And the last thing that has to be true is, is there liquidity propensity in the space? There are some markets where people just, there's no liquidity in the space. People don't want to own these companies.
--:-- And so if all five of those things are true, that helps us filter ideas. And so then we've got a research team that proves those out, and then we will take that idea off the shelf. We become the first CEO. We develop the product. And the first test is, can you get somebody to pay you for this? And that's our measure of product market fit.
--:-- So if we start to get contracted ARR, heading towards a million dollars, we say, "Ooh, there might be something here." And there's good signal in that because you have no sales force. It's not like you've got no marketing dollars. You're putting a product out and people are agreeing to pay for it. If we have that, then we go look for a team. And that's the next step.
--:-- And we will look for a second or third time entrepreneur who's had success in the domain. So they know the grittiness of taking a company from zero to its first 5 million in sales, which I think might be one of the hardest things in business. And they've been through that. They know how hard it is. They've seen their way through. And they often bring not only market insight, but talent. Because the thing that we look for in those leaders is, do they have a following? Because good leaders tend to have a following. And then we'll bring a leader in and they typically bend the curve of the company. And then we're off to the races.
--:-- But that's the basic formula of who DVX is. We invent these companies. We've got a method. And we've launched 17 of these companies with these methods. And we're about ready to launch the next three.
--:-- Shane Parrish: How do you think about time management?
--:-- Jon McNeill: It really comes down to, like, this is what Stephen Covey taught me in The Seven Habits. And it's really all about how you structure your day. And so I think about time management is around the things that are most important. So I kind of have blocks and they're literally blocks in my calendar. If I pulled out my Google calendar, it would show here's an exercise block. Here's a family block. Here's a work block, a few work blocks. And I manage my time around those work blocks.
--:-- Part of the method to the madness with those blocks is work blocks where I can totally concentrate. I shut down everything else and I just work that one thing. And it tends to be higher quality because I'm not switching back and forth and I've got a longer period of time. So I'm not time pressured to make progress. I've got two or three hours to really wrestle with something and get it off my plate.
--:-- And I use just different techniques within that. One lean manufacturing technique rule is you touch it once. So that means if I open an email, I'm answering that. I've touched it. I don't want to touch it once. I don't want to put it back as unread and then touch it again later. So I try to be super efficient with my time with little hacks like that. Touch things once, process it, get it out. And then concentrate your time on the stuff that really matters.
--:-- Shane Parrish: What are some of the other lessons you learned from Elon that didn't make it into the book?
--:-- Jon McNeill: I think a lot of entrepreneurs have taken inspiration from him to work on big stuff that matters. And we used to joke about some of the best minds of our generation were focused on getting people to click on ads. And that made me want to do something bigger because I was like, yeah, that doesn't satisfy me. I want to do something bigger that's more helpful and useful.
--:-- And so I think his tackling big challenges like space, like robotics, like artificial intelligence, et cetera. He just doesn't shy away from these big challenges. He's very commercial in the sense that he finds a way to make, to create wealth and to make real businesses out of these things. But he doesn't shy away from the big, big problems. Which is I think why Larry Page said, hey, rather than giving all my wealth to a philanthropy, I want to give it to Elon. Because he's actually going to create jobs. He's going to create tens of thousands of jobs, if not hundreds of thousands of jobs. And that really has direct impact on people's lives.
--:-- And so I think that one thing that I take away from him was the challenge to work on big stuff, the stuff that matters.
--:-- Shane Parrish: But it's not only big ideas that are pulling you forward. It's like big challenges internally.
--:-- Jon McNeill: Big challenges. Exactly. So you look for the challenge. You look for where people have shied away because the challenge is big. And it's typically like at DVX, my firm, when we start looking at a business opportunity or company opportunity, because we invent these companies from scratch, we look for a big technical challenge that exists. And that's why the opportunity is still there, because it hasn't been solved. And a lot of people have shied away from it. So we're crazy enough to say, "Ooh, that means we probably ought to look there." Because if we solve that problem, we've got the beginnings of a moat, a competitive moat that makes it very difficult to follow us. And moats tend to make really valuable businesses. So let's start with, if there's a real challenge there, let's not shy away. Let's go dive into that challenge. Let's run towards it.
--:-- Shane Parrish: Has the source of your motivation changed over time?
--:-- Jon McNeill: Yeah. Yeah, it definitely has.
--:-- Shane Parrish: What was it before and what is it now?
--:-- Jon McNeill: So when I started to build companies, I just, I came from a pretty poor economic background. And so I wanted to make money. And so initially I thought, I just want to build something that's very valuable. And then when the first company had its first outcome, I remember walking into the office and the first person that greeted me was the receptionist and she was in tears because she had stock. And she said, "We just bought a house." Then I walked into the office and another guy grabbed me, he put me in a bear hug, and he like, "You just paid for my kid's college education by this stock." And I was like, "No, you did it because we all did this together."
--:-- My motivation switched after that. I was like, the reason we're building companies is to create jobs. And when you create jobs, people, there's all these externalities and second order effects that you don't see as a leader. But walking through that office that day was way more satisfying to me, indescribably more satisfying, than looking at my bank balance. And over time, that satisfaction has become the currency that fuels me. It's like, let's go create long-term companies that are creating great jobs for people that are impacting the world in a really positive way. Because I want to go back to these companies in 10 or 15 years and they're still thriving, they're still employing people, because that's what matters.
--:-- It really mattered to be able to buy groceries in the family that I was growing up in. It really mattered to be able to buy a pair of shoes. And it's a raw sense. That's what I really enjoy doing is creating jobs.
--:-- Shane Parrish: We always end these interviews with the exact same question, which is, what is success for you?
--:-- Jon McNeill: Success for me is kids that want to be around me. That's my key beacon of success. Wife that wants to be around me, life partner. And that I have time to create companies, which I really enjoy, and just do the things non-professionally that I really enjoy, which typically is just be outside. I love to just be in wilderness. And so if those boxes are checked, I feel successful.
