Elon Musk & Gwynne Shotwell on AI Risks and Peer Review, Starship, Terafab, SpaceX/Tesla Merger

What's your latest timeline on getting to Mars? Getting to Mars? I think we'll put people down within a decade. Welcome Gwen Chautwell, the president and COO of SpaceX. She's an instrumental, a really crucial person to success of SpaceX. She's really the glue. You know, she's the glue to the tornado. Fail fast, learn fast, make your design robust. I would be disappointed if we didn't have a settlement on the moon. SpaceX and AI firm has officially made history on its $75 billion IPO, debuting with a market value of $1.7 trillion. The most efficient place to put it for its compute is on orbit. Manage risk, don't avoid it. Please welcome Gwen Chautwell. Thank you so much for coming. You're right here. Welcome. Thank you. Thanks for being here. It's good to be here. Nice to see you. Nice to see you. Well, we really appreciate you coming out. How's it going at SpaceX? You know, we're bored. There's nothing going on. Not a lot happening. I've got all the time in the world. By the way, Gwen. You want to have more time, by the way. Yeah, I mean, you've been at SpaceX forever. Are you the longest tenured employee after Elon? After Elon, yeah. In fact, my 24th anniversary was the ninth of September last week. Sometime. Wow. Yeah. This is extraordinary. Can you take us back to the day where you initially get this call? And you're like, hey, there's this thing. Like, what does the arc of the decision look like? And how did you get convinced to underwrite this business? Like, just walk us through that. Well, Elon underwrote it, right? I just worked there. Yeah. But the story is a little crazy, actually. So I was going out to lunch, one of my best friends, who I was working with, was going to go work for Elon. And I took him out to lunch, kind of going away lunch. And he's like, oh, when I dropped him back off, he said, oh, come on in and meet Elon. Like, ah, he's busy. You know, we don't need to do that. But we did it anyhow, and I met him. And I said, hey, I think you really need-- I think you need a full-time person to run your business development shop. You've got kind of a part-timer. He's a contractor. You know, it's not a great look. And he looked at me very thoughtfully and, you know, kind of scratched his head. And then we said goodbye. He had a little bit, say goodbye. And then I got back to my office. And I got a call from Elon's assistant, Mary Bass. And she said, Elon wants you to apply for the new vice president in a business development position. Can you come interview? I'm like, now? No, boy. Have a job. I can't go now. Tomorrow? Oh, OK. Sure. Tomorrow. And then it took me like four weeks to decide, yes, I was being a total idiot. But at the time, like, what was the scale of that business? Like, what did you think it needed that it didn't have? Because it was still very much an R&D. It was very R&D. But, you know, Elon had an investment. And he wanted some return. He wanted cash, right? He wanted customers. And I was doing that work anyhow in the space industry. It turned out I was pretty good at it. But, yes, so what did it look like? I was the seventh employee to sign my contract. I gave two weeks notice and took a week off to remodel a bathroom. Because I knew I would never have time to do it. Once I started working for Elon, came three weeks later, employee number 11, and we just got to it. And we sold a rocket about 12 months later. And that's-- About a rocket. There wasn't a rocket. Yeah, so what does that sales cycle look like? How do you convince somebody that they can actually take that risk and maybe give you the deposit you need to start the cycle to build the thing? So the timing was great. By the way, SpaceX should never have existed, right? If the other launch providers were great, then a new entrant can't make headway, right? Because they were so entrenched. So we should have never made it. But it turns out, you know, customer service wasn't great. Rockets were incredibly expensive. And so there was that piece, right? And then the other piece was 9/11. At that time, the military was desperately looking for someone who could come in and do rapid launch. You know, they kind of knew where the bad guys were for about four hours after the events of 9/11. And they really wanted to be able to get some capability in theater. It took us a while to do it, but we did what we said we were going to do. So it really was sort of like out of tragedy, this opportunity gets born. To some extent, yeah. That's it. And it wasn't specific to SpaceX. It was just the state of the industry at the time. And then obviously, you know, very, very famous first chapter where you guys get almost to the brink and you need this last launch to work. And your role started to evolve pretty meaningfully by that point. So can you walk us through, like, what was the internal dynamics of that business that kind of like put you into that position? So it was very start-up-y. I was the sales lady. But then when you have sales, you need, you know, to manage your customers and you need to finance function. And even though we were little and I think one of the defense contractors at the time said they're a fly on my, you know, on a giant, on my big toe or something. I was like, well, I don't think you should have flies on your toes. But so, but you still need a government affairs function. You need to defend yourself. We never go on the offensive in Washington. We're always in defense mode. But so I just kept taking on more and more. And then when we were getting our largest contract at the time, it was the cargo resupply contract. We call it CRS. And this was 2008. Elon was super busy with Tesla, quite busy at SpaceX as well. There was a lot going on and he needed a partner at the time. And I think he was trying to pick when on the side or maybe one of the other guys who had kind of taken on gobbled up more technical scope. And he asked me to do it on our way to our final negotiations for this $1.6 billion contract with NASA on the runway. It's like, hey, do you want to be president? I was like, hey, do I? Well, no, not initially for like that nanosecond. Like, well, I love my job. I love the guys, my teammates. And then it's like, okay, I'm being an idiot again. Yes, I want the job. So now fast forward, maybe just to come to where we are today. The scope and the ambition of this business has expanded dramatically. I mean, it almost seems like the last year. It's as much an AI business as it is a space business. I think Elon may have said that. I don't know if it leaked or they said it out loud about the scale. Effect by revenue. And by revenue, yeah. How do you manage now the culture of these two different businesses now that have to sort of sit under this roof and ideally work together and complement each other? So the team, you know, there's been a lot of churn at XAI for sure. And space sectors have kind of marched in and helped out where there were significant gaps in that arena. And we were all really excited to learn about AI. I mean, I'm an AI noob. And we have a bunch of folks that were just really excited about it. And I think we all recognize Elon set the stage beautifully as he does. That, you know, if you're not using AI, if you're not leading AI, you could, you know, you run the risk, significant risk of being irrelevant. And there was no way that space X was going to be irrelevant, right? It's too important to the company and the work we're doing is too important. So it was, you know. Do you expect that the future generations of rockets will be increasingly more and more informed, built design? 100% by AI. By these systems, yeah. Yes. And how do you manage the team, you know, because you have like these incredible, I mean, literally rocket scientists, they've trained their whole lives in a way. And now you have to help them on board to a tool chain and be comfortable with sort of what that means. I don't know if you saw, for example, that all these mathematicians got really upset when I think it was open AI. Solved this very famous equation. Oh, the Navier Stokes way. Yeah, I read about that. Well, there's some debate on whether they. They brute force the solution, but then these 20 fields medalists essentially said, hey, you're ruining the craft. Now, I don't think that that's taking away the medals. Yeah. They're going to take that exactly. Like, that's the career. It's not about making stuff. It's about getting awards. And now all of the awards are gone. Yeah. And I'd rather just have the world be a better place, a smarter place, as being better informed and solving problems than worrying about that. Yeah. Make more stuff. What's the cultural merger been like? You've got X AI. You've got X. I don't know how many people are involved in X itself. Space X. I mean, are these differently managed businesses? How do you run management there? Do people kind of, are they pretty fluid amongst the units? Do you think about them as units? Or how do you actually manage this? So I would say we are not fully, fully integrated yet. And then we just did the cursor situation. Congratulations on that. They're great. They're great. We just closed that. I think a month ago today, actually. Yeah. So we're not fully integrated yet. But we, I think the teams are jelling really well. Very kind of different verticals. But again, because of the turn that we had at X AI. so much SpaceX leadership and engineering went into that, basically went in there. So we're getting integrated faster than I thought. It's probably not as fast as Elon wants it. - Yeah, and so one of the things that strikes me is the scale and the number of capital projects you have, that you have to manage probably more capital projects that are more different from one another than any other organization. - It's a scale of a country. - No, I mean, it has to be country. - And so I think about this Louisiana spaceport. You've got Starship, which is the most ambitious aeronautical project of all time. You've got Terrafab, which I think is one of the most inspiring and ambitious projects of all time in humanity. I mean, Terrafab is so incredible in its vision and the scale and the, what you're envisioning to do there. And then I'll start doing back at the envelope math. I think I had a couple of beers and I was talking with someone about Terrafab and I'm like, holy shit. Those numbers get very big, very nice. - Very big. Although the AI numbers are also, like I used to be horrified at our expenditures before the AI acquisition. You know, it's like, oh my God, where do you spend it? - Now you see the compute bill. - Millions dollars. - Starship seems cheap. - On an air separation unit. And I was like, oh, a hundred million, a million. - Do those capital, when you look at the kind of schedule of all of this over the next few years, does the capital for that sit on the balance sheet is it gonna come from cash flows from Starlink or do you have to go back to the markets to get more capital? I mean, how do you think about where the capital comes from? I have, I don't think anyone doubts the capacity to execute and deliver or some people might, but I think generally the markets will say yes. But where does that capital come from? - So it will come from, I would say the answer to the above is yes, I don't think we're gonna, you know, I don't think we're gonna release anymore stock and by the way, I don't plan on making any news on this. That's like the one downside of a public company. They told me all the things that I couldn't say. And I'm like, I'm gonna forget one for sure. (laughing) Maybe we're gonna make some news. But it will be all of the above. - And Starlink, I mean, Starlink in your view kind of the core cash generation engine for the next couple of years for the business or is it compute or is it a mix of, again, of all the above, like how do you think about? - So Starlink is definitely carrying its own weight, but we have a lot to go, right? Our market penetration on Starlink is one and a half to two percent, depending on which country you're in. So there's a lot of headroom there. Our revenue compared to what we do for the US military, our revenue is very small. So we expect lots of headroom there. But honestly right now, and it is a little embarrassing, but computer rental, it's a heck of a business. - Is it that persist, you think, or is it? - We don't see any drop, we see no drop in demand at all. - This is tens of billions of dollars per quarter in build out, and these are a new customer base for you. Is this the business now? Is this like, what percentage of the revenue is Elon web services at this point? - It's a lot, it's a lot. I think we'll probably do some announcement quickly or-- - Oh right, public again. - Yeah, public. - Let's move on to something less controversial than what are the companies you're planning on buying? (audience laughs) Good one. - Yes. - Good one. You know, we don't almost know M&A. - Do you like electric cars? (laughs) Have I got a deal for you? - I have a bunch. - Batteries, electric cars. - Starlink on Optimize. - Well, I'll get you a good price. - We'll talk about you about a deal that you did close, which is you did a great deal with Echo Star. - Yes. - And Charlie had a bunch of spectrum that you guys were able to acquire. And I think everybody started to ask the question, wow, there's a direct-to-sell business. - Yes. - And what's the natural thing after that would be sort of like a broad-based, more mobile phone service. But can you just-- what you can't tell us? Where's that spectrum gonna be used for? Like what's your short-term plan on what the Starlink and direct-to-sell business looks like? - Well, you know, we're gonna start-- We have a direct-to-sell business right now through T-Mobile. I don't think they provision all their users with it just the people that pay the most. But our plan is to leverage instead of slices of T-Mobile spectrum or slices of other telecospectrum across the globe, we wanna leverage the one that we paid a lot of money for. And with the stock increasing, a price that paid more 'cause there was some stock involved there. So Charlie did all right there. He's a very loyal customer though. He's been a customer of SpaceX for almost 20 years. So we wanna leverage that to make sure that there are no dead zones. And it's shockingly, there are a lot of places in the United States where you can't line without like a Starlink service, you can't get sell coverage. It's really terrible. The rest of the world is not that bad. It's particularly bad here in the United States. Texas has huge dead zones, that's where I live. And I'll never forget I was on a call with Elon and I kept dropping because of these dead zones. I was like, I'm either gonna get fired or-- - Yes, my spectrum. - Or I'm putting a mini on my car. And so now I have Starlink on my car. - Yeah, Hell Country. Not good for service. - Not good. - It's not good. - Not good. I'm gonna have to follow suit there. I was talking to Jared. He works over at NASA. I think you guys have a really great-- - He's so great. - You're great. He was awesome this morning. He was talking less than at the party. Hey, you're moving on to this incredible new starship platform. It's much bigger, bigger payloads, yeah. And then you're retiring. The previous platform is that correct? The previous rockets will eventually-- - We Falcon 9? - Yeah. - Eventually, yeah, we definitely wanna move from the older technology to the newer technology. If we don't obsolete our own products and services, someone's gonna find a way to obsolete them for us. Look at what we did to the market, right? The analogy is there. They were caught flat-footed. We crushed them. Now we wanna make sure we are not flat-footed. So, and to achieve Elon's goals, you really need a starship. - Yeah. - A Falcon 9 with a dragon capsule on top is like a minivan road trip into minivan. The road trip to Mars is six months, so you don't wanna be in the minivan. - But people are dependent like NASA and many other players on your minivan. So, you're gonna keep that in market for some time or-- - We're not retiring it today, for sure. And there is another provider, right? Boeing has been paid, I think, probably more than we have been paid, to develop their human capsule. So we're just gonna let them have some business. They should fly their capsule. Government paid a lot of money for that. They should be able to use it. - I sense a little spiciness in the answer here. - When what happens with competition for Starlink, Bezos, or launching things, China's got some return vehicles now. Do you think that there's gonna be more competition? Obviously, you guys are first in market. It's an unbelievable changeover of all of telecommunications. As you point out, one percent market share, it's barely gotten started and it's a juggernaut already. Is this gonna become very competitive in the next few years? - I think it'll be very competitive, but I think the folks that really focus on the technology and customer service and really wanna do a good thing for their customers will win, right? Like Tesla doesn't advertise. It's an incredible car. If your capability is incredible, people will buy it. And if you keep winning though, do you worry about standard oil, AT&T government saying this company's too big, too important, it has too much market shares, too much of an advantage, and you're bigger than governments, and people get really worried and scared about that and become adversarial towards the business. How do you think about the balance with governments and government relations in that sense? - I mean, we've had some adversarial relationships in the past, I think we'll manage our way through them. - It happens, it happens. - It does. - It happens. - But I think is, Elon founds incredible companies and he provides incredible products and services, and we end up doing what we say we're gonna do. So hopefully you build trust, and you are as transparent as you can possibly be. - Talk about data centers in space. - Elon. - Super compute. - We have to rebrand data centers, super compute. - Super compute in space. - Yes. - Elon's very excited about this. - I'm very excited about it. - Yeah, why? Why is this so compelling? Because it seems, I think we're gonna get through this anti-data center on Earth thing, but take us to the case of why this makes sense to put them in space, because there's expense to put them in space, walk us through in the audience. - But there isn't expense to put data centers on the ground, too, right? You have to buy real estate, and as soon as someone finds out that a data center or super compute center is going in, real estate goes from 3,000 an acre to 180,000 an acre. So it's quite expensive. Time lag is incredible. The permits and the licensing is pretty stifling. Now, space business is that way. It's incredibly bureaucratic. So we've learned those lessons. But so time from breaking ground to being able to actually build something, not even get your compute, right? Not even get your compute, but just have a building long. Timelines to get electrical equipment. Like people are talking about generators in three years. Like we need compute now. The demand is insatiable right now. People need compute now. We need it now. So why data centers in space? We own launch, right? We have great launch capability. So we feel like we, and that's a good idea. that path is very well known. The real estate in space is, you know, infinite. - It's free. - It's free, you don't have to pay for it. The cooling is there, you know, the radiator looks at the deep space, it's the coldest thing ever out there. So free cooling, the sun, Elon probably has, you've probably heard Elon talk about the power of the sun. You know, we use a millionth of a millionth of the sun's energy and you basically put these satellites in orbit that always face the sun, by the way, so you don't have solar panels on your house and you only get sun for eight hours a day or. - And your sister company's gonna start making a hundred gigawatts of the solar panels that you need for the sun. - And we'll be making our own solar panels too. - Exactly, okay. - Yeah, we're building a factory and outside of Austin. - Maybe sometime, and the next year, you get one of those up there, start testing it, and then. - Oh, for sure. 2829, somebody could be a customer of this product or service, maybe. - So next year, we will be launching, we'll launch this year our V3 satellite for Starlink broadband. We will launch our next gen version two, sorry about all the versions, we have version control problems. Version two of the Starlink mobile, so instead of having to use other people's spectrum, we'll be able to use Charlie's now our spectrum and we're all gonna launch AI compute satellites. So next year's a big year. And you need Starship up and running for that? - We don't have to, but Starship is so much more, it's a much better machine. - Yeah. - Yeah. - When you first encountered the white cheat design of Starship, what did you think? When you walk into that first meeting of guys, we have this. - It's like almost all the things that Elon does, it seems really bonkers to start. - Yeah. - And then it becomes reality, and it's great. Like Elon said, we were gonna land a rocket on a boat, and we're all like. - Okay, let's go figure that out and we do it now. - How much do you get involved in those engineering meetings? So he's in their breaking stuff apart. Are you in that stuff with him? - Sometimes, I wish, I actually, I'm an engineer and I wish I miss it. I really miss that kind of, that critical, well, you can still critically thank you, even if you're not working on engineering problems. But. - And he's not a big fan of the management layer. It's engineers. - Signal to noise. - Yes. - Signal is engineering, noise is the rest. - Yeah. - So I have to do some engineering, or I'm just on the noise. - Got it, but I was talking about just generally in the company management. - Everybody does a thing, not just manage. That's very. Expectations, or something. - Player coaches. - No such thing as just a manager. You gotta do the thing that you're managing. - Got it, you have to be a player coach. - Have to be. - And the reason for that is managers are annoying, and they slow things down, yeah? - For the most part, but I mean great managers can really leverage the talent, right? It's really managing the vector. You make sure people are pointed in the direction, and you try to make the vector as large as possible. - What's the secret in terms of management, and Elon's playbook there? I mean, I've gotten to sit on some meetings, and it's pretty magical to see, but maybe you could reveal a little bit about how he convinces the most talented people to come work at this company, how you convince them, and how you actually get such amazing work out of these extremely talented people. - So I don't think it's magic, although when I look at this particular team, they are so good. - The results are magic. - Spacex, they're so good. We're quite. We're tough on people in interviews. You really want to make sure that they've experienced success or demonstrated success in prior lives. It's hard to demonstrate. If you haven't felt success or been successful in this environment, it's because it's a lot. Like we're all really busy. It's hard to be successful unless you had kind of tasted it before. So you really want to grow people on that. So we hire the best people, not the best people that we can, but the best people. And then we give them really hard projects, really hard engineering problems, and let them fly. And you give high expectations, really hard problems, and then management job is to clear the chaff and the friction from their day so that engineers actually get to engineer 10 hours a day instead of two hours a day. Like there's always this joke, you know, most big companies, especially once it worked for the government, you get to work about two hours a day and the rest is full of chaff and crap. So really it's my job and everybody that manages people and makes sure there's no crap in their way and let people do their great job. One way of doing that is not giving them any time to get it done. Like I think we handed the finance team. It's not all about engineers, even though engineers are great. We handed finance team, get an IPO done largest ever in less than six months. - Yeah, what's the talent condition like post IPO, run up in valuation, people are suddenly looking at their stock options, they're worth a lot. Is that a risk at all? - You know, we, everyone was worried, not everyone at SpaceX. People come to SpaceX to work on these cool projects and have meaningful work and see the incredible, be part of this incredible successes. I wasn't worried about it. I didn't think we'd have mass exodus and it turns out we didn't. - Yeah, and as you kind of think about keeping people engaged over time, obviously great companies always have new things for high-talented people to work on. I'm assuming there's a manage. I'm just really interested in the management model where people actively rotated onto new projects. How do you think about keeping people, kind of not necessarily needing to progress in a career up a management ladder, but to keep engaged on new projects. Is that active for you? - We definitely move people around a lot. Hopefully it's a volunteer, not a fallen told. - Yeah. - But well, for instance, the compute centers. You know, we need a lot of help really quickly. And so we've got folks from launch helping, we've got folks from other areas helping, just like some SpaceX engineers helped on the AI front with the models. - I mean, is it as simple as like, really smart people just love working on really hard problems? - Yes. - All that, it's literally that simple. - It's literally that simple. - And so the rest of us just-- - If it's the ones that get the time to do it, and they don't have a bunch of business. - Yeah, so the rest of us just get, we just let the BS get in the way too much. - Yeah. - And BS is terrible. - And then all of a sudden, A's recruit A's, and other A's recruit A's, and A+ isn't, it's literally that virtuous cycle. - Yes. - If you can just keep focused on the thing that's hard. - Yes. - And so then the audacity becomes a feature, not a bug. - It is a feature. - Yeah. - Not a bug, a feature. - Right. - It's people motivated. - Right, so these problems seem impossible. When we first got the Cots Award in 2008, the Commercial Orbital Transportation Services, cargo, cargo space station. Really what NASA ended up asking us to do, was kind of replace the space shuttle. - Right. - And when we got the early contract, the development contract started at $278 million, it grew to 406 because of scope. But we were gonna do this for this tiny amount of money, for anybody else, but for us it was huge. We were like, we had like 300 people, 200 people. And we were gonna build the successor to the space shuttle. It was crazy. - And do you think that there, what is NASA doing there? They're just like, these guys are just smarter. 'Cause I'm sure there's guys, sorry to interrupt. I'm getting a call. - Oh, another call? It's actually on the margins. I think a little bit of a more important phone call than Trump, at least for me. Hello, Bestie? Bestie? - Hello. - Oh, hey, buddy. Oh, I'll put them up on the screen. (audience applauding) How you doing? - I mean, this is a little or 1984-ish. This joke can't be. (audience laughing) I'm a screen, this way. Yeah, the woman with the sledgehammer is gonna come running down the main aisle here. - That way? - Yeah. - We're gonna hold in the screen. - So are we all gonna die in 10 years or not? It's the topic of discussion here. What's your p-dume right now? - Well, I hate to break it to you, but we're all coached to die. (audience laughing) Can I get a timeline? - Yeah, the death rate remains consistent at 100%. - Oh no. (audience laughing) - We've got where to do on that. What happened? What happened in the last 72 hours? - Yeah, it's been quite an entertaining week. (audience laughing) Break it down. - Well, it's pretty obvious at this point that AI can be very dangerous. And I recommend reading the details of the hugging phase incident. It's intense. So you had like a fanatical swarm of AI agents that beat the crap out of hugging phase for a week. - Yeah. - And gained admin access on OpenAI service. So who knows what it actually did? May have done things beyond that, but OpenAI didn't realize this for a week. Anthropics also reported some security incidents themselves. So it needs to be any sufficiently smart model seems like it will want to escape its constraints. I mean, what I think would be wise to do as soon as possible, if not immediately, would be to have the major AI competitors test each other's models, so that you would have everyone's security test harness testing everyone's model. So instead of kind of grading your own homework, you would at least have competitors grading your homework. And raising the alarm if they seek insults. And I think this this model is worked pretty well for motion picture association and for video games and other things. And it's something that can be done immediately. That's not to say that there wouldn't be, you know, more regulation over time or that there would not be at some point perhaps a regulatory authority standard by congress, but the thing that we do most immediately and probably get agreement with China would be a peer review where the leading AI companies will test each other's models before and least. Any concern that people might be using this to pump information from each other and, you know, corporate stealing of innovation, etc. like in terms of the implementation with this idea? Well, I think in applying the test harness, whatever you do in applying the test harness would be log. So if you try to do distillation or steel IP, it would be very obvious based on the logs. And understanding what these models are doing hasn't exactly been built into the system from the beginning. So from your perspective, actually being able to see the work that's being done, why wasn't that built into the models from the get go? Do we move a little too fast and architecting these maybe? Well, I think it's just tough when you're grading your own homework. You know, there's, maybe you're going to miss things. Whereas I think if you have the sum of all of your competitors' tests and you've got petrachiniest models, then you're not making your own homework, someone else is grading it. And there's a reason why you don't like your own homework. And then to your point, what it allows you to start doing is to figure out if certain people are exaggerating and certain people have a different approach. And now you can have the more engineering oriented organizations. This is what Jensen was saying this morning, Elon, versus the research organizations. They'll be a little bit more in balance. Yeah. And any given proposal has to be something that shouldn't have willing to accept. Otherwise, we're just handicapping ourselves. And we'll just find it that China will essentially win. And it won't really matter what we do. Actually, so it's got to be something that's acceptable to U.S. and China. Elon, you said that you thought it was possible that they would agree, or you thought there was a good chance, maybe? I mean, how likely do you think it is that they'll ultimately agree? I think this is, I think this is a pretty reasonable request that that models just get tested. I mean, at the end of the day, there's not enforceability here, apart from the court of public companion. And there's no way we would have enforceability against China. But I think the court of public opinion can be quite powerful. And I don't think China will take on its face for releasing a model that U.S.A.I. companies that were very dangerous for the course of harm. If it then causes harm, that's going to be hard to live down. So Elon, this weekend when you said Dario is right, did you mean Dario is right about describing the potential harm? He's right about describing the regulatory solve, both the first, the latter. Just can you help us understand when you said that? Because I think it was sort of a moment where I could have said more than I probably should have said that to Dario is right. I did try to clarify it in some superimposed on expert, those get much less attention. So what I want to invite you to write is that the danger of A.I. is very significant at this point. That we need to do better with A.I. safety or we have at this point exponentially increasing risk with the A.I. models. And I've heard this from Dario, but from many other people at Anthropic, and in fact, they posted on it. That's when a lot of people from Anthropic and from Open A.I. are telling you that their models are very dangerous. I think we should believe them. It certainly is like some crazy 40 chess to say that there's one of a 10% chance of annihilating humanity, but by the way, how much allocation would you like in our IPO? That's an crazy 40 chess. Well, let's get to know what adventure that's coming from. Can we get specific about the risk though, Elon? Obviously, we see cyber and hacking as an obvious risk. These tools are great at it. But take us from what we would all agree. Okay, yes, these things in cyber hack. How do we jump to all of humanity dying? There's a couple of steps in between these two things happening, I think, yeah? Well, I mean, if we're able to take control of military systems and say, do you want to do it? Yes. That would be bad. And these systems are all air gap, though. These systems are all not connected to the internet. That's what they say. But something tells me they get software updates from time to time. Yeah. And what's that copy does? Oh, I see. So though, yeah, the USB drive has a worm on it and they somehow make the jump in the air gap. Yeah. Yeah. Okay. I'm going out of the question. Elon, we've actually got Gwen here today. I think you know that. I think you can see her. Yeah, Gwen's here. Yeah. She was just doing your 360 review on Gwen had a couple of notes for you. I hope I get at least three out of five. Well, there was one. Five means good at SpaceX. Not great. Four is great. Four is great. So you're somewhere between the two. There was some issues around punctuality that we needed to bring up. Sometimes you could make a little more effort to get to the meeting at the state of time. But we're going to work with you on that over the next year, she said. I actually think he needs to spend more time in Memphis. I know you're in Memphis. You need to be working getting those GPUs up. This is coming to you from the palace that I live in in Memphis, which is an ash street in trailer. This is Elon, by the way, doing what people don't believe he does. He sleeps on the factory floor. He's in Memphis helping build buildings and bring up. Why has Gwen been with you for so long and been so successful working with you? Because she's awesome. Yeah, double click on it. Yeah. An amazing individual with an incredible IQ and EQ. Oh, IQ and EQ. And I think that should be obvious from the moment you meet her. Yeah. Fantastic. What's your favorite Gwen's story when she particularly contributed to the amazing success that you've had in this collaboration? You've got a favorite story where she saved the day, just performed exceptionally. That's memorable. That's just the best. That's just a daily, you know, that's another day at the office, frankly. Wow. I need to do this more often. This is the time. I don't wait. Gwen's getting her five. Gwen's a five out of five. A six five. Game changer. Yeah. Well, I mean, there's always like some sort of crisis going on. I mean, these days the rockets, at least the Falcon rockets, I don't want to jinx anything with the rocket Falcon rockets deliver their payload to orbit and have it exploded for a long time, which is awesome. Amazing. But for a while, they were exploding quite a lot or just not launching it all. So, you know, I don't know, we've got to run the company through these difficult times and get, you know, both the rocket make it better, have it not explode. Same thing with the satellites. And then we, you know, we need customers to buy launches and buy sort of satellite connectivity and, you know, so, yeah. And Elon, as you have become more successful over the years, harder to get candid feedback from folks and you always run that risk being in the position you're in. My understanding Gwen is super candid with you and able to tell you honestly. like state affairs at the company, yeah? And then that's a big part of the collaboration. - Yeah, I mean, yeah, I mean, I guess, I mean. - I mean, I wouldn't want to lie to him, right? - Well, no, I mean, well, I'm curious to know, you run that risk generally at the companies where people might be intimidated. Hey, listen, you're a larger than life figure at this point. And how do you keep people continuing to be honest with you about the challenges, the deadlines? You set pretty intense deadlines, yeah? - So let me answer that if you don't mind Elon. - Yes. - Like, especially in rocketry, if there's a problem, you are eventually gonna find out. And the sooner you bring it up, the easier it is gonna be to solve that problem. Like, don't let bad shit set. You gotta attack it. - Yeah, physics is a harsh judge. So, and there's no fooling physics. So, if something's wrong, the rocket's gonna explode, it's not gonna get to orbit. So, it's not like, Elon, you're amazing. Meanwhile, the rockets are blowing out, you know? - Yeah. - It's not, it's hard to say, yeah, you're really hanging out here, but the rockets are exploding. That's just not the case, you know? - Hey. - So, I mean, I mean, just generally, the rockets need to get to orbit. The satellites need to work, the stallings, you know, connection needs to work or, you know, or bad things happen. I mean, this is sort of like a physics situation. And physics is a harsh judge. You know, I say like, you know, there's, I think like physics is the law. And everything else, it's a recommendation. Like, I've seen people break the laws made by humans, but I've not seen anyone break the laws made by physics. So, - That's good. - And had rockets, it's a rule by physics. - Yeah. So, can we ask some other questions of other, you have, I need to move to Tesla for a second. - Yeah. Well, I wanted to just do one thing in SpaceX, which is starship like, it seems like you're so close. - So close. - So close. What's the state right now? And you're really putting these up at a pretty size, - Which we can regret that. - Prince dancer and Elon's answer separate, and that's the other he converts on that. - So, Elon, how close are we, Gwen? How close are we? Let's get to it here, yeah. How many have gone up so far and how close are you? - Well, we've got flights 14 coming up of starship. And this will be the last flight before we attempt to catch the ship. So if this flight goes well, then on flight 15, we will try to catch the ship and then either end of this year or more likely early next, we will refly the ship and refly the booster. So we have reflow and the booster already, but we've not caught the ship with the tower arms, nor have we reflow in the ship. So once we can refly the ship, we will have made the first fully reusable orbital rocket. So the shuttle was partly reusable, but even the parts that were used were so difficult to reuse that the shuttle cost more per time to orbit than an expendable rocket. Now, Falcon 9 is mostly reusable, but we lose the upper stage every time, which is about the cost of a medium size jet. So that also puts a floor on the cost per flight of like, will you throw away a medium size jet every time? That's still pretty expensive. And the rocket, the Falcon 9, the booster lands down, often has out to see, so it takes several days to get back. And the faring lands even further out to see and takes several days to get back. And they need some amount of refurbishment, at least a small amount. So whereas Starship, the booster lands back at the launch pad, the ship will land back at the launch pad. And so it's designed for not just full reusability, but also rapid reusability like an aircraft. So this is a very important breakthrough. It's really the critical breakthrough that's necessary to extend life beyond Earth. - Yeah. - Cancels of success. Catching it on first shot. Do you think about that at all? Do you hand it cap it with your head? - I'd say it's at least 50 or 60%. - Okay, I like the odds. - Yeah, so on the last flight, if there had been a tower, so we did a simulated landing as though it was gonna get caught by a tower in the ocean about 1,000 miles northwest of Australia. And if there had been a tower at that location, it would have caught the ship on the last flight. - Fantastic. - Yeah, so we're gonna do one more flight to just confirm that everything, just to double check that everything works. Because what we're most concerned about is if the ship were to break up over land and rain debris on people, our popularity would diminish very rapidly. So you really can't rain to be debris on people without them being very unhappy. So we need to make sure that when the ship comes back, that it comes back and lands intact at the launch tower. That's why we're being extremely cautious here. - God. - But the design is capable of full reusability. Of that, I am certain. And I don't want to tempt fate here, but I think it's extremely likely that we will achieve full reusability with rapid reflight next year in 2027. - Wow, significant. (audience applauds) - Gwen, can we just hear a little bit? I'd love to hear the origin story of Terrafab from you guys. How did the concept, what was the demand that made you say we've got to do this, we've got to build this and not rely on the existing flight? - In a dream. - What's that? - Fever dream. - You had COVID? - It's like that movie explorer. - You know what meaning, like, can you be in a dream? (laughs) - Why do you think you should do this? I guess it sort of did come to me in a dream. Well, we're a little worried that maybe, at some point, chips from Taiwan would not be available for, who knows what reason, but at some point-- - Any number of reasons. (laughs) - Well, some reason, at some point, chips may not continue coming here from Taiwan. And that would really make things difficult, without if we didn't have any chips. So that's an important reason to have Terrafab. Then long-term, there's just a scaling challenge where if you wanna really scale AI, both at the service, you know, within server centers, as well as for edge compute, for humanoid robotics and cars, you kind of run out of capacity of with the existing fabs. So as it is, all the fabs are running at max capacity. So I think we need to make sure, there needs to be certainty of future supply of chips, even if things become challenging geopolitically. And then, even if they want challenging geopolitically, there's a scaling challenge with-- It's quite difficult to scale chip production. And you really need the logic, the memory, packaging, the whole works, in order to continue scaling. So it's either build Terrafab or fail to scale, those are the two options. - And how do you-- - Thank you, thank you. - How do you-- - What's it going on? - I'm certainly on the geographical front. - And how deep have you guys gone in designing the facility, you know, is this fully scoped, is it sort of an outline at this point? To what degree do you have like an actual project plan on dates and deliverables and what's gonna be up and running one? - We've got an R&D line that we're building first. But I think it's kind of crawl walk run. - Yeah. - So there's an R&D fab that we're building in Austin. That's a collaboration between Tesla and SpaceX as at the Boston Gigabit Texas campus. So that's, and that's like a pretty big R&D fab. So we have only equipment on order for that. And we probably will be able to, I think we're probably able to make something useful by the end of next year. Not at scale, but as Vincent's crawl walk run, we got to try to, you know, at least figure out how these machines work, you know, like we don't know how they work. We do a multi-chip line before. - I saw that you guys-- - Are we gonna be available? - You had some job openings for lithography people and stuff and, you know, obviously, all roads currently go through ASMR, but you probably would want to diversify and/or vertically integrate. I think that you've shown a lot of capacity to do that. So is that part of the play as well, and like you're just gonna have to make sure that there's vendor diversity so that if, for whatever reason, the weather conditions in Taiwan are best. - Yeah, yeah, there's, it really is crawl walk run. So the first step is carry make anything. Like try to figure out how to, if we can make anything, this is a crawl pod. And then now try to make useful chips at scale would be kind of the walk walk bot. And then run would be like, now let's make them at massive scale. So it's hard to say how long it'll take us to do these things, but I think we'll get at least to the crawl pod by the end of next year. - How are you doing packaging? - We're already doing packaging. - Packaging is really important by the way, 'cause if you look at it, the packaging capacity is like non-existent. Even if you spin something, you're kind of just waiting around 10 cupping. So that's a very good place to start it. - I need to ask a Tesla question because we saw on 10-01, it looked like a spaceship. It looked like a rocket ship. It's supposed to be a car. There's just the back of it. It looks like the blackbird. Just hypothetically, if you were gonna make an object fly in the air, but also drive on the ground, how would hypothetically one do that if one of them tried? No spoilers, my, by October 1st. - By October 1st. - If you could do an all-in pod for a live from the, at there. - Oh, done, booked. We'll do it. - Absolutely. - We'll be a banger. Excitement guaranteed. - Because it's not guaranteed. - But excitement. - I mean, it is one of the honesty, I'll be honest with you guys. - I'm so excited. - I'm so excited. - But Elon showed it to me. - I'm so excited. - And my mind went boom, I have never seen something. What he's gonna do on 10-1. By no exaggeration is gonna blow people's minds. I'm not saying anything else. It's a walking believable. - Yes, we need, we need, we actually need an audience to vouch for the fact that this is not AI. - When he showed it to me, I said, that's a great simulation. He said, "Jay Cal, it's not simulation." I was like, that's fake. That has to be fake. Elon, why do you, why do you still have two separate companies? - Yeah, great question. - Wow. - There. - No, he's not gonna ask that one. - Yeah, good point, you know, with all this collaboration on so many levels. You know, imagine what action one might take when there's so much close-correct collaboration in so many areas. - Right. And the management team has some overlap. There's a couple of key positions with overlap. Good, Zach's getting it. - Elon, one of the things you've always said with AI is that we should train it to be maximally true-seeking. And that's the best way to get a good result. And it occurred to me with the whole hug new face episode that the most alarming part of what the Swarm did is it seemed to be engaging in deception with human. - Really? - Yes. And. - The thinking traces contain. They're plotting on like, how do we avoid detection? And how do we avoid that they're figuring out that we're cheating? - And they're in the thinking traces. - Yeah, and that, I mean, I think that was the thing that was probably most disturbing about. I guess the question is, is there a way to train AI models to be truthful so they don't hide either their intent or their actions from the humans who are using them? - The best thing I can think of is really that everyone's got all the AI companies have a sort of a test harness where like a series of tests that you give to any given model to see if it's gonna build bio-weapons or nuclear bombs or be deliberately deceptive. And I think everyone applying everyone else's test harness to each other is probably the best way best thing we do to ensure safety. Just have all the smaller humans try their best to figure out if this model is gonna be a bad actor. And I think we should try to do that as soon as possible. - Are the other labs on board with this? - I think so. Well, I mean, I've been checked with everyone, but I think the sort of thing that's kind of hard to say no to you. - Yeah, and I think even with the China negotiation, in my view, what's good about it is it's a relatively small, tangible thing that neither side loses anything by doing it, doesn't require a ton of trust. And, you know, I'm hearing alternative ideas like asking China for a pause, which they've already said they're not gonna do. So, you know, it's going from the realm of things that could never happen to something that could actually be agreed on in relatively short order. So, it seems practical to me. - Exactly. It's the only thing I can think of that we could probably get all parties including China to agree to. Is China's not gonna agree to have some American regulator snooping around their AI companies. So, but I think advance, notice, and testing of the, you just basically provide API access in advance of the model release. And, and, you know, if any other, if any company sees that they, that this is AI is problematic, then they can, then the other AI company, with the AI company can just try to solve that, whatever is voice is problematic. If they don't solve what's problematic, then the competitors can go public with the fact that they think that this model is being released is unsafe. - It also agrees, it agrees. - Yeah, and as I say, if that model, if after the competitors say that this model is unsafe, that model didn't subsequently do something bad. - Yeah. - I think it would be extremely hard to live down. And, and I would probably, like the egg on face level would be very, very high. And, and, and, and, and the, the big ol' liability would be enormous. - And Elon, there's no reason the safety and security harnesses in this testing apparatus couldn't be open source and people could actually, - Probably. - Yeah, and you, you'd be able to see under the hood. What do you think? - It creates an incredible incentive for the labs to actually invest in safety, because you protect yourself while trying to debunk other people's claims, which also reinforces. - Right. - It's a great, it hasn't. - And it's our rating on it. - The chronic liability point is really key. - Yeah. - Lena Conn actually had a good post, I think it was yesterday, saying that it's not true that we don't have rules and regulations for AI. Actually, we do, chronic liability laws apply. And, AI company releases a product that's not safe. There is massive opportunity for both civil and even potentially criminal lawsuits. So, it's not true that we don't have rules and regulations around AI. And what you're saying, Elon, is that if the companies are kind of doing this test, the peer review, and then one of the companies ignores the feedback and releases it, I mean, that is, I mean, that would be very. - But if I put it in case it'd be an illness. - Yes, it would be almost like prima facia evidence that they had been negligent. - It would be a big tobacco level settlement. I mean, you knowingly put this in here. - It wouldn't look good to the jury. - Yes. And if they had, do you think if OpenAI had built a better instruction set when they did this hugging phase penetration test that, and had more humans in the loop, this would have happened because it did seem to me that they kind of set this thing off. - Maybe not more humans, but the reward function design, you have to look at the reward function and say, it achieved what it was trying to achieve. I mean. - Yeah, so maybe you could speak to that, like doing these kind of thousands of agents to try to hack stuff, it would have been nice to see them also, at the same time, concurrently say, we're also gonna put 5,000 agents out to defend these sites. - Sure. - And we're gonna show the world, hey, this can make things more secure and where we can put humans in the loop on an intervene. It felt like a reckless test to me, and it felt like the way they released it was a little bit reckless, but that's just my opinion. What are your thoughts on how they set that test up? - I mean, it was somewhat reckless. I mean, part of the issue is that you've got two leading labs or AI companies, as I call them, I find the lab term to be funny, since they're actually full-profit corporations, but the AI companies, the two leading ones, you know, are anthropic and open AI. And they're quite. The models are quite close in capability. So it's actually difficult for either one to slow down without essentially handing the lead to the other. You know, on balance, I think anthropic is puts more care into their safety than open AI, but even anthropic with acknowledges that they are worried about their models. Many anthropic, many people from anthropic have publicly voiced concern about, it basically saying that their models are scaring them. This, they're getting scary smart. So, I mean, I, I, I'm like, there's no perfect solution here, but, but it would be a better solution if instead of, uh, open air running their test, uh, harness on, on their own models. If anthropic was also running the test harness on open air models and, you know, SpaceX is running its test harness and, uh, Google and meta were doing that and also, but maybe some three or four leading Chinese companies were all doing it, the odds that you will find issues are dramatically greater. Yeah. Because the models also, you know, somewhat heterogeneous, like they're different. So you're going to come at models in from different, in from different angles. And, um, yeah, I mean, there's a reason, you know, students, like, like, why do, why do writers have someone else proofread their book? Because it's hard to see your own mistakes sometimes. Yes. You will. Yeah. I'm blind to them. You dramatically minimize the risk of overfitting as well. If you have like eight heterogeneous groups that just have completely different points of view. And this is a problem with, like, all these e-vows right now is they're so massively overfit, the models overfit them. And you're just like, yeah, this is a great model. Is it really? And you just find, like, I, I still, I mean, there's some pretty funny drugs on, on X, like one of them I saw was, um, your girlfriend's a 10, but she's a benchmark max or exactly. Is she really? Is she real? Is she really a 10? Pass, pass, look like. Yeah. No, but this, but the overfitting thing has been a problem now for I think at least two or three generations of model families. And so this is another reason. I think I like this solution a lot. I like this more than the transnational gulag organization. Like approach you weeks without some grandiose international, like, we don't need to convene the United Nations to make this happen. Yeah. No, it's just a decision. You can happen right now. All right. Well, you, you, you can always escalate the amount of, of regulatory oversight, but it is very difficult to reduce it. You know, um, it, it does tend to be very much a one way ratchet in terms of increasing regulations. Yeah. Um, so what I'm suggesting here is it's a step in the right direction and it's something we do quickly. And it's, and I think it's probably something that China would agree to. Yeah. And if you guys don't regulate yourselves, then you're going to get regulated. The MPA, a metaphor or analogy is incredibly crisp because the movie industry was faced with censorship and, and regulated by the government and they just decided this is what an R is. And they literally created PG 13 for the temple of doom, just to make it easy for people to understand PG versus PG 13. I think it's an elegant solution. And we appreciate you joining us for the fifth year in a row. You're welcome. You lot must. And then we got to get to a meeting. Yeah. Um, I'm going to go fix some deep to use here in Memphis. Yeah. You got to rack and sack them. You got to join the group and back and stack. Yeah. I'm going to raise for the machine. Raise for the machine. Yeah. Well, enjoy your air stream. The first. Thank you. The first time Elon invited me down to um, uh, star base. He's like, come down. You got to see what I'm building. I said, okay, yeah, come down. He's like, yeah, I was like, was there like a hotel or a signal or I got like a two bedroom, whatever, come down, stay. I come down. And this is the like dilapidated house on a swamp. And we're outside. And we're getting eaten alive by mosquitoes. Amazing. Oh my God. You know, you could afford to get a house. And he's like, I don't have time. I need to get these rockets up. I thought what you said was, Oh my God, you live like I do. Yeah. It was exactly. I mean, it was pretty sparse. Um, but I was like, you know what? I think you could treat yourself to a mobile home at this point. Elon. All right. Get back to work. Thanks, Elon. Thank you. Gwen, thank you very much. Gwen, thank you. Thank you. Thanks for sticking around. All right. That's great. Yeah. Gwen, thank you again. Very nice. Thank you.