Martin Eberhard is an engineer, a veteran Silicon Valley entrepreneur, and inventor on at least 29 patents. In 1996, Eberhard founded NuvoMedia with his colleague, Marc Tarpenning, where they developed the Rocket eBook, the first eBook with secure internet delivery of content. Eberhard and Tarpenning founded Tesla Motors, where Eberhard was its original Chairman, and served as its CEO until late 2007. Since leaving Tesla Motors, Eberhard has served as Director of EV Development at Volkswagen and Chief Science Officer at SF Motors. Eberhard currently serves as Founder, Chairman, and CTO at Tiveni, a company designing safer, denser, and lower-cost EV batteries.
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| I’m Emily Kirsch, Founder and CEO of Powerhouse. This is Watt It Takes — a show about the entrepreneurs making our zero-carbon future a reality. When it comes to companies in climate tech, there's only one name that's known around the world. Tesla has arguably been the defining climate tech success story of the 21st century, driving demand for electric vehicles and becoming one of the world's most valuable companies. When people think of the person behind Tesla, they think of Elon Musk. But Musk wasn't there from the very beginning — he was an early investor in the company and didn't become CEO until five years after its founding. Tesla only represents one-tenth of that market. But thanks to a relentless push in the face of doubters, Tesla is the brand most closely tied to the EV boom. Martin Eberhard was there from the start. And as co-founder and founding CEO, he'd had already spent years building a new kind of electric car that people would actually want to drive. | |
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| I credit all of the electric vehicle industry, all of it to Tesla, a hundred percent there, there was nobody making electric cars when we started that and nobody believed in it. And if you went and talked to people in the auto industry, first thing I would tell you is that electric cars are dead.
And what the public knows about electric cars is they're dead and they suck. And we cured that. | |
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| Martin started Tesla with his co-founder Marc Tarpenning in 2003. This was the dark ages of electric cars. Automakers had lobbied against policies promoting EVs in the 90s, and then killed their own battery-powered models. They were also really expensive. The battery technology was still nascent, and it wasn't clear what kind of battery chemistry would work best to power electric mobility. Mainstream carmakers expressed nothing but doubt. | |
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| The auto industry would tell you that lithium-ion batteries would never be used in cars. They're too complicated, too hard to manage, et cetera. And today there isn't anybody who makes an electric car that doesn't have lithium-ion batteries. I would say that a hundred percent of the EV industry today, all traces back to Tesla and all traces back to that Tesla Roadster. | |
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| Martin was the CEO of Tesla from 2003 until 2007. Until one day, he was unceremoniously kicked out of the position by Tesla's board, of which Elon Musk was Chairman. | |
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| I was actually on my way to go give a talk at some conference and I got a call that said that when I got back, I wouldn't be CEO anymore. And no explanation, no opportunity for me to talk about it or talk to the board or so on. | |
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| This sparked a defamation lawsuit over who actually founded Tesla. In 2009, the lawsuit was settled -- and Martin was named co-founder, along with Musk, Marc Tarpenning, JB Straubel, and Ian Wright.
Over the years, Tesla has become synonymous with Elon Musk. But Elon was the fourth CEO. And a lot of people have forgotten -- or even tried to re-write -- the founding story of the company. | |
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| I guess the thing I would say is don't believe everything you read on the internet. Right. There's other people with agendas that say things about me that are simply not true. And as with reading about global warming, or vaccines or whatever, there's a lot of nonsense out there and people who are making it nonsense have their own agendas. | |
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| So we invited Martin here to Watt It Takes to tell his story -- and the untold story of Tesla's founding.
We talked about where his EV inspiration came from, blowing up batteries in his yard, cobbling together parts to make Tesla's first prototype, and what happened when he was kicked out of the company. We also dig into his rich history of entrepreneurship -- including pitching the first e-book to Jeff Bezos in the late 90s. | |
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| I want to start by asking about your first encounter with an electric car. It sounds like it was underwhelming. And so I would love to hear when was it and why was it so bad? | |
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| It's hard for me to say when's the first time I saw an electric car. I mean, I've been aware of them since I can remember. I grew up in Berkeley, California, where people were making various kinds of conversions of cars since I can remember. So I had seen kind of homemade and pretty crummy little electric cars since I can remember as a kid. And, all of them had basically the same features that they were underwhelming to drive, they usually looked pretty bad and they had very short driving range because the battery technology was so poor. | |
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| Tell me more about growing up in Berkeley. What was that like? I think it was in the sixties and seventies. | |
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| Well, that's right. I grew up in Berkeley in the sixties and seventies when Berkeley was very different than it is now. It was called the people's Republic of Berkeley, I suppose. | |
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| What was it like and what were you like? | |
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| Well wherever you grew up, that's all you know, so it seemed perfectly normal to me at the time. But I do remember for example, in 1968 and I was eight years old, I remember when downtown Berkeley was occupied by the national guard. I remember the various riots that went on in Berkeley and I was probably too young to really appreciate what this was about, but it was definitely something that we noticed. | |
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| I know you wore a pin on your coat that said question authority. What did that mean to you? | |
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| That's right. I don't know, it was, I guess I grew up thinking, I don't know, maybe doing things in unconventional ways, always. And somewhere along the way, probably from a street vendor on Telegraph Avenue in Berkeley, I bought a little pin that said "question authority". And one of my friends always ribbed me and said that does that mean I'm an authority on questions, like, rhetorical questions and stupid questions and et cetera. | |
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| Did that align with the personality of your parents or were you kind of unique and rebellious relative to who they were? | |
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| Oh, I guess they would say it was unique and rebellious to them. But yeah, I mean, my dad was early in the computer business, he started working as a computer programmer in like 1958 or 1959. And so that was from his family's perspective, pretty rebellious. | |
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| Before co-founding Tesla together, you and Marc Tarpenning had a bunch of collaborations together. You call Marc the "straight man", and if you couldn't get an idea past him, you knew it might not work. Describe that dynamic, and what were some of your early ventures together? | |
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| Yeah, so I met Marc socially through a mutual friend and we enjoyed talking to each other and exchanging ideas. After quite a few years of that, there was an opportunity for us to both work together on a consulting project for one of the disk drive companies. And we did that, it was, it was quite fun.
We had to design something that was, I mean, from today's perspective, pretty boring, but I think the architecture we came up with was unique and, and pretty interesting, and it worked nicely. And more importantly, the experience of working together with Marc was a real pleasure for me.
And I think he had the same feeling. So when that was finished, and we did a few consulting jobs together. We started thinking about the idea of starting our own company together. And this was at a time when mobile technology was just getting going. We all had actually workable laptops. We all had cell phones, much bigger and clunkier and lower function than today's of course, but nonetheless, and then of course the other item we would always have was our PalmPilot for our calendar and so on. And we had become aware of, well, first of all, that batteries were just getting good enough for mobile tech, this was still in the days of a nickel-metal hydride batteries, the low powered electronics particularly, competing power was just becoming possible as well as flash memory was getting to be pretty cheap. I mean, relatively so, and this is where this idea of making an electronic book came from was, was, basically looking at this bits of technology and thinking about where we could apply this in some space where we both were interested. It wasn't just some piece of tech gadget, but something that we liked. And that was the idea behind the eBook thing. | |
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| And this was in 1997, which was 10 years before Kindle was founded. And that's you- | |
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| Actually 1996, yeah. | |
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| Oh okay, 1996, even longer. And that's when you started this e-reader company called Rocketbook, as you said with Marc. What were the steps in your life that led up to that moment? Where did you go to college, what did you study, and then what was your entrepreneurial journey after college that led you to have that conversation with Marc to say, let's start an eBook company? | |
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| Well, so I got a master's degree in electrical engineering from the University of Illinois. And at that time, my interest was really in computers. I mean, designing computers, our equipment around computers seemed like the leading edge of technology at the time where new inventions were happening.
And it looked like a long future. So that's where I started. And, when I finished my Master's degree, I did the usual on-campus interview thing and interviewed with a whole bunch of companies and actually received quite a few job offers from various segments of the industry in different parts of the world. And I finally accepted an offer from a then startup company in Silicon Valley called Wyse Technology, which was making at the time computer terminals. And I selected that company. It was definitely not the highest paying offer I received, but it was, it was a company where I really liked the vibe of the company. It was dynamic and everybody seemed to be working together as a team, and I liked the feel of it. And I didn't actually understand what it was that I liked. I mean, as it turns out, this was a startup company. I was employee number 45 or thereabouts, and I actually didn't even understand what a startup company was. I didn't understand what stock was, at all. I didn't know what stock options were. And in fact, in those days, when you joined a company like that, they didn't actually give you a stock option. They gave you a stock grant, which you had to pay for on the spot. Okay, well, I was fresh out of college. I had amassed some serious student debt finishing my degree and suddenly I have to like pay money to get a job, which seemed- | |
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| That's wild. | |
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| -odd to me | |
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| You're like "wait a minute, you're supposed to pay me". | |
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| Right? Well, the company had a program where I could actually borrow that money from the company and then buy my stock, which is what I did. So I went further into debt at that point, which, seemed kind of weird. And I didn't really understand the whole game until some years later when Wyse Technology went public and suddenly I actually had some money and I had enough money to put a down payment on a house in Palo Alto. Of course, houses in Palo Alto were a lot cheaper than now. | |
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| Now, yeah. But so your first company out of college was a startup. You chose it because you liked the vibe, even though it didn't pay the most relative to your other offers, and then eventually that company went public. | |
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| Right. And maybe I didn't even know what a startup company was, it was all new to me. And I've worked my way up through the ranks in that company until I was a manager, I was manager of high end terminal development was my title.
And so I had proposed a network-connected graphics terminal to management at Wyse several times and was shot down every time. And so a friend of mine from that company and I together with four people from another startup company that had ended, got together to create a company to make such a product. We created a company called Network Computing Devices where we made these X windows-based graphics terminals. So that was my next startup company. I was not in management at that point. I was chief engineer was my title, and we came out with a line of these products and eventually went public in, I guess, 1991. | |
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| Two for two in public companies, right out of college. | |
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| Yeah, well, but this one I take more credit for it cause I was actually part of the founding team on that one. Whereas Wyse I just came in as an employee. | |
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| And then what was the path to Rocket eBook? | |
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| Well, so Entity went through a journey and eventually wanted to transform themselves into basically a software oriented company. And me as an electrical engineer, really focused on hardware I could see that my days there were numbered.
So I left, and I did some consulting. And this is when I started doing consulting together with Marc. We had known each other already, but we did a few consulting gigs together, mostly in the disc drive industry. But, the district industry was technically interesting if you're into the science, the engineering of it, but, other than that. I mean, crushingly dull. I mean, just, I mean, I remember we went to a trade show that was called disk con and if it weren't for the giant espresso shack outside the conference, I think we would both have just died of boredom. You know, you can only look at flex circuits and rechannel amplifiers and stuff like that so much. | |
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| From there, I know you went out to fundraise and at one point you pitched to Jeff Bezos. What happened? | |
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| That's right. Yeah. So we were looking for funding from anybody and obviously at the time Amazon, remember then, was a bookseller. They almost sold nothing else. And so it seemed like a kind of a natural fit, an internet based bookseller. And we're doing an electronic book where the content is delivered over the internet. Made sense.
And we had already made some progress with the publishing community that we were getting some content a little bit at that point, not much, but it was enough to show that it was maybe going to happen. So we pitched this to Jeff Bezos at Amazon and spent a couple of weeks with him up in Washington showing him what we had and he liked it. And I think he got the idea in general. But we were basically, after lots of negotiation, were basically unable to come to an agreement about how we would do business together and the hangup seemed to be that particularly not Jeff Bezos, but his lawyer was very concerned that by investing in us, that he would somehow rather enable his competitor also to get into the space and compete. His competitor in those days was Barnes and Noble. You remember they had bn.com, which was doing more or less the same thing, although not as well. And so every time we thought we had an agreement, by the time the lawyers were done putting a contract together, it had a poison pill in it where Amazon could basically block us from taking investment from anybody they felt like. And I was just really afraid to agree to such terms and after round and round, I gave up and I did kind of the obvious thing, I got on a plane and went to New York and met with the team from Barnes and Noble. I mean Leonard and Steve Riggio were then running the company. And I met with both of them and they also got it right away and agreed to invest. So actually Barnes and Noble became one of our very first investors, our first real investors. | |
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| So this is two IPOs and then Rocket eBook eventually gets acquired, is that right. | |
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| Right. Well, that was a real surprise. We had our own measurements and it was a really good Christmas season, the year of 1999. We sold, I don't know, something like 40,000 Rocket Books. We had about 50% of the front list books from all of the major US publishers available on the Rocket Book.
And that was, that was a big hurdle. We had gotten over to get those front list titles. I mean, there was a lot of resistance in the beginning from the author and the publishing community. | |
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| So it's interesting, your entire adult life after college, you were starting and pitching companies. And yet you had what you described as crippling stage fright. How did you pitch these ideas to investors and then how, and when did you overcome that fear? | |
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| Well, yeah, so I mean, the first time I was responsible for the pitch was with NuvoMedia, with the Rocket Book company. Before that I was just an engineer and I would, I would maybe, give materials to the management team to go to the pitch, but I didn't do the pitch. And, when I first started, when we first started NuvoMedia, I signed up as a CEO because Marc wasn't going to do that.
But the original idea was that we would go find somebody to be CEO because it was just not my gig. I wanted to be an engineer. And that didn't happen. I started, I put together the very, very early pitches, I wrote the decks and so on and I was coached then by a woman named Judy Estrine, who had been the executive VP at NCD, and was a good friend and was somebody who I knew gave really smooth presentations. And so she invited me to her office to try out my pitch on her. And she was brutal. I sat down with my presentation and, and walked her through it and she sat there with just a stone cold face. Didn't make any expressions at all, every now and then she'd write something on her paper and look up at me. It was just difficult as heck. And then afterwards she gave me some advice about my presentation and a couple of the pieces of advice she gave me were crucial. The first one was, she said, Martin, I know that you talk too fast, it's in your nature. And it seems like when you made this presentation, you were deliberately slowing it down. And I said, yeah, it was, I know I talk too fast and so I tried to make it slower. And she said, don't do that. When you do that, okay, you're slower, but you lose the energy, you lose the enthusiasm. It feels kind of uncomfortable. So just talk at your normal pace. Okay, that was really good advice. | |
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| Kind of summarizing your early career in all of your ventures, you have focused on the computer human interface. What has drawn you to that interface? | |
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| Well, that's right. It's how do you connect computer terminals, graphics terminals, electronic books, electric cars. What's the common thread and that's what it is. And when I took the job at Wyse, that was not on my mind, I don't think in particular. But I got into it there that I got real, real interested in just exactly what makes a keyboard feel right versus one that doesn't. Given the limitations of what was possible and an old CRT screen, how can they make that? The characters you're seeing are as readable as possible doing graphics, how do I get the graphics to be as natural as possible to the person looking at it.
And then that got me interested in thinking about kind of that fuzzy line between the machine and the person. | |
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| When did you start getting interested in batteries and what was battery technology like in the early 2000s? | |
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| Okay. So I started looking at batteries actually in the late nineties because of the Rocket eBook. So our first eBook used what were then the best kinds of batteries for handheld equipment, which were nickel-metal hydride batteries, which were pretty good. But they definitely had their limitations.
And as we designed the second generation Rocket eBook, which was actually the one that was in development, when we were acquired, we used lithium-ion batteries, which were the newest technology and clearly better than everything that came before. We also understood that they required a lot more management than every other kind of battery that came before them. And we pretty well understood that, what that management entailed and that was one of the key pieces of starting Tesla, was could we actually build a battery system for a car using the same technology and to scale up that battery management from two cells to nearly 7,000 cells? | |
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| Yeah, most people would assume the answer is no. And before Tesla had raised any capital, it was just you and Marc thinking about how to start a car company. And Marc thought that starting a car company was totally nuts. | |
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| That's right. | |
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| But you were convinced that there were major trends, like better batteries and the need to get off foreign oil that made electric cars attractive. So how did you convince Marc to start Tesla with you? | |
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| WelI, I had been thinking about this for a while, not originally as an idea for starting a company, but more for what kind of car would I drive next? And I wanted a car that was fun to drive. I like driving, I've had various kinds of sports cars over the years and I wanted something fun, but I didn't want to buy something that was lousy gas mileage and preferably something that didn't even use fossil fuels.
So that's where I started. And so I wanted to know for myself, what was the right technology. And I spent a lot of time studying every possible way. I could think of moving a car that would with gasoline or diesel or some kind of hybrid or our electric cars with the electricity made from various sources, like natural gas or coal or even diesel. And then also looking very closely at hydrogen fuel cells, which is where the auto industry had just recently moved. They had basically all given up on electric cars, maybe anybody who's seen that movie "Who Killed the Electric Car" knows that many of those cars were taken back and actually crushed. And so I did, I did this math where I looked at the actual energy content of the source fuel. I mean, the stuff that came out of the ground, whether it's coal or oil or natural gas or whatever and the efficiency of converting that into a fuel that goes into a vehicle and then the efficiency of the vehicle itself. And I could compute the well to wheel energy efficiency from the source field to the actual driving vehicle. And I went over that pretty carefully and all my numbers came from reliable sources and it was the more I looked at it, the more, it became obvious that the electric cars weren't just better than all the other choices, but much better. And that hydrogen fuel cells were a dead end, that the efficiency of that system was no better than gasoline cars, the carbon footprint would be the same. So that was where I started. | |
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| And then how did you convince Marc to join you? | |
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| Well, the next step was to try to go buy myself an electric car. And that's when it became painfully aware that you couldn't, there was none available. The best I could find was a little company in Southern California, that was basically on the way to going out of business. A company called AC Propulsion that had made a couple of, I mean, exactly three electric cars using lead-acid batteries still, but was trying to make a little sporty car.
It was very homemade, kind of a kit car, but it was something different than the glorified golf carts that you normally saw. And so I contacted them and they explained to me that they really weren't making anything anymore and that they had basically lost all of their revenue generating business. When the car companies stopped looking at electric cars, because what they had been doing to make money was, was making electric car conversions for the car companies. And that ended, so I realized that they had the pieces lying around their shop to make one more of these so-called T-zero cars. And I was willing to pay them to assemble that car for me. Additionally, I did not like the idea of the lead acid batteries, particularly the way they were actually installed in that car, that was really dangerous to me. And so I had this idea of using lithium-ion batteries, the same thing I was familiar with from the Rocket Book days. And as it turns out, they had also been thinking about the same thing. And so we agreed that they would build me a car using lithium-ion batteries before they did that, they would convert their own car. One of the three, they had built, they still owned, converted from lead-acid to lithium-ion. So I paid for that, I actually wound up investing in the company and paid them to convert that car. And in the end, actually, unable to build the car for me. They couldn't do it. They let me borrow their car. And I drove it for three or four months as my daily driver. And I got the feel of it and I enjoyed it and, to me, it was very sad that AC Propulsion would never be able to turn that into a car. And it was also clear to me that this was real, that even though this was a little homemade car, that it proved that you could make an electric car, that was exactly the opposite of what everybody thought about electric cars. It was, everybody thought electric cars were ugly. This car, maybe it wasn't beautiful, but it pointed in the direction of being beautiful. Most people thought of electric cars as slow and unfun to drive. This was fast and very fun to drive. You know, most people thought of electric cars as being very short range because of their lithium-ion batteries. This car had actually had a very decent range. And, and I looked at that, I said, this is a great opportunity. And on top of that, all of the people who ought to be the competitors in that space, all of the existing car companies had recently very vocally, very loudly moved out of the electric car space, and were off chasing the windmills of hydrogen fuel cell cars. So this is the kind of the story I laid up to mark and he was pretty skeptical and I had to do my homework on these energy calculations as carefully as possible, cause he challenged everything. How do you know what is the conversion of, for example, crude oil into gasoline. What's the efficiency of that? And I said, well here's a published study from Standard Oil Corporation. Okay. That's pretty good. You know, what is the efficiency of moving electricity on the electric grid? Well, here's a study that was co authored by the oil companies and one of the big electric companies. Okay. That's pretty good. So I did that all the way through and Marc began to realize that electric cars actually did make sense. Of course there was this big hurdle of, does it make sense to actually start a car company? | |
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| Right. And he thought you were nuts. | |
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| That's right. Yes. For me, the moment when I actually kind of maybe hadn't been persuaded, was when I, when I came up with this name, Tesla motors, I've been thinking about a name for a company for a long time. And I came up with this name and it sounded good to me and it sounded good at that time to my girlfriend.
And so, on one of our morning coffee meetings, I suggested this idea. I said, what do you think of the name, Tesla Motors. And he stops for a minute. And he, this is by the time we're of course, on wifi, and he gets on his laptop and tappity-taps on his keyboard board for a bit and says, oh, he says, now we own the domain name. So, at that moment, he bought the domain name for the company and we began looking around to find a little office space, which we did find over in Menlo park, and put the sign on the door that said Tesla Motors Inc. | |
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| Love it. What was fundraising like in the early days? How did you attract capital, given the lack of interest in the EV market? | |
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| Well, the earliest money in the company came from Marc and me, and then from our friends and family, it was small amounts of money, but it was what we needed to pay the rent of the office and buy the computers that we needed to do the work we were doing. And it was just the two of us sitting at our desks working out the ideas of the company.
So that was the first money. We then first pitched the idea of the company to various venture capital firms who had invested in our previous companies, and two of them agreed to invest in the company, but they weren't willing to lead, we needed to find a lead investor. So we were basically following every single lead we could find whether it's a venture capital firm or a corporate investor perhaps, or various wealthy individuals, and in that vein, this is how we approached Elon Musk to invest. And most of the people we had showed this car to, well, first of all, one thing for sure about venture capitalists is that almost all of them are experts on cars, if you're not sure, just ask them. So all of them came for a drive and this little prototype was the AC propulsion car. All of them knew all about the dynamics of cars or whatever, but they wanted to go for that joyride. But in the end, just coming off of the whole dot com thing, the idea of not only investing in a company that was making a big, old giant thing, but a car of all things. Know like when's the last time somebody was successful starting a car company, but you think back what DeLorean, Tucker, you know? | |
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| Right. Right. And so that first round, other than friends and family, ended up being 6.5 million, 5 million of which was from Elon. Is that right? | |
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| Roughly. Correct. Yeah, it was that kind of numbers. And the rest of it was largely filled in by those other VCs. | |
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| Got it. And then what did you have to give up in order to get Elon in for 5 million? | |
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| Well, he got a very large chunk of the stock and he became the chairman of the board and I gave up the title of chairman. | |
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| What did you try to do first from an engineering perspective, given that you're starting a car company from scratch? | |
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| Right. Well, even before we approached Elon, we had been thinking about how to do that, knowing full well that we would not be able to build an entire car from scratch. And more than that, it became very obvious early on that it would be difficult for us to hire people from the auto industry, because most people in that industry were convinced that electric cars were impossible.
So a bunch of crazy people out in California starting an electric car company on their own, it just doesn't sound like a career path. So we knew that we couldn't build the entire car, do homologation and crash testing and all that ourselves. And so we looked around for who might be a partner. We had a shortlist of companies that we thought would be suitable for that. And the top of our list was Lotus in the UK. Partly because their scale was not that far away from ours, they weren't a giant company, they were relatively small anyways. So their own production facilities were scaled the right way for us. And also because that company already had a business of doing engineering for other companies. So Marc and I approached Lotus at the LA auto show the next one that came up and basically invited ourselves into the booth and looked around until we found somebody who's name badge I recognized, and then basically forced ourselves upon this guy to listen to our story. And he'd been a polite British guy. He couldn't find a way to tell us to go away. So he had to listen. And when we were done, he was intrigued enough to invite us to the UK, to make a pitch to Lotus about potentially doing business with us. At the same time we talked to AC propulsion about maybe taking a license for some of their motor technology, which they were willing to do for us. So we did that. And that one, I think in the end it was a mistake, the tech we got from that was much less mature than we had thought, that we basically ended up having to start over and reinvent it all. But that's where we started. So we had these two things in our pocket, we had a handshake with Lotus to be our contract manufacturer for the non drive components of the car. And we had the starting point tech, at least for the motor and charger from AC propulsion. And that we were, our plan was to quickly hire our own engineering team and build our own motor controller and figure out how to make that motor in mass production and that kind of thing. | |
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| Tell me about that. You raised this capital so that you could hire an engineering team. Who were your first hires? | |
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| Well, so, I mean, we hired around, actually, before we approached Elon, we had already brought on board Ian Wright. And Ian, he wasn't actually looking to come to join us. Originally. He came to visit us to show us the business plan for his own company, something in the networking space. And he wanted some advice on how to make a presentation.
And so he showed me his presentation, which I thought was terrible. And I showed him my presentation unfinished for Tesla. And he was so intrigued by it that he basically closed down his company and joined our company. So that was that, he's the only other guy who actually worked at Tesla before we were paying salaries. So there's the three of us. And then once we had funding, we began hiring a variety of engineers. We hired electrical engineers. We hired a manufacturing engineer. We hired, of course software guys, a whole team of software engineers. I don't mean to say guys, not all of them were guys. | |
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| Good. Good point. And I know you hired JB Straubel who served as CTO for a long time. | |
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| Well, I hired JB Straubel, not as CTO though. | |
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| Oh. | |
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| JB was hired just as another engineer and after some time I promoted him up to CTO. Yeah. | |
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| Got it. Got it. You hired Gene Berdichevsky, who's now CEO and co-founder of Sila Nanotechnologies who we've had on the show. | |
| ___________________ | |
| Yeah, there's a whole bunch of them. We were hiring basically as quickly as we could hire people who would be actually useful to us. And along the way, some of our most important hires in the early days were actually in the UK, we opened a small office right on Lotus's campus.
And we were able to hire engineers that Lotus was actually shedding because they were going through what they colloquially called a redundancy. And we picked up a couple of very good engineers there, that were not- only were they automotive engineers, in general that knew the space pretty well, but they were very well tuned into exactly what Lotus had. So as we're, as we're taking Lotus' technology and redesigning it to turn it into the Tesla Roadster, we had in our team, people that were very familiar with how those worked and what their design was capable of. | |
| _________________ | |
| You've talked about the importance of battery safety in preparation for this interview, I talked to Gene about you and he told me to ask you about blowing up batteries in your front yard and Woodside. Can you tell me about that? | |
| ___________________ | |
| Yeah, well, so, if you read the data sheets from the various cells of battery cells that were made by the, you know, these various companies, you would think that they're completely, perfectly safe at the time. They all talked about, they could take a puncture and they could take of this and they could take that.
And there had recently been in the press, a couple of very spectacular laptop fires that had a lot of people concerned about the safety of these kinds of cells, just because they start so much energy. And when they burn, they released that energy as fire. And so our team realized that we needed to do something about it. We needed to understand this better. And Gene and his crew forced a single cell into thermal runaway in the parking lot of our office and had to go on the roof to get the remains of the battery after it went flying in the air. So, and that was just a single cell. So we wanted to understand what happened if one cell went off as part of a larger group. So we built- | |
| _________________ | |
| And a larger group, meaning like thousands? | |
| ___________________ | |
| No. Well, I mean, that's the implication, but, of course we can't test it that way. So we built a small brick of cells. It had half a dozen cells but mounted in the way we thought we would mount them in the battery system at the same spacing. And we knew we couldn't just set that off in a parking lot.
So I kind of live out in the country. So in my front yard, out in the country, we dug a big hole in the ground. And we put this, put this group of cells in the ground together with some equipment that was designed to set it off, force it to go into thermal runaway and, together with a camera that could watch what was going on. And then we put a piece of plywood on top of the hole and put a bunch of cinder blocks on top as weight to hold it down. And then we stood back and started the camera and force the thing into thermal runaway. And it was, it was very exciting. Exactly what we hoped would not happen is what happened. That the one cell caught fire and it very quickly set the rest of them on fire. Very vigorously. Enough that it actually blew that piece of plywood off of the hole and the cinder blocks went flying around and the camera itself was destroyed. | |
| _________________ | |
| Oh my gosh. | |
| ___________________ | |
| Well, that led me to, to really make it a policy at Tesla that the battery system, it was required that if a single cell goes into thermal runaway that did not propagate to the adjacent cell. And I wanted that proven both by engineering and by actually proving it by setting a cell on fire and proving it doesn't propagate. And I still think that's the right approach for any kind of advanced battery system. You know, it's one thing to say that we can make the cells more and more and more safe, but if the cells are flammable, then you should assume that one of them goes into thermal runaway for the reasons you didn't think of.
Whatever that might be whatever you're thinking of. It's something else. And when it goes into thermal runaway, I want to make sure that it doesn't propagate to the adjacent cells. Or more, more generally that nothing bad happens when that, when that one cell goes into thermal runaway. | |
| _________________ | |
| What was your single best day at Tesla? | |
| ___________________ | |
| Oh, I would say probably the best day was the day we got back from the prototype builder. We got the first Tesla Roadster that looked like a real car. I mean, it was fiberglass and Bondo and it was way heavy. And it was very imperfect if you got close, but when you stood back and looked at it, it was beautiful.
It really looked like a gorgeous car and it looked like something that would, that people would buy and it had a drivetrain inside of it, even though it was a little bit kind of handmade and thrown together. It was, it was actually drivable. When that showed up and we had the whole company come into the shop and we had a reveal to our employees where we pulled the cover off. Everybody got to see it. I mean, it was beautiful. I was in tears. | |
| _________________ | |
| How many people at the company at the time? | |
| ___________________ | |
| I'm not sure exactly, but I would guess on the order of the U S side, I would say on the order of 50, maybe something like that. | |
| _________________ | |
| Were there moments that you thought you would have to close the doors at Tesla? | |
| ___________________ | |
| Well, I started a company, at least anything you're doing this interesting, is always a little bit manic-depressive, there's days when you're absolutely sure you're going to take over the world. And there's other days when you're sure you're going to get crushed like a bug, and we had ups and downs like that all along.
And we had days where everything was working perfectly, we could see our way to the future. And there's days when some piece of technology was really holding us back. So we had a lot of that, but I guess I never thought about it myself as we might close the doors, I thought it might get difficult, but it never, I never considered the idea of closing the company ever. | |
| _________________ | |
| What lesson took you the longest to learn? | |
| ___________________ | |
| I don't know. I would say the lesson I'm still learning over and over again is to face your problems as soon as you can. It's easy to, when you've got a lot of problems going, it's easy to push the one you don't want to face to the side and let it fester for a bit and deal with it later.
And you need to be honest with yourself and understand what are your real problems and put your focus on those as early as possible and face them. And that's not just technical problems. It might also be a personnel problems. You know, there've been times when I've had to let somebody go from the company. And it's very difficult for me to do that. I finally worked myself up to getting rid of somebody who was a problem. And when I'm done, it's like I should have done that six months ago. Understanding which are your real issues and facing them first. | |
| _________________ | |
| I want to go back to that day that you got the call where they told you you were no longer CEO. What did you do immediately after? | |
| ___________________ | |
| I told my wife. | |
| _________________ | |
| What happened next? Like, walk me through like that 24 hours. | |
| ___________________ | |
| Then I tried to contact the other board members in the company and none of them would take my call at all. I was just cut off. | |
| _________________ | |
| Were you close with them prior to that? | |
| ___________________ | |
| Yeah. It was a board. It was really weird. I learned that they had had a board meeting without me to vote me off the island.
And I was not told about that and so on. So I then talked to, I have a relative, who's a lawyer, who pointed out that because of the bylaws of the company, that actually wasn't a board meeting. | |
| _________________ | |
| Right. | |
| ___________________ | |
| If I'm not there, it's not a board meeting. And so I informed them that they actually didn't have a vote, they voted me off the island, if they want to do that, they have to include me in the conversation. | |
| _________________ | |
| And did they? | |
| ___________________ | |
| We did. So we had another phone-based board meeting, and instead of just being kicked out of the company I was in, I became vice-president, or no, I became president of something ridiculous. I think shrubberies, or I don't know, sidewalk pavement or something God help, but I was a president with no portfolio.
But that was, that was at least a little bit better, than just being booted out with no explanation. | |
| _________________ | |
| Yeah. | |
| ___________________ | |
| The guy who came in to take my place was a guy named Michael Marks whom I'd known for some years before that he was the guy who had made Flextronics into the powerhouse that it had become in manufacturing.
And I was actually very pleased with that because we were at the point at Tesla where we needed to make a transition from an engineering company to a manufacturing company. And I guess this is an important point that long before that had happened, I had initiated a CEO search. I had known that I was not the right guy for that, that there were better people than me. And we had hired an executive head hunter who had brought in a parade of potential candidates to be our CEO. None of them pleased the board of directors, but that was ongoing, which is why I was so totally surprised when they bypassed all that. And did this maneuver to boot me out. | |
| _________________ | |
| And then what was your process like? As president of shrubs. When did you then eventually actually transition out of the company? | |
| ___________________ | |
| When Michael Marks came in, I'm not sure exactly what he had been told by Musk and by the other board members. I don't know, but he treated me pretty badly, as though I was some kind of pariah and that lasted for a couple of weeks until it became obvious that whatever he had been told wasn't true.
And we became, you know, we started work together and working toward the goal of making Tesla succeed again. And somewhere within a year, maybe less than a year, I don't remember the time for him anymore, but, but shortly thereafter that he had some run-in with Musk about something or there, my guess is it had to do it outsourcing, especially overseas because Michael Marks and with Flextronics before that, it had been very successful at making stuff all around the world, whether it's here in US or in China or in India or other places. And he had had some conversations that did not go well, and it was clear that he was on his way out too. So he took me aside and explained that to me. And we both basically left on the same day. | |
| _________________ | |
| Oh, wow. | |
| ___________________ | |
| And then as they brought in the next CEO, which is a guy named Ze'ev Drori, who I think was not so good. And he remained CEO for a while before Elon came into as Tesla's fourth CEO. | |
| _________________ | |
| If you could go back in your early years and give yourself any piece of advice, knowing what you know now, what would it be? | |
| ___________________ | |
| Well, I mean the first one is I would pay much more attention to the various kinds of bylaws that are put in place by investors to understand what are the parameters around changing the board of directors and so on. What we wound up with, with some investors who had a disproportionate control over the board of directors compared to their ownership in the company.
Here's another one, you know, one of the problems I had when I was CEO was that we never had a CFO at the company. We didn't have one, and I kept trying to bring them in. I had, I brought in candidate after candidate and every single candidate that we had, one board member or another objected, this one didn't have enough automotive experience, that one hadn't done a startup company, some other one had whatever. And it was one after another. So I was basically running without a CFO the entire time, and then being beat up for not having a good financial report. It's tough. I should have insisted in one way or another and just said, look, we're not running this company without a CFO. We're going to, we're going to bring one in. The first CFO of Tesla, the first actual CFO of the company started the day I left. | |
| _________________ | |
| Looking after Tesla, and then looking ahead for the industry more broadly, where did your journey in electrified transportation take you after Tesla? | |
| ___________________ | |
| Well, it's clear to me that electric cars will live or die by their batteries. Everything else is easy. You know, we can, if you pick the wrong kind of motor of your motor controller, isn't perfect. You'll be okay. I mean, it's not, it's not ideal, but you'll be fine, but the batteries are the thing that matter for a bunch of reasons.
I mean, the battery is the most expensive, least safe, heaviest, least reliable component in an electric car. And if you're not focused on the batteries, if you're not building the car around the batteries, you're doing it wrong. So, after I left Tesla and after a couple of years of various kinds of public speaking and consulting, I took a job for a while with Volkswagen, helping them to work on a battery program. Internally came to fruition. We made a really great demonstration car for their management there. And I continue to think about batteries since then, up until now, thinking about how to make the battery system less expensive, more reliable, less heavy, and also trying to encourage the people who were making electric cars to focus on building the car around the battery. | |
| _________________ | |
| One of my favorite stats is that Teslas represent just 10% of electric vehicles globally. And what that means is that Tesla has pushed all the other car companies who would not have acted as quickly as they did because of Tesla. So the fact that Tesla is only 10% is actually a good thing relative to the electrification of transportation. | |
| ___________________ | |
| Hundred percent agree, a hundred percent agree. At the time we started Tesla, as I said, not one single electric, sorry, not one single car company was making electric cars and now every single one does, there were a few holdouts until recently I think Mazda had no electric car program, and I understand they do finally. Now they're catching up. And even the guys who had spent a huge resources and marketing dollars on promoting hydrogen fuel cells are finally coming around to realize that those are stupid. | |
| _________________ | |
| With you and Marc as co-founders of Tesla, and I would argue some of the most influential people in the electrification of transportation globally. You're obviously a pioneer in electric vehicles, and yet you're very skeptical about autonomous vehicles. Why? | |
| ___________________ | |
| Well, it's two different things. I mean, electric vehicles, I'm very positive about because they're making a difference in terms of carbon footprint. I'm very nervous about autonomous vehicles because we are, we don't know how to make very complex systems provably correct. Bugs show up. And like, if you get a bug in your latest iPhone update and it causes some app to crash or the OS crashes, it's not a big deal.
It just reboots and you're okay. And the worst case you could throw the phone out and get another one. If the software crashes on your self-driving car, the car crash can kill you or somebody else. And that's what concerns me. And I mean, I have practically never seen a software update for my computer, for my iPad, for my iPhone, that didn't have some bugs in it somewhere. And even on my, on my Tesla model S, my wife has a Tesla model S, and even that, on its over the air updates, we get new bugs that come along. Sometimes it's terrible. The whole center console just shuts down and goes blank. There's a persistent bug that's been in my car, for the last, my wife's car, for the last, I don't know, five or six updates where it sporadically will open the charge port door. And you can hear it. It actually, in software, is releasing the charge board door and it opens you have to get out and close it again. Okay. That's just annoying. It's not a big deal, but if that kind of bug showed up in the software that's steering my car, my car might be driven into the median and it'd be killed and we've seen some of that. So I'm just really skeptical about our ability to make software that's safe enough, even if you can argue that it's already safer than human drivers, which I think is debatable. I think another piece that I'm concerned about is the ability to hack it and you malicious hackers hacking into that system, whether it's over the network or by hacking it on the road. I mean, there was a study that some university did where they put like two pieces of colored tape on a stop sign, just two pieces. And that was enough to convince the Tesla autopilot software, that it wasn't a stop line and to drive right through. That simple. | |
| _________________ | |
| Where do you expect the greatest technological leaps in electrified transportation to come from looking forward? | |
| ___________________ | |
| Well, the ones I hope for, of course, are all in the battery space right now I think we're on a trajectory where the electric cars are going to be just playing cheaper than the gasoline cars in the next three, four years, maybe five years. But, I think there's lots of room for that to get much, much better, faster.
And then related to that, I think there's lots of innovation to be done in the energy generation side so that we can stop making these coal-fired plants. Even if they are a better carbon footprint than the gasoline cars, we can do better. So there's these technologies I think are important. | |
| _________________ | |
| We're going to transition to our high voltage round. So these are quick questions with like couple word answers. The first of which, and I'm very curious about this one is Martin, if you were going to be an animal, what animal would you be and why? | |
| ___________________ | |
| I have no idea. What animal would I be, I don't know, maybe I would be a fox. | |
| _________________ | |
| How come? | |
| ___________________ | |
| Foxes are quiet and clever and can be adorable. | |
| _________________ | |
| I like it. What inspires you? | |
| ___________________ | |
| What inspires me? I guess seeing people do big accomplishments. | |
| _________________ | |
| If you had to start a new career tomorrow, what would it be? | |
| ___________________ | |
| If I were starting a new career tomorrow, especially if I was young and going and looking at going to college again, I would go into bioengineering for sure. I think that's where the future is. | |
| _________________ | |
| Other than yourself to whom do you attribute your success? | |
| ___________________ | |
| Many of my friends whom I admire, and that includes especially Marc. | |
| _________________ | |
| I remember you telling me that you and Marc have gotten coffee every Wednesday for the past. How many years? | |
| ___________________ | |
| Since about 1988. Yeah. Even through the pandemic, we do coffee over Zoom. | |
| _________________ | |
| That's an incredible friendship. When have you failed? | |
| ___________________ | |
| Oh, regularly. Failure is a lifestyle for me, but I tend to get up and run again. | |
| _________________ | |
| Any specific failure stand out? | |
| ___________________ | |
| Well getting booted out of Tesla counts, I suppose, but yeah. | |
| _________________ | |
| Do you see that as a personal failure? | |
| ___________________ | |
| Yes I do. I mean, I'm happy that Tesla succeeded and I take a lot of pride in the success of that company, but the fact that my transition out of there was abrupt and unexpected is a failure on my part. | |
| _________________ | |
| What is the best investment you've ever made? | |
| ___________________ | |
| Always investing in my own companies. Seriously. | |
| _________________ | |
| Is there something that you thought was true that you no longer believe? | |
| ___________________ | |
| I thought that I was a pretty good judge of character and I've learned that my first impressions of people are often quite wrong. | |
| _________________ | |
| Who has had the biggest influence on your life and work and why? | |
| ___________________ | |
| Oh my goodness. I would say that the person who has the biggest influence on my life is my now departed grandmother. She taught me to be intellectually honest and demanded, always honesty out of me. | |
| _________________ | |
| When are you your best self? | |
| ___________________ | |
| I guess I'm my best self when I'm actually in the flow, when I'm working on some complicated thing and I'm not thinking about anything else. | |
| _________________ | |
| What is your worst trait? | |
| ___________________ | |
| My worst trait is that I'm not really great at multitasking. | |
| _________________ | |
| If you could change one thing about the world, what would it be? | |
| ___________________ | |
| Oh my goodness. If I could change one thing about the world, I would reduce the amount of anti-intellectualism we have - this idea of being against fact-based arguments. | |
| _________________ | |
| If there was just one person who was going to listen to this podcast, who would you want it to be? | |
| ___________________ | |
| Oh, that would probably be some young person who's in the university now, and she's thinking about going into engineering and what to do with her life. | |
| _________________ | |
| Love it. When was the last time you were scared? | |
| ___________________ | |
| I mean, I'm scared in a lot of different ways, but, I used to be a hang glider pilot and I remember the last really big scare I had was my last, second to last flight where I nearly crashed it.
And I couldn't fly for another year after that. I was so scared. And then I did one more flight and sold my glider. | |
| _________________ | |
| Sounds like a safe choice. What is your best quality? | |
| ___________________ | |
| I guess my best quality is that I can, when I want to, I can focus really deeply on one particular subject and learn it. | |
| _________________ | |
| Finish these sentences for me, companies fail because... | |
| ___________________ | |
| Companies fail because they have the wrong people. | |
| _________________ | |
| If you really knew me, you would know... | |
| ___________________ | |
| I don't know how to answer that! If you really knew me, you would know that I'm not a tough guy. | |
| _________________ | |
| Success is... | |
| ___________________ | |
| Success is when you make yourself and the people around you happy. | |
| _________________ | |
| If I could have done one thing differently, I would have... | |
| ___________________ | |
| If I had done one thing differently, I would have paid attention more in school. | |
| _________________ | |
| I remember you telling me you did not get good grades, generally speaking? | |
| ___________________ | |
| I did sometimes and other times not. I got good grades after a while when I got the hang of it. But early on, not so much. | |
| _________________ | |
| I'm most proud of... | |
| ___________________ | |
| I'm most proud of having started the EV revolution. | |
| _________________ | |
| Last question, to build a successful startup, watt it takes is... | |
| ___________________ | |
| It takes a passion for what you're actually doing and it takes a good team. | |
| _________________ | |
| Martin Eberhard is the co-founder of Tesla. He is currently the founder, chairman and CTO of Tiveni, a company designing safer, denser, and lower-cost EV batteries.
Join us for new stories each month of founders who are building our carbon-free future — their upbringings, their risks, their failures, and their breakthroughs that are transforming our world. Before you go, would you take a few seconds to leave us a review? We read every review, and we’re so grateful for your feedback. I want to thank Google for their support of the show. Find out how Google is accelerating the deployment of next-generation clean energy with its 24/7 carbon-free goal. Learn more by following the link in the show notes. Watt It Takes is produced by Powerhouse in partnership with Post Script Audio. Our mission at Powerhouse is to identify the most innovative startups and connect them to the world’s leading corporations to drive decarbonization at scale. Our fund, Powerhouse Ventures, backs founding teams building innovative software to rapidly transform our global energy and mobility systems. You can learn more about Powerhouse at powerhouse.fund, and follow us on Twitter at @JoinPowerhouse. You can follow me at @emilykirsch. And at Powerhouse we are hiring! If you want to help some of the biggest companies in the world build the future of energy and mobility, head over to powerhouse.fund/careers. We're looking for an industry powerhouse to join as the Vice President of our innovation firm - and for someone who wants to accelerate their career in climate tech as our Marketing & Operations Associate who will, among other things, work on this very podcast. Our Executive Producer is Stephen Lacey. Our producers are Jaime Kaiser, Ry Storey-Fisher and Emma McDonagh. Sean Marquand mixed the episodes and composed our music. Special thanks to Mike Miskovsky for making this interview possible. I’m Emily Kirsch. This is Watt It Takes. |
