Welcome, everybody. It is great to see you all. Move on in. We'll have a lot of people here. So if you can move toward the middle, it would be fantastic. Wow! Thank you very much. Can you believe that it is almost Halloween? We are at the end of October. And also, two of my absolute favorite speakers, I'll be interested to hear from you all later how you all like it. I am also thrilled to have two people introduce. And a quick reminder, 11/4, which is next week, we're going to have class online. And it's mandatory for everybody because it has to do with everybody's year-end project, so just two cents on that. If you have any questions about that, feel free to ask me. But in the meantime, it is my pleasure to introduce the student speaker introducers tonight.
What do you do when an entire industry gives up on an idea? In 2003, that's exactly what happened to the electric car. General Motors had just recalled and destroyed nearly every last EV1, the world's first modern production electric car. The industry saw EVs as an unprofitable niche that they were forced to comply with due to the zero-emission vehicle mandate, which was very soon canceled under immense industry pressure. The message was clear: electric vehicles had no traction.
But two Silicon Valley engineers decided to run in the opposite direction. That summer, in a small office in Menlo Park, Tesla Motors was born. Neither of them were experienced with the automobile industry before, but they had already co-founded Nuvomedia and built one of the world's first e-readers, the Rocket eBook. Leveraging what they learned about batteries, they decided to do what no automakers dared. They networked nearly 7,000 lithium ion cells together into one single battery pack and dropped it into a sports car chassis. The result was the Tesla Roadster, a high-performance electric vehicle that could exceed 200 miles on a single charge and accelerate from 0 to 60 in under four seconds. It didn't just prove electric cars could function in everyday life. It proved that it could be accelerating. As an engineer myself, that story is particularly inspiring. My name is Yuhan. I'm a PhD candidate from Electrical Engineering and Computer Science department. Marc and Martin's journey bridging technology and entrepreneurship, taking bold leaps, and showing that engineers make great founders is particularly inspiring to me.
My name is Asha Gupta, an undergraduate student studying economics and media law and policy. Marc and Martin's relentless pursuit of their vision to create social impact through technology guides my desire to create change, proving that regardless of what others say, it is possible to make a difference that helps the world. To understand how they pulled it off, let's look at their paths before Nuvomedia and Tesla. Martin Eberhard began his journey by obtaining a computer engineering degree and a master of science in electrical engineering at the University of Illinois, Urbana-Champaign. He then jump-started his career as an electrical engineer at Wyse Tech and co-founded Network Computing Devices.
Marc Tarpenning graduated from UC Berkeley in 1985 with a degree in computer science. He started his career at Textron in Saudi Arabia, developed software and firmware for Seagate Technology and Bechtel, and later became Vice President of Engineering at Packet Design.
Martin continued revolutionizing EV technology as Director of EVs at Volkswagen and founded an EV battery startup. He is now a partner at Wardenclyffe Partners.
Now, Marc has dedicated himself to mentoring the next generation of entrepreneurs at Berkeley and as a venture partner at Spirit Ventures. As he once said, people have asked me why I would want to start a company, because there are things worth changing. So tonight at the Newton Changemaker series, please join us in welcoming the founders of Tesla, Marc Tarpenning and Martin Eberhard.
There you go. Wow. So glad you made it.
Thank you. Thank you for having us.
That was a great intro. I love that. Not setting expectations, however, that was a little bit scary.
Well, you've done a lot of amazing things. I have some opportunities to ask you one or two questions. I have a question that's been upvoted by the students. And by popular demand, we will try to leave as much time as possible for you all to ask questions. So, Hailie and Taiba, get ready. Thank you for joining us today. Thank you for joining us earlier even today. Gosh, it's nice to have you all here. It doesn't take rocket science to realize that you all have been somewhat present in your ideas. I know you think that you were kind of practical in looking at doing the e-book, because, I think, well, maybe you'll tell us the story later, or why you all wanted to do Tesla. But I thought we could start forward thinking before we go backward, if that's all right. And I wanted you all to think about the future and just maybe only 10 years in the future, wondering from each of you what you think the world might be like. And part of that is so that we as students, all of us, students always, can think about how we can orient ourselves or think about how we can positively impact that future or take advantage of it.
Well, just to start off, the talk we heard this afternoon from Michael Marks, he made the point that any predictions you make about the future are going to be wrong. So with that in mind, whatever we might think, the real answer is you need to stay flexible. You need to pay attention to what's going on and look forward, not backwards.
Yeah. Michael had said, you want to predict the future really often because it's always wrong. Yeah. The kinds of things that are going to happen: AI is everywhere. Of course, everyone knows that. So thinking back to when the internet was young, it sort of hit on the scene in the '90s, and it took over everything in a weird way. And everyone knew everything was going to change, but no one knew how it was going to change.
And we were wrong about our guesses.
We were wrong all the time, yeah. And I think that that's exactly right. Right now, we're in the middle of this AI revolution. We don't really know where value is going to accrue. We don't know who the winners and losers are going to be or what the winners or losers are going to be. But we know it's going to be everywhere and change everything in some inexplicable way. So be really flexible, play with AI in whatever your discipline is to understand how to use it, because it is useful. And if it isn't useful right now for you, it's likely to be useful in the near future.
And I think it also may come and do some harm, and you need to be able to recognize when it's AI that's doing something.
It's going to be a disaster many ways, yeah.
Well, let's call it like you all see it. What do you think is going to be disastrous? What could be disastrous? And maybe if we know about it, we could avoid it.
It's hard to predict all of it. But I would say the opportunity to create really convincing fraud scares me, having been the victim of identity theft already several times. AI already can be pretty convincing. And next year, it will be indistinguishable from real. So I think that kind of misuse of AI is inevitable, and we don't know how to protect against it yet.
If you look at Sora 2 that came out this week, or whatever, and the videos that it can create, they are watermarked conveniently at the moment, but it's indistinguishable from reality. It's beautiful.
And I've got a program that removes the watermark from your AI.
Well, no, of course. Yeah. You can't keep the watermarks on. So it's a beautiful technology, but it's going to make trying to figure out what's real and what is fake nearly impossible.
But back to your original question, this also creates all kinds of opportunities. If you've got ideas about how to protect people from this misuse of AI, even if you're also using AI, that's a huge opportunity for sure.
Yeah. What do you think is going to happen with cars?
We debate that a lot. So first of all, cars are going to be electric. The current administration might be slowing it down or whatever, but the fact is electric cars are better. And the worst thing about electric cars now is that they're too expensive. And the prices are coming down because we're learning how to make stuff cheaper. But I also personally think that in urban environments, cars in general aren't the right answer. I think that ultimately there's other kinds of mass transit that we could do that would be more efficient and make the cities better. I think Marc and I don't totally agree on this.
We don't agree totally, yeah, partially because if you look at mass transit, around here, of course, it's very limited. But if I take Caltrain now into San Francisco, I live on the Peninsula, so going into the city, that didn't used to be possible for me because it dumped me off at Fourth and Townsend unless I wanted to go to Fourth and Townsend. It was really hard to get anywhere else. Now, between Uber and frankly, Waymo, which is super fun, how many of you have been in Waymo? Yeah. Isn't that totally random? It's like so bizarre, you're in this thing, and it's driving around. I love it. And that really to me enabled a kind of public transit. Now, in an ideal world, it would be more like Europe, where I would have been able to go to Fourth and Townsend and then get into the metro or whatever and go to where I wanted to go. But we don't have that for whatever reason. So I think that these car services are going to be really powerful. The big question is, when do we get the self-driving car that you just buy? That might not be for a long time. That's going to be a hard problem. But I could imagine that maybe when you go and rent a car, you get the rental that doesn't have a steering wheel and it just drives itself, and it's a service that you're paying for. I could see how that might work. I don't know. We'll see.
It's going to be really fun to hack those cars, too.
We were talking about entertainment, but it does give you all sorts of opportunities for entertainment. What about you all really came out with the first e-reader. What do you think is going to be the future of reading?
I think we're already somewhat in that future that most people don't actually read books anymore. I see people reading on iPads more than I see them reading on a paper book.
Or their phones. You have this little tiny screen, and people sit there. So at the beginning of time when we were doing the e-book, we assumed that no one would ever read on a little tiny screen. And the screen technology was really bad. So we had just seen the very, very latest screen technology that was just barely readable. And we figured, this is the opportunity to create electronic readers, because if you do it when the technology is just barely possible, it just gets easier and easier and easier. And if you wait until it's easy, then it's too late, someone else got it. So it never occurred to me, at least, that people would be happily reading hundreds of lines of text on a little tiny display.
But the display is so much higher resolution.
It's so much better, yeah.
But you make a point that's been a hallmark of quite a few of the things we've done together. And that is, that we tend to get interested in a new field or a new technology when the technology is just barely good enough. And I would say that's also true for Tesla.
So just for giggles, here, we have the future in the room. I'm just curious how many of you actually buy textbooks? And we're not taking a picture of it. I just want to know, is there anybody in here who buys textbooks? I'd say that's a good 5% of you. How many of you have a driver's license? That's more than I thought.
How many of you have a car? Good. I got it. Here's the hard one. How many of you can drive a stick shift? That's better than I expected. Congratulations.
That's way better than I expected.
One of my hobbies is teaching kids how to drive stick shift. I've taught probably a couple dozen kids to drive stick. And a lot of kids can't.
Now, that explains why you're CEO, it all makes sense to me now, because that's a hard thing to teach anybody to drive stick shift. Yeah. So thank you for looking into the future a little bit. It is so evident talking to you all, and looking at what the picture that was up there before, how much you all, speaking of entertainment, complete each other in a way. And I'm curious to know, maybe no one said that to you all before, but you have such a wonderful camaraderie.
That's why we keep working together.
Yeah, well, you keep working together. Can you take us a little bit back to when you were both in college and how you all even met?
We didn't meet in college. We met after college.
Yeah. So we have a mutual friend.
So my high school buddy and actually Berkeley roommate was hired by you in my buddy's first job. You were his boss.
Yeah. No, I wasn't his boss. So this is a company called Wyse Technology. We made a thing called computer terminals. You probably never heard of one, but your computer is being turned into one now. But I got the job. I was the first kid hired straight out of school into this company, because I happened to have the same thesis advisor as the founder of the company did. That was handy. But Greg, your friend, was the next kid hired straight out of college. So we were the children at the company.
It was in Silicon Valley.
So how did you move here?
From, oh, well, I'm born in Berkeley. It's my home.
Exactly. So I knew. So I just needed to hear that from you. So that's why you went to Illinois for college?
My family moved there when I was in 11th grade. And I paid for my own school, so I was in-state resident. I could afford it.
I've never asked you this, I don't know how you got to Berkeley.
I drove from Sacramento. It's I-80.
Here's the weird thing, we both, yeah, two native Californians here.
And what on Earth, how long did it take before, for some reason, I had this vision of you all playing games or something together. But what was your relationship like when you met? Because when you meet someone and they're your friend's boss.
I wasn't a boss. I was just a colleague.
But he threw these great parties at New Years. And Marc in those days was working overseas and would just come into the US occasionally for good parties, I guess.
Yeah. It's for the party. What else?
Yeah. And Marc and I just talking to each other. I think we got into some deep political conversations. And I think you pulled me a little bit toward the right, and I pulled you a little bit toward the left, but not very far. Yeah.
So happy medium. When you were working overseas, was that when you were working in oil? I don't know.
I was never working in oil. Yeah. So when I got out of college, and this, I know, is going to sound totally irresponsible, but there was a time when there were so few computers around and people who knew how to operate them and work with them were in great demand. And that was me as a teenager. So while I was here at Berkeley, I was doing all kinds of consulting gigs for various companies. I was a great deal for them. So I had saved a bunch of money. And when I graduated, I didn't want to get a job or anything. I just went overseas, and I was going to hang around with some friends from Berkeley and tour Europe. I'd never been there. And I got tracked down by somebody I had done a project for. And he said, you got to come back. This is after like four weeks. You've got to come back. I've got this project. It's super off the rails. You're the perfect person for it. And it'll take three months. And then I'll send you right back to where you are in Geneva, Switzerland. You can go right back and continue your trip through Europe, and you'll just have a bunch more money. And I thought, OK, well, that sounds good. So that three months was six years. And it took me to Saudi Arabia. And I was working on computer systems at the airport in Riyadh, which was a project enormously off the rails, which was, so I was part of the fix-it team that came in and tried to get the project back on the rails.
So that's where you were coming from when you came back home for parties?
Yeah, so then typically around the holidays, I would come home. There are tax reasons to not come into the country very often, but I would come in around holidays. And the New Year's day party is, I think, yeah, where we spent a lot of time.
So there came an opportunity for us to do a consulting job together. I don't remember who got roped into it first, but we wound up working in, this is the most exciting space you can imagine, computer disk drives. Oh, baby.
So those are the spinny things that used to store data. And they still are used.
Yeah, it was incredibly boring, but it was fun working with you. And it was a good experiment to see if we could work together. And it turned out it was great. I was basically the hardware guy. You were the software guy.
Yeah. And disk drives are actually a really fun thing because they're fun for about a couple of weeks because they're electromechanical. So there's a spinny thing. There's a magnetic thing. There's an analog thing which is head, and it's flying. And there's an aerodynamic weirdness to it. And then there's a bunch of software. My specialty was the firmware, the thing that makes the hard drive get the data off the head. And that turned out to be really fun for one project and then another project.
And we knew it had to end when we found ourselves at Disk Con.
The world's most boring trade show ever. Oh, my god.
So like Comic-Con, but the opposite of Comic-Con. I like that.
If it wasn't for that espresso bar at the beginning of the thing, I think it would have just died.
Well, at the end, we were leaving, we had lost the will to live for being there. And then there was this espresso bar that kind of materialized. And we both had double espressos and.
We crawled on our hands and knees to it.
Yeah, it was really brutal. And that was the end. We said, we're never doing this again. We're done.
And that led to us hanging around cafes thinking about what to do next. And that's kind of where the e-book idea came from.
I thought, it's because you got tired of carrying those books back and forth.
Well, that was one of the, you want to solve a problem that you know exists. And at that time, you had to carry all these books around because that was the only medium that we had. And I was traveling a lot, or had been, and we thought, well, let's solve that problem. And it's going to take a technology that's just barely possible if we can get a display.
There were about three or four technologies that mattered. There were batteries, which, this led eventually to Tesla. But in those days, it was nickel metal hydride. There was low-power, relatively high-performance microprocessors. And there was flash memory, and then most importantly was screens.
So you know that now. Did you look at that then when you were meeting in the coffee house? Were you like, OK, these are the three things that are just.
Yeah, yeah. This is a problem-solving technique that I've used my whole career is that if I have an idea for something, I'll lay out an architecture of what I want to do. Then I'm going to try to be as honest as I can with myself and say, these are the places where it might fail. And if I can't get those working, I don't do the project.
So another technology that we were looking at was, again, it sounds ridiculous given where we are now, but at the time it was innovative. Because of our background in disk drives, we realized that the data rate coming off the heads was just barely good enough to support streaming video. And video decompression, the silicon had just become available that you could actually decompress MPEG-4s or 3s at the time I think, into video coming off the head. So we thought, well, we could make, and you could compress it as well. And we thought, well, that's pretty crazy. So we could use a disk drive to record television shows. Again, nobody had done this before. And we thought that was a great idea, and the technology was just possible, and it was just going to get easier and better. But neither of us had a TV. So we thought that.
We were both anti-TV in those days.
This was really not a good thing for us to be doing something that, again, we have no experience in. But we read books. So we thought, oh, let's do the book thing.
And then shortly thereafter, TiVo came out doing exactly what we were going to do.
Yeah. It was right in the same time, because those engineers had also come to exactly the same conclusion that this technology was just barely possible.
You're both investing in companies now. So I can't help but ask, is there some technology that's just barely possible now besides AI, which is totally possible, that you are wondering what's going to happen with it?
Well, the one I'm on is, maybe not quite possible. It's right on the hairy edge. And that's nuclear fusion. There's a company I'm intrigued by called Commonwealth Fusion in Boston, spin out from MIT. Whoever gets that working might well be the most valuable company in the world.
Well, that'll address the need for electricity.
Yeah, it'll help. I see a lot of technologies. And there's some in biotech that are quite exciting that are, again, sort of new understandings of enzymatic reactions and stuff. It's not something that I understand at all, so I just have to listen to the experts and say, OK, that must be exciting. And, oh, they did win the Nobel Prize for that. That seems important, which is actually what happened. So that is in chemical precursors for pharmaceuticals, which I thought was super, super fun. And then the other thing, we look at energy systems, and we also look at chemical conversion of electricity hopefully directly into synthetic fuels for aviation. It's all about aviation. Aviation is like the one place you.
Energy density. That's why, yeah.
So aviation is the one thing. You're not going to have electric jets. It just doesn't work.
So for those of us who don't know that much about enzymes or nuclear fusion or aviation, is there something that has to pass a smell test for you all to either give advice to or think about investing in? Is there some smell test for you all?
Oh, yeah. So the idea has to be compelling in some way. There has to be someone who would want to buy it if it existed. I know it sounds funny, but I see lots of deals where it's nice, save the planet or whatever, which I'm really in favor of. Don't get me wrong. But if no one's going to want it, no one's going to buy it. They're not going to buy it to save the planet. They really, it needs to be a compelling product in some way, in some vector. And it doesn't, it can be cheaper. It can be faster. It can be prettier. I don't care what.
And it has to be a solution to an actual problem. We've seen too many pitches of ideas that are solutions looking for a problem. It's a cool thing, but what are you going to do with it?
Yeah. And some of those eventually do find.
So MEMS technology was a great example. They discovered that you could make silicon that moved, which was weird. And I don't think it was expected. But anyway, they eventually figured it out. So for years, MEMS flip-flopped around trying to figure out what to do with this thing going up and down in the chip. And then they discovered projectors. And oh, that's a big market. But it turned out that you could reverse the whole thing and make it so it could sense very precision movement. And that's what's in every cell phone. So it went from being this really super weird thing in the lab for years, for decades. The problem is, if you had started a company doing MEMS, there would have been those many decades where you had no sales, which would have been very bad.
So I'm going to ask you something based on that I've never really thought of. And that is, when you all came out with electric cars, I don't think anybody, you all need a lot of money to start Tesla and do stuff. And it was not easy for you all to get investors.
I showed a prototype, we had to, I don't know, a hundred VCs at least. And the funny thing.
Were there even 100 VCs then?
And every VC, except one, is an expert on cars because they have a BMW or a Porsche or something. Yeah.
It's actually one of the great things when you're pitching to VCs about that because you can always say, well, what high-end sports car do you have? And they always have an answer.
Yeah, yeah. But they also say, well, I could never buy a car that doesn't sound just like my BMW. So anyway. But yeah, so we made a lot of pitches and got told no a lot of times. And we were also throwing the pitch to any rich guy who had money who might want to invest. We talked to quite a few of those. And one of them invested. You probably heard his name.
Did you, like crazy rich guy?
Crazy rich. Crazy rich guy.
Interesting. I'm sure there'll be some questions around that. So I am going to pivot once again and ask you a question that students asked, I think. Oh, yes. I think, Chung, you're not giving me control. Hailie, can you pull those questions up? Do you mind doing that? And if you go back, there you go. So we asked a whole bunch of questions.
What do you all want to hear about? And there are two that went to the top: what was your most valuable mistake, i.e., things didn't go as planned? And what did you learn from it?
I can think a lot of places where we made mistakes that if I could do it again, I would do it differently, that's for sure. The most, when I say most valuable, meaning the highest dollar value mistake probably was in the way that we negotiated our contracts with a particular investor. And if I could do it again, the lesson I learned from that is read the fine print really well.
I'm assuming, does anybody not know who this particular investor might be? Just wondering.
We're just being clear about that, yeah. But I think every entrepreneurial venture I've ever been on starts off with a certain degree of naivete, the stuff we don't know. And in reality, that's important that if we had known actually how hard it was to make a car, we really understood it, we might not have done it.
It's like having kids. If you knew what would be entailed, no one would have kids. But there's at least existence proofs that that's OK.
And then the other side of the coin is that once you get going, you need to get over that. You've got to figure out what you've got to do. And I would say the biggest hole in our understanding was, weirdly enough, supply chain, how hard it was to get suppliers to sell stuff to us. And I'm not sure going back, how we would have fixed that though. It's just hard.
Yeah, especially at that time, since there was no history of small car companies, at least in this country, we thought, well, the car companies don't make anything anymore. They assemble things, and they market things. And the only thing they make is the internal combustion engine. So we don't care about that. And we'll just be able to buy all the same stuff that they have. We will have to pay more for it.
We'll get windshields and rear view mirrors and everything else from the supply chain. Well, a lot of those places said, oh, yeah, we'll sell it to you. You have to order it in 100,000 quantity. And we're like, OK, we're making like 5,000 a year. This isn't going to work. So that was really hard to get the supply chain figured out, which we eventually did. But that took us way longer than we expected.
If we went back in time and said young Marc, young Martin, it's going to be really hard to do supply chain, what we might do is talk ourselves out of starting the company.
Yeah, or we might have really gone after some supply chain gurus or something. But I'm not sure that would have.
Oh, we had been. You remember when the board turned her down, turned us down.
Before we open it up and you all get ready, I am curious. You just said the board turned you down. How did you have to work with the board? I think that's something that people aren't, no one really talks about.
So first of all, your board of directors mainly is a bunch of people who have, in one way or another, invested in the company. And if you did a good job, you brought in one or two outside board members who aren't investors. And it's a contentious crowd. And if you build your board right, it's diverse, the people from different walks of life, people with different experiences. And you want to have a certain amount of, I don't want to say conflict, but it shouldn't be all agreement on the board. You want to be able to debate stuff. The question is, can you debate those things in a healthy way? Which I think we did in the beginning.
Oh, yeah. I don't think, that was really, the board is, and I'm on a bunch of boards now. And ideally, the board is helping. It's asking the right questions. It's getting you the right connections. It doesn't always work out, but at least they are, in theory, helping you. And they're helping you raise money, which for a lot of startups, including Tesla, that helping raise money is a big deal, unfortunately.
But to your original question, it's not helpful when the board would not let us hire a world-class supply chain person. She would have been perfect. And it was not helpful when the board never let us hire a CFO.
Yeah. Oh, my god. Yeah, that was, the thing is that the board, there's only a few hires that the board approves. So the board, the C-suite people, they kind of approve. But the big deal is that they approve the package, the stock price, the stock grants and stuff. That has to be approved by the board, and salary. Yeah. So that's the only time that the board we can get kind of contentious is when they won't allow you to hire somebody you really want because they're too expensive. And you can only rely, we had a cool company. So we got people that would never have thought that they were going to join some wacky little startup. But because it was a compelling idea, we got a lot of engineers at discount prices, it was stock, but I mean discount prices, that we couldn't have afforded otherwise. But as you work your way up, that delta becomes greater. And then to get those really high-powered people, you need to write a big check and a lot of stock. And the board did not like that.
You're both engineers. You both have an engineering background.
You went on to get your master's also. Do you wish that you had any kind of business education? Now I hear engineers go, I just asked Perplexity.
No, not really. I think we did do some reading on our own to learn about how finance works and stuff like that. But I think I don't know. I guess I say that we both wind up getting an MBA the hard way by doing it.
I think that if we had gone to business school or something, we would have made a whole set of different mistakes. I don't know if they would have been worse or better. Or we would have talked ourselves out of even doing the things. I don't really. But I don't think it would have changed the number of mistakes or even really the magnitude of them. It just would have made them different because there's a few things we would have learned, I hope. The degrees have to have some value.
And in the meantime, in the time that we didn't spend at business school, we were busy learning stuff.
There you go. I'll open it up for questions from you all if you all want to go. But, there's way, I love that, way in the background. While you're getting up there, can you remind us what your family situation was like when you were starting Tesla? Just wondering if you could, were you like?
I can hardly remember that. Yeah, I had three little kids that were, well, no, no, I had three little kids. Well, maybe.
Maybe you didn't know that.
Two almost. So at some point really early in Tesla, I had our third kid. So I had like three, so I had a newborn, a three-year-old, and a six-year-old.
And I got married just shortly after we started Tesla. And my wife had two kids from a previous marriage. So I suddenly was a dad with little kids, which was interesting.
And you were entrepreneurs as Mr. Software, Mr. Hardware in a totally new space. It's kind of stunning.
Yeah, you want to also then move, because you want to have as much of your life in total disarray as possible.
