>> chaie: welcome to the broadcast, tonight alexand karp, cofounder and ceo of pantir technologies, a the siliconvalley mpany nsulting with the government in the battle against terrosm. >> and whawe do ise use what legal scholars call predicate basesearch so we wouldook at you and thewe would goout and say oh tre is are lots of different ings in your life that may b indative of someone involved in bad behavi, but itould als also be very clear how the government looked at you it wouldn't be a wide net cast into a sea of data that bringsback all of our, all of the innocent citizens that are touched by that net, it would be a very precise, very precise operaon and eachtep that operation is documend. >> d also from silicon valley the race to produce electric carse tawld with elon tusk,

the ceo of tesla motors. >> we are not paying for the cost of the co2conzen flation the ocean and atmohere andnot paying for allf these auxiliary wars a the other ings at the gasumps, you fectively have a sudsy difficult taking pce at the gapump because of that and the only way to bridge that is th innovation. is to try to makelectric cars better, sooner than they wod otherwise be. >> charlie: arogramming note. my interview with elon tusk was recorded bore the government announced it would grant $465 millionn loans to tesla, the company plans to us the money touild an electric sedan and battery packs tonight,echnology for the hour. next. >> funding for charlie rose s be provided by theollowing. >> each day a blion peopl won't find safe driing around the wld we are helping communities to access clean waters. working to improve lives thrgh conservation and edution, one

drop aa time. >> additnal funding for charlie rose was also provided by these funders. captioning sponsored b rose communitions from our studios in new york city, this is arlie rose. >> charlie: alexandekarp is here, thcofounder and ceo of elon tu, data mining software used byarious government agencies in the united states, including the cia,bi and nypd and also used by hge funds and al financialirms, karp is a stanford gradue andofounder the company with ex-paypal engineers. i amleased to have hi here at this table forhe fst tim he doenot do many television interviews. and for that i amlso pleased

to have you here. thanks foraving me. >> charlie: let's talkbout th background which is interesting. stanford law, wasn't it? >> itas stanford law. and then you went to frankfurt? >> then i went to frankfurt. charlie: and ah.d. in neocssical. >> whichs a fancy wayf saying a quick path to bei unemoyed, currently to be the hiest educated, least earning person on the planet. >> charlie: and why did you do th? >> well, the se reason iot involvedn palantir technologies, i was really passionate about t issues and i was largy wasn't putting money ahead of what i thought wasimportant. some of the ideas i dealt with were quite important, what does it mean to ow something,hat does it mean to mmunicate it? what is the fouation of western siety? can we participate as cizens in how -- i was very passionate amot thedeas, just likei am passionate about my business, pantir. >> andlso aboutnti-semitism and otr issues thatou thought needed to be written

about and discussed? >> i published widely on both techcal issues, kind of issues involving the convergence of neophilosophy and fld and on freud and on civiliberties on anytng anyone would ld which is what you do when you are an aspiring acamic with an interest in writing, andhen i migrated io a busine context. >> charlie: and what cause you do that? >> well, you know, the interesting thing about acadea it is more interesting to e people in it than it is to anyone else, you know, d the impact -- >> charlie: i know. >> you end upwriting about small this that may be fair unimportant to other peopland thought that while the ideas were important, the actual imct they were going to have was going be very sml, i mean the kind of work that i did was intelligible to probay 30, 40 people in the wld, so it seemed more intrs teresting and mpelling to get involved in something els get inby and

see how it worke out, and some of the iues in busess are so quite compelling. >> it turd out ihad a fality, i was pretty goo at makingoney and very bad at getting paid, so i basically turned the abilityo ma money anget paid in a busins where i ok for other people who e good at making mon and bad at being paid and i ught them how to mak moneyuicker and to get paid fairly. >> charlie: this s kind of a venture capitakind of operation? >> bically, my own busines which i built and we -- i went arnd looking for motley people o hadcademic proclivits and re interested in business and i wod approach them and say y don't you bui a business? i will lp you and i did that for a couple of years and the i reconnected with peter. >>harlie: petertiel? >> yes, peter tiel and beg with a couple of other guys to build the compy. >> i don't a whilthere you had the idea for palantir technologi? >> post 9/ i think the idea again, was so, silicon vall

ght to be invved in fighting terrism and protecting our cil libeies. and, younow, terrorism i asymmetric, you ar finding needles in haystacks, usually an approach whichs not ta 9ing which there was a critique on dat ming approaches that had been usedt ppal and we thought thisould be eective in ts context, it wou allow huns to find needles in haystacks, so ma the data intelligibleo you and me which it is not, and by doing that it would allow them to find bad pele trying to destroy our society, a could be used also to protect civil liberties by making the data so transparent at it is very clear whathe governme is doing and how they are doing it which is a paicular passion passion oucompany. >> crlie: why did y name it palantir, after the stones in the lord of the rings. >> yes those who had a social life ihigh schoolou may not realize what pantir is, for

those of us who didn't have a social lifit jumps out to you as the gemstones in lord of the rings. and they allowed the west to communicate or the fors of good to communicate and seento st distances, and wehought it was a fittg nameor a part that allows you toee int large databases but doesn't allow u to see thingyou are noallowed to see, whh is basicay what the seam stones -- >> charlie: because civil liberties and everything els or what? >> yes, the bic idea is tt the west or western values will win if we in the west believ in at we are doing, there is no point in having aar on terrorism if civil libertie are being undermid to the extent we aren't wling to fight thi war and th is true in the cyber context, the appach that was ed at paypalas anti-da mining appach, it was ti-data mining because uses alrithms across large data ts what and we call predicate based search so would lookat u and then we would go out and

say oh therere lots of different things in yourife th may be inditive of someone being -- someone invoed in bad behavior. but would also be very cle how the government looke at you, it wouldn't be a wide net cast into sea of dat that brings back all of our -- all of the innocent citizens touched thnet, very precise operation and each step inhat opetion is dumented. >> crlie: how much of your businesss finding terrorist for the u.s. governmt or whoever wants to hire you? >> well, we -- >> charlie: 50 rcent of the business or -- >> most of our business is in government, and it all invols bothides ofhis h equatio finding people who are up to esntially bad things, both in the ti-terror area in cer, infinancial malfeasance mortgage fraudnd also making sure the data is nagged way that allows agencies to coaborate with one another, which is a bigfinding that people td to focus o the policy issues but ao msive

technical issues thatad to be solv and solved in a way where you canjust installt, do we that. and the second pce is how do yodo it so that when the government is lookingt you o me, it is clr that they are looking you and me for reason. if they bring a case against , wh is the case? here did e evidence come from? did it have sours they are allowed to see? d they migrate from one source of evidence, oneiece of evidence to another source? these are the kind of qstions thatmericans care a lot about. >> charlie: wh can't the government do ts tmselves? >> we -- fit of all, we are a piece ofthis, t hardworking and tremendously impressive people you meet in the busess arthe most important part. our part is to pvide world soft sofarea, this ishat america is good and silicon valley is good at. >> that will ntinue, america's leadershipn creating software >> i think software is a area amera will continue toead and silicowill be at the tip at tha movement, it is a place we have excelled , think of the products y like to use, th are mostly american, and

they d't use it becausit is built in america, they use it because it is the best. >> charlie: and why tha you knowthe thing is, we -- it isf course we have enormous lented people but what makes the software product rks an ability to build business around a compelling idea. and th, while this seems obvious in ameri and especially silicon valley, in most every other place i you want to bud a business say how will you make money tomorrow? and silicon value thinke build busisses around an idea, and then we figu outow we are going to me money and this is incredibly important becausef you wantomething to really work and something really complicated you cannotire pele who are motivated b a paycck, they have to live and breathe it, they have to do it over a long period of time, you have to be willing to, our company ok three years to build before we en went to market three years. no revenue. in any otherart of the world people would laugh you out of the room. u go into -- >> charlie: not in theventure capital world. >> not in silicon valley. >> it doesn't have to be sill valley for capitist to say you won't make revenue but we

lieve you have this seed grow into sething big. >> venture capal exists everywhere but the compaes thatave been best at usi th capital exists in america by and largend particularl in silico vaey and it is, believe, it is n because we are smarter, it isecause we work better gether, because we are more likely toe compelled by a big idea and put monetization secreta and this is theecret to our comny, en when we went to market we didn't he salespele, we have no salpeopleorking at palantir, we sell the prodt by exposing cents to it and saying, compare to what you ve. >> charlie: what is the coelling business idea here? >> the compellin business idea is, if you wanto make data, if you want to interact th data in a way that is inte intelligi you and you are government it is a hard hge to do at scale scale so let's say you go to the market and you buy sometng, you talk on yourellphone and you send a s mr., s andou extend eve little -- you wre a report, all of tho are data, and massive scale, it is very

hard for you to see that as a pattern. so wt is the pattern of charlie rose? each charlie rose intecting with people that are up to no goo and then is very hard for me, the citen of america to look at the governmentnd say,id they look at charlie rose because h was up to no good or did they look at charlie rose becae they dn't like his hair color, by the way did the use crlie ro as a way to look atcharlie ro's audience and findout who is in the audience? if i am looking at the government ying to figurthat out it is very hard to do, what is don curreny is they hire a team of mputer scientists who write al rhhms that none of fuss understand and then they come back and say, oh, well, mbe, do you bieve the computer scientists they hire or rather see it yrself? and tha is what we offer. we ofr a way jus gj plug in the platfo and you can be a leading expert in finding patterns on large ta sets, whether the patter are rrorists, cyberttackers, people, again, in financial malfee stance ore the people who wanto look at that the governments doing and wt to form another eithethrough congress or through ou

attorneys we c then see what is govnment is doing. this is very important, we alsollow peop to collaborate which is he fornously important problem, when people look at what happenedn 9/11, th conclusion was it happene because people weret collaborating, andthey focused on kind -- >> charlie: actually the cia and the fbi? >> ageies did not effectively collaborate d people focus on the foil and the in abili to work togher but there is also massive technical issue, how do you wk in a massive data t and take out the t-pieces of datthat the fbi is allowed to s? it is very tough, an thats something we hava rnkey approach to th, you can put our pruct on top o your servers and collaborate tomoow. >> chaie: what patterns have you discovered aut terrorists >> wale, y know, o obviously, we n't discuss ectly what we have done in a claified context nor am i allowed to but for example in thease that was discussed in t public, weook a ta set that ls of pele looked at, some of the world's perts, and we fnd that there was a group of people that lived

in a village tt was responsiblfor most of the attacks in iraq,nd we found that they were resnsible for most of the money andost of the attacks, and thats very valuable a highly actionable information. if you know, if you know a of threal attacks a coming from one source,here is a lotou cado about that, d this is typil for the kind of things or when we looked at the dalai lama, a care wch got a lotf puic attention we partnered with citizen lab in canada and we dcovered the dalai lama had en infiltrated by onef the world's most sophisticated and largest cyber networks. and we discovered th -- >> chaie: working at the service someone else? >> working at the servi of somebody else. charlie: a governmt? >> that part we wer not clear about, bute are clear, one of the various thinkings about cyber is attbution. >> chaie: right. >> ihink the metaphor that one could use intalking about cyber is maybe less cyber war but democratization of spy chniques, so in this eighties and the seveies, only large governmentcould pull off spy

operations now teenagers in the basement wh a computer ca pull off a spyperation and is very uncle if it is them or someone else and the diagntic ck he uses i complicated not like they break your room and the leave a fingerprint a hair behind or ke a picture i is tough to find out who they are but what we can allow people to do is get a muchetter sse of what the evidence is and a where it points to, it is important to ourovernment because if someone attacks your ow or an audnce, someone who is viewing this show's computer, it is a goverent, the reaction of our govement should b very difrent than if it is someone's ex-girlfriend or boyfriend. and these are the kind of things that our product wl allow you, allow the govement, all citizens to figure out. >> charlie: w smartnd how effective are terrorists without a broad brush, the best of the terrorists, many terms of derstanding what you ar about and, therefore, being able to flect it? well, the reason, thesimple reason why simple data mining

doest work, even leavi aside the moral issu it rais is it uses a static algorithm against a nstatic and highly entrepneurial adverry. >> charl: that would be with thterrorists? >> tt's the terrorist and so wh you plead to do is have a atform that allows you to enter t with the data d see the patter before they realize they are giving off th patterns so it is nonalgorithm tic it is not static gj and what we allow peopleo do is allow the acal person doing the work to, the alyst, the target tears to see thpattern it is trorists don' realize they are giving off. now how go is the terrorists? you have to think of terrorists at eer preniewshz, and they tend to be, i tnk, very good at what they do or my view is we need to put our best entrepreneurs agains theirest enr presentencenr entrepreneurse that's the way we win. >> charlie: because they quit using cellphones >> you n think of any approach you use as astatic approac and ey will figure this out, this person gets ken at that taken away ty do a dgnostic, how

did th person getcaught and change their tterns immediaty, and what we need to do is in them and be ahead of whatever their techniq is and that reques people thaare flible, agile, the people who build weird companies the valley, you butthem against those people, and by theay in thpockets of government that is what you find entrreneurial ople going after their entrreneurs. >> charl: where did they develop theirentrepreneurship and their own computer savvy. well that is complicated question b i tnk these movements tento bepeople who ar engaged in theseerrorist or cer attacks they believe this what they are doing and i think they td to attract pele that are agile and creative and sma, they believe in thingse don't believen and i think are highly destructive but nevertheless they behe most intesting, talentedeople of their society, the same people we get our entrepreneurs, t best schools and minds whe people are good at sething that is very valuable. >> charlie: moving to cyber warfare, what do you feathe most? >> well, i think that if we as a

country understand wh the nger is and we asa country understand the kind of -- that it is possibl to fight this without givin up our civil liberties we will n, if we underestate the danger or perceive this as a war that wil be cosy to who w are we wl lo. >> docracies tend twin when the country gets behind it, we are kd of the greest democracy in theorld and we tend to win war where other people believe in wt they are doing. where the people think tha there a tradeoff between civil likts a fighting cyber terrorists iwill be hard wibecause, you know, you can think ofyber espioge as something we are gng to live th forever, long as we have computers that are turneon there ll be peopleto penetrate them ery time we fi a way to brock them they will find a way many, t danger is real and is going to with us e rest of our life, now the question is, if the danger is re and with us for the rest of our lifewhat can we azizs d we as ericans do that allows usto experience the li we want and stock them gj

and i thin unless that ucational piece is really addressed directly, we ll have rob. >> educating the public about the threat? >> both the thrt and t way -- >> charlie: and thnecessity of taking certain -- >>ut approaches, obviously, i am biased and i think palantir technologi's ability to tag data and show what the govement has done is enormously iortant but you have to explain -- if this is plained where there i a contdiction between our liberty and protecting ourself we are goingo have a real problem. it is st the same way inny other w, where if we don't believe in whawe are doing we can't win. where amerins believe in what we are doinge tend to do very well. charlie: but then are you armenting if they believe in what y are doing they are willing give up civil liberties? is that part of e gument you are mang? no. >> well, i believe one of the reasons why actually talk in public is that the are oosms like ours which allow the people toake sure the governmenis actually doing what it claims to do,o if you understand what the government is doing to protect and you understand what

the limits are and you know those limi and they cane enforced that isne thing. if it is data mining where they are cast ago massive net under the aegis of protecting us, well that is not fine et me give you a concrete example, data destruction something at is not lked about engh, you are running a large multinational company and the government knocks on your door and says your thais about to be destroyed, we kno it because we are downhe stairs and also have classifiefiles and we knowhat is going on, we ed toake a copy now of your data to prevent it om being destroyed because know how to secure that data. well youight be in favor of that except for yo want to make sure theare heterosexual going to use that data agait you. but what is the guarantee they use it, tt that data doesn't get migrated into a case that thgovernment brings agast you? whative governmt already has case against you? >> charlie: you answere your, answer your own queion. >> our aroach is, wn the government takes the data, it is tagged in a way that shows the urce, so it can't be migrated om the datathey have taken from you to a ce they have pending. and this is enormous-

>> charl: so they take the data andou make sure they t . >> if you use our platform we take that data and tag it. if they use it in a case againt you your attorneyill see that and say okay ts data came from data i gave you, this is enormoly important, you won't help touy in to he the government protect you uess you know your liberties are protted and this is something we do kind of turnkey or as we say in the centrally out of the box. whether you use us or whher you builthe system, that not my point, these kin of things have toe buil in and ked and they have to be discusd with the american people. >> charlie: i am always per plek plexed by with this esion, if the a can hire people likeñi you, like palantir technologies, why can'tad guys hire people, not you, but peoe like you? >> well, i tnk -- >> they don't est? >> no, no, no. i think the bad guys do get ople of equal talent to what we can get. i think that we, in america, are

very good at oanizingurself, so tt we out particle the bad ys they get but i thi they get veryalented ople in the cyber context is a great example. you havehat are probably bands of teenars ting down mar organitions, these are hhly lented, highlyotivated -- >> charlie: that is happeng today or pential to do tha is there? >> it -- if what w found was e dalai lama and other on source operations is indative of wt is out there, it is ou there and exists todayhere are many cases we don't knowt is happening d we are all capable of being rgeted and take it down. >>harlie: are they being paid handsome toly to do ts or st a bunch of enagers? >>gain, ihink the right metaphor i software and techlogys demom i can't tied espionage gj so we take a large government organization can be done with two or three teenagers in a coffe shop and it is very hard to even know, the g -- the biggest question. >> charlie: that is really scary.

>> the biggest question you as a president would have if you were a presint, you would have to decidean organization in america is being taken down. ok? we know it is being tak down, what is the respons we, you can't knohow to respond, it could be yr teenage ster's boyfriend. who is just acting like an idiot or it cod be a large government organization. it is very hard to pig that out because your teage girl's boyfriend has the meanof doing somethg in the past which oy a large government organition could d what ithat? that person has tten inside an organization with significant surity and been able to obfuscate who they are,ow doesn't that sou like the nove you read? >> of course. >> but now you don't nd to be governmental organization. you can be a sileeenager. now u as the presint to go back to the example, how do you respond? well iit is a government organizatn,ou call and say lo, either stop or we will come afte you, but what if it ia teenager? and before you solvehat issue, you

cannot respond. anthis is a major issue that -- >> charlie: ok, as part of your abity to see around the corn, then, in terms of before something, before theyake it down you can see patterns of pele and/or actis and/or behavior? well, what we dos we help people like we did wh the dalai lamaigure out if yo actually have been infiltrated so what kind of ta is lving. >> and they have been? >> they had been an in a massive way but then, two, we say thes people are likely to actually be thi th appear to be teenagers. but they are teenagers that are likely beingandled by this organization. or they actually are teenagers or more likely, when y are done with our diagnostic, we say, we are not se who we are but we are sure they are in this building. why don't you send someonto go find out who they are. >> charlie: whisn't this going to collide head on into privacy and civi lints? >> wl, it would if there was a contradiction between fiing terrists and protecting civi liberties but the exact same tranarency you can use toind

terrorists you canse to see what the government is using gj the essentl question of civil libeies ishow, nothe government hasata, let's assume the government s as much data ashe insurance coany. how is it beg used? is it ing used in a way tt is lawful? do they have the rig to use i and is it bei migratedo places it is no allowed to be us? we allow, we allo the enforcement of les that theovernment ought to enforce andy the way the my experiences they wanto enforce or they know t need enforcand they are train heed in that way, then u can have what is the ultimate silicon valley solution, you remove the contraction and all march forward. >> charlie: extraordinary stuff, thank you foroming. >> thank y for having me, t as great pleasure. >> exander karp, palantir technologies, the company yo st heard him talk about, what they do and wt he does. >> charl: elon tusk is here

and chf executive of two startup companies with bold missionshe leads tesla motors, the electric car cpany that tracted attention from both car enthusiasts an environmentalists asell, the compy's powerful roadster that travels from zero to 60 i less than four seconds is entire pored by batteries. the company pls to break io th mainstream auto market with an elect electc sedan as early as 21, musk is also the ceo of space explotion technologies, a mpany trying to slash the cost of space travel. last year the compan signed an agreent with nasa toend car bow to the international space station. and if that is notnough he also is chaman of a growing coany called solar city that installsolar pans onomes anusinesses. he has thrived in silicon valley, onof the cofounders of paypal, on line paymts company that ebay bought for $1.5 billion in 2002. i am pleased to have him here at is tab. for the fit time. welcome. thank you, thanks for having . i have been a g fan of the show for long time.

>> charlie: let's lk about you first so the audience does not know,rowing up in south africa. >> yes >> charlie -- and how did you end in cada? >> wel i guessrowing up in sout afca actually it was ve technology oriented and i taught myself how to program computers, mostlbecause i wanted to progm games a when i was 12, i programm my first game and whever i would read about technology and great innovation, it was coming om thunited states, and s that's where i wanted toe and i tried to cvince my parents to move there, and neither of th would, my mother, neither would do it, my mother later moved back to, initially canadand then the.s., so when i w 17, as soon as i got my canadian passportthree weeks later i was in canada >> charlie: here you are, and you come to canada and make ito the united states, and then y and several other guys me together and create paypal.

right. >> charlie: and you sell i to ebay for one point whater it was billn dollars. >> yes after paypal, that ge me, capil, and there were three areas, when ias in college, there werthree are that i thought would most effect the future of humanity and those were the internet,the transition to a sustainab ener and transpoation sector and the third was exploration of the extension of life to multiple plane, i am not expectedo get involved in the third one but th is something which is very important in the future, and with the capital i got from e sale of paypal, i was able too into both of those areasness and so hence spac x, and energy, in the sustainable energye have solar city and tesla. >> charlie: let's ta aut spac explorion for just a moment, how is it going in terms ofreating a syste that will engage us in space exploration

not just forovernments and not ju for nasa but for private citizens as well? >> well, you have to dividthe efforts that areoing on into what isn overt class effort vers sub orbital andhere is a very big dference, the general pubc doesn undersnd getting to space and gettg to orbit it is important to make that distinctio too a b orbil flight you need a termin velityf around mach 3. to get to orbit youeed mach 25it is a huge,huge, difference becau the eney required to at deals with the uare of theelocity, so sub orbital may be ninth in energy and/or bit 625 units of energy, sot is about one and a half perce of the ergy to get su orbit to orbit, sorry the were several efforts i that cegory that youould ow to orbital, there is jeff, who has an eort, and i know

that is something -- >> is bran someinvolved in that. >>he bransom, absolely. not so much directly fro the technology sndpoint, but from he is funding that development and scaling compositein california. what are you doing? >> we are in the orbit cla. and it i a lot moreapital, and that is reall where we are pushing the ragged edge of what is physically possible. and last year we got to orbit, for thfifth timewith our rocket, and that was certaly a huge relief ana milestone. >> charlie: yes. so what is -- whats the next step, after getting a roet to orbit? >> yes, next month, we are putting a satellite from malaysia into orbit. >> from malaysia >>for malaia, amalaysian satellite, and in the rocket buness, the rocket company does t launch,not like the airline busiss, you don't sell the rocket, u sell the launc >> charlieright. >> and later this year we are

launching a big rock from cape canavel, the falcon 9, and that's one that going to be servicing th space stion. among her things. >> charlie: and is your philosophy he? how the private sectoran do a lot more than it ha has done in areas tht em, bause of the size, you know, reseed for government? >> ah. finitely, the private sector is very good a organization. andnnovation, i mean, ivate sector is genelly better after doing thgs tn the government, i think that is fair to say. buyou know, there a certain things that the government, that, like research and that so of thing, but, yes, so as far as space -- the reason tható there hasn't been a huge number of big improvement in the space indury i he is because oft is very difficult for-

create destructive procs to get the effect because there is such a signicant amount of capital thats needed start a rocket company and it is a very difficult tactical challenge and the number o people at really understand rocketry in thworld is a very small number, so it is really a huge barriers to ent. and that is why we haven't see thefunction of improvent that there should havbeen over the ars. >> charlie: d your undersnding came from sort of -- thisas not whayou studied in college? >>ell, i studied physics. charlie: or studying physics and studng rocket science -- >> well, no-- because i it ves you a framework, good analytical frawork but no, i picked it up along the way. charlie: what is your cor coetence, do you think? you? >> i think. >> charlie: tecology? >> tec technology, yes. if somethi has to be degned and invente and y have to figure outhow to ensur that

the value of t thing you crte is greater thanthe cost of the in puts, then that is probab my core skill. >> and bring theyto the car a i drove a car this afternoon. >> so far, so good. >> which was terrific. >>t is the roadster. >> yes >> charlie: whereoes that stand? youobviously have bn inhe google parking lot. >> yes. you have seen afew this there. i am sure that is true in otr places in silicon valley. >> yes. i don't know whether it is a car that appeals toeople silicon valley becauseof interest in technology and high performancesnd lots of other things, or what, whether there are a lot of rich people who are wiing to spend that kind of moy for something they thi is on the ctingdges of thingshey believe in, sustnable energy. >>ight. >> charlietell me about how, where you are in this development of this electric car which has, most o all, this extraordinary rt of power.

>> yes. secro to 60 in a w seconds and. >>harlie: it is extraordinary when y think aboutt, sports cars, and anything else that is out on the road today. >> yeah. in fact, on the top gear st track, ibeats a porhe xtr >> charlie exactly. nd the rdster wil do better. >> charlie: you havelso said in terms of ere you want to go that developing a hig performance sports car is no at this is about. >> absoluty. >> charlie: is about someing else and you want to develop a sedan. >> yes the whole purpose behind tesla, the reason i put so much of my time and mey intoelping create the busines is we want to be acatalyst for pushingthe electric car. >> the pre of ga you have a consortium of public good. it is one -- it is rlly a common probl in economics, the samehing in fishing, where beuse there is no cost to

fishing stockspeople just over fish and, you know, you he disaster that ensues and here we are not payinfor the cost of e co2 concentration in the oceans and atmosere and not paying f all of the auxiary defense of wars andll of these other things at the gas pumps, so you efftively have a subsidy taking placet the gas pump bause of that. so the only way bridge th is with iovation. is to try to make electric cars betterooner than they wod otherwise be. >>uppose this, this i a hypothetical whi may or may not speak to the poin but suppose 15 years a, let's say billlinton as presint, we talked aut the road to the 21 century and all of tt, suppose he said, i believe so much in sustainable ergy i want to make aommitment and the federagovernment using all of the resoues will develop and eltric carith appropriate battery power that will cnge the face of automobile -- the aomobile industry in the world.

s that very doable, ll clinton was ected in 1992, 17 years ago. >> s. you uld have made a reasonably od electric car around that time for a lot of investment. >> charlie and should that ha been done? should the u.s governme made that kind of -- otherwise you will not able to cnge the driving habits of ericans? >> was it a worthwhe expenditure at that tim >> i tnk it would have been a worthwhileexpenditure but the thing that really helpslectric cars is lithium iron. >> and when did thatome around? >> >> charlie: explain why batteries haalways been the great dilem for developing ectric cars. >> sure, well, the eney contained in the battery is so much les than as conined in gasone, that i mn it is really almost -- it isard to to quite dcribe it let me put think way, t tesla battery pack ithe roadster which is theost advanced btery pack in the world, the coon

referencis to call what is actually a cell a battery. charlie: right. so a cell is the little single thing whchemicals and if you have multiple cellshat is what actually is the battery. that is essentially what batteris. >> charlie: ltiple cells. >> multiple cells and as the batteries get bigger and bigger they get rder and harder to deal with. so the cell that we e is a commoditcell. >> charlieright. you can buit awhere? >> pretty much and the same sort of tng that is in a number of laptops the challenge combining those cells into, and hang thousands of them making sure they e safe, mang sure they will last for 200,0 miles, 100,000, over bumps and potholes d extremes of temperature and safe in a ash and that mpounds the problemas civil. and y have toas civil g you ve to make sure temperatu is balanced across the whole ing sohe difficulty is really at pack level more than i is at the cell level and that is rlly where the ggest area of tesla's

expertise, i should point ou the tesla so has, designed and built a mot and the power electronics and is software that manage it is who thing, those e important too but the baery is the single most important thing and e tes battery pack to rerence it to galine, it weighs about 000 pounds and it has the energy conte of two aer gallons gasoline. >> so. >> that means youave to have loof crges? >> but there is --ecause the consumption of thatnergy is muchore efficient in an electric car d this is, i will get to why is theesla roadster twice as efficient as toyota pri which is n aports car. >> right. >> and th reason is because an electric motor is fundamental superfficient at turning energy into moti, so aood electricotor such as the one thathat was giveno the tes rotor is 90 pernt of turning

electricitinto motion wre a gasoline internal com come comes shun i didt know is 17 to 18 percent, generally what i doesis create hea soven though its only tw and a lf gallons of gasoline, at two and a half gallons of energy content es far compared if that was -- charlie: okay, compared t the prius but compare foyt the newm volt. >> right. >>harlie: how does it do in comparison with a volt >> the volt is a differen architecture and it a plug in hybridrchitecture so i think it is abt a 40 or smiles battery back. >k. >> charlie: that's whathey sa >> and an engine with a generator, that allows youo go beyo the 40 mile >>xactly. >> and where ours the pure elect electric andhe gj and we have a re electric straty, and i mean, i have been criticid sometimes for responding t questions like yrs, to explain why weave gone to electric and

people have ken that to be an attack on the fault ich is not the case. i pe the volt -- i hope it is pretty gd car. >> chare: i don't don't take this as an attack. >> totally, it is i jus wanted to -- >> i hear you. >> put at -- >> what i hold hope don this conversati is figure out what you have done cause you got a fair amount of attenon. >> sure. >> charlie: figureut why you e not further ang than you are or figureut why u are and at your expectations are. >> yes. >> to do and where is e aim for you. >> i thin it has take a whe for e industry to come around to this, it is largely at this point, i almost has welme traditional wisdom that is future i electric cars, the question is the interi period of this transitiol perio but if you ok look at the pace of battery improvement, it is clear that is what i mean it is evitable, the future will be tirely electric. and the irony of all ofhis conversation is that in e last year, a yr before its bankruptcy generalotors had announced that the volt was the

key to their future >> right. >> charlieas an autobile company. >> rig. yeah. exactly. i mea there is vid regarng gm. >> charlie: priusad them con to that conclusion by t way. >> but i think if the have the ed 1. >> charlie: right, exactly. which didn't work -- worked but didn't me it for reasons i am not clear. >> right. >> charlie: and the marting success. >> ye. chris --ho built the electric car. >> charlie: right,ight. >> i thk it isotable that in that -- it shows the customers who had the ed 1 the cars had to be taken away from the and crushed and t hd a candlelight vigil. ifou have people thareally love a product to the degree they are willingo hold candlelighvigil for ithat says hey maybe you shoul make an ed 2. >> charlie: that cerinly does s that. so the car tt i drove today, the roadster 2, i thin i think

therwas a roadster befo this. >> right. >> charlie: this ithe second iteration of it. >> yes. >> came through production what year >> the first roadster, roadster number one, the first production which was fully, department o trsport legal and evething. >> chaie: right, right. met allf the standards. >> was february of last year and that was my car. >> charlie: that was t car, your car? meaning -- >> roadster o. >> and so then you decided'dly to make improvementsn that? >> yeah, yeah absolutely. it was -- it was a littl rough going inhe beginning and we had some iues with some of the power train components. in fact not the hard stuffut the stuff tha is sort of hypothetically eier and we were ae to fix thosend get production ramped up and now we are at the point where ware delivering abo 20 to 25 cars a week. >> you know that tata motors, obviouslyou know. >> take for a moment what he is doinin india. >> yes. >> charlie: deloping a lile sedan for $2,300.

>> right, rht, right. >> where do you put that in th wholequation of wher the future of cars are? >> well i thi it is a gd idea to haveffordable cars. >> you kw, i think t problem with something ke nana, tata, t a problem i think it is a great idea, and he is a gentleman and a holar. >> chaie: all of those i agree with. it is hard no to. >>es. exactly. i thinkhat as we look at e gasoline of the price of that rising, and ihink oil-- >> and inevitae -- do you have some sumptions in your own calculations as to where oil will level off? >> i thinkt will exceed the numbers we have seen last ye. >> 144? >> oh, yeah. re. solutely, i think we will see it approach $200 and bond.

>> charlie: by 2010, 11, 12? something like that? >> whenevethe next boom is, as i say the next boom is four years from nowit will be around that point. >> charlie: of a of your businesses, which one do you care the mos about? >> well,right now,y time is split rougy evenlbetween tesland space xo i guess it woul be prettyven between the two, and sar city is doing great on i own, and e two cofoders there have done a enomenal job and thankfully it requires very lile of my atteion. >> right nowthe reason to create sports r, a roadster, as the firs stage ofhis is because it attracts attenon or what? >> oh, great, great question. so people often misinteret why we created aports car because they will say, y know, the implication will be >> charlie: spor cars are for rich guys. >> right. >> charlie: and you want to solve thenergy problem. right. but i feel ere wasomehow a

shortage of sports cars forich ys or something lik that. if any new tenology is pensive when it starts t, and you can int to pretty much anythi, and because the first thing that youry to do is me it wk and when you make it work the you optimize and you optimizend optimize and look at the early days of computers or cellphones or almost anything, even gasolin car they were ly for rich people until they were made affordable in msroduction. >>harlie: right. an ford came along. >> and the you combinehat th the fact that we are just a little startup and there is just no way wcan afford a billion dollarto make aiant car plt tt would make, you know, hundreds of thousands o cars a year because that's e kind of volume you have to get to to make cheap cars. and it is it isirst iteration of technology, so we have both a volume problem and a new

technology proble and naturally u have to -- >> chaie: you have to reach scale. >> youave have you to reach scale and work the bugs out of the system a so youave got to make -- and you want e make the mistakes at a small sle. >> charl: how is that going, reaching scale and being abl to create a mket, a business plan that willnable you the reach a large audice and cate and ntinue the development of the technology that will makit even me attractiv >> it is going really well, actually so we had a few bumpy years in the binning but at this point are producing at a steady state of about,nnualized producon rate of about 1,000 roadster sports cars ayear, we uniled our sedan aew mons ago, whi is a much me functional car and a $50,000 car,o basically it is aut half the price of the roadster. >> and the production run for the year 20 for the roadster will be? >> about 1,000. >> charlie:and for the sedan?

>> sen, the sed is onl comingut in 22 years. >> 2011 will be the first year? >> right. >> charlie: and what is the prection for that? >> we are expecting to do 20,000 unita year for the sed. it is alwa difficult to predict these ings specifically but our target is, we will produce a totalf about 100,0 of them and about 20,0 a year and man strairtions on that, we wl have an suv and other ings and then we will do a third generation platform beyond the sedan, t model of the sedan will b a sub $30,000 car. so we are trying toet to mass production as soon as w possibly can. anthat is both from the cars that we make ourselves as well as thecars we in partnersp with other like the daimler deal you may he heard about. >> charlie: right. so how do you msure the odds of success? >> personalli would say success for me for tesla is that have accelerated the advent of vick cars by a least ve years. so that -- gj.

>> is that the gl to celerate the advent of electric cars? or to creat a grt electric car cpany? >> i thinkhe two are synonymous, you do one, yo do the other, yes. >>harlie: and why is it that it is happening by a guy tt created startup in 2003, rather than a wle range of sort of iustrial automobile companiearound the world? not just he? >> fiat is auccessful c mpany. >> yes. >> charlie: and they own rysler. >> welisruptive technology where you rlly have a big technology discontuity it tends to come from new companies. >> charlie: right. >> you asked the sa question of why does google come from -- why did it come from lay sergi. >> charlie: right. >> a fellow, i hav kwn larry since beforee got vture funding for google. >>harlie: and is he a investor in tesla? >>e is, they are both investorin tesla. >> andrive them or n't driv them. >> they drive them, absutely. becaussome of e critism

thatomes at you and the compan now is that you went ou to seeing a t of eernal financing and did no reach your goals. >> well, it has tak us longer to reach our foals but -- >> chaie: to raise 100 million or raise 40 orwhat s the goal? well, i thk some of the stumbles we silly mistakes we made ourselves and some were market anomali and we are in the process of raising about $100 million round that began in sort othe summer of last year, and th ran into, you know, force 5 hurricane [ laughter ] >> charlie: a economic circumstances thatook everhing off the table? >> yes. so that forced us tocale back our plans a litt bit and w had to d a layoff and we hado ise the money internally fm existi investors and i had to putp a lot of t money the personally, and becausthere was just n money, and so that was -- it was sort of

hair-raising time for th company, but at this point, we e actually in good spe. we expt to be profitable in the third quter. >> charlie: d that comes fromhe success of the adster? >> yes. and the roadst, we also have a rt tin for the -- charlie: smart car, and electr car? >> yes themart car was intended to be an electric car but they cld never get the batty right, so aear and a half ago i met with daimler and, working with them. i mean, we really tried hard to work with lot of dferent car companies. >> charlie: and what happened? >> well, i guess they think, they took the attitude of what is some ttle startup in silicon know that don't know or can do? >> charlie and what would u say them? >> well, we would sa drive our car and lookt our technology and, i d't know, it just never seemed to sort of sink in, but daler, daimler dñi actually, so i went -- we went to

stuttgart and went down th way to india, actually, and met with ctor, whoever was the head of r&we had a nversation a wh does it take to wor togeer and we would love to do something, we uld life to do something with an affordable mass mart car that we ouelves can't do right now because don't have the pital. >> ando iaid,ant, you knowwhat about an electric smart? becae the smart was alwa intended to be an ectric car. and wha what it would take forso workogether well if youould do a prototypehat would rely go a long way so we did. we worked really harat the power train team, and 40 day late when they came out to vit we said here is the car, take a drive. and they really ked what they w. >> charlie: anso what did they do then? >> then they sai okay,ell let's take it anher step further and they gave us a little r&d contract and eventually got to the point where got the contrt for -- to supply 1,000 cars for them

and then if we do well in that we will potentially go in tens of thousands of cars so this is a car that everyoncould afford and coul hopefully become quite soon >> do you have arofile of the ople you think will want to buy these roaders? >> yes, absolutely, its the kind of pern who likes the performance car, maybe a porhe or, you know, a lamborghini, you know,. >> charlie: this a car is tually faster than lamborghini zeroo 60? >> yes, i think it is almost faster than ything. >> anythg i know of. >> but really sort of million-dollar super cs, obviouslthose willeat it. but it is pretty muc faster than any normal sports car, and its really easy to dri if you want a high performance ca with a clean conscienc this is the only oion. [ lauger ]. the sedan is ing to be for someone at wants a great sedan and also, you know, a great consciencend also going to be cheaper to orate.

>> chaie: right. you are as croll know a controversial guy as well. >> i try not to be controversial. >> charlie: inow. >> peoe seem to find me. >> charlieand it finds you becausyou think big, you are a softwa guy who has been successful in thprivate sector. >> yes,es. you see no reason why you can't do things at other people have not been able to do, no matter how lar the corporate empire, to create the best electric car or b put asronas privately in space whh you say you will do in two yrs? >> well, yeah, it dependson en nasa askss to do that, so if nasa turns , asks us to do in this yearwhich we are hopel they will,the white house has a panelon the future human spaceflight that pilots n make recommendations in femonth, i hope some of thos

commendations will be favorable to space x, beuse the alternative is, if sce x doesn't do i we will be entirely dependent on the russians to carry ou astronau to the spatation after 2010 and billions of dollars will be spent on essentially a sole source situaon to the russia ich i think is outrageous. >> charlie: and you haven't taken advantage the opportunity go in space yourself, haveou. >> no, i havnot. >> have you wanted to? >> iit was purely matter of personal interest, i would he done it already. charlie: is there an interest the tt or not? >> search day -- >> charlie: expressed so interest in that >> some intest in that, yes. >> yeah. i would like to go at some poin but i amalmost at t point it is diicult for me to take personal risks, i ed to take a lot opersonal risks. >> charlie: because of ildren. >> i havmy kids and reonsibilities with the company as wel ando if i do things with personal ri at this point i risk more thanmy own being. >> charlie: you hav had how

many trip you have one seof trip one set of twins? >> yes. one setof trips? >> yes, i had the twins in new yorkactually. >> charlie: so they like the car? >> yeah:they can't go on the adster because it doesn't, you kn, it is n very kid iendly but the seda >> charlieno it is not d friendly you a right. >> the sedan is great for them. >>uch scess to you. thanks for coming. thank you for joini us,ee yonext time. captioning sponsor by rose comnications captioned by media access group at bh access.wgborg

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