Simone Cicero:
Hi, everybody. Welcome back to the Boundaryless Conversations podcast. In this podcast we meet with pioneers, thinkers, doers, entrepreneurs. And we speak about the future of business models, organizations, markets and society in the rapidly changing world we live in. I am Simone Cicero and today I’m joined by my usual co-host, Stina Heikkila Chastina.

Stina Heikkila:
Hello, everyone.

Simone Cicero:
And today, we’re also joined by Joe Justice. Joe is say a legend of Agile. He has led Agile practices at companies such as Google, Amazon, Microsoft, Tesla, and many others, and also lectures about these topics in many universities around the world. I met Joe, more than 10 years ago, after watching this TED talk that was released shortly after he founded WikiSpeed, a not so usual micro car manufacturer that pioneered the adoption of open source and Agile practices in the context of manufacturing. With Joe, we are going to talk about his own experience with Agile, mainly from the perspective of using Agile to help businesses succeed, but also to transform the world we live in. And I’m sure we’re going to go beyond that. So, Joe, welcome and thank you for being here.

Joe Justice:
Good day. My pleasure to be with you again, Simone, and wonderful to be with you here today, Stina.

Simone Cicero:
First of all, Joe, I think it will be great, really, to spend some time recalling how we met 10 years ago. And maybe you can give a little bit of context of what Wikispeed is. And maybe you can also convey a bit of the enthusiasm and the great feelings that 10 years ago we had as we are brought to Wikispeed and you to Europe and to talk about eXtreme Manufacturing, and open source culture injected into the world of manufacturing.

Joe Justice:
Well, let’s all think back to about 2010, 2011, 2012, in that time period. That’s when we were just starting to see some of the first cryptocurrency forums. I remember being invited to the World Economic Forum to talk about new financial models and many of the other advocates there were talking about these new concepts of digital coins. Bitcoin was one but it was not at all at any kind of forefront. It was a new concept and people were wondering, well, what is it? The collaborative economy had existed in one form or another as long as there had been the concept of an economy, but there was interest in it at that time. Some of you might remember 2010, 2011, 2012 global conferences, forum summits on what is the idea of unlimited growth, or degrowth, or collaborative economy, or sharing economy, and how do these aid each other? And which direction do governments want to be making policies to support in this environment?

A group called WeShare about the collaborative economy, sharing information and maybe curious at times about this new idea of digital currency or cryptocurrency. They found my story. I had started an open source car company, which was already strange. Tesla later open sourced many of their patents in 2016. WikiSpeed was part of that same sense of global collaboration, even a few years earlier than Tesla decided to go open source on much of its core technologies. WikiSpeed was modeled, is modeled after Wikipedia where you have collaborative editors. Except instead of editing articles, like an encyclopedia, these editors were authors, create car parts, 3D drawings, bill of materials, supply chain plans, manufacturing steps, and nothing’s considered done until they actually make a physical part and test it.

Well, that was really interesting to the WeShare group, which Simone was also collaborating with at that time. They organized for me to do a series of lectures in Italy, in France, in Spain, and maybe even a few other stops, I’m thinking back. And I got to learn a tremendous amount from speaking with, conversing with, having a meal with, having a — I mean a cocktail with the members of this community, which have all gone on to do very interesting things in many different businesses. Some of them are enormously financially successful, which is maybe counterintuitive, as the idea is a sharing collaborative, open economy. And yet some of them have gone on to generate tremendous amounts of wealth and be able to choose how it’s allocated, which is one definition of power or capability or productivity. So, by traditional definitions, this movement has had some tremendous successes.

Meeting Simone in Rome, we went deep on how to run a company with 24-hour, seven day a week, 365 day a year innovation cycles; how to run a around the clock collaborative, innovative company that focused on pace of innovation. Now, interestingly, I consulted to Tesla as early as 2010, and set up some work in Tesla, some Agile trainings in 2016, and then joined Tesla in 2020. Tesla is now a phenomenal financial success, that as of the date of this recording, the stock price is actually quite low, it’s still worth two and a half times more than Toyota, all of Toyota. Its massive financial success even on a down day. And Elon Musk, CEO of Tesla, well, chairperson of Tesla says, pace of innovation is the only thing that matters in the long run. And interestingly, that was the topic, how to run a business where that’s your goal, even a few years before with Simone and the people who attended. We’ve stayed in touch, largely. We’ve kept communicating, as they’ve used those practices to help grow their businesses.

Simone Cicero:
Joe, thank you so much for the recap and for nicely connecting this to today, right? It’s really amazing now to look back into these 10 years. And I must say maybe some of the promises that the movement, the sharing economy movement, somehow the late or maybe the early open source movement, some of the promises that were into the conversation when we met 10 years ago, I think they really played out. As you said, some of these companies had massive success and you’ve been able to bring your work to Tesla, which is a massively impacting company.

So, maybe before we move into expanding, double-clicking into your work at Tesla, or in general with some of these leading companies, can you maybe share what’s your impression in terms of instead what kind of reality checks that that movement encountered maybe in the last 10 years? I think you are in a good position to do so because you have been able to bring some of these principles into some of the most impacting companies in the world. So, you may be able also to point out what were maybe the, and what are still maybe the naive elements of some of the open source sharing economy movement, that have encountered some kind of reality check in the last decade.

Joe Justice:
Wow, wow. We’re taking it to a very important, maybe serious tone right in the beginning, and I love it. Thank you, Simone. So, I ran and still run WikiSpeed, this collaborative, open source, modeled after Wikipedia manufacturing business, and I went to work for Tesla. So, an interesting thought experiment is, why did I go to work for Elon Musk instead of Elon Musk going to work for me? What about it made one financially massive? WikiSpeed set four World Records, actually made some money, more than a million dollars, which I reinvested back into R&D, more than 100%. I net net contributed to the company but it made money that we could reinvest. But Tesla is a mega success by all traditional metrics. Safest car on the road, a few months ago, best-selling vehicle in Germany, a competitor’s home ground, best-selling vehicle of any type, not even just electric. Safest car in Europe, safest car in the USA, fastest car in the world, etc., absolutely shocking achievements and profit margin nine times higher than Toyota. Just absolutely unreal, the success of this company.

So, why is it that Tesla has grown so large and my open source collaborative company, I went to go work for Elon? I think this is a useful lesson for all of us who are interested in new business models, especially collaborative and sharing, economy and models. Cash flow still matters. And if we use cash flow only to generate more cash flow, the company becomes slow to innovate, it becomes protectionist almost 100% of the time. And we see that in the laziness of all the traditional automotive manufacturers, settling in and a five to seven year product development cycle, very slow, many people near retirement age not very excited are able to keep up with this pace easily. It makes the company feel dead inside, unengaged. Excited people want to go work somewhere else, and this is normal in most companies. That seems to be what happens when the company is built around the idea of maximize shareholder value above any other goal. When that’s the number one goal, generate money, it makes an uninspiring and slow place to work. Which eventually self corrects, the company does eventually shrink or die.

On the other hand, you have maximized the pace of innovation at any cost, and that’s where a platform like Wikipedia thrives. Absolutely more edits than any other type of encyclopedia or knowledge sharing tool on planet Earth. Or soon beyond with Starlink taking internet towards the moon and to Mars and beyond. If you want radical innovation, you do want, it looks like, open, collaborative, very few rules, fast movers and high quality testing so you can create quality content and not just make junk quickly. Well, how do you then have your company grow like Tesla does or SpaceX or Neural Link or Open AI or The Boring Company; all of which are the most financially successful company in the world of their type? How do you repeatedly do that? It looks like you focus on innovation above all else, and one of your primary innovation areas is cash flow. So, if you’re passionate about innovation, you’re likely going to want to be passionate about innovation, sharing, collaboration, openness, transparency, respect, courage, than one and not your first value is maximize cash flow.

When I was working for Elon, what mattered is how many meaningful improvements to the customer experience we could make in an hour in production. I’ve never seen a hardware company that fast except for maybe WikiSpeed. However, some of those improvements also needed to increase the profit margin on the cars, well, reduce the cost to manufacture the cars by continually grinding down the cost to manufacture the products. Naturally, cash flow increased and increased and increased and increased until now it’s nine times Toyota. The company has so much cash reserves it’s now incredibly durable. And I think this is something many open source communities miss, where they run at a net loss, or they’re dependent on donations, which can work for a time. Wikipedia does it. But if you also have a funding model, that as you innovate, the funding model improves, I think that’s what makes us compatible with a traditional economy while we’re pioneering, prototyping, and playing in the new economy.

Simone Cicero:
I was basically trying to frame these cultural elements that seem to exist beyond your experience of implementing Agile at Tesla, which are a bit, if I understand well from your keynotes, it’s a bit different maybe from the experience you had in implementing Agile at other companies. Right? You know, first of all, I would like to suggest our listeners to go and watch some of your keynotes speaking about Agile at Tesla. I’m sure that you have a preferred one. We’re going to take this link and put it into the note, because it’s extremely interesting. You know, it gives you an overview of how such a crazy company implements some of the principles of Agile and across the spectrum.

One thing I wanted to basically double dive here is the seemingly deep elements that essentially bring the conversation around Agile that we used to have for a couple of decades, right? From what a way to optimize, let’s say, business performances into something that is much more, probably also much more in tune with the original ideas that kind of generated the Agile manifesto. Seems to be much more related to elements of innovation and culture, which are, I would say, much more systemic and related to, I would say the impacts that a company or an organization more generally can generate on society, right? For example, if we think about the Tesla handbook, right, which is the NTN book handbook that is seems to be, I would say a code, a culture code, right, for how Tesla looks into work. And for people that didn’t read the handbook, we’re going to put that in the notes again.

So, the handbook itself is kind of a testament of the role that culture has in a company like that. So, it’s not just a question of processes. But I would say, it’s also a matter of, as you said, mission, it’s a matter of culture of work, it’s a matter of autonomy, it’s a matter of how you perceive yourself as an individual inside a broad organization. So, since the handbook itself, it’s also very much contentious piece of work. It’s really, sometimes when you share with people, some people will react very positively, some people will react very negatively. So, it seems like it’s kind of a synthesis of some of the culture wars we also live in. And if I connect, lastly, and I will, I don’t want to go long, but I think contextualize it systemically, the work that you have been doing at Tesla, and in general, this topic is important.

If we look at these also from the perspective of topics such as, for example, these resurgence of importance in topics such as the American dynamism. So, this idea that, essentially, the culture of innovation that is present in an industry, in a business, especially manufacturing, any space or something like that, is also foundational to the role that a nation like the US, for example, can take on the world scale, right? So, I mean, SpaceX is collaborating with NASA right now. So, how do you connect the conversation around Agile as a practice to optimize a business to this holons of culture, society, geopolitics?

Joe Justice:
Wow. When we talk about the politics piece, I think there’s some very important policy that enables some of the US companies to do what they do in the US. And I think if we zoom out a little bit and look at the whole world at a moment, we can see why China is rising absolutely fast as it is on a track to overtake the US in terms of GDP very soon. And I think we can then identify policies that would let any group of policymakers be far more innovative than either of those two groups, or any group currently on planet Earth, or soon beyond.

And here’s what it is. In the USA, it looks like, currently, companies are allowed to run with very few rules when they have very few people and generate very little money. So, it’s extremely inexpensive to try something with five people, six people, seven people. Once you start to have some level of success and can fund 50 people, then more rules and regulations incrementally apply, which is probably the right thing. We want people to be protected, and we want society to be protected, and we want investors to be protected, and we definitely want employees to be protected. And those protections are added as the business grows by more than one, measure employee headcount, the number of people employed on the payroll, or even in some cases, the number of contractors, and total money flowing through the company, the actual financial effect of the company. That has enabled many people in the USA to try radical new ideas, and at very low level of effort to start it up.

With three, four or five people, a startup in the USA can truly be turned on in less than 10 minutes, legally. You can file the forms online. In some states, it’s free. In some states, you pay maybe $50, and you are a legal entity ready to go. You don’t even have to go to the bank first. Whereas in many countries you do and you need approvals, letters in certain formats, some cases, hundreds of pages of documentation, describing what you intend to do over the next several years of your business. None of that is required f