Speaking at Tesla's annual shareholder meeting, Elon Musk praised the company's electric cars. But he also made a bold prediction about an entirely different product, one that's still in its early stages of development.
It's a humanoid robot named Optimus.
Optimus, apparently named after the leader of the Transformers, a fictional race of robot aliens, was first announced back in 2021. But this week, Musk revealed a video showing major advances in the technology since that unveiling. The clip showed Tesla engineers training Optimus to perform manual labor tasks like transferring objects from one place to another. (You can see the Optimus clip at the 53:28 mark of this video.)
After the video, Musk asked an interesting question:
"What would be the effective ratio of humanoid robots to humans?"
"Because I think basically everyone would want one," Musk added. "And maybe people would want more than one. Which means the actual demand for something like Optimus, if it really works--which it will--is, I don't know, 10 billion units? ... It might be 20 billion units."
"It's some very big number, is what I'm saying. And a number vastly in excess of the number of cars. So, my prediction is that Tesla's long-term value will be a majority of long-term value will be Optimus. And that prediction I'm very confident of."
Of course, Optimus is still an early stage of development, it's impossible to say if it will ever become a viable product. And Musk is known for making bold predictions that don't always come to fruition.
But Tesla's work on Optimus is also a teaching moment for business owners everywhere, who should ask themselves two important questions:
- Should I use valuable resources to develop products that are outside of my core focus?
- If so, how do I make more money, while reducing risk?
Before answering these questions, we can learn something from Musk's explanation as to what exactly Tesla has invested in creating Optimus, and why it has done it.
Making Optimus: A Lesson in How to Reduce Risk
According to Musk, Tesla had to invest significantly into manufacturing Optimus out of necessity.
"The motors, the controllers, the electronics, and everything you see in the Optimus robot is a Tesla-designed system," Musk said. "We actually tried to find drive actuators and [other components] that were off the shelf. We found that there weren't any. ... In order to make an effective humanoid robot, you actually have to design the motors and gearboxes and the electronics from scratch."
Additionally, adds Musk, as the worlds of full self-driving (FSD) and artificial general intelligence (AGI) combine, the software Tesla develops for its cars could be adapted and transferred to Optimus. Musk compares this to teaching a person to use their arms and legs to perform complex maneuvers like flying a plane or steering a boat.
In other words, yes, designing and producing Optimus takes time, resources, and people. But with that new hardware, Tesla can increase the use case for its software, thereby increasing its value. And Tesla would potentially have valuable patents and technology it could then license to other robotics companies, should they decide to go that route.
Which brings us back to you and your business.
If your business is healthy, should you invest precious resources on the shiny new thing?
Sometimes the answer is no. Resources like time, money, and employees are limited, and if you are distracted by every opportunity, you're likely to waste much of those resources in the long run.
But what if the new thing isn't as different as it looks to others? What if it's complementary?
If the new product not only creates value on its own, but can also increase the value of your other products, the risk lowers. And the potential rewards increase.
Of course, you have to think it through. Risk is risk. And the worst-case scenario may be something you never expected.
When it comes to Optimus, Musk has acknowledged this as well.
"We need to make sure that we don't have a Terminator scenario," said Musk. "It's all fun and games until Terminator shows up."
