In today’s episode, we’ll discuss how Musk became so successful. We’ll dive into his entrepreneurial journey, some of the tectonic shifts he leveraged, and the other business practices that led him to become the second richest person in the world.
Here is Musk’s journey to become a billionaire.
Musk was born in Pretoria, South Africa, on June 28, 1971. At a young age, he became interested in computing and created a BASIC-based video game called Blastar, which he sold for about $500. He went to school in South Africa, Canada, and eventually graduated from the Wharton School. Musk was accepted into a Ph.D. program at Stanford University but dropped out to launch an internet startup after two days (Source: Wikipedia.org).
Zip2 and Paypal
Musk founded Zip2, selling it for $307 million a few years later. After he founded Zip2, Musk founded X.com, which would later become Paypal. In 2002, eBay bought Paypal for $1.5 billion (Source: Britannica.com).
“Musk was long convinced that for life to survive, humanity has to become a multi-planet species. However, he was dissatisfied with the great expense of rocket launchers.” (Source: Britannica.com). He founded Space Exploration Technologies Corporation (SpaceX) in 2002 “with the intention of building spacecraft for commercial space travel. By 2008, SpaceX was well established, and NASA awarded the company the contract to handle cargo transport for the International Space Station—with plans for astronaut transport in the future—in a move to replace NASA’s own space shuttle missions.” (Source: Biography.com)
“There have to be reasons that you get up in the morning and you want to live. Why do you want to live? What’s the point? What inspires you? What do you love about the future? If the future does not include being out there among the stars and being a multi-planet species, I find that incredibly depressing.” – Elon Musk
Musk has also been interested in electric cars for a long time. “In 2004, he became one of the major funders of Tesla Motors (later renamed Tesla), an electric car company founded by entrepreneurs Martin Eberhard and Marc Tarpenning.” Tesla’s first car, the Roadster, “could travel 245 miles (394 km) on a single charge. Unlike most previous electric vehicles, which Musk thought were stodgy and uninteresting, it was a sports car that could go from 0 to 60 miles (97 km) per hour in less than four seconds.” (Source: Britannica.com)
“In September 2018, Musk was sued by the US Securities and Exchange Commission (SEC) for a tweet claiming funding had been secured for potentially taking Tesla private. The lawsuit claimed verbal discussions Musk held with foreign investors in July 2018 did not confirm key deal terms and thus characterized the tweet as false, misleading, and damaging to investors.” Musk settled with the SEC and had to step down as Tesla chairman. He was able to remain CEO however (Source: Wikipedia.org).
Tectonic Shifts Leveraged
Here are just three of the business tectonic shifts Musk has leveraged in his career.
Musk leveraged the internet rise when he left Stanford and founded Zip2. The company was founded by Musk, his brother Kimbal, and Greg Kouri. “They housed the venture at a small rented office in Palo Alto. [Zip2] developed and marketed an Internet city guide for the newspaper publishing industry, with maps, directions, and yellow pages.” (Source: Wikipedia.org)
Before the company became successful, Musk couldn’t afford an apartment so he slept on the office couch and showered at the YMCA. They could also only afford one computer and Musk said, “The website was up during the day and I was coding it at night, seven days a week, all the time.” Musk and his brother “obtained contracts with The New York Times and the Chicago Tribune, and persuaded the board of directors to abandon plans for a merger with CitySearch.” When Compaq acquired Zip2 for $307 million, “Musk received $22 million for his 7 percent share.” (Wikipedia.org)
Electric cars are quickly becoming more and more popular. They are better for the environment than gas cars and cost less to run and maintain. They are quieter and allow you to skip the gas station by charging them at home or work (Source: Fleetcarma.com).
Tesla has certainly leveraged this shift as they “[continue to produce] affordable, mass-market electric cars” (Source: Biography.com). Tesla is the most well-known electric vehicle company. “Globally, Tesla stands in the first position in the first half of the year 2020. With 179,050 units sold, this EV manufacturer makes up 28% of the market share.” (Source: powerright.ie)
“When Henry Ford made cheap, reliable cars, people said, ‘Nah, what’s wrong with a horse?’ That was a huge bet he made, and it worked.” – Elon Musk
In 2006, Musk helped his cousins start SolarCity. Ten years later, “a $2.6 billion dollar deal was solidified to combine [Musk’s] electric car and solar energy companies. His Tesla Motors Inc. announced an all-stock deal purchase of SolarCity Corp.” This was done in an effort to continue to make sustainable energy and products available to a wider consumer base (Source: Biography.com).
Solar is also becoming more prevalent. U.S. solar power capacity has grown from just 0.34 gigawatts in 2008 to an estimated 97.2 gigawatts today, enough to power the equivalent of 18 million average American homes (Source: Energy.gov).
Other Business Tips
Here are two more business tips from Elon Musk.
1. Take Risks
All the companies Musk has worked on have been built on risks. “They were all risky ventures: big bets in emerging industries—the Internet (in 1995), electric automobiles, and even private space travel!” (Source: bidsketch.com)
Musk said, “Failure is an option here. If things are not failing, you are not innovating enough.” Musk plans for failure. “That’s a big reason why he invested such a large amount of start-up capital ($100 million) into his company SpaceX. Musk knew it was highly unlikely they’d have a successful rocket launch the first time around, but he didn’t want a single setback to cripple the company.” He gave the budget enough padding for multiple launches, and the third one was successful (Source: bidsketch.com).
It paid off when NASA offered them a $1.6 billion contract “to resupply the international space station. That wouldn’t have happened if Musk hadn’t factored a few failures into his start-up capital.” (Source: bidsketch.com)
2. Seek Criticism
“Take as much feedback from as many people as you can about whatever idea you have. Seek critical feedback. Ask them what’s wrong. You often have to draw it out in a nuanced way to figure out what’s wrong.” – Elon Musk
Musk said, “When I spoke with someone about the Tesla Model S, I didn’t really want to know what’s right about the car. I [wanted] to know what’s wrong about the car.”
About Musk’s advice to take criticism, Hubspot says, “Criticism is like exercise. In the beginning, it’s tough. But it slowly shapes us into healthier people and leads to many long-term benefits. While compliments create contentment, criticism creates improvement. And when your mission for SpaceX is ‘interplanetary co-existence’ and Tesla ‘transforming sustainable energy for humanity’ (yes, those are Elon Musk’s words), you cannot be content.”
“You should take the approach that you’re wrong. Your goal is to be less wrong.” – Elon Musk
Here are some of my key takeaways from this episode:
- We must go after what we are interested in and passionate about, just as Musk has with electric cars and space travel.
- We should look for new tectonic shifts, and try to leverage them.
- If we want to succeed we must take calculated risks.
- We should plan for failure and not give up when it happens.
- Constructive criticism can help us improve our businesses, products, and services.
Connect with Elon Musk
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