Entrepreneur Story

Elon Musk

2016.11

Elon Musk: The World’s Raddest Man (2016)
Entrepreneur Story
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There is an American entrepreneur who is often compared to Iron Man, the tech-savvy Marvel Comics superhero. He founded Paypal, Tesla, SpaceX, and Solar City. His name is Elon Musk.

What were the factors that allowed Musk to accept challenge after challenge in order to improve humanity?

How was Musk able to shift the paradigm of four notoriously conservative and capital-intensive industries (finance, automobile, energy, space travel)?



I. Childhood to college: Musk dreams of a better world.

Elon Musk was born in South Africa, and from a young age, he displayed an above average ability to learn and absorb information, especially in computer programming.

  • Growing up, Musk read for 10 hours every day and even read through the entire Encyclopedia Britannica. He demonstrated a passion for learning and then used this information to better understand the world.
  • When he was nine-years-old, Musk got his hands on his first computer. He proceeded to master a six-month introductory computer programming course in three days and began to program on his own.
  • After creating an online video game called Blastar at age 12, Musk sold the game to a computer magazine for $500 ($1,200 in today’s dollars).

Feeling his intellectual growth stunted in South Africa, Musk moved to the United States at age 17.

  • Elon Musk perceived that South Africa, a nation plagued by adverse race relations and political corruption, would not be a good place to dream of a prosperous future.
  • At 17, Musk left for Canada, his mother’s homeland, and spent 2 years at Queen’s University in Ontario before transferring and completing his undergraduate studies at the University of Pennsylvania.

In college, Musk defined five areas that will most affect the future of humanity and decided to dedicate his life to commercializing at least three technologies that would positively contribute to humanity

  • The five areas: “the internet; sustainable energy; space exploration, in particular the permanent extension of life beyond Earth; artificial intelligence; and reprogramming the human genetic code.”
  • Musk was iffy about how positive the impact of the latter two would be and decided to develop in the fields of the internet, sustainable energy, and space exploration.


II. Challenge #1: transforming industries with the internet

After graduating from UPenn, Musk moved to California to pursue a PhD in applied physics and materials science at Stanford University.

  • Musk believed that high energy density capacitors (stores electricity more efficiently than conventional batteries) would change the field of energy.
  • He was accepted into Stanford, located in the heart of Silicon Valley, a pioneering city in the field of energy.

However, with the dawn of the internet age in 1995, Musk decided to become an entrepreneur in the internet industry instead.

  • Musk dropped out of his program two days after starting it, because he felt the impending explosion of the online world and “couldn’t stand to just watch the internet go by—[he] wanted to jump in and make it better.”
  • Musk attempted to get a job at Netscape, a giant in the industry at the time, but failed miserably.
  • Testing and proving right his hypothesis that $100 was enough money per month to live happily, Musk began his own business.

Musk successfully launches and exits his first company.

  • In 1995, Musk started Zip2, a regional, data-driven online service (akin to something that combines Yelp and Google Maps).
  • In 1999, Compaq acquired Zip2 for $307M, and Musk made $22M at the young age of 27.

However, aspiring to innovate with the internet, Musk invested ¾ of his fortune into starting X.com, an online banking startup, which later merged with Peter Thiel’s Confinity to become Paypal.

  • In 1999, Musk founded X.com, an e-banking service that was comparable to traditional banks by offering checking/saving/brokerage accounts and allowing users to transfer money.
  • At the time of X.com’s founding, in the same building, Peter Thiel (the founder of Y Combinator) and Max Levchin (the chairman of Yelp’s board of directors) were working on a company called Confinity that offered similar services to X.com.
  • In order to increase their competitiveness and in the hopes of revolutionizing the banking industry, X.com and Confinity merged into what we know of today as Paypal, a company that specializes in online money transfers.
  • Due to an “Anti-Musk” scheme, Musk had to cede his position as CEO to Peter Thiel. He did not agree with the decision, but understood why it occurred, and stayed on the team in a senior role.
  • In 2002, eBay acquired PayPal for $1.5B, and Musk, as the greatest shareholder, earned $180M from the deal.


III. Challenge #2: daring to push the boundaries of the space, energy, and automobile industries.

After conquering the internet, Musk spent four years, starting in 2002, to found three companies back to back.

  • SpaceX seeks to revolutionize the cost of space travel in order to make humans a multi-planetary species by colonizing Mars with at least a million people over the next century.
    (Musk invests $100M)
  • Tesla seeks to revolutionize the worldwide car industry by significantly accelerating the advent of a mostly-electric-car world in order to bring humanity on a huge leap toward a sustainable energy.
    (Musk invests $70M)
  • SolarCity seeks to revolutionize energy production by creating a large, distributed utility that would install solar panel systems on millions of people’s homes, dramatically reducing their consumption of fossil fuel-generated electricity and ultimately “accelerating mass adoption of sustainable energy.”
    (Musk invests $10M)

However, in the mid-2000s, SpaceX and Tesla both faced severe crises. In addition, Musk’s personal life was in shambles due to a messy divorce.

  • SpaceX failed to launch three of its rockets, leaving Musk with funds for one and only one more launch.
  • Tesla’s first electric car, Tesla Roadster, was released just prior to the global economic collapse, leading the company to near bankruptcy.
  • Elon Musk ended an eight-year marriage with Justine Musk in 2008.

Despite all these difficulties, Musk miraculously overcame each crisis and has continued on his quest to change the world.

  • In September 2008, SpaceX successfully launched its fourth rocket, leading NASA to offer the company a $1.6B contract to carry out 12 launches for the agency. SpaceX succeeded in launching the following 20 rockets and has left a legacy of allowing companies to launch things into space for the lowest cost ever.
  • Two days after SpaceX’s fourth launch, Musk managed to scrape together enough money to keep Tesla afloat, allowing the company to design and then release its second car, the Model S, in 2012. The Model S was a huge hit in the auto industry (170,000 sold between 2012 and 2016), and Tesla is currently about to release its $30K small-medium sized electric car.
  • SolarCity installs solar panels on the roofs of houses or commercial buildings in order to reduce long-term electricity costs. SolarCity also has a new solar lease option for homeowners (the installation is free and homeowners pay cheaper bills to SolarCity for 20 years).


IV. Elon Musk’s global influence.

Musk has been changing the auto and energy markets by lowering industry norms for carbon emissions.

  • Because of Tesla, automobile companies around the world have been investing in the R&D for their own line of electric cars.
  • SolarCity is the largest American provider of solar energy services and has been shaping the industry for homeowners who seek to lower electricity costs and reduce their carbon footprints.

Musk has inspired young adults everywhere to challenge themselves to think creatively and make a positive impact on the world.

  • Musk’s story encourages us to pursue careers not for the sake of making money but for the sake of creating value.
  • His story also discourages us from “checking out” after amassing a fortune, but rather, using it to challenge ourselves further.

What are the lessons we can obtain from Elon Musk’s life? How can we apply these lessons to our own lives? What are the drivers and motivators in your life?

Please discuss this topic with your Ringle Tutor, and seek to understand your passion and the goals that you seek to pursue.

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