Elon Musk’s First Startup
Elon Musk managed to get accepted into Stanford’s PhD program for Physics and Natural Sciences. However, like many great minds Elon dropped out in a matter of days.
Elon had his eyes on the Internet which was still new and most people were skeptical of it . So, he dropped out of his PhD to pursue an idea that he believed cannot wait.
So, in 1995 Elon and his brother Kimbal Musk started their first start-up Global Link Information Network (Zip2). The company is similar to a combination between Google Maps and Yelp. It was more than just a phonebook; it included a map that leads you to your destination.
The company started with a capital of $28,000 given by their father. Elon was in charge of all things related to coding, while his brother was taking care of sales and business.
Some investors were more interested in Elon’s personality rather than the company itself. One investor remembers Elon saying “my mentality is that of a samurai. I would rather commit seppuku than fail.”
Elon Musk was still young with no practical experience in business. This led investors to appoint someone else as CEO to the company he founded himself.
In Febraury 1999, a company called Compact bought Zip2 for $307 million. So, the Musk brothers were able to turn a $28,000 investment into $307 million in less than 6 years.
After the sale, Elon Musk had a net worth of $22 million. But, he didn’t settle and began brainstorming his next start up.
X.com becomes Paypal
Elon wondered why would people leave their home and physically go to the bank to make a transaction. If a technology is developed properly people should be able to make transactions online. So, Elon musk started a new company X.com to do just that.
Then, Elon Musk bought a million dollar car that was so rare there were only 62 cars of that model produced. However, he did not get it to show off. The car was a statement.
Elon bought the car to join the Big Boys Club of billionaires who would later invest in his company X.com. Soon enough, Elon began racing CEOs and fitting in with the Big Boys.
Elon invested all of his resources in X.com and the company was soaring in the market.
Soon enough, new competition showed up. Max Levchin and Peter Thiel startd their company PayPal where people can make online transactions by email.
The companies were draining each other up until March 2000. The two companies decided to merge under the name PayPal.
Paypal had better services, but was running out of money. On the other hand, X.com had complicated services and a lot of money. After the merger, Elon Musk became the CEO and the company had more than $100 million.
However, Elon and his wife decided to go to Sydney in 2000. That’s when the biggest coup in the Silicon Valley happened. The PayPal board decided to remove Elon Musk from his CEO position and appoint Peter Theil instead.
Then, in July 2002, ebay bought Paypal for $1.5 billion. Elon Musk’s share was $180 million after taxes. After receiving the $180 million Elon didn’t settle. He planned bigger
Officially a Big Boy
Elon Musk officially became a Big Boy after PayPal’s sale. However, he didn’t spend his money on a luxurious lifestyle. He wanted to use that money to change the world, and so he did
Musk took his proceeds from PayPal and invested $100 million in SpaceX, $70m in Tesla, and $10m in Solar City. Elon even had to borrow money for rent.
SpaceX was different from all other rocket companies since the start. Elon was running SpaceX with a startup mentality and was an unusual CEO. His mentality saved his engineers a lot of time and saved the budget as well.
The first client for SpaceX was the US Department of State who wanted to launch a small satellite TadSat-1. All eyes were on the company’s first rocket Falcon-1. And, in the prelaunch test the engineers found a malfunctioning valve in the liquid oxygen tank. The launch was postponed till December, ony to be postponed again due to bad weather.
Finally, In March 2006 the world was set to witness the first SpaceX launch. Exactly 25 seconds after liftoff the rocket began spinning and exploded in midair, destroying the satellite on board.
However, Elon sent an email to all his employees “We are going to make this work”
And indeed, SpaceX made it work. The company that took 6 years to launch one rocket is now leading the rockets industry.
SpaceX that started with a $100 million investment is now worth $74 billion. So, Elon Musk who was a Big Boy Club wannabe is now the Biggest Boy in the club with a net worth of $170 billion.