What drives Elon Musk to Succeed
This post was originally published by Australian Financial Review
Elon Musk, a regular Dude who grew up in South Africa, has taken on the aerospace industry, aviation giants, energy utilities, oil companies and the car giants of the auto industry . . . and winning.
Musk’s Model 3 Tesla was unveiled. The mass-market electric car has pre-sold more than 325,000 units, set to be delivered in the next two years. These numbers mean the company has implied future sales of $14 billion making it the largest one-week product launch of all time.
Tesla, is not about selling cars
“we are taking a huge step towards a better future by accelerating the transition to sustainable transportation.”
SpaceX – Musk’s commercial space exploration company – has launched its Falcon 9 rocket into orbit to deliver a payload to the International Space Station, and managed to bring the rocket back to earth and for the first time in history, land safely on a drone ship in the middle of the Atlantic Ocean. Landing at sea is desirable because a rocket returning at 5,000mph from lunar orbit means that if something goes wrong, the landing coordinates can change considerably – somewhere like the Atlantic offers a greater safety margin.
SpaceX’s mission is about “making humanity multi-planetary – with a goal of landing on Mars within the next 15 years.
What has made Musk “succeed? What has driven him to be regarded as one of the most successful humans on the planet?
in 1995, he asked himself a question: ‘What do I want to dedicate my life’s work to?’
What was his Vision?
His answer was simple
“to enable the future of humanity – to
Make the world a better place”
(A vision that extends beyond himself)
How was he going to do this -
The areas he chose
rewriting the human genetic code;
artificial intelligence (AI).
He questioned whether rewriting the human genetic code and AI would have a beneficial or detrimental effect on humanity, and therefore decided to base his life’s work on the first three.
Mission 1. The Internet
“It seemed like I could either do a Ph.D. and watch the internet happen or I could participate and help build it in some fashion.”
He Took Action!!!
In 1995, he co founded Zip2 with his brother, Kimbal. Zip2 would grow into an online map that listed local businesses, signing up major newspapers such as The New York Times, who could use the platform to advertise local businesses such as restaurants and gyms to their online readers. Now common, but in 1995 was a first – competing with the yellow pages.
Elon and Kimbal would literally live out of their tiny office, working there during the day and sleeping there at night.
Zip 2 raised VC , forcing Musk to hand over the day-to-day management to someone else. Four years later, Compaq acquired Zip2 for $307 million in cash and $34 million in stock options, making Mysk $22 million from the sale.
He immediately invested $10 million into his second start-up, enabling people to transfer money over the internet.
X.com made immediate payments a reality by taking the world of financial payments online. ‘Money is really just an entry in a database. It’s low bandwidth so it seemed like something that should really lend itself to innovation,’ Musk would tell Bloomberg Business in 2014.
One year after launch, X.com merged with Confinity to create PayPal – which would go on to become the leading payment system in the world. In 2002, eBay bought PayPal for $1.5 billion. As the largest shareholder, at 11.7%, Musk made $180 million from the sale.
Mission one complete.
Mission 2 and 3 space travel and sustainable energy – is what has made him legendary
In 2003 he founded SpaceX, ‘to enable people to live on other planets’.
He believes that eventually there will be an extinction event on planet Earth, and at that moment, it will be important for humanity to be multi-planetary.
Having a self-sufficient civilisation on Mars ensures the survival of human consciousness.
Therefore, this mission clearly falls within Musk’s vision of enabling the future of humanity.
Musk travelled to Russia three times in an attempt to buy a second-hand rocket. After several negotiations with the Russians failed, he decided that the biggest challenge of starting a rocket company was not in fact the price of existing rockets but rather that there had been no innovation in rocket engineering in 60 years.
How can SpaceX create a rocket that was affordable – enabling a private company to launch into space, with a goal of enabling us to inhabit Mars?
He had dish a sense of purpose that he was peepare dot invest all!
The risk of failure was and is massive – Musks genius is that – that is ok!!! He does not lose – he either wins or learns!
And Mission 3 sustainable energy. In 2004, he invested in and eventually took a controlling stake of and became CeO of Tesla, building top-quality cars based on sustainable energy and clean fuel..
‘Were not about competing with car companies – we’re just going to keep making more and more electric cars and driving the price point down until the industry is very firmly electric . . . We want to have a catalytic effect until [the point at which] half of all new cars made are electric, then I think I would consider that to be the victory condition. So the faster we can bring that day, the better.’
The cynics were out there!
Tesla was perhaps one of the most unwise investments in history. Automotive companies were going offshore, experts were declaring that the technology for electric cars wasn’t ready for consumers, Musk had zero automotive experience, and the last time there was a successful US car start-up was Chrysler in 1925.
Musk decided to invest $70 million in Tesla in the hope of moving the world towards a cleaner form of energy consumption.
in 2006, Musk co-founded and funded a company called SolarCity with the mission of ridding America and eventually the world of its addiction to fossil-fuel electricity.
With SolarCity, Musk wanted to revolutionise energy production by installing solar panels on the roofs of homes throughout America for free and giving people a more affordable, and clean, energy solution to power their homes.
In Musk’s words, ‘SolarCity is about sustainable energy production while Tesla is about sustainable energy consumption.’
Musk put $10 million into founding SolarCity, and with that, he had invested almost all of the money he had earned throughout his life.
Money has never been a driver – the vision he holds for humanity and his need to fulfil his purpose far exceeds his need for profit.
In business, it is an interesting paradox that it is often those who do not hold money as their primary motivation who add the most value to the world and therefore become the most wealthy.
Between 2006 and 2008, the world was laughing at Musk and towards the end of 2008, the criticism seemed warranted, as inflating costs, a global financial crisis and a lack of trust from investors in these fanciful upstarts made it appear as though all three companies were going to die.
When Musk invested $100 million into SpaceX in 2002, he knew that it would ultimately fund three unmanned rocket launches. One of these had to succeed if he was to prove that a private company could successfully build rockets.
If none of the first three launches worked, they would not win the contracts or attract the investors they needed to fund the company, and SpaceX would die.
‘The first rocket didn’t get very far. It got about a minute up and then there was an engine fire and that was it. The second flight actually did make it to space but not to orbit. And then in flight three again we didn’t get all the way to orbit.’ In this third launch, on 3 August 2008, the rocket exploded before it could reach orbit.
At Tesla, the costs of production had blown out of proportion, from a projected $65,000 to $140,000 per car. This put the company into extreme duress, as costs continued to stretch and sales continued to lag. Then the global financial crisis hit, which was disproportionately bad for car manufacturers.
‘That was tough. It was obviously an economic period that saw the bankruptcy of General Motors and Chrysler, and there we were a young company selling a very optional car – people don’t need a $100,000 sports car.’ And in 2008, people definitely didn’t need a $100,000 sports car that was battery powered.
‘I had to take all of my reserve capital and invest it into Tesla. Which was very scary because it would obviously be quite sad to have the fruits of my labour with Zip2 and PayPal not amount to anything. But there was no question that I would do that because Tesla was too important to let die.’ Coming into the end of 2008, Musk invested his last dollars into Tesla to give the company less than a fighting chance.
To make matters worse, the bank that had backed SolarCity terminated the relationship, meaning that company was also now in trouble. It was the week before Christmas, and Musk’s three companies each looked like they would be bankrupt before the year was out.
‘We had maybe a week’s worth of cash in the bank or less and there was just very little time left in the year to resolve these things. There was like two or three business days left in the year.’ If Musk reached the close of business on 24 December 2008 without raising money from external investors, then all three companies would die and he would be declared bankrupt.
Understandably, Musk was extremely challenged personally. ‘I never thought it was possible for me to have a nervous breakdown . . . that was about as close I was going to come.’His mother would later tell Bloomberg Business, ‘I felt like I had a hole in my heart. I just didn’t see him getting out of it, he was just so sad.’
On Tuesday 23 December 2008, with less than two business days before a Christmas that would see all three companies collapse, SpaceX received word that they had won a $1.6 billion contract from NASA to resupply the International Space Station. At this point, Musk had only a few hundred dollars in the bank and could not have made payroll the next day.
On Wednesday 24 December, at 4 pm, with one hour before the working year was out, Musk successfully raised money from previous Tesla investors that would ensure Tesla and SolarCity would also not die. Musk would end the year with his vision intact, having saved it from the brink of several disasters.
Musk’s biggest strength is also his biggest weakness: the vision he holds for the future is so implausible, so unlike anything the world has ever seen, that it is hard for his ideas to be taken seriously in a world that uses the past to navigate the future.
SpaceX, Tesla, and SolarCity are all so ambitious that, until they had each made significant progress towards ‘proof of concept’, Musk’s visions were unbelievable.
Today, SpaceX is the first privately owned company to put rockets into orbit, the first private company to have a rocket orbit the Earth and return safely, and the first private company to deliver cargo to the International Space Station. The only other organisations that have achieved any of these feats are the nations of Russia, China, and the USA.
SpaceX is now NASA’s largest contractor, with around $5 billion in space-travel contracts, and an investment from Google gives the company a valuation of $12 billion.
It is building the most powerful operational rocket in the world, and its rockets to date have been completed at about a quarter of the cost of Boeing’s or Lockheed Martin’s, making space travel the cheapest it has ever been in history.
Musk has single-handedly brought more innovation to space travel in ten years than Russia, China, the USA, Boeing and Lockheed Martin did in 60 years. Last weeks milestone of having Falcon 9 land safely on a barge ship mean that SpaceX continues to drive the cost of space travel down ensuring that rockets are becoming increasingly reusable. After the landing, Musk said in a press conference, “In order for us to really open up access to space, we need to achieve full and rapid reusability.”
In 2013, Consumer Reports labelled Tesla’s Model S the best car it had ever tested, scoring an unprecedented 99/100. It is the fastest four-door sedan in history and the safest car ever tested by the US Government’s National Highway Traffic Safety Administration.
The company doesn’t label each car by the year it is made, because – unlike other car brands – you don’t need to wait for a new model to get all the new features. With a Tesla, you get all the new features through an automatic software update over wi-fi. Tesla’s initial public offering in 2010 was the first of an American car company since Ford in 1956. Today, just eight years after being one hour from bankruptcy, the company is worth $33 billion.
Today, SolarCity is America’s largest provider of solar panels and employs more than 10,000 people.
It offers free installation across homes, businesses and governments, and delivers clean energy at a fraction of the cost that consumers pay for fossil fuels such as coal, oil, and natural gas. It is building the largest solar panel factory in the US and, after going public in 2012, is valued at $2.74 billion.
It has revolutionised the way the US produces energy and will continue to change the way the world thinks about the necessary transition to a cleaner future.
Misks journey has been extraordinary and challenging – breaking barriers – preparing to fail with a laser focus of achieving his vision and mission.
Musk is forcing the world to rethink space, energy production, energy consumption, transport and the future of humanity – he is only 44.
He is a brilliant example of someone who is unconstrained by yesterday’s thinking.
His vision of enabling the future of humanity gives him and his people such a sense of purpose that they set out to do the impossible and achieve it time and time again.
Musk is truly pushing civilisation forward and in doing so is prompting humanity to reimagine what we are capable of.
Through Musk’s accomplishments, the potential of human endeavour is travelling further than it ever has before.
Inspired by Jack Delosa’s article in Fin Review