Elon Musk
In this success story, we are going to share Elon Musk biography, the CEO and CTO of SpaceX CEO, chief product architect of Tesla Motors, chairman of SolarCity, and co-founder of PayPal. Musk is also envisioned in high-speed transportation system known as Hyperloop. Elon Musk invests into the projects that were able to change our world. He is not only an entrepreneur, but also an inventor, innovator and engineer: Musk personally participates in designing of electric cars and spaceships.
Elon Musk was the second entrepreneur in the Silicon Valley (the first one was James H. Clark) who managed to create three companies with the market cap of more than $1 billion – PayPal, SpaceX and Tesla Motors. Elon Musk dedicates himself to space and alternative energy technologies. He plays by some different rules and does that quite successfully. The distinctive personality traits of Elon Musk are perseverance, critical thinking, accurate self-analysis and hard work (he works 80-100 hours per week).
Contents
Early Life
Elon Reeve Musk was born on June 28, 1971, in Pretoria, South Africa. He was the oldest of three children. His father is a South African-born British and engineer Errol Musk and his mother is a Canadian-English and dietetics expert Maye Musk. Musk spent his childhood in South Africa and at the age of 9, he got his first personal computer, the Commodore VIC-20. Elon immediately got interested in programming and started to learn it by himself. At the age of 12, he earned $500 by selling a computer game Blastar (a shooter similar to Space Invaders), which he had created by himself.
Elon Musk Childhood
Biographies of famous people usually contain key episodes, which then leads them to an overwhelming success. In Elon Musk biography, there were at least two of such episodes. The first one was the decision that Musk made when he was only 17. After graduating from a secondary school in Pretoria, he decided to leave his home, and, without the support of his parents, to immigrate to the United States. However, he did not get into the United States right away.
In 1989, Elon Musk moved to Canada to the relatives of his mother. Having obtained a Canadian citizenship, Elon went to Montreal. At first, he worked on low paid jobs and almost a year was teetering on the brink of poverty. At the age of 19, he entered Queens University in Kingston, Ontario. In 2000, he met his future wife Justine Musk, who later gave a birth to his five sons: Damian, Griffin, Xavier, Saxon, and Kai. However, he broke up with Justine after eight years and in 2010, got married a second time on a British actress by the name of Talulah Riley, with whom he has lived for 4 years and got divorced in 2014.
Elon Musk has been studying in Ontario for two years and then, finally, his dream came true – in 1992, he relocated to the United States. He was able to move to the US after receiving a scholarship from The University of Pennsylvania: Penn. He earned his Bachelor of Science degree in Physics Bachelor the next year, but decided to continue his studying at The Wharton School of the University of Pennsylvania for one more year and obtained a Bachelor of Science degree in Economics as well.
Elon Musk graduates from The University of Pennsylvania with B.S. in physics and from The Wharton School with B.S. in economics.
When Elon Musk started to struggle with adolescent depression, he began actively absorb philosophical and religious literature. Yet the most valuable lessons, he eventually learned from Douglas Adams’ book The Hitchhiker’s Guide to the Galaxy.
Elon Musk learned that the most difficult thing was to be able to come up with the right questions and the day he began to do that, the rest was obtained very simply. An episode that guided him to this conclusion was in which a giant supercomputer after several million years of thinking on the main purpose of life responded with a meaningless number 42.
When I was in college, I wanted to be involved in things that would change the world. – Elon MuskCLICK TO TWEET
Musk figured out that humanity had to expand the limits of its consciousness in order to learn asking the right questions; and he had found his own question: what things would have the great impact on the future of humanity’s destiny? Elon Musk decided that those would be the internet, the transition to renewable energy sources, and space colonization. He wanted to try to contribute in all three of them. In order to do that, he needed funds.
Zip2 and PayPal
Kimbal Musk, the brother of Elon Musk, with whom he created Zip2.
In the summer of 1995, Elon Musk made the second and the most important decision in his life. Having graduated from the University of Pennsylvania, he enrolled in the graduate school at Stanford University to pursue studies in the field of applied physics and materials science. However, after 2 days, he left the graduate school and together with his brother Kimbal Musk created his first IT company Zip2. He worked from early morning until late evening. He lived in the same warehouse where he rent the office, and when he needed to take a shower he had to go to locker rooms of a local stadium. In return, he accumulated savings and kept the company afloat during the most difficult first two years.
At that moment, the Internet was experiencing a period of rapid growth and development; however, nobody had ever earned considerable fortune on it. Musk’s company was one of the first ones to do this: he created a platform where newspapers – including credible ones as New York Times – could offer their customers some additional commercial services.
Max Levchin, Co-founder and former CTO of PayPal
In 1999, the biggest search engine of that time AltaVista (later acquired by Compaq) bought Zip2 for $307 million in cash and $34 million in securities. This deal set a record in selling a company for cash. Musk spent $20 million on an 1,800-square-foot condominium and completely renovated it. Also he bought McLaren F1 and 12-seat Dassault 900 private jet.
In 1999, Musk started to work on electronic payment systems that were gaining popularity. The X.com startup became his new business. In March 2000, X.com merged with a rival company Confinity that was running by Peter Thiel and Max Levchin. Confinity developed software to allow owners of PalmPilots and other PDAs to store encrypted information on their devices, creating the first digital wallet. In 2001, after the merger, X.com was renamed to PayPal and Elon Musk became the chairman and chief executive of PayPal.
Peter Thiel (left) and Elon Musk (right).
There were some disagreements on strategy and management between new teams, but they have never affected the company’s dynamics and growth. Musk was involved in the development of new business models, conducted a successful viral marketing campaign, which led to a rapid growth of number of customers. In 2002, eBay bought PayPal for $1.5 billion. Elon Musk received $180 million for his share from PayPal and had enough funds to pursue his other interests: space engineering and alternative energy sources. That was then when Elon stopped investing in internet business.
Tesla Motors
In 2003, engineers Martin Eberhard and Marc Tarpenning founded Tesla Motors. From the very beginning, the company positioned itself as the first serial manufacturer of electric vehicles and its founders dreamed to free the customers from oil burden. Musk greatly supported such aspirations.
Marc Tarpenning (left) and Martin Eberhard (right).
Elon Musk came into the project in 2004, leading an investment round in the startup with a personal contribution of $70 million. He became the chairman of the board of directors and at first did not take over the operational management of the company. Musk participated in designing of their first electric car, which was a Tesla Roadster sports car based on the British Lotus Elise. He insisted on using carbon fiber composite materials in the hull to minimize weight, developed the battery module and even some elements of design, like the headlights. By 2006, the project has got into newspapers and Musk received Global Green 2006 product design award for Tesla Roadster design. Tesla Motors continued to grow and now the pool of investors included the creators of Google, Larry Page and Sergey Brin and the total amount of the investments reached over $100 million.
However, when Tesla Roadster was about to enter the production in 2007, a run of bad luck started for Musk. Some management failures led to the fact that the actual selling price of the electric vehicle was almost twice as high as originally implicit price of $92,000. In addition, Martin Eberhard made a strategic miscalculation: his concept of transmission for Tesla Roadster proved to be ineffective and the release of the car had to be postponed for more than a year.
Tesla Roadster, 2008.
During this crisis, Elon showed his incredible critical management skill: he fired everyone who stalled project’s development, including Eberhard and a few other key players. After the cleanup, he headed the company by himself. Eberhard appealed to court after being replaced by an interim CEO, Michael Marks, but the problem has been solved peacefully and so effectively that no details of the conflict was leaked to the public. In December 2007, Ze’ev Drori was assigned as the CEO and President of Tesla Motors. Elon Musk was much better CEO and succeeded Ze’ev Drori. Drori became Vice Chairman and left the company in December 2008.
On the verge of crisis, Elon Musk continued vigorously cutting costs effectively: he reduced staff, demanded lower prices from suppliers, closed some of the offices, etc. As the result, Tesla Roadster saw the world in 2008 with a minor – less than $20,000 – increase in price.
In his most difficult moment in the late spring 2008, Elon filed for divorce from his spouse Justine, for reasons he did not want to make public. In order to save Tesla Motors, Musk received additional funds for the takeover of a software development company Everdream for $120 million by Dell; Elon Musk was the main shareholder of it. He invested his last $20 million in Tesla Motors, sold his favorite McLaren F1 and finally saved the company from bankruptcy. Musk even gave personal guarantees to customers to make a refund in the event of the business failure.
Soon, things went smoothly, which was especially impressive against the backdrop of stagnating traditional auto industry. A German multinational automotive corporation Daimler made critical investments of $50 million in Tesla Motors and it helped save the company. Soon, the U.S. Department of Energy authorized the inclusion of Tesla Motors in a pool of innovative transport companies and authorized it to receive preferential interest-bearing loan. Later, some skeptics have criticized the government for their decision to support Tesla Motors, whose product was focused exclusively on wealthy buyers.
The expression “electric vehicle” often evokes associations with something slow and clumsy, but in the case of Tesla Motors it is not really so. Tesla’s electric vehicles are fast and similar in appearance to luxury sports cars. However, there are also plans to create more simple and affordable models. Tesla Motors’ engineers cooperate with Daimler and Toyota.
So-called “hybrid” cars of these companies, equipped as with an electric motor and an internal combustion engine, use Tesla Motors’ technology. In 2007, the Vice Chairman of General Motors, Bob Lutz called Tesla the main reason for the decision to begin development of the electric car Chevy Volt. “If some Silicon Valley start-up can solve this equation, no one is going to tell me anymore that it’s unfeasible,” Lutz said.
On June 29, 2010, Tesla Motors started its initial public offering (IPO). It was the second (after Ford) car-manufacturing company in the U.S. history that entered the IPO market. Tesla Motors, despite being unprofitable for 10 years, got listed on NASDAQ with $17 per stock and attracted more than $225 million of investments. It was truly the best time to enter the IPO market. The oil slick due to the fault of British Petroleum covered a significant part of the Gulf of Mexico was continuing to grow and to raise the issue of the transition to new fuels seemed more than logical at that time. As of February 05, 2015, one share of stock of Tesla Motors, Inc. cost $220.99, and its total market cap reached $27.44 billion. Elon Musk owns 30% of Tesla Motots, Inc. (TSLA).
CEO of Tesla Motors Elon Musk poses during a television interview after his company’s initial public offering at the NASDAQ market in New York. (© Reuters)
The main reason of Tesla’s financial success became a premium sedan Tesla Model S, with the battery that supplies 265 miles (426 km) of range in the EPA 5-cycle test. The production of Model S started in June 2012 with a price tag starting at $69,900 and was ranked 99 out of 100 points by Consumer Reports and the highest safety rating from the National Highway Safety Administration, a 5.4 out of 5 points.
At the presentation of Model S, Musk categorically stated that in twenty years, more than half of produced vehicles would be electric ones. He was even ready to bet on that as well as many others. Yet even the most optimistic analysts’ estimates state that Musk’s forecast cannot be realized. However, that does not scare Tesla’s CEO: by embellishing reality, he changes it.
Elon Musk believes that the world has become dependent on oil. This dependence leads to climate change and permanent geopolitical tensions. A refusal of internal combustion engines in favor of electric motors can make a difference. Therefore, Tesla Motors is not a simple business for Musk.
Musk continued to keep publicity interested in the company by starting a media argument with The New York Times columnist John M. Broder about one of test drives of the Model S. It is worth mentioning that these publicity stunts gave their results and during the first half of 2013, there were 10,500 Model S sold.
Tesla Model S
On October 09, 2014, The Tesla Motors team unveiled Model S 85D and P85D. That is the first electric car with dual motor. Model S P85D has 691 hp motor power and an ‘insane mode’ acceleration: a 0-60 mph run of 3.2 seconds. Additionally, the car can be equipped with a revolutionary autopilot system: a forward-looking camera, radar, and 360-degree ultrasonic sensors that actively monitor the surrounding roadway. With enabled autopilot system, Model S is able to automatically change lanes, indicate and avoid pedestrians and collisions and even to read speed limit signs, adjusting the car’s speed accordingly. In addition, the new Model S has an increased battery capability. The cost starts of $79,900. Visually, however, the car is going to be very similar to its counterpart Model S 60. On February 2014, Tesla Model S rated by Consumer Reportsas as best car in world for second year in a row.
There is an upcoming cross-over Tesla Model X, which is planned to be announced in early 2016. Elon Musk is planning to cover the US, Europe and Asia with the network of Supercharger stations. As of May 08, 2015, there are 425 Supercharger stations with 2,338 Superchargers in the world.
Tesla Superchargers
Powerwall
On May 01, 2015, within the Tesla Energy project, Tesla Motors introduced a wall mounted, rechargeable lithium ion battery with liquid thermal control, called Powerwall. There are two models of it: one goes with 10 kWh with a price tag of $3,500, which is applicable for backup applications, and another battery goes with 7 kWh – $3,000, which can be used for daily cycle applications. Powerwall batteries can be combined in arrays to increase the total storage capacity. Each battery is provided by a 10-year manufacturer’s warranty.
For more demanding consumers of energy Tesla Motors provides a solution, called Powerpack. It can be used in offices, industrial facilities, and utilities. In this case, it is possible to store much more energy. Moreover, 100 kWh batteries, can be combined into arrays from 500 kWh to 10 MWh. According to Elon Musk, 160 million Powerpack units would be enough to provide energy to all consumers in the United States; and 2 billion of Powerpack unites would be enough for the whole world.
Powerwall. Multiple batteries can be installed together.
SolarCity
SolarCity Corporation is a provider of energy services headquartered in San Mateo, California, USA. The co-founders of SolarCity are two cousins Lyndon and Peter Rive. Elon Musk is a shareholder of the company. In 2003, he invested $10 million in it, after selling his 11 percent of PayPal stock.
SolarCity provides solar power systems for homes, businesses and governments. The company provides several programs for homeowners: “MyPower” loan program, solar lease and solar power purchase agreement (PPA).
In May 2008, the company built solar powered electric systems for British Motors and eBay to power their headquarters and servers.
SolarCity Panels at eBay’s Headquarter
On January 15, 2015, SolarCity has tied up with Credit Suisse Group AG to start a new solar financing facility worth $200 million. This credit facility is targeted at assisting customers in investing in solar energy systems through the SolarCity’s “MyPower” loan program. This energy plan enables customers to own their solar systems in order to pay less for electricity when compared to leasing them through power purchase agreements (PPAs). For example, it helps to decrease the price per kilowatt-hour and customers are required to pay back the loan at $16 cents a kilowatt-hour for the first year.
SolarCity’s concepts are cost effective, environmental friendly and completely coincides with Elon Musk’s principles. The company, in particular, provides solar energy systems for Supercharger stations of Tesla Motors.
However, the leadership in the industry does not save SolarCity from criticism. Some skeptics state that solar electric power will never turn into an effective business model, and considering the fact that the competition is too high in this industry, it would be challenging to keep a company in the leading position. However, on December 10, 2012, since SolarCity entered the IPO market the value of its stock shares jumped from $8 to $11.79. As of February 13, 2015, the share stock price was $57.60 and the total market cap was $5.53 billion. Now Elon Musk owns 25% of SolarCity (SCTY).
Analytics consider his assurance in the company’s prospects to be the main reason for the phenomenal success. If the creator of SpaceX and Tesla Motors bets on that technology, then it means that there is truly something to it. The Wall Street society even came up with a term for this phenomenon and called it The Musk Effect.
SpaceX
Elon Musk started thinking of creating a space exploration technologies corporation (SpaceX) at the turn of the century. He was inspired by an ambitious idea of reducing space transportation costs to enable people to colonize Mars. SpaceX was founded in 2002 and is headquartered in Hawthorne, California, USA.
Elon Musk was fascinated by the opportunity of colonizing Mars and created Mars Oasis. The goal of the project was to create automated greenhouses, which in the future could have become a basis for a self-sustaining ecosystem. The main problem was an enormous delivery cost of greenhouses to Mars. Musk even tried to order launch vehicles from Russian Federation and discussed that with Russian officials, but he decided not to make a deal with them. Later Musk came up with an idea to design his own reusable launch vehicles and spaceships.
SpaceX Logo (© SpaceX)
On March 2006, Elon Musk invested more than $100 million in SpaceX. The prices per launch vehicle ranged from $15 million in Russian Federation to $65 million in the U.S. and they seemed to be too high to the entrepreneur. He calculated that the cost price of all the parts required for constructing a launch vehicle were only 2% of the launch vehicle price in the United States. This fact outraged Musk. The root of the problem he saw in the bureaucratization of the space industry, the low competitiveness of large corporations and their lobbying efforts to prevent the entry of new players.
If anyone has a vested interest in space solar power, it would have to be me. – Elon MuskCLICK TO TWEET
Musk was assured that the costs of creating and launching launch vehicles and spaceships could be reduced tenfold. First, he needed to redefine the goal of spaceflights. The main mission of SpaceX is not a delivery of astronauts and cargo into orbit, but the colonization of other planets like Mars and Musk wants to do that efficiently. On August 2008, one of the first investors who financially supported Elon Musk was Founders Fund that belonged to his former PayPal partners, Peter Thiel and Dave McClure. On June 2009, Steve Jurvetson on behalf of DFJ Venture led an undisclosed investment round including Founders Fund, which executed at least $15 million of the proposed $60 million. On November 9, 2010, DFJ Venture and Founders Fund led another round of investments and SpaceX raised $50.2 million. Yet, after all the investment rounds Elon Musk owns 66% of SpaceX shares.
SpaceX started working on the Falcon 1 launch system yet in 2002. It has taken 4 years and hundreds of millions of private investments to design it. In the period of 2006 through 2015 such companies as DARPA, NASA, ORS, Celestis, ATSB, SpaceDev, Orbcomm, NSPO, Astrium got interested in SpaceX and ran several test launches of Falcon 1 rocket.
In 2006-2008, the first three flight attempts failed. On 28 September 2008, during the fourth flight attempt Falcon 1 finally reached the orbit. If the fourth launch also failed, SpaceX would be never existed. NASA was impressed by these achievements and signed a $1.6 billion contract to fly American astronauts to and from Earth orbit. NASA plans to fly 12 delivery flights using SpaceX robotic Dragon spacecraft and Falcon 9 rocket.
The Falcon 1 rocket during its forth successful launch.
As of October 2012, SpaceX developed several types of rocket engines: Kestrel, Merlin 1, Draco and Super Draco without any support from the government. The last one was developed for the use in the Falcon family of launch vehicles, which are Falcon 1, Falcon 9, and Falcon Heavy, and for the use in the Dragon spacecraft.
However, Elon Musk does not want to rush with IPO this time. According to Elon Musk, all the achievements of SpaceX is a background for his biggest dream – an expedition to Mars. SpaceX is in designing process of Mars Colonial Transporter. Also, Musk’s engineers work on innovative rocket engines (Grasshopper and the Falcon 9 rockets) and Red Dragon spacecraft that using Falcon Heavy rockets (modified version of Dragon capsule) to transport people from Earth to Mars. He once said, “I would like to die on Mars, just not on impact”.
Falcon Heavy rocket flight animation:
Grasshopper and Falcon 9 are experimental launch vehicles that are able to make vertical landings and vertical takeoffs. On January 10, 2015 the first attempt to land the SpaceX Falcon 9 rocket on Earth after the launch failed – it landed too roughly. Nevertheless, the SpaceX team managed to make a difficult maneuver and landed a rocket on a floating platform off the coast of Florida.
