Elon Musk: Success Story

Musk's First Company: Zip2

After dropping out of his PhD program at Stanford, Musk and his brother Kimbal launched a software company in 1995 called Zip2, using $28,000 of their father's money and funds from angel investors. The Internet was beginning to expand by leaps and bounds, and newspapers were trying to figure out how they could make the best use of the new medium. The Musks’ company developed online city guides for newspaper publishers. Before long, Zip2 had won contracts with major players in the industry, including The New York Times and the Chicago Tribune.

But there was tension at Zip2. Musk wanted to be CEO, but the board stood firm against the move. In 1999, as the tech bubble was approaching its zenith, the board sold the company to Compaq for $307 million plus $34 million in stock options. In the sale, Elon Musk received 7% of the sale, $22 million. (See also: Three Steps Elon Musk Took To Become Successful.)

PayPal

That same year, Musk co-founded X.com, an online banking company, using $10 million from the sale of Zip2. A year after that, with the dot-com bubble fully popped and a preponderance of tech companies closing their virtual doors, X.com would purchase Confinity, another online financial services firm, and its money-transfer service, called PayPal.

It quickly became clear that PayPal was the most important element of the company. X.com focused on the service and renamed itself PayPal in 2001. It soon became the online-payment system of choice, with a few thousand users multiplying to more than 1 million in a few months. Its fast adoption has been credited to a marketing campaign that recruited new customers when they received money through the service.

But boardroom troubles dogged Musk, who was ousted from the CEO’s chair over technical arguments concerning the future architecture of the service. Again, those battles were followed by a sale, this time to eBay in October of 2002. At the time of the sale, one in four eBay transactions were completed using PayPal. This sale was enormous by Internet-company standards of the time, with $1.5 billion in stock changing hands. Musk received $165 million for his 11.7% stake in PayPal.

Before the PayPal sale had closed, Musk had begun to dream up a miniature experimental greenhouse that he could land on Mars. The greenhouse, which he called "Mars Oasis," would contain crops and would, he hoped, rekindle faded public interest in space exploration. (For more, see: Elon Musk's Ventures-Bringing His Visions to Life.)

Musk in Space

In 2001, Musk took steps to realize this vision, taking a trip to Moscow to shop for Soviet Intercontinental Ballistic Missiles (ICBMs) that could be refitted to deliver payloads into space. Musk and his advisors, however, failed to see eye-to-eye with the Russian aerospace companies, who didn’t take them seriously. In 2002, he tried again, this time bringing along a former CIA venture capitalist, but the Russian aerospace firms wanted too much money for their rockets and Musk moved on.

On the flight back, Musk decided to start a company that would build affordable rockets, using vertical integration and the modular approach of software engineering. Those ideas culminated in his launch of SpaceX in 2002, whose mission, Musk said, was to create a "true space-faring civilization.”

It was clear that SpaceX was more than a hobby to Musk, who invested $100 million to get it started. The company named its first launch vehicle Falcon 1, after the Millennium Falcon from Star Wars. The Falcon 1 made the history books in 2009 as the first privately-funded, liquid-fueled rocket to put a satellite into Earth’s orbit.

Since that fateful launch, SpaceX has continued to make history. When its SpaceX Dragon vehicle docked with the International Space Station in 2012, it was the first commercial company to ever do so. It once again made headlines in December of 2015, when the company was able to successfully land the first stage of the Falcon rocket back at the launch pad, a first for rocket science and a feat that would be replicated multiple times in the months to follow.

The company has also made money. In 2006, NASA gave SpaceX a contract to develop the Falcon 9 launch vehicle, which it followed up with another $1.6 billion contract in 2008. But beyond headlines and profits, Musk sees SpaceX as filling a vital need. “There's a fundamental difference, if you look into the future, between a humanity that is a space-faring civilization, that's out there exploring the stars... compared with one where we are forever confined to Earth until some eventual extinction event,” he said. In September of 2016, Musk outlined a plan to explore and eventually colonize Mars. (For more, see: The Reality Of Investing In Space Exploration.)

Tesla

Musk brought the same idealism and drive to another major venture, Tesla Motors Inc. (TSLA). That company was first incorporated in 2003 by Martin Eberhard and Marc Tarpenning, a pair of engineers. The two funded the company’s development until the Series A round of funding in 2004.

At that time, Musk came in as a leading investor, putting $7.5 million into the nascent car company. In addition to bringing his reputation and cash, Musk took an active role in the company, managing the design of the Tesla Roadster and insisting on a carbon fiber body, among other things. He continued to invest in the following years and took over as CEO of Tesla Motors in 2008. The company’s first car, the Tesla Roadster, sold 2,500 vehicles in 31 countries.

One issue electric cars face is a shortage of charging stations, especially when compared with the nationwide network of gas stations. In 2013, Musk said Tesla was investing in the creation of more charging stations on the East and West coasts. He also announced that Tesla Motors will allow other automobile manufacturers to use its technology patents to accelerate the development of electric cars worldwide.

For his work with Tesla, Musk earned a yearly salary of just a dollar (as of 2014), with other compensation in the form of stock and performance-related bonuses. As with SpaceX, though, Musk has insisted that Tesla is about more than just making money.

"Obviously Tesla is about helping solve the consumption of energy in a sustainable manner, but you need the production of energy in a sustainable manner," he said.

SolarCity

To address the production side of the energy equation, Musk came up with the idea for SolarCity, which his cousins Lyndon and Peter Rive co-founded in 2006. The company designs, finances and installs solar panels. It also constructs electric-car charging stations in collaboration with Tesla Motors.

As of 2014, SolarCity had more than 6,000 employees. Musk has promised to build a SolarCity factory in Buffalo, New York, that would be three times the size of the largest solar plant in the United States. The company has grown to become the second-largest provider of solar power systems in the United States, and Musk is still the largest shareholder. In June of 2016, Tesla formally moved to acquire SolarCity.

Hyperloop

Musk continues to invest in the future. In 2013, he released a proposal for a hypothetical machine that would carry passengers from Los Angeles to San Francisco in 35 minutes or less. He calls it the Hyperloop, and he estimates it would cost $6 billion to build. In 2015, he announced plans to build a 5-mile Hyperloop track in 2016 as a pilot program. The project has continued in the time since then, with Musk sponsoring a design competition for the creation of pods. He has also confirmed, as of the summer of 2017, that he had received “verbal government approval” to begin construction of a hyperloop between Washington, D.C. and New York City, although this has been called into question by various government officials. (See also, Is Elon Musk's Hyperloop Economically Feasible?)

Not content to innovate in the financial, automotive, and space worlds, Musk has in recent years also turned his attention toward artificial intelligence. In December 2015, he announced the development of OpenAI, a research outfit aimed at developing safe, beneficial general artificial intelligence that could be broadly accessible. Alongside this project, Musk has also developed Neuralink, which he co-founded in 2016. Neuralink is a neurotechnology startup which researches how to integrate artificial intelligence with the human brain. Finally, in December of 2016, Musk tweeted “Am going to build a tunnel boring machine and just start digging” while stuck in traffic. Early 2017 proved that he was putting his money where his (online) mouth is, as he announced plans to begin digging. The process was started in February of 2017.