In this success story, we are going to share Elon Musk, the CEO and CTO of SpaceX CEO, chief product architect of Tesla Motors, chairman of SolarCity, and co-founder of PayPal. Musk is also involved in developing a high-speed transportation system known as Hyperloop. Elon Musk invests in the projects that can 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).
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 Blaster (a shooter similar to Space Invaders), which he had created by himself.
Biographies of famous people usually contain key episodes, which then lead 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 in 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.
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.
Musk figured out that humanity had to expand the limits of its consciousness to learn to ask the right questions; and he had found his 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. To do that, he needed funds.
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, he 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 a 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.
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 for selling a company for cash. Musk spent $20 million on a 1,800-square-foot condominium and completely renovated it. Also, he bought McLaren F1, which he would wreck in 2000, 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.
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 increase in a 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.
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 significantly supported such aspirations.
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 including 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 the 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.
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 were 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. 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 principal shareholder of it. He invested his last $20 million in Tesla Motors 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 a 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.
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).
The main reason for 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 mere 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 the 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.
On October 09, 2014, The Tesla Motors team unveiled Model S 85D and P85D. That is the first electric car with a dual motor. Model S P85D has 691 hp motor power and an ‘insane mode’ acceleration: a 0-60 mph (0-97 km) run in 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 capacity. The cost starts at $79,900. Visually, however, the car is going to be very similar to its counterpart Model S 60. On February 2014, Tesla Model S was rated by Consumer Reports as the best car in the world for the second year in a row.
There is an upcoming cross-over Tesla Model X, which is planned to be delivered for new reservations in the latter half of 2016. On September 29, 2015, the first six deliveries of Tesla X model started at a market launch event in the Fremont factory. The Tesla Motors team has designed Model X P90D and 90D. Model X P90D has 259 hp front, 503 hp rear motor power and a 0-60 mph (0-97 km) run in 3.2 seconds with Ludicrous Speed Upgrade. Additionally, Tesla X has a panoramic windshield, ample seating for seven adults and all of their gear. The car equipped with the first true HEPA filter with “Bioweapon Defense Mode” button in a car. Musk stated that when the HEPA filter operates at a maximum performance no pollen, bacteria or viruses could be detected in the cabin. Model X equipped with Falcon Wing doors that automatically adjusts to the optimal opening arc.
On March 31, 2016, Elon Musk unveiled the five-seater car, Tesla Model 3. That is the most affordable Tesla car yet with a price tag starting at $35,000. The base car can do a 0-60 mph (0-97 kmh) run under 6 seconds. The range is at least 215 miles (346 km) and plus supercharger support is capable. Model 3 includes all the autopilot safety features and will be equipped with both rear-wheel drive and all-wheel-drive versions. Musk said that it would be one the world safest cars in the world. Deliveries of Model 3 begin late 2017.
Elon Musk is planning to cover the US, Europe, and Asia with the network of Supercharger stations. As of April 04, 2016, there are 613 Supercharger stations with 3,628 Superchargers in the world.
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.
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-efficient, environmentally friendly and entirely 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 efficient 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 stock share price was $57.60 and the total market cap was $5.53 billion. Now Elon Musk owns 25% of SolarCity (SCTY).
Analysts consider his assurance in the company’s prospects to be the primary 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.
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.
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 was 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 small competitiveness of large corporations and their lobbying efforts to prevent the entry of new players.
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 primary 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 never exist. 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.
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 of 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.”
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.
On February 12, 2015, Falcon 9 rocket successfully delivered the Deep Space Climate Observatory (DSCOVR) satellite to deep space orbit from SpaceX’s Launch Complex 40 located at Cape Canaveral Air Force Station, Fla. DSCOVR satellite was developed by a mutual partnership of NOAA, NASA, and the United States Air Force. The satellite was developed to detect and inform on extreme emissions from the sun, which can affect communications infrastructures, satellites close to the Earth and power grids.
CEO Elon Musk reported through Twitter about the soft vertical landing of the rocket in the ocean within 10 meters. That gives hope for a successful landing next time at sea in non-stormy weather. According to the entrepreneur, in 10-20 years from now, science fiction can become a reality.
Elon Musk demonstrated that SpaceX can potentially reuse rockets in future, which means cost savings for the company.
The incredible life of Elon Musk is a great example of a man who has accomplished his childhood dream: he conquers space. Colonization of Mars will soon become a reality thanks to SpaceX’s innovations in the space industry.
Elon Musk is a demanding perfectionist and innovator in the high-tech industry. His education in the field of physics and economics helps him to see the objective truth and separate it from the emotional and speculative forecasts. He just thinks big. A bright example would be his concept of the fifth mode of transport called Hyperloop.
On August 12, 2013, Musk published a blog post about Hyperloop and a 58-page Alpha Hyperloop presentation, which shed some light on its structure and function. Hyperloop is solar-power high-speed transportation system driven by linear induction motors and air compressors should deliver people from Los Angeles to San Francisco in 30 minutes covering the distance of 381.8 miles (614.44 km). Hyperloop is based on the similar technology of magnetic levitation trains. An electromagnetic impulse is used to move the “pods” or “capsules”, and a low air pressure makes it possible to achieve higher speeds than any other ground transportation.
Hyperloop would be two times faster than a plane and will not be limited to any schedule. Elon Musk wanted to share Hyperloop concept with the Governor of California Jerry Brown and the US President Barack Obama of how to build an efficient transportation system in the nearest future. Musk thinks that Hyperloop can be a great alternative to the Government’s plans to construct a high-speed railroad between San Francisco and Los Angeles, which will cost more than $70 billion. In his opinion, spending so many funds on such slow type of transportation is wrong.
The transportation system would be composed of steel tubes. These tubes would be mounted on columns 50 to 100 yards apart (45.72 to 91.44 meters), and the capsules inside would speed up to 800 mph (1287 kmh).
The Hyperloop transportation system would be powered by solar panels mounted all the way along the track. In addition, the heritage of other Musk’s companies comes handy here: the motors and electronics of the capsules can be inherited from Tesla Motors, the engineers from SolarCity can help with the solar panels, and SpaceX can share the materials that have been tested in space.
One capsule would be able to accommodate up to 28 people, and if the budget of the project were increased from $6 to $10 billion, the Hyperloop cargo capsules would be able to carry up to three cars in one cargo capsule. The starting acceleration of the capsule would be similar to that of a plane. There would be 70 capsules on the preliminary route with a minimum delay interval of 30 seconds; the safe distance between the capsules would be 5 miles (8 km). The payback period of investments is 20 years if a one-way ticket price is $20 and the annual number of transported passengers each way reaches 7.4 million.
The first Hyperloop transportation system is planned to be built along the California highway Interstate 5. Musk promises passengers an unprecedented level of security. Project engineers took into account the possibility of emergency braking at depressurization of the capsule and even offered solutions bridge building anti-seismic design of columns for leveling the risk of destruction by an earthquake.
Hyperloop is going to be a great way of transportation for large cities located at a distance of not more than 900 miles (1500 km) from each other. For longer distances, aircraft is more suitable, the inventor believes.
Even though Musk is not ready to devote sufficient time to the Hyperloop concept, he is still willing to finance the development of the prototype. He also made Hyperloop design as an open source, allowing everyone to improve the current version of it, guaranteeing all possible support. As Elon Musk said he was not afraid of losing something on Hyperloop financially, but it would be great to make a new mode of transport.
On January 15, 2015, Elon Musk, during his speech at the 10th Annual Texas Transportation Forum, announced the creation of Hyperloop beta test track somewhere in Texas with a total length of 5 miles (8 km). In the future, this track is planned to be used by different companies and a group of talented students of engineers to test capsules of their own design. Musk also plans to organize an annual student Hyperloop capsule racer competition, like Formula SAE.
On February 26, 2015, Hyperloop Transportation Technologies (HTT) signed an agreement to begin construction of the first full-scale test track in 2016 of Hyperloop in the California model town of Quay Valley and complete the construction by 2017 – accepting passengers by 2018. Currently, HTT is seeking $100 million of investments to build a test track. HTT is currently entirely dependent on equity-backed crowdfunding JumpStartFund. However, $100 million is quite a big amount for JumpStartFund, and the possibility of venture financing is excluded. At this stage, JumpStartFund CEO Dirk Ahlborn, who founded HTT, plans to start an IPO and raise at $100 million of investments.