“I could go and buy one of the islands in the Bahamas and turn it into my personal fiefdom, but I am much more interested in trying to build and create a new company.”
Why Elon Musk?
Arguably the greatest visionary of our time, Elon Musk is a real-life Iron Man (Tony Stark’s character was modeled after Musk!) whose unparalleled ambition is often misconstrued as a billionaire’s egotism and eccentricity. Elon Musk emerged a decade ago as a leader in the Silicon Valley scene, but had impossible goals that he would always be chasing. Musk has an unfathomable ability to locate a problem that needs solving and work tirelessly towards it, putting together a team of capable individuals and motivating them to formulate a practical solution.
Personally, I have idolized Elon Musk since reading Ashlee Vance’s biography (would absolutely recommend!) and I aspire to have the same positive impact on the world as Musk has and will continue to have. As a result, I apologize in advance for fangirling over Elon Musk in this blog post.
“I say something, and then it usually happens. Maybe not on schedule, but it usually happens.”
Musk sets a lofty example for what we can strive to become: envisioning a better future and making that dream a reality. Even though we will not be visiting Tesla, learning about Elon Musk and his various ventures can teach us a great amount about the evolving landscape of Silicon Valley and the rollercoaster path to success for startups. It is good to keep Elon Musk in mind as a pioneer of industry to emulate in terms of leadership and vision as we delve further into entrepreneurship and embark on our trip!
“When I was in college, I wanted to be involved in things that would change the world.”
Who is Elon Musk?
Emerging from a tough childhood in South Africa, Musk always stood out. At age 12, Musk created the video game Blastar. At age 14, he read a life-changing book, The Hitchhiker’s Guide to the Galaxy, which helped him realize that “a lot of times the question is harder than the answer.” Musk started asking the right questions and later graduated from Wharton with degrees in physics and economics. In 1995, Musk started Zip2, which later sold for $307 million. Using his share from the sale, Musk started X.com, which later became PayPal and sold for $1.5 billion. Like our friend Steve Jobs, Musk was forced out of CEO to CTO at Zip2, and was ousted as CEO again from PayPal.
Musk then decided to dabble in rockets and electric cars, as one does, and literally taught himself rocket science. He then started SpaceX to build reusable rockets to Mars, invested in Tesla to create electric cars, and became the first investor in his cousins’ company, SolarCity, to popularize renewable solar energy.
“My proceeds from PayPal were $180M. I put $100M in SpaceX, $70M in Tesla, and $10M in SolarCity. I had to borrow money for rent.”
During the Great Recession, SpaceX and Tesla verged on bankruptcy, but started their explosive growth following the narrow escape. Musk has since published a design for the Hyperloop high-speed rail, built the Tesla Gigafactory, unveiled the Tesla Powerwall, successfully landed a rocket, and started The Boring Company to bore tunnels in California… to name a few of his many accomplishments.
This blog post will focus on Tesla, SpaceX, and The Boring Company in particular. Since the inception of Zip2, Elon Musk has remained one step ahead of the competition, pioneering every industry imaginable and ushering humanity into the future.
“I don’t create companies for the sake of creating companies, but to get things done.”
Tesla is Elon Musk’s most renowned startup. Known for hemorrhaging cash and missing production deadlines, Tesla burned through $1.4 billion in cash in the third quarter of 2017. That said, Tesla singlehandedly made electric cars sexy, shifting the perception of sustainable transportation from a Toyota Prius to the Model S and spearheading the electric car race.
Elon Musk saw the future demand for electric cars and capitalized on the unrealized potential. Now, electric cars appear to be the future of transportation. California Governor Jerry Brown recently called for five million zero-emission cars by 2030, securing a future market for Tesla and indicating the evolving automobile industry that Musk anticipated.
However, Tesla is notorious for missing production deadlines and setting expectations impossibly high. Tesla aimed to produce 5,000 Model 3s per week, but only sold 1,550 in the final three months of 2017. Tesla is entering into the mass-production market, aiming to produce 500,000 cars per year, but has been plagued by production bottlenecks and issues with scaling production to meet demand. A capital injection or acquisition could be in its future, as John Reim’s blog post examines.
Despite the financial woes, Tesla continues to pioneer the electric car industry. Deliveries of the Model S and Model X rose 28% last quarter and Tesla sold about 76,000 total vehicles last year. Tesla also introduced the all-electric semitrailer truck (and already has hundreds of preorders), a $200,000 Roadster super car, and plans for a pickup truck. Tesla has even reduced the cost of driving cross-country to just $100!
In doing so, Musk and Tesla have generated astronomical value. Tesla’s market cap per vehicle sold in 2016 was a whopping $667,000. In comparison, GM’s was a meager $5,000.
Elon Musk has stepped into the spotlight by leading the electric car company to its $60 billion valuation. Musk and Tesla recently reached a new contract revolving around a 10-year grant of stock options split into 12 tranches, worth up to $55.8 billion if fully vested (assuming Tesla can reach a market cap of $650 billion – equivalent to Amazon today)! One expert remarked, “Mr. Musk is saying, ‘I want to set an audacious goal, and then if I achieve it, then pay me audaciously’ […] He is in some ways capturing the spirit of Silicon Valley.”
Elon Musk founded SpaceX in 2002 to revolutionize space exploration technology. Today, SpaceX designs, manufactures, and launches advanced rockets and spacecraft. SpaceX has made history countless times since 2008, pioneering the private-sector race in space exploration.
The Falcon 1 was the first privately developed liquid fuel rocket to reach orbit and to deliver a commercial satellite. The Dragon then became the first to reenter from orbit and to visit the space station. Most notably, the Falcon 9 successfully launched and landed… twice!
Now valued at $21 billion, SpaceX is at the forefront of space exploration. SpaceX will now be launching the Falcon Heavy on February 6th, 2018. The Falcon Heavy will be the most powerful rocket ever, setting the stage for the BFR – an absolute behemoth relative to past spacecraft.
The Boring Company and Hyperloop
As mentioned above, Elon Musk published a research paper in 2013 describing how the “Hyperloop” can revolutionize modern transportation. According to Musk, solar-powered passenger pods could hypothetically travel up to 700 mph in the $7.5 billion system. Musk has since improved on his initial designs, even forming the Boring Company to build underground transportation tunnels and a New York to Washington DC Hyperloop. Most importantly, Musk published the Hyperloop paper as a blueprint for a futuristic technology, inspiring startups and a generation of college students to ardently pursue his vision.
Elon Musk started the Boring Company with the goal of reforming Los Angeles transportation infrastructure by boring underground tunnels. On its website, Boring says “To solve the problem of soul-destroying traffic, roads must go 3D, which means either flying cars or tunnels. Unlike flying cars, tunnels are weatherproof, out of sight and won’t fall on your head.”
Boring recently proposed a 6.5-mile underground tunnel from Hawthorne (SpaceX HQ) to West Los Angeles. The tunnel would contain a high-speed underground “skate” system traveling up to 150 mph. In October, Boring also secured a utility permit to begin tunneling beneath a 10-mile stretch near Washington DC. Albeit a tiny first step, it demonstrates Musk’s commitment to his vision and the progress being made to bring the Hyperloop to life. The technology obviously remains years away, but Elon Musk has singlehandedly introduced a new dimension to transportation (quite literally).
Long-Term Vision: Envision a World!
Elon Musk has shown us how to find a problem, envision a solution, and offer that solution to the market. In my opinion, the greatest potential for Musk’s empire could lie in Tesla Energy. Following the acquisition of SolarCity, Tesla now offers the Solar Roof in combination with the Powerwall. In a short time, Tesla will hopefully be able to further reduce the cost and incentivize all homes in the US to purchase both, significantly reducing the energy footprint of the United States and opening a massive new market to Tesla. By constructing and developing these fantastical startups, Elon Musk is paving the way for sustainable energy, intergalactic transportation, and AI.
“I would like to die on Mars. Just not on impact.”
We are inching closer towards Elon Musk’s vision of the future. According to Musk, we will reach it in our lifetime! Imagine this… You open your front door and take a step outside onto the reddish dirt of Mars. You look up and see a Tesla Solar Roof connected to your Tesla Powerwall, which powers your entire house. Then, you hop into your Tesla Roadster and, as it drives you to the underground Hyperloop, you see yet another SpaceX BFR land, carrying new settlers.
It may sound out of this world (pun intended!), but Elon Musk and his many startups are working tirelessly to make it a reality. All of his ventures are concerned with a mission greater than Elon himself: “saving humanity”. You can thank Elon Musk for saving humanity and for pushing us towards a better future!
“When something is important enough, you do it even if the odds are not in your favor.”