Namaste🤓
Welcome to yet another episode of Fuzzzzzzyyyyy Logic!
Last week, I was asked: “Puneet, who is an entrepreneur”?
So today I am doing a small experiment with Super Sunday Series. Giving you a glimpse of entrepreneur’s life and how they become an overnight success :)
3…2…1...Lift Off!
This is a real story of a visionary, a risk taker, a businessman and most importantly a human. May this inspire you to keep going and never give up!
Elon Musk was born in 1971. He grew up in Pretoria, a large city in the northeastern part of South Africa.
Cut to 1995, Musk finds himself interning at a startup based in Silicon Valley, United States. At that time the internet that we know today was at it’s nascency and so Musk thought of building an online network for doctors but the idea didn’t fly.
Then one day a salesperson from the Yellow Pages came into the startup office to sell the idea of helping business get online. That pitch by the salesperson got Musk thinking and he decided to finally jump into building a similar startup.
Thus, ‘Global Link Information Network’ was born, a startup that would eventually be renamed to ‘Zip2’.
Zip2 may have been a go-go Internet enterprise aimed at the Information Age, but getting it off the ground required old-fashioned door-to-door salesmanship. Steadily, Zip2 became a remarkable success and in April, 1998 they announced merger with its main competitor ‘CitySearch’ in a deal which was valued at around $300 million.
But (like all Bollywood movies), the two companies canceled the merger, the press pounced, Musk lost his chairman title.
In February 1999, a reversal of fortune took place when the PC maker Compaq Computer suddenly offered to pay $307 million in cash for Zip2. Musk came away with a return of $22 million.
He poured almost all of $22 million into his next venture ‘X.com’, a finance start-up. At that time, it was shocking to put so much of one’s newfound wealth into something as iffy as an online bank.
In March 2000, X.com and it’s competitor ‘Confinity’ merged and was later renamed to ‘PayPal’. But in similar fashion to his last startup, one night while he boarded a flight, the company executives replaced Musk with another CEO.
But PayPal grew and had a revenue of about $240 million per year. And just like any fairytale, in July 2002, eBay offered $1.5 billion for PayPal. Musk netted about $250 million or $180 million after taxes.
The conventional wisdom at time (Dot Com Bubble - Equities Market Crash) was to take a deep breath and wait for the next big thing to arrive. But, Musk rejected that logic by throwing $100 million into SpaceX, $70 million into Tesla and $10 million into SolarCity.
SpaceX was America’s attempt at a clean state in the rocket business. It was an aerospace manufacturer and space transportation services company. After 6 years, $100 million and 3 failed launches later (where each rockets blew up), Musk was a decision away from failure.
At the same time, Tesla (electric-automobile manufacturer and clean energy company) was on the verge of bankruptcy as it was burning $4 million a month. When Musk ran through the calculations concerning SpaceX and Tesla, it occurred to him that only one company would likely even have a chance of survival.
“I could either pick SpaceX or Tesla or split the money I had left between them. That was a tough decision. If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company”
- Elon Musk
In order to maintain his own expenses, Musk had to start borrowing hundreds of thousands of dollars from his friends and even his in-laws offered to remortgage their house. People used to joke about Tesla and write articles on how Tesla will die and stories about SpaceX’s third failure.
Still, Musk made a last ditch effort to save both his companies and raised all the personal funds he could and put them into the companies. He took out loan for SpaceX. He also seized about $15 million that came from a startup he had invested in. He went ALL IN!
Tesla ended up raising a debt round just hours before it would have become bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day. The fourth and possibly the final launch for SpaceX took place on September 28, 2008 and it succeeded. It took six year, five hundred people to make this an overnight success.
SpaceX metamorphosed from the joke of the aeronautics industry into one of its most consistent operators and also became the first private company to send astronauts to orbit and to the International Space Station in 2020.
Tesla stunned its peers in the automotive industry and currently has a market value of $500bn.
Final Thoughts
Every entrepreneur goes through these cycles of irrational joy and agonizing pain. Add to them the pressures of running family, laying off people, failed startups and starting all over again. That is what makes us admire these founders. The harder it gets, the better they get.
For the entrepreneurs reading this, all I will say is that success is round the corner. Don’t you dare give up!😇
The above article has been edited for length (has lots of key crux missing) and directly inspired from autobiography of Elon Musk by Ashlee Vance.
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See you next week with Terrific Thursday series. BYE BYE!