2021 was the year of Elon Musk. Controversial and surely great in equal parts, the founder of Tesla, PayPal, SpaceX or Neuralink closed the year being the chosen one and also as the richest person in the world.
With a fortune of 221,000 million dollars, which has also grown enormously in the last year thanks to the fact that a large part are Tesla shares, other current technology billionaires such as Bill Gates or Jeff Bezos.
But it was not always like this. Although Musk’s family of South African and Canadian origin was well-to-do, his fortune has been made through invention and sale. Musk from childhood had an early aptitude with computers, designing his own video game at age 12. At 17 he went to Canada to escape South African conscription, and attended Queens University in Ontario.
Musk’s early business
In 1992 he moved to the University of Pennsylvania, where he studied physics and business. That’s where the first business known to him came from: he and a couple of friends rented a house off campus and turned it into a nightclub.
Then he went to Silicon Valley guided by the siren songs of programmers who had managed to make a fortune. With a background somewhere between formal materials physics and self-taught computer science, Musk enrolled in a PhD program in physics at Stanford, but dropped out after two days.
Musk tried his hand at the wild west of the internet and it worked out for him. Along with his brother Kimbal, Musk founded a company called Zip2 as an online business directory, a kind of yellow pages with maps that seemed like a great idea in the mid-’90s.
A first fortune of 22 million for his first ‘exit’ and a crashed sports car
Elon and Kimbal recruited investors and hired outside help to run the company, which has struck deals with outlets including the New York Times. In 1999, they sold the Zip2 to Compaq, a then-declining computer manufacturing giant, for $307 million. Musk made $22 million from the sale of the Zip2, and promptly spent $1 million on a McLaren F1 supercar. “It’s not consistent with the rest of my behavior,” he told CNN, which filmed Musk as the car was delivered to his home.
A year later, Musk wrecked the car: he was trying to show off his acceleration and ended up crashing it. The million-dollar sports car was not insured.
But by then, Musk was already thinking about his next adventure. On the day of the accident, Peter Thiel, co-founder of a payment company called Confinity and today one of the biggest (and also most controversial) investors in the technological world, was with him in the McLaren, from which they escaped unharmed.
Musk had invested his $22 million from the sale to create another online banking company called X.com. The two companies merged in March 2000, forming a business that eventually became PayPal.
Musk was named CEO, but in September, while on vacation, the board of directors fired him, replacing him with Thiel, in part over a disagreement over the company’s shifting of servers. “It’s not a good idea to leave the office when there are a lot of important things going on that are causing people a lot of stress,” Musk would later reflect.
The sale of PayPal raised his fortune to 180 million: the time has come to found Tesla
However, Musk still had a stake in the company. When eBay bought PayPal for $1.5 billion in 2002, Musk earned a mega-fortune of $180 million from the deal.
So, with the new money in his pocket, Musk decided to go a step further. Or several: specifically, to space. In 2002, he founded SpaceX with the almost ridiculous mission to colonize Mars. The following year, he put an initial investment of more than $6 million into Tesla, then not much more than a couple of founders and a vision to create electric sports cars.
The company wanted to harness new lightweight, energy-dense lithium-ion batteries to revolutionize a fledgling industry. At that time, lithium-ion cells were only used in small electronic devices, and one of Tesla’s main innovations was their extension, which allowed it to create an electric vehicle with a range far greater than what previous ones had achieved. electric cars.
And from there to almost touching bankruptcy
Both companies got off to a rocky start in the early years: Musk says he ended up pouring virtually all of the proceeds from the PayPal sale into financing the companies. SpaceX had to endure multiple launch failures, nearly bankrupting it, while Tesla ran into trouble when its engineers realized its prototype batteries could catch fire. Later, Tesla was on the brink of bankruptcy during the 2008 crisis.
Over time, Musk’s investments began to pay off. In 2008, SpaceX landed a $1.6 billion deal with NASA, while Tesla, in 2012, began building its first mass-market car, the Model S. Today, Tesla is a giant, controlling about two thirds of the US electric vehicle market. SpaceX is the undisputed leader in private space exploration.
In the past 18 months, Tesla’s stock price has more than tripled. No one knows if the company will maintain its huge valuation; if Tesla’s stock falls, so will Musk’s fortune. Musk currently owns about 17% of Tesla’s shares, valued at $175 billion, despite selling off in recent weeks, which makes up the bulk of his net worth.
Once a millionaire, Musk has also poured his money into startups. In 2016, Musk founded The Boring Company, which digs tunnels to create alternative routes in cities that avoid traffic jams, and the neurotech company Neuralink.
Those two most recent companies are illustrative examples of the mindset that created Musk’s fortune. Both are very speculative and imaginative companies. Bets that not everyone would support. But who would have thought that Tesla or SpaceX would be what they are today a few years ago?
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