How Elon Musk Created His Fortune Before Tesla, SpaceX, Or Even PayPal

2021 was the year of Elon Musk. Controversial and great, surely in equal parts, the founder of Tesla, PayPal, SpaceX or Neuralink closed the year being the chosen Personality of the Year by Time magazine 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 much of it is shares of Tesla, Musk has surpassed 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 off, his fortune has been made through invention and sale. Musk had an early aptitude for computers from a young age, designing his own video game at age 12. At 17 he went to Canada to escape South African compulsory military service, worked on the farms of some cousins and attended the University of Queens in Ontario.

Musk’s early business

In 1992 he transferred to the University of Pennsylvania, where he studied physics and business. There his first known business emerged: 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 generate fortune. With a background between formal materials physics and self-taught computer science, Musk enrolled in a Ph.D. program in physics at Stanford, but dropped out after two days.

Musk tried his luck in the wild west of the internet and it turned out well. Together 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 very good 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 reached agreements with outlets such as the New York Times. In 1999, they sold the Zip2 to Compaq, a then-declining computer manufacturing giant., for 307 million dollars. Musk made $ 22 million from the sale of the Zip2, and quickly spent a million dollars on a McLaren F1 supercar. “It is not consistent with the rest of my behavior,” he told CNN, which filmed Musk as the car was delivered to his home.

One year later, Musk wrecked the car: It tried to show off its 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 payments company called Confinity And today one of the biggest (and also most controversial) investors in the tech world was riding with him in the McLaren, from which they emerged unscathed.

Musk had invested his $ 22 million from the sale in creating another online banking company called X.com. The two companies merged in March 2000, forming a business that ended up becoming 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 changing the company’s servers. “It’s not a good idea to leave the office when there are a lot of important things going on that are causing a lot of stress for people,” 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 made a mega-fortune of $ 180 million for the deal.

So, with the new money in his pocket, Musk decided to go one step further. Or several: specifically, to space. In 2002, he founded SpaceX with the almost ridiculous mission of colonizing Mars. The following year, he put an initial investment of more than $ 6 million in Tesla, which was then not much more than a couple of founders and a vision to create electric sports cars.

The company wanted to take advantage of new energy-dense, lightweight 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 its expansion, which allowed it to create an electric vehicle with a range much greater than what previous ones had achieved. electric cars.

And from there to almost bankruptcy

Both companies got off to a rocky start in the early years: Musk says he ended up investing virtually all of the proceeds from the PayPal sale into financing the companies. SpaceX had to endure multiple failed launches, nearly bankrupting it, while Tesla struggled when its engineers realized its battery prototypes could catch fire. Later, Tesla came close to bankruptcy during the 2008 crash.

Over time, Musk’s investments began to pay off. In 2008, SpaceX reached a 1.6 billion dollar deal with NASAWhile Tesla, in 2012, began manufacturing its first mass-market car, the Model S. Today, Tesla is a giant that controls about two-thirds of the US market for electric vehicles. SpaceX is the undisputed leader in private space exploration.

In the past 18 months, Tesla’s stock price has more than tripled. Nobody knows if the company will maintain its enormous valuation; If Tesla shares fall, so will Musk’s fortune. Musk currently owns about 17% of Tesla shares, valued at $ 175 billion.despite having sold nearly $ 12 billion in recent weeks, which makes up the majority of his net worth.

Once a millionaire, Musk has also invested his money in startups. En 2016, Musk fundó The Boring Company, which digs tunnels to create alternative routes in cities that avoid traffic jams, and the neurotechnology company Neuralink.

Those two most recent companies are illustrative examples of the mindset that created the Musk fortune. Both are very speculative and imaginative ventures. Bets that not everyone would support. But who would have thought that Tesla or SpaceX were going to be what they are today a few years ago?