THE RISE OF ELON MUSK.

Without a doubt Elon Musk is one of the world’s most progressive innovators to date. Often criticized and parodied, Musk thinks broadly about the future and has made it his life’s mission to shift a multitude of industries to cause change. 

To say the least, Elon Musk’s is a polarizing figure in the tech and business worlds, but no matter what anyone thinks of him, he is an innovative disruptor that is tackling a wide set of issues. 

He may be best known for his electric vehicle company, Tesla, and his ambitious rocket startup, SpaceX, but he has much more going on. 

Here’s a quick overview of the companies that Musk has founded that are disrupting legacy industries and creating new ones.

ZIP2

In 1995, Musk, Kimbal, and Greg Kouri founded web software company Zip2 with funds from angel investors. They housed the venture at a small rented office in Palo Alto, California. 

The company developed and marketed an Internet city guide for the newspaper publishing industry, with maps, directions, and yellow pages. Musk says that before the company became successful, he could not afford an apartment and instead slept on the office couch and showered at the YMCA. They could only afford one computer, and, according to Musk, 

“The website was up during the day and I was coding it at night, seven days a week, all the time.” 

Musk obtained contracts with The New York Times and the Chicago Tribune, and persuaded the board of directors to abandon plans for a merger with CitySearch. Musk’s attempts to become CEO, a position held by its Chairman Rich Sorkin, were thwarted by the board.

In February 1999, Compaq acquired Zip2 for a whopping $307 million in cash.

Musk received $22 million for his 7-percent share.

X.com and PayPal

In 1999, Musk co-founded X.com, an online financial services and e-mail payment company.

The startup was one of the first online banks to be federally insured, and, within its initial months, over 200,000 customers joined the service. The company’s investors however saw Musk as inexperienced and had him replaced with Intuit CEO Bill Harris by the end of the year.

The following year, X.com merged with online bank Confinity to prevent unnecessary competition.  Founded by Max Levchin and Peter Thiel, Confinity had its own money-transfer service, PayPal, which was more popular than X.com’s service. Within the merged company, Musk returned as CEO. 

Musk’s preference for Microsoft software over Linux created a rift in the company and caused Thiel to resign. Due to resulting technological issues and lack of a cohesive business model, the board ousted Musk and replaced him with Thiel in September 2000.  Under Thiel, the company focused on the PayPal service and was renamed PayPal in 2001.

In 2002, PayPal was acquired by eBay for $1.5 billion in stock, of which Musk – the largest shareholder with 11.7% – received just over $100 million. 

In 2017, Musk purchased the domain X.com from PayPal for an undisclosed amount, explaining it had sentimental value.

SpaceX

In 2001, Musk became involved with the nonprofit Mars Society. He was inspired by plans to place a growth-chamber for plants on Mars and discussed funding the project himself.

In October 2001, Musk traveled to Moscow to buy refurbished Intercontinental ballistic missiles that could send the greenhouse payloads into space. He met with companies NPO Lavochkin and Kosmotras; however, Musk was seen as a novice and was even spat on by one of the Russian chief designers. The group returned to the United States empty-handed. 

In February 2002, the group returned to Russia to look for three more missiles. They had another meeting with Kosmotras and were offered one rocket for $8 million, which Musk rejected. Musk instead decided to start a company that could build affordable rockets. With $100 million of his early fortune, Musk founded Space Exploration Technologies Corp., traded as SpaceX, in May 2002. As of 2021, he remains the company’s CEO and chief engineer.

After three failed launches, SpaceX succeeded in launching the Falcon 1 in 2008. It was the first private liquid-fuel rocket to reach Earth’s orbit. Later that year, SpaceX received a $1.6 billion Commercial Resupply Services program contract for 12 flights of its Falcon 9 rocket and Dragon spacecraft to the International Space Station, replacing the Space Shuttle after its 2011 retirement.

In 2012, the Dragon vehicle berthed with the ISS, a first for a private enterprise. Working towards its goal of reusable rockets, in 2015, SpaceX successfully landed the first stage of a Falcon 9. Landings were later achieved on an autonomous spaceport drone ship, an ocean-based recovery platform.

In 2018, SpaceX launched the Falcon Heavy; the inaugural mission carried a Tesla Roadster as a dummy payload. 

In 2017, SpaceX unveiled its next-generation launch vehicle and spacecraft system, Big Falcon Rocket (BFR), which would support all SpaceX launch service provider capabilities. 

In 2018, SpaceX announced a planned 2023 lunar circumnavigation mission, a private flight called dearMoon project. 

In 2020, SpaceX launched its first manned flight, the Demo-2, becoming the first private company to place a person into orbit and dock a crewed space-craft with the ISS.

SpaceX began development of the Starlink constellation of low Earth orbit satellites in 2015 to provide satellite Internet access, with the first two prototype satellites launched in February 2018. 

A second set of test satellites and the first large deployment of a piece of the constellation occurred in May 2019, when the first 60 operational satellites were launched.

The total cost of the decade-long project to design, build, and deploy the constellation is estimated by SpaceX to be about $10 billion.

Tesla

Tesla, Inc. – originally Tesla Motors – was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning, who financed the company until the “Series A” round of funding. Both men played active roles in the company’s early development prior to Musk’s involvement. Musk led the Series.

A round of investment in 2004, joining Tesla’s board of directors as chairman. Musk took an active role within the company and oversaw Roadster product design but was not deeply involved in day-to-day business operations. Following a series of escalating conflicts in 2007 and the 2008 financial crisis, Eberhard was ousted from the firm. Musk assumed leadership of the company as CEO and product architect in 2008.

A 2009 lawsuit settlement with Eberhard designated Musk as a Tesla co-founder, along with Tarpenning and two others. As of 2019, Musk is the longest tenured CEO of any automotive manufacturer globally. 

Tesla first built an electric sports car, the Roadster, in 2008. With sales of about 2,500 vehicles, it was the first serial production all-electric car to use lithium-ion battery cells. Tesla began delivery of its four-door Model S sedan in 2012; a cross-over, the Model X was launched in 2015. A mass market sedan, the Model 3 was released in 2017. As of March 2020, it is the world’s best-selling electric car, with more than 500,000 units delivered. A fifth vehicle, the Model Y crossover, was launched in 2020. The Cybertruck, an all-electric pickup truck, was unveiled in 2019. Under Musk, Tesla has also constructed multiple lithium-ion battery and electric vehicle subassembly factories, such as Gigafactory 1 in Nevada and Gigafactory 3 in China.

Since its initial public offering in 2010, Tesla stock has risen significantly; it became the most valuable carmaker in summer 2020. It entered the S&P 500 later that year.

In September 2018, Musk was sued by the US Securities and Exchange Commission (SEC) for a tweet claiming funding had been secured for potentially taking Tesla private. The lawsuit claimed that discussions Musk held with foreign investors in July 2018 did not confirm key deal terms and thus characterized the tweet as false, misleading, and damaging to investors, and sought to bar Musk from serving as CEO of publicly traded companies. Musk called the allegations unjustified and claimed he had never compromised his integrity. Two days later, Musk settled with the SEC, without admitting or denying the SEC’s allegations. As a result, Musk and Tesla were fined $20 million each, and Musk was forced to step down for three years as Tesla chairman but was able to remain as CEO.

Musk has stated in interviews he does not regret the tweet that triggered the SEC investigation. On February 19, 2019, Musk stated in a tweet that Tesla would build half a million cars in 2019. The SEC reacted to Musk’s tweet by filing in court, initially asking the court to hold him in contempt for violating the terms of a settlement agreement with such a tweet, which was disputed by Musk. This was eventually settled by a joint agreement between Musk and the SEC clarifying the previous agreement details. The agreement included a list of topics that Musk would need preclearance before tweeting about. In May 2020, a judge prevented a lawsuit from proceeding that claimed a tweet by Musk regarding Tesla stock price (“too high imo”) violated the agreement.

Tesla Energy and SolarCity

Musk provided the initial concept and financial capital for SolarCity, which his cousins Lyndon and Peter Rive co-founded in 2006.

By 2013, SolarCity was the second largest provider of solar power systems in the United States. In 2014, Musk committed to building a SolarCity advanced production facility in Buffalo, New York, triple the size of the largest solar plant in the United States.

Construction on the factory started in 2014 and was completed in 2017. It operated as a joint venture with Panasonic until early 2020 when Panasonic departed.

Tesla acquired SolarCity for over $2 billion in 2016 and merged it with its battery energy storage products division to create Tesla Energy. The announcement of the deal resulted in a more than 10% drop in Tesla’s stock price. At the time, SolarCity was facing liquidity issues; however, Tesla shareholders were not informed.

Consequently, multiple shareholder groups have filed a lawsuit against Musk and Tesla’s directors, claiming that the purchase of SolarCity was done solely to benefit Musk and came at the expense of Tesla and its shareholders.

During a June 2019 court deposition, Musk acknowledged that the company reallocated every possible employee from the solar division to work on the Model 3, and, according to Musk, “as a result, solar suffered.” This had not previously been disclosed to shareholders. Court documents unsealed in 2019 have confirmed that Musk was also aware of the company’s liquidity issues. 

Tesla directors settled the lawsuit in January 2020, leaving Musk the sole remaining defendant.

Neuralink

In 2016, Musk co-founded Neuralink, a neurotechnology startup company to integrate the human brain with AI. Neuralink’s purpose is to create devices that are embedded in the human brain to facilitate the merging of the brain with machines. The devices will also reconcile with the latest improvements in artificial intelligence to stay updated. Such improvements could enhance memory or allow the devices to communicate with software more effectively.

At a live demonstration in August 2020, Musk described one of their early devices as “a Fitbit in your skull” that could soon cure paralysis, deafness, blindness, and other disabilities. Many neuroscientists and publications criticized these claims; MIT Technology Review described them as “highly speculative” and “neuroscience theater”.

The Boring Company

In 2016, Musk founded The Boring Company to construct tunnels.

In early 2017, they began discussions with regulatory bodies and initiated construction of a 30-foot (9.1 m) wide, 50-foot (15 m) long, and 15-foot (4.6 m) deep “test trench” on the premises of SpaceX’s offices as it required no permits. A tunnel beneath the Las Vegas Convention Center was completed in early 2020. Local officials have approved further expansions of the tunnel system.

As a merchandising and publicity stunt, The Boring Company sold 2,000 novelty flamethrowers in 2018.

The idea was allegedly inspired by the Mel Brooks-directed film Spaceballs (1987).

Image credit: Wiki Commons

Kate Shelton
Kate has led a diverse career in both the arts and business management. From dancing with the prestigious National Ballet of Canada to earning a Bachelor of Arts degree at Ryerson to then taking on the entrepreneurial role of running a small business, Kate’s wide range of experience has allowed her to develop a keen eye for art and design. As an avid Crossfitter, Kate has a true appreciation for leading an active, healthy lifestyle. She currently lives in Oakville, Ontario, with her husband and their wonderful son.