Just a few years ago, Elon Musk was down to his last $3 million. The serial entrepreneur and PayPal co-founder had earned close to a quarter of a billion dollars before his 32nd birthday, but by 2008, his two young companies – Tesla Motors and SpaceX – had burned through most of it, sending rockets into space and building $100,000 electric sports cars. Musk just needed a little more funding to keep his enterprises afloat. But this was the fall of 2008, and the global economy was teetering. No one was eager to sink more cash into a company selling eco-conscious sports cars to the Ferrari set or booking flights to the International Space Station. Musk had already borrowed against his own plane, and now, just before Christmas, he learned that Tesla Motors wouldn’t make its payroll unless he wrote a personal check – his last $3 million.”Either I went allin, or Tesla dies,” Musk says at Tesla’s Palo Alto offices. “I didn’t want to look back and say there was something more I could have done and didn’t.” So he wrote the check and went home wondering how he would pay the next month’s rent.
“I spent everything,” Musk explains. “Everything. I had to borrow money from friends.” Amazingly, the gambit worked. The fact that Musk was risking everything on the company shamed his fellow investors into putting up the tens of millions Tesla needed to survive. Eighteen months later, in June 2010, Tesla Motors went public, instantly earning Musk $630 million.
And remarkably, according to his friends, even as he was facing ruin, Musk never cut any corners or limited the ambitions of SpaceX, the company he started in 2002 to provide private and commercial transportation to space. Last December, SpaceX became the first private enterprise to send a capsule into orbit and successfully retrieve it. “SpaceX was just a nonstop balls-to-the-wall, doubling- and tripling-down effort,” says Musk’s friend and former partner at PayPal, Max Levchin. “It was him against the odds, swinging the sword in the dark. He gets this crazy vision; he decides to go for it. Things weren’t working for him, but he says, ‘I don’t care. I’ll spend another $20 million blowing up another rocket.'”
No one was questioning Musk’s sanity when he arrived in Washington, D.C., earlier this year, for what his PR team dubbed “a celebration of American innovation.” The excuse for the event was the new showroom Tesla was opening a short walk from the White House. The company flew in a red, white, and blue Tesla Roadster for the occasion, as well as a prototype of its Model S, the sedan that’s set to launch in mid-2012 to compete with BMW, Mercedes, and other luxury gas-guzzlers. For good measure, the company also put on display the capsule SpaceX had retrieved from orbit, complete with its reentry scorch marks.
“God bless our entrepreneurs,” Congressman Dana Rohrabacher told the crowd. “God bless those leading humanity into the next generation.” Not to be outdone, House majority whip Kevin McCarthy, who represents SpaceX’s Southern California district, turned to Musk from the podium, saying, “You’re the Wright Brothers of the next generation.”
It was all a bit much, but there was still plenty to celebrate in Musk: Tesla, beyond making him ridiculously wealthy (for the third time in his 40 years), jump-started the dormant American electric-car business; while SpaceX, which struck many as ludicrous when it was founded in 2002, is actually showing a profit, despite spectacular R&D expenses. The company has booked more than $2.5 billion worth of contracts with government and private entities seeking to ferry cargo and satellites to and from space.
Musk in the flesh seemed nothing like Tony Stark, the Iron Man movie superhero he inspired. He was exhausted, for one thing. He hadn’t gotten to sleep until 3:30 am, was up early for his first meeting, and then wondered why he had bothered. The day had not gone well. Apparently not every member of Congress appreciates the wisdom of committing billions to space travel through hard times. “I don’t know what else I could say to them to make them understand,” Musk says, the frustration apparent on his face. On the other hand, later that night he was flying to Milan for a Tesla store opening, accompanied by Talulah Riley, the 26-year-old actress he married last year. So maybe there was a bit of Tony Stark to his lifestyle after all.
Until now, shooting rockets into space was a job for industrialized nations, not private enterprise. “And it’s not like I own a navy,” Musk jokes with one well-wisher. But despite the set-backs and financial stagnancy of the past few years, events have largely broken SpaceX’s way. Earlier this year the U.S. retired its space-shuttle program, leaving SpaceX vying with a handful of competitors for the job of ferrying cargo – and, eventually, astronauts – to and from the International Space Station.
As Musk fields questions from partygoers – a task he describes as “tedious” – the scope of his various ambitions becomes clear: With NASA types, Musk speaks earnestly about the complexity of launching a rocket with a human inside. To laymen, he outlines his plans for colonizing Mars. (“Private space travel,” he calls it.) “We’ll do our best to make it a reality,” he promises one man, as if it’s just another entry on a long list of challenges he’s certain he’ll clear. Musk won’t settle for mere space travel; he has to go to Mars. And if he’s going to build electric cars, they need to be as affordable as Toyota Camrys. “Because,” he says, “otherwise, really, what’s the point?”
Musk was 12 or 13 when he locked in on the idea of getting to America. He’d grown up in the outskirts of Durban, South Africa, in a neighborhood that called to mind, he says, Beverly Hills. As a child, he read, and that’s about all he did, unless you factor in the time he spent showing off how much he knew. His mother dubbed him “Genius Boy.” He read the encyclopedia A to Z and seemed to remember everything. Even she concedes, “He just wasn’t any fun.” As Musk read about technology and new discoveries, it seemed to him that the U.S. had practically cornered the world market on innovation and scientific breakthroughs, to say nothing of the comic-book superheroes he adored. At some point after his parents divorced, he figured out that because his mother had been born in Canada, her children qualified for Canadian passports. Three weeks after his passport arrived, the 17-year-old Musk flew to Toronto. He phoned his mother collect. “What do I do now?” he asked.
Musk bounced around Canada for a year before starting his studies at Queen’s University, near Ottawa. A transfer to the University of Pennsylvania, where he earned dual degrees in physics and economics, landed him in the States; an acceptance into the physics Ph.D. program at Stanford brought him to Silicon Valley. There, he figured, he’d work on building a better lithium battery, but it was 1995, the year of the Great Internet Land Grab. So 48 hours after landing at Stanford, he dropped out to start a company he called Zip2.
Musk had no formal training in computers, but he was a fierce autodidact, fearlessly taking on massive, highly competitive industries he’d only previously dabbled in. At Zip2 he created a mapping service that anticipated MapQuest and Google Maps and began work on an online yellow pages that was an early competitor to Yahoo. His mistake, he said, was ceding control to the venture capitalists, who pushed him aside for an MBA, instead of adopting Musk’s plan to go head-to-head with the search leaders at the time: Yahoo, Excite, and AltaVista. But his investors sold to Compaq for $307 million, earning Musk $22 million for a few years’ work.
Musk is still pissed. “I thought Zip2 could have done better than it did by at least a factor of 10.”
It helped soften the blow that Musk was already deep into his next challenge: a company that aimed to use the Internet to challenge the supremacy of credit-card companies. Eventually Musk partnered with a pair of entrepreneurs who were trying to accomplish more or less the same thing. They named the resulting company PayPal. Musk served as their first CEO – until he was pushed aside and replaced by one of his co-founders, Peter Thiel. “There was this sense that I turned the risk valve up too high,” Musk says, adding, “I think maybe I have a higher tolerance than most.”
Yet that same willingness to play chicken, accelerating even as the edge of the cliff comes into view, paid off for everyone involved with PayPal. As the company’s largest stakeholder, Musk said no when eBay offered $400 million in 2001. He said no again when eBay doubled its offer, to $800 million – though it would have meant close to $100 million in Musk’s pocket. At the end of 2002, PayPal finally accepted an offer of $1.5 billion, but even then Musk argued against the deal.
“Elon’s confidence was extraordinary,” says Thiel. “He had more at stake than anyone, and he never wavered.”
After PayPal, Peter Thiel created a fund to invest in high-risk start-ups – he was Facebook’s first outside investor – but even he found SpaceX too bold an undertaking. Thiel thought he’d throw in $1 million as a “statement of support,” but that was before his team did due diligence and realized that Musk had assembled an incredible array of talent. So far, Thiel has invested more than $30 million – and he counts himself lucky. “When these things work,” he says, “they tend to work spectacularly.”
One would think that private space exploration would be enough of a challenge to hold the undivided attention of even the most ambitious visionary, but SpaceX wasn’t yet two years old when Musk’s entrepreneurial eye began to wander. He met an engineer named Martin Eberhard who had the idea of building an electric car powered by lithium-ion batteries. Intrigued, he wrote Eberhard and his partners a check for $6.3 million and named himself chairman of the newly christened Tesla Motors. By the time the first Tesla hit the streets, Eberhard was out on his ass, left to blog bitterly about the man who pushed him aside, and Musk was running two companies. And by now, he and two cousins had founded SolarCity, a company that finances and installs solar systems.
It’s that range of interests that prompted Steve Jurvetson, a venture capitalist, to liken Musk to Steve Jobs – and he thinks Musk might come out on top in the comparison. Apple and Pixar are remarkable creations, of course, but Jobs’s triumphs have all taken place within the computer field. “With Elon you get the Internet, but you also get rockets, you get cars, you get solar energy,” Jurvetson says. “He’s taken on the banks, aerospace, the auto industry, and by the way, energy. Those are as different as it gets.”
But Jurvetson’s admiration doesn’t account for the fact that many of Musk’s accomplishments are still essentially in beta. Tesla has sold more than a thousand Roadsters, and there is a long wait-list for the S sedan, but it remains a boutique brand. And while SpaceX is, as of this month, prepared to start transports to the International Space Station, it hasn’t yet completed a paid mission.
Even friends recognize that Musk’s optimism has its limits: “He assumed everything would naturally go his way,” says PayPal’s Levchin, “which, under the right circumstances, is inspirational and really cool and, under the wrong circumstances, really annoying.”
Whether it was his wealth or his ruthlessness – he did force Eberhard out of the car company he founded – few in Silicon Valley would be crushed to see him fail. And in 2008, while Musk was running two ambitious companies 400 miles apart, his detractors nearly got their wish. “I went from working insane hours to totally insane hours,” he says. It was around this time that his first marriage fell apart. His explanation for the split is, in part, scientific: “Stress tends to break things,” he says matter-of-factly, as if describing a fundamental precept of physics.
Musk dubbed the final few months of that year his “period of maximum suckage.” Tesla’s money woes were only a small part of it. In October his ex started blogging about their life together, casting him as a self-absorbed despot. “The will to compete and dominate that made him so successful in business did not magically shut off when he came home,” Justine wrote in a 2010 Marie Claire story. Tech gossip sites predictably piled on. But Musk’s problems weren’t confined to the blogosphere. At this point, all his businesses were at risk. Musk, who tends to view emotions as something that get in the way of his goals, found himself waking up at 3 am with tears in his eyes.
“For a while there, it looked like I had lost my marriage and all three companies were going to die,” he says.
Only now does Musk confess how big a risk he’d taken, betting his future on rockets and cars, on successfully sending a capsule into orbit and then retrieving it. “I would have thought that was an improbable outcome,” he says. But as anyone who’s walked into SpaceX’s offices in Hawthorne, California, knows, Musk has other improbable outcomes to pursue. By the door is a photo of Mars standing maybe 15 feet high – a reminder that the company’s ultimate aim is pushing beyond what humankind has already accomplished.
When I ask him what makes him such a risk taker, he says he wants to make a difference. “I want to be involved in the things that matter. The things I’m working on have the potential to change the world in meaningful ways,” he says. “If I wasn’t involved like I am, that would be the biggest risk of all. The chance of my success is zero.”