﻿In recent times, Elon Musk has had quite a lot of well-deserved attention showered on him from all
over the world. He is an industrial designer, engineer and business magnate who has founded
and co-founded several companies. Despite having several past and present business involvements,
one which he is most commonly known for is Tesla, Inc., an automobile company that has
revolutionized the concept of electric cars. Even though he is practically the face of Tesla,
you probably didn’t know that Elon Musk was not the founder of this now-iconic company.
But he was invaluable in getting the company where it is today and as a result, Tesla is
the most valuable car company in the world, with a value of about $200 billion dollars.
Even though the journey here wasn’t easy, it was definitely worth it.
This is the story of how Elon Musk saved Tesla. Welcome to Planet Biz.
A Difficult Childhood. Elon Reeve Musk was born
in Pretoria, South Africa on June 28, 1971. His father was an electromechanical engineer
and his mother was a model and dietitian who was born in Canada, but raised in South Africa.
As a child, Elon loved reading books. From encyclopedias and nonfiction novels to comic
books and science fiction, Elon would spend up to 10 hours a day engrossed in books.
At the young age 10, Elon Musk developed an interest in computing and, using nothing but a
manual, he taught himself how to code. At just 12 years old, he had created and sold the code
of a video game called Blastar for about $500. Elon was smart, but he wasn’t the most social
child. Growing up, he was the youngest and smallest kid in his class. Elon was also quiet
and kind of awkward so he didn’t exactly fit in. Throughout childhood, he was bullied and once, it
got so bad that he had to be hospitalized after a group of boys threw him down a flight of stairs.
Unfortunately, getting bullied wasn’t the only trouble he had in his childhood.
In 1980, his parents got divorced. After the separation, Elon and his siblings lived with their
mother but Elon began to feel sorry for his father because he seemed sad and lonely. So, two years
after the divorce, he decided to move in with his father, a decision he would soon regret. Elon and
his father developed such a strained relationship that they stopped talking to each other. In
an interview, Elon described his childhood as miserable. According to him, his father was “a
terrible human being” who was capable of “evil”. Elon’s father was verbally abusive to him as a
child, and was certain that his son would be a failure. But even though things were terrible
between the father and son, it seems that there was some good from the relationship after all.
According to Elon Musk, he inherited his natural engineering talents from his father.
As a teenager, Musk finally was able to escape his bullies – the ones at school and the one
at home. He decided to put aside his books and spend more time learning how to defend himself.
Elon picked up karate, judo, and wrestling. These new skills together with a growth spurt that left
him six feet tall as a 16-year-old, made Elon a more difficult target for bullies at school.
But there was still one bully left for him to escape – his father.
Elon’s best bet was to leave the country altogether.
What It Takes to Live After graduating from Pretoria Boys High School,
Musk decided he wanted to move to the United States. Knowing it would be easier to get to
the United States through Canada, he applied for a Canadian passport with the help of his
Canadian-born mother. His father was against him moving abroad and insisted that he stayed in South
Africa to complete his college education. Musk of course, didn’t listen. According to him, he wanted
to find out “what it takes to live” in the US. As he left for Canada, Musk’s father gave his
total disapproval, telling Elon that he wasn’t going to make it and that
he’d “be back in three months”. Upon getting to Canada in 1989,
Elon Musk was finally away from his father, but his struggles were far from over.
Musk lived with a cousin in Saskatchewan for about a year. During that time,
Elon had to work odd jobs as a manual laborer to get by. At first, he worked on his cousin’s farm,
shoveling grain bins and tending to vegetables. Later on, he worked at a lumber mill, where
he had to learn to cut logs with a chainsaw. In search for a higher pay, Elon Musk took on his
hardest job yet. For $18 an hour, he had to clean out the boiler room in a lumber-mill; wearing
a hazmat suit and working in a cramped space, Elon had to shovel steaming hot sand and grime.
At a point, Elon had to survive on just about $1 a day by buying food in bulk from the supermarket.
Eventually, he left manual labor and went to college. Elon graduated in 1997 from the
University of Pennsylvania. He was accepted into Stanford University for a Ph.D. program,
but after just two days, he dropped out of the prestigious university
to jump on the wave that was the internet boom. By 2002, Elon Musk had launched and sold two
internet startups, one of which would become what we know today as PayPal,
making him a millionaire. Living was finally starting to get easier for Elon.
Meeting Tesla A recent millionaire,
Elon had access to opportunities he may not have had before he made his fortune.
One of these opportunities that set the ball rolling occurred in 2003 when Elon Musk took the
"tzero electric sport car" for a test drive. AC propulsion, the maker of this car model,
had no interest in marketing the car. According to Elon, Musk, the first tzero model was
“unsafe and unreliable”. It didn’t have doors, a roof, an effective cooling system,
or even airbags. All the same, Elon thought he could make it work and was inspired to build an
entirely electric sports car that was marketable. The founder and the CEO of AC propulsion both
agreed to let Musk commercialize the tzero, but there was one problem – Musk had just founded
SpaceX, an aerospace company, and was already putting in 80 hours of work per week as a CEO.
He simply didn’t have the time to launch a new startup. Luckily for him,
a simple suggestion soon gave him the solution to this problem. AC propulsion CEO, Tom Gage, told
Musk about an electric car startup that was also looking to commercialize the tzero. He gave Musk
the idea of talking with the owners and teaming up with them. The company was named Tesla Motors.
The arrangement seemed perfect for Musk. By partnering up with the startup,
he could focus on his aerospace project and spend his spare time on electric cars.
Unfortunately, this didn’t work out as he planned.
Keeping Tesla Alive
Of the money from the sale of his first two startups, Elon Musk invested $6.3 million into
Tesla Motors in 2004. Martin Eberhard, one of the two people who had started Tesla Motors in 2003,
was the CEO of the company and Musk acted as chairman of the board of directors.
The company’s first model was going to be the Tesla Roadster and it was set to
be released in 2007. But things were rough. Their first prototype was insanely heavy,
bad decisions were made, and the cost of production was way beyond what they had expected.
It was the end of 2007 and the Roadster still hadn’t been released.
Tesla Motors was falling behind schedule. The startup had initiated an electric car wave
and other automobile companies were riding it. Even though the ideas were originating from Tesla,
the company faced the risk of being left behind by other bigger, more established
carmakers. Elon decided to hire a new CEO who was all business and no-nonsense. Meanwhile,
Musk focused on bringing in more income for the company which was quickly running out. He came up
with the idea to supply power packs to other car manufacturers. With some ingenious methods, he
was able to pull this off and secured a contract that would keep Tesla alive for a while longer.
Finally, in 2008, under a new CEO, Tesla Motors launched the Roadster. Later that year, Musk made
the decision to invest even more of his personal fortune into the company. But because Tesla
wasn’t the typical gas vehicle producing company, finding a suitable CEO seemed almost impossible.
Eventually, Elon Musk had to do what he had been trying to avoid all along – he stepped
in as CEO. But things were still rough and even Musk had doubts that the company would survive.
When it Rains, it Pours According to Musk himself, 2008, the year he
became CEO of Tesla, was an incredibly difficult one. His aerospace company wasn’t doing well,
his rocket launch had failed for the third time in a row; Tesla almost went bankrupt just two days
before Christmas; and to top it all off, Musk was having personal issues too – he had just gotten
divorced. At a point, he couldn’t even pay his rent and had to borrow money from his friends.
The situation was made even worse for Elon Musk and Tesla Motors by the financial crisis of 2008
which drove the global economy into a recession. Customers had already paid as much as $109,000
for the Roadster and it was looking more and more like the company would never be able to deliver.
Elon had only $40 million of his personal fortune left. And while that may seem like a lot of money,
it was hardly enough regarding all his liabilities and expenses. He had to make a choice between
using the money to save Tesla, or using it to save SpaceX. Both projects were dear to him and
choosing one of them over the other was difficult for Elon. So he chose to split the money between
both companies, which was a huge risk because that way, both companies were more likely to crash.
Elon Musk rolled the dice and emerged extremely lucky, both his companies
survived. Tesla was able to avoid bankruptcy and meet up with its production goals.
Early in 2009, Tesla introduced the prototype of the Model S, a luxury, completely electric
sedan. Just a few months later, Daimler AG, a giant in the automobile industry,
invested $50 million in Tesla. This timely cash infusion sped up the company’s recovery
from the economic crash of 2008. The company, which Elon renamed Tesla Inc.,
was finally starting to gain momentum – moving in the right direction this time. A few weeks later,
Tesla received a $465 million from the US Department of Energy and in a stroke of good luck,
caused majorly by the very same financial crisis that almost destroyed the company – Elon was
able to purchase a massive car factory for a fraction of its actual value.
In recent times, the value of Tesla Inc. has skyrocketed. Worth $208 billion,
it is now the world’s most valuable car company. Elon Musk of course has benefited from his hard
work and is now the richest man in the world with a net worth of about $200 billion. Without Elon’s
quick thinking and his courage to take risks, Tesla would most likely have failed and electric
cars could still be a thing of the future. For more inspiring business stories,
don’t forget to subscribe to our channel. This is Planet Biz.