Is Elon Musk A Crook/Mobster?
Updated: Jul 17
Elon Musk, an celebrity entrepreneur also holds many different executive titles, started first company, Zip2, with his brother in 1995, then the company was acquired by Compaq (Now, the HPC) for US $307M. Following in 1999, he co-founded a new online financial services and e-mail payment company called X.com, merged with Confinity had a money transfer service called PayPal. The join-venture company then shifted its market focus into the money wiring service and also renamed as PayPal in 2001. His official journey in the PayPal mafia began. Only in a short year after, PayPal was sold to eBay for US $1.5B in stock, of which he received US $165M.
In the parallel timeline of working in PayPal, Musk conceptualized a project to land a miniature experiential greenhouse on Mars, "Mars Oasis". So, he started traveling with his best college buddy to the Russia for refurbished rockets and gathering aerospace engineering talents from all over places, including CIA's VC firm, NASA and Orbital Sciences, to turn his vision into reality. During his adventure, he found out there wasnt any cost effective solution to accomplish his goal. On his flight back from Moscow, he decided to start a company building affordable rockets needed with US $100M of his own early fortune for the Mars colonization, and that's how the 1st chapter of SpaceX began in mid 2002.
Being as a successful entrepreneur and turning himself into an investor, Musk led Series A round of investment to an electric roadster company, Tesla Motors (TSLA), in 2004, and joined as its chairman oversaw the product design. Perhaps it's a fate for both Musk and Tesla Motors, during the financial crisis in 2008, he assumed the leadership of being its CEO and product architect. And in 4 years after he took over the management, the best selling model of Tesla, Model X, was born. In 2010, TSLA went IPO with 13.3M common shares issued at a price US $17/Share on NASDAQ, in which he still owns 31M shares of this company today.
Another reason why he invested in TSLA is bc of his desire of building a solution to combat global warming; therefore, he also initiated and financed the concept of building the solar power system, and co-founded the Solar City (SCTY) with his cousins in 2006. The company was so successful became the No.2 overall solar power company in US, and went public at the end of 2012. In the same year, TSLA and SCTY join handed in forming an efficient power grid ecosystem with their batteries and rooftop solar panels. Today, SCTY has over 13K employees and Musk's still its largest shareholder.
Musk's dream of building more efficient/effective energy solution didnt stop there. In 2013, Hyperloop (No association with the company Hyperloop One), the concept of high-speed, pressure-reduced tube transportation system, was unveiled to the public. Aside that, the potential of AI taking over humanity has worried both YC's Sam Altman and him, so that they together formed a non-for-profit AI research company, OpenAI, to preventing the 'Terminator' device created.
With the long introduction of Musk's early journey, you should now have a better perspective about his risk-taker personality and undermine motivation to build a better society. I am not an associate of him nor his supporter, but a spectator to try learning a thing or two from his successful entrepreneurship. From my observation, even after TSLA and SCTY had evolved into a sizable enterprise, but the mentality of Musk operating his businesses remains the same as he was in the beginning - the same startup entrepreneur's mindset to persuading his investors with a 'pitching' method (50K vehicles production goal set in 2016), to compromising customers with a Minimum Viable Product (MVP), to building social proof (Using his own TWTR account), to generating traction (The four planned TSLA models are named as S,3,X,Y), and to fund raising capital (e.g. the preordered Model 3), alike Steve Jobs did with AAPL in early days. How many of you would know the very first iPhone shown at the launch event was never a fully function model, but a prototype wired to a computer laying under beneath the table? Both Steve and Musk have many things in common; They like bootstrapping inside the boundary then fulfilling their commitment.
But from the prospect of consumers and investors of TSLA and SCTY, the management style Musk operates both public companies is very dangerous. For an enterprise manager, its job is to minimize and eliminate as much risks as its ability could, but not to gambling on company's equity, in which, Musk wasnt doing so. Therefore, I wasnt surprised when the CEO of the Murray Energy Corporation accused Musk as a 'fraud' bc of TSLA and SCTY both collected billions dollars of government subsidies to manufacture their products. And that's a debate between old and new schools of management.
At the end, is Musk a crook/mobster? I truely believe not. Contrary, is his practice questionably wrong? That answer depends on whose view you are in: customers, shareholders or employees.
(Update: TSLA updated its web site in the production date of Preorderd Model 3 delayed to late-2017, and delivering on mid-2018.)
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