Elon Musk’s Vacation Problem
When the world bets against Musk, he doubles down.
After returning from two weeks off in Australia, Musk was summarily fired by the Paypal board as CEO. When a reporter asked what happened, Musk deadpanned:
“That’s the problem with vacations…”
The 6" 1' South African entrepreneur, fresh off his most recent stint as co-founder of Zip2.com (where I succeeded him as CEO in 1999), was out of a job. It wouldn't be the last time he was thrown to the mat, nor was it the final resurgence of his unique, contrarian, manic life.
Big Spender
First, he needs to learn how to save money.
After eBay purchased PayPal as the firm's largest shareholder, Musk invested his $100 million-plus bounty in Tesla, SpaceX, and SolarCity. It was comparable to a gambler who finally wins a colossal pot, cashes in his chips, then turns around and buys the casino.
Secret Sharer
He also can't keep a secret.
Like Prometheus, the Greek mythical Titan who gave humankind the gift of fire, by 2006, Musk had a "Secret" Tesla Motors Master Plan (just between you and me). He was Co-Founder & CEO of Tesla Motors on August 2, 2006. The company had not produced a single car (and would not for two years), but Musk was wired to conquer the gravitational pull that brings most of us to our knees. He wrote, "My day job is running a space transportation company called SpaceX, but on the side I am the chairman of Tesla Motors and help formulate the business and product strategy with the rest of the team. I have also been Tesla Motor's primary funding source from when the company was just three people and a business plan." He ended the message by throwing down the gauntlet:
Ironically, for Musk, who would become the richest man in the world, it was always about improving the environment and never about making a profit. He would learn to curb his spending appetite in due course.
Long Haul Driver
The announcement wasn't for the car-buying public but intended to motivate the team for a long voyage.
His first mistake was starting a car company without a dealer network or advertising — another bumpy ride. The business had yet to make its first automobile, and market leader G.M. was on the verge of bankruptcy. Then, when Musk was raising money for Tesla, the financial markets crashed. By January, the company was not going to make payroll.
In flush times, daring venture investors beg to give you money but turn coy when things go haywire, also known as 'alligator arms.' The image is of someone unable to reach their wallet. They weren't buying green bananas.
Musk admitted, "trying to raise funding for a startup electric car company in the face of G.M. going bankrupt was very challenging." According to Business Insider, never a fan of Elon Musk cried Tesla was on the brink of bankruptcy.
Musk thought of a way to steel the nerves of his investors.
Take the Knee
When the term sheets were returned, he saw that VantagePoint Capital, one of the leads, needed to sign a page. According to Bloomberg, Alan Salzman, the managing partner of the company, was subtly attempting to scuttle the investment round. Musk subsequently recalled when he faced Salzman, "The only reason he sought the meeting was so he could say, 'No.'" Reports alleged that Salzman made Musk get down on his knee and beg before refusing him. When a reporter asked how he felt, his response was succinct:
“What a fuckhead.”
Silicon Valley venture investor Zach Coelius says this about Musk: "All founders soon realize there aren't any easy days on the calendar. Running a startup is like jumping on a rocket ship flying at the fastest speed possible until it smears you against your wall of incompetence. It doesn't matter how good you are. As great an entrepreneur as Elon Musk is, he nearly went bankrupt when he started Tesla. His wall of incompetence is much higher than mine, but wherever your incompetence resides, that's where the wall finds you."
According to Musk biographer Ashlee Vance, Tesla investor Antonio Gracias, one of Musk's closest friends, said, "Elon can endure more stress than anyone I've ever met. Most people are under that sort of pressure and start to fray. Elon gets hyperrational.”
Hyperrational was what Tesla needed.
Relentlessly Hyperrational
With no access to outside capital, Musk convinced his remaining investors that if they didn't pay, he would. That meant diluting their holding.
They handed over a $20 million check: "Because I was willing to invest everything, the other investors kept Tesla alive."
The Tesla deal closed at 6 p.m. on Christmas Eve, 2008, and the company's first car was launched that year. The Roadster engine is based on Nikola Tesla's 1882 design. The company went public in 2010 at $17 per share.
If not for Elon Musk, Tesla would be a small battery division in the small E.V. unit of G.M. or Ford.
