The Endurance of Elon Musk
What makes Elon Musk such a powerful leader? When the world bets against him, Musk doubles down.
“That’s the problem with vacations,” Musk deadpanned after the PayPal board ousted him as CEO while he was off on a two-week trip to Australia. The 6”1’ South African entrepreneur, fresh off his last stint as co-founder of Zip2.com (where I succeeded him as CEO in 1999), was now out of a job.
Musk is wired differently
After eBay acquired PayPal, as the payments firm’s largest shareholder, Musk took his $100 million-plus bounty and invested it in three startups, Tesla, SpaceX, and SolarCity. It was like a gambler cashing in his chips only to turn around and build a casino. His mind requires a constant challenge.
He also doesn’t know how to keep a secret. Like Prometheus, the Greek mythical Titan who gave mankind the gift of fire, by 2006, Musk wanted to tell the world about his “Secret Master Plan” for Tesla. In 2006, he even created a shorthand version:
1. Build a sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero emission electric power
P.S. Don’t tell anyone.
He makes people believe
The real reason behind the announcement was to inspire the team for the journey ahead. He was going to build an automotive company with no dealer network and no advertising, and that meant a bumpy ride.
By the summer of 2008, things started to get very weird at Tesla. The company had not produced its first car, and GM was heading towards bankruptcy. Then the financial markets fell apart while Musk was in the middle of Tesla’s next round of fundraising. The company was not going to make payroll, come January.
Those daring venture investors when times were flush were now only interested in sure things, and Musk as much admitted, “trying to raise funding for a startup electric car company in the face of GM going bankrupt was a very challenging endeavor.” According to Business Insider, Tesla was on the brink of bankruptcy. Musk put the options in front of his investors.
Challenges inspire him
When the term sheets came back, he noticed one of his leads, VantagePoint Capital forgot to sign a page. According to Bloomberg, the firms’ managing partner, Alan Salzman, was coyly trying to derail the funding round. When he confronted Salzman, as Musk later recounted, “The only reason he wanted the meeting was for me to come on bended knee begging for money so he
could say, ‘No.’” Musk concluded, “What a f — -head.”
Antonio Gracias, a Tesla investor and one of Musk’s closest friends said, according to Musk biographer Ashlee Vance, “Elon can endure more stress than anyone I’ve ever met. Most people who are under that sort of pressure fray. Elon gets hyperrational.”
Hyperrational was what Tesla needed. With no access to outside capital, Musk convinced his remaining investors that if they didn’t pay, he would, and that would dilute their holding. They handed over a $20 million check: “Because I was willing to invest everything that I had, the other investors were willing to keep Tesla alive.”
He is relentless
The Tesla deal closed at 6 p.m. on Christmas Eve, 2008, and the company’s first car was launched that year, the Roadster, with an engine based on Nikola Tesla’s 1882 design. The company went public in 2010 at $17 per share. If Musk hadn’t displayed such commitment, Tesla could have ended up a small battery division of a post-bankrupt GM or Ford.
Tesla will undoubtedly face more challenges as it fulfills its founder’s vision, as Musk’s recent 7% headcount reduction indicates. But his willingness to devote “extreme effort and relentless creativity” is what may matter most as Tesla’s market value propels past GM, Nissan, Subaru, Ford, Chrysler and Mercedes (Daimler). You could call it a feat of endurance.