In the previous post, we saw what drove Steve Jobs to upend a bunch of industries and change the way we thought about our daily-use devices. Another plucky youngster turned up at the gates of Silicon valley poking his nose into the businesses of well-entrenched incumbents, just because he found a better way to do things, thinking from a first-principles approach.
A fascination with Sci-Fi books, comics, and computers expanded the teen Elon Musk’s mind to the extent that South Africa could not hold his aspirations hemmed in. Two countries and a college transfer later he found himself earning a Physics degree at UPenn along with another in Economics from Wharton.
A bequest from his days of learning physics was looking at every industry with the first principles of a problem ailing it. For one of his classes, the business plans he submitted talked about giant solar arrays in space beaming energy to Earth and ultracapacitors that would run the battery-operated transport of the future. In Ashlee Vance’s biography of Elon his professor remarked “Musk’s ability to master difficult physics concepts in the midst of actual business plans with excellent financials.”
The story of becoming Musk began with a young man who flitted between two internships simultaneously. By day he worked at Pinnacle research with a bunch of scientists exploring ultracapacitors and in the evenings he’d run to Rockstar Games and write code for their drivers. In one of these internships, he’d spot a not so effective salesman trying to get the company on board with the idea of having an online listing to supplement the physical one on the Yellow pages.
With that bad sales pitch stuck in his head, Elon chose to forego a Ph.D. at Stanford because he couldn’t watch the internet take off from the sidelines. He started Zip2 to make listings of local pizzerias and other businesses and show someone the turn by turn directions towards them. This was a period of bootstrapping and having showers at the YMCA but Elon and his brother Kimbal were rewarded with a windfall when Compaq came shopping.
During his internship with the Bank of Nova Scotia, he importuned his superiors to leverage a huge arbitrage opportunity on less developed country debts because it was backed by the US Govt. But this advice from a novice intern fell on deaf years and Musk remembered to do something about it. He poured his Zip2 cash into ‘X‘, a company that was going to introduce internet banking to the world and would become the precursor of PayPal.
Having looked at the flimsy pitch of that salesman as well as the inability of banks to be agile, Elon spotted opportunities for business. His first principles approach got him thinking about how to pimp up a regular listing if it were online – sure you helped the user find the business they were looking for but how about give them directions next? Credit cards charge transaction fees so why not incentivize customers to perform internal transactions inside PayPal?
Elon Musk The Manager
While Steve Jobs was likely to fluster at the sight of incompetence Musk is known to be a few “orders of magnitude” higher, as he would say, on the ‘not suffering fools lightly’ scale. In his view the longer you spend mulling firing someone the longer it has been since you should’ve fired them. But to leave this out of context is a disservice to the man and trying to explain his actions is akin to making excuses for him. Still, give me (and him) a chance.
After the sale of PayPal to eBay, Elon piled up all his earnings and went after his dream of conquering space. He had to right the great wrong that the US was committing by refraining from its instinct for exploration. What he had left he invested in Tesla. SpaceX would have wound down had the fourth launch also failed.
“So he has skin in the game,” you’d say. “But that doesn’t allow him to treat people as dispensable.”
Well…
“I’m not finished!”
You’re not finished.
“What about the Pepper Potts to his Iron Man, Mary Beth Brown? What about the real founders of Tesla?”
Tesla was on the brink of death more times than a 70s rockstar. To imagine anyone else nurture these precariously balanced companies (and Solarcity), hopping from one office to another while attending meetings in Washington, is impossible. If Tesla were a movie there’d perhaps be a lot of Executive producer credits all the way until the Roadster. But ever since then, the company has survived and thrived, giving the world it’s best ever (alleged) car, the Model S, under the leadership of one man.
Neuropsychologists describe Musk as someone with profoundly gifted. You could throw around the “G” word at Elon and won’t be wrong. These children show exceptional intellectual depth from an early age and cherry-pick flaws in the society which they logically break down in order to find solutions for. Learning that Russia, the cheapest suppliers in the world wouldn’t sell ICBMs to Musk, didn’t stop him. He went to the drawing board and figured out he could build everything in house at a much cheaper rate.
“What has all that got to do with firing people whimsically?” you ask.
You see Musk has a long term plan of making SpaceX a profitable business. He sees revenues reaching $10 million a day in ten years and considered every day they were slower to achieve that as another day of losing money. He doesn’t care about calling out people even with years of experience overseeing NASA missions. That’s a great leveler. If there’s a bottleneck he expects you to come up with the solution rather than crib about it.
Musk is fighting a bureaucratic nexus of regulators, entrenched corporations, and government agencies. The least he expects his employees to do is march along with him on his mission. If launches from the remote island of Kwaj hit roadblocks because of faulty parts Musk would send reinforcements on his jet. He’d hear out his employees yell and break down after dozens of failed launches but despite his own battles reassuringly say, “Don’t worry. We’ll make it.”
A glass of Nervous Breakdowns with a shot of Euphoria
Robert Downey Jr. came down to the SpaceX factory on his quest to suss out Elon Musk while preparing for the role of Tony Stark. Relieved to find Musk was not a “fidgety, coder whack job”, Tony picked up on his “accessible eccentricities and ability to work alongside the factory workers.”
Little did Downey know at the time, the kind of stress Musk was about to go through as Iron Man took the world by storm. Another storm, one much more maleficient, hit the world of finance, and Musk’s companies were brought to their knees.
His friend Gracias recounted that “Most people under that kind of pressure fray. Their decisions go bad. Elon goes hyper-rational. He’s still able to make very clear long term decisions.”
Whenever crisis struck, Musk had the ability to revert to a meditative state and devour information. It was during the PayPal crisis when he was unceremoniously ousted from his position as CEO, that he became a rocket scientist pretty much overnight (over a matter of six months or so actually).
Through his first-principles approach, he found out that the cheapest space transport service providers, those in Russia and China, could also be undercut if a lean startup vertically integrated development. SpaceX would try and become the South West airlines of space.
A capacity for Magnanimity
While on a business trip which was extended to a honeymoon, Musk was subject to a coup in PayPal which saw Peter Thiel take over. Surprisingly, he took it under his stride and supported the new management.
Musk was at loggerheads with the Defence Department’s observer Worden during a SpaceX launch which was carrying payloads consisting of Defence satellites. But when the ship blew up Musk himself recommended that Worden oversaw the investigation for the government.
These characteristics of Musk mattered in the grand scheme of things as the companies saw the great ebbs and troughs of fortune.
One of the earliest Tesla employees, Straubel remarked, “It’s frequently forgotten in hindsight that VCs thought these companies to be the shittiest business opportunity…” What separated Tesla from the others was its ability to charge after its vision without compromise with a commitment to executing Musk’s standards.
Looking at these “shitty opportunities” from a first-principles approach helped create change.
This is what separated Tesla from the now-defunct Fisker. This is what separates SpaceX from other pretenders as well.
Elon is presently the driver of youth aspirations into giving practicality to everything thought to be impossible – This blog gives a brilliant peek into that walking wonder on Earth!!