Elon Musk closed 2021 as the richest person in the world with a fortune valued at 200,000 million dollars, although a large part was deposited in shares of their own companies. Now after the purchase of Twitter for 44,000 million and the general fall in the stock market we do not know how 2022 will end, but it is clear that Musk will remain among the great billionaires. Now, what is the germ of his fortune?
If Musk wanted to back out of buying Twitter, it was precisely because the social network’s shares had been plummeting since he made his initial offer in the spring. Now, already in charge more or less reluctantly, there is no doubt that it will lean on its enormous financial muscle. But it was not always like this. In fact, Musk’s fortune starts after a very risky project that went well.
The origins of the Musk fortune
Although Musk’s family of South African and Canadian origin was wealthy, his fortune has been built through invention and sale. Musk from a young age had an early aptitude with computers, designing his own video game at age 12. At 17, he went to Canada to escape the South African conscription, worked on farms for cousins and attended Queens University in Ontario.
In 1992 he moved to the University of Pennsylvania, where he studied physics and business. That’s where his first known business came from: he and a couple of friends rented a house off campus and turned it into a nightclub.
Then he went to Silicon Valley guided by the siren songs of the programmers who had managed to generate fortune. With a training halfway between the physics of materials in a formal way and computer science in a self-taught way, Musk enrolled in a Ph.D. program in physics at Stanford, but dropped out after two days.
Musk tried his luck in the wild west of the internet and it worked out for him. Along with his brother Kimbal, Musk founded a company called Zip2 as an online business directory.a kind of yellow pages with maps that seemed like a very good idea in the mid-90s.
22 million and an accident, his first steps as a millionaire
Elon and Kimbal recruited investors and hired outside help to run the company, which struck deals with media outlets including the New York Times. In 1999, they sold the Zip2 to Compaq, a then-declining computer manufacturing giant, for $307 million. Musk made $22 million from the sale of the Zip2, then quickly spent $1 million on a McLaren F1 supercar. “It’s not consistent with the rest of my behavior,” he told CNN, which filmed Musk as the car was delivered to his home.
A year later, Musk wrecked the car: he was trying to show off his acceleration and ended up crashing it. The million dollar sports car was not insured.
But by then, Musk was already thinking about his next adventure. On the day of the accident, Peter Thiel, co-founder of a payment company called Confinity and today one of the largest investors (and also most controversial) in the technological world, was with him in the McLaren, from which they emerged unharmed.
Musk had invested his 22 million from the sale in the creation of another online banking company called X, as you said you want to rename Twitter. The two companies merged in March 2000, forming a business that eventually became PayPal.
Musk was named CEO, but in September, while on vacation, the board of directors fired him, replacing him with Thiel, in part over a disagreement over changing company servers. “It’s not a good idea to leave the office when there are a lot of important things going on that are causing people a lot of stress,” Musk later reflected.
Paypal, the great seed of your fortune
However, Musk still had a stake in the company. When eBay bought PayPal for $1.5 billion in 2002, Musk made a mega-fortune of $180 million from the deal..
So, with the new money in his pocket, Musk decided to go a step further. Or several: specifically, to space. In 2002, he founded SpaceX with the almost ridiculous mission of colonizing Mars. The following year, he put an initial investment of more than $6 million into Tesla, then not much more than a couple of founders and a vision to create electric sports cars.
The company sought to harness new, lightweight, energy-dense lithium-ion batteries to revolutionize a fledgling industry. At that time, lithium-ion cells were only used in small electronic devices, and one of Tesla’s main innovations was their expansion, which allowed him to create an electric vehicle with a much greater range than previous ones had achieved. electric cars.
Although he almost went bankrupt for Tesla
Both companies had a rocky start in the early years:Musk Says He Ended Up Investing Virtually All Proceeds From PayPal Sale in the financing of companies. SpaceX had to endure multiple failed launches, nearly bankrupting it, while Tesla ran into trouble when its engineers realized its prototype batteries could catch fire. Tesla later came close to bankruptcy during the 2008 crash.
Over time, Musk’s investments began to pay off. In 2008, SpaceX secured a $1.6 billion deal with NASA, while Tesla, in 2012, began building its first mass-market car, the Model S. Today, Tesla is a behemoth that controls about two thirds of the US electric vehicle market. SpaceX is the undisputed leader in private space exploration.
Once already a millionaire, Musk has also invested his money in new companies. In 2016, Musk founded The Boring Company.which digs tunnels to create alternative routes in cities to avoid traffic jams, and the neurotechnology company Neuralink.
Those two most recent companies are illustrative examples of the mindset that created Musk’s fortune. Both are very speculative and imaginative companies. Bets that not everyone would support. But who would have thought that Tesla or SpaceX would be what they are today a few years ago? Is Twitter aligned with those plans and business logic? That is what many now question.
We would love to say thanks to the author of this write-up for this amazing content
This is how Elon Musk built his fortune until he bought Twitter and ran Tesla