Elon Musk, one of the richest men on the planet, needs no introduction in the entrepreneurial world. The billionaire was recently in news for Tesla’s purchase of the controversial cryptocurrency- Bitcoin worth $1.5 billion will give Tesla liquidity in the cryptocurrency once it starts accepting it as a payment mode for its cars. He created a flutter on twitter on the Bitcoin shopping, raising Tesla’s stock price as well as the cryptocurrency’s market price and demand. Musk has taken a risk in investing on the Bitcoin that has so far not found acceptance in many markets, governments and companies.
Musk never fails to draw attention of the regulators, investors, all stakeholders and the media alike with his tweets that often land him in the SEC (Securities and Exchange Commission) office. Coming back to Musk’s entrepreneurial skills, he is a visionary, a chief executive officer extraordinaire, of iconic cult brands like Tesla and PayPal. Musk has revolutionized space travel, online payments and electric cars. With a futuristic mindset, he is aiming to develop supersonic electric airplanes as a part of his dream to travel to Mars. Musk is the man behind SpaceX, Tesla Motors, Hyperloop, and SolarCity.
Elon Musk co-founded, funded and ideated SolarCity which became the second largest provider of solar power systems in the United States.
Elon Musk: The Entrepreneurial Journey
Elon Reeve Musk, is a South African born American business magnate, industrial designer and engineer. He started his entrepreneurial journey at a young age of 24. He gave up studying in Stanford University after receiving his dual bachelor’s degree in Economics and Physics from University of California. This bright young mind pursued his business career by co-founding a web software company Zip2 in 1995, four years later it was acquired by Compaq for $307 million. Musk co-founded Paypal in 1999 which was subsequently bought by eBay, three years later in 2002 for $1.5 billion. This young billionaire and a serial entrepreneur had nothing to look back. He looked way forward into the future. This young visionary went on to form SpaceX, an aerospace manufacturer and space transport services company, of which he is the CEO, CTO and lead designer.
Musk in his heydays as a dreamer was fascinated by the Silicon Valley, the success stories and innovations. He visualized that the future lies beyond the internet, artificial intelligence, space exploration, renewable energy and reprogramming of human genetic code.
In 2004, he joined as Chairman of Tesla Motors, an electric car manufacturer and led a series of funding of the newly formed company. In 2008, Musk took the leadership mantle up his sleeves following a financial crisis engulfing the company ousting its founder Martin Eberhard. Being the product architect, Musk produced the world’s first all-electric car using lithium-ion battery cells. Musk took Tesla public in its Initial Public Offering (IPO) making it a valuable company.
Musk co-founded, funded and ideated SolarCity with his cousins in 2006. By 2013, it became the second largest provider of solar power systems in the United States. Three years later in 2016, SolarCity was acquired by Tesla for $2 billion following liquidity issues with the company. But not without Musk facing multiple lawsuits by the Tesla’s shareholders who claimed being kept in the dark about SolarCity’s liquidity crunch.
The same year, the serial entrepreneur co-founded Neuralink, a neurotechnology startup that would create devices that will integrate human brain with Artificial Intelligence (AI), to improve memory and invent devices that could cure paralysis, deafness, blindness and other disabilities. Neuroscientists have however rubbished such claims describing it as ‘highly speculative’.
Musk however is unperturbed by criticism as he continues to invest in companies built to help humanity upgrade lives through technology. The year 2016 seems to be the busy year for the tech billionaire as he continued his quest for founding companies- The Boring Company, Hyperloop – a vactrain, a high speed transportation system incorporating reduced-pressure tubes to move pressurized capsules on an air cushion making driving cheaper at half the time.
Ten Takeaways from the Life of Elon Musk
To innovate use “first principle thinking”
The tech billionaire’s ability to use “first principles thinking” to solve problems simply means stripping things down to their fundamental principles or core elements and reasoning up from those principles to create something new. For instance, expensive batteries are a limiting factor to electric car companies like Tesla Motors. However, using first principles thinking, Musk was able to find an innovative solution to this problem- he stripped the battery down to its material costs- the cobalt, nickel, aluminium, lithium) and reasoned up from there to create “the best and cheapest battery cell.”
Musk claims to have left his competition behind on two of the most important factors for batteries- cost and energy. He has since ‘reasoned up’ by building a Gigafactory that will produce batteries to power over 1 million electric cars per year at full capacity. He aims to capitalize on economies of scale to further reduce battery prices to as low as $100 per kilowatt hour by 2020, beating industry projections by five years.
Musk has used the first principles thinking in every industry- e cash, energy services, electric cars and rocket technology; that is why he has been able to provide innovative solutions to all these industries.
How to apply the first principle thinking in your business?
The first step to applying first principle thinking is identifying your business’s core value proposition, you need to clearly outline yours. Once its done, find a way of reasoning up from that principle to provide value to your customers in a unique way. Using this principle leads to unique business ideas that makes your business innovative and competitive.
Make problem solving an upmost task
Musk is trying to make the world a better place to live in. Environmental problems are being sorted by him through innovations. He is known to solve problems that are affecting the present and future of humanity. Tesla Motors for instance, solves the problem of limited fossil fuel supplies. Musk capitalized on humanity’s need to have more sustainable and less fuel intensive transportation. He fulfilled this demand of the market as opposed to simply focussing on profit. He found an untapped business opportunity. He believed if you solve a problem first earnings and profitability will follow.
Persistence is important, you should not give up unless you are forced to give up.
Perseverance is key
Musk’s entrepreneurial journey hasn’t been a bed of roses, he has had to overcome numerous obstacles to get to the top. He was demoted to chief
Technical officer (CTO) from CEO by investors at Zip2, the first company he started. He was again thrown out by the CEO of PayPal. Musk put his entire life’s savings to start Tesla when it went into bankruptcy to keep it afloat. He faced multiple lawsuits.
Musk faced numerous challenges with SpaceX as the company’s first three rocket launches failed and drew eyeballs from his investors. SpaceX had to bootstrap for its third launch which was finally a success and received a contract from NASA for $1.6 billion.
Hire best minds not big numbers
Musk hires the best talent in numbers that is needed to build a team and does not believe in hiring big numbers to bulk up. Musk once said that it is a mistake to hire huge numbers as it will never compensate for talent in getting the right answer, numbers will tend to slow down progress, and will make the task incredibly expensive.”
Musk, however, added that talent cannot compensate for a lousy personality. So, hiring the best mind combined with a good heart is a must.
Execution of an idea is vital
Musk is a visionary that we all know of. His ideas are revolutionary and transformational and powerful. However, he believes that the success of an idea is in its execution. One that receives no action simply remains an idea while one that is executed effectively can grow into a profitable business. He says that hiring an innovative team that will come up with solid business models to execute your ideas is key. This will lead to healthy financial returns and successful execution of your vision.
Musk led rounds of funding from financial institutions to fund Tesla Motors at its inception. After a few years, the electric car company was in a deep financial crisis. But Elon got his act together and borrowed heavily to get it back on its feet. The company became a huge success and started selling 2400 units from its first batch of electric cars produced. After which Elon paid back his $400 million loan money. He cleared his debt. Conducting honest business, practising integrity as a part of company policy yields long term goodwill for the company.
Consider failure as part of your plan
Being afraid of failure only restricts us to pursue our dream. We let our fear stop us. Musk says instead of fear lets you take a back seat, you should acknowledge it and come up with a plan to handle its effects. Before he started the SpaceX project, Musk dedicated $100 million to the endeavour. He said if he failed to launch a rocket into space with that budget, he would shut down operations. His first two launches cost him $90 million and failed. The third one cost him $10 million and it succeeded- he was not afraid of failure for the third time and went for it.
No alternative to hard work
Musk has been a hard worker ever since he started his company back in 1995, he worked round the clock. He says he has worked 100 hours a week to reach where he has. He says if you work 100 hours a week while others work 40 hours a week, it will take you four months to achieve what they can in a year. Whatever great idea you have, you can meet your fortune only through hard work
Focus on quality of your product
Elon Musk, runs billion dollar enterprises and understands the power to focus on quality. They believe that it is better to focus your effort on making a product better instead of focusing your effort on how to sell it to the market. Musk says that he would rather under-market a revolutionary product than promote a mediocre one.
The most revolutionary inventions of Musk is Tesla Energy– an initiative that creates battery packs which have enough power to sustain homes- an idea his engineers rejected. He found ways to adjust the parts of the battery such that it was cheaper to produce and store more energy. Musk challenged the methods of doing things and emerged with an innovative affordable new result.