The wealth that made Elon Musk a multi-millionaire at the age of thirty-one was generated by the company that became PayPal, the popular money-transfer service used by web consumers. Musk has become one of a new breed of what The New York Times calls “thrillionaires,” a class of former high-tech entrepreneurs who are using their new wealth to take on the challenge of turning science fiction dreams into reality. He is the founder of Space Exploration Technologies, or SpaceX, a company based in El Segundo, California. In 2005, SpaceX was funded by the construction of the Falcon rocket, with the aim of someday making both space tourism and a colony on Mars realistic goals for humankind.
Sells Homemade Video Games
In 1971, he was born in South Africa to his parents who later separated. His father was an engineer and his mother, who was from Canada, was a nutritionist. He was immersed in science fiction and computers in his teens. Musk developed the programming of a video game at the age of twelve, which he later sold to a firm. He came to Canada in his late teens to avoid being recruited into mandatory military services, which was previously applied to white men in South Africa. At the time, the country still had apartheid, a legal system that denied both political and economic rights to the country’s majority-black native population. Not interested in serving in the military that was engaged in fighting the black nationalist movement at the time, he benefited from his mother’s ties with Canada, which helped him register at Queen’s University in Kingston – one of the best schools in Ontario.
Musk planned to get into business. He had spent a summer working as a co-op student at a Canadian bank; that was all he had for real jobs before becoming an internet entrepreneur. He dropped out of his first school to transfer to the University of Pennsylvania. Here, he earned a bachelor’s degree in economics as well as a second bachelor’s degree in physics a year later. He then managed to get into the highly prestigious doctoral program at Stanford University California, with plans focused on a PhD in energy physics. He arrived in California in 1995 just as the internet was taking off and thought he must be a part of it. He dropped out of Stanford after only two days and founded his first company, Zip2 Corporation, an online city guide for newspapers, and contracted with the New York Times and the Chicago Tribune for content for his new online sites.
At just 24 years old, Musk founded the company and did everything he could to make it a success. At one point, he said, “Failure is an option here. If things aren’t failing, you’re not innovating enough.” When it was in this state, he rented the same office where the company served as his headquarters and slept on futon couches and showered at the local YMCA, which was “cheaper than renting an apartment,” he explained to Roger Eglin of the Sunday Times of London. The company was failing to meet contracts, payroll and other expenses. It struggled to find outside financing. Eventually, a group of venture capitalists, investors who provide startup money to new businesses, funded Zip2 with $3.6 million, but in return they gave up most control of the company.
Opening An Online Bank
Finally, Musk made a wise decision. In February 1999, Compaq Computer Corporation purchased Zip2 for a sum of $307 million, making it one of the largest cash deals in the Internet business sector at the time. The $22 million it paid for his tiny 7 percent share made him a millionaire at the age of twenty-eight. At that point, in 1999, he started X.com with $10 million, an online bank with grand plans to become a full-range provider of financial services for consumers. The company’s only innovation was figuring out how to transfer money using the recipient’s e-mail-address-based method.
Musk’s proven ability with Zip2 earned it serious notice and good investor attention almost immediately. Two important executives signed on with him: investment banker John Story and Bill Harris, former chief executive officer of Intuit Corporation, maker of the best-selling Quicken accounting software as well as the tax-preparation program TurboTax. He was appointed president and chief executive officer of X.com, with Musk serving as chairman of the board. Sequoia Capital, one of the top-tier venture-capitalists in California, invested a whopping $25 million in start-up capital to X.com.
X.com came online in December 1999 and offered new customers a bonus: Open an online checking account with X.com and you’ll get a $20 cash card valid for automated teller machines (ATMs). Refer a friend and get a $10 card for each new member. By the second month, the number of customers reached nearly 100,000, far behind its primary competitor ETrade Telebank. But, even more malicious people from the competition were suspicious of online banking – which was the biggest obstacle to their success – and a bit of a setback came when Musk and other top executives had to admit that illegal transfers had been made from traditional bank accounts to X.com accounts by computer hackers. Immediately, a new policy began requiring customers to deposit canceled checks to withdraw any money, but the atmosphere in the office was not very positive about the company’s fate.
Buy PayPal
In March of the year 2000, X.com acquired a company called Confinity, which had started an Internet money-transfer presence called PayPal. PayPal was first designed to allow users of handheld personal digital assistants, or PDAs, to transfer money. The business began operating just a few months after X.com was acquired, and at the time Musk believed he had a futuristic technology called “P2P,” which stands for person-to-person in online transferring. Subsequently, he and Harris split the company, with Harris resigning from X.com in May 2000. After five months, X.com announced it would reduce efforts on its fledgling online bank and instead become the dominant online payment transfer company in the world. The PayPal name replaced X.com.
PayPal experienced tremendous growth during the year 2001, fueled in part by eBay, the online auction site, with person-to-person sales running into the hundreds of thousands. PayPal went public in February 2002 via an initial public offering (IPO) of stock, which saw an impressive first-day debut on Wall Street. Later that year, the acquisition was completed as eBay purchased the company outright for $1.5 billion. At this time, Musk was PayPal’s largest shareholder with 11.5 percent of shares, and he received valuable stock worth $165 million from eBay through this transaction.
However, before long Musk had moved on to his next project. SpaceX, or Space Exploration Technologies, was founded in June of the year 2002 by an enthusiast about these things and he had long been fascinated by the idea of possible life on Mars and has become part of a non-profit organization – a Mars Society that advocates for the exploration of the Red Planet. Other inspiring members of the Mars Society include filmmaker James Cameron. Musk’s plans included sending an experiential greenhouse he later named “Mars Oasis” to Earth, which, when the planets are favorably aligned, would be about 35 million miles from Earth. The oasis would contain a nutrient gel from which specific Mars-environment-adapted plant life could grow. The whole operation would have cost $20 million. But then he discovered that to send something into space with the standard delivery method—the Delta rockets built by Boeing Corporation—would add another $50 million to the cost. Musk also tried to buy a rocket from Russia, but instead realized it was too risky to deal with shady international traders in underground or illegal goods.
Borrows Star Wars >Name
So it was that Musk thought that okay, maybe he could build his own rocket too. He would start getting in touch with innovators and technologists in the US aerospace industry, and he might even manage to lure some of the more experienced engineers and technical experts from companies like Boeing and TRW and bring them to SpaceX headquarters in El Segundo, California. However, it proved very difficult for him to attract venture capital for the idea. “Space is pretty far out of the comfort zone of almost every VC on Earth,” he admitted to Matt Marshall of the San Jose Mercury News. Instead, he had to dig into his own pockets to build the first reusable rocket in the private sector.
In fact, Musk was working with his new SpaceX team to build not one but two types of Falcon rockets. The name now associated with the spacecraft in the Star Wars films would be the “Millennium Falcon”. The intention was to build a rocket based on existing technology and at a minimal cost. For example, the Falcon I has a pintle engine that harkens back to the 1960s. It has a single fuel injector; in contrast, rockets used by the U.S. National Aeronautics and Space Administration typically use a “showerhead” design that has multiple fuel injectors. The company also needed a theodolite, used to align the rockets. The theodolite would have cost them $25,000, but rather than buy it new, they bought it on eBay.
There are other expensive rocks associated with the rocket. Since Musk’s design will be reusable, that means the company will have to recover the rocket’s first stage, which falls off when the rocket leaves the atmosphere. That part usually falls into the ocean, according to safety plans, but retrieving it from the ocean is expensive.
Divine New “Thrillionaires”
Paul Allen – co-founder of Microsoft (born 1953) – is the seventh richest citizen in the world. Allen used the money to finance a project called SpaceShipOne. It is a private manned spacecraft, created by aviation design legend Burt Rutan (born 1943), and became the first such vehicle to fly into suborbital space twice in 2004. With the completion of these two flights, SpaceShipOne qualified for the $10 million Ansari X Prize, created by the X Prize Foundation to encourage private entrepreneurship in aerospace.
Karma on the Doom video game is co-created by John Carmack (born 1970; see entry). He founded a computer game-creation enterprise called id Software in the year 1991. He was acclaimed as one of the most brilliantly talented programmers to enter the industry of video games. He was one of the pioneers responsible for developing Doom and Quake, two games that sold millions and gained a huge following in the 1990s. Carmack founded a fairly new company, Armadillo Aerospace, in Mesquite, Texas, dedicated to ground testing of launch vehicles designed for manned suborbital flights in the year 2000. It lost its claim to the Ansari X Prize when its vehicles crashed due to technical malfunctions during the years 2004 and 2005.
In 1995, Jeff Bezos (1964-) launched the online bookseller, Amazon.com, one of the biggest successes in American business history. Bezos, with a personal wealth estimated at more than $5 billion, began donating his money to various philanthropic causes and also founded an aerospace company. Like Elon and Carmack’s ventures, his Blue Origin is also dedicated to manned suborbital flight. Its foundation is believed to be powered by hydrogen peroxide and kerosene and serves as a vertical-takeoff and landing vehicle.
NASA contractors charge $250,000 to bring back such parts, but Musk found some ocean-salvage companies that knew how to handle sensitive material. He found one who agreed to do the job for just $60,000. The Falcon has no special computers, which alone can cost $1 million to install and maintain. Instead its computer is a basic computer that uses the same technology as an automated teller machine and costs only $5,000.
Honda Looks To Outer Space
Launching small satellites into orbit at about $6 million apiece—half the going rate in the aerospace business—and building a reliable rocket at a lower cost is SpaceX’s dream. The company already has two customers—the United States Department of Defense and the Malaysian government. “Sometimes they would ask, ‘If you reduce cost, don’t you reduce reliability?’ That’s absolutely ridiculous,” Musk explained to Fast Company writer Jennifer Reingold. “A Ferrari is a very expensive car. It’s not reliable. But I would bet you 1,000-1 that if you bought a Honda Civic it wouldn’t break down in the first year of operation. You can get a cheap car that’s reliable, and the same applies to rockets.”
Musk’s dogs are available on site during the workday, SpaceX is a casual but committed environment that offers shareholder rights to all its employees. SpaceX uses Musk’s title as chief technology officer. But he has a wife and a home, where the garage houses a McLaren F1—a $1.2 million car that is the fastest production, or, again, non-customized race car in the world. He has testified before the U.S. Congress about the feasibility of commercial human spaceflight and also started the Musk Foundation, which is supposed to focus on space exploration and the search for clean sources of energy. The foundation operates the Musk Mars Desert Observatory telescope in southern Utah and has a simulated Mars environment in which visitors can come and get a taste of life on Mars, including bathrooms that burn human waste using toilets for the experience. “I think human exploration in space is very important,” he told Reingold. “Certainly, from a survival perspective, the likelihood of surviving longer is much greater if we are on more than one planet.”
Read Also:
- 5 Business Lessons from Elon Musk’s Twitter Takeover
- 100 Negative Impacts of Artificial Intelligence
- 50 Negative Effects Of Artificial Intelligence (AI) On Software Developers
- Negative Social Impacts Of Artificial Intelligence
- 50 Negative Effects Of Artificial Intelligence On Blogging
Leave a Reply