I picked up a copy of Ashlee Vance’s biography on Elon Musk. It’s worth reading. Here are the key takeaways that I got about Musk’s rise to success.
1. Willingness to take massive financial risks
Tesla and SpaceX both nearly went bankrupt and required backstopping from Musk’s personal capital. His willingness to go “all in” though on his companies ultimately paid off extremely well.
Note though that he didn’t just do this brazenly. Musk’s initial success at what became PayPal gave him the initial financial strength to be able to take such risks.
2. Being open to new opportunities
Musk recalled a tale when he was interning at a bank. He proposed an arbitrage trade involving Brady bonds, a bond issued by the US government designed to shore up capital in emerging markets that the US had friendly relations with. The bosses at the bank rebuffed the idea, saying that they were burnt before in emerging markets and did not want a repeat. However, the economics were fundamentally different; these bonds had backstops by the US government.
Musk realized this, whereas his bosses were closed off to the idea of even entertaining such a thing. While Musk was unable to go through this strategy, it caused him to realize that the financial services industry may be missing out on other opportunities—which is how he came about starting a company that eventually merged to become PayPal.
3. Shamelessly take the best ideas from your competitors and make them into your own
Tesla engineers once bought a Mercedes CLS coupe, measured everything, stripped it apart, and worked to figure out how Mercedes made such good luxury cars. You hear similar tales of how Sam Walton would go into competitor’s stores to see how they ran, and he would then relay his findings to his executives at Wal-Mart for them to take note.
4. Intense work ethic
Musk talked about a story about how he once took a break from working by vacationing in Africa. He ended up getting hospitalized due to Malaria. He said he learned his lesson from this to not take vacations—and I’m not entirely sure whether or not he was joking.
5. Refusal to settle or bend to negative criticism
Musk insisted on designs and timetables for SpaceX that many of his engineers found unrealistic, especially considering the company had yet to produce any profit (but was burning a hole in capex). At Tesla, bloggers in 2008 were making posts about a “Tesla Deathwatch”, believing the demise of the company to be imminent.
People may often daydream that it would be nice to be the President of the United States, the CEO of a major corporation, or other prominent leader role—but, at the same time, most people also fear such success. Being at the top also means that you are the main target of criticism. Most people cannot handle this, which is why either consciously or subconsciously, they self-sabotage their way out of success and hence out of the danger of criticism.
Take it from venture capitalist and Tesla board member Antonio Gracias:
Most people who are under that sort of pressure fray. Their decisions go bad. Elon gets hyperrational. He’s still able to make very clear, long-term decisions. The harder it gets, the better he gets…I’ve just never seen anything like his ability to take pain.
Musk’s style is aggressive, even harsh, perhaps overly so at times. It’s much more along the lines of Gordon Ramsay than, say, Mr. Rogers on PBS. He alienated some of his former partners, such as Tesla co-founder Martin Eberhard. His first marriage also ended in a divorce. Yet, he delivers the goods.
6. Get the right people in, and get the wrong people out
Musk talks about how he was relentless at firing employees who weren’t the right fit. He also talked about how he often hired people fresh out of school—from top schools like Stanford—and paid them sometimes only $45,000. Those graduates likely saw peers make six figures out of school going into finance or management consulting, but Musk wanted to hire people who believed in the vision (space travel, electric cars that are actually fun to drive, etc.) and were motivated to make it happen, rather than being made complacent by golden handcuffs.
Musk was noted for making decisions at SpaceX much faster than the bureaucracy at NASA or major aerospace companies. Similar to my 5th bullet point: many people may think it would be nice to be in a leadership position, but really, they fear the decisions that they would have to make. You can’t strike out if you don’t swing, but you can’t score either.
SpaceX vs. United Launch Alliance
Musk talked earlier in the book about how his vision for SpaceX would be for it to become the “Southwest Airlines” of space travel, undercutting expensive and bureaucratic traditional aerospace companies like Boeing and Lockheed’s joint venture called United Launch Alliance, or also foreign competitors from Russia and China. One passage from later in the book that I found memorable:
In March 2014, ULA’s then CEO, Michael Gass, faced off against Musk in a congressional hearing that dealt, in part, with SpaceX’s request to take on more of the government’s annual launch load…According to Musk’s math presented at the hearing, ULA charged $380 million per flight, while SpaceX would charge $90 million per flight. (The $90 million figure was higher than SpaceX’s standard $60 million because the government has certain additional requirements for particularly sensitive launches.) By simply picking SpaceX as its launch provider, Musk pointed out, the government would save enough money to pay for the satellite going on the rocket. Gass had no real retort. He claimed Musk’s figures for the ULA launch price were inaccurate but failed to provide a figure of his own. The hearing also came as tensions between the United States and Russia were running high due to Russia’s aggressive actions in Ukraine. Musk rightly noted that the United States could soon be placing sanctions on Russia that could carry over to aerospace equipment. ULA, as it happens, relies on Russian-made engines to send up sensitive U.S. military equipment in its Atlas V rockets. “Our Falcon 9 and Falcon Heavy launch vehicles are truly American,” Musk said. “We design and manufacture our rockets in California and Texas.” Gass countered that ULA had bought a two-year supply of Russian engines, and he said this with a straight face. (A few months after the hearing, ULA replaced Gass as CEO and signed a deal with Blue Origin to develop American-made rockets).
This biography is worth reading. It doesn’t over-romanticize its subject as some biographers do. It does give valuable insights into Musk’s success, which readers can adopt to their own career or business.
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