Reference no: EM131275505

Elon Musk: Serial Entrepreneur from Zip2 to Tesla and Beyond. In 1995 Elon Musk started a small software firm called Zip2 with his brother and a family friend. The group had very little money and Musk had large student loan debts. He found office space for less money than an apartment, so he rented an office and bought a futon to sleep there. He got in workouts and a shower at a local YMCA. The tiny firm got access to the internet from a startup internet service provider, who happened to have office space right below them. Thus, Zip2 was able to be cash flow positive even with initially small revenues. Musk believes this was very helpful in their later discussions with investors. As noted in the text, Zip2 was bought by Compaq for over $300 million in 1999. After selling Zip2, Musk went on to found PayPal with a larger team of people. While Zip2 provided a software product to the media industry, PayPal was pursuing online payments and working with the financial sector. Both firms were at their heart, software companies with “typical silicon valley” flat organizations. Both firms remained fairly small and focused before being acquired. Though the PayPal system was quite complicated even at its peak, employment was only about 30 highly talented and tenacious engineers. Musk also notes that both firms were very focused on giving the customers a great experience with the product. In 2002 PayPal was sold to eBay and Musk was again free to start something new. This time though he had broader plans than a software company. Musk parlayed the estimated $180 million he made from the PayPal sale into three disparate but socially engaged activities. First, SpaceX which is the first private firm to successfully dock with the International Space Station. It has delivered supplies, but as of 2013 not yet astronauts to the orbiting craft. Musk’s ultimate goal with this firm is to launch a spacecraft to Mars. He wants humans to be a multiplanetary species. Second, Solar City where Musk is chair of the board of directors. In early 2012 Solar City had nearly 30,000 customers in both residential and commercial markets. Musk wants to deliver ‘sustainable energy production’ for the planet. Finally is Musk’s investment in Tesla Motors (see ChapterCase3). Nearly bankrupt personally and with Tesla hemorrhaging cash in 2008, things were looking dire for Musk. He began borrowing money from friends and was close to losing the firm. Fortunately Dell purchased a fourth firm Musk had invested in (Everdream) for over $100 million dollars and this gave Musk some breathing room until the Tesla IPO in June 2010. The firm raised $226 million in the IPO. In fact, 2010 was a major turning point for Tesla and Musk. Just a month before the IPO, Toyota agreed to buy $50 million dollars of the IPO shares and to sell their factory in Fremont, CA to Tesla for a bargain basement price. Also in 2010, Tesla hired George Blankenship from Apple’s retail stores strategy to create the Tesla retail experience. A Tesla car retailer is much more like visiting an Apple store than a traditional luxury car dealership. In his spare time, Musk has proposed and offered initial designs for a “Hyperloop” human transportation tube. This futuristic idea could take a small pod of people from San Francisco to Los Angeles in about 30 minutes he estimates. Musk notes he looks forward to discussions with the California governor about the idea because the $60 billion dollar proposed California ‘bullet train’ would be the slowest moving and most expensive cost per mile of any train in the world. The Hyperloop would cost in the “$6 billion range” and take people where they want to go instead of using ‘earthquake resistant’ routes through the interior of California’s Central Valley.

Elon Musk's approach to social entrepreneurship is quite different than that ofJimmy Wales as discussed in the text. However, both men looked beyond financials to a greater social good for their organizations. What is the major difference in the organization Jimmy Wales founded from those started by Elon Musk?

a) Wales started his firm in California while Musk started Tesla in Detroit.

b) Musk is concerned about customer experience and usage of his products and services.

c) Wales did not use software or the internet for his startup

d) Musk inspires hundreds of people to want to work in his inspirational businesses.

e) Wales founded a non-profit organization though it could have generated many millions in ad revenue.