Elon Musk’s Learnings from Launching Businesses
Born in South Africa on the 28th of June 1971, Elon Musk moved to Canada at the age of 17. By 1995, Musk left Stanford University to start his very first business. He founded PayPal (online payment), SolarCity (solar energy), SpaceX (space and rocket technology), Tesla Motors (electric cars), and Zip2 (online yellow pages).
He is just one of two people in the world who founded three billion dollar businesses. Moreover, he is always known as a pioneer in any business he takes on.
For example, SpaceX is the first private business to launch rockets into space. They even have goals of helping human life colonization in Mars by 2030.
As an extremely successful serial entrepreneur who knows how to take advantage of innovation, here are some learnings from Elon Musk to help launch your business.
ELON MUSK’S LEARNINGS FROM LAUNCHING BUSINESSES
Elon Musk, as evidenced by his many businesses, has demonstrated that he can revolutionize everyday life — whether it is driving environmentally friendly cars through Tesla or exploring space via SpaceX. Here are a couple of things you can learn from Elon Musk for your own start-up business.
Think outside of your world.
According to Max Levchin, Musk’s PayPal co-founder, Musk is that person who when someone says something is impossible, he responds that he thinks he can do it. He obviously exists, not merely to create companies, but to create history. His automobile innovations have him being compared to Henry Ford. Even Jon Favreau, the director of “Iron Man” based Tony Stark (Iron Man) on Musk.
In order to think outside of your world like Musk, collaborate with others so you can find opportunities to create and grow; do not be afraid of radical change that alters the status quo; go for things that may seem impossible.
Communicate a strong vision.
Businesses with the most effectual leaders have a strong vision. They share their vision and plan out how to achieve it. They are also able to affect how others see their point of view.
People like Musk have a vision that is revolutionary more than evolutionary. They move at lightning speed and always aim to change the game.
Case in point, the government of California invested USD 68 billion for a high-speed rail line that goes from Los Angeles to San Francisco at 3 hours, traveling for 200 miles an hour. Currently, the project is not going as originally planned.
To counter the traffic problem, Elon Musk answered with the Hyperloop. The Hyperloop plans to transport passengers from Los Angeles to San Francisco in just 3 minutes, traveling at 800 miles an hour. This plan would take 8 years to build and will only cost USD 10 billion. As someone who is beginning his or her business, what is your vision for your company? Is it strong enough? Can you talk about it clearly to others?
Find opportunities in emerging industries.
Musk only begins companies in emerging industries. In the latter part of the 1990s, the internet was only emerging. He started Zip2 and then later on, PayPal. Both were successful because he hit the ground running while the internet was relatively a new thing.
Afterwards, Musk went into three more emerging industries: SolarCity, Tesla Motors, and SpaceX. Since they were pioneers, they benefited from the minimal competition and high growth potential.
So think about and be aware of untapped or promising industries.
Product quality comes first.
Elon Musk believes in focusing on product quality first. Sometimes, he thinks that people are too focused on how to manage, for example, but they should focus on the product, particularly on how to make it really compelling for the customer. So focus on the how to make your product better.
The most effective leaders in business have strong confidence in themselves. Musk has such great confidence that he makes use of his own finances for his projects.
He invested more than USD 10 million in Solar City, USD 55 million in Tesla Motors, and more than USD 100 million in SpaceX. Ask yourself this: do you have enough confidence in your capabilities that you would invest in yourself and your business?
You need to invest in yourself! Read the following slides and understand why and how to invest in yourself.
Be prepared for a pivot.
When we say “pivot,” we mean, be prepared to change your direction but keep one foot on the ground.
When Musk turned the online bank, X.com to the worldwide online payment transfer system, PayPal, X.com turned into something completely unrecognizable. However, Musk used many of its resources, including a modern way of transferring money securely online using just an email address.
This pivot resulted in a huge success. As soon as PayPal was used on EBay, it achieved even greater success.
Always look for criticism.
Remember that criticism might sting in the beginning. But it would gradually shape you into a better person and you can feel the benefits of it in the long term. Criticism can create improvements.
On the flipside, compliments can create complacency. When Musk was working on the Tesla Model S, he did not want to know what is great about the car, he wanted to know what was wrong with it, so he can improve it.
Challenge the reality.
Musk agrees with Einstein’s belief that problems cannot be solved with the same thinking that started them in the first place. Case in point, there was a time when people said that battery packs are just expensive because they are costly to make and people accepted that fact.
However, Musk figured out that when your break the batteries down to their basic components, you can create your own batteries. Hence, their costs decreased substantially. This created the latest project of Musk, Tesla Energy, which is energy storage for sustainable businesses and homes. Since he challenged the status quo, he is developing energy storage that is causing revolutionary change in the world.
Of course, not all of us can think and create as revolutionary as Musk. Keep it simple by questioning yourself or someone whenever something seems to be accepted, just because you think it is what it is. Try to change the status quo and ask the hard questions. Go behind the truths of the basics. Always ask why until it hurts. 🙂
Concentrate on the signal rather than the noise.
Elon Musk always underscores focus, especially in product development. For example, many businesses put much of their funds into marketing rather than engineering. Musk chooses to slightly promote a great product rather than promote a mediocre product to death.
In Tesla, they did not spend money on advertisements. They put their funds into research and development, design, engineering, and manufacturing. Before they spend their money, they would always ask if it would improve the product. So focus on the signal and not the noise.
Know that you can fail and thus, have a contingency plan.
Lack of action is a result of fear, specifically fear of failure. Many do not start the business of their dreams because they afraid of wasting money and failing.
If you are Musk and you are starting a business whose objective is to explore space, failure is a very possible option. But instead of giving up, Musk expected failure and created a contingency plan for SpaceX. He said that if he did not get the first rocket launch by SpaceX once they have spent USD 100 million, then the company would cease.
This, Musk said, is sufficient for around three launches. In the first USD 30 million launch, it failed. In the second USD 60 million launch, it failed again. For the third and last launch, SpaceX’s launch finally succeeded. This successful launch got them a USD 1.6 billion NASA contract to twelve resupply flights to the station.
Of course, Musk was afraid of failure, but what he did was address the possibility of failure to bring him back again. This was what led him to send rockets into space.
Have an exit plan.
Know when to call it quits. If Musk kept running PayPal, certainly, he would be successful and rich. However, he would not have rocket ships or electric sports cars attached to his name. Musk knew how long to stay in a company and when to leave it.
For example, Musk founded Zip2 in 1995 and sold it to Compaq in 1998 for USD 307 million, with Musk receiving USD 22 million. He then founded X.com. Then he left after a few years, selling PayPal to EBay for USD 1.5 billion in 2002, with Musk receiving USD 165 million in EBay stocks. Through selling, Musk got enough capital to start extraordinary businesses.
Learn about why you should be thinking about selling your company.
Eliminate your worries by having a worst-case scenario.
Even after creating a contingency plan for worst-case scenarios, you can still feel wary. Perhaps a good way to take away the fear is to put yourself in that worst-case scenario to check how you feel about your business failing.
Case in point, Musk decided he would like to be an entrepreneur at 17 years of age. What he did was to force himself to live on a dollar a day, as what entrepreneurs did. During that period, he ate only oranges and hotdogs.
Because he was successful in his experiment, he knew that money would not be a problem for him. By trying out how it was like to be poor, he knew he could be an entrepreneur and this propelled him into a spectacular entrepreneurship.
Invest your earnings in new businesses.
For the times Musk cashed in his company for millions, he invested forty-five-percent or more of the earnings back to his new businesses within the year. USD 10 million of the USD 22 million Musk received from selling Zip2 helped him to found X.com (which turned to PayPal).
The USD 100 million of the USD 165 million he received from the PayPal sale helped him to found SpaceX. So if you would like to be a serial entrepreneur because you have many business ideas you want to come into fruition, try to invest your earnings into your new businesses. If you want to focus on just your one business, invest your earnings into your business.
Hire carefully but fire fast.
Elon Musk is well known for being very detailed with putting his staff together. He believes that every person that he hires is essential for his company. Musk has a very high standard for people hired in his companies, particularly SpaceX. He literally wants the best people in the world.
It is thus difficult for him to find them. Once he finds them, he is usually able to attract them to his company. But if he has made a mistake in hiring, he is unsentimental and quick about it. He learned from experience with PayPal to fire without hesitation.
Although it sounds terrible, if someone is not working out, he believes it is better to part ways earlier than later. Do not try too hard to make something work even if it just cannot work.
Be your happiest customer.
Musk loves his Tesla Model 6 that he used it to drive across the U.S. with his sons. The 3,200-mile journey took him 6 days and 9 hours. This was not just a great public relations campaign to feature the charging stations of Tesla. By driving this model, he got firsthand knowledge on improving this premiere car.
For SpaceX, Musk gets more motivated to succeed because he wants to be one of its customers as soon as possible. When he is 61 years old, he wants to be on his way to Mars in a rocket by 2030. So think about your business. Would you want to be its customer? Would you really be happy whenever you buy your product?
Leadership requires that you step forward.
As previously mentioned, SpaceX took three launches to succeed. The Falcon 1 launch vehicle went through its first and most dangerous phase wherein it breaks away from the gravitational pull of the Earth. Yet the rocket faltered afterwards and they could not maintain communication with it. The mission failed.
More than three-hundred SpaceX employees felt heartbroken because they did not succeed and they feared for their jobs.
Then Musk spoke to them. He said that he already had more investment for SpaceX so they can continue on their mission. Musk also told his staff not what they must do, but what he would do. He said that he would never give up and when he says that, he means never.
The crowd noted that it was the most impressive show of leadership they have ever seen. Because of his encouraging words, the group went from defeat and sadness to determination as everyone was inspired to move forward and to not look back. Eventually, SpaceX became successful in its launch.
Work hard and persevere.
Musk says that it is a good idea to start your company if you do not mind the high risk and working hard. If you do not want to do so, then you have to do something else.
He is known to put in a hundred hours of work every week between SpaceX and Tesla. He simply believes that this is the cornerstone of success in any business.
If you are putting in hundred hour workweeks and other people are simply putting in forty hour workweeks, then even if you do the exact thing, you will reach the same objective in 4 months versus their 1 year.
Leaders who are as effective as Elon Musk are always creating ideas. Since he is a serial entrepreneur, he has created many billion-dollar companies through his ideas. But how does he create ideas?
It does not merely pop into his head. He reads a lot and is able to connect things that do not seem apparent. This gives him the resources to make big steps forward. So prioritize continuous learning. If you want to learn something that is foreign to you, read and research about the topic.
When Musk founded SpaceX, he realized that there is so much to learn. Even though he was rich in experience in physics, he had to seriously teach himself a lot, so he could design the first rocket of SpaceX and the bigger booster to create a launch debut. This was a big learning curve for him, as he has not designed anything physical, except for creating rockets when he was a child.
In the beginning, he did not want to be the rocket’s chief designer. He kept on attempting to hire other people to become the designer, but individuals who wanted to join could not do it and the individuals who could do it did not want to join. So, he became the chief rocket designer by default. He succeeded in it by continuously learning.
Know your limits.
Musk is hardworking and very smart but he knows his limits. In 2006, Elon wanted to start a solar panel company. However, he knew that if he started with this idea, he would overextend and be unavailable to work on Tesla and SpaceX.
Hence, he shared this idea with Peter and Lyndon Rive. They then founded SolarCity. Musk became the main investor of the company and its Chairman. But he has kept his distance from the company so it does not take too much of his energy and time.
Hence, when you launch a business, know where your limits lie and if you could be stretching yourself too thin.
Solve problems outside of yourself.
Do you think whether your work influences the world? Can you solve the problems of the future? Do you even think towards the future?
Musk did not ask what are some of the best approaches to make more money, but he asked what are some of the problems that can affect humanity in the future. Whenever you talk to Musk, he does not mention profit.
He instead discusses the goal of SpaceX to making the people of the Earth into a species that can go to other planets. Musk simply does not want to improve his world, but the everyone’s world.
Work with integrity.
The most effective businesspersons work with integrity and take the high road. Even though Musk invested more than USD 55 million of his money in Tesla Motors, he still needed more funds.
He borrowed more than USD 400 million from the government. Afterwards, he repaid the loan and thanked Congress, the Department of Energy, and others for helping him. Always thank others, be humble, and take the high road.
Find your bigger purpose.
Before, Elon Musk used to ask about what his purpose was until he figured out what mattered to him. He always had an existential crisis, attempting to find out what it all means. He realized that to increase the knowledge of the world, you have to increase the scale and scope of consciousness.
Thus, you can be able to ask the correct questions and become enlightened. He believes this is the way to go forward. Hence, find your bigger purpose, which would lead us to the last learning from Musk.
Begin a business that addresses your bigger purpose.
The mission of Musk went beyond profit making to making an impact for the good. Whenever he goes to work, he knows that he is creating renewable energy, reducing carbon emissions, saving humans just in case the Earth collides with an asteroid.
Perhaps the first step for you if you want to address your bigger purpose is to ask what it all means for you? Align your business with your purpose in life, work smart, hard, and better in order to reach your goals.