LEADERSHIP FROM THE FUTURE
(9 mins read)
Elon Musk… the richest man in the world, whose name is known everywhere. Is he the XXI reincarnation of King Midas who had an ability to turn everything he touched into gold or he is the real embodiment of Tony Stark, the IronMan?
At the beginning, I was fascinated with Musk and his visions: flying to Mars, driving an electric car or connecting the human brain with computers. Later, when I heard insight stories about Musk’s working style and leadership I was disturbed, puzzled and disappointed. Now, after exploring and diving into his professional life, I believe that he is a visionary genius and an inspirational leader from the future.
Let’s go deeper and understand who Elon Musk is, what his business philosophy and what we could learn from him.
THE BEGINNINGS
Elon was born in Pretoria, South Africa, in 1971. His father was an engineer and his mother was a model. Until he was nine years old he would read all the books they had at home, including encyclopaedias (!). He had an amazing brain capacity and super memory. Young Elon was introverted and different from other kids. He was talking about space and building rockets. When he was ten years old he expressed interest in computers and his parents bought him the Commodore, his first computer. By himself, using the manual, he learned how to program. It was an early sign of his genius. Elon’s father used his connections and sent Elon to IT lectures. One year later, he developed his first computer game “Blaster” and sold it for USD 500 (today’s value approx. USD 1,650). In 1980, his parents divorced and Elon stayed with his father. Later he regretted this decision as he had become estranged from his father. In 1989 Elon moved to Canada and continued with his studies. Finally, he obtained a bachelor in economics and physics. In 1994, he started his professional career and held two internships in Silicon Valley.
THE FIRST BUSINESS STEPS
During the tech boom at the turn of the century, in 1995, Musk co-founded first company: Zip2. They developed an interesting concept, digital maps with business data (like Google Maps). After only 4 years, in 1999 Zip2 was sold to Compaq for USD 307 million in cash and Musk received USD 22 million for his 7% share.
Majority of people with 22 million in cash would decide to retire in the Bahamas or Hawaii, but not Musk. He invested into his next business vision – X.com, online payments platform. After only one year X.com was acquired by PayPal and there is a high probability that Musk was able to convince senior executives there to go deeper into digital payments. In 2002 PayPal was bought by eBay for USD 15 billion and Musk cashed USD 165 million. What is interesting is that Musk was not happy with this transaction at all. He wanted to continue investing and building PayPal, however the decision was taken when Musk was away on vacation and he could not stop it.
SPACEX: “Mission to Mars”
After the PayPal experience he started drifting more and more into his youth passion: Space. 50 years after the US landing on the Moon he announced his new visions: Mission to Mars. With this vision he challenged NASA and the European Space Agency as no private business had been able to explore space before. It was unprecedented and extremely challenging. Once he found the right people, he created SpaceX. Originally, Musk wanted to use one of the existing launching rocket systems. He even went to Russia and met with people from the Russian space business. They wanted to buy a refurbished intercontinental ballistic missile system. The deal did not materialize and they went home empty-handed. During the flight back to the US, Musk was frustrated with progress they were making and he came up with an idea… he wanted to design and construct own rocket. One day the idea became an inspiring vision in SpaceX: they wanted to build a rocket system which would allow humans to fly to Mars and which would be used many times. The next several years were spent on contracting Falcon 1. The first launch of the Falcon 1 rocket took place in 2006. It was a failure as the rocket did not reach the Earth’s orbit. The next two attempts failed as well and SpaceX was centimetres from announcing bankruptcy. Finally, in 2008 the Falcon 1 succeeded in reaching Earth orbit and as a result of this unprecedented success, SpaceX signed a contract with NASA for resupply services to the International Space Station, replacing the Space Shuttle program from 2011, when the Space Shuttle had retired. SpaceX got a massive cash injection: USD 1.6 billion. In 2012, the Dragon spaceship docked safely and connected with the ISS. From that moment things started to line up in SpaceX. In 2015 they executed a successful landing of a new rocket, Falcon 9 on an inland platform, which was replaced later by an autonomous spaceport drone ship operating on oceans. In 2018, Musk launched the Falcon Heavy system, which had the fourth-highest load capacity of any rocket designed by humans. Finally, in 2020 launched its first crewed flight and became the first private company which was able to place astronauts into orbit and the ISS.
When we talk about SpaceX, we have to spend a bit of time on Starlink. Starlink is a low-Earth-orbit satellite system to provide Internet access on Earth. In Sep 2022 they were able to install 3,000 satellites and there are plans to expand it to 42,000 in the future. One new rocket launched puts 50 new satellites on orbit. At the moment there are 500,000 people who decided to subscribe to Starlink services. During the 2022 Russian invasion of Ukraine, Musk decided to establish the Starlink coverage above Ukraine and Ukrainians received Starlink terminals with free data transfer subscriptions. There are some plans that from 2023 Starlink will be a global phone service provider.
TESLA: “Tech King”
Tesla was founded in 2003 by Martin Eberhad and Marc Tarpenning and they were looking to create eco transport. Musk invested in Tesla USD 6.5 million in 2004. In 2008 they marketed the first serial produced all-electric car: the Roadster. They sold 2,500 pieces only and initially Tesla faced lots of challenges with technology and money. During the next decade they launched several EVs: Model S in 2012, Model X in 2015, Model 3 in 2017 and Model Y in 2020. In 2019 Musk unveiled Cybertrack as well, however until today they have not started a serial production.
First profit was made by Tesla in … 2020 only, 17 years after the company was founded. The key driver to realize the profit was the opening of the gigafactory in Shanghai (China) in 2019. This is the third Tesla gigafactory after two in the US. In 2021 Tesla sold 473,000 cars and half was sold in China. In Q1 2022 they generated USD 19 billion revenue and achievedUSD 3.3 billion profit.
In 2018, Musk was sued by the Security Executive Committee (SEC) for manipulating the Tesla stock with his activities on Twitter. The SEC claimed that Musk’s tweets were misleading, false and influencing the markets. Musk settled with the SEC, he paid USD 20 million fine and he was forced to step down for three years as Tesla chairman (he remained as CEO).
TWITTER: “Chief Twit”
In 2022 Musk decided to enter an unknown business area social media. For USD 44 billion he, together with support from other investors bought Twitter. There is a plan to work on Twitter 2.0. From the beginning Musk introduced a typical Musk’s leadership and working style, it’s like a shock therapy. He claimed that there was a mismatch between Twitter’s mission and with his vision, that there is a clash between Twitter culture and his ways of working, that there is a significant mismatch between Twitter business model and his plans. People describe it as Pre-Elon and Post-Elon era.
First Musk fired many senior leaders at Twitter, including chief executive Parag Agrawal. Additionally he introduced massive job cuts. Almost half of the Twitter Team (4,000 stuff) were made redundant. There are many Twitter employees who decided to accept a voluntary redundancy scheme and they left the company. For sure we will get more exciting news from Twitter in the future.
Since Musk took over Twitter, there are more and more users and traffic there. It looks like the company will not disappear soon.
WHAT ELSE?
SpaceX, Tesla and Twitter are gems in Musk’s portfolio. There are some other businesses founded by Musk and not all are as successful as other businesses whose names we could find on first pages of Financial Times or Wall Street Journal.
First, we need to mention DeepMind Technologies. It’s a business which focuses on AI and algorithms. Musk funded it in 2010 and he sold it to Google for USD 600 million.
Another one is Solar City, a company which operates in a photovoltaic arena. The PV business did not work well and faced some liquidity issues. In 2016 Solar City was bought by Tesla and it was seen negatively by the markets. When they announced the deal Tesla’s stock price dropped by -10%.
When we talk about other Musk businesses we need to mention Boring Company. The core business are tunnels which would be alternative transport for metro and highways in big cities. So far, they have contracted tunnels in Los Angeles and Las Vegas only.
Finally, we need to mention Neuralink which is the most inspiring idea. In 2017 Musk invested USD 100 million in a startup to connect the human brain with computers. The idea is to install implants in the human brain which will merge humans with machines.
After analyzing all his entrepreneurial and leadership activities it’s clear that there are three critical elements which when you put them together create an extreme competitive edge: Musk’s vision, Musk’s ways of working and Musk’s leadership.
MUSK’S VISION
Musk is disappointed with greatness or excellence and “Moonshot” ideas are not good enough for him at all. He shares visions which break the status quo, go far beyond the most aggressive and controversial “out-of-the-box” thinking and create a new paradigm for humanity. He is super visionary and super inspirational. There are no limits to his breakthrough ideas and revolutions. Musk is ready to take risks which other people are not.
MUSK’S WAYS OF WORKING
Musk is a workaholic. He works 80-100 hours per week and he expects exactly the same behavior from all his employees. There is no relief, no rest, no giving up. There is a hardcore work culture. Musk believes that if you work 100 hours weekly and others continue working 40 hours per week, you will be able to achieve in 4 months what they achieve in 1 year. It’s an extremely controversial idea, but… logic is there.
Musk wants to work with people like himself, people work extremely hard and solve problems, not generate them. He promotes a common sense approach in all his business and delegates decisions to an individual level. Musk’s employees are empowered to forget about the typical business hierarchy. They have to communicate directly with people to discuss problems, find solutions and make decisions. He democratized leadership and empowerment to the extremes.
There is also a very specific meeting etiquette in Musk’s businesses. People are encouraged to avoid large meetings. They should participate only when they are needed and where they can contribute. If they believe that they participation is not necessary, they can … leave the meeting.
It’s all about avoiding nonsense, being clear and using common sense all time. It’s a revolution and many traditional companies are not capable of doing what Musk does in his businesses.
MUSK’S LEADERSHIP
And finally, we need to mention one key element. Musk does not have different standards for himself and others. He leads by example every second. He follows his working philosophy and pushes to extremes every person every day. His leadership style sets new standards and is like leadership from the future.
Musk has already changed our lives. PayPal pioneered online payments. Tesla leads the EV business and revolutionized autonomous cars. SpaceX explores space and will take us to Mars. It’s only the beginning and Musk is only warming up.
Every Day Development 