From Trauma to Triumph
This is the story about a man on a mission…
And now… onto The Story
His first five months in college were a disaster, so he dropped out. Soon, it was clear he would be forced into the military where he would have to enforce segregation. The thought made him sick.
At school, he got beat up, and at home, it wasn’t much better.
With few friends and few prospects, he bought a one-way plane ticket from Africa to Canada.
In those days, ordering a plane ticket took three weeks. The days passed by agonizingly slowly, and finally, his ticket arrived. He was off to Canada with a few dollars and not much of a plan.
Once in Canada, he tried to call an uncle who lived there. No luck, so he stayed in a seedy youth hostel.
Supposedly, he had extended family scattered around Canada, but he’d never met them. With the little money he had, he made his way to the pay phone and cold called second cousins. After awkward conversations, one second cousin agreed to let him stay with them.
He used his last few dollars and bought a bus ticket to his second cousin’s house. That summer, he would work like hell to earn his keep.
He was terrified of poverty, but he also knew that fear was the mind killer.
To escape poverty, he knew he would have to remove his fear of it.
He devised a plan. He practiced living on $2 a day, eating oranges and hot dogs. After that, he knew he wouldn’t have any trouble making at least $2 a day. And that was all he needed to live. No more fear.
He worked in vegetable gardens, shoveled grain bins, cut wood, and when that work dried up, he went to the local unemployment office.
In those days, the unemployment office assigned jobs, so the young man asked for the highest paying job they had. They gave it to him.
It was cleaning out the inside of a boiler room at the local lumber mill. No surprise that the highest paying job was also the most dangerous.
Years later, the man would reflect on his job of cleaning the boiler room and say:
“You have to put on this hazmat suit and then shimmy through this little tunnel that you can barely fit in… Then, you have a shovel and you take the sand and goop and other residue, which is still steaming hot, and you have to shovel it through the same hole you came through. There is no escape. Someone else on the other side has to shovel it into a wheelbarrow. If you stay in there for more than thirty minutes, you get too hot and die.”
When he got the chance to re-enroll in college, he jumped at it. Like a typical young man, he picked the college with the most girls.
Next he started reading the local newspaper. If he saw an interesting local person featured, he would cold call them and ask to have lunch with them. One of the local businessmen he called agreed, and that led to the young man’s first summer internship at a bank.
The first two years of college flew by, but he didn’t make many friends. Later, when his classmates were asked about him, most people said they never noticed him.
When an opportunity came for him to transfer to a better school, he took it. Soon he was at the University of Pennsylvania. Next his brother escaped to America to join him.
After their graduation, the two brothers went on a road trip across America. It was 1994, and when they arrived in the Bay Area, the young man beat down doors until he got two internships.
One day he summoned the courage to go hang out in the lobby of the growing internet company, Netscape. He thought he might apply for a job, but once he was in the lobby, he lost his nerve. He was too nervous to actually talk to anyone or introduce himself, so he left. It was back to his internships.
One day at work, a salesman from a local startup arrived. The salesman was trying to sell advertising space on the internet. The pitch and offer were horrible, and the young man started thinking… I can do better than that. He had no idea how to start a company, so instead of going back to school to learn how, he just did it.
He rented a small office space with his brother, and they got to work starting an online advertising business. The office space doubled as their apartment. There were no showers, no elevators, and the toilets backed up in the building. So they showered at the gym, slept on mattresses on the floor, and used bathrooms at other businesses. They negotiated and bargained for all the equipment they needed. Most of the first employees that joined them all worked on commissions. In their spare time, they built a case around a PC to make it look like a custom built hardware product. When potential investors arrived, they would wheel it out on a dolly to impress them.
The first investment the young man got came from one of the older businessmen he cold called back in Canada. The young man showed up at the older businessman’s house, pitched him, and got $6,000 in a cash investment. Later, the older businessman would join the young man’s executive team.
All of this emboldened the young man. In future pitches with venture capitalists, he would get a bit wild. Instead of the, “I’ll work hard” and “this will work” type of pitch, he would look the VCs in the eye and try a new approach:
“My mentality is that of a samurai. I would rather commit seppuku than fail.”
Seppuku is the Samurai practice of killing yourself with a short sword when you fail or dishonor yourself or your family.
In those earlier days of venture capital, a founder that said he’d kill himself rather than fail was an anomaly. The crazy phrase didn’t work on every VC, and there were dozens of “nos”, but eventually, one said yes. He and his brother gave up some equity in their business, but they got the money they needed to grow.
Years flew by, and the VCs on his board removed him as the CEO (a common Venture Capitalist practice in those days). Somehow, the ragtag team persevered and managed to sell the company to Compaq.
The young man walked away with $22 million dollars.
That young man in our story is Elon Musk.
You might think that the rest of his story is well known. But is it?
The first thing that Elon Musk did after the sale of his company was to roll over and re-invest almost all of his profits into his next company. It was risky, but it also was the only way to avoid a huge tax bill.
His next company was an online bank called X.com, with brokerage services AND insurance services. He didn’t worry about perfecting his pitch, branding, or deck.
Instead, he called CNN to get on a segment highlighting new Silicon Valley millionaires.
On the day the crew arrived to film, he arranged to have his new McLaren sports car delivered. He also snuck in a long pitch for his new company.
On the CNN segment, he would declare that,
“Raising $50M is a matter of making a series of phones calls and the money is there.”
If that wasn’t bold enough, he would look convincingly at the camera and state, “I think that X.com could absolutely be a multibillion-dollar bonanza.”
With that sales pitch hitting the air, he was able to raise the money he needed for X.com.
The VCs he approached couldn’t believe it. The young entrepreneur who had just sold his previous company was already starting a new one. On top of that, he was going to reinvest almost all the money he’d just made into his next company. The VCs jumped at the chance to co-invest in someone with that much skin in the game.
X.com got off to a rough start. They faced thousands of regulations, challenges, and nefarious hackers. To survive, X.com had to merge with one of their competitors, Confinity.
The two companies integrated, and arguments ensued between the two different cultures. As the chaos grew, the Confinity CEO resigned. They were burning $10M a month, and would soon be out of cash. Most of the team lost their faith in Musk.
He’d recently got married and decided to take a long overdue honeymoon with his wife. While he was on the trip, a group of employees ousted him as CEO. He’d been replaced by the Confinity CEO, Peter Thiel, and the company rebranded from X.com to PayPal. Thiel and Max Levchin (and the rest of their team) would go on to save and rebuild the company’s technology. Musk had to take the role of mere advisor to PayPal during this time.
When it was clear the new leadership was working out, Musk checked his ego, and invested almost all of his personal net worth into PayPal, becoming the largest stakeholder.
He didn’t have time to be finicky or bitter, take it personally, or whine.
He was focused on one thing. Helping his team win.
You don’t know how hard you can fight until your back is against the wall.
PayPal had their back against the wall, and it paid off. They beat the hackers, collaborated with the regulators and bankers, formed the partnerships they needed, took the company public, and celebrated in epic fashion.
Soon after, eBay acquired PayPal for $1.5B. After taxes, Musk had $180M. He went on a vacation to decompress, caught malaria, lost forty-five pounds, and almost died.
When he finally recovered, he would immediately reinvest his earnings from PayPal, into new companies, and again, put everything on the line.
When most people get a lot of money, they spend it. Musk decided that instead of spending it all, he would make a slight tweak, he would invest all of it into companies vital to humanity’s future.
He founded SpaceX (which is an entirely different roller coaster and story for another day). Along the way, he discovered a struggling electric car company. He joined it, and then lead their Series A financing. That small electric car company became Tesla. Then his cousins wanted to start a company, so he invested $10M into their venture, SolarCity.
Looking back, Musk commented that,
“My proceeds from the PayPal acquisition were $180M. I put $100M in SpaceX, $70M into Tesla, and $10M into SolarCity.”
Sidenote: He occasionally he had to borrow money to pay rent!
Plenty of people might think this behavior is insane. But there are a growing number of people who think that what’s insane is not investing in yourself or those you believe in.
People don’t realize that the motivation they need is waiting in situations where they have to sink or swim. The will to fight and win only comes when you have created enough incentives.
Musk comments on this by saying:
“I think most people can learn a lot more than they think they can. They sell themselves short without trying.”
And remember, Elon wasn’t born with all the skills or self-confidence he needed, in fact, far from it.
In school, he got bullied and beat up. Life with his father was horrible. He had few friends.
Most people thought he was weird or never remembered him. They blew him off and could care less about the kid obsessed with video games, electric cars, and saving humanity.
What separated Musk from every other person society and culture writes off is that he didn’t let it cripple him. He did things that required courage in the real world. With each action he took, he gained new confidence and new skills.
In the early days of starting what would become Space X, his friends gave him a hard time about his ideas. He listened but still worked on turning the idea into reality. He started with an incredibly modest goal of helping to increase NASA’s budget. Then he began attending meetings of the Mars Society. He read books on space he needed. He didn’t care that plenty of people thought he was crazy. While they laughed, Elon built a spreadsheet of every component he would need to build a rocket.
He compared the costs of building a rocket with buying and retrofitting an ICBM from the military. The latter looked cheaper, so he reached out to a former U.S. Government agent to help him book a trip to Russia. The former U.S. agent he called thought he might be crazy, too. When Musk insisted that they meet, the agent made Musk meet him at SFO behind airport security in case Musk was crazy or had a gun.
After a few meetings, Musk got a group together to go with him to Russia. In person, the Russians insulted him, called him ‘boy,’ and laughed when he tried to make a lowball offer to buy two refurbished ICBMs. Musk’s plan was to put a mini greenhouse in the ICBMs, launch them at Mars, and then send footage back to earth of green life on the Martian soil. He thought it would reinspire the human spirit of exploration. After his small group made it out of Russia, Musk finished his spreadsheet of rocket components. He established that building it on their own was possible, and then began the process of making it probable.
SpaceX’s first three rocket launches were failures, and if the fourth didn’t succeed, the company would have been finished. Even with his track record, most venture capitalists didn’t take the idea seriously. It was his former rivals turned allies from his PayPal days that would be the first large investors in SpaceX outside of Musk. Peter Thiel’s venture capital firm, Founders Fund invested, and SpaceX had the capital they needed to keep going. Their fourth launch succeeded, and shortly after, SpaceX won a Nasa contract that kept the company going.
Most modern-day entrepreneurs don’t want to go out into the real world and talk to customers. Nowadays, the average person in Silicon Valley is busy building “minimum viable products.” They try to outsource their jobs. Or they build minor features or small products. The especially delusional types spend all their time at startup parties and events. They blush when somebody tells them “no” and run away with their tail between their legs. They refuse to work on any big ideas in favor of doing their own thing.
Don’t spend all your time on the incremental. Don’t let the fear of pursuing things vital to humanity’s future stop you from trying. Elon is famous for reading hundreds of books, including sci-fi. One of the best quotes from a book that inspired him to leave fear behind is from Dune. In the story, this is the prayer that the main character is trained to recite:
“I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.” –Frank Herbert, Dune
Do not accept fear or failure. Ever. Nothing is permanent, and the next opportunity is always coming.
Elon Musk is one of the main reasons why America is now able to go back into Space.
He endured traumas, defeats, and setbacks along the way.
But he didn’t stop. He kept going. Musk turned traumas into triumph.
That’s his story. What’s yours going to be?
This is episode 7 of season 3 of The Story podcast. Season 3 of The Story features twelve technology trailblazers who started a business that changed the world. The Story is brought to you exclusively by Salesforce, the world’s #1 CRM platform that helps businesses blaze their own trails to success.