How Elon Musk turned $28,000 borrowed from his father into a $400 billion empire
On November 11, Elon Musk became the first person in history to break the $400 billion barrier, a fortune that has skyrocketed since the US presidential election on November 5. The world's richest man took $270 million out of his own pocket to help Donald Trump return to the White House, but the investment paid off in spades: his fortune grew by $170 billion in just over a month, according to the Bloomberg Billionaires Index – Tesla shares alone were trading 70% higher in December than they were on election day.
Calculating the income, assets and savings of Elon Musk – or Jeff Bezos, the second richest person in the world, already a long way behind – is an exercise in creativity and estimation, not an exact science. However, Elon Musk has set himself apart from his predecessors on the list of great fortunes: he started out in innovative but more or less traditional businesses. However, step by step, he has conquered a unique place in sectors that were once exclusive to the United States, from space rockets to satellites.
Musk's entrepreneurial journey, recalled the Spanish newspaper 'El Mundo', which boasts of having sold its first computer program at the age of 12, began in 1995 with Zip2, a web software company that provided directories and maps for newspapers to be published on the Internet. He created it with his brother Kimball thanks to a donation of 28 thousand dollars from his father, a South African engineer.
Elon Musk has always said that he inherited nothing, much less a fortune, but that his father, before going bankrupt and depending on them, taught him “something much more valuable than money” – he recalled that in those early days of entrepreneurship they had almost no resources and as he did not have money to buy an apartment and an office, he opted for the latter, sleeping on a sofa and showering at the local YMCA facilities.
In 1999, Compaq acquired Zip2 for US$307 million, which allowed Musk, then 27 years old, to receive just over US$22 million, in cash and shares, which allowed him to buy his first whim: a McLaren F1, valued at one million dollars.
With that capital, he launched X.com, an online banking and financial services company that allowed him to first compete fiercely and then merge with Peter Thiel's Confinity to form PayPal. In 2002, eBay purchased PayPal for $1.5 billion, leaving Musk with an additional $165 million, but also allowing him to create a network of colleagues and friends, known as the 'PayPal Mafia', which over the course of of time has proven to be one of the most powerful lobbies in the world, in the technology industry but also in politics.
With a big account, a solid name and the ability to raise capital and get investors, Musk took advantage of the turn of the century to take one of the riskiest steps. In 2002, SpaceX was born, whose inspiration was considered visionary but also crazy by many.
Simultaneously, in 2004 Musk became responsible for Tesla's board of directors, taking charge of the first round of financing. Four years later, he would take full control of the company and the product. It is without a doubt the operation for which he is most known and revered by fans.
In 2009 came the company's Model S revolution, the equivalent of Henry Ford's T, with a still limited range, just over 400 kilometers, but enough to make it an object of desire and global success. Tesla now has a market valuation of $910 billion.
According to Forbes magazine, Elon Musk owns about 12% of the company, not including options, but has pledged more than half of his stake as collateral for personal loans of up to $3.5 billion. According to Bloomberg, his personal fortune as of March 15 was $442 billion, but that includes a bonus of nearly $50 billion that a Delaware court blocked.
These would be boom years: since 2002, SpaceX has launched around 250 rockets and spacecraft into space. It is the only private company that has managed to land a spacecraft launched in low orbit and bring astronauts to and from the International Space Station. Just a few months ago, the company was worth over 100 billion dollars, making it one of the most powerful on the planet.
In recent years it has achieved not the celebrity of Tesla, but almost, thanks to rockets and satellites, the Starlink service that provides high-speed internet, but mainly due to the ambition of its leader, who often wears a t-shirt with the slogan 'Occupy Mars'. Computer science gave him the money to start, Tesla gave him fame and halo, but Space X broke the mold.
This year, Elon Musk's SpaceX has placed more than 120 Falcon 9s in space and if its schedule is met, it will end 2024 with 134 missions. At the moment, Starlink has about 7 thousand satellites orbiting the Earth, more than half of the entire world fleet. And it hopes to reach 40,000 in less than a decade.
According to some estimates, the United States Congress and NASA spent more than $192 billion (in 2010 prices) between 1971 and 2010 to launch 131 flights, two of which ended in tragedy with the loss of the Challenger (1986) and the Space Shuttle.
“During the operational years 1982 through 2010, the average cost per launch was approximately $1.2 billion. Over the life of the program, this cost increased to approximately $1.5 billion per launch,” said an analysis published in 2011.
Instead, Elon Musk (who has had hundreds of millions worth of advice, help, and state agency funding) is now able to do this infinitely faster and at a cost of just over $15 million, allowing him to an extraordinary profit margin, which in turn finances other projects. Exactly what he promised when he started.
SpaceX's value has soared in recent weeks and is now worth around $350 billion since Donald Trump's victory, according to estimates from Bloomberg, as the company is not listed on the stock exchange and does not have to publish detailed accounts. Notable investors include Founders Fund (owned by entrepreneur Peter Thiel), Fidelity Investments, Alphabet (Google), Baillie Gifford and Sequoia Capital, among others. But Musk is the main investor, controlling 42% of the shares.
The sixth leg of Elon Musk's empire (after Zip2, eBay, Tesla, SpaceX and The Boring Company) is 'X', formerly known as Twitter. One of the most important social networks in the world and the main one in terms of information. He bought it in 2022 for 44 billion dollars and, although he fired a significant part of the staff, scared off many advertisers and destroyed a large part of its value (up to 70% according to 'Forbes'), he is more than satisfied with the investment.
The richest man in the world is today one of the most important speakers in history and has an almost unprecedented ability (except Mark Zuckerberg) to influence public opinion.
Musk is also the owner and co-founder of Neuralink Corporation, a neurotechnology company that develops implantable “brain-machine interfaces.” The goal is to develop brain implants that can communicate directly with phones, computers and other devices. The chips “are designed to give people the ability to communicate more easily through text or speech synthesis, to follow their curiosity on the web, or to express their creativity through photography, art or writing apps,” Neuralink said. .
The last stage of all exploration is that of artificial intelligence. Musk acted quickly in the business, like Peter Thiel or Sam Altman, now one of his archrivals. In 2015 they founded OpenAI, but left the board in 2018. “I don’t understand how a non-profit organization to which I donated $100 million became a for-profit company with a market capitalization of $30 billion,” Musk said when he was not allowed to take control and choose the direction.
On July 12, 2023, Musk announced the launch of a new artificial intelligence company, xAI, to “understand the true nature of the universe” but also to keep up with the chatbot wars. Musk is estimated to own 54% of xAI. Investors, according to a transaction carried out a few weeks ago, value the company at around $50 billion.