image captionWhat are the secrets behind Elon Musk’s astonishing business success?
Last month Elon Musk became the world’s second richest man, according to Forbes magazine. Pundits are now predicting he could leapfrog Jeff Bezos to take the top spot this year. So, what is the secret of his success? A few years back I spent almost an hour discussing exactly this with him. To mark his new milestone we decided to dust the interview off and share it with you. So here is Elon Musk’s guide to success in business.
1. It isn’t about the money
This is absolutely central to Musk’s attitude to business.
When I interviewed him in 2014 he said he didn’t know how rich he was.
“It’s not as if there is a pile of cash somewhere,” he said. “It’s really just that I have a certain number of votes in Tesla, and SpaceX, and SolarCity, and the marketplace has value on those votes.”
image captionA Tesla Model X 90D on display at a trade show in Brussels.
He doesn’t have anything against the pursuit of wealth “if it’s done in sort of an ethical and good manner”, but said it just isn’t what drives him.
The approach certainly seems to be working.
The real-life inspiration for Robert Downey Jr’s portrayal of Tony Stark of Iron Man fame was worth perhaps $10bn ($7.3bn) when we spoke in 2014. Now it is more like $150bn.
His electric car company, Tesla, has performed particularly well. Shares increased 700% in 2020 to take its value to more than $600bn. For that you could buy Ford, General Motors, BMW, Volkswagen, and Fiat Chrysler, and still have enough left over to buy Ferrari.
image captionRobert Downey Jr is said to have used Musk as an inspiration for his Iron Man portrayal.
But Musk, who turns 50 this year, doesn’t expect to die rich. He said he thinks most of his money will be spent building a base on Mars, and wouldn’t be surprised if the project consumed his entire fortune.
In fact, like Bill Gates, he would probably regard ending his life with billions in the bank as a mark of failure because he hadn’t put that money to good use.
2. Pursue your passions
That Mars base is a clue to what Musk believes is the key to success.
“You want things in the future to be better,” he told me. “You want these new exciting things that make life better.”
Take SpaceX. He told me he set the company up because he was frustrated the US space programme wasn’t more ambitious.
“I kept expecting us to advance beyond Earth, and to put a person on Mars, and have a base on the moon, and have, you know, very frequent flights to orbit,” he said.
When that didn’t happen, he came up with the idea for the “Mars Oasis Mission”, which aimed to send a small greenhouse to the red planet. The idea was to get people excited about space again, and persuade the US government to increase NASA’s budget.
It was while he was trying to get that off the ground he realised the problem wasn’t “a lack of will, but rather a lack of way” – space technology was far more expensive than it needed to be.
Et voila! The world’s cheapest rocket launching business was born.
image captionSpaceX’s Starship rocket prepares for a test launch at the company’s facilities in Boca Chica, Texas, in December
And here’s the important thing, its genesis wasn’t about making money, but landing a person on Mars.
Musk told me he regards himself as an engineer rather than an investor, and says what gets him up in the morning is the desire to solve technical problems.
It is that, rather than dollars in the bank, that is his yardstick of progress. He knows every hurdle his businesses overcome helps everyone else who’s trying to solve the same problem – and it does it forever.
That’s why, shortly before we met, the entrepreneur had announced he was going to open up all Tesla’s patents to speed up the development of electric vehicles worldwide.
3. Don’t be afraid to think big
One of the really striking things about Musk’s businesses is how audacious they are.
He wants to revolutionise the car industry, colonise Mars, build super-fast trains in vacuum tunnels, integrate AI into human brains and upend the solar power and battery industries.
There’s a common thread here. All of his projects are the kind of futuristic fantasies you’d find in a kid’s magazine in the early 1980s.
Put it like this, his tunnelling business is called The Boring Company.
Musk makes no secret of the fact he was inspired by the books and movies he consumed as a kid in South Africa.
image captionA new Tesla factory under construction in Shanghai, China in 2019
Which brings us to Musk’s third business tip – don’t hold back.
He believes low ambition is baked into most companies’ incentive structures.
Too many companies are “incrementalist”, he said. “If you’re the CEO of a big company and you aim for something that’s a modest improvement, and it takes longer than expected, and doesn’t work out quite as well, then nobody’s gonna blame you,” he told me. You can say it wasn’t my fault, it was the suppliers.
If you are bold, and go for a really breakthrough improvement, and it doesn’t work, you’re definitely going to get fired, Mr Musk argues. He says this is why most companies focus on making small improvements to their existing products rather than daring to imagine completely new ones.
So, his advice is to make sure you are working on what he calls “stuff that’s going to matter”.
Two things stand out in Musk’s personal hierarchy of stuff that matters.
First, he wants to accelerate the transition from fossil fuels.
Here’s what the entrepreneur had to say about that: “We’re drawing upon deep gas fields and deep oil fields that haven’t seen the light of day since the Cambrian era. If the last time something saw light was when the most complex organism was a sponge, you really have to question whether that is a wise move.”
Second, he wants to ensure the long-term survival of humanity by colonising Mars and “making life multiplanetary”.
Like I say, think big.
4. Be ready to take risks
This one is obvious.
You’ve got to have skin in the game to do well, but Musk has taken more risks than most.
By 2002 he had sold off his holdings in his first two ventures, an internet city guide called Zip2 and the online payment company PayPal. He had just entered his 30s and had almost $200m in in the bank.
He says his plan was to put half his fortune into the businesses and keep the other half.
Things didn’t work out like that. When I met him, he was just emerging from the darkest period of his business life.
His new companies faced all sorts of teething troubles. Space X’s first three launches had failed, and Tesla had all manner of production problems, and supply chain, and design issues.
image captionMore and more charging points for electric vehicles are popping up in city centres
Then the financial crisis struck.
Mr Musk said he faced a stark choice. “I could either keep the money, then the companies are definitely going to die, or invest what I have left and maybe there is a chance.”
He kept pouring in money.
At one point he was so in debt he had to borrow money from friends just to pay his living expenses, he told me.
So, did the prospect of bankruptcy frighten him?
He says it didn’t: “My kids might have to go to a sort of government school, I mean big deal. I went to a government school.”
5. Ignore the critics
What really shocked him – and it was clear in 2014 he was still very upset by it – was the delight many pundits and commentators took in his travails.
“The liberal schadenfreude was really quite astonishing”, said Musk. “There were multiple blog sites maintaining a Tesla death watch.”
I suggest people wanted him to fail because there’s a kind of arrogance about his ambition.
He rejects that. “I think it would be arrogant if we said we were definitely going to do it, as opposed to we’re aspiring to do it, and we’re going to give it our best shot.”
This brings us to Musk’s next lesson in business success – don’t listen to the critics.
He told me he didn’t believe SpaceX or Tesla would ever make money when he set them up – and the truth is nor did anyone else.
But he ignored the doomsters and went ahead anyway.
Why? Remember, this is a man who judges success on the basis of the important problems he’s solved, not how much money he has made.
Think how liberating that is. He isn’t worried about looking stupid because his big financial bet hasn’t paid off, what he cares about is pursuing important ideas.
It makes decision-making much simpler because he can stay focussed on what he believes really matters.
And the market seems to like what he’s doing.
In October, the US investment bank Morgan Stanley valued SpaceX at $100bn.
The company has transformed the economics of space flight, but what will make Mr Musk most proud will be how his company has reinvigorated the US space programme.
This summer one of his Crew Dragon rockets launched six astronauts to the International Space Station, the first such mission from US soil since the space shuttles were retired in 2011.
6. Enjoy yourself
Follow this guide and, with a bit of luck, you’ll become impossibly rich and famous too. Then you can start to come out of your shell.
Mr Musk is famously a workaholic – he boasts of working 120-hour weeks to keep production of the Tesla Model 3 on track – but since we met he seems to have been enjoying himself.
He has stoked controversy with defamation lawsuits, on-air dope smoking and wild outbursts on social media.
In 2018 he ran into trouble with the American financial regulator when he tweeted that he was planning to take Tesla private, and when the Covid-19 pandemic forced Tesla to shut down production at its San Francisco Bay Area factory, he became a vocal opponent of coronavirus lockdown restrictions.
He called panic over the virus “dumb” on Twitter, and described stay-at-home orders as “forcible imprisonment”, saying they were “fascist” and a breach of constitutional rights.
In the summer he announced plans to sell off his physical possessions saying they “weigh you down”.
Days later he took to Twitter to tell the world his new-born son would be called X Æ A-12 Musk.
Yet his unpredictable behaviour doesn’t seem to have affected his businesses, and the entrepreneur remains as ambitious as ever.
In September, Mr Musk claimed Tesla would have a “compelling” $25,000 car within three years, and said soon all the company’s new cars would be completely self-driving.
And his year ended with a real bang in December, when SpaceX tested its Starship launch vehicle which it hopes will take the first humans to Mars.
The giant rocket exploded when it crash-landed six minutes after lift-off.
Mr Musk hailed the test as an “awesome” success.
You can follow Justin on Twitter: @BBCJustinR