Chapter 3: Elon Musk: From PayPal to SpaceX

 Before diving into today's chapter, make sure to read Chapter 2: Elon Musk's College Days and First Start-Up to follow Elon Musk's journey from the beginning.

Musk turned from a Canadian backpacker to a multi-millionaire in a decade. By age 27, he had acquired $22 million. He bought a huge condominium, a prop plane, and a sports car. Musk drove his McLaren F1 all around Silicon Valley. While an intern, Musk had the idea of Internet banking. He shared it with his seniors, but they did not like it. In the 90s, people were hesitant to purchase books online. No one wanted to enter their credit card numbers on the web.

Musk, however, was intent on creating this bank online. He invested $12 million into his new project, called X.com. One of his co-founders said, "That's part of what separates Elon from mere mortals. He's willing to take an insane amount of personal risk. When you do a deal like that, it either pays off or you end up in a bus shelter somewhere." Zip2 was a neat practical idea, but X.com changed the banking industry. Musk entered a business backed with nothing but his passion. He thought the bankers were doing everything wrong and believed he could do better.

As with Zip2, Musk pitched the company to venture capitalists. He made powerful speeches to encourage engineers to work for him. X.com became a legitimate financial service with a banking license, mutual fund license, and FDIC insurance. In November 1999, the site went live on the internet. Musk stayed at the office for 48 hours to ensure things were running smoothly. X.com pioneered a new payment system called PayPal, which allowed sending money just by entering the person's email. Within a few months, PayPal gained 200,000 clients. It was a very convenient way to move money, as banks took days to process transactions.

In March 2000, X.com merged with its competitor Confinity. Musk still owned the majority of the shares. The company name remained the same, but X.com and Confinity had conflicts due to different cultures and decision-making. A group of employees planned to oust Musk and wanted to put Peter Thiel from Confinity as CEO. Meanwhile, Musk was on his honeymoon with Justine. Right after landing, Musk tried to convince the board to reconsider, but it was too late. He was told that the company had moved on. Musk lost power in the company he started. X.com was rebranded as PayPal in June 2001. Musk secured his role as company advisor and invested more, increasing his stake as PayPal's major stockholder.

The dot-com mania, however, was coming to an end. Other tech companies were in a hurry to sell. Musk convinced the board to turn down offers. PayPal's annual revenue rose to $240 million. It became a strong independent company that could go public. In 2002, PayPal received an offer from eBay for $1.5 billion. After taxes, Musk took home $180 million. PayPal survived the dot-com bubble thanks to Musk's instincts in market and technology trends. The company also made a successful IPO despite the 9/11 attacks, becoming a winner even when the technology industry was down.

Mice in Space

In June 2001, Elon Musk turned 30. He moved on from Silicon Valley, and Musk and his wife started over in Los Angeles. After PayPal, he had time for his dreams of space travel and rocket ships. There's no better place to start than L.A. The weather in Los Angeles is good for aeronautics. Musk found people who shared his vision and joined a group called Mars Society, which studies life on Mars. It has a project called Translife Mission, about a capsule that will orbit Earth with mice as the crew.

Musk donated $500,000 for Mars Society and its project. He suggested that Translife Mission should extend all the way to Mars. One day, Musk was browsing the NASA website and became really disappointed. There was no definite plan or exact schedule for Mars exploration. Musk read books on aerospace and hired talented engineers to plan the rocket ship. He studied the performance of low-cost rockets. The existing rockets produced by the Russians, Boeing, and Lockheed were very expensive and carried gigantic satellites. Musk thought of cheaper rockets for research and commercial use.

When eBay bought PayPal, Musk earned hundreds of millions of dollars. He used it to build his rocket ship to Mars. In June 2002, Space Exploration Technologies (SpaceX) was founded. Musk was joined by Mars Society members and other space enthusiasts in Los Angeles. Musk was very excited for SpaceX, but a tragedy happened in his family. Justine gave birth to their first child, Nevada Alexander Musk. Within ten days, the baby died.

Justine and Elon put Nevada to bed one night. The baby slept lying on his back. When his parents checked on him, he wasn't breathing. The doctors said it was sudden infant death syndrome. By the time paramedics came to revive him, the baby was already brain-dead. He was put on life support for three days. Justine held her baby boy in her arms when he died. She mourned openly, but Elon Musk firmly said he didn't want to talk about it. Justine thought it was Elon's defense mechanism, a survival thing he picked up since childhood. She said, "He doesn't do well in dark places. He's forward-moving, and I think it's a survival thing with him." Musk focused on the rocket launch attempts of SpaceX. In the next five years, Justine gave birth to a set of twins and then triplets. Musk said, "I'm not sure why I'd want to talk about extremely sad events. It does no good for the future. If you've got other kids and obligations, then wallowing in sadness does no good for anyone around you."