Elon Musk shoots his private Tesla convertible into space with his “Falcon-Heavy” launch vehicle: An eccentric gag, but the space rocket built by his company SpaceX is better and many times more economical than all previous ones. (Image: SpaceX) True, not everything about Elon Musk is likeable or even exemplary. Examples include the speed with which he changes his PR staff or the extreme working conditions to which he subjects his employees: up to twelve-hour shifts six days a week and nightly email bombardments. The fact that Musk also demands a lot from himself and during stressful periods even sleeps on the floor of the production hall for five straight nights without changing his clothes does not make it any better. Some former employees attest that the CEO of Tesla and SpaceX lacks empathy and is even cold. Moreover, the claim that at least 50 high-ranking managers are said to have left Tesla in the past 24 months seems quite credible. Chief engineer Doug Field was the most recent to leave.
Not only is Musk tough on employees, but he also regularly upsets investors with excessive announcements. He recently reacted to critical inquiries from financial analysts with indifference and condescension. Additionally, he has angry outbursts towards critics, with whom he likes to fight on the breaking news service, Twitter, which he seems to mistake for a boxing ring. The fact that Musk recently announced Tesla’s bankruptcy as an April Fool’s joke probably did not lift the spirits of his backers.
An Extreme Entrepreneur Who Reaches for The Stars
The behavior and management style of the 47-year-old twice-divorced father of five leaves much to be desired. What is sometimes even more irritating about Elon Musk is his approach, which is completely atypical for an entrepreneur. Not only does he throw himself into a multitude of major projects at the same time—from rocketry and space travel, electric cars, solar energy and hyperloop to space-based internet—Musk’s sometimes low interest in sales and profits inspires disapproval on Wall Street. How could he talk about producing hundreds of thousands of cars when Tesla was losing money with every single one?
The answer: This man is concerned with more than “just” running a reliable company that pleases fund managers. The central driving force behind Musk’s ambition lies elsewhere. Nor is it limited to the constant production of technical innovations, as Musk has very impressively managed in recent years. “He believes in the technologies to the extent that he thinks they’re the right things to pursue for the betterment of mankind,” says U.S. business journalist Ashlee Vance and author of the Musk biography Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. Musk’s final goal is nothing less than the colonization of Mars in order to make humanity an interplanetary species, and thus ensure its survival.
Musk sometimes speaks very openly about this wish: “If we can solve sustainable energy and be well on our way to becoming a multiplanetary species with a self-sustaining civilization on another planet—to cope with a worst-case scenario happening and extinguishing human consciousness—then,” there is a brief pause, “I think that would be really good.”
Musk Competes with Monopolies and State Industries
All of this may sound crazy and eccentric, as might Musk’s fear for the survival of humanity without a Mars colony. Larry Page, co-founder and CEO of Google and a close friend and fervent admirer of Musk, on the other hand, has a good point: “Good ideas are always considered crazy until they are not crazy anymore.” When Google decided to digitize all its books, all of the consulted experts thought it was impossible at the time—until Google succeeded. And many of Musk’s successful projects were for years dismissed as hopeless. In the meantime, Musk has been able to renew and drive forward industries that have long been dominated by a few monopolies or, as in the case of space travel, are almost entirely in government hands. In fact, Musk set new technological standards that others now emulate.
SpaceX, the rocket company he founded, has challenged some of the most powerful nations and in some cases even surpassed their space programs. With the Falcon 9 rocket and the Dragon spaceship, the company is now one of the most important suppliers of the International Space Station (ISS). A year ago, SpaceX became the global leader in satellite launches and now offers the most powerful launch vehicle available, the Falcon Heavy, which was first launched in 2018. Since 2014, SpaceX has been building its own spaceport in Texas.
Musk prefers to have all parts manufactured independently, so as not to be dependent on suppliers, and so that he can increase the frequency and lower the cost of production. Now the U.S. also benefits from him. For a long time, they had fallen behind in space travel and had been dependent on Russia and China for the supply of important components. Thanks to SpaceX this is no longer the case.
Tesla, in turn, is the first new car manufacturer in the U.S. since Chrysler was founded in 1925. Tesla currently produces the models 3, S, and X, and it recently achieved its goal of producing 5,000 units per week of the Model 3. The company wants to “accelerate the world’s transition to sustainable transportation and clean energy.” In addition to electric vehicles, Tesla also produces batteries, solar power systems, and power storage devices, and it expects to achieve higher efficiency from the combination of these different product categories. In Gigafactory 1, Tesla now produces more lithium-ion batteries annually than were produced worldwide before the establishment of the Gigafactory.
Tesla’s software and apps are constantly being developed and updated—even for cars that have already been sold, and to the delight of the buyers. At night, the cars are plugged in like a smartphone, and they no longer need to be driven to the gas station. Maintenance work such as oil changes are no longer necessary: Tesla embodies a new driving experience.
The Entrepreneurial Spirit of Silicon Valley
With Tesla and SpaceX, Musk brought the entrepreneurial spirit of Silicon Valley to the automotive and aerospace industries. The fact that this path is anything but easy is shown by the history of the companies’ origins. Musk first invested his money in the founding of SpaceX in 2002, after becoming a millionaire in the 1990’s with the Internet company Zip2 and with X.com—an online payment system via e-mail, which later became PayPal. The beginning was difficult. SpaceX lacked all the experience, contacts, funds, and infrastructure that existing entities like NASA could fall back on. A phase of breakdowns and setbacks began. The first three flights failed. It was not until September 2008 that the Falcon 1 was successfully launched into orbit. It was the first completely privately developed liquid fuel rocket to reach orbit.
Tesla—where Musk was initially chairman of the supervisory board before becoming CEO—did not fare much better. All of Musk’s announcements that he would soon be able to mass-produce electric cars proved too optimistic. Technical difficulties brought the company to the brink of bankruptcy in 2008. It was rescued at the last second by an investor.
With his last ounce of strength and literally his last dollar, Musk was able to save both companies, and he did so in the crisis year of 2008 when all investors were withdrawing. As Musk ran out of money, he had to borrow it from friends to make ends meet. The competition laughed at the newcomer. Many thought he just had a big mouth but could not actually accomplish anything. The tide turned in the years that followed, to the surprise of many.
Learning from Musk’s Example
It is not necessarily advisable to imitate successful business personalities, but we can learn a lot from them. For example, Musk was able to cleverly exploit the weaknesses of an often bureaucratic and cumbersome industry by implementing new things faster and becoming more independent of other manufacturers. Musk does not think in terms of short-term successes, but in the long term. The South African entrepreneur also benefited from his naivety combined with a good amount of stubbornness, not misled by cautious voices—and along with these qualities, he has always been served by his own expertise. Musk studied physics and became an expert in space travel, electric cars, and solar energy. Musk does not lose his nerve in emergency situations but keeps a cool head. Some even think he works better under pressure. The best university graduates and scientists these days want to work for Musk. Many of them have been doing so enthusiastically for years, because they can make a bigger difference working for him than anywhere else.
One could argue that so far, Musk has only produced toys for rich people. His products are certainly too expensive to be suitable for the masses in the way Facebook is. But, as Ludwig von Mises wrote, today’s luxury goods are tomorrow’s mass consumption. This was the case with all the technical achievements of the past 200 years. There is reason to suggest that it will be the same in this case.
It pays for an economy to attract creative minds like Musk. His success story shows that in free competition, even start-ups that initially appear to have no chance can compete with existing monopolies. Friedrich Hayek characterized competition as a discovery process. Of course, he was thinking of what happens in competition everywhere day in and day out, not just with eccentrics. Elon Musk, however, demonstrates the great discovery potential of competition in an especially vivid way. According to the Spanish economics professor Jesús Huerta de Soto, who relies on Hayek for this, entrepreneurial activity is “creative in its essence.” It first takes place “in thought” and “creates new information that did not exist before.” Musk has demonstrated this in many ways.
Elon Musk reaches for the stars. Whether he will reach all his goals is written in those same stars. Many people do not like Musk because of his behavior—for understandable reasons. But they won’t be laughing at him anymore.
Translation from German by Thomas and Kira Howes.
