It was both correct and costly

Sunday, February 25th, 2024

Elon Musk by Walter Isaacson “We only get to release our first car once,” Musk told Eberhard, Tesla’s CEO at the time, “so we want it to be as good as it can be.” Walter Isaacson explains (in his biography of Elon), how this played out:

One major design revision that Musk made was to insist that the door of the Roadster be enlarged. “In order to get in the car, you had to be a dwarf mountain climber or a master contortionist,” he says. “It was insane, farcical.” The six-foot-two-inch Musk found he had to swing his rather large butt into the seat, fold himself into nearly a fetal position, then try to swing his legs in. “If you’re going on a date, how is a woman even going to get in the car?” he asked. So he ordered that the bottom of the door’s frame be lowered three inches. The resulting redesign of the chassis meant that Tesla could not use the crash-test certification that Lotus had, which added $2 million to the production costs. Like many of Musk’s revisions, it was both correct and costly.

Musk also ordered that the seats be made wider. “My original idea was to use the same seat structures that Lotus used,” Eberhard says. “Otherwise, we would have to redo all the testing. But Elon felt that the seats were too narrow for his wife’s butt or something. I got a skinny butt, and I kind of miss the narrow seats.”

Musk also decided that the original Lotus headlights were ugly because they had no cover or shield. “It made the car look bug-eyed,” he says. “The lights are like the eyes of a car, and you have to have beautiful eyes.” That change would add another $ 500,000 to the production costs, he was told. But he was adamant. “If you’re buying a sports car, you’re buying it because it’s beautiful,” he told the team. “So this is not a small deal.”

Instead of the fiberglass composite material that Lotus used, Musk decided that the Roadster body should be made from stronger carbon fiber. That made it costlier to paint, but it also made it lighter while feeling more solid.

[…]

No detail was too small to escape Musk’s meddling. The Roadster originally had ordinary door handles, the kind that click open a latch. Musk insisted on electric handles that would operate with a simple touch. “Somebody who’s buying a Tesla Roadster will buy it whether it has ordinary door latches or electric ones,” Eberhard argued. “It’s not going to add a single unit to our sales.”

[…]

Eberhard finally got pushed to despair when, near the end of the design process, Musk decided that the dashboard was ugly. “This is a major issue and I’m deeply concerned that you do not recognize it as such,” Musk wrote. Eberhard tried to put him off, begging that they deal with the issue later. “I just don’t see a path — any path at all — to fixing it prior to start of production without a significant cost and schedule hit,” he wrote. “I stay up at night worrying about simply getting the car into production sometime in 2007…. For my own sanity’s sake and for the sanity of my team, I am not spending a lot of cycles thinking about the dashboard.”

[…]

By modifying so many elements, Tesla lost the cost advantages that came from simply using a crash-tested Lotus Elise body. It also added to the supply-chain complexity. Instead of being able to rely on Lotus’s existing suppliers, Tesla became responsible for finding new sources for hundreds of components, from the carbon fiber panels to the headlights. “I was driving the Lotus people crazy,” Musk says. “They kept asking me why I was being so hardcore about every little curve of this car. And what I told them was, ‘Because we have to make it beautiful.’”

All requirements should be treated as recommendations

Sunday, February 18th, 2024

Elon Musk by Walter IsaacsonWhenever one of Musk’s engineers cited “a requirement” as a reason for doing something, Walter Isaacson explains (in his biography of Elon), Musk would grill them:

Who made that requirement? And answering “The military” or “The legal department” was not good enough. Musk would insist that they know the name of the actual person who made the requirement. “We would talk about how we were going to qualify an engine or certify a fuel tank, and he would ask, ‘Why do we have to do that?’ ” says Tim Buzza, a refugee from Boeing who would become SpaceX’s vice president of launch and testing. “And we would say, ‘There is a military specification that says it’s a requirement.’ And he’d reply, ‘Who wrote that? Why does it make sense?’ ” All requirements should be treated as recommendations, he repeatedly instructed. The only immutable ones were those decreed by the laws of physics.

When Mueller was working on the Merlin engines, he presented an aggressive schedule for completing one of the versions. It wasn’t aggressive enough for Musk. “How the fuck can it take so long?” he asked. “This is stupid. Cut it in half.”

Mueller balked. “You can’t just take a schedule that we already cut in half and then cut it in half again,” he said. Musk looked at him coldly and told him to stay behind after the meeting. When they were alone, he asked Mueller whether he wanted to remain in charge of engines. When Mueller said he did, Musk replied, “Then when I ask for something, you fucking give it to me.”

Mueller agreed and arbitrarily cut the schedule in half. “And guess what?” he says. “We ended up developing it in about the time that we had put in that original schedule.” Sometimes Musk’s insane schedules produced the impossible, sometimes they didn’t. “I learned never to tell him no,” Mueller says. “Just say you’re going to try, then later explain why if it doesn’t work out.”

[…]

The sense of urgency was good for its own sake. It made his engineers engage in first-principles thinking. But as Mueller points out, it was also corrosive. “If you set an aggressive schedule that people think they might be able to make, they will try to put out extra effort,” he says. “But if you give them a schedule that’s physically impossible, engineers aren’t stupid. You’ve demoralized them. It’s Elon’s biggest weakness.”

Steve Jobs did something similar. His colleagues called it his reality-distortion field. He set unrealistic deadlines, and when people balked, he would stare at them without blinking and say, “Don’t be afraid, you can do it.” Although the practice demoralized people, they ended up accomplishing things that other companies couldn’t. “Even though we failed to meet most schedules or cost targets that Elon laid out, we still beat all of our peers,” Mueller admits. “We developed the lowest-cost, most awesome rockets in history, and we would end up feeling pretty good about it, even if Dad wasn’t always happy with us.”

After a few years, SpaceX was making in-house 70 percent of the components of its rockets.

Sunday, February 11th, 2024

Elon Musk by Walter IsaacsonMusk was laser-focused on costs, Walter Isaacson explains (in his biography of Elon):

He challenged the prices that aerospace suppliers charged for components, which were usually ten times higher than similar parts in the auto industry.

His focus on cost, as well as his natural controlling instincts, led him to want to manufacture as many components as possible in-house, rather than buy them from suppliers, which was then the standard practice in the rocket and car industries. At one point SpaceX needed a valve, Mueller recalls, and the supplier said it would cost $ 250,000. Musk declared that insane and told Mueller they should make it themselves. They were able to do so in months at a fraction of the cost. Another supplier quoted a price of $ 120,000 for an actuator that would swivel the nozzle of the upper-stage engines. Musk declared it was not more complicated than a garage door opener, and he told one of his engineers to make it for $ 5,000. Jeremy Hollman, one of the young engineers working for Mueller, discovered that a valve that was used to mix liquids in a car wash system could be modified to work with rocket fuel.

After a supplier delivered some aluminum domes that go on top of the fuel tanks, it jacked up the price for the next batch. “It was like a painter who paints half your house for one price, then wants three times that for the rest,” says Mark Juncosa, who became Musk’s closest colleague at SpaceX. “That didn’t make Elon too enthusiastic.” Musk referred to it as “going Russian” on him, as the rocket hucksters in Moscow had done. “Let’s go do this ourselves,” he told Juncosa. So a new part of the assembly facility was added to build domes. After a few years, SpaceX was making in-house 70 percent of the components of its rockets.

It is a perfect target for digital destruction

Wednesday, February 7th, 2024

Burn Book by Kara SwisherKara Swisher was a reporter at the Washington Post in the early 1990s, where, at age 30, she was the “young” person in the newsroom, so she had to cover digital media:

During that period, I made one prediction that started coming true much more quickly than even I expected. This was about the end of old media, starting with the destruction of one of its most important economic pillars: the classified ads in newspapers.

In 1995, a quirky programmer in San Francisco named Craig Newmark started emailing friends a list of local events, job opportunities, and things for sale. The next year, he turned Craigslist into a web-based service and eventually started expanding it all over the country and the world.

It was clear this list was a giant killer, and I told everyone who would listen to me at the Post that we needed to put all the money, all the people, and all the incentives into digital. I insisted that the bosses had to make readers feel like digital was the most important thing. But the bosses never did because the business they knew was the physical paper. I relayed my worries about the turtle pace of digital change many times to the Washington Post Company’s affable CEO, Don Graham, the son of legendary publisher and surprisingly entertaining badass Katharine Graham. Don Graham was inexplicably humble and even sheepish about his power. The very worst thing that Graham — always apologetic for having interrupted me, as I strafed big retail advertisers in my stories about the sector’s decline locally — would say to me was “Ouch.” Then he would saunter away from my desk with a jaunty wave. And while Graham was interested when I talked about what Newmark was doing, he laughed when I told him that Craigslist would wipe out his classifieds business.

“You charge too much, the customer service sucks, it’s static, and most of all, it doesn’t work,” I lectured him about this business, which was crucial to his bottom line. “It will disappear as an analog product, since it is a perfect target for digital destruction. You’re going to die by the cell and not even know it until it’s over and you’re dead on the ground.”

Don smiled at me with a kindness I certainly did not deserve at that moment. “Ouch,” he said.

The Post, of course, is now owned by a tech mogul, Jeff Bezos, and other Silicon Valley machers have taken over or invested heavily in legacy media, but they have not prevented its relentless decline, or the hemorrhaging of thousands of jobs from the industry in just the past few years, as the digital world has both sucked up and diminished print business models.

Rockets had an extremely high idiot index

Sunday, February 4th, 2024

Elon Musk by Walter Isaacson“I was pretty mad,” Elon Musk said about his failed attempt to buy Russian rockets, “and when I get mad I try to reframe the problem.” Walter Isaacson explains (in his biography of Elon) how Musk employed first-principles thinking:

This led him to develop what he called an “idiot index,” which calculated how much more costly a finished product was than the cost of its basic materials. If a product had a high idiot index, its cost could be reduced significantly by devising more efficient manufacturing techniques.

Rockets had an extremely high idiot index. Musk began calculating the cost of carbon fiber, metal, fuel, and other materials that went into them. The finished product, using the current manufacturing methods, cost at least fifty times more than that.

[…]

So on the flight home, he pulled out his computer and started making spreadsheets that detailed all of the materials and costs for building a midsize rocket.

[…]

“Hey, guys,” he said, showing them the spreadsheet, “I think we can build this rocket ourselves.” When Cantrell looked at the numbers, he said to himself, “I’ll be damned — that’s why he’s been borrowing all my books.”

Vacations will kill you

Sunday, January 28th, 2024

Elon Musk by Walter IsaacsonMusk’s ouster as PayPal CEO allowed him to have his first weeklong holiday from work, Walter Isaacson explains (in his biography of Elon):

After getting back to Palo Alto in January 2001, Musk started feeling dizzy. His ears were ringing, and he had recurring waves of chills. So he went to the Stanford Hospital emergency room, where he started throwing up. A spinal tap showed he had a high white blood cell count, which led the doctors to diagnose him with viral meningitis. It’s generally not a severe disease, so the doctors rehydrated him and sent him home.

Over the next few days he felt progressively worse and at one point was so weak he could barely stand. So he called a taxi and went to a doctor. When she tried to take his pulse, it was barely perceptible. So she called an ambulance, which took him to Sequoia Hospital in Redwood City. A doctor who was an expert in infectious diseases happened to walk past Musk’s bed and realized that he had malaria, not meningitis. It turned out to be falciparum malaria, the most dangerous form, and they had caught it just in time. After symptoms become severe, as they had in Musk’s case, patients often have only a day or so before the parasite becomes untreatable. He was put into intensive care, where doctors stabbed a needle into his chest for intravenous infusions followed by massive doses of doxycycline.

The head of human resources at X.com went to visit Musk in the hospital and sort out his health insurance. “He was actually only hours from death,” the executive wrote in an email to Thiel and Levchin. “His doctor had treated two cases of falciparum malaria prior to treating Elon—both patients died.” Thiel remembers that he had a morbid conversation with the HR director after learning that Musk had taken out, on behalf of the company, a key-man life insurance policy for $ 100 million. “If he had died,” Thiel says, “all of our financial problems were going to be solved.”

[…]

Musk remained in intensive care for ten days, and he did not fully recover for five months. He took two lessons from his near-death experience: “Vacations will kill you. Also, South Africa. That place is still trying to destroy me.”

Entrepreneurs are actually not risk takers

Sunday, January 21st, 2024

Elon Musk by Walter IsaacsonWhat struck Elon Musk’s colleagues at PayPal, Walter Isaacson explains (in his biography of Elon), was his willingness, even desire, to take risks:

“Entrepreneurs are actually not risk takers,” says Roelof Botha. “They’re risk mitigators. They don’t thrive on risk, they never seek to amplify it, instead they try to figure out the controllable variables and minimize their risk.” But not Musk. “He was into amplifying risk and burning the boats so we could never retreat from it.” To Botha, Musk’s McLaren crash was like a metaphor: floor it and see how fast it goes.

That made Musk fundamentally different from Thiel, who always focused on limiting risks. He and Hoffman once planned to write a book on their experience at PayPal. The chapter on Musk was going to be titled “The Man Who Didn’t Understand the Meaning of the Word ‘Risk.’ ” Risk addiction can be useful when it comes to driving people to do what seems impossible. “He’s amazingly successful getting people to march across a desert,” Hoffman says. “He has a level of certainty that causes him to put all of his chips on the table.”

It was like walking into a mob scene

Sunday, January 14th, 2024

Elon Musk by Walter IsaacsonIn the early days of PayPal, Walter Isaacson explains (in his biography of Elon), Musk and Michael Moritz went to New York to see if they could recruit Rudy Giuliani to be a “political fixer” for becoming a bank:

But as soon as they walked into his office, they knew it would not work. “It was like walking into a mob scene,” Moritz says. “He was surrounded by goonish confidantes. He didn’t have any idea whatsoever about Silicon Valley, but he and his henchmen were eager to line their pockets.” They asked for 10 percent of the company, and that was the end of the meeting. “This guy occupies a different planet,” Musk told Moritz.

Users will have the option to pay $3 a month to remove the ads

Wednesday, January 10th, 2024

On Jan. 29, Amazon will turn on ads for all of its Prime Video viewers:

Users will have the option to pay $3 a month to remove the ads, but as the executive quips: “Almost no one will do that, are you kidding me?”

[…]

Amazon, run by Andy Jassy, has always been coy about just how many Prime subscribers it has (the last official number, in 2021, was “more than 200 million”), but no one disputes that its reach is almost unrivaled. Consumer Intelligence Research Partners estimates that there are about 168 million Prime subs in the U.S. alone, as of 2023.

If just half those subs watch Prime Video content, it would be comparable to Netflix’s penetration in the U.S. (77 million) and significantly more subs than the likes of Hulu, Peacock or Paramount+.

Data from Nielsen reinforces that: While Netflix and YouTube take up the lion’s share of viewing time, Prime Video is extremely competitive. The latest Nielsen Gauge reported that 3.4 percent of TV viewing in November was Prime Video, compared to 2.7 percent for Hulu, 7.4 percent for Netflix and 9 percent for YouTube.

The Gauge certainly suggests that if Hulu has just shy of 50 million subscribers, as Disney has reported, then Amazon is at least in the same ballpark in terms of Prime subs that watch video content.

Most Netflix users, however, are not subscribing to the ad tier (the company said in November it had only 15 million “active users” of the tier), while some Hulu subcribers also opt out of ads.

That scale, in both subscriber reach and real viewership, has analysts thinking that Amazon will be able to quickly scoop up billions of ad dollars. Bank of America’s Justin Post estimated in a Jan. 3 note that the company will ultimately generate $3 billion in new ad revenue from the switch, and nearly $5 billion when accounting for users who opt to pay not to see ads. LightShed’s Rich Greenfield estimates that the company will hit $2 billion in ad revenue this year. Both analysts assume that the overwhelming majority of users will opt not to pay extra to remove the ads.

Percentage of households without pay TV.jpeg

Kevin Krim, CEO of the ad measurement firm EDO, estimates that Amazon could see a CPM (the cost per thousand consumers who see an ad) of about $50, below what Netflix sought when it got into advertising a little over a year ago, but still “a big premium to linear TV.”

It was a race to see who would run out of money last

Sunday, December 31st, 2023

Elon Musk by Walter IsaacsonElon Musk developed viral marketing techniques for X.com, Walter Isaacson explains (in his biography of Elon), including bounties for users who signed up friends, and he had a vision of making X.com both a banking service and a social network:

Like Steve Jobs, he had a passion for simplicity when it came to designing user interface screens. “I honed the user interface to get the fewest number of keystrokes to open an account,” he says. Originally there were long forms to fill out, including providing a social security number and home address. “Why do we need that?” Musk kept asking. “Delete!” One important little breakthrough was that customers didn’t need to have user names; their email address served that purpose.

One driver of growth was a feature that they originally thought was no big deal: the ability to send money by email. That became wildly popular, especially on the auction site eBay, where users were looking for an easy way to pay strangers for purchases.

As Musk monitored the names of new customers signing up, one caught his eye: Peter Thiel. He was one of the founders of a company named Confinity that had been located in the same building as X.com and was now just down the street. Both Thiel and his primary cofounder Max Levchin were as intense as Musk, but they were more disciplined. Like X.com, their company offered a person-to-person payment service. Confinity’s version was called PayPal.

[…]

“It was this crazy competition where we both had insane dollar bonuses to get customers to sign up and refer friends,” says Thiel. As Musk later put it, “It was a race to see who would run out of money last.”

[…]

Thiel asked him how he envisioned potential merger terms. “We would own ninety percent of the merged company and you would own ten percent,” Musk replied. Levchin was not quite sure what to make of Musk. Was he serious? They had roughly equal user bases. “He had an extremely serious I’m-not-joking look on his face, but underneath there seemed to be an ironic streak,” Levchin says. As Musk later conceded, “We were playing a game.”

After the PayPal team left the lunch, Levchin told Thiel, “This will never hunt, so let’s move on.” Thiel, however, was better at reading people. “This is just an opening,” he told Levchin. “You just have to be patient with a guy like Elon.”

The courtship continued through January 2000, causing Musk to postpone his honeymoon with Justine. Michael Moritz, X.com’s primary investor, arranged a meeting of the two camps in his Sand Hill Road office. Thiel got a ride with Musk in his McLaren.

“So, what can this car do?” Thiel asked.

“Watch this,” Musk replied, pulling into the fast lane and flooring the accelerator.

The rear axle broke and the car spun around, hit an embankment, and flew in the air like a flying saucer. Parts of the body shredded. Thiel, a practicing libertarian, was not wearing a seatbelt, but he emerged unscathed. He was able to hitch a ride up to the Sequoia offices. Musk, also unhurt, stayed behind for a half-hour to have his car towed away, then joined the meeting without telling Harris what had happened. Later, Musk was able to laugh and say, “At least it showed Peter I was unafraid of risks.” Says Thiel, “Yeah, I realized he was a bit crazy.”

Musk prowled the office each day

Sunday, December 24th, 2023

Elon Musk by Walter Isaacson>One of Elon Musk’s management tactics at X.com, Walter Isaacson explains (in his biography of Elon), was to set an insane deadline and drive colleagues to meet it:

He did that in the fall of 1999 by announcing, in what one engineer called “a dick move,” that X.com would launch to the public on Thanksgiving weekend. In the weeks leading up to that, Musk prowled the office each day, including Thanksgiving, in a nervous and nervous-making frenzy, and slept under his desk most nights. One of the engineers who went home at 2 a.m. Thanksgiving morning got a call from Musk at 11 a.m. asking him to come back in because another engineer had worked all night and was “not running on full thrusters anymore.” Such behavior produced drama and resentments, but also success. When the product went live that weekend, all the employees marched to a nearby ATM, where Musk inserted an X.com debit card. Cash whirred out and the team celebrated.

It would be a one-stop everything-store for all financial needs

Sunday, December 17th, 2023

Elon Musk by Walter IsaacsonElon Musk’s experience at Scotiabank had convinced him that the industry was ripe for disruption, Walter Isaacson explains (in his biography of Elon), so in March 1999, he founded X.com with a friend from the bank, Harris Fricker:

The balance he struck was to invest $12 million in X.com, leaving about $4 million after taxes to spend on himself.

His concept for X.com was grand. It would be a one-stop everything-store for all financial needs: banking, digital purchases, checking, credit cards, investments, and loans. Transactions would be handled instantly, with no waiting for payments to clear. His insight was that money is simply an entry into a database, and he wanted to devise a way that all transactions were securely recorded in real time. “If you fix all the reasons why a consumer would take money out of the system,” he says, “then it will be the place where all the money is, and that would make it a multitrillion-dollar company.”

[…]

“X” would become his go-to letter for naming things, from companies to kids.

She has no redeeming features

Sunday, December 10th, 2023

Elon Musk by Walter IsaacsonElon Musk’s mother Maye described his girlfriend Justine, Walter Isaacson explains (in his biography of Elon), as having no redeeming features:

“When he told me he was going to marry her, I did an intervention,” Kimbal says. “I was like, ‘Don’t, you must not, this is the wrong person for you.’ ” Navaid Farooq, who had been with Musk at the party when he first met Justine, tried to stop him as well. But Musk loved both Justine and the turmoil. The wedding was scheduled for a weekend in January 2000 on the Caribbean island of Saint Martin.

Musk flew in the day before with a prenuptial agreement his lawyers had written. He and Justine drove around the island looking for a notary who would witness it on a Friday evening, but they couldn’t find one. She promised that she would sign it when they returned (she ended up doing so two weeks later), but the conversation sparked a lot of tension. “I think he felt very nervous about getting married and not having this thing signed,” she says. That precipitated a fight, and Justine got out of the car and walked to find some of her friends. Later that night, they got back together in the villa but continued fighting. “The villas were open-air, so all of us could hear the row,” Farooq says, “and we didn’t know what to do about it.” At one point Musk stalked out and told his mother that the wedding was off. She was relieved. “Now you won’t be miserable,” she told him. But then he changed his mind and returned to Justine.

The tension continued the next day. Kimbal and Farooq tried to convince Musk to let them whisk him away to the airport so he could escape. The more they insisted, the more intransigent he became. “No, I’m marrying her,” he declared.

[…]

Then, as they danced, he whispered to her a reminder: “I am the alpha in this relationship.”

His only indulgence was allowing breaks for intense video-game binges

Sunday, December 3rd, 2023

Elon Musk by Walter IsaacsonFrom the very beginning of his career, Musk was a demanding manager, Walter Isaacson explains (in his biography of Elon), contemptuous of the concept of work-life balance:

At Zip2 and every subsequent company, he drove himself relentlessly all day and through much of the night, without vacations, and he expected others to do the same. His only indulgence was allowing breaks for intense video-game binges. The Zip2 team won second place in a national Quake competition. They would have come in first, he says, but one of them crashed his computer by pushing it too hard.

When the other engineers went home, Musk would sometimes take the code they were working on and rewrite it. With his weak empathy gene, he didn’t realize or care that correcting someone publicly — or, as he put it, “fixing their fucking stupid code” — was not a path to endearment. He had never been a captain of a sports team or the leader of a gang of friends, and he lacked an instinct for camaraderie. Like Steve Jobs, he genuinely did not care if he offended or intimidated the people he worked with, as long as he drove them to accomplish feats they thought were impossible. “It’s not your job to make people on your team love you,” he said at a SpaceX executive session years later. “In fact, that’s counterproductive.”

He was toughest on Kimbal. “I love, love, love my brother very much, but working with him was hard,” Kimbal says. Their disagreements often led to rolling-on-the-office-floor fights. […] “Growing up in South Africa, fighting was normal,” Elon says. “It was part of the culture.” They had no private offices, just cubicles, so everyone had to watch. In one of their worst fights, they wrestled to the floor and Elon seemed ready to punch Kimbal in the face, so Kimbal bit his hand and tore off a hunk of flesh. Elon had to go to the emergency room for stitches and a tetanus shot. “When we had intense stress, we just didn’t notice anyone else around us,” says Kimbal. He later admitted that Elon was right about Zip2. “It was a shitty name.”

Elon scuttled a potential merger and demanded to be made CEO again:

“Great things will never happen with VCs or professional managers,” Musk told Inc. Magazine. “They don’t have the creativity or the insight.” One of the Mohr Davidow partners, Derek Proudian, was installed as interim CEO and tasked with selling the company. “This is your first company,” he told Musk. “Let’s find an acquirer and make some money, so you can do your second, third, and fourth company.”

In January 1999, less than four years after Elon and Kimbal launched Zip2, Proudian called them into his office and told them that Compaq Computer, which was seeking to juice up its AltaVista search engine, had offered $307 million in cash. The brothers had split their 12 percent ownership stake 60–40, so Elon at age twenty-seven walked away with $22 million and Kimbal with $15 million. Elon was astonished when the check arrived at his apartment. “My bank account went from, like, $5,000 to $22,005,000,” he says.

The Musks gave their father $300,000 out of the proceeds and their mother $1 million. Elon bought an eighteen-hundred-square-foot condo and splurged on what for him was the ultimate indulgence: a $1 million McLaren F1 sports car, the fastest production car in existence.

You could not truly be the chief technology or product officer unless you were the CEO

Sunday, November 26th, 2023

Elon Musk by Walter IsaacsonFor the first six months of Zip2, Elon Musk and his brother Kimbal slept at the office, Walter Isaacson explains (in his biography of Elon), and showered at the YMCA:

Even after they moved in, Elon spent many nights in the office, crashing under his desk when he was exhausted from coding. “He had no pillow, he had no sleeping bag. I don’t know how he did it,” says Jim Ambras, an early employee. “Once in a while, if we had a customer meeting in the morning, I’d have to tell him to go home and shower.”

[…]

Errol Musk, not yet estranged from his sons, visited from South Africa and gave them $ 28,000 plus a beat-up car he bought for $ 500. Their mother, Maye, came from Toronto more often, bringing food and clothes. She gave them $ 10,000 and let them use her credit card because they had not been approved for one.

They got their first break when they visited Navteq, which had a database of maps. The company agreed to license it to the Musks for free until they started making a profit. Elon wrote a program that merged the maps with a listing of businesses in the area. “You could use your cursor and zoom in and move around the map,” says Kimbal. “That stuff is totally normal today, but it was mind-blowing to see that at the time. I think Elon and I were the first humans to see it work on the internet.” They named the company Zip2, as in “Zip to where you want to go.”

[…]

They bought a big frame for a computer rack and put one of their small computers inside, so that visitors would think they had a giant server. They named it “The Machine That Goes Ping,” after a Monty Python sketch. “Every time investors would come in, we showed them the tower,” Kimbal says, “and we would laugh because it made them think we were doing hardcore stuff.”

Maye flew from Toronto to help prepare for the meetings with venture capitalists, often staying up all night at Kinko’s to print the presentations. “It was a dollar a page for color, which we could barely afford,” she says. “We would all be exhausted except Elon. He was always up late doing the coding.”

[…]

They were soon astounded by an offer from Mohr Davidow Ventures to invest $ 3 million in the company. The final presentation to the firm was scheduled for a Monday, and that weekend Kimbal decided to make a quick trip to Toronto to fix their mother’s computer, which had broken. “We love our mom,” he explains. As he was leaving on Sunday to fly back to San Francisco, he got stopped by U.S. border officials at the airport who looked in his luggage and saw the pitch deck, business cards, and other documents for the company. Because he did not have a U.S. work visa, they wouldn’t let him board the plane. He had a friend pick him up at the airport and drive him across the border, where he told a less vigilant border officer that they were heading down to see the David Letterman show. He managed to catch the late plane from Buffalo to San Francisco, and made it in time for the pitch.

Mohr Davidow loved the presentation and finalized the investment. The firm also found an immigration lawyer to help the two Musks get work visas and gave them each $ 30,000 to purchase cars. Elon bought a 1967 Jaguar E-type. As a kid in South Africa, he had seen a picture of the car in a book on the best convertibles ever made, and he had vowed to buy one if he ever struck it rich. “It was the most beautiful car you could imagine,” he says, “but it broke down at least once a week.”

The venture capitalists soon did what they often do: bring in adult supervision to take over from the young founders. It had happened to Steve Jobs at Apple and to Larry Page and Sergey Brin at Google. Rich Sorkin, who had run business development for an audio equipment company, was made the CEO of Zip2. Elon was moved aside to chief technology officer. At first, he thought the change would suit him; he could focus on building the product. But he learned a lesson. “I never wanted to be a CEO,” he says, “but I learned that you could not truly be the chief technology or product officer unless you were the CEO.”