The Negotiation Book (by Steve Gates) - Summary

Preface

Negotiation is fundamental to your life and the way you distribute, create, protect, resolve, and manage anything of value. It is central to the viability of every business, for even non-profit-making organizations. It has delivered peace in war, resolved bedtime tantrums with our children, helped avoid millions of court cases, and has probably helped save a few marriages along the way too. It is how you resolve differences and form agreements based on mutually acceptable terms. It can represent the difference between viability and insolvency, profit making or loss, growth or decline; such is the power of the outcomes.

Chapter 1: So You Think You Can Negotiate?

“It is what we know already that often prevents us from learning.” - Claude Bernard

It is often difficult to work out how good a deal you really have secured following a negotiation. This would be far easier to work out if, when we reviewed our performance, self-justification was left out of the equation. Have you ever asked yourself: “If I had performed differently or taken different decisions, could I have secured a better deal?” It is easier to move on rather than reflect on our performance and consider the what and the why, and of course the resulting quality of the deal we finished up with. Learning something from each negotiation ensures that, where unplanned compromises have taken place, you take away some value from the experience. This requires honesty with yourself. The following four areas provide a useful frame of reference for review, and as preparation for your next negotiation.

The four challenges we face:

Challenge 1: This is all about you

So, the first challenge is you. It is people who negotiate; not machines, or companies. We all have prejudices, values, ideologies, preferences, pressures, objectives, and judgment, as will the other party in your negotiations. So one part of our journey will involve you understanding why your greatest challenge in negotiation is yourself and how, by nature, you naturally see the world from your perspective rather than that of others. The simple process of an exploratory meeting, patience, and seeking to work with someone rather than to assume and then impose ideas on that person, is key to understanding how others see the world and what their objectives are when you are both selling and negotiating. As an effective negotiator you need to be able to understand the dynamics of any situation from “inside” the other party’s head. Without this insight, you will remain in a state that we at The Gap Partnership call “being inside your own head,” which is a dangerous place to be during negotiation. If you really want to negotiate effectively, you first have to get your thinking this way round.

Challenge 2: There are no rules

In negotiation there are no rules. No set procedures, no cans or cannot(s). Negotiation is often likened to a game of chess – the difference being that in most negotiations you are not necessarily trying to beat an opponent, and are not restricted to alternate moves.

Challenge 3: Knowing when you have performed well

Have the humility to face such questions as:

• What might I have done differently?

• Might I have timed things differently?

• Might I have included other issues?

• Might I have tabled proposals that were better thought through?

• Might I have not agreed so easily at the end?

No good, bad, right, or wrong

In negotiation there is no good or bad, right or wrong. Negotiation is about doing things that are appropriate to each situation you face with the information as you see it at that moment in time.

Appropriateness

Knowing how a car was built and how it works does not make you a good driver. When driving with so many obstacles on the road, the challenge is to be able to maintain confidence, navigate, interpret, and, where necessary, respond to situations in the most appropriate way when there is no absolute answer that suits all situations.

The same applies to negotiation in business.

• Should you set out to compete or to work with the other party?

• Should you seek to manipulate the situation or collaborate instead?

• Should you trust them or work on being trusted by them?

• How will your options influence the balance of power?

• Is the perception of power and dependency between you and the other party based on reality?

Challenge 4: Nothing happens by accident

The essence of negotiation is doing what is appropriate for your circumstances. This means being conscious of everything that happens before, during, and after your negotiation. In negotiation, nothing happens by accident; everything happens for a reason.

Chapter 2 – The Negotiation Clock Face

To make sense of how different approaches to negotiation could serve us, and because each negotiation presents unique challenges, I developed a model called the Negotiation Clock Face.

The “engineering of variables”

The opportunity to build value through the “engineering of variables” and each party’s relationship with the other is more likely to take place where there is collaboration in play, that is, on the left-hand side of the clock. Collaboration of course requires some degree of common purpose, interest, or dependency between those involved. No matter how proactive or committed you are to developing a joint agreement, creating more value opportunities through negotiation requires the commitment of both parties, or such power on one side that the other has no option but to collaborate. Maximizing value through the engineering of variables need not be detrimental to the other party. They remain responsible for their actions and decisions as you remain responsible for yours. However, you should never allow complacency or the idea of fairness to affect your drive for improved terms as you will inevitably face resistance and challenge along the way, however you build your agreements.

The clock face, then, is a model for helping you, to determine what is “appropriate for each of your situations.” The clock face in simple terms defines capitalism. One way or another it reflects how most deals "get done". This model was designed to help negotiation practitioners differentiate between negotiations and consciously adopt the appropriate approach to each of their negotiations.

The clock face model is not good or bad, right or wrong, any more than north, south, east, or west is the right direction for any journey. It just “is” and, wherever capitalism exists, the clock face serves to offer a simple range of definitions within which your negotiations will take place. It is important to remember that the direction you take, decisions you make and results you achieve still remain y our responsibility. The clock face is simply a compass.

KEY TAKEAWAYS

There are no right or wrong ways to negotiate, and no fixed way of ensuring that you will always get the best agreement. The clock face helps to differentiate and recognize those behaviors and strategies in play and what these are likely to do to value, rather than simply suggesting a right way of negotiating, which would be highly exposing.

• The clock face simply serves as a compass to help you adopt the appropriate approach for each of your negotiations.

• Many negotiations will move around the clock during the negotiation, so never assume a constant.

• Your approach and behavior can help you to move the other party around the clock face to suit your preferred strategy.

• It’s easier to build and grow value cooperatively and collaboratively between 8 and 12 o’clock.

• The right-hand side of the clock face typically represents more competitive and transactional negotiations.

• Where the balance of power is strongly in favor of one party, the tendency is for the negotiation to take place or end up in the 1–6 o’clock environment.

Chapter 3 – Why Power Matters

So why is power so important in negotiations? Quite simply, it provides you with options and, if understood, will enable you to control where on the clock face your negotiation will take place.

• Holding the balance of power. If you hold the balance of power in your relationship(s), you have greater scope to control the agenda, the process, and ultimately influence the negotiation in your favor.

• Power to influence the climate, style, strategy, and possibilities. Power provides you with the opportunity to choose between being competitive or collaborative, depending on which suits your purpose and objectives.

HOW DOES POWER INFLUENCE NEGOTIATIONS?

Influencing factors - Those factors which have the greatest influence on where negotiations take place on the clock face are made up of the following:

1. The level of dependency.

Who needs who the most, or the level of dependency between both parties, directly influences the balance of power between you and those you negotiate with.

2. The power of the brand and the relative size of both parties.

Imagine you are responsible for selling an established mega-branded soft drink. You know that any retailer will sell more of your brand than their own brand or a lesser branded soft drink. The retailer accepts that margins will be lower due to the high investment in the brand itself, but this is offset by being able to sell higher quantities.

The retailer will probably sell their cheaper, higher-margin own brand as well, resulting in their overall product and margin mix being optimized.

Significant amounts of money are invested in building brands. As part of establishing the brands some manufacturers have even, for limited periods, supplied products to the distributors or retailers at no margin at all, or even at below cost. The aim here is to expose their product to the market as part of creating demand, brand awareness, and attracting market share. In the long term, brand power and the terms that can be negotiated with a strong brand will more than outweigh the market entry costs.

3. History/precedents.

History and precedents also play a part in influencing how people seek to rationalize and legitimize their position: “Last time we agreed to a discount of 15% on volumes in excess of $3 million so let’s start at 15%.”

Current terms can serve as the rationale for an anchoring position. Previous positions, all else remaining equal, serve to shape expectations.

4. Competitor activity and changing market conditions.

The unpredictability of change affects the degree to which people are prepared to commit and the level of risk they are prepared to accommodate. In other words, stability and certainty promote a basis for longer-term commitments. In our ever-changing and fast-paced world, the issue of change plays an important part in any negotiation, in terms of what is being discussed, the length of any agreement and which party is more exposed to the influence of uncontrollable change.

5. The party with more time.

Time and circumstances offer the greatest of power levers in negotiation. If you have been effective at getting inside the other party’s head and understand their time pressures, you will have more power to exert. How you choose to use this will depend on your objectives, the dependency within your relationship and the overall shape of the deal.

6. The nature of the product, service, or contract.

Negotiating a complex construction deal or business merger is, by its very nature, more challenging than buying a car from your local garage. Alternatively, agreeing a contract for IT services, by its very nature, requires a different type of process and agenda than, say, agreeing a settlement following a marriage breakdown. The different relationships in play and the nature of the outcomes required result in most negotiations being unique.

7. Personal relationships.

In every culture, relationships and trust play a part in the climate of negotiations. Building an understanding of each other’s position and needs through exploratory meetings is critical if broader agendas other than price are to be entertained. Most people prefer doing business with people they trust and respect.

KEY TAKEAWAYS

Power influences strategies and tactics employed, provides one party over another with more options and therefore advantages, yet should not be assumed. With the right strategy, those with the power stacked against them can still negotiate very good deals.

• The balance of power is not a constant and can easily move as time and circumstances or supply and demand dynamics change.

• Proactive positioning can help you create enough power to defend your position.

• Real and perceived power can be equally effective in gaining advantage.

• The common laws of capitalism do not always apply. It really does depend on whose head you are in.

• The stronger your options, the more powerful you become.

• If they have power, expect them to use it.

Chapter 4 – The Ten Negotiation Traits

1. NERVE

Believe in your position, never offend, and always remain calm.

Nerve helps us to exercise patience and to remain calm when the pressure is on.

2. SELF-DISCIPLINE

To understand what to do, and to do that which is appropriate.

Self-discipline: it’s an everyday term, yet in negotiation it requires you to separate your behavior from your feelings and emotions.

3. TENACITY

The negotiator's equivalent to stamina

The times you hear the words “no, can’t, won’t” are the occasions where you will have to turn to “how.” Rather than simply concede on the issue, you should examine the rejection from different perspectives to find out what other conditions or circumstances you could introduce as part of maintaining control and managing their expectations. For instance, in tennis if your opponent breaks your serve, you don’t give up on the set, you work harder in the next game to regain your position.

4. ASSERTIVENESS

Tell them what you will do, not what you won't do.

The best way to determine the future is to create it.

Being in control of the negotiation primarily comes from being proactive, and demonstrating confidence from being prepared and having a well-defined strategy. Then it’s about how well you perform.

5. INSTINCT

Trust it – you will be right more often than not

Instinct helps the Complete Skilled Negotiator:

• to hear not just what is being said but the meaning behind the words; and

• to gauge honesty, and sense if the deal is too good to be true or if there is more scope to negotiate.

6. CAUTION

If it seems too good to be true, it probably is.

7. CURIOSITY

Asking why because you want and need to know.

Effective questioning used to seek information and uncover facts, data and circumstances, which may be not be obvious or may even be concealed, must be a precursor to making any proposal.

• What are their priorities and why?

• What are their time pressures and why?

• What are their options and why?

• How might any of these be changed?

8. NUMERICAL REASONING

Know what it's really worth, know what it really costs.

9. CREATIVITY

Exploring and building on possibilities.

10. HUMILITY

It is people who make agreements and humility that breeds respect Exercising diplomacy and empathy during negotiations to help manage the appropriate climate sounds like common sense. However, with the tensions that can exist, it’s humility that often serves to bring discussions to an adult-to-adult level, cutting through the tactics and gamesmanship in play. Humility removes the need for ego to feature and helps you to demonstrate your intention of working with the other party, rather than against them, to create a mutually beneficial relationship.

KEY TAKEAWAYS

Some traits will be more reflective of you and your strengths than others. No individual trait will ensure better results, but understanding them and yourself offers you opportunity to become a truly outstanding negotiator.

• There is going to be some pressure, some tension, maybe even conflict. Control your nerve, stick with your plan, never off end, and always remain calm.

• Everything happens for a reason and they will try to influence you and your position. Keep your self-discipline and only act as you had planned.

• Some negotiations may wear you down. Your energy levels and tenacity will help you to get the best possible deal.

• Take control of your negotiation by exercising your assertiveness and self-assurance. Remain firm and yet engaging.

• Trust your instinct. If you think it could be too good to be true or if they are not to be trusted, don’t continue blindly. Recognize it and act accordingly.

• Before agreeing to any new terms, exercise caution by working out the potential consequences or hidden risks.

• Information is power. So, always use your curiosity and ask questions throughout your negotiation.

• Make the time to calculate options and alternatives using your numerical reasoning before and during the negotiation.

• Creativity, building on possibilities, and identifying synergies will help you to problem solve as well as optimize value.

• It is you who will make agreements and your humility that will promote the trust needed for your agreements to get across the line.

Chapter 5 – The Fourteen Behaviors that Make the Difference

“If all you have is a hammer in the toolbox, everything looks like a nail.” - Bernard Baruch

1. Think clearly when faced with conflict.

2. Do not allow your sense of fairness to influence behavior.

3. Maintain your self-control, use silence, and manage discomfort.

4. Open extreme yet realistically to shift their expectations.

5. Read their break point.

6. Listen and interpret the meaning behind the words.

7. Plan and prepare using all information available.

8. Question effectively.

9. Always trade concessions effectively and conditionally.

10. Apply analytical skills to manage the value of the deal as the negotiation unfolds.

11. Create and maintain the appropriate climate for trust.

12. Develop and use your agenda to help control the negotiation proceedings.

13. Think creatively to develop proposals which help move the deal forward.

14. Explore options to help gain agreement.

The first five behaviors are more commonly, although not exclusively, used on the right-hand side of the clock face (1–6 o’clock negotiations), yet the self-control associated with them can also underpin those behaviors used further around the clock face.

The next three behaviors are based on listening, planning, and questioning, and relate to all positions on the clock face.

The final six behaviors, which build on the former behaviors, help us to perform in more complex agreements where relationship, dependency, and total value are more important.

1. Think clearly when faced with conflict.

• Gather your thoughts and remove any emotion from your thinking; if you do not do this you will lose composure and will more likely underperform.

• Demand clarity as a condition of continuing.

• Remain focused on your purpose at all times.

• Control the negotiation by restating your position and letting them do the talking.

• If you are not sure about the deal or what it adds up to, then take time out. You can always return once you have taken time to consider your options.

2. Do not allow your sense of fairness to influence behavior.

• Aim to look for the optimum solution rather than simply a fair one.

• Remember that the easy, fair route to splitting the difference is rarely the optimum way to the best deal for all concerned.

• If the other party offers to split down the middle, it usually means that they would probably accept less.

• If you concede they will want more – all trade-offs should be conditional.

3. Maintain your self-control, use silence, and manage discomfort.

• Let the other party do the talking and focus your attention first on what they are saying, rather than thinking too much about how to respond.

• Listen to what the other party is saying in order to establish how far they will move from their current position.

• If you are not ready to make your proposal, either ask a question or say nothing.

4. Open extreme yet realistically to shift their expectations

The process will do three things for you.

1. First, it will help you to position your offer appropriately.

2. Second, it will help you to counter the position of the other party.

3. Third, it will ensure that you provide the other party with the satisfaction of having got a better deal than they believed was originally available.

• Ensure your opening position is extreme enough for them not to accept it – but not so extreme that they will immediately walk away.

• Make your position credible by cutting out any soft exposing statements: avoid the use of words like “around,” “in the region of,” “I was hoping for …,” “we were expecting …”

• Use a non-verbal reaction to their opening position – tactically known as the professional flinch, this is designed to clearly demonstrate to the other party your surprise at their position.

• Apply self-control when making your offer, state your figure – then shut up.

• Learn to be at ease with silence.

5. Read their break point

In any hard bargaining negotiation, you should define your break point first. That is:

• The point at which you have other options that you could take.

• The point at which the deal is not viable.

• The point at which you will walk, rather than do business.

You can read the other party’s limits through:

• the types of proposals they make;

• the language they use to justify their movements;

• the timescales they are working to; and

• the size and frequency of their concessions or counter proposals.

In practice:

• Remember you are negotiating with a person, not a company, and each will carry a set of circumstances that will be unique to them.

• Assess where their break point is by examining previous agreements (if you have dealt with them before), researching the market, and speaking to competitors.

• Identify the issues of high value to them and try to establish the issues in which they are prepared to be more flexible.

• One way of working out your own break point is to define your Best Alternative to a Negotiated Agreement (BATNA).

• Test your own assumptions by stating them as facts and waiting for their response.

6. Listen and interpret the meaning behind the words

• As a Complete Skilled Negotiator, understanding their position, priorities, interests, pressures, and needs is a critical part of your job.

• The value of listening is far greater than that which can be achieved by what you have to say.

• Listen and interpret their true position. How much do they need this deal? How many options do they really have? How dependent are they on an early decision?

• Think about why they are asking a particular question, and ask in return why this is important to them.

• Actively listen for information that will help you to progress the negotiation, rather than thinking about what you want to say next.

7. Plan and prepare using all information available

You should plan:

• what questions to ask;

• what position or statement to open with;

• what type of agenda to use;

• how to present your opening position;

• how to respond;

• what information they will need;

• when and where the meeting will be held;

• who needs to be involved; and

• when discussions will commence, and much more.

In practice:

• The time to start getting into their head is during your preparation.

• Focus your attention on each variable you are likely to discuss and be precise about the information you need or questions you plan to ask.

• Keep a record to simplify future planning.

• Involve others in your preparation – it will strengthen your discipline to plan in the first place, as well as keeping you grounded and objective in your assessments.

• Plan the agenda and map out the variables you can employ.

• Ensure you understand the values of the trade-offs involved against each of the variables from inside their head.

8. Question effectively

The following approach, STROB, enables you to plan out how you can extract more information than might otherwise be forthcoming. It helps you to create five open-ended questions which enable you to open up or expand your knowledge and understanding.

1. Examine broadening the SCOPE of the agreement as part of broadening or narrowing your relationship. This could include considering the longevity of the relationship, dependency, risk, or other factors, which create greater scope for maximizing value.

2. List the TERMS you think will feature and their relative value to them. This could include their basic requirements, issues, or could be related to how the individual negotiator will be measured.

3. List any issues they or you may regard as RISK related. This could include time scales, third-party relationships, market assumptions, etc.

4. List any/all of the OPTIONS you believe they may have if your negotiations run into difficulties. In the event of deadlock what would they do?

5. List the potential BARRIERS, issues, or objections that are likely to be presented.

QUESTION TYPES

• Contact questions help you to establish rapport: “How have you been since we last met? Did you have a good holiday? How is business?”

• Probing questions help you to seek further information: “What do you think about your competitor’s latest activities?”

• Interrogative questions help you to encourage them to think about solutions for themselves: “Why is that important to you?”

• Comparative questions help you to explore in detail: “What has business been like since the introduction of product A? How have things changed since your new promotion began?”

• Extension questions challenge: “How do you mean? How else could we do that? What are you thinking of specifically? What do you mean when you say …? How can you be sure of that?”

• Opinion seeking questions test their knowledge and thinking: “How do you feel about …? What do you think about …? What are your views on …?”

• Hypothetical questions help you to test their knowledge and thinking: “What if we were to order 500 units? What if we included all the costs? What if I paid you in advance?”

• Reflective/summary questions draw ideas together and test their understanding, and summarize what has been said: “So, you think that we need to introduce this new range? You think that the product will achieve X? As I understand it, you reckon that you can deliver it?”

• Closing questions help you to secure agreement: “When should we start – during May or at the beginning of June? I can deliver on the first or second week of that month; which would suit you best? How much?”

• Mirror questions serve to reverse the question and confirm the point: “We think we can deliver this for you.” “You think you can deliver this?”

• Leading questions help you to secure a desired answer. “You can’t deny that …? Isn’t it a fact that …? You wouldn’t say that …? It’s a great offer, isn’t it?”

• Rhetorical questions help you to prevent them from saying anything as they do not require an answer: “Do we really want to do that? And how did that happen?” Implying that you already know.

• Multiple questions help you to gain agreement to a package: “You did say that you could meet the deadline? Oh, and you will meet our specification and, ah, by the way, you can do this for us can’t you?”

• Closed questions help you to establish specific facts/information: “Will you do this? Have you the ability to deliver? Can you meet our requirements? Do you need help with this offer?”

In practice

• Use the STROB technique to put your questions into order of importance.

• Make a conscious effort to work on the different questioning types in order to maintain control.

• If they are reluctant to answer, try asking your question in a different way.

• Be careful to avoid being seen as interrogating – you’re likely to attract suspicion and resistance.

• Also be wary that you can sometimes give away your own interests unintentionally by the way you ask questions.

9. Always trade concessions effectively and conditionally

• Identify what is important to the other party through your planning and questioning.

• Build proposals that involve concessions of least cost to you, but greater value to them.

• Use “What if …?” questions to explore the value and measure reactions to particular suggestions.

• Always place your condition first, rather than the concession (i.e. “If you … then we …”) as they will be less likely to interrupt you in order to hear what’s in it for them.

• Be creative when identifying options for trading – change the shape of the deal rather than focusing on what can’t be done.

10. Apply analytical skills to manage the value of the deal as the negotiation unfolds

• Ensure that you understand the implications of the other party’s response in order to work out what your next proposal might be.

• Track your, and the other party’s proposals so that you can monitor each issue’s progress and movement.

• If you struggle with figures, take your time, or ensure you take someone as your “figures person”.

• Make it your business to qualify the worth of all the issues under discussion.

11. Create and maintain the appropriate climate for trust

• Trust takes time to build so patience is needed; yet it can be destroyed in a moment if you cross the other party.

• Offer information in a controlled and considered manner to demonstrate that you are prepared to be open and can be trusted.

• Drive at a broader agenda with the aim of building a sustainable agreement rather than engaging in a bruising battle over price.

12. Develop and use your agenda to help control the negotiation proceedings

• The broader the agenda, the greater scope there is for shaping the deal.

• Aim to trade off no more than three issues at a time.

• Watch out for hidden agenda points or “red herrings” introduced by the other party with the aim of trading off against them.

• Position price, fee, or cost about halfway down your agenda – too early and it can promote unnecessary friction; too late and it could limit room for maneuver.

• If you are going to “lose” or concede on an issue, then trade it conditionally and reluctantly – if it is truly important to the other party, they may give ground to secure it.

13. Think creatively to develop proposals that help move the deal forward

• Understand what is really important to them and why.

• Differentiate the people from the issues.

• Extend your mutual agenda to create more possible variables.

• Consider any risks involved and trade these off where possible.

• Identify low-cost, high-value trade-off opportunities.

14. Explore options to help gain agreement

• Convert thoughts of “no,” “can’t,” or “won’t” into “HOW,” no matter how frustrating this might feel at first.

• Take time to explore options and continuously consider the deal from their perspective.

• Use “positive energy” rather than “defensive energy” to explore options.

• Make use of the planning tools in Chapter 9 to help visualize possible or different relationships between the issues.

• Ask the question: “Under what circumstances could we bridge the difference?”

KEY TAKEAWAYS

The fourteen behaviors offer a framework for The Complete Skilled Negotiator to develop and perform across all types of negotiations effectively. The more conscious you become at using these skills, where appropriate, the more likely you are to optimize your negotiation opportunities.

• Understand the behaviors you need to employ to perform at your best. Different stages of the negotiation will require the use of different behaviors.

• Work out what your behavioral strengths are and compensate for those which do not come naturally.

• Planning and preparation (7) is the most important activity you will undertake so don’t “wing it.”

• Behaviors help you to understand how to perform but do not help you with the “why.” Be clear in your mind what you are trying to achieve and the various ways of arriving there.

• Disciplined behaviors alone will not make you an effective negotiator. You need to understand patience, nerve, power, and time before you can truly excel.

• Think as if you were inside their head – behave as an objective, conscious, competent negotiator.

• Comment on the link at the back of the book allowing the reader to profile themselves against the 14 behaviors and attract personal development recommendations.

Chapter 6 – The “E” Factor

Experienced negotiators:

• are conscious of what they are looking for;

• are calm in their thought process;

• are aware of the sensitivities in play; and

• send you the messages they want you to read.

The role of emotion: Emotion has its place when used in a considered and controlled manner:

• when the risks have been considered (walk out, outburst, deadlock);

• when its purpose is to attract a desired reaction; and

• when the seriousness of the issue needs conveying and you are confident that you will not ruin the chances of progress.

THE TELL-TALE SIGNS OF STRESS

Effective negotiators learn to adapt to becoming more comfortable with being uncomfortable. This is achieved through heightened levels of self-awareness and becoming experienced in doing what is necessary from an objective standpoint, rather than allowing themselves to be victims of their emotion.

If you witness negotiators exhibiting these fidgety types of behaviors it may well mean nothing, other than an adjustment of their position. Reading body language, tends only to be relevant when change, speed, or the timing of movement correlates with something that has happened. If the other party responds to your proposal immediately, insisting that they will not or cannot accept the offer, observe their physical behavior as they respond. It is likely there will be some emotion involved. It is possible they mean it but it is also possible that they don’t. Look for a correlation in body language or facial expressions if there is more than one of them negotiating. This is usually most recognizable when they are stating a position, rejecting a position, or making a statement.

• Listen to what they are saying, the way they are saying it, and what they do not say.

• Listen to whether they justify what they are saying.

• Listen to whether they go on to sell what they have just said.

BECOMING A CONSCIOUSLY COMPETENT NEGOTIATOR THROUGH UNDERSTANDING TA

Back in the 1950s, Dr. Eric Berne defined the ego states known to us today as transactional analysis (TA). In the book I’m OK, You’re OK, the author Thomas Harris analyzed Berne’s work, which was made up of definitions of ego states and how they affect the way we communicate with each other. These are defined as the roles of:

• parent (critical and nurturing);

• adult (sees the things as they are); and

• child (free and adaptive).

These are communication styles that we all use subconsciously whilst communicating with others. Within negotiation, these ego states resonate in the language and behavior used, which can directly impact on expectations, respect, irrationality, arrogance, and other attitudes exercised during discussions.

EMOTIONAL INTELLIGENCE

If there is one critical competency central to effective negotiation, I would suggest it is emotional intelligence. It underpins the balance of communication between you and those you negotiate with, and promotes the concept of negotiating from inside their head.

In his 1995 book, Emotional Intelligence, Daniel Goleman describes how emotional intelligence is made up of two parts. He claims that to be effective in business, you need to have a high level of self-awareness and self-control around your emotions and those of the other party:

• first, by understanding yourself, your intentions, your responses, and your own behavior;

• second, by understanding others and their feelings.

This is critical in negotiations because you are responsible for the feelings of those you negotiate with. Antagonize the other party and watch any hope of cooperation dissolve. Goleman goes on to describe the five “domains” of emotional intelligence:

1. Knowing our emotions.

2. Managing your own emotions.

3. Motivating yourself.

4. Recognizing and understanding other people’s emotions.

5. Managing relationships and the emotions of others.

THE ART OF LOSING

Negotiation is about the art of losing, or the art of letting others have your way. With your ego out of the way, and your attitude firmly focused on the outcome of the agreement, you are free to behave in any way you believe to be appropriate to your interests. Being what you need to be and doing what you need to do includes allowing the other party to enjoy the “symbols of success” whilst you focus on the total value of the agreement. This means understanding others and their needs and then trading off no more than you need to in order to optimize your net position. It means letting them win on items of less significance whilst you focus on the more significant, value-adding variables. You could argue that you cannot afford to set precedents by allowing them to win the psychological battle even on some issues (depending on whether there is an ongoing trading relationship or not), or that if you concede on certain issues they will expect this in the future. However, your job as a negotiator is also to help the other party to feel as though they have won.

KEY TAKEAWAYS

Careful planning ahead of your negotiation may help your confidence and provide you with considered options. However, emotional behavior and the actions of the other party, together with circumstantial changes, require nerve, self-awareness, and self-control, otherwise your composure and performance may be compromised.

• Understand yourself, your intentions, your responses, your emotions, and your own behavior.

• Try to understand the deal from inside the other party’s head and the priorities, interests, pressures, and emotions they will be feeling.

• Listen, understand, calculate, think, and slow down. It will increase your mental capacity and will make a real difference to your performance.

• Even where strong dependent relationships exist, with pressure and tension, emotion is never far away.

• Planning and preparation, starting with an agenda, will help you promote order, options, and more collaborative dialog.

• When unclear, feeling under pressure, or without the clarity you feel you need, take time out – otherwise you may find yourself facing the unintended consequences of your rash actions.

• Don’t be seduced by large concessions. Their extreme opening position may well have been designed to shock and then satisfy you.

• Keep your ego in check. Only then are you free to behave in any way you believe to be appropriate to your interests.

• Never take for granted how others may behave. Human beings under pressure can become irrational in thinking and in their behavior.

Chapter 7 – Authority and Empowerment

The Complete Skilled Negotiator will understand empowerment in terms of:

• how it can be used to protect you;

• how it affects your ability to be creative;

• how it affects your ability to build value; and

• how it affects the other party’s thinking and behavior.

The more empowered you are; the more risk you have to deal with.

EMPOWERMENT WITHIN TEAM ROLES

There are four distinct team roles that are typically adopted:

• the spokesperson;

• the figures person;

• the observer; and

• the leader.

Each is designed to help your team perform to the best of its varied abilities.

The spokesperson

The spokesperson is empowered. Their role is to:

• conduct most of the dialogue;

• table proposals within agreed parameters with the leader in the negotiation team; and

• trade variables on behalf of the team, while still needing to refer to their leader to get final agreement.

That is not to say that others should not or cannot talk, but they should do so through invitation from the spokesperson. The team is there to support the spokesperson.

The figures person

The figures person should not typically be involved in the dialog unless invited to do so. They:

• understand the implications of movement on each of the variables;

• advise on possibilities, calculate movements, possibilities, and proposals;

• understand the total value of the agreement at any given point in time; and

• advise the leader as the negotiation proceeds.

The observer

The observer is also disempowered. Their role is to:

• watch and monitor the other party;

• hear the things that others may be too preoccupied to hear;

• understand the motives, interests, and priorities of the other party; and

• read the size, timing, and nature of the moves that are taking place.

The purpose of the role is to help you to understand what is driving the other party. The observer is your eyes and ears in the room. They generally workout what’s happening in the room when others are too preoccupied.

The leader

The leader is usually the person with the greatest level of authority. They are the person who speaks least, but speaks loudest. Their role is to:

• set out the agenda and form the climate for the meeting;

• allow the spokesperson to manage the trading on behalf of the team; and

• summarize from time to time where clarity is required and make the final decision.

KEY TAKEAWAYS

Empowerment works just like authority. The more empowered you are; the more scope you have to negotiate. The positives are that with greater scope you can be more creative by working with a broader agenda and more variables. The negatives are that you can become exposed to pressure because you are empowered to say yes. In other words, it is often those with the authority who need protecting, which is why the act of negotiation is often delegated to others.

• Seek a higher authority as a way of disempowering yourself when necessary.

• Agree to whom and when you should escalate discussions or decision making before you start.

• Agree (and negotiate if necessary) the scope and parameters of your empowerment before you start.

• Always qualify the level of empowerment of those you are dealing with.

• When they say they are unable to agree, seek to escalate the matter to someone who can.

• Agreed team roles and discipline provides greater protection from tactics others may use.

• If you are empowered to negotiate around a broad range of variables, understand the value of each issue from inside the other party’s head.

Chapter 8 – Tactics and Values

KEY TAKEAWAYS

Influential tactics in negotiation have been used for thousands of years as a means of gaining leverage and advantage. They can be as subtle as providing misleading information or as blatant as an outright lie. As you never need to lie in negotiation, many tactics are regarded as a fast route to destroying trust.

• Recognize tactics being used and qualify them by challenging their consequences.

• The type of the tactics you use should be limited to how much trust and dependency you require in the relationship once the deal is done.

• The risk/benefit of employing tactics is something you must judge based on your own circumstances, objectives, motivation, and values.

• More than one tactic at a time will often be combined to increase pressure as others will seek to manipulate your actions.

• Performing as a conscious competent negotiator will help increase your awareness of the tactics in play and will help you recognize, qualify, challenge, and navigate through the gamesmanship.

Chapter 9 – Planning and Preparation that Helps You to Build Value

“There is only one good, knowledge and one evil, ignorance.” – Socrates

UNDERSTANDING VALUE

There are five things that can happen to value in negotiation. You can:

1. give it;

2. create it;

3. share it;

4. protect it; and

5. take it.

The three dynamics of value

In negotiation, as in business, the general offer is that you can have “it” quick, good, or cheap. Now pick any two.

THE SIX PRIMARY VARIABLES

There are six primary variables that tend to feature across any type of deal from business to politics. This helps to capture all the issues that are likely to affect the total value of your agreements. Once defined, you can use them to broaden out the scope of the agreement and to consider the consequences of performance around each of these variables. During your planning this also provides you with the opportunity to introduce a range of conditions linked to each variable.

1. Price, fee, or margin (how much will be paid).

2. Volume (how many, how much, or what types).

3. Delivery (when, where, response times).

4. Contract period (when it will start, how long it will run for, under what circumstances it will or can be terminated, when it will be reviewed, etc.).

5. Payment terms (when, how, currency, etc.).

6. Specification (what the product, service, or agreement will include, the quality, or how it will be supported).

List of planning tools:

KEY TAKEAWAYS

• Without preparation before you enter the “negotiation arena,” all the theory in the world (and indeed in this book!) will add up to nothing.

• Map out all the possible variables and value each from inside the other party’s head.

• Focus on the potential total value of your agreement.

• Identify ways you can change the shape of the deal, which allows the other party to move, in order to build solution-based proposals rather than seeking to simply drive down their terms.

• There are six primary variables that feature across most deals (price, payment, timing, specification, volume, delivery), which, once defined, can be used to introduce a range of risk-based conditions that you can link to each variable.

• Use the six negotiation planning tools to help scope the potential of your deal, work out the relative values, plan out your initial proposals, and then monitor the value of your agreement as your discussions unfold.

Final thoughts:

Negotiating effectively is firstly about accepting that it is only you who can influence the situations you are faced with. You can blame the market, personalities, timing, your options, the power balance, or any circumstance that you may think happens to be working against you, but ultimately it is you who can turn around situations (including deadlock situations) into workable and profitable deals.

Elon Musk (by Ashlee Vance) - Highlights

Chapter 1: Elon’s world

To bring to the light the entrepreneurial nature of Elon Musk, the book draws a comparison of Elon with the Steve Jobs. As in these lines:

"Musk’s ready willingness to tackle impossible things has turned him into a deity in Silicon Valley, where fellow CEOs like Page speak of him in reverential awe, and budding entrepreneurs strive “to be like Elon” just as they had been striving in years past to mimic Steve Jobs. Silicon Valley, though, operates within a warped version of reality, and outside the confines of its shared fantasy, Musk often comes off as a much more polarizing figure. He’s the guy with the electric cars, solar panels, and rockets peddling false hope. Forget Steve Jobs. Musk is a sci-fi version of P. T. Barnum who has gotten extraordinarily rich by preying on people’s fear and self-hatred."

~ * ~

"Yet, in the early part of 2012, the cynics like me had to take notice of what Musk was actually accomplishing. His once-beleaguered companies were succeeding at unprecedented things. SpaceX flew a supply capsule to the International Space Station and brought it safely back to Earth. Tesla Motors delivered the Model S, a beautiful, all-electric sedan that took the automotive industry’s breath away and slapped Detroit sober. These two feats elevated Musk to the rarest heights among business titans. Only Steve Jobs could claim similar achievements in two such different industries, sometimes putting out a new Apple product and a blockbuster Pixar movie in the same year. And yet, Musk was not done. He was also the chairman and largest shareholder of SolarCity, a booming solar energy company poised to file for an initial public offering. Musk had somehow delivered the biggest advances the space, automotive, and energy industries had seen in decades in what felt like one fell swoop."

~ * ~

"It was a Saturday, and the parking lot was full of cars. Inside of the Tesla offices, hundreds of young men were at work— some of them designing car parts on computers and others conducting experiments with electronics equipment on their desks. Musk’s uproarious laugh would erupt every few minutes and carry through the entire floor. When Musk came into the meeting room where I’d been waiting, I noted how impressive it was for so many people to turn up on a Saturday. Musk saw the situation in a different light, complaining that fewer and fewer people had been working weekends of late. “We’ve grown fucking soft,” Musk replied. “I was just going to send out an e-mail. We’re fucking soft.” (A word of warning: There’s going to be a lot of “fuck” in this book. Musk adores the word, and so do most of the people in his inner circle.) This kind of declaration seems to fit with our impressions of other visionaries. It’s not hard to imagine Howard Hughes or Steve Jobs chastising their workforce in a similar way. Building things— especially big things—is a messy business. In the two decades Musk has spent creating companies, he’s left behind a trail of people who either adore or despise him. During the course of my reporting, these people lined up to give me their take on Musk and the gory details of how he and his businesses operate."

~ * ~

Brief note about Musk’s companies:

Musk should have been part of the malaise that followed the Internet bubble burst. He jumped right into dot-com mania in 1995, when, fresh out of college, he founded a company called Zip2—a primitive Google Maps meets Yelp. That first venture ended up a big, quick hit. Compaq bought Zip2 in 1999 for $307 million. Musk made $22 million from the deal and poured almost all of it into his next venture, a start-up that would morph into PayPal. As the largest shareholder in PayPal, Musk became fantastically well-to-do when eBay acquired the company for $1.5 billion in 2002. Instead of hanging around Silicon Valley and falling into the same funk as his peers, however, Musk decamped to Los Angeles. The conventional wisdom of the time said to take a deep breath and wait for the next big thing to arrive in due course. Musk rejected that logic by throwing $100 million into SpaceX, $70 million into Tesla, and $10 million into SolarCity. Short of building an actual money-crushing machine, Musk could not have picked a faster way to destroy his fortune. He became a one-man, ultra-risk-taking venture capital shop and doubled down on making super-complex physical goods in two of the most expensive places in the world, Los Angeles and Silicon Valley. Whenever possible, Musk’s companies would make things from scratch and try to rethink much that the aerospace, automotive, and solar industries had accepted as convention.

With SpaceX, Musk is battling the giants of the U.S. military-industrial complex, including Lockheed Martin and Boeing. He’s also battling nations—most notably Russia and China. SpaceX has made a name for itself as the low-cost supplier in the industry. But that, in and of itself, is not really good enough to win. The space business requires dealing with a mess of politics, back-scratching, and protectionism that undermines the fundamentals of capitalism. Steve Jobs faced similar forces when he went up against the recording industry to bring the iPod and iTunes to market. The crotchety Luddites in the music industry were a pleasure to deal with compared to Musk’s foes who build weapons and countries for a living. SpaceX has been testing reusable rockets that can carry payloads to space and land back on Earth, on their launch pads, with precision. If the company can perfect this technology, it will deal a devastating blow to all of its competitors and almost assuredly push some mainstays of the rocket industry out of business while establishing the United States as the world leader for taking cargo and humans to space. It’s a threat that Musk figures has earned him plenty of fierce enemies. “The list of people that would not mind if I was gone is growing,” Musk said. “My family fears that the Russians will assassinate me.”

With Tesla Motors, Musk has tried to revamp the way cars are manufactured and sold, while building out a worldwide fuel distribution network at the same time. Instead of hybrids, which in Musk lingo are suboptimal compromises, Tesla strives to make all-electric cars that people lust after and that push the limits of technology. Tesla does not sell these cars through dealers; it sells them on the Web and in Apple-like galleries located in high-end shopping centers. Tesla also does not anticipate making lots of money from servicing its vehicles, since electric cars do not require the oil changes and other maintenance procedures of traditional cars. The direct sales model embraced by Tesla stands as a major affront to car dealers used to haggling with their customers and making their profits from exorbitant maintenance fees. Tesla’s recharging stations now run alongside many of the major highways in the United States, Europe, and Asia and can add hundreds of miles of oomph back to a car in about twenty minutes. These so-called supercharging stations are solar-powered, and Tesla owners pay nothing to refuel. While much of America’s infrastructure decays, Musk is building a futuristic end-to-end transportation system that would allow the United States to leapfrog the rest of the world. Musk’s vision, and, of late, execution seem to combine the best of Henry Ford and John D. Rockefeller.

With SolarCity, Musk has funded the largest installer and financer of solar panels for consumers and businesses. Musk helped come up with the idea for SolarCity and serves as its chairman, while his cousins Lyndon and Peter Rive run the company. SolarCity has managed to undercut dozens of utilities and become a large utility in its own right. During a time in which clean-tech businesses have gone bankrupt with alarming regularity, Musk has built two of the most successful clean-tech companies in the world. The Musk Co. empire of factories, tens of thousands of workers, and industrial might has incumbents on the run and has turned Musk into one of the richest men in the world, with a net worth around $10 billion.

Chapter 2: Africa

THE PUBLIC FIRST MET ELON REEVE MUSK IN 1984. The South African trade publication PC and Office Technology published the source code to a video game Musk had designed. Called Blastar, the science-fiction-inspired space game required 167 lines of instructions to run. This was back in the day when early computer users were required to type out commands to make their machines do much of anything. In that context, Musk’s game did not shine as a marvel of computer science but it certainly surpassed what most twelve-year-olds were kicking out at the time. Its coverage in the magazine netted Musk five hundred dollars and provided some early hints about his character. The Blastar spread on page 69 of the magazine shows that the young man wanted to go by the sci-fi-author-sounding name E. R. Musk and that he already had visions of grand conquests dancing in his head. The brief explainer states, “In this game you have to destroy an alien space freighter, which is carrying deadly Hydrogen Bombs and Status Beam Machines. This game makes good use of sprites and animation, and in this sense makes the listing worth reading.” (As of this writing, not even the Internet knows what “status beam machines” are.)

This chapter talks about the ancestry of Elon Musk.

Musk’s mind worked like magic to give him visual perceptions of his ideas and thoughts.

At five and six, he had found a way to block out the world and dedicate all of his concentration to a single task. Part of this ability stemmed from the very visual way in which Musk’s mind worked. He could see images in his mind’s eye with a clarity and detail that we might associate today with an engineering drawing produced by computer software. “It seems as though the part of the brain that’s usually reserved for visual processing—the part that is used to process images coming in from my eyes—gets taken over by internal thought processes,” Musk said. “I can’t do this as much now because there are so many things demanding my attention but, as a kid, it happened a lot. That large part of your brain that’s used to handle incoming images gets used for internal thinking.” Computers split their hardest jobs between two types of chips. There are graphics chips that deal with processing the images produced by a television show stream or video game and computational chips that handle general purpose tasks and mathematical operations. Over time, Musk has ended up thinking that his brain has the equivalent of a graphics chip. It allows him to see things out in the world, replicate them in his mind, and imagine how they might change or behave when interacting with other objects. “For images and numbers, I can process their interrelationships and algorithmic relationships,” Musk said. “Acceleration, momentum, kinetic energy—how those sorts of things will be affected by objects comes through very vividly.”

The most striking part of Elon’s character as a young boy was his compulsion to read. From a very young age, he seemed to have a book in his hands at all times. “It was not unusual for him to read ten hours a day,” said Kimbal. “If it was the weekend, he could go through two books in a day.” The family went on numerous shopping excursions in which they realized mid-trip that Elon had gone missing. Maye or Kimbal would pop into the nearest bookstore and find Elon somewhere near the back sitting on the floor and reading in one of his trancelike states.

A glimpse of Elon’s father, Errol:

Whenever the topic of Errol arrives, members of Elon’s family clam up. They’re in agreement that he is not a pleasant man to be around but have declined to elaborate. Errol has since been remarried, and Elon has two, younger half-sisters of whom he’s quite protective. Elon and his siblings seem determined not to bad-mouth Errol publicly, so as not to upset the sisters.

The basics are as follows: Errol’s side of the family has deep South African roots. The Musk clan can trace its presence in the country back about two hundred years and claim an entry in Pretoria’s first phone book. Errol’s father, Walter Henry James Musk, was an army sergeant. “I remember him almost never talking,” Elon said. “He would just drink whiskey and be grumpy and was very good at doing crossword puzzles.” Cora Amelia Musk, Errol’s mother, was born in England to a family famed for its intellectual genes. She embraced both the spotlight and her grandchildren. “Our grandmother had this very dominant personality and was quite an enterprising woman,” said Kimbal. “She was a very big influence in our lives.” Elon considered his relationship with Cora—or Nana, as he called her—particularly tight. “After the divorce, she took care of me quite a lot,” he said. “She would pick me up from school, and I would hang out with her playing Scrabble and that type of thing.”

On the surface, life at Errol’s house seemed grand. He had plenty of books for Elon to read from cover to cover and money to buy a computer and other objects that Elon desired. Errol took his children on numerous trips overseas. “It was an amazingly fun time,” said Kimbal. “I have a lot of fun memories from that.” Errol also impressed the kids with his intellect and dealt out some practical lessons. “He was a talented engineer,” Elon said. “He knew how every physical object worked.”

Both Elon and Kimbal were required to go to the sites of Errol’s engineering jobs and learn how to lay bricks, install plumbing, fit windows, and put in electrical wiring. “There were fun moments,” Elon said.

Errol was what Kimbal described as “ultra-present and very intense.” He would sit Elon and Kimbal down and lecture at them for three to four hours without the boys being able to respond. He seemed to delight in being hard on the boys and sucked the fun out of common childhood diversions. From time to time, Elon tried to convince his dad to move to America and often talked about his intentions to live in the United States later in life. Errol countered such dreams by trying to teach Elon a lesson. He sent the housekeepers away and had Elon do all the chores to let him know what it was like “to play American.”

While Elon and Kimbal declined to provide an exact recounting, they clearly experienced something awful and profound during those years with their father. They both talk about having to endure some form of psychological torture. “He definitely has serious chemical stuff,” said Kimbal. “Which I am sure Elon and I have inherited. It was a very emotionally challenging upbringing, but it made us who we are today.” Maye bristled when the subject of Errol came up. “Nobody gets along with him,” she said. “He is not nice to anyone. I don’t want to tell stories because they are horrendous. You know, you just don’t talk about it. There are kids and grandkids involved.” When asked to chat about Elon, Errol responded via e-mail: “Elon was a very independent and focused child at home with me. He loved computer science before anyone even knew what it was in South Africa and his ability was widely recognized by the time he was 12 years old. Elon and his brother Kimbal’s activities as children and young men were so many and varied that it’s difficult to name just one, as they travelled together with me extensively in S. Africa and the world at large, visiting all the continents regularly from the age of six onwards. Elon and his brother and sister were and continue to be exemplary, in every way a father could want. I’m very proud of what Elon’s accomplished.”

Errol copied Elon on this e-mail, and Elon warned me off corresponding with his father, insisting that his father’s take on past events could not be trusted. “He is an odd duck,” Musk said. But, when pressed for more information, Musk dodged. “It would certainly be accurate to say that I did not have a good childhood,” he said. “It may sound good. It was not absent of good, but it was not a happy childhood. It was like misery. He’s good at making life miserable—that’s for sure. He can take any situation no matter how good it is and make it bad. He’s not a happy man. I don’t know... fuck... I don’t know how someone becomes like he is. It would just cause too much trouble to tell you anymore.” Elon and Justine have vowed that their children will not be allowed to meet Errol.

Elon’s reaction when he got his first computer:

When Elon was nearly ten years old, he saw a computer for the first time, at the Sandton City Mall in Johannesburg. “There was an electronics store that mostly did hi-fi-type stuff, but then, in one corner, they started stocking a few computers,” Musk said. He felt awed right away— “It was like, ‘Whoa. Holy shit!’”—by this machine that could be programmed to do a person’s bidding. “I had to have that and then hounded my father to get the computer,” Musk said. Soon he owned a Commodore VIC-20, a popular home machine that went on sale in 1980. Elon’s computer arrived with five kilobytes of memory and a workbook on the BASIC programming language. “It was supposed to take like six months to get through all the lessons,” Elon said. “I just got super OCD on it and stayed up for three days with no sleep and did the entire thing. It seemed like the most super-compelling thing I had ever seen.” Despite being an engineer, Musk’s father was something of a Luddite and dismissive of the machine. Elon recounted that “he said it was just for games and that you’d never be able to do real engineering on it. I just said, ‘Whatever.’”

Elon’s childhood:

While bookish and into his new computer, Elon quite often led Kimbal and his cousins (Kaye’s children) Russ, Lyndon, and Peter Rive on adventures. They dabbled one year in selling Easter eggs door-to-door in the neighborhood. The eggs were not well decorated, but the boys still marked them up a few hundred percent for their wealthy neighbors. Elon also spearheaded their work with homemade explosives and rockets. South Africa did not have the Estes rocket kits popular among hobbyists, so Elon would create his own chemical compounds and put them inside of canisters. “It is remarkable how many things you can get to explode,” Elon said. “Saltpeter, sulfur, and charcoal are the basic ingredients for gunpowder, and then if you combine a strong acid with a strong alkaline, that will generally release a lot of energy. Granulated chlorine with brake fluid—that’s quite impressive. I’m lucky I have all my fingers.” When not handling explosives, the boys put on layers of clothing and goggles and shot each other with pellet guns. Elon and Kimbal raced dirt bikes against each other in sandlots until Kimbal flew off his bike one day and hurtled into a barbed wire fence.

As the years went on, the cousins took their entrepreneurial pursuits more seriously, even attempting at one point to start a video arcade. Without any parents knowing, the boys picked out a spot for their arcade, got a lease, and started navigating the permit process for their business. Eventually, they had to get someone over eighteen to sign a legal document, and neither the Rives’ father nor Errol would oblige. It would take a couple of decades, but Elon and the Rives would eventually go into business together.

The boys’ most audacious exploits may have been their trips between Pretoria and Johannesburg. During the 1980s, South Africa could be a terribly violent place, and the thirty-five-mile train trip linking Pretoria and Johannesburg stood out as one of the world’s more dangerous rides. Kimbal counted the train journeys as formative experiences for him and Elon. “South Africa was not a happy-go- lucky place, and that has an impact on you. We saw some really rough stuff. It was part of an atypical upbringing—just this insane set of experiences that changes how you view risk. You don’t grow up thinking getting a job is the hard part. That’s not interesting enough.”

The boys ranged in age from about thirteen to sixteen and chased a mix of parties and geeky exploits in Johannesburg. During one jaunt, they went to a Dungeons & Dragons tournament. “That was us being nerd master Supremes,” Musk said. All of the boys were into the role-playing game, which requires someone to help set the mood for a contest by imagining and then describing a scene. “You have entered a room, and there is a chest in the corner. What will you do?... You open the chest. You’ve sprung a trap. Dozens of goblins are on the loose.” Elon excelled at this Dungeon Master role and had memorized the texts detailing the powers of monsters and other characters. “Under Elon’s leadership, we played the role so well and won the tournament,” said Peter Rive. “Winning requires this incredible imagination, and Elon really set the tone for keeping people captivated and inspired.”

The Elon that his peers encountered at school was far less inspirational. Throughout middle and high school, Elon bounced around a couple of institutions. He spent the equivalent of eighth and ninth grades at Bryanston High School. One afternoon Elon and Kimbal were sitting at the top of a flight of concrete stairs eating when a boy decided to go after Elon. “I was basically hiding from this gang that was fucking hunting me down for God knows fucking why. I think I accidentally bumped this guy at assembly that morning and he’d taken some huge offense at that.” The boy crept up behind Musk, kicked him in the head, and then shoved him down the stairs. Musk tumbled down the entire flight, and a handful of boys pounced on him, some of them kicking Musk in the side and the ringleader bashing his head against the ground. “They were a bunch of fucking psychos,” Musk said. “I blacked out.” Kimbal watched in horror and feared for Elon’s life. He rushed down the stairs to find Elon’s face bloodied and swollen. “He looked like someone who had just been in the boxing ring,” Kimbal said. Elon then went to the hospital. “It was about a week before I could get back to school,” Musk said.

Chapter 3: Canada

Elon left for Canada when he was 17.

Elon ended up enrolling at Queen’s University in Kingston, Ontario, in 1989. (He picked Queen’s over the University of Waterloo because he felt there were more good-looking women at Queen’s.)

Outside of his studies, Elon would read the newspaper alongside Kimbal, and the two of them would identify interesting people they would like to meet. They then took turns cold-calling these people to ask if they were available to have lunch. Among the harassed was the head of marketing for the Toronto Blue Jays baseball team, a business writer for the Globe and Mail, and a top executive at the Bank of Nova Scotia, Peter Nicholson. Nicholson remembered the boys’ call well. “I was not in the habit of getting out-of-the-blue requests,” he said. “I was perfectly prepared to have lunch with a couple of kids that had that kind of gumption.” It took six months to get on Nicholson’s calendar, but, sure enough, the Musk brothers made a three-hour train ride and showed up on time.

Nicholson’s first exposure to the Musk brothers left him with an impression many would share. Both presented themselves well and were polite. Elon, though, clearly came off as the geekier, more awkward counterpoint to the charismatic, personable Kimbal. “I became more impressed and fascinated as I talked to them,” Nicholson said. “They were so determined.” Nicholson ended up offering Elon a summer internship at the bank and became his trusted advisor.

---

Navaid Farooq, a Canadian who grew up in Geneva, ended up in Musk’s freshman-year dormitory in the fall of 1990. Both men were placed in the international section where a Canadian student would get paired with a student from overseas. Musk sort of broke the system, since he technically counted as a Canadian but knew almost nothing about his surroundings. “I had a roommate from Hong Kong, and he was a really nice guy,” Musk said. “He religiously attended every lecture, which was helpful, since I went to the least number of classes possible.” For a time, Musk sold computer parts and full PCs in the dorm to make some extra cash. “I could build something to suit their needs like a tricked-out gaming machine or a simple word processor that cost less than what they could get in a store,” Musk said. “Or if their computer didn’t boot properly or had a virus, I’d fix it. I could pretty much solve any problem.” Farooq and Musk bonded over their backgrounds living abroad and a shared interest in strategy board games. “I don’t think he makes friends easily, but he is very loyal to those he has,” Farooq said. When the video game Civilization was released, the college chums spent hours building their empire, much to the dismay of Farooq’s girlfriend, who was forgotten in another room. “Elon could lose himself for hours on end,” Farooq said. The students also relished their loner lifestyles. “We are the kinds of people that can be by ourselves at a party and not feel awkward,” Farooq said. “We can think to ourselves and not feel socially weird about it.”

Musk was more ambitious in college than he’d been in high school. He studied business, competed in public speaking contests, and began to display the brand of intensity and competitiveness that marks his behavior today. After one economics exam, Musk, Farooq, and some other students in class came back to the dorms and began comparing notes to try to ascertain how well they did on the test. It soon became clear that Musk had a firmer grasp on the material than anyone else. “This was a group of fairly high achievers, and Elon stood way outside of the bell curve,” Farooq said. Musk’s intensity has continued to be a constant in their long relationship. “When Elon gets into something, he develops just this different level of interest in it than other people. That is what differentiates Elon from the rest of humanity.”

...

In 1992, having spent two years at Queen’s, Musk transferred to the University of Pennsylvania on a scholarship. Musk saw the Ivy League school as possibly opening some additional doors and went off in pursuit of dual degrees—first an economics degree from the Wharton School and then a bachelor’s degree in physics.

...

Musk’s longtime interest in solar power and in finding other new ways to harness energy expanded at Penn. In December 1994, he had to come up with a business plan for one of his classes and ended up writing a paper titled “The Importance of Being Solar.” The document started with a bit of Musk’s wry sense of humor. At the top of the page, he wrote: “The sun will come out tomorrow....”—Little Orphan Annie on the subject of renewable energy. The paper went on to predict a rise in solar power technology based on materials improvements and the construction of large-scale solar plants. Musk delved deeply into how solar cells work and the various compounds that can make them more efficient. He concluded the paper with a drawing of the “power station of the future.” It depicted a pair of giant solar arrays in space—each four kilometers in width—sending their juice down to Earth via microwave beams to a receiving antenna with a seven-kilometer diameter. Musk received a 98 on what his professor deemed a “very interesting and well written paper.”

...

A second paper talked about taking research documents and books and electronically scanning them, performing optical character recognition, and putting all of the information in a single database —much like a mix between today’s Google Books and Google Scholar. And a third paper dwelled on another of Musk’s favorite topics—ultra-capacitors. In the forty-four-page document, Musk is plainly jubilant over the idea of a new form of energy storage that would suit his future pursuits with cars, planes, and rockets. Pointing to the latest research coming out of a lab in Silicon Valley, he wrote: “The end result represents the first new means of storing significant amounts of electrical energy since the development of the battery and fuel cell. Furthermore, because the Ultra-capacitor retains the basic properties of a capacitor, it can deliver its energy over one hundred times faster than a battery of equivalent weight, and be recharged just as quickly.” Musk received a 97 for this effort and praise for “a very thorough analysis” with “excellent financials!”

Chapter 4: Elon’s First Start-up

Musk found in Silicon Valley a wealth of the opportunity he’d been seeking and a place equal to his ambitions. He would return two summers in a row and then bolt west permanently after graduating with dual degrees from Penn. He initially intended to pursue a doctorate in materials science and physics at Stanford and to advance the work he’d done at Pinnacle on ultra-capacitors. As the story goes, Musk dropped out of Stanford after two days, finding the Internet’s call irresistible. He talked Kimbal into moving to Silicon Valley as well, so they could conquer the Web together.

The first inklings of a viable Internet business had come to Musk during his internships. A salesperson from the Yellow Pages had come into one of the start-up offices. He tried to sell the idea of an online listing to complement the regular listing a company would have in the big, fat Yellow Pages book. The salesman struggled with his pitch and clearly had little grasp of what the Internet actually was or how someone would find a business on it. The flimsy pitch got Musk thinking, and he reached out to Kimbal, talking up the idea of helping businesses get online for the first time.

“Elon said, ‘These guys don’t know what they are talking about. Maybe this is something we can do,’” Kimbal said. This was 1995, and the brothers were about to form Global Link Information Network, a start-up that would eventually be renamed Zip2.

The Zip2 idea was ingenious. Few small businesses in 1995 understood the ramifications of the Internet. They had little idea how to get on it and didn’t really see the value in creating a website for their business or even in having a Yellow Pages–like listing online. Musk and his brother hoped to convince restaurants, clothing shops, hairdressers, and the like that the time had come for them to make their presence known to the Web-surfing public. Zip2 would create a searchable directory of businesses and tie this into maps. Musk often explained the concept through pizza, saying that everyone deserved the right to know the location of their closest pizza parlor and the turn-by-turn directions to get there. This may seem obvious today—think Yelp meets Google Maps—but back then, not even stoners had dreamed up such a service.

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Musk did all of the original coding behind the service himself, while the more amiable Kimbal looked to ramp up the door-to-door sales operation. Musk had acquired a cheap license to a database of business listings in the Bay Area that would give a business’s name and its address. He then contacted Navteq, a company that had spent hundreds of millions of dollars to create digital maps and directions that could be used in early GPS navigation-style devices, and struck a masterful bargain. “We called them up, and they gave us the technology for free,” said Kimbal. Musk merged the two databases together to get a rudimentary system up and running. Over time, Zip2’s engineers had to augment this initial data haul with more maps to cover areas outside of major metropolitan areas and to build custom turn-by-turn directions that would look good and work well on a home computer.

Errol Musk gave his sons $28,000 to help them through this period, but they were more or less broke after getting the office space, licensing software, and buying some equipment. For the first three months of Zip2’s life, Musk and his brother lived at the office. They had a small closet where they kept their clothes and would shower at the YMCA. “Sometimes we ate four meals a day at Jack in the Box,” Kimbal said. “It was open twenty-four hours, which suited our work schedule. I got a smoothie one time, and there was something in it. I just pulled it out and kept drinking. I haven’t been able to eat there since, but I can still recite their menu.”

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Zip2 may have been a go-go Internet enterprise aimed at the Information Age, but getting it off the ground required old-fashioned door-to-door salesmanship. Businesses needed to be persuaded of the Web’s benefits and charmed into paying for the unknown. In late 1995, the Musk brothers began making their first hires and assembling a motley sales team. Jeff Heilman, a free-spirited twenty-year-old trying to figure out what to do with his life, arrived as one of Zip2’s first recruits. He’d been watching TV late one night with his dad and seen a Web address printed at the bottom of the screen during a commercial. “It was for something dot-com,” Heilman said. “I remember sitting there and asking my dad what we were looking at. He said he didn’t know, either. That’s when I realized I had to go find me some Internet.” Heilman spent a couple of weeks trying to chat up people who could explain the Internet to him and then stumbled on a two-by-two-inch Zip2 job listing in the San Jose Mercury News. “Internet Sales Apply Here!” it read, and Heilman got the gig. A handful of other salespeople joined him and worked for commissions.

Musk never seemed to leave the office. He slept, not unlike a dog, on a beanbag next to his desk. “Almost every day, I’d come in at seven thirty or eight A.M., and he’d be asleep right there on that bag,” Heilman said. “Maybe he showered on the weekends. I don’t know.” Musk asked those first employees of Zip2 to give him a kick when they arrived, and he’d wake up and get back to work. While Musk did his possessed coder thing, Kimbal became the rah-rah sales leader. “Kimbal was the eternal optimist, and he was very, very uplifting,” Heilman said. “I had never met anyone quite like him.” Kimbal sent Heilman to the high-end Stanford shopping mall and to University Avenue, the main drag in Palo Alto, to coax retailers into signing up with Zip2, explaining that a sponsored listing would send a company to the top of search results. The big problem, of course, was that no one was buying. Week after week, Heilman knocked on doors and returned to the office with very little to report in the way of good news. The nicest responses came from the people who told Heilman that advertising on the Internet sounded like the dumbest thing they had ever heard of. Most often, the shop owners just told Heilman to leave and stop bothering them. When lunchtime came around, the Musk’s would reach into a cigar box where they kept some cash, take Heilman out, and get the depressing status reports on the sales.

...

What kept the employees’ spirits up were the continuous improvements Musk made with the Zip2 software. The service had morphed from a proof-of-concept to an actual product that could be used and demoed. Ever marketing savvy, the Musk brothers tried to make their Web service seem more important by giving it an imposing physical body. Musk built a huge case around a standard PC and lugged the unit onto a base with wheels. When prospective investors would come by, Musk would put on a show and roll this massive machine out so that it appeared like Zip2 ran inside of a mini-supercomputer. “The investors thought that was impressive,” Kimbal said. Heilman also noticed that the investors bought into Musk’s slavish devotion to the company. “Even then, as essentially a college kid with zits, Elon had this drive that this thing—whatever it was—had to get done and that if he didn’t do it, he’d miss his shot,” Heilman said. “I think that’s what the VCs saw—that he was willing to stake his existence on building out this platform.” Musk actually said as much to one venture capitalist, informing him, “My mentality is that of a samurai. I would rather commit seppuku than fail."

...

In early 1996, Zip2 underwent a massive change. The venture capital firm Mohr Davidow Ventures had caught wind of a couple of South African boys trying to make a Yellow Pages for the Internet and met with the brothers. Musk, while raw in his presentation skills, pitched the company well enough, and the investors came away impressed with his energy. Mohr Davidow invested $3 million into the company. With these funds in hand, the company officially changed its name from Global Link to Zip2—the idea being zip to here, zip to there—moved to a larger office at 390 Cambridge Avenue in Palo Alto, and began hiring talented engineers. Zip2 also shifted its business strategy. At the time, the company had built one of the best direction systems on the Web. Zip2 would advance this technology and take it from focusing just on the Bay Area to having a national scope. The company’s main focus, however, would be an altogether new play. Instead of selling its service door to- door, Zip2 would create a software package that could be sold to newspapers, which would in turn build their own directories for real estate, auto dealers, and classifieds. The newspapers were late understanding how the Internet would impact their businesses, and Zip2’s software would give them a quick way of getting online without needing to develop all their own technology from scratch. For its part, Zip2 could chase bigger prey and get a cut of a nationwide network of listings.

This transition of the business model and the company’s makeup would be a seminal moment in Musk’s life. The venture capitalists pushed Musk into the role of chief technology officer and hired Rich Sorkin as the company’s CEO. Sorkin had worked at Creative Labs, a maker of audio equipment, and run the business development group at the company, where he steered a number of investments in Internet start-ups. Zip2’s investors saw him as experienced and clued in to the Web. While Musk agreed to the arrangement, he came to resent giving up control of Zip2. “Probably the biggest regret the whole time I worked with him was that he had made a deal with the devil with Mohr Davidow,” said Jim Ambras, the vice president of engineering at Zip2. “Elon didn’t have any operational responsibilities, and he wanted to be CEO.”

...

Starting Zip2 and watching it grow imbued Musk with self-confidence. Terence Beney, one of Musk’s high school friends, came to California for a visit and noticed the change in Musk’s character right away. He watched Musk confront a nasty landlord who had been giving his mother, who was renting an apartment in town, a hard time. “He said, ‘If you’re going to bully someone, bully me.’ It was startling to see him take over the situation. The last time I had seen him he was this geeky, awkward kid who would sometimes lose his temper. He was the kid you would pick on to get a response. Now he was confident and in control.” Musk also began consciously trying to manage his criticism of others. “Elon is not someone who would say, ‘I feel you. I see your point of view,’” said Justine. “Because he doesn’t have that ‘I feel you’ dimension there were things that seemed obvious to other people that weren’t that obvious to him. He had to learn that a twenty-something-year-old shouldn’t really shoot down the plans of older, senior people and point out everything wrong with them. He learned to modify his behavior in certain ways. I just think he comes at the world through strategy and intellect.” The personality tweaks worked with varying degrees of success. Musk still tended to drive the young engineers mad with his work demands and blunt criticism. “I remember being in a meeting once brainstorming about a new product—a new-car site,” said Doris Downes, the creative director at Zip2. “Someone complained about a technical change that we wanted being impossible. Elon turned and said, ‘I don’t really give a damn what you think,’ and walked out of the meeting. For Elon, the word no does not exist, and he expects that attitude from everyone around him.” Periodically, Musk let loose on the more senior executives as well. “You would see people come out of the meetings with this disgusted look on their face,” Mohr, the salesman, said. “You don’t get to where Elon is now by always being a nice guy, and he was just so driven and sure of himself.”

...

As a bonding exercise one weekend, Musk, Ambras, a few other employees and friends took off for a bike ride through the Saratoga Gap trail in the Santa Cruz Mountains. Most of the riders had been training and were accustomed to strenuous sessions and the summer’s heat. They set up the mountains at a furious pace. After an hour, Russ Rive, Musk’s cousin, reached the top and proceeded to vomit. Right behind him were the rest of the cyclists. Then, fifteen minutes later, Musk became visible to the group. His face had turned purple, and sweat poured out of him, and he made it to the top. “I always think back to that ride. He wasn’t close to being in the condition needed for it,” Ambras said. “Anyone else would have quit or walked up their bike. As I watched him climb that final hundred feet with suffering all over his face, I thought, That’s Elon. Do or die but don’t give up.”

...

Employees at Zip2 would go home at night, come back, and find that Musk had changed their work without talking to them, and Musk’s confrontational style did more harm than good. “Yeah, we had some very good software engineers at Zip2, but I mean, I could code way better than them. And I’d just go in and fix their fucking code,” Musk said. “I would be frustrated waiting for their stuff, so I’m going to go and fix your code and now it runs five times faster, you - idiot. There was one guy who wrote a quantum mechanics equation, a quantum probability on the board, and he got it wrong. I’m like, ‘How can you write that?’ Then I corrected it for him. He hated me after that. Eventually, I realized, Okay, I might have fixed that thing but now I’ve made the person unproductive. It just wasn’t a good way to go about things.”

Musk, the dot-com striver, had been both lucky and good. He had a decent idea, turned it into a real service, and came out of the dot-com tumult with cash in his pockets, which was better than what many of his compatriots could say. The process had been painful. Musk had yearned to be a leader, but the people around him struggled to see how Musk as the CEO could work. As far as Musk was concerned, they were all wrong, and he set out to prove his point with what would end up being even more dramatic results.

...

Chapter 5: PayPal Mafia Boss

THE SALE OF ZIP2 INFUSED ELON MUSK WITH A NEW BRAND OF CONFIDENCE. Much like the video-game characters he adored, Musk had leveled up. He had solved Silicon Valley and become what everyone at the time wanted to be—a dot-com millionaire. His next venture would need to live up to his rapidly inflating ambition. This left Musk searching for an industry that had tons of money and inefficiencies that he and the Internet could exploit. Musk began thinking back to his time as an intern at the Bank of Nova Scotia. His big take-away from that job, that bankers are rich and dumb, now had the feel of a massive opportunity.

During his time working for the head of strategy at the bank in the early 1990s, Musk had been asked to take a look at the company’s third-world debt portfolio. This pool of money went by the depressing name of “less-developed country debt,” and Bank of Nova Scotia had billions of dollars of it. Countries throughout South America and elsewhere had defaulted in the prior years, forcing the bank to write down some of its debt value. Musk’s boss wanted him to dig into the bank’s holdings as a learning experiment and try to determine how much the debt was actually worth.

While pursuing this project, Musk stumbled upon what seemed like an obvious business opportunity. The United States had tried to help reduce the debt burden of a number of developing countries through so-called Brady bonds, in which the U.S. government basically backstopped the debt of countries like Brazil and Argentina. Musk noticed an arbitrage play. “I calculated the backstop value, and it was something like fifty cents on the dollar, while the actual debt was trading at twenty-five cents,” Musk said. “This was like the biggest opportunity ever, and nobody seemed to realize it.” Musk tried to remain cool and calm as he rang Goldman Sachs, one of the main traders in this market, and probed around about what he had seen. He inquired as to how much Brazilian debt might be available at the 25-cents price. “The guy said, ‘How much do you want?’ and I came up with some ridiculous number like ten billion dollars,” Musk said. When the trader confirmed that was doable, Musk hung up the phone. “I was thinking that they had to be fucking crazy because you could double your money. Everything was backed by Uncle Sam. It was a no-brainer.”

Musk had spent the summer earning about fourteen dollars an hour and getting chewed out for using the executive coffee machine, among other status infractions, and figured his moment to shine and make a big bonus had arrived. He sprinted up to his boss’s office and pitched the opportunity of a lifetime. “You can make billions of dollars for free,” he said. His boss told Musk to write up a report, which soon got passed up to the bank’s CEO, who promptly rejected the proposal, saying the bank had been burned on Brazilian and Argentinian debt before and didn’t want to mess with it again. “I tried to tell them that’s not the point,” Musk said. “The point is that it’s fucking backed by Uncle Sam. It doesn’t matter what the South Americans do. You cannot lose unless you think the U.S. Treasury is going to default. But they still didn’t do it, and I was stunned. Later in life, as I competed against the banks, I would think back to this moment, and it gave me confidence. All the bankers did was copy what everyone else did. If everyone else ran off a bloody cliff, they’d run right off a cliff with them. If there was a giant pile of gold sitting in the middle of the room and nobody was picking it up, they wouldn’t pick it up, either.”

In the years that followed, Musk considered starting an Internet bank and discussed it openly during his internship at Pinnacle Research in 1995. The youthful Musk lectured the scientists about the inevitable transition coming in finance toward online systems, but they tried to talk him down, saying that it would takes ages for Web security to be good enough to win over consumers. Musk, though, remained convinced that the finance industry could do with a major upgrade and that he could have a big influence on banking with a relatively small investment. “Money is low bandwidth,” he said, during a speech at Stanford University in 2003, to describe his thinking. “You don’t need some sort of big infrastructure improvement to do things with it. It’s really just an entry in a database.” The actual plan that Musk concocted was beyond grandiose. As the researchers at Pinnacle had pointed out, people were barely comfortable buying books online. They might take their chances entering a credit card number but exposing just their bank accounts to the Web was out of the question to many. Pah. So what? Musk wanted to build a full-service financial institution online: a company that would have savings and checking accounts as well as brokerage services and insurance. The technology to build such a service was possible, but navigating the regulatory hell of creating an online bank from scratch looked like an intractable problem to optimists and an impossibility to more level heads. This was not dishing out directions to a pizzeria or putting up a house listing. It was dealing with people’s finances, and there would be real repercussions if the service did not work as billed.

Undaunted, Musk kicked this new plan into action before Zip2 had even been sold. He chatted up some of the best engineers at the company to get a feel for who might be willing to join him in another venture. Musk also bounced his ideas off some contacts he’d made at the bank in Canada. In January 1999, with Zip2’s board seeking a buyer, Musk began to formalize his banking plan. The deal with Compaq was announced the next month. And in March, Musk incorporated X.com, a finance start-up with a pornographic-sounding name.

It had taken Musk less than a decade to go from being a Canadian backpacker to becoming a multimillionaire at the age of twenty-seven.

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He plowed the majority of the money he made from Zip2 into X.com. There were practical reasons for this decision. Investors catch a break under the tax law if they roll a windfall into a new venture within a couple of months. But even by Silicon Valley’s high-risk standards, it was shocking to put so much of one’s newfound wealth into something as iffy as an online bank. All told, Musk invested about $12 million into X.com, leaving him, after taxes, with $4 million or so for personal use. “That’s part of what separates Elon from mere mortals,” said Ed Ho, the former Zip2 executive, who went on to cofound X.com. “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.”

...

Where Zip2 had been a neat, useful idea, X.com held the promise of fomenting a major revolution. Musk, for the first time, would be confronting a deep-pocketed, entrenched industry head-on with the hopes of upending all of the incumbents. Musk also began to hone his trademark style of entering an ultra-complex business and not letting the fact that he knew very little about the industry’s nuances bother him in the slightest. He had an inkling that the bankers were doing finance all wrong and that he could run the business better than everyone else. Musk’s ego and confidence had started heading toward the levels that would inspire some and leave others thinking of him as pompous and unscrupulous. The creation of X.com would ultimately reveal a great deal about Musk’s creativity, relentless drive, confrontational style, and foibles as a leader. Musk would also get another taste of being pushed aside at his own company and the pain that accompanies a grand vision left unfulfilled.

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From the outset, there were personality clashes as well. Musk had become a budding superstar in Silicon Valley and had the press fawning over him. This didn’t sit that well with Fricker, who’d moved from Canada and pegged X.com as his chance to make a mark on the world as a banking whiz. Fricker, according to numerous people, wanted to run X.com and do so in a more conventional manner. He found Musk’s visionary statements to the press about rethinking the entire banking industry silly since the company was struggling to build much of anything. “We were out promising the sun, moon, and the stars to the media,” Fricker said. “Elon would say that this is not a normal business environment, and you have to suspend normal business thinking. He said, ‘There is a happy-gas factory up on the hill, and it’s pumping stuff into the Valley.’” Fricker would not be the last person to accuse Musk of overhyping products and playing the public, although whether this is a flaw or one of Musk’s great talents as a businessman is up for debate.

The squabble between Fricker and Musk came to a quick, nasty end. Just five months after X.com had started, Fricker initiated a coup. “He said either he takes over as CEO or he’s just going to take everyone from the company and create his own company,” Musk said. “I don’t do well with blackmail. I said, ‘You should go do that.’ So he did.” Musk tried to talk Ho and some of the other key engineers into staying, but they sided with Fricker and left. Musk ended up with a shell of a company and a handful of loyal employees. “After all that went down, I remember sitting with Elon in his office,” said Julie Ankenbrandt, an early X.com employee who stayed. “There were a million laws in place to block something like X.com from happening, but Elon didn’t care. He just looked at me and said, ‘I guess we should hire some more people.’”

Musk had been trying to raise funding for X.com and had been forced to go to venture capitalists and confess that there wasn’t much in the way of a company left. Mike Moritz, a famed investor from Sequoia Capital, backed the company nonetheless, making a bet on Musk and little else. Musk hit the streets of Silicon Valley once again and managed to attract engineers with his rah-rah speeches about the future of Internet banking. Scott Anderson, a young computer scientist, started on August 1, 1999, just a few days after the exodus, and bought right into the vision. “You look back, and it was total insanity,” Anderson said. “We had what amounted to a Hollywood movie set of a website. It barely got past the VCs.”

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Under Musk’s direction, X.com tried out some radical banking concepts. Customers received a $20 cash card just for signing up to use the service and a $10 card for every person they referred. Musk did away with niggling fees and overdraft penalties. In a very modern twist, X.com also built a person-to-person payment system in which you could send someone money just by plugging their email address into the site. The whole idea was to shift away from slow-moving banks with their mainframes taking days to process payments and to create a kind of agile bank account where you could move money around with a couple of clicks on a mouse or an e-mail. This was revolutionary stuff, and more than 200,000 people bought into it and signed up for X.com within the first couple of months of operation.

...

In March 2000, X.com and Confinity finally decided to stop trying to spend each other into oblivion and to join forces. Confinity had what looked like the hottest product in PayPal but was paying out $100,000 a day in awards to new customers and didn’t have the cash reserves to keep going. X.com, by contrast, still had plenty of cash reserves and the more sophisticated banking products. It took the lead in setting the merger terms, leaving Musk as the largest shareholder of the combined company, which would be called X.com. Shortly after the deal closed, X.com raised $100 million from backers including Deutsche Bank and Goldman Sachs and boasted that it had more than one million customers.

The two companies tried hard to mesh their cultures, with modest success. Groups of employees from X.com tied their computer monitors to their desk chairs with power cords and rolled them down the street to the Confinity offices to work alongside their new colleagues. But the teams could never quite see eye to eye. Musk kept championing the X.com brand, while most everyone else favored PayPal. More fights broke out over the design of the company’s technology infrastructure. The Confinity team led by Levchin favored moving toward open-source software like Linux, while Musk championed Microsoft’s data-center software as being more likely to keep productivity high. This squabble may sound silly to outsiders, but it was the equivalent of a religious war to the engineers, many of whom viewed Microsoft as a dated evil empire and Linux as the modern software of the people. Two months after the merger, Thiel resigned and Levchin threatened to walk out over the technology rift. Musk was left to run a fractured company.

The technology issues X.com had been facing worsened as the computing systems failed to keep up with an exploding customer base. Once a week, the company’s website collapsed. Most of the engineers were ordered to start work designing a new system, which distracted key technical personnel and left X.com vulnerable to fraud. “We were losing money hand over fist,” said Stoppelman. As X.com became more popular and its transaction volume exploded, all of its problems worsened. There was more fraud. There were more fees from banks and credit card companies. There was more competition from start-ups. X.com lacked a cohesive business model to offset the losses and turn a profit from the money it managed. Roelof Botha, the start-up’s chief financial officer and now a prominent venture capitalist at Sequoia, did not think Musk provided the board with a true picture of X.com’s issues. A growing number of other people at the company questioned Musk’s decision-making in the face of all the crises.

What followed was one of the nastiest coups in Silicon Valley’s long, illustrious history of nasty coups. A small group of X.com employees gathered one night at Fanny & Alexander, a now-defunct bar in Palo Alto, and brainstormed about how to push out Musk. They decided to sell the board on the idea of Thiel returning as CEO. Instead of confronting Musk directly with this plan, the conspirators decided to take action behind Musk’s back.

Musk and Justine had been married in January 2000 but had been too busy for a honeymoon. Nine months later, in September, they planned to mix business and pleasure by going on a fund-raising trip and ending it with a honeymoon in Sydney to catch the Olympics. As they boarded their flight one night, X.com executives delivered letters of no confidence to X.com’s board. Some of the people loyal to Musk had sensed something was wrong, but it was too late. “I went to the office at ten thirty that night, and everyone was there,” Ankenbrandt said. “I could not believe it. I am frantically trying to call Elon, but he’s on a plane.” By the time he landed, Musk had been replaced by Thiel.

...

By June 2001, Musk’s influence on the company was fading quickly. That month, Thiel rebranded X.com as PayPal. Musk rarely lets a slight go unpunished. Throughout this ordeal, however, he showed incredible restraint. He embraced the role of being an advisor to the company and kept investing in it, increasing his stake as PayPal’s largest shareholder. “You would expect someone in Elon’s position to be bitter and vindictive, but he wasn’t,” said Botha. “He supported Peter. He was a prince.”

...

The dot-com joyride was coming to a quick end, and people wanted to try to cash out in any way possible. When executives from eBay began approaching PayPal about an acquisition, the inclination for most people was to sell and sell fast. Musk and Moritz, though, urged the board to reject a number of offers and hold out for more money. PayPal had revenue of about $240 million per year, and looked like it might make it as an independent company and go public. Musk and Moritz’s resistance paid off and then some. In July 2002, eBay offered $1.5 billion for PayPal, and Musk and the rest of the board accepted the deal. Musk netted about $250 million from the sale to eBay, or $180 million after taxes—enough to make what would turn out to be his very wild dreams possible.

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The stronger critique of Musk during this period of his life was that he had succeeded to a large degree despite himself. Musk’s traits as a confrontational know-it-all and his abundant ego created deep, lasting fractures within his companies. While Musk consciously tried to temper his behavior, these efforts were not enough to win over investors and more experienced executives. At both Zip2 and PayPal, the companies’ boards came to the conclusion that Musk was not yet CEO material. It can also be argued that Musk had become a hyperbolic huckster, who overreached and oversold his companies’ technology. Musk’s biggest detractors have made all of these arguments either in public or private and a half dozen or so of them said far worse things to me about his character and actions, describing Musk as unethical in business and vicious with his personal attacks. Almost universally, these people were unwilling to go on the record with their comments, claiming to be afraid Musk would pursue litigation against them or ruin their ability to do business.

...

These criticisms must be weighed against Musk’s track record. He demonstrated an innate ability to read people and technology trends at the inception of the consumer Web. While others tried to wrap their heads around the Internet’s implications, Musk had already set off on a purposeful plan of attack. He envisioned many of the early pieces of technology—directories, maps, sites that focused on vertical markets—that would become mainstays on the Web. Then, just as people became comfortable with buying things from Amazon.com and eBay, Musk made the great leap forward to full-fledged Internet banking. He would bring standard financial instruments online and then modernize the industry with a host of new concepts. He exhibited a deep insight into human nature that helped his companies pull off exceptional marketing, technology, and financial feats. Musk was already playing the entrepreneur game at the highest level and working the press and investors like few others could. Did he hype things up and rub people the wrong way? Absolutely—and with spectacular results. Based in large part on Musk’s guidance, PayPal survived the bursting of the dot-com bubble, became the first blockbuster IPO after the 9/11 attacks, and then sold to eBay for an astronomical sum while the rest of the technology industry was mired in a dramatic downturn. It was nearly impossible to survive let alone emerge as a winner in the midst of such a mess.

PayPal also came to represent one of the greatest assemblages of business and engineering talent in Silicon Valley history. Both Musk and Thiel had a keen eye for young, brilliant engineers. The founders of start-ups as varied as YouTube, Palantir Technologies, and Yelp all worked at PayPal. Another set of people—including Reid Hoffman, Thiel, and Botha—emerged as some of the technology industry’s top investors. PayPal staff pioneered techniques in fighting online fraud that have formed the basis of software used by the CIA and FBI to track terrorists and of software used by the world’s largest banks to combat crime. This collection of super-bright employees has become known as the PayPal Mafia—more or less the current ruling class of Silicon Valley—and Musk is its most famous and successful member.

...

It took until late December 2000 for things to calm down enough for Musk to take his first vacation in years. He arranged a two-week trip, with the first part taking place in Brazil and the second in South Africa at a game reserve near the Mozambique border. While in Africa, Musk contracted the most virulent version of malaria—falciparum malaria—which accounts for the vast majority of malaria deaths.

Musk returned to California in January, which is when the illness took hold. He started to get sick and was bedridden for a few days before Justine took him to a doctor who then ordered that Musk be rushed in an ambulance to Sequoia Hospital in Redwood City. Doctors there misdiagnosed and mistreated his condition to the point that Musk was near death. “Then, there happened to be a guy visiting from another hospital who had seen a lot more malaria cases,” Musk said. He spied Musk’s blood work in the lab and ordered an immediate maximum dosage of doxycycline, an antibiotic. The doctor told Musk that if he had turned up a day later, the medicine likely would no longer have been effective.

Musk spent ten agonizing days in the intensive care unit. The experience shocked Justine. “He’s built like a tank,” she said. “He has a level of stamina and an ability to deal with levels of stress that I’ve never seen in anyone else. To see him laid low like that in total misery was like a visit to an alternate universe.” It took Musk six months to recover. He lost forty-five pounds over the course of the illness and had a closet full of clothes that no longer fit. “I came very close to dying,” Musk said. “That’s my lesson for taking a vacation: vacations will kill you.”

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Chapter 6: Mice in space

After being pushed out of PayPal, Musk had started to revisit his childhood fantasies around rocket ships and space travel and to think that he might have a greater calling than creating Internet services. The changes in his attitude and thinking soon became obvious to his friends, including a group of PayPal executives who had gathered in Las Vegas one weekend to celebrate the company’s success. “We’re all hanging out in this cabana at the Hard Rock Cafe, and Elon is there reading some obscure Soviet rocket manual that was all moldy and looked like it had been bought on eBay,” said Kevin Hartz, an early PayPal investor. “He was studying it and talking openly about space travel and changing the world.”

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Musk had picked Los Angeles with intent. It gave him access to space or at least the space industry. Southern California’s mild, consistent weather had made it a favored city of the aeronautics industry since the 1920s, when the Lockheed Aircraft Company set up shop in Hollywood. Howard Hughes, the U.S. Air Force, NASA, Boeing, and myriad other people and organizations have performed much of their manufacturing and cutting-edge experimentation in and around Los Angeles. Today the city remains a major hub for the military’s aeronautics work and commercial activity. While Musk didn’t know exactly what he wanted to do in space, he realized that just by being in Los Angeles he would be surrounded by the world’s top aeronautics thinkers. They could help him refine any ideas, and there would be plenty of recruits to join his next venture.

Musk’s first interactions with the aeronautics community were with an eclectic collection of space enthusiasts, members of a nonprofit group called the Mars Society. Dedicated to exploring and settling the Red Planet, the Mars Society planned to hold a fund-raiser in mid-2001. The $500-perplate event was to take place at the house of one of the well-off Mars Society members, and invitations to the usual characters had been mailed out. What stunned Robert Zubrin, the head of the group, was the reply from someone named Elon Musk, whom no one could remember inviting. “He gave us a check for five thousand dollars,” Zubrin said. “That made everyone take notice.” Zubrin began researching Musk, determined he was rich, and invited him for coffee ahead of the dinner. “I wanted to make sure he knew the projects we had under way,” Zubrin said. He proceeded to regale Musk with tales of the research center the society had built in the Arctic to mimic the tough conditions of Mars and the experiments they had been running for something called the Translife Mission, in which there would be a spinning capsule orbiting Earth that was piloted by a crew of mice. “It would spin to give them one-third gravity—the same you would have on Mars—and they would live there and reproduce,” Zubrin told Musk.

When it was time for dinner, Zubrin placed Musk at the VIP table next to himself, the director and space buff James Cameron, and Carol Stoker, a planetary scientist for NASA with a deep interest in Mars. “Elon is so youthful-looking and at that time he looked like a little boy,” Stoker said. “Cameron was chatting him up right away to invest in his next movie, and Zubrin was trying to get him to make a big donation to the Mars Society.” In return for being hounded for cash, Musk probed about for ideas and contacts. Stoker’s husband was an aerospace engineer at NASA working on a concept for an airplane that would glide over Mars looking for water. Musk loved that. “He was much more intense than some of the other millionaires,” Zubrin said. “He didn’t know a lot about space, but he had a scientific mind. He wanted to know exactly what was being planned in regards to Mars and what the significance would be.” Musk took to the Mars Society right away and joined its board of directors. He donated another $100,000 to fund a research station in the desert as well.

...

Like so many quests to revitalize America’s soul and bring hope to all of mankind, Musk’s journey began in a hotel conference room. By this time, Musk had built up a decent network of contacts in the space industry, and he brought the best of them together at a series of salons— sometimes at the Renaissance hotel at the Los Angeles airport and sometimes at the Sheraton hotel in Palo Alto. Musk had no formal business plan for these people to debate. He mostly wanted them to help him develop the mice-to-Mars idea or at least to come up with something comparable. Musk hoped to hit on a grand gesture for mankind—some type of event that would capture the world’s attention, get people thinking about Mars again, and have them reflect on man’s potential. The scientists and luminaries at the meetings were to figure out a spectacle that would be technically feasible at a price tag of approximately $20 million. Musk resigned from his position as a director of the Mars Society and announced his own organization—the Life to Mars Foundation.

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Scene post discussions with the Russians:

The Team Musk mood could not have been worse. It was near the end of February 2002, and they went outside to hail a cab and drove straight to the airport surrounded by the snow and dreck of the Moscow winter. Inside the cab, no one talked. Musk had come to Russia filled with optimism about putting on a great show for mankind and was now leaving exasperated and disappointed by human nature. The Russians were the only ones with rockets that could possibly fit within Musk’s budget. “It was a long drive,” Cantrell said. “We sat there in silence looking at the Russian peasants shopping in the snow.” The somber mood lingered all the way to the plane, until the drink cart arrived. “You always feel particularly good when the wheels lift off in Moscow,” Cantrell said. “It’s like, ‘My God. I made it.’ So, Griffin and I got drinks and clinked our glasses.” Musk sat in the row in front of them, typing on his computer. “We’re thinking, Fucking nerd. What can he be doing now?” At which point Musk wheeled around and flashed a spreadsheet he’d created. “Hey, guys,” he said, “I think we can build this rocket ourselves.

Griffin and Cantrell had downed a couple of drinks by this time and were too deflated to entertain a fantasy. They knew all too well the stories of gung-ho millionaires who thought they could conquer space only to lose their fortunes. Just the year before, Andrew Beal, a real estate and finance whiz in Texas, folded his aerospace company after having poured millions into a massive test site. “We’re thinking, Yeah, you and whose fucking army,” Cantrell said. “But, Elon says, ‘No, I’m serious. I have this spreadsheet.’” Musk passed his laptop over to Griffin and Cantrell, and they were dumbfounded. The document detailed the costs of the materials needed to build, assemble, and launch a rocket. According to Musk’s calculations, he could undercut existing launch companies by building a modest sized rocket that would cater to a part of the market that specialized in carrying smaller satellites and research payloads to space. The spreadsheet also laid out the hypothetical performance characteristics of the rocket in fairly impressive detail. “I said, ‘Elon, where did you get this?’” Cantrell said.

Musk had spent months studying the aerospace industry and the physics behind it. From Cantrell and others, he’d borrowed Rocket Propulsion Elements, Fundamentals of Astrodynamics, and Aerothermodynamics of Gas Turbine and Rocket Propulsion, along with several more seminal texts. Musk had reverted to his childhood state as a devourer of information and had emerged from this meditative process with the realization that rockets could and should be made much cheaper than what the Russians were offering. Forget the mice. Forget the plant with its own video feed growing— or possibly dying—on Mars. Musk would inspire people to think about exploring space again by making it cheaper to explore space.

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Founded in June 2002, Space Exploration Technologies came to life in humble settings. Musk acquired an old warehouse at 1310 East Grand Avenue in El Segundo, a suburb of Los Angeles humming with the activity of the aerospace industry.

Musk had soon transformed the SpaceX office with what has become his signature factory aesthetic: a glossy epoxy coating applied over concrete on the floors, and a fresh coat of white paint slathered onto the walls. The white color scheme was intended to make the factory look clean and feel cheerful. Desks were interspersed around the factory so that Ivy League computer scientists and engineers designing the machines could sit with the welders and machinists building the hardware. This approach stood as SpaceX’s first major break with traditional aerospace companies that prefer to cordon different engineering groups off from each other and typically separate engineers and machinists by thousands of miles by placing their factories in locations where real estate and labor run cheap.

As the first dozen or so employees came to the offices, they were told that SpaceX’s mission would be to emerge as the “Southwest Airlines of Space.” SpaceX would build its own engines and then contract with suppliers for the other components of the rocket. The company would gain an edge over the competition by building a better, cheaper engine and by fine-tuning the assembly process to make rockets faster and cheaper than anyone else. This vision included the construction of a type of mobile launch vehicle that could travel to various sites, take the rocket from a horizontal to vertical position, and send it off to space—no muss, no fuss. SpaceX was meant to get so good at this process that it could do multiple launches a month, make money off each one, and never need to become a huge contractor dependent on government funds.

SpaceX was to be America’s attempt at a clean slate in the rocket business, a modernized reset. Musk felt that the space industry had not really evolved in about fifty years. The aerospace companies had little competition and tended to make supremely expensive products that achieved maximum performance. They were building a Ferrari for every launch, when it was possible that a Honda Accord might do the trick. Musk, by contrast, would apply some of the start-up techniques he’d learned in Silicon Valley to run SpaceX lean and fast and capitalize on the huge advances in computing power and materials that had taken place over the past couple of decades. As a private company, SpaceX would also avoid the waste and cost overruns associated with government contractors. Musk declared that SpaceX’s first rocket would be called the Falcon 1, a nod to Star Wars’ Millennium Falcon and his role as the architect of an exciting future. At a time when the cost of sending a 550-pound payload started at $30 million, he promised that the Falcon 1 would be able to carry a 1,400-pound payload for $6.9 million.

...

A quick search on YouTube for “rocket explosions” turns up thousands of compilation videos documenting U.S. and Soviet launch disasters that have occurred over the decades. From 1957 to 1966, the United States alone tried to blast more than 400 rockets into orbit and about 100 of them crashed and burned.5 The rockets used to transport things to space are mostly modified missiles developed through all of this trial and error and funded by billions upon billions of government dollars. SpaceX had the advantage of being able to learn from this past work and having a few people on staff that had overseen rocket projects at companies like Boeing and TRW. That said, the start-up did not have a budget that could support a string of explosions. At best, SpaceX would have three or four shots at making the Falcon 1 work. “People thought we were just crazy,” Mueller said. “At TRW, I had an army of people and government funding. Now we were going to make a low cost rocket from scratch with a small team. People just didn’t think it could be done.”

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Elon’s son, Nevada’s death:

And then all of a sudden none of this seemed to matter. Justine had given birth to a son—Nevada Alexander Musk. He was ten weeks old when, just as the eBay deal was announced, he died. The Musks had tucked Nevada in for a nap and placed the boy on his back as parents are taught to do. When they returned to check on him, he was no longer breathing and had suffered from what the doctors would term a sudden infant death syndrome–related incident. “By the time the paramedics resuscitated him, he had been deprived of oxygen for so long that he was brain-dead,” Justine wrote in her article for Marie Claire. “He spent three days on life support in a hospital in Orange County before we made the decision to take him off it. I held him in my arms when he died. Elon made it clear that he did not want to talk about Nevada’s death. I didn’t understand this, just as he didn’t understand why I grieved openly, which he regarded as ‘emotionally manipulative.’ I buried my feelings instead, coping with Nevada’s death by making my first visit to an IVF clinic less than two months later. Elon and I planned to get pregnant again as swiftly as possible. Within the next five years, I gave birth to twins, then triplets.” Later, Justine chalked up Musk’s reaction to a defense mechanism that he’d learned from years of suffering as a kid. “He doesn’t do well in dark places,” she told Esquire magazine. “He’s forward-moving, and I think it’s a survival thing with him.”

Musk did open up to a couple of close friends and expressed the depth of his misery. But for the most part, Justine read her husband right. He didn’t see the value in grieving publicly. “It made me extremely sad to talk about it,” 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. I’m not sure what should be done in such situations.”

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By 2002:

SpaceX had picked up a customer as well. According to Musk, its first rocket would launch in “early 2004” from Vandenberg Air Force Base, carrying a satellite called TacSat-1 for the Department of Defense. With this goal looming, twelve-hour days, six days a week were considered the norm, although many people worked longer than that for extended periods of time. Respites, as far as they existed, came around 8 P.M. on some weeknights when Musk would allow everyone to use their work computers to play first-person-shooter video games like Quake III Arena and Counter- Strike against each other. At the appointed hour, the sound of guns loading would cascade throughout the office as close to twenty people armed themselves for battle. Musk—playing under the handle Random9—often won the games, talking trash and blasting away his employees without mercy. “The CEO is there shooting at us with rockets and plasma guns,” said Colonno. “Worse, he’s almost alarmingly good at these games and has insanely fast reactions. He knew all the tricks and how to sneak up on people.”

The pending launch ignited Musk’s salesman instincts. He wanted to show the public what his tireless workers had accomplished and drum up some excitement around SpaceX. Musk decided to unveil a prototype of Falcon 1 to the public in December 2003. The company would haul the seven story- high Falcon 1 across the country on a specially built rig and leave it—and the SpaceX mobile launch system—outside of the Federal Aviation Administration’s headquarters in Washington, D.C. An accompanying press conference would make it clear to Washington that a modern, smarter, cheaper rocket maker had arrived.

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While making the prototype for the event, Hollman experienced the full spectrum of highs and lows that came with working for Musk. The engineer had lost his regular glasses weeks earlier when they slipped off his face and fell down a flame duct at the Texas test site. Hollman had since made do by wearing an old pair of prescription safety glasses, but they too were ruined when he scratched the lenses while trying to duck under an engine at the SpaceX factory. Without a spare moment to visit an optometrist, Hollman started to feel his sanity fray. The long hours, the scratch, the publicity stunt— they were all too much.

He vented about this in the factory one night, unaware that Musk stood nearby and could hear everything. Two hours later, Mary Beth Brown appeared with an appointment card to see a Lasik eye surgery specialist. When Hollman visited the doctor, he discovered that Musk had already agreed to pay for the surgery. “Elon can be very demanding, but he’ll make sure the obstacles in your way are removed,” Hollman said. Upon reflection, he also warmed to the long-term thinking behind Musk’s Washington plan. “I think he wanted to add an element of realism to SpaceX, and if you park a rocket in someone’s front yard, it’s hard to deny it,” Hollman said.

The event in Washington ended up being well received, and just a few weeks after it took place, SpaceX made another astonishing announcement. Despite not having even flown a rocket yet, SpaceX revealed plans for a second rocket. Along with the Falcon 1, it would build the Falcon 5. Per the name, this rocket would have five engines and could carry more weight—9,200 pounds—to low orbit around Earth. Crucially, the Falcon 5 could also theoretically reach the International Space Station for resupply missions—a capability that would open up SpaceX for some large NASA contracts. And, in a nod to Musk’s obsession with safety, the rocket was said to be able to complete its missions even if three of the five engines failed, which was a level of added reliability that had not been seen in the market in decades.

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Musk never relented in asking his employees to do more and be better, whether it was at the office or during extracurricular activities. Part of Spikes’s duties included building custom gaming PCs for Musk’s home that pushed their computational power to the limits and needed to be cooled with water running through a series of tubes inside the machines. When one of these gaming rigs kept breaking, Spikes figured out that Musk’s mansion had dirty power lines and had a second, dedicated power circuit built for the gaming room to correct the problem. Doing this favor bought Spikes no special treatment. “SpaceX’s mail server crashed one time, and Elon word for word said, ‘Don’t ever fucking let that happen again,’” Spikes said. “He had a way of looking at you—a glare—and would keep looking at you until you understood him.”

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Another salesman flew down to SpaceX to sell the company on some technology infrastructure equipment. He was doing the standard relationship-building exercise practiced by salespeople for centuries. Show up. Speak for a while. Feel each other out. Then, start doing business down the road. Musk was having none of it. “The guy comes in, and Elon asks him why they’re meeting,” Spikes said. “He said, ‘To develop a relationship.’ Elon replied, ‘Okay. Nice to meet you,’ which basically meant, ‘Get the fuck out of my office.’ This guy had spent four hours traveling for what ended up as a two-minute meeting. Elon just has no tolerance for that kind of stuff.” Musk could be equally brisk with employees who were not hitting his standards. “He would often say, ‘The longer you wait to fire someone the longer it has been since you should have fired them,’” Spikes said.

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Early 2004, when SpaceX had hoped to launch its rocket, came and went. The Merlin engine that Mueller and his team had built appeared to be among the most efficient rocket engines ever made. It was just taking longer than Musk had expected to pass tests needed to clear the engine for a launch. Finally, in the fall of 2004, the engines were burning consistently and meeting all their requirements. This meant that Mueller and his team could breathe easy and that everyone else at SpaceX should prepare to suffer. Mueller had spent SpaceX’s entire existence as the “critical path”—the person holding up the company from achieving its next steps—working under Musk’s scrutiny. “With the engine ready, it was time for mass panic,” Mueller said. “No one else knew what it was like to be on critical path.”

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In November 2005, about six months after they had first gotten to the Kwaj island, the SpaceX team felt ready to give launching a shot. Musk flew in with his brother, Kimbal, and joined the majority of the SpaceX team in the barracks on Kwaj. On November 26, a handful of people woke up at 3 A.M. and filled the rocket with liquid oxygen. They then scampered off to an island about three miles away for protection, while the rest of the SpaceX team monitored the launch systems from a control room twenty-six miles away on Kwaj. The military gave SpaceX a six-hour launch window. Everyone was hoping to see the first stage take off and reach about 6,850 miles per hour before giving way to the second stage, which would ignite up in the air and reach 17,000 miles per hour. But, while going through the pre-launch checks, the engineers detected a major problem: a valve on a liquid oxygen tank would not close, and the LOX was boiling off into the air at 500 gallons per hour. SpaceX scrambled to fix the issue but lost too much of its fuel to launch before the window closed.

Finally, on March 24, 2006, it was all systems go. The Falcon 1 stood on its square launch pad and ignited. It soared into the sky, turning the island below it into a green spec amid a vast, blue expanse. In the control room, Musk paced as he watched the action, wearing shorts, flip-flops, and a T-shirt. Then, about twenty-five seconds in, it became clear that all was not well. A fire broke out above the Merlin engine and suddenly this machine that had been flying straight and true started to spin and then tumble uncontrollably back to Earth. The Falcon 1 ended up falling directly down onto the launch site. Most of the debris went into a reef 250 feet from the launch pad, and the satellite cargo smashed through SpaceX’s machine shop roof and landed more or less intact on the floor. Some of the engineers put on their snorkeling and scuba gear and recovered the pieces, fitting all of the rocket’s remnants into two refrigerator-sized crates. “It is perhaps worth noting that those launch companies that succeeded also took their lumps along the way,” Musk wrote in a postmortem. “A friend of mine wrote to remind me that only 5 of the first 9 Pegasus launches succeeded; 3 of 5 for Ariane; 9 of 20 for Atlas; 9 of 21 for Soyuz; and 9 of 18 for Proton. Having experienced firsthand how hard it is to reach orbit, I have a lot of respect for those that persevered to produce the vehicles that are mainstays of space launch today.” Musk closed the letter writing, “SpaceX is in this for the long haul and, come hell or high water, we are going to make this work.”

...

Almost exactly a year later, SpaceX was ready to try another launch. On March 15, 2007, a successful test fire took place. Then, on March 21, the Falcon 1 finally behaved. From its launch pad surrounded by palm trees, the Falcon 1 surged up and toward space. It flew for a couple of minutes with engineers now and again reporting that the systems were “nominal,” or in good shape. At three minutes into the flight, the first stage of the rocket separated and fell back to Earth, and the Kestrel engine kicked in as planned to carry the second stage into orbit. Ecstatic cheers went out in the control room. Next, at the four-minute mark, the fairing atop the rocket separated as planned. “It was doing exactly what it was supposed to do,” said Mueller. “I was sitting next to Elon and looked at him and said, ‘We’ve made it.’ We’re hugging and believe it’s going to make it to orbit. Then, it starts to wiggle.” For more than five glorious minutes, the SpaceX engineers got to feel like they had done everything right. A camera on board the Falcon 1 pointed down and showed Earth getting smaller and smaller as the rocket made its way methodically into space. But then that wiggle that Mueller noticed turned into flailing, and the machine swooned, started to break apart, and then blew up. This time the SpaceX engineers were quick to figure out what went wrong. As the propellant was consumed, what was left started to move around the tank and slosh against the sides, much like wine spinning around a glass. The sloshing propellant triggered the wobbling, and at one point it sloshed enough to leave an opening to the engine exposed. When the engine sucked in a big breath of air, it flamed out.

The failure was another crushing blow to SpaceX’s engineers. Some of them had spent close to two years shuffling back and forth between California, Hawaii, and Kwaj. By the time SpaceX could attempt another launch, it would be about four years after Musk’s original target, and the company had been chewing through his Internet fortune at a worrying rate. Musk had vowed publicly that he would see this thing through to the end, but people inside and outside the company were doing back-of-the-envelope math and could tell that SpaceX likely could only afford one more attempt—maybe two. To the extent that the financial situation unnerved Musk, he rarely if ever let it show to employees. “Elon did a great job of not burdening people with those worries,” said Spikes. “He always communicated the importance of being lean and of success, but it was never ‘if we fail, we’re done for.’ He was very optimistic.”

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Chapter 7: All Electric

In the fall of 2003, J.B. Straubel met Elon Musk through Harold Rosen.

Harold Rosen had set up a lunch with Musk at a seafood restaurant near the SpaceX headquarters in Los Angeles and brought Straubel along to help talk up the electric plane idea. When Musk didn’t bite on that, Straubel announced his electric car side project. The crazy idea struck an immediate chord with Musk, who had been thinking about electric vehicles for years. While Musk had mostly focused on using ultra-capacitors for the vehicles, he was thrilled and surprised to hear how far the lithium ion battery technology had progressed. “Everyone else had told me I was nuts, but Elon loved the idea,” Straubel said. “He said, ‘Sure, I will give you some money.’” Musk promised Straubel $10,000 of the $100,000 he was seeking. On the spot, Musk and Straubel formed a kinship that would survive more than a decade of extreme highs and lows as they set out to do nothing less than change the world.

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The efforts at Tesla began in earnest on October 18, 2004, and, rather remarkably, four months later, on January 27, 2005, an entirely new kind of car had been built by eighteen people. It could even be driven around. Tesla had a board meeting that day, and Musk zipped about in the car. He came away happy enough to keep investing. Musk put in $9 million more as Tesla raised a $13 million funding round. The company now planned to deliver the Roadster to consumers in early 2006.

Once they’d finished building a second car a few months later, the engineers at Tesla decided they needed to face up to a massive potential flaw in their electric vehicle. On July 4, 2005, they were at Eberhard’s house in Woodside celebrating Independence Day and figured it was as good a moment as any to see what happened when the Roadster’s batteries caught on fire. Someone taped twenty of the batteries together, put a heating strip wire into the bundle, and set it off. “It went up like a cluster of bottle rockets,” Lyons said. Instead of twenty batteries, the Roadster would have close to 7,000, and the thought of what an explosion at that scale would be like horrified the engineers. One of the perks of an electric car was meant to be that it moved people away from a flammable liquid like gasoline and the endless explosions that take place in an engine. Rich people were unlikely to pay a high price for something even more dangerous, and the early nightmare scenario for the employees at Tesla was that a rich, famous person would get caught in a fire caused by the car. “It was one of those ‘oh shit’ moments,” Lyons said. “That is when we really sobered up.”

Tesla formed a six-person task force to deal with the battery issue. They were pulled off all other work and given money to begin running experiments. The first explosions started taking place at the Tesla headquarters, where the engineers filmed them in slow motion. Once saner minds prevailed, Tesla moved its explosion research to a blast area behind an electrical substation maintained by the fire department. Blast by blast, the engineers learned a great deal about the inner workings of the batteries. They developed methods for arranging them in ways that would prevent fires spreading from one battery to the next and other techniques for stopping explosions altogether. Thousands of batteries exploded along the way, and the effort was worth it. It was still early days, for sure, but Tesla was on the verge of inventing battery technology that would set it apart from rivals for years to come and would become one of the company’s great advantages.

...

After many tweaks and much work, Tesla now had a pencils-down moment. It was May 2006, and the company had grown to a hundred employees. This team built a black version of the Roadster known as EP1, or engineering prototype one. “It was saying, ‘We now think we know what we will build,’” Tarpenning said. “You can feel it. It’s a real car, and it’s very exciting.” The arrival of the EP1 provided a great excuse to show existing investors what their money had bought and to ask for more funds from a wider audience. The venture capitalists were impressed enough to overlook the fact that engineers sometimes had to manually fan the car to cool it down in between test drives and were now starting to grasp Tesla’s long-term potential. Musk once again put money into Tesla—$12 million—and a handful of other investors, including the venture capital firm Draper Fisher Jurvetson, VantagePoint Capital Partners, J.P. Morgan, Compass Technology Partners, Nick Pritzker, Larry Page, and Sergey Brin, joined the $40 million round.

In July 2006, Tesla decided to tell the world what it had been up to. The company’s engineers had built a red prototype—EP2—to complement the black one, and they both went on display at an event in Santa Clara. The press flocked to the announcement and were quite taken with what they saw. The Roadsters were gorgeous, two-seater convertibles that could go from zero to 60 in about four seconds. “Until today,” Musk said at the event, “all electric cars have sucked.”

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In 2008, Tesla employees soon got to witness the same Musk that SpaceX employees had seen for years. When an issue like the Roadster’s faulty carbon-fiber body panels cropped up, Musk dealt with it directly. He flew to England in his jet to pick up some new manufacturing tools for the body panels and personally delivered them to a factory in France to ensure that the Roadster stayed on its production schedule. The days of people being ambiguous about the Roadster’s manufacturing costs were gone as well. “Elon got fired up and said we were going to do this intense cost-down program,” said Popple. “He gave a speech, saying we would work on Saturdays and Sundays and sleep under desks until it got done. Someone pushed back from the table and argued that everyone had been working so hard just to get the car done, and they were ready for a break and to see their families. Elon said, ‘I would tell those people they will get to see their families a lot when we go bankrupt.’ I was like, ‘Wow,’ but I got it. I had come out of a military culture, and you just have to make your objective happen.” Employees were required to meet at 7 A.M. every Thursday morning for bill-of-materials updates. They had to know the price of every part and have a cogent plan for getting parts cheaper. If the motor cost $6,500 a pop at the end of December, Musk wanted it to cost $3,800 by April. The costs were plotted and analyzed each month. “If you started falling behind, there was hell to pay,” Popple said. “Everyone could see it, and people lost their jobs when they didn’t deliver. Elon has a mind that’s a bit like a calculator. If you put a number on the projector that does not make sense, he will spot it. He doesn’t miss details.” Popple found Musk’s style aggressive, but he liked that Musk would listen to a well-argued, analytical point and often change his mind if given a good enough reason. “Some people thought Elon was too tough or hot-tempered or tyrannical,” Popple said. “But these were hard times, and those of us close to the operational realities of the company knew it. I appreciated that he didn’t sugarcoat things.”

On the marketing front, Musk would run daily Google searches for news stories about Tesla. If he saw a bad story, he ordered someone to “fix it” even though the Tesla public relations people could do little to sway the reporters. One employee missed an event to witness the birth of his child. Musk fired off an e-mail saying, “That is no excuse. I am extremely disappointed. You need to figure out where your priorities are. We’re changing the world and changing history, and you either commit or you don’t.”

Marketing people who made grammatical mistakes in e-mails were let go, as were other people who hadn’t done anything “awesome” in recent memory. “He can be incredibly intimidating at times but doesn’t have a real sense for just how imposing he can be,” said one former Tesla executive. “We’d have these meetings and take bets on who was going to get bloodied and bruised. If you told him that you made a particular choice because ‘it was the standard way things had always been done,’ he’d kick you out of a meeting fast. He’d say, ‘I never want to hear that phrase again. What we have to do is fucking hard and half-assing things won’t be tolerated.’ He just destroys you and, if you survive, he determines if he can trust you. He has to understand that you’re as crazy as he is.” This ethos filtered through the entire company, and everyone quickly understood that Musk meant business.

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Tesla could survive the loss of some of these early hires. Its strong brand had allowed the company to keep recruiting top talent, including people from large automotive companies who knew how to get over the last set of challenges blocking the Roadster from reaching customers. But Tesla’s major issue no longer revolved around effort, engineering, or clever marketing. Heading into 2008, the company was running out of money. The Roadster had cost about $140 million to develop, way over the $25 million originally estimated in the 2004 business plan. Under normal circumstances, Tesla had probably done enough to raise more funds. These, however, were not normal times. The big automakers in the United States were charging toward bankruptcy in the middle of the worst financial crisis since the Great Depression. In the midst of all this, Musk needed to convince Tesla’s investors to fork over tens of millions of additional dollars, and those investors had to go to their constituents to lay out why this made any sense. As Musk put it, “Try to imagine explaining that you’re investing in an electric car company, and everything you read about the car company sounds like it is shit and doomed and it’s a recession and no one is buying cars.” All Musk had to do to dig Tesla out of this conundrum was lose his entire fortune and verge on a nervous breakdown.

Chapter 8: Pain, Suffering, And Survival

Text about Musk’s divorce with Justine:

The media coverage and divorce freed Justine to write about her private life in a much more liberated way. In the posts that followed, she gave her account of how the marriage ended, her views on Musk’s girlfriend and future second wife, and the inner workings of the divorce proceedings. For the first time, the public had access to a deeply unpleasant portrayal of Musk and received some firsthand accounts—albeit from an ex-wife—of his hardline behavior. The writing may have been biased, but it provided a window into how Musk operated. Here’s one post about the lead-up to the divorce and its rapid execution:

Divorce, for me, was like the bomb you set off when all other options have been exhausted. I had not yet given up on the diplomacy option, which was why I hadn’t already filed. We were still in the early stages of marital counseling (three sessions total). Elon, however, took matters into his own hands—he tends to like to do that—when he gave me an ultimatum: “Either we fix [the marriage] today, or I will divorce you tomorrow.”

That night, and again the next morning, he asked me what I wanted to do. I stated emphatically that I was not ready to unleash the dogs of divorce; I suggested that “we” hold off for at least another week. Elon nodded, touched the top of my head, and left. Later that same morning I tried to make a purchase and discovered that he had cut off my credit card, which is when I also knew that he had gone ahead and filed (as it was, Elon did not tell me directly; he had another person do it).

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In 2008, When Musk ran through the calculations concerning SpaceX and Tesla, it occurred to him that only one company would likely even have a chance at survival. “I could either pick SpaceX or Tesla or split the money I had left between them,” Musk said. “That was a tough decision. If I split the money, maybe both of them would die. If I gave the money to just one company, the probability of it surviving was greater, but then it would mean certain death for the other company. I debated that over and over.” While Musk meditated on this, the economy worsened quickly and so too did Musk’s financial condition. As 2008 came to an end, Musk had run out of money.

Riley began to see Musk’s life as a Shakespearean tragedy. Sometimes Musk would open up to her about the issues, and other times he retreated into himself. Riley spied on Musk while he read email and watched him grimace as the bad news poured in. “You’d witness him having these conversations in his head,” she said. “It’s really hard to watch someone you love struggle like that.” Because of the long hours that he worked and his eating habits, Musk’s weight fluctuated wildly. Bags formed under his eyes, and his countenance started to resemble that of a shattered runner at the back end of an ultra-marathon. “He looked like death itself,” Riley said. “I remember thinking this guy would have a heart attack and die. He seemed like a man on the brink.” In the middle of the night, Musk would have nightmares and yell out. “He was in physical pain,” Riley said. “He would climb on me and start screaming while still asleep.” The couple had to start borrowing hundreds of thousands of dollars from Musk’s friend Skoll, and Riley’s parents offered to remortgage their house. Musk no longer flew his jet back and forth between Los Angles and Silicon Valley. He took Southwest.

Burning through about $4 million a month, Tesla needed to close another major round of funding to get through 2008 and stay alive. Musk had to lean on friends just to try to make payroll from week to week, as he negotiated with investors. He sent impassioned pleas to anyone he could think of who might be able to spare some money. Bill Lee invested $2 million in Tesla, and Sergey Brin invested $500,000. “A bunch of Tesla employees wrote checks to keep the company going,” said Diarmuid O’Connell, the vice president of business development at Tesla. “They turned into investments, but, at the time, it was twenty-five or fifty thousand dollars that you didn’t expect to see again. It just seemed like holy shit, this thing is going to crater.” Kimbal had lost most of his money during the recession when his investments bottomed out but sold what he had left and put it into Tesla as well. “I was close to bankruptcy,” Kimbal said. Tesla had set the prepayments that customers made for the Roadsters aside, but Musk now needed to use that money to keep the company going and soon those funds were gone, too. These fiscal maneuvers worried Kimbal. “I’m sure Elon would have found a way to make things right, but he definitely took risks that seemed like they could have landed him in jail for using someone else’s money,” he said.

In December 2008, Musk mounted simultaneous campaigns to try to save his companies. He heard a rumor that NASA was on the verge of awarding a contract to resupply the space station. SpaceX’s fourth launch had put it in a position to receive some of this money, which was said to be in excess of $1 billion. Musk reached out through some back channels in Washington and found out that SpaceX might even be a front-runner for the deal. Musk began doing everything in his power to assure people that the company could meet the challenge of getting a capsule to the ISS. As for Tesla, Musk had to go to his existing investors and ask them to pony up for another round of funding that needed to close by Christmas Eve to avoid bankruptcy. To give the investors some measure of confidence, Musk made a last-ditch effort to raise all the personal funds he could and put them into the company. He took out a loan from SpaceX, which NASA approved, and earmarked the money for Tesla. Musk went to the secondary markets to try to sell some of his shares in SolarCity. He also seized about $15 million that came through when Dell acquired a data center software start-up called Everdream, founded by Musk’s cousins, in which he had invested. “It was like the fucking Matrix,” Musk said, describing his financial maneuvers. “The Everdream deal really saved my butt.”

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At SpaceX, Musk and the company’s top executives had spent most of December (2008) in a state of fear. According to reports in the press, SpaceX, the onetime front-runner for the large NASA contract, had suddenly lost favor with the space agency. Michael Griffin, who had once almost been a cofounder of SpaceX, was the head of NASA and had turned on Musk. Griffin did not care for Musk’s aggressive business tactics, seeing him as borderline unethical. Others have suggested that Griffin ended up being jealous of Musk and SpaceX. On December 23, 2008, however, SpaceX received a shock. People inside NASA had backed SpaceX to become a supplier for the ISS. The company received $1.6 billion as payment for twelve flights to the space station. Staying with Kimbal in Boulder, Colorado, for the holidays, Musk broke down in tears as the SpaceX and Tesla transactions processed. “I hadn’t had an opportunity to buy a Christmas present for Talulah or anything,” he said. “I went running down the fucking street in Boulder, and the only place that was open sold these shitty trinkets, and they were about to close. The best thing I could find were these plastic monkeys with coconuts—those ‘see no evil, hear no evil’ monkeys.”

For Gracias, the Tesla and SpaceX investor and Musk’s friend, the 2008 period told him everything he would ever need to know about Musk’s character. He saw a man who arrived in the United States with nothing, who had lost a child, who was being pilloried in the press by reporters and his ex-wife and who verged on having his life’s work destroyed. “He has the ability to work harder and endure more stress than anyone I’ve ever met,” Gracias said. “What he went through in 2008 would have broken anyone else. He didn’t just survive. He kept working and stayed focused.” That ability to stay focused in the midst of a crisis stands as one of Musk’s main advantages over other executives and competitors. “Most people who are under that sort of pressure fray,” Gracias said. “Their decisions go bad. Elon gets hyper-rational. He’s still able to make very clear, long-term decisions. The harder it gets, the better he gets. Anyone who saw what he went through firsthand came away with more respect for the guy. I’ve just never seen anything like his ability to take pain.”

Chapter 9: Liftoff

THE FALCON 9 HAS BECOME SPACEX’S WORKHORSE. The rocket looks—let’s face it—like a giant white phallus. It stands 224.4 feet tall, is 12 feet across, and weighs 1.1 million pounds. The rocket is powered by nine engines arranged in an “octaweb” pattern at its base with one engine in the center and eight others encircling it. The engines connect to the first stage, or the main body of the rocket, which bears the blue SpaceX insignia and an American flag. The shorter second stage of the rocket sits on top of the first and is the one that actually ends up doing things in space. It can be outfitted with a rounded container for carrying satellites or a capsule capable of transporting humans. By design, there’s nothing particularly flashy about the Falcon 9’s outward appearance. It’s the spaceship equivalent of an Apple laptop or a Braun kettle—an elegant, purposeful machine stripped of frivolity and waste.

SpaceX sometimes uses Vandenberg Air Force Base in Southern California to send up these Falcon 9 rockets. Were it not owned by the military, the base would be a resort. The Pacific Ocean runs for miles along its border, and its grounds have wide-open shrubby fields dotted by green hills. Nestled into one hilly spot just at the ocean’s edge are a handful of launch pads. On launch days, the white Falcon 9 breaks up the blue and green landscape, pointing skyward and leaving no doubt about its intentions.

About four hours before a launch, the Falcon 9 starts getting filled with an immense amount of liquid oxygen and rocket-grade kerosene. Some of the liquid oxygen vents out of the rocket as it awaits launch and is kept so cold that it boils off on contact with the metal and air, forming white plumes that stream down the rocket’s sides. This gives the impression of the Falcon 9 huffing and puffing as it limbers up before the journey. The engineers inside of SpaceX’s mission control monitor these fuel systems and all manner of other items. They chat back and forth through headsets and begin cycling through their launch checklist, consumed by what people in the business call “go fever” as they move from one approval to the next. Ten minutes before launch, the humans step out of the way and leave the remaining processes up to automated machines. Everything goes quiet, and the tension builds until right before the main event. That’s when, out of nowhere, the Falcon 9 breaks the silence by letting out a loud gasp.

A white latticed support structure pulls away from its body. The T-minus-ten-seconds countdown begins. Nothing much happens from ten down to four. At the count of three, however, the engines ignite, and the computers conduct a last, oh-so-rapid, health check. Four enormous metal clamps hold the rocket down, as computing systems evaluate all nine engines and measure if there’s sufficient downward force being produced. By the time zero arrives, the rocket has decided that all is well enough to go through with its mission, and the clamps release. The rocket goes to war with inertia, and then, with flames surrounding its base and snow-thick plumes of the liquid oxygen filling the air, it shoots up. Seeing something so large hold so straight and steady while suspended in midair is hard for the brain to register. It is foreign, inexplicable. About twenty seconds after liftoff, the spectators placed safely a few miles away catch the first faceful of the Falcon 9’s rumble. It’s a distinct sound— a sort of staccato crackling that arises from chemicals whipped into a violent frenzy. Pant legs vibrate from shock waves produced by a stream of sonic booms coming out of the Falcon 9’s exhaust. The white rocket climbs higher and higher with impressive stamina. After about a minute, it’s just a red spot in the sky, and then—poof—it’s gone. Only a cynical dullard could come away from witnessing this feeling anything other than wonder at what man can accomplish.

For Elon Musk, this spectacle has turned into a familiar experience. SpaceX has metamorphosed from the joke of the aeronautics industry into one of its most consistent operators. SpaceX sends a rocket up about once a month, carrying satellites for companies and nations and supplies to the International Space Station. Where the Falcon 1 blasting off from Kwajalein was the work of a startup, the Falcon 9 taking off from Vandenberg is the work of an aerospace superpower. SpaceX can undercut its U.S. competitors—Boeing, Lockheed Martin, Orbital Sciences—on price by a ridiculous margin. It also offers U.S. customers a peace of mind that its rivals can’t. Where these competitors rely on Russian and other foreign suppliers, SpaceX makes all of its machines from scratch in the United States. Because of its low costs, SpaceX has once again made the United States a player in the worldwide commercial launch market. Its $60 million per launch cost is much less than what Europe and Japan charge and trumps even the relative bargains offered by the Russians and Chinese, who have the added benefit of decades of sunk government investment into their space programs as well as cheap labor.

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The SpaceX hiring model places some emphasis on getting top marks at top schools. But most of the attention goes toward spotting engineers who have exhibited type-A personality traits over the course of their lives. The company’s recruiters look for people who might excel at robot-building competitions or who are car-racing hobbyists who have built unusual vehicles. The object is to find individuals who ooze passion, can work well as part of a team, and have real-world experience bending metal. “Even if you’re someone who writes code for your job, you need to understand how mechanical things work,” said Dolly Singh, who spent five years as the head of talent acquisition at SpaceX. “We were looking for people that had been building things since they were little.”

Sometimes these people walked through the front door. Other times, Singh relied on a handful of enterprising techniques to find them. She became famous for trawling through academic papers to find engineers with very specific skills, cold-calling researchers at labs and plucking possessed engineers out of college. At trade shows and conferences, SpaceX recruiters wooed interesting candidates they had spotted with a cloak-and-dagger shtick. They would hand out blank envelopes that contained invitations to meet at a specific time and place, usually a bar or restaurant near the event, for an initial interview. The candidates that showed up would discover they were among only a handful of people who been anointed out of all the conference attendees. They were immediately made to feel special and inspired.

Like many tech companies, SpaceX subjects potential hires to a gauntlet of interviews and tests. Some of the interviews are easygoing chats in which both parties get to feel each other out; others are filled with quizzes that can be quite hard. Engineers tend to face the most rigorous interrogations, although business types and salesmen are made to suffer, too. Coders who expect to pass through standard challenges have rude awakenings. Companies will typically challenge software developers on the spot by asking them to solve problems that require a couple of dozen lines of code. The standard SpaceX problem requires five hundred or more lines of code. All potential employees who make their way to the end of the interview process then handle one more task. They’re asked to write an essay for Musk about why they want to work at SpaceX.

The reward for solving the puzzles, acting clever in interviews, and penning up a good essay is a meeting with Musk. He interviewed almost every one of SpaceX’s first one thousand hires, including the janitors and technicians, and has continued to interview the engineers as the company’s workforce swelled. Each employee receives a warning before going to meet with Musk. The interview, he or she is told, could last anywhere from thirty seconds to fifteen minutes. Elon will likely keep on writing emails and working during the initial part of the interview and not speak much. Don’t panic. That’s normal. Eventually, he will turn around in his chair to face you. Even then, though, he might not make actual eye contact with you or fully acknowledge your presence. Don’t panic. That’s normal. In due course, he will speak to you. From that point, the tales of engineers who have interviewed with Musk run the gamut from torturous experiences to the sublime. He might ask one question or he might ask several. You can be sure, though, that he will roll out the Riddle: “You’re standing on the surface of the Earth. You walk one mile south, one mile west, and one mile north. You end up exactly where you started. Where are you?” One answer to that is the North Pole, and most of the engineers get it right away. That’s when Musk will follow with “Where else could you be?” The other answer is somewhere close to the South Pole where, if you walk one mile south, the circumference of the Earth becomes one mile. Fewer engineers get this answer, and Musk will happily walk them through that riddle and others and cite any relevant equations during his explanations. He tends to care less about whether or not the person gets the answer than about how they describe the problem and their approach to solving it.

When speaking to potential recruits, Singh tried to energize them and be up front about the demands of SpaceX and of Musk at the same time. “The recruiting pitch was SpaceX is special forces,” she said. “If you want as hard as it gets, then great. If not, then you shouldn’t come here.” Once at SpaceX, the new employees found out very quickly if they were indeed up for the challenge. Many of them would quit within the first few months because of the ninety-plus-hour workweeks. Others quit because they could not handle just how direct Musk and the other executives were during meetings. “Elon doesn’t know about you and he hasn’t thought through whether or not something is going to hurt your feelings,” Singh said. “He just knows what the fuck he wants done. People who did not normalize to his communication style did not do well.”

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Asked about his approach, Musk said,

I certainly don’t try to set impossible goals. I think impossible goals are demotivating. You don’t want to tell people to go through a wall by banging their head against it. I don’t ever set intentionally impossible goals. But I’ve certainly always been optimistic on time frames. I’m trying to recalibrate to be a little more realistic.

I don’t assume that it’s just like 100 of me or something like that. I mean, in the case of the early SpaceX days, it would have been just the lack of understanding of what it takes to develop a rocket. In that case I was off by, say, 200 percent. I think future programs might be off by anywhere from like 25 percent to 50 percent as opposed to 200 percent.

So, I think generally you do want to have a timeline where, based on everything you know about, the schedule should be X, and you execute towards that, but with the understanding that there will be all sorts of things that you don’t know about that you will encounter that will push the date beyond that. It doesn’t mean that you shouldn’t have tried to aim for that date from the beginning because aiming for something else would have been an arbitrary time increase.

It’s different to say, “Well, what do you promise people?” Because you want to try to promise people something that includes schedule margin. But in order to achieve the external promised schedule, you’ve got to have an internal schedule that’s more aggressive than that. Sometimes you still miss the external schedule.

SpaceX, by the way, is not alone here. Being late is par for the course in the aerospace industry. It’s not a question of if it’s late, it’s how late will the program be. I don’t think an aerospace program has been completed on time since bloody World War II.

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There can be no question that Musk has mastered the art of getting the most out of his employees. Interview three dozen SpaceX engineers and each one of them will have picked up on a managerial nuance that Musk has used to get people to meet his deadlines. One example from Brogan: Where a typical manager may set the deadline for the employee, Musk guides his engineers into taking ownership of their own delivery dates. “He doesn’t say, ‘You have to do this by Friday at two P.M.,’” Brogan said. “He says, ‘I need the impossible done by Friday at two P.M. Can you do it?’ Then, when you say yes, you are not working hard because he told you to. You’re working hard for yourself. It’s a distinction you can feel. You have signed up to do your own work.” And by recruiting hundreds of bright, self-motivated people, SpaceX has maximized the power of the individual. One person putting in a sixteen-hour day ends up being much more effective than two people working eight-hour days together. The individual doesn’t have to hold meetings, reach a consensus, or bring other people up to speed on a project. He just keeps working and working and working. The ideal SpaceX employee is someone like Steve Davis, the director of advanced projects at SpaceX. “He’s been working sixteen hours a day every day for years,” Brogan said. “He gets more done than eleven people working together.”

To find Davis, Musk called a teaching assistant* in Stanford’s aeronautics department and asked him if there were any hardworking, bright master’s and doctoral candidates who didn’t have families. The TA pointed Musk to Davis, who was pursuing a master’s degree in aerospace engineering to add to degrees in finance, mechanical engineering, and particle physics. Musk called Davis on a Wednesday and offered him a job the following Friday. Davis was the twenty-second SpaceX hire and has ended up the twelfth most senior person still at the company. He turned thirty-five in 2014.

Davis’ thoughts about Elon:

One of my favorite things about Elon is his ability to make enormous decisions very quickly. That is still how it works today.

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Kevin Watson arrived at SpaceX in 2008 after spending twenty-four years at NASA’s Jet Propulsion Laboratory. Here’s what he has to say about Elon:

Elon is brilliant. He’s involved in just about everything. He understands everything. If he asks you a question, you learn very quickly not to go give him a gut reaction. He wants answers that get down to the fundamental laws of physics. One thing he understands really well is the physics of the rockets. He understands that like nobody else. The stuff I have seen him do in his head is crazy. He can get in discussions about flying a satellite and whether we can make the right orbit and deliver Dragon at the same time and solve all these equations in real time. It’s amazing to watch the amount of knowledge he has accumulated over the years. I don’t want to be the person who ever has to compete with Elon. You might as well leave the business and find something else fun to do. He will outmaneuver you, outthink you, and out-execute you.

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As of 2014:

Just as it did in the early days, SpaceX continues to experiment with these new vehicles during actual launches in ways that other companies would dare not do. SpaceX will often announce that it’s trying out a new engine or its landing legs and place the emphasis on that one upgrade in the marketing material leading up to a launch. It’s common, though, for SpaceX to test out a dozen other objectives in secret during a mission. Musk essentially asks employees to do the impossible on top of the impossible. One former SpaceX executive described the working atmosphere as a perpetual-motion machine that runs on a weird mix of dissatisfaction and eternal hope. “It’s like he has everyone working on this car that is meant to get from Los Angeles to New York on one tank of gas,” this executive said. “They will work on the car for a year and test all of its parts. Then, when they set off for New York after that year, all of the vice presidents think privately that the car will be lucky to get to Las Vegas. What ends up happening is that the car gets to New Mexico—twice as far as they ever expected—and Elon is still mad. He gets twice as much as anyone else out of people.”

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There’s a degree to which it’s just never enough for Musk, no matter what it is. Case in point: the December 2010 launch in which SpaceX got the Dragon capsule to orbit Earth and return successfully. This had been one of the company’s great achievements, and people had worked tirelessly for months, if not years. The launch had taken place on December 8, and SpaceX had a Christmas party on December 16. About ninety minutes before the party started, Musk had called his top executives to SpaceX for a meeting. Six of them, including Mueller, were decked out in party attire and ready to celebrate the holidays and SpaceX’s historic achievement around Dragon. Musk laid into them for about an hour because the truss structure for a future rocket was running behind schedule. “Their wives were sitting three cubes over waiting for the berating to end,” Brogan said. Other examples of similar behavior have cropped up from time to time. Musk, for example, rewarded a group of thirty employees who had pulled off a tough project for NASA with bonuses that consisted of additional stock option grants. Many of the employees, seeking instant, more tangible gratification, demanded cash. “He chided us for not valuing the stock,” Drew Eldeen, a former engineer, said. “He said, ‘In the long run, this is worth a lot more than a thousand dollars in cash.’ He wasn’t screaming or anything like that, but he seemed disappointed in us. It was hard to hear that.”

The lingering question for many SpaceX employees is when exactly they will see a big reward for all their work. SpaceX’s staff is paid well but by no means exorbitantly. Many of them expect to make their money when SpaceX files for an initial public offering. The thing is that Musk does not want to go public anytime soon, and understandably so. It’s a bit hard to explain the whole Mars thing to investors, when it’s unclear what the business model around starting a colony on another planet will be. When the employees heard Musk say that an IPO was years away and would not occur until the Mars mission looked more secure, they started to grumble, and when Musk found out, he addressed all of SpaceX in an e-mail that is a fantastic window into his thinking and how it differs from almost every other CEO’s.

June 7, 2013

Going Public

Per my recent comments, I am increasingly concerned about SpaceX going public before the Mars transport system is in place. Creating the technology needed to establish life on Mars is and always has been the fundamental goal of SpaceX. If being a public company diminishes that likelihood, then we should not do so until Mars is secure. This is something that I am open to reconsidering, but, given my experiences with Tesla and SolarCity, I am hesitant to foist being public on SpaceX, especially given the long term nature of our mission. Some at SpaceX who have not been through a public company experience may think that being public is desirable. This is not so. Public company stocks, particularly if big step changes in technology are involved, go through extreme volatility, both for reasons of internal execution and for reasons that have nothing to do with anything except the economy. This causes people to be distracted by the manic-depressive nature of the stock instead of creating great products.

For those who are under the impression that they are so clever that they can outsmart public market investors and would sell SpaceX stock at the “right time,” let me relieve you of any such notion. If you really are better than most hedge fund managers, then there is no need to worry about the value of your SpaceX stock, as you can just invest in other public company stocks and make billions of dollars in the market.

Elon

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Chapter 10: The Revenge of the Electric Car

THERE ARE SO MANY TELEVISION COMMERCIALS FOR CARS AND TRUCKS that it’s easy to become immune to them and ignore what’s taking place in the ads. That’s okay. Because there’s not really much of note happening. Carmakers looking to put a modicum of effort into their ads have been hawking the exact same things for decades: a car with a bit more room, a few extra miles per gallon, better handling, or an extra cup holder. Those that can’t find anything interesting at all to tout about their cars turn to scantily clad women, men with British accents, and, when necessary, dancing mice in tuxedos to try and convince people that their products are better than the rest. Next time a car ad appears on your television, pause for a moment and really listen to what’s being said. When you realize that the Volkswagen sign-and-drive “event” is code for “we’re making the experience of buying a car slightly less miserable than usual,” you’ll start to appreciate just how low the automotive industry has sunk.

In the middle of 2012, Tesla Motors stunned its complacent peers in the automotive industry. It began shipping the Model S sedan. This all-electric luxury vehicle could go more than 300 miles on a single charge. It could reach 60 miles per hour in 4.2 seconds. It could seat seven people, if you used a couple of optional rear-facing seats in the back for kids. It also had two trunks. There was the standard one and then what Tesla calls a “frunk” up front, where the bulky engine would usually be. The Model S ran on an electric battery pack that makes up the base of the car and a watermelon-sized electric motor located between the rear tires. Getting rid of the engine and its din of clanging machinery also meant that the Model S ran silently. The Model S outclassed most other luxury sedans in terms of raw speed, mileage, handling, and storage space.

And there was more—like a cutesy thing with the door handles, which were flush with the car’s body until the driver got close to the Model S. Then the silver handles would pop out, the driver would open the door and get in, and the handles would retract flush with the car’s body again. Once inside, the driver encountered a seventeen-inch touch-screen that controlled the vast majority of the car’s functions, be it raising the volume on the stereo* or opening the sunroof with a slide of the finger. Whereas most cars have a large dashboard to accommodate various displays and buttons and to protect people from the noise of the engine, the Model S offered up vast amounts of space. The Model S had an ever-present Internet connection, allowing the driver to stream music through the touch console and to display massive Google maps for navigation. The driver didn’t need to turn a key or even push an ignition button to start the car. His weight in the seat coupled with a sensor in the key fob, which is shaped like a tiny Model S, was enough to activate the vehicle. Made of lightweight aluminum, the car achieved the highest safety rating in history. And it could be recharged for free at Tesla’s stations lining highways across the United States and later around the world.

For both engineers and green-minded people, the Model S presented a model of efficiency. Traditional cars and hybrids have anywhere from hundreds to thousands of moving parts. The engine must perform constant, controlled explosions with pistons, crankshafts, oil filters, alternators, fans, distributors, valves, coils, and cylinders among the many pieces of machinery needed for the work. The oomph produced by the engine must then be passed through clutches, gears, and drive-shafts to make the wheels turn, and then exhaust systems have to deal with the waste. Cars end up being about 10–20 percent efficient at turning the input of gasoline into the output of propulsion. Most of the energy (about 70 percent) is lost as heat in the engine, while the rest is lost through wind resistance, braking, and other mechanical functions. The Model S, by contrast, has about a dozen moving parts, with the battery pack sending energy instantly to a watermelon-sized motor that turns the wheels. The Model S ends up being about 60 percent efficient, losing most of the rest of its energy to heat. The sedan gets the equivalent of about 100 miles per gallon.

Yet another distinguishing characteristic of the Model S was the experience of buying and owning the car. You didn’t go to a dealership and haggle with a pushy salesman. Tesla sold the Model S directly through its own stores and website. Typically, the stores were placed in high-end malls or affluent suburbs, not far from the Apple stores on which they were modeled. Customers would walk in and find a complete Model S in the middle of the shop and often an exposed version of the car’s base near the back of the store to show off the battery pack and motor. There were massive touchscreens where people could calculate how much they might save on fuel costs by moving to an all-electric car, and where they could configure the look and add-ons for their future Model S. Once the configuration process was done, the customer could give the screen a big, forceful swipe and his Model S would theatrically appear on an even bigger screen in the center of the store. If you wanted to sit in the display model, a salesman would pull back a red velvet rope near the driver’s-side door and let you enter the car. The salespeople were not compensated on commission and didn’t have to try to talk you into buying a suite of extras. Whether you ultimately bought the car in the store or online, it was delivered in a concierge fashion. Tesla would bring it to your home, office, or anywhere else you wanted it. The company also offered customers the option of picking their cars up from the factory in Silicon Valley and treating their friends and family to a complimentary tour of the facility. In the months that followed the delivery, there were no oil changes or tune-ups to be dealt with because the Model S didn’t need them. It had done away with so much of the mechanical dreck standard in an internal combustion vehicle. However, if something did go wrong with the car, Tesla would come pick it up and give the customer a loaner while it repaired the Model S.

The Model S also offered a way to fix issues in a manner that people had never before encountered with a mass-produced car. Some of the early owners complained about glitches like the door handles not popping out quite right or their windshield wipers operating at funky speeds. These were inexcusable flaws for such a costly vehicle, but Tesla typically moved with clever efficiency to address them. While the owner slept, Tesla’s engineers tapped into the car via the Internet connection and downloaded software updates. When the customer took the car out for a spin in the morning and found it working right, he was left feeling as if magical elves had done the work. Tesla soon began showing off its software skills for jobs other than making up for mistakes. It put out a smartphone app that let people turn on their air-conditioning or heating from afar and to see where the car was parked on a map. Tesla also began installing software updates that imbued the Model S with new features. Overnight, the Model S sometimes got new traction controls for hilly and highway driving or could suddenly recharge much faster than before or possess a new range of voice controls. Tesla had transformed the car into a gadget—a device that actually got better after you bought it. As Craig Venter, one of the earliest Model S owners and the famed scientist who first decoded man’s DNA, put it, “It changes everything about transportation. It’s a computer on wheels.”

The first people to notice what Tesla had accomplished were the technophiles in Silicon Valley. The region is filled with early adopters willing to buy the latest gizmos and suffer through their bugs. Normally this habit applies to computing devices ranging from $100 to $2,000 in price. This time around, the early adopters proved willing not only to spend $100,000 on a product that might not work but also to trust their well-being to a start-up. Tesla needed this early boost of confidence and got it on a scale few expected. In the first couple of months after the Model S went on sale, you might see one or two per day on the streets of San Francisco and the surrounding cities. Then you started to see five to ten per day. Soon enough, the Model S seemed to feel like the most common car in Palo Alto and Mountain View, the two cities at the heart of Silicon Valley. The Model S emerged as the ultimate status symbol for wealthy technophiles, allowing them to show off, get a new gadget, and claim to be helping the environment at the same time. From Silicon Valley, the Model S phenomenon spread to Los Angeles, then all along the West Coast and then to Washington, D.C., and New York (although to a lesser degree).

At first the more traditional automakers viewed the Model S as a gimmick and its surging sales as part of a fad. These sentiments, however, soon gave way to something more akin to panic. In November 2012, just a few months after it started shipping, the Model S was named Motor Trend’s Car of the Year in the first unanimous vote that anyone at the magazine could remember. The Model S beat out eleven other vehicles from companies such as Porsche, BMW, Lexus, and Subaru and was heralded as “proof positive that America can still make great things.” Motor Trend celebrated the Model S as the first non–internal combustion engine car ever to win its top award and wrote that the vehicle handled like a sports car, drove as smoothly as a Rolls-Royce, held as much as a Chevy Equinox, and was more efficient than a Toyota Prius. Several months later, Consumer Reports gave the Model S its highest car rating in history—99 out of 100—while proclaiming that it was likely the best car ever built. It was at about this time that sales of the Model S started to soar alongside Tesla’s share price and that General Motors, among other automakers, pulled together a team to study the Model S, Tesla, and the methods of Elon Musk.

It’s worth pausing for a moment to meditate on what Tesla had accomplished. Musk had set out to make an electric car that did not suffer from any compromises. He did that. Then, using a form of entrepreneurial judo, he upended the decades of criticisms against electric cars. The Model S was not just the best electric car; it was best car, period, and the car people desired. America had not seen a successful car company since Chrysler emerged in 1925. Silicon Valley had done little of note in the automotive industry. Musk had never run a car factory before and was considered arrogant and amateurish by Detroit. Yet, one year after the Model S went on sale, Tesla had posted a profit, hit $562 million in quarterly revenue, raised its sales forecast, and become as valuable as Mazda Motor. Elon Musk had built the automotive equivalent of the iPhone. And car executives in Detroit, Japan, and Germany had only their crappy ads to watch as they pondered how such a thing had occurred.

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It was the summer of 2008, when an artsy car lover named Franz von Holzhausen joined Tesla. His job would be to breathe new life into the car’s early designs and, if possible, turn the Model S into an iconic product.

“Elon’s mind was always way beyond the present moment,” he said. “You could see that he was a step or three ahead of everyone else and one hundred percent committed to what we were doing.”

Innovations in Model S:

Musk wanted to make another statement with a huge touchscreen. This was years before the iPad would be released. The touch-screens that people ran into now and again at airports or shopping kiosks were for the most part terrible. But to Musk, the iPhone and all of its touch functions made it obvious that this type of technology would soon become commonplace. He would make a giant iPhone and have it handle most of the car’s functions. To find the right size for the screen, Musk and von Holzhausen would sit in the skeleton car and hold up laptops of different sizes, placing them horizontally and vertically to see what looked best. They settled on a seventeen-inch screen in a vertical position. Drivers would tap on this screen for every task except for opening the glove box and turning on the emergency lights—jobs required by law to be performed with physical buttons.

Since the battery pack at the base of the car would weigh so much, Musk, the designers, and the engineers were always looking for ways to reduce the Model S’s weight in other spots. Musk opted to solve a big chunk of this problem by making the body of the Model S out of lightweight aluminum instead of steel. “The non-battery-pack portion of the car has to be lighter than comparable gasoline cars, and making it all aluminum became the obvious decision,” Musk said. “The fundamental problem was that if we didn’t make it out of aluminum the car wasn’t going to be any good.”

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To crank up the pace of the Model S design, there were engineers working all day and then others who would show up at 9 P.M. and work through the night. Both groups huddled inside of the 3,000- square-foot tent placed on the SpaceX factory floor. Their workspace looked like a reception area at an outdoor wedding. “The SpaceX guys were amazingly respectful and didn’t peek or ask questions,” said Ali Javidan, one of the main engineers. As von Holzhausen delivered his specifications, the engineers built the prototype body of the car. Every Friday afternoon, they brought what they had made into a courtyard behind the factory where Musk would look it over and provide feedback. To run tests on the body, the car would be loaded up with ballast to represent five people and then do loops around the factory until it overheated or broke down.

The more von Holzhausen learned about Tesla’s financial struggles, the more he wanted the public to see the Model S. “Things were so precarious, and I didn’t want to miss our opportunity to get this thing finished and show it to the world,” he said. That moment came in March 2009, when, just six months after von Holzhausen had arrived, Tesla unveiled the Model S at a press event held at SpaceX.

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In May 2009, things started to take off for Tesla. The Model S had been unveiled, and Daimler followed that by acquiring a 10 percent stake in Tesla for $50 million. The companies also formed a strategic partnership to have Tesla provide the battery packs for one thousand of Daimler’s Smart cars. “That money was important and went a long way back then,” said O’Connell. “It was also a validation. Here is the company that invented the internal combustion engine, and they are investing in us. It was a seminal moment, and I am sure it gave the guys over at the DOE the feeling that we were real. It’s not just our scientists saying this stuff is good. It’s Mercedes freaking Benz.”

Sure enough, in January 2010, the Department of Energy struck a $465 million loan agreement with Tesla. The money was far more than Tesla had ever expected to get from the government. But it still represented just a fraction of the $1 billion plus that most carmakers needed to bring a new vehicle to market. So, while Musk and O’Connell were thrilled to get the money, they still wondered if Tesla would be able to live up to the bargain. Tesla would need one more windfall or, perhaps, to steal a car factory. And in May 2010, that’s more or less what it did.

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Tesla employees developed similar techniques to their counterparts at SpaceX for dealing with Musk’s high demands. The savvy engineers knew better than to go into a meeting and deliver bad news without some sort of alternative plan at the ready. “One of the scariest meetings was when we needed to ask Elon for an extra two weeks and more money to build out another version of the Model S,” Javidan said. “We put together a plan, stating how long things would take and what they would cost. We told him that if he wanted the car in thirty days it would require hiring some new people, and we presented him with a stack of resumes. You don’t tell Elon you can’t do something. That will get you kicked out of the room. You need everything lined up. After we presented the plan, he said, ‘Okay, thanks.’ Everyone was like, ‘Holy shit, he didn’t fire you.’”

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By the end of June 2012, SpaceX had flown cargo to the International Space Station and had its capsule returned to Earth—firsts all around for a private company. That feat coupled with the launch of the Model S led to a rapid transformation in the way the world outside of Silicon Valley perceived Musk. The guy who was always promising, promising, promising was doing—and doing spectacular things. “I may have been optimistic with respect to the timing on some of these things, but I didn’t over-promise on the outcome,” Musk told me during an interview after the Model S launch. “I have done everything I said I was going to do.”

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While the doubters placed huge wagers on Tesla’s impending failure, Musk’s bluster mode engaged. He began talking about Tesla’s goals to become the most profitable major automobile maker in the world, with better margins than BMW. Then, in September 2012, he unveiled something that shocked both Tesla critics and proponents alike. Tesla had secretly been building the first leg of a network of charging stations. The company disclosed the location of six stations in California, Nevada, and Arizona and promised that hundreds more would be on the way. Tesla intended to build a global charging network that would let Model S owners making long drives pull off the highway and recharge very quickly. And they would be able to do so for free. In fact, Musk insisted that Tesla owners would soon be able to travel across the United States without spending a penny on fuel. Model S drivers would have no trouble finding these stations, not only because the cars’ onboard computers would guide them to the nearest one but because Musk and von Holzhausen had designed giant red and white monoliths to herald the appearance of the stations.

The Supercharging stations, as Tesla called them, represented a huge investment for the strapped company. An argument could easily be made that spending money on this sort of thing at such a precarious moment in the Model S and Tesla’s history was somewhere between daft and batshit crazy. Surely Musk did not have the gall to try to revamp the very idea of the automobile and build an energy network at the same time with a budget equivalent to what Ford and ExxonMobil spend on their annual holiday parties. But that was the exact plan. Musk, Straubel, and others inside Tesla had mapped out this all-or-nothing play long ago and built certain features into the Model S with the Superchargers in mind.

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Musk had hired George Blankenship, a former Apple executive, to run its stores and service center operations. At Apple, Blankenship worked just a couple of doors down from Steve Jobs and received credit for building much of the Apple Store strategy. When Tesla first hired Blankenship, the press and public were atwitter, anticipating that he’d do something spectacular and at odds with the traditions of the automotive industry.

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By the middle of February 2013, Tesla had fallen into a crisis state. If it could not convert its reservations to purchases quickly, its factory would sit idle, costing the company vast amounts of money. And if anyone caught wind of the factory slowdown, Tesla’s shares would likely plummet, prospective owners would become even more cautious, and the short sellers would win. The severity of this problem had been hidden from Musk, but once he learned about it, he acted in his signature all-or-nothing fashion. Musk pulled people from recruiting, the design studio, engineering, finance, and wherever else he could find them and ordered them to get on the phone, call people with reservations, and close deals. “If we don’t deliver these cars, we are fucked,” Musk told the employees. “So, I don’t care what job you were doing. Your new job is delivering cars.” He placed Jerome Guillen, a former Daimler executive, in charge of fixing the service issues. Musk fired senior leaders whom he deemed subpar performers and promoted a flood of junior people who had been doing above-average work. He also made an announcement personally guaranteeing the resale price of the Model S. Customers would be able to resell their cars for the average going rate of similar luxury sedans with Musk putting his billions behind this pledge. And then Musk tried to orchestrate the ultimate fail-safe for Tesla just in case his maneuvers did not work.

During the first week of April, Musk reached out to his friend Larry Page at Google. According to people familiar with their discussion, Musk voiced his concerns about Tesla’s ability to survive the next few weeks. Not only were customers failing to convert their reservations to orders at the rate Musk hoped, but existing customers had also started to defer their orders as they heard about upcoming features and new color choices. The situation got so bad that Tesla had to shut down its factory. Publicly, Tesla said it needed to conduct maintenance on the factory, which was technically true, although the company would have soldiered on had the orders been closing as expected. Musk explained all of this to Page and then struck a handshake deal for Google to acquire Tesla.

While Musk did not want to sell, the deal seemed like the only viable course for Tesla’s future. Musk’s biggest fear about an acquisition was that the new owner would not see Tesla’s goals through to their conclusion. He wanted to make sure that the company would end up producing a mass-market electric vehicle. Musk proposed terms under which he would remain in control of Tesla for eight years or until it started pumping out a mass-market car. Musk also asked for access to $5 billion in capital for factory expansions. Some of Google’s lawyers were put off by these demands, but Musk and Page continued to talk about the deal. Given Tesla’s value at the time, it was thought that Google would need to pay about $6 billion for the company.

As Musk, Page, and Google’s lawyers debated the parameters of an acquisition, a miracle happened. The five hundred or so people whom Musk had turned into car salesmen quickly sold a huge volume of cars. Tesla, which only had a couple weeks of cash left in the bank, moved enough cars in the span of about fourteen days to end up with a blowout first fiscal quarter. Tesla stunned Wall Street on May 8, 2013, by posting its first-ever profit as a public company—$11 million—on $562 million in sales. It delivered 4,900 Model S sedans during the period. This announcement sent Tesla’s shares soaring from about $30 a share to $130 per share in July. Just a couple of weeks after revealing the first-quarter results, Tesla paid off its $465 million loan from the government early and with interest. Tesla suddenly appeared to have vast cash reserves at its disposal, and the short sellers were forced to take massive losses. The solid performance of the stock increased consumers’ confidence, creating a virtuous circle for Tesla. With cars selling and Tesla’s value rising, the deal with Google was no longer necessary, and Tesla had become too expensive to buy. The talks with Google ended.

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What Musk had done that the rival automakers missed or didn’t have the means to combat was turn Tesla into a lifestyle. It did not just sell someone a car. It sold them an image, a feeling they were tapping into the future, a relationship. Apple did the same thing decades ago with the Mac and then again with the iPod and iPhone. Even those who were not religious about their affiliation to Apple were sucked into its universe once they bought the hardware and downloaded software like iTunes.

This sort of relationship is hard to pull off if you don’t control as much of the lifestyle as possible. PC makers that farmed their software out to Microsoft, their chips to Intel, and their design to Asia could never make machines as beautiful and as complete as Apple’s. They also could not respond in time as Apple took this expertise to new areas and hooked people on its applications.

Chapter 11: The Unified Field Theory of Elon Musk

The Rives (Elon Musk’s cousins) decided to make buying into the solar proposition much simpler and formed a company called SolarCity in 2006. Unlike other companies, they would not manufacture their own solar panels. Instead they would buy them and then do just about everything else in-house. They built software for analyzing a customer’s current energy bill and the position of their house and the amount of sunlight it typically received to determine if solar made sense for the property. They built up their own teams to install the solar panels. And they created a financing system in which the customer did not need to pay anything up front for the panels. The consumer leased the panels over a number of years at a fixed monthly rate. Consumers got a lower bill overall, they were no longer subject to the constantly rising rates of typical utilities, and, if they sold their house, they could pass the contract to the new owner. At the end of the lease, the homeowner could also upgrade to new, more efficient panels. Musk had helped his cousins come up with this structure and become the company’s chairman and its largest shareholder, owning about a third of SolarCity.

Six years later, SolarCity had become the largest installer of solar panels in the country. The company had lived up to its initial goals and made installing the panels painless. Rivals were rushing to mimic its business model. SolarCity had benefited along the way from a collapse in the price of solar panels, which occurred after Chinese panel manufacturers flooded the market with product. It had also expanded its business from consumers to businesses with companies like Intel, Walgreens, and Wal-Mart signing up for large installations. In 2012, SolarCity went public and its shares soared higher in the months that followed. By 2014, SolarCity was valued at close to $7 billion.

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SolarCity is a key part of what can be thought of as the unified field theory of Musk. Each one of his businesses is interconnected in the short term and the long term. Tesla makes battery packs that SolarCity can then sell to end customers. SolarCity supplies Tesla’s charging stations with solar panels, helping Tesla to provide free recharging to its drivers. Newly minted Model S owners regularly opt to begin living the Musk Lifestyle and outfit their homes with solar panels. Tesla and SpaceX help each other as well. They exchange knowledge around materials, manufacturing techniques, and the intricacies of operating factories that build so much stuff from the ground up. For most of their histories, SolarCity, Tesla, and SpaceX have been the clear underdogs in their respective markets and gone to war against deep-pocketed, entrenched competitors. The solar, automotive, and aerospace industries remain larded down by regulation and bureaucracy, which favors incumbents. To people in these industries Musk came off as a wide-eyed technologist who could be easily dismissed and ridiculed and who, as a competitor, fell somewhere on the spectrum between annoying and full of shit. The incumbents did their usual thing using their connections in Washington to make life as miserable as possible on all three of Musk’s companies, and they were pretty good at it.

As of 2012, Musk Co. turned into a real threat, and it became harder to go at SolarCity, Tesla, or SpaceX as individual companies. Musk’s star power had surged and washed over all three ventures at the same time. When Tesla’s shares jumped, quite often SolarCity’s did, too. Similar optimistic feelings accompanied successful SpaceX launches. They proved Musk knew how to accomplish the most difficult of things, and investors seemed to buy in more to the risks Musk took with his other enterprises.

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Musk is now quite rich on paper. He was worth about $10 billion at the time of this writing. When he started SpaceX more than a decade ago, however, he had far less capital at his disposal. He didn’t have the fuck-you money of a Jeff Bezos, who handed his space company Blue Origin a kingly pile of cash and asked it to make Bezos’s dreams come true. If Musk wanted to get to Mars, he would have to earn it by building SpaceX into a real business. This all seems to have worked in Musk’s favor. SpaceX has learned to make cheap and effective rockets and to push the limits of aerospace technology.

In the near term, SpaceX will begin testing its ability to take people into space. It wants to perform a manned test flight by 2016 and to fly astronauts to the International Space Station for NASA the next year. The company will also likely make a major move into building and selling satellites, which would mark an expansion into one of the most lucrative parts of the aerospace business. Along with these efforts, SpaceX has been testing the Falcon Heavy—its giant rocket capable of flying the biggest payloads in the world—and its reusable-rocket technology. In early 2015, SpaceX almost managed to land the first stage of its rocket on a platform in the ocean. Once it succeeds, it will begin performing tests on land.

In 2014, SpaceX also began construction on its own spaceport in South Texas. It has acquired dozens of acres where it plans to construct a modern rocket launch facility unlike anything the world has seen. Musk wants to automate a great deal of the launch process, so that the rockets can be refueled, stood up, and fired on their own with computers handling the safety procedures. SpaceX wants to fly rockets several times a month for its business, and having its own spaceport should help speed up such capabilities. Getting to Mars will require an even more impressive set of skills and technology.

“We need to figure out how to launch multiple times a day,” Musk said. “The thing that’s important in the long run is establishing a self-sustaining base on Mars. In order for that to work—in order to have a self-sustaining city on Mars—there would need to be millions of tons of equipment and probably millions of people. So how many launches is that? Well, if you send up 100 people at a time, which is a lot to go on such a long journey, you’d need to do 10,000 flights to get to a million people. So 10,000 flights over what period of time? Given that you can only really depart for Mars once every two years, that means you would need like forty or fifty years.

“And then I think for each flight that departs to Mars you want to sort of launch the spacecraft into orbit and then have it be in a parking orbit and refuel its tanks with propellant. Essentially, the spacecraft would use a bunch of its propellant to get to orbit, but then you send up a tanker spacecraft to fill up the propellant tanks of the spacecraft so that it can depart for Mars at high speed and can do so and get there in three months instead of six months and with a large payload. I don’t have a detailed plan for Mars but I know of something at least that would work, which is sort of this all methane system with a big booster, a spacecraft, and a tanker potentially. I think SpaceX will have developed a booster and spaceship in the 2025 time frame capable of taking large quantities of people and cargo to Mars.

“The thing that’s important is to reach an economic threshold around the cost per person for a trip to Mars. If it costs $1 billion per person, there will be no Mars colony. At around $1 million or $500,000 per person, I think it’s highly likely that there will be a self-sustaining Martian colony. There will be enough people interested who will sell their stuff on Earth and move. It’s not about tourism. It’s like people coming to America back in the New World days. You move, get a job there, and make things work. If you solve the transport problem, it’s not that hard to make a pressurized transparent greenhouse to live in. But if you can’t get there in the first place, it doesn’t matter. “Eventually, you’d need to heat Mars up if you want it to be an Earthlike planet, and I don’t have a plan for that. That would take a long time in the best of circumstances. It would probably take, I don’t know, somewhere between a century and a millennium. There’s zero chance of it being terraformed and Earthlike in my lifetime. Not zero, but 0.001 percent chance, and you would have to take real drastic measures with Mars.”

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People in the technology industry have tended to liken Musk’s drive and the scope of his ambition to that of Bill Gates and Steve Jobs. “Elon has that deep appreciation for technology, the no-holds-barred attitude of a visionary, and that determination to go after long-term things that they both had,” said Edward Jung, a child prodigy who worked for Jobs and Gates and ended up as Microsoft’s chief software architect. “And he has that consumer sensibility of Steve along with the ability to hire good people outside of his own comfort areas that’s more like Bill. You almost wish that Bill and Steve had a genetically engineered love child and, who knows, maybe we should genotype Elon to see if that’s what happened.” Steve Jurvetson, the venture capitalist who has invested in SpaceX, Tesla, and SolarCity, worked for Jobs, and knows Gates well, also described Musk as an upgraded mix of the two. “Like Jobs, Elon does not tolerate C or D players,” said Jurvetson. “But I’d say he’s nicer than Jobs and a bit more refined than Bill Gates.”

But the more you know about Musk, the harder it becomes to place him among his peers. Jobs is another CEO who ran two, large industry-changing companies—Apple and Pixar. But that’s where the practical similarities between the two men end. Jobs dedicated far more of his energy to Apple than Pixar, unlike Musk, who has poured equal energy into both companies, while saving whatever was left over for SolarCity. Jobs was also legendary for his attention to detail. No one, however, would suggest that his reach extended down as far as Musk’s into overseeing so much of the companies’ day-to- day operations. Musk’s approach has its limitations. He’s less artful with marketing and media strategy. Musk does not rehearse his presentations or polish speeches. He wings most of the announcements from Tesla and SpaceX. He’ll also fire off some major bit of news on a Friday afternoon when it’s likely to get lost as reporters are heading home for the weekend, simply because that’s when he finished writing the press release or wanted to move on to something else. Jobs, by contrast, treated every presentation and media moment as precious. Musk simply does not have the luxury to work that way. “I don’t have days to practice,” he said. “I’ve got to give impromptu talks, and the results may vary.”

“I would like to die on Mars. Just not on impact.” – Elon Musk