Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future

Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future



The Pequod Review:

Ashlee Vance's biography of Elon Musk is the most comprehensive book to date on the Tesla founder's background and business strategy. Vance begins with Musk's childhood — he was born in South Africa where he lived a somewhat troubled life, and later moved to Canada and then the United States, attending college at Penn and Stanford. Musk achieved his initial wealth when his first company (Zip2, an early internet advertising company) was acquired, and then made a much larger fortune ($100M-plus) when PayPal was sold to eBay. He invested his profits into what would become his most well-known ventures — SpaceX (a space rocket-building company) and Tesla (an electric car manufacturer) — and it is the growth of these two companies that makes up the majority of the book.

Vance has a strong knowledge of business and science, and his book is filled with informative and well-chosen details. Here for example he describes the fundamental inefficiency of internal combustion engines:

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 driveshafts 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 abut 60 percent efficient, losing most of the rest of its energy to heat. The sedan gets the equivalent of about 100 miles per gallon.

Vance intelligently traces Tesla's development, which required enormous capital from investors. Like Amazon and many other successful start-ups, the company had several precarious moments that could have led to bankruptcy or at least to Musk losing control:

In December 2008, Musk mounted simultaneous campaigns to try to save his companies....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 Even 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."

This happened again in 2013, when Tesla was close to running out of cash and nearly had to sell to Google. It was only because of a negotiating delay by Google that Tesla was able to avoid a sale; a favorable new sales report would send Tesla's stock soaring and enabled the company to raise additional debt. (The recession also led to enormous opportunities, as when Tesla was able to pick up a $1 billion GM assembly plant for about $42 million in the depths of the financial crisis.) 

Some of the best parts of the book cover Musk's leadership style, including his candid correspondence with employees as well as his impressive ability to "perceive a path from a scientific advance to a for-profit enterprise." Musk also has a keen sense for the importance of marketing — especially the need for a company to early on develop a status halo to drive consumer demand — and much of Musk's focus is on managing Tesla's public image. (This is an enormously underrated factor in the success of start-up companies such as Facebook and Google, and a very good book remains to be written on how these status halos are created and maintained.) 

Overall, this is a very good biography that covers a lot of other topics well too.