Zip2 and Musk's Early Funds
Zip2 was an unusual idea that was unprecedented at the time of its creation. In 1995, the use of internet for business advantage was not widespread. A lot of businesses, especially small ones, did not see an advantage to paying to have their business available online for the public to find. However, in 1995, there were individuals searching the internet, but they had not been searching for that purpose yet. Elon Musk and his Kimbal Musk wanted to make this idea of information about a business available after a few keystrokes a reality. Zip2 was to be a website directory for businesses, which allowed companies to pay to put their details up. In addition, Zip2 would link the directory with maps so that an individual could get directions to the store online, rather than having to use a map to find the location. The website would give turn-by-turn directions to each store listed on the directory. Elon Musk did all of the original coding for the website, but he still needed code for navigation so Kimbal called Navteq, which made rudimentary GPS-like devices. Navteq gave zip2 the code for free.
However, as previously stated, companies did not see an advantage to zip2 yet, so the website's success relied on companies paying to be included on the website. Kimbal Musk, Elon Musk's charismatic brother, went door by door to sell placement on the website to companies in the Bay Area of Palo Alto, California. For demoes to possible buyers and investors, Elon Musk built the computer which ran zip2 inside of a massive computer case to make the exhibit seem more impressive. Investors were also influenced by Musk's extraordinary drive. Musk said, "My mentality is that of a samurai. I would rather commit seppuku than fail." Zip2 fundamentally changed when Mohr Davidow Ventures invested three million dollars into Zip2. Finally, Zip2 was able to move to a larger office and hire new engineers. The best engineers from Silicon Graphics were recruited to Zip2, and their skills were well-founded. Where musk had been largely self-taught, these engineers had gone through extensive training. Musks code tended to be large and cumbersome, while these new engineers broke code down into a science, making prettier code, and allowing the Zip2 software to run more smoothly. The new Zip2 changed its selling point. Instead of selling to individual businesses, it would sell to newspapers as a website directory. This allowed newspapers to get on the web quickly and make postings such as real estate. The new selling point allowed for higher income fro fewer sources, effectively eliminating selling the business door-to-door. Elon Musk was demoted while Mohr Davidow Ventures was under control however. Musk became Chief Technology Officer, and Richard Sorkin, from Mohr Davidow, became Chief Executive Officer. Eventually, Zip2's reign as a stand-alone company came to a close. Compaq Computer offered 307 million dollars for Zip2, and Zip2 agreed. Elon Musk ended up gaining twenty-two million dollars on the transaction. This was just enough to buy a nice car - a Maclaren - and start a new company, X.com. |
X.com - Elon Musk Seeing the Future
X.com was a victory in terms of the failure surrounding silicon valley following 9/11. However, Elon Musk, ended up losing control as CEO like he had with zip2. Musk is noted to have a confrontational ant know-it-all personality, which rubbed many in the wrong way. Vince Sollito, the former chief of communications at PayPal said, "He comes from the school of thought in the public relations world that you let no inaccuracy go uncorrected." (Vance, 91) Actually, X.com being renamed as PayPal was a direct testament to the fact that Musk control, having been renamed PayPal the month Musk reached his thirtieth birthday.
X.com began as an idea of Elon Musk, with his own financial backing. In order to bring in actual banking, Elon Musk hired Harris Frick, a friend from his time working in the Bank of Nova Scotia. Elon Musk's relationship with Harris Frick quickly unraveled though. Harris Frick wanted to become Chief Executive Officer, but was rejected by Musk. As a result, Frick left with a large portion of X.com's employee team, effectively desolating the company. Fortunately for X.com's existence, Elon Musk found venture capitalists willing to invest. Then, he soon started recruiting new software engineers. Eventually, X.com would launch and become the first online bank for use. Another company PayPal, popped into existence, but PayPal soon ran out of money resulting in a merger. The new company would keep the name X.com. The tides had not stopped turning for Elon Musk yet. After the merger, the companies had different views about the direction in which X.com should go. During a plane flight to Sydney Australia, Elon Musk was outed as Chief Executive Officer in favor of Peter Thiel, a co-creator of PayPal. Peter Thiel changed the name of X.com to PayPal shortly after. Ebay became increasingly interested in buying PayPal over time. By July 2002, it offered PayPal an astounding amount of money, 1.5 billion dollars. PayPal sold. Elon Musk received 180 million dollars off of the transaction after taxes, which allowed him to create or guide the companies where he is currently Chief Executive Officer and turn them into successes. |