PDF Summary:Elon Musk, by Ashlee Vance

Hailed as this one of this generation’s most innovative entrepreneurs, Elon Musk has built several industry-disrupting businesses, and he’s known for shooting for the moon—or more literally, Mars. Technology journalist Ashlee Vance spent almost 50 hours interviewing Musk and talked to around 300 people close to him to produce this biography, which presents new insights into Musk’s life and businesses.

In this guide, we’ll discuss Musk’s childhood and early companies. Then we’ll talk about his roles in SpaceX and Tesla, and later, in SolarCity. Finally, we’ll discuss the traits and management methods that helped Musk succeed throughout his entrepreneurial career. Along the way, we’ll provide updated information about Musk and his companies, as well as perspectives from other experts on business success and key management strategies.

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By 2008, Musk was under pressure—he only had money for one more launch, and he was also juggling problems with Tesla. Vance explains that Musk put on a good front and boosted the morale of the SpaceX team in anticipation of the fourth launch.

Then, on September 28, 2008, the rocket launched successfully. After six years, Musk finally met his goal of getting a rocket into space. Although this was longer than Musk originally planned, SpaceX built a successful rocket faster than anyone in the industry expected.

(Shortform note: While the SpaceX team eventually succeeded with its Falcon 1 launch, it went through several failed launches first—but they eventually succeeded because they learned from their mistakes. In Think Like a Rocket Scientist, Ozan Varol explains that rocket scientists have a complicated relationship with failure. Some missions (particularly those with human lives at stake) have very little room for failure. However, in every other scenario, failure is a normal part of life as a rocket scientist taking scientific risks. Therefore, scientists value “intelligent failure”: the kind of failure that can be learned from. Varol argues that good scientists approach their failures with genuine, disinterested curiosity.)

Finances and NASA

Vance explains that while the launch marked a turning point for SpaceX, the company still had financial problems to address. Musk heard about a $1 billion contract from NASA to resupply the International Space Station, and he advocated for SpaceX and its ability to fulfill the contract. In December 2008, NASA awarded the contract to SpaceX, securing the company’s financial survival.

(Shortform note: In 2021, NASA awarded SpaceX two more contracts. One is to provide launch services for the Geostationary Operational Environmental Satellite-U (GOES-U) mission, which uses stationary satellites to monitor atmospheric indicators of severe weather conditions. The other is a $2.89 billion contract to develop spacecraft to take astronauts to the moon.)

Following this achievement, SpaceX continued to advance their technology and build a capsule for their NASA mission. The efforts paid off: On May 22, 2012, SpaceX sent up a capsule to resupply the International Space Station, making it the first private company to do so.

(Shortform note: As of 2021, Northrop Grumman and SpaceX are the only two commercial space companies to resupply the International Space Station. Even after almost a decade, most other private space ventures haven’t caught up with SpaceX’s progress.)

As a leader in the aerospace industry, SpaceX is now known for its intense work environment and 90-hour workweeks. But this hard work pays off: The company launches a rocket about once a month and has the cheapest launches in the world. They’ve turned their attention to developing a reusable rocket, which would further reduce launch costs.

(Shortform note: Musk claims that reusable rockets are the only way to achieve cheap space flight. Since the publication of the book, SpaceX made major advancements toward this goal by successfully reusing the rocket booster—the largest and most expensive part of the rocket—in its launches.)

Tesla

Around the time he started SpaceX, Musk met with an engineer working on battery technology and two engineers who had incorporated Tesla and were working on electric car technology. He suggested that these engineers all work together, and he invested in their venture. They all shared the vision of creating a great car and ending America’s reliance on gasoline. They also decided to build a luxury electric car, rather than a more affordable one that appealed only to environmentalists.

(Shortform note: Tesla had one hallmark of most great teams: a shared vision, or what Simon Sinek calls a Just Cause. A Just Cause is a big-picture vision that provides a framework for your corporate strategies—like Tesla’s vision of creating a car that would help end America’s reliance on gasoline, thus moving people toward a more sustainable future.)

Building the First Model

To build the initial car, the Tesla team used a luxury English car as the base. They replaced the engine with the battery pack, and within six months, they had a drivable electric car. In January 2005, Musk drove the car, was pleased by their progress, and kept investing.

But the engineers faced problems with this model—called the Roadster—such as flammable batteries and transmission issues. The design elements Musk wanted also delayed production. While they worked to address these issues, the first model took much longer to reach consumers than initially expected.

(Shortform note: In a 2016 interview, Musk admitted that the original plan for the Roadster wasn’t a good one and that he only gave Tesla a 10% chance of survival, perhaps in part due to the manufacturing issues and delays. In 2011, Tesla announced it would discontinue production of the Roadster. But in 2017, Tesla revealed plans for a second generation Roadster—for $250,000—that was set to debut in 2020, but it was pushed back to 2021 and again to 2022. Tesla noted that the new Roadster will have a range of up to 620 miles, a top speed of 250 mph, and a battery pack twice the size of its others. Some experts believe Tesla may delay the Roadster again to focus on production of its other models.)

Manufacturing and Management Issues

While Tesla thought they’d cut costs by manufacturing cheaply overseas, they were actually losing time and money because of manufacturing delays. When Musk heard about the problems, he sent an operations expert to investigate the issues.

Around the middle of 2007, the expert returned with his report on Tesla’s spending and production process. Musk realized the severity of the situation. Tesla reported that each car would cost about $68,000 to make. But the actual production cost was about $200,000. He believed this was a management issue and urged the board to find a new CEO for Tesla, which they did.

Under its new leadership, Tesla addressed many of the manufacturing issues it had, such as the car’s transmission problems, which needed a complete overhaul. Vance explains that Musk began to take a more active role in Tesla’s operations. He also began making more public statements, trying to ease buyers’ minds about the production delays and changes in management.

Improving Tesla’s Entrepreneurial Operating System

Tesla’s manufacturing delays and management flaws highlighted important issues that needed to be fixed to ensure a smooth Entrepreneurial Operating System: the six key components of a successful business. In Traction, Gino Wickman breaks down these six elements of any organization:

1) Vision: You need a compelling vision for your business that you communicate clearly so everyone can focus their energy on it and help you achieve it. While Tesla team members disagreed on some details, they agreed on their overall vision of revitalizing the EV industry with a luxury electric car. .

2) People: You need to have the right people in the right positions. People who are wrong for your company, or are in the wrong positions, hurt your business. After evaluating Tesla’s situation and management, Musk decided that they needed a new CEO.

3) Data: By creating a weekly report on a few key numbers, you can regularly check the vital signs of your business, quickly see and solve problems, and predict the future—without waiting for financial statements. Musk had a professional collect and analyze Tesla’s data.

4) Issues: You need to systematically identify and address issues before they undermine your business. When you take the time to solve a problem, you’ll save up to 10 times that amount of time dealing with the problem or its consequences later. Musk reviewed issues in Tesla’s management and production to address these issues before they crippled the company.

5) Process: Your processes are the way you do business. You need to identify, address, and document each of your core processes, and continually improve them. Musk did this with the production process, since the overseas manufacturing system was too expensive for Tesla and didn’t result in a better product.

6) Traction: Traction—the ability to execute, or make the company’s vision a reality—requires two things: 1) 90-day priorities for everyone, and 2) regular, focused, productive meetings at every level. While Vance doesn’t describe what kind of changes Musk made to improve communication, his active operations role eventually helped make Tesla’s vision a reality.

Financial Problems

In October 2008, Musk became CEO of Tesla. By this point, Tesla struggled to stay in business. The company was running out of money: The first model cost $140 million to develop, when it was originally estimated to cost $25 million. Vance explains that the company also faced a few other obstacles:

1) Consumers didn’t believe in the future of electric cars yet. (Shortform note: Over 10 years later, consumers still express concerns about electric vehicles, citing their mileage range, high initial cost, battery flammability, performance, and lack of charging infrastructure. These will be challenges the electric car industry will need to overcome to succeed.)

2) Short sellers altered the price of Tesla’s stock, causing the value to fluctuate. (Shortform note: Despite Tesla’s success, as of 2021, it was the most shorted stock in the market and has been for several years.)

3) Due to the 2008 recession, many consumers weren’t buying cars. (Shortform note: In 2008, consumers bought 3 million fewer cars than the previous year.)

Tesla was spending $4 million a month and needed more funding to survive. Musk began asking friends, family, and investors for money, and Tesla employees invested what little money they had. Many people never expected to see this money again.

In December 2008, Musk took out a loan from SpaceX—which had just received their contract from NASA—and asked Tesla investors for more money. Vance explains that Tesla was hours away from bankruptcy when the deal went through, saving the company.

(Shortform note: While Musk eventually solved his money problem with the loan from SpaceX and some outside investments, financing is a common problem for start-ups, and many of the 90% of failed start-ups cite cash-flow problems as a reason for going out of business. Experts advise that to prevent funding issues, have a clear plan for what you’ll do with your existing money and be creative about finding money, like Musk.)

Road to Success

By 2010, Tesla’s fortunes turned a corner. The US Department of Energy (DOE) struck a deal with the company, loaning them $465 million. Tesla used some of this money to buy a factory to manufacture their cars, hoping to send out Model S cars to consumers. A few months later, Tesla went public, raising $226 million.

Then, after Tesla started shipping out the Model S in 2012, the public perception of electric vehicles gradually started to shift, warming to the idea of electric cars. Tesla had addressed manufacturing issues and common complaints about the car. Additionally, Vance explains that Tesla’s salespeople sold enough cars in the span of a few weeks to make a large profit, ending their first quarter as a public company with $562 million in sales. Tesla’s stock prices rose, and they paid off their loan to the DOE early.

By 2013, Tesla’s Model S received the highest Consumer Reports car rating in history—a 99 out of 100—and won awards in the car industry, baffling competitors and naysayers.

(Shortform note: Tesla is an example of Gary Keller’s idea of sequential success, where you accumulate small wins one after the other, like a domino fall, rather than all at once. In The One Thing, Keller explains that success builds on success sequentially, as you move from one important task to another, until you reach the highest level possible. Over the course of a few years, Tesla accumulated small wins—such as receiving the DOE loan, addressing the manufacturing issues, selling enough cars to make a profit, and receiving high ratings—instead of one big win that made the company an instant success. While one win probably wouldn’t have ensured Tesla’s survival, its accumulated sequential success did.)

SolarCity

Musk had always believed clean energy is the key to human survival and a sustainable future, so in 2005 when his cousins asked for business suggestions, Musk suggested he do something with solar power. Thanks to Musk’s recommendation, his cousins started SolarCity, with Musk as the largest shareholder. Vance explains that the company made improvements on existing solar panels, offered installation packages, and gave consumers an understanding of how solar power would affect their individual homes. Eventually, the company expanded to big businesses like Intel and Wal-Mart. By 2014, SolarCity was worth $7 billion.

Does Musk Have a Conflict of Interest?

While Vance presents Musk’s involvement in both SolarCity and Tesla as a smart business strategy, many experts contend that this is a conflict of interest because Musk owns significant shares in both companies and employs family members. Additionally, SpaceX bought $90 million of SolarCity stock in March 2016.

To complicate matters, Tesla bought SolarCity for $2.6 billion in August 2016, renaming it Tesla Energy. Some shareholders viewed this as a self-serving move—since Musk had a 22% stake in SolarCity at the time—and a bailout for SolarCity rather than a beneficial move for Tesla. After the merger, auditors found that SolarCity didn’t have the necessary funds to continue as a stand-alone company. Investors sued Musk, stating he’d hidden SolarCity’s financial problems from investors.

Experts estimate that the lawsuit could cost him $13 billion if he loses the case. In the trial, Musk remained adamant that the acquisition was part of a larger plan to ensure Tesla’s future as a company committed to renewable energy.

What Helped Musk Succeed?

While Musk has many traits and management methods that he used to build his companies, Vance discusses five important factors that helped Musk succeed. Through a combination of being motivated by the future, having a high risk tolerance, hiring exceptional employees, maintaining control of his companies, and setting extreme deadlines, Musk’s businesses have achieved impressive results.

Future-Oriented Motivations

Vance believes Musk’s goals and actions are all motivated by the future. He puts present-day concerns aside to create a better future for humanity. Musk believes the survival of the human race depends on becoming a multiplanetary species—or living on Mars—and by creating sources of sustainable energy. The missions of Tesla and SpaceX are based on those two goals. Musk’s future-oriented mindset doesn’t prioritize his companies’ financial success over his goal to improve the future—to him, these aspects are inherently tied together.

(Shortform note: In prioritizing the future, Musk is thinking of the “infinite game.” In The Infinite Game, Simon Sinek explores the differences between finite games—where players play to win—and infinite games—where players play to survive, thrive, and keep playing the game. And Musk seems to be playing the ultimate game—humanity’s survival.)

High Risk Tolerance

Musk’s ability to handle stress complements his high risk tolerance. This means he doesn’t create any safety nets for himself should he fail. This mindset has given him an edge in his professional life. He’s willing to risk everything—his money, his possessions, his health, and so on—to make his vision a reality. Most people would find this level of risk extremely stressful, but Musk sees it as necessary in order to achieve his goals. He’s willing to invest all of his time and money into his businesses for the possibility of even bigger gains.

(Shortform note: While Musk believes in and encourages others to take risks—especially when they’re young—not everyone has his natural high level of risk tolerance. In Who Will Cry When You Die, Robin Sharma offers tips to help you get out of your comfort zone and increase your risk tolerance. He recommends taking small risks—such as striking up a conversation with someone new—and resisting the urge to think about the worst-case scenario, which is unlikely to occur.)

Exceptional Employees

Vance believes much of Musk’s success stems from his ability to find and hire exceptional people. He has an eye for talent, and he appreciates people who are hard workers and critical thinkers. These employees are also efficient, and they can do the work of multiple people. When every employee is doing exceptional work, the combination of their efforts results in something exceptional as well.

(Shortform note: While Musk values star players for their efficiency and hard work, he may have a tendency to overwork—and even injure—these exceptional employees. According to incident reports, Tesla called for ambulances over 100 times between 2014 and 2017 for reasons such as dizziness, seizures, abnormal breathing, and other injuries. One technician noted that sometimes when someone got hurt on the job, another employee was sent to work around that person while they were still injured on the floor.)

Retain Control of His Companies

After his experience at Zip2 and PayPal, Musk valued maintaining control of his companies. He knows leadership positions give him the most influence, allowing him to run his business how he wants to. Vance explains that Musk doesn’t have a desire for totalitarian control. Instead, he’s concerned about making sure things get done correctly. Musk believes there are certain things that need to be done to achieve his vision, and he thinks he’s the best one to make sure those things happen. This tactic has helped Tesla and SpaceX succeed, since Musk has the vision and drive to effectively lead and make business decisions.

(Shortform note: Musk has retained control as CEO of his companies because he believes he’s the best one to move his businesses toward his goals—to keep the companies playing in the infinite game, where players play to keep playing, not to win. In The Infinite Game, Simon Sinek explains that your CEO must have an infinite mindset to lead your company through its infinite game properly, which can be the difference between long-term survival or failure. Like Musk, your CEO needs an infinite mindset to lead your company through its infinite game and to look beyond her organization and envision where the company will head next.)

Ambitious Deadlines

In all of his companies, Musk set ambitious deadlines for both himself and others. He told employees, consumers, and executives that certain tasks or products would be completed faster than anyone thought possible. Vance believes he wasn’t setting an arbitrary timeline—this was genuinely how long Musk believed it would take to complete certain tasks.

(Shortform note: While Musk uses ambitious deadlines to achieve results, experts debate their effectiveness and whether they’re worth the stress. Many people say they work better under deadline pressure, but research indicates the opposite. Under deadline pressure, people feel stressed, make mistakes, and have to redo work, which ends up taking more time. Often the mistakes—such as product flaws and cost overruns—have long-term financial consequences.)