If you want to become a billionaire—and you didn’t happen to be born into the Saudi royal family—there are a few ways to get the job done. One idea could be a great one, such as a social networking system or computer operating system, that you then turn into a huge company. Another option is to follow Warren Buffet’s path, creating a decade-long sequence of smart, low-risk ideas.–Take risks and watch your wealth gradually trickle in. And then there’s what Elon Musk did.
Musk made his money differently than most of today’s famous billionaires. He had many great ideas, not just one. He made a handful of extremely risky investments instead of making a lot of smart, secure investments. But there was a method to his madness, even if it wasn’t apparent to many at the time. Musk was the world’s richest individual citizen due to the sum of these bets.—from privately-launched space missions to an electric vehicle titan that has left the auto industry desperate to catch up—have landed Musk as TIME’s 2021 Person of the Year.
Musk’s Family was financially secure. His early interest in computers was evident when he designed his first computer game as a 12-year-old. When he was 17, he left for Canada to escape military service in South Africa’s apartheid regime, attending Queens University in Ontario. In 1992, he was transferred to the University of PennsylvaniaThere he studied both physics and business. Penn’s tree-lined campus may have also given Musk his first taste for risky business ventures—he and a couple of friends rented out an off-campus house and turned it into a nightclub.
Then it was on to Silicon Valley and—briefly—to grad school. Musk entered a Stanford Physics Ph.D. program but dropped out two days later. Musk was one of many young entrepreneurs who realized that the internet could be much more than just a place for geeks. Together with his brother Kimbal, Musk founded a company called Zip2 as an online business directory, a kind of web-enabled yellow pages with maps—a nifty idea back in the mid-nineties.
Elon Kimbal and Kimbal sought out investors to help run the business, and they hired external assistance. This helped them make deals with New York-based publishers. Times. The Zip2 was sold to Compaq in 1999 for $307 million. Musk took home $22million from Zip2’s sale. Then he went on to spend $1 million on his McLaren F1 supercar. “It’s not consistent with the rest of my behavior,” he would tell CNN, which filmed Muskwhen the car arrived at Musk’s home. A year later, Musk wrecked the car—he was trying to show off its acceleration and ended up accidentally Its launchIn the air, like a frisbee. It was not insured for this multi-million dollar sports car.
Musk, however, was on his way to the next venture. Peter Thiel was co-founder and driver of Confinity, a payments startup. He drove with Musk in his McLaren on the morning of the wreck.. (Thiel and Musk weren’t injured in the crash.Musk invested millions in X.com, an online bank startup. In March 2000, the two businesses would merge to create a company that became PayPal. Musk was named CEO, but in September, while he was on vacation, the board fired him, replacing him with Thiel, partly due to a disagreement over switching the company’s servers. “It’s not a good idea to leave the office when there are a lot of major things underway that are causing people a great deal of stress,” Musk would Later reflect. Musk retained a share of the company. Musk made $180 million from eBay’s purchase of PayPal in 2002 for $1.5 Billion.
Musk didn’t end up relaxing with all the things his new millions could buy. He founded SpaceX, with an almost absurd mission: to colonize Mars in 2002. He invested more than $6million in Tesla the next year. This was a mere investment by two founders with a vision for electric cars. To revolutionize this field, the company was going to use new lithium-ion battery technology, which is both lightweight and efficient. At the time, lithium-ion cells were only being used in small electronic devices, and one of Tesla’s central innovations was scaling them up, which enabled it to create an electric vehicle with far greater range than previous electric cars had been able to achieve.
Both companies had a tough start in the first few years—Musk says he ended up pushing essentially all his proceeds from the PayPal sale into funding the ventures. SpaceX suffered several failed launches that almost cost it its business. Meanwhile, Tesla was in trouble after its engineers discovered its prototype battery packs would catch fire. “It was a potentially company-ending discovery if we couldn’t fix it,” says former Tesla chief technical officer J.B. Straubel. During the Great Recession of 2008, Tesla nearly went bankrupt.
Eventually, Musk’s investments began to pay off. SpaceX acquired a property in 2008. $1.6 BillionNASA has a contract, Tesla was founded in 2012. Turning offThe Model S was Tesla’s first mass-market vehicle. SpaceX is the clear leader in private-satellite exploration.
Although Tesla makes fewer cars than legacy carmakers Ford and GM like Ford, their valuations have soared to a great extent. In the past 18 months, Tesla’s stock price has more than tripled, pushing its market cap over $1 trillion. Musk owns a substantial portion of the stock even though it was almost completely sold off. $12 BillionHe may now have more shares than he had when he began, even though utilizing his other stock options could result in him having a greater stake. It’s anyone’s guess as to whether the company will maintain its massive valuation—if Tesla’s stock falls, so does Musk’s fortune. He currently holds about 17% of Tesla’s stock, valuedHis net worth is $175 billion. And with SpaceX’s value floating at over $100 billion, according to its October funding round, Musk’s 48% stake in the rocket-maker, plus cash and other assets, brings his total net worth to around $266 billion.
He’s put his money into new companies as well. Musk created The Boring Company and Neuralink in 2016. They are both worth hundreds of million of dollars. Those two most recent ventures are illustrative examples of the mindset that created Musk’s fortune. They’re both highly speculative endeavors—Neuralink is trying to develop telepathic interfaces with machines; The Boring Company aims to revolutionize infrastructure. There’s not much chance either will pay off in the long run, experts say, but big-bucks risk-taking is Musk’s bread and butter. Musk became the world’s wealthiest man by using the same method of throwing millions at difficult projects. Musk is the richest private citizen. “I think [Russia’s] President Putin is significantly richer than me,” Musk told TIME in early December. “I can’t invade countries and stuff.”
Oder, at the very least, it is not yet.