Bloomberg Risk Takers August 15, 2011 Bloomberg's "Risk Takers" profile of Elon Musk: from PayPal to founding SpaceX and building Tesla — the bets, the near-bankruptcies and the vision behind them.
Bloomberg's "Risk Takers" profile of Elon Musk: from PayPal to founding SpaceX and building Tesla — the bets, the near-bankruptcies and the vision behind them.
Transcript Narrator
Elon Musk is a lot like the kid in the comic book whose fantasies turn into reality. But not as a magician. He did it as an engineer.
An engineer is the closest thing to a magician that exists in the real world.
Narrator
Musk's fantasies and the companies they've inspired are transforming the way we live.
Colleague
Like this guy is changing the world.
Narrator
He founded his first company at age 23 and sold it a few years later for $300 million. He helped pave the way for online commerce with PayPal.
His goal was to transform the financial industry.
Narrator
He made solar energy affordable and jump started the electric car industry.
We show that you can make compelling electric cars that people really want to buy.
Narrator
And he's beating NASA to outer space.
Associate
Elon Musk goes a step further. Earth, not big enough with SpaceX. He literally wants to go to Mars
Narrator
and he's still only 40.
Associate
I look to him with awe at the way in which he can see the future and make it manifest.
Journalist
His greatest asset is his ability to take this big, big dream and make other people believe that it's true.
Narrator
There have been setbacks.
We have maybe about a week's worth of cash in the bank or less.
Associate
He saved the company in its darkest hour.
Narrator
And yes, he's controversial.
Critic
This is just the religion of electric vehicles. And like Jonestown, that religion will come to an end.
Narrator
Still, despite his critics, Musk has never been bashful about his own achievements.
You know, Prius is a gas guzzling hog by comparison with this car.
Narrator
Yes, he's a media darling.
On a scale of 1 to 10, how sexy am I going to be if I buy this car? I mean 11.
Narrator
Here he is in the movie Iron Man. He was even the model for the movie's hero.
Yeah, good idea for an electric jet.
Associate
You do, then we'll make it work.
Go get it, Bob. You can bleep. When I was a little kid, I was really scared of the dark. But then I sort of came to understand, okay, well, dark just means really the absence of photons in the visible wavelength, 400 to 700 nanometers.
Narrator
Elon's mother, May Musk.
And Elon said, darkness is merely the absence of light.
Then I thought, well, it's really silly to be afraid of a lack of photons. Then I wasn't afraid of the dark anymore after that.
Once one of the kids said to him, look at the moon. It's a billion miles away. And he said, well, no, it's actually under 250,000 miles away. And they said, oh, Elon, Elon Musk
Narrator
grew up in South Africa, the eldest of three children. His father was an engineer, his mother a model and nutritionist. Elon got off to a fast start and began school a year early.
He was the youngest. He made about two days and the shortest. And then he was this brilliant boy, and so people didn't really like him.
So I was this little bookwormy kid and probably a bit of a smart aleck. So this is a recipe for disaster.
Not that he told me much about it, but he was picked on quite a bit.
So I just, like, read a lot of books and tried to stay out of people's way during school.
And so his social life was much less than my other two kids. And that's a typical nerd.
I read all the comics I could buy or that they'd let me read at the bookstore before chasing me away. I read everything I could get my hands on from when I woke up to when I went to sleep. At one point, I really ran out of books and started reading the encyclopedia.
And he has a photographic memory, so he could remember everything. Anytime I had a question, my daughter Tosca would say, call genius boy.
Narrator
His brother, Kimball Musk.
When Elon was 10 years old, he got tested by IBM and he was found to have one of the highest aptitudes they'd ever seen for computer programming.
I tried taking some computer classes, but I was way ahead of the teacher, so it didn't really help. So I started programming the space game called Blastar.
Narrator
Musk, already thinking like an entrepreneur, figured out how to sell his game.
I don't think they realized. I was 12.
We decided we were going to open an arcade out near our high school. We were big into video games. We figured that it was going to be a huge hit. We got a lease on a building. We got the arcade provider to deliver the equipment, and the only thing we needed to do by the end of it was get the city to approve what we were doing.
Narrator
But an adult had to apply for a city permit, and they hadn't told their parents what they were up to.
But of course, they told us we were not going to be opening up an arcade.
Journalist
Really, the most amazing thing about his childhood is his escape from South Africa.
I remember thinking and saying that America is where great things are possible, more than any other country in the world. It's a little cliche, but it's true. America is the land of opportunity.
Elon came and told me that he wants to go to Canada. He really wanted to go to the United States. As A Canadian born, I could get my citizenship back and then I could pass it on to my children.
Narrator
Musk wanted to avoid serving in South Africa's army and as he put it, suppressing black people.
Growing up in apartheid South Africa was pretty surreal. We didn't support that government, we didn't believe in it. And so the idea of actually going to the military service was really out of the question.
I told my parents I was going to Canada and they tried to convince me not to leave.
And off he flew. And I thought, wow, he's so independent. Of course, as soon as he lands, he calls me and he says, what do I do now?
Narrator
He arrived with little money and almost no prospects.
So I bought a bus ticket from Montreal to Vancouver and that allowed me to kind of see Canada, at least from the highway.
Narrator
He worked at odd jobs across the country before settling at Queens College in Toronto.
In fact, when I went to college, I rarely went to class. I just read the textbook and then show up for exams. The big appeal at university was being able to date girls my own age. Actually met my first wife there.
Narrator
Justine Wilson was an English major from Southern Ontario. They put off marriage for 10 years. Musk still dreamed of reaching America and changing the world.
I really wanted to just kind of go where the really exciting breakthroughs were occurring.
Narrator
He got an engineering and business degree from the University of Pennsylvania and a scholarship to go to Stanford University. Silicon Valley was the place to be.
Elon had this ability to look at the world, go, this is a real problem that's going to happen in 20 years.
The Internet, sustainable energy and extending life beyond Earth, making life multi planetary now. I didn't actually expect to ever have the opportunity to be involved in space. So this is not from the standpoint of these are the things I'm going to do. It's from the standpoint of in the absolute. These are the things that I think will most affect the future of humanity.
Narrator
Max Chavkin writes for Inc. Magazine and profiled Musk in 2007 and again in 2010. After spending several weeks with his subject,
Journalist
he looked around and he saw that the world changing stuff was not happening at Stanford.
I didn't even go to class. I called the chair of the department and said, I'd like to try selling this Internet company. It probably won't succeed. And so when it fails, I want to make sure that I can still come back.
My kids do funny things and I'm never too concerned about them because, you know, if Elon wanted to drop out of college, he could always go back.
My brother was in Canada at the time, and I said, look, I think we should try to create an Internet company. So he came down and joined me.
Journalist
He had $2,000, no friends, barely enough money for an apartment. I think he told me he was showering at the gym because they didn't have a show where he was living.
And we spent six months sleeping in the office.
We just got some. A few tons that there were couches during the day and then turned into beds at night.
Narrator
Steve Jurgensen is a venture capitalist in Silicon Valley.
Associate
I first met Elon N. Kimble Musk, his brother, back in the mid-90s when they first set foot in California. I think they'd been here for about a week, and they were pitching a new company called Zip2. Silicon Valley in the mid-90s and late-90s was a gold rush. People were flocking to the region to find riches to make it in the Internet business.
Elon was more the business mastermind. I was more the sales guy.
I still had my core programming skills, so I was able to write the software needed for the first company.
Journalist
Now, when Elon was starting zip two, keep in mind, the Internet was just a couple of years old. Most local businesses were not on the Internet. And the way you found a local business was you opened up the yellow pages.
Narrator
It was 1995 when Musk came up with an idea to bring newspapers into the digital age. Elon took a CD rom, yellow pages, some mapping software, wrote a little code, and put it all together to create the first online city listings.
The thought was that media companies, like the newspapers, are going to need help coming online and building lots of functionality into their websites.
Journalist
So Zip2 was sort of like an early version of what we have with Google Maps.
We had someone literally throw a yellow pages book at us and tell us, do you think you'll ever replace this? And we thought the guy was crazy because not only were we going to replace this, but that's not where it ended. It would keep going from there.
Narrator
It wasn't long before media companies across the country were signing up.
And so we were able to get as investors and customers, the New York Times company, Hearst, knightritter, and a number of other companies.
Narrator
In 1999, the Alta Vista division of Compaq bought Zip2 for $307 million in cash and 34 million in stock options. Elon was 28 years old.
I thought, that's crazy. Why would somebody pay such a huge amount of money for this little company that we have? It actually, obviously Turned out very well for them financially, so they knew a lot more about it than I did.
When the kids sold two, it was the most exciting day. We couldn't believe it, because you don't know in the Internet world if you're going to, you know, make a million or die tomorrow.
Narrator
In 1999, Elon Musk sold his first company in the brave new world of silicon valley. He was a millionaire at the age of 28.
Software was acquired by Compaq for a little over $300 million. And I made, I think, about 21 or $22 million as a result of that, which was a phenomenal amount of money for me.
It was obviously a financial windfall. It was super fun to go out and buy some cool toys.
There is John, and the fastest car in the world.
Associate
One of his first things to do is go out and get a big sports car. He comes from a family that really enjoys racing and vehicles, and he got one of the highest performance cars money could buy at the time. It was a McLaren F1, and proceeded to enjoy that around the bay area, let's say the number of adventures and mistake he moves with his driving.
Journalist
While I'm sure it felt wonderful to have all this money and to have people recognizing success, I think he was also frustrated that this company hadn't become as great as he wanted it to be. It hadn't changed the world. It had just slightly altered the course of newspaper history, which I think, from his point of view, is kind of a piddling accomplishment.
I certainly had the choice at that point of retiring and buying an island somewhere and sipping mai tais, but that was not of interest to me at all.
There really wasn't a choice of we weren't going to do anything. It was just really what we were going to do next. In Elon's case in particular, it was really just a stepping stone.
Journalist
He was very rich. I mean, just more money than most people could dream. And he took almost no time in between that sale and starting the company that became paypal.
The goal in doing my second Internet company was to. To create something that would have a profound effect. And it seems to me that the financial sector have not seen a lot of innovation on the Internet. And money is really just an entry in a database. And so it's low bandwidth. It seems like something that should lend itself to innovation.
Narrator
Musk's new company created something we take for granted today. It changed forever the way the world buys things, the way money goes from one person to another.
At the time, transactions were Very slow. People would have to mail checks to each other. So it could take weeks just to complete a single transaction.
Narrator
In March 1999, Musk founded X.com to make electronic cash transfers possible. But he discovered a rival business was developing a similar technology called Confinity.
And they were really competing against each other. And the real enemy at the end of the day was ebay.
We combined our efforts in order to compete effectively against ebay's built in system.
Narrator
They called the new company PayPal.
When he looked at PayPal, his goal was not to create a place you could do person to person payments. His goal was to transform the financial industry.
We're able to become the leading payment system in the world. And then eBay finally threw in the towel and acquired PayPal.
Narrator
In early 2002, Musk and his partners sold PayPal for 1.5 billion. Musk, still only 30, walked away from the deal with roughly $180 million.
I could have bought probably a chain of islands, but again, that was obviously not of interest to me.
Narrator
So what next? The final frontier, Space.
He's always been obsessed with it. Even his computer game Blastor was about a spaceship shooting asteroids and evil aliens.
It's just a much more exciting, inspiring future if we're out there exploring the stars as opposed to a future where we are forever confined to Earth.
Narrator
He had what might seem a completely absurd notion that he just assumed he could pull off.
I was thinking, well, I wonder when we're going to Mars, when is NASA going to go to Mars? And I went to the NASA website and there was no plan to go to Mars and no plan to reach really even take the next step in space exploration.
This is Elon saying he wants to go and enable human civilization to leave the planet Earth. It's about as big a vision as you could possibly imagine. And that's going to require funds. And he has enough funds to go do it, so he's going to go do it.
Narrator
He had the outrageous idea that a private enterprise could actually re energize space travel. In June 2002, he founded Space Exploration Technologies, or SpaceX.
Associate
Elon was the only funder of the company for its early years. Another incredibly risky move to say nobody on the planet thinks this idea is financeable. I'm going to fund all of it myself to the tune of almost $100 million, which was the majority of his net worth at the time, into a dream to take on the military industrial complex. Here's an immigrant from South Africa coming to America to save NASA. That Whole rocket thing you do with the space shuttle. I've got a better way, let's move it all to a new design that I'll build. And you know, you've got countries failing left and right, and here's a startup trying to build them in Los Angeles.
Narrator
But Los Angeles didn't have all the parts he needed.
I actually traveled to Russia three times to look at buying a refurbished ICBM without the nuke. It was odd going to Russia. You know, it's like random American, South African guy shows up in Moscow wanting to buy refurbished ICBMs. We visited some weird places in Moscow, I don't know. We went to one place that looked like a. I don't know what they did there. After the third trip, I actually had learned a lot more about the space business. And I came to the conclusion that the thing that was really holding us back from making much more progress is space. It was really that rockets had not evolved since the 60s.
Journalist
So the trick isn't figuring out how to get to orbit, it's figuring out how to get to orbit cheaply.
So I had to come up with lower cost ways to produce engines, the primary structure of the electronics to launch operation, as well as run the company with very little overhead. And the sum of inventions in all those areas is what has led us to roughly three to four fold improvements over the cost of other rockets in the United States.
Journalist
What SpaceX has been very successful at is taking basically off the shelf technology stuff that was developed by NASA 50 years ago and streamlining it. So in that way, he's kind of the Henry Ford of space, because Henry Ford didn't invent the automobile, he just figured out how to make the automobile commercially viable.
Narrator
But Musk was more than just an entrepreneur.
Analyst
Elon wasn't trained as an aeronautical engineer, and yet he, he's had the ability to be very successful in that particular space.
Associate
He's deeply involved with product architecture, design and engineering, More so with SpaceX, but with all of his companies.
Journalist
If you ask Elon how he managed to teach himself rocket science, he'll just look at you very seriously and just say very quietly, I read a lot of books.
Narrator
At age 32, though still fascinated by rockets and fast cars, Musk was more dedicated than ever to ending the Earth's addiction to fossil fuels. He had his next big idea at his family's annual visit to Burning Man. The counterculture desert happening is a favorite rendezvous for the extended Musk family, including two cousins who had followed Elon and his brother from South Africa. And who had started a few companies of their own.
I was one that suggested the idea of going into the solar power arena to Lyndon and Peter Wright, my cousins.
Journalist
He's got this idea that we're going to make Dell Computer, but for solar panels. We're going to make it really, really, really easy for anybody to install solar panels on their roofs. And basically hands this idea to his cousins and says, if you want to start this, I will fund you and it'll be your company, but I'll be the chairman. And they say okay, and it works almost perfectly.
Associate
What they figured out is that if you sort of do 100 things 10% better in the area of solar cell installation for homeowners, you can dramatically consolidate an industry that's currently a bunch of mom and pop shops. So what SolarCities did was they said, how about no money down, you want solar cells, we'll just put them in.
Narrator
You don't pay a cent.
Associate
It's like leasing a car, but even better.
Narrator
Working in just five western states, the company became the largest solar service provider in the US installing 500 new projects per month, with the potential to make Musk the top supplier of green energy in the country.
Associate
The solar cells keep going. SolarCity then owns those at the end of the lease. So it's a fascinating business model where in the long term they may become the largest energy generator in America. Off all of these rooftops, renewable energy
Narrator
is just phase one. Smart stage two Tesla, the first viable long distance, fully electric car.
Journalist
He had this idea that he wanted to make electric cars help humanity get off fossil fuels.
Narrator
He discovered that computer engineer Martin Everhard and hybrid propulsion expert JB Straubel were working independently also trying to build an electric car.
To get to a sustainable energy future, we must have both sustainable energy creation and consumption. And so SolarCity is about sustainable energy creation, whereas Tesla is about sustainable energy consumption.
Narrator
In April 2004, Musk helped launch Tesla with $6.3 million of his own money. It's the first auto industry startup in decades and the only one born in Silicon Valley.
And it's really pretty simple. It's, you know, make a high priced car at low volume because that's essentially the only thing we could afford to do. And then step two is a medium priced car at medium volumes, and step three is a low price car at high volumes.
Narrator
Like the first mobile phones or Apple computers. Tesla decided to introduce a high end, high performance product first. Then when everyone wanted one, they'd make it affordable. Tesla's co founder and First CEO Martin Eberhard.
Tesla Executive
We expect to to change the way people think about electric cars with this car and that we hope to open a market for us to sell other electric cars. But we also know that if you start off by saying let's first change human nature and make everybody drive crummy little cars, that doesn't work. So instead let's build a car that people want to drive. Let's build a car that's hot and desirable and beautiful and convince people that driving an electric car is not a compromise.
This idea of actually going in and putting it in a high end car and breaking the mold of what, what an electric car was, was exciting. This is no longer going to be a golf cart. This is going to be a Ferrari.
Associate
When we first saw Tesla, it had a good explanation for how they get to market without having to spend exorbitant amount of money. How they would create a brand and a object of desire in consumers. And each part of the story clicked together.
Narrator
Alan Onsman is a reporter for Bloomberg News.
Analyst
He talked about Silicon Valley smarts. Being able to show Detroit how to do something that Detroit didn't think was possible.
Its batteries, its drive electronics, its electric motors, those are skills that are present in Silicon Valley and not present in Detroit.
Narrator
Tesla's revolutionary technology started with a computer battery as the power source for an automobile.
Tesla Engineer
For the first time, it was possible to drive over 200 miles and have performance that was directly comparable, competitive with what a gasoline car could do. And Tesla was the first company to take those principles and put that into practice and try it.
Tesla Executive
An electric car, if designed right, is all about torque. It means that at any speed you're driving, if you step on it, it's there instantly. So you can step on it and this hauls ass.
Narrator
The Governator himself showed up for Tesla's 2006 coming out party.
Narrator
He bought one. So did Leo DiCaprio and George Clooney. But could Musk sell regular consumers on the idea? The electric car still had an image problem.
Analyst
At that time, there was very little activity in the auto industry in electric vehicles. We were in the age of the large suv. So it was a little unusual to hear about this company in California that was planning to come to market with a high end all electric sports car.
Narrator
J.B. straubel, Tesla's chief technology officer, was the main designer of the electric powertrain.
Tesla Engineer
We were very passionate about trying to make sure that this car was going to just throw down the gauntlet on what the technology could do and really prove to the world that electric vehicles could be incredibly fast and could have incredibly long range. There was kind of a sense of adventure, you know, doing these things for the first time and doing it in a really scrappy way. We did some of the very first battery packs in my garage in Menlo park before we actually were able to rent a real office.
Narrator
The big issue for Tesla, as with all electric cars, has been the batteries, their cost, and how long they last. Eric Noble is president of Car Lab, an Orange, California consulting firm that evaluates new cars and trucks.
Critic
American consumers are very ready for battery electric vehicles. Unfortunately, battery electric vehicles aren't ready for American consumers.
Narrator
The first results at Tesla seemed to support this gloomy forecast.
Tesla, when we first started out, the thought was simple and really, obviously in retrospect, quite naive, which was to make use of a Lotus chassis, some technology that we develop ourselves, but we system technology that would license from AC propulsion, put that together and create an electric sports car that would be compelling. So let's see, where did that fall apart?
Narrator
The car that Musk's team told him could be made for $65,000 would actually cost 140,000 just for raw materials.
When we found out that the costs were a lot higher than expected, it was a, a very frustrating time for us.
Narrator
As the problems mounted, Musk faced a do or die decision at Tesla. Would he let the company collapse or invest his nest egg, the 160 million dollar fortune he'd made from the sale of PayPal. The bet of a lifetime. By 2007, Tesla was running out of money fast. No one wanted to step up to save the unproven automobile startup. Elon had to take the leap alone.
We have to make some pretty dramatic changes, essentially recapitalize the business and invest about twice what we'd originally expected. What we really expected is the outer limit.
Associate
And Elon was looking at this and saying, the dream is still there, but oh my gosh, what have I got? I've got to get this under control.
Journalist
Basically, Tesla got to this point where they only had enough money in the bank for a couple of months and there's nobody around who are willing to put more money in.
I take all of my reserve capital and invest it into Tesla, which was very scary because, you know, it would obviously be quite sad to have the fruits of my labor with Zip2 and PayPal not amount to anything. But there was no question that I would do that in my own mind because Tesla was too important. To let die. I'm available 247 to help solve issues. Call me 3am on a Sunday morning. I don't care.
We had to go in and make some really hard decisions on personnel changes. And Elon really had to dedicate his time to the company.
I want names named. So if someone's always on the hot seat and is always the root cause for problems, they will not be part of this organization. Long term income. It's not okay to be unhappy and part of this company. If somebody can't get happy, get divorced.
Narrator
Musk and his board replaced Martin Everhard, one of their co founders who had been running Tesla.
And I think we kind of really exceeded the level that Everhart could handle. And that became apparent in 2007.
We either were going to have to shut the company down or Elon Musk have to take over as CEO.
Tesla Engineer
It was actually a process of building a company as well as building a car. You know, a lot of people that fit in very well with the company when it was extremely small, you know, didn't end up, you know, fitting in as well when it was larger.
Narrator
Eberhard didn't go quietly. He sued Elon for libel, slander and breach of contract.
Journalist
I believe that I was scapegoated to
take the blame for the programs that
Journalist
were not run well.
Narrator
Musk resolved the dispute through mediation, but his company was in serious financial trouble. In September 2007, Musk flew to Germany with a scheme to raise extra cash by forging an alliance with Daimler Mercedes.
Daimler is the company that invented the internal combustion engine car, the maker of Mercedes Smart. And their endorsement carries a great deal of weight. So that, that was just a very important moment.
Narrator
He had to convince the company that Tesla could supply battery packs for Daimler's cars. But his PowerPoint demo failed miserably.
Really, the key thing with Daimler was to demonstrate hardware that worked.
Tesla Engineer
You know, if they can't touch it, they can't drive it. It's not particularly real.
Narrator
To convince the Germans of the potential of the electric car, he asked his team to retrofit a Daimler Smart Car with Tesla's electric motor.
Tesla Engineer
The challenge of converting a Smart Car to electric was doubly difficult because we couldn't find a Smart car.
The Smart Car is not for sale in the United States. So we had to send somebody down to Mexico to buy a Smart car, bring, bring one to the US and then the Smart Car is really tiny, so we had to fit a motor and power electronics and charger and everything in The Smart Car.
Narrator
The challenge was daunting. To replace the Smart Car's gas engine with a Tesla drivetrain and battery, fit it in a tiny space under the hood, and do it all in less than four weeks.
Tesla Engineer
We didn't have much time at all. We knew that from the beginning, and we kind of prepared for almost battle and, you know, set up war room in the shop.
Narrator
They worked around the clock, stealing naps on the factory floor right up to the deadline.
The Daimler executives arrived and not at all convinced that it made any sense to work with an American car company, let alone a little tiny American car company in Silicon Valley.
Narrator
The Daimler executive went for a test drive. When he came back, a breakthrough. A $70 million contract for Tesla to make electric Smart car batteries. This gave Musk the confidence to start building a competitively priced sedan. He called it the Model S. Taking his cue from the original Model T, he wanted a family car that was modern and sexy. So he hired the man who had designed the latest Aston Martin, James Bond's new ride in Casino Royale.
Originally with Model S, we thought, well, let's have Henrik Fisker, who had a design studio do the styling. We paid him a pretty good sum of money to do that, curiously enough. The designs that he. He worked on, that he came up with for us were terrible. And what he didn't tell us was that he was actually working on a competing car company.
Analyst
Tesla officials claimed that perhaps Henrik had come in to learn what Tesla was doing, while all along he was planning to form his own company, do his own vehicle.
We were pretty upset with him for basically taking what were, at the time, the original specifications for the Model S, and then going and shopping a business plan to create that same car.
Journalist
Tesla sued him. He sued Tesla, and there was all kinds of, you know, infighting.
Narrator
Henrik Fisker wouldn't grant Bloomberg an interview, but he told us that I believe there is enough space in the market for several new car companies that pursue a new type of electrified powertrain with different philosophies. In 2008, the court ruled in Fisker's favor. It was a minor setback for Musk, but the beginning of what would turn out to be the hardest year of his life.
It's always difficult to find the right partner in business or in one's personal life, and you don't always make the right choices.
Narrator
In fact, Musk's personal life wasn't working out either. He had married Justine in 2000. They have five kids, all born within two years. Then the marriage fell apart. Justine felt that Musk's work always came first.
I had the sense of being relegated and sidelined and, you know, that is kind of what I refer to as a trophy wife feeling.
Narrator
Justine challenged a settlement offered by Musk in court and went public.
Justine takes her story to Marie Claire magazine, the Times of London newspaper and her own blog.
Narrator
On March 29, 2011, Justine announced that she was accepting a settlement for $10 million less than what Musk had offered before she took him to court.
I got divorced. Personal life in somewhat of a shambles and in addition getting, you know, attacked by some in the media, my ex wife, every bad thing you could imagine.
Journalist
There were all kinds of crazy allegations around that, you know, allegations of affairs which have never been substantiated.
Narrator
Meanwhile, SpaceX, Musk's other company, hadn't been able to get a rocket into orbit.
Journalist
He started saying, I've got enough money for three cracks at it. He put $100 million of his own money and he sort of hinted at the idea that after three, if he didn't make would be over, SpaceX would die.
The first launch didn't get very far. Got about a minute up and then there was an engine fire and that was it. The second flight actually did make it to space, but not to orbit. And then also Flight three, we didn't get all the way to orbit.
Narrator
Musk had already burned through the $100 million he'd sunk into SpaceX. Now he was on his way back to the drawing board.
Journalist
Three days after the failure, he announced like first that he knew what was wrong. He announced that they'd raised money to finance a fourth launch. And the fourth launch was going to happen in a matter of months, which in the rocket industry was a crazy announcement.
We were able to solve the problems and then just as we'd solved those problems, we ran smack into the worst economic recession since the Great Depression.
It's been one of the darkest days on Wall street in recent memory. Stock markets falling the most since 9 11. The Dow off more than 500 points.
This is what financial Armageddon looks like. Red screens that scream sell, sell, sell.
Journalist
It was a week that shook Wall street and indeed the world.
GM Executive
The Dow had its biggest point drop ever, falling a little more than 777 points. Triple seven.
And a realization that the economy may
still head into a deeper downturn.
Narrator
As 2008 drew to a close, Musk faced the worst crisis of his career. All three of his companies appeared to be in free fall.
The worst point was probably just the weekend before Christmas in 2008, we had the economic tsunami take place and made things even worse. If it wasn't needed, we had had to shut it down and, and just figure out what's, how do we get through this, the stock period, and not go bankrupt?
General Motors shares falling to more than a 20 year low after Goldman cut the automakers rating to sell on a
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worsening sales outlook, Musk was forced to lay off almost a third of his staff and close Tesla's branch in Detroit.
That was tough. It was, it was obviously an economic period that saw the bankruptcy of General Motors and Chrysler. And there we were a young company selling a very, very optional car. I mean it was really a people don't need $100,000 sports car.
Narrator
But things would get even tougher. His energy company SolarCity foundered. The bank that had backed their leases pulled out of the deal.
I certainly did not anticipate that we would have the worst economic climate since the Great Depression. Depression and one which was disproportionately bad for cars. I mean General Motors went bankrupt. I mean General, General F and Motors.
Narrator
You know, Musk was in the fight of his life.
We had maybe about a week's worth of cash in the bank or less. And there was just very little time left in the year to resolve these, these things. I mean there were like two or three business days left in the year. I never thought it was possible for me to have a nurse breakdown, but if it was possible for me to have a nurse breakdown there, that was about as close as I was going to come.
Journalist
He told me that he was waking up in the middle of the night and there would be tears on his pillow and that must have been disturbing and scary. I think it was a dark time
when Elon was going through his sad period. I was so sad. I felt like I had a hole in my heart and there's nothing you can do. You just hurt so much. And I just didn't see him getting out of it. He was just so sad. And then the next thing I get this call saying, ma, you can't believe it. I've met a wonderful woman.
Narrator
Tallulah Riley is a British actress who debuted in the films Pride and Prejudice and Pirate Radio.
Elon, I think, was just having a horrific time. Your business and personal life is just talent.
That at that period, it was definitely a very difficult period. My ex wife and I just filed for divorce and I happened to be in London and my friend Will had dragged me out to a club and then Tallulah had A friend of hers
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had dragged her to the same club before they met. She had never heard of Tesla, SpaceX or Elon Musk.
I thought it was some sort of hapless engineer that had wandered into a London club. And he just looked so forlorn. He was sort of just sat in the corner on his BlackBerry and he just looked really out of place and sad. I was, you know, trying to be very sweet to him and sort of humoring and going, oh, yes. When he was going, this is my rocket and you know, this is my car.
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They were all real. She learned when her father Googled Elon Musk.
We spent four days in London together, just sort of hanging out and doing really exciting things. Then he went back to America. I went to Sicily to do a photo shoot. And then after he was texting me saying, come to America. So I said, fine, I'll come, you know, I'll have a break after this. I just finished a film. So I went for a seven day holiday. And he proposed at the end of that seven days. It's a strange way to begin a relationship, but we've said to each other, we've seen each other at our very, very worst, you know, and yet through that our love has managed to sort of grow and continues to grow every day.
Narrator
Musk's personal life was looking up, but the fate of his companies still hung in the balance.
I had to make a choice then that either took all of the capital that I had left from the sale of PayPal to eBay and invest that in Tesla, or Tesla would die.
Journalist
The company is really teetering on the brink of failure. And there's this board meeting late in 2008 where they're discussing what's going to happen. And Elon just says, well, I'm going to raise a $40 million round to keep the company going. And the board members are kind of wondering, well, how's he going to do that? And he says, I'm going to put it all in myself.
Narrator
And he did. Musk personally guaranteed $40 million more to avert the company's collapse. His total investment in Tesla would be $75 million.
Associate
And that incredible braggadocio confidence catalyzed a change in people's opinion. And we and everyone else around the table was like, my gosh, we want to be part of this. We want to get as much of this investment as we can. He saved the company in its darkest hour with an act of heroism that is hard to describe. There's nothing quite like spending your last remaining dollar on A project you believe in.
It was thankfully a good week, but definitely it took its toll from mental strain standpoint. And the gap mentally just burned out a few circuits.
Narrator
Just as Musk put his last 40 million into Tesla, he realized he needed another $20 million to save his rocket company, Space X. Even though his first three launches had failed, Musk believed in his technology. The fate of SpaceX would be riding on his next rocket, the Falcon 9.
Journalist
3, 2, 1, Stage 1, lift off
Associate
on their very first attempt to Launch the Falcon 9 from Cape Canaveral in front of the world's eyes. The very first attempt was a complete success.
Falcon 9 has cleared the towers.
The first successful launch at SpaceX was an incredibly emotional time. The team at SpaceX had worked for six years to do the impossible and they had succeeded and engine shut down.
Falcon 9, Stage 2 and the Dragon capsule are now in orbit around the Earth. So SpaceX was the first purely commercial ground up development to reach orbit.
What other companies would do in 20 to 30 years, we were able to do in six years.
Narrator
Recognizing Musk's breakthroughs in cost and efficiency, NASA awarded SpaceX a $1.6 billion contract to service the space station.
So the system that will replace the space shuttle that SpaceX has developed consists of two parts. There's our Falcon 9, which is the rocket, and then there's our Dragon spacecraft, which is what gets delivered to orbit and then maneuvers over to the space station, drops of cargo and returns to Earth.
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Musk initially invested $100 million of his own money and SpaceX has raised outside capital of over $800 million since the NASA deal. SpaceX has 40 launches on its manifest. Musk had come a long way since his field trip to look for rockets in Russia. In 2009. Coming off his enormous success with SpaceX, Musk rallied his core investors to keep Tesla going. Determined not to repeat his mistakes, he focused on bringing his family car to life.
So I said, look, we really need to have our own design studio. And that's when I hired Franz von Holzhausen to design the Model S. His
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green agenda was irresistible to von Holzhausen, whom he lured away from Mazda in July 2008. He was a legendary figure in car design who had already revolutionized the looks of vw, GM and Mazda.
Colleague
He's completely passionate to really rid the world of this addiction to fossil fuel as. And that was something that he talked about from the very first sentence, first conversation that we had.
Narrator
With a new team in place, Musk completely revamped the look of The Model
Colleague
S, a sedan doesn't have to be a brick. It doesn't have to be a big, blocky car. We wanted to bring this kind of passion and feeling back to this marketplace. The architecture of Model S is really similar to a skateboard. The floor of the vehicle is the battery pack and the motors between the rear wheels and everything above that is the opportunity space.
Narrator
In March 2009, Musk unveiled the prototype for the Model S, which could hold seven passengers and as much luggage as a station wagon. But to build it, he knew he would need at least a piece of the US government's new $25 billion loan program to support alternative energy vehicles.
Colleague
In order for Model S to truly be successful. You know, it was important that the loan come through.
Narrator
Government funding suddenly became controversial. When New York Times writer Randy Strauss called the program the bailout of very, very high net worth individuals who invested in Tesla Motors act, Musk fought back.
Randy's thrust is a huge douchebag and an idiot.
Narrator
Okay, it wasn't a bailout, but a loan. The US government agreed to lend Tesla $465 million to mass produce the Model S sedan, a move that astounded many in the industry.
Critic
It's very unlikely that the Tesla investment is ever repaid to the taxpayers. Electric vehicles are really not possible in ways that would be effective for most consumers. Still, this is just the religion of electric vehicles, and like Jonestown, that religion will come to an end.
Journalist
There are most certainly people who want to see Tesla fail because it is an attack on the mainstream car industry.
Of course, the biggest impact that Tesla will have is not the cars that we make ourselves, themselves, but the fact that we show that you can make compelling electric cars that people really want to buy.
Narrator
Former General Motors chairman Bob Lutz rose to the challenge.
GM Executive
If a small Silicon Valley startup believes that they can do a commercially viable electric car, are we going to sit here as General Motors and say, well, a guy in California can do it, but we can't?
Narrator
Game on. Lutz himself would supervise the launch of the Volt, a new electric Chevrolet family sedan to compete with Tesla's Model S. Musk's Success continued in 2010 as he took Tesla public, announcing the IPO in June. But it was a move that brought the Tesla doubters out in droves.
Journalist
Things really got ugly. I mean, they brought up the divorce, they brought up past problems at Tesla, they brought up, you know, Elon's background.
Narrator
Tesla stock voted by Wall street as the least likely to succeed.
You don't want to own this stock, you don't want to lease it.
Journalist
Heck, you don't even.
You shouldn't even rent the darn thing. We've confounded the critics at every turn. So at a certain point, people have to get tired of being wrong.
Associate
There hasn't been an IPO of a car company in America since Henry Ford, and that caught people's attention.
Journalist
You just saw on his face this sort of just elation and this feeling like all of this suffering is worth it.
Journalist
And it's real now.
Narrator
The IPO was such a success that Tesla's net worth rose to almost $2 billion. And GM copied them again with an IPO of their own, the biggest in US history.
GM Executive
Whether Tesla is ever hugely successful or not, I'll always owe him a debt of gratitude for having kind of broken the ice.
Narrator
Around the same time, Daimler invested $50 million in Tesla, embarking on a joint venture to build electric Mercedes and smart cars.
Analyst
For a company like Daimler, the maker of Mercedes Benz, to suddenly award this contract to them, it was a validation.
Narrator
Toyota also invested $50 million to have Tesla build a new electric branch version of the RAV4.
Analyst
For a startup like Tesla, it's quite significant at this point. Tesla has received investment from the world's largest maker of luxury vehicles and the world's largest automaker.
Narrator
But Tesla still had an earnings problem. The company's loss for the fourth quarter of 2010 was $51.4 million, more than double the losses of the year before. That didn't stop Elon from taking one of his biggest risks ever, acquiring a huge car making plant near San Francisco, abandoned the previous year by Toyota.
The dream factory location for Tesla was always the new ME factory, which was a 50% Toyota, 50% General Motors factory. It's one of the biggest car plants in the world. It's a great location, close to Tesla headquarters.
Critic
The reality is, for very little money, Toyota. Toyota got an albatross off its books. From an industry perspective, it looked incredibly savvy on Toyota's part and incredibly naive on Tesla's part. Car factories are big pieces of sunk capital. To retool a factory takes a tremendous incremental investment.
Narrator
Musk took on critics of the electric car. In 2008, the BBC broadcast a review View of the Roadster by Top Gear's Jeremy Clarkson.
Top Gear Presenter
This car then really was shaping up to be something wonderful. But then, although Tesla say it'll do 200 miles, we worked out that on our track, it would run out after just 55 miles. And if it does run out, it's not a quick job to charge it up again.
Narrator
Tesla charged that the incident was faked and said they had proof that the Roadster hadn't run out of power. In the spring of 2011, Tesla sued the BBC for libel and malicious falsehood to block reruns of the show. The case is now in court. But of all his companies, perhaps the greatest success could be the one addressing the world's energy needs. SolarCity continues to grow, now serving more than 10,000 customers from California to New York. It's the largest solar service provider in the US with more than 10,000 projects completed or underway.
Journalist
SolarCity has been very, very impressive. I mean, there are, you know, thousands of people with panels on their roofs and lots of big offices. I believe eBay has SolarCity panels. So it's having a very big, very visible impact on the world.
Associate
He really wants to change the world. And in Elon Musk's vision of the future, you'll have clean and renewable sources of energy feeding the grid and all of our vehicles will run off that. This is really the future. It's something you want to tell stories about.
You know, he wants to do so many things. I mean, he has an idea for an electric jet, he wants to work on nuclear fusion. You know, he wants to remake the highways in Los Angeles.
Narrator
And in October 2010, Musk married Tallulah Riley. We spoke to them during their honeymoon in Paris.
I feel incredibly blessed to be with the Elon for obviously so many reasons.
Thank you. Because I'm a visionary too. The past two years have been quite a ride, you know, and there's been some decisions that at the time I've been quaking in my boots over the things he's been doing. I feel privileged to be able to see them sort of so up close and witness it all.
Narrator
On December 8, 2010, SpaceX had its greatest mission yet.
NASA just launched the SpaceX Falcon 9 rocket. The cargo vehicle is favored to replace the space shuttle when it retires next year.
Narrator
For the first time in history, a commercial company's spacecraft was able to return from its orbit of the Earth and was recovered after a safe landing.
Associate
Elon Musk goes a step further. Earth's not big enough with SpaceX. He literally wants to go to Mars and set up private colonies on moon Mars and push the vanguard of space exploration beyond that which governments are capable of doing, even superpowers. That is unprecedented.
Journalist
Elon has a self confidence that is just. It's breathtaking. And it's especially breathtaking when you think about the things he's confident about. The idea that humanity is going to get to Mars, that not just humanity is going to get to Mars, but that he, in his lifetime, Elon Musk will get to Mars.
Narrator
Musk and SpaceX are keeping the dream of man so space flight alive. In April 2011, the company announced that its Falcon Heavy rocket will be ready to launch in 2013. And on April 19, 2011, NASA confirmed its confidence in SpaceX by awarding them $75 million to develop a revolutionary launch escape system that one day would enable the Dragon spacecraft to carry astronauts safely to the moon and Mars.
Associate
He finds a way to get from here to there with pragmatic steps. It's not just let's hunker down for 20 years, come up the other end with a dream and a vision. It's here's the incremental path of progress, here's how we can get from here to there.
Just is it significant, really? The question is, are things I'm working on, are they really going to matter or do they have the potential for really mattering?
Narrator
We don't know for sure if Elon Musk will revolutionize the world of automobiles with his electric car. We don't know if Musk will ever get to Mars or if he will really convert America to solar energy. We do know that Elon Musk will keep trying and there will be more innovative ideas along the way.