Success isn’t always earned with hard work alone. Most billionaires in the planet were either millionaires or very well off to begin with, but a big percent of them knew when and how to risk. You can call it a business intuition, a talent or simply plain luck. Some people like Elon Musk however, were ready to sacrifice everything at the right time and it paid out. As unreal as it sounds, going broke was a very possible reality for Elon Musk at one time.
Nowadays, Musk is one of the most known and respected CEOs in the planet. He is worth over $21 billion and owns two of the most revolutionary companies in human history, SpaceX and Tesla. So how is it that a multi-millionaire like Musk was on the verge of going broke?
Elon Musk had to borrow money to pay rent after he invested all US$180 million earned from PayPal on SpaceX, Tesla and Solar City.
— What The F*** Facts (@WhatTheFFacts) April 16, 2019
Back in 2008, Musk sold his shares in PayPal to eBay for the not so small sum of $180 million. That’s definitely no small amount of money and he could have easily used it to live the rest of his life comfortably and in luxury. Musk however, did no such thing as he invested the entire amount into his three new companies, SolarCity, SpaceX and Tesla.
After he invested the entire sum into the companies, he legitimately did not have money to pay his bills. With no money to pay the bills, he quickly found himself in divorce proceedings and was living entirely off loans from friends. Elon Musk actually risked everything, and going broke was not an option, it was the reality for a time.
To avert going broke by going all-in
Musk remembers 2008 as the absolute worst time of his life. In his interview, he explains how SpaceX already had 3 failed launches. To make matters worse, Tesla was experiencing immense difficulties while trying to put the Tesla Roadster on the market. Both companies were bleeding out with no end in sight.
It’s not widely known, but many entrepreneurs, who often appear very wealthy have little to no cash in reality. Musk himself mentioned that when discussing his own divorce filing in which he mentioned that he “ran out of cash about 5 months ago”.
So, by the end of the year, things were looking very grim. Musk did not give up and he got his own Christmas miracle, two of them in fact. A few days before Christmas, Musk was offered a $1.5 billion contract by NASA. Exactly on Christmas Eve, many of Tesla’s investors agreed to put more money in the project and the rest is history.
Like many billionaires, Musk does not take salary payments from Tesla. He instead made a very interesting deal with the board.
If things roll out in a favorable way, Musk can in fact make over $50 billion in the next few years. That is of course, if he hits preselected milestones. Tesla’s stock however, has been nothing but volatile recently and such developments seem unrealistic at the moment.
The risk Musk took paid off. Today, SpaceX is launching the most modern rockets in the world and Tesla will make more than 400 000 cars this year. Self-driving cars are also coming and Tesla will definitely benefit the most. Going broke might have been Musk’s worst nightmare, but he managed to turn the situation into something many people only dream of.
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