Op-ed: Are We Allowed To Doubt Elon Musk?
He’s become an icon of our age. A father figure to the Silicon Valley elite, an entrepreneurial superhero perched on the side of your cereal box.
The South African-born American business magnate, Elon Musk, has amassed a fortune worth an estimated $20 billion. Much like 20th-century icons Howard Hughes and Henry Ford, Elon Musk echoes a time when giants of industry were looked up to like gods able to transform entire industries from the ground up.
“Let’s be clear Elon Musk is excellent at marketing himself, he has that whole ‘Field of distortion Steve Jobs’ thing going on.”
But with all the high praise going on, one has to step back and ask, is all the adulation justifiable?
If you look around you, you’ll see the products and platforms that Instagram, Facebook, Apple, Google etc. have given us. They are all tools of the tech enlightenment. A playground where you’re literally using and interacting with these brands up to 50 times a day.
But Musk hasn’t been able to experience anywhere near that type of commercial success. You’d think with that level of worship, everything from our refrigerators to our energy systems would have the Musk Midas touch.
But other than fractured timelines, delirious moon shots and a car that has nowhere near the adoption saturation people were expecting, there isn’t much else to put by his name.
He has stayed highly visible by marketing himself as a visionary, he is clearly high functioning and has intentions to help the world iron some of its issues out but to date, he’s proved to be no Jeff Bezos with Amazon or Sergey and Larry with Google.
There is no doubt he has experienced some successful results; early on he co-founded X.com as a young adult, a financial payment platform which ended up merging with Confinity (a combination of confidence and infinity) founded by legendary entrepreneurs Max Levchin, Peter Thiel, and Luke Nosek.
Confinity already had the PayPal platform under its bonnet by the time X.com came around, but to save space in the marketplace, they joined forces. Company surveys showed that the public had little appetite for X.com.
After Paypal was sold in 2002 to eBay for $1.2 billion, Elon cashed out on the sale with $165 million, where he was ousted because of management disagreements. Shortly after that, he used that money to start SpaceX, the famous aeronautical moonshot company. His noble goal? To reduce the cost of human spaceflight by a factor of 10.
The company to date has already racked up billions of dollars in government and commercial contracts, but after nearly 40 rocket launches we haven’t seen any civic application of SpaceX come to fruition. And they continue to delay their planned tourist space missions.
However all his companies – Tesla Motors, SolarCity (a subsidiary of Tesla) and SpaceX – have relied heavily on government subsidies. According to a 2015 article in the Los Angeles Times, these three companies “together have benefited from an estimated $4.9 billion in government support.”
Then there is Tesla. According to Statista, Tesla has a 0.2% market share in the US of the car market or to put it more plainly, sales of electric cars represent just 1 per cent of the 17.55 million vehicles sold last year in the US.
Musk is excellent at anticipating change and no doubt might lead the pack in years to come, but it will be decades before we see the type of market transformation and saturation with electric cars that Steve Jobs created with the iPhone at Apple.
In the last few years Tesla has beaten out all other electric cars selling 300,000 cars since rolling out its debut electric vehicle in 2008, but they have also ploughed every cent of its $11 billion revenue into developing new products. It is clear he is selling a dream to his investors, with some even calling the unfulfilled destiny of Tesla a Ponzi scheme.
So how did Elon Musk make his $20 billion?
It has all come from large stakes in inflated valuations within his companies; on paper, he’s worth that much because people have invested billions into Tesla & SpaceX. Musk is still very much incubating his products to reach critical mass.
“Musk is still very much incubating his products to reach critical mass.”
On the personality side of things, you have to admit he is a little strange, highly strung and comes off as neurotic in interviews.
This his most recent peculiar confrontation:
Behind Tesla and SpaceX, all in theory great companies, there is a whiff of smoke and mirrors. Let’s be clear, he can dream up all the products and services he wants, he can write the next trilogy to Isaac Asimov’s Foundation, but that still won’t bring him a global user base that is worthy of his wealth.
Until my friends and I are driving a Tesla or flying in space on a Falcon, there isn’t much to talk about.