How Did Elon Musk Make His Money?

Elon Musk is one of the most popular and controversial technology CEOs on the planet. This outspoken entrepreneur founded a variety of companies over the past 30 years, including Tesla (TSLA), SpaceX, The Boring Company (which released a flamethrower, called Not a Flamethrower, in 2018), and Neuralink.

Being involved in so many things, one may wonder how Elon Musk made his money.

By the end of 2020, his Tesla stake made Musk the second-richest person in the world. He’s behind only Amazon (AMZN) founder Jeff Bezos after the stock gained over 500 percent and got included in the S&P 500 at an inflated price.

It’s the most valuable car company in the world, at the front of the electric vehicle race, and in a position to buy a legacy automaker.

Each company he leads is known for innovation, and he’s a frequent guest on digital media, like Joe Rogan’s podcast and Marques Brownlee’s MKBHD YouTube channel.

He always makes headlines. None more so than when he made his move from California to Texas. Here’s the story of how he made one of the biggest fortunes in history.

How Elon Musk Got Started

Musk was born in Pretoria, South Africa where he claims to have often been bullied. He moved to Canada and eventually came to the U.S. to settle in Silicon Valley. In 1995, Musk started Zip2 with his brother Kimbal and another partner using money raised from angel investors.

The company eventually sold to Compaq in February 1999 for $307 million in cash. Musk earned $22 million from his stake of the company during its sale.

A month later, he used that money to co-found payment company X.com, which merged with Confinity in 2000. The combined company also owned PayPal, a financial service it transformed into when it showed profitability.

Two years later, eBay bought PayPal for $1.5 billion in stock, which netted Musk $165 million. This was the start of his trajectory into the Elon Musk you know today.

How Did Elon Musk Make His Money?

Musk has a long-standing fascination with space, and he founded SpaceX in 2002 as a way to start a Mars greenhouse. The company gained in popularity and notoriety when it launched the first private manned flight in May 2020.

In 2003, he joined Tesla with the goal of creating a zero-emissions car. By 2017, the company had its Model 3 on the market and focused on lithium-ion batteries and power storage solutions through its expanded gigafactories.

The company also spent $2 billion to acquire SolarCity, which was co-founded by his cousins in 2006. Investments in the company and his large stake propelled Musk’s fortune over $23 billion by 2019. And that’s when his wealth really started to grow.

Tesla’s market capitalization rose over 500 percent by 2020’s year-end based on it finally surpassing four consecutive profitable quarters. This qualified it for entry into S&P 500, which is automatically invested in by most 401k and IRA plans.

Like Tesla, Musk’s net worth also increased, and he ended the year worth around $150 billion. This is more than Microsoft founder Bill Gates and LVMH Moet Hennessy – Louis Vuitton SE chairman Bernard Arnault.

So, Zip2 made him a millionaire, and he continued growing his wealth by investing and involving himself in new innovative tech companies.

Is Elon Musk A Billionaire?

Elon Musk is more than a billionaire – he’s a centribillionaire. The term was coined in 2020 as a handful (literally five) of people grew their wealth over $100 billion during the coronavirus pandemic. His net worth was over $153 billion in December 2020.

By comparison, John D Rockefeller’s (the country’s first billionaire) net worth of $1.5 billion would only be worth a paltry $25 billion in today’s numbers. Although when taken as a percentage of the U.S. GDP, Rockefeller’s fortune is equivalent to over $400 billion.

Not only is Elon Musk one of the richest men to ever live, but his car company Tesla also has a bigger market capitalization than Toyota (TM), Ford (F), and any other car company in the world. This is despite only generating a fraction of the revenues.

This is because Musk didn’t just reinvent the wheel – he also created the fuel and roads.

How Is Elon Musk So Rich?

Musk is a smart businessman and very tech savvy. This helped propel his fortune as he jumped from one business venture to the next. He’s a modern-day Howard Hughes who has an entrepreneurial spirit and yearning for exploration.

Tesla is what ultimately made Musk and its early investors generationally wealthy. It’s because Musk combined the ingenuity of both Henry Ford and Rockefeller to vertically integrate into a full-service car company.

By building out a network of EV charging stations and adding software into the vehicles, Tesla has subscription revenue.

Electric vehicles aren’t a new concept, but the implementation over the past decade proved the concept and could disrupt an industry that created America’s biggest titans. This makes Musk a disrupter that rivals titans of the past like John D Rockefeller, who at one time cornered the oil and gasoline production market.

What Companies Does Elon Musk Own?

Although Tesla is the big moneymaker, Musk is also CEO and Founder of SpaceX and The Boring Company, along with Chairman of SolarCity. He co-founded X.com, which became PayPal (PYPL), Neuralink, OpenAI, and Zip2, which later sold to Compaq.

OpenAI is a nonprofit artificial intelligence research company. Neuralink develops brain-computer interfaces. SpaceX sent the first private manned shuttle into space and is focused on interstellar exploration. The Boring Company is an infrastructure and tunnel construction company (do you finally get it – Boring into the ground?).

Each works with the other often, and he even developed the Hyperloop as an open-source concept that could be built by his company. If only this visionary had the vision to not name his son X Æ A-12.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.