Have you heard the term “snake oil”? The use of this idiom dates back to China, where it is believed that snake oil is a cure for every existential crisis present in the life of the average human .Though, the fact of the matter remains that snake oil never even exists in the first place. Despite its irrelevance, the term is engrained in people’s memory. The main reason behind it is that it helps us to describe business models of people like Elon Musk.
Musk back in Twitter saga
Musk is again in the news for his twitter deals. This time, he has re-offered to buy Twitter at the price decided in the original deal. However, Twitter lawyers are not sure about his offer as in return for fulfilling his legal obligation, Musk has asked Twitter to drop its lawsuit. They are so apprehensive of Musk’s offer that Twitter is trying to find an inside info about whether Musk is actually galvanising his fundraisers or not.
Twitter has its reasons to do so. Such has been its tryst with Elon that even if they want, they can’t trust him. Firstly, Musk put his leg into Twitter by becoming a majority shareholder in the company. He then reportedly accepted a deal according to which, Musk would be on Twitter’s Board of directors and would not be acquiring more than 14.9 per cent of its share.
However, he quickly changed his stance and launched a hostile takeover of the Social media giant. After a week-long scuffle between existing shareholders and Twitter Board of Directors, it seemed as if the deal was finalised. But then, Musk came out with his claim that Twitter is not giving him an exact amount of bot accounts present on the platform. Few months later, he said that he was pulling out of the $44-billion Twitter deal. And now, once again he has offered to buy it.
Shrewd from his childhood
It’s tough to understand how his mind works. But, his past may give us an idea about Elon. It can tell us whether he is the genius that Musk is known for or he just knows how to market himself better.
Musk had a quite privileged childhood. His Dad is Errol Musk, a South African electromechanical engineer, pilot, sailor, consultant, and property developer. Musk’s mom is Maye Musk, a supermodel and dietitian born in Saskatchewan, Canada and raised in South Africa. Musk is described as an awkward and introverted child.
It means that he did not have many friends, due to which he developed interest in computing and video games and became a self-taught coder. Despite his shy nature, Musk was a good salesman during his younger days, which he proved when he earned $500 by selling BASIC-based game Blastar to PC and Office Technology.
He showed more shrewdness when he applied for a Canadian passport, rather than a South African one. With a Canadian passport, entry into American Silicon valley was a cakewalk. Not only that, he also avoided mandatory service in the South African Defence Force by attending University of Pretoria for five months only. It was during that time Elon was waiting for the documentation.
Failed to hold on to Zip2
His first formal foray into business came in 1995, when he and his brother Kimbal, and Greg Kouri founded Zip2. Business Columnist Ashlee Vance said that Elon Musk did this with the help of $28,000 received from his father. But, Musk denied it and claimed that his father invested in it during later stages of Company’s development.
Later, Zip2 did grow but only until Musk became overambitious and wanted to become the CEO of the company. Resultantly, the company Compaq acquired Zip2 for $307 million, out of which Musk could receive only $22 million for his 7 per cent stake.
Musk is not a co-founder of Paypal
Musk used this money to become a co-founder of X.com, an online financial service and e-mail payment company. Despite being co-founder of the company, Musk was not liked by investors as CEO of the company. They replaced him with Intuit CEO Bill Harris by the end of 1999. It is due to X.com’s connection with Paypal that Musk has been propagandised as a founder of Paypal.
After Musk was ousted from his CEO position at X.com, the company was merged with online bank Confinity. The main reason behind this was Paypal being more popular in the money transfer domain than X.com. Paypal was a money transfer service of Confinity. Interestingly, Confinity wasn’t founded by Elon Musk; rather it was a brainchild of Max Levchin, Peter Thiel, and Luke Nosek.
Elon Musk took over as the CEO of the combined firm in April 2000 and was fired in October 2000. Later, Peter Thiel took over as the CEO of the merged company and the company got rechristened as PayPal in the year June 2001. PayPal launched its first IPO in February 2002 and later eBay purchased it for $1.5 billion. Elon Musk, who still held a stake in PayPal, made a windfall gain of $180 million from the sale and suddenly became super-rich. Later, he would invest this money into other ventures like SpaceX, Tesla and Solar City.
Read more: Unmasking Musk: Was Elon Musk really a cofounder of PayPal?
Tesla is not a brainchild of Elon Musk
Out of these 3 companies, Tesla is one company which finds more resonantion with Musk’s name. Interestingly, Musk is not the founder of it as well. It was founded by Martin Eberhard and Marc Tarpenning, who respectively were CEO and CFO of the company.
Musk kind of gained the first mover advantage when he poured in $6.5 million out of $7.5 million which Tesla brought in through Series A funding. Through the hard earned interest of Peter Thiel’s Paypal (Musk used his Paypal money to fund Tesla), Musk became the chairman and board of directors by virtue of being the largest shareholder of Tesla.
In total, Musk invested $30 million in Tesla and wished to be called as co-founder of the company. Later a Court settlement in 2009 paved the way for declaring 5 people as co-founders, one of them was Musk. Later, Musk is said to have led various rounds of funding which include money poured in by Google co-founders Sergey Brin and Larry Page, and former eBay President Jeff Skoll. From then on, Tesla has been on roll. Its models have been sold despite the company not relying on dealerships. Tesla sells its cars directly through its websites.
Read more: Musk puts Tesla on line for his Twitter stunt
Musk’s social media is advertising square
Its biggest brand ambassador is Elon Musk himself. His social media following does the trick for him. By judiciously utilising social media, Musk has carved out a sort of niche fan base for himself. This fan base comprises nerdy, science based guys with not much social skills, but having enough money to spend on anything which is advertised as game changing stuff. Tesla is branded as a revolutionary electric vehicle which will solve the climate change problem.
Despite being comparable to other EVs already there in the market, Elon Musk has been able to convince rich kids that buying Tesla is virtuous. The domino effect has led to normal people buying into sentiments. Rest of the profit end of business is taken care of by high prices of Tesla products. Tesla Model S catching fire and Model X being delayed by a year did not have any substantive impact on Tesla. All because of the perception of Musk’s personality.
Also read: Is Musk getting rid of Tesla?
Failures at SpaceX
It is his PR machinery which has kept SpaceX relevant in public space as well. The company has a record of failure, which only a beneficiary outfits failures could ignore. From the time of its inception to 2015, at least 5 of SpaceX ventures have failed. In one of the failures in 2008, a Tesla rocket with NASA satellites onboard failed as well. But, even today SpaceX is alive and Musk is telling the world that he has a dream of establishing the first human colony on Mars.
Musk’s USP is that he sells such ambitious dreams that people and investors term his failures as grand and he keeps getting funding and support from industry. The moment he seems to be in trouble, the man takes strange routes to fame such as smoking pot and sounding a disappointed genius on Joe Rogan Experience. The third option for Musk is courting Xi Jinping.
Also read: Tesla wants to come to India but doesn’t want to lose Beijing. Not going to happen
Pro-China Musk
Recently, he tried it by calling for a business resolution of Taiwan. He wants to declare Taiwan, a sovereign country, as a special administrative zone of China. Though it is not a sustainable idea, Musk got one more chance to stay in public view. Staying relevant is the reason why he keeps peddling irrelevant and unnecessary knowledge on various issues such as humanity, communism, capitalism, wokeism, nerd side of science, coding and even Ukraine-Russia crisis.
Experts do not take him seriously, but then again, the majority of people are not experts. Musk’s companies run on Stock exchanges and he galvanises his investors through his tweets. Apart from that, Musk is just a jack of all trades who is good at presenting himself to be a master.
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