September 26, 2023 1:21 am CDT
Lessons Elon Musk can teach us about investing
It is easy to think of Elon Musk as an outlier, someone who’s away from the common business world. While we all have our own opinions of what Elon Musk is as an entity, Robert Downey Jr based Tony Stark on him.
The fact is that Musk is not just someone who wants to go into space. He is also someone who has been incredibly savvy with his ventures and investments over his career. We all can learn lessons from Elon Musk the investor. For anybody who is running a business, what are the most important lessons to learn from Musk the investor?
Wholehearted commitment to business
Elon Musk started the company Zip2 with $28,000 borrowed from his dad. In 1999, he sold it to Compaq for $307 million. Musk would earn $22 million, investing some of his proceeds into X.com. It was one of the first iterations of online banking. Since then, it’s merged with Confinity to become PayPal in the year 2000. He is someone who had a stake on the ground floor in terms of online banking, which is something that has affected every organization since. This includes Provident State Bank and Bank of America and everyone else in between. Since PayPal was sold to eBay, he has made a lot of money from the sale. We have to remember that after he was out-maneuvered at Zip2 and PayPal, he would learn that a cast-iron grip on managing his company was a necessity. In 2007 at Tesla, he would swap $8 million of his preferred stock for the inferior common stock so he could get rid of the CEO. He is someone who has a wholehearted investment in his businesses. This is not just in a financial capacity, but also in a personal capacity. He is someone that doesn’t want to cash out at opportune moments. After all, his proceeds from the IPO of Tesla were worth $15 million. It is a very small sum indeed! Even in 2013, he took out a personal loan to purchase stock to help Tesla pay off one of its loans. As a business owner or investor, he is someone that has a focus on the personal rather than the professional.Elon Musk’s creative financial approaches
He has always helped his businesses to benefit. In 2015, his businesses and customers would benefit from $4.9 billion in savings coming from government subsidies. This did allow him to sell zero-emission vehicle credit allowances to other automotive producers via Tesla. Therefore, this allows Tesla to boost its revenue. Additionally, a contract worth $1.6 billion from NASA helped him to fight bankruptcy at SpaceX, his space exploration program. He’s someone that has always focused on creative financing. You could argue that he is almost flippant with finances. Regardless, he’s always focused on benefiting the customers.
Does bravery work?
There is a lot to consider about Elon Musk because of his various roles within Tesla and SpaceX. A lot of people have spoken about poor corporate governance within businesses. The raising of issues by a group of shareholders in a famous 2017 letter to Musk in Tesla is also well-known. Additionally, there were concerns about federal money being used to prop up the SolarCity company, which was meant to go to SpaceX. His latest interest appears to be Twitter. With so much hubbub around whether he’s going to buy it or not, he’s keeping everybody guessing. With unique approaches supposedly on the horizon, such as Tweeters being charged to quote a tweet, a lot of people are questioning his approach to free speech. Whatever the opinion is on Musk himself, the fact is that when we’re talking about his financial endeavors, he has always managed to defy expectations. In business, we can argue that we need mavericks in this respect who may not necessarily appear to have a foot in the real world. This is because of the seemingly huge amount of money that he has. He is one of the most human billionaires you are likely to meet. Musk has sheer ambition, but also dedication to the cause. You only have to look at the documentaries on SpaceX to have an opinion of Musk, not necessarily as an eccentric billionaire, but as someone who genuinely has a feel for the human condition. We can talk about lofty ambitions and exploring space as a metaphor for man and how we’ve always wanted to reach the stars. Musk is someone that has put his money where his mouth is.Creating comfort around himself
As businesses thrive on external stakeholders and the need to diversify, one of the biggest lessons we can all learn from investing is that Musk has had a very successful record as an angel investor. His investment in DeepMind netted a $90 million return, and yes, while one of his investments was a loss in 2012, Halcyon Molecular, the fact is that business and family are intertwined. Throughout his career, he has been involved with his brother Kimbal in a number of businesses, as well as his cousin Lyndon Rive. A lot of people voice concerns based on the links between companies like SpaceX and SolarCity. However, the lessons involved in investing and putting finances into the right areas are, in many ways, about having the right team around you. It’s not necessarily about having people fall on their swords. It’s about the strength in numbers and having the right people that you can trust to give you the courage to push forward. Like him or loathe him, or even if you just think he is an eccentric, Elon Musk is someone who continues to push the envelope. We can argue that he is an eccentric billionaire. He is someone that, throughout his investment career, has come from a very pragmatic place. You could argue his choices are beyond conventional. However, he is someone who delivers results and has helped many reach for the stars.
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