Elon Musk

Elon Musk

            Elon Musk is among the successful entrepreneurs in this modern world, with investments in major industries, including the space industry and the motor industry. Musk was born in 1971 in Pretoria, South Africa and made successful business ventures, including co-founding PayPal (electronic payment firm) and forming Space X (maker of space aircraft and launch vehicles). Musk was also among the first significant investors to delve in the electric car industry by investing and becoming the chief executive officer of Tesla. The aim of this paper is to produce an individual report analyzing the performance and operations of Elon Musk based on his entrepreneurial capabilities, with insights on some of his greatest ventures, including PayPal, Space X, and Tesla. The paper will then assess his performance, make a judgement on his operations, and draw lessons from his entrepreneurial and innovation capabilities. Judging from the assessment, the paper will then determine if they are doing well and recommend improvement areas.

            Early Life

            Being born from a South African father and a Canadian mother, Musk was full of great potential in terms of innovation and entrepreneurship. Elon Musk had an early talent for entrepreneurship and computers, and by the age of 12, he had already created a video game, which he sold to a computer magazine. Musk later obtained his Canadian passport and relocated since he did not support apartheid that required compulsory military service to every citizen. Musk also relocate because he was seeking greater opportunities economic-wise, especially from the United States. The entrepreneur attended the Queen’s University in Kingston, Ontario (1992) and later transferred to Philadelphia, where he studied at the University of Pennsylvania (received a bachelor’s degree in physics and economics).

PayPal and Space X

Elon Musk founded Zip2 as his first company, which ventured in providing business directories and maps to online newspapers. In 1992, Zip2 was bought by a computer manufacturer, Compaq for $307 million, having invested $28,000 on the company with his brother, Kimbal Musk. Musk then used his buyout money from Zip2 to create X.com; a company meant to shape the future of banking. X.com was later merged by Confinity to create PayPal. eBay later bought PayPal in 2002 for $1.5 billion. From the sale, Musk reportedly netted around $180 million from the eBay acquisition and went on a venture to form a new company. At this juncture, we already have a glimpse of the entrepreneurial capabilities that Musk has, including his skill in re-investing and not being afraid to venture into new and potential markets. PayPal was among the best ventures that Musk entered into, thanks to the previous investments that provided adequate capital.

According to Musk, for life to survive, humanity needs to develop into a multi-planet species. This idea fueled Musk’s next venture as he was not satisfied with the expense of rocket launchers. Musk founded Space X (Space Exploration Technologies) in a bid to more affordable rockets for venture into other planets. The first two rockets of Space X were the Falcon 1 (launched in 2006), followed by a bigger Falcon 9 (launched in 2010). Both rockets were designed to have lesser costs compared to their competing counterparts. Falcon Heavy was the third rocket designed by Space X, and it was launched in 2018 with a design to carry 117,000 pounds and the capability to orbit almost twice as much as its competitor (Boeing’s Delta IV Heavy) at a third of the cost. Later, Space X developed the Dragon spacecraft, which was able to carry supplies to the International Space Station and design to carry around seven astronauts. With Dragon spacecraft in mind, Elon’s motive was to reduce the expense of space travel and make space travel much cheaper than before. Space X’s Grasshopper rocket also made significant achievements in space exploration by 2012 with a new technology to transform space explorations. Most of Musk’s innovations and entrepreneurial ventures are seen to be focused on straightforward agendas which are daring as well. Musk is seen as an entrepreneur focused on making life easy for humanity at large, with inventions like online money transfer and space exploration.

As much as Musk was the CEO of Space X, he was also the chief designer responsible for building the Falcon rockets as well as the Grasshopper and Dragon rockets. Tesla proves to be proficient in matters of space exploration in a bid to make humanity explore other planets. Musk is at the forefront of making advancements in human technology, with inventions in one of humanity’s vital ventures. Explorations in space are vital to humanity at large since it the future of humanity depends mulita-planetary ventures. Musk was at the forefront of advancing the human species with ventures into space as a move to advance the human species. Musk develops from a simple game developer to a space explorer with the aim of developing the human species at large. As an entrepreneur, Musk has proven to be more proficient as he turned little fortunes into big ventures, like space explorations. Entrepreneurship about designing, launching, and running new businesses, especially small businesses into functional businesses.

Tesla

At the period when the world thought it was done with Musk, yet another innovation kicked in. The possibility of electric motors being used in the place of gasoline vehicles was a dream venture in the past years, but Musk saw an opportunity instead. Must venture into the field of electronic cars to transform the world into a safer place free from carbon dioxide emissions as a result of petroleum use. In 2004, Musk became the founder of Tesla Motors, alongside Marc Tarpenning and Martin Eberhard. Tesla introduced its first car in 2006, Roadster, which had an ability to travel 394 km on a single charge. The venture involved a sports car that could go from 0 to 60 miles in less than four seconds. Tesla’s initial public raising raised to around $226 million in 2010and two years later; the company introduced another sedan. Model S. Among the praises won by Tesla was the Model X luxury SUV that was re-introduced into the market in 2015. Other ventures involving Musk was the Hyperloop, a pneumatic pod that could travel 560 km between San Francisco and Los Angeles in 35 minutes at a speed of 760 miles per hour, almost the speed of sound. A report Moon (2020), Tesla announced a record-breaking quarter in terms of production and delivery. Tesla manufactured around 102,672 with deliveries of around 88, 400 vehicles at the beginning of the first quarter of 2020. Tesla is based in Palo Alto, California, with ventures in electric vehicles manufacturing battery storage of energy, thanks to the acquisition of Solar City (solar roof tile and solar panel). Among production assembly plants of Tesla include the main manufacturing facility in Fremont, California, and Giga Shanghai in Shanghai, China. Currently, Tesla sells Megapack and Powerpack batteries, solar roof tiles, and solar panels, including other related.’

After 11 years of service, Tesla was ranked among the world’s best-selling plug-in and best-selling battery electric passenger car manufacturers in 2019. In terms of global sales, Tesla’s sales vehicle sales increased by 50% from 250,000 units in 2018 to 370,000 units in 2019. By 2020, the company had produced around 1 million electric cars, hence improving the company’s profit margins. The technology used by Musk was to emulate the typical technological-product life cycles, with affluent buyers as initial targets. Presently, the firm targets larger markets with products at lower prices. The firm’s strategy involves selling its vehicles via an online platform, with company-owned showrooms instead of conventional dealer networks. The move towards e-commerce enables the customers to customize the vehicles and order them online, hence increasing the market base of the company.

The electric and battery technology that was used by each of Tesla’s initial model was developed and the profits used for other broader markets in later advanced models. Again, such advancements and developments in technology were strictly aimed at improving humanity as a whole, with renewable energy as the forefront of all innovations. Entrepreneurship often puts profit-making as the main motive, but this was not the case of Elon Musk. The entrepreneur has, in most instances, proved to delve beyond the basic understanding of human wants and needs, with the advancement in space explorations to serve humanity’s future. Tesla mainly focuses on pure-electric propulsion technology (renewable technology), and transfers technology from other technology industries, including the transport industry, with online software updates. Among the aspects that make Tesla distinct from other competent industries include the ability of it patents to be used by other innovators in good faith. The agreements of Tesla, however, allows it to maintain the control if it’s intellectual property, including intellectual property (trade secrets), to prevent direct copying of the company’s technology.

Space X, PayPal, and Tesla inventions were among Tesla’s achievements during his innovative years. Tesla invested most of his earning in much significant ventures, with the future of humanity being more vital. The next chapter pf this essay will focus at evaluating Tesla’s achievements…….

Tesla’s inventions were essential to the venture of entrepreneurship and at the highest award level, the market capitalization of the company $650 billion and the Earnings Before Interests Taxes Depreciation, and Amortization. If all twelve award tranches were given to Tesla, he would receive 20.3 million stock options, which accounts to 12% of the current outstanding shares. Musk was rated at #49 among Glassdoor’s Top CEO list in 2018, thanks to his role at Space X. Currently, the CEO holds a 97% rating, but his employees gave the company a 4.4 rating on the Q2 of 2018.

Among the awards received by Tesla for his great ventures include market cap milestones where Musk had to increase his market cap to around $650 billion. To achieve operational milestones, the company needs to meet a series of escalating Revenue and Adjusted EBITDA targets, which are more aligned to Musk’s shareholder value used in his 2012 performance award. The investment capabilities can be seen through Musk’s 12 tranches, as he would invest in stock options that amount to 1% of Teslas’s present total outstanding shares.

Tesla’s Financial Performance Measurement

According to Nasdaq, the current income ration of Tesla’s income statement was at 113% as of 2019, with a cash ratio of 61%. The gross profitability ratio of Tesla was at a 117% margin as of 2019. In terms of Tesla’s first sedan sale in 22^nd June 2012, the revenue of the organization has been increasing steadily, with the first half reported at $10,890*10^6 while the second half revenue almost doubling the initial one. The free cash flow, which is another critical number, is defined as the measure of a company’s financial performance, often calculated as operating cash flow without capital expenditures. In terms of cash flow, Tesla’s cash flow revenue has also been increasing steadily from 2017 through 2019. According to scholars, Tesla’s typical finances can be linked to those of a startup that goes on greater things and makes financial breakthroughs.

Other ways to measure the breakthroughs of Tesla include the company’s key metrics from its annual report in 2016. Tesla hit a revenue of $7 billion in 2016, which was a steady increase from the previous year’s ($4 billion), or compared to its revenue $413 million in 2012 during its first launch of the Model S Sedan. In terms of Tesla’s energy storage and –generation, the company catapulted from $14.5 million (2015) to $181 million (2016). The increase in energy generation and storage was a result of inclusion of revenues from the acquisition of SolarCity. In 2016, the production of Tesla vehicles increased by 64%, thanks to the quick development of Model X throughout the year. In the same year, the company delivered around 25,300 Model X units, compared to approximately 200 in the previous year. With an entrepreneurial mindset, Tesla company ended 2016 with around 790 Supercharger locations as well as 5,043 Supercharger connections. The digits were up from 582 sites and around 3500 connections at the end of the previous year (2015). With Elon Musk as the CEO, Tesla company seems to be headed in the right direction, with improvements in major sectors of the company’s operations.

Based on the company’s performance, indeed Tesla has been profitable between the years 2015-2016 as well as $139 million profit in the fourth quarter of 2018. 2018 was the first time Tesla ever posted back-to-back profitable quarters throughout its 15-year history. Tesla mainly focused on re-investing in the business to make more affordable cars and increase its profits. With such a strategy, most of the re-investments were channeled towards developing cars with self-driving capabilities, as well as battery storage, and solar proof. He company targets market share instead of profits in the third quarter of mid-term in 2019, as the CEO focused on capturing 1% of the global automotive sales. A successful launch of the car could potentially increase its demand to around 1.1 million cars by 2028 and could facilitate the entry of Tesla into Europe and China. Concerning battery manufacture, Tesla aims to match its production capabilities, and it has announced a deal with CATL company to provide packs to steer its Shanghai plant. Future ventures of the company involve an entry-level car that is to be priced at $25,000 by 2020. The company also plans a vast roll-out of self-driving features among its cars, with more advancements compared to its competitors. Manufacturing, quality, and delays issues are likely to crop in and as much as early adopters of the company’s products overlook these flaws, most of the mainstream customers will not tolerate them.

Judging from the company’s operations, Tesla seems to be doing fine, with profits increasing from the year 2015 onwards. Most of the profits realized in previous financial years tend to double as they are re-invested back into the company’s productive units. Musk seems to understand much of the entrepreneurship concept, thanks to the re-investments done by the company on its previous models. Musk also focuses on the future of the motor industry as he delves into the electric car venture, hence resulting into the creation of affordable and energy-efficient vehicles. Such innovations are not only future-oriented but also provide cost-effective products that are affordable to the majority of potential car owners.

Lessons learned from Elon Musk’s innovation and entrepreneurship

            A lot of lessons can be learned from Musk’s venture into entrepreneurship and innovation, including the need to provide affordable and energy-efficient products that can be sustainable. Tesla has proven that a good experience creates loyal customers, as the company boasts of the most loyal customers of any car manufacturer, with a satisfaction rating of 90% overall. Customer satisfaction amongst Tesla’s users is credited to its control of the manufacturing journey, plus Tesla is not pushy with its sales. The company’s focus on customer experience has significantly contributed to its loyal customers. Owning the customer experience fully has also contributed to the company’s success as the company’s customer-first focus has been successful in most aspects, including the control of messaging and relationship from the beginning to the end. Being mission-focused is also a vital lesson that can be learned from Tesla’s ventures, as it decided to delve into the industry of electric motors in a bid to transition the world into the use of sustainable energy. Employees are, therefore, more dedicated and engaged to the cause, hence encouraging them to deliver a better experience to its customers. Moreover, most customers tend to enjoy being part of something bigger, including helping the environment through the use of renewable energy.

Elon Musk’s

Tesla company seems to do well in most of its aspects as it focuses on not only revolutionizing the motor industry but also providing effective and energy-efficient products. The vehicles produced by Tesla can be customized online, and most of them are affordable. The company, however, still experiences downfalls in its Space X ventures, including commercial market stagnation since commercial space launchers are not that big. The demand for space launchers has stagnated from 17 spacecraft per year from 2003-2015 to only eight space crafts per year from 2016. The low demand has made most suppliers bail out of spacecraft missions, with Space X making loses in turn. The inability of the company to gain military access has also resulted in several loses as Space X was the only company that failed to receive an award during the development of new launch vehicles. The company, therefore, will not receive the government’s funding for its new rocket engine which is supposed to be the biggest rocket to ever been built. Tesla is also much focused on the local market with less investments in ventures in other markets with the demand for electric vehicles, including Europe and Asian markets.

Recommendations for improvements on Elon Musk’s ventures

The recommendations for Tesla include strategies to venture into international markets to transform the motor-industry from the use of petroleum products into the use of renewable energy to save energy. The ability of Tesla to produce cost-effective cars at a global market can also be a challenge to the company since it focuses on the commodity-type products, cars, which is competitive based on price as a key driver of demand. The company should expect competition from other global manufacturers, including BMW and Volkswagen, which have raised their barriers for entry. The company should, therefore, consider all such conditions before making ventures into the global market.

Conclusion

In summary, Musk grew up from a humble background to become one the world’s successful entrepreneurs, with ventures motivated by sustainable energy and the future of humanity in terms of multi-planet explorations.