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How Did Elon Musk Make His Money?

Elon Musk, South African native son of Maye and Errol Musk, is the world’s richest man according to Forbes. Elon Musk’s net worth is ~$237.9 billion. To put into perspective, that wealth equals about 80 Donald Trumps (reported net worth ~$3 billion), or about twice as much as Bill Gates (net worth ~$113.3 billion). 

Unlike the stereotypical billionaire, Musk is notoriously frugal. According to Inc, he lives in a 400-square-foot tiny house worth about $50,000. He even famously refused to buy a new mattress when he was living in Los Angeles with his on-and-off partner, Canadian musical sensation Grimes. 

He’s also famously outspoken and active on Twitter, where he has more than 100 million followers.

No matter what you think of him, Musk and his businesses have captured the public imagination, shaped pop culture, driven the development of once-unimaginable technologies, and have an eye toward shaping the future of humanity.

How Did Elon Musk Make His Money?

How did this eccentric billionaire earn the billions of dollars he refuses to spend? His path to riches involved starting and investing early in a series of successful businesses. 

His involvement in the business world started when he was a young boy. Musk had a driving interest in video games and taught himself how to code. By the time he was 12 years old, he had sold the code for a BASIC-based video game he called Blastar to a magazine for $500.

His journey to billions also took him around the world to receive the best possible education. 

Musk moved to Ontario, Canada, at 17 and studied at the University of Pretoria. He later studied at Queen’s University before he transferred to the University of Pennsylvania. After earning a bachelor’s degree in economics and physics, Musk moved to California in 1995 with the goal of studying at Stanford University but ultimately decided on a different path. 

Soon, Musk would launch the first of his many business ventures, Zip2, with his brother Kimbal. The rest plays out as follows.

Zip2 Yellow Pages (1995-1999)

Elon and Kimbal Musk borrowed $28,000 from their father to launch a startup that would become Elon’s first major success. The co-founders named their startup Zip2, which was the equivalent of an online Yellow Pages with maps — essentially the first technology-driven city guide. 

Consumers using the nascent internet finally had the directions to anywhere they wanted to go at their fingertips. When they found the businesses they were looking for, they would be presented with a map to show them how to “zip to” the business, hence the name Zip2. 

In 1999, Elon and Kimbal realized how successful their small business had become. Compaq Computers paid $307 million to acquire the technology. By this time, Musk only owned about 7% of the company, but the sale put about $21.49 million in his pocket. (PayPal) (1999-2002)

You may not know the name, but I’m sure you know the company it turned into: PayPal. After the sale of Zip2, Elon founded, one of the world’s first online banks. proved to be a huge success and attracted the attention of Cofinity, a company founded by Peter Theil, Luke Nosek, and Max Levchin. The two companies merged in 2000 and changed the name of the combined company to PayPal.  

In 2002, the team sold PayPal to eBay for a whopping $1.5 billion. At the time, Musk owned 11.72% of the company. That means his share of the company was worth about $175.8 million

SpaceX (2002-Present)

When the PayPal deal closed, Musk could have easily retired and lived a financially free life. However, he had other plans. He used the money he earned from the PayPal acquisition to launch a space exploration company he called SpaceX. 

Musk, like many of us earthbound humans, has a deep interest in space. His dream is to colonize Mars, and his most ambitious statement to date has been that he plans to put human beings on the red planet by 2026. 

In 2006, just four years after launching the company, SpaceX made its first attempt to send a vehicle into the vast vacuum of space. The vehicle, the Falcon 1 rocket, failed to reach Earth’s orbit, but all wasn’t lost. Following the failure, SpaceX won a NASA contract under its Commercial Orbit Transportation Program. 

Unfortunately, that was a bright light in what would be a dark two years for SpaceX and NASA. The next two attempts the company made to send the Falcon 1 into Earth’s orbit failed, nearly bankrupting the company and its eccentric founder. 

However, in 2008, the company finally succeeded and the Falcon 1 orbited Earth, leading to the company’s biggest contract yet. Shortly after the successful mission, SpaceX received a $1.6 billion contract from NASA under its Commercial Resupply Services program.  

Today, Musk is still the largest SpaceX shareholder. He owns more than 47% of the shares and 78% of the company’s voting rights. 

The company is still working to colonize Mars, but that’s not its only goal. Several experts from SpaceX and Tesla have been assigned to work on a transportation technology Musk calls the Hyperloop. 

The Hyperloop is essentially a train in a vacuum. With no drag on the vehicle or G-forces on passengers, the Hyperloop is being designed to travel at high speeds for minimal cost. According to Musk, a Hyperloop system can be built from Los Angeles to San Francisco for about $6 billion. If he can pull that off, Musk’s latest technology will be the cheapest form of transportation to cover such long distances. 

SpaceX is still a private company, so it’s difficult to get an accurate reading of what Musk’s shares in the firm are worth. The company’s most recent private fundraise was at a valuation of $125 billion. At that valuation, Musk’s share of the company is worth about $58.75 billion — not bad for a company he started when his entire net worth couldn’t have been more than $200 million. 

Tesla (2004-Present)

Contrary to popular belief, Elon Musk isn’t a co-founder of Tesla (originally Tesla Motors), the wildly popular electric car marker. The company was founded in 2003 by Marc Tarpenning and Martin Eberhard. The two hired Ian Wright a few months later. It wasn’t until early 2004 that the team at Tesla realized a need for venture capital and got in touch with Musk. 

Musk was so impressed by the company that he invested $6.5 million, taking about 86.67% of the company’s first Series A fundraising round. In total Tesla raised $7.5 million in its first round of fundraising. 

Today Musk owns roughly 17% of Tesla shares. Although he wasn’t a founder, Musk has played an integral role in the development of the company since his investment in 2004. 

Tesla has had its fair share of ups and downs, but Musk’s investment has paid off. The automaker is a publicly traded company with a more than $755 billion valuation. That means Musk’s stake in the company is worth about $128.35 billion

Recently, Tesla stock has fallen on hard times, but even with the ~40% drop in value the stock experienced in the first half of 2022, Musk’s early investment in the company is the biggest contributing factor to his wealth. 

SolarCity (2006-2016)

SolarCity is one of Elon Musk’s most controversial business moves. The company was founded by Musk’s cousins, Lyndon and Peter Rive, but Elon was its largest shareholder. The three Musk-eteers were on a mission to reduce power cost, grid consumption, and greenhouse gas emissions with solar technology. 

The company developed, sold, and installed solar energy systems for residential, commercial, and industrial applications. 

The problem is that in the 10 years from 2006 to 2016, the company failed to produce a profit. In 2016, Musk owned about 22% of SolarCity and sat on its board of directors. 

At the same time, Musk was also Tesla’s largest shareholder and a key board member of the electric vehicle manufacturer. In 2016, Tesla acquired the struggling solar energy company for $2.6 billion. Elon’s 22% share of the company was valued at about $572 million in the deal. 

Years later, investors were furious because Tesla couldn’t turn SolarCity into the successful company Musk believed it would become. According to TechCrunch, the company’s shareholders unsuccessfully sued Musk for $13 billion as a result of the deal. 

Musk has his hands in several areas of technology, but for many, his Neuralink company is the most interesting. The company is working on developing implantable devices that act as brain-machine interfaces, or BMIs.

The company’s system consists of thin strands of fiber implanted directly into the brain. The strands read signals from the brain and use artificial intelligence (AI) technology to determine what those signals mean.  

Neuralink is still highly secretive about its development of BMIs, but according to Gizmodo, the company has at least attempted to open an animal testing facility. 

Neuralink is a private company, so determining how much it contributes to Musk’s net worth is difficult. Some sources estimate the company’s value at between $500 million and $1 billion. It’s difficult to determine what percentage of the company Musk still owns. There’s no public documentation of how much he started with, but we know the company has raised over $300 million in four rounds of fundraising. 

Considering the stage of the company, the amount of fundraising, and a pure guess that Musk and his cofounder Max Hodak started the company with an equal 50-50 ownership split, we can estimate that Elon still owns around a quarter of the company, which would add between $125 and $250 million to his net worth. 

The Boring Company (2016-Present)

Elon Musk founded The Boring Company to solve a relatively boring problem — traffic. As the population grows and more cars hit the road, traffic will only get worse. Musk’s solution to this issue is making roads under roads in easy-to-dig, low-cost tunnels. 

However, the company isn’t just focusing on tunnels; it also has its fingers in public transportation with The Loop. 

The Loop is an all-electric public transportation model that brings consumers from point A to point B with no stops along the way. Musk designed the solution to be emission-free, efficient, and low-cost. The entrance to the company’s first commercially-operating loop is at the Las Vegas Convention Center. 

Based on the most recent round of fundraising, The Boring Company is worth about $5.7 billion. Although Elon Musk’s share of the company isn’t public information, we know he owned 90% of it in 2018. After other fundraises that likely happened along the way, he sold about 11% of the company earlier this year. 

Being conservative, we can say Musk likely still owns at least 60% of The Boring Company, which would contribute about $3.42 billion to his net worth. 

Final Word

Elon Musk may be the richest person in the world, but he’s far from done building his wealth. In some cases, he does so with a simple Tweet. He has famously sent multiple cryptocurrencies to the moon with simple posts on Twitter, likely generating sizable profits each time. 

Nonetheless, after reading how Musk made his money, you might come to the same conclusion I did. Musk made his money by coming up with out-of-the-box ideas and having the guts (and resources) to follow through on them.

Do you think Musk will get humans to Mars in the next four years? I think it’s a stretch, but that’s his goal and he’s sticking to it. If he accomplishes that goal as he did with so many other business ventures in the past, there’s no telling how many billions of dollars it will add to his net worth. 

Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.