Why Elon Musk is a trillionaire
Even if you hate Musk, he has made major innovations in multiple industries, with more probably coming.
Elon Musk’s right-wing political antics have turned off a lot of Americans. Now that the SpaceX public offering has made Musk the world’s first trillionaire, critics are lining up to claim the oddball entrepreneur has rigged the system and duped the public to win obscene amounts of money for himself.
A trillion dollars is obviously more money than anybody needs. And Musk is annoying. But he is also a remarkable innovator who has changed entire industries despite nearly impossible odds. Even if it’s too much, he has earned his money the right way: By building better mousetraps.
Musk’s first major windfall came from digital payment service PayPal, where he was a cofounder. After eBay bought PayPal for $1.5 billion in 2002, Musk used his share of the proceeds to start SpaceX and invest in Tesla, where he eventually became CEO.
Tesla didn’t invent electric cars. Musk’s innovation was to use the power of batteries to build ecofriendly cars that were fast, fun, and cool. Up till then, most cars employing electrification, such as the Toyota Prius, were wheezy econoboxes meant to maximize efficiency. Musk’s focus on performance made the Tesla Roadster and Model S hits. Just about all the giant automakers copied him, sooner or later, by building electrics with muscle and flair.
Tesla pioneered over-the-air updates, which are software updates beamed to a car through a cellular or WiFi connection, without the need to visit a dealership. OTAs, as they’re known, don’t solve every problem that might crop up in a car. But they solve a lot of them, while allowing for upgrades as the software improves. This is becoming the industry standard, courtesy of Musk.
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Other Tesla innovations include the integrated Supercharger network, battery-storage systems and a modular manufacturing process. Many industry veterans predicted the newcomer Tesla would fail in a ruthless, low-margin, heavy-manufacturing business. Instead, it became the world’s most valuable automaker.
SpaceX’s biggest innovation is the reusable rocket, which has slashed the cost of sending payloads into space and made Musk’s rocket company the world’s dominant commercial space launch provider. The 2002 startup has muscled aside established heavyweights such as Boeing and Lockheed Martin to become the government’s top space-launch contractor.
You can pick just about any Musk venture and point to failures and controversies. Tesla’s rollout of self-driving systems has been more aggressive than other automakers’, and probably more deadly, for instance. Musk combines his companies in unusual ways that can seem self-serving, such as directing SpaceX to buy more Tesla Cybertrucks than any other single customer. One of his businesses appears to be subsidizing the other.
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Musk’s involvement with President Trump’s “DOGE commission” last year probably generated more bad press for Musk than anything his businesses have done, as Musk’s hand-picked team of outsiders dismantled the aid agency USAID and many other parts of the bureaucracy. The social-media platform X, which Musk purchased in 2022 when it was known as Twitter, has become a right-wing echo chamber promoting Trumpy extremists. Some of Musk’s own posts seem racist.
All of this has made Musk a complicated figure even the most ardent capitalist can find hard to like. And Musk’s situationship with Trump makes him a target for liberals, such as Sen. Elizabeth Warren, who charge that Musk has exploited crony capitalism to feather his own nest.
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Yet Musk’s companies endure the scrutiny of public markets and still thrive. Most of his wealth now comes from SpaceX, which went public on June 12 at a valuation of nearly $1.8 trillion. Musk owns 46% of the company, worth some $820 billion. Tesla used to be the biggest source of Musk’s wealth, but that’s now worth about one-fourth of his SpaceX stake. Musk’s share of two other private companies, Neuralink and the Boring Company, are probably worth about $9 billion.
SpaceX is the most valuable company ever to go public, with a sky-high valuation based on future plans to operate data centers in space, colonize Mars and accomplish other unprecedented things. Some of those plans will undoubtedly flop.
But the market discounts Musk’s failures while placing a premium on his ability to disrupt and innovate. It’s easy for critics to cherry-pick his failures, while overlooking a record of achievement that may be rivaled only by the world’s greatest investors. You don’t have to like Musk. But you’re fooling yourself if you don’t respect his accomplishments.
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