Courtesy of Alyssa Pagano and Irene Kim
Narrator: From SpaceX to Tesla, Elon Musk is the face of some high-profile companies, and his current net worth is around $20 billion. Where did all this money come from, and where does it all go? Here’s how Elon Musk makes and spends his billions.
Musk grew up in South Africa and taught himself how to code. At just 12 years old, Musk sold the source code for his first video game for $500. Then, at age 24, Elon and his brother, Kimbal, founded Zip2 with $28,000 of their father’s money. Zip2 provided a searchable business directory, almost like an online version of the Yellow Pages with maps. Four years later, the brothers sold Zip2 for $307 million. Musk used his $22 million share to cofound the online-banking service X.com. Via merger, X.com ended up becoming PayPal, with Musk as a majority shareholder. When eBay purchased PayPal in 2002 for $1.5 billion, Musk made $180 million from the sale.
Musk and other PayPal executives like Peter Thiel and Reid Hoffman have become known as the “PayPal Mafia.” They took their gains from the PayPal sale and put them into various startups and funds. Their investments and creations include YouTube, LinkedIn, Uber, and countless others that have become major players in Silicon Valley today.
Following the PayPal sale, Musk founded space-exploration company SpaceX. SpaceX’s self-described mission is “to enable humans to become a spacefaring civilization and a multi-planet species by building a self-sustaining city on Mars.” The privately owned company is valued at $33.3 billion, according to CNBC. Musk himself is the largest individual shareholder of SpaceX, with a 54% stake.
While SpaceX shoots for the stars, Musk is most well-known for a company that’s at least a little bit more down-to-earth. Automaker and energy company Tesla was founded in 2003. It went public in 2010 and beat expectations with a $2.2 billion market cap. Just two years later, Musk made it onto Forbes’ richest list for the first time, with an estimated net worth of $2 billion.
Although Tesla helped build Musk’s fortune, the future of the company remains unclear. In 2018, Musk had to pay a $20 million fine and had to step down as chairman for three years after triggering an SEC investigation when he tweeted about taking Tesla private. Still, the company’s current valuation is $32.8 billion. He technically has a salary of $56,000, for legal reasons, but doesn’t cash the paychecks. Instead, all of his compensation comes through awards based on the company’s success.
And if outer space and our highways weren’t enough, another Musk venture is looking underground. Musk has also founded The Boring Company, an infrastructure and tunnel-construction company that hopes to build underground tunnels with an all-electric transportation system built in. Musk was inspired to start the company after experiencing the notoriously bad traffic of LA. According to Musk, The Boring Company’s first commercial tunnel could be finished in Las Vegas by the end of 2019. This and other high-profile contracts, like the one with Chicago’s O’Hare Airport, has estimates for the company’s value as high as $16 billion. With all of these ambitious projects, Musk has amassed an incredible fortune.
Here’s how he’s known to spend his billions. Musk currently owns a $70 million real-estate portfolio. His properties include several Bel Air estates. His first purchase, a $17 million mansion, includes a two-story library, a home theater, a gym, and a thousand-bottle wine cellar.
And of course, the Tesla cofounder has an affinity for cars. His car collection includes a $920,000 Lotus Esprit submarine car used in a “James Bond” movie, a Ford Model T, and a Jaguar E-Type Series 1 Roadster. As you can imagine, Musk is a bit of a workaholic, so he’s not spending money on vacations. In a 2015 interview, Musk claimed to only have taken off two separate weeks since founding SpaceX in 2002. Instead, a lot of Musk’s money goes right back into his companies.
The New York Times reported that 90% of the $112 million that The Boring Company raised came from Elon Musk. And in 2018, Musk bought more than $35 million worth of shares in Tesla.
He has also signed the Giving Pledge, started by Warren Buffett and Bill and Melinda Gates, vowing to donate the majority of his wealth during his lifetime. Musk has made a number of donations to important causes he cares about, including $10 million to the Future of Life Institute for regulating artificial intelligence.
Elon Musk has become somewhat of a controversial figure, but his journey to becoming a rocket-scientist billionaire remains impressive. And if humanity does end up living on Mars, it could be thanks to Musk.