ELON MUSK + Paypal + X.com

THE SALE OF ZIP2 INFUSED ELON MUSK WITH A NEW BRAND OF CONFIDENCE. Much
like the video-game characters he adored, Musk had leveled up. He had solved Silicon Valley and
become what everyone at the time wanted to be—a dot-com millionaire. His next venture would need
to live up to his rapidly inflating ambition. This left Musk searching for an industry that had tons of
money and inefficiencies that he and the Internet could exploit. Musk began thinking back to his time
as an intern at the Bank of Nova Scotia. His big takeaway from that job, that bankers are rich and
dumb, now had the feel of a massive opportunity.
During his time working for the head of strategy at the bank in the early 1990s, Musk had been
asked to take a look at the company’s third-world debt portfolio. This pool of money went by the
depressing name of “less-developed country debt,” and Bank of Nova Scotia had billions of dollars
of it. Countries throughout South America and elsewhere had defaulted in the years prior, forcing the
bank to write down some of its debt value. Musk’s boss wanted him to dig into the bank’s holdings as
a learning experiment and try to determine how much the debt was actually worth.
While pursuing this project, Musk stumbled upon what seemed like an obvious business
opportunity. The United States had tried to help reduce the debt burden of a number of developing
countries through so-called Brady bonds, in which the U.S. government basically backstopped the
debt of countries like Brazil and Argentina. Musk noticed an arbitrage play. “I calculated the backstop
value, and it was something like fifty cents on the dollar, while the actual debt was trading at twentyfive cents,” Musk said. “This was like the biggest opportunity ever, and nobody seemed to realize it.”
Musk tried to remain cool and calm as he rang Goldman Sachs, one of the main traders in this market,
and probed around about what he had seen. He inquired as to how much Brazilian debt might be
available at the 25-cents price. “The guy said, ‘How much do you want?’ and I came up with some
ridiculous number like ten billion dollars,” Musk said. When the trader confirmed that was doable,
Musk hung up the phone. “I was thinking that they had to be fucking crazy because you could double
your money. Everything was backed by Uncle Sam. It was a no-brainer.”
Musk had spent the summer earning about fourteen dollars an hour and getting chewed out for
using the executive coffee machine, among other status infractions, and figured his moment to shine
and make a big bonus had arrived. He sprinted up to his boss’s office and pitched the opportunity of a
lifetime. “You can make billions of dollars for free,” he said. His boss told Musk to write up a report,
which soon got passed up to the bank’s CEO, who promptly rejected the proposal, saying the bank
had been burned on Brazilian and Argentinian debt before and didn’t want to mess with it again. “I
tried to tell them that’s not the point,” Musk said. “The point is that it’s fucking backed by Uncle Sam.
It doesn’t matter what the South Americans do. You cannot lose unless you think the U.S. Treasury is
going to default. But they still didn’t do it, and I was stunned. Later in life, as I competed against the
banks, I would think back to this moment, and it gave me confidence. All the bankers did was copy
what everyone else did. If everyone else ran off a bloody cliff, they’d run right off a cliff with them. If
there was a giant pile of gold sitting in the middle of the room and nobody was picking it up, they
wouldn’t pick it up, either.”
In the years that followed, Musk considered starting an Internet bank and discussed it openly
during his internship at Pinnacle Research in 1995. The youthful Musk lectured the scientists about the
inevitable transition coming in finance toward online systems, but they tried to talk him down, saying
that it would takes ages for Web security to be good enough to win over consumers. Musk, though,
remained convinced that the finance industry could do with a major upgrade and that he could have a
big influence on banking with a relatively small investment. “Money is low bandwidth,” he said,
during a speech at Stanford University in 2003, to describe his thinking. “You don’t need some sort of
big infrastructure improvement to do things with it. It’s really just an entry in a database.”
The actual plan that Musk concocted was beyond grandiose. As the researchers at Pinnacle had
pointed out, people were barely comfortable buying books online. They might take their chances
entering a credit card number but exposing just their bank accounts to the Web was out of the question
to many. Pah. So what? Musk wanted to build a full-service financial institution online: a company
that would have savings and checking accounts as well as brokerage services and insurance. The
technology to build such a service was possible, but navigating the regulatory hell of creating an
online bank from scratch looked like an intractable problem to optimists and an impossibility to more
level heads. This was not dishing out directions to a pizzeria or putting up a house listing. It was
dealing with people’s finances, and there would be real repercussions if the service did not work as
billed.
Undaunted, Musk kicked this new plan into action before Zip2 had even been sold. He chatted up
some of the best engineers at the company to get a feel for who might be willing to join him in another
venture. Musk also bounced his ideas off some contacts he’d made at the bank in Canada. In January
1999, with Zip2’s board seeking a buyer, Musk began to formalize his banking plan. The deal with
Compaq was announced the next month. And in March, Musk incorporated X.com, a finance start-up
with a pornographic-sounding name.
It had taken Musk less than a decade to go from being a Canadian backpacker to becoming a
multimillionaire at the age of twenty-seven. With his $22 million, he moved from sharing an
apartment with three roommates to buying an 1,800-square-foot condo and renovating it. He also
bought a $1 million McLaren F1 sports car and a small prop plane and learned to fly. Musk embraced
the newfound celebrity that he’d earned as part of the dot-com millionaire set. He let CNN show up at
his apartment at 7 A.M. to film the delivery of the car. A black eighteen-wheeler pulled up in front of
Musk’s place and then lowered the sleek, sliver vehicle onto the street, while Musk stood slackjawed with his arms folded. “There are sixty-two McLarens in the world, and I will own one of
them,” he told CNN. “Wow, I can’t believe it’s actually here. That’s pretty wild, man.”
CNN interspersed video of the car delivery with interviews with Musk. The whole time he
looked like a caricature of an engineer who had made it big. Musk’s hair had started thinning, and he
had a closely cropped cut that accentuated his boyish face. He wore an all-too-big brown sport coat
and checked his cell phone from his lavish car, sitting next to his gorgeous girlfriend, Justine, and he
seemed spellbound by his life. Musk rolled out one laughable rich-guy line after another, talking first
about the Zip2 deal—“Receiving cash is cash. I mean, those are just a large number of Ben
Franklins”—next about the awesomeness of his life—“There it is, gentlemen, the fastest car in the
world”—and then about his prodigious ambition—“I could go and buy one of the islands in the
Bahamas and turn it into my personal fiefdom, but I am much more interested in trying to build and
create a new company.” The camera crew followed Musk to the X.com offices, where his cocksure
delivery led to another round of cringe-worthy statements: “I do not fit the picture of a banker,”
“Raising fifty million dollars is a matter of making a series of phone calls, and the money is there,” “I
think X.com could absolutely be a multibillion-dollar bonanza.”
Musk purchased the McLaren from a seller in Florida, snatching the car away from Ralph Lauren,
who had also inquired about buying it. Even very wealthy people like Lauren would tend to reserve
something like a McLaren for special events or the occasional Sunday drive. Not Musk. He drove it
all around Silicon Valley and parked it on the street by the X.com offices. His friends were horrified
to see such a work of art covered with bird droppings or in the parking lot of a Safeway. One day,
Musk e-mailed fellow McLaren owner Larry Ellison, the billionaire cofounder of the software maker
Oracle, out of the blue to see if he wanted to go race cars around a track for fun. Jim Clark, another
billionaire who liked fast things, caught wind of the proposal and told a friend that he needed to rush
over to the local Ferrari dealership to buy something that could compete. Musk had joined the big
boys’ club. “Elon was super-excited about all of this,” said George Zachary, a venture capitalist and
close friend of Musk’s. “He showed me the correspondence with Larry.” The next year, while driving
down Sand Hill Road to meet with an investor, Musk turned to a friend in the car and said, “Watch
this.” He floored the car, did a lane change, spun out, and hit an embankment, which started the car
spinning in midair like a Frisbee. The windows and wheels were blown to smithereens, and the body
of the car damaged. Musk again turned to his companion and said, “The funny part is it wasn’t
insured.” The two of them then thumbed a ride to the venture capitalist’s office.
To his credit, Musk did not fully buy in to this playboy persona. He actually plowed the majority
of the money he made from Zip2 into X.com. There were practical reasons for this decision. Investors
catch a break under the tax law if they roll a windfall into a new venture within a couple of months.
But even by Silicon Valley’s high-risk standards, it was shocking to put so much of one’s newfound
wealth into something as iffy as an online bank. All told, Musk invested about $12 million into
X.com, leaving him, after taxes, with $4 million or so for personal use. “That’s part of what separates
Elon from mere mortals,” said Ed Ho, the former Zip2 executive, who went on to cofound X.com.
“He’s willing to take an insane amount of personal risk. When you do a deal like that, it either pays
off or you end up in a bus shelter somewhere.”
Musk’s decision to invest so much money in X.com looks even more unusual in hindsight. Much of
the point of being a dot-com success in 1999 was to prove yourself once, stash away your millions,
and then use your credentials to talk other people into betting their money on your next venture. Musk
would certainly go on to rely on outside investors, but he put major skin in the game as well. So while
Musk could be found on television talking like the rest of the self-absorbed dot-com schmucks, he
behaved more like a throwback to Silicon Valley’s earlier days, when the founders of companies like
Intel were willing to take huge gambles on themselves.
Where Zip2 had been a neat, useful idea, X.com held the promise of fomenting a major revolution.
Musk, for the first time, would be confronting a deep-pocketed, entrenched industry head-on with the
hopes of upending all of the incumbents. Musk also began to hone his trademark style of entering an
ultracomplex business and not letting the fact that he knew very little about the industry’s nuances
bother him in the slightest. He had an inkling that the bankers were doing finance all wrong and that he
could run the business better than everyone else. Musk’s ego and confidence had started heading
toward the levels that would inspire some and leave others thinking of him as pompous and
unscrupulous. The creation of X.com would ultimately reveal a great deal about Musk’s creativity,
relentless drive, confrontational style, and foibles as a leader. Musk would also get another taste of
being pushed aside at his own company and the pain that accompanies a grand vision left unfulfilled.
Musk assembled what looked like an all-star crew to start X.com. Ho had worked at SGI and
Zip2 as an engineer, and his peers marveled at his coding and team-management skills. They were
joined by a pair of Canadians with finance experience—Harris Fricker and Christopher Payne. Musk
had met Fricker during his time as an intern at the Bank of Nova Scotia, and the two really hit it off. A
Rhodes scholar, Fricker brought the knowledge of the banking world’s mechanics that X.com would
need. Payne was Fricker’s friend from the Canadian finance community. All four men were
considered cofounders of the company, while Musk emerged as the largest shareholder thanks to his
hefty up-front investment. X.com began, like so many Silicon Valley operations, at a house where the
cofounders began brainstorming, and then moved to more formal offices at 394 University Avenue in
Palo Alto.
The cofounders were aligned philosophically around the idea that the banking industry had fallen
behind the times. Visiting a branch bank to speak with a teller seemed pretty archaic now that the
Internet had arrived. The rhetoric sounded good, and the four men were enthused. The only thing
stopping them was reality. Musk had a modicum of banking experience and had resorted to buying a
book on the industry to help understand its inner workings. The more the cofounders thought about
their plan of attack, the more they realized the regulatory issues blocking the creation of an online
bank were insurmountable. “As four and five months went by, the onion just kept unwrapping,” said
Ho.*
From the outset, there were personality clashes as well. Musk had become a budding superstar in
Silicon Valley and had the press fawning over him. This didn’t sit that well with Fricker, who’d
moved from Canada and pegged X.com as his chance to make a mark on the world as a banking whiz.
Fricker, according to numerous people, wanted to run X.com and do so in a more conventional
manner. He found Musk’s visionary statements to the press about rethinking the entire banking industry
silly since the company was struggling to build much of anything. “We were out promising the sun,
moon, and the stars to the media,” Fricker said. “Elon would say that this is not a normal business
environment, and you have to suspend normal business thinking. He said, ‘There is a happy-gas
factory up on the hill, and it’s pumping stuff into the Valley.’” Fricker would not be the last person to
accuse Musk of overhyping products and playing the public, although whether this is a flaw or one of
Musk’s great talents as a businessman is up for debate.
The squabble between Fricker and Musk came to a quick, nasty end. Just five months after X.com
had started, Fricker initiated a coup. “He said either he takes over as CEO or he’s just going to take
everyone from the company and create his own company,” Musk said. “I don’t do well with
blackmail. I said, ‘You should go do that.’ So he did.” Musk tried to talk Ho and some of the other key
engineers into staying, but they sided with Fricker and left. Musk ended up with a shell of a company
and a handful of loyal employees. “After all that went down, I remember sitting with Elon in his
office,” said Julie Ankenbrandt, an early X.com employee who stayed. “There were a million laws in
place to block something like X.com from happening, but Elon didn’t care. He just looked at me and
said, ‘I guess we should hire some more people.’”*
Musk had been trying to raise funding for X.com and had been forced to go to venture capitalists
and confess that there wasn’t much in the way of a company left. Mike Moritz, a famed investor from
Sequoia Capital, backed the company nonetheless, making a bet on Musk and little else. Musk hit the
streets of Silicon Valley once again and managed to attract engineers with his rah-rah speeches about
the future of Internet banking. Scott Anderson, a young computer scientist, started on August 1, 1999,
just a few days after the exodus, and bought right into the vision. “You look back, and it was total
insanity,” Anderson said. “We had what amounted to a Hollywood movie set of a website. It barely
got past the VCs.”
Week by week, more engineers arrived and the vision became more real. The company secured a
banking license and a mutual fund license and formed a partnership with Barclays. By November,
X.com’s small software team had created one of the world’s first online banks complete with FDIC
insurance to back the bank accounts and three mutual funds for investors to choose. Musk gave the
engineers $100,000 of his own money to conduct their testing. On the night before Thanksgiving in
1999, X.com went live to the public. “I was there until two A.M.,” Anderson said. “Then, I went home
to cook Thanksgiving dinner. Elon called me a few hours later and asked me to come into the office to
relieve some of the other engineers. Elon stayed there forty-eight straight hours, making sure things
worked.”
Under Musk’s direction, X.com tried out some radical banking concepts. Customers received a
$20 cash card just for signing up to use the service and a $10 card for every person they referred.
Musk did away with niggling fees and overdraft penalties. In a very modern twist, X.com also built a
person-to-person payment system in which you could send someone money just by plugging their email address into the site. The whole idea was to shift away from slow-moving banks with their
mainframes taking days to process payments and to create a kind of agile bank account where you
could move money around with a couple of clicks on a mouse or an e-mail. This was revolutionary
stuff, and more than 200,000 people bought into it and signed up for X.com within the first couple of
months of operation.
Soon enough, X.com had a major competitor. A couple of brainy kids named Max Levchin and
Peter Thiel had been working on a payment system of their own at their start-up called Confinity. The
duo actually rented their office space—a glorified broom closet—from X.com and were trying to
make it possible for owners of Palm Pilot handhelds to swap money via the infrared ports on the
devices. Between X.com and Confinity, the small office on University Avenue had turned into the
frenzied epicenter of the Internet finance revolution. “It was this mass of adolescent men that worked
so hard,” Ankenbrandt said. “It stunk so badly in there. I can still smell it—leftover pizza, body odor,
and sweat.”
The pleasantries between X.com and Confinity came to an abrupt end. The Confinity founders
moved to an office down the street and, like X.com, began focusing their attention on Web and e-mailbased payments with their service known as PayPal. The companies became locked in a heated battle
to match each other’s features and attract more users, knowing that whoever got bigger faster would
win. Tens of millions of dollars were spent on promotions, while millions more were lost battling
hackers who had seized upon the services as new playgrounds for fraud. “It was like the Internet
version of making it rain at a strip club,” said Jeremy Stoppelman, an X.com engineer who went on to
become the CEO of Yelp. “You gave away money as fast as you could.”
The race to win Internet payments gave Musk a chance to show off his quick thinking and work
ethic. He kept devising plans to counter the advantage PayPal had established on auction sites like
eBay. And he rallied the X.com employees to implement the tactics as fast as possible using brute-
force appeals to their competitive natures. “There really wasn’t anything suave about him,”
Ankenbrandt said. “We all worked twenty hours a day, and he worked twenty-three hours.”
In March 2000, X.com and Confinity finally decided to stop trying to spend each other into
oblivion and to join forces. Confinity had what looked like the hottest product in PayPal but was
paying out $100,000 a day in awards to new customers and didn’t have the cash reserves to keep
going. X.com, by contrast, still had plenty of cash reserves and the more sophisticated banking
products. It took the lead in setting the merger terms, leaving Musk as the largest shareholder of the
combined company, which would be called X.com. Shortly after the deal closed, X.com raised $100
million from backers including Deutsche Bank and Goldman Sachs and boasted that it had more than
one million customers.*
The two companies tried hard to mesh their cultures, with modest success. Groups of employees
from X.com tied their computer monitors to their desk chairs with power cords and rolled them down
the street to the Confinity offices to work alongside their new colleagues. But the teams could never
quite see eye to eye. Musk kept championing the X.com brand, while most everyone else favored
PayPal. More fights broke out over the design of the company’s technology infrastructure. The
Confinity team led by Levchin favored moving toward open-source software like Linux, while Musk
championed Microsoft’s data-center software as being more likely to keep productivity high. This
squabble may sound silly to outsiders, but it was the equivalent of a religious war to the engineers,
many of whom viewed Microsoft as a dated evil empire and Linux as the modern software of the
people. Two months after the merger, Thiel resigned and Levchin threatened to walk out over the
technology rift. Musk was left to run a fractured company.
The technology issues X.com had been facing worsened as the computing systems failed to keep
up with an exploding customer base. Once a week, the company’s website collapsed. Most of the
engineers were ordered to start work designing a new system, which distracted key technical
personnel and left X.com vulnerable to fraud. “We were losing money hand over fist,” said
Stoppelman. As X.com became more popular and its transaction volume exploded, all of its problems
worsened. There was more fraud. There were more fees from banks and credit card companies.
There was more competition from start-ups. X.com lacked a cohesive business model to offset the
losses and turn a profit from the money it managed. Roelof Botha, the start-up’s chief financial officer
and now a prominent venture capitalist at Sequoia, did not think Musk provided the board with a true
picture of X.com’s issues. A growing number of other people at the company questioned Musk’s
decision-making in the face of all the crises.
What followed was one of the nastiest coups in Silicon Valley’s long, illustrious history of nasty
coups. A small group of X.com employees gathered one night at Fanny & Alexander, a now-defunct
bar in Palo Alto, and brainstormed about how to push out Musk. They decided to sell the board on the
idea of Thiel returning as CEO. Instead of confronting Musk directly with this plan, the conspirators
decided to take action behind Musk’s back.
Musk and Justine had been married in January 2000 but had been too busy for a honeymoon. Nine
months later, in September, they planned to mix business and pleasure by going on a fund-raising trip
and ending it with a honeymoon in Sydney to catch the Olympics. As they boarded their flight one
night, X.com executives delivered letters of no confidence to X.com’s board. Some of the people
loyal to Musk had sensed something was wrong, but it was too late. “I went to the office at ten thirty
that night, and everyone was there,” Ankenbrandt said. “I could not believe it. I am frantically trying
to call Elon, but he’s on a plane.” By the time he landed, Musk had been replaced by Thiel.
When Musk finally heard what had happened, he hopped on the next plane back to Palo Alto. “It
was shocking, but I will give Elon this—I thought he handled it pretty well,” Justine said. For a brief
period, Musk tried to fight back. He urged the board to reconsider its decision. But when it became
clear that the company had already moved on, Musk relented. “I talked to Moritz and a few others,”
Musk said. “It wasn’t so much that I wanted to be CEO but more like, ‘Hey, I think there are some
pretty important things that need to happen, and if I’m not CEO, I’m not sure they are going to happen.’
But then I talked to Max and Peter, and it seemed like they would make these things happen. So then, I
mean, it’s not the end of the world.”
Many of the X.com employees who had been with Musk since early on were less than impressed
by what had happened. “I was floored by it and angry,” said Stoppelman. “Elon was sort of a rock
star in my view. I was very vocal about how I thought it was bullshit. But I knew fundamentally that
the company was doing well. It was a rocket ship, and I wasn’t going to leave.” Stoppelman, then
twenty-three, went into a conference room and tore into Thiel and Levchin. “They let me vent it all
out, and their reaction was part of the reason I stayed.” Others remained embittered. “It was
backhanded and cowardly,” said Branden Spikes, a Zip2 and X.com engineer. “I would have been
more behind it if Elon had been in the room.”
By June 2001, Musk’s influence on the company was fading quickly. That month, Thiel rebranded
X.com as PayPal. Musk rarely lets a slight go unpunished. Throughout this ordeal, however, he
showed incredible restraint. He embraced the role of being an advisor to the company and kept
investing in it, increasing his stake as PayPal’s largest shareholder. “You would expect someone in
Elon’s position to be bitter and vindictive, but he wasn’t,” said Botha. “He supported Peter. He was a
prince.”
The next few months would end up being key for Musk’s future. The dot-com joyride was coming
to a quick end, and people wanted to try to cash out in any way possible. When executives from eBay
began approaching PayPal about an acquisition, the inclination for most people was to sell and sell
fast. Musk and Moritz, though, urged the board to reject a number of offers and hold out for more
money. PayPal had revenue of about $240 million per year, and looked like it might make it as an
independent company and go public. Musk and Moritz’s resistance paid off and then some. In July
2002, eBay offered $1.5 billion for PayPal, and Musk and the rest of the board accepted the deal.
Musk netted about $250 million from the sale to eBay, or $180 million after taxes—enough to make
what would turn out to be his very wild dreams possible.
The PayPal episode was a mixed bag for Musk. His reputation as a leader suffered in the
aftermath of the deal, and the media turned on him in earnest for the first time. Eric Jackson, an early
Confinity employee, wrote The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest
of Planet Earth in 2004 and recounted the company’s tumultuous journey. The book painted Musk as
an egomaniacal, stubborn jerk, making wrong decisions at every turn, and portrayed Thiel and
Levchin as heroic geniuses. Valleywag, the technology industry gossip site, piled on as well and
turned bashing Musk into one of its pet projects. The criticisms grew to the point that people started
wondering aloud whether or not Musk counted as a true cofounder of PayPal or had just ridden
Thiel’s coattails to a magical payday. The tone of the book along with the blog posts goaded Musk in
2007 into writing a 2,200-word e-mail to Valleywag meant to set the record straight with his version
of events.
In the e-mail, Musk let his literary flair loose and gave the public a direct look at his combative
side. He described Jackson as “a sycophantic jackass” and “one notch above an intern,” who had
little insight into the high-level goings-on at the company. “Since Eric worships Peter, the outcome
was obvious—Peter sounds like Mel Gibson in Braveheart and my role is somewhere between
negligible and a bad seed,” Musk wrote. Musk then detailed seven reasons why he deserved
cofounder status of PayPal, including his role as its largest shareholder, the hiring of a lot of the top
talent, the creation of a number of the company’s most successful business ideas, and his time as CEO
when the company went from sixty to several hundred employees.
Almost everyone I interviewed from the PayPal days leaned toward agreeing with Musk’s overall
assessment. They said that Jackson’s account bordered on fantasy when it came to celebrating the
Confinity team over Musk and the X.com team. “There are a lot of PayPal people that suffer from
warped memories,” said Botha.
But these same people reached another consensus, saying that Musk had mishandled the branding,
technology infrastructure, and fraud situations. “I think it would have killed the company if Elon had
stayed on as CEO for six more months,” said Botha. “The mistakes Elon was making at the time were
amplifying the risk of the business.” (For more on Musk’s take on the PayPal years, see Appendix 2.)
The suggestions that Musk did not count as a “true” cofounder of PayPal seem asinine in
retrospect. Thiel, Levchin, and other PayPal executives have said as much in the years since the eBay
deal closed. The only useful thing such criticisms produced were the bombastic counteroffensives
from Musk, which revealed touches of insecurity and the seriousness with which Musk insists that the
historical record reflect his take on events. “He comes from the school of thought in the public
relations world that you let no inaccuracy go uncorrected,” said Vince Sollitto, the former
communications chief at PayPal. “It sets a precedent, and you should fight every out-of-place comma
tooth and nail. He takes things very personally and usually seeks war.”
The stronger critique of Musk during this period of his life was that he had succeeded to a large
degree despite himself. Musk’s traits as a confrontational know-it-all and his abundant ego created
deep, lasting fractures within his companies. While Musk consciously tried to temper his behavior,
these efforts were not enough to win over investors and more experienced executives. At both Zip2
and PayPal, the companies’ boards came to the conclusion that Musk was not yet CEO material. It can
also be argued that Musk had become a hyperbolic huckster, who overreached and oversold his
companies’ technology. Musk’s biggest detractors have made all of these arguments either in public or
private and a half dozen or so of them said far worse things to me about his character and actions,
describing Musk as unethical in business and vicious with his personal attacks. Almost universally,
these people were unwilling to go on the record with their comments, claiming to be afraid Musk
would pursue litigation against them or ruin their ability to do business.
These criticisms must be weighed against Musk’s track record. He demonstrated an innate ability
to read people and technology trends at the inception of the consumer Web. While others tried to wrap
their heads around the Internet’s implications, Musk had already set off on a purposeful plan of attack.
He envisioned many of the early pieces of technology—directories, maps, sites that focused on
vertical markets—that would become mainstays on the Web. Then, just as people became comfortable
with buying things from Amazon.com and eBay, Musk made the great leap forward to full-fledged
Internet banking. He would bring standard financial instruments online and then modernize the
industry with a host of new concepts. He exhibited a deep insight into human nature that helped his
companies pull off exceptional marketing, technology, and financial feats. Musk was already playing
the entrepreneur game at the highest level and working the press and investors like few others could.
Did he hype things up and rub people the wrong way? Absolutely—and with spectacular results.
Based in large part on Musk’s guidance, PayPal survived the bursting of the dot-com bubble,
became the first blockbuster IPO after the 9/11 attacks, and then sold to eBay for an astronomical sum
while the rest of the technology industry was mired in a dramatic downturn. It was nearly impossible
to survive let alone emerge as a winner in the midst of such a mess.
PayPal also came to represent one of the greatest assemblages of business and engineering talent
in Silicon Valley history. Both Musk and Thiel had a keen eye for young, brilliant engineers. The
founders of start-ups as varied as YouTube, Palantir Technologies, and Yelp all worked at PayPal.
Another set of people—including Reid Hoffman, Thiel, and Botha—emerged as some of the
technology industry’s top investors. PayPal staff pioneered techniques in fighting online fraud that
have formed the basis of software used by the CIA and FBI to track terrorists and of software used by
the world’s largest banks to combat crime. This collection of super-bright employees has become
known as the PayPal Mafia—more or less the current ruling class of Silicon Valley—and Musk is its
most famous and successful member.
Hindsight also continues to favor Musk’s unbridled vision over the more cautious pragmatism of
executives at Zip2 and PayPal. Had it chased consumers as Musk urged, Zip2 may have ended up as a
blockbuster mapping and review service. As for PayPal, an argument can still be made that the
investors sold out too early and should have listened more to Musk’s demands to remain independent.
By 2014, PayPal had amassed 153 million users and was valued at close to $32 billion as a standalone company. A flood of payment and banking start-ups have appeared as well—Square, Stripe,
and Simple, to name three among the S’s—that have looked to fulfill much of the original X.com
vision.
If X.com’s board had been a bit more patient with Musk, there’s good reason to believe he would
have succeeded with delivery of the “online bank to rule them all” that he had set out to create.
History has demonstrated that while Musk’s goals can sound absurd in the moment, he certainly
believes in them and, when given enough time, tends to achieve them. “He always works from a
different understanding of reality than the rest of us,” Ankenbrandt said. “He is just different than the
rest of us.”
While navigating the business tumult of Zip2 and PayPal, Musk found a moment of peace in his
personal life. He’d spent years courting Justine Wilson from afar, flying her out for visits on the
weekends. For a long time, his oppressive hours and his roommates put a crimp on the relationship.
But the Zip2 sale let Musk buy a place of his own and pay a bit more attention to Justine. Like any
couple, they had their ups and downs, but that passion of young love remained. “We fought a lot, but
when we weren’t fighting, there was a deep sense of compassion—a bond,” Justine said. The couple
had been sparring for a few days about phone calls Justine kept getting from an ex-boyfriend—“Elon
didn’t like that”—and had a major spat while walking near the X.com offices. “I remember thinking it
was a lot of drama, and that if I was going to put up with it, we might as well be married. I told him
he should just propose to me,” Justine said. It took Musk a few minutes to cool down and then he did
just that, proposing on the spot. A few days later, a more chivalrous Musk returned to the sidewalk,
got down on bended knee, and presented Justine with a ring.
Justine knew all about Musk’s grim childhood and the intense range of emotions he could exhibit.
Her romantic sensibilities overrode any trepidation she might have had about these parts of Musk’s
history and character and centered instead on his strength. Musk often talked fondly about Alexander
the Great, and Justine saw him as her own conquering hero. “He wasn’t afraid of responsibility,” she
said. “He didn’t run from things. He wanted to get married and have kids early on.” Musk also exuded
a confidence and passion that made Justine think life with him would always be okay. “Money is not
his motivation, and, quite frankly, I think it just happens for him,” Justine said. “It’s just there. He
knows he can generate it.”
At their wedding reception, Justine encountered the other side of the conquering hero. Musk
pulled Justine close while they danced, and informed her, “I am the alpha in this relationship.”
3 Two
months later, Justine signed a postnuptial financial agreement that would come back to haunt her and
entered into an enduring power struggle. She described the situation years later in an article for
Marie Claire, writing, “He was constantly remarking on the ways he found me lacking. ‘I am your
wife,’ I told him repeatedly, ‘not your employee.’ ‘If you were my employee,’ he said just as often, ‘I
would fire you.’”
The newlyweds were not helped by the drama at X.com. They’d put off their honeymoon and then
had it derailed by the coup. It took until late December 2000 for things to calm down enough for Musk
to take his first vacation in years. He arranged a two-week trip, with the first part taking place in
Brazil and the second in South Africa at a game reserve near the Mozambique border. While in
Africa, Musk contracted the most virulent version of malaria—falciparum malaria—which accounts
for the vast majority of malaria deaths.
Musk returned to California in January, which is when the illness took hold. He started to get sick
and was bedridden for a few days before Justine took him to a doctor who then ordered that Musk be
rushed in an ambulance to Sequoia Hospital in Redwood City.* Doctors there misdiagnosed and
mistreated his condition to the point that Musk was near death. “Then, there happened to be a guy
visiting from another hospital who had seen a lot more malaria cases,” Musk said. He spied Musk’s
blood work in the lab and ordered an immediate maximum dosage of doxycycline, an antibiotic. The
doctor told Musk that if he had turned up a day later, the medicine likely would no longer have been
effective.
Musk spent ten agonizing days in the intensive care unit. The experience shocked Justine. “He’s
built like a tank,” she said. “He has a level of stamina and an ability to deal with levels of stress that
I’ve never seen in anyone else. To see him laid low like that in total misery was like a visit to an
alternate universe.” It took Musk six months to recover. He lost forty-five pounds over the course of
the illness and had a closet full of clothes that no longer fit. “I came very close to dying,” Musk said.
“That’s my lesson for taking a vacation: vacations will kill you.”

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