Be Prepared to Pivot.
To pivot in business is to change direction while keeping one foot grounded where
you started.
That’s exactly what Elon Musk did when he turned X.com (online bank) into
PayPal (a global payment transfer provider). The change rendered X.com totally
unrecognizable, but Musk was able to use much of its resources. Those resources
included an innovative method of securely transferring money online through the
recipients email address, which Musk had developed himself.
Embrace an Exit Plan . *
Can you imagine if Musk had stayed running PayPal? He’d still be rich and
successful – but there would be no electric sports cars or rocket ships to his name.
Thankfully, Musk long ago learned how to extricate himself from his own startups.
In 1995, Musk founded Zip2 (an online city guide) and in 1998 he sold it to
Compaq for $307 million. Musk’s portion was $22 million. He was 28-years-old
and free to do whatever he wanted.
That meant founding X.com. Again, Musk jumped ship after a couple of years,
selling PayPal for to Ebay in 2002 for a cool $1.5 billion. For his trouble, Musk got
$165 million in Ebay stock. Now Musk had enough personal capital to start the
pair of truly extraordinary businesses that he still runs today.
Invest Earnings into New Businesses.
Both times Musk cashed in a company for millions of dollars, he invested at least
45% of his earnings back into a brand new business within the calendar year.
o $10 million of the $22 million Musk made from the sale of Zip2 went to
founding X.com (later PayPal).
o $100 million of the $165 million made from the sale of PayPal went to
founding SpaceX.
Musk also invested heavily in Tesla Motors (33,076,212 shares) and SolarCity
(20,724,991 shares). It’s the ownership of these three companies that constitutes
the vast majority of Musk’s $6.7 B estimated wealth.
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