Last updated on September 10, 2022 - My Free Marketing newsletter 👀
Elon Musk's net worth is $212 billion, making him the #1 richest person in the world.
That makes Elon richer than Bill Gates, Warren Buffet, and Jeff Bezos!
I was curious though, how did Elon make his first million and how old was he when he did?
What we uncovered was crazy.
One story involves him running a nightclub with his mother!
So now that you know the net worth of Elon Musk, let’s dive into exactly HOW he made his first million. We’ll highlight some of the key things he did to pull it off so that you can hopefully follow in his footsteps.
Let's get into it.
Elon was born and raised in Pretoria, South Africa.
His father, Errol Musk, is an electromechanical engineer and his mother, Maye Musk, is a model.
As a child, doctors actually thought that Elon was partially deaf because he had a habit of gazing off into the distance and not responding to people calling out his name. Musk’s parents had him undergo surgery to restore his hearing, but nothing improved.
It turns out he just spent a lot of time in his head daydreaming!
Musk also had a huge love for books and read 10 hours a day. He literally ran out of books to read at the library and ended up reading the entire encyclopedia!
He eventually also got into gaming, which is what initially got him interested in technology.
Part of the reason I got interested in technology… was video games. I probably wouldn't have started programming if it wasn't for video games. –Elon Musk
He wanted to learn how to program his own games, which led him to get an early Commodore computer. So now the time he used to devote to daydreaming and reading books, he spent computer programming! He was so passionate about it that he completed a 6 month programming course in 3 days.
At the age of 12, he created and sold his own video game called Blastar, which he sold to a PC magazine for $500. This is the first product Musk ever sold.
You can even still play Blastar here!
How cool is it that his first product was about Space, and now he’s literally sending rockets to Mars?!
The first product I ever sold was called NinjaCard. It was a discount card I sold to about 5 different campuses in California and it ended up making about $50,000 bucks!
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So the key takeaway here is, just get started selling and make things that you're excited about!
Go play video games and get into tech in whatever way that makes it exciting for you.
The second thing we can learn from Elon is what did you do as a kid that you really enjoyed?
Was it computers? Was it space? Was it horses?
Whatever it was, go and explore that as an adult and see if it’s something you can make into a business.
For me at an early age, I was doing deals on local restaurants, and guess what? I'm still doing deals! But now for great software at AppSumo.
Elon spent a lot of his early life learning how to code for fun, and that's how he actually made money later on.
And he's still using that skill today!
So do the things that are fun for you, and then guess what?! A lot of times, money will follow.
Alright, so phase two of Elon’s early life.
This is how his teenage years shaped his life as an entrepreneur.
So after leaving South Africa in 1988, Musk actually spent time doing weird-ass jobs in Canada.
What he did is surprising.
He tended vegetable gardens and shoveled out grain bins at a cousin's farm in Saskatchewan, and he even cut logs in Vancouver.
Elon also visited an unemployment office and asked what the highest paying job they had was, and it turned out to be cleaning the boiler room of a lumber mill.
So that’s what he did!
He was making $18 an hour wearing a hazmat suit, crawling through small spaces and shoveling residue. 30 people actually got hired for the same job and at the end of the week, it was just Musk and two other men who were able to stick with it.
I have a lot of respect for him doing the hard shit!
Sometimes you literally need to get dirt on your face. It makes you more resilient. And it gives you an appreciation for how good you actually have it when you're sitting at a computer making internet money rain down.
One of the things like this that I always think about is…
Do the dishes!
If you ever have dishes in your sink — Just. Do. Your. Dishes.
It always reminds me that no matter how much money I have, I do the work I need to do when it’s necessary to do it.
Another thing we can take away from Elon’s teenage years is, get into the buffet of work!
Try a bunch of things out to find out what you hate and what you really like.
I did this too:
Eventually, after working at Facebook and working at Mint and developing Facebook games and a whole bunch of other stuff, it led me to figuring out that I really love promoting amazing software deals on AppSumo and making YouTube videos.
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This is so cool and something anyone can try.
So Elon and his brother would read newspapers and find interesting business people to reach out to. This is when he didn't have a network, just like a lot of you! He and his brother would take turns cold calling and they eventually got the attention of Peter Nicholson.
Nicholson was the head of marketing for the Toronto Blue Jays baseball team, and a top executive at a bank. It took 6 months to get on this guy's schedule, but he eventually agreed to have lunch with two teenagers who took a 3 hour train ride to meet him.
But it worked! The meeting resulted in Elon landing an internship at the bank.
So something for you to think about — what do you really want and how persistent are you being to get it??
When I wanted to make a sale with Greg Tseng of Tagged, I spent 6 months! I sent him shoes, I sent him magazines, and eventually he actually became a customer of one of my earlier businesses.
So for whatever you really want, just keep being persistent every week and every month until you get it.
One of the keys to entrepreneurship is the follow up.
Keep following up.
The first is the power of the cold call. Or the cold email. Or sliding into the DMs.
Elon had nothing to lose! Maybe you don’t either. So ask execs to lunch, or anyone you want to meet. Don't worry about it too much. If you're scared, start small with the Coffee Challenge, which I always talk about, where you just ask for 10% off next time you go get a coffee or tea. See what happens! You’ll probably get rejected and guess what?! You’ll move forward.
So build up your ask muscle.
Next, I don't recommend cold calling just to pick people's brains. No one wants their brain picked. But instead, start helping people and offering them value — something they actually want.
That’s a way better way to get them to want to meet with you.
Elon went to Queen's University in Ontario, Canada and sold computer parts and PCs, and did tech support out of his dorm room.
And after he transferred to the University of Pennsylvania in ‘92, he paid for rent by converting his house into a nightclub! He and his friends made their fraternity house a full-out unlicensed speakeasy.
They’d have as many as 500 people come over, charge everyone $5, and it was an all-you-can-drink thing with beer and Jell-O shots.
Elon happily ran the parties because it was paying his way through college. He could make an entire month's rent in just one night.
In general though, he was actually quiet and sober — so he would be the one to talk to the cops when they showed up.
And, his mom Maye even worked the door!!
She would check coats and collect the money.
Opportunity and making money is everywhere — if you want it.
It's right in front of you all the time!
Can you Uber your car? Can you rent out a spare bedroom? Can you go on Facebook Marketplace and sell some things?
There’s so many ways to make money, you just have to get out there and do it.
This is surprising.
After graduating UPenn with a bachelor’s degree in physics and an economics degree from Wharton, Elon went to Stanford to pursue a PhD in energy physics.
A few weeks before classes started, Netscape went public with a valuation of nearly $3 billion dollars. Musk was already aware of the business potential of the internet, but at that moment he realized that he was going to be able to change society forever.
So he ended up leaving Stanford just two days in.
Now we’re getting to the good part. This is how Elon Musk’s net worth really took off.
Elon saw the potential that the Yellow Pages (if you were born this century you probably don’t even know what those are) was missing.
So he started Zip2.
He realized that he and his brother were fumbling around trying to find Netscape’s pitch and listing in the Yellow Pages. So he built Zip2 to be a searchable business directory that people could use to get door-to-door directions to businesses.
To get the business off the ground, Elon purchased a local business directory for a few hundred dollars.
So for your business, what is the simplest and cheapest action you could take right now that will produce a return?
Elon purchased that business directory — it wasn't super cheap, but it provided him with everything he needed to build Zip2’s website and start getting customers.
When I started AppSumo, I didn't hire a big-ass team. I didn't spend a lot on marketing. I went and hit up one company (which was Imgur) asked if they would offer a discount and then I went onto Reddit and asked people if they wanted to buy it, and we sold 200 of them.
And just like that, AppSumo was started.
I know many of you today might not even know what the Yellow Pages are, and it might seem obvious to have an online business directory, but this was 1995. Most people didn’t even really know what the internet was.
So Elon and his brother actually had trouble convincing anyone to believe in their idea.
And this is wild…
When they launched the website, Elon only had $2000 in the bank!
So most of their costs were covered by their father, who gave them $20,000 to get it going.
Elon and his brother actually lived super cheap. They slept on futons at the office rather than renting an apartment, they showered at the YMCA a few blocks away, and they shared one computer between them. Elon programmed at night, and turned the server on during the day.
And Elon even convinced a startup in the office below to use their internet so he could save money on the internet costs!
This is the stuff I love reading about — what it actually takes to be successful.
Because sometimes as you start getting money, you just throw money at every problem you have. But a lot of times if you don't have resources, you can be creative! Just like these guys were.
When I started, I slept on couches and in my aunt’s basement to save money so I could work on my businesses.
Once the website was up and running, Elon hired salespeople on commission and they went door-to-door in malls and shopping areas to sell sponsored listings. Slowly, the money started to trickle in.
This is one of the things I've talked a lot about to you guys — keep your expenses low in your personal life AND your business, because then you don't have to worry about making a ton of money!
And that's exactly what happened with Elon and his business.
They were able to achieve positive cash flow early on, which looked good to investors.
So around 1997, Zip2 began offering a platform service to newspapers — they were licensing their technology. They offered directories and city guides to these companies. By 1998, almost 200 newspapers were using their platform.
I really like his business model where at first he started selling directory listings and then he started selling the technology itself.
There are a lot of different business models out there.
I worked at Mint which was a free service that offered useful information but it was also a lead gen for credit cards and tax stuff. It was a win-win-win for everyone!
AppSumo has an interesting business model, too! We promote amazing deals for entrepreneurs, you get a great deal, our partners get money and new customers and we make a little bit of money. Everyone wins.
So take time to figure out which business model works for you that you can scale out.
Okay, back to Elon.
What's crazy is that he STILL hasn’t achieved $1 million dollars — or even anything close to his current net worth — yet.
So how did he get there?
In ‘96 Mohr Davidow Ventures invested $3 million in Zip2, but Elon had to hand over most of his shares and the role of CEO to someone else.
He was demoted to CTO and (not surprisingly) he was pissed off!
But he needed the money to take Zip2 to the next level, so he did the deal.
Zip2 actually had customers like The New York Times, Pulitzer Publishing, and Hearst Corporation — so before Craigslist owned the world of classified ads, Zip2 played a big role in print publishing going digital and the company did grow quickly.
Because of this, Elon got sour about the idea of someone else running his business.
This is where it gets crazy…
In ‘98, the new CEO tried to merge with CitySearch and Elon actually organized a coup to have that CEO ousted — and he reinstated himself.
The plan worked at first, but it backfired when Zip2's board turned around and sold the company to Compaq in 1999.
I've definitely had issues with my previous company, too. It was me plus two other founders and it was like a three-headed dog — we all wanted to go in our own direction, so the company went nowhere.
So that's why it's been so important for me with my current business partner Chad that we have a lot of alignment about where the hell we're trying to go.
So the Zip2 deal amounted to $307 million dollars and Elon FINALLY became a millionaire by ending up with $22 million from the deal.
I know you might be thinking, they sold for $300 million and he got less than 10%??
In Silicon Valley there's dilution. So the more that you get from investors, the smaller your percentage is — but hopefully it's a big pie anyways.
And $22 million bucks is still a good payday!
So Elon Musk became a multi-millionaire at 27 years old, and he used over $11 million from that payout to fund X.com, which eventually became PayPal.
In 2002, PayPal sold to eBay, and Elon earned $180 million from that deal.
So, here's a rough timeline of how Elon's first businesses:
He's founded and co-founded a few other companies since then (like Neuralink and The Boring Company) which also contribute to his net worth, but that's a breakdown of how Elon got his start.
It's crazy that he went from basically $0 in 1995 when he started Zip2, to $180 million in just 7 years!
Although Elon has made billions of dollars, he considers himself cash-poor. A lot of Elon Musk's net worth is tied up in non-liquid assets so he doesn't just have a few billion sitting in the bank at any given moment. He's said before that he's taken out mortgages and used credit cards just like anyone else.
And, even after Elon earned millions of dollars from his business sales, he still slept on friends' couches and asked them for money while he was re-investing everything he earned into starting his next business.
#1: Go explore the things that interest you.
Whether that’s the things you like now or things that interested you early on in life. It was video games for Elon, which led to programming, which led to actually creating a lot of really interesting companies.
#2: Be scrappy.
I love that he threw house parties with his mom, and that he saved money by living cheaply so he could get things started with Zip2.
I think a lot of us are a little bit too comfortable — including myself! So how do you create some limitations?
#3: Whatever experience you have in your career whether it's good or bad, how do you keep learning and using it like a ladder?
I think that's what Elon has done really well. He’s gone from Zip2 to Paypal to Tesla and to SpaceX and beyond.
#4: Start right now.
A lot of us are saying I need to watch another video, I need to buy another course, I need to talk to someone smarter, I need to read another book.
You already know the things that you need to be doing what you want to do.
And if anything, just get started today and build momentum to start making things happen.
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