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Case Studies

Elon Musk Was Once Going Bankrupt, Now He’s One Of The Richest Men Ever

by Roman P. | | 5 min read
elon-musk-bankruptcy

It may seem sometimes that the successful celebrities we see on the screen are nearly perfect and never make any mistakes. But today we’ll show you that even the most successful people face challenges. The difference is, the successful people learn to overcome these challenges.

2008 is a year Elon Musk still describes as the worst year of his life. During this challenging period, both Tesla and SpaceX were on the brink of collapse, and Musk himself was broke and in debt. Let’s delve into the details:

Tesla’s financial crisis

Photo of Tesla roadster

In December 2008, Elon Musk, the fearless entrepreneur who created SpaceX and Tesla, was facing a huge financial crisis. He had put all of his money, including the $180 million he earned from selling PayPal, into both SpaceX and Tesla. Tesla, which is now the world’s most valuable car maker, was then very close to failing, with the risk of going bankrupt on Christmas Eve. Both Tesla and Musk himself did not have enough money to pay their employees. How would you feel in that situation, knowing that the dream of electric cars, which only a few people shared, might disappear forever?

The bold move

Musk decided to take a bold and risky step, and tried to raise $20 million in new money to save Tesla. But he had a big problem with one of his main investors, Alan Salzman of VantagePoint Capital. Salzman, who had been disagreeing with Musk for a long time, thought Tesla should change its business and sell battery packs to traditional car makers like Chrysler. Musk, however, had a different vision. He strongly disagreed, and thought that working with the old car industry would be a terrible mistake.

Photo of Elon Musk

The company was now down to its last $9 million in cash, having sold 937 cars and lost $31.5 million. So the conflict became worse in the boardroom. Salzman, who wanted Tesla to change its direction, even tried to remove Musk as Tesla’s CEO. Kimbal Musk, Elon’s brother, supported him and vetoed any vote to fire Elon.

Salzman asked Musk to explain Tesla’s money needs at VantagePoint’s offices. The meeting was at 7 a.m., which was not a good time for Musk’s schedule. It seemed like another obstacle in their difficult relationship. Was Salzman really trying to make it hard for Musk, or was it just a coincidence?With Tesla’s future at stake, Musk cleverly changed the plan to get more money by borrowing rather than selling more shares. This important decision led to a phone call on Christmas Eve that would decide Tesla’s fate.

The Christman Eve miracle of Tesla

In a surprising turn of events, VantagePoint and other investors agreed to Musk’s plan. Musk was so relieved that he cried. This was a key moment, not only for Tesla, but for the dream of electric cars. At that time, major U.S. car companies had stopped making electric cars. What would have happened if Musk had not succeeded? How different would the world of electric cars be today?

SpaceX’s Falcon 1 Launch

SpaceX SpaceX is another company that Elon Musk started. And just like Tesla, SpaceX had many problems at the beginning.

First launch

Photo of the first failed launch of Falcon 1

In March 2006, SpaceX tried to launch its first rocket, called Falcon 1. But something went wrong very soon after the rocket left the ground. A rusty nut caused the rocket to explode. It was a big failure that cost SpaceX a lot of money.

Second launch

SpaceX did not give up. It tried again in 2007. But this time, the rocket’s engines stopped working too soon. The rocket could not reach space. SpaceX had failed again.

Third launch

The third time (2008) was very important for SpaceX. The Falcon 1 had a special thing inside it. It was the first thing that SpaceX made for NASA. But this launch also had a problem. Because two parts of the rocket hit each other and made the rocket spin. It was a very bad situation that could have shut down SpaceX for good.

Photo of sad Elon Musk

But then Peter Thiel stepped in and helped SpaceX. He was the first person who was not part of SpaceX to fund the company. He gave $20 million to them so that SpaceX could keep working, even after the botched rocket launches.

Photo of Peter Thiel

The redemption

So the fourth time, SpaceX finally did it. The launch was successful. The rocket reached space and came back to Earth. It was the first time that a private company did this. This made Musk very happy.

Photo of a successful launch of Falcon 1

After that, SpaceX only got better and better. It made new things and did new things in space. NASA liked SpaceX and gave SpaceX a big contract. How big? Think $1.6 billion. That is a lot of money.

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What can YOU learn from Elon Musk?

Musk’s journey wasn’t without personal sacrifices. He invested substantial amounts of his own money into his ventures and even borrowed funds during critical periods. His story is a testament to his own words:

If something’s important enough, you should try. Even if the probable outcome is failure.

Photo of Elon Musk

In summary, Elon Musk’s career, marked by both triumphs and near-disasters, demonstrates the power of unwavering determination and risk-taking. He navigated Tesla through its darkest hour and played a pivotal role in shaping the future of space exploration, electric vehicles, and sustainable energy. Isn’t it incredible to think how close we came to losing these revolutionary advancements, and how one person’s courage and vision made all the difference?

You may be facing some financial troubles yourself. It’s important to remember that, no matter what, you can always fix any situation you’re in and achieve success. With Sellvia’s help, you can create your own dropshipping store FOR FREE and start earning money right away with little to no investments or risks!

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by Roman P.
As a copywriter at Sellvia, Roman helps aspiring ecommerce entrepreneurs around the world learn how to launch and grow their online businesses. He has a degree in economics, which gives him an edge in understanding the ecommerce industry. Roman creates engaging and informative content that empowers people to achieve their full potential.
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