When I was researching Elon Musk, the young entrepreneur, and the humble beginnings of the company that would make him a millionaire I could not shake off the constant feeling that I was watching an episode of one of my favorite shows: AMC’s Halt and Catch Fire. It is not that straightforward to say if Elon Musk is Joe MacMillan or Cameron Howe in this story. Maybe the truth lies somewhere in between. It took me a while to shake off this idea and see a completely different story.

Compared to Halt and Catch Fire the story of Zip2 is not about competitive relationships and shifting partnerships. This is a family story.

This picture was taken in 1996 and shared by their mother Maye Musk: “My boys celebrating the funding of their first company. ”. Foto by Maye Musk.

Looking at what Musk accomplished later we can certainly say that Zip2 was his biggest failure as an entrepreneur. Instead of focusing on his failures, what I managed to see behind the lines was a completely different story.

The true secret behind his success was that the Musk family was a strong family that stuck to each other even in the hardest of times.

The Musk Brothers: Story of Zip2

Silicon Valley And The Dot-com Boom

San Francisco in 1995 by Gemini AI.

In 1995 Musk launched Zip2 and later in 1999 sold it for $307 million. With his 7% share that sale made the 27-year-old Musk a $22 million before tax. Later Musk invested his share in PayPal:

“Had no money to invest in Zip2, but my founder equity yielded ~$15M after tax. Of that, I rolled ~$10M into PayPal” said Elon.

After graduation Musk moved to San Francisco with a plan to do his PhD at Stanford. It was the year of 1995 and Silicon Valley was hit with the dot-com boom. Investors were throwing away money at anything that was a dot-com company. He decided to be part of the boom and make his fortune. After two days he quit Stanford. This is confirmed in this tweet:

“I arrived in North America at 17 w $2000, a backpack & a suitcase full of books. Paid my own way thru college. Dropped out of Stanford Eng/Phys grad school w $110k in college debt. Created Internet startup w bro & Greg Khouri (love bro & loved Greg, may he RIP)”

Idea Behind Zip2

Foto by Maye Musk.

The idea was very simple: a business directory that was searchable and integrated into a map which was explained by Elon in this tweet

“At Zip2, I wrote entire V1 of software for drawing vector maps & calculating point to point directions anywhere in US (first ever company to do so), as well as white pages & business listings w reviews (an early Yelp).”

This is a great business idea and a no-brainer but at that time Internet was just starting to boom therefore small business owners were hard to convince to pay for an Internet-based service.

How Zip2 Was Founded

Elon invited his brother Kimbal to join him and be a co-founder. Since their business was just a proof-of-concept they had to invest their own money. Elon had $2000 in his bank and his PC, Kimbal put in $5000 and they were joined by Greg Kouri who invested $8000. Three of them founded Zip2 in the year of 1995.

“We started Zip2 with ~$2k from me plus my overclocked home-built PC, ~$5k from my bro & ~$8k from Greg Kouri (such a good guy — he is greatly missed). My Dad provided 10% of a ~$200k angel funding round much later, but by then risk was reduced & round would’ve happened anyway.”

As they could not afford an apartment they had to live and work out of the office and share one computer. During the day it was the server that served their website and Elon would code during the night.

“When we started our first company (Zip2) in 95, I had over $100k of student debt, a computer I built myself, and a few thousand dollars”. “I couldn’t even afford a 2nd PC at Zip2, so programmed at night & website only worked during day” said Elon.

They managed to convince an ISP that was in the same building as them to allow them to drill the ceiling and connect to their network. Elon coded the website and put it online.

After the website was online Elon hired a few salespersons to work on commission. This was a successful idea and money slowly started coming in and resulted in a positive cash flow.

Later the V2 of Zip2 expanded to newspapers, as said by Elon:

“Zip2 also built a newspaper publishing platform that brought hundreds of regional & city papers online for the first time and made major functionality advancements to the NY Times, Boston Globe & Knight-Ridder websites. NYT, KR & Hearst were all major investors in Zip2.”

The Musk Brothers: The Next Adventure

Photo by Tesla Fans Schweiz on Unsplash

After they made their millions the Musk brothers went to invest in new companies. Elon formed companies such as PayPal, Tesla, and SpaceX and Kimbal was an early investor in these. The brothers supported each other with all the business adventures that made the Musk family wealthy.