Creating Generational Legacies

Friday, April 22, 2016

What drives Elon Musk to Succeed

This post was originally published by Australian Financial Review 

Elon Musk, a regular Dude who grew up in South Africa, has taken on the aerospace industry, aviation giants, energy utilities, oil companies and the car giants of the auto industry . . . and winning.

Musk’s Model 3 Tesla was unveiled. The mass-market electric car has pre-sold more than 325,000 units, set to be delivered in the next two years. These numbers mean the company has implied future sales of $14 billion making it the largest one-week product launch of all time. 

Tesla, is not about selling cars 

“we are taking a huge step towards a better future by accelerating the transition to sustainable transportation."

SpaceX – Musk’s commercial space exploration company – has launched its Falcon 9 rocket into orbit to deliver a payload to the International Space Station, and managed to bring the rocket back to earth and for the first time in history, land safely on a drone ship in the middle of the Atlantic Ocean.   Landing at sea is desirable because a rocket returning at 5,000mph from lunar orbit means that if something goes wrong, the landing coordinates can change considerably – somewhere like the Atlantic offers a greater safety margin. 

SpaceX's mission is about "making humanity multi-planetary – with a goal of landing on Mars within the next 15 years.

What has made Musk "succeed? What has driven him to be regarded as one of the most successful humans on the planet?

in 1995, he asked himself a question: ‘What do I want to dedicate my life’s work to?’ 

What was his Vision?

His answer was simple 
"to enable the future of humanity - to
Make the world a better place"

(A vision that extends beyond himself)

How was he going to do this - 
His Mission

The areas he chose 
the internet 
sustainable energy; 
space travel; 
rewriting the human genetic code; 
artificial intelligence (AI). 

He questioned whether rewriting the human genetic code and AI would have a beneficial or detrimental effect on humanity, and therefore decided to base his life’s work on the first three. 

Mission 1. The Internet 
"It seemed like I could either do a Ph.D. and watch the internet happen or I could participate and help build it in some fashion."

He Took Action!!!

In 1995, he co founded Zip2 with his brother, Kimbal. Zip2 would grow into an online map that listed local businesses, signing up major newspapers such as The New York Times, who could use the platform to advertise local businesses such as restaurants and gyms to their online readers. Now common, but in 1995 was a first - competing with the yellow pages.

Elon and Kimbal would literally live out of their tiny office, working there during the day and sleeping there at night.

Zip 2 raised VC , forcing Musk to hand over the day-to-day management to someone else. Four years later, Compaq acquired Zip2 for $307 million in cash and $34 million in stock options, making Mysk $22 million from the sale.

He immediately invested $10 million into his second start-up, enabling people to transfer money over the internet. made immediate payments a reality by taking the world of financial payments online. ‘Money is really just an entry in a database. It’s low bandwidth so it seemed like something that should really lend itself to innovation,’ Musk would tell Bloomberg Business in 2014.

One year after launch, merged with Confinity to create PayPal – which would go on to become the leading payment system in the world. In 2002, eBay bought PayPal for $1.5 billion. As the largest shareholder, at 11.7%, Musk made $180 million from the sale.

Mission one complete.

Mission 2 and 3 space travel and sustainable energy - is what has made him legendary

In 2003 he founded SpaceX, ‘to enable people to live on other planets’. 

He believes that eventually there will be an extinction event on planet Earth, and at that moment, it will be important for humanity to be multi-planetary. 

Having a self-sufficient civilisation on Mars ensures the survival of human consciousness. 

Therefore, this mission clearly falls within Musk’s vision of enabling the future of humanity.

Musk travelled to Russia three times in an attempt to buy a second-hand rocket. After several negotiations with the Russians failed, he decided that the biggest challenge of starting a rocket company was not in fact the price of existing rockets but rather that there had been no innovation in rocket engineering in 60 years.

How can SpaceX create a rocket that was affordable - enabling a private company to launch into space, with a goal of enabling us to inhabit Mars?

He had dish a sense of purpose that he was peepare dot invest all!

The risk of failure was and is  massive - Musks genius is that - that is ok!!! He does not lose - he either wins or learns! 

And Mission 3  sustainable energy. In 2004, he invested in and eventually took a controlling stake of and became CeO of Tesla, building top-quality cars based on sustainable energy and clean fuel..

‘Were not about competing with car companies - we’re just going to keep making more and more electric cars and driving the price point down until the industry is very firmly electric . . . We want to have a catalytic effect until [the point at which] half of all new cars made are electric, then I think I would consider that to be the victory condition. So the faster we can bring that day, the better.’

The cynics were out there!

Tesla was perhaps one of the most unwise investments in history. Automotive companies were going offshore, experts were declaring that the technology for electric cars wasn’t ready for consumers, Musk had zero automotive experience, and the last time there was a successful US car start-up was Chrysler in 1925. 

Musk decided to invest $70 million in Tesla in the hope of moving the world towards a cleaner form of energy consumption.

in 2006, Musk co-founded and funded a company called SolarCity with the mission of ridding America and eventually the world of its addiction to fossil-fuel electricity. 

With SolarCity, Musk wanted to revolutionise energy production by installing solar panels on the roofs of homes throughout America for free and giving people a more affordable, and clean, energy solution to power their homes. 

In Musk’s words, ‘SolarCity is about sustainable energy production while Tesla is about sustainable energy consumption.’ 

Musk put $10 million into founding SolarCity, and with that, he had invested almost all of the money he had earned throughout his life.

Money has never been a driver - the vision he holds for humanity and his need to fulfil his purpose far exceeds his need for profit. 

In business, it is an interesting paradox that it is often those who do not hold money as their primary motivation who add the most value to the world and therefore become the most wealthy.

Between 2006 and 2008, the world was laughing at Musk and towards the end of 2008, the criticism seemed warranted, as inflating costs, a global financial crisis and a lack of trust from investors in these fanciful upstarts made it appear as though all three companies were going to die.

When Musk invested $100 million into SpaceX in 2002, he knew that it would ultimately fund three unmanned rocket launches. One of these had to succeed if he was to prove that a private company could successfully build rockets. 

If none of the first three launches worked, they would not win the contracts or attract the investors they needed to fund the company, and SpaceX would die. 

'The first rocket didn’t get very far. It got about a minute up and then there was an engine fire and that was it. The second flight actually did make it to space but not to orbit. And then in flight three again we didn’t get all the way to orbit.’ In this third launch, on 3 August 2008, the rocket exploded before it could reach orbit.

At Tesla, the costs of production had blown out of proportion, from a projected $65,000 to $140,000 per car. This put the company into extreme duress, as costs continued to stretch and sales continued to lag. Then the global financial crisis hit, which was disproportionately bad for car manufacturers. 

'That was tough. It was obviously an economic period that saw the bankruptcy of General Motors and Chrysler, and there we were a young company selling a very optional car – people don’t need a $100,000 sports car.’ And in 2008, people definitely didn’t need a $100,000 sports car that was battery powered.

'I had to take all of my reserve capital and invest it into Tesla. Which was very scary because it would obviously be quite sad to have the fruits of my labour with Zip2 and PayPal not amount to anything. But there was no question that I would do that because Tesla was too important to let die.’ Coming into the end of 2008, Musk invested his last dollars into Tesla to give the company less than a fighting chance.

To make matters worse, the bank that had backed SolarCity terminated the relationship, meaning that company was also now in trouble. It was the week before Christmas, and Musk’s three companies each looked like they would be bankrupt before the year was out. 

'We had maybe a week’s worth of cash in the bank or less and there was just very little time left in the year to resolve these things. There was like two or three business days left in the year.’ If Musk reached the close of business on 24 December 2008 without raising money from external investors, then all three companies would die and he would be declared bankrupt.

Understandably, Musk was extremely challenged personally. ‘I never thought it was possible for me to have a nervous breakdown . . . that was about as close I was going to come.’His mother would later tell Bloomberg Business, ‘I felt like I had a hole in my heart. I just didn’t see him getting out of it, he was just so sad.’

On Tuesday 23 December 2008, with less than two business days before a Christmas that would see all three companies collapse, SpaceX received word that they had won a $1.6 billion contract from NASA to resupply the International Space Station. At this point, Musk had only a few hundred dollars in the bank and could not have made payroll the next day.

On Wednesday 24 December, at 4 pm, with one hour before the working year was out, Musk successfully raised money from previous Tesla investors that would ensure Tesla and SolarCity would also not die. Musk would end the year with his vision intact, having saved it from the brink of several disasters.

Musk’s biggest strength is also his biggest weakness: the vision he holds for the future is so implausible, so unlike anything the world has ever seen, that it is hard for his ideas to be taken seriously in a world that uses the past to navigate the future. 

SpaceX, Tesla, and SolarCity are all so ambitious that, until they had each made significant progress towards ‘proof of concept’, Musk’s visions were unbelievable.

Today, SpaceX is the first privately owned company to put rockets into orbit, the first private company to have a rocket orbit the Earth and return safely, and the first private company to deliver cargo to the International Space Station. The only other organisations that have achieved any of these feats are the nations of Russia, China, and the USA.

SpaceX is now NASA’s largest contractor, with around $5 billion in space-travel contracts, and an investment from Google gives the company a valuation of $12 billion. 

It is building the most powerful operational rocket in the world, and its rockets to date have been completed at about a quarter of the cost of Boeing’s or Lockheed Martin’s, making space travel the cheapest it has ever been in history. 

Musk has single-handedly brought more innovation to space travel in ten years than Russia, China, the USA, Boeing and Lockheed Martin did in 60 years. Last weeks milestone of having Falcon 9 land safely on a barge ship mean that SpaceX continues to drive the cost of space travel down ensuring that rockets are becoming increasingly reusable. After the landing, Musk said in a press conference, “In order for us to really open up access to space, we need to achieve full and rapid reusability.”

In 2013, Consumer Reports labelled Tesla’s Model S the best car it had ever tested, scoring an unprecedented 99/100. It is the fastest four-door sedan in history and the safest car ever tested by the US Government’s National Highway Traffic Safety Administration. 

The company doesn’t label each car by the year it is made, because – unlike other car brands – you don’t need to wait for a new model to get all the new features. With a Tesla, you get all the new features through an automatic software update over wi-fi. Tesla’s initial public offering in 2010 was the first of an American car company since Ford in 1956. Today, just eight years after being one hour from bankruptcy, the company is worth $33 billion.

Today, SolarCity is America’s largest provider of solar panels and employs more than 10,000 people. 

It offers free installation across homes, businesses and governments, and delivers clean energy at a fraction of the cost that consumers pay for fossil fuels such as coal, oil, and natural gas. It is building the largest solar panel factory in the US and, after going public in 2012, is valued at $2.74 billion. 

It has revolutionised the way the US produces energy and will continue to change the way the world thinks about the necessary transition to a cleaner future.

Misks journey has been extraordinary and challenging - breaking barriers - preparing to fail with a laser focus of achieving his vision and mission.

Musk is forcing the world to rethink space, energy production, energy consumption, transport and the future of humanity – he is only 44. 

He is a brilliant example of someone who is unconstrained by yesterday’s thinking. 

His vision of enabling the future of humanity gives him and his people such a sense of purpose that they set out to do the impossible and achieve it time and time again. 

Musk is truly pushing civilisation forward and in doing so is prompting humanity to reimagine what we are capable of. 

Through Musk’s accomplishments, the potential of human endeavour is travelling further than it ever has before.

Inspired by Jack Delosa's article in Fin Review 

Real money allocated to support innovation

 The Government has as part of its support for innovation ,  announced today an investment of  280k bringing to Australia  Masschallenge, who will be JV'ing with Microsoft to develop programmes for startups that will encourage Connection,  Collaboration and Education.

This initiative will encourage idea-pitching competitions, startup boot camps and local and international mentoring.

I absolutely and wholeheartedly endorse and approve this initiative - it's awesome !!! but they should applaud, encourage and continue to build on the success and experience of Australian accelerators and programmes that have been doing the same for many years and have been supported with significant funding by both Liberals and Labour over the years from both Federal and Victorian Government's (Sydney has been behind the 8 ball in this regard)

BSI has been and continues to assist their clients access these programmes  - that have added exponential value to the companies that have benefitted and are continuing to benefit from these programmes. 

With regard to the accelerator programmes, through its incubator ADI, that the government supported from 2002 to 2005, $5m was used to 
- provide education and support through taking 150 companies through an investor ready programme, culminating in them pitching their opportunity in front of 200 high net worth individuals and funds through our bsi investor forums held nationally 
- Provided an opportunity to take 30 companies to Silicon Valley enabling them to pitch their opportunities to VCs and potential alliance partners 
- 24 companies being directly invested in by ADI - which facilitated in excess of $500m of private investment over the past 10 years.
- Our incubatees scoring a number of home runs - while others have  "failed forward"- 
- notable investees successes have included :- 
- NewLease - that listed under Rhype - current asx valuation +$100m
- Spreets - sold to Yahoo for $40m 
- Redbubble - currently listing at a valuation of $300m
- Adlogic and My recruitment plus - still private but kicking significant goals in online recruiting
- Retriever - being the major player in field force technology - setting the pace for current technology
- Memsid morphing into asx listed bluechip - leading the field in rfid technology
- Referron - a technology close to my heart - adding value to thousands of business's - helping them easily refer and be referred with 3 taps of their phone, enabling them to track measure and reward referrals! ( my mates would be disappointed if I didn't give my obligatory plug!!!)

The investment of $5m (as one of 8 other incubators ) in 2002-2005 have resulted in  - in excess of $500m to the incubatees that were supported. Many of those entrepreneurs supported by these programmes are now the fabric of innovation in Australia today.

The reason for such significant leverage was that the government provided the spark - that encouraged private enterprise to fuel the flame. 

The incubator programme should have continued , but stopped due to change of government or budget cuts, although all reports clearly showed that the roi of the funding was significant!

The Turnbull $1.1b initiative is genius! It will encourage enterprise and the massive pot of superannuation available to invest in this all important sector - as long as these companies are educated, have a clear plan and an opportunity for exponential growth.

We can already see this happenning with 4 Recent Australian funds committing $800m to the innovation sector.

It's interesting to see the hype of the $280k of Masschallenge when the Victorian Government (who gets it) has just allocated $60m to support accelerators over 3 years, making Victoria a place to be for innovation! I haven't seen this in the news? 

Startups and innovators should not be used as a political football.... They should be supported and nurtured for the benefit of all Australians! 

Bsi looks forward to playing a part in The Innovation game to 2020 helping Innovative companies grow through Connecting Collaborating and Educating - helping them create ther generational legacies.

It's going to be an exciting and rewarding time for Innovation in Australia.

Some of the current government programmes include:-

The export market development grant - encouraging exporters to take risks - marketing their products and services to overseas countries - knowing that 50pc of their marketing spend can be recoups in the form of a grant to a maximum of $150k per annum. This scheme has been paired back - where exporters don't get their full entitlement - although the kpis show that for every dollar the government supports these companies, $12 is returned to australia in export revenue - increasing employment and tax dollars, providing significant benefit to Australia and its stakeholders.

Research and Development Tax Concessions - whereby innovators can get back up to 45pc of their r and d spend - encouraging them to innovate take risks and allowing them to fail - knowing that all is not lost

Commercialisation Australia - with a range of programmes - encouraging education and collaboration to innovative companies looking to grow their business

Vet fee help and state government programmes , investing billions of dollars up skilling the Australian workforce - getting them ready for the inevitable shift that is happenning - replacing most current jobs that exist today with technology. 

If you are interested in finding out more - 
Say "yes" in the comment below - or add to the conversation 

Friday, April 15, 2016

What is the one thing that leaders will need to be successful in a disruptive market?

Leaders who have redefined industries, and made markets beat to the sound of their own drum, all have a common trait.

Successful people are 100% confident that, whatever the challenge, they will be able to figure it out- and at the same time, they are 100% willing to forgo everything they think they know and admit to knowing nothing. (INC magazine)

 They are not scared to fail - in fact they embrace it - because "failing " to them is part of the learning process. If they are certain of a result they are not pushing boundaries and by definition - are not growing.

They want to know everything about their craft and the industry they're in, and they realise that it is continually changing and there needs to be continual learning and adapting. 

They know that every disruptive idea comes from the space of what they don’t know that they don’t know.

They realise that creating new markets—new products for new customers—is what’s disruptive and therein lies growth.

They quickly Identify what part of their business model is dying (or dead) and have the hard discussions about the implications for their business.

They have the ability to inspire their team to continue with them on the journey even though the future may be uncertain! 

They realise that a state of vulnerability is a positive as it allows them to constantly reinvent themselves, their companies and  the industries they play in! 

As my mentor Allen Pathmarajah says
You can only grow if your cup is empty. If your cup is full - there is no place to grow! 

There needs to be slack in people's days giving them time to think, innovate, fail and grow!

Who do you know that you believe is successful?
Do you believe that that person regards himself as a success? 

The upside to disruption

 Artificial intelligence (AI) and robotics are fundamentally reinventing the workforce. Drones and driverless cars are transforming supply chains and logistics and challenging policymakers to rethink existing approaches to infrastructure and regulation.

@ Changing consumer preferences and expectations are also having a massive impact on industry — most notably in millennials and Generation Z. These groups are leading the change in consumption patterns and demand for everything from cars to real estate to entertainment.

 @ Jobs and employment are potentially at risk - and the current norm of a job is changing.

Business leaders and governments will have to understand this and work together to strategically redeploy people to new roles and offer retraining and education to growing sectors. The winners will be those who can identify the problems  - and for every problem there are many solutions, which result in opportunities . Change and disruption is inevitable - Government's will have to do this in an environment of social stability. Not an easy ask! 

Those that embrace change and disruption and are not afraid to make mistakes and take risks and fail and transform the way they operate – will be the winners.

We are discussing what leaders need to think about in this new world to survive in today’s environment and to get ready for the future. New ideas and technologies are rapidly disrupting traditional models; we’re examining how organizations and governments can adapt.

 Here are some key takeaways from Day 1 of the retreat:

  1.  Creating new markets—new products for new customers—is what’s disruptive and therein lies growth.
  2. Innovation has to become everyone’s DNA at an organization. The tone is set at the top, but it’s not someone’s title or corner office.
  3. Every disruptive idea comes from the space of what we don’t know that we don’t know.
  4. You can’t expect innovation without building slack into people’s days, give them time to think and create.
  5. Identify what part of your business model has already died and have the hard discussions about the implications for your business.
  6. Achieving cognitive diversity with your workforce is as important as other kinds of diversity.

 Today’s disruptive environment is ripe for new market opportunities. Every industry and government body must rethink how to connect to their clients and constituents. Asking the right questions and not jumping to conclusions will also help make it clear that they are open to innovation as a way of life, not as lip service.

 Leaders in every industry are responding to shifts that would have seemed unimaginable even a few years ago. Artificial intelligence (AI) and robotics are fundamentally reinventing the workforce. Drones and driverless cars are transforming supply chains and logistics and challenging policymakers to rethink existing approaches to infrastructure and regulation.

 Changing consumer preferences and expectations are also having a massive impact on industry — most notably in millennials and Generation Z. These groups are leading the change in consumption patterns and demand for everything from cars to real estate to entertainment.

 Responding to these forces, including the potential negative impacts on job availability and employment, is one of the biggest strategic imperatives facing today’s business leaders and policymakers. Governments and businesses will have to work together to strategically redeploy people to new roles and offer retraining and education to growing sectors. Through all of this, they will have to figure out how to bear the resulting costs while maintaining social stability. 

 At a time when there are many unknowns and no easy answers, it’s all the more important to first ask the right questions. This is our primary purpose this week.

 Behind every challenge is an opportunity. Our approach of asking better questions seeks to find the upside of disruption, which in turn helps build a better working world. The ultimate better question is how you find the opportunity in the challenge. How do you seize the upside of disruption?

 The era of being afraid to make mistakes and take risks is over. Over the next 5 to 10 years, those that embrace the upside of disruption – that transform the way they operate – will be the winners.