Time Of the Year Man of the Year Musk: How did "Iron Man" come about?

Recently, Tesla CEO Elon Musk Elon Musk was named "Person of the Year 2021" by Time magazine. Musk is the most elite entrepreneur of this era. He has too many labels on him, such as Iron Man, Super Influencer, Genius, Joker, Adventurer, TechNocracy, Earth Savior. Today we will analyze how Iron Man is made.

Speaking of Musk as a person, we will think of a term called "the sea of stars". You see what Musk does is a flying thing, building Tesla, building rockets, building star chains, building high-speed pipelines. This person not only dared to brag, but also blew the bull to achieve, and circled many fans around the world. Fans are also confused, why can you play like this? Who can limit Musk? Are you going to occupy space? Why can the United States produce this fierce man?

We know that Musk was not originally American, he was born in South Africa, then immigrated to Canada with his parents, and then studied at Stanford University in the United States. Musk now has a triple citizenship of South Africa, Canada and the United States. In fact, in the United States, entrepreneurs like Musk are not common. I remember that earlier, before investing in Tesla and Space X, Musk and a small group of investors started an organization that wanted to invest in the future technology that flew around. Musk mocked Silicon Valley investment banks at the time for lack of foresight and saw only the "Earth" business, pouring money into 140-character tweets.

But the problem is to invest in the sea of stars, just have dreams, not only have the spirit of adventure, plus the ability to innovate is still not enough, but also need large-scale investment. We know that the entrepreneur's job is to organize roundabout production, and roundabout production is risky. In this work, the entrepreneur pays the wages of the workers, the interest of the banks, the suppliers of raw materials, buys out all future gains, and bears all the risks of the future.

This is the venture of an entrepreneur. If you're the boss, you'll find ways to reduce risk and make bigger profits, the most important of which is innovation. Because technological innovation can acquire customers, avoiding a decline in investment marginal returns. Therefore, we often say that entrepreneurial talent, one is risk-taking, the other is innovation.

However, investing in underlying technologies such as aerospace is a long-term, high-failure rate, and risky undertaking. Do entrepreneurs dare to do it? Dare to do it, but they are not stupid, they will also find a way to transfer the risk, how to transfer? Quite simply, it's about attracting venture capital. You see, the Internet, biotechnology, aerospace and other technical projects are all supported by rounds of venture capital.

For example, in 2002, Musk invested in SpaceX, how much money did he invest? $100 million. More or less? Compared to space technology, this can not be too little. At that time, Musk was a small person in the investment circle, and his financial strength was very limited. By 2015, SpaceX had become the global leader in commercial rocket launches, mastering vertical recovery technology and significantly reducing rocket launch costs. However, SpaceX still lost money. But how did SpaceX survive? Mainly relying on round after round of venture capital, Google, Founders Fund, DFJ, Fidelity Investment Group, etc. are all investors in SpaceX.

The Tesla example is even more obvious. Tesla has been losing money for a long time since its inception, and in the 2008 financial crisis, Tesla ran out of cash, musk borrowed $20 million from SpaceX to the company, and then took $2,000 from venture capitalists to get through the crisis.

Of course, venture capitalists are not stupid, and investors in the early stage may also withdraw in the later financing, and investors in the later stage finally complete the exit in the capital market. In 2010, Tesla went public and then survived with financing from the capital market. Before this round of plunge, Tesla's market value exceeded trillion US dollars. At present, SpaceX has not yet been listed, and the valuation has reached $100 billion. SpaceX completed the world's first commercial manned launch in 2020, along with an ambitious StarLink project behind it. Musk said StarLink "needs to cross the abyss of negative cash flow in the next year or so" and predicts that the cash flow will be good, and they will launch a public listing plan.

Therefore, what supports the dream of entrepreneurs Xinghai is a developed financing market. However, some people may question that the risk of the company after listing shifts to the capital market, and finally the leeks that cut the shareholders. It is not excluded that some projects may be cutting leeks, but we need to correctly understand the logic of it, that is, the capital market reasonably allocates risks. Technical engineers, entrepreneurs, angel investors, venture capitalists, stock market investors, everyone's risk preferences are different, the market reasonably allocates risks, so that technical engineers can engage in research and innovative technology with peace of mind, let entrepreneurs bear certain risks while concentrating on business, the pursuit of operating profits, so that people who can bear high risks, such as venture capitalists, stock market investors to bear risks, while seeking investment returns.

You see, the capital market has arranged all this clearly, allowing professional people to do professional things, and this spontaneous order supports major technological innovations. Conversely, if the capital market is sluggish and the financing policy is unstable, it will discourage venture capital and hinder technological innovation, especially high-risk and high-input major technological innovation. Even if the project fails, the risk is effectively allocated, the technical engineer will not be in debt, and the failed entrepreneur will not become a boss. In this way, society naturally has a greater tolerance for the failure of entrepreneurs and the trial and error of innovation.

Finally, to sum up, the dream of the sea of stars for mankind is built on a prosperous free market.