When you have a big technology change, it tends to come from new companies.481
A lot of entrepreneurial talent and financing goes to the internet. Other sectors like automotive, solar, and space don’t see new entrants. Not a lot of entrepreneurs go into those areas, and not a lot of capital goes into those startups.482
This is a problem because innovation tends to come from new entrants to an industry. This is Schumpeter’s idea of creative destruction. In an oligopoly, no one is forced to innovate.483 New entrants drive innovation more than anything, which is why I have devoted my efforts to building new companies in those industries.484
These industries require quite a bit of capital to get going. My proceeds from PayPal after tax were about $180 million. I thought I would allocate half to SpaceX, Tesla, and SolarCity. I thought that should be fine. I’d have $90 million left, and that’s…a lot, you know?485
But things cost more and took longer than I thought.486 Each one ended up costing double what I expected. I thought SpaceX would need $50 million. Tesla, I thought, would need $25 million, maybe $30 million. SolarCity…actually went really well.487
I ended up putting $10 million into Solar City, $70 million into Tesla, and $100 million into SpaceX. I literally had to borrow money for rent. It was a close call.488