Tesla is alive by the skin of its teeth. So is SpaceX. If things had gone a little bit the other way, both companies would be dead.
Man, this was grim. I thought this was going to turn into a tale of warning for hubris.517
In 2008, SolarCity made a deal with Morgan Stanley, and Morgan Stanley had to renege on the deal because they themselves were running out of money. For a while it looked like all three companies were going to die. I was also going through a divorce. In addition to all that, I was getting dumped on, massively, in the press. That was definitely a low point.518
In the midst of this, I faced one of the most difficult choices of my whole life. Tesla and SpaceX were both on the brink of bankruptcy.
I had maybe $30 million or $40 million left. I had two choices: I could put it all into one company, and the other would definitely die. I could split it between Tesla and SpaceX—but if I split it between the two, they both might die.
When you put your blood, sweat, and tears into creating something, building something important—it’s like a child.
Which one will I let starve to death?
I couldn’t bring myself to do it.
So, I split the money between the two.519
Trying to raise money for a startup electric car company in 2008 while GM was going bankrupt was difficult, to say the least. Eventually a subset of the previous investors came in, which included Antonio Gracias, Steve Jurvetson, and Aaron Price, all whom I hold a debt of gratitude to. They said they would invest as much as I put in, so I put in everything. All the money I had left. Literally everything. I didn’t have a house. I was staying in Jeff Skoll’s spare bedroom.
(Note from Eric: At this point, Steve Jurvetson might interject with this context about entrepreneurial heroism.
“Elon wrote a check for the entire remainder of his personal wealth to save the company, covering payroll during Christmas when no one else would. The economy was in a bad situation. Goldman just failed a private offering. It was the middle of the financial crisis.
Tesla did not look appealing, either. There was no DOE loan. There was no Daimler deal. The car had a negative gross margin. Oh, and the largest shareholder was pissed off, going AWOL. It was ugly.”)520
We closed that round at 6:00 p.m. on Christmas Eve 2008. It was the last hour of the last day possible. We would have bounced payroll two days after Christmas.
Eventually, Daimler executives came to visit. They showed up expecting a PowerPoint. While they were on their way over, we dropped a Roadster motor and battery into a Smart Car and let them drive it. They were shocked when it hit 60 mph in four seconds. Daimler ended up investing $50 million. If Daimler had not invested in Tesla at that time, we would have died.[156]
It’s definitely stressful when death is inches from your face, trying to eat your face off—like right there and the foam is spattering on you.522
For a while all I could think was, “We need to live. How do we live?”523
At both SpaceX and Tesla in 2008, if we’d paid our suppliers on time we would have gone bankrupt immediately.524