In business, some people really do reach for the stars. Simon Cook, chief executive of venture capital firm DFJ Esprit, explores what happens when an entrepreneur’s ambition is truly limitless.
In business, some people really do reach for the stars. Simon Cook, CEO of venture capitalist DFJ Esprit, explores what happens when an entrepreneur’s ambition is truly limitless.
One of the most interesting characters in the world of entrepreneurship and especially in the US is the so-called “serial entrepreneur”. These are successful people who, having built a business effectively, reinvest much of their time and money into a new venture or ventures.
Often the bar they set themselves is not determined by external influences, but is simply to exceed the success of their previous company. The US technology industry has many famous examples and this is a key driver of its success.
But is it possible to have too much ambition? We recently held our annual DFJ CEO event in Silicon Valley, with over 200 CEOs from our portfolio companies attending. At dinner, the keynote speaker was Elon Musk, someone who knows no limit to the word ambition.
Born in South Africa, and now one of the richest people in America under the age of 40, Musk sold his first company, Zip2, in 1999 for $300 million (£182 million) to Compaq when he was 28. He then founded X.Com, which became Paypal; that was sold to eBay in 2001 for $1.5 billion. Musk was the largest individual shareholder.
Following that success, the bar was obviously set high and he needed a real challenge. He chose two. Currently, Musk is CEO of the two companies he founded after Paypal, Tesla and SpaceX. Tesla is taking on the world’s automobile industry with mass-market electric cars, while SpaceX is squaring up to NASA and many governments around the world with commercially viable space travel.
Reshaping the future
Tesla’s plan is to drive down the costs of developing the electric drive trains that could power the electric cars we may all be driving in the next decade. Electric cars remain expensive and require subsidies to make them affordable. Tesla has started with a high-end sports car, as this would not be so different in price from its petrol engine competitors. The hope is that this car can be used as a springboard to reduce costs for the electric drive trains and develop more mainstream vehicles.
After the usual bumpy ride of any start-up, Tesla is now achieving great success. The Tesla Roadster is based upon the UK’s own Lotus Elise and the car bodies are built in Norfolk, before being shipped to the US for electric drive train fitting. I understand these cars have become popular among many UK tech entrepreneurs, with a few of them silently zipping around London. The Tesla S four-door saloon will be the next version, available in a year or two, and this is much more mainstream and affordable.
The genesis of SpaceX, a company on a mission to reduce sky-high rocket launch costs by a factor of ten, has its roots in Musk’s belief that space exploration is critical to the survival of the human species. ‘I’ve always thought that space is important to the future of humanity. I think it’s important that we one day become a space-faring nation, and I just didn’t see that happening by itself,’ Musk says. ‘So that’s really why I started SpaceX – to lower the cost of access to space, initially for satellites but eventually for human space travel. And the goal is to one day make space accessible to your average citizen.’
Again, as with many start-ups, the first years were very tricky, and SpaceX’s early launches did not go to plan. ‘While our first three test flights did not reach orbit, it would be inaccurate to call them failures, as each one taught us a lot about the design of the rocket. So even though we had only one success out of four flights, that doesn’t mean our success rate is 25 per cent. In principle, all our future flights should work if we build them the same way.’
Fortunately, the fifth launch was a complete success, and the company has recently landed a £1 billion contract with NASA.
Pushing the boundaries
Sometimes it feels in Europe that we may be a little too embarrassed to express our goals and dreams to each other, and often we feel that our brothers in the US are a little brash in their outright pursuit of the American Dream. Personally, I believe ambition is good (and very different from greed). In the European technology sector there have been hundreds of valuable IPOs and trade sales in the past five years, and some very recently by companies that are true world leaders in their fields. While the serial entrepreneur is often cited as a US phenomenon, there are plenty of serial entrepreneurs emerging in Europe. The UK’s own archetype, Richard Branson, is planning to take on space and electric cars, like Elon Musk. The next decade will be truly exciting as a result.
It is hugely encouraging to witness many of the people behind the successful exits we’ve seen in Europe in recent years re-emerging with newer and bigger plans. This cycle is infectious, often with several companies being spawned from one successful management team, and the cult of entrepreneurship in Europe is growing rapidly as a consequence. We are always on the lookout for such people and enjoy working with them and fostering that next level of ambition, as much as we enjoy helping first-time entrepreneurs succeed.
To infinity and beyond!
For more by Simon Cook, see the links below.