Elon Musk is no stranger to sacrificing sleep. In fact, burning the midnight oil was a regular part of his life a few decades ago. Even in the present, Musk doesn’t mind spending the night at his Tesla office to meet deadlines. We’ve seen him display this diehard attitude since he launched Zip2, his first company. This article is dedicated to studying the history of Elon Musk’s first company.

Zip2 is the first company Musk launched when he decided to venture into the world of innovators and entrepreneurs.He later sold it in 1999 for about $307 million. While this sale price would be a point of pride for many entrepreneurs, this isn’t true for Musk. If anything, the memory of this experience still brings up lots of disappointment and frustration.

Despite this frustration, Musk is one of the few people who not only rose from failure but also turned into a millionaire after said failure. From the sale of Zip2 in the 90s, Musk’s share was $22 million. At the time, he was below 30 years old.

While many would get distracted by this kind of success, Musk knew he had so much more to achieve. In fact, he was far from achieving his goal of exploring the full potential of the internet.

Like any startup, Zip2 had its fair share of drawbacks. While Musk might have done many wrong things along the way, he was not wrong about the timing. In addition, the place of launch meant his company had a brighter future ahead. 1995 at Silicon Valley market the birth of consumer internet.

Unveiling Zip2

After graduating from Pennsylvania University and earning two degrees in economics and physics, Musk moved to Francisco. The plan was to enroll at Stanford University and pursue a Doctor of Philosophy in Material Science. However, he took a different path a mere two days into joining the university.

Netscape was already online with a valuation of almost $3 billion USD. Musk knew about the great potential that the internet had. What’s more, he could see that all the companies investing in this sector were about to reap massive returns. It’s no surprise that Elon Musk wanted a slice of the pie. This is exactly why he dropped out of Stanford and cofounded his first digital company.

As the story goes, Musk didn’t have any idea what type of online company he should create. All he knew was that it should be an online venture. He had spent the summer before that doing an internship in one of the tech companies in Silicon Valley. That’s when he recalled a messy pitch from a sales representative of YellowPages. It was a pitch about online listing for printed books.

While the rep was just doing his job, Musk recognized an opportunity. He recognized the ease of using web directories online. This would bring people great value online. Drawing on this idea, he partnered with Kimbal, his brother to find ways to utilize this opportunity. Kimbal joined Musk in California as a co-founder of the business venture.

Early beginnings of Elon Musk

The first step in the venture was buying a local business directory. Elon Musk did that with a few hundred dollars. Thereafter, he needed access to a digital mapping program. He negotiated with a GPS company and he was granted that access. The company was known as Navteq.

With these things in place, starting this venture was straightforward. He started with coding and thereafter started working on the databases. As he liked to say, this platform needed to help people to not only locate the nearest pizza place but also show them how to get there.

Nowadays, we can appreciate the availability of search services. However, during that time, convincing people about the merits of this idea wasn’t easy. Only some of the businesses they approached could understand the benefit of their venture.

Additionally, high-profile venture capitalists couldn’t grasp the concept fast enough. In 1995, the number of internet users was small. As such, nobody was generating profit from it, as Musk said during an interview. If anything, people thought of the internet as a fad.

Raising funding by proof of concept was becoming impossible for Musk and Kimbal. As such, they had to fund the venture with money from their own pockets. And they didn’t have much of it. During the launch of Zip2, Musk could only afford to invest $2000. This was the only cash he had in his account. Kimbal, on the other hand, had more. He was able to generate a sizeable investment from a franchise that he had sold a short while before.

Even so, most of their capital came from a loan they got from their father. They received $28,000, which was enough to launch their startup.

Elon Musk’s professional wins and personal sacrifices

Due to their limited resources, Musk and his brother came up with a plan. This was a strategic plan that involved minimal spending. As Musk said during a talk he gave at Wharton Business School, a san entrepreneur, you should always aim to spend as little as you can. Moreover, you should not spend beyond what you can afford. Applying this advice requires a level of personal sacrifice.

Besides personal sacrifices, they still had to minimize business spending. Their operations were extremely lean. For instance, they had only one computer, which they shared. At night, Musk would program it, and during the day, they would switch on the server. Initially, the only internet connection within their means was a dial-up modem. It was cheap and affordable for their startup.

Ultimately, they were able to source it for an ISP startup after convincing them. The startup was right below them. Through a drill dug by Musk, they were able to source internet through a cable from the office below.

At the time, Musk and Kimbal could not afford rent. As a result, they opted to sleep at the office. Whenever they needed to shower, they would stop by the YMCA. It was several blocks from their office. Despite these hardships, in a 2003 speech to an audience at Stanford, Musk claimed that he was in the best shape.

After setting up the office, Musk went on to hire sales reps on commission. This was the strategic means to reach prospects during that time. They would walk door to door from shopping districts to malls selling sponsored listings.

Gradually, the money started flowing in. The benefit of personal and business sacrifices meant that any size of cash flowing in created a huge impact. The business was experiencing positive cash flow. To the investors, this meant that Musk’s venture was a good deal.

How marketing was essential

The hiring of a sales rep by Elon Musk is an indication that marketing is vital to businesses. It’s even more relevant to startups since they lack a market base to leverage. Through marketing, your business will earn the attention of potential investors. Therefore, do not underestimate this element of running a business if you want to succeed.

Musk and Kimbal’s effort and early sales paid off. They captured the attention of Silicon Valley venture capitalists. To impress the investors, he built a striking casement for their computers. This transformed its look into that of a mini-supercomputer. While the charm worked, he caught the eye of more than one investor. They saw an innovator with a do-or-die approach, a trait that impressed them.

Getting an investor

Finally, the gamble Musk had taken started paying off. They were able to bring on board Mohr Davidow Ventures, a prospective investor. The company invested $3 million into Zip2. However, before that, Musk had to let go of a majority of his shares. Furthermore, he had to allow a seasoned technologist, Rich Sorkin to take over the operation control post. As a result, Musk dropped back the role of the chief technology officer.

Of course, he didn’t enjoy watching someone else taking control of his business. Nevertheless, since the need for funds was extremely high, he accepted the deal. Under the management of Rich Sorkin, Zip2 expanded into the national market. Instead of targeting local clients like auto dealerships and flower shops, they were now targeting national businesses like newspaper companies. Through their platform, these companies could create local directories for their clients.

Some examples of Zip2’s clients at this stage were New York Times, Knight-Ridder, and Chicago Tribune. At this time, media companies had money. Therefore, investing in companies like Zip2 was paramount. This would allow them to keep up with the changing times. And most of them grew faster thanks to Zip2.

With more money flowing in, Zip2 could afford refined software engineers. They would even poach the top experts in Silicon Valley. While Elon Musk was gifted in programming and he was self-taught. This was reflected in his coding skills.

As a result, the new programmers had to start from scratch. A significant part of the software needed a complete rewrite to boost efficiency. Since he had taught himself to code, chunking was not part of his skills. As such, what he created was a tangle of codes that would make it impossible to fix issues in the event that something went wrong.

Problems with the team under Elon Musk

Must wasn’t a fan of changes. He wasn’t great at repaying favors either. When staff left the office at the end of the day, he would reprogram the entire software. He also had a habit of micromanaging. Beyond that, he would often criticize the team rudely. As such, many people found it hard to work with Musk.

Growing up, Musk had to deal with bullies often and his blunt approach to problem-solving carried over into his professional life. In spite of his lack of affection for the people he worked with, he gained a certain level of respect.

However, his lack of social delicacy meant he had a poor working relationship with people in Zip2. More specifically, he was not on good terms with Sorkin. In fact, Musk accused Sorkin of poor management of the company.

Earning money from media companies had turned ZIP2 into a profitable venture. However, according to Musk, Sorkin’s strategy was compromising the business potential to reach clients directly. They were not focusing on his vision of an exciting and impactful internet. Instead, they were assisting the old guard against encroachment by the internet.

In 1998, Sorkin was going for a merger with CitySearch, which had more reach nationally. While Musk was supportive of the idea at first, he later voted against it. He even decided to oust Sorkin to take over the company’s leadership position. Initially, the plan was going well, and the board dropped Sorkin. However, Musk didn’t get the CEO position as the board sold Zip2 to Compaq. Thereafter, Musk took his share and considered the next venture

Defining continuous success and failure

Success was not the goal of any of Musk’s ventures. This includes his first company, Zip2. Even so, like other entrepreneurs in Silicon Valley, he was willing to take risks as the ultimate reward. In fact, he is famously known for saying “A failure is an option here. If things are not failing, you are not innovating enough.”

However, in 2011, Elon Musk revealed that failure isn’t sweet. Zip2 definitely revealed the uglier side of failure and it haunts him to this day


Zip2’s success would be a big point of pride for anyone but Elon Musk. As far as he could see, the project didn’t attain the goal he had in mind. Instead, it only turned him into a millionaire. Beyond that, he mentions that he has other regrets about that period in his life. While he doesn’t specify exactly what they are, he talks about poor communication and leadership skills in his nook “Vance”.

When we put all of that aside, we can safely consider his first company a success. His willingness to take risks paid off. This is a point of pride for him.

What startups can learn

From Musk’s success story with his first venture, you can tell that taking risks is necessary sometimes. However, do not take these risks blindly. Even with Zip2, Musk had anticipated success in the internet business. That’s one of the major reasons for dropping out of Stanford to launch his first venture was a worthwhile risk for him.

How Pressfarm can help launch your startup into success

Launching a startup is just the start of the journey you need to take to make it successful. Another key aspect of that journey is marketing. During the Zip2 launch, the internet was still new. Therefore there were hardly any internet users. As such, sales reps on the commission were resourceful for marketing.

Today, there are experts who can present you with a more refined approach in the form of PR services.  For example, the experts at Pressfarm can build a personalized PR campaign to help you share your brand story with the world.

With a professional press release, some engaging guest posts, and an eye-catching media kit, you can capture attention, earn credibility, and draw clients in. Additionally, with your custom media lists from Pressfarm’s account executive, you can connect with respected media professionals who can help you reach a wider audience.

One of Pressfarm’s PR packages could be exactly what you need as you launch your startup.