Despite SpaceX and Tesla being successful tech companies, Elon Musk admits that both are just alive "by the skin of their teeth." At the recent South by South West (SXSW) conference, Musk told the audience that both companies almost went bankrupt in 2008.
"I gave both SpaceX and Tesla a probability of less than 10% likely to succeed," he said. "At the beginning in 2002, I wouldn't even let my own friends invest as I didn't want to lose their money."
According to Musk, when eBay acquired Paypal in 2002, he made $180 million. He put half of his Paypal fortune, roughly $90 million, into his two companies but the costs keep mounting up.
In 2008, SpaceX saw its third attempt to launch the Falcon 1 fail. The year also saw Tesla come close to bankruptcy two days before Christmas. By this point, Musk only had about $40 million left in his war chest.
This was when he was faced with his most difficult decision yet. Either put all his capital and effort into one company or continue to work on both of them only to watch them both wither. He chose the latter option and against all odds managed to keep both companies afloat.
"I could put it all into one company, and the other company would definitely die, or if I split it into both SpaceX and Tesla, then they both might die," he said. "And when you put your energy into building something, it's your baby, so I couldn't choose. I put the money into both, and thank goodness they both came through."
Miraculous as it may seem, Musk did not forget how close both of his babies were to bankruptcy. To this day, he still handles the technical aspect of both companies, spending 80-90 percent of his time in engineering in design. He leaves the business side of things to other executives.
But he's not out of the woods yet as SpaceX is just getting some traction while Tesla has yet to reach profitability. Until both companies can sustain themselves, Musk will have to keep his nose to the grindstone for the foreseeable future.