Elon Musk poured so much of his fortune into X.com that he was left with just $4 million worldwide.
This wasn’t the 21st century X.com. That was in 1999, at the height of the dot-com boom. Musk had just sold his first startup, a city guide website called Zip2 – that PC maker Compaq wanted for its search engine. Musk made $22 million from the deal. He didn’t play it safe with his winnings. The 28-year-old South African immigrant spent $18 million to develop a less than modest idea. X.com should be an online hub for all kinds of financial transactions in the world.
What did “X” have to do with finances? When people think of X, Musk pointed out, they think of treasure. They think, “X marks the spot.” Musk never caved to that belief, even when presented with ample evidence of what most people do Really Keep this in mind when you see that “X.com” is… porn. His blind love led to a boardroom coup that ousted him as CEO and eventually supplanted the X name—replaced by PayPal.
Twitter’s bird logo is dead and has been replaced with an X
If, like most of us, you’re still puzzling over Musk’s narrow-minded decision to wipe the Twitter name (and his…). Brand identity worth billions of dollars) by scrawling a big X over it, you start with the basic history of the PayPal mafia. There are surprising parallels between this era, which has now been documented in several bestsellers, and this one. It’s all there: the disdain for beloved brands; the impulsive decisions that angered even allies; the big vision in the style of an “everything app”; And perhaps most telling is how investors swooned every time Musk talked about it.
Musk could be counting on the last part now: a desperate attempt to rouse curiosity about new investments to lift the company formerly known as Twitter out of its deepening financial hole. Or the name change could be the result of a quarter-century of stewing over the loss of X.com, thanks to Musk redeemed by PayPal for “sentimental” reasons in 2017. Anyway, there’s reason to believe the sting of this cautionary tale of hubris is about to strike a second time.
Muskian History X
To be fair to Musk, he wasn’t a fool at the time. The latest bestseller that tells the story is Jimmy Soni’s The Founders: The story of PayPal and the entrepreneurs who shaped Silicon ValleyHe doesn’t shy away from Musk’s shortcomings (unlike Elon Musk, the 2017 biography that leans toward hagiography). But myself The Founders paints a picture of Musk as a prolific 20-year-old whose fascination with finance provided important insight into the chaotic process that led to the birth of PayPal.
For example, Musk early took the lead in the online payments war between X.com and its rival, a startup called Confinity, which operated out of the same Palo Alto offices.
Not only was Musk quicker to see the value of being able to pay by email (rather than porting it between Palm Pilots, the concept initially espoused by Confinity co-founder Peter Thiel), but he also paid X.com Users get $20 upon signup while Thiel pays $10. Because of this competition, the companies had to merge under the name X.com in 2000; Musk would be the largest shareholder of the combined company.
Musk had it all at this point. Especially after X.com’s first, lesser-known, boardroom coup. This is where Musk ousted his handpicked CEO, Intuit veteran Bill Harris, after Harris did all the hard merger work. Musk assumed the CEO role himself. But, significantly, he didn’t realize that the most valuable thing he owned was a name. The name for Confinity’s payment app, the name eBay sellers had come to love: PayPal.
The Founders goes into detail about the genesis of the PayPal name, and is worth dwelling on. Thiel’s team hired a professional naming company that reviewed hundreds of options, checked if they would infringe trademarks, and created a shortlist that included MoMo, Cachet, and PayPal. It took the team a while to come up with the latter, but once they realized it could be a verb — “just pay it to me” — they never looked back.
Elon Musk made Tesla overstate its battery range. As a result, Tesla canceled corresponding service appointments.
While X.com had 200,000 users shortly after its launch, none of those users said, “X just did it to me.” Worse, the pornographic-sounding name had attracted what one early X.com employee said “so many horrible, horrible e-mails”.
Musk didn’t care. It wasn’t just the sound (and the coolness of his personal touch) that fascinated him [email protected] email address), he thought “PayPal” was too restrictive. “It would be like Apple calling itself Mac,” Musk told Jimmy Soni, author of The Founders. X would change the world of finance, so it had to come first.
He decreed that the merged company’s payment product should be called X-PayPal. According to Max Chafkin, author of the Peter Thiel biography The adversaryMusk “asked the marketing department to revise the PayPal logo to include an X” and began “doing away with the PayPal name altogether.”
Team Thiel fought hard against “It’s hard to refute when people keep saying, almost in the same words: ‘I just wouldn’t trust that. That sounds really mysterious.’”
But Musk was persistent. Then as now, he solved the trust problem by ignoring it. Then, as now, he insisted that engineers rewrite the codebase his way and seemed unaware of the amount of money the company wasted. This all served a higher vision of X, which he dubbed to eager investors “the Amazon of financial services.”
It all led to the second coup in the company’s boardroom, in which Thiel called a meeting to oust his old enemy while Musk was on a belated honeymoon with his first wife Justine. That was cold — but Musk’s instinct was to cover it up, save face, and continue touting X.com as a company name even if he couldn’t win on the PayPal product question.
Check out this CNN report from 2001 — in which Musk makes it seem like it was his decision to resign, dubbing the company “X.com, now PayPal.”
Stop trying to make X possible
Why Musk Still Thinks He Can Make X Happen, Through He replaces another cult brand a quarter of a century later remains a mystery. The world has evolved. Online payment networks Apple Pay and Google Pay, not to mention Square, are all most consumers will ever need.
The “everything app” concept embodied by WeChat has not caught on outside of China; from 2019 Mark Zuckerberg tried to replicate WeChat via Facebook Messengerwhich has a far larger audience than Twitter ever had, and failed.
Musk hasn’t revealed any details about the upcoming X service and hasn’t provided any answers to the WeChat question. When approached by Twitter staff in November about “fundamental differences” between Twitter and WeChat, according to the New York TimesMusk said the questioners didn’t know what they were talking about and moved on.
But it seems more likely that Musk, surrounded by a bubble of yes-men like X.com veteran David Sacks, doesn’t have as tight a grip on gaps in the tech market as he thinks. Also, once again he doesn’t understand how much distrust he has sown among his user base.
But if Musk’s stubborn past is any indication, it will edge him out.
When this latest twist in the X.com saga leaves the billionaire once again with just $4 million left, the irony is hard to put into words. In this case maybe Musk’s belief that we are all living in a simulation will deserve another look.