📑 Table of Contents

First, here’s the overall trajectory of Elon Musk’s ventures so far. 

Right before starting his internet venture Zip2, Elon Musk enrolled in a Ph.D. program—materials science with a focus on energy—but dropped out almost immediately to launch his first company. (He did not earn a master’s degree. In the U.S., you can pursue a Ph.D. without a master’s, and Korea’s integrated M.S./Ph.D. track is similarly structured.) 

I see this as the very first starting point for understanding how Musk broke the cliché that “physics is a field where you starve.” If you major in physics and truly care about it, the typical path is a master’s, then a Ph.D., then a research post or a faculty position—an extremely traditional “specialize in one track only” approach. It’s a bit blunt, but that “typical path” is often chosen by those who prefer to settle into a known route. Not “lazy” by any means (calling professors lazy would be absurd), but perhaps less inventive in trailblazing. You build a personal box of “this is what I do,” and you think and breathe only inside that box. 

Classical music is similar: arts middle school → arts high school → conservatory → overseas grad school → return to teach → eventually become a professor. If you try to follow that route, classical music also too easily becomes a field where it’s hard to make a living. Musk yanked the wheel while standing at the Ph.D. starting line—yet the new direction wasn’t divorced from physics. Few fields scream “energy” more than “launch vehicles” and “electric cars.” 

Zip2 and the Rise of the Internet

Zip2 was basically a service like today’s Google Maps. In the mid-90s, the internet was just taking off, and people still consumed most information on paper. Zip2 pulled that information online—showing where stores were on a map, how to get there, phone numbers, and what services they offered—the kind of info that’s still useful in 2025. 

You can get a rough feel for what he built back then here.

Why I Still Wouldn’t Have Succeeded with a Zip2-like Business

Here’s a thought experiment: if I, in 2025 with the same brain, went back to 1995 to do Zip2, where would I have gotten stuck? 

1. Where would I get map data?

2. How would I build the servers?

3. How would I obtain local business data?

4. How would I sell my service to enterprises? 

I would have hesitated at these hurdles. To acquire data and to stand up servers you need capital (there were no mature cloud services back then—you needed physical hardware). To get capital you need investors. To get investors you need a clear vision. To realize that vision you need technical ability. And for that, you need interest and a good eye. In real life, these pieces often get out of order—people burn out doing work they’re not excited about, or they pour in money but miss the market and get left behind…

Initial Funding 

Elon Musk started the company with $15,000 from the co-founders (Musk himself put in $2,000) plus help from small angel investors (likely friends and Stanford connections). That money went to renting a small office in Palo Alto (the heart of Silicon Valley), buying servers and basic equipment, and building the first system by combining free Navteq map data with a local business database. (He later became CTO, but in the very beginning Musk himself was hands-on with the coding.)

That local business data wasn’t free—Zip2 appears to have purchased databases from Yellow Pages and local Chambers of Commerce, and also gathered data manually by pounding the pavement. 

After the very first phase, about $28,000 more came from his father, Errol Musk (per interviews). Elon initially denied it—perhaps due to their rocky relationship—but later acknowledged part of it. That money likely went into beefing up servers and paying for commercial map/data licenses, stabilizing the service. During this stage, he shored up the technical foundation. Big vision, but few employees and little revenue.

Growth Capital 

With the core tech—maps plus business listings—up and running, in 1996 Zip2 raised $3 million from the VC firm Mohr Davidow Ventures. That capital funded a pivot from local, small-merchant sales to a B2B strategy selling back-end software to newspapers nationwide, along with hiring an external CEO, strengthening sales and marketing, and pursuing major media contracts.

From this point, Zip2 partnered with major U.S. publishers like The New York Times, Knight Ridder, and Hearst to build online city guides, growing to about 160 newspaper partnerships by 1998. As deal sizes grew, they reinvested part of the revenue into expanding the service and infrastructure, accelerating growth.

Final Stage

Finally, in 1999, Compaq Computer acquired Zip2 for $305 million, with Elon Musk taking home about $22 million and Kimbal Musk about $15 million. The early angel money and VC funding drove expansion and a strategic pivot, culminating in a successful exit—Zip2’s textbook growth arc.

To be continued in the next installment…