The first mistake was the name Zip2. “Terrible name,” Elon said. “We were incredible stupid at the time, that’s the main reason for that name.”363 The problem with the name was that it would be difficult to know how to spell it after someone told you to visit zip2.com. Will you spell it zip2.com, zipto.com, ziptwo.com, or ziptoo.com? It would have failed the “drunk-test.” That test says that you should be able to say the name of your website to someone who’s drunk and the person should know how to spell out the name.
Mainly because he didn’t know anyone in the San Francisco area where Zip2 was founded, Elon was the only employee. But he felt he needed co-workers. The two brothers Elon and Kimbal had one year earlier been on a road trip from Silicon Valley to Philadelphia. During the journey they talked about founding an online medical database.320 Kimbal, who had studied at the Queen’s University in Canada, and now joined an Internet hardware firm as a market analyst and sales manager, decided to join his brother.262 They had both finished school the same year. Elon is one year older but had decided to remain one more year to get a second degree. Also a friend of Elon’s mother, Greg Kouri, was convinced to join Zip2. Kouri worked as a real estate developer in US and Canada.18 Both Kimbal and Kouri joined Elon in the fall of 1995.
Elon didn’t have any experience from the Internet industry or how to build a company. But since the genius boy is a fast learner, he could learn everything he needed to know along the way. No mentors were available, so he gained most knowledge on how to build a company by reading books and through learn by doing.324 “I think you could learn whatever you need to do to start a successful business,” Elon said. “There are examples of successful entrepreneurs who never graduated from high schools, and there are those with PhDs. So I think the important principle is to be dedicated to learning what you need to know.”364 But he added that a degree would speed up the learning process.
Not knowing anything was in retrospect an advantage. “I’ve found that being an outsider helps you to think creatively about improving the way things are done,” Elon said. “When people have been doing things the same way for years, they stop questioning their methods even if they defy common sense.”263
They never expected to make a large sum of money from this Internet venture. Elon wanted to make enough money to support himself since he had only $2000 in the bank account. He also owned a car and a computer.71 From his studies at the university, Elon accumulated a large sum of student loan he now needed to pay back together with interest on the loan.
Because they had so little money, their goal was to make money as early as possible. They decided to target the media industry because they believed the media industry had the money they needed to survive. Zip2 would help the media industry to convert their content in print to online content.
The first thing Zip2 did was to contact the company Navteq, which was founded by another South African immigrant. Navteq produced digital maps used in various navigation applications, such as GPS navigators. Elon persuaded them to let Zip2 put their maps on the Internet. Then he purchased a business directory for a few hundred dollars. Elon linked the business directory to the map with a software he developed himself.71 “I still had my core programming skills, so I was able to write the software,” he said.327
As they continued to develop their product, they branched out to more areas than was covered by the original business idea. Visitors to Zip2 could look up a movie, and then find a restaurant or nightclub in the same neighborhood. The Zip2 software could also give visitors door-to-door driving directions. “It [Zip2] did a bunch of things,” Elon said. “It was Internet publishing, mapping, yellow pages, white pages, calendar. Basically, what my first company really did was to help bring the media companies online.”321
This was the first description on their website:
Every year, businesses in your community spend thousands or even millions of dollars on advertising in order to provide you with information about their products, promotions, and services. This information comes through the mail, the print Yellow Pages, and many other forms you see and hear every day. However, despite all these efforts, you simply don’t always find the information you want when you want it… and here’s where the Internet can help.
The Internet not only allows you to get the depth of information you need about a business faster and more cost-effectively than any other source, it also allows you to go a few steps further. Through the Internet, you have the ability to communicate with that business once you’ve found it; the ability to get a map showing you where that business is relative to other businesses; the ability to look for businesses by proximity to your home; the ability to get door-to-door directions to that business, and many more. Zip2 not only brings you all of these benefits, but it is focused on continuing to provide new and innovative features in the years to come.262
The 1996 version of the Zip2 website featured a blue logo, which consisted of a running person where the legs form a lightning. You could search on the site, and the main heading said, “Search accurately for over 16 million businesses in the USA…” Zip2’s Management Team page revealed that, “Elon published his first computer program at age 12 and four years later achieved the highest possible grade in the IBM aptitude test for engineers.”262
Zip2 rented an office in Mountain View, California. The monthly rent was about $450, and it had a leaky roof. “It was just the nastiest place you can imagine,” Elon said. “It was way cheaper than a garage. Garages are expensive.” They didn’t have a home to live in because the apartment was more expensive compared with the office, so they got rid of the apartment. “When you are first starting out you really need to make your burn-rate ridiculously tiny,” Elon said. “Don’t spend more than you are sure you have.”436
They tried to repair the roof, and during the night they slept in the office on futon sofas, which is a Japanese type of furniture that easily transforms from bed to sofa. The futons were placed in the meeting room. To shower, they went to the El Camino YMCA. The facilities included a gym where they exercised, so they were all in good shape. Regular exercises were a good idea since they frequently ate at the low-cost fast-food restaurants Jack in the Box and White Castle.4,71,258,264
One floor below Zip2’s windowless office, a smaller Internet service provider had their own office. To get a fast Internet connection to Zip2’s office, they drilled a hole through the floor and connected the cables. For this connection, they needed to pay $100 per month, and it was a large improvement for the company. They had previously used Elon’s own computer and a dial-up modem to run their website. “I’d program it in the night and turn the server on during the day,” Elon said.71
All these smaller savings meant the company had low expenses, and they had some revenues. It didn’t take long before Zip2 had a positive cash flow – a fact they could brag about when they searched for outside investors. But the life of a Zip2 employee was still far from luxurious. They had so little money that Elon and Kimbal’s mother Maye had to pay for colored copies of their business presentation they needed when they presented their company in front of outside investors.417
In 1996, the fish took the bait when the venture capitalist firm, Mohr Davidow Ventures, invested $3.5 million for less than 50 percent of the company. Elon thought they were crazy who had given him all this money. “Do they have any idea what they’re doing giving me all this money?” he asked. “I was terrified of blowing that money.” In total, Zip2 would get $38 million more in funding.71,265