Bocconi University - Business History Cases

Titans in 21st century: Jeff Bezos and Elon Musk

ELON MUSK AND JEFF BEZOS: A RIVALRY OF TITANS?

Martino Lorenzo Fagnani and Valeria Giacomin

1. Corporate Titans in 21st Century

As of December 2021, Elon Musk was recognized as the richest man in the world. In fact,

of which are two specific companies: Tesla, Inc. and SpaceX Corp. The former was an electric
vehicles and clean energy venture, which delivered 936,000 cars in 2021, an 87% increase from
2020. The latter was specialized in aerospace manufacturing and space transport /
communication, and its value had been estimated at $100
value surpassed $1 trillion for the first time thanks to a 100,000-cars order by Hertz (a $4-billion
deal), making the company virtually worth more than every other competitor carmaker
combined.1 By doing so, Tesla joined an exclusive club of companies that had already reached the
2

In December 2021, Time

is our avatar of infinite possibility, our usher to the remade world, where shop-worn practices are
3

f his controversial statements,

and the legal issues associated with his business. For example, his megalomania and hunger for
eternal glory, his aggressive and petulant nature with associates, and the instability of his love life.
Not to mention that his companies have faced allegations of sexual harassment and poor working
conditions; they also had to paid fines for regulatory violations. Moreover, in October 2021, a
federal jury ordered Tesla to pay $137 million to a Black employee who accused Musk of ignoring
racial abuse.4

Behind Musk, ranking as the richest in the world between 2019 and 2020, there was Jeff Bezos,

biggest corporations in the world by market capitalization, emerged first as online marketplace for
books and then grew into the largest internet company, expanding into e-commerce, logistics,
cloud computing, digital streaming, and artificial intelligence.
Billionaires Index, Jeff Bezos total assets amounted to $202 billion in mid-2020 thanks mainly to
his Amazon.com, Inc., which included a number of services and subsidiary companies spanning

Amazon earnings for 2022 are expected to be five times those of Tesla, which is forecast to earn
5

titans. More recently the competition between Musk and Bezos has accelerated to go literally into
orbit. This is because both companies are heavily investing in the emerging business of space

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Titans in 21st century: Jeff Bezos and Elon Musk
travel. Since 2000 Bezos founded a new venture specializing into aerospace manufacturing. As The
Washington Post
publisher6 7

Their respective corporations have been working for

years on ambitious goals, such as private space travelling, partially or fully reusable rockets,
projects for new space stations, and even the colonization of satellites and planets to remove
heavy industry from the Earth. In this regard, the years 2020 and 2021 have recorded a series of
notable successes of the two companies, which we will have the opportunity to analyze in detail in
the following pages.

2. Jeff Bezos and the rise of the Amazon empire

Jeff Bezos was born in Albuquerque, New Mexico, in 1964. His father Ted and his mother Jacklyn
were respectively 18 and 17 years old at the time. Born Jorgensen, Jeff changed his surname after
who had emigrated from Cuba to the United States alone at
the age of 16. Mike had been sent by
rise to power. After graduating in engineering at the University of Albuquerque, Mike met the
recent divorcee Jacklyn in 1968, shortly after the two married, and he adopted Jeff. The family
moved to Houston, Texas, where Mike was hired at the former oil company Exxon Corp. After his

Princeton in 1986, then worked for the information technology sector in communications and
banking. First, he found employment at the startup Fitel, a company that was trying to build a
worldwide telecommunications network for trading firms; then he spent nearly two years at
Bankers Trust, where he sold software tools to the pension-fund clients; and finally, he worked for
the hedge fund D. E. Shaw.8

In 1994 Bezos quit his job at D. E. Shaw to launch the online bookstore Cadabra.com (in his garage
in Seattle), which he renamed Amazon.com referring both to the first letter of the alphabet and

some research, he realized that books would be the most logical product initially to sell online.
redibly unusual in one respect, that is that there are more
items in the book category than there are items in any other category by far. Music is number two
there are about 200,000 active music CDs at any given time. But in the book space there are
over 3 million different books worldwide active in print at any given time across all languages,
more than 1.5 million in English alone. So, when you have that many items you can literally build a
9 Actually, Cadabra/Amazon was not the first

company to do so: there were other bookstores already selling online since the early 1990s, but

focusing on technical-oriented titles. Amazon distinguished itself in terms of vision as Bezos aimed
the massive growth
potential of the Internet and understood that a successful company needed to grow fast. Indeed,

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Titans in 21st century: Jeff Bezos and Elon Musk
the book catalog which started off very large further expanded since 1998 to include other
types of items, such as DVDs, video games, household appliances, etc. In 1997 Amazon entered
the stock market, given that its revenues rose from $15.7 million in 1996 to $610 million 1998.10

During the 2000s Bezos expanded and further articulated the Amazon business. In 2005 he started
Amazon Prime, a premium delivery service for Amazon users with many perks such as free
delivery of many items, free access to video and music, libraries, and online-storage space in
.11 In 2006 it was the turn

distribution and logistics capacity to the widest range of products and customers possible, also
thinking about new means of selling.12

Then, in 2007 Amazon entered hardware through the introduction of the Kindle, an e-book reader
that ensured access to e-books purchased on Amazon without connecting a cable to a computer

was determined to keep the Kindle a single-purpose device something where you could lose
13
yourself in a book, rather than a multipurpo
Nonetheless, in 2011 Kindle evolved into Kindle Fire, a low-cost tablet thought as potential
alternative to iPad.14

Starting in 2008, Amazon started entering film production too, but only in 2010 Bezos established
Amazon Studios, a film and TV series producer, distributor, and streaming service. Amazon Studios

entertainment industry, following the growth of platforms such Netflix since the 1990s. Following
a similar logic in the film industry, Amazon announced in May 2021 its planned acquisition of the
Metro-Goldwyn-Mayer Studios for $8.45 billion. 15

The birth of Amazon Studios represented a further milestone

the 2010s, when he led the company to further expansion. In 2014 Amazon launched Echo, its
brand of voice-activated speakers, and in 2016 Amazon Air (at the time Amazon Prime Air), an
airline cargo that transported only Amazon orders. In 2017 Amazon acquired Whole Foods Market
for $13.7 billion, an US supermarket chain, leader in organic food and fresh products. In 2018,

with no human staff, relying almost entirely on cutting-edge AI technology. In the same year,
Amazon acquired the online pharmacy PillPack. In July 2021, Bezos left the position of Amazon
CEO to his trusted collaborator Andy Jassy formerly CEO of Amazon Web Services and became
executive president.16

Through the years, then, Amazon grew to be one of the main websites in the world, being at the
17. It

started with the book delivery business and then transformed into a champion in retail and

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Titans in 21st century: Jeff Bezos and Elon Musk
logistics, now even reaching cloud storage and streaming.18
cap grew from $88.1 billion to $1.7 trillion, its stock growing 1,588%. 19

Amazon was heavily c

20
These aspects were
present before the pandemic and they worsened starting from 2020 with the increasing amount of
online shopping and home deliveries, which meant greater pressure on warehouse workers. As a
solution, at least in the US, Amazon launched WorkingWell,
comprehensive program providing employees with physical and mental activities, wellness
exercises and healthy eating support that are scientifically proven to help them recharge and
ve by Amazon to invest over $300 million into
21
safety projects in 2021 for its employees.

the entrepreneur started focusing on several other ventures and philanthropic activities that well

Bloomberg, Bezos was an early investor in Google, although very few details are known about his
involvement, as for instance whether he kept his stake or sold it when Google went public in 2004.
Bezos Expeditions is the investment family firm through which Bezos has been operating outside
its main brand, investing in more than 100 companies such as Twitter, Airbnb and Uber since
2006. Through this vehicle Bezos also funded several non-profit projects for charitable
organizations, such as the Bezos Center for Innovation at the Seattle Museum of History &
Industry ($10 million) and the Bezos Center for Neural Circuit Dynamics at the Princeton
Neuroscience Institute ($15 million). 22

reported by a Time

23In addition, he did not sign The Giving Pledge list, which
gathers the wealthiest individuals and families in the world to pledge most of their fortune to
charitable causes. Brad Smith, president of the organization Candid, which monitors the charitable
sector, criticized Bezos comparing him to past philanthropists like Rockefeller and Carnegie, who
after building fortunes at a mature age retired and dedicated themselves to real philanthropy. 24

-wife MacKenzie Scott is instead heavily involved in philanthropy. After twenty-five

years of marriage to Bezos, she divorced him in 2019 and became the richest woman in the world
thanks to her own 4% stake in Amazon. In the following years, her fortune increased thanks to

organizations, spanning from racial equity to LGBTQ and gender equity, from public health to
climate change. She has been prized for her totally different approach to philanthropy compared
to her ex-husband, focusing on smaller-scale NGOs and impact-driven projects.25

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Titans in 21st century: Jeff Bezos and Elon Musk
Bezos also owns The Washington Post, which he acquired together with the respective
website and other magazines of the same group for $250 million in 2013 through his company
Nash Holdings LLC. The Post was in disarray and Donald Graham, member of the family who had
been publishing the newspaper since the early 1930s, invited Bezos whose business talent he
admired buy and save it. Bezos led a complete turnaround of the newspaper, financing and
directing its transition to digital, and increasing its stuff since the acquisition. Subscriptions soon
began to grow again and in early 2017 the Post crossed the 1 million-mark for paid digital-only
subscribers.26

-orbital
spaceflight services company featuring the blue feather logo. For Bezos, Blue Origin represents the
key to keep expanding his business beyond planet Earth. Bezos has repeatedly expressed his

himself to the project since 2000, when he founded Blue Origin as a startup for human space
flights. The project remained secret until 2006, when it became public due to a massive purchase
of land in Texas destined to the building of a launch facility.27

What is -term goal with Blue Origin? In addition to experimenting with flying vehicles,
Bezos is aiming for a perennial human settlement on the Moon, with plans to provide
transportation for facilities and personnel by 2025. At that point, the Moon would become the site
of all the heavy and polluting industry that is now on Earth. 28

anticipated launch in summer 2021, the project is promising. Indeed, in July 2021 the New
Shephard rocket made its first sub-orbital launch with four private passengers, including Bezos
himself and his brother Mark. The flight lasted 10 minutes and the New Shepard reached an
altitude of 106 km letting the four passengers experience the sensation of microgravity for three
minutes. Then the capsule with the passengers returned to Earth, followed by the booster. The
capsule and booster are designed to be reused and the New Shepard was human-unmanned,
controlled by the on-board computer. NASA has shown great interest in the whole enterprise.29

3. Elon Musk: serial entrepreneurship revolutionizing mobility

articulated in a different way and rests on a thornier personal profile than that of Bezos, as we
have seen reported by Time. For instance, here are three of the adjectives used by former

Kimbal add

30

Musk was born in Pretoria, South Africa in 1971. His father Errol was an electromechanical
engineer and property developer. In the mid-1980s Errol purchased a stake in a Zambian emerald

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Titans in 21st century: Jeff Bezos and Elon Musk
mine, a decision that earned him a supply of emeralds for the next six years and excellent incomes
that helped make his already wealthy family one of the richest in Pretoria. 31 Unlike Bezos, Musk
was thus exposed from early age to a context of entrepreneurship and luxury.

Nonetheless, Musk described his own youth as rather tormented, another element that deviates
from the biography of Bezos. His parents divorced in 1980 and Musk decided to live with his
father, but he developed a bad relationship with him culminating in estrangement. As a teenager,

computing and video games. For instance, after learning computer programming from a manual,
when he was twelve, he created the code for a video game and sold it to a specialized magazine.
After primary and secondary education in Pretoria, in 1989 he moved to North America to attend
university: first to Ontario, then to the University of Pennsylvania, where in 1997 he earned a

materials science at Stanford University, but did not complete it. While in California, he integrated
his university career with short internships in Silicon Valley startups specializing in energy storage
and video games. It was a period of intense activity for him, but also of heavy economic
difficulties.32

In the same years, Musk realized that the Internet boom could be his fortune and threw himself
into a series of ventures based on the nascent digital economy. In 1995, he co-founded the web
software company Zip2, through which he developed and distributed an Internet city guide. Zip2
was very successful, secured contracts with major newspapers and in 1999 was bought by the
information technology company Compaq for $307 million. Musk obtained $22 million for his 7%
share: this was the basis that helped him launch his following entrepreneurial career.33

In 1999, Musk co-founded X.com, an online financial services and e-mail payment company. Given

money transfer service was PayPal, which soon became the most important asset of Confinity, so

intermittently, while most decisions were taken by managers more experienced than him. 34
Although Musk was not the main
the largest shareholder and when Ebay acquired Paypal in 2002, he received $100 million. 35

Tesla, an electric vehicle and clean energy company founded in 2003 by entrepreneurs Martin
Eberhard and Marc Tarpenning.36 In the same year, the newly millionaire Elon tried an electric car:
tzero, by AC Propulsion. Fascinated by that model, he decided to build fully electric sports cars,
when the market offered mainly hybrid cars with both gas and electric motors, produced
primarily by Honda and Toyota. As Tesla was looking to commercialize the tzero machine, Musk
contacted Eberhard and Tarpenning to join their team: he had just founded the SpaceX startup, as
we will see shortly, so he did not want to begin with a second venture. In 2004, Musk invested in

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Titans in 21st century: Jeff Bezos and Elon Musk
Tesla $6.3 million, which was part of the money he had earned with the acquisition of PayPal by
eBay in 2002.37

In the following five years, he assumed an increasing influence within Tesla both as shareholder
and at the decision-making level. In 2008, Musk be

new generation electric sports car and the first serial production all-electric car to use lithium-ion
battery cel
the latest 2020 Model Y crossover.38

Another field which Musk showed deep interest in was artificial intelligence. In 2015, he founded a
non-profit research company on AI, named OpenAI with an endowment of $1 billion, but due to
39

Since 2014 Tesla started focusing on artificial intelligence for the Tesla Autopilot project. This is

criticized as excessive by a German court, after the Wettbewerbszentrale fair-competition group

objected that Tesla cars did not include a functionality that effectively corresponded to an
autopilot. as the Autopilot technology

other wording, the defendant suggests that their vehicles are technically
.40 On the other hand, when Tesla declared that its new
technology would allow cars to drive themselves in cities and on highways, regulators and experts
expressed concern about the danger that this type of driving can entail. Tesla replied that even in
autopilot mode, people must keep their hands on the wheel. Such a response did not appease
such criticisms.41

Another controversial topic related to Tesla is whether it is an actual tech company. Experts that
dismiss this label claim that yes
42 However, its revenue model and

essence are closely linked to the traditional car manufacturing industry, resembling in many
dynamics a well-known car company: Honda. In March 2021, Musk himself with his usual
megalomaniac irony e keeping his regular
43
position as CEO.
44 Aside these sorts of subversive
of, like, a joke
statements, it can be assumed that Musk considers Tesla as a real tech company and not a

Peter and Lyndon Rive in 2006. SolarCity sells and installs solar power systems and similar
products to households, businesses, and public institutions. Musk helped his cousins to start the
company and served as chairman of the board. In 2016, SolarCity was acquired by Tesla for more

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Titans in 21st century: Jeff Bezos and Elon Musk
than $2 billion, which raised criticism as SolarCity was suffering heavy liquidity issues, which Tesla
shareholders were unaware of at the time of the acquisition. Legal issues are still ongoing.45

-founded Neuralink, a
neurotechnology startup aiming at integrating the human brain with artificial intelligence. He also
founded The Boring Company, for the construction of massive underground tunnels. 46 In
particular, the former was at the center of numerous controversies in 2020, when Musk described
one of his early devices as being able to treat sensory and motor disabilities: a claim that the
47

In 2001, Musk became interested in the program of the non-profit Mars Society, particularly in the

aspired to conquer the Red Planet. In 2018, however, he also referred to the Moon, announcing a
lunar circumnavigation mission by 2023. Between 2001 and 2002 Musk and the Mars Society tried
to buy intercontinental ballistic missiles in Russia, but they failed to reach an agreement due to

Musk.48

Musk decided to remain independent and operate as a private business, which proved to be very
successful. In May 2002 he had founded SpaceX with $100 million, a corporation which he still
ter
three unsuccessful attempts, in 2008 SpaceX launched Falcon 1, the first successful orbital launch
of a private liquid-fuel rocket. In the following years, thanks also to financing and contracts with
NASA, SpaceX made great progress, until 2015, when it started to develop the Starlink, a
constellation of low Earth orbit satellites to provide satellite Internet access. 49

Like Bezos, Musk was also not exempt from philanthropy-

so huge, that his troll-philanthropy attitude did not deter requests for help from many parts, for
instance from the World Food Program through its executive director David Beasley. This however
such as
hi

Soskis, senior research associate in the Center on Nonprofits and Philanthropy at the Urban
Institute, Washington DC.50
albeit cautiously and
not without critics from the public opinion gave money to food banks and homeless families, as
well as engaging in the battle against climate change with his Bezos Earth Fund, created in 2020
with a commitment of $10 billion. On his side, Musk did create his own charitable foundation
Musk Foundation already in 2002, but he always held back from making large donations.

billionaires - such the one given in early December 2021

at an event hosted by The Wall Street Journal It does not make sense to take the job of capital

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Titans in 21st century: Jeff Bezos and Elon Musk
allocation away from people who have demonstrated great skill in capital allocation and give it to
an entity that has .51

4.

success of the New Sherpard system in July 2021, SpaceX launched its first operational flight with
astronauts on board in November 2020, and in April 2021 it launched its first crewed trip with
previously flown equipment. In the latter case, the SpaceX Dragon spacecraft transported the crew
to the International Space Station, the low Earth orbit station of the five main space agencies on
our planet (NASA, JAXA, ESA, CSA, and Roscosmos).52

feather announced it will team up with other companies aiming to build a new outpost. 53

Bezos and Musk are the protagonists of a real struggle between two titans ranging from the
management of giant business empires to an actual no-hold-barred space race, from philanthropy
to public image between myth and controversy. How will their tug-of-war develop in 2022? What
kind repercussions will it have on the lives of workers around the world and on the health of our
planet? Will their primacy remain indefinite for a long time, or will new competitors soon arise?

CBNC website, December 30, 2021, https://www.cnbc.com/2021/12/30/how-much-money-the-10-

richest-people-in-the-world-made-in-2021.html The
New York Times, January 2, 2022, https://www.nytimes.com/2022/01/02/business/tesla-sales.html; Hayley C. Cuccinello,
Forbes, August 27, 2020,
https://www.forbes.com/sites/hayleycuccinello/2020/08/27/elon-musk-100-billion-tesla/; Neal E. Boudette and Niraj

https://www.nytimes.com/2021/10/25/business/hertz-tesla-electric-
vehicles.html?campaign_id=4&emc=edit_dk_20211026&instance_id=43781&nl=dealbook&regi_id=170213664&seg
ment_id=72652&te=1&user_id=f686f3d65fc91c3acf940f9abe13e597
2 2
Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch, and
The New York Times, October 26, 2021,
https://www.nytimes.com/2021/10/26/business/dealbook/tesla-trillion-dollar-company.html
3
Time, December
13, 2021, https://time.com/person-of-the-year-2021-elon-musk/
4
Time, December
13, 2021, https://time.com/person-of-the-year-2021-elon-musk/
5
Andrew Ross Sorkin, Jason Karaian, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch, and
The New York Times, October 26, 2021,