May 31, 2024 • 11 mins
Elon Musk's first big hit, Zip2, wasn't just another startup—it revolutionized online city guides and business directories in the late '90s. Founded in 1995 with his brother and Greg Kouri, Zip2 combined mapping with business listings, paving the way for modern services like Google Maps. By partnering with major newspapers, Zip2 brought rich local content online, expanding the reach and credibility of digital city guides. The company's innovative software allowed direct communication between businesses and users, a precursor to today’s online interaction. This game-changing venture not only earned Musk $22 million from its $307 million sale to Compaq but also set the stage for his future tech triumphs.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss.The Critical.
Crossroads. That shape SpaceX.
Tesla X, The Boring Company and Neuralink.
I'm your host, Will Walden. Elon Musk started his
entrepreneurial journey when he founded Zip Two and Online
(00:22):
Mapping and Directions company in 1995.
This early venture played a significant role in shaping the
development of online services and the Internet itself.
Now, Zip Two was established in Palo Alto, CA by Elon, his
brother Kimball Musk, and Greg Corey, and the company's
original name was Global Link Information Network.
(00:43):
Most people don't know about that, and it quickly became a
pioneering force in online city guides and business directories.
Now, Zip Two was among the firstcompanies to provide searchable
online city guides in business directories, allowing users to
find local businesses and get directions to them.
This innovative approach laid the groundwork for modern
(01:05):
services like Google Maps and Apple Maps and online Yellow
Pages. At the time, and at a time when
the Internet was still in its infancy, Zip 2's ability to
integrate business listings withmapping data was a huge
advancement and this showed a lot of potential for practical
everyday use of the Internet. One of Zip 2's key contributions
(01:28):
to the Internet's evolution was enabling 2 way communication
between users and businesses. The software allowed users to
message businesses directly and receive fax messages from them.
Now, this facilitated online interaction between consumers
and companies, and this early adoption of online communication
channels foreshadowed modern business customer communication
(01:51):
methods, highlighting Zip 2's role in shipping the way
businesses interact with their customers online.
Now, Elon Musk himself was deeply involved in the technical
development of Zip 2, coding theinitial system for calculating
directions. This hands on approach
demonstrated Musk's technical expertise and commitment to
solving complex problems, and Zip 2's mapping and routing
(02:14):
services were among the first instances of such technology,
making it a trailblazer in the online mapping industry.
The company's innovative features set it apart from other
early Internet services, contributing to its success and
influence, and their strategic partnerships with newspapers
significantly transformed the online city guide industry.
(02:37):
And by providing the technology and platform for newspapers to
create their own comprehensive online city guides, Zip 2
enabled these established media companies to quickly establish a
digital presence. Newspapers like the New York
Times partnered with Zip 2 to build online city guides,
leveraging their extensive localcontent in advertising
(02:58):
relationships to enhance the value and reach of these guides.
These partnerships shifted the focus from pure listings to rich
local content, integrating in depth community news, event
listings, reviews, and other localized information into the
online city guides. This combination of technology
and editorial resources expandedthe reach and capability of
(03:22):
online City Guides, making them valuable tools for both users
and businesses. The collaboration between Zip 2
and newspapers demonstrated the potential of the Internet for
delivering comprehensive local information, paving the way for
future online services like Google Maps.
And Zip 2's approach to partnering with newspapers also
(03:42):
diversified its revenue streams.In addition to business listings
and advertising, Zip Two could offer supplementary services
like e-mail, calendars, and personalization features to the
newspaper partners now. This diversified business model
not only increased Zip 2's revenue potential but also
showcase the versatility of the platform.
(04:04):
And by catering to the needs of both the users and the
businesses, Zip 2 positioned itself as a comprehensive
solution for anything local online.
And the success of Zip 2 culminated in the acquisition
from Compaq for $307 million in 1999.
(04:26):
This acquisition was a significant milestone for Elon,
earning him $22 million for his 7% share in the company.
The financial windfall from the sale of Zip 2 provided Musk with
a capital and confidence to pursue more ambitious projects
in the tech industry, such as SpaceX and Tesla.
And the acquisition also underscored the value of
(04:46):
potential of Zip 2's innovative approach to online services,
validating Musk's early efforts now.
Zip 2's influence on the Internet's evolution extended
beyond its financial success, though.
The company's innovative features and approach to city
guides and business directories help shape the development of
many online services and business models that became
(05:09):
ubiquitous in the modern Internet era.
Like we said before, Google Maps, Apple Maps, anything with
a map. Zip Two was one of the beginning
software companies to develop that.
And by demonstrating the potential of the Internet for
businesses and driving the adoption of online advertising
and services, Zip 2 played a pioneering role in the early
(05:33):
development of the Internet. Google's online services with
advertising is partly due to Zip2's innovations, and one of the
last impacts of Zip Two was his pioneering role in the Software
as a Service, or SAS, model. Rather than selling its service
directly to consumers, Zip 2 licenses software to newspapers
(05:55):
and companies. This early example of the SAS
business model became prevalent later in the tech industry,
influencing how software services are delivered and
monetized. Think your Netflix subscription.
You don't pay a one time serviceto get Netflix, you pay on a
subscription basis, and that's what these newspapers and
(06:16):
companies were doing. This innovative approach was new
at the time. I set a precedent for future
tech companies, and the early success of Zip 2 provided Elon
Musk with invaluable experience and insights that carried into
his subsequent ventures. The lessons learned from
building and scaling Zip 2 informed Musk's approach to his
later companies such asx.com. Not the current x.com, but the
(06:40):
one back then, which became PayPal.
Also, SpaceX and Tesla and the technical challenges and
business strategies have navigated during this time at
Zip 2 helped his entrepreneurialmindset and prepared him for the
more complex challenges he wouldface in the future.
Now, Zip 2's legacy is evident in the online services and
(07:02):
business models that followed inits footsteps.
The approach to integrating business listings with mapping
data, enabling online communication, chat between the
businesses and the people, and partnering with established
media companies set a new standard for future online
platforms. So Zip 2's impact on the
(07:22):
internet's development is a hugeone, and Elon's technical
expertise and hands on involvement in Zip 2's
development was crucial. If it wasn't for Elon Musk to
push this forward, it would havenever been done, and maybe the
Internet that we have now would be completely different.
Musk's work at Zip 2 demonstrated his potential as a
tech innovator and set the stagefor his future advancements in
(07:45):
the tech industry. Partnerships with newspapers
like The New York Times showed the potential of this sort of
technology between startups and established media companies.
These partnerships allowed Zip 2to rapidly expand its reach and
lend credibility to the online City Guide concept, and the
success of these collaborations highlighted the benefits of
(08:07):
combining technological innovation with traditional
media. Now, Zip 2 facilitated the
transition towards a localized online advertising model.
Think of Google ads or even Facebook ads.
They are very localized to the person actually.
And Zip Two was one of the firstcompanies to facilitate that
(08:29):
transition, though it was at a broader scale.
This is one of the first places to do that now.
They combined business directories with local, rich
content. Zip 2 enabled targeted local
online advertising. Now that the Internet modern
giants use the same technology, Zip Two was their first.
(08:50):
The strategic approach to monetizing online services was a
key factor in Zip 2's success and influence on the Internet's
development. Zip 2's features such as the
early adoption of mapping and also routing was crucial for the
Internet practical and it gave value to the users that wasn't
just reading an article at the New York Times.
(09:13):
You could get something out of it other than learning
something. You could learn about a new
business and also become a patron of that business because
of and you could communicate with them and their their
ability to combine the technology with practical
applications. Like I was saying, set a
standard for future tech companies.
(09:34):
And the success of Zip Two was apivotal moment in Elon's
journey, providing him with the financial resources and
confidence to pursue more ambitious projects.
And something like SpaceX, something like Tesla or even
x.com, which we have now, wouldn't be available if it
(09:56):
weren't for Zip 2. This is the beginning, sort of
the the origin story of Elon Musk's entrepreneurial journey.
Now. It played a significant role in
shaping everything we have on the Internet today.
City guides, think Google Maps, business directories, think
Google Business. Or on Google Maps, you can get
(10:17):
all the business information, partnerships with newspapers,
partnerships with online media. The pioneering role in the SAS
business model set a precedent for future tech companies.
All the tech companies that are available now are because of Zip
Two and some of the SAS models that they've used.
And it set a foundation for ElonMusk, of course, demonstrating
(10:41):
his potential as a tech innovator and an entrepreneur.
Hey, thank you so much for listening today.
I really do appreciate your support.
If you could take a second and hit the subscribe or the follow
button on whatever podcast platform that you're listening
(11:01):
on right now, I greatly appreciate it.
It helps out the show tremendously and you'll never
miss an episode. And each episode is about 10
minutes or less to get you caught up quickly.
And please, if you want to support the show even more, go
to patreon.com/stage Zero. And please take care of
yourselves and each other, and I'll see you tomorrow.
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss.The Critical.
Crossroads. That shape SpaceX.
Tesla X, The Boring Company and Neuralink.
I'm your host, Will Walden. Elon Musk started his
entrepreneurial journey when he founded Zip Two and Online
(00:22):
Mapping and Directions company in 1995.
This early venture played a significant role in shaping the
development of online services and the Internet itself.
Now, Zip Two was established in Palo Alto, CA by Elon, his
brother Kimball Musk, and Greg Corey, and the company's
original name was Global Link Information Network.
(00:43):
Most people don't know about that, and it quickly became a
pioneering force in online city guides and business directories.
Now, Zip Two was among the firstcompanies to provide searchable
online city guides in business directories, allowing users to
find local businesses and get directions to them.
This innovative approach laid the groundwork for modern
(01:05):
services like Google Maps and Apple Maps and online Yellow
Pages. At the time, and at a time when
the Internet was still in its infancy, Zip 2's ability to
integrate business listings withmapping data was a huge
advancement and this showed a lot of potential for practical
everyday use of the Internet. One of Zip 2's key contributions
(01:28):
to the Internet's evolution was enabling 2 way communication
between users and businesses. The software allowed users to
message businesses directly and receive fax messages from them.
Now, this facilitated online interaction between consumers
and companies, and this early adoption of online communication
channels foreshadowed modern business customer communication
(01:51):
methods, highlighting Zip 2's role in shipping the way
businesses interact with their customers online.
Now, Elon Musk himself was deeply involved in the technical
development of Zip 2, coding theinitial system for calculating
directions. This hands on approach
demonstrated Musk's technical expertise and commitment to
solving complex problems, and Zip 2's mapping and routing
(02:14):
services were among the first instances of such technology,
making it a trailblazer in the online mapping industry.
The company's innovative features set it apart from other
early Internet services, contributing to its success and
influence, and their strategic partnerships with newspapers
significantly transformed the online city guide industry.
(02:37):
And by providing the technology and platform for newspapers to
create their own comprehensive online city guides, Zip 2
enabled these established media companies to quickly establish a
digital presence. Newspapers like the New York
Times partnered with Zip 2 to build online city guides,
leveraging their extensive localcontent in advertising
(02:58):
relationships to enhance the value and reach of these guides.
These partnerships shifted the focus from pure listings to rich
local content, integrating in depth community news, event
listings, reviews, and other localized information into the
online city guides. This combination of technology
and editorial resources expandedthe reach and capability of
(03:22):
online City Guides, making them valuable tools for both users
and businesses. The collaboration between Zip 2
and newspapers demonstrated the potential of the Internet for
delivering comprehensive local information, paving the way for
future online services like Google Maps.
And Zip 2's approach to partnering with newspapers also
(03:42):
diversified its revenue streams.In addition to business listings
and advertising, Zip Two could offer supplementary services
like e-mail, calendars, and personalization features to the
newspaper partners now. This diversified business model
not only increased Zip 2's revenue potential but also
showcase the versatility of the platform.
(04:04):
And by catering to the needs of both the users and the
businesses, Zip 2 positioned itself as a comprehensive
solution for anything local online.
And the success of Zip 2 culminated in the acquisition
from Compaq for $307 million in 1999.
(04:26):
This acquisition was a significant milestone for Elon,
earning him $22 million for his 7% share in the company.
The financial windfall from the sale of Zip 2 provided Musk with
a capital and confidence to pursue more ambitious projects
in the tech industry, such as SpaceX and Tesla.
And the acquisition also underscored the value of
(04:46):
potential of Zip 2's innovative approach to online services,
validating Musk's early efforts now.
Zip 2's influence on the Internet's evolution extended
beyond its financial success, though.
The company's innovative features and approach to city
guides and business directories help shape the development of
many online services and business models that became
(05:09):
ubiquitous in the modern Internet era.
Like we said before, Google Maps, Apple Maps, anything with
a map. Zip Two was one of the beginning
software companies to develop that.
And by demonstrating the potential of the Internet for
businesses and driving the adoption of online advertising
and services, Zip 2 played a pioneering role in the early
(05:33):
development of the Internet. Google's online services with
advertising is partly due to Zip2's innovations, and one of the
last impacts of Zip Two was his pioneering role in the Software
as a Service, or SAS, model. Rather than selling its service
directly to consumers, Zip 2 licenses software to newspapers
(05:55):
and companies. This early example of the SAS
business model became prevalent later in the tech industry,
influencing how software services are delivered and
monetized. Think your Netflix subscription.
You don't pay a one time serviceto get Netflix, you pay on a
subscription basis, and that's what these newspapers and
(06:16):
companies were doing. This innovative approach was new
at the time. I set a precedent for future
tech companies, and the early success of Zip 2 provided Elon
Musk with invaluable experience and insights that carried into
his subsequent ventures. The lessons learned from
building and scaling Zip 2 informed Musk's approach to his
later companies such asx.com. Not the current x.com, but the
(06:40):
one back then, which became PayPal.
Also, SpaceX and Tesla and the technical challenges and
business strategies have navigated during this time at
Zip 2 helped his entrepreneurialmindset and prepared him for the
more complex challenges he wouldface in the future.
Now, Zip 2's legacy is evident in the online services and
(07:02):
business models that followed inits footsteps.
The approach to integrating business listings with mapping
data, enabling online communication, chat between the
businesses and the people, and partnering with established
media companies set a new standard for future online
platforms. So Zip 2's impact on the
(07:22):
internet's development is a hugeone, and Elon's technical
expertise and hands on involvement in Zip 2's
development was crucial. If it wasn't for Elon Musk to
push this forward, it would havenever been done, and maybe the
Internet that we have now would be completely different.
Musk's work at Zip 2 demonstrated his potential as a
tech innovator and set the stagefor his future advancements in
(07:45):
the tech industry. Partnerships with newspapers
like The New York Times showed the potential of this sort of
technology between startups and established media companies.
These partnerships allowed Zip 2to rapidly expand its reach and
lend credibility to the online City Guide concept, and the
success of these collaborations highlighted the benefits of
(08:07):
combining technological innovation with traditional
media. Now, Zip 2 facilitated the
transition towards a localized online advertising model.
Think of Google ads or even Facebook ads.
They are very localized to the person actually.
And Zip Two was one of the firstcompanies to facilitate that
(08:29):
transition, though it was at a broader scale.
This is one of the first places to do that now.
They combined business directories with local, rich
content. Zip 2 enabled targeted local
online advertising. Now that the Internet modern
giants use the same technology, Zip Two was their first.
(08:50):
The strategic approach to monetizing online services was a
key factor in Zip 2's success and influence on the Internet's
development. Zip 2's features such as the
early adoption of mapping and also routing was crucial for the
Internet practical and it gave value to the users that wasn't
just reading an article at the New York Times.
(09:13):
You could get something out of it other than learning
something. You could learn about a new
business and also become a patron of that business because
of and you could communicate with them and their their
ability to combine the technology with practical
applications. Like I was saying, set a
standard for future tech companies.
(09:34):
And the success of Zip Two was apivotal moment in Elon's
journey, providing him with the financial resources and
confidence to pursue more ambitious projects.
And something like SpaceX, something like Tesla or even
x.com, which we have now, wouldn't be available if it
(09:56):
weren't for Zip 2. This is the beginning, sort of
the the origin story of Elon Musk's entrepreneurial journey.
Now. It played a significant role in
shaping everything we have on the Internet today.
City guides, think Google Maps, business directories, think
Google Business. Or on Google Maps, you can get
(10:17):
all the business information, partnerships with newspapers,
partnerships with online media. The pioneering role in the SAS
business model set a precedent for future tech companies.
All the tech companies that are available now are because of Zip
Two and some of the SAS models that they've used.
And it set a foundation for ElonMusk, of course, demonstrating
(10:41):
his potential as a tech innovator and an entrepreneur.
Hey, thank you so much for listening today.
I really do appreciate your support.
If you could take a second and hit the subscribe or the follow
button on whatever podcast platform that you're listening
(11:01):
on right now, I greatly appreciate it.
It helps out the show tremendously and you'll never
miss an episode. And each episode is about 10
minutes or less to get you caught up quickly.
And please, if you want to support the show even more, go
to patreon.com/stage Zero. And please take care of
yourselves and each other, and I'll see you tomorrow.
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