ELON MUSK says he is not a billionaire — just “a multi, multi-millionaire”. At 30, this Silicon Valley star has already created two spectacularly successful companies and has just set up a third. Less than 10 years ago he was living in a rented office, sleeping on a futon and “showering in the YMCA because this arrangement was cheaper than renting an apartment”.

Musk was born in South Africa and came to California to study postgraduate physics at Stanford university. But the entrepreneurial excitement around him was too much and he dropped out to take part in it.

Last week Musk, unassuming and amiable, was at Oxford University’s Said Business School. He was with a group of entrepreneurs and business people from California’s Silicon Valley taking part in a forum on business creation and entrepreneurship. The message was that life in Silicon Valley is more muted these days but those who have the determination can still make a fortune.

Musk’s first company, Zip2, started in 1995, became a leading supplier of online city guides and services to the media industry. He sold it to Compaq, the computer company, for $300m (£190m) after four years.

The next was PayPal (formerly known as X.com), an electronic financial-services company. One of its skills was the ability to transfer money to e-mail addresses. This business took off and with it PayPal, which was one of last year’s rare successful stock-market flotations before eBay bought it for $1.5 billion. Musk is still a director and the largest shareholder.

He says there is no place that can match Silicon Valley as a nursery for fledgling entrepreneurs. Unlike conservative British bankers who are prone to ask borrowers to demonstrate track records of several years, the money in Silicon Valley knows its business.

“The valley is probably the easiest place in the world to raise money if you are a high-technology company,” says Musk. “It’s not your track record they want to know about, it’s the idea. Banks are not a good bet. There is no collateral or cashflow to offer them. The ideal form of finance is high-risk equity investment and for that you need experienced venture capitalists. California has developed expertise in venture capitalism you won’t find in many parts of the world.”

The sophistication of its financing is a vital ingredient in the valley’s success, said Steve Cinelli, a finance man. “But you must have the skills if you want to surround yourself with the best and the brightest,” he says. “Take the advice of your networks, tap their grey matter and be humble and ready to ask for help.”

The high-technology downturn was inevitable, says Musk “For a time it went insane. There was completely irrational exuberance. But it’s still quite busy compared with other parts of the world.”

There is nothing wild about Musk’s recipe for success. It is the product that counts. “I focus on having a useful product. It sounds simple but people get caught up in the marketing or developing the story and forget. They slip into all sorts of silliness but it comes down to common sense. Most of the time you don’t need a marketing study. Is it obvious you would buy it? If not, it’s not clear you have a case for launching the company.

“Everything else is easy to fix but having a compelling product is harder. Wealth creation is about building a company that develops something more useful than what is out there.”

Musk says Silicon Valley offers would-be entrepreneurs plenty of role models to spur them on. “This is very important. You can see people doing things and you get the idea you can do it as well.”

Picking good people is essential. Musk’s latest venture, SpaceX, which will slash the cost of space launches, is only five months old but he has already put together a team of 15.

Damir Perge, a young Yugoslavian-born entrepreneur based in Silicon Valley, told the seminar that persistence was essential. He had taken a course in entrepreneurship and became so excited by it that he dropped out of college to join the fray.

He claimed to have been turned down by more financiers than the Starbucks founder, who accumulated 175 rejection slips before he managed to raise any cash. But after raising $40m last year, Perge has three ventures under way. “Being an entrepreneur is unpredictable — that’s what so much of the fun is about,” he says.

Kim Polese, another member of the delegation, caught the entrepreneurial mood after she moved to Silicon Valley in 1985. She soon realised that having exciting technology was not enough — as Musk says, you need a product to have a company.

She joined Sun Microsystems where she played a leading role in the development of Java, a programme language that can run on many different types of computer.

She is now chairman of Marimba, which she co-founded. Her vision, inspired by the Java experience, is “software on demand” that will make using the internet as easy as turning on a tap.

Raymond Nasr was another delegate. He is director of executive communications at Google but as he has worked at Apple, Sun and Novell, there are few who can match his experience. He is convinced that the right sort of leadership can rally large groups of people.

Google excels at this. Its two founders, Larry Page and Sergey Brin, are still in their twenties but have built an enterprise with 600 workers. It is the biggest internet search engine in the world with more than 10,000 servers.

The four-year-old company has been profitable for the past two years and by next spring expects to handle 500m queries a day. Its mission, says Nasr, is “to organise the world’s information and make it accessible and useful.”

Nasr was brought up in Palo Alto, the heart of the valley, and says it can be tough right now. “The valley has been defined by cycles and there was a huge boom which led to people to over-provide. But I’m pretty optimistic things will come back.”

It would be a disappointment if the greatest centre for entrepreneurial creativity can’t climb back.

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